ZEIDMAN & GODAR
[2021] FCCA 510
•22 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ZEIDMAN & GODAR | [2021] FCCA 510 |
| Catchwords: FAMILY LAW – Property settlement – de facto – contributions – s.90SF(2) considerations. |
| Legislation: Family Law Act1975 (Cth), ss.79(2), 90SM, 93SF(3) |
| Stanford v Stanford (2012) 247 CLR 108 Robb & Robb (1995) FLC 92-555 C v C [2005] FamCA 429 |
| Applicant: | MS ZEIDMAN |
| Respondent: | MR GODAR |
| File Number: | HBC 1022 of 2018 |
| Judgment of: | Judge McGuire |
| Hearing dates: | 17 & 19 November 2020 & 10 February 2021 |
| Date of Last Submission: | 10 February 2021 |
| Delivered at: | Launceston |
| Delivered on: | 22 March 2021 |
REPRESENTATION
| Counsel for the Applicant: | Mr Turnbull |
| Solicitors for the Applicant: | Ogilvie Jennings |
| Counsel for the Respondent: | Mr Trezise |
| Solicitors for the Respondent: | Wallace Wilkinson & Webster |
ORDERS – AS CORRECTED pursuant to amended pursuant to Rule 16.05(2)(e) of the Federal Circuit Court Rules 2001
(A)(1) That the proceeds of sale of the jointly owned property at B Street, Town C in Tasmania currently held in trust on behalf of the parties jointly ($212,119.52), be released to the applicant; and
(2)Any balance funds including accrued interest over the sum of $212,119.52 held in trust on behalf of the parties be divided as to 60% to the respondent and 40% to the applicant.
(B)That the respondent shall:
(1)Within sixty (60) days of the date of these Orders pay to the applicant a lump sum of $99,215.
(2)Transfer and/or vest all his right, title and interest in the following to applicant absolutely:
(i)The Motor Vehicle 1;
(ii)All personalty and chattels in the possession of or under the control of the applicant as at the date of these Orders;
(iii)Balances of any bank accounts or like investments in the name of or to the benefit of the applicant as at the date of these Orders; and
(iv)The applicant’s superannuation policies and entitlements.
(3)Be solely responsible for and indemnify the applicant in respect of:
(i)Any and all liabilities attaching to any of the assets retained by the respondent pursuant to these Orders and if necessary to provide the applicant with a release from any mortgage secured by any assets retained by the respondent pursuant to these Orders; and
(ii)Any and all liabilities incurred by the respondent since separation in either joint names or in his name alone.
(C)That the applicant shall:
(1)Contemporaneously with the payment referred to in paragraph (A)(1) hereof, transfer and/or vest all her right, title and interest in the following to the respondent absolutely:
(i)The property situate at D Street, Town C in Tasmania registered in the name of the respondent;
(ii)The property situate at Town E, Tasmania registered in the name of the respondent;
(iii)The respondent’s Motor Vehicle 2;
(iv)The respondent’s trailer;
(v)All personalty and chattels in the possession of or under the control of the respondent as at the date of these Orders;
(vi)The balances of any bank account or like investment in the name of or to the benefit of the respondent as at the date of these Orders;
(2)That the applicant be solely responsible for and indemnify the respondent in respect of:
(i)Any and all liabilities attaching to any asset retained by the applicant pursuant to these Orders; and
(ii)Any and all liabilities incurred by the applicant since separation in either joint names or in her name alone.
(D)That paragraphs (D)(a) to (f) (inclusive) of this Order are binding on the Trustee of Super Fund F, member No ... (“the Fund”) and it is declared that this Order is made in accordance with Section 90XT(1)(a) of the Family Law Act 1975.
(a)That pursuant to Section 90XT(4) of the Family Law Act 1975 the base amount allocated to Ms Zeidman out of the interest of the Respondent in the Fund is $44,120.84 (“the base amount”).
(b)That in accordance with Section 90XT(1)(a) of the Family Law Act 1975 whenever the Trustee of the Fund makes a splittable payment from the interest of the Respondent in the Fund Ms Zeidman shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“the Regulations”) using the base amount and there be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for this Order.
(c)That this Order have effect from the operative time and the operative time is the fourth business day after the day on which the final sealed Orders are served upon the Trustee;
(d)That until the Trustees of the Fund have effected the splittable payment in favour of Ms Zeidman pursuant to Order D(a) herein the Trustee of the said Fund, the Respondent, personal representatives and any other person or persons acting on his or their behalf be and are hereby restrained from disposing of all or any amount payable to the Applicant and/or his personal representatives received by or held in trust for the benefit of him or them;
(e)That a sealed copy of these Orders be served by the solicitors for the applicant upon the Trustees of the fund within fourteen (14) days of the date of this Order;
(f)That there be liberty to apply to each party and the Trustee of the Fund in relation to the implementation of this Order affecting the applicant’s superannuation interest.
