CARROLL & CARROLL
[2012] FMCAfam 1100
•11 October 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CARROLL & CARROLL | [2012] FMCAfam 1100 |
| FAMILY LAW – Property – long marriage – contributions – gambling – failed business – future needs. |
| Family Law Act 1975, ss.79, 75 Evidence Act 1995 (Cth) |
| Hickey & Hickey (2003) FLC 93-141 Anthony Dickey, Family Law (5th ed, Lawbook Co., 2007) |
| Applicant: | MR CARROLL |
| Respondent: | MS CARROLL |
| File Number: | DGC 2391 of 2008 |
| Judgment of: | Baker FM |
| Hearing dates: | 7, 8, and 23 May and 14 June 2012 |
| Date of Last Submission: | 14 June 2012 |
| Delivered at: | Hobart |
| Delivered on: | 11 October 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Turnbull |
| Solicitors for the Applicant: | Ogilvie Jennings |
| Counsel for the Respondent: | Mr Foster |
| Solicitors for the Respondent: | Moores Legal |
ORDERS
Within 45 days form the date of this order the wife shall pay to the husband the sum of $91,531.00.
In the event that the wife is not able to obtain finance to pay the husband to sum referred to in order 1:
(a)The property situated at Property E shall be listed for sale.
(b)The listing price shall be agreed between the parties and failing agreement as determined by a valuer nominated by the Present of the Real Estate Institute of Victoria.
(c)The property shall be sold by such means as auction or private treaty as agreed and failing agreement as determined by an agent nominated by the President of the Real Estate Institute of Victoria.
(d)The husband and wife both forthwith do all acts and things and sign all necessary documents to effect the sale of the property.
(e)The proceeds of sale of the property be distributed as follows:
(i)To discharge the mortgage and any other encumbrances effecting the property;
(ii)To pay all real estate agent’s costs, commissions and expenses of the sale of the property;
(iii)To pay any council fees and rates outstanding in the respect of the property;
(iv) To pay the solicitor’s costs in relation to the property;
(v)The balance to be divided between the husband and wife so as to ensure that the husband receives a sum equal to 25% of the net asset pool.
(f)Pending completion of the sale of the property the wife shall be solely responsible for the payments of principal and interest of the mortgage secured over the property and shall make all payments in relation to it.
(g)Pending completion of the sale of the property the wife will be liable for and indemnify the husband against all payments and liabilities in respect of the Property E property including but not limited to all rates, taxes and outgoings of whatsoever nature and kind and indemnify and keep the husband indemnified in respect thereof.
Unless otherwise specified in this order;
(i)Each party will be solely entitled to the exclusion of the other to all property in the possession of that party as at this date.
(ii)Each party will be solely liable for and indemnify the other party against any liability encumbering any form of property to which that party is entitled pursuant to this order.
(iii)Each party will remain solely liable for their respective debts.
(iv)Each party sign all such documents and do all such things as may be required to impellent the terms of this order.
The wife’s application for costs be adjourned to 23 November 2012 at 10.00am for hearing.
Pursuant to rule 21.15 of the Federal Magistrates Court Rules 2001, the Court certified that it was reasonable for the parties to employ an advocate.
IT IS NOTED that publication of this judgment under the pseudonym Carroll & Carroll is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT HOBART |
DGC 2391 of 2008
| MR CARROLL |
Applicant
And
| MS CARROLL |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application by Mr Carroll (“the husband”) for a property settlement pursuant to s.79 of the Family Law Act 1975 (Cth) (“the Act”). The respondent is Ms Carroll (“the wife”).
The primary dispute in these proceedings related to the (omitted) business, “(omitted) trading as (omitted)” (“the business or (omitted)”). The business failed and the parties disputed the responsibility of the husband for its failure.
Background
The parties commenced cohabitation in March 1974. They were married on (omitted) 1976 and separated on 9 June 2007. They have two adult children, and the husband has an adult daughter by a previous marriage.
At the commencement of the relationship, the wife owned a block of land, two insurance policies and held savings in Commonwealth Bonds all worth a total of approximately $15,000.00. The husband owned a motor vehicle.
Early in the marriage, the parties bought and sold properties in Tasmania, including the wife’s block of land.
In 1979 the parties purchased a house in Victoria with the assistance of a mortgage. After the birth of their daughter Ms K, the mother built up her business as a (omitted) working from home.
In 1987 the parties sold their home and purchased the matrimonial home at Property E in 1987 for $250,000.00, with the assistance of a mortgage (“the Property E property”).
In late 1992 the parties purchased units in (omitted) for approximately $260,000.00. They increased the mortgage to $380,000.00 secured on the Property E property and obtained a loan of $60,000.00 from the husband’s mother and a loan of $41,000.00 from the husband’s sister Ms G. Some time between 2000 and 2002 the parties sold the units.
On several occasions the wife’s mother assisted the parties with mortgage instalments to prevent foreclosure.
In 1997 the husband received a lump sum termination payment of around $220,000.00 from (omitted), a company for which he had worked for 24 years.
In 1998, the parties purchased the (omitted) business, including stock and a (omitted) license for the sum of $420,000.00.
A company, “(omitted)” (“(omitted)”), was incorporated to operate the business. The husband was a director. The husband and the wife each held 45% of the shares. The remaining 10% was held by Ms G.
In order to purchase the (omitted), the husband contributed funds by loan to (omitted), and obtained a loan from the National Australia Bank (“NAB”). A debt owed by Ms G to the NAB was repaid, so that her (omitted) could be used as security for the loan from the NAB. The sum of $70,000.00 was also borrowed from the solicitor’s firm Moores Legal. The husband’s mother agreed for her home to be used as collateral to secure that loan.
The husband also accessed his superannuation, which was paid into the business. Some of his superannuation was rolled over. The husband said that the remainder was paid into the business in 2007.
The (omitted) ran into financial difficulties. At some stage during its operation, the wife obtained a $36,000.00 bank guarantee so that (omitted) would not revoke the (omitted) licence. She paid the costs of that bank guarantee. She also contributed financially towards the (omitted) by taking out cash advances.
In 2003 the wife paid in excess of $20,000.00 to cover mortgage payments that were in arrears. In January 2004 the husband transferred the Property E property to the wife. She assumed responsibility for making the mortgage payments.
In 2005 the wife received an inheritance of $96,200.00 from her late mother. She purchased a (omitted) motor vehicle for $77,000.00 and spent $10,122.00 on maintenance to the home. She lent the business the sum of $7,368.00.
In 2004 the parties separated. They reconciled in 2005. They finally separated in May 2007 and the husband vacated the home.
Around 12 months following separation, the wife received another inheritance of $56,591.20.
