Taugher and Canes

FAMILY COURT OF AUSTRALIA

TAUGHER & CANES

[2010] FamCA 769

FAMILY LAW – PROPERTY – Husband seeks 75 per cent of the matrimonial property pool – Where the wife and her brother are trustees of property in the United Kingdom – Future inheritance to be excluded as the husband made no contribution – Previous distribution to the parties excluded – Wife’s superannuation accrued post-separation excluded – Unreliability of the husband’s evidence – Acquisition of after acquired properties by the wife – Where the husband suffers from mental health conditions – Contributions of the parties considered – Section 75(2) factors – Matrimonial pool split equally

APPLICANT:

Mr Taugher

RESPONDENT:

Ms Canes

FILE NUMBER:

BRF

4097

2001

DATE DELIVERED:

20 August 2010

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Barry J

HEARING DATE:

18 - 19 November 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Galloway of Counsel appearing for the Applicant Husband

SOLICITORS FOR THE APPLICANT:

Wellners Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Shoebridge of Counsel appearing as a direct brief for the Respondent Wife

Orders

By way of full and final settlement of property issues as between the parties the Wife pay the Husband the sum of $81,000 within sixty (60) days of the date hereof or such further time as the parties may mutually agree or as may be further ordered by this Court.
That all property (including real property, personal property and superannuation entitlements) registered in the name of either party vest in that party as their sole and absolute property and neither party shall have any further claim against the other.
That the Husband sign all documents and do all things necessary to release the guarantee to Westpac Bank over the properties at 7 and 9 B Street. Should the Husband fail to do so on request then after seven (7) days pursuant to section 106A of the Family Law Act a Registrar of the Family Court of Australia at Brisbane is hereby appointed to execute all deeds and documents in the name of the Husband and do all acts and things necessary to give effect to this order.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRF 4097/2001

MR TAUGHER

Applicant

And

MS CANES

Respondent

REASONS FOR JUDGMENT

By way of an amended application filed on 14 July 2009 the Husband seeks orders in the following terms :
“1.That pursuant to the provisions of s.79 of the Family Law Act the Husband receive 75% (or such greater proportion as this Honourable Court may order) of the parties’ property with the Wife to receive the balance.
2. In particular, the Husband seeks the following orders:
That the Husband retain his right, title and interest in and to real property at:
a.[S];
b.[A];
c.the advance of monies arising from the sale of [G Street] and land at [M Street];
d.his furniture;
e.his motor vehicles.
3.That the Wife convey to the Husband, free from encumbrance, all her right, title and interest in and to real property at:
a.[7 B Street];
b.[9 B Street].
4.That, further, the Wife pay to the Husband the sum of not less than $468,500 within 30 days of the date of these Orders, such money to be secured against the Wife’s properties at:
a.[T property];
b.[P property]; and
c.[…], United Kingdom.
5.That the Wife retain, subject to these Orders, all her right, title and interest in the following properties:
a.[T property];
b.[P property]; and
c.[…], United Kingdom.
6.That the Wife also retain:
a.the advance of monies arising from the sale of [G Street];
b.the furniture presently in her possession;
c.the motor vehicle presently in her possession;
d.the jewellery presently in her possession;
e.the superannuation presently in her possession.
7.That the Wife immediately provide to the Husband the items contained in the Schedule attached to these Orders and marked with the letter “A”.
8.That the Wife pay the Husband’s costs of and incidental to these proceedings, including any reserved costs, as agreed or assessed.”
Schedule “A” referred to in paragraph 7 of the Husband’s amended application details a list of particular chattels including two framed Toulouse Lautrec prints.

Wife’s Response

By way of her response document filed 7 August 2009 the Wife sought final orders in the following terms:
“1. That the Husband’s application be dismissed.
2.That all assets and property acquired during the marriage, save for motor vehicles, furniture and personal items, be divided as to 60% to the Wife and 40% to the Husband and in particular:
21.the Husband retain, where possible, his right, title and interest in:
the property at [A]
the property at [S]
the [professional practice] [L Firm at the time of separation] carried on at [S property].
2.2The Wife retain, where possible, her right, title and interest in:
The property at [7 B Street]
The property at [9 B Street].
3.That motor vehicles, personal possessions and furniture vest in the party presently in possession save for:
3.1items of furniture the subject of an application for compensation filed by the Wife on 24 March 2003
3.2the Wife’s viola.
4.Should the Husband fail to hand over all the furniture items referred to in the outstanding application prior to the final hearing then the application for compensation in Cl. 3.1 above be heard as part of the final hearing pursuant to the Order of Judicial Registrar Smith made 3 March 2005.
5.That all property, including real property, personal property and superannuation entitlements, acquired by either party since separation vest in that party as their sole and absolute property and neither party shall have any claim now or in the future.
6.That the Husband sign all documents and do all things necessary to release the guarantee to Westpac Bank over the properties at [7] and [9] [B Street]. Should the Husband refuse or fail to do so on demand then after seven (7) days of such refusal pursuant to s. 106A of the Family Law Act the Registrar or Deputy Registrar of the Family Court of Australia at Brisbane is hereby appointed to execute all deeds and documents in the name of the Husband and do all acts and things necessary to give effect to this Order.
7.That the order for costs, made by Justice May on 9 October 2002 be heard at the final hearing pursuant to that Order.
8.That the Husband immediately return to the Wife the Wife’s viola, taken from the Wife’s home in February 2002.
9.That the Husband pay the Wife’s costs of and incidental to these proceedings as agreed or assessed.
10.Such other orders as the Court sees fit.”

