Dritsas and Wilson
[2008] FMCAfam 44
•30 January 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DRITSAS & WILSON | [2008] FMCAfam 44 |
| FAMILY LAW – Property – marriage of around sixteen years in duration – husband 42 years of age – wife aged 56 – assessment of initial contributions – assessment of contributions during and after marriage – assessment of section 75(2) factors – wife in receipt of disability support pension – husband in modestly paid employment – wife wishes to retain former matrimonial home – just and equitable. |
| Family Law Act 1975, ss.75,79 |
| Lee Steere v Lee Steere (1998) FLC 91-626 Ferraro v Ferraro (1993) FLC 92-335 Clauson v Clauson (1995) FLC 92-595 Wardman & Hudson (1978) FLC 90-466 Biltoft & Biltoft (1995) FLC 92-614 Norbis v Norbis (1986) FLC 91-712 McMahon & McMahon (1995) FLC 92-606 Pierce & Pierce (1999) FLC 92-844 Russell v Russell (1999) FamCA 187 Waters & Jurek (1995) FLC 92-635 Danielian & Danielian [2003] FamCA 473 Clauson & Clauson (1995) FLC 92-595 |
| Applicant: | MR DRITSAS |
| Respondent: | MS WILSON |
| File Number: | ADC 1980 of 2007 |
| Judgment of: | Brown FM |
| Hearing date: | 22 November 2007 |
| Date of Last Submission: | 22 November 2007 |
| Delivered at: | Adelaide |
| Delivered on: | 30 January 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Noble |
| Solicitors for the Applicant: | Von Doussas Legal Pty Ltd |
| Counsel for the Respondent: | Ms Wilson in person |
ORDERS
Within forty-five days of the date of these orders the wife pay to the husband the sum of One hundred and eighty-three thousand five hundred dollars ($183,500.00).
Contemporaneously with the payment referred to in order 1 hereof the husband transfer to the wife the whole of his right, title and interest in respect of the property situated at and known as Property A in the State of South Australia (hereinafter referred to as “the former matrimonial home”).
In the event that the wife is unable to comply with order 1 hereof the parties execute all necessary documents and do all necessary things to place the former matrimonial home on the market for a price of not less than $550,000.00 or such other sum as the parties mutually agree with the proceeds of sale to be paid as follows:
(a)Firstly, to pay the costs, commissions and expenses in relation to the said sale;
(b)Secondly, to discharge the mortgage on the property;
(c)Thirdly, to distribute the balance of the proceeds of sale so that the wife receives fifty-five percent (55%) of the parties’ net assets and the husband forty-five percent (45%) of the parties’ net assets taking into account the items of property to be retained by each party as set out in these reasons for judgment but to exclude from such calculation all other debts of the parties and the husband’s interest in the property at Property B and the wife’s settlement payment in respect of her Workcare claim.
In the event the sale referred to in order (1) becomes necessary the husband and wife continue to pay equally, as they fall due, all regular instalments in respect of the mortgage, council rates, water rates, household insurance in respect of the former matrimonial home until the completion of the sale referred to in order (3) herein and that pending such sale the wife be entitled to occupy the property.
In the event that the parties are unable to agree upon the method of sale of the former matrimonial home and the identity of any real estate agent required to effect such sale these issues be determined by the President of the Real Estate Institute of South Australia or his nominee.
Unless otherwise as specified in these orders and except for the purposes of enforcing the payment of any moneys due under these or subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all property (including choses in action) in possession of such party as at this date;
(b)Each party hereby foregoes any claim that he or she may have to superannuation benefits belonging to or earned by the other which are standing in the other’s name;
(c)All insurance policies become the sole property of the beneficiary named thereunder;
(d)Each party be solely liable and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
The application herein be otherwise dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 1980 of 2007
| MR DRITSAS |
Applicant
And
| MS WILSON |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to the division of matrimonial property. The applicant in the proceedings is Mr Dritsas. The respondent is Ms Wilson. The parties were married in Adelaide in March 1992. Although they were divorced at Adelaide in May 2007, it is convenient to refer to them as “the wife” and “the husband” respectively in these reasons for judgment.
The parties finally separated in February 2006, after having begun to live together most probably in May of 1990. Accordingly, the relationship between them was one of about sixteen years in duration. The parties do not have any children.
The parties’ major item of property is their former home referred to as Property A. The parties agree it is worth $550,000.00 and is subject to a mortgage of $157,000.00.
The wife has been living in the property since the parties separated. Since that time, they have each been contributing to the weekly mortgage payments required equally, a sum of around $130.00 each. The wife would like to retain this property. It is her home and she is well settled in it.
The central issue in the case, from her point of view, is the sum of money she will be required to pay the husband to acquire his interest in Property A and more particularly whether she will be able to meet it.
Ms Wilson is not financially secure at present. She is in receipt of a disability support pension, as a result of feet, hip and lower back problems. Accordingly, it will be difficult, if not impossible, for her to service a mortgage, whilst she remains on the pension. For obvious reasons, she wishes to minimise the amount payable to Mr Dritsas.
Mr Dritsas works as a rental properties manager. His salary is around $40,000.00 per annum. He currently lives in rented accommodation. He is engaged to be married. His fiancée is from China and is not eligible to work in this country. Accordingly, she is totally financially dependent upon Mr Dritsas.
Currently, Mr Dritsas estimates his ongoing liabilities as being greater than his recurrent income. In time, he would like to purchase a residential property for himself and his new wife. For obvious reasons, he wishes to maximise the amount he will recover from his investment in Property A.
The extent of the wife’s disabilities and the effect they have on her capacity to work is in dispute between the parties. The husband believes that the wife’s difficulties are overstated and it strains credulity to suggest that her inability to work has occurred coincidentally with the end of the parties’ marriage.
Notwithstanding the controversy regarding the wife’s capacity to work, this is a case where the immediately available assets are likely to be insufficient to meet all the needs of both parties. The shortfall centres on the former matrimonial home and the question whether it needs to be sold so that both parties can realise their proper entitlements, at the end of the marriage between them.
