Popovski & Mabon
[2024] FedCFamC1F 270
•24 April 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Popovski & Mabon [2024] FedCFamC1F 270
File number: SYC 7140 of 2018 Judgment of: ALDRIDGE J Date of judgment: 24 April 2024 Catchwords: FAMILY LAW – PROPERTY – Application for final property orders – Small property pool – Add backs for interim distributions of property – Where the husband terminated the wife’s access to funds following separation – Where the wife obtained various personal loans for living expenses and legal fees – Loans for post-separation living expenses included as liabilities of the parties – Husband provided financial support for the family up to separation – Wife was and remains virtually the sole carer of the children – Net assets to be divided 60 per cent to the wife and 40 per cent to the husband. Legislation: Family Law Act 1975 (Cth) s 79 Cases cited: Biltoft and Biltoft (1995) FLC 92-614; [1995] FamCA 45
NHC and RCH (2004) FLC 93-204; [2004] FamCA 633
Division: Division 1 First Instance Number of paragraphs: 61 Date of hearing: 11 March 2024 Place: Sydney Counsel for the Applicant: Mr Stapleton Solicitor for the Applicant: Robertson Saxton Osborne Lawyers Counsel for the Respondent: Ms Cantrall Solicitor for the Respondent: Long Saad Woodbridge Lawyers ORDERS
SYC 7140 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR POPOVSKI
Applicant
AND: MS MABON
Respondent
ORDER MADE BY:
ALDRIDGE J
DATE OF ORDER:
24 APRIL 2024
THE COURT ORDERS THAT:
SALE OF THE SUBURB B PROPERTY
1.The property situated at C Street, Suburb B New South Wales, being the whole of the land contained in Certificate of Title Folio Identifier … (“Suburb B Property”), be sold forthwith by public auction and for that purpose the following sale provisions shall apply, unless otherwise agreed by the parties in writing:
(a)The Suburb B property shall be listed for sale by public auction with Ms AA of BB Limited the costs of and incidental to such appointment to be borne by the husband.
(b)The parties will engage D Conveyancers to undertake the conveyance of the Suburb B Property.
(c)The auction shall take place within 28 days of the date of these orders.
(d)The parties will not, without the consent of the other, cause any other agency agreement to be effected or binding on the parties.
(e)A reserve price shall be fixed by written agreement between the parties, and failing such agreement, within 14 days of the auction date being set the reserve price will be determined by Mr E of F Valuers, the cost of such valuation to be paid by the parties from their controlled monies account with National Australia Bank account number …00.
(f)The husband will not encumber or otherwise deal with the Suburb B property without the prior written consent of the wife.
(g)The wife shall provide access to the Suburb B property at all reasonable times to prospective purchasers and the agent, or his or her representative.
(h)The wife shall maintain the Suburb B property in a reasonable condition.
(i)Any repairs as recommended by the agent will be met by the husband.
(j)In the event a prospective purchaser makes a bid on the Suburb B property prior to the proposed date for auction, the parties may agree on a price and to sell to such a purchaser in writing. In the event the parties are unable to agree on a price then the Suburb B property shall proceed to auction.
(k)In the event that the Suburb B property fails to be sold at the auction referred to above, the property shall be resubmitted to auction at a reserve price 10 per cent lower than at the previous auction and shall continue to be resubmitted for auction every four weeks until such time the Suburb B property is sold.
2.The parties shall cause the proceeds of sale of the Suburb B property to be applied in the following order and priority:
(a)Payment of the agent’s commissions and advertising or other expenses payable on the sale;
(b)Payment of the legal costs and outlays relating to the sale; and
(c)Payment of the balance to the parties such that the wife receives $787,379.90 and the husband receives $212,620.10.
(d)In the event that the net proceeds exceed the total payments to be made under this order then the excess is to be divided so that the wife receives 60 per cent of the excess and the husband 40 per cent.
