The applicant submitted that taking into account the very short period of the relationship and the fact that all of the assets available for division were acquired by her through her own efforts, it would not be just and equitable for there to be any division of property at all.
If that was indeed the position there would be much force in that submission, but it entirely overlooks the fact that the parties have a child who has been and will remain in the primary care of the first respondent and not spend a great deal of time with the applicant. The first respondent was also the primary homemaker throughout the relationship.
The first respondent contended that he made regular payments towards the mortgage over the Suburb P property. I do not accept that. As explained earlier, these were partial repayments of the loan from the applicant.
There is little more that can be said about the parties' contributions up to the time of the hearing.
As to the future, the first respondent will carry the bulk of the care of the child. The first respondent is presently earning an income of $500 per week from C Pty Ltd, although he obviously has skills and capacity in property development and management.
The applicant's Financial Statement says she is not employed.
The first respondent has no assets except for his superannuation. Neither party sought a superannuation splitting order.
The child is presently attending a private school. The applicant is not paying the school fees. The likely inference is that the first respondent's parents are assisting.
The first respondent contended that these matters should result in him receiving 75 per cent of the divisible property.
The first respondent's continuing care for the child of the relationship where, at present, he has minimal income or assets results in the current ownership of the property of the parties no longer being appropriate. It is just and equitable that there be a property adjustment.
A significant difficulty in this matter is that the first respondent owes the applicant a substantial sum. Theoretically, at least, the position is that the applicant has net assets of $2,952,039 and the first respondent a liability of $1,456,347 and his superannuation.
The reality is that the first respondent has no means to repay the debt and none is looming on the horizon. At present the loan is simply not recoverable. Leaving the loan aside, this leaves the applicant with net assets of $1,495,692 ($2,952,039 - $1,456,347).
Division of property is commonly achieved by look at percentages, identifying contribution-based entitlements, and then taking into account other matters under s 90SM(4) and s 90SF(3) of the Act. That is a difficult task in this matter. This is caused in part by the very short period of the relationship and the nature of the contributions made. The property pool is completely distorted by the presence of a loan which is an asset in the applicant's hands but a liability in the first respondent's.
If the loan is simply put to one side and an adjustment of property interests is made, then unless an order is made to the contrary, the applicant could simply set off her obligation to pay the first respondent against his liability to her.
The Court is enjoined by s 90ST of the Act to do its best to make orders that end the financial relationship between the parties. In this matter, that means finalising the loan in some way.
Taking these matters into account, the starting point is the cancellation of the debt owed by the first respondent. The question is, is such an order alone just and equitable or is some further order necessary to achieve that result.
Such an order has several benefits. It ends the financial relationship between the parties and it frees the first respondent to resume business activities or acquire assets in his name without the debt hanging over his head.
This would leave the applicant with net assets of $1,495,692. The benefit to the first respondent of releasing the loan is roughly of a similar sum.
The applicant made all of the financial contributions to the property. The first respondent has made the bulk of the non-financial contributions in a short relationship and will have the future care of the child. He will keep his superannuation.
This analysis does not persuade me that a further order is required to do justice between the parties. It is true that this outcome will see the first respondent receive no property that is immediately available to him. But division of property must be undertaken in a principled way having regard to the matters mandated in the Act. It is not a task of social or redistributive justice.
The just and equitable order, in all of the circumstances, is to cancel the loan and that the parties otherwise retain their own property.
[2]
I certify that the preceding one hundred and forty-eight (148) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Aldridge.
Circuit and Family Court of Australia (Family Law) Rules 2021
Cases Cited (6)
No difficulty arises from the written agreement coming after the payment of the advance if the parties intended the oral agreement to be reduced to writing later (Masters v Cameron[1954] HCA 72; (1954) 91 CLR 353 at 360).
The applicant lodged a caveat over land owned by C Pty Ltd relying on the agreement. In 2021 she commenced proceedings in the Supreme Court of New South Wales to enforce the loan (the proceedings are on hold pending the determination of this matter).
In an affidavit affirmed in mid-2021 in the Supreme Court proceedings, the first respondent said:
On 2 May 2017 I signed a personal loan note (Loan Note) in the [Country KK] language, which was back-dated to 29 March 2017, in relation to a loan by the [applicant] of $650,000 (Loan Monies) to me personally. At pages 9 of [MC]‑1 is a copy of the Loan Note as signed; at page 10 is a copy of a translation made by a certified translator.
