Tavano & Tavano
[2022] FedCFamC2F 326
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Tavano & Tavano [2022] FedCFamC2F 326
File number(s): SYC 713 of 2017 Judgment of: JUDGE MORLEY Date of judgment: 25 March 2022 Catchwords: FAMILY LAW – property – final defended hearing – orders pursuant to section 79 of the Family Law Act 1975 (Cth) – where asset pool is contested – where Court deals with asserted “addbacks” to the pool – where Court finds it just and equitable to make an order pursuant to section 79. Legislation: Family Law Act 1975 (Cth), ss 75, 79, 79A, 117. Cases cited: AJO v GRO [2005] FamCA 195
Bevan & Bevan [2013] FamCAFC 116
Chang v Su [2002] FamCA 156
Dickons & Dickons [2012] FamCAFC 154
Fields & Smith [2015] FamCAFC 57
Fontana & Fontana [2018] FamCAFC 63
Grier & Malphas (2017) 55 Fam LR 107
Hepworth v Hepworth (1963) 110 CLR 309
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (‘Hickey’) [2003] FamCA 395
In the Marriage of Harris (1991) 104 FLR 458
In the Marriage of Kowaliw (1981) FLC 91-092
Jabour & Jabour [2019] FamCAFC 78
Jones v Dunkel [1959] 101 CLR 298
Masoud & Masoud [2016] FamCAFC 24
Shan & Prasad [2018] FamCAFC 12
Stanford & Stanford (2012) 247 CLR 108
Talbot & Talbot [2015] FamCAFC 132
Tate v Tate [2000] FamCA 1040
Townsend & Townsend [1995] FLC 92-569
Trevi & Trevi [2018] FamCAFC 173
Vass & Vass [2015] FamCAFC 51
Division: Division 2 Family Law Number of paragraphs: 224 Date of last submission/s: 9 December 2020 Date of hearing: 24-26 February 2020 and 2-3 November 2020 Place: Sydney Counsel for the Applicant: Ms Snelling Solicitor for the Applicant: Burt & Allen Lawyers Counsel for the Respondent: Mr Jackson Solicitor for the Respondent: Tomasevic Poljak Lawyers ORDERS
SYC 713 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR TAVANO
Applicant
AND: MS TAVANO
Respondent
ORDER MADE BY:
JUDGE MORLEY
DATE OF ORDER:
25 MARCH 2022
THE COURT ORDERS THAT:
1.Pursuant to section 79 of the Family Law Act 1975 (Cth):
(a)That within two (2) months from the date of these orders, the Husband Mr Tavano (‘the Husband’) do all acts and provide all consents and sign all documents as are necessary to transfer to the Wife Ms Tavano (‘the Wife’) all of his right, title, and interest in the property known as and situate at B Street, Suburb C, NSW being the whole of the land more particularly described in Certificate of Title Folio Identifier … (‘the former matrimonial home’).
(b)That simultaneously with order 1(a) above, the Husband and the Wife do all acts and provide all consents and sign all documents as are necessary to discharge registered mortgage number … to Bank D secured over the former matrimonial home, and the Wife is to be solely responsible as between the Husband and the Wife for any costs associated with obtaining and lodging a discharge of mortgage document.
(c)That within two (2) months from the date of this order, the Husband and the Wife are to do all acts and provide all consents and sign all documents as are necessary to transfer to the Wife the funds standing to the credit of the parties jointly in the NAB account ending #...34, and thereafter the parties are to do all things and provide all consents and sign all documents as are necessary to close that account.
(d)That the Wife be solely responsible as between herself and the Husband for the debt owed to Ms E.
(e)That a base amount of $4,650.00 be allocated, as required by section 90XT(4) of the Family Law Act 1975 (Cth) to Mr Tavano out of the interest of Ms Tavano in the F Super Fund.
(i)That, in accordance with paragraph 90XT(1)(a) of the Family Law Act 1975 (Cth):
A.Mr Tavano is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount allocated in this order; and
B.Ms Tavano’s entitlement, and the entitlement of such other person to whom a splittable payment may be made out of Ms Tavano’s interest in the F Superannuation Fund is correspondingly reduced.
(ii)That the trustee of the F Superannuation Fund (‘the trustee’) shall do all such acts and things and sign all such documents as may be necessary to:
A.Calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 the entitlement for Mr Tavano by this order; and
B.Pay the entitlement whenever the trustee makes a splittable payment of Ms Tavano’s interest in the F Superannuation Fund.
(iii)That having been accorded procedural fairness in relation to the making of this order, this order binds the trustee of the F Superannuation Fund.
(iv)That this order have effect from the operative time and the operative time is the fourth business day after the order is served on the trustee.
(f)That the Husband be solely responsible as between himself and the Wife for repayment of the loan for purchase of his F shares.
(g)That the Wife pay to the Husband one half of any amount of Capital Gains Tax paid by him in consequence of the sale of the real property at G Street, Suburb H, such payment to be made by her to the Husband within three (3) months of her receiving from him written notice of such amount verified by a copy of the Husband’s relevant personal income tax return, Notice of Assessment, and receipt from the Australian Tax Office for payment of the Capital Gains Tax.
(h)That except as otherwise provided for in this order, the Wife be solely entitled as between herself and the Husband to:
(i)Her personal effects and household contents in her possession;
(ii)Her Motor Vehicle 1 (registration …);
(iii)Her shares in Company J;
(iv)Any bank accounts in her sole name including but not limited to:
A.Her account with Bank D ending #..68;
B.Her account with Bank K ending #...42;
(v)Any proceeds from the sale of her Company L Shares; and
(vi)Subject to order 1(e), her superannuation entitlements.
(i)That except as otherwise provided for in this order, the Husband be solely entitled as between himself and the Wife to:
(i)His personal effects and household contents in his possession;
(ii)His Motor Vehicle 2 registration number …;
(iii)His Motor Vehicle 3 registration …;
(iv)His shares in Company F;
(v)Any bank accounts in his sole name including but not limited to:
A.His account with Bank M ending #...62;
B.His account with Bank M ending #...36;
(vi)Any proceeds from the sale of his Company L shares; and
(vii)His superannuation entitlements.
2.If either party refuses or neglects to sign or execute and return a document within seven days of a written request to do so, then a Registrar of the Sydney Registry of the Federal Circuit and Family Court of Australia is hereby appointed under section 106A of the Family Law Act 1975 (Cth) to sign or execute such document on behalf of that party upon lodgement of such document and the filing of an affidavit on behalf of the requesting party as to the said neglect or refusal.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 a pseudonym Tavano & Tavano has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
These Reasons relate to property settlement proceedings between the Applicant husband, Mr Tavano (“the husband”) and the Respondent wife, Ms Tavano (“the wife”). The husband filed his Initiating Application seeking property and parenting orders on 6 February 2017 and a final hearing took place on 24 to 26 February and 2 and 3 November 2020. On the last day of the evidence, the parties entered into final consent orders resolving all parenting proceedings between them, leaving the issue of property settlement for determination by the Court.
As is so often the case, the matrimonial asset pool is modest. As a consequence of the parties failing to reach agreement on property matters at any time, they will have expended a disproportionate amount of their property pool and their post-separation income on legal fees.
Following the close of the evidence regarding the financial aspects of the proceedings on 3 November 2020, directions were made for written submissions and judgment was reserved by Chambers order on 9 December 2020.
These Reasons should have been delivered and final orders made well prior to this time. I note the Court’s workload and the exacerbation caused by the difficulties of the SARS-CoV-2/COVID-19 pandemic as reason for the delay, but do not excuse it. I apologise to the parties and their legal advisors for the delay.
The parties were married in 2000 without any previous cohabitation and they separated on 28 February 2015. They remained separated under the same roof until the husband vacated the former matrimonial home on 21 September 2015, leaving the wife and their two children in occupation.
The parties’ two children are X, born in 2018, and Y, born in 2015. At the time of the final hearing X was 11 years of age and Y was five years of age.
Pursuant to the final parenting orders made by consent on 3 November 2020, the wife has sole parental responsibility for X and Y. They spend daytime only time with their father, between six and eight hours per fortnight
At the final hearing, the father was represented by Ms Snelling of counsel and the wife was represented by Mr Jackson of counsel. The parties were greatly assisted in resolving their parenting issues by the Independent Children's Lawyer, Mr Naidovski, and his counsel on the final hearing, Mr Ladopoulos.
MATERIALS RELIED UPON
The husband relied upon the following materials:
(a)Case outline document prepared by his counsel, Ms Snelling;
(b)His Amended Initiating Application filed 2 October 2019;
(c)Affidavit of Mr Tavano, sworn and filed 17 January 2020;
(d)Financial Statement of Mr Tavano, sworn or affirmed 17 January 2020; and
(e)Written submissions prepared by his counsel, Ms Snelling, dated 20 November 2020.
The husband did not rely on any exhibits in relation to the property settlement issues.
The wife relied upon the following materials:
(f)Case summary document prepared by her counsel, Mr Jackson;
(g)Her Amended Amended Response filed 12 December 2019;
(h)Affidavit of Ms Tavano sworn 17 January 2020 and the exhibited documents referred to in that affidavit, being exhibits E1 through to E57 inclusive;
(i)Financial Statement of Ms Tavano sworn and filed 17 January 2020;
(j)Affidavit of Ms Tavano sworn and filed 9 October 2020;
(k)Affidavit of Mr N sworn 15 January and filed 17 January 2020;
(l)Affidavit of Mr N sworn 8 October and filed 9 October 2020;
(m)Affidavit of Mr O, sworn 18 September 2020 and filed 9 October 2020 relating to the valuation of a motor vehicle;
(n)Written submissions prepared by her counsel, Mr Jackson, and dated 9 December 2020.
The wife also relied upon the following exhibits in relation to the property settlement issues:
(a)Exhibit R2, being a letter dated 2 August 2019 from the wife’s solicitor to the husband;
(b)Exhibit R3, being income statements for “Company U” for the financial years ended 30 June 2014, 2015, 2016, 2017 and 2018;
(c)Exhibit R4, being a photograph of the studio apartment at P Street, Suburb Q, NSW;
(d)Exhibit R5, being an AGL account for P Street, Suburb Q, for payment by 2 March 2017 addressed to the husband;
(e)Exhibit R6, being a sales inspection report and exclusive selling agency agreement relating to sale by Mr N of R Street, Suburb S dated 19 February 2020;
(f)Exhibit R7, being a Notice to Produce addressed to the husband dated 26 January 2020;
(g)Exhibit R8, being documents produced under subpoena by New South Wales Roads and Maritime Services relating to vehicle registration number …– Motor Vehicle 2 compliance date …;
(h)Exhibit R9, being a letter dated 28 August 2018 from the wife’s solicitors to the husband’s then-solicitors;
(i)Exhibit R10, being a letter dated 3 September 2019 from the wife’s solicitors to the husband;
(j)Exhibit R11, being Westpac bank statements for account ending #...54, in the husband’s sole name, statements 76 to 100 inclusive;
(k)Exhibit R12, being a letter dated 30 August 2019 from the wife’s solicitors to the husband;
(l)Exhibit R13, being another letter dated 30 August 2019 from the wife’s solicitors to the husband;
(m)Exhibit R14, being a sales inspection report and exclusive agency agreement in the name of Mr N relating to the property at R Street, Suburb S, and dated 26 October 2020;
(n)Exhibit R15, being a letter dated 1 October 2020 from the wife’s solicitors to F Super Pty Ltd and a letter dated 28 October 2020 from F Super Pty Ltd to the wife’s solicitors, in relation to procedural fairness to the trustees of the wife’s superannuation fund in relation to a proposed superannuation splitting order;
(o)Exhibit R16, being the husband’s tax return for the 2019 financial year;
(p)Exhibit R17, being the Notice Disputing Facts and the authenticity of documents dated and filed 29 October 2020;
(q)Exhibit R18, being the husband’s Notice of Assessment for the year ending 30 June 2017 from the Australian Taxation Office;
(r)Exhibit R19, being Bank T account statements for the husband’s account ending #...93, for the period of 9 July 2018 to 9 September 2020;
(s)Exhibit R20, being tax invoice number 163 issued by Company U dated 23 September 2019 to “Company V”;
(t)Exhibit R21, being a property condition report for W Street, Suburb Z, signed by the tenants, Mr Tavano and Ms Briggs, on 18 December 2015;
(u)Exhibit R22, being Bank M bank statements for an account in the name of the husband, account ending #...62, for the period 2 October 2019 to 31 December 2019;
(v)Exhibit R23, being M bank statements for an account in the name of the husband, account ending #...62, for various periods between 1 January 2020 and 30 June 2020;
(w)Exhibit R24, being M bank statements for an account in the husband’s name, account ending #...62, for the period of 1 July 2020 to 3 September 2020;
(x)Exhibit R25, being M bank statements for an account in the husband’s name, account ending #...62, for the period of 10 August 2019 to 18 August 2019;
(y)Exhibit R26, being M bank statements for an account in the husband’s name, account ending #...62, for the period 18 August 2019 to 26 August 2019; and
(z)R27, Notice to Admit facts issued by the wife directed to the husband, dated 26 October 2020 (appearing with exhibit R17).
