Ball & Snibson
[2006] FMCAfam 455
•1 September 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BALL & SNIBSON | [2006] FMCAfam 455 |
| FAMILY LAW – Property – financial contributions – greater initial financial contribution by wife – marriage of eight and a half years – whether initial financial contribution by wife eroded where husband found to have made greater subsequent financial contribution – no adjustment made for wife’s initially greater financial contribution. FAMILY LAW – Property – division – section 75(2) factors – wife’s ability to work restricted by back pain – husband in receipt of higher income than wife – non-superannuation asset pool to be divided 55% to the wife and 45% to the husband – superannuation divided equally. |
| Family Law Act 1975, ss.75(2), 79(2), 79(4) |
| Kowaliw and Kowaliw (1981) FLC 91-092 Marriage of Ferraro (1992) 16 Fam LR 1 Pierce v Pierce (1999) FLC 92-844 |
| Applicant: | GRAHAM JAMES BALL |
| Respondent: | JOANNE LYNDAL SNIBSON |
| File Number: | MLM 1225 of 2006 |
| Judgment of: | FM Riley |
| Hearing dates: | 14 and 15 August 2006 |
| Date of Last Submission: | 15 August 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 1 September 2006 |
REPRESENTATION
| Counsel for the Applicant: | Mr Whitchurch |
| Solicitors for the Applicant: | Samantha Ward |
| Counsel for the Respondent: | Ms Baczynski |
| Solicitors for the Respondent: | Hicks Oakley Chessell Williams |
ORDERS
On or before 13 October 2006, GRAHAM JAMES BALL (“the husband”) is to pay to JOANNE LYNDAL SNIBSON (“the wife”) the sum of $138,325.
In consideration of, and contemporaneous with, compliance with order 1, the wife is to do all acts and execute all documents submitted by the husband to transfer to the husband all of her interest in the property known as … Heathmont in the State of Victoria (“the Heathmont property”).
The husband is to indemnify the wife against any further liability in respect of the Heathmont property including any liability for outgoings and any liability in respect of any mortgage or charge on the land.
In the event that the husband does not pay to the wife the sum of $138,325 on or before 13 October 2006, or within such further time as may be agreed, the following orders are to take effect:
(a)The parties are to do all acts and execute all documents necessary to sell the Heathmont property by public auction, such auction to be held on or before 30 November 2006.
(b)The reserve price at the public auction is to be such amount as the parties agree 14 days before the auction and, in default of agreement, the reserve price is to be the value of the property as determined by a valuer engaged by the husband, and the valuer’s costs are to included in the costs of sale of the Heathmont property.
(c)Each party has the right to bid at the auction.
(d)Until completion of the sale, the husband has the right to occupy the Heathmont property (to the exclusion of the wife) subject to the husband paying the mortgage and rates, building insurance and other outgoings on the property as they fall due, keeping the property tidy, clean and in good repair (having regard to its present condition) and permitting inspection by agents and prospective purchasers at all reasonable times.
(e)The purchase price of the Heathmont property, less any adjustments in favour of the purchasers and plus any adjustments in favour of the husband and wife, are to be applied as follows:
(i)firstly, to discharge the mortgage to the Commonwealth Bank of Australia secured over the Heathmont property;
(ii)secondly, to pay the costs of sale of the Heathmont property, including the agent’s commission and disbursements, legal costs and disbursements and the costs of any valuer;
(iii)thirdly, 55% of the balance remaining, plus 55% of the value of the assets of the parties other than real estate, superannuation and home contents, being $22,888, to the wife; and
(iv)fourthly, the remainder to the husband.
(f)Each party has liberty to apply with respect to the sale of the Heathmont property.
For the purposes of these orders:
(a)the husband is the member spouse;
(b)the wife is the non-member spouse;
(c)the superannuation fund is the Employee Retirement Plan Membership No. … (MLC Nominees) (“the Fund”).
Paragraphs 5 to 10 of these orders are binding on the trustee of the Fund.
The wife is to be allocated out of the interest of the husband in the Fund the base amount of $13,000.
