DEVLIN & DEVLIN

[2015] FCCA 2789

FEDERAL CIRCUIT COURT OF AUSTRALIA

DEVLIN & DEVLIN [2015] FCCA 2789

Catchwords:
FAMILY LAW – Property – contributions – husband argued that wife’s non-financial contribution less because of her pursuit of “(sport omitted)”.

Legislation:

Family Law Act 1975, ss.75, 79

Stanford v Stanford (2012) 247 CLR 108
C & C (2005) FLC 93-220
Field & Mighell [2015] FamCAFC 32
Fields & Smith [2015] FamCAFC 57

Applicant: MR DEVLIN

Respondent: MS DEVLIN

File Number: ADC 4062 of 2013

Judgment of: Judge Young

Hearing date: 7 September 2015

Date of Last Submission: 7 September 2015

Delivered at: Adelaide

Delivered on: 14 October 2015

REPRESENTATION

The Applicant appeared in person

Counsel for the Respondent: Ms Tinning

Solicitors for the Respondent: Belchamber Legal

ORDERS

In full and final settlement of property between the parties:

1. That both parties take all necessary steps and execute all necessary documents to cause the property situated at Property E in the State of South Australia and being the whole of the land in Certificate of Title reference Volume (omitted) Folio (omitted) to be sold by private treaty within ninety (90) days of the date of these orders at a price to be agreed on between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or their nominee and that the proceeds of the sale be disbursed as follows:

   (a)Payment of any money due and owing to the mortgagee;

   (b)Payment of agent’s commission and advertising expenses and legal expenses of the sale;

   (c)Payment of the sum of twelve thousand dollars ($12,000.00) to the wife’s father;

   (d)The net balance to be divided between the parties with 47.4% to the husband and 52.6% to the wife.

2. If the subject property is not sold by private treaty within the ninety (90) day period the subject property shall be sold forthwith by public auction upon the terms and conditions set out in Order 1 herein (save and except the time for auction shall be fourteen (14) days from the expiration of the initial ninety (90) day period).

3. That until settlement of the sale of the property the husband pay as they fall due all regular instalments in respect of the mortgage, council rates and water rates in respect of the property and pay forthwith any arrears in respect of the said instalments.

4. That in accordance with section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the husband’s interest in (omitted) Superannuation Fund account number (omitted), the wife is entitled to a base amount of  thirty eight thousand five hundred and thirty two dollars ($38,532.00) and there is a corresponding reduction in the entitlement of the husband to whom the splittable payment would have been made but for these orders.

5. That, having been accorded procedural fairness in relation to the making of this order, this order binds the trustee of the superannuation fund.

6. That operative time for this order is 4 business days after the date of service of the orders on the trustee of the superannuation fund.

7. That the husband deliver up to the wife’s solicitors the following items:

   (a)Three (3) blankets made by the wife’s mother;

   (b)The teddy bear known as “(omitted)”.

8. That other than as otherwise set out in this agreement, the parties have the sole right, title and interest in any other property which is at the date hereof in their possession, title or name and they shall be solely liable for and indemnify the other against any personal liabilities.

9. That the husband and wife do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders made herein.

10. That in the event that either party refuses or neglects to execute any deed or instrument, the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act 1975, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.

11. The wife shall hereafter indemnify the husband and keep him indemnified in respect of the (omitted) debt/s (to the extent that there is or are any).

12. That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money under these or any subsequent orders:

    (a)Each party be solely entitled to the exclusion of the other to all property, including choses-in-action, in the possession of such party as at the date of these orders;

    (b)Any money standing to the credit of the parties in a bank account are to be retained by the party in whose name the account appears save as provided for in these orders;

    (c)Each party hereby foregoes any claim they may have to any superannuation benefit that is belonging to or owned by the other save as provided for in these orders;

    (d)All insurance policies are to become the sole property of the owner named hereon;

    (e)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and

    (f)Any joint tenancy of the husband and wife in any real or personal estate is hereby expressly severed.

13. The husband be solely liable for and indemnify the wife against any personal income taxation liability in his name.

14. The wife be solely liable for and indemnify the husband against any personal income taxation liability in her sole name.

15. This application is otherwise dismissed and the matter removed from the list of pending cases.

IT IS NOTED that publication of this judgment under the pseudonym Devlin & Devlin is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADC 4062 of 2013

MR DEVLIN

Applicant

And

MS DEVLIN

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is a property matter. The issues in dispute between the parties are relatively narrow. The asset pool is agreed, with some minor exceptions, as are valuations. The major part of the trial concerned the husband’s claim that the wife’s financial and non-financial contributions were significantly less than his and should result in a 55%/45% division of the proceeds of sale of the former matrimonial home, the major non-superannuation asset, in his favour. The wife contended for a 50%/50% division of non-superannuation assets after payment of some debts said to be owing to her father. There was agreement about the division of superannuation assets and the appropriate base amount for a splitting order.