The Property Pool

Fortunately the parties had appointed a single expert valuer and the valuer’s evidence was before the Court on an unchallenged basis.
Wife’s properties:
7 B Street  $   510,000
9 B Street  $   640,000
Husband’s properties:
S property  $   475,000
A property  $   830,000
After acquired assets in Wife’s name only:
T property  $   340,000
P property  $   350,000

Mortgage Liabilities

The mortgage secured over the Husband’s properties                  $   127,000
Mortgage over B Street  $   190,000
Mortgages over T property and H property  $   310,000

Net Assets

If the Wife’s after acquired assets are excluded $2,138,000
Nett assets including T property and H property $2,518,000
In the course of his final address Counsel for the Husband submitted an appropriate apportionment would be 70 per cent/30 per cent in his client’s favour inclusive of the after acquired assets of the Wife.
Leaving aside the liabilities, other than the mortgage liabilities, on my calculations to divide the property 70 per cent/30 per cent to the Husband would result in the Wife having to pay the Husband $584,600, calculated as follows:
Nett assets including T property and P property      $2,518,000
Husband’s entitlement @ 70 per cent  $1,762,600
Husband has following property:
S property  $   475,000
A property  $   830,000
Subtotal  $1,305,000
Less mortgage  $    127,000
Husband’s nett property  $1, 178,000
The difference between the Husband’s entitlement and his actual assets is $584,600.00.
Counsel for the Wife in written submissions produced at the commencement of the hearing suggested an apportionment of 55 per cent / 45 per cent in his client’s favour with the after acquired assets excluded. On my calculations this would result in the Husband retaining the two properties in his name but having to pay the Wife $215,900 assuming the Wife retains the existing nett assets in her name. The calculations are as follows:
Nett assets excluding after acquired assets  $2,138,000
Husband’s entitlement @ 45 per cent  $   962,100
Husband has existing nett real estate  $1,178,000
Less  $   962,100
Amount payable by Husband to Wife  $   215,900
By the time of final submissions the Wife’s Counsel contended that if the after acquired real estate in the Wife’s name is included in the pool, then the apportionment should remain at 55 per cent / 45 per cent in favour of the Wife but this would result in a payment to the Wife of $44,900. As I understood Counsel’s position the Wife proposed the parties would simply retain the properties they currently hold and no further cash adjustment would be required.
The properties at P and T were acquired solely in the Wife’s name after separation.

Balance Of Assets And Liabilities

I propose to disregard all other assets and liabilities listed in Exhibit 1. My reasons for adopting this approach are as follows:

Furniture

A consent order had been previously made by May J in final form in 2002. Her Honour’s order of 14 November 2002 is in the following terms:
“IT IS FURTHER ORDERED BY CONSENT:
(4)(i)       The husband within seven days choose one or other of the lists of furniture annexed to the wife’s affidavit filed 23 October 2002 with the piano to be added to List 2 and failing such choice by the husband, the parties reach agreement within seven days and should there be no agreement then the wife shall choose a list within 14 days from today.
(ii)The parties make all necessary arrangements for the collection of such items at their own expense.
(iii)     It is agreed that the piano will remain with the wife and that any consequential adjustment be made to the items to be retained by the husband.
(iv)     Each party will obtain a valuation of all items in their possession within 28 days after such items come into their possession unless they otherwise are able to agree in writing about their value.”
There were complaints from each of the parties about non-delivery of items on the respective lists. As I understand the evidence the Husband elected to receive the items in List 1 and the Wife received items in List 2. There was subsequent litigation on this aspect in the nature of enforcement proceedings.
In the current proceedings the only evidence is contained in an affidavit of Mr E. Mr E was not required for cross examination. No submissions were directed to the items he had valued.
In the whole of the circumstances, as I understood the situation, neither Counsel pressed for a financial adjustment on account of the division of furniture. Having regard to the paucity of the evidence before the Court I am unable to make any further determination on this aspect. If the parties wish to bring further proceedings in relation to enforcement of their respective rights they remain at liberty to do so.

United Kingdom Property

The Wife’s 87 year old mother resides in the United Kingdom. It is apparently common practice in that jurisdiction for parents to execute a Deed of Declaration of Trust in relation to property held in the parent’s names.
At paragraph 140 of her affidavit filed 6 November 2009 the Wife explains the situation in the following terms:
“In the 1980s local councils in the UK introduced a law whereby they could recover nursing home fees from residents if their assets exceeded a very modest amount - - -
This meant any real property would be taken upon death. It is now common practice in the UK for elderly people to transfer their property on trust to their children for this reason.”
The particular trust document is Exhibit 4 in the proceedings before me. It is dated the 20 November 2001. The Wife’s parents as donors appointed the Wife and her brother to be the trustees of the subject property. The deed provides that the donors retain the right of occupation at all times and this right of occupation continues for any substituted property that may be acquired. The donors are to be responsible for all outgoings other than the cost of repairs, maintenance and insurance which was to be the responsibility of the trustees. The trustees are precluded from encumbering the property or dealing with the property without the consent of the donor.
The Wife’s father died some years ago. The Wife has not had the subject property valued. In the course of cross examination the Husband conceded that he knew of the existence of the property in the Wife’s name and the preparation of the Deed of Declaration of Trust. As I understood the Husband’s evidence he went so far as to suggest the deed was drawn up on his advice.
The Wife’s attitude was the property was the subject of a life interest to her mother but that in any event the Husband had made no contributions whatsoever to any potential inheritance she may have. Neither party contended that I should make any adjustment on account of the Wife’s interest in the property other than in a global sense.
I do not propose to make any adjustment in the Husband’s favour as a result of the Wife holding a half interest in this property as trustee.
I accept the Wife’s mother is 87 years of age. There is no medical evidence as to her state of health. The principal reasons why I do not propose to bring the property into account or make any adjustment in relation to section 79 factors are:
·    the Husband has made no contribution whatsoever to this asset;
·    the Deed of Trust was not executed until some 14 months after final separation;
·    the Wife has had no direct benefit from her 50 per cent interest in the property in the ten years since separation. By paragraph 3 of the Deed, the Trustees are responsible for the costs of repair, maintenance and insurance on the subject property. There is no evidence before the Court what monies, if any, have been paid pursuant to this provision. There is no evidence as to what monies are owing on the property pursuant to the terms of paragraph 3 or pursuant to any mortgage on the property.
In A v A BRC 2062/93 the Full Court (Ellis, Finn and Maxwell JJ) held:
“- - - Given that no contribution, in the relevant sense, was made to that inheritance by the Husband, it was open, in my view, for the trial Judge to deal with the matter in the fashion in which he did, that is by not including it in the assets of the parties but taking it into account when he was considering the relevant s 75(2) factors.”
The judgment was delivered by Ellis J with the other members of the Court agreeing with his Honour’s reasons.
In C v C [1999] FamCA 1770 the Full Court (Ellis, Finn and Rose JJ) held (paragraph 51):
“51.The trial Judge, in our view erred in finding that the Wife made such an indirect financial contribution. In our judgment, the Wife made no contribution within the meaning of s 79(4) for the acquisition, conservation or improvement of the assets inherited by the Husband.”
I note in passing that Counsel for the Husband, Mr Galloway, was Counsel for the successful Appellant Husband in that matter.
Counsel did not include the inheritance in the updated list of assets and liabilities produced by him in the course of final submissions.
I will consider the Wife’s entitlement to the interest in the United Kingdom property in a global sense when considering any further adjustment pursuant to section 75(2). This is made difficult by the fact that there is no evidence of the property’s value or the extent of any encumbrance.
When considering the contribution factors I will give the Husband credit for the fact that an inheritance from his mother’s estate in a relatively modest sum was used for the mutual benefit of the parties early in the relationship. The evidence as to the extent of this contribution will be considered later in these reasons.

