Yusuf & Yusuf
[2021] FamCA 116
•12 March 2021
FAMILY COURT OF AUSTRALIA
Yusuf & Yusuf [2021] FamCA 116
File number(s): PAC 3522 of 2017 Judgment of: FOSTER J Date of judgment: 12 March 2021 Catchwords: FAMILY LAW – PROPERTY – property adjustment – where discussion of applicable principles – where evidence of husband and second respondent as to asserted loan arrangement not accepted – where such arrangement held to be a sham – where claim as to asserted loan dismissed – where consideration of parties’ contributions and relevant s 75(2) factors – where orders made for sale of matrimonial home. Legislation: Family Law Act 1975 (Cth) ss 75(2), 79, 79(1), 79(2), 79(4) Cases cited: Bevan & Bevan [2014] FamCAFC 19
Chapman & Chapman [2014] FamCAFC 91
Russell & Russell (1999) FLC 92-877
Scott & Danton [2014] FamCAFC 203
Stanford & Stanford [2012] HCA 52
Teal & Teal [2010] FamCAFC 120
Number of paragraphs: 91 Date of hearing: 3 and 4 September 2020 and 14 and 15 December 2020 Place: Parramatta Counsel for the Applicant: Ms Dart Solicitor for the Applicant: Sanford Legal Solicitor for the First Respondent: Malouf Solicitors Counsel for the Second Respondent: Mr Cummings SC with him Mr Moutasallem Solicitor for the Second Respondent: Platinum Lawyers Pty Ltd ORDERS
PAC 3522 of 2017 BETWEEN: MS YUSUF
ApplicantAND: MR YUSUF
First RespondentMS NOOR
Second Respondent
ORDER MADE BY:
FOSTER J
DATE OF ORDER:
12 MARCH 2021
THE COURT ORDERS THAT:
1.The husband and wife do all things necessary and sign all necessary documents to forthwith sell the real estate property situate at 1 & 2 B Street, Suburb C being the whole of the land comprised in folio identifier … by public auction within three months from this date at a reserve price of $1.3 million and that upon sale after payment of agents commission on sale, advertising expenses and legal expenses on sale the net proceeds of sale be paid in the following manner and priority:
(a)as to 40 per cent thereof to the wife;
(b)in payment of any arrears of council and water rates;
(c)in payment of the balance then remaining to the husband.
2.Liberty to apply as to implementation or enforcement of the previous order.
3.The second respondent’s Response in these proceedings be dismissed.
4.The second respondent do all necessary things and sign all necessary documents so as to cause to be delivered to the applicant’s solicitors the certificate of title in relation to the property situate at 1 & 2 B Street, Suburb C being the whole of the land comprised in folio identifier … within seven days from the date of these Orders.
5.The matter be removed from the active pending cases list.
6.All subpoenaed documents produced and all exhibits tendered in these proceedings, be returned at the expiration of one calendar month unless an appeal is lodged.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Yusuf & Yusuf has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
FOSTER J:
In property and parenting proceedings commenced by the applicant wife in July 2018 the parties were able to resolve the question of parenting by way of final consent orders dated 14 May 2020.
Those orders provided that the father have sole parental responsibility for the younger children, then aged 15 and nearly 14, that the children live with the father and that the children spend time with the mother in accordance with their wishes.
The resolution of parenting proceedings left outstanding the question of final property proceedings as between the husband and wife and the second respondent intervener Ms Noor.
Proceedings were listed for final trial commencing 3 September 2020. At final hearing the applicant wife relied upon the following documents:
(a)her further Amended Initiating Application filed 28 May 2019;
(b)her Financial Statement filed 2 September 2020;
(c)her primary trial affidavit filed 12 December 2019.
At final hearing the applicant wife sought orders, in summary, as follows:
(a)a declaration that the second respondent has no interest in the property situated at 1 & 2 B Street, Suburb C;
(b)that the respondent do all necessary things and sign all necessary documents to procure a subdivision of the said property within 12 weeks from the date of orders;
(c)that the respondent pay all costs associated with the subdivision;
(d)that in default of the respondent complying with his obligations as to subdivision the said property be sold by the applicant wife and that upon sale after payment of agent’s commission, advertising expenses and legal expenses the net proceeds of sale be divided as to 45 per cent to the applicant wife and 55 per cent to the respondent husband;
(e)that pending sale the respondent continue to pay as they fall due and payable, council rates and water rates in respect of the property, and be permitted to occupy the property and maintain and keep it in a clean and tidy condition, and facilitate inspections by prospective purchasers, and provide vacant possession prior to settlement of the sale.
