DRUMMER and KRANK
[2019] FCWA 72
•9 APRIL 2019
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY COURT ACT 1997
LOCATION: GERALDTON
CITATION: DRUMMER and KRANK [2019] FCWA 72
CORAM: DUNCANSON J
HEARD: 11 MARCH 2019
DELIVERED : 9 APRIL 2019
FILE NO/S: PTW 5523 of 2017
BETWEEN: MR DRUMMER
Applicant
AND
MS KRANK
Respondent
Catchwords:
PROPERTY - Where it is just and equitable to make a property settlement order - Assessment of contributions - Small adjustment for s 205ZD(3) factors
Legislation:
Family Court Act 1997 (WA) s 205ZD(3), 205ZG
Category: Reportable
Representation:
Counsel:
| Applicant | : | Self-Represented Litigant |
| Respondent | : | Self-Represented Litigant |
Solicitors:
| Applicant | : | Self-Represented Litigant |
| Respondent | : | Self-Represented Litigant |
Case(s) referred to in decision(s):
Nil
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT – PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED
IT IS NOTED that publication of this judgment by this Court under the pseudonym Drummer & Krank has been approved by the Family Court of Western Australia pursuant to s 243(8)(g) of the Family Court Act 1997 (WA).
1[Mr Drummer] and [Ms Krank] are unable to agree about the division of their property. For convenience I shall refer to the parties as husband and wife, although they were not married.
2To the parties credit they were able to agree on all matters relating to their children and final parenting orders were made by consent at the commencement of the trial. However the parties were unable to resolve by agreement their financial dispute. That was made difficult partly because the value of the parties' property at trial was considerably less than it had been at the commencement of cohabitation.
The orders sought by the husband
3The husband sought an order that the wife transfer to him her interest in [Property A] and he refinance the [Bank A] loan into his sole name. The husband proposed to pay the wife a cash sum so as to effect an equal division of the parties' property taking into account the assets and liabilities to be retained by each of them.
The orders sought by the wife
4The wife proposed that she transfer her interest in Property A to the husband and he refinance the Bank A loan into his sole name. She sought payment of a cash sum from the husband so as to effect a percentage division, 70% to her and 30% to the husband taking into account the assets and liabilities to be retained by each of them.
5The wife proposed that in the event the husband was unable to pay the cash sum to her within a reasonable period of time Property A be sold and the net proceeds divided so as to achieve the 70%/30% division sought by her.
THE PARTIES AND THE EVIDENCE
6Both parties were self-represented. Both gave honest evidence. They were courteous and respectful to each other most of the time.
7One of the issues for determination was the extent of the parties' respective initial contributions. The parties gave evidence about this very much from their own perspectives with each party maximising their own contributions and minimising those of the other.
8There were a number of evidentiary difficulties particularly with respect to the values of property introduced by each party to the relationship. I have had to do the best I can with the evidence such as it is and of necessity I have had to take a fairly broad brush approach to it.
FAMILY BACKGROUND
9The husband is 43 years of age. He is a self-employed [tradesman]. The wife is 50 years of age. She is engaged in home duties.
10The husband deposed that cohabitation commenced in October 2007, as did the wife. In evidence however, the husband said after discussing this with his family, on reflection cohabitation commenced after Christmas 2007, in January 2008. The date has a bearing on the assessment of the parties' initial contributions. I do not accept the husband's evidence in this respect. He has consistently deposed the commencement of cohabitation was October 2007, with which the wife agreed. I find the parties commenced cohabitation in October 2007. They separated in January 2017.
11[Child A] was born [in] 2008 and [Child B] was born [in] 2010. The children live with both parents equally on a week about basis.
SHORT FINANCIAL HISTORY
12When the parties commenced cohabitation in October 2007, the husband owned [Property B]. He also owned a [temporary dwelling] at [Suburb A]. The wife owned [Property C] and [Property D]. The wife was in full-time employment and the husband was a self-employed tradesman.