Previous Distribution of $190,000 to each of the Parties

Initially the Husband contended this distribution should be disregarded but the Wife sought for it to be treated as an add-back.
The consent order of 8 February 2005 provided for the release to the parties in equal shares of the monies held in fixed deposit. Paragraph 1 of the consent order of that date provided:
“The parties consent to the payment of the jointly owned monies held in fixed deposit be released to the parties in equal parts by way of an interim property settlement. The money so paid to each of the parties to be taken into consideration at the final property settlement.”
I am satisfied that the amount released to each party was approximately $190,000.
By the conclusion of the hearing it was common ground that this distribution should not be treated as an add-back.
There were far too many complications arising if this course was not adopted. No attempt had been made to trace the expenditure of these monies other than in the most general sense. There was a real risk of double counting if the parties had reduced mortgages or acquired assets with the monies distributed.
In the whole of the circumstances I propose to exclude the previous distribution and as I understood the position neither Counsel contended otherwise.

Wife’s Superannuation

The Wife has a superannuation interest of approximately $185,600. The Wife’s superannuation only commenced post-separation. In the Applicant’s amended list of assets and liabilities the Husband’s Counsel deleted item 15 being the superannuation interest.
Had this concession not been made I would have disregarded the amount anyway as being an after acquired asset to which the Husband had made no contribution.

Other Chattel Items

Counsel for the Husband at the commencement of his final address produced what amounted to an amended copy of Exhibit 1. In that document he had sensibly agreed to delete the motor vehicles, bank accounts and jewellery from the original list of assets and liabilities.

Liabilities Other than mortgage liabilities

As a result of complaints made by the Wife, the Husband was charged with a series of offences involving stalking and damage to the Wife’s property. The Husband subsequently pleaded guilty in the District Court to the charges which had been brought against him. Thereafter, the Husband, who practiced a profession, had proceedings instituted against him by the professional regulatory body. The regulatory body in May 2009 made an order that the Husband be disqualified from practicing his profession. He was ordered to pay costs of $10,000.
It was the Husband’s contention that the following liabilities should be brought into account:
Item 2
Line of credit  $   46,000
Item 3
Mastercard debt  $   10,000
Item 4 (in part)
Costs order  $   10,000
I do not propose to bring these liabilities into account.
For reasons to be given later in these reasons I formed a poor view of the reliability of the Husband’s evidence. No attempt was made to produce any records relating to the line of credit account to establish when the line of credit indebtedness arose or why it arose. The Husband asserted that largely the line of credit arose as the overdraft on the professional practice he operated ballooned out from the $30,000 maximum to $46,000. The Mastercard debt was said to relate to legal expenses incurred in contesting the criminal charges. The Husband asserted that the costs order of $10,000 should be a liability of each of the parties.

The Husband engaged in criminal behaviour which involved the police being sufficiently satisfied to prosecute him, a Magistrate being satisfied to commit him for trial, the Director of Prosecutions being satisfied there was sufficient evidence to present an indictment, the Husband thereafter pleading guilty to such charges and a District Court Judge thereafter accepting such pleas. The Husband now complains about the Wife’s conduct in instituting the complaint in the first place and expects her to pay half of the penalty imposed when steps were taken to have him barred from his profession as a result of the convictions recorded.
The proposition put forward by the Husband that the Wife should be liable for the line of credit debt incurred after he excluded her from the professional practice is equally preposterous and reflects in large measure the unreal position adopted by the Husband in relation to many aspects of the litigation.

Liability for Unpaid Rates

The S property in the Husband’s name has unpaid rates to the local City Council of $2,300. The Husband has unpaid rates on the A property of $1,400. It was argued that the Husband since shortly after ceasing his professional practice on 30 June 2008 has been reliant only on a disability pension and has not been in a position to pay the outstanding rates.
It appears that the Husband was hospitalised for a period of time. No records were produced as to how long he was hospitalised. In any event I see no reason why the Husband could not have made phone calls from hospital to have the S property leased and thereby start to generate an income. I will deal with this in more detail when considering what adjustment should be made under the principles of wastage as submitted by the Wife’s Counsel. Suffice it to say the rates on the properties were for the last decade the Husband’s responsibility and I fail to see why it should be treated as a joint liability at this point in time. He has had the benefit of residing in the A property and he has had sole control over the S premises which he has elected to leave untenanted for a period of 18 months.

