Chalmers and Chalmers (No.2)
[2016] FCCA 2786
•2 November 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CHALMERS & CHALMERS (No.2) | [2016] FCCA 2786 |
| Catchwords: FAMILY LAW – Property – 15 year marriage – small pool – where the husband was unco-operative throughout the proceedings and failed to make adequate financial disclosure – where the orders sought by the wife deliver a result for her which is less than the Court might, left to its own devices, have ordered – where the Court is satisfied that there are good reasons for making the orders sought by the wife notwithstanding that this financially advantages the husband. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79 |
| Cases cited: Chalmers & Chalmers [2015] FCCA 2103 Stanford & Stanford (2012) FLC 93-518 |
| Applicant: | MS CHALMERS |
| Respondent: | MR CHALMERS |
| File Number: | NCC 1484 of 2014 |
| Judgment of: | Judge Terry |
| Hearing date: | 19 May 2016 |
| Date of Last Submission: | 19 May 2016 |
| Delivered at: | Newcastle |
| Delivered on: | 2 November 2016 |
REPRESENTATION
| The Applicant: | In person |
| The Respondent: | In person |
ORDERS
The parties shall do all acts and things and sign all documents required to authorise Bridge Street Lawyers to disburse the money held in trust from the sale of Property C as follows:
(i)$4,678.50 to the wife pursuant to Order 12(f) of the orders made on 7 August 2015;
(ii)$109,035.38 together with 65% of any amount over $124,786.90 to the wife by way of property settlement.
(iii)$11,073.02 together with 35% of any amount over $124,786.90 to the husband by way of property settlement.
As and from the date of these Orders if the wife is a partner of the business “(business omitted)” and/or “(business omitted)” that the wife transfer all her right, title and interest if any in the businesses to the husband.
As and from the date of these Orders the husband indemnify the wife and keep her indemnified with respect to the businesses known as “(business omitted)” and/or “(business omitted)” and shall indemnify the wife from any debts owing to the Australian Taxation Office on account of any unpaid partnership tax, GST or BAS and shall indemnify the wife from all or any liabilities with respect to any debtors of the business or any personal guarantees provided by the wife.
Each party is otherwise declared the owner of all property and superannuation in their possession or under their control.
Pursuant to s.106A of the Family Law Act in the event that either party fails, neglects or refuses to execute any deed, instrument or document to give validity and effect to these orders a Registrar of the Federal Circuit Court at Newcastle is appointed to execute any such deed, instrument or document in the name of the party who defaults and to do all things necessary to give validity to the operation of the deed, instrument or document.
IT IS NOTED that publication of this judgment under the pseudonym Chalmers & Chalmers (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
NCC 1484 of 2014
| MS CHALMERS |
Applicant
And
| MR CHALMERS |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property settlement proceedings following the end of a 15 year marriage.
The pool primarily consists of the net proceeds of sale of the former matrimonial home ($124,786.90), the assets of the husband’s business ($72,500.00) and superannuation ($55,567.00). After an undisputed debt of $59,602.00 is taken into account the net pool is on my calculation worth about $200,000.00.
The proposals the parties put forward for how this pool should be divided were problematic and confusing.
The wife proposed that various specific amounts be paid to her from the money in trust before the balance (subject to an arithmetically based adjustment in her favour because of unpaid rates) be divided 65/35 in her favour. She proposed that the parties otherwise keep the assets and superannuation in their possession.
When worked through this proposal results in an outcome which overall favours the husband which is not consistent with the way the wife ran her case.
The husband proposed that some but not all of the assets be divided on a 60/40 basis in his favour but he also proposed that the wife pay him various specific amounts which in total considerably exceed the value of the assets she would receive.
I intend to deal with the matter by making findings and applying the law as I ordinarily would in a property case and then considering how the outcome I arrive at contrasts with the parties proposals before finally determining the orders which it is appropriate to make.
The evidence
Both parties filed documents very late and well outside the time frame set in the orders I made when listing the matter for hearing. However neither party sought to have the hearing adjourned because of late filing of documents by the other party and it proceeded on the allocated date of 19 May 2016.
The wife relied on her amended initiating application filed on 16 May 2016, her affidavit and financial statement filed on 13 May 2016, the affidavit of Mr S, a valuer employed by (omitted), filed on 17 May 2016 and an affidavit of her partner Mr K filed on 18 May 2016.
The husband relied on his affidavit and financial statement filed on 18 May 2016. He detailed on a page at the back of his affidavit the property division he was seeking.
The husband, wife and Mr K were cross-examined. Mr S was not required for cross-examination and his evidence went in unchallenged.
Background
The husband and wife commenced a relationship in about 1996 and married on (omitted) 1998. They are (religion omitted) and did not cohabit prior to marriage. They separated on 1 September 2013 and were thus married for 15 years.