The respondent husband at trial relied upon the following documents:
(a)his Amended Response filed 5 March 2019;
(b)his Financial Statement sworn 17 August 2018;
(c)his primary trial affidavit sworn 26 August 2020,
(d)the affidavit of the parties’ daughter Ms D sworn 18 December 2019.
At trial the respondent husband sought, in summary, the following orders:
(a)that there be a declaration that the second respondent has an equitable interest in the property at Suburb C;
(b)a declaration that the first respondent is indebted to the second respondent in the sum of $1,125,000;
(c)judgment in favour of the second respondent against the first respondent in the amount of $1,125,000;
(d)that within 28 days the first respondent pay the second respondent the sum of $1,125,000;
(e)a declaration that the debt of $1,125,000 is a liability of the marriage and to be taken into account in the assessment of the pool of property otherwise available for distribution as between the applicant and the first respondent;
(f)that within 28 days the husband pay to the wife the sum of $25,000;
(g)that in default of the payments provided for above not being made, that the applicant and first respondent do all things necessary to sell the Suburb C property, and that upon sale and after selling costs, the proceeds of sale be paid as to $1,125,000 to the second respondent, as to 80 per cent of the balance then remaining to the husband, and as to the balance then remaining to the wife.
At trial the second respondent relied upon the following documents:
(a)his Response filed 31 August 2020;
(b)his affidavit filed 14 March 2019;
(c)the affidavit of Ms E filed 9 December 2020.
Context
The applicant wife at the time of trial was 45 years of age. The respondent husband was aged 55.
The parties married in 1993 when the applicant wife was 18 years of age. The husband at that time was aged 27.
The parties separated under the one roof in early 2016 and on 27 November 2016 the wife left the home to reside with her mother.
There are seven children of the parties’ relationship at the time of trial aged 27, 25, 23, 19, 17, 16 and 14. The children all primarily reside in the former matrimonial home at 1 & 2 B Street, Suburb C.
During the course of the marriage the wife asserts she was primarily engaged in domestic and household duties and the care of the parties’ seven children and the husband for his part asserts a significant engagement in the upbringing of the children. One of the parties’ adult children gave evidence in support of the husband’s assertion as to his engagement within the household and his role with the children.
At cohabitation
At the commencement of the parties’ cohabitation in late 1993 the wife was not working. Her parents gifted to her new white goods for the parties’ home together with a quantity of other household goods and effects.
At this time the husband was employed in his brother’s business. He had, he says, some savings and some furniture at this time. He denies that he was working as a casual worker or that he was, otherwise, engaged in the purchase of motor vehicles, their repair and renovation and re-sale, notwithstanding he concedes that he has bought and sold 34 cars over the period of cohabitation. He says he has not worked in paid employment since 1996. At that time the eldest child was only three years of age. He then commenced as his mother’s carer, receiving a Centrelink carer’s benefit. In oral evidence, the husband asserted that he attended at his mother’s home in Suburb V for about two hours each morning and then about three to four hours in the evening. During his absences from the matrimonial home he conceded that the wife was running the household and looking after the children, save for some occasions when he would take two or three of the children with him to his mother’s home.
It is readily apparent that financial support, apart from the wife’s assertions as to the husband’s income, for this family was substantially provided in the form of government benefits paid to the husband and/or the wife throughout cohabitation.
The wife was in receipt of Centrelink benefits and applied those benefits as to expenses for the children and household expenses. It is not readily apparent on the evidence as to what Centrelink benefits the wife received in addition to her benefit and family allowance payments relating to the seven children within the household.
Neither party produced in evidence bank records evidencing receipt of government benefits or indeed any bank statements relating to any accounts during cohabitation save for one account with the F Bank referred to below. By reason of the discussion below, it is apparent that such records would have evidenced significant funds passing through such accounts.
The wife’s father passed away in November 1995 and in 2004 the family home in Sydney was sold and the wife received a share of the proceeds of sale in the sum of $34,800. These monies were absorbed into the parties’ finances.
The wife asserts that throughout the marriage the husband conducted an ongoing business of purchase, repair and resale of motor vehicles. She says that the husband would purchase vehicles that required minimal work, such as spray painting, as he was not a trained mechanic. He would attend to minor works on the vehicles and any mechanical work was done by his friends. She often observed him spray-painting vehicles at their residence. She recalls that on occasions there were up to five motor vehicles on which the husband worked parked in the backyard of their home.
