Warrick & Mia (No. 2)
[2021] FamCA 249
•29 April 2021
FAMILY COURT OF AUSTRALIA
Warrick & Mia (No. 2) [2021] FamCA 249
File number(s): PAC 845 of 2017 Judgment of: FOSTER J Date of judgment: 29 April 2021 Catchwords: FAMILY LAW – PROPERTY – property adjustment – where discussion of applicable principles – where Applicant deceased – where no appearance on behalf of the Applicant deceased estate – where matter proceeded on an undefended basis – where appropriate to make order in favour of the applicant estate. Legislation: Family Law Act 1975 (Cth) s 75(2), 79, 79(2), 79(4) Cases cited: Bevan & Bevan [2014] FamCAFC 19
Chapman & Chapman [2014] FamCAFC 91.
Farmer and Bramley [2000] FamCA 1615; (2000) FLC 93-060
Horrigan & Horrigan [2020] FamCAFC 25
Kessey and Kessey (1994) FLC 92-495
Stanford v Stanford [2012] HCA 52
Number of paragraphs: 74 Date of hearing: 27 April 2021 Place: Parramatta Solicitor for the Applicant: No appearance by the Applicant nor Just In Case Legal Counsel for the Respondent: Mr Todd Solicitor for the Respondent: Du & Associates ORDERS
PAC 845 of 2017 BETWEEN: MR Y WARRICK AS EXECUTOR OF THE ESTATE OF THE LATE MR WARRICK
Applicant
AND: MS MIA
Respondent
ORDER MADE BY:
FOSTER J
DATE OF ORDER:
29 APRIL 2021
THE COURT ORDERS THAT:
1.Within three months from this date the wife pay to the applicant or as the applicant may, otherwise, direct in writing the sum of $99,500.
2.In default of the wife complying with the previous order, the applicant have leave to make application to the Court for enforcement of the said order by way of the appointment of a trustee for sale of the subject property.
3.The applicant have leave to relist these proceedings as to implementation or enforcement on short notice by application to the Court in chambers in appropriate circumstances.
4.Any application for costs be made by way of written submissions filed and served within 14 days from this date with any submissions in response to be filed and served within a further seven days and upon completion of submissions judgment as to costs reserved to chambers.
Supreme Court Proceedings
5.That proceedings 2017/… in the Supreme Court of New South Wales being proceedings transferred to this Court be dismissed.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Warrick & Mia has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
FOSTER J:
On 28 February 2017 the applicant husband filed an Initiating Application in this Court seeking, in summary, orders as follows:
(a)that the financial agreements dated 27 July 2007 and 5 February 2014 between he and the wife be set aside;
(b)that pursuant to s 79 of the Family Law Act 1975 there be an order that the husband be entitled to 50 per cent of the net assets of the parties.
The husband thereafter sought an order for sale of the real estate property at D Street, Suburb M so as to realise his asserted interest in the matrimonial property.
Subsequently, on 18 July 2017 the Court noted that the husband conceded that the financial agreement dated 27 July 2007 was a binding financial agreement for the purposes of the Family Law Act 1975 (Cth) (“the Act”) and that both parties conceded that the financial agreement dated 5 February 2014 was not a binding financial agreement for the purposes of the Act.
Subsequently, issues arose in relation to the agreement dated 27 July 2017 and by court order on 12 June 2018 that financial agreement was set aside and proceedings were remitted for the purpose of appropriate directions in relation to the then outstanding s 79 relief sought by the husband.
In 2018 the applicant husband passed away. In circumstances where the executor appointed pursuant to the late husband’s will renounced probate, it was necessary for there to be an application for a grant of probate to a substitute executor.
Subsequently, on 4 October 2019 Mr Y, having been appointed as executor of the estate of the deceased husband, was substituted for the husband in the proceedings.
