Talton & Talton
[2024] FedCFamC1F 754
•14 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Talton & Talton [2024] FedCFamC1F 754
File number(s): BRC 2523 of 2024 Judgment of: BAUMANN J Date of judgment: 14 November 2024 Catchwords: FAMILY LAW – PROPERTY – Where the pool was broadly agreed – Add-backs for premature dispositions – One pool approach – Husband suffering a terminal illness – Weight to be applied to disparity in initial contributions – Contribution assessment 53.5% to the husband and 46.5% to the wife – s 75(2) adjustment Legislation: Family Law Act 1975 (Cth) s 75 and s 79 Cases cited: Hickey & Hickey (2003) FLC 93-143
Robb& Robb (1995) FLC 92-555
Townsend & Townsend (1994) 18 Fam LR 505
Division: Division 1 First Instance Number of paragraphs: 58 Date of hearing: 21–22 October 2024 Place: Brisbane Counsel for the Applicant: Ms Downes Solicitor for the Applicant: Chomley Family Law Counsel for the Respondent: Mr Duane Solicitor for the Respondent: Russell Kennedy Lawyers NSW ORDERS
BRC 2523 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR TALTON
Applicant
AND: MS TALTON
Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
14 NOVEMBER 2024
THE COURT ORDERS:
1.That these proceedings be adjourned for Case Management Hearing and pronouncement of final orders, on 27 November 2024 in the Federal Circuit and Family Court of Australia (Division 1) at Brisbane.
2.That both parties and their legal representatives have leave to appear by telephone on 27 November 2024 by using the Microsoft Teams conferencing system as follows:
(a)They shall click a link (if accessing this Order electronically) to join on 27 November 2024; or
(b)They shall each telephone a specific number on 27 November 2024;
(c)They shall each then enter the assigned pass code; and
(d)Hold the line until the Court is ready to connect and proceed with the matter.
3.That the Applicant husband prepare a minute of final orders consistent with the Reasons for Judgment delivered 14 November 2024, and provide same to the Respondent wife and the Court by no later than 12 noon on 21 November 2024.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Talton & Talton has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
INTRODUCTION
When the Applicant husband, Mr Talton, and the Respondent wife, Ms Talton, commenced cohabitation in 2012, they were both in their forties; were parents of children from their earlier relationships and began to build on wealth already created by each of them with an eye to a loving and happy relationship and, no doubt, retirement.
As these Reasons reflect, their initial contributions, particularly in real estate and prudent investment decisions, have combined to create a pool of nett interests at the time of trial exceeding $9 million.
This trial was expedited after the husband was diagnosed with a terminal illness this year. His prognosis is poor.
As a mentioned at the hearing, I recognise the sensitive advocacy demonstrated by Ms Downes (Counsel for the husband) and Mr Duane (Counsel for the wife), which was reflected in both the style and length of their cross-examination and submissions. It allowed the evidence before the Court that needed to be tested, to be undertaken in a short number of hours.
In these Reasons, I refer to the parties as husband and wife, although separated they have not yet been divorced.
PRINCIPLES
Shortly stated, but more concisely and elaborately described in the Full Court decision in Hickey & Hickey (2003) FLC 93-143, in a property settlement case, the Court must adopt a well-known four-step process, essentially:
(a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
(b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s 79(4) of the Family Law Act 1975 (Cth) (“the Act”);
(c)to consider the factors as are relevant contained in s 75(2) of the Act; and
(d)finally, consider the ultimate analysis to determine whether the order the Court proposes to make is just and equitable to both parties.
Both Counsel contend, and I agree, that it is just and equitable to make an order (s 79(2)).
SHORT HISTORY
When considering contributions, I will deal with the various property transactions more fully, however for context the following brief history is helpful.
Statements of fact which follow should be construed as findings of fact.
The parties commenced cohabitation in 2012, initially living in the wife’s home at Suburb B. The wife had the care of three children, then aged 12, 10 and eight. The husband’s two children, slightly older at ages 18 and 16, were primarily living with their mother.
The parties married in 2013, some months after the wife had, in 2012, entered into a financial agreement with her former partner, Mr C.
Both parties were able to work, with the husband, the wife concedes, generating more income than she did. The husband’s work changed from time to time, and he received a redundancy payment from D Company of $219,981 in 2014/2015 and a redundancy payment from E Company of $108,659 in 2020/2021.
