Donald and Donald

[2009] FamCA 852

FAMILY COURT OF AUSTRALIA

DONALD & DONALD [2009] FamCA 852

FAMILY LAW – PROPERTY - Settlement in relation to marriage

Family Law Act 1975 (Cth)

APPLICANT: Mr Donald

RESPONDENT: Ms Donald

FILE NUMBER: MLC 11800 of 2009

DATE DELIVERED: 08 September 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: DESSAU J

HEARING DATE: 21 & 24 August 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Grant

SOLICITOR FOR THE APPLICANT: Pearsons Barristers & Solicitors

COUNSEL FOR THE RESPONDENT: Mr Cantwell

SOLICITOR FOR THE RESPONDENT: Tyler Tipping Woods

Orders

1. That the husband shall pay to the wife the sum of $537,853 (“the payment”) by 4.00pm on 9 November 2009 (“the date”).

2. That contemporaneously with the husband making the payment, the wife shall do all acts and things and sign all documents to transfer to the husband at his expense all of her right, title and interest in the real property situate at and known as 18 C Street in the State of Victoria (“the real property”), and the husband shall become solely liable for and indemnify the wife against any liability encumbering the real property.

3. That in the event that the whole of the payment has not been made by the date then the husband shall sign all documents and do all things necessary to transfer to the wife the real property to be held on trust for sale (“the sale”) and upon completion of the sale, the proceeds of the sale shall be applied:

   (a)First to pay all costs, commissions and expenses of the said trust transfer and the sale;

   (b)Secondly, to discharge the mortgage and any other encumbrance affecting the real property; 

   (c)Thirdly, to pay to the wife so much of the payment as is then outstanding together with interest thereon at the rate set out in Rule 17.03 of the Family Law Rules 2004 adjusted monthly from the date; and

   (d)Fourthly, to pay the balance to the husband.

4. That pending the payment or completion of the sale neither party shall in any way encumber the real property without first obtaining the written consent of the other party.

5. That the husband shall forthwith do all things and sign all documents to transfer to the wife his interest in the monies held in the parties’ joint names in the Trust Account of Tyler Tipping & Woods Solicitors.

6. That the husband shall retain all funds held in the parties’ joint names, in the E Credit Co-operative, for his sole use absolutely.

7. That unless otherwise specified in these orders each party shall be solely entitled to the exclusion of the other to all other property in the possession of such party as at the date of these orders including all monies standing to the credit of a party in any bank account and any shares in a party’s name.

8. That all applications shall otherwise be dismissed and the case removed from the list of cases awaiting finalisation by the Court, save that if a party seeks costs they may do so within 14 days of this date.

9. That pursuant to the Family Law Rules this matter reasonably required the attendance of Counsel.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 11800 of 2009

MR DONALD

Applicant

And

MS DONALD

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. Mr and Mrs Donald cannot agree on a property settlement after a relatively short marriage of less than six years, the second marriage for both of them. 

2. There are four steps for me in a property case.  The first is to establish the pool of assets.  Ultimately, they were agreed.  There is a non-superannuation pool of almost $2 million, and the husband’s superannuation of over $520,000. 

3. Secondly, I must determine each party’s contributions.  Both Mr and Mrs Donald brought substantial assets into this marriage.  They disagree only on some relatively small items.  They agree each made equal but different contributions during the marriage.  There was a small disagreement about post-separation contributions.  Overall, each says I should decide contributions to a small degree in their favour.

4. Next I must consider the s 75(2) and other matters set out in s 79(4) of the Family Law Act.  The wife argues that there should be a further small percentage adjustment in her favour. The husband argues that there should be no further adjustment, except for a small adjustment in relation to the superannuation. 

5. The fourth step is to arrive at a decision that is just and equitable in all the circumstances.  The husband’s case is that overall he should receive 55% of the non-superannuation assets, and retain most of his superannuation.  The wife’s case is that overall she should receive 55% of the non-superannuation assets plus a sum of approximately $50,000 to take into account the husband’s substantial superannuation. 

BACKGROUND

1. The husband is aged 59.  He is about to start his 39^th year as a public servant, earning approximately $73,000 gross per year.  He is also engaged in long-term primary production.  The primary production runs at a loss. 

2. The wife is aged 42 and receives a TAC payment of $700 net per week, plus $161 from Centrelink. 

3. The parties married in 2000.  He was 50 at the time and divorced.  She was 33 and widowed.  They separated 5¾ years later in early June 2006.

4. At the time they married the wife had two young children.  Her son is now 19 and is in paid employment.  Her daughter is 16 and completing year 10. Both children live with her. 

