Roland & Argento
[2022] FedCFamC1F 84
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Roland & Argento [2022] FedCFamC1F 84
File number(s): PAC 2474 of 2013 Judgment of: RIETHMULLER J Date of judgment: 1 March 2022 Catchwords: FAMILY LAW – Property and maintenance of parties – Alteration of property interests – Matters for court's consideration – Just and equitable to make order – Failure of applicant to establish assets of parties – Section 79(2) not satisfied.
FAMILY LAW – Property and maintenance of parties – Alteration of property interests – Matters for court's consideration – Just and equitable to make order – Second marriage late in life – Agreement of parties to hold assets separately – Section 79(2) not satisfied.
Legislation: Family Law Act 1975 (Cth) ss 78, 79, 79(1A), 79(2), 79(8) Cases cited: Oamra & Williams [2021] FamCAFC 117
Stanford v Stanford [2012] HCA 52
Division: Division 1 First Instance Number of paragraphs: 62 Date of hearing: 22, 23 and 24 November 2021 Place: Parramatta Counsel for the Applicant: Ms Clifton Solicitor for the Applicant: Norris Somers Maait Lawyers Counsel for the Respondent: Mr Todd Solicitor for the Respondent: Jo-Anna F S Moy Solicitor ORDERS
PAC 2474 of 2013 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR F AS LEGAL REPRESENTATIVE OF THE DECEASED HUSBAND MR ROLAND
Applicant
AND: MS ARGENTO
Respondent
ORDER MADE BY:
RIETHMULLER J
DATE OF ORDER:
1 MARCH 2022
THE COURT ORDERS THAT:
1.The applicant husband’s application pursuant to s 79 of the Family Law Act 1975 be dismissed.
THE COURT DECLARES THAT:
2.The sum of $60,000 from the monies held as a result of the liquidation of the Roland Argento Self-Managed Superannuation Funds are superannuation funds held on account of the wife.
3.The wife is entitled to 50 per cent of the proceeds of the company M Pty Ltd, following the winding up of the said company.
THE COURT ORDERS THAT:
4.The solicitor for the estate of the late husband, Mr John Maait, pay to the respondent wife, from the nett proceeds of the winding up of the parties’ interests in the Roland Argento Self-Managed Superannuation Funds and M Pty Ltd, the sum of $60,000.
5.The solicitor for the estate of the late husband, Mr John Maait, pay to the respondent wife, from the net proceeds of the winding up of the company M Pty Ltd, following the winding up of the company, the sum of $122,142.48 (noting that this sum represents the wife’s 50 per cent shareholding in the company).
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
RIETHMULLER J:
This is an application commenced by the husband in 2013 seeking property settlement orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). The husband died in 2016 and the application was continued by his estate.
The wife does not seek property settlement orders under s 79, arguing that the parties should simply retain their existing property entitlements (and to the extent necessary orders made to give effect to that proposal pursuant to s 78 of the Act) on the basis that it would not be ‘just and equitable’ to make orders under s 79 of the Act.
Background
The parties were born in 1936 and 1953, respectively. They were married in 2004, after living together for a little over a year, when the husband was 66 years of age and the wife 50 years of age. At the time they commenced their relationship, they each had three children from previous marriages, all six of which are adults living independently.
The parties separated in 2013 when the husband was 76 and the wife 60, after a relationship of a little over 10 years. The following month, the husband commenced proceedings seeking property settlement orders. The parties were divorced later in the same year.
In 2016 the husband died and the proceedings have been continued by a Special Administrator ad litem, Mr V, appointed by the Supreme Court of NSW in 2019. The death of the husband does not preclude his estate from prosecuting these proceedings: ss 79(1A) and (8) of the Act. On the evidence before the Court, the assets of the husband’s estate have been assigned to his solicitor in satisfaction of legal fees pursuant to a deed entered into in August 2017. At trial the applicant’s solicitor said (through counsel at the bar table) that he had renounced the assignment, although there was no evidence to that effect.