Whenever the trustee of the Fund makes a splittable payment from the interest held by the husband in the Fund, the trustee is to pay to the wife the amount which is calculated in accordance with Part 6 of the Family Law (Superannuation)Regulations 2001 and there is to be a corresponding reduction in the entitlement that the husband would have had but for these orders.
Order 8 is to have effect from the operative time.
The operative time for the purposes of these orders is 4 business days after the day of service of these orders upon the trustees of the Fund.
Until the happening of any of:
(a)the establishing of a separate account in the name of the wife; or
(b)the transfer or rolling over into another superannuation fund of the payment split created by order 8; or
(c)the wife executing a waiver of rights within the meaning of s.90MZA of the Family Law Act in relation to the payment split created by order 8; or
(d)the wife satisfying a condition of release and being paid the payment split which was created by order 8 hereof,
the husband be and is restrained by himself, his servants or agents from executing a Death Benefit Nomination in favour of any person or doing any other act or thing which would render any part of his interest in the Fund a non-splittable payment within the meaning of Regulations 12 of 13 of the Family Law (Superannuation)Regulations 2001.
Each party and the trustee of the Fund have liberty to apply in relation to the implementation of orders 5 to 10 inclusive.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 1255 of 2006
| GRAHAM JAMES BALL |
Applicant
And
| JOANNE LYNDAL SNIBSON |
Respondent
REASONS FOR JUDGMENT
Applications
This matter concerns competing applications for property settlement between the applicant husband and the respondent wife. The husband filed the initial application on 4 November 2005. He filed an amended application on 4 April 2006 in which he sought orders principally that the wife transfer to the husband her interest in the former matrimonial home at Heathmont (“the Heathmont property”) and the husband pay to the wife 50% of the net equity in the home. The husband envisages that he will continue to live in the matrimonial home with the children of the marriage on a week and week about basis.
The wife filed a response and two amended responses, the second on 19 June 2006. In the second amended response the wife sought orders principally that the Heathmont property be sold and the net proceeds be divided 70% to the wife and 30% to the husband. The wife also sought spousal maintenance and orders that the husband pay the wife half of the difference between the value of his superannuation and car and the value of her superannuation and car, and half of the value of the chattels in the Heathmont property.
At the final hearing, the wife by her counsel orally withdrew her application for spousal maintenance, choosing to rely only on the prospective considerations in property settlement matters. The parties also indicated to the court that they would deal with the question of the contents of each of their houses without the need for the court to determine that matter.
Background
The husband is 48 years of age and the wife is 44 years of age. The parties were married on 14 September 1996 and separated on 22 April 2005. The marriage was of about eight and a half years’ duration. There are two children of the marriage, K is now 9 years old and L who is now 7 years old.
The wife initially sought orders permitting her to relocate with the children to Ballarat, where she has many associations. However, at the time of the final hearing, the parties consented to parenting orders which essentially provide that:
a)the children are to live with the husband and the wife on a week and week about basis;
b)the parents are to have equal shared parental responsibility for the children;
c)the wife is to collect the children from school on the Thursday of the weeks when the children are living with the husband and return them to his care at her home at 5.30 pm on that day; and
d)the children are to spend half of the long Christmas holidays with each of the parents.
The wife had been previously married and had a son from that relationship, B, who is now 17 and lives with his father in Ballarat. When the parties met, the husband was qualified as an architect and the wife was qualified as a psychiatric nurse. They met at Lakeside Hospital in Ballarat where the husband was doing some work as an architect and the wife was nursing. The wife was living in Ballarat at the time and the husband was living in Melbourne.
Initial contributions
When the parties married, on 14 July 1996, the husband had a house in Geelong and the wife had a house in Ballarat. The husband’s house in Geelong was negatively geared and rented out. The wife continued to live in her house in Ballarat until the end of the 1996 school year, when the parties began to live together in a house in Melbourne that they rented from the husband’s grandfather. The wife’s house in Ballarat was then rented out. The rents were insufficient to pay the mortgages on both the Geelong and Ballarat properties, and the parties jointly paid the difference between the rental income and the mortgage payments. There was no evidence on how much was required for this purpose and I make no findings on this issue.
