Ross and Ross

[2015] FCCA 2057

FEDERAL CIRCUIT COURT OF AUSTRALIA

ROSS & ROSS [2015] FCCA 2057

Catchwords:
FAMILY LAW – Property – Whether accepting a fair market value would do justice and equity to parties in a long marriage where one party seeks to retain home in a rising property market.

Legislation:

Family Law Act 1975, ss.75, 79

In the marriage of De Angelis [1999] FamCA 1609
C & M [2000] FamCA 1086

Applicant: MR ROSS

Respondent: MS ROSS

File Number: SYC 7593 of 2012

Judgment of: Judge Henderson

Hearing dates: 11 & 12 May, 8 July 2015

Date of Last Submission: 8 July 2015

Delivered at: Sydney

Delivered on: 6 August 2015

REPRESENTATION

Counsel for the Applicant: Mr Levy

Solicitors for the Applicant: WATTS MCCRAY LAWYERS

Counsel for the Respondent: Mr Batey

Solicitors for the Respondent: STIDWILL SOLICITORS

ORDERS

1. That each party shall do all things necessary to cause the Property S property to be listed for sale by auction to be conducted within 42 days of the making of these Orders or such other time as the selling agent recommends in order to sell the Property S property for the best price reasonably obtainable and upon sale the parties shall cause the proceeds of sale to be disbursed as follows:

   (a)In payment of agents commission and advertising expenses and legal expenses of the sale;

   (b)In payment of costs incurred in relation to the nomination of a real estate agent (if any), in payment of costs incurred in relation to the nomination of a solicitor (if any) and in payment of costs in relation to determination of value or selling price by the President of the NSW Division of the Australian Property Institute or his/her nominee (if any);

   (c)Discharge of all mortgages and other liabilities secured on title including overdraft to (omitted) Bank; and

   (d)The net balance then to be divided as follows:

   (i)In payment of 52% to the husband and the balance to the wife.

2. That, for the purposes of Order 1 above, the Real Estate Agent and auctioneer to act in respect of the sale shall be as agreed by the parties and, failing agreement within seven (7) days of the date of these Orders, then shall be a Real Estate Agent and auctioneer appointed by the President of the Real Estate Institute of New South Wales or his/her nominee.

3. That, for the purposes of Order 1 above, the Solicitor to act in respect of the sale shall be as agreed by the parties and, failing agreement within seven (7) days of the date of these Orders, then shall be a Solicitor appointed by the President of the Law Society of New South Wales or his/her nominee.

4. That, for the purposes of Order 1 above, the sale price for the property shall be as agreed between the parties and, failing agreement within seven (7) days of the date of these Orders, then shall be at a price determined by the President of the New South Wales Division of the Australian Property Institute or his/her nominee.

5. Pending the sale of the Property S property, the wife shall have the right of sole occupation of the Property S property and shall:

   (a)Keep the Property S property in good order and repair;

   (b)Cooperate in all reasonable ways with requests by Real Estate Agents and/or prospective purchasers including but not limited to:

   (i)Providing keys to obtain access; and

   (ii)Doing all things necessary to facilitate access to the Property S property at all reasonable times and facilitating access for inspection without interference;

   (c)Maintain the Property S property in a presentable condition so as to facilitate the sale including but not limited to presenting the Property S property in a neat and tidy condition at all times when the property is subject to inspection and to attend to such reasonable works as is recommended by the retained Real Estate Agent marketing the Property S property, in writing, with such works to be completed at a cost to be borne equally by the parties and in a timely fashion to ensure that the Property S property is marketed properly and in accordance with the timetable set within these Orders;

   (d)Do all things necessary to facilitate a sale at the earliest possible time and shall refrain from doing or saying anything which has the effect of hindering or preventing an inspection or a sale of the Property S property being given effect; and

   (e)The husband shall have liberty to inspect the Property S property, on giving to the Wife twenty four (24) hours notice and shall attend in the company of a Real Estate Agent retained to sell the Property S property in accordance with these Orders.

6. Pending sale of the Property S property provided for in Order 1, the wife shall be responsible for all mortgage payments, statutory rates and charges, other utilities, insurances, outgoings and expenses in relation to the property ('the outgoings') incurred prior to the completion date of the sale, and shall make all such payments as and when they fall due and the wife hereby indemnifies and shall keep indemnified the husband in respect of all outgoings in relation to the property whenever and however arising.

7. The wife be entitled to bid at the auction.

8. That otherwise as between the husband and the wife, and subject to the above orders, the husband shall retain all interest in and entitlement to:

   (a)All personal property now in his possession or control;

   (b)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his sole name; and

   (c)All interests in life insurance policies and superannuation funds standing in his sole name.

9. That otherwise as between the husband and the wife, and subject to the above orders, the wife shall retain all interest in and entitlement to:

   (a)All personal property now in her possession or control;

   (b)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in her sole name; and

   (c)All interests in life insurance policies and superannuation funds standing in her sole name.

10. That each party shall do all things necessary including providing all consents to give effect to these Orders in the time periods prescribed in these Orders.

11. That in the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these Orders, then the Registrar of the Court shall be appointed pursuant to Section 106A of the Family Law Act 1975 to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of Affidavit.

IT IS NOTED that publication of this judgment under the pseudonym Ross & Ross is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 7593 of 2012

MR ROSS

Applicant

And

MS ROSS

Respondent

REASONS FOR JUDGMENT

1. The matter of Ross was a property application, heard on 11 and 12 May 2015. Final submissions were heard on 8 July 2015.

