Caddell and Pacelli
[2013] FCCA 704
•4 July 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CADDELL & PACELLI | [2013] FCCA 704 |
| Catchwords: FAMILY LAW – De facto relationship – initial contributions much higher by one party – higher income by the other – contributions by non-party – eight year relationship – 90% distribution in favour of initial contributor. |
| Legislation: Family Law Act 1975, ss.4AA, 90SF, 90SM. |
| Cases cited: DJM and JLM (1998) FLC 92-816 Dobbins & Gibbs [2011] FMCAfam 35 Hirst v Rosen (1982) FLC 91-230 AJO v GRO (2005) FLC 93-218 Scott & Bellow [2012] FMCAfam 338 Shimizu & Tanner [2011] FamCA 271 Townsend and Townsend (1995) FLC 92-569 |
| Applicant: | MR CADDELL |
| Respondent: | MS PACELLI |
| File Number: | MLC 9449 of 2012 |
| Judgment of: | Judge F. Turner |
| Hearing dates: | 13, 14 & 15 June 2013 |
| Date of Last Submission: | 15 June 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 4 July 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hall |
| Solicitors for the Applicant: | Robinson Gill |
| Counsel for the Respondent: | Mr MacFarlane |
| Solicitors for the Respondent: | Novatsis & Alexander |
ORDERS
The wife refinance the mortgage over the property at Property N (the “property”) into her sole name and be responsible for repaying the mortgage.
The wife retain the property.
The wife refinance into her sole name the Bendigo Bank Loans No’s.[1] and [2].
The wife discharge the debt owing on the Bendigo Bank Red Credit Card held in the joint names of the parties.
The husband retain for his sole benefit all items of property currently in his possession (including the current VW Golf motor vehicle).
The wife retain for her sole use and possession all items of property now in her possession.
Each party retain the sole and exclusive right to their respective superannuation entitlements, long service leave entitlements and other employment based entitlements.
All insurance policies become the sole property of the owner named therein.
Subject to these orders any joint tenancy between the parties is hereby severed.
Unless other specifically ordered herein and save for the purposes of enforcing any money due and payable by either party pursuant to these orders each party shall be solely entitled to the possession absolutely of all items of property currently in their respective possession as at the date of these orders (including choses-in-action) and without limiting the generality of the above all the chattels in the real property are considered to the in the possession of the respondent.
The wife pay the husband $50,000.00 within 60 days.
THE COURT DECLARES THAT:
The husband has no interest whether legal or beneficial in the property.
IT IS NOTED that publication of this judgment under the pseudonym Caddell & Pacelli is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 9449 of 2012
| MR CADDELL |
Applicant
And
| MS PACELLI |
Respondent
REASONS FOR JUDGMENT
The parties in this case commenced cohabitation in 2003 and separated on 14 April 2012. It is not disputed that they were in a “de facto relationship” as defined in s.4AA of the Family Law Act1975 (the “Act”). The Court will refer to the applicant Mr Caddell as the “husband” and the respondent Ms Pacelli as the “wife”. There are no children of the relationship.
By Amended Initiating Application filed on 24 May 2013, the husband seeks:
·An adjustment of property between the parties pursuant to s.90SM of the Act;
·An order that the wife pay the husband 40% of the equity in the property at Property N, (the “property”);
·A superannuation splitting order of 40% to the husband and 60% to the wife; and
·Costs
At the hearing before the Court on 12, 13 and 14 June 2013, Mr Hall of Counsel appeared for the husband and Mr MacFarlane of Counsel appeared for the wife. The husband sought a 70/30% division of the pool and a 75/25% division of superannuation in the wife’s favour (Transcript “T” 12/6/2013 p.5, l.25).
The Court must not make an order under s.90SM of the Act “unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”.
Section 90SM(4) of the Act provides:
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e)the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
Section 90SF(3) and (4) of the Act provides:
(3)The matters to be so taken into account are:
(a)the age and state of health of each of the parties to the
de facto relationship (the subject de facto relationship ); and(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(o)the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i)a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii)a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i)a party to the subject de facto relationship; or
(ii)a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q)any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t)the terms of any financial agreement that is binding on a party to the subject de facto relationship.
(4)In exercising its jurisdiction under section 90SE, a court must disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit.
The wife alleges that cohabitation commenced in late 2003, whereas the husband alleges that it commenced in April 2003. Due to initial contributions, the actual date is not of significance (post).
