OWEN & OWEN
[2015] FCCA 2823
•22 October 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| OWEN & OWEN | [2015] FCCA 2823 |
| Catchwords: FAMILY LAW – Property settlement – marital relationship – 25 years – gift to adult children of inheritance – concealment of funds – allegations of domestic violence. |
| Legislation: Family Law Act 1975 (Cth), ss.72(1), 75(2), 79(2), 79(4) Evidence Act 1995 (Cth), s.128 |
| Cases cited: Article: |
| Applicant: | MS OWEN |
| Respondent: | MR OWEN |
| File Number: | MLC 5869 of 2014 |
| Judgment of: | Judge Riley |
| Hearing dates: | 28 & 29 May 2015 and 20 July 2015 |
| Date of last submission: | 20 July 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 22 October 2015 |
REPRESENTATION
| Counsel for the applicant: | Mr McCloskey |
| Solicitors for the applicant: | Dolphin Lawyers |
| Counsel for the respondent: | Mr G Combes |
| Solicitors for the respondent: | Aughtersons |
ORDERS:
The husband pay to the wife the sum of $307,500 (“the payment”) within 45 days (“the date”).
Contemporaneously with the payment:
(a)the wife do all such acts and things and sign all such documents as may be required to transfer to the husband at his expense all of her right title and interest in the real property situate at and known as Property V in the state of Victoria being the whole of the land more particularly described in certificate of title volume (omitted) folio (omitted) (“the real property”); and
(b)the husband indemnify the applicant wife against all apportionable rates, taxes and outgoing of or with respect to the real property of whatsoever nature and kind.
In the event that the whole of the payment has not been made by the date, the real property be forthwith sold altogether out of the court (“the sale”) and upon completion of the sale, the proceeds of sale be applied:
(a)first to pay all costs, commissions and expenses of the sale;
(b)secondly to pay any encumbrance affecting the real property; and
(c)thirdly the balance then remaining to be divided in the proportions of:
(i)37.5% to the wife; and
(ii)62.5% to the husband.
The wife do all such acts and things and sign all such documents as may be necessary to transfer to the husband, at his expense, all of her right title and interest in the Holden station wagon registration number (omitted).
Unless specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders (the furniture, personal possessions and like chattels in the real property are deemed to be in the possession of the respondent);
(b)monies standing to the credit of the parties in any joint account are to be equally divided;
(c)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;
(d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
THE COURT DIRECTS THAT:
The Registrar:
(a)refer this matter to Centrelink for investigation of whether the wife defrauded the Commonwealth and whether Ms J has aided and abetted a fraud on the Commonwealth; and
(b)provide to Centrelink a copy of these reasons, a copy of Ms C’s will (which is in exhibit O-2 to the affidavit sworn by the husband on 26 May 2015), a copy of the distribution statements (which are in exhibit O-3 to the affidavit sworn by the husband on 26 May 2015), and a copy of such other documents as Centrelink may require.
IT IS NOTED that publication of this judgment under the pseudonym Owen & Owen is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 5869 of 2014
| MS OWEN |
Applicant
And
| MR OWEN |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for property adjustment under s.79 of the Family Law Act 1975 (“the Act”). The husband and wife began living together in 1989, when the husband was about 47 years old and the wife was about 43 years old. They had both been previously married. The husband was divorced. The wife had been widowed. They married in 1991. They separated in September 2013, on the wife’s case, or on
9 January 2014, on the husband’s case. There were no children of the relationship. The husband and wife are now 73 and 69 years old respectively. They are both aged pensioners.
The principal areas of dispute in this case are:
a)the date of separation;
b)whether $305,000 inherited by the wife and given to her children from her first marriage should be taken into account in some way;
c)whether the $95,800 withdrawn by the husband from his bank account was given to the wife, as he alleged, or was hidden by him, as she alleged; and
d)whether there was domestic violence sufficient to satisfy the test in Kennon v Kennon (1997) 139 FLR 118, (1997) 22 Fam LR 1, [1997] FLC 92-757, [1997] FamCA 27.
The wife’s inheritance
The wife received an inheritance on about (omitted) 2013 from her first husband’s aunt, Ms C, who died on (omitted) 2013. The husband in this proceeding provided to the court copies of the will and two estate distribution statements. The will showed that the beneficiaries of the estate were the wife and Ms B, who I understand to be the sister of the wife’s first husband.