The husband informed her that monies from his activities would be remitted by him to Country G and he would have his relatives return the monies to her so that the Taxation Office and Centrelink were not aware of his earnings. He said to her “I will tell them it is an inheritance I received from overseas”. There was a Centrelink investigation into their financial circumstances in about 2013 that resulted in the accrual of a Centrelink debt. The husband asserted to Centrelink that funds appearing in bank accounts were from the proceeds of sale of cars. Somewhat inexplicably he asserts that he had no knowledge of any accrued Centrelink debt as a consequence of the 2013 investigation.
The wife exhibits to her affidavit AUSTRAC records over the period from March 2005 to July 2012 that evidences significant funds being remitted to Country G or, otherwise, are being remitted from Country G to Australia. The husband was interviewed by Centrelink in 2013 and questioned as to various deposits to bank accounts including about $32,000 during the 2006 year. He informed Centrelink that they were monies remitted from his family overseas. Notwithstanding deposits to bank accounts from the second respondent’s business “Dot Design”, the husband asserted that he told Centrelink that he had never worked for that entity.
A word about the evidence
The wife asserts that she was not privy to the financial machinations during the parties’ cohabitation. The husband acknowledges that she was not consulted and that she had little knowledge of what his financial dealings were.
The husband concedes in oral evidence that he had never filed a tax return in Australia. This notwithstanding at times significant funds at bank, significant funds moving in and out of Australia and the purchase and sale of an investment property at K Street referred to below.
He asserts some $250,000 to $270,000 was received from the realisation of his interest in family land in Country G commencing 2001 until 2004 with payments into his National Bank account that is not in evidence. His evidence, if accepted, would indicate that this family may have received significant government benefits to which it was not entitled.
The husband was afforded the benefit of a Section 128 Certificate under the Evidence Act 1995 (Cth) in circumstances where his evidence, otherwise, may have rendered him liable to prosecution for taxation offences. As such, the Court was alerted to the propensity of the husband to be dishonest and not truthful or fulsome in his evidence before the Court. Having had the opportunity to consider the husband giving oral evidence for some period of time, it was readily apparent that he was less than frank in his evidence, he sought to be vague and uncertain where such might assist him. The absence of objective evidence adduced by the husband to assist in the proof of his assertions as to financial dealing and transactions solely within his knowledge and control was alarming particularly where it was readily apparent that such records could well be available on subpoena. His evidence was confused and in conflict with documentary evidence put to him. Overall, the husband is not to be regarded as a witness of truth. Where possible his evidence, if to be accepted, would need to be objectively corroborated. The wife’s evidence where there is a conflict with that of the husband is to be preferred.
Otherwise, the wife asserts that the marriage was “filled with verbal, emotional and financial abuse”.
The husband, until 2003, required the wife to account to him for her Centrelink benefits that were paid into a joint passbook account. She was not allowed to access the account and he would then provide money to her as he saw fit to meet expenses. Subsequent to 2003 the husband permitted the wife to maintain her own bank account but she was expected to use her Centrelink pension benefits for the benefit of the children in the household. She was rarely provided additional funds by the husband and it was necessary for her to borrow funds from her mother. The husband, she said in oral evidence, made all the financial decisions for the family and she just followed.
The Suburb C properties
The matrimonial property at 1 & 2 B Street, Suburb C was purchased in about April 1996. The wife asserts that at the time of purchase the husband said to her “Mr P (his brother) and I are going to buy a property. It is going to be registered in his and his wife’s name. I cannot put it in my name as I’m not employed and so will not be able to obtain a loan. Mr P can obtain a loan because of his employment so we will register it in their name but we will both own it”. Otherwise, the wife has no knowledge as to the arrangement between the husband and his brother in relation to this property.
The property was purchased for $157,000 and the registered proprietors at the time of purchase were the husband’s brother Mr P and his wife Ms H. At the time of purchase the property comprised a single cottage dwelling. The husband and wife commenced to occupy the property subsequent to purchase and the wife asserts that monies were regularly paid to the husband’s brother. She recalls the husband saying to her “you need to apply to Centrelink for rental assistance so we can pay money to Mr P for the mortgage repayments”. The husband assisted the wife to complete the necessary Centrelink forms. The husband concedes that “rent” was paid to his brother and his wife for which Centrelink rental assistance was claimed.
