Farrell and Farrell
[2012] FMCAfam 75
•31 January 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FARRELL & FARRELL | [2012] FMCAfam 75 |
| FAMILY LAW – Property application many years after separation – effect on contribution of mother’s sole care for child for many years – whether father’s relocation overseas was reckless behaviour. |
| Family Law Act 1975 (Cth), ss.44, 66, 75, 79 Evidence Act 1995 (Cth), ss.69, 79 |
| Polonius & York [2010] FamCAFC 228 Z & Z [2005] FamCA 996; (2005) FLC 93-241 In the Marriage of Robb [1994] FamCA 136 Pierce and Pierce (1998) FamCA 74, (1999) FLC ¶92-844 Coon v Cox (1994) FLC 404 Streets & Streets (1994) FLC 92-509 Soblusky and Soblusky (1976) FLC 90-124 Kennon v Kennon [1997] FamCA 27; (1997) FLC 92-757 Sheedy and Sheedy (1979) FLC 90-719 Fisher and Fisher (1990) FLC 92-127 Mead and Mead (1983) FLC 91-354 Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) [2003] FamCA 395; (2003) FLC 93-143 M and M [1998] FamCA 42 |
| Applicant: | MR FARRELL |
| Respondent: | MS FARRELL |
| File Number: | DGC 2440 of 2010 |
| Judgment of: | Phipps FM |
| Hearing dates: | 8 & 10 August 2011 |
| Date of Last Submission: | 10 August 2011 |
| Delivered at: | Dandenong |
| Delivered on: | 31 January 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Gates |
| Solicitors for the Applicant: | David Wilkinson & Co |
| Counsel for the Respondent: | Ms Phelan |
| Solicitors for the Respondent: | Plaza Legal |
ORDERS
That on or before 20 March 2012 (“the date”) the wife pay the husband the amount of $200,675 (“the amount”).
Upon payment of the amount on or before the date the husband sign all documents and do all things necessary to transfer to the wife all his right title and interest in the property at Property B (“the property”).
If the wife does not pay the amount on or before the date the property be sold by an agent and in a manner to be agreed, and if not agreed by an agent nominated by the President for the time being of the Real Estate Institute of Victoria or his or her nominee and in a manner nominated by the appointed agent and the proceeds of sale disbursed as follows:
(a)First in payment of the costs and expenses of the sale;
(b)Second in payment of any mortgage and any other encumbrances over the property;
(c)Third by payment of the amount to the husband together with interest at the rate of 10.5% per annum on the amount so payable from the date until payment;
(d)Lastly by payment of the balance to the wife.
Otherwise each party is declared to have no interest in the property (including superannuation) in the name or the possession of the other, the contents of the house, are deemed to be in the possession of the wife.
Otherwise all extant applications are dismissed.
The wife file and serve written submissions in relation to costs on or before 4.00pm on 14 February 2012.
The husband file and serve written submissions in relation to costs on or before 4.00pm on 28 February 2012.
The question of costs be decided without further oral hearing.
IT IS NOTED that publication of this judgment under the pseudonym Farrell & Farrell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DANDENONG |
DGC 2440 of 2010
| MR FARRELL |
Applicant
And
| MS FARRELL |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Farrell, the husband, and Ms Farrell, the wife, were divorced on 3 March 1994. There had been no property settlement, and no property proceeding until the husband commenced the current one on 21 July 2010, well after the 12 month period in s.44 of the Family Law Act 1975 (Cth). An order by consent on 7 September 2010 provides that the husband have leave to issue proceedings pursuant to s.44(3) of the Family Law Act 1975 (Cth). The order was necessary because the parties owned a property in Victoria and the husband owned motor vehicles now in the United States of America. Both the property and vehicles were owned prior to the divorce. Both parties would have suffered hardship if orders could not be made to finalize financial matters between them.
The husband left Australia for the United States of America on 10 May 1994 and shipped the three motor vehicles to the United States of America. He has lived in the United States of America since. The wife remained in Australia with the parties’ child who was then aged 10.
Issues include the value of the motor vehicles now and at the time of separation and how contributions should be assessed. The husband proposes that the assets be divided equally. The wife proposes that the husband transfer his interest in the former matrimonial home to her, the husband keep the motor vehicles and there be no other orders.
Section 79(1) of the Family Law Act 1975 (Cth) provides that in property settlement proceedings the court may make such order as it considers appropriate. The following sub-sections set out the considerations the court takes into account in deciding what is appropriate. This is a four step process. First, determine what are the assets and liabilities of the parties, next consider the parties’ contributions taking into account the matters in s.79(4)(a)-(d), next consider whether an adjustment should be made taking into account the matters referred to in s.75(2) insofar as they are relevant, and finally consider whether in all the circumstances it is just and equitable to make the proposed order. The four step process is usually applied to superannuation and non superannuation assets separately, but there are cases where this may not be appropriate.[1]
[1] Hickey [2003] FLC 93-143. For superannuation Coghlan [2005] FLC 93-220
Apart from the value of the motor vehicles and issues relevant to the value there is little controversy about the facts.
