RIO & MCGRATH
[2013] FCCA 53
•19 April 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RIO & MCGRATH | [2013] FCCA 53 |
| Catchwords: FAMILY LAW – Property – just and equitable – whether a distribution to the respondent based on percentages would lead to a debit amount – whether just and equitable – where applicant seeks to retain former matrimonial home – where percentage adjustment made in respondent’s favour. |
| Legislation: Family Law Act 1975, ss.75, 78, 79, 81, 106A |
| Cases cited: Gosper & Gosper (1987) 11 Fam LR 601; FLC 91-818 Hickey & Hickey [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143 Jones v Dunkel (1959) 101 CLR 298 Rio & McGrath [2013] FCCCA 41 Stanford v Stanford [2012] HCA 52 |
| Applicant: | MS RIO |
| Respondent: | MR MCGRATH |
| File Number: | SYC 504 of 2010 |
| Judgment of: | Judge Scarlett |
| Hearing dates: | 11-13 July 2012 |
| Date of Last Submission: | 13 July 2012 |
| Delivered at: | Sydney |
| Delivered on: | 19 April 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms Nash |
| Solicitors for the Applicant: | Kinghan & Associates |
| Counsel for the Respondent: | Mr Wetmore (direct brief) |
ORDERS
Within three (3) months from the date of these Orders the following shall simultaneously occur:
(a)The Applicant Wife is to be solely entitled to the former matrimonial home situate and known as Property B[B] in the State of New South Wales being Lot [omitted] and the whole of the land in Folio Identifier [omitted] and the Respondent husband is to do all things and sign all documents and execute all deeds and instruments necessary to transfer all of his right, title and interest in the said former matrimonial home within fourteen (14) days of being called upon to do so;
(b)The Applicant Wife and the Respondent Husband must do all acts and things and sign all necessary documents and execute all necessary deeds and instruments at the Applicant’s expense to cause to be discharged and refinanced into her sole name the mortgages secured against the title to the property at Property B [B] and the Applicant must indemnify and keep indemnified the Respondent from any obligation the Respondent may have in respect of the mortgages to the Westpac Banking Corporation.
(c)The Applicant must pay to the Respondent by way of settlement of property the sum of $23,700.76.
In the event that the Applicant defaults in making the payment to the Respondent in accordance with Order (1)(c) above within three (3) months of the date of these Orders, then the Applicant and the Respondent must forthwith do all acts and things and sign all necessary documents and execute all necessary deeds and instruments so as to effect the sale by private treaty of the property at Property B [B] for a price agreed between the Applicant and the Respondent or failing such agreement, the gross value shall be the value nominated as the first market value thereof by a valuer appointed by the President for the time being of the NSW Division of the Australian Property Institute. The costs of and incidental to such appointment and valuation are to be borne equally by the parties as and when they fall due.
In the event that the property at Property B [B] is not sold within three (3) months of being listed for sale, then:-
(a)The parties must list the property for sale by public auction;
(b)The reserve price for the purpose of such auction shall be such as the parties agree upon within fourteen (14) days after the date upon which the property is first listed for sale or in the absence of agreement a price determined by the valuer appointed under Order (2);
(c)In the event that the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the property at a price which is not more than 20 per centum (20%) below the reserve price;
(d)If the property remains unsold the Applicant and the Respondent must do all things and sign all documents necessary to relist the property for sale by public auction again on a date nominated by the agent and at such auction there will be no reserve price unless otherwise agreed by the parties.
On settlement of the sale of the property at Property B [B] the proceeds of sale are to be paid in the following manner and priority:-
(a)All costs and expenses of sale including legal costs and disbursements, agent’s commission, valuer’s fees and auction expenses;
(b)The amount or amounts required to discharge any mortgage;
(c)The amounts required to discharge all outstanding municipal and water rates;
(d)The balance to be divided as to fifty-seven and a half per centum (57.5%) to the Applicant and forty two and a half per centum (42.5%) to the Respondent.
The Applicant is to retain any superannuation interest in her own name.
Each party is to retain any bank account standing in his or her own name.
The parties are to retain to the exclusion of each other all household possessions and items of jewellery in their respective possession.
The Respondent is to retain to the exclusion of the Applicant:
(a)The Toyota Corolla motor car in his possession; and
(b)The Suzuki motor cycle in his possession.
The Applicant is to be solely entitled to the net proceeds of the statutory controlled moneys account entitled “Kinghan & Associates in Trust for Mr McGrath and Ms Rio” after payment of the amount of $11,490.00 being the costs of the Independent Children’s Lawyer ordered this day.
The Applicant is to indemnify the Respondent and keep him indemnified against any claims in respect of debts owing to the following:
(a)Ms H;
(b)Mr L;
(c)Ms L;
(d)Ms M; and
(e)Ms O.
The Respondent is to indemnify the Applicant and keep her indemnified against any claims in respect of debts owing to the following:
(a)Mr A; and
(b)Mr K.
In the event that either party refuses or neglects to execute any deed or instrument having been directed to do so by these Orders then the Registrar of this Court shall have the power as prescribed by s.106A of the Family Law Act 1975 to execute the deed or instrument in the name of the person to whom the direction was given and to do all acts and things necessary to give validity and operation of the deed or instrument.
Written submissions in support of any application for costs are to be filed and served within 21 days of the date of these Orders and written submissions in opposition to any such application are to be filed and served within a further period of 14 days.
