Tabe and Napier

FEDERAL CIRCUIT COURT OF AUSTRALIA

TABE & NAPIER

[2013] FCCA 1893

Catchwords:
FAMILY LAW – De facto relationship – whether a small pool after short relationship should be divided according to contributions alone – whether it is possible for the court to decide on a settlement that is just and equitable in all the circumstances when there are few facts to be found.

Legislation:
Family Law Act 1975, ss.90SB; 90RD; 90SM; 90SF(3)

Calverley & Green (1984) 155 CLR 242
Stanford & Stanford [2012] HCA 52
Bevan & Bevan [2013] FamCAFC 116

Applicant:

MS TABE

Respondent:

MS NAPIER

File Number:

MLC 9698 of 2012

Judgment of:

Judge Small

Hearing date:

9 September 2013

Date of Last Submission:

9 September 2013

Delivered at:

Melbourne

Delivered on:

21 November 2013

REPRESENTATION

Counsel for the Applicant:

Ms Sweet

Solicitors for the Applicant:

Kennedy Guy

Counsel for the Respondent:

Mr Puckey

Solicitors for the Respondent:

Pearsons

DECLARATIONS

A.The court having found that the requirements of s.90SB(c) and s.90SD of the Family Law Act 1975 have been satisfied, the court declares that a de facto relationship existed between the parties between January 2010 and December 2011.
B.Pursuant to s.90SL of the Family Law Act 1975, the court declares that the property situated at and known as Property G, more properly described in Certificate of Title Volume (omitted) Folio (omitted), is the property of the Respondent.
C.Pursuant to s.90SL of the Family Law Act 1975, the court declares that the sum of $54,530, retained by the Applicant, is the property of the Applicant.

ORDERS

That within 14 days of these Orders the funds held in the Trust Account of Wyndham Partners be disbursed as follows
(a)$13,092 to the Respondent’s solicitor; and
(b)$51,032 to the Applicant’s solicitor.

(1A)In the event that there is either more or less than the sum of $64,164 held for the parties in the Trust Account of Wyndham Partners, then that sum shall be disbursed as to 80 per cent to the Applicant and 20 per cent to the Respondent.
(1B)That the release of funds to the Applicant pursuant to paragraphs 1 or 1A of these Orders shall be subject to and conditional upon the withdrawal of Caveat No. (omitted) registered on Certificate of Title Volume (omitted) Folio (omitted).

That upon the release to her of funds pursuant to paragraphs 1 or 1A hereof, the Applicant shall relinquish any right, title or interest she may have in:
(a)The real property known as and situated at Property G in the State of Victoria more properly described in Certificate of Title Volume (omitted) Folio (omitted);
(b)The Respondent’s business known as (omitted) Pty Ltd.
That the Applicant otherwise retain:
(a)her savings;
(b)her personal possessions;
(c)her motor vehicles; and
(d)her superannuation entitlements.
That upon the release to him of funds pursuant to paragraphs 1 or 1A hereof, the Respondent shall relinquish any right, title or interest he may have in the proceeds of sale from the properties known as and situated at Property Q and Property T.
That the Respondent otherwise retain:
(a)all his right, title and interest in the property known as and situated at Property G;
(b)his interest in the business known as (omitted) Pty Ltd;
(c)his savings;
(d)his personal possessions;
(e)his Toyota (model omitted) motor vehicle;
(f)his motorcycles;
(g)his boat; and
(h)his superannuation entitlements.
That, if within 7 days of any request to do so, either party fails to sign any document or instrument required to give effect to these Orders, then pursuant to s.106A of the Family Law Act 1975, the Registrar of this Court is authorised to sign such documents or instruments on his/her behalf.
All extant Applications are otherwise dismissed.

AND THE COURT NOTES:

A.That pursuant to s.90ST of the Family Law Act 1975, the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.

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

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLC 9698 of 2012

MS TABE

Applicant

And

MS NAPIER

Respondent

REASONS FOR JUDGMENT

Introduction

This is a de facto property settlement Application in which the relationship was a short one, and during which the parties, and more particularly the Applicant, engaged in multiple real property transactions.
Because of the relatively large number of properties bought and sold, for the sake of convenience, I have set them, and the transactions relating to them, out under the headings “(omitted)” to “(omitted)” and will refer to them as such throughout these reasons.
The end result of all those transactions is that there is currently the sum of $64,124.00 in the Trust Account of Wyndham Partners Lawyers (“Wyndham Partners”), who conducted conveyancing work on properties sold by the Applicant after the date of separation.
The dispute between the parties is about how that $64,124.00 should be divided between them.
The Applicant seeks that all the monies held for the parties in the Wyndham Partners Trust Account be released to her and that that should be the result of a “global settlement” process in which each of the parties otherwise keeps the assets he/she currently has.
The Respondent says (through his counsel’s submissions) that the parties’ assets, including the monies held in trust, should be divided between the parties based on one of two methods of complicated calculation of contributions. He agrees that apart from the monies held in trust, each party should retain his or her current assets.
There is considerable dispute between the parties as to where certain monies came from and went, and this case is characterised by less than certain figures and a lack of independent or corroborative evidence which would allow the Court to make findings of fact in relation to particular disputes.
That situation makes it very difficult to determine a just and equitable distribution of property interests between the parties pursuant to s.90SM of the Family Law Act 1975 (“the Act”).
Given that the asserter of a fact has the onus of proving it, where the parties are in dispute as to facts and neither has corroborative evidence to support her/his claim, I can only find that I am not satisfied as to the discharge of that onus and cannot make any finding of fact.
In fact the evidence is so uncertain in this case that I am tempted to decline to make orders at all and require the parties to engage in mediation or negotiation in order to resolve the matter. That would have been the sensible thing for the parties to do in relation to an asset of this size and in the evidentiary circumstances of this case.
However, given the small size of the asset pool and the investment the court has already made in attempting to resolve this case, I will do the best I can to untangle the various transactions and make orders that I consider just and equitable in all the circumstances.
I note that it is almost certain that the parties have expended in legal fees at very least half of the monies to be distributed.

