Yamikani & Ain (No 2)
[2024] FedCFamC1F 89
•26 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Yamikani & Ain (No 2) [2024] FedCFamC1F 89
File number: SYC 1342 of 2020 Judgment of: CHRISTIE J Date of judgment: 26 February 2024 Catchwords: FAMILY LAW – PROPERTY – De facto relationship – Lengthy relationship – Where the parties intermingled their financial affairs in the purchase of real property and otherwise conducted their financial affairs separately – Where the parties made contributions in a manner consistent with their ultimate legal ownership of assets –Where the parties’ contributions to real property are equal as reflected on title – Where the applicant’s financial contributions exceed those of the respondent as reflected in their ownership of property – Where post-separation the respondent diminished the assets in his name and the applicant conserved and increased the value of assets in his name – Where a s90SF adjustment is made in favour of the respondent in a dollar amount Legislation: Family Law Act 1975 (Cth) Pt VIII and Pt VIIIB, ss 4, 90SF, 90SM, 90XC, 90XD Cases cited: Jabour & Jabour (2019) FLC 93-898
Kane & Kane (2013) FLC 93-569
NHC & RCH (2004) FLC 93-204
Stanford v Stanford (2012) 247 CLR 108
Trevi & Trevi (2018) FLC 93-858
Wallis & Manning (2017) FLC 93-759
Williams & Williams [2007] FamCA 313
Division: Division 1 First Instance Number of paragraphs: 125 Date of hearing: 30 January–2 February 2024 Counsel for the Applicant: Mr Weightman Solicitor for the Applicant: Gordon & Barry Lawyers Pty Ltd Counsel for the Respondent: Mr Dura SC Solicitor for the Respondent: Cunningham Legal ORDERS
SYC 1342 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR YAMIKANI
Applicant
AND: MR AIN
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
26 FEBRUARY 2024
THE COURT ORDERS THAT:
1.The respondent pay to the applicant the sum of $375,000 within 60 days.
2.Simultaneously with the payment in Order 1:
(a)The applicant transfer to the respondent all of his right, title and interest in the property situated at and known as D Street, Suburb E (“the Suburb E property”); and
(b)The applicant and respondent do all acts and things and the respondent pay all sums as may be necessary to discharge the mortgage registered on title of the Suburb E property.
3.In the event the respondent does not comply with Order 1 or 2(b), within 90 days of the date of these Orders the applicant and respondent (collectively “the parties”) shall do all acts and things and sign all documents necessary to effect a sale of the Suburb E property by public auction on the following terms:
(a)The conveyancing solicitor shall be agreed by the parties and failing agreement within 7 days of the date of the Orders as nominated by the applicant (“the sale solicitor”);
(b)The applicant shall nominate 3 agents with whom the Suburb E property shall be listed and failing agreement within 21 days of the date of the Orders as nominated by the applicant (“the real estate agent”);
(c)The auctioneer shall be as agreed by the parties and, falling written agreement, shall be as nominated by the real estate agent;
(d)The auction shall be agreed and shall take place no later than 90 days from the date of these Orders;
(e)The reserve price shall be as agreed by the parties and, falling written agreement, shall be $1.5 million.
4.In the event the Suburb E property is not sold at the first auction or within 30 days of the first auction, the applicant and respondent shall do all such acts and sign all documents necessary to cause the Suburb E property to be relisted for sale by auction at 6 weekly intervals and each successive reserve price shall be as agreed by the applicant and respondent and, failing written agreement, shall be 10% lower than the reserve price.
5.For the purpose of these Orders the applicant shall be entitled to attend any open inspection of the Suburb E property and the respondent shall make the Suburb E property available for inspection at such times and dates as requested by the real estate agent and shall otherwise do all acts and things and sign all documents necessary to facilitate and cooperate in the sale of the Suburb E property.
6.Upon settlement of the sale of the Suburb E property, the proceeds of the sale shall be applied in the following manner and priority:
(a)Payment of agent’s commission and advertising expenses and legal expenses of the sale;
(b)Payment of any money due and owing to any mortgagee with respect to any loans secured on the Suburb E property;
(c)The balance paid to the trust account of Gordon and Barry; …84 (“the trust funds”).
7.The trust funds held in the trust account of Gordon and Barry pursuant to Order 6(c) shall be distributed as follows:
(a)$375,000 to the applicant or as he directs;
(b)The balance to the respondent.
8.Simultaneously with Order 2 the parties shall do all acts and things and sign all documents necessary to effect the closure of any and all joint bank or financial accounts (“the joint accounts”), and any and all funds standing in credit to the parties in the joint accounts at the time of these Orders shall be distributed equally.
9.Unless otherwise specified in these Orders, the applicant and respondent retain all other items of property in their possession or control at the date of these Orders including superannuation entitlements, funds at bank, home contents, clothing, jewellery and personal effects.
