WILBURN & WILBURN (No.2)

[2019] FCCA 2199

FEDERAL CIRCUIT COURT OF AUSTRALIA

WILBURN & WILBURN (No.2) [2019] FCCA 2199

Catchwords:
FAMILY LAW – Who should retain property – whether the property should be sold – whether it is just and equitable for one party to retain an interest.

Legislation:

Family Law Act 1975 (Cth), s.79

Income Tax Assessment Act 1997 (Cth), s.126

Cases cited:

Lee Steere & Lee Steere (1985) 10 Fam LR 431
Wilburn & Wilburn [2019] FCCA 2131

Applicant: MR WILBURN

Respondent: MS WILBURN

File Number: DGC 1426 of 2018

Judgment of: Judge McNab

Hearing dates: 12, 13, 14, 15 March 2019, 1 and 2 April 2019 and 6 August 2019.

Date of Last Submission: 6 August 2019

Delivered at: Melbourne

Delivered on: 6 August 2019

REPRESENTATION

Counsel for the Applicant: Mr Laidlaw

Solicitors for the Applicant: Tyler Tipping and Woods

Counsel for the Respondent: Ms Wheeler

Solicitors for the Respondent: Macpherson Kelley

IT IS NOTED that publication of this judgment under the pseudonym Wilburn & Wilburn (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

DGC 1426 of 2018

MR WILBURN

Applicant

And

MS WILBURN

Respondent

REASONS FOR JUDGMENT

(DELIVERED EX-TEMPORE – REVISED FROM TRANSCRIPT)

Introduction

1. On 6 August 2019 reasons were delivered in this matter, Wilburn & Wilburn [2019] FCCA 2131. The parties were directed to convene and draft orders that reflected the findings that I made in that judgment.

2. Upon reading the reasons, the parties sought clarification on who should retain the property at C(2) Street, Town D, as the Court had not addressed that question.

3. After hearing submissions by counsel on behalf of the Applicant father (‘father’) and Respondent mother (‘mother’), I gave oral reasons for my decision. The following reasons are those reasons, as revised from the transcript.

Background

1. Both parties have requested that the Court receive submissions before final orders are pronounced and have not raised that there is any legal impediment to the Court adopting this approach. In fact, they have positively sought that I adopt this approach.

2. The parties also expressed that it was their preference for a decision to be delivered ex-tempore on 6 August 2019.

3. The parties made no submissions of any substance in relation to who should retain the property in the course of the hearing. The mother’s counsel handed up written submissions at the commencement of the final day of hearing. These submissions contained no reference to the issue of who should retain C(2) Street, Town D save that a table of calculations and a list of assets prepared by the father makes reference to him retaining the property.

4. The issue was raised in the amended response filed by the mother on 12 March 2019. It was not the subject of any reference in the initial response filed by the mother and it was not the subject of any submissions in the mother’s Outline of Case filed prior to the trial.

5. The issue was not the subject of evidence, save that at [42] and [49] of the mother’s trail affidavit filed 26 February 2018. In [42] the mother deposes that the father leases the property. At [49] she states that the father operates a farm, buying and selling cattle using a portion of the property that is not leased.

6. The father makes reference at [26] of his trial affidavit filed 7 November 2018 that he was responsible for the mortgage payments on the property.

7. Aside from those references, there was no evidence in relation to which party should retain the property.

8. The father’s written submissions stated that he wished to retain the farm. The mother made brief reference in opening oral submissions to the property being a negatively geared investment property which reduces the father’s income and child support.

9. The mother in closing submissions stated:

   You will recall both parties want to retain the farm, because it is not a farm as such with a house on it. It is a negatively geared property, with significant benefits that flow from that. It may be that in order to fund a just and equitable settlement, the reality is that the farm may need to be sold.

10. In closing oral submissions, the father stated he wished to retain the farm.

11. In closing submissions in reply, the mother’s counsel submitted that retaining C(2) Street, Town D was advantageous to the mother, having her own business, as it reduces her taxable income and may increase the child support benefits available to her.

12. As stated earlier, the parties made no submissions of any substance in relation to who should retain the farm and why. 

Submissions

Father’s submissions

1. The father, in oral submissions delivered today, made reference to the history of the matter in terms of the Outlines of Evidence and the responses that were made by him to the material filed by the mother.

2. The father’s position is that the ownership of the property was never really a part of the issues to be determined until the amended response was filed shortly before the hearing. He explains that this is the reason for the lack of evidence that his client gave in relation to that question. Counsel for the father characterised the introduction of the mother’s claim to C(2) Street, Town D as a late change in tack without any case built around it and stated there was no detail set out in the mother’s material. It was conceded there was not a lot of time spent on the issue at trial. 

3. In terms of the father’s position, counsel for the father referred to evidence given by the father at trial: that the father had been the owner of the land; that he was responsible for controlling the land, including leasing the property; and that he spent time with the children at the farm, including time spent riding motorbikes. The Court has a note of that evidence from the trial. It was put on behalf of the father that he was significantly connected to, and involved on, the farm. It was also put that he was a country person who enjoyed spending time on the farm particularly with his children.