IT IS NOTED that publication of this judgment under the pseudonym Rio & McGrath is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 504 of 2010
| MS RIO |
Applicant
And
| MR MCGRATH |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application by the Wife for orders for settlement of property.
Orders Sought
The Wife seeks the following orders, as set out in her Case Outline Document:
The former matrimonial home be sold and proceeds used to pay
· Costs of sale
· Mortgages
· $261,230.00 to Wife’s creditors
· The balance divided as to 70% to the Wife and 30% to the Husband.
Each party retains any other assets in their possession.
However, at the conclusion of the hearing, in her final submission, the Wife’s Counsel, Ms Nash, submitted that it would be just and equitable for the Wife to retain the former matrimonial home.
The Husband, in a Minute of Proposed Orders prepared by his counsel, seeks this order:
From the sale of the former matrimonial home, first that the brother of the respondent be paid in full and that thereafter the respondent to receive 70% of the balance.
Background
These proceedings were conducted simultaneously with parenting proceedings relating to the parties’ two daughters, [X], aged 11 years and 6 months, and [Y], aged 9 years and 10 months. The children live with their mother.
Counsel for the Applicant Wife, Ms Nash, prepared a short history and an extensive chronology in the Applicant’s Case Outline Document, and that document has been used as a guide for the preparation of these background paragraphs.
The Husband was born [in] 1965.
The Wife was born [in] 1968.
The parties were married in China [in] 1992. The Respondent returned to Australia. He is an Australian citizen of Iranian birth.
The Applicant remained living in China, where she opened a [business omitted]. Between then and the end of 1993, the Applicant claims that she transferred an amount of between $45,000.00 and $50,000.00 to the Respondent.
The Wife arrived in Australia in January 1994. She commenced working in a [workplace omitted], where she was paid wages and received bonuses. She also traded in [omitted].
The Respondent worked as a [occupation omitted].
In July 1994 the Applicant sold the [business] in China for $40,000.00.
The parties purchased a property at [R]. Part of the purchase was financed by a mortgage.
In 2001 the parties purchased a unit in [O].
The Applicant became pregnant with the parties’ first child. She stopped work in [omitted] 2001. The parties’ daughter, [X], was born [in] 2001.
In February 2002 the Respondent was assaulted at work. He received workers compensation.
In April 2002 the Applicant returned to work, initially working part time. The parties’ baby daughter [X] was cared for in China by her maternal grandmother.
In [omitted] 2003, as a result of becoming pregnant with the parties’ second child, the Applicant stopped work. The parties’ second daughter, [Y], was born [in] 2003.
The Applicant’s mother travelled out from China to assist her with the care of the baby. She remained living in Australia for a year.
That same year the parties sold the property at [O] and purchased a home at Property B, [B]. The purchase was financed by the proceeds of sale of the [O] property and a mortgage to Westpac Bank.
In January 2004 the Applicant returned to work part time.
In January 2004 the Applicant attempted suicide and was briefly hospitalised.
On 9th March 2005 the Applicant’s mother came to Australia to assist with the care of the children. She stayed for a year.
In September 2005 the parties sold the property at [R]. The proceeds of sale were used to pay debts and the mortgage on the parties’ home at [B].
At the end of 2005 the parties separated but remained living under the one roof.
In 2007 the Applicant set up her own [business], called [A].
On 14th April 2008 the Applicant’s mother arrived in Australia to assist the Mother with the care of the children. She stayed for six months.
On 20th May 2009 the Applicant and the children moved out of the former matrimonial home. The Respondent remained living in the home.
On 21st May 2009 the Applicant withdrew the sum of $144,000.00 from the Westpac mortgage account and deposited the money into the Respondent’s bank account.
On 5th June 2006 the Applicant’s mother arrived in Australia from China to assist the Applicant with the care of the children. She stayed for a year.
On 29th January 2010 the Applicant filed an Initiating Application, seeking property and parenting orders. The Application was returnable on 22nd March 2010.
The parties were directed to attend a Conciliation Conference before a Registrar of the Court on 13th April 2010. No settlement was achieved was reached, but on 21st April 2010 the parties entered into Consent Orders to sell the former matrimonial home.
The Consent Orders stated:
1. That the parties do all things to give effect to the following orders:
2. That the parties appoint a realtor to market the former matrimonial home at Property B, [B] (“the Home”) for sale and appoint a solicitor or conveyancer to act on such sale.
3. In the event that the parties cannot agree on the appointment of a realtor or solicitor or conveyancer within two weeks of the making of these orders then the realtor or solicitor or conveyancer shall be nominated by in the case of the realtor the President of the Real Estate Institute of NSW and in the case of the solicitor or conveyancer the President of the Law Society of NSW.
4. The parties sell the home by private treaty at a price to be agreed upon or failing agreement at the best available price that is or exceeds $950,000.00.
5. In the event that the home is not sold within three (3) calendar months of the date the home is listed for sale, then at that time the parties shall list the home by the same or such other agent as the parties may agree upon for public auction with a reserve price of whichever is the higher of –
the highest price communicated from a prospective purchaser and-
the price recommended as a reserve price by the agent
or
such reserve price as the parties may agree upon.
Such auction to take place more than four weeks but less than 6 weeks from listing for auction.
6. If at auction the reserve price is not reached the parties may negotiate with bidders to sell the home at a price agreed upon by the parties.
7. Except as agreed in writing:
7.1The husband shall facilitate the agent providing open for inspection periods of up to 1.5 hours up to twice per week until sold.
