Bateman and Gaffney
[2010] FMCAfam 103
•12 February 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BATEMAN & GAFFNEY | [2010] FMCAfam 103 |
| FAMILY LAW ─ Property – whether the husband or wife should retain the family home. |
| Family Law Act 1975 (Cth), ss.75(2), 81, 90MT(1)(a), 90MT(4) Superannuation Industry (Supervision) Act 1993 |
| Hickey [2003] FLC 93-143 C v C [2005] FLC 93-220 |
| Applicant: | MR BATEMAN |
| Respondent: | MS GAFFNEY |
| File Number: | MLC 925 of 2009 |
| Judgment of: | Phipps FM |
| Hearing dates: | 14, 15 & 16 September 2009 |
| Date of Last Submission: | 16 September 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 12 February 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms Smallwood |
| Solicitors for the Applicant: | CE Family Lawyers |
| Counsel for the Respondent: | Mr Grant |
| Solicitors for the Respondent: | Mitchell Lawyers |
ORDERS
On or before 10 April 2010 the wife pay the husband the amount of $130,305 (the amount).
Upon the wife paying the husband the amount the husband transfer to the wife all his right title and interest in the property known as
Property T being the land described in Certificate of Title Volume [omitted] (the property) and the wife refinance the mortgages registered against the title so that the husband is no longer liable under those mortgages.
In the event that the wife fails to pay the amount on or before the date the property be sold in a manner agreed, and if not agreed, by an estate agent and in a manner nominated by the President for the time being of the Real Estate Institute of Victoria or his or her nominee, and the proceeds applied:
(a)first in payment of the costs and expenses of the sale;
(b)second in the discharge of the mortgages and other encumbrances over the property;
(c)third in payment of the amount of $130,305 to the husband;
(d)lastly the balance to the wife.
The husband and wife do all things necessary to transfer into the name of the husband registration and ownership of the Barina motor vehicle now in the possession of the husband.
That the following order has effect from the operative time.
(a)Pursuant to s.90MT(4) of the Family Law Act 1975 (Cth) the base amount of $9,740.50 shall be allocated to the husband in respect of the wife’s superannuation interest in the Health Super Fund (the wife being member no [omitted]) and that pursuant to s.90MT(1)(a) of the Family Law Act 1975 (Cth) whenever a splittable payment becomes payable in respect of that interest the husband is entitled to be paid an amount calculated in accordance with the Family Law (Superannuation) Regulations in respect of that base amount and there is to be a corresponding reduction in the entitlement of the wife.
(b)That having been accorded procedural fairness in relation to the making of this order, this order binds the trustee of Health Super Fund, Health Super Pty Ltd, subject to the Family Law Act 1975 (Cth) and the Superannuation Industry (Supervision) Act 1993.
(c)That the operative time is the fourth business day after the date upon which a sealed copy of this order is served upon the trustee of the Heath Super Fund, Health Super Pty Ltd.
Otherwise each party is declared to have no interest in property now in the name or possession of the other party including, but not limited to:
(i)the wife's Ford Territory motor vehicle;
(ii)the investment with Colonial First State Investment in the husband's name;
(iii)shares in the husband’s name;
(iv)bank accounts in each party’s name, including the bank account with Walchovia Bank in the husband's name;
(v)household contents, the contents at Property T being deemed to be in the wife's possession and the contents at Property R being deemed to be in the husband's possession.
NOTATION: These orders have been amended pursuant to rule 16.05(2)(e) of the Federal Magistrates Court Rules2001 to reflect the change in Applicant and Respondent Solicitors details on Page 2 in the Cover sheet and Orders section and the insertion of the date 20 April 2010 in Order 10. Paragraph 1.a) was altered to read “brother” instead of “husband”.
IT IS NOTED that publication of this judgment under the pseudonym Bateman & Gaffney is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 925 of 2009
| MR BATEMAN |
Applicant
And
| MS GAFFNEY |
Respondent
REASONS FOR JUDGMENT
Introduction
The husband and wife have agreement on living arrangements for their three children. They disagree on percentage distribution of their non-superannuation assets, and these specific issues;
a)Is there a debt to the wife's brother?
b)Should any mortgage withdrawal money be added back?
c)Did the husband purchase chattels with post separation money?
d)How should the husband’s HECS debt be treated?
e)Should a value be placed on the wife's business effects?
f)Who should retain the former matrimonial home?
g)How should chattels be distributed?
