Bray and Marillier
[2012] FMCAfam 962
•12 September 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BRAY & MARILLIER | [2012] FMCAfam 962 |
| FAMILY LAW – Property – de facto relationship – reliability of the parties’ evidence – cohabitation of less than four years – loan from one party to the other – repayment of loan with interest – commercial transaction - boat sold at a loss – motor vehicle destroyed by fire – insurance not paid – global or asset-by-asset approach – assessment of contributions not an exercise of mathematical precision – onus to provide medical evidence. |
| Family Law Act 1975 (Cth), ss.75, 79, 90SF and 90SM |
| Clauson (1995) FLC 92-595 Clives and Clives (2008) FLC 93-385 C v C (2005) FLC 93-220 Ferraro (1993) FLC 92-335 Hayne and Hayne (1977) FLC 90-265 Hickey (2003) FLC 93-143 Jarman and Jarman (2006) FLC 93-289 Kowaliw and Kowaliw (1981) FLC 91-092 Lee Steere (1985) FLC 91-626 Norbis v Norbis (1986) FLC 91-712 OSF and OJK (2004) FLC 93-191 Russell v Russell(1999) FLC 92-877 |
| Applicant: | MS BRAY |
| Respondent: | MR MARILLIER |
| File Number: | LNC 234 of 2010 |
| Judgment of: | Roberts FM |
| Hearing dates: | 19 and 20 March 2012 |
| Date of Last Submission: | 20 March 2012 |
| Delivered at: | Launceston |
| Delivered on: | 12 September 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr P McVeity |
| Solicitors for the Applicant: | Bishops |
| Counsel for the Respondent: | Mr G Tucker |
| Solicitors for the Respondent: | Grant Tucker |
ORDERS
That within sixty (60) days MR MARILLIER (“the Applicant”) must pay to MS BRAY (“the Respondent”) the sum of $104,300.00 (“the payment”).
That contemporaneously with the payment the Applicant must transfer to the Respondent all her right, title and interest in the property known as and situate at Property D in Tasmania (“the property”).
That contemporaneously with the transfer referred to in Order No. 2 hereof (“the transfer”) the respondent must provide to the Applicant a discharge of mortgage in registrable form releasing her from any liability pursuant to the mortgage with the Commonwealth bank of Australia secured against the title of the property.
That following the transfer the respondent must pay, and indemnify the Applicant in relation to the payment of all outgoings in relation to the property, including but not confined to mortgage repayments, rates, land tax, water charges and insurance premiums.
That the parties must do all acts and execute all documents as may be reasonably necessary to implement these orders.
That unless otherwise specified in these orders except for the purpose of enforcing the payment of money due under these or any subsequent orders:
(a)each party is solely entitled, to the exclusion of the other, to all other property and/or superannuation interests in the possession or control of that party, or to which that party is entitled as at the date of this order; and
(b)each party is liable for, and must indemnify the other against any liability attaching to any item of property to which that party is entitled pursuant to these orders.
That the parties have liberty to apply in relation to the implementation of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Bray & Marillier is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
LNC 234 of 2010
| MS BRAY |
Applicant
And
| MR MARILLIER |
Respondent
REASONS FOR JUDGMENT
The parties and their applications
The applicant is MS BRAY and the respondent is MR MARILLIER. They were not married but they lived together in a de facto marriage relationship. For convenience, I will refer to them as “Ms Bray” and “Mr Marillier”.
In her application filed in April 2010 Ms Bray sought a “distribution of the net asset pool” on the basis of 70% to herself and 30% to
Mr Marillier. She also sought a costs order in her favour.
In his response filed the following month Mr Marillier sought orders that the property at Property D (“the home”) be transferred to him in return for a payment of $50,000 to Ms Bray.
At the end of the hearing, Ms Bray was seeking orders for a payment to her of $305,620 in return for a transfer of her interest in the home to Mr Marillier, and that she retain her superannuation. Her counsel submitted that such would give her 65% of the non-superannuation assets.[1]
[1] Transcript at page 131
In his closing submissions, Mr Marillier’s counsel said that I should still order that his client pay Ms Bray $50,000 in return for a transfer of her interest in the home, which he said equated to a 70/30 division in his favour of the total net value of all assets.
