Walter & Walter
[2022] FedCFamC2F 1039
Federal Circuit and Family Court of Australia
(DIVISION 2)
Walter & Walter [2022] FedCFamC2F 1039
File number(s): PAC 252 of 2020 Judgment of: JUDGE MANSFIELD Date of judgment: 10 August 2022 Catchwords: FAMILY LAW – PROPERTY – many factual issues in dispute – paid legal fees and premature distribution of asset – contested add-backs partially allowed – wife’s compensation payment as whole of initial contribution – not a small pool case as contended for by the wife – four step process followed – additional adjustment for justice and equity and crafting of orders to provide wife with an opportunity to make arrangements which would relieve her from selling property if possible. Legislation: Child Support (Assessment) Act 1989 (Cth)
Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 75(2), 79, 79(2), 79(4), 79(4)(e), 79(4)(f)
Family Law (Superannuation) Regulations 2001
Cases cited: Babett & Falconer (2015) FLC 98-067
NHC & RCH [2004] FamCA 633
C v C [2005] FLC 93-220
Dickons & Dickons [2012] FamCAFC 154
DJM and JLM (1998) FLC 92-816
Dovgan & Dovgan [2021] FamCA 306
Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143
In the Marriage of Lee Steere [1985] FLC 91-626
In the Marriage of Magas [1980] FLC 90-885
Kennon & Kennon (1997) FLC 92-757
Marker & Marker [1998] FamCA 42
Norbis v Norbis [1986] 10 FamLR 819
AJO & GRO [2005] FamCA 195
Perrin & Perrin (No 2) [2018] FamCAFC 122
Stanford v Stanford (2012) 247 CLR 108
Townsend & Townsend (1995) FLC 92-569
Trevi & Trevi [2018] FamCAFC 173
Division: Division 2 Family Law Number of paragraphs: 140 Date of last submission/s: 27 May 2022 Date of hearing: 12 – 13 May 2022 Place: Parramatta Counsel for the Applicant: Mr Bennett Counsel for the Respondent: Mr Katsinas ORDERS
PAC 252 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS WALTER
Applicant
AND: MR WALTER
Respondent
order made by:
JUDGE MANSFIELD
DATE OF ORDER:
10 august 2022
THE COURT ORDERS THAT:
Superannuation
1.In accordance with section 90XT(1)(a) of the Family Law Act 1975 (Cth) (“the Act’), whenever a splittable payment within the meaning of section 90XE of the Act becomes payable to, or on behalf of the wife, Ms Walter (DOB: 1978, member number …), from her interest in Super Fund B, the husband, Mr Walter (DOB: 1977) is entitled to be paid by the trustee of Super Fund B the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount of THIRTY-ONE THOUSAND SIX HUNDRED AND NINETY FOUR DOLLARS ($31,694), and there will be a corresponding reduction in the amount the wife, Ms Walter, would be entitled to receive but for these Orders.
2.Order 1 binds the trustee of Super Fund B.
3.The operative time for Order 1 is four (4) business days after the service of a certified copy of the Final Orders on the trustee of Super Fund B.
4.Orders 1-3 are stayed pending compliance with Order 5 and Order 6.
5.Within 30 days, the wife is to provide notice to the trustee of Super Fund B such that the trustee is accorded procedural fairness in relation to the making of an order, as at Orders 1-3, binding on the trustee;
6.Within 60 days, the wife is to provide to the husband’s solicitors by email, and to the Court, by email to [email protected]:
(a)Confirmation of procedural fairness being accorded to the trustee of Super Fund B; and
(i)Confirmation the trustee of Super Fund B does not object to the terms of Orders 1-3 which bind the trustee; or
(ii)Confirmation the trustee of Super Fund B has not given written notice of any objection within 28 days of being notified of the terms of Orders 1-3 to bind the trustee.
7.The parties are at liberty to relist the matter if the trustee of Super Fund B objects to the orders.
Payment from the wife to the husband
8.The wife will pay, or cause to be paid, the amount of TWO HUNDRED AND THIRTY-TWO THOUSAND THREE HUNDRED AND EIGHTEEN DOLLARS ($232,318) to the husband’s solicitors trust account within SIX (6) weeks of these orders.
Default sale of the C Street, Suburb D Property
9.In the event the wife fails to make the payment referred to in Order 8, the following shall occur:
(a)Within seven days, the parties will do all acts and things and sign all documents necessary to cause the property known as and situated at C Street, Suburb D, in the state of New South Wales, being all of the land contained within folio identifier … (“the C Street, Suburb D property”) to be offered for sale by private treaty, with an agent appointed by the wife at a sale price as agreed between the parties, or failing agreement at a reasonable price for the property market at the point of sale, following consultation with the appointed agent or their nominee.
(b)The parties shall equally share all costs associated with the agent’s advertising expenses;
(c)Coleman Greig Lawyers shall act as the conveyancers on the sale of the C Street, Suburb D property.
(d)The parties shall give such instructions as are necessary to the conveyancer to prepare a Contract of Sale.
(e)For the purposes of Order 9(d) above, the Contract of Sale shall provide for completion within forty-two (42) days of the contract date unless otherwise agreed between the parties in writing.
(f)In the event that contracts are not exchanged for the sale of the property within three (3) months of the C Street, Suburb D property being listed for sale in accordance with the Order above, the parties shall do all acts and things and sign all documents for the property to be sold by public auction, at a reserve price agreed between the parties in writing, or failing agreement at a reasonable reserve price for the property market at the point of sale, following consultation with the agent or their nominee (“the First Auction”).
(g)For the purposes of Order 9(f), the First Auction shall be held within six (6) weeks after the three (3) month period referred to in Order 9(f) has expired.
10.In the event that the property is not subject to an exchange of contracts at the First Auction provided for in 9(f) and 9(g), then the property is to be submitted to successive auctions no greater than four (4) weeks apart until sold, with the reserve on each successive auction to be five per cent (5%) lower than the reserve for the proceeding auction.
11.That upon completion of the sale of the C Street, Suburb D property in accordance with Order 9 and/or Order 10 above, the proceeds of sale shall be disbursed in the following order and priority:
(a)In payment of the agent’s commission and any other expense properly incurred with respect to the sale of the C Street, Suburb D property.
(b)In payment in respect of the legal costs associated with the sale of the C Street, Suburb D property.
(c)In payment of any amount outstanding to any other authority or local council in respect of the C Street, Suburb D property, not otherwise taken up as a credit in favour of the vendor.
(d)The balance then remaining as follows:
(i)Payment to the husband via the husband’s solicitors’ Trust account being BSB: …64, Account Number: …00, Account Name: Kalpaxis Legal Statutory Trust Account, in accordance with the payment referred to in Order 8; and
(ii)The balance to the wife, via the wife's solicitors’ Trust account being Coleman Greig Lawyers Pty Ltd Law Practice Trust Account, BSB …84 and Account No. …13.
FURTHER, THE COURT ORDERS BY CONSENT THAT:
Withdrawal of caveat by husband over the C Street, Suburb D property
12.Upon compliance with the payment order at order 8, and within 48 hours of receipt of that payment, or otherwise to provide for compliance with Orders 9 and 10, the husband shall do all acts and things necessary to withdraw the caveat lodged against the property located at C Street, Suburb D, in the state of New South Wales, being all of the land contained within folio identifier … (“The C Street, Suburb D property”) at the husband’s expense and provide evidence that the Caveat has been withdrawn to the wife’s solicitor within twenty-four (24) hours after the withdrawal has been registered.
