Balsom & Hagerman (No 2)

[2021] FCCA 1281

FEDERAL CIRCUIT COURT OF AUSTRALIA

Balsom & Hagerman (No 2) [2021] FCCA 1281

File number:	DNC 14 of 2020
Judgment of:	JUDGE YOUNG
Date of judgment:	10 May 2021
Catchwords:	FAMILY LAW – property – de facto husband’s application for the alteration of property interests – where the parties were in a de facto relationship for 25 years – where the parties financial contributions were equal until the time of separation – where the former matrimonial home was in the sole name of the wife – where the husband remained in the property for twelve months after separation – where the husband failed to present the property in a clean condition for sale – where the condition of the property negatively affected the sale price – where the husband deliberately altered chattels to lessen their value – where the husband’s conduct is to be treated as a post-separation contribution – where the husband has a limited future earning capacity – where the wife has incurred significant legal fees due to the litigation of this matter – Order of an overall split of the assets of 47 per cent to the husband and 53 per cent to the wife
Legislation:	Family Law Act 1975 (Cth) ss 90SF, 90SM, 102NA
Cases cited:	Weir & Weir (1993) FLC 92-338
Number of paragraphs:	34
Date of hearing:	6 and 7 May 2021
Place:	Darwin
Solicitor for the Applicant:	Ms Farmer of Withnalls Lawyers
Solicitor for the Respondent:	Mr Barry of Darwin Family Law

ORDERS

DNC 14 of 2020

BETWEEN:

MR BALSOM

Applicant

AND:

MS HAGERMAN

Respondent

ORDER MADE BY:	JUDGE YOUNG
DATE OF ORDER:	10 MAY 2021

THE COURT ORDERS ON A FINAL BASIS THAT:

1.Darwin Family Law is authorised to release the funds held on behalf of the de facto husband and de facto wife as follows:

(a)In the sum of $50,343.00 to the de facto husband; and

(b)In the sum of $111,979.00 to the de facto wife.

2.The de facto husband retain the following assets and chattels for his sole use and benefit:

(a)Motor Vehicle 3;

(b)Motor Vehicle 4;

(c)Motor Vehicle 1;

(d)Motorcycle 6;

(e)Motorcycle 5;

(f)Motorcycle 2;

(g)Boat G;

(h)Boat H;

(i)Ablution block;

(j)Cool room; and

(k)Containers.

3.Each of the de facto husband and de facto wife are entitled to retain for their sole use and benefit all household possessions currently in their respective possession.

4.Otherwise all extant applications are dismissed.

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment under the pseudonym Balsom & Hagerman (No 2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT
Ex Tempore

JUDGE YOUNG:

1. This is an application for alteration of property interest pursuant to section 90SM of the Family Law Act 1975 (Cth) (the Act). 

2. The applicant de facto husband, who I will call the husband without intending any disrespect, is, according to his trial affidavit, 64 years old having been born in 1957.  However, I was told he is in receipt of an age pension which would suggest he is at least 66 or 67 years old. That discrepancy was not resolved in evidence. 

3. The de facto wife, who I will call the wife also without intending any disrespect, is 48 years old.  She is not working, having relatively recently undergone treatment for breast cancer, including surgery, radiotherapy, and chemotherapy.

4. The parties have four children who are all young adults.  The parties began their relationship in 1993 or 1994 and separated in late 2019.  The duration of the relationship was thus about 25 or 26 years. 

5. It appears that at the beginning of the relationship, the husband was engaged in a business. He owned an encumbered block of land in City J or rather the company the husband owned and controlled owned the encumbered block of land.  The husband said he had no significant liabilities at the commencement of the relationship. However, in cross-examination he said the land was subject to caveats or a caveat by a business creditor. This was contradictory to his affidavit where the husband said the caveat was lodged by his former partner.  As with much of the husband’s evidence, it was difficult to ascertain where the truth lay. 

6. At the commencement of the relationship, the wife was said to own a car of unspecified value and $5,000 in cash. 

7. I am not satisfied that either party thus had any significant equity in any property at the outset of the relationship. 

8. In 2006, the husband was convicted of producing methamphetamines.  He was sentenced to a period of imprisonment and released after 12 or 18 months; the exact time of his release is unclear from the affidavit material of the parties. The land owned by the husband or his company in City J was sold around that time for an unspecified amount. The parties were subsequently able to move to the Northern Territory after the husband’s release and they purchased a property at Suburb C for $438,000.  It was purchased in the wife’s sole name and was, according to the husband, unencumbered at the time of purchase. 

9. The wife said the parties borrowed $40,000 from her parents for legal fees resulting from the drug charges. It was said, by the husband at least, that the wife was also initially charged but the charges against her were subsequently dropped. There was no indication that the money borrowed from the wife’s parents is being sought to be repaid or in fact will be repaid. 

