ADAMS & ADAMS
[2013] FMCAfam 17
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ADAMS & ADAMS | [2013] FMCAfam 17 |
| FAMILY LAW – Property – credit – property pool – inherited and gifted assets – contributions – sub-section 75(2) factors – just and equitable. |
| Evidence Act 1995 (Cth) s.140 Family Law Act 1975 (Cth) ss.75, 79 Federal Magistrates Act 1999 (Cth) Pt 6, Div 5 Federal Magistrates Court Rules 2001 (Cth) r.21.02(1)(b) |
| Bremner and Bremner (1995) FLC 92-560 Briginshaw v Briginshaw (1938) 60 CLR 336 Clauson (1995) FLC 92-595 Clives and Clives (2008) FLC 93-385 C & C (2005) FLC 93-220 Ferraro (1993) FLC 92-335 Garrett and Garrett (1984) FLC 91-539 Gosper & Gosper (1987) FLC 91-818 Hayne and Hayne (1977) FLC 90-265 Helton v Allen (1940) 63 CLR 691 Hickey (2003) FLC 93-143 Kessey & Kessey (1994) FLC 92-495 Lee Steere (1985) FLC 91-626 Mallet v Mallet (1984) FLC 91-507 OSF and OJK (2004) FLC 93-191 Parshen & Parshen (1996) FLC 92-720 Poulos and Poulos (1984) FLC 91-515 Reifek v McElroy (1965) 112 CLR 517 Rolfe and Rolfe (1979) FLC 90-62 Russell v Russell (1999) FLC 92-877 |
| Applicant: | MS ADAMS |
| Respondent: | MR ADAMS |
| File Number: | PAC 2066 of 2010 |
| Judgment of: | Roberts FM |
| Hearing dates: | 22, 23 and 25 August 2011, 15 and 16 February 2012 and 23 March 2012 |
| Date of Last Submission: | 23 March 2012 |
| Delivered at: | Launceston |
| Delivered on: | 30 January 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr F Santisi |
| Solicitors for the Applicant: | K R Lawyers and Consultants Pty Ltd |
| Counsel for the Respondent: | Mr M Gilbert |
| Solicitors for the Respondent: | Lane & O’Rourke |
ORDERS
That MR ADAMS (“the husband”) must pay to MS ADAMS (“the wife”) the sum of $300,000.00 (three hundred thousand dollars) within 90 days of today (“the payment”).
That contemporaneously with the payment the wife must transfer to the husband all her right, title and interest in the property situated at Property E in New South Wales being the land in Folio Identifier [omitted] (“the property”).
That contemporaneously with the payment the husband must provide to the wife a discharge of her liability to the Commonwealth Bank of Australia pursuant to Home Loan Account Number [omitted] – NSW.
That the husband must pay all outgoings in relation to the property, including but not limited to all mortgage loan repayments, council rates and water rates, and keep the wife indemnified from payment of any such outgoings.
That the wife retain her interests in the properties at Property M and Property R in New South Wales free from any claim by the husband.
That the husband retain his interest in a property in [A], Greece free from any claim by the wife.
That each party retain all other property in his or her possession or control as his or her sole property.
The parties must do all acts and execute all documents necessary to implement these orders.
IT IS NOTED that publication of this judgment under the pseudonym Adams & Adams is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAC 2066 of 2010
| MS ADAMS |
Applicant
And
| MR ADAMS |
Respondent
REASONS FOR JUDGMENT
The applicant is MS ADAMS (“the wife”) and the respondent is
MR ADAMS (“the husband”). The main dispute between them is about how the Court should adjust their property interests following the breakdown of their marriage.
The length of the hearing
On 12 April 2011 both parties were represented by counsel when this matter was originally set down for hearing in August 2011, with an estimated hearing time of two days. The orders made when that time estimate was given contain notations that the wife “would propose to call evidence from herself, her brother, her mother and medical evidence” and the husband “would propose to call evidence from himself and two lay persons”.
The parties were represented by the same counsel at the hearing. Only the wife and her brother gave oral evidence for the wife, and the husband and one lay witness gave evidence for the husband. Notwithstanding a significant reduction in the number of people giving oral evidence, the matter was heard over six days in three different sittings.
Terminology
The six days of hearing were 22, 23 and 25 August 2011, 15 and 16 February 2012 and 23 March 2012. For convenience, I shall simply refer to those days as Day 1 for 22 August 2011 through to Day 6 for 23 March 2012.
I will refer to a number of properties as follows:
·Property M, NSW – “the [M] property”;
·Property E, NSW – either “the [E] property” or “the former matrimonial home”;
·Property R, NSW– “the [R] property”;
·Property C, NSW – “the [C] property”; and
·A property in [A], Greece owned by the husband – “the Greek property”.
I will refer to the wife’s affidavits filed 5 May 2010 and 20 June 2011 as her first and second affidavits respectively. Similarly, I will refer to the husband’s affidavits filed 6 July 2010 and 29 July 2011 as his first and second affidavits.
The competing property applications
At the end of the hearing, the wife was seeking orders that would have the following effect:[1]
a)That she retain the [M] property;
b)That the husband retain the Greek property;
c)That the husband retain “the undisclosed cash arising from the [C] property and the mortgage raised thereon estimated at a capitalisation rate of 6% to be about $400,000”;
d)That “the [R] property be excluded and retained by the [wife] as to her share free of any right or claim of the [husband]”;
e)That she retain her superannuation;
f)That the [E] property be sold and the net proceeds be divided on the basis of 70% to the wife and 30% to the husband (with the wife having control of the sale of the [E] property).