During the marriage, the wife was the main homemaker and parent. She was self-employed as a (omitted) and also worked with the husband in his various business ventures, namely in the (omitted) business and in the (omitted) business. Prior to the purchase of the (omitted) the husband worked as a (omitted). Throughout the marriage he operated a (omitted) business.
During the life of the business, the husband, the wife, Ms G and the parties’ daughter Ms K, amongst others, worked at the (omitted).
Following separation, the wife remained living in the Property E property. She spent $30,417.00 over the last few years on repairs and maintenance. She spent $7,442.00 to improve it. She used the proceeds of an insurance policy of $8,000.00, which her father gave her, to “put into the house debt.” She retained all furniture and chattels from the Property E property.
The Property E property was sold in around March 2008 for $285,000.00. It had been on the market from around February 2007, before separation. (omitted) ceased trading in 2008. It is being wound up.
The husband is 63 years old and is unemployed. He lives in Tasmania with his partner, Ms M, and assists her with the operation of her business. He does not receive a wage or any government benefits. He is financially supported by Ms M.
The wife is 59 years old. She lives in Victoria. During the marriage, she commenced employment with a company called (omitted). That position required overseas travel. She is employed as a (omitted) representative, although she supplements her income by (omitted). She is in a relationship with Mr R, a US citizen, who also works for (omitted). She lives with him part of the year.
Proposals
The husband proposed a 50% division of the pool, to be effected by a cash payment of $173,522.00 to him from the wife. He sought an equal division on the basis of contributions and s.75(2) factors.
The wife proposed that each party retain all assets and liabilities in their respective names and there be no further adjustment. This would result in the wife receiving assets to a value of $387,323.00 or 98% of the pool and the husband retaining his superannuation or 2% of the pool. The wife proposed that there be no adjustment in favour of either party for s.75(2) factors.
Issues
The central dispute in this matter related to the business. It was an uncontested fact that the business failed, however the parties disputed the reasons for its failure and the approach the Court should take in assessing the parties’ contributions in respect of it.
Counsel for the wife urged the Court to adopt an approach whereby the contributions of the parties are separated into spheres; namely, that the husband was responsible for the business, and that the wife was responsible for the home and her business.
Documents Relied Upon
The husband relied on the following documents:
·Financial Statement filed 30 April 2012;
·Initiating Application filed 26 August 2009;
·Affidavit of the husband filed 16 June 2012;
·Affidavit of Ms G filed 20 July 2012;
·Outline of Case; and,
·A document entitled “Husband’s Submission Regarding Asset Pool” tendered by the husband.[1]
[1] Exhibit “X1”
The wife relied on the following documents:
·Affidavit of the wife filed 4 November 2010;
·Affidavit of the wife filed 10 August 2011;
·Affidavit of Ms K filed 2 August 2011;
·Financial Statement filed 8 May 2012;
·Outline of Case;
·A document entitled “Summary of Certain Exhibits” tendered by the wife;[2]
·A document entitled “Wife’s Submission” tendered by the wife;[3]
·A document entitled “Summary of Wife’s Propositions” tendered by the wife;[4] and,
·A document entitled “List of Cases Relied Upon by the Wife” tendered by the wife.[5]
[2] Exhibit “X2”
[3] Exhibit “X3”
[4] Exhibit “X4”
[5] Exhibit “X5”
Credit
In this matter, Counsel for the wife asked the Court to make a finding of credit against the husband and Ms G. The husband sought to ameliorate the credit issue by making what he asserted were candid admissions to the Court.
The husband has a long-standing interest in (omitted). He has owned shares in a number of (omitted), and has been involved in many (omitted) events. Through his association with (omitted), he has acquired the nickname “(omitted).”
The husband enjoyed recreational gambling and he also operated a (omitted) business in Victoria and Tasmania during the marriage. He has continued to operate that business following separation.
(omitted) in Tasmania is regulated by the government. Pursuant to the (omitted) Regulation Act 2004 (Tas) (“the (omitted) Regulation Act”) (omitted) are required to be registered, and may not operate without a licence. The husband holds a (omitted) licence and held a licence during the marriage.
One of the conditions for the issue of a licence is that (omitted) are required to file periodic statements of Assets and Liabilities with (omitted) Services. In those statements, (omitted) are required to set out a summary of their financial situation. These statements are not sworn.
The husband’s Statements of Assets and Liability held by (omitted) Services were subpoenaed by the wife. The husband, in his affidavit and oral evidence, conceded that he had made false statements to (omitted) Services.
The husband said that, in order to operate as a (omitted), he needed to demonstrate that he had a sufficient asset base from which to pay out winnings. Because he did not have that base, he misrepresented the amount of assets held by him. He told (omitted) Services that he had cash and money in bank accounts, which he did not have. He estimated the value of real estate held by him, rather than using valuations. He did not correct records held by (omitted) Services when they became false.
By knowingly making these false statements to (omitted) Services, the husband may have committed an offence under the (omitted) Regulation Act. During cross-examination of the husband, Counsel for the husband made an oral application for the issue of a certificate pursuant to s.128 of the Evidence Act 1995 (Cth) (“the Evidence Act”). However, this application was not pressed, and a certificate was not issued.
The husband did not live up to his nickname of “(omitted)” in making these false statements. His conduct of providing false information was deliberately performed over many years. The issue for the Court is whether the husband can be believed on oath. He did not disclose an interest in a timeshare in (omitted). His explanation for that was that he thought the timeshare was purchased in his partner’s name and that they had borrowed more than it cost. He also did not disclose the receipt of instalments of vendor finance from the purchaser of the (omitted) or the receipt of funds from debtors upon the sale.
Whilst he was candid about his deficiencies as the manager of a small business and he made admissions about betting, drinking and attending the (omitted) Hotel, I consider that he was unimpressive and unreliable.
The wife was highly critical of the husband. She blamed him solely for the demise of the business. She made claims which I consider were exaggerated. She was unwilling to make concessions, and in my view she put a slant favourable to her case.
In her first affidavit, the wife said that her inheritance of $56,591.00 was applied towards the mortgage on the Property E property to further reduce the mortgage payments.[6] In her second affidavit, she said she put into the mortgage facility money she received from her mother by way of legacy.[7] In her evidence in chief, she corrected her affidavit to state that it was not the sum of $56,591.00 that was used; it was the sum of $58,000.00 which was applied to the mortgage. She created an impression that her inheritance had been paid into the mortgage to reduce it, yet her evidence during cross-examination indicated that she had withdrawn all but around $2,500.00 of the funds to use for her expenses.