(E)That pursuant to Section 90ST of the Family Law Act 1975 the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
IT IS NOTED that publication of this judgment under the pseudonym Zeidman & Godar is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT HOBART |
HBC 1022 of 2018
| MS ZEIDMAN |
Applicant
And
| MR GODAR |
Respondent
REASONS FOR JUDGMENT
(As corrected)
Applications
Ms Zeidman is the applicant for orders for property settlement pursuant to s.90SM of the Family Law Act 1975 (‘the Act’) following a de facto relationship of approximately 7 years with the respondent, Mr Godar.
The applicant seeks orders which would distribute the pool of tangible property as to a net 60% to her and net 40% to the respondent.
The respondent says there should be no further alteration or distribution of the parties’ property given an agreement reached between them in about 2012 as to the disposition of their property in the event of a separation with the Court being asked to find such agreement to be persuasive and/or determinative and in line with the well-known decision of the High Court in Stanford v Stanford[1].
[1] (2012) 247 CLR 108
In the alternative, and only if the Court does not accept the primary argument of the respondent, he argues that there should be a distribution of the tangible assets on a net 65% to the respondent, Mr Godar, and net 35% to the applicant, Ms Zeidman.
The applicant argues that there be a split from the respondent’s superior superannuation entitlements in her favour such as to equalise the superannuation entitlements of the parties accrued during the relationship.
The respondent argues that there be no splitting or adjustment of the parties’ current superannuation entitlements in favour of either.
Background
The parties commenced cohabitation in 2011. They did so in the applicant's residence at G Street, Town C. At that stage, the respondent owned a residence at D Street, Town C which he proceeded to rent out. Both properties were subject to mortgage.
The applicant has three children from her previous marriage being Ms H (dob 2001), J (dob in 2003), and K (dob in 2006). The children were therefore, 10, 8 and 5 years at the commencement of the parties’ cohabitation. The three children lived primarily in the parties’ family unit.
The respondent has a daughter from a previous marriage, L, (dob in 2003). L lived at times with the parties or substantially visited them.
The parties’ child X, was born in 2011.
In 2011 the parties jointly purchased a block of land at B Street, Town C. They built a residence and moved into that home in about mid 2013.
The respondent, Mr Godar, claims that the parties reached agreement in 2012 such that they would each retain their own original properties in the event of separation but share in the profit or equity of any property or assets purchased post-their cohabitation. The applicant does not concede that they reached agreement but does agree that there were discussions in such terms.
In 2012 or 2013 the respondent was gifted a property at M Street, Town E by his parents. The property consisted of land and a basic structure. The applicant's affidavit indicates that the property was gifted to both of the parties.
In April 2018 the property at G Street, Town C (owned by the applicant at cohabitation) was sold netting approximately $162,000. $130,000 was applied to the mortgage loan taken for the purchase of the property at B Street, Town C and subsequent construction of the residence. $100,000 of that money was, however, later withdrawn and invested in a Commonwealth Bank term deposit by the applicant. The respondent received $10,000 from the proceeds of sale. The applicant has exhausted the $100,000 except for a remaining E$2,000.
The parties separated in July 2018.
The applicant de facto wife commenced these proceedings by application filed December 2018.
On 4 February 2019 interim orders were made by consent for the respondent, Mr Godar, to pay outstanding principle and interest for the mortgage attached to the B Street, Town C property together with private health insurance, telephone/Internet. The parties were to be equally responsible for Council rates on the B Street, Town C property.
The B Street, Town C property was sold in October 2019 with net sale proceeds of E$215,000 remain held in the applicant's solicitors Trust Account.
On 18 August 2020 the parties agreed parenting orders for X whereby she live in an equal time arrangement between them.
The respondent remains employed as a tradesman with Employer N with an income of approximately $95,000 per annum inclusive of overtime.
At the commencement of the trial the applicant was employed casually in community-based support as a carer. By the time of the final addresses the applicant had secured employment with an income of $62,738 per annum.
There is evidence suggesting that each of the parties has entered into new relationships but without any evidence of financial support or dependency.
The Applicant's Case
The applicant says that the factual platform satisfies the threshold test at s.90SM(3) of the Act where the Court must not make any order unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. The applicant references a seven year relationship with significant financial and non-financial contributions by each of the parties but where they remain the joint owners of the balance of proceeds of sale of B Street, Town C currently held in trust.
