Dianto & Karkis
[2008] FamCA 350
•21 May 2008
FAMILY COURT OF AUSTRALIA
| DIANTO & KARKIS | [2008] FamCA 350 |
| FAMILY LAW – PROPERTY SETTLEMENT – Pool, Contribution, adjustments, just and equitable FAMILY LAW – SPOUSAL MAINTENANCE – Threshold, need and capacity FAMILY LAW – COSTS |
| Family Law Act 1975 (Cth) ss 72, 74, 75, 79 & 117 |
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of Omacini (2005) 33 Fam LR 134
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) l2 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
In the Marriage of Coghlan (2004) 33 Fam LR 414.
| APPLICANT: | Ms Dianto |
| RESPONDENT: | Mr Karkis |
| FILE NUMBER: | SYF | 2298 | of | 2006 |
| DATE DELIVERED: | 21 May 2008 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Judicial Registrar Loughnan |
| HEARING DATES: | 29 & 30 April & 1 May 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr G. Foster |
SOLICITOR FOR THE APPLICANT: | MCW Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms L. Judge |
SOLICITOR FOR THE RESPONDENT: | Demaine and Associates |
Orders
1.That within twenty-eight (28) days of the making of these Orders the husband do all acts and things and sign all documents necessary to transfer to the wife the whole of his right, title and interest in the matrimonial home situate and known as [W Street, H] and procure a discharge the Mortgage presently secured on the said property.
2.That forthwith upon the making of these Orders, the parties do all acts and things and sign all documents necessary to roll over to a fund nominated by the wife in writing the whole of her entitlement in the T Services Pty Ltd Superannuation Fund and T Pty Ltd Superannuation Fund upon the Wife providing to the Trustees of the said funds a rollover request to an Approved Superannuation Fund.
3.That simultaneously with Order 1 being complied with the wife do all such acts and things and sign all documents necessary to resign from any office held by her and to transfer to the husband all her shareholding and other interests in T Pty Ltd, T Services Pty Ltd and K Investments Pty Limited and that thereafter the husband indemnify the wife and keep the wife indemnified in respect of all claims, liabilities including loans, mortgages, outgoings, debts, taxation liabilities and guarantees arising from her role as an officeholder shareholder or otherwise in relation to T Pty Ltd, T Services Pty Ltd, K Investments Pty Ltd and all other entities or associated entities of which the wife has held any office.
4.That simultaneously with Order 1 being complied with the Wife sign all necessary documents to transfer to the Husband all her interest in the factory premises at S and the Husband thereafter indemnify the Wife from all or any liability arising from her ownership of the said property.
5.The husband shall pay to the wife the sum of $259,500 within two months of the date of these orders.
6.In the event that the husband does not make the payment in accordance with Order 5 within the time specified, unless the parties agree to the contrary in writing, they shall forthwith do all acts and things and sign all documents necessary to sell the property situate and known as S for the best price reasonably obtainable and to cause a disbursement of the net proceeds of sale as to:
a) $259,500 together with interest in accordance with the Family Law Rules calculated from the date of default to the date of payment; and
b) the balance of the proceeds to the husband.
7.Except as otherwise provided in these Orders, the husband and the wife are entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements, and personal effects currently in the possession or control of each of them respectively.
8.That all the parties do all things, sign all documents and give consents necessary to give full effect to these Orders.
9.That if either party refuses or neglects to sign or execute any document, instrument or writing or comply with any Order contained herein after seven (7) days of being required to do so, pursuant to Section 106A of the Act that the Registrar of the Family Court of Australia at Sydney be empowered to sign and execute such document, instrument or writing on behalf of either party as may be necessary to give full force and effect to the Orders herein.
10.The Application for Final Orders filed 20 February 2006 and the Further Amended Response to the Application for Final orders filed 12 March 2008 are otherwise dismissed.
11.The court noted that the husband withdrew his application for orders in terms of paragraphs 1 & 3 of his Second Further Amended Application in a Case filed 12 March 2008.
12.Orders 11, 12 and 18 dated 31 May 2006 are discharged as from the date from which they stand paid.
13.The Second Further Amended Application in a Case is otherwise dismissed.
14.The parties are at liberty to restore the proceedings before Judicial Registrar Loughnan within 28 days or such further time as the parties may agree in relation to the form of the orders. That restoration is to be by arrangement with his associate and the other party.
IT IS NOTED that publication of this judgment under the pseudonym Dianto & Karkis is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 2298 of 2006
| MS DIANTO |
Applicant
And
| MR KARKIS |
Respondent
REASONS FOR JUDGMENT
After a marriage of more than 22 years the parties cannot agree on a settlement of their property. They also disagree about spousal maintenance and costs. The wife prefers the family name Dianto and the proceedings have been amended accordingly.
Applications
The wife filed an Application for Final Orders on 20 February 2006. At the commencement of the trial the wife’s counsel lodged a minute of orders sought by the wife in the following terms:
PROPERTY
1.That within twenty-eight (28) days of the making of these Orders the husband do all acts and things and sign all documents necessary to transfer to the wife the whole of his right, title and interest in the matrimonial home situate and known as [W Street] and procure a discharge the Mortgage presently secured on the said property.
2.That forthwith upon the making of these Orders, the parties do all acts and things and sign all documents necessary to roll over to a fund nominated by the wife in writing the whole of her entitlement in the [T] Services Pty Ltd Superannuation Fund and [T] Pty Ltd Superannuation Fund upon the Wife providing to the Trustees of the said funds a rollover request to an Approved Superannuation Fund.
3.That simultaneously with Order 1 being complied with the wife do all such acts and things and sign all documents necessary to resign from any office held by her and to transfer to the husband all her shareholding and other interests in [T] Pty Ltd, [T] Services Pty Ltd and [K] Investments Pty Limited and that thereafter the husband indemnify the wife and keep the wife indemnified in respect of all claims, liabilities including loans, mortgages, outgoings, debts, taxation liabilities and guarantees arising from her role as an officeholder shareholder or otherwise in relation to [T] Pty Ltd, [T] Services Pty Ltd, [K] Investments Pty Ltd and all other entities or associated entities of which the wife has held any office.
4.That simultaneously with Order 1 being complied with the Wife sign all necessary documents to transfer to the Husband all her interest in the factory premises at [S] and the Husband thereafter indemnify the Wife from all or any liability arising from her ownership of the said property.
5.That the husband pay to the wife the sum of $1,000,000.00 within forty-two (42) days of this date.
6.Except as otherwise provided in these Orders, the husband and the wife are entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements, and personal effects currently in the possession or control of each of them respectively.
7.That all the parties do all things, sign all documents and give consents necessary to give full effect to these Orders.
8.That if either party refuses or neglects to sign or execute any document, instrument or writing or comply with any Order contained herein after seven (7) days of being required to do so, pursuant to Section 106A of the Act that the Registrar of the Family Court of Australia at Sydney be empowered to sign and execute such document, instrument or writing on behalf of either party as may be necessary to give full force and effect to the Orders herein.
SPOUSAL MAINTENANCE
9.That the husband pay and continue to pay for the benefit of the wife the sum of $500.00 per week by way of spousal maintenance for a period of 12 months from the date of these orders.
The husband seeks orders in terms of his Further Amended Response to the Application for Final orders filed 12 March 2008 as follows:
The Former Matrimonial Home
1. The husband is ordered to forthwith sign all documents and do all acts necessary to transfer to the wife all of his right title and interest in the former matrimonial home at [W Street] in the State of New South Wales (“the home”) free from all encumbrances.
The [K]Investment Trust
2. The wife is ordered to forthwith sign all documents and do all acts necessary to cause to be transferred to the husband all of the parties’ 50% interest held by [K] Investments Pty Ltd as Trustee for the [K] Investment Trust, in the property at [S] in the state of New South Wales (“the said property”).
3. The Court notes that the husband and wife in these proceedings are the sole shareholders and directors of [K] Investments Pty Ltd and through this entity control the [K] Investment Trust.
4. The Court notes that the co owners of the said property have been personally served with a copy of the further amended application herein and the orders sought in relation to the said property.
[T] Services Pty Ltd Superannuation Fund
5. The parties are ordered to forthwith sign all documents, obtain all necessary consents and do all do all acts and things necessary to cause the assets of the [T] Services Pty Ltd Superannuation Fund to be realised so as to allow each of the members of the fund, including the husband and the wife herein to henceforth transfer to and maintain and hold their entitlements in another approved fund nominated by them.
6. In order to facilitate compliance with the previous order herein each of the parties is ordered to obtain all necessary consents and sign all documents and do all acts necessary to cause [T] Services as trustee for [T] Services Superannuation Fund to effect a sale of the properties situate and known as [Y] in the state of New South Wales and [P] in the state of New South Wales (“the properties”).
7. The parties are to agree on a price at which the properties shall respectively be listed for sale by private treaty with a reputable local real estate agent or agents to be agreed by the parties.
8. In the absence of agreement as to the real estate agent or agents to conduct the sale/s, the parties are ordered to sign all documents and do all acts necessary to cause an agent to be nominated by the President of the Real Estate Institute of New South Wales for the time being or his nominee and the said nomination of the agent shall be bind and final as between the parties.