There are two children of the marriage, X born on (omitted) 2003 and Y born on (omitted) 2004.
The husband is a (occupation omitted) by trade and shortly after the parties married they opened a (business omitted) in (omitted) called (business omitted). The husband worked full time in the business throughout the marriage. The wife was the children’s primary carer and the primary performer of household duties but there were periods when she also worked in the business.
In May 2003 the parties purchased land at Property C and built a home on the land. The property was purchased in the wife’s sole name and I accept, because it is credible on this particular topic, the husband’s evidence that this was done to protect the property in case any issues arose with business creditors.
In early 2013 the wife obtained a job at (employer omitted) and this was followed fairly rapidly by the demise of the marriage. Final separation occurred on 1 September 2013 when the wife left the former matrimonial home with the children. The husband remained in occupation of the home.
Between September 2013 and March 2014, the husband spent fairly limited time with the children but in March 2014 he did not return Y to the wife after spending time with him during the school holidays and this led to the wife applying for parenting orders in June 2014. In December 2014 she amended her application to also seek property orders.
I heard the parenting matter on 29 & 30 June and 1 July 2015 and reserved my decision.
Not long afterwards the wife was contacted by the bank demanding to know why the mortgage payments were not being made and on 29 July 2015, the wife filed an application in a case seeking orders for the sale of the former matrimonial home.
On 7 August 2015, I handed down a decision in the parenting matter and made orders which provided for Y and X to live with the wife and spend no time with the husband. I also dealt with the wife’s application in a case and made orders appointing the wife trustee for sale of the former matrimonial home.
It is unclear exactly when the husband moved out of the home but the wife took possession of it in September 2015 and listed it for sale. It was sold on 6 January 2016 and net proceeds of $128,086.90 were deposited into the trust account of Bridge Street Lawyers, the wife’s then solicitors.
By order of the court the wife was later allowed to utilise $3,300.00 to pay (omitted) to value the assets of the (omitted) business and a balance of $124,786.90 remains in trust.
The husband eventually filed a response to the wife’s property application but he has never complied with the Federal Circuit Court Rules requiring disclosure of documents and the wife had to bring repeated applications to achieve a valuation of the business assets. On the positive side the husband did eventually give Mr S access so that he could carry out the valuation and he did attend the hearing.
On 4 March 2016, I listed the matter for final hearing and noted that the Court was of the view given the history of the matter, that it was not appropriate to require the parties to attend a conciliation conference.
The assets and liabilities
The non-superannuation assets are as follows:
Description
Ownership
Value
Proceeds of sale of Property C after deduction of $4,678.50 being an amount determined to be payable to the wife pursuant to Order 12 (f) of the orders made on 7 August 2015
Wife
120,108.40
Plant, stock and equipment of (business omitted)/(business omitted) (including motor vehicles, forklift, pallet jack, truck, office equipment and working tools and stock)
Wife and Husband
72,500.00
(omitted) Holden Commodore
Wife
8,000.00
Household contents
Wife
1,000.00
Household contents
Husband
2,500.00
Total
204,108.40
Property C was registered in the wife’s sole name and legally the net proceeds of sale of $124,786.90 belong to her. The parties agreed that the proceeds of sale should be placed in trust pending resolution of the property proceedings but that does not given the husband a legal interest in the money.
A complication in regard to the money in trust is that the wife potentially has a claim to part of it as a result of Order 12(f) of the orders made on 7 August 2015.
Order 12 provided for the money received from the sale of Property C to be disbursed in certain specific ways and Order 12(g) provides that the balance remaining after these specific disbursements be placed into the Trust Account of Bridge Street Lawyers.
Orders 12(a) to (e) were actioned at the time the property was sold but Order 12(f) was not. It provides for money from the proceeds of sale to be disbursed:
in reimbursement to the wife for her costs of this application for enforcement and all costs of service of the Order upon the respondent or otherwise referrable to the carrying out of this order, such costs to be agreed or assessed.
The wife attached to her affidavit a bill from her solicitors for $7,255.05 which she said was referrable to this order. However the bill appears to include charges for matters besides obtaining and enforcing the 7 August 2015 orders. In particular there is an item in the bill referring to documents prepared in pursuit of an order for the valuation of the plant and equipment of the business.
Another problem is that the husband has never agreed to the amount of $7,255.05 nor have the costs ever been assessed by anyone.
I have given considerable thought to how I can best deal with this because the last thing these parties need is to be put to the expense of further argument with a view to quantifying the costs for the purposes of Order 12(f).
The appropriate course is to fix the costs payable pursuant to Order 12(f) having regard to Schedule 1 of the Federal Circuit Court Rules. Pursuant to R. 12.10 of the Federal Circuit Court Rules unless the court otherwise orders costs should be awarded in accordance with Parts 1 & 2 of Schedule 1 of the Federal Circuit CourtRules.