While it appears from the two preceding paragraphs that the parties’ were $255,620 apart in their claims, the difference between their proposals was less than that because each was expressing a willingness to pay an agreed car loan debt of $27,907. I shall refer to that further below.
Reliability of the evidence
It is necessary to comment that, in general, I found Mr Marillier’s evidence to be more reliable than that of Ms Bray, particularly in relation to details of financial transactions. I do not say that Ms Bray was being particularly dishonest, but she was confused on important details at times and she had a tendency to resolve her confusion in her own favour. Examples were:
·Ms Bray claimed that she “had a very small loan” in relation to the purchase of a Honda motor vehicle,[2] whereas the finance documents produced to the Court show that she borrowed $36,898 out of a total cost of $39,898.[3]
·
Ms Bray claimed to have sold her Honda for $26,000 at the time when a Rav 4 motor vehicle was purchased, and that she and
Mr Marillier had agreed to pay that $26,000 off their housing loan.[4] However, the purchase documents in relation to the Rav 4 show that the “Trade In” on that purchase had a negative value of $3,012.89. That clearly showed that the amount still owing on the Honda at that time exceeded its trade in value by $3,012.89. It is not surprising therefore that Mr Marillier said: “… there was no $26,000 paid from the sale of the Honda into the housing loan. It simply did not occur, hence the lack of records.” [5] However it was only after she was extensively questioned by her own counsel and shown the relevant documentation that Ms Bray finally said that “there was $3,000 owing on the Honda at the time of trade-in”. [6]
·At the start of the hearing Ms Bray appeared to be unwilling to accept that Mr Marillier’s business had repaid a $75,000 loan to her, together with minimum interest of more than $11,000 in accordance with an agreement signed by her.[7] Ms Bray’s confusion about that was not assisted by the fact that Mr Marillier did not produce the relevant business records until part-way through the hearing. However, I find it to be somewhat unusual that a person could be repaid that much money and not be aware of it.
·Ms Bray claimed to have paid the deposit of $5,000 on the purchase of the home on 16 January 2006, when the property was not purchased until January 2007. She conceded her mistake when cross-examined.[8]
[2] Transcript at page 24
[3] Exhibit “DH2”
[4] See paragraphs 36 and 37 of her affidavit
[5] See paragraph 25 of his affidavit
[6] Transcript at pages 11 and 12
[7] See Annexure “C” to her affidavit
[8] Transcript at the top of page 37 and at page 41
In the circumstances, I find that I preferred Mr Marillier’s evidence when the parties differed in there evidence and there was no other corroborative evidence.
Brief background
Where I refer to any fact in these Reasons, it should be regarded as a finding of fact unless a contrary intention is otherwise clear from the context.
Ms Bray is aged 45 years and she is an [occupation omitted]. At the time of the hearing she had one child under 18 years old who lived elsewhere with that child’s father. Ms Bray was paying Child Support for that child.
Mr Marillier is aged 42 years and he has his own [omitted] business (“the business”). He has four children from his previous marriage, two of whom were teenagers living with him at the time of the hearing. I accept his evidence that he received no financial assistance from the mother of those children.
The parties commenced living together at the end of August 2005 and they separated on 1 June 2009. Initially, Ms Bray had said that their “relationship” commenced in January 2005,[9] but in her oral evidence she conceded the correctness of Mr Marillier’s evidence that they did not start living together until after he separated from his former wife in late August 2005.[10] I therefore conclude that their “de facto relationship” commenced no earlier than late August 2005, because their earlier “relationship” did not involve cohabitation or a mutual commitment to a shared life.[11]
[9] Paragraph 5 of her affidavit
[10] Transcript at pages 6, 7 and 20
[11] See section 4AA of the Family Law Act 1975
At the start of the parties’ co-habitation, Mr Marillier worked in a franchised [omitted] business in Launceston. That business was effectively jointly owned by him and a former business partner. Ms Bray had worked in the Devonport office of that franchised business. However, she moved to Launceston prior to the parties’ co-habitation and then worked in the Launceston office.