9. In the absence of agreement as to a sale price, the parties are ordered to sign all documents and do all acts necessary to cause the relevant property to be valued by the president of the New South Wales division of the Australian Institute of Valuers, or his nominee at the cost of both the husband and the wife. The said valuation and the nomination of the valuer to undertake the valuation shall be final and binding between the parties.
10. The husband's solicitor, Demaine & Associates, shall have the carriage of any sales.
11. In the event that either of the said properties is not sold by private treaty within four (4) months from the date of these orders parties are ordered to sign all documents and do all acts necessary to cause the properties to be sold by public auction and shall do all things necessary to facilitate a sale by auction including appointing an auctioneer and agreeing as to reserve price and in the event that the husband and wife are unable to agree on a reserve price or an auctioneer, the parties are to do all acts and sign all documents to cause an auctioneer to be nominated by the President of the Real Estate Institute of New South Wales for the time being or his nominee and the said nomination of the auctioneer shall be bind and final as between the parties.
12. In the event that the parties are unable to agree as to a reserve price in the event that either of the properties is to be auctioned pursuant to the orders herein the parties are to sign all documents and do all acts necessary to cause and request the auctioneer having conduct of the sale/s to nominate a reserve price and to accept the nomination of the auctioneer in this regard and to cause the property to be auctioned at that reserve price.
13. In the event that either of the properties does not sell at auction pursuant to the orders herein, the parties are ordered to sign all documents and do all acts necessary forthwith list the property for sale by public auction without a reserve price and to effect a sale of the said property, on the same terms and conditions as provided for in relation to the sale by auction pursuant to the previous orders save for the nomination of a reserve price.
14. Upon sale of the said properties the parties are ordered to sign all documents and do all acts necessary to pay and disburse the proceeds of sale to be paid and disbursed in the following listed order of priority:-
(i) Payment of agent's commission;
(ii)Payment of vendor's solicitor's conveyancing costs;
(iii)Full payment of debts secured by discharge mortgage over the said property and in discharge of the mortgage;
(iv)In full payment of any CGT or other taxation liability arising form the sale;
(v)As to the balance, to be applied to the general pool of fund assets to enable the respective members of the fund to comply with order 5 herein.
15. The Court notes that the other members of the fund have been served with a copy of the further amended application herein.
[T] Superannuation Fund
16. The parties are ordered to forthwith sign all documents, obtain all necessary consents and do all do all acts and things necessary to cause the assets of the [T] Pty Ltd Superannuation Fund to be realised so an to allow each of the members of the fund, including the husband and the wife herein, to henceforth transfer to and maintain and hold their entitlements in another approved fund nominated by them.
17. In order to facilitate compliance with order 16 herein each of the parties is ordered to obtain all necessary consents and sign all documents and do all acts necessary to cause [T] (NSW) Pty Ltd as trustee for [T] (NSW) Superannuation Fund to effect a sale of the property situate and known as [D] in the state of New South Wales (“the property”).
18. The parties shall agree on a price at which the property shall be listed for sale by private treaty with a reputable local real estate agent or agents to be agreed by the parties.
19. In the absence of agreement as to the real estate agent or agents to conduct the sale, the parties are ordered to sign all documents and do all acts necessary to cause an agent to be nominated by the President of the Real Estate Institute of New South Wales for the time being or his nominee and the said nomination of the agent shall be binding and final as between the parties.
20. In the absence of agreement as to the sale price, the parties are ordered to sign all documents and do all acts necessary to cause the property to be valued by the president of the New South Wales Division of the Australian Institute of Valuers, or his nominee at the cost of both the husband and the wife. The said valuation and the nomination of the valuer to undertake the valuation shall be final and binding between the parties.
21. The husband's solicitor, Demaine & Associates, shall have the carriage of any sale.
22. In the event that the property is not sold by private treaty within four (4) months from the date of the orders herein the parties are ordered to sign all documents and do all acts necessary to cause the said home to be sold by public auction and are to do all things necessary to facilitate a sale by auction including appointing an auctioneer and agreeing as to reserve price and in the event that the husband and wife are unable to agree on a reserve price or an auctioneer, the parties are to do all acts and sign all documents to cause an auctioneer to be nominated by the President of the Real Estate Institute of New South Wales for the time being or his nominee and the said nomination of the auctioneer shall be binding and final as between the parties.
23. In the event that the parties are unable to agree as to a reserve price in the event that the property is to be auctioned pursuant to the orders herein the parties are to sign all documents and do all acts necessary to cause and request the auctioneer having conduct of the sale to nominate a reserve price and to accept the nomination of the auctioneer in this regard and to cause the property to be auctioned at that reserve price.
24. In the event the said property does not sell at auction pursuant to the orders herein, the parties are ordered to sign all documents and do all acts necessary forthwith list the property for sale by public auction without a reserve price and to effect a sale of the property, on the same terms and conditions as provided for in relation to the sale by auction pursuant to the previous orders herein save for the nomination of a reserve price.
25. Upon sale of the said property the parties are ordered to sign all documents and do all acts necessary to pay and disburse the proceeds of sale to be paid and disbursed in the following listed order of priority:-
(i) Payment of agent's commission;
(ii)Payment of vendor's solicitor's conveyancing costs;
(vi)Full payment of debts secured by discharge mortgage over the said property and in discharge of the mortgage;
(vii)In full payment of any CGT or other taxation liability arising form the sale;
(viii)As to the balance, to be applied to the general pool of fund assets to enable the respective members of the fund to comply with order 16 herein.
26. The Court notes that the other members of the fund have been served with a copy of the amended application herein and the orders sought in relation to the fund.
[S Property]
27. The wife is ordered to forthwith sign all documents and do all acts necessary to transfer to the husband the whole of the parties’ 50% interest held in the property at [S] in the state of New South Wales (“the said property”).
28. The Court notes that the co owner/s of the said property have been personally served with a copy of the further amended application herein and the orders sought in relation to the said property.
[T] (NSW) Pty Ltd and the Associated Business
29. The wife is ordered to forthwith sign all documents and do all acts necessary to transfer to the husband all of her shareholding and interest in the business operated through the corporate structure known as [T] (NSW) Pty Ltd (‘the business”).
30. As and from the date of the transfer pursuant to order 29 herein the husband is to indemnify and keep indemnified the wife in respect of all claims, liabilities and taxation liabilities including Capital Gains Tax liability arising from position as an Officeholder, shareholder or otherwise in relation to [T] Pty Ltd, [T] Services Pty Ltd, [K] Investments Pty Ltd as and from the date of the said transfer.
Further and Other Orders Sought
31. Subject to the orders herein and for the whole of the period up to and including the date settlement of all of the transfers pursuant to orders 1, 2, and 27 herein the parties are to share equally in all claims, liabilities and taxation liabilities including Capital Gains Tax liability arising from their position as an Officeholder, shareholder or otherwise in relation to [T] Pty Ltd, [T] Services Pty Ltd, [K] Investments Pty Ltd, [T] Services Pty Ltd Superannuation Fund and [T] Pty Ltd Superannuation Fund and each of the parties is to indemnify and keep indemnified the other in respect of any such claim or liability.
32. The husband is to indemnify and keep indemnified the wife in relation to:
(i)the debt due to [Mr A];
(ii)the debt due to [Mr O];
(iii)the debt due to [Mr S];
(iv)all indebtedness to the Commonwealth Bank of Australia.
33. Within twenty (28) days of the making of these Orders the husband is ordered to transfer to the wife the whole of his right, title and interest in the motor vehicle registered number DK 1006.
34. The court notes that each of the parties has received funds by way of interim and partial property settlement in July 2007 following the settlement of the sale of the property situate and known as [H Street] pursuant to an Order of this Court made 9 May 2007.
35. Except as otherwise provided for in these Orders, the husband and the wife are entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements, and personal effects currently in the possession or control of each of them respectively.
36. The parties are ordered to do all things, sign all documents and give all consents necessary to give full force and effect to these orders.
37. In the event that either party refuses or neglects to sign or execute any document, instrument or writing or comply with any order contained herein after seven days of being required to do so, pursuant to Section 106A of the Act that the Registrar of the Family Court of Australia at Sydney be and is hereby empowered to sign and execute such document, instrument or writing on behalf of either party as may be necessary to give full force and effect to orders herein.
38. The wife's application for spousal maintenance is dismissed.
39. The wife is ordered to pay the husband's costs of this application.
The husband also seeks orders in terms of paragraphs 1 & 3 of his Second Further Amended Application in a Case filed 12 March 2008 as follows:
1.That orders 11, 12 and 18 dated 31 May 2006 be discharged as from the date from which they stand paid.
…..
3.That the wife pay the husband’s costs of the interim application herein on an indemnity basis
In the course of initial submissions learned counsel for the husband said that the husband was not pressing paragraphs 2 & 4 of the application, which related to child support.