Background

The Applicant is 53 years old and is employed as a (occupation omitted) earning about $70,000 per year.
The Respondent is 50 years old and is self-employed, undertaking (duties omitted) on contract. He earns about $63,000 per year.
The parties commenced living together in January 2010 and separated finally in January 2012. There are no children of the relationship although both parties have children from previous relationships.

Court Proceedings

These proceedings were begun by the Application filed 23 October 2012.
At that time, Wyndham Partners held $23,824 on trust for the parties from the sale of Property H.
Property T had not yet been sold, and the Applicant still owned that property. It was not until the sale of Property T in early 2013 that the additional sum of $40,300 was deposited with Wyndham Partners, making the total sum held on trust $64,124.
In her Application the Applicant sought orders in the following terms:
1.   That the funds held in the trust account of Wyndham Partners Solicitors be forthwith paid to the Applicant.
2.   That the Applicant and Respondent retain all other assets in their respective ownership and possession as at the current date with no further adjustment being made in relation to those assets.
3.   That the Applicant and Respondent be responsible for solely liable for all debts in their respective names as at the current date.
4.   That each of the Applicant and Respondent forego any claims they may have to the superannuation benefits belonging to or earned by the other.
5.   That the Respondent pay the Applicants (sic) costs of and incidental to these proceedings.
She sought no interim orders.
In his Response filed 29 November 2012, the Respondent sought the following Final Orders:
1. That the Respondent be excused from particularising the financial Orders he seeks until such time as the Applicant provides full and frank disclosure.
2. Such further or other Order as this honourable Court may deem appropriate.
He sought an interim order in the following terms:
1. That within 28 days the Applicant shall provide to the Respondent’s Solicitor all documents requested in full and frank disclosure (sic).
The matter came before the Court on 3 December 2012, when it was set down for a Conciliation Conference on 27 March 2013, and for Final Hearing on 5 June 2013.
The matter did not settle at the Conciliation Conference, and was not reached on 5 June 2013. It was set down again for Final Hearing on 19 July 2013.
It was again not reached on 19 July and was set down before me on 6 September 2013.
On that date, the parties’ counsel advised me that because there was very little if any evidence upon which I would be able to make findings of fact, they did not intend to call any viva voce evidence and both counsel sought the leave of the Court to proceed by way of submissions only. That leave was granted and the Final Hearing was conducted on that basis.

Was there a de facto relationship between the parties?

While the parties agree that they began living together in January 2010, there is some discrepancy between them as to the actual date of separation. The Applicant says it was January 2012 and the Respondent says the parties separated under the same roof in December 2011, with him leaving the parties’ home in January 2012.
If the Respondent is correct, and the relationship broke down in December 2011, the parties did not live together on a genuine domestic basis for a period of two years, that being one of the requirements for parties to seek a property settlement under Part VIIIAB of the Act pursuant to s.90SB(a).
Nevertheless, it is common ground between them that whether or not the relationship lasted two full years, this matter falls within the jurisdiction of this Court because of the significant financial contributions said to have been made by the Applicant to the assets of the relationship pursuant to s.90SB(c) of the Act, and therefore the relationship satisfies the definition of a de facto relationship found in s.4AA(1) of the Act.
On the little evidence before me as set out in these reasons, I concur with that view.
Section 90RD of the Act states as follows:
SECTION 90RD    DECLARATIONS ABOUT EXISTENCE OF DE FACTO RELATIONSHIPS
90RD(1)    If:
(a)An application is made for an order under section 90SE, 90SG or 90SM, or a declaration under s90SL; and
(b)A claim is made, in support of the application, that a de facto relationship existed between the applicant and another person;
The court may, for the purposes of those proceedings (the primary proceedings), declare that a de facto relationship existed, or never existed, between those two persons.
90RD(2)    A declaration under subsection (1) of the existence of a de facto relationship may also declare any or all of the following:
(a)The period or periods, of the de facto relationship for eth purposes of paragraph 90SB(a);
(b)Whether there is a child of the de facto relationship;
(c)Whether one of the parties to the de facto relationship made substantial contributions of a kind mentioned in paragraph 90SM(4)(a), (b) or (c);
(d)When the de facto relationship ended;
(e)Where each of the parties to the de facto relationship was ordinarily resident during the de facto relationship.
On the evidence before the Court, I am satisfied that the parties to these proceedings were in a de facto relationship between January 2010 and at least December 2011 having regard to the matters set out in s.90SB(c) of the Act.
Therefore, pursuant to s.90RD(2)(c) of the Act, I will make a declaration that a de facto relationship existed between the parties between at least January 2010 and December 2011, thus seizing this Court of jurisdiction in this matter.

