Sheen & Sheen
[2016] FCCA 3063
•22 December 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SHEEN & SHEEN | [2016] FCCA 3063 |
| Catchwords: FAMILY LAW – Property settlement – credit issues – ascertaining the pool of assets – assessing contribution and future needs – a just and equitable order. |
| Legislation: Family Law Act 1975, ss.75, 79 |
| Cases cited: Bevan & Bevan [2013] FamCAFC Hickey & Hickey & Attorney General for the Commonwealth of Australia [2003] FamCA395 |
| Applicant: | MS SHEEN |
| Respondent: | MR SHEEN |
| File Number: | CAC 757 of 2015 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 15 November 2016 |
| Date of Last Submission: | 15 November 2016 |
| Delivered at: | Wollongong |
| Delivered on: | 22 December 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Howard |
| Solicitors for the Applicant: | Phelps Reid Lawyers |
| Solicitors for the Respondent: | Andrew Warren Associates |
ORDERS
The Husband pay to the Wife by way of property adjustment the sum of $229,548.95; such sum to be paid within three (3) months failing which:
(a)Interest accrues from the said date at the rate calculated under the Family Law Act 1975, its Rules and Regulations; and
(b)Order 2 applies.
Should the Husband not comply with Order 1 above, then forthwith the Husband and the Wife do all things necessary to cause the property situated at Property G in the State of New South Wales (“the Property G property”) to be sold at the earliest possible date.
(a)Within 21 days the Husband and the Wife shall place the Property G property with an agent for sale, such agent to be agreed between the Husband and Wife and in default of agreement with an agent nominated by the President of the Real Estate Institute of NSW.
(b)Within 14 days thereafter the parties shall agree on the method of sale and marketing strategy to maximise the sales potential for the property in consultation with an agreed selling agent, and failing agreement the property shall be listed for sale by private treaty in the first instance and in the event that it does not sell by private treaty on or before three (3) months from the date of this Order, the parties shall do all acts and sign all documents as are necessary to sell the Property G property by public auction.
(c)The parties shall share equally in any agreed costs associated with preparing the Property G property for sale, and the parties agree that they will consider the recommendations made by the agreed selling agent with respect to any such preparations.
(d)The list price and/or reserve price for the Property G property shall be agreed between the Husband and the Wife or failing agreement the market value, and for that purpose, the market value is to be determined by a valuer agreed to between the Husband and Wife or alternatively as nominated by the President of the Real Estate Institute of NSW such determination to be paid for equally by the Husband and Wife.
(e)The Husband and Wife execute all documents requested by the selling agent and/or as auctioneers for sale of the Property G property by private treaty or public auction, including a Contract of Sale.
(f)The Husband and Wife will co-operate in every way with the agent in relation to the sale of the Property G property including making the keys available for any inspection at times requested by the agent and ensuring the Property G property is in a clean and neat condition at the time of inspection by the prospective purchasers.
(g)If the Property G property is not sold at the public auction within 21 days thereafter the Husband and Wife shall meet the market price and sell the Property G property at the best price then available.
(h)The Husband and Wife do all things necessary to cause the proceeds of the sale of the Property G property to be distributed as follows:
(i) To pay all costs, commissions and expenses of sale;
(ii) To pay the usual rates adjustments;
(iii)To pay to the Wife her entitlement under these Orders including interest;
(iv)The balance to the Husband.
(i)Pending completion of the sale of the Property G property the Husband shall make all payments of principal and interest due and owing in respect of the loan secured by mortgage over the Property G property as and when they fall due, and shall be solely responsible for all rates and other outgoings in respect of the property. In the event that the Husband fails to make such payments, then the amount due and owing up until the date of settlement shall be deducted from the Husband’s share of the proceeds of sale.
Within 14 days the Husband make available to the Wife the 30 boxes of chattels and personal property located at the time of the hearing of this case in the shed situated on the Property G property. The Husband is to cause the said 30 boxes to be neatly stacked outside the door of the said shed so that the Wife is able to collect, or cause the same to be collected, at the reasonable time and date notified by the her to him by email and text message, at least 48 hours before the nominated collection date and time. The Husband is forthwith restrained from dealing with the said chattels and personal property in any way which detracts, derogates or diminishes the intent of this Order, which is based on his evidence in cross-examination, and which is intended to give to the Wife the ownership and benefit of the said property.
Superannuation
A base amount of $20,000.00 is allocated as required by section 90MT(4) of the Family Law Act 1975 (Cth) (“the Act”) to MS SHEEN (“the Wife”) out of MR SHEEN’s (“the Husband”) interest in the (omitted) Super Fund.
In accordance with section 90MT(1)(a) of the Act:
5.1.The Wife is entitled to be paid, using the base amount allocated in the Order 4 herein, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“the Regulations”); and
5.2.The Husband’s entitlement in the (omitted) Super Fund is correspondingly reduced.
