CRAWFORD & RUSKIN
[2013] FamCA 493
•26 June 2013
FAMILY COURT OF AUSTRALIA
| CRAWFORD & RUSKIN | [2013] FamCA 493 | |
| FAMILY LAW – PROPERTY – Application for property settlement orders involving a de facto relationship – Whether just and equitable to alter property interests and rights – Stanford v Stanford [2012] HCA 52 applied – Assessment of the contribution of the parties – Where the parties’ contributions to the property held by them is 15 per cent to the applicant and 85 per cent to the respondent – Consideration of factors under s 90SM and s 90SF of the Family Law Act 1975 (Cth) – Where an adjustment, pursuant to s 90SF(3), of 3 per cent in the applicant’s favour is appropriate – Where the outcome of the assessment of contributions and other factors has resulted in the respondent receiving 82 per cent of the assets compared to the applicant’s 18 per cent. | ||
| ss 90SF, 90SM Family Law Act 1975 (Cth) |
| In the Marriage of Mitchell 19 Fam LR 44 Stanford V Stanford [2012] HCA 52 Robb & Robb (1995) FLC 92-555 |
| APPLICANT: | Ms Crawford |
| RESPONDENT: | Mr Ruskin |
| FILE NUMBER: | SYC | 7371 | of | 2011 |
| DATE DELIVERED: | 26 June 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Stevenson J |
| HEARING DATE: | 3, 4 June 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Alexander |
| SOLICITOR FOR THE APPLICANT: | Marriott Oliver Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Maurice |
| SOLICITOR FOR THE RESPONDENT: | David H Cohen & Co. |
Orders
That the respondent pay to the applicant a sum of $220,400, with such payment to be made within 28 days of the date of these orders or such other period as the parties may agree in writing.
That each of the parties is declared to be solely entitled to all items of property of whatever kind and superannuation benefits which are presently in his and her respective possession.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Crawford & Ruskin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 7371 of 2011
| Ms Crawford |
Applicant
And
| Mr Ruskin |
Respondent
REASONS FOR JUDGMENT
the proceedings
The applicant, Ms Crawford, and the respondent, Mr Ruskin, are in dispute as to settlement of property following the breakdown of their de facto relationship. They cohabited for almost eight years between July 2003 and May 2011.
The applicant sought orders to the effect that the respondent pay to her a sum of $250,000. Somewhat curiously, it was contended that the parties’ contributions should assessed 75% to the respondent and 25% to herself, with a 5% adjustment in her favour pursuant to section 90SF(3) of the Family Law Act. On the basis that the net pool of assets and superannuation is valued at approximately $1,400,000, her entitlement would thus amount to some $350,000. She would retain assets to the value of $30,000. Her counsel submitted “this seems excessive hence the applicant seeks a cash payment of $250,000”.
On behalf of the respondent, it was submitted that the contribution finding should be 89% to himself and 11% to the applicant, with an adjustment of 3% in her favour pursuant to section 90SF(3). The distribution of net assets and superannuation would thus be divided in the ratio of 86% to the respondent and 14% to the applicant.
Background
The respondent was born in 1959 and is aged 53 years. The applicant was born in 1969 and is currently 44 years of age. The parties commenced their relationship in 1999 and began to live together on approximately 10 July 2003. They separated on or about 20 May 2011, after a de facto relationship of almost eight years’ duration.
The respondent has two children of a previous marriage, J and K, who were born in June 1985 and July 1987 respectively. They were aged 18 and 16 when the parties began their cohabitation.
The applicant has three children of a prior marriage, L, M and N who were born in May 1992, December 1995 and June 1997 respectively. The applicant’s children were 11, 7 and 6 years old when the parties began cohabitation. They lived in the parties’ household throughout the relationship.
In 2001 the applicant commenced litigation with her former husband in relation to parenting orders and settlement of property. These proceedings were resolved on 8 May 2003. Consequently which the applicant was able to move with the children to live with the respondent at Town A. She received a cash payment of $35,000 by way of a property settlement with her former husband.
