Amero and Croft (No.2)
[2009] FMCAfam 763
•31 July 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| AMERO & CROFT (No.2) | [2009] FMCAfam 763 |
| FAMILY LAW – Property settlement proceedings – short marriage – small asset pool – relevant principles. |
| Family Law Act 1975 (Cth), ss.75(2) & 79 |
| Pastrikos (1980) FLC 90-897 Ferraro (1993) FLC 92-335 Clauson (1995) FLC 92-595 OSF & OJK [2004] FMCAfam 63 |
| Applicant: | MR AMERO |
| Respondent: | MS CROFT |
| File Number: | PAC1709 of 2008 |
| Judgment of: | Lindsay FM |
| Hearing date: | 19 & 20 May 2009 |
| Date of Last Submission: | 20 May 2009 |
| Delivered at: | Parramatta |
| Delivered on: | 31 July 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Thomas |
| Solicitors for the Applicant: | King Cain Solicitors |
| Counsel for the Respondent: | Ms Snelling |
| Solicitors for the Respondent: | Higgins & Higgins |
ORDERS
In full and final settlement of the parties’ claims for settlement of property and spousal maintenance and otherwise pursuant to Part VIII of the Family Law Act 1975 (as amended):
The wife do pay to the husband the sum of FIFTEEN THOUSAND DOLLARS ($15,000.00) within THIRTY (30) days of the date of these orders.
The husband and the wife do otherwise be declared to have the sole right, title and interest to all property, including motor vehicles, chattels and items of personalty, in their possession or control as at the date of these orders and any monies, shares and debentures and superannuation interests standing in their sole names at the date of these orders.
Each party be solely liable for, and indemnify the other party against, any liability encumbering any item of property to which that party is entitled pursuant to these orders and any other indebtedness standing in that parties’ name.
All applications do otherwise stand dismissed.
There be liberty to apply as to consequential matters.
IT IS NOTED that publication of this judgment under the pseudonym Amero & Croft is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARAMATTA |
PAC1709 of 2008
| MR AMERO |
Applicant
And
| MS CROFT |
Respondent
REASONS FOR JUDGMENT
This is an unfortunate case because the asset pool is so small and the costs which each party must have expended on the matter to date are out of all proportion to the value of the property adjustment order in dispute.
The parties met in March of 2003. The husband was a [tradesman] engaged to [work omitted, for] the wife. A relationship developed between the parties, though the husband did not end another relationship in which he was involved until December of that year. There is some dispute about when they began to co-habit in the wife’s home at [L] and whether the husband continued to live principally at his former residence (that which he shared with his former companion and owned by her). Certainly the evidence established that the police were being called to that latter property to intervene in a dispute between him and that lady as late as February of 2004. The husband says that he was living with the wife from January of 2004; the wife says he did not move permanently into her home at [L] until July of 2004. I had before me the Affidavit of the husband’s niece, a Ms Amero, which corroborates the husband’s version to some extent. The issue of whether he ceased to live at all in his former residence is far from clear but I am in no doubt that the parties were in a monogamous relationship as from December of 2003. I think it was more likely than not that he had ceased to live at the former residence at all by March of 2004.
The parties married in February of 2005 and they physically separated in September of 2007 when the husband finally moved out of the wife’s home. The relationship had ceased altogether by November of 2007.
So it is a co-habitation of three and a half years and a marriage of just two and a half years.
The wife purchased the home at [L] in December of 2002, before the parties met. It cost her $147,500. She borrowed $100,000 from the Commonwealth Bank to complete the purchase. Before me in evidence was the uncontested Affidavit of a valuer of that property. According to that evidence, it had a value of $185,000 in January of 2004 (the date to which the opinion is directed, closest to the date at which I have found the parties began to co-habit) and a value of $210,000 at separation. It was an agreed fact that it had a value of $220,000 as at the date of the trial before me (20 May 2009). The mortgage over the property was approximately $110,000 at the time the parties got together but had increased to approximately $126,000 by the date of the trial, principally on account of the wife having to purchase a new motor vehicle, which her most recent financial statement valued at $20,000.
The wife has three daughters. [Z], 18 years at trial, and [Y], 21 years at trial, lived with the parties at the home of the wife throughout the co-habitation. An elder daughter, [X], and her two children moved in with the parties at the end of 2006, about a year before the parties separated. [X] was in receipt of a Supporting Parent’s Benefit at all relevant times. The two younger girls worked, but the husband clearly assisted the wife in meeting the expenses associated with their occupation of the property with them.
The husband was a self-employed [tradesman] throughout the relationship. He is still. The wife found casual work with [W] in September of 2007 which became permanent by March of 2008.
