BRYDEN & BRYDEN

[2015] FCCA 1489

FEDERAL CIRCUIT COURT OF AUSTRALIA

BRYDEN & BRYDEN [2015] FCCA 1489

Catchwords:
FAMILY LAW − Whether personal injuries settlement after separation should be included − where the reality of parties circumstances the determining factor under s.75(2).

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79

Perrone [1995] FamCA 55
Stanford v Stanford [2012] HCA 52; (2012) CLR 108

Applicant: MS BRYDEN

Respondent: MR BRYDEN

File Number: DGC 2351 of 2012

Judgment of: Judge Phipps

Hearing date: 4 December 2014

Date of Last Submission: 4 December 2014

Delivered at: Dandenong

Delivered on: 4 June 2015

REPRESENTATION

Counsel for the Applicant: Mr Howe

Solicitors for the Applicant: Jkb Lawyers Pty Ltd

The Respondent: Appearing on their own behalf

ORDERS

1. That the husband pay to the wife the sum of $30,000 (“the payment”) on or before 31 July 2015 (“the date)”.

2. That in the event that the whole of the payment has not been made by the date the husband do all things necessary to transfer the property at Property M to the wife to be held by her on trust for sale and sold by her and upon completion of the sale, the proceeds of the sale be applied:

   (a)first to pay all costs, commissions and expenses of the sale;

   (b)secondly to discharge the mortgage and any other encumbrances affecting the real property;

   (c)thirdly so much of the payment as is then outstanding together with interest thereon at the rate of 8.5%;

   (d)fourthly the balance to the wife.

3. That pending the completion of the sale the husband retain the sole right to occupy the property and pay all rates taxes and outgoings during his occupation.

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

   (a)each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders (the furniture, personal possessions, and like chattels in the property at Property M being deemed to be in the possession of the husband);

   (b)money standing to the credit of the parties in any joint bank account are to become the property of the wife;

   (c)insurance policies remain the sole property of the owner or beneficiary named therein.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

DGC 2351 of 2012

MS BRYDEN

Applicant

And

MR BRYDEN

Respondent

REASONS FOR JUDGMENT

Introduction

1. Ms Bryden, the wife, and Mr Bryden, the husband, separated on 4 March 2006 and were divorced on 19 October 2012. This application by the wife for property orders commenced on 10 October 2013. The application is unusual in that property that the wife says should be the subject of orders under s.79 of the Family Law Act 1975 (Cth) was acquired after separation. The property is owned by the husband. The wife argues that she contributed, as described in s.79, to the funds the husband used to acquire that property. The husband denies this is so.

2. The wife’s proposal is that she receive 30% of the property.  The husband proposes that each party retain the property now in their names so there is no division.

3. The property owned by the husband is

   Property M   $136,000

   Toyota (omitted)             $  17,000

   Caravan  $  17,000

   Boat   $    6,000

   Trailer  $    1,000

   Household contents        $    5,000

   Total   $182,000

4. These values are taken from the husband’s financial statement dated 27 October 2014.  The husband purchased the property for $135,000 and after purchase he spent $55,200 on improvements.  The wife proposed that this amount be added to give a higher value.  That cannot be done.  There is no valuation evidence.  Given that the husband purchased the property for $135,000 and says that the value is $136,000 this amount can be used as an admitted value.  The same applies to the values of the Toyota (omitted), Caravan, Boat and Trailer and household contents.

5. In the same financial statement the husband gives these liabilities:

   Loan Ms R    $    2,200

   (omitted) Bank Visa   $    2,500

   Nissan Finance   $  25,000

   Total   $  29,700

6. The husband produced no documents to verify these loans.  They were not disputed.  They seem probable in his circumstances and so I will include them as liabilities.  The Nissan Finance loan is for his motor vehicle, purchased after separation.  The probabilities are that the other loans were incurred after separation.

7. The nett value of the husband’s property is $152,300.

8. The wife owns a Holden (omitted) motor vehicle which she values at $38,500.  Against that she has a debt of $51,419 and a credit card debt exceeding $22,000.  Her liabilities exceed her assets.  Each party has superannuation of about $30,000. Neither party proposes a superannuation splitting order.

