F and F
[2003] FMCAfam 163
•3 June 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| F & F | [2003] FMCAfam 163 |
| FAMILY LAW – Small asset pool – division of responsibility for debts between the parties. Family Law Act, ss.79 Lee Steerev Lee Steere (1998) FLC 91-626 |
| Applicant: | J S F |
| Respondent: | M J F |
| File No: | DNM 2200 of 2000 |
| Delivered on: | 3 June 2003 |
| Delivered at: | D |
| Hearing Dates: | 7 & 8 May 2003 |
| Judgment of: | Brown FM |
REPRESENTATION
| Counsel for the Applicant: | Ms J T |
| Solicitors for the Applicant: | Janet T |
| Counsel for the Respondent: | Ms M B |
| Solicitors for the Respondent: | Cecil Black |
ORDERS
That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money 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 the possession of such party as at this date;
(b)Each party hereby forgoes any claim they may have to superannuation benefits belonging to or earned by the other;
(c)All insurance policies to 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.
That the wife be responsible for the debt to the Australian Guarantee Corporation Limited account number * relating to the purchase of a computer in her possession and indemnify the husband and keep him indemnified from all liability for the said debt.
That within 14 days of the date of these orders the wife provide a copy of these orders to the Australian Guarantee Corporation Limited.
That the applications of each of the parties so far as they relate to the division of matrimonial property and liabilities be otherwise dismissed.
That the applications in respect of contact be listed for further mention at 9.30am on 24 June, 2003.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT D |
DNM 2200 of 2000
| J S F |
Applicant
And
| M J F |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to these proceedings are J S F “the husband” and M J F “the wife”. Originally, when the matter came on for hearing on the 7th of May, 2003, the proceedings concerned both contact and property issues. However, following evidence from the parties themselves and particularly from the writer of a family report, Mr R, the contact issues were dealt with by means of interim orders made on the 8th of May, 2003, which allowed for Mr R to interview one of the children concerned and for the father to have some contact with the other. The contact issue will have to be re-listed after these two things have occurred. Accordingly, these reasons for judgment are concerned only with property issues.
It is something of a misnomer to say that the proceedings relate to property. In reality, they are concerned with how responsibility for various debts are to be distributed between the parties. These debts were incurred over three and a half years ago. They relate to monies allegedly owed by the parties for childcare; for rent on their former matrimonial home; and for the purchase of a computer, which was financed through AGC.
The proceedings have been marked by delay, suspicion and a lack of cooperation between the parties. The debts, although not particularly large, have caused a great deal of friction between the parties. They have been outstanding for several years now and both parties have resolutely refused to pay them, without any consideration for the creditors concerned in each case.
The exact quantum of the debts is unclear. There is dispute between the parties as to precisely when each debt was incurred – that is whether before or after the parties separation - and so whether the debts should be counted as matrimonial ones or ones personal to either the husband or the wife. What little property the parties had at the end of their marriage has already been divided between the parties.
It is the husband’s position that each party should retain all property and debts that stand in his or her respective name or possession, with one exception. This relates to the debt to AGC. It is the husband’s position that, as the wife has retained the computer to which the debt relates, she should assume responsibility for the debt to AGC and should indemnify him in respect of it.
The wife was the sole lessee of the property that was formerly the parties’ matrimonial home, situated at S C, C G. She was sued by the landlord of the property, in the Small Claims Court at D in 2000.
A judgment debt stands against her name. She seeks payment from the husband for half of this sum. The husband asserts the debt relates to the wife’s occupation of the property following separation or alternatively that the landlord is no longer pursuing the debt.
The position is similar in respect of the childcare debt. Again proceedings have been instituted against the wife in the Small Claims Court at D. The wife seeks payment from the husband for half of the debt. For his part, the husband denies that he has any liability for the debt, because of uncertainty about its quantum and precisely when it was incurred, it being his position that the debt was incurred after the parties separated.
There is now some doubt as to whether the creditors will demand payment for these debts. During the course of her evidence and in submissions from her counsel, the wife sought to change the amounts of money she sought from the husband, particularly in respect of the childcare debt. So although at first blush the matters for resolution would appear to be quite simple, a great deal of time and effort has been utilised in respect of the matter.