13At the commencement of cohabitation the husband moved into Property D which was the wife's home.
14The wife ceased paid employment in October 2007 when she became pregnant. She was a full-time parent after the birth of the parties' first child in mid-2008.
15The husband renovated the wife's properties.
16In 2008 the husband purchased a [boat] at a total cost of $120,000. He refinanced the loan against Property B and applied his savings to fund the purchase price.
17In 2010 the parties refinanced their loans with Bank A and had five mortgages across the three properties owned by them.
18The wife sold Property C in December 2010. The husband sold Property B in April 2012 and in March 2014 the wife sold Property D. In March 2014 the parties purchased Property A using the proceeds of Property D of $355,650, a home loan of $400,000 and their savings of $200,000.
19The husband described Property A as a hobby farm. It was the parties' family home and they intended for it to be self‑sufficient. The wife said it is a 440.914 ha farm purchased with a house to run a commercial business.
20The parties encountered financial difficulties in 2015 and they sold the boat for $80,000, much less than its market value. The funds were applied to Property A.
21When the parties separated in January 2017 the husband moved into a temporary dwelling on Property A. In about mid-2017 he left Property A. The parties shared care of the children.
22The wife continued to live on Property A. The husband returned to the property to maintain it and care for the livestock.
23Consent orders were made on 18 October 2018 for Property A to be sold and after the payment of costs relating to the sale, including the discharge of the mortgage and payment of outstanding rates and taxes, the balance of the sale proceeds be deposited into an interest bearing account in the parties' joint names.
24By the time the matter came to trial Property A had not been sold.
THE LEGAL PRINCIPLES
25These proceedings are governed by s 205ZG of the Family Court Act 1997 (WA) ("the Act"). Orders altering the property interests of the parties may only be made if the Court is satisfied that it is just and equitable to make such orders.
26It is necessary firstly to identify the existing legal and equitable interests of the parties in their property.
27Having identified the existing legal and equitable interests of the parties in their property, it is necessary to ascertain whether it is just and equitable to make an order altering the interests of the parties in their property. In that process it is permissible to consider the contributions of the parties, but to do so is not mandatory, nor it is conclusive as to whether the just and equitable test has been met.
28If and when the Court determines it is just and equitable for the parties' interests in their property to be altered the Court must identify and assess the contributions of the parties within the meaning of ss 205ZG(4)(a), (b) and (c) of the Act. The Court must then identify and assess the relevant matters referred to in ss 205ZG(4)(d), (e), (f) and (g) of the Act which include those in s 205ZD(3).
THE EXISTING PROPERTY INTERESTS OF THE PARTIES
The wife's superannuation
29The wife has a superannuation interest with [Super Company A] valued at $68,038 and with [Bank D] – Group Super valued at $12,337, a total of $80,375. It appeared to be the husband's understanding that the wife's superannuation interests should be included in the balance sheet as property. As these proceedings are governed by the provisions of the Family Court Act 1997 (WA) and not the Family Law Act 1975 (Cth) the superannuation interests of the parties are not treated as if they are property for the purpose of a property settlement. The Court cannot split the superannuation of separated de facto parties until such superannuation has vested.
30The wife's superannuation will not however be ignored. Her superannuation is considered a financial resource and will be taken into account when I consider s 205ZD(3) factors. An adjustment may be made in favour of the husband by reason of the wife retaining her superannuation interests.
The husband's sporting gear
31The husband said he had sporting gear worth $3,000. In cross‑examination he acknowledged that he also had [motor vehicles] which are used by the parties' children. The husband conceded that an appropriate estimate of value for his sporting gear was $10,000.
The livestock
32There are currently approximately 40 livestock on Property A. They are in poor condition. The husband estimated that each livestock was worth $75. I shall include an amount for the value of the livestock in the balance sheet of $3,000.