[6] Affidavit of the wife filed 4 November 2010 at para 42
[7] Affidavit of the wife filed 10 August 2011 at para 67
In her affidavit filed 5 August 2011, the wife alleged that the husband had given conflicting evidence about how the (omitted) business was purchased. She said the husband claimed he used a termination payment from his former employer, his superannuation, a business loan and a loan secured against his mother’s property to purchase the business. She said that the total of those figures exceeded the purchase price of the business. Despite that, she said that the husband ended up with a debt of $760,000.00 for the business. The husband’s evidence was that the $760,000.00 debt alleged did not represent the debt in relation to the (omitted) business, but the parties’ overall debt.
During cross-examination, Counsel for the wife asked the husband about a document containing financial information about the purchase of the business. The husband identified his handwriting on the document and accepted that it had been prepared after 1997, and was likely to have been prepared in relation to the imminent acquisition of the business. It contained a statement of the assets and liabilities of the parties at that time, which included the Property E property and the (omitted) property. It referred to the husband’s superannuation payout of $128,520.00, superannuation rollover of $12,833.00, his bank account of $73,600.00 and the wife's bank account of $7,154.00. It included a Citibank mortgage of $370,000.00 and a personal loan from the NAB of $26,100.00. It set out the purchase price of the business, the funds available and the business capitalisation. The total assets of the parties amounted to $779,045.00 and the liabilities amounted to $403,778.00 before they borrowed funds for the purchase of the business. This document was tendered by the wife, and marked as exhibit “W8”.
The document “W8” corroborated the husband's evidence about the financial circumstances of the parties when the (omitted) was purchased. Yet the wife was not prepared to concede that the husband’s redundancy payment went into the business; she said during cross-examination that she did not know what happened to it.
The wife conceded that she was unable to accept that the husband made a positive contribution financially or otherwise during the 30 year marriage. She said, “He lived off his mother. He lived off me. He lived off his sister and now he is living off his girlfriend.” She then conceded that when he had a full-time job he made a positive contribution.
The Financial Statement and Income Tax return of (omitted) for the 1999 financial year referred to the 1998 financial year and showed a loan from the husband of $201,669.00 and a loan from the NAB of $216,302.00. The Financial Statements showed the husband’s loan account over the years, and showed a loan account of the wife which commenced in 2003 in the sum of $37,181.00. This increased to the sum of $44,181.00 in 2004.
In her second affidavit, the wife asserted that the husband has given conflicting accounts of how he financed the purchase of the business. She said:
…He has claimed he used a termination payment from his former employer, his superannuation, a business loan and a loan taken against his mother's house to buy and stock the business. The collective worth of these sums exceeds the purchase price. The figures do not tally. Despite the injection of over $400,000 cash (his termination payment and his superannuation) that he claims to have put into the business he ended up, he says, with debt of about $760,000 on it. Many thousands of dollars of this debt arose from not paying normal trading bills for the supply of (omitted) and similar. The chief explanation is that the applicant was gambling away huge sums, used in business revenue to fund this. He was also not attending to business while he gambled or was (omitted) so money was not being brought in at a reasonable level while it was being poured out at a ruinous one.
96. The Applicant has claimed he borrowed heavily from his sister to run the business… [8]
[8] Affidavit of the wife filed 10 August 2011 at paras 95-96
Although the wife’s Counsel tendered “W8”, which corroborated the husband’s account of the financing of the business, no concessions were made by the wife. I consider that the wife exaggerated the husband’s conduct and painted a picture of him which is not all accurate.
Overall, neither the husband nor the wife were impressive witnesses. This is not a matter where I am able to make a finding that I prefer one party’s evidence to that of the other party wherever it conflicts on the disputed issues. Instead, I shall consider and make findings on the facts in relation to disputed issues.
Relevant Law
Section 79(2) of the Act requires that any order made under s.79 must be just and equitable. Section 79(4) provides the matters which are to be taken into account when considering what order should be made.
Section 79(4) involves a four step exercise,[9] namely:
a)The identification of the property of the parties, their assets and financial resources.
b)The evaluation of the contributions.
c)The evaluation of the matters referred to in s.75(2).
d)A determination as to whether the result is just and equitable by considering the real impact of the orders in money terms.
[9] Hickey & Hickey (2003) FLC 93-141 and Ferraro & Ferraro (1993) FLC 92-335
It is a well accepted principle that in property cases, the Court is not required to assess the contribution of parties with mathematical precision. The reason for this is that many of the matters which the Court is required to take into account pursuant to s.79(4) are not at all capable of precise calculation, even if such calculation were desired.[10] The Court is required to consider the competing claims and relevant considerations broadly and fairly when making orders that are just and equitable.[11]
[10] Anthony Dickey, Family Law (5th ed, Lawbook Co., 2007) at 532
[11] Ibid
Identification of the property pool
The parties agreed the value of the following assets:
Assets
The Property E property $725,000.00
Superannuation (H) $3,400.00
(omitted) motor vehicle (W) $20,000.00
Shares (W) $7,960.00
Superannuation (W) $13,058.00
Jewellery (W) $10,000.00
Chattels (W) $10,000.00
Wine (H) $2,000.00
Total $791,418.00
Liabilities
Mortgage (W) $403,695.00
Net $387,723.00
The wife’s chattels have not been valued. The wife’s evidence was that they are worth $10,000.00. The husband accepted that value. The wife agreed that at separation she kept the furniture in the home and the husband did not want it.
The husband retained a collection of (omitted) wine. He gave evidence that it is worth $2,000.00. The wife accepted this.
It was agreed after the evidence was heard that the wife’s savings of $5,000.00 not be included in the pool.
The parties disputed the inclusion of the liabilities in the pool as follows:
Agreed Value
Tax debt (H) $5,430.00
Westpac loan (H) $4,300.00
Bendigo Bank credit card debt (H) $1,896.00
Husband’s value Wife’s value
Credit card debt (W) N/A $31,026.00
Personal debt (W) $Nil $6,382.00
The court has a discretion in respect of unsecured liabilities, which may be disregarded in circumstances where the liability has no connection with the marriage.[12]
[12] Anthony Dickey, above n 10, at 530
Counsel for the husband submitted that the wife’s credit card debt should not be included in the pool.
During cross-examination, the wife agreed that the credit card debts in her financial statement had been reduced. In respect of the Westpac Bank Visa (omitted) card of $12,549.00, she gave evidence that that sum was part of her legal costs, the (omitted) Visa card of $4,380.00 was legal costs paid to Moores Legal, the Citibank Visa card of $6,304.00 was a debt in respect of the business and the NAB MasterCard of $1,793.00 was in respect of living expenses. The loan of $6,382.00 was a loan from her partner for travel costs and legal costs.
The wife’s evidence was therefore that the debt had been either repaid or was incurred in respect of legal expenses or business expenses. Counsel for the wife acknowledged that those credit card liabilities and personal debts of the wife had been largely repaid. Nonetheless, he submitted that if the husband’s post-separation liabilities are included in the pool, the wife’s post-separation liabilities should also be included.
