Patrick and Patrick
[2016] FCCA 1522
•7 July 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PATRICK & PATRICK | [2016] FCCA 1522 |
| Catchwords: FAMILY LAW – Property – husband seeking repayment of loan made by his parents – wife denying loan ever made – assessment and proper characterisation of the advance – terms of loan uncertain – advance not a loan but part of initial contribution to credit of husband – consideration of other contributions and 75(2) factors. |
| Legislation: Family Law Act 1975, ss.79, 75(2) |
| Cases cited: Stanford v Stanford (2012) 247 CLR 108 Bevan & Bevan [2014] FamCAFC 19 Russell & Russell (1999) FLC 92 – 877 Teal & Teal [2010] FamCAFC 120 |
| Applicant: | MS PATRICK |
| Respondent: | MR PATRICK |
| File Number: | MLC 9515 of 2015 |
| Judgment of: | Judge Obradovic |
| Hearing dates: | 9 and 10 June 2016 |
| Date of Last Submission: | 10 June 2016 |
| Delivered at: | Parramatta |
| Delivered on: | 7 July 2016 |
REPRESENTATION
| Counsel for the Applicant: | Ms Byrnes |
| Solicitors for the Applicant: | Slater & Gordon Lawyers |
| Counsel for the Respondent: | Mr Robinson |
| Solicitors for the Respondent: | Berger Kordos Lawyers |
ORDERS
That within 60 days of the date of these Orders:
(a)The husband pay to the wife the sum of $463,181.50 (“the payment”);
(b)The husband do all acts and things necessary to refinance the home loan to the (omitted) Bank and secured against the property at Property W (“the former matrimonial home”) in the amount of $147,000 into his sole name; and
(c)The wife do all acts and things and sign all documents necessary, to withdraw, at her expense, the caveat lodged by her against the former matrimonial home.
That upon making the payment, the husband indemnify the wife, and keep her indemnified in relation to:
(a)The loan of $100,000 alleged by the husband to be owing to Mr M and Ms G; and
(b)Any further liability owing on the former matrimonial home.
In the event that the payment is not made, the husband do all acts and things and sign all documents necessary to sell the former matrimonial home (“the sale”). Upon the completion of the sale, the proceeds be applied:
(a)First, to pay all costs, commissions and expenses of the sale;
(b)Secondly, to discharge the mortgage affecting the former matrimonial home;
(c)Thirdly, such of the payment as is due to the wife together with penalty interest; and
(d)The balance to the husband.
That within 30 days of the date of these Orders, the parties do all acts and things necessary to authorise the (omitted) Group (“(omitted)”) to equally distribute any monies held on trust for the children to the parties when any distribution is made, and that both parties authorise (omitted) Group to sign individual cheques payable to each parent.
That the parties forthwith do all acts and things and sign all necessary documents to cause the husband to be a joint signatory with the wife on the children’s individual bank accounts.
That the base amount of $48,329 is allocated, as required by s.90MT(1)(a) of the Family Law Act1975 to Ms Patrick out of interest held by Mr Patrick in (omitted) Super.
That whenever (omitted) Super Pty Ltd (“the Trustee”) makes a splittable payment to Mr Patrick from his interest in (omitted) Super, the Trustee shall pay Ms Patrick the entitlements calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and make corresponding reductions in the entitlements Mr Patrick would have had but for these Orders in (omitted) Super.
That Order 7 has effect from the operative time.
That the operative time is four clear business days after service of a sealed copy of these Orders on the Trustee of (omitted) Super.
That within 14 days the husband return to the wife the following items which are in the real property:
a)The (omitted) Mint dagger;
b)The (omitted) light fighting;
c)All of the Applicant wife’s books and magazines;
d)The nativity scene; and
e)Baby furniture built by the wife’s father.
That within 14 days the wife provide to the husband any photographs in her possession or control of the husband for the period before they met.
That unless otherwise 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 all others, to all property (including choses-in-action) in the possession of such party as at the date of these Orders, including their respective jewellery and motor vehicles;
b)The furniture, person possessions, jewellery and like chattels in the former matrimonial home are considered to be in the possession of the husband;
c)That any policy of life insurance or assurance remain the sole property of the owner named therein;
d)Each party be solely liable and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
e)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
IT IS NOTED that publication of this judgment under the pseudonym Patrick & Patrick is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 9515 of 2015
| MS PATRICK |
Applicant
And
| MR PATRICK |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant wife and the Respondent husband are in dispute in relation to the question of property adjustment orders.