(e)In the event that the net proceeds of sale are insufficient to permit the payments in Order 2(c) to be made, the shortfall shall be borne by the wife as to 60 per cent and the husband 40 per cent.
OTHER PROPERTY
3.The parties are otherwise entitled to retain sole legal and beneficial ownership to the exclusion of the other of:
(a)All items of property, both real and personal, including but not limited to real estate, motor vehicles, bank accounts, money, shares, furniture, furnishings, jewellery and personal effects presently in the possession of each of them;
(b)Any insurance policies held in their respective name; and
(c)Any entitlements under any superannuation fund of which they are or have been a member.
4.The wife is solely responsible for and shall pay any tax liability or other liability incurred in her sole name or in the name of any entity in which she has an interest and shall indemnify the husband and keep him indemnified with respect to any such liability.
5.The husband is solely responsible for and shall pay any tax liability or other liability incurred in his sole name or in the name of any entity in which he has an interest and shall indemnify the wife and keep her indemnified with respect to any such liability.
IMPLEMENTATION
6.The parties do all acts and things and sign all documents necessary to give effect to these orders.
7.In the event either party refuses or neglects to sign any deed or instrument to give effect to these orders, within seven days of being requested to do so, the registrar of the Court be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to sign such document on behalf of such party to give effect to the operation of the deed or instrument.
8.The parties have liberty to restore this matter in relation to the implementation of these orders upon seven days notice to the Court and to the other party.
COSTS
9.In the event of any application for costs, the parties are to file written submissions of no more than five pages as to what costs order should be made within 28 days of the date of these orders.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Popovski & Mabon has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE J:
These are property proceedings between Mr Popovski (“the husband”) and Ms Mabon (“the wife”), who are 52 years and 44 years old respectively. The assets to be divided consisted mainly of a property in Suburb B and some superannuation.
BACKGROUND
The parties commenced a relationship in 2003, commencing cohabitation later that year. The parties were married in 2007 and at some time during that year, began to live in City G.
The parties’ first child was born in 2008.
In 2009 the parties moved to Country H for the husband’s employment and in 2010 purchased property there.
The family moved to Australia in 2011. At the time, the husband owned a property in Suburb J. It is agreed for the purpose of these proceedings that the husband’s initial financial contribution was his interest in the Suburb J property, which the parties have agreed as being worth $49,000.
In 2012 the parties’ second child was born.
The Suburb J property was sold in early 2012. In that same year a property in Suburb L was purchased which became the matrimonial home.
In 2015 the parties received financial assistance from the wife’s mother in loans of $60,960 and $53,985.
In mid-2017, the husband moved to Country K for work with the wife and children remaining at the Suburb L property. The husband returned from Country K in mid-2018.
It is agreed that the parties separated on 19 April 2018.
In late 2018, the property in Country H was sold and the proceeds were used to pay the balance of the purchase price of a property in Suburb B, New South Wales that the parties had bought off the plan in 2014. A loan to assist in paying the balance of that property was also obtained and secured over the Suburb L property.
In early 2019, the purchase of the Suburb B property settled and the wife and children moved in.
The Suburb L property was sold in mid-2019. The net sale proceeds after the payment of the mortgage were approximately $195,000. Each of the parties received $50,000 from that sum as an interim payment. The balance was used largely to pay outstanding fees for the husband’s supervision costs of spending time with the children and arrears of spousal maintenance. At some stage, apparently by agreement, a further $29,451 was paid to each of the parties.
The parties were divorced in late 2019.
PROCEEDINGS
Although the wife initially sought a child support departure order, that application was not pressed at the final hearing leaving only the property settlement dispute to be resolved.
The parties agreed that the circumstances were such that it was just and equitable for their property to be divided.
The property to be divided
Whilst the affidavits of the parties are replete with evidence directed to many disputes as to what property was properly available for division, sensibly at the hearing, most of those were resolved. It is not therefore necessary to deal with the husband’s contentions that a property in Country K was beneficially owned by the wife.