The husband was born on (omitted) 1942. He is aged 69. The wife was born on (omitted) 1956. She is aged 55.
The husband and wife met when the wife was a student nurse aged 18. They married on (omitted) 1976. There is one child of the marriage X born (omitted) 1984. They divorced on 17 March 1994. Obviously the divorce application gives a date of separation at least 12 months prior. Both agree that separation was in 1994. The husband left for the United States of America on 10 May 1994 with a return ticket but did not intend to return. The husband says the intention was that the wife would follow him, something with which the wife agrees. She subsequently decided not to go. They divorced in March 1994 on the husband’s application although at that time they were still living together in the house in Property B. The wife did not oppose the divorce. The wife says the husband told her he needed to be divorced to obtain a visa in the United States of America.
At the time the husband moved to the United States of America a company he controlled and owned a (omitted). The (omitted) was sold on 17 May 1994 and disbursed as described later in these reasons. Although $10,000 was sent to the husband in America in 2001 the parties have lived separately since 10 May 1994 with separate finances. For the purpose of assessing contributions the parties separated in May 1994.
The husband remarried in the United States of America in 1996 to Ms A. She was born on (omitted) and works in an (omitted) doing (omitted). The husband has been unemployed since 2009 and says given his age he does not believe he will find work.
The husband owns a residence at (omitted) a suburb of Los Angeles. He says it is valued at $250,000 with a mortgage of $200,000. He and his wife care for his wife’s adult granddaughter who has Downs Syndrome. The husband says the granddaughter is totally dependent on them.
The wife met Mr S in 2000. They commenced living together in 2003. In 2003 they purchased a property in Property J for $500,000. Mr S paid the deposit of $50,000. The wife’s evidence is not clear but it appears the balance was borrowed. The wife took out the loan because Mr S was a pensioner. The wife, Mr S and the party’s child lived in Property J.
They sold Property J in 2008 for $780,000 and purchased Property K in 2009. The wife estimates its value at $640,000. It does not have a mortgage. They own two motor vehicles.
In 1971 the husband won $35,000 in (omitted). He was then running a (omitted) in (omitted). He purchased a (omitted) Ford Falcon, (vehicle omitted) and a (vehicle omitted). He paid a total of $6,500. In 1972 he purchased Property B, for $35,000. He says he borrowed $15,000 and the rest was paid from the (omitted) winnings. In the valuations the property is said to be in Property B, .
It appears that the Property B house was bought in the names of the husband and his mother because on 19 May 1993 it was transferred into the names of the husband and wife, the mortgage was discharged and a new one taken out. The mortgage had been increased at some stage or a new one entered into to finance the purchase of a (omitted) in the name of a company (omitted) owned by the husband and wife or perhaps only the husband. Two (omitted) were purchased, the first in1982 or 1983 for $22,000 according to the wife. It was sold and after a time another taxi licence was purchased. The second licence was sold in May 1994.
The husband has always had an interest in cars, and as part of his business he says he bought and sold them including travelling to the United States of America and importing motor vehicles. The business included selling (omitted). The wife assisted in the business packing and posting orders. At the time of separation he owned three (motor vehicles) described later in these reasons. The husband worked as a (omitted) but the evidence does not show when.
The wife is a (omitted) and now works part time. She earns $52,000 per year. At the date of separation her superannuation was $2,973. She says when she was divorced she entered into a salary sacrificing package. She pays $18,200 per year towards superannuation. The wife’s superannuation in November 2010 was $278,000.
The (omitted) was sold on 17 May 1994 for $140,000. This was after the husband had moved to the United States of America and the sale was carried out by wife. $90,000 was used to discharge the mortgage, the wife sent husband $10,000 in 2001 and she used the balance on payment of liabilities described later in these reasons and living costs.
The husband purchased a (vehicle model omitted) in September 1991 for $4,500 and a (vehicle model omitted). These two vehicles and the (vehicle model omitted) are the motor vehicles he took to the United States of America.
The husband insured the motor vehicles for the purpose of their shipping to the United States of America. He acknowledged that he used (omitted) for the purpose of insuring the vehicles, that they appraised values and that he insured the motor vehicles against loss and damage during shipping for the appraised amounts.
The amounts are:
(vehicle model omitted) $39,866 plus $26,290 stamp and import duty say $66,000
(vehicle model omitted) $11,414 plus $7,524 stamp and import duty say $19,000
(vehicle model omitted) $5,720 plus $3,770 stamp and import duty say $9,500
Total (excluding stamp import duty), $57,000
The wife annexed copies of the appraisals to her trial affidavit. The husband did not acknowledge the correctness of the valuations. He said the cars had not been inspected by the appraiser and that the details in the appraisals such as descriptions of body damage must have been made up. He said he did not tell the appraiser about body damage and he said the appraiser could not have photographed the vehicles because he did not inspect them. He denied having seen a letter dated 5 May 1994 from (omitted) which attaches the appraisals, gives the valuations and information about the obtaining of comparative values.
The husband acknowledged that he insured the motor vehicles for the appraised amounts for the purpose of shipping because that is what it would cost to replace them. He said he used lower amounts for the assessment of import duty in the United States of America.