Interests in entities
13.Within twenty-eight (28) days of receipt of sealed Orders, the husband shall sign all documents presented to him and provide all necessary consents, directions and authorities required to the wife or her nominee, and the husband shall do all other things necessary to transfer to the wife or her nominee, the husband’s interest and units in the E Investments Trust AND the F Trust, and resign and remove himself from all positions as a beneficiary from the E Investments Trust AND the F Trust, in favour of the wife.
14.That upon compliance with Order 8, as between the parties, the wife shall thereafter be hereby solely declared pursuant to Section 78 of the Family Law Act 1975 (Cth), entitled to all right, title and interest in the E Investments Trust, and the wife shall indemnify and shall keep indemnified the husband in respect of all liabilities in relation to the E Investments Trust AND the F Trust and associated entities, whenever and however arising, including but not limited to, all taxation liabilities of the E Investments Trust AND the F Trust and associated entities, or either party personally, arising in connection with any interest, loan account or employment in relation to the entities.
15.Except as otherwise provided herein, from the date of these Orders, the husband shall do all acts and things necessary to indemnify, and keep indemnified, the wife from and against all liabilities, wherever and however incurred, of the husband including, but not limited to:
(a)All liabilities including claims, actions, suits or demands of whatsoever nature arising out of, or in connection with, the husband’s interests in any business, including but not limited to: the business “Company G”, motor vehicles and any other interest referred to in Order 17;
(b)Taxation (including CGT);
(c)Duties (including stamp duty)
whether past, present or future.
Other property
16.That except as otherwise provided in these Orders the wife be solely entitled, to the exclusion of the husband, to the following:
(a)All funds held in any bank, building society or credit union accounts in her sole name;
(b)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in her sole name;
(c)All interests in life insurance policies and superannuation funds standing in her sole name;
(d)Her interest in The E Investment Trust;
(e)Her interest in F Trust;
(f)Her shareholding in the entities:
(i)E Investments Pty Ltd ACN…; and
(ii)H Pty Ltd ACN …;
(g)The business “Company J” ABN …;
(h)The caravan situated at site number K Street Caravan Park, Town L in the state of New South Wales (“the caravan”);
(i)All motor vehicles in her possession and/or control; and
(j)All other personal property in her possession and/or control.
17.That except as otherwise provided in these Orders the husband be solely entitled, to the exclusion of the wife, to the following:
(a)All funds held in any bank, building society or credit union accounts in his sole name;
(b)All shares, debentures, units in unit trusts, bank, building union accounts standing in his sole name;
(c)All interests in life insurance policies and superannuation funds standing in his sole name;
(d)Motor Vehicle 1, registration number …;
(e)Motor Vehicle 2, registration number …
(f)Motor Vehicle 3;
(g)Boat registration number …;
(h)The business “Company G”;
(i)All items retained from the shed located at the M Street, Suburb N Property; and
(j)All other personal property in his possession and/or control.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Walter & Walter has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MANSFIELD:
INTRODUCTION
The husband at 34 and the wife at 32 years of age upon cohabitation were not particularly young. Neither of them brought any significant assets or liabilities to the relationship. Neither of them brought any significant earning potential to the relationship. The parties used a compensation payment made to the wife to obtain the M Street, Suburb N property. From that point onwards, the parties jointly endeavoured to significantly improve the M Street, Suburb N property, run their business and start and raise a family.
After eight years, their marriage had broken down and they have been in high conflict since. Despite the quantum of funds initially available, the only surviving remnant of the initial one million dollars is the purchase of the M Street, Suburb N property. This is then mixed with the significant renovations and improvements contributed to by both parties and then, post separation, morphed into the C Street, Suburb D property now held solely by the wife.
There were many disputes of fact on specific issues and of a general nature such as conduct throughout the relationship. Determination of these issues feeds into the ultimate issue for determination which is what, if any, alteration in property interests is just and equitable. In this case, that amounts to what, if any, settlement sum is to be paid by the wife to the husband out of the equity in the C Street, Suburb D property. The final orders provide for a division of the combined non-superannuation and superannuation property pool of 72.5 / 27.5 in the wife’s favour.
ORDERS SOUGHT
The wife sought orders to the effect that:
(a)The wife retain the C Street, Suburb D property and there be no payment to the husband;
(b)The husband pay to the Child Support Agency any child support arrears.
The wife contends that the contributions be assessed as 90 per cent in her favour and there be a further adjustment in her favour of 5 per cent for future needs such that an overall adjustment of 95 per cent in her favour is just and equitable.
The order sought by the wife with respect to child support is not an appropriate or necessary order for the Court to make in these proceedings.
The husband sought orders to the effect that:
(a)The wife pay to the husband $419,223;
(b)The wife retain the C Street, Suburb D property or it be sold in default of the payment to the husband;
(c)The parties file a joint application for divorce and share the filing fee.
The husband contended that the contributions be assessed as to 65 per cent in the wife’s favour and there be no adjustment for future needs. Counsel for the husband submitted that the payment amount sought represents an overall adjustment of 70 per cent in the wife’s favour based on their balance sheet.
The order sought by the husband with respect to the divorce application is not an appropriate or necessary order for the Court to make in these proceedings.
The parties were agreed as to the following ancillary orders:
(a)The husband is to transfer to the wife any interests he has in the wife’s entities;
(b)The wife is to retain all of her interests in the various entities owned or controlled by her;
(c)Each party is to retain all of the property in their respective names, possession or control; and
(d)The husband is to withdraw the caveat over the C Street, Suburb D property.
ISSUES
The factual issues for determination identified by the applicant in counsel’s opening remarks were:
(1)Treatment of the wife’s entities and trust arrangements;
(2)The jewellery – that it is no longer in the possession of or to the benefit of the wife;
(3)Legal fees – either adding both sides legal fees back, or adding neither side’s back.
Additional factual issues for determination identified by the respondent in counsel’s opening remarks were:
(4)The amount of the initial contribution being less than $1,200,000;
(5)Attribution of the increase in value of the M Street, Suburb N property to the renovation works performed by the husband;
(6)The wife’s receipt of $80,000 in proceeds from the sale of a restored caravan at the time of separation;
(7)Treatment of the funds advanced by the wife’s parents;
(8)The wife’s allegations of family violence.
Of the issues above, 1, 2, 3, 6 and 7 are dealt with in considering the balance sheet. Issue 4 is dealt with in considering initial contributions. Issues 5 and 8 are dealt with in considering contributions during the relationship.
FACTS, MATTERS & CIRCUMSTANCES
The husband and wife met in early 2011 and commenced cohabitation in mid-2011.
In late 2011, the wife received a compensation payment as a result of injuries sustained in a motor vehicle accident in 2008 for or around the amount of $1,500,000.
In December 2011, the property at M Street, Suburb N (‘the M Street, Suburb N property’) was purchased for the price of $335,000. The wife was solely named on the title. The purchase price was met in full by way of the wife’s compensation payout.
On 20 December 2011, following the purchase of the M Street, Suburb N property, the wife incorporated two companies, naming her as the sole director and shareholder for:
(a)E Investment Pty Ltd ACN …; and
(b)H Pty Ltd ACN ….
In 2012 per the wife’s evidence, and in 2012 per the husband’s evidence, the parties were married in City O, in the United States of America. The husband asserts the wife spent approximate $65,000 on this trip, funded through the compensation payout. Prior to this trip, the wife spent approximately $84,000 on a wedding and engagement ring, and purchased a new vehicle for $130,000. These purchases were also funded by way of the compensation payout. The wife agrees these things happened but contends they were all for lesser amounts.
