Ritchie & Debeney
[2021] FCCA 1173
•31 May 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Ritchie & Debeney [2021] FCCA 1173
File number(s): MLC 2522 of 2018 Judgment of: JUDGE HARLAND Date of judgment: 31 May 2021 Catchwords: FAMILY LAW – property – 6 year de facto relationship – assessment of initial contributions – assessment of s90SF(3) factors – respondent injured post-separation Legislation: Family Law Act 1975 (Cth) Cases cited: Brandow & Brandow [2010] FMCAfam 1026
Crawford & Ruskin [2013] FamCA 493
Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143
Pierce v Pierce (1998) FLC 92-844
Stanford & Stanford (2012) 247 CLR 108
Williams&Williams [2007] FamCA 313
Number of paragraphs: 101 Date of last submission/s: 7 April 2021 Date of hearing: 16 October 2020, 2 November 2020, 12 February 2021 Place: Melbourne Counsel for the Applicant: Mr Fuller Solicitor for the Applicant: Glenister Steinfort & Co Counsel for the Respondent: Mr Duckett Solicitor for the Respondent: RF Legal ORDERS
MLC 2522 of 2018 BETWEEN: MS RITCHIE
Applicant
AND: MR DEBENEY
Respondent
ORDER MADE BY:
JUDGE HARLAND
DATE OF ORDER:
31 MAY 2021
THE COURT ORDERS THAT:
1.Within 60 days (‘the Date’), the Respondent cause to be paid to the Applicant the sum of $276,035 plus $467.50 (being half of the cost of the Armstrong Biggs invoice) (‘the Payment’).
2.In default of the Payment by the Date, the parties shall forthwith take all necessary steps and execute all necessary documents to cause the real property known as B Street, Suburb C, Victoria being all of the land contained in Certificate of Title Volume ... Folio ... (‘the Property’) to be placed on the market for sale and sold by auction (‘the sale’).
3.At settlement of the sale, the proceeds of the said sale be disbursed as follows:
(a)Payment of the agent’s commission and advertising and legal expenses of the sale;
(b)Payment of the money due and owing to the mortgagee;
(c)To reimburse any agreed fees paid for the sale by either party;
(d)Such that the Applicant receives 45%; and
(e)The Respondent receives 55%.
4.For the purposes of the sale:
(a)The reserve price as agreed between the parties and in default of agreement by a further 14 days from the Date as recommended by the selling agent;
(b)The auction shall occur as soon as practicable;
(c)The conveyancer shall be as agreed between the parties and in default of agreement by a further 14 days from the Date, the Applicant shall forthwith propose three (3) independent conveyancers or solicitors to act in the sale of the Property and the Respondent shall choose one (1) from that list within 3 days of receipt of same. In default of the Respondent’s obligation to select one, the Applicant be at liberty to select a nominee from the list;
(d)Notwithstanding the registered ownership, the sale of the Property shall be conducted by the parties jointly and for the purposes of same, the parties are at liberty to produce a copy of these orders to the selling agent and conveyancer.
5.Pending settlement of the sale of the Property:
(a)The Respondent shall have the sole right to occupy the Property;
(a)The Respondent shall pay all loan and mortgage repayments relating to the Property as and when they fall due and indemnifies the Applicant in relation to same;
(b)The parties are restrained by injunction from withdrawing from or drawing down on any loan encumbering the Property or otherwise further encumbering the Property;
(c)The Respondent shall pay all rates, taxes, outgoings and other expenses relating to the Property as and when they fall due and indemnifies the Applicant in relation to same; and
(d)The parties hold their respective interests in the Property upon trust.
6.The parties have liberty to apply in relation to the sale and disbursement of proceeds.
7.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 the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)Each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(c)Insurance policies remain the sole property of the beneficiary named therein;
(d)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
(e)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
8.In the event that either party fails to comply with Order 2 of these Orders, within seven (7) days of a written request to do so, the compliant party shall be at liberty to:
(a)Apply pursuant to Section 106A of the Family Law Act 1975 for a Registrar of the Federal Circuit Court of Australia at Melbourne sign all and any necessary documents on behalf of the non-complying party to facilitate the implementation of Order 2; and
(b)Nominate a solicitor practicing in the Suburb C area who is authorised to sign documents for PEXA transfers and such solicitor shall sign on behalf of the non-compliant party upon the written request from the compliant party’s solicitor to do so upon provision of a sealed copy of these Orders.
9.Each party pay their own costs with respect to the application in a case filed on 11 December 2020 and the response filed on 10 February 2021.
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 under the pseudonym Ritchie & Debeney is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE HARLAND:
The parties were in a six year de facto relationship. They started living together in 2010 and separated on 13 March 2016. They did not have any children. They have been unable to agree on a just and equitable property settlement. The primary issues in dispute between the parties are the weight to be given to the respondent’s initial contributions and the parties’ respective section 90SF factors, particularly with respect to the applicant’s health issues as a result of the injury she suffered post separation.
The respondent also argued that, with respect to the injury the applicant obtained post separation, she should have access to a Total and Permanent Disability (“TPD”) claim, a work cover claim or a common law claim. That was not established on the evidence. The potential for making a claim was raised late in the proceedings. I will address this further.
