Sabato & Rimas (No 2)
[2024] FedCFamC2F 469
•18 April 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Sabato & Rimas (No 2) [2024] FedCFamC2F 469
File number(s): MLC 12585 of 2022 Judgment of: JUDGE SYMONS Date of judgment: 18 April 2024 Catchwords: FAMILY LAW – Property – de facto relationship – small asset pool comprising two regional properties – where both properties owned and purchased by the respondent – where applicant made weekly payments to respondent that were characterised as contributions to the mortgage over one property – where the applicant made some improvements to the properties – where applicant had almost exclusive occupation of one property and left it in a state of neglect – where evidence as to value of properties inadequate – where both parties in poor health and in receipt of government benefits – where respondent has responsibilities for a child – orders made as to 80/20 division in favour of respondent Legislation: Family Law Act 1975 (Cth), ss 90G, 90SB, 90SF, 90SM, 102NA Cases cited: Bevan & Bevan [2013] FamCAFC 116; (2013) 49 Fam LR 387
Browne v Green (1999) FLC 92-873
Chancellor & McCoy [2016] FamCAFC 256; (2016) FLC 93-752
Cosola and Moretto [2023] FedCFamC1A 61; (2023) 66 Fam LR 480
DW & GT [2005] FamCA 161; (2005) 33 Fam LR 177
Horrigan & Horrigan [2020] FamCAFC 25
Hsiao & Fazarri [2019] FamCAFC 37
Jabour & Jabour [2019] FamCAFC 78; (2019) 59 Fam LR 475
Kowaliw and Kowaliw (1981) FLC 91-092
Sabato & Rimas [2023] FedCFamC2F 1207
Stanford & Stanford (2012) 47 Fam LR 481; [2012] HCA 52
Willmore and Willmore (1988) 12 Fam LR 692
Woodcock & Woodcock (1997) 21 Fam LR 393
Division: Division 2 General Federal Law Number of paragraphs: 83 Date of last submissions: 13 March 2024 Date of hearing: 13 March 2024 Place: Melbourne Solicitor for the Applicant: Mr L Lakshman (TFA Legal) Respondent: In person ORDERS
MLC 12585 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR SABATO
Applicant
AND: MS RIMAS
Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
18 APRIL 2024
THE COURT ORDERS THAT:
1.All previous orders be discharged.
2.There be an alteration of the parties’ property interests pursuant to s 90SM(1) of the Family Law Act 1975 (Cth) (the Act) equating to a 80% division to the respondent and 20% division to the applicant of all assets.
Sale of the Town B property
3.On or before the expiration of sixty (60) days from the date of these orders, the applicant and the respondent do all acts and things and sign all such documents as may be required to sell the real property situate and known as Z Street, Town B, Victoria being the whole of the land more particularly described in Certificate of Title Volume … Folio … (the Town B property) on the following terms:
(a)The applicant and respondent jointly engage a real estate agent and failing agreement, the real estate agent be nominated by the President of the REIV;
(b)The method of sale, reserve price and sale price be agreed between the applicant and respondent and failing agreement, as determined by the agent;
(c)The applicant and respondent jointly engage a solicitor nominated by the respondent to undertake the conveyance of the sale of the Town B property.
4.For the purpose of obtaining a sale of the Town B property, the parties do all acts and things to:
(a)allow inspection of the Town B property at all times requested by the agent; and
(b)make the keys to the Town B property available to the agent.
5.The proceeds of sale of the Town B property be applied as follows:
(a)first, to pay and discharge the NAB Bank mortgage registered on the title to the Town B property;
(b)second, in payment of the legal costs and outlays relating to the sale;
(c)third, in payment of the agent’s costs of and incidental to the sale of the Town B property, including advertising and commission expenses;
(d)fourth, in adjustment of rates and taxes;
(e)fifth, in payment of the costs of the conveyance;
(f)sixth, in payment of any Capital Gains Tax arising as a consequence of the sale as assessed by the Australian Taxation Office.
(g)seventh, such funds to the applicant so that he receives/retains 20 per cent of the net assets and liabilities as identified in these reasons for judgment in paragraph [41];
(h)the balance (if any) to the respondent.
6.Pending the settlement of the sale of the Town B property:
(a)the respondent have sole use and occupation of the Town B property and be responsible for payment of:
(i)mortgage instalments;
(ii)council rates; and
(iii)utility costs.
(b)neither party further encumber the Town B property without the written consent of the other party.
Retention of property
7.The applicant retain all his right, title and interest in:
(a)his Motor Vehicle 1;
(b)his Motor Vehicle 2 and Motor Vehicle 3;
(c)his goods and chattels;
(d)funds in bank accounts in his sole name.
