They couldn’t agree on whether their relationship lasted three years (according to the wife) or five and a half years (according to the husband).
After considering the financial contributions of each of them, the non financial parenting contribution for their child, their separate finances etc, the Judge decided there should not be any percentage property division adjustment made at all.
Each kept what was in their own name and the Application was dismissed.
NOTE: This case has been published by the Court under a PSEUDONYM, rather than using the real names of the parties.
Newbury & Perrill  FCCA 1490 (30 June 2017)
Last Updated: 5 July 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
NEWBURY & PERRILL
FAMILY LAW – Property settlement – short marriage – whether any adjustment in the property interests of the parties is just and equitable.
PAC 4331 of 2013
1 & 2 June 2017
Date of Last Submission:
2 June 2017
30 June 2017
Counsel for the Applicant:
Counsel for the Respondent:
Solicitors for the Respondent:
Sarah Bevan Family Lawyers
(1) The wife is declared to be the sole owner to the exclusion of the husband of the real property at Property S, NSW (“the property”).
(2) The husband shall forthwith cause the caveat registered against the property to be removed at his expense.
(3) Each party is otherwise declared to be the sole owner to the exclusion of the other of all property and superannuation in their name or possession at the date of these orders.
(4) All extant applications are hereby dismissed.
FEDERAL CIRCUIT COURT
PAC 4331 of 2013
REASONS FOR JUDGMENT
- These are property proceedings after a marriage of three years (according to the wife) or five and a half years (according to the husband).
- The value of the combined property of the parties is $380,000 in round terms. $300,000 of that sum comprises the equity in a real property in the wife’s sole name. $80,000 is the value of cash owned by the husband at the time of separation.
- The wife argued there should be no alteration in the property interests. The husband argued that all of the property should be regarded as being jointly owned.
- In these proceedings the wife was unrepresented. The husband was represented by a solicitor and counsel.
- The applicant wife is aged thirty-six. She works in the (omitted) section of a (employer omitted). The husband is an (occupation omitted). He has always earned a higher income than the wife but as a consultant he has no paid leave or superannuation contributions made on his behalf.
- The parties were married on (omitted) 2007 in (country omitted). Prior to the marriage the wife lived in (country omitted) and the husband in Australia. The wife joined the husband in Australia several months after the wedding. She subsequently became an Australian citizen.
- The parties have one child born on (omitted) 2010.
- The wife said the parties separated on 15 August 2010 when she and the child went to (country omitted) for several months. When they returned in December 2010 the family continued living together, although the wife said the parties were living separately under the one roof. She said they slept in separate bedrooms and stopped interacting as a married couple at that time.
- During cross-examination the wife conceded that, after 2010, she and the husband occasionally slept in the one room and the one bed but said that was only in order to save face when they had visitors such as family members staying with them. She said there were no sexual relations between the parties after August 2010. Whether the parties separated under the one roof or not will make no difference to the outcome of this case as it is clear that the financial interdependence of the parties continued until they physically separated on 13 November 2012.
- The wife alleged the husband was violent to her, physically, verbally and emotionally. She said he behaved in a coercive and controlling manner throughout their relationship and had total control of the finances of both parties. She alleged that he had control over her income and her bank accounts whereas she had no access to or knowledge about his finances. While that issue is of importance to the parties it not relevant to the determination of the property proceedings except that the wife alleged the husband failed to make adequate financial disclosure and suspects he has significant undeclared assets. The evidence was inadequate and poorly presented in many respects and I am unable to make any clear determination about the adequacy or otherwise of the husband’s disclosure.
- The parties never had any joint bank accounts. They both worked full-time for most of the relationship, maintained separate bank accounts and accumulated savings in their individual accounts. However there was a degree of financial interdependence as they each paid for day to day living expenses for the benefit of both parties and each party supported the other during periods of unemployment.
- The husband sponsored the wife’s migration to Australia and financially supported her when she first arrived. She obtained paid employment within a year of arrival.
- The husband paid the rent on the properties in which the parties lived for most of their relationship. The wife said she was responsible for paying for all of the other living expenses for the parties including food, utilities and child care fees. Her evidence was that these expenses far exceeded the modest rent paid by the husband.