10.The applicant and respondent be solely responsible for any liabilities in their sole name and shall hereafter indemnify the other in respect of same and the respondent shall indemnify the applicant in respect of the body corporate levies and council rates in respect of the Suburb E property.
11.Both the applicant and the respondent hereby release and indemnify the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the other for or by reason of or in respect of any act, cause, matter or thing.
12.In the event that either of the parties refuses or neglects to do any act or thing necessary to give effect to these Orders, the Registrar of this Court is hereby appointed pursuant to Section 106A, Family Law Act, to do such act or thing necessary to give effect to these Orders.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Yamikani & Ain has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an application for adjustment of interests in property as between the applicant, Mr Yamikani (“the applicant”) and the respondent, Mr Ain (“the respondent”).
The parties commenced cohabitation in 1991 and separated on a final basis at the end of 2019/beginning 2020. They were in a relationship for almost 40 years and a de facto relationship for just shy of 30 years.
The parties do not agree about how their respective assets should be adjusted and accordingly, the Court is called upon to apply the principles in Pt VIII of the Family Law Act 1975 (Cth) (“the Act”).
There is one jointly owned asset: D Street, Suburb E, NSW (“the Suburb E property”) which the parties own as tenants in common in equal shares. Otherwise, each of the parties has assets in their name, albeit that the assets of the applicant are greater than those of the respondent.
THE LAW
Parties to a de facto relationship which has ended are entitled to approach the court to adjudicate any dispute relating to the financial circumstances of the parties in relation to the relationship. In this case, each party seeks that the Court make an order which would adjust their interests in property.
The Court is only to make an order where it would be “just and equitable” to do so: s 90SM(3) of the Act.
The High Court said in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) at [36]:
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…
(Footnote omitted)
The matters which are to be considered are set out in s 90SM and s 90SF of the Act.
CONSIDERATION
At the conclusion of the hearing the following issues remained the subject of dispute between the parties:
(a)The extent to which the parties’ financial affairs were conducted jointly during the relationship and with what consequence(s);
(b)The significance of amounts said to have been advanced by the applicant to the respondent during the relationship; and
(c)The use of funds by each of the parties after separation.
At the time of hearing the applicant’s property is, according to the Joint Balance Sheet which became Exhibit 14:
Assets Value 1 Suburb E property (50%) 750,000 2 CBA #...74 4,792 3 CBA #...45 5,079 4 Westpac #...87 2,130 5 F Bank #...99 1,750 6 G Bank #...4-3 290 7 F Bank #...75 10 8 G Bank #...2-5 42 9 G Bank Portfolio 346,729 10 H Finance account 1,259,516 11 Motor Vehicle 1 15,000 12 Household contents 7,500 13 J Company employee shares 16,159 14 K Company employee shares 1,860 15 Gordon & Barry Trust Account 103,000 16 CBA #...77 (50%) 1,076 17 Paid legal fees 215,682 Subtotal: 2,730,615
The applicant had included in his list of assets monies which were advanced by him to the respondent commencing in 2010 (which he estimated at $70,000). The advances were made pursuant to an understanding between the parties and repayments were made (albeit not on any specific schedule or at any specific rate). There was no interest payable. The advances had the character of a non-commercial oral agreement. I accept that both parties, by their conduct in record keeping (applicant) and repayments (respondent), treated the funds advanced as having been lent as opposed to gifted.
As time passed and the loan was not repaid (after 2016), it may well be that some or all of the monies have, by reason of the statute of limitation in NSW, lost their character as a debt able to be enforced. The applicant’s counsel sensibly conceded that this was the position.
The existence of the advances and repayments remain a relevant factor in this case (even though they plainly would not constitute a debt enforceable at law) because of the manner in which they inform the discussion of the parties’ financial arrangements. However, I have not treated the loan as an asset of the applicant in the circumstances described above.
In Exhibit 14 the respondent contended that it would be appropriate to include an amount of money as an “addback” in the applicant’s name being $59,928 withdrawn from the applicant’s H Finance account and it is contended not otherwise explained by paid legal fees. Senior counsel for the respondent properly conceded that it would be unusual if I included as notional property money which no was no longer in the applicant’s possession because it had been provided, for example, as Christmas or wedding gifts to family members from the applicant’s separate property after separation. This concession was made in circumstances where broadly both parties agreed that each of the parties were free to expend their own funds as they saw fit after separation. As discussed in some detail below, the respondent realised and spent his investment account and superannuation which together totalled $498,761 after separation. To include monies spent by the applicant (who was also paying rent) in those circumstances would not be just and equitable.
Accordingly, the applicant’s assets are: $2,514,933.