There was no evidence that the husband’s liabilities of tax debt of $5,430.00, Westpac loan of $4,300.00 and Bendigo Bank loan of $1,896.00 have any connection with the marriage. There was no evidence that the husband’s tax liability for income earned after separation has been used for the benefit of the wife.
The parties separated in 2007. For the above reasons, I consider that it is appropriate not to include either party’s liabilities in the pool for division.
Asset by Asset or Global approach?
In property proceedings, the Court may make such orders as it considers appropriate. The usual approach is for the Court to consider the property of the parties as an overall pool. However, it is also open to the Court to consider the assets of the parties on an asset-by-asset approach.
The difference between the asset-by-asset and global approaches was expressed by Ryan FM in DH & RM[13]:
The global approach involves the division of the parties’ assets on an overall proportion of the global view of the assets… [whereas] The asset by asset approach involves a determination of the parties’ interests in individual items of property…[14]
[13] [2004] FMCAfam 74
[14] Ibid at 40
In Norbis & Norbis[15] the High Court held that both the global and asset-by-asset approaches are legitimate, that either approach may be adopted by the Court, in some cases in part or in whole.[16] Mason and Deane JJ, with whom Brennan J agreed, said:
…which of the two approaches is the more convenient would depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is more convenient. It follows that the Full Court is quite entitled to prescribe that approach as a guideline in order to promote uniformity of approach within the courts. In saying this we are not to be understood as denying the legitimacy of the trial judge’s ascertainment in the first instance of the financial contributions of the parties by reference to particular assets. It is difficult to conceive how the trial judge in many cases could otherwise take account of such contributions as is required by s.79(4) of the Act…
…Again, it seems to us that it will depend on the circumstances of the particular case, though in the majority of cases the global approach will be the more convenient and for this reason the Full Court is entitled to prescribe its adoption as a guideline in the majority of cases. The Family Court has rightly criticised the practice of giving over-zealous attention to the ascertainment of the parties' contributions, and we take this opportunity of expressing our unqualified agreement with that criticism, noting at the same time that the ascertainment of the parties' financial contributions necessarily entails reference to particular assets in the manner already indicated..[17]
[15] (1986) 161 CLR 513
[16] Ibid at 553
[17] Ibid at 523
While the global approach is generally more convenient, the Court can adopt the asset-by-asset approach if it considers it to be more appropriate in the circumstances.[18] Generally, this approach has been adopted by the Courts in those cases where the marriage is of a short duration, or where the parties have strictly separated their assets.[19]
[18] Anthony Dickey, above n 10, at 572
[19] McMahon and McMahon (1995) FLC 92-606
In this matter, the parties were in a long marriage of over 30 years. I do not consider that the parties strictly separated the assets. The husband made contributions to the Property E property. The wife worked in the (omitted) in its early years and contributed to it financially. She was a 45% shareholder in (omitted). I consider that the global approach is appropriate.
Both parties adopted a one pool approach. I consider that this was appropriate as neither party sought a superannuation split. The asset pool is small and both parties’ superannuation entitlements are minimal.
Contributions
How should the husband’s gambling losses and failure of the business be treated?
Pursuant to s.79(4)(e) a Court may take into account any destruction or unreasonable diminution or dissipation of assets caused by a party. The circumstances in which the Court may take this into account were outlined by Baker J in the case of Kowaliw & Kowaliw[20] as follows:
As a statement of general principle. I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79.[21]
[20] (1981) FLC 91-902
[21] Ibid at 76,644
The Full Court in Browne & Green[22] explained the decision in Kowaliw,[23] saying that the “principles” stated by Baker J did not constitute any form of fixed code, rather they were guidelines for use in the exercise of the discretionary jurisdiction conferred by s.79. Nonetheless these guidelines have been accepted since the time that they were enunciated.[24] The Full Court went on to say that there should be good and substantial reasons for departing from the principle that where there are economic losses incurred in the marriage, those losses should be shared, absent any negligence, recklessness or deliberate dissipation of assets by one party.[25]
[22] (1999) FLC 92-873
[23] Above n 20
[24] Browne & Green, above n 22, at 86,361
[25] Ibid
To support a finding that conduct is sufficiently reckless, negligent or wanton to have reduced or minimised the value of the assets in accordance with the decision of Kowaliw & Kowaliw[26], there should be cogent evidence. In D & D[27] Carmody J discussed the degree of satisfaction necessary in fact-finding and said:
What this means in a practical sense is the more serious the allegation, the more cogent the evidence required to overcome the unlikelihood of what is alleged and thus to prove it.[28]
[26] Above n 20
[27] [2005] FamCA 356
[28] Ibid at 146
In Hamilton & Thomas[29], the Full Court of the Family Court of Australia noted that gambling had been a form of entertainment for the parties, and that the total losses were of a relatively modest total in the context of the pool as a whole:
In our view there was nothing so disproportionate in relation to the losses incurred by the parties in the lifestyle that they chose, that would make it appropriate for there to be an adjustment of the available capital upon the breakdown of the marriage. More is required than simply the existence of gambling losses. There needs in our view to be some element of wastage that is disproportionate to the positive contributions being made by each of the parties.[30]
[29] [2008] FamCAFC 8
[30] Ibid at 37
In De Angelis & De Angelis,[31] the Full Court held:
We agree that gambling is for some people a form of entertainment and that a party can be no more criticised for spending money on it than the other party can be criticised for spending money on sporting or other forms of entertainment. However every case must depend on its own particular circumstances. In the present case his Honour had the advantage of evidence which permitted him to arrive at actual, or at least approximate, figures for the wife's expenditure on gambling, and in addition he had expert psychiatric evidence regarding her propensity for gambling…[32]
The Full Court continued:
We are firmly of the view that, notwithstanding that the wife's gambling may have been her form of entertainment or indeed even a result of illness, and also notwithstanding that the husband also spent money on golf, the sums lost by the wife through gambling are very high in the context of the total value of the parties' overall assets. Further, we are of the view that the husband is entitled to some recompense or adjustment in these proceedings for the losses. Left to ourselves, none of us might have made that adjustment in the exact percentage or mathematical terms which his Honour did. However, we think that his approach has a certain validity or attraction in the circumstances of this case, and we will also employ it when re-exercising the discretion…[33]
[31] (2003) FLC 93-133
[32] Ibid at 78,239
[33] Ibid at 78,240
These cases show that a distinction must be drawn between the deliberate destruction, diminution or dissipation of assets, and the diminishing of assets in circumstances which do not involve blameworthy conduct by a party.
