D and D
[2007] FMCAfam 145
•1 March 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| D & D | [2007] FMCAfam 145 |
FAMILY LAW – Property settlement – difficulty of assessing contributions when substantial asset farming property – inheritance from parents of one party.
| Family Law Act1975 (Cth) |
| Gosper & Gosper (1987) 11 FamLR 601 Kessey & Kessey 18 FamLR 149 MVB v SDB [2005] FamCA 389 C & C (2005) FCAFC 429 |
| Applicant: | D A D |
| Respondent: | R J D |
| File number: | BRM6186 of 2005 |
| Judgment of: | Baumann FM |
| Hearing date: | 1 February 2007 |
| Delivered at: | Brisbane |
| Delivered on: | 1 March 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr Fleetwood |
| Solicitors for the Applicant: | Schultz Toomey O’Brien Lawyers |
| Counsel for the Respondent: | Mr Vandervalt |
| Solicitors for the Respondent: | Files Stibbe Lawyers |
ORDERS
That the notional pool of assets and liabilities is as follows:-
(a)Real property described as Silverdale – Lot 62 $849,000.00
(b)Real property described as Silverdale – Lot 64 $417,720.00
(c)Real property described as Cressbrook – Lots 43 & 127 $660,000.00
(d)Cattle$ 155,850.00
(e)Horses $13,000.00
(f)Farming equipment $77,500.00
(g)Nissan motor vehicle $3,000.00
(h)Household content for husband $5,000.00
(i)Household content for wife $2,000.00
(j)Forestry lease $6,500.00
(k)Husband’s bank account $10,075.00
(l)Husband’s superannuation $36,000.00
(m)Husband’s Commonwealth Bank Shares $11,100.00
(n)Children’s investments $8,000.00
(o)Wife’s bank accounts $150.00
(p)Wife’s motor vehicle $10,000.00
(q)Husband’s Hino truck $67,500.00
(r)Husband’s superannuation $36,000.00
(s)Add back to wife $6,000.00
Total $2,374,395.00
Less liabilities
a) Mortgage $58,000.00
b) Overdraft $80,000.00
c) Hire purchase agreement $75,000.00
d) Husband’s credit card $400.00
e) Wife’s combined credit card $20,000.00
f) Centrelink debt $800.00
Total liabilities $234,200.00
Net Realisable Assets $2,104,195.00
That the wife relinquish and/or transfer to the husband all her right title interest in and to the following:-
a) Real property described as S – Lot 62 $849,000.00
b) Real property described as C – Lots 43 & 127 $660,000.00
c) Cattle $155,850.00
d) Horses $13,000.00
e) Farming equipment $77,500.00
f) Household content in possession of husband $5,000.00
g) Husband’s ANZ account $10,075.00
h) Husband’s Commonwealth Bank Shares $11,100.00
i) Children’s investments $8,000.00
j) Hino truck $67,500.00
k) Forestry lease $6,500.00
l) Husband’s Superannuation $36,000.00
That the husband relinquish and/or transfer to the wife all his right title interest in and to the following:-
a)Credit Union account in the name of the Wife $50.00
b)Suncorp account in the name of the Wife $100.00
c)Household content in the possession of the Wife $2,000.00
d)Nissan Pulsar motor vehicle $10,000.00
That the husband indemnify and keep the wife indemnified in relation to the following:
(a)The mortgage indebtedness associated with the property described as S (Lot 62) and C (Lots 43 & 127) in the sum of $58,000.00;
(b)The ANZ overdraft in the sum of $80,000.00;
(c)The hire purchase agreement with respect to the Hino truck in the sum of $75,000.00;
(d)The credit card in the name of the husband solely in the sum of $400.00;
That the wife indemnify and keep the husband indemnified in relation to:-
(a)The credit card debt in the name of the wife in the sum of $10,000.00;
(b)The GE debt in the name of the wife in the sum of $10,000.00;
(c)The Centrelink debt in the sum of $800.00.
That the monies held in the trust account of Files Stibbe Lawyers from the sale of the real property described as Silverdale – Lot 64 in the sum of $417,720.50 be distributed as follows:-
(a)To the wife - $400,000.00 within 30 days of the making of these orders;
(b)To the husband – the balance thereof.
That the husband pay to the wife a further sum of $180,000.00 within twelve months of the making of these orders and such sum shall be secured by way of a mortgage secured over the husband’s real properties situated at S (Lot 62) and at a rate of 7% simple interest. Contemporaneously with the said payment of $180,000.00 plus interest, the wife must provide to the husband, at her cost, a signed release of the said mortgage or mortgages.
The husband shall do all acts and things and submit to the wife for execution by her within 30 days of the making of these orders a mortgage in the terms referred to in order 7 hereof and the husband will do all acts and things and sign all necessary documentation to give effect to stamping and registering that mortgage with respect the to the husband’s real properties at his sole cost.