The applicant conceded that the respondent paid $15,000 on account of her legal fees in these proceedings. She maintained that she paid additional legal costs of $8,000. It seems to me to be unlikely that she did so, as she said that she found it necessary to draw on her property settlement funds to meet living expenses. Her income consisted of Social Security benefits and irregular child support from her former husband. Further, she had a HECS debt of $5,242 of some twelve years’ antiquity which she did not discharge from her property settlement. For these reasons, it seems unlikely to me that the applicant had funds available to meet any substantial portion of her legal fees.
At the commencement of cohabitation the applicant had no significant assets, nor liabilities of any consequence. There was no issue that the respondent made substantial initial financial contributions. As clarified in his oral evidence, the respondent maintained that he introduced the following assets and superannuation into the relationship:
· equity of approximately $19,000 in the property B Street, Town C
· 2 Ducati motorcycles
· 3 motor vehicles
· tools of trade
· motor cruiser
· Westpac Bank accounts totalling $146,581
· outstanding invoices of his construction industry business totalling approximately $123,000
· IAG shares worth $1,954
· Colonial Super in an amount of $7,291
The question whether the unpaid invoices should be treated as property or part of an income stream was dealt with by the Full Court in In The Marriage of Mitchell 19 Fam LR 44, in the context of outstanding barrister’s fees. Their Honours said:
Unpaid fees are debts owing to, in this case, the husband and would ordinarily be understood to be property, especially here where there was apparently no question about their recoverability. We see no reason in this case for not treating these debts in the ordinary way. Mr Simpson, for the husband, argued that they will find their way into the husband’s income stream in following years and to treat them now as property is to double count. We do not think that this is so. Debts owing to a business are almost invariably treated as a present asset (subject to any discount for recoverability) but they will find their way into income in future years and that will continue to be so from year to year into the future until the business ceases. Nor do we think, as may have been suggested by Mr Simpson, that we need to discount this figure for the incidence of tax. The question of what tax will be imposed upon this amount will be determined in the future when it becomes income. Having regard to the husband’s taxable income, in recent years, it would be difficult indeed to hazard a view as to what, if any, allowance should be made.
On behalf of the applicant, it was submitted that the respondent in fact was owed only about $12,000 at the commencement of cohabitation. It was said that of the total of approximately $137,255 billed in the invoices contained in exhibit 3, some $110,000 was rendered after the commencement of cohabitation. The problem with that submission was that there was no evidence that these invoices represented the whole of the fees outstanding to the respondent’s business at any given time.
The respondent established a construction industry business in about 1986. It is apparent from a document which became exhibit 2 that this business generated significant income. That schedule read as follows:
Financial Year
Business Turnover
Nett Profit
Total Income
Taxable Income
2002/2003
$425,132.00
$77,879.00
NK
NK
2003/2004
$636,568.00
$102,823.00
$103,363.00
$103,363.00
2004/2005
$639,064.00
$220,931.00
$221,306.00
$221,306.00
2005/2006
$895,073.00
$244,813.00
$246,224.00
$246,224.00
2006/2007
$884,332.00
$181,734.00
$186,986.00
$185,986.00
2007/2008
$604,026.00
$59,928.00
$67,241.00
$67,241.00
2008/2009
$1,066,521.00
$489,661.00
$511,046.00
$501,046.00
($10,000.00 contribution to AMP Superannuation
2009/2010
$1,069,154.00
$314,403.00
$335,550.00
$335,550.00
2010/2011
$666,811.00
$198,922.00
$232,925.00
$182,925.00
($50,000.00 contribution to AMP Superannuation
2011/2012
$947,473.00
$248,665.00
$297,075
$272,275.00
($24,800.00 contribution to AMP Superannuation
The respondent’s children, J and K, spent one in every two or three weekends with the parties for approximately twelve months after the commencement of cohabitation. In about 2004, however, J moved into the home of his girlfriend’s father and K went to live with her now husband. Initially, the applicant suggested that she had a greater role in the care of these children but it became clear during the oral evidence that they began to live independently in 2004.
