BECKER & BECKER
[2010] FMCAfam 1093
•7 October 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BECKER & BECKER | [2010] FMCAfam 1093 |
| FAMILY LAW – Property – where the parties’ debts exceed the non-superannuation assets – whether an order should be made apportioning liability for the debts – whether a superannuation splitting order should be made. |
| Family Law Act 1975, ss.79, 75 |
| AJO v GRO (2005) FLC 93-218 Re NHC & RCH (2004) FLC 93-204 |
| Applicant: | MS BECKER |
| Respondent: | MR BECKER |
| File Number: | NCC 112 of 2010 |
| Judgment of: | Terry FM |
| Hearing date: | 27 September 2010 |
| Date of Last Submission: | 27 September 2010 |
| Delivered at: | Newcastle |
| Delivered on: | 7 October 2010 |
REPRESENTATION
| The Applicant : | Self Represented |
| The Respondent: | Self Represented |
ORDERS
That the husband and wife do all acts and things and execute all deeds, documents, instruments and writings necessary to sell Property L being the whole of the land comprised in Certificate of Title [omitted] (“the property”) on the following terms:
(a)the property be listed for sale with a real estate agent agreed between the parties;
(b)in the event that the parties cannot agree on the nomination of such agent they shall jointly approach the President of the Real Estate Institute of New South Wales and accept his or her nomination of a real estate agent to sell the property;
(c)in the event the parties are unable to agree on a listing price, the time of listing, the method of sale and conditions of such sale in respect of the property they shall accept the recommendations of the real estate agent appointed pursuant to these orders for the sale of the property in respect of each such matter;
(d)upon completion of the sale the proceeds of sale shall be applied as follows:
(i)firstly to pay all costs, commissions and expenses incurred in respect of the sale;
(ii)secondly to pay all outstanding municipal rates and other levies due in respect of the property;
(iii)thirdly, to pay the amount required to discharge the mortgage registered over the property in favour of St George Bank;
(iv)fourthly to pay the balance to the wife.
That the wife is declared the owner to the exclusion of the husband of the Toyota Tarago motor vehicle registration no. [omitted] and the husband shall forthwith upon presentation to him by the wife of the necessary documents sign all documents required to transfer to the wife at the expense of the wife the whole of his right title and interest in the motor vehicle.
That the wife is declared the owner to the exclusion of the husband of the 2001 Ford Falcon motor vehicle registration no. [omitted] and the husband shall within seven days of the date of these orders deliver up possession of the vehicle to the wife.
That unless specified in these orders and except for the purpose of enforcing payment of any money due under these orders or subsequent orders, each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in possession of each party and superannuation standing in their respective names.
That in the event that either party refuses or neglects to comply with the provisions of these orders the Registrar of the Federal Magistrates Court of Australia at Newcastle is hereby appointed to execute all deeds and documents in the name of the defaulting party.
That there be liberty to apply in relation to consequential orders.
That all applications are otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Becker & Becker is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT NEWCASTLE |
NCC 112 of 2010
| MS BECKER |
Applicant
And
| MR BECKER |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Becker and Mr Becker separated in January 2009. They were in a relationship for almost eight years and were married for almost six years.
The parties are in a dreadful financial position. The bank are pressing for the sale of the former matrimonial home at Property L and it is likely that once the home is sold a debt of more than $50,000.00 will still be owed to the bank.
The only substantial unencumbered non-superannuation asset is a Toyota Tarago motor vehicle registered in joint names which is worth about $18,000.00.
The parties have $88,000.00 of superannuation between them.
It was the wife’s case that the husband was entirely to blame for the parties’ financial predicament. She sought orders that he transfer the Tarago to her, pay 100% of any shortfall owing to the bank after the sale of the home, borrow $48,000.00 to make a cash payment to her and transfer 100% of his superannuation to her.
The husband rejected the suggestion that the parties’ financial predicament was solely his fault. He sought orders that the Tarago be sold and the proceeds used to reduce the mortgage, that the parties pay equally any shortfall arising from the sale of the home and that they each keep their own superannuation. He offered to return a Ford motor vehicle of minimal value to the wife.
Evidence
The wife relied on her amended application filed on 20 July 2010, affidavits filed on 25 February 2010 and 3 September 2010, and her financial statement filed on 3 September 2010.