The issues must be placed in the context of the four step property consideration process.[1] The steps are:
What are the assets and liabilities?
What are the parties’ contributions?
What are the parties future needs?
Is the order just and equitable?
[1] Hickey [2003] FLC 93-143. For superannuation C v C [2005] FLC 93-220
Background
The husband was born in Australia [in] 1968. He is 44. The wife was born in Colombia in 1961. She is 48. They met in China in 1990. They went through a form of marriage in China and then married again in Australia [in] 1992. They separated under the one roof on 22 March 2008. The husband moved out of the matrimonial home on 26 August 2008. He now lives at Property R.
There are three children of the marriage, [X] [in] 1992, [Y] born [in] 1995 and [Z] born [in] 2001. Final consent orders made on 28 July 2009 provide for the children to spend week about with each parent except that [Z] lives with the wife from after school Monday until the commencement of school Wednesday during the husband’s week.
When the parties met the wife was qualified [in the healthcare industry] in Colombia. After coming to Australia she studied, passed exams and carried out the necessary practical training so that she now [working in the healthcare industry].
The husband has an honour’s degree from [omitted] University. He spent several years in Ph.D. studies but did not finally submit his thesis. He now works for [omitted] which has contracts with the federal government. He has enrolled in and hopes to complete a Master’s degree in [omitted]. He puts his current income at $300 per week, but in a bank loan application he put his income at $40,000 per year. He says that if he finishes the Masters degree he should achieve a salary of $60,000 a year.
In 2002 the parties purchased Property T. Later they remortgaged the property to demolish the existing house and build a new home.
Assets and Liabilities
Assets and liabilities are largely agreed.
Property T $830,000
less mortgages $595,926
Net value $234,174
Ford Territory (wife) $ 33,000
Less loan $ 29,928
Net value $ 3,072
Barina motor vehicle (husband) $ 8,000
U. S. A. Bank account (husband) $ 553
Colonial First State Investment (husband $ 7,828
Shares (husband) $ 7,258
wife's bank account at separation (agreed adjusted amount) $ 1,863
husband's bank account at separation $442
contents of Property T $ 18,450
contents of Property R [some dispute] $ 8,830
wife's business effects (disputed) $ 10,704
Other debts
Council for footpath $ 1,498
Husband's HECS debt (disputed) $ 16,362
Proposals
Each party proposes that he or she retain the matrimonial home and make a payment to the other party. The husband proposes that the percentage distribution to him should be 65%. The wife proposes that the percentage distribution to the husband should be 55%. The husband submits that contributions are equal and there should be a 15% adjustment in his favour for s.75(2) matters. The wife submits that contributions were equal or perhaps 52½% by her and 47½% by the husband. She submits that the adjustment for s.75(2) matters should be such that the husband receives 55%.
Issues
Is there a debt to the wife's husband?
The parties conducted a business venture with the wife's brother. It was unsuccessful. The wife's case at the commencement of the hearing was that her brother had lent the parties US$2,000 for the purpose of the business venture. In final submission’s the wife’s Counsel acknowledged that I would be justified in treating the brother's payment as an investment and not a loan. There is no evidence from the brother and so only an assertion from the wife. The evidence suggests that this was a joint business venture between the parties and the wife’s brother, so that any contribution is probably an investment rather than a loan. The US$2,000 is not a debt owed by the parties.
Should any mortgage withdrawal money be added back?
On 5 August 2008, after separation, the husband withdrew $35,600 from the joint ANZ mortgage account. He used some of the money for bond and six months rent and spent, although the wife disputes it, $6,500 on furniture and chattels. He placed $20,000 in fixed deposit. Under orders made on 16 March 2009, $8,000 was paid to each party from the fixed deposit. From the remaining money, $3080 was paid to Dianne Docheary for a family report and $880 to [omitted] Valuers to value the home at Property T.