Clause 5 provided that upon a transfer of the property, "the gain shall be divided by share".
The first respondent's evidence, supported in very general terms by that of the second and fourth respondents, was that the proceeds of sale were entirely consumed by repayment of debts of the second respondent which were made from the fourth respondent's bank account.
As to the money that went into the PP Pty Ltd account, the first respondent and second respondents, said that in late 2020 the first respondent needed $3 million to assist him with cash flow on a development he was undertaking at Suburb WW. The fourth respondent borrowed this sum from friends and deposited $3,013,997.54 into the PP Pty Ltd account.
The Suburb WW development was conducted by C Pty Ltd. In 2017 it acquired properties at VV Street, Suburb WW and constructed 16 townhouses on them. In May 2018, C Pty Ltd borrowed $2.6 million from QQ Pty Ltd ("QQ Pty Ltd") for that purpose.
A further loan facility was entered into with RR Pty Ltd("RR Pty Ltd") on 24 February 2021. QQ Pty Ltd advised on 2 March 2021 that the payment figure owed was $6,020,189. The first respondent said that he caused PP Pty Ltd to transfer $3,060,035 to SS Lawyers' trust account in reduction of that sum on 3 March 2021.
From there, over two payments on 18 and 19 January 2021, $3,013,000 was paid in reduction of the mortgage over the Suburb Q property.
In the absence of any evidence as to express intention, the applicant submitted that a resulting trust for that amount arose in favour of the first respondent.
In Calverley v Green[1984] HCA 81; (1984) 155 CLR 242 ("Calverley v Green"), Deane J described a resulting trust arising "where a person pays the purchase price of property and causes it to be transferred to another or another and himself jointly" or "where two or more persons advance the purchase price of property in different shares" (at 266-267).
In Bosanac v Federal Commissioner of Taxation[2022] HCA 34; (2022) 275 CLR 37, Gordon and Edelman JJ gave two examples of resulting trust that arise from objective intention - voluntary conveyance resulting trusts or purchase money resulting trusts (at [94]. See also, Kiefel CJ and Gleeson J at [12] and [13] and Gageler J at [51]).
It is clear that a resulting trust can arise from unequal contributions to the purchase price of a property. There is no suggestion there that a contribution to a mortgage gives rise to a resulting trust. It is not a contribution to the purchase price. I was not taken to any authority that suggests it does. Indeed, in Gibbs CJ recognised "[t]he extent of the beneficial interests of the respective parties must be determined at the time when the property was purchased and the trust created. The fact that the mortgage debt was repaid by the appellant is therefore not relevant in determining the extent of the interests of the parties in the land" (at 252).
(2022) 275 CLR 37
(1984) 155 CLR 242
(1954) 91 CLR 353
(2023) 67 Fam LR 421
Calverly v Green
The claim must fail.
Further, in order to succeed on this claim, the applicant must establish the first respondent's ownership of the funds. Although it is not necessary for me to determine, I am not so satisfied.
I put to one side the evidence of the respondents to the effect that the proceeds of sale of the City OO property were paid to creditors and then another $3 million, the very same sum, was easily raised from friends. It seems improbable. The evidence is too vague and in general terms. The dates and amounts involved point to the money transferred from Country KK being the proceeds of sale of the City OO property.
The first and second respondents were the registered owners of the City OO property. In October 2007, some four years after the property was acquired, an agreement was entered into by them agreeing that the first respondent's interest was only 1 per cent, as set out above.
In assessing the genuineness of this document, I have regard to the unchallenged evidence of the first respondent that he made no financial contribution to the purchase of this property or that of its upkeep.
The use of his name on the title was said to be a device to enable his parents to buy a second property without paying the higher tax which would have otherwise been payable on it.
I was not assisted by any expert evidence as to the effect of any relevant Country KK law. I would not expect it to be similar to Australian law (see also Wei v Xia (No 5)[2023] FedCFamC1F 679; (2023) 67 Fam LR 421 at [237]).
I do not see why the owners of a property could not agree on the degree of interest that each owner has, especially where only one contributed to its acquisition.
On balance, therefore, I am persuaded that the proceeds of sale from the City OO property were owned by the second and fourth respondents. The odd evidence by the first respondent and the second and fourth respondents as to the disposal of the funds and the subsequent odd choice of a bank in Perth to receive the funds does cast some doubt on this but not enough to lead me to a different view.