2. The husband was the applicant and was represented by Mr Levy of counsel. The respondent wife was represented by Mr Batey of counsel.

3. The documents I read for the parties were as follows.

4. For the husband:

   a)His initiating application filed 6 September 2013;

   b)His affidavit filed 5 June 2014;

   c)Financial statement filed 6 May 2015;

   d)Case outline prepared by his counsel at the commencement of the trial;

   e)Final submissions prepared by counsel for 8 July 2015, together with the minute of the orders he sought and filed on 11 May 2015; and

   f)A document setting out the consequences of the orders sought by the husband.

5. For the husband, the exhibits were as follows:

   a)Husband’s Exhibit 1 is an email to Mr D from Mr Barry Frakes solicitor dated 8 May 2015. Mr D is the single expert who prepared a valuation on the former matrimonial home.

   b)Husband’s Exhibit 2, a notice to produce to the wife.

   c)Husband’s Exhibit 3, emails between Mr Frakes and Ms Jane Stidwell.

   d)Husband’s Exhibit 4, the wife’s tax returns for 2014.

   e)Husband’s Exhibit 5, the husband’s cost memo.

   f)Husband’s Exhibit 6, notice of assessment for the husband for years ended 2007, 2008 and 2009.

   g)Husband’s Exhibit 7, statements from the husband’s bank account ending (omitted) from July 2007 to December 2007, a period of time the wife asserted that the husband made no financial contribution to the household.

   h)Husband’s Exhibit 8, statements from the wife’s account ended (omitted) showing a balance of savings in her name at separation in September 2010 of $71,000 and in August 2009, some 12 months prior, $90,000.

   i)Husband’s Exhibit 9, documents from the wife in relation to the wife’s application for a loan with (omitted) Bank for $800,000 and a potential loan facility of $1.4 million.

6. For the wife, I read the following:

   a)Response to orders filed 9 September 2013.

   b)Affidavit of 6 June 2014.

   c)Financial statement of 20 April 2015.

   d)Case outline prepared by her counsel, together with the minute of the orders she sought and final submissions.

7. The wife tendered the following exhibits:

   a)Wife’s Exhibit 1, 2013 and 2014 financial returns for the Ross Family Trust, a trust which the husband has a beneficial interest in, set up by his father in 1978.

   b)Wife’s Exhibit 2, a résumé of the husband in relation to his work experience and job applications. This ultimately went nowhere.

   c)Wife’s Exhibit 3, a loan approval she obtained in the sum of $600,000 on 15 July 2014.

   d)Wife’s Exhibit 4, emails from the wife to her brothers Mr M and Mr T. Mr M has agreed to lend the wife $200,000 to assist her to buy out the husband’s interest in the home. Mr T has agreed to lend her $100,000. These emails are dated around 11 May 2015.

   e)Wife’s Exhibit 5, her 2014 tax return.

   f)Wife’s Exhibit 6, current value of her (omitted) share portfolio.

   g)Wife’s Exhibit 7, a dividend statement from her (omitted) share portfolio.

8. Court Exhibit 1 was the updated balance sheet.

9. An updated valuation of Mr D dated 20 April 2015 was filed on 11 May 2015.

10. The issues for determination were as follows:

    (1)Whether I accept the valuation prepared by Mr D, joint valuer, of the former matrimonial home at $1.8 million or, as asserted by the husband that I am unable to rely upon that valuation given the volatile and rising market in the Sydney market, particularly in the Property S area.

    (2)Depending upon my findings in relation to the above whether I permit the wife to buy out the husband’s interest in the former matrimonial home or, as contended for by the husband, the home is placed on the market by way of auction for sale.

    (3)Whether I take into account, as a financial resource available to the husband, his prospective interest in his mother’s estate. His mother is aged 88, is in a nursing home and has lost testamentary capacity. Her life expectancy is not known.

    (4)How I deal with the husband’s interest in the Ross Family Trust and whether that is a resource available to him.

    (5)Whether the wife’s (omitted) share portfolio in the wife’s name is her financial resource and not a matrimonial asset. The wife asserts the shares have been self-supporting in that she had a number of (omitted) shares at the commencement of cohabitation and marriage, has not put any money earned by her or the husband into additional purchase of those shares and that the share portfolio has grown of its own accord without contribution by either party.

    (6)The add back of $70,000 of monies the wife had at separation which she has expended in part and provided to her children in part.

    (7)The parties’ percentage entitlement to their assets. Each assert they are entitled to 55% of the assets.

The chronology

1. The husband and wife were born in 1960.

2. In 1980, the wife inherited her (omitted) shareholding. There is no evidence of the number or value of the wife’s shareholding in (omitted) at co-habitation. However, the husband conceded, properly, that the wife did have those shares at the commencement of cohabitation.

3. The parties commenced cohabitation in 1983.

4. The parties travelled to (country omitted) in 1985.

5. The parties purchased a (business omitted) with the husband and his brother in (omitted). The purchase price of the (business omitted) was $330,000.The parties worked hard in that (business omitted). It was not a financial success but did not result in any loss and provided income for the family.

6. The wife left employment as a (occupation omitted) for the (employer omitted) at (omitted) in 1985.

7. The wife obtained part-time employment as a (occupation omitted) in 1985 and studied for an (omitted) degree majoring in (omitted) at (omitted) University.