Matters between the parties have been complicated by the fact that they are both shareholders, with the wife’s father, K G H, in a company called O Pty. Ltd. This company operated a bakery at P under a franchise from B. The husband worked as a baker for O Pty. Ltd., during much of the parties’ marriage. However, upon separation, he was dismissed from his position by Mr H and the company sought to be repaid debts that it claimed it was owed by the husband. This created considerable bitterness between the parties and resulted in proceedings in the Industrial Relations Court brought by the husband against O Pty. Ltd. These proceedings were ultimately resolved in April of 2000. However, the issue of the husband’s shareholding in the company has never been settled. The husband no longer has any practical connection with the company. During proceedings to date, there has been considerable controversy about the value of the shares that each party holds in this company and in another company E E Pty. Ltd. E E operates a bakery at N, also under franchise from B. The shareholders were the wife and Mr H. The wife has since disposed of her shares in both companies to her father. A matter about which the husband is very suspicious. The husband continues to hold his shares in O Pty. Ltd. but has no control over any aspect of the company’s affairs, as he is a minority shareholder. At the outset of the proceedings before me, the parties agreed that no orders should be made in respect of the shares in either company. They are both content for the husband and Mr H to deal with the issue of the shares between themselves on a “commercial basis” and, in particular, to leave the question as to whether there should be any transfer of the shares from the husband to Mr H at what, if any, consideration, to them, outside of these current proceedings. Accordingly, although part of the background to the matter, the affairs and shareholdings of both companies are not directly related to these proceedings.
Background
The husband was born on the 27th of September 1962. The wife was born on the 10th of March 1967. The parties began to live together in 1987 and were married on the 5th of September 1992. They are the parents of two children namely, C J F born the 7th of August 1992 and E J F born the 29th of April 1996. There is no dispute between the parties that they finally separated on the 9th of October 1999.
There have already been extensive proceedings between the parties in respect of arrangements for the care of C and E. On the 22nd of December 1999, orders were made by the Family Court at D, with the consent of the parties, that the two children should reside with the wife and the husband should have defined contact.
On the 27th of June 2000, the husband filed an application in the Family Court at D seeking final property orders. He also sought a variation to the earlier contact orders.
On the 18th of December 2000, the husband filed an application for contravention in respect of an alleged breach of contact orders. This was listed before the Federal Magistrates Court at D on the 9th of February, 2001 but after negotiations between the parties, the contact orders were varied by consent and the application for contravention was dismissed.
On the 11th of January, 2001, the wife filed a response to the husband’s application for property orders. Accordingly, the property applications were listed for a conciliation conference on the 7th of June 2001. The wife failed to attend the conciliation conference. The husband was content to leave property matters as they were. His application was removed from the list of cases awaiting hearing. However, on the 11th of September 2001, the husband filed an application seeking shared residency of the children. This caused the wife to reinstate her application for property orders.
At the request of the parties, another conciliation conference was held on the 4th of June, 2002. The parties were unable to reach agreement in respect of the matters in issue between them. It is the husband’s position that his contact with both children, but particularly C, began to break down when tensions rose between the parties in respect of their property matters, but particularly when he raised the issue of his shareholding in O Pty. Ltd. Difficulties with contact led the husband to institute further contravention proceedings in October of 2002. Following the hearing of the children’s issues in this matter, those proceedings have been discontinued. Throughout this period as a whole, there has continued to be a high level of tension between the parties.
There have also been previous domestic violence proceedings between the parties in the Local Court at D. These proceedings resulted in a number of contested hearings between the parties. Once again, they speak of a high level of suspicion between the parties.
The parties began to live together in 1987 in N Q. At the beginning of their relationship, the husband owned a boat and a car and had a modest amount of superannuation. The wife had no significant assets. The husband is a qualified baker. He worked as a baker in C, T and P D. The parties separated in 1993 following C’s birth. However they reconciled a short time later and resumed their relationship in D, where the husband believed there were good work opportunities. In 1996 B, the bakery chain, became interested in setting up franchises in D. The husband and wife were interested in operating such a franchise and contacted Mr H, who had monies to invest. O Pty. Ltd. purchased a franchise at P and E E Pty. Ltd. purchased the franchise at N. The husband did not invest any money directly into either company. O Pty. Ltd. is the trustee for the F Family Trust. O Pty. Ltd. borrowed money from the ANZ Bank in order to set up the Bakery at P.
