Omdahl & Janicek
[2024] FedCFamC1F 323
•17 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
FIRST INSTANCE
Omdahl & Janicek [2024] FedCFamC1F 323
File number: BRC 14297 of 2022 Judgment of: CAREW J Date of judgment: 17 May 2024 Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – Contributions – Whether the funds received by the applicant and first respondent from the second and third respondent, after agreed repayments are made, should be regarded as a contribution by the first respondent alone or as a contribution on behalf of the applicant and first respondent – Whether the benefits received by the first respondent during the relationship as a discretionary beneficiary should be considered an additional contribution of the first respondent, and whether potential future benefits should be regarded as a future financial resource – Where the contributions of the applicant and first respondent are assessed to be in the proportion 60/40 in favour of the first respondent – Where there is a ten percent adjustment in favour of the applicant – Where the applicant and first respondent will each retain some assets including superannuation and the sale proceeds of the property will be divided in the proportion of 53.60 percent to the applicant and 46.40 percent to the respondent. Legislation: Family Law Act 1975 (Cth) ss 44, 90SB, 90SF, 90SM Cases cited: Gao & Wang (2016) FLC 93–735
Gosper & Gosper (1987) FLC 91-818
Hall & Hall (2016) 257 CLR 490
Kessey & Kessey (1994) FLC 92-495
Stanford v Stanford (2012) 247 CLR 108
Number of paragraphs: 62 Date of hearing: 15 – 17 April 2024 Place: Brisbane Counsel for the Applicant: Mr Gunn Solicitor for the Applicant: Hawkes Lawyers Counsel for the First Respondent: Mr Galloway Solicitor for the First Respondent: Suthers George Counsel for the Second and Third Respondents: Mr Drysdale Solicitor for the Second and Third Respondents: Pippa Colman Family Law ORDER
BRC 14297 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS OMDAHL
Applicant
AND: MR JANICEK
First Respondent
MR B JANICEK
Second Respondent
D PTY LTD AS TRUSTEE FOR THE E TRUST
Third Respondent
ORDER MADE BY:
CAREW J
DATE OF ORDER:
17 MAY 2024
THE COURT ORDERS THAT:
1.The remainder of the balance of the net proceeds of the sale of the property at H Street, Town C, Queensland (“the property”) more particularly described as Lot … on RP …, title reference number …, subject to the Order of this Honourable Court made 16 April 2024, be divided:
(a)53.60% to the applicant; and
(b)46.40% to the first respondent.
2.Until the property is sold, any party in possession of the property shall pay any rates and water liability associated with the property as they fall due and shall pay for and ensure that the property is insured for a value of not less than $850,000.
3.If the property is vacant, the applicant and first respondent shall pay one half each of any rates, water and insurance liabilities associated with the property.
4.By consent, the external storage at the property shall be sold with the property.
5.Unless agreed otherwise, the unregistered Motor Vehicle 1 and Equipment 1 shall be sold, and the net sale proceeds divided in the same proportion as provided in paragraph 1 of this Order.
6.The applicant shall otherwise retain, free from any and all claims of the first respondent, the following:
(a)her bank accounts;
(b)her superannuation interests;
(c)household furniture and contents currently in her possession;
(d)her personal possessions and belongings; and
(e)Equipment 2.
7.The first respondent shall retain, free from any and all claims of the applicant, the following items:
(a)his bank accounts;
(b)his motor vehicles;
(c)his trailer;
(d)Equipment 3 and tools;
(e)his superannuation interests;
(f)household furniture and contents currently in his possession; and
(g)his personal possessions and belongings as agreed between the parties to be collected on a day and time to be agreed between the parties.
8.The applicant and first respondent relinquish any claim, one against the other, to any interest in any other property not otherwise herein specifically referred to, including but not limited to motor vehicles, bank or building society accounts, jewellery, furniture, appliances, debtors, choses in action and any other property, whether realty or personalty, wheresoever situate and/or of whatsoever kind presently in the possession of or registered in the name of the other party.