The husband's claim about the way in which the valuations were done is unconvincing. In the end, it does not matter because before the end of the hearing the wife filed an affidavit from Mr M. Mr M. says he is the current owner of (omitted). He says he has been shown the originals of these documents:
a)Letter dated 5 May 1994 on (omitted) letterhead addressed to Mr Farrell Property B;
b)(omitted report) for (vehicle model omitted) with photos as attached and dated 2 May 1994;
c)Motor Vehicle Report for (vehicle model omitted) with photos as attached and dated 2 May 1994;
d)Motor Vehicle Report for (vehicle model omitted) with photos as attached and Dated 2 May 1994.
Mr M. says that Mr R had the care and conduct of compiling the reports and he is now deceased. Mr M. said he is unable to readily locate the file relating to the reports.
Mr M. says that his company has a policy of taking detailed photographs of the vehicles and that the policy provides for the assessor to validate his assessment by comparing with other experts in the field.
He says that from inspection of the reports and letter he can say that they indicate the vehicles in question were inspected on 2 May 1994 because the photos are dated on that date. They indicate that the values were checked against vehicles at (omitted). Mr M. identifies the reports as original reports from his company.
Mr M.'s evidence shows that the letter and reports are business records of the business (omitted). “Business” is defined in the Dictionary of the Evidence Act 1995 (Cth) to include “a profession, calling, occupation, trade or undertaking”. (omitted) is within this definition.
The admissibility of business records is provided for in s.69 of the Evidence Act
(1) This section applies to a document that:
(a) either:
(i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business; or
(ii) at any time was or formed part of such a record; and
(b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.
(2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made:
(a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact; or
(b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.
The letter and reports were and are part of the records of the business of (omitted). They contain representations by the appraiser, Mr R of the value of the vehicles. He might reasonably be supposed to have had personal knowledge of the asserted facts. The statements of fact contained in the letter and reports meet the requirements of the exception to the hearsay rule set out in s.69 of the Evidence Act 1995 (Cth).
Insofar as the letter and reports contain expressions of opinion I am satisfied from the material contained in the letter and the reports and Mr M.'s evidence that Mr R had the necessary specialized knowledge about the method of valuation of the three motor vehicles and that his statements come within the exception in s.79 at the Evidence Act 1995 (Cth) to the opinion rule.
The documents show that the vehicles were inspected by the assessor, photographs were taken and that the assessor adopted a standard valuation approach of obtaining comparative values. There is no reason to doubt the competence of the assessor or the accuracy of the valuations. The values of the motor vehicles at 5 May 1994, very close to the separation, are as set out in the letter of 5 May 1994.
Each party presented current valuation evidence. Mr H inspected the vehicles at the husbands residence in Los Angeles on 9 December 2009 and prepared comprehensive written reports. He is a member of the International Automotive Appraisers Association. The qualifications and experience document annexed to the reports shows he is well qualified.
His values of the motor vehicles are:
(vehicle model omitted) US $1,200
(vehicle model omitted) US $6,900
(vehicle model omitted) US $42,000
The husband has since sold the (vehicle model omitted) for US $500.
Mr. H. describes the (vehicle model omitted) as a poor at best example of this classic American automobile. He describes it as a virtual basket case and says the cost of fully restoring the vehicle would far exceed its potential value when completed. Its only value is the few undamaged components and trim parts.
He says the model is not a really desirable classic. Even in perfect, show quality condition with “matching factory numbers” they are only worth about $23,000 to $25,000.
Mr H. describes the (vehicle model omitted) as a fair to average example of this classic American muscle car. He said that although it now has a “(omitted)” installed, the vehicle originally came with a (omitted) inch motor, greatly affecting its value. He says the (omitted) inch motor has not run for many years and is in need of either replacement or total rebuild.
He says virtually eliminating any collector interest in the (vehicle model omitted) is the fact that it has been converted into a right-hand drive configuration. The factory never offered a right-hand drive version. The conversion was performed by using dash, pedal and interior trim components from a (vehicle model omitted). The interior looks little like a valuable (vehicle model omitted) and now looks like the low budget (vehicle model omitted). In his evidence Mr H. said that while left hand drive cars are driven in England and in Australia, right hand drive cars are not driven in the United States of America.
Mr H. says that in order for classic American muscle cars to have any value they must be absolutely factory correct with all original "matching factory numbers" drive train components. He says that the total cost of restoring the vehicle back to its correct factory configuration would far exceed its value when complete.
Mr H. says the (vehicle model omitted) is an average overall example of this classic automobile. He said that in addition to the average physical condition it has the wrong motor, a bad transmission, barely runs and needs a rebuild. He says it has many problem issues with the body and paint work diminishing an otherwise higher retail value.
He notes in his valuation report that any published value guides give values for "factory matching numbers” vehicles. He says that the (vehicle model omitted), having an incorrect number, cannot be evaluated using those guides. In his oral evidence he said the fact that the motor is not original can be readily established because an original engine has the same VIN stamped on it as the vehicle body.
