Coleman and Coleman
[2007] FMCAfam 604
•21 August 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| COLEMAN & COLEMAN | [2007] FMCAfam 604 |
| FAMILY LAW – Property – short marriage with no children – significant superannuation interests – splitting order sought – single or two pool approach – increases in real estate values due to market appreciation – non-financial contribution to superannuation in payment phase – lost opportunities for employment due to marriage – spousal maintenance for re-training. |
| Family Law Act 1975, ss.72, 74, 75, 77A, 79 |
| Bilous v Mudaliar and Anor; Mudaliar v Bilous and Anor (2006) 35 Fam LR 55 Coghlan and Coghlan (2005) FLC 93-220 Kardos v Sarbutt (2006) 34 Fam LR 550 Mallet v Mallet (1984) 156 CLR 605 McKinnon and McKinnon (2005) FLC 93-242 Pierce v Pierce (1999) FLC 92-844 |
| Applicant: | IRINA VALERIANOVNA COLEMAN |
| Respondent: | CHRISTOPHER STEPHEN COLEMAN |
| File number: | CAM 948 of 2005 |
| Judgment of: | Mowbray FM |
| Hearing dates: | 3, 4 and 14 August 2006 |
| Delivered at: | Canberra |
| Delivered on: | 21 August 2007 |
REPRESENTATION
| Counsel for the Applicant: | Ms A Tonkin |
| Solicitors for the Applicant: | Higgins Solicitors |
| Counsel for the Respondent: | Mr G Brzostowski SC |
| Solicitors for the Respondent: | Edita Whalley Solicitor |
ORDERS
The husband pay to the wife the sum of $35,600 within 28 days.
Order 1 is an order to which s.77A of the Family Law Act 1975 applies. The amount of $10,400 of the monies to be paid to the wife is attributable to the provision of maintenance for the wife.
Except as otherwise specified in these orders, each party be solely entitled to any interest in property, including any chattels, superannuation and choses in action, held in the name of that party.
Each party have liberty to apply on seven days notice on matters concerning the implementation of these orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAM 948 of 2005
| IRINA VALERIANOVNA COLEMAN |
Applicant
And
| CHRISTOPHER STEPHEN COLEMAN |
Respondent
REASONS FOR JUDGMENT
This matter involves the distribution of the property of the parties following separation in May 2004.
The orders sought by the applicant wife are for the respondent husband to pay her $120,000, a splitting order providing her with a 10 per cent interest in his superannuation entitlement, and spousal maintenance of $100 per week for a period of four years.
The husband’s response would see him pay the wife $25,200 of which $5,200 would be a lump sum for spousal maintenance equivalent to $50 per week for two years. Submissions on behalf of the husband during the course of the hearing would have increased the payment to about $43,000 with no element for spousal maintenance.
The main issues include:
·a single or two pool approach where a splitting order is sought for significant superannuation interests
·treatment of increases in real estate values due to market appreciation
·non-financial contributions to superannuation in the payment phase
·treatment of a short marriage with no children
·lost opportunities for employment due to marriage
·spousal maintenance for re-training.
Background
The respondent husband who is now 62 married his first wife in 1971. He has two adult children from that marriage. His first wife died in 1994. He retired from the Australian Public Service in August 1999 and has been on a CSS superannuation pension ever since. He was introduced to his second wife, the applicant in these proceedings, through an international introduction agency. She was born and living in Russia at the time. She is now 48.
The husband subsequently travelled to Russia and met the wife in late March or early April 2000, returning to Russia in July 2000. She travelled to Australia as his fiancée arriving on 8 December 2000. They were married on 2 June 2001.
The parties separated on 1 May 2004 but continued to live under the one roof for just over a year. The wife moved out to a flat on 25 June 2005.
Relevant law
The approach to the determination of an application under s.79 of the Family Law Act1975 is well established by authority, requiring a four-stage process.
The first stage involves making a finding as to the parties' assets and liabilities – the property pool. The second stage requires consideration of the contributions of various types made by the parties, and, if appropriate, an alteration of the property interests. The third stage involves consideration of such of the matters set out in s.75(2) of the Act as are applicable and again, if appropriate, altering the interests of the parties in the property. The final stage requires an overview of the result derived from the second and third stages to determine if overall that result is just and equitable.
The wife has also sought a superannuation splitting order and spousal maintenance. How these two issues should be handled is dealt with in the body of these reasons.