9.The applicant and first respondent shall do all acts and sign all documents required to indemnify the other, and hold them harmless, in relation to any liabilities held in their sole name and/or joint names with another party, or liabilities in respect of properties and assets which they are to retain in accordance with this Order.
10.The applicant and first respondent shall do all acts and sign all documents necessary to give effect to the terms of this Order and in the event that either party should fail or refuse to comply with a provision of this Order within 14 days of a request to do so by the other party, then a Registrar of the Federal Circuit and Family Court of Australia (Division 1) be hereby appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute all documents in the name of that party and do all acts and things necessary to give validity and operation to this Order.
11.The funds in the ANZ bank account number ending in …97 for the benefit of Y shall be under the joint control of the applicant and first respondent and any use of those funds in the account shall be only for the benefit of the child Y.
12.The funds in the ANZ bank account number ending in …61 for the benefit of X shall be under the joint control of the applicant and first respondent and any use of those funds in the account shall be only for the benefit of the child X.
NOTATION:
A.The reference in paragraph 1 of this Order to the remainder of the balance of the net proceeds of the sale of the property at H Street, Town C, Queensland is intended to take into account the Order made by consent on 16 April 2024 which requires the property to be sold and from the proceeds of sale $200,000 is to be paid to the second respondent and $200,000 is to be paid to the third respondent.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAREW J:
At the commencement of this trial there were four parties involved in the dispute.
The applicant, Ms Omdahl, and first respondent, Mr Janicek, were a de facto couple who separated in 2022. The applicant seeks a property settlement order.
The second respondent, Mr B Janicek, is the father of the first respondent and the third respondent, D Pty Ltd as trustee for the E Trust, is the trustee of a discretionary trust set up and controlled by the second respondent.
The second and third respondents’ involvement in the case concerned a claim for repayment of $800,000, being the balance of alleged loans owing to them by the applicant and first respondent. The applicant resisted the claim on several bases including that the funds advanced were a gift or, if found to be loans, were no longer recoverable as the claim was not made until after the statutory limitation period.
On the second day of the trial, the claim by the second and third respondents was compromised on the basis that the applicant and first respondent would sell their property at H Street, Town C, Queensland, (“Town C”) and pay to the second and third respondents, the sum of $400,000.
The remaining property pool is modest, likely to be in the vicinity of about $500,000, and the applicant will retain her superannuation of about $125,000 and the first respondent will retain his superannuation of about $68,000.
The applicant contends that the net assets and superannuation should be divided in the proportion 65/35 in her favour. The precise terms of the order sought by the applicant are set out in exhibit 13. The reference to “financial resources” in that document was not pressed.
The first respondent contends that the balance sale proceeds of Town C (after payment of $400,000 to the second and third respondents) should be divided in the proportion 70/30 in his favour and each party should otherwise retain the items in the balance sheet in their respective names. The first respondent contends that such a division would reflect a 65/35 outcome in his favour. The precise terms of the order sought by the first respondent are set out in exhibit 14.
ISSUES
The applicant and first respondent agree that the issues for my determination are adequately and accurately reflected in the following list:
(1)Should the balance of the $1,000,000 received by the applicant and first respondent, after payment to the second and third respondents of the $400,000 sum by way of compromise of the claims made by the second and third respondents, be regarded as a contribution made on behalf of the first respondent alone or as a contribution made on behalf of both the applicant and first respondent?
(2)Should the benefits received by the first respondent during the relationship as a discretionary beneficiary of the E Trust established by the first respondent’s father, be regarded as an additional contribution by the first respondent?
(3)Should the first respondent’s potential benefits as a discretionary beneficiary of the E Trust be regarded as a future financial resource of the first respondent?
(4)In addition, should any adjustment be made in the applicant’s favour, if any, by reason of her alleged lower earning capacity and primary responsibility for the children?
While no additional documents were tendered after the settlement of the second and third respondents’ claim, the first respondent relied upon the second respondent’s affidavit in support of his case. The second respondent was not required for cross-examination.