The wife’s use of alcohol at times, coupled with anxiety and depression, was an issue that contributed to some tensions in the relationship. The wife in her affidavit raised issues about the husband’s behaviour towards her and, at times, her children. Some of the material contained in the affidavits was struck out after objections were ruled upon, and in final submissions the Court was not asked to adopt anything like a Kennon & Kennon (1997) FLC 92-757 argument. Thankfully, the wife’s initial intention (as reflected in her case outline) to rely upon evidence from her adult daughter, Ms F, and the husband’s former partner, Ms G, was reviewed and those affidavits were not relied upon.
For completeness, the husband also reviewed his intended reliance on two lay witnesses and did not rely upon their evidence. This meant the only witnesses subject to cross-examination were the parties and the single expert valuer Mr H.
The parties moved to Queensland in 2020 and continued to reside together at a property at J Street, Suburb K (“the Suburb K property”) from 2022.
The parties dispute whether the cohabitation ceased (and formal separation occurred) in January 2023 (after return from an overseas holiday) as the husband asserts, or in early August 2023 (after the wife’s holiday to her native Country L) as the wife asserts. The Court does not need, in these proceedings, to determine the date of separation – although the wife’s conduct in withdrawing $100,000 from a joint account in late 2023 (followed shortly thereafter by the husband withdrawing $59,269 from the same account) suggests at least by late 2023, all remaining trust between the parties had evaporated.
As earlier indicated, in 2023 the husband was diagnosed with a serious medical condition, and in 2023 he commenced property proceedings which were transferred to this Court on 25 July 2024. On 15 August 2024, I listed the matter for final hearing some nine weeks later, with both parties (competently represented) ensuring broad compliance with trial directions over a very tight timetable.
As will become apparent, by final submissions, the pool was broadly agreed (at a preliminary stage a joint balance sheet was marked Exhibit 5), and where required, I make findings about the pool next.
POOL OF INTERESTS
On the basis of the entries in Exhibit 5, I make the following findings about the issues in dispute.
Items five, six and seven – the husband’s bank accounts
The dispute relates to whether the balances to adopt is the balance of accounts now or at some earlier date (the husband’s position) where it seems, at items eight and nine, the parties agreed on current balances for the wife’s accounts, that should be adopted for the husband’s bank accounts.
Item 11
In circumstances where it is accepted that the M Company investment included a sum of $60,000 that had moved from accounts in the name of the wife’s children, it was agreed the adjusted balance of the account should be a figure of $326,876, not $386,876.
Item 14
The wife contends for a value for some specific items owned by the Mr and Ms Talton Family Trust, at a figure of E$36,200. This figure is derived from a lay opinion expressed by the wife at paragraph 153(c)(ii) of her affidavit filed 20 September 2024 and Annexure “[MST]30” (which for ease became Exhibit 9). The wife conceded that the inventory was created by the husband; she had not had an opportunity to inspect the items and they have not been sold. In my view, where the parties agree on the value of the Suburb K property, and the valuer Mr N appears to have taken sundry chattels into account, I would not include any separate amount in the balance sheet for these items. Furthermore, Exhibit 11 (being the financial statements for the Trust to 30 June 2024) records no specific value for chattels or any depreciation schedule.
Items 15 and 16
As to the parties’ “household chattels”, again in the absence of any valuation evidence, I am not prepared to incorporate any figure for furniture.
Items 19
The husband contends for an addback, as against the wife, of $100,000 for what appears to be a premature disposition (in a Townsend & Townsend (1994) 18 Fam LR 505 sense). The evidence is not contested that the wife withdrew $100,000, from the then existing joint account. Whilst the wife says (at paragraph 311) she would need some funds for her everyday living expenses, on the evidence, the wife has the necessary income to meet her living expenses (Financial Statement sworn 16 September 2024) and she conceded at least some of the funds were used to pay her legal expenses. If the funds in the joint account at the time ($159,269) had been “frozen”, the total funds would have been available for equitable distribution. Accordingly, in the exercise of my discretion, I will add-back notionally the sums of $100,000 (the wife) and $59,269 (the husband), removed by the husband from the same account.
Item 20
The husband contends for an additional “add-back” as against the wife of $38,296 which according to Annexure “[MST] 144” (Exhibit 10) and paragraphs 302 to 309, the wife says were funds sourced and created in 2000, 2002 and 2004 by the wife and her former husband, Mr C. Although no Trust documents are produced, I am prepared to accept that the funds represented funds contributed to by the wife and Mr C, to meet children’s expenses and/or tertiary education expenses. The wife says the husband Mr Talton did not contribute to the funds, which have been disbursed to the children. I will not add the funds to the pool of interests, as an add-back.