- During cross-examination, upon being shown particular documents, the wife conceded that the husband paid utility bills and other household expenses from time to time but maintained that she paid the bulk of those expenses. I am satisfied on documents that were tendered in evidence that most of the child’s childcare fees were paid by the wife as they were paid directly from her bank account. Both parties said that some childcare payments were made in cash because they sometimes used unregistered family day carers. The husband said he made those payments in cash. The wife said she did. I am unable to determine that issue on the evidence.
- The husband had periods of unemployment during the relationship. The wife said that he was heavily engaged in share market trading both in Australia and (country omitted) and sent significant sums overseas as part of a share trading operation involving his father and brother. The husband agreed he engaged in share trading in Australia but denied doing so in (country omitted). Both parties sent money to their families in (country omitted).
The purchase of the Property S
- It appears that both parties are good financial managers. By early 2012 the wife had saved $100,000 and the husband had saved more than $80,000.
- In early 2012 the wife told the husband she intended to purchase a unit in a villa development in Property S and move there with the child. Although it appears the husband initially went to see a mortgage broker with the wife, he decided not to participate in or contribute to the purchase of the property. He agreed in cross-examination that he tried to dissuade the wife from the purchase and told her she was on her own if she went ahead with it. He said that he thought the property was in a poor position, being too close to the railway line and that it was not a good time for the parties to buy a property as his employment situation was not secure. He agreed that the wife went ahead with the purchase on her own and against his advice, using her own funds.
- The wife said she never intended to purchase the property jointly with the husband and saw it as a means of physically separating from him. She said the husband persuaded her to allow him to move into her property for a short time while he looked for a smaller rental property for himself. She said he told her that he would pay rent to her and help care for the child while looking for alternative accommodation. The wife agreed to that plan.
- The wife purchased the property for $375,000. She borrowed $300,000 and paid the deposit, legal costs and stamp duty from her savings. She retained $20,000 in her savings account.
- The parties’ moved into the wife’s home in June 2012. The wife said the husband did not honour his agreement and refused to pay her rent but did contribute to some joint household expenses. She said the parties remained physically separate, slept in separate rooms, bought, cooked and ate separately and had no physical intimacy.
- The husband moved out in November 2012. He moved in with friends before obtaining his own rental property.
- After separation the child lived primarily with the wife and she bore all of the child care expenses and the vast majority of the child’s living expenses. The husband paid for food, activities and other miscellaneous expenses while the child spent time with him but that time started off at a low level and gradually built up over time.
- The husband, despite his significantly superior income, paid no child support to the wife between November 2012 and September 2014.
- Final parenting orders were made on 1 September 2016 which provided for the child to live for equal time with each parent on a week about basis. The orders were made in the absence of the wife as she failed to attend court that day. In these proceedings she said she simply couldn’t face court at the time.
- Since its purchase, the Property S property has appreciated in value. The agreed value at the time of the trial was $575,000. The mortgage at that time was $275,500 in round terms, leaving net equity of $299,500.
- Counsel for the husband submitted that the sum of $81,000, being savings in the husband’s bank accounts at the time of the physical separation in November 2012 ought to be taken into account for the purpose of the property settlement. At the time of the trial the husband had only about $23,000 in savings in his bank accounts. He said he had spent $90,000 on legal fees, most of which had come from his savings and some from his income.
- The wife said she believed the husband had undeclared assets because he had always earned a substantially higher income than her and always had large sums of money in his account. Statements for the husband’s bank accounts showed transfers of large sums in and out of his accounts and between accounts. The husband said he regularly transferred money from one account to another and into fixed term deposits. He said that when the fixed term deposits matured they were returned to his account with interest and he then put the funds into another fixed term deposit. He said that, at the time of the trial, he had no fixed term deposits.
- The husband said that while he invested in the share market and sometimes made money from it, overall he did not. He said he and some friends commenced a business during the marriage but lost money in that business and closed it within three or four months.
- The wife was a credible witness. She gave the impression she was recalling actual events and she conceded reasonably. Although she was shown to be wrong on two particular aspects of her evidence, in most respects she was shown to be accurate. Her evidence as a whole was clear and specific.
- I had more difficulty assessing the husband’s credibility. He had a quiet and reserved manner. He frequently spoke in generalisations and his evidence was at times opaque. I was left with many more questions about his financial situation and history than the wife’s and had less confidence in his evidence overall. Ultimately however little turned on credit as the facts were largely agreed.
The legal principles
- The Court is empowered to alter the property interests of the parties if it is satisfied that it is just and equitable to do so.