Economic losses should ordinarily be shared between the parties in the same way as economic gains in the division of property. If a party to a marriage incurs a financial loss in circumstances not involving recklessness, negligence or other blameworthy conduct, this loss should already ordinarily be disregarded. If there has been destruction or diminution or dissipation of assets, the question of whether it is unreasonable depends on the circumstances of the case.[34]
[34] Anthony Dickey, above n 10, at 595
Discussion
After the parties purchased the business, the wife began working there for three days a week. After about six to twelve months, she scaled back to working only Mondays. After around two years, she ceased working there. She said that she and the husband operated the business and after separation the husband continued to operate it alone.[35]
[35] Affidavit of the wife filed 10 August 2011 at 14
The husband worked long hours at the business. He mostly started at 3:00 a.m. and finished at 7:00 or 8:00 p.m. He usually worked six and a half days each week. The parties’ daughter Ms K worked with him between 2000 to approximately 2004 on alternate Saturdays for a few hours. She acknowledged that she helped him because her father was fatigued from getting up at 3:00 a.m. and getting home well after 7:00 p.m. Although she said that she noticed her father’s absences from the business became longer over time, during cross-examination she conceded that he played cricket on Saturdays and would return late if the game did not finish on time.
The wife agreed that the husband initially worked very hard at the business; however, she said that as time progressed he became less and less attentive. She agreed that for the majority of time over ten years he worked in or about the (omitted) for six and a half days each week. She agreed that mostly he opened the shop at 3:30 a.m. and finished work at 7:00 or 8:00 p.m. She said that he would also be at the (omitted) Hotel.
The wife asserted that the husband pursued his gambling and (omitted) to the detriment of the business, spending less time at work and devoting less attention to it. Her evidence was that as a result of husband's gambling, she was required to contribute to the (omitted) on many occasions. She said that the husband's gambling ruined the marriage and the husband “wasted hundreds of thousands of dollars.”
The husband denied this. He said that the business was over-valued when they purchased it, and its profitability declined as the neighbourhood changed. He said that the business suffered from a number of setbacks. A staff member stole stock to a value of $15,000.00, which was not recovered. Between 1999 and 2003 $80,000.00 worth of Met Card tickets was stolen by a Met Card representative, who was convicted and received a gaol sentence. The monies were not repaid. On one occasion the store was “ram-raided” by burglars. There were several occasions of shoplifting. It was a struggle to pay the debts and as a result of loss of licences the revenue decreased.
The wife agreed that the (omitted) suffered a number of thefts, but she disputed the impact of those thefts on the business.
The wife was critical of the husband’s business practices. On occasions, the he removed cash from the till and carried it to the safe in his pocket. She conceded that she knew that he did this as a security measure. On five or six occasions, he deposited money from the business into a TAB account, when the bank was unavailable.
The wife alleged that the husband ran the (omitted) aspect of the (omitted) business poorly. She said that when (omitted) checked the accounts, it was often found short. The husband agreed. He said:
That did happen, yes. But because… It was robbing Peter to pay Paul. Some other account would get paid, then (omitted) would do the (omitted) and we’d be short. Other times it would be the (omitted) that wouldn’t get paid. We were chasing our tail the whole time.
The husband agreed that (omitted) cut the business off from its operations. This meant that when customers came in, they could not buy a (omitted). The husband said that this was something that would happen with any (omitted).
The wife alleged that, because of his reckless management, the husband caused the (omitted) business to lose an (omitted) franchise because of a non-payment of accounts stock. (omitted) is a (omitted) supply business. The wife said that franchise had yielded one third of the revenue of the business.
The husband disputed the value of the franchise to the business. He said that it was a break-even aspect of the business at best, which amounted to a small percentage of their profits. The business dropped out just before (omitted) introduced a changed fee system, which the husband said the business would have been “flat out” to meet. He also disputed the loss of the franchise was due to his recklessness. Instead, he attributed the loss to the “general malaise” of the business.
The wife alleged that, at the time the (omitted) business was being sold, the husband’s sale of the (omitted) to another (omitted) reduced the value of the business before its sale. The husband agreed he had sold the (omitted), but said that he had done so because the prospective purchaser was not interested in operating them. He did not agree that was reckless.
The husband agreed that he left the (omitted) unlocked on five or six occasions, and that this was “most likely” reckless. A number of times he simply forgot, once or twice he did not get back before the employees had to leave. No loss arose from leaving the store unlocked.
The wife asserted that the loss of value in the (omitted) business was due to the husband’s irresponsibility – his drinking, his gambling and his inattention. She said that he should bear the burden of the loss, as she did not contribute to it.
The husband said that the business was under pressure from day one, as they had not borrowed enough money to ensure sufficient cash flow. The theft of Metcards by an employee, and by a Metcard representative, caused a “cash flow crisis”. When the business lost the (omitted) agency, the profit went down, and the business began “chasing its own tail.”
The husband accepted that the decision to buy the (omitted) business was a poor one. He did not accept that he was responsible for its demise. He was asked if the purchase of the business was his sole decision. He said that, whilst it was not his sole decision, it was more his decision than that of the wife. When he left his employment, he wanted to go into (omitted). The wife wanted him to do something more “conservative”, and she was happy when he chose to purchase the (omitted).
As the (omitted) struggled, the husband and Ms G borrowed money to pay its debts. The wife alleged that the financial arrangements of the husband and his sister were linked, and that the nature of the loans was unclear.
The wife also alleged that the husband intermingled business and personal funds. The husband admitted this. He received a director’s fee of $13,000.00 per annum, but did not draw it regularly. He used money, which he had taken from the till for banking. He said that he did not bank every dollar or account for every dollar and there was no reconciliation. He admitted that there was no way to know how much “leakage” there was from the (omitted) takings.
By the time of the parties’ separation the (omitted) had been on the market for some time. The wife said that in about June 2008 the husband sold the (omitted) without notifying her. She considered that the sale price of $258,000.00 was extremely low. There was no evidence of any offers made to purchase it or evidence of its value at the time of sale.
Ms G
Ms Carroll was a 10% shareholder of (omitted). She worked in the (omitted) on Tuesdays, Thursdays, Fridays, Saturdays and most Mondays. She worked long hours and on Thursday and Saturday evenings did not finish until 8:00 p.m.
When the husband was not present she was the manager in charge. This usually occurred on Thursday evenings, Saturday afternoons during summer and several other occasions.
In November 2007 she took over the financial side of the business. It had been losing money for some time and a decision had been made to sell it. She obtained an overdraft which was secured against her property for $60,000.00 to meet the expenses of the (omitted) licence until the business could be sold. Revenue from the business was paid into the account and she paid all the accounts. From when it ceased trading there remained a debt of $3,683.11, which she retained.
