Clovelly & Clovelly (No 2)
[2010] FamCA 263
•1 April 2010
FAMILY COURT OF AUSTRALIA
| CLOVELLY & CLOVELLY (NO. 2) | [2010] FamCA 263 |
| FAMILY LAW – PROPERTY – Just and equitable |
| Family Law Act 1975 (Cth) ss 75(2), 79(1), 79(4) |
| C & C [2005] FamCA 429 Clovelly & Clovelly [2010] FamCA 43 Hickey & Hickey & Attorney-General for the Commonwealth (2003) FLC 92-144 Kowaliw & Kowaliw (1981) FLC 91-092 M & M [2006] FamCA 913 Marsden & Winch [2009] FamCAFC 152 NHC & RCH [2004] FamCA 633 Pierce & Pierce (1999) FLC 92-844 Pittman & Pittman [2010] FamCAFC 30 Rosati & Rosati [1998] FamCA 38 Townsend and Townsend (1995) FLC 92-569 West & Green (1993) FLC 92-395 |
| APPLICANT: | Ms Clovelly |
| RESPONDENT: | Mr Clovelly |
| FILE NUMBER: | CAF 655 of 2005 |
| DATE DELIVERED: | 1 April 2010 |
| PLACE DELIVERED: | Canberra |
| JUDGMENT OF: | Faulks DCJ |
| HEARING DATE: | 13 – 15 June 2007 29 March 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Tonkin |
| SOLICITOR FOR THE APPLICANT: | Legal Aid Commission, ACT |
| FOR THE RESPONDENT: | Self-represented litigant |
Orders
IT IS ORDERED THAT:
By way of property settlement the respondent husband Mr Clovelly will pay to the applicant wife Ms Clovelly the sum of $221,898 on or before 4 June 2010 or such other time as the parties may agree (settlement date).
If the husband fails to pay the sum stipulated in Order 1 by the settlement date or at such earlier time as the parties agree, the parties and each of them (but in particular the husband) will:
(a)List the property for sale with a real estate agent agreed upon by the parties, or in default of their being able to agree within 48 hours of the settlement date, with an agent nominated by the President for the time being of the Real Estate Institute of the Australian Capital Territory.
(b)Accept the listing agent’s advice about a listing price but will not, (except by agreement) list the property for sale at less than $495,000.
(c)Accept advice from the listing agent about whether it would be preferable to sell the property by private treaty or by public auction or agree between themselves as to which of those methods would be more appropriate to bring about the sale of the property.
(d)If after the listing of the property, an offer is received to purchase the property for less than the listing price, then the parties will consult with each other about whether they should accept the offer and if possible will agree. If they cannot agree then they will accept the determination of a valuer from T Firm or alternatively someone from another firm nominated by them as to whether the offer received is, in the market circumstances then prevailing, a reasonable market price for the property.
(e)Cooperate with the agent about inspections of the property and keep the property in good order and condition for inspection.
(f)Arrange for vacant possession of the property in accordance with the advice of the agent as to when that would be most beneficial for the sale.
Upon settlement the parties will cause the proceeds of sale to be paid as follows:
(a)To pay all the proper costs relating to the sale including the agent’s commission, lawyers or conveyances fees and any advertising not covered by the agent’s commission but agreed between the parties as properly to be incurred in relation to the sale.
(b) In discharge of the mortgage over the property.
(c)To divide the proceeds thereafter including the balance of the deposit as to 65 per cent to the wife less the adjusting amounts as referred to in my judgment and the balance to the husband.
(d)Until the date of settlement the husband will continue to pay the mortgage in respect of the property.
(e) All trusts in relation to the property are hereby dissolved.
(f)The husband be and is hereby restrained from in any way further encumbering the property or reducing its value pending the sale.
In default of either party carrying out any of the steps that are required in relation to the last mentioned Orders a Registrar of the Family Court is hereby authorised to sign any document which either of the parties fails to execute when it is necessary for him or her to sign such document in connexion with the sale. The Registrar may execute such document on certification from the other party that that party has failed to execute the document for a period of 48 hours after he or she has been requested to do so.
The Registrar may execute any document in the name of the person to whom the direction was given and do all acts and things necessary to give validity and operation to the document.
In accordance with s 90MT(1)(b) of the Family Law Act 1975 (Cth), whenever a splittable payment within the meaning of s 90ME of the Family Law Act 1975 (Cth) becomes payable to or on behalf of the husband from his interest in the Public Sector Superannuation Scheme and the AXA Australian Superannuation Scheme the wife is entitled to be paid (by the Trustees of the respective schemes) the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth), using a 50 percentage split and there is a corresponding reduction in the entitlement of the husband would have had but for these Orders.
The operative time for Order 6 is twenty eight (28) business days after the service of the Final Orders on the Trustees of the Public Sector Superannuation Scheme and the AXA Australian Superannuation Scheme.
Liberty is reserved to the said Trustees to apply to this Court about the Orders made or the form thereof within the period of twenty eight (28) days after service of a copy of these Orders on the Trustees.
The parties note that this Order, and payments made as a result, will be affected by the Superannuation Amendment (Family Law) Act 2004 (Cth) which came into effect on 18 May 2004 and the Family Law (Superannuation) Regulations 2001 (Cth) which together provide for a separate superannuation interest to be created for the non-member spouse and for consequential effects on payments.
The husband’s interest in the M Super Scheme is unaffected by these Orders and will remain unsplit.
Any flagging orders in relation to the abovementioned superannuation schemes are discharged.
Otherwise each of the parties is declared as against the other to be the owner at law or in equity of all of the chattels or possessions in his or her care and control.
There be liberty on the part of either party to apply about the terms of the sale (but not otherwise about the Orders).
All material produced subpoena, in relation to all matters apart from things in relation to the child and proceedings about her, which did not become the subject of exhibits will be returned by the Court to the persons producing it as soon as practicable.
Any material produced subpoena which became an exhibit, in relation to all matters apart from things in relation to the child and proceedings about her, will be returned by the Court at the expiration of the appeal period to the person producing it. Any material produced by a party which became the subject of an exhibit will be returned by the Court to the party at the expiration of the appeal period.
All extant applications are removed other than the application for final orders about the child.
IT IS NOTED that publication of this judgment under the pseudonym Clovelly & Clovelly is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT CANBERRA |
FILE NUMBER: CAF 655 of 2005
| MS CLOVELLY |
Applicant
And
| MR CLOVELLY |
Respondent
REASONS FOR JUDGMENT
Introduction
This was a case concerning both property proceedings pursuant to s 79(1) of the Family Law Act 1975 (Cth) and a parenting dispute between the parties, Ms Clovelly, the applicant wife and mother, and Mr Clovelly, the respondent husband and father, and involving the child of the parties, C, born in April 1999.[1]
[1] Throughout this judgment from time to time reference will be made to the parties as the “husband” and the “wife.” This nomenclature is used for convenience only and I do not intend any offence to either party by doing so.
The wife is currently 41 years of age and works as an office assistant. She was born in Malaysia. She was a citizen of Malaysia and is now an Australian citizen. She was raised in the Catholic faith. The wife presently resides in the Australian Capital Territory (ACT).
The husband is currently 49 years of age and is employed by an airline. Each party claims not to be in a new permanent relationship. The husband presently resides in New Zealand.
The marriage was one of relatively short duration. The parties met and commenced cohabitation in Malaysia in February 1996 (on the wife’s evidence) and married in February 1998, at which time the husband asserted that cohabitation commenced. There is some dispute about when the parties finally separated. The wife asserted that the parties separated under one roof in April 2004 and that she left the former matrimonial home in September 2004 with the child. The husband agreed with this time period but asserted that the wife informed him that the marriage was over in early 2002.[2]
[2] Affidavit of the husband, filed 23 October 2006, [26].
As I advised the parties during the hearing in June 2007, some of the e‑mails between the husband and the wife annexed to the wife’s primary affidavit of 6 October 2006 contained offers of settlement.[3] My Associate removed Annexures ‘Y’ and ‘N1’ and replaced them with copies which removed reference to settlement offers contained in those Annexures. Consequently, I have not seen such offers and they have had no bearing on my decision.
[3] Transcript of proceedings, 13 June 2007, 53.
The matter came on for hearing on 13 to 15 June 2007 and the hearing resumed after significant delay on 29 March 2010 and the child issues were then further adjourned for the production of a family report. On 15 June 2007, the last day of hearing, the following orders were made:
IT IS ORDERED BY CONSENT:
1. [C], born on […] April 1999, will live principally with her mother.
2. [C] will spend time with her father on each alternate weekend from after dance classes on Friday until her father returns her to school on the following Monday or if the Monday is a public holiday on the Tuesday (if the weekend is a long weekend commencing with a Friday holiday then the period will be extended by the appropriate day at the beginning of the period of the time that [C] spends with her father).
3. The first of such weekends will commence on Friday 29 June 2007 and will occur fortnightly thereafter.
4. By consent further [C] will spend two weeks in her longer school holidays with her father such time to be the first two weeks of the school holidays in years ending in an odd number and two weeks after Christmas to be the second weeks in January unless the parties otherwise agree. In the following year and every second year thereafter [C] will spend two weeks with her father beginning on 28 December and concluding two weeks thereafter.