Beginning in October 2003 with the wife’s bathroom, the husband carried out extensive renovations to the wife’s home. They are particularised in paragraph 29 of his Trial Affidavit. They included the renovation of the laundry, fencing work, work on the timber front of the home, gardening and landscaping and the purchase of the necessary materials to complete such work. He was assisted by two tradesmen ([occupations omitted]) with whom he had “contra” arrangements.
The husband called a [tradesman] who estimated the cost of the [trade] work performed by the husband to be in excess of $10,000 (this included work relating to fitting a gas line to the renovated portion of the garage). He also called a builder who expressed an opinion that the total cost of the building work was in excess of $65,000. Both estimates were inclusive of material costs.
The wife responded to these claims by contending that some of the work was not as significant as claimed by the husband; that he obtained trade discounts on a number of the items and materials purchased; that neither the [tradesman] nor the builder called by the husband had inspected the work in situ; that she herself was a diligent and keen gardener and that this work was done cooperatively; and that she had herself engaged a painter to paint all of the living areas of the home before she met the husband (see Exhibit 5).
Now, it is plain that I am not going to be able to make clear findings as to the value of the work performed by the husband nor the extent of it.
But I am satisfied that the work was extensive. The gardening development was obviously a joint enterprise. Some work (“the granny flat”) was overstated by the husband and I repeat that it is manifestly not possible to ascribe accurately a “value” to the work. Doing the best I can, I find that if the wife had engaged an arms-length tradesman or tradesmen to do the work that the husband did without charge from October 2003 to the end of the relationship, it would have cost her somewhere between $40,000 and $50,000 (therefore say $45,000). How that finding sounds in the property orders I make is another matter considered hereunder. Whatever was spent and whatever work was done, the value of the property increased from $185,000 at co-habitation to $210,000 at separation - an increase of $25,000.
In addition to that work, the husband also made significant financial contributions to the marriage. Paragraph 34 of his Trial Affidavit sets out the lump sums he obtained during the relationship and their source, summarised as follows:
a)$32,000 from his deceased mother’s estate in March of 2005;
b)$32,000 from a worker’s compensation payout in April of 2006;
c)$48,000 from the settlement of his de-facto property claim in April of 2006; and
d)unpaid work entitlements of $3,000 in February of 2007.
He also drew down on his superannuation entitlements. His Affidavit acknowledged a draw-down only in March of 2007 in the sum of $8,500 but there was a further draw-down established in the evidence in March of 2005 in the amount of $14,000. It was never explained how it was that he was able to access those entitlements pre-separation. He did not attain the age of 55 years until September of 2007.
Even excluding the superannuation draw-downs, that amounts to capital of over $110,000 received by him during the relationship.
The capital, like his earnings, appear to have gone into an account with the Family First Credit Union to which the wife had access and upon which she was able to draw for ordinary household expenditure. Curiously, the husband’s Affidavit provided details of his gross earnings rather than his net or taxable income for the period of the marriage but the wife introduced into evidence his taxation returns for the financial years 2004 to 2007 inclusive (Exhibit 2) and they indicate the following taxable incomes:
a)2004 - $36,570;
b)2005 - $39,955;
c)2006 - $32,262; and
d)2007 - $40,981.
I was not given the wife’s taxable income for 2004 and 2005 but it was $17,969 in 2006 and $17,828 in 2007. I proceed upon the basis of assuming that she did not have a taxable income for 2004 and 2005.
The husband acknowledges debts of $13,500 at the commencement of co-habitation, excluding taxation debt. He says the latter was approximately $6,000 by reference to his ATO Portal extract, which is annexed to his Affidavit for the period to 29 November 2003. The wife points to his Portal balance at May 2004 of $16,000 (Exhibit 3). The evidence was imprecise. I find the husband’s taxation liability at the commencement of co-habitation to be approximately $11,000.
The evidence established that, to the extent that the wife would draw upon the husband’s income capital during the relationship, she spent relatively modest amounts and the purposes for which she spent those amounts were appropriate. She never spent amounts of money that were unauthorised by the husband either as to their magnitude or their purchase.
On 12 April 2006 the Credit Union account showed receipt of the de-facto property claim proceeds in the amount of $48,474.37. That same day the sum of $27,000 was withdrawn by the husband (see Exhibit 1). He was unable to say to what use the money was put. The wife suggested it was given to his daughter. He acknowledged giving money to his daughter from time to time but not in such an amount as this. I cannot find that such was the purpose to which this money was put but I am satisfied on the basis of his evidence that it was not used for joint or matrimonial purposes.
