Escott and Lowe
[2007] FamCA 314
•12 April 2007
FAMILY COURT OF AUSTRALIA
| ESCOTT & LOWE | [2007] FamCA 314 |
| FAMILY LAW - PROPERTY – Mortgage liability to be responsibility of a party to the marriage and not third parties – Weight given to contributions and s75(2) matters – Independent children’s lawyer’s costs |
| Family Law Act 1975 (Cth) |
Hickey & Anor and Attorney-General for the Commonwealth (2003) FLC 93-143
Farnell and Farnell (1996) FLC 92-681
Biltoft and Biltoft (1995) FLC 92-614 at 82,124-82,127
| APPLICANT: | Mr Escott |
| RESPONDENT: | Mrs Escott (now Lowe) |
| FILE NUMBER: | SYF | 3200 | of | 2004 |
| DATE DELIVERED: | 12 April 2007 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | The Hon. Justice Rose |
| HEARING DATES: | 27, 28 & 29 September 2006; 3 April 2007 [Written submissions] |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr S Stewart |
| SOLICITOR FOR THE APPLICANT: | Watts McCray |
| COUNSEL FOR THE RESPONDENT: | Ms M Cleary |
| SOLICITOR FOR THE RESPONDENT: | Marks, Griffiths & Bova |
| INDEPENDENT CHILDREN’S LAWYER: | Ms E Karagiannis |
Orders
Property settlement
That the husband pay to the wife the sum of $172,542.00 on or before 12 July 2007 or such other date and upon such terms as the parties may agree upon in writing.
That upon the husband complying with Order 1 the wife sign all documents and do all things necessary to transfer to the husband the whole of her right title and interest in the property situate and known as E in the State of New South Wales.
That in the event of the husband failing to comply with Order 1 then the wife may make application for such orders by way of enforcement as she may be advised upon seven (7) days written notice being given.
That the husband shall pay all mortgage instalments, council rates, water rates and other outgoings in relation to the former matrimonial home as and when they fall due with the exception of the balance of the principal and interest which shall then be payable by the husband to the mortgagee upon orders for partition and sale by the parties and the other registered proprietors of the former matrimonial home namely the paternal grandparents which may be made in the Supreme Court of New South Wales or sale of former matrimonial home on such terms and conditions as may be agreed upon in writing between the parties and the paternal grandparents.
That the husband indemnify the wife in respect of all claims and demands that may be made upon her for payment of mortgage instalments and other monies due and payable pursuant to the mortgage for which the husband has liability pursuant to Order 3.
Declare that each of the parties is the sole owner of all items of personalty in his or her possession respectively.
That the application of the husband for a superannuation splitting order is dismissed.
Costs
That the husband pay his proportion of the costs of the independent children’s lawyer in the sum of $3,985.00 on or before 12 July 2007 or by such other date as agreed upon in writing.
That in the event of the wife’s pending application to the Legal Aid Commission of New South Wales for waiver of her liability to pay costs of the independent children’s lawyer being refused then she shall pay such costs in the sum of $5,635.00 or any lesser amount as may be agreed upon in writing on or before the expiration of 28 days from the receipt by her of the amount ordered to be paid by the husband to her in accordance with the Orders made this day.
Procedural
That all documents produced on subpoena may be returned to the person who produced the same.
That the proceedings be removed from the Active Pending Cases List.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
File number: SYF3200 of 2004
| MR ESCOTT |
Applicant
And
| MS LOWE |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant in these proceedings, Mr Escott (who for convenience I shall refer to as “the husband”) sought orders for property settlement including superannuation splitting orders.
The husband’s Further Amended Application filed 23 March 2006 was amended unopposed at the commencement of the hearing in accordance with Exhibit 4. The husband sought an order that he pay to the wife the sum of $108,020.00 by way of settlement of property and that upon payment the wife transfer to him her right title and interest in the property situate at E (“the former matrimonial home”).
The respondent, Ms Lowe (who for convenience I shall refer to as “the wife”) opposed the orders sought by the husband. The wife sought property settlement orders in accordance with her Amended Response filed 5 November 2004. The orders sought by the wife included inter alia an order that the former matrimonial home be sold and the proceeds of sale remaining after payment of selling costs and outstanding council and water rates be paid as to 44% to the paternal grandparents and the balance remaining after discharge of the existing mortgage be distributed as to 85% to the wife and 15% to the husband.
Whilst the paternal grandparents remained as respondents in the wife’s amended response, they did not take part in the proceedings as parties either on a represented or unrepresented basis. It is of course clear that the Court does not have jurisdiction to alter the property interests of third parties save and except in accordance with the amendments contained in Part VIIIAA, or that there is an issue that the third parties hold their interests as trustees for both or either of the husband and wife, or that it is contended that the Court should exercise accrued jurisdiction. None of those issues were raised on behalf of the wife.
