Stilo & Jones
[2024] FedCFamC1F 459
•11 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Stilo & Jones [2024] FedCFamC1F 459
File number: HBC 593 of 2023 Judgment of: MCGUIRE J Date of judgment: 11 July 2024 Catchwords: FAMILY LAW – PROPERTY - Application for the alteration of property interests – where the applicant seeks a 50/50 per cent distribution of the property in her favour – where the respondent’s primary position is no alteration of the parties property interests – lengthy de facto relationship of some 23 years – contributions – add-backs – orders that there be a 55/45 per cent division of the parties net property in favour of the respondent where the Court is satisfied in the circumstances that the division is just and equitable giving proper consideration and weight to the various contributions and the current circumstances of each of the parties Legislation: Family Law Act 1975 (Cth) ss 79, 90SF(3) and 90SM(4) Cases cited: Chapman & Chapman (2014) FLC 93-592; [2014] FamCAFC 91
Gadhavi & Gadhavi [2023] FedCFamC1A 117
Jabour & Jabour (2019) FLC 93-898
R v Watson; Ex parte Armstrong (1976) 136 CLR 248
Standford v Standford (2012) 247 CLR 108
Division: Division 1 First Instance Number of paragraphs: 51 Date of hearing: 5 July 2024 Place: Hobart Counsel for the Applicant: Mr Trezise Solicitor for the Applicant: Butler McIntyre & Butler Counsel for the Respondent: Mr Guest Solicitors for the Respondent Ian Guest & Associates, Solicitors ORDERS
HBC 593 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS STILO
Applicant
AND: MR JONES
Respondent
ORDER MADE BY:
MCGUIRE J
DATE OF ORDER:
11 JULY 2024
THE COURT ORDERS THAT:
1.The net property pool of the parties be distributed as to the Respondent, Mr Jones (“the respondent”) fifty five (55) per cent and forty five (45) per cent as to the Applicant, Ms Stilo (“the applicant”), in accordance with these Orders.
2.Within sixty (60) days from the of this order the applicant shall transfer to the respondent all her right, title and interest in the property situate at B Street, Town C in Tasmania, more particularly described in Certificate of Title Volume … Folio … (“the Town C Property”) and the respondent shall be solely responsible for the payment of all amounts payable in respect of any mortgage payments for the property and all rates, taxes and insurance and any other outgoings and shall indemnify and keep indemnified the applicant.
3.Contemporaneously with the transfer of the property in Order 2 herein the respondent shall pay to the applicant the sum of $218,983.33.
4.In the event the respondent fails, is unable or unwilling to make a cash adjustment to the applicant as set out in Order 3 herein then the Town C Property be forthwith listed for sale by an agent agreed between the parties and failing agreement by an agent nominated by the president or delegate of the Real Estate Institute of Tasmania with the respondent to do all things necessary to co-operate with the sale and the respondent pay and indemnify the applicant from payment of all liabilities falling due in relation to the property including but not limited to mortgage repayments, rates, land tax, water charges and levies.
5.The Town C property be offered for sale at a price recommended by the agent and that the parties prudently sign any unconditional contract for the sale at a price equal to or above that nominated by the agent from time to time.
6.The proceeds of the sale of the Town C Property be paid as follows:
(a)the discharge of any mortgage and or other encumbrances affecting Town C Property;
(b)the reasonable costs and disbursements on the sale of the Town C Property including the solicitor’s costs and the agent’s costs;
(c)to pay any rates, land tax water charges and levies outstanding in respect of the Town C Property; and
(d)the remaining net proceeds shall be divided between the parties so as to effect a settlement of the net property of the parties pursuant to the Reasons herein as to fifty five (55) per cent to the respondent and as to forty five (45) per cent to the applicant.
7.The applicant shall retain the following to the exclusion of the respondent:
(a)any superannuation entitlements where the applicant is named as the worker and/or beneficiary;
(b)any savings, monies in bank, investments of shares held in the applicant’s sole name or under her exclusive control;
(c)any furniture, household effects and chattels in the possession or control of the applicant;
(d)any insurance or assurance policy naming the applicant as the beneficiary; and
(e)Motor Vehicle 2 in the applicant’s possession.