Prior to the purchase of the (omitted), Ms Carroll’s husband died. When she approached the bank to obtain the mortgage to assist in the purchase of the business, she discovered that the bank transferred her husband’s outstanding overdraft of $33,000.00 into her name. The bank required that amount to be repaid before it would lend money to help purchase the business. The husband and wife paid this amount, as the dispute was holding up the purchase of the business.
When the business was starting to fail, the wife insisted that Ms Carroll repay the money. Reluctantly, she agreed to repay it, although it had been agreed that she would not have to repay it until she died. She paid it in two instalments.
Ms Carroll detailed the setbacks to the business:
a)In the first three years there were nine robberies, including a ram raid.
b)A previous employee stole cigarettes, cash and train tickets to a value exceeding $15,000.00. None of the losses were recovered.
c)Over a three year period from 1999 to 2003 a representative from Metcard stole approximately $80,000.00 worth of Metcards. He was charged with theft; however the monies were not repaid.
d)A number of businesses and factories in the area closed, which reduced substantially the number of customers.
e)Traffic was diverted from where the business was situated as a result of an overpass being constructed for over a period of two years.
f)An old warehouse was demolished and redeveloped into a block of units. The construction work caused a lot of dust and customers went to other nearby shopping centres.
g)The business had borrowings of $700,000.00 which meant repayments were $7,000.00 per month interest only.
The business sold in March 2008. A ledger entry report for the business for 2008 was attached to Ms Carroll’s affidavit. It indicated that the sale proceeds of $188,065.03 were received and payments of $130,000.00, $964.66 and $2,831.36 were made to “Moores Legal-Mortgage Discharge.”
Counsel for the wife submitted that there was “strange” evidence that related to the financial connection between the two siblings because the husband paid her bills with her money when her husband died. He submitted that the unexplained connection between them arose again when $35,000.00 was repaid by Ms Carroll to the husband.
Ms Carroll gave evidence that the husband paid her bills with her own money after her husband died because she was “a screaming heap.” I do not consider that it was “strange” for the husband to help his sister in this way.
Ms Carroll did not know why her mother’s unsecured loan to the business, which was the sum of $5,000.00 in 2007, increased to the around $82,000.00 in 2008. Her evidence was that her mother put a lot of money into the business and there was a loan with Moores Legal, secured against her mother’s property. She said that a lot of the time her mother was paying her own interest payments, and Moores Legal asked for the sum of $130,000.00. She was not able to say why more than $80,000.00, which she thought her mother borrowed, was paid to Moores Legal.
In respect of the payments shown on the ledger entry, she said that she paid the bills as they were given to her by the book-keeper.
During cross-examination, she gave evidence that she took over payment of the bills of the business as there did not seem to be a “captain of the ship,” the husband “dropped his bundle.”
Ms Carroll’s evidence was that the husband went to the (omitted) Hotel on his time off on a Saturday night. To her knowledge he did not go there during the week. She said that she did not think that she asked him where he was going when he went out. She said that he could have been at (omitted) or he could have been out doing deliveries or at (omitted). She agreed that the husband put money in his pocket from the till to take to the safe because it was not a very nice place to have a shop. She said that the cash could not stay in the till; otherwise the customers could see it there.
In respect of the husband's betting, she said that she could not recall him betting, although he placed a bet for her twice per year. She said that she saw Mr J and other people in the (omitted) gambling, but she did not really ask about it. She said that she has never given the husband money to gamble with because she is not sympathetic to gamblers.
Ms Carroll said that she deposited money at the (omitted) TAB when she had been locked out of the safe and had too much cash. She took it to the TAB on five, six or seven times so that it could be accessed to put into the bank.
The wife gave evidence that she saw a note in the husband’s handwriting stating that his sister owed him $34,000.00. The husband’s evidence was that his sister had written the false note for him. Ms Carroll was adamant that she would not have written a note if it was untrue. She said that she “is not a liar”.
Counsel for the wife asked the Court to make a finding of credit against Ms Carroll on the basis that her evidence conflicted with the evidence of the husband.
I consider that Ms G gave evidence in a forthright manner. I did not consider her to be untruthful, although her evidence was coloured by her loyalty to her brother. I consider that it is probable that she saw or heard the husband place bets at the (omitted). I also consider that her evidence about the sale proceeds of the business was unsatisfactory. She was not able to explain why the sum of over $80,000.00 was paid to Moores Legal. She was not able to explain satisfactorily the increase of the loan account of her mother from $5,000.00 to $82,966.00 in one year.
The husband’s gambling losses
Counsel for the husband submitted that the wife’s case in respect of the husband’s gambling fell far short of the required standard of proof. He submitted that the evidence must be cogent and be more than mere conjecture and suspicion. He referred to the decisions of D & D[36] and Briginshaw v Briginshaw,[37] and s.140 of the Evidence Act.
[36] Above n 27, at 139
[37] (1938) 60 CLR 336 at 145
The wife issued numerous subpoenas; to (omitted), Dial-a-bet, (omitted), Sporting Bet Australia, Bendigo Bank, NAB, Telstra, Optus and Vodaphone.
The only evidence of losses from gambling was given by the husband.[38] Counsel for the husband submitted that the subpoenaed documents evidenced the losses of $6,830.00 and $8,500.00, totalling $15,330.00. The wife in her oral evidence did not counter what the husband said about the losses and agreed that a no greater losses were found.
[38] Affidavit of the husband filed 16 June 2011 at para 33
The evidence of loss was $15,330.00 over seven years, including two years post-separation, amounting to around $44.00 per week. It was submitted that this sum could not be regarded as reckless and wanton and of the type of gambling, which should penalise the husband.
Counsel for the husband submitted that his gambling was a form of entertainment, and something the family enjoyed together during the marriage. The wife and husband were jointly involved in the interest of (omitted) throughout the marriage. The wife was a (omitted), a (omitted)for the husband, and a (omitted)for another (omitted). The wife worked jointly with the husband in relation to these endeavours. The parties’ daughter was a (omitted) for many years and helped the husband. She won “(omitted)” at the (omitted). The wife went to (omitted) to the (omitted) with the husband on several occasions. The husband had an interest in a (omitted), “(omitted)”. They sometimes went to the (omitted) as (omitted) and sometimes as (omitted). The wife agreed, for around 15 years of the marriage, (omitted) formed part of their social life.
I consider that the husband’s gambling was a form of entertainment. The evidence was not sufficient for me to find that there was wastage in accordance with the Kowaliw[39] principles.
[39] Above n 20
The failure of the business
The wife asserted that the husband’s gambling and mismanagement was responsible for the failure of the business.
The husband asserted that the business failed as a result of outside factors, including thefts, and a changing market. Additionally, he said that the business was overvalued when it was purchased and the repayment on the borrowings put pressure on the business.