It follows that there is no dispute as to the assets to be divided. I have excluded from those assets bank balances under $100. I have included the husband’s M Bank accounts in the sum inserted in the joint balance sheet by him, on the basis that he presumably knows more about what is in his bank accounts than the wife. For the same reason, his liability to N Financial Services will be in the sum he put forward in the joint balance sheet, not that suggested by the wife.
The wife’s version of the joint balance sheet includes funds of $1,791 in an identified bank account. The husband concedes the amount but asserts a different bank account number. It seems unlikely that the wife would have two accounts with identical balances. Since she contends for only one, the amount will appear only once.
It is agreed between the parties that the interim payments received by the husband ($50,000 and $29,451) should be added back as interim distributions of property. The wife however contends that the identical payments received by her should be categorised, not as interim property distributions, but rather as payments for maintenance and therefore not added back. The possibility for this choice arises because, at the time the payment was made (at least in relation to the $50,000), the order specifically recorded that the categorisation of this payment was to be left to the trial judge. That is not a practice to be encouraged, if only for the reason that the Court needs to be satisfied as to the nature of the payment and the jurisdiction to make it before it can be the subject of an order, even if by consent.
The difficulty that confronts the wife is that at the time she received the payments, the husband received payments in the identical sum. The obvious point is that therefore they represent equal interim divisions of the parties’ property. Equal payments to each party strongly suggest the payments were an interim property distribution because the essence of maintenance is one party making payments to the other. The only basis for inferring that some part of the payment was for maintenance, would be if the amount paid to the wife exceeded that paid to the husband. But that was not the case. Consequently, the full amount of both interim payments received by the wife will be added back.
The wife also sought to add back the costs of obtaining valuations and expert evidence in relation to the Country K property, but that application is, in fact, an application for costs and will be treated as such, and submissions will be sought in due course.
Liabilities
It is agreed that the personal loans in 2015 from the wife’s mother that assisted in reducing the mortgage on the Suburb L property should be included as a liability of the parties in the sum of $114,945 (which was incorrectly identified by the wife as totalling $114,495 on the joint balance sheet).
The husband’s evidence as to a loan from his parents was rejected as inadmissible.
The only other matters remaining to be dealt with are a number of personal loans the wife obtained in 2018.
The wife said that these loans were primarily for living expenses and payment of legal fees. There was no serious dispute as to the existence of these loans, only whether they should be included as liabilities of the parties.
Ultimately, the wife accepted that the unpaid loans for legal fees should not be added back (see NHC and RCH (2004) FLC 93-204 at [52]).
The loans came about in this way.
The husband said:
35.Following our separation, on 19 April 2018, I cancelled [the wife’s] authority to operate my bank account. [The wife] had made a number of withdrawals from my account without informing me, including the following:
i.On 28 March 2018, [the wife] transferred $3,000 from my account to her own, without first informing me.
ii.On 16 April 2018, I transferred the same amount ($3,000) from [the wife’s] account back to my account.
iii.On 19 April 2018, after I cancelled [the wife’s] authority to operate my bank account, [the wife] was still able to make a final transfer of $5,000 from my account to her account, before the cancellation took full effect.
iv.I have observed that [the wife] has also made the following cash withdrawals from my bank account:
9 March 2018: $500
12 March 2018: $400
22 March 2018: $500
31 March 2018 : $500
3 April 2018: $500
8 April 2018: $300
10 April 2018: $480
17 April 2018: $300
36.From the above, I was of the view that [the wife] had or ought to have had sufficient funds to support herself and the children in the interim, in circumstances where I continued to pay for many of the family expenses including property maintenance costs for the matrimonial home. In addition, I offered to continue paying for [the wife’s] medication and home Wi-Fi costs. [The wife] declined these offers. This was around the time I started paying the June 2018 interim support payments.
