CLARK & CLARK

[2013] FCCA 1428

FEDERAL CIRCUIT COURT OF AUSTRALIA

CLARK & CLARK [2013] FCCA 1428

Catchwords:
FAMILY LAW – Property dispute – small pool – by agreement matter proceeding by way of oral submissions only.

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

Applicant: MS CLARK

Respondent: MR CLARK

File Number: MLC 3077 of 2012

Judgment of: Judge Burchardt

Hearing date: 11 September 2013

Date of Last Submission: 11 September 2013

Delivered at: Melbourne

Delivered on: 23 September 2013

REPRESENTATION

Counsel for the Applicant: Ms McCreadie

Solicitors for the Applicant: Lander & Rogers

The Respondent: In Person

ORDERS

1. The $5,054 tuition fees owing to [omitted] College be paid out of the funds held on trust by Lander & Rogers (“the funds”). 

2. The balance of the fund be paid to the wife. 

3. The husband retains his shares (as described in the judgment and including the shares owned by [omitted] Family Trust). 

4. For the purposes of these orders:

   (a)the husband is the member spouse;

   (b)the wife is the non-member spouse;

   (c)the superannuation fund is the [T] Super Fund (“the Fund”).

5. Paragraphs 1-8 of these orders are binding on the trustee of the Fund.

6. The wife is to be allocated out of the interest of the husband/wife in the Fund the base amount of $145,164.50. 

7. Whenever the trustee of the Fund makes a splittable payment from the interest held by the husband/wife in the Fund, the trustee is to pay to the wife/husband the amount which is calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and there is to be a corresponding reduction in the entitlement that the husband/wife would have had but for these orders.

8. Order 6 is to have effect from the operative time.

9. The operative time for the purposes of these orders is 20 business days after the day of service of these orders upon the trustees of the Fund.

10. Until the happening of any of:

    (a)the establishing of a separate account in the name of the wife/husband; or

    (b)the transfer or rolling over into another superannuation fund of the payment split created by order 6;

    the husband/wife be and is restrained by himself, his servants or agents from executing a Death Benefit Nomination in favour of any person or doing any other act or thing which would render any part of his interest in the Fund a non-splittable payment within the meaning of Regulations 12 of 13 of the Family Law (Superannuation) Regulations 2001.

11. Each party and the trustee of the Fund have liberty to apply in relation to the implementation of orders 1-8 inclusive. 

12. The husband receive the television unit, sound system, wine refrigerator/storage unit and barbeque referred to in paragraph 3(e)(f)(h) and (i) of the wife’s Case Outline. 

13. The wife receive all the other items set out in paragraph 3 of her Case Outline. 

14. Unless otherwise specified in these orders, each party be solely entitled to the exclusion of the other to all property (including choses in action) in the possession of such party as at this time.

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

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLC 3077 of 2012

MS CLARK

Applicant

And

MR CLARK

Respondent

REASONS FOR JUDGMENT

Introductory

1. Most of the facts in this matter are agreed and the circumstances of the parties are on any view very sad ones.  It is a property dispute concerning a very small pool.  The applicant wife seeks, in essence, that the entirety of the proceeds of the sale of the former matrimonial home be granted to her and that each party retain their own debts.  The husband seeks an equal division of all assets and liabilities.  Both parties agree that their superannuation should be equalised.  For the reasons that follow, I propose to make orders in the main as sought by the wife. 

2. Although the parties are now divorced it is convenient in the circumstances to continue to refer to them as husband and wife.  It should be noted that given that there were only two witnesses and that each party expressly disavowed any desire to cross-examine, the matter proceeded by consent by way of submissions only. 

3. This was so even though there are some matters that might be said not to be agreed.  I accepted that this was an appropriate way in which to proceed bearing in mind the very small nature of the actual divisible assets and the likely cost to the parties of examining in far greater detail any minor factual disputes between them. 

Matters not in dispute

1. The wife was born [in] 1964 and the husband [in] 1961.  When they met they were both [occupation omitted]. They commenced a relationship in 1987 and married in 1989.  In 1990 the husband ceased [occupation omitted] and thereafter worked in a number of different professional capacities both for organisations such as [omitted] and for his own business. 

2. The parties have two sons [X] born [in] 1993 and [Y] born [in] 1996.  Both these children presently live with the wife and have done so since separation in May 2011.  [X] appears to be wholly estranged from his father and [Y] also to an extent.  Following separation the husband stayed in the matrimonial home for some 18 months until it was sold.  The wife has supported herself in premises initially rented from her parents but more recently it would appear on the open market. 