Ultimately, it became clear that the real issue between the parties was the amount that the husband should pay to the wife in consideration of the transfer by her to him of her right title and interest in the former matrimonial home. That was emphasised on the last page of the written submissions lodged by counsel for the wife.
Judgment was given and orders made in the parenting proceedings between the parties on 3 April 2007.
It was apparent to me that submissions made on behalf of the husband had not addressed one of the notations to Exhibit 12 being the “amended agreed list of assets and liabilities” in which the wife asserted:
“…that a retirement benefit as a component of the husband’s superannuation is not fully accounted for in the valuation. The present value of such retirement benefit is $51,150.00.”
Accordingly, I provided an opportunity for the legal representatives for the parties to further address me in relation to that matter. Submissions in that regard were made orally on 3 April 2007.
Historical background
The following are brief relevant historical matters including those referred in the Reasons for Judgment relating to parenting proceedings delivered on 3 April 2007.
The parties cohabited for a period of approximately six years and four months which commenced on their marriage that took place in December 1996 and concluded when they finally separated in March 2003.
The marriage was dissolved by decree nisi made in August 2004 which became absolute in September 2004.
The husband is 34 years of age and employed by the travel industry as a production planner.
The wife is 31 years of age and engaged in home duties.
The two children of the parties’ relationship are:
(a)A son, 9 years of age (8 years at the time of the hearing) born in March 1998.
(b)A daughter, 6 years of age born in May 2000.
The two children attend H Public School.
The two children have primarily lived with the wife since the parties separated.
In 1998 the parties together with the paternal grandparents purchased the former matrimonial home for $349,000.00. The parties hold a 56% interest in the title to the former matrimonial home as joint tenants. The paternal grandparents hold their interest of 44% as joint tenants. The parties and the paternal grandparents’ respective interests are held as tenants-in-common.
There appeared to be some controversy in the evidence regarding the description of the interests held by the parties and the paternal grandparents in the former matrimonial home including whether or not there had been a unilateral alteration of such interests by the wife.
Apart from the obvious difficulty of one party affecting an alteration to the title in those circumstances, their respective interests as summarised by me are made clear from the Land Titles Office search being annexure “A” to the Affidavit of the wife sworn 21 September 2005.
On 31 March 2003, being the date of separation of the parties the wife together with the two children ceased to reside in the former matrimonial home and have lived primarily in rented premises since that time. The former matrimonial home has remained occupied by the husband.
Relevant legal principles
It is now well established that generally speaking the approach to be taken to determination of property settlement proceedings, concluding with an order that is “just and equitable”, represents four steps.
The first of which is that the Court should determine the property and financial resources of the parties at the date of the hearing.
Secondly, determine the nature and extent of the respective contributions made by each of the parties whether financial or non financial, including contribution to the welfare of family in the role of home-maker and parent.
Thirdly, determine and assess the relevant matters pursuant to section 75(2).
Fourthly, consideration of orders, if any that should be made that are just and equitable.[1]
[1] Hickey & Anor and Attorney-General for the Commonwealth (2003) FLC 93-143
I will now proceed to make findings in relation to the property of the parties, their respective financial and non-financial contributions and relevant matters (if any) pursuant to section 75(2) of the Act.
Property of the parties
At the conclusion of the hearing, counsel had forwarded to me an agreed schedule of “assets and liabilities”. By letter dated 10 January 2007, signed by the solicitors for the parties, my Associate received a document described “amended agreed list of assets and liabilities”. I have received that letter together with its enclosed document as Exhibit 12.
The schedule contained in Exhibit 12 noting the items in dispute is reproduced as follows:
“Assets H/W Wife’s value Husband’s value Agreed value Parties’ value of [E] property (total value $650,000 but parties’ interest is only 56%) H&W $182,000 $182,000 $364,000 1997 Excel motor vehicle H&W $3,100 $3,100 Notional property: Mazda (insurance payout) H&W $4,050 $4,050 CBA account BSB […] H $1,071 $1,071 CBA account W $700 $700 [X] shares H $9,721 $9,721 [I] shares H $2,846 $2,846 [A] shares H $3,023 $3,023 [A] policy surrender value H $2,724 $2,724 Household contents H&W $10,000 $10,000 Legal fees (paid) H $39,872 $39,872 Legal fees (paid) W $2,238 $2,238 TOTAL ASSETS $192,088 $251,257 443,345.00 LIABILITIES Liability H/W Wife’s value Husband’s value Agreed value Debt to [Ms K] W $3,000 $3,000 Mortgage $83,800.50 $83,800.50 ****$167,601 Legal fees (unpaid) H $32,601.96 $32,601.86 Legal fees (unpaid) W $48,074 $48,074 Disbursements (unpaid) W $3,000 $3,000 ICL H $3,628.50 $3,628.50 ICL W $5,278.50 $5,278.50 Debt to [paternal grandfather]* H $55,078.92 $55,078.92 TOTAL LIABILITIES: $137,874.50 $180,388.38 $318,262.78 TOTAL NETT ASSETS: $54,213.50 $70,868.62 $125,082.12 SUPERANNUATION [X] superannuation H $111,558 **$111,558 TOTAL NETT ASSETS + SUPERANNUATION $54,213.50 $182,426.62 ***$236,640.222 NOTES: *The wife disputes the existence of a debt to […] (the paternal grandfather) and its value. **The wife asserts that a retirement benefit as a component of the husband’s superannuation is not fully accounted for in the valuation. The present value of such retirement benefit is $51,150. ***The husband asserts that the superannuation should not be included in the list of assets and liabilities. It should be treated separately. ****The wife asserts that the mortgage should be deducted from the agreed value and the net equity divided 56% between the parties and 44% between the paternal grandparents.”