8.The respondent retain all her right, title and interest in:
(a)the real property situate and known as AA Street, Town H being the whole of the land more particularly described in Certificate of Title Volume … Folio … and Volume … Folio … and Volume … Folio … (the Town H property);
(b)funds in bank accounts in her sole name;
(c)any personal items or effects.
9.The parties must do all acts and things, and sign and/or execute any necessary documentation reasonably required to give effect to these orders.
10.If either party fails to execute such documents as may be necessary to give effect to these orders within seven days of being requested to do so, the non-defaulting party be at liberty to apply to the Court to have a Registrar execute all such documents in place of the defaulting party in accordance with s 106A of the Act.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE SYMONS:
INTRODUCTION AND BACKGROUND
This is an application for orders adjusting the property interests of the applicant and the respondent pursuant to s 90SM(1) of the Family Law Act 1975 (Cth) (the Act).
The applicant, Mr Sabato, is 54 years old. The respondent, Ms Rimas, is aged 53. There are no children of the relationship. The respondent has two children from previous relationships.
Historically, the parties held different views about the length of their de facto relationship. This question was resolved judicially on 18 September 2023 when Judge Glass made a declaration that the applicant and the respondent were in a de facto relationship from early 2010 until early 2021 and published reasons for judgment explaining why a declaration in these terms had been made: Sabato & Rimas [2023] FedCFamC2F 1207 (the de facto judgment).
When the parties met, the respondent owned a home located at CC Street, Town G (the Town G property), where she was residing with her young daughter. The respondent says that when she met the applicant, he was squatting and did not have stable housing.[1] It is not in dispute that the applicant did not bring anything of monetary value into the relationship.
[1] Respondent’s affidavit filed on 5 March 2024, [4]
The applicant reports he is in poor health. It is common ground that in 2013 he suffered his first medical episode and had surgery. In late 2016, the applicant suffered his second medical episode and had surgery.[2]
[2] Applicant’s affidavit filed on 23 August 2023, [8]-[9], [14].
The respondent also suffers from compromised health, including various medical conditions, anxiety, and depression.[3]
[3] Respondent’s affidavit filed on 5 March 2024 (Exhibit “3”), [22].
THE PROPERTIES
The property pool in this matter is modest, comprising the following two real properties:
·Z Street, Town B, VIC (the Town B property).
·AA Street, Town H, VIC, (the Town H property).
The Town B property
In 2010, the respondent purchased the Town B property by providing a deposit in an amount that the respondent has never precisely quantified. In her affidavit of 5 March 2024 (marked as exhibit “3”), the respondent deposed that at the time she purchased the Town B property (late 2010) she had $50,000 in savings (the majority of these funds representing a small inheritance from her mother). However, it is not clear how much of these funds were applied towards the purchase of the Town B property.
Further, while it would appear from loan documentation annexed to the respondent’s second affidavit of 5 March 2024 (marked as exhibit “1”) that the amount borrowed on settlement was $48,000, in the absence of evidence about the purchase price, it is not possible to apply this information to determine the initial contribution made by the respondent. It is however uncontentious that the respondent was the only one of the parties to apply funds to the deposit for the purchase of the Town B property and that the mortgage over the property was taken out in her name alone.
The applicant claims that at the time of purchase, the parties made a verbal agreement to split equally the net sale proceeds of the Town B property (making an allowance for the respondent’s contribution of $30,000 or $40,000 upon its eventual sale).[4] The respondent denies this. However, in the de facto judgement, Judge Glass found that he preferred the evidence of the applicant on this issue.[5]
[4] Applicant’s affidavit filed on 23 August 2023, [6].
[5] De facto judgment at [52]-[53].
In around late 2010 or early 2011, the parties commenced cohabitation at the Town B property along with the respondent’s youngest daughter.
The parties moved back to the respondent’s home in Town G in early 2013. However, from around mid-2013, the applicant commenced living full time at the Town B property and remained in occupation there, apart from periods when he was receiving medical treatment and care (including from the respondent) for his medical episodes, for the remainder of the parties’ de facto relationship. Judge Glass also accepted the evidence of the applicant that he spent weekends together with the respondent at any of the three properties owned by her at various times with the choice of location dictated largely by the care needs for the respondent’s daughter, L.[6]
[6] De facto judgment at [31] and [34].
