SCHEER & SCHEER

[2018] FCCA 3285

FEDERAL CIRCUIT COURT OF AUSTRALIA

SCHEER & SCHEER [2018] FCCA 3285

Catchwords:
FAMILY LAW – Property– whether presumption of advancement is applied or rebutted to funds provided to daughters – whether funds provided should be added back to the pool of assets – whether funds should be treated as a financial resource – whether constructive trust arises over property wife’s family lives in.

FAMILY LAW – Property – long marriage – just and equitable division of assets – effect of domestic violence on adjustment – contributions.

Legislation:

Family Law Act 1975 (Cth), ss.75(2)(o), 79

Cases cited:

Aravanis (Trustee), in the matter of Gillespie(Bankrupt v Gillespie) [2014] FCA 630

Bevan & Bevan [2013] FamCAFC 116

Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Holland v Holland [2017] FamCAFC 166
In the Marriage of Chick (1987) 12 FamLR 64
In the Marriage of Kennon (1997) 22 Fam LR 1
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Quinn (1979) LC 90 – 677
In the Marriage of Woolley (1981) 6 Fam LR 577
Nelson v Nelson (1994) 33 NSWLR 740
Norbis v Norbis (1986) 161 CLR 513
Stanford & Stanford [2012] HCA 52

Applicant: MR SCHEER

Respondent: MS SCHEER

File Number: DGC 4033 of 2016

Judgment of: Judge McNab

Hearing date: 17 July 2018

Date of Last Submission: 17 July 2018

Delivered at: Melbourne

Delivered on: 14 November 2018

REPRESENTATION

Counsel for the Applicant: Ms Jenkins

Solicitors for the Applicant: Belleli King & Associates

Counsel for the Respondent: Mr Thistleton

Solicitors for the Respondent: H Silwa Lawyers

ORDERS

1. That within 60 days ("the due date") the Respondent pay to the Applicant the sum of $698,174.00 ("the payment").

2. Contemporaneously with the payment:

   (a)the Applicant do all acts and things required including the signing or execution of all necessary documents to secure a transfer of his interest in the properties situated at Property A ("the Property A property") and Property B to the Respondent at her expense if any; and

   (b)the Respondent do all acts and things required to discharge the mortgage secured over the Property A property.

3. In the event the payment is not made by the due date or the respondent does not comply with order 2(b) herein, the Property A property be sold ("the sale") and upon completion of the sale, the proceeds be applied:

   (a)firstly to pay all costs, commissions and expenses of the sale;

   (b)secondly, to repay and discharge the liabilities of the mortgage; and

   (c)thirdly, to pay the Applicant whatever is outstanding of the payment plus interest calculated in accordance with the rules from the due date;

   (d)fourthly, the balance to the Respondent.

4. That for the purposes of the sale in the preceding Order:

   (a)give effect to the provisions of this Order within 14 days of being requested to do so;

   (b)if either party refuses of neglects to sign or execute or return a document within 7 days of a written request to do so then the Registrar of the Dandenong Registry of the Federal Circuit Court is hereby appointed under s 106A of the Family Law Act 1975 to sign or execute such document on behalf of that party upon lodgement of such document and the filing of an affidavit of a solicitor  on behalf of the requesting  party  as to the said neglect or refusal;

   (c)a defaulting party shall pay the other party's taxed costs of an incidental to such request and production of documents to the Registrar.

5. That in relation to the Wife, Ms Scheer’s interest in the Super Fund 1 account number under the ("the fund") the Trustee of which is Super Fund 1:

   (a)there be an allocation for the purposes of s 90MT(4) of the Family Law Act 1975 a base amount of $26,901.29 to the Husband from the interest of Ms Scheer in the fund;

   (b)pursuant to Section 90MT(1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the interest in the fund held by the Wife Ms Scheer, the Husband Mr Scheer shall be paid an amount calculated in accordance with Pt 6 of the Family Law (Superannuation) Regulations 2001 using the base amount of $26,901.29 pursuant to paragraph 5(a) of these Orders and there shall be a corresponding reduction in the entitlements the Wife Ms Scheer would have had in the fund but for this Order;

   (c)that paragraph 5(b) of these Orders shall take effect from the operative time being the 4th business day after the date on which a sealed copy of this Order is served on the Trustee of the Fund;

   (d)that having been afforded procedural fairness in relation to the making of this Order this Order binds the Trustee of the Fund;

   (e)that the Trustee of the Fund and the parties in accordance with the obligations set out under the Family Law Act 1975, the Family Law (Superannuation) Regulations 2001 and the Superannuation Industry (Supervision) Act and Regulations 1994 shall do all such acts and things and sign all such documents as may be necessary to calculate the entitlement of and make payment to the Husband in accordance with this Order.

