Calkin and Calkin
[2009] FMCAfam 942
•17 December 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CALKIN & CALKIN | [2009] FMCAfam 942 |
| FAMILY LAW – Property settlement – interim distribution of property – draw downs on mortgage – negative contributions made by the husband – accumulated debt by both parties – section 75(2) adjustment – orders to finalise financial relationship between the parties. |
| Family Law Act 1975, ss.75(2), 79(1), 79(2), 79(4) |
| In the Marriage of Browne and Green (1999) 25 Fam LR 482; (1999) FLC 92-873; In the Marriage ofHickey (2003) 30 Fam LR 355; (2003) FLC 93-143 In the Marriage of Kowaliw (1981) FLC 91-092 |
| Applicant: | MS CALKIN |
| Respondent: | MR CALKIN |
| File Number: | WOC524 of 2008 |
| Judgment of: | Monahan FM |
| Hearing date: | 24 August 2009 |
| Date of Last Submission: | 25 August 2009 |
| Delivered at: | Wollongong |
| Delivered on: | 17 December 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Macpherson |
| Solicitors for the Applicant: | Heard McEwan Legal |
| Counsel for the Respondent: | Ms Friedlander |
| Solicitors for the Respondent: | Fulcrum Legal |
THE COURT ORDERS THAT:
Subject to any agreement between the parties to the contrary, the parties do all acts and execute all documents necessary to forthwith list for sale by private treaty the former matrimonial home situate and known as Property M in the State of New South Wales (“the former matrimonial home”) at a reserve price agreed between the parties or failing agreement within thirty (30) days at a price fixed by the President for the time being of the Real Estate Institute of New South Wales and upon sale to distribute the proceeds of sale as follows:
(a)firstly, to discharge the existing mortgage secured by the National Australia Bank;
(b)secondly, in payment of real estate agents’ commission on the sale;
(c)thirdly, in payment of proper legal costs and disbursements of and incidental to the sale; and
(d)fourthly, in payment of the balance remaining to the wife 60% and to the husband 40%.
In the event that contracts of sale of the former matrimonial home by private treaty have not been exchanged within ninety (90) days after the former matrimonial home is listed for sale or within such further time that the parties may agree in writing, then the parties shall forthwith upon expiration of the said period of ninety (90) days do all such things and execute all such deeds, documents and instruments as may be necessary to procure a sale by public auction of the former matrimonial home and the reserve price be as agreed between the parties or, failing agreement, as nominated by the auctioneer agreed to by the parties, or failing agreement, as nominated by the President for the time being of the Real Estate Institute of New South Wales, and upon completion of the sale, the net proceeds be applied:
(a)firstly, to discharge the existing mortgage secured by the National Australia Bank;
(b)secondly, in payment of real estate agents’ commission on the sale;
(c)thirdly, in payment of proper legal costs and disbursements of and incidental to the sale; and
(d)fourthly, in payment of the balance remaining to the wife 60% and to the husband 40%.
In relation to orders 1 to 2 herein, in the event that the parties cannot agree on the identity of the real estate agent and/or auctioneer to conduct the aforesaid sale by private treaty or auction sale, the real estate agent and/or auctioneer will be as nominated by the President of the Real Estate Institute of New South Wales.
In relation to orders 1 to 2 herein, in the event that the parties cannot agree on the identity of a solicitor and/or conveyancer to legally act for the parties in the conveyance of the former matrimonial home, the solicitor and/or conveyancer will be as nominated by the President of the Law Society of New South Wales.
Pending completion of the sale by private treaty or auction sale of the former matrimonial home pursuant to orders 1 to 2 herein:
(a)the husband have the sole right to occupy the former matrimonial home and during such right of occupation the husband pay all rates, taxes and outgoings of the former matrimonial home as they fall due (including any arrears);
(b)the husband forthwith indemnify the wife of all rates, taxes and outgoings of the former matrimonial home (including any arrears);
(c)in the event that any outstanding increase of the mortgage secured by the National Australia Bank over the former matrimonial home, as at the date of settlement, exceeds $65,539.85 (“the increase”), the husband be liable for this increase. Such increase is to be satisfied from the husband’s share of the net proceeds of the sale of the former matrimonial home pursuant to Order 1 to 2 herein;
(d)the parties hold their respective interests in the former matrimonial home upon trust pursuant to these orders; and
(e)neither party encumber the former matrimonial home without the consent in writing of the other party.
Contemporaneously upon settlement of the former matrimonial home pursuant to orders 1 to 2 herein:
(a)the husband pay to the wife the sum of $21,565.80; and
(b)the wife forthwith assume all liability arising from the loan due to Mr T (“the loan”) and forthwith indemnify the husband from any liability arising from the loan.
The husband forthwith assume all liability arising from his credit card debt with the National Australia Bank (“the debt”) and forthwith indemnify the wife from any liability arising from the debt.
The husband retain free from any claim from the wife all his interest in his shares and bank accounts held in his sole name.
The wife retain free from any claim from the husband all her interest and entitlements in her REST Superannuation fund.
Orders 10 to 15 herein (inclusive) are binding on the Trustee of the [M] Super Trust, Personal Superannuation Division (“the fund”).