The wife filed affidavits by her friends Ms W and Ms O. Ms W was not available for cross-examination and the wife did not seek to rely on her affidavit. Ms O was available but her evidence was largely a recitation of things told to her by the wife and her affidavit contained little admissible evidence. After this was raised with the wife she agreed that she would not rely on Ms O’s affidavit.
The husband relied on his response filed on 9 April 2010, his affidavits filed on 9 April 2010 and 13 September 2010 and his financial statement filed on 6 September 2010.
The husband and wife were both cross-examined.
Background
The husband and wife met in March 2001 when the husband moved in next door to where the wife was living.
The wife was separated and was living at Property L, [L] with her children [A], 6, [B], 4 and [C], 3. The husband was also separated and his children [D], 5 and [E], 2 were spending time with him on alternate weekends.
The husband and wife formed a relationship and eventually married in [omitted] 2003.
The wife’s children lived with the parties throughout. The husband’s children spent time with the parties on alternate weekends and during school holidays, save for one period of 4-5 months when they lived with the parties.
The [L] property became the parties’ home. The wife became the sole owner of it as a result of a property settlement with her former husband. In July 2005 she transferred a 20% interest in the property to the husband.
The [L] property was mortgaged when the parties commenced their relationship and over the years the mortgage was increased on several occasions.
By the time the parties separated in January 2009 at least $420,000.00 was owing on the mortgage.
The husband made no mortgage payments after separation and the wife (who initially remained in the home with her children) ceased making payments in November 2009.
The parties have recognised for some time that the home must be sold, indeed the bank is demanding it, but the parties have been unable to work together so far to achieve a sale. They expect to receive $400,000.00 or less for the home, and the mortgage now stands at $454,000.00.
The law applicable to the resolution of disputes about property settlement
Pursuant to s.79 of the Family Law Act, a court can make such orders as it considers appropriate altering the parties’ interests in property. s.79 (2) provides that the court shall not make an order under this section unless the court considers that it is just and equitable to do so.
The procedure usually adopted in determining applications for property settlement is:
i) to identify and value the assets and liabilities of the parties;
ii) to assess the contributions of the parties under s.79(4)(a), (b) and (c) and to express those contributions as a percentage;
iii) to consider the matters set out in s.79(4)(d),(e),(f) and (g), which include the matters in s.75(2), so far as they are relevant, and to determine whether any adjustment should be made as a result to the contribution based entitlements;
iv) to consider the effect of those findings and resolve what orders are just and equitable in all the circumstances of the case.
I will follow this process in these proceedings as far as I can, but in circumstances where the debts exceed the value of the non-superannuation assets following these steps will not inevitably lead to a satisfactory resolution of the parties’ competing claims.
The Assets and Liabilities
I am satisfied that the assets are as follows:
Description
Ownership
Value
Property L 80% wife 20% husband 400,000.00 2001 Ford Falcon Wife 1,200.00 Nissan Patrol Husband 1,000.00 Toyota Tarago Joint 18,000.00 Household contents Wife 2,500.00 Household contents Husband 2,000.00 Sporting equipment Husband 1,500.00 Add back amount received by husband when made redundant by [omitted] in February 2010 Husband 25,000.00 Total 451,200.00
The parties believe that the [L] property is worth between $390,000.00 and $410,000.00 and I have adopted a working value of $400,000.00 for the purposes of this decision. The precise value of the property will be fixed by its sale.
The parties each produced Red Book printouts from the internet in respect of the 2001 Ford Falcon. Red Book printouts give different prices depending on the condition of the vehicle, and the odometer reading also has a bearing, and are at best a guide to value.
The wife said that according to the Red Book the Ford Falcon station wagon ought to be worth $4,000.00 although in her financial statement she estimated it to be worth $500.00. The husband said that the vehicle was worth $1,200.00 as it was in poor condition and unregistered.
I will include the vehicle in the pool at a value of $1,200.00.
The Red Book printout for the Tarago gave $23,500.00 as its upper price limit but the Tarago needs some work. The husband and wife agreed that $18,000.00 was a reasonable value to place on this vehicle.
The Nissan Patrol was purchased post-separation by the husband. I will place it in the pool at $1,000.00 as the husband’s admission as to its value is the only evidence I have.
