Onh & Jang
[2023] FedCFamC1F 269
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Onh & Jang [2023] FedCFamC1F 269
File number(s): PAC 4448 of 2020 Judgment of: RIETHMULLER J Date of judgment: 24 April 2023 Catchwords: FAMILY LAW – PROPERTY – Where husband commenced the relationship with a greater asset position – Where the husband and wife each received money from their parents during the marriage – Whether money advanced by the parties’ respective parents was gifts or loans – No matters of principle Legislation: Family Law Act 1975 (Cth) s 79 Cases cited: Af Petersens and Af Petersens (1981) FLC 91-095 Division: Division 1 First Instance Number of paragraphs: 93 Date of hearing: 6-7 & 10 October 2022 Place: Parramatta Counsel for the Applicant: Mr Mellas Solicitor for the Applicant: Landers & Rogers Counsel for the Respondent: Mr Weinberger Solicitor for the Respondent: York Law Family Law Specialists ORDERS
PAC 4448 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR ONH
Applicant
AND: MS JANG
Respondent
order made by:
RIETHMULLER J
DATE OF ORDER:
24 APRIL 2023
THE COURT ORDERS THAT:
1.Within 14 days of the date of these Orders, the parties provide to the chambers of the Honourable Justice Riethmuller a joint draft Minute of Order to give effect to these reasons, and electronically file written submissions with respect to any numerical errors that may be discovered in these reasons.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 the pseudonym Onh & Jang has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
RIETHMULLER J:
INTRODUCTION
The applicant and the respondent seek property settlement orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) following the breakdown of their marriage in 2019.
BACKGROUND
The applicant husband was born in Country B in 1978 and migrated to Australia in 1979. The husband is now 44 years of age. The respondent wife was born in Country C in 1979 and migrated to Australia in 1994. The wife is now 42 years of age. Both the husband and wife are Australian citizens.
The parties married in 2008 in Australia (they had not cohabited prior to their marriage). The parties separated on a final basis on 29 January 2019 after a little over ten years together.
There are two children of the parties’ relationship, X, born 2011, and Y, born 2015. The parties entered into final consent orders on 26 April 2022 with respect to parenting, providing for an equal shared care arrangement where the children live with each parent on an equal basis during both the school term (half of each week) and share school holidays.
Evidence of the parties and witnesses
The husband
The husband gave evidence and was cross-examined. During cross-examination the husband was questioned about a property located at D Street, Suburb E (“the D Street property”) which was purchased by the husband in 2001 for $250,000, prior to the commencement of the parties’ marriage. The husband said that the D Street property was funded by way of a $200,000 mortgage to F Bank, and $61,550 received from the husband’s parents. The husband also said that he used a “few thousand dollars” from his own savings account to fund the purchase: see Transcript 7 October 2022, p.54 line 25.
The husband says that loan from his parents was made up of various smaller sums, which he deposited into his F Bank account. The husband was not able to provide any explanation as to why his parents gave him five varying amounts of both cash and cheque instead of one lump sum. The husband also said that he did not tell the wife during their relationship that he owed his parents $61,550 for the loan used to purchase of the D Street property, however he denied that these payments were gifted to him by his parents and were not a loan.
In 2009, the husband sold the D Street property and applied approximately $360,000 of the sale proceeds towards the purchase of a property at G Street, Suburb E (“the Suburb E property”), which the husband still owns. The husband did not repay the $61,550 to his parents from the sale proceeds of the D Street property. The husband says he spoke to his father about the money and says his father told him “we don’t need the money repaid yet”: see husband’s affidavit filed 31 August 2022, paragraph 33. When later pressed by the wife’s counsel, the husband asserted that he has an expectation his parents would one day seek return of the $61,550. There is no suggestion that the alleged loan involved any interest component.
The husband also says he and the wife received other financial assistance from his parents and brother. In total, the husband says he received $276,500 (including the $60,000 from his brother). In around late 2009, the husband’s parents lodged a caveat over the Suburb E property to secure their position. The husband rejected the wife’s counsel’s proposition that these funds were given by way of a gift. In 2016, the parties refinanced the Suburb E property with a different bank and the husband’s parents removed their caveat to enable the parties to do so. The husband’s parents did not receive any money at this time nor did they re-lodge a caveat after the parties refinanced. During cross examination, the husband agreed that his parents felt “safe and comfortable and content to remove the caveat because they didn’t expect [the husband and wife] to separate after two kids”: see Transcript 7 October 2022, p.70 lines 40–43.
In 2008, the husband’s father transferred his interest in a property located at H Street, Suburb J NSW (“the Suburb J property”) to the husband and the husband’s brother, as tenants in common divided at 60 per cent and 40 per cent respectively. The transfer arrangement was reflected in an Agreement for Transfer signed by the husband, his father and his brother in late 2008. During cross-examination, counsel for the wife questioned the husband in relation to the uneven division of the property between him and his brother. Counsel for the wife suggested to the husband that he received a greater share because the husband’s parents had given money to the husband’s brother previously “by way of a gift”, and that the husband’s greater percentage interest in the Suburb J property “was a way of equalising funds which had been distributed” to both the husband and the husband’s brother: see Transcript 7 October 2022, p.57 lines 11–18. The husband acknowledged his parents had helped his brother previously with the purchase of a property, but insisted throughout that he did not know any such money was a “gift” to his brother.