The applicant argues that there was no agreement between the parties in 2012 or at all such that reached a ‘contractual status’ but rather she concedes only ‘discussions’. In any event, she says that since 2012 the parties’ and each of them have acted contrary to the terms of the respondent’s asserted agreement in the use and distribution of the assets including proceeds of sale.
The applicant concedes a 5% loading to the respondent on account of contributions with specific reference to the ‘M Street, Town E’ property advanced in 2013. She denies any 'wastage' of assets during or post-separation as argued by the respondent.
The applicant then argues for a 15% adjustment in her favour by reason of the relevant factors under s.93SF(3).
The applicant argues that there be a distribution of superannuation so as to account for one half of the total superannuation accrued by the parties during the course of the relationship and her Counsel has provided a mathematical table/balance sheet accordingly.
The Respondent's Case - Estoppel
The respondent argues that there should be no orders altering or distributing the parties’ property with each retaining those assets currently in his or her possession or control but with an equal distribution of the sale proceeds of B Street, Town C currently held in trust. The respondent retains his D Street, Town C property whereas the applicant’s G Street, Town C property has been sold.
The respondent says that the parties reached an agreement in 2012 in respect of the disposition of their assets in the event of separation including inter-alia that each would keep the property that he or she brought into the relationship and then to equally divide any after-acquired joint property. The respondent says that the parties, or at least he, continued to and proceeded to act on the basis of that agreement. As such, he argues that the applicant is estopped from obtaining orders for further alteration under s.90SM of the Act.
The applicant concedes that there were discussions between she and the respondent in the terms of what the respondent says was an 'agreement'. Indisputably there was no form of written agreement. The parties did visit the applicant’s uncle, Mr O, who is a professional. Mr O gave evidence on subpoena issued late and was cross-examined. He has no recollection of giving advice to the parties in respect of any form of agreement be it formal or informal. He says that generally he would refer such matters to specialist solicitors.
The respondent insists that there were discussions with Mr O as to an agreement but interestingly seems equally unequivocal in his evidence that Mr O’s advice was not to enter into any form of financial agreement.
Significantly, and as emphasised in Stanford (supra) the Court must enter into a consideration at s.79(2) or s.90SM(3) where the sections state:
The Court must not make any order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
The consideration at s.90SM(3) is a separate and discrete consideration and not one made simply by conflating of the contribution claims set out at s.90SM(4)(b). In this respect, the respondent here says that there was an agreement and that the parties acted on that agreement such that justice and equity would not be served by the applicant now having any claim against the assets brought into the relationship by the respondent such being preserved by him pursuant to the said agreement. In a practical sense, the respondent says that each of the parties brought in a home to the relationship. The applicant chose to sell her home during the course of the relationship and she received the proceeds. The respondent retains his home. It has risen in value but the respondent says that justice and equity should not allow the applicant to make a claim where she exercised her option pursuant to the agreement in respect of her property.
This issue was considered on a similar factual platform to that now before me in Bevan & Bevan[2] where their Honours from [114] observed:
[2] [2013] FamCAFC 116
114.The fact the trial Judge placed weight on “what the husband’s entitlement might otherwise have been” and the consequences of refusing to make an order conferring that entitlement can be seen at [100] where his Honour said:
To refuse the husband’s application would be to deny him the opportunity to secure an alteration of the interests and a payment of the type indicated …
115.This is clearly a matter, his Honour took into account when, at [105], he gave what might be seen as grudging acceptance of the proposition in Stanford that the court does have a discretion to decline to make any order.
116. In our view, while his Honour purported to undertake a separate consideration of s79(2), he did so having already made findings which prevented him from taking account of all relevant factors. In particular, his Honour had found that he was not obliged to consider “representations the parties may have made during the marriage or subsequent to separation”. It is true that, at [100], the trial Judge said that in deciding “any threshold question” he had taken account of the husband’s representations, but that proposition is inconsistent with his earlier unambiguous finding. This inconsistency, at the very least, leads to an inference that insufficient weight was placed on this factor.
117. We also consider his Honour erred when, at [106], he took into account, against the interests of the wife, the fact that the “informal arrangements” between the parties were not formalised at any time during the 18 years in which they lived largely separate lives. In our view, that was not a material factor in this matter where the wife had disposed of all the substantial assets in which the parties had any joint interest and thereafter acquired property in her name, in relation to which the husband never asserted any equitable interest. At the very least, his Honour gave the absence of formality more weight than it deserved.
118. The trial Judge’s approach also seems to us incompatible with the following remarks made in Stanford concerning the three “fundamental propositions”:
… if the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact … These principles do so by recognising the force of the stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage. The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.
119.In our view, if the three “fundamental propositions” can truly accommodate any consideration the parties gave to how their property interests should be arranged during the continuance of their marriage, they must also accommodate express consideration given to how those interests should be arranged after separation. Indeed, the argument for doing so is stronger, given that any mutual understanding is less likely to have been affected by extraneous influences that would be at work whilst their relationship was intact.
