Fairchild and Fairchild - [2010] FMCAfam 527

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FAIRCHILD & FAIRCHILD

[2010] FMCAfam 527

FAMILY LAW – Property – greater initial contribution by the husband countered by a serious ongoing course of violence perpetrated by the husband against the wife – held adjustment in wife’s favour – wife suffered Post Traumatic Stress Disorder as a result of the husband’s violence which has impacted on her earning capacity – held ten per cent adjustment in wife’s favour in relation to section 75(2) factors.

Family Law Act 1975, ss.75, 79

Kennon v Kennon (1997) FLC 92-757
Hickey v Hickey (2003) FLC 93-143

Applicant:

MR FAIRCHILD

Respondent:

MS FAIRCHILD

File Number:

MLC 7126 of 2007

Judgment of:

Bender FM

Hearing dates:

24 & 25 May 2010

Date of Last Submission:

25 May 2010

Delivered at:

Melbourne

Delivered on:

26 May 2010

REPRESENTATION

Counsel for the Applicant:

Mr Allen

Solicitors for the Applicant:

Kelly & Associates

Counsel for the Respondent:

Mr Kiernan

Solicitors for the Respondent:

Thexton Lawyers

ORDERS

The wife pay to the husband the sum of $100,425.00 (“the payment”) on or before the 26th day of July 2010 (“the date”).
Contemporaneously with the payment the husband do all such acts and things and sign all such documents as may be required to:
(a)
transfer to the wife at the expense of the wife all of his right, title and interest in the real property situate at and known as

Property J (“the real property”); and
(b)obtain a Withdrawal of Caveat with respect to the Caveat lodged over the real property by his solicitors Kelly & Associates Family Lawyers.
The wife indemnify the husband against all payments and liability pursuant to the mortgage to the ANZ Bank (“the mortgage”) and all apportionable rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind.
In the event that the whole of the payment has not been made by the date then the parties sign all documents and do all things necessary to enable the real property to be forthwith sold altogether out of Court (“the sale”) and upon completion of the sale, the proceeds of the sale be applied:
(a)firstly to pay all costs, commissions and expenses of (the said trust transfer and) the sale;
(b)secondly to discharge the mortgage and any other encumbrance affecting the real property;
(c)thirdly so much of the payment as is then outstanding together with interest thereon at the rate of 10.5 per centum per annum adjusted monthly from the date to the husband; and
(d)fourthly the balance to the wife.
Pending the payment or completion of the sale:
(a)the wife have the sole right to occupy the real property and during such right of occupation the wife pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the real property as they fall due;
(b)the parties hold their respective interests in the real property upon trust pursuant to these orders; and
(c)neither party encumber the real property without the consent in writing of the other party.
In the event either party refuses or neglects to comply with any provision of this order:
(a)a Registrar of the Federal Magistrates Court of Australia at Melbourne is hereby appointed to execute all deeds and documents in the name of the party in default and do all things and acts necessary to give validity and operation to these orders; and
(b)the defaulting party is ordered to pay all reasonable costs incurred by the other party for the purpose of enforcing this order and providing his/her damages; and
for the purpose of this order, an affidavit setting out the defaulting party’s failure to comply with the orders shall be sufficient evidence of neglect and default.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders (the furniture, personal possessions, and like chattels in the property being deemed to be in the possession of the wife);
(b)insurance policies remain the sole property of the owner named thereon;
(c)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLC 7126 of 2007

MR FAIRCHILD

Applicant

And

MS FAIRCHILD

Respondent

REASONS FOR JUDGMENT

Introduction

This is the husband’s application seeking orders in relation to an adjustment of property as between himself and the wife.
The husband initially commenced these proceedings on 20 June 2007. He was incarcerated at that time and the proceedings were not pursued by either party at that time.
The husband’s application was reinstated by consent in July 2009 subsequent to the husband’s release from prison.
The husband is seeking orders that the wife pay him the sum of $154,500.00, being an amount equal to 50 per cent of the equity in the former matrimonial home situate at Property J (“Property J”), at which time he would transfer his interest in Property J to her.
The wife is seeking orders that she pay the husband the sum of $92,700.00, at which time he would transfer his interest in Property J to her. This amount represents 30 per cent of the equity in Property J.

