Cameron and Balla
[2012] FMCAfam 40
•24 January 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CAMERON & BALLA | [2012] FMCAfam 40 |
| FAMILY LAW – Property – de facto relationship of 12 years duration – severely disabled child of previous relationship – credit – asset pool – add-backs – contributions – sub-section 90SF(3) factors. |
| Family Law Act 1975 (Cth), ss.75, 79, 90RB, 90SF and 90SM Federal Magistrates Act 1999 (Cth), Pt. 6, Div. 5 Federal Magistrates Court Rules 2001 (Cth), r.21.02(1)(b) |
| Bremner and Bremner (1995) FLC 92-560 Clauson (1995) FLC 92-595 Money and Money (1994) FLC 92-485 Pierce v Pierce (1999) FLC 92-844 |
| Applicant: | MS CAMERON |
| Respondent: | MR BALLA |
| File Number: | LNC 127 of 2010 |
| Judgment of: | Roberts FM |
| Hearing dates: | 17 & 18 August 2011 |
| Date of Last Submission: | 18 August 2011 |
| Delivered at: | Launceston |
| Delivered on: | 24 January 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr W Ayliffe |
| Solicitors for the Applicant: | Doolan & Brothers |
| Counsel for the Respondent: | Mr D Walker |
| Solicitors for the Respondent: | David Walker & Co |
ORDERS
That within 90 days MR BALLA (“the Respondent”) must pay the sum of twenty-five thousand dollars ($25,000) to MS CAMERON (“the Applicant”).
That the Respondent retains all his interest in the property situated at and known as Property K in Tasmania free from any claim by the Applicant.
That the Applicant must do all things reasonably required to transfer to the Respondent all her right, title and interest in any property in his possession or control and for such purpose she must complete and sign any documents that may be required to register any such property in the sole name of the Respondent.
That the Respondent must do all things reasonably required to transfer to the Applicant all his right, title and interest in any property in her possession or control and for such purpose he must complete and sign any documents that may be required to register any such property in the sole name of the Applicant.
That the Respondent and the Applicant each retains his or her superannuation entitlements free from any claim by the other.
That all extant applications are dismissed, save as to costs.
IT IS NOTED that publication of this judgment under the pseudonym Cameron & Balla is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
LNC 127 of 2010
| MS CAMERON |
Applicant
And
| MR BALLA |
Respondent
REASONS FOR JUDGMENT
Applications
The applicant is MS CAMERON and the respondent is MR BALLA. They were not ever legally married, but I will for convenience refer to them simply as “the wife” and “the husband” respectively.
The wife filed an application for a property settlement under Part VIIIAB of the Family Law Act 1975 (“the Act”) on 26 February 2010.[1] In that application, she was seeking “that there be an even division of all property and superannuation entitlements in the name of the parties” but she also sought leave to be able to amend her application after the husband “has made full and complete discovery of his assets”
[1] Part VIIIAB of the Act deals with financial matters relating to de facto relationships
In her Case Summary filed 1 April 2011 she was seeking a 45% division in her favour. Her counsel increased her claim to 47.5% when opening her case on the first day of the hearing, but reduced it to 40% during his closing submissions.[2]
[2] Page 8 of the Transcript for 17 August and page 137 of the Transcript for 18 August 2011
In his Response filed 7 April 2010 the husband sought a division of 90% to himself and 10% to the wife. He has maintained that position throughout.
Brief background
Where I refer to any fact in these Reasons, it should be regarded as a finding of fact unless a contrary intention is clear from the context.
The parties in the matter lived together in a de facto marriage relationship for a period of approximately 12 years commencing in July 1997 (“the relationship”). Although they have a disagreement about exactly when they separated, the difference between them relates to a period of only five months. I shall refer to that in more detail below.
The wife is aged 39 years and the husband is 53 years old. There are no children of their relationship.
The parties commenced their de facto relationship when the wife moved into the husband’s property at Property K (‘the home”). The husband’s unchallenged evidence is that he had purchased the land in 1984 for $42,000 and he had built the house at a cost of $65,000 with the assistance of family members. A valuer has valued the home at $400,000. The husband does not agree with that valuation but has provided no alternative valuation.
The parties agree that the wife brought a motor vehicle and some furniture into the relationship, but they do not agree about their values.
The wife initially brought two children from an earlier relationship to live at the home, but one of those children went to live with his biological father very soon after that. Sadly, that child died at age 12 years.
X, the other child of the wife, lived at the home throughout the parties’ relationship and continued to do so after the parties separated. Sadly, X suffers from cerebral palsy and is quite severely disabled physically. He was in Grade 10 at the time of the hearing so he should be going into Grade 11 this year. The parties agree that he is intelligent and could go on to complete tertiary studies if he chooses to do so.
The husband has two adult children who were living in South Australia at the time of the hearing. They are both independent of the husband. His daughter required a heart-lung transplant in 2010.
At the time of the hearing, the husband was in receipt of a carer’s allowance from Centrelink for X. The wife was working part-time and in receipt of a Centrelink student allowance as a (omitted) student at the University of Tasmania. Neither party had re-partnered but the wife admitted to having a male friend.