EVIDENCE BEFORE THE COURT
The main issue of dispute in this case was whether the husband or wife had inappropriately dealt with the business’ funds and whether the wife had inappropriately dealt with the husband’s funds.
The administrator ad litem
The applicant administrator, Mr V, was called to give evidence. Mr V was an older man who had been a friend of the husband for 50 years. Mr V confirmed that the benefits of the estate had been assigned to the solicitor acting for the estate (formerly acting for the husband) in August 2017, and that he had been appointed as Administrator by the Supreme Court on 15 March 2019. He has no expectations of receiving any payment for his role, nor any benefit from the husband’s estate.
From initial set up, Mr V had acted as the auditor of M Pty Ltd (“M Pty Ltd” and “the business”) which was established and operated by the husband and wife. Whilst a long term friend of the husband, he considered that he was impartial in carrying out his duties as an auditor.
Mr V audited the business books from 2011 to 2013, although was not privy to the underlying transactions of the business. He said that the wife had declined to give him the books of the business, offering instead that he come into the office at night. However, he did not take up that offer.
Mr V appears to have been almost entirely reliant upon the solicitor for all of his responsibilities as Administrator of the estate and the conduct of the litigation. Importantly, he was unaware of what steps (if any) had been taken to obtain all of the husband’s shares, and unaware that notices with respect to shares (in publically listed companies) in the husband’s name continued to be sent to the wife’s home, at least until recently. He did not appear to be aware that the line item for the husband’s shares in the statement of assets and liabilities was simply noted with the letters ‘TBA’. He was unable to provide any detail as to the shares owned by the husband, and appears to have taken no steps himself to determine what shares the husband may have owned. When Mr V was asked about the costs paid to the solicitor to date ($172,687.57) he was unable to say from where those funds came. Presumably, they were paid from the husband or his estate.
My impression of Mr V was that he was a genuine and reliable friend of the husband since childhood. He is undertaking the current role simply to ensure that the husband’s affairs are finalised. However, Mr V has no real knowledge of any matters relevant to the current dispute and has been entirely reliant upon the solicitors who are acting in the proceedings.
The husband
As the husband died in 2016, the applicant relied upon most of the contents of three affidavits sworn by him on 7 June 2013, 2 July 2013, and 9 July 2014, before he died. The husband was a financial, legal and property professional. He had lectured in finance at various universities and had operated a property-related business for many years prior to the parties’ relationship. The weight that can be attached to the affidavit evidence of the husband, where it differs from the evidence of the wife, is limited as he could no longer be cross-examined. The affidavit evidence is also limited in that it does not directly address in detail many of the central issues in the case.
The wife
The wife gave evidence in a forthright and direct manner. She readily agreed to propositions that flowed from bank statements or business records. It was apparent from her evidence that she carried out considerable work in the business. She has no professional qualifications. She also undertook administrative roles, including those commonly undertaken by a bookkeeper or accounts clerk.
It was put to the wife that she was the one creating bank accounts for the business, as evidenced by her signature upon documents provided to O Bank for the purpose of opening accounts (see Exhibit 5). However, the wife explained that they each had authority to sign documents with the bank in order to open accounts as their business required them to open accounts for each strata scheme. The documents indicate simply that she certified that they held ‘a valid instrument of appointment executed by the body corporate strata plan’. It is also plain that the husband had authority to sign at the various accounts as he was able to withdraw over $70,000 at the bank from the accounts.
It was also put to her that she would transfer funds from one account to another as she had the electronic access. She agreed that she did the electronic transfers as she had the electronic token, but maintained that the transfers were in accordance with the husband’s general instructions. For example, he suggested they open an account in the name of a company her son had operated in order to use up tax losses: the wife did not appear to have the level of knowledge and sophistication to devise such a scheme. Similarly, the husband used other companies to provide property-related services in order to make a profit from supply of those services in a way that appeared to be a breach of his fiduciary duties to the property-related business.