Costs
The wife shall within 14 days of the making of these orders provide to the Court and to the husband written submissions with respect to the issue of costs;
The husband shall within 14 days of receipt of these submissions provide to the court and to the wife his response with respect to that application.
That the issue of cost be reserved to chambers.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRM6186 of 2005
| D A D |
Applicant
And
| R J D |
Respondent
REASONS FOR JUDGMENT
Introduction
The case before me involves property settlement arising from a relationship between the applicant wife, D D, and her respondent husband, R D.
The parties commenced their relationship in or about November 1992, and started living together in May 1993. At that time, the wife had the day-to-day care of at least two of the three children of earlier relationships; those children were M (born 1974); A (born January 1976); and W (born November 1983).
The husband was at the time of cohabitation, and still remains, a farmer. Being a farmer was a family tradition. The farms were in the Kilcoy area.
As these reasons identify, during the course of the relationship which continued from May 1993 (with cohabitation) through marriage on
15 May 1993, and finally coming to and with separation in mid-2004, the parties maintained a lifestyle as farmers.
The relationship was blessed with two children during the course of that time; namely B, who was born on 22 November 1993, and G was born in March 1997. Both children, post-separation, have continued to reside with the mother. The father has, and spends time with the children pursuant to orders of this Court. The mother has indicated in her recent affidavit an intention to consider moving to the Rockhampton area where it seems her older sons now reside.
The particular issues in this case involve the manner in which I should assess the relative contributions of the parties, particularly substantial financial contributions made by the husband at the commencement of the relationship, a further substantial contribution during the course of the relationship from an inheritance upon the death of his late father, P, and the relevant s.75(2) factors.
Positions
By final submissions the applicant wife sought a division in the husband's favour of 60 per cent/40 per cent. The husband, by final submissions, contended it would be just and equitable for the division to be 80 per cent to himself and 20 per cent to the wife.
Principles
The principles in a matter of this kind are well-established by authority, and in these reasons delivered orally there is no useful purpose gained by reciting at length those principles, save to summarise them in the following manner: the first stage of any property assessment is to determine, usually at the time of trial, the extent of the assets and liabilities which then exist. The second stage is to consider the relevant contributions of both a financial and non-financial nature, direct and indirect, during the course of and at the commencement of the relationship within the parameters of s.79(4) of the Act. Thirdly, by reference to s.79(4)(e) the Court is required to consider any relevant factors under s.75(2), and finally, the Court must stand back in respect of this matter and consider the actual order it proposes to make to ensure that it does justice and equity to the parties.
Pool of assets
Much of the pool was agreed by final submissions. This was in no small part due to the efforts, no doubt, of the experienced Counsel who appeared before me, Mr Vandervalt on behalf of the husband, and Mr Fleetwood on behalf of the wife.
For the reasons which follow, I determine the relevant pool of assets to be as follows:
Assets
S- Lot 62
$849,000
S – Lot 64 (recently sold)
$417,720
Creditbrook
$660,000
Cattle
$155,850
Horses
$13,000
Farm equipment
$77,500
Husband's Nissan vehicle
$3,000
Household goods
Husband
Wife
$5,000
$2,000
Forestry lease
$6,500
Husband's accounts
$10,075
Husband's CBA shares
$11,100
Children's investments
$8,000
Wife's bank accounts
$150
Wife's Nissan Pulsar
$10,000
Husband's Hino truck
$67,500
Husband's superannuation
$36,000
And add back partial property settlement to wife
$6000
Gives a gross assets of $2,338,395
Liabilities
Home mortgage
$58,000
Overdraft
$80,000
Hire purchase on Hino
$75,000
Husband's credit card debt
$400
Wife's credit card and store accounts
$20,000
Remaining Centrelink debt (payable by wife)
$800
Total liabilities of $234,200
A net pool of $2,104,195
I deal with some of the disputed issues in respect of this pool, and before doing so acknowledge that both counsel suggested, notwithstanding the observations by the Full Court in C & C, that this is a case where the husband's rather modest superannuation ought be included in the one pool.
Overdraft
These proceedings originated in the Family Court of Australia and were commenced on 5 August 2005 before they were ultimately transferred to this Court on 11 July 2006.
Separation occurred in July 2004. The husband had an overdraft with a limit of $100,000 at trial. The amount owing under this facility, indicative of the nature of his financial accommodation, fluctuated from time to time post-separation.
The overdraft was in the husband's name only, and was provided by the ANZ Bank. The best evidence I have of the level of the overdraft at separation was the husband's own evidence under cross-examination that the overdraft "was about $20,000" at separation. This is in part supported by par 101 of his trial affidavit which, although strangely expressed, suggests the overdraft was approximately $24,000 at separation.