In 2018, the husband and wife transferred $70,000 to the husband’s parents. The husband says that his parents wanted to help his brother and his brother’s wife with their surrogacy plans. The husband denied that this $70,000 was a gift to his brother (through his parents) and instead said that he was “repaying part of the loan back to my parents”: see Transcript 7 October 2022, p.72 line 46.
Between early 2009 and early 2019, the husband’s mother gave him and the wife a further $87,000, consisting of many smaller sums transferred to them during that period. A record of the funds received from the husband’s mother was kept by the wife. The husband denied that these sums were given to the parties as a gift. However, they were relatively modest amounts, paid at various times, and not associated with any particular purpose. The husband and wife were not in need of financial support at the time.
In 2012, the husband and wife lent the wife’s brother the sum of $130,000 by way of three instalments. The payment of this $130,000 was documented in a Deed of Debt dated mid-2012. The principal amount of the debt was repaid in full by late 2019. The husband and wife initially received $2,500 in interest from the wife’s brother by way of five instalments. However, the husband did not keep records as he said that he trusted the wife and her brother that the brother was paying the required interest payments to the wife. There is no evidence that the interest was not paid.
As noted above, in 2016 the husband’s parents released a caveat that they had over the title to the parties’ home (the Suburb E property), when he arranged a re-finance. The husband did not advise the bank that he had any debt to his parent at the time he refinanced.
After separation, the husband says he discovered that the wife had been using his K Bank credit card to meet costs associated with the wife’s brother’s business, in the sum of $73,924. During cross-examination, the husband denied that these transactions were “obvious” upon looking at the credit card statements as the transactions were “hidden amongst a lot of entries on the credit card statement”: see Transcript 7 October 2022, p.81 lines 20–21. I do not accept that the husband was simply unaware of these transactions on his credit card. It appears clear that the brother’s business operated largely on cash with less than formal bookkeeping, however the wife was involved in those finances. The monies charged to the K Bank card were likely repaid by the wife’s brother’s business to the wife around the time they were incurred. Both the husband and wife benefitted from the loyalty scheme points accrued on the credit card as a result of making these payments on the credit card.
The husband acknowledged that the wife’s parents gave the parties approximately $100,000 during the course of the relationship which they repaid. The husband said that the cash monies received from her parents from time to time were “very much in the same vein as my parents putting money into our account. It’s essentially an undocumented loan. And it was repaid”: see Transcript 7 October 2022, p.86 lines 43–45.
The husband presented as a very direct witness with clear and strong views. I am satisfied that he was a generally honest witness, and that the real difficulty in this case lies in how to categorise fairly loose family arrangements about money provided from the parties’ respective parents.
The husband’s father
The husband’s father gave evidence and was cross-examined. He required an interpreter.
The cross-examination of the husband’s father was relatively brief and centred around the money he and the husband’s mother gave to the husband and wife, and the transfer of the Suburb J property. In his affidavit filed 31 August 2022, the husband’s father recounts that he provided the husband “about $60,000” towards the purchase of the D Street property, “just over $210,000” to the husband and wife towards the purchase of the Suburb E property, and that the husband’s mother also provided the parties “over $80,000”. In line with the husband’s evidence, the husband’s father also recalls that the parties repaid $70,000 in about 2018.
The husband’s father firmly denied all suggestions by the wife’s counsel that the money provided by him and the husband’s mother was a gift. He said that the money was all a loan.
When the husband’s father was questioned about why the husband had received a 60 per cent share in the Suburb J property, and the husband’s brother only 40 per cent, he denied that he had previously given the husband’s brother money to assist in purchasing a property saying that “it is a loan. Promise has been made that money will be paid back”: see Transcript 7 October 2022, p.91, lines 38–39. When further pressed about why the Suburb J property was not transferred to his sons on a 50:50 basis, the husband’s father replied “it’s just simple mathematics to me. It’s just trying to be fair with the two brothers”: see Transcript 7 October 2022, p.91 lines 44–45. I am persuaded that the difference in the proportions of the Suburb J property given to each of the husband and his brother reflects differences in the amounts provided to each of them by their parents in the past.
The husband’s father denied having received any rental income from the Suburb J property, and confirmed that his brother (the husband’s uncle) who is in occupation of the property, was “responsible for all other fees, maintenance, and taxes”: see Transcript 7 October 2022, p.91 lines 25–26. It seems that the arrangement was always generous to the husband’s uncle.