On 14 May 2020 certain interim orders were made in the context of property proceedings. Those orders were as follows:
1. That the respondent wife’s application for removal of caveat be dismissed.
2. That the respondent wife’s application for security for costs be dismissed.
3.That the wife shall be and is hereby permitted to sell the property at D Street, Suburb M for the best price reasonably obtainable provided that the sale price shall be not less than $1,500,000 without the consent in writing of the applicant and that upon sale the gross proceeds of sale be paid as follows:
(a) In payment of agent’s commission on sale and selling legal costs;
(b) In payment of any contract adjustments;
(c)In payment of 40 per cent of the balance then remaining to an interest bearing controlled money account in the joint names of the parties’ solicitors in trust for the parties with the sum of $100,000 to be paid out therefrom to the applicant or as he may direct in writing and the balance to remain pending further order; and
(d)As to the balance then remaining to the wife or as she may direct, provided always that the applicant shall upon settlement of the sale provide on settlement a duly executed withdrawal of caveat so as to facilitate the sale completing.
4.That the wife, should she otherwise elect to do so, is hereby permitted to mortgage the said property for a total sum not exceeding $500,000 provided that from any sum borrowed she pay to the applicant, or as he may direct in writing, the sum of $100,000 by way of partial property adjustment with the remaining funds borrowed to be disbursed as the wife may direct provided always that the applicant as caveator shall consent to the registration of such mortgage in priority to his caveat.
5. That costs be reserved.
Subsequently, on 9 December 2020 trial directions were made to facilitate the matter being listed for final hearing noting that the parties estimated the matter would take two days.
On 16 March 2021 the proceedings were remitted to the List Clerk for allocation of trial dates. On 26 March 2021 the parties were informed by letter as to the allocation of hearing dates for two days commencing 27 April 2021. On 23 April 2021 the respondent’s solicitors by email served the applicant’s solicitors with the respondent’s case outline, chronology and balance sheet. That email confirming that proceedings were listed for hearing on 27 April 2021.
On 27 April 2021 at 10.00 am there was no appearance by or on behalf of the applicant. The Court endeavoured to contact the applicant’s solicitor and ascertained that the office number had been disconnected and that there was no response on the solicitor’s mobile phone. The Court then endeavoured to contact the applicant himself and again there was no response on the applicant’s mobile phone.
In circumstances where the matter has been before the Court for more than four years and where issues for determination were reasonably succinct, it was ordered that the matter proceed to undefended hearing. It is noted that the applicant may seek relief, should he so wish, under the provisions of Rule 11 of the Family Law Rules 2004.
Context
In third Further Amended Initiating Application filed 31 October 2019 the applicant, in summary, sought an order that the Suburb M property be sold and that the proceeds of sale, subject to a payment to the wife of $90,000, thereafter be paid as to the wife 60 per cent and as to the applicant 40 per cent.
The respondent wife, for her part, as set out in her Outline of Case document: Exh “A” sought primarily an order that the applicant’s case be dismissed and that in the event that there was an order for property adjustment the quantum of any such order in favour of the applicant be reduced firstly by the sum of $100,000, representing the lottery win referred to below and $90,000, being asserted payments made to the husband. Otherwise, the respondent wife sought certain orders as to costs that would properly be the subject of subsequent application and determination.
At trial the respondent relied upon the following documents:
(a)her further Amended Response to Initiating Application filed 22 January 2021;
(b)her Financial Statement filed 19 April 2021;
(c)her primary affidavit filed 17 February 2021.
The respondent wife is presently aged 60. The husband at the time of his death in 2018 was aged 70.
During the period of cohabitation the respondent worked as a casual worker and subsequent to separation as a carer until about 2019 when she ceased employment by reason of her age and health circumstances. The husband during cohabitation and until February 2014 worked as a salaried worker.
The parties married in 2007 at which time the respondent wife was aged 46 and the husband 58 years of age.
There are no children of the parties’ marriage. The husband has three children of his previous marriage and the wife one child of her previous marriage.
The wife asserts that separation was in January 2013 but it appears common ground that the husband remained living on the matrimonial property until about November 2016. The parties were divorced in October 2016.
At the commencement of the parties’ cohabitation the wife had various property and business interests and money at bank in City B China which she asserts was at a total value of about $1.388 million. Otherwise, the wife had funds in the L Bank of about $80,000 and some furniture and personal effects.