Following professional advice, on 23 February 2012, the wife established two trusts, namely:
(a)E Investment Trust (‘the Investment Trust’); and
(b)The F Trust (‘the F Trust’).
P Investments is the trustee company for the E Investment Trust, a discretionary trust which distributed income received through the business, ‘Company J’ (‘Company J’). The wife registered this business, Company J, on or about 12 October 2011. After registration of this business, the husband and wife established a partnership on 1 November 2011, operating Company J through this structure. The partnership was dissolved and ceased trading on 22 April 2015.
H Pty Ltd is the corporate trustee for the F Trust (‘The F Trust), a discretionary trust whereby only members related to the wife by blood are able to receive distributions as beneficiaries under the trust.
On 23 February 2012, the wife gifted the sum of $1,000,000 from her compensation monies to the F Trust. The F Trust loaned these monies back to the wife on the same date. On the wife’s instructions, these monies were applied as an unregistered mortgage over the M Street, Suburb N Property, for which the wife was named as mortgagor and H Pty Ltd as mortgagee.
The parties undertook extensive renovations and improvements to the M Street, Suburb N property, whilst operating the business Company J. In July 2013, the wife obtained a loan of $151,293 from Company Q, secured by a mortgage over the M Street, Suburb N property. The husband maintains he was not aware of this loan until in or around January 2020 when he became aware he was named as a borrower on the mortgage document.
In 2016, the wife refinanced the mortgage with Australia and New Zealand (ANZ) Bank for a new loan of $315,410 in order to complete the renovations. On the wife’s evidence, the husband was involved in this refinancing, as it was a joint account in both names. On the husband’s evidence, he believed the loan was of or around $20,000, rather than the actual borrowed amount of $315,410.
In or around mid-2012, the husband began to repair cars from the shed on the M Street, Suburb N property, creating a further revenue stream for the parties. These funds were applied to purchase building materials and to purchase the caravan located in Town L (‘the Town L Caravan’), which was purchased in or around April 2017.
The husband and wife conceived their two children via in-vitro fertilisation (IVF) following a number of miscarriages. X was born in 2014 and Y was born in 2016.
Sometime in 2016, the parties temporarily separated. They reunited approximately one month later.
Following the successful renovation of their own caravan in 2017, in 2019, the parties established the business ‘Company R’. The initial renovation of the Town L caravan was funded primarily through the income stream generated from Company J, and the following renovations and repair work undertaken through Company R was funded 50% via the sale of the husband’s car and 50% via a third party. Throughout the course of this business, the husband asserts he renovated around eight caravans and that he was never paid for this.
The parties separated on a final basis on 25 December 2019. Following separation, the husband remained in the M Street, Suburb N property and the wife remained in the Town L caravan with the children until 7 January 2020. On 8 January 2020 until 29 January 2020, the wife resided in a women’s refuge with the children in M Street, Suburb N.
On 20 January 2020, the wife filed an initiating application in the then-Federal Circuit Court seeking urgent interim and final orders for both parenting and property matters. On 29 January 2020, this Court made orders that the husband vacate the M Street, Suburb N property and the wife shall have exclusive occupation of the property. Orders were also made on this day regarding particular chattels of which were to be sold at an agreed purchase price by the wife, with the purchase price to be transferred to the husband. The chattels were ultimately retained by the husband following attempts at sale.
Additionally, on this date, an order was made for the wife to list the M Street, Suburb N property for sale within six months of the date of those orders. A number of renovations needed to be undertaken to prepare the property for sale, and these were not able to be undertaken in the six-month time frame. On 27 October 2020, the husband filed an application in a case concerning the orders made on 29 January 2020, providing for the sale of the M Street, Suburb N property which had not occurred at that time.
On 18 November 2020, solicitors for the husband conducted a title search and found two caveats registered over the M Street, Suburb N property. As a result, the husband filed an amended application in a case seeking orders that the sale of the M Street, Suburb N property be stayed by injunction pending full and frank financial disclosure.
On 25 January 2021, orders were made in chambers by consent providing for the wife to continue to solely proceed to facilitate the settlement of the sale of the M Street, Suburb N property and the caveats be removed. Upon settlement, the orders provided that the ANZ mortgage is to be discharged, costs order of 20 February 2020 be paid and the balance of the proceeds to be paid to the F Trust. Additionally, the orders provided that upon the wife purchasing an alternate property to house herself and the children, the monies shall be released to finance this purchase and the wife consents to the husband lodging a caveat over the title. Additionally, the Town L caravan was to be in the sole possession of the wife and the husband is to retain all the contents of the shed on the M Street, Suburb N property.
Upon settlement of the M Street, Suburb N property, which occurred in March 2021, the wife purchased a property at C Street, Suburb D (‘the C Street, Suburb D property), utilising funds from the sale of the M Street, Suburb N property. In accordance with the orders of 25 January 2021, a caveat was lodged over this property by the husband.
Following separation, the husband established his own business, ‘Company G’, which trades as Company J.
Final orders in respect of parenting arrangements were made on 23 February 2021.
THE HEARING
On 12 May 2022 the matter came before me for final hearing. On the first day of the trial the applicant wife gave evidence and was cross examined. On day two, cross-examination of the wife was completed, the respondent husband gave evidence and was cross examined and the parties made closing submissions.
The following material was received into evidence during the trial:
(a)Affidavit of Ms Walter filed 27 April 2022 (Exhibit A1);
(b)Affidavit of Mr Walter dated 27 April 2022 (Exhibit R1).
Other material referred to and relied upon by the applicant wife was:
(a)Outline of Case Document filed 11 May 2022;
(b)Financial Statement filed and April 2022; and
(c)Written submissions filed 20 May 2022.
Other material referred to and relied upon by the respondent husband was:
(a)Outline of Case Document filed 10 May 2022;
(b)Financial Statement filed 6 April 2022;
(c)Written submissions filed 27 May 2022; and
(d)Tender bundle of the Respondent Husband (333 pages).
THE LEGAL PRINCIPLES
Section 79 of the Family Law Act 1975 (“the Act”) sets out the following:
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
…
(c)an order for a settlement of property in substitution for any interest in the property; and
(d)an order requiring:
(i)either or both of the parties to the marriage; or
…
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2)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.
In exercising that discretion, the court is required to take into account the matters set out in s 79(4) of the Act, as follows:
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or 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 marriage 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 marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or 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 marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, 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 marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The High Court in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”), at [35] confirmed that before an order is made adjusting the parties’ property, the court is required to make a determination that it is just and equitable to do so. That determination is to be made, however, not as a discrete or preliminary issue but requires the Court to consider the matters set out in section 79(4) of the Act.
In Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143 (“Hickey”), the Full Court held at [39] that, in considering the matters set out in section 79(4) of the Act the preferred approach was to adhere to the following four steps:
(a)Identify and determine the value of the asset pool of the parties as at the date of the hearing (this necessarily involves identifying both the assets and liabilities);
(b)Identify and assess each of the parties’ financial and other contributions up until the date of the hearing (this can include the financial contributions made before, during and after the marriage);
(c)Assess how future and other events may have a financial impact on either of the parties, such as their age and state of health and their income and property or financial resources (known as the s 75(2) factors); and
(d)Step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.
The High Court noted at [35] in Stanford, s 79(2) of the Act provides that the Court shall not make an order altering the interests of the parties to the matrimonial property, “unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Accordingly, since Stanford, it has generally been the practice of the Court to determine, as an initial issue, whether it is just and equitable to make an adjustment of marital property.
