Stinson & Goldsmith (No. 2)
[2021] FamCA 540
•23 July 2021
FAMILY COURT OF AUSTRALIA
Stinson & Goldsmith (No. 2) [2021] FamCA 540
File number(s): BRC 397 of 2018 Judgment of: CAREW J Date of judgment: 23 July 2021 Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – Where the husband seeks to have the entirety of the wife’s partial property settlement considered an add back in final property settlement – Where a partial property settlement can be reconsidered at final hearing – Where there is no exceptional reason to include add backs in consideration of final property settlement.
FAMILY LAW – PROPERTY SETTLEMENT – Just and equitable – Where there is consideration of myriad contributions made by each party to the marriage including post separation inheritances – Where s 75(2) factors of the Family Law Act 1975 (Cth) do not favour either party to a marriage – Where it is just and equitable to distribute property on a proportional basis 57.5/42.5 in the husband’s favour – Where husband retains joint property and property in his name – Where wife retains property in her name and receives a cash payout.
Legislation: Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)
Cases cited: C & C[1998] FamCA 143
Chong & Chong [2016] FamCAFC 211
Dickons & Dickons (2012) 50 FamLR 244
Eufrosin & Eufrosin [2014] FamCAFC 191
Farmer & Bramley (2000) FLC 93-060
Gabel & Yardley [2008] FamCAFC 162
In the Marriage of Aleksovski (1996) FLC 92-705
Kennon v Kennon (1997) FLC 92-757
M & M [1998] FamCA 42
Stanford & Stanford (2012) 247 CLR 108
Trevi & Trevi [2018] FamCAFC 173
Wallis & Manning (2017) FLC 93-759
Williams & Williams [2007] FamCA 313
Number of paragraphs: 95 Date of hearing: 21 – 23 April 2021 Place: Brisbane Counsel for the Applicant Mr T Kirk QC Solicitor for the Applicant Phillips Family Law Counsel for the Respondent Mr S J Williams QC Solicitor for the Respondent HopgoodGanim Lawyers ORDERS
BRC 397 of 2018 BETWEEN: MR STINSON
Applicant Husband
AND: MS GOLDSMITH
Respondent Wife
ORDER MADE BY:
CAREW J
DATE OF ORDER:
23 JULY 2021
THE COURT ORDERS:
BY CONSENT
Definitions
1.In this Order, unless the context otherwise permits:
1.1.Business K and Business S means the business names of Business K and Business S registered in the name of the wife and the bank accounts related to same being ANZ Business Advantage account ending #...58 and ANZ Business Advantage account ending #...28 and the balance standing to credit in those accounts.
1.2.ANZ mortgages for Property B and Property C means the loans from the Australia and New Zealand Banking Group Limited to the husband being Equity Manager account ending #...31 and Residential Investment Loan Account ending #...56 secured over Property B and Property C by first registered bill of mortgage number …03 and second registered bill of mortgage number …04.
1.3.Property J means the investment property situated at Property J in the State of New South Wales registered in the name of the wife and more particularly described as Lot .. in Strata Plan …, Local Government area Sydney, Parish of …, County of …and being all that land contained in Title reference Folio … / SP… and subject to the DD Bank mortgage for Property J;
1.4.Business G means the company Business G Pty Ltd ACN …. The sole director and secretary of Business G is the husband. The sole shareholder of Business G is the husband who holds 2 fully paid ordinary shares.
1.5.Business G bank account means the ANZ Business Advantage account number ending #...23 in the name of Business G Pty Ltd and the balance standing to credit in the account.
1.6.Business G debtors means the debtors owing to Business G Pty Ltd.
1.7.Property C means the investment property situated at Property C Town A in the State of New South Wales registered in the name of the husband and more particularly described as Lot … in Deposited Plan … local government area of …, Parish of …, County of … and being all that land contained in Title Reference Folio … and subject to the ANZ mortgages for Property B and Property C.
1.8.Debt owing to the Respondent’s mother means the loan from the mother of the wife to the wife currently standing with a balance of $30,000 owing.
1.9.Property P means the rural property situated at Town HH in the State of New South Wales registered in the name of the husband and more particularly described as:
(a)Lot … in Deposited Plan … local government area of …, Parish of …, County of … and Parish of … being all that land contained in Title reference Folio …/…; and
(b)Lot … in Deposited Plan ….
1.10.Husband's credit cards means the following credit card facilities in the name of the Husband and the balance standing to debit in those accounts:
(a) ANZ Frequent Flyer Gold Account No. …94;
(b) ANZ Frequent Flyer Platinum Account No. …71
1.11.Husband's motor vehicles means the following motor vehicles registered in the name of the Husband and driven by the husband:
(a)Motor vehicle 1 Registration (NSW) …; and
(b)Motor vehicle 2 Registration (NSW) ….
1.12.Husband's M Shareseans the following H Shareseld by the husband in publicly listed companies:
(a) 591 H Shares.
1.13.DD Bank mortgage for Property J means the loans from DD Bank Ltd to the wife bank package equity accounts ending #...12 and mortgage loan #...99 secured over Property J by first registered bill of mortgage number ….
1.14.Partnership means the partnership of the husband and the wife known as Stinson and Goldsmith Partnership.
1.15.Property Q means the rural property situated at Town HH, in the State of New South Wales registered in the name of the husband and more particularly described as:
(a)Lot … in Deposited Plan …, local government area of …, Parish of …, County of … and being all that land contained in Title reference Folio … / …;
(b)Lot … in Deposited Plan …, local government area of …, Parish of …, County of … and being all that land contained in Title reference Folio … / …;
(c)Lot … in Deposited Plan …, local government area of …, Parish of …, County of … and being all that land contained in Title reference Folio … / …;
(d)Lot … in Deposited Plan …, local government area of …, Parish of …, County of … and being all that land contained in Title reference Folio … / …; and
(e)Lot … in Deposited Plan …, local government area of …, Parish of …, County of … and being all that land contained in Title reference Folio … / ….
1.16.Property E means the rural property situated at Town HH, in the State of New South Wales registered in the names of the husband and the wife as tenants in common in equal shares (per Stinson & Goldsmith Partnership) and more particularly described as:
(a)Lots …-… and … in Deposited Plan …, local government area of …, Parish of …, County of … and being all that land contained in Title reference Folio auto consol …-…;
(b)Lot … in Deposited Plan …, local government area of …, Parish of …, County of … and being all that land contained in Title reference Folio …/…; and
(c)Lot … in Deposited Plan …, local government area of …, Parish of …, County of … and being all that land contained in Title reference Folio …/…; and
all subject to the EE Bank mortgage for Property E.
1.17.Stinson Goldsmith Superannuation Fund means the Australian Taxation Office regulated self-managed superannuation fund Stinson Goldsmith Superannuation Fund ABN ….
1.18.Property B means the investment property situated at Town A in the State of New South Wales registered in the name of the husband and more particularly described as Lot … in Deposited Plan … contained in Title reference Folio …/… and subject to the ANZ mortgages for Property B and Property C.
