BALL & VARSITY
[2010] FamCA 95
•5 February 2010 (Corrigenda)
FAMILY COURT OF AUSTRALIA
| BALL & VARSITY | [2010] FamCA 95 |
| FAMILY LAW – PROPERTY - Distribution of property between husband and wife - Contributions - Contributions during cohabitation were equal - Husband argued there should be an adjustment in his favour as a consequence of his greater initial contribution as well as greater post separation contributions, particularly as a parent - Husband failed to give full and frank disclosure of relevant financial matters - Two younger children live with the husband, the oldest child lives between the two homes - Notional add backs - Treatment of paid legal fees - Orders made distributing the available assets 55 per cent to the husband and 45 per cent to the wife |
| Family Law Act 1975 (Cth) ss s 75(2), 79(2), 79(4)(a), (b), (c), Child Support (Assessment) Act 1989 Evidence Act 1995 (Cth) Family Law Rules 2004 |
| Weir v Weir (1993) FLC 92-338 Russell v Russell (1999) FLC 92-877 Biltoft v Biltoft (1995) FLC 92-614 Farmer and Bramley (2000) FLC 93-060 |
| APPLICANT: | Ms Ball |
| RESPONDENT: | Mr Varsity |
| FILE NUMBER: | (P)NCC | 1521 | of | 2007 |
| DATE DELIVERED: | 5 February 2010 (Corrigenda) |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | The Hon. Justice Ryan |
| HEARING DATES: | 8, 9 & 10 December 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Levick |
| SOLICITOR FOR THE APPLICANT: | Boyd Olsen Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Schonell |
| SOLICITOR FOR THE RESPONDENT: | Karras Partners Lawyers |
orders
Within eight weeks the husband shall do all acts and things and execute all documents necessary to transfer to the wife all of his right, title and interest in the properties known as the N Business, T Street, N being the land in Folio Identifiers …, ..., … and the land situate and known as 3 T Street, N, being the land contained in Folio Identifier ….
Within eight weeks the husband shall do all acts and things and sign all documents necessary to transfer to the wife his right, title and interest in the business owned by the parties and trading as “The N Store” including the associated liquor license.
Within eight weeks the husband shall pay to the wife $285,162.00.
Unless the parties sell the F Farm property from which proceeds the wife is paid the adjusting amount, in the event that the husband fails to comply with Order 3 he shall pay interest to the wife on the balance outstanding calculated at the rate prescribed by the Family Law Rules.
Simultaneously with the husband’s compliance with Order (3) above the wife shall do all acts and things and execute all documents to transfer to the husband all of her right, title and interest in the property known as F Farm being the land contained in Folio Identifier ….
That those business partnerships between the husband and the wife which have not already been dissolved are dissolved as at the date of these orders.
That in default of the husband complying with Orders (3) and (4) or either of them the parties shall do all acts and things and sign all documents necessary to list the property situate at and known as F Farm for sale by private treaty and the following provisions apply:
6.1The price be as agreed and failing agreement as determined by a valuer nominated by the President of the Institute of Valuers, the cost to be borne equally by the parties;
6.2The agent be as agreed or as determined by the President of the Real Estate Institute of New South Wales, the cost to be borne equally by the parties;
6.3The solicitor for the husband have conduct of the sale on behalf of the parties;
6.4The property be listed by private treaty for a period of four months.
6.5If the property is not sold during the four months referred to in Order 6.4 the property be listed for sale by public auction within a further eight weeks, the reserve price at such auction to be as agreed and failing agreement determined in accordance with Order 6.1 herein;
6.6If the property is not sold at auction in accordance with the provisions of Order 6.5 the property be listed for sale by private treaty at an agreed price or failing agreement realised in accordance with further order.
6.7That on the settlement of the sale of the property the net proceeds be paid as follows:
6.7.1in payment of real estate agent’s commission and legal costs of sale;
6.7.2in discharge of the mortgage secured on the property;
6.7.3in payment of rate adjustment;
6.7.445 per cent to the wife plus the equivalent of any rate adjustment made in favour of the vendor and the amount if any paid pursuant to Order 6.7.3 less the sum of $74,752.00 which shall be paid to the husband, and
6.7.5to the husband the balance.
Unless otherwise specified in these orders each party is solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purposes bank accounts are deemed to be in the possession of the person whose name appears on the banks records thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.
That the parties shall sign all documents necessary to instruct Merrick Spicer Solicitors to distribute funds held by them on trust for the parties in the proportion of 55 per cent to the husband and the balance to the wife.
That the parties shall sign all documents necessary to instruct the Commonwealth Bank to distribute joint funds held by them in the account ending with 994 in the proportion of 45 per cent to the wife, $3,500 to D’s orthodontist and the balance to the husband.
In the event that either party refuses or neglects to execute any deed or instrument in order to give validity and operation to these orders then a Registrar of this Court is appointed pursuant to s 106A of the Family Law Act 1975 to execute such document or documents on behalf of the defaulting party and to do all acts and things to give validity thereto.
Subject to any application for costs all outstanding applications are dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Ball & Varsity approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT NEWCASTLE |
FILE NUMBER: (P)NCC 1521 of 2007
| MS BALL |
Applicant
And
| MR VARSITY |
Respondent
REASONS FOR JUDGMENT
These are proceedings for property settlement and parenting orders.
On the second day of the hearing, the parties reached agreement about their children’s living arrangements. Consequently, only the property settlement applications required adjudication. The parties most valuable assets comprise a farm at F and a store and associated real estate at N. They agreed that the husband should retain F Farm and that the wife should have the store at N. With few exceptions of the remaining assets, they were generally in agreement as to the specific assets which each of them would receive. Ultimately, the pivotal issues for the hearing were the extent of their respective interests in the matrimonial assets and, the consequential adjustment which the husband would need to pay the wife in order to retain F Farm.
Short History
Mr Varsity (the husband) was born in 1958. The husband is now aged 51.
In 1967, Ms Ball (the wife) was born. The wife is now aged 43.
The parties were married in 1985 which is when they commenced cohabitation.
In July 1993 the parties eldest child, D was born.
J, who is the parties middle child, was born in June 1996.
In March 2002 the parties youngest child, B was born.
The parties separated on 26 March 2006. At separation the children remained with the husband at the farm at F. The wife returned to N to run the store.
The wife initiated parenting proceedings in the Federal Magistrates Court on 20 June 2007.
The parties were divorced on 26 July 2007.
On 10 October 2007 interim orders were made whereby D and J were to continue to live with the husband and B was to live with the wife. In his Response the husband applied for property settlement orders.
On 26 March 2008, the parties entered into final parenting orders. No orders were made in relation to D, who was then living with the husband. It was agreed that J and B would live with each of their parents on a week about basis during school term and for one half of the school holidays.
By 25 July 2008, the equal time arrangement in so far as it related to J spending time with the wife had broken down. Since then, J’s time with the wife has been limited.
Parenting Orders
On 9 December 2009, by consent and with the support of the Independent Children’s Lawyer, I made parenting orders which are set out below
(1)That these orders have effect from the conclusion of Term IV 2009.
(2)That all previous orders with respect to the children [D], born […] July, 1993, [J], born […] June, 1996 and [B] born […] June, 2002, be discharged.
(3)That the wife and the husband have shared parental responsibility for making all decisions in relation to the major long term issues concerning the children of the marriage, [D], born […] July, 1993, [J], born […] June, 1996 and [B] born […] June, 2002, such major long term decisions to include:
3.1Children’s education, both current and future;
3.2Children’s religious and cultural upbringing;
3.3Children’s health;
3.4Children’s names.
(4)That the children [J], born […] June, 1996 and [B], born […] June, 2002, (“[B]”) live with the husband.
(5)That [B] spend time with the wife as follows:
5.1During school terms, each alternate week from the conclusion of school on Thursday, or 3.00 pm Thursday on a day which is not a school day, to the commencement of school on the following Tuesday, or 9.00 am in the event Tuesday is not a school day, the first such period to commence on the first Thursday of school term in odd numbered years, and the second Thursday of school term in even numbered years;
5.2Half of each school holiday period, being the first half in such holidays commencing in even numbered years and the second half of such holidays commencing in odd numbered years;
5.3On the weekend including Mother’s Day from 6.00 pm Saturday to 6.00 pm on Mother’s Day.
(6)That the time the child [B] spends with the wife be suspended on the weekend of Father’s Day from 6.00 pm on the Saturday to 6.00 pm on Father’s Day.
(7)That the child [J] spend time with the mother as agreed between [J] and the mother.
(8)For the purpose of Order 5.2 school holidays be deemed to commence at the conclusion of school on the last day of the school term and to conclude at the commencement of school on the first day of the following term, and the mid point of such holidays shall be deemed to be 5.00pm on the day half way between the commencement of the holidays and the conclusion of the holidays.
(9)For the purposes of implementing Order 5, the changeover is to take place at the conclusion of school at the school attended by [B] and if the handover occasion coincides with a public holiday, or is otherwise not a school day, the changeover shall take place at [G Centre].
