ROY & YALDEN
[2020] FamCA 1026
•7 December 2020
FAMILY COURT OF AUSTRALIA
| ROY & YALDEN | [2020] FamCA 1026 |
| FAMILY LAW – PROPERTY – Final property orders – Relatively short period of cohabitation and marriage – Where the wife seeks orders for a just and equitable distribution of property under s 79 of the Family Law Act 1975 (Cth) – Where the husband opposes any alteration of the parties’ respective property interests – Where the husband asserts that monies advanced to him by members of his family and family companies constitute liabilities to be included on the balance sheet – Whether the purported loans are legally enforceable – Where the husband seeks a declaration that real property owned solely by the wife is held on trust for the wife and the husband as tenants in common in unequal shares – Where the husband made contributions to the purchase of the real property when the parties were in a de facto relationship – Court finds that the husband has an equitable interest in the property – Orders made for distribution of property in favour of the husband – Order made declaring the wife as sole owner of real property in law and in equity. |
| Family Law Act 1975 (Cth) ss 75, 79 Limitation Act 1969 (NSW) ss 14, 16, 64 Income Tax Assessment Act 1936 |
| Agius & Agius (2010) FLC 93-442 Ashton v Pratt(No 2) [2012] NSWSC 3 Bevan & Bevan (2013) FLC 93-545 Bremner & Bremner (1995) FLC 92-560 Britt & Britt (2017) FLC 93-764 Calder & Calder (2016) FLC 93-691 Calverley v Green (1984) 155 CLR 242 Chaudhary v Chaudhary [2017] NSWCA 222 Chow & Harris [2010] FamCA 366 Coghlan and Coghlan (2005) FLC 93-220 D & D [2003] FamCA 473 Dickons v Dickons (2012) 20 Fam LR 244 Dickson &Dickson (1999) FLC 92-843 DJM & JLM (1998) FLC 92-816 Douglas and Douglas (2006) FLC 93-300 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Fazarri & Hsiao [No 2] [2018] FamCA 447 Figgins & Figgins (2002) FLC 93-122 Fisher v Fisher (1986) 161 CLR 438 G & G [2006] FamCA 877 Grefeld & Grefeld [2010] FamCA 504 Harriott & Arena (2016) FLC 93-702 Hearne & Hearne (2015) 53 Fam LR 454 Heydon v The Perpetual Executors Trustees and Agency Co WA Limited (1930) 45 CLR 111 Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 Horrigan & Horrigan [2020] FamCAFC 25 Hurst & Hurst (2018) FLC 93-851 In the Marriage of Biltoft (1995) FLC 92-614 In the marriage of Bushby and Bushby (1988) FLC 91-919 In the marriage of Marinko and Marinko (1985) FLC 91-609 In the marriage of Pierce (1998) FLC 92-844 In the marriage of Waters and Jurek (1995) FLC 92-635 Jabour & Jabour (2019) FLC 93-898 Kennon v. Kennon (1997) FLC 92-757 Kildea v Kildea (2007) 38 Fam LR 347 Kowaliw & Kowaliw (1981) FLC 91-092 L & L [1994] FamCA 60 Lenehan & Lenehan (1987) FLC 91-814 Lovine & Connor (2012) FLC 93-515 Mallet v Mallet (1984) 156 CLR 605 Manolis & Manolis (No. 2) [2011] FamCAFC 105 Mayne & Mayne (2011) FLC 93-479 Money & Money (1994) FLC 92-485 Napier v Public Trustee (Western Australia) (1980) 6 Fam LR 238 Neale v Bank of Western Australia [2014] NSWSC 315 Norbis v Norbis (1986) 161 CLR 513 Omacini & Omacini (2005) FLC 93-218 Petruski & Balewa (2013) 49 Fam LR 116 Q & Q [1999] FamCA 1314 Reitsema and Reitsema (1991) 15 Fam LR 706 Rodgers & Rodgers (No 2) (2016) FLC 93-712 South Australia v Commonwealth (1962) 108 CLR 130 Stage Club Ltd v Millers Hotels Pty Ltd (1981) 150 CLR 535 Stanford v Stanford (2012) 247 CLR 108 Strand & Strand (No. 2) [2018] FamCAFC 247 Townsend & Townsend (1995) FLC 92-569 Trevi & Trevi (2018) FLC 93-858 United Pacific Finance Pty Ltd (Receivers and Managers Appointed) v Govindasamy [2020] NSWSC 128 Wallis & Manning (2017) FLC 93-759 Webster and Webster [1998] FamCA 1517 Young v Queensland Trustees Ltd (1956) 99 CLR 560 |
| APPLICANT: | Ms Roy |
| RESPONDENT: | Mr Yalden |
| FILE NUMBER: | SYC | 1833 | of | 2015 |
| DATE DELIVERED: | 7 December 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland DCJ |
| HEARING DATE: | 25, 26, 27, 28 and 29 May 2020 and by way of written submissions |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Coulton |
| SOLICITOR FOR THE APPLICANT: | Law Corporation Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Mr Othen |
| SOLICITOR FOR THE RESPONDENT: | Broun Abrahams Burreket |
Orders
That within 60 days of the date of these Orders, Mr Yalden (“the husband”) pay to Ms Roy (“the wife”) the sum of $121,191.
That the wife be declared the sole owner of the property known as B Street, Suburb C (“the Suburb C property”), in equity and law.
That the husband be declared the sole owner of the property known as D Street, Suburb E (“the D Street property”) in equity and law.
That both parties be declared the sole owners of any superannuation in their respective names.
That if the husband fails to pay the sum of $121,191 to the wife within 60 days of the date of these Orders, in accordance with Order 1 herein, the husband will do all acts and things and sign all documents necessary to sell the property known as D Street, Suburb E and use the proceeds thereof to pay the wife.
That each party shall be solely entitled, to the exclusion of the other, to all property and chattels of whatsoever nature and kind in their respective possession, ownership and control in equity or law.
That the wife be solely responsible for meeting the outstanding mortgage in respect to the Suburb C property.
That the husband be solely responsible for meeting the outstanding mortgage in respect to the D Street property.
That each party indemnify the other from and against all actions, claims, suits and demands as may be made against them in relation to all liabilities in their own name.
These orders have been amended pursuant to rule 17.02 of the Family Law Rules 2004.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Roy & Yalden has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 1833 of 2015
| Ms Roy |
Applicant
And
| Mr Yalden |
Respondent
REASONS FOR JUDGMENT
Introduction
This decision concerns property proceedings between Ms Roy (“the wife”) and Mr Yalden (“the husband”). The parties were in a de facto relationship for six (6) years and were married for approximately six (6) months before they separated. There are no children of the relationship.
A significant issue in this matter is the determination of whether sums of money lent to the husband by his mother and sisters can be characterised as loans and whether relevant loan documents, in some case created retrospectively, establish the existence of binding legal agreements.
Other relevant issues relate to whether a one-pool or two-pool approach should be taken in respect to the property. The husband contends that, depending upon the Court’s finding in respect to determining the nature and extent of his interest in the property in which the parties resided as a couple, the Court should take a two-pool approach with that property constituting a separate pool.
I have, however, accepted the wife’s contentions that the Court should assess the nature and quality of the parties’ contributions in respect to the totality of the parties’ property considered on the basis of it being a combined pool.
The end result is that I have rejected many of the husband’s contentions as to the existence of liabilities that he asserts require monies to be repaid to his mother and his sisters. At the same time, I have not accepted the wife’s contentions as to the extent to which her contributions justify a substantial adjustment of the parties’ property in her favour.
Background
Agreed facts
The parties helpfully agreed on the following facts and, where they disagreed, their respective factual contentions.
On … 1981, the husband was born. He is currently aged 39 years.
On … 1982, the wife was born. She is currently aged 38 years.
On 25 April 2002, the parties met.
In July 2002, the parties commenced their relationship. Both parties were employed on a full-time basis at the time.
On … 2002, the husband’s father, regrettably, passed away.
On 25 August 2003, the husband inherited the following from his father’s estate:
·A one third (1/3) interest in the property located at F Street, Suburb E (“the F Street property”);
·A one third (1/3) interest in the property located at G Street, Suburb E (“the G Street property”); and
·A 52 per cent shareholding in H Pty Ltd, a family company in the business of manufacturing and distributing consumer goods.
On 3 February 2003, the husband commenced employment as a Manager at H Pty Ltd.
In 2003, the husband and his two (2) sisters, Ms B Yalden and Ms C Yalden, agreed to vary the share structure of H Pty Ltd to give effect to the terms of their father’s Will. The husband and his sisters each received a 30 per cent interest in H Pty Ltd and the remaining 10 per cent interest in the company was given to the husband’s mother, Ms D Yalden.
From 2003 until 2005, the wife was employed at J Company and was earning $30,000 per annum. This later increased to $45,000 per annum.
In 2005, the wife commenced employment at K Company and was earning $50,000 per annum. The wife continued employment at K Company until 2007 by which time her income had increased to $60,000.
In July 2005, the husband purchased a property located at D Street, Suburb E (“the D Street property”).
In November 2005, the husband was promoted to the position of Managing Director of H Pty Ltd and was earning approximately $110,000 per annum.
In September 2006, the parties commenced cohabitating in rental accommodation in Suburb L. At the time, the wife owned a motor vehicle which she contends was valued at approximately $4,000.
In 2007, the wife commenced employment at M Company. She was initially earning approximately $70,000, which had increased to $110,000 by 2012.
From December 2008 until approximately August 2009, the parties resided in rental accommodation in Suburb C. The parties shared equally the costs of rent in the sum of $400 per week.
In June 2009, the wife purchased, in her sole name, a property located at B Street, Suburb C (“the Suburb C property”) for $495,000. The husband contributed $70,000 towards the purchase. There is some disagreement between the parties as to the precise amount but it is agreed that the wife contributed approximately $30,000 towards the purchase price and the remainder was paid by accessing a loan from National Australia Bank (“NAB”). The parties agree that by purchasing the property in the wife’s name, she was able to obtain a reduction in the amount of stamp duty that otherwise would have been payable in respect to the purchase.
In the financial year ending 30 June 2009, the husband’s total annual income was $129,795.
In 2010, a friend of the parties, Mr N, commenced residing with the parties at the Suburb C property and paid rent in the amount of $200 per week to the wife. Mr N and the parties equally shared the expense of outgoings in relation to the Suburb C property. The husband contends that the wife was able to do this from the monies paid to her by Mr N but the wife contends that she applied funds provided by Mr N and continued to contribute her share in the same proportion as Mr N and the husband.
