Saito and Saito
[2013] FMCAfam 112
•8 February 2013
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SAITO & SAITO | [2013] FMCAfam 112 |
| FAMILY LAW – Property dispute – parties separating in 2000/2001 to 2006 – reconciling 2006 – 2008/2009 – whether court’s jurisdiction ousted by court orders made in 2002 – whether court should make orders in any event – consideration of parties’ contributions during both periods of cohabitation. |
| Family Law Act 1975, ss.79, 79(2), 79(4) |
| MNJ v MEB(No.1) [2004] FMCAfam 259 Stanford v Stanford [2012] HCA 52 Erdem & Ozsoy [2012] FMCAfam 1323 |
| Applicant: | MS SAITO |
| Respondent: | MR SAITO |
| File Number: | MLC 4894 of 2012 |
| Judgment of: | Burchardt FM |
| Hearing date: | 22 November 2012 |
| Date of Last Submission: | 22 November 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 8 February 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Testart |
| Solicitors for the Applicant: | McNab McNab & Starke |
| Counsel for the Respondent: | Ms Daly |
| Solicitors for the Respondent: | Anthonys Solicitors |
IT IS NOTED that publication of this judgment under the pseudonym Saito & Saito is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 4894 of 2012
| MS SAITO |
Applicant
And
| MR SAITO |
Respondent
REASONS FOR JUDGMENT
Introductory
This is a property dispute in which, putting the matter broadly, there are two issues:
a)Whether the Court has jurisdiction to make any order adjusting the parties’ property interests and;
b)If the Court does have jurisdiction to make such an order, what should the division should be.
It should be noted that the matter proceeded by way of oral submissions only, with both sides adopting the position that the facts were sufficiently agreed and/or clear on the materials for cross-examination not to be necessary.
For the reasons that follow, I think that the Court does have jurisdiction to make a property order and that the assets of the parties should be divided equally between them.
Historical Background
What follows is taken from the affidavits of the parties and unless I misunderstand the matter, is not controversial.
The applicant wife was born [in] 1952 and the husband [in] 1950.
They have two children, [X] born [in] 1986 and [Y] born [in] 1988. Neither child is financially dependent upon either parent, although, as I understand it, [Y] may still live with her mother.
The parties commenced cohabitation in 1971 and married in 1985. They separated in either 2000 (the wife) or August 2001 (the husband’s version, see paragraph 8 of his trial affidavit). Following separation, the parties divided their property interests. The wife paid the husband $30,000 and retained the former matrimonial home. The husband transferred $70,000 of his then approximately $185,000 superannuation to the wife’s superannuation fund.
The only indication of the value of the first property settlement is at paragraph 32 of the wife’s trial affidavit, which asserts a value of the former matrimonial home in [B] of $210,000 with a mortgage of $84,000 (but the mortgage was increased to about $120,000 to pay the husband his $30,000). The parties apparently each had a car and the chattels were divided between them.
Thereafter, the wife went into business in 2005. Her [business] was unsuccessful and relevantly led to two loans, the first of $20,000 (since repaid by the wife from her earnings) and the second, a $40,000 loan.
The $40,000 loan was apparently repaid from the sale of the former matrimonial home in [B] and the wife received $140,000 net.
In the meantime, the husband had bought a unit which he sold in 2008 for a clear profit of $70,000.
In 2006, the parties reconciled and in June 2006, they bought a property in [S]. The husband contributed $70,000 and the wife, $140,000. The balance of the purchase price was comprised of two mortgages in the total sum of $325,000 to the Commonwealth Bank.
During the currency of their lengthy relationship both parties worked, although it seems it is conceded that the husband’s salary earnings were always greater, not least because for many years he had a second job. The wife appears to have contributed both by her earnings from time to time and by her support as a housewife and mother.
The parties separated under one roof in April 2008 (the husband’s version – apparently accepted (see wife’s outline of case) although the wife deposes (paragraph 85 of her trial affidavit) that this took place in late 2009).
More recent developments
When the proceedings commenced, the husband still had two jobs and was still earning far more than the wife. Since then, however, he has been made redundant and received a redundancy payment in September 2012 of $171,000.
Before that, in August 2012, he resigned his second job as a casual employee which had been previously earning him about $25,000 a year (see husband’s affidavit, 19 July 2012, at paragraph 9).
The husband also accessed $304,778 in superannuation of which $200,000 was committed to the home loan. It should be noted that the wife asserts - and there has been no cross-examination about this one way or the other - that $30,000 of the amount remaining went towards providing the husband with a car.