(10)[B] communicate with the parent whom he is not then living, or spending time with, by telephone whenever he so chooses and for that purpose the parent with whom [B] is living shall make a telephone service available for [B] to contact the other parent.
(11)Each parent shall advise the other in writing of all changes of contact telephone numbers at the earliest possible opportunity and within 48 hours of any such change.
(12)That each parent ensure [B] attends his school on days which are scheduled school days unless [B] is ill and unable to attend school.
(13)That both parties do all acts and things and sign all documents necessary to cause [B] to be enrolled for the 2010 school year and thereafter during his primary school education, unless otherwise agreed in writing between the parents, at […] Primary School.
(14)Each parent shall advise the other promptly in the event that any of the children sustains an injury or suffers serious illness, whilst in their care.
(15)Each parent shall be at liberty to approach the children’s schools or educational institutions and obtain information about the child or any of the children’s attendances at that school or educational institution and to receive all report cards, all reports and other usual communications given to parents and these orders shall be sufficient authority to the principal or relevant officer of that educational institution to provide such information to that parent.
(16)Each of the parents is restrained from denigrating the other, or members of the other’s family to, or in the presence of, the children.
(17)That the wife and the husband each party pay their own costs of and with respect to the parenting proceedings.
(18)That within 28 days each of the parties pay, in the amount of $3,300.00 inclusive of GST each, the cost of the Independent Children’s Lawyer, or so much as remains unpaid.
The Issues
The parties agreed contributions made by or on their behalf during cohabitation were equal.
The key issues which required determination were:
·The husbands’ contention that there should be an adjustment in his favour as a consequence of his greater initial contribution.
·The husbands’ contention that post separation his contributions, particularly as a parent, exceeded the wife’s overall post separation contributions and warranted an adjustment in his favour.
·The wife’s contention that the husband failed to give full and frank disclosure of relevant financial matters.
·The wife’s contention that there should be no s 75(2) adjustment or in the alternative none greater than five per cent, in the husband’s favour.
·The husband’s contention there should be a s 75(2) adjustment of ten per cent in his favour.
·A small number of issues in relation to the formulation of the pool of matrimonial assets; in particular in relation to add backs and a number of liabilities.
Disclosure and Credit
It was the wife’s contention the husband failed to comply with his obligation to give full and frank disclosure of all material facts. The principles which guide the determination of this issue are well settled. In Weir v Weir (1993) FLC 92-338, the Full Court said at 79,593:
This court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black v Kellner (1992) FLC 92-287 that it is the duty of a party involved in property proceedings in this jurisdiction to make full and frank disclosure of their financial affairs.
As to the effect of non disclosure their Honours in Weir v Weir said [at 79,593]:
It seems to us that once it has been established that there has been a deliberate non-disclosure….then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
These principles have received widespread appellate support.
The husband failed to disclose to the wife or in his written evidence the disposition of matrimonial assets. These included, in the period immediately after separation the sale of an Isuzu truck, a Steer loader and bulldozer. According to the husband these transactions netted him $33,000. The husband was unable to explain why, having sworn the number of affidavits and financial statements he had following those transactions, he made no mention of them. It would be something of an understatement to describe the manner in which the husband dealt with this issue in cross examination as cavalier. It was his evidence that the tractor, which was purchased three years earlier for $53,500 sold for $15,000 to a person who he was unable to identify. The husband said there was no paperwork associated with the transaction and produced no bank records which evidenced receipt of the sale monies. The few details the husband deigned to proffer in relation to these transactions were insufficient to undertake any further lines of enquiry to establish the accuracy of the details he gave. Although the husband was able to recall the amounts for which he sold the other two items he was similarly unable to recall the full names of the purchasers and failed to produce any paperwork associated with the transactions or the bank accounts into which these sizeable payments were deposited. Again the evidence concerning the disposition of these items was so vague it was impossible for the wife to enquire of others whether the details which the husband provided were accurate.
In July 2009 the husband purchased a shop business at S called “S Shop”. The husband first disclosed this acquisition in a financial statement filed at the commencement of this hearing. For some months prior to the hearing the wife, who had information which led her to believe the husband had purchased S Shop, called there three or four times a week. On most occasions when she called the wife recognised the husband’s voice when he answered the telephone. The frequency with which he answered the telephone established that he was significantly involved in the day to day running of the store. The husband’s disclosure of his acquisition of S Shop was only made after he knew the wife has discovered it. Again the husband provided no documents to corroborate his evidence concerning the transaction details. He failed to produce any documents which established his evidence that the expenses associated with the business exceed its income. As to the later the husband failed to disclose any evidence of the income earned in the business.
Each time the husband swore a financial statement, he swore that he had read Pt 13.1 and Pt 13.2 of the Family Law Rules 2004 and that he was aware of his duty “to give full and frank disclosure of all information relevant to the issues in the case in a timely manner”. In relation to S Shop and the transactions discussed earlier, the husband was aware of his obligations to give timely disclosure. He failed to comply with the disclosure rules in relation to timeliness of the S Shop transaction, its income or at all in relation to the disposition of assets already discussed. Later in these reasons I will discuss other areas where the husband’s disclosure was inadequate or his evidence was misleading.
Counsel for each of the parties conceded there were deficiencies in the way their respective clients gave evidence. Counsel for the wife conceded the wife was untruthful about the extent of violence her former partner inflicted upon her and the effect of his behaviour upon the children. In this respect it is beyond dispute that the wife failed to comply with her obligation to give full and frank disclosure of all material facts in the parenting aspect of the proceedings.
Counsel for the husband expressed the view that if one was to prepare for potential witnesses a video about how not to give evidence one could do no better than replay a recording of the parties’ oral testimony. Insofar as that observation related to the husband I agree. Far from the husband’s protestations that he was merely trying to assist he left me strongly satisfied that his evidence was motivated to obfuscate rather than reveal information which he did not want to disclose. A simple vignette of the type of evidence to which I refer relates to the husband’s evidence concerning events at S Shop in which he was involved only four days earlier. On the Sunday prior to the hearing a private investigator retained by the wife observed S Shop. The wife had in her possession photographs of the husband carrying boxes of goods into the shop and information about who was present with the husband running the store. The husband resisted answering question after question from the wife’s counsel about that day, pretending he was unable to remember.
In a similar vein, when trying to resist a suggestion he disclosed information about the acquisition of S Shop only after the wife revealed aspects of the transaction in her affidavit, the husband said he had not read it. It was suggested to the husband that it defied credulity that a person would spend over $250,000 on legal fees but would not have sufficient interest in the case mounted against them to read the other parties evidence. This observation prompted the husband to observe that he may have read parts of some of the wife’s documents. The husband agreed that although he has some limitations with literacy he had read all of the documents filed in his case. This was consistent with the jurat attached to the husband’s affidavits and financial statements. The husband’s evidence concerning his failure to read the wife’s evidence was frankly incredible. As he gave evidence on this topic he left me with a strong sense that he was making it up on the run. I am bolstered in my view that the husband only disclosed his ownership of S Shop after the wife mentioned it in her affidavit by his failure to produce a single document connected with the acquisition or operation of the business.
Counsel for the husband submitted, in effect, that I would be unable to distinguish between the wife’s untruthfulness and the husband’s failure to comply with his disclosure obligations and otherwise poor presentation as a witness. I do not agree. There are a number of points of distinction. These include that the wife’s deficiencies as a witness related to a different subject matter and she made concessions more readily than the husband. In her affidavit evidence, the wife gave a much more balanced account of the parties’ contributions than the husband did. By the time the wife completed her evidence I was satisfied she had revealed the truth on matters in issue. I was not so satisfied about the husband’s evidence and am strongly satisfied that the husband deliberately failed to disclose information, income and produce relevant documents. As to matters of credit the effect of these findings is that unless stated differently, where there is a conflict between the evidence given by the husband and that given by the wife on otherwise uncorroborated matters, the wife’s testimony has been preferred.
General principles for the adjustment of matrimonial property
The approach to the determination of an application under s 79 is well established by authority. In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595. The process ordinarily involves a four part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in s 79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. I must then evaluate the matters contained in s 75(2) insofar as they are relevant, any other order made under the Act affecting a party or child and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide, or might be liable to provide in the future, for a child to the marriage.
In determining what order the Court should make under s 79, the Court must be satisfied in all the circumstances that it is just and equitable to do so (s 79(2)). It is the justice and equity of the actual orders that the Court must consider. Russell v Russell (1999) FLC 92-877.
Background Facts
Throughout these reasons statements of fact are findings of fact determined upon the balance of probabilities. Section 140 Evidence Act 1995 (Cth).
In 1981, which was before the parties met, the husband was involved in a serious motor cycle accident in which he severely injured his right leg and pelvis.