The assets of the husband at the commencement of cohabitation are somewhat vague. Indeed, at the commencement of cohabitation he asserted superannuation entitlements of about $650,000 such entitlements never been realised.
The Suburb M property
On 2 August 2007 the parties exchanged contracts for the purchase of the Suburb M property referred to above. The purchase price was $535,000 and the purchase price, including stamp duty of $19,569, totalled $554,569. The purchase was in part funded by a first mortgage advance from the Westpac bank in the sum of $428,000. Over and above the mortgage advance, the wife funded the totality of the balance of purchase money being $126,569.
At purchase the wife thus contributed 22.8 per cent of the total cost of purchase. It is appropriate that that initial contribution to the purchase be recognised as discussed below.
Until early February 2014 both parties were in receipt of income, the husband from his work and the wife she asserts from her earnings of cash income as a casual worker. The husband’s income was paid to his personal L Bank account and when the wife was paid by electronic transfer her income was paid into the parties’ Westpac offset account. The wife asserts that the husband’s income was about $1,000 to $1,300 per week (between $52,000 and $67,600 per annum). Thus until early 2014 his total earnings were in excess of about $340,000.
The wife asserts that over the period from 2007 to early 2014 the husband transferred a total of about $241,000 to the L Bank account, being about $37,000 per annum and that she paid into that account from her work as a casual worker a total of about $60,000 from her cash income or money transferred to her account from China. Otherwise, the funds available to the parties were used to meet household and living expenses, including a further sum that the wife transferred to herself from China.
Overall, it is considered that the parties’ contributions to mortgage payments over this period are to be regarded as a joint endeavour. Initially mortgage payments were about $2,800 per month or about $33,600 per annum. However, as at February 2014 the mortgage balance had only been reduced to the sum of about $417,500, a reduction in the capital amount of only about $10,000. Otherwise, the parties had met accruing interest payments on the principal debt from their income.
As at February 2014 the former matrimonial home had a value of $775,000. The wife’s discharge of mortgage in the sum of $417,500, funded by way of a borrowing from her mother represented at that time in equity of 55.6 per cent in the property. Such further contribution should be recognised as discussed below.
In February 2014 the parties entered into a purported financial agreement pursuant to which the wife agreed to pay the husband $150,000 by way of instalments and the husband transfer to her his interest in the Suburb M property. Subsequent to the purported agreement, the husband transferred his interest in the property to the wife who remains the sole registered proprietor thereof and the wife over a period paid to the husband a total sum of $83,000.
In May 2014 the husband commenced to receive an aged pension. At this time he still remained in occupation of the Suburb M property with the wife. In November 2014 the husband moved out of the main cottage on the property and into a granny flat that had been constructed on the property by the parties over a period of several years until May 2013. The wife asserts an agreement that the husband would pay her $150 per week rent for the granny flat Notwithstanding the wife’s assertion that she and the husband had separated in January 2013, she applied for and received Centrelink carers payments in relation to the husband for the period from September 2014 to May 2016 at the rate of $800 per fortnight.
On 28 November 2016 the wife paid to the husband $18,000 after having deducted from her proposed payment of $24,000 asserted rental arrears due to her by the husband from 1 April 2016 to 28 November 2016. Total payments to the husband are in the sum of $83,000.
The wife, otherwise, asserts that some of her funds realised from the sale of her properties owned by her in cohabitation found their way into costs of renovation and improvement to the Suburb M property. Notwithstanding some evidence proffered by the wife as to the nature and extent of those improvements and purchases for the home, there is not any expert evidence as to whether the asserted home renovations and/or improvements improved the value of the property overall.
The wife, otherwise, gives evidence of certain improvements to the property undertaken by her subsequent to separation. However, she has remained in occupation of that property to the exclusion of the husband until his death and continuing to hearing of these proceedings.
The Lottery Winnings
In January 2013 the wife asserts that she purchased a lottery ticket using her funds, presumably debited as against the joint L Bank account or representing matrimonial income and for the purposes of the purchase used the husband’s then lottery card.