History

1. The wife was born on (omitted) 1960 and is aged fifty four.  The husband was born on (omitted) 1958 and is now aged 56.

2. The parties married on (omitted) 1981 they have one child X born (omitted) 1987.  They separated on 4 March 2006 and divorced on 19 October 2012.

3. In 1985 the wife’s father built a two bedroom unit next to his residence in (omitted) at a cost of $35,000.  Both parties and the wife’s father say that they agreed that the parties would live in the unit and pay monthly instalments until the $35,000 was paid.  When the property was sold they would be paid the $35,000 plus the increase in value attributable to the unit.  The husband acknowledges that they were not to receive title to the unit.

4. Both the wife and her father say that payments were made for about 12 months and then stopped.  The husband says they stopped for three months and then resumed and continued until 1997-98.  He says that the wife’s father then told them that they no longer needed to make further payments as he was satisfied they had paid enough.

5. The wife says that following the husband’s health scare and the birth of the child her father said not to worry about payments.  Her father says the same.

6. No records of payments are available and because it was so long ago the banks do not have records.  Neither party nor the wife’s father could remember the amounts each said were paid.  The wife could not remember whether it was bank transfer or paid in cash.  The husband said that when payments resumed they were electronic payments.  The wife’s father said that did not happen.

7. Both the wife and her father were quite definite in their evidence.  The husband was not quite so definite.  The wife’s father does not appear to bear any animosity towards the husband.  On the balance of probabilities I am satisfied that what the wife and her father say is correct that there was only a small amount paid in the first 12 months.

8. The husband says that the unit should be included as part of the matrimonial property.  Since the parties paid only a small amount of the $35,000 spent by the wife’s father to build it and lived rent free for 21 years there can be no argument that either the wife or both the husband and wife have an interest in the unit.  There is no evidence that the wife’s father intended for them to have any interest if they did not repay the purchase price.  An added consideration is that the small amount the parties paid the wife’s father is offset by him paying council rates and water rates.

9. Initially the property was rated as one by the municipal Council and the wife’s father paid the rates.  Later the unit was rated separately but the evidence does not make it clear when that happened.  Water rates were in the same position with no separate charge and again the wife’s father paid them.  The husband and wife paid their electricity bill and for the bottled gas.

10. The wife has remained living in the unit since separation.  The parties’ daughter suffered some significant health problems and the wife supported her and paid medical expenses following separation.  Over a period of about 10 months following separation the husband contributed $14,000 for child-support and payment of medical insurance.

11. The husband is now permanently disabled as a result of a workplace accident.  The evidence does not say when this accident happened.  The husband says he lived in a rented unit in (omitted) from September 2006 until January 2011 paying $230 per week rent.  He was still employed on light duties by (employer omitted) until July 2007.  His final payment was for the week ending 31 July 2007.  The payment was $10,412.66 after deduction of taxation.  The details of the payment are:

    Annual holidays  $    4,932

    Long service on termination  $    6,970.56

    WorkCover earnings, 40 hours                  $       620

    Annual leave loading   $       863.10

    Gross pay   $  13,385.66

    Less Tax   $    2,973.00

    Net   $  10,412.66

12. The husband says from August 2007 until November 2010 he lived solely on a disability pension.  From November 2010 to June 2013 he lived on his WorkCover payout.  He now receives a disability pension of $389 per week.

13. The husband pursued a Serious Injury claim.  A letter from Shine Lawyers to the husband dated 21 March 2014 states:

    Your WorkCover Serious Injury claim resolved on 23 November, 2010 for both pain and suffering and pecuniary loss.  The settlement was not the subject of any apportionment.