Sworn written evidence
The written evidence filed in the proceedings and relied on by the parties was:
Affidavit of the wife Sworn 27 July 2007
Filed 30 July 2007
Affidavit of the wife Sworn 18 April 2008
Filed 22 April 2008
Financial Statement of the wife Sworn 27 July 2007
Filed 30 July 2007
Financial Statement of the wife Filed 22 April 2008
Filed 30 July 2007
Affidavit of A Dianto Sworn 25 July 2007
Filed 30 July 2007
Affidavit of the husband Sworn 25 July 2007
Filed 26 July 2007
Affidavit of the husband (Updating) Sworn 19 March 2008
Filed 25 March 2008
Statement of Financial Circumstances Sworn 19 March 2008
Filed 25 March 2008
Affidavit of Dr B Sworn 8 May 2007
Filed 15 May 2007
Affidavit of Dr N Sworn 8 May 2007
Filed 15 May 2007
Affidavit of Mr C Sworn 4 June 2007
Filed 5 June 2007
Affidavit of Carolyn Demaine (Costs) Sworn 5 June 2007
Filed 6 June 2007
Affidavit of Mr O Sworn 23 July 2007
Filed 26 July 2007
Affidavit of Mr S Sworn 25 July 2007
Filed 26 July 2007
JOINT EXPERTS
Report of Dr R Dated 28 February 2008
Report of Mr H Dated 30 June 2006
Updated Report of Mr H Dated 19 December 2007
Report of Dr P Dated 31 March 2008
Issues for determination
The issues for determination are:
Property Settlement
The pool of assets and liabilities:
oWhether the value of the K Investment Trust is $387,597 or $257,614, the difference being an asserted debt to [Mr A];
oWhether debts asserted by the husband to be owed to Mr S, Mr O and the husband’s parents and sister are owing and in any event whether they should be taken into account in determining the net assets of the parties;
oWhether debts of the wife to Mastercard, Council rates, Energy Australia and for school fees should be taken into account in determining the net assets of the parties;
Whether the contributions favour the wife or the husband by 5%;
Whether there should be an adjustment to the wife for the other matters in section 79(4) and if so whether 12.5% or 5%
Spousal Maintenance
Threshold issue – the wife’s capacity for self support
The extent of the wife’s need
The extent of the husband’s capacity
Costs
The weight to be given to:
oThe proceedings having been necessitated by a breach of court order;
oWritten offers of settlement;
oThe fact that the wife succeeded on only one count.
Short History
As at the dates of the hearing the wife and husband were 44 and 50 years of age respectively. They were married in May 1983 and separated under one roof in December 2005. Physical separation occurred in May or June of 2006. There were other brief separations from 2003.
Children
There are three children of the marriage:
Dwho was born in September 1988 and as at the date of the hearing was 19 years of age;
Owho was born in June 1991 and as at the date of the hearing was 16 years of age; and
Rwho was born in June 1998 and as at the date of the hearing was 9 years of age.
Background Facts
The parties were married in May 1983. They first lived together at the husband’s sister’s property until August 1983. The wife was not in paid employment and had no significant assets. The husband was then in full-time employment as Driver and owned a Datsun 180B motor vehicle. The husband says that he also had $10,000 in savings. Neither party had any significant debts.
From August 1983 to about October 1987 the parties lived in a property owned by the wife’s parents at J. The parties paid all of the outgoings associated with their occupation save for the council and water rates, which I accept were paid by the wife’s parents.
In about September 1983 the wife started work at a Bank, first part-time and later on a full-time basis.
In about October 1986 an arrangement was struck whereby the wife’s parents gifted the J property to the wife and her brother, V. The parties then bought out V’s interest for $35,000. The husband says that sum was sourced in the $10,000 he brought into the marriage and a further $25,000 which the parties had jointly saved. The husband says he personally attended to replacing the iron roof at the rear of the J property, took up and re-laid floor boards, installed a slab and erected a new iron shed. The husband concedes that the wife’s father assisted when he was able. In addition the husband mowed the lawn and maintained the gardens. The husband was not challenged about his evidence and I accept it.
In 1987 the husband was injured while driving for work. He subsequently received $20,000 by way of a Worker’s Compensation Settlement which was later applied towards the renovation of the property at B Street.
In 1988 the parties sold the J property for $88,500. They purchased a property at B Street for either, approximately $138,000 or $160,000. They used the proceeds of sale of the J property, savings and about $43,000 borrowed from the Commonwealth Bank.
D was born in September 1988.
It is agreed that over the period 1988 to 1990 the wife’s father gifted the parties $50,000. The parties used some of the money for renovations to the B Street property and applied some to the purchase of a unit at S Street, which cost about $165,000. They borrowed the majority of the purchase price from the Commonwealth Bank. The wife says that she inherited about $55,000 from her grandmother’s estate and the S Street property was bought in her name and with that inheritance and borrowings from the Commonwealth Bank.
The wife says that her father helped maintain the B Street property, including mowing lawns, gardening and general upkeep. The husband took 12 weeks leave and personally attended to the renovations and repairs to B Street and undertook repairs and renovations to S Street. The wife and D stayed with the wife’s parents during the renovations on a rent-free basis.
O was born in June 1991.
In early 1994 the husband’s brother - in – law, JE, invited the husband to purchase a half share in his business, T Pty Ltd. The husband and wife purchased a 25% interest each in the business and paid a total of $125,000. They also purchased a 25% interest each in the property at S (the business premises) for which they paid a further $145,000. The parties borrowed all of the money required to acquire their interests in the business and the business premises.
From 1994 the husband and his brother- in- law started to invest in real estate.
In 1994 the husband left his work as a driver to take up his interest in T Pty Ltd. He transferred $16,000 of his superannuation entitlement to the T Pty Ltd Superannuation Fund. The husband worked 5 – 6 days a week in the business undertaking sales, installations, marketing and even administrative jobs. The wife worked 2-3 days a week in the business doing accounts, reception, secretarial jobs, acting as courier and other jobs.
In 1994 the husband injured his back at work and commenced regular physiotherapy and massage therapy.
In 1996 D property was purchased in the name of T (NSW) Superannuation Fund for the sum of $360,000.
In 1997 the parties sold B Street property for $320,000 and purchased a vacant block of land at W Street for a price of $400,000, plus costs and stamp duty. They used the proceeds of sale of the previous properties and borrowed a further $200,000. The parties built a home on the land for a cost of approximately $300,000 and funded this from a borrowing from the Commonwealth Bank. The husband obtained an owner builders permit and undertook all of the work not undertaken by contractors on the project. He also co-ordinated and directed the contractors. The wife says that her father too attended the site and supervised and assisted. The house was completed in around October 1998.
The parties lived in rented premises during the construction.
In 1997 the H Street property was purchased for approximately $480,000 and 2H Street Property was purchased for $360,000 through the T company.
In 1997-1998 the husband was referred to Dr N, Psychiatrist for psychiatric treatment in relation to panic attacks. The husband was referred for therapy.
In 1998, following accountant’s advice the H Street property was transferred to K Investments Pty Ltd and 2H Street property went to the JE Investments Trust. Until early 2007 the H Street property was tenanted and the K Investment Trust received the rental income.
R was born in June 1998.
The wife ceased working for T Pty Ltd in 1998.
In 1999 the parties bought out the husband’s other brother-in-law from the business. It is not clear to me how this older brother in law had any interest in the business given that the parties had originally acquired a half interest from JE but it probably does not matter. The parties sold the wife’s unit at S Street and cleared about $224,000.
In 1999, the husband and JE arranged for T Pty Ltd to invest $350,000 in a project involving the development of town houses. In 2000 T Pty Ltd made a profit of $200,000 from the townhouse development. The husband and JE divided the sum equally and the husband applied his share in the sum of $100,000 to reduce the parties’ debt to the Commonwealth Bank.
In 2000 the opportunity arose to purchase S2 being the premises next door to the business premises of T Pty Ltd. The property was purchased in the names of K Investments Pty Ltd and JE Investments Pty Ltd for $760,000. The business expanded into those premises.
The husband travelled to Lebanon in December 1999 and returned in January 2000.
In September 2000 the husband travelled to Lebanon with his parents and the older boys.
In 2002 the husband arranged for the purchase of a property at M Street for $655,000.00 in the name of K Investments Pty Ltd. The purchase price was borrowed from the Commonwealth Bank. The property was leased out.
The parties’ first separation occurred in 2003.
The husband says that on 22 August 2003, he, on behalf of K Investments Pty Ltd, borrowed $29,983 from Mr A.
The husband says that on 4 February 2004, he, on behalf of K Investments Pty Ltd borrowed a further $100,000 from Mr A.
In 2004 the T Services Superannuation Fund purchased a property at Y for the sum of $415,000, funded from the assets of the fund. In the same year T Services Superannuation Fund purchased P property for the price of $550,000 funded from the fund and T Pty Ltd.
On 29 September 2005 the husband caused $3,719 to be paid to the solicitors for the wife to allow the wife to meet legal fees.
On 22 December 2005 the parties separated under the same roof.
In 2006 the husband’s back problems became worse.
In 2007 the husband began to experience symptoms similar to previously experienced panic attacks. He was referred to Dr N, Psychiatrist. On 27 February 2007 Dr N issued a certificate to the husband indicating he was unfit for work. The husband was prescribed anti-depressant medication. The husband ceased to work in the business and ceased to draw a wage.