Relevant law
The law relating to financial matters with respect to de facto relationships is found in Part VIIIAB of the Family Law Act 1975 (“the Act”). Sub-section 90SM(4) sets out the matters that the court must take into account when considering what orders should be made for the alteration of the property interests of parties. They include:
a)the financial and non-financial contributions made directly or indirectly by or on behalf of each party or by a child of the de facto relationship to the acquisition, conservation or improvement of any property of the parties;
b)the contribution made by a party to the welfare of the family including any contribution made in the capacity of homemaker or parent;
c)the effect of any proposed order upon the earning capacity of either party; and
d)the matters referred to in sub-section 90SF(3) “so far as they are relevant”.
Because sub-sections 90SM(4) and 90SF(3) of the Act mirror sub-sections 79(4) and 75(2) of the Act, it is clear that the approach that Courts should take to the determination of de facto relationship property settlements has been well established by authority,[3] notwithstanding that Part VIIIAB of the Act only became law in 2009. The approach is essentially a multi-step process. The first step is to identify the property, liabilities and financial resources of the parties (generally at the time of the hearing). The second step is to evaluate the contributions made by the parties as defined in sub-section 90SM(4) of the Act and the third step is to consider those matters contained in sub-section 90SF(3) that are relevant.
[3] See Lee Steere (1985) FLC 91-626; Ferraro (1993) FLC 92-335; Clauson (1995) FLC 92-595, Hickey (2003) FLC 93-143 and Coghlan (2005) FLC 93-220
In determining what order the court should make under section 90SM, the court must be satisfied in all the circumstances that it is just and equitable to do so.[4] It is the justice and equity of the actual orders that the court must consider and this has sometimes been referred to as “the fourth step”.[5] In Russell v Russell, the Full court said:
Furthermore, it must be remembered in this regard that …… the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties' assets. Indeed we take the opportunity to emphasise that in what his Honour has termed ''the fourth stage'', that is, the consideration of whether the result is just and equitable, it is the justice and equity of the actual orders not of the percentage distribution which must be considered. [6]
[4] See sub-section 90SM(3),which is in expressed in terms almost identical to sub-section 79(2).
[5] See Hickey (2003) FLC 93-143 and Russell v Russell(1999) FLC 92-877
[6] (1999) FLC 92-877 at page 86,439
However, I agree with the sentiment expressed by Walters FM that “the testing of any proposed orders …… is not a fourth substantive step (properly so called) in the property settlement exercise, and there is no fourth step in that sense.”[7]
[7] OSF and OJK (2004) FLC 93-191 at paragraph 16
Credit
Counsel for each party attempted to persuade me that his client was more believable than the other. In relation to that, I can say that neither party was particularly impressive in the way that the evidence was given and I will refer to that further below.
However, I must say that I have no hesitation in accepting the truthfulness of the evidence given by the wife’s father. He was direct in his answers to cross-examination and was not shaken in his account of matters.
The oral evidence given by the husband’s mother was at times quite confusing, especially in relation to the timing of when she paid $20,000 each to the husband’s two children on his behalf. However, I note she said that she was not able to “tell you exactly the days, the minutes or anything”[8] and then she subsequently tied the receipt of funds from her son to the time that she had received treatment for a brain tumour. She was quite definite that the removal of that tumour had been on 23 November 2009, so that fits with the transfer of funds to her account in that month. In general, I accept that the husband’s mother gave evidence that was as honest as her poor recollection of detail would allow.
[8] Transcript: 18 August 2011 at page 110
The wife was clearly prone to either exaggeration or minimisation when it suited her case, and the husband’s counsel referred to it as “gilding the lily”. I set out some (but not all) examples below.
In her trial affidavit, the wife said:[9]
[9] At paragraphs 8.6 and 8.7
My father … is a (omitted). He assisted and provided expertise in relation to the erection of the three bay colour bond shed on (the home) property.
In addition:
(1) My father and I constructed a (omitted) at the (home)property;
(2) My father also assisted (the husband) to erect several brick piers at the driveway to the property and along the boundary of this property.
(3) (The husband) also borrowed quite a number of building tools from my father during the period of cohabitation.
I am sure that, when she swore that affidavit, she was not expecting her father to swear an affidavit in support of the husband’s case. However, her father commented in relation to her claims as follows:
·In relation to the shed, he said that he had only spent approximately 4 hours “showing (the husband) and assisting him to fix the cladding on one wall” and added that that was his total involvement in the erection of the shed.
·In relation to the (omitted), all he had done was construct a timber frame approximately 3 metres by 1.2 metres by 1.5 metres from second hand timber provided to him by the husband.
·He had assisted with the construction of several brick piers, which took about 5 hours of his time.
·In relation to borrowing of tools, he said that the husband had borrowed a cement mixer when he (the husband) was doing the foundations for the shed, and on another occasion he had borrowed a belt sander.