However, the first distribution statement indicated that the wife’s inheritance of $305,000 was distributed “as per instructions received 29/10/2013” as to $205,000 to the wife, as to $50,000 to her son, Mr G, and as to $50,000 to her daughter, Ms J. Subsequently, the wife gave the $205,000 she had received to her daughter, Ms J.
The second distribution statement indicated that, on or about
31 March 2014, the wife received a further $123,000, less $140 for family law advice on 16 January 2014. The wife retained the balance of $122,860 for her own use.
The wife maintained that she had not received any more than $122,860 under the will of Ms C, because there was an agreement that the bulk of the inheritance would go to the wife’s children. The wife’s son and daughter gave evidence to substantially the same effect. The wife’s daughter, Ms J, also provided a statutory declaration to Centrelink to substantially the same effect. That was after the wife’s pension had been terminated because of the inheritance. The wife’s pension was subsequently reinstated.
The husband’s case in relation to the inheritance was that the wife had chosen to give $305,000 to her children and that the wife had arguably defrauded the Commonwealth by receiving a pension to which she was not entitled. The husband said this reflected adversely on the wife’s credibility. The wife maintained that there was nothing untoward in the manner in which she dealt with her inheritance.
Following Stanford v Stanford (2012) 247 CLR 108, (2012) 87 ALJR 74, (2012) 293 ALR 70, (2012) 47 Fam LR 481, [2012] HCA 52, [2012] FLC 93-518, [2013] ALMD 931, [2013] ALMD 933, [2013] ALMD 934 it is no longer appropriate to treat dissipated funds as an add back. However, dissipated funds can be taken into account as part of the history of the relationship and under s.75(2)(o) of the Act.
The wife’s position is that she did not dissipate the $305,000 because it was never really her money. She claimed that the $305,000 always really belonged to her children.
The wife said that Ms C’s first will divided her estate equally between her nephew and niece, being respectively the wife’s first husband and his sister, Ms B.
The wife said that, after her first husband died, Ms C changed her will so that 50% of her estate went to Ms B and the remaining 50% went to the wife’s three children equally.
The wife said that one of her children, X, died of cancer in 2010. The wife said that, subsequently, Ms C changed her will again so that 50% of her estate went to Ms B and 50% was divided equally between the wife’s two surviving children.
At that point, the wife said that Ms B’s children were offended that the wife’s children were mentioned in the will when they were not. Consequently, the wife said that Ms C changed her will again so that her estate was divided equally between Ms B and the wife. However, the wife said that there was an agreement with Ms C that the wife’s 50% would mostly go to her surviving children.
Ms C’s first three wills, as described by the wife, were not provided to the court.
The husband did not submit that the wife’s children were holding the $305,000 on trust for her and that she would be able to recover that money after these proceedings were concluded. Consequently, I can only conclude that the $305,000 is no longer available to the wife.
The agreement alleged by the wife was very vague. At some points, she indicated it had been agreed that all of the money inherited from Ms C was to go to her children and at other points she said that it had been agreed that most of it was to go to her children.
The wife gave no evidence about why all of the first distribution from the estate was given entirely to her children but none of the second distribution.
Nor did she explain why she gave instructions on 29 October 2013 for each of her children to receive $50,000 from the first distribution, and only later gave her daughter the remaining $205,000 from the first distribution. If there really had been an agreement as alleged, one would have expected the wife to have given instructions for all of the first distribution to be distributed to her children immediately.
It is also unusual that the agreement, if it existed, was not for equal amounts to be given to both of the wife’s children. Mr G said that was because his financial situation was stronger than his sister’s, his mother had separated and he was comfortable that the balance of his share would remain with his mother. The latter part of that statement does not add up. Adding the $123,000 retained by the wife to the $50,000 Mr G received makes $183,000, which is about $20,000 less than Ms J received. More importantly, it suggests that the decision about the division of the inheritance was made after Ms C’s death and not by her or pursuant to any agreement with her.
Moreover, despite her financial situation allegedly being less strong than Mr G’s, Ms J claimed to have lent the wife $33,000 on or about 29 November 2013 to buy a car. The wife did not say that she has repaid that sum nor did she say that it is an outstanding liability. This suggests that Ms J was in fact holding money for the benefit of the wife. However, that was not the case put by the husband so I take that matter no further.