(Husband’s affidavit filed 20 December 2023, paragraphs 35–36)
In April 2018 the husband removed the wife’s access to the Visa debit card which was used by the parties for the payment of household expenses. At the time, the wife was not working and had no source of income. She had only approximately $100 in cash. The amounts that the wife had obtained as set out in the husband’s evidence were clearly inadequate to support her and the two children. The husband was, at that time, still in Country K.
Accordingly, the wife made arrangements to borrow funds from a number of friends, which were used for living expenses and later legal fees. Some of these funds have now been repaid and the wife seeks to include the balance outstanding as a liability of the parties.
Such a course is justified because whilst these are post-separation borrowings, they were undertaken for a relatively short period of time in 2018 for the purpose of supporting the wife and the children, because her access to the parties’ funds had been terminated by the husband.
Accordingly, it is appropriate for these loans to be treated as a liability of the parties.
Funds were also borrowed from Mr O for a number of purposes, including legal fees. The parties agreed that 1/3rd of the amount outstanding should be taken to represent the living expenses and therefore be included as a liability of the parties.
Finally, there was a loan from Mr P who was at the time, and remains, the wife’s new partner. The debt to Mr P is claimed in the sum of $42,075, but $29,075 of that was used for legal fees.
The wife’s evidence is that by and large, Mr P and herself keep their finances separate and that Mr P expects to be paid from any proceeds of the family law matter. It appeared from the cross‑examination of the wife that the first borrowing from Mr P of $2,000 was in mid-2018 before they commenced living together.
That is the extent of the evidence, which does not permit me to find that the debt owed to Mr P “is unlikely to be enforced” (Biltoft and Biltoft (1995) FLC 92-614 at 82,127). It may not be, but that is to speak in the realm of possibilities, not probabilities.
Superannuation
There was no dispute as to the parties’ superannuation. Neither party sought a superannuation splitting order and both agreed that the superannuation should be dealt with in the one pool with the other assets and liabilities.
Assets and liabilities to be divided
The balance sheet is as follows:
OWNERSHIP DESCRIPTION VALUE ASSETS J Property at C Street, Suburb B NSW 2037 $1,000,000
$1,000,000.00W Property in Country K $0 W Q Bank account ending …95 $1,791
$1,791.00W Westpac account ending …55 $1,850
$1,850.00H R Bank account ending …02 $185
$690.00H M Bank accounts ending …91, …38, …48 & S Bank account ending …46 $22,459 H Household contents $1,000 W Household contents $1,000 TOTAL $1,028,285 ADD BACKS H Partial property settlement (sale of Suburb L property) $50,000 H Partial property settlement (further distribution of Suburb L property sale proceeds) $29,451 W Partial property settlement (sale of Suburb L property) $50,000 W Partial property settlement (further distribution of Suburb L property sale proceeds) $29,451 TOTAL $158,902 LIABILITIES W Personal loan from Ms T (wife’s mother) $114,945 W Personal loan from Mr U $11,035 W 1/3rd of personal loan from Mr O $4,327 W Personal loan from Mr P (less amount used for legal fees) $13,000 W Personal loan from Mr V $8,190 W Personal loan from Ms W $10,800 H Personal loan from N Financial Services $27,581 TOTAL $189,878 SUPERANNUATION W Super Fund 1 (accumulation interest) $8,156 H Super Fund 2 (accumulation interest) $171,168 H Super Fund 3 (defined benefit interest) $18,918.50 TOTAL $198,242.50 NET TOTAL ASSETS (including superannuation) $1,195,551.50 Contributions
Initial contributions and contributions during the relationship
Up until the date of separation, the husband provided the financial support for the family. As noted earlier, the husband also made an initial financial contribution that exceeded the wife’s by $49,000, being the funds received from the sale of the Suburb J property that thereby assisted the parties to acquire their other properties.
The wife had the sole care of the children whilst the husband was working in Country K apart from the few occasions when the husband returned for one or two weeks. That has continued to the present and is a contribution of significant weight.
