Allen & Allen
[2008] FMCAfam 18
•18 January 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ALLEN & ALLEN | [2008] FMCAfam 18 |
| FAMILY LAW – Property settlement – wife deceased – executrix substituted in proceedings – just and equitable. |
| Family Law Act 1975, ss.75(2), 79(8)(b)(iii) |
| Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143) Kildea & Kildea (2007) FamCA 1324 McIntosh (unreported) (BR 1848 of 1995 – delivered 31 May 1996) |
| Applicant: | Ms Allen (deceased) |
| Respondent: | Mr Allen |
| File Number: | BRC 1558 of 2007 |
| Judgment of: | Baumann FM |
| Hearing date: | 7 June 2007 |
| Delivered at: | Brisbane |
| Delivered on: | 18 January 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hamwood |
| Solicitors for the Applicant: | SJP Law |
| Counsel for the Respondent: | Mr George |
| Solicitors for the Respondent: | Simonidis Shoebridge Lawyers |
ORDERS
That the matrimonial pool be divided with the Estate of the Late Ms Allen (‘the Estate”) to receive 50% and the Husband to receive 50% as follows:
Asset
Husband
Estate
Sale proceeds of TA Property
Divided so as to provide each party with an equal division of the asset pool.
Divided so as to provide each party with an equal division of the asset pool.
Toyota Coupe
4,000.00
Daewoo Hatch
1,500.00
Chattels - Husband
7,995.00
Chattels – Estate
2,880.00
That unless otherwise specified in these orders each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and for that purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s records therof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements. Each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
That the Husband’s Application in a Case filed 18 December 2007 be discontinued.
IT IS NOTED that publication of this judgment under the pseudonym Allen & Allen is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT Brisbane |
BRC 1558 of 2007
| Ms Allen (deceased) |
Applicant
And
| Mr Allen |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant Wife, MS ALLEN died aged 48 from cancer after proceedings had been commenced by her for property proceedings. It is conceded that the Court would have made an order with respect to property if the deceased party had not died, and the EXECUTRIX
Ms H was substituted for the deceased Wife in these proceedings.
The Respondent Husband Mr Allen also seeks an equitable division of the available pool of assets. Although the trial completed in June 2007, at that time the major asset being the former matrimonial home was on the market for sale. I anticipate that the home has now been sold and the nett proceeds await my order.
The parties were married in the United Kingdom in July 1978 and moved to Australia in 2000. There was one child of the marriage, S now aged nearly 18 years. She regrettably does not enjoy a close relationship with her father.
The history of the relationship was not significantly in dispute save for the date of final separation. The financial history is neither complex nor controversial.
Principles
The preferred or usual approach to determining property proceedings under s.79 of the Act was the subject of a succinct summary by the Full Court in Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143) at [39] where the Court said:-
“39. The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s79. That approach involves four inter-related steps. Firstly, 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. Secondly, the Court should identify and assess the contributions for the parties within the meaning of ss79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s79(4)(e), the matters referred to in s75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1085) FLC 92-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC 92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEL and DDR (2001) FLC 92-075 and Phillips and Phillips (2002) FLC 9.-104.”
Issues
The experienced Counsel who appeared for the parties at the trial had narrowed the issues such that none of the witnesses relied upon by the Executrix were required for cross examination and only the Husband and the expert psychiatrist, Dr Larder were required by the Counsel for the Applicant.
By final submissions, the issues were identified as follows:-
a)The date of separation;
b)What “add backs”, if any, should be included in the pool of assets;
c)After a 25 year relationship are their any factors which should favour a greater than 50% assessment on contributions to the Wife.
d)Should their be any adjustment in favour of the Husband for the factors under s.75(2) of the Act.
