Vallis and Estes - [2020] FCCA 172

FEDERAL CIRCUIT COURT OF AUSTRALIA

VALLIS & ESTES

[2020] FCCA 172

Catchwords:
FAMILY LAW – Property settlement – de facto relationship – husband making greater initial contributions – wife having substantial post-separation debt.

Legislation:
Family Law Act 1975, ss.49, 79, 90RD, 90RG, 90SB, 90SF, 90SM

Cases cited:
Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] ALR 334; (1938) 12 ALJR 100; [1938] HCA 34
Falk and Falk (1977) 15 ALR 189; (1977) 29 FLR 463; (1977) 3 Fam LR 11,238; (1977) FLC 90-247
Hickey v Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; [2003] FamCA 395
Pavey and Pavey (1976) 10 ALR 259; (1976) 25 FLR 450; (1976) 1 Fam LR 11,358; (1976) FLC 90-051.
Stanford v Stanford (2012) 247 CLR 108; (2012) 293 ALR 70; (2012) 47 Fam LR 481; [2012] HCA 52
Todd and Todd (No 2) (1976) 9 ALR 401; (1976) 25 FLR 260; (1976) 1 Fam LR 11,186; (1976) FLC 90-008

Applicant:

MR VALLIS

Respondent:

MS ESTES

File Number:

MLC 12063 of 2017

Judgment of:

Judge Riley

Hearing dates:

9, 10 and 24 October 2019

Date of last submission:

19 November 2019

Delivered at:

Melbourne

Delivered on:

31 January 2020

REPRESENTATION

Counsel for the applicant:

Ms Dellidis

Solicitors for the applicant:

Pearsons Lawyers Pty Ltd

Counsel for the respondent:

Mr Werner

Solicitors for the respondent:

Coulter Roache

DECLARATIONS

The applicant husband was ordinarily resident in New South Wales when the proceedings were commenced on 6 June 2018.
The parties were in a de facto relationship from 2003 until May 2014.

ORDERS

Contemporaneously, and within 60 days (“the due date”):
(a)the husband and the wife do all acts and things and sign all necessary documents to transfer to the husband, at his expense, all of the wife’s right, title and interest in the property situate at C Street, Suburb D, more particularly described in certificate of title volume (“the property”); and
(b)the husband discharge any mortgage over the property; and
(c)the husband pay the wife $279,052.90 (“the payment”).
The husband retain for his sole use and benefit to the exclusion of the wife:
(a)his E Shares;
(b)the payout received for his Motor Vehicle F;
(c)his Motor Vehicle G;
(d)his Motor Vehicle F;
(e)the funds standing to his credit in any bank or financial institution;
(f)B Pty Ltd;
(g)the furniture and chattels in his possession; and
(h)his superannuation entitlements.
The wife retain for her sole use and benefit to the exclusion of the husband:
(a)the funds standing to her credit in any bank or financial institution;
(b)the proceeds of sale of her Motor Vehicle H in the sum of $9,700;
(c)the furniture and chattels in her possession including but not limited to her overseas assets; and
(d)her superannuation entitlements accumulated in Australia and overseas.
In the event that the whole of the payment has not been made by the due date, then:
(a)the husband sign all such documents and do all such things as are necessary to transfer the property to the wife, (“the transfer”), at the wife’s expense;
(b)the wife hold the property on trust for sale and forthwith sell it out of court (“the sale”),
(c)the proceeds of the sale be applied:
(i)firstly, to pay all costs, commissions and expenses of the transfer and the sale;
(ii)secondly, to discharge the mortgage and any other encumbrance affecting the property;
(iii)thirdly, so much of the payment as is then outstanding, together with interest at the rate prescribed in the Family Law Rules 2004 adjusted daily from the due date, to the wife; and
(iv)the balance, to the husband.
(d)for the purposes of effecting the sale:
(i)the property be listed for auction with such real estate agent as is agreed between the parties and in default of agreement with such agent as is nominated by the President of the Real Estate Institute of Victoria (“the real estate agent”);
(ii)the listing price for the property be as agreed between the parties and in default of agreement, the listing price be as determined by a qualified valuer nominated by the real estate agent;
(iii)the reserve price be as agreed by the parties, and, in default of agreement, the reserve price be as determined by a qualified valuer nominated by the real estate agent; and
(iv)both parties cooperate with the real estate agent in relation to the sale, including making the keys available, allowing inspection of the property at times requested by the real estate agent, and ensuring that the property is in a neat and clean condition at the time of inspection by prospective purchasers; and
(e)each party have liberty to apply in respect of the mechanics of the sale.
The husband be liable for and indemnify the wife with respect to:
(a)all liabilities of B Pty Ltd including but not limited to taxation liabilities;
(b)all outgoings in relation to the property including but not limited to:
(i)mortgage repayments for the mortgage secured by the property;
(ii)council and water rates;
(iii)building insurance premiums;
(iv)contents insurance premiums;
(v)maintenance and repair fees; and
(vi)utility accounts;
(c)all credit card liabilities in the husband’s name;
(d)all repayments relating to the loan contract from Macquarie Leasing secured by the Motor Vehicle G; and
(e)personal taxation liabilities.
The wife be liable for and indemnify the husband with respect to all liabilities in her name including but not limited to credit card and taxation liabilities.
Unless otherwise specified in these orders and except for the purposes of enforcing the payment of any moneys due under these or any subsequent orders:
(a)each party be solely entitled to, to the exclusion of the other, all other property (including choses-in-action) currently in the possession of that party;
(b)moneys standing to the credit of the husband in any bank account in his name alone be the property of the husband;
(c)moneys standing to the credit of the wife in any bank account in her name alone be the property of the wife;
(d)each party forgo any claim he or she may have to any superannuation benefits belonging to or earned by the other;
(e)all insurance policies be the sole property of the owner named therein; and
(f)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

NOTATIONS

Section 121 of the Family Law Act 1975 provides that it is an offence punishable by imprisonment for up to one year to publish or disseminate to the public any account of family law proceedings which identifies the parties, witnesses or other people concerned with the proceedings, unless specifically authorised by the court.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 12063 of 2017

MR VALLIS

Applicant

And

MS ESTES

Respondent

REASONS FOR JUDGMENT

Introduction

This is an application under s.90SM of the Family Law Act 1975 (“the Act”) for a de facto property settlement.