[1] See pages 16 and 17 of her counsel’s written submissions.
By her counsel’s calculations, that would give the wife 56.87% of the suggested asset pool excluding the [R] property, but 64.63% if the [R] property was included. However, those calculations include:
·a notional [C] property “add back” of $400,000 to the husband’s side of the ledger; and
·the application of a conversion rate for the Euro to the Australian dollars for the Greek property at 1.39.
The husband was seeking orders for a 50/50 division of a differently constituted net asset pool, on the following basis:[2]
a)That the wife would transfer her share in the [E] property to him;
b)That he would assume sole responsibility for the outstanding mortgage over that property and his outstanding credit card debts;
c)That there would be a cash adjustment of $53,319 by him to the wife.
[2] See pages 10 and 11 of his counsel’s written submissions.
The calculations made by the husband’s counsel included the wife’s half interest in the [R] property and the parties’ superannuation, but did not include any funds associated with the disposal of the [C] property. They applied a conversion rate of 1.25 for the Euro to the Australian dollar.
Clearly, the parties’ lawyers were taking very different approaches to the matter, and at the end of the hearing they were still a very long way apart in what they each submitted should be the proper outcome.
Relevant law
Section 79 of the Family Law Act 1975 (“the Act”) sets out the matters that the court must take into account when considering what orders should be made for the alteration of the property interests of parties. They include:
a)the financial and non-financial contributions made directly or indirectly by or on behalf of each party or by a child to the acquisition, conservation or improvement of the property of the parties;
b)the contribution made by a party to the welfare of the family including any contribution made in the capacity of homemaker or parent;
c)the effect of any proposed order upon the earning capacity of either party; and
d)the matters referred to in sub-section 75(2) as far as they are relevant.
The general approach to the determination of a property settlement application has been well established by authority[3]. It is essentially a multi-step process. The first step is to identify the property, liabilities and financial resources of the parties (generally at the time of the hearing). The second step is to evaluate the contributions made by the parties as defined in section 79(4) of the Act and the third step is to consider those matters contained in section 75(2) that are relevant.
[3] See Lee Steere (1985) FLC 91-626; Ferraro (1993) FLC 92-335; Clauson (1995) FLC 92-595, Hickey (2003) FLC 93-143 and C & C (2005) FLC 93-220
In determining what order the court should make under section 79, the court must be satisfied in all the circumstances that it is just and equitable to do so.[4] It is the justice and equity of the actual orders that the court must consider and this has sometimes been referred to as “the fourth step”.[5] In Russell v Russell, the Full court said:
Furthermore, it must be remembered in this regard that under s79(2) of the Act, the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties' assets. Indeed we take the opportunity to emphasise that in what his Honour has termed ''the fourth stage'', that is, the consideration of whether the result is just and equitable, it is the justice and equity of the actual orders not of the percentage distribution which must be considered. [6]
[4] See Sub-section 79(2)
[5] See Hickey (2003) FLC 93-143 and Russell v Russell (1999) FLC 92-877
[6] Russell v Russell (1999) FLC 92-877 at page 86,439
However, I agree with Federal Magistrate Walters (as he then was) that “the testing of any proposed orders by reference to section 79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and there is no fourth step in that sense.”[7]
[7] OSF and OJK (2004) FLC 93-191 at paragraph 16
Credit
I am of the opinion that I should refer at this point to the credibility of the witnesses.
a. The wife’s evidence
I found much of the wife’s evidence to be extremely unreliable and I will refer to some examples.
On Day 2 I was told by the husbands’ counsel that there was “not a shred of paper produced to substantiate” the loan to the wife by the [Q] Credit Union in the sum of $70,000 that appeared in her second financial statement. The wife’s counsel said “that must be a typographical error”.[8] It is hard to imagine how such a “typo” could have occurred, particularly as she also claimed in the same document to be paying $77.32 per week to that Credit Union in loan repayments. However, its real significance is that the wife was prepared to swear to the truth of that on 14 December 2010, knowing that the document was to be used in these proceedings. When she was shown that Financial Statement and cross-examined about the apparent $70,000 loan, she made the following amazing statement:
Is this – is this mine or has somebody made a copy of it and just – and forged my signature? I don’t know what – this is totally – totally wrong. Everything that is on this – on this statement is totally, totally wrong. I’m – I can’t understand it. I can’t understand it. I’m pretty sure that somebody must have either made a copy and written incorrect amounts on here.[9]
[8] Transcript: Day 2 at page 66
[9] Transcript: Day 3 at page 204
When she was cross-examined about payment of mortgage instalments with respect to the [E] property as claimed by her in two sworn Financial Statements,[10] this exchange took place between the husband’s counsel and the wife on Day 3:[11]
Mr Gilbert: And the only way in which that payment could be made was, as you know, (was) by a deduction from your …credit union?
The wife: Actually, I've had time to think about that, and I did stop the payments from the credit union.[12]
Mr Gilbert: When?
The wife: I think it would have been late 2009 or early 2010, and then I was paying cash over the counter.
[10] Filed 5 May 2010 and 16 December 2010
[11] Transcript: Day 3 at page 211
[12] My emphasis.