The property transactions

Mortgage contributions

When considering contributions to the various properties the parties owned at various times during and after the relationship, and where the only agreed evidence before me is that the mortgage payments for Properties G and H were made from a joint account to which both parties contributed significant sums, I have calculated mortgage payments to those properties, and to the Property K mortgage for the year or so that it was registered in joint names, as having been equal.
I note that the Applicant claims that her contributions to the mortgages were greater than those of the Respondent, but she provides no real evidence as to that assertion and I am left with what the authorities say about such matters.
In Calverly & Green (1984) 155 CLR 242, the High Court made it clear that where a mortgage is registered in joint names, and the parties are jointly and severally liable for the attached loan, Upon a proper analysis one half of the moneys which were jointly borrowed and applied towards the purchase price were provided by Ms Green (per Deane J at para.6). That was in a situation where the mortgage was registered in joint names and the de facto wife had paid none of the mortgage repayments. It follows that the same principle applies when one party can be shown to have paid some, but less of the mortgage loan than the other.
In this case, I therefore find that the contributions of the parties to the periodic mortgage repayments in relation to joint mortgages over Properties G and H, and to the Property K mortgage between January 2011 and January 2012, were equal.
I say “the periodic mortgage repayments” because that principle is subject to some qualification in relation to the whole of the mortgage repayments for Property H. This is discussed later in these reasons.
Property K
At the date of commencement of cohabitation, the Respondent moved into the property at Property K (“Property K”) which was owned by the Applicant subject to a mortgage. There is no cogent evidence before the Court as to the value of Property K at that time, nor of the amount owed pursuant to the mortgage held against it, although the mortgage loan at the time of discharge some ten months later appears to have been about $285,000.
It is the Applicant’s case that the Respondent did not pay rent in the 10 months the parties lived at that property, nor did he pay any other expenses in relation to it. The Respondent disputes that, saying that he contributed to household expenses such as groceries, entertainment and petrol. He does not say, however, that he contributed to the Property K mortgage or to the maintenance of the property.
In September 2010, some nine months into the relationship, the Applicant sold Property K with the net proceeds of sale being $152,800.
Property G
At the time of cohabitation, the Respondent owned the property at Property G, and while exact retrospective valuations have not been obtained, it is agreed between the parties that the Respondent had equity of about $100,000 in that property in January 2010. He appears to have had a mortgage of some $250,000 at that time, which would mean that the property is likely to have been worth about $350,000.
The property has been recently valued at $370,000 and the parties therefore think it was probably worth somewhere between $350,000 and $370,000 at the date of cohabitation. I intend to take the value of the property at cohabitation at $350,000.
When the parties began to live together in Property K, the Respondent’s adult daughter moved into Property G. The Applicant says she paid no rent for the five or six months that she occupied that property. The Respondent makes no comment as to that issue.
After the Respondent’s daughter vacated Property G, the Applicant’s adult son moved in. The Applicant says that he paid her the sum of $200 per week in rent, which was applied to the parties’ living expenses. The Applicant’s son did not vacate Property G until about March or April 2012, some months after separation.
The Respondent says he is unaware of any such payments and that if they were made, the Applicant retained the monies for her own purposes.
There is no independent evidence of any kind, whether on Affidavit from the Applicant’s son or the Respondent’s daughter or in the form of documentary evidence, to support either argument.
In any event, it is not the contention of either party that any rent monies were applied to the Property G mortgage.
While the issue of whether the parties’ children paid rent for the Property G while they lived there is not a matter of great moment in these proceedings, it is typical of many issues in this case where the parties are in dispute, but there is no independent evidence to support either’s contention.
At an uncertain date after the purchase of Property H, but by inference from other evidence provided by the Applicant, in or about January 2011, the parties refinanced the home loan on Property G in the sum of $253,000 and that property was transferred into their joint names, with both being registered as mortgagors. There is no documentation about that (or indeed any other) property transfer in the evidence before the court.
Given that the Respondent had about $100,000 worth of equity in Property G at the date of cohabitation, and that Property G was valued at somewhere between $350,000 and $370,000, it is inferred that the $253,000 loan, or almost all of it, was applied to the discharge of the previous mortgage, although again there is no documentary or indeed Affidavit evidence to say so.
Property G was transferred back into the Respondent’s sole name and the mortgage refinanced by him soon after separation, the Applicant says in return for the $10,800 the Respondent paid her at that time. I will return to that payment later in these reasons.
The Applicant says that until Property G was refinanced during the relationship, the Respondent made all mortgage payments on that property, but made no financial contributions to the Property H mortgage in the first nine months of the relationship.
After the refinancing, she says, and the Respondent does not deny, that between January and July 2011 he paid $4,000 per month into the parties’ joint account for payments to the property G and Property H mortgages and the living expenses of the parties. From July to November 2011, she says he paid $2,000 per month, that sum being applied towards the Property G mortgage and living expenses of the parties.
The Applicant agrees that he paid from $2,000 to $4,000 per month into the joint account between January and November 2011. He says that those contributions, or part of them, cannot be apportioned only to the Property G mortgage as both mortgages were paid from that account.

