Both Parties Seek Adjustments Relating to Property Orders
Ungur & Inaba [2021] FedCFamC2F 65 (17 September 2021)
The parties are in dispute over property orders where both seek adjustments. The respondent asserted addbacks for funds spent by Applicant from redundancy payment. On the other hand, the Applicant asserted addbacks for funds spent by Respondent in drawing down mortgage and offset accounts. The Court, in determining which addbacks to accept, relied upon relevant jurisprudence as well as each of the submissions of the parties and their counsel.
Facts:
The parties’ commenced cohabitation in 2000, married in 2000 and separated in July 2012 under the same roof. The husband left the matrimonial home on 13 October 2017, and the wife and the two children of the marriage continued to reside in the matrimonial home. There are two children of the marriage, X, born in 2007, 13 years of age at the time of the hearing and Y, born in 2011, 9 years of age.
The proceedings commenced on 20 March 2019 with the filing of the husband’s initiating application, with a first return date of 15 May 2019. The matrimonial home at the time of the parties’ separation was at B Road, Suburb C in the State of Queensland (‘the B Road property’), a property that was owned by the wife as between herself and the husband prior to the commencement of their cohabitation.
The Conciliation Conference on 14 June 2019 was unsuccessful, and the matter did not settle. The husband sought final orders seeking that within 42 days of orders the wife pay to the husband the sum of $275,206, that the husband retain as his sole property as between himself and the wife, Motor vehicle 1; the husband’s R superannuation fund; all personal property in the husband’s power, possession or control, including any shareholdings; and any life insurance policies, that the wife retain as her sole property as between herself and the husband, the real property at B Road, Suburb C and that the wife be solely responsible as between the parties for payment of the loan with the Bank P secured by way of mortgage on that property.
During submissions, Mr Blackah, the counsel for the husband, indicated that the orders the husband proposed provided for a division of the matrimonial asset pool, not including superannuation entitlements, as to 60 per cent to the wife and 40 per cent to the husband, with the superannuation entitlement to be dealt with in a separate pool and divided equally between the parties. Dr Sayers submitted on behalf of the wife that the joint balance sheet, as provided to the Court as an aide-memoire on that day, reflected on the wife’s values and arguments, a circumstance where if each party retained the assets in their power, possession or control, and each retained their own superannuation entitlements, with the addback arguments being determined as asserted by the wife, she would have 76.66 per cent of the matrimonial pool if she retained sole responsibility as between the parties for the single liability, the loan account secured on the Suburb C property.
Dr Sayers submitted, the wife was not seeking that the Court find that it was not just an equitable to proceed with making orders under section 79 for adjustment of property between the parties, but was seeking that an adjustment order be made, so as to establish the trust for the children, and that otherwise an order be made that each party retain what they have, with the wife to be solely responsible for the Bank P loan account. The wife sought a division on a single pool basis to 76.6 percent to herself, and 23.4 percent to the husband.
Issues:
I. Whether or not the husband has any interest in the property in India that formed part of his late mother’s estate.
II. Whether or not the balance of the husband’s redundancy payment after $20,000 therefrom was paid toward his legal fees for these proceedings, being $60,163 is an addback as asserted by the wife.
III. Whether or not redraws made by the wife from Bank P loan account secured by the mortgage on the B Road property between 13 October 2017 when the husband vacated the property (balancing owing $68,354.96) and the hearing (balance owing $117,271) is an addback to the pool in the sum of $48,916, as asserted by the husband.
Applicable law:
Evidence Act 1995 (Cth), s 50 - provides that the court may, on the application of a party, direct that the party may adduce evidence of the contents of 2 or more documents in question in the form of a summary if the court is satisfied that it would not otherwise be possible conveniently to examine the evidence because of the volume or complexity of the documents in question.
Family Law Act 1975 (Cth) s 75 - where the rights of the parties, if any, according to ordinary common law and equitable principles and under legislation, in relation to any asserted resources of the parties that may, if it is considered just and equitable to proceed with the property settlement, are taken into account in the Court’s consideration of the matters referred herein.
Family Law Act 1975 (Cth) ss 79, 79A - vests the Court with power to alter the interests of the parties in property, and the power to make orders providing for the settlement or transfer of property, as determined by the Court.
Family Law Act 1975 (Cth) ss 117, 117B - provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders.
AJO v GRO [2005] FamCAFC 104; (2005) 191 FLR 317 - the Full Court identified three types of addbacks that are commonly encountered in property settlement decisions.
Dickons & Dickons [2012] FamCAFC 154 - provides that the Explanatory Memorandum to the Family Law Act Amendment Bill 1983 provides, at Clause 36, that a specific purpose of the re-casting of s 79(4) was, relevantly, to revise sub-section 79(4) to remove the possibility of an interpretation of the sub-section requiring that there be a nexus between a spouse’s contribution and a specific item of property in section 79 proceedings.