BACKGROUND
The applicant and first respondent lived in a de facto relationship from 2009 until they separated in June 2022. The applicant and first respondent have two children aged 10 and eight respectively. The children live with the applicant nine nights each fortnight and with the first respondent five nights each fortnight.
The applicant is 39 years of age and employed as an assistant in a government department. The applicant’s average annual income is somewhere between $55,000[1] and $61,515.[2] The applicant also receives a payment from “Aus Gov Families” of $165 per week and child support of $54.31 per week has been assessed as payable to her by the first respondent (although it is seems this has not been paid, and under the current assessment a payment is assessed to be paid by the applicant to the first respondent).
[1] Applicant’s affidavit filed 18 March 2024 at [20].
[2] Applicant’s financial statement filed 18 March 2024 at item [9].
Since separation, the applicant has had the benefit of living at Town C with the children, to the exclusion of the first respondent. The home is unencumbered. The applicant has met the rates and other outgoings on the property of about $100 per week.
The first respondent is 44 years of age and currently in receipt of an income protection insurance payment. The first respondent contends that he moved into a small unit at Town J after separation in 2022 for which he initially paid $400 per week rent but that he ceased making rent payments in August 2023 because he was experiencing financial stress. The first respondent also spends time at the second respondent’s home (two hours away) when the children are not living with him.
Until October 2022, the first respondent had been employed in a variety of occupations with an annual income of $65,000 to $70,000. Since December 2022, the first respondent has been receiving income protection payments under an insurance policy. His weekly income protection payments are currently $1,375 ($71,500 per annum). The first respondent received a payment from the applicant by way of child support of $54.13 per week for an unknown period after the recent parenting arrangements were assessed by the Child Support Agency. The first respondent contends that this assessment is not correct in circumstances where he is receiving income protection payments, and he expects he “will have a bill to [the applicant] in the vicinity of about eight thousand dollars” after his tax return for the 2022/2023 financial year is lodged. The first respondent intends to return to full time employment upon the conclusion of these proceedings.
The circumstances leading to $1,000,000 being advanced to the applicant and first respondent are briefly summarised as follows:
(a)The second respondent commenced a de facto relationship with Ms K in mid-2009;
(b)In 2010, Ms K received a substantial sum;
(c)The second respondent contends that he and Ms K decided to offer each of their respective children a loan of $500,000 each to assist them to enter the property market;
(d)The second respondent and Ms K held a family group meeting in September 2010 to discuss the terms associated with the money being advanced;
(e)The second respondent asserts the terms included;
(i)That $500,000 would be advanced to children of each of them and some of the children’s partners;
(ii)That the money is a loan, not a gift;
(iii)That there would be no interest associated with the loan and regular repayments would not be required;
(iv)That the purpose of the loan is to help the children purchase real property;
(v)That the money will need to be repaid if the children were to “leave the family”; and
(vi)That the children will need to sign documentation evidencing the loan that had not yet been prepared and security would be required;
(f)In or about early 2011, the second respondent established the E Trust and Ms K established the L Trust. L Pty Ltd was established as the corporate trustee for both trusts and was incorporated in New South Wales in late 2010. The second respondent and Ms K were both directors and shareholders of L Pty Ltd;
(g)The second respondent and Ms K decided to advance a further sum of $500,000 to each of their children in 2011 in similar terms to the initial advancement;
(h)The applicant and first respondent signed a Deed of Loan and Letter of Offer in late 2011; and
(i)The applicant and first respondent signed a mortgage document in early 2012 prepared by lawyers for the second respondent.
The second respondent and Ms K separated on 15 April 2019 and finalised a property settlement by agreement in late 2019. Part of their property settlement included the assignment of loans made to the children of the second respondent, to the E Trust. The applicant and first respondent received documents recording the assignment of the loans to the second and third respondents.
The second respondent contended that he called in the loans in mid-2022. As a consequence, the first respondent paid to the second and third respondents $100,000 respectively in mid‑2022. The second respondent asserts this left the balance of loans owing to the second and third respondents at $400,000 respectively.