2. Implicit in the way the parties put their cases was that a “two pools” approach was appropriate. As the principal assets were the former matrimonial home and the husband’s superannuation fund and the parties accepted that there were different contributions in each case I am satisfied that this is a convenient approach, remembering that the overall result must be just and equitable[1].  

   [1] C & C (2005) FLC 93-220, [64], [65].

Background

1. The parties began to live together in (omitted) 2006 and married in (omitted) 2006. The wife is now 32 years old. The husband is 40 years old. There are 2 children of the marriage aged 5 years and 7 years. The parties separated in August 2013 after a period of cohabitation of about 7 ½ years. The children spend equal time with each parent.

2. The conventional approach in property settlement proceedings is to identify the property pool or pools of the parties, determine respective financial and non-financial contributions to the acquisition, conservation or improvement of any of the property and contributions to the welfare of the family, take into account the matters in section 79 (d), (e) - that is, subsection 75(2) factors so far as they are relevant – (f) and (g) of the Family Law Act 1975. A court must not make an order altering property interests unless it is satisfied that, in all the circumstances, it would be just and equitable to make the order. Since Stanford v Stanford[2] it may be appropriate to consider at the beginning whether any order should be made. In this case both parties sought alteration of property interests and I am satisfied that it is just and equitable to make the orders[3].

   [2] (2012) 247 CLR 108.

   [3] Field & Mighell [2015] FamCAFC 32, [25].

3. The assets of the parties and values at commencement of cohabitation were:

Wife	(omitted business) trading as (omitted)	Nominal
Motor vehicle	Nominal
Savings	Nominal
Inheritance from great grandmother	$10,000
Superannuation	$1,828
Husband	Savings	$33,000
Superannuation	$44,974

The property pool

1. At the time of trial the assets and their values were largely agreed. The unchallenged expert valuation evidence about the former matrimonial home was that it was worth $450,000. The husband asserted during final submissions that since the valuation it had been discovered that there was an encroachment on a neighbouring property and this would cost an indeterminate amount to remedy. In the absence of evidence it was not possible to form a view about that and, as I propose to order the sale of the property, any added expense or diminution in value because of that factor will be reflected in the net amount realized by the sale.

2. The husband also claimed in his trial affidavit that he owned a car worth $9,000 at the commencement of cohabitation but in the absence of evidence as to its value I have ignored this in the following calculations. The wife claimed or admitted that the husband had applied $33,000 of his savings towards a deposit for the purchase of the house at Property E in 2007. The husband asserted that an additional amount of $7,000 from his savings was also put towards the deposit. No evidence beyond the husband’s assertion was adduced and I am unable to make a positive finding on that point. The wife also contributed $10,000 towards the deposit from her inheritance. This was not disputed. The wife claimed that she did not contribute to superannuation during the marriage and her superannuation balance remained the same to the date of trial.

3. There was some minor disagreement about the extent of liabilities at trial and, in particular, whether an amount was owed to the wife’s father for the purchase of a car. For reasons set out below I have resolved that dispute in favour of the wife and have concluded that there is a debt owed in respect of the Lexus car to the wife’s father and this should be repaid from the proceeds of sale of the former matrimonial home. In respect of another debt, an amount of $4,075 said to be owing after the winding-up by an external administrator of the wife’s business, (business omitted) trading as (omitted), I am not satisfied that either party owed this sum and as far as I could discern from the unsatisfactory evidence on the point this was simply a deficiency borne by the creditors of the company. However, the wife has indicated in her proposed orders that she is willing to indemnify the husband against any liability for this supposed debt and I will make an order accordingly.

4. The husband continued to reside in the former matrimonial home after separation and pay the mortgage.

5. The assets and liabilities at trial were as follows:

Assets	Home at Property E	$450,000
Husband’s savings/redraw from mortgage post-separation	$20,000
Lexus car	$11,000
Honda car	$4,000
$485,000
Liabilities	Mortgage Property E	$160,265
Debt to wife’s father for Lexus	$8,000
Debt to wife’s father for Honda	$4,000
Net assets	$312,735
Superannuation	Husband’s superannuation	$122,038
Wife’s superannuation	$1,828
$123,866