8.The respondent shall retain the following to the exclusion of the applicant:
(a)any superannuation entitlements where the respondent is named as the worker and/or beneficiary;
(b)any savings, monies in bank, investments of shares held in the respondent’s sole name or under his exclusive control;
(c)any furniture, household effects and chattels in the possession or control of the respondent;
(d)any insurance or assurance policy naming the respondent as the beneficiary; and
(e)Motor Vehicle 1 in the respondent’s possession.
9.Each of the parties be solely responsible for and indemnify the other in respect of the following:
(a)any liabilities attaching to any asset retained by that party pursuant to these orders; and
(b)any and all liabilities incurred by that party since separation in either joint names or that party’s name alone.
10.There be liberty to the parties or either of them to apply to the Court generally in respect of the execution of these Orders including but not limited to the sale of the Town C Property.
11.Pursuant to s 90ST of the Family Law Act 1975 (Cth) the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
12.All extant property and financial applications be dismissed except costs applications between the parties, if any, which are to be dealt with in accordance with the Family Law Rules 2021 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym of Stilo & Jones has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McGUIRE J:
APPLICATION
Ms Stilo is the applicant for property settlement orders in proceedings commenced by her on 11 July 2023. The parties were in a de facto relationship from about 1998 until July 2021. She asks for orders dividing the parties’ property, inclusive of superannuation, on a 50/50 basis taking an in globo approach to the property pool.
The respondent, Mr Jones, in his Outline of Case document filed 3 July 2024, and in the opening address of his counsel, submits that it be not just and equitable to make any alteration of the property pool as between the personal assets currently held by each of the parties and given the circumstances of their relationship on the basis of the well-known decision in Standford v Stanford[1] with perhaps also a consideration and weighing of various contributions.[2]
[1] (2012) 247 CLR 108.
[2] Chapman & Chapman (2014) FLC 93-592; [2014] FamCAFC 91.
Nevertheless, and after appropriate concessions by the respondent during his short cross-examination, and apparently oblivious to the position put during counsel’s opening and in his own Case Outline, by the time of closing submissions he was offering a cash adjustment to the applicant of $100,000 which I am told and accept would constitute a division of the property pool as to 77 per cent to the respondent and 23 per cent to the applicant.
BACKGROUND
The applicant is 65 years of age. She was employed in the healthcare sector for the duration of the relationship until taking a redundancy in 2011.
The respondent is 76 years of age. He was employed as an educator during the relationship until late 2020. He resigned receiving a $10,000 payout for entitlements and commenced employment, for the next two years, with D Company. He voluntarily left that employment at or around the end of 2002.
The parties were in the de facto relationship between 1998 and July 2021.
There are no children of this relationship.
The respondent has been on an age pension since about 2013.
The applicant has been on a disability support pension since about 2012.
In July 2003 the respondent paid out his existing mortgage of $75,650 using his superannuation funds.
In late 2011, the applicant received a redundancy from her employment in City E of $41,771.
In early 2015 the applicant received an inheritance of $80,555.53.
In early 2016 the applicant received a lottery win.
Since separation the respondent has had the sole use and occupation of the property at B Street, Town C. The applicant has moved and pays rent for her residence.
ISSUES
The parties agree the content and value of the property pool, the major issue is as to the weight to be afforded the various contributions of the parties during the relationship of some 23 years duration, with reference to the far superior initial contributions made by the respondent by reason of his equity in the property at Town C, as against the myriad of contributions by each of the parties during the course of the relationship, including the specific contributions by the applicant mentioned above and the applicant being the primary income earner for the household for about nine years between 2002 and 2011.
RELEVANT LAW
The Court is given power to alter the interests of parties in property at section 79 of the Family Law Act 1975 (Cth) (‘the Act’). ‘Property’ is to include assets and liabilities with amendments to the Act providing that ‘superannuation may be treated as property’. It is well-established that the discretion in the Court to alter property interests is a broad one limited only by the statute itself. In R v Watson: Ex parte Armstrong[3] footnote reference (1976) the High Court noted:
… The judge called upon to decide proceedings of that kind is not entitled to do what has been described as “palm tree justice”. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down.