Background Facts

The parties were each born in the United Kingdom, the Husband in 1945 and the Wife in 1950.
The background details of the parties at different stages of their lives are to be found in the report annexed to the affidavit of the Husband’s psychiatrist,

Dr C. The parties themselves in their trial affidavits set out in considerable detail the history of their relationship.
The parties met in the United Kingdom in 1976. Each was a citizen of that country. They married in February of 1980. They migrated to Australia in July 1981. The Husband had practiced in his profession whilst in the United Kingdom. On arrival in Queensland he was qualified to practice in Australia. For a number of years he worked as an employed professional before purchasing a practice in about 1987. In about 1989 the Wife commenced work in the practice. She subsequently undertook studies and by July 1995 was qualified in the same profession. By 1999 the parties agreed the Wife would work in the practice and the Husband would focus on property redevelopment.
In the period 1989/1990 the Husband acquired the S property in his name with the intention of relocating the practice to that address. This was done.
In March 1997 the parties purchased the B Street property. The property was subdivided and a duplex was constructed on a vacant block created by the subdivision. The other allotment had an existing home on it.
The parties bought and sold a number of properties over the course of the late 1990s.
In May 2000 the A property was acquired solely in the Husband’s name. The Husband has at all relevant times continued to occupy this property.
Separation occurred in about September 2000. After separation the Wife resided at the practice for a short period before moving into one of the B Street properties.
Around this time the Wife commenced a relationship with Mr F. In March 2002 she commenced residing in a property at occupied by Mr F. At the present time she resides in a property owned by him. The Wife’s estimate was the property was worth $660,000 and she understood it was unencumbered. Mr F has no other assets and no income. He is supported by the Wife.

Acquisition of After Acquired Properties

In paragraphs 113 to 116 and 120 of her trial affidavit the Wife says:
“113.I have already deposed to the period of unemployment which followed from the Husband locking me out of the office and the relatively low paid job I obtained after that.
114.Although I am the owner of three [B] Street properties I was living in one therefore rent was only coming from two which did not cover the mortgage and outlays. The husband guaranteed the loan for [B] Street when the townhouses were built and has refused to release it despite requests.
115.As I could not use the equity in [B] Street I was obliged to pay mortgage insurance to purchase [the P property] as I needed to borrow 90% of the purchase price. The other 10% I borrowed using a loan.
116.[T property] was purchased using [P property] as collateral, the valuation increased significantly in about eighteen months and I was able to borrow all of the purchase price plus costs. Both these loans are cross collateralised with Bank of Queensland. To this day they are both still, “negatively geared”, ie. they make a financial loss.
120.The [B] Street properties were a burden I had no choice other than to let out and maintain. The rental income produced a loss I had to make up until I moved out in March 2002. I managed them myself to save on agents fees. I cleaned them, advertised them and let them. I could not sell them as the Husband refused to release the guarantee he had given over the loan when they were built. He would not negotiate a property settlement. He refused to let me re-finance them at a lower rate (the rate remains higher than normal mortgage lending due to the nature of the loan and it being interest only). This means the net rent each year is less than it would be if the loan were converted to a P and I loan with Bank of Queensland – with whom I enjoy a discounted loan rate due to some sort of customer loyalty/privileged customer rating.”
The Wife’s evidence was:
·She acquired the P property for $161,000. She borrowed 90 per cent of the purchase price from the mortgagee and a further sum of $16,100 from another source.
·At the time the B Street properties were not producing profit because one or more of the properties was vacant for periods of time and she was in occupation of one of the properties from shortly after the separation until March 2002.
·She acquired the property at T for $206,000. She borrowed $214,000 presumably to assist with the payment of stamp duty and other costs associated with the purchase.
Her evidence was that she was able to borrow not because of a positive income flow from the B Street properties but she concedes ownership of those properties gave her a greater capacity to borrow.
I accept since about 2003/2004 the Wife has derived income from five properties being the three B Street properties and the two after acquired properties.
So far as the P and T properties may be negatively geared the rental from her ownership of these has been instrumental in increasing her equity in the properties. The B Street properties produce income as set out in the Wife’s statement of financial circumstances.

Initial Contributions

No submissions were made on this aspect. Any initial contributions were of a relatively minor nature and having regard to the period of the relationship may be safely disregarded.
The Husband says that shortly after co-habitation commenced he received an inheritance from his mother’s estate. At paragraphs 5 and 6 of his trial affidavit the Husband says:
“5.After the Council loan was paid back there was about ₤10,000 left.
6.I cannot recall whether ₤7,000 was used to purchase antiques and the shipment or whether ₤7,500 of that money was used to purchase the land at [H]. Either way the money was used for the Respondent and I.”
The Wife’s evidence is that the amount received from the estate was several thousand pounds.
The evidence is vague but on balance because I prefer her as the more credible witness I find it likely that the Wife’s version is more accurate.
The Wife at paragraph 19 of her affidavit says the home the parties had acquired was sold before they migrated to Australia and it realised a nett gain of ₤22,000.
It would appear that this property was acquired with proceeds of the sale of the Wife’s apartment of about ₤3,000. The Husband says he contributed ₤5,000 from savings from when he worked in the Caribbean.
There were no submissions made in relation to the issue of initial contributions and I am prepared to treat them as being approximately equal and in any event of no great financial significance.

Medical Evidence

Each of the parties relied on medical reports.