The husband’s mother
The husband’s mother also gave evidence and was cross-examined, aided by an interpreter. In the husband’s mother’s affidavit filed 31 August 2022, she recounts contributing “approximately $50,000” towards the husband’s purchase of the D Street property prior to marriage, “about $270,000” to the parties towards the purchase of the Suburb E property (although says she does not have a “recollection to the exact amount”), and also “over $80,000 over a period of 10 years” to the parties. The husband’s mother also recalls receiving a cheque from the wife in the sum of $70,000 in about 2018.
The husband’s mother denied giving “a single dollar as a gift” during the course of the parties’ marriage, insisting that any such money was “lending”: see Transcript 7 October 2022, p.94 lines 3–4, 6, and 19. She also denied that any part of the money paid to the parties was from any rent received from the Suburb J property, and that the money was instead paid from savings owned by her and her husband (the husband’s parents).
Notably, in relation to the approximate $80,000 paid by her to the parties (often paid to the wife in relatively small sums) the husband’s mother says that the wife “did not ask for it, but I just wanted to help for her to save on the interest”: see Transcript 7 October 2022, p.97, lines 1–2. Such an approach is inconsistent with a loan in a legal sense.
The husband’s brother
The husband’s brother was called to give evidence and cross-examined.
The husband’s brother was questioned by the wife’s counsel about the transfer of the Suburb J property to him and explained that his parents had loaned him money previously to help him purchase a property, and that it was explained to him by the husband’s father (his father) that:
Because I got into the market earlier, I effectively had an earlier start, so they felt like when they helped me, they helped me more, because I was ahead of [the husband] through that time. [The husband] hadn’t bought his house yet, so I was effectively ahead.
(Transcript 7 October 2022, p.98 lines 12–15)
The husband’s brother outlined that although he and the husband held the title to the Suburb J property, their father would manage the Suburb J property, as he saw fit. Specifically, when it was queried whether the husband’s brother would be able to ask his uncle (who is currently utilising the Suburb J property) about arrangements, he repeatedly denied he would be able to do so, saying “that’s entirely why my father has gone about this way. It’s to ensure that I couldn’t interfere with my uncle’s business”, and that even if he and the husband acted jointly, he didn’t believe such a course was available to him due to “what was set out in that [Agreement of Transfer]”: see Transcript 7 October 2022, p.102 lines 36–37, and 41–42.
In his affidavit filed 31 August 2022, the husband’s brother says that in 2009 he provided the husband with a $60,000 loan (made by cheque given by the husband’s brother directly to the real estate agent at auction, representing a portion of the required 10 per cent deposit) as assistance towards purchasing the Suburb E property. During cross-examination, he confirmed the $60,000 has not yet been repaid by the parties, however there are no records of this transaction. The husband’s brother also recounts in his affidavit filed 31 August 2022 that he received a loan of $70,000 from his parents towards he and his wife’s surrogacy plans in mid‑2018. During cross-examination, he said he was not aware that the wife organised a bank cheque from funds contained in the joint account owned with the husband. However, in his affidavit, the husband’s brother clearly sets out that he was aware he received a $70,000 loan from his mother, “in the form of a bank cheque that [the parties] had given her”: see the husband’s brother’s affidavit filed 31 August 2022, paragraph 21. I am not persuaded that the money the brother alleges he provided to the husband was a loan rather than one of the many transactions involved in the husband’s parents providing money to their sons.
The husband’s brother is agreeable to the Suburb J property being sold.
The wife
The wife presented as quite focused, if not single minded.
The wife completed tertiary studies at N University. The wife was unable to provide any specific detail about her degree: see Transcript 10 October 2022, p.182 lines 44–46.
It was not disputed by the wife that the husband owned the D Street property prior to their marriage, and that he was in a stronger financial position than her at the date of marriage (when the parties first cohabitated). At the time of marriage, the wife says she had $16,000 in savings (less any money spent on renovations), and owned a $3,000 motor vehicle. The parties moved into the D Street property once they were married, and the wife contends that she contributed to the renovations undertaken prior to marriage.
The wife acknowledged that the husband says there was money contributed by his family to fund the purchase of the Suburb E property in 2009 but that she “did not see it” and “did not know who actually made the payment or where it came from”: see Transcript 7 October 2022, p.112 lines 16–17. The wife says the money advanced from the husband’s parents and his brother “was a gift” (Transcript 7 October 2022, p.111 line 9), and that she “didn’t agree” the $276,500 figure asserted in the proceedings by the husband was “borrowing” or a “loan”: Transcript 7 October 2022, p.112 line 24. Although the wife was evasive in her responses, choosing words such as “I was told”, when asked about how the funds from the husband’s parents were applied, the wife was aware the funds were applied to the purchase of the Suburb E property and subsequent renovations of about $80,000: see Transcript 7 October 2022, p.112 line 47.