The husband and wife were both involved in the running of the B at P, which was owned by O Pty. Ltd. The wife worked on the counter and looked after the sales and banking. The husband was involved in the baking of cakes, pies and bread and trained apprentices. Because of the success of the P B, Mr H and the parties decided to purchase the franchise at N. Although not a shareholder of E E Pty. Ltd., the husband was a director. The husband and wife both worked primarily at P, but would help out at N when required.
Both parties were employed by O Pty. Ltd. at the P B and each received a regular weekly wage. They also each received some fringe benefits, such as fuel and the use of motor vehicles from O Pty. Ltd.
There is no dispute between the parties that they separated on the 9th of October, 1999. At that time, the husband was in P attending a squash tournament and a conference of B franchisees. The wife apparently left the parties’ former matrimonial home at 22 S C, C G taking the two children of the marriage with her, whilst the husband was in P.
In December of 1999, the husband discovered that his weekly wage was being docked in respect of the cost of his trip to P. The husband was considerably aggrieved at hearing this news. Later, in January of 2000, his employment with O Pty. Ltd. was terminated by Mr H. He did not receive any holiday pay or leave entitlements, as Mr H informed him that he owed the company $20,000.00. This was the background to the husband’s application in the Industrial Relations Commission. There is considerable dispute between the parties as to whether or not he and the wife owe any sums of money drawn by them from O Pty. Ltd. during the period of their marriage. As has already been indicated, it is not necessary for me to resolve these matters. Similarly, neither party has provided any evidence as to the value of their shareholding in O Pty. Ltd. In any event, the wife has transferred her shares in both O Pty. Ltd. and E E Pty. Ltd. to her father. Although, in cross-examination, she conceded that it was possible that her father would return her shares to her once these proceedings have been concluded. The wife is currently employed by E E Pty. Ltd., in its B outlet at N.
In general terms, the parties agree as to their assets on separation. The husband retained a 3.6 metre dinghy and a Nissan 4 wheel drive motor vehicle. The parties’ furniture was divided between them. As has been previously indicated, a computer that is a bone of contention between them, remained in the procession of the wife. No formal valuations have been provided of any of these items. On separation, each party had superannuation of modest but comparable value. The Nissan motor vehicle was sold in November 2000 for the sum of $3,000.00 and the proceeds were divided equally between the parties. Accordingly, although both parties worked very hard for O Pty. Ltd., in the bakery at P, their efforts have not produced items of any great value available to be divided between them.
There is far more controversy between the parties as to the extent of their debts on separation. In general terms, the debts at separation on which the parties agree can be listed as follows:
Commonwealth Bank Visa card (husband) $ 2,000.00[1] AGC computer loan $ 3,372.76[2] ANZ account $ 2,850.00[3] ANZ account
$ 220.00[4]
[1] This debt is in the husband’s sole name. The wife estimates the debt at separation as $1,877.00. The husband has paid $500.00 off this debt after separation. He does not know the current balance of the account.
[2] This debt is in the husband’s sole name. The amount owing is at 19 December 1999. Neither party has made any payment in respect of the debt since separation and neither provided any evidence as to its current extent. The wife indicated in her evidence that AGC has been prepared to defer payment in respect of the debt until after these proceedings are concluded. Given the period of time that the debt has been outstanding, this seems to be an extraordinary decision on its part.
[3] This account is apparently in the wife’s sole name. No formal evidence has been provided as to its extent. At the outset of the proceedings, the wife indicated that she was prepared to accept orders that would result in her retaining responsibility for this debt.
[4] This account has been paid by the husband. Given its magnitude, it has marginal relevance.
As has already been indicated, the wife claims that two debts that stand in her name to D (NT) Pty. Ltd., which relate to the lease on the parties’ former matrimonial home and to C G, the operator of the W G Childcare Centre are debts of the marriage and responsibility for them should be divided between the parties.