The final orders sought by the husband are set out in the written Closing Submissions for him as follows:
(1)That within 30 days of the date of these orders (‘the due date’) the Respondent:
(a)pay to the Applicant the sum of $145,000 (‘the payment’);
(b)discharge the existing joint mortgage secured against the real property situate at and known as Property N, in the State of Victoria (‘the real property’);
(c)discharge the first and second personal loans from Bendigo Bank in the join names of the parties;
(2)That contemporaneous (sic “contemporaneously”) with the Respondent’s compliance with her obligations pursuant to paragraph 1 herein the Applicant provide to the Respondent a duly executed discharge of the caveat lodged on his behalf against the discharge (sic “of”) the real property.
(3)That in the event the Respondent fails to comply with her obligations pursuant to paragraph 1 hereof by the due date then the real property be forthwith sold altogether out of court (‘the default sale’) and upon completion of the sale the proceeds be applied:
(a)First to pay the costs commissions and expenses of the sale;
(b)Secondly to discharge the liabilities listed in paragraph 1(b), (c) and (d) herein;
(c)Thirdly to pay the Applicant so much of the payment as is then outstanding together with interest thereon at the rate prescribed under the Rules of the Court.
(d)Fourthly the balance to the Respondent.
(4)That the parties have liberty to apply to the court with respect to the default sale.
(5)That pending the payment or completion of the default sale:
(a)the Respondent have the sole right to occupy the real property and during such right of occupation she pay all instalments due pursuant to the first mortgage and all other liabilities mentioned in paragraph 1(b), (c) and (d) herein;
(b)the parties hold their interests in the real property upon trust pursuant to these orders;
(c)neither party further encumber the real property without the prior written consent of the other party.
(6)That the Applicant retain sole right, title and interest in the Golf motor vehicle registered in his name.
(7)That unless otherwise specified in these orders and save for the purposes on enforcing the payment of any monies due under these or any subsequent orders:
(a)each party be solely entitled to all other property including choses in action in the possession of that party as at the date of these orders;
(b)insurance policies become the sole property of the owner named thereon;
(c)the contents of any joint bank account are the sole property of the Respondent;
(d)each party be solely entitled to the superannuation entitlements registered in the name of that party as at the date of these orders;
(e)any joint tenancy in any real or personal estate is hereby expressly severed.
(8)That all extant applications be otherwise dismissed.
The final orders sought by the wife are set out in her Outline of Case filed 12 June 2013 as follows:
(1)The Respondent retain for her sole use and benefit the property situated at and known as Property N, (“the real property”) and it is hereby declared that the Applicant has no interest whether legal or beneficial in the real property.
(2)The Respondent discharge or refinance into her sole name, the mortgage registered over the property.
(2) The Applicant at his expense cause to be removed the caveat lodged by him over the real property.
(3)The Respondent discharge or refinance into her sole name the Bendigo Bank Loan No.[1];
(4)The Respondent discharge or refinance into her sole name the Bendigo Bank Loan No. [2]
(5)The Respondent discharge the debt owing on the Bendigo Bank Red Credit Card held in the joint names of the parties
(6)The Applicant retain for his sole benefit all items of property currently in his possession (including the VW Golf motor vehicle).
(7)That unless other specifically ordered herein each party shall retain the sole and exclusive right to their respective superannuation entitlements/long service leave entitlements and other employment based entitlements.
(8)That all insurance policies become the sole property of the owner named therein.
(9)That subject to these orders any joint tenancy between the parties is hereby severed.
(10)That unless other specifically ordered herein and save for the purposes of enforcing any money due and payable by either party pursuant to these orders each party shall be solely entitled to the possession absolutely of all items of property currently in their respective possession as at the date of these orders (including choses-in-action) and without limiting the generality of the above all the chattels in the real property are considered to the in the possession of the respondent.
(11)The Application and Response be otherwise dismissed.
During the proceedings on 13 June 2013, Mr MacFarlane added that the wife was prepared to pay the husband $50,000.00 in addition to him retaining his current VW Golf motor vehicle (the “current VW Golf”) (T 13/06/13 p.99, l.37).