Doing the best I can I intend to fix the costs at $4,678.50, which allows for the preparation and filing of the interim application, several court attendances, travelling costs, filing fee and service costs.
As a result the proceeds of sale will be included in the list of assets and liabilities at $120,108.40.
The plant stock and equipment of the business were valued at $72,500.00 by Mr S as at 15 March 2016. The husband adopted this value in his financial statement by placing a value of $63,500.00 on the business and $9,000.00 on the Holden Commodore in his possession which Mr S valued as part of valuing the plant stock and equipment of the business. He also adopted the figure of $72,500.00 in his affidavit as the value of the commercial assets.
Neither party has ever sought to have the business valued as a going concern.
I accept that it would have been virtually impossible for the wife to arrange this given the husband’s possession of the business and his uncooperative and obstructive attitude since separation and the husband has never suggested obtaining nor attempted to obtain such a valuation. I cannot speculate about whether the business has a value as a going concern and the only figure I have attributing any value to the business is the figure of $72,500.00 arrived at by Mr S.
There was a dispute about the ownership of the business. The wife said that she had always believed that she and the husband were partners in the business throughout the marriage but that as a result of obtaining copies of tax returns for the business from the ATO (because the husband failed to make disclosure) she discovered that in 2006 she had ceased to be a partner and the husband’s parents Mr R and Ms R had become partners.
It was the husband’s case that he and the wife were partners in the business at separation and that this continued. He attached to his affidavit a document headed “ABN Lookup” which showed that an ABN for the (business omitted)/(business omitted) businesses was issued to the husband and his parents in 2000; that the wife was named as a fourth partner in March 2002 but that her name was removed in April 2005; that the husband and his parents were then named as partners from April 2005 until 9 October 2012 and that from 9 October 2012 to the current time the husband and wife are named as the partners.
The last tax return the wife received from the ATO was for the year ending 30 June 2012 so the husband’s evidence that he and the wife were partners in the business from 9 October 2012 is not contradicted by documents and would appear to be correct. It is moreover consistent with what the wife believed was the case at the time of separation.
The husband agreed during cross-examination that he made the change to the ABN details on 9 October 2012 online and that the wife did not sign any documents authorising this. The wife asked him whether she had agreed to being restored as a partner and the husband said that she did. The wife did not follow up on this answer.
I have no means of resolving the issue of whether the wife did or did not agree to the change the husband made on 9 October 2012 but I do note that until proceedings commenced the wife believed she was a partner in the business. I therefore intend to include the assets of the business as joint assets.
The figures for the wife’s household contents and the husband’s household contents are taken from their financial statements and have been treated as admissions against interest. No other evidence about the value of these items was provided.
No independent evidence was provided about the value of the wife’s Holden Commodore and I have used the estimate of $8,000.00 in her financial statement as an admission against interest.
The wife asked that the following debt be taken into account:
Description
Amount
Mr K – loan to pay business debts
59,602.00
This debt came into existence in the following circumstances.
Soon after separation the wife began receiving calls from (omitted) Bank demanding repayment of a debt which they alleged she owed them and threatening to repossess her car if she did not pay.
The wife said that she recalled that in April 2013 the husband had demanded that she sign a document so that money could be borrowed from (omitted) Bank to purchase (equipment omitted). She said that she voiced her concern but signed the document. She said that she thereafter had no involvement in repayment of the loan.
I accept this evidence because it is consistent with the evidence given in the parenting proceedings and admitted to be true by the husband that during the parties’ marriage the husband controlled the finances even to the extent of transferring the wife’s wages once she started work in (omitted) 2013 out of her account and into an account in his sole control and permitting her to have access only to a limited fixed amount per week for household expenses.
After the debt to (omitted) Bank came to light the wife made inquiries at the (omitted) Bank and discovered that there was also a MasterCard and a personal loan in her name. She said that she had no recollection of signing documents in respect of the personal loan or the Mastercard and the husband conceded at trial that he had applied for them online.
The amounts owing on the three debts at about the time of separation were approximately:
Description
Amount
(omitted) Bank (later taken over by (omitted) Finance then (omitted) Finance).
$29,000.00
(omitted) Bank Credit Card
$2,413.60
(omitted) Bank Personal Loan
$28,798.47
Total
$60,212.07
The wife said and I accept that after she found out about the debts she spoke to the husband who told her that the debts were for stock for the (business omitted). She said that when she asked the husband why they were in her name he said:
That’s just how it is. You left me at the wrong time. I’m not paying them for you. It will teach you a lesson.
The wife also said as follows:
During the hearing in relation to the children’s matters I was present in Court when Mr Chalmers was asked a question about why he would not pay the loans that were for the (business omitted). Mr Chalmers said words to the effect, “She had to realize it was hard in the world. I thought if she had to service these loans it might help her to see that it might be better to reconcile”.
