VAN EDE & GAINSFORD
[2020] FamCA 935
•30 October 2020
FAMILY COURT OF AUSTRALIA
| VAN EDE & GAINSFORD | [2020] FamCA 935 |
| FAMILY LAW – PROPERTY – Whether the second respondent provided funds to the applicant and respondent for the purpose of renovating the former matrimonial home – Whether the funds were a loan or a gift – Where the applicant conceded some of the funds were a loan – Where the remainder of the funds were a financial contribution on behalf of the wife – Where there is a five per cent adjustment in favour of the wife for section 75(2) factors – Where the net non-superannuation assets are to be 75 per cent to the wife and 25 per cent to the husband – Order for husband to receive funds from the wife’s superannuation entitlement. |
| Family Law Act 1975 (Cth) s 75(2), 79, 90XT |
| Black and Kellner (1992) FLC 92-287 Trevi & Trevi (2018) FLC 93-855 Weir and Weir (1993) FLC 92-338 |
| APPLICANT: | Mr Van Ede |
| RESPONDENT: | Ms Gainsford |
| 2nd RESPONDENT: | Ms J Gainsford |
| FILE NUMBER: | SYC | 2272 | of | 2017 |
| DATE DELIVERED: | 30 October 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Stevenson J |
| HEARING DATE: | 24-26 August 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Tovey |
| SOLICITOR FOR THE APPLICANT: | Maspero Legal |
| COUNSEL FOR THE 1ST RESPONDENT: | Ms Reid |
| COUNSEL FOR THE 2ND RESPONDENT: | Ms Reid |
Orders
The wife pay to the husband a sum of $144,963 within 60 days of the date of these Orders.
Simultaneously with and upon payment by the wife to the husband of such sum of $144,963, both parties do all things and execute all documents required to effect the transfer to the wife of the whole of the husband's right title to and interest in the property situate at and known as D Street, Suburb E in the State of New South Wales ("the Suburb E property").
Simultaneously with compliance by the wife with Order 1, she do all things necessary to refinance the existing mortgage on the title to the Suburb E property and to secure a fresh mortgage in her sole name.
From the date of these Orders, the wife indemnify the husband and keep him indemnified against all liabilities arising pursuant to the loan of $300,000 from the second respondent Ms J Gainsford to the husband and the wife jointly.
In the event that the wife fails to comply with Order 1 within the prescribed period of 60 days then the husband and the wife forthwith do all things and execute all documents required to effect the sale of the Suburb E property, for the best price reasonably obtainable, and to distribute the proceeds of sale as follows:
5.1 in payment of real estate agent's commission and expenses;
5.2 in payment of legal costs and expenses incidental to the sale;
5.3in discharge of the mortgage to the National Australia Bank secured on the title to the property;
5.4in payment to the husband of the sum of $144,963 together with interest at the rate prescribed for the time being by the Family Law Rules, from the date of default by the wife in compliance with Order 1 until payment in full to the husband;
5.5in payment of the sum of $300,000 to the second respondent Ms J Gainsford;
5.6 in payment of the balance then remaining to the wife.
Upon the provision of notice and procedural fairness to the trustee of the N Super fund:
6.1pursuant to section 90XT(1)(a) of the Family Law Act 1975, a splittable payment becomes payable in respect of the superannuation interest of Ms Gainsford in the N Super fund and Mr Van Ede shall be entitled to a base amount of $130,152 and there be a corresponding reduction in the superannuation interest of Ms Gainsford.
6.2the operative time for these Orders is four (4) business days from the date of service of these Orders upon the trustee of N Super
Each of the husband and the wife is otherwise hereby declared to be solely entitled to all items of property which are presently in his and her respective possession and control.
All outstanding Applications and Responses herein are dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Van Ede & Gainsford has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 2272 of 2017
| Mr Van Ede |
Applicant
And
| Ms Gainsford |
1st Respondent
And
| Ms J Gainsford |
2nd Respondent
REASONS FOR JUDGMENT
The proceedings
Mr Van Ede and Ms Gainsford are parties to proceedings for alteration of property interests. The applicant husband joined to the proceedings as second respondent Ms J Gainsford, who is the mother of the wife.