3. The husband has not paid any Child Support although it is his case that he has effectively not been asked to do so.  The wife worked full time until the birth of [X] and worked thereafter as best she was able although very understandably she ceased work in 1996 when [Y] was born.  More recently she has returned to the workforce and continues subject to various health difficulties to work as a [omitted]. 

4. The parties bought their first home in [omitted] in 1991 and sold it in 1999.  It is agreed that they both contributed equally to that purchase.  In 2000 they bought the former matrimonial home in [omitted] which was sold in November 2012.  Following discharge of the mortgage and the like there was approximately $171,402 in equity remaining of which it is common cause that $113,089 was disbursed as set out in the affidavit of the wife filed 15 August 2013 at paragraph 43.  In essence, a number of outstanding debts and legal costs were repaid.  The balance remaining is $58,312.80 and remains for distribution. 

5. Very regrettably both parties are in poor health to a greater or lesser extent.  The wife suffers from serious asthma and has Parkinson’s disease with early onset given her age.  Furthermore she has been diagnosed with Bowel cancer in April 2012 and suffered significant surgery removing one third of her bowel.  The wife’s future health in this regard remains necessarily uncertain. 

6. The husband is an alcoholic (he described himself as a recovering alcoholic in Court) and suffers from Bipolar disorder and Manic depression.  Although there is no evidence to this effect before me these concessions against interest were made by Mr Clark with evident sincerity and in my view are more probably than otherwise true not least because the wife makes similar assertions in any event. 

The first step - should there be a property distribution

1. This is one of the very many cases in which it is clear that there ought to be a property distribution. The circumstances of the parties given their separation following so many years of marriage are plainly such that there ought to be a distribution and the question posited by s.79(2) of the Family Law Act 1975 (“the Act”) is easily answered.  Neither party has suggested for an instant to the contrary. 

The pool

1. In terms of ready assets there is the $58,312.80 remaining funds of the sale of the former matrimonial home together with the parties’ superannuation pool.  Both parties agreed that it was appropriate that there be an equalisation of their superannuation.  The husband’s superannuation amounts to over $331,000 of the total of $373,633 that the parties have jointly between them.  The wife submitted that it was appropriate that there be an equal division because it was clear that all of their superannuation had been garnished during the marriage. 

2. The husband agreed that there should be an equalisation of superannuation and conceded frankly that there should be an equal division bearing in mind the contributions both parties had made to the marriage.  Notwithstanding that the husband was self-represented, I think that in the circumstances of this case and the very long marriage that concession should be accepted. 

3. It is common cause that the husband has some shares in [C] Limited worth $431.46 and [T] shares worth $18,262.60 together with [T] shares worth $10,637.52 held in a Family Trust controlled by the husband.  While it is common cause that the wife has a [omitted] motor vehicle there is nothing to suggest that it has any net value and likewise in respect of the husband’s Volvo.  I omit both those vehicles from the pool accordingly.  It should be noted that references to other motor vehicles in the materials the parties have filed have now been well and truly overtaken by events. 

4. An issue in the trial is the value of the husband’s business [R] Pty Ltd.  I will return to the parties’ submissions later but it is clear that this business is effectively valueless, or unfortunately, it has a number of liabilities which are likely to see it wound up in the relatively near future. 

5. The only significant area of difference between the parties related to a debt to [omitted] College (in respect of [Y]’s tuition fees) in the sum of $5,054 which the wife proposes to be paid out of the $58,312.80 remaining equity in the former matrimonial home. 

6. The wife also asserts loans to her family in the sum of $27,078 to her father and a further $3,000 to her sister together with outstanding debts to her lawyers.  The husband puts in issue the [S] shares which he says were transferred to the wife at the time he started his business [R] Pty Ltd.  The husband says that these should be brought back into play, so to speak, in the final reckoning between them. 

7. The wife has deposed at paragraph 39 of her affidavit filed 13 August 2013 as to how she spent the value of the various shares that she has sold (which include the [S] shares referred to).  She was not required for cross-examination.  The explanation provided in her affidavit is inherently probable and I accept it.  It therefore follows that that the [S] share should not be put back into the pool. 

