B and B
[2001] FMCAfam 249
•23 November 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| B & B | [2001] FMCAfam 249 |
| FAMILY LAW – property settlement – treatment of monies paid to the wife by the husband post separation – husband’s post separation contributions to the welfare of the family – parties’ comparative earning capacities. |
| Applicant: | J B |
| Respondent: | M B |
| File No: | ZC 2484 of 2001 |
| Delivered on: | 23 November 2001 |
| Delivered at: | Canberra |
| Hearing Date: | 8 November 2001 |
| Judgment of: | Brewster FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Brzostowski |
| Solicitors for the Applicant: | Elrington Boardman Allport |
| Counsel for the Respondent: | Ms Tonkin |
| Solicitors for the Respondent: | City First Solicitors |
ORDERS
That the wife forthwith transfer to the husband or his nominee her shares in S Pty Ltd, resign from all offices she might hold with that company and assign to the husband any benefits to which she might be entitled with respect to that company.
That the parties forthwith take all steps to sell the property situated at W and to apply the proceeds of that sale as follows:
(a)To discharge the mortgage on that property.
(b)To pay any agent’s commission and other costs of sale.
(c)To pay to the wife 75% of the balance.
(d)To pay the balance to the husband.
That each party be entitled as against the other to retain the chattels presently in his or her possession and bank and other accounts and investments in his or her name.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
ZC 2484 of 2001
| J B |
Applicant
And
| M B |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns competing applications for Orders under Section 79 under the Family Law Act.
Background
The husband is 41 years of age and the wife 38 years of age. They lived together for a period in 1982 and 1983. They then separated but commenced to live together again in early 1984. They married on
7 September 1985.
There are two children of the marriage, A who is 14 years of age having been born on …………… 1987 and B who was born on ……………. 1993 and who is therefore aged 8.
The parties separated in April 1999. The marriage was obviously unhappy and the wife left in April for a trip to the United States. She said that it was during this trip that she decided to end the marriage. She returned to Australia in May and then shortly afterwards returned to the United States. She remained there until December 1999 when she returned to Australia.
In January 2000 the parties reached an agreement that the children would reside with each of them on a two week about basis.
These proceedings commenced when the wife filed an application in the Family Court on 1 March 2001 seeking orders in relation to property and spousal maintenance. On 15 March 2001 Orders were made by consent that the application for spousal maintenance be dismissed on the basis that the husband pay her the sum of $15,000. The Orders stated that the $15,000 was “by way of part payment to the wife’s claim for property settlement filed by the wife under Section 79 of the Family Law Act”.
There were no liquid funds in existence at the time and the husband complied with this Order by borrowing the whole of the $15,000. Later however he was able to repay this loan. This was because he invested in a scheme known as the Heritage Golf Estate which enabled him to receive a tax refund in the order of $18,000 to $19,000. He applied $15,000 of this towards discharging this loan.
In the course of her trips to the United States the wife accumulated a credit card debt of $10,074. The husband paid this debt. He did not borrow any money for this purpose and paid it over time from his income. He received a refund of $428 from medical insurance which related to expenses for which the credit card was used so the figure to be taken into account is $9,646.
In addition in May 2001 the husband paid the wife $6,950 to purchase a motor vehicle. He borrowed this money but has since discharged this loan.
The wife had accumulated $5,305 in superannuation during the marriage which she managed to have paid to her. She also sold some NRMA shares for $900.
The husband is employed in the area of Information Technology and the parties are directors and shareholders of a company S Pty. Ltd which ran an IT business in which the husband worked. In July 2001 however the husband ceased to operate this business and commenced employment in the IT field with H Pty Ltd.
After separation the husband invested $15,000 in the Heritage Golf Estate referred to earlier. He borrowed the whole of this amount.
The approach under Section 79
I propose to approach this matter using a three stage process. The first stage involves making findings as to the property and liabilities of the parties and their financial resources. The second stage involves an assessment of the matters referred to in Section 79(4) (a), (b) (c) and (g). I will call these the contribution factors. The third stage involves a consideration of the matters contained in Section 75(2).
The property pool
The parties are the joint owners of the former matrimonial home at W. The parties agree that this property is valued at $274,000. It is subject to a mortgage of $143,000 and therefore has an equity of $131,000.
The net value to the parties of S Pty Ltd is agreed at $24,232.
The Golf Estate investment is agreed to still be worth $15,000 although it now has an equity of $2,500 as the loan raised to acquire it has now been reduced.