It was common ground that the second respondent provided a sum in excess of $500,000 to the husband and the wife for the purposes of renovations to the former matrimonial home at D Street, Suburb E ("the Suburb E property"). The husband deposed that a total sum of $519,842 was advanced by the second respondent, while she and the wife gave evidence that the advances amounted to $529,842. The latter calculation was supported by the evidence of Mr K Gainsford, who is the husband of the second respondent and the father of the wife. Mr K Gainsford set out his calculations as annexures to his affidavit and I accept the total amount of the advances to be $529,842.
Initially, the husband maintained that the whole of the funds advanced by the second respondent constituted a gift to himself and the wife jointly. During the course of the trial, however, he conceded that a sum of $300,000 was a loan to himself and the wife jointly. A loan agreement signed by the husband, the wife and the second respondent on 23 April 2013 referred to a principal sum of $300,000 and an interest rate of 5 per cent per annum.
The husband continued to assert that the balance of the funds provided by the second respondent constituted a gift to himself and the wife jointly. This application was denied by the wife and the second respondent, both of whom maintained the husband and wife received the balance of these advances as a joint loan.
The husband contended that the net pool of non-superannuation assets has a value of $786,896 and sought orders to the effect that the wife pay to him a sum of $472,138. The husband thus sought orders to the effect that he receive an amount equal to 60 per cent of the net pool of non-superannuation assets. He sought further a splitting order of a sum of $200,000 in relation to the wife's superannuation benefit. The husband thereupon would transfer to the wife the whole of his interest in the Suburb E property.
The respondents sought orders to the effect that the wife pay to the husband a sum equal to 30 per cent of the net value of the former matrimonial home, whereupon he would transfer to the wife the whole of his interest in that property. For the purposes of implementation of these orders, "the net value of the former matrimonial home" was defined as the amount remaining after deduction of the National Australia Bank mortgage of $537,148 plus a loan of $529,842 payable to the second respondent and a sum of $73,295. This sum of $73,295 was broken down as follows in the Minute of Orders submitted by the respondents:
$25,000 paid to the Husband by way of partial property settlement pursuant to Consent Orders made on 24 September 2019.
$1,120 representing the Husband's half of the single expert fee relating to the valuation of the marital home.
$5,495 being half of the fee relating to preparation of the Family Report by Dr M.
$33,180 representing monies due to Ms J Gainsford (See appendix to Balance Sheet, item 17 ($102,666 minus legal fees of $87,486)
$8,500 being the value of assets already held by the Respondent and declared by him on his Balance Sheet.
These proposed orders would appear to result in the payment by the wife to the husband of approximately $100,415, calculated as follows:
Value of Suburb E property: $1,475,000 Less: ● NAB Mortgage
● Loan Payable to Ms J Gainsford● "$25,000 paid to the Husband by way of partial property settlement pursuant to Consent Orders made on 24 September 2019.
$1,120 representing the Husband's half of the single expert fee relating to the valuation of the marital home.
$5,495 being half of the fee relating to preparation of the Family Report by Dr M.
$33,180 representing monies due to Ms J Gainsford (See appendix to Balance Sheet, item 17 ($102,666 minus legal fees of $87,486)
$8,500 being the value of assets already held by the Respondent and declared by him on his Balance Sheet."$537,148
$529,842
$ 73,295$334,715
of which 30 per cent equals $100,415. The wife proposed a splitting order of 33.3% in respect of her superannuation in favour of the husband.
Background
The husband and the wife, who are aged 46 and 49 respectively, met in late 2002/early 2003. They married and began to cohabit in 2004. According to the wife, separation occurred on 18 November 2016 when she emailed the husband notice that she wished to terminate the relationship. The wife maintained that the husband continued to live in the upstairs portion of the former matrimonial home until 20 May 2017, when he moved into a self-contained flat on the lower level of the property. The husband maintained that the parties separated in March 2017, when he moved into the downstairs section of the property.
At the date of the marriage the wife was employed as an educator on a full-time basis. She owned a motor vehicle and household contents. The wife did not state in her trial affidavit that she had a superannuation benefit at the commencement of cohabitation. At the date of marriage the husband was self-employed whose only assets were a motor vehicle and personal effects. The husband gave uncontradicted evidence that he had a superannuation benefit of $52,320 at the date of marriage.
Initially, the parties lived in a rented flat which the wife had previously occupied with two other people. They lived in this accommodation with their two children until they purchased the Suburb E property in October 2009.