[3] [1976] 136 CLR 248 at [257].
Section 79(2) of the Act provides:
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.
Following the decision of the High Court in Standford v Standford (supra) a renewed focus has been placed on this subsection with emphasis on the requirement for a separate and discrete determination by the Court as to whether it be just and equitable, in the particular circumstances, to make any order altering the property interest of the parties. Relevantly and importantly, that consideration is not to be simply conflated with a consideration of contributions at s 79(4).
As their Honours in the High Court noted, in many cases the just and equitable requirement of a property settlement is readily satisfied by the demise of the marriage or de facto relationship. Whilst the intellectual exercise under s 79(2) is not to be satisfied or conflated with the consideration of the various contributions of the parties at s 79(4), in my view, such considerations may be relevant to the overall determination of justice and equity s 79(2).
Where counsel for the respondent no longer argues it to be just and equitable not to make any orders altering the property interest of the parties, I am satisfied, in any event, that the s 79(2) requirement is satisfied. This was a lengthy relationship of some 23 years duration. The relationship was an exclusive one. The parties agree that it ended 2021. Whilst not a mandatory or necessary requirement, I am of the view that the duration, nature, and expectations of the relationship are such that the Court should consider it to be just and equitable to alter the property interest of the parties noting in particular the use of sources of finance for joint benefit.
Having made the determination at s 79(2) of the Act, the Court must move to consider the contributions by and on behalf of the parties to the contents and valuation of the property pool. Contributions may be of a direct or indirect financial type or, alternatively, by non-financial contributions, including as homemaker.
After considering the impact and effect of the contributions of the parties the Court then considers whether it be just and equitable to make any further adjustment to either of the parties by reason of the matters set out in s 90SF(3) of the Act so far as they are relevant.
Permeating the entire intellectual process of consideration is the notion of justice and equity in arriving at orders which will be full and final in their force and effect.
PROPERTY POOL
The parties agree the property pool and values as follows:
B Street, Town C, Tasmania $463,000 Motor Vehicle 2 (applicant) $4,000 Motor Vehicle 1 (respondent) $2,000 ANZ account (respondent) $15,280 F Bank accounts (applicant) $5,045 TOTAL $489,325 Superannuation Superannuation Fund 1 - (applicant) $17,138.75 Superannuation Fund 2 – (respondent) $38,352 TOTAL $55,490.75 Assets inclusive of Superannuation $544,815.75
There are no relevant liabilities of the parties or either of them.
CONTRIBUTIONS
The respondent owned the property at Town C prior to the commencement of the relationship. He had purchased the land in 1992. As an owner builder he had constructed the residence. His unchallenged evidence is of a gross value of $350,000 as at the commencement of the relationship. Notably, it was not until about 2016 that the property was able to comply for certification, but the best evidence is that it was in a liveable state as from the commencement of the relationship in 1998 and that only minor further work was needed and completed until 2016.
The respondent paid out his outstanding mortgage of $75,650 in full from superannuation funds in 2003, contemporaneous with him ceasing full time employment. I have no evidence as to the quantum of the mortgage in 1998 but can infer that it was greater than the $75,650 payout figure some five years later giving him an equity in 1998 of something less than $275,000 at the commencement of the relationship.
The respondent also had the following assets:
·Motor Vehicle 3 $6,000;
·Furniture, contents and tools $3,500;
·Bank savings $3,000; and
·Superannuation Fund 3 $110,000.
The applicant owned the following:
·Motor Vehicle 4 $3,000;
·Furniture and contents $1,000; and
·Superannuation Fund 1 $12,000.
During the course of the relationship the respondent worked from 1998 until approximately the end of the 2002.
The applicant worked from the commencement of the relationship in 1998 until late 2011. Whilst the respondent may have done some odd jobs for cash payment, the evidence satisfies me that the applicant was the primary source of income for the parties for a period of approximately nine years during this 23 year relationship.
