Babbitt and Babbitt

[2011] FamCA 739

FAMILY COURT OF AUSTRALIA

BABBITT & BABBITT [2011] FamCA 739

FAMILY LAW - PROPERTY SETTLEMENT – adjustment of property interests – where the parties agree on the assets, liabilities, initial contributions and contributions during cohabitation – where the post-separation contributions are subject to dispute – where the husband has continued to make payments towards the parties’ mortgage commitments – where the husband has the sole care of one of the parties’ children who suffers from serious health issues – where the Court was satisfied that the husband’s post-separation contributions have been greater than those of the wife – contributions assessed as 55:45 in favour of the husband – further adjustment of 5% in favour of the husband upon consideration of s 75(2) factors – matter adjourned to allow parties an opportunity to fashion their own orders based upon findings of the Court.

Family Law Act 1975 (Cth) s 75(2) & 79

APPLICANT: Ms Babbitt

RESPONDENT: Mr Babbitt

FILE NUMBER: DNC 546 of 2008

DATE DELIVERED: 26 August 2011

PLACE DELIVERED: Brisbane

PLACE HEARD: Darwin

JUDGMENT OF: Burr J

HEARING DATE: 7 & 8 July 2011 &
9 August 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Holtham

SOLICITOR FOR THE APPLICANT: Holtham & Associates

COUNSEL FOR THE RESPONDENT: Not Applicable

SOLICITOR FOR THE RESPONDENT: Self-represented litigant

Orders

1. That further consideration of the matter for the making of final Orders by this Court be adjourned to 10.00 am on Friday 9 September 2011, with leave to the parties to attend by way of video link between the Adelaide and Darwin Registries of this Court.

2. That on or before 10.00 am on Friday 9 September 2011 the parties present to the Court agreed Minutes of Order that reflect this Court’s findings herein or such other agreement as the parties may achieve.

3. That liberty be granted to the parties to apply at an earlier date in the event that they are able to submit final agreed Minutes of Order prior to 10.00 am on Friday 9 September 2011.

IT IS NOTED that publication of this judgment under the pseudonym Babbitt & Babbitt is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT DARWIN

FILE NUMBER: DNC 546 of 2008

Ms Babbitt

Applicant

And

Mr Babbitt

Respondent

REASONS FOR JUDGMENT

The applications

1. This matter already has a long history in both the Federal Magistrates Court and this Court since proceedings were instituted on 29 September 2009. 

2. The dispute between the parties is as to matters of property settlement.  Parenting issues were resolved by consent and they entered into a parenting plan in March 2009.

3. The property dispute between the parties was first heard and determined by Federal Magistrate Turner.  The learned Federal Magistrate delivered her decision on 16 July 2010.  The husband subsequently successfully appealed that decision and on 25 March 2011, in allowing the Appeal, the Full Court remitted the matter for re-hearing by a Federal Magistrate other than Federal Magistrate Turner.  On 6 April 2011 Federal Magistrate Brown transferred the proceedings to this Court for determination.  Evidence was given and taken before me on 7 and 8 July 2011 and after receiving written final submissions from the parties on 9 August 2011 the proceedings were ultimately reserved for my decision.

4. At the conclusion of the evidence in July the parties invited me to give a preliminary intimation of my views in order to try and assist them to resolve the matter immediately, rather than have to wait for my written determination given that they had waited a long time to resolve their issues and given further that the banks were pressing them to resolve their issues and reduce their indebtedness.  In emphasizing that it was a preliminary view only, I indicated that I thought the evidence suggested that there ought to be a loading of at least 5% in the husband’s favour.  I also informed them that in the event that they did not achieve a settlement then, after considering their final submissions and having had the opportunity to consider the evidence in more detail and upon greater reflection, my ultimate determination could well be different.  They indicated that they understood and accepted that but still invited the preliminary intimation from me.