8. The only matter otherwise to consider is the question of chattels which I will deal with separately.  It should be noted that as is so often the case there is no valuation of any of the chattels, and I allot them for these purposes no value even though obviously they would cost money to replace.  The liabilities of the parties are in respect of the wife as I have set them out above.  The husband also says that he has personal and business liabilities estimated at approximately $675,676.  In response to a question from the Court the husband confirmed that these are undisputed liabilities. 

9. From materials annexed to the husband’s trial affidavit filed 27 August 2013, it is clear he has considerable liabilities in this regard although it would appear that only some approximately $48,252 appears to be asserted against Mr Clark personally by a company called [B] Pty Ltd, so far as the various Court proceedings issued are concerned.  I note, however, that in other materials annexed to Mr Clark’s trial affidavit, very substantial sums are said to be owing, including $169,133 to the Australian Taxation Office (“ATO”). 

10. It remains Mr Clark’s view that these debts should be apportioned between him and his wife, although I note that it is clear from what he told me that he structured his affairs in such a fashion as to ensure that the assets of the marriage (his shares and home) were alienated to enable to him to trade in his company at less risk of insolvency. 

Contribution issues

1. Counsel for the wife submitted that in a lengthy relationship such as this, of some 22 years of marriage where the husband had earned the money and the wife had looked after the home and children, the contributions should be taken as equal.  Mr Clark, who appeared for himself, did not take issue with this proposition and it is sufficient to say in these circumstances that I agree.  Where the parties differed, however, was in relation to the post separation contributions.  It is clear that the husband did not pay anything towards the mortgage of the matrimonial home for the 18 months or so he lived in it following separation.  The wife had to pay her own accommodation in substantial amounts.  The wife had to pay, in the ultimate, an electricity bill run up by the husband from the proceeds of sale.  The wife complains of delays in the sale caused by the husband (although the evidence is not wholly clear in this regard).  It is clear, in any event, that the wife made mortgage repayments as set out in paragraph 12 of her Case Outline document, which totalled post separation no less than some $53,875.  That $53,875, in my view, involves an element of double counting, because it includes substantial amounts of rent which would have had to have been paid whether the family was living in the home or not, but nonetheless, it is clear in any view that the wife made a significant (in the scheme of the total value of the pool) contribution post settlement.  Even taking out the rental figures asserted, she paid between $26,000 and $30,000 to mortgage, bills and the like. 

2. Counsel submitted that there should be a 7 per cent adjustment in the wife’s favour accordingly.  In circumstances where the total pool in terms of cash is $58,312.80, the wife’s contribution merits recognition.  In my view, there should be a 5 per cent adjustment in the wife’s favour in this regard. 

Section 75(2) factors – future needs

1. Here it is clear that the wife’s health is parlous.  She knows she has Parkinson’s disease, which as I have already said has had an early onset.  She also has debilitating asthma.  Additionally, she is by no means certain as to her future in relation to her cancer.  Counsel has submitted that the treatments she requires for these various conditions are often not subsidised by the PBS scheme, and I accept that that is so.  Medical evidence exhibited to her trial affidavit shows that her position is, most unfortunately, very unsatisfactory.  The extent to which this will impact upon her capacity to earn is not by any means clear, but even if she is able to earn, she will earn little more than average weekly earnings, $1,700 per week. 

2. The husband’s health situation is likewise by no means clear.  He said, and I am prepared to accept that the managing of his mental health problems requires a complex system of management, and it is not easy for drugs to be prescribed for him.  Although he is presently in employment at over $100,000 per annum, he is on probation and his mental health difficulties appear to make his further employment by no means entirely secure.  He was unemployed for some period of time before taking up his present position in March 2013.

3. Nonetheless, the fact is that he is presently in employment, and even if that employment should cease, any further employment he attains is likely, on past history, to generate a six figure income.

4. The wife has full responsibility for the care of the two children of the relationship.  [Y] is only completing VCE this year and [X] is in tertiary education.  The husband concedes that he has paid no Child Support, as I have already indicated, and although he contributes from time-to-time as best he says he is able to [Y]’s needs, his contributions are small. 

5. I accept the submission of counsel for the wife that although [X] is an adult he still costs money to maintain.  If nothing else he has to be fed. 

6. In all the circumstances, bearing in mind the wife’s greater ill health and lesser earning capacity and family responsibilities, a loading to her of some 8 per cent is, in my view, is appropriate. 