When she was asked if she had been given receipts by the bank, she said that she had, but she “just didn’t bring them” to court.[13]
[13] Transcript: Day 3 at page 213
It was quite clear that she meant to convey the impression that she had regularly made mortgage payments in cash direct to the Commonwealth Bank. Indeed, this exchange also took place:[14]
Mr Gilbert: So you say that you received receipts for cash payments off a mortgage in respect of the matrimonial home, and you did them every month, and you were given receipts; is that right?
The wife: That's right.
Mr Gilbert: And even though that you had previously for a period paid it out of your credit union account, you abandoned that course in favour of paying in cash to the bank directly; is that right?
The wife: Yes, I stopped the credit union paying direct to the Commonwealth Bank, and then I paid it in cash.
[14] Transcript: Day 3 at page 213
In her oral evidence on Day 3, the wife confirmed on at least six occasions that she had been making those cash payments to the bank.
When her cross-examination resumed nearly six months later on Day 4, the wife said that she had been “confused” in her earlier evidence and that she had not made cash payments to the bank. Instead, she said that every month she had paid her half share of the required mortgage payment in cash, which she put on the kitchen bench from July 2008 until April 2009 and thereafter right up until February 2012 in envelopes which she placed in the husband’s letterbox.[15] However, she appeared to be confused about whether her half share was $400 per month or $146 per week (being more than $600 per month). She then appeared to resolve her confusion by saying that her payments were $400 per month and that she had “lied” when she had said in her sworn Financial Statements that she had been paying $146 per week.[16]
[15] Transcript: Day 4 at page 10
[16] Transcript: Day 4 at page 11
When questioned further about her claim to have made cash deposits in envelopes in the letterbox, she said that she had sent text messages to the husband to ensure that he was available to collect the money. However, when she was asked whether she had kept any of those text messages, she said that she had not and added:
I always cancel all the messages. I always cancel all the texts. I cancel everything on my phone.[17]
[17] Transcript: Day 4 at page 21
In my view, what I have set out above is sufficient for me to easily come to the conclusion that the wife does not always tell the truth. Indeed, I find that she was very deliberately not telling the truth on Day 3 and, in an effort to correct what was unlikely to be believed, she was again deliberately not telling the truth on Day 4. I do not accept her explanation that she was confused; she was quite clearly and deliberately not telling the truth on Day 3 and her evidence on Day 4 was even less believable. In short, I do not accept that her “confusion” had anything to do with her medical condition or the medication that she may have been taking. She was clearly not telling the truth on Day 3, and she was even more blatantly dishonest on Day 4.
There were other inconsistencies in the wife’s evidence. For example:
·When she was asked who cared for her after August/September 1997, the wife said: “There was no need for anybody to look after me. I was able to look after myself. And there’s a letter there from my neurologist explaining to say that I was capable of looking after myself and looking after my children.” However, almost immediately after that she conceded that the husband had often driven her to doctors’ appointments because she was incapable of driving.[18]
·She claimed that at one particular time the husband was never at home when the children were at school. However, she then conceded that the children were only three years and one year old at the relevant time so they could not have been attending school.[19] When the error was pointed out to her, she commented: “Well, I’m sorry, I lied about that one.”
[18] Transcript: Day 3 at page 188
[19] Transcript: Day 3 at page 187
In her first affidavit the wife said: “My husband started to gamble from the time the children were born and would consume alcohol.” However, in her second affidavit she said that he had been a gambler “from the onset of our marriage”. I note that there was a period of five years between the date of their marriage and the birth of their first child, so there is a clear inconsistency in the timing of her allegations in relation to gambling by the husband.
At paragraph 43 of her second affidavit, the wife said:
[The husband] would watch the races on the TV and I believe he had an account with someone because he would phone someone and gamble over the phone. He would say words to the effect “On the race in Melbourne that I am watching on the TV at the moment, I want to put $20 on X horse and ....”.
That allegation was denied in the husband’s affidavit, and I do not recall either party being asked any questions about betting on horse races. However, I think that I can take notice of the fact that it would have been extremely difficult, if not absolutely impossible to place a bet on a horse during a race that was already in progress.
In general, I was somewhat surprised that the wife appeared not to be at all concerned when her dishonest or inconsistent evidence was quite clearly exposed. On numerous occasions, she appeared to be not taking the proceedings very seriously.
In her affidavit evidence, the wife also made assertions that were not supported by the annexures to the particular affidavit. For example:
·she claimed to have paid school fees for her son when the relevant annexure clearly related to the school attended by her daughter;[20] and
·she claimed to have paid for things after separation when the relevant annexures related to purchases that had been made years before separation.[21]
[20] Paragraph 48 of her second affidavit
[21] Paragraph 7 of her second affidavit
However, I consider the examples referred to in the paragraph immediately above to be more a lack of concentration on the part of her solicitor than deliberate falsehoods on her part.
There was a similar lack of concentration in the preparation of her second affidavit, where she said “I was hospitalised for approximately one month in total” but in the very next sentence she said “I was in intensive care for 2 weeks and in the ward for approx 4 weeks thereafter”.[22]
[22] Paragraph 12 of her second affidavit
There were more inconsistencies and deliberate falsehoods in the wife’s evidence than I have referred to so far, but what I have set out above is sufficient to demonstrate why I concluded that she was not an honest witness. Having heard all her oral evidence over three separate days, I have no hesitation in concluding that the wife was quite prepared to manipulate the truth to suit her purpose. Indeed, I gained the very clear impression that the wife was often tailoring her evidence, particularly in order to understate the husband’s contributions and exaggerate her own.
b. The wife’s brother
I was not impressed with the oral evidence given by the wife’s brother. He contradicted what he had said in his own affidavit and he contradicted the evidence of his sister.
