Whent and Marbrand
[2017] FCCA 1873
•11 August 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WHENT & MARBRAND | [2017] FCCA 1873 |
| Catchwords: FAMILY LAW – Property – Contributions – settlement – length of relationship – discussion of s.79(2) of the Family Law Act 1975 – is it just and equitable to adjust property interests of the parties – discussion of s.75(2) factors – does husbands expenditure of $1.2 million constitute wastage – discussion of proper outcome applying s.79(4) if the Court has erred by dismissing the application of the husband. |
| Legislation: Family Law Act 1975, ss.75, 79 |
| Beklar v Beklar [2013] FamCA 327 Stanford v Stanford [2012] HCA 52 |
| Applicant: | MR WHENT |
| Respondent: | MS MARBRAND |
| File Number: | MLC 7514 of 2015 |
| Judgment of: | Judge Williams |
| Hearing dates: | 29 – 31 May 2017 & 1 June 2017 |
| Date of Last Submission: | 1 June 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 11 August 2017 |
REPRESENTATION
| Counsel for the Applicant: | Ms Byrnes of Counsel |
| Solicitors for the Applicant: | Clancy And Triado |
| Counsel for the Respondent: | Mr Hall of Counsel |
| Solicitors for the Respondent: | Kingston Lawyers |
ORDERS
The Husband’s application for property settlement filed 16 March 2016 is dismissed and any subsequent amended application.
The Husband withdraw any caveat/s lodged over any real property owned by the Wife or any entity controlled by the Wife within 7 days and provide evidence of such withdrawal to the Wife’s solicitors.
The Husband indemnify and keep the Wife indemnified in relation to any and all of his past, present and future personal and business liabilities either on his own account or through any entity associated with the husband.
That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders.
(b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
IT IS NOTED that publication of this judgment under the pseudonym Whent & Marbrand is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 7514 of 2015
| MR WHENT |
Applicant
And
| MS MARBRAND |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This is an application for property adjustment pursuant to s.79 of the Family Law Act 1975 (“the Act”)
ISSUES IN DISPUTE
The following issues were in dispute between the parties:
i)The date of separation;
ii)whether it would be just and equitable to make any orders altering property interests;
iii)If it is determined that it is just and equitable to alter property interests, the following issues are in dispute:
a.what assets and liabilities comprise the asset pool
b.the extent of and weight to be given to the respective contributions of each party;
c.whether the husband’s expenditure of his trauma and TPD insurance payments constitute waste;
d.the future needs of both parties.
BACKGROUND
The applicant husband is aged 50 years. The respondent wife is aged 52 years.
The parties commenced cohabitation on (omitted) 2006, married on (omitted) 2008 and, according to the wife, separated on 31 January 2011 and according to the husband, separated in October 2014. An application for divorce was filed by the wife on 10 August 2015 and a divorce was granted on 15 October 2015.
The wife is the (occupation omitted) of her own (business omitted). In her Financial Statement filed 5 May 2017 she deposes to an average weekly income of $4000 with expenses of $4543 per week.
The husband is a disability pensioner, having been diagnosed with Multiple Sclerosis, at least since 2009. In his Financial Statement filed 3 May 2017, he deposes to an average income of $490 per week with expenses of $1528 per week.
In 2000 the husband’s sister, Ms S advanced to the husband the sum of $50,000. It is unclear whether the amount advanced was to the husband personally, or to his (company omitted) (“the company”). It is also unclear whether it was a loan or funds advanced to enable Ms S to subscribe shares in an anticipated stock-market float of the company.
On (omitted) 2000 the company was placed into receivership with liabilities between $2 million and $2.5 million.
On 29 October 2001 the husband took out an (omitted) insurance and TPD policy.
On (omitted) 2001 the husband was declared bankrupt. He was discharged as a bankrupt on (omitted) 2004.
In September 2003 the husband was charged with dishonestly using his position as a director of the company, which was instigated by ASIC. He removed approximately $58,000 from the company prior to receivers being appointed. After a hearing in the Magistrates’ Court the husband was found guilty, although a conviction was not recorded.
In 2004 the parties met through an online dating site.
In June 2006 the wife purchased a property situated at Property A (“the Property A property”) for the sum of $870,000. The deposit of 20% of the purchase price, stamp duty and acquisition costs were paid by the wife and the balance was funded by a mortgage from (omitted) bank. The husband did not contribute to the purchase price of the property.
In September 2006 the parties commenced cohabitation and moved into the Property A property.
In 2007 the husband established Business A, an (omitted) business of which he held a one third share.
In 2007 the husband and a business partner purchased a property at Property B.
In 2008 the husband and a business partner purchased a property situated at Property C. The wife advanced the husband $115,830 to enable him to settle the purchase of Property C.
In 2007 the husband was diagnosed with Multiple Sclerosis (“MS”) as deposed in paragraph 27 of his affidavit sworn 15 March 2016. However, in his affidavit of 18 August 2016, he states that he was diagnosed with MS on 14 May 2009.
In mid 2009 the husband sold Property B for a profit and retained the proceeds of sale.
In November 2009 and December 2009 the wife was repaid $115,830, plus interest, which she had advanced to the husband.
In 2010 the Property A property was renovated at a cost of approximately $150,000. This was funded by the wife’s funds which she had accumulated prior to cohabitation. The husband asserts that he project managed the renovations.
In January 2011 the husband moved out of the Property A property and the parties remain living separately and apart.
In 2012, the husband sold his one third share in Business A for $65,000. The proceeds of sale were paid to the husband, as income over a six-month period, and he was required to pay tax on this amount.
In December 2012 the husband received a trauma payout from (omitted) of $736,618, and placed the funds into a joint account with his daughter [Y].
On 9 January 2013 the husband paid $50,000 to his sister Ms S, ostensibly to repay a loan to her.
In January 2013 the husband paid his father, Mr B Whent the sum of $41,135 ostensibly to repay credit card debts which the husband had incurred on his father’s credit card.
In 2013 the husband established Business B, a (omitted) business. He asserts that $350,000 of (omitted) monies were applied towards the setup costs of the business, and an additional $100,000 was lost in operating costs.
In May 2013 the parties purchased a commercial property situated at Property D (“the Property D property”) for the sum of $850,000. The property was held as tenants in common in equal shares, by two family trusts, namely the Trust A trust, being the wife’s trust and the Trust B trust, being the husband’s trust.
In August 2013 the wife’s (business omitted) relocated from the (omitted) to the Property D property and commenced to rent the premises from the two trusts.
In August 2013 the husband received a second payout from (omitted), in respect of his TPD claim, of $550,000, which netted after-tax, $459,708.
In September 2013 the husband lent the wife $18,000, which was repaid one day later.
In October 2014 the husband requested the wife to exit his investment in the Property D property. Due to the husband’s precarious financial position, the wife provided a loan to the husband of $20,000.
In October 2014, the husband asserts that the parties separated.
In December 2014 the wife paid the husband the sum of $170,000 for his share of the Property D property, based on a market valuation of the property. That sum represented a refund of the husband’s initial contribution and increased capital value, less the $20,000 which the wife lent to the husband in October 2014.
In June 2015 the husband entered into a joint-venture business with his friend, Mr S.
On (omitted) 2015 the wife filed an application for divorce. The divorce order was made on (omitted) 2015.
In January 2016 the husband lodged a caveat against the Property D property.
In March 2016 the husband filed an Initiating Application seeking a property settlement.
PROPOSALS OF THE PARTIES
HUSBAND
The husband’s proposals are set out in his Amended Initiating Application filed 3 May 2017. The orders he seeks are as follows:
a)That there be a division of the net non-superannuation matrimonial assets in the percentage of 60% to the respondent wife and 40% to the applicant husband;
b)That the parties respective superannuation entitlements, be divided equally, by way of a superannuation splitting order;
c)That the wife pay the costs of and incidental to this application.
WIFE
The wife’s proposals are set out in her Response filed 19 May 2017. The orders she seeks are as follows:
a)that there be no adjustment of the parties interests in any property or superannuation;
b)that the husband’s amended application filed 3 May 2017 be dismissed;
c)that the husband withdraw any caveat/s lodged over any real property owned or controlled by the wife within seven days, and provide evidence of such withdrawal to the wife’s solicitors;
d)that the husband indemnify and keep the wife indemnified in relation to any and all of his past, present and future personal and business liabilities either on his own account or through any entity or other organisation associated with the husband;
e)that each party otherwise be entitled to retain to the exclusion of the other, all property in their respective position.
DOCUMENTS RELIED UPON BY THE PARTIES
Husband
The husband relied upon the following documents:
i)Amended Initiating Application filed 3 May 2017;
ii)affidavits of the husband filed 3 May 2017 and 24 May 2017;
iii)Financial Statement of the husband filed 3 May 2017;
iv)affidavit of Mr R filed 3 May 2017;
v)affidavit of Dr M filed 4 May 2017;
vi)affidavit of Mr S filed 8 May 2017;
vii)affidavit of Ms S filed 15 May 2017;
viii)affidavit Mr B Whent filed 24 May 2017;
ix)affidavit of Mr R, valuer filed 25 May 2017.
Wife
The wife relied on the following documents :
i)Amended Response to final orders filed 19 May 2017;
ii)affidavits of wife filed 5 May 2016, 24 August 2016, 19 May 2017 and 23 May 2017;
iii)Financial Statements of the wife filed 5 May 2016 and 19 May 2017.
EVIDENCE
The standard of proof in this case is the balance of probabilities (s.140 of the Evidence Act1995 (Cth)).
Counsel for both parties prepared lists of written objections to the evidence of the other party, the majority of which were resolved by consent. It was agreed that those objections were not agreed would be argued and determined prior to the hearing. This is what occurred.
The husband and all of his witnesses, except Dr M, gave evidence and were cross-examined. By consent of the parties, Ms S and Mr B Whent gave evidence and were cross-examined via telephone. Dr M was not required for cross-examination.
The wife
The wife gave evidence and was cross-examined. In his final written submissions, counsel for the wife submitted that she gave evidence in a candid and forthright manner and there was no reason to doubt the reliability of her evidence. I agree with that submission.
I had the benefit of observing the wife whilst she was giving evidence and she presented as a mature, sensible, genuine and reliable witness, who was ready to make concessions when appropriate. She had an exceptional recollection of all relevant history, including financial transactions. I do not accept the submission of counsel for the husband that the wife was not telling the truth about why she had not yet written to her clients, in the context of her statutory obligations arising from the administrative error of her personal assistant, when renewing the wife’s practising certificate. In my view, the wife gave a plausible explanation of these events.