All in all, I consider that the wife was the beneficiary under the will of Ms C and received $428,000 in that capacity. Of that sum, she chose to give $305,000 to her children. I do not accept that the children had any legally enforceable entitlement to that money. They said that, if the wife had not given them the money that she did, they would have contested Ms C’s will. However, I can see no basis on which they could have succeeded. The agreement they claimed existed was vague and for that reason unenforceable. Moreover, Ms C was their great aunt. It is difficult to see how she could have had any obligation to maintain them under the testator’s family maintenance provisions.
Similarly, the husband’s claim that Ms C said that half of the money she left to the wife was to go to the husband cannot be accepted as a legally binding promise. There are strict rules about the making and signing of wills and codicils to avoid exactly the kind of debate that the parties to this case were intent on pursuing.
Credibility
I accept the husband’s contention that the manner in which the wife dealt with her inheritance and Centrelink reflects badly on her financial honesty generally and her credibility in this proceeding. Also, she did not present in the witness box as being a reliable witness. Many of her answers were evasive.
Having said that, the husband did not present as an entirely honest witness either. He tried to avoid answering questions by saying the matter had been dealt with previously, by which he apparently meant when the wife had given evidence. He did not seem to understand the concept of both parties being cross-examined to enable the court to arrive at the truth. As explained below, I did not find some of his answers to be plausible. On the other hand, there were other areas of his testimony where he seemed entirely straightforward and he appeared to be making appropriate concessions.
The husband’s $95,800
The husband said that, following the downturn in the share market at the time of the Global Financial Crisis, he took his superannuation out of shares and put it into a (omitted) Retirement Account in his sole name. The husband said that, after Ms C died, and before separation, the wife asked him if she could borrow some money to buy a car and give some money to her children on the basis that she would repay the loan when her inheritance from Ms C came through.
The husband said that he agreed, and withdrew amounts of cash, usually in the sums of $5,000, $7,000 or $8,000, when the wife asked him for them during the period 22 May 2013 to 21 November 2013. He said that the amounts he gave to the wife in this manner totalled $95,800. Bank records substantiate the withdrawals but give no indication of what was done with the money as the withdrawals were all in cash.
The husband said that the wife bought herself a car on
29 November 2013. That was shortly after the first distribution from Ms C’s estate. Ms J said that she lent the money to the wife for the purchase of the car.
In any event, the husband said that he started asking the wife about repaying the $95,800 in November and December 2013, but she said he would get the money back when the estate was finalised. Later, the husband said that the wife denied having received the $95,800 from him and said it was his bad luck that he did not have receipts from her to prove the loan. He said that the stress of the issue led to separation on 9 January 2014.
The wife was adamant that she had not received the $95,800 from the husband. She said that they were not happily married at the time the husband withdrew the cash. She said that it was “unfathomable” that she would ask him for money to give her children and that he “always” kept cash in jars.
The husband conceded that, when the parties first cohabited, he had about $4,000 to $4,500 in cash in a jar for emergencies. However, he denied that he kept cash in jars except for that once.
I find it completely implausible that, in the six to eight months before separation, the husband would have made cash withdrawals of thousands of dollars at a time and given them to the wife without any record. If the husband had wanted to lend the wife money for a car, one would expect it to have been lent in one lot, and be in the form of a bank cheque made out to a car dealer. If the husband had wanted to lend the wife money for her to lend to her children, one would have expected him to have transferred the money directly to each child’s bank account in two lots, one for each child, or in one lot directly to the wife’s bank account.
It also makes no sense that the wife would have borrowed money from the husband for a car, which she purchased on 29 November 2013, when she had just received an inheritance of $305,000. Of that sum, she initially retained $205,000, according to the first distribution statement. Also, the husband did not explain why the wife’s children needed money so urgently that they could not wait a short time for the distribution from Ms C’s estate.
The husband’s withdrawal of 14 separate cash amounts over a period of months has the hallmarks of an attempt to squirrel money away pending separation. I find that that is what happened. I consider that the husband has retained that money, and concealed it from the wife and the court.
Date of separation
The parties agreed that they had separated but disputed the date of separation. The wife said separation occurred in September 2013 and the husband said they separated on 9 January 2014. There is little objective evidence about the date of separation.