Her father also added:
It is true that (the husband) did not pay me and I did not expect to be paid. He did pay me for my fuel. (The husband) also assisted me at times.[10]
[10] At paragraph 9 of his affidavit
In her affidavit, the wife had said:
The (home) property was still mortgaged at the commencement of our relationship. Whilst there was only a relatively small amount outstanding, it was not fully discharged until 5 August 1999. I accepted responsibility for the household expenses at the commencement of our relationship, because (the husband) was still paying his former wife pursuant to a matrimonial settlement arrangement.[11]
[11] Paragraph 3.2 of the wife’s affidavit filed 12 August 2011 (“the wife’s second affidavit)
However, when it was put to her in cross-examination that no money was owing on the property, her response was:
I’m not sure, but I believe it was.[12]
[12] Transcript: 17 August 2011 at page 27
Frankly, if she was not sure about whether any money was still owed at that time, she should not have said that an amount was outstanding and implied that it had not been paid off until August 1999.
In view of what I have said in the last three paragraphs, I have no hesitation in accepting the husband’s evidence that the mortgage loan had been fully paid off before the start of this relationship and that his former wife had been paid her entitlement a long time before the start of the relationship also.[13]
[13] Transcript: 18 August 2011 at page 57
In her second affidavit the wife had said:
Prior to meeting (the husband), I had been in a de facto relationship with my two children's biological father, residing in a three bedroom house at …. As a result of the separation, I retained the bulk of the furniture and chattels and introduced them into my relationship with (the husband).[14]
[14] At paragraph 3.4
When it was put to her by the husband’s counsel that she had in fact had very little furniture, she denied that and said that she came into the relationship with quite a lot of furniture.[15] However, the wife’s father had said the following at paragraph 10 of his affidavit:
I am aware that when (the wife) separated from her husband … she had an old car… . She borrowed money from me to be able to set up a flat for her and X with a small amount of old furniture.
[15] Transcript: 17 August 2011 at page 28
The husband’s counsel put it to the wife that her father had lent her $2,000 to set up a residence. She responded:
No. I had already set up the residence. My father offered me the money to actually help purchase a pony for X, and with the money that was left over I may have purchased some other items, but I already had some furniture prior to that.[16]
[16] Transcript: 17 August 2011, also at page 28
When he was cross-examined, the wife’s father was asked very few questions, but his evidence was clear that his daughter had told him that she wanted money to buy furniture and that he had given her $2,000 for that.
I therefore conclude that the wife was attempting to improve the value of her initial contributions by exaggerating how much furniture she brought into the relationship.
In cross-examination it was put to the wife that prior to 2006 the husband had collected X from school and taken him to the husband’s place of employment. The wife said that happened only “occasionally” when she was on evening shift. When the husband was asked about that by his counsel, he said:
She was always on evening shift. She had to be there for the (omitted) to go out and that which went out in the evening (sic). Her shift went from 11.30 to 8.30. She wouldn’t be home till 9 o’clock every night. Every day I would pick him up from school and I would take him back to work. I would use my afternoon break, go pick him up and he would come back to work with me.
I consider that I am able to take judicial notice of the fact that the wife was at that time working for the (omitted), a (omitted) company operating two (omitted) in and out of (omitted) on an alternating daily basis, with departures from (omitted) in the evenings. I therefore find on the balance of probabilities that the husband did collect X from school on many more occasions than the wife was prepared to admit, because it suited her case to minimise his contributions in relation to X’s care.
When I consider that and other evidence, I come to the very clear conclusion that the wife did attempt to “gild the lily” by either deliberately exaggerating contributions made by her or made on her behalf, or by deliberately minimising the contributions made by the husband.
I find that the husband was less than truthful in relation to the evidence that he gave about transferring $70,000 to his mother’s account. I shall not repeat the totality of that evidence, but his explanations about why he transferred that money in November 2009 when he had received it in 2007 were implausible. Similarly, his explanations for his failure to refer to it in Part M of his Financial Statement filed 7 April 2010 lacked credibility. While I accept that he had genuine intentions to benefit his adult children and his mother, I can only conclude that it suited him in November 2009 not to have that money in his account. In my view that was unfortunate, because almost all of that money was inherited by him from his late father’s estate and the wife could not claim any contribution to that inheritance. In that regard, I refer to Kessey & Kessey,[17] where Baker, Finn and McCall JJ said:
In other words, a contribution by a parent of a party … will be taken to be a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child.[18]
[17] (1994) FLC 92-495
[18] Their emphasis – see page 81,150
I also note that the husband was not trying to hide that money when he swore his trial affidavit on 26 May 2011. At paragraph 20 he includes that sum of $70,000 in the assets available at the time of separation.
Notwithstanding the unsatisfactory aspect of the husband’s evidence referred to in paragraph 37 above, I find that where the husband and the wife differ in their versions of events, I generally prefer the husband’s version, particularly in relation to their respective contributions and efforts during the relationship.
In relation to the husband’s initial failure to disclose an interest in a superannuation fund, I accept that the husband was not aware that he still had an interest in that fund until the wife disclosed it in an affidavit filed only five days before the hearing. That begs the questions how the wife and her lawyer came to be in possession of a letter from the fund that was clearly addressed to the husband, and why its existence was not disclosed to the husbands’ lawyer until the hearing was already under way.
I note that this was not the only letter of a personal nature addressed to the husband that was in the possession of the wife and her lawyers prior to the hearing, but not revealed to the husband’s lawyer until the husband was being cross-examined. I therefore take this opportunity to remind legal practitioners of their professional obligation to ensure that hearings are conducted fairly, and further, that “trial by ambush” does not operate in the Federal Magistrates Court of Australia.