It is clear there is a typographical error in Exhibit 12 in that the “total net assets plus superannuation” given as $236,640.222 should read “$236,640.22”.
Disputed items in Exhibit 12
Husband’s debt to his father - $55,078.92
Both the liability and quantum are disputed by the wife.
Written submissions were made by counsel on behalf of the parties in relation to all relevant aspects of the property settlement proceedings including the evidence adduced. No submissions were made by either counsel in relation to this disputed liability.
The oral evidence given in the husband’s case was that of himself and the paternal grandfather.
The husband’s evidence is set out in his affidavits and financial statement, to which I will now refer. The husband was not cross-examined in relation to this contended liability.
The paternal grandfather gave both written and oral evidence and was cross-examined.
The substance of the husband’s evidence given in his two affidavits sworn 6 September 2005 (paragraph 129) and 8 September 2006 (paragraph 76) is that the husband borrowed funds from his parents, in particular the paternal grandfather, when he has been short of funds for the purposes of paying outgoings associated with the former matrimonial home and legal fees. The husband further swore that his implicit agreement with his parents, based on a conversation with each of them, was that the relevant monies were a loan to be repaid when he could afford to do so, and if not repaid during their lifetime would be deducted from “your inheritance or otherwise it will be sorted out so that you and your siblings get the same amount each”.
The husband deposed in his Financial Statement sworn 8 September 2006 that he owed the paternal grandfather $54,766.00 by way of a “personal loan”.
In his Affidavit sworn 6 September 2005 (paragraph 46) the paternal grandfather gave evidence that he and the paternal grandmother have:
“assisted [the husband] financially with the mortgage repayments, council rates, legal fees and other general expenses. We are keeping a record of these amounts. We expect [the husband] to repay us this amount.”
Following an objection taken by counsel, which was upheld, the amount claimed by the paternal grandfather to be owing to him and the paternal grandmother was struck out.
The husband was not cross-examined in relation to the liability he claimed he owed to the paternal grandfather or the amount thereof.
During the course of his oral evidence, the paternal grandfather stated he had lent the husband funds since the parties separated and had kept a record of it by way of computer entries although it was “not too close”. The paternal grandfather identified the computer print-out which became Exhibit 6.
Exhibit 6 covers various expenditure albeit in parts with incorrect categories such as “Bunning’s warehouse childcare” between 17 April 2003 and 31 May 2006. The total indebtedness of all categories amounting to $40,286.68.
The paternal grandfather gave evidence explaining some of the entries in Exhibit 6 and that it included a credit of $1,000.00 repaid by the husband. Category “A” of Exhibit 6 contains such a credit entry.
I accept the evidence of the husband, which was not challenged in cross-examination, that he was indebted to his parents reflected in the amount owing to the paternal grandfather in order to meet the various expenses set out in his affidavit.
I also accept the evidence of the paternal grandfather in relation to the lending of money to the husband as well as the content of Exhibit 6. The paternal grandfather’s evidence was both detailed and plausible corroborated so far as the quantum shown in Exhibit 6 by its content.
There was an absence of evidence of the calculation of the balance of the indebtedness that the husband claimed he had to the paternal grandfather in the sum of $14,792.24 ($55,078.92 - $40,286.68). The amount of $54,766.00 was claimed by the husband as part of his liabilities in his Financial Statement sworn 8 September 2006. The higher amount of $55,078.92 is the asserted indebtedness in Exhibit 12.
Given that the husband claimed he was indebted to the paternal grandfather in the sum of $55,078.92, my acceptance of the evidence of the paternal grandfather corroborated by Exhibit 6 in the sum of $40,286.68 and the absence of evidence demonstrating the calculation of the balance of the indebtedness as claimed by the husband, I am satisfied as to both the indebtedness and the quantum in the amount of $40,286.68 as set out in Exhibit 6, subject to paragraphs 47 to 51 hereof.
The evidence of both the husband and paternal grandfather is that the husband has received the amount of $130.00 per week in cash from a boarder and that amount has been passed on to the paternal grandfather. The evidence of the husband is that he takes that action in order to help the paternal grandfather financially. The paternal grandfather’s evidence is that he does receive that amount which supplements his income. I accept their evidence.