120. This is not to suggest that any understanding between spouses would be conclusive of any later dispute, since an agreement can only be conclusive when the s90G(1) formalities are satisfied or when a s90G(1B) declaration is made. Long experience in this jurisdiction teaches that there will be cases in which other factors will be present that would make it just and equitable to make an order inconsistent with a previous understanding, even one reached after separation. But the reasoning in Stanford makes clear that such an understanding would have to be a factor to be taken into account in deciding whether it would be just and equitable to make orders altering existing interests. This reasoning is entirely consistent with what was said by the Full Court in Woodcock v Woodcock[3].
[3] (1997) FLC 92-739 at 83,968 to 83,969
In Woodcock v Woodcock (supra) their Honours concluded at 83, 968:
In our view the cases referred to above clearly indicate that the Court's jurisdiction to grant relief under s74 or 79 can only be ousted by court order or by an agreement approved pursuant to the provisions of s87. It may be that the ability of a court to take into account the terms of an unapproved agreement creates in the words of Hoffman LJ “the worst of both worlds” as it will be impossible to predict from case to case, exactly what weight ought to be given to the agreement … However it is the dominant and unwavering thread of all of the cases that the parties cannot by their conduct or agreement oust the jurisdiction of the Court.
…
However the facts relied upon to establish the existence of circumstances where the doctrine of equitable estoppel might otherwise operate (i.e. an agreement reached or a representation made and acted upon) may well be relevant to determine:
(a) whether it is proper to make an order for the provision of maintenance pursuant to s 74 of the Family Law Act.
(b) whether it is appropriate to make an order for alteration of property interests pursuant to 79(1) of the Family Law Act.
(c) whether it is just and equitable to make an order for alteration of property interests within the meaning of s79(2) of the Family Law Act.
(d) whether it is necessary to make an order to do justice within the meaning of s80(1)(k) of the Family Law Ac.t
(e) whether it is just and equitable to make an order with respect to the application for the benefit of all or any of the parties …
In the matter now before me, I am not satisfied that the parties reached an agreement of sufficient certainty as to its terms. The applicant candidly concedes that there were discussions. She does not concede any reached agreement. The parties agree that they went to see Mr O, the professional. Significantly, the respondent himself says that the advice was not to make any agreement. Although it is not to crucial or determinative of my consideration, it is a fact that there exists no written form of any agreement. There is no evidence before me to corroborate the respondent’s assertion of an ‘agreement reached’.
It is for a party making an assertion of fact to prove that fact to the relevant standard being on the balance of probabilities. It would be a nonsense to expect the other party to 'prove' a negative which is both a logical and actual impossibility. On the evidence before me, I am not satisfied that the respondent has discharged his onus in this respect.
In any event, I accept the submissions of Counsel for the applicant here that the parties have acted contrary to the terms of what the respondent says was an agreement. Specifically, the applicant received E$162,000 from the sale of the G Street, Town C property in April 2018. The respondent's argument by way of his Counsel’s cross-examination was in respect of the expenditure of only E$100,000. The evidence is that the respondent himself received a portion, albeit a much smaller portion, of the proceeds of sale from which he apparently met some legal costs. The proceeds of sale, or at least, the majority thereof, were initially placed into the mortgage secured by the jointly purchased and held property at B Street, Town C on which the parties had built a residence. The applicant says that a further portion was utilised for the 'payment of debts' which although not particularised, was not a claim that was substantially challenged.
Consequently, and regardless of my findings in respect of the asserted agreement, in these circumstances I am of the view that the applicant should not be estopped by reason of s.90SM(3) from pursuing her claim. That is, I am not satisfied that the applicant herself retained the totality of the net proceeds of sale of her G Street, Town C property for herself.
Respondent’s Alternative Case
Alternatively, but without retreating from his primary position, the respondent argues that he made superior financial contributions through the D Street, Town C and M Street, Town E properties which currently sit significantly in the net wealth of the parties. Further, he says that he contributed to the support of the applicant's three children who lived substantially with them during the relationship (although conceding this to be a factor under s.90SF(3).
The respondent argues for no, or no significant, adjustment under s.90SF(3) with the applicant now disclosing an income of over $60,000 per annum and receiving child support and, importantly on his argument, that the applicant wasted or spent without adequate explanation a sum of at least $100,000 from the proceeds of sale of her G Street, Town C property and that her prudent retention of those monies would have mitigated against any claim under s.90SF(3).
The respondent therefore argues that he should receive 65% of the net non-superannuation assets.