In addition, the applicant has the following superannuation entitlements:
Superannuation Value 1 Superannuation Fund 1 119,212 2 Superannuation Fund 2 1,809,140 Subtotal: 1,928,352
The applicant also has entitlements in Country L to funds described in the Joint Balance Sheet as “[Country L Super Fund]”. In actual fact, the parties’ description of this as a “Super Fund” may be a misnomer. The employment records of the applicant make plain that the name of the fund is an abbreviation for a type of Country L savings and pension fund. I indicated to counsel that if they sought to be heard against the proposition that this entitlement is more properly characterised as a financial resource then they would be entitled to file written submissions and I made orders accordingly. No submissions were received.
Part VIIIB of the Act enables this Court to make orders, binding on third parties, to split superannuation entitlements.
Section 90XC(2) of the Act provides that “[a] superannuation interest is to be treated as property for the purposes of paragraph (c) of the definition of de facto financial cause in section 4” (emphasis added).
Section 4(c) of the Act provides that definition as follows: “proceedings between the parties to a de facto relationship with respect to the distribution, after the breakdown of the de facto relationship, of the property of the parties or either of them” (emphasis added).
“Superannuation interest” as it appears in s 90XC(2) of the Act is defined in s 90XD as “an interest that a person has as a member of an eligible superannuation plan, but does not include a reversionary interest”. “Eligible superannuation plan” is also defined in s 90XD and means any of the following:
(a) a superannuation fund within the meaning of the SIS Act;
(b) an approved deposit fund;
(c) an RSA;
(d)an account within the meaning of the Small Superannuation Accounts Act 1995;
(e)a superannuation annuity (within the meaning of the Income Tax Assessment Act 1997).
It follows that a superannuation account which is not an eligible superannuation plan is not a superannuation interest that may be regarded as property for the purpose of the definition of de facto financial cause.
Prior to the introduction of Part VIIIB of the Act, superannuation was taken into account in making orders for adjustment of parties’ interests in property and characterised as a financial resource in the hands of the member spouse. The amendments which were introduced permitted the Court to make orders which changed the beneficial entitlements of the spouses in superannuation entitlements and were binding on third party trustees. The Court does not have the power to alter the beneficial entitlements of spouses in off-shore superannuation accounts nor does it have the power to bind foreign third parties. The nature and characteristics of an off-shore superannuation account are such that it is properly considered a financial resource.
The distinction between property and financial resources is that the Act provides that the Court may alter the interests of the parties in property (s 90SM(1) of the Act) but may only take into consideration the existence and financial consequences of financial resources held by one or other spouse: s 90SF(3)(b) of the Act.
It follows that the Country L Super Fund of the applicant is appropriately considered as a financial resource.
The respondent has the following assets:
Assets Value 1 Suburb E property (50%) 750,000 2 CBA #...77 (50%) 1,076 3 M Bank #...77 8 4 Household contents 3,000 5 Artworks purchased 5,000 6 Artworks, [sold] -paintings 1,000 7 Computer equipment 1,475 8 Mary Cunningham Trust Account 107,794 9 Paid legal fees 114,742 Subtotal: 984,095
The parties have a number of joint liabilities, namely a mortgage to the Commonwealth Bank of Australia for the Suburb E property ($76,074), body corporate levies for the Suburb E property ($7,975) and council rates for the Suburb E property ($2,069).
The respondent drew on the mortgage facility secured against the Suburb E property to fund legal fees. During the relationship, the mortgage debt had effectively been retired but the parties elected to leave the facility open and the mortgage was consequently not discharged. The portion of the mortgage referrable to the respondent’s legal fees is $63,777.
The parties have two jointly owned assets: the Suburb E property and a bank account which contains $2,152.
The respondent does not have any superannuation entitlements. After separation, the respondent received about $352,000 from his superannuation entitlements and applied those funds to living expenses and legal fees.
Treatment of paid legal fees
The applicant has paid legal fees of $215,682 and in addition has placed $103,000 in his solicitor’s trust account. The applicant’s legal fees have been funded by a combination of withdrawals from his investment account with H Finance and income.
The respondent has paid legal fees of $114,742 and an additional $107,794 is in his solicitor’s trust account.
The respondent’s legal fees have been funded by a combination of three payments made pursuant to court order: N Finance account #...27 in the parties’ joint names ($24,000), redraw on the mortgage facility secured against the Suburb E property in the sum of $63,777 and a payment of $38,390 from the applicant and monies drawn from the respondent’s superannuation.
The treatment of paid legal fees is a discretionary matter guided by the authorities: NHC & RCH (2004) FLC 93-204 at [56-[60]; Trevi & Trevi (2018) FLC 93-858 at [30].
Here the source of funds to meet the applicant’s and the respondent’s legals fees is primarily capital which would otherwise have been available to adjust between the parties and it is appropriate to include the paid legal fees and the monies in trust in the pool of assets.
The applicant contends that it would be just and equitable for the Court to order the sale of the jointly owned property and divide the net proceeds equally (but to take into account that the respondent should bear sole responsibility for the mortgage and that money received by way of partial property settlement should also be taken into account). The applicant also seeks that the respondent pay to him monies which he says were loaned to the respondent.