Fields & Smith [2015] FamCAFC 57 - provides that the Court's task is to consider the contributions holistically over the whole period from the commencement of cohabitation to trial, and the analysis requires the Court to weight all of the contributions of all types prescribed by section 79(4) made by both parties across the entirety of the relationship until the time of Hearing, including the post-separation period.
Fontana & Fontana [2018] FamCAFC 63 - held that the authorities are consistent in finding that assessing contributions is not an accounting exercise but a holistic one.
Grier & Malphas [2016] FamCAFC 84; (2017) 55 Fam LR 107 - provided that when significant sums of money are said by one party or the other to have been “wasted” or to amount to a unilateral “premature distribution of property” and the evidence is suggestive of either or both, an analysis of the relevant sums and their use is needed.
In the Marriage of Harris [1991] FamCA 124; (1991) 104 FLR 458 - provides that the Court should make findings as to the identity and value of the property, liabilities, and financial resources of the parties at the date of the hearing.
Jabour & Jabour [2019] FamCAFC 78 - provides that the Court is required to consider the parties’ contributions made on and from the commencement of their relationship, during their relationship, and following separation.
Keskin & Keskin and Anor [2019] FamCAFC 236 - where the Court was considering a circumstance where the husband took “large sums of money” from the spouse’s corporations and applied those sums, at least in part, for his personal gain or purposes that were “not proper corporate purposes”.
Masoud & Masoud [2016] FamCAFC 24 - where the provision of an agreed balance sheet providing for the inclusion of notional property would not mandate his Honour’s acceptance of it or that he would treat the notional property in the same way as had the parties.
Shan & Prasad [2018] FamCAFC 12 - provides the purpose of the Act as set out in section 79(1) is to alter interests in property to which a party has an interest in possession or reversion.
Stanford & Stanford [2012] HCA 52; (2012) 247 CLR 108 - authority for any necessary contrary solution. Some statements made by the High Court may lead to the conclusion that references to “notional property” as have been referred to in decisions of this court and at first instance may need to be reconsidered.
Talbot & Talbot [2015] FamCAFC 132 - the Full Court said that where one party unilaterally distributes to themselves property which no longer exists and which, but for that premature distribution, would be susceptible to section 79 orders, justice and equity may require the Court to take account of the dissipated property by adding it back as against the dissipating party.
Trevi & Trevi [2018] FamCAFC 173 - where the discretionary increase in the wife’s proportional share of the spouses’ property due to such dissipation could properly find expression in either the overall comparison of their contributions under s 79(4)(a)-(c) of the Act or as a factor under s 75(2) of the Act.
Vass & Vass [2015] FamCAFC 51 - where the Full Court held that there is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties.
Watson & Ling [2013] FamCA 57 - provided that premature expenditure might be taken up in the assessment of contributions, for example by a party making a disproportionately greater indirect contribution to the existing property by reason of other property having been dissipated.
Analysis:
During the husband's cross-examination by Dr Sayers, he indicated that his initial belief that he would have inherited half of his mother’s estate was in line with his understanding of the relevant custom rather than the applicable law in India. He never took any steps in relation to his assumed inheritance. His mother's will stated that she would like her house to be given to her daughter Ms F. From the husband’s redundancy payment which he received net in the sum of $80,163.34, he applied $42,000 to the payment of his legal fees ($20,000 when received and a further $22,000 when refunded by Ms L) and expended the balance on repayment to Ms L of moneys expended in paying down the husband’s credit cards, and expended the balance on living expenses.
The moneys expended on repaying Ms L in relation to paying down of his credit cards relates to his expenditure of moneys on credit cards for his gambling, and that such expenditure was post-separation expenditure by the husband. Dr Sayers submitted that the increase in the balance owing on the loan account secured on the B Road property and the reduction in the credit balance of the wife’s Bank P offset account are fully and adequately explained by the wife as to the expenditure thereof and do not ground any form of addback or adjustment in favour of the husband. In relation to the husband’s submission that the difference between the wife’s Bank P home loan account debit balance as at 13 October 2017 and as at the time of hearing – $48,916 – should be added back, the wife provided that $25,000 thereof was applied by her toward the purchase of the motor vehicle 3; $20,000 thereof was applied by her toward purchase of furniture; and $3000 thereof was supplied toward insulation of a new air conditioner at the B Road property.
Conclusion:
The wife is ordered to pay to the husband the sum of $118,245.50 within two months of the date of this order pursuant to section 79 of the Family Law Act 1975 (Cth). The Court accepts addbacks for Applicant’s redundancy payment and legal fees only. The Court found that the husband has no interest in his late mother’s home in India. It was also concluded by the Court that the balance of the husband’s redundancy ($38,163.34) was expended by the husband on repayment of moneys borrowed on credit cards by him for the purpose of gambling post-separation and on living expenses during a period when the parties were no longer living separated under the one roof. Contrary to the wife's claim, the Court will not add back the sum of $60,163 as well as the sum of $48,916. In the event that the wife does not pay to the husband $118,245.50 within two months from the date of this order then the wife shall sign all documents and instruments and do all things necessary to list for sale the property at B Road, Suburb C.