At par 101 the husband gives details of other expenses which he says he "was required to incur" in addition to the overdraft as follows:
Motor vehicle lease – Pulsar
$19,000
Housing loan
$65,000
Tax liability
$11,000
Premier House Removals
$7000
Total
$102,000
At par 102(b) of his said affidavit the husband says he increased the overdraft (I assume to a limit of $100,000) to enable payment of:
The motor vehicle lease
$19,000
The credit card debt
$8500
Taxation liability of
$11,000
Court order of payment to wife
$10,000
Property rates and farming expenses (including feed
Not known
Total
$48,500
The aggregate of the limit at separation and these debts amounts to approximately $72,500. The husband says he used the overdraft to pay legal expenses of $20,000, and for the first group of valuations, $10,000. At the time the husband gave an undertaking to the Family Court on 16 August 2005 that he would not "increase the present limits of my current mortgages to - or my current overdraft facility with the ANZ Bank Limited without giving Mrs D 14 days notice of intention to do so."
Exhibit 3 are ANZ Bank statements from 9 August 2005 to 1 October 2005. During this period the limit did not change; however at times the husband exceeded the limit by up to $4950.
In my view, the transactions made by the husband to consolidate certain debts post-separation through an increase in the overdraft are quite normal business practice. The husband says I should bring into account into the pool of assets as a liability an overdraft debt of $100,000. In my view, this figure should be reduced by $20,000 for his payment of personal legal expenses. The deduction for legal expenses is consistent with authority. As valuations were a joint expense. I do not propose to adjust for that payment.
The payment of $12,000 to the wife under the order of Bell J (it was a consent order) was described as follows: "In partial satisfaction the wife's claim against the husband for spousal maintenance and property settlement in such proportions as may be determined by the Court as (sic) the trial of this action."
The said order also included a notation that: "The husband shall within 30 days from the making of these orders pay all arrears of child support outstanding to the wife." It is clear from the husband's own admissions that he did not discharge all the arrears of child support. The husband's taxable income for the last two years had been drought-affected and modest. The wife has been reliant on a modest income also as a tuck-shop convenor.
It would be fair, in my view, to attribute the sum of $6000 of the payment of $12,000 as a partial property payment, and add this sum back to the pool. The balance of $6000 should be regarded as spouse maintenance for the period of about 17 months (or about $82 per week). I do not add that amount back.
Children's Investments
The husband says I should not include in the pool the Plasmic shares ($4,000) or children's accounts ($4,000). These investments were made unilaterally by the husband. There is no evidence before the Court that the husband is under any fiduciary obligations to the children in respect of these investments. He can access those assets (save for any moral duty he believes he might owe to the children) as quickly as he created them. He says that they were purchased with the proceeds of the children's "cows". In my view, it is proper that they be included in the pool as the husband's property.
House removal expenses
The husband claims he owes a home removalist $7,000. The husband did not satisfy me to the requisite standard he has that liability, or (if he does) that the creditor is intending or capable of commencing actions for its recovery. It will be excluded from the liabilities as a result.
Credit
Before turning to the issue of contributions, I merely say in terms of credit that both of the witnesses, the wife and the husband, struck me as generally truthfully. Their perception of past events was clouded to some degree by a tendency to exaggerate their own contributions and to minimise the contributions of the other party. That is hardly surprising in these types of proceedings.
There is also an absence of some documentation to support some of the allegations made by the parties, but I do not regard either of the parties as untruthful in a general sense.
The contributions
It is appropriate in this matter to consider some of the more substantial direct financial contributions which the evidence deals with.
Cohabitation
Although the statement of agreed facts (which I attach to this judgment) identified what the parties had at cohabitation in May 1993, some of the values of the items were contested. Little was the subject of corroborating documentary evidence; save for income tax returns which I have relied upon as, for some of the disputed issues it represents the best evidence available.
I find on the whole of the evidence the approximate value of the initial contributions of the parties to be as follows:
Husband
a)
| Half share in a O'L's Lane | $336,172 |
| Harlin | $75,000 |
| 173 head of cattle | $72,359 |
| 23 horses | $10,810 |
| Farming equipment | $67,003 |
| Cash investments | $100,000 |
| Nissan 4 X 4 (included in farm equipment) | nil |
| Superannuation | $11,000 |
| Total | $336,172 |
b)The 1992/93 income tax return shows cattle on hand at 30 June 1993 as 214 head; however the husband only claimed to have had 173 (some six weeks earlier). The aggregate sale price of stock sold in 92/93 year was $597.60 a head ($47,216 divided by 79) and in the following year approximately $795 a head ($42,945 divided by 54).