The husband and the wife are the parents of two children:
·B born in 2005 (15)
·C born in 2007 (13).
C spends time with the husband at the home of his parents. B presently spends no time with the husband and they appear to have a very strained relationship.
The wife took maternity leave for several months at the time of the birth of each of the children. The husband operated a business from home throughout the relationship. There was a substantial dispute between the husband and the wife as to his contention that he was the primary homemaker and carer for the children. Each of the husband and the wife also took issue with the quality of the childcare and homemaking role of the other parent.
In October 2009 the husband and the wife purchased the Suburb E property for a sum of $770,000. They borrowed $635,000 by way of mortgage and contributed savings of approximately $70,000. It was common ground that the husband's mother gifted a sum of $30,000 to assist with the purposes of the purchase of this property.
The husband deposed that he "contributed $57,000" to the purchase of the Suburb E property. I reject, however, the suggestion that he accrued these funds independently of any input from the wife. The husband deposed to no savings held by him at the date of marriage and this property was purchased some five years after the commencement of cohabitation. During that time, the parties intermingled their funds and created a family unit with their two children. Accordingly, the husband must have accrued these funds during cohabitation and at a time when each of the parties were making contributions of various kinds recognised pursuant to section 79 of the Family Law Act1975 (Cth) (“the Act”). For those reasons, I am of the view that it is not open to the husband to isolate and claim sole credit for this contribution to the purchase price of the property.
The second respondent contributed an amount of $100,000 for the purchase of the Suburb E property. She described this transaction as follows:
I gifted to Ms Gainsford & Mr Van Ede of sum of $100,000…"
In her oral evidence the second respondent stated her intentions as to this advance of $100,000 in the clearest possible terms. She stated unequivocally:
I gave $100,000 to my daughter and her husband – this was a gift, no strings attached...
The second respondent deposed that, at the same time, she gifted a sum of $100,000 to her son Mr P and his wife. She deposed that she did so "for the sake of fairness to both of our children."
As indicated above, during the course of the trial the husband accepted that he and the wife have a joint liability of $300,000 to the second respondent. He continued to assert that the second respondent gifted the balance of the advances to himself and the wife jointly. The wife and the second respondent continued to assert that the remaining advances constituted a loan.
For reasons which are set out below, I conclude that the advances of $229,842 did not constitute a gift from the second respondent to the husband and wife jointly. At the same time, I am unable to find that these advances can be construed as a legally enforceable loan from the second respondent to the husband and the wife jointly.
The second respondent deposed that she received an inheritance of $906,637 from her mother in December 2011 and that, essentially, she treated these funds as a superannuation benefit for her retirement. The second respondent deposed that she decided to make available to the husband and the wife, from this source, funds for the renovation of the Suburb E property.
The wife and the second respondent deposed to conversations, which included the husband and Mr K Gainsford, in relation to arrangements for the funding of these renovations. In effect the wife, the second respondent and Mr K Gainsford deposed to conversations in which agreement was reached that these funds would be supplied on the basis that interest would be paid on a regular basis at a rate initially set at 5 per cent per annum. They deposed that this rate was selected as a figure which was less than the interest which would be payable by the husband and the wife on a bank loan but greater than that which the second respondent could achieve by way of investment in term deposits.
The husband denied that he was a party to any such conversations. He adduced no admissible evidence as to any conversations with the wife and/or the second respondent as to the nature of these advances. In particular, the husband adduced no evidence as to any conversation with the second respondent wherein she stated or indicated that she made these advances by way of a joint gift.
The second respondent deposed that she continued to advance funds for the renovations "reluctantly", as the costs began to exceed the building contract price. She deposed to her concerns that her grandchildren "were living on a building site that was dangerous" and to her belief that "money had to be sent to Ms Gainsford to achieve completion of the works."
The case for the husband included an allegation that the wife withdrew a total sum of $93,480 from the National Australia Bank mortgage and offset accounts between 27 September 2012 and 17 April 2015 and that she used these funds for her own and unexplained purposes. The husband deposed also that the wife "arranged another loan drawdown of $20,921 on 1 May 2015" and that he did “not know what this money was for and had not been able to trace it." The husband did not appear to pursue the latter allegation.