Husband’s Medical Condition

The Husband relied on a report of the 4 November 2009 by Dr C, Consultant Psychiatrist. The Husband has been a patient of Dr C’s since October 2002.
On the first page of his report Dr C makes reference to the letter of referral from the Husband’s general practitioner in the following terms:
“The marriage breakup seems to have been particularly acrimonious and [the husband] says he has also quarrelled with all of his friends and has none left. He works 12 hours a day and tries to sleep the rest of the time. He actually presented to me yesterday complaining of not being able to sleep.
During the consultation he admitted that he had constant thoughts of violence towards his wife and then himself. He had no specific plans but said, “I would like to blow the bitch up or pour petrol over her car and set it alight.” However, he said that these thoughts had been present for years and he had never acted on them and would not do so now.”
Under the heading, “Past Psychiatric History” the doctor notes:
“He had seen a psychiatrist once in the early 1970s following the break up of a relationship. He appears to have been briefly admitted to hospital for a day or so at that time as he was not coping but recovered quickly and had no long term treatment. He had spoken to a psychologist [Ms V] subsequent to the breakup but had found this treatment of limited use.”
Dr C at page 6 of his report in the final paragraph makes the following observations as to the Husband’s condition:
“His illness has been complicated by the presence of significant personality features in the obsessional spectrum. This is quite clearly reflected in his correspondence over a long period of time and this correspondence in my view, in many ways emanates from his somewhat obsessive compulsive personality style rather than from his bipolar disorder although the two clearly mix and produce quite significant symptomotology.
It is worthwhile noting that [the husband] continues to see me though there have been in recent times, substantial periods where I have had no contact with him as he has been in hospital. However, as is his want, [the husband] continues to correspond even at these times and his writing style really only becomes more elaborate and filled with hyperbole at times when he is more manic.”
In his own affidavit the Husband deposes at paragraph 3:
“Some time in my childhood I was institutionalised following emotional difficulties that have returned to me in later life.”
This period of institutionalisation does not appear to have been mentioned to Dr C.
The Husband’s sole source of income is the disability support pension until he commences to receive rent from the S property.
Annexed to his affidavit (annexure 7) the Husband discloses his records from the Royal Brisbane Hospital. It indicates that he has insulin dependent diabetes, had an amputation of the right big toe in February 2009, suffers hypertension, hyperlipidaemia, and there is a provisional diagnosis of bipolar disorder.
Exhibit 8 in the proceedings is a report given to the Husband’s solicitors by the Community Health Service dated the 12 November 2009, immediately prior to the commencement of the hearing.
At page 2 of that report under the heading “Social Isolation” it is recorded:
“[The husband] states that his only family contact is infrequent contact with a nephew and that all other family members have deceased. [The husband] says he has two friends, […] and […], who visit about every six weeks and he occasionally has dinner with them. [The husband] says that usually the only time he goes out are (sic) to do the shopping or to attend appointments. [The husband] has identified that he would like to extend his social support network and we have discussed ways that he might do this, including pursuit of his interest in art. [The husband] has not been able to make progress in this area thus far.”
Under the heading “Home Environment” it is recorded:
“During home visits the following has been observed:
·    Rooms, upstairs and downstairs, are extremely cluttered with items, including piles of clothes, boxes, tissues, utensils and other miscellaneous goods.
·    Kitchen floor cluttered with several large plastic bins, other items, and recently with two drills with bits protruding. On one occasion, we noted two plastic shopping bags containing vegetables on the floor. They appeared to have been there for a period of time and [the husband] confirmed that they had been there for a few days and he seemed unaware of the need for them to be refrigerated.
·    Kitchen benches covered with utensils, used crockery, food tins, and other items and kitchen sink was grimy. Stove also grimy.
·    Loose floor mats are throughout hallways and some rooms. Community Health Nurse has advised [the husband] that these present a potential falls risk to him.
·    Carpet flooring in lower level rooms appear to have been damaged in places and [the husband] confirmed that they had been partly eaten by moths. There appeared to be mouse or rat droppings on the carpet in places.
·    The bed did not have any bed linen on it except the doona which seemed to be damaged.
·    Entrance to front steps is overgrown and littered with advertising material.”
Under the heading “Summary” it is reported:
“In summary, [the husband] appears socially isolated. [The husband] lives in a very cluttered house with several loose floor mats and an overgrown garden. Although he has identified that he would like to clean and de-clutter the house, and has planned to do this in small areas at a time he has been unable to achieve this goal. [The husband] has also acknowledged the importance of having a functional kitchen to enable him to prepare appropriate meals, but has had great difficulty in maintaining clear kitchen bench space. The Community Health Nurse has also advised [the husband] about the risks of food poisoning and the need for refrigeration of fresh foods and maintaining basic hygiene standards in the kitchen. Equally, although [the husband] has identified that he would like to extend his social support network, he has not been able to make progress in this area.”
In the final paragraph of the report there is a recommendation that the Husband would benefit from having a carer to assist him with house cleaning, food preparation, and general maintenance of household order.
It would seem from the terms of this report which was not challenged that the Husband’s quality of life leaves a deal to be desired.

Wife’s Medical Condition

For the Wife reliance was placed on a report from an Orthopaedic Surgeon,

Dr M. The report is dated the 20 October 2009.
He records that the Wife:
“- - - underwent a right sided total hip replacement at the Brisbane Private Hospital on 7 June 2007 - - -
Prosthetic implants such as those used with [the wife] have a finite life span. Survivorship analyses vary but she has an 80% to 90% chance of having 20 useful years with this prosthetic joint. Thereafter the failure rate increases.
- - -
Revision hip replacement procedures cost in the order of $50,000 in current terms.”
The doctor engages in a degree of conjecture when he says:
“At the time of originally examining her in May of 2007, I was not aware of any malady referable to her left hip joint. It is theoretically possible however that the arthritic process which was witnessed in the right hip could also involve the left hip. She therefore is at risk of requiring a left side total hip replacement at some time in the future. I am not able to quantify that risk. Costs for a primary total joint replacement are in the order of $30,000 in current terms.”
This evidence was before the Court on an unchallenged basis.