7.2The completion date on any contract for sale shall be 42 days after the date of the contract of sale of land.
8. On completion of the sale, the proceeds of sale shall be paid to the following parties in the following order:
8.1 Firstly to the solicitor or conveyancer for fees.
8.2Secondly to the realtor for its commission and expenses including marketing and auction expenses.
8.3Westpac Banking Corporation for all moneys payable and due with respect to the parties home loan and mortgage secured on the title of the home.
8.4.Until further order or by agreement in writing under the hands of both parties witnessed by solicitors the remaining balance shall be placed in a statutory controlled moneys account of interest bearing nature with a bank holding an Australian banking licence with title “Kinghan & Associates In Trust for Mr McGrath and Ms Rio”.
The Respondent vacated the former matrimonial home on 7th June 2010.
The parties had difficulty selling the former matrimonial home. In March 2012 a purchaser forfeited a deposit of $20,000.00 for the purchase. That amount was placed in the controlled moneys account.
On 8th May 2012 the former tenants of the granny flat at the rear of the former matrimonial home became tenants of the property.
Evidence
For the property application, the Applicant relied on the following affidavits:
a)her affidavit of 29th January 2010;
b)her affidavit of 22nd June 2012;
c)her Financial Statement filed on 25th June 2012;
d)the affidavit of Ms H affirmed on 17th February 2012;
e)the affidavit of Mr L affirmed 17th February 2012;
f)the affidavit of Ms L affirmed 17th February 2012;
g)the affidavit of Ms M affirmed 17th February 2012; and
h)the affidavit of Ms O sworn 22nd June 2012.
As it turned out, only the Applicant was required for cross-examination. The Court was told on the second day of the hearing that the other five deponents, four of whom resided in Shanghai, were not required for cross-examination. The Respondent was cross-examined about the affidavit of Ms O.
It was the Applicant’s evidence that the parties met in Japan in 1988, where they were engaged in [omitted] study. They commenced living together about six months after they met.
The Respondent returned to Australia in 1991, as his visa had expired. The Applicant returned to China in early 1992.
The parties were married in China on [omitted] 1992. The Applicant remained living in China after the marriage because she had to wait for her visa to be approved. The Respondent returned to Australia. Her mother gave her the capital to enable her to open a [business].
The Applicant deposed that she received a telephone call from the Respondent saying that his father had died. He said that he had to go to Iran and needed money for fares and funeral expenses. The Applicant deposed that she arranged to send to the Respondent by telegraphic transfer the equivalent of $45,000.00 to $50,000.00. She annexes two telegraphic transfer application forms for part of the amount. The amount transferred on the first of the two forms is $US 10,229.45 and the second, although the form is so faded as to be barely legible, appears to be for the amount of $US 4,462.32. The Applicant states at paragraph 5 of her affidavit of 29th January 2010:
I have searched everywhere for the missing telegraphic transfers however I cannot locate them.[1]
[1] Affidavit of Ms Rio 29.1.2010 at paragraph [5]
The Applicant deposed that she arrived in Australia in September 1993. She commenced living with the Respondent in a bedsit where he was living. She had brought an amount of $AUD 10,000.00 with her.
The Applicant returned to China and sold her [business] for the equivalent of $AUD 40,000.00. Although the money to start the business had come from her mother, the Applicant deposed that her mother gave the money to her and she contributed those funds to the expenses of the marriage.
The Applicant commenced work in a [business omitted]. She also purchased [omitted] at a discount, some of which she sold.
The Applicant deposed that she worked at the [workplace omitted], with breaks in her employment due to her pregnancy and the birth of the parties’ two children, until the end of 2005.
The Respondent sustained an assault whilst working as a [omitted] and, according to the Applicant, commenced receiving workers compensation of approximately $30,902.00 per annum.
The Applicant also deposed that whenever her mother came to stay with her she would bring the allowable amount of $10,000.00, which she would use for her expenses whilst staying in Australia. When she left Australia she would leave the unspent amount of money with the Applicant.
The parties purchased a home unit at [R] in 1997 for $251,000.00. They paid a deposit of $25,100.00, which they contributed in equal shares. The balance of the purchase money came from a mortgage to the Westpac Bank. They sold that property in September 2005 for approximately $350,000.00.
The Applicant deposed:
We received $168,092.37 net from the sale after repayment of the Bank’s mortgage…From that we repaid two loans owed to firstly, Ms W in the amount of $39,630.00 and secondly, to Mr F in the sum of $30,000.00.[2]
[2] Affidavit of Ms Rio 29.1.2010 at [14]
The parties purchased a unit in [O] for $410,000.00. They paid the deposit in equal shares and obtained mortgage finance from the Westpac bank for the balance of the purchase price. They sold this property in June 2003.
The parties purchased the former matrimonial home at Property B for $775,000.00. They paid a deposit out of the funds they had received from the proceeds of sale of the [O] property and obtained mortgage finance from Westpac Bank for the balance of the purchase price. The Applicant deposed that the Respondent told her to put the property into her name only.[3]
[3] Ibid at [15]
The Applicant set up a business called [A] in February 2007. She paid approximately $30,000.00 to set up the business.
The Applicant left the former matrimonial home with the children on 20 May 2009. The Respondent remained living in the home.