K Street Property
In September 2006 the husband purchased a property at K Street, Suburb L for $327,500 from the New South Wales Land and Housing Corporation. The property was not lived in by the parties. The husband asserts that the property was never tenanted but that it was occupied by him one or two days a week for long hours while he undertook repairs, with the wife residing at the Suburb C home with the children. The wife is uncertain as to how the purchase price was funded but AUSTRAC records reveal funds from Country G paid to the parties, or either of them, in the period prior to purchase, totalling $118,673. The husband obtained a loan from the Westpac bank for $250,000 for the balance of the purchase price with monthly repayments of $1,600. The husband represented to Westpac that the K Street property was being purchased as a home for his family. In July 2006, prior to the purchase, the husband facilitated an application for mortgage finance being made to the National Australia Bank: Exh “G”. In that application the husband, if his other evidence is to be believed, falsely represented to the bank that he was in full-time employment as a transporter with T Pty Ltd, falsely represented that he was previously in part-time employment with N Services and falsely represented that his gross monthly salary was $7,361. His prospective mortgage commitment by way of monthly payments, if the National Australia Bank loan had proceeded, would have been in the range of $1,600-$1,800 per month.
Otherwise, the husband conceded in oral evidence as to various cash deposits to his bank account totalling about $45,000 prior to the purchase that he asserts were funds remitted from Country G to fund the deposit on the Suburb L property. When pressed in cross examination, he asserted for the first time in the proceedings that he had, in fact, sold his interest in a family property in Country G.
Subsequent to purchase, the wife was often sent to the Westpac bank by the husband to pay mortgage payments in cash. For his part, the husband asserts that funds for the deposit on the K Street property represented his share of his father’s estate but international transfers evidencing the remittal of funds in 2005 reveal that those funds were remitted to the wife, save for one transfer in September 2004 for $49,674. The husband proffers no evidence as to how, he being reliant he asserts on Centrelink benefits, was able to procure a loan from the Westpac bank for $250,000.
Inexplicably, four months after the purchase of the K Street property the husband had to the credit of his US dollar account with F Bank about $55,000: Exh “F”. Thereafter various cash deposits continued to be made to the account with the balance accumulating to $70,400 as at 28 July 2008. On 28 July 2008 the husband facilitated an international transfer of funds out in the sum of $30,000 reducing the balance of the account to $40,400. Then on 13 October 2008 the husband withdrew by bank cheque the sum of $40,014 leaving a small balance in the account.
The K Street property was sold privately three years later in November 2009 for $392,500. The husband’s evidence is that there was little paid off the mortgage over that time and there would have been funds of approximately $142,000 realised on the sale. There is no objective evidence as to where the net proceeds of sale of the K Street property were paid. The husband asserts that the net proceeds of sale were paid to his brother Mr P in relation to the acquisition of the Suburb C property at that time.
Suburb C Development
At about the time of sale of the K Street property, the husband spoke to the wife telling her that he wished to develop the Suburb C property into two duplexes but that the property would need to be transferred out of his brother and sister-in-law’s name to his name. The wife asserts there was some difficulty in discharging the mortgage as the husband’s brother had taken out an additional personal loan of about $50,000. However, later in 2009 the husband informed her that he was able to discharge the mortgage and personal loan. The husband’s oral evidence asserts that in 2008 various funds were remitted from Country G onto Australia to be paid towards the outstanding Westpac mortgage on K Street. These funds, he asserted, represented funds that had been remitted from Country G in the period from 2001 to 2004, representing his interest in family property in Country G. In his oral evidence, he further asserted that other monies were paid to his brother in 2008/2009 prior to the sale of the K Street property with funds received from Country G. Apart from the F Bank statements referred to above, there is an absence of objective supporting documents, such as further F Bank statements, statements relating to the husband’s Westpac account or documents evidencing international wire transfers over that period.
In February 2010 the Suburb C property was transferred from the husband’s brother and his wife to the parties, for a nominated consideration of $380,000. There is no objective evidence that such consideration was ever paid.
The husband’s brother Mr P, in his primary evidence, simply asserts that he and his wife purchased the property in 1996 and that the husband made no contribution to the purchase. The property it was, he asserts, “rented” to the husband. Thereafter he asserts that it was sold to the husband in 2009 for “full market value”. In oral evidence the husband’s brother asserts that he obtained a development consent for the property in 2007/2008. The husband asserts that they both did. He says that it was his belief that the husband, on selling the property in K Street “pay me some money and he pay the rest over a couple of years …”. He says that he received no funds from the husband prior to the sale of the K Street property but got his first payment after that property was sold. He asserts that he is owed no money by the husband in relation to the transaction having been paid in full over a period of about two years. The husband’s brother asserts that he has no knowledge as to the husband’s source of funds save for, he says, funds paid from the sale of K Street. The brother has no records in relation to payments received, saying that the husband would attend at his house with cash in envelopes. His evidence as to how he applied significant funds totalling $380,000 over two years is vague in the extreme, simply that he put most of the money into a business.