By memorandum of transfer registered on 20 August 1981 the husband’s parents transferred to him title in a vacant block of land at M Street. On 1 September 1981[1] the husband’s parents lodged a caveat against the land in which they claimed an interest in it “under unregistered mortgage dated 4 August 1982”. The husband did not disclose the existence of the caveat and his affidavit was silent about his parent’s unregistered mortgage. In cross examination the husband denied that he owed his parents money or that he was party to an unregistered mortgage. The husband gave no credible explanation for his parent’s caveat. Although the husband denied it, shortly before the sale of M Street he told the wife that he owed money to his parents for the property in relation to which there was a caveat. The husband’s father is now deceased and his mother is alive. The husband’s mother did not give evidence. The existence of the caveat, reference therein to an unregistered mortgage, combined with the husband’s discussion referred to with the wife and his failure to disclose the existence of the caveat persuades me the husband had a debt to his parents in relation to the land which he failed to disclose in these proceedings. The evidence does not able me to precisely determine the magnitude of the debt. However, it is unlikely that the amount due was insignificant as it would have been unlikely that his parents would have gone to the effort of requiring the husband to execute a mortgage and themselves lodge a caveat if the amount due to them was small.
[1]Annexure ‘I’ wife’s affidavit 6 May 2009
In April 1983 in equal partnership with his brother, the husband purchased an unrenovated house at C Street for $33,000. The husband did not disclose how he funded this acquisition.
On 3 July 1984 the husband and his brother sold C Street for $48,500. From his share from the C Street sale proceeds, the husband said he paid out the liabilities of a personal services business he owned. However the husband did not acquire the personal services business until after the parties met, which was after he sold C Street. I infer that the husband used his share of the sale proceeds, in whatever amount he received, for a purpose not revealed by the evidence. However the proceeds were used the use it was unrelated to these proceedings. So that it is clear the husband failed to establish that such funds as he received from the sale of C Street formed part of his initial contribution to the matrimonial assets.
The parties met in late 1984 at which time the wife was a school student and the husband worked as a tradesman. By the time the parties were engaged in early 1985 the wife was employed full time as a trainee sales agent and attended a sales industry course.
The parties agreed that after they met the husband acquired a personal services business and associated rental premises from his uncle. The wife was not involved in the decision to acquire the business. Nonetheless she gave up her work as a sales agent and began working at the business as an apprentice. The husband also employed a senior employee. Quickly it became apparent that the business was poorly located and its takings were less than its expenses.
The husband received $80,000.00 compensation for his 1981 motor cycle accident. There was an issue as to when these monies were received. It was the husband’s evidence he received his compensation funds prior to meeting the wife. The wife said the husband only claimed compensation at her prompting and that he received his award in 1985. The wife gave a detailed account of her role in assisting the husband with his compensation claim. Again the husband failed to produce any documents, which should be available, to support his contention. On balance I am persuaded that the husband received his compensation payment after the parties met and in the circumstances described by the wife. I am also satisfied that from the settlement monies the husband paid $20,000 - $30,000 for the personal services business’ liabilities.
Without payment in mid 1985 the husband transferred the lease on the personal services businesses premises and the store to an unrelated third party. The wife found employment as an apprentice in the same industry.
It was the husband’s evidence that he commenced construction of a house on the M Street land in about 1984 which was completed by the time the parties married in September 1985. The wife said that for the first six months following the parties’ marriage, they lived in a caravan located on the husband’s parent’s property during which period the parties commenced building the house. The parties agreed that the construction was an owner builder venture with various contractors employed as required. After about six months, the wife said the parties moved their caravan to the M Street property which was where they lived until the house was ready for occupation in about 1987. The wife gave a detailed account of the work she performed. It was her evidence that both parties were in full time employment and outside their working hours, they effectively worked side by side at the property. The wife recalled that the cost of building the house was approximately $60,000 which funds were drawn from the parties’ wages and the remainder from the husband’s compensation monies. The evidence did not reveal the income which the parties then earned. However given the nature of the wife’s employment and that she had not long finished school I infer her income was relatively modest and probably less than that which the husband received. The husband proffered little evidence concerning the erection of the house or its cost. When these factors are combined with my earlier findings concerning the husband’s veracity on financial matters, I am satisfied that the house was completed subsequent to the parties marriage and in the manner described by the wife. It follows that I accept the wife also contributed to M Street and that I do not accept that the amount for which the property was subsequently sold was a contribution made solely by the husband.
The effect of these findings is that at the commencement of cohabitation the husband owned the vacant M Street land worth about $20,000 (as admitted by the wife), $5,000 from the sale of a 1934 vehicle, a Dodge truck and a portion of his compensation payment. The husband owed a not insignificant sum of money to his parents, which was secured by a caveat on the M Street land.
At the commencement of cohabitation the wife owned a Morris Minor car, some linen and crockery. Notwithstanding the uncertainty about the magnitude of the husband’s debt to his parents at the commencement of cohabitation he made a greater initial contribution than the wife.
In August 1988 the husband sold the M Street property for $165,000.00. I infer that the sale price reflected the value of the property as at the date of the parties marriage ($20,000), the value of the improvements (about $60,000), the effect of the parties efforts in maintaining the property and subsequent movements in the property market.
On 8 August 1988 the parties purchased a property at B Street for $112,000.00 for which the entire purchase price was drawn from the M Street sale proceeds. The difference between the M Street sale price and B Street purchase price was $53,000. From this sum the wife spent about $10,000 on a holiday with her parents. Absent any evidence from the husband concerning the disposition of the balance of these funds, I am satisfied a not insignificant proportion represented the amount which the husband owed his parents pursuant to their unregistered mortgage. It is also likely that a proportion was applied towards the subsequent B Street development.
The parties realised the development opportunity presented by B Street and it became the first of a series of property developments undertaken by them. The parties moved into one room and then personally renovated the existing dwelling. The wife performed all necessary works for subdivision, development and building approval for a second dwelling on the subdivided block. During this development the wife worked alongside the husband at the site.
On 21 August 1989 the parties purchased a residential investment property at J for $80,500. The purchase was funded with monies advanced by the Commonwealth Bank. The property was tenanted until its sale in September 1993 for $108,500. The Commonwealth Bank mortgage secured thereon was discharged at the point of sale.
The subdivision of the B Street land was registered on 30 May 1990. Two months later, the parties sold the original home which they had renovated on B Street for $120,000. They then purchased a caravan in which they lived until they occupied one of the two strata duplex dwellings they built on the remaining sub divided B Street property. The parties had cleared the property and the concrete slab was poured for the duplexes before the wife travelled overseas with her parents. During the six weeks the wife was away the husband completed the duplexes to “lock up” stage. In total, it took between six to nine months for the duplexes to be completed. Upon completion, the parties moved into one duplex. They sold one duplex on 7 June 1991 for $118,000 and the second in August 1991 for $114,000.
In July 1990 the parties purchased land at H for $58,000. This purchase was funded from the B Street proceeds. The parties successfully applied for approval to build two shops and a home unit on the H land. They managed the development for which the husband personally completed the concreting and the wife made some of the arrangements for contractors.
On 14 August 1991 the parties purchased a property at P Street for $124,500. The parties used funds derived from the B Street sales to pay for the P Street acquisition. The parties renovated the original home at P Street and as she had with their earlier development applications, the wife attended to all the work required for the successful subdivision of the P Street land. The P Street subdivision was registered on 16 July 1992. The parties then owner built a house on the subdivided land. The original P Street home was sold in March 1993 for $130,000 whereupon the parties moved into the home which they constructed on the subdivided portion. The home in which they lived was unencumbered and the cost of construction was met from their savings and property sale proceeds.
D was born in July 1993. About two months earlier the wife gave up paid employment. From when D was born and until the parties separated the wife was primarily responsible for the children’s care and running the parties homes. Throughout this period the husband had full time work, primarily as a tradesman and in property development. He was involved with the children’s care outside of his working hours.
On 1 November 1993 the parties sold their home at P Street for $137,500 and the same day completed the purchase of L Street for $135,900. The parties borrowed money from the Commonwealth Bank to fund the purchase of L Street, costs of subdivision, to renovate the existing house and complete the erection of a second house on the subdivided block. Upon settlement the parties moved into L Street. The wife submitted plans for its subdivision and development which she prepared.
On 7 February 1994 the parties purchased a block of land at O Street for $113,500. This purchase was funded from the sale proceeds of the P Street properties.
Not without difficulty, the parties were able to subdivide the L Street land which subdivision was registered in September 1994. Again the parties owner built a second house on the subdivided property which, for a time they lived in. The original L Street home was sold in September 1994 for $153,500 following which the parties moved into the home which they built on the subdivided land at L Street. This property was sold in January 1995 for $166,500. From the sale proceeds the parties discharged the Commonwealth Bank mortgage secured over the O Street property.
In December 1994 the parties purchased land for $72,000 at H which abutted the H property they owned. This purchase was funded from the sale proceeds of the L Street development and the J property investment property.
The parties developed the O Street property as they had the other properties, that is obtained approval to subdivide the block whereupon they owner built a second home on the newly created block. The parties sold the original house on O Street to the wife’s parents in September 1995 for $80,000. The sale proceeds partially discharged the Commonwealth Bank mortgage which had been raised for the O Street development. The parties moved into the newly built O Street home which they sold later that year for $136,000.