In late 2022, the second and third respondents filed a Claim in the Supreme Court of Queensland each seeking repayment of the $400,000 owing and interest by the applicant and first respondent.
On 14 November 2022, the applicant commenced proceedings in this Court. The Supreme Court proceedings were transferred to this Court under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Qld) on 20 February 2023 by order of Wilson J.
The applicant contended that the monies advanced in 2010 were provided as a gift. Further, the applicant contended that upon advancing the monies in 2011 the second respondent asserted that both sums were a loan and required the applicant and first respondent to sign a Deed of Loan without opportunity to receive advice.
The first respondent agreed with the second and third respondents’ contention that both advances were loans.
As the second and third respondents’ claim settled, neither the applicant nor the first respondent sought a finding on the issue of whether the advances were loans or gifts, although each party maintained their contentions. Further, no finding was sought on whether the second and third respondents’ claims were statute barred.
The applicant has incurred $125,000 in legal fees. The first respondent has incurred $132,000 in legal fees. The second and third respondents have incurred $182,000 in legal fees.
APPLICABLE LEGAL PRINCIPLES
It is common ground that the Court has jurisdiction to make a property order in circumstances where there was a de facto relationship between the parties, and they had two children together (s 90SB of the Family Law Act 1975 (Cth) (“the Act”)). The proceedings were commenced within two years of the end of the de facto relationship (s 44(5)).
In property settlement proceedings, the Court may make such order as it considers appropriate, altering the interests of the parties to the de facto relationship in the property of the parties or either of them, including an order for a settlement of property in substitution for any interest in the property for the benefit of the parties, and an order requiring either or both of the parties to the de facto relationship to make, for the benefit of either or both of the parties, such settlement or transfer of property as the Court determines (s 90SM(1))
The Court cannot make an order unless it is satisfied that, in all of the circumstances, it is just and equitable to make the order (s 90SM(3)).
Section 90SM(4) of the Act prescribes matters that must be taken into account in considering what, if any, order is made under the section. Those matters are as follows:
(a)The financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;
(b)The contribution (other than financial) made directly or indirectly by or on behalf of a party to the de facto relationship to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;
(c)The contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties and any children, including any contribution made in the capacity of homemaker or parent;
(d)The effect of any proposed order upon the earning capacity of either party;
(e)The matters referred to in s 90SF(3) of the Act so far as relevant;
(f)Any other order made under the Act affecting a party; and
(g)Any child support under the Child Support (Assessment) Act 1989 (Cth) that a party has provided, is to provide, or might be liable to provide for a child of the de facto relationship.
The High Court of Australia in Stanford v Stanford[3] identified certain principles to be applied in property settlement proceedings. Whilst Stanford v Stanford dealt with a property settlement application involving a married couple, the propositions discussed by the High Court of Australia apply with equal measure to a de facto couple.[4] In particular, when considering whether it is just and equitable to make an order, it is firstly necessary to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.[5] Secondly, the discretion as to whether or not to make a property settlement order, although extraordinarily wide, must nevertheless be exercised in a principled way.[6] Thirdly, there is no presumption that the parties’ rights to or interests in property are or should be different from those that currently exist.[7] The consideration of whether it is just and equitable to make an order should not be considered by reference only to the matters in s 90SM(4). It is necessary to separately consider s 90SM (3) and (4) and not to ‘conflate’ the two subsections.
[3] (2012) 247 CLR 108 (“Stanford”).
[4] Gao & Wang (2016) FLC 93–735 at [19].
[5] Stanford (fn 3) at 120, [37].
[6] Ibid at 120–121, [38].
[7] Ibid at 121, [40].
Is it just and equitable to make a property order?
Neither party submitted that it was not just and equitable to make an order. That position is understandable given that the applicant and respondent separated in June 2022 and “there is not and will not thereafter be the common use of property” by the parties.[8] Additionally “the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the relationship”.[9] In such cases, the “just and equitable requirement is readily satisfied”[10] and I am satisfied in this case that it is just and equitable to make an order.
[8] Ibid at 122, [42].
[9] Ibid.