8. In either 1986 or 1987, the parties purchased a property at Property M. Nothing turns on whether it was purchased in 1986 or 1987.

9. The parties married in (omitted) 1989 and Y was born on (omitted) 1989.

10. In 1989, the wife commenced employment as a (occupation omitted).

11. The husband recommenced working with (employer omitted) and running the (business omitted) with his brother.

12. On (omitted) 1992, X (“X”), the parties’ son, was born.

13. 1992, the parties purchased a property at Property S, for $210,000.

14. 1992, the wife commenced studying a (studies omitted).

15. 1993/1994, the husband accepted a redundancy from (employer omitted), returned to work in the (business omitted) for six months on the basis that it was going to be sold. The (business omitted) was sold in 1994, some 10 years or so after purchase, for $360,000.

16. The husband works in (omitted) in 1994 for about six weeks. He commenced employment with the (employer omitted) as a (occupation omitted) in 1994.

17. 1996, the husband commenced studying for his (studies omitted) degree and he worked for (employer omitted).

18. 1997, the parties commenced renovating Property S and they lived in the wife’s brother’s home, for nine months, rent free.

19. 1998, the wife commenced a (business omitted) at (omitted), which is a (business omitted) she continues today.

20. 1998, the wife asserts she receives $40,000 as a redundancy from (employer omitted).

21. In 2000, the husband completed his (studies omitted) degree and took a job with (employer omitted) at (omitted), which required him to travel at times for business interstate, within the state and overseas.

22. The parties sold the Property M property in 2004 for $175,000.

23. In 2010, the husband commenced employment with the (employer omitted) as a (omitted).

24. 4 September 2010, the parties separated. The husband moved out of the home.

25. Husband rented privately while the wife and children remained in the home with a very small mortgage on that property, less than $100,000.

26. The husband became employed as a (occupation omitted) in 2010/2011.

27. He commenced employment with (employer omitted) in Melbourne in February 2011.

28. He moved to Melbourne and commenced a relationship with his current partner, Ms M.

29. Ms M and he returned to Sydney in 2012 and lived at his parents’ home in (omitted). His mother was then in a nursing home.

30. Ms M and the husband currently rent a property at (omitted).

31. From separation until mid-2013, the husband paid $600 per month by way of mortgage payments for the home in which the wife and children were living, at the same time as he was paying child support for his children.

32. The wife is obsessed with retaining the former matrimonial home. That is the most accurate word I can use to describe her desire to retain the home. Her case is that her contributions during the marriage were greater than the husbands at every level.

33. She asserted this was the case in her material and maintained that fiction, as I found it to be, in her case outline.

34. The wife asserted that the husband ceased contributing to the mortgage or payment for the family in about 2004, commenced to salary sacrifice his income into his superannuation fund and that, since that time she has supported the family as a sole parent, paid mortgages, all outgoings, with minimal assistance from him.

35. The wife asserted in her affidavit that when he worked for (employer omitted) he was in (country omitted) for work for 600 days and that she was then left to care for the children as a sole parent and his contribution to their current asset base is minimised because of that.

36. The wife further contends that the husband’s interest in the Ross Family Trust, his de facto partner’s income which is a financial resource to him and his prospective inheritance in his mother’s estate, she now no longer having testamentary capacity, would favour an adjustment to her of 5 per cent.

37. Consequent upon her position she asserts his entitlement is 45% of the assets including superannuation which she says is a payment to him of $800,000.

38. The husband’s case is that he is entitled to a 55 per cent adjustment in his favour. He asserts that the contribution-based entitlement of the parties to their jointly held assets at separation was equal and that, post-separation, he has made a superior contribution to the asset pool by way of paying the mortgage for some three years post-separation with the wife has remaining in the home whilst he has rented and the adjustment should favour him by 5 per cent.

39. The husband I found to be a witness of truth and credit. He did not embellish, he did not obfuscate in his answers and was careful and considered in his response to questions. He made appropriate concessions when he had made an error. For example, he said at paragraph 93 of his affidavit:

    I recall between 7 February 2013 and January 2014 I made 10 payments of $600 each towards the mortgage.

    He resiled from that position stating that when he finally looked at the statements, it was only five to six payments made, not 10.

40. I accept his evidence in the remainder of paragraph 93 of his affidavit that from September 2010, separation until 7 February 2013 he paid $22,940 in mortgage payments for a property he was not residing in whilst making child support payments for the children who were then minors. This is in circumstances where the wife continued to work full time as a (occupation omitted), as she always had.

41. The wife made no payment whatsoever towards the mortgage during that period. It is simply a fact that she was living in the home rent free. No concession was forthcoming from the wife on this point.

42. The husband was a witness of credit and truth. The husband conceded, for example, that his financial statement stating he owed the Ross Family Trust $10,000 was in error and he only owed $4,200 because he had made a payment to that trust. He said he was told that was the amount but he conceded the error.

43. He agreed that 25 per cent of the distribution of the family trust is paid to him. However he said he and his brother intend to wind up the trust in the future and pay the monies to their respective children, as was his father’s intention, when they wish to purchase a home. I accept this is what will happen to the capital in the trust which is some $120,000, namely that the money will be distributed to the 4 grandchildren.

44. The husband said that his de facto wife was not working at present and he did not know what her income was which is why he did not include it in his material as a resource available to him. I accept that evidence. Ultimately Ms M’s relevant tax returns were produced and show she had an income in 2013 of some $65,000 per annum. I accept she is not working at the moment and the husband is supporting her. When Ms M resumes working she will be a financial resource and that is a relevant factor.