There was no expert evidence about the profitability of the business, nor was there expert evidence about the accounting and business practices utilised by the husband.
An examination of the Financial Statements of (omitted) from 1998 until 2008 indicated that very little profit was made over the life of the business. In the first year a loss of $3,273.00 was made, a profit of $2,786.00 was made in 1999, and the largest profit of $21,095.00 was made in 2006. In other years there were small losses or profits, save for 2001 and 2008, when the losses were higher. The sales diminished over the life on the business. In 1998 the liabilities of the business amounted to $417,971.00 and in 2008 they amounted to $382,545.00.
It was conceded by Counsel for the wife that the husband did not deliberately dissipate the assets; rather he had been negligent or reckless. However, Counsel for the wife submitted that the wife was really basing her case on the issue of contributions and the quality of contributions by each of the parties in their spheres. He submitted that the Court cannot draw conclusions from the evidence about what affected the business, but it can conclude that the husband did not fulfil his role in relation to the business and did not properly contribute for ten years.
There was no request by the wife for any funds to be notionally added back to the pool of assets. Rather, Counsel for the wife submitted the proper outcome was for the wife to keep the Property E home, which was transferred to her by the husband as a reflection of the way in which the parties believed their assets should be saved or managed. She looked after that and used her income for improvements and for maintaining it.
In Browne & Green[40] the Full Court referred to the practical difficulty in relation to the recognition of contributions to a project which has failed or to property which may no longer exist, if the overall pool of property ultimately available for division has been reduced by the failure of the project in question or the absence of the property previously in existence.
It is in this context that the Court has to turn its mind to the question of whether one party, or alternatively both parties, should as a matter of justice and equity bear the financial loss in question. In the present case, her Honour determined that only the husband should bear responsibility for the loss of his funds in the (omitted) project. The practical effect of her determination was that out of his very diminished funds, the husband had to pay to the wife a sum close to $300,000, at least in part on account of her contributions to that project.[41]
[40] Above n 22
[41] Ibid at 40
I find that the husband had not embarked upon a course of conduct designed to reduce or minimise the effective value or worth of the (omitted). I am not persuaded that he has acted recklessly, negligently or wantonly which has had the effect of reducing the value of assets, in accordance with the principles in Kowaliw.[42]
[42] Above n 20
The demise of the (omitted) can be partly explained by the numerous set-backs and the declining sales over the years.[43]
[43] See Exhibit “H2”
Nevertheless, I consider that the husband adopted poor business practices and was a poor manager. He did not ensure that adequate records were kept. He did not arrange for financial statements of the business to be completed for a period of six years. He spent time betting, drinking and at the (omitted) Hotel. He lost interest in the (omitted) to the extent that his sister assumed full responsibility for its management
The husband drew a director’s fee of $13,000.00 per annum, but kept no accounts or reconciliations of the cash he took for that fee. The amount of cash taken by him could not be determined. However, I am not persuaded that there was evidence sufficient to find that he was taking amounts of cash to contribute to the level of indebtedness of the business or to its demise. I do not consider that this conduct was sufficient to make a finding of waste against the husband.
The wife was a joint owner of the (omitted). She worked in it for several years. Whilst her day-to-day involvement ended after several years, her financial involvement did not end. Her loan account with (omitted) in 2008 amounted to the sum of $44,000.00. Her evidence was that she was making financial contributions to the business as late as June 2006. Having said that, she was not involved in decisions about the business, including the sale price.
I refer to what the Full Court said in Browne & Green[44] that economic gains and losses should be shared by the parties to a marriage unless there is conduct of the type referred to in Kowaliw.[45] Nevertheless, such losses need not be shared equally.
[44] Above n 22
[45] Above n 20
Sale proceeds of the (omitted)
The issue about the sale proceeds of the (omitted) was what happened to the sum of $130,000.00, being part of the amount of $188,065.03 entered on the ledger account of the business on 12 March 2008 and received from A.I.F. Lucas & Co Solicitors.
The wife claimed she did not know why Moores Legal received the funds. She had raised the issue of the sale proceeds in her 2010 affidavit. She also raised the issue of how this sum had been used in her 2011 affidavit.[46]
[46] Affidavit of the wife filed 10 August 2011 at para 99
The (omitted) Financial Statements for the 2008 financial year indicated an unsecured loan from the husband's mother of $82,966.28, which had increased from $5,000.00 in 2007.
The husband said that he did not have paperwork in respect of the loan from Moores Legal and he could not remember whether the initial $70,000.00 loan was in the name of the parties or of his mother. He said that the loan was increased from $70,000.00 to $140,000.00 to pay creditors in respect of debts incurred during the operation of the (omitted) business. He said that all money received from his mother was put towards the (omitted) business.
The husband did not clarify or produce any documents to explain why the sum of $130,000.00 was paid to Moores Legal. The sum of $82,966.28 was recorded in the 2008 financial statements of (omitted) as a loan from the husband’s mother. Neither the husband nor Ms Carroll could explain satisfactorily why over $82,966.28 of these funds was paid to Moores Legal.
Counsel for the husband submitted that the husband should not be criticised for not providing the details about the payment to Moores Legal. He submitted that because the wife was a shareholder of the business, she could have obtained an authority and sought the information from Moores Legal, which was representing her in the proceedings.
I do not agree with that submission. The information was available to the husband as a director of the company. He should have provided the information to the wife to explain how the proceeds were disbursed. He knew this was an issue. He had the opportunity to produce evidence about the disbursement of the funds and he did not do so.
The following comments made by the High Court in G v H[47] are apposite:
…Leaving aside special considerations which arise in criminal cases as a result of the right to silence, it is well settled that, in the course of the ordinary processes of legal reasoning, an inference may be drawn contrary to the interests of a party who, although having it within his or her power to provide or give evidence on some issue, declines to do so…[48]
[47] (1994) 181 CLR 387
[48] Ibid at 402
During cross-examination, the husband gave evidence that he had received several payments in respect of the sum of $35,000.00, being vendor finance for the sale of the (omitted), which was paid by the purchaser in instalments of $1,458.33 over 24 months. He said that he used the funds for living expenses. He also admitted that he received payments from debtors which he said he retained and used for living expenses of around $2,000.00-$3,000.00.
He was not sure where the balance of the instalments went, but thought some money was used to pay (omitted) and the balance was paid to his sister’s account. When he responded in his affidavit to the wife’s assertion that he was owed money from the purchaser, he failed to disclose that he received several payments from the vendor.
I infer from the husbands’ lack of satisfactory explanation about the funds paid to Moores Legal and from his failure to disclose in his affidavit that he had received payments from the vendor, that it is likely that he received some further benefit of these funds. I consider that it is appropriate to take this into account under s.75(2)(o) of the Act.