[10] Ibid.
BALANCE SHEET
There is an agreed balance sheet set out below:
Ownership Description Applicants value Respondents value ASSETS 1 Joint H Street, Town C $850,000.00 $850,000.00 2 First respondent Motor Vehicle 2 $31,600.00 $31,600.00 3 Currently unregistered Motor Vehicle 1 (to be sold) $4,000.00 $4,000.00 4 First respondent Motor Vehicle 3 $12,050.00 $12,050.00 5 First respondent Motor Vehicle 4 $4,000.00 $4,000.00 6 First respondent Motor Vehicle 5 $15,000.00 $15,000.00 7 First respondent Motor Vehicle 6 $3,000.00 $3,000.00 8 First respondent Motor Vehicle 7- Motor Vehicle 6 $1,500.00 $1,500.00 9 First respondent Trailer $3,000.00 $3,000.00 10 First respondent Child's bike $150.00 $150.00 11 Joint Equipment 1 (to be sold) $750.00 $750.00 12 Joint External storage (to be sold with the house) $750.00 $750.00 13 Applicant Equipment 2 $500.00 $500.00 14 First respondent Equipment 3 $300.00 $300.00 15 First respondent Various Tools $1,140.00 $1,000.00 16 Applicant Furniture and Chattels $2,000.00 $4,000.00 17 First respondent Furniture and Chattels $2,000.00 $2,000.00 18 Applicant Bank Accounts $5,031.00 $5,265.00 19 First respondent Bank Accounts $3,809.00 $3,809.00 LIABILITIES 20 Applicant HECS $16,416.00 $16,416.00 21 First respondent Payment due to Mr B Janicek pursuant to Orders of 16 April 2024 $200,000.00 $200,000.00 22 First respondent Payment due to D Pty Ltd pursuant to Orders of 16 April 2024 $200,000.00 $200,000.00 SUPERANNUATION Member Name of Fund Type of Interest Applicants value Respondents value 23 Applicant Super Fund 1 Accumulation $122,304.00 $122,304.00 24 First respondent Super Fund 2 Accumulation $23,025.00 $23,025.00 25 First respondent Super Fund 3 Accumulation $45,286.00 $45,286.00
In the absence of evidence or submissions about the discrepancy in values attributed to items 15, 16 and 18 in the balance sheet, I propose to adopt the value attributed by the person who is to retain those items.
SHOULD THE BALANCE OF THE $1,000,000 RECEIVED BY THE APPLICANT AND FIRST RESPONDENT, AFTER PAYMENT TO THE SECOND AND THIRD RESPONDENTS OF THE $400,000 SUM BY WAY OF COMPROMISE OF THE CLAIMS MADE BY THE SECOND AND THIRD RESPONDENTS, BE REGARDED AS A CONTRIBUTION MADE ON BEHALF OF THE FIRST RESPONDENT ALONE OR AS A CONTRIBUTION MADE ON BEHALF OF BOTH THE APPLICANT AND FIRST RESPONDENT?
This issue should reflect the fact that in addition to the agreement by the applicant and first respondent to pay $400,000 in total to the second and third respondents, a sum of $200,000 has already been paid to them by the first respondent. The balance of the $1,000,000 advanced is $400,000 not $600,000 as this issue might otherwise suggest.
The applicant contends that the $400,000 should be regarded as a contribution made by the applicant and first respondent jointly.
The first respondent contends that the $400,000 crystallised as a gift made by the second and third respondents upon compromise of the second and third respondents’ claim by the parties on the second day of trial, and that because the benefit was afforded by the first respondent’s family, it should therefore be treated as a contribution made solely on his behalf. Reliance is placed on authorities such as Kessey & Kessey[11](“Kessey”) and Gosper & Gosper[12] (“Gosper”). In Kessey, the Full Court said at 81,850:
In other words, a contribution by a parent of a party to a marriage to the property of the marriage will be taken to be a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child.
[11] (1994) FLC 92-495 at 81,850.
[12] (1987) FLC 91-818 at 76,168.
