Dacomb and Dacomb
[2010] FMCAfam 11
•13 January 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DACOMB & DACOMB | [2010] FMCAfam 11 |
| FAMILY LAW – Property – 24 year relationship – assessment of contributions in circumstances where each party received gifts and/or inheritances during the relationship – whether there should be any adjustment in favour of the wife for s.75(2) factors. |
| Family Law Act 1975, ss.75, 79 |
| Efthimiadis & Efthimiadis (1993) FLC92-361 Mallet & Mallet (1984) 156 CLR 605 Pierce v Pierce (1999) FLC 92-844 Weir & Weir (1993) FLC 92-338 |
| Applicant: | MR DACOMB |
| Respondent: | MS DACOMB |
| File Number: | NCC 3021 of 2008 |
| Judgment of: | Terry FM |
| Hearing dates: | 31 August & 23 October 2009 |
| Date of Last Submission: | 23 October 2009 |
| Delivered at: | Darwin |
| Delivered on: | 13 January 2010 |
REPRESENTATION
| Solicitor Advocate for the Applicant: | Mr Byrnes |
| Solicitors for the Applicant: | Byrnes & Cox Lawyers |
| Solicitor Advocate for the Respondent: | Mr Price |
| Solicitors for the Respondent: | Price & Company Solicitors |
ORDERS
That the husband shall within 42 days of the date of these orders refinance into his sole name the loan from Holiday Coast Credit Union secured over Property R by mortgage No. [A].
That contemporaneously with the husband complying with Order (1) the wife shall sign all documents and do all acts and things required to transfer to the husband at the expense of the husband the whole of her right title and interest in the Property R property being the whole of the land contained in Certificate of Title Folio Identifier [1].
That the wife shall within 42 days of the date of these orders and provided that the husband has contemporaneously made arrangements for the refinancing into his sole name of the Holiday Coast Credit Union mortgage secured over the Property R property:
(i)pay to the husband the sum of $120,280.50;
(ii)refinance into her sole name the loan from Hastings Credit Union secured over Property C by Mortgage No. [9].
That contemporaneously with the wife complying with Order 3 the husband shall sign all documents and do all acts and things required to transfer to the wife at the expense of the wife the whole of his right title and interest in the Property C property being the whole of the land contained in Certificate of Title Folio Identifier [2].
That the husband is declared the owner to the exclusion of the wife of the business “[W]” and shall indemnify the wife and keep her indemnified from and against all suits, demands, actions claims, liabilities and expenses arising out of or incidental to the said business and arising out and incidental to the business operated by the partnership Mr & Ms Dacomb.
That the wife sign all documents required to transfer to the husband at the expense of the husband the whole of her right title and interest in the 1996 Jayco Eagle Off-Road Caravan Registration No. [omitted].
That the husband sign all documents required to transfer to the wife at the expense of the wife the whole of his right title and interest in the 2000 Mitsubishi Pajero Registration No. [omitted].
That the husband is declared the owner to the exclusion of the wife of:
(i)the Toyota Hi-Lux Utility Registration No. [omitted];
(ii)the 1964 EH Holden.
That within 21 days of the date of these orders the wife make available for collection by the husband the following items:
(i)glass china cabinet and contents;
(ii)opal shape mirror;
(iii)photograph of husband’s mother (in frame).
That unless specified in these orders and except for the purpose of enforcing payment of any money due under these orders or subsequent orders, each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in possession of each party and superannuation standing in their respective names.
That in the event that either party refuses or neglects to comply with the provisions of these orders the Registrar of the Federal Magistrates Court of Australia at Newcastle is hereby appointed to execute all deeds and documents in the name of the defaulting party.
That if either party defaults in compliance with the requirement that they refinance the loans on the Property C and Property R properties respectively, the parties have liberty to apply on short notice for consequential orders.
IT IS NOTED that publication of this judgment under the pseudonym Dacomb & Dacomb is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT NEWCASTLE |
NCC 3021 of 2008
| MR DACOMB |
Applicant
And
| MS DACOMB |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Dacomb and Ms Dacomb separated in June 2008 after 20 years of marriage and 24 years of cohabitation. They have asked the court to make orders about their property, because they are unable to agree about how much they each should receive from the property pool.
In dollar terms the dispute between them at the hearing came down to the amount the wife should be required to pay the husband, on the premise that the husband retained the investment property and the wife retained the former matrimonial home in which there is much greater equity.
The husband sought a payment of $164,000.00, while the wife proposed a payment of $55,000.00. The disparity arose principally because each party claimed that they should receive 60% of the net asset pool.
