Faulkner and Faulkner
[2011] FMCAfam 955
•4 November 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAULKNER & FAULKNER | [2011] FMCAfam 955 |
| FAMILY LAW – Section 75(2) adjustment. |
| Family Law Act 1975, ss.75(2), 106A Child Support (Assessment) Act 1989 Federal Magistrates Court Rules 2001 |
| Norbis & Norbis (1986) FLC 91-712 Ferraro & Ferraro (1993) FLC 92-335 AJO v GRO [2005] FamCA 707 Burgoyne & Burgoyne (1978) FLC 90 - 467 Farmer & Bramley (2000) FLC 93-060 Milankov & Milankov [2002] FamCA 195 Bonnici (1992) FLC 92-272 Z & Z (2005) FLC 93-241; McMahon & McMahon (1995) FLC 92-600 C & C (2005) FLC 93-220 Bania & Jacopo (No 2) [2011] FamCAFC 139 Pierce & Pierce [1998] FamCA 74 SJS & NS (2005) FLC 93-214 Clauson (1995) FLC 92-595 |
| Applicant: | MS FAULKNER |
| Respondent: | MR FAULKNER |
| File Number: | PAC 3518 of 2009 |
| Judgment of: | Harman FM |
| Hearing dates: | 1 – 3 August 2011 |
| Date of Last Submission: | 3 August 2011 |
| Delivered at: | Parramatta |
| Delivered on: | 4 November 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Batey |
| Solicitors for the Applicant: | Mark Brown & Associates |
| Counsel for the Respondent: | Ms Druitt |
| Solicitors for the Respondent: | Rowlandson & Co Solicitors |
ORDERS
That each of the parties shall forthwith do all things, sign all documents and give all consent and authorities necessary to cause the funds presently held on behalf of the parties in a solicitors controlled monies account to be distributed as follows and in the following priority:
a)In payment to Ms F of a sum of $23,756;
b)As to the balance then remaining to be distributed as to 75% thereof to the wife Ms Faulkner and as to the remaining 25% to the husband Mr Faulkner.
That pursuant to s.78 Family Law Act 1975 that each of the parties shall be and are hereby declared, as against the other, to be the sole and absolute owner of:
c)Any interest in real estate registered in the name of that party and including, in the case of the husband, the property Property G in the State of NSW;
d)All shares held by each party;
e)All motor vehicles in the possession of that party;
f)All monies in the possession custody or control of each party;
g)All contributions to or benefits or entitlements arising from membership of any fund of superannuation;
h)All chattels, personalty and furniture and furnishings held by each party.
That pursuant to s.106A of the Act and in the event that either party should fail, neglect or refuse to sign any document or instrument required by or to give effect to these orders then the Registrar of this Court shall be and is hereby authorised to sign all such documents and instruments in the place and instead of such party and to thereafter do all acts and things necessary to give full force, validity and operation to same.
That all outstanding applications and responses are dismissed.
That all issues be removed from the list of cases awaiting hearing.
That all exhibits and all material produced on subpoena shall, at the expiration of the Appeal period and upon no Appeal having been filed, be returned to the person or agency tendering or producing same or securely destroyed by the Court if such a request was made.
IT IS NOTED that publication of this judgment under the pseudonym Faulkner & Faulkner is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAC 3518 of 2009
| MS FAULKNER |
Applicant
And
| MR FAULKNER |
Respondent
REASONS FOR JUDGMENT
These are proceedings involving competing applications for property adjustment between Ms Faulkner who is the applicant wife in these proceedings and Mr Faulkner who is the respondent husband to the proceedings.
When the trial commenced the parties were also at issue with respect to parenting arrangements and an application under the provision of Child Support (Assessment) Act 1989. Those matters where resolved on the second day of hearing and orders made 2 August 2011 by consent.
HISTORY
These proceedings were commenced by way of application filed by the wife 4 March 2010.
On 15 June 2010 a response was filed by Mr Faulkner. That response joined parenting issues and this was so notwithstanding that final parenting orders had been made by consent between the parties 29 June 2009. In those proceedings, which where dealt with by way of an application for consent orders, the Husband was the applicant.
Each party has subsequently filed amended applications and responses and the orders proposed by them at trial where set out in case outline documents provided at or shortly prior to the commencement of the hearing.