1. Ms M owns a home in Melbourne where her adult son lives.

2. The husband agreed he had nothing to do with the wife’s (omitted) shares and he would not know and could not make a comment whether the wife’s assertion that the shares had grown by self-funding was correct or not. He just did not know.

3. He agreed that the (business omitted) was always a touch and go business but they did not lose money on it because, when they sold it, they were able to repay the loan they had borrowed to purchase it.

4. It was put to the husband that when he was working with (employer omitted) and working in (country omitted), travelling extensively within Australia and interstate, that the wife was the primary carer of the children. The husband said, “Yes. She did a good job”.

5. The wife’s assertion throughout her material, which was demolished in cross-examination that she in some way from her income managed to pay for everything and the husband did not contribute to the family or their life is not borne out on the facts.

6. The parties pooled their income in that each contributed all their income to pay for necessary expenses to support their family and provide a lifestyle for the children they deemed appropriate. The parents travelled extensively with their children. They believed it was important for their children and their children reaped the benefit. They attended private schools. Neither of their parents are high income earners, yet they have managed to have, today, a mortgage of $76,000, virtually no debt, and that can only have occurred if each of these parties, as the husband contends, applied all the income they earned towards the acquisition of assets and maintaining the joint debts, and the wife’s case is simply a fiction on her part.

7. Further unbeknownst to the husband at the time and 12 months prior to separation the wife had $90,000 saved in an account in her name which had reduced to $71,000 at separation. The husband had no such resource. Thus I am entitled to find that contrary to the wife’s case at some point she was able to save money from her income because the husband was paying all costs associated with the family. That can be the only explanation.

8. At times the husband said he worked triple shifts when he was working at (employer omitted), did double shifts and did two jobs. I accept that is exactly what he did.

9. The husband said he is surprised by the wife’s evidence that she has paid all the household bills since 2004. He was off work for one month in 2008, not 12 months, as the wife asserts.

10. Mr Batey under instruction asked “You made no contribution to a holiday that you took in 2008/2009”. The husband disagreed. The wife’s position on this issue was farcical. The wife had saved $90,000 in August 2009 and none of this money was used to fund the holiday to Italy. The parties and children could not have had this holiday without financial input from the husband given the level of the wife’s savings.

11. The wife could only have managed to save this money if the husband was paying the costs of the family and contributing, as he said he did the entirety of his income and financial resource to the support of the children. I accept the money was also saved due to the wife’s thrift however she cannot have it both ways. Saving that sum and paying all the costs of the family for 6 years is inconsistent with the income she earned.

12. The wife made much in her affidavit that the husband had drawn down on the mortgage account and she did not know what he did with it. As it turned out in cross-examination, this draw down of the mortgage was used for a holiday to (country omitted), maths tutoring and to pay off a credit card so that the parties had money to spend in (country omitted).

13. The wife would not make one concession of the husband’s contribution. Her evidence is not accepted by me and she is not a witness of truth either because she was careless with her answers or was being untruthful.

14. When pressed on matters that she clearly got wrong, such as the husband spending 600 days in (country omitted) – she would answer, “Oh, well, look, it doesn’t really matter because – well, maybe you’re right. I don’t know…. It felt like 600 days”. In reality it was in total one month in a six month period.

15. The wife was not careful in either the preparation of her affidavit or her oral evidence and this did not assist her case. Where there is an issue of contest, the husband’s evidence is to be preferred.

16. The wife claimed Y and X were living at the home at separation. Y had left for university. X was at home. He now maybe spends 16 weeks a year at the home. This wife has effectively lived in that home on her own since separation.

17. Mr D’s evidence in his valuation of 11 May 2015 refers to the rental the parties could have achieved for this property at Property S from 2010 to 2015. He found it be from 2010, $54,000 gross up to $65,000 gross in 2015. The wife has been living in a property that could have returned that income to them. Admittedly, the wife would have had to live somewhere else, but the children have not lived in that home since that time, and I will have regard to these figures as an indicator of the value to the wife of her sole occupation of that home.

18. The husband, of course, at times was paying $250 a week to rent a room. He has paid money directly to his children as adults when he need not have paid, because they are over the age of 18. He has bought them computers. He pays between four and five thousand dollars a year towards their car and car registration, etc. He was clear in his evidence his interest in the trust will be for his children, that is, to provide a deposit for them for a home.

19. The husband said he commenced his relationship with Ms M in 2011. They had been good friends. They are now a de facto couple. He initially rented from her a room at her home and that became a relationship where they shared expenses. He did not have to pay rent for a year when he lived at his mother’s home in (omitted). They rent now at (omitted) and he pays $2,000 a month towards that rent. Ms M pays $1,700 and she pays for the internet and cars. The husband unlike his children does not have a car and says he does not need it where he lives.

20. Ms M ceased her position with (employer omitted) in February 2015, went back to Melbourne and she is currently on holidays. The husband said he will buy a home with his share of the proceeds of sale and she will retain her home in Melbourne.

21. The wife’s evidence is in stark contrast to the husband. The wife said she wanted to change paragraph 24 of her affidavit to majority. Paragraph 24 of her affidavit is as follows:

    From this time until separation in 2010 –

    I paid for all the household expenses, now reads the majority.