At the hearing, the wife relied upon two further affidavits by witnesses, but those affidavits relate solely to parenting issues.
THE ORDERS SOUGHT BY THE HUSBAND
The husband sought the following final orders as set out in his Amended Initiating Application, filed 2 October 2019:
[24] That the husband within 2 months of the date hereof do all things and sign all documents necessary to effect a transfer to the wife of all or his right title and interest in the property situate at and known as B Street, Suburb C in the State of New South Wales and being the whole of the land contained in Certificate of Title FI: ….
[25] At the time of delivery by the husband of the executed transfer pursuant to Order 24 herein the wife forthwith pay the husband the sum of $435,000.00.
[26] That is in the event of wife failing to comply with Order 25 herein, each party shall take all necessary steps and sign all necessary documents to cause the said property situate at and known as B Street, Suburb C in the State of New South Wales to be sold by private treaty at the earliest possible date, and at a price and with an agent agreed between the parties, and that said the proceeds of sale by disbursed in accordance with these orders, and:
a. Failing agreement as to the price, to be determined by the President of the New South Wales Property Institute or his nominee;
b. Failing agreement as to the appointment of an agent, to be determined by the President of the Real Estate Institute of New South Wales or his nominee.
[27] That in the event that the said property fails to be sold by private treaty within a period of 2 months, the parties shall at the request of either of them, take all necessary steps and execute all necessary documents to cause the said property to be sold by auction at the earliest possible date at a reserve to be agreed between the parties, and failing such agreement, to be determined by the President of the NSW Division of the Australian Property Institute or his nominee and that the proceeds of the said sale be disbursed in accordance with these orders.
[28] If the property is not sold at auction then the parties shall follow the directions contained in orders 26 and 27 herein so far as they apply provided a period of 3 calendar months shall elapse after the attempted auction sale before the property is again put to public auction.
[29] That the proceeds of sale of the property situate at and known as B Street, Suburb C in the State of New South Wales be disbursed in the following manners.
a. Payment of legal costs and agent’s costs on sale.
b. The payment of any mortgage.
c. The payment of $435,000.00 to the husband together with interest as provided herein and the balance to the wife.
[30] That in the event of the wife failing to comply with Order 25 herein the wife shall pay to the husband from her share of the proceeds of sale in addition to the said sum, interest on such sum calculated from a date 2 months after the making of this Order until payment at a rate prescribed by the Rules of Court.
[31] That the wife continue to pay as they fall due, all regular instalments in respect of the mortgage, council rates, water rates, household insurance in respect of the property and forthwith pay any arrears in respect of the instalments and indemnify the husband in respect of all such outgoings.
[32] That the husband and wife do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders made herein.
[33] That in the event that either party refuses to execute any deed or instrument necessary to give effect to those orders, within seven (7) days of being requested so to do, the Registrar of the Court be appointed pursuant to Section 106A to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed or instrument.
[34] That except as otherwise provided for in this order the husband and wife each be the sole legal and beneficial owners of all items of all property including furniture, money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively to the exclusion of the other.
[35] That a base amount of $71,500.00 is allocated, as required by s90XT(4) of the Family Law Act 1975, to Ms Tavano out of the interest of Mr Tavano in the F Superannuation Fund.
a. That, in accordance with paragraph 90XT(1)(a) of the Family Law Act 1975:
i. Ms Tavano is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount allocated in this order; and
ii. Mr Tavano’s entitlement, and the entitlement of such other person to whom a splittable payment may be made out of Mr Tavano’s interest in the F Superannuation Fund (member number …), is correspondingly reduced.
b. That the trustee of the F Superannuation Fund (“the trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
i. Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement for Ms Tavano by this order, and
ii. Pay the entitlement whenever the trustee makes a splittable payment of Mr Tavano’s interest in the F Superannuation Fund (member number …).
c. That having been accorded procedural fairness in relation to the making of this order, this order binds the trustee of the F Superannuation Fund.
d. That this order have effect from the operative time and the operative time is the fourth business day after the order is served on the trustee.
The husband asserted that an appropriate property settlement between the parties was a division of the net matrimonial asset pool, including superannuation, as to 60% thereof to the wife and as to 40% thereof to the husband. This is based upon his assertion that contributions favour the husband as to 55% and the wife as to 45%, with a 15% adjustment under considerations in section 75(2) of the Family Law Act 1975 (Cth) (“the Act”) from the husband to the wife.
The wife asserted by the end of the hearing that a proper division of the matrimonial assets favoured her as to 87% thereof and as to 13% thereof to the husband. This is based upon a contribution division between them of 57% by the wife and 43% by the husband with an additional adjustment in favour of the wife from the husband of 30%.
Both parties were as one in proposing that a final settlement would entail the wife having opportunity to retain the former matrimonial home at B Street, Suburb C NSW (“the former matrimonial home”) by proposed orders that arrived at that final result by very different paths.
THE EVIDENCE
Each of the parties relied upon the materials I have listed above.
The husband was cross-examined by Mr Jackson on behalf of the wife and the wife was cross-examined by Ms Snelling on behalf of the husband. Mr N was cross-examined by Ms Snelling for the wife in relation to the financial issues. The wife’s expert witness, in relation to value of the husband’s Motor Vehicle 2, was not cross-examined. A brief submission in relation to his valuation, being an attachment to his affidavit, was made on behalf of the husband in his counsel’s written submissions.
The relevant assets, liabilities, asserted addbacks, and superannuation entitlements are gleaned for the purposes of these Reasons from the evidence and from the written submissions provided by counsel for each of the parties. No final joint balance sheet was presented for the assistance of the court.
At the end of the hearing, there remained a dispute between the parties in relation to the composition of the balance sheet, which will be resolved in these Reasons.[1]
[1] I note that the term “balance sheet” is used as a term of art in these proceedings, such documents not strictly being balance sheets as they do not balance at all, but rather being a table of assets, liabilities, asserted addbacks, superannuation entitlements and alleged resources.
The husband was born in 1976 and was 44 years of age at the time of the final hearing. The wife was born in 1978 and was 42 years of age at final hearing.
The husband resides in Suburb Q, a suburb in Sydney just below Suburb AA. The wife resides in the former matrimonial home at Suburb C, also a suburb in Sydney, adjoining Suburb AA. Both X and Y live with their mother on a full-time basis and spend time with their father as outlined earlier in these Reasons
The father is employed by Employer BB. The wife is not in paid employment, being a full time homemaker and parent.
The parties commenced their cohabitation at the time of their marriage in 2000. They separated on 28 February 2015 under the same roof until the husband vacated the former matrimonial home on 21 September 2015, leaving the wife and the children in occupation.
The husband commenced these proceedings by filing his Initiating Application on 6 February 2017, the wife filing her Response on 16 March 2017. At the first return date of the matter before Judge Harper (as His Honour then was), interim orders were made by consent providing for the wife to have sole occupation of the former matrimonial home.
An order was made on 5 July 2017 in relation to the parties obtaining valuations of the former matrimonial home and a property at R Street, Suburb S (“the R Street, Suburb S investment property”). This property in R Street, Suburb S was owned jointly by the husband and his brother, Mr N, as an investment property.
The parties attended a Conciliation Conference with a Registrar on 13 September 2017, but the matter was not settled.
On 7 September 2018, a further interim order was made by consent for the husband, in cooperation with his brother Mr N, to sell the R Street, Suburb S investment property, pay out the loan accounts secured by mortgage on that property, pay out the costs of sale, and then to divide the net proceeds of sale as to 50% to Mr N (reflecting his half ownership of the property), 25% to the wife and 25% to the husband. An order was made that, until sale of the property, the husband was responsible (presumably as between the parties) for payment of all outgoings in relation to the property, and another order was made providing that, if the husband received “monetary interest in his late mother’s estate, such interest is to be retained in a bank account operated by the husband’s solicitors, any withdrawals by the husband requiring the wife’s written consent.”
Notably, no order was made in relation to payment of the Capital Gains Tax arising from the sale of the R Street, Suburb S investment property, that liability resting solely with the husband, as between the husband and the wife.
Further orders were made during the course of the matter in relation to a preparation of valuations of the former matrimonial home, and the matter was listed for final hearing for 24 to 26 February 2020, but carried over part-heard to 2 and 3 November 2020, with written submissions being provided thereafter, and judgment reserved on 9 December 2020.