On the principles set out in Calverly and Green above, I agree with the Respondent on that issue, and consider the mortgages on Properties G and H to have been paid equally by the parties for the approximate twelve months that Property G was registered in joint names.
Property G has increased in value by about $20,000 since the parties began living together. For one year of that time, the Applicant contributed to the mortgage through the joint account, and therefore, in my view, deserves to benefit from the appreciation in value. She contributed for approximately half the relationship, and the appreciation is $20,000. Therefore I find that she is entitled one quarter of the appreciation that occurred over the period of cohabitation, or $5,000. That amounts to about 18.5 per cent of the current equity in Property G.
The Respondent retains Property G and it is agreed between the parties that it will remain in his possession after final property settlement.
Property H
At about the same time as the sale of Property K, that is, in about September 2010, the parties purchased the property at Property H for a total purchase price of $381,704. The property was registered in joint names, as was the mortgage.
The purchase price was met by a bank loan of $240,000, a cash contribution by the Applicant of $122,000 from the sale of Property K, and a cash contribution of $20,000 from the Respondent’s savings.
There is a dispute between the parties as to whether the Respondent accrued those savings in the first nine or ten months of the relationship or whether he had them at the date of cohabitation. The Applicant says the former is true, the Respondent the latter, but there is no independent evidence to support either view. I will therefore count them as a contribution from the Respondent.
In her Affidavit sworn 19 October 2012, the Applicant deposes, at paragraph 9, that she also contributed the sum of $30,000 from the Property K sale to renovations undertaken at Property H.
She further contends, in her Outline of Case Document filed 2 September 2013, that she applied the sum of $28,000 to improvements to Property H from the sale of her property at Property P which she owned prior to the relationship and which was sold only two months after the parties began living together. There are no documents produced to show either of these payments.
The Respondent says that the renovations were funded from the parties’ joint account, to which he too contributed. He also disputes the amount the Applicant says she contributed, but he cannot put any figure of his own in relation to either party’s actual contribution to the renovations and/or improvements.
In December 2011, upon purchasing the property at Property Q, the Applicant says she made a lump sum payment to the mortgage on Property H in the sum of $40,834.48. This is evidenced by bank statements showing a credit in that sum to the parties’ joint (omitted) Bank Account on 22 December 2011.
There is some question about the source of that lump sum, but on the parties’ “best guess” (and that is the phrase used by counsel in submissions), it appears that about $26,000 came from extra mortgage funds the Applicant borrowed against Property Q, with the remainder being sourced from funds remaining from the sale proceeds of Property K, and the downgrading of her Mazda (model omitted) motor vehicle to a Mazda (model omitted), which netted her $9,000. The purchase price of the Mazda (model omitted) had been met from the sale proceeds of Property P.
It was said in submissions that the amount of $40,834.48 probably also included the $10,800 the Respondent paid the Applicant around the time of separation, but again, there is no corroborating evidence for any of that and it is essentially inferred from the amounts the Applicant had available to her at the time. What is not in dispute is that the mortgage loan on Property H had been reduced by a lump sum payment of $40,834.48 when the mortgage was discharged upon the sale of the property.
In any event, the Applicant says she contributed a total of $192,834.48 in lump sums to the purchase of and improvements to Property H overall, as well as contributing to the mortgage.
The husband says he contributed $20,000 in a lump sum at the time of purchase, and that he also made contributions to the mortgage loan up to November 2011.
Property H was sold after separation, in June 2012, with net proceeds of $164,330. At that time, the mortgage of $194,670 was discharged, which means it had been reduced by the sum of $45,330 during the time Property H was owned by the parties.
As there is corroborative evidence in the form of bank statements to suggest that the Applicant contributed $40,835 of her own money to the mortgage loan in the form of the lump sum paid into the joint account on 22 December 2011, I find, on the balance of probabilities, that she did so.
Therefore I consider the joint contributions to the Property H mortgage to have been $45,330 minus $40,835, or $4,495, to which each party contributed half.
The amount of $23,824 from the Property H sale proceeds makes up part of the monies held in trust by Wyndham Partners. The remainder of about $141,000 was applied by the Applicant to the purchase of Property T.
Given that Property H was a jointly owned property with a joint mortgage, it was difficult to see how the amount of $141,000 from its sale proceeds could have been applied directly to the purchase of a property in the name of the Applicant alone without the explicit consent of the Respondent.
However, further perusal of the filed material revealed that the Applicant’s Outline of Case Document filed on 2 September 2013 states that Property H was transferred to her at the time of separation and that she refinanced the mortgage in her own name at that time. Nowhere is that information to be found in her sworn Affidavit material, but that is just another of the questions raised by the presentation of evidence (or lack thereof) in this case.
So, the financial contributions to Property H that can be said to be in any way certain can be stated as follows:
· Applicant: $122,000 deposit from the sale proceeds of Property K
$40,835 in a lump sum deposited to the mortgage on 22 December 2011
$2,475 as half of the total mortgage payments of $4,495
= $165,310. That amounts to 88% of the total amount the parties can be shown to have expended in capital on the property.
· Respondent: $20,000 deposit from savings
half of the total mortgage payments of $4,495 (ie $2,475)
= $22,476. That amounts to 12% of the total amount.
I have not considered the contributions alleged to have been made by each party to the renovations/improvements as there is simply not enough evidence before me to apportion them between the parties.