The Applicant claims that she withdrew an amount of $144,000.00 from the mortgage at the Respondent’s request the day after she moved out of the former matrimonial home. She deposed:
Before I left the matrimonial home with the children the Respondent said to me words to the effect “I want you to withdraw the sum of $144,000.00 from the mortgage and give that to me as I want to buy a 1 bedroom unit in Iran to live in and I will pay you back when I sell my land”…I was very scared as to what the Respondent would do to me if I did not withdraw the amount he wanted and on the 21 May 2009 I withdrew the amount of $144,000.00 from the investment loan account and deposited it into his account.[4]
[4] Affidavit of Ms Rio 29.1.2010 at [18]
The Applicant states that the Respondent did not repay the money. The Applicant annexed to her affidavit a copy of a print-out showing a withdrawal of $144,000.00 from account [1] and a deposit of that same amount into account [2].[5]
[5] Ibid Annexure “F”
The Respondent moved out of the former matrimonial home on 17th June 2010. The tenants in the granny flat remained and the Applicant received rent from them. They had previously been paying rent to the Respondent.
The parties were unable to sell the former matrimonial home by private treaty. The property was put up for auction in accordance with the Consent Orders of 21st April 2010. The auction took place on 27th November 2010 and the property was passed in as there were no bidders.
However, a purchaser was found and a contract was entered into to sell the property for $940,000.00. The sale of the property fell through in March 2012 and the purchaser forfeited his deposit of $20,000.00, which was placed into a controlled moneys account in accordance with the Consent Orders made on 21st April 2010.
The Applicant deposed that in April 2012 the tenants of the granny flat moved into the house, as the ceiling in the flat had started to crack and was in danger of collapsing. The tenants are paying $400.00 per week rental. The granny flat has not been repaired and is untenanted.[6]
[6] Ibid at [48]-[49]
The Applicant denies claims made by the Respondent in his affidavit of 18th March 2010 that the parties owe an amount of $106,000.00 to his brother Mr M as part of a total loan of $260,000.00.
The Applicant gave oral evidence. She was cross-examined by the Respondent’s counsel, Mr Wetmore, about her gambling and said that she had quit gambling once and for all as of June 2008. She denied any knowledge of any loan from the Respondent’s brother.
The Applicant relied on an affidavit by Ms O sworn on 22nd June 2012. In her affidavit Ms O claimed that to date she had lent the Applicant a total of $41,230.00.[7] This amount was made up of two payments each of $20,000.00 and one of $1,230.00. The latter was paid on Ms O’s credit card to meet advertising expenses. The transfers to the Applicant from Ms O were made on 10th November 2008, 31st January 2011 and copies of the transaction details are annexed to her affidavit, as is the receipt from [omitted], the auctioneer.
[7] Affidavit of Ms O 22.6.2012 at paragraph [2]
Ms H deposed in her affidavit that she is a friend of the Applicant’s mother, Ms D, and at her request had lent the Applicant and amount of $15,000.00 on 21st October 2011. A copy of the telegraphic transfer document showing the transfer of that amount is annexed to her affidavit.
Mr L deposed in his affidavit that he is a friend of the Applicant’s mother. At her request, he lent the Applicant the amount of $10,000.00, which the Applicant told him on the telephone she needed to start up her business.
On 3rd June 2008 he sent the Applicant the amount of $10,000.00 by telegraphic transfer. A copy of the credit advice confirmation dated 3rd June 2008 is annexed to his affidavit.
Ms L deposed in her affidavit that she is a close friend of the Applicant and her family. In August 2011, she was studying in Australia when she received a telephone call from her father asking her to transfer the sum of $20,000.00 to the Applicant’s account. She telephoned the Applicant who said that she needed that amount to keep her business going.
Ms L transferred an amount of $20,000.00 to the Applicant on 6th September 2011. A copy of the bank transfer document is annexed to her affidavit. The description of the transaction on the bank transfer document is “personal loan”.
Ms M deposed that she is the Applicant’s aunt. At the request of her sister, the Applicant’s mother, who telephoned her in June 2008, she transferred a sum of $10,000.00 to the applicant on 1st July 2008. A copy of a letter from Westpac Banking Corporation dated 7th February 2012 confirming that a payment of $9,985.00 was received into the Applicant’s account on 1st July 2008 is annexed to her affidavit and marked with the letter “A”. The letter states:
The remitter of the payment is Ms M.
Ms M further deposed that in about April 2010 the Applicant telephoned her and asked for a further amount of $25,000.00 or $30,000.00. On 14th May 2010 she transferred the sum of $30,000.00 to the Applicant. A copy of the bank transfer document recording that transaction forms Annexure “B” to her affidavit.
Again, the Applicant’s aunt deposed that in about October 2010 she again received a telephone call from the Applicant seeking financial assistance to pay the mortgage on the former matrimonial home. On 2nd November 2010 she transferred the sum of $20,000.00 to the Applicant. A credit advice confirmation from Westpac Bank confirming that transaction forms Annexure “C” to her affidavit.
The Respondent relied on his affidavits of 18th March 2010, 23rd February 2011, 19th March 2012 and 15th June 2012. He also relied on his Financial Statement filed on 18th March 2010.