Given the approach that the parties have elected to take in respect of their shareholding in O Pty. Ltd. and to the alleged debt of the parties to this company in respect of their drawings from it, which I note are the subject of allegations only by the wife and not subject to any formal proof by her[5], the debt to AGC, D (NT) Pty. Ltd. and to Ms G assumed major importance in the hearing before me on the 7th and 8th of May, 2003. It will be necessary for me to make findings of fact in respect of these matters, which will reflect on the credit of each of the parties.
[5] See wife’s affidavit of evidence at paragraph 74.
The husband’s position in respect of the debts is unequivocal. He will bear responsibility for the Visa debt in his name. He denies any liability for the debts to Ms G for childcare and to D (NT) Pty. Ltd. It is his position that as the wife retained the computer to which the AGC debt relates, it is her responsibility to pay this debt and keep him indemnified in respect of it.
The wife’s position in respect of these debts is less certain and has varied throughout these proceedings. Initially, it was her position that the husband should take responsibility for all these debts, which on her calculations totalled some $20,430.00[6]. This total included the sum of $9,000.00, which the wife alleged was owed to D NT Pty. Ltd. and $3,200.00 which was owed to Ms G. However, in another letter dated the 7th of May, 2003, the wife indicated that she would accept liability in respect of all the debts, if the husband transferred his superannuation to her. However, neither party had obtained the required valuation of the superannuation funds or notified the relevant trustees of an intention to split or flag the funds and it seems to be common ground between them that up until the wife’s letter of the 7th of May, 2003, the parties were acting on the assumption that they would each retain their superannuation funds. At any event, the wife abandoned this position, which was never the subject of a formal application during the proceedings before me. In addition, throughout the proceedings, she changed her position in respect of the exact quantum of these two debts.
[6] See proposed orders sought by the wife dated 17 April, 2003.
The evidence
The husband has maintained a consistent position in respect of each of these debts. The wife has not. The husband gave his evidence in a clear and orderly fashion. He provided documentary evidence in support of his position that two of the debts, namely to D (NT) Pty. Ltd. and to Ms G, were incurred after the parties separated. The wife provided no such documentary evidence and her oral evidence in respect of the exact extent of the debts, differed from what she had stated in her affidavit evidence. Although the husband is clearly annoyed with the wife and exhibited some frustration at what he perceives as being her unreasonable behaviour, I formed the impression that he was an honest witness.
The wife too, is clearly aggrieved at what she sees as the unreasonable behaviour of the husband following their separation. After he was terminated by O Pty. Ltd., the husband obtained work at C D S as a carer, at a considerably reduced wage from that which he had previously received as a baker. He also began to attend university and has completed a Diploma in Training Assessment Systems and a Bachelor in Teaching specialising in vocational education. She is critical of the husband for failing to provide a proper level of financial support for the children of the marriage. It seems there have been several review applications before the Child Support Review Officer. The wife provided no evidence in respect of those proceedings. Similarly, the wife did not tender any formal evidence of the husband’s history of child support payment. It is the husband’s position that he is presently paying $200.00 per fortnight by way of child support. There are still review proceedings outstanding. He denied that he had not paid the proper level of child support as assessed and reviewed from time to time.
It is the thrust of the wife’s case that justice and equity demand that the husband contribute some monies towards the three outstanding debts that are in dispute between the parties. It is her position that she is in a less secure position than the husband. She has been in receipt of legal aid for these proceedings. One of the reasons she gave for disposing of her shares in O Pty. Ltd. and E E Pty. Ltd. to her father was that they were a problem to her as far as social security and legal aid were concerned, as each of those authorities regarded the shares as being an asset and so an impediment to her receiving legal aid or a government benefit. I can well understand why both organisations would take this view. This action on the part of the wife smacks of disingenuousness. My impression of the wife was that she would say things in her evidence that she though suited her position at the time. This seems to be the explanation for the divergence between her oral and affidavit evidence. For all these reasons, on balance, I preferred the evidence of the husband over that of the wife. In my view, although the parties were both hostile to one another, the wife’s hostility towards the husband has influenced her evidence to a greater degree than the husband’s hostility towards her has affected his evidence. I did not always believe her evidence.
a) The debt to D (NT) Pty. Ltd.