Where the evidence of the wife and the husband conflicts, I prefer the evidence of the wife.
The husband and his witnesses
I also had the benefit of observing the husband in the witness box. His evidence was problematic.
At the commencement of the husband’s evidence, at approximately 3.35 pm, his Counsel adduced oral evidence from her client about his capacity to provide instructions and his understanding of the proceedings. The husband’s response was that his doctor said he had capacity, and that he had obtained that in writing.
Counsel then tendered a letter dated 25 May 2017, the previous day, from the husband’s treating neurologist,[1] which stated as follows:
[1] Exhibit H1.
25/5/2017
To whom it may concern,
Re: Mr Whent DOB (omitted)67
in my opinion, Mr Whent has capacity to give legal instructions.
Yours sincerely
Dr M Neurologist
During cross-examination of the husband, during the morning of the second day of trial, after a short morning break, counsel for the husband sought to raise an issue in the absence of her client.
She submitted that the husband’s answers to cross-examination, gave rise to a concern that he may not have the requisite capacity to continue the proceedings. Counsel sought my view about the manner in which the husband had answered questions. It was my observation that the husband understood the questions put to him. He did not seem to hesitate prior to answering questions or request that the questions be overly repeated or clarified. He demonstrated a recall of past dates and times. I advised the husband’s counsel that it was a matter for her to determine her client’s capacity, and if she sought an adjournment to have her client examined by a neurologist or other relevant specialist, I would readily grant such an application
With the consent of counsel for the wife, counsel for the husband was permitted to speak to her client to ascertain whether an adjournment to obtain medical opinion was necessary. After a short break, I was advised that there would be no such application. The trial then continued.
The husband endeavoured to answer questions to the best of his ability, however, he was much less inclined to make concessions in matters which were adverse to his interests. His evidence appeared at times to be tailored to what he perceived to be the best outcome for his case, in particular in relation to:
a)The date of separation;
b)The manner in which he was paid out his interest in his business as a capital payment, when he was actually paid the amount as income over a six month period and paid tax on the income;
c)The reconstructed “loan agreement” between the husband and his sister Ms S;
d)The explanation, or lack thereof, as to how he had spent nearly $1.2 million in such a short period of time.
The husband did not seem to accept that the expenditure of over $1.2 million in a few years was anything exceptional and continually sought to justify the expenditure, except for the failed Business B business, as proper living expenses and payment of debts.
I also troubled by the husband’s failure to disclose in his affidavit sworn 15 March 2016, that he had received a further sum of $459,708, after-tax, from (omitted) on 29 August 2013. There was no explanation offered for the failure to disclose receipt of the second (omitted) payment.
In his closing written submissions, counsel for the wife referred to a number of matters which gave rise to significant problems with the husband’s credit. These may be summarised as follows:
i)The husband’s inconsistent evidence about the date of diagnosis of MS. His affidavits in these proceedings referred to the date of diagnosis of MS as both 2007 and 14 May 2009. His affidavits sworn in September 2010, in proceedings in the Family Court of Australia involving his former wife, deposed to the date of diagnosis, as approximately 10 years prior, around 2000.
ii)In 2003 the husband was found guilty of crimes of dishonesty relating to removal of approximately $58,000 from his failed company in 2000. He emphasised that he had not been convicted of any such offence, however upon further questioning he admitted that he had been found guilty by a Magistrate after a defended hearing. He was ordered to pay a bond, albeit without a conviction being recorded.
iii)The husband’s oral evidence about the date of removal of the funds from the company was that it had occurred a couple of months, prior to the company being placed into voluntary receivership. That statement was in contrast to the (omitted document) exhibited to the wife’s first affidavit, which stated that the removal of funds occurred between 28 September 2001 and 1 October 2001, prior to the company being placed into receivership on 3 October 2001.
iv)The husband’s conduct and involvement in fabricating/reconstructing an alleged loan agreement between himself and his sister.
v)The husband’s failure to disclose $700 per week, which [X] and Ms O contributed to the household, and the failure to disclose [X]’s receipt of a carer’s payment from Centrelink.
I agree with counsel for the wife that the issues referred to in the preceding paragraph, significantly and adversely affect the husband’s credit. Where there is a dispute between the husband’s evidence and the wife’s evidence, I preferred the wife’s evidence.
The evidence of the husband’s sister, Ms S was most unimpressive. She gave evidence by telephone. She was highly evasive and persisted in referring to a document of recent creation as a “copy” of a document which was allegedly originally prepared in 2000. Her evidence was of no assistance. I agree with the comments of counsel for the wife in his final written submissions that her evidence “raises more questions about the husband’s own honesty than it answers.”
The evidence of the husband’s father, Mr B Whent was also given by telephone. As would be expected, he was keen to assist his son in the proceedings. His evidence did little to assist the husband with the proposition that the sum of $41,135.43 which the husband had paid to him, was a repayment of credit card debts. As at the date of trial, Mr Whent confirmed that he had been unable to secure documentary evidence to prove that assertion. Interestingly, during the course of his evidence, Mr Whent senior said that he had lent his son a further $55,000, which he now regarded as a gift. There was no mention of that in any of the husband’s material and this evidence, in my view, undermines the husband’s claim that he was required to repay his father approximately $43,000.
Mr S, a long-term friend of the husband gave evidence in a straightforward manner. He answered questions directly, and his credibility was not impugned. His evidence was of little assistance in relation to the date of separation, as he readily conceded that he had no contact with the wife after 2008.
Mr R is both the husband’s accountant and friend. He was very keen to anticipate questions in order to provide an answer, which he thought would be favourable to the husband’s case. His former (business omitted) had been involved in litigation with the wife about fees for (omitted) services, in which the wife had counter claimed arising from alleged negligent advice. He professed to be unable to recall the outcome of the litigation between the wife and his former (business omitted), which the wife maintained was resolved in mid-2016. He agreed that he had only had contact with the wife, after January 2011, on two or three social occasions. His evidence as to the date of separation is of little assistance. Where his evidence conflicts with that of the wife, I prefer the evidence of the wife.
RELEVANT LEGISLATION
Property proceedings between parties to the marriage are governed by the provisions of s.79 of the Family Law Act1975.
Section 79 (1) of the Act provides that the court may make such orders as it considers appropriate altering the interests of the parties in the property.
Section 79 (2) provides as follows:
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.
If the Court is satisfied that it is just and equitable to make an order altering the interests of the parties in property, s.79 (4) of the Act sets out the matters which the court must take into account when considering what order (if any) should be made.
That section provides as follows:
Section 79(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
Section 79(4) (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
Section 79(4) (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
Section 79(4) (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
Section 79(4) (d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
Section 79(4) (e) the matters referred to in subsection 75(2) so far as they are relevant; and
Section 79(4) (f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
Section 79(4) (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.
Prior to the decision of the High Court in Stanford v Stanford [2012] HCA 52 the preferred approach to determine property matters was set out by the Full Court in the matter of In the Marriage of Hickey [2003] FamCA 395.
The approach, as set out in Hickey (supra) may be summarised as follows. Firstly, the court should make findings as to the identity and value of the property pool. Secondly, the court should determine the contributions of the parties both direct and indirect, including financial and non-financial contributions and then determine the contribution based entitlements of each of the parties; as a percentage of the value of the property of the parties. Thirdly, the court should determine whether any further adjustment should be made to the contribution based entitlements of the parties, after giving consideration to the relevant matters referred to in s.75(2) of the Act. Fourthly the court should consider the effect of those findings and decide what order for division of property is just and equitable.
In Stanford (supra) the High Court noted that s.79(1) enables the court to make such orders as it considers appropriate. However, prior to making any orders for the adjustment of parties interests in property, the court must determine whether it is just and equitable to make any property orders, or to alter the parties interests in property.
At Paragraph [36] of Stanford , the High Court said:
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations .it does not admit of exhaustive definition. It is not possible to chart its metes and bounds.
In Bevan & Bevan [2013] FamCAFC 116 the Full Court considered which matters might be taken into account in determining whether it is just and equitable to alter existing property interests.
At paragraphs [84] and [85], Bryant CJ and Thackray J said:
[84]Just as the expression “just and equitable” does not admit of exhaustive definition, it is not possible to catalogue the “range of potentially competing considerations” that may be taken into account in determining whether it is just and equitable to make an order altering property interests. However, in our view, it would be a fundamental misunderstanding to read Stanford as suggesting that the matters referred to in s 79 (4) should be ignored in coming to that decision. Indeed, such a reading would ignore the plain words of s79(4) which make clear that in considering “what order (if any) to make, the court must take into account the matters referred to in that subsection.
[85] This requirement to consider the s79(4) matters, in determining whether it is just and equitable to make any order provides fertile ground for potential conflation of the two different issues, which the High Court has warned against. However, this potential will not be realised in many cases because of what the plurality said at [42] about the “just and equitable” requirement being “readily satisfied”. But there will be a range of cases, of which arguably the present is a good example, we determining whether it is just and equitable to make any order altering property interests will not be so clear cut and will therefore require not only separate but very careful deliberation.
In Bevan (supra) Finn J stated at paragraph 169:
[169] Findings of fact concerning of the parties financial history (i.e. the contributions) and their present circumstances and future prospects made in the context of s 79(4) will also assist, but such findings cannot (according to Stanford) be conclusive in determining whether or not it is just and equitable to make an order altering any particular property interest.
The Full Court in Chancellor & McCoy [2016] FamCAFC 256 said at paragraph [42]:
[42] In adopting the approach she did, her Honour proceeded in accordance with what the Full Court said in both Bevan and Chapman, namely that it is open to a trial judge to take into account the matters stated in s 79(4) (or s 90SM) of the Family Law Act 1975 (Cth) (“the Act”) when determining whether it is “just and equitable” to adjust existing property interests. However, consistent with Stanford, her Honour also recognised that it was not open to her to decide that issue merely by reference to those matters.
The High Court stated in Stanford at [37]:
[37] First, it is necessary to begin consideration of whether it is just and equitable to make property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property……. The question posed by S79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.”
At paragraph [40] of Stanford (supra), the High Court stressed that the question of whether it is just and equitable to make property settlement orders should not be answered by starting with an 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 a marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s79 (4). The power to make a property settlement order must be exercised. “In accordance with legal principles, including the principles which the act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79 (4) without a separate consideration of s79 (2), B to conflate the statutory requirements and ignore the principles laid down by the act.