At the commencement of the hearing, the parties handed up an agreed Minute of Order and an agreed balance sheet, which by the commencement of the second day of hearing were refined by the parties but not materially altered.
In essence, the main issue between the parties was the payment to be made to the wife by way of property adjustment orders upon the husband retaining the former matrimonial home.
The central factual dispute between the parties was whether the husband’s parents lent him an amount of $100,000 when he purchased in 1993, what later became the former matrimonial home.
In summary, the husband’s case is that the money the husband’s parents provided to him when he purchased the property at Property W (“The Property W Property”) was a loan in the amount of $100,000 and thereby a legally enforceable contract.
The husband’s argument is that the loan gives rise to a liability to repay the husband’s parents before any property adjustment orders are to be made or in the alternative if the Court finds that there was no loan, that the money advanced should be treated as part of the husband’s initial contributions.
In summary, the wife’s case is that any money which the husband’s parents advanced to him when he purchased the Property W Property should be treated as part of the husband’s initial contribution, or in the alternative, if there was a loan that the Court should either not take it into account as a liability as it is vague or uncertain; or that otherwise the liability is statute barred in any event.
Despite some differences in the evidence which the parties gave about the various contributions made over the course of their 18 year marriage, the parties were not far apart in relation to what each of them ultimately submitted were the parties’ overall contributions.
The parties had agreed on a two pool approach, a 50/50 splitting order of the husband’s superannuation and specific orders with respect to other property of the parties. The agreed proposed minute read as follows:
1.That within 60 days of the date of these Orders:
a. The Husband pay to the Wife the sum of …………..(“the payment”);
b. The Husband do all acts and things necessary to refinance the home loan to the (omitted) Bank and secured against the property at Property W (“the former matrimonial home”) in the amount of $147,000 into his sole name; and
c. The Wife do all acts and things, and sign all documents necessary, to withdraw, at her expense, the caveat lodged by her against the former matrimonial home.
2. That upon making the payment, the Husband indemnify the Wife, and keep her indemnified, in relation to:
a. The loan of $100,000 alleged by the Husband to be owing to Mr M and Ms G; and
b. Any further liability owing on the former matrimonial home.
3. In the event that the payment is not made, the Husband do all acts and things and sign all documents necessary to sell the former matrimonial home (“the sale”). Upon the completion of the sale, the proceeds be applied:
a. First, to pay all costs, commissions and expenses of the sale;
b. Secondly, to discharge the mortgage affecting the former matrimonial home;
c. Thirdly, such of the payment as is due to the Wife together with penalty interest; and
d. The balance to the Husband.
4. That within 30 days of the date of these Orders, the parties do all acts and things necessary to authorise the (omitted) Group (“(omitted)”) to equally distribute any monies held on trust for the children to the parties when any distribution is made, and that both parties authorise (omitted) Group to sign individual cheques payable to each parent.
5. That the parties forthwith do all acts and things and sign all necessary documents to cause the Husband to be a joint signatory with the Wife on the children’s individual bank accounts.
6. That the base amount of $48,329 is allocated, as required by s.90MT(1)(a) of the Family Law Act 1975, to Ms Patrick out of interest held by Mr Patrick in (omitted) Super.
7. That whenever (omitted) Super Pty Ltd (“the Trustee”) makes a splittable payment to Mr Patrick from his interest in (omitted) Super, the Trustee shall pay Ms Patrick the entitlements calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, and make corresponding reductions in the entitlements Mr Patrick would have had but for these Orders in (omitted) Super.
8. That Order 7 has effect from the operative time.
9. That the operative time is four clear business days after service of a sealed copy of these Orders on the Trustee of (omitted) Super.
10. That within 14 days the Husband return to the Wife the following items which are in the real property:
a. The (omitted) dagger;
b. The (omitted) light fighting;
c. All of the Applicant Wife’s books and magazines;
d. The nativity scene; and
e. Baby furniture built by the Wife’s father.
11. That within 14 days the Wife provide to the Husband any photographs in her possession or control of the Husband for the period before they met.