Items 21 and 22
The parties credit card liabilities are excluded, in circumstances where the parties separated over 12 months ago, and the liabilities represent and reflect unilateral discretionary spending by each party post separation.
With these findings, and adopting agreements and concessions, I find the pool of interests to be as follows:
OWNERSHIP
DESCRIPTION
VALUE ASSETS Trust Suburb K property $2,750,000 Husband O Street, Suburb P $2,800,000 Husband Motor Vehicle 1 $12,950 Wife Motor Vehicle 2 $30,000 Husband Bank accounts $16,144 Wife Bank accounts $31,538 Joint M Company $326,876 Joint Q Company Investments $434,442 Husband Partial property settlement to the husband being funds withdrawn from his superannuation $1,550,000 $7,951,950 ADD-BACKS Wife Premature disposition $100,000 Husband Premature disposition $59,269 $8,111,219 SUPERANNUATION Husband Super Fund 1 $151,504 Wife Super Fund 1 $1,541,380 $9,804,103
For completeness, and sensibly, the parties agreed that rather than try to account in the balance sheet for how the husband used funds he was able to access from his superannuation (including the purchase of the Suburb R property and the $100,000 loan to his son), it was better to merely add back the funds totalling $1,550,000 withdrawn from his superannuation.
Both parties contend for a “one pool” approach which I agree is appropriate.
CONTRIBUTIONS
When these parties commenced cohabitation in 2012, they were both possessed of assets and financial interests which reflected their careful financial management to that point in time. The parties prepared an “aide memoire” as to initial contributions (marked Exhibit 6). It reflects broadly an acceptance by the parties that the husband’s initial nett contributions were greater than those of the wife.
In the absence of retrospective valuations of real property introduced at cohabitation, some uncertainty as to market values exist at the time of cohabitation. What is apparent from the history that follows, is that the parties’ “wealth” from an approximate joint nett value of around $3 million increased over 12 years to the current pool of around $9.8 million – without any real extraordinary financial windfalls such as gifts, lottery wins or personal injury awards. I do not, in so finding, ignore the small inheritance received by the wife detailed at paragraphs 171 to 175 of her trial affidavit.
In assessing, in a holistic way how the initial contributions have, as particularly the husband contends, been the springboard to this increase in joint wealth, I now set out what I find are broadly uncontroversial details of financial events after cohabitation, as follows:
(a)The parties commenced cohabitation in the wife’s property at Suburb B. That property was ultimately sold in 2017 for over $1,600,000, with the funds introduced into the pool. Between 2023 until its sale in 2017, the wife rented the property – so that income was available after payment of the usual expenses and tax;
(b)The wife’s property settlement with her former husband Mr C was achieved with a financial agreement (dated 2012 and marked Exhibit 8). That agreement (at clause 3) required Mr C to transfer his interest in the Suburb B property to the wife, with the wife contemporaneously discharging the existing mortgages totalling approximately $442,000;
(c)The husband says the wife was unable to refinance the mortgages and, at paragraph 31 of his affidavit filed 4 October 2024, he deposes to ultimately being a guarantor, accepted by Westpac, to facilitate the refinance occurring. I regard the husband becoming a guarantor as an indirect contribution – but I am not satisfied that, in the absence of his guarantee, it was a certainty that the wife would have been forced to sell the home. The preservation of the home until the sale in 2017 however meant a healthy capital gain was achieved;
(d)In 2013, the parties purchased a home at Suburb S for $1,850,000 into which they moved as their primary residence, in late 2013. I accept that a loan of $1,000,000 was obtained, with the husband using his available cash to pay nearly all of the balance required to complete the purchase. The property was sold in 2021 for $2,850,000 – another healthy capital gain;
(e)In 2014, the husband sold his property at Suburb T for $1,850,000, with the nett proceeds of around $850,000 used to pay down the mortgage over the Suburb S property;
(f)In around 2014, the husband was made redundant and received a payment of $219,981. He was able to secure new employment in a short time thereafter;
(g)In 2016, the parties purchased a property at Suburb U for over $1,650,000 and were able to use the husband’s Suburb P property (which was then unencumbered) as collateral for a loan of $1,750,000 to cover the purchase price and stamp duty etc;
(h)As earlier noted, the Suburb S property was sold in 2021 and around the same time the husband was made redundant by his then employer and received a payment of $108,659;
(i)In 2020, the parties moved into the Suburb P property. The wife was able to maintain employment, working remotely and, I infer, that when the family moved into Suburb P, the income flow from the rentals came to an end;
(j)The sale of the Suburb U property in 2021 for $2,400,000 (another significant capital gain) enabled the parties to buy the Suburb K property for $2,500,000 in 2021. This property comprises both rural residential options and a capacity to generate an income on the property. It is clear that the parties must have seen some long-term potential in the property, having decided in 2021 to establish the Mr and Ms Talton Family Trust, which became the registered owner (through the Trustee) of the Suburb K property. The husband says, and I accept, that the parties contributed the nett sale proceeds of the Suburb U property to the purchase by the Trust of the Suburb K property, together with $250,000 from joint savings. The husband deposes that the Trust, since commencement, has operated at a loss. Exhibit 11 demonstrates both the existence of the loan by the parties to the Trust (being the beneficiary account liability of $2,631,015) and the fact that the expenses exceed income, which amounted to $27,895 for the 2022/2023 year and $9,604 for the 2023/2024 year; and
(k)Weather events in 2023 in Suburb K have caused income reduction and need for capital expenditure – both on the property and the husband says, by the local authority in respect of infrastructure repairs. The husband no longer resides on the property, having decided to purchase a smaller property at Suburb R in 2024, with funds he had available from permitted withdrawals on his superannuation totalling $1,550,000. The withdrawals were allowed because of his terminal diagnosis. As earlier noted, the husband used some of the funds then available to provide a loan to his 20-year-old son of $100,000.