The wife completed a declaration to Centrelink dated 10 January 2014. It included questions about her partner, which she answered on the basis that the husband was still her partner (see, for example, question 23). She should not have done so if they had separated. However, it seems to me that she may have been under a misapprehension about the requirements of the form. Moreover, 10 January 2014 is after the husband claimed the parties separated, which is the latest possible date on the cases presented by the parties. Consequently, I give little weight to the Centrelink form.
The wife also said that the husband assaulted her on 10 January 2014, although elsewhere she said the assault occurred in April 2014. She said he punched her and pushed her into the garden, bruising her arm. The husband conceded that there was an incident, but said that he simply removed her from the barn by grasping her arm because she was smashing his (hobby omitted).
Having observed both parties give their evidence in the witness box, I consider that the wife’s date of separation was more accurate than the husband’s. I find that separation occurred in September 2013. However, both parties agreed that they remained living together until 15 November 2014, when the police attended the matrimonial home and advised the wife to leave.
Domestic violence
The wife alleged that the husband had perpetrated domestic violence against her and sought an adjustment in this property dispute for that reason. This court is bound by the decision in Kennon v Kennon. Even though that case is almost 20 years old, and community awareness of the horror of domestic violence is now increasing, not least because of the current Royal Commission into Family Violence, this court is not permitted to go beyond the limits set out by the majority in Kennon & Kennon. It may be that the laudable concept of no-fault divorce has been inadvertently expanded to create a concept of no-fault property settlement when the preferable course might be to use property settlements as a mechanism to punish, and thus deter, perpetrators of domestic violence. However, that is a matter for others.
In any event, Fogarty and Lindenmayer JJ said in Kennon v Kennon:
Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s.79. …
…
It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions). Similarly, in Killick v Killick (1997) 21 Fam.L.R. 331 at 341, in proceedings under the De Facto Relationship Act 1984 (N.S.W.), the Court of Appeal rejected the argument for the male partner that incidents of infidelity during the relationship by the female partner should be taken into account as diminishing her contribution as homemaker or parent. (emphasis added)
In the present case, in her first affidavit, which was sworn on
30 June 2014, the wife alleged that the husband was “a very difficult, unpleasant and grumpy person to live with”. She said that in
April 2014, he assaulted her as described above. In her psychologist’s report, the same event is said to have occurred on 10 January 2014. In either case, the alleged assault was after separation. As such, on the authority of Kennon & Kennon, it cannot be taken into account, even if the facts are as the wife alleges.
In her first affidavit, the wife also attributed to her husband’s abuse of her a mild stroke that she suffered “recently”. However, there was no medical evidence to substantiate that assertion. As it is a matter that would require evidence from an appropriately qualified expert, I cannot give weight to the wife’s opinion of this matter.
The wife also said in her first affidavit that the husband sought an intervention order against her in June 2014, “and as a consequence”, she sought an intervention order against him. This is while the parties were separated under one roof. The matters were resolved with mutual undertakings not to abuse each other or damage anything in the house.
The wife also alleged in her first affidavit that the husband engaged in various acts, such as chaining up the front gate, in an effort to drive her out of the house. The husband conceded that he chained the front gate, but said that he gave the wife a key, which she used to unlock the chain and then threw the chain away. He said this process was repeated about six times. It was clearly immature and unpleasant behaviour on the part of both parties. However, it does not fall within Kennon & Kennon, due to it being post-separation and due to there being no evidence that it made the contributions more arduous.
Otherwise, the wife’s first affidavit did not make any allegations about the husband’s violence and abuse. Most of the wife’s complaints in the first affidavit were directed to the question of how intolerable it was living with him under the one roof.
In her second affidavit, sworn on 23 October 2014, the wife detailed “months of mental and emotional abuse” by the husband following separation. The wife also said that, on 15 October 2014, while a valuer was in attendance at the property, the husband twisted her arm behind her back. As discussed, on the authority of Kennon & Kennon, post separation abuse is not relevant.
In her third affidavit, sworn on 15 May 2015, the wife alleged that the husband had been violent and controlling throughout the marriage but that his violence increased about six years ago, which would have been a bit over four years before separation. The wife reported that, “many years ago”, during a family dinner, the husband threw a carving knife at the wife’s daughter-in-law but missed. A number of the wife’s family members gave evidence but that incident was not corroborated.
Otherwise, the wife did not detail any incidents of domestic violence that allegedly occurred before the parties separated. The husband denied that there was any domestic violence perpetrated by him.