On 7 April 1995 the parties purchased a house on a large block of land at R Street for $137,000. This property was purchased unencumbered. The parties undertook minor tidying up repairs to the house and again subdivided the land.
In September 1995 the parties purchased a farm at F for $180,000. They borrowed funds from the Commonwealth Bank to complete the purchase. The farm is about 46.12 hectares. At that time it was largely uncleared with a somewhat run down main house. Prior to separation the property was improved so that now about half is timbered and the other half is pasture. The main house was extended and renovated in about 1998. It was the husband’s evidence that the parties bought the farm in 1997 for $220,000. The transfer by which the property was acquired is consistent with the wife’s evidence as to the date of purchase and consideration. This is another simple example of the greater reliability of the wife’s evidence compared to the husband’s.
The parties sold the property at R Street for $160,000 in June 1996. They used the sale proceeds to pay for improvements to the farm at F and for the H property development. On settlement of the sale of R Street the parties moved to the farm. The husband had long been keen to run livestock, and has been overwhelmingly responsible for the animals care. He established a small but unprofitable breeding business. It was the husband’s evidence that he spent about three hours each day caring for the animals.
The second H property was developed as almost a mirror image of the development which the parties undertook on their original property at H. To do so, they borrowed funds advanced by the Commonwealth Bank. The Commonwealth Bank advanced additional funds to enable the parties to pay for improvements to the farm. As he had with the first H property acquisition the husband worked on site and project managed the development. The wife, who remained at home with the children, also dealt with many of the sub-contractors.
By the time the H property development was completed it comprised a number of shops and a residence. These properties were tenanted which tenancies were managed by the wife.
The parties sold one of the H properties in June 2002 for $350,000. After payment of Capital Gains Tax, the parties spent between $50,000 and $70,000 improving the house at F and clearing the land. The balance of the sale proceeds were deposited in a term deposit with the Commonwealth Bank.
In June 2004 the parties sold the second H property for $650,000. After payment of Capital Gains Tax, the parties spent an amount acquiring farming equipment, an Isuzu Truck, purchased land and a business at N and deposited the balance in a term deposit with the Commonwealth Bank.
The parties purchased a business called the N Business, the freehold land from where the business was conducted and two other blocks of land at N in July 2004. For the land the parties paid around $140,000. They paid $50,000 for the business plus $15,000 to $25,000 for stock. The business had a liquor licence and sold fuel. From the Commonwealth Bank the parties obtained a business loan which provided the working capital for the store. A manager was employed to run the store.
Not long afterwards the parties successfully tendered for a block of land at 3 T Street, N, for which they paid $4,000. This property the parties referred to as the “3 T Street property”.
In 2004, with a friend, the parties purchased 114 acres of vacant land at Y for $225,000. That property is not included in the matrimonial asset pool, identified as being owned at separation nor referred to in the parties financial statements. The evidence did not reveal the circumstances of its disposition. I infer that the parties disposed of the property prior to separation and agreed that the circumstances of its disposition should not influence the outcome of these proceedings.
In about March 2005 the N store was damaged by fire. A few weeks later the store was burgled and about $20,000 and some equipment was stolen. Following a police investigation the store manager disappeared.
In about April 2005 the parties and children moved to N where they lived in the accommodation attached to the store. The wife ran the store which was a seven day a week and often 12 hours a day commitment. About four weeks after the parties moved to N, the husband returned to the farm. From that time and until January 2006 it was the husband’s practice to visit N weekly for one or two nights. The wife put considerable energy into the store where she expanded the product lines and services. She obtained approval from the local Council to develop the two vacant blocks of land in relation to which the parties spent $30,000 of the Commonwealth Bank term deposit for earth works.
The elder children were unsettled at N and keen to return to the farm. Because D was due to commence secondary school in 2006, the parties agreed the wife and children would return to the farm and to employ someone to work in the store. In January 2006 the wife and children returned to the farm to live. From the farm the wife continued to manage the store where she attended twice a week.
In late March 2006 the parties separated. At the wife’s behest, the children remained with the husband at the farm and she returned to live at N where she took over day to day management of the store. As had been the situation previously this involved the wife being required to work on average seven days a week for twelve hours a day. The wife spent time with the children when they visited her at N. As will be discussed later the wife contributed income earned from the store post separation towards the farm’s expenses.
At separation the parties owned the following property:
·The former matrimonial home at F,
·Lots 1 and 2, T Street, N,
·Lot 3, T Street, N,
·T Street, N property being the premises from which the store operated,
·The motor vehicles identified at paragraph 233B of the wife’s affidavit sworn 6 May 2009,
·Plant and equipment located at the former matrimonial home identified at paragraph 233C of the wife’s same affidavit subject only to their being one horse float,
·Cattle, horse and livestock as identified in the wife’s same affidavit,
·An interest in a trade partnership which traded as Varsity & Varsity,
·N Business,
·Cash at bank and in specie as identified in paragraph 233, H, I and J of the wife’s same affidavit and which totalled about $670,000,
·Furniture and furnishings at the former matrimonial home.
At separation the parties had the following liabilities:
·$10,000 owed to Centrelink. This related to an overpayment of family tax benefit.
·Commonwealth Bank, $72,138.59
·Wife’s Commonwealth Mastercard, $274.30.
Since separation payments made by the wife reduced the Centrelink debt to $8,564.77. She has also paid about $11,362 towards farm expenses plus at least half of its council rates. In addition, from separation until 26 June 2007 the wife paid $8,990.67 in payments of principal and interest on the Commonwealth Bank loan.
Sometime during the 2006/2007 financial year the husband stopped undertaking paid building work for others. His accountant informed the single expert appointed to value the parties various business entities that he resumed these activities in a small way during the 2007/2008 financial year. In relation to this matter the husband was silent. The husband retained all income he earned post separation.
In the period following separation and prior to parenting orders which regulated the situation the children primarily lived with the husband. In this period they spent time with the wife as set out in the schedules attached to her affidavit sworn on 19 March 2009. There is no doubt that post separation and prior to the late 2007 parenting orders the husband’s role in the children’s day to day care greatly exceeded the wife’s.
On 21 September 2006, without the wife’s knowledge, the husband withdrew $85,000 from the parties joint term deposit. After the wife’s solicitors wrote to the husband, the monies were redeposited into another joint term deposit with the Commonwealth Bank.
Since separation the parties have distributed the term deposit equally between them. From the terms deposits, the parties each received the following amounts:
·On 17 August 2007, $40,000
·On 28 December 2007, $101,980
·On 11 January 2008, $35,869.88
·On 31 March 2008, $85,000
·On 10 June 2008, $133,764.81.
The wife ran the N store until April 2007. In April 2007 so as to be closer to the children and more involved in their care the wife and her then partner moved to G. The parties leased the store and by agreement the lease payments were paid into the wife’s former solicitors trust account. The lessees have recently exercised an option to continue in occupation of the store until May 2011. At present the tenant pays $2,160 gross per month.
From when the store was tenanted, it and the associated properties outgoings were paid from the monies held in the trust account or the stores trading account which the wife managed. As to the latter, once the store was tenanted the trading account was the account into which the wife deposited monies received from debtors whose liabilities had arisen whilst she ran the store. From the trust account fund the parties distributed $10,000 to each of them on 4 June 2008. Without the wife’s knowledge, on 25 July 2008 the husband withdrew a further $8,220. It was agreed that amount would be notionally added back into the pool of assets.
At about the same time the wife discovered the husband had withdrawn $5,000 from an account the parties had established for their daughter. The wife closed the two remaining accounts, being accounts established for the two younger children which funds she deposited in separate accounts.
When the wife moved to G she established a home with her then partner. From May 2007 until July 2008 the wife paid $15,289.30 rent.
On 26 June 2007 from the Commonwealth Bank joint deposit, the parties paid out the Commonwealth Bank loan, the payout figure was $69,825.78. Although the loan has been repaid the mortgage is still registered.
On 3 September 2007 interim orders were made that the children live with the husband and spend time during school term with the wife each alternate weekend from Friday until Monday and half of the school holidays. B also stayed with the wife each Tuesday.
On 10 October 2007 interim orders were made for B to live with the wife and for the older two children to remain with the husband. Notwithstanding these orders there were occasional difficulties with J who did not always spend time with the wife for periods required by the orders.
On 26 March 2008 orders were made for B and J to live week about. D remained living with the husband. By June 2008 J resided full time with the husband and rarely spent time with the wife.
In July 2008 with funds loaned by her mother, the wife purchased her present home at B for $152,000. By agreement this property and its associated liability were not included in the pool of matrimonial assets.
In September 2008 the wife was elected to a local representative body.
In November 2008 D moved to live with the wife where she remained until early February 2009.
The wife and her partner ended their relationship on 12 April 2009. Since then, other then when the children were with her, the wife resided alone.
In July 2009 the husband purchased a shop business at S called “S Business”. The husband produced no documents in relation to this transaction. It was his evidence that he purchased this business for $22,000. The husband said he transferred a VT Commodore to the vendor worth $2,500 to whom he was indebted for $12,000 in vendor finance. Although the husband made no mention of it in his evidence in chief, in cross examination he said the balance of the purchase price came from funds his friend Mr W originally advanced towards his legal fees. The husband gave no disclosure of the income earned in the business or its outgoings.