The husband’s F Bank account statements reveal ongoing deposits by him of cash in the period from 17 January 2011 to 4 July 2011 accumulating a balance at that time of $27,174. On 21 July 2011 $27,150 was transferred to a second F Bank account which is not in evidence.
The husband asserts that he paid his brother and his brother’s wife about $150,000 of the proceeds of sale of the K Street property by withdrawal from his bank account over a period of one or two months. Once again no such account is in evidence. He asserts he paid the balance of about $240,000 by cash instalments from the funds received by him from Country G into his F Bank account paid to his Westpac account and withdrawn in sums of “$2,000, $5,000, $30,000 whenever I collect from overseas” that he deposited to his bank account. Again no bank accounts are in evidence.
Notwithstanding his evidence as to his family’s complete reliance on Centrelink benefits, he adduces no objective evidence from his brother or sister-in-law relating to these transactions nor is there one jot of any documentary evidence, including his Westpac bank statements or his F Bank account as to available balances or withdrawals, save as referred to above, as to the asserted payments. The husband was unable to recall over what period he continued to pay sums to his brother asserting that they were paid “every now and then” and that, otherwise, he on one occasion transferred money to his brother in Asia.
It is an available inference that the property was at all times that of the husband and the wife. Yet in the overall scheme of things nothing turns on the resolution of the issue save for the husband’s disposition of the net proceeds of the K Street property of about $142,000.
Development approval for the Suburb C property was obtained in 2009. No documents relating to the application for development consent or the consent itself were adduced in evidence.
Subsequent to the transfer of the Suburb C property to the parties in early 2010, the present duplex was constructed after demolition of the cottage. The parties and their children lived in rented premises at Suburb M during construction for a period from late 2009 until early 2011. The duplex properties have not been subdivided. The wife observed the husband hiring and dealing with different subcontractors to attend to the construction. During the development the husband spoke to the wife informing her that he was paying subcontractors in cash, on one occasion requiring the wife to withdraw funds from her Centrelink account to pay a plumber.
The husband asserts that in February 2010 he agreed to borrow in total $750,000 from the second respondent to fund the construction of the duplexes. He acknowledges that he owner/built the property borrowing funds, he says, as required from the second respondent to purchase materials and pay contractors. Curiously, all of the payments were made in cash not only to purchase materials and pay subcontractors, but payments received by the husband from the second respondent. The husband in oral evidence asserts, that on receiving cash advances from the second respondent he paid those funds out straightaway to creditors. He did not bank the funds for fear that Centrelink might stop the benefits being paid. Curiously it was not until after the wife commenced proceedings in July 2018 that a “loan agreement” dated 20 February 2010 was produced by the husband, he asserting it was in support of the debt he says he owes to the second respondent. The husband acknowledges that he never spoke to the wife in relation to this asserted “financial relationship” with the second respondent.
The second respondent gives evidence that in about mid-2009 he had a conversation with the husband who sought to borrow about $750,000 in circumstances where he would be unable to raise funds by way of mortgage as he was on Centrelink benefits. Subsequently, the second respondent asserts that his agreement with the husband was the subject of the written agreement dated 20 February 2010 and in consideration of that agreement the husband handed to the second respondent the Certificate of Title to the property at Suburb C. At no time did the second respondent speak to the wife about the asserted loan arrangement notwithstanding that the wife was a registered proprietor of the property.
The availability of the Certificate of Title in February 2010 is clear evidence that the Suburb C property was unencumbered by mortgage. Once again this raises the issue as to how the husband, as asserted by him, paid the total sum of $380,000 in consideration of the transfer of the Suburb C property to him by his brother and his wife. Even if funds from the sale of the K Street property were available, there is no objective evidence as to how the balance of about $250,000 was funded by the husband. The husband’s assertion is that funds were received by him from overseas to an F Bank account that is not in evidence, save as referred to above, and that funds were withdrawn from his National Australia Bank or Westpac accounts that are not in evidence, to make periodic cash repayments. Yet notwithstanding that there was a balance owing of some $250,000, the husband’s brother’s evidence is that the Certificate of Title was made available to the husband in about February 2010 by the brother’s lawyer.
Subsequent to completion of the duplexes, the husband informed the wife that he would not register the subdivision as it would cost too much money. Notwithstanding there being no subdivision, the property was utilised as duplexes with the parties and the children residing in 1 and the adjoining duplex number 2 being tenanted for a short period with the parties failing to disclose that rental income to Centrelink or the Australian Taxation Office.
