B and B
[2001] FMCAfam 169
•8 October 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| B & B | [2001] FMCA fam 169 |
| Applicant: | J C B |
| Respondent: | G D B |
| File No: | ZD 2085 of 2001 |
| Delivered on: | 3 September 2001 |
| Delivered at: | Darwin |
| Hearing Date: | 3 September 2001 |
| Judgment of: | Baumann FM |
REPRESENTATION
| Solicitors for the Applicant: | Applicant appeared in person |
| Solicitors for the Respondent: | Respondent appeared in person by way of telephone link |
ORDERS
That the HUSBAND pay to the WIFE the sum of $13,000 within
14 days.That the HUSBAND retain as his sole property and to the exclusion of the WIFE, his motor vehicle, bank accounts, superannuation entitlements, furniture and other property in his possession at the date of this order.
That the WIFE shall retain, as her sole property and to the exclusion of the HUSBAND, her interest in The J S Café; any motor vehicle, bank accounts, superannuation entitlements, furniture and other property in her possession at the date of this order.
That the WIFE shall indemnify the HUSBAND against any claims or demands arising from the operation of her business.
FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN
ZD 2085 of 2001
J C B
Applicant
And
G D B
Respondent
REASONS FOR JUDGMENT
Introduction
I have before me an application for property settlement commenced by the wife, J C B, against her husband, G D B. The parties represented themselves having, it would seem at certain times during the course of this litigation, the benefit of independent legal advice.
Issues
The issues which became apparent during the course of the trial this morning which required determination were:
a)The valuation of the business, the J S Cafe;
b)Payment by the husband of certain debts;
c)Distribution of furniture;
d)Contributions under section 79(4);
e)The factors under section 75(2).
Principles to be applied
The approach to be adopted in the determination of an application for property settlement is well established by authority and requires the adoption of a three step process; firstly to determine the extent and value of the property, liabilities and financial resources of the parties at the time of the trial; secondly to consider what contributions have been made by the parties within section 79(4)(a), (b) and (c); and thirdly to consider what is identified as the other factors being the matters in section 79(4)(d), (e), (f) and (g) including by reference to section 79(4)(e) the matters in section 75(2); finally section 79(2) of the Act requires the Court to be satisfied that all the circumstances it is just and equitable to make an order.
The business
In dealing with the business, no reliable evidence was produced as to the current value of the business. I allowed the wife to tender unaudited financial statements of the business for the past 7 months together with some total financial statements for the period to January 2001. It was a matter for the wife to produce appropriate evidence to the Court in relation to her business. However the evidence in relation to the business, which I think I can accept, was that the business was purchased in February 2000 for $25,000; that from the time of purchase there had been further financial contributions that had been made to its development by the parties and in particular by the wife and her former partner in the business; that in August 2000 the wife made a decision, she says, with the consent or approval of the husband to purchase the interest of a pregnant partner who wished to retire from the business for $17,000.
In her evidence she indicated that it may have been better to have used the retirement of her partner as the catalyst for the sale of the business, a business which she now says is trading unprofitably and has amassed debts which she estimates to total some $65,000. She has fallen into arrears for rent and creditors. When I asked her what she believed the business would be worth at sale she said that she hopes to advertise seeking a sale at about $30,000. When I put to her whether she would sell for $10,000 she indicated that she would not. She clearly is anxious to be able to recover as much of the current debt currently burdening the business as she can.
I would accept the husband's evidence that the business was paying its way at the time of separation, although it also seems clear that it was not making any particular return to the wife by way of wages or other drawings. Because of the wife's failure to produce appropriate material before me to assess the value of the business, a business within her control, I believe I am required to make some inferences from the material and the inference I draw is that the wife's decision not to sell the business at the time of the retirement of the partner should mean that at about that time she believed that the business was worth about what they paid for it or what it owed them at that time.
What it owed them at that time was the $17,000 paid to the partner and the $17,000 which she had borrowed essentially from her brother who had in turn borrowed it from the National Bank. A number of the other expenses which have accumulated in respect of the business in relation to rent, creditors, failure to account properly for BAS statements or GST input credits are such that they have arisen from or shortly after the period of separation. In these circumstances I believe that the business has no current net value but I do not believe it is appropriate to bring into the calculation of the pool of assets the debts which the wife now has from the operation of her business. To some degree she must bear the brunt of her decision to continue to maintain the business in light of decreasing profits and profitability.
The Magna motor vehicle
The Magna transaction is also confusing. The husband says that after he took it back from the wife he sold it for $14,000 and still had to use $5,700 from the funds which were to be held in an interest bearing deposit towards the payout to Esanda Limited. No evidence was produced, to me of a satisfactory and independent nature, as to the payment schedule or payments made to Esanda Limited or of the amount required to discharge that loan, although the wife concedes that the loan was fully discharged. Furthermore there was no evidence produced to me to indicate the true nature of the transaction – the sale of the Magna which apparently took place at a time when the husband purchased a Commodore.