The husband contended that a sum of $93,480 should be treated as an "addback" and included this sum in his Balance Sheet as "Drawdown of mortgage in July 2013 that disappeared." The husband did not seem to pursue his addback contention in relation to the sum of $20,921.
In cross-examination the wife was taken to these paragraphs in the affidavit of the husband. She said words to the effect:
We had a variable home loan and if we did not need to spend money immediately, I put it into the offset account to save interest.
The husband's evidence was that the wife controlled the family finances throughout the relationship.
On behalf of the husband, it was submitted that these considerations warranted "a Black and Kellner inference” against the wife. In Black and Kellner (1992) FLC 92-287 the Full Court referred to a situation where "the assets of the parties could not be ascertained in full because of obvious non-disclosures." This line of authority is well illustrated in the authority Weir and Weir (1993)
FLC 92-338, where the Full Court said:
... once it is established that there has been a deliberate non-disclosure ... the court should not be unduly cautious about making findings in favour of the innocent party ...
I can see no basis for a finding that an adverse inference of this nature should be drawn against the wife. I accept that the wife supplied whatever documents were requested of her and that the husband's solicitor allowed her little time to comply with requests for production in respect of certain material.
On 24 September 2018 interim orders were made by consent, which provided inter alia that the husband receive a partial property settlement of $25,000. These orders provided that "such sum to be used exclusively to assist the father to obtain suitable accommodation and purchase necessary furnishings for himself and the children at such accommodation". A notation to this order read as follows:
"This sum is being provided to the Mother for payment to the Applicant by way of a loan to the parties by the Second Respondent. The latter expects this sum will be deducted from the settlement monies…
Following these Orders, the husband moved into the home of his parents, where he continues to live, and purchased a motor vehicle with some of these funds. He deposed that rooms were available for both children in the home of his parents.
Approach to these proceedings
In Stanford v Stanford (2012) 293 ALR 70 the majority of the High Court of Australia held as follows (paragraph 35):
It will be recalled that s 79(2) provides that “[t]he court shall 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 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under this section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
Their Honours further observed as follows:
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).
I am comfortably satisfied that it is just and equitable that there be orders for alteration of property interests between the parties to these proceedings. They have lived separate lives for several years and they both wish to sever their financial relationship. Their major asset is the Suburb E property, of which they are registered proprietors as joint tenants.
It is first necessary to determine the nature, value and ownership or extent of assets, liabilities and financial resources of the parties. All relevant contributions of each of the parties, within the meaning of paragraphs (a) to (c) of section 79(4) must be identified and weighed against each other. The matters set out in paragraphs (d) to (g) of section 79(4), particularly paragraph (e) which takes up by reference the provisions of section 75(2), must be considered and a determination made as to what if any alteration should be made to the entitlements of the parties as earlier assessed on account of contribution.
The evidence and witnesses
The applicant husband relied upon his affidavit of 18 June 2020 and Financial Statement of 24 June 2020. The husband gave oral evidence by way of cross-examination by counsel for the respondents.
The respondents relied upon the following affidavits:
1. Ms Gainsford (the wife) sworn on 16 June 2020 and 22 July 2020
2. Ms J Gainsford (the second respondent) sworn on 16 June 2020
3.Mr K Gainsford (the husband of the second respondent and father of the wife) sworn on 16 June 2020.
The wife relied upon a Financial Statement sworn on 23 June 2020. All of these witnesses gave evidence by way of cross-examination by counsel for the applicant.