The Trustee of the (omitted) Super Fund (“the Trustee”) do all such acts and things and sign all such documents as are necessary to:
6.1.Calculate, in accordance with the Act and the Regulations, the entitlement for the Wife created by Order 4 and 5 herein.
6.2.Pay the entitlements whenever the Trustee makes a splittable payment out of the Husband’s interest in the (omitted) Super Fund; and
The operative time for Order 4 and 5 herein is seven (7) business days after the service of these Orders on the Trustee.
After service of the payment split notice pursuant to r.7A.03 of the Superannuation Industry (Supervision) Regulations 1994, the Wife shall do all such things and sign all such documents as may be necessary, including but not limited to, exercising her request pursuant to r.7A.06(1) of the Superannuation Industry (Supervision) Regulations 1994 for the rollover or transfer of the transferable benefits out of the Husband’s interest in the (omitted) Super Fund to a fund of the Wife’s choosing in accordance with r.7A of the Superannuation Industry (Supervision) Regulations 1994.
General
Except as otherwise provided by these Orders, the Wife be entitled as against the Husband to be the sole legal and beneficial owner of:
9.1.Any money in any bank accounts in her name;
9.2.Any contents, furniture and personal possessions in her name;
9.3.Any motor vehicles registered in her name;
9.4.Any superannuation interests in her name;
9.5.Any horses in her name, possession or control;
Except as otherwise provided by these Orders, the Husband be entitled as against the Wife to be the sole legal and beneficial owner of:
10.1.Any money in any bank accounts in his name;
10.2.Any motor vehicles registered in his name;
10.3.Any superannuation interests in his name;
10.4.Any contents, furniture and personal possessions in his name, specifically excluding those items made available to the Wife in accordance with Order 3;
10.5.Any cattle in his name, possession or control;
10.6.Round yards
10.7.Rodeo and husbandry equipment, including bucking arena, sheep crush and imported semen.
Section 106A
If either party refuses, fails or neglects to execute any document necessary to put these Orders into effect within fourteen (14) days of being requested to do, and any such refusal, failure or neglect is proved by affidavits filed and served by or on behalf of the party alleging this, the Registrar of the Family Court at Canberra be and is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute such document in the name of such party.
Rental payments received from property
Should any further rental payments become due and payable in respect of the Property G property before these Orders are fully implemented, the Court records its intention that the Husband shall not become beneficially entitled to 100% of the said rental until he has fully complied with his obligation to pay the Wife pursuant to Order 1.
IT IS NOTED that publication of this judgment under the pseudonym Sheen & Sheen is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
CAC 757 of 2015
| MS SHEEN |
Applicant
And
| MR SHEEN |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment explain the Orders that the Court has made in the dispute between the parties. The case is about an application to alter property interests, commonly known as a property settlement.
Background
The Applicant Wife is 40 years old and describes herself as a stay-at -home Mother. The Respondent Husband is 37 years old and he describes himself as an (occupation omitted). They commenced cohabitation in (omitted) 2005 and married on (omitted) 2006. They separated in November 2014, after a relationship that spanned nine years. They have one child, X, who is 7 years old, and who lives with the Mother but spends time with the Father pursuant to consent orders that were made in the Local Court of New South Wales at Batemans Bay. Those Orders provide, in effect, for there to be equal shared parental responsibility, for X to live with her mother, but to spend time with her father each alternate week from after school on Friday to before school on Monday, and then each Wednesday from after school until before school on Thursday. The Order also provides for school holidays and special occasions.
Both parties had assets at the time of cohabitation. One of the issues for the Court is to assess the value to the parties of those assets. For example, the Husband owned land at Property P, upon which he constructed a house. Indeed, the parties moved into the house at the commencement of their relationship. The Wife had acquired her previous husband’s interest in a property at Property D. The Husband owed money to a lender who had financed the purchase of the land and subsequent construction of the home. The Wife owed money to her father.
At about the time of cohabitation, the parties moved into the Husband’s property at Property P and the Property D property was rented out. Both were working full-time at this stage.
In January 2008, the Wife caused to be sold the Property D property and, as a consequence of that, $168,886 out of the sale proceeds was paid into the Husband’s loan account secured over the Property P property. This reduced the loan balance to about $30,000 and the Property P loan was in fact discharged later in 2008, using moneys that the parties borrowed from the Wife’s father, and subsequently repaid. It is clear that by about 2009, even if a loan facility was still secured over the Property P property, the balance was either nil or negligible though there was certainly the facility to draw on the equity in the Property P property. The subsequent drawing was the focus of much cross-examination and evidence.
In November 2013, the parties purchased the property at Property G, for $525,000. This became the former matrimonial home. A unique feature of this property, which is a rural property, is that a mobile phone tower is erected on it and it provided an annual income by way of lease payments to the parties.
In 2014, the Husband’s property at Property P, was sold for $529,000. This was paid into the Property G property loan.