So, the sale proceeds from Property H will be apportioned 88% to the Applicant and 12% to the Respondent.
The sum held by Wyndham Partners from those sale proceeds is $23,824. Therefore, a provisional distribution of that sum between the parties of 88% to the Applicant and 12% to the Respondent would result in the Applicant receiving $20,965 and the Respondent $2,859.
Property Q
The Applicant purchased the property at Property Q in December 2011, a month before separation finally took place.
The Respondent says he knew nothing about this purchase and was not consulted about it.
The purchase price of Property Q was $285,000 and the Applicant says she purchased it as accommodation for her adult son, who has some health and disability issues. Her son moved into Property Q after he vacated Property G in March or April 2012.
The Applicant says she borrowed $311,000 at that time, and that the extra $26,000 was applied to the Property H mortgage as part of the $40,848 lump sum applied to the parties’ (omitted) Bank Account on 22 December 2011. I have found that on the balance of probabilities that is what happened.
According the Applicant’s evidence contained in her Affidavit sworn 31 May 2013, her mortgagee required to her increase the mortgage on Property T in order to decrease the mortgage on Property Q.
At some unspecified time but again by inference in 2012, after separation, the mortgage on Property Q was decreased to $230,000.
Property Q was sold in early 2013 with net sale proceeds of $43,730, which are retained by the Applicant.
The Respondent has made no claim to any contribution to Property Q and I do not consider that he has any claim to its sale proceeds.
Property T
The Applicant purchased the property at Property T in mid-2012 for a total purchase price of $254,000.
That sum is made up of about $141,000 from the sale of Property H (which I have apportioned 88 per cent/12 per cent in favour of the Applicant), and a mortgage loan of $110,000, with the remainder of about $3,000 coming from an unknown source, but assumed to be from the Applicant’s savings.
The Applicant’s contribution to Property T can therefore be said to have been $124,080 from the Property H sale proceeds, plus $3,000 from her own savings, plus all mortgage payments.
Property T was sold in March 2013 with the net proceeds being $40,300, those proceeds forming part of the monies held in trust by Wyndham Partners Lawyers. There appears to be no evidence before the court as to the full sale price of Property T.
At the time of the sale, the mortgage was discharged in an unknown sum, but again by inference from the Applicant’s Affidavit material in relation to the transactions, it appears to have been $195,000 plus interest, minus payments made.
The monthly payment on a mortgage loan of $110,000 between June 2012 and March 2013 would have been about $800 per month. This is applying a mean home loan interest rate of 7.33% on a 25 year loan, that having been the mean interest rate on home loans in Australia during that period.
If the loan were increased to $195,000, the monthly payments would have been about $1,420 per month based on the same assumptions.
As there are no documents to show when the mortgage loan on Property T increased, the best I can do is average the likely repayments over the nine months of the Applicant’s ownership, which means I take her to have contributed an average monthly repayment of $1,110, a total of $9,990 over the nine months she owned the property.
Therefore, the contributions to Property T can be stated as follows:
· Applicant: $124,080 from her share of the Property H sale proceeds (88% of $141,000)
$3,000 from her own savings
$ 9,990 in mortgage payments
=$137,070 or 89% of the capital invested in that property
· Respondent: $16,920 from his share of the Property H sale proceeds (12% of $141,000) or 11% of the capital.
The sum of $40,300 is held in trust by Wyndham Partners from the sale proceeds of Property T. Therefore, a provisional distribution of those funds at 89 per cent to the Applicant and 11 per cent to the Respondent would result in the Applicant receiving $35,867 and the Respondent $4,433.
Provisional distribution
The provisional distribution on the basis of contributions made to Property H and Property T would therefore be:
· Applicant: $20,965 or 88% from the Property H sale proceeds
$35,867 or 89% from the Property T sale proceeds
= $56,832
· Respondent: $2,859 or 12% from Property H
$4,433 or 11% from Property T
= $7,292.
The $10,800 payment from the Respondent to the Applicant at separation
To retrace steps a little, at about the time of final separation, the Respondent paid the sum of $10,800 to the Applicant, Property G was transferred back into the sole name of the Respondent and, it would appear, Property H was transferred into the sole name of the Applicant.
The Applicant says that she understood that sum to have been in full and final settlement of all financial matters between the parties, but concedes that that view was flawed and that it is the Orders the Court makes in these proceedings which will, as far as is possible, finally conclude the financial relationship between them.
The Respondent acknowledges having made that payment but does not say what it was for, or whether there was any mutual understanding as to its nature or import.
When I asked Mr Puckey, counsel for the Respondent, what the Respondent understood to have been the nature of that payment, the following exchange took place:
Mr Puckey: Don’t know. My client’s handle on financial matters is very weak.
Her Honour: But he transferred about $11,000 from his account to the (Applicant) through the joint account.
Mr Puckey: He did.
Her Honour: He must know why he did that.
Mr Puckey: No, that’s the difficulty in the case is that my client is – I don’t think he would mind me saying this – almost illiterate financially and mathematically….
Again, this exchange highlights the difficulty the Court has with the evidence in this case, and in using that evidence to determine a just and equitable settlement between the parties.
In any event, once Property H had been sold and some of its proceeds placed in trust, and believing that she was now free of any financial entanglement with the Respondent, there no longer being any real estate in the joint names of the parties, the Applicant then embarked on the purchase of Property T.
Whatever the payment was for, it was paid from the Respondent to the Applicant, it occurred in the context of separation, and I will take it into account when determining how the trust funds held by Wyndham Partners are ultimately to be divided.