12. That unless otherwise 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 all others, to all property (including choses-in-action) in the possession of such party as at the date of these Orders, including their respective jewellery and motor vehicles;
b. The furniture, person possessions, jewellery and like chattels in the former matrimonial home are considered to be in the possession of the Husband;
c. That any policy of life insurance or assurance remain the sole property of the owner named therein;
d. Each party be solely liable and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
e. Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
The wife also sought what might loosely be called “add-backs”, namely:
a)A reimbursement of half of the rent which she has paid from date of separation to date of hearing, being an amount of $3,390; and
b)A repayment to her of half of the amounts drawn down by the husband on 11 November 2015 ($1,100) and on 16 February 2016 ($1,291) from the mortgage account, being an amount of $1,195.50
The Wife relied upon the following documents:
a)Amended Initiating Application filed 9 May 2016;
b)Financial Statement affirmed and filed 9 May 2016;
c)Applicant’s trial Affidavit affirmed and filed 9 May 2016;
d)Affidavit of Mr S sworn and filed 9 May 2016;
e)Affidavit of Ms K affirmed and filed 9 May 2016; and
f)Valuation of former matrimonial home by (omitted) obtained by the parties jointly dated 19 April 2016.
The Respondent relied upon the following documents:
a)Amended Response filed 23 May 2016;
b)Financial Statement sworn and filed 23 May 2016;
c)Respondent’s trial Affidavit filed sworn and filed 23 May 2016; and
d)Affidavit of Mr M sworn and filed 23 May 2016.
Both parties filed a Case Outline document.
The wife, Mr S, the husband and Mr M were all cross-examined.
Agreed Pool of Assets
At the conclusion of the hearing, the parties were in agreement about the pool of assets. The parties agreed to the following:
Asset
Ownership
Agreed Value
Property W
Husband
$1,150,000
Wife’s Subaru
Wife
$10,440
Wife’s Savings
Wife
$500
Wife’s Shares
Wife
$4,738
Husband’s Savings
Husband
$1,800
Husband’s Shares
Husband
$1,345
Husband’s Jeep Cherokee
Husband
$54,150
Husband's (omitted) Motorbike
Husband
$5,000
TOTAL
$1,227,973
Liabilities
Mortgage
Joint
$147,151
Husband’s car lease
Husband
$34,170
Wife’s credit card
Wife
$14,302
TOTAL
$195,623
NET TOTAL
$1,032,350
Superannuation
Ownership
Amount
Wife’s Superannuation
Wife
$96,462
Husband’s Superannuation
Husband
$192,941
TOTAL
$289,403
In the absence of specific evidence about the value of certain of the parties’ property, the Court is left in a position where it can make no findings as to such values. However, the Court accepts the parties’ joint position in respect of the value of the property.
Position of the Parties with respect to contributions
The Court is urged by the wife that there is no evidence of $100,000 coming in at all or that if it did, it wasn’t a loan (or is unenforceable as such) and it should be treated as simply part of the initial contributions made by the husband. The wife submitted that at separation the parties’ respective contributions were 55/45 to the husband and that there should be a 10% adjustment in the wife’s favour for 75(2) factors.
The husband submitted that at separation the parties’ respective contributions were 60/40 to the husband (if the Court finds that there was no loan) or alternatively 55/45 to the husband (if the Court finds that there was a loan) and that there should be a 5% adjustment in the wife’s favour for 75(2) factors.
The Evidence of the Parties on Contributions
The husband was born on (omitted) 1969. At the time of hearing he was 46 years old. The wife was born on (omitted) 1970. At the time of hearing she too was 46 years old.
The parties met in early 1994 and were engaged to marry in late 1996. The parties married on (omitted) 1997 and separated in early August 2015 when the wife left the former matrimonial home. Since separation, the husband has remained living in the former matrimonial home while the wife has moved into rented accommodation.
Both the husband and the wife are employed on a full-time basis. The husband is employed as an (occupation omitted) and the wife is employed as an (occupation omitted). Both parties are healthy.
The parties have two children together, a daughter who was born on (omitted) 2000 and a son who was born on (omitted) 2004. Since separation the children have been living with the parties on a week about basis. Both parties attest to the fact that the children are well settled and happy with their living arrangements.
The wife asserts that they commenced living together in 1997, shortly before they were married. The husband’s evidence is that they commenced living together only after they were married; however he says that he did stay over from time to time prior to the date of marriage. Nothing much turns on the exact date of cohabitation.
In 1988, the husband when he was 18 years old, with the assistance of his parents purchased his first property. That property was located at Property F (“The Property F Property”). The purchase price of the Property F Property was $60,000. The husband’s evidence is that his parents lent him $40,000 and the balance was funded via a loan from a bank.