The Full Court in Perrin & Perrin (No 2) [2018] FamCAFC 122 cited at [57]–[58] with approval, the decision in Babett & Falconer (2015) FLC 98-067 at [44]:
Within the family law context, those comments [in respect to the adequacy of reasons] should be seen as reinforced by the fact that the nature of the s 79 inquiry is, in essence, a broad discretionary assessment, which is neither an accounting nor mathematical exercise and which, effectively as a corollary, requires a “broad-brush approach”. (Citations omitted)
Is it just and equitable to make a property adjustment?
Both parties contend that it is just and equitable for the parties’ property interests to be adjusted. I am satisfied that this should occur in circumstances where the parties’ relationship is at an end and they no longer have the common use of their property. The express or implicit assumptions which underpinned their relationship, including that they would be able to consensually adjust their interests in such property, are at an end. (See Stanford at [42]).
THE BALANCE SHEET
The balance sheet contended for by the parties at trial is set out below. It contains a number of disputed items.
Ownership Description Applicants value Respondent value ASSETS 1 W C Street, Suburb D NSW Title ref: … $690,000 $690,000 Bank Accounts 2 J ANZ Bank Joint Offset account ending in #...05 (as at 23 March 2022) Nil Nil 3 W Super Fund S account ending in # …01 (as at 25 December 2021) $1,922 $1,922 4 H ANZ Access Advantage account ending in #...63 (as at 23 March 2022) $1,304 $1,304 5 H ANZ Online Saver account ending in #...81 (as at 23 March 2022) Nil Nil 6 W Entities
P Investments Pty Ltd ACN …
T/as Company J (ABN …)
Assets
Bank T Business acc ending in …55 as at 31 October 2021 $1,688
Liabilities
ATO Integrated client account balance as at 28 February 2022 = $49, 309
Company U = $8,218
V Accounting and Advisory = $ 15,355.85Nil NK 7 W 12 Ordinary shares H Pty Ltd (ACN …) $581,507.66 as at 4.03.21 (paid on settlement of M Street, Suburb N pursuant to orders dated 25 January 2021 $581,508 $581,508 8 W Company G ABN …
(t/as Company J)Unknown Nil Vehicles 9 W Motor Vehicle 4 $21,200 $21,200 10 H Motor Vehicle 2 $16,550 $16,550 11 H Motor Vehicle 3 $10,000 Nil 12 H Motor Vehicle 1 $53,150 E $53,150 13 H Car Shell x 2 $2,000 Nil 14 H Trailer registration number … E $900 Nil 15 H Boat (details unknown) E $4,000 Nil Other assets 16 W Caravan located at K Street, Town L $12,000 $30,000 17 W Household furniture and contents Nil E $2,000 18 H Watch E $280 E $280 19 H Car hoists (at $800 each) x 2 $1,600 E $800 20 H Personal possessions:
- Clothing
- Lounge fabric
- 40-inch TV
- DVD player x surround sound
- Bunk beds for the children
- BMX Bike
And other items removed from property$1,000 E $1,000 21 H Items in shed:
- Motorbikes
- Car parts
- Tools of trade
- Trade products
Other itemsE $5,000 $5,000 22 W Jewellery Nil E $66,025 23 J Matrimonial Furniture $1,255 $7,110 Total $1,403,669 $1,477,849 ADDBACKS 24 H Expenses paid by the Wife on behalf of the Husband:
- Gyprock of an agreed amount :$500
- Two (2) pool fence warranty jobs the
respondent refused to complete: $3000
(total)
- Caravan insurance from 19 March 2020 to 15
June 2020: $224.00
- Company W: $505.00
- Company Z: $202.00
- Company AB: $3,010.00
- Company AC: $8788.00
- Mortgage repayments between 1 January
2020 until 4 March 2021$16,219 Nil 25 H Payment made by wife pursuant to court orders dated 30 January 2020 on account of legal fees $10,000 $10,000 26 W Money paid to Coleman Greig on 9 January 2020 on account of legal fees $10,000 $10,000 27 W Withdrawals of fund from ANZ account ending in #...05 by Wife Not conceded $80,000 28 W Withdrawal from superannuation fund by Wife Not conceded $20,000 29 W Payment of legal fees by Wife to Australian Executor Trustees Limited and Coleman & Greig from proceeds of sale of M Street, Suburb N property Not conceded $185,000 30 W Balance of proceeds of sale of M Street, Suburb N property Not conceded $89,870 Total $36,219 $394,870 LIABILITIES 31 W Loan from Mr & Mrs AD $130,000 Nil 32 W Loan from H Pty Ltd (ACN …) $581,508 $418,492 33 H Finance on Motor Vehicle 1 E $56,816 E $56,816 Total $768,324 $475,308 SUPERANNUATION Member Name of Fund Type of Interest Applicants Value Respondents value 34 W Super Fund B Member Number …..…
As at 16 Jan 2022Accumulation Interest $86,369 $86,369 35 H Super Fund AE Member Number
… (as at 25
March 2022)Accumulation Interest $23,674 $22,980 Total $110,043 $109,349 FINANCIAL RESOURCES Ownership Description Applicants value Respondents value Total $781,607 $0
There are no joint accounts. The parties’ respective bank accounts are modest and excluded. Personal items and home contents are also modest and of immaterial value or of no value to the other party and are excluded. Accordingly, items 2-5, 17-21 and 23 are disregarded.
The wife’s entities
In the applicant’s case outline, counsel for the wife contends that the entities be “seen through.” In the respondent’s case outline, counsel for the husband contends that the wife is the sole director and shareholder and primary beneficiary and has the ability to make transfers, absolve inter-entity loans, or retain funds as and when required. In closing written submissions, counsel for the wife contended that the wife did what she did with respect to the trust arrangements as a function of legal advice, there was no actual movement of any funds in the capitalisation of the [F] Trust, and there was no deceit in the manner in which she represented the arrangement in her written or oral evidence. I agree with all of those contentions and proceed accordingly by disregarding the offsetting line items 7 and 32.
Lest there be any doubt, it was established in cross-examination of the wife that by the time the ‘gift’ of $1 million occurred on paper on or about 23 February 2012, on the wife’s evidence at its highest, only a maximum of $350,000 remained with at least $655,000 having already been spent (made up of gift to parents $100,000; gift to sister $20,000; M Street, Suburb N property $335,000; wedding ring $55,000; engagement ring $10,000; Motor Vehicle 5 $90,000; City O trip $45,000; ring and necklace $9,000).
Goodwill and business expenses
At Item 6, the wife includes what appears to be the current status of the business that the parties ran during the relationship. Though listed as an asset, it appears to amount to liabilities exceeding assets. The wife nevertheless attributes nil value to it as an asset. It falls within a structure of which she has sole control (P Investments Pty Ltd ACN … As Trustee For E Investments Trust, Trading As Company J (ABN …)).
Item 8 lists the husband’s post separation business (Company G ABN … Trading As Company J). The wife attributes an unknown value and the husband attributes a nil value. I am satisfied that it has nil value. There is no evidence that it holds any assets of significance including any goodwill. There are no customer contracts or anticipated revenues. The wife contends that the husband took the goodwill from the previous business which now resides in his business. I cannot see any such goodwill. That the husband is known to certain clients and has a relationship with them such that they call on him and not the wife to perform work is not transferable goodwill. It is entirely reliant on the husband to do the work on an ordinary commercial do-and-charge basis. I accept the husband’s evidence that he is a tradesman and post-separation he has simply worked as a tradesman. That he now does so outside of the previous structure owned and controlled by the wife is obvious. I am also satisfied that the husband working outside of the wife’s structure, regardless of the client, has not caused any detriment to the wife post-separation as there is insufficient evidence to suggest that the wife would have been capable of or interested in performing the work anyway.