MATERIAL RELIED UPON

1. The husband relies upon the following documents:

   ·His Application for Final Orders filed 26 October 2007

   ·His Undertaking as to disclosure filed 28 July 2009

   ·Notice to Produce filed 25 June 2009

   ·His affidavit sworn 27 July 2009 filed 28 July 2009

   ·His financial statement filed 28 July 2009

2. The wife relies upon the following documents:

   ·Her Response to an Application for Final Orders filed 6 December 2007

   ·Her affidavit sworn 24 July 2009 filed 28 July 2009

   ·Her financial statement filed 28 July 2009

THE ASSETS AND LIABILITIES

1. The non-superannuation assets and liabilities are agreed as follows:

   The Assets

   ·18 C Street  $575,000

   ·10 C Street  $269,000

   ·Unit 7, B Street  $141,075

   ·Unit 5, B Street  $101,545

   ·W property  $320,000

   ·H property  $390,000

   ·Wife’s chattels  $    3,630

   ·Cattle   $  34,000

   ·Husband’s cars  $  81,000

   ·Wife’s cars  $  33,000

   ·Husband’s savings at separation  $  14,000

   ·Wife’s savings at separation  $    2,379

   ·Plant & Equipment  $  33,000

   ·Add backs

   ·       Drawdown on Unit 17 on 25 January 2006                $  12,000

   ·       Drawdown on Unit 15 on 8 June 2006   $    7,443

   ·       Drawdown on Unit 15 on 6 October 2006                  $  10,040

   $2,027,112

   The Liabilities

   ·18 C Street`  $    8,900

   ·Capital Gains Tax paid by the wife  $  45,824

   $  54,724

   Total  $1,972,388

2. In addition, the husband’s superannuation is valued at $523,400.

CONTRIBUTIONS

Contributions prior to or at the start of the marriage

1. There are four outstanding issues:

   (i)Whether the wife paid $2,600 for a sod-seeder and $5,000 for a baler before marriage;

   (ii)Whether the wife paid legal fees for the husband in the sum of $42,000 or $46,416 (in relation to proceedings with his former partner);

   (iii)Whether the wife paid the husband’s parents a total of $136,000, or $150,000, to purchase the farming property “W property”; and

   (iv)Whether or not the property “W property” was “discounted” by the husband’s parents by $64,000, or $50,000, and in any event, how that sum should be treated. 

   (i)Whether the wife paid $2,600 for a sod-seeder and $5,000 for a baler before marriage;

2. It was agreed that in the mid-nineties the husband bought a sod-seeder and a baler for the farm.  His evidence was vague about the source of the funds for the purchase.  During cross examination he conceded that the wife had provided the funds, but he said he had since repaid her. He did not produce any evidence to support his claim, nor could he recall any particulars of the repayment.

3. The wife was clear in her evidence about these funds.  She said she provided them to the husband, he said he would pay her back in the future, but he did not. 

4. I prefer the wife’s evidence.  Although her bank statements could not satisfy me that sums withdrawn were used for a particular purpose, she was at least able to produce proof that she withdrew relevant sums at the relevant times.  Her evidence about it was clear and consistent.  Her version had more support than the husband’s particularly vague account.

5. Although the wife referred to these sums as “loans” by her to the husband, her Counsel Mr Cantwell made the reasonable concession that after all these years there was no expectation of any repayment, rather that it should be brought into account as part of the wife’s pre-marriage contribution.  I agree.  

(ii)Whether the wife paid legal fees for the husband in the sum of $42,000 or $46,416 (in relation to proceedings with his former partner);

1. In 1998, the husband was concluding legal proceedings brought against him by his former partner.  The wife claimed that she paid $62,000 towards his legal fees.  The husband’s evidence was that she paid only $42,000.  The issue narrowed in the course of the hearing.  The wife produced bank statements that suggested she paid a total of $46,416. 

2. Again, although the wife’s documents could only prove that she made particular withdrawals at the relevant time, rather than showing a particular purpose for the withdrawals, for his part the husband had no proof at all to support his claim that he received only $42,000.  There is only a small difference between the parties in relation to the sum paid.  I prefer the wife’s version, given her more meticulous approach to record-keeping.

(iii)Whether the wife paid the sum of $136,000 or $150,000 towards the purchase of a farming property at W from the husband’s parents;

1. The husband claimed that when the wife paid his parents to purchase the “W” farming property, she paid $136,000 for the property and $14,000 for cattle and plant and equipment.  She said she paid $150,000 for the property.  In one sense it is a distinction without a difference.  It is common ground that she paid a total of $150,000.  The difference is relevant as to whether the property, which the husband said was otherwise worth $200,000 on the open market at the time, was “discounted” by his parents to the tune of $64,000 or $50,000.

2. The only documentation produced by the husband was a copy “Primary Production Statement” dated 18 February 2002, purportedly signed by his parents, showing that livestock and various plant was valued at $14,400.  This document, dated almost two years’ after the purchase, apparently for taxation purposes, tells me very little about the purchase itself.