In May 1998, the parties bought the Heathmont property. It cost $165,000 plus stamp duty. There was an initial mortgage of about $125,000 or $135,000. The wife had sold her house in Ballarat in December 1997 and used the proceeds of the sale of that house, being about $33,000, as the deposit on the Heathmont property. The wife also cashed in her superannuation, receiving about $8,250. That sum was also put into the Heathmont property, for the deposit or the cost of renovations.
The wife received payment for her accrued long service leave, in the sum of about $5,000, when she left her previous employment. This sum was contributed to the family finances. There was a dispute as to whether the long service leave payment should be regarded as a payment in lieu of salary or whether it should be regarded as a capital contribution. In my view, the long service leave payment is better characterised as a payment in lieu of salary. The wife, naturally, did not work at around the time of the births of the children, on 19 May 1997 and 11 February 1999. She did not work for ten months when K was born and a comparable time when L was born. Although the long service leave payment was received in a lump sum, if the wife had not left her employment, she would have been paid her long service leave entitlement on a fortnightly basis. Overall, it is more in keeping with reality to treat the long service leave payment as normal income.
At the time of marriage, the wife also had a car worth $8,000 and savings of $1,500. The wife’s initial financial contribution to the marriage was the $33,000 from the sale of her house, about $8,000 in superannuation, $8,000 for her car and $1,500 in savings, making a total of about $50,500.
I accept that at the time of the marriage, the husband had a car worth $12,000. The wife disputed this but did not support her claims with evidence. I accept the husband’s estimate. The husband also contributed superannuation worth $10,500, a motor bike worth $3,500 and his house in Geelong. The husband sold the house in Geelong in June 1998 and received $5,735 as the proceeds of sale. This amount was spent on renovations of the matrimonial home. The husband also said that he had a tax refund of $3,300 that was due to him from income years which preceded the marriage. I accept this evidence. The husband’s initial contribution was thus $12,000 for the car, $10,500 for the superannuation, $3,500 for the motorbike, $5,735 for the house in Geelong and $3,300 for the tax refund, making a total of $35,035.
The difference between the initial contributions of the parties is accordingly about $15,500 in favour of the wife.
Contributions during the marriage
Both parties worked outside the home during the marriage, though the husband earned more and the wife generally worked part-time.
The parties undertook some renovations of the husband’s grandfather’s property while they were living there. The husband claimed that he did the bulk of the work, but acknowledged that the wife put some money and time into the renovations. The husband gave oral evidence that he was reimbursed by his family to the extent of $2,000 for some of the work done on his grandfather’s property, and that the reimbursement had been used for the purposes of the parties. The wife disputed that there had been any reimbursement. However, there was no documentary evidence either way. Having observed the father giving evidence, I am satisfied that the father told the truth on this matter. However, his evidence did not specify the value of the work done or indicate that the amount reimbursed equalled the cost of the time and money put in to the grandfather’s house. All in all, I am satisfied that both of the parties did contribute an unspecified amount in time and money to the value of the grandfather’s property and that less than the total value of that contribution was reimbursed. In the absence of specific evidence, it is not possible to place any particular value on the wife’s contribution to the property owned by the husband’s grandfather. However, I do accept that the wife did make a contribution to the property of a member of the husband’s family.
Both parties were involved in renovating the Heathmont property. There was some dispute as to the respective contributions, but I accept that the husband did somewhat more of the renovating and gardening than the wife did. I also accept that the husband was a very involved father and made substantial contributions to child care, though the wife, being in part-time employment and off work when the children were very young, did somewhat more child care overall.
I accept that the husband left his architectural firm on 19 January 2001 after a falling out with his partners. The partners sued the husband. He eventually got a settlement of $12,000, although his legal costs had been $20,000. The husband claimed the balance as a tax deduction. In the next few months, the wife says the husband did some architectural work cash in hand. The husband said that he did some work for the La Trobe Regional Hospital and that he was paid $8,000. He denies that he was paid in cash and says that the government does not pay in cash. I accept the husband’s evidence on these matters.