Credibility Of The Parties

Whether because of his mental state as described in the report by Dr C or because of medication he has been taking over the years, or the large quantities of alcohol he has at times consumed, the Husband concedes he has poor recall of events. The Husband says at one stage he was consuming three bottles of gin a day.
In his affidavit at paragraph 65 he says when dealing with the period May 2001:
“65.My actions and memory from about that time were and still are, unknown to me. I cannot recall much at all, but that was I devastated by the end of our relationship and could not accept that “it was over”.”
At paragraph 121 he deposes:
“121.The Respondent claims that I unilaterally cancelled the delivery of the piano – I suspect I did, if the Respondent says so, but have no clear recollection of events.
At paragraph 172 under the heading “My Health” he deposes:
“172.I have been very unwell and remain unwell suffering from a severe mental disturbance, which is illustrated with the volume of affidavits filed in the Court. My solicitor asked me to read the affidavits. My initial reaction was, “who wrote these”? I was completely taken aback when I was shown the sworn sealed copies of the affidavits.”
For the purposes of the criminal proceedings in the District Court a statement of agreed facts was handed up to the presiding Judge.
The Husband was legally represented at the relevant time. The Husband now disputes the accuracy of some of the agreed facts as set out in that document.
I find it likely that the statement of agreed facts produced represents the more accurate account of events which occurred during the period described.
In considering charge 9 a charge of swearing a false and/or misleading affidavit, the professional regulatory body found (paragraph 41):
“The Respondent was reckless in asserting that all correspondence was sent to the [Z] address. To that extent, the Applicant has proved that the Respondent made representation in his affidavit sworn on 20 August 2004 that was false and/or misleading at the time the affidavit was sworn. In the circumstances, however, that could not be characterised as any more than unsatisfactory professional conduct.”
It is one more aspect where it has been demonstrated that in various respects the affidavit material of the Applicant is unreliable.
The Wife’s affidavit of evidence in chief was filed on 6 November 2009. It is a very detailed document setting out with considerable specificity the acquisition and sale of properties and the activities the parties engaged in, particularly in the process of renovating properties.
At appropriate times the Wife makes concessions against interest by confirming the Husband’s skill and hard work.
By way of example, paragraph 41 she says:
“41.The practice turned out to be a success. The Husband worked hard. He was complaining at this time of being “tired and busy”.”
I do not necessarily attribute bad faith to the Husband where there is conflict between his version of events and the version of events of the Wife but on balance I find it is more probable than not that the Wife’s account is likely to be the more accurate one.

Contributions

Submissions For Husband

For the Husband it was submitted that the Wife has an interest in six properties.
·The three properties in B Street (a house and a duplex).
·The T property.
·The P property.
·An inchoate interest in the property owned by her partner. This property is estimated to be worth $660,000 and is unencumbered. The Wife’s partner is retired and has no assets other than the house. The parties have been in a relationship for about ten years. She supports her partner. One obvious advantage to the Wife so long as the relationship remains afoot is she has rent free use of the property which is some offset for the support she provides which she says is $300 a week. If the Wife and Mr F were to separate it is difficult to speculate what the results of any litigation would be. It is possible that it would be found that she is not only not entitled to an interest in Mr F’s property but she may have to pay her partner an adjustment if it is found that her assets are significantly greater than her partner’s.
The Wife’s financial statement filed on 9 November 2009 reveals an income of $1,765 from salary, rental income is $1,393. From the rental income she meets mortgage and rate payments totalling $1,240 a week.
The Husband’s income is a disability pension.
The Wife has had the benefit of using the B Street properties, not only as an income stream, but also at one stage she occupied one of the properties.
Because of the Husband’s significant health issues and because of the considerable disparity in income between the parties, Counsel for the Husband submitted an apportionment of 70/30 in favour of his client would be an appropriate adjustment.
As previously noted by way of a consent order there was a distribution in equal terms of a sum of $190,000 to each party being the proceeds of the sale of one of the investment properties.
The Husband at paragraph 74 of his affidavit deposes that he used his share to reduce the mortgage on the S property from $220,000 down to $30,000. Annexure 2 to the affidavit is a copy of the mortgage bank statement which verifies this claim.
Thereafter when operating the overdraft account of $30,000 the Husband has allowed the line of credit to extend to $46,000 which is the current indebtedness.
At paragraph 75 the Husband says:
“75.Unfortunately as there were outstanding barrister’s fees and other unexpected and expensive accounts to be discharged the mortgage account gradually crept back to its former level of $175,000.”
The barrister’s fees appeared to relate to representation in the District Court for the criminal charges preferred against him. There has been no attempt to give a breakdown of what fees, if any, were attributable to contesting the charges before the professional regulatory body.
I have difficulty in understanding what liability the Husband is referring to other than it may be reflected in the mortgage of $127,000 and the line of credit of $46,000 which total $173,000.
If this be the case, in bringing the mortgage on the A property into account, effectively the Wife is being responsible for one half of the Husband’s legal fees in defending the charges brought against him.
It was common ground that the $190,000 would not be added back as notional assets on the basis that there would be a risk of double counting. No submissions were made in relation to this aspect. On my recollection it was common ground that the $127,000 mortgage on the A property should be brought into account. It is really academic whether the Husband paid his legal fees from the $190,000 distribution or by a draw down on his (reduced) mortgage and (increased) line of credit.