22. That does not mean the husband did not pay other expenses which she did not such as the mortgage, the rates electricity, gas. The wife completely dismissed the husband’s contributions. When it was put to her in cross-examination by Mr Levy that, “I solely supported the children” was an exaggeration, the wife said, “It was not an exaggeration. I felt that I was solely looking after the children, but it’s not the case. He did look after the children on the weekend.” It was put to her that whoever was at home looked after the children and that must be correct.

23. At Paragraph 16 of her affidavit she says:

    The husband’s course took four years to complete and cost $20,000.

    The wife also obtained qualification during the relationship being a (qualifications omitted) yet makes no reference to that in her material.

24. At paragraph 14.

    I supported the husband solely by being responsible, caring for the children in the home as well as the usual driving the children to and from Property S to school at (omitted) each day, then to my work at (omitted) where I was employed and then collected them on the return trip.

    The wife had to concede the husband also drove the children to and from school, as all working parents do.

25. The wife asserted she obtained $40,000 when she left (employer omitted) in 1998. However, she had no documentary evidence to support this figure and had to admit it was just a guess on her part.

26. The wife’s assertion that the husband salary sacrificed his salary whilst at (employer omitted) was a complete lie or at best a fabrication. The wife said he told her that was what he was doing. What the husband said to her was that the bonuses he earned from his trips to (country omitted) with (employer omitted) went into his superannuation. The wife would not concede that is what he told her. I find this is what occurred. The wife either made this up or was careless about her recollection.

27. At paragraph 22, she says:

    The husband stopped contributing any money to the household or the relationship and commenced salary sacrificing, 2004.

    That is just an outright lie. His salary was paid into the joint account, to which she had access. Her story is simply not true. This gentleman did not stop contributing to his family or the relationship in 2004. The wife has made this up or is careless.

28. On one occasion she answered Mr Levy, “Oh, I suppose if he was contributing to our joint assets then it was wrong”. Namely paying the mortgage. The wife complained she had not benefited from the contribution he made to his superannuation. Neither however, did he from hers. Each would have benefited had their marriage continued.

29. At paragraph 22 she said:

    We did not have a joint bank account to which I had access.

    That is a lie and totally wrong. The fact she now asserts she chose not to access the joint account is a matter for her. She was able to access the account and I am not satisfied she did not access the account.

30. When the wife was pressed on her answer to her access to the joint account she said, “All right. Okay”. This careless attitude to telling the truth and making proper concessions of contribution, which the husband made did not assist her case.

31. The (country omitted) evidence of 600 days away or 2 years was astonishing. The wife’s answer, “that’s not right. It felt like 600 days”, was glib.

32. The wife finally conceded that not one single thing changed in their financial arrangements from 2004, 2006, 2007 or 2008. That the husband paid for the food when he was there: “Yes”. He paid the mortgage from the joint account: “Yes”. He paid utilities in the house: “Yes”. I am left wondering what the complaint was of the husband by the wife of these years in her affidavit.

33. The wife says at paragraph 23 she saw none of the large payouts from the (country omitted) job. These were the bonuses he put into his superannuation account. When this proposition was put to her she said, “Well, I didn’t know what happened at the time”. That is not what her affidavit tells me. She tells me she did know and that he was keeping his money. Nothing could be further from the truth. Again the wife was being at best careless or at worst telling a lie.

34. I accept Mr Levy’s position that the wife was trying to create in me a suspicion that the husband in some way had money which he was not contributing to the support of the family, did not tell her of this money and has kept it for himself. Nothing could be further from the truth. In fact, the reality is the wife was the one who had money the husband had no idea of, being her savings at separation.

35. The wife complained he was unemployed for 12 months in 2006 and took 12 months off work. That was a lie. He was out of work for one month. His tax returns, Husband’s Exhibit 6, show that he was working and earning income in that time, being year ended 2007, taxable income $73,000; 2008, taxable income $77,000; 2009, taxable income $73,000.

36. When this fabrication was put to the wife she answered, “Well, I don’t know why I said he had 12 months off. I must have been referring to something else”. The husband was working from home and earning income. The wife ultimately agreed he did support the family in this 12 month period.

37. I find he has always supported his family to the best of his ability and has done so when there was no obligation so to do for example paying the mortgage for three years after separation.

38. Mr Levy in an endeavour to have the wife face the reality of where their money was spent explored the costs involved in extensive travelling with the children. The wife agreed it was difficult to find money at times, which is the husband’s case. This is not a case of unaccounted for income or missing money at all other than the savings the wife had at separation which were unknown to the husband until this case commenced.

39. The most concerning evidence of the wife was when she was pressed on her assertion that the husband repaid his credit card of $10,000 from a drawdown of the mortgage just prior to separation and she did had no idea what this was for.

40. At paragraph 29 of her affidavit she says:

    At the time of separation, the mortgage was $76,000. I am aware he would been redrawing against the mortgage from time to time although I did not know for what purpose. I have since learned from my solicitor that the husband used 10 thousand of the 76 to make a repayment on his credit card bill shortly before separation.

    The husband’s evidence was that he paid off his credit card with this money so the parties could have money to spend when they went to Italy. When this was put to the wife she said, “Well, so did I”.

41. The wife knew precisely what the money was drawn down for. She was asked “Why did you write this?” She answered, “I have to write down something about the finances”. The truth is what is written not a fiction. It was put to her she took no care in her evidence which she denied.

42. I find the wife wrote down whatever she thought would assist her case to retain the home. None of the criticisms by the wife of the husband in her material are accepted by me.