The husband admitted during the hearing of the property matter that these debts were business debts but said that he did not pay them because he was unable to do so. He alleged that the business had not done well since separation to the point where he had not been able to pay all the business debts in a timely fashion. It was his case that the fact that the wife ceased be involved in the business and ceased contributing some of her income to it had an adverse effect on the business.
The problem for the husband is that he has never complied with the Rules which require financial disclosure and he ignored correspondence from the wife’s solicitor requesting disclosure. I cannot make any findings about the state of the business based only on the pre-separation tax returns which the wife was able to obtain from the ATO and in the absence of evidence, I am not prepared to find that the business declined after separation or that the husband was unable (as opposed to unwilling) to repay the debts in the wife’s name.
The wife tried to make repayments but found it a struggle to do so on her wage. She applied for a loan to consolidate the debts but was unsuccessful. Mr K with whom the wife had formed a relationship, offered to take out an interest only loan to pay out the debts. The wife agreed that she would pay the interest until she received her property settlement and would then repay Mr K.
Mr K obtained an interest only loan from the (omitted) Bank and in July 2014, he arranged for the following payments to be made:
Description
Amount
(omitted) ((omitted) Credit Card)
$9,953.28
(omitted) ((omitted) Bank Personal Loan)
$20,000.00
(omitted) Finance ((omitted) Bank Debt)
$28,589.61
Total
$58,542.89
The wife said, and I accept, that the amount she currently owed to Mr K was $59,602.00.
I am satisfied that the wife has entered into a commercial agreement with Mr K and will be required to pay him the amount referable to the consolidation of the debts once she obtains her property settlement and the consolidated debt is a relevant liability for the purposes of ascertaining the property pool because it was used to pay pre-separation business debts.
The result of dealing with the debts in this way of course is that the wife will in effect be liable for part of them and it was her case that this was unjust because the husband had provided no evidence that he could not have paid the debts from business income after separation if he had chosen to do so.
There is some merit in this argument but for the time being I intend to treat the amount owing to Mr K as a relevant liability. I will consider the wife’s argument further when considering s. 75(2) matters.
In his financial statement the husband declared that he had the following debts:
Description
Amount
Income Tax assessed and unpaid
7,200.00 E
Income Tax assessed and unpaid previous financial years
26,000.00E
(omitted) Bank
89,006.12
(omitted business) Creditors
13,428.00
Centrelink
28,355.20
The only evidence the husband provided about these debts was that he attached to his financial statement:
i)a document stating that $24,214.83 was due on a (omitted) Mastercard in his name as at 16 May 2016;
ii)an email from (omitted) Bank dated 23 February 2016 asserting that he owed $41,741.63 on an (omitted) Credit Card and $47,503.12 on a (omitted) Bank Credit Card;
iii)a letter from (omitted) & Co stating that he owed arrears of rent for the (business omitted) premises of $5,368.74 for the period February to May 2016;
iv)a letter from (omitted) Ltd dated 3 July 2015 stating that he owed $1,802.00;
v)a letter from (omitted) Ltd stating that he owed $4,367.00 as at 31 December 2015;
vi)a letter from Centrelink claiming that he owed $10,676.22 because he and or the wife had failed to lodge tax returns for 2011/12 and Centrelink had been unable to check that he had been paid the correct amount of family tax benefit, letters in the same vein claiming $10,964.60 for the 2012/13 financial year, $5685.51 for the 2013/14 financial year and a letter from Centrelink claiming repayment of the $400.00 Schoolkids Bonus for 2013 and the $820.00 Schoolkids bonus for 2012.
Working backwards, the debts to Centrelink are not relevant liabilities. The documentation from Centrelink makes it clear that Centrelink are seeking tax returns from the parties. The wife has lodged her returns and the husband needs to lodge his. Once the tax returns are lodged, Centrelink will revisit the matter and I cannot be certain that any debt will remain once the returns are lodged.
For the following reasons I cannot have regard to the “(business omitted) debts” referred to in paragraphs 64(iii), (iv) and (v) above or the amount owing to (omitted) Bank.
There is insufficient documentation for me to be satisfied that the debts to (omitted) and (omitted) are currently due and the husband provided no explanation for why he was failing to pay rent for the (business omitted) premises.
The husband provided no evidence about the genesis of the $89,000.00 in credit card debt which (omitted) Bank are endeavouring to collect or about efforts he had been making to repay the debts. The wife said and I accept that her solicitors wrote to the husband a number of times requesting financial disclosure in relation to these debts but the husband never replied to the correspondence.
I cannot be satisfied based on a one page document produced by (omitted) Mastercard about the genesis of the (omitted) Bank debt or about whether any reasonable efforts have been made to repay it since separation.
The husband provided no documentation in respect of the alleged ATO debts and in the absence of evidence, I cannot take these alleged debts into account.