Chronology

The parties prepared a joint chronology which was agreed, except where otherwise indicated. The joint chronology is substantially as follows.
2003The parties commenced cohabitation in the husband’s rental premises.
The husband was employed as a tradesman for Employer N. The wife was employed as a professional at Employer O.
The husband had:
i)$200,000 in savings;
ii)200 E Shares that he still holds;
iii)a four year old Motor Vehicle F that he traded in post-separation; and
iv)$50,000 in superannuation benefits.
The wife had no significant assets and had a HECS debt.
2003The parties purchased a property at C Street, Suburb D (C Street, Suburb D) in joint names for $411,000 plus purchase costs.
The husband applied part of his savings (about $100,000) for the deposit, stamp duty and legal fees.
The balance of the purchase price was met with a mortgage to the ANZ bank in the sum of $326,761.
Each party thereafter contributed one half of the mortgage repayments from their respective wages.
Early 2004The husband ceased paid employment and commenced renovating and extending C Street, Suburb D over four months. The wife remained in paid employment.
Mid 2004The parties moved from the husband’s rental premises to C Street, Suburb D, when the renovation and extension of the property were almost complete.
Late 2004The husband completed the balance of the renovations while the parties lived in the property.
2004The wife commenced employment at Employer J for two years as a Professional and then as a Professional.
2005The parties increased the amount outstanding on the mortgage secured by C Street, Suburb D by $50,225.00.
2006The wife commenced employment at the Employer P as a Professional.
2006The wife commenced Qualifications at University.
2006The wife had a breast enhancement at a cost of $15,000 funded by a loan secured against C Street, Suburb D.
Late 2006The husband commenced arrangements for the subdivision of C Street, Suburb D.
2007The wife relocated to City Q, USA to work for the Employer P as a professional for two years earning $150,000 per annum.
2008The wife received an inheritance from her deceased father’s estate. The wife asserted it was $15,000. The husband asserted it was $10,000.
The wife asserted that she applied $10,000 of the inheritance to the renovation of the kitchen. The husband asserted the wife applied the entirety of the inheritance to her personal expenses.
For the reasons discussed below, I consider that the wife applied the entirety of the inheritance, however much it was, to her personal expenses.
2008The husband effected the subdivision of C Street, Suburb D into two titles and began to build a second dwelling.
The renovated dwelling in which the parties were living became known as C(1) Street, Suburb D.
The new dwelling constructed on the subdivided land became known as C(2) Street, Suburb D.
The mortgage on C(1) Street, Suburb D was increased by $300,000 to fund the construction of C(2). Subsequently the mortgage was increased by a further $20,000 to complete the renovations.
2008C(1) Street, Suburb D was sold at auction for $720,000.
The proceeds of sale of C(1) Street, Suburb D were applied to pay out the original mortgage used to purchase C(1) Street, Suburb D and to pay down the second mortgage used for renovation of C(1), leaving an outstanding balance of $80,000.
2009The husband completed the construction of C(2). He moved into it and completed the landscaping and driveway while living there.
2009The wife returned from City Q, USA and began employment as a professional for Employer P for 18 months.
2010The wife’s employment as a professional was terminated and she received a redundancy payment of $11,000.
The husband asserted that the wife applied the redundancy payment to her own personal expenses.
The wife asserted that, apart from the purchase of a laptop computer, she applied the redundancy payment to the reduction of the mortgage.
For the reasons discussed below, I consider that the wife applied the entirety of the redundancy payment to her personal expenses.
2011 The wife relocated to Sydney for eight months to work for Employer K as a Professional.
2011The wife returned to Melbourne after her role as a Professional was terminated. She received a redundancy payment of $10,000.
The husband asserted that the wife applied the redundancy payment to her own personal expenses.
The wife asserted that she applied the redundancy payment to meet outstanding payments on her leased property in Sydney and to transport furniture back to Melbourne.
For the reasons discussed below, I consider that the wife applied the redundancy payment to her personal expenses.
30 March 2012      The mortgage to the ANZ bank secured over C(2), Suburb D was paid out.
2012The wife began working as a Professional at Employer L for three months. The husband asserted that this was a voluntary position. The wife asserted it was a paid position.
As discussed below, neither party was a particularly credible witness. However, on this issue, I accept the husband’s evidence. It strikes me as plausible, given how common it is these days for people to take unpaid positions to secure paid employment.   Moreover, if the wife had received payments for that period, she ought to have been able to produce some record of the payments, especially as, even on the wife’s case, separation had occurred in 2016, and it would have been apparent from then that documentary evidence would be required to finalise the financial aspects of the relationship.
2012The wife commenced employment at Employer L for two years as a professional for R Group.
2013The husband resigned from his job at Employer N after 14 years and commenced his own business as a sole trader.
The husband had accumulated $45,000 in savings.
The husband obtained an overdraft facility as a buffer for his business, which was secured over C(2) Street, Suburb D.
2014The wife left Employer L to pursue a position with Employer L in Country S.
May 2014The husband asserted and the wife denied that the parties separated at this time. For the reasons discussed below, I accept the husband’s date of separation.
C(2) Street, Suburb D was valued at $875,000.
2014The wife relocated to Country S and began employment as a Professional for R Group.
2014The wife visited Australia for Christmas.
2015The wife participated in Course of study, in Country U until 2015.
March 2015The husband advanced the wife $17,000 for the purposes of buying a car in Country S.
The husband asserted it was a loan advanced on condition the wife repaid him from her property settlement. The wife asserted it was a gift.
For the reasons discussed below, I accept the husband’s evidence about this matter.
2015The wife visited Australia for the purposes of renewing her Country S visa.
November 2015     The husband advanced the wife $7,000.
The husband asserted it was a loan advanced on condition the wife repaid him from her property settlement. The wife asserted it was a gift.
For the reasons discussed below, I accept the husband’s evidence about this matter.
2016The wife visited Australia. The husband asserted the trip was for the purpose of the wife renewing her annual Country S visa. The wife disputed that.
For the reasons discussed below, I consider that the wife visited Australia to renew her Country S visa, and not because the parties were in an ongoing relationship at that time.
23 June 2016         The wife completed Country S Pension Fund documents listing her marital status as single.
October 2016        The wife asserted that the parties separated.
2016The wife visited Australia. The husband asserted that the purpose of the visit was for the wife to apply for Country S permanent residency and that the parties met for dinner and discussed property settlement. The wife disputed that.
In view of the messages between the parties discussed below, I accept that the parties discussed property settlement in 2016. It is immaterial why the wife returned to Australia in 2016 given that, on any view, the parties had separated by that time.
The husband lent the wife $10,000 on condition that she repaid him from her property settlement.
2017The husband registered B Pty Ltd.
The wife asserted that she commenced a long-distance relationship with Mr V. The husband disputed that.
Whether the wife commenced a relationship with Mr V in 2017 or earlier is immaterial, given the finding that separation occurred in May 2014.
2017The wife asserted her employment at Employer L Country S was terminated, and she was thereafter unable to secure employment in Country S. The husband disputed that.
For the reasons discussed below, I consider that the wife could have found employment if she wished, in Country S or elsewhere.
22 Nov 2017          The husband filed an initiating application in the Family Court of Australia for property adjustment orders.
12 Feb 2018Directions were made at a case assessment conference in the Family Court of Australia requiring the wife to file responding material.
28 Feb 2018The wife filed a response to the initiating application.
9 May 2018The parties attended a conciliation conference in the Family Court of Australia. The matter was transferred to the Federal Circuit Court of Australia.
6 June 2018The husband filed an amended initiating application.
28 June 2018         The wife filed an amended response.
23 August 2018     The parties attended a private mediation.
Early 2019The wife asserted her relationship with Mr V ended, although they remained friends. The husband disputed that the relationship had ended.
There is insufficient evidence for the court to conclude that the relationship is ongoing.
2019The wife returned to Australia.
2019The wife began employment as a customer service officer with Employer M until 2019 earning $52,000 per annum pro rata.
6 September 2019 The husband filed a further amended initiating application.
16 Sept 2019              The wife filed a further amended response.
It was not entirely apparent from the parties’ chronology, but, for completeness, the husband is now 47 years old. He is a tradesman. He was employed by a company until he commenced his own business in 2013. He took time off work to renovate the parties’ property and construct another, being C(2) Street, Suburb D. The wife is now 42 years old. She has had various jobs in various sectors.
In summary, the parties commenced cohabitation in 2003 in C Street, Suburb D. In 2007, the wife relocated to City Q, USA for two years for work reasons. The relationship continued while the wife was in City Q, USA. The parties again lived together in C Street, Suburb D from 2009 until May 2011, when the wife relocated to Sydney for eight months for work reasons. The relationship continued while the wife was in Sydney. The parties again lived together in C Street, Suburb D from December 2011 to about June 2014, when the wife relocated to Country S for work reasons. The husband asserted that the parties separated in May 2014, shortly before the wife moved to Country S. The wife asserted that they separated in October 2016. As will be seen below, the court is satisfied that separation occurred in or about May 2014. The wife returned from Country S in 2019 and is now living in Town DD with her mother. In all, the parties cohabited for about eight years.
There are no children of the relationship.
The parties largely maintained separate finances, except that they jointly owned C Street, Suburb D and each paid half of the mortgage on it, even when the wife was not living there. They each paid half of the utilities for C Street, Suburb D when they were living there together, but when the wife was not there, the husband paid all of the utilities for C Street, Suburb D and the wife paid her own rent and utilities.
The husband conceded that, throughout the relationship, and until at least mid-2014, the wife earned more than he did.