5. [C] will spend two days of each of the shorter school holidays in each year at the end of each term such two days to be the first two days of the school holidays unless the parties otherwise agree.
6. Nothing in these orders will preclude the parties from agreeing to other times for [C] to spend time with either parent if the parents agree.
7. The father henceforth will hold the property known as [O property], in the Australian Capital Territory in trust for himself and for the mother [Ms Clovelly] in the proportions as to two-thirds for [Ms Clovelly] and one-third for [Mr Clovelly].
8. The mother may lodge a caveat in the titles office at Canberra to record her equitable interest in the said property.
9. The father be and is hereby restrained from further encumbering the property in any way pending the final determination of this matter.
10. The mother may cause a copy of this order to be delivered to each of the existing mortgagees or chargers in relation to this property.
11. The matter is otherwise adjourned for delivery of final judgment as soon as possible.
These orders left for determination the issue about how parental responsibility for the child should be divided between the parents, how much, if any, telephone contact should occur, and what time the child should spend with each of her parents on special days, such as Mothers’ and Fathers’ Day, her birthday and the parents’ birthdays, and the division of the property of the parties.
Orders Sought by the parties
At the resumed hearing the orders sought by each party appear as Endnotes 1 Endnote 1 and 2.Endnote 2 The more recent procedural listings since my judgment was reserved on 15 June 2007 are listed at Endnote 3.Endnote3
Property
The law in relation to alteration of property interests is relatively well settled, and the following (so-called) four stepped approach is to be followed:
a)Identify and value the property, assets, financial resources and liabilities of the parties as at the date of the hearing;
b)Identify relevant contributions and assess them within the meaning of s 79(4)(a) to s 79(4)(c) of the Family Law Act 1975 (Cth) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties;
c)Consider relevant matters referred to in s 79(4)(d) to s 79(4)(g) of the Family Law Act 1975 (Cth); and
d)Ensure my order adjusting the property, assets and liabilities of the parties is just and equitable.[4]
[4] Hickey & Hickey & Attorney-General for the Commonwealth (2003) FLC 92-144, 78,386 (Nicholson CJ, Ellis & O’Ryan JJ) (‘Hickey’).
The property pool
The parties did not have a great deal of property to divide. The most significant piece of property owned by the parties was their home at O. The parties also owned cars, household contents, the husband had superannuation and there were a series of “add backs” I was asked to make.
O Property
The parties’ most significant asset was the former matrimonial home. Mr L, the Single Expert Witness, produced a report of 10 November 2006 providing a valuation as at that date of $375,000. An updating report of valuation was provided on 1 June 2007 which provided a valuation of $410,000. The husband did not accept this valuation and sought to challenge the valuation, asserting a value of $360,000. However, at that time both parties agreed at that point to sell the property.[5]
[5] Transcript of proceedings, 15 June 2007, 226.
At the resumed hearing on 29 March 2010, the wife produced a new valuation which valued the property at $495,000. The wife sought nevertheless that the property be sold and the proceeds divided as to 75 per cent to her and 25 per cent to the husband. Although the husband’s previous position had been that the property should be sold, in his revised Minutes of Orders filed in Court on 29 March 2010 he sought that the wife be paid $50,000 by way of property settlement and (implicitly) that he retain the property. When I questioned him about this proposition, he subsequently agreed that it may be possible that the property had to be sold in orders to finalise his proposed settlement figure to the wife and that if it were, it should be divided proportionately rather than by giving a fixed sum to the wife. The husband, however, sought to retain the property if he could. To that end, in his final comments to me before I adjourned the proceedings asked for 62 days in which to pay any monetary sum that might be ordered to be paid to the wife.
In such circumstances, given the directions that were made and the production of what amounts to an unchallenged valuation of $495,000 for the purposes of these proceedings, I will consider at least indicatively the figure that would be paid to the wife. For reasons, however, which I will deal with in due course it seems to me that it is probable that the property will have to be sold and that accordingly to some extent the valuation may be irrelevant except to provide a context within which the general determinations about the division of property might be conducted.
The sale of the property would take account of some of the other matters raised by the husband but not necessarily any Capital Gains Tax (CGT). The CGT liability would arise because the husband unilaterally rented the property for some period and that it did not, or perhaps more accurately does not, at this point constitute, his home residence. The husband now gives his permanent residence as being in New Zealand, although he has indicated he proposes to return to Australia in the comparatively near future.
This property has a mortgage of $185,785, of which $80,000 is the result of the husband unilaterally drawing down on the mortgage. This occurred in circumstances where he gave on the same day as he, in effect, drew down on the mortgage an undertaking not to further encumber the property or incur any further debts. While the juxtaposition of the two actions would lead to a conclusion the husband was being less than forthright in his disclosures, I could not be satisfied on the evidence that he had knowingly given a false undertaking, or perhaps more accurately, entered into an undertaking when he knew that what he was about to undertake would be breached immediately. In other words, I cannot be satisfied as to which event came first. In the end, the additional drawing‑down was disclosed; the application of the funds has been identified, at least after a fashion. In view of the fact that each of the parties has expended money on legal fees, and, in particular, the husband has expended money on legal fees which have increased various liabilities that are outstanding, whether or not the husband was being forthright on this occasion is not really of great significance.
The husband asserted that after separation he paid for an upgrade of security on the property in the sum of $3,500 and for the installation of two skylights ($900) and the removal of flaking wallpaper. These values were accepted by the wife as financial contributions made by the husband to the property and do not constitute property in themselves. It is reasonable that such contributions should be taken into account in some way if the increased value of the property is to be taken into account or if the wife is to receive the benefit for the increased value of the property. It seems that these relatively minor additions would not in any way explain the increase in value over the original figure which, without my making any specific finding about it, is almost certainly due to the movements in the property market in Canberra in the intervening period. The “wind fall” derived from that ought properly to be shared between the parties in whatever proportions are appropriate.
Cars
The husband had in his possession a 1990 Ford Courier with a value of $750 which by 29 March 2010 had been sold. Despite this, however, he alleged that $12,500 of the money used to draw down on the mortgage in October 2005 was used to pay for his car.[6] In support of this assertion, the husband provided an affidavit of his mother, who asserted that in 1991 she paid $11,550.21 to the Colonial State Bank to pay the outstanding amount owing on the vehicle. The loan was repaid from the drawdown. The car is gone. The husband has the proceeds whatever they were.
[6] Affidavit of the husband, filed 23 October 2006, [175].
When the parties were in Malaysia, the husband purchased a 1996 Proton Iswara motor vehicle, and it remains in Malaysia at the wife’s parent’s house. The husband asserted that the Proton had a valuation of $4,500. The wife provided the Court with an affidavit of Mr K, the Managing Director of V Automobiles Sdn Bhd who stated that he had personally quoted the car’s value as being MYR 6,000. With an average exchange rate of 1 MYR being worth $AU0.34400,[7] this would give a valuation of $2,064. The wife also provided a valuation from KK Enterprise of MYR 5,300. With an average exchange rate of 1 MYR being worth $AU0.34400,[8] this would give a valuation of $1,823.
[7] As an average over the three days of the original hearing in June 2007.
[8] As an average over the three days of the original hearing in June 2007.
The evidence of the wife’s mother is that she had expended over $2,000 for registration and road tax on the car, but that if the husband wanted to reimburse her for these amounts or for whatever she had expended he could have the car. I am unsatisfied that the car has any value or that I should make any orders about it. It appears to be in the name of the husband and it appears that there might be some dispute about what might be described as an equitable lien over the car in respect of the money that the wife’s mother has paid. That is matter between the husband and the wife’s mother. I ascribe no value to the car and I do not take it into account otherwise.
It appears that the wife’s car broke down and was not repairable. As a consequence, the wife spent approximately $28,000 on a new car on the basis that she had no money to pay for repairs on a continuing basis. The wife considered it was preferable to have a new car with a warranty. This liability is being discharged over a period and has no value that needs to be taken into account in this judgment.
Household Chattels
Mr M was appointed as a Single Expert Witness to value the parties’ chattels, and provided a report of 28 October 2006. His evidence was that the chattels in possession of the wife were valued at $3,575 and those in the possession of the husband were valued at $5,925. The husband did not agree with these valuations and asserted that all the chattels were worth $4,500. There was no evidence to support the husband’s assertion and Mr M was not called to give evidence. In these circumstances, I accept the valuations provided by the Single Expert Witness.
The law with respect to “add-backs”
It is reasonably clear proposition that the value of the contributions to the property of the parties, as well as the value of property itself, is ordinarily taken as at the time of the hearing.[9] There is also now a substantial line of authority that property that has been pre-emptively taken by a party to the diminution of the total property might properly be the subject of an add‑back on the basis that this is property already received by a party or which constitutes, in effect, a premature or pre-emptive distribution in favour of that party (to the detriment of the other party). A number of exceptions have been made to this proposition. In NHC & RCH,[10] the Full Court of the Family Court stated:
24. We will refer again later in these reasons to the decision in Townsend,[11] but we would in the present context draw attention to the following observations by later Full Courts:
2.11 There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge. (Marker [1998] FamCA 42, 1 May 1998, per Baker, Kay and Chisholm JJ.)
46. Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. (Cerini [1998] FamCA 143, 8 October 1998, per Nicholson CJ, Ellis, Kay JJ.) (Footnotes referred to are of the Full Court.)
[9] See Hickey above and the obiter dicta comments of the Full Court of the Family Court in Pittman & Pittman [2010] FamCAFC 30 (Bryant CJ, Finn and Thackray JJ) at [52]: “Having regard to the provisions of ss 79(4) and 75(2), contributions (whether they be to property or to the welfare of the family) are usually only considered up to the time of trial.”
[10] NHC & RCH [2004] FamCA 633 (Finn, Kay and May JJ).
[11] Townsend and Townsend (1995) FLC 92-569 (Nicholson CJ, Fogarty and Jordan JJ).
In essence a tracing exercise is necessary. To the extent that money which exists at the time of separation is expended by the parties in reasonable living expenses for a party, even if the other party did not have access to the funds, that money ought not necessarily to be the subject of a notional add‑back.
Unilateral Increase in the Mortgage by the Husband
On 20 October 2005, the parties entered into Terms of Settlement, which specifically provided at Notation E:
The husband undertakes not to sell or further encumber the former matrimonial home excepting in accordance with Court order or with the wife’s prior written agreement.
However, on 20 October 2005, the husband increased the mortgage by an additional $80,000 and this sum was transferred into his bank account. The husband asserted that he paid his mother $37,500 (of which $25,000 was used to repay a loan on his first house and the remaining $12,500 was used for the purchase of his motor vehicle), and used two sums of $15,800 and $25,800 to pay for the boat and to reduce his credit card debt.
The husband relied upon an affidavit of his mother to support his assertion that he repaid his mother $25,000 by way of a loan for a home purchase in Western Australia in 1984 and a payment to his mother of $12,500 for the car.
In his affidavit, the husband stated: “I refer to the Affidavit of my mother in relation to this matter.”[12] While supporting the husband’s proposition, the affidavit of his mother refers specifically to a loan for a property in Western Australia, which is not mentioned anywhere in the husband’s affidavit, allegedly borrowed in 1984.[13] It is in relation to the property in Western Australia that the husband asserts he re-paid to his mother from the draw down on the O property mortgage.[14]
[12] Affidavit of the husband, filed 23 October 2006, [139].
[13] Affidavit of the husband’s mother, filed 23 October 2006, [9].
[14] Affidavit of the husband, filed 23 October 2006, [175].
During cross-examination at the final hearing in June 2007, an affidavit was produced from the Family Court file from when the husband entered into consent orders with his former wife (not the present applicant). In his primary affidavit of 5 August 1991 in relation to those proceedings, the husband sought that the wife pay his mother the sum of $20,500[15] and this figure appeared in his financial statement as well. The financial statement from 1991 revealed two debts, being that of $20,500 to the husband’s mother and $3,815 owed to the Australian Taxation Office.[16]
[15] Transcript of proceedings, 14 June 2007, 167.
[16] Transcript of proceedings, 14 June 2007, 168.
In the consent orders the husband received a payment from his former wife of $47,500 and agreed to indemnify his former wife against all money owing to his mother.[17] The husband did not attempt to repay his mother the loan from 1984 during the parties’ relationship, but did after the parties’ separation.[18]
[17] Consent orders of 5 August 1991; Transcript of proceedings, 14 June 2007, 107.
[18] Transcript of proceedings, 14 June 2007, 171.
The husband asserted that his car was purchased in 1990 and the evidence was that it was a 1990 model. However, the debt allegedly owed to his mother for this car – borrowed in 1990 – did not appear in the husband’s financial statement.[19]
[19] Transcript of proceedings, 14 June 2007, 173–174.
The husband asserted that $25,800 was used for the purchase of the boat which has now been sold, an additional $15,800 was also used for boat expenses and to pay the husband’s credit card debt.[20] The boat had been sold prior to the hearing and it was not included in the parties’ list of assets.
[20] Affidavit of the husband, filed 23 October 2006, [175].
Child support payments
Following the sale of the Q property in January 2007 for $210,000, the husband made two payments $3,808 and $1,815 to the Child Support Agency by way of outstanding arrears, and $13,364 went to the Australian Taxation Office.[21] In my opinion, it would be unfair if the wife was required indirectly to contribute to the husband’s obligation to pay child support of $5,623 that was debited against the husband. I will make an adjustment in favour of the wife accordingly.
[21] Exhibit ‘H1’.
Liabilities
The husband asserted he had a number of taxation debts. Exhibit ‘W5’ was an Australian Taxation Office Notice of Assessment issued on 12 September 2006 which recorded his tax outstanding as $18,712.10. The husband’s tax on income for the year ended 30 June 2004 is recorded as being only $854.10. However it is reasonable to assume, and the husband asserted that it is so, that the balance of the tax is payable in respect of the period when the parties were together. It is therefore reasonable that if the parties were to have the benefit of his income they should also share the tax relating thereto.
From the sale of the Q property for a total of $210,000 from the balance of deposit a sum of $13,364.67 was paid to the Australian Tax Office which in part discharged the liability referred to above. The settlement of the sale took place on 30 January 2007. In addition, the husband asserted that he had paid another $2,550 in discharge of this indebtedness.[22] Although there was some argument about whether the sum was $1,550 or $2,550 the husband in his oral evidence was adamant it was $2,550. This sum appears to have been paid by credit card and is taken into account with those matters. That means that there is an outstanding debt, or at least was between the hearings of $2,798. This appears to be the way in which the calculation is arrived at and agreed in the exchange between counsel for the wife and me.[23] It is reasonable therefore that the wife should bear one half of that sum which is $1,399 which should be regarded as notionally held by her. The husband retains the obligation and will have to pay the full amount.
[22] Transcript of proceedings, 15 June 2007, 201.
[23] Transcript of proceedings, 15 June 2007, 274.
The husband also made reference to minor amounts due in respect of a company called N Pty. Ltd. His evidence about these matters was far from satisfactory and it appears he also claims there were director’s fees owing to him from at least one of those companies. It is not suggested the wife has been involved in these companies since separation and in view of the unsatisfactory nature of the evidence and in particular the relatively small amounts asserted to have been involved I propose to disregard them for these purposes.
The husband also asserted he had paid accountancy fees in the sum of $7,123.[24] It is reasonable that in respect of this amount as well the wife should bear half of the cost as it is an expense relating to the production of the husband’s income. Again, the amount she received should be notionally reduced by one half of that sum being $3,561.
[24] Affidavit of the husband, filed 23 October 2006, [176].
The husband made reference to a tax liability which appears he may have incurred in Malaysia. I am uncertain about whether the tax is still due. It appears to relate to a period before the parties were together on any version of the facts. It seems that the husband has no present intension of returning to Malaysia. Whether or not the sum is ever payable by him is problematic. I do not propose to take it into account or to require any adjustment in relation to the property settlement consequentially.
The husband also accrued a Centrelink debt of $5,191 while the parties were together which was repaid after separation. The wife conceded that it should be added-back in to the total property pool, half being attributable to each party.[25] Again, the amount she received should be notionally reduced by one half of that sum being $2,595.
[25] Transcript of proceedings, 15 June 2007, 273.
Credit card debts and legal expenses
How I should deal with the additional borrowing by the husband is by no means clear. The husband’s evidence about what happened to the $80,000 was vague and unhelpful in many respects. At Exhibit ‘W3’ which was a summary supported by bank statements tendered by the wife in these proceedings outlined how the $80,000 (or net $79,100) was disbursed from husband’s Westpac ‘Rocket’ Account. The husband had the opportunity to contradict or for that matter to verify the payments made and did neither to any marked extent. I am left therefore to interpret to some extent the material provided and the bank statements and it may be that my interpretation is therefore not as accurate as it might have been if I had had further assistance from the person who knew most about it being the husband.
It would appear that from the Westpac Account ‘6365’ into which the $80,000 was paid was in credit for $10,191.81 before the deposit. From that, in short order, the sum of $33,209 was apparently expended on credit cards. By that I mean this sum was used to pay amounts off the various credit cards owned by the husband. In addition, a sum of $37,500 appears to have been paid to his mother. That was his evidence and this appears again, although it is by no means clear, to have been to discharge the pre-marriage debt of the husband in respect of his first marriage.
There is a reference to a boat in the sum of $19,800 and a payment of $1,000 to C Craft (whatever that may be). It would seem therefore that some $20,800 was spent on the boat which the husband retained and subsequently sold and incurred tax liabilities in relation thereto. The husband’s evidence about the boat was far from clear at all and I am unable to make any precise finding about all the transactions associated with it. It probably suffices to say that although it was sold, he asserted at a loss, it was regarded as a profit for CGT purposes and he incurred a tax debt as well as the asserted loss. Whatever it was he had the boat, he had the potential profit, he had the responsibility for its sale, he should carry any liability that arises therefrom and it should not be taken into account as a joint debt of the parties.