There was an implicit suggestion by the wife that the husband’s conduct in relation to his partnership constituted wastage. The principal case on this issue is Kowaliw and Kowaliw (1981) FLC 91-092, in which Baker J said, at 76,644 that:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) or (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.
On the evidence, there is no basis on which it could be said that the husband’s conduct fell within either of the exceptions mentioned in Kowaliw. There was nothing to suggest that the husband was particularly blameworthy in relation to the termination of his partnership. In my view, the losses that resulted from the termination of the partnership are to be shared by the parties, and in my view, shared equally. The husband throughout the marriage as a whole was the principal breadwinner and fulfilled that role more than adequately.
During the marriage, the wife received child support for B from her previous partner. The parties, including the husband in the present case, otherwise supported B for about four or five years, before he went to live with his father in about 2001. The amount of the husband’s contribution to B’s support was not quantified.
The parties generally had a joint account but the wife accepted that she had placed money in an account in B’s name. She said that she used the money in the account to buy her own underwear and makeup because the husband was too controlling financially. There was a claim that the wife was secreting money in the account for her own purposes and depriving the family of those funds. The evidence on this matter was not very specific. However, on the evidence, such as it was, it did not appear that the wife was using a particularly large amount for her personal purposes. I am unable to conclude that the wife’s expenditure on personal items was unreasonable or excessive.
Overall, I consider that the contributions of the parties during the marriage were approximately, and commendably, equal. While the husband earned more than the wife throughout the marriage, contributed more physically to the renovations and garden, and contributed to the support of B, for a time, the wife did more of the child care and also made contributions for the benefit of the husband’s family in the form of renovations to the husband’s grandfather’s property. The husband’s counsel noted that both parties had worked hard throughout the marriage for the benefit of their family. I consider that to be an accurate description of the contributions of both of the parties during the marriage.
Post-separation incomes of the parties
The husband began working for the Department of Human Services (‘DHS’) on 5 May 2001 as a project manager and continues to do so. He earns about $79,000 per year. He has access to a work vehicle for work purposes. He needs to fund his own private vehicle for private purposes. The husband also receives a mobile telephone from his employer, though he must pay for private calls himself. His home internet is funded partly by his employer because DHS promotes family friendly work practices, including giving staff the option of doing some work at home. The husband does do some work at home and this helps him to meet his child care responsibilities.
The wife is a psychiatric nurse. She works part time. This is partly to enable her to look after the children and partly because she has pain in her lower back resulting from a disc disease. Commencing in February 2006, the wife attended a rehabilitation program at Cedar Court. A consultant physician noted in a report that as at 21 June 2006, the rehabilitation program had improved the wife’s pain levels and reduced the frequency of flare ups from weekly to fortnightly, had reduced the use of pain medication, had resulted in the regular implementation of pain management strategies and had enabled the wife to maintain her pre-injury working hours of 25 hours per week. The physician also said that he did not consider that the wife could upgrade her working hours from six hours per day, four days per week. The physician was not cross examined. I accept his evidence.
The wife claimed in her financial statement that she earned about $42,000 per year. However, a child support assessment dated 7 August 2006, which was expressed to be based on the wife’s 2005/2006 taxable income plus any supplementary amounts, put her income at $53,382 per year. The wife gave evidence that she had worked full time for about six months after separation, until about November 2005, and that had increased her annual income. She had reverted to part time work in November 2005 because of back pain. I accept that evidence.
Pay slips of the wife for the periods ended 9 April 2006, 2 July 2006, 16 July 2006 and 30 July 2006 showed that the wife’s pay averaged about $1,720 per fortnight for those periods. Applying that across a whole year gives an annual income of about $44,720. I find that the wife could expect to continue to receive an annual income of about $45,000 and the husband could expect to continue to receive an annual income of about $79,000. Accordingly, it is likely that the husband will be earning about $34,000 more than the wife per year.