6. That within 28 days of this Order being made:

   (a)the Husband shall serve a certified sealed copy of this Order upon the Trustee of the Fund;

   (b)the Husband shall serve a notice upon the Trustee of the Fund pursuant to reg 72 of the Family Law (Superannuation) Regulations 2001.

7. Ms Scheer is hereby restrained by herself, her servants or agents from executing and/or giving to the Trustee of the fund a binding death nomination in favour of any person or doing any other act or thing which would render any part of, or payment from, her superannuation interest in the fund a "non splittable payment" within the meaning of Regulation 12 or 13 of the Family Law (Superannuation) Regulations 2011 such as would defeat Mr Scheer’s entitlement pursuant to these Orders.

8. That unless otherwise specified in this Order except for the purposes of enforcing payment of any money due under these or any subsequent Orders:

   (a)each party shall be solely entitled to the exclusion of the other to all property (including choses in action) in the possession of such party at this date;

   (b)money standing to the credit or either party in any bank, building  society or investment account shall be the property of the account holder;

   (c)each party foregoes any claim they may have to any superannuation benefits belonging to or earned by the other;

   (d)all insurance policies shall be the sole property of the owner names thereunder;

   (e)each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to this Order;

   (f)each party shall be solely liable for and indemnify the other in respect of individual debts; and

   (g)any joint tenancy of the parties in any property real or personal is hereby severed.

9. The Applicant file any written submissions in relation to costs within 14 days.

10. The Respondent file any written submissions in relation to costs within 28  days.

11. The question of costs is reserved and may be determined on the papers.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

DGC 4033 of 2016

MR SCHEER

Applicant

And

MS SCHEER

Respondent

REASONS FOR JUDGMENT

Introduction

1. The Applicant husband commenced these proceedings on 21 December 2016. He seeks by final orders 50% of the net assets of the marriage and equalisation of the superannuation interests.

2. The issues in this matter are determining the assets of the marriage and whether there should be adjustments made by adding back into the asset pool funds ($415,000) provided to an adult daughter by the mother and invested in her name with a resulting $285,000 profit. The proceeding also raises issues as to whether, and how, admitted family violence committed by the Applicant should be taken into account.

Evidence

1. The husband filed the following documents:

   a)Husband’s initiating application filed 21 December 2016;

   b)Husband’s affidavit sworn 21 December 2016;

   c)Husband’s financial statement filed 21 December 2016;

   d)Husband’s affidavit sworn 25 June 2018;

   e)Husband’s financial statement filed 27 June 2018;

   f)Affidavit of Mr N sworn 4 July 2018; and

   g)Affidavit of Ms R sworn 4 July 2018.

2. The wife filed on the following documents:

   a)Wife’s response filed 24 March 2017;

   b)Wife’s affidavits sworn 18 June 2018 and 24 March 2017;

   c)Wife’s financial statement filed 18 June 2018;

   d)Affidavit of Ms S sworn 14 June 2018 filed 18 June 2018;

   e)Affidavit of Ms N sworn 16 February 2018 filed 18 June 2018

   f)Affidavit of Mr B sworn 18 May 2018 filed 18 June 2018;

   g)Affidavit of Mr L sworn 18 May 2018;

   h)Affidavit of Mr M sworn 18 May 2018; and

   i)Valuation of Property B, (country omitted) property by Valuations.

3. The deponents of the affidavits referred to in [4] (f) – (h) above were not called to give evidence and those affidavits were not read into evidence. The affidavits of the parties’ daughters were received into evidence by consent without them being called to give evidence. Similarly the affidavits of Mr N and Ms R were not referred to and the deponents did not give evidence,

4. The wife’s trial affidavit was prepared by her, and with attachments, is very lengthy (160 pages). What purport to be attachments are in fact attached statements on separate issues with their own attached documents and commentaries. A real difficulty was presented because the whole of the bundle of documents was tendered with very little guidance to the Court from counsel for the wife as to which parts of the voluminous documentation was relevant or to be relied on. This has made the task of determining the issues more difficult. The Court appreciates that counsel for both parties were faced with the difficulty of determining which part of the documentation prepared by the wife was relevant and ought to be relied upon.  

Background

1. The husband is aged 54 and the wife is aged 53. They married on 1988 in (country omitted). They have twin daughters, Ms S and Ms N, who were born on 1991 and a son, Mr N, born on 1998.

2. The wife immigrated to Australia permanently in 2005 and a house was bought in the Applicant and Respondent’s joint names in Property C, in 2005 for $252,000 (‘Property C’). The husband travelled to Australia regularly between 2005 and 2006. He moved to Australia permanently on 2006, residing with his family at Property C.

3. In 2006, the parties purchased a vacant lot of land at Property A (‘Property A’). The property was purchased with funds obtained by way of an extension on the mortgage over Property C.