The balance sheet asserted by the end of the hearing, gleaned from the evidence and from the written submissions on behalf of the parties, was as follows, including matters in issue:
Item Ownership Description Wife’s Value Husband’s Value 1 Joint B Street, Suburb C, NSW $925,000 $925,000 2 Joint Household contents $2,000 No value stated 3 Husband Household contents $2,000 nominal 4 Husband Company U (business) Not known No value stated 5 Joint Motor Vehicle 4– unregistered $1,600 No value stated 6 Husband Motor Vehicle 2 $50,000 $10,000 7 Husband Motor Vehicle 3 $9,500 $9,500 8 Wife Motor Vehicle 1 $18,300 $18,300 9 Wife Company J – 212 shares $8,039 $8,039 10 Husband Company F shares – 4000 shares $1,492 $1,492 11 Wife Bank D account #...68 $284 $284 12 Wife Bank K account #...42 $132 $132 13 Husband Bank M account #...62 $9,842 $9,842 14 Husband Bank M account #...36 (joint with brother Mr N) $3 $3 15 Joint NAB account ending #...34 $5 $5 16 Husband 25% net proceed sale R Street, Suburb S $76,628 $63,918.20 17 Wife 25% net proceed sale R Street, Suburb S $76,628 $63,918.20 18 Husband Proceeds of sale of COMPANY L shares $4,524 $4,524 19 Wife Proceeds of sale of COMPANY L shares $3,880 $3,880 Liabilities
20 Joint Bank D account #...13 debt $62 $62 21 Wife Debt to Sydney Water $1,418 $1,418 22 Wife Debt to Suburb AA City Council $818 $818 23 Wife Debt to AGL Gas $688 $688 24 Wife Debt to AGL Electricity $1,176 $1,176 25 Wife Debt owed to Ms E $1,625 $1,625 26 Wife Debt to CC School – 2019 fees $364 No value stated 27 Joint Debt to CC School – 2020 fees $1,969 $1,969 28 Husband CBA Mastercard liability no amount stated $2,597 29 Husband DD Leasing for Motor Vehicle 3 no amount stated $3,718 30 Husband Company EE– motor vehicle accident liability Nil $9,818 31 Husband Company FF – motor vehicle accident liability Nil $2,818 32 Husband GG Mobile Mechanic – repairs to Motor Vehicle 3 Nil $3,200 33 Husband Loan for Company F shares $1,500 $1,500 34 Husband Liability to Company HH –AGL electricity and gas bills for the Suburb C property after separation of the parties Nil $1,923 35 Husband Debt to Mr N for R Street, Suburb S Nil $1,551 Superannuation entitlements
36 Husband F Super superannuation $241,500 $241,500 37 Wife F Super superannuation $77,686 $77,686 Financial Resources
38 Husband 25% interest in R Street, Suburb S, following life estate to Mr N– expert’s valuation $720,000 at 19 November 2019 $180,000 less share of sale costs $180,000 less share of costs 39 Husband Ms Briggs (non-cohabitation partner) no amount stated no amount stated
At the commencement of cohabitation, the husband was in full-time employment with Employer F as a tradesman. In 2007 he moved to full-time employment as a tradesman at Employer JJ, and in 2014 moved to full-time work as a tradesman at Employer KK. In 2019, he moved to full-time employment as a supervisor at Employer BB.
From 2004 until at least 2019, as asserted by the husband, the husband was a sole trader under the business name “Company U”. The wife contends the business continued thereafter 2019. In addition to the husband’s full-time employment, this business generated a yearly income.
The husband asserts that the business ceased trading as at 30 June 2019 and that any income received thereafter related to outstanding invoices and any expenditure thereafter related to the winding down of the business.
The husband confirmed his assertions under cross-examination, but was then cross-examined about an ongoing account in relation to that business with transactions, and was presented with exhibit R20 being a tax invoice issued by Company U on 7 October 2019 for goods supplied, installation and services with a “ship date” of 23 September 2019. This was explained by the husband as mentioned above, but this tax invoice seemed to contradict the husband’s assertion that the business terminated as at 30 June 2019.
Further, the wife gave evidence in paragraph 119 of her affidavit of 9 October 2020 that statements produced on subpoena by Westpac Banking Corporation in relation to an account in the name of Company U operated by the husband as a sole trader (account #..54) showed that there was an entry on 7 April 2020 by way of a deposit relating to invoice 144 in the sum of $3,016.36 and a deposit on 26 August 2020 from “Company LL” described as “wages 21/08/2020” in the sum of $635.00.
I note that if the business Company U issued tax invoices in sequential numbers, a tax invoice number 144 must have predated tax invoice number 163, which is dated 23 September 2019 (exhibit R20). The wife asserted that there were plant, equipment, tools and motor vehicles purchased by the husband in the operation of Company U as a sole trader, and in relation to which there had been no disclosure or opportunity for valuation.
The issue remained unclear to the end of the hearing. Neither party ascribed a value to Company U.
At the commencement of cohabitation, the wife was employed as a manager with Company J on a full-time basis and remained in that employment until 2006 when she moved to full-time employment as a sales representative for Employer MM. The wife left that employment in 2008 in preparation for the birth of X in 2008. The wife has not engaged in paid employment since 2008.
At the commencement of cohabitation, the husband was the sole owner as between himself and the wife of an Motor Vehicle 6 and a Motor Vehicle 7. He had some superannuation. There is no evidence as to the value at the commencement of cohabitation of either motor vehicle or any evidence of what happened to them thereafter. There is no evidence as to the value of superannuation entitlements held by the husband at the commencement of cohabitation.
At the commencement of cohabitation, the wife had some superannuation with Super Fund NN. There is no evidence as to its value at that time.
Leading up to the parties’ marriage and the commencement of their cohabitation, they jointly purchased a block of vacant land at B Street, Suburb C, in 1999 for $148,000. The parties made about equal contributions from their individual savings toward this purchase, though there is no evidence as to the amounts paid. The parties borrowed a sum of $227,000 on a loan account with the Commonwealth Bank of Australia for the purchase and to finance the building of a home on the property by OO Homes.
The home was completed and the parties took up occupation in 2001. The original loan was eventually refinanced with Bank M in the sum of $280,000, secured on the B Street, Suburb C property and composed of three loans – $155,000, $75,000 and $50,000.
The husband asserts that he expended his own labour on finishing the property, the parties having contracted with OO Homes to build a home to a basic unfinished level so as to reduce the original building cost. The wife asserts that her brother, Mr PP, assisted by her other brother, Mr QQ, the husband, and the husband’s brother, Mr N, did the completion work on the property on an unpaid basis.
At the time of marriage and commencement of cohabitation, the former matrimonial home was not completed and so the parties lived with the wife’s mother for about two months and then with the husband’s mother for a further two months. No cost to the parties was stated in the evidence.
Ultimately, the loans secured on the former matrimonial home were refinanced with Bank D Limited composed of three Bank D redraw accounts, all secured on the former matrimonial home. The whole of the amounts owing were repaid during the parties’ cohabitation, but a mortgage remains registered on title to the former matrimonial home (dealing …) and the parties agree that at the time of separation, and up to hearing, no amount was owing in relation to the Bank D accounts and, accordingly, the mortgage did not secure any indebtedness.
The combined evidence of the parties’ grounds a finding that the wife was primarily responsible for both the homemaker role within the family and for the day-to-day parenting of X born in 2018, and Y, born after the parties’ separation in 2015. Such evidence also grounds the finding that the husband assisted the wife, when he was available within the parameters of his employment, in relation to both the homemaker role and parenting of the children. The husband undertook the outside maintenance of the matrimonial home.
The husband entered into a relationship with Ms Briggs (the parties’ former sister-in-law) in 2015, but they have not formed a de facto relationship, despite spending some time previously living together in the same property at RR Street, Suburb SS (“the RR Street, Suburb SS property”). For some time, the husband occupied a studio apartment while Ms Briggs occupied the main house at the RR Street, Suburb SS property. From December 2018, Ms Briggs left that property and took up residence in a property close by, whilst the husband took occupation of the main residence of the RR Street, Suburb SS property.
The wife has not re-partnered.
The husband has paid child support for X and Y as assessed through the period of the parties’ separation. The current assessment amount at the time of trial was $373 per week. In addition, the husband paid for:
(a)The internet and phone connection at the former matrimonial home at a cost of $75 per month until December 2018;
(b)Private health cover for the family at a cost of $65 a week until December 2018; and
(c)The costs of the home and contents insurance in relation to the former matrimonial home at a cost of about $25 per week until December 2018.
Since the parties’ separation, the wife has been the sole carer for the children as between the parties.
At some time during cohabitation, the husband repainted the upstairs of the former matrimonial home, assisted by his brother.
On 30 April 2003, the husband purchased the R Street, Suburb S investment property in equal shares with his brother, Mr N. The property was tenanted from about the time of purchase until 31 March 2017 when it fell vacant and remained so until it was sold by the brothers. The husband did some maintenance work at the property and, following damage to the property by tenants, the brothers received an insurance payment of $10,474, which contributed towards the repair costs and repayments on the loan account secured by a mortgage on the property relating to its purchase.
The property was purchased for $284,000, utilising:
(a)$29,500 provided by the husband from the parties’ joint funds held in an Bank M account;
(b)$29,400 from Mr N; and
(c)$225,200 borrowed on a loan account with Bank TT, secured on the property by way of mortgage.
Stamp duty payable on the purchase was $8,430 in relation to which half was paid by the husband from the parties’ joint moneys from their Bank M account, and half was paid by Mr N.
During the brothers’ ownership of the R Street, Suburb S investment property, the rent received paid the required payments on the loan account secured by a mortgage on the property. The parties paid the husband’s share of outgoings from funds from their joint Bank M account and Mr N paid his half of outgoings. The insurance payment of $10,474 was received on 3 April 2017 after the parties had separated.
The R Street, Suburb S investment property was sold in July 2019, pursuant to the interim order made in these proceedings. The husband asserts in his evidence that he received $63,918.20 as his 25% of the net proceeds of sale under the interim order. The wife contends that the amount received by both she and the husband was $76,628, being the initial receipt on settlement of $63,918.20, plus an additional amount of $12,710 received by each of the parties once the deposit of $62,000 on exchange of contracts was released by the agent (presumably, after deduction of agent’s fees, though there is no evidence in that regard).
I find that the amount received by each of the parties from the proceeds of sale of the R Street, Suburb S investment, pursuant to the interim order, was a sum of $76,628.
As referred to earlier, there would be Capital Gains Tax payable in relation to the sale of the R Street, Suburb S investment property, the property having been purchased for $284,000 and sold for $620,000. The submissions made by counsel for the husband indicated that such Capital Gains Tax liability is shared as to 25% of the capital gain amount by the husband, and 25% of the capital gain amount by the wife (the other half of the capital gain being a tax liability for Mr N). That submission cannot be correct, as the wife was not a registered owner or holder of any beneficial interest in the property. Accordingly, half of the capital gain amount relating to the sale of the property represents, for taxation purposes, a capital gain to the husband and he is solely liable as between himself and the wife for Capital Gains Tax on that amount.
The interim order for a sale of the R Street, Suburb S investment property made by consent on 7 September 2018 made no provision for contribution by the wife to payment of the Capital Gains Tax liability of the husband consequent upon the sale. The Capital Gains Tax liability of the husband arose in the financial year ended 30 June 2020 and the hearing concluded in November 2020. Though actual evidence of the husband’s Capital Gains Tax liability may have been available to be tendered at hearing, no information by way of document or otherwise was tendered and admitted into evidence in relation to that capital gain. The amount of the Capital Gains Tax payable by the husband cannot be estimated by the Court. This amount depends on the husband’s taxable income, and the rate of tax applicable to a capital gain on a purchase for $284,000 and a sale of $620,000.
The taxable capital gain amount could not be in excess of $84,000 because the property was held for more than 12 months and the husband was a half owner of the property. As stated, the actual amount of Capital Gains Tax cannot be calculated on the basis of the evidence before the Court.
Under the interim order, each of the parties received 25% of the net proceeds of sale. The parties agree that the Court should include the interim distribution of $76,628 to each of the parties as assets in the matrimonial asset pool. No order is sought by either party in relation to payment of the Capital Gains Tax. Nevertheless, it would be unjust if the payment of the Capital Gains Tax was not taken into account as a matter for consideration in these proceedings, though when taken into account, it must be dealt with in a theoretical manner because the actual liability amount is not known on the evidence.
In 2007, the husband purchased a Motor Vehicle 8 for $37,500. The vehicle was later damaged and, for insurance purposes, destroyed by fire in 2013, leading the husband to receiving a payout from Company UU in the sum of $63,430.96 which was deposited by him into the parties’ joint account with Bank D, account #...13. The husband was able to keep the burnt shell of the vehicle and in 2014, sold the shell for $12,000. What happened with the $12,000 is not in evidence.