He argues that given the relatively short duration of the relationship and with the respondent not prudently claiming receipt of her superannuation split entitlement from her previous husband then there should be no superannuation split or adjustment of the parties’ superannuation entitlements.
The respondent, Mr Godar, argues that the applicant, Ms Zeidman, has had the use and benefit of $100,000E being part proceeds of sale of the G Street, Town C property and that effectively these monies should be 'added back' to the pool on her side of the ledger. Ms Zeidman argues that these monies have been reasonably spent by her in the period following separation at a time that she did not claim interim spousal maintenance and where her income was approximately $16,000 per annum. She says that there should be no add-back.
The G Street, Town C property was sold in about April 2018 and the parties separated in July of the same year.
The question of 'add-backs' can be a vexed one and particularly so since the seminal decision of the High Court in Stanford v Stanford[4]. Nevertheless, it is commonly agreed that the process of making 'add-backs' is an available one for trial judges although perhaps remaining the exception rather than the rule in what is a discretionary exercise[5]. Certainly, various Full Courts have made it clear that an add-back is not a necessary result on each and every occasion that a 'a party has expended money realised from the disposition of assets that existed as at the date of separation' and that such a proper proposition would be 'unduly simplistic'.[6] The Full Court in AJO & GRO (supra) found that add-backs fall into 'three clear categories' being, firstly, where parties have expended money on legal fees, and secondly where there has been a premature distribution of matrimonial assets, and thirdly where the Court is able to find 'wastage' in the form of wanton, negligent or reckless dissipation of assets.
[4] (2012) 247 CLR 108
[5] C & C [1998] FamCA 143
[6] AJO & GRO (2005) FLC 93-218
The applicant, Ms Zeidman, was cross-examined extensively and intrusively as to her expenditure on items such as alcohol, tobacco and 'entertainment'. She explained that she only has approximately $2,000 remaining from the sale proceeds. Superficially cross-examination in this form presents an attractive consideration of the usage or even wastage of monies. However, it must be seen in context. Mr Godar was similarly cross-examined about to the nature of his expenditure during the period since separation in 2018. There were distinct similarities. The respondent, Mr Godar, of course, had the benefit of an ongoing income near $100,000 per annum. The applicant did not have a similar income but did, of course, have use of a resource. Her income was closer to $16,000 per annum. She had four children in her household albeit X only on a half-time basis. Ms Zeidman, both in her affidavit and in Court, gave detailed evidence as to her expenditure of the $100,000 including meeting one half of the mortgage payments for approximately three months although having vacated the B Street, Town C property in favour of Mr Godar. She details other expenditure in her affidavit at [20] as follows:
·$3,000 was paid to my father in accordance with paragraph 15 of my affidavit above;
·Approximately $5,000 was used to pay off a P Bank personal loan in Mr Godar’s sole name. To the best of recollection, this was a loan that we had taken out to fund a family holiday to Queensland.
·Approximately $6,000 was used to purchase new beds for all four children.
·The sum of $2,796.69 was used to pay off a credit card in Mr Godar’s sole name.
·$730 was used to purchase new blinds for the B Street, Town C property.
·$2,000 was applied to Mr Godar's overdraft account with P Bank. The overdraft Mr Godar already had prior to our relationship.
· $500 was paid to Mr Godar's mother to repay her for purchasing airline tickets for our family trip to Queensland.
·An invoice to the sum of $4,936.20. This invoice was paid out of the CBA monies, as detailed above.
·The balance was put towards a family trip to Melbourne.
In her evidence in Court Ms Zeidman gave even more detailed evidence such as $23,400 put to rental and a bond (after she had vacated the B Street, Town C property) which is also set out in her affidavit at [52] where she deposes to expenditure since separation totalling some $60,654 some of which related to joint liabilities.
Although Ms Zeidman gave one response in cross-examination that she agreed not all of her expenditure during the relevant period to having been ‘necessary’, such does not therefore make it ‘wanton, negligent or reckless’ and I am content that Ms Zeidman used the word ‘necessary’ in a strict sense of definition not ordinarily used in these Courts. I accept generally Ms Zeidman's evidence as to the expenditure of the money. It seems not in dispute that her income for a time was around $16,000 per annum and that she had obligation for the support of four children. I am not persuaded that there was wanton, negligent or reckless expenditure of these monies in all of the circumstances and am not inclined, therefore, to 'add-back' the sum of $100,000 or at all in respect of those monies.
