Crandall and Crandall
[2008] FMCAfam 954
•25 July 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CRANDALL & CRANDALL | [2008] FMCAfam 954 |
| FAMILY LAW – Property – credit – asset pool – contributions – s.75(2) factors. |
| Family Law Act 1975 (Cth) ss.79 & 75 |
| Lee Steere (1985) FLC 91-626 Ferraro (1993) FLC 92-335 Clauson (1995) FLC 92-595 Hickey (2003) FLC 93-143 C v C (2005) FLC 93-220 Russell v Russell (1999) FLC 92-877 NHC & RCH (2004) FLC 93-204 C & C [1998] FamCA 143 Kowaliw and Kowaliw (1981) FLC 91-092 Hayne and Hayne (1977) FLC 90-265 Garrett and Garrett (1977) FLC 90-265 Poulos and Poulos (1984) FLC 91-515 Bremner and Bremner (1995) FLC 92-560 Baumgartner v Baumgartner (1988) DFC 95-058; (1987) 164 CLR 137 Muschinski v Dodds (1985) DFC 95-020 |
| Applicant: | MS CRANDALL |
| Respondent: | MR CRANDALL |
| File Number: | HBC 1251 of 2007 |
| Judgment of: | Roberts FM |
| Hearing date: | 23 July 2008 |
| Date of Last Submission: | 23 July 2008 |
| Delivered at: | Hobart |
| Delivered on: | 25 July 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr D Smith |
| Solicitors for the Applicant: | PWB Lawyers |
| Counsel for the Respondent: | Mr G Faulds |
| Solicitors for the Respondent: | Faulds & Associates |
ORDERS
That the parties’ former matrimonial home located at Property S and more particularly described in Certificate of Title Volume [1] Folio 1 be sold.
That from the proceeds of such sale the following liabilities be paid:
(a)The outstanding mortgage loan balance.
(b)Any outstanding rates.
(c)All reasonable real estates agents’ fees with respect to the sale.
(d)All reasonable legal fees and charges in relation to the sale.
(e)Any outstanding surveying or council charges in relation to renovations of the property.
That the remaining balance from the sale be paid in the proportions of 55% to MS CRANDALL (“the wife”) and 45% to MR CRANDALL (“the husband”).
That the wife is to transfer to the husband any interest she may have in the Holden motor vehicle registered [F] currently in the husband’s possession.
That the husband is to transfer to the wife any interest he may have in the Holden motor vehicle registered [E] currently in the wife’s possession.
That the husband be solely responsible for any debt in relation to the Holden motor vehicle currently in his possession including a loan in the approximate sum of $18,000.00.
That the wife be solely responsible for the payment of the credit card liabilities in her sole name.
That the parties otherwise retain the property in their respective possession or control as their sole property.
That the parties have liberty to apply in relation to the implementation of these Orders.
That the husband’s applications for costs are adjourned for hearing in Devonport on 11 August 2008 at 10.00 a.m. (noting that the legal representatives of both parties will appear by telephone).
IT IS NOTED that publication of this judgment under the pseudonym Crandall & Crandall is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT HOBART |
HBC 1251 of 2007
| MS CRANDALL |
Applicant
And
| MR CRANDALL |
Respondent
REASONS FOR JUDGMENT
The Applicant is Ms Crandall (“the wife”) and the Respondent is Mr Crandall (“the husband”).
The court must decide how the parties’ property should be divided between them. In essence, the wife seeks a division of 80% to her and 20% to the husband. That is set out in her application filed 5 October 2007 and that position was maintained at the hearing.
The husband seeks a division of 55% to the wife and 45% to him. In his response he had sought a 50/50 division but changed that at the hearing to 55/45 in the wife’s favour.[1]
[1] Husband’s Case Outline filed 18 July 2008
Each party seeks a costs order against the other.
The evidence
The wife relied only upon evidence from herself.
The husband relied upon his evidence and also upon affidavit evidence from;
·Mr Q;
·Mr W;
·Mr C; and
·Mr H.
Of those four witnesses, only Mr H was cross-examined so the affidavits of the other three are unchallenged. However, I found Mr Q’s evidence to be of little assistance to me in relation to what I have to decide.