The asset pool
This is a case where a very significant part of the interests of the parties is represented by the husband’s CSS pension which is in the payment phase. It has a high value relative to the property interests. The pension had commenced well before the husband met the wife and the period of cohabitation was very short. The Full Court has said that the Court has a discretion whether to use a two pools approach – one for superannuation interests and the other for the other assets – or to take a single pool approach. In Coghlan and Coghlan (2005) FLC 93-220 the majority referred to the two pools approach as the preferred approach. In the circumstances of this case it is the appropriate one to take.
Non-superannuation assets
There are a number of disputes about the asset pool for interests other than superannuation. The husband says his car should be valued at $25,000 while the wife says $30,000. It was purchased in April 2006 four months before the hearing for $34,380 including on-road costs. No valuation has been given to the Court. In the circumstances I set its value at $30,000.
There is also some disagreement about some smaller sums such as the wife’s savings and the husband’s Visa Gold Credit card. I have relied on the figures for these contained in the most recent financial statements for the parties.
Noting that I am treating superannuation as a separate pool and that the parties agreed on most items at the hearing, I find that the parties’ assets and liabilities excluding superannuation are as set out in the table below:
| Assets other than superannuation | $ |
| Holt property (husband) | 285,000 |
| Investment portfolio (husband) | 126,717 |
| CPS Credit Union (husband) | 7,241 |
| ANZ Bank (husband) | 3,725 |
| Household contents (husband) | 3,500 |
| Car (husband) | 30,000 |
| Personal effects (wife) | 500 |
| Partial property settlement – interim orders (wife) | 5,000 |
| St George Bank (wife) | 757 |
| IMB less partial property settlement (wife) | 1,312 |
| Total assets | 463,752 |
| Liabilities | $ |
| St George loan (husband) | 13,640 |
| Capital gains tax (husband) | 6,131 |
| Visa Award credit card (husband) | 6,310 |
| Visa Gold credit card (husband) | 818 |
| Total Liabilities | 26,899 |
| Net asset pool (other than superannuation) | 436,853 |
I therefore find that the net asset pool excluding superannuation is $436,853.
Superannuation
The parties agree that the value of the husband’s CSS superannuation income stream as actuarially determined under the relevant regulations is $778,384. The wife’s HESTA accumulation fund is $2,197.
Contributions
The parties first met in Russia in late March or early April 2000. They commenced cohabitation when the wife arrived in Australia on
8 December 2000 and married on 2 June 2001. They separated on
1 May 2004 but continued to live under the one roof. Their cohabitation was thus for about three and one half years. The wife left the matrimonial home one year later in June 2005.
Contributions to non-superannuation assets
When the wife arrived in Australia and commenced cohabitation she brought virtually no assets. She only had her personal possessions. She agrees she had minimal savings, clothes and personal effects. Thus the wife acknowledges that all the capital, house and share investments brought into the marriage were contributed by the husband. Her financial contribution at this stage was negligible.
The wife’s evidence of her contribution during the marriage includes:
·during cohabitation she performed almost all of the household duties except shopping which was done by her husband. She prepared half of the meals
·she says she did all of the washing and ironing, the household cleaning and looked after the garden. The husband did the vacuuming
·the husband did the shopping as she did not have good enough English or a licence, although she accompanied him to the shops
·her husband’s adult son lived with them for about two years during which she cooked his meals, washed his towels and provided general cleaning for him
·she repaired her husband’s clothes, made pillow cases and restored bed clothes
·she washed down walls and assisted her husband in painting the inside of the house
·she was also responsible for organising celebrations and making curtains and soft furnishings.
The wife was shown under cross-examination credit card statements which contradicted her claim that her husband limited her credit card spending to $100 each month. She agreed that he also drove her to a range of shops to undertake this spending, and on many occasions to Woden to her English classes.
The husband says:
·he was employed by the Commonwealth Government from 1967 until he retired in 1999
·after the marriage he and his new wife lived in the husband’s house at Holt, ACT
·he paid for the wife to do an English language course at the CIT
·by 2003 her English language skills were such that “she was seldom lost for words”
·at the time of separation her language skills were good with good vocabulary and she was able to express herself clearly
·household duties were generally shared although the wife preferred to wash the floors. His son cleaned after himself
·the wife probably did more cleaning than he did as she was fastidious and gardening was a joint effort
·they shopped together and he cooked at least 75 per cent of the meals
·he did not restrict her access to credit as she suggested
·all painting was a joint effort.