It was put to the wife that the company books showed that she had loans owing to the company in significant amounts. She denied this, explaining that after separation the husband had altered the books to show her wages as loans. She was not taken to any specific books or records.
Whilst the wife was cross-examined at some length, she did not appear to be shaken in her evidence. Whilst her evidence was not perfect on every point, I generally accept her evidence.
Other evidence
The valuers who had prepared reports were not required to give evidence.
The applicant did not call either the receiver or the liquidator to give evidence as to the business operations.
THE NATURE OF THE RELATIONSHIP OF THE PARTIES
The husband and wife commenced their relationship late in life, at a time when each appeared to have considerable assets. The wife recounted that they had met at an activity club and that the husband had telephoned her afterwards at her office. The husband wanted the wife to work for him in the business where he was then working, however, the wife was concerned about earning sufficient income to meet her expenses.
In 2003 the parties decided to start a business, M Pty Ltd, which offered property-related services. Initially the business did not generate significant income, however, the number of clients was built up over time. Ultimately, the business was sold for around $750,000. In the early periods, the wife obtained work at a sports venue as she said she needed to generate at least $50,000 per annum of income in order to meet her living expenses and mortgage payments on the property that she owned. Whilst she was cross-examined at some length about the mortgage payments being too high to be met from such a low income (after living expenses), the amounts are only anomalous if one ignores the significant rental income that the wife was receiving from the tenants of her properties.
The wife says that from the outset of the relationship the parties agreed to keep their finances separate and to share the money earned in the business equally. The husband says that they had a joint understanding that all of their assets would become joint assets upon marriage. Both parties’ version in their affidavits are brief.
They did operate the business together, however, it appears that the only accounts that were operated by them together were business accounts, a share account and a self-managed superannuation fund. She gave evidence that at the start of the relationship he was awaiting payment of his half share from the sale of the home that he owned with his previous wife. The husband says in his affidavit that he received “about $416,000” from his first wife (by way of property settlement) “shortly after” his marriage to the respondent. The husband says in his affidavit that he “brought [his] matrimonial settlement moneys … into our relationship” yet provides no detail as to how the $416,000 was applied. The wife had considerable mortgages over her properties at that time, yet the husband makes no mention of any decision by them as to the application of the $416,000.
The wife’s evidence about having to confront the husband in order to have him make a reasonable contribution to household expenses was compelling. The parties lived in the wife’s home and she met all of the expenses including for food. The wife also gave evidence that early in the relationship she continued at her previous employment (earning around $700 per week) until the business could pay her sufficient income to meet her expenses. Clearly, the wife was not in a position to financially support the husband through meeting his basic living expenses. The amounts contributed by the husband, after demand from the wife, were clearly in the range of payments for board, rather than any real contribution to the mortgage or maintenance of the home. If this feature of the relationship sounds in indirect contributions under s 79 of the Act, it would favour the wife who was maintaining the household with only the equivalent of board from the husband. When the bathroom was modified after the husband’s illness, it appears to have been largely at the wife’s expense and in order to meet the husband’s needs.
The wife says that she was unaware of how the husband dealt with his assets. The husband, in his affidavits, alleges that the wife controlled his funds and lost considerable sums share trading, which the wife denies.
The business and other holdings they had together were in both names and their other assets appear to have continued in their respective names. The husband prepared a Will during the marriage that left all of his assets to his children without any provision for the wife.
On the limited evidence actually before the Court I prefer the wife’s evidence. I accept that the parties approached their marriage on the basis that each would retain their separate assets and share what they accumulated. Of course, this is not a binding agreement but merely provides evidence of the nature of the particular approach to the relationship by these parties.
The operation of the business of the parties
The wife was cross-examined at some length about who opened bank accounts (as her signature appeared upon a number of forms) and who had access to the accounts. I accept her evidence that the arrangement with the bank was such that they could open joint accounts with one person’s signature as this facilitated creating an account for each new property-related group whose affairs they managed. The arrangement allowed either her or the husband to operate the account, although there was only one electronic ‘token’ which she held and as such she was the only one who could undertake electronic banking on the accounts.