Material relied upon

The husband relied upon:
a)his further amended initiating application filed on 6 September 2019;
b)his financial statement sworn or affirmed on 15 November 2017;
c)his trial affidavit sworn on 6 September 2019; and
d)the affidavit sworn by Ms W, a valuer, on 26 September 2019.

The wife relied upon:
a)her further amended response filed on 16 September 2019;
b)her financial statement sworn or affirmed on 16 September 2019; and
c)her affidavit sworn or affirmed on 16 September 2019.

Common ground

The parties agreed that the matter should be resolved by the husband retaining C(2) Street, Suburb D, if he can refinance it, and paying the wife an amount of money. The parties were in dispute about how much money the husband should pay the wife. Neither party sought a superannuation split or the transfer of any property.

The husband’s proposal

The husband proposed final orders in his case outline filed on 25 September 2019 as follows:
1.That there be such alteration of interests in property pursuant to Section 90SF of the Family Law Act 1975 (Cth) representing a division of the net assets as follows:
(a)80% to the Applicant;
(b)20% to the Respondent.
2.That on or before 120 days of an Order of the Court (“the date”[)], the following occur contemporaneously:
(a)The Applicant and Respondent do all acts and things and sign all necessary documents to transfer to the Applicant, at the expense of the Applicant, all of the Respondent’s right, title and interest in the property situate at C(2) Street, Suburb D more particularly described in Certificate of Title Volume (“the C(2) Street, Suburb D property”);
(b)The Applicant discharge and refinance the mortgage encumbering the C(2) Street, Suburb D property;
(c)The Applicant make a payment to the Respondent equating to a 20% division of the asset pool less the value of the items the Respondent is to retain in Order 4 herein and less the sum of $2,252 being her half share of Mediation fees and her half share of the Retrospective Valuation fees to be repaid to the Applicant.
3.That the Applicant retain for his sole use and benefit to the exclusion of the Respondent, the following:
(a)His E Shares;
(b)The payout received for his Motor Vehicle F;
(c)His Motor Vehicle G;
(d)His Motor Vehicle F;
(e)The funds standing to his credit in any bank or financial institution;
(f)B Pty Ltd;
(g)The furniture and chattels in his possession;
(h)His superannuation entitlements.
4.That the Respondent retain for her sole use and benefit to the exclusion of the Applicant, the following:
(a)The funds standing to her credit in any bank or financial institution;
(b)The proceeds of sale of her Motor Vehicle H in the sum of $9,700;
(c)The furniture and chattels in her possession including but not limited to her overseas assets;
(d)The sum of $34,000 borrowed from the Applicant post separation.
(e)Her superannuation entitlements including but not limited to superannuation accumulated in Australia and overseas.
However, in his closing submissions, the husband proposed a split of 70:30 in his favour.

The wife’s proposal

The wife proposed final orders in her further amended response filed on 16 September 2019. They are summarised in her case outline filed on 26 September 2019 as follows:
1.The total net assets of the parties, as they presently stand, be divided 55/45 in favour of the Husband.
2.Within 60 days, the Husband make a cash payment to the Wife sufficient to achieve that outcome.
3.Contemporaneously with that payment, the Wife transfer her half share of the matrimonial home to the Husband and the Husband refinance all secured debt in his own name.
4.In default of payment by the due date, the Matrimonial home be sold and the Wife receive that cash payment from the proceeds, with the Husband to retain the balance.
5.The Husband retain, within his 55% share, his interest in the company B Pty Ltd (i.e. the company through which he trades as a tradesman).
6.Each party retain, within their respective 55% and 45% shares, the motor vehicles registered in their names and be responsible for any liabilities attaching to them.
7.Each party retain, within their respective 55% and 45% shares, all other personal liabilities presently standing in his/her name.
8.No adjustment of superannuation interests.

The husband’s credibility

The wife strenuously attacked the husband’s credibility, saying that he was an unacceptable witness and a demonstrably dishonest litigant[1]. The wife relied on the following matters.
[1] Wife’s closing written submissions filed on 4 November 2019, paragraph 6.
Firstly, the husband, notwithstanding that he was aware of his discovery obligations, failed to disclose to the wife until after the trial was scheduled to have commenced that:
a)he had not lived in the former partnership home for the previous 15 months, but had allowed his brother and his family to live in C(2) Street, Suburb D rent-free without consultation with the wife, who was the joint owner of the property;
b)the husband had been living and working in City X, NSW during that time;
c)the husband, without any plausible explanation, provided a profit and loss statement for his company for the period 9 August 2018 until 30 June 2019, when profit and loss statements are meant to cover a full financial year; and
d)he provided a false address in his trial affidavit, being the C Street, Suburb D address, rather than his City X, NSW address;
e)he had lied about the date of separation; and
f)he said in his affidavit, falsely, that his company had $100,000 in its bank account, but he was unable to use these funds, even for the operation of the business, and he had to retain the $100,000 for three years for warranty purposes.
The husband’s failure to disclose that he had allowed his brother to live rent free in the former partnership home, of which the wife was a joint owner, was unacceptable. The husband had no right to allow that arrangement to occur, and to fail to disclose it compounded the problem. These matters reflect poorly on the husband’s credibility.
The husband’s failure to disclose that he was living in City X, NSW, of itself, is not significant. Former partners are not obliged to keep each other informed of where they are living. Similarly, it is immaterial that the husband did not disclose that he was working in City X, NSW. The only material issues about the husband’s work are its financial aspects, which are discussed below.
Having said that, when swearing or affirming an affidavit, it is customary to give one’s actual residential or business address. The husband did not do so, although he could argue, with some force, that the C Street, Suburb D address remained his permanent address, and his address in City X, NSW was only a temporary address. This issue is not particularly significant.
Whether the husband lied about the date of separation, and what was in fact the date of separation, is discussed in more detail below.
The issue about the $100,000 supposedly in the husband’s company’s bank account is a more complex matter. The parties agreed that the company’s cash in the bank on the first day of the trial amounted to $9,000, although they agreed that it sometimes amounted to as much as $347,000. Although the husband said in his affidavit that he could not use the $100,000 for operational purposes, he conceded in cross-examination that he routinely did just that.
Much of the wife’s argument about this matter was based on her belief that the husband’s company was obliged by its insurer to retain $100,000 at all times to be used in the event of any warranty claims against the company. That belief was informed by the husband’s affidavit.
After much urging, the husband produced, on the final day of the trial, the deed of indemnity for his company’s builder’s insurance. The deed became exhibit 27. The deed actually provides that, if the insurer accepts a claim, the insurer may send the company a demand, and, in that event, the company is required to give the insurer $62,500 within 20 days of the demand. To be in a position to comply with the deed, the company would need to have that amount in its bank account, or be able to have access to $62,500 within 20 days.
The figure of $100,000, which the husband gave in his affidavit, was a nonsense. The actual amount payable by the husband’s company to its insurer in the event of a warranty claim was $62,500.
It was also not true, contrary to the husband’s claim in his affidavit, that he was not allowed to use the money, whether it was $100,000 or $62,500. The husband’s oral evidence was to the effect that he frequently used the money in the account to pay suppliers and so on, but always tried to restore it to $100,000 by the end of the month.[2]
[2] Tr. pp.119-122.
The husband’s affidavit evidence about the $100,000 was significantly inaccurate. The inaccuracies reflect poorly on his credibility.
For completeness, I note at this point that the parties agreed in their closing submissions to deal with the matter on the basis that the company’s account had $100,000 in it, and that the $100,000 could be treated as an asset of the husband. I accept the concessions in this regard.
Secondly, the wife said that the husband was not an honest witness because:
a)he filed a financial statement on 22 November 2017 and did not update it for the trial which began on 9 October 2019; and
b)he initially said in cross-examination that his 2017 financial statement was accurate but later conceded that it was not.
The husband sought to explain his failure to provide an updated financial statement by saying that the judge who had previously had the conduct of this matter, Judge Williams, as her Honour then was, had not ordered an updated financial statement.[3] That is beside the point. It is incumbent upon litigants to ensure that their material is up to date and accurate in good time for the trial, to permit the trial to proceed efficiently.
[3] Tr. p.60. l.20-23.
In fact, the husband’s counsel asked him a number of questions in oral evidence in chief to update his financial statement. The husband said at that point that:
a)he was no longer working as a sole trader and started working through his company in 2017, which, I note, was prior to the date that he swore his financial statement saying that he was a sole trader and also worked through his company;
b)he had earned $846 per week, or about $44,000 per year, in 2017, about $1,200 per week, or, he said $58,000, in the 2018 financial year, (it is actually about $62,400 per year) and about $70,000 per year for the 2019 financial year;
c)he had contributed about $288 per week for superannuation in 2017, but was now contributing $480 per week, however, in answer to a question from the court, the husband conceded that his company was paying those superannuation payments on his behalf and they did not come out of his $70,000 salary;
d)his financial statement said that his company had $99,000 in its account, but, as at 9 October 2019, the company actually had $9,000 in its account, but he was expecting a payment on 10 October 2019 which would bring the balance in the company’s account back to $100,000; and
e)contrary to his financial statement in which he said he had no credit card liabilities, he did in fact have a $10,000 credit card liability which all accrued after 2016.
In other respects, the husband maintained that his 2017 financial statement was accurate, including when he said that his average weekly expenditure was $1,257, albeit with a reduction of $288 per week, because that amount was for superannuation paid by the company rather than the husband himself. The husband was pressed at some length about his weekly expenditure, to the effect that, if his claims about his income and expenditure were true, he must have saved more than the $45,000 he claimed to have saved as at his alleged date of separation in May 2014. It was also put to the husband that he may have lied to the Australian Taxation Office (“ATO”).
The husband eventually said in cross-examination that his expenditure may not have been as high as his financial statement indicated, and perhaps it was only $500 per week. Using that figure, the husband’s claims about the amount he had saved at separation added up. Consequently, I conclude that the husband’s evidence in his financial statement about his weekly expenditure, which he orally confirmed, was substantially inflated. This bears negatively on the husband’s credibility.
The wife also criticised the husband for not providing his income tax return for the year ending 30 June 2019. However, as the husband used an accountant, his 2019 income tax return was not due as at the date of trial. The husband said, and I find it plausible, that his accountant had not prepared it. The husband was under no obligation to provide to the wife a document that did not exist. In other words, the husband was under no obligation to prepare his income tax return earlier than the ATO required it, simply for the purpose of providing it to the wife. Having said that, the husband had a very clear obligation to accurately disclose to the wife all of his financial circumstances in good time for the trial. He clearly did not do so. This detracts significantly from the husband’s credibility.
The wife also criticised the husband for claiming to have a before tax income of about $70,000 per year, and also claiming to have given his lawyers about $91,000 since 2017 from his own resources. The court is obviously not able to conduct an audit of the husband’s actual income and expenditure. However, in broad terms, it appears that the husband’s claimed income and expenditure would not have enabled him to have paid his lawyers $91,000 since February 2017. This casts doubt on the husband’s credibility.
An additional very significant matter going to the husband’s credibility is that, well before the trial, he was asked in writing to produce all current building contracts to which his company was a party. The husband’s solicitor responded to that request by letter dated 28 June 2019, saying that:
We are instructed that there are no current contracts held by B Pty Ltd.
The husband agreed that letter was written on his instructions. On the first day of the trial, the wife called for production of all the current building contracts to which the husband’s company was a party. On the second day of the trial, the husband produced a contract showing that his company was party to a building contract worth about $4,000,000. The contract was dated 19 April 2018.
The husband at first tried to explain this by saying that he thought the request was for contracts that had not previously been provided to the wife, and he thought, mistakenly, that the $4,000,000 contract had previously been provided to her. When it was pointed out to the husband that his solicitor’s letter did not say anything like that, but stated categorically that the company held no current contracts, the husband said that he must have been mistaken.
I do not consider this matter can be explained away as a mistake. It seems to me that the husband deliberately tried to conceal a very material fact from the wife and the court. This seriously detracts from the husband’s credibility.
All in all, I consider that the husband’s credibility, as a witness, was poor.