In or about 2010, the parties carried out renovations on the Suburb C property. The work consisted of installing new wardrobes and installing and painting a false ceiling, a task which Mr N assisted the parties with. The value of those works totalled approximately $4,500.
In the financial year ending 30 June 2010, the husband’s total annual income was $150,334.
In the financial year ending 30 June 2011, the husband’s total annual income was $163,823.
In 2012, the husband began to withdraw from his personal and professional life and commenced using illicit substances which he contends was as a result of the pressures he experienced while managing H Pty Ltd.
In the financial year ending 30 June 2012, the husband’s total annual income was $198,808.
On 2 November 2012, the parties married.
On 8 March 2013, the husband ceased working at H Pty Ltd.
In 2013, the wife commenced employment as a freelance contractor at M Company and was earning $150,000 per annum.
On 23 May 2013, the parties separated. At that time, the amount owing to NAB in respect of the mortgage over the Suburb C property was approximately $380,000.
In the financial year ending 30 June 2013, the husband’s total annual income was $116,331.
In 2013, the husband commenced a relationship with Ms O.
In 2013, Ms O was involved in a car accident and, regrettably, passed away as a result of her injuries. Consequent to this traumatic event, the husband attests to using illicit substances more frequently which he contends he took in order to cope with his trauma of losing Ms O in tragic circumstances.
On a Friday in late-2013, the husband suffered a drug overdose and was admitted to P Hospital. The husband attests to attending the Q Clinic on the following Monday. This was pursuant to a recommendation by the treating psychiatrist at P Hospital. The husband stayed at Q Clinic for a period of three (3) weeks.
In 2014, the husband resided in rental accommodation in Suburb R for 12 months and was responsible for payment of all rent and associated expenses.
On 13 April 2015, the husband commenced employment at S Pty Limited and was earning $80,000 per annum.
On 7 November 2015, the parties were divorced.
In 2015, the husband commenced residing at the D Street property.
In 2016, the wife refinanced the loan from NAB which had initially been secured over the Suburb C property.
In July 2016, the wife vacated the Suburb C property in order to earn rental income to pay the interest accruing on the loan from NAB. The wife resided with her parents until October 2017, save for a period from October 2016 until March 2017, when she visited her sister in City T.
In March 2017, the wife commenced full-time employment at V Company. She is currently still employed at V Company and earns approximately $161,000 per annum.
In October 2017, the wife commenced residing in a rental accommodation in Suburb U.
In 2017, the husband’s income increased to $90,000 per annum.
On 11 December 2017, the wife became an independent healthcare consultant. She contends, however, that she receives little income from this venture.
In early-2018, the husband’s sister, Ms B Yalden, requested the husband to obtain a mortgage secured against the G Street property in the sum of $400,000 to inject capital into H Pty Ltd. The husband obtained an interest-only loan and attests to the rental income derived from the G Street property being sufficient to meet the loan repayments.
On 23 April 2019, the wife moved to an alternate rental accommodation in Suburb U. The rent payable for this property is $880 per week. Since June 2019, however, a tenant has been residing with the wife and contributing $350 towards payment of rent.
In July 2019, the wife refinanced the loan from NAB to DD Bank. The wife attests to doing this upon receiving advice from a financial planner. The wife also entered into an additional loan agreement for monies advanced to her by DD Bank in the sum of $75,032.
On … 2019, the husband’s grandfather, Mr F Yalden, regrettably passed away. The husband did not receive any gift from the estate of Mr F Yalden.
On 12 November 2019, probate for the estate of Mr F Yalden was granted to the husband’s uncle, Mr H Yalden, as the executor appointed under the Will.
Factual contentions by the wife
Further to those facts which have been agreed between the parties, the wife contends that the Court should accept her evidence in respect to the immediately following factual contentions.
The wife contends that, in 2006, she inherited $25,000 from her grandmother. She further states that this money was contributed towards payment of the deposit for the purchase of the Suburb C property in 2009. The husband disputes this contention.
During the course of the parties’ relationship, the wife attests to carrying out a majority of the homemaking contributions and providing support to the husband by attending his workplace and attending events such as dinners and corporate functions. The husband, however, disputes this and contends that the parties shared their homemaking responsibilities equally and the wife did not attend his workplace nor such events as contended by the wife.
In respect of the repayments of the loan advanced to the parties by NAB for the purchase of the Suburb C property, the wife contends that she contributed 60 per cent and the husband contributed 40 per cent of those payments until 2012, after which, the wife states that she paid the full amount of repayments due. The wife also contends that the husband did not contribute towards the payment of outgoings after 2012. Conversely, the husband contends that he continued to assist with the payment of outgoings until he vacated the Suburb C property in 2013 and states that, although the parties’ arrangement initially resulted in the wife paying 60 per cent of the mortgage repayments due to NAB, a reduction of the interest rate had the effect of decreasing the amount payable by the wife such that the parties were, ultimately, equally contributing to the repayments of the loan.
The wife contends that the husband vacated the Suburb C property and commenced residing with his mother in May 2013, at the time of the parties’ separation. The husband, however, states that he commenced residing with his mother for a period of 12 months from 9 March 2013 while the wife retained exclusive occupation of the Suburb C property.
On 15 April 2019, by letter addressed to the husband’s solicitor, the wife’s solicitor stated:
We note that pursuant to the updated balance sheet enclosed in your correspondence of 19 March 2019 you detail liabilities of your client totalling $1,293,886 as follows:
a. Loan from Ms D Yalden: $110,259;
b. Loan from Ms B Yalden: $16,875;
c. Loan from Ms B Yalden & Ms C Yalden: $283,416;
d. Loan from H Pty Ltd: $328,383;
e. Loan from W Pty Limited: $39,941;
f. Loan from X Pty Limited: $353,096; and
g. Loan from Ms B Yalden & Ms C Yalden: $161,916.
The wife’s solicitor also requested copies of documents relating to the loans set out at (a) to (g) above.
Factual contentions by the husband
Further to those facts which have been agreed between the parties, the husband contends that the Court should accept his evidence in respect to the immediately following factual contentions.
The husband contends that, on 16 August 2004, members of the husband’s family executed a deed by which Mr F Yalden entered into a loan agreement with X Pty Limited (“X Pty Ltd”) and thereby advanced a sum of $1,059,278.95 to X Pty Ltd. The husband and his two (2) sisters were listed as personal guarantors of that loan. The husband describes X Pty Ltd as “a non-trading entity of which [his] sisters, mother and [himself] are the directors and shareholders in equal proportions”.
In respect to the loan agreement, the husband states that the terms of the deed stipulate that the loan is payable on demand. On 12 August 2019, Mr H Yalden, as executor of the estate of Mr F Yalden, sent a letter addressed to the husband and his sisters stating, “the loan is recalled and you must now make arrangements for the principle sum of the loan of $1,059,278.95 to be repaid to the estate”.
When purchasing the D Street property, the husband contends that he used $200,000 from the loan advanced to X Pty Ltd by Mr F Yalden, being the sum allocated to him for the purpose of purchasing an investment property. The wife, however, while conceding that a document was executed on 16 August 2004, disputes the husband’s assertion that such monies were provided to X Pty Ltd and, consequently, the husband as a loan.
The husband gives evidence that the net amount of his assets and liabilities at the commencement of the parties’ cohabitation was $3,583,261 plus superannuation. The wife disputes this contention.
The husband states that, in 2009, as a result of his income being insufficient and the tenant of the D Street property falling behind on the rental payments due, he started borrowing funds from his mother, sisters and the family’s companies. The husband contends that the monies were loaned to him by his family to assist him to pay mortgage repayments and undertake extensive repairs on the D Street property following eviction of the tenant from the property. The wife challenges the existence and enforceability of those alleged loans.
The husband contends, in his trial Affidavit, that the following sums of money were loaned to him:
·$407,066.27 from his sisters, Ms C Yalden and Ms B Yalden, in the period 19 August 2009 to 28 March 2013, being funds over and above the husband’s one-third entitlement to the funds loaned to X Pty Ltd by Mr F Yalden. Of this amount, the husband has repaid $123,650;
·$328,382.85 from H Pty Ltd, with this family’s permission, in the period 6 December 2011 to 29 August 2017;
·$185,954.85 from his mother in the period 29 February 2012 to 17 April 2020 – of this amount, the husband states that $60,296.13 was applied towards the cost of his legal fees in respect to these proceedings;
·$16,875 from his sister, Ms B Yalden, in the period 14 January 2013 to 21 January 2019; and
·$39,941 from W Pty Limited (“W Pty Ltd”), in the period 1 April 2013 to 28 April 2015.
The wife accepts that the relevant amounts identified by the husband were transferred to him but, disputes the characterisation of the funds provided to the husband as legally enforceable loans.
The husband contends that he entered into the following loan agreements:
·On 2 February 2018, a Division 7A Agreement (of the Income Tax Assessment Act 1936 (Cth)) with H Pty Ltd – the husband contends that the purpose of this agreement was to document the funds he had borrowed from H Pty Ltd to ensure that they are not deemed a dividend however, the wife notes that clause 1 of the Division 7A Agreement states that the “agreement applies to all loans made from the date of [the] agreement”;
·On 1 March 2019, a loan agreement with Ms B Yalden in respect of “[a]ll monies advanced to the [husband] from time to time” and secured against “[a]ll shares held by the [husband] in H Pty Ltd…”; and
·On 1 March 2019, a loan agreement with his mother, Ms D Yalden, in respect of $110,258.69 as well as any further advance agreed to “in writing… on such terms as to interest and repayments as are agreed” and secured against “[a]ll shares held by the [husband] in H Pty Ltd…”.
Applications
Orders sought by the wife
The wife seeks that orders be made in accordance with her Initiating Application filed 24 March 2015 as follows:
1. That there be a just and equitable division of the assets of the parties, inclusive of superannuation, pursuant to section 79 of the Family Law Act 1975.
2. That the wife be excused from further particularising the final orders sought pending the completion of valuations and any discovery.
3. That the husband and wife do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders made herein.
4. That in the event that either party refuses or neglects to execute any deed or instrument, the Registrar of the Court be appointed pursuant to section 106A, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.
5. Such further or other orders as this Honourable Court deems fit.
Orders sought by the husband
The husband seeks that orders be made in accordance with the Annexure “A” annexed to his case outline document, provided to the Court via upload to an electronic file hosting service facilitated by the Court on 21 May 2020, set out as follows:
1. The Court make a declaration in the Part VIII proceedings that the Applicant Wife holds the property known as and situate at B Street, Suburb C in the state of New South Wales being the whole of the land comprised in Certificate of Title Folio Identifier … (“the Suburb C Property”) on trust for the Applicant Wife and Respondent Husband as tenants in common in unequal shares as to 54.5% to the Respondent Husband and 45.5% to the Applicant Wife.