Otherwise, the applicant’s position is that each party should retain his own assets and be responsible for his own liabilities.
The respondent seeks an order that the applicant transfer to him all of his right title and interest in the Suburb E property free of encumbrance and make a further payment of such sum as may be necessary to divide the net assets (excluding superannuation) such that the respondent receives 55 per cent of them.
The respondent seeks a superannuation splitting order directed to the applicant’s interest in Superannuation Fund 2 such that he receives 47 per cent of that fund.
Financial conduct during intact relationship
It is necessary to have an awareness of the “stated and unstated assumptions” upon which the parties operated the financial aspects of their relationship. In broad terms, the parties to this relationship did not pool their income.
The main focus of the parties’ dispute was on whether the financial affairs of the parties were separate or “intermingled”. This focus threatened to distract from the more central assessment of contribution. The question of joint or separate finances is relevant to that assessment of contribution but it is not a binary question. It is not the case that, where parties have separate financial affairs, the court will inevitably conclude that they should each retain their own assets (without adjustment) at the conclusion of the relationship, just as it could not be the case that, if all assets were held in joint names, that fact would dictate the outcome.
Accordingly, it is appropriate to review the evidence about financial contributions focusing, in the first instance, on real property acquisition. The parties purchased a number of properties during their relationship. It is useful to understand how those properties were acquired to evaluate the respective contentions about contribution.
P Street, Suburb Q
The first property, P Street, Suburb Q, (“the Suburb Q property”) was purchased in 1991 in the name of the applicant alone. The deposit was sourced from the proceeds of sale of the respondent’s property (owned prior to cohabitation). The respondent had owned a property R Street, Suburb S (“the Suburb S property”) which he sold in 1991. The respondent says the net proceeds were about $26,000. The applicant accepts this figure.
The purchase price of the Suburb Q property was around $130,000. The respondent says he paid the 10 per cent deposit from the proceeds of sale of the Suburb S property. That would have been around $13,000. The respondent says the balance was funded by a mortgage over the Suburb Q property. The applicant says he paid 50 per cent of the deposit. The respondent says that the applicant did make a greater lump sum contribution to acquisition of this property, but as a consequence, the respondent’s loan was greater such that their contributions were equal. Notwithstanding the factual discrepancy, there was no cross-examination on the topic and I am unable, in those circumstances, to make a finding. The applicant was working for a bank which provided the mortgage which was secured against the title. In 1993, the property was transferred into the parties’ joint names as tenants in common in equal shares (Exhibit 15).
The respondent says both he and the applicant made (unspecified) mortgage payments in respect of the Suburb Q property.
The Suburb Q property was occupied by the parties as their primary residence between 1991 and 1998. In 1995 the applicant moved to Country L for work while the respondent remained living in the Suburb Q house. The applicant returned to Australia in 1998 and recommenced to live in the Suburb Q house.
The parties moved to Sydney in or about 1998 and the Suburb Q property was tenanted. The property was negatively geared.
The parties sold the Suburb Q property in 2001. On the settlement of that sale in 2001, the sum of $56,178.14 was deposited to the parties’ joint Commonwealth Bank account.
T Street, Suburb U, City V
In 1994 the parties acquired T Street, Suburb U, City V (“the City V property”) in joint names. The parties obtained an interest only loan. The purchase price was $35,000. The City V property was not developed and the parties sold it in 1997.
W Street, Suburb X
In 1994 the parties acquired W Street, Suburb X (“the Suburb X property”) in joint names. There was a mortgage on title and the parties applied the rents to the mortgage. Each agrees the expenses exceeded the income. The shortfall was met equally. The property was sold in 1996.
D Street, Suburb E
In 1999 the parties acquired the Suburb E property. The purchase price was over $400,000. The parties obtained a mortgage with the Commonwealth Bank for $236,150. The borrowings were structured to create individual loan accounts in the names of each borrower.
In 1999, at the time of the purchase of the Suburb E property, the parties obtained three loans:
(a)A loan for $125,000 in the applicant’s name (spread over two loan facilities);
(b)A loan for $125,000 in the respondent’s name; and
(c)A joint loan of about $60,000 which was said by the applicant to cover losses in respect of the Suburb U and Suburb X properties and otherwise to purchase an investment in joint names with the N Finance Hybrid Fund. The respondent says sale of City V and Suburb X property resulted in a small profit but little turns on this discrepancy.
The parties’ only joint bank account was opened in 1994. That account was used to meet their joint expenses: mortgage, utilities, rates, electricity, telephone land line. The respondent says they each contributed the sum of $250 per fortnight. It has also been the account to receive any joint income (from rental of property owned by the parties).
Non-real estate investments
The applicant says that he established an investment portfolio with H Finance in 2004.