Both parties directed cross examination to the issue of whether the other party could be in more gainful employment. The wife suggested that the husband could earn more as an architect by going into private practice and the husband suggested that the wife could earn more by working more hours. There was no evidence in support of either of these suggestions. I do not consider them to be viable. Indeed, the suggestion that the wife could work more hours was contrary to unchallenged medical evidence, which, as I have indicated, I accept.
The husband commenced paying child support to the wife in November 2005 in the sum of $123 per week. He said that he had not previously paid child support because no application had been made. The husband is continuing to pay that amount of child support.
The wife since separation has been paying rent of $210 per week. The husband has been paying the interest only part of the mortgage and other outgoings on the matrimonial property. The mortgage amounts to $213 per week, the rates to $21 per week, the mortgage protection insurance to $20 per week and property insurance to $12 per week, making a total of $266 per week. When the parties were together, they had been paying $312 per week on the mortgage, which had the effect of reducing the capital outstanding as well as paying the interest. The husband reduced the mortgage payments to interest only on
15 December 2005.
Post separation contributions
The wife claimed a balancing adjustment of $6,500 for the reduction that would have occurred in the capital outstanding under the mortgage if the husband had continued to make payments off the capital as well as paying the interest. I do not accept that submission. Any payments of capital after the marriage ended would have been a post-separation contribution to the asset pool. The husband was under no obligation to make capital payments in reduction of the mortgage. As it happens, the wife’s rent payments and the husband’s interest payments are almost identical. The extra outgoings on the property paid by the husband post-separation should not, in my view, be given any significant weight, as they were necessary outgoings on a property that the husband in all probability will keep in his sole name. The husband did continue to make some payments in reduction of the capital outstanding under the mortgage from the time of separation, until
15 December 2005. This amounts to about $3,600. This amount is to be put into the balance in favour of the husband.
Since separation, the parties have shared the care of their children equally. They have each accrued some savings, the husband about three times as much as the wife. The husband’s greater savings are to be put into the balance in favour of the husband.
The asset pool
The non-superannuation assets of the parties, the values of which were either agreed or not effectively disputed, are as follows:
a)Heathmont property $365,000.00
b)Husband’s cash in bank $ 4,615.00
c)Husband’s car $ 26,000.00
d)Husband’s motor bike $ 1,500.00
e)Husband’s home contents $ 2,500.00
f)Wife’s cash in bank $ 1,500.00
g)Wife’s car $ 8,000.00
h)Wife’s home contents $ 2,000.00
The non-superannuation assets of the parties are thus valued at about $411,000, less the mortgage on the Heathmont property of about $155,000, giving the parties equity in their non-superannuation assets of about $256,000.
The wife’s superannuation amounts to $37,000.00. The husband’s superannuation is made up as follows:
i)GSO $ 5,071.00
ii)Vic Super $ 35,593.00
iii)MLC $ 22,427.00
$ 63,091.00
The difference between the wife’s superannuation and the husband’s superannuation is accordingly $26,091. The difference between the values of the husband’s car and the wife’s car is $18,000.
The legislation
Section 79 of the Family Law Act1975 (“FLA”) defines the Court’s powers in determining applications for property settlement. Sub-section 79(2) of the FLA provides that:
The Court shall not make an Order under this Section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.
Section 79(4) of the FLA sets out the matters the Court must take into account when considering what orders should be made for the alteration of the interest of the parties in property. Those matters are:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
In the Marriage of Ferraro (1992) 16 Fam LR 1 the Full Court of the Family Court said at page 23:
A now well established line of authority in this Court indicates the approach normally to be taken in the exercise of the discretion in Section 79 proceedings. That approach is firstly to ascertain the property of the parties at the time of the hearing, then to consider “contributions” of the parties within paragraphs (a) – (c) of Section 79(4) and then consider the matters in paragraphs (d) – (g), more especially paragraph (e) which takes up by reference the provisions of Section 75(2) which are generally referred to as the “Section 75 Factors.”
The matters to be taken into account under ss.75(2) of the FLA are as follows:
(a) the age and state of health of each of the parties;
(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;
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
(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;
(e) the responsibilities of either party to support any other person;
(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;
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
(l) the need to protect a party who wishes to continue that party’s role as a parent;
(m) if either party is cohabiting with another person–the financial circumstances relating to the cohabitation;
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p) the terms of any financial agreement that is binding on the parties.