c)On this analysis, adopting a mean figure of, say, $700 a head, the 173 head of cattle could be said to have a value of approximately $121,000. The husband says in his affidavit (par 54) that he had 200 head of cattle with an estimated value of $172,500. I might have allowed for cattle a figure of $121,000 save for what was the agreed value of between $63,700 and $72,359. I allow the higher sum.
d)In terms of farming equipment, no valuation evidence was offered. Whilst I accept that values in a depreciation schedule might not always represent market value, that is the best evidence I have. The schedule of 30 June 1993 shows items such with a value of $67,003 (including the Kubota tractor purchased in August 1992 for $31,000). I adopt this figure which includes an allowance for the Nissan which is shown at $12,650, and it was purchased a few years earlier for $41,192 (according to the schedule). On that basis, and in the absence of any other evidence, it would not be appropriate, in my view, to include as an initial contribution the Nissan at the purchase price as the husband contends.
e)The husband claims to have had $124,000 in cash investments at cohabitation. In cross-examination he says he may have had only $100,000 - he couldn't remember when he had purchased the Kubota tractor. As it seems the tractor was purchased some months earlier, I adopt the figure of $100,000 for cash investments.
f)The husband says he spent the funds, other than on the tractor, towards irrigation and the shed. The depreciation schedules for the 1992/93 and 1993/94 years confirm that to be so - with upwards of $24,000 paid in the 92/93 year, and $37,000 in the first three months of the 93/94 tax year towards these improvements. I am satisfied the cash investments were contributed by the husband to the farm improvements as he says was the case.
Wife - $33,000
g)It is agreed the wife had equity in a house at Kilcoy. The best evidence is the net proceeds achieved some two years later of approximately $33,000, and the wife had some smaller items (furniture, sewing machine, small car, et cetera) but these items were, in my view, about the same value as her credit card liabilities at the time.
Based on these findings, the initial contributions of the parties aggregated to a value of approximately $369,172 – with about 90 per cent being contributed by the husband, and 10 per cent by the wife.
Inheritance
The husband's father, P E D, died on 6 December 1998. He left a will (which is exhibit 4) dated 2 November 1993. It provides, after certain pecuniary bequests, that the husband receive:
a)The Mt S property, being portions 62, 64, and 107 (clause 5);
b)A half-share with the brother of a S Dam lease number 24 Kilcoy, and all livestock and all farm equipment (clause 6). This property was known as K's Road V, (also called “A E”); and
c)A third share in the net residuary (clause 7).
No estate documentation was produced to the Court. One wonders why it was not possible to produce, for example, some evidence from the solicitors involved in the administration of the estate.
Nonetheless, the wife concedes that the property inherited under clause 5 of the will above (described as "S at L") had a value at the time of inheritance of $849,040. This property had become the property occupied by this family since shortly after marriage.
The wife concedes the half-interest in the property inherited under clause 6 of the will above (described as K's Road V) had a value at the time of inheritance of $59,840.
The husband and his brother, B, by agreement (no documents being produced to the Court of any agreement however) some time in 1999 and after the father's death swapped various property interests, and the wife concedes and accepted (clearly after pretrial discovery had been completed) that the husband swapped (a) his half-interest in O'L's Lane, H, held at cohabitation, but valued at the time of the swap at $282,538 (noting that it had been valued at approximately $75,000 at cohabitation); and (b) a half-share of K's Road, V, valued at the time of the swap at $119,680, for a property known as C, being lots 127, 43, and 129. Lot 127 comprising 160.2 acres had a value of $64,000. Lot 43, comprising 405.5 acres, had a value of $182,475. It appears that lot 129, comprising 160 acres, did not have an agreed value on the evidence before me.
No evidence was produced of costs (for example, stamp duty and valuation fees) incurred on these transactions between the brothers.
On the basis of the land inheritance swap it is reasonable to attribute the value of the land inherited at approximately $969,000 ($849,040 plus $119,680).
Additionally, to the real property above described, the husband claims to have also inherited the following:
250 Head of Cattle.
a)In the absence of either an estate statement, any corroborating evidence from the husband's brother, B, or stock records, the best indication of any extraordinary increase in stock levels which the husband benefited from is the income tax returns for the year ended 30 June 1999.
I say this because on the will terms alone, the Mt S property was inherited without stock or equipment. I assume this is because the husband, who had occupied that property for some time, in effect "owned" whatever equipment or stock was on the property at the time of the father's death. Clause 5 of the will is to be contrasted to clause 6, which makes no mention of stock or equipment.
In the 1998/99 income tax return it was revealed that additional stock "ex-estate P E D" of 207 head, appear to be brought in to the livestock trading account at a gross sum of $35,190. The husband asserts an inherited value on that stock at the time of $262,500 (or an average of approximately $1260 per head). This estimate does not sit comfortably with the average gross sale price for the year of approximately $548 a head ($61,950 for 113 head).