2. That within 7 days of the making of this Order, the Applicant Wife will do all acts and things and sign all documents necessary to market for sale and sell the Suburb C Property and in particular will:
2.1. list the Property for sale with an agent agreed upon by the Applicant Wife and the Respondent Husband within seven days of the date of this Order and failing agreement the Respondent Husband shall forthwith in writing nominate three agents from which the Applicant Wife shall within a further seven days select one and failing which the Respondent Husband will select one who shall be the agent appointed (“the Agent”);
2.2. execute all documents requested by the Agent for the sale of the Property including the Agent’s contract in a form agreed upon by the Applicant Wife and the Respondent Husband and in the event that the Applicant Wife and the Respondent Husband cannot agree on the terms of the Agent’s contract within seven days of the agent being selected, the contract is to be in the agent’s standard terms and with the agent’s standard fees;
2.3. give such instructions as are necessary to a legal practitioner agreed upon by the Applicant Wife and the Respondent Husband within seven days of the date of this Order and failing agreement the Respondent Husband shall forthwith in writing nominate three legal practitioners from which the Applicant Wife shall within a further seven days select one and failing which the Respondent Husband will select one who shall be the legal practitioner appointed (“the Legal Practitioner”).
2.4. market the Property for sale by public auction on a date within six weeks of the date of the selection of the Agent (“the First Auction”) at a reserve price agreed between the Applicant Wife and the Respondent Husband and failing agreement in the sum of $850,000;
2.5. in the event that the Property does not sell at the First Auction, market the property for sale with the Agent by way of private treaty for a period of 12 weeks during which time accept any offer made to purchase the Property within 5% of the reserve price of the First Auction unless the Applicant Wife and the Respondent Husband otherwise agree;
2.6. in the event that the Property is not sold at the First Auction and is not sold in the period provided for sale by private treaty, market the Property for sale by public auction with the Agent on a date within six weeks of the date of the conclusion of the period of sale by private treaty at a reserve price agreed between the Applicant Wife and the Respondent Husband and failing agreement 5% below the reserve price at the First Auction;
2.7. attend any auction pursuant to this Order and in the event that the reserve price set for that auction is not reached will negotiate with the highest bidder and the second highest bidder and will accept the highest offer to purchase made within 5% of the reserve price set for that auction unless the Applicant Wife and the Respondent Husband otherwise agree;
2.8. execute the contract for sale in a form agreed to by the Applicant Wife and the Respondent Husband and in the event that the Applicant Wife and the Respondent Husband fail to agree on the terms of the contract for sale the terms recommended by the Legal Practitioner will be adopted;
2.9. co-operate in every way with the Agent in relation to the sale of the Property at all times requested by the agent and ensure that the Property is in a neat and clean condition; and
2.10. execute all other documents necessary to complete the sale within the time required by the contract for sale to ensure that the purchasers do not have a right to terminate or rescind due to failure to do so.
3. That on settlement of the sale of the Suburb C Property the Applicant Wife and Respondent Husband will do all acts and things necessary to distribute the proceeds of sale in the following manner:
3.1. payment of the agent’s commission, marketing and advertising costs, auctioneer’s fees and any other expense properly incurred in respect of the sale of the Property;
3.2. payment of the legal costs of sale;
3.3. payment to the supplier of any unpaid costs of preparation of the Property for sale, where such costs have been agreed to in writing between the parties;
3.4. payment to either party by way of reimbursement for any expense of the type referred to above which has been paid by them in advance of the settlement of the sale;
3.5. payment of any amount outstanding to any water authority or local council in respect of the Property not otherwise taken up as a credit in favour of the vendor;
3.6. payment in the sum of $380,000 in relation to the loan secured by way of registered mortgage on the title to the Suburb C Property number AP446791 (“the Mortgage”);
3.7. to the Respondent Husband, 54.5% of the amount then remaining;
3.8. to the Applicant Wife, the amount then remaining from which she shall apply the sum necessary to repay the balance of the Mortgage, after the application of the sum referred to in Clause 3.6 and any other debt secured against the title to the Suburb C property as at the date of settlement.
4. In the Alternative to Order 1 herein and by way of property adjustment order, the Applicant wife to pay to the Respondent Husband the sum of $256,150 within 90 days of the making of this order and failing which the Suburb C Property be sold in accordance with Order 2 herein and the proceeds of sale be distributed in accordance with Order 3 herein.
5. The Applicant Wife and Respondent Husband shall otherwise be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature and kind in the possession, ownership or control of each party as at the date of this Deed including but not limited to superannuation entitlements.
6. Pursuant to Section 106A of the Act, in the event either party refuses or neglects to execute any deed or instrument necessary to give effect to Clause 1 then the Registrar of a Court of competent jurisdiction in relation to the Act is appointed to execute such deed or instrument in the name of the defaulting party and do all acts and things necessary to give validity and operation to the deed or instrument.
7. The application of the Applicant Wife shall be dismissed.
8. Pursuant to Section 117(2) of the Act:
8.1. the Applicant Wife will pay the costs of the Respondent Husband of and incidental to these proceedings as agreed and failing agreement as assessed.
8.2. in respect of any action taken pursuant to Order 6, the defaulting party will pay the other party’s costs of and incidental to that action as agreed and failing agreement as assessed.
Evidence
The wife relied upon the following documents:
a)Initiating Application filed 24 March 2015;
b)Affidavit of the wife filed 21 April 2020 (“ the wife’s trial Affidavit”);
c)Financial Statement of the wife filed 21 April 2020;
d)Written submissions of the wife provided to the Court by email dated 29 June 2020; and
e)Written submissions of the wife in reply to written submissions of the husband provided to the Court by email dated 10 August 2020.
The husband relied upon the following documents:
a)Response to Initiating Application filed 11 June 2015;
b)Affidavit of the husband filed 21 April 2020 (“the husband’s trial Affidavit”);
c)Exhibits to the Affidavit of the husband filed 21 April 2020;
d)Financial Statement of the husband filed 21 April 2020;
e)Affidavit of Ms D Yalden filed 21 April 2020;
f)Affidavit of Ms B Yalden filed 3 April 2020;
g)Affidavit of Ms C Yalden filed 3 April 2020;
h)Affidavit of the husband filed 6 May 2020; and
i)Written submission of the husband provided to the Court by email dated 20 July 2020.
The following exhibits were relied upon:
a)Z Bank portfolio account for Mr G Roy and Ms J Roy statement numbers …96, …01 and …24 (‘Exhibit 1’);
b)Affidavit of the wife filed 24 March 2015 (‘Exhibit 2’);
c)Financial Statement of the wife filed 24 March 2015 (‘Exhibit 3’);
d)Y Valuers valuation report dated 14 August 2019 (‘Exhibit 4’);
e)Letter from Broun Abrahams Burreket (“BAB”) to Y Valuers dated 19 May 2020 and letter from Y Valuers to BAB dated 22 May 2020 (‘Exhibit 5’);
f)H3 Working Paper 2017 H Pty Ltd (‘Exhibit 6’);
g)Tax returns of the husband from 2014 to 2018 (‘Exhibit 7’);
h)SMS text messages between the parties: Documents 1, 22, 29 and 34 (‘Exhibit 8’);
i)BB Finance statement for loan number …08 for period from 30 January 2018 to 21 May 2020 (‘Exhibit 9’);
j)X Pty Ltd Balance (‘Exhibit 10’);
k)Tab 19 of the annexures to the Affidavit of the husband: Transactions of monies loaned to the husband by Ms B Yalden (‘Exhibit 11’);
l)Financial Statement of the husband filed 11 June 2015 (‘Exhibit 12’);
m)NAB bank statements for the joint account of the husband and his sisters for the period from 7 August 2009 to 4 April 2013 (‘Exhibit 13’); and
n)Joint balance sheet (‘Exhibit 14’).
The law – concepts and principles
Subject to s 79(2), s 79(1) of the Family Law Act 1975 (Cth) (“the Act”) empowers the Court in property proceedings to “make such order as it considers appropriate”. However, neither the fact of marriage nor the ending of a marriage creates an assumption that there should be an adjustment of the parties’ property interests: Fazarri & Hsiao [No 2] [2018] FamCA 447 at [75]-[76], citing Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) at 121 [39] per French CJ, Hayne, Kiefel and Bell JJ.
Section 79(2) of the Act provides that the Court shall not make an order altering the interests of the parties to the matrimonial property unless the Court is satisfied that, “in all the circumstances, it is just and equitable to make the order”.
That issue is to be determined having regard to “a range of potential competing considerations”: Stanford (supra) at 120 [36], including the parties’ contentions regarding their contributions, assessed in accordance with the legislative guide set out in s 79(4) of the Act. The plurality in Bevan & Bevan (2013) FLC 93-545 (“Bevan”) rejected the notion that s 79(2) of the Act forms a threshold issue before undertaking an assessment of considerations in accordance with s 79(4): Hearne & Hearne (2015) 53 Fam LR 454 (“Hearne”) at 466 [72].
Since the decision of the High Court in Stanford (supra), there has been some debate as to the approach that should be taken by the Court in the exercise of its discretion pursuant to s 79 of the Act.
Prior to Stanford (supra), the Family Court had established principles for determining what kind of order is just and equitable under s 79(2) of the Act. In the leading case of Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 (“Hickey”) at 78,386 [39], it was held that the preferred approach was to adhere to the following four steps:
a)identify and determine the asset pool of the parties as at the date of the hearing (this necessarily involves identifying both the assets and liabilities);
b)identify and determine each of the parties’ financial and other contributions to the date of the hearing (this can include the financial contributions made before, during and after the marriage);
c)assess how future and other events may have a financial impact on either of the parties, such as their age, state of health, income and property or financial resources (known as the s 75(2) factors); and
d)step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.
That approach had been endorsed many times[1] however, as the High Court noted in Stanford (supra), s 79(2) of the Act provides that the Court shall not make an order altering the interests of the parties to the matrimonial property, unless it is satisfied that “in all the circumstances, it is just and equitable to make the order”. Accordingly, since Stanford (supra), it has generally been the practice of the court to determine, as an initial issue, whether it is just and equitable to make an adjustment of marital property.