On 22 September 2009 the parties each received $10,000 from the store trust fund account.
On 13 October 2009 D moved to live with the wife where she remained until the eve of this hearing. During the hearing D lived at the farm with her boyfriend. One of the few matters upon which the parties agreed was that they have good reason to be worried about D’s future. It is impossible to conclude with any certainty where she will in the future live.
Assets, liabilities and financial resources as at the date of hearing.
The parties reached agreement as to the value of most assets and liabilities.[2]
[2] Exhibit ‘A’
I find that the parties assets, liabilities and financial resources as at the date of hearing are as identified in the following table:
Assets
Agreed
Value
F Farm (J)
Agreed
$800,000.00
N Business (J)
Agreed
$170,000.00
3 T Street, N (J)
Agreed
$7,000.00
CBA…994 (J)
Agreed
$8,200.97
Merrick Spicer Trust Account (J)
Agreed
$6,545.00
N Business Liquor Licence (J)
Agreed
$25,000.00
N business goodwill (J)
Agreed
Nil
Varsity & Varsity livestock partnership (J)
Agreed
Nil
Livestock, cattle and horses (J)
Agreed
$3,270.00
Farm plant and equipment (J)
Agreed
$6,330.00
Varsity & Varsity trade partnership (J)
Agreed
Nil
Holden Commodore (W)
Agreed
$2,000.00
Toyota Landcruiser (H)
Agreed
$1,000.00
Household contents (H)
Agreed
$5,000.00
Total
$1,034,345.00
Add backs
Agreed
Value
Sale proceeds, plant and equipment at N (W)
Agreed
$100.00
Sale proceeds of plant and equipment (H)
Agreed
$33,000.00
Monies drawn from CBA …1388 (H)
Agreed
$8,820.00
Cash at separation (H)
Not agreed
$20,000.00
Paid legal fees (W)
Not agreed
$129,322.46
Paid legal fees (H)
Not agreed
$167,716.00
Total
$358,958.46
TOTAL ASSETS
$1,393,304.46
Liabilities
Agreed
Value
Trade supplier (H)
Not Agreed
$14,300.00
Centrelink (W)
Not Agreed
$8,564.77
TOTAL LIABILITIES
$22,864.77
NET ASSETS
$1,370,439.00
There are a number of findings which require explanation.
There was agreement that S Shop and its associated liabilities would be excluded from the pool. The same approach being adopted in relation to the home which the wife purchased with funds advanced by her mother.
The parties agreed to share equally the cost of orthodontic work for D. The total cost for this work was $7,000.00 of which the wife had paid half. There is $3,500 outstanding which is the husband’s share. Potentially including the entire sum, which was the wife’s contention, or half, which was ultimately the husband’s contention, delivered a result different to the parties’ agreement. To give effect to the parties’ agreement to share equally this expense, from the husband’s share of the assets $3,500 will be ordered to be paid directly to the orthodontist.
The remaining issues concerned the inclusion or exclusion from the asset pool of assets which either no longer exist, distributions from the Commonwealth Bank term deposit, the treatment of paid legal costs and associated liabilities. In B and B [2000] FamCA 1301 (unreported) the Full Court made it clear that notional adjustments are not limited to wasted assets of the type discussed in Kowaliw v Kowaliw (1981) FLC 01-092 or Townsend v Townsend (1995) FLC 92-569 but may also include “identified items of property that have been bona fide disposed of”. Also that:
It may also be appropriate, depending on the circumstances, to notionally include in the pool of assets items of property in respect of which no or no reasonable explanation has been given for the assertion that they no longer exist or never existed: Mezzacappa and Mezzacappa (supra). In other words, it is also possible, in appropriate cases, to have regard to, and notionally include in the list of assets, what is called unascertained property the value of which is capable of some identification and quantification. In this case, the trial Judge notionally included in the pool of assets items that were capable of identification and quantification. However, he also found that there were other assets the identity of which was not known but for which an adjustment should be made in favour of the wife. There is no doubt that such a finding is open to a trial Judge.
The Full Court has been reluctant to notionally add back assets where monies that existed at separation have been spent on reasonably incurred living expenses. For example in M & M [1998] FamCA 42, Baker, Kay and Chisholm JJ held:
It is well settled that save in exceptional circumstances a trial Judge should deal with the property as at the date of the hearing and make adjustments taking into account the various matters set out under s.79. (Wells v Wells (1977) FLC 90-285; Wardman v Hudson (1978) FLC 90-466; In the Marriage of Geyl 7 Fam LR 219). However, the particular justice of the case may make it appropriate to notionally add back assets which have been demonstrated to have been dissipated either during the marriage or post-separation. Normally it is necessary to demonstrate an appropriate basis for doing so, for example by wastage such as gambling or extravagant living. (Kowaliw v Kowaliw (1981) FLC 91-092; Fane-Thompson v Fane-Thompson (1981) FLC 91-053; Winnel v Winnel (1984) FLC 91-580; Townsend v Townsend (1995) FLC 92-569; Doherty v Doherty (1996) FLC 92-652.
In a similar vein in C & C [1998] FamCA 143, the Full Court held, where the monies have been shown to have been reasonably disposed of, the notional add back approach should be the exception and not the rule.
The parties agreed to notionally add back as the husband’s asset $33,000 being the sale proceeds of the Isuzu truck, Steer Loader and bulldozer discussed earlier.
At separation the parties had $20,000 cash at the farm. It was the wife’s evidence that the husband retained the entire sum. Although he made no mention of it in his written evidence, in oral testimony the husband agreed there had been $20,000 and said that the parties each retained $10,000. After separation the husband undertook a series of transactions which he either kept secret from the wife or without first informing her took significant cash assets. For example, he withdrew $85,000 from their joint account which funds were only returned after the wife retained solicitors. Without notice to the wife he took $5,000 from a trust account the parties established for D and $8,820 from the N store account. The husband also disposed of those assets represented by the $33,000 notionally added into the asset pool. These actions were inconsistent with him having given the wife half of the $20,000. I am satisfied he did not. These were funds built up during the marriage and in relation to which it is appropriate that they remain available for distribution between the parties in the proportions which ultimately the parties’ property is divided. This approach is consistent with the parties’ agreement to add back the sale proceeds from plant and equipment from N, the husband’s withdrawal of funds from the store account and the sale proceeds he received from the steer loader, bulldozer and Isuzu truck. This is notwithstanding that the husband claimed but did not establish to my satisfaction that he had used these funds on his and the children’s living expenses. Had he disclosed these matters in his affidavit evidence his evidence on this point may have been more persuasive. In any event as to the later factor, the husband had income earned from his various business ventures, benefited from farm payments made by the wife, his savings and the term deposit distributions. Ultimately in the exercise of my discretion I am satisfied the entire $20,000 should be included as the husband’s asset.
The husband argued that the entire term deposit distributions should be notionally included in the asset pool. As I have already found these funds existed at separation and resulted from the parties joint efforts. The funds were distributed in proportions agreed by the parties. They used a significant proportion of their respective shares of these post separation distributions to pay legal costs. Consistent with the approach adopted by the Full Court in Chorn & Hopkins (2004) FLC 93-204 the wife submitted that only the parties paid legal fees should be added back. Reliant upon cases such as M & M (supra) and C & C (supra) the wife submitted that the evidence demonstrated that the balance of the funds had been used by each of the parties for their and the children’s reasonable living expenses and ought thus to be excluded from the pool. As I understood it there was no dispute that the balance of these funds which remained after the parties had paid their respective legal fees were used in the manner described. This submission is consistent with the evidence, that is, as to the disposition of the balance of the funds. In response counsel for the husband submitted that if I adopted the approach contended for by counsel for the wife I would also include as a liability $62,000 which the husband claimed Mr W paid towards his legal expenses and which he was obliged to repay. Provided the husband established he was indebted to Mr W in the manner he alleged the approach he contended for is also consistent with authority. Chorn & Hopkins (supra).
In the exercise of my discretion I have determined against the notional inclusion in the asset pool of all of the distributions made from the Commonwealth Bank term deposit. Given the passage of time since separation and the necessity for the parties and children to utilise a reasonable portion of the assets acquired prior to separation in order to maintain a reasonable standard of living, it would be erroneous to proceed as contended for by the husband. Having regard to the source of funds used to pay legal fees the argument for their inclusion is consistent with authority. Where the issue became complicated was whether the husband was indebted to Mr W as he claimed. Mr W was available to give evidence but he did not. The husband proffered no explanation why he did not nor did he produce any documents which corroborated his evidence that monies advanced by Mr W were to be repaid. The husband’s solicitors rule 19.04 costs notification was evidence of the husband’s instructions to them of the source of funds he used to pay legal costs but did not corroborate that the funds there referred to were to be repaid. These factors when combined with the husband’s compromised veracity lead me to conclude that the evidence was too unsatisfactory to conclude that the husband must repay Mr W. The purported liability will thus be excluded. Biltoft v Biltoft (1995) FLC 92-614. So as to deliver a just and equitable outcome I will exclude from the asset pool that portion of the husband’s legal fees which he said were paid by Mr W. That is $229,716 less $62,000 which is $167,716. The effect of these findings is that only paid legal fees sourced from the Commonwealth Bank term deposit will be notionally added back. Thus the husband contributed $38,000 more in paid legal fees included in the asset pool than the wife.