The wife’s proposal therefore becomes:
·That the wife refinance the mortgage of the property into her name and be responsible for the repayments;
·That the wife refinance the two loans from Bendigo Bank (No’s. [1] and [2]) into her sole name and repay them;
·That the wife discharge the debt owing on the Bendigo Bank Red Credit Card;
·That the husband retain the current VW Golf valued at $20,000.00;
·That the parties keep the chattels in their possession; and
·That the wife pay the husband $50,000.00 within 60 days.
Closing Submissions for the Respondent Wife
Mr MacFarlane submitted the wife’s calculation of the current asset pool as follows:
| Assets | |
| Property N | $725,000.00 |
| Applicant’s current VW Golf GTI | $20,000.00 |
| $745,000.00 | |
| Liabilities | |
| Mortgage | $172,740.00 |
| Bendigo Bank – Joint Loan – VW Golf | $24,254.00 |
| Bendigo Bank – Joint Loan – Holiday | $18,195.00 |
| Bendigo Bank Red Visa – Joint | $3,000.00 |
| (218,189.00) | |
| Total Net Assets | $526,811.00 |
| Superannuation | |
| Applicant’s Superannuation | $20,000.00 |
| Respondent’s Superannuation | $75,764.00 |
Mr MacFarlane agreed that at cohabitation the mortgage over the property was $170,000.00.
As to s.90SM(4)(a), Mr MacFarlane provided the Court with a Schedule of the “Parties Respective Incomes” (the “Schedule”) which shows the husband’s net income from 2003 to 2012 was $333,962.00, and the wife’s was $311,561.00, or about $20,000.00 less than the husband’s. The figures for 2004 to 2012 show the wife’s income about $41,000.00 less than the husband’s.
As to initial contributions, Mr MacFarlane submits that in 2003 the wife owned a home worth $360,000.00 with a mortgage of $170,000.00, leaving an equity of $190,000.00. Mr MacFarlane accepted that the husband’s then VW Golf had a value of $7,500.00 at the time (T 13/06/13 p.81, l.5). He submits that the wife contributed 95% of the initial contributions (the correct figure is 96.1%).
The initial contribution figures were:
| The wife’s equity in the property | $190,000.00 = 96.2% |
| The husband’s VW Golf | $7,500.00 = 3.8% |
Mr MacFarlane submits that the husband made no financial contributions to the acquisition of the property and made only six or eight mortgage repayments.
Mr MacFarlane submits that each party contributed to the rates and food. He submits that the wife’s parents also provided food to the parties. The Court accepts the wife’s, and her witness’s evidence, about this (post). Out of the seven evening meals per week, the wife’s parents provided food for the parties on average three or four times a week. The wife’s father did house maintenance (including gardening), and gave money to the husband. The Court finds that those contributions by the wife’s parents over nine years were significant.
Mr MacFarlane submits that the wife’s father paid a fee of $2,000.00 for the husband to retrain. The husband denies that. There is evidence that the wife’s father paid the fee (Affidavit of Mr K filed 6 June 2013 at [4]; the wife’s Affidavit filed 31 October 2012 at [12], the Affidavit of Ms P filed 27 May 2013 at [9] and the Affidavit of Ms D filed 27 May 2013 at [5]). The Court finds that the wife’s father paid the fee of $2,000.00 for the husband to retrain. The Court takes that fact into account pursuant to s.90SF(3)(r).
The Court accepts the contention by Mr MacFarlane that the work of the husband, painting part of a wall, repairing a hole in a plaster wall, repairing a heating duct, putting chicken wire under the house and assisting a technician to install a burglar alarm, was not substantial and was more than offset by the contributions of the wife’s parents.
Mr MacFarlane submits that over the eight or nine years covered by the Schedule, the husband contributed between $20,000.00 and $40,000.00 more income that the wife, but that his contributions should be offset by the wife’s non-financial contributions of cooking and cleaning, and by her parent’s contributions. In addition the wife made all of the mortgage repayments (except for seven or eight).
Mr MacFarlane submits that in 2003, the wife had the property with a mortgage of $169/$170,000.00. That mortgage is now $172,740.00; and the applicant “came with a car worth, say, $7,500. He goes out with a car worth $20,000” (T 13/6/2013 p.93, l.36). The wife now has two personal loans with a total of over $40,000.00 owing and a joint credit card debt of $3,000.00.
Mr MacFarlane submits that where there are discrepancies between the evidence of the parties, the Court should accept the wife’s evidence. Those discrepancies are outlined at T 13/6/2013 p.96, l.5.