43. I find up to separation that the husband and wife made an equal contribution to their assets by way of direct financial contribution and parent and homemaking.

44. Post-separation is a very different issue. The wife had saved $71,000, which she determined to give to her children and do with whatever she wanted. That sum will be added back to the pool of assets available for distribution.

45. The wife remained in the former matrimonial home to the exclusion of the husband while he continued to pay the mortgage. That will be a factor I will take into consideration as a post-separation contribution and/or any other factor under section 75(2)(o) of the Act.

46. I accept that the wife’s (omitted) shares were hers at cohabitation and, as best I can, I accept that no matrimonial money went into them; however, they are available to her and not the husband; they are her financial resource. I will have regard to those shares in the exercise of my discretion.

47. In relation to the trust the husband has an interest in, I accept his evidence unreservedly that, when that trust is wound up, it will be paid to his children and his niece and nephew to assist them to afford a home and I will not take account of his interest in that trust into the future.

48. As difficult as it is for the husband to accept, the wife has made out a case, relevant to the case law, that I must have regard to his interest in his mother’s estate now she has no testamentary disposition, and I do that on the basis of the following cases. In the Marriage of De Angelis[1], where the Full Court said at page 325, paragraph 95:

    The discussion by the Full Court in White and Tulloch & White (1995) 127 FAM LR 105 of this question of the treatment of anticipated inheritance in property settlement proceedings indicates there is no absolute rule. Each case will depend on its facts; however, we think it important to remember that the Court is required in exercising the jurisdiction under section 79 of the Act to accord justice and equity to both parties. The question, therefore, has to be asked whether, in the present case, it would be just and equitable to the husband for the Court to have ignored the probability that, in what could be very well a short period of time, given the ages of her aunt and mother, the wife could well be the owner of two properties having a combined value of almost the same amount as the value of the parties’ property currently for distribution. We consider it would have been unjust to the husband to ignore this matter even if it was categorised only as a possibility and not a probability.

    [1] [1999] FamCA 1609.

49. And again in the decision of C & M[2], an unpublished decision of Moore J, she quotes at page 32:

    This argument about prospective inheritance is becoming a feature of matters being litigated in more recent times, no doubt as a result of this decision [referring to De Angelis & De Angelis] being given some prominence in professional writings, and the evidence is being sought to support it, particularly the production of a will of a relative of one of the parties. In my experience, more often than not, when it has been raised in a particular case, there has been a misunderstanding of the basis upon which De Angelis proceeded. On my reading, it is confined to a rather narrow band of circumstances and is not an invitation to intrude and offend by ghoulish pursuit of the current will of a parent of one party, merely because that parent may be of advanced years, or a concession about the value of their property.

    [2] [2000] FamCA 1086.

50. Her Honour found that the circumstances of C & M did fall within the category of cases to which the Full Court was referring and thus the Court would have regard to a prospective interest in a general way being the likelihood that the wife (in that case) will inherit her mother’s property in the not too distant future. In Her Honour’s matter the wife’s mother was of advanced years and had lost her testamentary capacity and the wife was the sole beneficiary of her mother’s estate.

51. The facts in this matter relevant to this issue are as follows and found at paragraph 98 of the husband’s affidavit.

52. The husband and his brother are the beneficiaries of their mother’s estate. She is 88 years of age. She suffers from Alzheimer’s and has lost her testamentary capacity. He and his brother share the estate. The husband has assessed that it is worth approximately $960,000.

53. I accept his mother has ongoing health costs, which will increase, as she is in a nursing home. She has a bond in the nursing home and she has some $960,000 cash to support her while she lives. His mother only receives a small pension and the husband has no idea what her final assets will be in the estate or what her future further health costs will be and whether they are all covered by Medicare.

54. I accept that the length of her life eats into the value of the bond at the end. The bond diminishes by three per cent each year.

55. However looking at the above cases and given she has lost testamentary capacity and is of advanced age, I must, in accordance with those decisions – De Angelis and C & M – take this prospective inheritance into account in the exercise of my discretion.

What are the assets for division?

1. Before I assess that important fact I will determine whether I adopt the wife’s position and accept the value of the home at $1.8 million and give her an opportunity to buy out the husband’s interest at that price or accept the husband’s position that it be sold at auction.

2. The husband has contended since after the conciliation conference that the property should be sold. It is in an area of Sydney, Property S, which is highly prized. The market is exceedingly volatile in an upward trajectory in Sydney and particularly so in Property S at this time.

3. Auctions commonly result in properties reaching a far higher figure than might have been anticipated and have reached at times 100% clearance rates and a regular clearance rate of 90%. This evidence came from cross-examination of Mr D and is common knowledge in Sydney. The wife knows this to be the case.

4. At the conciliation conference which was held in September 2013 the home was valued at $1.2 million.

5. The matter was listed for trial in June 2014 however those dates were vacated in February 2014 and a trial set in July 2014. Unfortunately the hearing could not be reached at that time and was listed for trial in July 2015.

1. A valuation was carried out by Mr D in March 2014 for the July 2014 hearing and came in at $1.6 million. The updated valuation for the 2015 trial came in at $1.8 million in 20 April 2015.

2. The husband’s case is that property has continued to rise in value in the 3 months since 20 April 2015 to today and will continue to rise. That the most just and equitable manner in which the parties should receive their entitlement to their property is from a sale at auction where the sale price will be maximised.