In 2007 the respondent purchased a home unit at Town D for $160,000, which he provided in cash from his savings. He carried out renovations and sold this property for $180,000 in 2011. There was no suggestion that the applicant played any role in the renovations to this property.
In 2008 the respondent constructed a multi-car space garage on the land at B Street, Town C at a cost of approximately $60,000. He then sold this property, which was unencumbered, for $270,000. Similarly, there was no contention that the applicant played any role in this construction work.
For most of the period of cohabitation the parties lived in a rented home at E Street, Town A. They paid a low rental of $70 per week and carried out repairs or renovations to this property. There was a dispute as to whether that work constituted a “contribution” for the purposes of section 90SM.
During the relationship the applicant undertook courses and obtained the following qualifications:
(a)A certificate in computer studies in 2004
(b)An induction course into the construction industry in 2006
(c)A certificate in website studies in 2008.
The applicant holds a Bachelor’s degree and said that she has the opportunity to return to university and obtain a Master’s degree.
In her oral evidence the applicant maintained that she earned undeclared income between 2005 and 2008. The only evidence of the quantum of this alleged income was that her contention that she was paid about $100 per week in 2006 and 2007.
In her affidavit the applicant referred to a business venture in 2005 and 2006 in which she sold her own handicrafts. She described this enterprise as “not very profitable” and said that she thus took on paid work in that field until 2009. She then worked in two shops on a casual basis.
A significant issue in the proceedings was the extent to which the applicant assisted the respondent by carrying out secretarial work in his construction industry business. I will consider the evidence relevant to this question below in these reasons.
Approach to These Proceedings
Section 90SM provides, relevantly for present purposes, as follows:
(1) In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them—altering the interests of the parties to the de facto relationship in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the de facto relationship—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the de facto relationship; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the de facto relationship or a child of the de facto relationship, such settlement or transfer of property as the court determines.
Note 1: The geographical requirement in section 90SK must be satisfied.
Note 2: The court must be satisfied of at least one of the matters in section 90SB.
Note 3: For child of a de facto relationship, see section 90RB.
(2) If a party to the de facto relationship dies after the breakdown of the de facto relationship, an order made under subsection (1) in property settlement proceedings may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
(3) The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last mentioned property;
whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last‑mentioned property;
whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c) the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e) the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
Section 90SF(3) provides as follows:
(3) The matters to be so taken into account are:
(a) the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship); and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party’s role as a parent; and
(m) if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(o) the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i) a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii) a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p) the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship; or
(ii) a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q) any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s) the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t) the terms of any financial agreement that is binding on a party to the subject de facto relationship.
These provisions mirror section 79 of the Family Law Act, in respect of which the High Court held as follows in Stanford v Stanford [2012] HCA 52:
It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under this section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
Their Honours further observed as follows:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
I have no hesitation in concluding that it is just and equitable to make orders for adjustment of property interests between the applicant and the respondent. Their relationship broke down on approximately 20 May 2011 and they have since lived entirely separate lives. The acrimony between them was readily apparent during the trial. In my view, the parties need to sever the last tie between them and move ahead with their lives.
The Assets, Liabilities and Financial Resources
At the commencement of the trial counsel helpfully provided a Joint Balance Sheet which read as follows:
No.