On 31 May 2006 orders were made in the Family Court at Sydney, some by consent and some following hearing. Pursuant to the orders the property at M Street was sold and the proceeds of sale applied to reduce the parties’ indebtedness to the Commonwealth Bank.
On 11 June 2006 the husband left the home to give the wife exclusive occupation.
On 12 January 2007 parenting orders were made by this Court in terms agreed between the parties. The orders provided that the younger children live with the wife and spend time with the husband including alternate weekends during school terms from 5-30pm Friday to 6.30pm Sunday and, unless the parties agree to the contrary, for half the school holidays. D’s arrangements were left to him.
On 20 April 2007 the wife filed an application for contravention in relation to maintenance.
On 9 May 2007 orders made by consent for the sale of the property at H Street.
On 10 May 2007 the husband through his solicitors made an offer in relation to the contravention matter.
On 15 May 2007 orders were made in the Family Court at Sydney in the contravention proceedings, including a reservation of the question of costs.
On 25 June 2007 orders were made by consent suspending the orders dated 31 May 2006 in relation to the payment of outgoings on the former matrimonial home, motor vehicle expenses, spousal maintenance and legal costs, until 24 July 2007.
In September 2007 the company car used by the husband was sold for $55,000 to Mr S, a supplier of the T company. The debt of $22,000 in respect of the car was paid out and fringe benefits tax of approximately $11,500 was also paid. The balance was paid into the overdraft account of T Pty Ltd. The business sold the vehicle used by Mr E senior, to him.
On 26 July 2008 the sale of H Street property settled and funds were paid to the wife in accordance with the order of 15 May 2007. Following a sum being set aside from the sale for CGT the wife was paid $62,731.88 and the husband received $52,731.87. From the husband’s share $40,731.87 was paid on account of costs to his solicitor and $12,000.00 was paid to the husband. He repaid loans from his parents and sister, but has since further borrowed and owes them $12,500. The debt of $545,299.05 in respect of the H Street property was discharged.
On 30 August 2007 the order suspending the various orders made 31 May 2006 was continued by consent pending further order.
On 19 July 2007 the husband’s solicitor paid the child Support Agency $12,814.67 from funds held in her trust account pursuant to a notice issued pursuant to Section 72A of the Child Support (Regulation and Collection) Act 1988 dated 13 July 2007.
On 1 December 2007 the husband returned to work part time.
On 12 March 2008 the T Pty Ltd Superannuation Fund sold the property at D and the net proceeds were paid into the fund. The amount in the fund (which includes Mr and Mrs E as well as the parties to these proceedings) is $705,779.89.
Credit and Submissions
The evidence of the witnesses
The witnesses called for cross-examination were the parties, the wife’s father and Mr C. The question of credit does arise in these proceedings because there are factual disputes on issues in relation to which the formal records are not adequate.
The wife was a reasonable witness. She was argumentative on some matters but appeared to try to give truthful answers. She made ready concessions in relation to the husband being responsible for money matters within the marriage, having business acumen and nous and being a generous provider.
The wife’s father is not a good witness. That is not to say that he set out to mislead the Court. English is not his first language, he is physically frail and in giving evidence by telephone, had difficulty hearing and understanding questions. For example at first he agreed that the husband gave him money to put towards the council and water rates for the J property but he immediately thereafter rejected that same proposition. Although he agreed with propositions put to him by learned counsel for the husband that described a reduced or less significant contribution by him towards maintenance and renovation of the parties’ properties and the care of their children, than his evidence in chief described, I was not confident that he picked up that nuance. In relation to the construction of the W Street property the lead-in question was to the effect that he went to the site to look. That drew no specific reaction from him save for an answer about cutting the lawn. Words to the effect “You did little physical work” were put to him and he answered “Yes”. That is different to his evidence in chief and I am not sure he appreciated the qualification “little”. He was asked if he was paid for work he undertook at T Pty Ltd and rejected that proposition twice. Seconds later he volunteered words to the effect of “A few times my son in law gave me $50 – sometimes, not all the time”. It is rarely possible to be confident about findings of credit and it is no easier when the witness is not physically present in Court but I detected no artifice in the wife’s father. In my view he tried to give accurate evidence and was not seeking to be an advocate for his daughter.
There are problems with aspects of the husband’s evidence. For example, having made a significant contribution claim and having secured concessions from the wife about his business acumen and financial management skills it was surprising to find that the husband’s knowledge of business financial arrangements was not good. Other aspects of his evidence were confusing. His evidence about a Mercedes Benz motor vehicle that was owned by T Pty Ltd and exclusively used by him is that in September 2007 the company sold the vehicle to … (Mr S) for $55,000. First the husband said that since the sale he borrowed the car from time to time. He then conceded that the car is usually garaged at the T Pty Ltd premises, that he drives it about 75% of the time and that no one else uses the vehicle. He conceded that whenever he has picked up the children since September 2007 he has done so in one of the T Pty Ltd utility vehicles and never in the Mercedes Benz vehicle. Putting all of that together it is impossible to reconcile the statements that he borrows the vehicle from time to time and that he alone uses it. The inferences that I drawn from that are that the husband was attempting to hide from the wife and from the Court that he had the use of a fully maintained luxury motor vehicle. But for Mr S’s evidence I would have inferred the existence of an unexplained and non-commercial relationship between the husband and Mr S. However, Mr S explained the agreement between the husband, Mr E junior and himself about the car. Mr S was advised that the car was worth $75,000. He bought it from the T company under value, at $55,000 but on the express terms that the husband could continue to use the vehicle until he purchased another vehicle. He did not say how long that use might extend. Why did the husband not give that evidence?
The husband’s dealings with Mr A also appeared to lack commerciality. The evidence is as follows. Mr A is a developer. His company was unable to pay the T Pty Ltd bill for a development in P and apartment at P given to T Pty Ltd in part payment for that work together with a cash component. That apartment was then bought by the T Pty Ltd directors’ superannuation funds. The husband contends that Mr A had earlier advanced about $130,000 to the K Investment Trust for an indefinite period and interest-free. Mr A was not been called to give evidence to corroborate those facts. At the end of the day I accept the husband on this issue but minds might differ about such a finding.
Mr S was cross-examined briefly and his evidence was not successfully challenged. Indeed he gave evidence about the Mercedes transaction that was inconsistent with the husband’s initial disclosure about it but which made far better sense than the husband’s own evidence. I found him to be a witness of truth.
Submissions
The written submissions made on behalf of the wife in relation to the case as it was finally argued are:
1.WIFE’S CONTENTION AS TO ASSET POOL:
Asset W Value: H Value: Agreed: [W Street property] 1,250,000 [S property] 475,000 412,500 Funds held by H solicitors in trust for the parties as to CGT arising from sale of [H Street property] 23,200 H distribution from sale of [H Street property] 62,731 W distribution from sale of [H Street property]. (part of these funds are in W Westpac account)[1] 62,731 H. Landcruiser 4WD 25,000 W. Contents [W Street property] 20,000 [K] Investments Trust[2] 257,614 H and W Joint Loan Account [K] Investments Trust[3] 317,434 Shareholding and interest in [T] NSW Pty Limited[4] 700,000 269,560 H Loan account [T] NSW Pty Limited[5] 5,229 Shareholding and interest in [T] Services Pty Limited[6] 0 [T] NSW Superannuation Fund:[7]
H as at 30.06.2007
W as at 30.06.2007139,140
139,267139,140
139,267[T Services] Super Fund:[8]
H as at 30.06.2007
W as at 30.06.2007212,392
212,392212,392
212,392H. Funds in solicitors Trust Account 1,267 W AMP and IOOF Super 505 Liabilities: H. [Mr S] 50,000 H. [Mr O] 45,000 H. Parents and sisters 12,500 H estimated CGT sale of [H Street] nk 11,600 W. estimated CGT sale of [H Street] nk 11,600 H. [Mr A][9] 0 65,000 W. [Mr A] 0 65,000 H. [T] NSW Pty Ltd[10] 0 78,783 H. [T] NSW Pty Ltd 0 78,783 W Comm Bank Mastercard 9,860 W Council Rates 788 W Energy Australia 897 W School fee arrears 445 [1] See W Fin Statt (22.04.2008)
[2] Mr H Single Expert. Balance sheet needs to be adjusted to reflect sale of H Street property post 30 June 2007.
[3] Mr H PKF Single Expert.
[4] W does not accept Mr H Single Expert valuation of 19 December 2007 as figures reflect aberration to regular trading pattern. W asserts that valuation by Mr H dated 17 November 2006 reflects more accurately the present valuation.
[5] Balance sheet 30 June 2007
[6] The H assets no value but historically the company has received distributions from the M Unit Trust. The H has failed to disclose or explain the financial nexus between the two entities.
[7] These benefits as per Members Benefit Statements as at 30 June 2007 will need to be adjusted to reflect sale of real estate property in March 2008.
[8] These benefits as per Members Benefit Statements as at 30 June 2007
[9] These debts are balance sheet items in the K Investments Trust as valued and are not liabilities of the parties.
