CARDUS & CARDUS

[2014] FCCA 774

FEDERAL CIRCUIT COURT OF AUSTRALIA

CARDUS & CARDUS [2014] FCCA 774

Catchwords:
FAMILY LAW – Property orders sought – parenting orders agreed upon – long marriage – young child to live with wife – at separation inheritance – contribution – future needs – just and equitable order.

Legislation:

Family Law Act 1975 (Cth), s.75(2)

Applicant: MR CARDUS

Respondent: MS CARDUS

File Number: MLC 7196 of 2012

Judgment of: Judge Hartnett

Hearing dates: 26 & 27 February 2014

Delivered at: Melbourne

Delivered on: 15 April 2014

REPRESENTATION

Counsel for the Applicant: Ms Williams

Solicitors for the Applicant: Barbayannis Lawyers

The Respondent: In Person

ORDERS

1. From the totality of the sale proceeds ($994,000) of the former matrimonial home situate at [O] in the State of Victoria including the monies held on trust, the deposit monies, and other monies already distributed to the parties by court order, there be a payment out to the husband of 60 per cent and a payment out to the wife of 40 per cent of such funds. Any interest earnt on the funds be also apportioned in this percentage adjustment.

2. Each party to receive half of the monies in the Westpac bank account in the joint names of the parties.

3. Each party be solely liable for and indemnify the other against any debt and liability owed to the other party’s families.

4. Each party indemnify and keep indemnified the other against all or any taxation liabilities for which they may be liable in the past, present and future.

5. Otherwise each party retain to the exclusion of the other:-

   (a)the furniture and chattels in their respective possession; and

   (b)their respective superannuation benefits and entitlements.

6. There is liberty to the parties to apply with respect to the question of costs.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 7196 of 2012

MR CARDUS

Applicant

And

MS CARDUS

Respondent

REASONS FOR JUDGMENT

1. The Applicant husband commenced proceedings for property and parenting orders in April 2013. To assist in the determination of the competing parenting orders applications, a Family Report was prepared by a Regulation 7 Family Consultant, Ms F, which was introduced into evidence in the proceedings and is dated 19 July 2013 (‘the Family Report’). Following the closing of the husband’s case, the parties agreed to consent orders resolving the parenting dispute between them, and without the need to cross-examine Ms F. Ms F’s recommendation that the parties’ son [X] born [in] 2008 (now aged five years) live with the wife was adopted by the parties. His time spent with the husband and a raft of other orders was agreed between the parties.  That left outstanding, and as a matter to be determined judicially, the dispute between the parties as to property adjustment. What follows are the factual matters relevant to that consideration as found on the balance of probabilities, and the application of the necessary legal framework.

2. The husband relied upon his Amended Initiating Application filed 30 January 2014, together with affidavits filed by him on 31 January 2014 and 26 February 2014.  He also relied upon an Amended Financial Statement filed 30 January 2014 and an Affidavit sworn by Mr M on 12 February 2014. The wife relied upon her Amended Response filed 11 February 2014 and affidavits sworn by her on 24 May 2013; 29 August 2013; 25 October 2013 and 11 February 2014. The wife also relied upon an Amended Financial Statement sworn and filed by her on 11 February 2014. The husband was represented in the proceedings and the wife was initially represented by solicitors and at trial appeared as a litigant in person. Procedural fairness was accorded to both parties. Each of them sought orders such that there be no adjustment to their superannuation entitlements and no splitting orders. As their superannuation entitlements were fairly equal, they were content to leave those entitlements as they stood. The husband’s current superannuation entitlements are approximately $46,432 and the wife’s approximately $51,026. Further, the parties agreed during the trial of the matter that the asset pool available for distribution between them should include those monies representing a part of the net sale proceeds of the former matrimonial home, to which they have already had access, pursuant to court orders. On 28 October 2013, the parties received an advance on property settlement payment in the distribution of the net deposit monies on the sale of the former matrimonial home. Each received approximately $49,000. At trial, each of the parties sought to have a further advance on property settlement in the sum of $100,000.  The parties consented to an order to this effect.