Whilst she did most of the data entry and bookkeeping transactions for the business, it was the husband that made decisions about the finances of the business. This is unsurprising given that the husband was a financial, legal and property professional and was the one with long experience in running this type of business.
After the receiver was appointed to run the business, the receiver continued to employ the wife in the business until the business was sold.
Various line items from the business records were put to the wife, which demonstrated that expenses were paid directly from the business (such as the cost of a holiday). However, there was no evidence that these expenses were not taken up in the accounts as wages, as so commonly occurs with small business. The wife said that after the husband had a heart attack in 2011 she had modifications made to the bathroom for the benefit of the husband, and the costs were met from the business, but accounted for as part of her wages. Whilst a number of individual transactions were put to the wife, no schedule showing the yearly drawings or wages for the business over any representative period was put to her in cross-examination.
It was accepted that the business rented a dwelling at the wife’s property. However, the wife’s evidence is that this was a market rent and that when the business was not paying the rent she was renting the dwelling to other tenants. In such circumstances, it is difficult to see this as a contribution by the wife to the business or a contribution of the business to the wife.
Following separation the husband withdrew funds from the business account (over $70,000). The money was from money held on trust in the business for various property-related schemes they were managing. The wife contacted the bank to have the account locked and when the bank would not do so she withdrew almost all the funds to prevent the husband taking them. Once the accounts were again secure, she returned almost all of these funds. The course of conduct, not surprisingly, attracted the attention of regulators who placed a receiver into the business.
The receiver continued to employ the wife until the business was sold. Unfortunately the costs of the receiver were over $1 million. Thus, the result of the husband’s misuse of trust funds was not only the loss of funds he took, but also the receiver’s costs. The husband’s dealings in this respect were a reckless waste of funds, for which he ought to bear responsibility.
On the material in evidence, I am not persuaded that the wife took more from the business than she was entitled to receive.
THE PROPERTY OF THE PARTIES
The property of the parties, to the extent that the wife has been able to ascertain it (and there does not appear to be any real dispute as to these figures), is as follows:
Ownership
Description
Value
W
G Street Suburb H
$1,325,000.00
W
L Street Suburb J
$1,250,000.00
W
Motor Vehicle 1
$2,500.00
W
P Bank offset account ending …25 (31/8/21)
$7,919.00
H
Credit Union account balance (June 2019)
$500.00
H
Credit Union account balance (June 2019)
$9,549.00
J
Net proceeds of liquidation of the company M Pty Ltd
$244,285.00
Total
$2,839,753.00
LIABILITIES
W
Mortgage Suburb H account ending …95 (31/8/21)
$292,839.00
W
Mortgage Suburb J account ending …94 (31/8/21)
$236,907.00
W
Credit card (30/06/21) paid each month
$419.00
H
Super Fund 1
$6,463.00
Total
$536,628.00
The self-managed superannuation fund presented peculiar difficulties in this case. The fund, had been liquidated during the course of the proceedings. The records were such that there is no record from which to calculate the entitlements of the parties with any degree of accuracy. I pressed both counsel during the trial for submissions as to the appropriate method of dealing with the superannuation monies in the unusual circumstances of this case. Counsel for the wife argues that the wife remains the trustee of that fund and is, therefore, obliged to make a determination (in her capacity as trustee) of the entitlements of each of her and the husband. She made such a determination during the trial allotting $60,000 to her and $38,941 to the husband’s estate. The applicant did not seek to challenge the determination itself, and indeed it would be difficult to do so given the limits upon challenging the determination of a trustee, the lack of records, and the evidence that the wife had initially placed $40,000 in the fund. I accept the submission that the superannuation fund is held in accordance with the wife’s determination as trustee.