Some of the ‘expenses paid by the wife on behalf of the husband’ in item 24 appear to relate to business expenses. I infer that means expenses within her structure and not the husband’s new business. Under cross-examination, the wife conceded that she negotiated to pay half of the claimed $8,788 to Company AC. I am not satisfied as to what these expenses in fact are or that they are expenses paid by the wife ‘on behalf of the husband.’ I am not satisfied they are addbacks. (For completeness, the unparticularised claimed addback for mortgage repayments between 1 January 2020 until 4 March 2021 is excluded as whatever the amount may be, it is not an addback).
Accordingly, items 6, 8 and 24 are disregarded.
Vehicles
The parties each retain a comparable vehicle. The husband’s Motor Vehicle 1 is wholly encumbered. I am satisfied the other items under ‘Vehicles’ are inconsequential or of no value to the other party. Accordingly I disregard items 9-15 and 33.
Caravan site
In relation to item 16, the husband contends for a value of $30,000 and deposes in his affidavit:
[57] In or around April 2017, [Ms Walter] and I purchased a caravan situated at site number [K Street, Caravan Park, Town L] ("the caravan") for about $8,000. I undertook works to the caravan such as new flooring, custom windows and doors, landscaping of paving and barbecue area on the side installing decks and a kitchen that was purchased by [Ms Walter] with funds accrued from income of [Company J]. This caravan was subject to interim property settlement in accordance with orders of 25 January 2021. I no longer have an interest in the caravan, [Ms Walter] has a sole interest in the caravan and the value of the caravan is said to be $30,000 as set out in notations made by the court on 25 January 2021.
The wife contends for a value of $12,000. In the notes to the balance sheet, the wife says:
Caravan was damaged significantly from the storms in 2022 and the Wife is requires to repair the Caravan by replacing the roof, new interior walls, new flooring, new lounge, new dining chairs and table new air conditioner.
There is no evidence in support of the wife’s contentions. The value of item 16 will remain at $30,000.
Jewellery
At item 22, the husband contends the wife has jewellery to the value of $66,025. The wife contends she has none. The husband’s number comes from the amount an 18CT white gold diamond ladies ring was insured for as at 3 December 2019. The wife’s value comes from her reports that the jewellery is missing and no longer in her possession.
The question of the missing jewellery is indeed an embedded narrative and intriguing.
On 3 December 2019, the insurance policy was renewed.
On 25 December 2019, the parties separated.
From the cross-examination of the wife:
(a)On 8 January 2020, the wife and the children were staying in the caravan at Town L when the wife decided to go into a women’s refuge to hide from the husband. She was told not to bring anything of value so she says she intentionally left the ring hidden in the caravan.
(b)On 1 February 2020, the wife cancelled the insurance policy whilst at the shelter.
(c)From January to June 2020 the husband had access to the caravan.
(d)On 23 June 2020, the wife returned to the caravan to discover, she says, that the ring was not there.
(e)On 27 June 2020, the wife says she reported the missing ring to the police who told her that it was a family law property dispute and declined to make a report.
From the husband’s affidavit:
[71] On 28 July 2020, my solicitors received draft joint letters of instruction for the following:
a. [Company AF] to value the matrimonial furniture at the [M Street, Suburb N] property; and
b. [Mr AG] of [AG] Jewellers to value the matrimonial jewellery.
[72] Included in these joint letters of instructions was a list of items to be valued. Later that day, my solicitors sent a letter to [Ms Walter’s] solicitors noting that a considerable amount of items were missing from the itemized lists contained in the draft joint letters of instruction, some of which was [Ms Walter’s] 3-caret diamond wedding ring, my watch which [Ms Walter] was in possession of at the time, and [Ms Walter’s] diamond wedding band.
[73] To this, [Ms Walter’s] solicitor responded later that day and mentioned that, “The wedding band and engagement ring are not in my client's possession. I am instructed she left them hidden in the caravan and when she has returned to the caravan they are not there”. In response my solicitors sought confirmation of the dates when [Ms Walter] alleged that the jewellery became missing from the caravan and if she had made any claim on her insurance concerning the jewellery or made a report to the Police.
[74] On 4 August 2020, my solicitors received a letter from [Ms Walter’s] solicitor which confirmed that [Ms Walter] did not make a claim to her insurance as she had cancelled her policy on I February 2020. Further, [Ms Walter] did not make a report to the Police in circumstances where, “she did not realise until 27 June 2020 that the rings were missing.” In the letter, [Ms Walter] had assumed that I took the items from the caravan (as there had been no break in), despite me not having access to the caravan ever since [Ms Walter] changed the locks in or around June 2020 (or prior).
[75] Subpoenas were issued by my solicitors to [Ms Walter’s] jewellery insurance company as well as the NSW Police. Both subpoenas produced material that indicated that [Ms Walter] has not made any report to Police that the jewellery were stolen. …
In cross-examination of the husband:
Q: I’m going to put it to you squarely. Did you find and take the jewellery that was in that caravan?
A: No.
From the wife’s affidavit, in October 2020 a letter of instruction was issued for the valuation of the matrimonial jewellery. The report was completed circa December 2020 but not released because the husband did not pay for it. Under cross-examination the wife said the report related to all the jewellery she had in her possession, two necklaces, a ring and insignificant jewellery. One of the necklaces, the black necklace, is worth $5,500. She doesn’t know about anything else because the report was never released.
My findings with respect to the jewellery are as follows.
(a)It is not clear whether the jewellery said to be left in the caravan is a single ring or not. I proceed on the basis that it is and that it is the ring that was the subject of the insurance policy and it is the wedding ring that was purchased in 2011 for $55,000.
(b)The wife’s absence of particulars in her narrative is striking, such as: any consternation or other options she considered about leaving such a valuable item in a caravan; the alleged abuse that she was urgently fleeing from; the manner in which she ‘hid’ the ring in the caravan; and, her efforts to locate the ring between 23 and 27 June 2020.
(c)Other striking aspects of her narrative that are unexplained include: why she did not report it to police for four days; her blasé description of the police supposedly not even making a report of a missing $55,000 ring; why there was no record produced under subpoena by the police of any report made to them at all; why she did not disclose any of this to the husband until he sought to value it over a year later; or if she thought that he had it as early as 27 June 2020, why she did not ask for it back, or at least confirm it with him after supposedly being sent away by the police.
(d)Perhaps the most difficult to accept aspect of the wife’s narrative is her decision to cancel the policy on 1 February 2020 after leaving the ring in relatively precarious circumstances on 8 January 2020.
As to other items of jewellery, there is evidence of the existence of other items (engagement ring for $10,000 purchased with the wedding ring, another ring and necklace purchased in City O for $3,500 and $5,500 respectively). There is no evidence as to where these items are now or their current value other than the $5,500 necklace to which the wife admitted to still possessing and to its value in cross-examination.
Having regard to section 140 of the Evidence Act 1995 (Cth):
(a)I am far from satisfied on the balance of probabilities as to the wife’s account of the jewellery;
(b)However, I cannot be satisfied on the balance of probabilities as to who has possession of, or has the benefit of the value of, the ring;
(c)To allow for the husband to benefit by including item 22 amounts to a finding that the wife has outright lied in her evidence. Whilst I do not disregard this as a possibility, having regard to sub-sections 140(b) - the nature of the subject-matter of the proceeding, and 140(c) - the gravity of the matters alleged, I am not sufficiently satisfied to make such a finding.