The assets, superannuation, liabilities and financial resources
At the commencement of the trial, the parties submitted a Balance Sheet in the following terms:
Ownership Description Applicant's value Respondents value ASSETS 1. J D Street, Suburb E
1,475,000.00
1,475,000.002 W NAB savings account …54
105.003 W NAB account …47 20.81 4 W Motor Vehicle 1 4,000.00 5 W artwork 10,000.00 6 W household contents 3,000.00 7 H bank accounts 5,000.00 8 H Motor Vehicle 2 3,000.00 9 H Household contents 500.00 Total $1,483,500 $1,492,125.81
ADDBACKS 10. H Loan to Ms Gainsford in 2007 30,000.00 NIL (See note) 11. H Drawdown of mortgage in July 2013 that disappeared
93,480.00Not AGREED see note 12 W Unmatched house and child costs since April 2017
102,775Total $123,480.00 $102,775
LIABILITIES 13 J Mortgage on D Street, Suburb E (from National Australia Bank)
537,148.00
537,148.0014 J Loan from extensions & renovations & other costs from second respondent to applicant and first respondent
568,162
(see note)15 H Personal loan from parents 60,000.00 Not agreed
(see note)16 W NAB Visa 4,600.00 17 W Loan from Second Respondent 120,666
(See note)Total $597,148.00 $1,230,576.00
SUPERANNUATION Member Name of Fund Type of Interest Applicant's value Respondents value 18 W N Super $558,643.20 $558,643.20 19 H Q Super 96,299.00 106,299.00 Total $654,942.20 $664,942.20
FINANCIAL RESOURCES
Ownership
DescriptionApplicants value Respondents value
Counsel for the husband indicated that he did not press for inclusion as a liability his post-separation borrowings of $60,000 from his parents. Counsel for the husband stated that he accepted that the non-superannuation assets have a gross value of approximately $1,492,000.
I consider that a sum of $25,000 which the wife caused to be paid to the husband pursuant to the interim orders of 24 September 2018 should be included in the list of assets. This payment was identified expressly in those orders as
"partial property settlement." It seems to me that it then follows that
Items 8 and 9 on the draft Balance Sheet should be excluded, as the husband's car and household contents were purchased from these funds.
No reference was made by either counsel in final submissions as to Item 7
"H bank accounts [$]5,000". I was taken to no evidence that the husband held $5,000 in bank accounts as at the date of the trial. If the husband did hold such a sum in savings, it seems reasonable to infer that he acquired these funds either from the partial property settlement of $25,000 or from some other source post the parties' separation. I do not include the amount of "$5,000 bank accounts" as an asset.
I will exclude from the list of assets also the wife's bank accounts with balances of $105 and $20.81. These funds must have been acquired by the wife
post-separation and, further, these small amounts can safely be excluded as a matter of convenience.
I will not include in the Balance Sheet any of the "addbacks" proposed by either party. The issue of "addbacks" was addressed relatively recently in the Full Court decision of Trevi & Trevi (2018) FLC 93-855 per Murphy J as follows:
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 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.
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". An earlier Full Court made the same point, saying that adding back is "the exception rather than the rule".
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" at trial. An important parallel proposition is that the parties do not "go into a state of suspended economic animation" after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
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."
I do not accept that an amount of $30,000 which the husband purportedly loaned to the wife in 2007 should be treated as an addback. I was taken to no evidence, nor provided with any submission, which would support such a conclusion. In any event, I struggle with the notion that an isolated amount provided by one spouse to the other 13 years prior to trial should be brought to account in favour of that party.
The husband's evidence in relation to his proposed addback of "$93,480 drawdown of mortgage in July 2013 that disappeared" was as follows:
199.By going through these bank statements, and cross checking transactions between the NAB offset account and NAB mortgage account, I found Ms Gainsford removed from the mortgage account the sum of $93,480 between 27 September 2012 and 17 April 2015 under transaction descriptions as "withdrawal". These withdrawals did not go into accounts I knew of or have been able to identify.
200.On 8 July 2013 Ms Gainsford asked me to sign a drawdown on the mortgage for $90,000 against the mortgage. Ms Gainsford said she wants the money to buy a new car and I can have some of this money for a car also.
201.Ms Gainsford then transferred $93,480 into accounts unknown to me around this time under the transaction description of only "Withdrawal" this money did not go into accounts I knew about or have been able to identify.
202.I recall Ms Gainsford said to the bank the loan was for painting, furnishing and landscaping. However the painting and landscaping was already done and our furniture did not cost $90,000. A copy of the loan application is exhibited ...
203.I created a new excel document, and added the transactions omitted by date order along with the previously supplied [renovation] transactions Ms Gainsford had provided, it shows that around the time Ms Gainsford was paying for renovations as per her [excel] document emailed to me, Ms Gainsford was also transferring large amounts of money into unknown accounts. All the renovations and omitted transactions occurred from 3 January 2012 to 1 December 2016 which is roughly the start of the renovations to the start of divorce.
Leaving aside the inadmissibility of substantial parts of this evidence, it is difficult to construe precisely what allegation the husband made which could justify an addback in the sum of $93,480. On the husband's own evidence, these transactions occurred in the period five to seven years prior to trial and in circumstances where the parties continued to make contributions of various kinds thereafter until their separation in 2015. As noted, the wife held responsibility for the financial dealings of herself and the husband during the marriage.