Background

1. It is not necessary for me to set out herein extensive background information in relation to the parties and the dispute between them as those matters were extensively canvassed in the Judgment of Federal Magistrate Turner delivered on 16 July 2010 and subsequently in the Full Court’s determination of 25 March 2011.  Wherever more detail of the background of the dispute between the parties is needed, I canvass same in my reasons hereunder.  The need for any further expression of extensive background information was rendered unnecessary also by agreement having been reached between the parties on a wide range of issues previously in dispute between them.

2. Having agreed:-

   6.1.the identity and value of the assets and liabilities;

   6.2.that initial contributions ought to be treated as having been equal; and

   6.3.that contributions made by the parties during the period of their cohabitation ought also to be considered as having been equal

   I am left only to determine the respective post-separation contributions of the parties and make findings with respect to Section 75(2) factors.

3. The parties commenced cohabitation in 1993, married in April 1994 and separated some 14 years later in September 2007.  There was then a brief period of cohabitation under the one roof until January 2008 when the husband moved from the former matrimonial home property.  For a period of nine months from March 2008 he returned to the former matrimonial home but cohabitation was not resumed between the parties.  It became necessary for the husband to do so in order to recuperate from serious injuries he received when injured at work.  The parties’ divorce was granted in March 2009.

4. The parties have three children of their relationship namely N Babbitt (“N”) born IN January 1995 (aged 16), T Babbitt (“T”) born 22 February 1997 (aged 14 years) and D Babbitt (“D”) born 1 January 2000 (aged 11 years).  T and D live in a shared care arrangement by spending one week alternately with each of the parties.  N, whom the parties agree suffers Asperger’s Syndrome and has other health issues, resides full time with the father.

The evidence

1. Each of the parties gave evidence in support of their application before the Court.  Evidence was also called by the husband from two real property valuers.  However, after hearing their evidence he agreed the property values as indicated below.

Credit

1. I am not able to state as a matter of general observation that I prefer the evidence of one of the parties over that of the other but issues of credit do not loom large in the determination of this dispute.

Assets and liabilities

1. As I said earlier, ultimately the parties agreed the identity and value of the assets and liabilities relevant to this Court’s determination.  They are:-

   Property
   Property W (joint)  $1,150,000.00
   Property J (joint)  $490,000.00
   Property O (joint)  $690,000.00
   Property K (wife)  $325,000.00
   Shares in Z P/L (joint)  $525,000.00
   Toyota motor vehicle (wife)  $2,000.00
   S Pty Ltd (joint)  $89,000.00
   Jewellery (wife)  $2,000.00
   Boats, firearms (husband)  $18,750.00
   Household furniture (wife)  $6,000.00
   Household furniture (husband)  $5,000.00
     $3,302,750.00

Less Liabilities
Property W (joint)  $415,621.00
Property J (joint)  $420,656.00
Z Pty Ltd (joint)  $43,594.00
Line of Credit (joint)  $126,226.00  $1,006,097.00
  $2,296,653.00
Superannuation
MLC Masterkey (wife)  $17,959.00
MLC (husband)  $24,232.00
MLC (husband)  $20,774.00
AMP (husband)  $6,174.00  $69,139.00

Net property and superannuation  $2,365,792.00

1. Issues of contention raised between the parties in the course of the Appeal to the Full Court included the value of the business S Pty Ltd and what proportion of the liabilities ought to be borne jointly by the parties.  Ultimately, as indicated above, the parties agreed the value of S Pty Ltd at $89,000 and the extent of the line of credit to be borne jointly by the parties at $126,226.  During the trial of the proceedings I pressed the husband on a number of occasions as to whether or not he was content that the line of credit at $126,226 represented the total amount that he wished to be taken into account as a liability (apart from the mortgages) in the ultimate determination of the net asset pool.  He reiterated on a number of occasions that he was.  Subsequently, in a mention before me on 21 July 2011, the husband indicated that there were other debts that he considered relevant to the exercise but that he was content for me to have regard to the alleged additional debts within the context of determining the parties’ respective post-separation contributions, rather than making any alterations to the agreed list of assets and liabilities. His position in that regard is further confirmed in the annexures to his written final submissions filed 29 July 2011 (document 54) where he adopts the figure for the joint line of credit at $126,226.  I have thus proceeded on that basis.