The detail in Mr H.'s reports elaborated on in his oral evidence shows that he carried out a careful inspection of each of the vehicles. I accept that his description of each of the vehicles is accurate.
Mr V valued the vehicles for the wife. He is in Australia and so did not inspect the vehicles. He had available these documents:
a)(vehicle model omitted) - receipts totalling $12,300 dated 5 May 1993, (omitted) Certificate of Title, (omitted) motor vehicle report, 11 colour photographs, shipping receipt and other miscellaneous supporting documentation;
b)(vehicle model omitted) - receipts totalling $4,500 dated 1981, (omitted), six colour photographs, shipping receipt and other miscellaneous supporting documentation;
c)(vehicle model omitted) - (omitted) motor vehicle report, 5 colour photographs, shipping certificate and other miscellaneous supporting documentation.
Some of the colour photographs in his report are colour photographs from the (omitted) vehicle report. One is a photograph of the (vehicle model omitted) in the showroom of a car dealership in Los Angeles where the husband was working. The husband says he sent this photograph to the parties’ daughter. Other photographs show background identifiable as the same background in the (omitted), which is the property at Property B of the (vehicle model omitted) show it to be in much better condition than the photographs in Mr. H.'s report. The inference is that they were taken in Australia
Mr V. says that the (vehicle model omitted) appears to be a genuine 1970 (vehicle model omitted) fitted with a (omitted) engine and (omitted). He says that he condition appears to be good to excellent. He says that the current market value for the vehicle ranges from AUD $175,000 to AUD $185,000.
Mr V. says that the (vehicle model omitted) appears to be a genuine (vehicle model omitted) fitted with a (omitted) engine and (omitted). He says the condition of the vehicle appears to be good to excellent. He says the current market value for the vehicle ranges from AUD $65,000- AUD $75,000.
Mr V. says the (vehicle model omitted) is fitted with a (omitted). He says the condition of the vehicle appears to be poor in need of restoration. He says the current market value of the vehicle ranges from AUD $12,500 to AUD $15,000.
Mr V. says that the vehicles are considered quite rare in Australia and are highly desired by classic enthusiasts worldwide. He says the (vehicle model omitted) and (vehicle model omitted) are considered iconic models in the (vehicle model omitted) Range.
Mr H.’s expertise in classic motor vehicle valuation is set out in his documentation. He has inspected the vehicles recently and his inspection was careful and detailed. I accept his descriptions are accurate. I accept his evidence that vehicles without original engines are not as valuable and I accept that he has correctly identified that two of the vehicles do not have original engines. I accept his evidence about the devaluing effect of conversion to right-hand drive particularly for a motor vehicle in the United States of America. The motor vehicles have the values assigned to them by Mr H..
The motor vehicles may have a different value in Australia. Shipping costs and any taxes and duties would have to be taken into account as well as availability and perhaps the different economic circumstances in Australia. The vehicles are in the United States of America and so must be valued as they are and where they are.
I do not consider that Mr H.’s evidence affects my finding about the value of the vehicles at the time of separation. Mr H.'s evidence about the devaluing effect of different motors and conversion to right-hand drive is not referred to in the (omitted) reports. Whether they were taken into account is not known. However they are expert reports obtained by the husband. He accepted the benefit of them for insurance purposes and he can hardly be heard to complain. They are the only the evidence of value at the time of separation. He says they are not accurate, but I have rejected much of his reasons for making that assertion. He has not advanced any contrary evidence of the value of the vehicles at the time of separation.
The former matrimonial home Property B has been valued at $695,000. The valuation is not in dispute.
The assets for the purpose of s.79 are the property at Property B, and the three motor vehicles in the United States of America.
For the reasons given later I have determined that an asset by asset approach is the proper way to determine contributions. For the reasons given the husband’s property in the United States of America and the wife’s superannuation can be excluded for the purpose of assessing contributions. The husband says he has a loan of $20,000 secured against the (vehicle model omitted). Again this dealt with later in these reasons.
The assets for the purpose of assessing contributions are:
Property B $695,000
(vehicle model omitted) US $1200, AUD $1152
(vehicle model omitted) US $6,900, AUD $6624
(vehicle model omitted) US $42,000, AUD $$40,320
Total AUD $743,096
I have used $0.96 for the conversion from United States of America currency to Australian currency. I have used Mr H.’s valuation for the (vehicle model omitted) rather than the US $500 for which the husband subsequently sold it. The amount of US $1,200 is an expert valuation.
Global or Asset Approach
In Polonius & York [2010] FamCAFC 228 the Full Court of the Family Court considered the proper approach in cases where there has been a lengthy time between separation and the property hearing. At [92] the Full Court agreed with these observations of Finn J in Zalewski and Zalewski [2005] FamCA 996; (2005) FLC 93-241 at 79,978:
It is my impression that there are currently coming before the Court a significant number of cases in which the period between the parties’ separation and the hearing of their property settlement proceedings is substantial. The delay seems often to arise, at least in part, because the parties have initially reached some form of informal (or even formal) settlement from which one party later resiles (often for good reason). In these long separation periods, the parties will usually have built up substantial new assets or incurred substantial liabilities. In an endeavour to satisfy the parties that any orders which are eventually made by the Court in these somewhat complicated cases are just and equitable, it can, in my view, be very useful for Judges to assess contributions to property on an asset by asset basis.