Date of Separation
The Executrix relies principally upon a document, which the Husband concedes bears his signature, to establish that final separation occurred under the one roof on 10 December 2004. The document is Annexure “REH4” and is dated 25 January 2003. It is common ground the Wife and S moved out of the home on 1 September 2004 to take up separate rental accommodation. The Husband says this represents the date of final separation. The Husband was not cross examined to any degree about this difference. As I note when dealing with the issue of contributions, little turns on the difference. It is likely the relationship was unhappy from at least September 2003 but as S was then only about 13 years old, staying together for her benefit may have been a convenient solution. The Husband also says, over this period he assisted the Wife and cared for her. This is disputed. Unresolved disputes as to who may have made withdrawals against the joint loan account with Westpac further confuse the issue. This was likely to have been a very difficult time for the family with the Wife being diagnosed with cancer, she says, in December 2002. The Husband deposes (at paragraph 103 of his trial affidavit) that after being informed in 2004 by her doctors that her condition was terminal, she agreed to have chemotherapy and “in September 2004 Ms Allen had her fourth chemotherapy session and after recovering advised me that she was leaving the former matrimonial home and was taking S with her.”
The document “REH4” was created for a purpose. It is a formal document with more than a hint of “legalese” about it. It is witnessed by a Justice of the Peace. It was created, on the Wife’s version, over 12 months after separation. The Wife’s sworn affidavit filed 19 October 2005 merely asserts (at paragraph 3) that separation occurred “on or about 10 December 2003.” In that affidavit she does not refer to the documents at “REH 3” and “REH 4”.
For the purpose of this decision, I regard the date of separation to be when the parties physically separated in September 2004. When I refer to events “post separation” that is meant to refer to the period after September 2004.
Pool
As previously noted, I anticipate that the former matrimonial home at TA has now been sold and the secured mortgage discharged. To that extent, the pool which I have determined, should be regarded as “notional” on the basis that the agreed value of the home and mortgage at trial would be substituted for the nett proceeds of sale (and after allowance for costs of sale, trustees expenses, real estate agents commission and the like).
The value of 2 motor vehicles and chattels in the possession of the Husband and the Estate were agreed and the real issue for determination was whether and to what extent the funds should be “added back” to the notional pool or otherwise included.
Before analysing the evidence on these disputed issues. I record the now established “guidelines” for “adding back” (as so called) which was very recently summarised by the Full Court decision reported as Kildea & Kildea (2007) FamCA 1324 (delivered 21 December 2007) where at paragraph 112, the Full Court (Finn, May & Boland JJ) said:-
“The Full Court has had cause to consider on a number of occasions the question of so called “add backs” and has established guidelines to facilitate consistency in decision making (see Chorn and Hopkins (2004) FLC 93-204, Townsend and Townsend (1995) FLC 92-569 and Kowaliw and Kowaliw (1981) FLC 91-092). In Gollings and Scott (2007) FLC 93-319 at paragraph 65 the Full Court said as follows:-
In Omacini and Omancini (2005) FLC 93-218; (2005) 33 Fam LR 134 the Full Court identified there clear categories of cases where it was appropriate to notionally add back the pool assets which were said by the Full Court to “no longer exist”. Those three categories were:
(a) monies spent on legal fees;
(b) monies disbursed by way of premature distribution of matrimonial assets; and
(c) monies lost by one party either during or after marriage as a result of a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or as a result of reckless negligent or wanton behaviours which had the effect of reducing or minimising the value of assets.”
Furthermore as the Full Court noted in Chorn and Hopkins (Supra) funds being “added back” is more the exception than the rule. I deal with the following issues:
Husband’s British Caledonian Airways Superannuation Benefit
This interest, which has a value to the Husband of the equivalent of approximately A$57,427.00 ( if the methodology set out in Schedule 4 of the Family Law (Superannuation) Regulations 2001 were to apply), arises from employment the Husband had with this airline. It appears that the Husband is entitled to a pension (now payable by British Airways Pension Services Ltd) of £3,137.08 from 1 December 2020. This amount is subject to an increase of 5% per annum from the date payment commences.
In my view it is clear that this entitlement, which has not yet vested, is a financial resource. It is a relevant factor under s75(2) and it is not a superannuation interest for the purpose of the Family Law Act 1975. It will not therefore be included in the pool of assets.
Norwich Union (UK) Funds
The Executrix, and substituted Applicant, deposes at paragraphs 44 to 59 of her trial affidavit that the Wife had an interest at the time of death in two separate pension funds with Norwich Union (UK). The terms of the policy are not before the Court. Furthermore, it seems clear that shortly prior to the death of the Wife, the Wife forwarded to Norwich Union a ‘death benefit nomination’ (see annexure “REH34”). The Execturix says she has not been able to find a copy of the ‘death benefit nomination’. It is not clear why Norwich Union could not be prevailed upon to provide a copy, however, on the evidence I am prepared to accept that Norwich Union (UK) in accordance with its legal and/or contractual obligations paid or will pay the following parties:-
a)To Mr Allen - £4,954.00
b)To S - £72,797.00
c)The payment due to the Husband under the policy are payable as a pension. The payment for the daughter S has been received and deposited with the Public Trustee (Qld) as S does not attain her majority until 8 February 2008.
