Bloom and Bloom

[2014] FCCA 1882

FEDERAL CIRCUIT COURT OF AUSTRALIA

BLOOM & BLOOM [2014] FCCA 1882

Catchwords:
FAMILY LAW – Property dispute – lengthy marriage – major initial contributions by husband – weight to be given to husband’s contribution considered – wife having care of two teenage children – positions of both parties exaggerated and unrealistic – division of pool ordered 55/45 in favour of husband.

Legislation:  

Family Law Act 1975, s.75(2)

Kennon v Kennon (1997) FLC 92-757
Stanfordv Stanford [2012] HCA 52

Applicant: MS BLOOM

Respondent: MR BLOOM

File Number: MLC 4416 of 2013

Judgment of: Judge Burchardt

Hearing date: 24 June 2014

Date of Last Submission: 10 September 2014

Delivered at: Melbourne

Delivered on: 27 August 2014

REPRESENTATION

Counsel for the Applicant: Mr Mellas

Solicitors for the Applicant: Beswick Foulkes Family Law

Counsel for the Respondent: Mr Edmonds

Solicitors for the Respondent: Challenge Legal

ORDERS

1. That the sale proceeds of the (business omitted) currently held in trust by Rigby Cooke solicitors be distributed as follows:

   (a)To pay the Wife’s tax in the sum of $24,141.00;

   (b)To pay the Husband’s tax in the sum of $18,581.00;

   (c)To pay the loan balance on the Husband’s Mazda ute motor vehicle in the sum of approximately $12,000

   (d)To pay the sum of $134,944.36 to the Wife: and

   (e)To pay the balance to the Husband. 

2. The Husband retain the following assets in this possession or control:

   (i)Shares held by the Husband;

   (ii)The Husband’s Mazda;

   (iii)The cash retained by the Husband at separation. 

3. The Wife retain the following assets in her possession or control:

   (i)Shares held by the Wife;

   (ii)The Wife's Holden motor vehicle;

   (iii)The cash retained by the Wife at separation;

   (iv)The property situate at Property S in the State of Victoria;

   (v)Credit balances in the Wife’s bank accounts. 

4. On or before 4.00 pm on 24/09/2014 the Wife deliver up to the Husband:

   (i)All the Husband’s personal papers, records and effects in her possession or control;

   (ii)All the records of (business omitted) Pty Ltd and The Bloom Family Trust in her possession or control; and

   (iii)The trailer.

(4A)The husband forthwith do all such acts and things necessary to transfer the Holden to the wife, at her expense.

SUPERANNUATION ORDRS:

1. (a)     These orders are binding on the Trustee of the Bloom Superannuation Fund. 

   (b)That the base amount allocated to Ms Bloom out of the interest held by Mr Bloom in The Bloom Superannuation Fund is $43,533.00. 

   (c)That in accordance with s.90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable out of the interest held by Mr Bloom in The Bloom Superannuation Fund, the trustee shall pay to Ms Bloom the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using the base amount of $43,533.00, and there is a corresponding reduction in the entitlement Mr Bloom would have but for those orders. 

   (d)That orders 5(a), (b) and (c) herein have effect from the operative time.  The operative time for these orders is 14 days from the date of these orders. 

2. The Husband and Wife shall, once the operative time has commenced, do all acts and signs all documents as are necessary to enable and authorise the trustee of The Bloom Superannuation Fund to forthwith:

   (a)Effect a splittable payment in accordance with order 5 hereof, whether such acts involve the Wife rolling out her interest into a complying superannuation fund of her choice or such other act or acts as are in accordance with the Family Law Act 1975 (as amended), Superannuation Industry (Supervision) Act 1993 and the Superannuation Industry Supervision Regulations; and

   (b)To roll over the interest of Ms Bloom created by these orders into a complying superannuation fund of her choice. 