The oral evidence of the maternal grandmother was that the amount paid by the boarder in the former matrimonial home was inferentially used by her and the paternal grandfather to pay for fencing and plumber. I accept her evidence.
Exhibit 6 contains a detailed record over some years of the husband’s indebtedness to the paternal grandfather also showing credits due to amounts paid to the paternal grandfather by the husband. There is no entry of what one might have expected for further credits representing the receipt by the paternal grandfather from the husband of the cash amount of $130.00 per week.
The affidavit evidence of the wife is that prior to the separation of the parties they had a student boarder in the former matrimonial home paying $150.00 per week. Whilst the evidence does not reveal whether that particular student boarder continued to board in the former matrimonial home after separation, and, if so, the amount paid on the husband’s evidence is that the current boarder has been boarding in the former matrimonial home for the past two years. I infer that the amount the boarder has been paying is $130.00 per week given that if it was a different figure then evidence of that different figure could have been given by the husband in re-examination. Re-examination of the husband did not touch upon that issue.
I accept the husband’s evidence in relation to the boarder having boarded in the former matrimonial home for the past two years. The financial consequence of that is that the husband has paid to the paternal grandfather $13,520.00 representing $130.00 per week received in cash passed on to the paternal grandfather by the husband in accordance with their evidence, previously accepted by me. I will allow a credit for that amount as against the indebtedness shown in Exhibit 6. Accordingly, I find the outstanding indebtedness of the husband to the paternal grandfather is $26,766.68 ($40,286.68 - $13,520.00).
No submissions were made on behalf of the wife that the husband’s liability to the paternal grandfather should be left out of the calculation of the parties’ net property on the basis that he is unlikely to be called upon to repay, apart from the paternal grandmother’s expectations in that regard. Accordingly, I will include the liability in the amount as previously found by me in the calculation of the parties’ net property.
Husband’s retirement benefit (valuation of husband’s entitlement) - $51,150.00
An issue arises in relation to these matters as a consequence of one of the notations to Exhibit 12.
On 3 April 2007, as a consequence of further submissions made on behalf of the parties so that their respective positions could be made clear, I was informed that it had now been agreed that:
(a) the valuation of the husband’s superannuation is $111,558.00;
(b)the husband’s retirement benefit of $51,150.00 is a financial resource of the husband and appropriate weight is to be given to it;
(c)the husband’s retirement benefit of $51,150.00 was not to be included in the calculation of the parties’ assets and liabilities as it is the husband’s financial resource;
(d)an issue remains as to the weight to be given to the value of the husband’s superannuation entitlements.
The treatment of the mortgage over the former matrimonial home
An issue arose as to whether the amounts secured by the mortgage should be deducted from the gross agreed value of the former matrimonial home or whether it should be deducted solely from the 56% interest jointly held by the parties.
Consequently, the issue is the treatment of the mortgage in terms of the competing contentions identified (emphasis added). That will be a matter that I will determine in my conclusion for the purpose of making orders that are just and equitable.
The parties’ unpaid legal costs
In her written submissions on behalf of the wife, it was submitted that the “unpaid legal costs should be left out of consideration”.
Curiously, if that was a real issue for determination then I would have expected it to be amongst the notations of issues in Exhibit 12 consistent with unresolved issues in that regard. No submission was made in support of that position as stated on behalf of the wife.
Not surprisingly, no submission was made on this matter in the written submission in reply lodged on behalf of the husband.
In those circumstances, I will retain the unpaid liabilities for legal costs in Exhibit 12, although arguably consistent with the Full Court’s decision in Farnell[2] the liability for unpaid costs could be omitted. However, to take that course in the absence of submissions made on behalf of each party, as opposed to a mere statement of position as set out in the written submissions on behalf of the wife, would not be in accordance with procedural fairness that must be extended to both parties.
[2] Farnell and Farnell (1996) FLC 92-681
Each party was represented by competent counsel and no doubt would have provided arguments for one position or the other in their written submissions had they considered this to be an issue for determination.
Revised property of the parties
I find that the following is the revised property of the parties consistent with my previous findings in relation to disputed or noted items in Exhibit 12.