In July 2003 the respondent satisfied his mortgage on the Town C property in the sum of approximately $75,000, having withdrawn those funds from his superannuation entitlement and having retired from his employment.
In October 2014 the applicant received an inheritance in the sum of $80,555.53.
In 2012 the applicant received a redundancy payment from her employment of $41,771.91. This was received some 14 years into the relationship.
In 2016 the applicant had a lottery win but, quite obviously, during the course of the relationship and some of five years prior to separation.
The respondent has had the sole use of the unencumbered Town C property since separation in July 2021 and for those subsequent three years the applicant has been required to pay rent for her accommodation.
Where the above are, in my view, the relevant contribution factors within, of course, the myriad of usual contributions made by each of the parties, there is dispute as to the weight to be afforded those contributions. In this sense, it is inappropriate to disproportionately account for one contribution over and above the ‘myriad’ of all contributions made during a relationship, but instead should be assessed as one of those myriads of contributions.
It is well established that in taking the property pool in an holistic sense, the Court would fall into error if it were to compartmentalise or quarantine a particular contribution and weigh it against the remainder and thereby search for a nexus between a particular contribution and present value within the pool.[4]
[4] Jabour & Jabour (2019) FLC 93-898.
Nevertheless, a more recent Full Court in Gadhavi & Gadhavi[5] confirmed previous authority that the Court should not overlook the use and impact of an asset introduced into the relationship by a party, with their Honours commenting as follows:
[5] [2023] FedCFamC1A 117 at [30].
30.It was not in dispute that the primary judge applied proper principle in determining that the assessment of the impact of the husband’s initial contributions could only properly occur after she assessed “the totality of the parties’ contribution-based entitlement over the entirety of the marriage and post-separation” ….
31.In that respect, in Pierce v Pierce (1999) FLC 92-844 (“Pierce”), the Full Court stated at [28]:
…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.
(Original Emphasis)
32.To similar effect, in Cabbell & Cabbell [2009] FamCAFC 205, the Full Court stated at [54] that in considering the parties’ contributions, it is necessary to trace the use of those assets and consider the foundation that they laid for the subsequent accumulation of wealth by the parties.
33.That is, in evaluating the parties’ contributions, it was necessary for the primary judge to have regard to the context of the husband’s initial contribution and specifically, to the opportunity that initial contribution created and the impact of that initial contribution on the subsequent wealth of the parties as at the date of the hearing.
(Emphasis Added)
It follows that the respondent’s initial contribution is significant. It was overwhelming in its dollar value as at the date of commencement of cohabitation. The property remains in the pool of assets. The parties enjoyed the home as their primary residence. That asset was introduced into the relationship by the respondent some 26 years ago. It has a current agreed value of $463,000 and is unencumbered.
The applicant was the major financial provider for the parties for a period of nine years from 2002 until the cessation of employment in late 2011, whereupon she received a redundancy payment of $41,771. Whilst the parties may have lived relatively frugally, the evidence satisfies me on the balance of probabilities that the applicant’s income was the primary source of support for the household and must be seen as a significant direct financial contribution over a nine year period, albeit her income was relatively modest in a sum of approximately $35,000 per annum, this would represent a gross financial contribution of in excess of $300,000 subject, of course, to taxation and where I am satisfied that the respondent also contributed by his exploits.
The applicant received an inheritance of $80,555.53 in 2015. She deposes in her evidence and in her affidavit[6] at [57] to the expenditure of those monies for the benefit of both herself and the respondent. Any small residue might remain evident in her bank account balances in the property pool set out above. There is no evidence of the applicant otherwise retaining those monies for her own benefit or in the purchase of unnecessary or luxurious items. I am satisfied generally that the applicant’s inheritance monies were used for the greater benefit of the parties and as a supplement to their receipt of pensions.
[6] Filed 20 June 2024.