The husband’s oral evidence under cross-examination included:
·at times during the marriage he received both emotional support and companionship from his wife, but at other times she withdrew completely
·she embraced the traditional female role in a marriage
·but she did not perform “almost all of the household duties on a daily basis” – they were performed together equally
·he did a lot of the cooking and housework as she was at college or the library
·she probably did more than half the washing but they shared the housework
·he insisted that the cleaning before painting, and the painting of the house was “absolutely a joint effort”
·she enjoyed sewing as a hobby making curtains, cushion covers and other soft furnishings
·it was his wife’s choice not to pursue her dissertation
·his wife had more input into the design of the garden, but work in the garden was a joint effort
·he would frequently check she had enough money – “she had access to money whenever she wanted it”, although she had no independent access prior to March 2002 when a bank account was opened for her
·his wife had been very reluctant to get involved in the money side of the marriage
·he did not limit her spending to $100 a month, although at some stage he started giving her $50 a week cash which continued until separation
·on separation she voluntarily returned her credit card and refused to communicate with the husband
·his wife then lived on Centrelink benefits until she fairly quickly obtained a job.
Affidavit evidence from the husband’s son and daughter-in-law included:
·the son lived with his father and the new wife from December 2000 to February 2003
·the significant role played by the husband in cooking meals after he married the wife was confirmed
·the son deposing that his father shared the housework, the painting in the house and gardening although the wife took on the planning
·the son cleaned his own room and did his own laundry.
Neither was required for cross-examination.
In looking at the financial contributions during the marriage, Ms Tonkin for the wife says that the husband seeks to over emphasise the significance to be placed on the “initial contributions that are productive of asset growth at the expense of less tangible contributions”. She appears to be saying that some substantive proportion of the increase in market value of the home from $120,000 to $285,000 during the marriage which was due principally to capital appreciation from increases in real estate market values should be attributed to the wife. She relies on a passage from the judgment of Ipp JA in Bilous v Mudaliar and Anor; Mudaliar v Bilous and Anor (2006) 35 Fam LR 55 at [62]-[63]:
By “the approach adopted in Howlett v Neilson” Brereton J appears to have meant the apportionment of the increase in value of the assets initially contributed. His Honour appears to have stated a rule to the effect that, for the purposes of determining what order should be made under s 20(1) of the Property (Relationships) Act, any increase in value in assets initially contributed should be regarded, in all circumstances, as entirely a contribution by the party who contributed those assets. If that is what his Honour intended, I do not agree.
Determinations as to what orders should be made under s 20 are to be made solely on the grounds of the justice and equity of the case. The justice and equity of the case may derive from the fact that the party who owns the family home or other property was able to retain that property, while the market value increased, because “of joint efforts of wage earning, homemaking and parenting, and mutual support”. In some instances the non-financial contributions of one party may result in property of the kind in question not having to be sold. In other instances, the non-financial contributions of one partner may allow the other to advance his or her career and earn a high income that enables the property in question to be maintained and retained. Thus, an increment in capital value may well result, indirectly, from “joint efforts of wage earning, homemaking and parenting, and mutual support”.
His Honour was referring to a judgment of Brereton J in Kardos v Sarbutt (2006) 34 Fam LR 550.
However I agree with Mr Brzostowski for the husband:
The real and relevant factor in this case is that Mr Coleman owned, and was able to retain the house before, during and after separation quite independently of anything done by the Wife. Nothing done by her falls within the scope of the considerations raised by Justice Ipp. At core, the basis of the comments by Justice Ipp are perfectly correct provided there is relevant evidence that will call for an examination of the other party’s assistance to the retention of the house. If there is no relevant evidence, the approach stated by Justice Brereton works in this kind of case.
There is nothing in this case to suggest that the increment in capital value resulted directly or indirectly from “joint efforts of wage earning, homemaking and parenting, and mutual support”. The increase in value of the house is not a “fruit of the marriage”. To treat it as such would seriously undervalue the significance of the husband’s initial capital contribution. This finding is quite consistent with Pierce v Pierce (1999) FLC 92-844.
Ms Tonkin points to the importance placed on homemaking by the High Court in Mallet v Mallet (1984) 156 CLR 605. Such contributions should be recognised not in a token but in a substantial way. I acknowledge that such contributions should not be understated. But this is not a case where the husband was freed to pursue professional or other work activities while the wife remained at home caring for children and supporting the husband.