Consideration
Section 79(4)(a) –(c)
In relation to paragraph 79(4)(a) of the FLA, both parties made substantial financial contributions to the acquisition of the Heathmont property. The wife’s initial contribution was about $50,000 while the husband’s was about $35,000. The husband’s initial contribution was thus about 70% of the wife’s. Subsequently, however, the husband had higher earnings than the wife. Because of the contribution of their earnings by both parties to the Heathmont property and their other property over the course of their eight and a half year marriage, the equity of the parties in their assets has now increased to about $256,000. Additionally, the husband has made a post-separation capital contribution to the value of the Heathmont property in the sum of about $3,600 and also has savings of about $3,000 more than the wife.
The question of the weight to be given to an initial contribution by one of the parties to a marriage was considered by the Full Court of the Family Court in Pierce v Pierce (1999) FLC 92-844 at 85,880. A unanimous Full Court (Ellis, Baker, O’Ryan JJ) there said:
26. In Way and Way (1996) FLC 92-702, the Full Court (Barblett DCJ, Finn and Butler JJ), said at 83,404:-
"… we regard the law in this area as now settled by the statement by Fogarty J in Money (and subsequently accepted by all members of the Full Court in Bremner) that "...an initial contribution by one party may be "eroded" to a greater or lesser extent by the later contributions of the other party even though those later contributions do not necessarily at any particular point outstrip those of the other party"."
27. However, it is important to put that quotation in its correct context. Fogarty J in Money and Money (supra) said at page 81,054:-
" … In an appropriate case, in my view, an initial substantial contribution by one party may be "eroded" to a greater or lesser extent by the later contributions of the other party even though those later contributions do not necessarily at any particular point outstrip those of the other party.…”
“I think it is legitimate for me to say, as I was a member of the Full Court in Le Steere and Le Steere (1985) FLC 91-626, that His Honour has read too much into the passage to which he refers and that the term "off-setting contribution" does not necessarily mean "greater contribution". It simply reflects the circumstance that the respective contributions of the parties over a long period of marriage "offset" the significance which might otherwise be attached to a greater initial contribution by one party. This is, in my view, made clear by the Full Court in White and White (1982) FLC 91-246 where that court pointed out that the principal in Crawford and Crawford (1979) FLC 90 - 647 is that the original contribution should not be carried forward as a mathematical proportion; ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be later factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution".
28. In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home …”
The wife’s initially greater financial contribution was used to good effect in the purchase and renovation of the Heathmont property. However, the husband also made a substantial, though not so great, financial contribution to the acquisition and renovation of that property. Moreover, his earnings were considerably greater over the period of their eight and a half year marriage and he made post-separation capital contributions in the form of the reduction of the capital outstanding under the mortgage and savings. In my view, the wife’s somewhat greater initial contribution has been offset, so to speak, by the husband’s somewhat greater subsequent financial contributions. In my view, there should be no adjustment for the wife’s initially greater contribution or for the husband’s subsequently greater financial contribution. I would continue to be of this view even if, contrary to my conclusion expressed earlier, the wife’s $5,000 long service leave should be treated as a capital contribution.
In relation to paragraph 79(4)(b) of the FLA, both parties made non-financial contributions to the value of the Heathmont property, in the form of working on the renovations and the garden. I am satisfied that the husband made a somewhat greater contribution than the wife in these respects. The parties paid the general expenses of the family through a joint account, so this is not a case where one party paid the mortgage and the other made an indirect contribution to the property by paying for the utilities and other household expenses.
In relation to paragraph 79(4)(c) of the FLA, both parties made substantial contributions to the welfare of the family and the children of the parties. The wife made a somewhat greater contribution in the role of homemaker and parent.