Mr Godar's Paid Legal Fees
This issue appears to have been fundamentally resolved by the time of final addresses. Mr Godar drew down $10,000 from his superannuation during the Covid period. It is conceded, that he paid '$2,000 – $3,000' from those monies to his accrued legal fees. He paid a further $6,000 to his previous lawyers and on his evidence 'from Ms Zeidman's $10,000 given to me'. The balance of his paid legal costs has been through the generosity of his mother or out of his accrued earning since separation. The respondent's own Counsel concedes that there is no reasonable (or perhaps any) explanation for the expenditure of the remaining $7,500 of the superannuation drawdown. Consequently, the sum of $10,000 should be added back to the pool in respect of this superannuation drawdown. The balance of his paid legal costs to his former lawyers in a quantum of $6,000 was paid from a payment of $10,000 made to him by the applicant from the proceeds of sale of G Street, Town C. Given, that I am not prepared to 'add-back' the applicant's expenditure of $100,000 (despite she herself admitting that not all of it may have been 'necessary' in the precise definition of the term), I am equally not persuaded therefore that there should be any add-back for this amount received from the same source by the respondent voluntarily using it to meet his legal costs where he might have spent this money on more ‘personal’ pursuits as did the applicant. Consequently, in simple terms, I intend to add-back the sum of $10,000 on the respondent’s side of the ledger in respect of the superannuation draw-down a part of which was used to meet legal costs.
Loan to the Respondent from his Father, Mr Q
The respondent claims a liability of the relationship in the sum of $15,000 being an outstanding loan from his father, Mr Q. The applicant disputes that there is a loan.
The alleged loan is not evidenced by any contemporaneous loan document. There is a document albeit dated 25 September 2019 purporting to list a number of advancements made from 2011. There is no evidence of an instalment payment plan. There is no evidence of interest. There is no evidence to corroborate the debt. There is no evidence that the alleged lender has attempted to call in the debt. Significantly, the respondent's father, Mr Q, sat in the Court for the entirety of the trial but did not provide an affidavit and was not called to give evidence either in a leading or rebuttal form. Applying the principles in Jones v Dunkel[7] and with no explanation for Mr Q not giving evidence, it is open for me to, and I do, draw an inference that the uncalled evidence would not have assisted the respondent. Consequently, I am not persuaded that there is an outstanding loan repayable to Mr Q in the sum of $15,000 or at all. The evidence of the advancements, however, is persuasive in its precise detail and I am prepared to consider the contribution made by Mr Q being 'by or on behalf of' the respondent.
[7] [1959] HCA 8
Consequently, and with the assistance of the majority of the property pool being agreed, I can now find that property pool to consist of the following:
ASSETS
Sales proceeds of B Street, Town C (Joint)
E$212,119.52
D Street, Town C property (Respondent)
$475,000
M Street, Town E property (Respondent)
$200,000
Motor Vehicle 1 (Applicant)
$ 3,650
Motor Vehicle 2 (Respondent)
$ 7,750
Trailer (Respondent)
$ 850
Respondent’s savings
$ 692
Applicant’s savings
$ 3,140.90
Respondent’s debt to the property pool for mortgage arrears which were taken from sale proceeds upon settlement (Agreed)
$ 2,000
Furniture and household contents
Divided by agreement
Rates not paid by Respondent – at settlement of sale of B Street, Town C
$ 560
Respondent’s savings held in L’s account (Agreed)
$ 700
Add-back - Respondent’s superannuation drawdown
$ 10,000
Total
$916,462.42
LIABILITIES
R Bank Mortgage (D Street, Town C) (Respondent)
$120,500
Credit Cards (Respondent)
$ 650
Total
$121,150
TOTAL NET TANGIBLE ASSETS
$795,312.42
SUPERANNUATION
Super Fund F (Accumulation Fund) (Respondent)
$171,197.30
Super Fund S Eligible Rollover Fund (Applicant)
$ 1,915.67
Super Fund T (Applicant)
$ 5,510.21
Super Fund U (Applicant)
$ 4,931
Super Fund V (Applicant)
$ 69,545
Super Fund W (Applicant)
$ 8,777.03
Super Fund Y (Applicant)
$ 25
Total Superannuation
$ 261,901.21
Contributions
The best evidence is that of the applicant as to the parties’ respective financial positions as at the date of cohabitation in 2011. The respondent says that he owned a property at D Street, Town C but does not assert its value or encumbrances as of that date. The applicant says:
At the date of cohabitation Mr Godar owned a property at D Street, Town C (‘the D Street, Town C property'). I understand that this property had an estimated value of $240,000 and which was subject to a mortgage of approximately $150,000, resulting in a net value of approximately $90,000.
The applicant says that she brought into the relationship the G Street, Town C property which also had an equity of $90,000. Each party had motor vehicles and some furniture and household contents.
It is generally agreed that the respondent assisted both actually and financially in the improvement of the G Street, Town C property as did the applicant herself.