Some ten days prior to the commencement of the trial an amended application was filed by Ms Faulkner which purported to join an application for departure under the provisions of the Child Support (Assessment) Act 1989. That application was faced with some opposition and particularly noting that:
a)The relief sought, whilst of a general financial nature and capable of being heard and determined at the same time as and based upon the same findings of fact as the application for property adjustment, was the joinder of a fresh issue; and
b)No copy of a current assessment was filed and, accordingly, the court was absent jurisdiction.
Ultimately as indicated that issue was resolved by consent as where parenting arrangements. That resolution did not occur, however, until the parties had attended, together with their children, upon a family report writer and a report had been produced as well as over one day of cross examination.
The parties attended a Conciliation Conference on 28 June 2010 and which was subsequently adjourned to 1 July 2010. The matter was not resolved at that conference and subsequently orders and directions where made which moved the matter towards trial and the ultimate listing of the proceedings for a three day hearing 1 – 3 August 2011. The matter was contained within the time allocated to it, largely as a consequence of the manner in which the case was conducted by Counsel for each of the parties which conduct is deserving of comment having been exemplary and an example to all litigants and legal practitioners who come before the Court as to the manner in which proceedings can and should be litigated with civility, cordiality, common sense, appropriate and frank concessions where required and a general demeanour of collegiality.
During the course of the hearing each party raised substantial issues regarding non production of information by the other and I will deal with those issues in a discussion of the evidence. Suffice to say that as the matter was ultimately heard and determined and as the parties gave their evidence the issues of apparent non disclosure where clarified through skilful cross examination and very little was left in dispute evidentially by the conclusion of the hearing.
The substantial asset of the parties is proceeds of sale of the former matrimonial home at Property W. That property had been sold prior to trial and a partial distribution of funds had occurred after payment out of a number of debts. Each party had received some funds and each had used or invested them differently. The balance of the proceeds of sale being a sum at trial (with accumulated interest) was $259,220.
The Parties Proposals
Mr Faulkner proposed, in accordance with his case outline and submissions, that contributions favoured him due to initial contributions allegedly made by him. It was suggested that this would entitle the husband to a finding of contribution of not less than 55% and a division of all jointly acquired matrimonial assets as at the date of separation in a similar or slightly lesser proportion. An argument was also raised in the husband’s case based on Norbis & Norbis (1986) FLC 91-712 seeking to apply an asset by asset approach regarding a property at Property G in which the husband now lives and which was acquired by him post separation. There is not issue as to that purchase or the circumstances of the purchase.
The wife ultimately proposed a 70% division of the matrimonial pool of assets in her favour and on a global basis.
As noted above there where very few issues as to the pool presently available for division between the parties and particularly by the conclusion of evidence. The parenting and child support issues where resolved on day two of the trial and as indicated whilst a substantial portion of the evidence particularly that of Ms Faulkner went to those issues I need not be concerned with them for the purpose of these reasons.
The Parties Evidence
I have read all of the material identified by each of the parties in their respective case outline document. In Ms Faulkner’s case this had included her amended application, case outline and trial balance sheet together with affidavits and financial statements sworn by her together with an affidavit of her present partner Mr S and her mother Ms F. An affidavit in the parenting proceedings by a Mr G was also read but ultimately was not relevant to this determination.
In the husband’s case I have read and considered his response and amended response together with affidavits and a financial statement sworn by him together with affidavits by each of his mother, father and sister.
Affidavits where sworn by valuers but ultimately their evidence was of no great significance as valuations were agreed.
There is a substantial quantity of agreed evidence in these proceedings. To deal with that evidence chronologically is instructive.
a)The wife was born [in] 1969 and is, accordingly, at trial 42 years of age.
b)Mr Faulkner was born [in] 1970 and is, accordingly, at trial 41 years of age.
c)In August 1995 the Husband purchased a property at Property W for approximately $260,000. It is asserted by the husband in his evidence and not substantially disputed by the wife that the funds required to purchase the property and to meet associated costs where derived from savings which the husband held at that time of approximately $26,000 together with a gift from the husband’s parents of approximately $60,000. The remainder of funds in the sum of approximately $180,000 where borrowed by the husband from the National Australia Bank and secured against title against the property.
d)Some time prior to the marriage the wife had also purchased a property in the form of a town house at [R]. That property was subject to a mortgage.
e)The parties commenced to live together at the time of their marriage [date omitted] 1997. At that time there is no real dispute between the parties that:
f)The wife owned:
i)her interest in the town house in [R] subject to a mortgage;
ii)superannuation entitlements of modest value;
iii)a share portfolio of modest value;
iv)savings in the nature of a term deposit which was, again, of modest amount.