Owner
Item
Wife says
Husband says
1
Husband
Westpac accounts
750,189
750,189
2
Husband
Bendigo accounts
324,736
324,736
3
Husband
Contents
1,000
1,000
4
Husband
Tools of trade
4,250
4,250
5
Husband
[Land cruiser] MV
28,000
28,000
6
Husband
Ducati Motor Bike
12,000
12,000
7
Husband
Catamaran
600
600
8
Husband
… Motor Cruiser
47,500
35,500
9
Husband
IAG Shares
12,214
12,214
10
Wife
Commonwealth
2,000
2,000
11
Wife
Kluger MV
20,450
20,450
12
Wife
Contents
2,570
2,570
13
Husband
Debtors
75,000
NA
14
Gross Assets
1,280,509
$1,193,509
15
Wife
AMP Superannuation
4,937
4,937
16
Husband
AMP Superannuation
106,029
106,029
17
Gross Assets and Superannuation
1,391,475
1,304,475
18
Husband
Boat Registration & Mooring
NIL
(8,000)
19
Husband
[Construction industry] Licence Fee
NIL
(800)
20
Net Assets and Superannuation
1,391,475
1,295,675
21
Husband
Work liability – Financial Resource
35,000
NA
Mr F valued the motor cruiser in a report dated 20 May 2013. He described its poor state of repair and opined: “It requires a large amount of work to restore it to a condition to demand returns of six digits.” Mr F opined that: “Overall this vessel I believe needs sustain (sic) work to bring it to an attractive saleable positive and inspected condition with the work and repairs needed, it would be hard to market.”
Mr F assessed the worth of the motor cruiser on both an “auction realisable” and “fair market value” basis. He opined that the value of the vessel fell within the range of $38,000 to $40,000 on an “auction realisable” basis. In his opinion the motor cruiser’s worth on a “fair market value´ basis was in the range of $40,000 to $55,000.
Neither party sought an order for the sale of the motor cruiser, which will thus remain in the ownership of the respondent. In these circumstances, I consider that the “fair market value” approach is preferable to the alternative “auction realisable” alternative postulated by Mr F. Both counsel invited me to adopt the median of the range which I deemed to be the preferable approach. I thus find that the motor cruiser has a value of $47,500.
The applicant sought to include as an asset a sum of $75,000 on account of debtors of the respondent’s business. The respondent alleged, reasonably in my view, that these outstanding payments should be treated as an income stream rather than an asset. There can be no guarantee that the respondent will ever receive the entirety of this sum, even though he has a right to sue for recovery. As well, this gross amount will be reduced by income tax payable in the year when this money comes into his hands.In my view, however, the Full Court authority of In The Marriage of Mitchell compels me to include the sum of $75,000 as an asset in the balance sheet.
The respondent sought to include as a financial resource an amount of $35,000, being apparently a “work liability”. There was no evidence nor submission as to this matter. I did not understand this contention and I can thus take this issue nowhere.
The applicant sought to include as assets amounts of earned but unpaid interest on the respondent’s three Westpac Bank term deposits. It was said that this interest amounts to approximately $20,000 (exhibit 6). These term deposits are current for several more years. Accordingly, a similar calculation could be carried out for each year of their existence. It seems to be that this exercise is something of a contrivance and I will not include any amount in the list of assets on account of such interest.
The applicant also sought to include as an asset a sum of $40,000, being the respondent’s paid legal fees. There was no suggestion that this money came from any source other than his post-separation income. That being so, I will not add back the sum of $40,000 and treat this money as a premature distribution to the respondent of assets of the de facto relationship.
I am not persuaded that the sums of $8,000, on account of boat registration and mooring, and $800, being a construction industry licence fee, should be treated as liabilities of the respondent. He conceded in his oral evidence that these amounts are recurring annual expenses.
I thus find the assets, liabilities and financial resources of the parties to be as follows:
Non superannuation assets
1.
Westpac Bank accounts (R)
$750,189
2.
Bendigo Bank account (R)
$324,736
3.
Household contents (R)
$1,000
4.
Tools of trade (R)
$4,250
5.
Land cruiser motor vehicle
$28,000
6.
Ducati motor cycle (R)
$12,000
7.