The husband said that he should receive 60% because:
· his contributions exceeded the wife’s as a result of the inheritances he received and in particular the large inheritance he received late in the relationship; and
· he and the wife were the same age and earned about the same income and no adjustment in favour of either party for s.75(2) factors was warranted.
The wife said that she should receive 60% because:
· her contributions exceeded the husband’s, especially when regard was had to the large gift from her family which had enabled the parties to purchase the former matrimonial home; and
· she was entitled to a small adjustment in her favour for s.75(2) factors.
The Evidence
The husband relied on the following documents:
i)his application filed on 26 November 2008;
ii)his affidavit filed on 27 July 2009;
iii)
his financial statements filed on 26 November 2008 and
29 July 2009.
The wife relied on the following documents:
i)her response filed on 30 December 2008;
ii)her affidavit filed on 8 July 2009;
iii)her financial statements filed on 30 December 2008 and 8 July 2009.
The husband was a calm and reasonably responsive witness, but he was not an entirely satisfactory witness. He was vague about some of the details of his financial affairs and never satisfactorily explained why the rent he said he was receiving for the investment property and the amount shown on his 2009 tax return in this regard did not match up.
The wife also was not an entirely satisfactory witness. There was a degree of exaggeration and overstatement in the evidence she gave about the current state of her finances and the extent (or lack thereof) of the husband’s contributions during the relationship.
Each party was critical of the other for some of their post-separation financial dealings while being open to criticism for similar actions themselves. The wife complained about the husband selling the Mitsubishi Triton after separation and retaining the proceeds for himself, but she did not suggest sharing with the husband the substantial long service leave payment she received in March 2009, most of which was attributable to her employment prior to separation. The husband complained about the wife renting out the former matrimonial home without consulting him and retaining the rental, but did not consult with the wife before terminating the business partnership and setting up business as a sole trader using the partnership assets.
Background
The husband and wife commenced living together in August 1984 when they were 20 years old. They married [in] 1988 and separated on 15 June 2008. They cohabited for almost 24 years.
There are three children of the marriage: [X], born in 1987, who is 22, [Y], born in 1989, who is 20 and [Z], born in 1992, who is 17. [X] is in the workforce, [Y] is studying and [Z] completed year 12 in 2009.
Prior to meeting the wife the husband had done two years of a [trade omitted] apprenticeship, but had ceased the apprenticeship when the company for which he was working went out of business. In the early period of cohabitation the husband worked in other occupations and may have had some periods of unemployment.
In about 1986 the husband commenced working for [N]. When his employment with [N] was terminated in 1988 he returned to [trade omitted] and completed his apprenticeship in about 1993.
After completing his apprenticeship the husband went into business for himself. The business, ‘[W]’ was still in operation when the parties separated fifteen years later.
The wife was employed when the parties commenced cohabitation in 1984 and she continued to work during the early years of cohabitation, although whether this was always full time or was sometimes part time is something I cannot now determine.
After the children were born the wife took on the primary parenting role but she also regularly engaged in part time work, with her hours increasing once all the children reached school age.
In 1989 the parties purchased Property C in joint names for $85,000.00. $40,000.00 of the purchase price was provided to the wife by her parents as a gift,[1] and the parties borrowed $40,000.00 from Hastings Credit Union. Property C became the parties’ home for the remainder of the marriage.
[1] Cf the evidence in wife’s affidavit that her parents provided $30,000.00 however Exhibit C supports the wife’s contention at the hearing that the gift was $40,000.00, not $30,000.00
In April 2008 the parties purchased a half interest in Property R, with Ms J and Mr S. The house on Property R was split down the middle into two separate dwellings known as flats [A] and [B] and was in poor condition.
I accept the husband’s evidence that he and Mr S reached an informal agreement that flat [A] would be the husband’s and flat [B] would be Mr S’s and that each of them worked to renovate “their” flat. The husband and Mr S intend in due course to seek separate titles for the two flats.
The parties’ share of the purchase price was $110,000.00 and they borrowed $131,000.00 in total intending to use the extra money to assist with the cost of renovations.
When the parties separated in June 2008 the principal assets were the two real properties.
The wife continued to live in the former matrimonial home with [Z] until March 2009, when she rented out the home and moved to southern Queensland. The wife said that she was finding it difficult to cope in a small community following the breakdown of the marriage and decided she needed a change of scene for a while. The wife wishes however to retain the home as part of the property settlement.
For the first few months after separation the husband lived at the Property R property and continued to renovate it. He then commenced living with his new partner in [D]. Since late November 2008 [A] Property R has been rented out by the husband. He wishes to retain the flat as part of the property settlement.
The law applicable to the resolution of disputes about property settlement
Pursuant to s.79 of the Family Law Act 1975, a court can make such orders as it considers appropriate altering the parties’ interests in property. s.79 (2) provides that the court shall not make an order under this section unless the court considers that it is just and equitable to do so.