g)The husband owned:
i)The property at Property W subject to a mortgage and the loan from his parents; and
ii)Modest superannuation entitlements.
h)At the commencement of cohabitation and following marriage the parties lived for a period of approximately 12 months with the wife’s parents.
i)
In 1998 the parties commenced to reside with the husband’s parents and continued to do so for approximately 18 months. During this period the parties demolished the existing home on the Property W land and built a new home. There is significant dispute between the parties as to whether payment was made by them or by the husband to the husband’s parents whilst living with his parents. It is asserted in the wife’s evidence that there had been a discussion between the husband and wife that a sum of $100 per week would be paid. However it was conceded by
Ms Faulkner in her evidence that she had left any payments that where to be made to Mr Faulkner. Mr Faulkner’s evidence, together with that of his parents, is that nothing was paid. There is no factual dispute between the parties that no payment was made to the wife’s parents during the period of residing at their home.
j)Clearly Mr Faulkner, in his occupation as an [omitted] was able to undertake [omitted] work to the new home with a saving to the parties. It is asserted by Ms Faulkner that she otherwise assisted in all other work and including through picking colour schemes, painting and the like. Ultimately and in the overall context of contributions by these parties I am not satisfied that anything significant turns upon the minor differences in their evidence.
k)At the commencement of the parties’ relationship the wife was a full time student studying to become qualified as a [omitted]. The wife subsequently completed her studies and became so qualified.
l)The first of the children of the marriage, [X] was born [in] 2000 and the wife ceased employment shortly prior to his birth.
m)In June 2001 Ms Faulkner recommenced employment [omitted] on a casual basis two days per week. However, this was short lived and in December 2001 the wife ceased employment. This departure from employment was shortly prior to the birth of the second of the two children of the relationship [Y] who was born [in] 2002.
n)In July 2003 Ms Faulkner returned to employment doing casual [omitted] for up to 18 hours per week.
o)It was following [Y]’s birth the parties then, in 2004, commenced constructing a new dwelling at Property W.
p)Once the new home at Property W was completed the parties returned to live there. It would not appear disputed between the parties that the funds to meet the construction costs where derived from the sale of the wife’s [R] property and a mortgage with the Commonwealth Bank of Australia. The parties are not substantially in dispute regarding that portion of the construction although they are more at odds in their evidence as to who undertook what work to assist in the construction. Each party claims a different level of credit for direct contributions towards construction.
q)The town house owned by the wife had been sold in July 2002 and net proceeds of $154,000 was received, subsequently invested and then applied towards the construction of costs.
r)After completion of construction of the new home at Property W the parties borrowed a sum of $260,000 from the wife’s parents. The wife’s father has subsequently passed away but the wife’s mother Ms F has continued to assist the wife, and prior to separation, both parties financially. The funds borrowed from the wife’s parents of $260,000 where lent on the basis of a written loan agreement and provided for payment of interest at 5%. The funds lent by the wife’s parents where used to discharge the mortgage that had been obtained from the Commonwealth Bank.
s)In 2005 the parties borrowed a further sum of $28,000 from the wife’s parents which was used to purchase the Toyota Aventis motor vehicle still in the wife’s possession.
t)During the relationship it is also contended and does not appear to be significantly in dispute that gifts and other gratuities from the wife’s parent totalling approximately $68,000 where provided.
u)In April 2008 the husband left his then employment as an [omitted] and commenced his own business as an [occupation omitted] trading under the business name “[G]”. The husband continues to operate this business.
v)Prior to separation the wife had ceased paid employment and so as to devote herself to the care of the children on a full time basis. This has continued to date.
w)
On 18 September 2008 the parties separated. At this time
Mr Faulkner left the former matrimonial home and the wife continued to occupy that property with the children for some little time. Ultimately the home was listed for sale and sold. During his evidence Mr Faulkner conceded that he had indicated to the children or at least one of them words to the affect “you can’t live there because mummy’s with [Mr S]” [being the wife’s present defacto partner Mr S with whom the wife had by the time of that conversation formed a relationship].
x)Following the sale of the matrimonial home on 3 December 2010 the net proceeds of sale then received would distribute as follows:
i)In payment to the wife’s parents of a sum of $249,000. An amount of a little over $23,000 remains outstanding to the wife’s parents;
ii)In payment to the wife $380,789;
iii)In payment to the husband $143,163;
iv)Transfer to a controlled monies account for investment on behalf of the parties $253,625. This sum has, with accumulated interest, grown, by hearing, to an amount of $259,220.