These transactions clearly demonstrate how the parties’ prudent and impressive decisions to buy and sell real estate, to take at least advantage of rising property values, has, I find, been the major contributor to the increase in the pool. On the evidence, I do not find either party’s non-financial contributions to achieving this outstanding joint benefit to be more significant than the other party.
I accept during the course of the relationship the husband’s income exceeded that of the wife. At paragraphs 41 to 43 of his affidavit, the husband’s taxable income (not nett income) is tabulated. The husband was not significantly challenged on these amounts. Furthermore, the wife’s taxable income for the period 1 July 2012 to 30 June 2023 was $927,734. Again, no challenge to those calculations was made.
Thankfully, for these parties’ dignity, neither Counsel were instructed to cross-examination the other party on the evidence in the trial affidavits, primarily raised by the wife as to the husband’s behaviour, or his strong denials. Similarly, the wife’s, at times, excessive use of alcohol and the consequences of many matters upon her mental health were not explored. I again acknowledge the sensible and sensitive approach adopted by Counsel.
I would not assess the parties’ non-financial contributions in different ways and not all acknowledged now by the other party as a significant factor, where both parties accepted they both were employed; worked hard and strived jointly to create a financial secure retirement. The separation and subsequent diagnosis now confronted by the husband, has sadly meant those long-term plans as an intact couple will not occur. The post separation contributions do not create a significant differential.
In final submissions, Counsel for the husband Ms Downes said the husband’s contribution should reflect in a 60% finding for him – and certainly no less than 55%. Mr Duane for the wife submitted that contributions should be assessed as equal but no more than 52% to the husband.
Over the 12 years relationship the initially greater contribution by the husband must be weighed with the myriad of other financial and non-financial, direct and non-direct contributions to the acquisition, maintenance and preservation of the parties’ assets. For most of the relationship, the evidence reveals these parties engaged in joint endeavours taking advantage of the real estate market and their combined income to increase their wealth – and reduce debt which both parties held at cohabitation.
It is a testimony to the success of their efforts that now, at the ages of 57 and 54 years respectively, that their assets of approximately $10 million is all debt free.
In my assessment however, the husband’s direct initial contributions and superior income during the relationship compel that a contribution-based entitlement in favour of the husband be made.
I assess contribution-based entitlements as being 53.25% to the husband 46.75% to the wife – a differential of 6.5%, which in a pool of $9.8 million is quantified as $637,000.
SECTION 75(2) CONSIDERATIONS
The issue that everyone in the courtroom was conscious of, is the evidence, broadly accepted, that the husband’s current prognosis is that he will die by 2025. It was to be expected that, under cross-examination, the husband said he hopes the doctors are wrong – and that although he has already spent $283,230 on medical costs (see paragraph 82), if new options for treatment emerge, he would want to take them up. He cannot work at present.
The wife has really no significant health issues that are likely to prevent her generating an income from personal exertion – currently achieving a gross income of $114,000 per annum plus fringe benefits. It is not clear whether the wife’s terms of employment include the additional payment of occupational superannuation.
The wife will be able, at the age of 54 years, to look forward to being able to work for at least another 10 years and in circumstances where the share of the property pool from the orders I make will include for the wife, an unencumbered home worth $2.8 million; superannuation of $1,541,000 and other cash resources and investments (even after she funds a payment to the husband).