The second respondent asserts that monies advanced by him to the husband over the period of time were sourced by him sometimes from his bank safety deposit box, with those cash funds coming from his business activities, and sometimes from his Commonwealth Bank account. He is careful to say that the money in his safety deposit box had been declared to the Australian Taxation Office. He, otherwise, asserts that monies advanced to the husband were recorded in his handwritten notebook. The “notebook” purports to evidence various payments in cash to the husband in the period from 20 February 2010 to 2 February 2011 in 18 separate advances, totalling $750,000. Yet over the same period the second respondent accessed the safety deposit box on only four occasions. Conveniently, the second respondent asserts that he has difficulties in retrieving his company and personal bank statements for the relevant period when he asserts he accumulated significant cash funds. His Commonwealth Bank records in support of his evidence as to alleged payments were not in evidence.
The parties
The wife is currently 45 years of age and suffers from medical conditions that prevented her from obtaining meaningful employment. At the time of trial she was receiving a Centrelink Newstart allowance. The wife remarried in 2017. Her partner is 24 years of age and works in the beauty sector. The wife has a minimal child support assessment in relation to the children under 18 who remain residing with the husband.
The husband is 53 years of age, and says, he is solely reliant upon his Centrelink parenting payment of about $982 per week. He has three adult children residing in the household who are in receipt of income. He remains residing in the former matrimonial duplex property and has about $5,000 in savings. He asserts ill health arising from diabetes, hypertension and arthritis and he had a stent inserted in 2014. Yet in his oral evidence he asserts that he could get a job in the future and it was his wish to obtain employment. He says he wishes to retain the Suburb C property that comprises in all eight bedrooms for himself and the children but concedes that it may need to be sold.
Property Principles
The approach to the determination of an application under s 79 of the Act is set out in Stanford & Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19, Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203.
The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing, and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4).
The Court in the application of s 79(2) of the Act needs to conclude that it would be unjust or unfair to leave the parties’ property rights intact.
In many cases such as the present matter, this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements, such as the accumulation of assets or financial resources by one for the benefit of both, have been brought to an end with the relationship.
In particular, such a circumstance arises where both parties seek property adjustment orders but are unable to agree as to same. Here the wife seeks an order for adjustment of property so as to end the joint ownership of the matrimonial home as does the husband.
It would, in some circumstances, be unjust or unfair to leave property rights intact where there is common ownership and discrete assets are sought by each. Such is the case in this matter and the parties both agree that their common ownership of property is to be brought to an end so as to reflect their respective contentions as to entitlement.
It is appropriate that property adjustment orders be made.
Otherwise, a consideration of s 79(4) factors as discussed below reveals it would be unjust or unfair to leave the parties’ property rights as they are.
Section 79(4) requires a consideration of the contributions made by the parties as defined in s 79(4)(a) to (c). The Court must then consider s 79(4)(d) to (g), in particular, the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant: (s 79(4)(e)).
The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.
The Property Pool
During the course of the trial, the parties provided to the Court a working draft a balance sheet that was marked into evidence as Exhibit “D”. The draft pool was as follows:
Joint Property at 1 & 2 B Street, Suburb C $ 1,300,000
Husband Motor Vehicle 1 $ 5,990
Husband Motor Vehicle 2 $ 8,500
Husband Motor Vehicle 3 $ 10,000
Husband Motor Vehicle 4 $ 4,000
Husband CBA account $ 5,543
Wife CBA account $ 4
Liabilities:
Husband Debt to Ms Noor $ 1,125,000
Husband Debt to Q, R and S Yusuf $ 25,000
Wife Debt to Centrelink $ 46,440
Joint Unpaid rates $ 8,025
It was common ground that the Suburb C property would have a value of $1.4 million if subdivided and $1.3 million if sold as is. Neither party has funds to effect the subdivision.
During the course of submissions, the parties refined the asset pool for consideration. The final pool for consideration was agreed as follows:
Joint Property at 1 & 2 B Street, Suburb C $ 1,300,000
Husband Motor Vehicle 2 $ 3,000
Husband CBA account $ 5,503
Wife CBA account $ 10
Liabilities:
Husband Debt to Ms Noor ($ 1,125,000)
It was agreed that in the event that on sale of the Suburb C property there were any arrears of outgoings that those arrears would be paid from the husband’s share of the proceeds of sale.