y)Prior to the sale of the matrimonial home and post separation the husband had purchased the property in which he is presently residing being a home at Property G. The property was purchased for $650,000 and a mortgage in the sum of $700,000 was obtained and secured against both against Property G and the former matrimonial home at Property W.
z)Following purchase of the property the husband realised that he did not need funds of the magnitude that he had borrowed and accordingly not all funds where drawn down and ultimately the mortgage was renegotiated and refinanced to a smaller amount.
aa)At the time of the purchase of Property G the husband was living with his parents and continued to do so until shortly prior to the trial. During this period the Property G property was tenanted and the husband made a net rental loss of approximately $11,000 for the period which was included in the husband’s income tax return and which reduced his income for tax purposes. This would have provided some taxation benefit to the husband but this has not been quantified in the evidence.
bb)Prior to the sale of the former matrimonial home and in January 2010 Ms Faulkner commenced to cohabit with her partner Mr S at [omitted] which is no substantial distance from the husband’s past or present residence.
As indicated and during the course of this hearing parenting arrangements have been resolved between the parties which will now see the children shared between their parents on what would be described, within the terminology of Part VII, as a substantial and significant time arrangement. The children live primarily with their mother and spend time with their father from Thursday – Monday each alternate weekend and from Thursday - Friday in the intervening week. School holidays are shared and other provisions made for the children’s care and decision making.
The parties have also entered into a child support agreement as between themselves which increases the rate of child support to be paid by Mr Faulkner in the future. At all times since separation child support assessments have been in force although these have been for modest amounts and, at the time of trial, approximately $80 per month. It was conceded that additional sums where paid by Mr Faulkner but the value of the additional sums, as regards the payment of school fees, purchase of clothing and the like where in dispute. Monthly payments made by Mr Faulkner were some $20-30 per month more than assessed. However, even at that level of payment the amount paid by
Mr Faulkner on a weekly basis represents less than 5% of the amount that he is and was paying with respect to the mortgage encumbering the home in which he now lives.
Disputed Facts and Issues Arising from Cross Examination
Unusually there were relatively few factual issues between the parties at the commencement of their evidence. At the conclusion of evidence there were even less factual issues between the parties and whilst credit may be of some assistance in dealing with those issues, had they been substantial, the magnitude of dispute is not such that I need make any significant finding of fact adverse to either party or their credit.
Each of the parties gave their evidence in what I accept was a frank and candid manner and doing the best that they could. Clearly
Ms Faulkner’s recollection of detail and events was superior to that of Mr Faulkner and her understanding and comprehension of financial concepts was more sophisticated than that of Mr Faulkner. That would lend some weight to support Ms Faulkner’s contention that she had been of substantial assistance, if not instrumental, in assisting with the running of day to day finances within the household.
Very little turns upon any other factual issue between the parties with respect to property adjustment. The issues between the parties are significantly more legal than factual. These are particularly related to:
The Treatment of Initial Contributions
There is no dispute between the parties as to what they each owned at the commencement of the relationship (other than minor differences as to value). However, significant issues arise from the manner in which I am invited to deal with those initial contributions being:
a)The wife asserts that the proceeds of sale of her property at [R] (representing $154,000 at the time of sale) should be included as her “initial contribution”. Mr Faulkner, for his part, contends that the historical valuation obtained by him, which purports to fix the value of the property at the date of marriage, is that which should be taken into account as the wife’s initial contribution.
b)Whether the Property G property, purchased by Mr Faulkner post separation, should be included as an asset for division between these parties or whether, instead, the funds that where received by him by way of partial distribution from the proceeds of sale of the Property W should, instead, be included they having been applied, in turn towards the purchase of Property G.
The other issues that arise between these parties largely, again, relates to the legal interpretation or “gloss” to be applied to the parties’ evidence. These include issues as to:
a)Whether either party has made the greater home maker or parent contribution both during the relationship and post separation;
b)The manner in which post separation contribution should be treated, particularly the purchase of the Property G property and/or the wife’s support from her partner Mr S and/or borrowing of funds from him;
c)Whether any adjustment should be made in favour of the husband and/or the wife having regard to s.75(2); and
d)The wife’s presently unutilised earning capacity and a general consideration of the financial resource represented by her partner.
Evidence, Disclosure and Credit
At the commencement of the trial each of the parties suggested that there where issues regarding the others failure to provide proper disclosure particularly regarding present circumstances, post separation dealings and use of assets.