In his affidavit he said this about the [R] property that had been conveyed to him and his sister as joint tenants by their parents: [23]
I have always paid the rates and maintenance requirements of the property. I received no assistance from my sister or her husband. There was an agreement between my sister and myself that I would deduct the expenses I have paid if the house was ever to be sold.
[23] See Annexure “B” to his affidavit.
However, in his oral evidence he said that he is the sole owner of the [R] property, so that must beg the question why he would expect to be reimbursed by his sister for any expenses at all upon a sale of the property. The only logical inference is that, because he is not the sole owner, upon any sale of the [R] property, he expects to be reimbursed by the other joint owner for expenses he has paid.
He also gave contradictory evidence that it was always the intention of his parents that the [R] property would go to their grandchildren (which includes the wife’s children). That clearly does not sit well with his assertion that the family’s intention was that the property would be solely his property.
In his oral evidence he said that the reason why the [R] property was conveyed to him and his sister jointly was to prevent him from selling it and using the proceeds for gambling. He said that he had been a problem gambler when it was conveyed to him and his sister in 1994.
I note that he had not said that in his affidavit,[24] and I find it to be another fabrication on his part.
[24] See paragraph 12 of his affidavit
I have no difficulty in concluding that the wife’s brother was quite prepared to fabricate evidence if he thought it would bolster his sister’s case.
c. Ms N
Ms N gave evidence on behalf of the husband. She had been previously married to the wife’s brother, from whom she separated in 2001. They were divorced in 2006.
In her affidavit, she had said (inter alia):
11. I have read the affidavit of [the wife’s brother] affirmed on the 17 June 2011 and in relation to that affidavit I say that in my many conversations with [the wife] over many years she never said or even suggested that [the husband] was a heavy gambler … . My ex-husband [the wife’s brother] never said anything to me to suggest that [the husband] was a heavy gambler.
12. Myself and my then husband and [the wife] and [the husband] would frequently visit local clubs for dinner an (sic) often play Poker machines, but [the husband] played Poker machines no more than myself, my then husband and [the wife].
In her oral evidence she confirmed that evidence and added that:
·she had known the wife since they were at school together;[25]
·they had been very close from their school days up until 2001[26]; and
·the wife would confide in her and they spoke about “everything as far as two good friends and sisters-in-law would talk about”.[27]
[25] Transcript: Day 2 at page 124
[26] Transcript: Day 2 at page 132
[27] Transcript: Day 2 at page 124
I found her to be an honest witness.
d. The husband
In some respects, the husband was unreliable in his evidence. Some examples were:
a)He claimed to be paying the rates on the [E] property at $100 per week in order to keep up with the accruing rates, the arrears and the interest (although he admitted that he may have missed an occasional weekly payment due to financial difficulties).[28] However, notwithstanding that that the rates were accruing at approximately $1,500 per year and the exhibits tendered show that the interest on overdue rates did not exceed 11%, the [E] property rates liability increased from $4,804.80 on 21 January 2008 to $9,848.60 by 20 July 2011.[29] That must mean that the husband was less than candid about his attempts to reduce the arrears. Indeed, he could not possibly have made the payments that he claimed to have made.
b)In his Financial Statement he said he was paying minimum weekly credit card payments of $758, when net income after tax was $685. To his credit he accepted that his Financial Statement could not possibly be accurate when I put it to him.[30] (I venture to suggest that the amounts stated were more likely to be the “monthly” minimum amounts that particular Banks required, and not “weekly” minimums that the standard form Financial Statement required. This is perhaps another example of a lack of concentration on the part of a solicitor, rather than a deliberate falsehood.)
c)On a number of occasions in cross-examination he gave the answer: “I don’t think so”. It was only in re-examination that he indicated that his use of that phrase was intended to be an answer in the negative.[31]
[28] See Transcript for Day 4,commencing at page 61
[29] See Exhibits “W20” and “W21”
[30] See Transcript for Day 5 at page 11
[31] See Transcript for Day 5 at the foot of page 119.
However, I did not conclude that he was an essentially dishonest witness as the wife’s counsel submitted I should conclude.
The husband was vigorously cross-examined for nearly six hours in total, but he generally maintained his ground and was unshaken in his answers. On a number of occasions I had cause to say to the wife’s counsel that I considered the questioning of the husband to be unfair. One example was that counsel persistently put to the husband that he and his brother had borrowed $420,000 by way of mortgage over the [C] property (clearly suggesting that it had been borrowed in one amount), whereas the husband’s consistent evidence was that he and his brother had a line of credit (secured by the mortgage) that they drew on from time to time. In relation to that particular issue, I accept the husband’s evidence that his brother drew more than he did. I shall refer to the line of credit liability further below.
In her second affidavit, the wife had said:
37. After the children were born I never knew how much [Mr Adams] earned because he worked for his brother. He did not contribute financially to the household and never conveyed to me what he was getting paid or the arrangement he had with his brother. I was therefore unable to rely on him financially.
The husband’s response to that in his affidavit was: “Prior to and following the birth of the children I never worked for my brother …”
During cross-examination of the husband, it was put to him on numerous occasions that he had been working for his brother after he and his brother had sold their [omitted] business. He consistently denied that and no evidence has been produced that corroborates in any way that allegation by the wife. If it was her contention that he had been working for his brother, the onus was upon her to provide evidence that could persuade the court of that.[32] For example, she should have had a subpoena served upon his brother, but she did not do that. I therefore find on the balance of probabilities that he was not working for his brother as alleged by the wife.