The ticket won a lottery prize of $100,000 that by reason of it being purchased on the husband’s lottery card was payable only to him and to his account that was linked to the card. The sum of $100,000 was paid to the husband’s personal account on 5 February 2013. Those funds have been retained by him.
The property at Suburb M has a value as at trial in the sum of $1,550,000. As noted above, the property subsequent to the wife’s discharge of the mortgage is unencumbered
Property
The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19 and Chapman & Chapman [2014] FamCAFC 91.
In Stanford the majority [at 120] said as to ss 79(2) and 79(4):
... the requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. ... while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.
The first of these propositions is for the Court to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
The second is that although s 79 confers a broad power on the Court, it is not a power that is to be exercised according to an unguided judicial discretion. It must be exercised in accordance with legal principles, including the principles which the Act itself lays down.
The third is that the question of whether the order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters set out in s 79(4). To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2) would be to “conflate” the statutory requirements and ignore the principles laid down by the Act.
The majority then said [at 122]:
... The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.
Thus, the process ordinarily involves a staged process.
The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4) (Stanford supra). This consideration addresses the prohibition in s 79(2) of the Act.
The Court needs to conclude that it would be unjust or unfair to leave property rights intact.
In many cases, such as this matter, this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
In particular, as in this matter, such a circumstance arises where both parties seek orders but are unable to agree as to same. It is just and equitable that there be adjustive orders under s 79 of the Act.
The Asset Pool for consideration
Clearly, the property at Suburb M is to be considered for the purposes of adjustment.
It is, otherwise, contended by the wife that the lottery win in the sum of $100,000, being a windfall to the marriage with those funds being retained by the husband, should be included notionally for the purposes of adjustment. Authority establishes that such should be the case and that some will be included.
Otherwise, there are various assets retained by the wife and/or the husband’s estate that so long after separation cannot rationally be included in any asset pool for division. These include the wife’s modest Westpac account, her motor vehicle, her household items, her very modest superannuation entitlement and other items of personalty and a bank balance asserted to be retained by the husband after separation. In circumstances where the lottery win retained by him is to be included for notional adjustment, it is considered inappropriate that any bank balance represented in his deceased estate should not be included as in all probability it may represent part of those lottery winnings.
Accordingly, it is considered that the asset pool for consideration comprises the following:
Wife The property at Suburb M $1,550,000
Husband Retained lottery winnings $ 100,000
The wife, otherwise, asserts a debt to her mother in respect of monies advanced to her to discharge the mortgage and make some payments to the husband as referred to above. In the circumstances of this matter, it is appropriate that that liability remain a matter between the wife and her mother and that the whole of the equity that accrued to the wife by reason of her discharge of mortgage remain as such. It is a matter for her should the property be sold to address any liability to her mother.
Contributions
In Kessey & Kessey (1994) FLC 92-495 (Full Court) at 89,151 the Full Court made clear that ultimately all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party:
“... In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions. In a case such as the present, it is not necessary to arrive at precise mathematical valuations of the parties’ contributions - all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party.”
In Farmer and Bramley [2000] FamCA 1615; (2000) FLC 93-060, Kay J clearly stated two things, namely:
68.The Court’s task is to evaluate all of the contributions from the time of the commencement of the parties’ relationship until the time of the hearing and to give such weight to such contributions as the Court thinks is appropriate in the circumstance.
69.There is nothing in the legislation that requires s 79(4)(a)(b) and (c) contributions to be measured only in terms of what either party contributed to the assets of which the parties are presently possessed.
As the Full Court recently said in Horrigan & Horrigan [2020] FamCAFC 25:
[35]It is well established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties’ respective contributions, in a holistic way across the course of the relationship and in the post separation period to the point of assessment. (Pierce v Pierce (1999) FLC 92-844; Singerson & Joans [2014] FamCAFC 238; Dickons v Dickons (2012) 50 Fam LR 244 and Marsh & Marsh (2014) FLC 93-576; Lovine & Connor and Anor (2012) FLC 93-515 at [39]-[42]).