There be allocated as required by section 90MT(4) of the Family Law Act 1975 (“the Act”), a base amount of $76,958.50 to the wife out of the husband’s interest in the fund.
In accordance with section 90MT(1)(a) of the Act, the Trustee of the fund:
(a)create an entitlement on the part of the wife to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount referred to in Order 11 above; and
(b)make a corresponding reduction in the entitlement the husband, or such other person to whom a splittable payment may be made, would have had in the fund, but for this Order.
Whenever the Trustee of the fund makes a splittable payment out of the husband’s interest in the fund, the Trustee shall do all such acts and things and sign all such documents as may be necessary to pay the entitlement created in Order 12 of these Orders in accordance with requirements of the Act and the Family Law (Superannuation)Regulations 2001.
Orders 11 to 15 herein (inclusive) have effect from the operative time and the operative time is four (4) business days after service of a copy of the sealed Orders on the Trustee of the fund.
The husband shall do all things necessary, including but not limited to, exercising his request pursuant to regulation 7A.05 of the Superannuation Industry (Supervision) Regulations 1994 for the creation of a new interest in the wife’s name in the fund with the value of the transferable benefits calculated in accordance with regulation 7A(11) of the Superannuation Industry (Supervision) Regulations 1994.
The husband indemnify the wife with respect to all debts and liabilities in the husband’s sole name.
The wife indemnify the husband with respect to all debts and liabilities in the wife’s sole name.
Except as is otherwise provided in these orders:
(a)each party is solely entitled to any real property, the wife’s motor vehicle, monies on deposit, monies standing to their individual credit in any bank or financial institution, chattels, furniture and items of personalty (including choses-in-action) in their respective ownership and/or possession as at the date of these orders;
(b)insurance policies remain the sole property of the owner/beneficiary named thereon/in; and
(c)each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
All extant applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Calkin & Calkin is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT WOLLONGONG |
WOC524 of 2008
| MS CALKIN |
Applicant
And
| MR CALKIN |
Respondent
REASONS FOR JUDGMENT
Introduction
This case involves an application by MS CALKIN (“the wife”) who is seeking various property orders pursuant to section 79 of the Family Law Act 1975 (“the Act”). The wife’s application is opposed by MR CALKIN (“the husband”) who seeks different property orders.
The parties’ dispute is essentially in relation to the relevant percentage split of the matrimonial property each should receive following the breakdown of their marriage.
In her Application filed 5 June 2008 (and confirmed in her Case Outline document dated 23 August 2009 handed to the Court at the commencement of the final hearing), the wife seeks orders that:
· “The former matrimonial home at Property M be sold and the net proceeds of sale be distributed as to 65% to her and 35% to the Husband.
· [The wife] Be declared the owner of the 2004 Nissan Pajero.
· There be an equal division of the parties’ superannuation.
· The parties’ furniture [and contents] be divided equally between them.”[1]
[1] The wife’s Case Outline dated 23 August 2009 document only referred to “furniture”.
In his Response the husband also seeks the sale of the former matrimonial property, and an order that after the payment of all costs associated with its sale and the discharge of the mortgage secured over it, the balance of the proceeds of sale then remaining “be divided as to 52% to the Wife and 48% to the Husband.”
In addition, in his Response the husband seeks, inter alia, the following orders:
“1.2 That:
1.2.1the Court allocates, as required by Section 90MT(4) of the Family Law Act, a base amount of $86,849.93 to [the wife] out of [the husband’s] interest in the [M] Superannuation (“the fund”).
…
1.3That the furniture and household effects be divided as agreed between the parties.
1.4That within 28 days of the date of these Orders the Husband discharge the NAB MasterCard.”
The matter initially came before his Honour Brewster FM on
5 February 2009 and on that occasion an order was made for the parties to attend a conciliation conference. The parties subsequently attended the conference on 17 April 2009 before Registrar Whitten but were unable to settle their dispute.
The matter came before his Honour Brewster FM again on 4 June 2009 and on that occasion his Honour listed the matter for final hearing on 24 August 2009. His Honour also made the following Order:
“THAT by way of an interim distribution the husband pay to the wife the sum of $8,000 from his savings and may appropriate an amount of $8,000 to himself from those savings.”
The matter came before me for final hearing on 24 and 25 August 2009 with the wife represented by Mr Macpherson of Counsel and the husband represented by Ms Friedlander of Counsel.
Relationship history
The parties are both currently aged 42 years and, interestingly, they were both born on the same day.
The parties commenced cohabitation following their marriage [in] 1989. There are three children of the marriage, namely [X] born [in] 1992 (“[X]”), [Y] born [in] 1994 (“[Y]”) and [Z] born [in] 1996 (“[Z]”) (together “the children”).
According to the wife the parties separated under the one roof on
19 November 2007.[2] The husband asserts that the date of separation was “on or about 26 January 2008”.[3] The parties agree that they remained living under the one roof until the wife left the former matrimonial home on 13 June 2008.[4]
[2] Wife’s affidavit sworn 23 April 2008 and filed 5 June 2008, paragraph 5.
[3] Husband’s affidavit sworn and filed 20 August 2009 (“husband’s trial affidavit”), paragraph 3.