3. The asset pool at trial, which the parties agreed was available for distribution between them, was:-

   a)the net proceeds of sale (less the deposit monies) of the former matrimonial home situate at [O] in the State of Victoria (‘the former matrimonial home’) in the amount of $896,000;

   b)earlier distributed deposit monies totalling $98,000; and

   c)jointly held monies with Westpac totalling $1,100. They agreed that this sum could be equally divided between them.

4. The parties sought the inclusion of no further assets thereby compromising some of their claims as set out in affidavit evidence.

5. The husband seeks orders that he receive 65 per cent of the net proceeds of sale of the former matrimonial home. The wife seeks orders that she receive 60 per cent of the net proceeds of sale of the former matrimonial home. Each seek that they be indemnified in respect of the debts to family members, of the other.

History

1. The husband was born [in] 1966 and he is now aged 47 years. The wife was born [in] 1965 and she is now aged 48 years. They married [in] 1988 and separated on 19 July 2011. Thereafter, the husband remained residing in the former matrimonial home and the wife took up rental accommodation in [suburb omitted]. The parties cohabitated for a period of 23 years. In that time they had three children; two of whom are now adult. Their youngest child, [X], shall live predominantly with the wife in the years ahead. The wife will continue her part-time employment as a [omitted] where she has been employed for some 16 years. Her working life has always fitted around the three children’s needs. She works about two and a half days a week. The parties’ adult daughter [Y], who is currently aged 22 years, is a full-time [omitted] student and is residing with her mother at the present time. The parties’ son [Z], aged 24 years, has commenced full-time employment as a [omitted] and is living independently. The husband gave evidence at trial, that he intended to give four weeks’ notice of the cessation of his employment as a [omitted] with his current employer, [A]. He proposed in the immediate future that he might retrain and perhaps obtain a trade qualification. The business he ran over many years of the marriage and in which he worked long, hard hours (being 14, 15 and 16 hours a day and six days a week at times) was sold by him following separation.

Contribution

1. At the commencement of their cohabitation, neither party had assets of any particular significance. They both worked and commenced to reside in accommodation provided by the wife’s parents on a rent free basis. They remained so accommodated for approximately nine months before purchasing their first home at [M] in the State of Victoria. They were able to complete this purchase with assistance from the husband’s mother and the wife’s parents. The husband’s mother, in or about March 1989, advanced a loan of $20,000 to the husband with that loan agreement being as set out in the annexure ‘SMC-7’ to the husband’s trial Affidavit sworn 31 January 2014. No repayments were ever requested by the husband’s mother and none ever paid. The wife was not told of this loan nor had she sighted the loan agreement until these proceedings commenced. The husband sensibly did not seek enforcement of the loan agreement, but rather that the sum advanced be treated as a contribution on his side of the equation. The Court finds this to be so. The husband conceded that the wife’s parents assisted them in the provision to them of approximately $25,000 or $30,000. The husband could not recall whether additionally the stamp duty and legal costs were paid by the wife’s parents, as asserted by the wife. I accept the wife’s evidence in that regard. Both parties declined to place their parents on affidavit, yet both claimed their parents gave them cash sums over the years, or paid for school fees and the like, which claims were challenged by the other. No persuasive corroborative evidence was forthcoming, a matter to which I shall return. The parties agreed that the wife’s parents gave them a further sum of $15,000 by way of contribution to the installation of a pool at the former matrimonial home. The parties purchased this real property in September 1993. It was situate at [O] in the State of Victoria and had a purchase price of $180,000 approximately. The parties applied the proceeds of sale of the [M] property and obtained a mortgage advance of approximately $40,000. Approximately four years later, and in 1997, the parties carried out renovations to that property and obtained additional mortgage money advances. In 2003, and again in 2008, they drew down on the mortgage to purchase motor vehicles. Both the husband and wife contributed directly and indirectly to the repayments of the mortgage monies, which the wife was able to salary sacrifice, and to the improvements made to, and maintenance of their home. They also both contributed to the welfare of the household with the wife being the primary care giver to the children, and the husband being the primary financial provider from the operation of his [omitted] business.