At about the time of her move to Launceston, Ms Bray received approximately $100,000 from a property settlement between herself and her former husband. By 1 January 2006 the funds received by Ms Bray had reduced to $80,000.[12] I make the assumption that the reduction in her funds was partly caused by her purchase of a “hot tub” for $12,000, which is still at the home (and its current value is presumably included in the agreed value of the home).
[12] Transcript at pages 31, 32 and 38
Mr Marillier and his former wife resolved their property settlement and I accept his evidence that he received approximately $35,000 or $36,000 from the sale of his former matrimonial home.
In early 2006 Mr Marillier entered into an agreement whereby he purchased his former business partner’s interest in the Launceston franchise.[13] Ms Bray lent Mr Marillier $75,000 to assist him to pay out his former business partner. That $75,000 came from her matrimonial property settlement funds that are referred to above. Mr Marillier’s company entered into an acknowledgment of that debt to Ms Bray,[14] which provided that:
·the sum on $75,000 was to be repaid to Ms Bray by quarterly instalments of $7,207.41; and
·interest was set at 9.5%; and
·there was to be “a minimum interest payment of $11,488.92 due no matter at what stage the loan [was] repaid”.
[13] See Annexure “B” to Mr Marillier’s affidavit
[14] See annexure “C” to Ms Bray’s affidavit
At the start of the hearing, Ms Bray was clearly unsure about whether that sum of $75,000 had been repaid or not. However, by the end of the hearing it was clear that both parties accepted that it had been repaid with interest prior to 30 June 2007.
In January 2007 the parties purchased the home for $445,000. I accept the accuracy of Mr Marillier’s evidence about how that purchase was financed. He said that:[15]
·He had paid the deposit of $5,000;
·They borrowed $400,000 from the Commonwealth Bank;
·Ms Bray contributed $45,000 from the sum of $75,000 that had been repaid to her; and
·He paid a further sum of nearly $11,500.
[15] See Mr Marillier’s affidavit from paragraphs 21 to 23
The parties purchased a boat for approximately $70,000, with the assistance of a loan of $46,000 from a finance company. That purchase was clearly “a loss making enterprise”.[16] The parties agree that the net sale proceeds from that boat amount to only $3,936. That sum is included in the asset pool below.
[16] See Mr Marillier’s affidavit at paragraph 32 and the Transcript at page 48
During the parties’ relationship, Mr Marillier’s children would spend time with him. However, Ms Bray conceded during cross-examination that they lived predominantly with their mother.[17]
[17] Transcript at page 47
The Rav 4 was destroyed by fire at Ms Bray’s home approximately six months after the parties separated. They have different views about how that fire may have started and who was responsible for paying the insurance premiums. From the way in which the matter was conducted, it appears that I am not asked to determine those questions. However, the parties agree that the burnt out Rav 4 has no value and that the insurance premiums were not paid. Unfortunately, the debt to the finance company still needs to be repaid and it is included in the liabilities referred to below.
De Facto property law
The law with respect to financial matters relating to de facto relationships is found in Part VIIIAB of the Family Law Act 1975 (“the Act”). Sub-section 90SM(4) sets out the matters that the court must take into account when considering what orders should be made for the alteration of the property interests of parties. They include:
a)the financial and non-financial contributions made directly or indirectly by or on behalf of each party or by a child of the de facto relationship to the acquisition, conservation or improvement of any property of the parties;
b)the contribution made by a party to the welfare of the family including any contribution made in the capacity of homemaker or parent;
c)the effect of any proposed order upon the earning capacity of either party; and
d)the matters referred to in sub-section 90SF(3) “so far as they are relevant”.
Because sub-sections 90SM(4) and 90SF(3) of the Act mirror sub-sections 79(4) and 75(2) of the Act, it is clear that the approach that Courts should take to the determination of de facto relationship property settlements has been well established by authority,[18] notwithstanding that Part VIIIAB of the Act only became law in 2009. The approach is essentially a multi-step process. The first step is to identify the property, liabilities and financial resources of the parties (generally at the time of the hearing). The second step is to evaluate the contributions made by the parties as defined in sub-section 90SM(4) of the Act and the third step is to consider those matters contained in sub-section 90SF(3) that are relevant.