The parties separated within a short period thereafter. The Wife left the former matrimonial home. There was a dispute and remains a dispute, about a quantity of personal property supposedly left on that property.
Issues in dispute
The Court will need to assess the value of the initial contribution made by each party in the circumstances described above. There is a particular issue between the parties related to this and the focus there is on the loan from the Wife’s father to herself, and how, and whether, it was repaid. The Husband asserts that in consequence of moneys repaid to the Wife’s husband after the sale of the Wife's Property D property, the Wife’s actual contribution from the sale of her property to the Husband's Property P property, is significantly less than what she asserts.
There appears to be no issue between the parties that, apart from the transactions referred to above, their contribution during the period of cohabitation should be assessed as being equal. That is entirely appropriate in all the circumstances.
A finding of contribution will then need to be made as at the date of the trial.
There is a dispute as to the valuation of the Property G property. The evidence of both of the valuers called in this case will need to be assessed.
There is a dispute between the parties as to the personal property which the Wife asserts was left at the former matrimonial home on separation.
There are some minor other disputes in relation to the constitution of the asset pool.
There is a further dispute in relation to the assessment of future needs under s.75(2) of the Act.
Credit issues permeate all of the above. The Court will need to make findings in this regard.
The evidence
The evidence relied upon by the Applicant was as follows:
a)Affidavit of Ms Sheen filed 7 November 2016.
b)Affidavit of Mr A filed 7 November 2016.
c)Affidavit of Ms Sheen filed 24 October 2016.
d)Financial Statement of Ms Sheen filed 24 October 2016.
e)Affidavit of Mr W filed 17 October 2016.
The evidence relied upon by the Respondent was as follows:
a)Response filed 26 June 2015.
b)Affidavit of Mr Sheen affirmed 31 October 2016.
c)Financial Statement of Mr Sheen affirmed 31 October 2016.
d)Affidavit of Dr C, annexing report dated 26 October 2016.
e)Valuation report of Mr R dated 9 October 2015.
f)Affidavit of Mr R (valuer), annexing updated report dated 9 November 2016.
g)Affidavit of Mr D affirmed 1 November 2016.
h)Affidavit of Mr N affirmed 28 October 2016.
i)Affidavit of Ms J affirmed 8 November 2016.
A number of exhibits were tendered at the time of the hearing. The exhibits were as follows:
| Exhibit No. | Description of Exhibit/MFI |
| R1 | (omitted) bank statements |
| R2 | 2 letters between solicitors |
| R3 | (omitted) statements |
| R4 | (omitted) bank statements |
| R5 | Roads and Maritime documents |
| R6 | PayPal Transaction records |
| R7 | (omitted) streamline (omitted) account statements |
| R8 | (omitted) Bank saver account statements |
| R9 | (omitted) Bank account statements |
| R10 | (omitted) Bank account statements |
| A1 | Photos of the property |
| A2 | (omitted) bank account search |
| A3 | Joint valuers’ statement |
| A4 | Statements contained in aide-memoire |
| A5 | (omitted) Super Fund statement for period 1/7/14 to 30/6/15 |
| A6 | (omitted) Super Fund statement for period 1/7/04 to 30/6/05 |
| A7 | (omitted) Super Fund statement for period 1/7/5 to 30/6/06 |
The applicable law
This is an application under s.79 of the Family Law Act 1975 which relevantly provides:
Alteration of property interests
(1) In property settlement proceedings, the Court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the Court determines.
(2) The Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the Court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Section 79(4) incorporates the provisions contained in s.75(2) of the Act, which states:
(2) The matters to be so taken into account are:
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party's role as a parent; and
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account; and
(p) the terms of any financial agreement that is binding on the parties to the marriage; and
(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
In Bevan & Bevan [2013] FamCAFC 116, the Full Court of the Family Court of Australia considered the High Court’s decision in Stanford & Stanford [2012] HCA 52, which provided guidance on how s.79 was to be interpreted and implemented. Bevan endorsed the continuing application of the four-step approach articulated by the Full Court in Hickey & Hickey & Attorney General for the Commonwealth of Australia [2003] FamCA395, but on the basis that it is a shorthand distillation of the words of s.79, as opposed to being a statutory edict. The four steps articulated in Hickey at paragraph 39 are:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
The decisions in Stanford and Bevan also emphasise the importance of making findings that any order is just and equitable for the purposes of s.79(2), independent of the s.79(4) process. In most cases, such as the present one, it makes no difference to the outcome of the alteration of property interests exercise. Even if the just and equitable consideration were treated as a threshold issue in this case the parties have, by their actions (separation, and re-ordering of their financial lives since then), and claims (divergent claims about their property under s.79 of the Act), indicated that they themselves consider it just and equitable that some order be made under s.79 adjusting their property interests as presently held. It is clearly just and equitable in this case to make an order.
Both decisions also emphasise the importance of identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. This is not inconsistent with step one in Hickey.