The parties separated in 1994 after 18 years of marriage. During all of the time they occupied the Property B property. Since separation the property was occupied by the wife for much of the time and cared for by the wife and it has appreciated in value. One of the motor vehicles was owned by the husband at the commencement of the relationship. The other two were purchased during the relationship. Since separation they have been in his sole position and care. They have not appreciated in value. The wife had a small amount of superannuation at separation and both parties have acquired property since then. Separation was seventeen years ago. There are obviously different considerations applying to property and superannuation acquired after separation. Different considerations apply to the Property B property and the motor vehicles because they have been in the sole control of one party to the exclusion of the other. The motor vehicles have been in the United States of America and there is a debt secured against the motor vehicles.
The husband's property in the United States of America and the wife's property in Property K were acquired after separation. Matrimonial funds were not used in their acquisition. Neither party made a contribution under any of the subsections of s.79(4) to the property in the other party’s name. The wife had only about 1% of her current superannuation at the time of separation. The husband has not contributed under any of the subsections of s.79(4) to the wife’s superannuation since. The 1%, after 17 years, can be ignored. Since each has made all of the contribution each retains 100%. They do not require any further consideration under the second step.
The husband says a loan of $2,000 is secured against one of the motor vehicles. He borrowed the money after separation and so the wife has no responsibility for it.
Contributions, House and Cars
The parties married in 1976 and separated in 1994. The relationship was about eighteen years. At the time of the marriage the wife had no assets. The husband owned the former matrimonial home in Property B and some classic cars for which he had paid $6,500. He purchased Property B a few years before for $35,000 with a mortgage of $15,000. He says his assets at the commencement of the marriage were the house and cars.
Once she had finished her training and was registered as a (omitted) the wife worked throughout the marriage. The husband ran a (omitted) business at the commencement of the marriage and then a business (omitted) and selling (omitted). As some stage he worked as a (omitted) but the evidence does not say when. The wife assisted in the business. The (omitted) were purchased after the marriage. The money borrowed for their purchase was secured against the house. The wife had a (omitted) and sometimes drove the (omitted).
The one child of the marriage was born in 1984 and prior to separation the wife had the greater part of her care. Little detail is given by the parties of their income during the marriage. In the absence of any detailed evidence, the inference I draw is that the party's financial contributions under s.79(4)(a) during the marriage were equal. Some of the income would come from ownership of the (omitted). The parties owned a (omitted) sold with the licence according to the wife. The wife says that it was a (vehicle model omitted) which had high mileage and was worth a minimal amount of money. Given that the (omitted) was purchased during the marriage with borrowed money secured against the matrimonial home income attributable to the license itself was a contribution from both parties.
At the time of separation the assets were the house, the (omitted) and the three motor vehicles, plus a motor vehicle used by the wife and household contents. No other assets had been accumulated. As a (occupation omitted) the wife enjoyed a relatively high income. The inference is that the parties combined income met their living expenses, including mortgage payments, but little more, and although the parties appear to have lived comfortably, they did not live extravagantly. Counsel for the husband put to the wife that the husband earned more than she did, which she denied. Therefore the inference I draw is that the parties’ incomes were about equal, particularly taking into account that the wife helped in the (omitted) business and sometimes drove the (omitted). The wife must have had some time off work at the time of the birth of the child, but in the 18 years of marriage any reduction in income would have been a small proportion of her total income during that time. Time spent caring for the child may have affected her income but it does not displace the inference that overall the parties incomes were about equal.
Similar reasoning applies to any non financial contribution under s.74(4)(b). Overall the parties’ financial and nonfinancial contributions to the acquisition, conservation or improvement of the property during the marriage were equal.
I have already said that I consider that the inference to be drawn is that the wife made by far the greater contribution towards the care of the child during the marriage. The wife's contribution under s.79(4)(c) was greater than the husband’s.
The husband has two other children. One of them, A lived with the parties from 1976 or 1977, largely cared for by the wife. She was unwell and had to be taken to the (omitted) Hospital every second or third month for an intravenous (omitted) to check her (omitted) because she suffered (omitted) which causes infection and bed wetting. The wife cared for her for seven years. She was placed in the care of her grandmother at 14 or15 through court proceeding, the nature of which is not entirely clear.
A gave evidence and alleged that the wife mistreated her including beating her. The wife denied that she did. It is impossible to decide who is correct. It does not matter because what is relevant is that for 7 years the wife saw to A’s day to day needs including her medical needs. The family finances, contributed to by the wife, provided for A.
The circumstances in this case in relation to A are similar to those considered by the Full Court in the decision of In the Marriage of Robb [1994] FamCA 136 except that the roles are reversed. The husband had a legal obligation to maintain A, the wife did not. In Robb the Full Court said that the wife's care of the children from a previous relationship was not a contribution by her under s.79(4)(c), nor was the husband’s. That means that the husband’s care of A was not a contribution under s.79(4)(c), nor was the wife’s. The wife’s contribution, both financial and nonfinancial, is to be taken into account under s.75(2)(o).