[1] See for example Manolis & Manolis (No. 2) [2011] FamCAFC 105, [63] (Coleman, May and Ainslie-Wallace JJ); Kildea v Kildea (2007) 38 Fam LR 347, 365 [104] (Finn, May and Boland JJ); Coghlan and Coghlan (2005) FLC 93-220, 79,639 [22] (Bryant CJ, Finn and Coleman JJ), 79,655 [142] (O’Ryan J).
More generally, in Petruski & Balewa (2013) 49 Fam LR 116 (“Petruski & Balewa”) at [49], the Full Court said:
The task of assessing contributions under s 79 of the Act is an holistic one; what is required is to evaluate the extent of the contributions of all types made by each of the parties in the context of their particular relationship: Dickons v Dickons [2012] FamCAFC 154 (Dickons). As was also said by the Full Court in Lovine v Connor [2012] FamCAFC 168 at [40] and [41] (Lovine) such an evaluation “inevitably involves value judgments and matters of impression”, and accordingly it cannot be treated as “a mathematical exercise.”[2]
[2] See also Dickons v Dickons (2012) 50 Fam LR 244 at 249.
In exercising its discretion, the Court is required to take into account the matters set out in s 79(4) of the Act. Section 79(4) is divided into two limbs. The first limb is in respect to those matters set out in paragraphs (a) to (c), which deal with what are commonly known as the “contribution” factors. Contributions can, in turn, be direct or indirect, financial or non-financial contributions to the matrimonial property. The second limb is in respect to those matters set out in paragraphs (d) to (g), which primarily relate to the future needs of the parties but can include any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account.
As noted, a determination of what orders should be made is to be carried out with reference to s 79(4) of the Act once the Court has determined that it is just and equitable to make an order adjusting the matrimonial property. The section is a legislative guide to assist the Court in considering how its broad discretion should be exercised to make appropriate orders to adjust the matrimonial property. This is to be contrasted, for instance, with s 75(1) of the Act, which provides that, in exercising jurisdiction in respect to spousal maintenance, the Court “shall take into account only the matters referred to in subsection (2)” (Emphasis added). In other words, s 79(4) of the Act sets out a non-exhaustive list of matters to be considered in order to do justice between the parties: see In the marriage of Marinko and Marinko (1985) FLC 91-609 at 79,944. Those matters are:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Further to considerations under s 79 of the Act, s 79(4)(e) requires the Court to have regard to the matters referred to in s 75(2) of the Act so far as they are relevant. I will subsequently discuss those provisions in undertaking the third step referred to in Hickey (supra) at 78,386 [39].
Consideration
Is it just and equitable to make a property adjustment?
In Stanford (supra) at 122 [42], the High Court said:
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).
In his written submissions, the husband specifically referred to that passage however, the husband submitted that:
This is a case where listing the actual legal and beneficial interests of the parties in property, as opposed to a single joint balance sheet with no attention to those interests, is important and instructive in a just and equitable assessment. The Court is asked to consider what is the beneficial interest of the husband in property at Suburb C registered in the name of the wife so that the Court can properly assess what property adjustment order, (if any) should be made from the beneficial interests in that property.
That submission was made in the context where the husband contends that the preferable approach that the Court should take in this matter is a two-pool approach, with one-pool, essentially, consisting of what the husband describes as “the respondent’s wealth” and the second pool being the Suburb C property. The husband contends that the wife has made merely “slight” contributions, during the period of the parties’ cohabitation, to property contained in the first pool, that is, property identified as being “the respondent’s wealth”. Comparatively, the husband contends that his contributions to the first pool have “overwhelmed” those of the wife and, further, that he has made a contribution, both direct and indirect, to the second pool, being the Suburb C property.
After that exercise is completed, the husband contends that the Court might appropriately determine that there should be no adjustment in the property held in each of the parties’ names or that which the husband has sought to be the subject of a declaration, that is, the declaration that the husband has an equitable interest in the Suburb C property. Whether or not the Court takes that course of action, the husband contends, is dependent upon whether the Court finds that the husband has an equitable interest in the Suburb C property equivalent to 54.5 per cent of the value of that property.
The husband contends that, if a finding is made that the value of the husband’s equitable interest in the Suburb C property is 54.5 per cent of the value of that property, it would not be just and equitable for a property adjustment order to be made.
In her written submissions, the wife contends that:
The Husband made a claim for a resulting trust in respect of the Suburb C property for the first time in his case outline prepared for the purposes of the final hearing. There has been no statement of claim or points of claim. Ultimately the evidence does not establish a resulting trust particularly having regard to the percentage interests of the property sought by the Husband.
Comparatively, the husband contends that he has an equitable interest in the Suburb C property for the following reasons:
The parties purchased property at Suburb C in the name of the wife. The parties agree each party made a direct financial contribution to the purchase: the applicant paid $30,000 (she claims $37,000) and the respondent $70,000 (now an agreed fact). They made a further direct, joint financial contribution in the form of a mortgage of $400,000.
The parties were not married at time of purchase and so the presumption of advancement does not apply. There is a presumption in favour of a resulting trust proportionate to contribution to purchase price.
The respondent argues that the property is held on trust for the parties as tenants in common in unequal shares as to 54.5% to him and 45.5% to the applicant, reflecting his greater contribution to the purchase price. The Court will be asked to consider whether an adjustment from the legal and beneficial ownership is just and equitable. This will depend on the finding the Court makes as to the beneficial ownership.
a. If the Court finds the respondent has a 54.5% interest in the property he argues there it would not be just and equitable in all the circumstances to make a property adjustment order. He seeks a declaration of trust and a sale of the property to realise his beneficial interest in the property;
b. If the Court finds the respondent’s beneficial interest in the property is less than 54.5% then he argues it would be just and equitable to make a property adjustment order. He proposes that the applicant pay him a fixed sum of money failing which the property is sold and the proceeds of sale divided to give effect to the order.
Equity presumes that when two purchasers contribute to the purchase of a property in unequal shares but it is conveyed into the name of one of the parties alone, the legal estate is held in trust for themselves as tenants in common proportionate to their contributions.
While the presumption is rebuttable with evidence of contrary intention, this does not apply here as the parties both admit the reason the property was conveyed into the name of the applicant alone rather than the joint names of the parties was so that she could apply for a first homeowners’ grant.
The parties agreed their mortgage liability of $400,000 would be joint, and the respondent says he contributed $70,000 to the purchase price compared with the applicant’s $30,000. The purchase price was $495,000. Half the mortgage ($200,000) plus $70,000 equals $270,000, which is 54.5% of $495,000.
In Bevan (supra), the Full Court considered whether or not it was necessary to decide whether, as between the parties, the legal title accurately reflected their respective equitable interests. The Full Court said, at 87,232, that it seemed unnecessary in many cases to do so:
However, where it is accepted that justice and equity require the making of an order, it would seem unnecessary to complicate proceedings by deciding whether one party has an equitable interest in property held by the other, since the ultimate outcome will not be determined by application of equitable principles but rather by reference to ss 79(4) and 75(2) [see also and Goldsmith & Stinson and Ors (2019) FLC 93-930].
However, in this matter, the husband contends that his assertion of an equitable interest in the Suburb C property is of critical importance in deciding whether it is just and equitable to interfere with the existing legal ownership of the parties’ property. I am satisfied that it is appropriate to do so in this case.
For the reasons advanced by the husband, I am satisfied that he has an equitable interest in the Suburb C property. It is undisputed that the property was purchased solely in the then de facto wife’s name in order to obtain a stamp duty concession. This occurred in circumstances where there is no presumption of advancement in respect to a de facto relationship: Napier v Public Trustee (Western Australia) (1980) 6 Fam LR 238 per Aickin J at 242 and Calverley v Green (1984) 155 CLR 242 (“Calverley v Green”) per Mason and Brennan J at 260. That is, in the absence of the application of the presumption, it can be inferred that the parties intended the husband would obtain an interest in the property equivalent to the extent of his contribution.
The proportion of the parties’ respective interests is to be determined at the time of the purchase: see Calverley v Green (supra) per Deane J at 269. The mortgage, which, in this case, was to be paid by both parties, is regarded as a joint contribution at that point in time: see Reitsema and Reitsema (1991) 15 Fam LR 706 per Kay J at 709 referring to Calverley v Green (supra).
As noted by Gibbs CJ in Calverley v Green (supra) at 252:
The extent of the beneficial interests of the respective parties must be determined at the time when the property was purchased and the trust created. The fact that the mortgage debt was repaid by the appellant is therefore not relevant in determining the extent of the interests of the parties in the land, although it may be relevant on an equitable accounting between the parties.
Therefore, I find that the husband has an equitable interest in the Suburb C property slightly in excess of 54.5 per cent in accordance with the calculation set out by the husband and referred to above. However, the mere fact that I have found that the husband has an equitable interest in the Suburb C property of that amount does not necessarily lead to the conclusion that it would not be just and equitable to make orders for the adjustment of the parties’ property pursuant to s 79 of the Act. This is particularly so in circumstances where, as I will set out, the wife has paid a larger proportion of mortgage repayments on the Suburb C property. In those circumstances, it is not necessary to undertake or consider undertaking the task of an equitable accounting between the parties. This is because the Act provides an alternative means of doing justice between the parties. As noted by Mason and Brennan JJ in Calverley v Green (supra) at 260:
The provisions of ss.79 and 80 of the Family Law Act 1975 (Cth) now furnish a further ground for not applying the special rules governing the title to property in the case of spouses in order to resolve property disputes between parties who have cohabited but who have not married. On dissolution of a marriage, ss.79 and 80 confer a discretionary power upon the Family Court of Australia to alter the property interests of the parties to the marriage if it is just and equitable to do so.
In attempting to determine the additional amount of the mortgage payment made by the wife in respect to the Suburb C property, I note that the husband contends, at paragraph 31 of his trial Affidavit, as follows:
Due to the reduction in interest rates, the mortgage repayments in relation to the Suburb C property varied over time. At the commencement of the loan, it is my recollection that our mortgage repayments were the sum of $2,800 per month. Initially, [the wife] met 60% of the mortgage repayments and I paid 40% of the mortgage repayments. However as interest rates reduced, [the wife] reduced her payments accordingly and I continued to pay the same amount such that after a period of time, we were contributing approximately the same amount.
Comparatively, at paragraph 21 of the wife’s trial Affidavit, the wife states:
While residing together at Suburb C from August 2009 until separation on 23 May 2013, contributions were divided between the Husband and myself as follows:
a. I paid 60% of the mortgage payments and the Husband paid 40% until early 2012.
b. After early 2012, I paid 100% of the mortgage payments up to separation and continue to do so.