The wife estimated that her household contents were worth $2,500.00[1]. Some of the contents were brought into the relationship by the wife and are now 7 or more years old, but the wife did retain a Queen Size bed purchased for $3,000.00 during the relationship. I will adopt the wife’s estimate of $2,500.00 as the value of her furniture.
[1] Wife’s Financial Statement filed 3 September 2010.
The husband’s estimates of the value of his household contents were $1,500.00 in his most recent financial statement and $2,000.00 in his financial statement filed on 9 April 2010. There was no other evidence of the value of these items and I have included the husband’s contents in the pool at the higher amount of $2,000.00.
The husband admitted that he had sporting equipment such as [omitted] in his possession. He estimated its value variously at $1,500.00 in his first financial statement and $1,000.00 in his current financial statement. I have included the sporting equipment in the pool at $1,500.00.
The wife alleged that the husband had much more sporting equipment than he disclosed and alleged that he had cleaned out the shed at the time of separation and taken items which belonged to her children and her father. The husband denied that he had taken substantial quantities of sporting equipment at separation or had taken anything which did not belong to him.
I have no reason to prefer the evidence of one party over the other on this issue and cannot resolve this dispute.
In February 2010 the husband received a termination payment of $25,000.00 from his former employer [omitted]. The money has all been used up but for the following reasons I have included the whole of this amount in the pool as a notional asset.
The husband commenced working for [omitted] in either late 2004 or early 2005,[2] and he was made redundant effective February 2010. The majority of the redundancy he received was attributable to his employment during the relationship.
[2] Husband’s affidavit filed 9 April 2010 paragraph 39 cf paragraph 78
None of the $25,000.00 still exists. The husband used it as follows:
(a)To repay $3,300.00 to his parents. His parents lent him this sum in December 2008 and he used it to establish separate accommodation post-separation.
(b)To pay $12,000.00 in legal fees to Brazel Moore, the lawyers then representing him in the property proceedings.
(c)To pay living expenses and to pay for some courses which he undertook with a view to improving his employability.
In AJO v GRO[3] the Full Court identified three categories of cases where it was appropriate to notionally add back to the pool assets which no longer existed. The Full Court said that it was appropriate to add back:
a)monies spent on legal fees;
b)monies disbursed by way of premature distribution of matrimonial assets;
c)monies lost by one party either during or after the marriage as a result of a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or as a result of reckless negligent or wanton behaviours which had the effect of reducing or minimising the value of assets.
[3] AJO v GRO (2005) FLC 93-218
There is a clear case for adding back the $12,000.00 paid to the husband’s lawyers. To do otherwise would be to force the wife to contribute to payment of the husband’s legal fees.
There is also a clear case for adding back the $3,300.00 paid to the husband’s parents. The husband had no right to prioritise re-payment of his parents over re-payment of the substantial mortgage debt owed by the parties.
According to the husband the remaining $9,700.00 was spent mainly on living expenses. On occasions money spent on reasonable living expenses is not added back. In Re NHC & RCH[4] the Full Court said as follows:
“There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge. (Marker [1998] FamCA 42, 1 May 1998, per Baker, Kay and Chisholm JJ.)…”
[4] Re NHC & RCH (2004)FLC 93-204
I do not consider however that it was reasonable or necessary for the husband to spend this money on living expenses in preference to using it to reduce the mortgage.
The husband had already secured new employment before he received the redundancy payment, and there was no evidence that his income from that employment was insufficient to meet his day to day living costs. There was also no evidence that educational courses were necessary to help him gain employment.
I therefore intend in the exercise of my discretion to add the whole of the $25,000.00 back to the pool as a notional asset.
I take into account that the husband was employed by [omitted] for five years and that during the last of those years he and the wife were separated, but during that last year the husband made no contribution to the mortgage repayments for the [L] property, even though some of the mortgage debt related to legal expenses he had incurred during the relationship for a parenting matter in respect of his children. I am satisfied that it is just and equitable that the whole of the $25,000.00 is added back.
I am satisfied that the liabilities are as follows:
Description
Ownership
Value
Mortgage to St George Bank Joint 452,495.80 Land & Water Rates Joint 2,186.28
Balance of St George Mastercard debt owing in May 2009 Wife 1,500.00 Total 456,182.08
The mortgage balance and the amount owing for the land and water rates were agreed.