When the husband purchased the Property F property it was in a dilapidated state. The husband and his father did a great deal of work in improving the property before it was initially leased. The husband estimates that the labour and improvements to the property were to the value of approximately $27,000 to $35,000. The husband’s evidence, consistent with that of his father, is that there was an agreement with his parents at the time of the purchase of the Property F Property that when the property was sold, he would repay them the monies they had lent him.
Between 1988 and 1997 the husband collected the rent from the Property F Property and utilised it firstly to pay off the mortgage which was secured over the property and later towards repayments on his second property, which he purchased in late 1993.
In 1993, before the parties met, the husband once again with the assistance of his parents purchased a second property, being the Property W Property.
The Property W Property ultimately became the former matrimonial home.
The husband’s evidence (which is contested by the wife) is that the purchase price for the Property W Property of $160,000 was funded as follows:
a)via a loan from the husband’s parents in the amount of $100,000;
b)via a $50,000 loan from a bank; and
c)any balance either came from his savings or he was further assisted by his parents.
The Property W property was purchased some 23 years before the date of hearing. It is not surprising that the husband is not able to remember the finer detail of the purchase, particularly in the absence of any documentary evidence being available in his case. Doing the best that he could, the husband’s recollection is that in addition to the $100,000 from his parents, the husband borrowed $50,000 from the (omitted) Bank.
The evidence troubling the Court, or rather its scarcity, is the evidence as to the terms of the $100,000 loan to the husband from his parents. This particular issue is addressed later in these reasons. It was conceded by the husband in cross examination that his evidence in chief in relation to the terms of the loan was incorrect.
In about 1995, before the parties commenced living together, the husband purchased a Holden (omitted). He bought the vehicle from a car yard and that he obtained finance from the car yard at the time of purchase and then later refinanced the loan by drawing down on the home loan to pay out the vehicle loan.
The husband initially borrowed $50,000 from the (omitted) Bank and then had a further mortgage registered on the property in 1996 with the (omitted) Bank which was to a value of $80,000.
The husband’s evidence in chief (bar the name of the bank which initially lent him the money to partly fund the purchase of the Property W Property) and his evidence about the loan to purchase the Holden (omitted) is consistent with the documents and answers given by him in cross-examination.
The husband gave evidence that he spent over $30,000 in improvements to the vehicle. The wife drove this vehicle for about 8 years while the parties were together and before the vehicle was sold in late 2005.
The Property F Property was sold in July 1997 for $80,000 and the entire sale proceeds were paid by the husband to his parents. On the husband’s evidence $80,000 was paid firstly in repayment of $40,000 being the money they had lent him when he purchased the property and a further $40,000 being a repayment of all of the costs of materials, labour and assistance provided by them towards the renovations of the property.
The husband was in some respects inconsistent in his evidence. For example, when asked about why he sold the Property F property he initially said that he wanted to and that it had nothing to do with his sister wanting to buy a property. He then gave evidence which was that there were family discussions that his parents asked him to sell the property, that his sister wanted to buy a property and that he wanted to sell it.
Shortly prior to the parties’ marriage, the husband’s parents learnt that he had refinanced the home loan in order to purchase the Holden (omitted).
The husband says that his father in particular was upset and that as a result his parents approached a lawyer to prepare a loan agreement to evidence the $100,000 loan made by them to the husband in 1993. A draft agreement was drawn up by the solicitors engaged by the husband’s parents and sent to the husband’s parents.
The cover letter from the lawyers who prepared the agreement indicates that the document attached was only a draft. In any event, the husband and his parents signed the document at some stage in 1997 (“1997 Loan Agreement”).
The signed document is undated but appears to be witnessed. The husband did not call Mr N, who witnessed the agreement, to give any evidence.
Mr M, the husband’s father gave evidence that the 1997 Loan Agreement contained in error in so far as it stated that the loan was repayable when the house was sold. His evidence was that the $100,000 loan was to be repaid when the mortgage was paid off, however, there was no further evidence as to exactly what this meant.
The wife who was not a party to any of these initial transactions, namely, the purchase of the Property F Property or the purchase of the Property W Property, did not have any knowledge of things such as the purchase price nor how the properties were funded. The wife did not have any knowledge of where the husband obtained the money from when he purchased the properties except as she was disclosed to her by the husband during their relationship.
The husband says that he believes the wife did at some stage ask him how it was that he purchased Property W, and that his answer to her at the time was that he borrowed some money and the rest his parents “helped him” with. The husband’s evidence is that he does not recall ever telling the wife that he borrowed such moneys from his parents.