The husband had what the wife describes as a cancer scare some three or so years ago but at the present time, his bowel cancer appears to be in remission, although of course the future is, as ever is the case, uncertain. The wife is in generally unremarkable health and has a job paying her $843 per week, to which is added $55 care allowance for full-time care of her mother (see financial statement dated
19 November 2012).
The husband has no income.
Jurisdictional Issue
The wife’s application was filed on 1 June 2012. It sought a 75/25 split of both assets and superannuation in her favour. The husband’s response filed 19 June 2012 sought that he retain the former matrimonial home and that there be a splitting order in relation to superannuation, with the degree of adjustment left to the Court.
Notwithstanding that no amended response has ever been filed, at trial the husband asserted through counsel that the Court had no jurisdiction to make a property order because of the orders made in 2002. It was submitted that it was only at Court on the day that those orders had become available and it was thus apparent, only at the last moment, that the orders made had included both children and property orders. It is submitted that the husband could not be taken to have consented to any further property order merely by the filing of his materials.
Counsel for the wife relied upon the decision of Walters FM, as his Honour then was, in MNJ v MEB(No.1) [2004] FMCAfam 259.
I do not propose to deal with this matter at great length because in my view, the answer is clear. I am obliged to follow the decision of Walters FM unless I think it is clearly wrong. I do not think it is clearly wrong at all.
I refer to the entirety of the decision by reference to what his Honour had to say at paragraphs 52 and following as follows:
“[52] McCabe was a case in which the parties had very clearly stated that they wished to set aside earlier orders to which they had consented, and a letter had in fact been sent to the court for that purpose. At p 82,369–70, the Full Court said:
In cases of this nature conclusions about intention which should be attributed to the parties will depend upon the particular circumstances of each case. That material would not necessarily be confined to the initial decision to reconcile or, as in this case, to write to the court. Their intention may crystallise into a more precise form as time progresses and as the parties’ reconciliation continues and they conduct their lives together, including their financial affairs, so that it becomes inconsistent with any other conclusion …
There is no reason to doubt that parties can expressly or by their conduct consent to the discharge of prior orders so as to enable the court to make a fresh property order. Indeed, this would be a more likely conclusion in most cases of this type. The conclusion contended for by Mr Sofronoff would produce a situation where the previous orders were unenforceable but neither party could seek new orders (other than orders under s 78) and would be inhibited from taking proceedings in another court because such proceedings would inevitably constitute a “matrimonial cause.
[53] In my view, those two passages are extremely important. They emphasise that intention can be attributed to parties in a broad range of circumstances. Such an intention can crystallise as time progresses. In this case, there is no doubt that the parties intermingled their finances to some extent during the later period of cohabitation. They each made relevant contributions, and they conducted their lives as if they were married. That is so, notwithstanding the semantics used (and consciously used) by each of the parties in their affidavit material.
[54] The first sentence of the second of the passages in McCabe referred to in para 47 above warrants careful consideration. The Full Court said:
There is no reason to doubt that parties can expressly or by their conduct consent to the discharge of prior orders so as to enable the court to make a fresh property order. [Emphasis added]
[55] In my view, the words "so as to enable the court to make a fresh property order" are extremely important. In some cases, and B v B was such a case (and so is the present case), the initial orders have long since been carried out, and there can be no doubt that all or almost all of the property dealt with in them has been subsumed by other property. A great deal of water may have passed under the bridge, as it were. It follows that the parties would not or may not have directed their minds — even by some form of implied intention or inference — to specifically setting aside the original orders because of some perceived need or desire to reallocate the property that was the subject of those orders.
[56] What the Full Court acknowledges and reinforces by the sentence "Indeed, this would be a more likely conclusion in most cases of this type" is that parties — by their behaviour, and by conducting themselves once again as a married couple after a period of separation — would not wish to be prevented from re-litigating the issue of property settlement should it become necessary for them to do so. They would not want what may well be perceived as something akin to an artificial impediment to be placed in their way.
[57] The Full Court in McCabe clearly accepted that an inference can be drawn from the parties’ conduct to the effect that they intended what I have loosely described as the impediment that the previous orders comprised to be removed — so that, if necessary, fresh property orders can be made. Put another way, such an intention can (but need not necessarily) be imputed to the parties.”
