Bianco and Bianco
[2009] FMCAfam 433
•15 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BIANCO & BIANCO | [2009] FMCAfam 433 |
| FAMILY LAW – Property dispute – consideration of contribution issues and s.75(2) factors – lump sum spousal maintenance. |
| Family Law Act 1975 |
| Pierce (1998) FLC 92-844 Williams v Williams [2007] FamCA 313 Mallett, in the Marriage of (1984) 156 CLR 605 Rolfe, in the Marriage of (1977) 25 ALR 217 Clauson, in the Marriage of (1995) FLC 92-595 |
| Applicant: | MR BIANCO |
| Respondent: | MS BIANCO |
| File Number: | MLC 5081 of 2008 |
| Judgment of: | Burchardt FM |
| Hearing date: | 9 April 2009 |
| Date of Last Submission: | 9 April 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 15 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | Ms M.L. Smallwood |
| Solicitors for the Applicant: | Pearsons |
| Counsel for the Respondent: | Mr G.F. Holmes |
| Solicitors for the Respondent: | Harwood Andrews |
IT IS NOTED that publication of this judgment under the pseudonym Bianco & Bianco is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 5081 of 2008
| MR BIANCO |
Applicant
And
| MS BIANCO |
Respondent
REASONS FOR JUDGMENT
This is a bitter property dispute over a relatively small pool consisting of about $190,000 of equity in the former matrimonial home, some chattels and about $75,000 worth of superannuation. Although the parties are divorced, it is convenient to refer to them, as they themselves did in their outlines and submissions, as husband and wife.
The husband proposes in effect that he retain all the equity in the former matrimonial home and some of the chattels, and the wife proposes that there be a non-superannuation division of 55 per cent in her favour and seeks spousal maintenance of $100 per week. She further seeks a fifty-fifty division of the available superannuation assets.
For the reasons that follow, I think all the assets of the parties (leaving aside some chattels) should be divided equally and there should be an order for lump sum spousal maintenance in the amount of $10,000.00.
Introductory Facts
The husband was born in 1961 and is 47 years old. He is employed as a [omitted] on a salary of $150,000 per year. He lives with a partner with whom he has been in a relationship for some (unspecified) time. The partner is an [occupation omitted], although she is presently out of work.
The wife was born in 1961 and is also 47. She works [in the hospitality industry] for an average of 40 hours per week. She has not repartnered. Her salary is about $34,000 per year.
The parties commenced to cohabit in 1987 and married in 1988. They separated on 10 April 2007 and both agreed that the relationship thus lasted for 20 years.
They have three children. [X], born in 1989, and therefore now 20 years old, is in the process of trying to build up a business as a [omitted] but as yet, little income has been forthcoming.
[Y] was born in 1990 and is 18 years old. She is presently an unpaid volunteer [at workplace omitted
The last child, [Z], was born in 1992 and is 16 years old. She is still a student. All three children continue to live with the wife in the former matrimonial home at Property B.
The Pool
It is common ground that the home has an agreed value of $280,625 but is encumbered by a mortgage slightly in excess of $80,000, such that its net value is now $197,056.
Those figures reflect, amongst other things, a shortfall of some $40,000.00-$50,000.00 upon the sale of a former investment property at Property D.
The parties own some shares in a company called [C] which, notwithstanding recent turmoil, appear to be still worth in excess of $10,000. The parties also own a number of chattels, none of which are the subject of expert evidence. Since neither side cross‑examined about the value of the various chattels, I will accept as an admission against interest the lowest figures advanced by each side. They include:
(a) boat retained by the husband, $7000;
(b) husband's tools of trade, $1,000;
(c) Mitsubishi car, $2000;
(d) Mazda car, $3000;
(e) husband’s E-type Jaguar, $12,000; and
(f) furniture, no expert evidence as to its value.
Additionally, the parties both have superannuation. In their most recent financial statements, the husband gives a total of $50,177 and the wife $18,900.