I will not add back a sum of $102,775 "unmatched house and child costs since April 2017", as contended by the wife. This figure appeared to be based on calculations carried out by Mr K Gainsford. With respect, this proposition misapprehends the nature of proceedings for alteration of property interests. The court is not required to conduct an accounting audit of funds which passed through the hands of each party to proceedings for alteration of property interests. This same observation can be applied to the husband's dissection of various bank transactions and transfers in support of his addback contentions.
The values of the parties' superannuation funds as set out in the Balance Sheet differed from those contained in documents submitted by counsel for the husband in final submission. These documents showed balances of the husband's Q Super of $92,048 as at 27 August 2020 and $666,601 for the wife's N Super benefit as at 20 August 2020. I was not invited by counsel for the respondents to ignore this updated information, thus I will include the superannuation balances as these amounts.
As noted above, during the trial the husband conceded a joint liability of himself and the wife to the second respondent. This sum will be included in the Balance Sheet as a joint liability of the husband and the wife. The issue then is whether the remaining advances of totalling either $219,842 or $229,842 to the parties by the second respondent should be treated as a loan or a gift. It may be that these advances cannot be found to be either a loan or a gift. In that event, these funds could be treated as a contribution on behalf of the wife or taken into account pursuant to section 75(2)(o).
It seems to me that there are considerable difficulties with a finding that these advances constitute a legally enforceable loan by the second respondent to the husband and the wife jointly. The advances occurred over a number of years and were not the subject of any written loan agreement. There was no evidence which was sufficient to warrant a finding of a contract for loan, based on conversations between all relevant parties. The available evidence did not identify the terms of any such agreement. For example, there was no evidence as to the conditions of repayment or the rate of interest payable from time to time.
It seems to me to be more probable than not that the second respondent considered that she had little choice but to continue to provide funds for the building work to the completion of the project. I accept her evidence that she had concerns as to the safety of her grandchildren, who "were living on a building site that was dangerous". I accept the evidence of the second respondent, to the effect that she believed the work could only be completed if she continued to provide funds from her inheritance for that purpose.
I accept the evidence of the wife and the second respondent as to payment of weekly sums of $288 and later $178 to Ms J Gainsford. I am of the view that the parties entered into a family arrangement, in the terms set out above in the evidence of the second respondent. I find that the evidence fell short of establishing that this arrangement constituted a legally enforceable loan contract between the second respondent and the husband and the wife jointly.
Counsel for the husband contended that "the finding should be a loan of $300,000 and a gift of $200,000." It was contended further that "the wife should not be accepted that the gift was $100,000 and that $200,000 was a typo."
I am not satisfied that the second respondent made a gift of $200,000 to the husband and the wife jointly. Nothing in the evidence of the second respondent could be construed as an intention on her part to provide a gift of $200,000 to the husband and the wife jointly. As noted above, the second respondent conceded readily that she made a gift of $100,000 to the husband and the wife "with no strings attached" and simultaneously extended the same generosity to her son and his partner.
I do not consider that the wife's email of 15 November 2012, in which she thanked her parents "for $200,000 gift and then on top of that lending us the additional funds to build the house", assists the husband with his contention. It seems clear to me that the wife referred in this email to the initial advance by the second respondent, when the property was purchased, and to her subsequent funding of the building work.
The wife explained that she typed this email, which was addressed to the husband's mother and step-father, the second respondent and the husband, late at night at a time when she was upset by an altercation with her mother-in-law. She deposed that she intended to type "100,000" and accidentally hit the "2" instead of "1" key. In my view, the wife was unshaken in this evidence in
cross-examination.
The husband gave no evidence as to a gift to him and the wife in the sum of $200,000. He deposed to the initial advance of $100,000 by way of gift and to separate and subsequent advances "between the period 27 May 2010 to 11 April 2017". He gave no evidence of any conversations in which he, the wife and the second respondent discussed a gift in the sum of $200,000. On his own evidence, the advances by the second respondent for the building work amounted to $219,842 in addition to the loan amount of $300,000.