Having observed the parties give evidence, and in view of the fact that it was only in her third affidavit that the wife alleged pre-separation domestic violence, and in view of the fact that the only pre-separation violence she provided any detail of concerned another person and was not corroborated, I am not persuaded that there was any pre-separation violence in this relationship against the wife. Moreover, the wife did not give any evidence about how any pre-separation violence made her contributions more arduous, and it is not apparent from the material that her contributions were made more arduous by any pre-separation violence. For these reasons, I am not satisfied that the wife has met the Kennon test.
The legislation
Section 79 of the Act gives the court power to alter the interests of the parties to a marriage in the property of the parties to that marriage. Sub-section 79(2) of the Act provides that:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 79(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the interests of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The matters to be taken into account under s.75(2) of the Act are as follows:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person — the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
The approach to applications under s.79
In Stanford, the High Court explained the proper approach to an application under s.79 of the Act as follows:
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. … The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order. (emphasis added)
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. … (footnotes omitted)
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered. (emphasis added)(footnotes omitted)
40.Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act. (emphasis added)(footnotes omitted)
…
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, 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 marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4). (emphases added)(footnotes omitted)
In Stanford, the critical fact was that the parties had not separated.
The wife had suffered a stroke and had moved into a nursing home, but the parties’ marriage was intact. It was the wife’s case guardian, a daughter from an earlier marriage, who sought the alteration of property interests.
The wife died while the judgment of the Full Court of the Family Court was reserved. Consequently, when the Full Court of the Family Court came to re-exercise the discretion, the wife had no future needs, but the husband did. The High Court noted at [47] that the courts below had not adequately considered the consequences for the husband of the orders made, namely, that his home would have to be sold.
Against that backdrop, the High Court emphasised that the just and equitable requirement of s.79(2) of the Act is not necessarily satisfied merely by a consideration of the contributions of the parties as described in s.79(4) of the Act. However, in the usual case before this court, where the parties have separated, the High Court acknowledged at [42] that the just and equitable requirement would be “readily satisfied”.
Following Stanford, it is no longer appropriate to think of “contribution based entitlements” or the “adjustment” based on future factors. Rather, the court is required to take into account all the relevant matters and then determine what order, if any, is just and equitable. It is also no longer appropriate to think of a pool of assets.[1]
[1] Patrick Parkinson ‘Family Property Law and the Three Fundamental Propositions in Stanford v Stanford’ (2013) 3(80) Family Law Review 88
Additionally, and significantly for this case, the High Court emphasised that marriage, at common law, does not create a community of ownership: [39]. The rights a person might have in his or her partner’s property and income arise from the Act, notably s.79(4) and s.72(1) respectively.
Stanford requires the following matters to be determined in applications brought under s.79 of the Act:
a)whether the parties have separated;
b)the assets and liabilities of each party;
c)the contributions of each party;
d)the future needs of each party;
e)bearing in mind all of the foregoing matters, whether it is just and equitable to make any orders altering the interests of the parties in their property; and
f)what orders, if any, are just and equitable in all the circumstances of the case.
Stanford does not require these matters to be addressed in any particular order. In most cases, it would seem rational to consider them in the order set out above. It does not seem to me to be possible to determine whether it is just and equitable to make an order altering the parties’ interests in their property without the other matters mentioned above having been previously determined. That seems to be clear from the opening words of s.79(4) of the Act, which are that:
In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account [the various matters set out in s.79(4)]…
The approach outlined above is consistent with the decision of the Full Court of the Family Court in Bevan v Bevan (2013) 279 FLR 1 (2013) 49 Fam LR 387, [2013] FLC 93-545, [2014] ALMD 3413 [2013] FamCAFC 116. I note that in that case, the Full Court said at [89]:
In our view, it will be less likely that the separate issues arising under s 79(2) and (4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order.
I also note that, in Bevan, at [79] the Full Court said, in relation to add backs:
We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.
Whether the parties have separated
The parties agreed that they had separated. As discussed above, I find that separation occurred in September 2013.