A problem that commonly arises, and indeed does arise in this case, relates to property that once existed but no longer does. This disposed of property may still be significant, however. As the Full Court said in Bevan, such disposals must be dealt with carefully. In practical terms this means carefully assessing the evidence about the disposal, attempting to quantify it if this is at all possible, and then assessing its weight whilst neither placing too much, or too little, weight on it. It would seem that notionally adding back such property may still be appropriate in some cases. In Vass & Vass [2015] FamCAFC 51, the Full Court said at [138]:
There is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan & Bevan [2013] FamCAFC 116; (2013) FLC 93-545 – or, more particularly, the decision of the High Court in Stanford & Stanford [2012] HCA 52; (2012) 247 CLR 108 – is authority for any necessary contrary solution.
Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by the parties. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.Credit findings
Credit Issues
It is not possible to make a broad-brush credit finding in this case. As it turns out, the Court has reservations about some of the evidence that both parties gave. It is not possible, however, to conclude that everything one party said should not be accepted, or that all of the evidence of a party should be preferred to that of the other.
The Wife was a generally unconvincing witness when it came to financial matters. She was frequently unresponsive in cross-examination. She changed her evidence several times when confronted with inconsistencies and the fundamental improbability of what she was asserting. She was evasive at times. At first, the Court formed the impression that her lapses were related to memory, but that her evidence was otherwise in good faith. As the cross-examination progressed, however, the magnitude and frequency of the memory lapses evolved, in the Court’s mind, into the impression that she was ambivalent and/or cavalier in relation to the financial evidence she put before the Court. Ultimately, however, the sheer magnitude and frequency of the Wife’s cavalier and ambivalent evidence in relation to financial matters has led the Court to conclude that she frequently lied about financial matters, and that she was motivated by the desire to obtain advantage for herself in the present financial proceedings. The examples from the evidence to support this finding are plentiful, and are obvious from the transcript. There is no need to further humiliate the Wife by setting out the evidence. The Court finds that wherever the Wife’s evidence on financial matters differs from that of the Husband, unless corroborated by objective material, the Husband’s evidence should be preferred.
By contrast, the Husband’s evidence about financial matters was clearer and more consistent. Whilst his evidence about the records of the repayments to the Wife’s father was unclear at times, the Court does not accept the submission that his evidence should not be accepted in this regard. His memory about these records is clearly different to that of the Wife’s, but that does not make him a liar, especially in the context of the adverse credit findings on financial matters relating to the Wife. However, the Husband’s evidence in other respects was suspect. The Court does not accept his evidence about the personal property that was left at the former matrimonial home on separation, and findings against him will be made in this regard at the appropriate place in these reasons for judgment. The Court will also observe that there are aspects of the Husband’s conduct of this matter that are less than ideal but, in the maelstrom of separation, this conduct does not make him a liar and it is, in any event, accountable in other ways.
The Wife’s father gave evidence. Again, the Court has concerns about his evidence. He plainly lied about the motivation for the operation by the Wife of two bank accounts that were, in fact, his. He too, the Court finds, was motivated by seeking to ensure that his daughter, the Wife, maximised her opportunities for benefit in this litigation.
The real estate valuers gave evidence, and there are no credit issues in that regard.
The balance sheet
For the reasons set out below, the Court finds the balance sheet to be as follows:
Non-superannuation assets Ownership Value ($)
1 Property G property Joint 615,000
2 Ford (omitted) motor vehicle W 32,000
3 Lease payment W 18,000
4 Lease payment H 18,000
5 (omitted) H 30,000
6 (omitted) Horse Float W 21,000
7 Horses and horse tack W 9,500
8 Insurance payment on Land Cruiser H 38,000 TOTAL: $781,500 Liabilities
9 Property G mortgage Joint 200,866
10 Loan from Mr B H 20,000
TOTAL NET NON-SUPERANNUATION ASSETS: $560,634 Superannuation Assets
11 (omitted) Plus W 29,095
12 (omitted) Super Fund H 63,260
TOTAL NET ASSET POOL: $652,989
Item 1 is the Property G property. The Husband’s valuer, Mr R, valued the property at $500,000. The Wife’s valuer, Mr W, valued the property at $580,000. Their written valuations are in evidence. Each gave oral evidence in the presence of the other, and was cross-examined.
The differences in the land value component is insignificant. One says $350,000, the other $355,000. For present purposes, there is no significant difference and the Court will adopt the lower figure. The land value component, therefore, will be $350,000.
Oddly, the Wife’s valuer put the value of the improvements on the land at $57,740, whereas the Husband’s valuer put the same at $100,000. The Court accepts the Husband’s valuation of improvements at $100,000, and indeed, was urged to do so by Counsel for the Wife. Accordingly, the improvements on the land are found to be valued at $100,000.