- I am not persuaded that an adjustment of the legal interests of the parties is just and equitable in the particular circumstances of this case. The major item of property is the unit purchased by the wife in 2010. The husband had the opportunity to participate in that purchase but on his own evidence made a clear and unambiguous decision not to do so. On his version of events he was initially interested but then decided not to go ahead with the purchase and actively discouraged the wife from doing so. The wife invested her money in the purchase and took on 100 percent of the risk. She alone paid the mortgage, rates and strata levies. The husband had the benefit of living rent-free in the property for five months during which time he contributed to household expenses but made no contribution to any of the outgoings on the property.
- At the time of the physical separation in November 2012 the husband had $81,000 in cash to do with as he chose without any reference to the wife.
- It is clear the husband thought the investment by the wife was unwise and did not want to risk his own money in the venture. The purchase was made at the end of the relationship when the parties were in the process of physically separating. At the time of its purchase, neither party had any intention that the husband would acquire an interest in the Property S property or take on the risk associated with it. There is no principled basis for now altering the legal interests in it simply because it turned out to be a wise investment.
- In case I am wrong about that, and by way of checking exercise, I will consider what distribution, if any, might be made in the event I had been satisfied that some alteration in the parties’ property interests was just and equitable in the circumstances.
- The first step is to identify the parties’ legal and equitable interests in property. About this there is no disagreement. The wife’s unit has a value of $575,000. The mortgage is $275,500 in round terms leaving net equity of $299,500. It was conceded on behalf of the husband that the cash in his account at the time of the physical separation ought to be taken into account. That was $81,000. The wife also had $20,000 of savings in her account at that time but a significant portion of that was used to support herself and the child through a period of unemployment post-separation. Neither party sought the notional inclusion of that sum in the “pool” of property to be divided between the parties.
- Each party had accumulated low level funds in bank accounts by the time of the trial but, given the time that has elapsed since the physical separation they agreed they should not be taken into account. Each has a car of similar value and superannuation interests of a similar value. Both parties agreed those items should not be taken into account.
- Accordingly, the total value of the combined property interests of the parties is $380,500.
- In determining what adjustment, if any, should be made to those property interests, the Court is required to take into account the following:
- First, the contributions of the parties to the acquisition, conservation or improvement of the property and to the welfare of the family as provided in subsections 79(4)(a),(b) and (c) of the Family Law Act; and
- Secondly, the matters set out in the remaining subsections of 79(4) which incorporate section 75(2) of the Act. Those matters broadly require a consideration of the financial position and resources of the parties; their age and state of health; their necessary commitments in supporting themselves or any other person; the duration of the marriage and the extent to which it has effected the earning capacity of either party; the effect of any proposed order on the earning capacity of either party and any other fact or circumstance which the justice of the case requires to be taken into account.
- The parties maintained separate bank accounts throughout their relationship and never had any joint bank accounts. Each party accumulated savings in their own accounts and each contributed to mutual living expenses. The husband paid the majority of the rent. The wife paid rent for periods when the husband was unemployed. The wife paid the majority of the child care fees although the husband paid some. Each party contributed to utilities and other household bills. There is a significant dispute about who paid for the parties’ day to day living expenses. Although I had a greater degree of confidence in the wife’s evidence, I am unable to determine that dispute on the evidence as a whole.
- The husband had about $20,000 in savings before the relationship began which was used to pay for the wife migrating for Australia and to pay for the parties’ living expenses early in their relationship.
- The wife commenced paid work in the first year of living in Australia. She managed to save a little over $100,000 over the course of the relationship. The husband saved $81,000. The husband earned more than the wife during the relationship but had periods of unemployment. He started a business which was unsuccessful and he lost about $4,000 in that venture.
- Although the husband contributed to the care of the child during the relationship, I am satisfied on the evidence that the wife carried out a much bigger role as homemaker and parent than the husband, even though both parties worked full-time. The husband said he cared for the child almost full-time during periods of unemployment but I found the wife’s evidence that the child continued to attend childcare was more persuasive.
- I am satisfied that, in a general sense, the different contributions made by the parties between their marriage in July 2007 and their physical separation in November 2012 ought to be accorded equal weight.
- Each party can be seen to have made indirect contributions to the accumulation of funds in the other party’s account shortly before separation. The wife made indirect contributions to the $81,000 that accumulated in the husband’s account and the husband made indirect contributions to the $100,000 that accumulated in the wife’s account.