The procedure usually adopted in determining applications for property settlement is:
i)to identify and value the assets and liabilities of the parties;
ii)to assess the contributions of the parties under ss.79(4)(a), (b) and (c) and to express those contributions as a percentage;
iii)to consider the matters set out in ss.79(4)(d),(e),(f) and (g), which include the matters in s.75(2), so far as they are relevant, and to determine whether any adjustment should be made as a result to the contribution based entitlements;
iv)to consider whether it is just and equitable to make the relevant orders.
In my view it is appropriate to follow this procedure in the present case.
Assets & Liabilities
I am satisfied that the assets are as follows:
Description
Ownership
Value
Property C Joint 280,000.00 Half interest in Property R Joint 181,250.00 2000 Toyota Hilux Husband 8,000.00 1964 EH Holden Husband 800.00 2000 Mitsubishi Pajero Joint 14,000.00 1996 Jayco Eagle off-road camper Joint 7,000.00 Furniture in former matrimonial home Joint 5,000.00 [W] Husband Nil AMP Shares Husband 2,292.00 Total 498,342.00
The parties agreed on the value of the former matrimonial home, the half interest in the Property R property, the Toyota Hilux, the EH Holden and the AMP shares.
Prior to the hearing the parties agreed that the Mitsubishi Pajero was worth $14,000.00 and this agreement was confirmed by the wife’s advocate when the hearing began. However during the hearing the wife sought to resile from this agreement, claiming that the Pajero was only worth $7,000.00.
The wife did not produce any admissible evidence of the value of the Pajero and I intend to include it in the pool at the agreed value.
The husband agreed that the Jayco had a current value of $7,000.00, but submitted that it should be included in the pool at a value of $4,000.00. The husband said that he had done extensive work on the Jayco post-separation and that $4,000.00 was a fair estimate of its value absent that work being done.
I intend to include the Jayco in the pool at its current value. I will consider the husband’s argument that he should be given credit for work done on the Jayco post separation when assessing contributions.
At separation the wife retained all of the furniture in the home. In her financial statement the wife admitted that the furniture was worth $5,000.00 and I intend to include it in the pool at this amount.
It was the wife’s case that a value of about $10,000.00 should be assigned to the husband’s sole trader [omitted] business. The husband submitted that no value should be assigned to this business.
Prior to separation the [omitted] business was run by the husband and wife in partnership. Shortly after separation the husband unilaterally dissolved the partnership and commenced operating as a sole trader using the vehicles, tools and equipment owned by the partnership. He did not tell the wife at the time what he had done.
The wife’s advocate was critical of the husband for effectively dissolving the partnership without telling the wife, but I do not consider that the husband intended to be devious. The husband’s evidence, that he did not think he could continue trading as a partnership once the marriage ended, was credible.
The husband did assume control of the partnership assets however. The wife’s advocate submitted that a value of $10,000.00 should be attributed to the husband’s new business because the financial statements for the partnership for the year ending 2009 (which were prepared because the partnership carried out some work immediately after the beginning of the 2008/9 financial year) showed that for accounting purposes the partnership had assets of $10,491.17 at 30 June 2009, mainly plant and equipment at cost less depreciation.
I do not accept that it would be reasonable to proceed in this way. The financial statement does not disclose what is included in the term “plant & equipment” and in any event deducting accumulated depreciation from purchase costs is not a valid means of determining value for family law purposes.
The depreciation schedule attached to the financial statement contains only two items, namely two motor vehicles. One is a Mitsubishi Triton, which has a written down value of $3,791.00. It was sold by the husband post separation for $4,800.00. The other is the Toyota Hilux which is already separately included in the pool.
On his own admission the husband did take tools previously owned by the partnership for use in his new business, but the wife provided no admissible evidence of their value, and the identity and potential value of these items was not explored with the husband during cross-examination.
There is no admissible evidence which would permit me to ascribe a separate value to the husband’s business.
At the hearing the husband was cross-examined about the sale of the Mitsubishi Triton which he owned at separation and sold after separation. The husband’s evidence was that he sold the vehicle for $4,800.00. He retained the proceeds. The husband may well have considered this justifiable because he paid out the Triton loan with part of an inheritance received from his grandmother in August 2007.
The wife’s advocate questioned the husband about the fact that he had originally advertised the vehicle for sale for $9,900.00. The husband was adamant that nobody had been willing to pay this much for it and that all he eventually received was $4,800.00.
There was nothing to cast doubt on the husband’s evidence and I accept it.