The applicant received $70,000 superannuation from a property settlement with her former partner in 2011. There was a substantial delay of some years in her actually receiving these monies with some blame attributed to her previous lawyer. I cannot, however, find blame with the applicant in the sense of 'wastage' in the form of negligence or otherwise where the evidence in respect of this delay is sparse and non-existent as to what, if any, interest accrual might have been lost.
The respondent worked as a tradesman with Employer N throughout the relationship and continues in that employment. His more recent income is around $100,000 per annum.
The applicant worked part time at a local store. She stopped that work for her pregnancy with X. She later returned to part time employment in the community care sector after undergoing some training.
The evidence suggests that the respondent worked hard, including undertaking available overtime. The result of this was that the applicant assumed a greater homemaker and parent role.
In about 2012 or 2013 the respondent received a gift of a property at 'M Street, Town E'. That property contained a basic structure on rural land. Whilst the applicant might claim that the property was 'gifted' to both parties, the evidence suggests that the transfer was made by the respondent’s parents to him and that the property was then registered in his sole name. The respondent incurred costs on the registration of the transfer, insurance and land tax. Some improvements were made and paid for by the respondent’s parents in the sense of the advancements to him referred to above. The M Street, Town E property now has an agreed value of $200,000.
The M Street, Town E property was later used as security for the mortgage loan obtained to purchase land and build a residence on the property at B Street, Town C.
The parties and all children lived for a period of approximately nine months with the respondent's parents during the building of B Street, Town C. They did so rent-free. I accept the applicant’s evidence, however, that she contributed as a homemaker during that period.
This was a relationship of just seven years duration. I am satisfied generally that the initial contributions of the parties were near equal. During the course of the relationship the respondent assumed the greater financial support role whilst the applicant contributed to a greater extent as homemaker and parent. There was a significant financial injection by way of the M Street, Town E property in 2013 being just four years or so prior to separation. I am also satisfied that the respondent’s parents made financial advancements and otherwise the families of each of the parties contributed more indirectly.
It is not contentious that I should consider the property pool and its contributions to its acquisition, conservation and improvement on a global basis. The net tangible pool now has a value of around $800,000. Despite the relatively short nature of this relationship, it did bring into the world a child and there were a myriad of contributions. Counsel for the respondent referred me to the decision of Williams & Williams[8] in which the Full Court stated at [26]:
We think that there is force and the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in so doing it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
[8] [2007] FamCA 313
In this sense Counsel for the respondent urges me to consider the value of the D Street, Town C property currently sitting in the pool of assets with an equity of approximately $355,000 whereas I have found the equity at the commencement of cohabitation was around $90,000. Similarly, the M Street, Town E property sits in the property pool now with a value of $200,000 with both properties being registered in the name of the respondent and either brought in by him or gifted to him. Nevertheless, Counsel for the applicant correctly urges me to take the above statement in Williams cautiously and references the more recent decision of the Full Court in Jabour & Jabour[9] where their Honours say at [43]:
We consider that the decisions in Baker and Bilous indicate that the Court in Williams somewhat overstated the importance of the increase in value of a piece of property at the expense of “the myriad of other contributions that each of the parties has made during the course of the relationship” (Williams at [26]).
[9] [2019] FamCAFC 78
I do consider the myriad of contributions be they financial or non-financial and direct or non-direct. Nevertheless, the injection of funds referred to above and most evident in the M Street, Town E property is deserving of recognition and weight. However, in doing so I should emphasise that I do not accept the argument of the respondent in respect of the current value of the D Street, Town C property. Put simply, both parties brought real property into this relationship and each with an equity of around $90,000. A joint decision was made during the relationship to dispose of the applicant's G Street, Town C property which at that time had equity of approximately $160,000. The current equity in the D Street, Town C property of $355,000 must therefore be seen within the context of the global pool and not in any way seen as an isolated or quarantined contribution by the respondent.
Taking all of these matters into account and within the context of the length of the relationship at just seven years, the current property pool, and the plethora of contributions by the parties including the advancements made to the respondent, I am of the view that there should be a loading to the respondent of 12% of the property pool thereby dividing it as to 62% to the respondent and 38% to the applicant.
S.90SF(3) Factors
The respondent remains in his long term employment. The best evidence is that he can hope to earn near $100,000 per annum but perhaps with continuing overtime.
The applicant's circumstances changed during the course of the trial. Her income has increased from $16,000 to more than $60,000 per annum.
The difference in the parties’ available incomes is concertinaed after taxation considerations but where the respondent would still enjoy a superior net income to the applicant and where, as a consequence of that income discrepancy, he will be able to superannuate himself to a slightly greater extent than the applicant moving forward.
The respondent has paid child support to the applicant for X but I expect his assessment will decrease given the applicant’s income increase in circumstances where they share the care of X.