I note also Walters FM’s reference to the decision of Nicholson CJ in Summerville (see MNJ at [62]-[63]) which is to the same effect as that which I have just set out.
In these circumstances, I respectfully and entirely agree with the conclusions arrived at by Walters FM and it is clear that the Court has jurisdiction to make a further property order in this case.
The underlying principle attaching to the proposition that the Court has the power to make one property order only arises from the perfectly proper understanding that parties have a relationship which ends and requires a judicial determination. This is a once and for all order. What is not comprised within that paradigm is the proposition that the same parties may have more than one relationship. To suggest that parties who re-partner, conceivably for many years and in very different circumstances after a first relationship, are precluded from exploring the justice and equity of the outcome of the second relationship merely by reference to long-ago historical events is radically unsound, in my view, and not a result which the law should produce.
I am saved from the necessity of making any new law, however, by the most helpful decision of Walters FM which I propose to apply.
In this case, although it puts the matter shortly, it is clear that the parties by their conduct should be taken impliedly to consent to further property orders being made. Any other outcome would, in the circumstances, be utterly unjust.
The Decision of the High Court in Stanford
The High Court in the recent case of Stanford v Stanford [2012] HCA 52 has given guidance as to the approach to be adopted in property cases. That case has been considered by Walters FM in Erdem & Ozsoy [2012] FMCAfam 1323. I have already indicated in another decision that I respectfully agree with his Honour’s conclusions in that case.
The High Court made it clear that there are three fundamental propositions to be borne in mind. The first step is to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
The next matter to consider is that although the Court has a very broad power to make orders in relation to property, that judicial discretion must be exercised in accordance with legal principles. The question presented by s.79 of the Family Law Act 1975 (“the Act”) is whether the rights and interests that the parties have should be altered.
The third proposition is that consideration of the various factors in s.79(4) does not automatically give rise to a right on the part of one or other party to have property divided. The just and equitable requirement in s.79(2) must also be considered and applied.
I agree with Walters FM that this means that the Court must first decide what are the parties’ legal and equitable interests in their properties.
The Legal and Equitable Interests of the Parties
So far as I can see, the closest any of the parties gets to setting out in any kind of clear way the current asset pool is at paragraph 52 of the husband’s trial affidavit, which reflects the outcomes of his redundancy and receipt of superannuation, matters which obviously only arose relatively close to trial.
Assets
Matrimonial home: $590,000 agreed value.
(It is described as in joint names. It must either be a joint tenancy or the parties are tenants in common in equal shares)
Wife’s Holden Barina 2010: $10,000.
Husband’s 2009 ute: $14,000.
Husband’s MECU account: $44,000.
Husband’s CBA account: $95,000.
Total: $753,000.
Superannuation
Wife’s superannuation: $7,758.
Husband, nil.
Liabilities
CBA mortgage: $48,000, joint names.
Just and Equitable (Section 79(2))
As observed by Walters FM in Erdem at [116]:
“… The second step involves ascertaining whether it is just and equitable to make an order altering the interests of the parties in their property. In most cases — relevantly, where the parties have separated and are no longer living in a marital relationship — the underlying assumptions that the parties had to the effect that the existing property ownership arrangements were functional (or perhaps irrelevant) and could be varied by agreement between them, no longer apply. That fact alone should ordinarily persuade the court that it is just and equitable to make orders altering the parties’ interests in their property. It is only after the court has concluded that it is just and equitable to make such orders that it should proceed to take what might be regarded as the third and fourth steps — namely:”
Here, what Walters FM described as the ordinary assumption is one that should clearly be made. It is implicit in the parties’ submissions that there should be an adjustment of the parties’ property interests. Any other outcome would not, in my view, produce a just and equitable conclusion.
Contribution Issues
The wife’s affidavit seeks to revisit, as it were, the validity or appropriateness of the orders originally made in 2002. I do not think that that can be done. While the wife has attributed various values to the settlement made in 2002, the only things I can really be sure of are the value of the former matrimonial home and the superannuation. The chattels appear to be neither here nor there for these purposes.
To evaluate whether that was an appropriate outcome looking back is really impossible. All I can say is that the wife got superannuation of $70,000 and the husband retained about $115,000. The wife appears to have obtained about $100,000 in equity in the matrimonial home and the husband, approximately $30,000 cash paid to him by the wife.