[10] These debts are balance sheet items in the K Investments Trust as valued and are not liabilities of the parties.
A THE POOL OF ASSETS:
The W contends that the Court will find that the assets of the parties are in the sum of about $4.021m as per the attached Table.
B. CONTRIBUTIONS:
The W. contends that as at separation the contributions of the parties are only distinguished by the following:
a.the rent free period of the parties occupation at the [J] property for just over three years that facilitated them saving funds to partially acquire the said property from the W father.
b.the [J] property obtained from the W father as to one half by way of gift as to the sum of $35,000 that facilitated the parties then on selling that property within 12 months for $88,500.
c.the gifting of funds totaling about $95,000 by the W father to the W that facilitated the purchase of an investment property unit at [H] for $160,000 which was self funding from rent. That property was sold later for $250,000, with net proceeds being about $224,000.
d.The contributions by the W father to renovations and improvements to the properties of the parties.
Otherwise it is contended that the parties other contributions during cohabitation in their various forms and in their differing roles within the partnership of marriage would be regarded as equal.
Post separation contributions it is asserted would favour the W by reason of her primary parenting role for the two youngest children over the two year period since the H was removed from the home. She has done this in circumstances whereby the H was in default of child support obligations and the W had to struggle financially. This period it is contended should see the W receive a further adjustment for such contributions.
Overall it is contended that such contributions will lead the Court to assess contributions by the parties at the time of hearing in favour of the W as to 55/45.
B. SECTION 75(2) FACTORS:
(a) the age and state of health of each of the parties;
The W is presently aged 44 and in good health.
The H is presently aged 50 and it is contended by the W in fair health such that he is able to continue to work in his previous capacity within his business once these proceedings are resolved. His present difficultly is uncertainty as to the resolution of these proceedings similar to a “litigation neurosis”.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The W is untrained, except for a short CEO course such as would allow her to gain employment as a clerk. She is 44 years of age and presently works part time as a shop assistant. She is obligated to the care of two children within the home with little real parenting help from the H and elderly parents such that future full time wok in any meaningful capacity is not in her foreseeable future.
On the other hand the H aged 50 will resume work if he has not already done so in his former capacity. He asserts that his company is most successful and despite his efforts to minimise its value to him it represents a most significant financial resource that is difficult to realistically quantify by reason of his own capacity to so organise his affairs to clothe his circumstances in uncertainty evidence. The H will retain his interest in two income producing properties such that in the event that his business interest is sold or ortherwise disposed of he will retain, if he elects, the uinderlying real estate assets.Otherwise the assets and financial resources of the parties are set out above.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
The W has the primary care of the two youngest children of the marriage with little real parenting help from the H who sought orders that limit his role with the children..
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;See the parties Financial Statement filed. The W will retain the financial obligation to house the two children of the marriage and her prospects of receiving regular and meaningful Child Support appear problematic having regard to the H history of non payment and his ability to so manage his affairs to minimise his taxable income.
(e) the responsibilities of either party to support any other person;
N/A
(f) subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under¾
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;See the Asset Pool attached.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
N/A
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
The W has throughout the marriage undertaken the primary obligation of parenting that has facilitated the H attending to the day to day running and development of his business interests. The W has no skills and subject to her ability to reenter the workforce will require retraining to acquire appropriate skills.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
The W has throughout the marriage undertaken the primary obligation of parenting that has facilitated the H attending to the day to day running and development of his business interests.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The W has effectively been out of the workforce since 1991, almost 17 years. She has no skills and the marriage has drastically affected her earning capacity. Her career as a bank officer was cut short by her family obligations.
(l) the need to protect a party who wishes to continue that party's role as a parent;
The W stiil has two children at home with the prospect that they will remain in her care for some years due to University education prospects. The youngest is yet to commence to complete primary school and is three years off commencing high school.
(m) if either party is cohabiting with another person the financial circumstances relating to the cohabitation;
N/A
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
The H has a Child Support obligation which presently stands at about $500 per week. The H does not seek to disturb that commitment. On the 1st July the W assessment will change under the new amendments. Subject to any factors changing the H Child Support obligation will be about the same amount as per the attached CSA estimate.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
N/A
(p) the terms of any financial agreement that is binding on the parties.
N/A
The W seeks an adjustment for s75(2) factors of not less than 12.5% in the absence of any periodic spousal maintenance order.
C. JUST AND EQUITABLE
Should the W receive an overall adjustment of 67.5%, then her entitlement of the pool of $4,021,895 would be $2,714,779 comprise the following:
1. Home at [W Street] $1,250,000
2. Contents $ 20,000
3. Preliminary distribution $ 63,721
4. TKK Super Fund $ 139,267
5. TKM Super Fund $ 212,392
6. Other Super $ 505
$1,685,885
7. Debts $ 11,990
8. Est CGT sale of [H Street]. $ NK
$1,673,895
Cash adjustment from H. $1,040,884
$2,714,779
On behalf of the husband the written submissions about the issues that were finally argued were as follows:
RELEVANT FACTORS
The husband relies upon the following contributions pursuant to Section 79(4)(a),(b) and (c):
1.The husband made an initial contribution of $10,000.00, a Datsun 180B motor vehicle and accumulated superannuation.
1.Contribution of the whole of his earnings during the marriage to the payment of debts, acquisition and improvement of the parties various properties, family expenses and to the running of the household.
2.A significant contribution through the introduction of the opportunity for the parties to purchase an interest in [T] Pty Ltd through his brother in law and in working extremely long hours and contributing his business acumen to the development of that business.
3.Contribution through the application of his business acumen in engaging in investment purchase of real estate with his brother in law [JE] from about 1994.
4.A significant contribution of his skill and labour to the building and maintaining of the business of [T Pty Ltd].
5.Lump sum contributions of the proceeds of his workers compensation claim in the sum of $20,000.00 and through the transfer of his earlier superannuation benefits of $16,000.00 into the parties’ own superannuation fund.
6.A significant contribution as a homemaker and parent during the marriage.
7.A significant contribution through undertaking maintenance, improvements and renovations to the real estate owned at various times by the parties.
8.A significant contribution through the management of the building of the parties’ matrimonial home at [W Street] and in undertaking physical labour over an extended period in building the home and in maintaining it.
9.A post separation contribution as a parent.
10.A contribution to the costs and expenses of the children over and above the payment of child support as assessed following separation.
11.Significant contribution post separation through the paying of expenses on behalf of the wife following separation, ensuring that all of he taxation liabilities of the parties were paid and through ensuring regular payment fo the parties liabilities so as to maintain the value of the various assets.
12.Such other contributions as are revealed by the evidence.
OTHER RELEVANT FACTORS
The husband relies upon the following further matters pursuant to Section 79(4),(d),(e),(f) and (g).
1.The wife is in good health.
2.The husband is not in good health and his health situation has reduced his capacity to earn income and to undertake many income earning activities.
3.The husband is and has always exercised his earing capacity to the optimum that his health has enabled him to.
4.The wife has a capacity to work and obtain remunerative employment which is not being exercised.
5.The husband has brought arrears of child support up to date at the first opportunity and has maintained regular payments of child support thereafter.
6.The wife has had the benefit of the occupation of the matrimonial home, the use of a motor vehicle paid for by the husband and the business and all of her ongoing debt commitments paid by either the husband or the businesses since the date of separation.
7.The husband has ensured that all of the wife’s taxation liabilities and the taxation liabilities of the parties’ various entities have been met since the date of separation.
8.The wife will hold assets of significant value and continue to receive the regular payment of child support by the husband upon the finalisation of the proceedings.
9.Such other matters as disclosed by the evidence that the husband seeks to rely upon at hearing.
F.LIST OF ASSETS AND LIABILITIES
Note:The following is a schedule of the property which the husband alleges is likely to be relevant and the values as alleged by each of the parties. This schedule is prepared to assist the court only and is subject to amendment following evidence being taken in the matter.
ASSETS
W’S VALUE
H’S VALUE
AGREED
VALUE
Matrimonial Home – [W Street] - joint expert valuation
1,250,000.00
[S property] (Parties half share)
412,500.00
Money set aside in Demaine and Associates Controlled Money Account for Capital Gains Tax on [H Street] and Arrears
25,683.48
Parties’ 50% Share holding in [T] (NSW) Pty Ltd (Joint expert valuation)
269,560.00
Contents - Matrimonial home
20,000.00
[T] Superannuation Fund - parties 50% share after sale of [D property]
352,888.00
[T] Services Superannuation Fund - parties’s 50% share
419,118.00
Land cruiser Motor Vehicle - currently in the wife’s possession
25,000.00
[K] Investment Trust - Joint Expert Valuation
257,614.00
[T] Service - Joint Expert Valuation
0.00
Husband’s Commonwealth Bank Account - see Form 13 filed 25 March 2008
3,000.00
Husband’s Funds in solicitor’s trust account - see Form 13 filed 25 March 2008
1,267.47
Wife’s personal bank accounts
NK
Amount held on behalf o wife by her solicitors
NK
TOTAL (Estimate subject to evidence)
0.00
4,267.47
3,032,363.48
Gross Assets: $3,036,630.80
LIABILITY
W’S VALUE
H’S VALUE
AGREED VALUE
[Mr A] - joint
130,000.00
[T Pty Ltd] - joint
157,566.00
[Mr S]
50,000.00
[Mr O]
45,000.00
Husband’s parents and sisters
12,500.00
Joint Capital Gains
23,200.00
TOTAL (Estimate subject to evidence)
418,266.00
Gross Liabilities: $418,266.00
Estimated Net Assets: $2,618,364.80
SUPERANNUATION - is included in the list above - the parties’ funds are self funded private funds.