The husband bought a Motor Vehicle 2, registration being or have been …(“the Motor Vehicle2 2”), on in 2010. The husband has retained the Motor Vehicle 2 following the parties’ separation and his vacating of the former matrimonial home. The husband’s Financial Statement asserts it as unregistered and it was referred to in his evidence as being “in parts”.
The wife asserts that the husband conducted an informal business of hiring both that vehicle and the Motor Vehicle 8 - while he still had it - for weddings and other such functions and that he continued to conduct that informal business and receive income therefrom following the parties’ separation. The husband denied in cross-examination that he had at any time hired either vehicle out for functions and received any income therefrom. During his cross-examination, the husband admitted that the vehicle was intact when he took it from the matrimonial home, but asserted it had since been dismantled. Throughout the course of his cross-examination, he began to admit that the vehicle was in the care of another person at a location he would not disclose and it was being put back together, though remained incomplete and unregisterable.
The wife’s evidence contained various photographs of the Motor Vehicle 2. Those photographs were used by her expert witness, Mr O, to support his valuation of the vehicle, in relation to which he was not tested by cross-examination. The husband denied that the vehicle had ever been used for functions. However, when shown the photographs appearing in the valuation and also appearing in the wife’s evidence of persons arranged around vintage cars in a “wedding photograph” scenario, he admitted that his Motor Vehicle 2 was one of the vehicles pictured. The husband when shown page 158 of the wife’s affidavit, identified the vehicle as the one “on the far right” of the photograph. During cross-examination, the husband admitted that at the time of the parties’ separation, the vehicle had been insured for a sum of $50,000.
The affidavit of Mr O of 18 September 2020 contains evidence that establishes him as a certified valuer with experience in valuation of vehicles of the subject type, and he attached his valuation report which, though not based upon actual inspection of the vehicle either in whole or in parts, places a value on that vehicle of $50,000. Mr O was not cross-examined. I accept his evidence in full and I find that the Motor Vehicle 2 is valued at $50,000.
In January 2016, after the parties ceased being separated under the same roof, the wife withdrew a sum of $146,000 from the parties’ joint Bank D offset account. Shortly thereafter, the wife deposited $10,000 thereof to that account. She used a sum of $40,000 to purchase a Motor Vehicle 1, registration …, retained by her at the time of hearing. She expended the balance of the monies on living expenses for herself and the children.
She was cross-examined in some detail and with some force by Ms Snelling in relation to the period of time between January 2016, when she withdrew the monies, and the filing of her first Financial Statement in March 2017. The wife was unshaken under cross-examination on the issue of her expenditure of the balance of $96,000. No evidence was presented to prove that she retained any of those funds at the time of hearing or that they were expended other than on living expenses for herself and the children.
In that regard, I keep in mind the uncontested evidence that the wife was not in employment through the relevant period. She was in receipt of Centrelink payments and child support only, and was responsible for all of her own expenses and the greater part of the expenses of X and Y.
During her cross-examination, it was put to her that on 12 July 2016 she provided a sum of $5,000 from those monies to her solicitors toward her legal expenses in the proceedings. The wife accepted that if that was the case, then such sum may have come from such monies.
In the period from 1 December 2014 (two months before separation) to 31 December 2015, the husband made withdrawals from the parties’ joint Bank D account to a value of about $60,000. The husband was not cross-examined about the wife’s evidence in that regard, but nor did the husband present any evidence in contradiction. The wife was not cross-examined in relation to her assertion of that evidence.
On 5 September 2018, the husband sold his then-holding of 700 COMPANY L shares and received a sum of $4,524 retained by him and paid by him toward legal fees in the matter. On 11 February 2019, the wife sold the 700 COMPANY L shares retained by her, and received a sum of $3,880, expended by her on living expenses for herself and the children.
The husband asserts that he was involved in a motor vehicle accident in January 2016, a result of which he incurred a debt in a sum of $9,818 to “Company EE” and a debt in a sum of $2,818 to “Company FF”. There is no other evidence in relation to that accident and the liabilities arising therefrom, and there is no suggestion in the evidence that the wife had any involvement therein.
Sadly, the husband’s mother passed away in 2017, leaving her last will and testament dated 13 October 2017. The will named the husband’s brother, Mr N, as her executor. Mr N obtained a probate of the will on 6 July 2018. The wording of the will is uncertain and there is some appearance of an absolute gift of the late Mrs Tavano’s property at R Street, Suburb S, being made to Mr N. This appearance is repeated at least twice and perhaps three times in the will, due to the wording of paragraph 6 because a last disposition in a will takes precedence over any contradictory dispositions stated earlier in the will. However, it has been accepted that Mr N has a life estate in the property and that upon a sale of the property the proceeds of sale are to be divided as to 50% to Mr N and as to 25% to each of the husband and his other brother, Mr VV. On the evidence on hearing, the property was placed on the market for sale by Mr N in February 2020, but there was no marketing of the property due to the SARS-CoV-2/COVID-19 pandemic throughout 2020. The property was again placed on the market for sale in October 2020, with the intent by Mr N to sell the property and distribute the proceeds of sale in accordance with paragraph 6 of the will.
The property at R Street, Suburb S, was valued as at 19 November 2019 by an expert chosen by the parties at $720,000, making the gross value of the husband’s share of the property on termination of the life estate $180,000 as at that time.
The husband purchased a Motor Vehicle 3 on 17 August 2012 for $47,000. The purchase was financed by the husband and later refinanced with DD Leasing at the end of the initial financing period. The lease arrangement with DD Leasing ended on 30 August 2020. The vehicle is registered … and is retained by the husband. The husband asserts that he has a debt in the sum of $3,200 to GG Mobile Mechanic for repairs to the vehicle in 2019.
At some time in 2003, the parties purchased a Motor Vehicle 4 registered …. It would seem on the evidence, though none too explicit, that the vehicle was retained at separation by the wife, but is unregistered and unusable.
Both parties are members of F Super Fund. The husband joined in 1999. The fund is an accumulation fund and the husband’s membership had a gross value as at 28 November 2019 of $229,860.43.[2]
[2] Exhibit E30 to the wife’s affidavit of 17 January 2020.
The wife joined the F Super fund in 2013 with a “members eligible service date” of 1993. The wife’s fund is an accumulation fund and her membership had a gross value as at 26 November 2019 of $79,849.33.[3]
[3] Exhibit E31 to the wife’s affidavit of 17 January 2020.
The accepted value of the wife’s membership at the close of the evidence was $77,686.
Ms Snelling, the husband’s counsel, referred the husband to his Financial Statement, sworn or affirmed on 17 January 2020 and relied upon by him at hearing, during examination in chief. The husband was asked if the contents were true and correct or if there were any alterations required, and he answered to the effect “there were a few figures that need to be adjusted”. When asked by Ms Snelling what corrections needed to be made, he responded that the superannuation figure for his F Super should be $241,500. Accordingly, I find that a $241,500 is the value of the husband’s membership in F Super at the end of the evidence.
On 7 December 2017, Suburb AA City Council issued a Statement of Claim naming both the husband and wife as defendants as the registered owners of the former matrimonial home, for a sum of $1,625.13 relating to outstanding council rates.
The wife borrowed a sum of $1625.13 from Ms E and paid the debt without contribution thereto from the husband. The wife was required to make repayment of that sum to Ms E. Ms E provided an affidavit in the wife’s case, but the whole of the contents thereof related to the parenting issues at the hearing. Ms E was cross-examined by Ms Snelling on behalf of the father, but was not cross-examined about the debt. The wife was also not cross-examined about the debt.
In her Financial Statement of 17 January 2020 the wife refers in Part O to an outstanding liability to CC Primary School for the overdue balance of X’s 2019 school year fees in a sum of $364 and X’s school fees for the 2020 school year in a sum of $1,969.60 for which she says she is liable for half, being $984.
In her affidavit of 17 January 2020 at paragraphs 366 to 370, the wife gives evidence that when X commenced her attendance at CC Primary School the father nominated himself as the payer of X’s school fees, but that since separation of the parties, the father has made no contribution to X’s school fees. At 18 July 2018 the outstanding amount for X’s school fees was $6,568 and the wife annexes as exhibit E38 a copy of a letter of 18 July 2018 from CC Schools addressed to herself at her address but directed to the father confirming the outstanding amount.
On 14 February 2019 the wife commenced paying CC Schools Board $180 per month by way of a payment plan for X’s outstanding school fees. In her affidavit of 9 October 2020, in paragraphs 149 through to 158 the wife asserts that she alone as between herself and the husband has been paying all of X’s school fees and Y’s kindergarten fees since the parties’ separation and there is no updated evidence in relation to any arrears outstanding in relation to school fees.
The wife gives evidence of some liabilities as at 17 January 2020 relating to her occupation of the former matrimonial home, including amounts owed to Sydney Water, AGL Gas, AGL Electricity and Suburb AA City Council.
The husband claims outstanding debts to AGL arising from services provided to the former matrimonial home and also asserts a debt owed by him to his brother, Mr N for the R Street, Suburb S investment property. This is mentioned in his Financial Statement of 17 January 2020 but without giving any evidence to explain the asserted debt of $1,551 to Mr N.
In the wife’s Financial Statement of 17 January 2020 at item 54, she asserts a joint debt owed by the parties to Bank D in relation to account #...13 in a sum of $62.65. The account is an “offset deposit account” in the joint names of the parties and the wife attaches as exhibit E5 to her affidavit of 17 January 2020, copies of the statements for that account from 30 September 2014 to 15 February 2017 at which time the account had a credit balance of $24.
The husband’s taxable income as at 30 June for each financial year was as follows:
(a)2014 – $92,332;
(b)2015 – $89,595;
(c)2016 – $86,479; and
(d)2017 – $96,816.
The husband remains employed as a supervisor with Employer BB and discloses an annual salary including benefits of a company car and mobile phone of $103,376, with an additional $104 from dividends on his Company F shares. He details personal expenditure of $2,013 per week in his Financial Statement including asserting payment of $373 per week child support under assessment for X and Y.
The wife’s Financial Statement, completed the same date as the husband on 17 January 2020, asserts that she receives a sum of $238.95 per week from the husband by way of child support for X and Y. Neither party was cross-examined on the discrepancy.
The wife’s Financial Statement confirms that her only sources of income are Centrelink Parenting Payment and Australian Government Family Tax Benefits types A and B, and child support from the father, with weekly personal expenditure (including for the children) estimated by her to be $1,566.
THE LAW
Property settlement under section 79 of the Act
The law relating to the alteration of property interests between two parties to a marriage is governed by section 79 of the Act.[4] Relevant in this case, section 79(1) vests the Court with power to alter the interests of the parties in property,[5] and the power to make orders providing for the settlement or transfer of property, as determined by the Court.[6]
[4] Family Law Act 1975 (Cth) s 79.
[5] Family Law Act 1975 (Cth) s 79(1)(a).
[6] Family Law Act 1975 (Cth) s 79(1)(d).
However, the Court must not make an order under section 79 unless the Court is satisfied that, in all of the circumstances, it is just and equitable to do so.[7] The legislative process required by section 79 was considered by the High Court in Stanford & Stanford.[8]
[7] Family Law Act 1975 (Cth) s 79(2).
[8] Stanford & Stanford (2012) 247 CLR 108.
In that decision, the High Court held that section 79(2) requires that at the outset of the Court’s decision-making process the Court must consider whether or not, in all the circumstances, it is just and equitable to make an order under section 79(1) altering the interests of the parties to the marriage in property.