3. On the other hand, the wife produced a hand-written “receipt”, signed by the husband’s parents, acknowledging payment by the wife towards the property’s purchase price of $150,000.  It was dated 8 September 2000, acknowledged the first payment of $110,000, and that the balance owing was $40,000.  The document is not disputed.

4. Whatever documents the husband’s parents may have later signed for tax purposes, I accept the wife’s evidence that at the time of purchase, the simple arrangement was that she was to pay $150,000 to purchase the farm.  That said, I am conscious that when it comes to a transaction between family members, often the transaction is not clear-cut.  There appears to be no disagreement that the property did include some plant and equipment and cattle.  Although their value is unclear, it is fair to note that it was something brought in by the husband.  I shall return to that.

(iv)Whether or not the property at W was “discounted” by $64,000 in the parties’ favour. 

1. Given my finding directly above, I am satisfied that there was a “discount” to the parties in the sum of about $50,000.  I accept the husband’s straightforward evidence about this, to the effect that his parents were otherwise able to sell the property for $200,000, but they were prepared to sell it to his wife at a lower rate.  The “discount” should be recognised in the husband’s favour. 

Contributions during the marriage

1. Ultimately it was agreed that the parties made different but equal contributions.

Contributions after separation

1. The husband claims he should be given credit for working and maintaining the farming properties after separation.  I disagree.  He has worked long and hard on the properties, as he did before and during the marriage.  However that contribution must be balanced with the fact that he has had the use and enjoyment of those properties (and he describes farming as his “hobby” and his “escape”), and he has had the benefit of offsetting farming losses against his income, thereby minimising the tax he has paid.  

Conclusion re Contributions

1. Counsel both approached the case separating the non-superannuation and superannuation assets.  That was a sensible approach. 

Non-superannuation Assets

1. The husband contributed the following assets before or at the time of marriage:

   ·18 C Street  $325,000

   ·H Farm  $265,000

   ·Savings  $  16,800

   ·Discount on W property  $  50,000

   $656,800

2. He had the following liability:

   ·Mortgage on 18 C Street  $  64,503

3. The wife contributed the following:

   ·10 C Street  $315,000

   ·Unit 15, B Street  $117,000

   ·Unit 17, B Street  $122,500

   ·R Street  $122,000

   ·W Property  $150,000

   ·Savings   $  71,575

   ·Payment in husband’s legal proceedings  $  46,416

   ·Shares in MG  $      400

   ·Shares in OFM  $        80

   $944,971

4. Her liabilities were as follows:

   ·Balance to husband’s parents for W property         $  40,000

   ·Mortgage on R Street  $  49,724

   ·Mortgage on 10 C Street  $  45,986

   ·Mortgage on Unit 15, B Street  $  21,674

   $157,384

5. Taking into account the liabilities, the husband contributed assets worth about $592,297.  The wife contributed assets worth about $787,587. 

6. I make two observations.  First, the small sums paid by the wife for the sod-seeder and baler were some years before the marriage and in the further past than other significant payments.  So were the monies paid for the husband’s legal fees, although they were closer to the time of marriage and more substantial. 

7. Secondly, it is common ground that the husband had plant and equipment, cattle, and motor vehicles at the time of the marriage.  Although the parties have no valuations as at that point, they cannot be overlooked.  The current agreed value is $148,000.  Of that, $115,000 is attributable to the motor vehicles and plant and equipment.  Counsel for the husband argues that it is reasonable to attribute that sum to the husband’s contribution at the start of the marriage.  The motor vehicles and plant and equipment are mostly the same now as then.  It was not contested by the wife, and seems a reasonable approach.

8. Accordingly, the husband’s original non-superannuation contribution was about $707,297, the wife’s $787,587.  His contribution was around 47.5% of the total, hers 52.5%.  I accept her case that her initial contribution in this short marriage should be treated on that basis.

Superannuation

1. The husband’s superannuation has built up during around 42 years’ of his contributions.  The parties cohabited for 6 of those years.  The husband says that all but about $13,000 was contributed by him outside the marriage.  He concedes there should be a small adjustment in favour of the wife, although he did not specify the amount.  His approach does not take into account that the value of the superannuation has risen considerably from its value at the time of the marriage.

2. Counsel for the wife argues that the parties’ time together represents a seventh, or about 14% of the superannuation contribution.  He sought an adjustment in the wife’s favour of 10% or $52,340.  As the parties’ contributions during the marriage were equal, I am satisfied that at most there should be an adjustment in the wife’s favour as to 7% of the husband’s superannuation.

SECTION 75(2) AND OTHER FACTORS

1. Counsel for the wife submits there should be a further adjustment of 2.5% in the wife’s favour.  Counsel for the husband submits there should be no adjustment.