The St George Mastercard is in the wife’s sole name. The wife sought to have the debt she currently owed, namely $7,053.00, included as a liability but for the following reasons I do not consider that this would be appropriate.
When the parties separated $6,470.00 was owed on the card. The husband’s evidence was that immediately following separation the parties sold items on E-Bay and used the proceeds of sale to reduce the debt to $1,500.00. The debt has been built up again by the wife using the card post-separation.
The wife agreed that items had been sold on E-Bay after separation but professed not to remember how much had been paid off the card as a result.
The husband produced two credit card statements, one for January 2009 showing the balance as $6,470.00 and one for April 2009 showing the balance as $1,500.00. The intermediate statements were not available and there was no evidence about the payments made between January 2009 and March 2009. The wife said that the husband’s then solicitors had not asked her for any of the intermediate statements and that she had not brought them to court.
The wife was evasive when answering questions about this issue.
I accept that the credit card debt was reduced as the husband claimed. The wife had sole use of the card post separation and the husband should not be required to accept responsibility for her post separation spending choices. I do not consider that anything more than $1,500.00 should be included as a liability.
The wife sought to have included as a liability a debt of $3,600.00 which she owes her father. The wife’s father provided this money to the wife post-separation and I not persuaded that it should be included in the pool as a liability.
Using the figures in the above tables the parties’ have assets of $451,200.00 and liabilities of $456,182.08 and thus have non-superannuation assets of negative $4,982.08. This masks the true difficulty of the parties’ situation however. $25,000.00 has been included in the pool as a notional asset, and in addition no allowance has been made for the further interest which will accrue on the mortgage debt up to the time the house is sold, the legal costs of the bank’s solicitors which the parties will ultimately have to pay, or the costs commissions and expenses of the sale. The agent’s commission alone will be in the vicinity of $10,000.00 or $11,000.00 if the home sells for $400,000.00.
The reality is that the parties are likely to owe the bank well in excess of $50,000.00 once the home is sold, and the only asset of substance which could be sold to reduce this debt is the Tarago valued at about $18,000.00.
The parties have the following superannuation:
Description
Ownership
Value
[1] Super (30/06/2010) Husband 40,273.00 [2] (30/6/10) Wife 20,629.60 [3] Super (31/12/09) Wife 27,909.99 Total $88,812.59
Contributions to the non-superannuation asset pool
It is difficult to get a clear picture of when the parties started living together. The wife alleged in her affidavit that the husband did not live with her on a “permanent” basis until the parties married in [omitted] 2003,[5] but elsewhere in her affidavit talked of the husband’s nephew Mr J “moving in with us” in October 2002,[6] and complained about the fact that Mr J did not contribute financially to the home or do any chores. The wife also gave evidence of her involvement with the care of the husband’s children each alternate weekend prior to the marriage and of paying for two family holidays in 2002 for the two adults and five children.
[5] Wife’s affidavit filed 25 February 2010 paragraph 2
[6] Wife’s affidavit field 25 February 2010 paragraph 50
It is impossible to fix a precise date on which cohabitation commenced but I am satisfied that prior to their marriage the parties were for some time in a relationship which involved them providing financial and non-financial support to each other. I do not accept that this support was all a one way street (and provided only by the wife) as the wife claimed. The wife is very bitter toward the husband, a bitterness which coloured much of her evidence and made it unreliable on the issue of the husband’s contributions.
The parties both attempted to identify the assets they brought into the relationship/marriage.
The wife focussed on what she had when the parties married in [omitted] 2003 rather than what she had in 2001. By 2003 the wife was the sole owner of the [L] property and it was her case that it was then worth $440,000.00.
There was no independent evidence of the value of the home in March 2003 or at any other time and the wife provided no basis for her estimate that it was worth $440,000.00. The husband estimated that the home was worth $380,000.00 in 2001. He provided no basis for this estimate.
The wife asserted that $220,000.00 was owed on the mortgage when the parties married but overlooked the fact that she had increased the mortgage to $250,000.00 in mid 2002.
The wife’s evidence was that she also had two vehicles worth $25,000.00 and $5,000.00 respectively and furniture and tools to the value of $15,000.00. I accept that the wife owned the vehicles, as she had purchased them (or at least one of them) in mid-2002 by increasing the mortgage but there was no evidence of their value in March 2003, nor was there any evidence of the value of the furniture and tools.