Catamaran (R)
$600
8.
Motor cruiser (R)
$47,500
9.
IAG shares (R)
$12,214
10.
Business debtors (R)
$75,000
11.
Commonwealth Bank account (A)
$2,000
12.
Kluger motor vehicle (A)
$20,450
13.
Household contents (A)
$2,750
$1,280,689
Superannuation Assets
14.
AMP Super (R)
$106,029
15.
AMP Super (A)
$4,937
$110,966
$1,391,655
Liabilities
Nil
Financial Resources
Nil
Contributions
I have referred above to the respondent’s initial financial contributions, which were vastly superior to those of the applicant. The respondent generated a relatively substantial income throughout the relationship, which he applied in part for the benefit of the applicant and her three children.
In my view the respondent made a significant contribution to the support of the applicant’s children, who lived with the parties during the entirety of their eight year relationship. Initially the applicant was reluctant to concede that he paid the children’s school fees and met the costs of some of their extra-curricular activities. When confronted with cheque butts for his Westpac Bank account in his writing, however, she conceded that he “may” have done so. She gave some rather vague evidence to the effect that only the respondent had a cheque account at these times.
The reality is that the respondent must have been responsible for a significant portion of the financial support of the applicant’s children. By her own account, she earned little income and admitted that “there were always issues about child support from my former husband”. In practical terms, therefore, the only real source of money to support the applicant’s children was income from the respondent’s business.
The applicant appeared to suggest that she made a contribution within the meaning of section 90SM(4) as homemaker and parent. It is clear from the Full Court authority of Robb & Robb (1995) FLC 92-555 that this submission is not open to her in relation to her own children. Their Honours said:
Accordingly, in contributing to the support of these children the wife was merely honouring a legal obligation which she owed to the children, whilst the husband, in making his contribution, was acting essentially as a volunteer assisting the wife in the discharge of her legal obligations. Upon that basis, whilst we consider the justice of the case clearly required the husband’s contribution to be taken into account under sec 75(2)(o), the same cannot be said of the wife’s contribution. In making that contribution the wife was in no way discharging or assisting to discharge any legal obligation of the husband.
Of course, the applicant could properly assert that she made a contribution as homemaker in relation to the respondent. That matter is considered below in these reasons.
As noted, a significant issue in the proceedings was the extent to which the applicant undertook secretarial work in the respondent’s business and thus contributed to its income. In her affidavit she claimed that she carried out the following tasks:
17.After I started living with [the respondent] I began running the secretarial side of his business including:
17.1Taking and making calls;
17.2On a regular basis [the respondent] would give me hand written notes as to what jobs he had completed that day, detailing what he had paid in labour and materials on what [jobs] and money he had received which I then entered into the computer, creating invoices. I would create quotes for job requests for both major construction companies that [the respondent] sub-contracted for and for private [jobs]. I backed up and stored files. This would take many hours and I would often work late at night while the children were asleep.
17.3Invoicing to the major companies [the respondent] did work for such as [Company G], [Company H], [Company I], [Company O], [Company P], a number of public schools, private [jobs], and insurance companies;
17.4I was inducted as a sub-contractor to work on school sites and [job] sites for both [Company I] and [Company G]. I still retain my on-site security clearance cards.
17.5Production and mailing of quotes, downloading and printing of site plans, email correspondence, site management check lists and [job] reports.
17.6In early 2011 I taught [the respondent] how to complete his own invoices and basic emailing. He still needed assistance in the office work up until the time of our separation.
17.7Preparation, addressing and mailing of correspondence including payment of accounts;
17.8Writing references, resumes and character witnesses for employees.
The respondent maintained that “the applicant did not do any secretarial work for me”. In cross-examination, however, he conceded that she typed some quotes and invoices and that she “may have written references for some contractors”.
