CARR & CARR - [2005] FMCAfam 588

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CARR & CARR

[2005] FMCAfam 588

FAMILY LAW – Property – unvalued motor vehicle – receipts of term life insurance policy – section 75(2) factors – uncertainty of party’s health – capacity to engage in gainful employment – income protection plan insurance policy – responsibility for children.

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

Applicant:

RUSSELL WILLIAM CARR

Respondent:

JULIE ANN CARR

File Number:

CAM 573 of 2004

Judgment of:

Mowbray FM

Hearing date:

15 December 2004

Date of Last Submission:

15 December 2004

Delivered at:

Canberra

Delivered on:

8 November 2005

REPRESENTATION

Counsel for the Applicant:

Mr Dura

Solicitors for the Applicant:

Farrar Gesini & Dunn

Counsel for the Respondent:

Ms Rees

Solicitors for the Respondent:

Dobinson & Associates

ORDERS

Within seven days of these orders, each party take all necessary steps to have the proceeds of the sale of the former matrimonial home currently in trust distributed between the parties as follows:
(a)payment to the husband in the sum of $78,903;
(b)payment to the wife in the sum of $145,088.
Any interest that has accrued on the monies held in trust be distributed 57.5 percent to the wife and 42.5 percent to the husband.
Within seven days of the date of these orders, each party take all necessary steps:
(a)to transfer the AMP shares to the sole name of the wife; and
(b)to transfer the caravan to the sole name of the husband.
As between the husband and the wife, the husband be declared solely entitled to all interests in the company known as Facility Control Services Pty Ltd.
The husband indemnify and keep the wife indemnified in relation to all liabilities in respect of Facility Control Services Pty Ltd whenever and however arising.
Except as otherwise specified in these orders, each party be solely entitled to any interest in property, including any chattels, superannuation and choses in action, held in the name of that party.
Each party have liberty to apply at seven days notice on matters concerning the implementation of these orders.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
CANBERRA

CAM 573 of 2004

RUSSELL WILLIAM CARR

Applicant

And

JULIE ANN CARR

Respondent

REASONS FOR JUDGMENT

Introduction

This matter is a property dispute between Mr Russell Carr and Ms Julie Carr. On 7 September 2004 the husband filed an application for alteration of their property interests.
At the hearing the husband sought payment of 60 per cent of the available assets with 40 per cent to go to the wife. The wife wanted an adjustment whereby she received 65 per cent of the available assets and the husband 35 per cent.
The issues include:
·whether a car for which the valuation is disputed and the associated hire-purchase debt should be included in the property pool
·treatment of receipts of a term life insurance policy
·treatment of a redundancy payment
·section 75(2) factors, including:
-care for the daughter, Amelia
-the uncertainty associated with the husband’s health – he has chronic myeloid leukaemia
-the husband’s income protection insurance.

Background

The husband is 45 years old and the wife 46. They commenced their relationship in 1976-1977 and started living together in approximately 1981-1982. They were married in June 1984 and separated on a final basis in July 2003. There had been a short separation followed by reconciliation earlier in 2003.
There are two children of the marriage, Martin Russell Carr born 11 September 1985 and currently 20 years old, and Amelia Clare Carr born 21 July 1992, currently 13. Martin resides with the husband and Amelia with the wife, although the husband has significant contact with Amelia.
The husband commenced living with Ms Susanne MacErlean in July 2004 and married her in November 2004. The wife has been residing with her partner, Derek Lark, since October 2004, having had a relationship with him from early 2003.

The relevant law

The approach to the determination of an application under section 79 of the Family Law Act1975 is well established by authority, requiring a four-stage process.
The first stage involves making a finding as to the parties' assets and liabilities – the property pool. The second stage requires consideration of the contributions of various types made by the parties, and, if appropriate, an alteration of the property interests. The third stage involves consideration of such of the matters set out in section 75(2) as are applicable and again, if appropriate, altering the interests of the parties in the property. The final stage requires an overview of the result derived from the second and third stages to determine if overall that result is just and equitable.