Mr MacFarlane submits that the wife’s proposal that the husband retain his car ($20,000.00), and receive a cash payment of $50,000.00, would more than compensate the husband for the $41,461.00 extra income he contributed during the relationship.
Mr MacFarlane referred to the decision in Dobbins & Gibbs [2011] FMCAfam 35 where there was a 17 year de facto relationship, and the wife had almost all of the assets. The husband contributed a car and his pension, but died on the day of the hearing. The husband was awarded a distribution of 15%, (which was reduced from 20% because of a lack of future needs). Mr MacFarlane submits that the circumstances are similar to those here. The Court accepts that submission, except as to future needs.
Mr MacFarlane submits as to future needs here, that the wife is 52 years old and the husband is 39 years old; that both have a similar earning capacity, but the husband has a longer working life to build up funds, including superannuation.
Mr MacFarlane submits as to superannuation that the wife has $75,764.00 and the husband has $22,934.00; Neither party has contributed to the other’s superannuation, and that each party should retain their own.
Mr MacFarlane submits as to the wife’s expenditure on clothing and cosmetics (Exhibit R10), that the wife cannot dispute the figures but the Court should take care in accepting the accuracy of them. The Court finds that the figures were extracted carefully by Mr Hall, and accepts them.
Mr MacFarlane submits that the Affidavits of the following witnesses for the wife were not challenged and therefore should be accepted:
·Affidavit of Ms P filed 27 May 2013, being the wife’s mother – She deposed that the husband and wife came for dinner every Tuesday, and were provided with “a box of foodstuffs to take home” at [4]. They were provided with loaves of bread and soup, and with other cooked food each Friday to eat over the weekend, and a box of fresh fruit and vegetables. She deposed that she and her husband would cut the lawn at the parties’ house, do weeding, prune plants and clear the spouting. The wife’s father often gave the husband $50.00 or $100.00 cash.
·Affidavit of Ms D filed 27 May 2013, being the wife’s sister – She deposed that she would meet the husband and wife at her mother’s place for a meal on Tuesday nights and that her parents would “‘load up’ a case full of fresh fruit and vegetables” at [4], for the husband and wife, and the husband would collect bread from there on Fridays; that her father paid for the husband to retrain; that her parents paid for a new floor, bathroom, vanity and air conditioning in the parties’ house; that the only repairs that she recalls the husband doing was minor plastering to a wall, and helping to paint the kitchen and bathroom. She deposes that the husband did not help the wife with household chores.
·Affidavit of Ms C filed 27 May 2013, being a friend of the husband and wife – She deposed that she has known the parties since 2002; that it was obvious that the wife’s mother did most of the cooking, or that the parties bought take-away; that the wife’s father told her that he did the gardening and whatever needed to be fixed at the parties’ house; and that she never saw the husband assist with household chores.
·Affidavit of Ms H filed 27 May 2013, accountant – She deposed that she had known the parties for about 10 years. She deposed that the wife was solely responsible for the mortgage repayments, but that both parties contributed to day to day living expenses. Apart from helping to paint the kitchen, she cannot recall the husband doing anything else to maintain the house.
·Affidavit of Mr K filed 6 June 2013, being the partner of the wife’s sister – He deposed that he attended at the wife’s parents home for dinner on Tuesday nights; he recalls the wife’s father giving the husband money to undertake a training course; he deposed that the husband “didn’t do anything” about the house apart from “some plaster repairs and a little painting” at [6].
The Court has no reason to reject the above evidence, and accepts it.
Mr MacFarlane submits that the evidence shows that the wife’s parents did far more than contribute food. They also undertook gardening, cleaning gutters, pruning and paid for the kitchen floor, the vanity basin and the air conditioning. The Court finds that the wife’s parents made significant contributions to the welfare of the parties [s.90SF(3)(r)].
Mr MacFarlane submits that the wife’s expenditure on clothing and cosmetics is not a significant matter. The Court finds that some adjustment should be made for it.
Closing Submissions for the Applicant Husband
Mr Hall submits that cohabitation commenced in early 2003; where the wife contends that it was late in 2003. The husband’s Bank Statements from 1 October 2003 to 28 November 2003 (Exhibits A2 and A3) show that many of the transactions were at banks in [suburbs omitted], which supports a finding that the applicant was regularly present in those areas from 1 October 2003 onwards.