There was a question about whether the wife’s contributions to the renovations on the husband’s grandfather’s property could be characterised as a contribution for the welfare of the family. The renovations to that property were partly for the benefit of the parties, as they were living there, but the renovations were beyond the level that a tenant would normally undertake. The wife derived no lasting benefit from the renovations, while the husband perhaps did, by improving an asset which he or other family members may one day inherit, and perhaps by increasing the goodwill which his other family members may feel towards him.
In my view, the wife generously contributed to the renovation of the husband’s grandfather’s property for the benefit of the husband and his family. In that sense, they were contributions to the welfare of the family, consisting at that stage of the husband and the wife. I am only able to take into account in a general way the wife’s contributions to the grandfather’s property, given that they were not quantified.
Section 79(4)(d) to (g)
In relation to paragraph 79(4)(d) of the FLA, it was not submitted by the parties that the orders that were sought would have any effect on the earning capacity of the parties. It appears to me that any orders which I might make in this matter would not have an effect on the earning capacity of either party to the marriage.
The matters referred to in paragraph 79(4)(e) of the FLA are considered further below.
In relation to paragraph 79(4)(f) of the FLA, it was not submitted that there was any other relevant order under the FLA affecting a party to the marriage or a child of the marriage.
In relation to paragraph 79(4)(g) of the FLA, the husband has been assessed to pay to the wife child support of $123 per week for the children of the marriage and is paying that amount. The husband is in employment and it seems very likely that he will continue to pay child support as assessed. The children are living week and week about with each of their parents, so the child care responsibilities of the husband and the wife are equal.
Section 75(2) factors
In relation to paragraph 75(2)(a) of the FLA, the husband is 48 years of age and in good health. The wife is 44 years of age and, apart from her back pain, is in good health. The wife is able to work in her profession, though her back pain prevents her from working more than 25 hours per week.
In relation to paragraph 75(2)(b) of the FLA, the income of the husband is about $79,000 per year and the income of the wife is about $45,000 per year. It appears that the only property of the parties is that contained in the asset pool described above. The financial resources of the parties appear to consist only of their incomes and their asset pool. Subject to the limitations imposed by the wife’s back pain, each of the parties has the capacity for professional employment.
In relation to paragraph 75(2)(c) of the FLA, the parties have equal time with the children of the marriage.
In relation to paragraph 75(2)(d) of the FLA, the wife has a duty to maintain her 17 year old son Ben. However, he is presently living with his father. Given Ben’s age, the wife’s financial responsibility for Ben will be of a fairly short duration. Otherwise, the parties only have the usual commitments that are required to support themselves and their children.
In relation to paragraphs 75(2)(e) and (f) of the FLA, there was no suggestion that these factors are relevant in the present proceeding.
In relation to paragraph 75(2)(g) of the FLA, I note that the court is to take into account a standard of living that in all the circumstances of the case would be reasonable for both of the parties. In this case, there are now two households to support and, it appears, no additional sources of income. It is to be expected that the standard of living of both parties will be less than it was. Within the constraints of the presently available sources of income and the asset pool, the court should endeavour to ensure that the standard of living of both of the parties is reasonable.
In relation to paragraph 75(2)(h) of the FLA, the application for spousal maintenance was withdrawn. In any event, there was no suggestion that the property settlement in this case would be used to increase the earning capacity of either party.
In relation to paragraph 75(2)(ha) of the FLA, there appear to be no creditors other than the mortgagee of the Heathmont property. It is anticipated that the mortgagee will either be paid in the normal course of the mortgage or will be paid if the property is sold. Accordingly, this consideration is not of any particular significance in this matter.
In relation to paragraph 75(2)(j) of the FLA, both parties were professionally qualified when they met. There was no suggestion that during the course of the marriage either of them undertook further training that the other party supported. They have each contributed to the joint asset pool. The wife may have contributed marginally to the husband’s potential financial resources by contributing to the renovation of his grandfather’s property. However, this possibility is too vague and speculative for any weight to be given to it in relation to s.75(2)(na) of the FLA.