Contributions

1. As indicated earlier, the parties agreed initial and pre-cohabitation contributions as having been equal and further that contributions made by them during the course of their cohabitation, should also be treated as having been equal.  The dispute between them as to contributions relates to post-separation contributions.  It is the wife’s contention that those contributions were equal.  It is the husband’s contention that they were not, particularly having regard to the work and effort undertaken by him to secure and maintain the additional borrowings negotiated by him in order to sustain the parties’ assets.  In addition, he contends that N’s special needs within the context of the husband providing for his sole care, ought to be recognised also by a loading in his favour after consideration of all relevant contributions.  He seeks a loading in his favour of 5%.

2. Each of the parties has made contributions post-separation of the type and in the manner identified in Section 79(4)(a),(b) and (c).  However, I am satisfied that the husband’s contributions have been greater than the wife’s.  This fact ought not to be a matter of great controversy between the parties given the findings of the Full Court on 25 March 2011, particularly as a consequence of the matters identified in paragraphs 33 to 45 inclusive.  However, the wife continued to decline to accept that position and in the written submissions filed on her behalf on 2 August 2011, continued to suggest that indeed it might be appropriate that the wife receive an adjustment in her favour.

3. As the matter has been sent back for re-hearing by this Court, it is not appropriate that I divert from the task of making my own findings based on the evidence before me.  The evidence before me though is as compelling on this topic as were the matters raised on appeal by the husband and as identified in the findings of the Full Court referred to by me above.

4. I am satisfied that the husband’s post-separation contributions have been greater than that of the wife in the following respects and for the following reasons:-

   16.1.since the parties’ separation in September 2007 the wife has not been obliged to make any payments by way of mortgage or rental on the property occupied by her since then and to this day.  After their separation the husband continued to make all payments on the mortgage which was then secured against the property until he made a final payment in December 2008 in the sum of $8,852 to unencumber the property.  There was a period between September 2007 and January 2008 when the husband continued to occupy the premises at Property O and for a further period between March 2008 and December 2008 when, to her credit, the wife accepted the husband back into the property to assist in his recuperation from a severe accident suffered by him at work.  In summary, at no time in the 4 years since separation has the wife been faced with any mortgage or rental payments on the property in which she resides.

   16.2.after the husband left the former matrimonial home at Property O he resided in the shed on the Property W business property which was subject to mortgage, the payments on which were made by him. 

   16.3.in March 2009 the husband moved into Property J when tenants of that property moved out.  Until March 2009 rental of $470 per week was applied to the mortgage but there was still a shortfall of $350 per week paid by the husband.  After the tenants left and he became the sole occupant of Property J, he made all payments on the mortgage.  The husband was also obliged to fully equip the property with furniture in order to house himself and the children when they were in his care.  The parties agree there is still an amount due and owing on mortgage in the sum of $420,656.  Thus the parties’ comparative situations in terms of their accommodation, are markedly different.  I am satisfied on the evidence of the husband that the amount contributed by him to the payment of the mortgage on Property J since separation is in the order of $84,000 (paragraph 36 of the husband’s affidavit filed 23 June 2011).  The wife did not challenge the husband’s contention in this regard.

   16.4.the wife has retained her rental property at Property K.  It is a property free of encumbrance and on her evidence produced in the 2010 / 2011 financial year a net return of $7,500 from gross rental received of $17,160.

   16.5.the business of S Pty Ltd is operated from Property W, a property which is subject to a mortgage in respect of which is currently owing an amount of $415,621, although that amount is likely of late to have increased because it was the husband’s evidence, which I accept, that he has been unable to generate sufficient income from the business to meet all of his obligations and the obligations of the business.