The parties have shared the contents of the former matrimonial home and have agreed that this represents an equal division. There is no valuation of these chattels.
There is a Credit Union loan standing at $2,560 which the husband has taken over and which relates to the period the parties lived together.
The way in which the pool is to be assessed however is quite complex. This is because of the amounts paid by the husband to or for the benefit of the wife after separation and the superannuation redeemed by and the shares sold by the wife in this period. Mr Brzostowski who appeared for the wife produced a table in which he included the $15,000 paid the wife in March, the $6,950 paid to her in May and the net $9,646 paid off her credit cards together with the $5,305 from her cashed-in superannuation and the $900 from NRMA shares as notional property. He did not however include the loans taken out to pay the $15,000 and the $6,950 as notional liabilities. The problem with this approach is that it produces different results depending on the time at which, in effect, the snapshot is taken. Mr Brzostowski has taken it at the date of the hearing. If however it had been taken in May 2001 there would have been debts totalling $21,950 and the pool would have been reduced by this amount.
I do not think there is any one logical and consistent way in which the pool can be calculated if it is to include the monies paid by the husband to or for the benefit of the wife as notional property. It would have been comparatively simple if the monies used for this purpose had been in existence at separation. However they were not.
I propose to adopt the following approach:
(a)I will disregard the wife’s superannuation. The husband has superannuation of his own. It would be unfair if her superannuation were treated differently from his simply because she has accessed it. I will take each party’s superannuation into account when making an adjustment under Section 75(2).
(b)I will disregard the Heritage Golf Estate investment. It was acquired post separation and all the monies used to do this were borrowed. Its present equity is referable to post separation contributions made by the husband. Theoretically this should be taken into account when looking at the Section 75(2) factors but the amount involved is insufficient for this to be done in any meaningful sense.
(c)I will include the NRMA shares as notional property. These were acquired during the marriage.
The treatment of the payments made by the husband for the benefit of the wife is more complicated. Plainly it was intended that they should be counted in the property settlement and indeed this was explicitly stated with respect to the $15,000 paid pursuant to the March 2001 Orders. I will have regard to these payments when I come to make the final division. I will take into account under Section 75(2)(o) the fact that the husband was able to repay the loan raised to pay the $15,000 by reason of something akin to a windfall.
Contribution factors
The parties agreed that until the separation there was no reason to regard the contributions by one party as being more or less significant than the contributions by the other.
As previously indicated the wife spent most of the period from April to December 1999 outside Australia. The children were cared for by the husband during this period. The wife made no financial contribution to their care.
The parties have, as previously indicated, been sharing the care of the children since January 2000. Overall they have shared equally in the task of physically caring for the children. The responsibility for providing for them financially has been mostly borne by the husband. For most of the period since separation the wife has not been working or only working part-time and the husband has been assessed to pay child support. This has varied between $630 and $845 per month. If the mean of these two figures were to be regarded as the average amount of child support paid by him it would come to $170 per week. Considering the wife only has the care of the children for two weeks in four this would be a significant proportion of the cost to the wife of maintaining those children. In addition the husband has paid school fees, music lessons and insurance payments and met the costs of orthodontic treatment for A. Since separation he says he has paid $20,718 in this respect.
I appreciate that the husband has been in a position to make these financial contributions whereas the wife has not. However in my opinion this makes no difference. Contributions should be measured in absolute terms and are not to be weighted to reflect a party’s capacity to make such contributions.
I propose to treat the husband’s contributions post separation towards the children as exceeding those of the wife. An adjustment to the contribution based entitlement should be made accordingly. This must be put in context however. The husband’s additional contributions were made over a period of less than three years. It must be appreciated that the parties each contributed in various and significant ways to the acquisition and preservation of property and to the welfare of the family during the approximately fifteen years they lived together. It is not possible to recognise adequately any of these contributions in actual monetary terms given the limited pool available for distribution. Such a recognition can only be in percentage terms unrelated to the actual amount that those percentages represent.
I propose to make an adjustment to the contribution based entitlement in favour of the husband of 2½ %.
Section 75(2) factors
The husband has in the order of $19,000 in accumulated superannuation entitlements. As previously indicated, the wife accumulated $5,305 in superannuation during the marriage. She would have accumulated a small amount of superannuation through the employment she has had since separation, although the amount of this is not disclosed in her financial statement. The husband’s entitlements will be growing at a significant rate by reason of his substantial salary and the compulsory superannuation contributions that his employer would be making based on this salary.