Accordingly, for the purposes of calculating the net asset pool, the mortgage should be reduced by the $20,800 that appears to have been expended from that in respect of the boat. Precisely how much of the money spent on credit cards was actually expended on legal fees by the husband is not clear. In his evidence he agreed that $54,682 at least came from credit card payments. Whether they were the credit card payments repaid out of the money that he got as the mortgage extension or not is not clear. The husband asserted that the money had gone on legal fees and living expenses. Consistent with NHC & RCH, if the husband had expended the money on living expenses it would be reasonable not to have the amounts added back into the pool of assets and liabilities. However, it is clear that the husband expended on his own admission $100,000 on legal fees and that this was paid for by credit cards. Hence, in my opinion, in default of his being able to identify more precisely what sums were used for which purpose it is reasonable to add back into the pool the amount that can be identified as having been paid off on credit cards. This is the sum of $33,209. I accept that this was not the sum that was argued for by Ms Tonkin. I accept that it may not represent in the overall picture all that was in fact the amount by which the asset pool may have been diminished. It does represent however, with some certainty, an amount by which the credit cards of the husband which were paid out in this way might have been applied for legal expenses given his concession that his legal expenses were paid from credit cards. Any remaining debt is obviously his as is the amount that the wife owes in respect of her legal costs. In the resumed hearing, the wife provided information that suggested that her legal fees were of the order of $84,248 and that these remain unpaid.
In summary, therefore, in relation to the unilateral mortgage extension negotiated and obtained by the husband the existing mortgage of approximately $187,000 should be notionally reduced for the purposes of calculating the pool of assets of the parties by the amount of the credit card payments made $33,209. I leave in the extended mortgage the money repaid by the husband to his mother. This has the effect, however, of diminishing the value of the husband’s initial contributions because at the time he made the contributions he owed his mother what he acknowledged to be by this payment $37,500 or thereabouts and the value of his initial contributions must necessarily have been diminished by that amount. The wife in participating via the extended mortgage and the payment of the debt to his mother should obtain the benefit of my treating the husband’s initial contributions as diminished. The amount expended on the boat which appears to be $20,800 I have indicated above should be excluded because the husband had the benefit (or loss depending on which it was) and all his actions in relation to it were unilateral. Accordingly, the amount of the mortgage to be taken into account notionally for the purposes of the calculation of the pool is $132,991.
Additional credit card debts
In addition, the husband asserted that the wife owed him a sum of $5,555 which was required to be repaid from the use of his credit card. However, in her oral evidence, the wife stated that she had repaid the husband.[26] On this point, I accept the evidence of the wife who was subjected to significant cross‑examination about it. Accordingly, this figure will not be included in the total ‘pool’ calculation.
[26] Transcript of proceedings, 13 June 2007, 42, 57.
Other Loans
The husband also sought to rely on a further affidavit of his mother, filed 26 March 2010. The husband’s mother was not cross-examined on 29 March 2010. In that affidavit, she effectively stated that the husband owed her $20,000 (of which there was an additional $2,000 interest) to “pay out [the husband’s] training bond to [his previous employer] when he left to join the company he presently works for.”[27] I note that this was lent to the husband in “late March or early April 2008.”[28] Given that this purported loan was effected some four years after separation, I do not consider that it is appropriate that it should be taken into account as an appropriate liability in the he pool of property. I will take it into account as an obligation under the relevant s 75(2) factors analysis in my reasons below.
[27] Affidavit of the husband’s mother, filed 26 March 2010, [5].
[28] Ibid.
CGT on Q Property
The husband stated, and the wife conceded,[29] that CGT was owed on the Q property, and her share is $11,000. I will make a negative adjustment accordingly.
[29] Transcript of proceedings, 15 June 2007, 269, 298 – 299.
Assets & Liabilities
The assets and the liabilities (excluding add-backs, adjustments and superannuation) of the parties are therefore as follows:
Assets[30]
Value
O property
$495,000
Liabilities
Mortgage
$132,991
Net assets available for distribution
$362,009
[30] The husband’s savings of $21,524 at separation I am prepared to acknowledged was dissipated as reasonable living expenses. Similarly, I disregard the husband’s insurance Aviva insurance policy of $1,368 as this, on his evidence, has now gone into debt.
Superannuation
Mr S was appointed as a Single Expert Witness to value the husband’s superannuation. The wife does not have any superannuation. The husband provided a report which included valuations as at October 2006 for the Public Sector Superannuation Scheme (PSS) and M Superannuation Benefit Scheme (M Super).
Accordingly, based on figures available at the hearing in 2007 and in 2010, the husband’s superannuation interests are:
PSS Scheme Specific
$35,048.13
M Super
$131,121
AXA Australian
$9,805.38
AV Super
$7,019
Total superannuation interests of the husband
$182,993.51
The M scheme is in payment phase as a pension and was taken by the husband as a result of a voluntary redundancy from his employment between 1986 and 1993. Although valued at $131,121, it is an entitlement of $6,629 a year, or $254 per fortnight and is treated as taxable income. As appears from the record of interlocutory proceedings, the husband was offered the opportunity to update the valuations and, indeed, was ordered to do so.[31] He did not do so. The value of his M Super interest has probably diminished but the remedy for this potential error in valuation lay in the husband’s hands – unused.
[31] Orders of DCJ Faulks, 19 June 2009, Order 3.
The husband’s AV Super was accumulated after the parties separated in 2004.[32] I agree with the husband’s submission this should not be taken into account except as a resource in his hands under s 75(2) of the Family Law Act 1975 (Cth).
[32] Transcript of proceedings, 13 June 2007, 23.
The husband sought that I adopt a West v Green[33] position where I value his superannuation by the number of years that the parties were together. I note, however, that the Full Court of the Family Court in M & M relevantly stated at [121] & [123]:[34]
We do not find a contribution assessment based on a calculation of years of marriage divided by the years the member had been in the fund to be helpful. In the context of considering contributions pursuant to s 79 it has never been necessary to apply a mathematical formula in the way we have described. All that is required is that the contributions of the parties be evaluated in relation to superannuation as they are to other assets. Further there may be real injustice in doing so as there is frequently far less contributed to a fund in the early years of membership compared to later years. A formulaic approach does not take account of the years in which greater contributions were made, often later in a marriage, nor the effect of contributions over many years of marriage which may have diluted initial contribution. (Pierce and Pierce (1999) FLC 92-844).
…
In our view it is clear from those comments that the majority in Coghlan[35] (supra) was concerned with a consideration of actual contributions where they were ascertainable. The relationship between years of fund membership and cohabitation might be relevant in a defined benefits scheme whereas actual contributions made by the fund member at the commencement of the cohabitation might be relevant to an accumulation fund where in both cases the marriage was of short duration. However, in our view there is nothing said by the majority in Coghlan (supra) that would give any support for the application of some kind of a formula or that contributions to superannuation whatever the nature of the fund, should be treated in a different way from contributions to other property under s 79(4). This is so in our view whether the superannuation is considered as part of one pool of assets or in a separate pool.
[33] West & Green (1993) FLC 92-395.
[34] M & M [2006] FamCA 913, [12] & [123] (Bryant CJ, Finn and Boland JJ).
[35] C & C [2005] FamCA 429.
Noting the relevant considerations as identified by the Full Court in M & M in the above paragraphs, I now assess the contributions of each of the parties. I will deal with how the superannuation is to be treated in my reasons below.
Background to contributions
The parties met in early 1996 in Malaysia, when the husband was working there on contract. At the time, the wife was a successful artist and the husband worked in the aviation industry. It is at this point, however, that the parties’ accounts of their history significantly diverge.
The wife asserted that the husband moved into her rented apartment in Kuala Lumpur in February 1996, and proposed marriage to her in about April or May 1996.[36]
[36] Affidavit of the wife, 6 October 2006, [3].
The husband asserted that the parties were never engaged and did not cohabit until after their marriage.[37] The husband states that he lived in an apartment block in the same complex as the wife but that they did not live together.
[37] Affidavit of the wife, 23 October 2006, [6].
In November 1996, the husband returned to Australia, although in mid 1996 the parties had come to Australia together for a visit. In addition, the wife had come to Australia on a tourist visa in November 1997 for a period of six weeks, and the husband had returned to Malaysia on a few occasions.
The parties married in February 1998 in Malaysia, and a month after the marriage, the wife immigrated to Australia. The parties lived in rental accommodation in Melbourne until the parties then returned to Malaysia to enable the wife to give birth to C. The husband’s employment contract, however, had ended in February 1999 and in November 1999 the parties moved to Newcastle. From early 1999 until mid 2001, the husband performed irregular contract work. The wife travelled back and forth to Malaysia to work in the Arts and to see her family at least once a year every year of the parties’ relationship.
The parties lived in rental accommodation in Newcastle until they moved to Canberra in mid 2001 upon the husband obtaining employment in the Australian Public Service. The parties lived in rental accommodation from mid 2001 until the purchase of the home at O in early 2002. At about this time, the wife started teaching lessons in the Arts both at studios and in the parties’ home. The wife still takes lessons.
The parties stayed together until early 2004 when they separated under one roof. The wife vacated the former matrimonial home in September 2004 and obtained public housing in March 2005 after living in various accommodation during that time.