The Australian Taxation Office was paid sums totalling approximately $29,000 a fortnight later from that same account. There is no explanation provided by the husband as to how these two amounts had accumulated to that point but they must be taken to include tax that had accrued upon his earnings as to both the pre and post relationship periods.
To complete the bigger picture of the parties’ financial positions I need to say a word or two about motor vehicles. The wife owned a motor vehicle worth approximately $4,000 when the parties got together. It was traded in (for $3,000) in 2004 upon the purchase of a Ford Falcon motor vehicle. The parties borrowed the sum of $18,000 to purchase that vehicle. It remains in the possession of the husband. I do not need to recite the facts that demonstrate why that occurred. He also retains a Nissan motor vehicle that he brought into the relationship of negligible value and a Mitsubishi Triton motor vehicle which was purchased by him in March of 2005 for $17,000.
In summary, then, and excluding any reference to superannuation and upon the basis of the findings described above and other evidence before me which was not controversial, I find that at co-habitation the wife had a home worth $185,000 and a car worth $4,000. She had a mortgage liability in the amount of $110,000 (I have ignored her minor credit card liability and liability for rates and taxes as at that time as they balance out with an equivalent minor credit card balance liability of the husband at that time). She earned very little income during the relationship. She was supported by the husband, who also assisted her in the care of her two daughters.
The husband brought liabilities of approximately $12,000 into the marriage together with an older motor vehicle.
He received capital of approximately $110,000 (excluding his superannuation draw-downs) during the course of the marriage. That was used (as to $17,000) for the purchase of one of the motor vehicles he retains and to pay tax (in the amount of $29,000, though only $11,000 relates to his taxation debt at co-habitation) and he also spent $27,000 which was unaccounted for.
He performed work and supplied materials (I cannot say in what proportion) of a total value of $45,000 to the wife’s home during the relationship.
At trial the wife had a home worth $220,000, motor vehicle worth $20,000 and a mortgage liability of $125,000 with a credit card liability of $8,000. The wife’s “net worth” then at trial was $123,000.
The husband had credit card and personal liabilities of approximately $10,000 and motor vehicles (three of them) worth a total of $15,000. His net worth, therefore, was $5,000.
The wife earns an income of approximately $40,000 per annum. The husband’s income for his self-employed position is likely to be in that approximate amount for the foreseeable future based upon his earnings in the recent past.
At co-habitation the husband had superannuation of about $212,000 in value. It is now of an approximate value of $175,000 (following a further post-separation withdrawal of $5,000). It is immediately accessible by him and indeed he has already accessed it.
The wife has superannuation of approximately $15,000. She had no superannuation at co-habitation.
If I add the superannuation interests as a component of the present net value of the assets of the parties the position of the husband is $180,000 and the wife $138,000.
Determining property disputes is a three step process of, firstly, ascertaining the identity of and the value of the assets available for distribution; considering the contribution each of the parties have made to those assets (now to be found in s.79(4)(a) to (c) of the Family Law Act 1975 (Cth) (“the Act”)); and considering the s.75(2) factors (see Pastrikos (1980) FLC 90-897; Ferraro (1993) FLC 92-335; and Clauson (1995) FLC 92-595). At the end of the exercise I must only make that order which I consider to be just and equitable (see s.79(2) of the Act). That is not a discrete fourth step but it is a vital one and it can affect the “form, structure and balance” of the order (see the discussion of this issue by Walters FM in OSF & OJK [2004] FMCAfam 63 at [13] to [28]).
I have set forth my findings as to the constitutive elements of the asset pool.
The marriage was short.
The wife’s home has increased in value from $185,000 to $210,000 during the period of the relationship.
The parties occupied her home during the relationship.
The husband made significantly greater direct and indirect financial contributions and I have set them out herein in detail. They each otherwise contributed equally to the marriage partnership.
The increase in value of the wife’s home is contemporaneous with the husband’s improvement of the property. Those contributions may account, wholly or in part, for the increase in value. That issue is not the subject of any expert evidence. It is difficult to know what opinion evidence could have meaningfully been adduced in respect of that matter, so finely calibrated would the expression of such an opinion be in the context of this case.
The husband is 57 years of age. The wife is 52 years of age.
In short marriages, the Court should always attempt to restore the parties to their ante-marriage position if possible and if such is consistent with an evaluation of their contributions and of the relevant s.75(2) factors and if such an order is just and equitable.