The High Court further stated at [42] that in most cases:
[42] In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
In the majority of matters the decision as to whether or not it is just and equitable for the Court to make property orders is resolved by the breakdown of the marital relationship and the mutual applications of the parties to the court for orders altering their respective property interests.
This is not such a case. In this matter, although the parties have separated and both parties have made an application to the court, the husband seeks orders adjusting their respective property interests. However, the wife seeks orders that there be no adjustment of the parties interests in any property or superannuation, and that the husband’s application for property settlement filed 16 March 2016 be dismissed.
The orders which the wife seeks are premised on the fact that it would not be just and equitable to make an adjustment of the parties’ property.
Is it just and equitable to make any order?
I will now consider whether it is just and equitable to make an order adjusting property in this particular case. In order to do so, I am required to adopt the pathway set out in the relevant authorities and to embark on a separate but very careful deliberation. As previously referred to, Stanford requires the first step of that inquiry to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
The parties existing interests in property
The agreed assets and liabilities are as follows:
Asset Husband Wife Property A $1,940,000 Property D $1,100,000 (omitted) shares $1763 (omitted) motor vehicle $6000 (omitted) motor vehicle $2000 Wife’s (business omitted) $153,000 (omitted) motor vehicle $8000 (omitted) motor vehicle $7000 Sub -Total $15,000 $3,202,763 Superannuation Superannuation $360,000 Superannuation $1000 Liabilities Mortgage on Property A $870,000 Mortgage on
Property D
$790,000
Motor vehicle finance $11,478 (omitted) team leasing $22,000 (omitted) premium funding $8,000 Centrelink debt $14,000 Sub – total $25,478 $1,690,000
The additional assets/liabilities the wife sought to include were as follows:
Asset/ Liabilities Husband Wife Chattels $10,000 $10,000 ATO tax debt $25,659.62 Debt to clients
((omitted))
$281,335.60
The additional assets/ liabilities the husband sought to include/exclude from the pool were as follows:
Asset/ Liabilities Husband Wife Funds in bank (Trust A
Wife’s Trust )
E$6,500 Debt to clients ((omitted)) $281,335.60 ATO tax debt $25,659.62
The husband’s Outline of Case Document, at paragraph 4, included the wife’s ATO tax debt of $32,000 as a liability which the parties agreed should be included in the pool. The wife was cross-examined about the extent of the debt and it transpired that she had made payments reducing the debt. The current amount outstanding to the ATO is $25,659.62.
The husband’s summary of final submissions state that the husband does not accept that the taxation liability of the wife is to be taken into account in the proceedings, as it arose from her income in the 2015 and 2016 financial years. I refer to the tax debt at paragraphs 105 – 107 hereof.
In the final written submissions, counsel for the husband asserted that the husband had an equitable interest in both the property is situated at Property A and Property D
Treatment of disputed assets
In order to identify the existing legal and equitable interests in property of the parties, I must consider how to treat the assets/liabilities which both parties claim should be included/excluded from the asset pool. I will address each of the disputed asset/liabilities in turn.
Disputed assets/liabilities wife seeks to include in the pool
The wife seeks to include in the pool chattels in each party’s possession, which she values at $10,000. The wife did not particularises the chattels and there was no independent evidence of valuation. Sensibly there was no cross-examination by either counsel about this issue. I do not intend to include chattels in the pool.
The wife seeks to include her outstanding tax debt of $25,659 in the asset pool. I refer further to this matter at paragraphs 105 – 107 hereof.
The wife sought to include in the pool a debt of $281,335.60 which she asserts is owing to her clients, as a result of the wife’s failure to renew her practising certificate within the required time frame.
In October 2016 the wife was advised by the (omitted) that her (licence) for the year commencing 1 July 2016 had not been renewed. The wife’s evidence was that her personal assistant had electronically renewed her (licence), prior to the due date, 30 April 2016. However, she had inadvertently included the wrong practitioner number on the renewal application. The requisite fee for renewal the (licence) had been paid by the wife and she had taken out compulsory professional indemnity insurance. The wife was unaware of this error until she received correspondence from the (omitted). This unfortunately resulted in the wife inadvertently practising without a valid (licence).
The (omitted) requires the refund of fees for services rendered whilst unlicensed.
The wife asserts that the total fees, for the relevant period owing by her to her clients amounted to $281,335.60 and that (omitted) is mandatory.
The husband relies on a letter from the (omitted), to the wife, dated 17 February 2017, which refers to the (omitted). The letter also states as follows:
“(omitted).”
As at the date of trial, the wife had not written to her clients, as mandated by the (omitted), and had not taken any other steps to ascertain the extent of her potential liability to her clients.
The husband submits that the (omitted) will not take any further interest in whether or not the wife writes to her clients, even though as she is mandated to do so, and accordingly there is no evidence that the wife will actually have to repay any liability.
Furthermore, it is submitted on behalf the husband that it is a post separation debt and should be the wife’s sole responsibility.
The wife was clearly concerned about her obligations under the (omitted), and her evidence was that she took those obligations extremely seriously. She had an unblemished record as a (occupation omitted) and was so concerned about the issue that she had sought advice from senior counsel. Her demeanour when giving evidence was genuine and she was visibly distressed about the whole circumstances.
This is a most unfortunate matter for the wife. The relevant evidence would not enable me to find that there is no such liability. The problem is that the liability and debt has not yet crystallised and the quantum cannot be determined.
I am persuaded by the submissions of the husband and I do not intend to include the debt as a liability of the parties for the purposes of identifying the legal and equitable interests in property. I will however take, the potential liability into account, pursuant to s.75 (2) (o).
Disputed assets/liabilities husband seeks to include in the pool
The husband seeks to exclude the wife’s potential liability to her clients of $281,355.60. I have addressed this issue in the preceding paragraphs.
The husband also now seeks to exclude the wife’s current liability to the ATO, of $25,659.22, despite previously agreeing that it should be included as a liability.
The wife was cross-examined about this amount, and she properly conceded that payments had been made to reduce the debt from approximately $32,000 to $ 25,659. She also conceded that the debt was for the financial years 2015 and 2016. As the debt arose from income earned subsequent to separation, the husband claims that the debt should be excluded from the asset pool.
I note that the husband’s final written submissions refer to authority, Bolger & Headon (2014) FLC 93-575, that assets and liabilities are taken at the date of trial .I agree with that statement and intend to include the debt as a liability in the asset pool.
The husband seeks to include in the asset pool the funds of approximately $6500 in a bank account in the name of the wife’s property trust. The wife’s evidence is that each month she deposits sufficient funds into this account to meet the mortgage payments for the Property D property. The amount in the account fluctuates depending on whether or not the monthly mortgage repayment has been debited from the account. I do not intend to include this account in the pool of existing legal and equitable interests in property.
Conclusion as to the existing legal and equitable interests of the parties
As a result of the findings set out herein, I determine that the existing legal and equitable interests of the parties in property are as follows:
Asset Husband Wife Property A $1,940,000 Property D $1,100,000 (omitted) shares $1763 (omitted) motor vehicle $6000 (omitted) motor vehicle $2000 Wife’s (business omitted) $153,000 (omitted)motor vehicle $8000 (omitted) motor vehicle $7000 Total $15,000 $3,202,763 Superannuation Superannuation $360,000 Superannuation $1000 Liabilities Centrelink debts $14,000 Mortgage on Property A $870,000 Mortgage on Property D $790,000 Motor vehicle finance $11,478 (omitted) team leasing $22,000 (omitted) premium funding $8,000 Wife’s ATO debt $25,659.22 Sub – total -$25,478 -$1,715,659.22 Nett Assets -$9,478DR $1,847,103.78CR
Factors relevant to exercise of discretion as to just and equitable
The matters I consider relevant, in addition to consideration of the factors in s.79(4), to determine whether it is just and equitable to make an order adjusting property in this case are as follows:
i)The length of the marriage;
ii)The marriage was characterised by a financial autonomy and independence;
iii)The purchase of Property A in the wife’s name and her contribution to the purchase price;
iv)Renovations of Property A property;
v)Payment of living expenses during cohabitation including:
a. each party applied the income in the manner in which they chose without explanation or accountability to the other;
b. Each party was responsible for their own debts;
c. The shared payment of household expenses;
d. Calculation of the amount paid for the husband to live in the property was referable to prior commercial rental;
vi)Husband’s purchase and sale of the Property B and Property C properties;
vii)Conduct of their respective businesses during cohabitation;
viii)Sale of husband’s interest in Business A;
ix)Receipt and disposition of (omitted) insurance proceeds by the husband, including not disclosing to the wife the receipt of the TPD payment of payment of $459,708.76;
x)Manner of establishment of (omitted) business;
xi)The only piece of real estate which they purchased together was Property D, which was purchased as tenants in common in equal shares in 2013;
xii)Payment to the husband of his half the equity in the Property D property in December 2014;
xiii)Repayment of loans between the parties;
xiv)Lack of provision for each other in their respective wills;
xv)There had been no common use of the former family home for five years prior to the husband initiating these proceedings.
I will now consider in more detail each of the factors referred to in the preceding paragraph.
The length of the marriage
Both parties agree that they commenced cohabitation in the Property A property in (omitted) 2006, and that the husband ceased living in the property in January 2011. They married on (omitted) 2008 and it was a second marriage for both of them. That is the extent of the agreement about the length of the marriage.
The husband contends that the parties remained in a marital relationship, whilst living separately and apart, until separation in October 2014, thus a relationship of 8 years.
The wife contends that the marriage ended upon the husband leaving the Property A property in January 2011, thus a relationship of 4 ½ years. The wife conceded under cross-examination that the parties had attempted reconciliation on a number of occasions, and that it was difficult to specify with any certainty the actual date of separation
Both parties filed a number of documents in these proceedings with different separation dates.
On 10 August 2015 the wife filed an application for divorce. At paragraph 14 of the divorce application, the date of separation is specified as 31 January 2011. The husband did not file a response to that document, and the divorce order was made on 15 October 2015.
On 16 March 2016 the husband filed an Initiating Application seeking a property settlement. At paragraph 27 of the Initiating Application, the date of final separation is specified as February 2011. On the same date the husband filed an affidavit sworn by him on 15 March 2016, which refers to the date of separation as October 2014.
On 5 May 2016 the wife filed a response to the husband’s Initiating Application. The date of separation referred to in that document is 31 January 2011.