14. The letter encloses a breakdown of the settlement.  The details are:

    Settlement   $337,500

    Plus Ministerial Costs   $  13,500

    Plus Party/Party Costs   $  33,072.20

    Total funds  $384,072.20

    Less Refunds Centrelink   $  49,163.84

    Total Funds received   $334,908.36

    Less Fees and Disbursements               $  71,610.70

    Balance paid to husband   $263,297.66

15. In about May 2012 the husband received a payment, in round terms, of $60,000.  This was a disability insurance payment of $35,000 and a superannuation payout of $30,000 less $5,000 tax.

16. The husband purchased the Property M property in 2011 for $135,000.  He then spent $55,200 on improvements as follows:

    Shed   $   9,000

    Plumber   $   4,500

    Tank   $   7,000

    Solar power   $   4,500

    Conara heater   $   3,000

    Air-conditioner   $   2,100

    Base construction for tank, driveway        $ 15,600

17. He says he spent approximately $5,000 ”setting up home” on leaving the marital home as he took only clothing with him.

18. The wife’s father had lent the parties $10,000.  The husband repaid $5,000 on 5 March 2009.  The receipt from Mr V, the wife’s father says “loan from 2002 about”.

19. The evidence of the parties working history is not detailed.  The husband was employed until the end of July 2007.  The wife says that in March 2013 she was made redundant as (occupation omitted) for (employer omitted), followed by a period of 12 months of unemployment.  She then became employed working for (employer omitted) for the (employer omitted) and remains working there.  Her gross income is $1,056 a week.

Just and equitable

1. The husband’s proposal is that there be no order.  He was unrepresented so the basis on which that is proposed was not stated by him.  He said that he had purchased a two-bedroom property on three quarters of an acre in a small town where he could support himself on the disability pension and by saving money affording to go fishing from time to time.

2. The High Court of Australia in Stanford v Stanford [2012] HCA 52; (2012) CLR 108 said that after determining the parties’ property the next step is to determine whether it is just and equitable to make an order. The parties’ marriage and the basis upon which they shared their financial affairs has come to an end so it is just and equitable to consider making an order. To determine whether an order should be made the parties contributions need to be assessed and then whether there should be any adjustment for s.75(2) matters.

Contributions

1. The initial issue under contributions is whether the wife has contributed either financially or non-financially, or as a homemaker and child carer to the acquisition and maintenance and improvement of the husband’s property.  All of this property has been acquired since separation.

2. The $60,000 payment the husband received in May 2012 was from disability insurance and superannuation.  Since the husband ceased working at the end of July 2007 and the parties separated on 4 March 2006 a substantial amount of this benefit must have accrued during the marriage.  Consequently, the wife has contributed to the husband’s receipt of this amount of $60,000.

3. The same applies for the husband’s superannuation of $30,000.  Contributions to the husband’s superannuation must largely have occurred prior to separation.  On the other hand, except for a period of 12 months, the wife has worked since separation.  The amount of her superannuation at separation is not known and contributions since then are not known but the probability is that the wife’s superannuation was less than $30,000 at separation.  The husband has made no contribution to increase the wife’s superannuation by payments into her fund since then.

4. The husband received a payment of $263,297.66 in November 2010.  The only evidence of its components is that it was for pain and suffering and loss of earnings.  From November 2010 to June 2013 he lived from this payment.  The evidence of the husband’s injury is the wife’s statement that he injured his left arm and shoulder and the husband’s statement that he has been assessed with a 30% disability.  There is no evidence whether the payment in November 2010 was on the basis that he was permanently disabled for gainful employment.  The husband says he is and so he receives a disability pension.  A reasonable inference is that since the husband was employed until after separation, in so far as the payment was for loss of income the substantial majority of the loss of income component must have been for future loss of income.  If there was any component of loss of income prior to separation it was so small that it can be ignored.  That leads to a conclusion that the payment was for pain and suffering and loss of income subsequent to separation.

5. In Perrone [1995] FamCA 55 the Full Court of the Family Court of Australia said at [47] that previous cases in the Full Court and the High Court of Australia made it clear that in the case of a personal injury settlement, that if evidence of the components of the settlement existed attention should be paid to it but in the absence of any evidence it was inappropriate to ignore the existence of the damages award.