This debt relates to rental payments in respect of the parties’ former matrimonial home at 22 S C, C G. The wife entered the lease for the property on the 13th of November 1998. The husband was not a signatory to the lease, however he lived in the premises until the parties separated. It would be extraordinary if the husband did not know what the weekly rental payments were and whether or not those payments were up to date during the period he and the wife were living together as a married couple, particularly as his wages were in part paying the rent. It is his position that as both parties were in regular employment that the rent on 22 S C was up to date when the parties separated.
The circumstances surrounding the parties’ separation has already been outlined. There is no dispute between the parties that the actual date of separation was 9 October, 1999. Shortly prior to this date the husband was in P. When he returned, he discovered that the wife had unbeknownst to him vacated the premises. Following this event, the husband arranged alternative rental accommodation for himself in A. It is his position that the wife moved back into 22 S C, C G.
It is the wife’s position that at separation the amount owing to D (NT) Pty. Ltd. was $9,000.00. On the 29th of December, 1999 the landlord issued a small claim against both the husband and the wife seeking the sum of $4,141.00, being rental arrears from the 27th of October 1999 to the 8th of January 2000. A Notice to Quit was served on both parties on the 18th of January 2000. The grounds for the issue of the Notice to Quit was that the lessee had failed to pay rent of $350.00 per week, which had been due on the 23rd of October 1999. The landlord issues a further small claim on the 6th of March 2000 claiming the sum of $5,066.00 being rent arrears from the 9th of January 2000 until the 7th of February 2000 and the costs of cleaning and repairing the premises. Accordingly, the landlord sought payment of a total sum of $9,207.00 from the parties.
Both parties filed notices of defence in respect of the claims made against them. It was the husband’s position that as he had not signed the tenancy agreement and the debts had been incurred after separation, he was not liable for them.
It is common ground between the parties that the wife negotiated a settlement of the claims against her. The husband has provided a copy of a deed of settlement and release which was signed by her and the owner of the property at S C. Pursuant to this agreement, the wife agreed to pay the total sum of $6,200.00, in monthly instalments from October of 2000. The wife has apparently paid the first three instalments, amounting to $2,000.00, leaving a balance of $4,200.00.
The solicitors for the landlord applied to have the matter re-listed in the Small Claims Court. However, subsequently this application was withdrawn on the 19th of February, 2002. Accordingly, I have grave doubts that the landlord is still actively pursuing the remainder of the debt, apparently a sum of $4,200.00.
It is the wife’s position that she left the premises in October of 1999 and never returned to them. It is her view that the landlord decided “to go them” for breaking the lease because, as the operators of a B franchise, it was believed that the lessees were well off financially, otherwise she and the husband would not have been pursued for breaking the lease. Regardless of the truth or otherwise of this position, both parties seemed to have displayed a cavalier disregard for the rights of the landlord under the lease. The parties did not consult with one another about what should be done about the lease but each seems to have blindly assumed that the other would take care of it. However, on balance, I prefer the evidence of the husband to that of the wife and accept that the wife did re-enter the property after separation in October of 1999. In reaching this view, I bear in mind that in her affidavit material, filed in the Family Court in December of 1999, in support of her application for the residence of C and E, the wife gave as her address 22 S C, C G.
b) The childcare debt
In her affidavit material, the wife states that at separation the outstanding childcare fees for E were $3,200.00. She says nothing more about the matter in her affidavit[7]. In cross-examination, the wife conceded that this figure was incorrect. During her evidence, she gave other figures for the amount outstanding at separation, ranging from $1,200.00 to $1,800.00. In her final submissions, counsel for the wife sought to tender documents, which indicated the debt was $2,075.00. These documents were not formally tendered and I refused the wife leave to reopen her case to introduce them. Because of these different figures and the discrepancies in the wife’s evidence in regards to them, I have grave difficulties in accepting the wife’s evidence in regards to the childcare debt and particularly whether it was incurred before or after the parties separated.