The wife’s credibility

The wife’s credibility was also impeached.
The parties were in dispute about what the wife did with her inheritance in 2007. The wife said in her trial affidavit that, in about 2007, she received an inheritance from her father of $15,000 and she used $10,000 of that money for the renovation of the kitchen of the original property at C Street, Suburb D.
The husband said that the wife used all of her inheritance, which he said was only $10,000, on her personal expenses. The husband gave oral evidence on the first day of the trial that the kitchen was installed in 2004, three years before wife said she received the inheritance. The husband produced cheque butts substantiating that claim.
The following day, in oral evidence in chief, the wife conceded that her affidavit evidence about her contributing money for the kitchen could not have been right. She then said that she received the inheritance in 2005. That was still after the kitchen had been paid for. However, the wife maintained that she had contributed $10,000 of her inheritance to some aspect of the renovation, perhaps a bathroom.
The husband’s position was that, although the wife earned more than he did, she was a spender and he was a saver. He maintained that the wife did not contribute any of her inheritance to the renovations, and spent it all on her own purposes.
I found the wife’s evidence in relation to her claim to have contributed $10,000 of her inheritance to the renovation of the original property at C Street, Suburb D to be entirely unconvincing. When presented with irrefutable documentary evidence, she resiled from her affirmed affidavit evidence about the year that she received the inheritance and what she used it for. The bottom line is that the parties agreed that the renovations of the original C Street, Suburb D property were completed in 2004 and the work on C(2) Street, Suburb D was not started until 2008. There was simply no renovation work to pay for in 2007, as the wife originally claimed, or in 2005, as she claimed in her revised evidence.
Moreover, the wife did not present at all convincingly when giving evidence about this matter. On the contrary, she presented as a person who would make things up to improve her position in this litigation.
I do not accept that the wife contributed any of her inheritance to the renovations. I consider that she used her inheritance, whether it was $10,000 or $15,000, for her own purposes.
In her trial affidavit, the wife said in her assets and liabilities table that she had a liability of $64,751, being monies that she had borrowed from Mr V, her former boyfriend. The wife did not substantiate those borrowings until the third day of the trial when she produced a loan agreement dated November 2018. It stated that, as at the date of the agreement, Mr V had already advanced to the wife:
a)78,900 on 18 September 2017 for living expenses (being about $A8,050 in today’s money;
b)165,000 on 24 August 2018 for living expenses (being about $A16,840 in today’s money);
c)€5,160.42 being 82,358 on 2 July 2018 for legal expenses (being about $A8,260 in today’s money); and
d)€3,839.44 being 61,274 on 3 September 2018 for legal expenses (being about $A6,150 in today’s money).
Those amounts add up to about $A39,300. That is about $A25,000 less than the $64,751 that the wife claimed in her assets and liabilities table that she had borrowed from Mr V. Even allowing for variation in conversion rates, that is a big discrepancy.
Moreover, in the body of her trial affidavit, at paragraph 121, the wife said that she had borrowed $A83,141 from Mr V. That is an even bigger discrepancy, being about $A43,000.
Further, the wife said at paragraph 122 of her trial affidavit that she had borrowed another $A10,000 from Mr V on 16 July 2019 for living expenses but said that she had not yet utilised that amount. That may be the same $10,000 that the wife said in her assets and liabilities table that she had in an ING account.
In any event, the wife claimed in her trial material that she had borrowed $93,141 in total from Mr V.
The wife said in cross examination that the loan agreement dated November 2018 was signed by herself and Mr V in each other’s presence in front of the same witness, who was a person called Mr Y. However, when shown the loan agreement, the wife conceded that the signature of the person who witnessed her signature was different from the signature of the person who witnessed Mr V’s signature. This is a significant discrepancy in the wife’s evidence, and raises the possibility that the loan agreement was a fabrication.