The wife gives evidence of a conversation with the husband in 1997 when he sold the Property F Property. The wife was unmoved during cross-examination about the possibility that she could be mistaken about the content of that conversation. The wife does not depose to the date of the conversation, where it occurred nor in what circumstances did it occur.
The wife’s evidence is that after the husband sold the Property F Property she had asked him if what he received he had given to his parents and if that was everything that he did owe them, to which the husband replied that that was right. The wife then gives evidence that the husband never told her that he paid the sale proceeds of the Property F Property to his parents to repay a loan in relation to the purchase of the Property F Property. It is unclear what the wife considered that the husband was repaying his parents for, particularly in light of her concession that she was unaware of the details of the purchase of either of the properties.
The wife’s evidence was that because the husband had said to her words to the effect “that’s all the money that I owe my parents” at the time which he repaid them $80,000, that there is no $100,000 loan. It was not put to the wife in cross-examination that the husband, if he did say those things, was either mistaken or untruthful at the time.
The husband conceded during cross-examination that he may have said to the wife at the time that he paid his parents all of the sale proceeds from the Property F Property, that he did not owe his parents any more money.
The wife’s evidence is that she did not know anything about the loan to purchase the Property W Property, nor until these proceedings, was she aware of the 1997 Loan Agreement. The discrete issue of the loan, being an important issue for the parties, is discussed separately in these reasons.
In 1997, before the parties were married, the wife moved into the Property W Property. In July 1997, the husband obtained a building permit to extend the kitchen, which the parties then proceeded to do together. The evidence of both of the parties is that the kitchen renovations included an extension, new kitchen cupboards, electrical work and tiling. The parties assert different amounts for the cost of the renovations and precisely how the renovations were funded. They do agree that the wife’s parents paid for the kitchen cupboards, that both the husband and the wife and their families assisted to different degrees with those renovations and that the renovations cost approximately $25,000 in total.
In about April 1999, the parties borrowed a further $88,000 on the already existing $72,000 home loan. This additional loan was with the (omitted) Bank and was by way of (omitted) Account. Consequently, the total amount owing on the home loan as at about April 1999 was $160,000. The additional $88,000 was spent on family holidays and further significant renovations to the Property W Property.
In 2005, there were further significant renovations to the Property W Property. The parties at this time applied to refinance their home loan with the (omitted) Bank in the amount of $170,000. These moneys were utilised to complete these additional renovations.
The wife says that had she known about the $100,000 loan during the parties’ relationship she would have ensured that the parties had repaid it and they wouldn’t have gone on holidays or borrowed money to fund the renovations until the loan to the parents was paid out.
Both parties gave evidence about the assistance provided by their respective families.
The husband deposed to the significant contributions made by his parents in particular his father towards the renovations and by both of his parents towards the care of the children.
The wife deposed to significant contributions made by her father towards the renovations of the Property W Property and minimised any contributions of the husband’s father to the renovations.
The wife did not give appropriate acknowledgement in her affidavit to the significant work done by the husband’s father to improve the Property W Property, although she did concede in cross-examination that the husband’s father did a great deal of the work and that it wasn’t simply ‘odds and ends’. The wife conceded that some of the work was done after her own father was either too ill to assist or had passed away.
The wife also asserted that her parents provided significant assistance towards the care of the children.
The wife’s evidence is that during the parties’ marriage her parents provided in addition to the amounts for the kitchen renovation, a further estimated $30,000 for other improvements to the home and for other expenses. The husband does not concede that the wife’s parents provided such further amounts but does agree that they did provide some financial assistance to the parties.
The wife’s father passed away in late 2005. The wife’s mother then provided to the wife $50,000 from the estate. The wife’s evidence is that she used these monies to buy her current motor vehicle, a Subaru (omitted) and some other electrical and white goods items for the home. After separation the wife retained the Subaru (omitted).
The parties during their marriage both worked hard – not only in supporting each other but also in terms of the support they provided to the family. The wife worked part-time during most of the marriage, particularly while the children were young. The husband worked full time and when he was at home he looked after the children and did some household chores.
The alleged loan of $100,000
The Court accepts the submissions made on behalf of the husband that the only way the husband could have purchased the Property W Property was with the assistance of his parents. There was no evidence to the contrary or to suggest that the husband’s parents did not provide $100,000 for the husband’s use at the time that he purchased the Property W Property. The quandary facing the Court is how to classify that assistance – namely, was it a loan or not.