The circumstances of this case are very different to the those in both Kessey and Gosper. In this case, the disputed nature of the advances made by the second and third respondents are unable to be determined because the claims were settled by a compromise. Accordingly, I reject the first respondent’s argument. The second and third respondents’ motivation for the settlement of their claim against the applicant and first respondent is unknown. I am not prepared to attribute to them an intention to make a gift of the balance of $400,000 (which they claim was a debt due by both the applicant and first respondent) to the first respondent. To the extent that the settlement may be seen as affording a benefit, it is a benefit received by both the applicant and the first respondent.
SHOULD THE BENEFITS RECEIVED BY THE FIRST RESPONDENT DURING THE RELATIONSHIP AS A DISCRETIONARY BENEFICIARY OF THE E TRUST ESTABLISHED BY THE FIRST RESPONDENT’S FATHER, BE REGARDED AS AN ADDITIONAL CONTRIBUTION BY THE FIRST RESPONDENT?
The applicant concedes that since shortly after the E Trust was established by the second respondent in or about 2012, the first respondent received regular weekly distributions from the trust and that “[t]his amounted to hundreds of thousands of dollars over the years”. In addition to the monetary payments, the applicant concedes that the first respondent also received other benefits including, “the free use of the unit in which he is currently residing, use of vehicle, paid for overseas and interstate holidays, use of various vehicles, cash etc”.
The first respondent also includes a list of benefits received from “Dad and [Ms K]” over the years including cash of $30,000, white goods, a mower, furniture, holidays, etc. in addition to weekly distributions from the E Trust from 2012, “initially … ($300) per week, then … ($400) per week and later increased to … ($800) per week”.
The second respondent corroborates the first respondent’s list of gifts he “advanced for the benefit of [the first respondent] and [the applicant]”. The second respondent also deposes to trust distributions to “[the first respondent] and [the applicant]” which commenced shortly after he set up his trust in early 2011. More specifically, the second respondent details trust distributions of $400 per week to each of his three children from his trust and that the weekly distributions increased to $800 per week from late 2021 until mid-2022.
It seems common ground that the first respondent received total payments into his bank account of about $250,000 by way of trust distributions over the period 2011/2012 to June 2022, upon which he was required to pay tax. The fact that the payments were received solely by the first respondent is significant. These payments were of benefit to the family and represented their sole source of income at times, when the first respondent was not working. I find that the receipt of the trust distributions arose as a consequence of the familial relationship between the first and second respondents and are likely to have represented a direct or indirect financial contribution made by or on behalf of the first respondent to the acquisition, conservation or improvement of property of the parties (although no specific property is identified) or alternatively as a contribution by the first respondent to the welfare of the family.
The other gifts represented a range of benefits, some for the first respondent’s benefit solely, e.g. several motor vehicles and trips relating to his interest in motor vehicles, but many other gifts provided benefits for the family generally and should also be regarded as a contribution by or on behalf of the first respondent to the welfare of the family.
SHOULD THE FIRST RESPONDENT’S POTENTIAL BENEFITS AS A DISCRETIONARY BENEFICIARY OF THE E TRUST BE REGARDED AS A FUTURE FINANCIAL RESOURCE OF THE FIRST RESPONDENT?
The first respondent contends that the trust stopped making distributions to him and his siblings on about 30 June 2022 when he and his siblings received an email from the second respondent dated 21 June 2022 which set out the financial reasons for the distributions ceasing. The first respondent contends that he has not received any distributions since that time and has no knowledge or information as to when or if distributions will occur in the future.
The second respondent contends that in or around March/April 2022 he recalls expressing his concern that his trust was returning losses and his “general fears about sharp economic downturn”. In his affidavit, the second respondent deposed as follows:
169. The [E Trust] held considerable investments in shares and stocks, managed by [Mr M] at [N Financial Services]. In early 2022, I had growing concerns about the economic climate, and started to pay closer attention to share market performance and general growth in the local and global economy. There was a lot of media at the time predicting an economic crash, and that made me nervous. Throughout the first half of 2022 I saw the value of my investments decreasing- sometimes quite dramatically.