The assets and liabilities
The parties agreed that their joint assets and their values at the time of trial were as follows:
Joint Assets
Value
a. Property V $820,000 b. Holden Commodore $12,000 Total joint assets
$832,000
The parties agreed that their joint liabilities and their values at the time of trial were as follows:
| Joint liabilities | |
| Council Rates | $5,194 |
| Total joint liabilities | $5,194 |
The parties agreed that their joint assets less joint liabilities at the time of trial were as follows:
| Total joint assets less joint liabilities | $826,806 |
The parties agreed that the wife’s individual assets at the time of trial included the following:
Wife’s assets
Value
a. Subaru car $20,000 b. cash $105,000 Wife’s total assets
$125,000
Wife’s superannuation
$0
Wife’s total assets plus superannuation
$125,000
The parties agreed that the wife’s individual liabilities at the time of trial were as follows:
Wife’s liabilities
Nil
Value
$0
Wife’s total individual liabilities $0 Wife’s total assets plus superannuation less liabilities
$125,000
The parties agreed that the husband’s individual assets at the time of trial included the following:
| Husband’s Assets | Value | ||
| a. Shares | $57,897 | ||
| b. Toyota (omitted) | $1,500 | ||
| Husband’s total assets | $59,397 | ||
| Husband’s superannuation | $0 | ||
| Husband’s total assets plus superannuation | $59,397 | ||
The parties agreed that the husband’s individual liabilities at the time of trial were as follows:
Husband’s liabilities
Nil
Value
$0
Husband’s total individual liabilities $0 Husband’s total assets plus superannuation less liabilities $59,397
| Disputed assets and liabilities | ||
| 70. The parties were in dispute about the following assets and liabilities. | ||
| a. wife’s inheritance | $305,000 | |
| b. husband’s cash | $95,800 | |
As discussed above, $305,000 of the wife’s inheritance has been given to her children. It is no longer an asset owned by either of the parties. Consequently, following Stanford and Bevan, it cannot be included in the parties’ combined assets. However, it can be taken into account in the history of the matter and under s.75(2)(o) of the Act.
As discussed above, the husband has retained the $95,800 that he removed from the bank. That amount must be added to the husband’s individual assets.
The wife’s individual assets plus superannuation less liabilities have an agreed value of $125,000. The husband’s individual assets plus superannuation less liabilities have an agreed value of $59,397. In addition, the husband has cash of $95,800. Therefore, the husband has individual assets plus superannuation less liabilities of $155,197. Including their joint assets less liabilities of $826,806, the combined total of the parties’ assets is therefore $1,107,003. Consequently, the wife presently holds about 11.3% of the parties’ combined assets, the husband presently holds about 14% of the parties combined assets, and their joint assets comprise about 74.7% of their combined assets.
Contributions
a. Initial contributions
The parties agreed that, at the commencement of the relationship, the husband owned a property at (omitted), which was worth between $250,000 and $300,000 and had a mortgage of $12,000.
The wife claimed and the husband disputed that, at the commencement of the relationship, she had savings of $6,000. The husband said that, shortly after the relationship commenced, the wife’s car was repossessed and he paid $8,000 to get it back.
Having observed both parties giving evidence, I prefer the husband’s evidence on this issue. That is, I find that the wife brought no savings to the relationship and the husband paid $8,000 to get her car back.
The wife also claimed that, at the commencement of the relationship, the wife had furniture worth about $2,000. The husband accepted that.
b. Contributions during the marriage
During the marriage, the husband sold the (omitted) property and put the proceeds into another property that was jointly owned. That property was later sold and the proceeds put into the parties’ current joint property in Property V.
During the marriage, both parties worked except towards the end, when the husband retired about two years before the wife.
The husband worked as a (occupation omitted). The wife worked as an (occupation omitted). There was some dispute about how many days the wife worked, and whether the husband had days off due to a sore back. However, in the absence of any financial records, I accept that they earned approximately the same amount of money.
The parties agreed that, in 2002, the husband inherited from his father cash of $180,000 and shares worth $80,000, making a total of $260,000. The husband said that he lost about $50,000 in the Global Financial Crisis, leaving about $210,000. Except for the $95,800 which the husband claimed to have lent to the wife but which I have found he has retained, the husband claimed to have contributed the balance to the matrimonial endeavour. I accept that.
The wife claimed that she contributed to the matrimonial endeavour her superannuation of $54,000. The husband disputed that, saying that she spent a lot of money on (hobby omitted) paraphernalia. However, I accept that the wife did contribute her superannuation to the matrimonial endeavour except for a reasonable amount spent on her personal interest in (hobby omitted), just as the husband spent a reasonable amount on his personal interest in (hobby omitted).