1.19.Property D means the rural properties and homestead situated at Town A, in the State of New South Wales registered in the name of the husband and more particularly described as:
(a)Lot … Property D means the property situated with the former matrimonial home and adjacent to Lot … Property D more particularly described as lot … on Deposited Plan …, local government area …, Parish of …, County of … and being all that land contained in Title reference Folio …/…;
(b)Lot … Property D means Lot … on Deposited Plan … local government area …, Parish of …, County of … and being all that land contained in Title reference Folio …/…; and
(c)Lot … Property D means Lot … on Deposited Plan … local government area …, Parish of …, County of … and being all that land contained in Title reference Folio …/… and being adjacent to Property Q.
1.20.Wife's bank accounts mean the following bank accounts in the name of the wife and the balances standing to credit in those accounts:
(a) ANZ GST Payment account ending #...99;
(b) ANZ Access Advantage Cheque account ending #...53;
(c) FF Bank Direct Savings Maximiser account ending #...11;
1.21.Wife's credit cards means the following credit card facilities in the name of the wife and the balance standing to debit in those accounts:
(a)GG Bank Rewards Credit Card Account No …84;
(b)GG Bank Rewards Signature Visa Credit Card Account No …41;
1.22.Wife’s HECS debt means the wife’s HECS debt currently standing in the sum of $13,053 owing.
1.23.Wife's M Shareseans the following H Shareseld by the wife in publicly listed companies:
(a)134,744 M Shares; and
(b)13,000 N Shares.
1.24.Wife's motor vehicle means the following motor vehicle registered in the name of the wife and driven by the wife:
(a)Motor vehicle 3 Registration ….
1.25.Wife’s Superannuation means the wife’s Super Fund 1 superannuation entitlement.
Partnership - Transfer to husband
2.Within 30 days from the date of this Order the parties do all such acts and things and execute all documents necessary to transfer all assets and liabilities of the partnership (save in respect of Property E and the EE Bank Loan) to the husband including but not limited to:
(a)the current funds at bank (on the understanding that funds disbursed after 1st July 2017 will be retained by the party who received those funds and the wife will not be required to reimburse any such funds received to the husband);
(b)livestock;
(c)plant and equipment as from 1 July 2017; and
(d)the husband be responsible for any taxation liability that may arise in respect of the trading activities since 1 July 2017.
3.That the husband indemnify the wife and keep her indemnified in relation to any liabilities that may arise in respect of the assets, liabilities and trading of partnership assets as and from 1 July 2017.
Husband retains
4.That the husband retain the following assets:
(a)Property B;
(b)Property C;
(c)Property Q;
(d)Business G Pty Ltd including bad debtors owing and monies held in Business G’s bank account;
(e)Livestock held in the husband’s name;
(f)Trailer;
(g)564 H Shares held in the husband’s name;
(h)Bank accounts in the husband’s name; and
(i)Furniture & contents in the husband’s name and/or possession.
Wife retains
5.That the wife retain the following assets:-
(a)The business “Business K”;
(b)Motor vehicle 3;
(c)Bank accounts in the wife’s name;
(d)134,744 M Shares in the wife’s name;
(e)13,000 N Shares in the wife’s name;
(f)Jewellery in the wife’s possession;
(g)Furniture & contents in the wife’s name and/or possession; and
(h)The wife’s superannuation entitlements with Super Fund 1.
Liabilities
6.That the husband be solely liable for and indemnify the wife in respect of the following liabilities:
(a)ANZ Equity Manager Loan no. …31;
(b)ANZ Residential Investment Loan no. …56;
(c)Tax relating to the sale of the business by Business G Pty Ltd in the 2018 tax year;
(d)Tax payable by Business G Pty Ltd in respect of income received from remaining debtors of Business G; and
(e)Any other loan, lease, credit card or other liability held or registered in his sole name.
7.That the wife be solely liable for and indemnify the husband in respect of the following liabilities:
(a)DD Bank Mortgage Loan Account No. …39; and
(b)Any other loan, lease, credit card or other liability held or registered in her sole name.
Wife’s loan account(s) with debit balance in books of account
8.That from 1 July 2017:
(a)The husband be responsible for and/or be entitled to all and any loan accounts in the name of the wife (whether solely or jointly with others) in the partnership, if any, standing with a debit or credit balance in the books of account of all and any entity within the partnership and indemnify and keep indemnified the wife from all liability howsoever arising therein and the husband, and his servants, agents, executors, administrators, substitutes (including a person who becomes a party by novation) and permitted assigns be restrained from pursuing the wife for any and all funds, liabilities or otherwise which may appear in the accounts of the partnership; and
(b)The wife, her servants, agents executors, administrators, successors, substitutes (including a person who becomes a party by novation) and permitted assigns be restrained from pursuing the partnership for any and all funds, liabilities or otherwise which may appear in the accounts of the partnership.
(c)And for the sake of clarity the reference to ‘loan accounts’ in this order excludes any loan account to any third-party or external creditor including but not limited to EE Bank.
(d)And upon the husband preparing or having prepared the returns and financials for the partnership for the financial years 2015/2016 through 2020/2021 (or until the partnership is dissolved, whichever occurs first) he shall provide copies of same to the wife forthwith to enable the wife to amend and/or file her personal tax returns.
Spousal Maintenance
9.This is not an Order to which Section 77A of the Family Law Act1975 (Cth) (“the Act”) applies and there are no provisions for maintenance of the parties in this Order.
Interest to Accrue in event of default
10.That subject to this Order, in the event that the whole or part of any payment required under this Order has not been made by the date required, then interest accrues in addition to the payment due and payable, at the interest rate prescribed by the Family Law Rules 2004 (Cth) (“the Rules”) adjusted monthly from the due date, to be calculated from the date of default until the date of payment.
Registrar to sign if default
11.That the parties execute all deeds or instruments and do all acts and things necessary to give validity and operation to the deed or instrument to give effect to this Order.
12.That if either party refuses, fails or neglects to execute any document necessary to put this Order into effect 14 days after being requested to do so, 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 of Australia at Brisbane be and is hereby appointed pursuant to Section 106A of the Act to execute such document in the name of such party.
Severance of tenancy
13.That any joint tenancy of the parties in any real or personal estate is forthwith expressly severed.
Preparation of documents and duty
14.That save as otherwise provided herein the transferee spouse or the spouse receiving the benefit of any transaction pursuant to this Order prepare the documentation necessary to give effect to the provision of this Order at their cost and further be responsible for the payment of registration fees and any other fees in relation to the transfer of property into their name.
15.That any duty payable on any transaction arising out of this Order be paid by the transferee spouse or the spouse receiving the benefit of such transfer or transaction.
16.That the parties promptly comply with the requirements of the Duties Act 2001 (Qld) (or equivalent legislation of other States and Territories of the Commonwealth of Australia) and associated legislation and all requisitions issued by Revenue NSW, NSW Land Registry, Transport Roads & Maritime Service NSW, Australian Taxation Office, ASIC, National Livestock Identification System and any other government department in relation to any document executed or transaction pursuant to or putting into effect the terms and conditions of this order. In default of either of the parties hereto complying with any requisition so issued within 14 days of the date upon which any requisition issues, the party not in default shall be entitled to comply with any of the said outstanding requisitions and recover from the other party in default the costs and outlays incurred in complying with any of the said requisitions such costs to be calculated in accordance with the Rules.