Although the husband was cross-examined about the amount he received from the sale of the Triton it was not submitted that the amount received should be added back to the pool as a notional asset, and in any event the money appears to have been used up.
The wife received $7,866.00 long service leave when she left her employment at [P] in March 2009, most of which has also been used up. In my view no injustice will result for either party if both the Triton proceeds and the long service leave payment are ignored.
I am satisfied that the liabilities are as follows:
Description
Ownership
Value
Mortgage Property C Joint 28,000.00 Mortgage Property R Joint 129,500.00 Personal Loan Holiday Coast Credit Union Husband 14,244.00 Total liabilities 171,744.00
I accept that the husband took out a loan of $15,000.00 from Holiday Coast Credit Union post-separation and used the funds to assist him to renovate Property R. It is appropriate that the balance of this loan be included as a relevant liability.
It was the husband’s case that there was a pre-separation debt of $2,600.00 owing to the Australian Taxation Office (ATO) by the partnership and that this should be included as a relevant liability. In circumstances however where the husband assumed all the assets and goodwill of the partnership at separation and where the husband gave no explanation about why the amount owing to the ATO had not been repaid long ago I do not intend to include this debt as a relevant liability.
The superannuation is as follows:
Description
Ownership
Value
[C] Superannuation as at 30 June 2009 Wife 25,379.00 [Q] Superannuation Husband 200.00
In view of the small amount of the superannuation in proportion to the pool generally I consider it appropriate to deal with this matter on the basis that there is one pool of assets having a net value of $352,177.00.
The evidence about contributions
At the commencement of cohabitation the husband owned an EH Holden and some personal items of minimal value. The wife owned a Galant and some personal items of minimal value.
It was the wife’s case that she also had $5,000.00 in savings and the husband agreed that this was probably correct.
In her affidavit the wife did not give any information about what had happened to these savings. It was the husband’s case that the wife used up the savings on holidays just for herself early in the relationship.
During oral evidence that wife maintained that she should be given credit for making a contribution of $5,000.00 to the purchase of the former matrimonial home in February 1989. There was an inference that the wife’s original $5,000.00 could be traced to this contribution.
I do not accept that the wife should be credited with a contribution of $5,000.00 toward the purchase of the former matrimonial home in 1989 simply because she had $5,000.00 in savings in 1984. I am not convinced that the wife now has any independent recollection of what happened to the savings she had 24 years ago, and she admitted that it was likely that at least some the money had been used up early on and then resaved after cohabitation commenced.
Turning to financial contributions during the relationship, I am satisfied that the husband was substantially employed throughout the relationship. He may have had some relatively brief periods of unemployment but not to an extent significant in the context of a
24 year relationship.
Between 1993 and June 2008 the husband earned his income via the partnership Mr & Ms Dacomb. The husband principally operated the business although I accept that the wife did some bookwork for the business.
The wife attempted to downplay the importance of the husband’s role as an income earner. She said that he was essentially lazy, that he lost his job on [N] because of all the time he took off and that she had to prod and organise him to ensure that he obtained his apprenticeship.
The wife claimed that from 1999 until 2007:
“The husband continued working in his [trade] business, although at times this was ad hoc, as again I observed the husband to prefer his recreational activities to that of working earning money.”[2]
[2] Wife’s affidavit filed 8 July 2009 paragraph 73
The husband vehemently denied that the wife had helped him obtain his apprenticeship. He vehemently denied that he had taken it easy or made minimum effort as far as income earning was concerned during the relationship.
The problem for the wife is that her criticism of the husband as a financial provider did not go beyond bare assertion. There was no evidence of the husband’s actual income during the relationship, nor any evidence about the number of hours he actually worked as opposed to the number of hours he might have worked. I am not able on the evidence to draw a conclusion that the husband failed to earn as much as he might otherwise have done as a result of laziness or failure to apply himself.
The wife made much of the fact that at the time of separation the council rates on the Property C property had not been paid for twelve months.
The husband was cross-examined about this and gave credible evidence that for a considerable time prior to the end of the marriage he felt he was paying more than his fair share of household expenses and that he had deliberately ceased paying the rates in an effort to force the wife to make a greater financial contribution.
I cannot determine whether the husband was right to feel financially put upon and I accept that the wife is aggrieved about the non-payment of the rates but in my view the dispute about who should have been paying the rates is more symptomatic of the dysfunction at the end of the relationship than evidence of a chronic inability or willingness on the part of the husband to properly contribute financially.
I am satisfied that the husband was the primary financial provider during the relationship and that his income was used to pay bills and meet the expenses of the family.