The absence of any satisfactory explanation for this variance, and in circumstances also where the balance sheet shows the value of "livestock-on-hand" which includes both cattle and horses as being only $66,924, I propose to adopt as the value of cattle inherited at that time $35,190. As I say, I was, to a large degree, not assisted by the evidence produced at that time. It may be, for example - and I merely speculate – that the value of the stock passing from the estate to the husband was written down for tax purposes, but again, no evidence was offered by any accountant of the Husband to explain this inconsistency between the husband's asserted value and the records he produces to the Court.
Farming Equipment
b)The husband is unable to attribute a value or identify with particularity the farm equipment inherited, and the depreciation schedule attached to the husband's 1998/99 income tax return suggests at "acquisition" three months after his father’s death, of plant and equipment (including items described as "cottage" of "homestead", "barn", etc) with a total value of only $9,183, which is further reduced by the depreciation to 30 June 1999 to a figure of $8,890.
This sum was said to be shared equally with the husband's brother. Considering the uncertainty created by the evidence, and in the absence of any evidence of value at the time of death, I propose to adopt a sum of $4,445 (again shown in the balance sheet) as the value of the inherited half-share of farm equipment.
Commonwealth Bank Shares and Cash
c)Again, the evidence offered by the husband to support the assertions was limited, and entirely non-existent with respect to the alleged cash. It is reasonable to infer that the husband would have either produced bank statements to show funds deposited or a statement from the estate's solicitors (or even his brother) if he had wanted to do so. His failure in this regard means he has failed to discharge the evidentiary onus upon him.
The shares still exist, and the wife does not dispute the husband's shares in the Commonwealth Bank are now valued at $11,100. The number may have swelled by dividend reinvestment during the period post-inheritance; however, in the scheme of things, an inheritance of only about 250 shares (if I adopt at trial a sum of approximately $45 per share as their market value) suggests it is not a significant factor in this case. I do, however, not ignore their existence nor the origin of the benefit to the husband.
Alleged gifts and benefits from husband's family
The husband says the other gifts included:
a)A total of 415 head of cattle from 1993 to 1998 with a value between $415,000 to $498,000. No corroborative evidence offered by the husband of these "gifts" from family members was produced to the Court. No reason was offered by the husband, why such evidence from family members who are still alive and available, was not produced. The husband says (at para 66 of his trial affidavit) that: "During the marriage I received gifts of calves from my father between 1993 and 1998 totalling at least 415 in number. Each calf at maturity was worth between 1000 and 1200 dollars."
The financial statements/income tax returns for the period
30 June 1993 to 30 June 1998 reveal the following stock-on-hand:
At 30 June 1993- 214 head
At 30 June 1994- 234 head
At 30 June 1995- 235 head
At 30 June 1996- 232 head
At 30 June 1997- 252 head
At 30 June 1998- 260 head
At 30 June 1999- 462 head
As already identified in these reasons, the increase in the 1998/99 year is attributable primarily to the inherited herd of 270 head from the estate of P E D. These records do not support the husband becoming the owner of any cattle by gift or even purchase during this period. For these reasons, the husband has failed to discharge with the evidentiary onus in respect of this asserted fact.
b)Free agistment for 1440 cattle from 1992 to 1998 is claimed by the husband. The husband's foundation for this alleged contribution by his father is found at paragraph 68 of his trial Affidavit where after his assertion of receiving a gift of 415 calves (which I do not find proven), he says:
“The abovementioned cars, together with my other cattle, were agisted for free and grew to maturity on my father's properties, and the average market value agistment fees during these times, that I would have been required to agist externally, varied between $2.50 and $5 per week per head."
Based on this assertion, the husband says he received a benefit quantified at $118,756.25. The husband has not satisfied me that:
a)he owned during this period 1140 head to agist or to be responsible for agistment; and
b)where the cattle were agisted.
The evidence is that the husband and wife moved to the Mt S property in or about June 1993. This was part of the ultimate inheritance by the husband; he worked the farm, including the father's cattle, it seems. In that regard, whether accidentally or otherwise, the documents tendered as part of exhibit 5 included not only the husband's financial statements but also of financial statements for the husband's late father, Percy, from the periods ended 30 June 1995, 1996, 1997, 1998, and 1999.
For all those returns the home address of P D is shown as "27 G Street, K" and not the subject Mt S property.