I, therefore, find that the superannuation interests are as follows:
Member
Name of Fund
Value
W
Super Fund 2
$179,504.00
W
Roland Argento Super Fund
$60,000.00
H
Roland Argento Super Fund
$38,941.00
Total
$278,445.00
I accept that this table representing the assets, liabilities and superannuation of the parties is the best the wife is able to determine (and which it is said by the husband’s estate represents the total of the assets of the parties), comes to $2,581,570. Almost all of this sum is in property held by the wife at present.
However, there are a number of further issues that bear directly upon the determination of the property of the parties. First, in his affidavit the husband lists the value of his interests at $820,892 (including a sum for his pension fund). There is no clear evidence as to what happened to these assets.
Secondly, the wife gave evidence that she understood from the husband that he had given half of his share of the money from the sale of his former matrimonial home to his son and retained the other half of the money. The husband says in his affidavit that he received $416,000. The applicant led no evidence as to the actual amounts involved, nor called the son or previous wife to give evidence. There is no evidence of how the husband dealt with the lump sum he received following the sale of the home that he held with his former wife. Whether the sum of $416,000 was the half of the husband’s share that he retained (after giving the other half to his son) or represented the entirety of the share from which he gave his son $200,000 is unclear.
Thirdly, the husband was in receipt of a superannuation pension until he died. He says that this had a value, in 2013, of around $387,892. The husband made a Will when the parties were married leaving the entirety of his estate to his children, and making no provision for the wife. There is no evidence as to whether his superannuation pension simply ceased upon his death or was commuted to a lump sum and paid to his estate or other family members. In the absence of evidence as to the fund there is no way of valuing the interest he had immediately prior to death, other than taking account of the valuable resource that a pension of $807 per week represented in 2013.
Fourthly, the wife gave evidence that at the commencement of the relationship the husband was owed around $300,000 by Q Company. She says that she saw papers relating to this in his possession and annexed them to her affidavit. Those papers are handwritten notes of amounts which appear to calculate CPI increases less other figures (presumably payments or drawings). The wife says that as the husband was paid he gave the proceeds to his son. Her affidavit lists this at only $300,000 although the handwritten notes show greater amounts. The son was not called to address the issue.
Fifthly, at the start of the relationship, the husband also had companies that were trading (not the business that the parties operated together), however, there is no evidence of their value nor did the husband provide any estimate in his affidavit. The wife estimated that those businesses had a value of $500,000 and counsel for the husband accepted a value of $100,000 on the basis that the husband had a 20 per cent interest in the companies. I, therefore, proceed on the basis that these companies had a value of $100,000 to the husband in 2013. There is no evidence as to what has become of these interests, although the husband’s son was also a shareholder of each of them.
Sixthly, the wife also attests to other property of the husband (with considerable particularity) from information to which she has had access, stating in her affidavit:
87.When the Court permitted [Mr Roland] to sell $90,000 in shares to pay his legal bill, I understand [Mr Roland] sold or transferred all his shares. I now know that is not correct. WTB pages 208 - 209 is a true copy of [Mr Roland's R Bank] Margin Loan statement dated 1 October 2014 - 31 December 2014 showing the following:
a) 6 November 2014 - Direct Deposit to [Mr S] of $50,000.
b) 10 November 2014 - Direct Deposit to Norris Somer of $52,392.16.
c) 19 November 2014 - Direct Deposit to Norris Somer of $44,262. 42.
d) 13 November 2014 - transfer to an unknown person of $72,101. 92.
I have no idea where this transfer went. It shows that the husband continued to own shares so that as at the end of the statement his balance was $44,262.42. 1 note that [Mr Roland] had several other share trading accounts in his own name as well as the super fund.
88.In 2015 [Mr Roland] still held shares that were not registered with either his [T Investments] account (account number …28) or [U Investments] account (account number …67). This included four letters received on the same day regarding four different parcels of ICP shares deposed to above in paragraphs 20 - 22. From correspondence that I found in my home after separation I have compiled the following table showing the value of the shares at the date of the correspondence.