3. Further to order 6 hereof, the Husband and Wife do all such acts and sign all such documents as are necessary to enable:

   (a)The superannuation interests of the Husband in The Bloom Superannuation Fund after the superannuation splitting orders herein to be rolled over into a complying superannuation fund of his choice; and

   (b)The Bloom Superannuation Fund to be wound up according to law. 

4. That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these orders or any subsequent orders:

   (a)Each party be solely entitled to the exclusion of the other to all the property (including choses-in-action) in the possession of such party as at the date of these orders. 

   (b)Each party forego any claims they may have to any superannuation benefits belonging to or earned by the other. 

   (c)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders. 

   (d)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed. 

5. That the Initiating Application of the Wife filed on 3 June 2013 and the Response of the Husband filed on 16 September 2013 be otherwise dismissed. 

IT IS NOTED that publication of this judgment under the pseudonym Bloom & Bloom is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT MELBOURNE

MLC 4416 of 2013

MS BLOOM

Applicant

And

MR BLOOM

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is a property dispute in which there is some relatively minor dispute as to the property pool.  The real difference between the parties is the weight that should be given to contributions and future needs.  The applicant wife (the parties are divorced but have continued to use the phraseology of husband and wife) seeks that there be a total division of the asset pool 60/40 in her favour.  The respondent husband seeks the division 65/35, or alternatively 60/40, in his favour. 

2. The parties agree that their superannuation should be equalised. 

3. For the reasons that follow, I am going to order that the property pool be divided 55/45 per cent in favour of the husband.  

Agreed Matters

1. Although there were, of course, a number of matters of disagreement, much, if not most, of the material facts in this case were not the subject of significant disagreement. 

2. The wife was born on (omitted) 1971 and the husband on (omitted) 1962.  They commenced their co-habitation in (omitted) 1994 (asserted by the wife without contradiction).

3. The husband had a former wife who died in 1993 in a motor vehicle accident, following which he received a number of significant payments, from TAC, and from life insurance and other payments arising from his first wife’s tragic death.  Although the husband initially put the figure somewhat higher, it now seems reasonably clear that the figure received from TAC was of the order of $91,000 and the other ancillary insurance related payments were worth $167,000. 

4. Although the wife was not able to concede, because she was not there, it seems clear that the husband bought his first home with the proceeds of these payments, and additionally bought a number of shares.  He has said that the initial mortgage of $20,000 on his first property was paid off before the co-habitation with the wife started. 

5. The parties married on (omitted) 1998, by which time W, their first child had been born on (omitted) 1997.  Their second child, Z, was born on (omitted) 2000.  

6. Each of the parties had a child by a prior relationship.  The wife’s son, X, whose date of birth is not, I think, given in terms, was 21 when the husband swore his affidavit on 25 July 2013.  The husband’s daughter by his first marriage, Y, was then 22. 

7. TAC paid regular benefits of about $25,000 a year to Y until 2009.  Those benefits were not, it would seem to me, treated properly in that while they were clearly benefits paid on trust for Y, it would appear they were applied for general household expenses.  They were additionally applied to pay for a (omitted) course for Y, which the wife has asserted, without contradiction, cost $25,000.  This was, of course, a mere tithe of the moneys paid ostensibly to Y’s benefit over time.

8. The husband and his late wife had already owned a home in Property K at the point of the first wife’s demise.  He thus had well over $250,000 worth of funds (apparently used to purchase shares) together with an unencumbered house at the time of the commencement of the relationship with the applicant wife.

9. It does not appear that the wife had any assets of any moment at the commencement of the relationship. 

10. The husband was employed as a (occupation omitted) until 2004, when the parties decided to buy a (business omitted).  They sold the property they owned at Property K (the husband’s prior one had been sold in the meantime and proceeds applied to a new property) and bought the (business omitted) for $330,000 in October 2004.  It seems clear that the purchase price was made up with the receipt of the sale funds from the property in Property K plus a sale of (omitted) Bank shares. 