…
171. By June 2022, the situation had worsened and I could see that, if I was to continue paying out trust distributions at their current levels, I would have to sell down shares and stocks (at a loss), as I was not receiving sufficient returns on the trust's investments. I made the decision to cease those weekly distributions to each of [the first respondent], [Ms F] and [Mr G], but to keep the smaller distributions to the grandchildren's accounts going.
172. I sent an email to each of [the first respondent], [Ms F] and [Mr G] on 21 June 2022, explaining that I will be ceasing the weekly distributions from 30 June 2022, and detailing my reasons for that. I quickly received a reply from [Ms F] thanking me for keeping them in the loop, and saying that she agrees with my decision.
173. At paragraph 99 of the Affidavit filed by [the applicant] on 18 March 2024, she says that she does not accept that [the first respondent] no longer receives weekly distributions from the [E Trust]. I can confirm that [the first respondent] does not receive these distributions. Neither do [Mr G] or [Ms F]. There is no accrual of these distributions. I have stopped paying them for reasons explained in my email sent to the children on 21 June 2022.
174. These trust distributions have at all times been determined by me as director of the corporate trustee for the [E Trust], using the trustee's discretion. The trust distributions are not loans and not repayable to the trust.
175. The trust distributions are income that has been distributed to [the first respondent] and should be declared in his tax returns.
The second respondent was not required for cross-examination and thus his evidence is unchallenged.
In Hall & Hall,[13] the High Court of Australia said at [54] – [55]:
The reference to “financial resources” in the context of s 75(2)(b) has long been correctly interpreted by the Family Court to refer to “a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”. The requirement that the financial resource be that “of” a party no doubt implies that the source of financial support be one on which the party is capable of drawing. It must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that the party must control the source of financial support. Thus, it has long correctly been recognised that a nominated beneficiary of a discretionary trust, who has no control over the trustee but who has a reasonable expectation that the trustee’s discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation.
Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.
(footnotes omitted)
[13] (2016) 257 CLR 490.
The first respondent has no control over the E Trust. The second respondent gave unchallenged evidence that he ceased the trust distributions to all three of his children in June 2022 because of the declining financial circumstances of the trust. Accordingly, I am unable to find that the first respondent could reasonably expect direct financial support to be forthcoming from the second or third respondents if he were to call upon it.
In relation to other benefits that have historically been received by the first respondent from the second and/or third respondents e.g. the use of property, the provision of holidays, etc., the first respondent contends as follows:
138. At paragraph 159 [of the applicant’s trial affidavit], [the applicant] deposes to me having free use of a unit which is untrue. I pay rent for that unit as directed by the Trust. I have not received the benefit of any overseas or interstate holidays post-separation from the Trust. …
I note that the first respondent pays no rent according to his financial statement and that at [79] of his trial affidavit he deposes to having moved to a small unit at Town J after separation where he initially paid $400 per week rent but “this stopped in August 2023 because I had financial stress”. I infer that the first respondent currently, at least, receives free accommodation. The first respondent was not cross-examined about other benefits, if any, received by him.
In my view, the first respondent can reasonably expect to receive indirect financial support, i.e. the provision of accommodation, should he request same. This represents a financial resource that I will take into account when considering the s 90SF(3) factors.
IN ADDITION, SHOULD ANY ADJUSTMENT BE MADE IN THE APPLICANT’S FAVOUR, IF ANY, BY REASON OF HER ALLEGED LOWER EARNING CAPACITY AND PRIMARY RESPONSIBILITY FOR THE CHILDREN?
The applicant is an educator but has not worked at that capacity for over ten years. During the relationship, and with the agreement of the first respondent, the applicant dedicated herself to her role as homemaker and parenting the children. The applicant rejoined the workforce after separation and works for a government department as an assistant and she contends that the hours and conditions suit her responsibilities to care for the children. I accept her evidence. There is conflicting evidence about the income received by the applicant from her employment. The applicant’s financial statement discloses an annual salary of $61,515.96 whereas her trial affidavit discloses an annual salary of approximately $55,000. The inconsistency is unexplained.