Prior to the relationship the husband owned an apartment in Victoria as an investment property, purchased in February 1996 for $140,000 with a mortgage of $110,000, which stood at $105,441 at the date of marriage.[38] The husband also paid conveyancing costs and stamp duty. It was asserted by counsel for the wife that this property was purchased in 1997 however no evidence was provided to support this assertion.[39] To some extent, the date is irrelevant. The wife did not contribute to this property.
[38] Affidavit of the husband, filed 23 October 2006, [103] – [104] & Annexure ‘O’.
[39] Transcript of proceedings, 15 June 2007, 184.
The husband also brought to the relationship a 1990 Ford Courier, a life insurance policy, household contents, a boat, a business related to boats and shares valued at $35,900.[40] The Victorian property was tenanted from February 1996 until its sale in June 2001, when it was sold for $232,275. The husband asserts that the proceeds were used to pay the mortgage, and part of the deposit and purchase costs of O property and to meet the parties’ living expenses. The husband also asserts that he has unpaid CGT owing in relation to the sale of this property. In 2001, the husband sold his boat for $41,000.
[40] Affidavit of the husband, filed 23 October 2006, [106]
The husband alleged that the wife made no contribution to the property in Victoria, the shares or the boat, and indeed, had no knowledge of this property until just prior to the parties’ marriage.[41]
[41] Affidavit of the husband, filed 23 October 2006, [16].
From January 1997 until November 1998, the husband worked for A Airline. During this period, the husband accrued superannuation with AXA Australia.
In addition, the husband owned a Proton Isawara motor vehicle purchased and registered in Malaysia.[42] That vehicle remains in Malaysia at the wife’s parents’ house and I disregard the car as relevant property for the reasons earlier set out.
[42] Affidavit of the husband, filed 23 October 2006, [111].
The husband purchased a property at Q in December 1998, which was solely in his name. The purchase price was $175,000 and the purchase price was borrowed.[43] The property was leased and the income received met the mortgage expenses until its recent sale for $210,000.
[43] Affidavit of the husband, filed 23 October 2006, [126].
The husband argued that he contributed to the wife’s brother’s university fees and his financial support while he was at university.[44] These asserted should be treated as marital debts.[45] The husband provided a copy of a written agreement between the husband and the wife’s brother dated 22 April 2004 which stated that the wife’s brother agreed to repay the husband $4,300 and an additional amount of $2,508. The husband then sent the wife’s brother a letter on 12 April 2006 asserting that two payments had been made for $2,000 and $400, and that there was an outstanding balance remaining of $3,059. Since this period, the wife’s brother made another payment to the husband of $400, bringing the amount owing to $2,659. The wife’s brother was cross-examined on these issues by the husband and did not resile from his evidence that he had repaid the husband through his tax returns and in additional payments.[46] I accept the brother’s evidence that whatever the debt was, it was repaid.
[44] Affidavit of the husband, filed 23 October 2006, [29].
[45] Affidavit of the husband, filed 23 October 2006, [147].
[46] Transcript of proceedings, 14 June 2007, 107, 115 – 116.
The husband also asserted that he paid all of the household bills and the wife did not contribute at all to the financial upkeep of the household.[47] This included a period when neither party was earning much income – the husband presented his tax returns for 1999 to 2006 which showed an income in 1999 of $20,677, in 2000 of nil and in 2001 of $13,845. After that period, however, the husband earned $64,000 or more each year. The husband also sold the shares, and other investments which he had prior to the relationship to meet living costs.
[47] Affidavit of the husband, filed 23 October 2006, [31].
The husband’s evidence was that he purchased the property in O in early 2002 for $255,000 in his sole name, on two bases. The first was that the money for the purchase came from his pre-marriage assets: $25,000 of his savings from the sale of the boat and proceeds from the Victorian property; a loan from his mother in the sum of $25,000 which was repaid in full in February 2004;[48] and a Westpac Bank mortgage.[49] The second reason was that in February 2002 the wife gave the husband a note which stated that she wanted a divorce as the marriage was not working out.[50] It appears, however, that at the time that the O property was purchased, the husband still had an outstanding debt with the Bank of Melbourne in the sum of between $48,000 and $62,000. It would appear that nothing seems now to turn on this issue.
[48] Affidavit of the husband, filed 23 October 2006, [27] & [137].
[49] Affidavit of the husband, filed 23 October 2006, [137].
[50] Affidavit of the husband, filed 23 October 2006, Annexure ‘D’.
The husband alleged that he has paid all expenses related to the O property both prior to and after separation, including making mortgage repayments, rates and insurance.[51] However, the wife gave evidence that she paid rent to the husband for the household and her evidence was not challenged in cross-examination.[52] In addition, the husband did acknowledge that the wife did financially contribute.[53] This, of course, needs to be balanced against the fact that the husband has had the sole occupation and use of the former matrimonial home since September 2004. As at the date of separation, there was a mortgage balance on the O property of $191,785 and the husband held savings of $21,564.[54] It appears from the husband’s most recent evidence that his savings (in New Zealand) are now about $8,000.
[51] Affidavit of the husband, filed 23 October 2006, [156].
[52] Transcript of proceedings, 13 June 2007, 50.
[53] Transcript of proceedings, 14 June 2007, 152.
[54] Transcript of proceedings, 14 June 2007, 176; Exhibit ‘W2’.
The husband sought credit for the payments he had made in respect of the O property after separation. I have already indicated that there should be credit given for the capital improvements effected but these are only relatively minor in the overall context of things. The money the husband paid out from mortgage repayments and rates and general maintenance of the house ought properly to be regarded in the circumstances as, effectively, his costs of accommodation which must properly be offset against the wife’s need to obtain alternative accommodation. The accommodation she obtained was subsidised. Although I infer from general comments made by the husband that he thinks this is significant in some way (because his accommodation was not subsidised) that is not the case. There should be no allowance for the money paid by the husband during this period. In fact, I note that, without consulting with the wife, he has let the property for some two years at least and his present outlays for accommodation are very modest. The husband should obtain no credit for the payments and the property should be brought into account at its current value. In my opinion, this would be accomplished by its sale.
The husband asserts that he is the sole director and shareholder in V Pty Ltd and that he and the wife together were the shareholders and directors of N Pty Ltd, which owes him money.[55]
[55] Affidavit of the husband, filed 23 October 2006, [180].
The wife also accepted a figure of $900 paid by the husband in relation to sale expenses on Q property, and repairs of $350.[56]
[56] Transcript of proceedings, 15 June 2007, 272.
The husband has been assessed to pay child support in the sum of $184 per week but the amount he should be paying may not be clarified for some time with yet with the Child Support Agency.
The wife argued that she contributed financially to the home through paying rent, utilities and petrol,[57] as well as paying for the child’s activities and clothing.[58] She worked at a studio teaching upon moving to Canberra from Newcastle from early 2001 and in 2002 commenced teaching students at the parties’ matrimonial home as well. In April 2003, the wife established a business which enables her to teach lessons but acknowledges that she does not receive a significant income from this.[59] Since the original hearing, the wife was required by Centrelink to give up her business to obtain paid employment of not less than 15 hours per week. She is now employed as an office assistant.
[57] Affidavit of the wife, filed 6 October 2006, [276].
[58] Affidavit of the wife, filed 6 October 2006, [277].
[59] Affidavit of the wife, filed 6 October 2006, [278].
The husband stated that during their relationship the parties shared household duties until they moved to O, where it is his assertion that the wife did not regularly contribute to the household either financially or by way of cleaning or cooking.[60] The wife protested that she performed all of the care required by the child from when she was first born,[61] and paid for all her clothes and other items that she needed,[62] and taught her.[63] The husband denied this, asserting that prior to separation he played a significant role in caring for the child.[64] After separation, the husband’s contact with the child dramatically decreased until the obtaining of interim contact orders (as they were then known) in August 2005.
[60] Affidavit of the husband, filed 23 October 2006, [44].
[61] Affidavit of the wife, filed 6 October 2006, [7].
[62] Affidavit of the wife, filed 6 October 2006, [15].
[63] Affidavit of the wife, filed 6 October 2006, [16] – [30].
[64] Affidavit of the husband, filed 23 October 2006, [45] – [51].
In addition, since separation the wife has had the primary care of the child and has received relatively modest amounts from the husband. This is to some extent highlighted by the fact that on the wife’s evidence (which I accept) at the resumed hearing she has been informed by the Child Support Agency that as a result of material submitted by the husband about his taxable income, the husband has accrued a credit. She will not receive child support from the Child Support Agency (on her understanding of the matter) until that debt has been expunged. This may take some time. At the same time, the husband has disclosed in the resumed hearing that his income is at the rate of $100,000 (New Zealand) a year[65] and this is significantly more than the amount upon which his child support assessment has been calculated. It would have been open to the husband to have made a disclosure of that amount to the Child Support Agency and voluntarily made a higher payment in anticipation of a subsequent re-adjustment (after his credit) against him for what will then become arrears. I put that scenario to the husband and he did not refute that he would probably have to pay additional child support for the last two years when he was earning more money.
[65] Approximately $81,580 AUD as at 29 March 2010.