The trial was conducted via Microsoft teams. The respondent was present with his solicitor. Due to technical difficulties on the computer he was using, it was necessary to adjourn the trial because cross examination of the respondent required several documents to be shown to him and he was only able to access a mobile telephone in the afternoon and would not have been able to read the documents shown to him on screen. Sensibly, the parties agreed that it was preferable to adjourn the trial prior to commencing cross examination of the respondent as it was 3:00pm and not possible to complete the cross examination that afternoon. Attempts had been made to address the problem and it is important that the trial is fair to all parties and the adjournment was outside of everyone’s control. Certainly it is sensible for the respondent’s cross examination to be undertaken in one sitting. This has the benefit of avoiding the respondent being under cross examination for a number of weeks and unable to speak to his lawyer during the adjournment.
The case has been set by difficulties and delays which are only in part due to the COVID-19 pandemic. Originally the trial was due to take place in June 2020, however had to be adjourned to October 2020. It is difficult to see why the respondent, for the first time, the day before the trial was due to begin in October 2020, sought a superannuation split that the Court deems just and equitable. The applicant’s Counsel complained that in the previous applications and responses each party have sought to retain their own superannuation entitlements. No satisfactory explanation was given for this.
In her case outline, the applicant set out objections to parts of the respondent’s affidavit on the basis that much of the affidavit of the respondent contained submissions, argument and commentary, much of which is inadmissible. I accept those submissions. There were other problems with the respondent’s evidence which I will refer to below. It is clear the respondent is trying to create the impression that he was naive and has been taken advantage of by the applicant.
APPLICATION TO REOPEN
On 3 November 2020, the applicant’s Counsel raised an omission to tender material at trial by email to Mr Duckett and outlined the material he sought to tender by consent to the Court. The material included:
(c)An email from the respondent’s solicitor dated 15 October 2020;
(d)YouTube videos from the respondent’s YouTube account;
(e)A Notice to Produce;
(f)The respondent’s affidavit filed on 28 May 2018.
Mr Duckett responded on 9 November 2020 and objected to the YouTube videos being tendered.
On 26 November 2020, solicitor for the applicant forwarded correspondence to the respondent’s solicitors proposing the re-opening of evidence.
On 4 December 2020, Chambers emailed the parties advising of the non-compliance with the Orders dated 2 November 2020.
On 11 December 2020, the applicant filed an Application in a Case seeking to reopen the evidence to admit four documents, including videos and extend deadlines for filing submissions. The Application was originally listed to be heard on 17 December 2020 but adjourned to 12 February 2021.
The delay was in part caused by Auscript failing to provide the transcript the applicant. The transcript was ordered by the applicant’s solicitor on 4 November 2020 but not received until January 2021. Unfortunately this is not an isolated case.
The respondent’s Counsel advised the Court that he had not been provided with a copy of the transcript, and that if the applicant’s Counsel intended to rely on a section of the transcript that he should be provided with a copy of the material. The applicant’s Counsel was of the view that as his client paid for the transcript, the respondent should not be provided with a copy. However, when one party wishes to rely on the transcript it becomes a matter of procedural fairness.
At the hearing of the application the respondent consented to the following items being tendered by consent:
(a)the email from RF Legal of 15 October 2020 (pages 32 to 33 of the Applicant’s Tender book) which is an email from the respondent’s solicitor providing extremely late disclosure of a bundle of the respondent’s ANZ bank statements;
(b)the Applicant’s Notice to Admit filed on 27 October 2020 and bank statements attached to it; and
(c)the Respondent’s Affidavit filed on 28 May 2018.
The remaining dispute was with respect to 8 YouTube videos. The respondent was shown and cross-examined about two of the YouTube videos. The respondent’s Counsel objected to the videos being tendered at trial on the grounds of relevance. I allowed the applicant’s Counsel to cross-examine on the videos at that time. Therefore it is appropriate to allow those two videos to be tendered. I will not allow the tender of the other videos which were not the subject of cross examination.
Application for Costs
The necessity for the application to re-open came about because of Counsel’s mistake in failing to tender documents during the course of the trial.
The orders on 12 February 2021 provide for the parties’ application for costs be addressed in written submissions. The applicant seeks costs of and incidental to the Application in a Case filed on 11 December 2020. The applicant’s submissions make reference to the YouTube videos, namely that they go to the issue of the respondent’s credit, the respondent was shown two of those videos during cross-examination and re-examination. Further reference is made in relation to correspondence forwarded on 26 November 2020 to the respondent’s solicitor and that no response was received until two days prior to the hearing in February 2021. The applicant’s Counsel does not specify what those costs are.
Whilst the respondent’s Counsel indicated that he was also seeking costs, his submissions filed on 1 April 2021 do not address that issue. I am not inclined to exercise the discretion to depart from the usual order that each party pay for their own costs in circumstances where the necessity for the application to reopen due to Counsel failing to tender them during the course of trial. Certainly it would have been preferable that it could have been resolved by consent and an order made in Chambers. The issue of the videos were contentious at trial and also in this application. The applicant was not successful in tendering all of the videos and only the ones that are subject of cross examination.
In all the circumstances, and not knowing the quantum of costs claimed, I will order that each party pay their own costs with respect to the application in in a case filed on 11 December 2020 and the response filed on 10 February 2021.