IT IS FURTHER ORDERED
Transfer of Property E from the partnership
17.That within 60 days of the date of this Order the parties transfer to the husband all their right, title and interest in Property E and for that purpose the following shall apply:
(a)If the husband requires the return of the transfer for stamping purposes, then:
(i)The husband’s solicitor will advise the wife of this requirement at the time the transfer documentation is delivered;
(ii)Subject to the husband’s solicitor giving an undertaking to use the transfer for stamping purposes only but to otherwise hold the transfer in escrow pending settlement, the wife must sign and deliver the transfer to the husband’s solicitor no later than 14 days prior to the settlement date.
(b)If the property has a Certificate of Title, and that Certificate is held by someone other than the husband, wife or mortgagee, then subject to the husband’s solicitor providing an undertaking to hold the Certificate of Title in escrow pending settlement, the parties must sign an irrevocable authorisation and direction (such document to be prepared by the husband’s solicitor) to release the Certificate of Title to the husband’s solicitor and deliver the authorisation document to the husband’s solicitor no later than 10 days prior to the settlement date.
(c)On or before the settlement date, the wife must:-
(i)Hand to the husband’s solicitor any Certificate of Title for the property;
(ii)Hand to the husband’s solicitor all transfer documents duly signed;
(iii)
Hand to the husband’s solicitor all records and documents relating to
the purchase of the property together with any improvements carried out on the property since that acquisition such documents being necessary to be retained for the calculation of the index cost base of the property to assess any future capital gains tax liability.
(iv)Do all such acts and things and sign all documents necessary to give effect to the said transfer.
Discharge and release of mortgage
18.That within 60 days of the date of this Order and contemporaneously with the transfer of Property E pursuant to paragraph 17 herein, the husband refinance into his sole name the joint EE Bank loan being mortgage registration number …89 in favour of EE Bank Australia Limited, and that the wife sign within seven (7) days of such request being made, an authority and any other document required by the mortgagee to facilitate the administrative process of release of the mortgage.
19.That in default of the husband complying with paragraph 18 herein the parties are to forthwith do all things necessary to sell Property E at a price agreed and failing agreement for $700,000 with the net proceeds of sale paid to the husband.
Property D and Property P
20.That subject to paragraph 21 herein, the husband retain Property D and Property P.
21.That the husband pay to the wife within 60 days of the date of this Order the sum of $602,415.
22.That in default of the husband complying with paragraph 21 herein the husband shall transfer all his right title and interest in Property D to the wife free of encumbrance and the wife is to pay the husband within a further 60 days the sum of $447,585.
23.That in the event the husband is required to transfer Property D to the wife pursuant to paragraph 22 herein, the husband shall provide a right of carriageway through Property P to the wife, and for this purpose the husband and wife shall jointly engage a firm of surveyors as agreed and failing agreement PP Consulting Surveyors and share equally in the costs of the creation of the right of carriageway including signing all documents and taking all steps to cause same to be registered on the title of the property.
24.That in the event the wife is to acquire Property D pursuant to paragraph 22 herein and she defaults in the payment to the husband of the sum required, then the husband will forthwith elect to sell either Property D or Property P or Property E and pay to the wife the sum of $602,415 from the proceeds of sale together with interest thereon calculated from 120 days from the date of this Order to the date of payment.
Stinson Goldsmith Superannuation Fund
25.That within 14 days of the date of this Order, the husband and wife do all acts and things and sign all documents as advised by Super Fund 2 to wind up the Stinson Goldsmith Superannuation Fund and the parties shall share equally all costs relating to those tasks except that the wife will be solely responsible for any penalties and interest due and payable to the Australian Taxation Office as a result of the delay in filing the super fund’s taxation returns and activity statements.
Miscellaneous
26.That save as provided herein each party otherwise retain all property in their respective name, possession or control.
27.That each party have liberty to apply upon the giving of 14 days’ notice in writing in relation to the implementation of this order.
28.That in the event that a party requires a determination of a costs application and the parties are unable to reach agreement in relation to costs within 21 days from the date of this Order then the following shall apply:
(a)The person applying for costs shall file and serve one affidavit (if necessary) and written submissions within 14 days from the date of this Order;
(b)The person against whom costs are sought shall file and serve one affidavit (if necessary) and written submissions within a further 14 days; and
(c)The person applying for costs shall file and serve one affidavit strictly in reply (if necessary) and written submissions strictly in reply (if necessary) within a further 14 days.
29.That the costs application (if any) will be heard in chambers without the need for further appearance unless a written request is received for the matter be re-listed.
30.That all outstanding applications be otherwise dismissed.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Stinson & Goldsmith has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAREW J
Mr Stinson (“the husband”) and Ms Goldsmith (“the wife”) separated in 2017 and remain unable to agree on how to divide their property. The property available for adjustment comprises various real properties and, in particular, farming properties which each party wants to retain at least in part.
This is a re-hearing of a property trial which was initially heard in the Federal Circuit Court of Australia and remitted for re-hearing after the wife’s successful appeal on 2 December 2019. The matter was transferred to this Court on 1 July 2020 and listed for trial in December 2020. The matter was not ready to proceed on those dates and as a consequence, the wife was ordered to pay the husband’s costs of the adjournment fixed in the sum of $33,000.
To date the husband has incurred legal costs (including the first trial, the appeal and the re-hearing) of approximately $527,476, and the wife has incurred legal costs of approximately $858,232 (including the first trial, the appeal and the re-hearing).
For the reasons which follow, the property of the parties or either of them will be divided in the proportion 57.5% to the husband and 42.5% to the wife. The husband will retain the farming properties on condition he pays to the wife the sum of $602,415. In default of payment the husband will be required to transfer to the wife Property D and she will be required to pay to the husband the sum of $447,585.
ISSUES
By the end of the trial the significant issues requiring determination were agreed but further concessions were made during submissions. Accordingly, I have identified the remaining issues requiring determination to be as follows:
1)Should the partial property payments received by the wife be included in their entirety or only the legal fees paid therefrom and the balance in the wife’s bank account?
2)Having regard to the use made of and current value of each party’s initial contributions (if still in existence), should greater weight be given to one party’s initial contributions over the other?
3)Having regard to the myriad of contributions made by each party over the course of the marriage, should greater weight be given to one party’s contributions over the other?
4)Having regard to the myriad of contributions made by each party during to the marriage and after separation, what weight should be given to the husband’s post separation inheritances?
5)Should the wife be able to retain one or more of the rural blocks as part of the property settlement or should they all remain with the husband?
6)Do the relevant s 75(2) factors favour one party over the other?
The wife made a number of allegations in her evidence in chief about the husband’s conduct during the relationship but ultimately did not pursue a Kennon[1] type claim. Further, the wife did not press a claim that the inheritance received by the husband after separation should be regarded as their joint inheritance.
[1] Kennon v Kennon (1997) FLC 92-757.
THE ORDER SOUGHT BY EACH PARTY
The terms of the order sought by the husband are set out in exhibit 7. The husband seeks a division of the property of the parties or either of them in the proportion 65% to him and 35% to the wife. The husband proposes the he retain all the farming properties.
The terms of the order sought by the wife are set out in exhibit 9. The wife seeks a division of the property of the parties or either of them in the proportion 60% to her and 40% to the husband. The wife proposes the she retain some of the farming properties.