Pursuant to a recent parenting plan, the children will continue to live primarily with the applicant but will spend five nights per fortnight and school holiday time with the first respondent.
While the first respondent is currently in receipt of income protection insurance payments of $71,500 per annum, he intends to return to employment after the conclusion of the proceedings. It is unclear what salary the first respondent is likely to receive but historically it seems he has received at least $65,000 per annum.
Currently, the applicant has been assessed to pay the first respondent child support of $54.13 per week which the first respondent contends is an error. The applicant contends that the first respondent has been assessed to pay child support to her of $54.13, which she does not currently receive. In the absence of the child support assessment document, I am unclear what the situation is regarding child support.
It appears that first respondent’s income is likely to exceed the applicant’s income although not by a significant sum but that disparity will favour the applicant when considering the s 90SM(3) factors.
WHAT PROPERTY ORDER IS APPROPRIATE?
It has been agreed that the former matrimonial home will be sold, and that the external storage will be sold with the property. The unregistered Motor Vehicle 1 and Equipment 1 will also be sold. The best I can do in relation to the items being sold is to look at the value attributed to those items in the agreed balance sheet and take into account in a general way that there will likely be sale costs incurred, although no estimate of those has been provided.
H Street, Town C $850,000.00 External storage $750.00 Sub-total (sale proceeds) $850,750.00 Less payment required to the second and third respondents as per order made by consent on 16 April 2024 ($400,000.00) Sub-total (net sale proceeds) $450,750.00 Motor Vehicle 1 $4,000.00 Equipment 1 $750.00 Estimated total $455,500.00
Each party will retain certain property and certain liabilities as reflected in the tables below:
To be retained by the applicant Value Equipment 2 $500.00 Furniture $2,000.00 Bank accounts $5,031.00 HECS debt ($16,416.00) Superannuation $122,304.00 Total $113,419.00
To be retained by the first respondent Value Motor Vehicle 2 $31,600.00 Motor Vehicle 3 $12,050.00 Motor Vehicle 4 $4,000.00 Motor Vehicle 5 $15,000.00 Motor Vehicle 6 $3,000.00 Motor Vehicle 7 $1,500.00 trailer $3,000.00 Child's bike $150.00 Equipment 3 $300.00 Various Tools $1,000.00 Furniture and Chattels $2,000.00 Bank Accounts $3,809.00 Superannuation $68,286.00 Total $145,695.00
The estimated total net assets including superannuation are $714,614.
When considering the myriad of contributions made by each party during the relationship and subsequent thereto, and when taking into account my findings in relation to the significant issues identified by the parties and determined earlier in these reasons, namely, the treatment of the $400,000 benefit received as a result of the compromise of the second and third respondents’ claim, and the receipt of trust distributions and other benefits from the second and third respondents during the relationship, I assess the contributions of the applicant and first respondent to be in the proportion 60/40 in favour of the first respondent.
When considering what, if any, adjustments are warranted pursuant to s 90SF(3) of the Act, the only factors identified by the parties as relevant related to whether the first respondent has a financial resource, the greater responsibility of the applicant to provide day to day care for the children, and any income earning disparity.
In view of my earlier findings at [46], [49], [51], and [54], I consider that on balance there should be an adjustment in the applicant’s favour of ten percent. The overall division will reflect an equal division of the estimated net assets including superannuation so that each party will receive an estimated $357,307 depending upon the sale price and costs associated with the sale of the Town C property and the three additional items.
As the applicant will retain net assets including superannuation of $113,149 and the first respondent will retain net assets including superannuation of $145,835, the balance sale proceeds of the Town C property and the three items to be sold will be divided in the proportion 53.60 percent to the applicant and 46.40 percent to the first respondent.
Finally, each party sought an order in relation to the control of two bank accounts held on trust for the children. I have determined that the parties should maintain joint control of the bank accounts for the benefit of the children.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew. Associate:
Dated: 17 May 2024
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