   16.6.the wife conceded in evidence that she had never made any payments in respect of any of the parties’ mortgage commitments.  They were all met by the husband, conceded by him to have been in part from shareholders funds, but also in large part from his wages.  As a consequence of his injury (discussed later in these reasons) and as a consequence of the crippling debt faced by the parties, the parties are now significantly in arrears in their payments pursuant to the liabilities.  It was an agreed position that they had received a solicitor’s letter indicating that they (the solicitors) had received instructions from the National Australia Bank to pursue a forced sale of the properties.  At the time of the hearing before me the accumulated arrears were $42,253.  I accept that they are now greater.  Ms Holtham, for the wife, indicated during brief addresses in support of the written submissions provided, that the National Australia Bank was now poised to take immediate action.  The husband acknowledged that mortgage payments were last on the list of things that he paid after attending to worker’s entitlements, superannuation, outstanding accounts and the children’s needs.  I accept, on the husband’s evidence, that he borrowed substantially upon his own Mastercard in order to meet worker’s entitlements and his own wages at times. 

   16.7.It is appropriate to acknowledge the husband’s post-separation contributions in respect of the payment of the children’s school fees in 2009, 2010 and in 2011, except for the last account in respect of which he said that he had no money to pay.  He indicated though that he would pay.

   16.8.I am further satisfied that the husband has made a greater contribution to the welfare of the family in his capacity as homemaker and parent in respect of all three children.  The care of the two youngest children T and D is shared equally between the parties on a week and week about basis.  However the husband has the sole care of N who is now 16 years of age.  Those arrangements have been in place since early 2009.  His contributions in respect of the care of N are also made the greater by dint of the fact that N suffers Asperger’s Syndrome which promotes in him a significant dependency upon the husband.  In addition, N suffers severely pronated feet and has a significant weight problem being currently in the order of 150 kilograms.  N also suffers from serious muscle hypertonia.  It is clear from the evidence that the husband has therefore made a greater post-separation contribution than the wife in respect of N’s care.  The husband is further contributing by providing employment for N at S Pty Ltd in circumstances where N would otherwise struggle to find employment.

5. I am satisfied that the husband’s greater post separation contributions ought be recognised by an adjustment as sought by him of 5% in his favour.

6. In making my calculation as to the additional percentage by which the husband’s greater post-separation contributions ought to be recognised, I have had regard to the fact that some $12,000 to $15,000 of the joint line of credit was used by the husband to pay his legal costs and undertake a holiday.

7. In addition, in arriving at that determination that the husband’s post-separation contributions ought to be recognised as having been greater than the wife’s, I have had regard to the various contributions also made by the wife including:-

   19.1.the wife’s contribution to utilities, school expenses, food and other household expenditure;

   19.2.the wife’s primary care of all three children prior to March 2009 and equal shared care of the youngest two thereafter;

   19.3.the wife’s increased household responsibilities whilst the husband was recuperating after his injuries;

   19.4.the wife’s part-time work in the business until March 2009;

   19.5.contributing to the cleaning and painting of Property J;

   19.6.as a party in the joint borrowings by the parties;

   19.7.the various other matters of contribution attested by the wife in paragraphs 90 – 94 inclusive of her affidavit filed on 5 July 2011.

8. If it were not for these contributions of the wife it would have been my determination that the husband was entitled to a greater recognition of his post-separation contributions than 5%.

Section 75(2) factors

(a)    the age and state of health of each of the parties;  

and

(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;

1. The parties are of equivalent age, the wife being 49 years and the husband shortly to turn 47 years of age.  It is thus not the issue of age which is a relevant consideration here but rather the parties’ respective states of health.

2. In the written submissions of Counsel for the wife, there is a grudging acknowledgment of the husband’s injuries to his feet.  However, the situation for the husband in that respect is far worse.  Little will be gained by me canvassing in great detail the materials considered at length by the Full Court in paragraphs 47 to 69 inclusive of their Judgment delivered 25 March 2011.  The issue of the extent and consequence of the husband’s injuries was not re-litigated before me.  No additional evidence was called.  The wife takes issue rather with the husband’s capacity to work despite those injuries and hence his capacity to earn income. 