[4] Wife’s affidavit sworn 11 August 2009 and filed 12 August 2009 (“wife’s trial affidavit”), paragraph 4; husband’s trial affidavit, paragraph 3.
Following the wife’s departure from the former matrimonial home the children have resided under an arrangement whereby [X] and [Y] live with the wife during the week and with the husband from Friday afternoon to Monday morning each week, while [Z] stays with each parent on a week about basis.[5] The husband currently pays child support to the wife.[6]
[5] Wife’s trial affidavit, paragraph 54; husband’s trial affidavit, paragraph 4.
[6] $179.40 per week according to the husband’s trial affidavit, paragraph 12; $216 per week according to the wife’s trial affidavit, paragraph 56(c).
The wife’s most recent affidavit indicates that she is not currently in good health.[7] At the time of the final hearing she was employed casually [in the Retail and Hospitality Industries]. The wife worked [in the Retail Industry] during the marriage until the birth of [X] in 1992, and then continued this employment, on her evidence, from the time [X] was 10 months old until [Y] was born in 1994.[8] She did not undertake paid employment from this time until after separation.
[7] Wife’s trial affidavit, paragraph 57.
[8] Wife’s trial affidavit, paragraph 7.
During the marriage the husband worked full-time with [C] until receiving a redundancy payment in late 2006.[9] The husband was out of work from January to August 2007.[10] At the time of the final hearing he was employed full-time as a regional manager with [P]. In his affidavit material the husband indicates that he suffers from high-blood pressure and depression.[11]
[9] Husband’s trial affidavit, paragraph 21.
[10] Husband’s Case Outline document dated 23 August 2009 and presented to the Court prior to the commencement of the Final Hearing on 24 August 2009 (unfiled).
[11] Husband’s trial affidavit, paragraph 32.
The husband has not re-partnered since separation[12] while the wife has commenced a new relationship.[13]
[12] Ibid.
[13] Wife’s trial affidavit, paragraph 69; Affidavit of Mr T sworn 19 August 2009 and filed 20 August 2009, paragraph 4.
Both parties provided the Court with a chronology listing significant events in the parties’ relationship. The parties were not in dispute, or not in any significant dispute, in relation to the following:
·1989: parties marry; both parties in full-time employment at [C];
·1990: parties purchase house and land package in Property R for $110,000; parties borrow $110,000 to facilitate this purchase;
·1992: parties move into Property R property; wife leaves full-time employment at [C] in preparation of [X]’s birth; [X] born
·1993: wife commences part-time work at [C];
·1994: wife ceases part-time work in preparation for [Y]’s birth; [Y] born;
·1996: parties move to [B] and reside in property provided by husband’s employer; parties rent their Property R property; [Z] born;
·1998: wife receives $10,000 from her paternal grandmother’s estate ($5,000 of which was given to the wife’s mother);
·1999: parties move into rental property at [F]; parties sell (and discharge the mortgage over) the Property R property for $143,000; parties purchase former matrimonial home at Property M (“former matrimonial home”) for $213,500; parties borrow $213,500 to facilitate this purchase;
·2007: husband receives redundancy payment of $174,240 (and superannuation payout of $56,605) from [C]; redundancy funds applied to reduce mortgage over former matrimonial home; husband unemployed between January-August; husband commences work with [G]; husband commences work with [P];
·2007-2008: parties separate ‘under the one roof’; wife vacates former matrimonial home; wife commences part-time work at [K]; husband sells Mitsubishi Pajero motor vehicle for $10,000; and
·2009: former matrimonial home listed for sale.
The issues
Generally speaking, the following issues were in dispute at the hearing:
·the parties’ contributions made prior to cohabitation;
·the parties’ contributions made during the relationship;
·the date of separation;
·the parties’ contributions made following separation; and
·the parties’ respective future needs and obligations.
In addition, the parties disagree about the current net value of the asset pool and, in particular, whether the husband sold their former Mitsubishi Pajero motor vehicle at under value and whether the husband’s alleged debt to his employer, [P], is a relevant matrimonial liability.
In her “Summary of Argument on behalf of the Applicant Wife”, handed up to the Court at the commencement of the hearing, the wife argues that the following additional issues are relevant:
·how should the payment to the wife of $8,000 pursuant to the orders made by Brewster FM on 4 June 2009 be characterised?
·should the husband’s drawdown from the NAB mortgage of $10,000 be “added back” to the full [list] of assets?
·what has become of the $1000 received by the husband from dividends from IAG shares?
·what was the sum of $11,000 transferred by the husband from the joint NAB account used for?
Evidence of the parties
Both parties provided the Court with affidavit and oral evidence and were cross-examined by the opposing party’s Counsel.
Applicant wife’s evidence
The following documents were relied upon by the wife:
· Initiating Application filed 5 June 2008;
· Affidavit of the wife sworn 11 August 2009 and filed 12 August 2009 (“the wife’s/her trial affidavit”); and
· Financial Statement of the wife sworn 15 May 2009 and filed 18 May 2009.