During cross-examination, counsel for the wife put to the husband that he ceased making mortgage payments in respect to the Suburb C property in early 2012 however, the husband could not, with certainty, accede to that proposition and he could not recall the exact date that he stopped making the payments. In light of that uncertainty on the part of the husband, I prefer the evidence of the wife.
The wife has also made improvements to the Suburb C property by way of renovation of the bathroom. At annexure B to her trial Affidavit, the wife provides evidence that the cost of those renovations total $21,400.87
Having regard to that evidence, I am satisfied that the task of making an adjustment of the parties’ property pursuant to s 79 of the Act should be undertaken in this case because of the following:
·The greater proportion of the mortgage in respect to the Suburb C property paid by the wife;
·The improvement to the Suburb C property made by the wife in the form of the bathroom renovation;
·The fact that the wife’s actions in meeting expenses in respect to the Suburb C property avoided that burden being placed upon the husband to the extent that it otherwise would have, thereby leaving him with a greater capacity to meet expenses in respect to the properties which were in his sole name;
·The wife has made non-financial contributions during the course of the parties’ relationship that justifies recognition in an order, pursuant to s 79 of the Act, that results in what I have determined to be a just and equitable entitlement to a distribution of the parties’ property such that she receives a greater allocation than she would receive according to the husband’s proposal being an amount equivalent to 45.5 per cent of the value of the Suburb C property.
In circumstances where I have found that it is just and equitable to make orders for there to be an alteration of the parties’ interests in the property, the task is not constrained by the fact that I have found that the husband has an equitable interest in the Suburb C property. In that respect, in Fisher v Fisher (1986) 161 CLR 438 at 457, Brennan J stated:
A proceeding under s.79(1) of the Act arising out of the marital relationship subjects the whole of the property of the spouses to the discretionary jurisdiction of the Family Court. The interests of the spouses in the property may be altered and either or both of them may be ordered to settle or transfer property “for the benefit of either or both of the parties (to the marriage) or a child of the marriage”. The property of the spouses is thus made available to answer the moral claims of either spouse or the children of the marriage against the spouse who is entitled to the property. It mistakes the operation of s.79(1) to say that a proceeding under that sub-section arising out of the marital relationship does not affect the property of the spouses until an order is made. So soon as the proceedings are commenced, the Family Court may make "such order as it thinks fit" to adjust the proprietary interests of each spouse and of the children of the marriage in the property of the spouses.
In summary, once the Court is satisfied that it is just and equitable to make an order under s 79(1) and (2) of the Act, the Court has what has been described as “a very wide discretion to make such order as it thinks fit”: see Mallet v Mallet (1984) 156 CLR 605 (“Mallet”) at 608 per Gibbs CJ, and that discretion is not constrained by the fact that I have found that the husband has an equitable interest in the Suburb C property.
Balance sheet
The parties presented a joint balance sheet on the final day of hearing setting out their respective contentions in respect to each of the parties’ property, liabilities and superannuation as well as their quantification of the asset and/or liability (marked ‘Exhibit 14’ in the proceedings). That joint balance sheet, with emphasis added to the areas of disagreement, is as follows:
| Item | Owner | Description | Wife’s value | Husband’s value |
| ASSETS | ||||
| 1 | H | D Street, Suburb E | $1,200,000 | $1,200,000 |
| 2 | H | 1/3rd share in F Street, Suburb E | $1,488,333 | $1,488,333 |
| 3 | H | 1/3rd share in G Street, Suburb E | $1,166,666 | $1,166,666 |
| 4 | W | B Street, Suburb C | $850,000 | $850,000 |
| 5 | H | 30% share in H Pty Ltd | $906,597 | $906,597 |
| 6 | H | CBA Account No. …44 | - $1,763 | - $1,763 |
| 7 | H | 1/3 share in X Pty Ltd Account No. …24 | $1,354 | $1,354 |
| 8 | W | Motor Vehicle 1 | $15,700 | $15,700 |
| 9 | W | 387 CC Company Shares | $6,143 | $6,143 |
| 10 | W | NAB Bank Account #…08 | $592 | $592 |
| 11 | W | DD Bank Offset Account #…04 | $2,432 | $2,432 |
| 12 | W | ING Account #…83 | $5,247 | $5,247 |
| 13 | W | Household Contents | $10,000 | $20,000 |
| 14 | H | Jewellery | $0 | NK |
| 15 | H | Household Contents | NK | $500 |
| Total | $5,651,301 | $5,661,801 | ||
| ADDBACKS | ||||
| 16 | H | Paid legal costs and disbursements from Ms D Yalden and H Pty Ltd | $66,666 | $66,666 |
| 17 | H | Illicit substance waste | $30,000 | |
| 17A | H | Post-separation borrowings on NAB Mortgage | $39,585 | |
| 18 | W | Post-separation borrowings on first mortgage | $0 | $43,559 |
| W | Post-separation borrowings on second mortgage | $0 | $74,900 | |
| Total | $136,251 | $185,125 | ||
| LIABILITIES | ||||
| 19 | H | NAB Mortgage - D Street, Suburb E | $419,585 | $419,585 |
| 20 | H | Loan from Ms D Yalden | $0 | $185,055 |
| 21 | H | Loan from Ms B Yalden | $0 | $16,875 |
| 22 | H | Loan from Ms B Yalden & Ms C Yalden | $0 | $283,416 |
| 23 | H | Loan from H Pty Ltd | $0 | $328,383 |
| 24 | H | Loan from W Pty Limited | $0 | $39,941 |
| 25 | H | 1/3rd share of Mortgage secured over G Street Property | $133,333 | $133,333 |
| 26 | H | Loan from X Pty Limited | $0 | $353,096 |
| 27 | W | DD Bank Mortgage - B Street, Suburb C | $423,559 | $423,559 |
| 28 | W | DD Bank Investment Loan #…04 | $46,003 | $74,900 |
| 29 | W | AMEX Credit Card | $592 | EXCLUDE |
| 30 | W | Ms J Roy & Mr G Roy | $22,404 | $0 |
| Total | $1,045,476 | $2,258,143 | ||
| NET ASSETS (excluding Superannuation) | |||
| $4,605,825 | $3,403,658 | ||
| SUPERANNUATION | ||||
| 31 | H | Super Fund 1 | $159,516 | $159,516 |
| 32 | W | Super Fund 2 | $160,306 | $160,306 |
| $319,822 | $319,822 | |||
| NET ASSETS (including Superannuation) | |||
| $4,925,647 | $3,723,480 | ||
During the course of the proceedings, counsel for the husband and counsel for the wife indicated that the parties are in agreement in respect to the amounts set out by the husband in items 20, 21, 22, 23 and 24 but not how they should be treated on the balance sheet. The wife contends that those specified amounts, as well as the amount specified at item 26 of the joint balance sheet, are not legally repayable and/or are debts which are unlikely to be enforced and, accordingly, ought to be excluded from the balance sheet. The time and expense incurred by the parties in these proceedings was primarily as a result of their dispute in respect to those matters. I will, subsequently, set out my findings in respect to that aspect of the parties’ dispute.
As noted, the parties were, helpfully, able to reach agreement in respect to most of the items identified as being an asset of the parties. In terms of property, the two areas of disagreement concerned each party’s contentions regarding the value of household contents. There has been no expert evidence presented regarding the value of household items in either of the parties’ households. In those circumstances, the amounts identified are, with respect, merely lay opinion as to value and, therefore, not admissible to establish the actual value. In those circumstances, I propose to take the same course of action as was taken by O’Reilly J in Chow & Harris [2010] FamCA 366 at [9], where the amount conceded by each party to be the value of household contents in their possession will be the amount included on the balance sheet as it is, essentially, an admission against interest. This is because, when making an assessment as to the amount of property that each party should receive as a result of the Court exercising its power pursuant to s 79 of the Act, it will be taken that each party is already in possession of their own household contents:. in the wife’s case, $10,000 worth of household content; and, in the husband’s case, $500 worth of household content.
In circumstances where it is agreed that item 6 is a negative balance of -$1,763, that item will be moved to the liabilities sub-heading.
Addbacks
Leaving aside item 16 on the balance sheet – that is, the amount of $66,000 in respect to legal fees paid by the husband – the parties contend that the following amounts should be included on the balance sheet by way of “add backs”:
·Item 17 – $30,000 in respect to the husband’s illicit substance use;
·Item 17A – $39,585 in respect to what is contended to have been post-separation borrowings by the husband;
·Item 18 – $43,559 in respect to what is said to be post-separation borrowings by the wife as against the first mortgage on the Suburb C property;
·Item 18 – $74,900 in respect to what is said to be post-separation borrowings by the wife against the second mortgage on the Suburb C property.
The rationale for “add backs” was described by the Full Court in Mayne & Mayne (2011) FLC 93-479 at 85,896-85,897 in the following terms:
Parties to proceedings about the division of property before the Family Court… frequently urge the Court to add-back assets or funds that have been applied by one party or another for allegedly his or her own purposes after separation. The rationale is that one party should not benefit from a premature distribution of the assets. An obvious example is withdrawing and using money from a bank account either joint or owned by one of the parties. …
The application of the funds removed… may have been for a personal purpose (for example, to pay legal fees) or it may have been applied in the sustenance of a party or the children of the parties.
If the former is the case this has generally been found to be a pre-emptive unilateral division of property. If the latter is the case then the principles enunciated in Marker v Marker [[1998] FamCA 42] and Chorn NH & Hopkins RC [(2004) FLC 93-204] apply. If the money was, or part of the money, was used to meet reasonable living expenses then that money, or that part of the money, is not “added-back” or regarded as a pre-emptive distribution.
(Emphasis added)
In Omacini & Omacini (2005) FLC 93-218 at 79,617, the Full Court, applying earlier authority, identified three (3) categories where it may be appropriate to notionally add back an item of expenditure as follows:
1.Where the parties have expended money on legal fees: DJM & JLM (1998) FLC 92-816 at 85,262;
2.Where there has been a premature distribution of matrimonial assets: Townsend & Townsend (1995) FLC 92-569 at 81,654; and
3.In the circumstances outlined by Baker J in Kowaliw & Kowaliw (1981) FLC 91-092 at 76,644:
…
(a) “where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets”, or
(b) “where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value”.