4. Between January 2012 and October 2012 the parties separated and the husband lived in rented accommodation in Suburb L. The parties reconciled briefly but shortly thereafter separated again, with the parties living separately under the same roof at Property C in October 2012 (the wife says beginning November 2011). The parties remained living under the one roof until 15 June 2016.

5. In 2013, the construction of Property A was completed and Property C was sold for $361,000 (the wife says $353,600 net). The net proceeds of the sale of Property C were transferred to the daughter Ms N (together with further funds already held by the parties) to the point that, by 2015, $415,000 was held in a term deposit to Ms N’s benefit. It has been put that these funds were held on trust for the benefit of Ms N and Ms S jointly by Ms N. The husband says that the transfer of funds to Ms N was made without his knowledge and without his consent.

6. A property was purchased with the $415,000 in the name of Ms N at Property D (‘the Property D Property’). The property sold on 13 March 2018 for $810,000 and, after expenses, left $700,000.

7. In about October 2015, the husband took over the mortgage on Property A.

8. On 17 August 2016 the parties divorced.

9. Behind this rather bland recitation of the background, there lies a significant degree of controversy between the parties.

Approach to property proceedings

1. The Full Court in Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 identified the four-step process that the Court is required to adopt in property matters under the Family Law Act 1975 (Cth):

   a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;

   b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s 79(4) of the Act;

   c)to consider the factors as are relevant contained in s 75(2) of the Act; and

   d)finally, determine whether the order the Court proposes to make is just and equitable to both parties.

2. This approach was approved in Bevan & Bevan [2013] FamCAFC 116, where the Full Court of the Family Court of Australia considered the High Court’s decision in Stanford & Stanford [2012] HCA 52 (‘Stanford’).

3. In Stanford, the High Court noted that s 79(1) enables the Court to make such orders as it considers appropriate. However, prior to making any orders for the adjustment of parties’ interests in property, the Court must first determine whether it is just and equitable to make any property orders, or to alter the parties’ interests in property.

4. The High Court stated in Stanford at [37]:

   [37]  First, it is necessary to begin consideration of whether it is just and equitable to make property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property… The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.

5. The High Court further stated at [42] that in most cases:

   [42] In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).

   21.In summary, in the majority of matters the decision as to whether or not it is just and equitable for the court to make property orders is resolved by the breakdown of the marital relationship and the mutual applications of the parties to the court for orders altering their respective property interests. Neither party in this case contends that it not just and equitable for the Court to make property orders.

The Asset Pool

1. The wife’s asset pool summary:[1]

   [1] Submissions for the Respondent Wife, filed 1 August 2018, 15.

Ownership	Value
Assets
Property A, Vic	Joint	$950,000
Property B, (country omitted)	Registered in joint names but wife asserts parties do not have a beneficial interest	$ 210,000
Life Insurance – Policy Number Surrender Value $40,000	Husband	$26,000
Motor vehicle 1	Husband	$2,700
Motor vehicle 2	Wife	$3,400
Household contents Savings	Wife	$15,000 $31,000
Household contents	Husband	$5,000
Total Assets	$1,023,740
Liabilities
Mortgage on Property A	Wife	$45,372
Bank P Credit Card	Wife	$2,617
Total Liabilities	$47,989
Total Net Asset Pool	$975,751

1. The husband’s asset pool summary:

Description	Ownership	Value
Property B, (country omitted)	Joint	$285,000
Property A, Vic	Joint	$950,000
Proceeds of sale of Property D, Vic	Wife	$700,000 estimate
Motor vehicle 1	Husband	$1,200 estimate
Motor vehicle 2	Wife	$3,400 estimate
Bank Q Account	Husband	$12,000 estimate
Bank P Account	Wife	$31,121 estimate
Household contents	Wife	$15,000
Household contents	Husband	$5,000
Total	$1,817,721
Liabilities
Mortgage on Property A property	Husband	$60,000
Master Card	Wife	$2,617
Total	$167,890
Superannuation
Super Fund 2	Husband	$66,197.42
Super Fund 1	Wife	$120,000
Total	$186,197.42
Total Asset Pool	$1,836,028.42