I must take into account the husband's initial contribution.
In Pierce and Pierce (1998) FamCA 74, (1999) FLC ¶92-844 the Full Court said at FamCA [28] FLC 85,881:
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home.
An indication of the husband's initial contribution is his (omitted) winnings of $35,000 in 1971, five years before the parties were married. He purchased the home in 1972 for $35,000, with a mortgage of $15,000, four years before the marriage. After 18 years of marriage the weight to be attached to the husbands initial contribution was greatly diminished and at least equalled, if not outweighed, by the wife’s greater contribution under s.79(4)(c). When all things are considered, if there had been a property settlement soon after separation the parties contributions under s.79(4) what have been assessed as equal. This applies to both the home and the cars. Under s.75(2) an adjustment would have been made in the wife’s favour because she had the care of the child. She had little superannuation at separation and assuming it was known that the husband would be employed until 2009, and that the wife would receive no assistance from the husband in the care of the child, financial or otherwise, an adjustment of 25% would have been appropriate.
The parties did not have a property settlement soon after separation and so after separation contributions must be assessed along with all other contributions.
After separation different considerations apply to different assets. The wife remained in Australia with the child living in the home. So far as the home is concerned the wife has made all contributions, financial and non financial. She provided the entirety of the child's care from age 10 to age 18, including all the financial provision. The husband acknowledges that he did not provide any financial support for the child. He says the wife did not ask for any. That does not alter the fact that he provided none. He had no contact with the child except for occasional photographs and cards. The wife cared for the child from age 10 to age 18 with all the myriad tasks and difficulties involved with a child growing through those ages. She provided all the child's financial support in the most expensive years of a child's life.
In Coon v Cox (1994) FLC 404, a child maintenance case, Nicholson CJ
In addition to the evidence, counsel for the wife relied upon the Lee scale published by the Australian Institute of Family Studies and referred to the current tables adjusted to the average weekly earnings figure for the March quarter 1993. This is an approach which I consider realistically takes into account the many and varied and often hidden and neglected costs of maintaining children by custodial parents. It is, I think, a more comprehensive approach than the calculations which go to compromise the Lovering scale which has several important and acknowledged omissions, for example, housing, medical and dental expenses, transport and school uniforms: see McDonald (1990), ''The Costs of Children, A Review of the Methods and Results'', Family Matters, No. 27, pages 18 to 22.
Pursuant to Section 66D(2) regard may be had to both the Lee and Lovering tables, but given their differences in the nature of the calculations required, I prefer to rely upon the Lee scale in the context of this case. According to this scale, the total weekly expenditure on a child aged 11 to 13 years in one-child one-income family amounts to $215.75.
The use of the Lee scale was approved by the Full Court of the Family Court in Streets & Streets (1994) FLC 92-509.
Section 66D(2) is now s.66J(2)(b), and although it is part of the child maintenance provisions of the Family Law Act I consider that what the Chief Justice said, including the figure of $215.75 per week is a useful guide to the amount the wife would have spent. Making allowance for increasing costs over time and as the child became older, the total amount until the child became 18 must have exceeded $100,000, assuming relatively modest amounts spent on education. It may have been higher because the wife says she paid school fees but there is no evidence of what they were.
From 2003, when the wife commenced living with Mr S, until 2009 the wife rented Property B to the husband’s sister at $150 per week which the wife says was about half the market rent. The husband’s sister was in financial difficulty according to the wife. Since 2009 the parties’ child has lived in Property B.
Otherwise, the wife maintained the family home paying all outgoings. The wife says she repainted the house, replaced window furnishings, attended to plumbing works and stained and polished the floorboards. She spent in the vicinity of $30,000. Her evidence was not challenged and I accept it.
The husband asserts in his first affidavit that the wife retained some benefit from the sale of the (omitted). It was sold for $140,000. The wife says she applied the money as follows:
a)She sent the husband in America $10,000 as requested by him;
b)She applied $91,000 to the mortgage on the home;
c)$6,526.75 for the export of the three cars;
d)$255, Optus accounts;
e)$3,232, M.I. CBA credit;
f)$350, divorce solicitor (omitted);
g)$5,500, Mr C at the direction of the husband;
h)$5,500, husband’s visa card;
i)$375, ASIC for (omitted);
j)$555, ATO (omitted);
k)$450, cost of winding down (omitted).
The wife in her affidavit says that the balance was $22,243.75. The total of all of the expenses listed above was $123,243.75, so that the balance should be $16,756.25. Whatever the amount the best that can be said in support of the husband's case is that half of it was a contribution by him to the support of the family. The husband received some additional money after separation from the sale of spare parts and tools. Estimates in the evidence are that it was perhaps $2,000. Any balance in the wife’s favour from the sale of the (omitted) is an insignificant amount.