ASSETS Agreed value Parties’ value of [E] property (total value $650,000 but parties’ interest is only 56%) H&W $364,000 1997 Excel motor vehicle H&W $3,100 Notional property: Mazda (insurance payout) H&W $4,050 CBA account BSB […] H $1,071 CBA account W $700 [X] shares H $9,721 [I] shares H $2,846 [A] shares H $3,023 [A] policy surrender value H $2,724 Household contents H&W $10,000 Legal fees (paid) H $39,872 Legal fees (paid) W $2,238 TOTAL ASSETS 443,345.00 LIABILITIES Debt to [Ms K] W $3,000 Mortgage $167,601 Legal fees (unpaid) H $32,601.86 Legal fees (unpaid) W $48,074 Disbursements (unpaid) W $3,000 ICL H $3,628.50 ICL W $5,278.50 Debt to [paternal grandfather] H $26,766.68 TOTAL LIABILITIES: $289,950.54 TOTAL NETT ASSETS: $153,394.46 SUPERANNUATION [X] superannuation H $111,558 TOTAL NETT ASSETS + SUPERANNUATION $264,952.46
Contributions of the parties
I make the following findings in relation to the financial and non-financial contributions of the parties and their contributions to the welfare of the family in the role of homemaker and parent.
The husband
There was little, if any, cross-examination of the husband in relation to his affidavit evidence of his contributions.
I find that the husband’s initial financial contributions included:
(a) Savings - $51,164.00.
(b) Superannuation entitlements - $12,322.79.
(c) 1987 Toyota motor vehicle.
(d) Motor bike and riding gear.
(e)Some household furniture and appliances referred to by the wife in her primary affidavit.
The husband used some of his funds to purchase a Datsun motor vehicle for an unspecified amount.
The husband implicitly also used part of his savings to pay the deposit of about $15,000.00 in relation to the purchase of the former matrimonial home which the parties purchased together with the paternal grandparents. The purchase price was $349,000.00. The parties’ interest as joint tenants amounted to 56% and the paternal grandparents acquired a joint interest of 44%. The parties borrowed $193,000.00 from BankWest secured by mortgage. The paternal grandparents funded their 44% from their funds and also met the cost of stamp duty and legal fees. The paternal grandparents also entered into the mortgage which they were no doubt required to do by the mortgagee as otherwise the mortgage could not have been registered on the title to the former matrimonial home.
I accept the overwhelming evidence of the husband and in particular the paternal grandparents that the agreement between the paternal grandparents and the parties was that the parties would be solely responsible for the mortgage payments. I accept their evidence in preference to that of the wife where they conflict as it was detailed, plausible and not shaken in any cross-examination.
Indeed, the wife’s evidence in part was that she did not realise at the relevant time that the paternal grandparents had become purchasers with the parties of the former matrimonial home. That was an issue raised by the wife’s counsel prior to the parties giving evidence. Whether that was due to the wife not properly reading the contract for the purchase of the former matrimonial home or for some other reason, it is fundamental that the paternal grandparents could not have become joint registered proprietors with the parties unless they had also entered into the contract for the purchase for the former matrimonial home and their names subsequently appeared on the Memorandum of Transfer by the vendors for the purpose of having the interests of the parties and the paternal grandparents registered on the title. The acquisition by them of their legal interest in the former matrimonial home could not have occurred simply pursuant to an agreement between the husband alone and the paternal grandparents. Indeed, no such issue was raised at any time during the hearing.
Whilst there was explanation in the oral evidence given as to the circumstances which led to the paternal grandparents becoming parties to the contract in relation to the former matrimonial home and the financing of it, the paternal grandparents and husband were not seriously challenged, if at all, in relation to the husband’s case that the agreement between the husband, wife and paternal grandparents was that the husband and wife were to be responsible for the mortgage instalments.
I accept the evidence of the husband and the paternal grandparents in that regard and make findings accordingly. Indeed, I note that the wife in her Financial Statement sworn 29 August 2006 stated that she bore 50% of the liability of the parties in relation to the mortgage over the former matrimonial home. Therefore, the parties were recognised by the wife in her financial statement to have the full liability pursuant to that mortgage. Otherwise, the wife no doubt would have contended that her liability extended to only 28% representing her half interest in the 56% interest in the title to the former matrimonial home held by the parties.
I accept the evidence of the husband that he was engaged in full-time employment throughout the period of cohabitation and since as well as earning additional income from time to time through overtime work and his income was applied by him in meeting liabilities and living expenses of the parties and progressively the two children.
I further find the husband carried out work by way of maintenance and improvement to the former matrimonial home represented by: painting of part of the interior; construction of a garden shed provided by the paternal grandparents; fencing including fencing repairs; and installation of a gate. A number of those maintenance/improvements were assisted by both or either of the paternal grandparents.
I also accept the husband’s evidence that internal maintenance work has been carried out by the paternal grandparents particularly since post-separation of the parties.
Whilst work performed by the paternal grandparents or either of them to the former matrimonial home and its surrounds was of benefit to them having regard to the fact that they were also registered proprietors as to 44%, nonetheless, the work so performed as obviously of benefit to the parties directly and indirectly as it was in the nature of maintenance and improvement to the former matrimonial home.
The husband also made a contribution to the welfare of the family in the role of homemaker and parent. In that regard, the husband assisted the wife in the care and upbringing of the two children and since separation has carried out gardening.
Subsequent to the separation of the parties the husband has also met his child support assessment obligations.