I have included the wife’s loan from her mother as a liability of the parties. Therefore that is not something that can be taken into account in assessing the relative contributions of the parties, other than to take into account the fact that it was interest free and a ready form of finance when other forms of finance may not have been available.
Post-separation contributions
Since separation the wife has had almost the sole care of the children. Even on the husband’s return to Australia the children have spent very little time with him. Currently, the eldest child does not see the father at all and the younger child spends time with him during the week and overnight every second or third weekend for one night. The overnight time ceased in late 2023.
In addition to being virtually the sole parent to the two children, one of whom has some behavioural difficulties, the wife has provided the bulk of the financial support for them. Particular weight must be given to the care and support of the children for nearly six years.
Since the separation the husband has paid child support as assessed. The evidence reveals significant disagreements between the parties about the child support assessments and the assessments have changed from time to time as a result. In 2019 the husband paid spousal maintenance for a year.
For the last three years the wife has been employed at a franchise for 20 hours per week. The franchise in which the wife works is owned by Z Pty Ltd, a company owned by Mr P. When it was initially incorporated, the wife was the company’s sole director, but her unchallenged evidence was that that role ceased when the company began trading after acquisition of the franchise. She is not a shareholder in the company.
Mr P pays the strata levy, council rates, water rates and electricity and gas bills in relation to the Suburb B property where the wife and children reside and contributes about $250 a week to the household expenses.
Since separation, the husband has lived in rented accommodation, whilst the wife and the children have had the benefit of living in the Suburb B property without rent, but as I have said, the outgoings are paid by Mr P.
Taking these matters into account, I assess the wife as having made 55 per cent of the relevant contributions up to the time of hearing and the husband 45 per cent.
Future needs
As to future needs, the wife will remain the primary carer for the children, which in the case of the younger child, will be for another six years. The wife will receive some financial support from the husband, but it is likely to fall short of their actual expenses.
As the children get older, the wife’s capacity for full-time work will improve and it is her hope to retrain as a health professional. It is likely that she will continue to receive some financial support from Mr P.
The husband is somewhat older than the wife. He will retain his superannuation, which is almost all of the superannuation held by the parties.
The property pool cannot be described as at all large. It is somewhat artificially inflated by the add backs, which are not property but a recognition of property had and spent, which account for nearly 15 per cent of the total net property.
The wife carries a significant debt burden which will see her receive more in liquid assets. The husband will receive a significant part of his share of the property as superannuation which he is unlikely to be able to access for another 10 years or so.
Having regard to these matters, I am of the view that an allowance should be made of five per cent for matters arising under s 79(4) of the Family Law Act 1975 (Cth), leading to an overall distribution of the property in favour of the wife as to 60 per cent and 40 per cent to the husband.
For the wife to receive 60 per cent of the net property she must receive $717,330.90. She has:
Description Value Bank account $1,791 Bank account $1,850 Household contents $1,000 Add backs $50,000 Add backs $29,451 Superannuation $8,156 Sub-total $92,248 Less (loans) $162,297 TOTAL - $70,049 Proceeds from Suburb B $787,379.90
Therefore, the wife must receive $787,379.90 from the Suburb B property (assuming its value to be $1 million).
For the husband to receive 40 per cent of the net property he must receive $478,220.60. He has:
Description Value Bank account $185 Bank account $22,459 Household contents $1,000 Add backs $50,000 Add backs $29,451 Superannuation $171,168 Superannuation $18,918.50 Sub-total $293,181.50 Less (loan) $27,581 TOTAL $265,600.50 Proceeds from Suburb B $212,620.10
Therefore, the husband should receive $212,620.10 from the sale of the Suburb B property (assuming its value to be $1 million).
There will be orders for division of the property accordingly. Neither the actual sale price of the Suburb B property nor its costs of sale are yet known. The parties will have to share in any shortfall or surplus in the determined property proportion.
I consider these orders to be just and equitable in all of the circumstances.
I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Aldridge. Associate:
Dated: 24 April 2024