In evidence was an email from the applicant to the respondent in August 2012. The applicant had received tax advice about living in Country L which he shared with the respondent. In the body of the applicant’s email, he wrote about the Suburb E property and referred to it as “our property”. In the same email, the applicant referred to “my non-property investments (eg listed shares and managed funds)” and “[m]y investment portfolio”. This contemporaneous characterisation is consistent with the applicant’s evidence in this case that he considered the joint property of the parties as joint and the assets in his sole name as his and dealt with them accordingly.
H Finance
The parties are at issue about whether the investment with Y Limited (which became H Finance) in 2004 was joint or an investment by the applicant alone. The respondent’s evidence does not assert that he made any financial contribution to the initial investment of funds in 2004 but says that they were introduced to the firm by his contacts and met with the adviser jointly.
The evidence that is available suggests that the respondent’s investment with H Finance, whenever it commenced, was a separate account from the applicant’s. In my view, nothing turns on the fact that the accounts were grouped together by the adviser – this is in keeping with the fact that the firm was assisting two spouses. The adviser confirmed the separateness of the accounts in correspondence with the applicant in May 2019 when she wrote “both portfolios are managed and held separately”.
The unchallenged evidence of the applicant is that from approximately 2014 he was contributing between 30-40 per cent of his salary to this investment account.
H Finance Hybrid Fund
The parties’ H Finance Hybrid Fund was in joint names. The applicant submitted that the parties made conscious choices around their investments whether in sole or joint names and, when the investment was joint, then the financial contributions were equal. This is factually accurate and supports the conclusion that the parties’ intentions were reflected in the manner in which they acquired individual assets.
The parties borrowed jointly to fund this joint investment and the legal interests of the parties reflected this election.
2010 “loan”
In 2009 the applicant says that he offered to lend the respondent money and the respondent, at that stage declined. In 2010 the applicant says the respondent asked to borrow money. From this point onwards the applicant says there were several individual advances each of which was documented with a running total. The funds were provided for a computer and holidays interstate and overseas.
In 2010 the applicant bought a car paying the purchase price upfront. The respondent requested that the car be in joint names and the applicant recorded half of the purchase price (total $45,000) against the respondent as a loan.
In 2012 the applicant advanced funds to the respondent to retire his share of the debt secured over the Suburb E property. He kept a record of that payment.
The applicant says that in the latter part of the relationship, the respondent’s loan was extended to include living expenses including, in later years of occupation, the rent of their apartment in Country L, relocation expenses and work and new furnishings for the Suburb E property.
The parties agree that there was a loan spreadsheet and that the respondent made payments which reduced the outstanding balance. No repayments were made after February 2016.
The applicant estimates the balance outstanding at the time of separation was about $70,000.
The respondent put in issue any formal loan and contended that while he accepted that money was advanced by the applicant and repaid by him, he disputed that this was formal or mutually agreed upon. I accept it was not formal, by which I mean legally enforceable. The fact of the advances and repayments is established on the evidence. The fact that the respondent says he did not always engage with the spread sheet or that the applicant would raise the indebtedness in the context of arguments between them establishes, rather than negates, the existence of this informal arrangement.
The advances and their documentation and repayment are part of the evidence which demonstrates the separate nature of the parties’ financial arrangements.
It is not in dispute that the parties discussed finances throughout the relationship – where they diverge is in how they seek to characterise the discussions. The applicant says he told the respondent his plans and sometimes gave the respondent advice but each of them made their own decisions. The respondent says decisions were joint. This is illustrated by the evidence which they each give about retirement planning. The respondent says they discussed the need to have $2 million to secure a comfortable retirement. The applicant says the parties discussed that they would need to have $1 million each.
The questions that arise are:
(a)Does the evidence allow me to make a finding about which version is accurate? and
(b)Does it matter having regard to the objective evidence?
It is not unusual for two members of a couple to recall the same facts in a subtly different manner. I cannot make a finding in this case about what words were spoken and hence I am persuaded by what the parties actually did, that is, by the objective evidence of the manner in which they conducted their affairs.
I am comfortably satisfied that the manner in which the parties conducted their financial affairs during the relationship is a relevant (albeit not necessarily determinative) factor.
The rationale behind legislation which establishes a statutory basis for the adjustment of the interests of individuals in property attendant upon relationship breakdown is to ensure that proper recognition is given to the financial consequences of a relationship for the parties to that relationship. For example: where one party has taken time out of the workforce to raise children, or where one party has undertaken all the homemaking tasks to facilitate the other party’s career progression. In that sense the statutory regime is remedial. Considering the statutory factors informs the exercise of the broad discretion. Where it is necessary to do justice and equity as between the parties then orders for adjustment may be made in reliance upon an assessment of the relevant matters in the Act.
The High Court in Stanford said:
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).
(Emphasis added)
The “stated and unstated assumptions” in this relationship were plainly that the parties did not pool their earnings. The parties each had their respective salaries deposited to a bank account in their individual names.
The parties acquired real property as tenants in common in equal shares and agreed to (and in fact did) meet the costs of the ownership of that property in the same proportion.