The Respondent claimed that he borrowed sums of money from his brother up till May 2009 in order that he and the Applicant could meet their financial obligations. He deposed at paragraph 31 of his affidavit of 18th March 2010:
These moneys I borrowed from my brother were not attracting interest, and the funds that we received from him, borrowed, that we did not spend on mortgage, a day-to-day expenses and renovations Property B[8] decreased our loan by at least $54,000 between 2005 and our separation in May of 2009 (“available funds” as at 13 June, 2006 one loan facility with Westpac, were $90,663.15, whereas they were more than $144,000, in May 2009).[9]
[8] sic
[9] Affidavit of Mr McGrath 18.3.2010 at paragraph [31]
This paragraph is rather confusingly drafted, even though it was apparently prepared by the Respondent’s then solicitor, although I take it to mean that the Respondent asserts that he received an amount of at least $54,000.00 by way of a loan from his brother between 2005 and 2009.
Two statutory declarations annexed to the Respondent’s affidavit were the subject of successful objections and will not be considered. A number of withdrawal slips from an account at Westpac Banking Corporation of one Mr F are annexed to the Respondent’s affidavit.
In his affidavit of 13th June 2012 the Respondent expanded on his claim that his brother in Iran provided money by way of loan to the Applicant and himself. He deposed at paragraph [20]:
He has been able to do this through Dr M and Mr F who both reside in Sydney but also have extensive family in Iran.[10]
[10] Affidavit of Mr McGrath 13.6.2012 at [20]
The Respondent deposed that he received a total amount of money from Dr M on behalf of his brother exceeding $100,000 and annexes copies of deposit slips.[11]
[11] Ibid at [22]
The Respondent also deposed that he and the Applicant also received moneys from Mr F on behalf of his brother in various amounts totalling $35,000.00.[12]
[12] Ibid at [24]
A further amount of $36,595.00 was paid to [omitted], solicitors, on 29th May 2003, from Mr F. The Respondent states that this sum was the initial deposit for the purchase of the property at [B].[13]
[13] Ibid at [25]
The Respondent goes on to depose at paragraph 36:
ANNEXURE G totalling over $70,000 are also not the full amounts that Mr F has paid. He gave me cash from time to time, and I deposited into the Applicant’s mortgage accounts or passed it to the Applicant to deposit as she requested. The total amount I received from Mr F exceeded some $150,000.00 excluded the above mentioned $36,595. As I mentioned in paragraph 15, most of the deposit slips have been kept by the Applicant. I could only provide those deposit slips which are listed above.[14]
[14] Ibid at [26
The Respondent claims that his brother in Iran has loaned to the Applicant and himself through Dr M and Mr F a total of $250,000.00. He deposed at paragraph 61 of his affidavit:
I want to pay the left over money back to my brother ($106,000) from proceeds of selling the house [at] Property B, [B] and I believe I am entitled to 70% of any remaining proceeds from the sale of the matrimonial house and any other matrimonial assets.[15]
[15] Affidavit of Mr McGrath 13.6.20912 at [61]
The Respondent denied in cross-examination that the debts he claimed to owe to his brother were because he had been gambling the money. He was asked about money that Ms O lent to the Applicant and said that he did not think that the money was for the Applicant to buy her [business] that she now runs.
The Respondent agreed that the sum of $20,000.00, being the forfeited deposit, remained in the controlled moneys account.
The Respondent said that he was paying child support in the sum of $54.00 per week, which was the most he could afford.
As to the moneys provided by Mr F and Dr M, the Respondent said that both of them lived in Sydney. He conceded that neither one of them had deposed to an affidavit.
Submissions
Mr Wetmore submitted for the Respondent that the Applicant’s credit was lacking and that she had previously misled the Court. By comparison, the Respondent may have been rigid but was prepared to make concessions on matters that were not in his interest. He came across as a thoughtful person, of intelligence.
It was submitted that, in respect of the loans claimed by the Respondent to have come from his brother through intermediaries in Sydney, the Court should take judicial notice of the Iranian situation.
Mr Wetmore also submitted that the wife’s mother, who she said had lived in Australia for up to a year at a time, would have been the best person to call about matters in dispute between the parties, but she was not called, and there was no explanation for the failure of the wife’s mother to give evidence. Therefore, the Court could apply the presumption in Jones v Dunkel[16] and infer that the Applicant’s mother’s evidence would not have advanced her case.
[16] (1959) 101 CLR 298
It was further submitted that both parties had been gamblers. The Respondent said he did not have any gambling debts. He did not borrow to gamble. He had very good luck gambling; he broke even or did a little bit better then that. The Applicant gambled on poker machines. She said in evidence that she had lost $9,000.00 gambling but the submission was that she had “lost a bundle”.
Mr Wetmore told the Court that the deponents to the affidavits from the various residents of China and Ms O were not required for cross-examination because of the evidence of telegraphic transfers annexed to their affidavits.
Counsel for the Applicant, Ms Nash, submitted that the loans to her from friends and family members were matrimonial loans. The Respondent had no capacity to support the family from 2002 onwards. Since 2010 the Applicant was solely responsible for meeting the outgoings on the property at [B].
It was also submitted that it would be just and equitable for the Applicant to retain the former matrimonial home. It was still unsold at the date of the hearing and it is obviously hard to sell.
The contributions favour the Applicant as do the s.75(2) factors.
The Proper Approach to determination of a Property Application
The way a court approaches property matters has been set out by the Full Court of the Family Court of Australia in its decision of Hickey & Hickey[17]. Nicholson CJ, Ellis & O’Ryan JJ held at [39] that the approach involves four inter-related steps:
Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss. 79(4)(a),(b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss. 79(4)(d),(e),(f) and (g), (the “other factors”) including, because of s. 79(4)(e), the matters referred to in s. 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case (citations omitted).