[32] Her brother also made that allegation, but I have commented above upon his credibility.
The husband was also cross-examined at length about the wife’s allegation that he had a “gambling addiction”. In my view that was a serious allegation to make and the onus was on the wife to prove it to the requisite standard.
Proceedings under the Family Law Act 1975 are civil proceedings. Sub-section 140(1) of the Evidence Act 1995 states that the standard of proof in civil proceedings is that the court must be satisfied that the case has been proved on the balance of probabilities. Sub-section (2) specifically incorporates dicta in cases such as Reifek v McElroy, Helton v Allen and Briginshaw v Briginshaw, all of which state that the degree of satisfaction which the civil standard of proof calls for may vary, having regard to the gravity of the facts to be proved. [33]A passage of Dixon J’s judgment in Briginshaw reads as follows: [34]
The truth is, that when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independent of any belief in its reality.[35]
[33] Reifek v McElroy (1965) 112 CLR 517, Helton v Allen (1940) 63 CLR 691and Briginshaw v Briginshaw (1938) 60 CLR 336
[34] Briginshaw at p.361
[35] My emphasis
Exhibit “W16” consists of what purports to be copies of the wife’s [Q] Credit Union statements for 2004 and 2005. In fact, there are no statements for August 2004 because the statements for August 2005 are repeated. The husband was taken laboriously through virtually every cash withdrawal from the account in 2004 (apart from August) and asked to explain those withdrawals. I accept that in the main those withdrawals were to obtain cash to pay for things to support the family. I say that because:
·Apart from miniscule interest payments from time to time, nowhere in Exhibit “W16” is there any other deposit than fortnightly Centrelink deposits and monthly [Q] Superannuation Disability Benefits.
·In January 2004 the Centrelink deposits equated to $300.17 per week and the [Q] deposit equated to $258.92 per week, making a total of $550.09 per week.
·In December 2005 the Centrelink deposits had increased to the equivalent of $314.11 per week and the [Q] deposit had increased to the equivalent of $276.28 per week, making a total of $590.39 per week.
·I accept the evidence of the husband that they did not have any other source of income other than occasional rental income from the wife’s [M] property,[36] but Exhibit “W16” does not reveal any rental income being deposited in those 23 months.
·Therefore, the evidence that I have is that this family of two adults and two children was being supported on less than $600 per week in those two years. I am therefore satisfied that the husband did not have the wherewithal to fund a “gambling addiction”. I prefer to accept the evidence of the Husband and Ms N that the husband and the wife both played “the pokies” for entertainment from time to time.
·In short, I do not feel an actual persuasion of the existence of a “gambling addiction” that can be attributed to the husband.
[36] See Transcript: Day 5 at page 104
Given what I have said above, it should be clear that where the evidence of the wife or her brother differs from that of the husband or Ms N, I generally prefer the evidence of the husband and Ms N.
Background
Unless a contrary intention is clear from the context, where I refer to facts below in these Reasons, they should be regarded as findings of fact, especially where there is a dispute between the parties in relation to those facts.
The husband is aged 53 years and the wife is nearly 51 years old.
The parties started living together in 1987 and were married in 1988. At that time the wife was working for [Q] and the husband was self-employed in a [omitted] business with his brother.
The wife had prior to the marriage purchased the [M] property in July 1986 for $52,500.[37] That purchase was financed by a GIO mortgage loan of $34,000 and a further “loan” from her parents.[38] The parties lived in the [M] property until they moved to the [E] property as set out below.
[37] See Exhibit “W1”
[38] See paragraph 3 of the wife’s first affidavit
At the time of cohabitation the husband had a 50% interest in a [omitted] business that he operated with his brother. In his affidavit he valued that interest at $70,000. However, I consider that to be unlikely, because when the business was sold in December 1997, the liabilities exceeded the sale price by approximately $60,000.
I accept that the husband otherwise had assets at the start of the relationship worth approximately $25,000.
The parties’ son was born in late 1993 and their daughter was born in mid 1995.
In 1992 the parties jointly purchased the [E] property with the assistance of a loan from the Commonwealth Bank. The balance required to settle the purchase was funded from the husband's business and from their savings.
The parties subsequently demolished the house existing on the [E] property and built a new four-bedroom house. They borrowed further funds from the Commonwealth Bank to do that, making their total indebtedness to the Commonwealth Bank at that time to be approximately $126,000.
In mid-1996 the family moved into the [E] property but some finishing off of the construction work was still required.
In December 1996 the wife became seriously ill and was hospitalised for approximately 2 months. When she returned home, it was quite clear that she needed full-time care and, after family discussions, her own mother moved into the [E] property to assist with that care for the next eight months.
Because the wife’s mother left at the end of that eight-month period, the husband employed a nurse to care for the wife but that cost him approximately $1000 for only a week. He therefore gave up his employment and became the full-time carer for the wife and the children (who were aged approximately 4 years and 2.5 years at the time). It was at this time that the husband and his brother sold the [omitted] business.
The husband then received Centrelink benefits and did some part-time work. However, he had to cease that part-time work because his employer wanted him to work on night shifts.
I accept the husband’s evidence that the family income then came essentially from Centrelink benefits and the wife’s disability pension paid by her [Q] superannuation fund. I also accept that at that time the husband began “resorting to the use of credit cards to meet day to day expenses”.[39]
[39] Paragraph 32 oh his affidavit
In 1999 the husband cashed in a superannuation policy on hardship grounds, realising approximately $10,000 which was applied to the family’s general expenses.