Share name HIN Value $ Correspondence year
RCP …36 $ 2,749 2020
MS …13 $ 710 2020
OZ $ NK 2019
ZMI …89 $ 21,415 2020
EOR …67 $ 108,000 2015
ICP letter confirming a/c 78 $ NK 2015
ICP letter confirming a/c 79 $ NK 2015
ICP 1/4 letters rec same day $ NK 2015
ICP 2/4 letters rec same day $ NK 2015
CVN …67 $ 9,439 2015
ABX …67 $ 15,680 2015
BPP …04 $ NK 2019
Winmar …39 $ NK 2016
BLY …57 $ NK 2015
GXN …44 $ 375,000 2015
GXNCA …44 $ NK 2015
GXNOB …44 $ NK 2015
AUZ …87 $ NK 2015
$ 532,993.30 plus the unknown amounts
89.I now know that there are still shares in [Mr Roland's] name that continue to be traded or dealt with by an unknown third person as deposed to above. I am not dealing with the shares.
90. I still receive proxy voting forms and other share documents.
As is apparent from the above discussion, a very real difficulty in this case is the lack of evidence as to the husband’s financial affairs. On the evidence given, the husband had considerable assets at the start of the relationship. What assets he held, directly or indirectly, at the end of the relationship is entirely unclear. The lack of knowledge by Mr V, although understandable as he left everything to the solicitor, meant that there was no evidence that the assets of the estate had even been fully ascertained.
On the wife’s case, the husband has not accounted for an enormous amount of property, for example:
(a)The half of the sale proceeds from his former matrimonial
home given to his son (even taking the lower figure) $ 200,000
(b)The companies where his son held shares $ 100,000
(c)Money transfers (wife’s affidavit para [87]) $ 218,756
(d)Shares identified by the wife at para [88] of her affidavit $ 532,993
(e)Funds taken from company (admitted as an add-back) $ 71,092
(f)Funds paid to solicitor $ 172,687
Total $ 1,295,528
In addition, there is the significant loss caused by the husband’s conduct in taking money from the company in the form of the receiver’s fees of $1,076,983. The total value of the wasted fees and unaccounted for property is around $2,371,755. This estimate does not include the value of the husband’s pension at the time of his death (whether the pension was property or a financial resource).
Whilst the wife had considerably less assets at the start of the relationship and at the time of separation, the effect of the Sydney property market has placed her in a position where the houses now give her considerable wealth. In this respect it appears fortunate that she did not heed the husband’s advice to her that shares were a better investment than real estate, although there is no evidence as to the effect of the husband’s share investments. I also note that the wife provided a significant sum to her daughter in 2011 (although it appears it was from the wife’s funds from the sale of one of her homes). The wife’s financial dealings, save from sharing in the business they had together appear to have been largely separate from the financial dealings of the husband.
Whether it is ‘just and equitable’ to make an order under s 79
Section 79(2) of the Act provides:
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
As the husband has died, I must consider whether it is just and equitable to make an order both at the time immediately before his death and as at the time of trial, as a result of ss 79(1A) and (8) which provide:
(1A)An order made under subsection (1) in property settlement proceedings may, after the death of a party to the marriage, be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
…
(8)Where, before property settlement proceedings are completed, a party to the marriage dies:
(a) the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;
(b) if the court is of the opinion:
(i) that it would have made an order with respect to property if the deceased party had not died; and
(ii) that it is still appropriate to make an order with respect to property;
the court may make such order as it considers appropriate with respect to:
(iii) any of the property of the parties to the marriage or either of them; or
(iv) any of the vested bankruptcy property in relation to a bankrupt party to the marriage; and
(c) an order made by the court pursuant to paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
The requirement to consider the circumstances immediately before the husband’s death is particularly significant in this case as he held a superannuation pension at that time.