The head of cattle owned by P D fluctuated between 926 and 484 during this period. The financial statements further show that in each year during this period P D actually claimed expenses for agistment – generally $5,407 per annum, although for the year ended 30 June 1998, a sum of $14,295 was paid.
c)The husband seeks a finding that is simply not supported by the evidence. Why would his father offer "free agistment" to his son whilst at the same time pay to agist his own cattle? This analysis also raises doubts about the further claim by the husband for a quantified contribution by his father for "free rent" totalling $71,500 (or $250 per week).
I find what actually is likely to have been the arrangement is that he husband, after marriage, moved to the property owned by his father at Mt S, and he ran the farm, including managing the stock. He inherited that property and some of the stock. The will (as I said before) was made after the husband's marriage to the wife. I do not accept the wife's claim that it was meant to be an inheritance for both of them. She has not produced any evidence which would rebut the usual presumption Gosper & Gosper (1987) 11 FamLR 601 and Kessey & Kessey 18 FamLR 149
I find the inferences I have made are reasonably open to me on the evidence. They could have been the subject of evidence from the husband's brother, B, or sister, R, but the husband did not seek to corroborate his version of events through evidence they might have been able to give.
Other contributions
Reflective of the life of a hardworking farmer (“dawn to dust”), the wife conceded the husband had worked long hours. The effect of the drought; low cattle prices, and time taken for the stone fruit enterprise to gain some profitable momentum all contributed to the fluctuations in taxable income derived over the period by the husband (who, for tax purposes, operated as a sole proprietor).
It was agreed the relevant taxable incomes for the husband were:-
30 June 1993 $23,000
30 June 1994 loss of $192.00
30 June 1995 $2,600
30 June 1996 $12,200
1997 $9,400
1998 $11,000
1999 $10,700
2000 $37,600
2001 $28,000
2002 $65,000
2003 $49,600
2004 $74,000
2005 $24,600
2006 $32,000.
The husband's counsel, Mr Vandervalt, described this as "living from year to year". The wife said that the husband worked for his father, P, who paid him "about $240 a month in cash, and a share of cattle at branding time in lieu of wages".
When the wife received net proceeds of sale of her K home in 1995 of about $33,000 she says she retained all but $10,000 (which was used to buy a car) with the balance of those funds used to "support us and pay for things" as set out in para 37 of her trial affidavit. Considering the minimal taxable income of the husband during the five years, including 1995, I accept the evidence of the wife in this regard.
The wife's non-financial contributions in the operation of the farm were not significant, and although the husband said she did virtually nothing, the wife's evidence at paras 39 and 60 of her affidavit has a ring of truth about it, and I accept that evidence. I also accept the wife "used to take in mending, ironing, and did some dressmaking to help with finances." The wife also attended to some of the renovations (not yet completed) to the home which was moved onto the property.
I make these findings on the evidence; however, I am satisfied that the more significant contribution to the farm maintenance, livestock management and stone fruit orchard, was made by the husband. I also acknowledge and accept his fire-fighting efforts which he said "saved" the farm on more than one occasion.
The long hours devoted to the outside farmwork by the husband meant, quite simply, he was not available for the day-to-day activities required to maintain the household, and the young children of the parties, B and G. I am satisfied on all the evidence this was the wife's primary role, and she managed those tasks with dedication and perseverance in, at times, difficult economical and weather conditions.
The husband attempts to minimise the wife's contributions in this regard, saying for example at paras 42 to 45:
42. “During our marriage the sexual relationship between the Applicant wife and myself became very infrequent. As a result of the disinterest the Applicant wife displayed towards me she very rarely cooked for me and I cooked and prepared my own breakfast and lunch.”
43. “If the Applicant wife was preparing a meal for the rest of the family then she would prepare my meal, otherwise I would cook for myself or sometimes have leftovers.”
44. “Particularly during the last 12 months of our marriage, although the Applicant wife washed her own clothes and often he children’s clothes, I was required to wash my own clothes and sometimes also those of the children.”
45. “The Applicant wife was a poor and untidy housekeeper, only cleaning occasionally and in particular at such times when were likely to have guests or visitors. I cleaned the home occasionally myself and probably as regularly as the Applicant wife.”
I prefer the wife's evidence in respect of her non-financial homemaker contributions to that of the husband. I do not ignore, and make some allowance for, the financial support the husband provided for particularly the child, W, who was about 9 when the parties commenced cohabitation, including boarding-school fees, partly subsidised by rural allowances.
Although the wife's sons from her first relationship, M and A, were about 19 and 17 when the parties started living together, I accept that at times they helped around the farm, but essentially, they lived independently and were not a financial impost on the new relationship. The mother says A, who was a stockman, did work on the farm for which he was not paid. The evidence is insufficient to regard this as a substantial contribution. The husband says he helped train A in part, in any event.
I also take into account the not-contested two small pecuniary legacies received by the husband of $7500 in 2001, and $5500 in 2003.