The document headed “Agreement and Roadmap October 2019” prepared by the respondent confirms two things. The parties’ financial affairs were largely separate and the respondent was dissatisfied with this situation in October 2019.
The separateness of the parties’ financial affairs is further established by the respondent’s various queries about transactions during the parties’ intact relationship – such as transfers by him of funds invested in his sole name in Australia to Country L where they were again invested in his sole name to take advantage of the premium banking services and return of the funds to Australia subsequently as well as transfers by both of the parties to members of their respective families. The respondent was not across the detail because the applicant dealt with those funds as his own.
This is not a case where focus on the parties’ financial contributions to the acquisition of specific assets obscures the financial contributions to the relationship more broadly since the evidence does not suggest that one party contributed to living expenses permitting the other to acquire assets.
What is the significance (if any) of the parties’ estate planning?
The terms of the parties’ respective wills were the subject of evidence. It does not appear as though the parties had wills before 2006. In 2006 they each prepared a will. The evidence establishes that the terms of the wills were unknown to one another. It would appear that the applicant left his half share in the Suburb E property to the respondent and the remainder of his estate to his nephews while the respondent left the whole of his estate to the applicant.
The terms of the parties’ wills do not offer any evidence in respect of contribution. They speak to the provisions which the spouses made for one another in the event of death.
Assessing non-financial contributions
There is very little evidence in either parties’ case about non-financial contributions. The respondent gives evidence about his role on the strata committee for the apartment owned by the parties and gardening in the building’s common areas in the last four years. The applicant’s evidence about non-financial contributions – which is not contradicted – is of a largely equal division of homemaking tasks although the applicant identifies some tasks as having been generally performed by him. The evidence taken together does not appear to require an adjustment in favour of one party or the other on account of non-financial contributions.
In addition, during a number of periods during the parties’ de facto relationship they did not share the same residence, making it less likely that they made contributions of a non-financial nature to the benefit of the other party or the parties’ jointly. Certainly, there is nothing in the evidence which would support such a conclusion.
During the relationship the parties moved from WA to NSW and NSW to Country L and back to NSW. While various of these moves were undertaken in order to permit one or other of the parties to take up work, at times the parties lived separately as a consequence of the decision to accept one job or another.
It appears that the parties’ financial contributions to the acquisition of assets is accurately captured by the manner in which they hold their jointly owned property.
Accordingly, it is appropriate to understand their contributions to the only jointly held asset. Contributions to real property in the names of the parties throughout the relationship were almost entirely equal as reflected on title.
A proper assessment of contributions – financial and non-financial – in the circumstances of this case demonstrates that the parties’ contributions were not equal or equivalent. The applicant’s financial contributions exceeded those of the of the respondent in a manner reflected in their ownership of property.
The applicant directed his earnings into savings, investment and superannuation such that his assets are greater than those of the respondent. The length of the relationship does not obscure this assessment of contribution. I am acutely aware that a focus on direct financial contributions risks potentially overlooking “the myriad of other contributions that each of the parties has made during the course of the relationship”: Williams & Williams [2007] FamCA 313 at [26]). I am satisfied that in this case I am not overlooking contributions which require consideration.
In Jabour & Jabour (2019) FLC 93-898 (“Jabour”), the Full Court, reviewing the jurisprudence concerning contributions, said (in the context of a discussion of initial contributions):
52.The suggestion that an initial contribution could be “eroded” or “offset” over time by subsequent contributions made by the other party was first made in Lee Steere and Lee Steere (1985) FLC 91-626 in which the Full Court said at 80,078:
The longer the duration of the marriage, depending on the quality and extent of her contribution, the more the proportionality of the original contribution is reduced … the proposition that the strength of a contribution made at the inception of a marriage is eroded, not by the passage of time but by the off-setting contribution of the other spouse, still holds true.
53.In Money and Money (1994) FLC 92-485 at 81,054 (“Money”) Fogarty J further observed that:
the term “off-setting contribution” does not necessarily mean “greater contribution”. It simply reflects the circumstance that the respective contributions of the parties over a long period of marriage may “offset'” the significance which might otherwise be attached to a greater initial contribution by one party … the original contribution should not be carried forward as a mathematical proportion; ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be later factors of significance, and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
54.Finally, in Pierce, after quoting Fogarty J’s remarks in Money, the Full Court said:
28. In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
55.Again, consistent with the authorities set out above and those which we discuss below, the import of Pierce is that the weight to be attached to an initial contribution must be assessed against the rubric of all of the contributions, both financial and non-financial, made by the parties over the course of their relationship.