It is agreed that the applicant paid the respondent the amount of $75 per week over the course of the de facto relationship in connection with the Town B property. The applicant characterised this as contributions made towards the mortgage over the Town B property. The respondent instead maintained that they represented a weekly payment of rent for the applicant’s occupation of the Town B property. In the de facto judgment, Judge Glass preferred the evidence of the applicant and found that he had transferred $75 per week to the respondent from early 2011 and that the funds were intended to pay for the mortgage.[7] Judge Glass also found that the applicant had occasionally paid rates for the Town B property.[8]
[7] De facto judgment at [47]-[48].
[8] De facto judgment at [49].
The Town H property
In mid-2019, the respondent sold her Town G property and used the proceeds to purchase the Town H property, at which time the respondent and her daughter, L, moved into the Town H property.[9]
[9] Applicant’s affidavit filed on 23 August 2023, [23].
The respondent set up a broadband connection for the Town H property and paid the account from 2019 until 2021.[10]
[10] De facto judgment at [50].
MATERIAL RELIED UPON
At the hearing, the applicant, who was represented by lawyer, Mr Lakshman, said that he relied upon:
(a)His case outline filed on 13 November 2023;
(b)His affidavit filed on 23 August 2023;
(c)The affidavit of Mr DD filed on 15 March 2024.
At the hearing, the respondent, who appeared without the benefit of legal representation, said that she relied upon:
(a)Her first case outline filed on 8 March 2024;
(b)Her second case outline filed 11 March 2024;
(c)Her affidavit affirmed on 5 March 2024 consisting of 3 paragraphs and various annexures marked exhibit “1”;
(d)Her affidavit affirmed on 5 March 2024 consisting of 27 paragraphs and various annexures marked exhibit “3”;
(e)Her affidavit affirmed on 8 March 2024 marked exhibit “R-2”.
Both parties gave limited viva voce evidence but otherwise adopted their respective affidavits. Mr Laksham cross-examined the respondent and in circumstances where none of the mandatory conditions for the making of an order under s 102NA(1)(c) were present and neither did I consider there to be factors present to warrant the exercise of the discretion under s 102NA(1)(d), I discharged the s 102NA order made on 27 February 2023 so that the respondent was not subject to the prohibition against personal cross-examination of the applicant that had earlier applied.
Despite this, the respondent chose ultimately to conduct her cross-examination principally by identifying a series of questions that the Court put to the applicant on her behalf. Some of the evidence adduced at trial trespassed on matters that were the subject of findings recorded in the de facto judgment and were therefore subject to the principles applying to issue estoppel, which precludes a person from challenging essential findings of fact or law in proceedings which determine the cause of action between the same parties.[11] However, to the extent that new issues arose, or took on a different complexion for the purpose of the matters that the Court was required to determine in an application for orders under s 90SM(1), they are identified below.
[11] Blair v Curran (1939) 62 CLR 464 at 531 - 532; Kuligoski v Metrobus (2004) 220 CLR 363 at [21], [25], [39], [40], [47], [60] – [62]; Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at [22].
RELEVANT LAW
My decision in this case is governed by s 90SM of the Act. There is no dispute that the threshold conditions set out in s 90SB of the Act are met, nor that the de facto relationship between the parties has ended.
I must not make any order pursuant to s 90SM unless I am satisfied that in all the circumstances it is just and equitable to do so. If I am so satisfied, I must take into account the factors set out in s 90SM(4) in deciding what orders to make.
The High Court opined in Stanford & Stanford (2012) 47 Fam LR 481 that:
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.[12]
[12] Stanford at [36].
Their Honours went on to identify “three fundamental propositions”[13] relevant to the consideration of justice and equity; firstly, the identification of the parties’ existing legal and equitable interests, secondly, the principled application of judicial discretion to any alteration of those interests and:
Third[ly] whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.[14] (Citations omitted) (Emphasis added).
[13] See Cosola and Moretto [2023] FedCFamC1A 61 at [29].
[14] Stanford at [40].
The High Court further stated that:
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 need 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).[15]
[15] Stanford at [41].
In Bevan & Bevan[16] the Full Court considered further the exercise of discretion as to whether it is just and equitable to alter existing property interests, stating that:
The third “fundamental proposition” demands separate consideration of the preliminary question of whether it is just and equitable to make any order altering property interests before the need arises to consider the extent to which existing interests are to be altered and the manner in which that is to be done.
…
Just as the expression “just and equitable” does not admit of exhaustive definition, it is not possible to catalogue the “range of potentially competing considerations” that may be taken into account in determining whether it is just and equitable to make an order altering property interests. However, in our view, it would be a fundamental misunderstanding to read Stanford as suggesting that the matters referred to in s 79(4) should be ignored in coming to that decision. Indeed, such a reading would ignore the plain words of s 79(4), which make clear that in considering “what order (if any)” to make, the court must take into account the matters referred to in that subsection (emphasis added).