2. The husband and wife purchased the [omitted] business, known as ‘[S]’, in May 2003 and for a purchase price of $35,000. These funds were borrowed by the parties, together with a further $50,000 during the operation and development of the business. The husband sold the business following separation – it was by then in his sole name – and in October 2012. The husband incurred considerable debt in the business, being approximately $450,000 between 2009 and 2012. The husband claimed such debt was not due to his financial mismanagement, as claimed by the wife, but rather the very difficult trading times that occurred in that period. The husband was supported in that claim by the evidence of Mr M, a casual employee in the business between December 2003 and its sale in 2012. His evidence was that at the time of the global financial crisis, the husband’s business experienced a downturn in revenue and profitability. He had no actual knowledge of the extent of that though, and was not an expert witness. The husband claimed that much of the inheritance he received from his late father, was applied toward repayment of this debt. In September 2010, the husband’s father passed away. The husband received, and at around the time of separation, an inheritance totalling $217,000. He applied such funds as follows:-

   a)$100,000 into the parties joint NAB home loan account. This reduced the home loan (account number [omitted]) from $182,309.89 to $82,309.89;

   b)$15,000 to purchase a motor vehicle for the parties’ daughter; and

   c)a significant portion of the balance to pay out creditors remaining of the [omitted] business, and after the [omitted] business sale profit had been applied to repayment of some of this debt. In addition, family expenses and family credit card debt was paid, in addition to the husband’s personal debt.

3. Following the parties’ separation in July 2011, the wife remained living away from the former matrimonial home until early May 2013, when she took up residence in it again. Both parties then resided there until following the sale of the former matrimonial home, when the wife left and took up rental accommodation in [suburb omitted] in January 2014, and the husband departed following settlement of the sale in February 2014. He took up rental accommodation in [suburb omitted]. The parties had not resumed their relationship. The wife had commenced a relationship with a man in [country omitted] just prior to separation, and she spent the period between July 2011 and January 2013 pursuing that relationship including travelling to [country omitted] for four separate periods of approximately four weeks duration each time, save the last period which was for one week in January 2013. Around that time, her relationship with the man in [country omitted] ceased. Although she had the care of the parties’ youngest child for considerable periods during this time, and in particular during the husband’s long working hours, so too did the husband, including obviously those times the wife was overseas. The wife’s parents also assisted in the care of the parties’ three children, and in particular [X].

4. The wife and her lawyers (on the record at the time) had available to them discovery and inspection of all bank statements of the Business Cheque Account (bsb [omitted], account number [omitted]) all original receipts, and all cheque butts for the business, ‘[S]’. The wife had further an authority from the husband to enable her to contact directly the accountant for the business. This person was the mutual accountant for the parties. The husband also arranged and paid for four boxes of original documents relating to the business to be delivered to his lawyers, and available for the wife or her lawyers to inspect for many months. The wife and her lawyers failed to carry out such inspection of the documents. The wife nevertheless continued to claim that the husband had hidden funds from her and had not applied the business sale profits and a part-of his inheritance, to the payment out of debts. She produced no evidence to support such a claim.

5. The business was sold for $100,000. The profits for the sale of the business were applied toward the debts of the business and to the credit card debts of the parties accumulated during the marriage. Thereafter, there was no remaining balance.