In Stanford v Stanford [2012] HCA 52 the High Court noted the requirement of s 79(2), saying, inter alia, that:
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property … The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion …
39… whether it is "just and equitable" to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that "[c]ommunity of ownership arising from marriage has no place in the common law"[26]. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be "decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses"[27]. The question presented by s 79 is whether those rights and interests should be altered.
40.Third, whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down"[28]. To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
…
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
More recently in Oamra & Williams [2021] FamCAFC 117 the Full Court made clear that the mutual assumptions referred to by the High Court in Stanford v Stanford [2012] HCA 52 must actually be mutual and not unilateral, saying:
36.… Axiomatically any agreement must be mutual. The High Court makes no reference to unilateral assumptions and the reference to “a choice made by one or both of the parties” in the first sentence of [42] is a reference to a unilateral decision to leave the marriage. The primary judge was correct to record that mutual assumptions and agreements which are informed and truly consensual will potentially inform whether it is just and equitable to make any order altering property.
In this case, I have accepted the wife’s evidence that there was an informal agreement that the parties keep their assets separate. The parties here married later in life and already held considerable assets. This is not a case where the party seeking orders under s 79 of the Act was arguably affected by a power imbalance within the relationship that may have impacted upon the agreement to keep finances separate. The roles of the parties in the relationship do not appear to have led to one or other having less capacity to generate income than if they had not assumed a particular role in the relationship (for example, where a party has remained out of their career whilst caring for children). There is no evidence that the applicant made significant non-financial contributions that would not be adequately reflected in the existing legal or equitable interests, rather, it appears that the significant non-financial contributions were made by the wife in maintaining the household. They arranged to share in the income earned from the business, consistent with their arrangement. The husband’s Will showed that he had not intended to share his estate with the wife, also consistent with the agreement. At best, following separation the husband could no longer reside in the home of the wife, however, it was in circumstances where he had considerable assets of his own.
Importantly, on the case as brought by the applicant, it is entirely unclear what the husband’s financial position was at the start or the end of the relationship, nor at the date of the husband’s death. However, it can be comfortably concluded that he had significant assets and a pension. The evidence does not demonstrate where all of his assets now are, save that some part of his assets appear to have been transferred to his son. The evidence is entirely unsatisfactory in this respect. This is not a case where one could conclude that the husband’s assets at the end of the marriage were modest, despite the lack of evidence, as may be the case with a long term homemaker spouse who has not had any significant financial dealings. It appears that at separation the husband had significant assets (if he had not dissipated them), a superannuation pension, and had caused a loss of over $1 million to the parties prior to his death.
The legal interests of the parties reflect their historic and intended arrangements, and in the husband’s case his intentions in his Will (made during the marriage) to provide no share of his assets to the wife. The wife’s Will, which provided for her estate to be left to her children, was unchanged by her following marriage, it appears in ignorance of the now not so well known legal rule that invalidates Wills made prior to marriage. Oddly, by operation of law her testamentary intentions to leave her estate to her children would have been defeated, had she predeceased the husband.
In the circumstances of this matter, I am not persuaded by the applicant that it is ‘just and equitable’ to make an order pursuant to s 79 of the Act.
There is no dispute that the parties have existing entitlements at law to half of the proceeds of the sale of the business. I accept that the determination of the wife in her capacity as trustee determines the entitlements of the parties to the superannuation monies.
In the circumstances, it is appropriate to make orders pursuant to s 78 of the Act declaring that the wife is entitled to one half of the proceeds of the business that are now held in the solicitor’s trust account, and that she is entitled to $60,000 from the monies held as a result of the liquidation of the superannuation fund. Consequential orders should be made for the wife’s entitlement from the sale of the business to be paid to her and for the superannuation monies to be paid to her account at her nominated superannuation fund.
The husband’s application for orders pursuant to s 79 must be dismissed.
I, therefore, make orders accordingly.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Riethmuller. Associate:
Dated: 1 March 2022
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