Contributions
Arising from the matters discussed above, it is readily apparent that the evidence in its preparation and presentation to the Court was sadly lacking in forensic preparation. Much of the issues as between the parties, in particular the husband and the second respondent, as to history are readily resolved by objective documents that may well have been available on subpoena to assist in discharging the onus of proving facts asserted by them. In particular, reference is made to the parties’ bank accounts including National Australia Bank, Westpac and the F Bank that would have permitted the Court some insight into the financial machinations of the husband during the course of this relationship. As such it may be inferred that such documents may not have assisted the assertions made.
Much of the husband’s assertions cleverly suggest that there is no objective evidence as an overwhelming majority of his financial dealings were in cash. Yet apart from a few documents there is little objective evidence to suggest significant funds being transferred to him from Country G. His assertions as to significant entitlements from the realisation of family property are simply not supported by one jot of evidence.
The wife’s contentions as to his income over and above Centrelink entitlements may well explain initial funds available for the acquisition of the Suburb C property early in the relationship, in circumstances where there is a sham arrangement so as to facilitate there being a mortgage borrowing procured to fund the purchase.
The Court has had the opportunity of hearing oral evidence from all of the witnesses save from the parties’ adult child who was not required for cross examination. The wife’s evidence is limited in circumstances where she was not party to most of the husband’s financial dealings throughout cohabitation. Her role was within the household and with the children, particularly in circumstances where the husband was a carer for his elderly mother, in circumstances where he became entitled to a Centrelink funded carers benefit. He readily conceded that at times when he was attending to his mother, the wife was attending to the household and the children.
The husband’s evidence is replete with contradictions, uncertainty and failure to recall. He made disparate representations to Centrelink in relation to funds deposited from overseas to the wife’s account, asserting that they were from the sale of motor vehicles and yet on the other hand he asserts that funds came from the realisation of a family asset in Country G, in respect of which there is no objective evidence whatsoever. Notwithstanding his assertion as to his sole reliance on government benefits he was able to procure mortgage finance over the K Street property that obligated him to mortgage payments of $1,600 a month plus property outgoings, in circumstances where the property was not tenanted and he was, otherwise, obligated to pay “rent” to his brother Mr P.
The husband was an unimpressive witness notwithstanding that he is given some consideration by reason of giving evidence through an interpreter. The absence of his banking records particularly over the last 10 years is not explained, leading to the inference that perhaps those records would not have assisted him in supporting his explanation as to various funds available to him throughout cohabitation. As discussed above, in the circumstances of this matter, the wife’s evidence where it conflicts with that of the husband is to be preferred and, otherwise, the husband’s evidence is treated with great circumspection in circumstances where it is not supported by objective documents.
As to the husband’s brother Mr P, his evidence also is to be treated with circumspection. His evidence in relation to his asserted transaction relating to the Suburb C property is sought to be simplistically corroborative of the evidence of the husband. It is difficult to believe his assertions that he is unable to account for the asserted receipt and dissipation by him of $380,000 over a period of two years, except in the most general terms. His assertion of the receipt of periodic cash payments from the husband is not supported by any evidence from the husband as to the source of such payments, the bank accounts from which such payments may have been drawn and any timeframe over which periodic payments resulting in a full repayment of the asserted debt were made. The brother’s evidence could well have been supported by his taxation returns evidencing disclosure of asserted rental payments over a period of years and disclosing realisable capital gain on sale of the property that was clearly on his assertion an investment property only. No such evidence has been adduced.
On balance the Court is satisfied that the arrangement in relation to the Suburb C property was as asserted by the wife: that is a transaction whereby the husband’s brother facilitated a home loan being made available with the properties standing in his and his wife’s name but in reality the property being that of the husband and/or his wife with “rental” payments being made in respect of ongoing mortgage obligations relating to the property.
As a result, the inference is that the realised proceeds of sale of the K Street property of about $150,000, on the husband’s evidence, was not paid to the brother but was available in part to fund the duplex construction on the Suburb C property.
The evidence of the husband and the second respondent in relation to the “loan agreement” relating to monies allegedly advanced for the purposes of the duplex construction is remarkable. The wife had no knowledge of any such arrangement or any documents relating thereto until these current proceedings. Not one record of any financial transaction save for self-serving notes. Not one record of any withdrawal from the second respondent’s CBA accounts of cash then paid to the husband when the second respondent’s own evidence is that some $300,000-$350,000 would have been withdrawn from his CBA account. The evidence is of a complete development of a duplex wholly funded by cash payments to tradesmen and suppliers with precious little evidence evidencing those payments. The evidence is of large amounts of cash retained at the home of the second respondent or in the pockets of the husband pending payment in relation to the development. There is significant reservation in accepting the evidence of the husband, as referred to above, and the second respondent in relation to this evidence. It is contended on behalf of the wife that the arrangement simply reflects a round-robin of cash provided by the husband to the second respondent and then notionally “lent” by the second respondent to the husband to fund the development in circumstances where the husband did not wish to risk the family’s ongoing Centrelink benefits by the disclosure of his other sources of income.