The wife claims to be in poor health. An affidavit was filed by her general practitioner, Dr Thompson, which indicates that she is suffering anxiety with phobic features and depression. He has considered her unfit for work during the period 25 October 2000 to
31 October 2000 and then from 3 November 2000 to 1 December 2001.
Dr Thompson believes that the stresses of the marital breakup and of this litigation have been the primary cause of the wife’s condition. He is optimistic that her symptoms will resolve when this litigation is concluded. He believes that there is no reason from a medical point of view why she should not be able to obtain employment once these proceedings are finalised.
As previously indicated the husband is employed in the IT area. He holds a degree in Business from the Bendigo College of Advanced Education. He is employed on a salary of $75,000 per annum and receives fringe benefits to the value of about $1,500 per annum.
The wife studied at the Bendigo College of Advanced Education in the early 1980s for a Bachelor of Arts degree but she did not complete this. She worked in the Australian National University Library in the early 1980s, but did not work from 1987 until 2000. In 2000 she had some part-time work between March and August and then in August obtained full-time employment with D. She voluntarily left this employment in November 2000. She says, and I accept her evidence in this respect, that she was struggling in this job and was still on probation. She says that she failed her performance assessment. She said that she left this employment because she was concerned that if she were dismissed it would prejudice her prospects of obtaining other employment. I suspect that her medical condition, which includes the symptoms of feelings of embarrassment in public situations, may be partly responsible for her reluctance to risk the humiliation of being dismissed. In any event I do not believe that her decision to leave this job was unreasonable. She has not worked since November 2000 and, as I have indicated, Dr Thompson has not considered her medically fit for employment in this period.
In July 2001 the wife commenced a course in Legal Studies at G University. She has been doing this part-time. She was due to commence her examinations the day after the hearing of this case. She has passed her assignments to date. If she were to continue to study part-time she would graduate in three years’ time. If she studied full time from 2002 she would graduate at the end of 2003.
Graduating in this field would qualify the wife to work in the court system or in a paralegal position such as a conveyancing clerk. There is no evidence as to what she might expect to earn in such a position but I take judicial notice of the fact that it would be much less than the income presently being earned by the husband.
I consider it reasonable that the wife complete her course in Legal Studies. I believe that after this case is concluded she could cope with a full time load. She would be 40 years of age when she completed the course. She would be unemployed for the next two years. I would assess her prospects of then obtaining employment upon graduation as good but there can be no guarantee in this respect.
It has been said by the Full Court of the Family Court that often the most valuable asset a party will take from a marriage is a secure, significant earning capacity. The husband has this capacity. The wife does not. In considering the disparity in the parties’ income earning capacities I appreciate that I must have regard to the fact that the husband will continue to be liable to pay significant child support even if the wife does obtain employment and his income needs to be looked at in this light. This must also be taken into account under Section 75(2)(na). Nevertheless this disparity is the most significant of the matters referred to in Section 75(2) and calls for a substantial adjustment in favour of the wife. In this respect it is not merely a matter of percentages. The adjustment in favour of the wife has to be looked at in actual monetary terms.
In fixing the adjustment to be made I have regard to all the matters I have mentioned under this heading together with the matters referred to in paragraph 22. I propose to make a 35% adjustment in favour of the wife.
Conclusion
The total property pool comprising the equity in the home, the value of the company and the NRMA shares is $156,132. From this is to be deducted the Credit Union loan of $2,560 which makes a net pool of $153,572.
The percentage division is to be 82.5% to the wife and 17.5% to the husband. This would result in the wife receiving $130,536.
The wife has already had the benefit of the sum of $32,496 being the $15,000 paid pursuant to the March 2001 orders, the net $9,646 paid towards her credit card debt, the $6,950 paid for her car and the $900 she received from the NRMA shares. I propose to reduce the amount she is to receive by this amount. This leaves an amount of $98,040 which I round off to $98,000.
The evidence is that the husband cannot borrow more than $60,000 and so the home will presumably have to be sold. $98,000 represents 75% of the equity in the home. The orders I make will require the home to be sold and the wife to receive this proportion of the net proceeds of sale. However in case the husband’s position has changed in this respect I will not take the orders out for seven days. If he finds that he can keep the home and wishes to do so I will amend the orders accordingly. Also if either party seeks any variation or addition to the orders consonant with this judgment the matter can be re-listed for this purpose. If nothing is heard from either party in this time the orders will be taken out as drafted.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Brewster FM
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