3. The cross-examination of Mr D was illuminating. Ultimately he adhered to his valuation of $1.8 million as a fair market value. However I am not persuaded that at this time a fair market value is the appropriate way to determine value to do justice and equity between the parties.

4. Mr Levy put the comparables he had used in his valuation to him together with other comparables which were contained in Husband’s Exhibit 1, being a letter from Mr Frakes to Mr D dated 8 May 2015.

5. There were six properties that the husband asserted were comparables as follows.

6. (omitted) sold for just over $3 million in March 2015.

7. (omitted) sold for $2,050,000 on 28 February 2015.

8. (omitted) sold 28 March 2015 for $3,200,000.

9. (omitted) sold 28 March 2015 for $1,865,000.

10. (omitted) sold 21 March 2015 for $2,120,000.

11. (omitted) sold 23 March 2015 for $1,536,000. These properties were all put to Mr D and he knew them all.

12. (omitted), was of a similar land size and home design as the subject property with which he agreed. He said it was a somewhat larger block, had an extra bathroom, had three double bedrooms, but he did not inspect it. It was renovated to the level of a prestige home which the subject property is not.

13. Mr Levy put to Mr D that if some $300,000 was spent on the subject property would that renovate the property to the prestige home (omitted) was. Mr D said the renovations could be $500,000 to a million, there is no limit on renovating a property in Property S, and that (omitted) was vastly superior property.

14. Mr D had to agree that the difference between the value of (omitted) at $3.2 million and this property, $1.8 million, being a difference of $1.4 million, would not be the amount of money needed to get the subject property to the level of a prestige terrace. Mr D then said (omitted) has other advantages. It is a better location, a better street and it has a large deck courtyard. Mr D said you cannot do a valuation by pulling out one isolated sale, which is correct.

15. Mr Levy then pressed Mr D on the property at (omitted) which sold for $2,100,000. This is on a narrower block and is a smaller home. Mr D said that (omitted) is a location which is reasonably comparable to the subject property but it had two bathrooms.

16. (omitted), which sold for $2.8 million, was the same width as the subject property, five metres to 5.6 metres and a similar home. Mr Levy put to him that, on that basis, the subject property at 1.8 is too low a value. Mr D would not agree. Mr D said (omitted) was a much more significantly renovated property and on a larger block. He said it was a superior condition and presentation internally, had potential for further extension, but agreed it was a premium price achieved under the current strong market conditions. Mr Levy put to Mr D that a coat of paint on the subject property would bring it up to this same standard. He did not agree.

17. (omitted) is a very interesting property. That was sold on 28 March for $1,865,000. That property, on anyone’s reading, is a significantly inferior property to the current property. It is a much narrower block, has no rear access with which Mr D agreed. Mr Levy said it is inferior to the subject property and Mr D agreed it was inferior. Yet it sold for more than the valuation of the subject property. Mr D would not agree that the subject property was therefore worth more than $1.8 million.

18. (omitted) was a derelict home and sold for $1.536 million. It is on a smaller block at 114 square metres whereas the subject property is 231 square metres. Mr D would not agree that the sale of this derelict property, which was vastly inferior to the subject property, at $1,536,000, means that the subject property would potentially reach more than he valued it at. He disagreed.

19. He was asked how much it would take to bring (omitted) up to the condition of the subject property. He said about 400 to 500 thousand. That would mean that (omitted), a derelict property, much smaller at only 114 square metres compared with 231 square metres would be valued at $2,000,000 if it had $400,000 to $500,000 spent on it. This is $200,000 more than the subject property.

20. Mr D agreed the clearance rate has been 90 to 100 per cent. It was 100 per cent in the month before he gave evidence. He gave evidence in May, so that was in April 2015. He understood and agreed that many of the reserve prices are being exceeded. He said the market was in a significant boom period and it is difficult to establish a fair market value due to the strength of the market. The decrease in interest rates for a number of years in a market like Sydney increases values. Mr D agreed that was the case.

21. He said he has worked through three boom markets in Sydney: in the late 1980s, 2002 to 2003 and now. He agreed property is selling at auction highly in excess of the reserves. It was put to him that at auction a reserve of 1.8 is highly likely to be exceeded. Mr D agreed.

22. He then said that what he was doing was establishing a fair market value to allow one party to purchase out the other. He agreed that agents are being astonished by the prices being achieved, and it was difficult for him to deny that a value set today would be out of date in two weeks.

23. I accept that what Mr D was doing was establishing a fair market value to allow one party to buy the other out, not necessarily the best price reasonably obtainable. A fair market value at a point in time may not be the best price reasonably obtainable. Even on Mr D’s evidence an auction is likely to realise a higher price at this time.

24. Mr D said a valuation may vary by 10%. At $1.8 million that is a difference of nearly $200,000. Even if auction costs, agents commission and solicitors costs amounted to $60,000 to $70,000 this still gives the parties an additional $110,000 to divide up between them and possibly much more if the home sells for over $2 million.

25. The husband seeks a sale by way of auction to enable the parties obtain the best price reasonably obtainable. Given the limitations of a valuation which can vary by 10% and the strong Sydney market particularly in Property S, I find that to do justice and equity to the parties the husband’s application is to be preferred to that of the wife.

26. If I accept the wife’s position the wife only reaps the benefit of the strong Sydney property market. As this is the only significant liquid asset there being no other liquid assets approaching a value from which I could make an adjustment to the husband to make up for the windfall to the wife in retaining the home at a value of $1.8 million, a sale is the most appropriate means to ensure each receives the benefit of their contributions over the years of the marriage.