I accept the husband’s evidence contained in paragraph 36 and 37 of his affidavit:
36. When the children went to school I dropped them off and picked them up after school. For the first 4 years of the applicant’s illness I did all of the family shopping, I sometimes prepared food on the barbecue, but frequently bought take away, but eventually the applicant was able to cook for herself and the children.
37. I took the children to soccer, swimming and other sports on weekends, I went to all teacher-parent meetings in relation to the children, I drove the applicant to medical appointments at least once a week.
I also accept that the husband’s evidence that he was essentially the wife’s carer until she was able to fully carry out household duties and was able to drive a car again. However it is conceded by the husband that she took over control of her finances again in August 2005.
In early 2005 the husband and his brother inherited the [C] property.[40] It had a value at that time of $460,000. The husband and his brother had mortgaged that property prior to their parents’ deaths in order to secure the line of credit referred to above.
[40] See Exhibit “W23”
The husband also inherited his interest in the Greek property.
In August 2008 the husband and his brother sold the [C] property for $544,000 and paid out $424,167 to discharge the mortgage securing the line of credit. After expenses, there was a balance of approximately $106,500 which they shared equally (i.e. approximately $53,250 each).[41]
[41] See paragraph 11 of his first affidavit
When the husband’s application for a Carer’s Pension was made, the parties failed to include the wife’s half interest in the [R] property as a family asset. When the wife later disclosed that asset to Centrelink, the husband received an account from Centrelink to recover a significant overpayment. That account is dated 3 December 2008 and it is Annexure "D" to his affidavit, and part of it reads as follows:
Due the your partners (sic) inheritance of the Property R property your combined assets have increased above the threshold. You have been overpaid $14,977.94. We are required to recover this amount from you.
Although the wife now claims that she was not aware that the husband was in receipt of a Carer’s Pension, I find that, while she may not have been well enough to understand the sources of the family’s income in the early days after she became ill, she would have been well aware of those sources before 2008 when she made the disclosure about the [R] property to Centrelink.
The husband gave no satisfactory explanation about why he did not discharge that debt to Centrelink from his share of the net proceed of the sale of the [C] property.
The husband obtained full-time employment in February 2009 and he was still in full-time employment at the time of the hearing.
The parties physically separated in April 2009 when the wife left the [E] property. The wife says that they separated under the same roof in 2007.[42] However, the husband says that they separated “on or about 10 April 2009 when the applicant left the matrimonial home”.[43] On balance, I prefer the husband’s evidence and consider April 2009 to be the correct time of separation. However, I have no doubt that things were very tense in the household for some time prior to that because the wife’s last mortgage payment from her credit union account was on 15 July 2008 [44] (and I find that she did not make the cash payments that she claimed to have made after that).
[42] See paragraph 16 of her first affidavit
[43] See paragraph 5 of his second affidavit
[44] See Annexure “H” to her second affidavit
The asset pool
The parties have legal interests in the following properties, either jointly or individually:
Property Owner Agreed Value [E] property Joint $920,000 [M] property Wife $280,000 [R] property Wife 50%[45] $375,000 Greek Property Husband $97,000 [45] I reject the submission that the wife “was merely named on the title as a trustee” as stated in paragraph 14 of the written submissions by the wife’s counsel.
I note that the Greek property has been valued at 70,000 Euros and on Day 1 the parties were in agreement that an Australian dollar value of $97,000 should be attributed to it.[46] That agreement appeared to have evaporated by the end of the hearing, because of the increased value of the Australian dollar. Exchange rates at the beginning of this month would suggest that 70,000 Euros is currently worth approximately $88,000. However, that may become somewhat academic in view of what I say below.
[46] See page 22 of the Transcript
The parties do not agree upon how I should treat the wife’s interest in the [R] property or the husband’s now sold half-interest in the [C] property. The differences in the approaches suggested by counsel are substantial and, bearing in mind that I must do what is just and equitable, I propose to adopt an unusual course and exclude all inherited or gifted property from the assert pool. That includes the Greek property.
My reasons are:
·Notwithstanding the dishonest efforts of the wife and her brother to say otherwise, I am satisfied that she is a half owner of that property. However, she made no financial contribution of her half interest because it was a gift to her from her parents. Similarly, the husband made no financial contribution to the acquisition of that half interest. I note also that the husband’s only claimed contribution to that property appears to be some “painting it looking after it”[47] of unquantified value that was clearly not sufficiently significant to detail in his affidavits.
·The wife does not claim to have made any contribution towards the [C] property and, in any event, there is no evidence that any of that asset still remains. Notwithstanding that the husband may not have been able to account for every dollar; I reject the submission of counsel for the wife that he may still have cash from either the mortgage or sale of that property. I consider it to be unrealistically fictional to apply a capitalisation rate of 6% to an already notional sum in order to arrive at the conclusion that I should add back a notional $400,000 as an asset in the husband’s possession.[48]
·The value of the Greek property has fluctuated over recent times, and will probably continue to do so over coming months while the European economic crisis plays out.
·The husband’s counsel appears to suggest that if the Greek property is to be taken into account in these proceedings as an asset on the respondent’s side of the ledger, the wife’s potential inheritance should also be taken into account.[49] (I will refer to that potential inheritance below.)