The parties agreed that the wife did virtually all of the washing, cleaning and cooking. There was a dispute about who did the gardening. I consider that both parties contributed substantially to the garden.
The wife claimed that she nursed the husband’s father for a significant period. The husband said it was two weeks. In any event, I consider that the wife’s nursing of her father in law was a not insignificant contribution.
c. Contributions post separation
Post separation, the parties remained under the one roof for about one year. There was some dispute over who paid for the outgoings during that time. However, the wife produced receipts for the telephone, insurance, electricity and rates. She also produced a receipt for a hot water service. I accept that the wife paid the bulk of outgoings on the property at that time.
The husband claimed that he has maintained the property but the wife disputed that. I accept that he has maintained it, not least because he wants to retain it.
Also post separation, the wife received her inheritance from Ms C and gave most of it to her children.
The s.79(4)(d), (e), (f) and (g) and the s.75(2) factors
The parties did not address the “future factors” other than to say that they were both aged pensioners and they both had various health concerns. However, as neither of them proposes to work in the future, and as neither of them gave any evidence about the financial consequences of their health concerns, I take that matter no further.
Whether it is just and equitable to alter the parties’ property interests
The parties agreed that it would be just and equitable to alter their property interests in this case. In view of paragraph 42 of Stanford, the fact that the parties are no longer living in a marital relationship and the various findings made above in relation to contributions and future needs, I also consider that it would be just and equitable to alter the parties’ property interests in this case.
What order is just and equitable
The wife proposed that the Property V property be sold and proceeds be divided equally. In the alternative, the wife proposed that she transfer her interest in the property to the husband in exchange for $410,000. Otherwise, the wife proposed that each party keep what they have.
The husband proposed that he buy out the wife’s share in the property at Property V for about $218,000 and that she transfer her interest in the Holden to him. In the alternative, the husband proposed that the property be sold, and that the wife receive basically 25% of the proceeds, and the husband the balance. Otherwise, the husband proposed that each party keep what they have.
The parties’ contributions and future needs were roughly equal except for the following:
a)the husband brought to the relationship an almost unencumbered property worth $250,000 to $300,000 in 1989;
b)he paid out the $8,000 debt on the wife’s car in 1990;
c)he contributed the inheritance from his father in 2002;
d)the wife did virtually all of the cooking, cleaning and washing;
e)the wife nursed the husband’s father for a time;
f)the husband lived in the former matrimonial home post separation while the wife had to pay board;
g)the wife retained about $125,000 of the inheritance from Ms C in 2013; and
h)the wife paid most of the outgoings on the property post separation.
It was submitted that the significance of the husband’s initial contribution had eroded over the 25 years since the relationship commenced. However, it seems to me that, in the context of this case, the husband’s initial contribution, along with the inheritance from his father, was a very significant contribution.
The wife has also received an inheritance, but she gave most of it to her children, and the amount that she retained was not actually contributed to the matrimonial endeavour. It was a post separation acquisition that the husband has received no benefit from.
It seems to me, taking into account all of the aforementioned matters and considering them holistically, that it is just and equitable that the wife receive 37.5% of the value of the Property V property, and that the parties otherwise retain the assets they have, including, in the case of the husband, the Holden motor vehicle. By my calculation, 37.5% of the value of the Property V property is $307,500.
As the husband wishes to retain the property, I consider that it is just and equitable that he has an opportunity to buy out the wife’s share of that property within 45 days. If he is unable to find the money in that time, the house will have to be sold and the proceeds split 37.5% to the wife and the balance to the husband. There will be orders accordingly.
Centrelink
It seems to me that the wife may have received a pension from Centrelink to which she was not entitled. It is proper that Centrelink investigate that issue. I granted certificates under s.128 of the Evidence Act 1995 to the wife and to Ms J. However, those certificates do not cover Ms C’s will or the distribution statements. I will refer the matter to Centrelink for investigation and direct the registrar to provide to Centrelink a copy of these reasons, a copy of Ms C’s will (which is in exhibit O-2 to the affidavit sworn by the husband on 26 May 2015), a copy of the distribution statements (which are in exhibit O-3 to the affidavit sworn by the husband on 26 May 2015), and a copy of such other documents as Centrelink may require.
I certify that the preceding ninety seven (97) paragraphs are a true copy of the reasons for judgment of Judge Riley
Associate:
Date: 22 October 2015
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Family Law
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Equity & Trusts
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