The date of separation
That brings me to the parties’ dispute about the date of separation, and in relation to that I find the following:
·The wife left the home in early June 2009 for what she said was a “trial separation”. The husband considered the relationship to be over and did not consider their parting to be only a trial separation.
·The wife rented separate accommodation approximately 35 kilometres from the home.
·Shortly thereafter she needed to have a hysterectomy so the husband allowed her back into the home while she was recuperating. Notwithstanding that, she maintained her lease on her rented accommodation for six months.
·The husband did not consider it to be a resumption of cohabitation. Instead, he considered it to be merely an act of kindness on his part to allow her to recuperate at his home before she resumed her employment with the (omitted) company.
·In or about September 2009 both parties travelled to South Australia with X to visit the husband’s adult children.
·Whatever the wife may have thought about the status of their relationship after she returned to the home, she clearly concluded that the relationship was over by the end of October 2009, but she did not finally leave the home until the end of November 2009.
In the Supreme Court of New South Wales (Court of Appeal) in Hibberson v. George,[19] Mahoney JA said:
There is, of course, more to the relevant relationship than living in the same house. But there is, I think, a significant distinction between the relationship of marriage and the instant relationship. The relationship of marriage, being based in law, continues notwithstanding that all of the things for which it was created have ceased. Parties will live in the relationship of marriage notwithstanding that they are separated, without children, and without the exchange of the incidents which the relationship normally involves. The essence of the present relationship lies, not in law, but in a de facto situation. I do not mean by this that cohabitation is essential to its continuance: holidays and the like show this. But where one party determines not to “live together” with the other and in that sense keeps apart, the relationship ceases, even though it be merely, as it was suggested in the present case, to enable the one party or the other to decide whether it should continue.[20]
[19] (1989) DFC 95-064
[20] At page 75,766
In my view, what Mahoney JA was essentially saying in that paragraph was that, irrespective of whether the parties are living in the same dwelling, there needs to be a mutual intention for a de facto relationship to continue. I agree with that as a proposition.
In this case, the husband considered the relationship to be over in early June 2009 and did not consider their parting to be only a trial separation. Further, he did not consider it to be a resumption of cohabitation when he allowed her to stay in his home again to recuperate. I therefore conclude that the parties separated in early June 2009. However, having said that, I do not believe that a great deal turns upon that finding.
The asset pool
I find that the assets are as follows:
The home (per valuation) $400,000 Husband’s domestic chattels (at the home) $5,160 Wife’s Mazda $14,500 Husband’s Commodore $4,200 Wife’s Commodore $2,450 Holden Utility (parts) $450 Horse float $1,200 Horses $1,500 Husband’s bank account [21] $1,329 Wife’s domestic chattels $3,000 Wife’s expenditure on legal costs $4,000 Husband’s AustralianSuper superannuation $22,970 Husband’s ING superannuation $4,600 Husband’s GrowSuper superannuation $9,700 Wife’s superannuation (3 funds) $21,173 Total $496,232 [21] Paragraph 21 of the husband’s affidavit filed 27 May 2011 (“the husband’s trial affidavit”)
The wife would like me to also include a number of items that the husband has sold. They are a Hilux Motor vehicle ($1,500), a Kawasaki motor cycle ($1,200), a Honda motor cycle ($150) and a Slide-on Camper ($1,800). I presume that she wants those to be “added back” into the asset pool. I decline to do so because I accept the husband’s evidence that he sold them to make ends meet.[22] In this respect, I have had regard to the authorities in relation to “add-backs” that are referred to in the next two paragraphs.
[22] Paragraph 26 of the husband’s trial affidavit
In Chorn & Hopkins, [23] Finn, Kay and May JJ appear to have endorsed the remarks of Nicholson CJ, Ellis, Kay JJ in the unreported decision of Cerini and Cerini, [24] when they quoted paragraph 46 as follows:
Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.
[23] (2004) FLC 93-204
[24] [1998] FamCA 143
In Marker & Marker [25] their Honours Baker, Kay and Chisholm JJ put the principle succinctly when they said:
There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.
[25] [1998] FamCA 42
On the other hand, the wife’s counsel appropriately conceded that a sum of $4,000 that the wife paid for her legal costs should be added back into the notional asset pool,[27] and that is included in the table above.
[27] Transcript: 18 August 2011 at page 137
However, I have not added back the sum of $70,000 that the husband transferred to his mother on 5 November 2009. That is because:
·The husband had genuine reasons for wanting to benefit his mother and his two adult children, especially his daughter who had recently undergone a heart-lung transplant operation; and
·In any event, that sum was almost entirely made up by the husband’s inheritance and the wife cannot claim to have made any contribution to the “acquisition, conservation or improvement” of those funds. Essentially, I have adopted a “swings and roundabouts” approach to that sum; if I had included it, I would have attributed greater weight to the husband’s direct financial contributions than I have done below.
I have also not included a boat in the table above. I accept that the boat in question did not ever belong to the husband.[28] Further, I have not included a “bike trailer”, because I have no evidence that one was the property of either of them.
[28] Paragraph 27 of the husband’s trial affidavit.