In Trevi & Trevi (2018) FLC 93-858 (“Trevi”) at 78,454, the Full Court stated:
Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
(Footnotes omitted)
The Court commonly sees a claim for add backs in property proceedings. The fact that such claims are made frequently adds an additional layer of complexity to the proceedings and often involves detailed factual assessments in respect to the conduct of the party who is alleged to have improperly and/or inappropriately expended monies. The inclusion of a claim for add backs can also often be an impediment to the parties’ ability to resolve the matter. In short, in my experience, it is not uncommon to see parties incur additional legal fees as a result of a claim being made for add backs that rivals and even surpasses the value of that particular aspect of the claim. Accordingly, parties would do well to have regard to the further comments of the Full Court in Trevi (supra) where, at 78,454, the Full Court referenced earlier decisions in which the Full Court confirmed that:
… an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”. An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule”.
The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it” at trial. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
(Footnotes omitted)
In this case, leaving aside item 16 on the balance sheet, to which I have referred, each party’s claim that property should be added back against the other is, in essence, based on both parties alleging that the other has been profligate in their expenditure of funds. In the case of the wife, her primary allegation is that the husband has expended the amount set out in item 17 on illicit substances. The husband acknowledges that he would have spent some of that amount on illicit substances but denies that he has spent the totality of the amount asserted by the wife on illicit substances.
Comparatively, the husband contends that the wife has unreasonably and irresponsibly increased the indebtedness of the parties and spent the funds so borrowed on non-essential lifestyle expenditure, including several overseas holidays.
In their joint judgment in Norbis v Norbis (1986) 161 CLR 513 (“Norbis”), Mason and Deane JJ noted that the exercise of discretion pursuant to s 79(4) of the Act essentially involves the making of “value judgements” by the trial judge. In this case, even if it were possible for me to make a determination as to what amount of the claimed add backs was irresponsibly spent, as opposed to being incurred in respect to the reasonable day-to-day living expenses of the parties, it is somewhat artificial for me to determine the comparative degrees of profligacy of each of the parties with a view to determining what portion of the amount so expended should be added back to the balance sheet.
Accordingly, I do not propose to include items 17, and 17A nor the two sub-items of item 18 on the balance sheet.
Both parties appropriately, in my view, acknowledged that item 16 should be included in the balance sheet. In that respect, in Trevi (supra) at 78,458, the Full Court stated that “different discretions, informed by different considerations, are involved in the different approaches [to add backs] dealing with paid legal fees”. Specifically, the Full Court held that, on the facts of that case, it was necessary for the trial judge to exercise a separate discretion in determining whether funds spent on legal fees should be “added back” into the balance sheet.
In that decision, the Full Court determined, by reference to Calder & Calder (2016) FLC 93-691 (“Calder”), that the trial judge correctly acknowledged that “the purpose of adding back funds expended on legal costs is to ensure that one party does not pay the other party’s legal costs in the absence of an order [for legal costs]”.
At this stage, no application nor submissions have been made in respect of an order for costs. No doubt each party will have regard to these reasons in determining whether such an application should or should not be made for costs in whole or in respect to that part of the proceedings. Accordingly, at this stage, applying the principle set out in Calder (supra) to which I have referred, I will include item 16 on the balance sheet. This is in circumstances where I have included, as a liability in the balance sheet, a portion of funds provided by the husband’s mother, to the husband, which funds were provided for purposes including the husband attending to payment of his legal fees.
Liabilities
It is also not uncommon, as in this case, for parties to disagree on whether an advance of funds from family or friends is to be considered a gift or a loan which must be repaid. The latter would have the effect of characterising that advance as a liability and, unless other discretionary considerations apply, the amount would usually be included on the balance sheet of the parties’ assets and liabilities.
The burden of proving that those monies were advanced as a loan falls to those asserting that it was a loan: see Heydon v The Perpetual Executors Trustees and Agency Co WA Limited (1930) 45 CLR 111 at 113. This is to be determined by objective evidence not subjective perception. In Chaudhary v Chaudhary [2017] NSWCA 222 (“Chaudhary”) at [100], the New South Wales Court of Appeal said:
The question of whether or not the advances … are to be properly characterised as loans or gifts … is not to be determined by reference to any uncommunicated subjective state of mind about which inferences may or may not be drawn. The characterisation of the advance must depend upon the objective evidence as to what was said by [the lender/s] to [the recipient/s] and what [the lender/s] did, including, for example by way of documentation.
(Emphasis added)
In Grefeld & Grefeld [2010] FamCA 504 at [95], Barry J described the usual characteristics of a loan as including:
·The real lender to know about the borrowing.
·Some definition of the period of the loan. Is it to be for five, ten or one hundred years, or when the borrower chooses to repay it?
·Some definition of the interest payable with evidence supporting such agreement by regular deposits to bank accounts.
·Some form of documentation to validate or authenticate a loan for such a significant sum of money.
However, the absence of one or more of those characteristics is not necessarily determinative of the issue.
It is frequently the case that financial arrangements between family members, including between parents and their children, are not expressed in formal terms: see Sackville AJA in Chaudhary (supra) at [7] and [8].
Nevertheless, even in those circumstances where there are, commonly, less formal arrangements between parents and their children and also between siblings, those seeking to assert that the monetary advance was a loan must adduce sufficient evidence to satisfy the Court of an intention to create a legally enforceable relationship. In that respect, in Strand & Strand (No. 2) [2018] FamCAFC 247 at [24], the Full Court said:
The characterisation of a particular advance of monies depends on whether the circumstances known to both parties to the transaction at the time demonstrate, objectively, that the payment was made by way of loan. If, for example, the money was paid upon the express condition that it should be repaid then, notwithstanding any absence of formal documentation, and regardless of the motivation for the payment, a contract of loan will exist: Berghan v Berghan (2017) 57 Fam LR 104.
(Emphasis added)
In terms of the Full Court’s reference to the “circumstances” of the case, in South Australia v Commonwealth (1962) 108 CLR 130 at 154, Windeyer J said:
The circumstances may show that they did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts. The status of the parties, their relationship to one another, the topics with which the agreement deals, the extent to which it is expressed to be finally definitive of their concurrence, the way in which it came into existence, these, or any one or more of them taken in the circumstances, may put the matter outside the realm of contract law.
(Emphasis added)
Applying that principle in the area of contract law, in Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 105, the High Court stated:
“It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty.”[3] To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet “[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts.”[4]
(Emphasis added)
[3] Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 457 per Dixon CJ, Williams, Webb, Fullagar and Kitto JJ.
[4] South Australia v The Commonwealth (1962) 108 CLR 130 at 154 per Windeyer J.
In the context of family relationships, in Ashton v Pratt(No 2) [2012] NSWSC 3 (“Ashton v Pratt (No 2)”) at [29], Brereton J said:
In the absence of express statement that their arrangements were or were not intended to be legally binding, intention to create legal relations is an inference of fact, determined objectively; accordingly, Ms Ashton’s subjective intentions in that respect are not relevant [Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95, 105-7, [24]-[28]; Darmanin v Cowan [2010] NSWSC 1118, [204]-[215]].
(Emphasis added)
In determining whether such an inference should be drawn, context is relevant. In that respect, in Ashton v Pratt(No 2) (supra) at [30], Brereton J further said:
Family, social, and domestic arrangements do not normally give rise to binding contracts, because the parties lack the necessary intention [Teen Ranch Pty Ltd v Brown (1995) 87 IR 308, 310 (Handley JA, referring to Balfour v Balfour [1919] 2 KB 571)].
(Emphasis added)
For reasons which I explain, other than to the extent that the agreement is reflected in a written instrument, neither party has satisfied me that they have received a legally enforceable loan from another family member. This is because neither party has discharged the evidentiary onus which they each bear to establish, on the evidence, a credible foundation as to the existence of a loan from various family members and to identify evidence that would enable findings to be made revealing the terms of the loan agreement, including such matters as:
1.the principal borrowed or advanced pursuant to the agreement;
2.the process of that advance;
3.the duration or term of the loan;
4.the required repayments; and
5.important terms of the loan such as:
a.would there be a requirement to pay interest, and if so,
b.at what rate.
Item 20 – Loan from Ms D Yalden
The husband’s evidence of what he contends to be loan from his mother, Ms D Yalden, in the sum of $185,055 is set out in paragraphs 73-80 of the husband’s trial Affidavit as follows:
73. On 29 February 2012, I approached my mother and said words to the following effect "Mum, I don't have enough money to meet all of my expenses, can I borrow some money from you?"
74. My mother agreed and said words to the following effect "… I will lend you some money. It is not a gift and must be repaid."
75. On that day, my mother loaned me the sum of $1,000 in cash.
76. From time to time from 29 February 2012 to 17 April 2020 my mother has provided me with loans by either giving me money to meet all my expenses or paying for expenses on my behalf. When I would ask her for money we would often have the same conversation where I would ask for further money by way of loan and my mother would agree on the condition that it must be paid back.
77. As at 17 April 2020, I have borrowed the sum of $185,954.85 of which $60,296.13 was applied towards the cost of my legal fees in these proceedings.
78. … On 1 March 2019, my mother and I attended on Mr FF, my mother's solicitor, and executed a loan agreement she had instructed her solicitor to draw up. At Tab 15 is a copy of this document.
79. As at 1 March 2019 I had borrowed $110,258.69. The terms of the loan agreement provide for further money to be provided from time to time as agreed between my mother and I.
80. Since entering into the loan agreement on 1 March 2019, my mother has lent me the further sum of $74,796.
The evidence of Ms D Yalden is set out in her Affidavit filed 21 April 2020. Leaving out those paragraphs referring to annexures, paragraphs 16-23 are as follows:
From 29 February 2012 until 17 April 2020 I advanced [the husband] $185,054.85
The money I lent was given to [the husband] either by cash payments into [the husband]'s bank account or at times I would pay [the husband]'s personal expenses such as his local council rates, his medical expenses and at times his legal expenses.
From February 2012, I had regular conversations with [the husband] whereby [the husband] would ask me to help him and lend him some money. I would regularly say to [the husband] words to the effect “… I will lend you the money that you need. Make sure that you pay the money back". [The husband] would say words to the effect “I agree I will pay the money back as soon as I can". Many times, I said to [the husband] words to the effect “I will help you out but let's be clear this is a loan and I expect to be paid back". [The husband] said words to the effect "yes I agree, keep a record of what I owe you l will pay you back as soon as I can”?
I am aware that [the husband] has also borrowed money from his sisters Ms C Yalden and Ms B Yalden.
In or about early 2019, I asked my lawyer Mr FF to prepare a loan agreement with [the husband] so that I could document the agreement I had with [the husband] for the payment of the money that I had lent to him.