Respondent husband’s evidence
The husband relied upon the following documents:
·Response filed 15 December 2008;
·Financial Statement of the husband sworn 10 December 2008 and filed 15 December 2008; and
·Affidavit of the husband sworn and filed 20 August 2009 (“the husband’s/his trial affidavit”).
The law – the four steps
Section 79(1) of the Act provides that the Court may make such orders as it sees fit altering interests in matrimonial property. The Court’s discretion is not unlimited and must be exercised in accordance with the factors set out in the legislation and more specifically, section 79(4).
The preferred approach to the exercise of the discretion has been outlined in numerous decisions of the Full Court of the Family Court, more recently in cases like In the Marriage ofHickey (2003) 30 Fam LR 355; (2003) FLC 93-143. That approach involves four interrelated steps:[14]
·Step 1: identify and value the parties’ property, liabilities and financial resources as at the date of the hearing;
·Step 2: identify and assess the parties’ ‘contributions’ within the meaning of section 79(4)(a), (b) and (c) and determine the parties’ contribution-based entitlements expressed as a percentage of the net value of the parties’ property;
·Step 3: identify and assess the relevant matters referred to in section 79(4)(d), (e), (f) and (g) (the other factors) including, because of 79(4)(e), the matters referred to in section 79(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution-based entitlements of the parties established at Step 2; and
·Step 4: consider the effects of those findings and resolve what order is just and equitable in all of the circumstances of the case.
[14] L Young & G Monahan, Family Law in Australia, 7th ed, LexisNexis Butterworths, Australia, 2009, pp.614-615.
Step 1: the asset pool
Following submissions by Counsel and questioning by the Court, the following table represents the agreed assets and liabilities of the parties (including superannuation entitlements):
Assets
Valuation
Estimated net proceeds from the sale of the former matrimonial home
$338,265
Proceeds of sale of Mitsubishi Pajero (not admitted by wife)
$10,000
1050 IAG shares (husband)
$3,727
293 Wesfarmers shares (husband)
$7,142
NAB savings (joint account)
$35
NAB savings (husband)
$2,089
NAB savings (husband)
$2,200
St George savings (wife)
$1,500
Holden Commodore station wagon (wife)
$9,800
Subtotal/Assets
$374,758
Liabilities
Loan from Mr T (wife)
$9,000
[P] debt (husband) (not admitted by wife)
$11,715
Credit card (at separation $1,340) (husband)
$550
Subtotal/Liabilities
$21,265
Superannuation
[M] Super (husband)
$161,230
BT Super (husband)
Nil
REST Super (wife)
$7,313
Subtotal/Superannuation
$168,543
With respect to their real estate, no formal valuation was tendered given that the parties had listed the property for sale and a non-binding offer to purchase had been made. The net figure of $338,265 was based on the amount of money the parties hope to realise following the discharge of the existing mortgage and payment of sale costs. The Court was advised during closing submissions that the proposed sale to the prospective purchaser would not be proceeding.[15] Following questioning by the Court, the parties agreed that the net figure of $338,265 was now only an estimate.[16] That having been said, the parties agreed that the former matrimonial home will need to be sold and that the final orders will need to reflect such an outcome.[17]
[15] Transcript, 25 August 2009, page 90 (lines 6-10).
[16] Ibid, line 23.
[17] Ibid, lines 35-37.
There was no disagreement between the parties over the division of household contents, personal effects and any other personal property.
To determine the net available property pool several matters require determination:
·should the payment by the husband to the wife of $8,000 pursuant to the orders made by Brewster FM on 4 June 2009 be characterised as an interim property distribution, and if so, ‘added back’ to the property pool by the wife?
·should the husband’s draw-downs from the NAB mortgage ($10,000) and withdrawals from the joint bank account ($11,000) be ‘added back’ to the property pool?;
·did the husband sell the Mitsubishi Pajero motor vehicle for fair market value?;
·is the wife’s debt due to Mr T amounting to $9,000 a relevant matrimonial liability?; and
·is the husband’s debt to [P] amounting to $11,715 a relevant matrimonial liability?
Payment of $8,000 to the wife
As stated above, this payment relates to an order made by his Honour Brewster FM on 4 June 2009. The relevant order states:
“That by way of an interim distribution the husband pay to the wife the sum of $8,000 from his savings and may appropriate an amount of $8,000 to himself from those savings.”
At the commencement of the final hearing, Counsel for the wife enquired as to whether the relevant order contained any specific notation in respect of the purpose underlining it, and in particular, whether there was any reference to the payment being spousal maintenance.[18] On my reading of the relevant order it is clear that no such notation appears. Moreover, it is also clear from the wording of the order that the payment was in the nature of an ‘interim distribution’ of property.
[18] Transcript, 24 August 2009, page 4 (lines 15-27).
Consequently, the payment of $8,000 to the wife by the husband must be characterised as an interim distribution of property and a notional ‘add-back’ in that amount by the wife will be reflected in the net available property pool. In addition, there will also be a similar notional ‘add-back’ by the husband of $8,000 to reflect the interim property distribution.