The parties' separation contributions, considering this period, only amounts to a little over two years, it has to be assessed in the context of severe drought conditions affecting the farm. The husband maintained the payments on the home loan and maintained the farm. The wife had the overwhelming obligation to provide for the children. The husband's low income caused him to fall behind in paying modest child support, and an inability to contribute, as he had previously done, to extracurricular activities, and some payments to the wife, including payments for fuel and tyres for her car. The children missed out on opportunities dancing.
The wife has also been personally responsible to repay an overpayment of Centrelink benefits during the marriage, and about $800 remains outstanding. The wife says, and I accept, that she meets all the children’s school fees, books, and uniforms. The children now attend State schools so that fees are minimal. The wife has a contract as a tuck-shop convenor for three mornings a week, and also as a part-time teachers' aide, as well as cleaning duties.
It is important in cases like this, in my view, where farming lifestyles were hard and incomes poor despite long hours of hard manual labour and effort not to undervalue the homemaker role. Recently, the Full Court is MVB v SDB [2005] FamCA 389, paras 64-67:
64. The weight to be given to disparate contributions, particularly in a very long term marriage such as this one is subject of well known authority (see Mallet v Mallet (1984) 156 CLR 605; Ferraro and Ferraro (1993) FLC 92-335). In Ferraro the Full Court at 79,572 noted the difficulty in comparing parties’ respective contributions, albeit not having regard to, as in this case, a significant external injection of funds, as follows:
“The task of evaluating and comparing the parties’ respective contributions where one party has exclusively been the breadwinner and the other exclusively the homemaker, is a most difficult one to perform because the evaluation and comparison cannot be conducted on a “level playing field”. Firstly, it involves making a crucial comparison between fundamentally different activities, and a comparison between contributions to property and contributions to the welfare of the family. Secondly, whilst a breadwinner contribution can be objectively assessed by reference to such things as that party’s employment record, income and the value of the assets acquired, an assessment of the quality of a homemaker contribution to the family is vulnerable to subjective value judgments as to what constitutes a competent homemaker and parent and can not be readily equated to the value of assets acquired. This leads to a tendency to undervalue the homemaker role.”
65. Later in the judgment the Full Court adopted with approval the passage in Dawes and Dawes (1990) FLC 92-108 which we find is apposite in this case:
“The passage from Dawes, supra, at 77,729, is a recent authority of the Full Court emphasizing the significance in cases of this sort under para (b) of the contribution which a wife and homemaker makes to the business assets controlled by the husband.
The Full Court said:
‘Although it is difficult, as it always is in such cases, to put one’s finger squarely on what led his Honour to so undervalue the wife’s contribution, we think that one significant matter which did so was that he failed to give any weight to the fact that the wife’s performance of her role as homemaker and parent during the 30 years of cohabitation was not just a contribution under sec. 79(4)(c) (which he subsequently recognised to some degree) but was also a significant contribution under sec. 79(4)(b).’
66. In Mallet (supra) Gibbs CJ said that the balancing of financial and homemaker contributions depends “entirely on the facts of the case”. The High Court rejected equality as a starting point, with Mason J (with whom Deane J concurred) noting instead that:
“...the Court must in a given case evaluate the respective contributions of husband and wife under para. (a) and (b) of subsec. [79](4), difficult though that may be in some cases. In undertaking this task it is open to the Court to conclude on the materials before it that the indirect contribution of one party as homemaker or parent is equal to the financial contributions made to the acquisition of the matrimonial home on the footing that that party's efforts as homemaker and parent have enabled the other to earn an income by means of which the home was acquired and financed during the marriage. To sustain this conclusion the materials before the Court will need to show an equality of contribution – that the efforts of the wife in her role were the equal of the husband in his.
No doubt a conclusion in favour of equality of contribution will be more readily reached where the property in issue is the matrimonial home or superannuation benefits or pension entitlements and the marriage is of long standing. It will be otherwise when the property in issue consists of assets acquired by one party whose ability and energy has enabled the establishment or conduct of an extensive business enterprise to which the other party has made no financial contribution and where the other party's role does not extend beyond that of homemaker and parent.”
67. Although the acquisition of the cane farm and the inheritance were not initial contributions of the husband, we do not disagree with the trial Judge’s reference to the principles enunciated in Pierce v Pierce (1999) FLC 92-844, particularly at paragraph 28 when the Full Court said:
“In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home...”
Considering all these different contributions, but giving appropriate weight to the overwhelming and more significant direct financial contributions of the husband at the time of cohabitation, and inheritance from the estate of his late father, both directly and as a results of the arrangement reached with his brother, B, I regard the assessment on contributions of 22.5 per cent to the wife, and 77.5 per cent to the husband is appropriate. This, in effect, can be seen as the husband receiving the first 55 per cent of the pool, or approximately $1,157,000.