Legal costs
33The husband has paid $28,000 in legal costs. The source of the funds were his earnings and indirect financial support from his parents.
34The wife has paid $16,000 in legal costs. The source of the funds were her earnings and financial assistance from her mother.
35In my discretion I do not intend to include either parties' paid legal costs as notional assets in the balance sheet. The sources of funds for both parties are similar, being their post-separation earnings and financial support from their families.
BALANCE SHEET
36 I find the property of the parties to be as follows:
ASSETSOwner
Value
Property A
J
$600,000
The livestock
J
$3,000
Bank account
H
$15,000
Bank account
W
$2,500
Motor vehicle A
W
$5,000
Motor vehicle B
H
$500
Box trailer
H
$500
[Tradesman business]
H
$1,000
Household contents
H
$500
Household contents
W
$2,000
Farm equipment
H
$4,000
Sporting gear
H
$10,000
Total Assets
$644,000
Liabilities
Home Loan
J
$375,000
Bank B Visa Card
W
$7,000
[Bank C] Visa Card
W
$4,000
[Building supplies]
H
$3,500
Tax debt
H
$15,000
Credit Card
H
$2,000
Total Liabilities
$406,500
TOTAL NET ASSETS
$237,500
IS IT JUST AND EQUITABLE TO MAKE A PROPERTY SETTLEMENT ORDER?
37The parties separated over two years ago. Both parties seek a property settlement order. They both seek an order for the transfer of Property A to the husband and the refinancing of the loan.
38There is no longer any common use of property by the parties.
39The parties seek to separate their financial affairs. In these circumstances I find it is just and equitable to make a property settlement order.
CONTRIBUTIONS
40At the commencement of cohabitation the husband owned Property B which he said was worth $420,000. The wife described the property as a construction site at the time and estimated its value to be $360,000. The husband said the property had been valued by the bank in January 2008. Neither party provided a valuation of the property. Doing the best I can, I intend to accept the husband's estimate of value on the basis that he is more likely to know what his property was worth and he said it had been valued by the bank. It was not in dispute that Property B was subject to a mortgage of $190,000.
41The husband owned a temporary dwelling in Suburb A worth $60,000. He had two vehicles worth $10,000 and a motorbike and a boat worth $10,000. As at December 2007 the funds at credit of the husband's bank account were $22,800.
42The total net value of the husband's assets at the commencement of cohabitation was approximately $332,800.
43At the commencement of cohabitation the wife owned Property C. She estimated its value to be $400,000. The husband said the property was in disrepair, although it was rented out at the time. He estimated its value to be $320,000. As with Property B, I was not provided with any evidence as to the value and instead presented with the conflicting views of the parties as to value. In evidence, the wife suggested a mid-point would be acceptable to her. I therefore intend to adopt an estimated value for Property C of $360,000. It was not in dispute that there was a mortgage of $170,000 in respect of this property.
44The wife also owned Property D. She deposed the value of that property was $585,000, although in evidence she described it as worth "easily $700,000" but she settled for $600,000. In support of this the wife provided a Landgate property sales report containing property sales between 1 July and 31 December 2007 for the suburb of Property D. In that document the wife highlighted properties worth between $715,000 and $872,500 suggesting that they were similar to her own. In evidence she referred to 4x2 houses selling for prices between $1,125,000 and $715,000. The husband said Property D was in a state of disrepair and very run down. He estimated its value to be $480,000.
45The Landgate sales report refers to the sale of properties in [Property D's location], although there are variations as to location, land area and the condition of the property. The lowest registered sale price in the relevant period was $557,500. I consider the wife's estimated value to be closer to the value of the property than that of the husband. Again, doing the best I can I intend to accept the wife's estimate of value of $585,000. It was not in dispute that the mortgage in respect of Property D was $285,000.
46The wife had superannuation benefits of $30,000. The total value of the wife's assets at the commencement of cohabitation was approximately $520,000.