Draw-downs and withdrawals made by husband
The wife details her allegations about the draw-downs and withdrawals made by the husband in paragraphs 31-33 of her trial affidavit. At the commencement of the hearing, the wife, through her Counsel Mr MacPherson, confirmed that she was now only alleging that the husband had, without proper explanation, drawn-down the mortgage over the former matrimonial home by $10,000 and the joint account by $11,000 (i.e. a total of $21,000).[19]
[19] Transcript, 24 August 2009, page 4 (lines 1-2).
The husband explains his actions in paragraphs 34-38 of his trial affidavit. Firstly, he admits that in late January 2008 he withdrew $11,000 from the joint account and deposited these funds in his personal account “so the Wife would be unable to access the money and make it disappear”.[20] Secondly, he admits re-drawing $10,000 from the mortgage account prior to the wife vacating the former matrimonial home in June 2008.[21] Both transactions were confirmed by the relevant bank statements.[22] The husband then goes on to state that these monies were used towards his credit card and family-related expenses.
[20] Husband’s trial affidavit, paragraph 35.
[21] Ibid, paragraph 34.
[22] Exhibits ‘AW6’ and ‘RH3’.
The husband was cross-examined at some length about these transactions.
I am not satisfied that the husband has demonstrated any evidence that would lead the Court to the conclusion that he was justified in withdrawing the $11,000 from the joint account to ensure that the wife would not misuse it. Notwithstanding having to pay household expenses and child support, he was in full-time employment throughout 2008 and in receipt of an income that clearly exceeds that of the wife. In addition, the husband enjoyed the benefit of the dividend income earned from his shares.
In addition, the husband’s decision to draw-down the mortgage account by $10,000, ostensibly to pay down his credit card liability by the sum of $6,000, is highly questionable given that it actually resulted in a credit balance in his NAB Mastercard Account of $2,157.54 as at 27 May 2008.[23] It is also noteworthy that some of the transactions for which the husband used his credit card for during the period 29 April 2008 to 27 May 2008 were work-related accommodation expenses which he acknowledged under cross-examination he would be reimbursed for.[24]
[23] Exhibit ‘AW3’.
[24] Transcript, 25 August 2009, see generally pages 57-61.
Consequently, the husband will be required to account for the drawn-down from the mortgage account of $10,000 and the withdrawal from the joint account of $11,000. There will be a notional ‘add-back’ by the husband of $21,000 reflected in the net asset pool.
Sale of the Mitsubishi Pajero motor vehicle
The wife refers to the sale of the 2004 Mitsubishi Pajero by the husband in paragraphs 50-51 of her trial affidavit. The vehicle was purchased by the parties for $30,000 in late 2006.[25] The wife alleges that, after refusing to register the vehicle in May 2008, the husband sold it for $10,000 in August 2008. The wife maintains that this sale was for considerably less than the vehicle was worth and that, consequently, the husband should ‘add-back’ an amount equal to the shortfall. The wife acknowledges having received half the sale proceeds (i.e. $5,000) from the husband. The wife attaches to her trial affidavit (being annexure ‘V’) a copy of the ‘Red Book’ guide[26] as at 11 August 2009 which indicates a private price guide of between $23,000-$25,600 for a 2004 Mitsubishi Pajero with an odometer reading of between 80,000-130,000 km.
[25] Ibid, page 93 (lines 26-27).
[26] >
The husband refers to the sale in paragraph 38 of his trial affidavit. He acknowledges selling the vehicle for $10,000 in July 2008 and thereafter giving the wife half of the sale proceeds. The husband described the vehicle as being:
“… unregistered and in need of new tyres and servicing and other work and was expensive to run on fuel and was depreciating further in value the longer we kept it.”
The husband goes on to indicate that he “spent a whole day on the phone, internet and e-mail trying to find a buyer” and asserts his belief that he “had no choice but to accept the offer” of $10,000 from the purchaser.
In property proceedings, a party may submit to the Court that the other party has made a ‘negative’ rather than a ‘positive’ contribution to the assets thereby ‘wasting’ rather than increasing the value of the net asset pool. Negative contributions, like positive contributions, should be taken into account where relevant. The principle case is In the Marriage of Kowaliw (1981) FLC 91-092 (“Kowaliw”) where the Court determined that financial losses incurred by the parties or by either of them during the course of the marriage, where such losses result from a several or joint liability, are generally shared by the parties, although not necessarily equally.[27] In Kowaliw Baker J said that the general principle of joint liability does not apply in the following circumstances: [28]
“(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.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79.”
[27] M Broun et al (eds), Australian Family Law and Practice, CCH Australia Limited, Sydney, 2008, p.28,794.
[28] In the Marriage of Kowaliw (1981) FLC 91-092 at 76,654.
The Full Court of the Family Court in the case of In the Marriage of Browne and Green (1999) 25 Fam LR 482; (1999) FLC 92-873 rejected the proposition that the above statement from Baker J was a principle; however the Full Court did acknowledge that it was a “well accepted guideline.” [29]
[29] In the Marriage of Browne and Green (1999) 25 Fam LR 482 at 497; (1999) FLC 92-873 at 86,360 (per Lindenmayer, Finn and Holden JJ).
Therefore, if a Court finds that a party to a marriage has wasted assets, that party may receive a lesser proportion of the net property pool or may be called to account for the loss.