On 24 November 2015, the wife emailed a proposed binding financial agreement to the husband. Recital G of the agreement states that the parties separated on 7 October 2014 and the marriage had broken down irretrievably on that date. A copy of the email and proposed financial agreement is annexure W 10 to the husband’s affidavit sworn 18 August 2016.
In July 2015, the wife had an application for consent orders prepared and forwarded to the husband. The date of separation in the application for consent orders was 7 October 2014. A copy of the application is annexure W 11 to the husband’s affidavit sworn 18 August 2016.
Both parties were comprehensively cross-examined by counsel for the other party about the discrepancy of dates in the various documents.
Neither party was able to provide a credible explanation as to the varying dates in the documents.
The husband asserts that the date of separation is apparent from an email which he forwarded to the wife on 7 October 2014, which is annexure W 7 to his affidavit sworn 3 May 2017. That email is not particularly helpful or conclusive.
Both the husband and the wife agree that subsequent to the husband’s departure from the Property A property they continued to email each other and see each other socially. The wife characterised the arrangement as continuing to be friends. On occasions they went away for the weekend, together, which the wife says was to attempt reconciliation.
The wife’s evidence about the weekends away was plausible, and I accept her account.
The wife’s evidence was that there were continuing discussions about possible reconciliation and that those discussions continued until October 2014. She said it was difficult to characterise the nature of the relationship. In my view the email of 7 October 2014 is entirely consistent with the wife’s evidence.
Both parties agree that subsequent to January 2011, they did not make any financial contribution to the others households. Indeed, the husband deposes to consulting Centrelink at the time, and thereafter receiving Centrelink benefits to assist with the maintenance of his household. He also incurred a personal debt to Centrelink, resulting from an overpayment because of an inaccurate estimate of his income.
I did not gain the impression from either party that subsequent to January 2011 there was any sense of a continuing committed marriage or domesticity in the relationship between the parties.
They were even in dispute about the assistance the husband gave to the wife with his asserted collection of her children from school and delivering them to various extracurricular activities. The wife’s evidence, when cross-examined, was specific, and she was able to name the Nanny, the days of employment and the activities of her children. I prefer the evidence of the wife to that of the husband.
The husband contended that the joint purchase of the Property D property in 2013, was compelling evidence that the parties were in a marital relationship. I refer to the joint purchase of this property at paragraph 192 - 198 hereof. I do not accept this assertion for the reasons referred to at those paragraphs.
Whilst I accept that the between January 2011 and October 2014 the parties were in contact with each other, attended some social outings together, and had three weekends away together, this in my view does not constitute a continuation of the marriage.
Counsel for the husband, in her final submissions, referred me to authority about the requirement for intention and action in order to find a destruction of the marital relationship. On the evidence before me, I am satisfied that at the very least, the wife intended the marriage to be over and it must have been obvious to the husband that this was the case. In his affidavit sworn 15 March 2016 he complains about the undue haste with which he was effectively evicted from the Property A property. He also refers to the fact that he and his children were required to move on four occasions with no financial assistance from the wife. I find it highly unlikely that anybody in the husband’s situation could entertain the thought that a marriage subsisted given what transpired after he left the Property A property. Accordingly, I find that the consortium vitae was irreparably damaged when the parties physically separated. Accordingly, I find that the date of separation was January 2011.
Furthermore, if the husband’s date of separation was correct, then the application for divorce filed by the wife is of no effect. That application was filed on 10 August 2015, which is not 12 months subsequent to the date on which the husband says the parties separated. 2015.
There is no suggestion in the husband’s material that the divorce was not valid and there were no submissions to that effect. To the contrary, paragraph 5 of the husband’s first affidavit sworn on 15 March 2016 refers to the divorce order, taking effect on 16 November 2015.
The application for divorce was the only document which was sworn and subsequently filed with the court. The husband had the opportunity to respond to the wife’s application. He has not taken any steps to challenge the validity of the divorce order which was made on 15 October 2015, which was predicated on the date of separation as sworn in the application before the court.
The marriage and relationship was characterised by a financial autonomy and independence
The wife asserts that the parties never had a joint bank account, joint superannuation, nor acquired joint assets, whilst living together. The acquisition of the Property D property was a commercial enterprise between the parties, which occurred post separation.
The husband asserts that the wife would not have been able to acquire assets without his assistance, and that the parties intermingled their finances during cohabitation and jointly acquired the Property D, property as a joint matrimonial endeavour.
Even though I have found that the parties separated in January 2011, I will discuss the evidence in relation to the financial autonomy of each of the parties, including events which occurred subsequent to January 2011. I prefer the evidence of the wife to that of the husband, in this regard.
Purchase of Property A property
In July 2006 the wife purchased the Property A property. Settlement took place in September 2006. The wife was and remains the sole registered proprietor of the property.
Both parties agree that the purchase price was $870,000 and that the wife paid the deposit of $87,000. The wife’s evidence is that upon settlement she paid a further $137,000 plus stamp duty and registration fees of $49,311. The husband does not dispute that he did not make any direct financial contribution to the property. Where the parties differ is that the husband asserts that the wife required his income to qualify for a bank loan. This is disputed by the wife and her evidence is that she qualified for a home loan based on her income and assets at the time. Both agree that the balance of purchase monies was funded by a mortgage from the (omitted) bank, which the wife particularises at $646,000.
At paragraph 24 of her affidavit sworn for May 2016. She details her taxable income as at 30 June 2006 as $241,843 and the income of her (business omitted), of which she was the sole shareholder at $205,169. Her personal taxable income as at 30 June 2007 was $140,912 and the taxable income of her (business omitted) was $221,354.
The husband did not specify his income as at the date of purchase or adduce evidence why his income was necessary to enable the purchase to proceed in the wife’s name.
He also claimed that the purchase of the Property A property was a joint endeavour, and that the reason it was purchased in the wife’s name, was to avoid a future claim from his previous wife. At paragraph 20 of the husband’s affidavit sworn 3 May 2017, he states that he suggested that he and the wife combine their savings to jointly purchased a home in Property A. The problem with that statement is that at paragraph 13 of the same affidavit, the husband lists his assets at the commencement of the relationship in 2006. Those assets are extremely modest and comprise a motor vehicle, superannuation, and an interest in a business. There is no reference to any savings or available cash.
The wife asserts that she did not require the husband’s financial input to purchase the Property A property, and that the husband did not contribute any of his savings to jointly purchase the property, as he did not have any savings. Furthermore, the husband had only been discharged from bankruptcy since (omitted) 2004 and that the family law property proceedings with his first wife, had been settled in 2005.
Her evidence was that she had wanted to purchase her own home for many years, and that was a source of argument between herself and her former husband. This had been a long hard held goal and that she was able to achieve this goal, following the conclusion of the property settlement with her first husband.
Despite his statements referred to in the preceding paragraphs, the husband does not seem to challenge fact that the wife contributed $273,311 of her funds towards the purchase of the property, and that the mortgage obtained to finance the balance of the purchase was in her name alone.
His evidence about his contributions to the acquisition of the Property A property were more properly characterised as an indirect financial contribution. I address this evidence later in these reasons.
The wife’s evidence about the purchase of the Property A property was steadfast and entirely plausible and I accept her evidence where it conflicts with the husband.
After having considered the evidence of the parties and the matters referred to in paragraphs 139 to 148 hereof, I find:
a)The property was intentionally purchased in the wife’s name;
b)The parties did not intend it to be a joint asset;
c)The wife solely contributed the funds required to purchase the property;
d)The wife was able to obtain a mortgage in her name without the husband being a co-borrower or Guarantor of the mortgage;
e)subsequent to the husband’s departure from that the Property A property in January 2011, the wife has solely been responsible for payment of the mortgage.
Renovations of Property A property
In 2010 renovations were carried out to the Property A property at a cost of approximately $150,000. Both parties agree that the cost of the renovations were funded exclusively by funds contributed by the wife, which had been accumulated by her prior to cohabitation.
The wife engaged a professional builder, (omitted) to carry out the internal works, and a landscape gardener, Mr G to carry out external landscaping works.
The husband did not make any direct financial contribution to the renovations of the property. His evidence was that he had made indirect financial contributions by project managing the renovations. The wife disagrees with the husband’s evidence in this regard. This issue is considered under the heading of indirect financial contributions.
Living expenses during cohabitation
The wife’s evidence is that during cohabitation, the parties kept their finances entirely separate, apart from sharing living expenses. The husband seeks to paint a picture of a joint financial household.
Both parties agreed that the husband contributed the sum of $2300 per month towards the household and that they shared living expenses, including utilities and rates and the cost of the social outings. When cross-examined, the wife’s evidence was that the husband’s contribution of $2300 per month was calculated by reference to the comparable rents each of the parties was paying, prior to the wife acquiring the Property A property.
There were only two instances of intermingling of finances during the cohabitation, namely:
a)The parties obtained joint private health insurance and equally shared the premiums;
b)The wife arranged for the husband to be a cosignatory on a credit card in her name.
In relation to the health insurance premiums, upon the husband vacating the Property A property, it was incumbent upon both parties to advise the health insurance fund. The wife’s evidence was to the effect that she didn’t realise that or alternatively didn’t ever get around to doing so. The husband’s evidence was to the effect that the joint health insurance was indicative of intermingling of finances and the continuation of the marriage after physical separation.
Unsurprisingly the evidence of both parties about the credit card differs. The wife’s evidence is that the husband requested her to provide him with a supplementary credit card on one of her credit card accounts, to enable him to meet any emergency expenses which could arise whilst she was overseas. She removed the husband’s access shortly after the husband vacated the property. The husband’s evidence was an attempt to create a picture of financial interdependence.
I consider it entirely appropriate that the husband was making a contribution towards his costs and those of his children living in the property, in addition to paying utilities, groceries and household expenses, during the time he lived in the Property A property.
The fact that the parties appear to have been steadfast in the splitting the expenses, including the costs of social outings, is entirely consistent with the lack of intermingling of finances.
There was no suggestion or evidence by either party that each did anything other than expend their income as they chose, without explanation or accountability to the other.
The husband agreed with counsel for the wife that apart from the overheads of the family home, each party could use their wages as they chose without accountability to the other.
Husband’s purchase and sale of Property B and Property C properties
In 2007 the husband and his business partner purchased a property at Property B. The wife was not a party to this transaction, nor was there any evidence that the husband shared with her any of the profits from the development venture.
There was no evidence of intermingling of finances during or upon completion of this project, or that the wife received any financial benefit.