47At the commencement of cohabitation the husband was a self‑employed tradesman. The wife was in employment however she ceased paid employment in October 2007 when she became pregnant. The husband assumed financial responsibility for the wife. After the birth of the parties' first child in June 2008, the wife was the primary care giver to the children. The husband continued to be self-employed and was the primary income earner.
48Both parties worked very hard during their relationship. The husband said, and the wife readily acknowledged that he carried out extensive renovations to both of the wife's properties and made significant improvements to them. As a consequence their value increased.
49The wife obtained paid employment for about three years later in the relationship. Her superannuation increased in value.
50When the parties separated in January 2017, the husband lived in a temporary dwelling on Property A. In June 2017 he left Property A although he returned to it to do some maintenance.
51Both parties maintained the property and contributed to the mortgage repayments and outgoings until October 2017. After that time the husband paid the rates of approximately $2,400 per annum. The wife paid the mortgage repayments of approximately $2,400 per month. The parties have shared cared of the children equally. The wife has supported the children financially, although the husband has paid for school expenses, fees and the cost of extracurricular activities. The condition of Property A has deteriorated. The husband occupies a rental property.
52The wife's superannuation increased in value from $30,000 at the commencement of cohabitation to $80,375 at the date of trial.
ASSESSMENT OF CONTRIBUTIONS
53At the commencement of cohabitation the value of the wife's assets was greater than those of the husband.
54During cohabitation the husband made the greater financial contribution. The wife was the primary carer for the children. Both parties worked hard in their respective spheres during their 10 year relationship. The parties agreed that their contributions during cohabitation, although very different were equal. Having heard the evidence I agree with that assessment. Since the parties separated they have shared care of the children. The wife has occupied Property A and since October 2017 she has solely paid for the loan repayments in respect of it.
55I have considered the parties differing contributions in the particular circumstances of their relationship from the commencement of cohabitation to date of trial. In my assessment by reason of contribution the percentage should be 45% to the husband and 55% to the wife.
56The effect of this finding as to contribution is that the husband is entitled to receive property to a value of $106,875 and the wife is entitled to receive property to a value of $130,625.
SECTION 205ZD(3) FACTORS
57The husband is 43 years of age. The wife is 50 years of age. Both parties are in reasonable health. The husband requires [surgery]. The wife has suffered some mental health difficulties.
58Both parties have the capacity for employment. The husband anticipates that he can work as a self-employed tradesman in Perth every second week when he does not have the children and earn approximately $2,000 in that week. He can also work locally in the week he has the children as they are of school age. The wife hopes to obtain employment in an administrative role in or around [Property A's location]. She anticipates from part-time employment she would earn about $35,000 gross per annum.
59The wife has superannuation benefits of $80,375. The husband has no superannuation. The wife will retain her retirement benefits as there can be no superannuation splitting order.
60The children are aged 10 and eight years. The parties share their care on a week about basis.
61The parties support the children when they are in their respective care. The husband will pay child support, if he is assessed to do so.
62Both parties are in receipt of government benefits including Family Tax Benefit.
63Both parties seek to enjoy a reasonable standard of living.
64Currently the wife occupies Property A and is meeting the loan repayments. The husband seeks to acquire her interest in that property and proposes to be solely responsible for the loan which would be refinanced into his sole name. The wife agrees to transfer her interest in Property A to the husband. She seeks payment of a lump sum and upon receipt of that payment proposes to vacate the property. The husband hopes to improve Property A and make it viable in the future. He will be responsible for a significant liability in respect of this property. The wife will have to find alternative accommodation and she expects to rent a house.