3. Each of the parties was refreshingly frank in their evidence about their capacity for future gainful employment.  Since ceasing her part-time work at S Pty Ltd in March 2009, the wife has had a chequered work history.  I am satisfied that she has endeavoured to secure full time permanent employment but has not been able to do so.  Her work history since March 2009 has been:-

   24 March 2009 to 4 June 2010                employed at Company 1

   24 March 2009 to August 2009               employed on a part-time basis at S School (clerical role)

   5 June 2010 to about 10 July 2010         Unemployed

   About 10 July 2010 to 31 July 2010      Employed at Company 2

   1 August 2010 to 24 August 2010           Unemployed

   25 August 2010 to 8 November 2010     Employed as a console operator on a casual basis

   8 November 2010 to 14 April 2011        Employed at Company 3

   15 April 2011 to 4 May 2011                   Unemployed except for 3 casual days work as a shop assistant

   5 May 2011 to 30 June 2011                    Employed at Company 4

   From 1 July 2011 onwards  Unemployed

1. Thus in a period of 29 months the wife has been able to secure employment for only some 13 months.  The wife has though, and will continue to have, a steady stream of income from the Property K rental property, albeit of modest proportions.

2. The wife acknowledged that there was nothing to stop her working and I accept her evidence that she is doing all she can in order to secure permanent employment.  She indicated she felt “modestly confident” of finding work.  She indicated that she enjoyed working.  She acknowledged that she was physically well and the only impediment to her health was the stress of the ongoing litigation.  As a counter to that though, she is a 49 year old woman seeking to find employment in a competitive job market which has rendered for her employment for only 13 of the past 29 months.

3. For his part I accept that the husband’s health presents as a genuine and likely impediment to his capacity to earn income in the manner and to the level which he has in the past.  In his equally frank evidence, the husband said that whilst his feet were “killing him” he could well learn another trade and would certainly find a way of earning income.  He said that S Pty Ltd continued to promise viability especially if he could reduce or discharge the crippling debt load.  He said that if there was to be an equal distribution of the net asset pool, he would need to sell the business.  If there was an adjustment of the division in his favour, he contemplated the likelihood of being able to continue with the business and continue to employ his son N therein.

4. I am satisfied that the evidence suggests that the only possible finding is that each will have a diminished capacity to earn income in the future.  I am satisfied that this factor alone does not justify any further adjustment between the parties.  In cross-examination the husband acknowledged that the parties’ respective earning capacities were equal.

(c)     whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;  

1. The care of the two youngest children T and D is shared between the parties and thus is not a factor.  However, the care of N is relevant.  As indicated earlier in these reasons N suffers from Asperger’s Syndrome, pronated feet and serious muscle hypertonia.  He is also significantly obese being 150 kilograms at the age of 16 and medical advice is to the effect that N needs to lose 40 kilograms in weight.  The wife acknowledges that the husband will continue as the primary carer and provider for N.  It was the husband’s evidence that lap band or other surgery may be necessary in order to assist N.  The wife, in her evidence, did not acknowledge that such a procedure was necessary at this time but she did acknowledge that N would encounter ongoing future health problems.  Surgery on N’s feet though I accept is particularly likely and necessary once he has stopped growing.  These are problems which the husband will have to face primarily, with a consequent devotion of time, energy and money.

2. The fact that the husband has his own business is likely the only reason that N is employed and is thus another important consideration in the husband endeavouring to maintain the operation of S Pty Ltd.  The husband though is also seeking to encourage N to find alternative employment.

(d)commitments of each of the parties that are necessary to enable the party to support:

(i)himself or herself; and

(ii)a child or another person that the party has a duty to maintain; and

and

(e)     the responsibilities of either party to support any other person;  

1. No matters of relevance emerge for my consideration pursuant to these sub-sections.

(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:

(i)any law of the Commonwealth, of a State or Territory or of another country; or

(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;

and the rate of any such pension, allowance or benefit being paid to either party;

1. Both parties have superannuation accumulation funds.  Neither has asked that it be treated as anything other than a property asset.  The total of the husband’s entitlements is $51,180 and the wife’s $17,959.  Neither is able to access those entitlements for many years hence.