Although both parties put on material about some $33,000 in their savings account at separation from the sale of the property at [R], it is now common cause that these have been dissipated on bona fide expenses of the parties.
The husband has also sought to add back into the pool a number of payments he asserts were made on behalf of the wife since separation. They include mortgage payments on the former matrimonial home, mortgage and other payments on the investment property at Property D in a total of $30,000, this being a half‑share of the sums allegedly spent.
For reasons I will set out under the heading of Contribution, I do not think that these add-backs should be made.
Contribution
It is common cause that at the commencement of the relationship, the only really significant asset owned by either of the parties was a home in Tasmania owned by the husband. That was eventually sold or swapped (though there is disagreement about this) for another property at [T] in Tasmania. That was eventually sold in 1999 producing about $30,000 clear funds.
That figure itself was less than the equity in the husband’s original property at the time of the commencement of cohabitation, which was about $65,000. The loss appears to have arisen out of trading losses incurred by one or other or possibly both of the parties in the intervening period. Each tells a different tale and each blames the other for the losses.
It is not in my opinion necessary to do more than note that having married in 1988, their circumstances were such that by 1999, they had only $30,000 clear.
The husband who had been self-employed in Tasmania came to Victoria to get work and in due course the parties settled in Geelong. The $30,000 clear funds were invested in the former matrimonial home.
In 2003 the husband inherited $180,000 from his father, which funds were essentially used to pay out the mortgage (apparently in excess of $160,000) and buy a boat for $15,000, which the husband still retains.
The wife was working at the time the relationship commenced but understandably has worked little since the advent of the three children. It is clear on the material as a whole that she has been the primary caregiver and that following separation, she has effectively been the sole caregiver.
The husband appears to be estranged completely at the moment from [Z] and largely so from [Y] and [X].
This has given rise to immense bitterness about the often vexed area of child support.
Much of the material in the proceeding was addressed towards endeavours to explain to me how much child support has or has not been paid since separation and the legal or other base on which it was paid.
I am not able to say more than it is absolutely clear, and was clear almost immediately once the parties started giving evidence, that they are obsessed with the issue of child support. The husband has done everything in his power to minimise any such payments, including the extraordinary step of putting the paternity of his younger two children formally in issue late last year. He did not pay any child support from September 2008 until March 2009.
The husband has also sought, not improperly, to reduce his child support payments by reference to payments made from time to time to the wife as benefits, such as mortgage payments. It is not clear whether the wife has resisted any such diminution, but I suspect she would if she could.
The bitterness between the parties about child support was palpable.
I have described the husband’s steps in relation to paternity as extraordinary and in my view that is what they were. Although his affidavit material discloses some alleged longstanding disquiet as to paternity, in truth the materials looked at objectively are extraordinarily thin. I think it is far more probable than otherwise that the husband put paternity in issue to enable himself to cease paying child support. That of course has only further alienated his children and I have the clear impression that the husband does not want to pay one penny more in child support than he has to. He was vivid in his evidence that his obligations ceased in the most absolute way upon each child attaining the age of 18.
In a relationship of this length, self-evidently the value of initial contributions falls to be assessed as a relevant consideration but one in which the length of the relationship is also extremely significant. Cases such as Pierce (1998) FLC 92-844, Williams v Williams [2007] FamCA 313 and Mallett, in the Marriage of (1984) 156 CLR 605 all touch upon the extent to which an initial contribution may be either eroded or seen to be less significant as time goes by.
I accept that the question of initial contribution must be judged and assessed as at the date of trial in the light of all relevant considerations. These considerations of course include the importance of recognising the contribution made by the wife as a homemaker and a parent "not in a token way but in a substantial way", Rolfe, in the Marriage of (1977) 25 ALR 217 at 219, quoted by Gibbs J in Mallett at 609.
Here I would take the view that whatever force the initial contribution had, it was certainly far less significant than the inheritance in 2003.