The evidence of the husband and the second respondent in relation to the asserted loan arrangement is to be treated with great circumspection. They assert the “loan agreement” and the transactions evidencing same. They bear the evidentiary onus of proving that assertion on the balance of probabilities. Yet not one piece of objective evidence is produced to support their contentions.
On balance the Court is satisfied that the “loan arrangement” asserted by the husband and the second respondent is a sham. The Court is unable to determine on balance whether, indeed, any funds were advanced by the second respondent as asserted and in such circumstances the alleged debt to the second respondent unilaterally asserted by the husband is not established and will not be included in the asset pool.
It is asserted to be a matter of agreement between the husband and second respondent that the value of the Suburb C property prior to the commencement of the development was $450,000 as recited in the “loan agreement”. At that point of time in early 2010, the wife would have had a significant, if not half, interest in the property as it then existed. The husband’s machinations with his brother and the second respondent seek to reduce the wife’s interest in the matrimonial property to $25,000 as sought by the husband in his orders.
There is no doubt that once the development commenced there was a significant contribution by the husband in the day-to-day management of the undertaking, notwithstanding that he did little or no physical work in relation thereto. He supervised and retained trades for the purposes of demolition and construction. Otherwise, subsequent to separation, he has remained in the property with the primary care of the children of whom four were under the age of 18 years at the time of separation. Otherwise, he has continued to provide care and support for the children remaining in the household to date of hearing.
It was contended on behalf of the applicant wife that overall in this marriage, ostensibly supported by government benefits throughout, and with seven children over a cohabitation of some 20 years, that the evidence was supportive of contributions being regarded as equal.
Such contention pays no regard to the husband’s engagement in the duplex development notwithstanding that whilst he was so engaged it is readily apparent that the primary care of the children must have been substantially undertaken by the wife. Otherwise, since separation, he has had the primary care of those children then under the age of 18 years and that continued with two children still under 18 years at the time of final trial.
Save for the issue of the second respondent’s asserted claim, it was contended on behalf of the husband that overall contribution should favour the husband 60 per cent as to the wife’s 40 per cent. This gave recognition to the wife’s inheritance early in the relationship, the husband’s assertion as to funds available to him “from Country G” and the significant care of the children by the husband since separation, notwithstanding that the husband has had sole use and occupation of the matrimonial property for four years to trial.
Overall on assessing contributions in a holistic manner, the Court is satisfied by reason of the discussion above that contributions should favour the husband as to 55 per cent and as to the wife 45 per cent.
Section 75(2) factors
It was contended on behalf of the wife that a consideration of the relevant s 75(2) factors would result of a modest adjustment of 2.5 per cent to the husband. This adjustment would reflect his ongoing care of two children within the household under the age of 18 years, his evidence that he would seek to return to employment and the wife’s position that she is not working due to suffering from some medical disabilities but that she is in circumstances where she has re-partnered.
The husband contended that a consideration of the factors referred to above identified by the wife, together with the non-payment of any significant child support by the wife, would lead to an adjustment to the contribution based entitlements of 10 per cent in favour of the husband in the event that the second respondent’s debt is included in the pool, thus, reducing the pool to a very modest level. In the event that the second respondent’s debt is not included in the pool then it was contended on behalf of the husband that a smaller adjustment would be appropriate.
In all the circumstances, it is considered that in circumstances whereby the second respondent’s debt is to be omitted from the pool, that s 75(2) factors should result in a further adjustment in favour of the husband of 5 per cent. Thus, leading to an overall adjustment of the pool referred to above as to 60 per cent to the husband and 40 per cent to the wife.
In circumstances where it is now four years after separation, the modest sums of money held by the husband and wife at bank and the value of the motor vehicle retained by the husband should not be the subject of any adjustment. Accordingly, it is appropriate, and just and equitable, that there be an order for the sale of the matrimonial home and that the net proceeds of sale be apportioned as to 60 per cent to the husband and 40 per cent to the wife.
Otherwise, the second respondent’s Response is to be dismissed and there will be an order that the second respondent deliver up to the wife’s solicitors the certificate of title in relation to the property at 1 & 2 B Street, Suburb C within seven days from the date of orders.
Orders will be made accordingly.
I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Foster. Associate:
Dated: 12 March 2021
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