The third component of the valuation, and the most contentious was that value of the property that was attributable to the lease of the mobile telephone tower. The current rental in this regard is just over $34,000 per annum. The Wife’s valuer put the present value of the income stream at $165,000, whereas the Husband’s valuer put it at $50,000. The Court accepts the Wife’s valuer’s valuation of the income stream. The methodology that each valuer adopts is set out in their report, and was then further explained in cross-examination. The fundamental differences between the two methodologies hinge around issues of the certainty of the income stream.
It was very much the Husband’s case that the income stream could not be regarded as certain because of provisions in the lease that enable the leasee to either escape its obligations, or not take advantage of options to renew, in circumstances that are described in clauses 16 and 18 of the lease, which document was in evidence. The Husband’s criticism of the Wife’s valuer’s methodology was that, in simple terms, he had adopted as certain that which was merely contingent. There were other factors raised, however, including the possible risks presented by changes in technology, insolvency of telecommunication providers, etcetera.
In the Wife’s case, it was submitted that her valuer was well entitled to consider the antiquity of the lease arrangement, and solid history of payments the increases of which are locked into the lease itself. In particular, and relying on evidence that was elicited in cross-examination by Counsel of the Husband, the Wife’s valuer gave the evidence which the Court finds quite compelling and that was that for the leasee to walk away from its lease commitment would involve walking away from an investment of at least half a million dollars in the infrastructure that they have built on the property.
In all the circumstances, the Court assesses the value of the income stream at $165,000. It is important to acknowledge that the Husband’s valuer, Mr R’s assessment of the present value of the income stream already factors in a discount to reflect some of the uncertainties and contingencies that were highlighted on the Husband’s behalf. Viewed overall, however, the Court accepts the submission made on behalf of the Wife. The reality is, in fact, the opposite of uncertainty, given the past history of rental payments, the locked-in increases, the substantial investment that the leasee would need to walk away from, and the very limited conditions that are prescribed in clauses 16 and 18 of the lease in question.
Having regard to the valuation evidence, therefore, the Court finds the land value to be $350,000, the improvements to be $100,000, and the present value of the income stream to be $165,000. Thus meaning that the Property G property is valued at $615,000.
Items 2-6 inclusive of the balance sheet were either agreed, or conceded. Item 7 (the horse and horse tack) was, the Court finds, in the Wife’s possession at the time of the hearing. This is based on the Wife’s own evidence. She herself ascribed $4,500 being the value of saddles, and $5,000 for the horse, totalling $9,500. The Court does not accept, however, that X’s $3,000 horse should be included here. The Husband did not challenge the contention that it was X’s horse, nor that of either the Husband or the Wife, so the Court finds no reason to include it.
Item 8 is conceded by the Husband as being a payment that he received. The application of these funds, however, is in dispute, and the Court’s reasons for not including the other items in the balance sheet are set out below.
Both parties contended that the balance sheet should contain some reference to the contents, or personal possessions and effects of the parties. The evidence about this, however, was less than satisfactory. In particular, the absence of valuation evidence makes it impossible to refer to some of these contentious issues on the balance sheet. For example, the Husband gave evidence of about 30 boxes of personal property kept in the shed on the Property G property in circumstances where he has had sole control, and has actively sought to exclude others from the property, the Wife included. Indeed, the Court finds that he acted in an arbitrary manner in excluding the Wife from even inspecting these items, let alone removing them.
He even excluded the Wife’s valuer from accessing the shed in which these items were located. These are items that can neither be identified with precision, nor valued, as a result of the Husband’s own actions. The Court will order that he provide to the Wife the 30 boxes in question and, that, in the meanwhile, he be restrained from dealing or interfering in any way with the said property, pending the implementation of the order. Given that the Husband has made it impossible for these items to either be identified, or valued, their value will be treated as nominal and as not otherwise interfering in the alteration of property interests exercise.
At one stage there was an issue about moneys in the Wife’s PayPal account. That issue appears to have resolved itself by the time of closing submissions, with neither party contending that it should be added back.
The evidence indicates that the Husband received two tax refunds on 25 and 26 August 2016, totalling $17,315. The Wife contended that these should be added back, but the basis for doing so was unclear, given that the parties separated just a few months into the 2015 tax year. Whilst these funds were certainly available to the Husband the rationale for including it in the balance sheet is not apparent. It is hard to perceive how the Wife could be said to have meaningfully contributed to these funds except in the general sense of an ongoing post-separation contribution to the welfare of the family. This particular contribution did not receive that much attention. Accordingly, the Court believes that the safest approach is to keep it off the balance sheet.
The Wife contended for an add back into balance sheet of legal fees totalling $49,000 expended by the Husband. The Husband conceded an add back of $38,000, but asserts that item 8, the insurance payout on the Land Cruiser was the source of his legal fees and thus it would be duplication to include both items on the balance sheet. Two matters are clear. Firstly, the Husband did receive an insurance payment of $38,000. Secondly, the Husband has paid legal fees of $38,000. The question for the Court is whether the $38,000 was applied towards the legal fees. Counsel for the Wife quite correctly points out that there is simply no evidence to show that the $38,000 was applied towards legal fees. Indeed, the evidence suggests that it was not received until 21 October 2016, shortly before the commencement of the hearing. This, of course, does not exclude the possibility that it was used for that purpose.