The Husband submits that the funds paid from this policy to and for the benefit of S should be notionally “added back” to the pool. I disagree. The funds arise as a result of the Wife’s death and never because the entitlement of a party or of her estate. If the Husband believes he was entitled to those funds he may have had remedies in the UK before payment.
I can see no basis upon which the proceeds of either contract should be included in the pool. Such a view is consistent with the analysis undertaken by Lindermeyer J in the unreported decision of McIntosh (unreported) (BR 1848 of 1995 – delivered 31 May 1996) who found that the Husband “had no right of property in or in relation to the funds of the superannuation scheme unless and until the Trustee exercised its discretion to pay those funds to him.”
Furthermore, as the interest never vested in the estate (of a binding death benefit nomination), the funds were not the property of the Wife or her estate for the purpose of s.79(8)(b)(iii) of the Act. I think the situation my have been different if, in the absence of the binding death benefit nomination, the entitlement under the UK pension fund was paid to the estate (see Evans v Public Trustee for WA 14 Fam LR 646).
Recruitment Superannuation Fund
The Executrix at paragraphs 64 to 76 of her trial affidavit, deposes to the interest that the deceased held in that fund at the time of her death. After a claim had been made by the Executrix as “the guardian for the deceased‘s child S and will use the benefit for the general well being and maintenance of S,” the Trustee determined that the amount of $424,706.42 would be paid “in trust for S, with the proceeds to be used for the education, maintenance and well-being of S.” The funds have been paid to the Public Trustee (QLD).
Adopting the same principles for excluding the Norwich Union (UK) funds received for the benefit of S, I do not include the SRRecruitment Super funds in the pool of assets for division.
Bereavement Benefit (HM Revenue and Customs)
Arising from the Wife’s death the Husband was entitled to, and has received, a bereavement benefit which he estimated to be £5,800.00 (from 2 sources) together with the payment of £57 a week for 12 months. As the Husband and Wife were not divorced at the time of death, on the limited evidence available to the Court, it seems the benefit was payable to the Husband as the surviving spouse (see annexure “REH60”).
The Executrix submits the totality of these bereavement benefits estimated to be the equivalent of A$14,388.00 should be “added back”. I disagree.
Although, on the authority of Evans (Supra) it could be said the funds were paid to the benefit of the Husband “as a consequence” of the Wife’s death, by the time of trial none of the funds remained., it is clear that the Husband had almost entirely relied upon funds from his mother, as well as his centrelink benefit to meet his living expenses.
Whilst the Executrix might (and seemingly does) take the view that the Husband has been unjustly enriched by this “windfall”, I am satisfied that where it has been disbursed on living expenses, it should not be added back – but do not ignore the benefit when considering the post separation contributions and relative justice and equity of any order.
Funds in ING Savings Maximiser Holiday Account
The Executrix deposes that the Wife kept her retained savings in this account. At the time of her death the said account had a balance of approximately $16,000.00 and after payment of funeral expenses of $4,386.80 on 1 September 2006, the balance in the account of $11,607.00 was withdrawn and deposited into the Trust Account of the Wife’s Solicitors. The funds have been available to pay any costs of the estate administration or the Wife’s Westpac Altitude Visa card debt and other expenses. I do not regard it as appropriate to add the balance of the Wife’s account to the pool of assets – but also take the view that any costs of administration of the estate (estimated to be approximately $12,520.00) should not, as a result, be brought into account as a debt.
Increase in Westpac Home Loan
The evidence before the Court reveals that as at 21 November 2003, the amount owing on this loan was $62,394.00 and was, according to the Statements, further reduced to $51,016.00 by 12 February 2004. Between 1 September 2004 to 24 January 2005 withdrawals totalling $32,526.77 were made. The solicitors for the Husband raised with the solicitors for the Wife, by correspondence dated 9 October 2006, how those funds were utilised by the Wife. The letter alleges without any proof, that the funds were “taken by Ms Allen”.