This requirement to consider the s 79(4) matters in determining whether it is just and equitable to make any order provides fertile ground for potential conflation of the two different issues, which the High Court has warned against. However, this potential will not be realised in many cases because of what the plurality said at [42] about the “just and equitable” requirement being “readily satisfied”. But there will be a range of cases, of which arguably the present is a good example, where determining whether it is just and equitable to make any order altering property interests will not be so clear cut and will therefore require not only separate but very careful deliberation.
We do not consider it helpful, and indeed it is misleading, to describe this separate enquiry as a “threshold” issue. We say this for two reasons. First, as was emphasised in Stanford, the initial enquiry is to determine the existing legal and equitable interests of the parties. Secondly, although s 79(2) is cast in the negative and amounts to a prohibition against making any order unless it is just and equitable to do so, the corollary is that if the court does make an order, such order itself must be just and equitable. The just and equitable requirement is therefore not a threshold issue, but rather one permeating the entire process.
It will be seen from this discussion that while the s 79(2) and s 79(4) issues must not be conflated, they are intertwined because the text of the Act links them. This was recognised in Ferguson & Ferguson where Strauss J said that s 79(2) “is directed to both the questions whether an order should be made at all, and what the order should be, if one is made”.
…
In our view, it will be less likely that the separate issues arising under s 79(2) and s 79(4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order…[17] (Citations omitted)
[16] Bevan & Bevan [2013] FamCAFC 116.
[17] Bevan [81], [84]-[87] and [89].
The Full Court said in Chancellor & McCoy:
In adopting the approach she did, her Honour proceeded in accordance with what the Full Court said in both Bevan and Chapman, namely that it is open to a trial judge to take into account the matters stated in s 79(4) (or s 90SM) of the Family Law Act 1975 (Cth) (“the Act”) when determining whether it is “just and equitable” to adjust existing property interests. However, consistent with Stanford, her Honour also recognised that it was not open to her to decide that issue merely by reference to those matters.[18]
[18] Chancellor & McCoy [2016] FamCAFC 256 at [42].
LEGAL AND EQUITABLE INTERESTS OF THE PARTIES
A composite picture of the parties’ assets appears in the table below which incorporates the values attributed to the various items (where acknowledged) by the applicant and the respondent in their respective case outlines.
Asset Ownership Applicant Value Respondent Value
Town B property Respondent $180,000 $118,750 - $131,250 Town H property Respondent $230,000 $210,000 - $230,000 Goods and chattels Respondent $5,000 Nil EE Bank Account #...60 Respondent $201 $700 CBA Bank Account #...31 Respondent $209 $500 NAB Bank Account #...06 Respondent $8 $50 CBA Bank Account #...65 Respondent $101 Nil NAB Bank Account #...94 Applicant $156 Nil EE Bank Account #...44 Applicant $8 Nil Motor Vehicle 1 model Applicant $1,500 Nil Goods and chattels Applicant $5,000 Nil Motor Vehicle 2 and Motor Vehicle 3 (in need of restoration) Applicant $500 Nil
As noted earlier, the overwhelming value in the asset pool is located in the Town B property and the Town H property. Regrettably, the evidence before me as to the value of both properties was very limited notwithstanding that pursuant to an order made by a Judicial Registrar on 14 December 2023, the parties had been required by 12 January 2024 to instruct FF Company, Town N to prepare a valuation of each property and to file an affidavit annexing the valuations within seven days of their receipt.
Instead, as far as the Town H property was concerned, the applicant filed an affidavit of lawyer Mr DD to which was annexed a single page document dated 19 January 2024 appearing on the letterhead of FF Company and which contained the following information (reproduced in full):
Re: [Z Street, Town H], VIC
Thank you for the opportunity to provide you with an opinion of the property’s current market worth.
To establish the market worth of a property, we take into account comparable properties which have recently sold, also those that are currently for sale.
Based on the information available, I believe the current market worth of the property is between $210,000 and $230,000
The document self-evidently does not conform to the order of a Judicial Registrar as it contains an appraisal, rather than a more robust valuation. The applicant however sought to rely upon the appraisal and submitted that the Court should fix the value of the Town H property in the amount of $230,000.
The respondent instead relied upon an appraisal annexed to her affidavit marked as “1” and which had apparently been prepared by HH Company in Town H in late 2023. The appraisal assigned a value to the Town H property of $200,000.
During cross-examination the respondent was questioned about the Town H property. She described the HH Company’s evaluation of $230,000 as being in “the higher range” and that $210,000 or $220,000 would be “more doable” given the property was dated. Of course, the difficulty is that these characteristics of the Town H property may have already been taken into account in either or both appraisals. It is impossible to know. Where the most recent appraisal operates across a range, the course that commends itself to me is to assign a value in the middle of that range, being $220,000, to the Town H property.