It is of course not proper to make a direct “dollar for dollar” financial allowance for the substantial contributions by the husband, as to do so makes no adjustment for inflation or the effect of capital gains and the like or to weigh in the substantial non-financial contributions of the wife It is not, for example, a proper approach for the husband to contend that he should "get back what he put in" – which might be estimated (on my findings) as directly – initial contributions $336,000, inheritance from his father's estate $1,000,008, smaller inheritances $13,000, a total of $1,357,000.
In my view, however, considering the nature of the contributions and the fact that property still substantially remains intact this variation on contributions as I have identified to trial is appropriate.
Section 75(2) factors
The husband is 56 years of age and has, since he left school at age 15, devoted himself to the rigours and modest financial returns from his rural pursuits. He intends to remain on the farm as it is "my life and my only means of income". Of course, if the drought breaks the costs of farming reduce and the profit from farming increase. There is no way of predicting when that will hopefully occur. It is reasonable to infer that until it does the husband's income may not substantially exceed the modest income he had in the 2006 financial year of $32,000 (before tax).
The wife is younger by some six years, but her skills for employment have not been enhanced by her full-time duties as a mother and homemaker for at least the last 20 years or so. Cleaning and tuck-shop convening may be as good as she gets. Her doctor, Dr Wulla, a general practitioner, opines she suffers moderate hypertension and anxiety/ depression for which she was medicated. I note that she has, however, not seen her doctor for anxiety symptoms for over two years. I do not the regard the health issues of the parties as significant and to be influential in this matter.
The three factors which compel, in my view, an adjustment in the wife's favour are:
a)The likely lack of child support payments and other financial support by the husband for the children. The husband's past record of paying a modest sum is poor. It is likely for a number of years into the future that he will be "asset rich and income poor". This makes assessment and collection of child support for the children, now aged 13 and nearly 10, extremely difficult. However, the children's lifestyle, needs, and expenses continue to require attention, and the wife will be the one to do so and meet those substantially, in my view, probably with the assistance of Centrelink benefits and other Government support;
b)The wife will also have the day-to-day responsibility for the emotional and physical support of the girls. The father's time with them is limited. The wife does not have any significant degree of flexibility in work hours, really needing to be available before and after school for the young children;
c)As a result of the contribution-based assessment, the husband will have greater assets which could be converted in time to cash. Of course, the husband says he intends to keep the farm which has been in his family for many years. The real effect of his greater share does not result in a greater income - but potentially could do so if he decided to sell same. In this regard, it would not be appropriate, in my view, to make a substantial adjustment for this disparity. The disparity essentially arises from the additional financial contributions the husband made initially, and from the estate entitlements from his father's will.
I am not, on the evidence, capable of assessing the effect of capital gains liabilities on the husband - if he should sell, (which he say he will not) or even in respect of the parcel of land he has sold (worth $417,000 approximately and retained in trust). It was open for the husband to produce such evidence, but he failed to do so.
In summary, I assess a further adjustment to the wife of 5 per cent is appropriate. In straight money terms, this amounts to a further payment to the wife from the share of the pool above of the husband of approximately $105,000. This is not an insignificant amount, and over the next, say, seven years equates to about $140 per child per week, if one was to look at its impact in a "child support" type context. I regard such amount as appropriate and proper.
Just and equitable
The effect of the division of the pool, as I have found it to be, of $2,104,195, as to 27.5 per cent to the wife, and 72.5 per cent to the husband equates to the wife receiving $578,653 in property which would comprise the following:
Payment by husband to the wife of
$581,303
Wife's motor vehicle
$10,000
Household goods
$2,000
Wife's account
$150
Partial property settlement received
$6,000
Less the wife's current credit card debt
$20,000
Less the remaining Centrelink debt
$800
Net Total
$578,653
The wife should pay from her share a 50 per cent contribution to the further valuation fees (total $3500) of Johnson and Company Pty Ltd – or $1750. Taking this into account I estimate the husband should pay to the wife the sum which I will round out to $580,000.
The husband will be left with essentially his farm property intact, with an increased debt of approximately $200,000, or a total debt of $360,000. When one takes into account the current overdraft debt and house mortgage. I say this because he has already sold one paddock (within five weeks of listing for sale) and has approximately $417,000 in cash investments.
I did not ignore the fact that these borrowings will cause some financial strain to the husband in these difficult drought conditions. I propose to give him some time to pay the sum. Mr Fleetwood for the wife says he could not oppose some time to pay. I believe $400,000 should be paid within 30 days. As to when the balance should be paid, I will hear further submissions on. Security with interest will be required for any extensive time delay. I regard an order which divides the current pool in this manner does justice and equity to the parties and propose to so order.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of Baumann FM
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