The contents of each party's residence have been valued. The amount set out in paragraph 8 are agreed values. The husband says he spent $6,500 on furniture following separation to set himself up, the $6,500 being part of the $35,600 withdrawal from the mortgage account. His case is that this furniture is included in the contents valued at
Property R, and the amount of $6,500 should be deducted from any add back otherwise there is double counting.
The wife's submission is that the husband has not proved that he spent that amount of money on furniture. He did not produce receipts or invoices. However, there is no dispute that the items exist and must have come from somewhere. I accept the husband's evidence and find that he spent $6,500 of the mortgage withdrawal money on furniture which is included in the contents valuation.
The wife includes in her list of adjustments the husband's tax refund for 2008, retained by him, was $1,576.58. Her tax debt for the year ending 30 June 2008, $2723.90, paid 12 March 2009, is taken into account in the amount of adjusted bank account at separation included in paragraph 8.
The husband’s tax refund was an amount which he could receive any time after 30 June 2008 by lodging a tax return. He could have received it prior to separation. That being the case it is matrimonial property and should be included.
The wife submits that an amount should be included against the husband for interest earned on $20,000 of the withdrawn money invested. This is disputed and any amount is so small that it may be ignored.
The husband's case on the balance of the money is that when he left the matrimonial home he had nowhere to live and no furniture and so he had to make provision for himself and the children when they were with him. That is correct, but he did this by increasing the mortgage and so the matrimonial debt and using the money for his living expenses. The wife continued to pay the mortgage and other expenses for the matrimonial home. The husband’s lower income is a matter to be taken into account when considering s.75(2) matters, but not when determining matrimonial assets and liabilities.
These joint liabilities were paid.
Amount withdrawn $35,600
Family report $3,080
Valuation $ 880
$3,960 Balance $31,640
Adjustments are these.
Husband Wife
Order March 2009 $ 8,000 $ 8,000
Balance retained $15,640
Less furniture purchased -$ 6,500
tax return $ 1,576
adjustment $18,716 $ 8,000
Did the husband purchase chattels with post separation money?
The husband says that he purchased for $970 four items included in the valuation of the contents of Property R with money he earned subsequent to separation. Consequently, he says this amount should be deducted from the valuation of $8,830.30.
The husband did not produce receipts or invoices but as with the other items purchased by the husband after separation, I accept his evidence. Consequently, the valuation of the contents of Property R for the purpose of the list of assets and liabilities is $7,860.
How should the husband’s HECS debt be treated?
The husband has an education debt of $16,362 described as a HECS debt. He is not liable to pay anything until his taxable income reaches $43,000. Then he will pay a small percentage amount of his income. He has not had income above this level since incurring any of the debt.
Some discussion at the hearing concerned whether this was a contingent debt. I do not consider that is the proper way to characterise it. The liability to pay is set out in various statutes. The liability to repay depends upon the husband’s income, but it is never a liability to repay the whole amount. The liability is to pay a percentage of income. It is not income taxation but its effect on the payer, in this case the husband, is the same. The amount the husband is liable to pay at any given time depends on the level of his income. It reduces his disposable income in the same way as taxation. It is not a matrimonial debt. It is a financial matter to be taken into account under s.75(2).
Should a value be placed on the wife's business effects?
The husband submits that the amount of $10,704 as the value of the wife's business effects should be included in the list of assets. The amount of $10,704 is taken from a wife's 2009 taxation return. It is the depreciated value of her home office equipment. The amounts are $7,500 for a professional library, $625 for home office furniture and $2,532 for a Dell computer purchased 11 June 2009.
The items have not been valued by a qualified valuer. The taxation depreciated value is not necessarily their sale value. Without proper valuation they cannot be included.
Who should retain the former matrimonial home?
The husband proposes to finance his retention of the former matrimonial home by his mother selling her current home, he borrowing $250,000 and these amounts used to refinance the existing mortgage and make a cash payment to the wife.
The husband's mother gave evidence that she agreed with this proposal. She said she believed her home is worth $450,000.