Taking the husband’s worst-case scenario, he nearly has no future needs. It is understandable, but not a legal issue to be considered, that he feels a duty to make proper provision in his Will for his adult children.
In respect of the husband’s contention that his contribution to the care, housing and welfare of the wife’s children from her earlier marriage deserves some monetary recognition, the husband was seeking to have the Court apply principles which were identified by the Full Court in Robb& Robb (1995) FLC 92-555. In that case, decided 30 years ago, the Full Court (Lindenmeyer, Finn and Joske JJ) said that it may be appropriate in some cases, so as to do justice, to consider whether acts done by a party to support the children of their partner from an earlier relationship, require consideration under s 75(2)(o).
In this case, I accept that the wife’s children were aged 12, 10 and eight at the time of cohabitation. The wife says that the children’s father provided financial support. Whilst I accept it was the parties to this matter who, through their joint efforts, created a secure home for the children and that although, as the wife says and I accept, she cared overwhelmingly for the children, I do not ignore that the husband made a contribution – indirectly, financially and through his effort with transport or the like during the relationship.
However, in the end analysis, I do not regard this as a significant issue requiring any overall adjustment to the husband.
Mr Duane contended that if the contribution-based entitlements of the parties were equal, he could not sensibly submit for any adjustment under s 75(2). As is clear, the contribution adjustment is not equal, however I do not regard any adjustment under s 75(2) to the contribution-based assessment as appropriate.
JUST AND EQUITABLE ORDERS
It is not the “percentages” between the parties that need to be considered for the Court to be satisfied that the orders are just and equitable to both the husband and wife, but the form of orders.
The wife’s proposed minute was tendered as Exhibit 2. It included that she retain the Suburb P property where she resides. Whilst, in the husband’s case outline he sought orders for the sale of the home, he no longer (and appropriately so) seeks that order. On the pool of assets as found to exist, the wife’s minute of order would amount to interests totalling $5,188,236 – or approximately 52.9% of the pool. I do not find such a result is just and equitable.
The husband’s proposed minute would amount to interests totalling $5,701,185 – or approximately 58.1% of the pool. I do not find such a result is just and equitable.
In my assessment, orders which permit a distribution of the interests set out in the pool of interests being just and equitable, would see the following alterations:
(a)Husband’s 53.25% of $9,804,103 = $5,220,685, being:
Suburb K property
$2,750,000
Motor Vehicle 1
$12,950
Bank accounts
$16,144
Q Company investments
$434,442
Partial property withdrawal
$1,550,000
Premature disposition
$59,269
Superannuation
$151,504
$4,974,309
Plus payment by the wife
$246,376
$5,220,685
(b)Wife’s 46.75% of $9,804,103 = $4,583,418, being:
Suburb P property
$2,800,000
Motor Vehicle 2
$30,000
Bank accounts
$31,538
M Company investment
$326,876
Premature disposition
$100,000
Superannuation
$1,541,380
$4,829,794
Less payment to the husband
$246,376
$4,583,418
I appreciate that the wife could, on the current evidence, meet a payment to the husband rounded down to a figure of $246,000, by either borrowing money or using some of the funds on the M Company investment. The nature of that investment, and how flexible it is to access, is not clear on the evidence. It is my view that the wife retaining the joint M Company investment is appropriate because the investment in real terms includes a $60,000 component for her children which was excluded from the pool of interests divisible between the parties.
It occurred to the Court, although a superannuation splitting order was not considered by the wife – the husband had sought a superannuation split of $400,000 in his minute – that one way of funding the payment due by the wife to the husband of $246,000 would be to split the wife’s superannuation and have that sum “transferred” to the husband’s fund (which is the same as the wife – namely Super Fund 1). As the husband was able to access $1,550,000 of his superannuation this year, post transfer of that sum from the wife’s superannuation he may, if he wishes to do so, seek early release of that sum in his current tragic circumstances.
It is noted the husband still decided to retain $151,504 of superannuation, so an additional $246,000 in his fund might be a better option than the wife having to access some of the M Company investment.
In circumstances where this proposition was not the subject of any submissions, even though a splitting order was raised in the husband’s minute of order, I believe it is appropriate for the parties to have an opportunity to discuss the form of order, consistent with these Reasons, before I pronounce formally the order.
Accordingly, I will adjourn the proceedings until 27 November 2024 to allow the parties an opportunity to discuss the form of order, but require the Applicant husband to prepare an order and make it available to the wife and the Court no later than 21 November 2024.
I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 14 November 2024
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