Wagner and Wagner

[2018] FCCA 2179

FEDERAL CIRCUIT COURT OF AUSTRALIA

WAGNER & WAGNER [2018] FCCA 2179

Catchwords:
FAMILY LAW – Property – small pool – short relationship.

Legislation:

Family Law Act 1975 ss.75(2), 79(2), 79(4)

Cases cited:

Stanford v Stanford (2012) 247 CLR 108

Applicant: MS WAGNER

Respondent: MR WAGNER

File Number: MLC 2735 of 2017

Judgment of: Judge Harland

Hearing date: 1 August 2018

Date of Last Submission: 1 August 2018

Delivered at: Melbourne

Delivered on: 1 August 2018

REPRESENTATION

Counsel for the Applicant: Mr Ambrose

Solicitors for the Applicant: Harwood Andrews

The Respondent: In person

ORDERS

1. That for the purposes of these orders:

   1.1.‘the Superannuation Fund’ is the Wagner Family Super Fund of which the husband is a member spouse and holds superannuation entitlements.

   1.2.‘the Trustee’ means the trustee(s), person(s) or corporation(s) responsible from time to time for the management or investment of the Superannuation Fund;

2. That a base amount to be allocated to the wife out of the husband's interest in the Superannuation Fund is the amount of $6,000 ('the base amount').

3. That in accordance with Section 90MT(1)(a) of the Family Law Act 1975 whenever the Trustee makes a splittable payment from the interest held by the husband in the Superannuation Fund the Trustee shall pay to the wife the amount which is calculated in accordance with part 6 of the Family Law (Superannuation) Regulations 2001 the base amount (provided that such base amount shall not exceed the value of the interest determined under Section 90MT(2)), and there be a corresponding reduction in the entitlement that the husband would have had but for these orders.

4. That:

   1.3.the husband pay to the wife the sum of $27,200 ('the payment') within 90 days of the date of these orders ('the date').

   1.4.interest shall accrue on the payment or any part thereof which remains outstanding after the date and comprise part of the payment due to the wife and such interest:

5. That contemporaneously with and upon the payment:

   1.5.the husband shall retain the sole proprietorship and the wife shall relinquish all claims to any right title and interest in respect to

   1.5.1.the real property situate at and known as Property A, in the State of Victoria being the whole of the land more particularly described in Certificate of Title Volume ('the Property A property'); and:

   1.5.2.the real property situate at and known as Property B in the State of Victoria being the whole of the land more particularly described in Certificate of Title Volume ('the Property B property');

   1.5.3.the husband indemnify the wife against all payments and liability for and discharge any liability of the wife absolutely in respect to the mortgage to the Bank 1 ('the Property A mortgage') and indemnify the wife for all rates, taxes and outgoings of or with respect to the Property A property of whatsoever nature and kind.

   1.5.4.the husband indemnify the wife against all payments and liability for and discharge any liability of the wife absolutely in respect to the mortgage to the Bank 1 ('the Property B mortgage') and indemnify the wife for all rates, taxes and outgoings of or with respect to the Property B property of whatsoever nature and kind.

   1.6.The wife shall do all acts and things and sign all documents necessary to provide a Withdrawal of Caveat in registerable form lodged by the wife at her expense on the Property A property.

6. That in the event that the husband does not make the payment to the wife in full as referred to in order 4 herein by the due date then forthwith the husband and the wife do all act and things and sign all documents necessary for the Property A property to be sold altogether ('the sale') and the parties and by way of consequential arrangements for the purposes of effecting the sale:

   6.1The listing price for the Property A property shall be as agreed between the parties and if there is no agreement the listing price shall be as determined by a qualified valuer nominated by the President of the Real Estate Institute of Victoria ('the qualified valuer').

   6.2The Property A property shall be listed for private sale with such real estate agent as agreed between the parties and in default of agreement with such agent as nominated by the President of the Real Estate Institute of Victoria ('the real estate agent').

