Anaya & Anaya [2019] FCCA 1048

This is a case dealing with a 45 year marriage and the death of one party during proceedings.

Section 79(8) will be relevant.

The estate of the husband was represented by a Legal Personal Representative.

The husband was the original Applicant.

A significant issue was the wife’s substantial inheritance 24 years prior to separation and 22 years into the marriage.

The husband had contributed to the support of the wife’s three children, and the wife had engaged in high risk investments post-separation which had occasioned loss.

They were married in 1969 and separated in 2015 having had no children together and not having divorced.

At the time of their marriage, they each had been married before and each had three children.

The husband’s children spent weekends and school holidays in the household while the wife’s children, aged 12 and twins aged 9, lived with the parties throughout the marriage until they were 18, 22 and 25 respectively. 

While the husband provided support to the wife’s children, he also paid child support to his former wife for his three children.

At the time of their retirement, the husband was 80 and the wife was 75.

The total value of an inheritance she received in separate distributions in 1990 and 1991 was approximately $1M.

Each party’s Will provided life interests to the other and that the combined estate be ultimately divided amongst their six children.

The husband entered a rehabilitation centre in August 2014 and at that time, and for the rest of his life, he was wheelchair bound.  The wife continued to visit him on a daily basis. She visited, did his washing, cleaned the windows in his room, took him treats, took him on outings or to visit the home. She provided two wheelchairs and an air-conditioner for his room.

By late September/October, within say two months of his entering that facility, the parties began to have discussions about their financial circumstances.

The parties got financial advice and eventually the wife purchased a unit pursuant to that advice that was, in her view, not entirely suitable, being described as “less than ideal for a range of reasons”, but which permitted there to be a sufficient RAD (refundable accommodation deposit) to the husband for a private room in the nursing home, which he wanted.  The unit was purchased by the parties as tenants in common in equal shares.

The parties entered into a contract for the sale of the former matrimonial home. The sale settled in April 2015. The wife instructed the conveyancer to place the proceeds of sale of the former matrimonial home into the parties’ joint account.  She discovered the husband had instructed the conveyancer to place half of the sale proceeds into an account in his sole name. She was shocked and upset as neither party had had their own bank accounts for the entirety of the relationship. She then instructed the conveyancer to deposit the other half of the sale proceeds into an account in her name.  They each got the same amount.

The wife visited the husband and raised the issue with him. He said he didn’t remember their financial advice and that he had given the instructions he had because half of the house was his.

The wife said she needed to ensure her own financial needs and the husband asked whether she was divorcing him. She said she wasn’t but because he had reneged on their arrangement, she felt the need to separate their finances.

The husband had a different version as to what happened on 24 April after the issue of the sale proceeds.

The wife didn’t visit the husband again.

She learnt three weeks later that the husband was moving to a nursing home close to his children. The wife said until then she had not regarded the marriage as over.  She had only chosen her particular unit because it was close to the husband’s nursing home. She would have purchased a property closer to her own children.

A financial planner subsequent told the wife that given the relative life expectancy, a 70/30 percent division of funds in her favour “was necessary ensure both parties had sufficient funds to meet their living expenses”.  Please note that this was not legal advice. It was not advice perhaps that contemplated the factors in sections 79 and 75(2).  

The matter came on for trial on 27 and 28 March 2017.  The husband did not attend and he was too unwell to give evidence even by telephone from his nursing home.

Proceedings were adjourned as a witness was not available in March and were adjourned to June. By the time the matters came on in June, the husband had died.

The next date was 6 April 2018, 13 months after the first trial.

The husband’s RAD account had been returned to his estate.  The court considered the wife’s investment losses.

The wife didn’t advise the husband she was making the investments, she was using joint funds, there were court proceedings on foot, and when she filed material before the court she failed to declare the investments. She was in fact the victim of fraud.

The net loss was $360,000.

The wife’s reaction to being the victim of a scam resulted in her being referred to a psychiatrist “who prescribed medication to manage her depression”.

Between February and August 2016, there were 144 transactions involving the transfer of funds from the wife’s account to the high risk investments.

The court noted that she “had a number of opportunities to avoid the loss of the funds”.

The psychiatrist didn’t think she had a cognitive impairment.

The court felt there was no evidence of her actual capacity at the time she was making the decisions but said, “The state of the evidence does not allow me to make such a finding”.

The court went on to say:

“If impaired decision making was to be seriously argued I would expect to see a careful forensic report where the expert had been given all the relevant information and had had an opportunity to test the wife’s narrative. That did not occur in this case.”

The contentious issues were the treatment to be given to the loss through the wife’s investment and how to deal with the proceeds of the life insurance policies of the husband.

The court determined that her conduct was reckless and came within the second category of behaviour referred to in the case of Kowaliw & Kowaliw [1981] FamCA 70.

In considering that, the court said:

“The parties have a particular duty not to do anything to dissipate or diminish the value of joint assets within their control”.

The court determined to add back the sum rather than take it into account in section 75(2)(o).

The life insurance issue arose in this way. Until December 2015, the husband both owned and was the beneficiary of the policies.  That meant any payment on his death would return to his estate.

After proceedings were commenced, he transferred ownership of each of the policies to his three children who were then also named as beneficiaries.  This was done without any reference to the wife.

The wife didn’t press for a section 106B Application, but rather sought to have the funds removed from the estate added back to the property pool.  The Judge determined that the proceeds should be added back to the property pool.

The court determined to add back the gross amount paid pursuant to the life insurance policies and that legal fees paid from joint funds should be brought to account.

The court then considered contributions. A particular issue was that the wife’s total inheritances in 1990 and 1991 were a significant sum, especially in 1991 and represented almost 60% of the current pool.

The wife received an adjustment of 15% of the current asset pool as a result of those contributions halfway through the marriage.

The court then considered s.75(2) factors.

The wife was 84 at the time of a medical report. The life expectancy figure suggested 88.9 years, but medical opinion was that she could live beyond 90 and possibly to 95 years of age.

As a result of the contribution adjustment, the court did not make any s.75(2) adjustment.