In 2008 the husband and his business partner entered into a contract for the purchase of a property in Property C, with settlement due in June 2009.
The wife’s evidence was:
a)On 12 May 2009 she lent the husband $115,830 from her own savings to enable the husband to settle the purchase of the property. This was necessary as the bank’s offer to finance the project left the husband with a shortfall of approximately $115,000.
b)The loan from the wife to the husband and his business partner was properly documented and repaid in two instalments on 5 November 2009 and 11 December 2009.
The husband agreed with this evidence, and indeed said that the wife was repaid the debt together with interest. There was no evidence that there was any other intermingling of finances during or upon completion of this project, or that the wife received any financial benefit from the proceeds of sale.
Conduct of their respective businesses during cohabitation
Since 1993 the wife had conducted a (business omitted) and she continued to do so during cohabitation. The husband was not involved in nor assisted with the (business omitted), save that his Business A company carried out work for the (business omitted).
In return for the (omitted) work, the wife carried out (omitted) work for the husband and some of his business partners. She estimates she undertook more than 25 (omitted) matters for the husband and did not render any account. Under cross-examination, she estimated (omitted) work carried out for the husband was worth significantly more than the (omitted) work the husband carried out for her (business omitted).
Other than carrying out (omitted) work, the wife was not involved in the husband’s Business A company and neither party claimed that she was.
Sale of husband’s business interests in Business A
At the time of cohabitation the husband held a one third interest in the business, Business A.
In April 2012 the husband’s interest in the business was purchased by his business partners for the sum of $65,000. During cross-examination, he conceded that the sum was paid over a period of six months, as income and he was required to pay tax on the amount received.
His evidence was that the money was paid directly to him and was used for his day-to-day living expenses. There was no evidence to indicate that the wife benefited or indeed had any involvement in the sale of the husband’s business interest.
Receipt of and disposition of husband’s (omitted) payouts
On 29 October 2001 the husband took out an (omitted) insurance policy.
On 24 December 2012, the husband received a trauma payment of $736,618 from (omitted). On 29 August 2013 the husband received a further payment of $459,708.76 from (omitted), being a payout for a total and permanent disability benefit.
Both these amounts were paid into a bank account of the husband and or a bank account he held with his daughter, [Y].
The wife’s evidence is that she was unaware the husband had received the TPD benefit of $459,708, until she found the deposit into a bank account during the discovery process. He had never advised her about this payout. Although the funds had been received by the husband in August 2013, the husband, in his affidavit sworn 15 March 2016 made no mention of receipt of such a substantial amount. No plausible explanation was offered why this relevant and highly pertinent information had been omitted.
The husband asserts that he and the wife discussed how he should apply the proceeds of the trauma payout. The wife emphatically denied providing the husband with any advice about how to invest the funds, other than commenting that he should obtain some professional advice, which the husband declined to do. The husband’s evidence seeks to implicate the wife in the establishment of the (omitted) business.
I prefer the wife’s evidence to that of the husband.
The husband was at liberty to deal with the proceeds of the trauma payout as he saw fit, which is what eventuated. There is no evidence that the wife was consulted by the husband, about the disposition or spending of any of the trauma insurance payout, nor that she received any personal benefit from the funds. The husband paid his sister Ms S $50,000 from the payout and his father, Mr B Whent approximately $43,000. There is no suggestion that he consulted or obtained the wife’s approval for payment of these sums, prior to payment to his family members.
Similarly, there is no evidence that the husband consulted the wife about the disposition of the second payout of $459,708, or that she received any benefit from it, particularly as she was not even aware of the payment until it had already been spent by the husband.
In his final written submissions, counsel for the wife referred to an email from the husband to the wife, dated 22 October 2014, which is annexure M 4 to the wife’s affidavit sworn 18 May 2017.
The relevant parts of that email are as follows:
When I received my insurance payout, we had been living separately for quite some time. I had no financial ties to you, and I had been extremely fragile about our whole situation. As I have expressed to you a number of times, I have never really got over being forced from our home. I fell in love with you 10 years ago and moved my whole life to (omitted) for you and to be with you, only to end up in a number of rental properties. All this seems to have made me withdrawal and not be able to discuss things with you or feel like big decisions were ours. Our relationship as a married couple has not been as such since that time, yet we’ve always tried desperately to hang on, unfortunately with a lot of painful consequences and unhappiness. I’m sorry for my part in all this.
That email succinctly summarises the wife’s lack of involvement with the receipt and disposition of those funds.
In my view, the fact that :
a)The husband did not consult with the wife about the disposition of such vast sums of money;
b)The husband did not advise the wife about the receipt of $459,708 until during the course of these proceedings, when the funds had been spent some years prior;
c)The wife did not receive any benefit from the funds; and
is entirely consistent with the parties arrangement of their financial affairs during and after the marriage and that both considered themselves at liberty to make autonomous financial decisions.
Establishment of Business B business
Following the receipt of the (omitted) trauma payout monies, the husband established, a (omitted) business known as “Business B”.
The husband’s evidence is as follows:
a)He and the wife discussed how best to apply the proceeds of the trauma policy;
b)He and the wife discussed the proposed investment and she was supportive of the purchase;
c)The wife stated to him that “buying a job is the only option”;
d)By performing (omitted) work for the leasing of the premises, and drafting a press release, the wife was implicated in the decision to establish the business.
The wife’s evidence is as follows:
a)She agreed that she did advise the husband to seek professional advice as to the disposition of the trauma payout;
b)She did not provide any advice as to the suitability of the Business B business;
c)She carried out (omitted) work at no cost, including advising about the lease and obtaining a trust for the husband, in order to assist him;
d)She was otherwise not involved in the purchase/ establishment/ running of the business.
The husband was cross-examined about the establishment of the (omitted) business, and he conceded the following:
a)He did not obtain any independent professional advice prior to deciding to invest in a (omitted) business;
b)He had a conversation with a friend of the family who owned a similar (omitted) business in (omitted), which he understood to be a highly profitable business;
c)He had a discussion with his personal trainer about the potential costs of fit out of the business;
d)The fit out cost of the premises was approximately $170,000.
The husband:
i)Did not produce to the court any documentation to establish the fit out costs of the premises where the business was conducted;
ii)Did not produce any documents to substantiate the loss of $100,000, which he alleged had been incurred by running the business.
Surprisingly, counsel for the husband submitted that the wife had not taken any steps to substantiate or disapprove the expenditure claimed by the husband. It is difficult to consider what the wife could have done to obtain such documents. It is incumbent upon the husband to discover and produce documents in his possession, power and control which relate to any issues in dispute. As planning for the business commenced in mid-2013, and the business opened in or about January 2014, any relevant documents should have been readily available for production by the husband in order to prove his claims. The documents were not produced to the court.
After considering the evidence of both parties and observing their demeanour whilst being cross-examined, I prefer the evidence of the wife about this issue. I find that the husband unilaterally made the decision to purchase/establish and run the business.
Purchase of Property D
In May 2013 the parties the entered into a contract to purchase the Property D property, which is commercial premises where the wife conducts her (business omitted).
The husband asserts that the purchase was a joint matrimonial investment.
The wife asserts that the purchase was a commercial arm’s length investment for both of them.
Both parties agree:
a)A contract of sale was signed on 22 May 2013;
b)The purchase price for the property was $850,000 plus GST;
c)Both contributed equal amounts to purchase the property although the husband states that the contribution was $190,000 and the wife states it was $196,000
d)The balance of purchase price was funded by a mortgage from the (bank omitted) of $595,000
e)The property was purchased by the trustees of two separate family discretionary trusts, as tenants in common in equal shares;
f)Trust A , was the trustee of the wife’s trust, Trust A Trust;
g)Trust B , was the trustee of the husband’s trust, Trust B Trust;
h)The property trusts of each of the parties were created to hold their respective interests in the Property D property, and neither trust held any other assets;
i)Subsequent to the purchase of the Property D property, the wife prepared a lease between the two trusts and the wife’s (business omitted), and the wife’s (business omitted) occupied the premises;
j)In October 2014 the husband advised the wife that he wanted to withdraw from the investment;
k)The wife agreed to refinance the property and purchase the interest of the husband’s trust. A series of emails between the husband and wife, dated 7-8 October 2014, which are annexure W 7 to the husband’s affidavit sworn 3 May 2017, reflect the agreement reached;
l)In October 2014 the wife lent the husband the sum of approximately $20,000, to assist with his financial position and this amount was credited against the funds the husband ultimately received when the property was transferred to the wife’s trust;
m)In December 2014 the wife paid the husband’s trust half the equity in the property, $170,000, which was calculated pursuant to a bank valuation of the property of $930,000. The $170,000 was the balance of the equity owing to the husband’s trust, after deduction of the sum of approximately $20,000 which the wife had advanced to the husband in November 2014.
The husband asserts that the wife would not have been able to purchase the Property D property, without his assistance. The wife disputes that assertion. He did not provide any evidence to substantiate the claim, and I note it is similar to the claim he makes in relation to the purchase of the Property A property. I do not accept that argument, as just over 12 months after settlement, the wife was able to refinance the property into the sole name of her property trust, and obtained a mortgage, which enabled her to do so.
I find that the acquisition of the Property D property was a commercial arrangement between the husband and wife, and not a joint matrimonial endeavour. I do so for the following reasons:
a)From the commencement of the relationship there was virtually no financial interdependence or mingling of finances, except that the parties each equally contributed to ongoing private health insurance;
b)Whilst living together they did not previously acquire any jointly held assets or investments;
c)The parties had been living separately and apart since January 2011 and had maintained separate households and continued to maintain separate finances and assets and liabilities;
d)Both parties were mature, intelligent and were not commercially naïve;
e)Neither party alleges that they were subject to any overbearing behaviour by the other to participate in the investment;
f)The purchase occurred in May 2013, some five months or so, after the husband received his (omitted) trauma payout of $736,618;
g)There is no evidence that the husband consulted the wife about the disposition of the (omitted) trauma payment or that the wife personally received any benefit from it;
h)The husband’s actions in dispersing the (omitted) payment without reference to the wife, and as he saw fit, are demonstrative of financial autonomy between the parties;
i)The ownership of the property by two independent property trusts as tenants in common in equal shares;
j)The structure of the investment via the two independent property trusts;
k)The division of the amount invested by both parties, so that the investments would be roughly equal;
l)The calculation of the amount payable to the husband, by reference to an independent bank valuation, upon his property trust divesting itself of the investment.