Background

The husband was born [in] 1966 and is 44 years of age. He is currently unemployed.
The wife was born [in] 1967 and is 43 years of age. She is engaged in home duties and as a [occupation omitted]. She has two children from previous relationships, [X] aged 17 years and [Y] aged 15 years. [X] and [Y] live with her.
In late 1993 the husband purchased a property at Property N (“Property N”) for $93,000.00. He borrowed $60,000.00 to complete the purchase.
In 1996 the parties commenced cohabitation. They initially lived in the wife’s then premises in [H] for three to four months. They, together with [X] and [Y], then moved to Property N. The husband’s equity in Property N at the commencement of cohabitation was approximately $40,000.00 to $50,000.00.
The [H] property was sold and it is the wife’s evidence she received $17,000.00 from the proceeds of sale. This is disputed by the husband.
It is the wife’s evidence she applied the $17,000.00 towards improvements to Property N. This is disputed by the husband.
At the commencement of cohabitation the husband was employed full-time as a [tradesman]. He developed a serious addiction to intravenous amphetamines in or around 1998 and his employment thereafter was intermittent.
In 1999 the husband was in a serious motor bike accidence and suffered serious injuries, including a broken leg, foot, arm and nerve damage. He was confined to a wheelchair for a period and was cared for by the wife during his recovery.
It was the husband’s evidence he received $25,000.00 by way of “damages” from the TAC in or around 2001 arising from the injuries he suffered in the accident. This is disputed by the wife whose evidence is he received $8,000.00 which he used to purchase a motor bike.
In August 1999 the police sought the first of 22 Intervention Orders granted to the wife arising from domestic violence perpetrated on her by the husband.
In late 1999 the husband breached the Intervention Order and was sentenced to three months imprisonment.
In October 2001 the husband was convicted for a further breach of the Intervention Order and was given a six month suspended sentence.
In June 2002 the husband was convicted of a further breach of the Intervention Order and the suspended sentence was wholly restored, together with a further sentence of two months for possession of a firearm and ammunition without a licence.
The husband was released from gaol in January 2003 and the parties married two weeks later [in] 2003. Shortly thereafter further Intervention Orders were taken out by the wife against the husband.
Improvements were made to the Property N property in or around 2003. The parties are in dispute as to who performed such improvements and how they were funded. The husband’s evidence is he renovated the kitchen and paid for roof replacement, aluminium windows and cladding. The wife agrees the husband renovated the kitchen but says the husband subsequently wrecked it in a rage. The wife concedes the husband sold a Harley Davidson motorcycle to pay for the cladding but claims that all other renovations were paid for from the monies from [H] or from monies inherited by her in 1995.
Property N was sold in mid 2003 and the net proceeds of sale of $180,000.00 were utilised in the purchase of Property J. The parties borrowed $160,000.00 to complete the purchase. The property was registered in joint names.
The parties separated in or around 2005. The wife’s evidence as to the date of separation varied. She deposed at various times and in varying documents that separation took place in 2003, 2004 and 2005. The husband deposed to separation taking place in early 2005 when, whilst incarcerated for breaches of Intervention Orders and stalking, he determined the marriage to be over. On balance I am satisfied that the parties determined their marriage was over in early 2005. On a practical level, because of the husband’s periods of incarceration and the Intervention Orders that prevented him from attending at the former matrimonial home, the parties would not have lived with each other for any extended period between 2003 and 2005.
Between 2005 and 2009 the husband was incarcerated for a total of three and a half years for breaches of Intervention Orders, intentionally destroying property and making threats to kill. These were all offences committed against the wife. There is currently an Intervention Order against the husband for protection of the wife that is for an indefinite period.
In 2007, within hours of his release from gaol, the husband telephoned the wife. In this conversation he threatened to injure the wife and to kill her father, partner and friends.
A report and evidence was lead on the wife’s behalf by Dr K, Clinical Psychologist. It was Dr K’s evidence that as a result of the violent marriage and the “profoundly disturbing phone call” that came after a period of relative calm for the wife as the husband had been in gaol, the wife was suffering from Post Traumatic Stress Disorder.
Dr K’s prognosis for the wife as contained in his report of