1. The wife’s father purchased a Lexus car for $13,000 for the parties during the marriage and the wife asserted that, after payment of $5,000, a balance of $8,000 was owed to the father. The husband appeared to challenge this and appeared to assert that the debt had been forgiven wholly or partly because of some in-kind work he and the wife had done for the wife’s father and mother. However, in cross-examination the husband adopted somewhat different positions, first, saying that he did not know what arrangements were made with the father because the wife had made them and, later, saying that he did not agree to the debt anyway. I am satisfied that the arrangements were made by the wife and whether or not the husband knew about the precise details of those arrangement he was content to allow the wife to make whatever arrangements she thought fit. I am satisfied that she feels bound to repay her father and is likely to do so. The wife’s father also made a “balloon payment” at the end of the car lease on the Honda of $4,000 on behalf of the wife. The husband accepted that this had happened but did not concede that the wife was indebted to her father. The wife gave evidence that she felt bound to repay that sum. I am satisfied that these two amounts should be treated as debts and that provision should be made to repay $12,000 to the wife’s father from the proceeds of sale of the home.

Contributions

1. Much of the focus of the trial was on the extent of the wife’s contributions during the marriage. This fell into two parts: first, the husband’s contention that the wife’s business was unprofitable and there was no real financial contribution by her during the marriage to the acquisition, conservation or improvement of any of the property of the parties and, secondly, his contention that the wife’s contributions to the welfare of the family were less than the husband’s because of her passionate pursuit during the marriage of her sport or hobby, (sport omitted).

2. Before the parties met and throughout the marriage the wife conducted a business of her own, (business omitted), which she described as a “(business omitted)”. This appears to have been a sizable small business. The wife said that she had 10 or 12 employees at one point. I have no doubt that the business was time consuming and the wife and, at times, the husband put considerable effort into the business. However, it is clear from the taxation returns prepared by the wife’s accountant that this business did not produce any significant taxable income for her, at least in later years. In the year ending 30 June 2009 she earned $3,752, in 2010 she earned $2,246, in 2011 nothing and in 2012 she earned $4,258 from the business.

3. The wife gave evidence that groceries and other household supplies were purchased by the business but used domestically by the parties and that the taxable income figures were not the whole story. That may be true but the business was not ultimately profitable and was wound-up by an external administrator in 2014 with a small deficiency of funds. I also accept the husband’s claim that there were various private advances made by the parties to support the wife’s business and that ultimately this was possible because of the husband’s income of approximately $50,000 to $75,000 a year from employment in the (employer omitted). It is apparent that the husband supported the wife in the pursuit of her own business both financially and with his labour. It is unclear why the parties continued to operate the business when on any objective measure it was not profitable or, at best, marginal. I think the wife was emotionally committed to the business and the husband was prepared to support her. Both the wife and the husband were financially somewhat naïve. This was apparent in a number of ways during the trial. Nevertheless, I am satisfied that the business was a joint enterprise of the husband and wife in the sense that both voluntarily pursued it as an aspect of the marriage partnership. I do not think that its lack of profitability can simply be sheeted home to the wife. I see no reason to distinguish between the parties’ contributions on this basis[4].    

   [4] Fields & Smith [2015] FamCAFC 57, [172].

4. The husband contended that the wife was neglectful of the welfare of the family and, particularly, that her allegedly zealous pursuit of her hobby, (sport omitted), was excessively time consuming. He said this necessitated a greater effort from him looking after the children and the house. As part of his evidence he tendered photographs of household mess and a dirty car, allegedly showing the wife’s indifference to domestic duties. He claimed that the wife spent many evenings out with her (sport omitted) friends and he, the husband, was required to spend many lonely evenings caring for the children. He alleged that the wife spent a great deal of time on interstate travel to (sport omitted) events.

5. The wife admitted that she was enthusiastic about (sport omitted). She said she developed this interest in the last two years of the marriage (which was admitted by the husband) and that it made her feel good to get out of the home, to physically exercise and to socialise. She said it was good for her morale and mental outlook after the birth of her second child. She denied that the time spent pursuing the hobby was excessive. She said that if she went out in the evenings to (sport omitted) this was after the children were fed, bathed and ready for bed. On other occasions she claimed that it was a family affair: that the children enjoyed the outings, the eldest child had become a proficient (sport omitted) and the husband has participated as a (omitted). She said on the one interstate trip for (sport omitted) the family had accompanied her and, after the (sport omitted) event over a couple of days, had a family holiday.  

6. I do not accept the husband’s contention that the wife’s non-financial contributions or contributions to the welfare of the family were less than his. I do not accept his evidence on this issue. It was, at best, exaggerated. As an example, he tendered photographs of himself and his father working laying paving stones in the yard at the former matrimonial home. He tendered another photograph from the same time showing the wife about to go cycling. The husband claimed this showed the wife’s attitude to domestic work: she was, to paraphrase the husband, a shirker selfishly interested in her own pursuits. In cross-examination it transpired that the photograph simply showed the wife about to cycle to work.