The husband focussed on what he had in 2001 rather than in 2003 when the parties married. His evidence was that in 2001 he had $49,298.15 from his property settlement, a [omitted] business with an estimated value of $15,000.00, minimal furniture and household contents and a 1985 Toyota Corolla.
The husband produced a document which tended to confirm that he became entitled to $49,298.15 on 1 March 2001 as a result of a property settlement although whether he actually received this amount (which the wife disputed) was not established by any documents. He did not explain where the money went and it apparently no longer existed in 2003 when the parties married. The husband provided no evidence of the value of the other assets. There was a document which confirmed that he sold his [omitted] business in 2005 for $15,000.00 but this is not evidence of its value in 2003 or 2001.
The wife said that at the time of the marriage the husband owned two lawnmowers, a Hilux Ute, a box trailer, tools, gym equipment and minimal household furniture. It was her case (no foundation) that his assets at that time were worth $4,650.00 in total.
I cannot make precise findings about the value of assets owned by each party at any time between 2001 and 2003. I am satisfied however that the wife’s initial contributions considerably exceeded the husband’s, as she brought in the significant asset of equity in the [L] property. I am satisfied (because the bank advanced further loans against it later on) that it still had a reasonable amount of equity in it when the parties married in [omitted] 2003, probably to the extent of $130,000.00 or more.
From 2001 until late 2004 the husband earned income operating his [omitted] business. He then obtained full time employment with [omitted]. He worked for [omitted] for the next four years and was still employed by them when the parties separated in January 2009. The [omitted] business was sold in February 2005 for $15,000.00.
The husband provided a summary of his taxable income from 2002 to 2008 and the wife did not dispute this evidence. His income was $11,005.00 for the 2002 financial year, $13,449.00 for 2003, $28,836.00 for 2004, $31,010.00 for 2005, $51,711.00 for 2006, $51,245.00 for 2007 and $54,409.00 for 2008.
The wife was engaged in home duties and study between 2001 and early 2002. In early 2002 she obtained work as a [omitted]. The wife said that she earned an estimated $60,000.00 per annum in this employment and the husband did not dispute this evidence.
The wife resigned from her job in December 2003 and she did not give any evidence in her affidavit about her subsequent employment. In her Financial Statement filed on 25 February 2010 she deposed to being a [occupation omitted] and said that she had been employed there for five years and four months, which would suggest that she commenced with [omitted] in late 2004.
The wife did not provide any comprehensive evidence of her income during the marriage. She was earning $83,000.00 per annum in February 2010.
The wife went into some detail about her financial contributions during the marriage and was highly critical of the husband for his spending choices and alleged failures to contribute financially. She was especially critical of the husband for his holiday choices (eg a trip to Fiji) but she acquiesced to these activities at the time. The wife claimed that the husband wasted a very large amount of money buying items of Ebay (an activity to which she introduced him) but there was simply no concrete evidence which would allow me to find that this claim had substance.
It was abundantly clear during the hearing that the wife is extremely bitter toward the husband and I am not convinced that her evidence about his contributions (or lack thereof) was reliable. The husband earned a reasonable income for much of the marriage and I am satisfied that he made a reasonable financial contribution on a day to day basis, as did the wife.
The wife emphasised the importance of her own homemaker and parenting contributions during the marriage and was disparaging of the husband’s efforts. The husband gave evidence of a variety of contributions to parenting and to the renovation and maintenance of the home, and I accept that both he and the wife made substantial non-financial contributions.
The difficulty with this matter however is that while the wife introduced equity in the home and while each party made financial and non-financial contributions during the marriage, the end result of all the parties efforts is a debt, not a pool of assets available for division, and it is necessary to have a close look at how each party contributed to the growth of the mortgage debt.
For a number of reasons it is very difficult for me to be sure that I completely understand how and why the mortgage debt grew. First of all, some of the evidence in the affidavits was confusing and contradictory. The wife initially claimed for example that the mortgage was increased to purchase a Toyota Hilux for the husband for $35,000.00. Elsewhere in her evidence she referred to this vehicle as having been leased, and the husband said that he took out a personal loan to purchase it. I cannot resolve disputes such as this.