6. Each of the parties claimed their respective parents had provided much direct financial assistance to the parties over the many years of the marriage. The husband claimed his mother lent him monies, both before and after separation, totalling some $115,000. These alleged borrowings, which I find to have been gifts in an unquantified sum for the purposes of the necessary standard of proof, were not disclosed to the wife. The wife’s parents also provided considerable financial assistance to the parties during the marriage, a fact known to the husband. The wife claims such monies to be in excess of $65,000 and, further, that her parents paid various expenses of the children. None of such advances were required to be repaid. Contributions were made on behalf of each of the husband and wife by their respective parents in this matter. Although the husband made at least some attempt to prove his mother’s contribution, unlike the wife, neither party put before the Court necessary probative evidence from either of their parents to enable the Court to find on the requisite balance of probabilities that a contribution had been made which should be recognised as to these claimed amounts. An affidavit by a parent with documentary corroborative evidence was required, and was absent. The parties own evidence was that they lived well with the two elder children in private schools and the family holidaying overseas regularly. It is apparent on the evidence of both parties, that this lifestyle was sustained with the assistance of each of their parents and with constant credit card usage.

Section 75(2) of the Family Law Act 1975 (Cth) matters

1. The husband had shoulder reconstruction surgery in August 2013 and was in receipt of WorkCover payments at trial. He was employed by [A] conducting light duties only at that time. He claimed to have verbally resigned his employment on 20 February 2014. Under cross-examination, there appeared some flexibility in the husband’s ongoing employment. He had not taken the necessary steps to actually resign. He may or he may not. Certainly the employment, and a return to normal duties was available to him. His income has always been higher than the wife’s. The wife’s employment is ongoing and secure. Whilst she works less hours then the husband, she earns a higher hourly rate of pay. She has available to her increased hours of work should she wish to perform them. She has however the greater care of [X], which impacts upon her capacity to work extended hours. She currently receives some amount by way of child support payments from the husband for [X], but the ongoing nature of that is dependent upon the husband’s ongoing employment, and the nature of such employment.

2. Some of the debt incurred by the husband for instance the Westpac Credit Card debt, was not known by the wife. The husband’s evidence was that he did not inform the wife of such debt, because he wanted to make her happy. In respect of the Westpac liabilities, he specifically provided for no mail to be delivered to the home. His evidence was unsatisfactory in this regard and there was no doubt a personal element to the incurring of this debt.

3. The husband struggled to pay the former matrimonial home mortgage repayments between November 2011 and May 2013 (leaving it in modest arrears), and from May 2013, when both parties resided in the home he ceased paying all mortgage instalments leaving that obligation to the wife. Subsequently, there was a moratorium on mortgage repayments consequent upon the parties’ determination to sell the former matrimonial home.

Conclusion

1. The asset pool excluding superannuation entitlements has a value of $995,100. Following the equal division of the Westpac monies, there is an amount of $994,000. The husband’s inheritance of $217,000 is approximately 22 per cent of those monies available for distribution. Counsel for the husband submitted that the husband should have an additional percentage adjustment to reflect this. The parties’ contributions, save the inheritance over such a long marriage, I find to be equal. The wife’s care of the parties’ five year old son leads to an adjustment in her favour. I determine this to be an adjustment of five per cent. This is so, regardless of what the parties determine to do so in the future, in part, because historically the wife has earnt less than the husband and is likely to continue to do so and, in part, because if the husband resigns from his employment, or retrains, then the wife will be to a greater extent supporting the parties’ young child.  If he continues to be employed at [A], then he has the capacity to increase his current income and hours. The wife’s apportionment is thus 55 per cent prior to the consideration of the husband’s inheritance. The husband’s inheritance went in considerable sum in excess of $100,000, but not in its entirety, to the benefit of the husband and wife. Some part of the husband’s debt, both credit card and business, was post separation and personal to him. Some part, identified, was credit card debt not know to the wife. The difficulty for the Court is the precise proportion of debt repaid from the husband’s inheritance is not known. Doing the best I can on the evidence available, an adjustment in the husband’s favour for the contribution of his inheritance is 15 per cent. Thus, the property of the parties is to be apportioned as to 60 per cent to the husband and 40 per cent to the wife.

2. I conclude the making of these orders is just and equitable. Each of the parties have sought an altering to their existing property interests. The outcome of these proceedings should enable each to be possessed of such funds as is just and equitable as between them and in the circumstances of this case.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Associate: 

Date: 15 April 2014