It was open to the husband to produce to the Court in an appropriate way, in accordance with the directions of Mead FM the full details of the transaction in relation to the trade-in, as I find it, of the Magna and the purchase of the Commodore – he has failed to do so. As a result in much a similar way as the wife failed to produce documents in relation to her business, I must make some inferences, and in this case inferences which are adverse to the husband. My impression of the husband's evidence is that there was some transaction which was attractive to him that was made at the changeover, otherwise common sense would suggest why would he go to a Holden dealer to sell a Mitsubishi?
I am unable to make a finding as to the benefit that he actually received. The wife says, that she believes the car was sold as a trade-in for $17,000; I am unable to accept that statement as reliable evidence. Having said that, however, I intend to bring into account in the 75(2) factors what I believe to be a small benefit to the husband from the transaction of the sale of the Magna towards the purchase of his Commodore.
Payment of other debts
I accept the husband's evidence of joint credit card and small personal loan debts at the time of separation being $8,100. This was a joint liability for which both parties have an equal responsibility. I intend to bring into the pool of assets the debt in relation to the Magna paid out of $5,700 but as I have indicated I propose to take into account that there was some small benefit to the husband. It is at this point in time that I should express my concern and dismay with the absolute failure by the husband to comply with the orders made by Mead FM.
In this regard it is clear that Mead FM on 23 February 2001 made an order restraining the husband from dealing in any way with $25,000 of the net sale proceeds from the property at 190 A Street, H, except as may be agreed between the parties in writing or as ordered by the Court and further she provided that the $25,000 referred to be held in an interest bearing account with a bank or other appropriate financial institution in the parties joint names. The husband concedes that he has had the benefit of those funds and has retained them in an account of his own name. He says that he had the authority or some advice from his solicitor to do so – but, I find it impossible to accept that any officer of the court would give such advice to a person that they should so wantingly and deliberately breach a direct and clear order of the court.
Nonetheless I am satisfied that the husband has used part of the monies of $30,000 which was available to him to meet the liability in relation to the Magna of $5,700 and the joint liabilities at separation of $8,100, although I have some very serious concerns about the husband's conduct in this respect. It seems appropriate that the balance of funds being $16,200 should be brought into account.
Furniture
Finally, before dealing with the pool of assets I should deal with the furniture. Again the parties evidence is vague in this regard and I would have expected more evidence of value, if it was such a major issue as they both sought to make it. I am not prepared to make any findings in relation to distribution of the furniture other than the following ones, which are that:
a)The wife admitted that she had retained most of the furniture she brought into this short relationship;
b)The husband retained most of the items he brought into the relationship;
c)The husband has possession of a number of items which are referred to in paragraph 16 of the wife's affidavit. She attributes a market value on a secondhand basis to the goods of some $6,000.
There is no evidence produced by the husband in relation to those goods; they are in his possession, he could have provided that evidence. In failing to do so in my view gives me the opportunity – and in fact in terms of the justice of the matter – the obligation to make a finding in relation to the value of the furniture I choose to do so and I value the furniture at $6,000.
I therefore assess the pool of assets to be as follows:
Balance net proceeds of H Home.................................... $30,000
Furniture.................................................................................. 6,000
Business Net Value.................................................................... NIL
Less
Credit Card Liability............................................................. $8,100
Magna Payout......................................................................... 5,700
SUB-TOTAL....................................................................... $13,800
TOTAL................................................................................ $22,200
In relation to the contributions it should be recorded that this is a relationship of relatively short duration. The wife who is 34 years of age and the husband who is 37 years of age commenced cohabitation in 1995. They separated in November 2000. During that period the husband re-enlisted with the Army in 1996 and also had the benefit of a compensation payment in relation to an injury during his service with the Army of $21,000 which he received in June 1999. It seems clear that the wife was forced by reason of the husband's movement in the armed services to find employment at different locations where the husband was posted. This has had an effect upon her continued earning capacity.
There are no children of the relationship. It seems to me in all the circumstances, bearing in mind the contributions made by the husband of direct financial sense which was superior to those of the wife, including the application of his compensation payment that I should assess, on a contribution basis, a fair division to be 60 per cent to the husband and 40 per cent to the wife.
I now turn to the factors under section 75(2); these in my view heavily favour the wife even though there are no children. The wife has very little secure income; part of that I find attributable to her own insistence of running her business in a non-profitable way, but nonetheless it seems to me that her only income is likely to come from the hospitality or casino industry where she has previously enjoyed part-time work. She has to meet the debts of her business which are substantial; she has no substantial financial resources available to her. She is otherwise, it would seem, healthy and capable of earning.
The husband has a secure income, now as a probationary officer with the Northern Territory Police Service and if he chooses not to take up that option he can return to the armed services. He has no substantial debt; he has a possibly $50,000 in the MSVS Fund of which a proportion of approximately 20 per cent was either accrued or contributed during the course of the relationship. In my view these factors favour the wife by a proportion of 15 per cent.
I find as required under s 79(2) that it is just and equitable that the wife receive 55 per cent of the pool of assets which I intend to round up to $13,000 payable from the fund currently controlled by the husband.
I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate:
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