Item 22 will be the wife’s jewellery as to the admitted amount of $5,500.
Lastly, I note that in any event the ring was an initial contribution attributable to the wife out of her personal injury settlement which would have been of relevance when considering its treatment if it was included in the balance sheet.
Wife’s loan from her parents
At item 31, the wife contends that she has a liability to her parents of $130,000 which the husband disputes.
In her affidavit, the wife deposes:
[139] My total expenses are $1,520.00 per week, which means my shortfall is approximately $409.00 per week. I am required to borrow money off my parents to assist in the payment of the above expenses. Although my parents had the benefit of $100,000.00 as a gift from me, this was in 2012 and almost 12 years ago. I have borrowed significant amounts of money from my parents throughout these proceedings, including continuing to pay legal fees as I cannot afford them on my own.
[144] When I first obtained legal advice, I obtained a loan through [Company AH]. I could not afford the repayments from [Company AH]. When the [M Street, Suburb N] property was sold, [Company AH’s] outstanding fees were paid out in the sum of $159,100.00 (being the Australian Executor’s Trustee). I no longer have a contract with [Company AH] and pay my legal fees outright, with the assistance of my parents. My parents expect me to repay the monies loaned to me in the sum $130,000.00 inclusive of all monies I have borrowed from them since separation. I anticipate this debt will rise once I borrow monies for the payment of this Trial. I am already worried that I will not have the capacity to repay them and if I am required to refinance the [C Street, Suburb D] property, I will not have the capacity to meet the above expenses for the children or myself.
Under cross-examination, the wife conceded that in her financial statement she said there was a personal loan agreement, she was unsure if she had that, the evidence of the loan would be her parent’s bank statements which she had not provided because no one had requested her to.
The wife’s alleged and post separation liability to her parents of $130,000 is disregarded for the reasons that it is a post separation liability, the lack of particulars and evidence in support of it, including business records or evidence in chief from the supposed lender. It is not sufficiently certain and I am not satisfied that it is repayable at all or that it is likely to be enforced. Item 31 is disregarded.
It is relevant at this point to refer to the husband’s evidence in his affidavit that he has borrowed monies from his mother of about $180,000 and from his friend of about $50,000 to meet legal fees in these proceedings and some of his everyday expenses. He has not sought to include these post separation liabilities in the balance sheet.
Superannuation
As to the amount of superannuation interests, there is no evidence of valuation pursuant to the Family Law (Superannuation) Regulations 2001. I proceed on the basis that the appropriate method of determination of the value of the respective interests is that the wife’s value is as stated in her Financial Statement filed 11 April 2022, and the husband’s value is as stated in his Financial Statement filed 12 May 2022.
Add-backs
Whether to add back an amount is always a discretionary decision. The courts have emphasised time and time again that add-backs are the exception and not the rule. In AJO & GRO [2005] FamCA 195 the Full Court of the Family Court identified three types of add-backs that are commonly encountered. Two of those categories are applicable to this case:
(a)Where there has been a premature distribution of matrimonial assets.
(b)Where the parties have expended money on legal fees.
The husband contended for a number of add-backs, each one opposed by the wife.
Item 25 and item 26 are agreed between the parties. They also offset and may be disregarded on that practical ground alone.
Item 28 is the wife’s withdrawal of $20,000 from her superannuation which the husband contends should be added back.
I am satisfied that these funds were used to meet necessary living expenses and those expenses were reasonably incurred and should not be added back. AJO & GRO [2005] FamCA 195. Nor is there evidence of the acquisition of other assets or of unreasonable or extravagant spending. Marker & Marker [1998] FamCA 42. In cross-examination, the husband conceded to also having made withdrawals from his superannuation entitlements. The amount though was not explored.
Item 30, being the balance of proceeds of sale of the M Street, Suburb N property was abandoned by the husband after being satisfied after cross-examination of the wife that those funds are effectively accounted for in the value of the C Street, Suburb D property. Item 30 is disregarded.
The proceeds of sale of the caravan
Item 27 arises from the wife’s unilateral transfer of the proceeds of sale of a renovated 21-foot caravan from the joint account to her own account. Around October 2019, the rundown caravan was purchased by the parties and another person, Mr AJ, for two half shares of $5,000 each. The costs of parts for the renovations to the caravan was $27,841.42. The wife’s parents later bought Mr AJ’s share for $14,000. In December 2019, the caravan was sold for $80,000. The wife unilaterally reconciled her parents share and paid to them the amount of $31,241.
The wife’s evidence was unsatisfactory. She would not concede that the appreciation from $10,000 to the sale price of $80,000 was the product of the husband’s efforts which was obviously the case. Further, I do not accept her justification of transferring the entirety of the $75,000 out of the joint account and into her own account in order to pay the supplier invoices accrued during the works. She says they were $27,841.42 and that associated paperwork existed but she didn’t know if it had been provided to her solicitors, or disclosed, or not. I do not accept that these invoices were outstanding at the time. Further, she was vague around the arrangements involving her parents as an interested party to justify her dispersal of $31,241 of the sale proceeds to them.
I am satisfied that the wife’s transfer of $75,000 from the joint account to her own account is a premature distribution of property and is eligible to be added back consistent with the decision in AJO & GRO (2005) FLC 93-218 and based on the principles derived in Townsend (1995) FLC 92-569 which include that: the asset existed at separation; the other party had a legitimate interest in it; it was taken by one of the parties without consent; and it would be included in the pool if it still existed.
The full amount however ought not be added back for the following reasons.
Reconciliation of the caravan is as follows.
Sale price $80,000
Cost of goods -$10,000
Parts -$27,841 (as accounted for by the wife)
Labor -$10,000 (as accounted for by the wife to her parents)
Profit $32,159
Half share $16,079.50The amount payable to the wife’s parents for their half share in the caravan (which they purchased for $14,000 from Mr AJ) is $16,079.50. The wife instead paid them $31,241. They have been overpaid by $15,161.50.
Of the $80,000 sale proceeds, $5,000 remained in the ANZ mortgage account and therefore accounted for in the sale of the M Street, Suburb N property. I am satisfied that the $5,000 for the original half share and the $27,841 for parts were paid upfront from joint resources and not from the sale proceeds. The $10,000 accounting for labour was only ever notional.
The notional amount to be added back is therefore $75,000 less $31,241, totalling $43,759. It would have been greater had the wife’s parents not been overpaid but for the purposes of these proceedings that money is gone and not in the hands of the wife. Further, the parties concede that the respective $10,000 payments at items 25 and 26 came from the proceeds of sale of the caravan. They have each already received the benefit of those amounts such that they also ought to be deducted from the amount to be added back.
The amount to be included at item 27 is $23,759.
Legal Fees
The husband contends that an amount of $185,000 for the payment of the wife’s legal fees be added back. The wife opposes it being added back.
The principle behind adding back legal fees was stated by the Full Court in DJM and JLM (1998) FLC 92-816 at 85,262:
‘11.6 … Section 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out’.
The guidelines since derived in relation to legal fees and whether there should be an add back, taken largely from the decisions of AJO & GRO [2005] FamCA 195 and NHC & RCH [2004] FamCA 633, include:
(a)It is always important to have regard to the source of funds for payment of any legal fees;
(b)If the funds used to pay legal fees existed at separation, either as cash in an account or an asset that has been disposed of, and the other party can be seen as having an interest in that asset, then usually the legal fees should be added back to the pool;
(c)If the source of funds to pay legal fees was post separation earnings then, usually, the paid legal fees will not be added back.