SUMMARY OF ARGUMENT - CONTRIBUTIONS AND SECTION 75(2) FACTORS
Generally
It is submitted on a preliminary basis only, that up to the date of separation the contributions of the husband were approximately 50% and the wife’s 50%. Since the date of separation the husband has continued to make substantial financial and non financial contributions and the wife has had the financial benefit of those contributions and some assets to the exclusion of the husband. At the commencement of hearing, the contributions of the husband are approximately 55% and the wife 45%.
In the event that the Court was to find that the overall contributions are as have been asserted by the husband it is submitted that given the extent of the assets to be retained by the wife and the husband’s state of health that there should be no further adjustment in favour of either of the parties pursuant to Section 79(4),(d),(e),(f) and (g). In the alternative, should the Court find an adjustment warranted in the wife’s favour largely by virtue of her continuing care of the youngest child the weighting should be no more than 5%.
Overall (and on a preliminary basis prior to the taking of evidence) it is submitted that the husband should receive 50% to 55% of the current matrimonial assets.
The approach in proceedings under section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. First, I am to make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I should identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, I should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. [11]
[11] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370
The property of the parties at the date of the hearing
The Court is required to make a finding as to the property of the parties at the date of the hearing.
There are circumstances which the Court has found in other cases, to have justified the inclusion of property that no longer exists, in the pool of property for settlement. Similarly the Court has sometimes found that debts that do exist should not be included in the list that goes to make up the net pool of assets. In In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
[30] To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
The list of assets and liabilities is largely agreed. As to the disputed issue:
The value of the K Investment Trust
The submission on behalf of the wife is that the value of the trust is affected by a debt of about $130,000 to Mr A. The evidence of the husband is that in August 2003 Mr A advanced him $29,983 to reduce his debts and those of the K Investment Trust. The husband agrees that in advance of a holiday trip to the Lebanon by the husband, his parents and Mr A in August 2003, the husband (with the knowledge of the wife) remitted about $29,952.40 to the Lebanon. There were three payments, the last two on 16 and 29 July 2003, in amounts calculated to avoid the reporting obligations associated with transactions of $10,000 or more. Those moneys were spent by the husband while he was in the Lebanon on that trip. Then there was an advance by Mr A to the trust of $100,000 in February 2004.
Mr A is a developer. His company was unable to pay the T Pty Ltd bill for a development in P and in May 2005 an apartment in P was given to T Pty Ltd in part payment for that work together with a cash component. That apartment was then bought by the T Pty Ltd directors’ superannuation funds. The submission on behalf of the wife is that the circumstances of similar amounts being sent to Lebanon and advanced by Mr A about the time of a holiday shared by the husband and Mr A suggests an explanation other than a loan to a trust; that it is odd that Mr A would be caught short for a payment to the T Pty Ltd business in May 2005 and yet would not call in an interest free advance of $130,000 made to the associated trust; that I should infer that Mr A’s evidence would not help the husband’s case.
In response on behalf of the husband it is submitted that the debt has been recorded in the books of the trust since 2005 and despite the opportunity to ask the company accountant about it or to direct the single expert to investigate it, the wife has taken no steps to explore the validity of the debt. That in effect, I am being asked to find that a fraud has been committed on the trust. It is submitted that any such finding would be on the civil standard but at a higher level given the seriousness of the subject matter. It is submitted that in those circumstances no inference can be drawn from the failure to call Mr A. It is also submitted that the wife said in cross-examination that she knew of the advances, was angry that the husband had borrowed from Mr A, had asked Mr C about it at the time and he told her that the interest free terms were an obvious advantage over bank finance.
At the end of the day I accept the husband on this issue. The story is odd and suggestive of some mischief but I cannot lightly come to that conclusion. The first advance predated the parties’ first separation. It would have involved considerable forethought for the husband to contrive at the advance during the marriage, so as to advantage himself if his marriage broke down. The debts are recorded in the records of the business and no effort was made to test the bookkeeper, the company accountant, Mr C or to have an investigation by the single expert. The wife said in cross-examination that she was upset, not that the money had been borrowed but that it had been borrowed from Mr A. Finally, although not critical to this finding, there is no evidence from the expert that the absence of the debt would have a dollar for dollar impact on the value of the trust.
The Add back of legal fees paid
The wife has paid legal fees from the proceeds of H Street. All of those proceeds are already read back into the pool. There is no need for further adjustment.
The husband has paid $125,582.02 in legal fees. $40,731.87 was paid from his share of the proceeds of H Street, all of which are already read back into the pool. The source of the remaining $84,850.15 is in doubt. The husband’s case is that a reconciliation of the outgoings from separation to date and the husband’s income over that period demonstrates that the husband could not make ends meet without the various borrowings he claims. His evidence in cross-examination was that the borrowings were used for debts, living expenses and legal costs. Thus some unidentified component of the borrowings has been applied to legal costs. The Full Court In In the Marriage of DJM and JLM calls for an explanation if I am not to read back legal costs. With the state of the evidence I cannot explain why $84,850.15 is not read back and I will read that sum into the balance sheet. I will deal with the argument about the husband’s loans below.
I find that the assets of the parties are:
Asset Value S property (joint) $412,500 Shareholding and interest in T NSW Pty Limited (joint)
$390,242 K Investments Trust (joint) $363,983 H and W Joint Loan Account K Investments Trust (joint) $213,470 Funds held by H solicitors in trust for the parties as to CGT arising from sale of H Street. (joint) $23,200 W Street property (W) $1,250,000 W distribution from sale of H Street property. (part of these funds are in W Westpac account) $62,731 W. Contents W Street property $20,000 T NSW Superannuation Fund:
Wife$149,765 T Services Super Fund:
Wife$209,559
W AMP and IOOF Super $505 H distribution from sale of H Street property. $62,731 H. Landcruiser 4WD $25,000 H Loan account T NSW Pty Limited $5,229 Shareholding and interest in T Services Pty Limited $0 Husband’s funds in solicitor’s trust account $1,267 Add back husband’s paid legal fees $84,850.15 T NSW Pty Ltd Superannuation Fund:
Husband$149,765
T Services Super Fund:
Husband$209,559
Total $3,634,356.15
Liabilities:
As to the disputed issues:
Debts asserted by the husband to be owed to Mr S, Mr O and the husband’s parents and sister
It is the husband’s case that he owes $50,000 to … who is known as Mr S. Mr S trades as … Pty Ltd. He says that in May 2006 the husband asked for a loan of $50,000 and that in tranches of $20,000 in late May and $30,000 in late June or early July he paid the husband that sum. He says that he told the husband there was no interest payable and that the loan was repayable at the end of these proceedings. The husband created documents to evidence that arrangement.
The husband says that Mr S is a significant supplier to T Pty Ltd. During cross-examination the husband rejected the proposition that the advance from Mr S was somehow related to the motor vehicle transaction. Mr S was cross-examined and was not successfully challenged in his evidence. I accept that the debt is owed.
It is the husband’s case that he owes $45,000 to Mr O. Mr O operates a development company, O Developments Pty Ltd and trades as … Pty Ltd. To the husband’s knowledge Mr O is not a developer but owns a motor inn in …. Mr O says that in March 2005 the husband told him he needed funds and he offered to lend the husband $20,000. Mr O says he made that advance and that in April 2006 he agreed to lend the husband another $20,000. Mr O says that he intended both loans to be interest free and repayable whenever the husband could do so. Mr O says that from July / August 2006 to date he has offered further advances to the husband. He says that in advances of lots of $500 and $1,000 he has lent a further $5,000 to the husband. He says that came about when he offered to pay bills for the husband (“I’ll fix up the bill”) and the husband responded by requesting that instead, Mr O lend him the money (I presume, for that bill). If the husband deals with Mr O as a motel owner and not as a developer, I query how the payment of bills by Mr O for the husband from time to time could result in neat advances of $500 and $1,000 as asserted by Mr O. However, Mr O was not called for cross-examination. His evidence is not seriously challenged and I accept it.
As to $12,500 said to be owing to the husband’s parents and sister, there is no evidence about the circumstances of the advances. Objection was taken and upheld to assertions of debt in the husband’s affidavits. The husband was on notice that the wife contested these liabilities. I am left with the bare assertion of debt in the husband’s Financial Statement. There was no evidence called from the husband’s parents and sister. I do not accept the husband’s evidence on those debts.