The husband has received loans from the paternal grandfather from time to time since the parties separated. Whilst I have made a finding in relation to the husband’s liability in that regard, the evidence before me suggests and I find that those loans have been made interest-free. That has been of benefit to the husband and implicitly the parties due to the range of expenditure which has been funded by such loans including but not limited to child care expenses.
There is no issue or any reliable evidence to suggest that all or any of the funds so linked to the husband have been frittered away by him or used to meet expenditure that was not reasonable in all the circumstances.
The wife
As with the husband’s evidence in relation to contributions, there was insignificant challenge if any to the wife’s affidavit evidence in relation to her contributions.
I find that the wife’s initial financial contributions included:
(a) Toyota Corona.
(b) Minimal savings.
(c) Some furniture.
I accept the wife’s evidence that she earned income as a part-time nanny which continued until during the course of her pregnancy with the first child. I also accept the wife’s evidence that she applied the income so earned towards meeting the parties’ living expenses. I make findings in accordance with that evidence.
The wife made an indirect financial contribution due to the payment of and work done by the maternal grandparents in respect of installation of new roof guttering, downpipes and hot water system together with a new kitchen tap and plumbing work carried out by the maternal grandfather.
I find that the wife made a contribution to the welfare of the family in the role of homemaker and parent by carrying out almost all, if not all the domestic work in and about the home and the daily care and upbringing of the two children with some assistance from the husband.
Subsequent to the separation of the parties, I find that the wife has continued to make her contribution in the role of homemaker and parent on a daily basis in not only the performance of domestic work for herself and the two children but also their care, support and upbringing with particular attention being paid to the youngest child due to an eye problem that required a number of appointments with an ophthalmologist and with an optometrist.
I also find that the wife has continued to apply her income for the financial support of the two children. The sources of that income has been child support paid by the husband and government benefits.
Assessment of the contributions of the parties
It is not a matter of controversy that the primary financial contribution was made by the husband in relation to his continuous full-time employment and the income so earned by him being applied to meet the parties’ liabilities and living expenses.
The wife, for her part, made the primary contribution to the welfare of the family in the role of homemaker and parent.
The parties’ contributions, to which I have referred, were made both prior and subsequent to their separation. I assess those contributions as being equal.
I have assessed the remaining contributions of the parties to their net property including the husband’s superannuation entitlements as favouring the husband in the proportion of 65% with the remaining 35% in favour of the wife for the following reasons.
The husband’s initial financial contributions were very significant both by reason of the amounts involved and the manner in which they were applied or retained, in the case of superannuation entitlements as well as by comparison with the initial financial contributions of the wife.
The husband’s initial financial contributions are set out in paragraph 65. They included savings of $51,164.00 and superannuation entitlements of $12,322.79, apart from motor vehicle and other items of personalty.
The husband’s savings were applied in part to enable the parties to pay the deposit of $15,000.00 in the purchase of the former matrimonial home. The husband has retained his superannuation entitlements which have increased during the course of cohabitation and since. I accept the submissions made by counsel on his behalf regarding the weight to be given to the superannuation entitlements of the husband.
By contrast, the wife’s initial financial contributions were very limited.
The husband also made indirect financial contributions as a result of the paternal grandparents joining in the purchase of the former matrimonial home using their funds to acquire a 44% interest, without which the former matrimonial home could not have been purchased and subsequently used for the benefit of the parties and the two children.
Indeed, the former matrimonial home has been occupied by the parties and the two children exclusively prior to separation, and by the husband post-separation with the two children spending time with him.
Whilst the parties have borne the liability, pursuant to the mortgage, nonetheless that was as a consequence of the need for them to borrow funds to acquire their 56% interest in the former matrimonial home whereas the paternal grandparents used their own funds to acquire their interest.
In addition, the husband and/or the paternal grandparents carried out substantial improvements and maintenance to the former matrimonial home and its surrounds both prior and subsequent to the separation of the parties. Whilst that work represented the maintenance of the paternal grandparents’ proprietorial interest, nonetheless it also benefited the parties so far as their legal interest in the former matrimonial home.
The husband and indirectly the parties and the two children have benefited from interest-free loans that have been made from time to time by the paternal grandparents and in particular the paternal grandfather given my findings that the funds involved were used to meet a variety of reasonable expenditure.
I have taken into account the wife’s financial contributions represented by her employment and income derived from it prior to the birth of the first child, such income being applied to the benefit of the parties, as well as the improvement to the former matrimonial home carried out by the paternal grandparents in accordance with my findings set out in paragraph 83.
Relevant matters pursuant to section 75(2)
I make the following findings in relation to matters that are relevant in these proceedings pursuant to the provisions of s75(2).
The husband and wife are 34 and 31 years of age respectively.
Each party is in good health.
In his Financial Statement sworn 8 September 2006, the husband states his average weekly income is $1,138.00 per week gross. That includes his base salary estimated to be $991.00 per week; $17.00 per week company dividend; and $130.00 per week by the boarder.