I do not accept the husband’s explanation that the vehicle was “depreciating further in value the longer [the parties] kept it”. [30] This explanation would require the Court accepting that in less than two years the vehicle’s value had plunged from $30,000 to $10,000. It is noteworthy that the husband acknowledged, in answer to a question from me, that the vehicle had odometer readings of “just under” 100,000 km when purchased and approximately 130,000 km when sold.[31] The husband also acknowledged to the Court that the vehicle was in “good order” when it was purchased.[32] The Court finds that the husband’s decision not to re-register the vehicle would have acted to reduce its market value. Moreover, given the indicative ‘red book’ value, I accept the wife’s submission that the vehicle would have had a value of at least $20,000 at the time of its sale.[33]
[30] Husband’s trial affidavit paragraph 38.
[31] Transcript, 25 August 2009, page 80 (lines 7-10).
[32] Ibid, page 80 (lines 1-2).
[33] Ibid, page 93 (lines 30-36).
Consequently, each party will be required to notionally add-back the $5,000 they each received from the sale of the vehicle and, in addition, the husband will be required to notionally add-back a further $10,000 to reflect the vehicle’s sale by him at significantly less than its market value.
Mr T debt
The wife details her reasons for borrowing $10,000 from her friend, and now boyfriend, Mr T, in order to purchase the Holden Commodore station wagon in July 2008.
Mr T confirms this loan, and the repayment by the wife of $1,000 to him in or about late June 2009, in his affidavit sworn 19 August 2009 and filed in Court on 24 August 2009.
Given this evidence, and the fact that Mr T was available at Court to give evidence but was not required by the husband for cross-examination purposes,[34] I am satisfied that this debt remains owing and is a relevant matrimonial liability.
[34] Transcript, 25 August 2009, page 96 (line 34).
[P] debt
The husband outlines this debt owing by him to his employer, [P], in paragraph 40 of his trial affidavit. The debt relates to overpayments totalling $22,358 he received from his employer in respect of the leased Mitsubishi 380 motor vehicle he drives. In July 2009, the husband paid back the sum of $15,071 to his employer. The balance outstanding, being $6,287 as at the date of his trial affidavit, is to be paid back by him at the rate of $500 per pay period. In support, the husband attaches to his trial affidavit as Annexure ‘B’ a copy of a letter he received from his employer, dated 25 June 2009.
While the Court accepts the husband’s evidence that he received overpayments from his employer in respect of the leased vehicle, the Court does not accept that this debt due by the husband is a relevant matrimonial liability. The husband had the financial benefit of these overpayments post-separation and there is no evidence that these monies were used to acquire, conserve or improve any relevant matrimonial property.
Consequently, this debt will not be included as a relevant matrimonial liability for the net asset pool.
Net asset pool
Given the above determinations, the Court finds that the net available property pool is $412,208 (excluding superannuation entitlements) and $580,751 (including superannuation entitlements) as follows:
Assets
Valuation
Estimated net value of former matrimonial home
$338,265
Husband’s drawn-down on mortgage account ($10,000) and withdrawal from joint account ($11,000) – ‘add-back’ by husband
$21,000
Proceeds of sale of Mitsubishi Pajero – ‘add-back’ by husband
$15,000
Proceeds of sale of Mitsubishi Pajero – ‘add-back’ by wife
$5,000
Interim property distribution – ‘add-back’ by wife
$8,000
Interim property distribution – ‘add-back’ by husband
$8,000
1050 IAG shares (husband)
$3,727
293 Wesfarmers shares (husband)
$7,142
NAB savings (joint account)
$35
NAB savings (husband)
$2,089
NAB savings (husband)
$2,200
St George savings (wife)
$1,500
Holden Commodore station wagon (wife)
$9,800
Subtotal/Assets
$421,758
Liabilities
Loan from Mr T (wife)
$9,000
Credit card (husband)
$550
Subtotal/Liabilities
$9,550
Superannuation
[M] Super (husband)
$161,230
REST Super (wife)
$7,313
Subtotal/Superannuation
$168,543
The notional net property pool (excluding the net value of the former matrimonial home and superannuation entitlements) is $73,943.
Step 2: contributions
It is clear from the evidence that the parties have, throughout much of their relationship, specialised their respective roles into that of significant ‘breadwinner’ and significant ‘homemaker and parent’. This is quite a normal and sensible division of labour in our society that usually advances both the financial prosperity, and the welfare, of the couple and their children.
While there is no presumption that such specialised roles equalise for contribution assessment purposes,[35] an outcome favouring equality is not unusual in cases involving long relationships following an analysis of the evidence relevant to section 79(4)(a)-(c).[36] Of course, such an outcome may alter following consideration of the other section 79 factors, in particular section 79(4)(e).[37]
[35] In the Marriage ofMallet (1984) 156 CLR 605, In the Marriage of Ferraro (1992) 16 Fam LR 1; (1993) FLC 92-335, In the Marriage of McLay (1996) 20 Fam LR 239; (1996) FLC 92-667.
[36] In the Marriage of McLay (1996) 20 Fam LR 239 at 248-250 (per Nicholson CJ, Fogarty and Dessau JJ).
[37] Ibid, at 250.