The trial Judge in Jabour, discussed the decision in Wallis & Manning (2017) FLC 93-759 where the Full Court relevantly observed:
122.There can be little doubt on the evidence that each party contributed to the maximum of their respective capacities and abilities within these various roles. There was a genuine mutuality to their relationship and it, and the financial decisions and arrangements within it, were subject to the ‘unstated assumptions’ that devolve from mutuality…
The evidence in this case does not allow the same conclusion. The applicant applied his income to his debts and then to investments in his own name. The respondent says he tried to make equivalent contributions to the parties’ joint expenses. It seems that this was the pattern until about 2010. From that point, the respondent did not always contribute equally to the parties’ expenses and for some periods the applicant met these by way of advance. Some of those amounts were repaid but eventually the arrangement was abandoned by both parties.
The latter part of the relationship starkly demonstrates the lack of mutuality. The applicant continued to save and meet his liabilities. The respondent spent money on the purchase of illicit drugs, he ceased meeting expenses such as strata fees and withdrew his investments and superannuation. He accrued credit card debt. The applicant incurred significant rental expenses arising out of the separation. The respondent had the benefit of occupation (the modest mortgage ($203 per month) being met by the applicant).
In total, the respondent’s superannuation entitlements went from $352,814 in June 2021 to nil in February 2022.
The respondent has also disposed of his investment account with H Finance which was in the sum of $145,946.94 as at 30 June 2019.
This is not a situation where prior to separation the applicant was responsible for payment of the respondent’s living expenses and ceased to provide those funds at separation. The parties had always provided for their own living expenses.
A proper assessment of contribution must recognise that the applicant conserved assets (his own and the joint assets) and they increased in value both because of the interest earned and his own contributions and the respondent diminished the assets in his name.
No questions of non-financial contribution, nor the length of the relationship cast doubt on the appropriateness of assessing contribution through the lens of what each party has acquired. For that reason, I assess the contributions to the jointly held property to be equal and otherwise consider that each party has contributed individually to the other property and financial resources in his respective name. I accept the submission of the respondent’s senior counsel that it is generally neither practicable or possible to undertake a detailed accounting of the financial contributions made by each of the parties. In the factual circumstances of this case, assessing the manner in which the parties organised their finances does not require a detailed accounting. The agreed facts support the conclusion that the parties contributed in a manner consistent with their ultimate legal ownership of assets. This conclusion takes into account the myriad contributions of the parties’ financial and non-financial and gives them the weight which is appropriate given the factual findings which I have made.
That is not the end of the inquiry. Section 90SM(4)(e) of the Act directs me to consider those matters in s 90SF(3) as are relevant on the facts of this case in arriving at a decision as to what order (if any) is appropriate. The principled reason to intervene may arise from an assessment of contributions or matters arising under s 90SF(3) or a combination of both. I have concluded that it is only by reason of the operation of s 90SF(3) that it would be proper to adjust the parties’ existing interests in assets. The parties are in very different financial positions. The effect of my contribution findings would be as follows:
The applicant would retain:
Assets Value 1 Suburb E property (50%) 750,000 2 CBA #...74 4,792 3 CBA #...45 5,079 4 Westpac #...87 2,130 5 F Bank #...99 1,750 6 G Bank #...4-3 290 7 F Bank #...75 10 8 G Bank #...2-5 42 9 G Bank Portfolio 346,729 10 H Finance account 1,259,516 11 Motor Vehicle 1 15,000 12 Household contents 7,500 14 J Company employee shares 16,159 15 K Company employee shares 1,860 16 Gordon & Barry Trust Account 103,000 17 CBA #...77 (50%) 1,076 18 Paid legal fees 215,682 Subtotal: 2,730,615
In addition, the applicant has the following superannuation entitlements:
Superannuation Value 1 Superannuation Fund 1 119,212 2 Superannuation Fund 2 1,809,140 Subtotal: 1,928,352
And his interest in the Country L Super Fund with a value of $315,551.
As against this the respondent would retain:
Assets Value 1 Suburb E property (50%) 750,000 2 CBA #...77 (50%) 1,076 3 M Bank #...77 8 4 Household contents 3,000 5 Artworks purchased 5,000 6 Artworks, [sold] -paintings 1,000 7 Computer equipment 1,475 8 Mary Cunningham Trust Account 107,794 9 Paid legal fees 114,742 Subtotal: 984,095 (76,074) 908,021
It is necessary to place the mortgage on the respondent’s side of the ledger since it was used to fund his legal fees.
It would not be appropriate to require that the applicant be responsible for the outstanding body corporate levies for the Suburb E property ($7,975) and council rates for the Suburb E property ($2,069) as, while they are joint liabilities, they have accrued at a time when the respondent has had sole occupation of the property. The orders which I make will allocate those debts to the respondent.
The respondent’s financial position
The respondent is 60 years of age.
There is no expert evidence about the respondent’s health. The respondent’s evidence is that he has a drug addiction dating from 2012 (now in remission), suffered a medical episode in 2020 and has long lasting physical impacts from a surgery. The respondent is unemployed and has been unemployed since 2020.