The wife asserts that the payment to the husband of his equity in the Property D property and the transfer of his property trust’s interest to the wife’s property trust was intended by both parties to be a full and final settlement of all matters between them.
The husband’s counsel, in her final submissions, correctly identified that the wife’s views as to the nature of this agreement do not bind the court, DW & GT [2005] FamCA 161, although the court may consider any such agreement.
Loans between the parties
During the relationship the parties made loans to the other.
In 2008, when the wife lent the husband and his then a business partner the sum of $115,000, to settle the purchase of Property C. As previously referred to in these reasons, the loan was documented, interest was paid and the loan was repaid in full.
In September 2013 the husband lent to the wife’s (business omitted) $18,000. The amount was paid into the wife’s (business omitted) trust account on 10 September 2013. On the following day the amount was repaid by the wife.
In October 2014 the wife lent to the husband $20,000. This sum was deducted from the sum of $190,000, which the wife paid to the husband for his equity in the Property D property, in December 2014.
There was no other evidence about loans passing between the parties and which were not assiduously repaid.
Provision for the other in their respective wills
Counsel for the wife tendered a series of the wife’s testamentary documents. These were as follows:
a)Unsigned will of wife, dated 2005 – exhibit W5;
b)Unsigned will of wife dated 2010- exhibit W6;
c)Signed will of wife dated 7 July 2015- exhibit W7;
d)(omitted) super – change of details, dated 22 April 2010 – exhibit W8.
The wife’s unsigned will dated 2005 appointed the husband as a co-executor, and left her residuary estate to her two children, with the usual grandchildren proviso. In the event there were no named beneficiaries at the date of the wife’s death, then the husband was one of four reserve beneficiaries.
The wife’s unsigned will dated 2010 appointed the husband as executor and left her residuary estate to her two children, with the usual grandchildren proviso. In the event there were no named beneficiaries at the date of the wife’s death, then the husband was the reserve beneficiary.
The wife’s signed will dated 7 July 2015 did not appoint the husband as executor, and he was not included in the class of reserve beneficiaries.
Counsel for the wife also tendered a copy of an unsigned an undated will of the husband, which was exhibit W3.
Exhibit W3 is not dated and was made when the husband lived in (omitted). The will makes provision for his three children, and makes no mention of the wife. There was no evidence to enable me to ascertain whether the husband and the wife, even knew each other, or had any relationship at the time the draft will was prepared.
Copies of the husband’s subsequent wills were called for, but he failed to produce them.
It is apparent from the wife’s wills that she did not make any provision for the husband in the first two wills, unless both of her children predeceased her without leaving grandchildren. The third will did not make any provision for him at all.
The wife’s wills are entirely consistent with the manner in which the parties separated their assets and made independent financial decisions.
The wife’s (omitted) super nomination form, dated 22 April 2010 nominates her two children as equal beneficiaries. The husband is not a nominated beneficiary, although at that time the parties lived together in the Property A property.
The nomination form is also entirely consistent with the manner in which the parties separated their assets and made independent financial decisions.
No common use of property and delay in asserting an interest in the wife’s property
It was agreed by the parties that there had been no common use of property for over six years, by the time of the trial. There were no joint assets, and apart from the Property D property, there never had been.
This was the manner in which the parties had always arranged their respective finances, assets and liabilities. Counsel for the wife, in his final written submissions commented that the parties had the common sense and maturity to deal with ownership of assets and the dissolution of the one jointly owned property, fairly and voluntarily. I agree with that submission.
Consistent with that approach, was the husband’s submissions that he should not assume any liability for the wife’s tax debt, which had been incurred in the previous financial year, nor should the wife’s asserted liability to her clients of $281,335 be included in the pool of assets and liabilities.
Consideration of section 79 (4) factors
I will consider the contributions of the parties by reference to the assets of each party at the commencement of cohabitation, the financial and non-financial contribution of the parties during the relationship and the contributions of each party post separation. I will also consider relevant s.75(2) factors .
Initial Contributions
The assets and liabilities of the parties at the commencement of the relationship are not particularly controversial.
At the commencement of the relationship the wife had the following assets:
i)Her (business omitted), which she had been operating since 1991. The (business omitted) had been valued at $600,000 for the purposes of the wife’s property division with her first husband. For these proceedings, the (business omitted) was valued at $153,000;
ii)Cash in (omitted) bank accounts of approximately $110,000;
iii)A (omitted) share portfolio valued at approximately $220,000;
iv)Cash in (country omitted) bank accounts of $67,942;
v)Cash assets in her (business omitted) of $34,000;
vi)Household furniture and jewellery of $50,000;
vii)Superannuation with (omitted) super of approximately $200,000.
In relation to the wife’s superannuation, she produced a statement from (omitted) super as at 30 June 2006. Her superannuation entitlements on that statement were $175,275. She produced a further statement as at 30 July 2007. Her superannuation entitlements on that statement were $204,513. There was no precise statement available as at the date of commencement of the relationship in September 2006, however, during the best I can, it is reasonable to assume that the midway point of $200,000 represents the wife’s superannuation at that time. I note that the husband, at paragraph 17 of his trial affidavit sworn 3 May 2017 states the wife’s superannuation at the commencement of the relationship, as $200,000.
At the commencement of the relationship the husband had the following assets:
i)A motor vehicle valued at $15,000;
ii)Superannuation of approximately $5000;
iii)A one third interest in the IT business Business A.
Contributions during the relationship
Section 79(4)(a) financial contributions
At the commencement of the relationship the wife was working as a (occupation omitted) in her own (business omitted). At paragraph 24 of her affidavit sworn 4 May 2016, she deposes that her personal taxable income for the year ending 30 June 2006 was $241,843, and the income of her (business omitted) was $205,169. Her personal taxable income as at 30 June 2007 was $140,912 and the taxable income of her (business omitted) was $221,355.
In her Financial Statement sworn 5 May 2016 she deposes to an average weekly income of $4000, with an average weekly tax liability of $1100. In her Financial Statement sworn 18 May 2017 she deposes to an average weekly income of $4000 with an average weekly tax liability of $1100.
At the commencement of the relationship the husband was working as an (occupation omitted) in his own business, Business A. He claims to have earnt an annual income of between $100,000 and $150,000. He did not produce any documents to the court to substantiate his income. The wife conceded that she did not know the particulars of the income earned by the husband during the relationship. The husband ceased this employment in (omitted) 2012, when he sold his interest in the business to his partners.
The husband attempts to justify his spending in paragraphs 74, 75 and 76 of his affidavit of 3 May 2017, however no source documents were provided to the court to substantiate the amounts claimed. I note that the amount for supermarket/groceries ($16,800), utilities, ($6000) home insurance, ($1248) general maintenance, ($3600) cleaners, ($3600) clothes and entertainment ($24,000) and car expenses ($6000) are the same in 2013, 2014 and 2015.
The husband spent a significant amount on rental accommodation, namely:
a)In 2013- $41,400;
b)In 2014- $63,000;
c)In 2015- $44,328.
I also note that the husband did not provide any documentary evidence substantiating his estimates of expenditure as set out in paragraph 74 of his affidavit of 3 May 2017.
In light of the husband’s comments that he understood that the (omitted) insurance proceeds were to provide for his financial future, the amounts referred to as spent by him in each of 2013, 2014 and 2015 are simply astonishing. During the three years his own evidence is that he spent $386,602 on living expenses.
The husband was cross-examined about his reasonable future living expenses, and conceded that it would be necessary and appropriate for him to rent premises for less than his current rental of $750.00 per week.
Again, in the absence of any documentation, it is very difficult for me to make precise findings about the reasonableness or necessity of such expenditure.
It is however, apparent that the husband has spent money in a reckless manner without regard to the long-term financial consequences for him. By way of example, in each of 2013, 2014 and 2015, the husband claims that he spent $24,000 per annum on clothes and entertainment, which is equivalent to $2,000 per month .In my view, that is excessive for a person reliant on a fixed capital sum for his lifelong financial support.
Repayment of liabilities and debts
In relation to the debts of $932,223, which the husband claims that he has paid from the (omitted) monies, there is an overlap with his contribution to the Property D property purchase and the set up and running losses incurred by Business B.
Again, in the husband’s final submissions, he suggests that the wife does not particularise, which liabilities she questions and why. It is also submitted that she has not provided any evidence to counter the husband’s evidence. The submissions are critical of the fact that she has made no effort to subpoena the records of Mr B Whent, and states that she sits on her hands and requires the husband to defend himself.
In light of my comments on findings as to credit of the husband, that argument is untenable. The husband has a positive obligation to disclose documentation about any issue in dispute in the proceedings. It would have been of great assistance to me if the husband had provided documentary evidence to substantiate his claims.
Debt owing to Ms S, the husband’s sister
In January 2013 the husband paid Ms S the sum of $50,000 from the (omitted) proceeds, purportedly to repay a loan, she had advanced to the husband/and or his then company, in 2000.
In 2000 Ms S paid $50,000 to (business omitted), the husband’s company. The funds were intended to be applied towards the purchase of shares in the company prior to its public listing.
At paragraph 80 of his affidavit sworn 3 May 2017 the husband states that as the company was not ultimately publicly listed, the funds were to be repaid to Ms S. At paragraph 81, he deposes that prior to the company being placed into receivership in 2001, he withdrew $50,000 from the company, with a view to paying the monies to Ms S. He states that he retained the funds, due to financial difficulties that he was experiencing at the time, and apparently Ms S told him she did not require the repayment of funds at that time.
The husband was charged by ASIC for withdrawing the funds from the company in the period shortly a prior to the company being placed in receivership and was found guilty by a Magistrate, although no conviction was recorded.
There is no mention of any purported loan agreement between Ms S and the company, in that affidavit.
On 12 May 2017 Ms S swore an affidavit which was filed on behalf of the husband on 15 May 2017. In paragraph 3 of that affidavit she refers to a loan agreement which she entered into with the (omitted company), which provided for the sum of $50,000 to be repaid, without interest upon her written demand, Annexure A to that affidavit is a “true copy of the loan agreement dated 5 December 2000”.
Annexure A is purportedly a copy of short loan agreement between Ms S and (omitted company). The document has three different dates, 10 April 2017, 9 April 2017 and 8 December 2000.
On the 24 May 2017 the husband swore and filed a further affidavit, seeking to clarify issues in relation to the loan of $50,000 from Ms S. Paragraph 3 of that affidavit states that the husband entered into a loan agreement with Ms S at that time, and attempts to explain why the purported agreement was between Ms S and (omitted company), rather than Ms S and the husband.