[17] [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143
The Court should also have regard to the recent decision of the High Court of Australia in Stanford v Stanford[18], where the majority (French CJ, Hayne, Kiefel and Bell JJ) held at [35]-[40]:
35It will be recalled that s 79(2) provides that “[t]he 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) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two subsections are not to be conflated. In every case in which a property settlement order s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
36.The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.
37First, 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. So much follows from the text of s 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property” (emphasis added). The question posed by s 79(2) is this, whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
38Second, 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…
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…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 rights 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.
40Third, 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 set out 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.[19]
[18] [2012] HCA 52
[19] [2012] HCA 52 at [35]-[40]
Clearly, the decision in Stanford means that the Court must consider the requirements of s.79(2) before embarking on the four-step process set out in Hickey, or at least before taking the second step, identifying and assessing the contributions of the parties. In other words, satisfaction that it is “just and equitable” to make an order is a condition precedent to considering the matters referred to in s.79(4). The Court must be satisfied that it is just and equitable to make an order at all.
It would follow that the Court must consider whether it is just and equitable to make a particular order when the Court is considering “what order (if any)” should be made under s.79. Thus, the requirements of s.79(2) must be borne in mind, in my view, after the Court has undertaken the third step of the process, as the Full Court of the Family Court has held in Hickey.
Just and Equitable
Applying the decision of the High Court in Stanford, the first matter to be considered is whether it is just and equitable to make an order under s.79. In my view, it is just and equitable to do so, as the parties have separated permanently, even though they have not divorced. Their communication is non-existent and there seems to be no likelihood that they will reconcile.
Accordingly, there is a need to make such orders as will finally determine the financial relationship between the parties and avoid further proceedings between them (see Family Law Act, s.81).
However, before making any final orders, the Court must again consider whether those orders will be just and equitable in all the circumstances. Counsel for the Applicant has now submitted that the Court should make an order allowing the Applicant to retain the former matrimonial home.
The Parties’ Property and Liabilities
Counsel for the Applicant submitted a balance sheet. The parties agreed on the values of only four items:
a)The former matrimonial home, at an agreed value of $940,000.00;
b)The [A], at an agreed value of $65,000.00;
c)The monies in the controlled account, standing at $20,057.35; and
d)The Applicant’s household contents, valued at $2,500.00.
The other assets remained in contention or else not addressed. The parties remained at issue about some of the liabilities.
The Applicant’s Jewellery
The Applicant estimated the value of jewellery at $6,000.00, whilst the Respondent placed a far higher value on the jewellery, namely $125,000.00. In the absence of any valuation evidence, the only value that can be placed on the jewellery is $6,000.00, which is perhaps an admission against interest by the Applicant.
The Applicant’s Bank Accounts.
The Applicant claims that at the date of the hearing she had money in the bank in the sum of $1,692.12. In the absence of any other evidence, that amount will be accepted.
Household Contents
The Respondent claims to have household contents to the value of $2,000.00. The Applicant offers no value. In the absence of any other evidence, the Respondent’s estimate of $2,000.00 will be accepted.
Bank Accounts
The Applicant claims that the Respondent has an amount of $2,000.00 in his bank account, the Respondent claims to only have $1,200.00. The difference is only minor. The Respondent is more likely to know how much he has in the bank than the Applicant and he is hardly likely to lie about something as trivial as a discrepancy of $800.00. The Respondent’s estimate of $1,2000.00 will be accepted.
Motor Car and Motor Cycle
The Respondent has a Toyota Corolla motor car, the valuer of which he estimates to be $500.00. He has a Suzuki motor cycle which he values at $300.00. The Applicant offers no opinion.
It would appear that both vehicles are of relatively little value. The Respondent’s estimates of their values will be accepted.
The Applicant claims that the amount of $144,000.00 withdrawn by her on the day after the parties separated and paid to the Respondent’s bank account should be added back as an asset on the Respondent’s side of the ledger.
The evidence is clear that this transaction took place. The Respondent claims that this amount was repaid to his brother Mr M as a partial repayment of a loan totalling $250,000.00. He claims that an amount is still owing to his brother.[20]
[20] Affidavit of Mr McGrath 13.6.2012 at [32]
I am not persuaded that the Respondent has proved that the parties received the amounts claimed as a loan. Even if he were not able to obtain an affidavit from his brother in Iran, it would surely have been possible to obtain affidavits from Dr M and Mr F, both of whom live in Sydney.
At best, the payments received, only some of which have been proved, will be regarded as contributions from the Respondent’s family (see Gosper & Gosper[21]).
[21] (1987) 11 Fam LR 601; FLC 91-818).
In my view, the amount of $144,000.00 should be added back as an asset against the Respondent.
Liabilities
The Respondent claims two personal loans of $10,000.00 and $7,000.00 from Mr A and Mr K in his Financial Statement. The Applicant does not challenge these amounts owed by the Respondent.
The Applicant claims to have received loans from a number of friends and relatives which were either personal loans or loans to help her maintain her business. The amounts she claims are:
a)Ms H, to pay mortgage and household bills $15,000.00
b)Mr L, personal loan $10,000.00
c)Ms L, personal loan $20,000.00
d)Ms M:
i)Personal loan $10,000.00
ii)Business loan $30,000.00
iii)Personal loan $20,000.00
e)Ms O:
i)Business loan $20,000.00
ii)Personal loan $20,000.00
Personal loan $1,230.00
TOTAL$146,230.00
Whilst the Applicant refers to loans totalling $261,230.00 in her Financial Statement and in the balance sheet, the above figures, taken from the affidavit evidence, lead to a considerably lower total of $146,230. The discrepancy is significant, $115,000.00, but it is only the lower total that has been proved by evidence.