Remaining sub-sections of Section 75(2)

1. No matters of relevance emerge for my consideration pursuant to any of the remaining sub-sections of Section 75(2).

Conclusion on Section 75(2) factors

1. By dint of relevant Section 75(2) factors, I am satisfied that a further adjustment in the husband’s favour is appropriate, specifically as to his ongoing primary care of N.  In her present unemployed state, the wife is in no position to proffer any assistance to the husband.  I am satisfied that the likely majority of future expenses in relation to N’s care will fall to the husband.

2. I therefore consider it appropriate to make a further adjustment in favour of the husband of 5% as sought by him.

Just and equitable

1. As presently distributed and allocated to the parties the husband has property and superannuation within his control as follows:-

   35.1.Property W  $1,150,000.00

   35.2.Property J  $490,000.00

   35.3.Shares in Z P/L  $525,000.00

   35.4.S Pty Ltd  $89,000.00

   35.5.Boats, firearms  $18,750.00

   35.6.Household furniture  $5,000.00

   35.7.Superannuation:

   MLC  $24,232.00

   MLC  $20,774.00
   AMP  $6,174.00  $51,180.00

   $2,328,930.00

2. The husband though presently bears responsibility for all liabilities being:-

   36.1.Property W  $415,621.00

   36.2.Property J  $420,656.00

   36.3.Z Pty Ltd  $43,594.00

   36.4.Line of credit  $126,226.00

   $1,006,097.00

3. Thus the net figure for assets and superannuation presently attributable to the husband is $1,322,833.00, which represents 56% of the net asset pool.

4. For her part the present distribution to the wife is:-

38.1.Property O  $690,000.00

38.2.Property K  $325,000.00

38.3.Toyota Motor vehicle  $2,000.00

38.4.Jewellery  $2,000.00

38.5.Household furniture  $6,000.00

38.6.Superannuation (MLC Masterkey)  $17,959.00

$1,042,959.00

1. That figure represents 44% of the net asset pool.

2. If, as I have determined, it is appropriate for the husband to receive 60% of the net asset pool of $2,365,792.00 he would be entitled to receive property and superannuation valued at $1,419,475.00 and the wife $946,317.00, a differential of some $473,158.00.  That would oblige the wife to make a payment to the husband of $96,642.00.

3. To raise the $96,642.00 due and payable to the husband the wife would either have to sell property (probably Property K) or borrow the money.  Property K affords to the wife presently her only independent and very modest income by way of rent.  She is unemployed.  Without Property K, she has no income to support herself and the two youngest children when they are in her care.  Without a job, her prospects of borrowing $96,642.00 or any amount, especially with the damaged credit rating of the parties, are remote in the extreme.

4. In large part as a consequence of his courage and application to task, the husband nonetheless has a business from which he continues to receive drawings, albeit reduced because of his injuries and the significant debt load.  Whilst it is a business which has been running at a loss now for the past two years, it is the husband’s intention to endeavour to return S Pty Ltd to viability at the conclusion of these proceedings.  If he cannot do so he was confident he would find a way of earning income.

5. I am not satisfied that it would represent a just and equitable outcome to require the presently unemployed wife, with limited job prospects, to find nearly $100,000.00 to pay to the husband.  In my view the only just and equitable result would be for the parties to each retain the property and superannuation, subject to the liabilities attached thereto, as identified by me respectively in paragraphs 35, 36 and 38 above.  That outcome in any event would result in the husband receiving a settlement of $279,874.00 more than the wife.

6. Rather than make orders to that effect just yet I deem it appropriate for the parties, in taking into account my findings herein, to have a limited opportunity to model orders that would present to them the best prospect of avoiding dramatic action by the banks in ways that it is not possible for me to contemplate on the evidence before me.  In his written submissions the father promoted a number of alternative possibilities but the evidence before me is insufficient to determine what might best represent the parties’ needs or interests.

7. At the commencement of the trial before me the parties indicated that Property W was to be sold.  That seemed to have changed by the conclusion of the proceedings but may still be one of the options, along with a number of others, that may attract themselves to the parties. 

8. In the event that they are unable to agree how to apply my findings, I will make orders reflecting a distribution as outlined in paragraphs 35, 36 and 38.

I certify that the preceding forty six (46) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Burr delivered on 26 August 2011.

Associate: 

Date: 26 August 2011