In considering the proposition posed by this first step, a Court should start by identifying items under the following categories:
(a)The existing legal and equitable interests of the parties in property, according to ordinary common law and equitable principles;
(b)The existing liabilities of the parties, according to ordinary common law and equitable principles and under legislation; and
(c)The rights of the parties, if any, according to ordinary common law and equitable principles and under legislation, in relation to any asserted resources of the parties that may, if it is considered just and equitable to proceed with the property settlement, be taken into account in the Court’s consideration of the matters referred to in section 75(2) of the Act, to which section 79(4)(e) directs the Court’s attention.[9]
[9] Stanford & Stanford (2012) 247 CLR 108; see, especially, [37].
That the interests as described above are ‘existing’ is of importance, as the Court noted, because the text of the section gives reference to ‘altering’ the interests.[10]
[10] Stanford & Stanford (2012) 247 CLR 108, [37].
I further note the comments of the High Court in Stanford at paragraph 42 which I reproduce in full here:
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 make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).[11]
[11] Stanford & Stanford (2012) 247 CLR 108, [42].
I will examine the matrimonial asset pool and the existing interests of the parties, before determining whether it is just and equitable to make a property adjustment order.
If the Court determines that it is just and equitable to make an order under section 79, the Court must then consider what orders are appropriate to be made. In doing so, I will follow the four-step process set out in Hickey & Hickey & Attorney-General for the Commonwealth of Australia.[12]
[12] Hickey & Hickey & Attorney-General for the Commonwealth of Australia (‘Hickey’) [2003] FamCA 395, [39].
In Hickey, the Full Court of the Family Court set out a process of four inter-related steps that must be taken by a court when determining a property application:
(a)First, “the Court should make findings as to the identity and value of the property, liabilities, and financial resources of the parties at the date of the hearing”;[13]
(b)Second, “the Court should identify and assess the contributions of the parties within the meaning of section 79(4)(a), (b), and (c), and determine the contribution-based entitlements of the parties expressed as a percentage of the net value of the property of the parties”; [14]
(c)Third, “the Court should identify and assess the relevant matters … (“the other factors”) including…the matters referred to in section 75(2) so far as they are relevant…”;[15]
(d)Fourth, “the Court should … resolve what order is just and equitable in all the circumstances of the case”.[16]
[13] Hickey [2003] FamCA 395, [39].
[14] Hickey [2003] FamCA 395, [39]. See also Family Law Act 1975 (Cth) s 79(4)(a)-(c).
[15] Hickey [2003] FamCA 395, [39].
[16] Hickey [2003] FamCA 395, [39].
The Full Court pointed out in Hickey that pursuant to the wording of section 79, there can only be one property settlement order at any one time, and that the one property settlement order is final, subject only to anything that may be properly done pursuant to section 79A of the Act.[17]
[17] Hickey [2003] FamCA 395, [47].
The Full Court held in Fontana:[18]
Indeed, the authorities are consistent in finding that assessing contributions is not an accounting exercise but a holistic one (Brandt & Brandt (1997) FLC 92-758; Norbis & Norbis (1986) 161 CLR 513).[19]
[18] Fontana & Fontana [2018] FamCAFC 63.
[19] Fontana & Fontana [2018] FamCAFC 63, [27].
The Court is required to consider the parties’ contributions made on and from the commencement of their relationship, during their relationship, and following separation.[20]
[20] See, eg, Jabour & Jabour [2019] FamCAFC 78.
The approach to determining the appropriate percentage of the net value of property in relation to the contributions of the parties, at step two of the four-step process, requires an assessment of contributions by, or on behalf of, each of the parties in a holistic manner, rather than attaching specific contributions to a specific item of property and making a determination upon that basis. To do the latter would be to disregard the whole of the contributions made during the whole of the relevant period of the relationship by or on behalf of each of the parties.
As the Full Court said in Dickons & Dickons[21] at paragraphs 14 to 16:
[14] As is plain from earlier decisions of this Court, regard must be had to the use made of contributions of various types so as to compare the contributions made by each of the parties during the course of, and over the length of, their relationship (see, for example, In the Marriage of Pierce (1998) FLC 92-844) But that is an entirely different proposition to, as it were, causally linking contributions with their asserted financial “product” or “value”. The former recognises that the nature, form and extent of contributions made by each of the parties might differ; the latter suggests that the absence of a causal link counts as no contribution at all.
[15] The search for a causal link might be seen to come instinctively to the necessary inquiry and all the more so when regard is had to s 79(4)(a) which refers to financial contributions made “...directly or indirectly...” “...to the acquisition, conservation or improvement of any of the property ...” and goes on to also refer to the financial contribution made “...otherwise in relation to any of that last-mentioned property...” The terms of that sub-paragraph might, naturally enough, be seen to suggest a causal link between those contributions and the “financial product” which those contributions of that type are said to have produced. That same requirement might also be seen to suggest that relevant contributions of that type can be seen to be quantifiable – or, at least, conceptualised – in monetary terms, in contradistinction to contributions made pursuant to s 79(4)(c).
[16] While that apparent “causal connection” might be seen in s 79(4)(a) (and (b)), no such connection is apparent from the terms of s 79(4)(c); contributions of that latter type are not linked by the words of the sub-paragraph to the “...acquisition, conservation or improvement of any of the property...” or, indeed, to “property” at all. This is not a legislative oversight; the 1983 amendments to the Act which inserted the current s 79(4)(c) were specifically intended, relevantly, to remove any suggestion that there needed to be a causal link between contributions of that type and any particular asset or property. The Explanatory Memorandum to the Family Law Act Amendment Bill 1983 provides, at Clause 36, that a specific purpose of the re-casting of s 79(4) was, relevantly, to:
... revise sub-section 79(4) to remove the possibility of an interpretation of the sub-section requiring that there be a nexus between a spouse’s contribution and a specific item of property in section 79 proceedings ...[22]
[21] Dickons & Dickons [2012] FamCAFC 154.
[22] Dickons & Dickons [2012] FamCAFC 154, [14]-[16].
The Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind.[23] The principle was expressed succinctly by the Full Court in the joint judgment of Bryant CJ and Ainslie-Wallace J in Fields & Smith[24] at paragraph 168:
...the task is to consider the contributions holistically over the whole period from the commencement of cohabitation to trial, and the analysis requires the Court to weight all of the contributions of all types prescribed by section 79(4) made by both parties across the entirety of the relationship until the time of Hearing, including the post-separation period.[25]
[23] In the Marriage of Harris (1991) 104 FLR 458, 464.
[24] Fields & Smith [2015] FamCAFC 57.
[25] Fields & Smith [2015] FamCAFC 57, [168].
The Full Court has been repeatedly clear that the approach to property settlement under section 79 of the Act is not an accounting exercise. Here, I note the comments of the Full Court in Grier & Malphas[26] at paragraph 129, where Murphy and Kent JJ said:
As the Chief Justice points out, with those principles in mind, the trial judge adopted a broad-brush approach to the parties’ respective expenditure. Nowhere error is established by reason alone of that approach; authority eschews “overly pernickety analysis” and section 79 demands neither an audit nor an exercise in accounting. However, when significant sums of money are said by one party or the other to have been “wasted” or to amount to a unilateral “premature distribution of property” and the evidence is suggestive of either or both, an analysis of the relevant sums and their use is needed.[27]
[26] Grier & Malphas (2017) 55 Fam LR 107.
[27] Grier & Malphas (2017) 55 Fam LR 107, [129].
Addbacks
The approach adopted by trial judges to the concept of ‘addbacks’ over the years since the commencement of the Act has varied between placing back into the matrimonial asset pool no-longer existent assets as “notional assets” and giving them a value and dealing with them as if they still existed, to taking any such notional assets into account at step three of the four-step process when considering the matters referred to in section 75(2) of the Act and, in particular, at section 75(2)(o) “Any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account.”[28]
[28] Family Law Act 1975 (Cth) s 75(2)(o).
In AJO v GRO (2005) 191 FLR 317,[29] at paragraphs [30] to [31], the Full Court identified three types of addbacks that are commonly encountered in property settlement decisions:
[29] AJO v GRO (2005) 191 FLR 317.
[30] To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM v JLM (1998) 23 Fam LR 396 the Full Court said (at 410-411):
11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In In Marriage of Townsend (1994) 18 Fam LR 505 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said (at 509):
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the Husband did was to distribute to himself an asset in which the Wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the Husband as a matter to which regard should be had under section 75(2). It seems to me that the Husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the Husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in In Marriage of Kowaliw [1981] FLC 91-092 at 76,644: As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.
[31] As the Full Court said in Browne v Green [1999] FLC 92-873 at 86,360:
[44] We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction — a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.[30]
[30] AJO v GRO (2005) 191 FLR 317, [30]-[31].
In AJO & GRO, the Full Court was careful to point out the difference between a “premature distribution” and expenditure on reasonable day-to-day expenses and, in particular, expenditure on reasonable self-support.[31]
[31] See especially, AJO v GRO (2005) 191 FLR 317, [30](b).
In Talbot & Talbot [2015] FamCAFC 132, the Full Court said:
Where one party unilaterally distributes to themselves property which no longer exists and which, but for that premature distribution, would be susceptible to section 79 orders, justice and equity may require the Court to take account of the dissipated property by adding it back as against the dissipating party (Townsend & Townsend (1995) FLC 92-569). Whether that should occur, or whether the dissipation should be taken into account pursuant to section 75(2)(o), or indeed at all, are all matters requiring the exercise of a trial judge’s discretion (In the marriage of AD and AC Townsend (1995) FLC 92-569; Omacini & Omacini; Cerini & Cerini [1998] FamCA 143).[32]
[32] Talbot & Talbot [2015] FamCAFC 132, [31].
In Vass & Vass [2015] FamCAFC 51, the Full Court said the following at paragraphs 137 to 139:
[137] At [50] to [65] of the First Reasons under the heading “Add-backs,” the trial judge held that $25,000 withdrawn by the Husband from the parties’ bank accounts post-separation should be added back into the pool of assets, and further concluded that $50,000 which the Husband had, post-separation, paid to his parents, purportedly in repayment of a loan from them, should also be added back.
[138] There is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan & Bevan (2013) FLC 93-545 – or, more particularly, the decision of the High Court in Stanford & Stanford (2012) 247 CLR 108 - is authority for any necessary contrary solution. Some statements made by the High Court may lead to the conclusion that references to “notional property” as have been referred to in decisions of this court and at first instance may need to be reconsidered.
[139] The decisions referred to seek to remind the Court that, however the exercise of discretion might seek to deal with property that is said to be the subject of “add back”, proper consideration must be given to existing interests in property, and the question posed by s 79(2) as a separate inquiry from any adjustment to property interests by reference to s 79(4) if a consideration of s 79(2) reveals that it is just and equitable to alter existing interests in property.[33]
[33] Vass & Vass [2015] FamCAFC 51, [137]-[139] (emphasis in original).
The reference in the Full Court’s decision in Vass to the Full Court’s decision in Bevan & Bevan (2013) 279 FLR 1 was to the comments made in obiter by Bryant CJ and Thackray J:
[79] We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under section 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that section 79(4) and in particular section 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.[34]
[34] Bevan v Bevan, (2013) 279 FLR 1, [79].