Secondly, some of the wife’s evidence raises a possibility that the mortgage may in fact have been a line of credit. She said for example that the costs of workers compensation for the husband’s business were “paid out of the mortgage along with other bills associated with the husband’s business[7].” If this is so the lump sum borrowings which I have collated in paragraph 79 below provide a very incomplete picture of how the debt to the bank ended being $452,495.80.
[7] Wife’s affidavit paragraph 80. See also paragraphs 91, 94 and 104.
Thirdly, at various times during the marriage amounts were paid off the mortgage, such as $6,000.00 when the husband’s [omitted] business was sold and $4,500.00 when the van was sold, and I cannot be certain that I have a complete understanding of the lump sum repayments.
Doing the best I can the situation with the mortgage appears to be as follows:
Date
Activity
Balance owing
2001 Balance owing on mortgage 220,000.00 2002 Wife increases mortgage to buy Ford Falcon [registration omitted] and (possibly) Ford Econovan (total borrowing $30,000.00) 250,000.00[8] Nov 2003 Wife increases the mortgage by $80,000.00 to fund her family law litigation 330,000.00[9] May 2004 Mortgage increased by $30,000.00 to fund construction of shed on [L] property E360,000.00[10] May 2005 Mortgage increased to fund the husband’s legal costs of parenting proceedings with his ex-wife. There was a dispute about amount of the costs ($48,000.00 according to wife and $30,000.00 according to husband and no documentary evidence to verify either contention) No evidence about the resulting balance Amount owing at separation in 2009 432,552.03 (wife) or
420,000.00 (husband)
January 2009 Husband ceases contributing to mortgage repayments after he moves out November 2009 Wife ceases making mortgage payments September 2010 Mortgage balance 452,495.80 [8] Wife’s affidavit filed 25 February 2010 paragraph 19.
[9] Wife’s affidavit filed 25 February 2010 paragraph 21.
[10] Wife’s affidavit filed 25 February 2010. My estimate of balance.
While it is impossible on the state of the evidence to get an absolutely clear picture of how and why the mortgage increased, one thing which is clear is that it was not all down to some profligacy by the husband. The wife increased the mortgage by $110,000.00 to fund her own family law litigation and to purchase a motor vehicle. $30,000.00 was used to construct a shed on the [L] property and while the wife was highly critical of the husband for the fact that a very large shed was constructed, she acquiesced at the time in the construction of the shed. I am also unable on the state of the evidence to make the finding which the wife seemed to invite, namely that the husband’s reckless spending on holidays and lifestyle items was responsible for the predicament in which the parties currently find themselves.
In my view the parties must share responsibility for the fact that the mortgage debt increased so substantially during their relationship.
Post separation contributions
After separation in January 2009 the wife continued to live in the [L] property. Until November 2009 she made mortgage payments in the amount of $2,574.00 per month or $600.00 per week. She also paid the rates and insurance and paid for some maintenance on the home.
The husband made no mortgage payments after separation and the wife has made none for the last ten months.
Each party criticised the other for being obstructive and unco-operative post separation concerning the sale of the property and the sale of the Tarago (at a time when the wife was willing to sell it).
I cannot on the state of the evidence be satisfied that one party more than the other is to blame for the failure to achieve a sale of the property or the Tarago and while the wife was paying the mortgage she had sole occupation of the home and the husband had to pay for accommodation elsewhere. The mortgage payments were high but all things considered I am not satisfied that either party should be adjudged to have contributed more (or been more difficult and unco-operative than the other) post separation.
Assessment of contributions to the non-superannuation pool
I am satisfied that the parties financial and non-financial contributions from whatever time between 2001 and the time of the marriage they found themselves in a committed and mutually supportive relationship until separation should be assessed as equal, and that there are no post-separation contributions which would justify an adjustment in favour of either party.
I am also satisfied however that the wife brought in assets which considerably exceeded in value those brought in by the husband.
If there was a pool of assets available for division this would warrant the wife receiving a greater share of it, but there is no such pool, and I am not satisfied that this finding should translate into a finding that the husband should pay a greater share of the debt than the wife.
The husband was debt and mortgage free when the parties met and later married, and the wife brought a significant mortgage debt into the marriage. Both parties are responsible for the subsequent increase in the debt, and nothing in my findings about contributions would justify an outcome which required the husband to pay more of the debt which will arise on the sale of the home than the wife.