Each party includes some alternative orders depending upon the findings made and to the extent that the parties were able to agree on certain provisions they will be reflected in the order by way of consent. The alternative orders and the agreed provisions were provided after the completion of trial and will remain with the Court papers.
BACKGROUND
The parties commenced cohabitation in 2004 and married in 2005. They separated on 23 October 2017. They continued to live separately under the one roof until 9 September 2019 when the wife left the home with the children and rented accommodation in Town JJ, a town proximate to the former matrimonial home known as Property D. The husband continues to live at Property D.
There are two children of the marriage. X was born in 2007 and Y was born in 2010. The wife was the primary homemaker/parent during the marriage.
The wife is 55 years of age and a qualified legal practitioner holding a practising certificate issued by the Law Society of New South Wales. The wife completed an MBA during the marriage. The wife recently obtained full time employment[2] in a management role (commencing on 10 May 2021) with a remuneration package (including superannuation) of $182,000. The role is subject to a six month probation period.
[2] A joint letter was received by the Court after the trial to this effect and will remain with the Court papers.
The husband is 63 years of age and self-employed as a farmer. Prior to separation he had his own engineering business, Business G. The husband sold the business in 2018 and is subject to a restraint of trade until 2023. The husband hopes to make his farming enterprise profitable. The husband has three adult sons from a previous marriage aged 38 years, 36 years and 33 years respectively.
Four years prior to the commencement of cohabitation, the husband’s father acquired Property D and told the husband to treat it as his own. The husband did so from that date and throughout the marriage. He ran livestock on the property, maintained it, and in the period 2007-2008 he and the wife built a home on it, in which they lived until the wife left in 2019. An adjoining property known as Property P was also acquired by the husband’s father in 2000 and likewise this property was treated as though it were the husband’s from the time of acquisition. The husband’s father continued to pay the rates and insurances on Property D and Property P and did not charge the husband and wife any rent for living on Property D after they completed construction of their home in early 2008 nor any agistment fees for the livestock they ran on the properties.
At the commencement of cohabitation the husband owned Business G which he had commenced in 1980 and he also owned a number of properties.
At the commencement of cohabitation, the wife the wife was working full time for KK Ltd on a remuneration package of $120,000 plus superannuation and bonus. The wife also owned a number of properties. In 2004 the wife received a termination payment from KK Ltd of $82,104.
In August 2007 the wife received a termination payment and annual leave payout from LL Company of $67,578.
In about 2009 the husband’s parents provided a gift of $100,000 to the husband.
In 2009 the parties established a self-managed superannuation fund, the Stinson Goldsmith Superannuation Fund. The husband’s superannuation of $176,125 and the wife’s superannuation of $82,914 were rolled into the Fund. The Fund purchased a half share in the land and workshop of the husband’s Business G for $270,000 of which $192,484 was paid into the wife’s DD Bank Equity Loan account which reduced the balance owing from $272,905 to $80,420 and the balance was paid into the husband’s loan accounts. Thereafter, the husband’s business paid rent of about $15,600 per annum to the Fund and made employee contributions on behalf of the husband.
The husband continued to operate his Business G throughout the marriage. He also spent a lot of his time, energy and money working on the farming properties.
In 2010 the husband and wife established the Stinson and Goldsmith Partnership (“the partnership”), through which they conducted their farming operations. At the commencement of the partnership the husband transferred livestock and plant and equipment to the partnership.
In 2010 the partnership purchased industrial sheds at Town A known as The Sheds for about $570,000 and made improvements. When The Sheds were rented, the rent was paid to the wife. The Sheds were sold in 2017 and the net sale proceeds were about $665,000.
In 2012 the parties via the partnership purchased the property known as Property E for about $450,000. The parties obtained a joint loan for about $225,000. The property was improved after purchase, utilising the husband’s business for material and labour.
In 2014 the wife received an inheritance of about $112,465.
On 2 March 2018 the husband sold his business Business G and the property on which it was conducted. He received net sale proceeds of $100,702 for the business and $500,000 for the property in Town A.
The husband’s father died in late 2018 and the husband inherited Property D, Property P and a third property known as Property Q. The husband also received cash payments of $85,796.
The children live in a shared care arrangement spending 5 nights per fortnight and half holidays with their father and the balance with their mother.
APPLICABLE LEGAL PRINCIPLES – PROPERTY
In property settlement proceedings, the Court may make such order as it considers appropriate altering the interests of the parties to the marriage in the property, including an order for a settlement of property in substitution for any interest in the property for the benefit of the parties, and an order requiring either or both of the parties to the marriage to make, for the benefit of either or both of the parties, such settlement or transfer of property as the court determines (s 79(1) of the Family Law Act 1975 (Cth) (“the Act”)).
The Court must not make an order unless it is satisfied that, in all of the circumstances, it is just and equitable to make the order (s 79(2) of the Act).
In considering what order (if any) should be made in property settlement proceedings, the Court is required to take into account the following (s 79(4)):
(a)The financial contribution made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;
(b)The contribution (other than financial) made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;
(c)The contribution made by a party to the welfare of the family constituted by the parties and any children, including any contribution made in the capacity of homemaker or parent;
(d)The effect of any proposed order upon the earning capacity of either party;
(e)The matters referred to in s 75(2) of the Act so far as relevant;
(f)Any other order made under the Act affecting a party; and
(g)Any child support under the Child Support (Assessment) Act 1989 (Cth) that a party has provided, is to provide, or might be liable to provide for a child of the marriage.
The High Court of Australia in Stanford v Stanford[3] identified certain principles applicable to applications for property settlement. In particular, when considering whether it is just and equitable to make an order, it is firstly necessary to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.[4] Secondly, the discretion as to whether or not to make a property settlement order, although extraordinarily wide, must nevertheless be exercised in a principled way.[5] Thirdly, there is no presumption that the parties’ rights to or interests in property are or should be different from those that currently exist.[6] The consideration of whether it is just and equitable to make an order should not be considered by reference only to the matters in s 79(4). It is necessary to give separate consideration to s 79(2) and (4) and not to ‘conflate’ the two subsections.[7]
[3] (2012) 247 CLR 108 (“Stanford”).
[4] Ibid at 120, [37].
[5] Ibid at 120–121, [38].
[6] Ibid at 121, [40].
[7] Ibid.
Is it just and equitable to make an order?
Neither the husband nor the wife contend that it is not just and equitable to make an order. That position is understandable given that the husband and wife separated a number of years ago and “there is not and will not thereafter be the common use of property” by the parties.[8] Additionally “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 relationship”.[9] In such cases, the “just and equitable requirement is readily satisfied”[10] and I am satisfied in this case that it is just and equitable to make an order.
[8] Ibid at 122, [42].
[9] Stanford (n 3) at 122, [42].
[10] Ibid.