I have included the wife’s domestic chattels. She claims that these were “virtually all acquired after separation”,[29] but they were purchased from a voluntary redundancy payment that she obtained when she left her employment with the shipping company.[30] Her entitlement to that redundancy payment would have accrued during the parties’ cohabitation so it is clearly appropriate to include the value of her domestic chattels in the asset pool.
[29] See Annexure “A” to her affidavit filed 30 March 2011 (“the wife’s trial affidavit”)
[30] Transcript: 17 August 2011 at page 24
Although the wife declared the contents of her bank account to be minimal, I note that she had a total of $12,000 in two bank accounts when the parties separated in early June 2009, I have not added back any of that to the asset pool, or any of her redundancy payment that now no longer exists, other than the legal costs referred to in paragraph 50 above. However, while I consider that, to some extent, the wife has been reckless in relation to her finances, I will refer to that in my consideration of the sub-section 90SF(3) factors below.
The undisputed liabilities are:
Husband’s credit card $1,200 Wife’s credit cards $8,400 Wife’s car loan $15,300 Total $24,900
Deducting the value of the liabilities from the value of the assets, I arrive at a net property pool of $471,332.
In accordance with the reasoning of the majority in Coghlan,[31] I conclude that it is appropriate to include the parties’ superannuation interests in the same pool of assets as the other assets. This is because the superannuation is of minor value in relation to the total value of the other assets, and that also appears to be the manner in which the parties have chosen to treat those superannuation interests.
[31] (2005) FLC 93-220
The contributions of the parties
At the start of the relationship in 1997, the husband’s contributions were massive in comparison with those of the wife. He was the owner of a house and land that had cost him a total of $107,000 in the 1980s. I accept that it was worth $140,000 in 1997 and that it was fully paid off.
The wife does not challenge that he also owned a motor vehicle, furniture and other chattels at that time.
On the other hand, at the start of their de facto relationship the wife only contributed a second hand motor vehicle (described as “old” by her father) and limited furniture. I accept the husband’s evidence that all she brought into the relationship was only what she was able to fit into her motor vehicle along with children’s clothes and toys. Even if she is correct, and her vehicle was a 1985 Nissan Bluebird station wagon, that is not a large vehicle, so I conclude that the second hand furniture that she transported to the home was of very little value. I also note that even on the wife’s evidence, her motor vehicle was 12 years old and it had cost her $4,100 the previous year.
Based on that information, it is not difficult to conclude that the husband made very close to 100% of the value of the parties’ initial contributions
Between July 1997 and May 2006, both parties worked in employed positions from time to time.
The wife’s evidence in relation to her employment was:
(1) From July 1997 to October 1999, I was employed on a casual basis … as a (omitted), devoting approximately 25% of my working time in this position …..
(2) From October 1999 to June 2002, I was employed as a (omitted) by (a (omitted) company) on a part time basis. My income was approximately $30,000.00 per annum.
(3) I was made redundant by (the (omitted) company) when it closed its operation in (omitted).
(4) From October 2002 until January 2003, I was employed by (another (omitted) company) … . This was part time and my income was approximately $30,000.00 per annum.
(5) From February 2003 until April 2010, I was employed by (the (omitted) in a variety of positions. My income over this period was from approximately $38,000.00 when I commenced, to approximately $50,000.00 when I ceased. [32]
[32] See paragraph 8.1 of the wife’s trial affidavit
In paragraph 3.10 of her second affidavit, the wife says that her full time employment started in July 2008, so I conclude that she only earned $50,000 in the last year of the relationship.
The husband conceded that he was unemployed for most of 1997 and 1998 and was in receipt of a Newstart Allowance. I conclude that if he was in receipt of such an allowance, then the wife could not have been earning very much from her casual employment as a shop assistant, because there was no suggestion that he was not entitled to claim that allowance.
During his cross-examination the husband also conceded that he earned the following approximate amounts in the relevant financial years:
1999 $12,000 2000 $20,000 2001 $20,000 2002 $30,000 2003 $30,000 2004 $35,000 2005 $40, to 42,000 2006 $40, to 42,000
When I look at the figures in paragraphs 63 to 66 above, I conclude that the parties would have earned similar total amounts from the start of their relationship until mid-2006. Certainly, neither party was a high income earner at any stage.
The wife attempted to convince me that she paid more expenses than the husband,[33] but I refer to what I said above about her tendency to exaggerate her own contributions and minimise those of the husband. I do not find that the husband “used the carer’s payment for his own purposes” as suggested by her,[34] but accept the husband’s evidence that it was applied to household expenses.[35]
[33]For example, see paragraph 8.3 of her trial affidavit and paragraph 3.9 of her second affidavit.
[34] Paragraph 3.9 of her second affidavit
[35] Paragraph 14 of his trial affidavit
I find that from the start of their relationship until mid 2006 the parties each contributed their similar earnings as direct financial contributions to the relationship.
The wife sought to belittle the husband’s contribution to the care of X. Indeed, she even made the emphatic statement that the husband “was never involved in X’s care until his employment was terminated”.[36] I have already found at paragraph 35 above that the husband collected X from school on many more occasions than the wife was prepared to admit, but I also find that the husband generally helped in the care of X in many more other ways than the wife would concede.[37]
[36] Paragraph 3.11(1) of her second affidavit - my emphasis.