These proceedings are designed to resolve the various disputes between the parties, and as far as possible, finalise their financial relationship with one another.
The legal principles to be applied and the issues in the case
The process to be followed for the division of the parties’ property is well established by law.[1] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.
[1] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[2] The parties have been able to agree upon the valuation of most items of their property, particularly Property A.
[2] See Wardman & Hudson (1978) FLC 90-466; and Biltoft & Biltoft (1995) FLC 92-614
Regardless of this agreement, there exist a number of issues which arise in respect of items of property potentially able to be included in the pool of the parties’ assets and how those assets are to be dealt with. The issues can be summarised as follows:
·In October 2005, the husband was registered as a joint proprietor, in equal shares, with his brother Mr F D and his sister Mrs H P of Property B. The husband’s father, who died in 2001, lived in the property with his wife (the husband’s mother), who continues to live there. It is agreed that the husband’s one-third share in the property is worth $130,000.00.
·It is the husband’s position that this property was transferred to him and his siblings in exchange for their undertaking to safeguard their mother’s interests for the remainder of her life. The husband estimates his potential liability to support his mother as being a sum of around $100,000.00.
·Should either of these figures be included in the parties’ pool of assets and liabilities?
·The wife stopped working in early May 2006. Initially, she was in receipt of sickness benefits. In June of 2007, she was assessed as entitled to a disability support pension. She sought WorkCover payments from her former employees and instructed solicitors to act on her behalf.
·In June 2007, the wife settled her WorkCover claim against her former employers on the basis that she would receive $75,000.00. Around $22,000.00 of this sum represented compensation for loss of function in her feet and overall loss of bodily function. The remainder was a redemption of her entitlement to weekly payments in respect of lost wages.
·Moneys have been deducted from this sum of $75,000.00 to reimburse Centrelink in respect of sickness benefits paid to the wife and to the Medicare Compensation Recovery in respect of medical expenses paid on the wife’s behalf. The wife has been left with a net sum of around $56,000.00.
·Should this sum be included in the parties’ table of assets and liabilities?
·Both parties have accumulated significant debts in the period since separation, as a result of their changed financial circumstances. In the husband’s case, the sum of debts is $32,383.00; in the wife’s case, the sum is $20,000.00. How should these sums be treated?
Secondly, I must ascertain the contributions which each party has made towards those assets. Contributions fall into two broad categories. The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.” It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
In assessing the parties’ contributions to the acquisition of the assets of their marriage, it is necessary to consider whether the court should adopt a global approach or an asset by asset approach. In the former, the court assesses the parties’ contributions to their assets in a total or comprehensive manner. In the latter, the court assesses the parties’ contributions to individual items of property.
The global approach is the method generally adopted because it is usually the more convenient, particularly when the court is assessing different types of contributions – home making and financial – towards the acquisition of the various assets concerned.[3]
[3] See Norbis v Norbis (1986) FLC 91-712 at 75,268
However, the court retains a discretion to adopt the asset by asset approach in appropriate cases. Cases where it is appropriate to adopt this approach include those where the parties have made different contributions to the assets concerned; or where the marriage between the parties has been short and they have kept their assets separate. In determining what is the appropriate approach, the court must have reference to considerations of justice and equity.[4]
[4] See Norbis (supra) at 75,173-75,174 and McMahon & McMahon (1995) FLC 92-606
The second step occasions controversy between the parties in the following major areas:
·The husband asserts an asset by asset approach should be taken in respect of his interest in the inherited Property B and his contribution towards the acquisition of that property assessed at 100%.
·The husband also concedes that a similar asset by asset approach should be taken to the wife’s WorkCover payment and she be regarded as having contributed 100% of it.
·It is the husband’s position that he brought considerable assets into the marriage. Accordingly, it is his position that these are contributions, which in the overall context of this case, are of such magnitude that they merit being given “special recognition” in his favour in the court’s deliberation.[5]
·The wife does not agree. It is her position that the parties brought in assets of approximately equal value and, in any event, the considerable length of the marriage between the parties discounts the degree of weight to be given to the husband’s initial contributions, if any.
·In early 1994, the husband received a worker’s compensation payment amounting to $24,697.00. Again, it is his position that this contribution merits “special recognition”.
·The husband asserts that his contributions in the period following the parties’ separation are superior to those of the wife. He has paid half the mortgage payments on Property A, whilst having to rent alternative accommodation. On the other hand, the wife has had the benefit of living in the former matrimonial home.
·It is the husband’s position that the parties’ responsibility for their current individual debts should be assessed individually and the debts should lie where they are. The wife does not disagree with this approach.
[5] See Pierce & Pierce (1999) FLC 92-844 at 85,811
At the end of the second stage, the husband asserts that the parties’ matrimonial property should be divided 60/40 percent in his favour, after the exclusion of Property B and the wife’s workcover payment.
On the other hand, it is the wife’s position that the parties’ various contributions should be regarded as being much closer to equal. She points to the length of the marriage between the parties and the fact that both were engaged in the paid workforce for its vast majority, pooling their respective wages and financial resources.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2) (o), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
In the main, section 75(2) deals with the prospective needs of the parties. This area too, occasions controversy between the parties in the following areas:
·The wife is fifty-six. The husband is forty-two. The wife points to this age differential as being a factor in her favour.
·The wife asserts her poor health and current level of disability are also a significant factor in her favour. She has physical limitations in her feet, hips and back. Formerly she was employed as an enrolled nurse, in an aged care facility. The wife asserts that her level of disability, when combined with her age, preclude her from returning to the paid workforce forever.
·The husband does not accept that the wife is precluded from returning to the paid workforce. He characterises her injuries as being “relatively minor”.
·The wife points to the current disparity in the respective incomes of the parties – she receives a disability support pension in the sum of $271.75 per week; the husband receives a wage of $762.00 per week.