Balance Sheet
The legal and equitable interests of the parties in property are agreed (save for one item) and set out in the following balance sheet:
Ownership
Property/Liability
Value
Joint Property E $700,000 Livestock $163,961 Plant and equipment $77,000 EE Bank loan ($172,943) Net joint property $768,018.00 Husband Property B, Town A $160,000 Property C, Town A $290,000 Property D ($300,000 of the value held on constructive trust for the wife)[11] $1,050,000 Property P $700,000 Property Q $190,000 Motor vehicle 1 $50,000 Livestock purchased since first Final Hearing in Husband’s personal name. $29,312 ANZ Access Advantage account number …09 $3,651 Business G ANZ Business Advantage account $1,704 Monies owing from bad debtor of Business G $14,848 591 H Shares $706 Paid legal fees $527,476 ANZ Equity Manager Loan a/c no. …31 ($108,867) ANZ Residential Investment Loan a/c no. …56 ($52,944)
Net assets in husband’s name $2,855,886.00 Wife Property J $875,000 Motor vehicle 3 $2,500 Paid legal fees $858,232 ANZ Access Advantage Cheque a/c no. …53 60,554.85 ANZ Business Advantage a/c no. …58 $3,349.78 ANZ Business Advantage a/c no. …28 $199.83 134,744 M Shares $3,503 13,000 N Shares $130 Super Fund 1 $265,017 DD Bank Package Equity a/c no. …12 ($284,587) DD Bank Mortgage Loan a/c no. …39 ($109,987) Wife’s loan from her mother to pay legal fees ($30,000) HECS Debt ($13,053) Net assets in wife’s name $1,630,859.46 Total property (net) 5,254,763.46 [11] Exhibit 1 sets out the concession made by the husband to this effect.
The only dispute about the balance sheet relates to the balance of the sum received by the wife by way of partial property settlement in the sum of $116,583.15 which the wife contends has been used for general living expenses during the period May 2019 to November 2020 and the husband contends should be notionally added back. If this sum is added back then the total pool of assets increases to $5,371,346.61.
SHOULD THE PARTIAL PROPERTY PAYMENTS RECEIVED BY THE WIFE BE INCLUDED IN THEIR ENTIRETY OR ONLY THE LEGAL FEES PAID THEREFROM AND THE BALANCE IN THE WIFE’S BANK ACCOUNT?
The total sum received by the wife since separation and characterised at the time of payment as partial property settlement is $1,035,370, and of that sum it is agreed that all bar $116,583 should be notionally added back as legal fees paid by the wife ($858,232) and the sum remaining in her bank account from that source ($60,554).
The wife resists the notional add back of $116,583 contending that she has utilised the funds for general living expenses particularised in her evidence in chief and including rent of $27,693, mortgage repayments of $43,691, school fees of $7,734, health insurance and health care costs of $14,068, groceries and household goods of $29,949. The total for these items alone ($123,135) exceeds the disputed add back item.
The wife also points to the additional funds which the husband has had use of which she is prepared to accept have been used by the husband in general living expenses e.g. $191,317 in livestock sales, $112,000 in raw materials sales, the sale of a loader for $36,363 and inherited cash of about $85,000. It is not in dispute that some of the funds received by the husband, as outlined, were used for his legal fees and have been notionally added back in the balance sheet. The husband also used some of the funds for maintaining the farms and in paying partnership expenses, but as he has provided a breakdown of the figures, I am prepared to accept that some of the funds were used for general living expenses.
The husband submits that the $116,583 should be the subject of a notional add back in the balance sheet because of the uncertainty surrounding the actual expenditure; where it became apparent during cross-examination that it was the wife’s solicitor rather than the wife who had created the table of expenditure in her affidavit; and the wife was unable to explain particular cash withdrawals during the relevant period. Further, it is argued that the wife “conveniently omitted to deduct the income received in this period which included Family Benefits of $12,000, some minor employment and COVID payments of $10,000”.
Finally, the husband submits that it is significant that there was “no application for spousal maintenance or child support in this case and the wife’s insistence that the monies ordered by way of final property settlement be paid, notwithstanding her appeal, puts it in a slightly different category to interim partial property orders which are more easily reconsidered.”
Including funds in the ‘balance sheet’ that have been expended by the time of trial, commonly referred to as ‘add backs’, is generally the exception rather than the rule.[12] Part of the rationale for that approach is the observation that parties do not “go into a state of suspended economic animation” after separation.[13] “Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.”[14] As the Full Court of the Family Court of Australia (“the Full Court”) observed in Trevi & Trevi:[15]
Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
(Footnote omitted)
[12] C & C[1998] FamCA 143 at [46].
[13] M & M [1998] FamCA 42 at [2.11].
[14] Trevi & Trevi [2018] FamCAFC 173 at [29].
[15] Ibid at [30].
In this case, the wife has provided a detailed account of various sums expended by her in the relevant period from the sums received and characterised as partial property settlement. Despite the challenges to her account I am persuaded by her evidence that the sums identified were spent as claimed.
It is not in doubt that the characterisation of sums received by way of partial property settlement can be reconsidered at final hearing.[16]
[16] Chong & Chong [2016] FamCAFC 211 at [42]–[43]; Gabel & Yardley [2008] FamCAFC 162 at [51].
It seems to me the expenditure by the wife of the $116,583 falls fairly and squarely within the description of general living expenses. Accordingly, I am not persuaded that there is an exceptional reason for notionally adding back the sum of $116,583 nor for taking it into account under s 75(2)(o) of the Act, particularly having regard to the fact that the husband has also had the use of funds after separation for general living expenses that are not otherwise brought into account in the balance sheet.
HAVING REGARD TO THE USE MADE, AND CURRENT VALUE, OF EACH PARTY’S INITIAL CONTRIBUTIONS (IF STILL IN EXISTENCE), SHOULD GREATER WEIGHT BE GIVEN TO ONE PARTY’S INITIAL CONTRIBUTIONS OVER THE OTHER?
While the term ‘initial contributions’ is a common descriptor used to identify a particular contribution, the Full Court has emphasised in numerous cases that trial judges should avoid placing too much weight on any particular contribution at the expense of the “myriad” of contributions made by parties over many years of a marriage.[17] While the issue has been formulated in the terms set out above, I am conscious that placing a percentage or ‘value’ on any particular contribution is not an approach required by the Act nor approved of by the Full Court.[18]
[17] Wallis & Manning (2017) FLC 93-759 at 77,031, [19] - [20], [23] (‘Wallis’); Williams & Williams [2007] FamCA 313 at [26], [32]; In the Marriage of Aleksovski (1996) FLC 92-705 at 83,437, 83,443; Dickons & Dickons (2012) 50 FamLR 244 at 249, [18] – [26] (‘Dickons’); and Jabour & Jabour (2019) FLC 93-898 at 78,940, [73] (‘Jabour’).
[18] Dickons (n 17) at 249, [26].
The Court is, of course, required to identify, weigh and assess all contributions made by each party throughout the relationship and subsequent thereto.[19]
[19] Ibid at 249, [20]; Wallis (n 17) at 77,031, [20]; Jabour (n 17) at 78,937-78,939, [60] – [64].
Each party contends that the weight to be afforded to their respective initial contributions exceed that of the other. Certainly, it does not do justice to either party’s initial contribution to look simply at initial value, even where that is available. It is important to consider what use was made of each party’s initial contributions, whether or not that property still exists.