The husband thus distinguished clearly between the initial gift for the purchase of the property in 2009 and subsequent advances for the costs of the building work. Notably, the wife's email of 15 November 2012 referred to her parents "lending us the additional funds to build the house." The wife stated further in this email "it saves us going to a bank and so much money paying at a lower interest rate." This contemporaneous statement was consistent with the evidence of the second respondent as to an intention within the family to benefit both herself and the husband and the wife.
For these reasons I find that the husband failed to establish that the second respondent made a gift of $200,000 to himself and the wife jointly. I will consider the advance of funds, following the initial gift of $100,000 by the second respondent, in the context of the contributions of the parties and/or section 75(2)(o) factors.
Accordingly I find the assets, superannuation and liabilities of the parties to be as follows:
ASSETS ($) 1. D Street, Suburb E (J) 1,475,000 2. Motor Vehicle 1 (W) 4,000 3. Artwork (W) 10,000 4. Household Contents (W) 3,000 5. Partial Property Settlement (H) 25,000 $1,517,000
SUPERANNUATION 6. N Super (W) 666,601 7. Q Super (H) 92,048 $758,649
LIABILITIES 8. NAB Mortgage (J) 537,148 9. Loan Payable to Ms J Gainsford (J) 300,000 $837,148
The contributions of the parties
As observed above, the court is not required to conduct an accounting analysis in relation to the application of funds received by each of the parties in proceedings for alteration of property interests. In these proceedings there was little utility in the calculations set out in the affidavits of the husband and Mr K Gainsford, aside from the calculation of the total amount advanced by the second respondent. An example is their respective dissections of the amounts allegedly paid by way of mortgage instalments by each of the husband and the wife. The exercise of identification and weighing of the various contributions made by each of the parties is not assisted by isolation of and focus upon one relevant consideration such as mortgage repayments, at the expense of other significant matters.
The husband's calculation as to the percentage of mortgage repayments which he asserts were made by him was of questionable evidentiary weight and relevance to the determination of a just and equitable outcome to the proceedings. His assertion that he paid "66.77% of the total weekly mortgage repayment” between 12 January 2010 and 17 October 2018" can only be an amalgamation of his opinion and conclusion. Similarly, his statement "I estimate I cooked approximately 90% of the dinners" can only be a conclusion or opinion and is inadmissible as evidence.
Both parties engaged in paid employment during the marriage. The wife worked as an educator and also earnt income from a role with a local organisation. The husband conducted a business from home during the parties' cohabitation. It was abundantly clear that the wife's income exceeded that of the husband throughout the marriage.
The husband contended that his capacity to engage in paid employment outside the family was limited significantly by his role as primary homemaker and carer for the children. It is true that the husband spent more time in the home than did the wife. The reality, however, is that the husband had an established business which he operated from home. Further, the children were at school for a substantial portion of each week day during term time. I am not inclined to accept that the husband's opportunity to earn income was as compromised as he suggested by his childcare and homemaker roles.
The second respondent was adamant in her evidence that she had no intention to gift a sum of $229,842 to the husband and the wife. In my view she was an impressive witness, who appeared to give her evidence in a sincere and honest manner. I accept her account that she entered into a family arrangement which she believed would operate to the benefit of all concerned and that she felt obliged to continue to fund the building work to secure a safe living environment for her grandchildren. Nothing in her evidence suggested to me that she held an intention at any stage to make a gift of these funds to the husband and the wife.
In these circumstances, I consider that the sum of $229,842 provided by the second respondent to fund the building work should be regarded as a direct financial contribution on behalf of the wife. The reality is that direct financial input from the second respondent played a substantial role in the acquisition and improvement of the Suburb E property by the husband and the wife.
I accept that the husband carried out physical work on home renovations, as he outlined in his affidavit. No suggestion was put to the husband in
cross-examination that he did not in fact perform this work.
Each of the husband and the wife criticised the quality of the other's role as homemaker and parent. It seems clear that the relationship was unhappy and dysfunctional for several years. In my view it is likely that they each now regard the activities of the other, during the marriage, through this prism of long-term dissatisfaction. I consider that the available evidence does not enable me to make findings as to the quality of the respective homemaker and parent contributions of the husband and the wife.