Relevant law
The Court’s approach to the determination of an application for the adjustment of property interests has been well established by authority[2]. It is essentially a multi-step process to:
·firstly, identify the property, liabilities and financial resources of the parties (usually at the time of the hearing);
·secondly, evaluate the contributions made by the parties as defined in section 79(4)(a) to (c) of the Family Law Act 1975 (“the Act”); and
·thirdly, consider the matters referred to in section 75(2) of the Act, if they are relevant
[2] See Lee Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335, Clauson (1995) FLC 92-595, Hickey (2003) FLC 93-143 and C v C (2005) FLC 93-220.
In determining what orders the Court should make under section 79, the Court must also be satisfied that it is just and equitable in all the circumstances to do so.[3] This is often referred to as the fourth step and has been described by one commentator as “the overriding caveat”[4].
[3] See section 79(2) and Russell v Russell (1999) FLC 92-877.
[4] See Australian Family Law & Practice, Vol. 2 at ¶37-640
Credit
Before I move to consider the evidence in the light of the process that I must follow, I feel that should comment about credit.
I said at the outset that, from my perusal of the affidavits, credit might be an issue. Mr Smith, for the wife, said that that was not so. However, his client proved him wrong about that by her performance in the witness box.
I found the wife to be a most unimpressive witness. The most blatant example of her poor performance was in relation to what she had said in paragraph 9 of her affidavit. In relation to a property at Property B, to which I will refer later, she said in that paragraph:
In the meantime, I paid $8,000 to the [J]’s (sic) as a part-deposit. The monies were paid direct to Mr B on the understanding that he will be forwarding the money on to the [J]’s (sic). Mr B was a builder who we understood to be working with the [J]’s (sic) in building and selling the property. Mr B was later investigated by the Consumer Affairs and Fair Trading for building houses and units without indemnity insurance.
In her oral evidence she said that the $8,000 was spent on various materials for improvements to that property and explained that what I have quoted above from her affidavit was a “typing error” which she had overlooked when reading her affidavit before swearing to the truth of it as recently as 30 May 2008.
I find her statements in that regard to be unbelievable.
The wife was also inaccurate in relation to a period of separation in 2003. Paragraph 4 of her affidavit clearly suggests that the parties were separated from the end of 2002 until October 2003; which is a period of approximately ten months. When cross-examined, she made a concession of being separated from July 2003 until October 2003, which could be less than three months.
The husband’s evidence in relation to that was that the parties separated at the end of July 2003 and then resumed cohabitation over a period of about one week after a counselling session at Relationships Australia on 13 August 2003.
I find that I prefer the husband’s evidence in relation to that because:
i)he was not cross-examined about it; and
ii)his unchallenged witness, Mr W, says in relation to their residence at Property L: “As far as I am aware [Mr Crandall] continued to live in the property with [Ms Crandall] from the time they moved there until they left. I certainly would have noticed if [Mr Crandall] had left the premises for any substantial period of time, ie, more than a month.”
The wife conceded contributions on the part of the husband only begrudgingly and only when pressed did she concede that he had done “some” work in relation to various properties that they lived in.
I find that where there is a difference between the husband and the wife on the evidence, I generally prefer the husband’s version.
Background
The husband is 62 years old and the wife is 61 years old. They started living together in October 2000, were married in late April 2004, and separated in July 2007.
On 29 January 2001 the husband became a bankrupt. He says it was to protect a criminal injuries compensation award.
He received that award and a short time later paid $17,000 by way of a deposit to enable both parties to purchase a property in Property B (“the Property B property’). Unfortunately that sale did not go ahead and the parties were unable to recover that $17,000.
On 7 February 2002 the wife had entered into a contract to purchase Property L (“Property L”) and on the same day she received $26,200 as a property settlement.
On 10 February 2002 the wife used $10,000 of her funds to pay the deposit for the purchase of Property L. When that purchase was settled a further sum of $18,163.33 was paid by the wife and the required balance came from a mortgage loan from Island State Credit Union.
I am satisfied that the purchase of that property was a joint enterprise and not simply a single-handed exercise on the part of the wife as suggested in paragraph 13 of her affidavit. In this regard I refer not only to the preferred evidence of the husband, but also to the affidavit of Mr H, and the unchallenged evidence of Mr C.