The wife was also asked why Mr V would have lent her money for living expenses on 18 September 2017 when she was still employed by Employer L at that time, and had an income of $A100,000 per year. The wife said that perhaps Mr V had not lent her 78,900 on 18 September 2017 for living expenses, but had merely used her account for a payment that he needed to make in Country S, as he did not have his own Country S bank account. The wife conceded that she might have made a mistake in the loan agreement, and Mr V had not actually lent her 78,900 on 18 September 2017 for living expenses.
This is a very big mistake. On the wife’s case, she and Mr V must both have mistakenly thought that Mr V had lent the wife 78,900 on 18 September 2017 for living expenses, because that is very clearly what the loan agreement said.
I find that completely implausible. Moreover, the wife did not present in the witness box as at all credible on this issue. In addition, the wife, who claims that she is still such good friends with Mr V that he lent her $10,000 in July 2019, a few months before the trial, did not call him to give evidence to corroborate her claims regarding the loan. The loan agreement is dated after the alleged loans were made, which, in itself, raises questions about the authenticity of the loans.
The wife produced on the third day of the trial an email that she sent her solicitors on 17 October 2018 asking them to look over a draft loan agreement. The wife said in her email that she wished to formalise the loan agreement, because the family law proceeding had not settled. That email does not make the wife’s case more credible. The email is consistent with the wife deciding on about 17 October 2018 to manufacture a supposed loan document.
On the balance of probabilities and applying the Briginshaw[4] standard, I consider that the wife did manufacture the loan agreement. I do not accept that she borrowed any money from Mr V. I do not accept that she has any liability to him. Any money that Mr V put in the wife’s bank account was a gift, or was for him to use, as the wife explained in respect of the 18 September 2017 payment.
[4]Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] ALR 334; (1938) 12 ALJR 100; [1938] HCA 34
I do not consider that the wife was a credible witness. There were also issues about the husband’s credibility. However, I consider that the wife was significantly less credible than the husband.

The date of separation

The husband said that the parties separated in May 2014. The wife said they separated in October 2016. This issue is complicated by the fact that neither party was a particularly credible witness.
The wife said that it was unnecessary for the court to determine the date of separation because the mortgage on C(2) Street, Suburb D was paid out two years before the earliest proposed date of separation, and C(2) Street, Suburb D thereafter had no further contributions to it from either party. I reject that argument. There were funds advanced by the husband to the wife between May 2014 and October 2016 which may have a different complexion depending on whether the parties were separated or not at the time of the payments.
Section 49 of the Act provided that:
Meaning of separation
(1)The parties to a marriage may be held to have separated notwithstanding that the cohabitation was brought to an end by the action or conduct of one only of the parties.
(2)The parties to a marriage may be held to have separated and to have lived separately and apart notwithstanding that they have continued to reside in the same residence or that either part has rendered some household services to the other.
The test for whether separation has occurred was explained by Watson J in Todd and Todd (No 2) (1976) 9 ALR 401; (1976) 25 FLR 260; (1976) 1 Fam LR 11,186; (1976) FLC 90-008 as follows:
In my view, ‘separation’ means more than physical separation – it involves the destruction of the marital relationship (the consortium vitae). Separation can only occur in the sense used by the Act where one or both of the spouses form the intention to sever or not to resume the marital relationship and act on that intention, or alternatively act as if the marital relationship has been severed. What comprises the marital relationship for each couple will vary. Marriage involves many elements some or all of which may be present in a particular marriage – elements such as dwelling under the same roof, sexual intercourse, mutual society and protection, recognition of the existence of the marriage by both spouses in public and private relationships. (emphasis added)
The Full Court of the Family Court approved that statement in Pavey and Pavey (1976) 10 ALR 259; (1976) 25 FLR 450; (1976) 1 Fam LR 11,358; (1976) FLC 90-051, save that it substituted the word breakdown for destruction. Also in Pavey and Pavey, the Full Court said that:
There are marriages where the parties drift apart without discussing the problems that cause this, and, without expressing any intention about the matter, act as if the marital relationship has been severed. In a case such as that, the time at which the parties can be said to have “separated” is often difficult to establish in evidence but it must be established under sec.48.
In Falk and Falk (1977) 15 ALR 189; (1977) 29 FLR 463; (1977) 3 Fam LR 11,238; (1977) FLC 90-247 at [333], the Full Court of the Family Court clarified that, in addition to intention and action, there also needed to be communication of the intention, whether that communication was direct or indirect. The Full Court of the Family Court said in Falk and Falk that:
The attitudes and intentions of the parties may be spoken or unspoken; where both parties withdraw from recognition of the marriage the surrounding circumstances would often make it easier to establish separation. Where one party only has formed the relevant attitude and intention they should have been communicated to the other party directly or indirectly. Where other aspects of the relationship continue a party should not be heard to claim separation on the basis of a secret intention unknown to the other party. There are many ways of communicating an intention or change of attitude.
In the present case, it was not suggested that either party expressly stated to the other that the relationship was over. Rather, the intention was unspoken and communicated indirectly. Both parties accepted that and acted as if the relationship was over at some point. The question for the court is when.
The husband in his submissions relied on various circumstances to support his contention that the relationship ended in May 2014.
Firstly, the husband was not cross-examined about his claim about the date of separation. However, such cross-examination was unnecessary, given that it was clear from her materials that the wife disputed the husband’s proposed date of separation and put forward a much later date of separation.
Secondly, the husband did not visit the wife in Country S and showed no interest in doing so, although she lived there for two years and five months before, on the wife’s case, they separated. This factor tends to suggest that the parties had separated.
Thirdly, the husband was not challenged, in cross-examination, on his evidence that no sexual relationship existed between the parties after the wife went to Country S in 2014. However, the wife did dispute this in her material, claiming that the parties were intimate on those occasions when she returned from Country S. The husband was allowed to give oral evidence in chief about this matter. He was adamant that the parties were not intimate after the wife left for Country S. Having seen the husband give this evidence, I found his evidence on this point to be compelling. This factor tends to suggest that the parties had separated.
Fourthly, the wife suspected that the husband was in another relationship while she was in Country S. This factor tends to suggest that the parties had separated, although, in view of the number of people who are not monogamous, and, in view of the fact that it was only a suspicion on the part of the wife, it is not a weighty factor.
Fifthly, the wife did not produce any photographs or correspondence that suggested that the parties were in an ongoing relationship. The absence of photographs, in circumstances where the wife visited Australia in 2014, 2015 and 2016, would be somewhat surprising if the parties were in an ongoing relationship at those times, given how easy it is to take photographs with smartphones and given how regularly people take photographs of themselves and their partners.
The lack of any correspondence would be more surprising, if the parties had in fact been in an ongoing relationship. With electronic media, it is not unusual for partners to communicate numerous times a day about nothing much in particular. For the wife to have produced no electronic communications between herself and the husband between May 2014 and October 2016 is very telling. This is a substantial factor tending to suggest that the parties had separated.
Sixthly, the wife repaid the husband the money he had spent repairing her car prior to its sale in 2015. However, given that the parties kept their finances largely separate while the relationship was undoubtedly on foot, this circumstance is not significant either way.
Seventhly, the wife did not know that the husband had travelled to Country EE to undergo dental surgery in 2015. The chance of people in an ongoing relationship not communicating that sort of information to each other is negligible. This is a factor tending to suggest that the parties had separated by May 2015.
Eighthly, the wife asked the husband if she could stay at the former matrimonial home when she visited Australia in 2015. The wife had been to Canberra to get her Country S visa extended. The parties communicated via WhatsApp in the following terms:
The wife: Is it okay if I come hang out with you and the [dog] tomorrow?
The husband: Sure, but I will be at work. Are you going back to Town DD for Mother’s Day?
The wife:Thank you. I mean to stay. Seriously, I have to focus on an assignment due. Yes. But maybe just for the day. Still might do [the Mothers’ Day Classic].
The wife clarified in cross-examination that she meant that she wanted to use the C Street, Suburb D property to do her assignment, stay overnight and go to the fun run before going to Town DD for a day.
It is unlikely that the wife would have asked the husband if she could hang out with him and the dog if she was in an ongoing relationship with the husband. If she had been in an ongoing relationship, it would be expected that she would be with the husband whenever she was in Melbourne. She would not have had to ask him if she could stay at his place.
It is also clear from the WhatsApp exchange that the husband thought the wife meant that she would only be there during the day. He did not expect her to stay overnight. He made no effort to arrange a time to be with the wife, and said, bluntly, that he would be at work.
This WhatsApp exchange, and the circumstances surrounding it, are strong evidence that the parties were not in an ongoing de facto relationship in 2015.
Ninthly, the wife conceded that she and the husband both went separately to the same holiday destination six weeks apart in early 2016. If the parties had been in an ongoing relationship, it would have been expected that they would have coordinated their holidays so they could have spent that time together. This is strong evidence that the parties were not in an ongoing de facto relationship in early 2016.
Tenthly, the wife did not tell the husband that her mother had suffered a heart attack in 2016, and the husband found out from a Facebook post uploaded by the wife’s sibling. This is strong evidence that the parties were not in an ongoing de facto relationship in April 2016.
In addition, the husband relied on additional circumstances in his trial affidavit.
Firstly, the husband said, without challenge or explanation, that the wife took all of her personal possessions from C(2) Street, Suburb D in about 2014, except for a few items, such as ski gear, which she collected in 2016. This is strong evidence that the relationship had ended.
Secondly, the husband said, without challenge or explanation, that the wife changed her mailing address to her mother’s address prior to 2014, as evidenced by an American Express statement. This is strong evidence that the relationship had ended.
Thirdly, the wife’s solicitors said in a letter dated 2 February 2018 that the wife had been the primary homemaker for 12 years, which amounted to a concession that the relationship had ended by 2015, given that the relationship had started in 2003. This point is not compelling, as the solicitors may have been mistaken, and the solicitors may have excluded some periods when the wife was away.
Fourthly, the parties exchanged text messages in 2016 in which the husband said that he had been trying to agree a settlement for two and a half years. When this was first raised, the wife said that she had been waiting for the husband to visit her in Country S. When it was raised for a second time, there was no response from the wife, at least in the text messages before the court. The first response suggests that the wife may have been hoping for the relationship to be rekindled. However, overall, if the relationship had been ongoing, the wife’s response to the husband saying he had been trying to reach a settlement for two and a half years, would have been along the lines of “What are you talking about?!?!”. The text messages support the husband’s position.
Fifthly, the wife’s pension statement as at 23 June 2016 lists her marital status as single, although she claimed to the court that the relationship ended in October 2016. This is strong evidence that the wife believed on 23 June 2016 that the parties had separated prior to that date.
The wife argued that the court could find that the wife considered that the relationship ended in October 2016, even though the husband thought it was over much earlier. In theory, the court could find that.
However, in view of the strong evidence discussed above, especially taken when cumulatively, I consider that the relationship between the husband and the wife ended in or about May 2014. I consider that the wife well knew that the relationship was over at that time. This circumstance also detracts from the wife’s credibility.
In addition, the fact that the relationship ended in May 2014 means that the wife’s trips to Australia from Country S were not for the purposes of spending time with the husband but were for the purpose of the wife renewing her Country S visa, or for some other extraneous purpose.