Summary of property transactions

As can be seen from the above history, or what can be gleaned from the parties’ versions of it, the Applicant’s alleged financial contributions can be traced in a broad sense as follows:
(a)$192,834.48 from the sale of Property K, the net proceeds of the Mazda vehicle swap, and extra mortgage funds from the Property Q purchase, was applied to the purchase of Property H;
(b)$5,000 was contributed to the increase in value of Property G by way of joint mortgage payments between about January 2011 and separation;
(c)$124,040 of the proceeds of sale from Property H was applied to the purchase of Property T (a cumulative loss to the Applicant from her investment in Property H to her investment in Property T on her figures of some $68,795);
(d)$40,300 from the sale proceeds of Property T, is now held in trust by Wyndham Partners (a further loss to the Applicant of about $83,740).
$43,730 from the sale of Property Q has been retained by the Applicant. She has also retained the $10,800 payment made by the Respondent at around the date of final separation.
Therefore, of the $192,834.48 the Applicant received from the sales of Property P and Property K, she has lost somewhere in the vicinity of $152,535 minus the $43,730 retained from the property P sale, the $5,000 interest in Property G and the $10,800 payment – a total loss of about $98,005 - with the amount of $64,124 being held in trust by Wyndham Lawyers.
I am aware that the above calculations leave considerable sums of the Applicant’s alleged contributions unaccounted for in the property transactions, but in the somewhat chaotic circumstances of this case, I am not able to trace any further sums at all, although the costs of those transactions themselves must have been significant and may account for much of the money unable to be traced.
The Applicant apparently currently owns no real property and is renting her accommodation.
The Respondent says the Applicant’s loss is due to imprudent investment of funds by the Applicant and that he should not be held to account for that loss.
The Applicant says she is far worse off now than she was at the beginning of the relationship, while the Respondent is much better off and that that is not a just outcome.
The Respondent’s financial contributions can be traced as follows:
(a)$100,000 in equity in the Property G property at the beginning of the relationship has turned into about $120,000 in equity in that property currently (valuation of $370,000 less the mortgage of about $250,000), an increase of about $20,000. The corollary of the statements made in paragraph 106(b) of these reasons is that the Respondent’s equity in Property G should be reduced by $5,000 because of the Applicant’s contributions to the mortgage payments on that property during the relationship;
(b)The $20,000 he invested in Property H is essentially being held in trust by Wyndham Partners (net status quo).
(c)The $10,800 he transferred to the Applicant at the time of separation.
On these figures, the Applicant is almost $100,000 worse off, minus the share, if any, she receives from the monies held in trust, while the Respondent has gained $15,000 plus any share he might receive of the monies held in trust. He also retains ownership of the Property G.
There are other sums which might be taken into account, such as the $10,000 the Respondent says he has spent on legal fees and which was funded by the sale of his boat, but again, it is impossible to determine exactly what happened to certain monies because of the appalling state of the evidence. In any event, the Applicant too has had to meet the liability of legal fees in these proceedings.
Mr Puckey for the Respondent contended in submissions that there were really only two significant factual disputes in this matter:
· whether the Applicant applied $30,000 of the sale proceeds from Property K to renovations at Property H; and
· the source of the $40,848 which effectively reduced the Property H mortgage by that amount on 22 December 2011.
To reduce this vexing case to those two factual disputes is in my view an oversimplification. The real issue is how to make a determination of a just and equitable distribution of the funds held by Wyndham Partners in accordance with the law.

The Law

Having determined and declared that the parties were indeed in a de facto relationship, I must now look to the relevant sections in Part VIIIAB of the Act to determine the principles upon which to base my decision as to how the trust funds are to be divided.
First, I make a declaration under s.90SL of the Act that the sum of $64,124 held in trust by Wyndham Partners is the joint property of the Applicant and the Respondent. That is the basis upon which that sum is held and there is no dispute about that fact.
I similarly declare that the sum of $54,530, being made up of the payment of $10,800 made by the Respondent as set out in paragraphs 99 to 105 above, and the sum of $43,730 derived from the sale proceeds of Property Q as set out in paragraphs 80 to 87 above, is the property of the Applicant.
The Applicant has had the benefit of that sum and there is agreement between the parties that apart from the distribution of the funds held by Wyndham Partners, each party will retain all other assets currently in their possession.
On the same principle, I declare that as between the parties, Property G is the property of the Respondent.
S.90SM(1) of the Act states that the Court may make such order as it considers appropriate after the breakdown of a de facto relationship altering the interests of the parties to that relationship in property owned by them.
S.90SM(3) states:
The court must 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.
In the case of Stanford & Stanford [2012] HCA 52, the High Court considered the meaning and application of the identically worded s.79(2) of the Act in relation to property settlements between married couples.
That decision was discussed at some length in the subsequent Full Court decision of Bevan & Bevan [2013] FamCAFC 116. In Bevan, the Full Court sets out the following passage from Stanford:
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court makes a property settlement order.