The Property B, (country omitted) Property

1. The husband asserts that the parties own a leasehold property in Property B, (country omitted) (‘the Property B, (country omitted) property’) located at (country omitted) which the wife values at 210,000 (country omitted) dollars (approximately AU$136,000) and husband values at 285,000 (country omitted) dollars (approximately AU$184,000). The property was purchased in the parties’ names in 1993 and both parties are on title. At the time the Property B, (country omitted) property was purchased, the wife was a student at a technical college and was in receipt of a government allowance. No argument was presented on what valuation should be preferred. The husband’s valuer was not given access to the property to inspect the improvements on the land, although he was able to sight the exterior of the buildings. The wife’s valuer valued the land at $65,000 (country omitted) dollars and the husband’s at $70,000 (country omitted) dollars. The husband’s valuer assessed 7 comparable property sales whereas the wife’s valuer assessed 5 comparable properties. In my assessment of the descriptions of the properties, the second property of those referred to by the husband’s valuer appeared to be most comparable to the Property B, (country omitted) property. That was a lot of 567 square metres with a single storey dwelling that sold in May 2017 for $260,000 (country omitted) dollars. The valuer considered the Property B, (country omitted) property to be superior and adjusted the value of the Property B, (country omitted) property to $285,000. However, the husband’s valuer had not sighted the interior of the house on the property, which the wife’s valuer noted was affected by water damage and in need of renovation. That allowance for an increase in value may not have been warranted. The Court is not obliged to accept or reject in totality the evidence of one valuer[2] and the Court may select a figure that lies within the two competing valuations if it believes that the true valuation lies at about the midpoint,[3] but not if the selection of an average figure is done without the exercise of the Court’s independent judgement.[4]

   [2] In the Marriage of Chick (1987) 12 FamLR 64, 72.

   [3] In the Marriage of Woolley (1981) 6 Fam LR 577, 581.

   [4] In the Marriage of Lenehan (1987) 11 Fam LR 615, 619.

2. In the present case there is a minor disagreement between valuers as to the land value of the property and a difference of opinion in relation to the value of improvements. Different properties are used to create a benchmark and the husband’s valuer has not had the benefit of inspecting the interior of the building. The husband’s valuer considered a wider range of properties as a point of comparison and identified a suitably similar comparator although the land size was smaller and he assumed that that the quality of the building was inferior to the Property B, (country omitted) property. In my view, a rational and proper point of fixing the value is at AU$160,000 having regard to the views expressed in both valuations.

1. The wife’s evidence in relation to the Property B, (country omitted) properties was set out in annexure four of her trial affidavit. I use the word ‘evidence’ loosely as much of what is said by her in her affidavit is simply conjecture or opinion. Sensibly, in the interests of the efficient conduct of the matter, objection was not taken line by line to the material filed by the wife. However, in considering the material for the purposes of making a decision, I will not rely on matters set out by the affidavit which are in the nature of opinion and conjecture.

2. At [15] of annexure four of her trial affidavit, the wife states that she had savings of 11,000 (country omitted) dollars and used those funds to purchase the Property B, (country omitted) property. She says her father built a home on the property at the cost of about 56,000 (country omitted) dollars (AU$36,000).[5] She claims that the husband made no contribution to the house, either physically or financially. The construction was funded by a construction loan taken out by the wife, who subsequently repaid it.

   [5] Affidavit of Mr Scheer, sworn 18 June 2018, 136 [22].

3. It appears that the parents and members of the wife’s family have lived in the home rent-free since 1995, although the wife gives evidence that her mother repaid her unspecified amounts of money. At [20] of her affidavit, the wife states:

   Whenever I visited (country omitted), Mum would keep aside small cash savings from her business and hand [them] over to me in crumpled notes and I would complain as to why the notes were crumpled. She never counted how much she gave me, she just handed over everything she could to pay me back. My parents repaid me much more than I helped them, not ever considering that the title was not in their name.[6]

   [6] Ibid [20].

4. The wife’s mother did not give evidence. I do not accept that the wife’s parents paid back the purchase price of the land, the loan or the construction costs.

5. The husband gave evidence that the wife’s father commenced construction of the dwelling on the land but contractors were organised to complete the construction of the house. The husband also gave evidence that he built a garage (with the help of friends) in about 2003.

6. The wife contends that the property in (country omitted) is owned by her mother and this is said to arise because:

   a)a promise was made by the wife to her parents that the land would belong to them;

   b)her father built on the land on the strength of that promise; and

   c)the parents repaid money on the understanding that they were the true owners of the land.

7. The wife contends that the parties hold the Property B, (country omitted) property on a constructive trust for the wife’s mother by reason of promissory estoppel. The Court is urged not to take this property into account when considering a just and equitable division of the property interests of the parties because it is said that it is not beneficially owned by the parties.

8. The wife’s evidence in her first affidavit was that the construction costs of building the dwelling on the Property B, (country omitted) property was $65,000 and the wife obtained a loan of $37,000 to fund the construction. She then repaid this loan with her wages in the amount of (country omitted) $250 per fortnight. She was able to make these payments in circumstances where she was earning a relatively low amount of money and when the husband was working. It was in those circumstances that she was able to fund the construction of the dwelling. 

9. The husband’s evidence is that the home was bought in joint names and paid for from the Respondent’s salary. The property was acquired with the condition that the wife’s family live in it and, when they passed on, that it would remain the parties’ property. The husband gave evidence of building a garage on the land.