The respondent accepts that he has a modest earning capacity. Neither party contended that the respondent is likely to obtain employment as a professional and he indicated a preparedness to undertake work in the allied health sector consistent with his employment many years ago. His age and the period of time he has been out of paid employment support the conclusion that his earning capacity is limited.
The respondent has no superannuation. His assets are limited to his interest in the Suburb E property.
The Act provides that the Court should consider, in making an order for property adjustment, a standard of living that in all the circumstances is reasonable. What is reasonable will arise out of the facts and circumstances in each case.
The applicant’s financial position
The applicant is 63 years of age. The applicant is in full time employment. In 2023 his taxable income was $268,171.
The applicant will have significant assets by reason of the orders I propose to make: s 90SF(3)(n) of the Act.
The applicant also has a financial resource in his Country L Super Fund entitlements.
The applicant provides financial assistance to his mother which is a relevant consideration under section 90SF(3)(e) of the Act, being a moral rather than a legal obligation.
Is there a partially articulated claim by the respondent for something akin to “expectation damages”?
The respondent says that the parties jointly planned to have sufficient investments to provide for their retirement. The applicant says something similar but subtly different as discussed above. On the first version, the assets of the parties were to be applied to the expenses of the parties in retirement without reference to source. In the second, the assets of each were to be applied to his own expenses.
There is no explicit statutory provision which requires me to have regard to the (financial) expectations of a party which have been frustrated by separation. Section 90SF(3)(r) of the Act permits consideration of any fact or circumstance which in the opinion of the court the justice of the case requires to be taken into account. I am not persuaded that the unilateral assumption by one party to a relationship that their spouses’ assets will be available to them in retirement when their own have been exhausted in the manner which has occurred here is a matter which the justice of the case requires me to consider.
It is necessary to say something about s 90SF(3)(k) which reads:
(3) The matters to be so taken into account are:
…
(k)The duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration…
This subsection is not to be read in a disaggregated fashion as though the duration of the relationship in and of itself was material to the assessment of what order would be just and equitable. It is where the duration of the relationship has had an impact on earning capacity that the length of the relationship becomes material to the assessment of matters under s 90SM(4)(e) of the Act.
As previously articulated, the need to ensure that each party has a standard of living that in all the circumstances is reasonable is a relevant consideration and applicable here.
I accept that the respondent would like to retain the property in which he resides but his desire to do that must be weighed against whether or not an order facilitating that outcome would be just and equitable to both parties.
I find that it is appropriate to provide the respondent with a sum of money in addition to his interest in the Suburb E property but he will still need to pay the applicant an amount to secure transfer. There is no evidence about the respondent’s borrowing capacity (if any) so I cannot be satisfied he will be able to obtain a mortgage and accordingly will make default orders for sale.
In calculating the appropriate amount, I have had regard to the content of the respondent’s financial statement. He lists modest expenses although I accept Part N is not completed. The amount is not designed to place the applicant and respondent in the same position as one another. It recognises the respondent’s evidence that he will return to the workforce and that he is 3 years younger than the applicant. It is a capital sum designed to provide either for living expenses or accommodation at the respondent’s election.
It is not necessary for me to express this adjustment in percentage terms. In the circumstances of this case such an approach would not be in keeping with ensuring justice and equity as between both of the parties to this relationship. In approaching the adjustment to the respondent in dollar terms I have in mind the observations of Faulks DCJ in Kane & Kane (2013) FLC 93-569:
3. Nothing in s 79 requires a trial judge (or for that matter the parties) to allocate a percentage entitlement of the property to each party in applying the criteria and requirements of s 79. (And because of s 79(4)(e) s 75(2)). The articulation of such percentages is a practical tool whereby the parties and ultimately the trial judge indicate the weight and evaluation given to any contribution (or contributions in combination) or to any factor under s 75(2) (or all factors in combination). While the allocation of percentages is a sensible and valuable tool, (particularly to promote consistency and predictability) it cannot be an objective in its self. Section 79 imposes no obligation on a Court to divide property or interests in property in accordance with some determined percentage.
(Original emphasis)
In “real money terms”, the $375,000 represents a significant sum which the respondent may draw upon (and which is not subject to income or other taxation impost). It is also a sum which is approximately equivalent to 10 per cent of the non-superannuation assets. I consider that this adjustment is within the range of results which appropriately recognises the parties’ respective 90SF(3) considerations.
I will make orders that provide for a cash adjustment to the respondent. There is no obligation arising out of the statute that the adjustment be expressed as a percentage of the whole pool and given my findings about the separate nature of the parties’ financial affairs it is appropriate to fix the adjustment in dollar rather than percentage terms.
I find that it is appropriate that in addition to his entitlement to half of the Suburb E property the respondent receive $375,000. That will necessitate a payment by the respondent to the applicant of $375,000 in order to secure transfer of the property. The mortgage must be discharged. If the respondent cannot discharge the mortgage and/or pay the applicant then the property should be sold.
I certify that the preceding one hundred and twenty-five (125) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 26 February 2024
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