The Husband positively asserts at paragraph 122 of his trial affidavit that “Ms Allen unilaterally withdrew the following amounts from the Westpac Loan Account……”, totalling $22,480.30. In reply the Executrix says (at paragraph 144) that:-
“I have not been able to establish if those funds [the net funds of $30,653.27] identified by the Respondent have been transferred to an account held by Ms Allen.”
Whilst therefore each party either positively or implicitly denies withdrawing or using the funds, neither party has satisfied me, to the requisite standard, that the other party has received the funds. The debt, through the withdrawals together with accumulation of interest (no instalments of any significance having been made) increased the joint debt to about $100,290.00 at trial.
In the circumstances the only fair approach (and entirely consistent with Chorn and Hopkins (Supra)) is to not make a finding about which party did benefit from the funds. It is clear that each party had the authority, unilaterally, to withdraw from the account. It is curious, when both parties claim the relationship ended some time ago (and at least prior to the withdrawals on 1 September 2004), that steps were not taken to prevent the capacity to withdraw without the other parties consent.
I am aware of the allegation that $3,000.00 was withdrawn post the Wife’s death. At least $2,000.00 was agreed to be for repairs. I do not intend, on all the evidence, and with the uncertainties as to the nature use and beneficiary of some of the small amounts, to add back $1,000.00.
Debt to Ms H
The Executrix asserts that she lent $7,500 to the Wife prior to her death (see paragraph 123). Some of the funds were used to purchase furniture but such furniture does not seem to be included in the agreed value (for the estate) of $2,880.00. If it were the case that part of the loan of $7,500.00 was used to buy the furniture, I would generally have excluded both items. I assume, based on the agreement reached by the parties at the trial that the furniture of $2,880.00 represents a share of furniture retained in the Wife’s possession but not purchased from the loan from Ms H. The debt of $7,500.00 is an estate debt, but not a debt which should, in my view, be brought into the pool of assets for division.
Summary of Pool
Based on my earlier findings the “notional” pool is as follows
Assets
TA Property
$775,000.00
Husband’s Toyota Coupe
$ 4,000.00
Wife’s Daewoo Hatch
$ 1,500.00
Chattels
Husband
$ 7,995.00
Wife
$ 2,880.00
$791,375.00
Liabilities
Mortgage
$100,290.00
$691,085.00
Contributions
This was a long marriage where the parties were in their early 20’s at the time of marriage. Neither had assets of significance at cohabitation.
The Husband sets out a fairly detailed chronology of the parties’ financial transactions and work history from their marriage in July 1978. The only evidence which adds to (but does not significantly challenge) the Husband’s version of this history and nature of contributions to separation is:-
a)The wife’s statements at paragraphs 10 to 17 of her affidavit filed 19 October 2005; and
b)The statements made by the Wife’s mother, Mrs M in her affidavit filed 17 May 2007. Mostly this evidence challenged the Husband’s assertion that he was the primary carer of S. Mrs M refers to the assistance she and her husband gave the family – mostly through their time and effort. Mrs M was not required for cross examination.
The married parties applied themselves to the roles adopted by them. The Wife says (at paragraph 17) that:-
“For the first 12 years of our relationship we both earned income however my income was greater than Mr Allen’s. After S was born, Mr Allen was, with the assistance of my parents, the primary caregiver for 3 years and earned no income however this enabled me to work. After this Mr Allen’s income was minimal. He lost his desire to work. Accordingly I have been the primary income provider since this time, and contributed equally to the care of S…..”
Although the evidence of Mrs M seeks to minimise the non-financial contributions of the Husband (principally as primary carer of S), I find that throughout the relationship the Wife was the primary income earner such that her financial contributions were greater than those of the Husband- whilst his non-financial contributions as homemaker and parent were superior to those of the Wife. I accept he did a range of maintenance tasks and improvements to the properties and assets of the parties. I do not ignore the Wife’s contribution of the proceeds of, apparently, employer sponsored shares in 1997. The funds seem to be an incidence of her employment.
Mr Hamwood says that their should be a weighing in favour of the Wife for contributions because:-
a)the “damages” received by the Wife for a claim against her employer. This provided a sum of £50,000.00 and was received in 1999 just prior to coming to Australia; and also
b)the “post separation” contributions made by the Wife.