The circumstances bear some relationship to one where one party has made an initial contribution. An inexact analogy can be made with the approach described by the Full Court in Pierce. For the purpose of assessing contributions and making an inexact analogy the husband's interest in the former matrimonial home at the time of separation was half. From then on under S79(4) he made no contributions to the house, financial or nonfinancial, and no contributions to the welfare of the family or the child. The wife made them all. The analogy is not exact because the husband did not live in the house, but it is useful to take into account the Full Court’s statement that “It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife” and substitute for “initial contributions”, “contributions at separation”.
Mr I valued Property B. He values it at December 2003 at $135,000 to $140,000. His valuation was not contested. It was put to him in cross examination that the value might have increased by mid 1994. He said without looking at comparative sales at that time he could not say. For the purpose of assessing contributions I will use $140,000 as the value at separation. That has increased to $695,000 while the wife has been the custodian. Much of that is due to increase in value over time, but I take into account that she has maintained improved and preserved the property while the husband has made no contribution. On the other hand, the wife has had the benefit of living in the house free of a mortgage until 2003, and rent of $150 per week until 2009. The husband has no benefit from the house including no access to its capital. I take both these matters into account.
A significant matter is the wife’s sole care of the child for nearly 18 years until she turned 18. That care included the total cost of caring for and educating the child. Taking all matters into account the assessment of contributions for the house are 65% by the wife and 35% by the husband.
Different considerations apply to the motor vehicles. For the reasons already given contributions until the time of separation were equal. Since then they have been in the husband's possession.
The husband says that when he first arrived in the United States of America he stayed in a motel. He initially kept the three motor vehicles at the motel and then put them into storage for a time. He has kept them at his home once it was purchased.
He says he has not driven the cars except for short times at two shows. The inference from Mr H.’s detailed valuation is that the cars have not been maintained and have deteriorated. There are numerous body defects, even in the best of the cars. Normal expectations are that the value of classic motor cars will increase but the opposite has happened. If the husband could not afford to maintain them he could have sold them. Immediately prior to the husband leaving for the United States of America the parties had assets in the motor vehicles worth $57,000. They are now worth $48,000.
The husband is a (occupation omitted). He worked for a (omitted) in the United States of America. He was capable of maintaining the cars in better condition than he did. He has made a negative contribution to their value. He has stored the cars and kept them in his possession and to that extent it has provided some contribution, but some allowance must be made for their deterioration and his failure to maintain them. For reasons given later I will take the deterioration in value into account as a matter under s.75(2)(o) and asses the parties contribution to the motor cars as equal.
Section 75(2)
The relevant matters are:
The age and state of health of each of the parties
The husband is 69, the wife is 55. The wife is in good health. The husband is in poor health. An affidavit by Dr O shows he has numerous health problems. He is obese. He has hypercholesterolemia, elevated fasting glucose and central (omitted), a combination collectively referred to as “(omitted)” with known increased risk of cardiovascular mortality and morbidity. He has low back pain and (omitted) both badly affected by the obesity. He has left hand sensory symptoms which may be due to carpal tunnel syndrome. The doctor says he is at high risk of a cardiovascular event and unlikely to remain physically capable of remaining in the workforce much longer.
Income property and capacity for employment
The husband is unemployed. His age and state of health means he is unlikely to obtain employment again. He has a house in the United States of America. He says its value is $250,000 with a mortgage of $200,000. He has a debt of $20,000 secured against one of the motor vehicles. He says he relies on unemployment benefits and his wife’s income.
The wife has employment as a (omitted) and the capacity to continue working. She is registered with her partner as owner of the residence in which she lives. His income is a pension but he had the resources to purchase the residence. The wife has superannuation of $278,000 and she continues to contribute.
Commitments for support and standard of living.
Each party has the normal commitments to maintain their standard of living.
Commitments to support others
The husband says that his wife’s granddaughter lives with them and is totally dependant on them. He has no legal responsibility to support her but given that he is substantially dependent on his wife's income the support of the granddaughter reduces his wife’s ability to support him.
Other matters
The wife’s care of A, both financial and non financial, is to be taken into account under this paragraph.
The conduct of the husband is to be taken into account. In Polonius & York the Full Court said at [86-[88]
Marital conduct of parties is not specifically referred to in s 79 of the Act and as a general proposition the marital behaviour of parties is not of itself relevant to applications under s 79: Soblusky and Soblusky (1976) FLC 90-124. However, there may be circumstances in which marital conduct may be relevant and taken into account. If the conduct of a party towards the other had a significant adverse impact upon the other parties’ contributions to the marriage or made the other parties’ contributions more arduous than they ought to have been, then this may be relevant: Kennon v Kennon [1997] FamCA 27; (1997) FLC 92-757. As well, certain types of behaviour which have a direct connection with financial matters may be relevant. In Sheedy and Sheedy (1979) FLC 90-719 Nygh J said at 78,872 that conduct may be relevant “if it has financial consequences, such as financial misbehaviour resulting in the waste or suspension of family assets”: see also Fisher and Fisher (1990) FLC 92-127 at 77,846.
In Kowaliw Baker J said at 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of the marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79.
Examples of this type of conduct may include circumstances where the drinking and gambling of one party has led to the failure of a business or the dissipation of assets: see Mead and Mead (1983) FLC 91-354 per Asche SJ at 78,369.