11. The parties operated the (business omitted) which was owned by a company set up for the purpose, it would appear, called (business omitted) Pty Ltd.  As it emerged, the two shares issued in that company were owned by the husband. 

12. There was some dispute as to the degree of the wife’s contribution by way of work to the operation of the (business omitted) which, on any view, must have been somewhat reduced by her primary child rearing responsibilities, but there is no dispute that the husband worked long hours in the business. 

13. The parties separated in September 2012 when the wife moved out, although she continued to be employed by the business with a payment of $347 per week thereafter.  There was some dispute as to how long this continued, but taking the evidence as a whole, it seems more likely than not that it continued until settlement on the sale of the (business omitted).

14. The sale price of the business was $635,000, albeit that there were a number of deductions from that gross total.  I note that the wife has to pay Capital Gains Tax as a result, at $24,141.02 and the husband $18,581. 

15. Following separation, the wife appears to have changed bank accounts in such a fashion that some $300,000 cash reserves, allegedly built up through the operation of the business, were transferred wholly to her and she applied these funds to purchase a home where she now lives in Property S.  Following some toing and froing, it is apparent that she owes her son, X, $43,000 in respect of that purchase. 

16. The wife also took out a loan of $75,000 in respect of the property purchase, as she puts it, to consolidate various other loans.  She concedes that there has been some wastage since, particularly the expenses in respect of her daughters. 

17. The husband moved to (omitted) where his father had a rather primitive beach shack, and he lived there at the time of the trial.  It is his intention to return to (omitted) to be closer to his two daughters. 

18. There was some issue between the parties as to the extent that the father has spent time with and/or communicated with the children since separation, but on any view it has not been overly much. 

19. Funds formerly disbursed to the parties were distributed through the Bloom Family Trust and as a result of the notional income the wife received from that trust, she was not entitled to receive Centrelink or other statutory benefits. 

20. The purchase price of the Property S property, which remains subject to the $75,000 loan and the $43,000 loan from X, to which I referred, was $345,000. 

21. The wife had in excess of $54,000 in bank accounts at an earlier stage in this proceeding, but that has largely been dissipated. 

Matters of Disagreement

1. The foregoing would, in fact, provide, by and large, a relatively straight forward basis upon which to approach this case, which has been bedevilled, in my opinion, more by the parties’ unrealistic expectations than by any significant forensic conflict. 

2. The wife complained in her affidavit material that the husband was controlling, domineering and aggressive and that he spent far too much time and money on his hobby of fishing, including trips to (omitted). 

3. There is no suggestion that this was a Kennon case and the reference to the husband’s behaviour in that regard, in my view, takes the matter nowhere.  The criticisms of the husband’s fishing hobby were, in my view, grossly overdone and any suggestion that there should be an adjustment as a result of consequential wastage has no prospects of success. 

4. A further area of significant disagreement was how much cash there was in the cash tin that the parties kept from time-to-time.  On any view, it involved substantial amounts of money at various times.  The wife put it that the husband extracted $55,000 from this source, but the husband said he received $18,000 and that after Easter in 2013 (the time the wife said he took the $55,000) each of the parties took $3,000 and the wife additionally had a further $3,500. 

5. I am not able to make a finding as to whether the husband took $18,000 or $55,000.  Both the parties were, in the main, good witnesses who answered the questions put to them directly and straightforwardly.  I will simply accept the $18,000 figure as a concession as against interest. 

An Overview of the Oral Evidence – The Wife

1. I do not propose to repeat the synopsis of the evidence already given.  These notes address some additional matters that arise that were issues of contest before me. 

2. The wife gave evidence about her employment.  A fixed term contract she had previously had, had ended on 6 June 2014.  She gave evidence of what seemed to me to be significant efforts on her part to obtain further employment.  Despite achieving interviews in what are plainly very keenly contested fields, she has not actually obtained a job.  She gave evidence-in-chief that she has no income at the moment (although this, of course, ignores Child Support payments that have been made since the start of 2014 by the husband, in the sum of about $700 per month). 