The wife was questioned by the husband’s counsel about a total sum of $40,000 (made up of four smaller amounts) paid into the parties’ loan account in 2009 from her parents. At first she was unable to recall these transactions, and later was reluctant to categorise the money received as a gift or a loan. Instead, the wife says these monies were “a holding for them” to reduce interest, and that “when they need it, then they ask me and I will withdraw it”: see Transcript 7 October 2022, p.115 lines 15, and 21–22. The wife had kept a spreadsheet as a record of the money she had received from her parents (Exhibit 4). Over the course of ten years during the parties’ marriage, the she said her parents “parked” around $100,000 in the parties’ account. The wife agreed that between 2012 and 2019, she received $168,000 from her father, and $19,000 from her mother (which was typically coming and going from the account).
At the time of separation in 2019, the wife returned the final $7,000 she says was being held by the parties’ in their account from her parents (of which she said her parent’s had kept a record). The funds received from the wife’s parents were ultimately repaid in full.
During cross-examination, the wife acknowledged the husband’s mother advanced approximately $87,000 to the parties (made up of many small transactions). The wife denied the money was “parked” in the parties’ offset account, and said that the husband’s mother told her “use it on [the children] and buy food for them. Take them to [sport], to tutoring”: see Transcript 7 October 2022, p.124 lines 3–4. The wife went on to explain that “the money given from [the husband’s] parents, we can use it. But with the money given from my parents, I cannot use that because I’m holding it for them”: see Transcript 7 October 2022, p.124 lines 26–27.
The wife denied the suggestion by the husband’s counsel that the wife kept a record of the funds received from the husband’s mother because it was a loan.
Although claiming that money provided by the husband’s parents to the parties’ during the course of their marriage were gifts, the wife said that the money advanced by her parents was “different” because “the money was – hold from my parents. When they need it, then I return it back to them. But with [the husband’s parents], what they mentioned to me – they give it to us”: see Transcript 7 October 2022, p.117 lines 14, and 16–18. The wife says the husband and the husband’s parents were lying in their affidavits when they said the money paid by them to the parties was a “loan”. When questioned by the husband’s counsel about why she would keep records of money received if it was not a loan, the wife explained “I’m quite traditional in a cultural way, so usually, when someone give you something, I like to either have a chance - if I can help back, I help back”: see Transcript 7 October 2022, p.125 lines 44–45. The wife acknowledged this was the case for the $70,000 cheque drawn for the husband’s brother. However, the wife was reluctant to agree the same would apply to the husband’s parents if they needed $250,000, becoming quite emotional and admitting that she no longer had a good relationship with the husband’s family as a result of the parties’ separation. I could not help but form the impression that the breakdown of the relationship with the husband’s parents had a significant impact on how the wife now categorised the money received from them.
The wife acknowledged that the parties loaned the wife’s brother $130,000 in 2012 and contended that her brother had paid the interest payable under the Deed of Debt dated mid‑2012.
The wife commenced working within the wife’s brother’s business in mid-2013, and says she was told by her brother to take $500 per week cash by way of interest payment from the turnover of the business. She says this continued until about late 2019, however, despite managing the business’ books, no record was kept of the $500 per week being deducted from the business’ turnover as payment of the business debt owed to the parties. The wife says her brother told her “because we don’t have any tax invoice, or anything, so we can’t really declare – record that”: see Transcript 10 October 2022, p.141 line 21. It would appear that the wife’s approach in managing the business accounts in this way was in error, as the wife’s brother had entered into a Deed of Debt in 2012 which required ongoing regular payments by his business to the parties.
The spreadsheet (Exhibit 5) detailed other moneys which had been paid to the wife’s brother. In addition to the $130,000 the wife and the husband loaned the wife’s brother in 2013, the wife agreed she had given her brother three further sums between 2014 and 2015, totalling $250,000. The wife’s spreadsheet also included record of these sums being paid back, and recorded approximately $8,600 of interest paid by the wife’s brother.
The wife prepared a spreadsheet for the purposes of the proceedings which sets out the transactions in the parties’ account that reflect the repayment of interest by the wife’s brother. During cross-examination by the husband’s counsel, it became apparent that there was a number of discrepancies between the figures recently prepared in the spreadsheet for the purpose of the proceedings (Exhibit 4), and the spreadsheet prepared by the wife in 2012–2013. There were a number of payments recorded by the wife, said to have been payments of interest from the husband’s business, which did not correlate to the earlier spreadsheet, or the banking records themselves. For instance, the wife recorded in Exhibit 4 that in late 2013 $2,995 was deposited into her bank account, and the wife says that these funds were interest payments from the wife’s brother. However, a document prepared by the wife around 2013 did not record banking $2,995. Counsel for the husband proposed to the wife that there was a discrepancy between the two records because the $2,995 was not interest from her brother, and that the wife has “made it up as she went along”, which the wife denied. Counsel for the husband took the wife through various transactions, cross-checking them across the two spreadsheets the wife had prepared, and after much confusion, the wife conceded that she looked at the account statements over the seven year period when preparing Exhibit 4 and said “when I go through, of course, there will be – I’m oversight some”: Transcript 10 October 2022, p.175 line 1.