The husband would have had difficulty convincing me to have regard to these debts even if satisfactory documentation had been provided when he failed to provide any disclosure documents which would allow an assessment of how the business has been travelling since separation.
The parties declared the following superannuation
Description
Ownership
Value
(omitted) Super
Wife
26,000.00
Superannuation savings
Husband
29,567.00
Total
55,567.00
The wife did not make any independent inquiry about the husband’s superannuation and the figure of $29,567.00 is taken from his financial statement. It may or may not be accurate but I have no means of checking it and the wife was content for the husband’s superannuation to be included in the pool at this amount.
The pool therefore consists of non-superannuation assets of net $144,506.40 and superannuation of $55,567.00, a total of $200,073.40.
Whether it is just and equitable to make property settlement orders
Pursuant to s.79 (1) of the Family Law Act, the court can make such orders as it considers appropriate altering the parties’ interests in property.
S.79 (2) provides that the court shall not make an order under this section unless it considers that it would be just and equitable to do so.
It is clearly just and equitable for me to consider making property settlement orders in this matter. The parties are separated and they cannot continue to jointly own and use the property built up by them during their relationship.
I intend to take the usual steps to resolve the question of what particular alteration of the parties interests in property would be just and equitable namely:
i)to assess the contributions of the parties under s79(4)(a), (b) and (c);
ii)to consider the matters in s.79(4)(d), (e), (f) and (g), which include the matters in s.75(2) so far as they are relevant, and determine whether any adjustment should be made as a result to the contribution based entitlements;
iii)to consider the effect of those findings and resolve what orders are just and equitable in all the circumstances of the case.
Contributions
Initial contributions
The husband and wife both owned motor vehicles at the commencement of cohabitation.
In his trial affidavit the husband said that he also had $15,000.00 cash and that the wife owed a debt of $6,000.00 for her car. However he provided no documentary evidence to support these claims and in the absence of documents I am not prepared to accept his evidence about these matters.
I cannot be satisfied on the state of the evidence that one party made a greater initial contribution.
Contributions during the relationship
The husband is a (occupation omitted) by trade and immediately after the parties married they commenced the business (business omitted) which provided their income for most of the marriage. The name (business omitted) may also have been used for the business on occasions or alternatively the parties operated another business under this name. Both names are referred to on the document called ABN Lookup produced by the husband.
The husband worked in the business throughout. The wife worked in it from 1998 to 2003 and again from 2009 to 2013 although in the latter period she was also involved in the care of the children. In the last 6 months of the marriage the wife earned income from her job at (employer omitted).
The husband was thus the primary income earner but the wife was the primary homemaker and parent.
It was the wife’s case that due to the husband’s attitude to the role of a wife arising out of the parties’ religious beliefs, she had to do a more than usually large share of the homemaker and parenting tasks. That may well be true but there is nothing in the evidence to support a finding that the wife’s contributions overall as income earner, participant in the business, homemaker and parent surpassed in value the husband’s contributions as the operator of the business and performer of some limited parenting and household tasks.
The only significant assets acquired during the relationship were:
a)The business;
b)Property C.
c)Superannuation.
Neither party received any gifts, inheritances or damages awards and I am satisfied that contributions during the marriage should be assessed as equal.
Post separation contributions
Property C
The husband lived in the Property C property from separation until October 2015. He made the mortgage payments of $596.00 per month until January 2015 but he is not entitled to credit for this because he had sole occupation of the home; he should have been making the payments.
The husband ceased making the mortgage payments in January 2015 and after the wife was made aware of this by the bank, she made some payments to prevent the bank foreclosing. It was her evidence, and I accept, that between 20 July 2015 and 6 January 2016, she paid $4,800.00. She should receive credit for this because it helped preserve the home pending orderly arrangements being made for its sale.
On 13 November 2015, the wife was served with a Statement of Claim by the (omitted) Bank seeking payment of $68,794.44. She was able to negotiate through her solicitors for the bank to wait until sale of the home to recover their money.
The husband either did not pay or did not pay the full amount of the rates while he was in occupation of the home. The wife paid $1,502.03 between December 2014 and June 2015 and at settlement in January 2016, $4,718.73 of the sale proceeds were used to pay outstanding council rates.
After the wife took possession of the home she spent about 40 hours cleaning the house, mowing, trimming and arranging for rubbish to be taken to the tip.
Prior to listing the property for sale the wife paid (omitted) $990.00 to value the property so that she could be sure that she was selling it for the correct amount.
Business debts
The wife was pursued by three creditors after separation. She paid $4,448.00 to the creditors prior to Mr K taking out the consolidation loan and she paid $5,789.25 interest on the consolidation loan up to 10 April 2016.