10. The evidence does not support a finding that there is a constructive trust arising from promises made by the wife and there is no evidence to support a finding that the wife’s parents acted on the assumption that a promise had been made in relation to the ownership of the property.

11. The wife’s parents have made contributions to the upkeep and maintenance of the property and this should be taken into account in determining contributions made by the parties. The evidence does not support a finding that a particular amount of money or percentage of the value of the property has been contributed by the parents. Their contribution is a matter that is taken into account in general terms with the Court doing the best that can on the evidence before it.

12. For these reasons, the value of the property in (country omitted) shall be taken into account as an asset of the marriage but some allowance will be made for the contribution made by the wife’s parents.

The Property D Property.

1. The wife gave evidence that since about 2008 she been making regular payments to the adult daughters’ bank account from the parties’ joint funds. The documents comprising Exhibit A2 demonstrated that there are been a number of transfers from her account to that of her daughter Ms S.

2. The wife also gave evidence that the net proceeds from the sale of the Property C were paid to the adult daughters. The wife gave evidence that in around 2013, the Property A property had a mortgage of $440,000 and  an offset account of $440,000. This had the effect that there was no mortgage on the property.

3. The wife gave evidence that in 2013, Property C was sold and after payment of the mortgage over that property, two payments were made on 2013 into the offset account in the amount of $261,000 and $11,455.

4. On 2013, the wife then transferred to payments from the offset account to joint account in the sum of $100,000 and $28,700.  As a result of the transfer of those funds, the balance of the joint account was $305,434. Exhibit 86 demonstrates that on 2013 the wife then transferred a total of $300,000 out of account to her daughter Ms S. Whilst the wife gave evidence that these funds were transferred to repay the girls for the money they placed in the parties’ offset account earlier, no evidence was produced to corroborate this assertion.

5. The wife gave evidence that on 2013 she transferred $310,000 from the joint account into the mortgage account to pay it down to $130,000, and on 2013 the wife transferred $130,000 from the offset account to herself.[7]

   [7] Wife’s affidavit sworn 18 June 2018, S-7.

6. I accept that the net effect of these transfers was that the proceeds of the Property C sale ultimately ended up with the adult daughters. The wife also transferred a further $100,000 to herself and then to the adult daughters. Finally, the Property A property, which had no mortgage, ended up with a $130,000 mortgage.

7. Whilst it is not clear what the total of the funds transferred to the daughters by the wife were, the evidence shows that by 2015, Ms N had a term deposit of $415,000.[8] In 2015 the daughters were of 24 years of age and neither of them were in a position to amass a deposit in the sum of $415,000 from their respective incomes.

   [8] Wife’s affidavit sworn 18 June 2018, S A2.

8. The wife gave evidence that in around 2015 she insisted that Ms S purchase the Property D property. Land was purchased for $285,000 from monies held in the term deposit and the wife then assisted Ms S to arrange finance for the building the house on the land which totalled about $400,000. The wife oversaw the construction of the dwelling as Ms S was overseas for part of the time that the building works were performed. I accept the husband’s submission that the wife was largely the architect of the financial arrangements and the arrangements for the construction of the building, as this was a field in which she had some experience. The wife’s detailed correspondence with tradesmen regarding the construction of the Property A property supports the assertion that she had experience in managing building works.

9. The wife gave evidence that the Property D property was sold in March 2018 for a net profit of $700,000. The wife did not produce documents in relation to the sale. The wife gave evidence that the proceeds of sale were deposited into Ms N’s account and then transferred to Ms S’s account for tax reasons. She gave evidence that two lots of $200,000 and one lot of $100,000 was transferred.

10. The wife’s contentions in relation to the facts surrounding the Property D property are set out at [21] – [28] of the final written submissions filed on her behalf:

    21. The wife meets the husband’s case as solely one in which he asserts there should be addbacks under s75(2)(o) of the Family LawAct

    22.    There are competing versions about the husband’s knowledge or money given to the daughters that is now property of the daughters and not of the parties.

    23.    It seems uncontroversial that at some date in 2013 the parties’ daughter Ms N had over $415,000 in her bank account.

    24.    The source of those funds was gifts made by the wife over a number of years, at least since 2010.

    25.    Although noting turns on it seems uncontroversial that Ms N held this money in trust for herself and her sister Ms S in equal shares.

    26.    Ms N now owns about $700,000 in trust for herself and her sister.

    27.    The increase is at least in part referable to the building of a house at Property D by Ms S and its subsequent sale earlier this year. In this regard it seems Ms S obtained a first home owner’s grant and borrowed money to buy the land and build the house.

    28.    The parties are at issue about the husband’s knowledge and/or consent to the gifts to the daughters.

Does a presumption of advancement apply?