Although the wife kept detailed records of money received by her parents, and the husband’s mother, the wife says she only kept a record of the five instalments received from her brother between mid-2012 and late 2013 because she was taking the $500 per week herself, and unlike the money she was given directly by the husband’s mother, the $500 per week was “regular” (although for approximately two months the wife recorded payments of $600 per week): see Transcript 10 October 2022, p.143 line 4. The husband says he and the wife never had a discussion about the wife taking cash from the wife’s brother’s business.
Notably, the wife says the husband’s parents speak Basic English and would have conversations with the husband in Country B Language, however the wife speaks only English or the language of Country C. It is understandable that there may have been some loss of nuance in the family conversations.
The wife denied that the $70,000 cheque she organised in 2018 was to repay a “loan” to the husband’s parents, and contends that it was a cheque made payable to the husband’s brother as a gift for his surrogacy plans, which she gave to the husband’s mother.
The wife says she did not find out about the Suburb J property having been transferred to the husband and the husband’s brother until about 2014. The wife explained that she had little involvement with the Suburb J property and only attended the property to visit the husband’s uncle on the odd or rare occasion.
The wife acknowledged that from about 2015 she used the husband’s K Bank credit card to pay $73,000 of expenses of her brother’s business. The wife says this money was reimbursed in cash “straight away” or “sometimes it’s a day later”, but that no record was kept of such: see Transcript 10 October 2022, p.144 lines 41–43. Despite the wife accepting she kept records of the money received from family as they were “irregular”, and that she did not keep a record of the interest she took from the wife’s brother’s business as the payments were “regular”, the business expenses charged to the husband’s K Bank credit card were irregular but without records. The wife contends that the husband knew she was using the K Bank credit card to pay the business expenses of her brother.
It appears to me that the wife was quite fixed in her views, and her spreadsheets were not reliable. I am not persuaded that she had any clear understanding of the basis on which the husband’s parents provided funds, other than understanding the smaller amounts from the husband’s mother were gifts for day to day use.
The wife’s brother
The wife’s brother acknowledged that he borrowed $130,000 from the parties, and says once the wife began working for his business, he told the wife to take $500 per week from the cash received as payment of the interest owed. The wife’s brother had difficulty explaining how the $500 per week was recorded, and admitted “It’s very confusing. I’m not an accountant”, and conceded that it was likely the $500 per week came “from my profit” and would have been treated by the accountant as a business expense: see Transcript 10 October 2022, p.187 lines 8, and 21.
Although the wife’s brother believed the wife was taking the interest repayments, he did not keep a specific record of these payments as it was “personal as family, it’s trust [of the wife]”: see Transcript 10 October 2022, p.190 line 3. Despite the husband’s contention that the interest on the $130,000 was not paid, the wife’s brother says “it’s obvious it got paid. Otherwise, [the husband] would have asked me. I mean, it has been seven years”: see Transcript 10 October 2022, p.190 lines 27–41. The wife’s brother denied that the interest payments were never made to the parties. There is no dispute that the wife’s brother repaid the principal of the $130,000 loan.
The wife’s brother accepted he received other monies from the husband and wife, and conceded to the husband’s counsel’s proposition that he had received a total of $380,000 (including the $130,000 documented loan). The wife’s brother was questioned by the husband’s counsel as to how he managed to repay approximately $600,000 (including interest), when his yearly net income between 2015 and 2020 ranged from approximately $66,679 to no more than $99,290 (and his wife’s income was less). The wife’s brother says that his wife’s family is large, and there is “money flying everywhere”, so that when he and his wife were short, they borrow it from extended family including the wife and the husband: see Transcript 10 October 2022, p.196 lines 28–41.
Overall, the wife’s brother presented as an unsophisticated witness who relied upon the wife and family to manage his finances. Whilst I accept he was generally an honest witness, I have doubts as to the reliability of his evidence as to finances.
THE ASSETS OF THE PARTIES
In this matter, the parties largely agreed upon the list of assets and liabilities and the values thereof, as set out in Exhibit 2. However, there is a number of matters requiring consideration.
Monies provided for the parties’ children
There was a dispute at trial as to a sum of $16,000 which had been provided by the husband’s mother to the parties to be held for benefit of the children. The monies were provided for the benefit of the children and not the parties. As the children hold the beneficial interest it is not appropriate to include these monies when considering the monies provided by the husband’s parents to the parties. The $16,000 is gifts to the children and the children’s money.
Money from the husband’s family
The wife argues that the money from the husband’s family should be treated as gifts by the husband’s family rather than loans that are repayable. As a result, the wife argues that these monies are relevant when considering the contributions of the parties, but not liabilities to be taken up in the balance sheet. The husband, however, alleges that the monies are, in fact, loans that are repayable to his parents. As discussed above, the husband’s parents did lodge a caveat over the Suburb E property in around late 2009, however the caveat was removed in 2016 for the parties to refinance. Despite the large amounts of money, no further formal security was obtained by the husband’s parents. There does not appear to have been any bookkeeping or records kept with respect to the alleged loans from the husband’s parents, other than notes that the wife had at one period kept about amounts of money that had come from both families.