Paragraph 8 of the affidavit attempts to explain the circumstances giving rise to the document which is annexure A and is as follows:
On 13 May 2017 Ms S signed an affidavit which was then filed in these proceedings. Attached to Ms S’s affidavit was a loan agreement in the same terms as the one we had both signed in 2000. Neither Ms S nor I could find a copy of the loan agreement we had signed in 2000, so Ms S drew up a loan agreement in the same terms as our original loan agreement and we both signed it. The loan agreement attached to Ms S’s affidavit filed 15 May 2017 is in the same terms as the one we both signed in 2000.
At the commencement of the trial, the husband gave oral evidence, whereby he said that he drew up the loan agreement. This was in direct contrast to his affidavit sworn 24 May 2017.
Ms S was cross-examined and was a most unimpressive witness. She would not concede that annexure A was not a copy of any loan agreement. It was only in response to my question, that she admitted that annexure A was a reconstruction. She was also evasive about who had prepared annexure A.
The evidence of both the husband and Ms S was unreliable and in my view, impugns the integrity of both witnesses. I find that there was no debt to Ms S and that it is appropriate that the payment to her, is considered pursuant to s.75(2)(o).
Debt owing to Mr B Whent
The husband’s evidence is that in 2012 he contacted his father, Mr B Whent, to ask if he could use his credit card as a short term loan. The monies expended on the credit card, would be repaid once the husband received his payment from (omitted). The funds expended on the credit card were approximately $43,000.
The husband asserts that he repaid his father by five instalments in January 2013. Annexure W 26 of his affidavit sworn 3 May 2017 is his bank statement which evidences the payments to Mr B Whent.
Whether the husband paid Mr B Whent is not in dispute, however, what is in is in dispute, is whether or not the husband was repaying a debt to Mr Whent, and whether he had actually used his father’s credit card, as claimed.
Neither the husband nor Mr B Whent produced the credit card statements of Mr B Whent for the relevant period, which could demonstrate that the husband had actually used the credit card, and that the payments in January 2013 were by way of reimbursement to Mr B Whent.
Mr B Whent swore an affidavit on 23 May 2017 and was cross-examined. He was obviously keen to support his son. Both during his evidence, and at paragraph 6 of his affidavit, Mr Whent referred to the fact that he had ordered copy statements of his credit card for the relevant period, but they had not yet arrived. He was therefore unable to produce any documentary evidence substantiating the claims.
Mr Whent stated in his oral evidence that he had in fact lent his son, additional amounts of money, totalling $55,000, which he now regarded as gifts and would not be seeking repayment of these amounts. This had never been disclosed by the husband in his affidavits nor in his oral evidence. In my view, both that statement and the omission of the arrangement from the husband’s evidence, casts doubt on the assertion that the funds supposedly owing to Mr B Whent in January 2013, were actually loans.
Given my findings about the husband’s credit and his involvement with his sister Ms S in the reconstruction of the alleged loan agreement, I am unable to be satisfied, on the balance of probabilities, that the payment of monies to Mr B Whent was a liability owed by the husband to his father.
Counsel for the husband, in her final submissions, was critical of the wife’s failure to subpoena the relevant credit card statement of Mr B Whent. I refer to my earlier comments about the disclosure obligation of the husband and his responsibility to prove his case.
Is there a nexus between the husband’s expenditure and his cognitive function?
During the course of the trial, counsel for the husband suggested that there was a nexus between the husband’s expenditure and his cognitive difficulties, impaired judgement and poor short-term memory. This assertion was also made in the final submissions of the husband. There was no timeframe provided as to when this may have occurred.
The husband’s outline of case and the husband’s opening made no reference to this possible nexus. When questioned by me whether there was any evidence as to this alleged nexus, I was referred to paragraph 79 of the husband’s affidavit sworn 3 May 2017. That paragraph does not refer to any specific nexus between the husband’s MS symptoms and his excess expenditure.
Annexure W 5 to that affidavit is an article entitled “Cognitive Changes” from the National Multiple Sclerosis Society website. That article does not refer to any direct link between cognitive problems, and excessive spending. Neither does the affidavit of the husband’s treating neurologist, Dr M, sworn 4 May 2017.
At the request of the husband’s solicitors, Dr M prepared a report about the husband’s MS. A copy of the letter requesting the report, dated 27 April 2017 is annexure M1 to the affidavit, and Dr M’s report dated 27 April 2017, is annexure M 2.
Annexure M1 is Dr M’s response, in relation to a number of issues. Paragraph 8 of the letter requesting the report states as follows:
Please provide details of any cognitive changes in Mr Whent in (either reported by him or observed by you) during the course of your treatment of Mr Whent as a patient. Has Mr Whent judgement or memory been effected during his illness? If so, please provide details of the impact on judgement and memory, and when this began to occur.
There is no request for Dr M’s opinion about the theory advanced on behalf of the husband, that his cognitive abilities account for the extent of his expenditure and his inability to recall all monies spent by him. I note the request for a report was forwarded to Dr M on 27 April 2017.
Dr M’s report does not include any reference to the nexus between excessive expenditure by the husband, and his cognitive impairment.
There is no evidence to support the hypothesis of a nexus between cognitive impairment and the husband’s excessive expenditure.
Conclusion as to wastage
After having considered the matters referred to in these reasons, I have determined that the husband’s conduct in expending the majority of the (omitted) proceeds was reckless negligent or wanton and most certainly reduced or minimised the value of the assets.
As previously referred to in these reasons, I am unable to accurately particularise the amounts which constitute wastage, due significantly to the husband’s nondisclosure of contemporaneous documents.
What is apparent is:
a)The husband was given a lifeline for his future financial security by virtue of the (omitted) payouts of approximately $1.2 million;
b)The whole of the two payments was spent by him between December 2012 and December 2014;
c)I do not accept that this expenditure could be categorised as having been spent on reasonable living expenses;
d)The husband admitted that the expenditure of $273,000, between December 2012 and January 2013 was excessive;
e)He was solely responsible for the determination of the disposition of the monies;
f)As at January 2013 there was no debt of $50,000 owing to Ms S;
g)I am unable to find there was any requirement for the husband to repay his father Mr B Whent, $43,135;
h)The wife received no benefit, save for the husband’s investment in the Property D property, which was subsequently repaid to him in December 2014.
I intend to take into consideration, pursuant to s.72(2)(o) the following:
a)The husband’s expenditure of the (omitted) insurance proceeds;
b)The payments to both Ms S and Mr B Whent;
c)The evidence of both parties as to the post separation assistance the husband provided to the wife’s children;
d)The wife’s possible liability to her clients of $281,335.
Conclusion as to exercise of discretion
In exercising my discretion, I have, as I’m permitted to do, considered the matters in s.79(4) of the Act, in addition to the matters referred to at paragraph 110 hereof. I have determined that it would not be just and equitable to make any order altering property interests.
I am cognisant of the effect of my determination on the husband and his likely dissatisfaction with the result, however, most unfortunately, he was the architect of his own financial predicament.
Alternative approach
In the event I have erred in the exercise of my discretion in concluding it is not just and equitable to make any order, I will now address what I consider to be the appropriate outcome in the event the matter had been determined on the basis that it was just and equitable to make an order adjusting the parties property. I note this was the approach adopted by His Honour Thackray CJ in Fielding & Nichol [2014] FCWA 77.
The approach and considerations I must make are as follows:
(a)Attribute value to the assets comprising the property pool;
(b)Identify and give weight to the various contributions of each of the parties as set out in s.79 (4) (a) – (c) and make an assessment as to the entitlements of the parties based on their respective contribution;
(c)Identify the identify the relevant considerations as set out in s.79(4)(d)-(g), including the matters set out in s.75(2) so far as they are relevant, and then decide whether any further adjustment is appropriate;
(d)Consider whether the proposed orders are to equitable.
I am also mindful of the comments of the Full Court in Bevan & Bevan [2013] FamCAFC 116 at [86], that the just and equitable requirement permeates the entire process.
Asset pool
The assets and liabilities which are agreed by the parties are set out at paragraph 84 hereof.
The assets and liabilities which the wife additionally seeks to include in the pool are set out at paragraph 85 hereof.
The assets and liabilities which the husband additionally seeks to include in the pool are set out at paragraph 86 hereof.
At paragraph 109 hereof, I have set out my conclusion as to the existing legal and equitable interests of the parties in property.
Contributions
Global or Asset by asset approach?
Counsel for the wife invited me to adopt an asset by asset approach and relied upon the Full Court decision of McMahon & McMahon [1995] FLC 92-606.
He submitted that the relationship was short and that there was a strict division of assets and income of the parties, as was the case in McMahon.
Counsel for the husband, other than referring to the possibility of such an approach did not make any submissions, as to which approach was preferable, other than commenting that in McMahon (supra), the court said that it is more convenient in the majority of cases to take a global approach because of the need to assess a party’s contribution to the homemaker and welfare of children to the whole of the assets unless that contribution is not significant in the case.
I am persuaded by the submissions of counsel for the husband that it is appropriate to adopt an asset by asset approach, and indeed given the lack of intermingling of finances, and the short duration of the marriage, and no biological children, it would be more difficult to assess contributions if a global approach were adopted.
CONTRIBUTIONS
Initial contributions
As previously referred to in these reasons the assets and liabilities of the parties at the commencement of the relationship is the subject of agreement between the parties.
The wife’s non-superannuation assets at the commencement of the relationship, are set out at paragraph 221 hereof. The wife’s superannuation entitlements are referred to at paragraph 222.
The husband’s assets, both non-superannuation and superannuation, are set out at paragraph 223 hereof.
Neither party claims that they made any contribution to the assets of the other party, which they had at the commencement of the relationship.
As referred to at paragraph 347 hereof, I will address contributions on an asset by asset basis.
Contributions during the marriage
Section 79(4)(a)(b)and (c)
I will firstly consider contributions to the Property A property.
Paragraphs 139 – 149 hereof discuss the financial contributions of the parties to the purchase of the Property A property and my finding that the wife solely contributed all funds required to purchase the property.
Paragraphs 150 to 152 hereof discuss the financial contributions of the parties to the renovations of the Property A property and my relevant findings. The husband agreed that he did not make any direct financial contribution to the renovations of the property, which took place in 2010.
Paragraphs 153 to 161, and 224 to 229 hereof discuss the financial contributions of the parties in relation to the outgoings of the Property A property, and the equal payment of other household expenditure.