   6.3In the event that the Property A property has not been sold by or before a date three (3) months from the date of these orders ('the private sale date') then the parties shall make all such arrangements and do all such acts and sign all such documents and each pay half of all costs and expenses necessary to procure a sale of the Property A property by public auction ('the auction') upon the following terms:

   6.2.1the auctioneer shall be appointed by the real estate agent;

   6.2.2the auction shall take place within three (3) months of the private sale date;

   6.2.3the reserve price shall unless agreed upon by the parties be as determined by a qualified valuer nominated by the President of the Real Estate Institute of Victoria; and

   6.2.4the parties shall each pay and be responsible for payment of one-half of the auction expenses payable before the Property A property is auctioned.

   6.4In the event that the Property A property is not sold within fourteen (14) days of the auction then the parties shall do all acts and things and sign all necessary documents and pay all money equally as necessary to facilitate a second auction within a further five (5) weeks of that date upon the same terms and conditions as applied to the first auction save that the reserve price be reduced by not less than ten per centum (10%) unless the parties otherwise agree.

   6.5Both parties shall co-operate with the real estate agent in relation to the sale, including making the key available, allowing inspection of the Property A property at times requested by the real estate agent, and ensuring that the said property is in a neat and clean condition at the time of inspection by prospective purchasers.

   6.6The husband shall nominate three (3) solicitors qualified to undertake property conveyancing vendor transactions for the consideration and agreement by the wife as to the appointment of a solicitor who shall be jointly retained by the parties for the purpose of the sale and be remunerated on their standard conveyancing rates applicable to such transactions.

7. That upon completion of the sale the proceeds shall be applied as follows:

   7.1First, to pay all costs, commissions and expenses of the sale;

   7.2secondly, to discharge the mortgage and any other encumbrances affecting the Property A property;

   7.3thirdly, to pay any council and water rates and other charges (if any) outstanding in respect of the Property A property;

   7.4finally the balance then remaining be distributed in the following proportions between the parties:

   7.4.1forty per centum ( 40 %) to the wife

   7.4.2sixty per centum ( 60 %) to the husband.

8. That pending the payment or the completion of the sale of the Property A property:

   8.1the husband pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the Property A property as they fall due;

   8.2the parties hold their respective interests in the Property A property upon trust pursuant to these orders; and

   8.3save for the sole purpose of complying with these orders neither party shall encumber the Property A property without the consent of the other party.

9. That liberty be reserved to either party to apply with respect to the terms, conditions and execution of the sale.

10. That it be declared that the husband shall retain his sole interest, both legal and equitable in the Property B property and the wife shall provide a Withdrawal of Caveat lodged by the wife on the Property B property upon the receipt of the payment as referred to in order 4 herein or the proceeds of the sale of the Property A property as referred to in paragraph 7.4.1 herein.

11. That unless otherwise specifically ordered herein each party shall retain the sole and exclusive right to their respective superannuation entitlements/long service leave entitlements and other employment based entitlements.

12. That all insurance policies become the sole property of the owner named therein.

13. That 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.

14. That any joint tenancy between the parties is hereby severed.

15. That unless otherwise specifically ordered herein and save for the purposes of enforcing any money due and payable by either party pursuant to these orders each party shall be solely entitled to the possession absolutely of all assets in their possession including but not limited to chattels, bank accounts and motor vehicles

THE COURT NOTES THAT:

A.That pursuant to Section 81 of the Family Law Act 1975 the parties intend that these orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 2735 of 2017

MS WAGNER

Applicant

And

MR WAGNER

Respondent

REASONS FOR JUDGMENT

1. These reasons for judgment were delivered orally.  They have been corrected from the transcript.  Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.

2. By the time this matter came before me for trial, the parties, to their credit, had narrowed the issues in dispute.  The parties agree that the parties’ legal and equitable interests for the purpose of the trial are as set out in exhibit A. 

3. They agree that the property at Property B (“the Property B property”) has equity of approximately $8,000, and that the property at Property A (“the Property A Property’) has equity of approximately $68,000.  Apart from those two properties the parties each have superannuation interests. 