19 November 2009 at page 5 is:
“The expected outcome of PTSD is firstly a long period of recovery with extensive counselling and “re-working” of the thought and emotion patterns in the victim’s mind;
Difficulty in a range of life activities including meeting people, and concentrating upon fruitful activities (such as employment and life or social activities)
An ultimate if fragile tentative recovery which his always at risk of having the PTSD (that is the frightening symptoms) being triggered by an unforseen event.”

Property

The parties agreed that their property pool consists of the Property J property only. They agree that the property has a value of $470,000.00 and is currently encumbered by a mortgage of $161,000.00, leaving equity of $309,000.00.
Having heard the parties’ evidence and the submissions put on their behalf, I identified the issues between the parties as follows:
a)Did the husband make a greater initial contribution by dint of his equity in the Property N property and the TAC payment allegedly received by him?
b)Is the husband’s initial contribution “matched” by the wife’s alleged contributions to the improvement to Property N funded by the monies she allegedly received from the proceeds of sale from [H] and the inheritance she received from her aunt?
c)Has the husband’s “course of violent conduct” towards the wife throughout the relationship been such as to make the wife’s contribution “significantly more arduous” such that it should be taken into account when assessing contributions under section 79 of the Family Law Act 1975 (“the Act”) – ie. a “Kennon” adjustment?;
d)Should there be an adjustment in the wife’s favour pursuant to section 75(2) of the Act arising from the impact her diagnosed Post Traumatic Stress Disorder has on her earning capacity?; and
e)If such an adjustment in the wife’s favour under section 75(2) of the Act is found to exist, is this balanced by the husband’s inability to find employment arising from his history of incarceration and drug addiction?

The legislation

Section 79 of the Act defines the Court’s powers in determining applications for property settlement. Sub-section 79(2) of the Act provides that:
The Court shall not make an Order under this Section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.
Section 79(4) of the Act sets out the matters the Court must take into account when considering what orders should be made for the alteration of the interest of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

The four-step approach

In Hickey v Hickey (2003) FLC 93-143 at [39], the Full Court of the Family Court described the preferred four-step approach in property matters as follows:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), ("the other factors") including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case ….

Assets and liabilities

As noted earlier in this judgment, the parties agree their assets consist solely of the equity in the former matrimonial home at Property J of $309,000.00.
It is also agreed the wife is to be given the opportunity to retain this property.

Contributions

It is common ground that the husband had equity in the Property N property of $40,000.00 to $50,000.00. Thus he made this initial contribution.
During the course of the relationship the husband was in a serious motorbike accident. It was agreed that for many months he was seriously incapacitated and that the wife cared for him.
The husband gave evidence that as a result of this accident he received $25,000.00 by way of “damages” and that those funds were contributed to the household. This is disputed by the wife.
In his affidavit filed on 25 September 2009 at paragraph 14(e), the husband deposes that part of his contributions consist of:
“a personal injury payment of about $25,000.00 as a result of a motor bike accident in about 2001”.
The wife’s solicitors issued a subpoena to the TAC in which they sought details of all payments to the husband arising from the motor bike accident in 2001. In response to that subpoena, the TAC produced a statement that indicated in 2001 the husband was paid $1,812.50.
A subpoena to the TAC requesting details of all payments made to the husband arising from the motor bike accident would have no doubt put this matter to rest. No such subpoena was issued.
In cross-examination the wife conceded that in early 2003 or just prior to the husband’s release from gaol, she purchased a brand new Holden Commodore motor vehicle for $57,000.00 including on road costs. Her evidence was this purchase was funded by $25,000.00+ of money which was in the husband’s account as well as finance from the dealer from whom she purchased the car.
The wife indicated in cross-examination that the money in the husband’s account came from his “nefarious” activities, being drug dealing.