Debts of the wife to Mastercard, Council rates, Energy Australia and for school fees
The wife was not challenged in relation to the debts. They are part of her living expenses. In the event that she had paid those debts from her savings, the savings would have been reduced by that figure. The outcome is the same if the savings are included as they stand and these debts are allowed. It is accepted that debts by way of normal living expenses or the reduction of savings because of normal living expenses are not usually a basis for adjusting the list of assets and liabilities. I will include the wife’s debts as claimed.
I find that the relevant liabilities of the parties as at the date of the hearing are as follows:
Liabilities Amount Mr S $50,000 Mr O $45,000 W Comm Bank Mastercard $9,860 W Council Rates $788 W Energy Australia $897 W School fee arrears $445 Total $106,990.00
The net assets have a value of $3,527,366.15 ($3,634,356.15 - $106,990).
Financial Resources
There is no evidence that either of the parties has any other financial resources. They have each received assistance from others but there is no evidence on the basis of which I could make findings about the capacities of those persons to provide support let alone the likelihood of continued support.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets[12]. There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties[13].
[12] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[13] In the Marriage of Shewring (1987) l2 Fam LR 139
As to whether the Court should assess contributions asset by asset or globally the authorities have it the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that that:
“… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.”
Here the case has been argued on the basis of one pool of assets. In accordance with the counsel of the Full Court, on that basis, I too will adopt that approach and apply the section 79(4) considerations to a combined pool of superannuation and non-superannuation assets.
Contributions
Section 79(4)(a) Contributions
The husband brought in $10,000 in savings when the parties married. The parties each had paid employment, the husband as a driver and then in the T business. The husband received $20,000 by way of workers compensation in 1987. The wife worked in a bank for about 10 years, on full-time and part-time bases, subject to two periods of 12 months maternity leave and then for about four years doing secretarial work in the business.
The wife’s father gave the parties one half of the value of the J property. The gift was of an equity of $35,000 which became $88,500 on the sale of that property within 12 months. In about 1990 the wife inherited about $55,000 from her grandmother’s estate. The wife’s father gave the parties funds totalling an amount that could have been as much as $95,000. About $85,000 of that went into an investment property unit at H which cost $160,000 and through self funding from rent, realised about $224,000 some years later.
Section 79(4)(b) contributions
The parties lived rent free period in the J property owned by the wife’s parents for just over three years. For about three months prior to that they lived together at the husband’s sister’s property.
Renovations and construction were undertaken by the parties. Work was performed by the husband and with some assistance from the wife’s father. That included improvements to the J property involving replacing the iron roof at the rear of the property, taking up damaged floor boards and re-laying new floor boards, installing a slab and erecting a new iron shed. The wife’s father assisted when he was able. In addition the husband mowed the lawn and maintained the gardens at the J property.
During 12 weeks leave the husband undertook renovations to the B Street property. He laboured for bricklayers and tilers working on a new garage, built a laundry and installed a new bathroom. He caused the installation of a new kitchen but personally removed the old kitchen, did the electrical work and laid tiles on the floor and splashback. The husband and the wife’s father both claim that they did the plumbing. It is perhaps a small point but the husband expressly says that he did not do any plumbing work that required a licensed plumber, for the S Street property. It may be that the wife’s father is correct on this claim. The husband renovated a section at the back of the house and a bathroom. He took all the windows off and installed a new air conditioner in the living room. He built a new entrance with a canopy on top, new fencing, including a brick fence at the front of the property and a gate. He laid carpet and did landscaping work. Again, the wife’s father assisted with that work and did most of the lawn mowing and general upkeep. The wife and children stayed with her parents during renovations.
The husband and the wife’s father constructed a wine cellar at the property.
In the S Street unit the husband took off wallpaper and painted and laid carpet. He installed a new kitchen save for the work requiring a licensed plumber or electrician. He maintained the property.
For the W Street property the husband was the owner builder. He instructed the architect, lodged the development application and cleared the site. He erected the temporary toilet and shed for the construction and before and after work, attended at the site to supervise and clean up. He appointed all of the contractors and with a foreman, supervised the work. He spent two and a half hours on site in the morning and the same in the afternoon. In cross-examination he explained that he did not leave any earlier from home, he just went to his work late. Once the building was complete the husband cleaned the site and did work associated with landscaping. Thereafter he says that he regularly maintained the lawn and outside areas and cleaned and maintained the pool. The wife’s father helped the family move house on more than one occasion.
On the face of the written evidence there is a dispute about the extent to which the wife’s father provided physical assistance for the renovations, construction and maintenance of the various properties. His cross-examination was characterised by propositions tending to minimise his role with question to the effect of – “you went to the [W Street] site to watch the construction” “You did little physical work to the property”. In my view that is not the husband’s attitude, even if it is his case. The husband volunteered a generous concession as to the value of the contribution of his father in law.
There is little evidence in relation to the standard of living of the parties during the marriage. The parties spent 10 weeks in Italy before children. The husband travelled to Lebanon on several occasions. The former matrimonial home is a substantial property. The husband has had the exclusive use of a luxury motor vehicle. The children attend fee paying schools.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
The wife seeks spousal maintenance but for a finite period. There is little detail about the specific course or courses she proposes to undertake. The background evidence suggests that a job geared around school hours would be ideal and that the wife is wanting for office and computer skills to best fit her for a meaningful job in school administration.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
This is not relevant.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
The wife’s role with the children and the injections of funds and physical assistance from her family allowed the husband to make the transition to self employment. It is not clear that he would have otherwise been as able to buy into the business or take up investment opportunities from a commencement point as an employed driver.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The effect of the marriage was that the wife was out of the paid workforce for several years. She gave up work in the bank with the birth of D. She had low level casual employment for various periods and undertook office work for the business 2 – 3 days a week until 1998. It is likely that the marriage adversely affected her earning capacity. She was denied the opportunities that come with unbroken permanent employment including the building of skills and experience that can lead to promotion and the other benefits of employment such as leave and superannuation. The husband was free to develop his managerial skills in the business.
(l) the need to protect a party who wishes to continue that party's role as a parent;
The wife does wish to be available to the boys and for a period that will restrict her availability for paid employment.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
This is addressed above.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
There is a relevant child support assessment. A child support assessment issued on 4 February 2008 putting the husband’s liability at $2,002.58 for the boys based on a child support income for the husband at $95,124 and $2,344 for the wife. The husband is currently up to date but the wife says he has been in arrears from time to time. Learned counsel for the wife estimates that due to amendments to the child support legislation, from July 2008 the husband’s liability may reduce by as much as $80 per week.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
Nothing comes to attention here.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the parties.
Section 79(4)(f)
As set out above, there are parenting orders albeit they are not slavishly adhered to by the parties.
Section 79(4)(g)
This is not relevant.
Conclusion
The factors arguing in favour of an adjustment to the wife are:
The husband has a greater earning capacity than that of the wife. He has health problems that could limit his earning capacity but the evidence of the psychiatric expert and the fact that he wants to continue in the business are reasons for confidence that he will return to something like his former role and capacity. The gap between the earning capacities of the parties may narrow if the wife brings her skills up to the standard required in a modern office but there will still be a gap;
The wife contributed to the husband’s earning capacity while her own capacity was damaged by the marriage;
The wife has more of the care of the younger children than the husband.
The factors arguing in favour of an adjustment to the husband are:
At 50 years of age the husband is 6 years older than the wife;
The wife will have more assets based on the assessment of contribution.
In my view there should be an adjustment in favour of the wife by virtue of the other matters in section 79(4). Again, give the size of the pool, care is needed in dealing with percentages without reference to the dollar impact of any adjustment. I will adjust the distribution by 2.5%. That would call for an overall distribution in the proportions 55% to the wife and 45%
Just and Equitable
The net assets have a value of $3,527,366.15. If the wife retains 55% she would have about $1,940,051.38 and the husband would have $1,587,314.77.
The wife has and owes:
Assets & liabilities Value W Street property (W) $1,250,000 W distribution from sale of H Street property. (part of these funds are in W Westpac account) $62,731 W. Contents W Street property $20,000 T NSW Superannuation Fund:
Wife$149,765 T Services Super Fund:
Wife$209,559
W AMP and IOOF Super $505 W Comm Bank Mastercard -$9,860 W Council Rates -$788 W Energy Australia -$897 W School fee arrears -$445 $1,680,570.00
In order to have 55% of the assets the wife should receive a further $259,481.38 from joint assets. I will round that figure to $259,500.
It will leave the husband with:
Assets & Liabilities Value S property (joint) $412,500 Shareholding and interest in T NSW Pty Limited (joint)
$390,242 K Investments Trust (joint) $363,983 H and W Joint Loan Account K Investments Trust (joint) $213,470 Funds held by H solicitors in trust for the parties as to CGT arising from sale of H Street. (joint) $23,200 H distribution from sale of H Street. $62,731 H. Landcruiser 4WD $25,000 H Loan account T NSW Pty Limited $5,229 Shareholding and interest in T Services Pty Limited $0 Husband’s funds in solicitor’s trust account $1,267 Add back husband’s paid legal fees $84,850.15 T NSW Superannuation Fund:
Husband$149,765
T Services Super Fund:
Husband$209,559
Mr S -$50,000 Mr O -$45,000 Payment to the wife -$259,500 Total $1,587,296.15
In my view the orders will reflect the intention of the legislation to achieve a just and equitable settlement.