3. Under cross-examination, the wife conceded that the husband had bought shares in her name with his money, but said that the husband managed the share portfolio and really did not know much about it, because it was his hobby. 

4. The wife was cross-examined about the extent of her involvement in the (business omitted) and maintained that she was as much involved as the husband.  As I have already indicated, I have no doubt that the wife was involved in the operation of the (business omitted), but she must have had some time devoted to her child-rearing responsibilities. 

5. The wife was cross-examined about the husband’s fishing trips to (omitted) and the like, and in my view, her answers, like her evidence generally, were straightforward and honest.  She conceded that she had had a trip to the (country omitted) and (country omitted) in 2009 for 10 days. 

6. Some time was spent examining the car accidents that X had been involved in and the related cost, but in my view these are of no moment.  The amounts involved were not gigantic and the money is long gone.  The wife was cross-examined about a trailer in her possession and she said she required it.  She said she had this in her possession when the (business omitted) was sold on 5 July 2013 and used it to move furniture and collect firewood.  These answers were given carefully and were clearly honest. 

7. The wife denied having the husband’s personal records, and pointed out that she herself had lost shared documents.  She pointed out that she had moved twice since she left the (business omitted), and despite searching carefully, had been unable to find any of the documents sought. 

8. The wife said that the $54,000 previously in the bank accounts had been used to live on and she had already bought her Property S property with $20,000 taken from the bank account and $300,000 from an account which represented the profits from the (business omitted). 

9. She confirmed that she settled the Property S property in early to mid August 2013.  The property was rented for five weeks before she moved in. 

10. The mortgage to (omitted) Bank for $75,000 was in April 2014.  She had not disbursed this to any particular end.  

11. The wife confirmed that she was not calling her son X, to whom she said she owed $43,000, nor her mother, to whom she said she owed $25,000, a debt accumulated in various tranches over time before she moved to Property S. 

12. The wife denied receiving $350 per week from the business account after separation until about September/October 2013. 

13. The wife was extensively cross-examined about her endeavours to obtain employment, but in my view, it is clear both that she has tried hard to get employment and that her future employment prospects are uncertain.  I accept that she has been told by (omitted) that she is over-qualified for unskilled work.

14. The wife conceded that the $54,000 was gone and that $20,000 of that was applied towards the purchase of her property in Property S.  She said that money received from her own mother ($25,000) was after separation and went on household items and the children.  It is clear that a certain amount of money has been dissipated, and the wife conceded that some of her spending was what she described as reactionary spending as a result of the girls’ behaviour. 

15. I note that when (omitted) and other share dividends, the property of the husband, were paid into the wife’s own account, she drew on these even though they were not hers on any view. 

The evidence of the husband

1. The husband gave evidence that he was now engaged by a company called (employer omitted).  He intends, however, to move, as I have said, to (omitted), and his employment would therefore cease.  He confirmed that the Bloom Family Trust and Bloom superannuation are to be wound up and the superannuation distributed.  The trust’s only asset was the (business omitted). 

2. He confirmed that the loan in respect of a Mazda in his possession, bought for $30,000, is down to $12,000.  He maintained his assertion that the wife was still receiving $347 per week from the business, which was being paid out of the business trading account by direct debit.  He said he did not know when it stopped and that he did not stop it.  

3. Under cross-examination, the husband confirmed that his first home was bought in 1988 with a mortgage of $20,000, which was repaid by the time his relationship with the wife started.  His evidence about the various figures, to which I have already referred, received from his late wife’s estate were given with conviction. 

4. The husband was cross-examined about the amount of time he had spent with his children, and in my view, his answers were straightforward and honest.  He was quite prepared to concede that the wife had had responsibility for the children of the relationship on a 24/7 basis during the marriage.  He also conceded that the wife worked 20 hours per week despite being the primary caregiver.  He did not deny frequent fishing trips. 