1. It is submitted on behalf of the wife that the transfer of funds to purchase the Property D property was to assist the daughters with their advancement in life and is a gift from a mother to her daughters and therefore subject to a presumption of advancement. It is said that the transfer represents a perfected gift, that the land bought and the house built with the funds has been sold by the daughter and a transfer cannot be called back. It is submitted that the presumption of advancement cannot be rebutted.

2. In Aravanis (Trustee), in the matter of Gillespie(Bankrupt v Gillespie) [2014] FCA 630, Jagot J set out the following summary of the operation of the presumption of advancement:

   Jacob’s Law of Trusts in Australia (7th ed) provides a convenient summary in respect of resulting trusts and the presumption of advancement:

   [1210] A resulting trust will be presumed where, on a purchase, the legal title to real or personal property is vested in someone other than the person who is proved (by parol or other evidence) to have provided the purchase money.

   [1212] A resulting trust is raised in the foregoing circumstances because the court presumes, in the absence of evidence to the contrary, that the person paying the purchase money intended to obtain the beneficial interest in the property. But where the legal title is, on a purchase, vested in someone whom the person providing the purchase money is under an obligation to support, namely, a wife, child or someone to whom the person stands in loco parentis, there is no presumption of a resulting trust in favour of the purchaser; there is, on the contrary, a presumption that the property was vested as an absolute gift or as an advancement. In Nelson v Nelson [(1994) 33 NSWLR 740] the New South Wales Court of Appeal held that the presumption applied between mother and adult child. The further appeal to the High Court was decided on other grounds. However, all five members of the court supported the extension of the presumption to mother and adult child.

3. In the present case, any presumption of advancement is rebutted by the evidence. The funds which were advanced to the daughters were the property of the husband and wife jointly and the evidence does not support a finding that the husband consented to, or had knowledge of, the monies being advanced to the daughters. The wife asserts that the husband would have known that monies were being deposited in an account or accounts as he had access to bank statements showing the transactions. I do not accept that the wife told the husband what she was doing with the joint funds or that the husband knew of or agreed to the money being provided to the daughters.

4. There is no evidence that the daughter Ms S – into whose name the funds were deposited – was in any particular need. Further, Ms S has given no evidence about the circumstances of the Property D property being purchased in her name. Neither the mother nor daughter filed any affidavit which referred to the circumstances of the daughter Ms S being gifted $415,000, the purchase of land in her name or the construction of a dwelling. It is not explained why in 2015 the property was purchased in the name of one twin daughter and not both when the wife claimed that the transfer of funds was for the purpose of providing for the futures of both women.

5. I do not accept that the funds were transferred by the wife to the daughters for the purpose of advancement. Rather, the wife’s evidence gave the overwhelming impression that she was effecting the transactions in order to move money away from the husband (who she clearly detested) so that she could enter into a venture in the name of her daughter to develop and sell a property. She entered into the transaction to attempt to put funds beyond the husband.  She argued that she did this because the husband would not support his daughters and he had disowned them in favour of his son and that they needed support. As stated above, the wife’s principal consideration was to remove funds away from the husband, not to provide for her adult daughters.

6. The funds were not solely the wife’s funds to advance and, in my view, the funds that were taken by the wife to purchase land and construct the Property D property should be taken into account as a matter under s 75(2)(o) of the Act. The interests of justice require that the husband’s loss of the benefit of those funds to be considered.

7. In that regard I refer to Bevan & Bevan [2013] FamCAFC 116. The Full Court of the Family Court discussed the practice of courts making ‘notional add-backs’ to property to account for the unilateral disposal of assets. At [79] Bryant CJ and Thackeray J stated:

   We observe that “notional property” which is sometimes added back to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them” and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage-and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.

8. The amount consisting of the funds provided to the daughters from the matrimonial assets and the profit from the sale of the Property D property are currently in the name of Ms S, or held for the benefit of the daughters. The daughters have not been joined to the proceedings for reasons that have not been explained.

9. In circumstances where the daughters have not been joined to the proceeding and no application has been made pursuant to s 106B of the Family Law Act 1975, it is not possible to characterise the sum of $700,000 ($415,000 plus the net proceeds of the sale of the Property D property) as property for the purposes of this proceeding.

10. There has been no application for a declaration that the daughters hold those funds on trust for the mother or that they are existing property of the parties in the sense that the wife has an equitable interest in the funds. In relation to the proper treatment of those funds, I have regard to what the Full Court of the Family Court said in Holland v Holland [2017] FamCAFC 166 [20]:

    20.    The expression “financial resource” requires similar caution. It has been used by the court throughout the Act’s history in contradistinction to “property” to highlight a proposition central to the operation of s 79 of the Act. Orders pursuant to s 79 of the Act can alter interests in respect of “property”; “financial resources” cannot be the subject of such orders. However, those same financial resources can be important to the making of s 79 orders by reason of a consideration of them pursuant to s 79(4)(e) of the Act (i.e. the “s 75(2) factors”).