The wife, in her evidence, described the money that had come from her family as having been “parked” with the husband and wife, describing a family arrangement whereby monies are available to extended family. She said that monies were provided with the parties to enable them to have the benefit of the funds in mortgage offset accounts or to make other purchases. From the wife’s perspective, the funds from her family remained the property of the family members hence the expression “parked”.
Whilst the wife expressed the view that the moneys from the husband’s family were gifts, she stated that she felt a strong moral obligation to be in a position to return the money should it be needed by family members or asked for, or at least she felt that way until the families fell into dispute.
The husband gave evidence that the monies were a loan, and that it was never intended that they be a gift. He points to the fact that at one point $70,000 was provided by him to his parents so that they could help the husband’s brother (at the request of his parents). He says this was treated as a repayment to his parents and provided on to his brother to enable his brother and his brother’s wife to engage in a fertility program.
In Af Petersens and Af Petersens (1981) FLC 91-095, Nygh J considered obligations of a husband to repay monies which had been lent to him by his father during the parties’ relationship. The husband’s father “lent money for the benefit of his son and was prepared to wait for his money” (at 76,666), however, as the parties’ relationship broke down, the husband’s father decided to call in the loan. Nygh J contemplated whether the husband’s father may have been prepared to “wait indefinitely” had the parties relationship continued. In Af Petersen, the husband did not “treat the obligation to his father as an immediately pressing need”, there was “no record of any payment of, or demand for, interest on the loan”, and sale proceeds “were used to reduce the indebtedness of the parties to persons other than the father” (at 76,669–76,670). Nygh J said at 76,669:
It is fairly common in this Court to meet a situation where a parent has made a loan to a child which in all respects legally enforceable, but which is not in fact enforced and would not really be expected to be enforced”. It is no doubt an ‘obligation’ but if the obligation is not likely to have to be met, it should not be taken into account.
Ultimately, on the facts of that case, Nygh J found at 76,670 that:
The [husband’s] obligations to the father directly or indirectly are not such that I should deduct the full amount from the appropriate figure for property settlement. What I should take into account however is the fact that almost all of the funds with which the property of the parties were purchased came from the husband’s father and that the husband will be left with a residual obligation towards his father which he may be in a position to re-negotiate with him.
The dichotomy of loan or gift does not sit easily with the practices of the families in this case. The money from the husband’s family could be characterised as a loan repayable upon demand, but appears to have, in reality, been a gift. Even if it were a loan repayable on demand it is quite unlikely that there would be any demand unless another member of the extended family is in financial need, as it appears both the husband and wife’s families often cycle money around between their family groups.
On the wife’s case, the money is simply a gift, however an incident of the gift in this family is a strong moral obligation to return the money if the parents request its return due to financial need.
Whilst the larger sums may have started as loans (particularly when secured by a caveat), I am persuaded that it is unlikely any repayment would be insisted upon, rather that there remains a strong moral obligation upon the husband to support his parents should they ask for support in the future. The uneven proportions of the Suburb J property indicate a desire by the husband’s parents to ensure the husband and his brother received similar amounts.
I am persuaded that the reason the wife’s family were repaid reflects a difference in the financial capacities of the families more than a difference in the nature of the transactions.
I am comfortably satisfied that the smaller amounts from the husband’s mother were gifts for day to day use.
The gold jewellery
There remains a dispute as to whether the wife owns various gold jewellery wedding gifts that are in the husband’s mother’s safe deposit box. On the state of the evidence, I am not able to be persuaded that the wife has established that the husband or his mother have retained possession of that jewellery, and even if they did retain possession, there is no evidence of its value.
The commercial property
As set out above at [9], in 2008 the husband’s father transferred his interest in the Suburb J property to the husband and the husband’s brother, as tenants in common divided at 60 per cent and 40 per cent respectively.
At the commencement of the trial, there was an issue relating to the likely capital gains tax (CGT) which would be incurred on the sale of the Suburb J property, which had been gifted in part to the husband by his parents. However, it was agreed by the husband, the husband’s father, and the husband’s brother that orders would be made for the sale of the property, and that therefore any CGT would crystallise upon the sale of the property. During submissions, counsel for the wife confirmed the current estimate for the CGT applicable to the husband’s 60 per cent share of the Suburb J property was approximately $113,359 (it is agreed between the parties that the husband’s 60 per cent share of the Suburb J property is presently valued at $780,000). It was accepted that this CGT estimate was the appropriate figure to use in determining the property of the parties. As a result, I am satisfied that the assets and liabilities of the parties are as set out below, and that no further liabilities to or from family members should be added to that balance sheet.
The dealings with the wife’s brother
Upon considering the evidence given by the husband, the wife, and the wife’s brother in relation to the interest payable on the $130,000 loan, I am not able to be persuaded whether the wife’s brother either did or did not pay the interest owing in accordance with the Deed of Debt. As a result I do not include this as an asset. On the evidence available I am not persuaded that the wife’s brother spent more on the credit card of the parties than was repaid, particularly given that the wife was effectively managing the finances of the brother’s business at the relevant time.