The husband made an additional financial contribution during the marriage as a result of inheritances received from his grandparents, as follows:
Date received
Amount
Use made of inheritance
c. 1997 $20,000.00 For purchase of caravan (predecessor to the Jayco) and costs of the around Australia trip and/or payment of bills prior to leaving for this travel AMP shares worth $14,000.00 Toward the costs of the around Australia trip August 2007 $100,000.00 $48,053.21 used to reduce mortgage on former matrimonial home
$7,000.00 used to pay out loan for Mitsubishi Triton
$12,000.00 used to purchase the Toyota Hilux ute
Some of the balance used to meet the cost of renovating Property R and to meet the husband’s living costs post separation while he was renovating the Property R
In respect of the 1997 inheritance the wife disputed that the AMP shares realised $14,000.00 in about 1997 but the husband’s evidence was credible and I accept it.
In respect of the 2007 inheritance, the husband had $33,000.00 left after he paid $48,000.00 off the mortgage, bought the Toyota Hilux and paid off the Triton loan. He maintained that he used this balance to assist in the renovations at Property R and to meet his living costs while he carried out the renovations but he gave absolutely no detailed breakdown about how the money had been spent. He went on holidays to the Whitsundays in October 2008 and to Tasmania at Christmas 2008, fuelling the wife’s suspicion that some of the money may have been used during these trips as the husband had no income at this time.
The wife also made a financial contribution during the relationship. While she became the primary homemaker and parent from [X]’s birth onwards, throughout the children’s upbringing she worked part time more often than not, increasing her hours after the children commenced school.
The wife made much of the fact that the mortgage was usually paid from her wage, but in my view nothing turns on this in circumstances where the husband’s income was used to pay other bills and meet other expenses.
The wife made an additional contribution during the relationship as a result of gifts from family, as follows:
Date received
Amount
Use made of gift
1988 $40,000.00[3] Toward purchase of the former matrimonial home for $85,000.00 1992 $10,000.00 In reduction of mortgage on the former matrimonial home 1998 $7,500.00[4] Toward part of the cost of purchasing the Jayco camper (the other $7,000.00 received from the insurer) [3] Cf evidence in wife’s affidavit but Exhibit C supports the wife’s contention at the hearing that the initial gift was $40,000.00, not $30,000.00
[4] The husband said that the wife’s parents contributed $7,000.00 but conceded that his recollection might be wrong. Nothing turns on a difference of $500.00
As to non-financial contributions, the husband conceded that the wife was the primary homemaker and parent but said that he was also involved in the care of the children when he was not at work, and that in particular he looked after the children at night or on weekends when the wife was either working or pursuing her interests in sports such as netball.
It was the husband’s evidence that he carried out a number or improvements to the home, including fencing and concreting, converting the garage to a granny flat, constructing a carport, building an outdoor entertainment area and renovating the bathroom. It was also his case that he did any necessary [trade] tasks around the home.
It was the wife’s evidence that during the marriage she did the overwhelming majority of the homemaker and parenting tasks and it was essentially her case that the husband made a minimum effort in this regard also.
The wife was dismissive of the husband’s efforts in making improvements to the home, emphasising that he had the assistance of contractors and friends, and that she had paid for some of the materials.
The wife was obliged during cross-examination to admit that some of her statements, such as that the husband never did the shopping, were not entirely accurate. She was obliged to admit that the husband did look after the children when she worked in the evening and when she worked or played sport on the weekend.
I accept that the wife did the majority of the housework and the parenting tasks, but it was in the context of the husband working full time outside the home and the wife either not working or working part time. I accept that the husband made a reasonable contribution to homemaker and parenting tasks in the time available to him.
I am satisfied that the husband was instrumental in making a number of improvements to the home. The fact that he engaged contractors to perform part of the work or had the assistance of friends does not take away from the fact that the husband orchestrated and carried to completion a number of improvements to the former matrimonial home.
I accept that the wife also carried out some home improvements and repainted the interior of the home during the relationship.
The parties each argued that they should be given credit for post-separation contributions. The husband said that he should be given credit for:
i)the work he did on the Jayco;
ii)the work he did on the Property R property.
The husband’s evidence was that at separation he took the Jayco with a view to living in it, as the Property R property was not then properly habitable, but discovered that it was water damaged. He said that he carried out extensive repairs to the Jayco and replaced the fridge. His evidence was that he contributed his labour and $900.00 worth of materials.
The husband raised this issue only during oral evidence. While I accept that the husband carried out this work, he did not produce any admissible evidence that his work on the Jayco had increased its value from $4,000.00 to $7,000.00. I am not prepared to place any weight on the husband’s work on the Jayco as a significant post-separation contribution by the husband.