By arrangement between counsel, further inspection took place by the wife’s legal representatives of pay slips provided by the husband, the detail of which was then set out in the written submissions made by counsel for the wife. Those submissions refer to the husband’s implicit fortnightly net income after tax being $1,804.81 as at 25 July 2006; $2,239.38 per fortnight net as at 22 August 2006; and $1,666.05 per fortnight as at 5 September 2006. The net salary in each instance being after deduction of income tax and superannuation contribution on two of the three salary payments to which I have referred. In each of those three pay periods the husband’s base salary has been increased by payments for shift work and on one of the three occasions for overtime work. The written submissions in reply on behalf of the husband did not dispute the material which I have just summarised from the written submissions made on behalf of the wife.
Consequently, I find that the range of the husband’s income from his employment is $1,666.05 to $2,239.38 per fortnight net.
I find that the husband has the property and liabilities described in paragraph 62 of this judgment.
The husband had given his occupation as that of an engineer in his Further Amended Application filed 23 March 2006 as well as in an earlier Affidavit sworn by him on 6 September 2005. The husband then subsequently described his occupation as production planner in his Affidavit and Financial Statement sworn 8 September 2006.
Accordingly, I find the husband has the capacity to earn income as an engineer and production planner employed by X Limited earning the income the subject of my earlier findings.
I find that the husband has the financial commitments set forth in his Financial Statement sworn 8 September 2006.
The husband has superannuation entitlements described as part of his property referred to in paragraph 62. The husband also has a financial resource represented by him retirement benefit of $51,150.00. In addition, the husband’s financial resources include the demonstrated opportunity for financial assistance albeit by loans interest-free, from the paternal grandparents.
The income of the wife is described in her Financial Statement sworn 29 August 2006 amounting to an average total of $605.00 per week, which given its sources is not subject to tax.
The wife has the property and liabilities described in paragraph 62.
The wife’s financial commitments are as set forth in her Financial Statement sworn 29 August 2006.
The wife has the qualifications and experience as a nanny working on a part-time basis. That work ceased almost 10 years ago. There is no evidence before me to suggest the wife would be able to be readily re-employed in that capacity in the near future, let alone the income she could potentially earn in that occupation.
In her Affidavit sworn 31 August 2006, the wife’s evidence was that she has been undertaking a part-time TAFE administration course with a view to obtaining work in office administration in school or child care during school hours. The wife expressed her intention of gaining employment to enable her to care for the two children outside school hours.
During the course of the wife’s oral evidence, she stated her business administration course was not a certificate but rather qualified by way of attainment upon completion with skills being gained in data entry and reception work.
I accept the wife’s affidavit and oral evidence in relation to her capacity to earn income and make findings accordingly. There is an absence of evidence regarding the range of income that may be earned by the wife in business administration on either a part-time or full-time basis.
Each of the parties has had a further liability represented by their joint and equal liability for the legal costs of the independent children’s lawyer including fees incurred by the child expert.
On 3 April 2007 a memorandum setting out the independent children’s lawyer’s costs including expert’s fees was filed in court without objection. The husband’s unpaid liability amounted to $3,985.00 after allowance had been made for payment made by him of $1,650.00. The wife’s liability was $5,635.00. No opposition was made on behalf of the either of the parties to an order as sought by the independent children’s lawyer that each of the parties pay the amount of his or her outstanding liability respectively. No issue was raised in relation to quantum.
The wife does not have superannuation entitlements.
The wife does not have any other financial resources.
The wife has the daily care of the two children of the marriage subject to those periods of time they spend with the husband pursuant to the parenting orders made 3 April 2007.
The husband has had exclusive occupancy of the former matrimonial home since the parties separated. He has met the mortgage instalments at times with the assistance of one or other of the paternal grandparents. The two children have spent time with the husband at the former matrimonial home.
The wife has principally lived with the two children in rented premises since the parties separated.
Conclusion
I have determined that there will be an adjustment in favour of the wife by 10% having regard to my findings in relation to relevant matters pursuant to s75(2).
For the purpose of that adjustment, I have given weight to the wife’s significant inferior financial position compared to that of the husband and that the wife is and will continue to be the primary carer of the two children for the foreseeable future. The two children are still young aged 8 and 6 years.
The husband is in secure, full-time employment receiving the income to which earlier reference has been made. He has the proven capacity to continue to earn income in his occupation. The husband will be able to improve his future financial position due to increasing superannuation entitlements.
In addition, the husband has the financial resources represented by the established willingness of the paternal grandparents to assist him financially as well as his retirement benefit to which earlier reference has been made.
The wife for her part is unemployed. The wife’s income is solely derived from government benefits and child support. The wife is in the process of obtaining a qualification from TAFE to carry out business administration work. Whilst the wife was positive in relation to her anticipation of obtaining part-time work, there was an absence of evidence of the range of income that she may earn in that occupation.