The property pool

I find that the parties' assets and liabilities at the date of the hearing are as set out in the table below:

Assets	$
Proceeds of sale held in trust	223,991
Proceeds of sale held in St George account (wife)	19,057
Lantra car (wife)	4,000
AMP shares (husband)	1,434
AMP shares (joint names)	3,426
IAG shares (husband)	7,306
Household contents (husband)	1,000
Household contents (wife)	3,000
Superannuation (husband)	41,826
Superannuation (wife)	16,160
Caravan (jointly owned)	13,000
Total assets	334,200
Liabilities	0

The husband sought to include a figure of $4,000 for a caravan debt which was described in his list of liabilities as being associated with its relocation. This debt is not included in any of the financial or other evidence. I therefore propose to disregard it.
A sum of approximately $23,000 which was part of the proceeds of the sale of the former matrimonial home was also mentioned. It is currently held by Duesburys Accountants to meet taxation debts and the costs of the winding up the parties' former business and associated trusts. The parties agreed that this should not be included in the list of assets as the fund held by Duesburys was cancelled out by the outstanding liability.
The only matter in contention was the husband's Mazda car and the associated debt to AGC Finance for $23,936. He valued the car at $12,000. When the car was purchased in October 2004 from the family company the husband took over the debt.
Ms Rees for the wife urged that the safest approach would be to disregard the Mazda and the associated debt altogether. The value of the vehicle was unreliable, particularly having regard to the size of the hire-purchase debt.
I agree and propose to leave the Mazda and its associated hire-purchase debt out of the property pool. No proper evidence of its value has been placed before the Court. In view of the substantial hire-purchase debt which the husband has put at approximately twice the value of the vehicle, it would be unsafe to accept the husband's valuation.
Apart from the matters to which I have just referred, the property pool set out above is that agreed to by the parties at the hearing.
I therefore find that the net asset pool is $334,200.

Contributions

It was accepted by both parties that neither had any significant property at the time they commenced to live together around 1981-1982.
The husband was the principal breadwinner during the period they were together. He was employed principally in the electrical trades and equipment supplies area, initially as an employee but later in a business in which both he and his wife had an interest. In July 2003 at about the time that the parties finally separated he established a new business on his own - Facility Control Services.
Apart from periods following the births of the two children, the wife was also engaged in paid employment for most of the marriage. Some of this employment was part‑time and the remainder full‑time.
In 1995 the husband went into a partnership with his wife and with another individual in Advanced Control Equipment Supplies Pty Ltd. Within a couple of years the parties had purchased the 50 per cent share held in Advanced Control Equipment Supplies from the other individual. Together they now owned the whole business. The husband was responsible for operating the business. The wife spent quite a considerable amount of time in afternoons and weekends undertaking tasks for the business.
The husband concedes that the wife made the primary contribution during the marriage as homemaker and parent. But he says that he provided a significant amount of assistance to the wife in this role at times when he was not at work.
During the course of the relationship a number of payments were made by the parties and a couple of individuals on their behalf for the acquisition, conservation or improvement of the property. However, it is only principally in relation to one that it is suggested that an adjustment should be made to the contributions.
The husband says that in May 2003 he received $13,000 from an AMP term life insurance policy. He applied these monies directly to the mortgage over the matrimonial home. The life insured under the policy was his. He had commenced payments for that policy in 1977. He asserts that as this sum was deposited into the parties' mortgage account he was entitled therefore to a 5 per cent adjustment.
I do not agree. In my view, the premiums for that policy came from joint monies during the relationship, at least since the early 1980s when the parties started to live together. The $13,000 does not represent an additional contribution made by the husband to the family assets. Rather it represents funds earned as a result of an investment by the parties during their relationship.
In early July 2003 the wife was paid $21,600 net when she resigned from her employment with Country Energy. Part of this was for unpaid leave and approximately $18,100 before tax was a redundancy payment. The wife says that she used these monies to supplement her income for living expenses for herself and Amelia.
I accept Mr Dura's contention that this payment resulted from entitlements which arose during the course of the relationship. Nevertheless, I am of the view that the wife was entitled to spend this money for her reasonable financial support and for the support of Amelia. As Ms Rees said, she had no other money to live on and she spent it on reasonable living expenses.
Post-separation the wife has made contributions as a parent. Amelia, 11 at the time of separation, has continued to live with her, although she has had significant periods of contact with the husband. In July 2004 the husband stopped paying child support of $150 per week for Amelia.
Until July 2004 the husband paid half of the mortgage repayments. These ceased in July and the matrimonial home was sold in October 2004. From July to October 2004 the wife paid the full mortgage costs. She met rates and water rates for the former matrimonial home from separation in July 2003. However, she received the value of occupation of the former matrimonial home until it was sold.
It is reasonable to assume that each party's superannuation has grown since separation and that the entitlements of the husband would have grown by more than those of the wife.
The husband has submitted that especially on the basis of the $13,000 AMP payment he is slightly ahead on contributions. He seeks a 5 per cent adjustment. The wife says that the contributions were equal.
There is nothing, in my view, which would justify a finding that one party’s contributions, whether financial or non-financial, should be given more weight than that of the other. The parties lived together for over 20 years and were married for approximately 19 years. They have two children. The husband assumed primary responsibility for the financial support of the family and was able to earn greater income than the wife. This money was applied to joint matrimonial purposes. The wife contributed the money she earned similarly and assumed primary responsibility for the home and the children. The husband also contributed to home-making. Since separation the wife has had the primary responsibility for Amelia.
Having regard to the factors set out in section 79(4), I am not satisfied that there should be any adjustment for contributions. I therefore assess the parties' contributions as equal.