Thereafter, the wife’s unfortunate business initiative led, it would appear, to the complete dissipation of the $70,000 and a further $40,000 from the sale of the former matrimonial home. I infer that the former matrimonial home must have netted approximately $180,000 because $140,000 was applied by the wife to the purchase of the [S] property, whereas the husband was able to provide only $70,000, notwithstanding his greater earnings in the interim.
I do not think one can, as it were, start the clock all over again in 2006 when the parties re-partnered, notwithstanding their endeavour to bring their finances to a conclusion in 2002. It is clear that the contributions they made in the 30 plus years to 2002 had a lot to do with providing the springboard from which their affairs stood in 2006. This cannot, in my view, be done in a dollar for dollar way but it has to be borne in mind, in an overarching sense, when one looks at where they are now.
It is clear that most of the present assets, including most of the equity in the matrimonial home, have come from the husband’s contributions. Whether he contributed $200,000 to the pay down on the home loan or only $170,000, the reality is that a mortgage in excess of $200,000 now only has $48,000 owing on it.
The husband’s income until his redundancy (his employment ending on 27 July 2012) was clearly greater than that of the wife.
There is argument and disagreement between the parties as to whether the husband’s repayments of various credit cards and the like related wholly to his own indebtedness, and I note that the wife still has a relatively small personal debt, but I am not able to resolve this controversy in view of the methodology the parties have agreed to use.
In circumstances where the matrimonial home appears to have an equity of some $540,000-odd, and:
a)the wife contributed $140,000 to the husband’s $70,000 in 2008 and;
b)the husband has contributed some $200,000
it might reasonably be thought that the husband’s contribution, at least in respect of the matrimonial home, is approximately twice that of the wife. The other sums in the husband’s MECU and CBA accounts are plainly attributable to him alone.
Section 75(2) Factors
The husband has been made redundant and had resigned from his second job. His affidavits appear to suggest that he did this because the physical demands of the position are now excessive, given his health and age, but there is no objective evidence to support that proposition. Nonetheless, while this goes close to a wastage argument, it has been expressly conceded by counsel for the wife and I will not, as it were, punish the husband for that resignation. Given his age and health, his future employment prospects must be uncertain, although his present unemployment has been, in my view, more probably than otherwise influenced by a desire deliberately to divest himself of employment in the context of these proceedings.
The husband’s health is likewise by no means certain, but the fact is that he has been in remission from his cancer for quite some time.
The wife’s health is unremarkable. She is in what appears to be relatively secure employment at a modest rate of pay. She has also to care for her mother, a factor I do not find irrelevant although it is impossible to say to what extent, and this creates a financial rather than a physical and/or emotional burden upon her.
The fact that [Y] still lives with her mother does not in my view take the matter further. There is nothing to suggest that [Y] is financially dependent upon the mother and there is no evidence that the mother expends substantial or indeed any money on her.
In all the circumstances, I would regard the parties’ future needs as being of equal weight.
Just and equitable
There is an ongoing debate as to the extent to which there is an independent fourth step but everybody seems to agree that at the very least, the Court can properly consider, having dealt with the issues of contribution and future needs, under this heading the practicalities of orders that are to be made.
In my view, the husband should retain solely to his benefit the money in his MECU and CBA accounts. They appear to me to be wholly referable to his redundancy payments and accrued superannuation.
One area where the parties should in a general sense be held to their bargain is the superannuation aspect of the 2002 settlement. The fact is that the husband crystallised an amount at that time and what he ultimately got represents his own efforts. The wife did not contribute in any fashion between 2000/2001 and 2006, nor in any significant fashion between 2006 and 2008, to the accrual of this superannuation, and I think he should keep all of it as should the wife keep her superannuation.
The parties’ cars appear to be, in the scheme of things, of roughly equal value and no adjustment should be made, especially bearing in mind that there has been no valuation. This leaves the matrimonial home.
In my view, the net value of the matrimonial home should be split evenly between the parties. While I have already said that on one view the husband contributed twice as much to that property as the wife, the reality is that it was the wife’s contribution that in far greater substance enabled it to be purchased. The property appears to have gone up in value by some $180,000 since its purchase and the quantum of that increase can reasonably be assumed to have been all the greater because of the relatively significant purchase price.
In all the circumstances, I think that an equal division of the matrimonial home with the parties otherwise holding those assets which are, as it were, personal to their own exertions and endeavours is a just and equitable outcome in this most unusual case. I will direct the parties to bring in orders to give effect to these conclusions and we will deal with any other matters that the parties may consider I have overlooked.
I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Associate:
Date: 8 February 2013
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