[18] See Lee Steere (1985) FLC 91-626; Ferraro (1993) FLC 92-335; Clauson (1995) FLC 92-595, Hickey (2003) FLC 93-143 and C v C (2005) FLC 93-220
In determining what order the court should make under section 90SM, the court must be satisfied in all the circumstances that it is just and equitable to do so.[19] It is the justice and equity of the actual orders that the court must consider and this has sometimes been referred to as “the fourth step”.[20] In Russell v Russell, the Full court said:
Furthermore, it must be remembered in this regard that …… the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties' assets. Indeed we take the opportunity to emphasise that in what his Honour has termed ''the fourth stage'', that is, the consideration of whether the result is just and equitable, it is the justice and equity of the actual orders not of the percentage distribution which must be considered. [21]
[19] See sub-section 90SM(3)
[20] See Hickey (2003) FLC 93-143 and Russell v Russell(1999) FLC 92-877
[21] (1999) FLC 92-877 at page 86,439
However, I agree with the sentiment expressed by Walters FM that “the testing of any proposed orders … is not a fourth substantive step (properly so called) in the property settlement exercise, and there is no fourth step in that sense.”[22]
[22] OSF and OJK (2004) FLC 93-191 at paragraph 16
In general, there are two differing ways in which courts can assess of the entitlements of the parties to property under the Act. They are the global approach and the asset-by-asset approach. A global approach involves the division of the parties’ assets on a global view of the asset pool, whereas the asset-by-asset approach involves an assessment of the parties’ interests in individual items of property. The High Court has held that either approach is valid. See Norbis v Norbis.[23]
[23] (1986) FLC 91-712
It is clear that most matters that are resolved by this Court and the Family Court of Australia are dealt with on a global approach. However, in cases where the relationship is relatively short and the parties contributed to different assets in different ways, it may be more just and equitable to adopt an asset-by-asset approach. In my view, this is such a case.
The assets and liabilities
To a large degree, the parties agree upon the composition of the asset pool and the values of the assets and liabilities.
Ms Bray’s counsel urged me to adopt a “two pool” approach by treating the superannuation in a different pool from the other assets. Mr Marillier’s counsel made submissions on the basis of one pool. However, I am of the view that the assets and liabilities should be treated in three different pools and I set those out below.
The superannuation pool
The parties agree that Ms Bray has superannuation worth $131,957 and Mr Marillier’s superannuation is worth $48,714, making the superannuation pool worth a total of $180,671.
The business asset pool
The parties agree that the value of the company is $336,600, but an associated property trust has a negative value of $36,670. Consequently, Mr Marillier’s business has a net value of $299,930.
The non-business asset pool
The non-business assets are as follows:
The home $515,000 Boat proceeds $3,936 Total $518,936
The non-business liabilities are:
Mortgage $363,708 Car loan $27,907 Total $391,615
In fixing the amount of the mortgage loan balance, I agree with
Ms Bray’s counsel that it is not appropriate to add in any amounts of monthly interest, as had been suggested by Mr Marillier’s counsel.
This means that the net value of the non-business asset pool is $127,321.
Contributions
Contributions to the superannuation pool
I was not given any information about the growth in the parties’ superannuation interests during their de facto relationship, so I am unable to say whether the parties contributed indirectly to any growth in the superannuation interests of the other party in the manner referred to in Jarman and Jarman.[24] However, given the relative shortness of the parties’ relationship (i.e. less than four years), it is safe to conclude that each party effectively made all the contributions to his or her own superannuation entitlements. It is therefore unsurprising that neither party is seeking a superannuation splitting order.
Contributions to the business asset pool
[24] See Jarman and Jarman (2006) FLC 93-289 at paragraph 54
I accept that Mr Marillier was a joint owner of the business prior to the start of the parties’ de facto relationship. He did owe his former business partner some money but that was resolved when he entered into Heads of Agreement on 19 January 2006.[25]
[25] See Annexure “B” to his affidavit
It is true that Ms Bray lent Mr Marillier $75,000, which enabled him to purchase his former business partner’s interest. However, that was clearly a commercial arrangement and Mr Marillier’s business repaid that loan in full with interest in less than 18 months. In addition, the interest rate was clearly an advantageous interest rate for Ms Bray, and I note that she conceded in cross-examination that it had been a “commercial transaction”.[26]
[26] Transcript at page 31
I also note that, if the loan had not been repaid by Mr Marillier’s business, Ms Bray would not have been able to make her contribution to the purchase of the home that I will refer to further below.