Section 75(2) factors

The wife is employed as a public servant earning approximately $45,900 per year. As she does not possess formal qualifications she is unlikely to significantly increase her income capacity.
The position for the husband is less clear. Fees come from his business - Facility Control Systems. For the first three months of the 2004-2005 financial year the husband's drawings amounted to a little over $20,000. On a full-year basis this could be projected to around $60,000. However, the husband gave evidence that activity had declined significantly since the first three months of the financial year.
The husband was cross‑examined extensively on the income and financial resources available to him from both Facility Control Systems and Advanced Control Equipment Supplies during the 2003-2004 financial year. While it is impossible to draw precise conclusions about his earnings for that year, it is clear that it was considerably greater than the net profit of Facility Control Systems of $62,512.

I accept Ms Rees' submissions that in addition to this profit he had access to the profit of Advanced Control Equipment Supplies. He had other direct cash drawings from Advanced Control Equipment Supplies, he was paid travel expenses over and above the amounts actually incurred, and a motor vehicle was provided to him.
I accept that, as Ms Rees put it, it is impossible to say with any certainty what income and financial resources the husband had available to him during the 2003-2004 financial year. As Ms Rees put it:
It certainly wasn't $700 a week and it was probably more likely in the region of $100,000 [per year].
It is important also to note that during that same financial year the wife also received some benefits from that company: for example, payments for her tax and for rates on the jointly owned property. In addition, the business covered some expenses associated with her motor vehicle.
At the time of the hearing Advanced Control Equipment Supplies was in the process of being wound up. It will not provide any future income or financial resources for the parties.
The most significant factor affecting the husband's capacity for gainful employment and income is his health. In May 2004 he was diagnosed with chronic myeloid leukaemia. This is a rare form of leukaemia and without adequate treatment is likely to result in death in approximately five years. The husband is waiting for a bone marrow transplant to be undertaken in Sydney.
A bone marrow transplant operation will impact on the husband in a number of ways. He will be in hospital for a considerable period, perhaps up to six months. He also will be unable to work for some time after that. As the operation will take place in Sydney, his current wife will be with him. Her income will also cease. Ms MacErlean testifies that she will not recommence work until her husband has fully recovered.
The husband's condition presents considerable uncertainty. If he is unable to obtain a donor or if the operation is unsuccessful his life expectancy may be short. At the very best his state of health and treatment will prevent him from gaining a reliable source of income for some time. For a period Ms MacErlean will also not have an income.
The husband has an income protection plan insurance policy which provides for a $60,000 per year if he is totally disabled. It also covers partial disability. The husband argues that too much reliance should not be placed on this policy as it is unclear when it would be likely to start, how much he would get and for what period of time. On the other hand, the insurance is directed precisely at the circumstances which may face the husband. All insurance policies have certain preconditions. This policy seems to be designed and has been entered into by the husband to cover the sort of circumstances that he envisages as a result of his illness.
It is reasonable in my view to project that in the event that the husband is unable to work because of his illness he will receive $60,000 per year from the policy. This is to be contrasted with the wife's income of $45,000.
The only child under 18, Amelia, who was 12 at the time of the hearing, lives with the wife. She attends a private school with the fees currently being paid by the wife. Until July 2004 the husband paid $150 per week by way of child support. He has not made any further child support payments since that time.
Since separation Amelia has resided with the wife during each school week, spending each alternate weekend with the husband as well as having contact during the holidays. There have also been additional periods that she has spent with the husband. The husband disputes the wife's suggestion that Amelia has spent no less than 65 per cent of nights with her. He concedes that more than half of the time the child is in the care of the wife.