Mr Hall submits that at the commencement of cohabitation the property had a value of $360,000.00 less a mortgage of $169,000.00, leaving an equity of $191,000.00.
Mr Hall submits that the husband contributed a VW Golf with an agreed value then of $7,500.00.
Mr Hall submits that there is no dispute about the asset pool and submitted an analysis of the affect of the orders sought by the husband, as follows:
| Assets | Applicant | Respondent |
| Property N | $725,000.00 | |
| Mortgage | (172,740.00) | |
| Bendigo Bank – Joint Loan | (24,254.00) | |
| Bendigo Bank – Second Joint Loan | (18,195.00) | |
| Settlement payment | $145,000.00 | ($145,000.00) |
| Equity | ||
| Applicant’s Current VW GTI Golf | $20,000.00 | |
| Bendigo Bank Red Credit Card – Joint | (3,000.00) | |
| Net Current Assets | $165,000.00 | $361,811.00 |
| Superannuation | ||
| Respondent | $75,764.00 | |
| Applicant | $22,934.00 | |
| Net Current Assets & Superannuation | 187,934.00 | 437,575.00 |
| Expressed as a percentage | 30.1% | 69.9% |
Mr Hall submits that the total initial contributions were $198,500.00 (whereas they were actually $197,500.00) and that the final property pool is valued at $625,509.00 (written Closing Submissions [30]-[31] as amended during the hearing). Mr Hall submits that the husband’s initial contributions were about 1% (whereas they were 3.8%) and that leaving him with his superannuation, his current VW Golf and $145,000.00 would give him 30% of the current asset pool. Having regard to the initial and on-going contributions, the Court finds that that would not be just and equitable.
The Court finds that it makes little difference to the division of the pool to include the income figures for 2003 in the overall contributions of income. By doing that, the overall net income of the husband over nine years would exceed the wife by $22,401.00; whereas over eight years his income would exceed the wife’s by $41,461.00. Having regard to the other contributions by the wife and her family, those income figures are not of great significance.
The husband made initial contributions of 3.8% at most, and made similar contributions to those of the wife during the relationship; he wants to go out with 30%. By comparison, the wife made an initial contribution of 96.2% and made similar contributions to those of the husband during the relationship, and would be left with 70% on the husband’s proposal.
The Wife’s clothing and cosmetics
Mr Hall submits that the wife spent $90,000.00 on clothing and cosmetics during the relationship. He does not seek “to take it all back” (T 14/06/13 p.16, l.16), but submits that an allowance/deduction should be made from the contributions of income by the wife over the period. Mr Hall submits that appropriate spending on those items may have been $150.00 per month, or $16,200.00 over the period. It is not possible for the Court to assess what reasonable discretionary expenditure by the wife should have been on those items during the relationship.
The Court finds that adding back or making an adjustment for discretionary expenditure was identified by the Full Court in AJO v GRO (2005) FLC 93-218 at [30], as notional property (that has commonly been encountered to be added back). The three categories of assets that no longer exist and may be added back were identified as:
·“Where the parties have expended money on legal fees”: DJM and JLM (1998) FLC 92-816 at 85,262;
·“Where there has been a premature distribution of matrimonial assets”: Townsend and Townsend (1995) FLC 92-569; and
·Financial losses incurred by the parties or either of them during the marriage, whether from a joint or several liability, should be shared by them, except:
(a)“where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.”
There is material before the Court here shows that the wife’s expenditure of $90,000.00 over nine years was “wanton” (“undisciplined, unrestrained, self-indulgent, luxurious, extravagant” – Shorter Oxford Dictionary).
The Court finds that in the circumstances where the wife’s annual net income over the period of cohabitation averaged between $32,300.00 (ie $290,705.00 ÷ 9), it was luxurious and self indulgent for her to spend approximately $10,000.00 annually on clothing and cosmetics. However no material was put to show what would have been a “reasonable living expense” in the circumstances (Shimizu & Tanner [2011] FamCA 271 at [108]).
Mr Hall submits that $150.00 per month “might have been appropriate to the wife’s circumstances”. The Court is unable to make a precise calculation. No doubt every judicial officer would arrive at a different figure. The Court makes no precise adjustment for that expenditure, but takes it into account when considering the wife’s proposed cash adjustment to the husband of $50,000.00.