The issue about where the child will stay principally for the future will not be resolved until after a further family report has been obtained. I would not have sought such a family report necessarily, but each of the parties in the end asked that I should commission such a report.
The husband’s orders sought about the child would have her primarily living with him. Following an oral application made by the father on 27 November 2009, I delivered an interlocutory judgment (Clovelly & Clovelly [2010] FamCA 43) on 28 January 2010. After considering the relevant authorities (including the judgment of the Full Court of the Family Court in Marsden & Winch [2009] FamCAFC 152 (per Bryant CJ, Finn and Cronin JJ)), I stated relevantly stated at [9] and [10]:
In this case, in the context of family law and making a parenting order, I am to give paramount consideration to the best interests of the child. I take into account the difficulty that reopening the matter will have for both parties and the costs (both financial and time) they will each likely incur as a result of the matter being re-litigated by way of the applicant’s initiating application. Given that [the child] is now much older and that it is possible that her circumstances have changed since Judgment has been reserved, I consider that the interests of justice, and, in particular, [the child’s] best interests, outweigh the difficulty of the matter being re-litigated. It is necessary for a proper and full examination of the issues that need to be determined regarding which parent should have parental responsibility for the important decisions in [the child’s] life and the time that should be spent with each of them. This must be undertaken in a relevant and current context.
I propose that the applicant file and serve an initiating application by 10 February 2010. The respondent will then file and serve a response within six weeks of that application being filed and served. The matter will then be listed for a first day hearing of the Less Adversarial Trial. It is likely that a Family Report will need to be completed by a Family Consultant once the issues arising from the first day of the Less Adversarial Trial have been identified. (Footnotes omitted)
Given that the husband did not provide any relevant oral evidence on 29 March 2010 which would indicate that there should be a significant change in the present time with arrangements, I indicated during the hearing that there is no evidence to support such a dramatic change in her circumstances as he seeks in his Minute of Orders Sought. It is therefore highly likely that the child will spend most of her time with her mother or alternatively at the very best (from the husband’s point of view) that she would spend half of her time with him and half with the mother. Even this latter proposition, however, could not occur until the husband has (a) given notice to finish his work in New Zealand, (b) found a job in Australia (which he has been unsuccessful so far in doing) and (c) found accommodation if, in fact, the family home has to be sold. Accordingly, there is a significant additional contribution on a continuing basis as homemaker and particularly as parent by the wife.
I canvassed with the parties before the conclusion of the resumed hearing how I might properly take this into account in property proceedings before the completion of the child proceedings. I believe I can properly take into account the contribution to the date of the resumed hearing as being significantly greater in this respect by the wife rather than the husband. Any further adjustment that might be made in this regard should it seems to me properly fall under the s 75(2) considerations as it is at this point undetermined. I do note, however, that whatever may be the circumstances each of the parties will in this regard require some accommodation for himself or herself and the child and each will have some expenses in relation to her. I do note, however, in this regard that the husband has for the last two years on his own evidence been able to find accommodation for the child with either his girlfriend (as he describes her)[66] or with his sister when she is with him for the time that she spends with him.
Section 75(2) of the Family Law Act 1975 (Cth)
[66] I note that an affidavit of Ms W was filed an affidavit on 26 March 2010. In that affidavit, Ms W stated at [1]: “[Mr Clovelly] and I do not live together. [Mr Clovelly] and I have never lived together. [Mr Clovelly] and I are not in a de facto relationship. [Mr Clovelly] and I are not even domestic partners. I am also not a financial support nor resource to [Mr Clovelly]. [Mr Clovelly] and I are not presently in a committed long-term relationship. [Mr Clovelly] and I are presently dating. We have dated on and off since around September 2006.” Ms W was not cross‑examined.
In addition to considering the contributions by the parties, I must consider the effect of any proposed order on the earning capacity of the parties, the matters in s 75(2) of the Family Law Act 1975 (Cth) to the extent that they are relevant, any other order affecting a party to the marriage or a child, and any child support provided under the Child Support (Assessment) Act 1989 (Cth).
The factors that I consider to be relevant under s 75(2) are as follows.
The husband clearly has a much more significant earning capacity than does the wife. The orders that I make will require the sale of the matrimonial home at least if the husband is unsuccessful in paying the wife within 62 days the sum of money I find to be her entitlement. This will leave the husband to re-house himself, and the wife potentially in the situation where she will have to remain with the child in public housing.
The husband’s financial situation is difficult to gauge. He appears to live substantially on his credit cards. He has had holidays in Darwin, Port Macquarie and in this year in the United States of America. On previous occasions, he has indicated his income was quite low although it seems that it has now been at a figure of about $100,000 (New Zealand) for some time. By contrast, the wife has very limited earning capacity. She has few qualifications other than in the Arts. This is not a ready source of income for her. Notwithstanding some vigorous cross-examination by the husband, I accept that the wife has very little capacity to earn money from private tuition in the Arts. Her present job is only 15 hours a week and pays only $20 per hour. Her capacity to re-educate herself and to obtain better remunerated employment is in part diminished by her desire to be available for the child. This is a fact which I can properly and should acknowledge as appropriate under s 75(2) of the Family Law Act 1975 (Cth). There is, therefore, a significant difference, notwithstanding the alleged ill health (which I take into account) of the husband in the parties’ capacity to earn money. I note that since before the resumed hearing the wife had undergone major surgery which had meant that she was not able to work for some seven weeks.
The wife receives a single parent pension of $243 per week and the husband receives a pension from his superannuation fund of $254 per fortnight.
The husband has been assessed to pay child support for C. My comments above are on point.
Conclusion
The various adjusting factors about contributions and other financial resources and factors, in my opinion, are summarised as follows.
The husband’s initial contributions are as is so much in these proceedings shrouded in uncertainty. A reasonable analysis appears to be arrived at on pages 264 to 265 of the transcript 15 June 2007 where in the end Ms Tonkin, on her client’s behalf, conceded what amounts to $59,000 worth of contributions made on behalf of the husband. However, against that must be set the amount he repaid his mother which was a debt outstanding at that time. Hence, his contribution ought properly to be regarded as being $59,000 less $37,500, or $21,500.
In coming to this conclusion, I acknowledge that the husband’s initial contributions provided in some ways the platform for the future development of the parties’ assets.[67]
[67] See Pierce & Pierce (1999) FLC 92-844 (Ellis, Baker & O’Ryan JJ).
In my opinion, the contributions that each of the parties have made, in the husband’s case at a higher financial level during the course of the parties’ cohabitation and in the case of the wife as homemaker and parent and more substantially than was the case with the husband, should be regarded as equal. I do not presume by that comment to indicate that there is some general presumption of equality. I do, however, note that individual couples may reach agreement implicitly or explicitly (and in this case implicitly) that each will contribute what they can to the common good of the marriage. These contributions may be financial or may be physical or may be as homemaker and parent. It is inappropriate as has been held on a number of previous occasions to distinguish among these various contributions as to quality or to elevate financial contributions over other contributions that might be made. I perhaps indicate in this regard to the extent that it was asserted by the husband that the mother had failed to make any financial contributions or had made very few I found her evidence about the contributions that she was in effect obliged to make by the husband to be more compelling than his contrary assertions.[68]
[68] The husband’s task in representing himself was a difficult one. He appeared to believe that the appropriate way of dealing with this in many cases was to “put to” the witness (particularly his former wife) various propositions which were in contradiction of her assertion. These almost universally resulted in a reassertion by the witness of the original evidence of the witness. In most cases there was no contrary evidence then given by the husband. This hiatus in the evidence would ordinarily have been rectified by evidence in reply or potentially at the primary evidence‑in‑chief of the husband. However, while acknowledging his difficulty in accomplishing this task, it was something that was rarely undertaken by the husband in any formal way. This does not mean that I should automatically accept the evidence of the witness or the wife where there had been “puttage” by the husband but it does mean that my task in accepting a contrary view is made more difficult.
Post‑separation
For the reasons I have indicated above, I do not believe the husband’s contributions to the house other than in a relatively minor way as referred to should be added back, or perhaps more accurately, that he should be reimbursed in some way for those expenditures. Otherwise his living expenses need to be in effect offset against the wife’s living expenses and she had the primary care of the child. I have already indicated that I believe that the wife’s care of the child at least to the date of the resumed hearing should be regarded as an additional contribution from her.
In summary, therefore on the question of contributions I believe the wife has from the analysis set out above contributed as much as the husband. This is a relatively small adjustment in the overall scheme of things. I find contributions to be as to the wife 50 per cent and 50 per cent as to the husband.
The factors relevant pursuant to s 75(2) of the Family Law Act 1975 (Cth) also favour the wife as I have indicated above. Her income earning capacity is significantly less than that of the husband. He maintains that she should have no part of his M Super interest which is presently being paid as an income. Given that her ability to access the income would be deferred for many years, in my opinion, it is appropriate that that should remain in effect as a resource in his hands. It is, however, a substantial resource in his hands as is indicated by the valuation from Mr S. That valuation has not been revised as the husband might have thought appropriate to do so and as such it represents a major resource in his hands when it is compared to the total of the property pool. I accept that the other superannuation entitlements might well be split apart from the AV superannuation which accrued post‑separation. I do not accept as the husband asserts that they should be divided as to 25 per cent to the wife in the case of the PSS Scheme Specific superannuation. My reasons for coming to that conclusion are set out above. In any event what is irrespective of contributions that may have been made the amounts involved are small in the overall scheme of things and any prior contributions have now been offset as I have indicated above. In essence, splitting the superannuation in this area represents but a small step towards the implementation of just and equitable orders.