Conclusion under Section 79
The outcome I propose will have the wife retain the former matrimonial home, her superannuation and personalty and a payment of $259,500. Subject only to that payment the husband will retain the business assets and his superannuation and personalty. I do not know how the husband would prefer to make the payment. Provided it is made by way of non-superannuation adjustment and in a timely way, it does not matter much. In the event that the payment is not made within 2 months of the date of these orders I will order the sale of S property and the payment of $259,500 to the wife from the proceeds of that sale.
In relation to superannuation, no splitting orders are sought. I have framed the orders as sought on behalf of the wife. The orders sought on behalf of the husband involve the sale of a property which I understand has already been sold. Those same orders also call for the Court to note that the other members of the business superannuation fund have been served. In those circumstances perhaps nothing else need be done. If some further formality is required to achieve a separation of superannuation interests the parties can relist the matter pursuant to leave for that purpose.
The Approach to Spousal Maintenance
The wife’s application is for the husband to pay her $500 per week for 12 months. In the course of final submissions the wife’s counsel submitted that an order would not be made if the wife is to receive a cash adjustment of $600,000 or even $400,000. That is not the outcome of the orders proposed above. Thus the wife presses her application and the husband opposes any order.
In the circumstances of this case and by reference to Section 72 of the Act the husband will be liable to maintain the wife to the extent that he is reasonably able to do so if she is unable to support herself adequately whether by reason of having the care and control of a child under the age of 18 years or for any other adequate reason, having regard to any relevant matter referred to in S75(2).
Pursuant to s 74(1) the court may make such provision of maintenance order as it considers proper.
Spousal maintenance is a remedy available between parties who have been married, whether the marriage is dissolved or still on foot. It is a remedy based on one party to a marriage establishing that he or she has a need for financial support because of obligations in relation to the care for children under 18, because of age or physical or mental incapacity for appropriate gainful employment, or for any other adequate reason. In this case, the wife would need to establish that she is not able to adequately support herself from her own resources for an adequate reason. Then the inquiry turns to whether ‑ and the wife has to establish this ‑ there is a capacity in the husband to provide the required support. The Court has to determine the extent of that capacity. The examination of the extent of the need and the extent of the capacity is undertaken by reference to the matters that are set out in s 75 of the Family Law Act.
I have referred to some of the relevant issues in considering section 75(2) factors including (a), (b), (h), (j) & (k) in making an adjustment under section 79(4).
The Exercise of Discretion
Turning first to the threshold issue – can the wife adequately support herself? She receives $667 per week. I am obliged to ignore for this purpose her income tested benefit. Thus her income is $600 per week. Separating out the need and provision of child support, the wife earns $100 per week and spends $373. In addition she spends $639 on the children, $139 per week over and above the child support paid. Thus the wife’s income is $100 per week and her outgoings are $512. She has a shortfall of $412 per week.
In extensive cross-examination the wife conceded that she has significant spending on clothes, beauty products and hairdressing. She did not concede that her spending was excessive or out of character with the circumstances that applied during the marriage. Indeed, after highlighting the wife’s spending since October 2007 learned counsel for the husband obtained a concession from the wife to the effect that her spending habits could be traced to the marriage. In any event, there is no doubt room for trimming that expenditure.
I accept however, that for a period there is likely to be a gap between the wife’s expenses and her capacity to meet them from her income. In part because she is underemployed in terms of hours and because she has identified a need to improve her skills, I am confident that the wife will be able within, say 12 months, to better address her proper needs from her own income. In the property settlement orders proposed above the wife will receive a fund which will provide a buffer against her budget shortfall, whether by way of income of those moneys or a drawing on the capital.
The corollary of that is the impact of the orders on the husband’s capacity. The way the assets are divided between business and other assets he will be left with either a debt of $259,500 in addition to his legal fees and other private debts or will be required to dispose of business assets, the title to the one of the business premises or some other asset. On the face of it he will have no provision to fund a change in his own accommodation. In those circumstances he has no reasonable capacity to pay spousal maintenance.
This issue was not the subject of much of the final submissions. The wife has a weekly shortfall but she will be able to meet it from her own resources. The application for spousal maintenance will be dismissed.
Discharge of interim support orders
The husband seeks that Orders 11, 12 and 18 dated 31 May 2006 be discharged as from the date from which they stand paid. I do not recall any submissions about this issue. I will infer that there is no issue about this. Such an order would make sense. The orders made on 15 May 2007 leave the enforcement of the orders in question, stayed. It would be neater to have the orders off the books.
Costs application
The husband seeks a costs order arising out of the wife’s contravention application filed 20 April 2007. The wife originally sought her costs but did not press that application before me.
The application contained three allegations and the proceedings were determined by me on 15 May 2007. I made the following orders:
THE COURT FOUND
1.That the husband breached orders made by this Court on 31 May 2006 without reasonable excuse in relation to non-payment of spouse maintenance since 26 February 2007.
IT IS ORDERED
2.That the husband be released without penalty today in relation to the findings that he contravened the order in respect of one charge without reasonable excuse.
3.Otherwise the contravention application filed 20 April 2007 is dismissed.
4.The husband be restrained from dealing with the proceeds of sale of the property at [H Street] without first paying the sum of $10,000, or such further sum as the parties agree, from those proceeds into an interest bearing account held in the names of the solicitors for the parties to abide further order of the Court.
5.From that account the parties are to do all things and sign all documents necessary to cause the amount payable to the wife by way of arrears of Order 12 of the orders made on 31 May 2006 as at the date that fund is established and then to authorise, subject to any order made for the variation of the orders made on 31 May 2006, payment to the wife as is necessary for the husband to continue to comply with Order 12 of those orders.
6.The proceedings in relation to the husband’s application for a further stay and for variation of the orders of 31 May 2006 are adjourned to the Judicial Registrar’s Call-over at 9:30 am on 25 June 2007.
7.Unless the Court otherwise orders any further enforcement action of Order 12 of the orders of 31 May 2006 is stayed.
8.The costs of the parties are reserved AND the Court noted that there is an application by the husband for indemnity costs in relation to these proceedings and an application on behalf of the wife for her costs of these proceedings.
Thus the wife successfully established that the husband breached the maintenance orders without reasonable excuse but released the husband without penalty. The application was otherwise dismissed. The husband seeks his costs of the proceedings on an indemnity basis.
Unlike the provisions for contravention of parenting orders (Section 70NFB), the Family Law Act 1975 does not make specific provision for costs in relation to non-parenting contraventions.
Section 117 of the Act provides:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
….
Thus the usual position is that parties bear their own costs. The Court has power to make an order for costs and in considering such an order is required to take into account the matters referred to in subsection 2A above.
I have set out above the evidence in relation to the financial circumstances of the parties. I was not told that either party had legal aid. Nothing is raised as to the conduct of the parties.
The proceedings were necessitated by the failure of the husband to comply with a court order. Neither of the parties was wholly unsuccessful. The wife brought her application in relation to three allegations. She was only successful with one. There were written offers of settlement. On 4 May 2008 the husband’s solicitors wrote to the wife’s solicitors, referring to a letter of 2 May 2007 and inviting the wife to consent to the sale of the property at H Street. In the letter the wife’s solicitor’s attention was drawn to the fact that the husband was paying all of the outgoings on the wife’s residence. On 8 May 2007 a letter was sent between the same firms as follows:
“We refer to the above matter and to your letter dated 4 May 2007 and are instructed to reject your offer and put the following counter offer in relation to the sale of [:
1. That the interim orders of May 2006 be discharged.
2. That the following debts be discharged:
Sale price $792,000.00
- GST $ 72,000
- Agents Commission $ 15,840
- Legal costs $ 2,000 E
- Bill to Commonwealth Bank $525,000
- Debt to Commonwealth bank $ 20,000
- Capital Gains tax on [H Street] $ 60,000 E
$694,840 $694,840$ 97,160
3.That the wife be paid one half of the sum remaining from the sale forthwith by way of partial and interim property settlement.
4.The debt to [Mr A] was incurred through a borrowing to pay out a bank loan prior to separation. It will need to be discharged at the time of the settlement of the property proceedings along with the debt to [T Pty Ltd] in the sum of $157,566.56.”
A breach of Court orders without reasonable excuse is not an insignificant thing. The outcome of the hearing on 15 May 2007 was that the husband was found to be in breach of orders without excuse. The proceedings in relation to such a breach are civil proceedings but findings of fact are made on the basis of factors including the seriousness of the subject matter of the proceedings[14]. The fact some resort was then had to the H Street property proceeds and that the further enforcement of the original orders for interim maintenance and other payments was stayed is not to detract from the finding in this case.
[14] Section 140 Evidence Act 1995
It is usual for costs to follow the event in contravention proceedings. Here the application was at least in part, successful. I will make no order as to costs. The husband is not successful in relation to the costs of the contravention proceedings. Thus the issue of the basis on which the costs should be assessed does not arise.
I certify that the preceding one hundred and seventy seven (177) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 21 May 2008
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