The situation as it concerns the value of the Town B property is more problematic. The applicant relied on an appraisal produced again by HH Company and annexed to the affidavit of Mr DD. It is dated 18 January 2024 and states, “based on the information available”, that in the author’s belief, the current market worth of the property is between $170,000 and $180,000.
The respondent instead relied on an appraisal that was annexed to her affidavit marked as “1” and which had been prepared by JJ Company on a date that was not apparent from the face of the document but which the respondent informed the Court was sometime in late 2023. The document identified as a “Summary” records an appraisal price range of $118,750 - $131,250 and contains the following “Notes from your agent”: Due to the extensive smoking damage inside, the properties (sic) value has decreased by approximately $30,000. In the current state the properties (sic) market value sits around $125,000.00.
The respondent invited the Court to fix the value of the Town B property in line with this appraisal and placed into evidence eight pages of photographs that the applicant, in cross-examination, agreed showed areas (both internal and external) of the Town B property.[19] The first page of photographs was taken at around the time that the respondent purchased the property and depict a property that is in a clean, tidy, and undamaged state. The remaining seven pages of photographs were taken by the respondent when she attended the Town B property in early 2024. By contrast, they depict a property that is in a state of neglect and disrepair. There is evidence of significant damage to and brown discolouration of the walls and flooring throughout the property as well as damage to the appliances in the kitchen.
[19] The photographs were annexed to the respondent’s affidavit of 5 March 2024 (“-3”).
The applicant did not deny that the Town B property was in a poor condition. He attributed the brown marks to a broken heater and told the Court that it would cost $10,000 to repaint the property to restore it to its earlier condition.
While neither party produced compelling evidence as to the value of the Town B property, in circumstances where it appears at least that the agent who produced the appraisal for the respondent did so with an appreciation of the condition of its interior and where there is evidence before the Court that corroborates the view taken that the property is currently in need of remedial work, I will fix the value of the Town B property at $125,000.
The parties agree that the Town B property is encumbered by a mortgage in the amount of $29,994. The applicant also identified a “liability” in the nature of a personal loan from his father, in the amount of $4,000. However, I was not taken to any evidence about the existence of such a loan and nor could I find any mention of it in the trial affidavit of the father. There is no basis to make allowance for it in the joint balance sheet.
I understood the respondent to contend that the amount of $20,000 should be added-back to the asset pool as an amount referable to personal items stored at the Town B property which the applicant had sold, without her knowledge or consent,
The respondent’s evidence about this was unsatisfactory. The respondent deposed in her affidavit of 5 March 2024 (“3”) that when the applicant left the Town B property in early 2024, he sold her household items which had a value of $20,000. However, when cross-examined about this, the respondent was not able to produce any evidence of such sales and did not identify the items (except in the vaguest of terms) or produce evidence of how they might be valued. I am not prepared in these circumstances to make any allowance for a category of personal items.
The final position of the parties and their interests is therefore as follows, where I have adopted the values assigned by the parties to items which are in their possession, particularly bank accounts, as essentially declarations against interest:
Ownership Description Gross value Debt Net value Respondent Town B Property 125,000 29,994 95,006 Respondent Town H Property 220,000 220,000 Respondent Funds in EE Bank Account 700 700 Respondent Funds in CBA Bank Account(s) 500 500 Respondent Funds in NAB Bank Account 50 50 Applicant Funds in NAB Bank Account 156 156 Applicant Funds in EE Bank Account 8 8 Applicant Motor Vehicle 1 1,500 1,500 Applicant Goods and chattels 5,000 5,000 Applicant Motor Vehicle 2 and 3 500 500 TOTAL $353,414 $29,994 $323,420 IS IT JUST AND EQUITABLE TO MAKE ORDERS ADJUSTING THE PARTIES’ PROPERTY INTERESTS?
Insofar as both parties propose a suite of orders that would involve the sale of the Town B property and distribution (albeit in different amounts or proportions) of the sale proceeds, it might be said that the parties acquiesce in orders being made under s 90SM(1) of the Act to alter their respective interests in property. This does not, however, obviate the need for me to form my own view about that matter.
The parties were in a relationship that spanned 11 years and although they differ as to the nature of the assumptions that underpinned their use and enjoyment of common property, it is evident that both had turned their mind to and accepted that upon the dissolution of their relationship, there were means by which those assumptions could be given effect.