The legislation

Section 90RD of the Act permits the court to make a declaration that a de facto relationship existed between two persons.
Under s.90RG of the Act, the court is only permitted to make such a declaration if it is satisfied that one or both of the persons were ordinarily resident in a participating jurisdiction when the proceedings commenced. There was no dispute about this issue. On the material before the court, I am satisfied that the husband was ordinarily resident in New South Wales, which is a participating jurisdiction, when the proceedings commenced.
Under s.90SB of the Act, the court may make an order under s.90SM of the Act adjusting property interests if it is satisfied that the de facto relationship lasted at least two years. That was not disputed and I accept that the de facto relationship between the parties lasted at least two years.
The court is only permitted to make orders under s.90SM of the Act if the de facto relationship ended after 1 March 2009. That was not disputed and I accept that the de facto relationship in this case ended after 1 March 2009.
Section 90SM of the Act gives the court power to alter the interests of the parties to a de facto relationship in the property of those parties following the breakdown of their relationship. Sub-section 90SM(3) of the Act provided that:
The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 90SM(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the interests of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e)the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
The matters to be taken into account under s.90SF(3) of the Act are:
(a)the age and state of health of each of the parties to the de facto relationship …; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(o)the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i)a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii)a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i)a party to the subject de facto relationship; or
(ii)a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q)any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t)the terms of any financial agreement that is binding on a party to the subject de facto relationship.

The approach to applications under s.90SM

In Stanford v Stanford (2012) 247 CLR 108; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; (2012) 293 ALR 70; [2012] HCA 52, the High Court explained the proper approach to an application under s.79 of the Act. Section 90SM of the Act mirrors s.79 of the Act, except that s.90SM of the Act applies to de facto relationships. Accordingly, Stanford is applicable to the present proceedings. In Stanford, the High Court said:
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. … The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order. (emphasis added)
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs "as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which "rests upon the law and not upon judicial discretion”. …(footnotes omitted)
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is "just and equitable" to make the 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 then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that "[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common 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”. The question presented by s 79 is whether those rights and interests should be altered. (emphasis added)(footnotes omitted)
40.Third, whether making a property settlement order is "just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act. (emphasis added)(footnotes omitted)
…
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4). (emphases added)(footnotes omitted)
Stanford requires the following matters to be determined in applications brought under s.79 of the Act:
a)whether the parties have separated;
b)the assets and liabilities of each party;
c)the contributions of each party;
d)the future needs of each party;
e)bearing in mind all of the foregoing matters, whether it is just and equitable to make any orders altering the interests of the parties in their property; and
f)what orders, if any, are just and equitable in all the circumstances of the case.
Stanford does not require these matters to be addressed in any particular order. In most cases, it would seem rational to consider them in the order set out above. The approach outlined above is consistent with the decision of the Full Court of the Family Court in Bevan v Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116. In that case, the Full Court said at [89]:
In our view, it will be less likely that the separate issues arising under s 79(2) and (4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order.

The four step approach

In Hickey v Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; [2003] FamCA 395 at [39], the Full Court of the Family Court described the preferred four step approach in property matters as follows:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, 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. Secondly, the court should identify and assess the contributions of the parties within the meaning of s 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. Thirdly, the court should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case ….
In the light of the High Court’s decision in Stanford, it seems that the basic steps stated in Hickey v Hickey remain correct. That is, the court is required to:
a)identify the assets owned by the parties, jointly or separately, and the liabilities to which the parties are subject, jointly or separately;
b)take into account the contributions made by each party;
c)take into account the so called “future factors”; and then
d)determine what order, if any is just and equitable.