THE PARTIES LEGAL AND EQUITABLE INTERESTS
The parties agreed that the asset pool is as follows:
Asset
Ownership
Value
B Street, Suburb C
Respondent
$720,000.00
Motor Vehicle 1
Applicant
$4,500.00
Motor Vehicle 2
Respondent
$5,000.00
Tools, home contents, bird loft
Respondent
$20,000.00
TOTAL ASSETS
$749,500
Liabilities
Ownership
Value
Mortgage on B Street, Suburb C Property
Joint
$106,588
TOTAL LIABILITIES
$106,588
NET ASSETS (EXCLUDING SUPERANNUATION)
$642,912
Superannuation
Ownership
Value
Super Fund D
Applicant
$86,094.00
Super Fund D
Respondent
$106,571.00
TOTAL SUPERANNUATION
$192,665.00
TOTAL ASSETS (INCLUDING SUPERANNUATION)
$834,882.94
The parties included minimal bank account balances in the balance sheet. I will not include these minor amounts in the pool. Each party will keep their bank accounts, motor vehicles and any chattels and personal belongings in their possession. The respondent will keep his birds and bird loft.
The parties will also keep their superannuation entitlements. That was the position of both parties until the eve of the trial when the respondent changed his position and sought a splitting order as the “Court deems fit”. In his written submissions he sought a split from his superannuation fund to the applicant of $10,000. The applicant’s Counsel correctly points out that the case was not prepared on this basis and this sum was not raised during the trial. As can be seen from the table above the parties hold similar amounts of superannuation. The respondent has drawn down on his superannuation to rectify the mortgage arrears. I am satisfied that it is just and equitable for each party to retain their superannuation entitlements.
What remains to be determined is the division of the equity in the B Street, Suburb C Property, which is $613,412.
INITIAL CONTRIBUTIONS
One of the major areas of dispute between the parties is the assessment of the parties’ initial contributions. The applicant does not dispute the fact that the respondent owned the B Street, Suburb C property prior to the relationship. The dispute is with respect to the equity in property at the beginning of their relationship and the existence of other assets.
Before she moved in with the respondent, the applicant was living with her cousin paying rent of about $1,000 a month, which was 70 percent of the rent plus utilities.
The applicant had two credit card debts totalling $5,501 and had superannuation entitlements with Super Fund E of $14,281.76 as at June 2010. A few months before the parties started living together, the applicant purchased a motor vehicle which was fully financed. She believes she purchased the vehicle for approximately $27,000. The applicant also had a HECS debt accrued from three years of her degree, which she did not complete. She could not recall the amount of her HECS debt. She has not earned a high enough income for HECS payments to be deducted from her salary.
The applicant acknowledged that the respondent owned a Motor Vehicle 3 and motorbike. She also agrees that the respondent had some superannuation but did not know how much.
At the commencement of the relationship the respondent owned the property at B Street, Suburb C. He also had some superannuation. The respondent gave varying amounts for his superannuation but did not supply any evidence with respect to it. He had ample opportunity to do so. There was considerable controversy about the equity the respondent had in the home at the beginning of the relationship.
The respondent says he purchased the B Street, Suburb C property in 1989 and over the years has made improvements to property. In his trial affidavit, the respondent claims that the mortgage was under $10,000 when the parties started their relationship.
In his trial affidavit, the respondent claims that he was considering refinancing the mortgage. He was working full-time and negotiating a property settlement with his former wife of 16 years. He claims that the applicant suggested that she become co-mortgagor and gave him assurances as to having interest in properties in Suburb F and Country G. These bold assertions in the respondent’s affidavit with respect to the applicant owning the property, is one example of objectionable material in his trial affidavit. When cross-examined about this, the respondent said he believed the applicant and did not enquire further about the properties, nor undertake a property search for a Suburb F title. The applicant’s Counsel suggested to the respondent that it would be important for the Court to know whether she did in fact, have these properties, as it would form part of negotiating an appropriate property settlement. The respondent agreed with that and then said he should have done his homework. He then claimed that he later found out she did not own those properties. He denied, however, making the allegation up. I do not accept the respondent’s evidence on this point. He provides absolutely no detail and his evidence when cross-examined was unconvincing.
The respondent was cross-examined about his December 2019 affidavit prepared in response to the applicant’s first affidavit. In her first affidavit filed on 7 March 2018 at paragraph 17 the applicant sets out the assets and liabilities she believed the parties had at separation. In his affidavit filed 28 May 2018, the respondent replies to the applicant’s affidavit, alleging at paragraph 13(b), that the applicant mentioned having a number of superannuation accounts and that he believes she had more superannuation at the commencement of the relationship than the $14,281.76 she disclosed. The respondent was unable to recall when pressed in cross-examination how he knew she had more superannuation than she disclosed. The applicant was not cross-examined about the respondent’s allegations and the respondent was unable to provide any evidence to support this contention. In contrast the applicant annexed supporting documents to her trial affidavit verifying her figures for her credit card debts and superannuation entitlements at the commencement of the relationship. Exhibit 2 is the conditional loan approval which the parties signed on 22 January 2010. It includes the parties’ liabilities which they wished to consolidate at that time and the interest rates they were being charged for those loans. Those liabilities are as follows:
(a)The respondent’s home loan and mortgage with ANZ for $65,695 and $2,063;
(b)The applicant’s ANZ MasterCard debt of $1,515;
(c)The applicant’s Commonwealth Bank Visa card debt of $3,986; and
(d)The applicant’s car finance for $21,275.
The respondent’s debt totals $67,758. The applicant’s debt totals $26,776.
The respondent also gave unreliable evidence where he claimed that the applicant had $15,000 in credit card debt at the commencement of the relationship. The respondent was unable to explain why that amount would not have been included in the loan consolidation application form, and claims to have seen bank statements of the applicant’s reflecting that amount. The applicant annexed statements showing the balances to her trial affidavit which are consistent with the information the parties provided to the mortgage brokers when refinancing.