Ms Bray was employed by Mr Marillier’s business and was paid a wage by that business, which she clearly conceded was Mr Marillier’s business. In paragraph 38 of her affidavit, she said:
For the remainder of our relationship, I worked … in Launceston as a [omitted]. This was the business which [Mr Marillier] owned.
I also accept Mr Marillier’s evidence that Ms Bray was paid a wage that was “in excess of her relative worth” to the business.[27] That would appear to be supported by Ms Bray’s own evidence that she is earning less now than she earned while working for the business.[28] In addition, I accept that Ms Bray purported to resign from the business on many occasions.[29] Further, Ms Bray conceded that she would generally leave work at 2.30 or 3.00 pm, so I find it difficult to accept her assertion that she was working full-time.[30]
[27] Paragraph 28 of his affidavit
[28] See paragraphs 40, 72 and73 of her affidavit
[29] Paragraph 29 of his affidavit
[30] Transcript at page 13
In view of what is referred to above, I find that Ms Bray has already been well compensated or rewarded for her claimed “contributions” to the business, both as a lender and as an employee.
In my opinion, in any weighing up of contributions to the business under section 90SM of the Act, Mr Marillier must be given full credit for contributions to “the acquisition, conservation or improvement” of the business.
Contributions to the non-business asset pool
As stated above, at the time of the purchase of the home:
·Ms Bray contributed $45,000; and
·Mr Marillier contributed a total of nearly $16,500, being the deposit of $5,000 and a further sum of nearly $11,500.
Ms Bray says that they contributed equally to the payment of the home loan during their time together in the home,[31] and Mr Marillier does not appear to dispute that.
[31] Paragraph 41 of her affidavit
On the face of it, that appears to make Ms Bray’s overall contributions to the home somewhat greater than those of Mr Marillier. However, it is not appropriate to treat the home in isolation, because the proceeds of the boat and the remaining car loan liability are also matters to be taken into account in relation to the non-business asset pool.
In relation to the losses attributable to the boat and the Rav 4, neither counsel submitted that there had been “wastage” of the sort referred to in Kowaliw and Kowaliw.[32] It follows therefore that both parties should “wear the losses”. However, that does not mean that financial contributions should be ignored.
[32] (1981) FLC 91-092
I have no doubt that the purchase of the boat was intended to contribute to a better lifestyle of the parties, and that Mr Marillier made all the direct contributions towards its acquisition and maintenance. In this regard, I accept that he paid:
·the $24,000 difference between the purchase price and the loan funds obtained from a finance company;
·all the loan repayments;
·all maintenance and repairs (which he described as “significant and staggering”); and
·the mooring fees.[33]
[33] See paragraph 32 of his affidavit
Mr Marillier was not challenged about his estimate of having paid $40,000 in relation to that boat. It is just unfortunate that the boat turned out to be “a very serious money losing exercise”. [34]
[34] See paragraph 34 and 35 of his affidavit
Given that the Rav 4 was destroyed by fire while it was not insured, its purchase was also a money losing exercise. I note that there was an agreement that Mr Marillier should make some repayments, and indeed, that agreement was the subject of a consent order. I further note that Mr Marillier did not comply with the order. However, I accept that he tried to comply, but his efforts were thwarted because of a mistake on the part of the finance provider. The result of that is that Ms Bray has been paying that loan by arrangement with the finance provider and she wishes to continue paying that. In my view, it is appropriate for her to pay that, because the liability is in her name. However, there will need to be an adjustment for that.
I accept that on occasions Ms Bray did assist with collecting
Mr Marillier’s children, and with getting them ready for school. However, I also conclude that her efforts in that regard were not particularly onerous because the children lived predominantly with their mother.