Section 79 – Submissions For Wife

Many of the submissions by the Wife in relation to the percentage distribution pursuant to the section 79 factors related to what was said to be the “wastage” issue or the negative contributions by the Husband.
These included:
·The Husband not doing anything to maintain the A and S properties. It was contended this had an impact on the value of each property.
A single expert had been appointed to value the various properties. He valued the A property occupied by the Husband at $830,000. In doing so at page 4 paragraph 7 it was noted:
“7.The improvements as at the date of inspection were presented to a poor condition both internally and externally. This was generally cosmetic in nature and appears that general maintenance, cleaning and tidy (sic) has not been undertaken for some time. In addition the yard has been overgrown and rubbish has accumulated.
We have made an allowance in our assessment which we have discounted from the current market value to allow for the anticipated costs (for example cleaning and maintenance) to reinstate the improvements to a condition suitable for sale. This cost we estimate at approximately $10,000 to $20,000.”
·Failing to lease the S property for a period of 18 months.
Mr D, a valuer prepared a valuation for the S property. He describes the property as 156 square metres of office and storage accommodation. He notes that the proposed lease is reportedly $200 per square metre nett plus GST and outgoings over a five year term with a five year option period.
This would appear to indicate that failing to lease the property has resulted in a loss of income in the order of $45,000. I accept that there would have been some outgoings deducted from this.
·Failing to agree to the Wife refinancing the B Street loan to a more favourable interest rate and to allow repayments of both principal and interest.
The Wife at paragraph 114 deposes to the fact the Husband had guaranteed the loan for the B Street development and refused to release the loan despite request.
It is somewhat unfortunate that the Wife did not lead evidence from an accountant to quantify what she says would have been the saving in interest and the advantages of having repaid both principal and interest instead of an interest only loan which she had been paying for the past nine years.
·Locking the Wife out of the professional practice in May 2001 while she was away on leave. It had been agreed between the parties that the Wife would operate the practice and the Husband would engage in property development.
By his conduct in locking the Wife out of the practice, the Husband unilaterally altered an arrangement which had been in place for a number of years and which had the effect of the practice being operated successfully.
The Husband had acquired the practice when it was operating from Y for $20,000. It is again unfortunate that no evidence was led by the Wife from an accountant, a valuer or a practitioner experienced in the acquisition and sale of professional practices to say what the practice would have been worth based on the earnings in the year 2000 when she had been operating the practice.
There are emails from the Husband’s legal practitioner to the Wife indicating that the Husband had not been capable of operating the practice for many years prior to the professional regulatory body moving in to shut it down on 30 June 2008.
The nett result of this is what could have been a valuable professional practice has ended up being worthless.
To his trial affidavit the Husband has annexed a bundle of statements entitled “bank reconciliation general account” for the period from May 2004 to May 2008 (46 pages in all). These show on a monthly basis the total credits and total debits. The evidence presented in this form is quite meaningless without some explanation as to the legitimacy of the monthly debits. Does it include personal expenditure? What were the Husband’s drawings? There has been no attempt by the Husband to produce a profit and loss statement and balance sheet covering the period from 2001 to the time when the professional regulatory body moved in to take over the practice. It is possible that at times during this period the Husband was making a reasonable income but at the same time engaged in excessive expenditure. There is simply no evidence as to what nett income was generated from the practice over this period of time.
The Husband conceded that no personal tax returns had been lodged by him for the last five years.

Positive Contributions By The Wife

On behalf of the Wife it was submitted she made positive contribution in the following manner:
·Managing B Street herself. Over the entire period she has not engaged real estate agents. This has necessitated the Wife in considerable extra responsibility. Again, it is somewhat unfortunate that no attempt has been made to quantify the savings to the parties by a comparison of what a real estate agent’s fees would have been over the decade based on rental returns.
·The Wife has added significantly to the property pool by the acquisition of the T and P properties. Because of the Husband’s intransigence in not allowing the Wife to refinance B Street it could not be used as collateral for the acquisition of P property. The Wife’s evidence, which I accept, is that she had to borrow 100 per cent to acquire P property. P property was later used as collateral to acquire T property.
The Wife’s actions acquiring these two properties has resulted in an increase in the assets of the parties of a nett amount of $380,000. There is no comparable contribution by the Husband in the period since separation. His contribution as described above has been of a negative nature. It is not simply a case of poor investment. The negative contribution in any objective sense could only be categorised as wastage.

Delay In Resolving Property Settlement Issues

No submissions were made on this aspect.
At paragraph 94 of her affidavit the Wife says that she informed the Husband in early September 2000 that she would be leaving and moving into one of the townhouses at B Street.
The parties had married in February 1980 but had cohabited for a number of years from about 1976.
The delay has occasioned considerable change in the financial position of the parties.
By way of example the Wife says in her affidavit material (paragraph 104):
“104.At the time the Husband locked me out the practice was quite healthy. It suffered a little around July to September 2000 which we attributed to the introduction of GST. By Christmas 2000 the overdraft had hit its $30,000 limit for the first time ever. By this time the tide had turned and business was picking up again. January was, fortunately, busier than usual and by the time the Husband “took back” the practice, the overdraft at the end of April 2001 was $1,000. When I had taken over the practice initially in July 1999 I had “inherited” an overdraft of $15,000.”
At paragraph 129 of her affidavit the Wife deposes as follows:
“129.I have had no contact with the Husband since mid-2005 when the property settlement application was once again adjourned (at) the request of the Husband’s Counsel. I did not want this – it was five years since separation. The matter had already been adjourned in 2003 due to the criminal charges and I was prejudiced by the delay - - - ”
Clearly the professional regulatory body could not move against the Husband until the criminal charges were deposed of. It appears to have taken at least six years for the criminal charges to eventually be finalised.
The Wife says as a consequence of the Husband unilaterally taking over the practice she was unemployed until she was employed with a business, FS Business. She stayed in that position for a period of two and a half years earning about $50,000 per annum.
In the intervening period the Wife has acquired the properties as set out in the material, the professional practice has closed down and the Husband has had significant liabilities for legal fees and other expenses.
The case was presented on the basis that all of the assets and liabilities should be valued as at the present time and no submission was made to determine the property settlement issues as at an earlier point in time.