For her part, the applicant made these concessions in cross-examination:
· the business had no secretary before or after the parties’ relationship
· the primary accounting records were cash books handwritten solely by the respondent
· “the money side of the business was never computerised”
· invoices were handwritten by the respondent at the commencement of cohabitation.
Before any involvement on the applicant’s part, the respondent’s business operated for seventeen years. The business generated sufficient income to allow the respondent to accrue the substantial assets which he introduced into the relationship.
Overall, my impression was that the applicant exaggerated her involvement in the business and the respondent minimised her efforts. In my view, it is more probable than not that the respondent could have continued to operate his business without input from the applicant but her efforts helped with its smooth running on a day-to-day basis. Accordingly, I find that the applicant carried out secretarial work in the business to an extent which was exaggerated by her and minimised by the respondent.
As noted, there was an issue as to whether the parties’ work on the Town A property constituted a “contribution” for present purposes. It was common ground that they carried out repairs and improvements to this home, although there was a dispute as to the extent of the applicant’s involvement. The applicant contended and the respondent denied that they carried out this work in exchange for a low rate of rental. As a matter of logic, it seems likely to me that they received the benefit of a low rate of rental in exchange for improvements to the property.
A third party with no relationship to either the applicant or the respondent was the registered proprietor of this property at all relevant times. Section 90SM(1) provides as follows:
(1) In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them—altering the interests of the parties to the de facto relationship in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the de facto relationship—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the de facto relationship; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the de facto relationship or a child of the de facto relationship, such settlement or transfer of property as the court determines.
It thus seems to me that the renovations and improvements to the Town A home constituted a contribution to the “property of the parties to a de facto relationship or either of them”. For whatever reason they carried out renovations and improvements to this property, the beneficiary was a stranger to their relationship. Nonetheless, on the balance of probabilities, I am satisfied that the parties’ joint efforts secured for them the financial benefit of reduced rental for most of their relationship. It seems likely to me that, again, the applicant exaggerated and the respondent minimised her involvement in this work.
The applicant maintained that she provided substantial assistance on renovations to the motor cruiser. In particular she claimed:
22. In 2004, [the respondent] purchased a [motor cruiser] called “[AB]” for approximately $40,000.00. The boat was in a total state of disrepair, so together [the respondent] and I restored the boat to make it liveable which included:
22.1Sanding and lacquering of interior teak;
22.2Anti-fouling the hull;
22.3Painted the deck, walls, hull, railing, roof and outside of the boat;
22.4Decorating of interior involving making curtains from material I purchased from Spotlight in [Town Q], purchasing linen and towels and fitting out with cutlery and crockery.
22.5Cleaning and maintenance including:
22.5.1Vacuuming;
22.5.2Scrubbing the shower and toilet;
22.5.3Washing linen and clothing by hand;
22.6Being a deckhand which included mooring, gaffing buoys, sailing, scrubbing the hull, patching rust, sanding, painting name plates and lettering.
The respondent claimed that “the only work she did on the boat was painting the lettering on the bow”.
The report of Mr F suggested that neither of the parties carried out significant work on the motor cruiser. I have referred above to his description of the vessel and opinion that substantial work would be necessary before it could be marketed successfully.
I am satisfied and I find that the applicant was responsible for most of the domestic tasks in the parties’ household. As noted this contribution benefitted her children, to whom she bore responsibility independently of the de facto relationship. Nonetheless the respondent also received the benefit of her homemaking efforts and, in my view, she made a significant contribution in that regard for the purposes of section 90SM.
I am satisfied, and I find, that the applicant focussed her efforts on the parties’ relationship and their joint advancement. I have found that she was the primary homemaker and that she played a role in the day-to-day operation of the respondent’s business.
There is no doubt that the respondent’s asset base increased in value during the course of the relationship. For example, his superannuation increased from about $7,000 at the commencement of cohabitation to approximately $106,000 at the date of trial. His available cash rose from approximately $146,000 in 2003 to about $1,074,000 in 2013. In my view, it is reasonable to conclude that the respondent achieved this increase in the value of his asset base while he had support in an indirect and/or non-financial sense from the applicant.