As earlier noted, at the commencement of cohabitation the husband was working in his own business, Business G, which he had established in 1980, and owned the following property:
(a)Property B, Town A subject to a mortgage securing an unknown sum. This property was purchased in 1996 for $52,500 and is currently valued at $160,000;
(b)Property C, Town A subject to a mortgage securing an unknown sum. This property was purchased in 1998 for $90,000 and is currently valued at $290,000 with a mortgage secured on this property and the Property B property with a balance outstanding of $164,009;
(c)Property R, Town A which the husband purchased in 2003 for $149,950 with borrowed funds of $145,000 and sold in about 2007 for $248,000 (with the husband receiving net sale proceeds of $221,558). At the time of sale the husband had a debt of $294,000 which he contends may have related to all three properties owned by him at the date of cohabitation;
(d)Business G including plant and equipment and the land on which the business was conducted at Town A which was unencumbered. The business was sold in March 2018 for $100,702 (net) and the land for about $500,000;
(e)Plant and equipment still retained by the husband is currently valued at $77,000;
(f)H Shares currently valued at $1,025;
(g)60 head of livestock (the wife estimates the husband had 20 head of livestock) which the husband continued to buy and sell until the commencement of the partnership with the wife in 2010 when the value of livestock then owned (110) was $42,500;
(h)Superannuation which was valued at $176,125 when it was rolled into a self-managed superannuation fund in 2009.
In 2000 the husband’s father purchased the farming properties known as Property D and Property P and told the husband he should treat the properties as his own. The husband did so. He ran livestock on the properties and cleared, maintained and improved the properties over many years. He was not charged any agistment costs or rent but in turn he maintained and improved the properties.
As already noted, at the commencement of cohabitation the wife was working at KK Ltd on a remuneration package of $120,000 plus superannuation and she owned the following property:
(a)Property T purchased in 1999/2000 for $254,000 to which substantial renovation was undertaken before being sold on 18 December 2010 for $830,000. The net proceeds were $519,219. The debt owing on the property as at January 2004 was $113,251;
(b)Property J purchased in 1994 for $185,000 and currently valued at $875,000. The debt owing on the property as at January 2004 was $206,345;
(c)Superannuation valued as at 4 February 2004 at $38,130;
(d)A car and frequent flyer points.
The wife had additional loans as at January 2004 of $169,069 and $14,249.
In about February 2004, shortly after the commencement of cohabitation the wife received a termination payment from KK Ltd of $82,104.
In 2007 the parties constructed a home on Property D. The initial building cost was $395,596. The wife contributed about $170,000 to the construction and additionally contributed about $30,000 towards the kitchen, bathroom, cabinetry, “PC items” and major items of furniture. While the husband did not concede the full extent of the wife’s contribution as claimed by her, the parties were not far apart and I am inclined to accept the wife’s evidence to the extent it differs from the husband on this point. The husband contributed the sale proceeds of his Property R of $221,428. The evidence is not entirely clear as to whether the husband contributed an additional $100,000 received as a gift from his parents, or whether this sum had already been received and used to reduce the loan on Property R, or whether the $100,000 from his parents was received by the husband in 2009. On balance, I am inclined to the view that the $100,000 was not received until 2009 and was not used for the construction of the former matrimonial home which was completed in early 2008. The husband’s business, Business G, did the steelwork for the construction and provided significant materials for the construction. This included the following:
(a)Steelwork, purlins and fasteners;
(b)Erection of steel work;
(c)Supply of reo mesh, bars, plastic, ancillaries;
(d)Supply of roofing sheets and fasteners;
(e)All site excavations;
(f)Supply hot water system;
(g)Supply solar power system;
(h)Stair frame, stringers, handrails; and
(i)Sand and gravel.
The husband’s business also built a shed and installed solar power on the property and installed ten 5,000 gallon water tanks and built dams and a cool room. The husband and wife lived in a shipping container until the home construction was completed in about February 2008. The parties were involved in litigation with the builder which left them about $20,000 out of pocket.
I note that in a letter dated 6 August 2015 by the wife to a solicitor advising both the husband and the wife in relation to succession planning, the wife says that she and the husband “have invested approximately $700,000 in house and infrastructure on the land”. I infer from this that the wife acknowledged that the husband’s indirect contributions had a value.
In 2010 the parties jointly acquired The Sheds for about $570,000 and about $170,000 was spent on improvements. The Sheds were sold in October 2017. The net proceeds were about $665,000. While the partnership accounts record the respective contributions as $497,200 from the wife (from her DD Bank Equity Loan) to fund the purchase and approximately $49,708 towards the development costs (total $546,908) and $101,007 from the husband, the husband had deposited $192,484 into the wife’s DD Bank Equity Loan account on 2 February 2010 from the sale of land and workshop of the husband’s Business G to the self-managed superannuation fund.
In 2012 the husband and wife jointly acquired via the partnership, a farming property known as Property E for $450,000. The wife contributed $253,600 from the sale proceeds of the Property T. The parties jointly borrowed $240,000 to complete the purchase of Property E. I have no doubt that the capital contribution made by the wife saved the parties interest as they did not have to borrow those funds. The husband undertook significant work to the property and through his business, he supplied significant materials and labour at no cost to the partnership. The work undertaken by the husband included the following:
(a)Building and improving access roads between all properties and in particular between the livestock yards on the Property D and Property E. This required building a bridge over the creek situated near the livestock yards at Property E;
(b)Building dams on Property E;
(c)Constructing and replacing fences around boundaries between Property D and Property E together with internal fencing on both properties;
(d)Constructing brand new steel livestock yards; and
(e)Clearing and pasture improvement.
As the Full Court has said on many occasions; assessing respective contributions is not a mathematical exercise.[20] While the direct financial contributions favour the wife, it does not follow that her contributions overall should be assessed as greater than the husband’s. It would not do justice to either party to consider only their direct financial contributions. Each party made direct and indirect contributions, utilising, at times, property brought into the relationship. Importantly, the husband made significant indirect contributions to the acquisition, maintenance and improvement of property including by providing materials and labour. Overall, I do not propose to give greater weight to one party’s so-called initial contribution over the other.
HAVING REGARD TO THE MYRIAD OF CONTRIBUTIONS MADE BY EACH PARTY OVER THE COURSE OF THE MARRIAGE, SHOULD GREATER WEIGHT BE GIVEN TO ONE PARTY’S CONTRIBUTIONS OVER THE OTHER?
[20] See for example: Eufrosin & Eufrosin [2014] FamCAFC 191 at [25].
Contributions made by each party during the marriage have been discussed to some degree already. To the extent that those contributions e.g. the construction of the former matrimonial home on Property D, are relevant when considering this issue, I will not repeat the detail.
Contributions during the marriage reflected an arrangement between the parties that the husband would continue to operate his Business G full time while the wife would reduce her employment and become the primary homemaker and parent. The decision to have children involved the wife undergoing IVF procedures for both children. In the early years the wife’s income exceeded the husband’s. Despite the wife reducing her employment she continued to receive rent from property owned by her at the commencement of cohabitation until sold. The wife continues to own the Property J which is one she owned at the commencement of cohabitation and currently receives rent of $560 per week.
In August 2007 the wife received a termination payment and annual leave payment of $67,578 (net) from LL Company. This was the second such payment received by the wife, the first being in 2004 for $82,104.