The Court is required to consider the parties’ contributions made on and from the commencement of their relationship,[38] during their relationship, and following separation.[39] While there is no disagreement between the parties as to when they commenced a relationship, they disagree on their date of separation.[40] The difference between them is marginal; they agree that they were separated under the one roof for nearly 5 months (according to the husband) or 7 months (according to the wife) until the wife left the former matrimonial home on 13 June 2008.
[38] In the Marriage of Olliver (1978) 4 Fam LR 360; (1978) FLC 90-499.
[39] In the Marriage of Ferraro (1992)16 Fam LR 1; (1993) FLC 92-657.
[40] See paragraph 11 of this decision.
Financial and non-financial contributions
It is clear that both parties have made financial and non-financial contributions to the acquisition, conservation and improvement of their matrimonial property. This is particularly so given their mutual investment of their earnings into their property pool and their labours associated with their conservation of their homes at Property R (1992-1999) and Property M (1999-2008).
Apart from his contributions through his employment, the husband asks the Court to take into consideration that he made a significant initial financial contribution (on a pro rata basis) by his receipt in 1999 of a redundancy package from his former employer, [C]. The argument advanced by the husband was that, given his 2007 redundancy package of $174,240 (plus superannuation) was based on his employment from 1982 (i.e. 7 years prior to cohabitation) until 2006, an amount of approximately $50,820 (i.e. 7/24 years) represents a pre-relationship contribution.
It is clear that the husband’s redundancy payment is a significant financial contribution for the Court to consider in relation to section 79(4)(a) of the Act. The parties were able to use the receipt of these funds to greatly reduce the mortgage due over the former matrimonial home and to fund living expenses during the period the husband remained unemployed. The nature of the contribution must be considered in the context of it being a post-relationship, rather than a pre-relationship contribution. The husband had no specific entitlement to the redundancy payment from [C] at the commencement of the parties’ relationship. The argument, at best, is that he had a notional resource available. If the Court were to accept the redundancy payment as an initial financial contribution by the husband then, in theory, it might be subject to an ‘erosion’ argument in relation to competing contributions by the wife.[41] In any event, the significance of the redundancy payment, as a contribution made in early 2007, is clear.
[41] For example, as discussed in In the Marriage of Pierce (1998) 24 Fam LR 377 at 386-387; (1999) FLC 92-844 at 85,881 (per Ellis, Baker and O’Ryan JJ).
That having been said, the husband has had the benefit of the former matrimonial home since physical separation and has not made any contributions to the mortgage repayments since that time. This is confirmed by the relevant mortgage statements for the period which shows that on 30 June 2008 the mortgage balance due was $61,182.96, and that by 30 June 2009 it had increased to $65,539.85.[42] During the same period the wife has applied her income, and government benefits received, to weekly rental of $300 per week.[43]
[42] Exhibit ‘RH3’.
[43] Wife’s trial affidavit, paragraph 60.
It is also clear from the evidence that the husband, through the parties’ decision to specialise their respective roles, has been able to significantly contribute more of his income and energy into making relevant financial and non-financial contributions than that of the wife.
The wife, understandably, asks the Court to consider her own contributions, not just to the conservation and improvement of the Property R and Property M properties they lived in during their relationship and her contribution to the parties’ living expenses, but her own competing family contributions that act to erode the significance of the husband’s on-going financial and non-financial contributions.
Both parties ask the Court to accept the contributions they made with the assistance of family, being the receipt of rent-free accommodation from the husband’s parents for approximately one year after their marriage and the receipt by the wife of a bequest from her grandmother’s estate.
Family contributions (as homemaker and parent)
As has been previously noted, in addition to her contributions made pursuant to section 79(4)(a) and (b), I am satisfied that the wife was the primary homemaker for the parties and the primary carer of the children. Consequently, I find that she has made a significant contribution to the family pursuant to section 79(4)(c).
The family contribution by the wife as the primary carer of [X], [Y] and [Z] has continued post-separation. That having been said, the husband clearly spends significant time with the children. In her submissions, Ms Friedlander stated that “the husband and the wife’s care of the children is very near to being shared”.[44] Indeed, the wife acknowledges in paragraph 54 of her trial affidavit that [Z] lives on an ‘equal time’ basis with the husband and her, and further that [X] and [Y] spend time with the husband during school term “from Friday night to Monday morning”. The wife also acknowledges that the children spend half their school holidays with the husband. Lastly, the wife also confirms in paragraph 56(c) of her trial affidavit that the husband also pays her child support of $216 per week.
[44] Transcript, 25 August 2009, page 89 (line 17).
Global or asset-by-asset assessment of contributions
Given the length of the parties’ relationship, and its history, the ‘global’ approach to the assessment of contributions is the most appropriate to the parties’ circumstances.
Step 3: section 75(2) and related factors
The parties are both aged in their early forties.
In paragraph 57 of her trial affidavit, the wife asserts that she is “not in good general health”. She attaches to her trial affidavit two medical reports from Associate Professor S, Consultant Neurologist, dated 26 May 2009 (Annexure “AA”) and 25 June 2009 (Annexure “BB”), detailing the medical investigations that occurred and that ultimately cleared the wife from suffering an aneurysm. Professor S did report, however, of the wife’s ongoing need to take prescribed medication to reduce her headaches and high blood pressure.