[37] For example, see paragraph 17 of his trial affidavit.
It is important also to examine the nature of the husband’s contribution to X’s care:
·Prior to the husband’s acceptance as his carer by Centrelink, the husband had no legal obligation to care for X or to contribute financially to his support. That is because X is not a child of the de facto relationship as defined by section 90RB of the Act, in that he is not a child of the husband. In my view, that adds greater weight to the husband’s contributions to the care of X prior to May 2006.
·The husband’s legal obligations to X clearly changed after his acceptance as X’s carer by Centrelink in May 2006. From that time on, he clearly had a legal obligation to care for X because he was receiving a financial benefit from the Commonwealth to do that (and he still is).
I find also that it was a joint decision of the parties that the husband should become X’s full-time carer in 2006. Certainly, the husband’s employment had ceased at about that time but it did the wife little credit to suggest that it was because he was summarily dismissed for stealing. I accept the husband’s denials about that, but even if it had been true, it does not diminish the husband’s care of X in any way.
While there is some evidence that the wife was receiving Child Support at some times from X’s father, I find that the husband’s financial contributions for the care of X throughout the relationship were equal to those of the wife, notwithstanding that he was not legally obligated to provide for him financially prior to May 2006. Clearly, that contribution deserves significant weight.
However, the husband’s non-financial physical care of X also deserves significant weight. That physical care is described by the husband in Annexure “C” to his trial affidavit. Some of it is worth repeating:
I lift X from bed about 6:30am and place him on the toilet. He is then placed in his wheelchair while things are prepared for his shower.
I take him undressed to the shower chair where he can manage to wash some of this body.
I prepare his breakfast while he is doing this.
I then return to X and wash his hair and make sure he's clean.
He is then wrapped in a large towel and lifted to his chair to be then transferred to his bed to be wiped and dressed.
He is unable to do any of this for himself.
He's dressed and hair brushed.
All food fed to X must be cut up and placed on a tray so he can manage it.
When he's ready for school all books etc., and lunch packed, he wheels himself to the car, I then have to lift him into the car and undo the wheelchair to transport that also.
We arrive at the school, unpack his wheelchair and then lift X into the chair. I then take him into school, books lunch etc.
After school I pick him up, same procedure. When loaded we then head for physio and it is the same thing, load and unload but this is very important for X’s development.
If it's not physio then there are trips to (omitted) for his braces to be adjusted and fitted or replaced.
We go home, change his school clothes and his like (sic) to ride his three wheeler bike so it's out to transfer him to the bike and stand and watch to see he's okay.
After this I prepare a meal, he will watch television or play the Play Station but he always wants to know you're close by, as he is very insecure.
I sponge him down, change him for bed and I am always on call for night calls to the toilet etc.
That is what the husband described as a “typical day” and while it appears to be what the husband does for X now, I find that the husband was providing some of that assistance before he became X’s carer for Centrelink purposes. Indeed, I have no doubt that the husband was providing physical assistance with his care from the time that X came into his household at 2 years old. Clearly, that physical assistance has became more and more demanding as X has become older and larger. I also note that until recently X’s bedroom was upstairs so it was necessary for someone to carry him up to, and down from that bedroom on a daily basis.
What I have said in the paragraphs immediately above does not mean that the wife did not also provide financially and physically for X’s care. However, it is important to note that I specifically reject her evidence that the husband “was never involved in X’s care until his employment was terminated”. I find that he was very involved in his care.
I conclude that up until May 2006 both parties provided financially and physically for X, notwithstanding that the husband was not legally obligated to do so, whereas the wife was.
I accept that the husband spent more time with X in Melbourne when he had a series of operations at the Royal Children’s Hospital. However, it is important to keep in mind that the wife was in employment at those times, so she would not have been as available to be in Melbourne. While the wife was the main provider of finances at that time, that is counterbalanced by the husband’s greater availability to care for X physically.
Since the parties separated in 2009, the husband’s care of X has continued, with almost no assistance from the wife. The only assistance that she did provide amounted to no more than eight payments of $20 into X’s personal account between the end of October 2009 and February 2010. It is clear that she ceased those payments in a fit of pique when X returned a birthday card to her. There is also some evidence that, in addition to her income of approximately $50,000 per annum, the wife continued to receive Child Support payments from X’s father for a time after separation.
A total of only $180 in a period of almost 22 months[38] is not much assistance towards the support of a teenager, especially one who has severe physical disabilities. (It amounts to approximately 25 cents per day.)
[38] From November 2009 until the hearing in August 2011.
In view of the above, it is very clear that the husband made substantially greater contributions than the wife both before and after the parties separated.
In his closing submissions, the wife’s counsel said that “the effect of the initial contribution so far as the house is concerned has been … considerably eroded” and that is “the approach that has consistently been laid down by the authorities”.[39] He subsequently sought to remind me about “some authorities in relation to the erosion of initial contribution after a significant length of time”[40] and referred me inter alia to the decision in Lawler & Lawler.[41] However, I find that decision has little relevance to what I have to decide because the wife in that case made very real contributions to her husband’s business.