In this respect I am referring to the verbal agreement concerning the Town B property (see [10] above) and the agreement upon which the respondent relies, namely, the “agreement” contained in a statutory declaration made by the respondent on 19 March 2018 which records that the respondent will give the applicant the amount of $15,000 if, within 15 years, they are “no longer in each other’s lives what so ever”.[20] The applicant accepts that the statutory declaration bears his signature but deposes that he only signed the document when directed to do so by the respondent as a condition of the two of them getting back together after a brief period of separation.[21]
[20] A copy of the statutory declaration is annexed to the respondent’s first case outline and is annexure “S-1” to the applicant’s affidavit.
[21] Applicant’s affidavit at [19].
An agreement which purports to alter parties’ property interests, unless formalised by court order or through s 90G of the Act, has a limited status in an application made under s 90SM of the Act. This is true even of uncontentious agreements. The Full Court in Woodcock v Woodcock [1997] FamCA 5 concluded:
“[i]t may be that the ability of a court to take into account the terms of an unapproved agreement creates in the words of Hoffman LJ “the worst of both worlds” as it would be impossible to predict from case to case, exactly what weight ought to be given to the agreement…However it is the dominant and unwavering thread of all cases that the parties cannot by their conduct or agreement oust the jurisdiction of the court”.[22]
[22] Woodcock & Woodcock (1997) FLC 92-739, 83, 968 (Murray, Baker and Kay JJ).
The Full Court confirmed as much in Hsiao & Fazarri [2019] FamCAFC 37,[23] extracting the following from DW & GT [2005] FamCA 161:
“Where parties enter into an agreement concerning property…the Court must determine the application on its merits having regard to the factors set out in s 79(4) as they exist at the time of the hearing. There is no threshold test, before embarking upon the s 79 exercise, to determine whether the earlier agreement was just and equitable at the time it was made according to the facts as they then existed and the law then in force. The earlier agreement should be considered (as an indication of what the parties may have regarded as just and equitable at the time), but its provisions only given effect if they coincide with an order which is just and equitable according to s 79 at the time of the hearing”.[24]
[23] Hsiao & Fazarri [2019] FamCAFC 37, [82]-[84] (Strickland, Kent and Watts JJ).
[24] DW & GT [2005] FamCA 161, [39] (Finn, May and O’Reilly JJ).
Where the terms of both agreements are uncertain and in the case of the second agreement, subject to questions as to the legitimacy of its procurement, they shed little light on what justice and equity require in this case. I am however satisfied that it is just and equitable to proceed to make orders pursuant to s 90SM(1) of the Act.
CONTRIBUTIONS
Applicable Legal Principles
The authorities establish that an assessment of contributions does not require “over-zealous” attention.[25] It is not a mathematical or accounting exercise but rather the exercise of a wide discretion. The assessment involves the identification and assessment of all of the parties’ respective contributions of all kinds and from all sources in a holistic way across the course of the relationship and in the post-separation period up to the point of assessment.
[25] Horrigan & Horrigan [2020] FamCAFC 25.
Contributions are not required to be attached or directly referable to any arbitrary time frames or any specific item of property.[26] However, the use of timeframes assists in pinning down the contributions made by the parties and in this case, reference to specific items of property is inevitable given that the parties’ evidence and submissions was concerned almost entirely with contributions made to the three properties legally owned by the applicant at different times over the course of the parties’ relationship.
[26] Jabour & Jabour [2019] FamCAFC 78.
Initial contributions
As noted earlier, the applicant did not own anything of value at the start of the parties’ relationship, whereas the respondent owned the Town G property and had funds in the amount of $50,000 which she subsequently applied, in part, to the purchase of the Town B property.
Contributions during the relationship
The respondent purchased the Town B property in late 2010 by payment of a deposit and by assuming the burden of a mortgage in the amount (at the time of settlement) of $48,000.
The applicant made regular weekly payments in the amount of $75 to the respondent as a contribution to the mortgage over the Town B property. In the de facto judgment, Judge Glass noted that no document relied on established the amount that was required to pay the home loan secured against the Town B property.[27] At final hearing, while neither party made any submission about what proportion the amount of $75 bore to the loan instalments owing under the mortgage (as will be recalled, the respondent denied that the payments possessed this character), some of the documents annexed to the respondent’s affidavit of 5 March 2024 (“1”) shed some light on the issue. In particular, the settlement advice letter issued to the respondent by EE Bank in 2010 identified a fortnightly repayment amount of $162, commencing from early 2011 whereas more recent NAB documents, including statements for the account ending #...06, recorded a fortnightly amount of $145 being deducted from the account as a “loan instalment” as recently as 9 February 2024. According to the respondent, she refinanced the Town B property loan with NAB in mid-2015. Having regard to this information, I find that the contribution made by the applicant towards the Town B property mortgage of $150 fortnightly represented a significant proportion of the instalment amount payable at any given time.