In Kowaliw Baker J also said at 76,644-45: “It does seem to me, however, that if a party has either by deliberate act or by economic recklessness reduced the value of assets available for distribution then the economic consequences which flow therefrom including the resultant burden to the other party are directly relevant to a consideration of the respective contributions of the parties contemplated by sec. 79(4)”.
It follows that in certain circumstances financial misconduct or financial misbehaviour may be taken into account in a number of ways. It may be taken into account by the notional inclusion of an amount at step one of the preferred approach to the determination of an application pursuant to s 79 of the Act which was explained in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) [2003] FamCA 395; (2003) FLC 93-143 or when assessing the contributions at step two of the preferred approach or perhaps when considering the other factors at step three of the preferred approach: see M and M [1998] FamCA 42 (1 May 1998).
In 1994 the husband moved to the United States of America. He says he thought the wife, would follow. Prior to moving he had applied for permission to work in the United States of America, a green card, but was unsuccessful. He had a return ticket to Australia but he did not use it and so he remained in the United States illegally. He said that he expected the wife and child to move to the United States of America to live permanently, but they could only do that illegally. It is not surprising that the wife decided not to attempt this with a 10 year old child.
The husband had income in Australia. The company (omitted) owned a (omitted) and the husband had a business (omitted). He had worked as a (omitted). The evidence does not show what his income was but the parties met their expenses. The husband was financially successful in Australia.
How the husband obtained the right to live permanently in the United States of America and work there is not clear. It may be when he married in 1996. The wife says the husband told her he needed a divorce so that he could obtain a visa. When he moved to the United States of America he did not have a right to reside there. At first he lived in a motel. Subsequently he obtained employment. How long the employment lasted and how much he earned is not in evidence. What is known about his finances is that he has accumulated little in assets over 17 years. In the same time the wife has accumulated substantial superannuation while being the sole provider for the child.
The husband was financially successful in Australia. He had successfully worked and conducted business in Australia and acquired assets. He had limited experience of the United States of America except for travel their purchasing motor vehicles. The evidence shows that his decision to move to the United States was a reckless one so far as his income earning potential was concerned.
The value of the assets the husband took with them, the three motor vehicles, in 1994 was $57,000. They could have been sold for that amount or kept in good condition. Instead, family assets were used to pay for their transport to the United States where they have deteriorated. He could have sold them in the United States of America and improved his position. He was not buying and selling motor vehicles and they had no relevance to his income. He kept them for himself as collectors items, but did not look out for them.
The husband's conduct in moving to the United States of America and taking the motor vehicles with him, including the cost of shipping and importing had a significant effect on his present and future finances. It was reckless conduct so far as finances were concerned. It substantially affected his ability to earn income. It can be taken into account and the s.75(2)(o) of the Family Law Act 1975 (Cth).
The husband’s lack of capacity to earn income and poor financial position, if existing on their own and contrasted with the wife’s position, would justify some adjustment under s.75(2) in favour of the husband. Counsel for the wife suggested 10%. I consider 15% is an appropriate figure.
The wife’s care for A was not argued as a s.79(2)(o) matter but as a contribution. It was argued as a matter and the husband is not disadvantaged by having it taken into account as it should be under s.75(2)(b).
The deterioration in the value of the motor cars was not argued as a s.75(2)(o) matter. Counsel for the wife submitted that the cars should be valued as if they had been properly maintained and that a value of $200,000 should be used. I consider that I can take that into account as a s.75(2)(o) matter and because it has been argued the husband is not disadvantaged.
The evidence does not permit a finding of the value of the cars if properly maintained other than that they would have been worth more. On the other hand, the husband could have sold them soon after separation and been in a substantially better financial situation
The wisdom of the husband’s move to the United States of America was made an issue and so I can take it into account.
If the husband had remained in Australia he probably would have maintained his satisfactory financial position. If there had been a property settlement in 1994 he would have received a capital sum, or retained Property B subject to a mortgage. He could have rebuilt his financial position and now be in a position where he had a mortgage free home and some superannuation or savings. He could have sold the motor vehicles. His reckless conduct in moving illegally to the United States of America and then keeping the cars while they deteriorated is a consideration which cancels the 15% adjustment in his favour which would otherwise apply.
The wife’s care for A, financial and non financial, including managing her health problems means that a 2½% adjustment in her favour is appropriate.
Just and equitable
The husband receives 32½% of $695,000, the value of the house, and 47½% of $48,000, the value of the motor vehicles. The wife receives 67½% of the value of the house and 52½% of the motor vehicles. The just and equitable way to do this is to order that the husband retain the motor vehicles, that the wife upon payment of an amount to the husband retain the house and if not paid the house be sold to pay the amount you to the husband.
Husband
32½% of the house ($695,000) $225,875
47½% of cars ($48,000) $ 22,800
$248,675
Less cars $48,000 $200,675
Wife
67½% of the house $695,000 $469,125
52½% of cars $ 25,200
$494,325
I certify that the preceding one hundred and ten (110) paragraphs are a true copy of the reasons for judgment of Phipps FM
Date: 31 January 2012
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