In paragraph 32 of his trial affidavit, the husband asserts that he suffers “from high blood pressure and depression” that has caused him to lose weight. While the Court understands the significant strain that marriage breakdown can cause to both parties, in the absence of medical evidence to the contrary, there is no evidence that the husband’s medical condition affects his current employment or future employment prospects.
At the time of the final hearing both parties were employed. The wife had casual employment [in the Retail and Hospitality Industry] and she asserted to earning just over $200 per week from these positions. In contrast, at the time of the hearing the husband had a well-paid, full-time, position as a Regional Manager with [P], and substantial experience in retail sales and associated management.
The husband has not re-partnered. The husband claims that the wife has now re-partnered[45] (presumably with Mr T) although this is denied by the wife. The wife does admit that she is in a romantic relationship with Mr T but claims that they live separately and keep their finances separate.[46] The wife’s evidence about her relationship with Mr T was not contradicted under cross-examination and nor did the husband choose to cross-examine Mr T.
[45] Husband’s trial affidavit, paragraph 32.
[46] Transcript, 25 August 2009, page 96 (lines 35-36).
In light of the above-mentioned circumstances, and in particular the considerable disparity in the parties’ earning capacities, the Court agrees with the submissions made by the wife that there should be an adjustment of 15% in her favour pursuant to section 75(2) and related factors.
Final step: justice and equity
Section 79(2) of the Act provides that:
“The Court shall not make an Order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.”
The Court is satisfied that, on a contributions analysis, the husband’s contributions do outweigh that of the wife (in percentage terms 55% in favour of the husband and 45% in favour of the wife). In addition, the Court is satisfied that a further adjustment of 15% in the wife’s favour, to reflect section 75(2) and related factors, is warranted. In other words, the wife should receive money or assets to the value of 60% of the overall net property pool and the husband the balance (i.e. 40%).
Based on the agreed valuations and determinations made by this Court, and excluding superannuation entitlements, household contents and other personal property (i.e. $412,208), this represents an amount of $247,324.80 in favour of the wife and $164,883.20 in favour of the husband.
In relation to superannuation, at the commencement of the hearing I was advised by the wife’s counsel that the parties had agreed on an equal superannuation division and that, in respect of the husband’s [M] Super Trust policy, there would be an agreed superannuation splitting order.[47] Moreover, procedural fairness had been afforded to the relevant trustees. Following the hearing I was provided with an agreed “Minute of Superannuation Split Order” and a copy of a letter dated 17 July 2009 from [M] Legal Pty Ltd (for the [M] Super Trust) indicating their consent to the proposed superannuation splitting order. Consequently, an agreed super splitting order, in favour of the wife, and using the agreed base amount of $76,958.50 will form part of the final orders.
[47] Transcript, 24 August 2009, page 5 (lines 11-19).
The principal asset for division between the parties is, of course, the former matrimonial home at Property M.
There was also no disagreement between the parties that, subject to a just and equitable division of the principal asset, each party should retain all the other personal property in their respective possession, including any monies standing to their respective credit in any bank or financial institution.
Conclusion
As stated, the Court is satisfied that the net available property pool, excluding superannuation entitlements, household contents and other personal property, should be divided in percentage terms 60% in favour of the wife and 40% in favour of the husband.
There will be an order requiring the former matrimonial home to be sold and that the net proceeds of sale, following the discharge of the mortgage and payment of sale and related expenses, be divided in the ratio 60% to the wife and 40% to the husband. Pending settlement of the sale of the former matrimonial home, the husband will be solely responsible for the payment of all rates and taxes due and owing in respect of that property and will indemnify the wife accordingly. In addition, the husband will be liable for any increase in the mortgage outstanding as at the date of settlement that exceeds $65,539.85 with such liability to be satisfied from the husband’s share of the net proceeds of sale.
Contemporaneously upon settlement of the sale of the former matrimonial home, the husband will pay the wife the sum of $21,565.80 and the wife will assume all liability and indemnify the husband accordingly in respect of the loan due to Mr T. The husband will retain his shares and bank accounts and be responsible for payment of his credit card debt. The sum of $21,565.80 is made up as follows:
Notional net property of parties[48]
$73,943
60 % to wife
$44,365.80
LESS ‘add-backs’ by wife
$13,000
LESS Holden Commodore station wagon (retained by wife)
$9,800
Total
$21,565.80
[48] See paragraph 52 of this decision.
As previously stated there will be an agreed superannuation splitting order in respect of the husband’s [M] Super Trust policy in favour of the wife using the agreed base amount of $76,958.50. The wife will also retain all her interest in her REST superannuation policy.
There will also be orders that each party retain all other property currently in their respective possession, free of any claim from the other. This will include the wife’s motor vehicle, monies standing to their individual credit in any bank or financial institution, and any furnishings, household or personal effects.
Each party will be required to indemnify the other with respect to any debts and liabilities standing in that party’s sole name.
There will be orders of the Court to reflect this decision.
I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of Monahan FM
Associate: Shani Drogemuller
Date: 11 December 2009.
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