Mr Hall submits that the husband paid most of the utilities and “core living expenses” of the household. The Court finds that the wife’s parents made a significant contribution to the requirements of the parties, but that the husband paid most of the bills and probably rates, but not the mortgage.
Mr Hall submits that the net income contributed by the parties during the relationship was 60% by the husband and 40% by the wife. On the figures in the Schedule, the Court finds that the wife contributed approximately 47 – 48% of the total.
Mr Hall submits that the Court cannot take into account contributions made by the wife’s parents as they were not contributions made by “a party to the de facto relationship” [s.90SM(4)(c)]. The Court finds no force in that argument. Although s.90SM(4)(a) and (b) refer to contributions “made directly or indirectly by or on behalf of a party”, it is just to take those contributions into account under s.90SF(3)(r) as “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
Mr Hall submits that the wife’s initial contributions to the current asset pool, in dollar terms was 30% with the husband 1%. This corresponds roughly with the 96.2/3.8% found earlier. The Court finds that the
non-financial contributions during cohabitation were similar but that the husband contributed income over the period of cohabitation of 52% or 53% (depending on the period used).
Mr Hall made submissions about the borrowing capacity of the wife. Mr Hall’s submission on this point was that the wife could borrow significant funds to pay out the husband. Because of the orders to be made in this case (post), that issue does not require examination. The Court notes that s.90SM(4)(d) relates to “the effect of any proposed order on the earning capacity of either party”, and not to the affect on a party who borrows funds.
Mr Hall submits that the husband seeks a 30/70% split of the total pool (in the wife’s favour), inclusive of superannuation (being $75,764.00 for the wife and $22,934.00 for the husband); and that the husband therefore seeks a cash payment of $145,000.00; that he keep his current VW Golf, his superannuation and the other goods and chattels in his possession.
Mr Hall referred to the decision in Dobbins & Gibbs (supra)
(T 14/06/13 p.27, l.26) which he said is distinguishable because there, the wife owned an unencumbered home at the date of cohabitation, and the husband brought in no capital. During the 17 year relationship the husband earned a state pension. The husband, who died on the day of the hearing, was awarded 15% of the pool. The Court finds that decision relevant here. With a shorter period of cohabitation here, there is less justification to decrease the significance of the initial contributions by the wife.
Mr Hall referred to the decision in Scott & Bellow [2012] FMCAfam 338 and the requirements on Courts to treat a de facto relationship in the same way as a marriage when deciding an adjustment of property interests. Mr Hall submits that each case turns on its facts, and that the decision does not assist the wife here because non-financial contributions were equal. At [86] Curtain FM (as he then was) referred to the decision in Hirst v Rosen (1982) FLC 91-230 at p.77, 251 that:
“… where a marriage has lasted for some time or where there have been substantial contributions made to the care and control of the children of the marriage, the indirect contribution especially that usually made by the spouse who assumes the primary role of homemaker and parent, must be taken into account, but where a marriage of short duration and no question arises of the care and control of children, the question of assessment of the indirect contributions made by the parties becomes less important…”.
The Court finds that in the present case, the most significant factor is the direct initial contributions by the parties.
Credibility
The husband denied that the wife’s father paid $2,000.00 for the costs of the husband retraining. The Court rejects that denial. The husband gave evidence that he took a violin without permission from what he described as “junk” under the house of a customer where he was working at the time (T 13/6/2013 p.5, l.25). That violin was not his to take. It is now for sale for $8,700.00. During the hearing, Mr Hall advised the Court that the husband is willing to share the value of the violin with the wife, and later that he was willing to return the violin to its owner.
The above gives the Court good reason to doubt the honesty of the husband and therefore his credibility. Mr Hall submits that there are grounds to question the wife’s honesty as she gave evidence about being able to make mortgage repayments on her income without assistance from the husband. Having observed the wife giving evidence, the Court concludes that the wife’s evidence on that issue resulted more from a lack of analysis by her of her financial situation, than from any dishonesty. It was her misguided opinion. She appeared to have understood the facts only when put to her in cross-examination.
The Court finds that there are no grounds to question the wife’s honesty and credibility, but there are strong grounds to question the husband’s honesty and credibility. The Court will accept the wife’s evidence where there is conflict with the husband’s evidence.