[39] Transcript: 18 August 2011 at page 130
[40] Transcript: 18 August 2011 at page 138
[41] (1988) FLC 91-927
In Money and Money [42] the dissenting judge, Fogarty J had said:
In an appropriate case, in my view, an initial substantial contribution by one party may be ‘eroded’ to a greater or lesser extent by the later contributions of the other party even though those later contributions do not necessarily at any particular point outstrip those of the other party. [43]
[42] Money and Money (1994) FLC 92-485
[43] At page 81,054
The Full Court in Bremner and Bremner [44] approved that approach of Fogarty J.
[44] Bremner and Bremner (1995) FLC 92-560
In Pierce v Pierce [45] the Full Court said:
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all the other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. [46]
[45] Pierce v Pierce (1999) FLC 92-844
[46] At page 85,881
It is clear therefore that a person’s initial contributions do not “erode” simply as a result of the passage of time. The initial contribution must be weighed against the subsequent contributions of both parties and, significantly in my view, “regard must be had to the use made by the parties of that (initial) contribution”.
In this case, the husband’s initial substantial contribution was the home. The parties used it as a home (rent free to them both) and apart from the construction of a shed, it appears to have changed very little. In this regard, I accept the evidence of the wife’s father, a retired (omitted), that “the home today is much the same as it was apart from the erection of the shed”.[47]
[47] Paragraph 21 of his affidavit.
In support of his “erosion” submissions, the wife’s counsel sought to persuade me that there had been substantial intervening contributions by the wife. It should be clear from what I have said above that I do not accept that to be the case. The wife’s contributions were not substantial when compared with the contributions of the husband, and it should be borne in mind that for twelve years she received a rent free place for herself and her son to live in (and her son continues to live there).
In view of this I conclude that the husband’s initial substantial contribution was not “eroded” by the passage of time. Certainly, the home has been improved by the erection of a shed. Unfortunately, the valuer did not provide a separate valuation for the shed, but I note that he does not make any special mention of it; he simple mentions “shed (in paddock)” as part of a relatively long list of items under the heading “Other improvements”.[48]
[48] See page 4 of the valuer’s report.
When I take all these matters into account, I conclude that if I was deciding this matter on contributions alone, it would be appropriate to attribute 80% to the husband and 20% to the wife. However, I must also consider matters under sub-section 90SF(3) of the Act.
The sub-section 90SF(3) factors
As mentioned, the wife is aged 39 years and the husband is aged 53 years.
The wife is employed part-time because she has chosen to enrol in a (omitted) course at the University of Tasmania. However, she clearly has the capacity to be employed full-time. She was working full-time and earning more than $50,000 per annum between July 2008 and April 2010, but she gave up that employment voluntarily.
I said above that I consider that, to some extent, the wife has been reckless in relation to her finances. In this regard she has twice taken voluntary reductions in her pay: firstly from $50,000 to $38,000 and secondly from $38,000 to $30,000 per annum.
In May 2010 she chose to take a redundancy and received a lump sum of $26,683.[49] She said the following about that at paragraph 11.1 of her trial affidavit:[50]
[49] Transcript: 17 August 2011 at page 24
[50] Paragraph 11.1 of her trial affidavit
I received a redundancy payment from the ((omitted)company) of approximately $25,000.00 in April 2010 and have utilised that sum as follows:
(1) Living expenses for approximately two (2) months whilst I was unemployed;
(2) Reduced my credit card liabilities;
(3) Paid my legal expenses and valuation expenses;
(4) Miscellaneous living expenses and removal expenses to enable me to move from (omitted) to (omitted) for the purposes of employment.
At paragraph 12.1 of that affidavit she said:
I took the previously mentioned redundancy in order to attempt to re-establish myself financially. However, given my move to (omitted) (for employment reasons) and the general cost of living, I am experiencing quite severe financial difficulty.
When she was cross-examined about taking that redundancy, she said:
Unfortunately it was a choice that I had to make due to my financial circumstances.[51]
[51] Transcript: 17 August 2011 at page 14
It was put to the wife in cross-examination that in her affidavit she had complained about her financial situation having been extremely difficult after separation and she agreed. [52] The following exchange then took place:[53]
Mr Walker: “But at that time isn’t it the case that you were still employed by (the (omitted) company) with an income of at least $50,000 per annum?”
The wife: “That is correct, but I was paying rent.”
[52] See paragraph 3.16(2) of her second affidavit.
[53] Transcript: 17 August 2011 at page 16
In my view, that was a somewhat unusual explanation, considering that she then moved to (omitted) and is still paying rent.[54]
[54] $280 per week, according to her Financial Statement
In fact, the wife did not ever adequately explain why she needed to move to (omitted) for employment, or indeed why she needed to take employment in (omitted) at $12,000 less per annum than she had been earning in (omitted). She also did not adequately explain what she did with the sum exceeding $5,000 that was in her bank account in November 1999 when she finally left the home.
The husband is not employed, primarily because he is X’s full-time carer and is in receipt of a Centrelink carer’s allowance. As I have mentioned above, all that the wife contributed financially to X’s care after she left the home was total of only $180 in a period of almost 22 months. To my mind that belies her statement that she will be more than happy to assist X in any way that she can when property matters with the husband are settled.[55] In any event, $20 per fortnight from her salary of more than $50,000 per annum was hardly a generous level of support for her son.