It must be acknowledged that the concession made on behalf of the Husband for the add back of $38,000 was clearly conditioned on there being no duplication relating to the insurance pay out on the LandCruiser. It is nonetheless clear that he paid $38,000, otherwise even the conditional concession would not have been made. The Court would have appreciated more evidence about this issue. The evidence of the Husband in cross-examination confirmed that he had income from his own business, income from cattle sales, income from the rentals for the mobile telephone tower, and then two taxation returns refunds, all of which could have been used, in part or in whole, to fund the payment of legal costs. Moreover, it would not necessarily mean that there is ground to justify an add back. In the circumstances, the risk of prejudice to the Husband is too great and the Court declines to add back the amount paid for legal costs.
There were two contentious liabilities. The Husband sought to include in the balance sheet a loan from his mother, Ms L, in the sum of $30,000. The Court declines to do so. The only evidence about this liability was contained in his two sworn financial statements. It was incumbent on him to lead further evidence about the nature of this liability, when it was incurred, and whether it is likely to be repaid. For example, the Court knows nothing about whether this was a liability in place at the date of separation, or incurred later, and for what purpose. The inclusion of this liability cannot be permitted in the circumstances.
The Husband contends for the inclusion of a loan from his brother, Mr B, in the sum of $20,000, and on the basis that the $20,000 loan funded the improvements to the Property G property to which he deposes in paragraph 68 of his trial affidavit. The Husband was not challenged on this. There is ample evidence from the real estate valuers about the benefit to the Wife of the improvements the Husband affected to the Property G property, even if she did not know or consent to them. In circumstances where she will derive a benefit from this expenditure, and where it is largely unchallenged in the evidence, the Court believes that it is just and equitable to include the liability to Mr B in the sum of $20,000 on the balance sheet, and it has done so. For the reasons set out above, the Court finds the balance sheet to be as stated.
Contribution
It seems agreed between the parties that on settlement of the sale of the Wife's Property D property, she received about $410,000. This was in February 2008, a few years after cohabitation. The property in question had been rented out.
Equally, there is no dispute that, a few days later, about $168,000 from this money was paid into the Husband's Property P property loan account. At this time, the balance of the loan account was about $200,000, and so just over $30,000 was still owing.
It appears accepted between the parties that out of the balance of about $242,000, $36,000 was applied towards payment of a debt that the Husband owed to his mother in respect of a motor vehicle. This means, in effect, about $202,000 of the sale proceeds of the Wife’s property was applied to reduce the Husband’s debt, and there can be no doubt that he benefited as a result of this.
That still leaves much money unaccounted for. Indeed, that amounts to $174,000, approximately. The Wife contends, and there appears to be no serious dispute, that $174,000 was paid back to her parents.
There appears to be no dispute between the parties that in about 2009 they borrowed $29,000 from the Wife’s father and applied this money towards reducing the Property P loan balance to nil. There is no controversy over the fact that this loan was subsequently repaid.
In assessing the initial contribution made by the Wife, the controversy arises in the following manner. The Husband is prepared to concede that the value of the Wife’s initial contribution was $73,000 because of a payment totalling $95,000 that the Wife caused to be made to her father in the circumstances outlined at paragraphs 28 and 35 of the Husband’s trial affidavit. The Husband contends that the withdrawals totalling $95,000, were undertaken by the Wife, and were paid to the Wife’s father.
The Wife’s explanation for this money is set out, for example, at paragraph 64 of her affidavit and, in effect, she contends that the moneys drawn were used for joint expenses or for their joint benefit.
In short, the Husband’s case is that whatever the value of the Wife’s initial contribution was, it should be assessed as being at least $95,000 less, because of these payments to her father. The Court agrees. The Court’s findings are primarily based on the shambolic nature of the Wife’s evidence pertaining to financial matters, but especially the funds in question. The evidence of the Wife’s father did not assist her case in the least.
It is clear from the evidence of both of them that their finances were closely intermingled, and it is by no means clear to the Court whether the money is held in the Wife’s name supposedly on behalf of her father or actually hers, or the Husband, or a combination of both. Their motives are unclear, but certainly include seeking to place the Wife’s father in a more advantageous position for Centrelink purposes, and almost certainly to seek to assist the Wife in the present proceedings.
The Court does not accept the Wife’s explanation, either in her affidavit or in cross-examination, for the use of the contentious funds. The Court accepts the Husband’s case in this regard. In assessing the value of the Wife’s contribution, however, whilst the cash contribution is less than what she asserts, it is nonetheless substantial.
Turning now to the Husband’s initial contribution and the assessment that pertains to it, it is accepted that he owned the property at Property P and that by the time of cohabitation he had caused to be constructed a home on that property which became the former matrimonial home. The value of the home at that time is unknown. It was clearly subject to mortgage, and as set out above, that mortgage balance was reduced to zero within a relatively short time of the sale of the Wife’s property.