4. Further, the father raised that if the Court determines that ownership of C(2) Street, Town D be transferred from the father to the mother, then there is rollover relief pursuant to the terms of the Income Tax Assessment Act 1997 (Cth), in particular section 126(5). If there is a sale to a third party, then the parties are not subject to rollover relief and a capital gains tax (‘CGT’) is payable. There is no evidence as to the quantum of that tax and there were some submissions made as to how that should be dealt with in orders of the Court.

Mother’s submissions

1. It was raised with the mother, both before submissions were made by the father and by the father’s submissions, that the mother’s attempts to value C(2) Street, Town D at a higher amount was logically consistent with the father retaining the farm and paying out the mother based on the higher value.

2. Counsel for the mother responded that the fact the mother sought a higher price for C(2) Street, Town D was indicative of the mother seeking a fair price for the property and, also, as a precaution in the event that the Court ordered that the father retain the farm.

3. Counsel for the mother also referred to the decision of Lee Steere & Lee Steere (1985) 10 Fam LR 431, a Full Court authority which was said to be authority for the proposition that farming properties are not a special species of property and that the ordinary principles of section 79 of the Family Law Act 1975 (Cth) (‘the Act’) apply when dealing with cases involving farming properties.

4. It was raised in response to a question from the Court as to the evidence of the mother’s connection to the farm, that if the property is owned by the mother, the children will go to the farm with the mother. Therefore, with respect to the children’s enjoyment of the property, it does not advance matters, necessarily, whether the farm is in her or the father’s name.

5. It was put that the mother has not been able to enjoy the property because she has been effectively excluded from it by the father. Further, she has not had the children on weekends when she might have been be able to take the children to the farm.

6. That said, both in the brief submissions that were made before the Court at the time of the hearing and in the submissions made today, it seems that the principal reason the mother wishes to retain the property is to obtain some tax relief and other benefits in relation to child support.

7. The mother, via counsel, referred the Court to section 79(2) of the Act: that the Court must make an order that is just and equitable. The submissions on this were somewhat vague as to how they would actually operate in terms of the decision that I have to make. Other than section 79(4)(g), the mother’s counsel did not refer to any of the other section 79(4) subsections.

8. It seems, based on the mother’s submissions, that section 79(4)(g) is only relevant because the words ‘child support’ are referred to in the section. Otherwise there was no particular connection made between that section and the decision I have to make. That is, whilst the mother referred to sections 79(2) and 79(4), there was no specific submission as to how these legislative provisions should apply to the benefit of the mother.

9. A submission was also made on behalf of the mother that if the Court is against the mother keeping the property, the only just and equitable result would be to sell the property. Again, no submission was made in support of that proposition, despite being invited to do so.

Father’s submissions in reply

1. Counsel for the father noted that section 79(2) deals with the adjustment of property interest. Counsel stated that the mother’s submission was effectively asking the Court to deal with a property that had been owned, possessed and used by the father and give it to the mother in order to provide her with tax relief. It was said that those matters are dealt with administratively and that making adjustments for that reason was not a suitable basis to make the order.

2. Counsel for the father stated that the father is ‘a man of the land’. He purchased the property from family members, and that since the parties separated, there has been no application made by the mother that she occupy or possess the land.

3. In conclusion, it was said that the orders were being sought on the basis that the mother was really concerned with child support, and that was said not be a determinative issue.

Consideration

1. Whilst C(2) Street, Town D has been negatively geared and part of it has been leased, it has been more than merely an investment property to this family, and in particular, to the father.  The father purchased the property from relatives and has had the ownership, possession and care of the property. I accept his evidence that he uses the farm as a place where his children play in his care.

2. I do not accept that the only just and equitable result is that the mother retain the farm property and pay out the father or that the property be sold to a third party. No explanation that the Court could discern was provided as a rationale for that statement. The mother’s emphasis on retaining the property in her name was for tax and child support benefits.

3. I am not persuaded that the orders sought by the mother are justified on that basis. The mother has, in her evidence, described the farm as a farm where the father raises cattle for sale through his association with his employer.

4. I accept, as was put by counsel for the mother, that this is not a native title claim. However, the evidence of the father goes beyond this property being merely an investment vehicle through which he or the children derive no other benefits. The thrust of the mother’s case was that she wished to move to Suburb HH. There was no reference by her, in any evidence that she gave, that she had any particular interest in the property other than for tax and child support reasons. Those benefits also apply to the father.

5. For these reasons, I am of the view that the father should retain the property, and adjustments made on the basis of the balance of the Court’s findings should follow.

6. The orders to be drafted by the parties should contain an order that if there is a default in paying what is owed to the mother, that C(2) Street, Town D may be transferred to mother or otherwise sold. Any CGT shall be deducted from any sale price prior to being distributed to the parties.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Judge McNab

Date:  6 August 2019