65As to any other fact or circumstance the justice and equity of the case requires to be taken into account, the husband suggested there had been some financial misconduct on the part of the wife. In cross‑examination he put to her that an amount of approximately $42,500 had been withdrawn from her [Bank B] account during the period from January 2013 to June 2016 and he questioned where these funds had gone. He pointed to some substantial withdrawals from the account. The wife said that she used a credit card for her day to day living expenses during that period and the withdrawals in question were paid to her credit card account to clear it. She said she also paid household expenses such as insurance on her credit card. She said she also withdrew funds from the parties' joint account to make lump sum mortgage repayments. The wife was referred to a cash deposit and subsequent withdrawal of $8,000 on 27 July 2012. She explained that she had incurred costs for the parties to travel to [Europe] for her [sibling's] wedding and she used her credit card in that respect.
66The husband questioned the need for the wife to use a credit card for her day to day living expenses saying that she had access to the parties' joint Bank A account and that her expenses were paid from there.
67The wife's credit card statements for the relevant period were not produced. The wife said she did not have them. She explained she did not have the statements for the relevant period because her credit card number has changed over time and she could only retrieve bank statements relating to the current card number. The joint account statements to which the husband referred did not show day to day expenditure by the wife during the relevant period which would suggest she did use a credit card.
68Overall I am inclined to accept the wife's evidence that she used her credit card. It has not been established to me that during the relationship she syphoned funds from the parties' accounts for some other purpose. Averaging the amount in question over three years, it is not a substantial sum of money. The husband's suspicions have not been substantiated, and it is clear that the parties were not fully aware of each other's financial transactions dating back several years. In reality the parties lost a great deal of money during the course of their relationship. That much is indicated by the fact that they had to sell the boat at a considerably low value to obtain funds to put into Property A. The net value of the property available for division is considerably less than the value of their property at the commencement of cohabitation.
69The husband is seven years younger than the wife and has a greater earning capacity. The wife has superannuation interests, although she is older than the husband and is not able to earn an income at a similar level to his.
70I consider the husband to be in a stronger economic position in the future than the wife, although I have not overlooked the fact that he will have to work very hard to make Property A viable and service its debt. There will be an adjustment in favour of the wife, although that adjustment will be less than it would have been had she not retained her superannuation benefits. In my discretion having regard to the s 205ZD(3) factors as a whole a modest adjustment of 5% in favour of the wife is warranted. 5% of the parties' property is $11,875.
JUST AND EQUITABLE
71The overall division of property will be 40% to the husband and 60% to the wife. The total of the property is $237,500. The husband's entitlement is $95,000. The wife's entitlement is $142,500.
72The husband retains following:
Property A
$600,000
Livestock
$3,000
Bank account
$15,000
Motor vehicle B
$500
Box trailer
$500
Tradesman business
$1,000
Household contents
$500
Farm equipment
$4,000
Sporting gear
$10,000
Total Assets
$634,500
Liabilities
Home Loan
$375,000
[Building supplies]
$3,500
Tax debt
$15,000
Credit Card
$2,000
Total Liabilities
$395,500
TOTAL NET ASSETS
$239,000
73The wife retains the following:
Bank account
W
$2,500
Motor vehicle A
W
$5,000
Household contents
W
$2,000
Total Assets
$9,500
Liabilities
Bank B Visa Card
W
$7,000
Bank C Visa Card
W
$4,000
Total Liabilities
$11,000
TOTAL NET ASSETS
-$1,500
74If each party retains the property as set out above, the husband has net assets of $239,000 and the wife has net assets of -$1,500.
75To achieve the percentage division ordered the husband will have to pay the wife the sum of $144,000. Upon doing so, to retain Property A the husband will have to refinance the loan. If he is unable to refinance the loan and pay the sum of $144,000 to the wife Property A will have to be sold. In that event the actual amount to be received by each party will be that which gives effect to the percentage division which I have determined which is just and equitable. The amounts will be calculated by reference to the balance sheet above but to include the actual sale price of Property A, the actual amount required to repay the mortgage and the usual adjustments and sale costs.
76The wife does not own a home and expects to rent accommodation locally. She will receive a lump sum payment and has retirement benefits of approximately $80,000.
77If the husband retains Property A, he will have the opportunity to make it viable, but he will also have a significant debt.