The husband has pre approval for a loan of $250,000. His application puts his income at $40,000 a year. The husband puts his income at this amount by including child support paid by the wife.
The wife proposes refinancing so that she can pay a cash amount to the husband. She too has obtained an indication that she could borrow the additional money.
The husband's proposal has more uncertainties than the wife’s. His proposal depends upon a bank or other financial institution accepting the wife's child support payments as part of his income. It depends upon his mother selling her home and investing all the proceeds with the husband in the former matrimonial home.
Neither the husband nor his mother gave evidence of how they intended to hold the title to the property and in what proportions. There is no evidence that the husband’s mother has received independent legal advice. The husband and his mother might not reach agreement on important details.
The wife has an established and secure income [in the healthcare industry]. Her income is about $150,000 a year and she can increase it by working longer hours. I can readily accept that she would be able to raise sufficient funds to pay the husband. I cannot say the same thing about the husband. The husband's proposal has the added uncertainty around his mother's involvement. The just and equitable way to deal with the matrimonial home is to adopt the proposal with the more certainty.
If the husband received a cash payment he and his mother could still carry out their scheme to provide a home for both the husband's mother and the children.
How should chattels should be distributed?
The majority of the chattels remain at the former matrimonial home. The husband's case is that they should be distributed by a pick about method. The wife’s is that each should retain the chattels now in their possession and adjustment made for different values.
The chattels have been itemized and valued. None of them appear to be unique in the sense that they could not be duplicated with an item similar if not exactly the same. The potential for dispute is high. The pick about method does not necessarily lead to each party receiving a chattel that party particularly wants. Financial fairness between the parties is achieved by leaving the contents where they are with their known values. A pick about method may unbalance the financial fairness leading to further dispute. The court’s duty to make orders which as far as practicable achieve finality in financial matters[2], and justice and equity are best achieved by leaving the contents where they are.
Four steps
[2] Section 81 Family Law Act
What are the assets and liabilities?
Applying these findings non superannuation assets and liabilities are;
Property T $830,000
less mortgages $595,826
Net value $234,174
Ford Territory (wife) $ 33,000
Less loan $ 29,928
Net value $ 3,072
Barina motor vehicle (husband) $ 8,000
U. S. A. Bank account (husband) $ 553
Colonial First State Investment (husband) $ 7,828
Shares (husband) $ 7,258
wife's bank account at separation (agreed adjusted amount) $ 1,863
husband's bank account at separation $442
contents of Property T $ 18,450
contents of Property R $ 7,860
Add back(husband) $ 18,716
Add back (wife) $ 8,000
Total $316,216
Other debts
Council for footpath $1498
Net Assets $314,718
Superannuation is:
Husband $ 12,412
Wife $ 31,893
The parties agree on a splitting order so that a base amount of $9,740.50 is allocated to the husband in respect of the wife's superannuation.
What are the parties’ contributions?
The parties had no assets at the commencement of the relationship. When the parties met in China the husband was studying for his honours degree. The wife, already qualified [in the healthcare industry] in Columbia, was in China to study.
The husband completed his honours degree and then commenced Ph.D studies. He was paid a grant of $18,000 a year. In 1995 he spent a year in China. He did not finish the degree.
The parties moved to Melbourne in 1992 and the first child was born in October. The wife studied English. From January to July 1994 she completed English for Vocational Education and Training. In 1995 she completed a course in English for Healthcare Professionals. The parties’ second child was born in August 1995 and in September 1995 the wife passed the occupational English test.
She worked in a small [workplace] for 6 to 12 months and at the same time did a part-time course for [omitted].
She passed the written component of the [omitted] examinations in 1998. She commenced working at [workplace omitted] for a year. She passed the clinical examination in 1999, and for a number of years worked [in the healthcare industry].
She passed the exams to [work in the healthcare industry] Services are provided to her by the [workplace] in which she works. She pays 40% of the fees she receives to the [workplace] for these services.
The wife has had well-paid employment since 1998. Her taxable income in the year ending 30 June 2008 was a little over $150,000, and in addition she paid a salary of about $38,000 to the husband as her practice manager.