The husband’s evidence about a loan from his sister via a family company of $14,300 for his legal fees was slightly more satisfactory that his evidence concerning repayment of Mr W’s advance. On balance I am satisfied that the husband is required to promptly repay his sister. Accordingly as the asset is included in the pool so too is the associated liability.
Section 79(4) – the evaluation of contributions and other factors
Section 79(4) requires that the Court looks at the entirely of the contributions, both financial and non-financial, to the welfare of the family as well as to the acquisition, conservation and improvement of assets. Contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense. Farmer and Bramley (2000) FLC 93-060. In Ferraro the Full Court highlighted the difficulty involved in evaluating and balancing fundamentally different contributions. It also reinforced that the Court’s task includes evaluating the significance of the various contributions, the weighting of which is ultimately a matter for the Court.
The evaluation of financial contributions is more complex than the mere calculation of the funds introduced by each party. Antman (1980) FLC 92-800. This point is reinforced by the oft quoted comments in Pierce (1999) FLC
92 -844 where, in relation to initial contributions, the Full Court said:
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.
The parties disagreed about the extent of the husband’s initial contribution and the weight that should be attached to it.
Contrary to the husband’s stance, I have found that the funds he received from his motor bike accident were paid to him after the parties began dating but prior to the commencement of cohabitation. The husband provided no documents which evidenced disposition of his compensation funds, nor the amount which remained when the parties married. By the time the parties married, he had paid between $20,000 and $30,000 to cover losses he incurred in the personal services business. Although the husband employed the wife this was his business enterprise and there was no just and equitable basis upon which the Court could find that the wife should contribute towards these losses. The effect being that the husband was unable to bring the full value of his compensation award into the marital assets. From the funds which remained the husband contributed a not insignificant component of the $60,000, which the parties spent, building their home on the M Street land. In addition, the husband introduced the M Street land, which I have found, was worth about $20,000, the sale proceeds of a hot rod and an unvalued Dodge truck. The husband was also liable to his parents for a not insignificant sum of money. Even with the uncertainty which surrounded the extent of the husband’s liability to his parents, when my findings about the wife’s modest contribution are considered, it is beyond dispute that the husband made a greater and not insignificant initial contribution. This initial contribution set the parties in good stead.
The wife claimed a contribution towards the husband’s compensation damages award. It was her evidence that without her encouragement he would not have pursued a claim. She said she attended upon his legal advisors and various medical appointments. While the husband denied this evidence this tension was immaterial. This is because consistent with authority in most cases, a damages verdict arising from a personal injury claim, whenever received, is a contribution by the party who suffered the injury. Aleksovski (1996) FLC 92-705. Even if the wife assisted the husband in the way she suggested her efforts do not equate to a contribution towards the husband’s damages verdict.
From the time they commenced cohabitation until separation each of them contributed all of their income from whatever source to joint matrimonial purposes. This included, during the period the parties constructed their home on the M Street land, their wages.
Three years after the parties married M Street was sold for $165,000. As the history of their acquisition, development and disposition of real estate demonstrated, their interest in M Street was an important contributing factor to their ability to acquire B Street, which was the first of their acquisitions and developments. Throughout cohabitation, the parties demonstrated a remarkable capacity for hard work and diligent financial management. Whilst I do not consider that the evidence would warrant a conclusion that absent the husband’s introduction of the M Street property and the balance of his compensation funds that the parties would have been unable to acquire and develop properties in the manner which they did, his initial contribution enabled them to embark upon these projects sooner than would have otherwise been the case. I accept Counsel for the husband’s contention that the introduction by the husband of his initial contribution in effect provided the seed capital for the acquisition of B Street.
So that it is clear, I do not accept that the price received for M Street on its sale in 1988 resulted solely from contributions made by the husband. The effect of the evidence was that slightly more than half of the ultimate sale price was derived from the market response to a total capital outlay on M Street of about $80,000. No valid distinction can be drawn between the value of the efforts made by each of the parties in building and maintaining the property. The effect of these findings is that I am satisfied that the wife made a direct and indirect contribution to the ultimate price achieved for M Street, albeit when the husband’s initial contribution is taken into account, considerably less than his.
As already stated, the parties agreed that during the period of cohabitation their contributions were equal. I agree with that assessment from which it is implicit that the parties valued the wife’s contributions as a homemaker and parent in a real and substantial way. These cohabitations contributions were made for about 21 years and were very significant. Their efforts were compatible and substantial. The parties did not merely rely on the husband’s initial contribution but worked hard to improve their financial position and rear their children. While the husband’s initial contribution provided the seed capital for what followed the parties cohabitation contributions were far more substantial and significant.
Post separation it is the husband’s contention, that his contributions were greater than the wife’s. It is the wife’s contention that post separation the parties’ contributions were equal. As I have earlier found from separation until April 2007 the wife ran the store at N. There she worked on average seven days a week for 12 hours a day. She alone made payments of principle and interest on the Commonwealth Bank loan and reduced the Centerlink debt. From monies she earned from the store the wife paid $11,362 plus other expenses for the farm. Once the store was tenanted it was the wife who oversaw the tenancy and managed its debtors. The husband, on the other hand, made no ongoing contribution post separation to the store. The effect of my finding in relation to paid legal fees is that post separation the husband contributed $38,000 more in paid legal fees than the wife.
While the wife was running the store the husband was overwhelmingly responsible for the children’s care and during this period his contribution as a homemaker and to the welfare of the children greatly exceeded the wife’s. To enable him to do so the husband had effectively exclusive use of the farm which was the parties’ most valuable asset. After the wife left N in April 2007 she moved into rental accommodation for which she paid throughout the period of occupation approximately $15,000. Although not directly comparable because, amongst other things, the wife’s partner also had the benefit of her rental payments, this gives some indication of the type of benefit the husband received by virtue of his exclusive occupation of the farm post separation.
The wife’s contributions to the welfare of the children increased from about October 2007 when B came into her primary care. Thereafter, the children moved between the parties in the manner already discussed. While the effect of these movements was that the husband had more of the children with him more of the time during this period the distinction between the parties’ contributions to the welfare of the children is very small.
The orders will not effect either parties’ earning capacity.
Since separation the wife has paid the husband a few hundred dollars child support.
Post separation I am satisfied the parties’ contributions were equal.
The overall effect of my findings expressed as a percentage of the net value of the parties’ assets as at the date of hearing, is that the husband’s contributions and other factors favour him 52 per cent compared to the wife’s 48 per cent. This reflects a weighing in his favour of his greater initial contribution balanced with the parties’ respective contributions made in the many years which followed their marriage and other s 79(4) factors.
Section 75(2) factors
The husband sought a 10 per cent adjustment pursuant to s 75(2) in his favour. It was the wife’s contention that neither party was entitled to a s 75(2) adjustment, and in the event, the Court was persuaded that an adjustment in the husband’s favour is appropriate this should be no greater than five per cent.
The husband is aged 51 and the wife is 43. The wife is in reasonably good health. Dr BW, who is an Orthopaedic Surgeon, has treated the husband since early 2000. Dr BW established that from his 1981 motor cycle accident the husband suffers from damage to the right knee with severe post traumatic osteoarthritis, severe end stage osteoarthritis of the right hip and extensive degenerative changes throughout his lumbosacral spine. He has a very large herniated disk at L5/S1 level. It was Dr BW’s opinion the husband required a total right hip replacement, total right knee replacement and possibly spinal surgery. Each of these procedures would be expensive and debilitating to some degree. In relation to the husband’s work capacity in his affidavit sworn in July 2008 Dr BW said:
Given [the husband’s] right tibial and knee problems alone, I was surprised he was still managing to maintain fairly heavy work commitments. If one considers his right hip problems and those of his back, it is my opinion that it is unlikely that [the husband] could be gainfully employed in the workforce in the future. He suffers from severe spinal stenosis, end stage osteoarthritis of the right hip and post traumatic degenerative arthritis of the right knee. Any one of these problems would certainly preclude him from being gainfully employed. He should not be undertaking any heavy manual work. He is unable to sit for any length of time. He should not walk any significant distance. He should not climb stairs and ladders. He should not be lifting anything more than 10 kgs and he should be avoiding any long distance driving.
Dr BW’s evidence did not reveal the nature of the work to which he made reference in his statement “.. I was surprised he was still managing to maintain fairly heavy work commitments.” Although the husband was silent on this issue I infer Dr BW referred to the husband’s work as a tradesman (as disclosed to the single expert) and managing livestock.