The husband asserts that the parties to the loan contract were the husband and his parents. No evidence from the husband’s mother as to the terms of the loan was called. Possibly such evidence would not have assisted the Court. The husband’s mother was present in Court during the proceedings. The Court was however not asked to draw any inference in respect of this evidence or lack thereof.
The husband says the $100,000 loan was repayable upon sale of the house. This was his evidence in chief and during cross-examination at first instance. When it was put to him further in cross-examination that his father’s evidence about the terms was different (i.e. that it was repayable when he paid off the mortgage), the husband said that his father is probably right. The terms of the 1997 Loan Agreement indicate that the loan was to be repaid in full when the property was sold.
In any event, the husband’s evidence is that it is not his intention to sell the Property W Property at present. Indeed it is his intention to keep the property and never sell it. It may be that the liability to repay the money will never arise because not only might he never pay off the mortgage but he has no intention of selling the house.
The husband’ father, Mr M gave evidence that he expected his son to pay him back, that he understood the husband would significantly increase the mortgage over the property if he was to pay out the wife and that in all likelihood the husband would not be in a position to repay the $100,000 for some time, if ever. It was not put to Mr M that the husband should borrow from a bank to pay him out; indeed such a proposition would be against all of the evidence. The husband’s parents in providing the money to him in 1993 wanted the husband to get a head start in life.
Counsel for the husband submitted that the 1997 Loan Agreement could be looked at in one of three ways: (1) that it was evidence of the 1993 agreement, (2) that it was a new agreement or (3) that it was a variation of the 1993 agreement.
It was submitted that the consideration for the 1997 Loan Agreement was the forbearance to sue on the 1993 loan – as a result of Mr M finding out that the husband had re-mortgaged the property and taken out a new loan to purchase the car. The difficulty with this argument is that it is contrary to the express evidence of Mr M. Mr M gave evidence that the $100,000 loan made in 1993 was always to be repaid when the mortgage was repaid and that the way that the 1997 Loan Agreement was written up was simply a typographical error. Furthermore, there is no evidence that Mr M had any intention of commencing proceedings against his son in respect of the money lent to him in 1993 at the relevant time or since.
It was submitted on behalf of the wife that if the Court was to make a finding that there was a loan of $100,000 then the value of this liability should not be taken into account or discounted completely because it is the liability is vague or uncertain, or it is unlikely to be enforced (notwithstanding the general practice of ascertaining the value of the property of the parties to a marriage by deducting from the value of the assets the value of the liabilities): Biltoft & Biltoft (1995) FLC 92-614.
It was submitted, inter alia, on behalf of the wife that:
a)If there was a loan, it consisted of an oral agreement, the terms of which were that the amount be repaid once the mortgage has been paid out;
b)The written loan agreement, said to have been signed by the parties in 1997 and as conceded by the husband’s father to be technically incorrect, was not evidence of the 1993 oral agreement nor was it itself a legally binding agreement between the husband and his parents;
c)If there was a loan it was statute barred. The basis that this submission was that because the mortgage over the property was discharged on 20th of November 1996, the repayment of the loan was due upon the discharge of that mortgage, an event that occurred more than six years ago.
It was submitted, inter alia, on behalf of the husband that:
a)The husband brought into the relationship a significant asset and whatever equity was in that asset at the commencement of the relationship has grown over the years;
b)The financial contributions made by or on behalf of the wife, particularly the $50,000 which the wife contributed late in the marriage were contributions of a different character to those made by the husband; and
c)The husband’s initial and significant financial contributions provided a springboard to the parties in terms of the assets they were able to retain and acquire during the marriage.
In respect of the argument about how the initial contributions are to be assessed, it was submitted in the husband’s case that the Court would be mindful of what the Full Court of the Family Court said in Pierce & Pierce [1998] FamCA 74 at [28], namely:
In our opinion is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: See also Campo and Campo (unreported, Full Court (Ellis, Lindenmayer and Finn JJ), Sydney, delivered 19 May 1995 at pages 21 and 22 of the joint judgment) and Zahra and Zahra (unreported, Full Court Sydney, delivered 3 October 1996, per Ellis J. at page 10).
It is almost a matter of going back to first principles in determining whether the arrangement between the husband and his parents is a legally binding contract and if so what its terms are.