2. The husband is 59 years’ of age and in good health.  The wife is 42 and is also in good health. 

3. The husband’s present intention is to continue in the public service until he reaches the retirement age of 65.  He has a higher income than the wife, and significant superannuation.  Although the farming properties run at a genuine loss, it is his choice to continue the farming, and he does obtain the benefit of off-setting losses to reduce his taxable income.

4. The wife was last in paid work some 20 years’ ago, when she worked as a book-keeper.  She is still young enough to retrain and to return to the workforce.  She proposes to do so once this case is over.  While the husband has the greater income, the wife has a greater capacity to work into the future.  Otherwise, she has the benefit of her TAC pension while her 16-year-old daughter is studying and dependant on her, until her daughter is 25.  The wife’s daughter does intend to go on to tertiary study.  Although the wife’s son still lives with his mother, he is over 18 and is in paid work.

5. Both parties are housed and have access to significant assets, for the most part unencumbered, which will act as solid financial resources for them into the future.

6. While the husband has substantial superannuation entitlements he will not have access to them for some years. The wife has time to build her own superannuation, although it is still likely to be less than his.

7. I propose that the wife will receive a sum of $36,638, equivalent to 7% of the husband’s superannuation, representing her contribution to it.  A splitting order is inappropriate for such a small share of the fund, so she will receive that sum now from the husband’s share of the assets.  That adds value for her.  The husband must wait for his share of his superannuation.  Accordingly, nothing should be added to that 7% for s 75(2) purposes.

8. I am satisfied that these combined circumstances mean there should be no further adjustment in the wife’s favour.

CONCLUSION

1. I am satisfied that it is a just and equitable result for the wife to receive 52.5% of the non-superannuation assets, a sum of $1,035,503, with an additional sum of $36,638, a total of $1,072,141.  The husband will thus receive a sum of $900,247, and retain his superannuation of $523,400.

2. It is agreed that the wife will retain the balance of the proceeds of sale of 10 C Street, and Units, 15 & 17 at B Street, her motor vehicles, chattels, savings, and the monies already drawn down by her, a total of $580,112.  Against that is the parties’ CGT liability of $45,824, paid by her.  Taking that into account, she retains assets of $534,288 and requires a payment of $537,853 from the husband.

3. The husband will retain 18 C Street, W property, H Farm, the cattle, his cars, plant and equipment, and savings, less his mortgage liability of $8,900, a total of $1,438,100.  He is entitled to $900,247, plus superannuation, once he pays the wife the sum to which she is entitled.

4. There is consensus that the payment should be guaranteed against the 18 C Street property.  The husabnd sought a 90 day period for payment as the H farm title, against which he shall borrow the payment, cannot be located, and there will be a delay while a new title is issued.

1. The wife has waited a long time for monies due to her.  In the normal course, I would ensure that the payment was made in a very short time.  In the extenuating circumstances I will make it 60 days.  There was no detailed evidence as to why it could not be done in that time.  It is incumbent upon the husband to act promptly.  Until the payment is made, he must not further encumber the 18 C Street property, save with the wife’s prior written consent.

THE ORDERS

1. The orders I propose, subject to submissions as to form, are as follows:

   1.That the husband shall pay to the wife the sum of $537,853 (“the payment”) by 4.00pm on 9 November 2009 (“the date”).

   2.That contemporaneously with the husband making the payment, the wife shall do all acts and things and sign all documents to transfer to the husband at his expense all of her right, title and interest in the real property situate at and known as 18 C Street, in the State of Victoria (“the real property”), and the husband shall become solely liable for and indemnify the wife against any liability encumbering the real property.

   3.That in the event that the whole of the payment has not been made by the date then the husband shall sign all documents and do all things necessary to transfer to the wife the real property to be held on trust for sale (“the sale”) and upon completion of the sale, the proceeds of the sale shall be applied:

   (a)    First to pay all costs, commissions and expenses of the said trust transfer and the sale;

   (b)    Secondly, to discharge the mortgage and any other encumbrance affecting the real property; 

   (c) Thirdly, to pay to the wife so much of the payment as is then outstanding together with interest thereon at the rate set out in Rule 17.03 of the Family Law Rules 2004 adjusted monthly from the date; and

   (d)    Fourthly, to pay the balance to the husband.

   4.That pending the payment or completion of the sale the husband shall in no way encumber the real property without first obtaining the written consent of the wife.

   5.That unless otherwise specified in these orders each party shall be solely entitled to the exclusion of the other to all other property in the possession of such party as at the date of these orders including all monies standing to the credit of a party in any bank account and any shares in a party’s name.

   6.That all applications shall otherwise be dismissed and the case removed from the list of cases awaiting finalisation by the Court.

   7.That pursuant to the Family Law Rules this matter reasonably required the attendance of Counsel.

I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau 

Associate: 

Date:  8 September 2009