·The wife also asserts that the husband will receive the benefit of his interest in Property B in due course.
·On the other hand, the husband points to his responsibility for his elderly and ailing mother.
·The wife’s consummate wish is to remain living in Property A. Given the length of the marriage, she believes her remaining in the property would ensure she retains a reasonable standard of living at the marriage’s conclusion. The husband points to his responsibility to financially maintain his current fiancée as a factor in his favour.
At the end of the third stage, it is the husband’s position that the various section 75(2) factors are largely immaterial. However, if there is to be an assessment in the wife’s favour, on the basis of her physical disabilities, he contends that it should be a modest one in the vicinity of around five percent.
By necessary implication, it is the wife’s position that the section 75(2) factors greatly favour her. She has not approached the case in percentage terms. Rather, she proposes that she pay the husband the sum of $75,000.00 in order to acquire his interest in Property A.
Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[6]
[6] See Russell v Russell (1999) FamCA 187
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[7] or of equalisation of assets or financial resources.
[7] See Waters & Jurek (1995) FLC 92-635 at 82,375
At the outset, I am at pains to point out to the parties that the task I must undertake is not a simple accounting or arithmetical task. In the jargon of the times, I cannot “crunch the numbers” to come up with a division of their property, which is not open to challenge or incapable of different interpretation.
Marriage is by and large a joint enterprise. How much buffer spouses must give one another, when financial set backs occur must depend on the degree of consultation and acquiescence in their relationship.[8]
[8] See Danielian & Danielian [2003] FamCA 473 at paragraph 49
The task, set out for me in this case, requires me to balance and compare contributions which are by their nature different, within the framework of a marriage. Many contributions in a marriage, such as being a homemaker, do not result in the direct acquisition of assets. They are also difficult to value. The discretion I have is a wide one.
The evidence
The parties each gave evidence and relied on a number of affidavits each, as well as their respective financial statements.[9] No other witnesses were called.
[9] In the husband’s case he relied on his affidavit and statement of financial circumstances both filed on 9 November 2007; in the wife’s case, she relied on her statement of financial circumstances filed 26 October 2007 and three affidavits filed respectively on 14 June 2007; 26 October 2007; and 19 November 2007
Mr Dritsas was legally represented throughout the proceedings. Ms Wilson was initially represented in the case but her solicitor ceased to act on her behalf on 15 August 2007. She herself prepared her two most recent affidavits and statement of financial circumstances.
Ms Wilson is a pleasant and intelligent person. However, she was at a considerable disadvantage in the proceedings due to her lack of representation. It was difficult for her to come to terms with the applicable legal principles in the case. She chose not to cross-examine her former husband and did not call extensive medical evidence in respect of her current capacity to work. Certainly no formal affidavit evidence was provided by any of her treating medical practitioners.
The most significant evidentiary disputes concern the following matters:
·The level of the parties’ respective financial contributions at the start of their marriage.
ØThe husband asserts he had an interest in Property C, which was realised on 3 June 1990 netting him $67,520.43, which sum went entirely to matrimonial purposes.
ØAt best, he says the wife brought into the marriage $9,000.00 in cash and some items of property of modest value.
ØOn the other hand, the wife asserts that she brought in around $18,500.00 from the sale of her interest in Property D and assets, particularly furniture, a motor vehicle and savings worth around $19,500.00.
ØThe wife asserts that the husband overstates his initial financial contributions and at best he netted between $42,000.00 and $45,000.00 of the sale of Property C. She disputes the value of the husband’s motor vehicle at the time, which she says was negligible.
·The extent, if any, of any direct financial contributions made towards the improvement of Property B, during the parties’ marriage.
·The level of the wife’s incapacity for employment and whether it is likely she will be able to return to the workforce, once these proceedings have concluded.
The marriage between the parties was a long one. It would be unrealistic to expect them each to have a comprehensive recollection of every sum of money and every item of property and its value they had at the start of their marriage. There are some records which relate to the period but the documentary record is not complete.
In terms of credit, both parties seem to me to be pleasant and honest witnesses, who both attempted to reconstruct their financial history together as best they could. I do not think that this case turns on credit and one party should be automatically preferred over the other.
Inevitably proceedings between former marital partners invoke strong feelings. Such emotions are likely to inform how parties recollect past events and, when those events need to be reconstructed, for the sake of adversarial proceedings such as these, it is only to be expected that such a subsequent reconstruction will favour the party making it.
Both parties have, I think, followed the natural human tendency, in proceedings such as these, to maximise their own contributions and minimise those of the other.
In this case, I will endeavour to reconstruct as best I can, the parties financial history bearing in mind that the prerequisite standard of proof is the balance of probabilities – that is what I think most likely occurred.
An assessment of the wife’s current and future capacity to work poses particular difficulties for the court. It is, in my view, primarily a medical issue. In this regard, the medical evidence is limited.
For obvious reasons, at this stage of proceedings, the wife has an interest in maximising her level of difficulties. That is not to say I found her conniving and disingenuous. I did not.
However, she is not likely to be the best placed person to assess her capacity to work in future, particularly whilst she remains somewhat bitter about the circumstances surrounding the end of the parties’ marriage. In my view, it is highly probable that some of her difficulties will ease, once the emotional disturbance created by these proceedings subsides.
The wife provided two medical reports in support of her case. The first was from her general practitioner, Dr K, who assessed her as having qualified for the disability support pension in June 2007. His report is handwritten and was in the form of the completed questionnaire required by Centrelink by a treating doctor before such pensions are granted.
The second report was from Dr B, who is a consultant in rehabilitation medicine. He provided a report on 31 August 2006 to Ms Wilson’s solicitor in respect of her workcare claim.
Initially Mr Noble, who appeared for the husband indicated that he wished both doctors to attend at court for cross examination. In the event that either was unavailable, no doubt it would have been his position that the court should not rely on their evidence. In any event, he chose not to maintain this position, rather submitting that the reports concerned did not support the wife’s claim that she was totally and permanently incapacitated for work.