Throughout the marriage the husband drew on his pension to support both of them. The wife did not have to “free” the husband to earn income. He did not undertake paid work but shared with the wife most of the activities at home. The wife did engage in a range of home activities – perhaps more zealously and fastidiously than other wives. But there were no children to care for.
Ms Tonkin contends that the wife made the greater non-financial contribution during the marriage. She says that she did more in the home and provided emotional support and companionship.
On the evidence I assess that the contributions to the non-superannuation assets during the marriage were equal. It is just not realistic to suggest that the wife made some greater contribution.
Following separation in May 2004 the wife lived in the home until June 2005 and then moved into a flat. She received no financial assistance from her husband until spousal maintenance of $100 a week was ordered in August 2005. The husband has continued to receive his superannuation pension and the wife has had part time employment since May 2004.
This was a very short period of cohabitation – three and a half years. The husband was receiving a superannuation pension before, during and after the marriage. I have been unable to distinguish between contributions during the marriage. There are no children. In the result I assess the wife’s contributions as 7.5 per cent of the assets other than superannuation. This amounts to about $32,800 in an asset pool of almost $437,000.
Non-financial contributions to superannuation
Contributions to the husband’s superannuation are a different matter. Ms Tonkin argues that the wife provided emotional support and companionship during the husband’s retirement: “[s]he didn’t work, she was there to assist in attending to his needs. She travelled around Australia with him and was his companion.” She says that her non-financial contribution to the superannuation should be assessed at 5 per cent.
In my view this submission is fanciful. On the evidence there is no basis in contributions for providing part of the husband’s superannuation interest to the wife. She made absolutely no contribution, financial or non-financial, to it. It was in the payment phase well before she met him. The comments of Coleman J in McKinnon and McKinnon (2005) FLC 93-242 at [7] are apposite:
To determine the contributions to the acquisition of the DFRDB superannuation interest to be other than entirely by the husband would be nonsensical. There is no evidence that the husband actually had to do anything to conserve the entitlement after the commencement of cohabitation, nor is there any evidence that he had to do anything to “improve” the interest, or for that matter that the interest was in fact improved. However, the husband’s DFRDB superannuation interest is treated, on no rational basis could it be regarded in terms of contributions as other than wholly the interest of the husband.
There should be no adjustment to the husband’s superannuation because the wife made no contribution to it. The same applies to the wife’s small superannuation holding.
Section 75(2) factors
The relevant evidence of the wife is that:
·English is not her first language and she has limited skills in written and spoken English
·when she met her husband she was a university lecturer working in the field of pedagogical teaching methods
·she held the equivalent of a masters degree which is not recognised in Australia and had been studying part time for five years for the equivalent of a Ph D with about six months to complete it
·when she agreed to marry the husband in April 2000 she stopped work towards her dissertation which was due to be examined in November 2000 with his encouragement
·she therefore lost the opportunity of a career.
Under cross-examination it was revealed that:
·in 1997 the wife registered her name with an introductions agency looking for an Australian to marry. This included making a video for the agency
·her wages at the university in Russia were about $A80 per month
·she commenced employment in Australia on 3 May 2004 with KU Childrens Services
·her most recent PAYG Payment Summary for 2005-2006 showed her gross income was $21,565
·in January 2003 when she applied for a job with YWCA After School Care she said that her English language skills allowed her to communicate well with children, they had improved rapidly over the two years since arrival in Australia and she was continuing to study English as a second language at CIT
·she says her husband helped her to compose this application
·since separation at the beginning of May 2004 she had been able to make some savings such that in November 2005 she invested $10,000 in an IMB account. This was after the husband paid her an interim property advance of $5,000 in August 2005. She also drew $5,000 from the IMB account to pay her lawyers ($3,000) and for translation of documents.
The husband’s evidence is:
·he denies he encouraged his wife to give up her studies
·he told his wife that she should decide for herself whether to stay and finish her doctorate but she decided to focus on learning English
·she was keen to get away from Russia where wages were low and safety an issue
·he paid for the wife to do an English language course at the CIT
·by 2003 her English language skills were such that “she was seldom lost for words”
·at the time of separation her language skills were good with good vocabulary and she was able to express herself clearly.
The husband said in oral evidence that:
·he retired when he was 54 and 11 months after a career basically in two parts – initially statistical and survey work followed by policy
·he had looked at a couple of positions since he stopped work but was enjoying his retirement
·he was doing a proof reading course but has no plans for future work.