·As neither party made much of a contribution to the other’s inherited or gifted property, it seems likely that if the assets were to be included in the asset pool, the party who received the gift or inheritance would get almost 100% of the credit for the contributions made on behalf of that party by that party’s parents. (See Gosper & Gosper[50] and Kessey & Kessey [51]) Excluding those gifted properties from the asset pool will avoid unnecessary arithmetical gymnastics in the allocation of percentages attributable to contributions on behalf of the parties.
·I consider that it is therefore more appropriate to take account of all inherited and gifted property (including potential future inheritances) under section 75(2)(o) of the Act.
[47] Transcript: Day 5 at pages 106 and 107
[48] See paragraph 38 and the table at the end of his written submissions.
[49] See paragraph 47 of his written submissions.
[50] Gosper & Gosper (1987) FLC 91-818
[51] Kessey & Kessey (1994) FLC 92-495
The asset pool that I will take into account is as follows:
Asset Agreed value [E] Property $920,000 [M] property $280,000 Wife’s superannuation[52] $131,962 Husband’s superannuation[53] $6,075 Total $1,338,037 [52] See exhibit “W29”.
[53] See paragraph 47 of his second affidavit.
In accordance with the reasoning of the majority in C & C,[54] I conclude that it is appropriate to include the parties’ superannuation interests in the same pool of assets as the other assets. My reasons are:
·That is the way that both counsel have treated superannuation in their written submissions; and
·Overall, the superannuation comprises a relatively minor proportion of the total value of the assets.
[54] C & C (2005) FLC 93-220
The liabilities to be taken into account are the mortgage balance in relation to the [E] property, credit card debts and the Centrelink debt.
In relation to the mortgage, I note that the wife’s last mortgage payment was on 15 July 2008 and that the mortgage loan balance on 30 June 2008 was $90,799.[55] I therefore consider it appropriate to attribute a sum of $90,000 as the mortgage loan balance for the purposes of quantifying the net value of the asset pool.
[55] See Exhibit “W27”.
In relation to the husband’s credit card debts, I accept his evidence that the balances were substantially incurred prior to the parties’ separation. The balances shown in paragraph 47 of his second affidavit total $28,644.[56] I shall round that down to $28,500.
[56] Not $38,000, as stated on the last page of his counsel’s written submissions.
The Centrelink debt is referred to above. I do not see that it matters who failed to notify Centrelink of the wife’s interest in the [R] property. The debt was incurred during the marriage in relation to Centrelink benefits that were used for the family so the debt should be included as a liability in my calculations.
The liabilities are:
Mortgage loan $90,000 Credit card debts $28,500 Centrelink debt $14,000 Total $132,500
The total net value of the asset pool is therefore $1,205,537.
Contributions
As can be seen from paragraphs 58 to 60 above, the parties had little in the way of assets at the start of their relationship.
It should be apparent from what I have said above that I do not accept that the husband contributed “minimally to the household” as suggested by the wife. However, due to the relatively unsatisfactory state of the evidence generally, I am not able to specifically state who contributed how much financially at any particular time. Notwithstanding that, it is quite clear that despite her illness, the wife’s financial contributions continued because she was in the fortunate position of being able to receive regular payments of disability benefits from her superannuation fund and I accept that there were the occasional rent receipts from the [M] property. The husband was contributing financially from Centrelink benefits.
In addition, both parties were contributing financially for the benefit of the family unit from funds obtained because of the generosity of their respective parents. In the husband’s case, that generosity took the form of cash receipts following the inheritance of a half-interest in the [C] property and the subsequent line of credit secured against that property. In the wife’s case, I accept that she received cash gifts from her parents from time to time. In my view, however, neither party gave sufficiently clear evidence supported by documentation to enable me to quantify the amounts actually contributed for the benefit of the family unit. Indeed, I got the very real impression that both parties had been quite happy not to have financial records when it suited them in the past.
In the circumstances, I propose to adopt the approach taken in Parshen & Parshen, where their Honours Ellis, Finn and Purdy JJ said the following:
In our view, in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to the provisions of s79 that moneys howsoever received by a party during the course of the parties’ cohabitation, are used by that party for the benefit of the family unit. Such moneys, in those circumstances, thus constitute a financial contribution by the party who received the moneys. [57]
[57] Parshen & Parshen (1996) FLC 92-720 at page 83,665
In any event, it is clear that the assessment of contributions is not an exercise of mathematical precision.[58] Indeed, I would say that an evaluation of the weight to be attributed to different types of contributions - such as direct financial contributions and indirect non-financial contributions - cannot be a science involving precise measurement.
[58] See Hayne and Hayne (1977) FLC 90-265 at p. 76,415, Garrett and Garrett (1984) FLC 91-539, Poulos and Poulos (1984) FLC 91-515 at p. 79,184, Bremner and Bremner (1995) FLC 92-560, Clives and Clives (2008) FLC 93-385 at paragraph 44 and Kessey and Kessey (1994) FLC 92-495 at page 81,150
After the wife became ill, the husband clearly adopted the greater homemaker and parent role and it is clear that the contributions “made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent” [59] should not merely be recognised in a token manner, but rather, they should be recognised in a substantial way irrespective of who undertakes the greater homemaker and parent role.[60]
[59] See section 79(4)(c)
[60] See Rolfe and Rolfe (1979) FLC 90-62 and Mallet v Mallet (1984) FLC 91-507
In the circumstances, I conclude that throughout their relationship of more than 20 years the parties contributed equally to the acquisition, conservation or improvement of the property referred to at paragraphs 84 to 91 above. Consequently, if I was to decide this matter on contributions alone, I would make orders that would provide for an equalising of the net value of those assets. However, I am not deciding this matter on contributions alone.