As discussed above, it is to be considered that the lottery winnings arise as a consequence of the joint contributions by the parties.
Otherwise, in respect to the Suburb M property capital payments by the wife at the time of purchase of the property and in discharging the mortgage encumbrance represent in total as a consequence of those two payments about 78.4 per cent of the equity in the home.
However, over a period of years joint contributions by the parties to capital and interest payments far exceeded the reduction in the balance outstanding on the mortgage.
This is a short marriage of only five or so years and it is more appropriate to have regard to the capital contributions made by the parties. The significance of the initial contribution made to the property by the wife is to a small extent offset by the passage of time and the contributions by each of the parties over the period of years to separation.
Non-financial contributions in a short marriage do not loom significant. Both parties made contributions from income and financial resources over and above the mortgage payments and outgoings on the home.
Overall, contributions are to be considered as significantly favouring the wife as to 85 per cent and as to the husband 15 per cent in relation to the matrimonial home at Suburb M. Otherwise, the husband has retained the sum of $100,000 representing lottery winnings and there should be a notional adjustment back to the wife of $50,000 of those funds.
The value of the Suburb M property is $1,550,000, 15 per cent thereof is $232,500. By way of a deduction from any payment due and payable to the husband’s estate there should be a deduction for the $83,000 already paid, leaving a balance of $149,500. After adjustment to the wife of a further sum of $50,000 in relation to the retained lottery winnings the amount thus payable to the applicant is $99,500.
Consequent upon the unfortunate death of the husband the provisions of s 79(8) of the Act must be considered. Section 79(8) provides:
(8)Where, before property settlement proceedings are completed, a party to the marriage dies:
(a)the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;
(b) if the court is of the opinion:
(i)that it would have made an order with respect to property if the deceased party had not died; and
(ii)that it is still appropriate to make an order with respect to property;
the court may make such order as it considers appropriate with respect to:
(iii)any of the property of the parties to the marriage or either of them; or
…
By reason of the assessment of contributions set out above, it is clear that there would have been an order made in respect to property as at the date of the husband’s death if the husband had not died. Otherwise, by reason of the modest payment made by the wife to the husband under the provisions of the purported financial agreement it is still appropriate to make an order in favour of the husband with respect to property.
As such, the Court may make such order as it considers appropriate with respect to the property of the parties.
Accordingly, there should on an assessment of contributions be a payment to the husband’s estate as follows:
15 per cent of the equity of the Suburb M property $232,500
Less
Lottery win adjustment $ 50,000
Funds already paid to the husband $ 83,000
Balance: $ 99,500
The Court is required to have regard to the consideration set out in section 75(2) of the Act.
By reason of the untimely death of the husband, there are no factors for consideration in regard to his estate.
Relevantly, the wife asserts that she is in only fair health. She is at present in receipt of jobseeker payments in the sum of $362 per week. Otherwise, she meets the property outgoings in relation to the unencumbered Suburb M property that has been occupied by her relevantly since 2014 to date of trial. She has modest funds in the bank, a car and superannuation entitlements accrued in the sum of about $4,700. She asserts that she has borrowed funds totalling about $800,000 from her mother. However, apart from her interest in the Suburb M property as determined above she has a property at City B in China which she asserts has a value of about $1 million.
In all of the circumstances, it is inappropriate to make any further adjustment to the contribution based findings by reason of the s 75(2) considerations.
The husband’s estate is thus to receive a payment of $254,500 from the wife and in default of payment liberty would be granted to the applicant to seek the appointment of a trustee for sale of the subject property.
Orders will be made accordingly.
Otherwise, it is noted that proceedings commenced by the wife in the Supreme Court of New South Wales seeking to remove the Caveat registered on the title of the Suburb M property by the deceased husband were transferred to this Court pursuant to orders made by Parker J on 18 May 2017. It is now appropriate that those proceedings be dismissed. An order will be made accordingly.
I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Foster. Associate:
Dated: 29 April 2021
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