The question of addbacks was again considered by the Full Court in Masoud & Masoud [2016] FamCAFC 24 in paragraphs 90 to 99 of that judgment, and in particular at paragraph 97 where the Court said:
[97] … The way in which non-existent property is to be treated remains a matter for judicial discretion (see Townsend & Townsend FLC 92-569) … the provision of an agreed balance sheet providing for the inclusion of notional property would not mandate his Honour’s acceptance of it or that he would treat the notional property in the same way as had the parties.[35]
[35] Masoud & Masoud [2016] FamCAFC 24, [97].
In that case, the Full Court held that it was open to the trial judge in the exercise of discretion to deal with asserted addbacks in a manner different to that proposed by either of the parties, or indeed by the parties jointly, as reflected in that case by the treatment of addbacks in an agreed balance sheet.
In Shan & Prasad [2018] FamCAFC 12, the Full Court, in dealing with the issue of ‘addbacks’ said at paragraphs 130 and 131:
[130] … A Court cannot create property for the purposes of alteration. Section 79 empowers a Court to alter interests of the parties to the proceedings in property. Property is defined in section 4 of the Act to mean:
... [In] relation to the parties to a marriage or either of them – means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.
[131] As French CJ said in Kennon & Spry (2008) 238 CLR 366 at 390, “‘property’ in section 79 is to be read as part of the collocation ‘property of the parties to the marriage’”. It is to be read widely and conformably with the purposes of the Act. Gummow and Hayne JJ said at 397 that “the term ‘property’ is not a term of art with one specific and precise meaning”. The purpose of the Act as set out in section 79(1) is to alter interests in property to which a party has an interest in possession or reversion.[36]
[36] Shan & Prasad [2018] FamCAFC 12, [130]-[131].
The Full Court of the Family Court of Australia has provided useful guidelines for adding back to the property available at trial in paragraphs 27 to 42 and 46 and 47 of Trevi & Trevi [2018] FamCAFC 173, which I find it of assistance to quote in full, with original footnotes:
Guidelines for adding back to the property available at trial
(a) Dissipation of property and expenditure other than on legal fees
[27] The Full Court held in Omacini and Omacini[37] that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.[38]
[37] (2005) FLC 93-218 (“Omacini”).
[38] Omacini at 79,617 [30], referencing in particular Kowaliw and Kowaliw (1981) FLC 91-092 (“Kowaliw”); Townsend and Townsend (1995) FLC 92-569 (“Townsend”).
[28] However, the Full Court also made it clear that an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”.[39] An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule”.[40]
[39] Omacini at 79,619 [39].
[40] Cerini & Cerini sub nom C & C [1998] FamCA 143 (“Cerini”) at [46].
[29] The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it”[41] at trial. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation.[42] Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
[41] Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 355. See also, Stanford v Stanford (2012) 247 CLR 108.
[42] Marker & Marker sub nom M & M [1998] FamCA 42 at [2.11].
[30] Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.[43]
[43] Line and Line (1997) FLC 92-729 at [4.72] as quoted in Chorn at 79,317 [38] (noting that, at [4.71], legal fees were said, in obiter, to be different and there is reference to the “notional property” approach). It has also been said that premature expenditure might be taken up in the assessment of contributions, for example by a party making a disproportionately greater indirect contributions to the existing property by reason of other property having been dissipated (see, Watson & Ling (2013) FLC 93-527 at 86,924 [33]).
(b) Expenditure on Legal Fees
[31] To the considerations just discussed must be added the propositions emerging from authority that paid legal fees as a category of addback is imbued with considerations specific to that expenditure. The Full Court said in Chorn:
[56] In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
[57] If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
[58] If funds used to pay legal fees have been generated by a party post‑separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post‑separation income or acquisitions.
[32] Those passages can be seen as an attempt to establish “guidelines”,[44] undertaken after a detailed examination of earlier authorities,[45] for the treatment of paid legal fees within s 79 proceedings. There can be little doubt that the statements made in that case have been applied by trial judges ever since.
[44] See, the comment to that effect in the earlier decision of Browne v Green (1999) FLC 92-873 at 86,360 [44].
[45] Chorn at [32] – [55] referencing: Farnell and Farnell (1996) FLC 92-681; Line and Line; A and A (unreported, 23 December 1997, Lindenmayer, Kay & Dessau JJ); Marker & Marker sub nom M & M [1998] FamCA 42; DJM v JLM (1998) FLC 92-816; C v C (1998) FLC 92-824; Ibrahim and Beavis [1999] FamCA 765; Gartner & Gartner [2000] FamCA 793; Clifford and Lodge [2000] FamCA 1666; Finlayson v Finlayson and Gillam (2002) FLC 93-121.
[33] The word “guidelines” is used advisedly so as to distinguish the same from “binding principles of law”.[46] The distinction is important. Failure to follow a binding principle of law is an error of law. By contrast, the failure of a trial judge to follow a guideline:[47]
[46] See, Norbis v Norbis (1986) 161 CLR 513 (“Norbis”) at 520 (Mason & Deane JJ); at 537-8 (Brennan J); Mallet v Mallet (1984) 156 CLR 605 at 608-9 (Gibbs CJ). See also, the discussion in Hoffman & Hoffman (2014) FLC 93-591 at [21]–[44].
[47] Norbis at 520 (Mason & Deane JJ).
…does not of itself amount to error, for it may appear that the case is one in which it is inappropriate to invoke the guideline or that, notwithstanding the failure to apply it, the decision is the product of sound discretionary judgment. [However] [t]he failure to apply a legitimate guideline to a situation to which it is applicable may … throw a question mark over the trial judge’s decision and ease the appellant’s burden of showing that it is wrong…
[34] The guidelines emerging from Chorn should be read together and read conformably with the Full Court authorities upon which they are based. That being so, the delineations there referred to — “the funds used existed at separation … such that both parties can be seen as having an interest in them”; or “funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours” or received by a party “in his or her own right (for example, by way of gift or inheritance)” - cannot be seen as determinative of the exercise of discretion but, rather, as informing it.
[35] Again, the matters just referred to have important ramifications in an appellate context. They may ease the appellant’s burden of showing that “although the nature of the error may not be discoverable … a substantial wrong has in fact occurred”,[48] or that the decision is “plainly wrong, [the] decision being no proper exercise of [the] judicial discretion”.[49] Equally, they may ease the burden of establishing that irrelevant considerations have been taken into account or that relevant considerations have not been taken into account.
[48] House v The King (1936) 55 CLR 499 at 505 (Dixon, Evatt and McTiernan JJ).
[49] Gronow v Gronow (1979) 144 CLR 513 at 519 (Stephen J).
[36] Paid legal fees occupy a particular position in the consideration of addbacks by reason of s 117(1) of the Act; a matter not relevant to any other form of expenditure or dissipation of property the subject of an addback claim.
[37] An order failing to addback legal costs is a pre-emptive decision about one party paying the other’s legal costs. The statutorily prescribed default position is that neither party pays all or some of the other party’s costs.[50]
[38] If, contrary to the demands of that section, there is to be a payment of costs, the award is dependent upon a finding of justifying circumstances which, in turn, is dependent upon (non-exhaustive) considerations all of which are informed by antecedent events - for example, whether one party has been “wholly unsuccessful” and “the conduct of the parties to the proceedings”.[51] An award of the costs of trial, if any, is in the usual run of events made after the respective entitlements of the parties to a settlement of property have been assessed and, importantly, any awarded costs are paid from the assessed entitlement to property received by the paying party.
[39] As has been said, legitimate guidelines “guide the exercise of a discretion”; they do not replace it.[52] Guidelines, must “[preserve], so far as it is possible to do so, the capacity … to do justice according to the needs of the individual case”.[53] The decision to addback or not addback paid legal fees remains a matter of discretion. But, a finding that it is just and equitable to not addback an amount of legal fees so paid is a finding that it is just and equitable for the other party to contribute to the costs of the first party in that proportion as part of an overall assessment of the justice and equity governing their property division.
[40] The considerations just referred to are plainly always important and central to the exercise of that discretion in respect of paid legal fees.
[41] The passages from Chorn, quoted above, draw a distinction between legal costs met from property that would otherwise be available at trial and legal costs met from funds “generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance)”. The proposition there advanced, that such expenditure “would generally not be added back”, also needs to be seen as a guideline informing the relevant discretion rather than determining it. A further distinction is suggested in Chorn between funds generated in that manner and “[f]unds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement”.
[42] The latter suggestion recognises the discretion inherent in the task and also, perhaps, that in the particular circumstances of a case, adding back sums generated post-separation in the different manners suggested might create injustice as much as it might cure it.[54]
…
[46] In Stanford v Stanford,[55] the High Court emphasised as fundamental that a consideration of whether it is just and equitable to make a property settlement order begins by “identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property”.[56]
[47] The essence of a claim for addbacks is that the asserted sum/s should be added to the value of the existing property interests of the parties and, subsequent to the assessment of contributions, credited to the spending party as part of the value of their assessed entitlements. Doing so does not offend what was emphasised by the High Court. Adding back does not seek to create property interests that do not exist. Rather, doing so emphasises that satisfying the respective requirements of ss 79(2) and (4) of the Act to do justice and equity can require an “accounting” or “balance sheet” exercise for the purposes of s 79(2) and (4), so as to include the value of the dissipated property or expended sums within the total value of the parties’ existing interests in property, and to credit the value of same against the assessed entitlement of the dissipating or spending party.[57]
[50] Family Law Act 1975 (Cth) s 117(1).
[51] Family Law Act 1975 (Cth) s 117(2A), specifically sub-paragraphs (e) and (c), respectively.
[52] Norbis at 537 (Brennan J); 519-520 (Mason & Deane JJ).
[53] Norbis at 520 (Mason & Deane JJ).
[54] See, Doolan, P., “Now you see it, now you don’t: notional property and add-backs in family law”, Families, broken, blended, mended: conference handbook: 13th National Family Law Conference, p 255 at [2.3]ff. The paper itself provides examples of the potential injustice and inequity that can occur by a strict adherence to the “source of funds” distinction referred to in Chorn.
[55] (2012) 247 CLR 108 (“Stanford”).
[56] Stanford at 120 [37] (emphasis in original) (French CJ, Hayne, Kiefel and Bell JJ).
[57] See, eg, Bevan & Bevan (2013) FLC 93-545 at [79]; Vass & Vass (2015) 53 Fam LR 373 and pre‑Stanford statements to similar effect in Milankov & Milankov (2002) FLC 93-095.
Non-disclosure
Mr Jackson submitted that it was noteworthy that the sum had been withdrawn by the wife some five years prior to the hearing and that during that five years, the wife has “in effect, been the sole parent of the two children”. Over that five-year period, he calculated the expenditure of the balance sum of $90,000 (as he expressed it) at $18,000 per annum or approximately $346 per week. As such, he asserted the expenditure was “not unreasonable under such…circumstances, and should not come under the category of representing an addback consistent with the authorities” and referred to Townsend, AJO v GRO, and Trevi.[65]
[65] Townsend & Townsend [1995] FLC 92-569, AJO v GRO [2005] FamCA 195; Trevi & Trevi [2018] FLC 93-858.
In relation to the assessment of the parties’ contributions, Mr Jackson traversed the evidence in relation to the initial contributions, contributions during the co-habitation and post-separation contributions and submitted that contributions favour the wife by 57% to the husband’s 43%.