The husband received a bequest of $15,000 which was used as the deposit for purchase of the home, but otherwise his financial contribution has been limited. During his Ph.D. studies he received a grant of $18,000 a year but otherwise he has done some part-time teaching and received social services payments.
The parties dispute the extent to which each contributed to the care of the children and the home maker role. The husband says that he did the major part of that work, including the organization of the construction of a new home.
The wife is that she did much of the cooking, housework and care of the children as well as working and claims that the husband spent much of his time at his computer. She gives considerable detail in her affidavit. She says that she urged her husband to finish his Ph.D. and to obtain work but he would not.
Each party has their own perception of what they did. Of necessity, the husband must have undertaken much of the care of the children. His pursuit of Ph.D. studies was mutually agreed. There is some dispute between the parties about the extent to which each cared for the children and the home, and the extent to which the wife urged the husband to obtain employment. Nonetheless, until separation or shortly prior to it each carried out their respective roles in the marriage. The wife's greater financial contribution has been matched by the non-financial and other contributions of the husband. The parties’ contributions are equal.
What are the parties future needs?
The wife is 48, four years older than the husband, aged 44. Both are in good health.
The wife says that her current income is in the region of $145,000-$150,000. She says that she has reduced her hours of work in the week in which she has the children. She has earned more in previous times by working longer hours. Given her professional qualifications and experience the wife has a substantial and secure earning capacity.
The husband says that in his employment since March 2009 he has earned about $300 per week. There is some dispute about this. However, the real issue is his income earning potential.
From March 2009 the husband was employed as an [omitted].
More recently that work has reduced and he is now employed by the same firm doing [occupation omitted]. He described how he received his work and how he was paid.
He has enrolled in a Masters of [omitted] at [omitted] University. He has not commenced studies. He said that he considers that once he completes that degree he should be able to obtain employment with a salary of about $60,000.
He had spent some time working on a business plan for [omitted]. He is no longer pursuing that business.
The husband has an honour’s degree from [omitted] University. He pursued Ph.D. studies and, according to the wife, his thesis reached the stage where it required editing. The wife says that the husband could have completed his Ph.D. and received his degree but that he lost interest. The husband does not dispute this.
The husband’s studies mean that he must have acquired considerable research and analytical skills, applicable in employment not necessarily related to his particular interest in [omitted].
There is no evidence from either party about the type of employment the husband could obtain, but I am satisfied that with appropriate effort his income earning potential is substantially higher than his current income. It is not as great as the wife's, but still substantial.
The wife pays the husband child-support at the rate of $330 a week. She is paying school fees and additional school expenses. The oldest child attends [M] College, the next child [S] College and the youngest child [P] Primary School. Fees at [S] College are $4,040 for three terms, and [P] Primary School $2,332. She has paid for books and uniforms. She says that the husband paid $400 towards the oldest child's expenses.
Because the wife has the youngest child for some additional time she has more of the care of the children than the husband. She is paying child support and school expenses. Consequently, she is carrying the major part of the financial cost of the children.
The significant consideration in this case under s.75(2) is the wife's greater income earning ability. There should be an adjustment of 7½ % in favour of the husband
Is the order just and equitable?
The distribution of the net assets of $314,718 is 57½%, $180,962, to the husband, and the 42½ to the wife $133,756.
The issues under this heading, who should receive the matrimonial home and how chattels be divided, I have already dealt with. The just and equitable way to put the result into effect is to order that the wife pay the appropriate amount to the husband and retain the home.
Distribution is:
Wife Husband
Property T $234,174
Ford Territory $ 3,072
Barina motor vehicle $ 8,000
U. S. A. Bank account $ 553
Colonial first State investment $ 7,828
Shares $ 7,258
wife's bank account $ 1,863
husband's bank account $ 442
contents of Property T $ 18,450
contents of Property R $ 7,860
Add back(husband $ 18,716
Add back (wife) $ 8,000
Payment wife to husband -$ 130,305 $130,305
Council for footpath -$ 1,498
$ 133,756 $180,962
I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate: Jan Smith
Date: 10 February 2010
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