Parenting and child support
The wife had sole care of X from September 2013 to April 2016 and the sole care of Y from September 2013 to March 2014 and has had the sole care of both children since August 2015. The husband has never paid child support and he has spent very little time with X in the 2½ years since separation and no time with either child since the parenting orders were made in August 2015.
The wife has never applied for a child support assessment but the reason why she would have been reluctant to do so emerges from the findings I made in the parenting matter, and the husband has never offered to financially assist the wife with the care of the children.
The wife has also been almost solely responsible for the day to day care of X in a broader general sense since separation and has had sole responsibility for parenting Y for about half of the post-separation period.
Conclusion about contributions
The parties had a 15 year marriage during which they each made contributions, the husband as a business operator and to a limited extent, as homemaker and parent and the wife as primary homemaker and parent and to a lesser extent, in the business and in the last 8 months of the relationship, as a PAYG income earner.
I am satisfied that contributions during the marriage were equal but for the following reasons the wife’s post-separation contributions greatly exceeded the husband’s:
i)She has had the primary financial and non-financial care of the children since separation.
ii)She was left to deal with business debts in her name even though the husband continued to operate the business and derive income from it and she paid $4,448.00 to creditors and $5,789.25 interest on the consolidation loan.
iii)She took steps to ensure that the bank did not re-possess the Property C property and to that end made mortgage payments of $4,800.00 and she also paid rates of $1,502.03. In addition the amount payable to the council for outstanding rates when the sale settled ($4,718.73) was largely attributable to the husband not making any contribution to the rates for a considerable period of time even though he was in occupation of the home.
iv)She spent about 40 hours cleaning the Property C property and preparing it for sale.
Deciding on an appropriate percentage finding about contributions in the light of this is not easy. I am required to weigh and balance contributions which have a monetary value (such as the wife’s post-separation payment of the mortgage and business debts) and contributions which do not (such as the wife’s efforts to arrange for a speedy sale of the home and mitigate any loss associated with the non-payment of the mortgage and her post-separation parenting role in respect of the children) and I must ensure that the husband’s contributions during a 15 year marriage are given proper weight and not swamped by consideration of his behaviour in the 2½ year post separation period.
The pool is modest and I consider that an appropriate assessment of contributions would be 55% by the wife and 45% by the husband. This would entitle the wife to $110,040.37 and the husband to $90,033.03. It creates a differential of $20,007.34 between the parties and in my view this adequately recognises the wife’s post-separation contributions when balanced against an equal contribution during a 15 year marriage.
S. 79(4) (d) (e) (f) and (g) matters
I have referred to the past payment of child support in the assessment of contributions and I will refer the issue of future child support when considering the s. 75(2) matters and the only relevant subsection is (e) which directs me to consider the matters in s. 75(2).
s. 75 (2) matters
The wife is 36 and earns $49,000.00 as a (occupation omitted) employed by (employer omitted).
The wife does not have any health issues which impact on her capacity to work but given her lack of qualifications, it is somewhat unlikely that she will be able to earn a significantly higher income in the future.
The wife commenced living with Mr K in April 2014 but at some point after orders were made on 7 August 2015, that Y as well as X to live with her, she decided to move to separate accommodation.[1] The wife said that she and Mr K were still in a relationship.
[1] A consideration of the reasons for decision in Chalmers & Chalmers [2015] FCCA 2103 explains this.
Mr K is 52 and is a (occupation omitted) at (employer omitted). The wife did not inform the court about his income. He has been supportive of her since separation by organising the debt consolidation loan but there was no evidence about whether and, if so, to what extent he is presently providing her with financial support.
Pursuant to final orders made on 7 August 2015, X, 13 and Y, 12, live with the wife and spend no time with the husband.
The husband is not paying child support. The wife said that she was too frightened to ask for it and based on my findings in the parenting proceedings, I accept this evidence and in any event the husband is not offering any financial support for the children.
The wife is entitled to $110,040.37 on the basis of contributions. If she retains her car, furniture and superannuation and assumes responsibility for the consolidation loan and the business Mastercard debt, she has negative $25,714.00 in assets. To receive her contribution based entitlement, she would need to receive all of the money in trust and $14,533.97 from the husband if he retained the remaining assets in the pool.
The wife owes her former lawyers $26,262.62 and will also owe them $2,576.55 being the balance of the bill for $7,255.05, after deduction of the amount I have allowed for costs pursuant to Order 12(f) of the orders made on 7 August 2015.
The husband is 51 and continues to operate the (business omitted) business. In his financial statement filed on 18 May 2016, he said that his income was $500.00 per week or $25,000.00 per annum. However he has never provided financial disclosure in the form of recent tax returns or financial statements and I have no means of verifying this information.
It is impossible for me to get any real understanding of the husband’s financial situation in terms of his income earning capacity or whether the business is doing well or is in trouble because of the husband’s refusal to co-operate and provide financial disclosure.
There was no evidence that the husband had re-partnered.