It has not been submitted by counsel for the husband that I should excise the inheritance entirely from the pool, nor in any event would it in my view be appropriate to do so. Nonetheless it constitutes a considerable weighting factor in favour of the husband.
Against this, it was a very long relationship in which I have no doubt each party contributed from day to day as best they were able. As is so common, the husband made the money and the wife looked after the children and the home. I notice there were substantial enough periods of time when she was on her own (in effect) in Tasmania and would have looked after the children entirely on her own. That is not a criticism of the husband who deserves every credit for moving interstate to obtain an income but it does reflect the burden that the wife had to bear.
This brings me to the question of the add-backs. In essence, what has happened is that since separation in April 2007, the wife and children have remained in the former matrimonial home. The husband paid the mortgage and other payments on the property in a total sum of about $36,000 from then till trial. He likewise paid for the costs associated with the Property D property until it was sold.
In this latter regard, the parties once again had differing opinions as to exactly what had occurred in respect of the Property D property - was it rented?, how much rent, if any, was received?, should it have been dealt with differently? - but the most I can find is that it has been sold and crystallised a loss. I am prepared to accept that there were payments made in excess of $20,000 in respect of this property. The husband seeks reimbursement of $12,000 in this regard.
I think the add-backs need to be considered in the light of the relationship of the parties as a whole. The moneys expended on the Property D property would, in my view, more probably than not have been avoided or at least significantly reduced if the parties had moved more rapidly to sell the property as the wife says was appropriate.
Furthermore, although the husband has made the payments on the former matrimonial home, the net effect of those payments has simply been to preserve the asset of the relationship. In the context of a relationship lasting some 20 years, the drawing-down of the curtain in the way sought by the husband is to ignore the obligation he had to support the children and to an extent, their mother.
It would not be just and proper in the overall circumstances of the parties' relationship to add these moneys back in as precise amounts, especially in circumstances where it is wholly impossible to say what the outcome would have been (other than to infer a sale several years ago) if they had not been made.
While the husband’s inheritance is of course a very significant factor, it did take place some four years before separation and that is another aspect of the contribution question that I have taken into consideration.
In all the circumstances it seems to me there should be a loading in the husband’s favour of 20 per cent in respect of contribution.
Future Needs - the Section 75(2) Factors
Here, counsel for the wife pressed his case as one based on future need. If one turns to the matters set out in s.75(2), one is immediately struck by the very considerable disparity in income of the parties. I note that counsel for the husband expressly conceded that the wife’s family benefits were to be excluded for this purpose and I accept that that is a proper concession.
Here the husband makes $150,000 a year in what appears to be secure employment. He lives with a professionally qualified woman who, from the evidence, will be highly likely to be in reasonably well-paid employment within a short period of time. Although the husband was at pains to suggest that he and his partner have completely separate finances, it is clear that there would be some financial benefit to him of the joint household, albeit that it cannot be quantified.
The wife obtains a salary of some $34,000 a year, although she does of course have, at least for the moment, the benefit of a certain amount of child support in respect of the youngest child, [Z].
Counsel for the husband, consistent with the exceptionally parsimonious position for which her client contended, submitted strongly that there was no question of seeking to achieve equality in proceedings such as these. I accept that that is so.
Nonetheless, not only does the wife have to survive on an income only just over half the current national wage (the ABS website indicates that for November 2008 the figure concerned was just over $60,000) but by contrast, the husband has about four and a half times more than the wife has.
The wife additionally has obligations towards the children. She is to all intents and purposes the sole carer of [Z] and she still has two other very young adult children living with her. Counsel for the husband said that these children were irrelevant and that any moral obligation that the wife expressed to try to help them was likewise irrelevant under the Family Law Act 1975.
I do not accept that somewhat niggardly submission. The reality is that neither of the elder two children, and for good reason, is presently making any appreciable amount of money. They are unable reasonably to be asked to contribute to the expenses of the household. For the wife to say, as she did, that it is not easy having three adolescents in the house and looking after their needs is, in my view, no more than common sense. It is not a matter to which one should give inordinate weighting, particularly since of course two are over 18, but it is not in my view irrelevant.