10. The parties also borrowed money soon after moving to Darwin according to the wife.  One loan was to pay for the cost of the family’s move to Darwin. The other was borrowed in order to establish a business which the wife operated until about May 2020 when it ceased trading.  According to the evidence, the income from the business was minimal, but the wife said that the family’s living expenses were paid from the turnover of the business.

11. The wife said, and this was not denied, that the husband received a Disability Support Pension from some time after his release from jail which would probably be about 2007 or 2008.  The nature of his disability was not in evidence and, in particular, any restrictions on his earning capacity was not the subject of any evidence. Therefore I accept there is likely to be some limitation on his earning capacity flowing from the fact that he was identified as having a disability meriting a pension.  The wife said, however, that the husband was active and helped in her business by running deliveries and undertaking other tasks.

12. The wife said that the husband drank to excess during the relationship. She alleged that he spent about $200 per week on alcohol.  The husband denied he drank to that degree.  I find both parties are unreliable as witnesses and I do not feel able to make findings on this issue. Indeed, I do not feel able to make any finding on any issue in dispute between the parties unless it was the subject of independent evidence or was corroborated. 

13. It is to be noted that the borrowings of the parties secured against their property at Suburb C do not appear to have been repaid, or at least not significantly, up until the time the property was sold at the end of last year. The property at Suburb C was sold for less than its purchase price; it was sold for $385,000. It was also subject to the encumbrances that I have mentioned. The capital of the parties would thus appear to have decreased since their purchase of the property at Suburb C. 

14. I find that contributions of the parties, financial and non-financial, up to the time of separation were equal.  Post-separation is another matter.  The parties made allegations about each other’s conduct after separation and those matters are relevant to the assessment of contributions overall. 

15. The husband remained in occupation of the Suburb C property for approximately a year after the parties separated. He did not make mortgage repayments on the property during that period or any payments to service the borrowing secured against the property.  The wife, however, applied to the lender banks under hardship provisions for a pause or reduction in the payments. It would appear that she did not make mortgage repayments over the past 12 months or so.  Interest would have continued to accrue during that period.

16. An order was made by this Court that the husband vacate the property and that it be sold.  That order and the associated orders were opposed by the husband.  An order was also made at the time that the husband clean up the property before sale in order to make it more attractive for a purchaser.  The husband said in evidence that he had spent a great deal of time cleaning rubbish from the property. He said that he had made many trips with a trailer to the rubbish tip.  However, photographs of the property show that it was in a very untidy and dirty state at the time of sale with tyres, car parts and household rubbish strewn throughout the property. The tyres and wheel rims were ultimately removed by a contractor employed by the wife. 

17. The real estate agent responsible for the sale has said on affidavit that the property, which sold for $385,000, would probably have achieved a sale price in the “low $400,000 area” if it had been properly cleaned up.  That claim was not challenged. 

18. The husband also removed a pump filtration unit from the house once it had been listed, or at least once he knew that an order for sale was likely.  The prospective purchaser, who I assume had inspected the property when the pump filtration equipment was in place, not surprisingly insisted that it be replaced before settlement. It was reinstalled, however, the required repairs were ultimately paid from settlement moneys and cost $3,633.  The wife said this should be deducted from the husband’s share. However, it is not clear whether the associated costs relate solely to the husband’s conduct rather than simply the condition of the equipment and whether what occurred was more than reinstating the equipment to the condition it was in before removal. I am not satisfied the expenditure was caused solely by the husband’s conduct. I do not propose to follow the course proposed by the wife.  Nevertheless, I consider the husband’s conduct was deliberate and detrimental to receiving the best price for the sale. 

19. The husband also removed an ablution block, a cool room and two or four containers (that was in dispute) from the land.  These items were not valued but I am satisfied they had some value and that is the reason why the husband removed them.  The husband says that another cool room was purchased by the wife after separation and that should be taken into account. The purchase of that cool room, which was presumably initially intended to be used in the wife’s business, is merely an instance of the wife getting on with life.

20. Another factor in dispute were the valuations of two motorbikes:  a Motorcycle 2 and a Motorcycle 5.  These were valued by a joint expert at $3,500 and $5,500 respectively.  However, the wife alleged that the husband, who claimed to have sold these motorbikes to a friend for $500, had in reality altered them to make them appear less valuable than they were at the time of valuation.  The husband said the wife was confused and in fact he had owned two Motorcycles 2 and two Motorcycles 5. He said she was confusing the motorbikes in poorer condition with ones that were in better condition which he said he had sold prior to separation.

21. Regrettably, the parties’ son, Mr K, was required to give evidence.  Mr K is a young man and was clearly reluctant to give evidence, however, I am satisfied he was an honest witness.  He said, and I accept, that there was only ever one Motorcycle 2 and one Motorcycle 5 in the possession of his father.  He said he knew that because, like his father, he is a tinkerer with motorbikes. He was, and I accept, relatively knowledgeable about motorbikes and would know whether or not there was two Motorcycle 2 or two Motorcycle 5 in the possession of the husband at the property.   Mr K pointed to some indications that the various photographs said by the husband to show different motorbikes were probably photographs of one and the same machine but with some alterations such as a changed petrol tank. 