However, the fact remains that I have no current medical material before me, which specifically deals with the wife’s current level of capacity to work and particularly whether the wife has any present capacity to return to the workforce.
There were some other minor factual issues between the parties. The wife asserts that the husband is likely to have some form of interest in a piece of real property in E in Greece. The husband denied that he had any such interest attributing the wife’s view that he had to his mother’s story regarding a family dispute about some land at E. In any event, the wife did not pursue this issue with any rigour. I propose to discount it.
Other issues in dispute between the parties, regarding the value of the husband’s interest in Property B and the parties’ interest in Property A were dealt with by means of a notice to admit facts. A similar approach was taken in respect of the motor vehicles currently in the possession of each of the parties and the value of their respective items of furniture.
In these reasons for judgment, findings of fact are made on the balance of probabilities. In what follows, statements of fact constitute findings of fact.
a) Chronology
The wife was born in Eastern Europe in 1951. She arrived in Australia in 1982. The husband was born in Adelaide in 1967.
The parties met in 1987 at O, where both were working at the time. After he completed his secondary education, the husband worked as a labourer with various firms, until he was injured at his work in 1992. He had hurt his back over a number of years of heavy work. Subsequently he has retrained to be a rental properties manager.
The wife speaks English reasonably well. She has Eastern European qualifications in occupational health and safety but no specific qualifications recognised in Australia. She was previously in a long-term relationship, which ended in the late 1980s. The wife and her then partner, Mr W owned a townhouse in Property D.
The parties began to live together in either May 1990 (the wife’s view) or March 1991 (the husband’s view). I do not think the difference is hugely significant, but both parties point to the date he or she favours to buttress arguments regarding the extent of initial financial contributions. They married on 7 March 1992.
The wife deposes that the Property D property was sold for $85,000.00. This is the type of detail a person is likely to recall, even many years later. I do not disbelieve the wife in this regard. She has retained a passbook in her and Mr W’s name from the H Building Society. The passbook relates to what is described as a retail term loan. I accept the passbook relates to a mortgage on Property D.
On 18 January 1990, $48,000.00 was deposited into this account clearing an overdraft of $47,634.94. Evidence provided by the wife indicates that this was around the time the Property D property was sold.
It is the wife’s case that she and Mr W divided the proceeds of sale of this property equally between them. Accordingly, I accept that she received a sum of around $18,500.00 from the sale of the property.
At the time he met the wife, the husband was living with his parents. However, he owned a property known as Property C. The husband sold this property in June 1990. There is no doubt that the sale netted him $67,520.43.
It is also incontrovertible that the husband placed $45,000.00 in a Commonwealth Bank term deposit on 26 June 1990. A certificate with the Commonwealth Bank dated 19 October 1990 proves that the wife had a similar term deposit, in the sum of $9,500.00.
These respective certificates are the basis of the parties’ respective assertions regarding the extent of their initial contributions. The wife indicating that the husband had $45,000.00; the husband asserting that the wife had $9,500.00. It is impossible to say definitively where the difference between the respective sale prices of each property concerned and each subsequent term deposit went in the case of each party.
The parties had joint expenses together, relating to their marriage, honeymoon and the costs of setting up home together. Given the period of time which has elapsed since the parties married, no records apparently still exist in respect of this expenditure.
Both parties strike me as being somewhat cautious with money and having frugal dispositions. I do not think they are the type of people, who would waste the proceeds from the respective sales of their real properties.
In addition, at the time, each of the parties had other items of personal property in his or her possession. They now dispute the value of these various items of property. The wife says she had furniture worth $11,500.00; a car worth $6,000.00; and other items worth $3,000; all of which came into the marriage.
She further asserts that the husband had a motor vehicle in a poor state of repair worth $2,000.00 and very little else. The husband disputes the value of the wife’s property, but accepts she had more furniture than him. He puts a higher value on his motor vehicle and a lower value on the wife’s motor vehicle.
At this juncture, it is impossible to ascertain the value of these various items. The wife probably brought in more items of personal property, having had her own household for a number of years, but in my view, the difference was not significant.
Regardless of the dispute between the parties regarding the date of commencement of their relationship, there can be no dispute that they purchased their first home together known as Property E on 12 March 1991. The purchase price was $104,000.00. After payment of fees associated with the purchase, the sum required to complete the transaction was $107,870.54.
The parties borrowed $60,000.00 from the Commonwealth Bank by way of a first mortgage secured against the property. I accept that the husband paid the deposit of around $5,000.00 and the balance came from a Commonwealth Bank savings account. It is the husband’s position that this sum was solely sourced from the proceeds of sale of Property C.
The date of purchase of Property E tends to suggest that the wife’s nominated time for the commencement of the parties’ relationship is more likely to be correct. It seems unlikely that the parties would consider purchasing a home together in the first month of their relationship.
Given my view about the frugal nature of the parties, it seems to me likely that the wife brought in a sum in excess of $20,000.00 and the husband around $67,000.00, at the time of the commencement of their relationship, both of which sums were utilised in joint matrimonial purposes.
The husband’s savings were the main source for the purchase of the Property E, which clearly has represented the mainstay of the couple’s wealth in the period since. That is not to say I do not believe the wife used her savings for joint purposes. I accept that from an early stage the parties inter-mingled their funds and worked together for their common good.
Both parties worked hard, in the paid workforce during the entire period of their marriage. Figures extrapolated by the wife indicate that over the fifteen to sixteen year period of the marriage, the wife earned $356,860.00 gross and the husband $430,738.00 gross. The husband accepts these figures. I do not think that the difference is significant. From time to time, the wife worked shorter hours than the husband but utilised her spare time in household duties. Neither party can be described as a passenger during the period of their marriage.
The parties were able to pay out the mortgage on Property E by 2000. This was as a result of their joint contributions, as their respective salaries were paid into a joint account. The parties acknowledge that they enjoyed a comfortable lifestyle together, including regular holidays, which they were able to fund from their pooled income.