There were subsequent drawings on the mortgage, it was refinanced, but nothing turns on that. The Property P property was sold for $520,000 and the parties netted about $50,000 from its sale proceeds. Importantly, however, the mortgage liability against the Property P property was also discharged and over $315,000 was paid off the Property G property mortgage (that property having been purchased the year before in November 2013 for $515,000, entirely financed by bank loan).
This too, of course, is a substantial contribution made on behalf of the Husband. Unlike the Wife's Property D property, which was realised shortly after cohabitation, the Property P property was realised shortly before separation. Accordingly, from an assessment of contribution perspective, the Court must consider the myriad other contributions that were made in the intervening period by both parties, but of course including the Wife.
In other words, an assessment of the Husband’s initial contribution cannot be made purely by reference to dollars and cents in abstract terms, but must take into account the diverse forms of contribution made in the period leading up to its sale. Nonetheless, what is equally important is to ensure that he receives credit for the value to the parties of his initial contribution, particularly when the pool of assets is such a small one.
The fact is that but for the Wife’s contribution from the sale of Property D, the Husband would have owed much more on the Property P property, and but for the Husband having the Property P property, the parties would have owed much more on the Property G property. The two contributions were made at different times.
On behalf of the Husband, in closing submissions it was contended that contribution should be assessed in his favour as to at least 65 per cent. On behalf of the Wife it was contended the contribution should be assessed in her favour as to 65 per cent. Counsel for the Wife quite frankly conceded, however, recognising no doubt that adverse credit findings might be made against his client based on the evidence before the Court about the payments made to the Wife’s father, that even so a contribution should be assessed in her favour as being in excess of 50 per cent.
The Court does not accept the submissions made on behalf of either party. They have both made initial contributions in different ways at the commencement of their relationship but the direct benefits of this were, in the Husband’s case, not enjoyed until late in the relationship. The sale proceeds of the Property P property improved the parties’ financial position by well over $400,000. Nonetheless, it must be recognised that the benefit would have been significantly less but for the contribution the Wife made from the Property D property.
Moreover, the parties enjoyed the benefit of funds that were provided on behalf of the Wife through her father, on the basis that the money repaid to him was money originally enjoyed by them. In addition, it was his loan that assisted the parties to pay down to zero the Husband's Property P property mortgage.
It is, of course, impossible to be precise in these cases, but the Court’s assessment is that the Husband’s initial contribution was greater than that of the Wife, though nowhere near what was asserted on his behalf. The Court assesses that contribution overall should be assessed in the Husband’s favour as to 55 per cent.
Future needs?
On behalf of the Wife, it was contended that there should be an adjustment in her favour of up to 15 per cent under section 75(2), but the Court recognises this was predicated on a favourable contribution finding from her perspective. On behalf of the Husband, it was conceded that a section 75(2) adjustment of up to 5 per cent should be made in the Wife’s favour, reflecting the fact that she has the primary care of X.
The age of both the Husband and the Wife is not pertinent in this case. Each asserts that they have health conditions that are relevant to their capacity to earn income. Insofar as this relates to the Husband, the Court does not accept that it has materially affected his income earning capacity, nor is it likely to in the future. The Wife is probably depressed and anxious, but the Court finds that this is very much linked to the separation and the current proceedings and is thus, situational.
The Husband has an income, and has a capacity to earn an income which is significantly in excess of that of the Wife. The Court cannot ignore the fact that he wishes to retain the Property G property which will give him the entire income stream from the rental of the mobile telephone tower, provided he can buy the Wife out. The Court does not accept that there is any restriction on the Husband’s physical and mental capacity for appropriate gainful employment in the medium to long-term future.
The situation as regards the Wife is more complicated. The fact is that she has worked since separation, notwithstanding the conditions that she claims to suffer from, and notwithstanding being on disability benefits. The Court does not accept the Wife’s evidence about the limited circumstances in which, she contends, she worked. The adverse credit findings made against the Wife cast a significant shadow over her contention of lack of physical and mental capacity for appropriate gainful employment. The most likely scenario, the Court opines, is that on conclusion of these proceedings she will regain the capacity she once had.
X is 7 years old and is predominantly in the care of her mother. Even the Husband concedes this is grounds for at least a three per cent adjustment in her favour and certainly up to five per cent. That is a conservative assessment.
There are no issues in this case about the commitments of each party or of the responsibilities either has to support another person.
The Wife receives Centrelink benefits, supplemented by her share of rental payments from the mobile telephone tower.
There are no issues about standard of living that need to be taken into account. There is no maintenance application. It was not contended in the Wife’s case that the duration of the relationship had affected her earning capacity. The desire that the Wife has to care for X was not expressed as being incompatible with working.
The Court must take into account any s.79 order proposed to be made, including an assessment of contribution that favours the Husband.