In coming to a further adjustment of the division between the parties as a consequence of the s 75(2) factors, and taking into account that as a consequence of there being no finalisation of the child proceedings at this point in time, I should adjust as I have indicated above matters relating to the child by taking account of the fact that both parents will require some accommodation in the future and will incur some expenses in relation to her. In my opinion, these factors are more likely to affect the child’s mother than her father. Again for the reasons set out above, I believe there should be a further adjustment on the figures and percentages reached about contribution to reflect that the mother should receive 65 per cent of the property pool and the husband should receive 35 per cent.
The entitlements of the parties
As earlier stated, the net assets of the parties are $362,009.
The wife’s notional share of the net assets (without adjustments) is $235,305. The husband’s notional share of the net assets if $126,703.
The following adjustments then need to be taken into account in accordance with my reasons.
There should be a negative adjustment against the wife’s entitlement for the improvements to the O property. Paragraph [16] of my reasons refers. This sum is $2,200.
There should be a positive adjustment in favour of the wife for the difference between the value of the chattels of each of the parties ($5,925 for the husband’s chattels and $3,575 for the wife’s chattels). Paragraph [21] of my reasons refers. This sum is $2,350.
There should be a positive adjustment in favour of the wife for the child support arrears paid by the husband. Paragraph [32] of my reasons refers. This sum is $5,623.
There should be a negative adjustment against the wife’s entitlement for the income tax owing by the husband. Paragraph [34] of my reasons refers. This sum is $1,399.
There should be a negative adjustment against the wife’s entitlement for the accountancy fees. Paragraph [36] of my reasons refers. This sum is $3,561.
There should be a negative adjustment against the wife’s entitlement for the Centrelink debt of the husband. Paragraph [38] of my reasons refers. This sum is $2,595.
There should be a negative adjustment against the wife’s entitlement for the Q property expenses. Paragraph [73] refers. This sum is $625.
There should be a negative adjustment against the wife’s entitlement for the CGT liability for the Q property. Paragraph [46] of my reasons refers. This sum is $11,000.
The following adjustments as totals are represented below:
Item
Against the wife
In wife’s favour
Improvements to O property
$2,200
Difference in chattels
$2,350
Child support arrears
$5,623
Income tax owing
$1,399
Accountancy fees
$3,561
Centrelink debt
$2,595
Q property expenses
$625
CGT liability on Q property
$11,000
Totals
$21,380
$7,973
The net effect of these adjustments is a sum of $13,407. This will be reduced of the wife’s notional share accordingly ($235,305 less $13,407 = $221,898).
That means that if the husband is to buy out the entitlement of the wife as he seeks to do, he will need to pay the wife the sum of $221,898. As mentioned above, the superannuation entitlements will be split.
Sale of the O property
The husband requested a period of 62 days to enable him to raise the money to pay the wife. I find it difficult to understand how it is possible for him to raise this money given his assertions about his debts and the relative insecurity of his financial future. Effectively, he is seeking a two month delay to enable him to raise the money. Given the delays that have already occurred in this matter, this does not seem to me to be a totally unreasonable position on his part. I am conscious that if I were to make such an order and the husband ascertains before that time that he is unable to raise the money it simply postpones the inevitable and delays the wife’s receiving what she is entitled to. In the possibly vain hope that there would be some goodwill between the parties, I nevertheless propose to make an order that will require him to make the payment within 62 days. If he is unable and unwilling to do so within that timeframe or he has earlier been advised by his lending authorities that he cannot raise the money then the property will be sold in accordance with my orders as set out.
The wife seeks that she be the trustee for sale and the husband resists that proposition. I believe the appropriate order I should make is that the husband should be responsible for the sale but that in default of his carrying out the necessary steps a Registrar of the Family Court is appointed to execute any documents or do any actions that are necessary to bring about the sale.
There will be orders involving the wife in any decision about the sale. Moreover, to some extent in compensation for the opportunity afforded to the husband it seems to me that I have to make the calculations about the entitlement to the wife based upon the value of the property without there being any deduction for sale. The husband might assert that it may be necessary at some point for him to sell the property and the cost consequences about that would follow. I accept that that may be the case but that is his decision in the light of his seeking to exercise the option to purchase as I have indicated above. That also postpones the issue of CGT in relation to the period of time for which the property has been occupied. As the husband asserted he proposed to return to the home if he is successful in acquiring it, any CGT will be at least uncertain depending upon the period of time in which he then continues to occupy the home for the future.
Therefore, in accordance with the principles enunciated in Rosati & Rosati[69] as I have no evidence about whether or not there would be any CGT liability and I have no idea when that would be incurred and the extent to which it might or might not at that point be offset by other capital losses, I decline to make any allowance for CGT whether the property is sold or not.
[69] Rosati & Rosati [1998] FamCA 38 (Ellis, Lindenmayer & Kay JJ).
If the property is sold because of the husband’s inability or unwillingness to buy out the wife’s interest in accordance with these orders, the husband’s liability for CGT will only be ascertained when he has completed and filed all his relevant taxation returns for the relevant periods. As I have not even an estimate as to what the CGT might be, it seems to me that the only order I could make which would reflect some entitlement on the part of the husband for the contribution from the wife would be to require her to make a payment of either half or some other proportion of that capital gain when it might be incurred and finally ascertained.
I decline to make such an order. First, there is no guarantee from the husband’s point of view that if he sought to enforce such an order that there would be funds to collect as a result. I do not believe that it is appropriate to quarantine any sum in case this eventuality should occur. There is little enough in the pool as it is without restricting its application even further. In addition, the decision by the husband to rent the property, while probably sensible rather than leaving it vacant, was a decision he made without any consultation with the wife at all. He also received all of the benefit from the rental that was arrived at during that period and there could well be arguments that he failed diligently to obtain tenants. I have listened to his evidence and I am satisfied to whatever extent may be necessary that there is no Kowaliw & Kowaliw[70] point that what he did (or did not do) constituted waste. The husband’s diligence in finding an appropriate agent to let the property, however, may be in question. I make no finding about that but merely indicate that that would be a further complication in determining how, if at all, the questions of sharing of any CGT liability might be arrived at. Accordingly, in my opinion if there is a CGT liability, it is a liability that should be borne by the husband and he should indemnify the wife in relation to it. I will so order.
[70] Kowaliw & Kowaliw (1981) FLC 91-092.
Further, if the property is sold the full mortgages will have to be discharged. If this occurs, there will need to be an adjustment in favour the wife because the percentage calculations (above) were based on a notional figure for the mortgage of $132,991. The actual figure for the mortgage will change before settlement but for certainty I calculate the adjustment on the basis that the mortgage is $187,500. The means an adjustment of $187,500 less $132,991, which equals $54,509; divided between the parties, which equals $27,254. Therefrom the wife should receive from the net proceeds of sale 65 per cent of the net proceeds plus $27,254 minus the adjustment factor of $13,407.
Having taken account of all of those matters it seems, to me that the orders that I propose to make give each of the parties an opportunity to do little more than discharge their outstanding liabilities. The pool is small, their needs are great, their debts are comparatively enormous. The result is a financial disaster to both the parties and I am sorry that it has taken such a long time for this situation to be fully understood and realised. I regret and apologise for the delay in delivery of my judgment. Nevertheless, for the reasons I have indicated above the result it seems to me is just and equitable and I so find.
I certify that the preceding one hundred and seventeen (117) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks.