Property L was sold in August 2003. That sale settled on 16 September 2003 and a sum of $127,273.67 was realised. On the same day all but $3,777.90 of that money was used to settle the purchase of Property C (“the Property C unit”) in the wife's sole name.
On 30 January 2004 the husband was discharged from his bankruptcy and on 26 April 2004 the parties were married.
In November 2004, the Property C unit was sold and $147,314.93 was realised. The parties used some of those funds to purchase a block of land at Property H (“the Property H block”) and to purchase a motor vehicle.
The parties then lived in rented accommodation before moving to the mainland and house-sitting in late 2004.
In late 2005 the parties moved back to Tasmania and sold the Property H block. They purchased the property at Property S (“Property S”). They still own Property S but it is subject to a contract for sale.
The husband currently occupies Property S.
The asset pool
The major asset is undoubtedly the parties’ former matrimonial home at Property S which is subject to a contract for sale. Although it is a conditional contract, things apparently look reasonably good for settlement of the sale. This case is really all about how I should distribute the proceeds of such sale.
The wife has a Holden Commodore with an agreed value of $10,000.
The husband also has a Holden Commodore. It has an agreed value of $17,990 but he has a loan in relation to that in the sum of approximately $18,000. As I read the papers, that loan was originally for $18,940.
When the husband purchased that Holden Commodore, he traded in a vehicle and received $8000 in cash and it is Mr Smith's view that that amount should be added back into the asset pool. The husband's evidence was that he needed some of those funds to help him pay the mortgage and some to meet payments on the Holden Commodore that he had purchased.
[6] [1998] FamCA 143
In NHC & RCH[5] Finn, Kay and May JJ appear to have endorsed the remarks of Nicholson CJ, Ellis, Kay JJ in the unreported decision of
C & C[6]. They quoted paragraph 46 as follows:
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.
[5] (2004) FLC 93-204
With that in mind, when I consider that the husband has used some of those funds to retain the principal asset of the parties (i.e. Property S) and generally used the rest for other expenses, I do not consider that I should add that sum of $8,000 back into the asset pool.
However, I am also of the view that the husband’s Holden Commodore and his loan for that vehicle should be excluded from the asset pool. The net value of the vehicle is a negative one, and I do not think that the wife should be prejudiced by a decision in which she was not involved, being the decision to purchase that Holden Commodore. In any event, I note that in the orders sought by the husband, he acknowledges that he should be solely liable to pay out that loan.
I am also of the view that the parties’ bank balances should be excluded from the asset pool. The value of those bank balances is somewhat small and they are fairly similar (although they do favour the wife by some tens of dollars).
In his Case Outline, counsel for the husband includes furniture and effects at $5,000. However, I have no evidence about that. Both parties stated “Not known” in relation to household effects in their Financial Statements. I can only conclude that neither party is particularly concerned about what furniture and effects the other one has, because there was no cross‑examination about that from either party.
Apart from Property S and its associated liabilities, it seems to me that I should only include the wife’s car at $10,000 and the two credit card liabilities in the wife’s name of $3,000 and $3,500 in the asset pool.
Contributions
Mr Smith argues on the part of the wife that the husband should be given no credit for the $17,000 he paid to buy the Property B property because that was lost. In my view that is a novel argument, and certainly does not fit with the established line of authorities.
Firstly, it is clear that contributions prior to marriage but during cohabitation are to be taken into account. In other words, there is no magic in the actual date of marriage.
Secondly, as long ago as 1981 in the well known case of Kowaliw and Kowaliw[7], Baker J said:[8]
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
[7] (1981) FLC 91-092
[8] At page 76,644
It seems clear to me that neither of those apply in this case.
The purchase of the Property B property, or the attempted purchase of it, was quite clearly a joint enterprise. It is just that the husband had the required $17,000 available at the time from his criminal injuries compensation award.
The loss of the husband’s contribution was indeed unfortunate but it contributed in an indirect way to the wife’s ability to purchase Property L in her sole name, in that it freed up her property settlement funds.
Put another way; if the parties had shared equally in providing the $17,000 deposit, being $8,500 each, the wife would have had $8,500 less to contribute to the purchase of Property L and the husband would have had $8,500 more to contribute towards its purchase.
Certainly the wife’s contribution of her property settlement of $26,200 was greater than the husband's contribution of $17,000 but the difference is less than $10,000.