The best evidence of the source of the payment of ₤50,000.00 is the Husband’s evidence at paragraphs 80 and 81 where he says:-
“80. Ms Allen received £50,000.00 on or about 28 August 1998. This was in lieu of salary not received by the Wife and termination pay from WLtd after Ms Allen took action against the firm for sexual harassment.
81. I supported Ms Allen through these legal proceedings by negotiating on Ms Allen’s behalf and contacting solicitors.”
Although this payment greatly assisted the parties’ modest financial circumstances at the time, I do not regard it as the equivalent of a financial windfall such as a personal injuries award. I would allow a small adjustment in favour of the Wife but a larger adjustment arising from the post separation period for her financial and emotional support of S to the time of her death. Whilst it seems both parties drew financial support from their own Mother, the inability of the Husband to make any substantial payments of child support required the Wife (who was in a worsening medical/health situation) to bear almost the totality of these responsibilities post separation. During the post separation period the Husband had the benefit of being in the former matrimonial home essentially for no payment. He did, I accept, some maintenance and gardening.
The Wife’s amended application sought an order for “occupation rent of the property” of up to $500.00 per week. Such a claim is not consistent with authority- the more appropriate way to recognise this benefit that accrued to the Husband being, that it represents a contribution by the Wife. I so find. He also had the use of the bereavement funds referred to earlier.
Weighing up all these different contributions, I regard an adjustment in the Wife’s favour of 7.5% to be appropriate.
Section 75(2) Factors
Most of the cross examination of the Husband centred on his assertion of his inability to work. It is clear that in the tragic circumstances of the Wife’s death, there are no countervailing claims in favour of the deceased, which can be offset against those identified to favour the Husband.
I accept the Executrix might see this as quite unfair – as there are some continuing needs for the soon to be adult child S. I do not ignore the fact that S, in addition to the share of her Mother’s estate (arising primarily from the division of the matrimonial property) also has separately the funds invested with the Public Trustee which would be an aggregate of approximately $200,000.00 If she can maintain a claim for adult child maintenance then she has every right to do so.
I was asked to find that the Husband’s assertions of his inability to work are fabricated and that he should not be believed. The Husband is now 53 years of age. Since separation he has relied on Newstart type benefits. To continue to maintain this benefit he is required to seek employment – up to 4 applications for employment a week. He has not been successful.
He complains of a “frozen shoulder” and therefore limited movement. I did not regard his physical impediments as the major factor. The Husband has really not worked since 1990. He seems to have “handyman” type skills but no formal qualification other than as a hypnotherapist. Dr Larder agrees the Husband identified reasonable difficulties to returning to work as a hypnotherapist.
Based on his history of chronic depression and his presentation over the 2 reports, Dr Larder was very guarded about giving a positive prognosis. He did say with intensive psychotherapy; support by medication and an ongoing therapeutic relationship it is possible the Husband could improve his functioning. There were doubts expressed by Dr Larder as to his motivation to improve. Put succinctly, the Applicant says that the Husband is acting and that a 10% adjustment in favour of the Husband “would be generous”.
I take into account the evidence of Dr Larder and the less than impressive past work history of the Husband. He would need some retraining even if his functioning and capacity to deal socially with people improves, before his work options improve.
I take into account that he will have a reasonable capital sum available to him although there is little evidence of his intentions for future accommodation. He will of course have the benefit of the British Airways pension and the pension from Norwich Union earlier referred to in these reasons.
I regard an adjustment of 7.5% in the Husband’s favour as reasonable – which amounts to the Husband receiving the first 15% of a pool of some $700,000.00 or approximately $100,000.00.
An Order that is Just and Equitable
Based on my assessments of a contribution based entitlement in favour of the Applicant and then a further adjustment in favour of the Husband for the commonly called s.75(2) factors, I come to a conclusion that an equal division of the pool may be just and equitable.
The effect of the order would be (on the notional pool) that because of the small nature of the other assets comprising the pool, each party will receive about half of the proceeds of the home – which could be in the region of $335,000.00. I regard an order which achieves such a result as just and equitable.
I will hear submissions from the parties as to the form of order which will give effect to these reasons.
I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate: R. Carter
Date:
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