On 7 August 2015 I made orders that the husband have no contact with Y and X. In his trial affidavit filed on 8 May 2016, however, he said that:
One boy has already shown he wishes to remain with me and the other will most likely return to me shortly or at least at puberty particularly as he has seen the conduct of his mother.[2]
[2] Husband’s affidavit paragraph 11
There was no evidence to suggest that this was in fact likely to occur. The evidence available to me suggests that the wife is likely to be the sole carer and sole financial provider for the children in the future.
Pursuant to s. 75(2)(o), I must have regard to any other fact or circumstance which the justice of the case requires me to take into account.
It was the wife’s case that since separation the husband had behaved in a way which seriously disadvantaged her financially in that he had left her to pay three business debts in circumstances where there was no evidence that the business could not have paid them. A contribution based assessment such as I have carried out to date means that she is required to accept responsibility for 45% of these debts and it was her case that this was unjust and that the husband should be made to take responsibility for the entirety of the debts.
Another relevant matter is that the husband has failed to co-operate throughout the proceedings. He has never made full or frank disclosure and he failed to co-operate in any way which would assist the wife to form an accurate view of the value of the business. I am unable to form a view about whether the business has a value as a going concern or about whether had he chosen to do so the husband might have been able to pay the three business debts which the wife was left with, which would not only have removed a burden from the wife post-separation but might have meant that there was more in the pool now than is the case.
I am troubled by the husband’s behaviour and his failure to make full and frank disclosure but there are no overt signs in this case that he might be concealing considerable wealth. The parties’ lifestyle prior to separation and the tax returns the wife obtained from the ATO do not support a finding that the business is capable of generating sufficient income for this.
The parties managed to pay their debts and stay afloat prior to separation and given the husband’s failure to make financial disclosure, I am not prepared to find that he could not have paid the three business debts in the wife’s name after separation had he chosen to do so. However I consider that this is adequately dealt with by taking the wife’s contribution in respect of those debts into account as a post-separation matter when assessing contributions.
Conclusion about s.75(2) matters
In my view an adjustment is required in the wife’s favour for s.75 (2) matters because of her care of the children and the lack of financial contribution by the husband to their care and upbringing.
The wife has the capacity to earn income and is relatively young and the children are now 12 and 13 but she does not have a high income earning capacity and it is extremely unlikely that she will receive any financial or non-financial assistance from the husband in respect of the children in the future.
Another relevant matter is that the wife owes almost $30,000.00 in legal fees and any cash amount she receives by way of property settlement will be severely reduced as a result. She will have little enough to assist her to provide for the children between now and when they become adults.
Keeping proportionality in mind, in my view an appropriate adjustment in the wife’s favour would be 10%, which will give her an additional $20,407.34 and create a differential of $40,814.68 between the parties.
The wife is thus entitled to 65% of the pool or $130,047.71 made up of:
Description
Value
Money in trust
$120,108.40
Motor Vehicle
$8,000.00
Furniture
$1,000.00
Superannuation
$26,000.00
Payment from husband
$34,541.31
Less debt to Mr K
$59,602.00
Total
$130,047.71
The wife would in this scenario potentially have $95,047.71 cash but unless she obtained the payment from the husband, would have $60,506.40 from which she would have to pay almost $30,000.00 in legal fees.
The husband is entitled to 35% of the pool or $70,025.69 made up of:
Description
Value
Business assets
$72,500.00
Furniture
$2,500.00
Superannuation
$29,567.00
Less payment to wife
$34,541.31
Total
$70,025.69
Before finally determining the matter, however, I need to compare this outcome with the outcomes proposed by the parties.
The parties proposals
The husband proposed that what he termed the domestic assets (the money in trust and the wife’s car) be divided 60% to him and 40% to the wife and the reason he gave for this percentage was that the children might well end up in his care in the future.
He proposed that the commercial assets (i.e. the business) also be divided 60/40 and the reason he gave for this was that the wife ran off and did not fulfil her duties as a partner leaving him to service the majority of the debts post-separation.
The husband’s proposal was based on there being $124,786.90 in trust and the effect of the proposal would be that the husband would receive $74,880.00 of the money in trust and $4,800.00 being 60% of the value of the wife’s car or a total of $79,860.00 which would mean that the wife would receive $44,940.00 (these figures are rounded).
In the summary page attached to his affidavit, the husband did not set out how his proposal that there be a 60/40 split of the commercial assets would work but on paper given that the husband adopted Mr S’s figure of $72,500.00, this would entitle the wife to $29,000.00 worth of commercial assets.
The husband went on to propose that the debt the wife owed to Mr K ($59,602.00) and his debts ($212,000.00) be added together and that each party pay half of the total or $135,801.00 each. He also proposed that the wife pay him half of the rent on the (business omitted) since separation ($32,303.82) and half of the house repayments he made prior to the house being sold ($8,344.00).