The husband invested substantial sums in the marriage during its short span. He now wants those investments recognised by the wife accounting to him for them. His application originally sought payment of the sum of $110,000 from the wife. That would constitute the entirety of the equity in the home. By the end of the trial he was seeking a payment that represented fifty per cent of the net non‑superannuation assets of the parties and the retention by them of their respective superannuation entitlements. Fifty per cent of the net non‑superannuation assets of the parties, based upon my findings herein, would amount to a payment of $64,000 (one-half of $138,000 less the $5,000 he has - see paragraph 32). The wife would have to borrow that sum and so increase her mortgage balance to approximately $185,000 or $190,000 or sell the property. In that latter event, the husband’s payment would reflect his proportionate contribution to the costs of sale.
The wife sought an order that she pay the husband $15,000 and that they otherwise retain their assets of both superannuation and non‑superannuation.
The relevant s.75(2) considerations, apart from the ages of the parties, are as follows:
a)Neither has a specially notable health complaint. The husband had been incapacitated following an accident for a period of time following separation.
b)The wife has negligible future financial resources in the form of superannuation. If she continues to work full-time until retirement her superannuation will grow, obviously enough. If the husband continues to contribute to his superannuation scheme it will grow from its present base of approximately $180,000 (if we ignore the post-separation draw-down of $7,000). The wife will have an equity in the home which will (presumably) gradually enlarge as she makes anticipated regular mortgage repayments.
c)The husband will have to rent accommodation or draw-down on his superannuation to put a deposit on a home. If he drew down $100,000 to come up with such a deposit he would still have a balance in his superannuation of approximately $75,000 on which to build.
d)The extension of the wife’s mortgage by approximately $64,000 to finance the repayment of a capital sum to the husband would leave her with a home mortgage amounting to approximately 90 per cent of its equity and would obviously increase her liability in terms of monthly mortgage repayments.
e)The marriage is short (s.75(2)(j)) but has not affected the earning capacity of either party in the marriage in any meaningful way.
It is the shortness of the marriage and the small size of the non‑superannuation asset pool which are the most significant factors governing the exercise of my discretion.
The husband was generous to the wife in making his income and (a proportion of) his capital available to the wife during their relationship. She did not indulge in excessive or unnecessary expenditure. She made her home available for their joint use.
The husband may have spent more capital and devoted more time to the improvement of the property during the relationship than was capable of being realised in a capital appreciation of the home, given that it was a relatively modest dwelling. The increase in value is less - much less - than the value of the work and materials he contended and less than the value I found them to have (see paragraph 12). The value of the home has increased by a further $10,000 since separation. The orders he seeks would give him the entirety (and more) of the capital appreciation of the property since the parties met. It would also leave the wife with a heavy debt-to-asset burden and deprive her of the small capital available to her as she approaches the latter part of her working life. She has a higher mortgage already because she has had to acquire a motor vehicle in view of the husband’s retention of all three vehicles which the parties had at separation.
The husband’s contributions of capital and labour were at all times voluntarily made by him, as was his decision to put $27,000 of his settlement monies (see paragraph 20) to whatever use it was he did put them. He has, say, eight working years ahead of him during which he can build on his substantial superannuation base.
A proper balancing of his contributions and s.75(2) considerations of the parties referred to above should see him retain the value of his superannuation (which is less than it was at co-habitation (because he has drawn down on it, both pre and post-separation for purposes that were never made clear) but is still worth $175,000) and the wife retain her modest equity in her home (now $95,000, $75,000 at co-habitation). The non-superannuation and superannuation assets retained by each of them as set out above is a disposition of their financial affairs which in my view is just and equitable. I do not consider, therefore, that any cash or other adjustment is required. I have weighed the superannuation assets and non-superannuation assets separately. There is a marked disparity in each “pool” in favour of one party or the other. The fact that the husband’s superannuation assets are immediately available to him is significant.
But the wife offers to pay the husband $15,000 in addition to the assets he retains.
The exercise of evaluating the various factors referred to above is not so finely calibrated that it can be said that such an adjustment of their financial positions would not be just and equitable. She is prepared to pay the sum. It is her own assessment of the financial adjustment required at the end of the relationship and it does not seem to me to be appropriate for the Court to refuse to make it if she is prepared to pay it. It leaves the husband with $20,000 in non-superannuation assets and $175,000 in superannuation. It leaves the wife with $123,000 in non-superannuation assets and $15,000 in superannuation. It leaves the husband with 58.5% of their current assets and the wife with 41.5%, but that must be seen against the modest size of the total pool and of the wife’s assets, which is almost entirely her home equity. Seen in such perspective, such an outcome is just and equitable.
I will order accordingly.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Lindsay FM
Associate: Ms N. Julius
Date: 31 July 2009
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