STEP 1: The assets and liabilities

The parties agreed that their joint assets and their values at the time of trial were as follows:

Joint Assets

Value

C Street, Suburb D, Victoria

$1,130,000

Total joint assets

$1,130,000

The parties agreed that they had no joint liabilities at the time of trial.
The parties agreed that the husband’s individual assets at the time of trial and their values included the following:

Husband’s Assets

Value

E Shares

$748

ING Direct account

$10,000

Westpac account

$400

ANZ account …18

$12,859

ANZ account …27

$1,337

Motor Vehicle F

$7,250

ANZ Business Account …49 of B PL

$100,000

Total of the husband’s agreed individual assets

$132,594

The husband said in his financial statement that his company, which he wholly owned, had no value. That claim was not challenged and I accept it. However, the company had cash in the bank, which was the subject of a good deal of discussion at the trial. The company’s cash in the bank on the first day of the trial was agreed to be $9,000, although sometimes it amounted to as much as $347,000.
However, the parties agreed in their closing submissions to deal with the matter on the basis that the company’s account had $100,000 in it, and on the basis that that amount could be treated as an asset of the husband. I accept the husband’s concessions in this regard.
In addition to the assets listed above, the husband claimed that he had lent the wife three sums of money post separation that the wife had agreed to repay him as part of the property settlement. The wife agreed that the husband had advanced the sums to her, but said that he did so prior to separation, and the sums were in the nature of gifts rather than loans.
The amounts advanced totalled $34,000 and consisted of:
a)$17,000 in March 2015;
b)$7,000 in November 2015; and
c)$10,000 in November 2016.
Those dates were all after the date of separation. As such, it is more likely that the amounts advanced by the husband to the wife were loans rather than gifts. Neither party was particularly credible, but I prefer the husband’s evidence in this regard.
On normal commercial principles, a debt owed to a person is that person’s asset and a debt owed by a person is that person’s liability. The amounts will be included as such, although, as they cancel each other out, it will make no difference to the size of the asset pool. However, for fairness, the wife will be required to pay the husband $34,000 from her share of the pool.
In addition, the husband paid on behalf of the wife her share of the mediator’s costs, being $1,980. The parties proposed that that amount be dealt with as a sum to be paid by the wife to the husband from the proceeds of her property settlement, rather than as an asset and a liability. However, strictly speaking, it should be included as an asset and a liability. For fairness, the wife will be required to pay the husband $1,980 from her share of the pool.
Adding the $132,594, being the husband’s agreed individual assets, to the $34,000 and the $1,980 means that the husband’s individual assets amount to $168,574.
The parties agreed that the husband had no individual liabilities at the time of trial.
The parties agreed that the husband’s superannuation at the time of trial was worth $240,000.
Consequently, the husband’s total individual assets less liabilities plus superannuation amounted to $408,574.
The parties agreed that the wife’s individual assets at the time of trial included:

Wife’s Assets

Value

Z Bank accounts

$893

ANZ and ING accounts

$11,600

Motor Vehicle H

$10,000

Wife’s total individual assets

$22,493

In addition, the husband claimed and the wife denied that she presently has some money in a s.401(k) pension fund. The husband was unable to give the court any evidence about how much the wife might have in the fund and did not make any submissions about how much the court should attribute to the wife’s s.401(k) pension fund. Consequently, I make no findings about the alleged s.401(k) fund.
The parties agreed that the wife’s individual liabilities at the time of trial included:

Wife’s Liabilities

Value

ANZ Visa credit card

$6,987

Z Bank credit card

$4,678

Amex Australia credit card

$7,968

Commonwealth Fee HELP Debt

$11,192

Total of the wife’s agreed liabilities

$30,825

The husband claimed and the wife did not dispute that her credit card debts were all accrued post-separation. In view of my findings about the date of separation, I accept the husband’s claims in this regard.
The wife also claimed that she owed $64,751 to Mr V. The husband denied that money was borrowed, and argued that it was possibly a gift. As discussed above, I do not accept that the wife borrowed any money from Mr V.
That is, I consider that the wife’s liabilities are only those set out the table above, plus the $34,000 she borrowed from the husband and the $1,980 he advanced to her for the mediator’s costs. That means the wife’s total liabilities amount to $66,805.
The parties agreed that the wife’s superannuation at the time of trial was as follows:

Wife’s superannuation

AA Super Scheme

BB Super Scheme

$94,898

$63,363

Wife’s total superannuation

$158,261

The wife’s individual assets less her individual liabilities plus her superannuation amount to $113,949.
The parties’ joint asset is worth $1,130,000. The husband’s individual assets less liabilities plus superannuation are worth $408,574. The wife’s individual assets less liabilities plus superannuation are worth $113,949. The combined total of the parties’ assets less liabilities plus superannuation is therefore $1,652,523.

Contributions

a. Initial contributions

The parties agreed that, in 2003, at the commencement of the relationship, the husband had savings of $200,000, 200 E Shares which are now worth $748, a four year old Motor Vehicle F and $50,000 in superannuation.
At the commencement of the relationship, the wife conceded that she had no assets of significance and what she described as a small HECS debt, which she paid out during the early years of the relationship via deductions from her salary in the usual way. The wife’s current HECS debt is for a degree that she did later.

b. Contributions during the relationship

The parties agreed that:
a)the husband’s $200,000 in savings enabled the parties to purchase C Street, Suburb D in 2003 and renovate it, albeit with a bank loan as well;
b)the purchase price of C Street, Suburb D plus the purchase costs amounted to $411,000;
c)from the husband’s $200,000 in savings, $80,000 was used for a 20% deposit with the result that the parties were not required to pay mortgage insurance;
d)the mortgage on C Street, Suburb D was joint, and amounted to $326,000;
e)from the husband’s savings of $200,000, $120,000 was used for renovations of C Street, Suburb D;
f)the joint mortgage was increased by $50,000 in 2005 to complete the renovation;
g)the husband, as a tradesman, took four months off work to do the renovations himself;
h)in 2006, the wife had breast enhancement surgery at a cost of $15,000, which was paid for with a loan secured over the C Street, Suburb D property, which the wife repaid entirely herself from her income;
i)the parties borrowed another $300,000 to subdivide C Street, Suburb D and build C(2) Street, Suburb D;
j)the husband, as a tradesman, took time off work to construct C(2) Street, Suburb D;
k)the husband used accrued leave and savings to pay his share of the mortgage and so on while he was off work;
l)the original property at C Street, Suburb D was sold;
m)the husband moved into C(2) Street, Suburb D while the wife was working in City Q, USA;
n)the wife earned $150,000 per annum when she was working in City Q, USA in 2007;
o)the wife inherited $10,000 or $15,000 in 2005 or 2007;
p)in 2008, the mortgage was increased by a further $20,000 for landscaping;
q)the husband during the relationship usually earned less than the wife;
r)the husband was employed except when renovating C Street, Suburb D and building C(2) Street, Suburb D;
s)in 2010, the wife earned $85,000 per annum, in 2011, she earned $98,000 per annum and, in 2013, she earned $86,000 per annum;
t)each party paid 50% of the mortgage and all other living costs when they were living together;
u)the wife paid the mortgage even when she was not staying at C Street, Suburb D;
v)the wife did not pay the utilities when she was not at C Street, Suburb D;
w)the parties had separate bank accounts;
x)the wife was made redundant in 2010 and received a payout of $11,000;
y)in 2011, the wife received another redundancy payout of $10,000;
z)the wife was unemployed between February and June 2012, during which time she had a holiday in Country FF, and started a degree course;
aa)the wife then began a job at Employer L earning $19,000 per year;
bb)the husband had accumulated savings by 2013 of at least $45,000; and
cc)the parties put 100% of their income into the mortgage account from 2003 to 2005.
The parties were in dispute about what the wife did with her inheritance. As discussed above, I consider that the wife did not use any of her $10,000 or $15,000 inheritance on the renovation or construction of the properties at C Street, Suburb D. On the contrary, I consider that the wife used all of that money on her personal expenses.
The parties were also in dispute about what the wife did with her $11,000 redundancy payment that she received in 2011. The husband maintained that the wife used the money for her own personal purposes. The wife maintained that she bought a laptop and applied the rest to the mortgage. In view of the parties maintaining separate finances, and each contributing 50% to the mortgage, and in view of the serious issues regarding the wife’s credibility, I do not accept her claims to have used her redundancy payment in 2011 for the reduction of the mortgage, or otherwise used it for the benefit of the couple.
The parties were notionally in dispute about what the wife did with the $10,000 redundancy payment she received in 2011. The husband said that the wife used it for her own purposes. The wife said she used it to pay out a lease in Sydney and transport furniture back to Melbourne. I accept the wife’s evidence on this matter, although, if she did spend $10,000 on those two matters, she may have been overcharged. In any event, on the wife’s own evidence, she spent the 2011 redundancy payment on her own purposes rather than for the benefit of the couple.
The parties agreed that they each put all of their salary into the mortgage account between 2003 and 2005, and each withdrew some amounts. The husband said that the wife withdrew amounts that meant that she did not, overall, contribute her 50% of the mortgage repayments. The wife said that she contributed more to the mortgage than the husband because she made extra repayments from her greater earnings.
Neither party was able to substantiate their assertions on this issue. Neither party was an entirely credible witness. I consider that, in accordance with their agreement, each party paid their 50% of the mortgage instalments and no more.
Although the wife did not formally concede it, the husband’s efforts in renovating the original property at C Street, Suburb D and in building C(2) Street, Suburb D would have saved the parties a lot of money.

c. Contributions post separation

The husband has had the benefit of living in C(2) Street, Suburb D since separation, which was unencumbered throughout that time. That is, the husband has not been required to pay for his accommodation since separation, while the wife has had to pay rent.
Nevertheless, the husband has paid the rates and insurance for C(2) Street, Suburb D since separation.
In addition, the husband is now living in City X, NSW, for work purposes. It seems that his company is paying rent on his behalf. The husband has allowed his brother and his family to live in C(2) Street, Suburb D rent-free, when C(2) Street, Suburb D could be earning money for the parties jointly.