On any view, the direct financial contributions by and on behalf of the wife outweighed those of the husband to a substantial extent. I have regard to the non-financial contributions of the husband, in relation to physical work during the course of the home renovations. In my view, each of the husband and the wife made contributions as a homemaker and parent during the marriage. Since the husband and the wife began to live in separate accommodation, she has been the primary carer of the children. Having regard to and weighing the various contributions made by and on behalf of the husband and the wife, I find that their respective contributions to the non-superannuation assets should be assessed at 30 per cent and 70 per cent respectively.
The evidence in relation to the superannuation benefits of the husband and the wife was scant, thus creating difficulties in terms of contribution findings. There was no evidence that procedural fairness has been afforded to the trustee of the wife's N Super fund.
The husband sought a splitting order of $200,000 in his favour. This sum represents approximately 38 per cent of the total present value of the two funds. I have considerable difficulty in accepting that outcome as just and equitable, in terms of the likely respective contributions before, during and since the end of the relationship. In my view, it is reasonable to infer that the wife made contributions to her fund consistently throughout the marriage and since the separation. By contrast, the husband appears to have made irregular contributions to his benefit and he withdrew $20,000, for his own purposes, during the year 2020.
The wife sought a splitting order which would provide the husband with a sum of one-third of the N Super fund minus the value of his current benefit. The resulting amount is approximately $130,152, which equates to some 17 per cent of the total present value of the two funds. Doing the best I can with the scant evidence as to the superannuation funds, I regard such an order as a just and equitable outcome.
Section 75(2) factors
The husband is 46 years old and listed his occupation as a professional in his Financial Statement. In his oral evidence the husband said that his business "was going okay after separation" but has subsequently been affected by the COVID-19 pandemic. He said that he will probably re-skill. when these proceedings have reached a conclusion.
In my view, a reasonable expectation would be that the husband has the opportunity to undertake gainful employment for a future period of the order of 20 years. During that time he could earn income, make contributions to his superannuation fund and look to re-establish himself financially.
The wife is 49 years old and is employed an educator by R Organisation. There was no evidence as to the security of her ongoing employment. She has tertiary qualifications and a demonstrated ability to apply her skills in the workforce.
Pursuant to final consent orders made on 24 September 2018, the wife has responsibility for the primary care of the parties' two children. The children are aged 15 and 13 years respectively, thus this responsibility will continue for some years into the future.
The husband is currently assessed to pay no child support. It appears that he has made no meaningful contribution to the support of the children since about September 2018. Nothing in the evidence gave me any reason for confidence that the husband will commence to contribute to the financial support of the children in the near future.
In my view the most significant section 75(2) factors are the wife's ongoing responsibility for the primary care of the children and the husband's failure to contribute to their financial support, coupled with the unlikelihood that he will do so in the near future. It thus seems to me that there is no doubt that section 75(2) factors favour the wife. I am satisfied, and I find, that there should be an adjustment of 5 per cent of the net value of the non-superannuation assets in favour of the wife.
Result
The result is that I find that the net non-superannuation assets should be divided as to 25 per cent to the husband and 75 per cent to the wife. I find further that there should be a splitting order in favour of the husband in an amount of $130,152 with respect to the wife's N Super benefit.
The net value of the non-superannuation assets is $679,852, of which 25 per cent and 75 per cent equate to $169,963 and $509,889 respectively. The husband has received a partial property settlement of $25,000, thus he requires a payment of $144,963 to constitute his 25 per cent entitlement.
I will make provision for the wife to pay this sum to the husband within two calendar months of the date of orders. I will also make the order sought by the wife, whereby she indemnifies the husband in respect of all liability pursuant to the loan to the second respondent. The Gainsford family thus will have an opportunity to arrange their financial affairs without necessarily resorting to a sale of the Suburb E property. I will, however, make provision for a sale of the property in default of such payment by the wife to the husband.
I will not deduct from this payment to the husband the amounts set out in paragraph six of these reasons, other than the partial property settlement of $25,000 which I have taken into account. There was no evidence as to the fees of the single expert, Dr M, or the real estate valuer. In any event, inclusion of these costs is not a proper means of conducting litigation for alteration of property interests. A claim against the husband for the legal costs of the second respondent is both premature and similarly an inappropriate inclusion in these proceedings.
I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 30 October 2020.
Associate:
Date: 30 October 2020
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Appeal
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Costs
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Damages
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Injunction
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Natural Justice
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Procedural Fairness
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