The Full Court then goes on to say:
70.In our experience, the circumstances described in the paragraph above encapsulate the vast majority of cases. Hence, the reminder in Stanford of the pivotal role of s79(2) is unlikely to have any impact on most cases, although it will serve as a reminder to trial judges that the precondition to making any order is a finding that it is just and equitable to do so.
In my view, this is such a case. That is, the severance of the de facto relationship and the existence of joint property mean that it will be just and equitable to adjust the parties’ interests in that joint property - the $64,124 held in trust by Wyndham Partners.
However, because the parties agree that only the sum held in trust by Wyndham Partners is at issue in these proceedings, and because of the clearly greater contributions made to the overall property pool made by the Applicant, I will not make any orders altering the property interests as declared in paragraphs 120 and 122 of these reasons, as I do not consider it just and equitable to do so.
The next determination I must make in determining what is a just and equitable order to make is the extent and value of the property pool to be divided between the parties.
This issue is simpler to determine than in most cases – the asset pool is simply the sum of money held in trust by Wyndham Partners.
Then I must consider the contributions of the parties to that asset under S.90SM(4) of the Act, the relevant parts of which I set out here in full:
S.90SM(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to a de facto relationship or either of them; or
(ii)otherwise in relation to any of that last-mentioned property;
Whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to a de facto relationship or either of them; or
(ii)otherwise in relation to any of that last-mentioned property;
Whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e)the matters referred to in s.90SF(3) in so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship.
(g)any child support order under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
I have already set out in these reasons what I can glean from the evidence as to what the financial contributions of the parties were to their property pursuant to s.90SM(4)(a).
The evidence of any non-financial contributions made by the parties pursuant to s.90SM(4)(b) and (c) is so scant as to be negligible and I do not propose to make any findings in relation to those matters.
Similarly, I have no evidence before me that any order I make might have any effect on the parties’ earning ability under s.90SM(4)(d) and therefore cannot make any findings in relation to that matter.
S.90SM(4)(e) requires me to consider the matters referred to in s.90SF(3) insofar as they are relevant, and I will return to those matters shortly.
S.90SM(4)(f) requires me to consider any other made under this Act in relation to the parties or a child of the parties. I am unaware of any such order.
S.90SM(4)(g) is not relevant to these proceedings because there is no child of the de facto relationship.
Section 90SF(3) factors
S.90SF(3) sets out the matters to be taken into account when the court is considering whether to make an order that one party to a de facto relationship pay a sum or sums for the maintenance of the other. I will set out those sub-sections that have relevance to this case in full:
S.90SF(3) The matters to be taken into account are:
(a)The age and state of health of each of the parties to the de facto relationship; and
(b)The income, property and financial resources of the each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)Not relevant in this case as neither party has the care or control of a child under the age of 18 years;
(d)Commitments of each of the parties that are necessary to enable the party to support:
(i)Himself or herself; and
(ii)A child or another person that the party has a duty to maintain; and
(e)The responsibilities of either party to support another person; and
(f)Not relevant as it appears that neither party is eligible for Commonwealth benefits; and
(g)A standard of living that in all the circumstances is reasonable
(h)Not relevant
(i)Not relevant
(j)The extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)The duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)Not relevant as neither party has any child living with him or her; and
(m)Not relevant. I have no information that either party is cohabiting with another person; and
(n)The terms of any order made or proposed to be made under section 90SM in relation to the property of the parties; and
(o)Not relevant. Neither party is engaged in another de facto relationship at law; and
(p)Not relevant as the parties have no proceedings on foot with any prior husband or wife; and
(q)Not relevant. There are no children of the relationship; and
(r)Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
The remaining two sub-sections relate to financial agreements that are binding upon the parties and are therefore not relevant to this matter.
The only evidence or information before the court in relation to the matters set out in s.90SF(3) relate to sub-sections (a), (b), (d), (g), (j), (k), (n) and (r).
The Respondent is 50 years old and in employment. In his Affidavit sworn 3 June 2013, he sets out at paragraphs 34 to 39 certain health problems which he alleges he suffers from and which have caused him considerable expense.
However, apart from naming a specialist he has seen, he provides no corroborative evidence in the form of medical reports, invoices, bank statements or the like.
The Applicant provides no evidence as to her health but she is 53 years old.
In these circumstances, I cannot therefore find that there is anything about the parties’ age or health that would cause me to adjust the division of property other than on the basis of their financial contributions as set out above.
The Applicant works as a (occupation omitted), while the Respondent is self-employed as a (occupation omitted).
The Respondent, on the basis of his Financial Statement sworn on 3 June 2013, earns $62,620 per year.
The Respondent owns Property G and has, according to his Financial Statement, $75,000 in superannuation entitlements. He owns a business through which he pays expenses relating to his motor vehicle, mobile phone and computer. He says his mortgage repayments on Property G are $500 per week and that he pays $25 per week in rates and unit levies.