The applicant vacated the Town C property at separation in 2021 and for the past three years has lived in rental accommodation. She deposes to a current rental obligation of $217.50 per week where the evidence suggests that she and the respondent have roughly equivalent pension incomes. On the other hand, the respondent has had the sole use and benefit of the Town C property for the three years since separation, where that property is unencumbered. He meets the council rates of $20.65 per week. There is some considerable financial advantage consequently to the respondent over the three year period.
This is a lengthy relationship of some 23 years duration. There have been the usual contributions made by each of the parties for their mutual benefit. There have been some particular contributions which are weighed in the positions taken by each of the parties and specifically the respondent’s introduction of the property to Town C which sits in the property pool today as the major asset of value. However, the contributions identified as emanating from the applicant have also been of considerable benefit to the parties. Notably, her primary support income for some nine years is significant as is the introduction of $80,555 by way of inheritance. Taking all of the contributions into account, including those of particular significance as set out above, I am of the view that the property pool should be divided on the basis of contributions as to 55 per cent to the respondent and 45 per cent to the applicant.
Where the respondent’s superannuation entitlement, in a quantum of $89,897 as of June 2021, has decreased to a current value of $17,138, counsel for the respondent argues that the applicant does not account for the dissipation of those monies and argues then for a form of ‘add-back’ on the basis of wastage by the applicant. In mounting this argument the respondent’s counsel does not point to any particular expenditures or purchases of luxuries inconsistent with the reasonable expenditure of those monies which indeed the applicant argues at [33] of her affidavit.[7] Within context, the respondent’s counsel helpfully put to the applicant in cross-examination that over a three-year period she has had the use of the following monies:
[7] Filed 20 June 2024.
Superannuation $70,000 Centrelink pension $60.000 Decrease in Bank account $10,000 TOTAL E $140,000
Simple mathematics would suggest, over a period of three years, this would amount to total expenditure by the applicant of approximately $897 per week. As noted above, she has been required to re-establish herself in accommodation where there is a rental obligation. She is required to fully support herself. In all of the circumstances, I do not consider such expenditure to be unreasonable and certainly not so where the respondent himself does not allege any particular extravagances on the part of the applicant.
SECTION 90SM(4)/SECTION 90SF(3) FACTORS
Each of the parties here is retired from gainful employment. Each receives a Centrelink pension of roughly equivalent quantum. Neither party seeks any adjustment on account of the relevant considerations. I have no reason to disagree with them.
Consequently, after consideration of contributions and where there should be no further adjustment, I conclude that the property of the parties should be divided as to 55 per cent to the respondent and 45 per cent to the applicant. The property pool, inclusive of superannuation is $544,815.75. The applicant’s entitlement at 45 per cent is to value of $245,167.08. She will retain her motor vehicle ($4,000), F Bank accounts ($5,045) and superannuation ($17,138.75) being a total $26,183.75. I calculate, therefore, a cash adjustment from the respondent to the applicant of $218,983.33.
The respondent will retain his Motor Vehicle 1 ($2,000), the balance of his ANZ account ($15,280) and his superannuation ($38,352). He is to retain the property at B Street, Town C.
I am the very much alive to the fact that the respondent gave some evidence as to his borrowing capacity should he be required to make a cash adjustment on the applicant. His research has been limited to googling a reverse mortgage facility which he suggests might be limited to $150,000. Consequently, I will give the respondent every opportunity to explore finance options but should the respondent be unable to finance a payment to the applicant in the quantum set out above, then unfortunately but inevitably, the property at B Street, Town C will need to be sold. There will inevitably be costs of sale and the figures above adjusted accordingly. Consequently, I will make a default order if the respondent is unable to meet the payment to the applicant whereby the property be sold, with the parties retaining those items currently in each his and her possession, and that the net proceeds of sale be divided so as to effect an overall 55 per cent / 45 per cent distribution of the property pool.
I am satisfied that where there has been a twenty three year relationship and taking into account the contributions of the husband heightened by his then equity in 1998 of the current home as against the later but also the significant contributions of the applicant together with all of their various contributions, that orders dividing the property pool as to 55 per cent to the respondent and 45 per cent to the applicant will be just and equitable.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices McGuire. Associate:
Dated: 11 July 2024
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