The husband adduced affidavit evidence from his son and daughter-in-law that the wife struggled with English when she arrived. She quickly learnt to speak English. The son said that that they were soon able to have conversations and discuss everyday matters with no difficulty. Neither was required for cross-examination.
The husband is now 62. He is retired and receiving a weekly income of $1,032, $996 of which is from his superannuation which is indexed for life. He has an unencumbered home and a new motor vehicle. There is no evidence that he is in ill health. The wife’s suggestion that he might seek work is not realistic. There is no evidence of work opportunity nor of what the work might bring in income.
The wife is now 48. I have no evidence on her health. Her most recent figures put her income at just over $400 a week. She says that she lost the opportunity to follow her chosen career by coming to Australia.
I do not think she has been totally frank about this. She clearly wanted to come to Australia and registered her name with an introductions agency some three years before she met her husband. If she wishes she could return to Russia. Indeed her husband offered to assist her return if she desired.
On the evidence and following my observation of her, I find that her English language skills are somewhat better than she would have me believe. Nevertheless I accept that she does need to undertake further studies including in English if she is to improve her employment and income prospects.
I have had regard to the relevant matters set out in s.75(2) including the income, property and financial resources of both parties.
The period of cohabitation was short and there are no children of the marriage.
In these circumstances there is no basis for an adjustment under section 75(2) for either party for either the superannuation interests or the non-superannuation assets.
Overview
For this exercise I am not concerned with precise figures. The end result of examination of the contributions and s.75(2) factors is that the wife should receive 7.5 per cent of the pool of non-superannuation assets and the husband 92.5 per cent. In money terms this results in the wife receiving in the order of $32,800 and the husband $404,000, a difference of $371,000. The wife should not receive any part of the husband’s superannuation nor the husband any of the wife’s.
Taking all matters into account, and in particular the relative contributions, the very short marriage, the ages of the parties and the fact that there are no children, I am satisfied that the orders I propose are just and equitable within the meaning of s.79(2).
Spousal maintenance
The wife also seeks spousal maintenance of $100 a week for a period of four years. In August 2005 orders were made providing for interim spousal maintenance of $100 a week payable fortnightly. Thus the wife has now been receiving this amount for two years.
Ms Tonkin submits:
·given her circumstances the wife has a need to re-educate herself
·spousal maintenance will enable her to re-train to improve her financial circumstances
·she will need to change her work arrangements to enable her to re-train as they clash with her proposed classes
·the wife is currently only able to meet her expenses because she receives spousal maintenance
·the husband has the capacity with quite a large discretionary income.
The husband opposes any spousal maintenance. Mr Brzostowski asserts:
·the wife has sufficient income earning capacity to support herself
·she has consistently managed to improve her position since separation
·she has a steady job and her income has increased
·the balance in her St George account has grown
·she was able to pay a lump sum rent in advance to her new landlord to enable renovations to the flat
·her English language skills are a matter of contention.
I have already expressed my views on a number of these matters. I am for example not satisfied that the wife’s English language skills are as poor as she has made out. Nevertheless it would be appropriate for the husband to provide some assistance to allow the wife to undertake a course of education or training to improve her employment prospects and to enable her to obtain an adequate income. He was after all instrumental in her coming to Australia and certainly has the capacity. On the other hand the wife is struggling to support herself.
Having regard to all the relevant evidence and the requirements of ss.72, 74 and 75, I propose that the husband make a lump sum payment of spousal maintenance equivalent to two further years at $100 a week – that is a lump sum of $10,400. I am satisfied that such a payment is proper in the circumstances of this case. I will accordingly make an order under s.77A.
Conclusions
The net asset pool other than superannuation is $436,853. The wife’s 7.5 per cent of this amounts to $32,764. In addition the husband is to pay the wife $10,400 lump sum spousal maintenance, making a total of $43,164. The property currently held by her including the $5,000 partial property settlement is $7,569. The net assets held by the husband amount to $429,284.
This means with rounding that the husband must pay the wife $35,600 of which $10,400 is for spousal maintenance. There will be no splitting of the husband’s superannuation interests and the wife will be entitled to her small superannuation fund in its entirety.
I also will order that each party be sole owner of all other assets in their respective names or possession.
The orders of the Court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding fifty-seven paragraphs are a true copy of the reasons for judgment of Mowbray FM
Associate: Hal Tilemann
Date: 21 August 2007
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