Contributions to the superannuation pool
The wife’s evidence, accepted by the husband, was that she had superannuation worth $20.000.00 at the time of the marriage.
The husband also claimed that he had $20,000.00 superannuation at the time of the marriage. The wife disputed this and said that it was not established by documents. However the husband currently has superannuation worth $40,000.00 and given his income it is somewhat unlikely that he would have accrued this amount over the course of the marriage, even allowing for the fact that he put in an extra $5,000.00 in addition to employer contributions.
I consider it more likely than not that each party and not just the wife brought superannuation into the marriage. Each party accrued further superannuation during the marriage as a result of employer contributions and the husband contributed the additional $5,000.00 from his wages.
I am satisfied that each party should be treated as the major contributor to their own superannuation and as having made a modest indirect contribution to the superannuation of the other party.
The wife has $48,500.00 worth of superannuation. This represents 55% of the superannuation pool. It is reasonable to assess contributions to superannuation as having been 55% by the wife and 45% by the husband, given that the wife’s contributions in the eighteen months since separation are likely to have considerably exceeded the husband’s as a result of her higher income. No adjustment between the parties in terms of the amount of superannuation they each have is warranted on the basis of contributions.
Section 75(2) matters
As required by s.79(4)(e) I now turn to consider the matters in
s.75(2) of the Family Law Act. Ss.79(4)(d), (f) and (g) have no relevance to these proceedings.
The wife is 40. She is in good health and earns $82,836.00 per annum as a [occupation omitted].
Following these proceedings the wife will retain her furniture and personal belongings.
The [L] property must be sold and present indications are that the parties will be left with a debt of more than $50,000.00 following the sale. The bank will pursue repayment of this debt as it sees fit and in a worst case scenario could pursue the wife for the entire debt if the husband declares himself bankrupt. The bank is not a party to these proceedings, and I cannot make orders apportioning liability for the debt which will be binding on the bank.
The wife is in possession of the jointly owned Toyota Tarago which has a value of $18,000.00. She is keen to retain this vehicle. It appeared to be her hope that if she retained the Tarago she might be able to do a deal with the bank to her advantage which included selling the Tarago and paying the money off her “share” of the bank debt. Whether this hope is a realistic one I am unable to say.
The wife has a credit card debt of $7,000.00 and she owes $3,600.00 to her parents.
The wife has superannuation totalling $48,500.00. Unless the wife chooses to try and access it on hardship grounds it can be preserved free from any claim by the bank.
There are no children of the marriage. The wife has the care of the three children from her previous marriage, [A], aged 15 and [B] and [C], 13. She receives $22.00 per week child support from these children’s father. Clearly the wife bears the overwhelming financial responsibility for the support of these children.
The husband is almost 50. He has been employed as a [omitted] for the past four months and earns about $39,000.00 per annum. The husband’s income fluctuates weekly depending on the number of shifts he does, where he does those shifts and whether any of the shifts attract shift penalties.
The husband has had a variety of employment in the past. He worked as a self-employed [omitted] contractor between 2001 and 2005. He worked for [omitted] for five years as a [omitted] and earned in excess of $50,000.00 per annum. He had a couple of different jobs earlier this year and he now works as a [omitted]. He is clearly a resourceful man who is capable of finding some way of earning a living.
The husband has little property in his name. He has some furniture, some sporting goods, a motor vehicle of minimal value and he has possession of the Ford motor vehicle also of minimal value.
The husband like the wife will be left with a substantial debt following the sale of the [L] property, and he has little capacity to repay it.
The husband has superannuation of $40,000.00.
The husband’s daughters [D] and [E] are almost 14 and 11. According to his most recent Financial Statement he does not pay any child support for these children.
I am required by s.75(2)(o) to take into account any other fact or circumstance which the justice of the case requires me to take into account and I take into account that the husband assisted financially with the support of the wife’s three children during the marriage and during the period preceding the marriage when the parties were at least to an extent co-mingling their financial affairs. The wife in turn made a contribution to the care of the husband’s two children but these two children spent substantially less time in the family.
Conclusion concerning s.75(2) matters
It is meaningless to consider whether a percentage adjustment should be made in favour of either party for s.75(2) factors in respect of the non-superannuation pool when the non-superannuation pool has a negative value.