6. In this case I am satisfied that the components of the settlement were for pain and suffering and loss of income after separation so that the wife has not made a contribution to the monies the husband received in the settlement.

7. Some of the payment of $263,297.66 was used for the husband’s living expenses from November 2010 to June 2013, a period of two years and eight months.  For part of the time the husband was paying rent and then after the purchase of the property in 2011 he had no rent or mortgage payments.  There is no evidence of this amount.  Since a substantial amount of the payment of $263,297.66 must have been for loss of future income a fair way to approach the assessment is to treat the whole of the $60,000 the husband received from disability insurance and superannuation as a capital amount going to the acquisition of his property with the balance coming from the personal injury settlement.

8. The issue then is what contribution each party has made.

9. The parties’ marriage lasted for 25 years, from 1981 until 2006.  For 21 of those years, from 1985, they lived in the unit on the wife’s father’s property.  The provision of a residence by the wife’s father is a contribution by the wife.  I have no evidence of each party’s income during the marriage other than that they both worked.  The one child had health problems, allergies, and the best inference I can draw from the evidence is that the wife undertook the greater care of the child.  In the circumstances the scant evidence there is leads to the conclusion that apart from the provision of the residence the parties’ contributions were equal.

10. The residence was provided initially four years into a 25 year relationship and so its influence has been eroded over time and that needs to be given some recognition.  On the other hand there is no evidence of maintenance or improvement of the property by the husband, even, for instance that he maintained the garden.  That inference cannot be drawn given that the unit was on a property owned by the wife’s father.  This means that despite the passage of time the assessment of contributions up to the time of separation is 60% to the wife and 40% to the husband.

11. Following separation the wife continued supporting the parties’ daughter although she was then over 18.  Over about 10 months the husband contributed $14,000.  The events after separation do not alter contributions assessment.

12. The wife’s contribution under s.79(4) is 60% of $60,000, $36,000. The fair way of assessing her contribution to the husband’s assets of $152,300 is to say that she contributed $36,000 of those assets that is 24%.

Section 75(2)

1. The submission on behalf of the wife for her 30% proposal is that it takes into account the disparity in the parties’ future income earning potential.  The husband’s income is a disability pension.  In his October 2014 financial statement this is $389 per week.  The wife in her financial statement of November 2014 gives her total average weekly income as $1,056.  She puts her income tax at nil and so it would seem that the $1,056 is her net income.

2. Both parties have accommodation, mortgage free in the husband’s case and rent-free in the wife’s case.  The wife has no legal security over the tenure of her property, but her relationship with her father is obviously good and so the case can be assessed on the basis that the wife will have this accommodation into the future.

3. While I cannot assume that the improvements the husband made to the property have increased its value I can take them into account under s.75(2)(o) as (“any fact or circumstance which, in the opinion of the Court come the justice of the case requires to be taken into account”).

4. The circumstances are unusual and it is a situation where the realities of the parties’ circumstances must be taken into account rather than make a percentage adjustment under s.75(2).

5. The husband has little ability to raise funds.  He is paying off a loan on his motor vehicle and a bill for legal costs of about $6,000.  He does have superannuation of $30,000 and he has reached the superannuation preservation age of 55 and is retired.  I do not have specific evidence about the rules of his superannuation fund but I consider I can assume that he can access all of his superannuation now.  Therefore, the husband can pay an amount of $30,000 by accessing that superannuation.  To pay any more he would have to sell his home.

6. An order that the husband pay the wife the sum of $30,000 will mean that each party will have a home.  The husband owns his home, the wife does not own her home.  Nonetheless, the wife can expect to live in that home indefinitely.

7. A payment of $30,000 to the wife is about 19½% of the assets, an adjustment of about 4½% on contributions in the husband’s favour.

8. When all the considerations are taken into account, each party’s income earning potential, the particular circumstances and the fact that the husband has substantially improved his home over and above the $135,000 he paid for it, this is a proper assessment under s.75(2) and it is just and equitable.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Phipps

Date:  4 June 2015