The wife has not been employed as a nanny for many years. It is doubtful that she could obtain worthwhile remuneration should she seek to be employed in that capacity. However, the matter was not explored in the evidence before me.
Last, but far from least, the wife in the role of primary carer of the two children has restrictions upon her capability to earn income which the husband does not have.
It is apparent from my assessment of the parties’ contributions and the relevant s75(2) matters that orders for property settlement will be made reflecting a division of the net property of the parties in the proportions of 55% in favour of the husband and 45% in favour of the wife.
An issue was raised in relation to the treatment of the mortgage liability that the parties and the paternal grandparents have in relation to the mortgage over the former matrimonial home.
I have made findings in relation to the agreement between the parties and the paternal grandparents so far as the practical assumption of liability pursuant to that mortgage. Whilst the paternal grandparents are legally bound by the mortgage, having regard to my findings of the relevant facts in these proceedings, whereby the parties have historically assumed the full responsibility for making mortgage instalments, I have calculated the net property of the parties by deduction of the amount outstanding pursuant to the mortgage from their 56% interest in the title to the former matrimonial home.
For that purpose, I have relied upon and followed the discretionary approach available to me consistent with the Full Court’s judgment in Biltoft and Biltoft given the review of the authorities carried out in that judgment.[3]
[3] Biltoft and Biltoft (1995) FLC 92-614 at 82,124-82,127
The husband had sought a superannuation splitting order. I have concluded that such an order will not be made in these proceedings as it is not just and equitable, or proper to do so having regard to the facts in this particular case.
It is clear that the husband’s overall financial position is vastly superior to that of the wife due to his income, capacity to earn income, opportunity to have appropriate accommodation for himself and the two children during such periods that they live with him, significantly assisted by the paternal grandparents who have been a proven financial resource to the husband.
It was common ground between the parties that the husband have the opportunity to pay to the wife a lump sum in consideration of the transfer by her to him of her interest in the former matrimonial home. The husband’s assets will then be much greater than those of the wife, especially due to the indirect benefits of the paternal grandparents’ interest in the former matrimonial home.
The wife’s position is that she has a reasonable need for maximum funds now to enable her to have suitable accommodation for herself and the two children or otherwise to use such funds for investment in the event that premises need to be rented by her as she may be advised. The benefits to the wife and indirectly the two children of her having superannuation entitlements but less money in the circumstances to which I have referred including her overall financial position are not reasonable.
I have considered the practicalities of the proposed orders in terms of property which will be retained and/or received by each of the parties as set out below which satisfy me that the orders will be just and equitable.
The husband:
Assets The [E] property $364,000.00 Mazda insurance 4,050.00 CBA account (BSB […]) 1,071.00 [X] shares 9,721.00 [A] shares 3,023.00 [I] shares 2,846.00 [A] policy 2,724.00 Household contents 10,000.00 Legal fees paid 39,872.00 Superannuation 111,558.00 548,865.00 Liabilities Mortgage $167,601.00 Legal fees unpaid 32,601.86 ICL 3,628.50 Debt to [paternal grandfather] 26,766.68 Payment to wife 172,542.00 403,140.04 Net property $145,724.96
The wife:
Assets 1997 Excel motor vehicle $3,100.00 CBA account 700.00 Legal fees paid 2,238.00 Payment by husband 172,580.50 178,580.50 Liabilities Debt to [Ms K] $3,000.00 Legal fees unpaid 48,074.00 Disbursements unpaid 3,000.00 ICL 5,278.50 59,352.50 Net property $119,228.50
In the event of the husband defaulting in the payment of the lump sum referred to in Order 1, which will be made today, there are both legal and practical problems in terms of orders which will require a sale by the parties. Those difficulties include the fact that the paternal grandparents are registered proprietors.
That may lead to proceedings having to be instituted in the Supreme Court of New South Wales.
Consequently, an appropriate order will be made to enable an application to be filed on seven (7) days written notice seeking such orders as either of the parties may be advised.
Costs sought by independent children’s lawyer
An order for costs has been sought by the independent children’s lawyer for payment by the parties, on an equal basis.
The husband’s outstanding liability is $3,985.00.
The wife’s outstanding liability is $5,635.00.
The wife has a pending application to the Legal Aid Commission of New South Wales to waive her liability for costs. That application will be determined subsequent to orders being made in these proceedings.
The husband has not made any such application to the Legal Aid Commission of New South Wales, and apparently will not be doing so, no doubt due to the relevant criteria.
The quantum of costs sought was not in issue.
Therefore, I will make orders requiring payment of those costs by each of those parties.
I certify that the preceding one hundred and fifty three (153) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose
Associate:
Dated: 12 April 2007
IT IS NOTED that this judgment for all publication and reporting purposes be referred to as ESCOTT & LOWE
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Costs
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Jurisdiction
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