The Court accepts the wife’s evidence and that of her witnesses:
·The husband contributed very little to cooking or other household duties [s.90SM(4)(c)], or to the maintenance of the property [s.90SM(4)(b)(i)].
·That her parents supplied bread, fruit and vegetables and approximately three to four evening meals each week, and that her parents paid $2,000 for the husband to be retrained.
·The Court accepts the wife’s evidence that, apart from the food provided by the parents, the wife paid for most of the household expenses. She also made most mortgage repayments.
Financial Contributions – s.90SM(4) of the Act
Initial Contributions
The Court finds that the wife made much greater initial financial contributions to the relationship. She contributed the property. The property had a value at the time of $360,000.00 and a mortgage of $169/$170,000.00 which left a net value of $190/$191,000.00. The husband contributed a VW Golf with an agreed value of $7,500.00.
Each party had some other possessions of relatively minor value.
During the Relationship
Mr MacFarlane prepared a Schedule of the Parties Respective Income throughout the relationship. On those figures, the total net income of the wife from 2003 to 2012 was $311,561.00 and of the husband for the same period was $333,962.000. For the period 2004 to 2012, the total net income of the wife was $286,717.00 and of the husband $328,178.00. The total net incomes over the 9 year period therefore differ by either $22,401.00 or $41,461.00 in favour of the husband. The husband therefore contributed, on average, either $2,489.00 or $4,607.00 more income per annum over the relationship that did the wife.
The Court therefore finds that the wife made much greater financial contributions at the commencement of cohabitation. Those contributions are not offset by the higher financial contributions by the husband during the relationship. Non-financial contributions by or for the wife were greater than by the husband.
The increase in value of the property
The Court finds that the increase in the value of the property from $360,000.00 in 2003 (agreed) to $725,000.00 in 2012 was due to the efluxion of time and not to either party’s contributions. It resulted from the wife [insert word] the property at the time of cohabitation. The mortgage in 2003 is agreed to have been about $170,000.00 and at separation agreed to be $172,740.00.
Section 90SM of the Act
Section 90SM(4)(a) – The Court finds that the wife’s financial contributions far exceed those of the husband.
Section 90SM(4)(b) – The Court finds that the parties non-financial contributions to the acquisition, conservation or improvement of the property were equal.
Section 90SM(4)(c) – The Court finds that the wife’s contributions to the welfare of the family, including contributions by her parents, were equal to or exceed those of the husband.
Section 90SM(4)(d) – The husband’s proposed order that the wife pay him $145,000.00 would not affect the earning capacity of either of the parties.
The husband thereby proposes that the wife retain the value of the property at cohabitation and that the balance of the pool be divided equally between the parties. The Court finds that the wife contributed more directly and indirectly during the relationship and that a 50/50 division, after the deducting value of the property at cohabitation would not be just and equitable [s.90SM(3)].
Section 90SF(3) of the Act
Section 90SF(3)(a) – The husband is 33 years old with no health problems. The wife is 52 years old with no health problems, but with far less potential working life.
Section 90SF(3)(b) – The wife earned $71,000.00 in 2012 and the husband earned $65,000.00 in 2012 (Schedule). The wife is not due to receive any inheritance under her father’s will. The husband’s company “[B] Pty Ltd” has a bank balance of $12,000.00 but owes $20,000.00. The parties have no other financial resources. Both parties have the capacity for gainful employment.
Section 90SF(3)(c) – There are no children of the relationship.
Section 90SF(3)(d) – Both parties need to support themselves. The wife has a higher earning capacity than the husband if she returns to full time work.
Section 90SF(3)(e) – Not relevant.
Section 90SF(3)(f) – Not relevant.
Section 90SF(3)(g) – Both parties will be able to maintain a reasonable standard of living on their respective incomes.
Section 90SF(3)(h) – Not relevant.
Section 90SF(3)(i) – Not relevant.
Section 90SF(3)(j) – Not relevant.
Section 90SF(3)(k) – The de facto relationship was from 2003 until April 2012, which enabled the wife to undertake a PhD. In the long term, this may give her a higher earning capacity.
Section 90SF(3)(l) – Not relevant.
Section 90SF(3)(m) – Not relevant.
Section 90SF(3)(n) – The husband is to retain the current VW Golf, his chattels and receive a payment from the wife of $50,000.00.
Section 90SF(3)(o) – Not relevant.
Section 90SF(3)(p) – Not relevant.