22. Annexed hereto and marked DY-E is a true copy of a loan agreement between me and [the husband] dated 1 March 2019.
23. As of the date of this affidavit, [the husband] has not repaid any loans that | have advanced him and [the husband] owes me the sum of $185,054.85
With the exception of the loan agreement between Ms D Yalden and the husband dated 1 March 2019 and evidence pertaining to a conversation between Ms D Yalden and the husband which the husband contends occurred on 29 February 2012, no evidence has been presented regarding the following:
·The date of those conversations referred to in paragraph 76 of the husband’s trial Affidavit in which he states that he would ask his mother for separate amounts of money and she would agree to advance to him the sum as requested;
·In respect to each request made to his mother and her agreement to advance the money to him:
othe principal borrowed or advanced pursuant to the agreement, including whether several advances made by his mother related to one specific request or whether there were multiple requests prior to each and every advance or payment made by his mother;
othe process of that advance save to the extent that the husband states that, on some occasions, funds were “given to him” and, on other occasions, expenses were paid on his behalf;
othe duration or term of the loan;
othe required repayments; and
oimportant terms of the loan such as:
§would there be a requirement to pay interest, and if so,
§at what rate.
Taking the evidence at its highest, it appears that there were multiple requests by the husband to his mother for financial assistance and those funds were advanced to him on the understanding that they would be repaid at some point in the future.
Despite that contribution on the part of the wife, including in the context of the hardship resulting from the impact of the drought, the Full Court distinguished the facts of Jabour (supra) from the facts of the case before the trial judge in Horrigan (supra). One of the points of distinction made by the Full Court was the fact that, in Jabour (supra), the parties’ relationship had been for a period of 24 years. In upholding the decision of the trial judge, the Full Court in Horrigan (supra) stated at [47]-[48]:
47. Unlike in Jabour, the primary judge here did not isolate the husband’s contribution of the farming properties from the myriad of other contributions, and, in effect, weighed them against each other. Nor did his Honour embark upon some quest to find a “nexus” between the contributions of the parties and particular items of property.
48. In any event, Jabour and many of the authorities it traverses, involved a long relationship of over 24 years. Inevitably the length of the relationship under consideration informs the holistic assessment of contributions. Here the parties’ relationship subsisted for a little less than eight years
In the case at bar, the period of the relationship was approximately seven (7) years. That fact distinguishes this case from the facts which were considered by the Full Court in the Jabour (supra) case. Further the nature, quality and extent of the contributions made by the wife in the present case were of a lesser significance than the contributions made by the wife in the Horrigan (supra) case.
Absence of children of the relationship
The assessment of a party’s contributions as a homemaker is not to be diminished by virtue of there being no children of the relationship: see Kennon (supra) at 84,298. However the fact that a party, in undertaking tasks as a homemaker, was not required to care for dependent children is a very relevant factor in assessing the extent of the parties’ respective indirect contributions.
In a paper titled “Issues of Contribution Re-visited” presented at 2009 QLS/FLPA Family Law Residential by then Michael Kent SC (now his Honour Justice Kent), his Honour stated that in assessing the parties respective contributions:
Clearly enough and unsurprisingly, the single most powerful influence or variable is whether the relationship produces children because of the obvious impact of that in terms of a home making and parenting contribution.
I respectfully agree with that observation.
Again noting that each case must be determined on its own particular facts and circumstances, authorities establish that, in relationships which do not produce any children, even in cases where there is a fairly substantial period of cohabitation, the non-contributing party may ultimately receive a modest adjustment because of the significance of the initial contributions of the other party.
In that respect, in In the marriage of Bushby and Bushby (1988) FLC 91-919, where Baker J, with whom Bell and McCall JJ agreed, stated, in respect to the particular facts of that case, at 76,667:
In a marriage of four years, with no dependent children being involved on either side, it ought to have been apparent to the parties' legal advisers that each party's actual financial contribution to the marriage was the primary issue.
The matter of Douglas and Douglas (2006) FLC 93-300 (“Douglas”) concerned an appeal from a decision of a trial judge awarding 7.5 per cent to the wife for contributions with an additional 7.5 per cent for s 75(2) adjustments with the overall result thus being that the wife received 15 per cent of the available property. On the particular facts of that case, the Full Court found that the trial judge’s assessment of the wife’s contributions was excessive and was an incorrect exercise of discretion. The award was made in circumstances where the parties had lived together for a period of five (5) years and there were no children of the relationship. The majority decision of the Full Court was delivered by Warnick J who stated:
In my view, an appropriate recognition of the contributions of the parties, having regard in particular to:
·the increase in the wife’s assets;
·the pursuit by the parties of leisure activities, in particular travel, funded by the husband throughout much of the period of cohabitation;
·the enormous disparity in initial contributions [the wife had contributed approximately 3.5% of the property pool];
·the fairly short period of cohabitation and;
·in a marriage of which there are no children;
is for the wife to retain approximately what she already has.
In those circumstances, the Full Court reduced the trial judge’s assessment of contribution factors to her existing property which represented approximately five (5) per cent of the property pool. With s 75(2) factors included, the Court held that a total adjustment of 8.36 per cent to the wife was appropriate.
A further example is the decision of the Full Court in G & G [2006] FamCA 877 (“G & G”) where Warnick J held that, in the context of a four (4) year relationship where the parties had no children and the initial contributions were found to be “overwhelmingly in the husband’s favour”, “the increase in the wife’s share by a further 6.5 percent (i.e. to three (3) times the proportion of her initial contribution) was excessive and unexplained”: see also Kennon v. Kennon (1997) FLC 92-757 (“Kennon”) which is another case where there were no children of the relationship.
It is to be noted that the length of the relationship in this case is slightly longer than the length of the relationships considered in G & G (supra) and Douglas (supra), however, the reasoning applied in those cases is relevant to the consideration of the case at bar.
Summary of findings in respect of s 79 contributions
For reasons which I have previously set out, I have found that the combined net property pool of the parties, including superannuation, is approximately $4,987,016. The parties are in agreement that their respective superannuation entitlements are approximately equal. Accordingly, the Suburb C property, which the parties agree is valued at $850,000, represents approximately 17 per cent of the parties’ net property pool. As previously noted, the wife made an initial contribution to the acquisition of that property which represented approximately 45 per cent, although she has increased the value of that property by renovating the bathroom. Additionally, for reasons which I have set out, I am satisfied that she has paid a greater contribution of the mortgage commitment in respect to the property, including having exclusively met the mortgage obligations in respect to the Suburb C property after the period of the parties’ separation.
It is, nonetheless, highly significant, in these proceedings, that the property introduced by the husband into the relationship is, in the context of current valuations, worth considerably more than the property acquired by the parties together during the course of their relationship. This is considered in the context of the background of the parties’ de facto and married relationship being relatively short, approximately seven (7) years, and during which they were married for a period of approximately six (6) months before separating.
Comparatively, however, the wife acknowledges that she made no direct financial contributions to property owned by the husband either in his own name or that which he owns jointly with other members of his family. While she has not made a direct financial contribution to those properties, I have found that, by making the additional mortgage payments to the Suburb C property and solely meeting the mortgage commitment in respect of that property in the period after the parties’ separation, the wife relieved the husband from paying additional monies in respect to the Suburb C property mortgage such that he was able to contribute to the financial commitments in respect to properties which are in his sole name and which are jointly owned with his sisters.
Comparatively, during the course of the parties’ relationship, the husband, by virtue of his superior income at the time, made a significantly greater financial contribution to the totality of the parties’ joint property pool. Further, for reasons which I have set out, I have determined that the amounts set out in items 21, 22, 23, 24 and 26 of the balance sheet, together with a significant portion of item 20 over and above that which I have acknowledged to be a loan from Ms D Yalden to the husband, represents a significant financial contribution attributed to the husband. It is to be acknowledged, however, that the husband used a portion of those funds for his own personal use, including, as acknowledged by the husband, to fund the acquisition of illicit substances during the period where he suffered from an addiction disorder. It is not possible to quantify those amounts which the husband used for such purposes over and above his day-to-day living expenses which he otherwise would have been required to fund from the parties’ matrimonial property.
I have further found that the wife made marginally greater indirect contributions during the period of the parties’ relationship in terms of undertaking domestic chores associated with maintaining the parties’ household particularly during the course of 2012 and 2013 when the husband commenced having personal problems. It is, however, significant that those tasks did not involve the care of dependent children. For reasons which I have set out, I am also satisfied that the wife provided moral and emotional support and encouragement to the husband in respect to his business activities, as well as attending business functions and, on at least one occasion, providing and offering positive assistance in the husband’s business.
The totality of the parties’ contributions occurred, however, in circumstances where they each maintained substantially separate financial lives other than in respect to being parties to a joint NAB account which both parties acknowledge was applied to meet day-to-day running costs associated with their Suburb C property when they were living together, including acquiring food and household supplies.
In the period subsequent to the parties’ separation, the wife has remained in full-time employment other than for a period of approximately six (6) months. The husband had a period of unemployment, however, satisfactorily, has now re-joined the workforce. However, the wife’s superior earnings during that period have been substantially offset by assistance the husband received from his mother and sisters which enabled the husband to continue to maintain those properties which are in his sole name and also to contribute to those properties which he jointly owns with his sisters. In addition, to the extent that I have earlier set out, I accept the respective contentions of each of the parties that the other has, in the post-separation period, engaged in self-indulgent and excessive expenditure. In the husband’s case, that is reflected most significantly in his acquisition of illicit substances. In the wife’s case, it is reflected in her undertaking substantial overseas travel. In balancing that evidence, I have not determined that there has been any differential in the parties’ contributions as a result of their post separation contributions.
Accordingly, in determining what adjustment should be made in respect to the parties’ property, I have focused upon their initial contributions and the contributions that they have made during the course of their relationship. Having regard to the totality of the matters to which I have referred, I am satisfied that there should be an adjustment of 15 per cent in favour of the wife and an adjustment of 85 per cent in favour of the husband.
Relevant s 75(2) factors
As previously noted, s 79(4)(e) of the Act requires the Court to have regard to those matters set out in s 75(2) of the Act to the extent that those matters are relevant. Section 75(2) relevantly provides that those factors are:
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party's role as a parent; and
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p) the terms of any financial agreement that is binding on the parties to the marriage; and
(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
In her written submissions, the wife contends that, in considering whether there should be an adjustment of the parties’ property pursuant to those matters set out in s 75(2) of the Act, the Court should have regard to the following contentions:
·The wife is aged 38 years and has little savings, but a number of liabilities and debts including:
oA mortgage in the sum of $425,771 in respect to the Suburb C property;
oA loan account owing approximately $75,286.37;
oA loan from her parents in the sum of $22,514.36.