In relation to adjustment between the parties for the considerations referred to in section 79(4)(e), set out in section 75(2) of the Act, Mr Jackson asserted this “prodigiously favours the wife”. He noted the disparity in the parties’ earning capacities, the wife’s sole attention as between the parties to significant expenditure on behalf of the children including school fees and costs for extra-curricular activities, tutoring, dancing lessons, swimming lessons, child psychologist fees for X, and her ongoing day-to-day care for the children. Mr Jackson referred to a consideration of the husband’s inheritance under his mother’s estate, being 25% of the net proceeds of sale of his late mother’s property once sold (on the evidence, best estimated at a gross figure of $180,000 value), the husband’s failure to obtain rent from the R Street, Suburb S investment property from February or March 2017 until its sale in August 2019, and submitted it was a wastage within the principles enunciated in Kowaliw. [66]
[66] In the Marriage of Kowaliw (1981) FLC 91-092.
Mr Jackson also submitted, in relation to adjustment between the parties, that the husband’s relationship with Ms Briggs was a factor to be considered, submitting that the husband had inter-mixed his financial affairs with Ms Briggs, but conceded that “the evidence surrounding Ms Briggs’ financial circumstances and how it is relevant to section 75(2) of the Act are difficult to decipher.”
He noted that Ms Briggs was not called by the husband as a witness and submitted that the Court should draw an inference that any evidence that could have been given by her in relation to the relevance of her financial affairs to the husband’s financial position “would not assist the husband with his property case.” [67]
[67] See Jones v Dunkel [1959] 101 CLR 298.
On all of the evidence, carefully examined and considered, I cannot find that Ms Briggs is a relevant consideration in these proceedings.
Finally, in relation to any adjustment between the parties related to the matters under section 75(2) Mr Jackson submitted that the proceedings have been hampered by “the husband’s rather secretive behaviour and non-disclosure issues”. In that regard, he referred to the husband’s sole trader business of Company U, which the husband asserts ceased trading on 30 June 2019, but in relation to which there are certain pieces of evidence indicating a possible continuance of the trading past that time. Though such evidence is also consistent with the husband’s version that they would cease trading at 30 June 2019, there were still moneys owed on tax invoices to come in and expenses to be paid.
Mr Jackson also referred to exhibit R19, the husband’s Bank T statements for account #...93 for the period 9 July 2018 to 9 September 2020 and noted that the husband failed to disclose the existence of that account in his Financial Statement sworn 17 January 2020, the wife first becoming aware of the account following material produced to the Court under a subpoena to produce issued to Commonwealth Bank of Australia in August 2020.
Mr Jackson noted that during his cross-examination, the husband conceded that he had not bothered to respond to letters and emails sent by the wife’s solicitors directed to him when he was unrepresented, occurring over a period of about six months.
Mr Jackson submitted, on behalf of the wife, that an appropriate adjustment under section 75(2) factors would favour the wife by “about $450,000 or a little less than 30% on a $1,498,484 net property pool”, the net property pool figure being that calculated on the basis of the wife’s submission as to the net property pool in the written submissions.
Accordingly, Mr Jackson submitted on behalf of the wife that an appropriate property division outcome between the parties would favour the wife by about 87% to the husband’s 13%.
IS IT JUST AND EQUITABLE TO MAKE AN ORDER UNDER SECTION 79 OF THE ACT IN THE INTERESTS OF THE PARTIES?
In making a finding as to whether or not the Court is satisfied in all the circumstances that it is just and equitable to make an order adjusting the interests of the parties in the property, the Court must first identify “according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property”, [68] and decide whether “having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order”.[69]
[68] Stanford v Stanford (2012) 247 CLR 108 at [37].
[69] Stanford v Stanford (2012) 247 CLR 108 at [37].
Whether it is “just and equitable” to make a property settlement order is not to be answered by assuming that the parties rights to or interests in marital property are or should be different from those that exist. Questions about the ownership of property that may be then, or may have been in the past, enjoyed in common by a husband and wife are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”.[70] The question “presented by section 79 is whether those rights and interests should be altered”.[71]
[70] Hepworth v Hepworth (1963) 110 CLR 309.
[71] Stanford v Stanford (2012) 247 CLR 108 at [39].
As a first step in considering whether it is just and equitable, in all the circumstances, to make a property settlement order under section 79, I will resolve the parameters of “the property” as referred to by the High Court in Stanford v Stanford.[72] This involves resolving certain issues between the parties in relation to composition of and value of “the property”.
[72] Stanford v Stanford (2012) 247 CLR 108 at [37].
I find on the evidence that the household contents referred to as being “joint” are in the possession of the wife in the former matrimonial home and have a value of $2,000.
The husband’s household contents are asserted by him to be of “nominal” value, and asserted by the wife to be valued at $2,000. I find that the husband’s household contents have a value of $2,000.
There is no evidence of a value of the husband’s sole trader business Company U, whether or not he ceased trading under that business name as at 30 June 2019.
I will not consider the Motor Vehicle 4, estimated by the wife to be worth $1,600 as being in the asset pool, as I have no actual evidence about the vehicle other than the wife’s statement that it is, basically, derelict.
In relation to the husband’s Motor Vehicle 2, I accept the evidence of the wife’s expert valuer, Mr O, and I find that the vehicle has a value of $50,000.
I repeat my finding that the amount received by each of the parties under the interim orders on sale of the R Street, Suburb S investment property is $76,628 and that there will be a Capital Gains Tax liability payable in consequence of the sale and that the husband is solely responsible for that payment. Orders should address the justice and equity of the division of the net proceeds of sale between the parties, assuming I find it is determined to be just and equitable to proceed with orders altering the interests of the parties in the property.
I would include in “the property” the sums received by each of the parties from the sales of their COMPANY L shares, including the amount received by each party in full, and noting that some, at least, of the funds received by the husband were applied by him to a payment of legal fees, but there need not be any addback for same in consequence of the source fund being included.
In relation to the effect of liabilities on “the property” I find that it is appropriate to disregard asserted liabilities that go to occupation and ownership of the former matrimonial home except for the funds borrowed by the wife from Ms E to pay the debt for outstanding Council rates with Suburb AA City Council that was represented in a Statement of Claim issued by Council against the parties, being in a sum of $1,625.
In consequence of the state of the evidence, I will not include any debt in relation to payment of school fees for the attendance by X, or either of the children, at C School for 2019 or 2020, noting that if it is found to be just and equitable to proceed with a section 79 order, the wife’s payment of the children’s school fees and consideration of the amount of child support paid by the husband will be matters for consideration in determining whether there should be any adjustment, and if so what adjustment, under section 75(2).
I find that the husband’s debts being:
(a)His credit card debt of $2,597, in relation to which he presents no evidence other than the straight statement in his Financial Statement;
(b)His debt to Company EE for $9,818 and Company FF for $2,818 consequent upon his motor vehicle accident; and
(c)His debt of $3,200 to GG Mobile Mechanic
have all been incurred so far past the date of separation of the parties, and without the involvement each of the other, that they should be disregarded in calculation of “the property”.
I find that there is no evidence whatsoever to ground the husband’s assertion of a debt owed by him to his brother, Mr N in relation to the R Street, Suburb S investment property, and I will disregard that asserted liability.
In relation to the wife’s assertion that the parties have a joint debt to Bank D in relation to an overdrawn amount on their offset account #...13 in the sum of $62, I have no evidence in explanation of the assertion and I will disregard that amount but provide for closure of any joint accounts by the parties and consequent division of credit or contribution to debit balance between the parties.
As found earlier in these Reasons, I find that the value of the husband’s membership account in F Super is $241,500 and the value of the wife’s member account in F Super is $77,686.
Accordingly, I find that the following table represents the calculation of “the property” and relevant ownerships in law and equity as between the parties or indebtedness as between the parties.
Assets Ownership Description Value 1 Joint B Street, Suburb C NSW $925,000 2 Husband Household contents $2,000 3 Wife Household contents $2,000 4 Husband Motor Vehicle 2 $50,000 5 Husband Motor Vehicle 3 $9,500 6 Wife Motor Vehicle 1 $18,300 7 Wife Company J shares, 212 shares $8,039 8 Husband Company F shares, 400 shares $1,492 9 Wife Bank D Account …68 $284 10 Wife Bank K …42 $132 11 Husband Bank M Account #...62 $9,842 12 Husband Bank M Account #...36 (joint with Mr N) $3 13 Joint NAB Account …34 $5 14 Husband 25% net proceeds of sale of G Street, Suburb H, NSW– interim disruption $76,628 15 Wife 25% of net proceeds of sale of G Street, Suburb H – interim distribution $76,628 16 Husband Proceeds of sale of COMPANY L shares $4,524 17 Wife Proceeds of sale of COMPANY L shares $3,880 TOTAL $1,188,257 Liabilities Ownership Description Value 18 Wife Debt Owed to Ms E $1,625 19 Husband Loan for purchase of F shares $1,500 TOTAL $3,125 Superannuation Ownership Description Value 20 Husband F Super $241,500 21 Wife F Super $77,686 TOTAL $319,186
On the basis of my findings as to “the property”, if a two-pool view is taken as between the available assets minus liabilities on the one hand, and superannuation entitlements on the other hand, then the first pool is worth $1,185,132, and the super pool is worth $319,186. If a one pool approach is taken, then “the property” is worth $1,504,318.
IS IT JUST AND EQUITABLE TO MAKE AN ORDER UNDER S79?
The parties separated on 28 February 2015 and have not resided in the same premises since 21 September 2015. They have joint ownership of the former matrimonial home. The tenor of the evidence when considered in the light of the parties’ contributions,[73] and also considered in the light of the considerations in section 75(2) of the Act, have an inevitable flavour of an end result favouring the wife.
[73] Family Law Act 1975 (Cth) s 79(4)(a)-(c).
As mentioned by the High Court in Stanford v Stanford, it is just and equitable to make a property settlement order in cases such as this, because there is not and will not hereafter be the common use of property by the husband and the wife due to the severance of the mutuality of the marital relationship.
Having found that it is just and equitable to proceed with orders under section 79 of the Act, I follow the four-step process so well-known and as described by the Full Court of the Family Court of Australia in Hickey.[74]
[74] Hickey & Hickey, & Attorney-General of the Commonwealth of Australia [2003] FamCA 395.
CONSIDERATION OF CONTRIBUTIONS
Having resolved the first step in the four-step process by making findings and resolving the composition and value of “the property”, I will now consider the contributions made by or on behalf of the parties in the light of section 79(4)(a) to (c) of the Act, considering those various contributions made at the start of, during, and after the end of the parties’ cohabitive relationship on a holistic basis so as to arrive at a percentage division between the parties.[75]
[75] Jabour & Jabour [2019] FamCAFC 78.
The initial contributions of the parties were modest, the husband having two motor vehicles, at least one of which may have considerable value these days (the Motor Vehicle 6), but there is no evidence on hearing as to values, nor is there any evidence as to the value of the husband’s superannuation entitlements at commencement of cohabitation or the wife’s superannuation entitlements at the commencement of cohabitation.
The parties made an equal initial contribution prior to the commencement of their cohabitation to the purchase of the former matrimonial home. The bulk of the purchase price and the cost of building the home was borrowed by the parties from the Commonwealth Bank of Australia and later refinanced first with Bank M and later with Bank D Limited, with the repayments thereof coming from the earnings of the parties from their full-time employment up to 2008 when the wife left employment at the time of birth of X, and thereafter from the husband’s earnings.