5. His evidence denied the alleged $55,000 taken in cash, and as already indicated, in the face of two good witnesses, I am not able to make a final finding as to that issue. 

Findings about the facts

1. In many ways, these have already been dealt with.  As a matter of belt and braces, I would make it clear that I am convinced that the wife has done everything in her power to obtain employment, and that, while she may well do so (she has got very close in a very competitive field on more than one occasion), jobs even within the 100 kilometres radius from (omitted) that she is prepared to accept may well be few and far between.  It remains uncertain whether she will obtain employment. 

1. Despite having taken very commendable attempts to re-qualify himself, the husband’s desire to move to (omitted) means that he will have to leave his current employment, and his employment prospects are equally by no means certain.  Although, as I find, notwithstanding his greater age, he is more multi-skilled than the wife and in areas where employment is probably more likely. 

2. Other findings will be made when I consider contribution and future needs. 

Should a property division be ordered

1. The High Court has made it clear in the case of Stanfordv Stanford [2012] HCA 52 that the first step for the Court is to decide what the parties’ legal and equitable interests are and whether it is appropriate to make a property division between them. Nonetheless, this is one of the very many cases in which it is instantly obvious that there should be a property division. The parties’ relationship has ended following a lengthy period of co-habitation. It is appropriate that a property order be made and indeed both parties seek it.

The pool

1. The pool is largely agreed and appears to consist of the following.

Assets

·Proceeds of sale of the (business omitted), $565,947

·Shares held by the husband, E $214,000

·Shares held by the wife, E $38,000

·Property S, $345,000

·Husband’s motor vehicle (not the subject of expert evidence, but the husband’s estimate taken as a concession), $30,500

·Wife's Holden, $12,000

·Cash tin, husband, $18,000

·Cash sock, $3,500 to the wife.

1. I have not made this clear before, but I accept the husband’s evidence that the wife took $3,500 from the so-called cash sock.  Whether they each received $3,000 in April 2013 is unclear, and in any event, is an equal sum, so I will ignore it. 

Liabilities

·Wife’s tax, $24,141

·Husband’s tax, $18,581

·Husband’s car loan, $12,000

Superannuation

·Bloom Superannuation Fund, Husband as at separation, $52,092

·Bloom Superannuation Fund, Wife as at separation, $59,481

·Husband, (omitted) Super, $109,966. 

Disputed aspects of the pool

1. These essentially relate to the amount of money held in the bank by the wife in the amount of the $54,951 disclosed in the wife’s first Financial Statement, the loan taken out by the wife from the (omitted) Bank of $75,000; the loan from X, $43,000; and the loan from the wife’s mother, $25,000. 

2. I accept that, barring some inconsequential amounts, the $54,000 appears to have been dissipated in living expenses.  That is a lot of money, but, of course, $20,000 of it was used towards the purchase of the wife’s property in (omitted).  The wife’s Financial Statement was sworn on 7 August 2013 and the property in (omitted) settled on a date described as mid to early August 2013 by the wife, which is consistent with this account. 

3. If I understand the matter correctly – and the evidence is far from clear – the loan taken out by way of the (omitted) Bank Mortgage does not appear to have been applied to anything in particular, save the re-constitution, as it were, of earlier debts.  The evidence is scarcely clear enough to enable any conclusive finding to be made, but it would seem that the wife has an ongoing obligation to discharge that debt. 

4. Neither X nor the wife’s mother were called to give evidence, and while I accept that there is a debt to X of $43,000 and there may well be other debts owing to the wife’s mother, there is no suggestion that these are in any way the subject of any likely call for repayment.  

5. In any event these were, clearly post-separation debts, albeit that the wife would put it that these were both debts she had no alternative to take out.  I note that the wife has a five-bedroom house, which seems relatively large in the circumstances.  In my view, these debts are contingent only and should not be included in the pool. 