- Shortly before separation, the wife made the decision to purchase the property in Property S. The mortgage was taken out in her name alone and she alone bore the risk of that investment. She paid for the stamp duty and legal fees and paid the mortgage, rates and body corporate fees without any contribution by the husband. The husband lived rent-free in that property between June 2012 and November 2012 but he did contribute to some living expenses.
- At the time the parties separated the wife had approximately $75,000 in equity in the Property S unit and $20,000 in savings and the husband had $81,000 in savings.
- The wife has owned the property for five years, since June 2012. During that period the husband made minor, indirect contributions for a period of five months.
- It was submitted on behalf of the husband that the wife has had the benefit of living in the real property post-separation while the husband has had to pay rent. That is true but he would have paid rent in any event. The purchase by the wife of the property made no difference to that. The husband also had the benefit of the $81,000 in cash which he used as he chose without reference to the wife.
- The husband made no contribution to the acquisition, improvement or preservation of the real property other than his indirect contributions to the deposit which were matched by the indirect contributions of the wife to his $81,000 cash.
- Counsel for the husband submitted that the contributions made by the parties would warrant them each taking 50 percent of the combined value of the property. I do not agree. The wife made all of the financial contributions to the real property for the nearly five years post-separation. The husband made low level, indirect contributions by way of paying household bills for a period of five months prior to the physical separation but so too did the wife.
- The property has appreciated in value since its purchase as a result of market forces and the payment of the mortgage and other outgoings by the wife. The husband played no part in that. If the wife had not bought the unit the value of the property available to be divided between the parties would be about $160,000 comprising the $81,000 in the husband’s account at the time of separation and the $100,000 the wife had in her account, less the almost $20,000 she spent on supporting herself and the child through a period of unemployment post-separation. The increase in the value of the property “pool” as a result of the wife’s investment is in the order of $220,000. That represents almost 60 percent of the current value of the pool.
- The wife also made the overwhelming contributions to the care and financial support of the child post-separation. Between November 2012 and September 2014 the husband paid no child support. The parties commenced equal shared care of the child in September 2016.
- The wife’s post separation contributions to the real property and to the care of the child warrant a significant adjustment to her. In my view her contributions would warrant a distribution of the property as to 80 percent to the wife and 20 percent to the husband.
Section 75(2) factors
- The parties are of similar age, the wife being thirty-six and the husband forty-one. The husband has a superior income earning capacity to the wife which is likely to continue for the rest of their working lives. There is no evidence that either party suffers ill health and each is able to adequately support themselves and the child from their employment.
- The husband’s income at the time of the hearing was $113,000 per annum according to his financial statement. At times he has earned $150,000 per annum. He currently rents a property with his brother and sister in law and their children. He pays $225 a week in rent. The wife was earning $70,000 per annum at the time of the hearing.
- Each party cares for the child for equal time and each has similar expenses when caring for him.
- Counsel for the husband conceded there ought to be an adjustment to the wife on the section 75(2) factors. He submitted that adjustment should be 2.5 percent. In my view it ought to be in the order of 5 percent given the disparity in income earning capacity and the equal responsibility for the care of the child who is only seven years of age. That would result in an overall adjustment of 85 percent to the wife and 15 percent to the husband.
- The value of the combined property pool is $380,500. For the husband to take 15 percent he would take property to the value of $57,075. He has had the benefit of $81,000. The wife’s 85 percent would have a value of $323,425. The property she holds has a net value of $299,500. To achieve an 85/15 percent division of the property would therefore require the husband to make a cash payment to the wife of $23,925.
- The wife seeks orders which provide for each party to retain the property currently in their possession. I agree that is the appropriate order in the circumstances of this case. The husband will also be required to immediately remove the caveat he lodged on the Property S property.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Hughes
Date: 30 June 2017
NOTE: This case has been published by the Court under a PSEUDONYM, rather than using the real names of the parties. Section 121 of the Family Law Act 1975 makes it an offence, except in very limited circumstances, to publish or distribute a report of a case or part of a case, including information contained in a Judgment, which identifies parties, related or associated persons, witnesses or others involved in the case. A breach of the section is a criminal offence. The section also sets out certain limited defences to criminal liability. An example is where the Court has expressly authorised the publication.
A printable version can be accessed from Austlii without pictures or advertisements here, which should be used if you wish to provide the case to the Court in your matter.