In all the circumstances, there should be an adjustment of 20 per cent in favour of the wife.
Just and Equitable
In my view, given the very considerable length of the marriage, the much greater future needs in financial terms of the wife, and the much greater contribution by the husband in financial terms, a result dividing the assets of the parties equally is entirely appropriate.
Spousal Maintenance
It is clear on the authorities that spousal maintenance falls to be considered separately from the property settlement generally. In Clauson, in the Marriage of (1995) FLC 92-595 the Full Court said (at p81, 907):
“The distinction between s 74 and the s 75(2) exercise in a property order is important and must be maintained. In the latter context, the s 75(2) exercise is not an exercise of the maintenance power, nor is it a "backdoor" maintenance order.”
The Court had already said, however:
“The result of the s 79 order may be such that the applicant for maintenance can no longer be described as being “unable to support himself or herself adequately” because he or she may have sufficient assets which, with or without income arising from the investment or use of those assets, will provide an adequate level of support. It also defines the other party's capacity to meet any order.
In addition, it is necessary to determine the issue of periodic maintenance first because this type of lump sum maintenance is the capitalisation of that conclusion. The Court must satisfy itself of the components necessary to justify a periodic maintenance order, namely, in effect, need and capacity, and determine the amount in question and in some cases the duration of that order. If the applicant fails to establish those components, that will end any claim for not only periodic maintenance but lump sum maintenance as well.”
The Court went on to say at page 81, 908, having referred to the need for caution in capitalised spousal maintenance awards:
“In particular, uncertainty about future events explains this approach, and capitalisation of maintenance would rarely be justified where there was no genuine concern about the capacity and preparedness of the payer to comply regularly with a periodic order.”
Counsel for the husband submitted strongly that the wife failed at the first step. It was submitted that she does not have need and has the capacity in any event to live on the income and other payments that she has.
An examination of the wife’s most recent financial statement shows that on any view, she is not overly flush with funds. She will additionally have to pay rent or alternatively borrow funds with which to buy a place to live, notwithstanding the cash settlement that she will receive in this proceeding. I disagree with the husband. I do not think that in the circumstances of this case the wife is able to support herself adequately.
The matter is in my opinion finely balanced but I think that the proper exercise of my discretion, having regard to the operation of the criteria in s.75(2) to the circumstances of these parties, makes it appropriate that there be a spousal maintenance order for a period of two years which will have the effect of giving the wife a period of time in which to better examine her employment future.
Matters of particular relevance here include ss.75(2)(b), (c), (d), (e), (g), possibly (h), (j), (k) and (na). Their operation is sufficiently clear in my view not to require further elaboration.
Having decided that an order for spousal maintenance would be appropriate on a periodic basis, in this case I think it is far preferable to make an order for capitalised spousal maintenance. These parties are clearly bickering mightily over child support and I have every confidence that in the event that I make an order for spousal maintenance, it will simply become the subject of further dispute. It makes far more sense, to my way of thinking, in the light of the difficulties the parties have in relation to their financial interrelationship, simply to capitalise that sum (ie $100 per week for two years), round it off at $10,000 and provide for its payment out of the sale of the matrimonial home.
So far as chattels are concerned, I have no expert evidence as to any of them and in my view each party should retain the chattels in their possession. I will hear from the parties, however, as to whether it is appropriate to make any order in respect of the three particular items that the husband has sought be returned to him in his affidavit material and which material was not the subject of cross‑examination.
There will also need to be a splitting order to enable the parties to receive 50 per cent each of superannuation.
I will give the parties an opportunity to consider these reasons for decision and to bring in minutes of consent orders to give effect to them. In the event that the parties are unable to agree, I will list the matter for further argument.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Deputy Associate
Date: 15 May 2009
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