27. Going now to the assets for division. I find them to be as follows.

28. The matrimonial home, which Mr D has valued at 1.8 million. Although I do not accept that is necessarily its value I need some idea of value as part of the factors to take into account in exercising my discretion as an understanding of the result of the orders I propose to make is part of the determination of whether the orders are just and equitable.

29. I will not include the parties’ present savings accounts. They have been separated for many years.

30. The wife’s (omitted) business, $12,812.

31. I will add back the $71,000 that the wife had in savings at separation. That was clearly joint money.

32. This is liquid assets of $1,883, 812.

33. Household contents. Each has modest contents. The wife has agreed for the husband to take what he wishes from home. I will not include this item in the balance sheet.

34. I will not include the current value of the wife’s (omitted) shares at $128,598 as a matrimonial asset rather as a resource available to her and not to the husband. Although I cannot be certain that as the wife asserts she did not use earnings to increase the share value the husband agrees they were hers at separation and given the frugality with which the parties led their life this version is more likely than not to be true.

35. The husband’s interest in the Ross Family Trust. The husband has a 25 per cent interest in that trust which is worth $120,000 or so. However, I accept that his interest will go to his children. Given that I found him a witness of truth, I will not include this interest in the balance sheet.

36. There is the prospective interest in the husband’s his mother’s estate, which I will have regard to. I cannot include it in the balance sheet as it is unknown and not yet vested but it is a relevant resource into the future.

37. Liabilities.

38. The mortgage on the matrimonial home, $76,000.

39. Debt to the Ross Family Trust of $4,495. I will take into account as this money was borrowed and used during the marriage.

40. Taking the debts of $80,495 from the liquid assets of $1,883,812 is $1,803,317 for distribution.

41. Superannuation.

42. The husband has $303,000 in superannuation.

43. The combination of the wife’s total superannuation is $290,000.

44. I will take a two pool approach and treat superannuation and liquid assets separately. These parties have a number of years before they can access their superannuation.

45. The balance sheet.

ASSETS
Former matrimonial home.	$1,800,000.
Wife’s (omitted) business.	$12,812.
Add back of wife’s savings at separation.	$71,000.
TOTAL	$1,883,812.
LIABILITIES
Mortgage on former matrimonial home.	$76,000.
Debt to the Ross Family Trust	$4,495.
TOTAL	$80,495.
NET ASSETS	$1,803,317.

SUPERANNUATION
Husband’s superannuation.	$303,000.
Wife’s superannuation.	$290,000.

1. I find the evidence is overwhelming that the parties had made an equal contribution to their asset base at separation. The wife’s endeavours to convince me that this honourable and trustworthy man in some way squandered or squirrelled away money or did not support his family only made it impossible for me to accept her evidence when it was inconsistent with his. The wife is not a witness of truth at worst, and is careless in her recitation of history and facts, at best.

2. Post-separation, the wife has had the use of the former matrimonial home without paying a mortgage for three years. The children have been independent, studying at university and the like, with the father supporting them to the best of his ability. The husband has had to rent or find alternative accommodation to the wife. He has a resource in his de facto partner, I accept.

3. The wife has had the full benefit and use of her (omitted) shares and the dividends from that share, that being her financial resource.

4. Their incomes despite the wife’s assertion to the contrary, are very similar. In Husband’s Exhibit 9 the wife’s loan application she gives her income as $98,000 per annum, similar to the husband’s, and I accept that that is what her income is. There is little difference in income and earning capacity. There is only some $13,000 difference in their superannuation. The wife has $290,000 and he the husband $303,000 and each have their health.

5. The significant adjustment for the husband is his prospective inheritance in his mother’s estate and his de facto wife who is a financial resource. I make an allowance of 3% for those factors.

6. The significant adjustment for the wife is her sole occupation of the home for four and a half years and her (omitted) shares.

7. I accept Mr Levy’s position that I should adjust to the husband by way of his post-separation contribution and, having regard to 75(2)(o), any other factor that is relevant, the wife’s occupation of the home and his payment of that mortgage for three years, and her ownership of the (omitted) shares. I make an allowance of 5% for those factors.

8. This results in a division of the parties’ assets of 52% to the husband and 48% to the wife.

9. I do not propose to make any adjustment to parties’ superannuation. The husband has slightly more than the wife of about $20,000. However she has a readily liquid resource in her (omitted) shareholding whereas superannuation is not accessible for the parties at this time and I will make no adjustment.

10. Does this result in a just and equitable division?

11. The liquid assets available for distribution are $1,803,317.

12. 52% of those assets are $937,724 to the husband and $865,592 to the wife. These figures are all based on a value of the home at $1.8 million.

13. The parties are entitled to achieve the best price reasonably obtainable for their property. It is their most significant asset. It is almost certain that the home will realise more than $1.8 million at auction and thus the parties are highly likely to receive more than these amounts. They could each receive around the million dollar mark to buy their own real estate.

14. I will ensure by order that the wife is entitled to bid at auction and buy out her husband’s interest in the home and I will make such an order to alleviate any stamp duty issues should she be successful.

15. I find these orders do justice and equity to the parties and I will so order.

I certify that the preceding one hundred and seventy-four (174) paragraphs are a true copy of the reasons for judgment of Judge Henderson

Date:  6 August 2015