The allegation about the applicant having undisclosed superannuation is another example of the respondent making a vague unfounded allegation of non-disclosure against the applicant. He claims when pressed that “I would have got the information from somewhere solid”. Further, when pressed as to whether he had any document verifying his allegation, he said his former solicitor might have one and again insisted that he would not have recorded it in his affidavit “for no reason” and would have had “solid information”. I reject his evidence on this point.
The respondent also says that by becoming a joint mortgagor, the applicant could consolidate her debts. Indeed that is what she did. The interest rate payable on home loans is much less than the interest rates on credit cards, as is typical. That was of benefit to her.
The applicant denies insisting on becoming a joint mortgagor and says when they attended a meeting with K Home Loans, they were told that the respondent had difficulty refinancing the mortgage on his own due to his income and length of employment.
I prefer the applicant’s evidence on this point. If the applicant was trying to obtain some sort of benefit as the respondent implies to his detriment, she would also insisted that her name be on the title.
The retrospective valuation of the home was $425,000. The controversial issue between the parties was the amount of equity the respondent had accrued in the home.
At the commencement of their relationship, the respondent was in the process of finalising a property settlement with his former wife and at this time, the mortgage was approximately $67,731. By the time the parties refinanced the mortgage in March 2010 the respondent had reduced the mortgage to $20,298 by drawing down on his superannuation.
The parties refinanced the mortgage for $125,000.The settlement sheet shows the following:
Disbursement of monies
Amount
H Law Firm
$490.00
Conveyancing
$150.00
Land Titles Office
$464.80
J Law Firm
$375.00
K Home Loans Pty Ltd (Establishment Fee)
$8,550.00
K Home Loans Pty Ltd (One Valuation Fee)
$250.00
L Law Firm
$5,820.00
M Law Firm Trust Account
$47,000.00
ANZ Banking Group
$20,298.08
Surplus Funds
$41,647.12
TOTAL
$125,000.00
The loan approval documents in Exhibit 2 and the balance sheet for the refinance which is at page 236 court book is consistent with the respondent having drawn down $50,000 from his superannuation and applying it to the mortgage. I am unable to make a finding as to any amount of superannuation the respondent had left at this time after making that draw down due to the lack of any documentary evidence and unreliability of the respondent’s evidence.
Clearly the respondent’s equity is reduced to $300,000 in March 2010 in part because of consolidating the applicant’s debts into the mortgage. This cannot be ignored.
Putting aside the parties’ superannuation entitlements, the B Street, Suburb C property is the only significant asset the parties have to divide. The respondent’s initial contributions must be given real and significant weight.
CONTRIBUTIONS DURING THE RELATIONSHIP
Parties’ employment history
At the commencement of the relationship the applicant was working as a carer. In mid 2010 she obtained full time employment as a customer service officer. She continued to work nights and weekends as a carer. She worked these jobs until she suffered her spinal cord injury in 2016.
The respondent was receiving WorkCover benefits due to a back injury at the beginning of the parties’ relationship. The respondent worked for Employer N from 2010 until 2012. He was then unemployed for a few months until he started working at Employer O in Suburb P from 2012 until 2017.
One of the respondent’s hobbies is birds. He has birds and built a bird coop the property. The house has sentimental value to him as his mother helped him pick the house and he also would find it challenging to find alternative accommodation accommodating the birds. Presumably there is some expense involved. The respondent does not give evidence about the costs involved and whether or not he earns any income from it.
After separation from February 2017 to early 2019, the respondent was again in receipt of WorkCover payments which was about 80% of his salary. He then received NewStart benefits until December 2019 when he started his current employment with Employer Q.
Respondent’s alleged computer illiteracy
Part of the respondent’s case is that he is computer illiterate and that he trusted the applicant to deal with their accounts, and that this was how the applicant was able to make those withdrawals on his behalf. The respondent was cross-examined about two YouTube videos he uploaded of his birds to his YouTube account. He agreed that there were 8 or 9 videos he took and uploaded to his YouTube channel. He said in cross-examination that he knows how to do a few things such as get on Facebook and eBay but says he could not download something without help and does not use computers. The respondent had referred to earlier about being better with his phone. Upon being shown videos uploaded to his YouTube account, he said he knows how to upload videos from his phone to YouTube but does not know how to do it on a computer and does not have a computer. Whilst the respondent was keen to emphasise the difference between using his phone and a computer, the relevant point is with respect to online banking. The applicant pointed to drawdowns occurring during overseas trips and did not accept the contention that he was unable to perform online banking on his phone. Her evidence is that most of their expenses were paid either via the online banking or using the respondent’s card rather than cash. She was able to access cash from her Commonwealth account if needed. She says that both used the respondent’s account to make B-Pay payments for things like utilities.
The respondent does not have a computer at home and is limited in his use of them, his evidence was clear that he uses his phone to take videos and upload them. I do not accept that the respondent is so computer illiterate that he would be unable to use an online banking application on his phone to check balances, make withdrawals and transfers.
Mortgage redraws and mortgage repayments
In his trial affidavit, the respondent claims that the payments the applicant made to the mortgage were negated by withdrawals she made for her own use, primarily on overseas trips. Again, the respondent’s vague allegations are not made out on the evidence.