The wife asserts that she utilised some of her earlier savings to undertake renovations on Property E. I have no reason to disbelieve her. Certainly I think it unlikely that she either wasted or concealed any of the moneys she brought into the marriage from the husband.
The husband received a worker’s compensation payout of $24,500.00, relating to a back injury, in January 1994. The wife says $22,000.00 of this sum was used to purchase a motor vehicle, which the husband utilised for his own exclusive use. It seems that this vehicle has long been superseded by others. The wife’s claim that the husband used the vehicle solely is immaterial. The fact remains that the husband contributed a significant sum into the marriage, which related to compensation for injuries sustained by him largely prior to the commencement of the marriage.
The parties decided to sell Property E in 2004. The sale realised approximately $250,000.00. In place of the Property E home, the parties decided to construct a house on land at H, (to become Property A). The land and construction costs were greater than the proceeds of sale of the Property E, all of which were allocated to Property A. When Property A was completed, the parties were indebted to the Westpac Bank in a sum of approximately $160,000.00. It is agreed between the parties that the current level of the mortgage is around $157,000.00.
The husband’s father, Mr C D died on 21 September 2001. It seems that he and his wife, the husband’s mother Mrs V D owned the Property B jointly. On Mr C D’s death, his wife became the sole proprietor of the property.
In August 2005, Mrs V D transferred her entire interest in the property to her three children – the husband; Mr F D; and Mrs H P. The three children hold the property as tenants in common. Stamp duty of $8,742.50 was paid in respect of the transaction.
Mrs V D is seventy-seven years of age. She suffers from alzheimers disease and needs assistance with her care. Her major carer is the husband’s sister, Mrs H P, who lives nearby.
It is the husband’s position that Property B was transferred to him and his siblings in order to safeguard their mother’s future financial security. In consideration of the transfer, the husband deposes that he and his brother and sister are obliged to support their mother until her death. If necessary, they will be responsible for providing accommodation for her in a nursing home or retirement village, if the need arises. This agreement has not been formally documented.
It is the wife’s position that between the date of Mr C D’s death and the formal transfer of the property to him and his siblings, the husband and she paid for renovations to Property B. These renovations included the installation of kitchen cupboards and benches; floor tiling; and the installation of fencing and gates to the property.
The wife asserts that these improvements were paid for from joint matrimonial resources in anticipation of the husband receiving a share of the property in due course. The wife is not able to quantify the cost of these improvements.
The husband’s position is that he has “helped out” his mother from time to time and has done repairs and maintenance to the property, at this own expense, during the entire period of the marriage. It is his case that none of these works can be regarded as exceptional but rather are to be regarded the sorts of things a loving son would do for his ailing parents. On balance, given the absence of any definitive financial documentation regarding the issue, I think the husband’s version of events is likely to be the more reliable one.
For much of the marriage, the wife was employed as an enrolled nurse. She ceased this employment on a full-time basis in May 2006 and on a full-time basis in August 2006. Initially her general medical practitioner certified her as being fit for light duties on a part-time basis but she ceased her employment in August 2006, when her claim for workcare payments was rejected.
On 4 June 2007, in support of the wife’s claim for a disability support pension, Dr K diagnosed her as suffering from osteoarthritis in her mid and distal feet. The date of onset of this condition was said by Dr K to be 2002. In addition, Dr K diagnosed depression, which was said to have commenced in May of 2006. The wife’s application for a disability support pension was successful.
The wife has recently settled her claim for workcover payments. The sum she agreed to accept was $75,000.00. This sum was calculated on the basis of a 10% loss of function of each of her feet and a 2.5% loss of her whole body function, relating to an alteration of her gait. In dollar terms, this translated to a compensation payment of $21,715.35.
In addition, she agreed to accept a redemption payment of $53,284.64, being $53,000.00 for weekly payments of compensation and $284.64 for medical expenses. As previously indicated, significant deductions were made from this sum leaving the wife with a sum of $56,218.20.
The wife has remained living in the former matrimonial, Property A since the parties separated. It is common ground between them that they have divided the outgoings in respect of the property equally between them. Both parties have incurred debts in the period since their separation. The wife has borrowed $20,000.00 from her brother Mr M S. The husband has borrowed $32,383.00 on credit cards in the period.
The husband has lived in rented accommodation, since the parties separated. His rent is $560.00 per month. He shares the property concerned with his fiancée Ms R X. Ms R X is in Australia on a fiancée visa. Accordingly she is not eligible for paid employment in this country. In order to validate her continuing stay in Australia,
Ms R X and the husband must marry by 7 May 2008.
Step One – the pool of assets available for division
Given the nature of the husband’s interest in Property B, which is in my view analogous to an inheritance, I think it appropriate to assess the parties’ contributions to this asset on an individual basis. I reach this view because I find that the husband has acquired his interest in the property as a result of the ties of affection and obligation, which bind him to his mother.
I propose to take a similar approach in respect of the wife’s workcover payment and the parties’ current personal debts. In respect of the debts, the husband’s counsel Mr Noble submits this is an appropriate approach. The wife does not disagree.
In respect of the wife’s debt to her brother, I have been provided with no specific details. In particular, I do not know whether there is any formal loan agreement and so whether the wife will be expected to repay the debt by a specific date. In these circumstances, I believe that it would be inappropriate to include this debt.
Having reached these conclusions, the parties’ pool of assets and liabilities, available to be divided between them can be easily identified as follows:
Primary Pool
$
Property A
$550,000.00
Husband’s motor vehicle
$10,000.00
Wife’s motor vehicle
$4,200.00
Husband’s superannuation entitlements
$37,736.00
Wife’s superannuation entitlements
$60,162.00
Furniture and effects in the wife’s possession
$10,000.00
Furniture and effects in the husband’s possession
$1,000.00
Total
$673,098.00
Liabilities
Mortgage on Property A
$157,000.00
Net Assets
$516,098.00
Subsidiary Pool
Husband’s one-third interest in Property B
$130,000.00
Wife’s workcare payment
$56,218.20
Step Two – assessment of contributions
The relationship and subsequent marriage between the parties was one of significant length, being somewhere between fifteen and sixteen years.