Calculations

Property pool assets:
7 B Street  $   510,000
9 B Street  $   640,000
S property  $   475,000
A property  $   830,000
T property  $   340,000
P property  $   350,000
Total assets  $3,145,000
Liabilities:
Mortgage A property   $   127,000
Mortgage B Street properties  $   190,000
Mortgages P and T properties  $   310,000
Total     $   627,000
Nett assets of parties  $2,518,000
For reasons soon to be given I propose to order that the assets be divided equally between the parties.
The Husband’s entitlement:   $1,259,000
Property Husband has received:
S property  $   475,000
A property  $   830,000
Total  $1,305,000
Less mortgage on A property  $   127,000
Husband has received   $1,178,000
If the Wife makes a payment of $81,000 to the Husband this would involve an equal distribution of the assets as between them.
Counsel for the Wife in the course of final address made submissions that an order should be made for the Wife to receive 55 per cent of the total assets. On this basis the Husband would have had to pay to the Wife about $44,900. Counsel indicated that the Wife would not seek any order that there be a cash adjustment paid by the Husband to her.
In appropriate circumstances it is common to differentiate assets into two property pools and submissions were made along these lines by the Wife’s Counsel, at the commencement of the hearing (at paragraph 19 of his written submissions) that the T and P properties be treated separately. In the course of final submissions Counsel for the Wife only made reference to a split of 55/45 for a consideration of all assets in the pool. I do not propose to treat the assets in separate pools principally because in final submissions neither Counsel sought that I should adopt such an approach.
On account of section 79 factors I am of the view it is just and equitable to apportion the property 60/40 to the Wife.
My reasons for so finding are:
·I accept to the time of separation the parties each worked to the best of their respective abilities both as professional practitioners and property developers. An equal division of the assets as at late 2000 or early 2001 would have been an appropriate order. The Husband’s medical condition had not manifested itself at that point in time.
·Since separation the Wife’s contributions have been positive in the following way:
o   The acquisition of P and T properties.
o   Managing the B Street properties.
·The Husband’s contributions have been of a negative nature:
o   Failing to agree to the Wife refinancing B Street.
o   Operating the professional practice when he knew or should have known he was incapable of properly operating same.
o   Not maintaining the A property in a fit and tidy state resulting in an under value of between $10,000 and $20,000.
o   Leaving S property untenanted for a period of 18 months after the practice ceased to operate.
The Wife’s positive contributions when compared to the Husband’s negative contributions lead to a differential of 20 per cent in her favour.
In making this adjustment I am fully conscious the Wife has superannuation entitlements of about $185,600 whilst the Husband has no superannuation. He will have the S property investment which should produce a gross income of about $30,000. The valuer’s report indicates the tenant would be responsible for outgoings on the property. The Husband would be liable to pay tax.
It is in the Husband’s favour that the A property is his principal place of residence and accordingly is not subject to capital gains.
It is difficult to quantify the Husband’s negative contributions but I would assess them as significant. The Wife’s positive contribution is more easily assessed as the equity in her two properties and her role in managing the B Street properties.
Where the nett assets are valued at $2,518,000 an adjustment of 60/40 results in the Wife receiving approximately $500,000 more than the Husband. This reflects:
a)the positive contribution of $380,000 being the equity in the two after acquired properties;
b)the savings to the parties in self managing B Street;
c)the Husband’s failure to lease the S property for 18 months;
d)the Husband’s failure to maintain the A property in proper condition; and
e)a very conservative global assessment of the cost of the negative contributions by the Husband including the loss in value of the professional practice.

Section 75(2) Factors

It is inherent in the above findings that the Husband has made no contribution to the after acquired assets other than in an indirect sense by the Wife’s having B Street as part of her property portfolio.
It was contended for the Wife that there was the prospect of the Husband returning to work as a property developer. In paragraph 7 of the written submissions Counsel for the Wife noted:
“7.He clearly preferred property renovations/development in any event. There is no medical evidence to the effect that the Husband could not engage in such activity. He has an abundance of tools, skills and knowledge. Following the trial he will also have the necessary capital.”
The Husband’s attitude at all times has been along the lines, “she ruined my life and that should be taken into account”. In the course of cross examination the Husband when questioned about the state of disrepair of the A property gave the distinct impression that he was not interested in doing anything to improve his capital position until the property settlement issues were resolved.
It is possible the Husband may endeavour to engage in some income producing activity but I would be extremely sceptical of his prospects of success in this regard.
The Wife will soon be 60 years of age. She has had and may have some future medical expenses. Counsel in his written submissions (paragraph 9) submits:
“9. She will have to have the other hip replaced.”
That is not the evidence of the Orthopaedic Surgeon. He speculates that there is a prospect of it occurring.
The Wife earns a significant income at the present time as a professional practitioner and has the benefit of the income from the B Street properties and the two after acquired properties. In addition she has the security of her superannuation interest and the prospect of a half interest in the United Kingdom property, on the assumption she will outlive her mother.
By making an adjustment of equality as between the parties, the Husband in effect is being compensated for the sum of $500,000 for his disabilities and the differential in their earning capacities.
Such an order results in him receiving the sum of $81,000. With that money he could pay out the line of credit, the rates and the credit card debt and also meet the costs order from the professional regulatory body. Such payments would total approximately $70,000.
There is evidence that he has outstanding legal costs of $66,000. Whether that relates to the proceedings in the Family Court or unpaid costs from proceedings in the State Magistrates Court, the professional regulatory body or the District Court was never made clear. The Husband will be left with the mortgage debt of $127,000. The bank has delayed recovery action in relation to this debt pending the finalisation of these proceedings. If that outstanding debt results in the S property having to be sold it is a matter for which the Husband has to take responsibility. The evidence is that the $127,000 indebtedness arises in part from legal fees incurred separate from these proceedings.
Where the Husband is to receive a settlement in these terms it is speculative as to the quality of life he is able to bring to bear to the assets under his control. If he returned to the heavy consumption of alcohol, the assets would be frittered away and the Husband would again become dependent on the disability pension.
However, it is not for this Court to tell citizens how they may or may not lead their lives or how they may or may not spend their money. I am bound by the terms of section 79 and section 75(2) to make an order which is assessed as being just and equitable.

For the reasons given above I am of the view that the property should be divided equally resulting in a cash adjustment to the Husband of $81,000 which represents an order which in all the circumstances I find to be just and equitable.

Form of Orders

The real property is already in the parties’ respective names and no consequential order is required.
I will hear the parties on the form of orders prior to issuing same. At this stage the proposed orders are at page 2 of these reasons.

I certify that the preceding one hundred and fifty-one (151) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry

Associate:

Date: 20 August 2010

[2010] FamCA 769

20 August 2010

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Injunction

Fiduciary Duty

Constructive Trust