[27] De facto judgment at [46].
The respondent purchased the Town H property in mid-2019, apparently unencumbered, by applying the proceeds of the sale of the Town G property.
In the de facto judgment, Judge Glass accepted that the applicant made “improvements” to the properties as follows:
·The Town G property – minor renovations and painting prior to its sale in 2019;[28]
·The Town B property – renovations and new installation of fittings and fixtures;[29]
·The Town H property – renovations, repairs of fittings and fixtures.[30]
[28] De facto judgment at [54].
[29] De facto judgment at [54].
[30] De facto judgment at [54].
Judge Glass also found that the applicant had occasionally paid rates for the Town B property.
The respondent deposed to having otherwise paid all rates on the Town B and Town H properties, home insurance and water bills. The applicant did not challenge this evidence and I accept that the respondent made these contributions.
Further, while the respondent may have been relieved from most of the financial burden of servicing the mortgage over the Town B property, she nonetheless assumed the legal burden and ultimate financial responsibility for servicing the debt over the property and in circumstances where the applicant enjoyed almost exclusive occupation.
The Town H property
In mid-2019, the respondent sold her Town G property and used the proceeds to purchase the Town H property, at which time the respondent and her daughter, L, moved into the Town H property.[31]
[31] Applicant’s affidavit filed on 23 August 2023, [23].
The applicant set up a broadband connection for the Town H property and paid the account from 2019 until 2021.[32]
[32] De facto judgment at [50].
Contributions following end of de facto relationship
Following the end of the de facto relationship, the status quo was largely maintained. The applicant continued to live in the Town B property until around February 2024 and the respondent continued to live in the Town H property with her youngest daughter. There is evidence that the applicant continued to make fortnightly payments in the amount of $150 to the respondent’s NAB bank account ending #...06 until as recently as 7 February 2024.[33]
[33] Annexure to respondent’s affidavit dated 5 March 2024, “1”.
Conclusion on contributions
The applicant, in his case outline, invites the Court to assess his contributions at 55%. The respondent invites the Court to assess her contributions at 100%.
The applicant places emphasis on the “improvements” he made to each of the properties. The respondent places emphasis on her purchase of and legal ownership of each of the properties.
In the case of the applicant, I consider that his most significant contribution came in the form of his payments made to the respondent that were then directed at paying down the mortgage over the Town B property.
As far as the applicant carried out, or paid for, maintenance and/or improvement work at each of the properties, his case is diminished by his failure to produce expert evidence showing that his work added value to any of the properties. As a result, there is no evidence of the effect of his work upon the market value of the properties.
However, I acknowledge that there is no requirement that a contribution must result in a positive economic result before it can be taken into account: see Browne v Green (1999) FLC 92-873 at 86,359. Whilst the lack of economic benefit may be relevant (Willmore and Willmore (1988) FLC 91-975), a party’s work and effort generally remain a contribution unless it is conduct of the type described in Kowaliw and Kowaliw (1981) FLC 91-092.
I accept that the work performed by the applicant on the Town G and Town H properties, as well as the applicant’s regular and substantial contribution to mortgage payments for the Town B property are matters that require recognition. The applicant’s efforts were crucial to reduce the mortgage and had the mortgage not been paid, it is conceivable that the respondent would not have maintained ownership of the property.
There is however a further aspect. The state of the Town B property and its market value is affected by the condition of the property as it was left following the applicant vacating the property in early 2024. I have earlier accepted the evidence of the respondent that the property is significantly damaged and uncared for and that there will be a cost involved in carrying out cleaning and remedial work to restore it to a state of marketability. Alternatively, if sold in its present condition, its presentation will impact on the sale price achieved. On either scenario, there is a cost that accrues, and which can be attributed to the applicant.
I consider in all of these circumstances that the contributions favour the respondent in the proportion 80 to 20 per cent.
RELEVANT FACTORS PURSUANT TO SECTION 90SF(3)
The age and state of health of each of the parties
The applicant is aged 54 years and the respondent is aged 53. Both parties have serious health challenges.
As noted earlier, the applicant suffered illnesses in the past ten years, and I accept that his health has been compromised as a result. Further and although there is a dearth of documentary evidence of these conditions, in circumstances where there is no substantial challenge by the respondent to his evidence on these matters, I accept that the applicant also suffers from various medical conditions.