4. The parties have taken a practical approach with respect to those superannuation interests and agree that the wife should receive a split from the husband’s superannuation in the sum of $6,000. This sum represents, as best as the parties have been able to work out on the documents they have, an equal split of the superannuation for the period of the relationship.  This is a particularly sensible approach given that this is a short relationship and the husband had superannuation at the beginning of the relationship and has also accumulated further superannuation post the relationship.  The wife has a more modest amount of superannuation. 

5. As the husband has a self-managed superannuation fund and is a trustee of the fund, the issue of procedural fairness to the trustee does not arise. 

6. The wife is aged 46 and the husband is aged 38.

7. The wife says the parties started living together in early 2012.  The husband says that they started living together in mid-2012.  They married in 2013 and separated on 25 December 2015.  So in either case the relationship was either three and a half years or four years, which is a relatively short relationship. 

8. The parties do not have any children together.  The wife has a child from a previous relationship who is an adult and the husband has two children from a previous relationship who are now aged eight and ten and he spends time with them on the weekends. 

9. The husband owned the Property B property at the commencement of the relationship having bought it in 2009.  The property had little equity in it at the commencement of the parties’ relationship and has little equity now.  The property was purchased as an investment and has an interest only loan and the parties agree after obtaining a valuation that that property has not increased in value.  It has been valued at $135,000 and the mortgage on that property is approximately $127,000 leaving $8,000 in equity. 

10. The parties purchased the Property A property in 2012 for $402,000.  The property was purchased in the husband’s sole name because the parties agree that at the time the wife had a dispute with (company omitted) over what was either a $7 debt or $10 debt which affected her credit rating at the time. 

11. Insofar as the legal principles that I have to apply in this case, it makes no difference that the property was purchased in the husband’s name as opposed to in the parties’ joint names. 

12. The husband had $8,500 in savings to contribute towards the deposit and the wife had $5,000 in savings.  The husband had a $50,000 personal loan and also took out a mortgage for the purchase.  He was able to complete the purchase as a result of an advance that his parents gave him of $10,000.  There is a dispute between the parties as to whether this was a loan or a gift.  The husband has annexed a document to his affidavit which he says was prepared by his broker at the time which is signed by his parents and refers to it as being a non-revokable gift.  He says that that was the only way he could borrow sufficient funds to complete the purchase.  It is not uncommon to see such documents provided to financial institutions. 

13. The wife says that the $10,000 was repaid to his parents.  She does not have any documents to that effect, but says that she was told that verbally by the husband and the husband denies this. 

14. Regardless of whether it is a gift or a loan, it is a contribution on behalf of the husband which assisted with the purchase of the Property A property.  The husband says that the Property B property should be excluded from the pool as he had that property prior to the relationship and the wife has made no contributions to that property, it being an investment property and having been rented out during the course of the relationship. 

15. The husband gave evidence that there is a shortfall on the Property B property of $50 a week for the mortgage repayments and about another $30 a week for rates and maintenance. 

16. The wife points out that this means that the funds for the shortfall weren’t otherwise available for the benefit of the parties in the relationship.  The husband is able to claim a tax deduction for the loss on the rental property. 

17. There is no dispute between the parties that the husband earns a higher income than the wife.  The husband is a (occupation omitted).  He currently earns approximately $100,000 a year.  The evidence is that for the year ending 30 June 2015 his taxable income was $67,785, for 2016 it was $86,813 and for 2017 $92,000.  I do not have evidence as to how much of that is his income and how much is as a result of any deduction for the property.  Nor do I have evidence about what his income was for the years 2012 to 2014, but presumably it would have been similar to $67,000 or a little less. 

18. The wife was working as a (occupation omitted) earning approximately $42,000 a year.  The wife is now working part-time and studying for a (qualifications omitted).  The husband says that the wife could earn more than what she is earning currently which she deposes to being approximately $20,000.  The wife was unable to say what she is likely to earn once she receives her qualification, but her evidence was that that will give her greater employment opportunities.  She said that she had an emotional breakdown after their relationship ended and she ceased working full-time. She also gave evidence that her position as a (occupation omitted) has become more obsolete because of greater online sales. She hopes to finish her qualification in about two years’ time. 