7. Although this is not in order, it is appropriate at this time to refer to the matters that the husband had to say in his submissions. 

8. The husband’s position was that he had done the best he could following separation to assist in the parties’ finances.  He has already put in issue in the proceeding the extent of his earnings and he was, like the wife, not required for cross-examination.  Mr Clark’s submissions were made with evident sincerity and equally under evident personal strain.  He appeared at times close to breaking down.  Everything he said was said with a measure of sincerity.  It suggests that at the very least he believes it to be true and in most instances I accept that his perception is correct. 

9. Mr Clark referred to his bipolar and manic depression, which were only diagnosed some 10 years ago.  He has been sent by his current employer to the Employer’s Assistance Program, which is an unsatisfactory situation.  Essentially, Mr Clark said that both parties had made a very valuable contribution to the marriage but that at this stage his affairs were so poor he could not afford even to wind up his business, which has simply been left as it were, fallow.  He said that through a combination of errors of judgment and downturn in business his business has gone from some 78 employees to some 6 or 7.  His credit history is tarnished and he has no credit cards.  He seeks a 50/50 division both of assets of the relationship and of the liabilities. 

Chattels

1. The wife has sought the return of chattels set out in paragraph 3(d) of her Case Outline document.  The husband is presently living in a rented room but will eventually seek a better accommodation.  He cannot obtain credit.  He sought the items set out at subparagraphs 3(d), (e), (f), (h) and (i).  Items (d) and (e) refer to a television unit, which the wife wants and a sound system which is inter-related with it, which the wife likewise also wants.  The wife is content for the husband to have the wine refrigerator/storage unit (subparagraph (h) and the barbecue, subparagraph (i).

2. The husband also seeks a Spode crockery set, but the wife counters that he is in possession of a Dalton crockery set. 

3. There was some argument about what were described as travel collectables, but doing the best I can in an imperfect evidentiary situation, it seems clear to me that these either have already been divided or are of no moment. 

4. In the unsatisfactory situation the parties are in, they both clearly have need for chattels.  As I have already said these chattels are probably worth nothing in terms of sale price but will cost money to replace. 

5. No one could pretend that this is a satisfactory situation in terms of the Court doing justice and equity, but in my view the husband should retain the television and the sound system, additionally to the barbecue and wine refrigerator/storage unit.  No order will be made about travel collectables or crockery.  The wife can keep the Spode crockery she has and the husband the Dalton set if there is one. 

6. The other items set out in paragraph 3 of the wife’s Case Outline document should be handed over to her. 

7. The husband has confirmed that these items are all spread over various storage units and I will direct them to confer before making final orders as to their production. 

8. It should be noted that the wife is living in rented property but clearly a property of greater size and moment than that occupied by the husband.  I infer that she must have a number of chattels already, and it is for this reason together with the husband’s lack of liquidity that I have ordered he receive the relatively small number of chattels he should receive. 

Disposition

1. It is clear, in my view, that the wife ought not be required to take 50 per cent of the husband’s debts.  These are debts that he engendered through the running of his business, a matter in which the wife had no practical part.  The vast majority of these debts appear to fall to the business alone and it would seem highly probable that that will be wound up and the debts thus extinguished. 

1. The state of the evidence regarding those liabilities which obtain to the husband only is incomplete on any view.  He purports to acknowledge his indebtedness.  He has asserted in his affidavit he is likely to go bankrupt and given that the debts he asserts are in his own name only it seems far more appropriate than otherwise that these debts are down to him alone.  Whether the husband will be able with his relatively substantial salary to compromise those debts remains to be seen.  I note he does not have access to credit.  It would seem more probable than otherwise that his debts will simply be resolved through the bankruptcy process, which will, of course, in any event leave him with a substantial earning before the trustee starts to intrude. 

Just and equitable

1. The pool consisting as it does of some $87,644 (the funds from the matrimonial home and the husband’s shares) an outcome that gives the husband his 37 per cent would give him $32,428, about $3,000 more than the value of his shares. 

2. In circumstances where the wife has to provide for the two children in the most uncertain circumstances as to health and the inter-related issue, her capacity to earn, and where the husband has six figure remunerative employment, it is in my view just and equitable that the wife retain the entirety of the proceeds of the matrimonial home. 

3. I have prepared draft orders to give effect to these conclusions but will give the parties an opportunity to consider them before making final orders.

I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Associate: 

Date:  23 September 2013