The respondent expressed scepticism about the applicant’s claim to have chronic pain in circumstances where he had professed to having carried out extensive work on the Town B and Town H properties. I accept however that the applicant does, to some extent, suffer from these conditions. Not all of the work to the properties was carried out by the applicant – instead he paid others to carry it out – and it is conceivable that these conditions have developed over time consistently with the respondent’s evidence in cross-examination that the applicant’s health (generally) had deteriorated over the time since she has known him.
The respondent deposed to suffering from both anxiety and depression and there was medical evidence before the Court (although some was quite dated) that supported these diagnoses. I also accept the respondent’s evidence (to which there was no challenge by the applicant) that she suffers from medical conditions.
It is significant that both parties are in receipt of a disability pension.
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
Both the applicant and the respondent are persons of limited financial means and I accept that their physical and mental conditions, as well as their significant time out of the workforce, mean that they have little (if any) capacity for gainful employment. They appear wholly dependent on their receipt of government benefits.
The respondent invited the Court to take into account as a prospective and contingent financial resource that the applicant would inherit the amount of $900,000 upon the death of his father. I decline to do so as the recognition of an interest of this character (about which, in any case there was no evidence), would be contrary to principle.[34]
[34] Marchant v Marchant (2012) 49 Fam LR 1 at [65]-68], referring to In the Marriage of Crapp (No 2) (1979) 5 Fam LR 47 and In the Marriage of W (1980) 6 Fam LR 538.
The responsibilities of either party to support any other person
The respondent has responsibility to support her daughter, L, who is aged 16.
Sub-sections 90SF(3)(c), (d), (f)-(t) of the Act have either been addressed already, were not the subject of submission and/or are not relevant in this matter.
Consideration
Having regard to the above factors, I do not consider that there is a basis to alter the parties’ interests to reflect ongoing needs. Both parties are in poor health and while the applicant’s ailments might be more impactful physically, there is little to differentiate the outlook of either party in terms of their capacity to improve their financial circumstances. The respondent has the additional responsibility of providing for her teenage daughter.
EFFECT OF FINDINGS AS TO CONTRIBUTIONS AND ONGOING NEEDS
If the parties’ interests in property are altered in accordance with my findings as to contributions and ongoing needs, then the applicant shall receive or retain 20 per cent of the net property pool and the respondent shall receive or retain 80 per cent of the net property pool. Although accepting that there is some imprecision in arriving at this calculation, on the figures identified in the balance sheet set out at [41] above, the applicant will receive $64,684 and the respondent will receive $258,736.
HOW IS THE ALTERATION TO BE GIVEN EFFECT?
Both parties’ proposed orders made provision for the sale of the Town B property and it is clear that in order to facilitate an alteration of interests in the proportions identified above, it will be necessary to make an order for its sale.
In circumstances where the value ultimately assigned to the Town B property involved the Court doing the best it could with a series of less than compelling appraisals, I consider it appropriate to frame a set of orders for the sale of the Town B property that give effect to the proportionate split, rather than to make allowance for the payment to the applicant of a fixed monetary sum. I also prefer this approach in circumstances where it is uncertain whether, and in what amount, capital gains tax might apply to the sale of the Town B property. This is not a case where I am content for the gains or losses to lie where they fall.
At the conclusion of the trial, I inquired of the parties as to whether, given the condition of the Town B property, it might be necessary to include a form of “make good provision” conditioning the orders for its sale. The applicant provided a modified form of order that would have required the applicant to engage in certain steps including cleaning the kitchen and living room areas to “return them to a state of cleanliness and presentability to the extent that it is possible to do so”. However, it quickly became apparent, including from the response to the proposal provided by the respondent,[35] that there would be significant challenges associated with the enforcement of such a provision. I have decided therefore not to include any mechanism for remedial work to be performed by the parties, noting the consideration I have given to the state of the Town B property above at [67] and my finding above at [68], although the parties will be at liberty to take whatever steps are recommended by the selling agent to improve the marketability of the property.
[35] The respondent communicated her disagreement with the “make good proposal” in emails sent to chambers on 14, 15 and 18 March 2024.
JUSTICE AND EQUITY
I am satisfied that alteration of the parties’ interests in property such that the applicant receives 20 per cent and the respondent receives 80 per cent of the net property pool achieves justice and equity between the parties. It recognises that while the applicant made contributions to the property of the relationship, the respondent made the overwhelming contribution. It factors in my findings that the applicant has devalued the Town B property. It accommodates the future needs of the parties (within the limits of a modest pool) by facilitating a payment to the applicant of a sum of money (in circumstances where he is being accommodated in a form of residential care and did not provide evidence of accommodation expenses) and allows the respondent to retain the Town H property where she can continue to reside with and care for her daughter.
I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons. Associate:
Dated: 18 April 2024
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