(I note that the above values are not reflected in the parties’ joint balance sheet as set out above.)
·The wife lives in rental accommodation with a flatmate while renting the Suburb C property to pay the mortgage on that property. The husband owns and resides in the D Street property with his partner of five (5) years, receiving rental from a self-contained unit at the back of the D Street property, known as 2 G Street, as well as income from the F Street property and the G Street property which he owns with his two sisters as well as owning a 30 per cent interest in H Pty Ltd.
·Although the wife is in good health and has a capacity to earn, her financial position is significantly disproportionate to the husband’s income, property and financial resources. She does not have the financial security of the husband.
It was therefore submitted, on behalf of the wife, that:
The Court, after taking into consideration all relevant factors, even including her age of 38 years, the income, property and financial resources of each of the parties, a standard of living that is reasonable in all the circumstances, the extent to which the wife has contributed to the income, earning capacity, and property of the Husband, and the duration of the marriage, could safely make a significant adjustment in her favour.
It was further submitted that:
Given the disparity of property of the parties it is appropriate that an adjustment be made under s 75 (2)(b) of the Act in the Wife’s favour.
It was further contended that:
The Court could take into consideration waste and lack of disclosure by the Husband pursuant to s 75 (2)(o) of the Act and make an adjustment in the Wife’s favour.
Comparatively, the husband contended that, “[i]n circumstances where both parties are young, in good health, have no dependents, and have more than sufficient income from employment to support themselves, section 75(2) has a limited role to play in the determination”. Specifically, in the husband’s written submissions, it was contended that:
142. These parties are young healthy people. They have good jobs; the wife earns more than the husband does in fact. They are not parents to children and have no necessary commitments to support others.
143. By reason of the respondent’s wealth awarded solely to him by reason of contributions, and the return to him of his equitable interest in the Suburb C property, the respondent is significantly wealthier than the applicant.
144. There are doubtless times when it is just and equitable to give some recognition to a party’s greater wealth at section 75(2), in some way to temper the outcome in all the circumstances of the case. The circumstances of this case militate strongly against this, and would represent an unjustified interference in the rights of the respondent to his property. The Court is not engaged in a process of social engineering.
145. This was a short marriage of 7 years. There are no children. The wife made no contributions to the respondent’s wealth. The wife made no sacrifice for her own advancement in life and in her career during the marriage. To make an adjustment just because the husband is richer than the wife after an assessment of contributions would not be an appropriate exercise of discretion under section 79, on the particular facts of this case.
(Footnotes omitted)
In this matter, save in respect to some funds provided to the husband by his mother, I note that I have rejected both parties’ contentions that they have a legal liability to pay members of their families in respect to funds that have been advanced to them. I acknowledge that each of the parties may nonetheless consider that they are under a moral obligation to repay those funds. I have not, however, taken into consideration that potential moral obligation in determining that there should be a further adjustment of the parties’ property pursuant to s 75(2) of the Act. This is because, whether or not either party acts in accordance with such a perceived moral obligation will be entirely up to them.
In circumstances where each party has alleged that the other has engaged in profligate spending, I have not attempted to engage in an exercise of comparative profligacy. Accordingly, I have not considered any issues of waste or profligacy in weighing up whether there should be any further adjustment to the parties’ property pursuant to s 75(2) of the Act.
The parties are young. Both parties are in good health although the husband has had periods of mental health challenges, including a period of substance addiction. Both parties are now earning comfortable incomes and neither party is responsible for supporting any third party, including, most relevantly, any children, which neither party has.
While I have found that the wife has, during the period of the parties’ relationship, provided encouragement and emotional support to the husband and has been of some assistance to him in his business activities, it could not be said that such assistance has been of great significance and there is no evidence that the encouragement and assistance has resulted in any additional business success for the husband. Further, there is no evidence that any sacrifices that the wife has made in providing that emotional support and encouragement as well as physically attending certain business functions and hosting business associates of the husband has resulted in any impediment to the wife’s career progression.
Throughout their careers, both parties have accumulated an approximately equivalent amount of superannuation, which is reflective of the fact that neither has made career sacrifices for the benefit of the other.
While both parties have been critical of the other in respect to issues of inadequate disclosure, the absence of documentation has not been an issue that has impacted upon my ability to properly consider the parties’ respective cases or to identify property that is available for distribution. Accordingly, issues of nondisclosure are not relevant to my consideration of the matters set out in s 75(2) of the Act.
Therefore, the only possible basis upon which I would consider making a further adjustment of property under s 75(2) of the Act in favour of the wife is in relation to s 75(2)(b). Specifically, as a result of the orders that I make in these proceedings, the husband will have access to a considerably greater amount of property than will be the case for the wife.
The wife relies on the authority of Webster and Webster [1998] FamCA 1517 to contend that this disparity in wealth justifies a substantial adjustment under s 75(2). In that 1998 case, however, the Full Court stated that there were a number of factors, not simply the difference in the parties’ wealth, that justified an adjustment in favour of the husband, in that case. Those matters were identified at [127] of the Full Court’s decision as including:
·The disparity in the overall financial position of the parties and the effect of the orders upon the husband’s career, namely that he would have to commence a new career in his mid-40’s after devoting many years of his working life to one career;
·The extent to which the husband had contributed to the income, property and particularly the financial resources of the wife; and
·That the wife had access to a significant financial resource in the form of a trust known as “Q Trust.”
That similar combination of factors is not present in this case.
In Mallet (supra) at 638, Wilson J stated that the purpose of s 79 of the Act is not simply to assist the Court in considering the future circumstances of the parties in the exercise of making an order that is “just and equitable” but the purpose of the section is not simply to “equalise the financial strengths of the parties.” In referring to that statement concerning the purpose of s 79, it is to be noted that, in evaluating the considerations set out in s 79 of the Act, s 79(4)(e) requires the Court to have regard to the matters set out in s 75(2) to the extent to which those considerations are relevant.
Consistent with that statement in Mallet (supra), in In the marriage of Waters and Jurek (1995) FLC 92-635 at 82,376, the Full Court said:
The connection between the s. 75(2) factors and a just and equitable property order is more difficult since the criteria are expressed very broadly and are fundamentally prospective in their operation. The provision does not invite a process of social engineering…
That is not to say that a disparity in wealth may not, in some circumstances, be a very relevant consideration for the Court to consider in exercising jurisdiction to make an order pursuant to s 79 having regard also to the matters set out in s 75(2) of the Act. By way of a guide, a useful and common sense example of when that disparity in wealth may be a very relevant consideration was identified by the Full Court in Dickson &Dickson (1999) FLC 92-843 at 85,872 [47] where the Full Court said:
Whilst it may, as a matter of individual circumstance, be correct to say that the mere existence of disparity of wealth ought not of itself justify a settlement of property to one party at the expense of the other, it may often, in the overall circumstances of a case, call for further adjustment beyond that assessed on contributions alone, so that the final order is just and equitable. In this case, after the contribution issues were determined, not only was there a huge disparity in respect of capital, and a significant disparity in respect of income, but this was a marriage that had lasted 26 years and, in the circumstances, the reasonable standard of living that might be expected by each of the spouses at the end of a very long marriage, and towards the end of their working lives, might be said to be one where each could enjoy a not dissimilar standard.
In the circumstances of this case, the parties were in a relatively short de facto and married relationship of approximately seven (7) years. Neither of the parties’ careers were adversely impacted by the fact that they are in such a relationship. Equally, neither of the parties’ careers was substantially enhanced by the fact that they were in their relationship. Neither party has ongoing commitments to a third party. Both parties are in good health and have comparable earning capacity. Both parties have comparable superannuation to provide a basis to build upon and provide for themselves in their retirement.
In the totality of those circumstances, even though I recognise that there is a substantial differential between the parties in terms of wealth, I have determined that it is not appropriate to make a further adjustment as a result of the factors set out in s 75(2) of the Act and to do so would not result in an outcome that is just and equitable in accordance with the Court’s obligation pursuant to s 79(2) of the Act.
Holistic assessment
In this matter, I have determined that an appropriate adjustment of the parties’ property, having regard to those matters set out in s 79(4) of the Act, is for orders to be made such that the wife will receive a distribution of 15 per cent of the parties’ property and the husband a distribution of 85 per cent.
This means that the adjustment in favour of the wife should be 15 per cent of $4,987,016 which equates to $748,052.
The wife currently has the following property and superannuation:
·Super Fund 2 superannuation – $160,306;
·The Suburb C property – $850,000;
·Motor Vehicle 1 – $15,700;
·CC Company shares – $6,143;
·NAB bank #…08 – $592;
·DD Bank offset account #…04 – $2,432; and
·Household contents – $10,000.
The total value of the wife’s property and superannuation together is therefore $1,045,173.
From that, however, the wife is responsible for paying the outstanding debt to DD Bank, being the mortgage which is secured over the Suburb C property in the sum of $423,559.
Accordingly, having regard to that debt, the wife currently has net property of $621,614.
This means that the husband is required to pay to the wife an amount of $126,438 to ensure that she has net funds of $748,052. As noted, the wife will, however, remain responsible for paying the outstanding debt payable to DD Bank in the sum of $423,559.
This will result in a situation where the wife will have property in the form of the Suburb C property unencumbered by the husband’s interest in that property. She has an acceptable motor vehicle, she has cash in a bank account to meet urgent expenses and she is in receipt of a comfortable income by community standards. She presented as a competent and intelligent person and there is no reason as to why she should not be capable of continuing to exploit what she has demonstrated to be a substantial earning capacity.
The husband has a substantial property portfolio that he owns individually and jointly. The husband will be required to access funds to pay to the wife the amount of approximately $126,438. The husband has, however, substantial property, including in his own name, to offer as a security for a loan or, alternatively, in the event that he does not wish to borrow additional funds or is unable to do so, he has the capacity to sell the D Street property, which is solely in his name, in order to raise the amount payable to the wife and still be left with substantial capital after doing so.
I accept, however, that in circumstances where the husband may have difficulty in raising the funds required to pay the wife the amount of $126,438, it is appropriate to allow a reasonably comfortable period of time for him to arrange finance. In those circumstances, I propose allowing the husband a period of 60 days from the date of these orders in order to raise those funds, after which time, if that does not occur, orders providing for the sale of the D Street property will be activated.
For all these reasons, in the circumstances of this case, I am satisfied that the orders as set out at the commencement of my reason for judgment represent a just and equitable adjustment of the parties’ property.
I certify that the preceding three hundred and fifty-nine (359) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice McClelland delivered on 7 December 2020.
Associate:
Date: 7 December 2020
3
25
3