11. Whilst the funds are in the name of the daughters, they are a financial resource available to the mother and can be taken into account under

    
    

    s.75(2)(o). Given that the resource is a sum certain, it is possible to make a determination in relation to the contributions made by the parties to the acquisition of that resource and the impact that it has on the ongoing maintenance of the parties.

12. Further, it is possible to assess the presently existing property and the contributions to the acquisition of that property separately to the assessment of the Property D proceeds. As was noted in Norbis v Norbis (1986) 161 CLR 513, 532 – 533:

    Of course, it may be possible and appropriate in many cases to determine the proportions in which the property is to be divided without treating any of the assets separately, but where the interests of the parties differ, a different approach will be open. Section 79, in particular s. 79(4), refers to “any property of the parties to a marriage or either of them” and that expression is sufficient to encompass both the entirety of their property and their individual interests. If the parties’ interests in specific items of property differ or they have made differing contributions, it may be desirable to proceed upon an item by item basis in the division of the property between them. In such a case, justice and equity may best be served by treating the items separately for the purpose of determining the proportions in which they are to be divided, particularly if the overall division is to be effected by the transfer or retention of interests in individual assets, as was convenient in this case. …

13. By parity of reasoning, where a financial resource is available to the parties, and that resource is ascertainable, then that may be separately assessed and taken into account when considering whether to make an order under s 79 of the Act.

14. The Court finds that the total existing asset pool is as follows:

Assets
Description	Ownership	Value
Property B, (country omitted)	Joint	$160,000[9]
Property A	Joint	$950,000
Motor vehicle 1	Husband	$1,200
Motor vehicle 2	Wife	$3,400
Bank Q Account	Husband	$12,000
Bank P Account	Wife	$31,121
Household contents	Wife	$15,000
Household contents	Husband	$5,000
Total	$1,177,721.00
Liabilities
Mortgage on Property A property	Husband	$60,000
Master Card	Wife	$2,617
Total	$167,890
Total assets not including superannuation	$1,009,831.00
Superannuation
Super Fund 2	Husband	$66,197.42
Super Fund 1	Wife	$120,000
Total	$186,197.42

[9] $285,000 (country omitted) dollars at 5 November 2018.

Contributions

1. The wife submits that contributions should be assessed 70/30 in her favour. It is said that during the period they lived in (country omitted), the husband’s tax returns show that he was unable to make a direct financial contribution to the welfare of the family to any significant extent. It is also said that the wife has made a significant financial contribution by immigrating to Australia and seeking out opportunities for investment in real estate. The wife also points to the husband’s admitted family violence, which she says made her financial and non-financial contributions more difficult.

2. The husband says that that he was working throughout the course of the marriage and that he ran his own business in (country omitted). By 1991 he was earning around 6,000 (country omitted) dollars versus from his business the wife’s 10,000 (country omitted) dollars at Bank P. He also gives evidence that during the period that the wife and children lived in Australia, he contributed regularly to the family carrying over amounts of up to $20,000 at a time, which he obtained through sales of assets and business equipment, being two trucks and an excavator. There is no doubt that the wife has been a very effective saver of funds and that she has made a significant contribution to the assets of the family and as a mother to her children. Similarly, the father has made regular contributions and has been employed for most of the relationship and has also provided non-financial contributions in relation to care of his children.

1. I agree with the submission of the father that each of the parties worked to the best of their abilities throughout the marriage and contributed both financially and non-financially to the children. It is neither possible nor appropriate to evaluate contributions in a year-by-year, transaction-by-transaction style of analysis where assets were acquired over a reasonably long marriage. Both parties worked hard through the marriage and the assets accumulated reflect that hard work and the capacity to save money. However, there should be some allowance made for the contributions made by the wife’s parents in relation to the Property B, (country omitted) property. There should be an allowance made for the wife’s capacity to save funds, manage the household finances to the benefit of both parties and be the primary carer of the children when she was in Australia on her own with the children. An allowance must also be made for the wife’s significant contributions as the manager of the construction of the Property A property. The correspondence between herself and the builder (annexed to her trial affidavit) indicates that she was concerned with the detail of the building process and the financial management. I assess the contribution made by the wife in relation to the presently available assets to be an additional 5%.

2. Otherwise, I reiterate that it is not possible to engage in a year-by-year mathematical analysis of the contributions made by the parties to the acquisition of assets and the maintenance of the family. It is an established principle that in determining contributions, the Court should not adopt an excessively mathematical approach: In the Marriage of Quinn (1979) LC 90 – 677.