In terms of non-financial contributions, the husband claims that he project managed the renovations, and this constitutes an indirect financial contribution. Paragraphs 242 -245 refer to my findings as to the husband’s claims that he project managed renovations.
The husband claims an interest in the Property A property, resulting from his contributions of $2300 per month towards the mortgage on the property and payment of a one half share of rates and outgoings referable to the property.
As previously stated, in these reasons, I consider it entirely appropriate that the husband contributed to the household expenses, as he was living at the property with one or more of his children. Furthermore, the wife’s unchallenged evidence was that the husband’s contribution was calculated by reference to the rent each of the parties had paid to rent properties, prior to the wife’s acquisition of the Property A property.
Both parties asserted that they each assumed the majority of the domestic chores in the household. The wife’s evidence was specific and detailed and is set out at paragraph 237 hereof. The husband’s evidence is set out at paragraph 238 hereof. As previously remarked, both parties appeared content with their domestic arrangements, which enabled both of them to work full-time, whilst they cohabited at the Property A property. Where their evidence differs, I prefer the evidence of the wife.
Apart from an appropriate contribution to the living expenses of himself and his children, the carrying out of the domestic chores and looking after both his children and sometimes the wife’s children, I do not consider that the husband made any additional contributions, which substantiate any contribution to the acquisition, conservation or improvement of the Property A property.
I will secondly consider any contributions by the parties to the others business.
Both parties agreed that they had provided business services, in their field of expertise to the other, throughout the relationship. The wife had carried out various (omitted) work for the husband and the husband had attended to (omitted) work for the wife’s (business omitted).
The wife’s evidence was that she had carried out (omitted) work for the husband and his associated businesses to the value of approximately $150,000 and that the value of the husband’s (omitted) work for her (business omitted) was approximately $75,000.
The husband did not attempt to quantify the value of the work carried out by either party. I accept the evidence of the wife in this regard and find that there was no contribution by either party to the business of the other, which would result in either party claiming interest in the others business.
I will thirdly consider any contributions by the parties to the other’s superannuation.
Neither party asserted that the wife had made any contribution to the husband’s nominal superannuation entitlements, and there did not seem to be any evidence that the husband had indeed made any contributions to his superannuation during the relationship.
In relation to the wife’s superannuation entitlements, it was not disputed that she contributed $28,793 to her existing superannuation contributions, during the relationship. The balance of the increase in her superannuation entitlements was referable to interest accumulating on her superannuation balance which existed at the commencement of the relationship and the modest contributions made during the relationship.
The husband did not specifically address how he claimed he had made any contribution to the wife’s superannuation, either directly or indirectly.
Given the strict division of the parties respective finances during cohabitation, I do not accept that the husband’s payments towards the living expenses of the household , nor any (omitted) work he carried out for the wife’s (business omitted) could be considered contributions to the wife’s superannuation entitlements.
Contributions post separation
I will firstly consider the husband’s post separation contributions to the Property A property.
The basis of the husband’s claim to having contributed to the Property A property is that he assisted the wife with the care of her children, as referred to at paragraphs 251 to 254 hereof. I refer to my comments at paragraph 254 hereof, that these contributions should be assessed as a fact of potential relevance under s.75(2)(o) and not as contributions.
I will secondly consider the husband’s post separation contribution to the Property D property.
Paragraphs 247 - 252 (which incorporate paragraphs 192- 198) hereof refer to my findings as to the purchase of the Property D property, and the wife’s trusts acquisition of the husband’s trusts share in the property in December 2014.
Both parties agree that their financial contributions to the acquisition, conservation and improvement of the Property D property, were equal. It was also agreed that the husband was paid, upon transfer of his trust’s interest in the property to the wife’s trust, an amount equivalent to 50% of a valuation of the property undertaken by the (omitted).
In my view, irrespective of whether the arrangement was intended to be a final settlement of outstanding property issues between the husband and the wife, it is apparent that there has been no contribution by the husband of any nature whatsoever to the Property D property since December 2014.
Conclusion as to contribution
In relation to the respective contributions of the parties I find as follows:
a)The husband brought nominal assets into the relationship.
b)The wife brought substantial assets into the marriage, namely the assets referred to at paragraph 221 hereof, totalling approximately $634,942, together with the superannuation entitlements of approximately $200,000.
c)The wife made all direct financial contributions to the acquisition of the Property A property.
d)The husband did not make any direct financial contributions to the acquisition or renovation of the Property A property.
e)The husband did not project manage the renovations to the Property A property to any significant extent, which would entitle him to claim an additional contribution towards the conservation and improvement of the property.
f)The financial and non-financial contributions of the husband whilst living in the Property A property between September 2006 and January 2011, were essentially contributions to support himself and his children and did not result in the acquisition, conservation or improvement of any asset.
g)The financial contributions of the husband between September 2006 and January 2011 were not significant when balanced against his occupation and enjoyment of the Property A property.
h)The (omitted) work carried out by the husband was not significant when balanced against the (omitted) work carried out by the wife and did not result in any contribution to the conservation or improvement of the wife’s (business omitted).
i)The husband’s financial and non-financial contributions did not contribute to the conservation or improvement to the wife’s superannuation entitlements.
j)Both parties equally contributed to the acquisition of the Property D property, and the expenses of the property between May 2013 and December 2014.
k)In December 2014 the husband was paid, together with an increase in capital value of the asset, and amount referable to his interest in the property.
l)Since January 2011 the wife has made all contributions towards the mortgage and outgoings of the Property A property.
m)The husband retained and disposed of the proceeds of both (omitted) insurance payouts, of approximately $1.2 million, between December 2012 and October 2014, without reference to the wife, and without her receiving any benefit therefrom.
It is abundantly clear that overall the contributions of the wife pursuant to s.79(4)(a) and (b) of the act are overwhelming, when compared to those of the husband. There is no question that but for the wife’s contributions, the husband would ever have been in a financial position to purchase the Property A property. The wife has made far greater financial and non-financial contributions than the husband.
In terms of contributions pursuant to s.75(4)(c), there are no children of the husband and the wife. The parties’ respective evidence as to contributions made in the capacity of homemaker are referred to earlier in these reasons. Where the evidence of the parties as to their respective contributions to the welfare of the family differs, I prefer the evidence of the wife to that of the husband.
In his written closing submissions, Counsel for the wife submitted that the husband had failed to show a contribution to the assets of the wife. I agree with that submission, save for the husband’s contributions to the Property D property. I refer to my comments under the heading Conclusion as to Contributions.
The wife’s payment to the husband of $190,000 in October 2014 and December 2014 was to repay his invested capital, together with an amount representing the increased value in the property. Both parties evidence was to that effect. It is difficult to find that the husband has made any further contribution towards the Property D property, over and above the moneys which the wife paid to him for his trust’s interest in the property.
The wife’s contributions were overwhelming and the husband’s were essentially to support himself and his children, with the exception of his contributions to the Property D property, which he has been reimbursed.
The Section 79 (4)(d),(e),(f) and (g) and the Section 75(2) factors
Section 79(4)(d): the effect of any proposed order upon the earning capacity of either party to the marriage.
The orders which I propose to make will not have any affect on the earning capacity of the wife. The husband currently has no earning capacity.
Section 79(4)(e): the matters referred to in S75(2) so far as they are relevant
Paragraphs 257 to 269 hereof refer to the relevant s.75 (2) factors.
Section 75(2)(o)
I refer to the relevant matters at paragraphs 270 -335.
Conclusion as to future needs
As previously referred to, the husband has significantly greater future needs than the wife. If the husband had not received the proceeds of the two (omitted) policies, an adjustment for his future needs would have been appropriate.
However, the fact is that the husband did receive almost $1.2 million from (omitted) and that those funds were intended to provide for his future financial support. Those funds were spent by the husband between December 2012 and December 2014, with little regard to the consequences of his financial future.
Adjustment of interests
As a result of the findings made relating to contributions and future needs, I am satisfied that it is just and equitable not to make any order adjusting the property between the parties.
On the basis of the property pool I have determined, the wife will receive/retain the following non-superannuation assets:
i)The Property A property, subject to a mortgage;
ii)The Property D property, subject to a mortgage;
iii)Her (business omitted);
iv)Her motor vehicle and shares;
v)The liabilities relating to her (business omitted), a taxation debt, and the contingent liability to her clients, resulting from her lack of a valid practising certificate;
vi)Her superannuation entitlements.
I have determined that the husband will retain the following:
i)His motor vehicle;
ii)His personal possessions;
iii)His superannuation entitlements;
iv)His Centrelink debt.
Whilst I acknowledge that the husband will be left in a parlous financial position, I cannot ignore that the husband has had the benefit of $1.2 million from the (omitted) payouts, which he chose to dissipate between December 2012 and October 2014.
The payment of $1.2 million to somebody in the husband’s position with no future earning capacity was a tremendous financial resource, and an opportunity to invest wisely and provide for his future financial needs.
Most regrettably, the husband’s conduct in dissipating this vast sum of money in such a short period of time, namely between December 2012 and December 2014, is of his own doing. His actions were reckless and imprudent. He admitted that his expenditure of $273,000, between December 2012 and February 2013 was extraordinary, and I agree with that statement.
It was also extraordinary, that he sought to establish the Business B business when he had no previous retail experience and did not obtain advice from anybody with appropriate qualifications, nor undertake any due diligence prior to allegedly investing such vast sums of money in the venture. Regrettably, in the absence of documentation to prove the actual expenditure as claimed I am unable to find that the money claimed was actually applied to the failed business venture.
The husband conceded that with the benefit of hindsight, he had been partially careless in the expenditure of his money.
Unfortunately, the consequences to Mr Whent are bleak indeed, however, I do not consider it just and equitable that the wife should be called upon to effectively underwrite the husband’s careless and reckless expenditure of $1.2 million. This is particularly so, in circumstances where the parties did not cohabit after January 2011 and the husband’s own evidence was that he had no financial ties to the wife at the time of receipt of the first payment in December 2012.
I agree with the submissions of counsel for the wife, that the fact the husband has gone through $1.2 million in two years is not a proper basis for a further needs adjustment to him.
In conclusion, I do not intend to make any order adjusting property interests.
I certify that the preceding three hundred and ninety nine (399) paragraphs are a true copy of the reasons for judgment of Judge Williams
Date: 11 August 2017
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
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Property Law
Legal Concepts
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Remedies
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Injunction
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