[7] See wife’s affidavit of evidence at paragraph 83
The husband annexed a number of documents in respect of the childcare debt to his affidavit of evidence. He is able to provide a vastly superior documentary record in respect of the debt than the wife. These documents included the actual statement of claim that Ms G issued against the wife. This statement of claim was issued in the Local Court at D on the 9th of October 2001 and claims the sum of $1,681.21 in respect of a claim that arose between the 1st of March 2000 and the 30th of September 2000. The basic amount of the claim is $1,227.75 for childcare fees. It is the husband’s position that, as the statement of claim indicates, this sum was incurred after the parties separated and, as such, is the wife’s responsibility. It is the wife’s position that she paid some childcare from time to time and although the statement of claim relates to a period after separation, there was an amount outstanding at separation.
It is unclear to me as to what has happened in respect of the statement of claim. I do not know if the claim was defended and whether or not judgment has been entered against the wife. In my view, the whole of the evidence in regards to the matter is unclear and unsatisfactory. Because of all these factors, in regards to the childcare debt, I prefer the evidence of the husband over that of the wife. In particular that there was no monies owing at the time of the parties’ separation. This, at least on the face of the documents produced by the husband, is the position.
c) The debt to AGC
Again, both parties seem to have displayed a cavalier disregard for this debt, which has continued to accrue interest since separation. Both parties seem to have been content to leave the problem of the debt to the other.
It is the husband’s position that following separation, he went to the former matrimonial home to obtain some of his personal items, including the computer. The wife indicated to him that she was keeping the computer and when asked about the debt to AGC replied “don’t worry about it, I’ll look after it” or words to that effect.
The wife denies this conversation. However she concedes that she still has the computer. It is her position that the husband has never asked for it and she herself has no interest in the computer, it being used by the husband during the marriage for both work and leisure purposes. Clearly, when the pigeon of the outstanding debt to AGC comes home to roost, as it must, each party wants the other to assume responsibility for it. In many ways it is academic who ultimately ends up with the computer, as I have little doubt that the debt is now considerably greater than the value of the computer itself. However, because of where the computer has been for the last three and a half years, on balance, once again, I accept the evidence of the husband over that of the wife. In particular, I accept that the wife elected to retain the computer and the husband acquiesced in this demand on the basis that the wife would assume responsibility for the debt related to it.
d) Contributions during the marriage
It is clear to me that both parties worked hard during the marriage. The husband was the main breadwinner and was continuously employed throughout the marriage. As a result, the wife was more involved in home-maker and parenting duties, although she was also heavily involved in the P Bakery. However, as is clear, there are no significant assets against which those contributions may be gauged.
e) Events since separation
Both parties have re-partnered since their separation. The husband re-married on the 5th of January 2003. His current wife has a daughter, H aged 4 who lives with him and the current Mrs F. The wife lives with R J, who works at a freight company on an annual salary of about $30,000.00. The wife has recently given birth to her and Mr J’s child. As a result, the wife is only working part time at the N B. She works 15 to 20 hours per week and receives a weekly wage of about $280.00. She anticipates that she will return to full time work in about 6 months time. However, when that occurs, she will have to place her baby in childcare and this will be a considerable drain on her finances.
The husband is currently the catering manager at the Northern Territory University. His average gross weekly income is $543.00. his wife and step-daughter are financially dependent upon him. Since the parties separated, he has obtained tertiary qualifications and is presently engaged in a Masters of Training. He has a particular interest in vocational training and community development. He has no significant assets to speak of. However, from his statement of financial circumstances, it is his position that his shares in O Pty. Ltd. have a significant value, although it is difficult to see how this sum will be easily realised.
Similarly, the wife’s statement of financial circumstances indicates that she has no assets of any significant value. She has provided a letter that indicates that she owes the sum of $44,664.10 to O Pty. Ltd., as trustee for the F Family Trust. The husband disputes that either he or the wife owes O Pty. Ltd. any significant sums of money. As has already been indicated, she has transferred her shares in both O Pty. Ltd. and E E Pty. Ltd. to her father. She apparently received the nominal value of the shares from her father. She conceded that her father was likely to transfer the shares back to her, once these proceedings had concluded. She is presently employed by E E Pty. Ltd. at the N B. As a result of her employment she is entitled to the use of a company vehicle. Given the circumstances surrounding the transfer of the shares and her close relationship with her father, I formed the impression that she is better off financially than she would like the Court to believe. Mr H is likely to arrange the affairs of both companies to benefit his daughter. He is unlikely to accommodate the husband in a similar manner.