Both parties were employed during their marriage and pooled their income in a joint account, from which their expenses were paid. Their marriage was one of equals. The husband earned slightly more than the wife over the period but no suggestion is made that she was not working to her full capacity or was not contributing to the parties’ common good in other ways. For example, it is agreed that she attended to the parties’ finances.
The husband asserts that he carried out all the repairs and maintenance of both Property E and Property A and was highly involved in the construction phase of the later property. The husband also asserts that the parties shared household chores within the home during their marriage. The wife describes herself as the “primary home-maker” and throws doubt on the husband’s claims regarding maintenance citing his 1992 back injury in support of her decision.
It seems to me that both parties had physical limitations, particularly in the latter part of their marriage, but it is my impression that both continued to contribute in the marriage, in a variety of capacities. I do not think one spouse’s performance can be singled out as being immeasurable superior to the others. Accordingly, my assessment of the parties’ respective contributions during the marriage is that they are essentially equal.
Both parties have accumulated superannuation. The wife has significantly more than the husband. I am not sure why that is so. In such circumstances I am unable to differentiate between the parties’ respective contributions to the accumulation of that superannuation.
Neither party seeks a splitting order in respect of any of the superannuation. The wife hopes to realise her superannuation entitlement to purchase the husband’s interest in Property A.
Accordingly, the only differential factors between the parties’ respective contributions during their marriage relate to their initial contributions of capital, including the husband’s 1995 compensation payout and their financial contributions after separation, in the period from February 2006 to now. The latter aspect is less controversial and I will deal with it first.
Currently the husband’s salary is a modest one of just under $40,000.00 per annum. Half the mortgage payments on the former family home consume $6,720.00 per year or around seventeen percent of his income. It is a considerable burden. In addition, the husband has contributed his half share to other outgoings on the property, such as rates and insurance.
The wife has borne the same burden on a considerably lower annual income of just over $14,000.00. Accordingly, the mortgage payments alone consume around half her income. The main difference between the parties is that the wife has had the benefit of being able to live in the property, whilst the only benefit to the husband (other than seeing his former partner safely housed) is that his investment in the former matrimonial home has been maintained. He has had to rent alternative accommodation for himself at considerable expense.
However, in my assessment, Ms Wilson must be regarded as having contributed more to the mortgage by virtue of her financial circumstances. She has been in receipt of a disability support pension as a result of suffering from osteoarthritis and depression. It is difficult to see how she could have contributed more financially towards the preservation of the home in the period following separation. Accordingly, I do not think it would be just and equitable to distinguish between the parties’ post-separation contributions in the overall context of this case.
This leaves the assessment of the parties’ initial contributions. One of the central issues in the case is the weight to be given to the husband’s initial superior contributions of cash, which enabled the parties to purchase Property E. Later this contribution was augmented by the husband’s worker’s compensation payout, although this sum did not go directly into the home itself.
In round terms, Mr Dritsas brought in around three times more cash. In today’s terms, the sums are not large but both then and now they are very significant to the parties themselves. However, the contributions were made over fifteen years ago now. There has been much water under the bridge in that time.
Although these contributions must be regarded as significant, as I have found, the wife has also made significant contributions, as both a homemaker and wage earner. She worked hard during the marriage and her income was used for family purposes.
The difficulty provided by the case is how the husband’s superior initial financial contributions and his other financial contributions made during the marriage, particularly his worker’s compensation payout, are to be balanced against the other significant contributions which the wife has made during the period of the marriage.
It is a difficulty to which I have already eluded in that, pursuant to the section 79 exercise, the court is often called upon to compare fundamentally different things. This comparison cannot be conducted on a “level playing field”. The court must be careful to avoid a tendency to under value non-financial contributions made by homemakers and parents.[10]
[10] See Ferraro & Ferraro (1992) 16 Fam LR 1 at 38
Cases involving one party having made a significant initial injection of capital, where the marriage concerned is of a significant period and which involve the court having to assess non-financial contributions pose particular problems. As the Full Court observed in Ferraro, a court such as this one must be careful not to undervalue the homemaker and other roles.
On the other hand, it may lead to injustice if, in a similar fashion, a major discrepancy in the respective contributions of initial capital is overlooked. In the past, there has been a tendency to suggest that such an initial contribution of capital is “eroded over time” by other factors, particularly homemaking contributions. The Full Court has pointed out that such a formulation is erroneous.[11]
[11] See Pierce & Pierce (supra) at page 85,811
Rather, it is necessary for the court to weigh any initial contribution with all the other contributions made by both parties during the marriage to reach an outcome, which is both “appropriate and just and equitable”. In particular, having looked at all the circumstances of a case, one particular contribution “may be so disproportionate as to other contributions as to merit special recognition”.
In assessing whether initial financial contribution merits such special recognition, the Full Court has directed that regard be had to the use to which such an initial financial contribution is put.
The husband’s workers compensation payment cannot now be tied to any particular piece of property. It has been spent. The amount the husband contributed to the Property E is significant. It enabled the parties to live securely in the period since. It and its successor, Property A, are by far the most significant assets the parties have owned. However the wife’s wages also enabled Property E to be paid off quickly and for the property then to be sold and its proceeds put into the Property A home.
Accordingly, notwithstanding the wife’s significant efforts during the marriage, I have reached the conclusion that that the husband’s overall financial contributions during the marriage are to be regarded as marginally superior, particularly by dint of his initial contributions. I assess the parties’ respective contributions, at the end of the second stage, as being 55/45 percent in the husband’s favour.
Step three – section 75(2) factors – the prospective needs of the parties
In my view the most relevant factors under section 75(2) in this case are the factors set out in section 75(2)(a), (b), (e), (f) and (g).