The husband was the sole financial support for the family unit, other than any government benefits received by the wife in consequence of the birth of the children, from 2008 until separation, noting that the loan account secured on the former matrimonial home had been fully paid out by the parties prior to separation. Following separation, the husband continued to contribute to some of the family costs in addition to payment of child support as assessed until about December 2018 and in particular, as detailed earlier, the former matrimonial home internet and telephone costs, private health cover and home and contents insurance.
There is evidence from the husband of his personal exertion and work in effecting completion of the home built on property of the former matrimonial home, and also evidence from the wife of such work being undertaken by her brother Mr PP whilst assisted by her other brother Mr QQ, the husband, and his brother Mr N.
The wife was principally responsible for the day-to-day care of the children of the marriage up to separation. The wife was also principally responsible for undertaking the homemaker role within the family unit – cooking, cleaning, washing, ironing, shopping and so forth, up to separation. Following separation, the wife has been solely responsible for the day-to-day care and control of the children of the marriage and solely responsible for their financial support other than those amounts paid by the husband toward child support as assessed and such of the amounts he continued to pay in relation to outgoings up to December 2018 as provided benefit to the children.
The husband continued in full-time employment with consequent increase to the value of his member’s account with F Super post-separation, though there is no evidence to indicate the value of such increase.
Taking the whole of the evidence into account, including those matters to which I have just referred, and approaching assessment of the relative contributions of the parties at commencement of cohabitation, during cohabitation and post-separation on a holistic basis, I cannot at all agree with the assertion of the husband that contributions favour him as to 55% as against the wife’s 45%. Such a finding would necessitate a considerable devaluation of the wife’s contribution as homemaker and parent and post-separation contribution as parent way below the husband’s contribution by way of a financial provider for the family during cohabitation.
I also do not agree with the submission of the wife that an assessment of contributions favours her by 57% compared to 43% for the husband, though I find that in consequence of the wife’s post-separation contributions, the holistic view of the overall contributions of the parties would favour the wife. I find that an appropriate assessment of the parties’ contribution favours the wife as to 52.5% against the husband’s 47.5%, being a differential of five per cent, which has a value of $75,215.90 when calculated on the one-pool approach.
CONSIDERATION OF THE MATTERS REFERRED TO IN SUBSECTION 75(2) SO FAR AS THEY ARE RELEVANT
I will now consider the matters referred to in section 75(2), and whether there should be an adjustment between the parties as a result of these considerations.
At hearing, the husband was 44 years of age, and the wife 42 years of age. There is no evidence to indicate that either is in anything but good health.
The husband’s income is derived from his appropriate gainful employment, and there is nothing in the evidence to indicate other than the husband is physically and mentally capable of engaging in appropriate gainful employment. The wife’s income is derived from Centrelink benefits in consequence of her day-to-day care of the children X and Y, 11 years and five years of age at the time of the hearing respectively. On the evidence, there is a significant disparity between the income of the husband and the income of the wife.
Pursuant to section 75(2)(o), I will also consider here the comparative earning capacities of the parties, and pursuant to section 75(2)(j and (k) the extent to which the wife has contributed to the income and earning capacity of the husband and the effect on the wife’s earning capacity throughout the duration of the marriage.
The wife ceased full-time work in 2008 at the time of X’s birth. She has not re-joined the workforce since that time, and a period of 12 years elapsed between her ceasing work and the hearing. During her working life up to 2008, she had skills in customer service, but has not been able to maintain and develop those skills since that time.
The husband, on the other hand, has worked in his area of expertise as a tradesperson, including the conduct of his sole trader business, throughout the whole period of cohabitation and the separation of the parties.
The husband asserts in his evidence that he had ceased conduct of the business Company U as at 30 June 2019, but did not give evidence as to why it was necessary to cease that business, for instance, if his current employment with Employer BB necessitated the end of his conduct of the sole trader business. Conceivably, the husband can resurrect the business either concurrent with his current employment or, if not, in the event he changes employment and conditions are suitable.
The wife contributed to the husband’s income and earning capacity by her undertaking the homemaker and parent role from 2008 to separation, enabling the husband to continue in his full-time development and develop his skills and experience and, therefore, value in the employment marketplace, whilst the wife’s earning capacity and employment value depreciated over that time due to her not being engaged in gainful employment outside the home.
I find that the husband’s earning capacity is significantly in excess of the wife’s earning capacity.
The wife has care and control of X and Y and will continue to be their principal, almost sole parent, under the final parenting orders, whilst they are in their minority. That responsibility presents a further inhibition on her ability to engage in appropriate gainful employment.
I have noted the parties’ evidence each in relation to their weekly expenses, being the commitments of the husband necessary to enable him to support himself and of the wife to enable her to support herself and the children of the marriage, with contribution of child support by the husband towards the financial support of the children.
I am not able, on the basis of the evidence before me, to assess the standard of living of the parties during their cohabitation and the standard of living of each of the parties now so as to make any finding in relation to any appropriate adjustment consequent upon “a standard of living that in all the circumstances is reasonable.”
Neither the property settlement orders proposed by the husband, nor the property settlement orders proposed by the wife, would have any detrimental effect on the ability of a creditor of either party to recover the creditor’s debt.
There is a need to protect the financial position of the wife as the parent who will continue to be virtually the sole carer for the children of the marriage during their minority, and that should be reflected in an adjustment between the parties.
The wife is not cohabitating with any person and on the evidence before me, I cannot make a finding on the balance of probabilities that the husband is cohabiting with Ms Briggs. It may be that the husband and Ms Briggs have refrained from entering into an overt de facto relationship pending the outcome of the proceedings, and if that is so, it is sad for both of them, but the evidence does not support the making of a finding of a de facto relationship with its consequent effect upon the husband’s financial circumstances compared to the wife.
The husband is paying child support for the children as assessed under the relevant legislation, though the parties differ in their evidence, given on the same day on 17 January 2020, as to the amount paid.
The husband is a beneficiary under his late mother’s estate as to 25% of the net proceeds of sale of her home at the time of her death at R Street, Suburb S, and as at the time of hearing, based upon the evidence available, the gross value of that entitlement was $180,000. The property had not been sold by the end of the hearing, and it may be that such amount that would be received by the husband in consequence of a sale may either decrease or increase, though being a property in the Sydney property market in the period of November 2020 to the date of making of orders, there is a greater likelihood that it will increase.
The husband received the inheritance under the terms of his mother’s will after the parties’ separation on 28 February 2015 following the late Mrs Tavano’s death in 2017, and he is yet to receive his inheritance in his own hands. It is a resource to be considered pursuant to section 75(2)(b), a resource in which the wife will not share and ground for an adjustment between the parties in favour of the wife.
I find that there will be no effect on the earning capacity of either of the parties, currently or in the foreseeable future, caused by the making of the orders sought by either of the parties.
I have already considered the effect of the final parenting orders made by consent on 3 November 2020 in relation to the parties’ past, present, and future positions in relation to the day to day parenting of the children, X and Y. I have also already considered the child support paid by the husband under an assessment under the relevant legislation.
WHAT ORDERS UNDER 79 OF THE ACT ADJUSTING THE INTERESTS OF THE PARTIES TO THE PROPERTY ARE APPROPRIATE?
The appropriate orders adjusting the interests of the parties in the property, are those which enable the parties to achieve a division in line with what I have found to be the appropriate percentage division between them.
It is the wife’s aim expressed through the orders she seeks to retain the former matrimonial home. The husband’s orders recognise and concur with that aim, subject to the husband’s claim that such a result would entitle him to a significant payment from the wife. The finding I have made in relation to the appropriate adjustment between the parties, does not ground the husband’s claim to such payment.
Accordingly, as a consequence of my consideration of the maters referred to in section 79(4)(e), and its reference to the matters in section 75(2), I find that an adjustment should be made in favour of the wife of 21%, equating to $315,907.
Accordingly, I find that an appropriate division of “the property” between the parties is as to 73.5% to the wife and 26.5% to the husband.
I find that the appropriate approach to the matter is to deal with “the property” on a one pool approach, inclusive of the parties’ superannuation entitlements.
In order to achieve the alteration of the parties’ interests in the property in line with what I have found to be the appropriate division, I will make orders providing for the wife to retain:
(a)The former matrimonial home;
(b)Her household contents;
(c)Her Motor Vehicle 1 (registration …);
(d)Her Company J shares;
(e)Her bank account with Bank D and the Bank K;
(f)The proceeds of sale received by her on sale of her COMPANY L shares; and
(g)The interim distribution received by her on sale of the investment property at R Street, Suburb S under the interim orders.
Further, I propose to make an order that she receive any monies standing to the joint credit of the parties in the joint NAB account #...34 – on the evidence $5 – and that she remains solely responsible for repayment of the debt owed by her to Ms E.
The wife will retain her entitlement to her member’s account with F Super, subject only to a superannuation splitting order made in favour of the husband with a base amount of $4,650.
An order will be made providing that the husband retain:
(a)His household contents;
(b)The Motor Vehicle 2 vehicle registration number …;
(c)His Motor Vehicle 3 registration …;
(d)His Company F shares;
(e)His accounts with Bank M being #...62 and #...36;
(f)The proceeds received by him on sale of his COMPANY L shares; and
(g)The interim distribution received by him on sale of the R Street, Suburb S investment property under the interim orders.
The husband will retain the whole of his members’ entitlements with F Super and will receive a superannuation split from the wife’s F Super account in his favour with a base amount of $4,650. The husband will remain solely liable as between himself and the wife for repayment of the loan associated with his purchase his Company F shares.
A mortgage remains registered on title to the former matrimonial home by Bank D Limited (dealing …), the parties not having obtained a discharge of mortgage document for registration after paying out the loan accounts secured by that mortgage. It is appropriate that as the wife will receive the title to the B Street, Suburb C property and become sole registered proprietor, she should meet costs associated with obtaining a discharge of mortgage document so as to remove that dealing from the title to clear the way for lodgement of the relevant transfer document pursuant to the orders.
As stated earlier in these Reasons, it is appropriate that the husband’s sole liability as between he and the wife for payment of Capital Gains Tax relating to half of the capital gain on sale of the R Street, Suburb S investment property, be dealt with between the parties, and I consider that notwithstanding my finding as to the appropriate division of the property between the parties, an appropriate order (also being just and equitable between the parties) is that the wife recompense the husband for one half of any amount of Capital Gains Tax paid by him in consequence of that sale, such payment to be made by her to the husband within three months of receiving written notice of such amount, verified by a copy of the husband’s relevant personal income tax return and notice of assessment and receipt from the Australia Taxation Office for payment of the Capital Gains Tax.
73.5% of the net property pool, which I found to be $1,504,318, is $1,105,673. Under the orders I will make, the wife will receive net property to the value of $1,105,679.
26.5% of the net property pool is $398,644 and under the orders I will make, the husband will receive net property to the value of $398,639.
The “imbalance” between the net amount each party will actually receive, and the calculation based upon the percentage division is a sum of $5. I will not make any further adjustment to deal with that sum.
Accordingly, I make the final order pursuant to section 79 of the Act. Pursuant to what was said by the Full Court of the Family Court of Australia in Hickey, there can only ever be one property settlement order under section 79 and accordingly, the order will be expressed as one order, through subparagraphs.
I will also make an order pursuant to section 106A of the Act, particularly in consequence of the order that I will make that will include the requirement for a transfer of the husband’s interest in the former matrimonial home to the wife and for the wife to obtain a discharge of the mortgage with Bank D Limited that remains registered on title to that property, without any sum owing being secured by that mortgage.
I certify that the preceding two hundred and twenty-four (224) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Morley. Associate:
Dated: 25 March 2022
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