That legal costs paid from a source that would otherwise be property of the parties will almost always be added back under the guidelines was re-confirmed by the Full Court of the Family Court in Trevi & Trevi [2018] FamCAFC 173.
It is not in dispute that payment to the amount of $185,000 from the proceeds of sale of the M Street, Suburb N property was made to Australian Executor Trustees Limited (being Company AH) and Coleman Greig Lawyers being the amount then owed by the wife for monies borrowed for her legal costs or outstanding legal costs in respect of these proceedings.
According to the costs’ notices filed by the parties on 11 May 2022, the parties’ legal costs are close to the same. The wife’s total costs are estimated at $261,726 ($232,143 paid) and the husbands are estimated at $256,435 ($172,321 paid).
Aside from the payment of $185,000, the parties have met their respective legal costs, and carry their respective liabilities for outstanding fees, from sources derived post separation and not from joint property. On the evidence, I am not persuaded by the wife that the husband paid his legal fees out of the goodwill of the business that operated within the wife’s structure.
I do not consider that this issue is more appropriately dealt with when having regard to section 79(4) or section 75(2).
Accordingly, I see no reason why it would be inappropriate to exercise my discretion to permit the wife’s legal costs paid from a source that would be property of the parties to be added back in accordance with the authorities referred to herein.
Item 29 is included at the amount of $185,000.
Final Balance sheet
I find the final Balance Sheet to be:
Ownership Pool Assets C Street, Suburb D property W 690,000 Jewellery W 5,500 Caravan site K Street, Town L W 30,000 Total Assets 725,500 Addbacks Proceeds of sale of caravan W 23,759 Wife's paid legal fees W 185,000 Total Addbacks 208,759 Total Liabilities 0 Net Non Super 934,259 Superannuation Superannuation – Super Fund B W 86,369 Superannuation – Super Fund AE H 22,980 Total Superannuation 109,349 Combined Total 1,043,608
CONTRIBUTIONS
The Court is required to make an assessment of the nature and quality of the totality of the parties’ contributions throughout the entirety of their relationship, together with their contributions in the period subsequent to their separation. Dickons & Dickons [2012] FamCAFC 154. See also Dovgan & Dovgan [2021] FamCA 306 at [347], which restates the need to holistically assess contributions following the case of Dickons, and that ‘all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder’.
Initial contributions
The husband was 34 and the wife was 33 at the commencement of the relationship. The husband was a tradesman, the wife was not working. I am satisfied that neither party had any assets or liabilities of significance when cohabitation commenced in 2011. Although the wife received the compensation payment after cohabitation, for the purposes of these proceedings, it is considered as an initial contribution as it was received so soon after cohabitation and from a source obviously entirely attributable to the wife.
The wife submits the initial contribution is $1,200,000 being $1,500,000 less $300,000 in legal fees. In cross-examination, the wife conceded that $155,000 was withheld by Medicare. The husband points to a cheque for $1,014,005.04 and I accept that amount as the starting point.
Items of expenditure within two or three months totaled at least $655,000 and included: gift to parents $100,000; gift to sister $20,000; M Street, Suburb N property $335,000; wedding ring $55,000; engagement ring $10,000; Motor Vehicle 5 $90,000; City O trip $45,000; ring and necklace $9,000. Of the identifiable assets from the wife’s initial contribution, only the M Street, Suburb N property endured.
The evidence does not establish where exactly the balance of no more than $345,000 went. I am satisfied that it was absorbed into the expenditure of the marriage including living expenses, IVF fees, repairs and renovations of the M Street, Suburb N property and set up of the business. I am satisfied that it was exhausted by July 2013 when the wife borrowed $151,293 from Company Q.
I infer that a not inconsiderable amount was also spent by the wife on legal fees setting up the elaborate structure. There is nothing relevant arising from the existence of the wife’s entities. I make no findings as to credit against her associated with this. I accept it was a product of accepting and acting on the advice she received at the time. I accept the husband never had any interest in the structure, either financially or conceptually, and the consent orders confirming this are appropriate.
The wife’s initial contribution, represented in the acquisition of the M Street, Suburb N property, significantly exceeded the husband’s initial contribution.
Contributions during the course of the parties’ relationship
The wife was a poor witness who was unwilling to concede anything that tended to indicate that the husband contributed anything at all either financially or nonfinancial. Her evidence was focussed on diminishing the husband’s contributions at every opportunity. The most she was willing to concede was that she knew the husband, as at 2019, was very good with his hands. My impression is that her evidence was selective and crafted to support the outcome she was seeking.
The husband was a credible witness. My impression was that his evidence was whole, straightforward and therefore informative of the outcome rather than the other way around.
I do not accept that the wife was primarily responsible for the running of the business, managing the extensive home renovations and extensions and attending to the majority of the needs of the family as homemaker all at the same time. I do not accept that the husband largely drank, smoked, swore at the wife and contributed little beyond menial tasks. The increase in value of the M Street, Suburb N property from $335,000 in 2011 to $1,200,000 in 2020 is well beyond capital appreciation alone.
I find that the parties’ relative contributions during the relationship were instead unremarkable. The husband and the wife worked and contributed together. The wife was incapable of and did not perform physical tasks beyond assisting the husband from time to time. The wife primarily contributed to the administrative tasks and as homemaker. The husband was incapable of and did not perform any administrative tasks, including financial management to which he deferred entirely to the wife. The husband primarily contributed to the work of the business and the home renovations. The sole source of income, and also the vehicle through which they ran the majority of their expenditure, was the business Company J, owned and controlled by the wife’s entities.
The parties’ contributions during the relationship were equal.
Family violence
Under cross-examination the wife gave evidence that the reason she did not tell the husband about the complex structure and the $1 million gift and loan, was to protect her assets specifically against the husband because she was “already in a very violent marriage of what I couldn’t escape.” Supposedly that was as at 23 February 2012, following her receipt of her payout in November 2011 and the lavish expenditure and marriage in City O in 2012. There was no evidence in chief of said inescapable violence.
Even if accepted at its highest, which I do not, the family violence described in the mother’s affidavit, (which the husband denies) does not amount to what is described by the Full Court in Kennon & Kennon (1997) FLC 92-757 as a course of violent conduct by one party towards the other which occurs during the marriage and which is demonstrated to have either had a significant adverse impact on that party’s contributions to the marriage, or, to have made that party’s contributions significantly more arduous than they ought to have been. I do not take family violence into account when assessing the parties’ contributions.
Post separation contributions
The parties have been in high conflict and there has been no joint endeavour in any sense since separation. The wife has had the primary care of the children but also housing in the M Street, Suburb N property and then the C Street, Suburb D property. The business fractured and broke without their joint contributions to it and the parties have largely been left to their own devices. Both parties have borrowed money and accessed their superannuation entitlements.
There have been no post separation contributions and therefore there is no adjustment to be made to account for post separation contributions.
Evaluation of contributions
I do not agree with the wife that contributions be assessed at 90 per cent in her favour. My findings, primarily because of the wife’s initial contribution and the short to medium duration of the relationship relative to the ages of the parties, is closer to but not quite to that contended for by the husband, of 65 per cent to the wife and 35 per cent to the husband. The contributions ought to be assessed in the proportion of 67.5 per cent to the wife and 32.5 per cent to the husband.
RELEVANT Section 75(2) FACTORS PURSUANT TO Section 79(4)(E)
Subsections (2)(a) and (b) – the age and state of health of each of the parties; and, 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;
The husband is 45 years old and in generally good health. He continues to work as a self-employed tradesman earning a modest income of $1,371 per week.