Superannuation
I am satisfied that given the small amount of superannuation compared to the overall asset pool that it is appropriate to simply add it to the assets generally rather than treating it separately.
The balance sheet
I therefore find that the appropriate form of the balance sheet should be as follows:
Ownership Description Value ($) ASSETS 1 Husband Property - G Street, Suburb E 2,150,000 2 Husband Property - 60% interest in H Street, Suburb J 780,000 3 Joint Bank Account - CBA offset accounts …47 361 4 Husband Bank Account - CBA account …69 194 5-13 Wife Various Bank Accounts 7,567 14 Husband Vehicle - Motor Vehicle 1 50,000 15 Wife Vehicle - Motor Vehicle 2 2,000 16 Husband Jewellery 6,000 18 Wife Gold wedding gifts (in bank safe in wife’s possession) 2,000 19 Husband Figurine collection NIL 21 Husband Household contents NIL 22 Wife Household contents NIL 22A Wife Funds in York Law Trust Account on Account of Counsel fees (source: borrowing from Ms M - see item 34 below) 33,000 TOTAL $ 3,031,122 ADD BACKS 23 Husband Total legal costs paid 238,311 24 Wife Total legal costs paid 136,570 TOTAL $ 374,881 LIABILITIES 26 Joint Mortgage - CBA Account …08 367,258 27 Joint Mortgage - CBA account …16 169,163 32 Husband Personal loan - financing Pty Ltd 182,553 33 Husband Estimated CGT payable on the Suburb J property (if sold) 113,359 34 Wife Personal Loan - Ms M 45,626 TOTAL $ 877,959 SUPERANNUATION 36 Husband Superannuation Fund 1 344,023 37 Wife Superannuation Fund 2 36,005 TOTAL $ 380,028 NET TOTAL ASSETS (including Super) $ 2,908,072
IS IT JUST AND EQUITABLE TO MAKE AN ORDER?
There is no dispute that it is just and equitable to make property settlement orders in this case.
CONTRIBUTIONS
It is agreed that at the commencement of the relationship, the husband brought assets of around $646,476 consisting of a home in Suburb E (the D Street property) valued at $365,000 subject to a mortgage of $75,805, his interest in the Suburb J property, valued at $273,000 (although the husband says $261,000), superannuation of $42,781, some savings of around $11,724, and a motor vehicle worth around $30,500. As discussed above, the husband’s parents contributed $61,550 towards the purchase of the D Street property prior to the parties’ marriage.
The wife brought in assets of a much more modest value, totalling around $33,760, being savings of $16,000, a motor vehicle valued at $3,000, and superannuation of $14,760.
There is no dispute between the parties that significant amounts were provided by the husband’s family. As set out in Exhibit 1, the husband’s mother had given the parties some $72,000 (excluding $16,000 gifted to the children by the husband’s mother, as discussed at [56]), a deposit for the Suburb E property of $100,000, and various other deposits totalling $176,500. The parties returned or repaid $70,000 over the course of the relationship, bringing the total monies provided to them from the husband’s family of around $206,000.
There is also no dispute that the wife’s family provided the parties money over the course of their relationship. In his evidence, the husband acknowledged the wife’s parents gave the parties approximately $100,000. Similarly, in her evidence, the wife first said her parents had provided, or “parked”, around $100,000 in the parties’ account. The wife recorded having received $168,000 from her father and $19,000 from her mother between 2012 and 2019, and although Exhibit 4 and Exhibit 5 do appear somewhat unclear at times, I accept over the course of the parties’ marriage that they received a total of $198,000 from the wife’s parents (all of which has been repaid).
Both parties have made significant contributions to the family over the years, and both have worked and participated in homemaking (including renovations) and assisting with the children. The husband undertook a far greater share of the income earning activities in his employment and the wife a far greater share of the homemaking and childcare activities, although also working in her brother’s business.
When assessing the overall contributions of the parties and considering what weight should be attributed to the Suburb J property (in which the husband was given a 60 per cent share), I note that it is clear neither the husband nor the wife made any direct contributions to the Suburb J property, and rarely did they attend at the property altogether. The husband did not receive rent from the premises nor even contribute. Instead, the husband’s uncle utilised the premises to operate a business (and it appears he has done so since 1993 when the husband’s uncle migrated to Australia from Country B). The arrangement reflects the husband’s father’s ongoing control of the property until recently. It is only now that the Suburb J property is effectively available to the husband. As discussed above, the husband’s father transferred the Suburb J property to the husband and his brother, and the husband’s 60 per cent share was valued at $273,000 (although the husband says $261,000) at the time the husband and wife commenced their relationship. The husband’s 60 per cent share in the Suburb J property is now said to be worth $780,000, less CGT of a little over $113,000. At least until recently, it appears that the husband and his brother held the title to the Suburb J property on the basis that their father and uncle continued to have the use of it, and their father continued to meet the expenses. There does not appear to have been any contributions of the husband or wife (or the husband’s brother) to the Suburb J property. The husband and wife have not preserved or improved the property as they did not have the use of it (or liability for the expenses associated with it) until recently.