The respondent was cross-examined about the affidavit he filed on 28 May 2018 and his reference at paragraph 6(f) where he claimed the applicant bought a camera and lenses for over $5,500. He was cross-examined about the credit card statement at page 239 of the court book being annexed to the applicant’s trial affidavit which, whilst somewhat faded and difficult to read, is a credit card statement showing the purchase of the camera at R Store on 27 December 2012 for $2,324.86. When faced with this, the respondent then claimed there were two cameras, one of which broke and so it probably did work out to a total of $5,500. I prefer the applicant’s evidence on this point.
The applicant says that the redraws were for major household items such as maintenance around the house and both their car expenses as there were insufficient funds in the respondent’s account to cover these expenses. She acknowledged that there were also drawdowns for holidays. They drew down $11,000 in 2010 for a holiday they took together.
The applicant also went on two overseas trips without the respondent. The first was in 2015 and the second was in 2016 with her mother. She says of the $5,000 draw down, she kept $4,800 and the respondent kept $200.
On 1 June 2016 they drew down $4,500. She kept $3,500, the respondent kept $1,000. The applicant says she used the $3,500 she took for spending money on the trip she took with her mother to Country S and Country T in 2016. She conceded that she also bought a camera costing about $2,000 but recalls having that on around the time of her 30th birthday which was earlier than that. She says her mother paid for hers and the respondent’s flights to Country U for her birthday in 2012.
The applicant’s case is that they had to keep drawing down on the mortgage because they could not meet all their expenses. She agreed that they arranged for her income to pay the mortgage and his income to pay the other household expenses after a short period. The applicant says she also received income from her carer jobs which were paid into her Commonwealth bank account. She used that account for her own expenses such as petrol, mobile bills and health insurance. The parties otherwise drew down on the mortgage to pay for living expenses. At the beginning of the relationship, the applicant was earning approximately $2,000 a month from her job with the Employer V. That amount is identified as a deposit into the mortgage account each month.
The respondent conceded that there are only two trips that the applicant took without him during the relationship overseas. He took one trip overseas, which he paid for by selling his motorbike, and there were other trips they took together. The applicant’s evidence is that the draw down with respect to those trips total $8,300. The respondent said “All I know as a fact is I withdrew bugger all from that account.” he claims he does not know what the applicant did and that he trusted her.
The respondent was cross-examined about the tables prepared by the applicant included in her affidavit starting at page 241 of the court book showing a table of the parties’ respective contributions to the mortgage account. The mortgage statement covering the period the parties separated shows a balance on 9 March 2016 of $116,481.46. It shows the applicant contributing $190,765.59 over the six year period of their relationship and the respondent contributing $67,038. The respondent disagreed with those figures and referred to the mortgage only reducing by $10,000 but more importantly referred to the fact that he paid other expenses. The respondent argues that the high level of drawdowns was due to the applicant’s expenditure, which he argues must be taken into account when assessing contributions, rather than simply looking at the respective amounts each party paid into the mortgage over the relationship. The applicant says that analysis of the bank statements shows that she paid more than twice the amount of the respondent into the mortgage. She refers to only part of the respondent’s income being paid into the mortgage but also said in cross-examination that the parties found that paying both of their incomes into the mortgage was not working and they agreed to pay the mortgage using her income from her Employer V job and to use his income for other living expenses. It is necessary to take into account the broad myriad of contributions the parties make over the course of the relationship. It is overly simplistic and somewhat dangerous to focus on the amounts that each party put into the mortgage accounts, which are easy to tally, and ignore the evidence that they both gave being that they agreed how income was to be paid into the mortgage account, with his income paying for other expenses as well. In addition to this is the dispute about the drawdowns with respect to the mortgage. This highlights the danger of taking an overly mathematical approach and focusing on what is easily reflected in bank statements.
The applicant gave evidence that all of the drawdowns were deposited into the respondent’s ANZ account as only one account could be nominated. She gave evidence that both of them did the online banking and drawdowns.
It is clear from the mortgage statements that both parties’ incomes were deposited into the mortgage account from which the monthly interest payments are deducted. The last page of the statement bundle shows the interest rates which were significantly higher in the early years. The statements also show various drawdowns and credits being paid to the loan including both parties income being deposited into the account. The applicant says the account is linked to the respondent’s ANZ account as it can only be linked to one account. The monthly repayments of $1,500 are not reflected in the mortgage statements but the applicant relied on Exhibit 1 which, is an Advantage Loan document. This document summarises the loan details. The product is described as “variable PI” presumably this is short hand for variable principal and interest loan. The applicant obtained this document after the mortgage fell into arrears, after interim orders were made requiring the respondent to pay the mortgage. Exhibit 2 is the application for conditional approval signed by the parties on 22 January 2010. The applicant says that at the start of the loan they were making significantly higher repayments. Near the end of the relationship, the respondent asked if they could be reduced to the minimum amount required. The applicant agreed. Contrary to the respondent’s submissions, I did not make a finding during the trial that it was an interest only loan but queried this.
There was some confusion as to whether or not the mortgage is an interest only one or also requires principal payments. The applicant did not accept the proposition that the mortgage repayments, shared with the respondent, was $700 a month. The applicant says they were required to make repayments of about $1,500 a month. The K Home Loans statements do not clearly identify what were interest repayments and what were the obligatory monthly repayments. Unless it was an interest only loan, there would need to be monthly repayments of the principal in addition to the interest repayments on the mortgage. The terms of the mortgage are not in evidence.