In a best case scenario this would leave with the wife with $29,000.00 plus $44,940.00 ($73,940.00) and debts of $176,457.82. She would, of course, retain her motor vehicle and furniture.
The husband did not mention superannuation and presumably intended that each party should retain their own.
The husband’s proposal is clearly not a viable alternative outcome. It requires the wife to share in debts which I cannot be satisfied are owed, to share in the running costs of the business since separation, even though he has controlled it and she has derived no benefit from it and to share in the mortgage payments for the former matrimonial home since separation even though he has had sole occupancy of the home. It would result in the wife being lumbered with a debt to the husband which she would have no means of discharging and if the husband scooped up the wife’s proposed share of the money in trust to partially pay this debt, the wife would be left at the end of a 15 year marriage with her car, furniture and superannuation and a debt of almost $30,000.00 to Mr K in addition to a significant debt to the husband.
There is absolutely no merit in this proposal.
The wife proposed that from the amount of $124,786.90 in trust, she receive the following:
i)$7,255.05 being her legal costs in respect of the application that she be appointed trustee for sale of Property C.
ii)$990.00 being the cost of valuing Property C.
iii)$4,800.00 being the mortgage payments she made between July 2015 and January 2016.
iv)$1,502.03 being the rates payments she made prior up to the date of sale of Property C.
v)$59,602.00 being the amount required to discharge her liability to Mr K
vi)$10,237.26 being the repayments made by her referable to the business debts in her name.
This totals $84,386.34 and would leave $40,400.56 in trust.
She next proposed that there be a notional add back of the amount of $4,718.73 paid for council rates at the time of settlement of the sale of Property C, which would increase the total amount to $45,119.29 and she proposed that this be divided 65% to her and 35% to the husband.
It is unclear from the orders the wife sought, how she proposed the notional amount be dealt with in this scenario but it would appear from paragraph 45(d) of her affidavit, that she is proposing that the husband be held liable for the amount of $4,718.73. If the husband is entitled to 35% of the balance of the funds but is required to accept the notional asset as part of his share, he would receive $11,073.02 of the money in trust and the wife the remaining $29,327.54.
The wife proposed that each party otherwise keep the assets in their possession.
To set this out in a table the wife would thus receive:
Description
Value
From the money in trust
$113,713.88
Motor Vehicle
$8,000.00
Furniture
$1,000.00
Superannuation
$26,000.00
Less debt to Mr K
$59,602.00
Total
$89,111.88
If her car, furniture and superannuation are deducted, she will have cash of $54,111.88 and in this scenario, she will owe $26,000.00 in legal fees.
The husband would receive:
Description
Value
From the money in trust
$11,073.02
Furniture
$2,500.00
Superannuation
$29,567.00
Business assets
72,500.00
Total
$115,640.02
This represents an overall division of assets between the parties 56.5% to the husband and 43.5% to of the wife.
Conclusion
The outcome I have arrived at by considering the property settlement matter in the usual way results in an outcome which is just and equitable in dollar terms, but there is no cash in the pool which would enable the husband to pay the wife the cash amount which would be required. The only obvious means by which he could pay her would be to sell business assets. This may not result in him losing his livelihood as he could earn an income working as a (occupation omitted) but it may result in the loss of the business and I can understand why the wife may not have the stomach for trying to enforce an order for the husband to pay her money in these circumstances.
The proposal the wife put forward results in the husband receiving a very small amount of the money in trust and a percentage division which favours him in circumstances where this is not indicated as appropriate given my findings in the case.
However the pool is small and the wife clearly, carefully, considered her proposal with the assistance of her lawyer prior to the hearing.
The wife’s proposal results in the husband receiving more than the wife in percentage terms but she will receive a similar amount of cash in immediate terms. Her proposal is within a range of just and equitable outcomes and in the circumstances of this case, if this is the outcome the wife prefers, then I will make orders in those terms.
Because of the findings I have made about the operation of Order 12(f) of the orders made on 7 August 2015, I shall word the order about the disbursement of the money in trust slightly different to the way the wife proposed but the outcome for the wife will be the same.
I am uncertain about whether the money in trust has been invested but in case it has, I intend to order that any amount above the figure of $124,786.90 be paid as to 65% to the wife and 35% to the husband which is consistent with my findings about contributions and s. 75(2) matters.
I have some concern about the wife’s situation if she is indeed still a partner in the business but she proposed an order that the partnership be dissolved as at the date of the orders, if she was indeed a partner, and expressed confidence in her affidavit that this would not affect her adversely and on the state of the evidence there is nothing more I can do about this issue.
For all of the above reasons the orders of the court will be as set out at the beginning of the judgment.
I certify that the preceding one hundred and fifty four (154) paragraphs are a true copy of the reasons for judgment of Judge Terry
Date: 2 November 2016
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