6. The $54,951 is already included in the pool insofar as it constituted part of the purchase price of the (omitted) property.  Otherwise it has been properly and necessarily applied to living expenses.  It will not be included in the pool. 

Contribution issues

1. This was a relationship that endured from 1994 until 2012, a total of almost 20 years.  It is clear that the parties both contributed throughout that relationship as best they were able.  The husband and the wife both worked until the children came along, and even thereafter, the wife worked, as the husband concedes, 20 hours a week in the (business omitted) business.  It is clear that the wife was the primary caregiver to the children.  The husband worked very long hours, particularly once the (business omitted) had been bought. 

2. I note that it is now agreed that the superannuation should be equalised, so I do not have to deal with the husband’s initial position that his (omitted) superannuation should be excised from the pool. 

3. In the ordinary way of things, it would be all too clear that the parties’ contributions should be assessed as equal.  The difficulty of course is that the husband made an enormous initial contribution.  The wife sought to minimise this contribution.  She pointed out accurately enough that it was made almost 20 years ago.  Counsel submitted that a five per cent adjustment should be made in this regard. 

4. Counsel for the husband put the figure as a 20 per cent adjustment. 

5. There is all too much law about the issue of initial contributions, springboard effects and the like.  It needs to be remembered that each case turns on its own facts. 

6. It is true that the husband’s initial contributions were made a long time ago, but what is unusual perhaps in this case is that the parties’ ultimate relative wealth springs as it were in an uninterrupted way from the husband’s initial contributions.  The husband owned an unencumbered property at the start of the relationship and this is basically what enabled the parties to buy their next property in Property K and it was that that enabled them to buy the (business omitted).  The (business omitted) has appreciated significantly, but that of course was due to the efforts of the parties.  It is fair to say that it is far more probable than otherwise that the parties would never have been able to accrue anything like the sort of money they now have available to them without the initial contribution, albeit that substantial elements of the pool that has ultimately resulted come it would seem from both the capital appreciation in the (business omitted) and the profits of the (business omitted).  The latter appears to have funded the purchase of the Property S property. 

7. In all the circumstances there should be a 12 per cent adjustment in the husband’s favour in this regard. 

The Parties’ Future Needs – the section 75(2) Factors

1. The husband has in my view a slightly better earning capacity than the wife, but both their future employment seems uncertain.  It does not appear to be suggested that the parties’ future earnings if any are likely to be wildly disparate. 

2. Neither party has any health difficulties such as to impact upon the Court’s deliberations, although I note that the husband is some nine years older and has therefore an appreciably lesser time available to him to work and accrue benefits. 

3. On the other hand, the wife will undoubtedly have the primary care of the children for some time to come.  In the case of W, she will turn 18 in January 2015 and in the case of Z, in May 2018.  It is not appropriate to ignore the additional cost and responsibilities this will involve but it is not as if these children are tiny tots who will be on the mother’s unassisted hands for well over a decade to come. 

4. Just as the husband overstated and the wife understated the loading to be given to the contribution issue the same is true here.  The husband’s assertion that the wife’s loading should be five per cent is unduly ungenerous and the wife’s assertion that it should be of the order of 10 to 10-15 per cent is likewise excessive. 

5. One only has to note that if the wife had been successful in one of the job applications in which she came so close, the financial future of the parties would be thought to be radically different.  After all, the wife has a home that is effectively unencumbered albeit that this will take up a substantial proportion of whatever amount of the pool that she receives.  In all the circumstances in my view the wife should receive a loading in her favour of 7 per cent under this heading. 

Just and Equitable

1. In my view there is no doubt that a final disposition of some 55 per cent in favour of the husband is just and equitable.  I have drawn up draft orders to give effect to this conclusion, which draw upon the orders proposed by the husband’s Case Outline document but will give the parties an opportunity to consider them and to make any further submissions. 

I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Associate: 

Date:  10 September 2014