[55] Paragraph 3.16(3) of her second affidavit
As I have said, X is not a child of the de facto relationship as defined by section 90RB of the Act, so the husband does not have “the care or control of a child of the de facto relationship who has not attained the age of 18 years”. However, X is a child that the husband has a duty to maintain from the carers allowance that he receives. [56]
[56] See paragraph (c) and (d) of sub-section 90SF(3)
At paragraph 29 of his trial affidavit, the husband said:
I am a carer for X and am likely to be a full time carer in the foreseeable future.[57]
[57] The paragraph contains an obvious typographical error, in that it referred to “career” instead of “carer” in one instance.
The wife responded to that by saying:
The issue of X’s care into the future is far from certain. My strong desire is to re-establish a rapport with X and ultimately to become his carer. I believe this will happen once our property settlement has been achieved.[58]
[58] Paragraph 3.20 of her second affidavit
I do not share the wife’s belief. Clearly, there is something fundamentally wrong with the relationship between the wife and her son that will not be repaired simply by a resolution of the property dispute between herself and the husband. X took the significant step of sending back the birthday card that his mother sent to him in February 2010. That is a clear indication of a serious breakdown in the relationship between him and his mother. Unfortunately, their relationship could only have been made even worse by the wife then cutting off the small supply of money that she had been sending to him. There is no evidence that the wife has made any efforts to repair her fractured relationship with her son since she cut off those meagre funds in February 2010, so I must agree with the husband’s prediction that he is likely to be X’s full time carer in the foreseeable future.
That means that, in terms of income earning potential, there is a significant disparity between the parties.
X is a child that the wife has a duty to maintain (and X’s biological father shares that duty.) However, it is clear that the mother had not fulfilled that duty at all for a period of approximately 18 months when this matter came on for a hearing. While I accept that the husband had not made any real efforts to obtain financial assistance for X from the wife, her unwillingness to provide any financial assistance voluntarily does not give me much confidence that she will “assist him in every way possible” in relation to his future education, either at the fee paying school he attends now or at university.[59]
[59] See paragraph 3.24 of the wife’s second affidavit.
Paragraph (l) of sub-section 90SF(3) refers to “the need to protect a party who wishes to continue that party’s role as a parent”. In this case, the father is not strictly “a parent” but he is clearly in loco parentis in relation to X. Because paragraph (r) of the sub-section refers to “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”, I consider that it is important to protect the position of the husband who wishes to continue his role as X’s carer.
It is clear from the matters set out above that the factors under sub-section 90SF(3) weigh heavily in favour of the husband. I therefore consider it appropriate for there to be a further adjustment in favour of the husband in the range of 10 to 15% of the net value of the assets.
Conclusions
What I have said above means that the husband should retain between 90% and 95%, and the wife should retain between 5% and 10% of the net value of the assets. I fully appreciate that, on the face of it if the husband is to retain anything in excess of 90%, it will in fact be more than he is seeking. However, sub-section 90SM(3) states that I must not make an order unless I am satisfied that it is just and equitable to make the order in all the circumstances. Consequently, it is clear that I am not limited by the proposals of either party.
If the wife retains only 5% of the total net pool of the assets of $471,332 referred to in paragraph 56 above, her share would be worth $23,567. If she retains 10%, her share would be worth $47,133.
The wife will retain, or have had the benefit of assets as follows:
Mazda $14,500 Chattels $3,000 Wife’s expenditure on legal costs $4,000 Superannuation $21,173 Total $42,673
However, she will also be responsible for her car loan and credit card liabilities with a total of $23,700, so the net value of what she will retain is $18,973.
Clearly, then if she is to receive between 5% and 10% of the net value of the assets, she should receive a further payment of between $4,594 and $28,160.
Giving this matter careful consideration in the light of all of the foregoing, I conclude that it is just and equitable for the wife to be paid the sum of $25,000. That will give her slightly more than 9% of the net asset pool of $471,332.
I am aware from the evidence that the husband’s family were willing to provide him with some financial assistance to enable him to raise money to pay the wife’s entitlement, and I am also aware that $25,000 is less than what they thought may be needed. (However, I am not bound by his family’s thoughts on the matter either.) In those circumstances, I consider that the husband should be given 90 days to make arrangements and raise the necessary funds.
I note also that at the end of the hearing there appeared to be some agreement that there could be a superannuation splitting order to partially satisfy the husband’s obligations (notwithstanding that neither party had sought such an order). However, I do not consider such an order to be appropriate in the circumstance of this case.
I will make orders to take account of what I have set out above.
I note that the parties were each seeking an order for costs. No doubt they will wish to consider their positions in the light of these Reasons. Consequently, if either party wishes to pursue such an application, a re-listing should be sought by contacting my Associate within 28 days of today in accordance with Rule 21.02(1)(b) of the Federal Magistrates Court Rules 2001. In relation to that, I am aware that both parties’ solicitors are based in Devonport and the wife’s counsel is based in Hobart, so I am prepared to hear any costs application by telephone or video link in accordance with Division 5 of Part 6 of the Federal Magistrates Act 1999 if that is requested.
I certify that the preceding one hundred and eighteen (118) paragraphs are a true copy of the reasons for judgment of Roberts FM
Date: 24 January 2012
[26] At paragraph 2.11
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