The wife sought an adjustment in her favour in respect of the superannuation. This would be one way of compensating the wife if I was of the view that the husband should bear a greater responsibility for the debt situation than the wife but this is not my view and, nothing else justifies the making of a superannuation spitting order.[11] The wife already has more superannuation then the husband, she is the stronger income earner and is ten years younger than the husband. The husband deserves the opportunity to either preserve his superannuation from creditors or access it in an attempt to appease the bank if he chooses.
[11] There was no evidence that the wife had given procedural fairness to the Trustee of the husband’s fund but this could have been cured if it was otherwise appropriate to make a superannuation splitting order by giving the wife time to give the Trustee procedural fairness before the order was made.
Just and Equitable
The wife sought an order that the husband pay her $48,000.00, transfer 100% of his superannuation to her, pay the shortfall on the mortgage, sign the Tarago over to her and return the Ford Falcon to her.
Such an outcome would simply not be just and equitable.
There is no $48,000.00 in the pool to give to the wife, and the power I have under the Family Law Act is to divide up the existing property of the parties, not to force one party to take out a loan and create property.
For reasons outlined earlier I do not consider that it would be just and equitable to make a superannuation splitting order and denude the husband of the only asset of value in his possession.
There is also no justification for an order that the husband pay 100% of the shortfall debt when each party has contributed to it and the husband’s income earning capacity is less than that of the wife. Consistent with my findings it is just and equitable that this debt lies where it falls.
The husband offered to return the Ford Falcon (of minimal value) to the wife and I intend to order that he do so, but I am not going to order that he register the vehicle prior to its return.
There remains however the issue of the Tarago which is registered in joint names.
Translating my finding about equality to contributions to this asset means that the parties would remain entitled to half of it. The husband sought an order that the vehicle be sold and the money received be paid off the bank debt. If this occurred the husband would continue to benefit from his half interest in the vehicle.
I am mindful of the fact however that the husband received a redundancy of $25,000.00 in February 2010 and that rather than use it to reduce the mortgage he used it all for his own benefit. To even up this situation I intend to order that the husband sign his interest in the Tarago (worth about $18,000.00) over to the wife. If the wife can use this to broker a better outcome for herself with the bank then that is a matter for the wife.
I do not intend to make an order that the husband pay half of the wife’s St George credit card debt or half of the amount owing at separation. Most of the debt on the card was incurred by the wife post separation and the wife is in a superior income earning position to the husband.
The wife sought an order that the husband return certain chattels to her including camping equipment and sinker moulds.
It was clear from cross-examination that there was a dispute between the parties about the extent if any to which the husband had taken items which did not belong to him at separation. He admitted taking a tent which the wife had brought into the relationship but said that he had left the wife a much larger tent purchased during the relationship.
The husband said that he was willing to give the sinker moulds and a couple of other items back to the wife and if he chooses to do so he may, but I do not intend to make any order about it. The items are not of significant value. I have insufficient information about the description of the items or the numbers (eg the number of sinker moulds) to allow me to draft precise orders and the last thing the parties need are orders which they each interpret differently and which lead to enforcement proceedings.
As to the mechanics of the orders about the sale of the property, during the hearing the wife proposed that it be listed for sale with a real estate agent who had offered to auction it without requiring the parties to pay any upfront auction costs. The agent proposed charging 2.75% commission. The husband said that he would prefer the property to be listed with an agent who would charge 2.5% commission.
The wife did not provide sufficient details about her proposed selling agent to allow me to make an order for their appointment. I intend to make an order that the property be listed for sale with an agent agreed between the parties and failing agreement be listed with an agent nominated by the President of the Real Estate Institute of NSW. However I strongly hope that if the wife forwards the husband a listings agreement from her proposed agent that the husband will not refuse to sign simply because of the difference of 0.25% in commission. The difference between the two commissions if the property sells for $400,000.00 is $1,000.00, and the parties will rapidly lose much more than this is the property is not marketed at once.
I intend to order (because this extremely unlikely eventuality must be covered) that in the event that there is any money left after the property is sold and the bank repaid the wife receive that money. This is just and equitable given that the wife’s initial contributions exceeded the husband’s.
For all of the above reasons the orders shall be as set out at the beginning of this judgment.
I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of Terry FM
Associate:
Date: 7 October 2010
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