78The parties' financial circumstances are modest. This outcome gives the husband the opportunity of retaining Property A if he wishes to do so. If he does not wish to do so, the property will be sold. Both parties will then receive a cash sum.
79In the context of a 10 year relationship producing two children, where both parties worked very hard, but the value of the property diminished, I am satisfied the orders I propose to make are just and equitable.
THE PROPOSED PROPERTY ORDERS
80Subject to hearing from the parties, I propose to make the following orders.
1Within 60 days of the date of these orders the husband, pay to the wife the sum of $144,000.
2Contemporaneously with the payment referred to in order 1 above:
(a)the wife transfer to the husband the whole of her right, title and interest in the property at [Property A]; and
(b)the parties do all things and sign all documents necessary for the husband to refinance the [Bank A] mortgage registered over [Property A] and discharge the wife from liability in respect of that mortgage.
3In the event the husband fails to pay the said sum of $144,000 to the wife as provided for in order 1 above, then [Property A] be forthwith placed on the market for sale and there be liberty to apply in relation to the conditions of sale.
4Upon settlement of the sale of [Property A], the parties do all acts and things necessary to cause the proceeds of sale to be disbursed as follows:
(a)in payment of all usual and necessary costs of sale and settlement of sale, including agents fees and commissions;
(b)in payment of any rates and taxes outstanding;
(c)in discharge of the mortgage to the [Bank A]; and
(d)the balance remaining be divided between the parties so as to effect an overall division of the property of the parties as to 60% to the wife and 40% to the husband, taking into account the property to be retained by each of them as provided for in paragraphs 72 and 73 of the reasons for judgment, copies of which are attached to these orders, save and except:
(i)the value of [Property A] which shall be the actual sale price less actual selling costs and actual adjustments on sale; and
(ii)the actual sum required to discharge the mortgage to the [Bank A].
5Pending the transfer or sale of [Property A], the parties jointly be responsible for payment of and pay the mortgage repayments and rates and taxes pertaining to the property.
6Any right, title or interest the husband may have in the following vest in the wife absolutely:
(a)bank accounts in the wife’s name;
(b)the wife's motor vehicle;
(c) the wife's household contents; and
(d)the wife’s superannuation benefits with [Superannuation Company A] and [Bank D] – Group Super.
7Any right, title or interest the wife may have in the following vest in the husband absolutely:
(a)[the livestock];
(b)the husband's motor vehicle;
(c)the box trailer;
(d)[the Tradesman business];
(e)the husband's household contents;
(f)the farm equipment; and
(g)the sporting gear.
8Each party be solely responsible for any and all liabilities in the name of each of them respectively and indemnify the other and keep that party indemnified in relation to such liabilities.
9The parties do all acts and things and sign all documents necessary to give effect to these orders.
10The parties have liberty to apply with respect to the implementation of these orders.
11The application and response insofar as they relate to financial matters be otherwise dismissed.
12In relation to material tendered as an exhibit into evidence in these financial proceedings:
(a)all parties must contact the chambers of Justice Duncanson to arrange the collection of their exhibits;
(b)in default of compliance with subparagraph (a), all material tendered as an exhibit, save and except for material produced pursuant to subpoena, will be destroyed by the court without notice to the parties.
13In the event of an appeal being lodged prior to the expiration period of 42 days, order 12 above does not apply.
81I propose to give both parties an opportunity to consider the findings as set out above and the proposed orders. The husband indicated he would require time to ascertain if he can afford to refinance the loan over [Property A] and pay funds to the wife.
82I shall hand down these reasons from Chambers. The proceedings will be listed for a special appointment on the date below when I shall hear from the parties as to the proposed orders.
THE ORDER
1The proceedings be listed for a special appointment on 29 April 2019 at 9.30 am.
2Both parties have permission to attend by telephone linkup.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.
RM
Associate9 APRIL 2019
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