I also note the husband’s evidence, as set out in his Outline of Case filed 30 September 2022, that the husband’s mother cooked for the parties approximately three times per week, and that post-separation, the husband continued to meet many of the expenses for the wife and children including utilities, household bills, groceries, petrol, and entertainment. I note the wife’s contentions, as set out in her Outline of Case filed 28 September 2022, that during the parties’ marriage the wife worked and she applied all of her income to the benefit of the family (noting her working life was interrupted by the birth and care of the children), and that post-separation, she has continued working part-time and has completed a course but has not worked in the related field.
I note that post-separation the husband remained living in the Suburb E property, and the wife resides in rental accommodation. Initially, the wife took a large sum from the parties’ accounts and the husband did not pay the mortgages for a period. The husband now pays child support at a reasonable rate, having regard to the income differences between the parties and that they share the care of the children.
When considering the contributions of the parties as a whole, I am ultimately persuaded that the contributions of the husband ought to be assessed at 62 per cent and those of the wife 38 per cent.
OTHER CONSIDERATIONS
Both the husband and wife are relatively young, being 44 years of age and 42 years of age, respectively. There was no suggestion by either party that they would be prevented from earning an income in the many working years to come.
The husband earns approximately $179,556 per annum before tax, and the wife earns approximately $33,488 per annum before tax. The wife is also in receipt of Government benefits of $330 per week, and $278 per week by way of child support from the husband: see the husband’s Financial Statement filed 27 September 2022, and the wife’s Financial Statement filed 16 September 2022. Given the wife’s inability to recall even basic details of the tertiary degree she undertook, and has not worked in the industry, it appears unlikely the wife would be able to obtain employment in the related industry. It appears to me that the wife is likely to remain working in her brother’s business for the foreseeable future on a relatively low income.
The parties’ two children, X and Y, are now aged 11 years of age and seven years of the age, respectively. Both children currently attend primary school. As noted at [4] above, the parties entered into final consent orders on 26 April 2022 with respect to parenting. The parties’ two children live with each parent in an equal shared care arrangement, where the children live with each parent on an equal basis during both the school term and school holidays. As noted above, the husband pays the wife child support.
As discussed above, the husband has a strong moral obligation to his family as a result of receiving funds and property, however it appears unlikely that this obligation will be called upon. The wife does not have any monies in respect of which she has an ongoing obligation to cycle or return to her parents or extended family.
I also note the difference in the asset position of the parties based upon the contribution assessment.
In the complex circumstances of this case, I am persuaded that an adjustment of 7 percent in favour of the wife is warranted. Whilst this is a significant sum, it must be seen in light of the very large difference in income earnings of the parties and the difference in asset their positions. Following such an adjustment, the property settlement would be based upon a split of 55 per cent to the husband and 45 to the wife.
JUST AND EQUITABLE
The effect of the orders in the figures indicated would be for the husband to receive $1,625,713 of the total assets (including superannuation), and $1,330,128 to the wife. I note that these amounts include the add-backs of legal fees for both the husband and wife respectively and the debts related to those fees.
I note that in the wife’s Outline of Case she sought an overall equal distribution of the parties combined superannuation interests. On the assumption the husband will seek to retain the Suburb E property and pay out the wife, the wife would receive the assets currently held by her (including her gold wedding gifts, Motor Vehicle 2, and all bank accounts held in her sole name), retain the balance of the parties’ joint bank account, retain her Superannuation Fund 2 interests and receive a super split of $154,009 from the husband (causing a distribution of the parties’ combined superannuation interests such that she holds 45% and he 55%), together with receiving a payment of a little over $1,000,000. The wife will also remain responsible for her personal loan from Ms M.
The husband would retain his remaining superannuation interests (less $154,009 split to the wife), the Suburb E property, his interest in the Suburb J property, his Motor Vehicle 1, and the assets such as all bank accounts held in his sole name and his jewellery, together with liabilities consisting of the two mortgages secured over the Suburb E property, his share of the CGT payable on the Suburb J property, and the financing Pty Ltd loan. He would also have a liability to pay the wife a little over $1,000,000. If he is unable to retain the Suburb E property, it will need to be sold.
I am satisfied that such a split of the property between the parties would be a just and equitable outcome in the circumstances of this case.
In this matter, part of the legal fees incurred by the husband were $6,380 for the cost of updated property valuations. It is appropriate that the parties share equally in this cost of the litigation, and therefore the final figures should be adjusted for one half of this amount to be paid by the wife to the husband from her entitlements.
CONCLUSION
At the trial, it was agreed that following publication of these reasons the parties would draft orders to reflect the outcome (and advise of any corrections required to numeric or arithmetic amounts set out above).
I certify that the preceding ninety-three (93) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Riethmuller. Associate:
Dated: 24 April 2023
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