There is no doubt that the husband did do work on Property R post separation. Exactly what he contributed in terms of money and time remains uncertain, because the husband did not descend into detail about this in his affidavit and I cannot exclude the possibility that he did use some of the money while on holiday. It was essentially his case however that he should receive credit for the increase in value of Property R. It has increased in value from $110,000.00 at the time of purchase in April 2008 to $181,000.00 at this time of the hearing.
The wife of course contributed to part of this increase by co-borrowing $20,000.00 with the husband in April 2008, and part of the increase is due to the personal loan of $15,000.00 the husband took out the majority of which remains outstanding, so at best the husband can claim credit for a net increase in value of about $35,000.00.
I am satisfied that the wife should be given credit for her post-separation financial support of [Z], in circumstances where the husband paid no child support. I do not accept the husband’s advocate’s submissions that the husband made significant indirect post-separation contribution to the care of [Z] through the fact that the wife retained the whole of the rent of the former matrimonial home from March 2009 onwards. The wife has very likely made some profit from this rental but I am satisfied that it was almost certainly minimal when repairs and outgoings as well as mortgage payments together with costs incurred by the wife in living in another location, are factored in.
I also take into account that the wife’s superannuation has increased net $2,500.00 since separation[5] while the husband contributed about $200.00 to superannuation in this period.
[5] Exhibit H [C] Superannuation Statement
Conclusion about contributions
Each party argued that a finding should be made that they had contributed more overall.
On the wife’s behalf it was argued that she contributed more financially and non-financially during the relationship as a result of her own exertions. It was further argued that the family gifts she received, although lower in amount than the husband’s inheritances, were the more valuable in comparison because of the purpose for which they were used.
On the husband’s behalf it was argued that contributions during the marriage from personal exertions were equal and that the size of the husband’s inheritances when compared to the size of the wife’s family gifts, together with the late receipt of his most substantial inheritance, warranted a finding that his contributions exceeded the wife’s.
Turning first to the issue of the contributions by the parties made during the relationship from their own exertions, it is important that I not too readily conclude that contributions were equal simply because this was a long marriage. In Mallett & Mallett[6] the High Court made it clear that a court must
“in a given case evaluate the respective contributions of husband and wife under pars.(a) and (b) of sub-s.(4), difficult though that may be in some cases.”
[6] Mallet & Mallet (1984) 156 CLR 605
I have carefully considered the evidence and in my view it is reasonable to assess the parties’ contributions from personal exertions during the marriage as equal in the light of that evidence.
The wife did not produce any evidence in support of her claim about the husband lack of contribution and her contentions in this regard were shown to be exaggerated and unreliable. I am satisfied that the the husband was the primary income earner but he also made non-financial contributions as a homemaker and parent. The wife was the secondary income earner and the primary homemaker and parent.
The more difficult task is to assess the weight to be given to the contributions which came from inheritances and gifts.
The husband’s advocate submitted that the husband should be given credit for contributions of $102,000.00 from family sources ($34,000.00 in 1997 and $68,000.00 from the inheritance he received in 2007) and that he should also be given credit for the increase in value of Property R ($50,000.00 less personal loan of $15,000.00 - say $35,000.00). It was submitted that the amounts of $68,000.00 and plus $35,000.00 should be given particular weight because they were contributed late in the relationship or immediately after separation.
The husband’s advocate submitted that in comparison to the $102,000.00 contributed by the husband, together with his contribution of $35,000.00 to the increase in value of Property R
post-separation, the wife contributed only $57,000.00 as a result of family gifts and $50,000.00 of this amount was contributed early in the relationship and was now of diminished significance.
There is some force in the submission of the wife’s advocate however that the gift of $40,000.00 from her family in 1989 should be given considerable weight as it was particularly valuable at the time it was made, allowing the parties to acquire the former matrimonial home.
In Pierce and Pierce[7] the court emphasised that:
“In considering the weight to be attached to the initial contribution, …………….. regard must be had to the use made by the parties of that contribution.”
[7] Pierce & Pierce (1999) FLC 92-847
This observation also holds true when it comes to assessing the weight to be given to gifts or inheritances received during a relationship.
The husband was an apprentice when the former matrimonial home was purchased, the parties had a young child and the wife was pregnant with the second and not working. The equity in the home purchased in 1989 now represents some 70% of the current pool (acknowledging of course that the husband reduced the mortgage by $48,000.00 from his 2007 inheritance.)
The gift of $10,000.00 made by the wife’s family in 1992 (when the husband was either still an apprentice or just finishing his apprenticeship) was also valuable in reducing the mortgage on the home further.
There is also some force in the argument that $40,000.00 contributed twenty years ago and $10,000.00 contributed seventeen years ago represented considerably more in real terms than the $48,000.00 contributed by the husband to the home in 2007.