19. The wife seeks 50 per cent of the equity in both properties and proffered three different bases for that result. She argued that the contributions by both parties, bearing in mind it is not just direct financial contributions that the court must take into account, should be seen as being equal. Alternatively she argued that if the court finds that the husband made greater contributions then there should be an adjustment in the wife’s favour for 75(2) factors given the disparity in their income earning capacity. 

20. Thirdly, she argued pointed out the husband’s evidence is that he intends to keep the Property A property and, indeed, the parties’ plan was to buy that property, which was in a dilapidated state and remains so, and the husband would work on the property using his skills as a (occupation omitted) to improve the property over a course of 10 years or so.  The wife says that the husband will retain a property that will increase in value and will be a valuable asset to him while she does not have any real estate. 

21. The husband’s case is that he has made the greater financial contributions, particularly with respect to financial contributions.  His case is that the wife should receive 25 per cent of the equity in the Property A property only.  The husband’s focus in his evidence and in his cross-examination of the wife was on direct financial contributions to the Property A property.  He says that the expenses were about $5,000 a month and that the wife contributed about $1,000 per month.  The wife said in cross-examination that it was possible, but she wasn’t sure of the figures. 

22. The husband pointed to a couple of errors in the wife’s affidavit and case outline being an address of a property and also the husband being described as self-employed rather than employed.  These do not make any difference to the outcome.

23. The wife tendered as exhibit B a series of bank statements of hers showing the monthly deposits to the husband’s account of approximately $1,000 and also some other payments, including a payment for a stereo, a dishwasher and Christmas expenses. 

24. The husband says that whilst the wife purchased the dishwasher it broke down a few months later and he had to replace it. He also says that the wife took the stereo. He says the expenses she paid for are miniscule in comparison to expenses he has paid for the Property A property. 

25. The husband says that the parties’ non-financial contributions were fairly equal and that was not an issue that was the subject of much dispute. 

26. In the High Court decision of Stanford v Stanford (2012) 247 CLR 108 the majority of the High Court set out at [35] and [36] of that decision the following statements:

    It will be record that section 79(2) provides that the 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.  And section 79(4) prescribes the matters that must be taken into account and considering what order (if any) should be made under this section.  The requirements of the two subsections are not to be conflated.  In every case in which a property settlement order under section 79 is sought it is necessary to satisfy the court that in all the circumstances it is just and equitable to make the order.

27. The expression just and equitable is a qualitative description of a conclusion reached after an examination of a range of potentially competing considerations.  It does not admit of exhaustive definition.  It is not possible to chard its metes and bounds. 

28. The High Court found that there were three fundamental propositions with respect to the application of s.79 which can be summarised as follows:

    a)Firstly, in order to ascertain whether it is just and equitable to make a property settlement order it is necessary to identify the existing legal and equitable interests of the parties in the property.  And the High Court emphasised the word existing.

    b)Secondly, although s.79 gives the court a broad power to make property settlement orders may not be exercised in an unprincipled fashion.  There must be no assumption that the parties’ interests are or should be different to their existing interests.  

    c)Thirdly, when considering whether making a property settlement order is just and equitable the court must not assume that one or the other party has a right to a property adjustment order. The court must give separate consideration to s.79(2) in addition to the matters referred to in s.79(4).

1. The High Court pointed out that in the vast majority of cases the requirement of s.79(2) will be readily satisfied largely as a result of the circumstances of the parties concerned and the nature of their separation. The High Court also pointed out that what is just and equitable is different in every case.

2. I indicated previously the parties have agreed on what their legal and equitable interest are for the purposes of the trial.  I am satisfied that it is just and equitable to make property orders in this case. 

3. As can be seen from the summary I have given, there is little that is factually in dispute between the parties and certainly their positions have narrowed since the proceedings were commenced.  The case falls into the category of case which is difficult to resolve because the equity that the parties have to divide is so small. In cases of this type that means that the differences in percentages can make a big difference in terms of the outcome. 