The wife’s contributions as homemaker and parent were significant. The husband worked long hours not only in his Business G but also on the farming properties and in the operation of the partnership. To the extent the wife’s homemaker/parent responsibilities permitted, the wife assisted the husband on the farms e.g. driving the husband around when he was moving machinery, assisting with fencing on occasion and on at least two occasions assisting the husband with hazard reduction burning. On any view, the wife’s assistance on the farms could only have been minimal given her other commitments.
The wife provided some limited support and assistance to the husband’s parents from time to time e.g. collecting the papers for them and delivering them and occasionally buying groceries.
The husband’s adult sons, particularly, Mr MM assisted on the farming properties when the parties were away or the husband needed assistance. In turn, Mr MM was able to keep some livestock on the properties free of charge.
The husband and wife had the use of Property D on which they built their home in late 2007 and operated farming activities in partnership from 2010 on this property and on Property P. The husband’s father maintained ownership of the properties and paid the rates and insurances over the 18 years from the time of purchase in 2000 until his death in 2018. The parties did not pay rent for their occupation of Property D which commenced in early 2008, but maintained and improved the properties. In a handwritten statement prepared by the husband in relation to a dispute with his sister in the Queensland Civil and Administrative Tribunal, the husband estimated that he made “many 100’s of thousands of dollars (sic) worth of improvements – pasture, fences, livestock yards, roads etc” to Property D. However, contrary to the submission made by the wife, the husband’s concession therein was not that he had “spent” hundreds of thousands of dollars but, rather, the improvements undertaken were “worth” that. I have no doubt that funds were expended on those improvements, and to the extent they were, they were funds that were not available to the family and therefore represent an indirect contribution by the wife.
Each party received gifts or inheritances from family during the marriage. The husband received a gift of $100,000 and the wife received an inheritance of $112,000. The wife’s parents also contributed about $20,000 to the parties’ wedding.
The husband has had the benefit of continuing to live at Property D since the wife relocated with the children in September 2019. The wife has paid rent. The husband has maintained the farming properties and continued to operate the partnership. He has had the benefit of income derived therefrom. Until April 2019, each party received income from the partnership and subsequent thereto some credit cards for each party were paid from the partnership accounts. Some of the work undertaken by the husband on the properties since September 2019 includes the following:
(a)Grading the roads by using machinery lent to him by his adult sons;
(b)Laying poly pipes from the rental property at Property P to a dam on Property P for water for the livestock and as a backup water supply to the house;
(c)Installing a new dam on Property P;
(d)Arranging for the dams on Property P, Property D and Property E to be cleaned out and offsetting the cost with a debt owing to Business G;
(e)Making the firebreaks wider and clearer;
(f)Replacing about one kilometre of internal fencing in Property P with the unpaid assistance of his son, Mr MM. This task involved splitting about 470 fence posts and cutting all strainers;
(g)Replacing part of Property E’ boundary fence with the unpaid assistance from Mr MM;
(h)Replacing flood fencing and flood gates in Property P with assistance from Mr MM;
(i)Regrowth control including spraying for poison peach and suckers with assistance from Mr MM and using chemicals supplied by Mr MM without charge;
(j)Hazard reduction burning with unpaid assistance from Mr MM.
In summary, the contributions made by each party over their thirteen year relationship, and subsequent thereto, took many forms. They each introduced property (as discussed above). They each undertook employment, although the wife’s employment decreased as her homemaker/parent commitments increased. The wife underwent IVF procedures in order to have children. The wife was the primary homemaker and parent throughout the marriage. Each party made indirect contributions to the properties they owned or acquired e.g. maintaining, improving or managing properties. Each party received rental income from properties owned by them. The husband contributed his time and money into farming properties owned by his father which he treated as his own. The husband made substantial improvements to the farming properties. Had he not done so, the funds utilised would have been available for the family. The wife used her income to pay general living expenses particularly expenses for the children. The husband paid the majority of the partnership and farming expenses and some general living expenses. The husband assisted with homemaking and parenting tasks when his limited availability permitted and he undertook general maintenance and handyman work around the former matrimonial home. Each party worked to the best of their ability in accordance with the arrangements that operated throughout their marriage.
I conclude that the myriad of contributions made by each party during the marriage should be regarded as equal.
HAVING REGARD TO THE MYRIAD OF CONTRIBUTIONS MADE BY EACH PARTY DURING TO THE MARRIAGE AND AFTER SEPARATION, WHAT WEIGHT SHOULD BE GIVEN TO THE HUSBAND’S POST SEPARATION INHERITANCES?
The husband’s father died in late 2018 and the husband inherited Property D, Property P and Property Q. He also received cash of about $85,000 which the husband used to pay legal fees. The current value of the three properties is $1,940,000. Included in that value is the former matrimonial home built by the parties on Property D. The former matrimonial home (including sheds situated on the land) is valued at $600,000 to which both parties contributed and it is agreed the husband holds $300,000 of the value on trust for the wife. The adjusted value of the inherited properties is $1,340,000.
The wife conceded during submissions that she could not maintain an argument that the inheritance was intended for, or received by, both of them.
In Bonnici & Bonnici[21] the Full Court said (from [43]):
43. A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question.
44. The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances. Such circumstances might include the care of the testator prior to death by the husband or wife as the case may be or other particular services to protect a property. See James and James (1978) FLC 90-487. But there was no evidence of this in the present case despite submissions by counsel for the wife to the contrary. Accordingly, we think that in the present case the monies received by the husband from the sale of the freehold and from his uncle's estate should not be brought into account.
[21] (1992) FLC 92-272 (“Bonnici”).
However, the Full Court went on to say:
45. Because his Honour did not condescend to detail as to how he arrived at his finding of equality of contribution, and because of the fact of the substantial inheritance to which the wife did not contribute it is, we think, necessary for this Court to examine carefully whether his Honour's finding can be supported.
46. In a case such as this, we think that the global approach, taken by his Honour, presents considerable difficulties. If the matter had been approached upon an asset by asset basis, we think that the task of his Honour and this Court would have been a simpler one. To approach the matter globally as his Honour did, in circumstances where the wife had clearly made no contribution to a major asset, must of necessity have involved a greater weighting of her contribution than that of equality to the assets to which she did contribute. There would, nevertheless, have been nothing wrong with his Honour having approached the matter globally if he had explained how he did so.
47. If his Honour did so weight her contributions, he should have outlined his reasoning so that the same could be the subject of examination. Because his Honour failed to do this it seems to us that his judgment cannot stand unless it can be established that the end result which he reached was a proper one.
In my view, the inheritance cannot be viewed as a contribution made solely on behalf of the husband. To do so would be to ignore the myriad of contributions made by the wife during the marriage in circumstances where the husband expected the inheritance and worked the farming properties (particularly Property D and Property P) with that expectation in mind. The husband spent years improving the properties and farming them. Before inheriting the farms the husband’s father paid the rates and insurance on the property and the parties did not pay rent for living on the property or agistment fees for their livestock. Funds that were contributed by the husband in maintaining and improving the farming properties were funds that would otherwise have been available to the family. The wife bore a greater financial responsibly for the children’s expenses from her own sources while the husband’s money was contributed to the farms and the partnership. The time and energy spent by the husband on the farms must be balanced against the time and energy spent by the wife in caring for the children and the household in the husband’s absence. There does not need to be a nexus between the homemaker/parent contribution and property (see s 79(4)(c) of the Act).[22]
[22]See also: Farmer & Bramley (2000) FLC 93-060, 87,948 at [56] (Finn J), [65] (Kay J).