7. I do not accept the husband’s contentions that the wife was neglectful of domestic matters. No doubt she was an enthusiast and devoted considerable time to her hobby but I do not accept that her pursuit of her hobby was anything other than ordinary recreation. Furthermore, I do not accept that a woman, or a man for that matter, is to be criticised because she or he pursues a healthy hobby and does not spend all available time either working or carrying out domestic chores. As Juvenal said, we need “… mens sana in corpore sano”.  

8. I am satisfied that each of the parties’ non-financial contributions and contributions to the welfare of the family were equal.

9. Taking into account that the duration of the co-habitation and marriage was not especially long, about 7 ½ years, I consider that there should be some recognition of the husband’s slightly greater financial contribution at the commencement of cohabitation. The husband applied his savings of $33,000 into the house deposit and the wife put in her inheritance of $10,000. I find that contributions to the non-superannuation assets were 52% by the husband and 48% by the wife. As the net value of the non-superannuation assets is $312,735 this would equate to $162,622 to the husband and $150,113 to the wife before any adjustment for section 75(2) factors.

10. The superannuation assets are, in each case, accumulation funds. The parties agreed that the appropriate course was to identify the growth in the funds since commencement of cohabitation and split that evenly between the parties. Implicit in that approach is an assumption that the growth in the funds during the relationship was the result of equal contributions and that there should be no adjustment for section 75(2) factors.

1. The growth in the husband’s superannuation fund was from $44,974 to $122,038 or an increase of $77,064. The growth of the wife’s superannuation was nil.  Half of the growth of the husband’s fund is $38,532. This is the relevant base amount for a splitting order in respect of the husband’s superannuation.

Section 75(2) factors

1. The wife contended that no adjustment was required in favour of either party for the factors in section 75(2) of the Family Law Act 1975. As mentioned above the children spend equal time with each parent.

2. I was told by the wife’s counsel in submissions that the wife is unemployed but undertakes some occasional (employment omitted). According to her financial statement her weekly income is $300 from “loan monies”. She has re-partnered. She is apparently in good health and impressed me as an intelligent and energetic. She has considerable experience in the (occupation omitted) industry and I have little doubt that she could obtain employment if she wished.

3. The husband, who did not file or serve an outline of case document or expressly address the matters in that section, submitted that his future employment prospects and earning capacity were “no better” than the wife’s. He submitted that his work prospects were bleak and that he would need to be retrained after such a long absence from his (occupation omitted) work. He called no evidence to support these assertions.  

4. The husband is presently unemployed. He stated that he had a “mental breakdown” at the time of the separation in 2013. Before that the husband was employed in a company owned by his father which is involved in the (omitted) industry. He said he had previously earned about $75,000 a year before taking some time off to help care for the children. The husband gave evidence of the many awards and successes he had achieved in the industry. I do not accept that his future in that industry is bleak or that he would need to be retrained. The husband adduced no medical or other evidence to support his claims and, as noted above, the husband was prone to exaggeration in some of his claims. I consider that the husband is likely to be re-employed by his father at some time in the future.

5. I do not accept that the husband’s employment prospects or any other matter merit an adjustment in his favour for the matters in section 75(2).

Conclusion

1. Both parties sought orders for alteration of property interests. I am satisfied that it is just and equitable to make orders for adjustment of property interests in conformity with the contributions I have found: 52% to the husband and 48% to the wife of the non-superannuation interests and to make an order for splitting the husband’s superannuation interest and providing a base amount of $38,532 for the wife. This equates to an overall division, in percentage terms, of non-superannuation and superannuation assets of about 56% to the husband and about 44% to the wife.

2. The effect of the proposed orders in respect of non-superannuation assets will be as follows:

Husband	Proceeds of sale of the home at Property E	$131,622
Husband’s savings/redraw from mortgage post-separation	$20,000
Lexus car	$11,000
$162,662
Wife	Proceeds of sale of home at Property E	$146,113
Honda car	$4,000
$150,113
Total (net value of non-superannuation assets	$312,735

1. As the amount to be realised by the sale of the home is not known at this stage the actual net proceeds, after all costs of sale including any additional costs relating to the alleged encroachment and the deduction of $12,000 to be paid to the wife’s father, should be paid to the husband and wife in proportion to the amounts identified above, that is the ratio 131,622:146,113. This equates to about 47.4% to the husband and 52.6% to the wife.

2. As mentioned, a splitting order will be made in respect of the husband’s superannuation with the wife’s base amount to be $38,532.

3. The wife also sought orders for the return of some personal items. As this was not opposed by the husband I will make orders accordingly.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Judge Young

Associate: 

Date:  14 October 2015