4. I am satisfied that the husband made a greater initial financial contribution, but as is clear from the wording of s.79(4) and the case law the assessment of the parties’ respective contributions is a holistic one that must take into account both direct and indirect financial and non-financial contributions. It is not simply a matter of assessing direct financial contributions to the Property A property. Financial contributions also include contributions to other family expenses whether it be towards whitegoods, entertainment, holidays or other expenses. The shortfall on the Property B property is also another relevant consideration in terms of indirect contributions.

5. In my assessment of the facts and applying the legal principles to this case I am not satisfied that the parties’ contributions are equal, but nor am I satisfied that it would be just and equitable for the wife to receive 25 per cent of the equity in the Property A property only as that does not recognise other contributions that she has made to other household expenses.  In fact, that both parties have made non-financial contributions as well. 

6. Before returning to the issue of the contributions, I will touch on s.75(2). As I’ve indicated, the relationship was a short one of between three and a half and four years. Both parties were employed throughout the relationship and I accept both contributed their best to the relationship.

7. The husband has greater income and financial resources than the wife which is a relevant consideration. The wife’s earning capacity has not been adversely or otherwise affected by the marriage. Her income was lower than the husband’s at the beginning of the relationship and, as best as is known, remains so.

8. The other relevant factor is that the husband has an obligation to maintain his two minor children. In my assessment the s.75(2) factors do not loom large in this matter and if anything would cancel each other out. The real issue is the assessment of contributions.

9. In a small pool such as this it is particularly important to look at the actual outcome of the orders that I will make and not simply the percentages. 

10. In my view, the wife should receive 40 per cent of the equity in the Property A property.  That would give her a payment of a little over $27,000.  The husband should retain the Property B property which has the equity of $8,000 and 60 per cent of the equity in the Property A property.  Otherwise, the parties will retain what other assets and liabilities they have in their possession. 

11. I propose to make orders using the orders in the wife’s case outline, subject to some amendments.

12. I will make the orders in the wife’s case outline that contain the superannuation splitting order and I will insert in order 2 after the words “base amount” the sum of $6,000.

13. I will order that the husband pay to the wife the sum of $27,200 within 90 days.  The reason why I am giving 90 days is I think it is to the wife’s advantage if the husband can raise the money and keep the property rather than it being sold, given the sale costs would further reduce what is available for both of them. I will make the wife’s proposed order with respect to interest accruing on the payment by the husband. 

14. I will further make the wife’s proposed orders with respect to the husband retaining sole proprietorship and the wife relinquishing all claims to the Property A property and the Property B property, but I will add that “and contemporaneously the wife will provide to the husband withdrawal of caveats in registerable form at her expense with respect to the Property A property and the Property B property”. 

15. I will make the wife’s proposed order that if the event the husband does not make the payment to the wife by the due date then the husband and wife will forthwith do all acts and things and sign all documents necessary for the Property A property to be sold.  However, it will not refer to the Property B property.  If after the 90 days the Property A property is to be sold, the husband shall nominate three solicitors to act on the sale of the property within 21 further days and the wife will choose one of those three solicitors within seven days after that.

16. If the Property A property is sold, the distribution of sale will be firstly to pay all costs, commissions and expenses of the sale, secondly to discharge the mortgage and any other encumbrances affecting each real property, thirdly to pay any council and water rates and other charges (if any) outstanding in respect of each real property, fourthly 40 per cent to the wife, and then the balance to the husband. That way if the property sells for more than the valuation then both parties will benefit. If the property sells for less than both parties will share in that loss.

17. I will order that pending either the payment to the wife or the completion of the sale of the properties that the husband is responsible for the outgoings with respect to the properties.

18. I will make a further order that the husband will be declared as the legal and equitable owner of the Property B property and the wife will provide a caveat in registerable form.  The wife shall withdraw the caveat in registerable form to the husband upon the payment of the money or upon the completion of the sale of the Property A property. 

19. I will make an order that the parties will otherwise retain any assets, including chattels and bank accounts, superannuation, motor vehicles and other chattels not otherwise dealt with in these orders which are in their possession. 

20. I will make a note that pursuant to s.81 that the parties intend that these orders will be final as between them.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Harland

Date:  27 August 2018