Section 90SF(3)(q) – Not relevant.
Section 90SF(3)(r) – The justice of the case requires that the contributions by the wife’s parents be taken into account.
Section 90SF(3)(s) – Not relevant.
Section 90SF(3)(t) – Not relevant.
Superannuation
Since separation the wife has not contributed to her superannuation personally, but her employer has. Since separation there have been no contributions to the husband’s superannuation.
The wife proposes that both parties keep their own superannuation (being the husband $22,934.00 and wife the $75,764.00).
The Court finds that to be just and equitable [s.90SM(3)].
The asset pool agreed between the parties is:
| Assets | ||
| Property N | $725,000.00 | Agreed |
| Current VW Golf | $20,000.00 | Agreed |
| Superannuation | ||
| Applicant | $22,934.00 | Agreed |
| Respondent | $75,764.00 | Agreed |
| Liabilities | ||
| Mortgage over Property N | $172,740.00 | Agreed |
| Bendigo Bank – Joint Loan | $24,254.00 | Agreed |
| Bendigo Bank – Joint Loan | $18,195.00 | Agreed |
| Bendigo Bank Red Credit Card | $3,000.00 | Agreed |
| Net asset pool (Agreed figure) | $625,509.00 |
In addition, the applicant submits that the chattels should be included with the wife’s valued at $20,000.00 at the husband’s at $5,000.00, making a total pool of $650,509.00.
Mr MacFarlane proposes:
| That the wife retain the property and refinance the mortgage into her name | $725,000.00 – $172,740.00 |
| Sub-Total | $552,260.00 |
| That the wife repay the two loans to Bendigo Bank and the Credit Card debt of $3,000.00 | – $45,449.00 |
| Sub-Total | $506,811.00 |
| That the wife retain her superannuation | $75,764.00 |
| Total | $582,575.00 |
The Court finds that the wife and her parents contributed far more to the relationship than did the husband. Having regard to the initial contribution of the wife of 96.2%, the Court adjusts the initial 3.8% contribution of the husband to 11%, on account of the higher income he contributed, offset by the non-financial contributions made by the wife, and her parents.
The parties have agreed on a net asset pool of $625,509.00. The wife proposes to pay the husband $50,000.00 (in addition to him retaining his current VW Golf valued at $20,000.00). This would give the husband $70,000.00, or 11% of the asset pool, including superannuation.
The Court having found the initial contribution by the husband to have been 3.8%, and because of his contributions of higher income, finds that division of 89/11% in favour of the wife to be just and equitable [s.90SM(3)]. It will repay to him his greater contribution of income, and he receives a VW Golf of nearly triple the value of the one he contributed at cohabitation. The wife retains the property and loses 7% because of the husband’s higher input of income, and because of her expenditure on clothing and cosmetics.
The Court makes the orders as proposed by the wife as follows:
(1)The wife refinance the mortgage over the property at Property N, (the “property”) into her sole name and be responsible for repaying the mortgage.
(2)The wife retain the property.
(3)The wife refinance into her sole name the Bendigo Bank Loans No’s.[1] and [2].
(4)The wife discharge the debt owing on the Bendigo Bank Red Credit Card held in the joint names of the parties.
(5)The husband retain for his sole benefit all items of property currently in his possession (including the current VW Golf motor vehicle).
(6)The wife retain for her sole use and possession all items of property now in her possession.
(7)Each party retain the sole and exclusive right to their respective superannuation entitlements, long service leave entitlements and other employment based entitlements.
(8)All insurance policies become the sole property of the owner named therein.
(9)Subject to these orders any joint tenancy between the parties is hereby severed.
(10)Unless other specifically ordered herein and save for the purposes of enforcing any money due and payable by either party pursuant to these orders each party shall be solely entitled to the possession absolutely of all items of property currently in their respective possession as at the date of these orders (including choses-in-action) and without limiting the generality of the above all the chattels in the real property are considered to the in the possession of the respondent.
(11)The wife pay the husband $50,000.00 within 60 days.
The Court declares that the husband has no interest whether legal or beneficial in the property.
I certify that the preceding ninety-eight (98) paragraphs are a true copy of the reasons for judgment of Judge F. Turner
Associate:
Date: 4 July 2013
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Equity & Trusts
Legal Concepts
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Remedies
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Injunction
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Costs
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Jurisdiction
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