Non-Superannuation Asset Pool
I find the value of the non-superannuation asset pool to be:
a)Property B [B] $940,000.00
b)[A] $65,000.00
c)Monies in controlled account $20,057.35
d)Applicant’s jewellery $6,000.00
e)Applicant’s bank account $1,692.12
f)Applicant’s household contents $2,500.00
g)Respondent’s bank account $1,200.00
h)Respondent’s Corolla motor car $500.00
i)Respondent’s Suzuki motor cycle $300.00
j)Respondent’s household contents $2,000.00
k)Funds paid to Respondent (added back) $144,000.00
Total non-superannuation assets $1,183,249.47
Liabilities
The Applicant claims in the balance sheet that she owes a total of $50,000.00 in legal fees. No evidence has been provided in support of this claim and I am not prepared to allow it as a liability.
I find the parties’ liabilities to be the following:
a)Amount owing to Westpac Bank a/c [1] $299,726.00
b)Amount owing to Westpac Bank a/c [3] $345,590.00
c)Amount owing to Ms H $15,000.00
d)Amount owing to Mr L $10,000.00
e)Amount owing to Ms L $20,000.00
f)Amounts owing to Ms M $60,000.00
g)Amounts owing to Ms O $41,230.00
h)Amount owing to Mr A $10,000.00
Amount owing to Mr K $7,000.00
Total Liabilities $808,546.00
Superannuation
The Applicant has superannuation to a value of $40,787.65
The Respondent has no superannuation.
I find the value of the parties’ superannuation to be $40,787.65.
The gross value of the parties’ non-superannuation asset pool is $1,183,249.47.
The liabilities amount to $808,546.00.
By deducting the total liabilities from the total of the non-superannuation asset pool, the net value of the non-superannuation asset pool stands at $374,703.47.
The total value of the parties’ superannuation stands at $40,787.65.
The net total, combining the net non-superannuation asset pool with the superannuation, amounts to $415,491.12.
The Parties’ Contributions
Each party submits that a proper division of the net assets would be for him or her to receive 70% of the net proceeds, or, in the Applicant’s case, that she should be declared the sole registered proprietor of the former matrimonial home. I am not satisfied that the parties’ contributions, on the evidence before the Court, support any of those proposals.
The initial contributions favour the Applicant Wife. She provided an amount of between $45,000.00 and $50,000.00 to the Husband at the beginning of the marriage and brought an amount of AUD 10,000.00 with her when she arrived in Australia early in 1994. She worked during the marriage, first as an employee and then in her own business, except when she took time off to have the parties’ two daughters. She received some financial assistance from her mother and later, from friends and relatives in China and Australia.
The Respondent Husband did not make any capital contributions at the commencement of the parties’ marriage and worked as a [omitted] until he was off work as a result of being assaulted. He was living in a bed-sit when the Applicant arrived in Australia in 1994.
The Respondent appears to have relied heavily on his brother to provide money to support him and the family whilst the parties were together. The amount of this contribution is said to be a total of $250,000.00 but has not been proven. Clearly, the Respondent appears to have received substantial amounts of funds, apparently from his brother in Iran, through the good offices of Dr M and Mr F, both of whom live in Sydney.
It is a major deficit in the Respondent’s case that, even if he were not able to obtain admissible evidence from his brother, Mr M, who apparently resides in Iran, he did not provide detailed evidence in admissible form from Dr M and Mr F, whose evidence would appear to have been vital to establishing his claim to have borrowed sums of money totalling $250,000.00 to support the family. Had these two persons provided admissible evidence, they would no doubt have been required for cross-examination.
The Court is left to wonder where all this money, a quarter of a million dollars, it is claimed, actually went. Each party accuses the other of having gambled money during the marriage, and each admits to some involvement in gambling. However, the Applicant Wife claims that she was not a heavy gambler on poker machines and stopped gambling in 2008. The Respondent Husband claims that he either “broke even” or came out a little ahead.
The evidence does not permit a finding that either party gambled away significant amounts of money.
The evidence shows that the Applicant was the primary carer for the children, with the assistance of her mother, who cared for the older daughter, [X], in China for up to a year when she was a baby. The maternal grandmother also assisted the mother with the care of the children in Australia for months at a time.
The Respondent Husband suffered a loss of income from 2002 onwards, after he was assaulted whilst [occupation omitted]. His Financial Statement[22], prepared by his then solicitor and filed on 18th March 2010, showed an income of $600.00 per week from [omitted], his workers compensation insurer, and $250.00 per week as rent from [names omitted].
[22] Which, curiously enough, says it was filed on behalf of one “Mr H”
After the Respondent moved out of the former matrimonial home on 17th June 2010, he no longer received the rent but he ceased paying the mortgage payments, as well. The Applicant took on the responsibility of making those payments, although she received a stay from the bank for a period of time.
In my view the contributions favour the Applicant Wife. I assess the parties’ contributions at 55% to the Applicant Wife and 45% to the Respondent Husband.
Other Factors taken into account under Subsection 79(4)(d) to (g)
Paragraph (d) of subsection 79(4) requires the Court to take into account the effect of any proposed order on the earning capacity of either party. There would appear to be no effect on the earning capacity of either party.