The husband made a valuable contribution by working on Property R after separation but the wife also made two valuable post-separation contributions, namely the complete financial care of [Z] post-separation and a contribution of about $2,500.00 to her superannuation.
It is a finely balanced matter, but I am unable to be comfortably satisfied that the husband’s contributions exceeded the wife’s simply because of the greater monetary value of his inheritances or the stage at which they were received.
I assess contributions as equal and on that basis each party is entitled to 50% of the pool or $176,088.50.
Section 75(2) Factors
As required by s.79(4)(e) I now turn to consider the matters in s.75(2) of the Family Law Act. Subsection 79(4)(d) and (f) have no relevance to these proceedings and I have considered the husband’s failure to pay child support for [Z] between separation and the date of the hearing when assessing contributions.
The husband is 45. He is in good health and is a [tradesman] by occupation.
In his financial statement filed on 27 July 2009 the husband said that he was receiving $500.00 per week gross from his business which would equate to an income of $25,000.00 per annum.
I have grave doubts about whether this is an accurate representation of the husband’s income earning capacity. At the commencement of the hearing the husband’s advocate asserted that the husband’s income was similar to the wife’s, and the wife’s income as declared in her financial statement was $36,900.00 per annum.
No historical evidence about the husband’s income was made available at the hearing so I have no yardstick against which to consider his future income earning capacity. The husband earned net $656.00 from [trade omitted] in 2008/9 but there was not a representative year.
I am satisfied that the husband has trade skills and has the capacity to earn a reasonable income and I am also satisfied that he is capable of earning an income adequate to support himself but I can make no other findings about the husband’s income earning capacity.
The husband’s assets at the end of these proceedings will be the equity in Property R, and his motor vehicles, caravan, and AMP shares of minimal value.
The husband has incurred legal fees. In his financial statement filed in July 2009 he declared that he owed $10,000.00. His legal fees will have increased substantially as a result of the hearing.
The husband is in a new relationship with Ms H. Ms H is employed as a [omitted] and earns about $75,000.00 per annum. She is not dependent on the husband for financial support, indeed she contributes to household expenses, which benefits the husband.
The husband is not currently liable to pay any child support. He did not pay child support for his youngest child [Z] during 2008 or 2009. He made one payment of $1,500.00 to assist [Y] who is at university.
I have grave doubts about whether the husband could be depended on to pay anything toward the support of the children in the future, but there was no evidence that he was likely to be required to do so. [Y] had not ever sought adult child maintenance from either of her parents. [Z] will be 18 in March 2010. She completed year 12 in 2009, and there was no evidence that she intended to go on to any further education.
The wife is 45 and is also in good health. The wife has worked in [business’ omitted] for much of her working life and is presently [employed] at [T].
When she completed her most recent financial statement the wife was working at [K]. The wife then was working only part time. During oral evidence the wife said that she was now working at [T].
During the 2008/2009 financial year the wife earned $54,000.00 and I consider that this is likely a reasonable indication of her income earning capacity from full time work.
The wife kept up her skills and gained work experience during the marriage.
Following these proceedings the wife will retain the former matrimonial home, her furniture and a motor vehicle. The wife’s legal fees were similar to the husband’s at the time her financial statement was filed and will no doubt have increased substantially as a result of the hearing.
The wife was responsible for the support of [Z] in 2008 and 2009 but [Z] has now completed year 12. The wife did not give any evidence about [Z]’s plans for 2010 and beyond. She did not give evidence that [Z] intended to pursue further study.
During 2009 the wife provided some assistance to [Y], who is studying [omitted]. The wife created the impression that she would help [Y] more if she could, but there was no evidence that [Y] was likely to make any particular financial call on the wife for support in the future.
The husband and wife are both are in their mid forties. They are both capable of earning sufficient for their self support and while the husband’s income earning capacity is shrouded in mystery the wife did not produce any historical evidence to suggest that he was capable of earning a vastly superior income to herself. The husband does have an advantage over the wife in that he has re-partnered and can share expenses with another person. However I do not consider that the fact that the husband is in a fairly recently formed new relationship should result in an adjustment in the wife’s favour for s.75(2) factors in property proceedings.
In my view nothing in the parties circumstances generally would warrant an adjustment in favour of either party for s.75(2) factors.
I am however required by s.75(2)(o) to take into account any fact or circumstance which in the opinion of the Court the justice of the case requires to be taken into account.
It was the wife’s case that the husband had failed to make full and frank disclosure of financial information and that as a result consequences should be visited upon him in the form of an adjustment in the wife’s favour.