It was the wife’s evidence that whilst the husband was in gaol, a cheque for $8,000.00 from the TAC was received. The wife gave evidence that this amount was placed in the husband’s account and he used it to buy a Harley Davidson motor bike on his release from gaol.
Neither party’s evidence on this issue was in the least bit satisfactory. There is no independent proof of the quantum of any amount paid to the husband by the TAC or when such payment was made. Whilst it is tempting to conclude that the $25,000.00 utilised by the wife to purchase the Holden Commodore is the alleged TAC monies because of the similarity of the figure, coincidence does not equal proof.
What is known is that the husband had a serious accident, the wife cared for him for many months whilst he was incapacitated, the husband was incarcerated for nine months in 2002 during which time the wife continued to maintain Property N, including ensuring all outgoings were paid, an amount of between $8,000.00 and $25,000.00 was received from the TAC and it was or wasn’t utilised to fund either the purchase of the Holden or motorbike by the husband.
The wife further gave evidence that the Holden Commodore was subsequently sold by her in 2004 and that after paying out the finance on that motor vehicle, she used the proceeds to purchase a Hyundai motor vehicle. I believe she retains that motor vehicle and neither party sought to include it in the matrimonial asset pool.

In the circumstances I find that whatever payment was received by the husband, it is not a “contribution” for the purposes of section 79 of the Act.
It is the wife’s evidence that at the commencement of the relationship she had assets of some $46,000.00, being her interest in the [H] property of $17,000.00, an inheritance of $25,000.00 from her aunt and some $4,000.00 of savings. It was the wife’s evidence that she utilised a large proportion of these funds in improvements to the Property N property and otherwise for the benefit of the family.
This was disputed by the husband. His evidence was that if the wife had such monies he knew nothing of them.
Other than correspondence from the solicitors for the estate of the wife’s aunt which disclosed distribution to her of $18,418.73 in mid 2006, the wife provided no independent proof of the monies she alleges she held at the commencement of the relationship.
The husband indicated all the improvements to Property N were funded by him and that he built a new kitchen utilising his skills as a [tradesman].
In cross-examination the wife conceded the husband sold a motor bike to pay for the cladding for Property N. Her evidence in cross-examination as to the balance of the improvements can at best be described as vague. She was unable to name who performed the works on the home, what they cost and how they were paid.
In these circumstances, I am unable to make a finding that the wife had an amount of $46,000.00 at or around the commencement of the relationship or that she utilised same in improvements on the Property N property.
It was argued on behalf of the wife that she and her children were subjected to a continuous and ongoing course of violence from the husband throughout and subsequent to the relationship such that her contributions were considerably more arduous.
The Full Court in Kennon v Kennon (1997) FLC 92-757 at 84,294 held:
“…where there is a course of conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s 79. We prefer this approach to the concept of ''negative contributions'' which is sometimes referred to in this discussion.”
Their Honours emphasised in their decision that whilst the existence of violence can be relevant to decisions under section 79 of the Act, this will only be in exceptional cases. Fogarty & Lindenmayer JJ ruled at 84,294-94,295:
“It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions).”
It was the wife’s evidence that she was subjected to continuous and ongoing domestic violence by the husband from 1997 onwards. This arose in large part from the husband’s admitted long term serious addiction to intravenous amphetamines.
The husband in his evidence did not acknowledge that he had been violent to the wife. He described their relationship as a:
“rah rah rah relationship”
meaning that they argued a lot but that he:
“never hit her”
and that:
“she gave as good as she got”.
It was the husband’s evidence that the wife “would set him up” by inviting him to the former matrimonial home and then ringing the police and alleging he had breached the Intervention Orders.
The husband refuted the wife’s allegations that he had caused her physical injury and said her failure to provide medical evidence of any such alleged injuries was confirmation that such injuries had not been inflicted.
The husband adopted the Victoria Police LEAP record of his convictions. Such record disclosed convictions for crimes committed by the husband against the wife between 1999 and 2009 including:
·Eight unlawful assaults;
·Twenty-two breaches of Intervention Orders;
·Five charges of prohibited person possessing a firearm;
·Two charges of stalking;
·Two charges of threatening to kill; and
·Three charges of threatening serious injury.
The husband was incarcerated for a total of four and a half years for these offences.
The impact on the wife of the husband’s behaviour is that she is now suffering from Post Traumatic Stress Disorder.
There can be no doubt in my mind that the wife and her children were subject to a “course of violent conduct” at the hands of the husband for most of their relationship. I am also satisfied that the violence was at such a level that it falls within the category of “exceptional cases” as envisaged by the Full Court in Kennon. Therefore this must be a factor which I must take into account when assessing the parties’ respective contributions.
It was submitted by the husband that when assessing contributions, there should be a finding of equal contribution on the basis of his greater initial contribution weighed against any “Kennon” argument put by the wife (not that the husband conceded the wife had such an argument).
It was submitted on behalf of the wife that the initial contribution by the husband was matched by her initial contributions and her support of the family once the husband’s serious drug addiction took hold. It was further submitted that because of the extended and continuous violence of the husband, her contributions in supporting the family and maintaining the home were the greater. In those circumstances, it was argued there should be an adjustment in the wife’s favour of ten per cent.
There is no doubt that the husband did make the greater initial contribution and that absent of the Property N property, there would in all likelihood be no property for division between the parties.
The horrendous ongoing violence to which the wife was subjected at the hands of the husband is such that her contributions to the family and maintenance of the home were made greatly more arduous.
In these circumstances, I am satisfied that the husband’s initial greater contribution is outweighed by the wife’s subsequent contributions that were made more arduous because of the husband’s ongoing violence and that there should be an adjustment in the wife’s favour of seven and a half per cent.