3. The wife has sought to do this and has pointed to her management of the family finances, such that about $70,000 was paid off a home loan in one year. Her analysis ignores that the husband was earning and contributing the majority of his income to pay off loans on the matrimonial property. There is no evidence that the husband accumulated cash reserves for his own use. Further, the father gave his daughters cars worth $21,000 each for their 21st birthdays. He also was responsible for maintaining the properties. His contribution was greater than that asserted by the wife, although I do accept, for reasons stated, that the existing assets should be divided at 55% to the wife and 45% to the husband.

4. The wife's use of the funds in the sum of $415,000 was in the nature of a premature distribution of assets. For the reasons stated above, I am not inclined to notionally add back that amount into the asset pool but will take it into account in making an order to ensure a just and equitable outcome. That sum, had it not been disbursed, represented a significant asset within the total pool of assets and, given that it is not included in the pool, should be taken into account.

5. The husband asserts that the whole of the proceeds of the Property D sale should be included for consideration as an add back to the asset pool. The wife contends that none of those funds should be considered and certainly not the sum of $415,000 plus the net proceeds of sale.

6. The whole of the amount of $700,000 should be considered, however the issue of contributions in relation to that sum looms large.

7. The enterprise whereby the wife took the funds, selected and purchased land, arranged for a house to be built and then subsequently sold was done solely by her, without the husband’s knowledge.

8. In relation to the Property D proceeds, I find that the wife contributed 55% to the sum of $415,000 ($228,250) and 80% to the acquisition of the net proceeds of sale, being $285,000 ($228,000) which leads to a finding that the wife has an interest of $456,250 or 65% in the financial resource represented by the Property D property.

9. I make the assessment of 80% of the profit to the wife as she was solely responsible for the work directed at achieving that profit, although it is reduced because the funds contributed by the husband effectively provided her with the means to do so. No evidence was tendered that might have assisted the Court with this calculation and the Court is doing the best it can with the evidence and submissions provided.

10. For these reasons, the wife should receive 55% of the presently available assets ($555,407) and retain 65% of the Property D proceeds ($456,250).

Section 75(2) factors

Family violence

1. There have been allegations of serious family violence over a long period raised in this case by the wife. The allegations are supported in the affidavits of daughters Ms S [10] and Ms N.[11] Both daughters say that their father is prone to aggression and there have been a number of violent incidents over the years, including the father forcing the wife out of the car and leaving her by the side of the road in the middle of the night far from their home, harming the wife such that she was admitted to hospital with broken ribs and allegedly leaving a long scar on Ms N’s arm as she defended her mother from being hit with a rod. They also say that the husband inflicted psychological harm on the wife over the marriage.

   [10] Affidavit of Ms S, sworn 14 June 2018.

   [11] Affidavit of Ms N, affirmed 16 February 2018.

2. The wife asserts that family violence perpetrated by the husband should be taken into account as a factor under s 75(2) and there should be an adjustment in favour of the wife. Whilst the husband admitted family violence (he admitted assaulting the wife after she woke him, causing a sufficiently serious injury for her to be hospitalised) it is difficult to make a specific allowance for this in relation to property settlement in the absence of clear evidence as to the effect of the violence on the financial circumstances of the parties.

3. The wife contends that the family violence made the accumulation of assets more difficult. I accept that the descriptions of aggression and family violence given by the wife and each of the children in relation to the father will have meant that the family environment was difficult, and at times frightening and that a corollary of this is that the everyday effort of working will have been made more difficult. I also accept the unchallenged evidence of the adult daughters that the father had a very bad temper and was prone to angry physical outbursts directed at them and at the wife. It appears that much of the family life was strained because of tension between the parties and the family violence inflicted on the family by the husband must have made the task of turning up to work and managing a family of three children all the more difficult. However there is no medical evidence to support a finding that the wife was unable to contribute, or that her physical and mental capacity to obtain or continue in gainful employment has been impaired. Otherwise, I have had regard to the decision of the Full Court of the Family Court in In the Marriage of Kennon (1997) 22 Fam LR 1 (‘Kennon’), particularly that the principles in Kennon relate to a narrow band of cases and that it is necessary to show that the conduct had a discernible impact on the contributions of the other person.

4. Otherwise, neither party asserts that they are unable to continue to work in order to support themselves.

Just and equitable

1. In relation to superannuation, it was the husband’s submission that the parties’ respective should be divided equally. The wife contends that she was able to accumulate superannuation when she was living alone with the children in Australia and that she should retain the benefits of her work.

2. In my view, the disparity in superannuation is as a result of different employment. The husband was self-employed for periods and he spent some superannuation on matrimonial assets in the course of the marriage. It is just and equitable to split the superannuation equally.

3. Otherwise, the orders attached represent a just and equitable division of the family assets.

I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of Judge McNab

Date: 14 November 2018