The wife’s advocate pointed to a number of instances of unsatisfactory evidence given by the husband. I do not accept however that the fact that the husband chose to fill in one particular box on his financial statement rather than another for the purpose of disclosing his income, or the fact that, although giving evidence about his partner’s income, he failed to itemise the expenses she paid on his behalf, should lead to a finding that the husband has been guilty of failing to make full and frank disclosure.
The wife’s advocate was also critical of the husband however for being tardy in providing some of his financial documents and for failing to accurately disclose in his tax returns the amount of rental he was receiving from Property R, although he was frank enough in the witness box about how much that was.
The wife’s advocate referred to the case of Weir & Weir[8] in which the Full Court said that:
“…it is the duty of a party involved in property proceedings in this jurisdiction to make full disclosure of their financial affairs….
It seems to us that once it has been established that there has been a deliberate non-disclosure….then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
…We should have thought that the Court’s jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.
The difficulty then arises as to what order should be made. However, we are troubled by the proposition which seems to arise in Monte and Monte that if a party is either cunning enough or vague enough to cover his or her tracks sufficiently to prevent a Court making a finding as to the amount that has not been disclosed, then the other party fails. We do not believe this to be the law and in so far as the decision in Monte and Monte supports such a proposition we do not believe that it should be followed.”
[8] Weir and Weir (1993) FLC 92-338
In my view the above pronouncement does not bear the weight the wife’s advocate sought to place on it namely that a mere finding that one party had made inadequate financial disclosure should lead to an adjustment in favour of the other party.
The husband’s failure to provide documents as promptly as he might have was no doubt irritating for the wife and it may well have increased her legal costs. There was simply nothing in the evidence as whole however to suggest that the husband was hiding assets.
I suspect that the husband was not frank about his income or his income earning capacity but the following observation of the Full Court in Efthimiadis is relevant: [9]
“So far as the wife is concerned, there is no doubt that she should be treated as substantially understating her income…..The circumstances that the wife had a significantly greater income than she deposed to was very damaging to her on issues of credit overall and virtually ensured that she was put out of court as far as Section 75(2) factors was concerned. However, it does not follow that a conclusion should be reached that it was likely that she had other property of significance and her case dismissed on that basis.”
[9] Efthimiadis & Efthimiadis (1993) FLC92-361
I am not persuaded that there has been any non-disclosure by the husband such as might warrant an adjustment in favour of the wife.
The husband thus remains entitled to $176,088.50 and the wife to $176,088.50.
Whether the proposed orders are just and equitable
The parties agreed that the wife should retain the former matrimonial home (subject to the mortgage) and the other assets in her possession. This would give the wife the following:
Property C less mortgage 252,000.00
Mitsubishi Pajero 14,000.00
Furniture 5,000.00
[C] superannuation 25,379.00Total 296,379.00
On an application of the percentages to the asset pool the wife would be required to pay the husband $120,280.50.
This will leave the wife with a mortgage of $148,000.00, and she may have to find some money to pay her legal fees if they remain unpaid. The wife has a good employment history and she did not give any evidence that any particular level of borrowing might place her in difficulty or cause her to lose the home.
The husband will receive:
Property R less mortgage 51,750.00
EH Holden 800.00
Jayco Caravan 7,000.00
Toyota Hilux 8,000.00
Q superannuation 200.00
AMP shares 2,292.00
Payment from wife: 120,280.50Less
Holiday Coast personal loan 14,244.00
Net received by husband 176,078.50
The husband will have some advantage over the wife in that he will be receiving all his assets in the form of immediately available assets, whereas the wife will be receiving part of her entitlement in the form of superannuation which will not be available to her for more than twenty years, and the wife will have a much greater mortgage than the husband in the immediate future. However the property the husband is to retain is significantly less valuable, and he may be liable for some capital gains tax if he sells the property in the future.
The parties have a modest asset pool after 24 years of marriage, during which they brought up three children to adulthood. However they are both only in their mid-forties and are both capable of earning a modest but sufficient income in the future. I am satisfied that the outcome, and the orders, are just and equitable.
It is important that as part of the orders the husband be required to refinance the mortgage secured over Property R contemporaneously with receiving the payment from the wife. The wife may indeed be unable to borrow sufficient to pay out the husband unless he simultaneously relieves her of liability for the Property R loan.
If the husband is unwilling or unable to refinance the Property R loan then the parties may need to come back to court pursuant to the liberty to apply order I intend to make so that further machinery orders can be made.
The husband sought four specific items of property from the home. I did not hear any argument against this during the hearing and I intend to order the wife make these items available for collection by the husband.
For all of the above reasons the orders shall be as set out at the beginning of this judgment.
I certify that the preceding one hundred and forty-six (146) paragraphs are a true copy of the reasons for judgment of Terry FM
Associate: Barbara Cameron
Date: 13 January 2010
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