I also refer to what the Full Court said in Weir & Weir:[49]
This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black and Kellner (1992) FLC 92-287 , that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs. See also Giunti and Giunti (1986) FLC 91-759 , and Mezzacappa and Mezzacappa (1987) 11 Fam LR 957; (1987) FLC 91-853 . It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.[50]
[49] (1993) FLC 92-338
[50] Ibid at 79,593
Conclusion as to Contributions
The husband’s Counsel submitted that the marriage was a long one and both parties made a joint effort and made joint contributions. They should share the losses equally and there should therefore be an equal division of the assets.
The wife’s Counsel conceded that the wife acknowledged that when the husband was a wage earner until 1998, he made a proper contribution to the acquisition of the assets. It was submitted that the Court should give full weight to his contributions until 1998 and give them no weight thereafter and the wife should therefore retain the home.
I do not accept either of these submissions entirely and the consequent conclusions.
I take into account that this was a marriage of long duration of over 30 years. The parties have been separated since 2007, some five years ago.
The wife owned more assets than the husband at the commencement of cohabitation, although I do not place weight upon this due to the passage of time and the subsequent contributions of the parties.
The husband earned income in his employment for many years until he was made redundant in 1998. The husband was the main financial contributor until the purchase of the business. His termination payment and superannuation received by him in 1998 was used in the business. It is no longer available for division between the parties, due to the demise of the business.
During the marriage the wife was the main homemaker and parent. She earned income as a self-employed (omitted). She also worked with the husband in his various business ventures, in the (omitted) business and in the (omitted) business. She earned income and built up her business with (omitted) during the marriage.
Both parties made financial contributions to the (omitted) business. The wife worked in it for a few years after its purchase. There was no evidence which persuaded me that the wife was involved in the day-to-day running of it after this time or that there was joint decision making about the running of it. The husband worked long hours in it for many years, but had lost interest in it after separation. He adopted poor management practices in respect of its operation.
The husband supported the wife with her vocation, so she could develop her (omitted) business. From around 2003 she was taking overseas trips on a regular basis and building up her business.
The wife’s shares were gifts from her father, to which the husband made no contribution. Most of her jewellery were gifts prior to marriage or inherited by her.
The (omitted) motor vehicle was purchased by the wife from her inheritance, and the husband has not made any contribution to it.
Following separation in 2007, the wife remained living in the Property E property. She paid the rates and outgoings since around 2004. She has made the mortgage payments, although the amount of the mortgage liability has not reduced to any extent. Since separation the wife has conserved the home by making repairs and maintaining it. She has spent funds to renovate it. I place weight upon these contributions of the wife in respect of the home.
The husband has not made any financial contribution to the Property E property since 2004, when he transferred his interest in it to the wife. The wife did not involve the husband with any decisions about the house, including the renovations she made.
Assessing all their respective contributions there needs to be a significant weighting in favour of the wife. I assess her contributions as 75% and those of the husband as 25%.
Section 75(2) matters
The wife is 59 years old. There was no evidence that she is not in good health. Her income tax returns indicated that she earned a gross income in 2011 of $64,683.00, and in 2010 of $87,135.00. She had business expenses of $43,879.00 and $36,432.00 in those years, which included amounts for overseas travel and accommodation, for which she can make income tax deductions.
She continues to earn income from her (omitted) business and from (omitted). Her gross income is $1,248.00 per week and her net income is $188.00 per week. She has weekly personal expenditure of $2,969.00 per week.
The wife’s partner has an average weekly income of $268.00 per week. His income for 2010 was $13,935.00. He lives with the wife for part of the year in Melbourne and contributes to her living expenses. When she travels to (omitted) she shares his home. She has a benefit of these living arrangements with him.
The husband is 63 years old and there was no evidence that he is not in good health. He was working as a (omitted) and earning $800.00 per week. He said that due to the physical nature of the work he finished working on 8 April 2011.
The husband is unemployed. He lives with his partner and assists her with the operation of her business. He does not receive a wage or any government benefits. His partner earns around $33,000.00 per annum and financially supports him. He did not have any expenses nominated in his financial statement. He has debts totalling around the sum of $12,000.00. He has a benefit of the living arrangements with his partner.
There is an income disparity between the parties; however it is the husband's choice not to work. There was no evidence that he has made attempts to obtain employment. There is a small disparity between the parties’ superannuation entitlements.
The effect of the findings as to contributions is that the husband will receive assets to a value of $96,931.00 and the wife to a value of $290,792.00. There is a large disparity of property between them. I consider that while this factor under s.75(2)(b) favours an adjustment for the husband, this must be balanced by the adjustment to the wife under s.75(2)(o).
The husband admitted that he received between $3,000.00 and $4,000.00 from the sale proceeds of the (omitted) business. He admitted that he retained funds paid from debtors after the sale. I take into account that I have inferred that it is probable that he received further funds from the proceeds of sale of the (omitted).
I have regard to Waters & Jurek[51] in which the Full Court of the Family Court said that:
The connection between the s. 75(2) factors and a just and equitable property order is more difficult since the criteria are expressed very broadly and are fundamentally prospective in their operation. The provision does not invite a process of social engineering (Clauson and Clauson (1995) FLC ¶92-595 at 81,912). In Mallet, supra, at FLC p 79,127; CLR 638 Wilson J said that:—
``The objective of the section is not to equalize the financial strengths of the parties. It is to empower the court, following a dissolution of a marriage, to effect a redistribution of the property of the parties if it be just and equitable to do so...''[52]
[51] (1995) FLC 92-635
[52] Ibid at 82,376; see also Clauson and Clauson (1995) FLC 92-595 at
This section of the Act is not therefore to be used as a means of social engineering to redistribute property.
Having regard to these factors I do not intend to make any further adjustment.
Is the order just and equitable?
The Court must be satisfied that an order pursuant to s.79 of the Act is just and equitable.
The husband will retain the following:
(omitted) wine $2,000.00
Superannuation (H) $3,400.00
Cash payment from the wife $91,531.00
Total $96,931.00
The wife will retain the following:
The Property E property $725,000.00
(omitted) vehicle $20,000.00
Chattels $10,000.00
Jewellery $10,000.00
Superannuation $13,058.00
Shares $7,960.00
Total $786,018.00
Less mortgage $403,695.00
Less cash payment to husband $91,531.00
Total $290,792.00
The wife may need time to obtain finance. I will give her time to do so. She may need to sell the Property E property if she cannot obtain finance.
I am satisfied that in the circumstances of these parties, the settlement is a just and equitable one.
I certify that the preceding one hundred and seventy six (176) paragraphs are a true copy of the reasons for judgment of Baker FM
Date: 11 October 2012
0
6
2