The Applicant’s Financial Statement sworn on 19 October 2012 sets her income at $69,888 per annum. She deposes to having $56,710 in superannuation entitlements at that date. She did not file a subsequent Financial Statement.
The Applicant currently owns no property and was paying rent of $292 per week as at the date of swearing her Financial Statement.
I consider that the extra amount the Respondent pays on his mortgage is offset by his interest and equity in Property G.
Each of the parties is gainfully employed, and while the Respondent says his work future is uncertain, again he provides no corroborative evidence for that statement. I therefore cannot find that there are any matters under s.90SF(3)(b) that would cause me to make an adjustment to the distribution figures based on contributions alone.
There is no evidence that the parties are unable to maintain themselves.
In his Financial Statement, the Respondent deposes that he pays child support of $135 per week for his son pursuant to a Child Support Assessment.
I cannot find that that payment is sufficient to disturb the distribution based on contributions, and neither party deposes to the need to maintain any other person.
When I consider a “standard of living that in all the circumstances is reasonable”, again the evidence is scant.
The Applicant says that she deserves the whole of the monies held in trust because she is significantly worse off now than she was at the beginning of the relationship.
The Respondent says that the Applicant’s current standard of living, in circumstances where she now owns no property, is entirely of her own making.
I can find nothing in the Act, or in case law, that supports the notion that the party who is worse off financially at the end of a relationship ought to receive more of the available assets than one who is better off. It is not uncommon, especially in short relationships, for one or other party, or indeed both parties to find themselves in a lesser financial position at the end of a relationship than they were at the beginning when all seemed so positive and hopeful.
I therefore do not consider that there is anything in the current standard of living experienced by the parties that would cause me to adjust the distribution based on contributions.
The issue of how each has contributed to the property of the other has been canvassed at some length earlier in these reasons and I do not propose to repeat that material here. There is no evidence that either party has contributed to the other’s earning capacity.
The duration of the relationship was very short, and I cannot find that it contributed in any way to either party’s earning capacity.
Overall, pursuant to sub-section (r) of s.90SF(3), I am cognisant of, and even sympathetic to the position the Applicant finds herself in. It must be galling in the extreme to have gone from owning two properties with significant equity to owning no real property in a period of about three years. It must be particularly difficult when her former partner still has the property he owned at the commencement of their relationship, and can be said to be better off financially.
However, that sympathy is not sufficient to cause me to disturb the contributions-based distribution I have set out in these reasons.
The parties, but more particularly the Applicant, undertook multiple property transactions during and in the 15 months after the relationship. By my calculations, there were at least 11 separate property transactions in that period. The transaction costs alone on those must have been considerable and must have served to diminish the Applicant’s capital.
Therefore, when I consider the relevant matters under s.90SF(3), I am not satisfied that I should adjust the contributions-based distribution on the basis of those matters.
The last matters to be considered in deciding whether to disturb the provisional distribution of the available trust funds on the basis of contributions are whether it should be adjusted in any way for the $10,800 the Applicant received from the Respondent at separation, and for the Applicant’s $5,000 interest in the Property G.
As a matter of justice and equity, I think it must.
While the Respondent cannot give any reason why he gave the Applicant the $10,800, the fact that it was transferred at about the same time that Property H was transferred into the Applicant’s sole name and Property G was transferred into the Respondent’s sole name at the end of the relationship gives rise to a strong inference that there was a connection between the payment and the transfers and that the payment was made with the intention to adjust the then interests of the parties.
Therefore, I think it should be “returned” to the Respondent as part of this settlement.
Similarly, the Applicant should receive an adjustment of $5,000 for her contribution to the appreciation of the Property G.
The result of that process is an overall adjustment of $5,800 to the Respondent.
Therefore the final settlement sees the Applicant receiving the sum of $51,032 and the Respondent the sum of $13,092. That is an approximate overall division of 20 per cent to the Respondent and 80 per cent to the Applicant.
To prevent any further disputes between the parties, if there are any further amounts held in trust at the date of distribution as a result of interest earned, then those amounts are to be divided as to 80 per cent to the Applicant and 20 per cent to the Respondent and paid to their respective lawyers..

Conclusion

This settlement has been a particularly frustrating exercise.
The evidence is scant, and the process of coming to what I consider to be a just and equitable division of the meagre sum available for division between the parties has been akin to attempting to nail jelly to the wall.
Nevertheless, I believe the final outcome is just and equitable in all the circumstances and for all the reasons given herein, I will make the orders set out at the beginning of this judgment.

I certify that the preceding one hundred and seventy-six (176) paragraphs are a true copy of the reasons for judgment of Judge Small

Date: 21 November 2013

[2013] FCCA 1893

21 November 2013

Key Legal Topics

Areas of Law

Family Law

Property Law

Legal Concepts

Jurisdiction

Statutory Construction

Remedies