There are various ways in which the principal requirements of a legally enforceable contract are worded in the various texts and authorities. At its most basic level:
The foundation of the legal relations called contract is the agreement of the parties, and in the absence of agreement, or circumstances which the law treats as giving rise to agreement, there is no contract;
The concept of 'agreement' signifies satisfaction of the legal requirements applicable to the formation of a contract or a promise enforceable as a contract, namely:
i. certainty and completeness;
ii. consideration; and
iii. an intention to create legal relations…
In order to constitute a contract, an agreement must be expressed in terms which are sufficiently certain in their operation to be enforced in a court of law.[1]
[1] Carter on Contracts, LexisNexis online, accessed 17 June 2016, see general principles at commencement of chapters 2 and 4.
The terms of the said $100,000 loan are unclear and there is a great deal of ambiguity about when and if repayment of the loan is due and how such repayments are to be made, namely whether in instalments or a lump sum.
The evidence simply does not support and indeed is against the submission that the 1997 Loan Agreement is anything but evidence of money provided to the husband in 1993 and the reasons why such money was provided (taken at its highest).
The Court does not accept that the $100,000 provided to the husband by his parents in 1993 was a loan in the strict legal sense, namely a contract between the husband and his parents.
It was in the nature of assistance provided to the husband by their parents, to be repaid by the husband in due course when he was able to – perhaps after he’d paid off the mortgage but more probably if and when he sold the house. It is not suggested that the loan is repayable at call, or that the loan has ever been called upon.
It will be treated as part of the husband’s initial contributions.
Overall Approach to s.79 Family Law Act
In Stanford v Stanford (2012) 247 CLR 108 the High Court stated:
[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.
…
[40]… 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) … 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.
The approach to the determination of applications under s79 Family Law Act1975 (“Cth”) has subsequently been considered by the Full Court of the Family Court in Bevan & Bevan [2014] FamCAFC 19; Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203.
In many matters which come before this Court, the requirement of whether it is just and equitable to make any orders is readily satisfied by the fact of the parties’ separation; as there is not and will not thereafter be the common use of property by the parties.
In this matter, the parties’ major asset is owned by the husband, i.e. it is in his name. Both parties seek orders as to the division of their property and in particular both parties urge it upon the Court that in all of the circumstances it is just and equitable to make an order adjusting the property interests of the parties. It is appropriate that the Court do so.
Once the issue of whether it is just and equitable to make any order is resolved, the Court is to then consider the contributions made by the parties as defined in s.79(4)(a) to (c), the matters set out in s.79(4)(d) to (g) and in particular the subjective considerations as to the parties by having regard to the provisions of s.75(2) in so far as they are relevant; and then the justice and equity of the actual orders to be made, in the context of the Court’s obligations to make appropriate orders as provided for in s79(1) of the Act (see generally Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120).
Contributions
The Court makes the following findings of fact in respect of contributions:
a)The husband purchased the Property W property for $160,000 in 1993. He funded the purchase via money from his parents in the amount of $100,000, a loan from the (omitted) Bank of $50,000 and the balance from his savings and further assistance from his parents (to make up the difference in the deposit and the stamp duty).
b)Between 1993 and 1997, the husband utilised the rent from the Property W and the Property F properties to pay the Property W mortgage. By 1996, the majority of the amount owing was paid off.
c)In 1995, the husband bought a new Holden (omitted). He financed the purchase with (omitted) finance. He later realised that the repayments were very high and that he could pay less interest if the transferred the debt onto the home loan.
d)In November 1995, the husband took out an $80,000 loan with the (omitted) Bank, secured against the Property W Property. That money was used to pay off any balance of the (omitted) Bank loan and the (omitted) car finance.
e)At the commencement of cohabitation the husband was in full time employment and owned property as follows:
i)the Property W Property, subject to mortgage;
ii)the Holden (omitted), subject to finance; and
iii)Various items of household furniture.
f)At the commencement of cohabitation, the wife was in full time employment and owned property as follows:
i)A Honda motor vehicle,
ii)Various items of household furniture; and
iii)Savings.
g)The husband’s initial contributions were significantly higher than those of the wife.
h)The wife moved into the Property W property in either June or July 1997. The husband and wife then together renovated the Property W property by extending and renovating the kitchen. The husband’s father assisted with some of the work which was carried out, as did the wife’s father. The whole extension cost about $25,000. Some of the money for the extension came from the wife’s parents, some from the parties themselves and some from the husband’s parents.
i)By January 1998 when the renovations were competed, the house had been valued by the bank at $240,000. There is no evidence of how much the renovations improved the value of the property. In any event, when the parties commenced their relationship, the husband was the sole owner of the Property W property. This is a property which remained with the parties throughout the marriage and which the husband still retains. It is the former matrimonial home.