The applicant says that later in the relationship she was having to cover utilities from her Commonwealth bank accounts as well as paying the mortgage and their relationship was strained because of arguments about money.
The respondent was cross-examined about the applicant’s bank account statements and the transactions showing that she paid for council rates and utilities, using her Commonwealth bank accounts in 2015. It supports the applicant’s claims that the respondent was not able to cover these expenses at that time from his income.
I reject the respondent’s evidence that seeks to create an impression of the applicant taking advantage and spending money wastefully to his detriment. I accept the applicant’s evidence that they both accessed the accounts and made withdrawals and that they had to make drawdowns on the mortgage because they could not otherwise meet their expenses at various times.
POST SEPARATION
After separation, the applicant moved out of the B Street, Suburb C home. The parties agreed that they would each pay half the mortgage. The bank account statements show the respondent ceasing to contribute to the mortgage in February 2017. He had to concede that the applicant is continuing to make payments for the mortgage in 2017 and 2018 when she was not living in the property.
On 9 August 2018 the Court made interim orders requiring the respondent to pay for the mortgage and indemnify the applicant. In May 2019, the applicant was contacted by the bank and discovered that the respondent had fallen into arrears. In November 2019, the applicant sought interim orders for the sale of the property. The respondent appeared in person on that occasion and opposed the order. He was given the opportunity to provide evidence as to how he was going to discharge the arrears and refinance the loan. The applicant was reasonably concerned about the negative impact on her credit rating and that in fact had occurred.
The applicant gave evidence that since October 2017 she has been paying home and contents insurance for the property. When it was put to the respondent in cross-examination he asked why she was doing that. The respondent said that he has never insured the property. It is reasonable for the applicant to insure the property when she is still liable for the mortgage in case something happens to the property. Indeed it is somewhat reckless of the respondent not to have insured the property, which he claims to be deeply attached to. It would be surprising if the terms of the mortgage did not require the property to be insured.
SECTION 90SF FACTORS
The applicant is 39 years old. The respondent is 58 years old. The respondent will be looking to retirement in the next 10 years or so. He is much closer to retirement age than the applicant. This is a relevant consideration.
The applicant is studying for her degree. It is a three year degree which she is doing over 4 years. She is half way through. She wants to gain employment when she finishes her degree at the end of 2022.
The applicant anticipates being able to work part time, 2 to 3 days a week as a result of her spinal injury suffered at work in 2016 and the ongoing medical care she requires to maintain her condition.
The applicant’s health and compensation entitlements
The respondent does not challenge the medical evidence the applicant relies on. Namely, the Affidavits of Dr X, Physician in rehabilitation medicine, filed on 11 June 2020, Dr Y, Urologist, filed on 11 November 2019, Ms Z, Colorectal Surgeon, filed on 5 November 2019 and Dr AA, Psychiatrist filed on 25 October 2019. It is not necessary to outline that medical evidence. It is a clear from the medical evidence and the evidence of the applicant that her medical issues substantially limit her ability to obtain employment and prohibit her from obtaining full-time employment. The controversy centred on whether or not the applicant would be entitled to make a common law claim, a lump sum claim and or a claim on her TPD superannuation policy. The respondent annexed documents from Super Fund BB, the applicant’s superannuation fund and the TPD policy.
I accept the applicant’s evidence that she has made enquiries with her super fund and is not entitled to make a TPD claim. This is because, whilst she has significant permanent disabilities, her unchallenged medical evidence supports her having a limited capacity for part-time work. She also does not fulfil the other requirements including future care as she is able to use special equipment to assist her with daily activities such as walking. I accept the applicant’s submissions that the clear wording of the TPD policy demonstrates the applicant is not eligible to make a claim as she does not meet the conditions due to not being totally disabled and unable to engage in any type of paid employment. The language in the super documents contained in the court book are clear. The applicant does not meet all of the requirements necessary to qualify for the TPD payment. Given the nature of the pool it is understandable that the respondent would be looking to make a case for the applicant to be able to receive either the TPD payment of approximately $364,000 in accordance with her superannuation policy or a another type of compensation claim that would address her future needs.
When cross-examined about this, the applicant said she had received telephone advice about the possibility of making a common law claim and was told she would not be entitled to make a common law claim as she would need to have a 30% or higher permanent disability. Her injuries have only recently stabilised which is another requirement. In relation to making a civil law claim, the applicant’s evidence is that if she received a lump sum payment for her future care needs she would forfeit the insurance company paying her future medical expenses and would also have to repay the five years of wages she has received under the insurance policy through work safe. She made a worker’s compensation claim with the Employer V and it is WorkCover that is paying her 80% of her income and paying for her medical expenses.
Those payments will cease in late 2021, after the expiry of 5 years. WorkCover pays her medical expenses and will continue to do so after the income payments cease. The applicant is required to attend at a WorkCover nominated doctor for an assessment every 6 to 12 months. She sees a total of 8 specialists. She has significant injuries which restrict her capacity to undertake meaningful employment. The applicant will be able to do desk work. She will not be able to work full time because of the time she needs each day to attend to her medical care needs. She has to manually stimulate her bladder and colon in order to toilet. She is required to self-catheterise. She also has to use dilators which need to be refilled and she will need surgery every 5 to 7 years to replace them. She must also undertake physical therapy every day to maintain the use of her leg. She walks with the assistance of a walking stick.