The husband said that, post-separation, he spent $5,000 improving the joinery at C(2) Street, Suburb D and also did work on the landscaping. The wife did not dispute that, but said these matters were trifling. In the overall scheme of things, they are fairly minor.
Post separation, the husband lent the wife $34,000 and saved about $24,000.
Post separation, the husband has continued to work and accrue savings. The wife ceased employment in Country S in about 2017 and did not obtain further employment until 2019. In her new job, the wife is earning about $52,000 per year, which is about half of her usual earnings since the relationship began.
While unemployed, the wife travelled from Country S to:
a)Country GG, in 2017;
b)Country HH, and Country U in 2018;
c)Country GG in 2018;
d)Country JJ in 2018;
e)Country GG in 2018;
f)Country CC in 2018;
g)Country JJ in 2018;
h)Country U in 2019; and
i)Country GG in 2019.
Overall, post separation, the husband has worked to preserve and increase the parties’ asset pool, while the wife continued to spend money.

The s.90SM(4)(d), (e), (f) and (g) and the s.90SF(3) factors

The husband submitted that there were no future factors of any significance.
The wife submitted that there may be an issue around the earning capacity of husband. While there were various attacks in cross-examination on the husband’s current earnings, I am not able to be satisfied on the evidence that his earnings are other than he has claimed.
The wife also raised issues about her earning capacity, particularly in view of her claimed depression. There was no expert evidence as to the wife’s mental health, or the impact it might have on her earning capacity. Consequently, I am unable to take into account any issues regarding the wife’s mental health. Even if the wife does have depression, appropriately treated, it would be no hindrance to the wife’s usual level of employment.
The wife was unemployed in Country S from 2017 until 2019. The wife claimed this was for reasons connected with her visa status in Country S. In my view, the wife remained in Country S, notwithstanding that she was unemployed, for her own reasons. She was not unemployable. If she had returned to Australia, she could undoubtedly have obtained employment here, as she had previously, and as she did when she returned in 2019.
The wife is presently working in Town DD in a job that is well below her historic earning capacity. I have no doubt that, once this matter is finalised, the wife will find a job more commensurate with her abilities.
Dealing specifically with the s.90SF(3) factors:
a)the husband is 47 years old and the wife is 42 years old;
b)on the evidence, they are both healthy;
c)the income, property and financial resources of each of the parties are discussed elsewhere in these reasons;
d)on the evidence, they both have the capacity for appropriate gainful employment;
e)there are no children of the relationship;
f)there are no particular commitments that either party has to enable them to support themselves, except for the money the husband must have access to in the event of a warranty claim;
g)neither party is responsible for the support of any other person;
h)neither party is eligible for a pension;
i)a moderate standard of living would be reasonable for each party;
j)neither party is seeking maintenance from the other; in any event, any amount payable as a property settlement would not increase either party’s earning capacity;
k)on each party’s proposal, there would be sufficient money for the wife to pay her creditors;
l)neither party is seeking maintenance from the other;
m)neither party has contributed to the income, earning capacity, property, or financial resources of the other, except to the extent that they each contributed to the mortgage and the husband contributed his labour and mental effort to the renovation of the original property at C Street, Suburb D and the construction of C(2) Street, Suburb D;
n)the duration of the relationship did not affect either party’s earning capacity;
o)neither party is a parent;
p)neither party is cohabiting with another person;
q)the terms of any property order will be determined as part of this process;
r)neither party is in another de facto relationship;
s)neither party has been married;
t)neither party is liable for or entitled to child support;
u)there are no other facts or circumstances that the justice of the case requires to be taken into account;
v)there are no Part VIIIAB financial agreements binding on either party; and
w)there are no financial agreements, as defined in the Act, binding on either party.

Whether it is just and equitable to alter the parties’ property interests

The parties agreed that it would be just and equitable to alter their property interests in this case. In view of paragraph 42 of Stanford, the fact that the parties are no longer living in a de facto relationship and the various findings made above in relation to contributions and future needs, I also consider that it would be just and equitable to alter the parties’ property interests in this case.

What order is just and equitable?

In my view, it is just and equitable that there be a 70:30 split in the husband’s favour, on the basis that the wife be solely responsible for her post-separation debts. The husband brought a good deal of cash to the relationship, while the wife brought debt. The husband’s cash represented about half of the purchase price of C Street, Suburb D. While the parties took out a mortgage of more than three quarters of the purchase price, the husband’s additional cash was utilised to renovate the property and, no doubt, increase its value.
The husband through his own labour renovated C Street, Suburb D, and thereby saved the parties a good deal of money. Similarly, through his own labour, the husband built C(2) Street, Suburb D, and again, saved the parties a good deal of money. That is, the mortgage would have taken longer to pay out if the parties had been required to borrow enough money to pay tradesmen to do the work.
Although the wife usually earned more than the husband, she also spent more, with the result that her contribution to the property was only her 50% of the mortgage repayments.
The wife has accrued a good deal of post-separation debt, being $66,805. The husband should not bear any part of that debt. Indeed, much of that debt is owed to him.
The wife is in difficult financial circumstances at the moment. However, that seems to be largely the result of choices she has made, and is not reflective of her ongoing earning capacity or any action taken by the husband.
The asset pool is $1,652,523. Thirty per cent of that is $495,756.90. Leaving aside her post-separation debt, the wife presently has assets of $180,754, including about $158,000 of superannuation. Taking $180,754 from $495,756.90 equals $315,002.90. The husband would be required to pay the sum of $315,002.90 to the wife.
However, the wife owes the husband $34,000 plus $1,950. Those sums will be deducted from the amount the husband is to pay the wife. In total, the husband is to pay the wife $279,052.90.
The husband proposed a 120 day settlement. The wife proposed a 60 day settlement. It seems to me that 60 days is ample, given that it is not intended that C(2) Street, Suburb D be sold.
It is appropriate that there be the usual orders, including orders for the sale of the property in the event of a default in the payment, and mutual indemnities.
There will be orders giving effect to these reasons.

I certify that the preceding one hundred and fifty-nine (159) paragraphs are a true copy of the reasons for judgment of Judge Riley

Date: 31 January 2020

Joint Assets	Value
C Street, Suburb D, Victoria	$1,130,000
Total joint assets	$1,130,000

Husband’s Assets	Value
E Shares	$748
ING Direct account	$10,000
Westpac account	$400
ANZ account …18	$12,859
ANZ account …27	$1,337
Motor Vehicle F	$7,250
ANZ Business Account …49 of B PL	$100,000
Total of the husband’s agreed individual assets	$132,594

Wife’s Assets	Value
Z Bank accounts	$893
ANZ and ING accounts	$11,600
Motor Vehicle H	$10,000
Wife’s total individual assets	$22,493

Wife’s Liabilities	Value
ANZ Visa credit card	$6,987
Z Bank credit card	$4,678
Amex Australia credit card	$7,968
Commonwealth Fee HELP Debt	$11,192
Total of the wife’s agreed liabilities	$30,825