The husband testified that in the past he had been responsible for some of Amelia’s financial expenses, including the payment of school fees, dancing fees as well as financial support when she resided with him. He purchases clothing and other items for her personal needs as well as paying for entertainment expenses.
However, on the evidence before me I am satisfied that the vast bulk of Amelia’s expenses, including private school tuition fees, ballet tuition expenses and after-school care, are now met by the wife.
The husband says that he intends to continue with child support payments, but only once an assessment has been made by the Child Support Agency. The wife is sceptical about any assessment by the Agency because as the husband is self-employed he would be able to estimate his income for that assessment. In the circumstances she has not made an application for a child support assessment.
There is no doubt that the wife is the primary carer for Amelia. This can be expected to continue until Amelia is 18. The husband will continue to have a significant role in the development of the child. But on the evidence before me I cannot be confident that he will make any significant financial contribution by way of child support to Amelia's upbringing.
Based on the May 2005 quarter figures from the Lee scale on the cost of children, a child of Amelia's age would involve a total expenditure of roughly $17,000 per year. The figures in this scale relate to a one-child, one-income family with an income of about $940 gross per week. Of course, as the child grows older total expenditure will increase.
In my view, the wife's responsibility for the care and control of Amelia until she is 18 and the associated costs are a very significant matter in this case.
Both parties have repartnered. The wife's partner with whom she commenced living in October 2004 is in employment with a gross income of approximately $140,000 per annum. He gives the wife an amount of $100 per week to assist her with her living expenses. They live in his house. He has also provided an interest-free loan of about $19,000 to the wife to meet certain expenses including those associated with these proceedings.
The husband met his current partner in July 2003, commenced residing with her in July 2004 and they were married in November 2004. She is employed part‑time as a ward clerk at a local hospital and earns approximately $31,000 per year. They live together in a rental property with the husband responsible for payment of the rent. I noted previously that it is the husband's new wife's intention that if the husband were to receive a bone marrow transplant she would resign her position and relocate with him to Sydney to provide him with support during his hospitalisation and subsequent rehabilitation.

The husband seeks a further 5 per cent adjustment in his favour for section 75(2) factors. The wife wants a 15 per cent adjustment in her favour.
Having regard to the considerations set out above, in particular, the wife's responsibility for Amelia for about five years, the income and financial resources available to each of the parties and the uncertainty concerning the husband's health, it is my view that overall the section 75(2) factors favour the wife. I propose to make an adjustment of 7.5 per cent in her favour under this subsection.

Overview

For this exercise I am not concerned with precise figures. The end result of examination of the contributions and section 75(2) factors is that an adjustment should be made in favour of the wife whereby she receives 57.5 per cent of the pool and the husband 42.5 per cent. In money terms, this results in the wife receiving in the order of $192,000 and the husband $142,000, a difference of $50,000.
Taking all matters into account, and in particular the fact that the wife will be the primary carer of Amelia, and the uncertainty associated with the husband's health, I am satisfied that this result is just and equitable within the meaning of section 79(2).

Conclusion

The pool is $334,200. The wife's 57.5 per cent of this amounts to $192,165. The husband's 42.5 per cent is equivalent to $142,035. I propose that the husband's interests in the AMP shares be transferred to the wife and any interest the wife has in the caravan be transferred to the husband. This means that the $223,991 proceeds of sale of the house held in trust should be distributed with $145,088 to the wife and $78,903 to the husband.

The orders of the Court will be as set out at the commencement of these reasons for judgment.

I certify that the preceding fifty-nine paragraphs are a true copy of the reasons for judgment of Mowbray FM

Associate: Natasha Werner

Date: 8 November 2005