The law applicable to applications for property division
Although this case is largely concerned with the allocation of debts between the parties. It is appropriate to outline the law applicable to applications for property division in a general sense. Section 79 of the Family Law Act defines the Court’s powers in determining applications for property settlement. The approach to the determination of an application under section 79 is well established by authority[8]. The process involves a four-part procedure. First, the identification of the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, an evaluation of the contributions made by the parties as defined in section 79(4)(a) to (c) inclusive. Thirdly, an evaluation of the matters contained in section 75(2), in so far as they are relevant. 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[9].
[8] See Lee Steerev Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335 and Clauson v Clauson (1995) FLC 92-595
[9] See Russell v Russell (1999) FamCA 1875
Generally speaking, the Court takes a global approach to both the division of property and allocation of debts between the parties. That is usually thought to be the more convenient approach, but it is not the only approach. It is also open to the Court to take an asset by asset approach in assessing the parties contributions to the acquisition of individual assets and debts[10]. In this particular case, given that the parties have essentially divided all their available assets between themselves and the issues that remain concern only debts, it is in my appropriate to take an item by item approach to each of those debts.
[10] See McMahon & McMahon (1995) FLC 92-606 at page 82,043
Conclusions
I turn to consider each of the relevant debts against the background of facts as I have found them. There is no dispute between the parties that the husband will bear responsibility for the debt in his name to the Commonwealth Bank and the wife will bear responsibility for the debt in her name to the ANZ Bank. Neither party seeks to disturb their present holdings of superannuation or any other assets. It is somewhat artificial to analyse the remaining debts on the basis of contribution, especially as I have found that two of them were incurred after the parties separation.
I do not propose to make any specific orders in respect of the debt owing to D (NT) Pty. Ltd. As I have found, this was a debt that was incurred after the parties separated. In any event, in my view, there exists considerable doubts that the company will pursue either the husband or the wife in respect of the debt. The Court has a discretion to determine not to take into account, or to discount the value of unsecured liabilities, in certain circumstances. These circumstances include situations where the liability is vague or uncertain, is unlikely to be enforced or has been unreasonably incurred[11]. In this case, the wife has compromised the action against her brought by D (NT) Pty. Ltd. She has defaulted in her payments to the company in respect of the agreement she reached with it. However, notwithstanding this default, the company has elected not to re-list the matter before the Small Claims Court. Given all these circumstances, it would not in my view, be either just or equitable for the husband to have to bear any responsibility for this debt.
[11] See Biltoft & Biltoft (1995) FLC 92-614
The situation is broadly analogous in respect of the childcare debt. There is a level of uncertainty about this debt, particularly about the quantum of the debt. I have found that the debt was incurred after the parties separated. Once again, I do not believe that it would be either just or equitable to require the husband to pay any proportion of this debt.
The final issue concerns the debt to AGC and the computer to which it relates. The wife claims she has no interest in the computer and no need for it. However, the fact remains that it has been in her possession since the parties separated. The husband claims that this situation was as a result of agreement between the parties. The wife disputes this claim. I have accepted the evidence of the husband. I do not believe that he is the sort of person, who is likely to have left the computer with the wife if he believed that he would continue to be exclusively responsible for the debt. It is extremely regrettable that the debt has been ignored by both parties for so long. In my view, primarily because the wife has maintained possession of the computer for the past 3½ years, it is appropriate that she should assume responsibility for the debt to which it relates. She disputes that she has had any benefits from the item for that period. That may be so. However, that is not a reason to absolve her for responsibility for the debt, particularly as I have found that the husband left the computer with her on the basis that she would indemnify him in respect of the debt. This may, in part, explain why he ignored the debt standing in his name for so long. Certainly, I do not believe that the husband is the sort of person who would ignore his financial responsibilities. The fact remains that the wife has had the computer for the past 3½ years, given this state of affairs it is in my view just and equitable that she should assume responsibility for the debt and indemnify the husband in respect of it.
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 fifty-four (54) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: Lynnette Chin
Date: 3 June 2003
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