They will require her to undergo ongoing assessments every 6 to 12 months to ensure she remains eligible for her medical expenses. Given the nature of the injuries, the number of specialists she has and her requirements for medical equipment, she indicated she will need to have surgery every 5 to 7 years with respect to her bowel and rehabilitation. WorkCover also paid for her car to be modified to insert a left foot accelerator. I accept the applicant’s evidence that in her circumstances it is in her interests to have the insurance company coordinate with WorkCover to continue to cover her medical expenses for the foreseeable future.
The respondent’s written submissions ask how responsible the respondent should be for the applicant’s future needs as her injury took place after separation. This argument does not engage with the wording of the section. Section 90SF(3)(a) requires the court to consider the age and state of health of the parties to the de facto relationship. Unlike some of the other factors listed in s.90SF(3) it does not tie this consideration to the relationship. Whilst it is understandable why the respondent would think there should be a link between the applicant’s health and the de facto relationship. I am satisfied that the applicant’s health will significantly limit her capacity to work in the future and that she will be limited to part-time work.
WRITTEN SUBMISSIONS
The applicant’s submissions are consistent with her position of trial. She seeks an equal division of the equity in the B Street, Suburb C property. Her Counsel submits that this gives appropriate recognition to the significant initial contributions by the respondent whilst also recognising her significant future needs.
Counsel for the applicant provided detailed written submissions engaging with the evidence and setting out various issues with respect to the respondent’s evidence. He highlights inconsistences and exaggerations in his evidence which I have addressed above including:
(1)vague allegations about the applicant owning real estate and superannuation she did not disclose and having a higher credit card debt than she disclosed;
(2)The respondent gave varying figures about the balance of the mortgage on the B Street, Suburb C property to maximise the suggested equity.
(3)He also suggested in his case outline, although not his trial affidavit, that he has approximately $140,000 in superannuation at the commencement of the relationship.
The applicant’s Counsel takes issue with the respondent’s evidence and submits that the respondent cannot be considered reliable and that much of his evidence is inconsistent. Various references are made by the applicant’s Counsel to the two affidavits filed by the respondent in May 2018 and June 2020 and also his oral evidence.
It is submitted by the applicant that the respondent accepted in cross-examination and deposed in his June 2020 affidavit, the March 2010 refinance was discussed between the parties and consideration was given as to the merits of the applicant becoming a co-borrower. By comparison, the applicant’s Counsel indicates that in the May 2018 affidavit, the respondent deposed the refinance occurred as a result of the applicant’s insistence. This was accepted by the respondent in cross-examination as being incorrect. The applicant’s Counsel demonstrates another inconsistency where the respondent asserts in his June 2020 affidavit that the applicant had interest in properties in Suburb F and Country G. The applicant’s Counsel is of the view that this assertion was not put forward in his May 2018 affidavit as it would have been inconsistent with his view that the applicant insisted on the refinance. The applicant’s Counsel submits further that the respondent deliberately failed to mention the liability owing to his former wife and solicitors.
There are a number of matters in dispute with respect to the initial contributions. Counsel for the applicant submits the loan balance at the commencement of cohabitation was $67,758 with reference to Exhibit 2. The respondent previously provided varying figures from $10,000 to $26,000. The refinance statement annexed to the Affidavit filed by the applicant on 12 June 2020 shows a balance of $20,298 which was submitted by the applicant as being the difference between the loan balance at the commencement of cohabitation and the withdrawal of superannuation in the sum of approximately $50,000 in March 2010.
The applicant’s Counsel submitted that the dispute regarding the applicant’s initial contributions came down to her motor vehicle. The respondent’s Counsel submits that the vehicle holds no value and the Court should only consider it as a liability. The proper approach would be for the loan to be offset against the value of the car. They may well cancel each other out. It would be an error to simply include the debt and not any value to the car.
Further submissions by the applicant’s Counsel outline the applicant’s health issues as a result of the injury sustained at work. The applicant’s Counsel refers to the parties’ weekly income and that the applicant cares for her elderly parents which requires her to financially contribute to the household expenses. The respondent does not have any dependents. It is significant that the applicant’s injury has caused her ongoing medical issues which will impact her ability to undertake employment in a meaningful way.
The respondent’s submissions provide a chronology of the events and background of the proceedings. Two pages of the submissions provide for orders sought by the respondent.
At trial, the respondent sought to refinance and pay the applicant the sum of $150,000 as that is the maximum he can borrow. He also conceded that he owes money to his lawyers but claimed that he will draw down on his super to pay legal fees which he thinks are about $17,000. In re-examination the respondent said he will be able to borrow about $290,000. His total legal fees including from his former lawyers is approximately $37,000.
Counsel for the respondent submits that the respondent’s initial contributions were significantly greater than the applicant’s, which largely came down to the B Street, Suburb C property. It is further submitted that the respondent had approximately $90,000 in superannuation at the commencement of the relationship and submits that $50,000 was drawn down and applied to the mortgage on the B Street, Suburb C property. The respondent’s Counsel submits the applicant’s liabilities came from her car loan and credit card debts and that the respondent had a liability owed to his former wife. There is no mention of the liability to his previous solicitors in his submissions. As noted earlier, I do not accept that the respondent had $90,000 in superannuation at the commencement of the relationship. Whilst I accept that it is likely the respondent had some superannuation after drawing down $50,000 to apply to the mortgage, I am unable to attribute a figure to it.