Sub-section 75(2) factors
As mentioned above, the husband is aged 53 years and the wife is nearly 51 years old.
At the time of the hearing, the husband was employed full-time and there was no suggestion that his employment would not continue. On the other hand the wife's state of health and the fact that she cares for the parties’ daughter makes it most unlikely that she will be able to find gainful employment.
Annexure “E” to the wife's second affidavit is a letter from the wife's doctor that was unchallenged. It reads as follows:
[The wife] has been a patient at this surgery for three years. Her daughter is also a patient here.
In this time I have treated [the wife] for munerous (sic) medical conditions, including epilepsy, migraine, dizziness and syncope.[61] Her daughter … suffers from Turner's Syndrome and requires constant care and attention.
[The wife] suffers from intermittent dizziness and headaches, which require her to rest and take medication.
[The parties’ daughter] has problems with her feet, relating to her condition and is unable to walk more than short distances. This requires her mother to transport her frequently.
[61] Temporary loss of consciousness.
I feel these circumstances make it impossible for [the wife] to seek employment.
The 17 year old daughter of the parties continues to live with the wife and the husband conceded that she was in a “special needs class” at school.[62] Annexure “F” to the wife’s second affidavit shows that the parties’ daughter functions in the moderate intellectual disability range. It seems likely therefore that she will continue to need assistance from her mother well beyond the age of 18 years.
[62] Transcript: Day 5 at page 112
The parties’ son is now 19 years old and at the time of the hearing he was living with his father. During his oral evidence the father said that his son was not at home that particular day because he was working.[63] I also note that the parties’ son regularly has evening meals at his mother's home.
[63] Transcript: Day 5 at page 9
The wife will continue to retain her [M] property, her half interest in the [R] property and her superannuation interest. The total value of those is approximately $787,000. However, none of those is currently capable of producing any additional income for the wife at this time.
Counsel for the husband says that, because the husband’s retention of the Greek property will be taken into account, the wife’s future prospects of inheriting should also be taken into account. He says her widowed mother is aged 82 years and was said to be suffering from poor health. He submits further that because the wife and her brother are the only siblings, “it is reasonable to suppose that in the fullness of time and in the ordinary course of events that the applicant will inherit a one half share of her mother’s assets”, and this was a factor that I should take into account pursuant to sub-section 75(2)(o) of the Act. [64]
[64] See paragraphs 47 and 48 of his written submissions.
There are some difficulties associated with those submission, and they are:
·I have no medical evidence about the state of health or life expectancy of the wife's mother. All I can really assume is that “in the ordinary course of events” she can be expected to live for a further eight or nine years. However, that expectation is based upon Australian Life Expectancy Tables which are, of course, based only on averages;
·I know nothing about the intention of the wife’s mother in relation to what is to happen to her assets after she dies; and
·I have no real information about her mother’s assets and liabilities.
In those circumstances, all I can assume is that the wife is unlikely to be left “high and dry” by her mother, but I am unable to assess what her inheritance prospects really are.
When I weigh up all these factors, I conclude that the employability of the parties is the most significant. Put shortly, the husband is employable whereas the wife is not, essentially because of her own health difficulties and the special needs of the parties’ daughter who lives with her. I am therefore of the view that there should be an adjustment of some significance to the wife, and that it should be in the region of $100,000.
Conclusions
As mentioned above, the net value of the asset pool is $1,205,537. Fifty percent of that is $602,768.
The wife will retain the [M] property worth $280,000 and her superannuation of $131,962. The total of those is $411,962.
The husband wishes to retain the [E] property, so his assets will comprise that property and his superannuation, with a total value of $926,075. However, he will have to pay out the liabilities totalling $132,500, so the net value that he retains from the asset pool set out above is $793,575.
That means that husband would have to pay the wife a further $190,806 if she was to receive a 50% division of the asset pool referred to above on the basis of contributions. In addition to that she should receive a further sum of approximately $100,000 under sub-section 75(2) of the Act. That total is $290,806.
In the circumstances, I consider it to be just and equitable for that sum to be rounded up to $300,000.
I will therefore make orders that provide for the husband to pay the wife the sum of $300,000 in return for a transfer of the wife’s interest in the [E] property to him. I will make that payable within 90 days to enable him to raise the necessary finance.
In my view, the husband should be able to raise $300,000 on a property that has equity in excess of $800,000. I do not know if he is still able to rely upon family generosity to assist also.
The orders that I make appear at the start of these Reasons.
Costs
The husband is seeking an order for costs thrown away in relation to two aborted or cancelled Conciliation Conferences.[65] That application was adjourned on 23 March 2011 on the basis that it may still be argued in the light of what I have determined today.
[65] See his Application in a Case filed 23 February 2011.
If that application for costs is to be pursued or any other costs application is to be made, my Associate should be notified within 28 days in accordance with Rule 21.02(1)(b) of the Federal Magistrates Court Rules 2001. My Associate can then make arrangements for any costs applications to be listed for hearing by telephone or video link in accordance with Division 5 of Part 6 of the Federal Magistrates Act 1999 (soon to be known as the Federal Circuit Court of Australia Act 1999).
The Parramatta Registry file will be retained in Launceston until at least the expiry of that 28 day period.
I certify that the preceding one hundred and nineteen (119) paragraphs are a true copy of the reasons for judgment of Roberts FM
Associate:
Date: 30/1/13
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