22. I accept the evidence of Mr K. It follows that the evidence of the husband is untrue and deliberately so. I am satisfied the husband has dishonestly attempted to manipulate the valuation process.  I am unable to put a true value on the Motorcycle 2 and the Motorcycle 5 motorbikes, but I am satisfied it is significantly more than the value ascribed by the joint expert.

23. I am satisfied that Weir & Weir (1993) FLC 92-338 is apposite to the facts of this case. The husband has failed to make full disclosure. It follows from my finding that he has engaged in dishonesty. While I am unable to ascribe a dollar value to the motorcycles, I propose to treat the husband’s behaviour as a matter of post-separation contribution.

24. Up to the time of separation I find that the contributions of the parties were equal. After taking into account the conduct of the husband after separation, I find that the contributions are 56 per cent to the wife and 44 per cent to the husband.  That is a 6 per cent adjustment in the wife’s favour leading to a difference of 12 per cent which, having regard to the pool of $207,322, equates to $24,878. That is the additional amount that I consider is merited to the wife as a result of the issues I have mentioned. 

25. There were some other items mentioned, in particular an L portrait or print.  The parties did not seek to have this valued or included in the balance sheet. I do not propose to make an order about this or any other chattel apart from those appearing in the balance sheet.

26. Having regard to the factors pursuant to section 90SF(3) of the Act, I find the husband is 64 years old as stated in his affidavit. He was in receipt of a Disability Support Pension following a car accident. How that has affected his earning capacity was not stated. However, according to the evidence he had in the past been employed in manual work and does not appear to have any trade or other qualifications. I am satisfied that his earning capacity is very limited. He currently receives an Age Pension of $868 a fortnight.

27. The wife is 48 years old.  She was diagnosed with breast cancer and over the past 12 months she has undergone surgery, chemotherapy and radiotherapy. Her prognosis was not the subject of any medical evidence but there is nothing to suggest she will not be able to return to some employment in future.  She is currently receiving an unemployment benefit of $287 a week.  It was alleged that the wife had re-partnered. I am not satisfied that is the case. The wife denies it. 

28. I also consider, pursuant to section 90SF(3)(r) of the Act, the justice of the case requires me to take into account that the wife has, or will, incur significant legal fees in the region of at least $50,000 and very possibly more. I am satisfied a significant part of this expenditure was incurred because of the lack of cooperation, the dishonesty, and the conduct of the husband in this litigation. The husband on the other hand was legally represented as a result of an order made pursuant to section 102NA of the Act. The real result between the parties is likely to be that the cash they receive after the payment of the wife’s legal fees are likely to be quite similar.

29. I propose to make a three per cent adjustment in favour of the husband for the section 90SF(3) factors.

30. It should also be mentioned that at one point it was submitted on behalf of the husband that the various chattels should be sold and the amounts received be the amounts taken into account.  I am not satisfied that that is practicable.

31. The wife is living in Queensland.  She has no capacity to carry out the steps necessary to sell this material.  Based on the husband’s conduct, I am satisfied he cannot be trusted to act properly in relation to any sale, and I consider that the proposal is impractical.  The chattels, in the possession of the husband, which are listed in the balance sheet, will be ascribed to him a value mentioned in the balance sheet.

32. This leads to an overall difference between the parties for that matter of six per cent, or $12,500, taking into account my findings in relation to contribution.

33. The overall split of assets is 47 per cent to the husband and 53 per cent to the wife.  After taking into account a small adjustment for payment of evaluation fees and for advertising on the sale of the property, the husband will receive $50,343 and the wife will $111,979 from the monies in trust.

34. The balance sheet mentioned in the reasons above is as follows:

Description	DF Husband	DF Wife	Total
Assets
1	Joint funds in Darwin Family Law trust account	$81,161	$81,161	$162,322
2	Motor Vehicle 3	$17,000
3	Motor Vehicle 4	$8,000
4	Motor Vehicle 1	$5,500
5	Motorcycle 6	$3,500
6	Motorcycle 5	$5,500
7	Motorcycle 2	$3,500
8	2 boats	$2,000
9	Ablution block	n/k
10	Cool room	n/k
11	Containers removed from property by husband	n/k
Total assets	$126,161	$81,161	$207,322
If 47/53 df husband pays df wife	($28,720)	$28,720
$97,441 (47%)	$109,881  (53%)	$207,322
After payment of $28,720 to df wife division of monies in trust	$52,441	$109,881	$162,322
Adjustments for E Valuer, advertising	($2,098)	$2,098
$50,343	$111,979
13	Liabilities	Nil	Nil
14	Superannuation	Nil	Nil

I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Young.

Associate:

Dated:       8 June 2021