In section 75(2)(na) the Court must consider the issue of child support. The Husband is not paying child support. The Court finds this a somewhat extraordinary situation, given the evidence before the Court of his actual income from all sources. The strong impression formed is that he has structured his affairs in such as a way as to offset most of his income by way of allowable tax deductions. This has resulted in an absurdly low taxable income, which means no child support is assessed. It resulted in what the Court considers to be a totally unacceptable situation where the Husband was in a significantly better financial position than his Wife and had substantial real income available to him but did not apply it to support his daughter. The Court regards this an important section 75(2) consideration.
On behalf of the Wife it was contended that child support will always be low because of the Husband’s ability to manipulate his business income. There is some substance to this, but it must be noted that the Wife clearly has remedies available to her under the child support legislation which, for various reasons, she appears not to have availed herself of. The Court needs to be very careful not to make too generous an adjustment in the Wife’s favour in this regard in circumstances, for example, where she could then apply for a review of the assessment or even seek a departure order and use exactly the same evidence before this Court in that context. Accordingly, the Court takes into account the current circumstance of the Husband not paying child support and accepts the contention that child support will either not be paid or will be at low levels or will only be recovered after the Wife exhausts the legal rights that she has available to her.
Having regard to all of these matters, the Court assesses the adjustment in the Wife’s favour under section 75(2) to be 10 per cent.
Just and equitable?
Having regard to the Court’s finding the contribution should be assessed in the Husband’s favour as to 55 per cent and 75(2) factors in the Wife’s favour as to 10 per cent, this means the final assessment will be 55:45 in the Wife’s favour. In all the circumstances, the Court believes that such an adjustment will be as just and equitable as the circumstances permit.
In terms of the orders to be made a number of things should be noted. Firstly, the Wife had no objection in principle with the Husband retaining the Property G property if he were able to fund the payout to her pursuant to any orders made. Accordingly, the Husband will have a reasonable time to make such payment. Secondly, the Wife proposed a superannuation splitting order in her favour in the sum of $20,000 out of the Husband's (omitted) Super superannuation. The Husband’s proposal implied that each would keep their respective superannuation entitlements. There is no reason not to give effect to the Wife’s proposal, as it ultimately reduces the cash payout by the Husband to her. However, the proposed splitting order does not necessitate that the assessment of contribution to the superannuation pool be different to that for the non-superannuation. Indeed, neither counsel made any submission to this effect. Accordingly, both superannuation and non-superannuation assets will be treated in the same pool.
The Wife originally sought a child support order under section 116 of the Act, but that was not pressed. The Wife also sought a number of orders in relation to items of property which the Husband acknowledged (at least as regards to some) were located in the shed situated on the Property G property. In evidence the Husband conceded that items 3.2-3.17 inclusive and items 3.29, 3.35, 3.36 and 3.37 (referred to in the Wife’s minute of order) were all found in the shed. As foreshadowed in these reasons, however, the only way the Court can deal with the assets in respect of which some concession were not made is to simply direct that the Husband make available to the Wife within 14 days of this order the 30 boxes containing personal property presently located in the shed situated on the Property G property. The Husband will be restrained forthwith on making these orders from dealing, damaging or dissipating this asset in any way.
Within that general frame-work the assets that each would retain is as follows.
Husband
·Property G, $615,000
·Mortgage, ($200,866)
·Lease payment, $18,000
·(omitted) bucking bulls, $30,000
·Insurance payment car, 38,000
·Loan Mr B, ($20,000)
·Superannuation, $63,260
·Total $543,394
Wife
·Ford (omitted), 32,000
·Lease payment, 18,000
·(omitted) horse float, 21,000
·Horses and tack, $9,500
·Superannuation, $29,095
·Total $109,595
The total asset pool is for $652,989. Accordingly the Husband’s 45 per cent entitlement is $293,845.05. The Wife’s 55 per cent entitlement is $359,143.95.
The Wife has in her possession $109,595. Accordingly she is entitled to receive from the Husband a further $249,548.95, which will consist of a superannuation split of $20,000, as well as a cash payment of $229,548.95.
Conversely, the Husband’s entitlement is $293,845.05, meaning he owes the Wife $249,548.95. A super split will make up $20,000 of this, and the balance will be a cash payment of $229,548.95.
The Husband will have three months to pay that amount to the Wife. At the end of three months, interest will accrue calculated in accordance with the Family Law Act 1975, its rules and regulations. If the amount has not been paid, not only will interest accrue; but the Husband and the Wife will need to cause the Property G property to be sold. In the meanwhile, he is to be responsible for all outgoings on the property and to service the mortgage. Should there be a delay in implementing these Orders and another rental payment in relation to the mobile phone tower accrue, an Order will be made to cover this.
An order will be made to reflect the Court’s determination above.
I certify that the preceding eighty-nine (89) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Date: 22 December 2016
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Jurisdiction
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Fiduciary Duty
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