Both parties have re-partnered but without any evidence of either support or dependency.
The applicant has three children from her previous marriage who are now aged 20, 17 and 14 years. She maintains some responsibility for those children. The respondent continues a responsibility for his daughter L now aged 17 years.
The applicant's children lived primarily in the family unit with the applicant and the respondent. L spent substantial and significant time in that home as well. As set out above, the respondent was the primary financial provider for the family unit. The applicant received some but apparently modest child support for her three children. I accept the submission of Counsel for the respondent that the applicant had a legal responsibility not shared by the respondent[10]. The respondent’s contribution continued for the seven year duration of the relationship. I also note, however, the frequent presence of L in the household.
[10] Robb v Robb (1995) FLC 92-555
Considering the matters above, with reference to the respondent’s contribution towards the support of the applicant's children but with the respondent's greater current income, I am of the view that there should be an adjustment to the applicant of 2% of the tangible pool.
Conclusion
Consequently, and being satisfied that it is just and equitable to alter the property interests of the parties, I am of the view that the net tangible property pool should be divided as to 60% to the respondent and 40% to the applicant.
I have been asked to consider this matter on a 'two-pool basis' and where the issue of superannuation did not receive great attention in either cross-examination or submissions. In broad terms, the respondent has superannuation entitlement of approximately $171,000 and the applicant has current entitlements through six separate policies of $90,703.
The respondent argues that there should be no superannuation split and each party retain his or her own entitlement. Counsel so argues firstly on the basis of the argument that there should be no alteration of the parties’ interests in the property pool (Stanford) being an argument which I have generally rejected but also on the basis of the contribution factors set out above. Further, the respondent argues that the applicant did not act prudently so as to maximise her current superannuation entitlement by not enforcing her award of a splitting order from her previous property settlement for a number of years.
I have been provided with an aide memoire showing that in 2011 the applicant's superannuation entitlement was $86,091 whereas the respondent's entitlements totalled $72,622. Clearly the applicant's entitlement has increased only marginally during the course of the relationship and since separation, whereas the respondent's entitlement has increased by near $100,000. Of course, all of the contribution factors mentioned above, be they direct financial, indirect financial, or of a non-financial type, are to be considered in respect of any superannuation split as do the relevant s.90SF(3) factors. The increase in the respondent's entitlement is commensurate with the fact that he continued in the workforce whereas the applicant worked only casually, part-time and for periods around X's birth, not at all.
Counsel for the applicant urges me to split the superannuation by way of a simple mathematical exercise whereby the increase in the parties’ superannuation entitlements since cohabitation being a quantum of $108,907.68 be simply divided between them where the alteration and the distribution of the net tangible assets give recognition to the respondent's superior contributions. Whilst I am cognisant of potential pitfalls in such simple mathematical approaches as for instance cautioned in well-known decisions of the Full Court such as C v C[11], I am also reflective of the need to bring justice and equity. On consideration, I am prepared to accept the submission of Counsel for the applicant to alter the superannuation entitlements by a splitting order in accordance with those calculations. To do so, recognises the relatively small differences in the superannuation entitlements of the parties at the commencement of cohabitation. It also recognises the different roles assumed by the parties during their relationship whereby the respondent was the greater financial earner but where the applicant assumed the homemaker and parent role. Again, the respondent’s greater financial contributions have been in the form of tangible assets and accommodated above. Consequently, I find it to be just and equitable that there be a splitting order in favour of the applicant from the respondent's superannuation entitlement of the base amount of $44,120.84 calculated by 50% of the combined increase during cohabitation at $54,453.94 less the applicant's own increase in entitlements of $10,333 and in accordance with an Aide-Memoire tendered by Counsel for the applicant[12].
[11] [2005] FamCA 429
[12] Exhibit A – Aide Memoire
Consequently, and given the distribution of the assets and liabilities set out herein, I calculate that the applicant will have an entitlement of $318,125. She will retain the proceeds of sale of B Street, Town C ($212,119.52) together with her Motor Vehicle 1 ($3,650) and her savings ($3,140.92) being a total of $218,910 leaving a cash adjustment from the respondent of $99,215. There will be a splitting from the respondent’s superannuation entitlement with Super Fund F of $44,120.84.
I certify that the preceding eighty-two (82) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Associate:
Date: 22 March 2021
CORRECTIONS IN ORDERS
(1)Order (D) second line insert ‘Super Fund F”.
(2)Order (D)(a) third line delete “Applicant” insert “Respondent”.
(3)Order (D)(b) third line delete “Applicant” insert “Respondent”.
(4)Order (D)(d) third line delete “Applicant” insert “Respondent”.
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Fiduciary Duty
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Injunction
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Statutory Construction
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