Section 75(2) factors

The wife works part-time as a [occupation omitted] earning $150.00 per week. She is otherwise dependent on Social Security payments. She has the full-time care of her two children, [X] aged 17 years and [Y] aged 15 years.
As a result of the husband’s violence, the wife is suffering from Post Traumatic Stress Disorder. She deposes to suffering from loss of self esteem and confidence, flashbacks, sleep disturbance and a degree of agoraphobia. It is here evidence this limits her capacity to engage in employment.
These limitations are confirmed by Dr K and were not challenged by the husband.
It was submitted on behalf of the wife that in these circumstances there should be an adjustment under section 75(2) of the Act in her favour of ten per cent.
The husband is currently unemployed and has been since his release from gaol in 2009.
It was submitted on the husband’s behalf that with his background of imprisonment and past drug addictions, he will find it difficult to find employment and thus is in a similar situation to the wife. It was therefore submitted on behalf of the husband that no adjustment should be made in relation to section 75(2) factors.
The husband is a qualified [tradesman] and, on his own evidence, conducted his own [omitted] business until incarcerated.
The husband gave no evidence of what, if any, efforts he has made to obtain employment in the last twelve months, and if such efforts were made, why they were unsuccessful. Further, there was no evidence given that the husband suffers from any physical or mental infirmities that impact on his capacity for employment. I do not accept the husband has any impediment to obtaining appropriate gainful employment.
Having considered all these factors, I am of the view that there should be an adjustment of ten per cent in the wife’s favour in relation to section 75(2) factors.

Conclusion

Consequently, there should be an adjustment in the wife’s favour such that she receives 67.5 per cent of the property pool, or in practical terms, that she pays the husband the amount of $100,425.00 for his share in the Property J property.

I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Bender FM

Associate: Sarah Hession

Date: 26 May 2010