j)Over the years, the parties have expended much effort in improving the property. There were 3 sets of renovations during the parties’ relationship. The first was in late 1997, the second in 1999 and the third in 2005. The parties borrowed funds from their bank to fund the 1999 and 2005 renovations.
k)Both the parties’ extended families assisted to different degrees with the various renovations and provided assistance to the parties by helping care for their children. The husband’s family provided the greater assistance in both regards.
l)In 2005 the wife made a financial contribution of $50,000. This was used to purchase a new motor vehicle, which the wife retained at separation and which has since its purchase date decreased in value, and also some household items.
m)Both parties made significant contributions to the welfare of the family and as homemaker and parent, although in this respect, the wife’s contributions were significantly higher.
The parties have consented to a 50/50 adjustment of the parties’ superannuation and have agreed that there should be a splitting order to that effect.
With respect to the argument about add-backs by the wife and post separation contributions by the husband towards the Property W Property, the Court finds that there should be no adjustment for either.
In accordance with the agreed balance sheet, the pool of assets (on a two pool approach) is as contained in paragraph 15. The net non-superannuation pool stands at $1,032,350.
Having regard to the relevant authorities such as Pierce, the Court finds that without the husband’s significant initial financial contribution, the parties would not be in the financial position they were at a final hearing. The use of that initial contribution provided by the husband, meant that the parties were able to renovate, improve and maintain that asset, which provided a significant springboard for the parties to the acquisition of all of their assets as at the time of hearing.
In assessing the contributions, the Court has taken into consideration, inter alia:
a)the significant initial contribution by the husband of bringing in the only major asset of the parties, namely the former matrimonial home;
b)the renovations and improvements undertaken on that property over the years and in particular the assistance provided by the husband’s family in this regard, which the Court assesses was greater than the assistance provided by the wife’s family;
c)the contributions by the parties throughout the marriage, and in particular the wife’s significant contribution as parent and homemaker; and
d)the financial contributions made by the wife and in particular the $50,000 brought into the marriage in 2005.
The overall contributions[2] by the husband are assessed at 60% and the overall contributions by the wife are assessed at 40%.
[2] In respect of the non-superannuation assets
Section 75(2) Factors
Both the husband and the wife are in full time employment.
Both the husband and wife are in good health.
The parties have equal care of the children.
The husband pays child support.
The wife at present earns about $30,000 gross per annum less than the husband. She is in the process of obtaining further qualifications. Once she has completed her further studies and in a few years, she expects to be earning on par with what the husband earns now.
A 5% adjustment in the wife’s favour for 75(2) factors is appropriate in the circumstances.
Overall
Having assessed the parties’ contributions at 60/40 in the husband’s favour, and after finding that a further adjustment of 5% in favour of the wife for 75(2) factors is appropriate, the end result is a 55/45 adjustment in the husband’s favour.
Based on a net pool of $1,032,350[3] and a 55/45 adjustment in the husband’s favour, the husband is to receive by way of adjustment of property interest assets to the value of $567,792.50 and the wife is to receive by way of property adjustment orders assets to the value of $464,557.50; in the manner described in the two paragraphs below.
[3] which takes into consideration the splitting order agreed to between the parties
The husband is to receive:
Assets:
| Item | Value |
| Property W | $1,150,000 |
| Jeep Cherokee | $54,150 |
| Savings | $1,800 |
| Shares | $1,345 |
| Motorbike | $5,000 |
| Total | $1,212,295 |
Less:
| Item | Amount |
| Cash payment to wife | $463,181.50 |
| Mortgage | $147,151 |
| Car Lease | $34,170 |
| Total | $644,502.50 |
| NET TOTAL | $567,792.50 |
The wife is to receive:
Assets:
| Item | Value |
| Subaru | $10,440 |
| Savings | $500 |
| Shares | $4,738 |
| Cash Payment from Husband | $463,181.50 |
| Total | $478,859.50 |
Less:
| Item | Amount |
| Credit Card | $14,302 |
| Total | $14,302 |
| NET TOTAL | $464, 557.50 |
The result in all the circumstances is appropriate and just and equitable.
Orders will thus be made accordingly as set out at the forefront of these Reasons for Judgment.
I certify that the preceding one hundred and three (103) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Date: 7 July 2016
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Injunction
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Fiduciary Duty
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Constructive Trust
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