Concerning future work the husband said that, albeit with some difficulty, he was able to run S Shop which enabled him to sit and stand throughout the day. Where needed he was able to call on others to assist him with any heavy lifting. Alternatively, the husband explained he had experience with project management building work and as a tradesman. He tends to livestock on the farm. Nonetheless the significance of Dr BW’s evidence is twofold. Firstly, it is almost inevitable that the husband will undergo surgery of the type referred to in Dr BW’s evidence, which will be expensive and to a degree debilitating. Secondly, even with medical intervention the husband’s capacity for paid work other than at S Shop, or in a similar venture, is reasonably short - medium term. These matters warrant an adjustment in the husband’s favour. This is a factor to which I attach reasonably significant weight.
I have already made findings about the parties’ assets and liabilities. As a consequence of my s 79(4) contributions and other findings, rounded out the wife will have assets worth about $657,857.
The wife’s significant assets comprise the N store, real estate at N, paid legal fees, $325,876 being the cash adjustment which would be required from the husband and 48 per cent of the parties joint bank accounts. The wife is the registered proprietor of a property at G for which she paid $152,500 last year. Although the wife had undertaken minor improvements to the property the evidence did not suggest these have increased its value and I infer the property is worth the amount the wife paid for it. When the wife purchased G property she borrowed $165,000 from her mother. The larger sum was necessary to cover the transaction costs associated with the purchase. The loan is to be repaid at 7.45 per cent interest with an additional $40 fee payable at settlement. The wife’s mother requires the money to be repaid in order to meet her own living expenses. According to her mother, the wife has been meticulous in their financial dealings and in particular in relation to the repayment of funds advanced to her. This suggested that the wife would be likely to use a significant proportion of the cash adjustment paid by the husband to reduce, or probably pay out, the loan her mother advanced.
It is the wife’s intention that she would continue to live at G and lease the N store. For the next two years the wife will receive $2,160 gross rental per month. Mr MN was appointed to value the liquor license at the store. He was not cross examined. He described the bottle shop operation as “..one part of a low turnover business.” Mr PE was appointed to value the N real estate including the improvements. He too was not cross examined. Under the heading ‘rental commentary” Mr PE said the current rental was high by local standards. He assumed that profit levels would probably be relatively low and concluded that there existed a “…limited ability to sustain high rental payments.” Mr PE’s assumption about relatively low profitability for the business was consistent with partnership taxation returns.[3] I accept both expert valuers’ evidence. Thus while the wife would have the rental income for the next two years it is far from certain that she would thereafter receive comparable income. For the remainder of her current term in office the wife will receive a small stipend with her work on the local representative body. It was the wife’s expectation that she should be able to obtain at least casual work in the personal services industry. While there involved an element of speculation I accept that the probability is that for a few years at least the wife is likely to earn a small income from casual employment. Even if she paid in full the advance made by her mother the wife would have about $161,000 which she could invest. As a rough guide, if she invested this amount at about 6% this would provide her with an additional $182 each week. The Australian Financial Review reported[4] term deposit rates for amounts between $100,000 and $200,000 secured for 12 months were widespread at or slightly above six per cent.
[3] Exhibit ‘M’
[4] As at 1 February 2010
The husband would have assets worth about $712,678 minus the payment that will be made on his behalf to D’s orthodontist. His most valuable asset would be the farm at F. Otherwise, the husband would retain S Shop, livestock, plant and equipment, 52 per cent of the parties joint bank accounts and the other assets identified in the table of assets and liabilities in his sole name. Notably, this includes $167,716 in paid legal fees, which self evidently he has spent. The husband owes his sister $14,300 which she advanced on the basis she would be promptly repaid. For the reasons already given the evidence was too unsatisfactory to conclude that the husband must repay Mr W. In addition to the factors already discussed for having reached this conclusion it was noteworthy that the husband had not received a demand from Mr W to reimburse him and the husband hoped Mr W would advance further money to enable him to pay the wife; if not all of the funds he required then at least a portion. I take in to account the possibility, albeit unstated by Mr W, that he may be hopeful that the husband will at some stage reimburse him. However even on this alternate scenario the notion that the husband would repay Mr W remained mere speculation.
In order to retain the farm so as to give effect to my contributions and other s 74(4) factors findings the husband would have to pay the wife $325,876 for which he would raise a loan in that amount.
In his financial statement filed on 9 December 2009, the husband swore that his total average weekly income was $200 which comprised family tax benefit. He acknowledged the rental income from the N store but did not include it in his average weekly income. The husband did not disclose his income from S Shop. On this issue, the husband’s evidence was: “The business does not earn sufficient income to meet its expenses.” He did not disclose the expenses incurred by the business or where he deposited its income before paying its expenses. I accept the husband’s evidence that his total weekly expenses (excluding S Shop) are $571. However he was unable to explain how he paid the shortfall. Counsel for the husband submitted the Court would recall that the husband received approximately $330,000 from the parties’ trust account and further distributions from the N store account. As to the former amount, in the husband’s financial statement sworn 12 March 2009 he deposed that he had $400 cash. It follows he had disposed of the balance of the $330,000. According to the husband he did not receive any further payments from any source until Mr W deposited funds with his solicitor for a hearing scheduled for mid 2009 some of which were returned to the husband when the hearing did not proceed. The net effect of the husband’s unexplained ability to meet his expenses between March 2009 and release of funds provided by Mr W to the husband’s solicitors, when combined with Dr BW’s evidence and the single expert accountant’s report, is that I am satisfied that during this period the husband had additional income which he chose not to disclose. Dr BW’s evidence suggests that the period during which the husband earned undisclosed income was considerably greater than those few months.
Since then the husband has received further funds from the N store trust account and had undisclosed income from S Shop. The husband is keen to retain the farm and prior to this hearing spoke with his banker about his eligibility for a loan. It was the husband’s evidence that the bank required him to provide it with a cash flow projection for S Shop and other documents which presumably at least went to that businesses’ financial viability and thus the husband’s capacity to repay any advance. This evidence was inconsistent with the husband’s written evidence that he was in negotiation with the original owner of S Shop to reverse the sale. Notwithstanding that the husband originally purchased S Shop with the hope that the parties daughter would operate it, I consider it more likely than not that the husband will continue to operate S Shop. The husband failed to establish that the expenses incurred by him for S Shop exceed its income. I am also satisfied that for at least the medium term the husband is likely to be able to supplement his income earned through S Shop, for example during periods when the store is not busy, through work as a tradesman and probably also from occasional building work.
There is small difference in the net value of the parties property. Neither have financial resources. The fact that the wife has the physical and mental capacity to earn a modest income in all probability, for about a decade longer than the husband, in other circumstances may well have resulted in an adjustment in his favour pursuant to subsection (b). However the husband’s failure to disclose his income makes it impossible to evaluate the financial consequences to him of his shorter working life. I also infer that the husband deliberately failed to disclose income earned by him post separation because he considered that disclosure may have been favourable to the wife, for example through an adjustment pursuant to subsection (b) in her favour. In these circumstances I am satisfied that it is appropriate to make an adjustment pursuant to subsection (b) in favour of the wife. This is a factor to which I attach significant weight.
At present, all three children live with the husband. D is headstrong and has been moving between her parent’s homes at whim. The parties were concerned about D and it was not possible to anticipate what her future holds or where she will live. J and B are likely to continue to live with the husband. J will spend time with the wife on an irregular basis and B will be with her in accordance with the current parenting orders. As I said to the parties at the end of the hearing, each of them needs to do more to ensure that the present ad hoc arrangements for J’s time with the wife are regularised so that he has a proper opportunity to enjoy his relationship with her. With modest effort by both parties this should be achievable. The husband will apply for child support payable by the wife which will to an extent moderate the financial consequences to him of the children’s care. However, as the Full Court in Clauson (1995) FLC 92-595 held at 81,991: “… it should not be forgotten that the payment of child support in no way compensates the custodial parent for the loss of career opportunities, lack of employment mobility and the restriction of an independent lifestyle which the obligation to care for children usually entails.” These matters warrant an adjustment in the husband’s favour. This is a factor to which I attach reasonably significant weight.
In her financial statement filed 7 December 2009 the wife said she incurred average weekly expenses of $411, which I infer included expenses she paid for B and probably also D. Because B’s time with the wife will be reduced and D was again living with the husband, I infer the wife’s average weekly expenses will be slightly reduced. If the wife repaid her mother she would not make the $237 per week loan repayment currently paid to her mother. On the other hand, the wife will be solely responsible for her share as landlord of rates and insurances on the N property. On balance I am satisfied that for the foreseeable future the wife will be able to meet her reasonable expenses. I have already referred to the husband’s average weekly expenses ($571). There are a number of circumstances which will result in these being increased. These include that he will incur slightly greater living expenses for B, farm payments previously made from the store account will become his sole responsibility and he may need to make loan repayments for funds advanced from his bank to pay the wife. I say may because it is also feasible Mr W may advance these funds upon terms favourable to the husband. Having regard to my earlier s 75(2) findings these are not matters which warrant further adjustment.
Other than the children, neither party has any responsibility to support another person.