Paragraph (e) of subsection 79(4) requires the Court to take into account the matters referred to in subsection 75(2) so far as they are relevant.
The Applicant was born [in] 1968. She is, therefore, 45 years of age. Although she gave evidence of previously having attempted suicide and consulting a psychiatrist on a regular basis until 2006, she appears now to be in good health.
The Respondent was born [in] 1965. He is 47 years of age. He has been off work on workers compensation as a result of an assault whilst at work. He has apparently suffered from depression but there is no medical evidence available.
The Applicant, according to her Case Outline, will continue to run her own business, [A]. She has a modest superannuation entitlement.
The Respondent is in receipt of workers compensation payments and has no superannuation.
The parties’ two children reside with the Applicant. The older girl, [X], is eleven years old. The younger girl, [Y], will attain the age of ten years on [date omitted]. The children will, on present indications, remain living with the Applicant for at least the next seven or eight years.
The Respondent pays some child support, although his Financial Statement said that he was not paying any. He appears to be paying approximately $54.00 per week.
Neither party has re-partnered.
The Applicant is not eligible for any pension, allowance or benefit. The Respondent is in recept of workers compensation payments in the sum of $600.00 per week.
In my view, there should be an adjustment of 10% in favour of the Applicant wife as she has the responsibility for the care of the two children, with minimal financial support from the Respondent.
Thus, I assess the parties’ entitlements at 65% to the Applicant and 35% to the Respondent. However, the Court must still consider whether orders to be made are just and equitable under s. 79(2).
Just and Equitable
Subsection 79(2) of the Act provides that the Court shall not make an order under s.79 unless it is satisfied that, in all the circumstances, it would be just and equitable to make the order.
Counsel for the Applicant submitted that it would be just and equitable for the Applicant to retain the former matrimonial home for herself and the children.
The net total value of the asset pool stands at $415,491.12. However, in the accompanying parenting decision[23], an order has been made that the sum of $11,490.00 is to be paid to Legal Aid NSW on account of the costs of the Independent Children’s Lawyer. This amount is to be paid from the moneys held on behalf of the parties in the controlled moneys account. This will leave an adjusted net asset pool of $404,001.12.
[23] Rio & McGrath [2013] FCCA 41
The Applicant’s share, at 65%, would amount to $262,600.73. The Respondent’s share, at 35%, would therefore amount to $141,400.39.
After retaining his bank account ($1,200.00), his motor car ($500.00), his Suzuki motor cycle ($300.00), his household contents ($2,000.00) and taking into account the sum of $144,000.00 which has been added back as a premature distribution to him, the Respondent’s entitlement would be a gross figure of $148,000.00, from which would be deducted the following:
a)Amount owing to Mr A $10,000.00; and
b)Amount owing to Mr K $7,000.00.
Thus, by deducting the two amounts owing, which come to $17,000.00, the Respondent husband would be left with an entitlement, on paper, at least, of $131,000.00. However, the fact is that the amount of $144,000.00, that was paid to the Respondent on 21st May 2009, the day after the Applicant moved out of the former matrimonial home, has apparently been repaid to the Respondent’s brother.
Such a result would leave the Respondent with assets totalling $4,000.00 and debts amounting to $17,000.00, so that he would end up with a negative balance of $13,000.00.
Mr Wetmore of counsel said in his submissions that his client was “virtually impecunious”, which appears to be an accurate comment.
It is difficult to see that this would be a just and equitable result in all the circumstances.
In my view, there needs to be a further adjustment in favour of the Respondent Husband in an amount of 7.5%, which amounts to a total share of the net asset pool of 42.5%, giving a figure of $171,700.76 This amount is made up as follows:
a)Funds paid to Respondent (added back) $144,000.00;
b)Respondent’s bank account: $1,200.00;
c)Respondent’s Corolla motor car: $500.00
d)Respondent’s Suzuki motor cycle: $300.00
e)Respondent’s household contents: $2,000.00
Sub-Total $148,000.00
ADD CASH ADJUSTMENT $23,700.76
The Respondent will be responsible for the following debts:
a)Mr A $10,000.00
b)Mr K $ 7,000.00
Total debts $17,000.00
The Applicant will therefore be entitled to an adjusted figure of 57.5% of the net asset pool, amounting to $232,300.64. Thus, she will be in a position to retain the former matrimonial home at Property B, [B], but she will be obliged to pay to the Respondent the sum of $23,700.76, for which she will be allowed a period of three months. On the evidence before the Court, the Applicant is the sole registered proprietor of the land, the title details of which, from the Rates enquiry forming part of Annexure “O” to the Applicant’s affidavit, of 22nd June 2012, are Lot [omitted] and the whole of the land in Folio Identifier [omitted].
The Applicant will be required to indemnify the Respondent in respect of the mortgages encumbering the property and the debts owing to:
a)Ms H;
b)Mr L;
c)Ms L;
d)Ms M; and
e)Ms O.
The Applicant will retain her interest in her superannuation account. She will also retain:
a)The balance of the funds in the controlled moneys account;
b)Her interest in her [business], [A];
c)Her jewellery;
d)Her bank account; and
e)Her household contents.
If either party seeks to pursue an application for costs, he or she may do so by way of a written submission, to be filed and served on the other party within 21 days. A further 14 days will be allowed for any written submission in reply.
I certify that the preceding one hundred and sixty-six (166) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Associate:
Date: 17 April 2013
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