When I consider the parties’ overall contributions to the non-business asset pool, I conclude that they should be given equal weight. However, it should be noted that the assessment of contributions is not an exercise of mathematical precision. In Hayne and Hayne, Pawley J said:
In matters such as this one cannot approach the problem with an eye for meticulous detail. It should rather be dealt with broadly so that the end result can be said to be just and equitable.
Similarly, in Clives and Clives, the Full Court said:
We accept that the task to be undertaken by a trial Judge in assessing weight to be attached to initial contributions, and other contributions, is not always an easy one and not discharged by a strict accounting exercise. [36]
[36] (2008) FLC 93-385 at paragraph 44
In view of what I have said above, if this matter was to be decided on contributions alone, I would have made orders that provided for:
·each party to retain their respective superannuation entitlements;
·Mr Marillier to retain his business; and
·an equal division of the non-business asset pool.
However, as stated under the heading “De Facto property law” above, these matters are not decided solely on the basis of contributions.
The sub-section 90SF(3) factors
Ms Bray is 45 years old and Mr Marillier is 42 years old. Both parties are employed, but it is clear that Mr Marillier has a higher income than Ms Bray. It is my view that Mr Marillier’s higher earning capacity is likely to continue, because he will retain his business.
Ms Bray has had health difficulties. She was unchallenged in relation to her evidence that she:
·was diagnosed with breast cancer and muscular dystrophy in 2008;
·has had both breasts removed and has required reconstructive plastic surgery;
·had been prescribed anti-depressants; and
·was having counselling at the time that she swore her affidavit.
Although Mr Marillier clearly acknowledged in his affidavit that
Ms Bray had health difficulties during their relationship, I am somewhat surprised that Ms Bray has not provided the Court with any medical evidence in relation to her prognosis generally or, more importantly, whether her health will have any impact upon her future earning capacity. The onus was upon her to provide the Court with that evidence, but she has not done so. In this regard, I cannot agree with the submission of Ms Bray’s counsel that there was “no need for medical evidence”. [37]
[37] Transcript at page 128
Mr Marillier has two teenage children living with him and he is totally responsible for them financially. Ms Bray’s child does not live with her, but she pays Child Support and contributes a further $200 per annum towards that child’s school fees.
The de facto relationship between Mr Marillier and Ms Bray was one of relatively short duration. There is no evidence before me that the duration of the relationship per se has affected the earning capacity of either party.
I note also that Ms Bray will retain superannuation interests that have a value almost three times the value of the superannuation interests that Mr Marillier will retain.
When I consider the relevant factors under sub-section 90SF(3) of the Act, I am of the opinion that overall there should be an adjustment in Ms Bray’s favour. That adjustment should be 10% of the net value of the non-business asset pool, being $12,732.
Conclusions
As can be seen from what I have said above, I conclude that:
·each party should retain his or her superannuation entitlements free from any claim by the other; and
·Mr Marillier should retain the business.
I also conclude that if Mr Marillier is to retain the home (subject to the mortgage) and Ms Bray is to be responsible for the payment of the car loan, Mr Marillier must pay Ms Bray the sum of $104,300. The calculations in relation to that are set out below.
Fifty percent of the net value of the non-business asset pool is $63,661 (rounded up), and a distribution of 50% to Ms Bray would require her to receive a cash adjustment from Mr Marillier of $91,568, because she will be responsible for paying the car loan in the sum of $27,907.
A distribution to Mr Marillier of 50% of the net value of the non-business asset pool would result in Mr Marillier retaining:
The home $515,000 Boat proceeds $3,936 Sub-total $518,936 Less mortgage balance $363,708 Sub-total $155,228 Less cash to Ms Bray $91,568 Net value to Mr Marillier $63,660
I have said above that there should be a further adjustment for sub-section 90SF(3) factors in the sum of $12,732. Therefore the amount payable to Ms Bray is: $91,568 plus $12,732, making a total of $104,300.
In my view, such a settlement is just and equitable, so I will make orders accordingly. I will also grant the parties liberty in relation to the implementation of the orders.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Roberts FM
Date: 12 September 2012
[35] (1977) FLC 90-265 at p. 76,415
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