There is a fourteen year age gap between the parties. In my view, it is a significant period. Although the wife speaks English well, it remains her second language. She has no specific skills to speak of.
For much of her recent working life, the wife has worked in an aged care facility. It seems to me that, regardless of any health issues she may have, the wife is likely to find it difficult to obtain full-time work and be limited to unskilled positions.
Although I have not been provided with any specific statistical data, it seems to me to be likely that unskilled migrant woman in their mid-late fifties are amongst the hardest workers to place into work in the Australian community, notwithstanding that we live in times of high employment participation.
Mr Dritsas does not have an extensive education behind him. For much of his career, he has been a labourer. It is also the case he has sustained a back injury. These factors are also considerable impediments to obtaining and retaining paid employment. However, to his credit, the husband has been able to re-equip himself for the workforce in the field of residential property management. This is lighter work. However, it does not provide him with anything other than a modest wage.
However, notwithstanding the impediments facing both parties in respect of ongoing participation in the paid workforce, it seems to me to be clear that the wife faces significantly greater difficulties. The husband is currently in the workforce and has many more years of productive life before him, in which to regroup financially, after the set back occasioned by the end of the parties’ marriage. Regardless of her health difficulties, the wife has significantly less years of potential paid work before her.
Apart from his back injury, the husband enjoys good health. He deposes that he is willing and prepared to engage in lighter work, such as property management and clerical work for the foreseeable future. Accordingly, it does not seem improbable to consider that he may have at the least twenty years of productive employment life before him.
The situation confronting the wife is more complex. At the very best, she has three to eight years of productive life before her. However, I consider it unlikely that she will be able to remain in the paid work force until she attains the age of sixty five years, particularly as she has already been assessed as eligible to receive the disability support pension, which is predicated on the basis of an assessment that its recipient is both unable to work or to be retrained for work for periods of up to fifteen hours per week within a period of two years from the onset of illness, injury or disability.
The husband is dubious about the wife’s current state of health and believes that she is attempting to gain an advantage in these proceedings by exaggerating her current health difficulties. In particular he points to the limited medical evidence which she has brought to support her position.
The first report relied upon by the wife is by her treating general medical practitioner, Dr K. It was prepared in June of 2007 in respect of Ms Wilson’s application for a disability support pension. It is not a lengthy document by any means. In the report Dr K diagnoses two conditions – firstly osteoarthritis in the mid and distal foot and secondly depression.
The first condition is said to have commenced from 2002 and been confirmed by diagnosis in 2003. It seems to be the case that the wife has suffered pain in both her feet for many years and to have difficulty in standing for lengthy periods. Dr K assesses the condition as likely to persist for more than twenty four months and to be likely to deteriorate. The treatment prescribed is analgesia and anti-inflammatory medication. Surgery is said to be under consideration.
Dr K indicates that the wife’s depression commenced in May of 2006 and was confirmed by diagnosis in November of 2006. Her symptoms are described as depressed mood; insomnia; emotionally labile; which Dr K believed suggested severe depression. Dr K assessed this condition as likely to persist between three and twenty four months and to improve somewhat in that period. The consequences of the condition are described as fatigue; social phobia; low self-esteem; and poor concentration.
Dr K has been treating Ms Wilson since 1988. In a concluding comment to his report, he wrote (as best as I can decipher his hand) as follows:
“…for the near to medium term future Ms Wilson is disabled (completely). I am hopeful that over the next 12-24 months that she may be able to resume part time work eg 8-12 hours per week. But this is only a possible outcome – at present totally disabled.”
The second report relied upon by the wife is by Dr B, a consultant in rehabilitation medicine. His report is dated 31 August 2006 and was prepared in relation to her work cover claim. In the report Dr B confirms that Ms Wilson’ foot problems became apparent to her from late 2003, with increasing severity thereafter. This had led in time to back and hip pain, which was aggravated by prolonged standing or walking for more than half an hour.
Dr B was of the opinion that:
“…[Ms Wilson] suffers a partial incapacity for work. In my opinion, her restrictions should include avoiding prolonged static standing or walking, with the ability to change between sit and stand postures intermittently, avoiding repetitive access to stairs or inclines, or working in prolonged low level postures. Hence, your client does suffer a partial incapacity for work as an Enrolled Nurse in a hostel setting.
Your client is reporting a reduction in her symptoms since being away from work for the last one and a half weeks. Depending on whether your client wishes to pursue further treatment intervention, it would be prudent to see how she progresses away from work over the next few months before offering an opinion in regards to permanent disability. It may well be that her problems settle to a level compatible with the underlaying pre-existing problems and the aggravation by her work is less significant.”
In my assessment, the wife cannot be described as malingering. I accept that she has ongoing pain in her feet which preclude her from standing or sitting for prolonged periods. It is difficult to see how she could return to work as an enrolled nurse. Given her age, Ms Wilson does not appear to be an ideal candidate for re-training. Most unskilled positions are likely to include at least an element of either prolonged sitting or standing. Accordingly, Ms Wilson’s return to the full time paid work force appears problematic to me at this juncture.
The wife’s depression is likely to relate, at least in part, to the difficult circumstances surrounding the end of the parties’ marriage and the uncertainty and insecurity which has followed for her. It is likely that this depression will resolve in time. As the wife’s confidence does return, she may find it easier to find some form of employment but this cannot be guaranteed, particularly given her age and background. In my assessment, at best, the wife is looking at returning to some form of part time work. It seems more likely however that she will remain on some form of government based income support for the foreseeable future.
Accordingly, on the basis that the most reliable source of on-going financial security for a party, following marital breakdown, is most often an assured income, the wife’s financial security, in the longer term, does not seem to be as secure as the husband’s does.[12] Although the husband’s income cannot be described as anything other than modest, it is likely to be considerably more than the wife’s will be in the years to come. In addition, the husband has the prospect of many more years of work before him in which to replenish his financial stocks. The wife does not have this facility.