This is not a case where the inheritance should, in effect, be in a separate pool. The connections with the inherited property during the marriage and the wife’s indirect contributions thereto militate against such an approach. Such an approach would run the risk of undervaluing the wife’s contributions. The inheritance is nevertheless a significant contribution made by the husband and overall results in my assessment of contributions favouring the husband in the proportion 57.5% to the wife’s 42.5%.
SHOULD THE WIFE BE ABLE TO RETAIN ONE OR MORE OF THE RURAL BLOCKS AS PART OF THE PROPERTY SETTLEMENT OR SHOULD THEY ALL REMAIN WITH THE HUSBAND?
The husband sold his Business G in 2018 and signed a restraint of trade which does not expire until 2023. He did so without consultation with the wife but argues that he should be given the opportunity to pursue his lifelong dream to pursue his farming interests full time, which he contends can only be viably done if he retains all of the farming properties. I have no reason to doubt that the husband has spent a lifetime preparing for the time when he can pursue farming full time. He commenced farm work as a child and when he returned to Town A in 1980 he worked on his father’s farms whenever needed. He fixed machinery and did repairs at no cost to his father.
The farming operations have not to date been profitable but the husband is optimistic. It is acknowledged by the wife that the husband has a special connection to at least Property Q and agreement has been reached that the husband retain that property.
If the wife retains any of the farming properties she does not propose to farm the properties herself but rather would contract most of the work out to third parties. If Property D is transferred to her she would live in the former matrimonial home with the children. The wife is confident she could produce an income for herself from the farming properties but to do so the husband and wife would have to be neighbours. There are complications with access to Property E and Property D which have historically maintained access through ‘gentleman’s agreements’. The parties agree that if they are to be neighbours, something more formal would be required to guarantee access. The cost and time frame for completion of a formal carriageway is unknown.
The wife has only recently been successful in obtaining employment and is subject to a six month probation period. The wife is constrained in her employment opportunities by having to remain in the Town A area to enable the children to live in a shared care arrangement and continue to attend the school they enjoy. Hence, the wife’s wish to retain at least one of the farming properties from which she hopes to earn an income. Now that the wife has secured employment there is some reduced pressure for her retaining farming properties to produce an income, although I am nevertheless conscious that there may be some uncertainty about her employment long term.
The parties have no relationship. Their communication is limited to texts about the children and while their communications are civil, I consider it preferable for them not to be neighbours if at all possible. Whether or not it is possible will depend on the husband’s ability to raise sufficient funds to pay out the wife.
If the husband can buy out the wife that would better achieve the aims of the legislation to finalise parties’ financial relationship and avoid the prospect of further litigation or dispute.
DO THE RELEVANT S 75(2) FACTORS FAVOUR ONE PARTY OVER THE OTHER?
The husband is 63 years of age and the wife 55 years of age. Both enjoy good health.
The wife has recently obtained employment with a salary package of $182,000 although she is subject to a six month probation period. Prior to obtaining employment, the wife had made considerable effort to obtain work as a lawyer, to little effect. Although, I note that the wife had approached only one local legal firm and that was two years ago. In order to maintain the children’s shared care arrangement with their father and continue at the school they enjoy, the wife is unable to relocate to a place where her employment prospects may be better.
The husband sold his Business G after separation and is restrained from working as an engineer in the area until 2023. It was an outcome of his own making. The husband is optimistic that his farming operations will become profitable if he retains all the farming properties.
Given her age, the wife is likely to have a longer working life than the husband.
The wife is likely to bear a greater burden for the financial needs of the children although the children live in a shared care arrangement where they spend five nights per fortnight and half school holidays with the husband and the balance of time with the wife. No child support is paid by either party.
The husband contends that should he be required to sell Property C and Property B to pay out the wife he will incur capital gains tax. He provides no evidence of what the tax liability may be.
Given my assessment of contributions the husband will retain a greater proportion of the assets than the wife.
Overall I conclude that the s 75(2) factors do not favour either party.
WHAT PROPERTY ORDER IS JUST AND EQUITABLE?
A distribution of the property of the parties or either of them in the proportion 57.5% to the husband and 42.5% to the wife, will result in the husband retaining net assets of $3,021,489 and the wife retaining net assets of $2,233,275. The husband will retain the joint property and the property in his name and the wife will retain the property in her name and receive a cash payment. In my view, such a distribution gives proper weight to the myriad of contributions made by each party and effects a just and equitable outcome.
If the husband retains the joint property and the property in his name, he has net assets of $3,623,904 so a cash adjustment will need to be made to the wife of $602,415. The husband will have 60 days to raise the funds, failing which Property D is to be transferred to the wife unencumbered and the wife will be required to pay the husband $447,585.
Other than if the wife defaults in her payment to the husband (and that will only arise if the husband defaults on his payment to the wife), I do not intend to provide for the wife to retain any of the farming properties. It is common ground that the farming properties were always intended to one day be the husband’s property and that he largely conducted the farming enterprises throughout the marriage and subsequent to separation. His long time aim has been to devote his full time attention to farming.
I am not at all attracted to the prospect of the parties becoming neighbours given the tensions between them and limited capacity to communicate. They also have young children and being exposed to unnecessary tension should be avoided if at all possible. Therefore the husband will have the opportunity to retain all the farming properties and pay out the wife. There seems to be some prospect of him being able to borrow sufficient funds to do so.
If the husband does not pay out the wife in the time required, Property D will be transferred to the wife unencumbered. This was the farming property the husband most favoured transferring to the wife if he had to, but it will require the wife to pay the husband a sum of money. If she is unable to raise the funds, the husband will need to sell a property to pay out the wife and interest will accrue from the time the wife defaults (i.e. 120 days from the date of order) until the ultimate payment. If both parties have defaulted, the husband can elect which property to sell. I do not intend to make provision for any deductions or additions to the balance sheet to reflect the actual sale price of any particular property or sale costs. The benefit or detriment, if there is one, will lie where it falls. I place greater weight on a simple finalisation which hopefully will minimise any further costs to the parties and avoid the prospect of dispute about sale prices, time frames, agents etc.
I consider the order I propose to make to be appropriate and proper in the circumstances. It achieves a just and equitable outcome.
MISCELLANEOUS
The parties superannuation benefits in the Stinson Goldsmith Self-Managed Superannuation Fund were paid out in or about 2019 and arrangements were made to wind up the fund in 2019. The wife allegedly refused to sign documents to wind up the fund because of an issue she raised about a sale of a property at an alleged under value. The allegation was not pursued at trial. The wife did not address the issue of the winding up of the Fund in her proposed orders and made no submissions in relation thereto. The husband continues to seek an order requiring the parties to do all things required to wind up the fund and contends that any penalties and interest due to the Australian Taxation Office as a result of the delay in filing the fund’s taxation returns and activity statements should be borne by the wife. I propose to so order.
I certify that the preceding ninety-five (95) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew. Associate:
Dated: 23 July 2021
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