The wife is employed on contract as an administrative officer by the Employer AK earning a modest income of $1,111 per week.
The wife is 44 years old and says she does not have the capacity to work full time due to her ill mental health, being a diagnosis of depression and anxiety following her car accident in 2008. There is no supporting evidence of this. It is inconsistent with the quantum and intensity of work she says she did over eight years in support of her contributions to the property of the marriage.
Subsection (2)(c) – whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
Pursuant to parenting orders made by consent on 23 February 2021, the mother has care and control of the two children about 65% of the time during school term and 50% of the time during school holidays. The father has the balance of care and control of the children.
Subsection (2)(d) – commitments of each of the parties that are necessary to enable the party to support himself or herself, and a child or another person that the party has a duty to maintain;
There is no evidence that either party has commitments beyond their living expenses.
Subsection (2)(f) – the eligibility of either party for a pension, allowance or benefit under any law of the Commonwealth, of a State or Territory or of another country; or 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
The wife deposes in her affidavit that “As part of the settlements funds I received in relation to my motor vehicle accident claim in 2011, I am not eligible to make an application or receive government assistance being the single parent allowance until 2028.” In her Financial Statement the wife states she receives an estimated $60 per week in Family Tax Benefit A & B.
Subsection (2)(g) – where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
The standard of living for both parties since separation has depreciated. The reality of the circumstances are that there is insufficient assets or income to provide for an equivalent standard for both parties across two residences.
Subsection (2)(k) – the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
When the parties commenced cohabitation in 2011 the husband and wife were 34 and 32 years of age respectively. The parties separated eight years later in 2019. There is no evidence that the duration of the relationship has affected the earning capacity of either party.
Evaluation of section 75(2) factors
The husband submitted that there be no adjustment for the section 75(2) factors. The wife submitted that there ought to be an adjustment in her favour of 5 per cent. Primarily because of her requirement to maintain the C Street, Suburb D property and her primary care of the children, there ought to be an adjustment for future needs of 2.5 per cent in favour of the wife.
OTHER FACTORS
Other factors under section 79(4) that I have taken into account but are of no or insufficient relevance in this case are:
(a)The balance of the factors in s 75(2) not addressed above (s 79(4)(e)).
(b)The other orders made under this Act affecting a party to the marriage or a child of the marriage (s 79(4)(f)).
(c)The child support as assessed under the Child Support (Assessment) Act 1989 that the husband has provided, is to provide, or might be liable to provide in the future, for the children of the marriage (s 79(4)(g)).
OVERALL EVALUATION
Consistent with the above findings as to contributions and future needs, the property of the parties to the marriage or either of them, ought to be altered such that the husband’s interest amounts to 30 per cent of the total value.
On the balance sheet that I have determined, that equates to $313,082 less the value of the husband’s superannuation entitlements of $22,980. Alteration of the parties’ interests, or a settlement of property in substitution for an interest in the property, is required in the husband’s favour to the value of $290,102.
JUSTICE & EQUITY
Having identified the asset pool, assessed each parties’ contributions, and assessed how future events may have a financial impact on either of the parties, pursuant to the fourth step in Hickey it is necessary to “step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.”
Although the case was not run as such, in essence the wife’s position is that the question posed by the approach of the High Court in Stanford as to whether or not it is just and equitable to make an order at all be answered in the negative. On the final balance sheet, that would leave the husband only with his superannuation entitlements of $22,980 amounting to 2.2 per cent of the total pool of $1,043,608. I do not consider that as a just and equitable outcome. Indeed, such an outcome would be extreme.
There is however an additional aspect to the parties circumstances in this case that I take into account in seeking to determine justice - conservation of the C Street, Suburb D property.
Counsel for the wife submitted that this case falls into the category of small asset pool cases such that departure from computation under the four step process is warranted in order for the wife to retain secure housing for herself and the children in the currently unencumbered C Street, Suburb D property. I do not accept that just over one million dollars is a small pool case, nor are there extreme circumstances warranting the extreme outcome sought by the wife. There is still however some merit to this submission.
On this issue, there is the same type of concern applicable to so-called ‘farming cases.’ The Full Court said in In the Marriage of Lee Steere [1985] FLC 91-626 at 440:-
“In our view the correct principle was laid down by Asche J in In the Marriage of Magas [1980] FLC 90-885, a decision of the Full Court on appeal from the Family Court of Western Australia. His Honour said there at 75,591:
“If arrangements can be made which would relieve the spouse who is working a farm as a farmer from selling the farm but at the same time doing proper justice to the claim of the spouse who is not living on the farm, then of course those arrangements should be made.”
However, his Honour then went on to say:
“If there is no other way to do that which is just and equitable then a sale must take place. It becomes an incident to the sad fact that when two persons separate property which might have given them together a reasonable competence will not be sufficient for each when divided. That is an inescapable situation and cannot be used as an argument to deprive one party of that to which he or she is otherwise properly entitled.”
Having regard to the above:
(a)There ought to be an additional 2.5 per cent adjustment in favour of the wife such that her interests amount to 72.5 per cent of the total value. I have considered that this may also have been a position arrived at under section 75(2)(o). I do not consider that pathway would have made any difference to the overall effect. On the balance sheet that I have determined, that equates to an alteration of $286,992 less the value of the husband’s superannuation entitlements of $22,980 equals an alteration to the value of $264,012;
(b)The manner in which the parties’ interests are altered be considered. Since Norbis v Norbis [1986] 10 FamLR 819, it is well settled that the Court can adopt either a global approach or an asset by asset approach to property proceedings under section 79. The latter approach has been referred to as a “two pools approach” to distinguish the treatment of superannuation interests from other property. (See C v C [2005] FLC 93-220). Whilst a global approach has been taken to the assessment of contributions and future needs, it is necessary to adopt a two pools approach to the orders in order to achieve a just and equitable result whilst being mindful of maximising the opportunity for the wife to retain the C Street, Suburb D property.
Namely, orders are made to the effect that:
(a)A base amount of THIRTY-ONE THOUSAND SIX HUNDRED AND NINETY-FOUR DOLLARS ($31,694) is allocated to the husband out of the wife’s interest in the Super Fund B. This will equalise the value of the parties superannuation entitlements. Compared to a split in line with the overall evaluation of 72.5 / 27.5 in the wife’s favour, this has the effect of decreasing the non-superannuation amount payable to the husband.
(b)The wife pay to the husband the settlement sum of TWO HUNDRED AND THIRTY-TWO THOUSAND THREE HUNDRED AND EIGHTEEN DOLLARS ($232,318) within SIX (6) WEEKS. This will provide for a division of the combined non-superannuation and superannuation property pool, as determined by the final balance sheet and the preceding superannuation split, of 72.5 / 27.5 in the wife’s favour. Thereby providing the husband with that to which he is entitled whilst providing the wife with an opportunity to make arrangements which would relieve her from selling the C Street, Suburb D property if possible.
(c)In the event the wife is unable to make such arrangements within the specified time, there be by default a sale of the C Street, Suburb D property and the proceeds distributed in accordance with the entitlements determined herein.
(d)Contemporaneously upon the wife’s compliance with the payment order, the husband remove the caveat lodged against the C Street, Suburb D property.
(e)The husband is to transfer to the wife any interests he has in the wife’s entities and the wife is to retain all of her interests in the various entities owned or controlled by her.
(f)Each party retain their own interests in all other property as against each other.
I certify that the preceding one hundred and forty (140) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansfield. Associate:
Dated: 10 August 2022
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