[12] See Clauson & Clauson (1995) FLC 92-595 at 81,911
In the form of the items of property identified in the subsidiary pool, both parties have significant items of property available to them for their future exclusive use. In the wife’s case, she has her work cover payment of just over $56,000.00. In the husband’s case, he has his third share in the house currently occupied by his elderly mother, valued at $130,000.00.
The wife’s work cover payment is less than half of the husband’s interest in Property B. It is likely that she will be called to utilise it sooner rather than later. It is the wife’s hope that she will be able to use it to purchase the husband’s interest in Property A. If this does not come to pass, it seems likely that it will be consumed in day to day living expenses for the wife.
The husband’s interest in Property B is quarantined from his immediate use. I accept that his mother will continue to occupy the property for as long as she possibly can and the husband has moral responsibilities, which he will honour, to provide for his mother as she grows frailer.
These responsibilities include ensuring she always has somewhere to live. However, notwithstanding these responsibilities, the husband is likely to come into a significant sum of money at some time in the future, certainly prior to his permanent retirement from the work force. This is a factor which reinforces my view that the husband is likely to be significantly more financially secure than the wife.
There is currently a marked discrepancy in the amounts that each party has accumulated by way of superannuation. Being closer to retirement, the wife has a more pressing need for superannuation than the husband, who has more time available to him to prepare for it. In these circumstances, I do not think the discrepancy is significant. Certainly neither party seeks any splitting order in respect of the other’s superannuation.
The husband has re-partnered since the parties separated. His current partner, Ms R X is not entitled to work in Australia and is totally dependent upon Mr Dritsas for her financial support. The two will marry in the first half of next year, after which it is likely the working restriction will be relaxed. However, Ms R X’s English is poor and accordingly it will be difficult for her to obtain paid employment in the short to medium term. I take this matter into account.
Ms Wilson’s fervent desire is to retain Property A. I can understand why she would want to remain living in a place which she regards as her home. Given her age and years of hard work, it is not unreasonable that she should aspire to having a home of her own in which to live in her retirement. No doubt she sees such an outcome as being the one most calculated to giving her security in her old age.
How the goal is to be achieved is more uncertain. It is likely that Ms Wilson has a limited capacity to borrow through conventional financial sources, particularly whilst she remains out of the paid workforce. In order to purchase Mr Dritsas’ interest in Property A, she proposes to utilise the entire amount of her work cover payment as well as her accrued superannuation. Putting aside any considerations due to tax, this would leave her with a sum of around $116,000.00.
Thereafter, she proposes borrowing whatever is the shortfall from her brother, Mr M S, from whom she has apparently already borrowed $20,000.00. Mr M S will apparently thereafter live in the house with her and will be able to contribute to the expenses involved in serving the mortgage.
Mr M S did not give evidence in these proceedings. Accordingly I cannot gauge his financial position and assess his willingness and ability to assist his sister. However, notwithstanding these concerns, it is my perception that the wife’s proposal to purchase Mr Dritsas’ interest in the former matrimonial home is an ambitious one.
It is inevitable that at the end of a long marriage, both the parties to it will suffer a measure of financial hardship. Two households cannot live as cheaply as one. Both parties are in need of secure future accommodation. Due to her greater age, the wife’s need is probably the more pressing. If at all possible, she wishes to avoid the sale of the former matrimonial home.
However in assessing the standard of living which is reasonable for the parties to expect at the end of their marriage, I must be careful not to place undue weight on the wife’s understandable desire to remain in Property A. If the parties’ assets are insufficient to achieve the appropriate outcome without the sale of the property, without inflicting injustice on the husband, sadly it must be sold to achieve an equitable outcome for both parties.
Having considered all the relevant section 75(2) factors, I have come to the conclusion that overall these factors favour the wife. The relevant provisions being section 75(2)(a) and (b) in the main – the age and state of health of each of the parties and their respective levels of income and most importantly their respective physical and mental capacities for gainful employment in the future. I assess the wife’s entitlement in this regard as being a further 10% of the marital assets.
Section 79(2) – Is this a just and equitable outcome?
The final step in determining property proceedings is stand back and consider whether the proposed result represents a just and equitable outcome. It is all very well to talk in percentage terms but what is important to the parties is what the result means to them in dollars and cents and what effect it will have on their plans and aspirations for the future.
These considerations are all the more pressing when the pool of assets concerned is small and slight percentage shifts are likely to have severe consequences for the parties concerned. In this case, the pool of assets is relatively modest and unlikely to meet the future needs of either party, but particularly the wife given her current circumstances.
Fifty five percent of the parties’ net assets (excluding the items in the subsidiary pool) is represented by the sum of $283,853.90 and forty five percent by the sum of $232,244.10.
If the wife retains the parties’ net interest in the former matrimonial home ($393,000.00) and the other items of property in her current possession ($74,362.00) and the husband retains the items of property currently in his possession ($48,736.00), it will be necessary for the wife to pay to the husband the sum of $183,508.10 to achieve a 55/45% division of matrimonial assets in her favour, predicated on the basis of her retention of Property A.
It will also potentially leave her with a mortgage to service in excess of $220,000.00, provided she is able to realise her current superannuation reserves. It will also leave her with no savings to buttress her against the exigencies of life. I have considerable reservations that it represents an achievable outcome, from her point of view, particularly as I have not heard any evidence from Mr M S.
If she is unable to raise the necessary sum within forty five days of the date of these orders Property A will have to be sold so that Mr Dritsas may receive his share of the martial assets. In such an eventuality the parties should each retain the assets currently in his or her possession. I am satisfied that it is neither just nor equitable that there be any split of superannuation made in this case.
After the sale of the property and the payment of the necessary sale expenses, the proceeds should be distributed in such a way that the husband retains 45% of the net pool of asset (excluding the items listed in the subsidiary pool) and the wife 55%. I am satisfied that this results in a just and equitable outcome, in the difficult circumstances which prevail.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and fifty-two (152) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 30 January 2008
and Clauson v Clauson (1995) FLC 92-595
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