Legal Associate:
Date: 1 April 2010
Endnote 1
Minute of Orders Sought by the Respondent Father, filed in Court 29 March 2010
Property
1. The husband pay to the wife a settlement made up as follows:
a.The sum of $50,000 to the wife after 1b, 3 and 4 have been carried out by the wife. The wife shall carry out these items within 30 days of the agreement, and the husband shall pay the money within 45 days after that;
b.The Proton Iswara (approximate value $5,000) be transferred to the wife once the wife pays any outstanding fines/summons or other liabilities on the car and provides proof to the husband, and transfers the insurance out of the husband’s name and provide written proof from the insurance company after 3 and 4 have been carried out. The wife shall carry out these items within 30 days of the agreement. Letters from JPJ and the insurance company shall be sent directly to the husband in Australia to confirm this. The wife shall be responsible for all costs/debts or other money owing on, or in relation to the vehicle including any incurred during the marriage or since separation;
c.The debts of about $7,000 owed by the wife to the husband be forgiven on the same date as 1 occurs;
d.The debt of $3,000 still owing plus interest of around $5,000 owed by the wife’s brother […] to the husband be transferred to the wife for her to recover this money from [the wife’s brother] for herself, on the same date as 1;
e.The wife’s share of upgrades and maintenance to [O property] of $3,000 be forgiven;
f.The wife’s share of contributions to the mortgage while the property was vacant of $7,000+ be forgiven;
g.The wife’s share of CGT on sale of the [O] property of $8,500 be forgiven;
h.The wife’s share of sale costs of the [O] property of $8,500 be forgiven;
i.The wife’s share of husband’s [professional] training costs of $11,000 be forgiven;
j.The wife’s share of money owing to the husband’s mother of $7,240 be forgiven;
k.The wife’s share of CGT on [Q property] of $11,500 be forgiven;
l.The wife’s share of CGT on the sale of the houseboat of $1,300 be forgiven;
m.The wife’s share of husband’s Malaysian tax liability of $4,000 be forgiven;
n.The wife’s share of accounting fees of $1,000 be forgiven;
2. The husband split superannuation of approximately $17,500 made up as follows:
a.The husband’s CSS superannuation be split with 50% to the wife (approximately $15,000) after 1b, 3 and 4 have been carried out;
b.The husband’s AXA superannuation be split with 25% to the wife (approximately $2,500) after 1b, 3 and 4 have been carried out;
3. The wife return items in her possession belonging to the husband, including photos and negatives;
4. The wife remove the caveat on the property [O] within 30 days of the agreement;
5. The wife remain responsible for all her own debts;
6. The husband be responsible for his own debts and become responsible for the listed joint debts arising during the marriage and since separation (except related to the Iswara), including Australian, Malaysian, and New Zealand (if any) taxation and any interest or penalties, CGT, loans and interest owing to the husband’s mother, any other loans credit card debts, accounting fees, and any other liabilities;
7. The wife have no further claim over the husband for any reason.
[The child]:
8. Three options are offered on a shared/semi-shared basis as follows in order of preference:
a.[The child] live with the father and the mother have access every second weekend, and half the holidays, and my [sic] ring [the child] up to twice a day. The mother may pick up [the child] from school and take [the child] to her dance classes Monday to Friday evenings. The father will pick up [the child] from dance classes;
b.Shared arrangement on a week about starting with the father on 5 July 2010. the father may make changes to the week [the child] spends with hm [sic], and the mother may request a change of which week [the child] spends with her. Failure to reach an agreement for alternative time with the father will not be deducted from time counted as [the child] being with the father. The mother may still see [the child] on the weekdays [the child] is with the father and will pick [the child] and take [the child] to her dance classes. The father will pick up [the child] each evening after dance classes; or
c.[The child] to spend every weekend with the father from Friday evening until Monday morning starting on 2 July 2010. The mother may request [the child] spend up to 3 weekends a [sic] during each school term and the time by agreement with the father, which will not be unreasonably withheld. This time will be made up at a time convenient to the father during school holidays. Failure to reach an agreement for alternative time with the father will not be deducted from the time counted as [the child] being with the father;
And,
d.Half the school holidays with each parent, with the father to determine whether it is the first or second half of the holidays, or whether holidays are split equally on another basis. [The child] will spend alternate Christmas Eve and day with each parent with 2010 being spent with the wife; and
e.Each parent may phone [the child] up to twice a day when [the child] is with the other party, and [the child] may call the other parent as she wishes up to twice a day; And
9. Decisions relating to [the child] be made by the father; And
10. The mother be consulted about matters affecting [the child], however the father have the final say power; And
11. All items bought by the father for [the child] be kept at the father’s residence for [the child’s] use there. Items bought by the mother that [the child] brings to the father’s residence will be returned with [the child] on the next changeover unless the mother advises this is not necessary;
12. [The child] be permitted to hold a passport and travel overseas with the mother for periods up to 3 weeks (within the mother’s scheduled access time), subject to $50,000 of the sum in 1 being held in trust by the father or a nominee of the father as guarantee that [the child] returns to Australia, and the funds be held in trust and any balance due be held until [the child] turns 25, or they are needed to pay for costs in locating [the child] and having her return to Australia. If it is not possible to have [the child] return to Australia then the money is forfeited to the father at $10,000/year of [sic] part thereof that [the child] is out of Australia. Any tax due on interest will be deducted from the interest earned on that account;
13. [The child] may travel overseas with the father during his periods of access.
Child Support:
14. The husband pay $75/week in child support while employed by [C Airlines];
15. The husband lodge tax returns by August and child support be assessed by the CSA;
16. The wife drop the CSA review.
Endnote 2
Minute of Orders Sought by the Applicant Wife, filed in Court 29 March 2010
1. The wife be appointed the trustee for the sale of the [O] property.
2. Within 28 days of the date of these Orders the wife shall do all acts and things to effect the sale of the [O] property and upon sale, the proceeds be applied as follows:
a.To pay sales costs, agents commission and legal fees with respect to the conveyance;
b.To pay any rates;
c.To discharge the mortgage to Westpac bank;
d.To pay to the wife the sum of $200,000; and
e.To pay the balance of proceeds into the trust account of the ACT Legal Aid Office pending distribution to the husband.
3. A splitting order be made in the wife’s favour of 100% of the husband’s interest in Aria and 40% of the husband’s interest in the M Super fund.
4.
Endnote 3
| Chronology of relevant events since judgment reserved in June 2007 | |
| Date | Event |
| 28.04.09 | Registrar Parker (on DCJ Faulks’ behalf) writes to the parties inviting them to re-open on the discrete issue of updating valuations, as well as giving them an opportunity to adduce anything further on children’s issues |
| 11.05.09 | Registrar Parker advised that the husband no longer resides at previous address – letter of 28.04.09 sent out again to new address |
| 12.05.09 | Letter received from Ms Smithies indicating that she did not yet have instructions from her client as to whether to re-open to adduce further evidence about valuations. Advised that Mr L could update the valuation of the property if no agreement to new valuation. Sought leave to adduce further update financial statement. Issue of the child’s potential travel to Malaysia/Singapore and passport. |
| 01.06.09 | Fax received from husband seeking clarification about what some of the issues raised by Registrar Parker in letter of 11.05.09. |
| 01.06.09 | Letter from Registry to Parties advising of listing before DCJ Faulks on 19.06.09. |
| 02.06.09 | Letter sent from Registrar Parker (obo DCJ Faulks) includes the following paragraphs: If neither party sought to re-open and each party was content for the matter to be decided upon the evidence as it was at the time of the final hearing, then his Honour will proceed immediately to judgment. If on the other hand either party seeks to re-open, then it would be appropriate for both parties to have an opportunity to adduce further evidence before the Court if they wish to do so. |
| 19.06.09 | Listing before DCJ Faulks. Orders made by DCJ Faulks, inter alia, that the parties will formally agree on a valuer from T Firm as a Single Expert Witness to undertake a further valuation of the O property. The husband to cause Mr S or such other person as agreed to conduct a further valuation of his superannuation entitlements. Consent orders about amendment of time for the child with respect to school holiday period. Orders made about telephone contact. |
| 29.06.09 | Letter from husband asking whether wife proceeding with application for child’s passport to be released for purpose of travel to Malaysia/Singapore. |
| 03.07.09 | Listing before DCJ Faulks. Orders made that application with respect to passport issue to be heard on 31 July 2009, material to be filed by 17 & 24 July 2009 respectively (husband first, wife second). |
| 31.07.09 | Hearing before DCJ Faulks. Wife’s application for passport release dismissed. |
| 21.08.09 | Complaint received from husband about Legal Aid’s conduct with an appointment scheduled with valuer to inspect matrimonial home. |
| 20.10.09 | Valuation received by the Court from Ms Smithies. |
| 22.10.09 | Fax from Ms Smithies enclosing email correspondence between the parties as to whether or not the evidence is now closed. Ms Smithies indicates that there will unlikely be agreement between the parties that the evidence is now complete. |
| 26.10.09 | Hearing in Chambers. DCJ Faulks directs (in accordance with orders of 19.06.09) that the husband file the valuation of his superannuation entitlements by 13.11.09. DCJ Faulks foreshadows that judgment would be delivered after 20.11.09 notwithstanding whether or not any further material filed by the husband. |
| 05.11.09 | Complaint from the husband about his Honour an in Chambers hearing. |
| 06.11.09 | Letter from Legal Associate to husband explaining the concept of “in Chambers” |
| 13.11.09 | Fax from husband to Registrar Parker advising that he does not have Mr S’s contact details and Legal Aid have not responded to his requests to provide it to him. Husband stated the following: There is also substantial further evidence required to be submitted related to the case and change of situation about residence, contact and property. Husband asked for final submissions not be made on 20.11.09. |
| 17.11.09 | Letter from Legal Assoicate to parties advising that a listing will be held before DCJ Faulks on 25.11.09, draws attention to High Court Judgment of CDJ v VAJ [1998] HCA 67. |
| 17.11.09 | Fax from husband asking for matter be stood over until 27.11.09, subsequently changed on 18.11.09. |
| 27.11.09 | Interlocutory judgment reserved by DCJ Faulks. |
| 28.01.10 | Judgment delivered by DCJ Faulks. |
| 24.02.10 | Application in a case filed by husband. |
| 25.02.10 | Orders issued by Registrar Parker in Chambers. |
| 01.03.10 | Email sent from husbandto Canberra Registry seeking re-scheduling and clarification of Registrar Parker’s orders. |
| 03.03.10 | Letter from Legal Associate to husband. |
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