In relation to paragraph 75(2)(k) of the FLA, the marriage lasted about eight and half years, which makes it of a medium duration, though perhaps towards the shorter end of a medium duration. The marriage in itself did not substantially affect the earning capacity of either party. Both were professionally qualified when they met and have continued to work in professional capacities throughout and since the marriage. It is conceivable that both of the parties could have progressed further in their careers if they had not undertaken child care and had been quite driven in their work. However, it cannot be said in this case that either party has sacrificed his or her career to a significant extent for the benefit of the marriage or the children.
In relation to paragraph 75(2)(l) of the FLA, both parties wish to continue in their roles as parents, and will do so on a week and week about basis.
In relation to paragraph 75(2)(m) of the FLA, there was no suggestion that either party was cohabiting with any other person, except the children of the marriage.
In relation to paragraph 75(2)(n) of the FLA, there was no suggestion that either party is bankrupt. The proposed orders are that the husband pay to the wife an appropriate sum in exchange for her transferring her interest in the Heathmont property to the husband, and that there be adjustments in favour of the wife in relation to the difference in the values of the parties’ superannuation and cars. The precise amount of the appropriate sum and the adjustments needs to be worked out in the light of all the relevant considerations stipulated by the applicable legislation.
In relation to paragraph 75(2)(na) of the FLA, the husband is paying child support of $123 per week to the wife. The husband is likely to continue to do so. The child support being paid amounts to about $6,400 per year. It has the effect of increasing the wife’s annual income by about $6,400 and decreasing the husband’s annual income by a corresponding amount, at least while both children are under 18 years of age. They will both turn 18 in about 10 years time. The effect of the child support payments is that the husband’s annual income will be effectively reduced to about $73,000 and the wife’s annual income will be increased to about $51,000, a difference of about $22,000 before tax. They both have equal time with the children and, accordingly, equal expenses associated with the children.
In relation to paragraph 75(2)(o) of the FLA, there do not appear to be any relevant matters, other than those stipulated by the legislation.
In relation to paragraph 75(2)(m) of the FLA, there was no suggestion that there is any relevant financial agreement that is binding on the parties, other than the mortgage on the Heathmont property.
Resolution
In my view, the parties’ overall contributions to the joint asset pool have been equal. The factors that might require an adjustment in the wife’s favour are the difference between the parties’ incomes and the wife’s health, which somewhat limits her capacity to work. In my view, in the light of all the considerations mentioned above, it is just and equitable to make an adjustment to equalise the value of the parties’ superannuation, and to give the wife 55% of the equity in the parties’ asset pool, except for the contents of their respective homes, which the parties have indicated they will adjust between themselves.
I consider that the superannuation of the parties should be equal, rather than adjusted in favour of the wife, because it is a long term asset that both parties have, in effect, contributed to more or less equally. The division of the other assets on the basis of 55% to the wife and 45% to the husband, in my view, makes adequate provision for the wife’s lower earning capacity. I do not consider that more than 55% should be given to the wife in circumstances where the parties have contributed equally to the asset pool and the parties will each have equal child care responsibilities in the future.
The wife submitted that the adjustment for superannuation should be by way of cash. I accept that it would be advantageous to the wife to receive the difference in the superannuation as cash. However, in my view, that would impose an unreasonable burden on the husband. Legislative reform has permitted one party’s superannuation to be split in such a way that it stands to the credit of the other party and grows in value as superannuation. That is the just and equitable approach in this case. The trustee of the MLC superannuation fund has been notified of the orders relating to superannuation proposed by the husband, and is content that they are made, provided that certain changes are made to them. In my view, it is appropriate to make orders in the terms the trustee accepts. That is, in substance, that $13,000 be allocated to the wife from the husband’s MLC fund.
Otherwise, the husband will be ordered to pay the wife, on or before 13 October 2006, 55% of the joint asset pool, excluding the value of the home contents and superannuation, that is to say: $256,000 minus $4,500 equals $251,500; $251,500 multiplied by 55% equals $138,325. Orders will also be made that, if the husband fails to pay the wife that sum by 13 October 2006, the Heathmont property will be sold and the equivalent payments made. I am satisfied that these orders are just and equitable in the circumstances of this case.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Riley FM
Associate: Melissa Gangemi
Date: 1 September 2006
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