The husband is in receipt of a Commonwealth benefit, which has already been taken into account.
I agree with the submission made by counsel for the wife that the outcome of these proceedings will enable each of the parties to enjoy a reasonable standard of living. The application of sub-section (g) does not warrant an adjustment in favour of either party
Subsections (h), (j) and (k) do not arise.
Subsection (l) recognises that a parent may legitimately consider their children’s needs when structuring his or her life post separation. As I understood the husband’s evidence, he anticipated being able to care for the children, project manage, perhaps work as a tradesman and to also run/oversee S Shop. There is an obvious connection between s 75(2) (l) and s 75(2)(b) and (c). The Court must be careful not to double count the impact upon the husband’s circumstances of having the children’s primary care. In the circumstances I make no adjustment pursuant to the subsection.
Other than the children, neither party cohabits with another person.
Section 75(2)(n) achieves a cross referencing between s 75(2) and s 79(4). The outcome of the assessment of contributions and other factors has resulted in the husband receiving 52 per cent of the available assets compared to the wife’s 48 per cent. These findings have already been considered pursuant to subsection (b). These circumstances do not warrant further adjustment pursuant to the subsection.
Section 75(2)(na) concerns a parties’ liability to pay periodic child support. I have already considered the wife’s payment of child support to date. Under this sub-section the Court considers the impact of child support payments not already taken into account. I am confident that as soon as these proceedings are finished the husband will apply for an administrative assessment of the wife’s child support liability qua at least J and B. I am satisfied that the wife is likely to pay child support at least in accordance with any assessment. Because the evidence does not enable me to make precise findings about the parties’ future income, I cannot determine with precision the wife’s future child support liability. When regard is had to the wife’s relatively modest income and the amount of time B will spend with her, the probability is that the amount of child support she will pay periodically will not be large. Nonetheless, the wife is likely to pay child support for about 11 years. This is not a weighty consideration but nonetheless warrants a small adjustment in the wife’s favour.
There are no additional factors which require consideration.
Having regard to all of the s 75(2) factors it is appropriate that there be an adjustment in the husband’s favour of three per cent. This reflects the cumulative outcome of the findings I have made pursuant to s 75(2). Tomasetti (2000) FLC 93-023. To test the measure of that assessment, it should be viewed in monetary terms. Waters and Jurak (1995) FLC 92-635. That puts in the husband’s hands a further $41,115. This is a small but nonetheless appropriate recognition of his age, health issues and parenting responsibilities in the overall context of my s 75(2) findings. This means the husband will pay the wife less than the amount which would have been required from him at the conclusion of the contributions and other s 79(4) factors phase. As a consequence the husband will need to borrow less and the wife will have less to invest after she has repaid her mother. These variables do not warrant further adjustment under either s 75(2)(n) or (o).
The husband will therefore be entitled to a property settlement of 55 per cent or $753,742 compared to the wife’s 45 per cent or $616,698.
Section 79(2)
Because the Court must consider the actual orders, not just the percentage distribution, under s 79(2) justice and equity in cases like this requires that the Court stands back and looks carefully of the outcome of the s 79(4) and s 75(2) process. It is at this stage that the Court considers the actual structure of the orders. I will not repeat the findings made thus far. It is sufficient to refer to those findings which relate to the husband’s greater initial contribution, the duration of the period which has elapsed since the parties commenced cohabitation and during which they worked hard and contributed equally in the various ways already considered and which albeit in different form, they have continued post separation, the husband’s age and health issues, his future care of the children as well as his failure to disclose post separation income. With this in mind I am comfortably satisfied that an outcome which distributes the available assets 55 per cent to the husband and 45 per cent to the wife is just and equitable.
Other than the property which the parties described as 3 T Street at N, the parties agreed upon those assets which each of them should receive. These included that the wife would receive the store and associated land at N. Given the wife’s particular involvement in the acquisition of the 3 T Street property and its proximity to the store she has a slightly stronger claim to it. Other than saying he would like to retain the 3 T Street property the husband advanced no compelling reason why he should have it. If the husband were to receive the 3 T Street property the amount he must pay the wife would increase and thus, may indirectly reduce his capacity to retain the farm. My point being that the husband would need to borrow more in order to comply with orders which would enable him to retain the farm. On balance, these factors weigh in favour of the wife receiving the 3 T Street property.
The wife’s property settlement entitlement will thus give her the following assets:
·N business Nil
·N Business property N $170,000.00
·3 T Street, N $7,000.00
·45 per cent CBA ..994 $3,690.00
·45 per cent Merrick Spicer Trust Account $2,945.00
·N Business liquor license $25,000.00
·Holden Commodore $2,000.00
·Sale proceeds plant and equipment N $100.00
·Paid legal fees $129,322.46
·Add cash payment from husband $285,162.00
·Less Centerlink debt $8,564.00
·Entitlement $616,698.00
The husband will receive:
·F Farm $800,000.00
·55 per cent CBA .. 94 account $4,510.53
·55 per cent Merrick Spicer Trust Account $3,599.00
·Varsity & Varsity livestock partnership Nil
·Livestock cattle and horses $3,270.00
·Farm plant and equipment $6,330.00
·Varsity & Varsity trade partnership Nil
·Toyota Land Cruiser $1,000.00
·Household contents $5,000.00
·Sale proceeds of plant and equipment $33,000.00
·Monies drawn from CBA .. 1388 $8,820.00
·Cash at separation $20,000.00
·Paid legal fees $167,716.00
·Less trade supplier loan $14,300.00
·Less cash payment to the wife $285,162.00
·Entitlement $753,742.00
It was the wife’s proposal that the husband pay her the adjusting amount within six weeks, it being her position that he has had ample time to put in place appropriate arrangements to raise such funds as may have been required to pay her. For his part, the husband proposed that he pay the wife in 12 weeks. Given the period of time which had elapsed since the parties separated I agree with the wife that 12 weeks is too long. It cannot be overlooked that the wife would be required to continue to pay interest on the mortgage advanced by her mother. I infer that in the period since judgment was reserved the husband continued to work with his banker to arrange to pay the wife. So as to balance the husband’s desired 12 weeks with the disadvantage which delay would cause the wife, he shall be ordered to pay her the adjusting amount within eight weeks. In the event that the husband fails to make the payment within the designated time frame, unless the payment is made as a result of the sale of the farm, interest on the amount which remains outstanding calculated in accordance with the Family Law Rules will be payable by him.
At settlement, the parties must each give the other proof that the Commonwealth Bank mortgages secured against properties that each will retain have been discharged or a Discharge of Mortgage in registrable form. Although these loans have been fully repaid the loan facility remains intact. It would offend s 81 notions of finality to continue even this limited financial connection.
Between now and giving effect to the property settlement orders the husband shall pay all outgoings associated with the farm and ensure the improvements erected thereon are adequately protected by insurance.
Although it is feasible that the husband may default in his obligations to pay the wife within the timeframe required by these orders I contemplated that I would not make orders that addressed this possibility. However, it was the wife’s position that orders should be made, I infer so that the parties would know how to proceed on enforcement without the need for further litigation and its associated costs. Ultimately the considerable fees which the parties to date have paid combined with those matters which resulted in findings adverse to the husband persuaded me to adopt the course proposed by the wife. Thus, should the husband fail to pay the wife on time the parties shall join in the sale of the farm. Although the farm has an agreed value its actual selling price cannot be known. Excluding the farm from the asset pool, the parties have net assets worth $570,535. The husband’s entitlement of 55 per cent would result in him receiving $313,794 of this pool. The wife would receive $256,740, which is 45 per cent of this pool. Accordingly, from her 45 per cent entitlement from the sale proceeds of the farm, the wife must pay the husband an adjustment of $74,752.
In the event that the mechanism by which the wife receives her cash adjustment is by virtue of a sale it would be unjust to the husband to order that he pay interest to the wife on the balance outstanding from the time the farm is listed for sale.
In the difficult circumstances of this case I consider that the proposed orders identified at the start of these reasons deliver to each of the parties a just and equitable division of their matrimonial property.
Before entering the proposed orders identified at the start of these reasons my reasons will be published to the parties so that their lawyers may proof read the proposed orders so as to ensure that my calculations and findings are accurately reflected in the orders. After they read the judgment and proposed orders the parties lawyers agreed that the figure included in the asset table at par 92 for the CBA…994 account was wrong. I originally included this asset at $8,290.00. The parties agreed this was a transposition error and that the figure should have been $8,200.97 and that the asset pool should accordingly be reduced. I agreed with them and accordingly made the flow through adjustments to the calculations. The effect of this was the amount to which the husband was entitled reduced from $753,793 to $753,742 and the amount the wife would receive reduced from $616,741 to $616,698. Although the calculations in par 153 were not reworked, the parties agreed that the adjusting figure should be reduced from $74,795 to $74,752.
Having corrected the calculations in accordance with the parties agreed figures orders are entered in accordance with those at the start of this judgment.
I certify that the preceding one hundred and fifty-six (156) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan
Associate:
Date: 5 February 2010
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Appeal
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Remedies
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Statutory Construction
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