Having regard to all of these considerations, I find that the contributions of the parties should be assessed at 15% to the applicant and 85% to the respondent. I turn now to consider what adjustment, if any, is warranted pursuant to section 90SF(3).
Section 90SF(3) Factors
It was common ground that there should be an adjustment in favour of the applicant pursuant to section 90SF(3). On her behalf it was submitted that she should receive an adjustment of 5%, while the respondent contended for a percentage of 3%
The applicant and the respondent are aged 44 and 53 years respectively and both enjoy good health. They each have qualifications and are capable of engaging in gainful employment. As noted, the applicant obtained employment qualifications and skills during the relationship.
The applicant has a current weekly income from all sources of $935 and the respondent a gross amount of approximately $1,100. It seems to me that there was some force in the submission on behalf of the respondent that, to some extent, the applicant under-exercises her capacity for gainful employment. She works making handicrafts, a calling which she obviously enjoys, but it may well be that she could earn a higher income if she chose to work in another field.
The respondent gave uncontradicted evidence of a recent downturn in his income due to a change in government policy. Historically, he has done contract work in public schools for the Department of Education. His unchallenged evidence was that in mid-2012 school principals became entitled to contract directly with contractors, a change which reduced his contract work. Nonetheless, the respondent issued an invoice on 1 June 2013 for $14,000 for work which he carried out recently at Town R High School. In my view, the respondent is likely to continue to earn a comfortable living for the rest of his working life.
The applicant has skills and qualifications for employment and intends to undertake a Master’s degree in the future. At present, she chooses to work in an area which generates a relatively modest level of income. Nonetheless, I am satisfied that the respondent will always have the benefit of an income earning capacity which exceeds that of the applicant. In addition, the respondent will have the benefit of a strong asset base in comparison to the applicant’s far more modest financial position. That being so, I find that there should be an adjustment in favour of the applicant equal to 3% of the net pool of assets and superannuation.
Result
The net pool of assets and superannuation will thus be divided in the ratio of 18% to the applicant and 82% to the respondent. The applicant’s entitlement equates to $250,498 and that of the respondent $1,141,157.
The applicant will retain the following assets and superannuation:
1.
Commonwealth Bank account
$2,000
2.
Kluger motor vehicle
$20,450
3.
Household contents
$2,750
4.
AMP Superannuation
$4,937
$30,137
Accordingly, a payment of $220,361 from the respondent is necessary to constitute her entitlement of $250,498.
The respondent will retain the following assets and superannuation:
1.
Westpac Bank accounts
$750,189
2.
Bendigo Bank account
$324,736
3.
Household contents
$1,000
4.
Tools of trade
$4,250
5.
Land cruiser motor vehicle
$28,000
6.
Ducati motor cycle
$12,000
7.
Catamaran
$600
8.
Motor cruiser
$47,500
9.
IAG shares
$12,214
10.
Business debtors
$75,000
14.
AMP Super
$106,029
$1,361,518
He is required to pay an amount of $220,361 to the applicant, which leaves him with his entitlement of $1,141,157.
The applicant will have cash reserves of around $222,000, household contents, a motor vehicle and a small superannuation benefit. She has the opportunity to build upon her superannuation fund during her remaining years in the paid workforce. The respondent will be left with cash of approximately $855,000, a viable business which has operated for 27 years, various motor vehicles, two boats, shares and superannuation. He has a proven capacity to generate a comfortable level of income.
For the sake of convenience, I will round off the amount payable by the respondent to the applicant to $220,400. I will order that this payment be made within 28 days of the date of my orders, unless otherwise agreed by the parties. I regard this outcome as just and equitable in all of the circumstances.
I certify that the preceding sixty three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 26 June 2013.
Associate:
Date: 26 June 2013