In terms of financial contributions overall, I note that both parties contributed their Centrelink benefits and their additional incomes from time to time. The wife had some additional income from a superannuation fund. The husband had additional income from casual employment.
There is not enough information before me to do a precise financial calculation of who contributed exactly how many dollars, and indeed, in my view it would not be appropriate. In Hayne and Hayne[9], Pawley J said:
In matters such as this one cannot approach the problem with an eye for meticulous detail. It should rather be dealt with broadly so that the end result can be said to be just and equitable.
[9] (1977) FLC 90-265 at p. 76,415
In my view, that reasoning has flowed right through to today in many of the cases that one reads.[10]
[10] For example, see Garrett and Garrett (1977) FLC 90-265, Poulos and Poulos (1984) FLC 91-515 and Bremner and Bremner (1995) FLC 92-560.
What is clear to me is that both parties (and I stress both parties) contributed what income they could towards their common purpose of acquiring and improving different properties.
It is quite clear that both parties contributed a great deal of effort to improve and beautify a number of properties and, in my view, the wife did herself no credit in the begrudging way she conceded that the husband did some improvements to the properties.
On behalf of the wife, Mr Smith put forward a novel, but in my view misconceived argument that, because the husband was a bankrupt for a period and could not own property in his own right, he was somehow unable to contribute. In my view the principles suggested by him in Baumgartner v Baumgartner[11] and Muschinski v Dodds[12] have no application in this matter. Section 79 of the Act is what I must apply, and it refers to contributions - financial (direct and indirect) and non-financial.
[11] (1988) DFC 95-058; (1987) 164 CLR 137
[12] (1985) DFC 95-020
It is quite clear to me that both parties have made very similar contributions, financial and non-financial, and the husband’s contributions cannot be swept under the carpet or ignored because his initial financial contribution was lost or that he was a bankrupt for some time.
On contributions, the wife might be given some slight advantage because she contributed $26,200 in the early stages of the relationship whereas the husband contributed $17,000.
Section 75(2) factors
Both parties are in their early sixties and are in receipt of Centrelink benefits supplemented by modest top-up incomes.
The husband probably has a slightly more saleable skill as a builder‑handyman.
Statistically, the wife will probably live longer than the husband and therefore have greater long-term needs than him. However, their needs at this point are very similar.
Overall, there should be a slight additional adjustment in the wife’s favour in relation to the section 75(2) factors.
Conclusions
As I have said, the wife is entitled to slight adjustment on contributions and a further slight adjustment on the section 75(2) factors.
In my view, those two small adjustments can be met in two ways:
a)Firstly, by her retaining the motor vehicle at $10,000, but being responsible for the two credit card debts totalling $6,500, giving her a net advantage of $3,500; and
b)Secondly, by receiving a 5% adjustment in her favour from the proceeds of sale of the former matrimonial home at Property S.
In my view such a settlement of this matter is just and equitable within the meaning of section 79(2) of the Act.
I will make that provide for the following:
a)Property S be sold;
b)That from the proceeds of sale the following liabilities be paid;
i)the mortgage loan balance;
ii)any outstanding rates;
iii)reasonable real estate agents’ fees with respect to the sale;
iv)reasonable legal fees and charges with respect to the sale;
v)surveying and council charges - I do not appear to have evidence about these, but if they are outstanding then they should be paid as well because they relate to the renovation of Property S;
c)That the remaining balance then be paid to the parties in the proportions of 55% to the wife and 45% to the husband;
d)That the wife is to transfer any interest that she may have in the Commodore in the husband’s possession to him, and similarly he is to transfer any interest that he may have in the Commodore in her possession to her;
e)That the husband be solely responsible for any debt in relation to the Holden, and in particular the loan of approximately $18,000;
f)That the wife be solely responsible for the payment of the credit card liabilities in her sole name;
g)The parties otherwise retain whatever property they may have in their possession or control as their sole property; and
h)That the parties have liberty to apply in relation to the implementation of the orders. (Such an order is just to give the parties “a foot in the door” if Mr Oakley's advice turns out to be incorrect and the sale does not go ahead.)
I certify that the preceding sixty five (65) paragraphs are a true copy of the reasons for judgment of Roberts FM
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