The respondent’s Counsel submits that there was an agreement between the parties where the applicant was responsible for payment of the mortgage and the respondent pay household expenses. The respondent’s submissions provide for the financial contributions to be assessed largely in favour of the respondent. For this reason, simply comparing the amounts each party deposited into the mortgage ignores the respondent’s significant financial contributions to living expenses. The respondent’s argument that the redraws were due to the applicant’s expenditure on several overseas trips was again exaggerated by him. It was another example of him making vague statements that could not withstand scrutiny. The applicant readily acknowledged she withdrew a total of $8,300 on two trips taken without the respondent. The respondent consented to those withdrawals which is modest when compared to the total withdrawn during the relationship. Again as the applicant points out in her submissions, the respondent made a broad statement that the applicant used most of the withdrawals, the respondent does not engage in any analysis of both statements to support this. It is further compounded by the fact that he only produced his bank statements very late in the proceedings. The evidence also shows that from March to May 2017, the respondent drew down $13,220 from the mortgage which he used for various living expenses.
In addressing factors such as the parties’ ability to earn an income, Counsel for the respondent submitted that the he has approximately 6 years before retirement. It is submitted that the applicant has limited career opportunities and she receives fortnightly payments of $21.06 per hour.
The respondent now proposes that the he pay the applicant the sum of $162,000. The respondent’s Counsel discusses the effect of his proposed orders, submitting the asset pool be split 75:25% in favour of the respondent. The proposal involves the respondent refinancing the property into his sole name and thus relieving the applicant of that responsibility. He incorrectly refers to his client as the applicant and not the respondent and discusses how the features of the property accommodates his pets and birds. It is the respondent’s position that securing another similar property would be “bleak”.
In the respondent’s submissions, Counsel refers to two authorities, Crawford & Ruskin [2013] FamCA 493 (incorrectly referred to in the submissions as Crawford & Rankin) and Brandow & Brandow [2010] FMCAfam 1026. In referring to the first case, the respondent’s Counsel briefly outlines the facts of the case and highlights the Court held that the property division was largely in favour of the husband. Similarly with the second case, the respondent’s Counsel briefly discussed the background of the case and that the Court held the large majority of the asset pool be awarded to the husband. These cases do not assist as each case turns on its own facts.
LEGAL PRINCIPLES
Section 90SB(a) of the Family Law Act 1975 is satisfied as the de facto relationship was longer than two years. Section 90SD being the geographical requirement is also satisfied.
Part VIIIA is the part of the Family Law Act 1975 dealing with property, spousal maintenance and maintenance agreement between de facto partners. The major provisions relating to de facto property division are contained in ss.90SM(1); 90SM(3), 90SM(4); and 90SF(3) of the Family Law Act 1975.
Until the High Court decision in Stanford & Stanford (2012) 247 CLR 108, the position in respect of the process to be applied to the resolution of matrimonial property cases was said to be well settled with a preferred approach as set out by the Full Court in Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39].
The High Court considered the operation of s.79 of the Family Law Act 1975 (which has almost identical terms to s.90SM) in the matter of Stanford. In this case, the majority stated at [35]-[36] that:
35. “It 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 sub-sections are not to be conflated. In every case in which a property settlement order under 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.” [Footnotes omitted]
The High Court found three fundamental propositions with respect to the application of s.79, which can be summarised as follows:
1. Firstly, in order to ascertain whether it is just and equitable to make a property settlement order, it is necessary to identify the existing legal and equitable interests of the parties in the property. The High Court emphasised the word ‘existing’.
2. Secondly, although s.79 gives the court a broad power to make property settlement orders it may not be exercised in an unprincipled fashion. There must be no assumption that the parties’ interests are or should be different to their existing interests.
3. Thirdly, when considering whether making a property settlement order is just and equitable the court must not assume that one or the other party has the right to a property adjustment order. The court must give separate consideration to s.79(2) in addition to the matters referred to in s.79(4).
In Stanford the High Court indicated that, in the vast majority of matrimonial property cases, the requirements of s.79(2) will be readily satisfied, largely as a result of a consideration of the circumstances of the parties concerned, particularly the nature of their separation.
The High Court also pointed out that what is just and equitable is different in every case.
The principles referred to in Stanford & Stanford are equally applicable to de facto property matters.[1]
[1] See Watson & Ling (2013) 49 Fam LR 303.
In Pierce v Pierce(1998) FLC 92-844 at paragraph 28 the Full Court said:
In our opinion it 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 Williams&Williams [2007] FamCA 313 the Full Court states at the paragraph 26:
We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
CONCLUSION
I found the respondent to be an unreliable witness due to the inconsistencies and exaggerations in his evidence. I am satisfied that the respondent is so desperate to keep the home which he has had for many years and is sentimentally attached to, although, that he has exaggerated evidence which does not strengthen his case.
I do not accept the respondent’s submissions that his contributions should be assessed at 95%. That ignores the significant contributions the applicant made during the relationship which I have referred to above. Whilst the respondent’s initial contributions must be given significant weight, the myriad of other contributions must also be properly considered. I reject any suggestion that the refinance was to benefit the applicant only. Both benefited from it. I find that the equity of the B Street, Suburb C property should be adjusted as to 45% to the applicant and the remaining 55% to the respondent This reflects an assessment of her contributions at 25% and a s.90SF(3) finding of 20% in the applicant’s favour. Each party will keep the other items in their possession and their superannuation entitlements.
I will give the respondent an opportunity to retain the house. If he is unable to do so, the house will have to be sold.
I certify that the preceding one hundred and one (101) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Harland. Associate:
Dated: 31 May 2021
0
4
0