Material was certainly produced late in the proceedings by
Mr Faulkner and this had extended to and included his affidavit material some of which was filed, in fact, the working day prior to the trial. Whilst the husband can be criticised for this I am not satisfied that blame can rest solely with one party as these proceedings had been on foot before the Court for well in excess of 12 months and steps must and should have been taken by both parties to both provide full and frank disclosure and require and demand it of the other.
Whilst the matter has been before the Court the parties have participated in conciliation processes with the assistance of a Registrar. Prior to commencing the proceedings pre action procedures, as described by the Federal Magistrates Court Rules 2001, require that both parties provide, without request or invitation, full and frank disclosure.
It is unacceptable in this day and age and with the resources made available through the court and directly available to these parties (as represented by their asset pool available for distribution) that matters should be made more complex, delayed or time taken at trial in negotiating the production of material. Parties must and should be properly directed by the Court at the earliest possible stage to provide full and proper disclosure.
The provision of disclosure in this fashion is fundamental to aid and assist the parties to receive the best possible advice based upon their legal representatives having been provided with full and proper instructions. Only following proper disclosure can parties, with the aid of their legal representatives fully advance their position and assess and determine the desirability of offers of settlement (whether put or received) and to generally conduct the matter so as to determine issues in dispute and the material that must be filed by them to address those issues.
The absence of full and proper disclosure by either party (and I have referred to the husband’s late filing and non discloser at this time but will also address Ms Faulkner’s) impedes the proper administration of justice, inflates costs, inflates the degree, nature and intensity of the dispute between parties and does all unnecessarily.
The wife was criticised for the failure to provide full and proper disclosure with respect to a number of issues and particularly relating to post separation issues arising from her relationship with Mr S.
A very substantial subpoena, calling for the production of documents as enumerated in three pages of detail, had been served upon Mr S. Mr S had lodged a Notice of Objection to the subpoena which objection had been adjourned to the first day of trial.
A call was made upon the subpoena and a small volume of material produced. That material could not and did not answer each of the 25 paragraphs that where called for by the subpoena.
As events ultimately transpired and through judicial intervention concession was made that Mr S was a person of substantial income and assets. Indeed it was conceded that those assets included holdings by him with a net value in excess of $2 million and an income that comfortably met all of his households expenses including discretionary or lifestyle expenditure and with a surplus of not less than $23,000 nett per annum.
Mr S was cross examined for some little time about his income and the substantial excess of income over expenses (including expenses for
Ms Faulkner who is not working and her two children who live as part of their household together with Mr S’s two children).
As events ultimately transpired and on the basis of the above concession by Mr S it was not necessary to further deal with the subpoena served upon him. However, I note that Mr S’s objection had been broadly expressed in terms that he did not feel that it was appropriate that he be required to produce such extensive material regarding his financial position when he was not a party to the proceedings. That might well be interpreted, in lay terms, as being an invitation to the Court to strike out or read down the subpoena as being oppressive.
Had such an application been made (and Mr S appeared in person and Ms Faulkner’s solicitors where not retained or instructed by him other than for the limited purpose of producing through them the material that he had provided) the application would, in all probability, have found favour. I do not consider it appropriate that the defacto partner (or husband or wife) of a party involved in financial litigation before this Court should, in the absence of clear evidence to indicate the relevance and significance of same, be required to produce such Volumous and oppressive documents as where called for from Mr S such as:
·Originals of copies of all cheque books, cheque butts, deposit slips, statements of accounts, passbooks, computer print outs, deposit books, ledgers, certificates of deposit or other records with respect to any investments, saving, trading or loan account conducted with any bank, building society or other financial institution by your or by any company or business of which you are a share holder, proprietor or partner.
·Originals of copies of all service agreements, pay advice slips, wage advices, group certificates and other records relating to your gross earnings, benefits received from your employer, income tax and other deductions for the past three financial years.
·Copies of all credit card statements, contracts, deposit slips, records of payments or expenditure relating to any company, firm, partnership or business at which you are or were a share holder or entitled to receive a share of profits or receipts for the last three financial years, etc.
A point of practical reality must be reached in proceedings which includes the realisation that the only relevance of the financial affairs of the partner of a party to proceedings is the extent to which either:
a)they might be suggested to be joint owner of property or joint conspirator with a party to the relationship or;
b)they represent a financial resource to that party.
The concession made by Mr S as to his financial position can and should appropriately address such an issue without requiring the production of minutia of detail in relation to his private affairs.
The matters addressed above ultimately are not an issue of credit for either party as clearly, and as the evidence has fallen, there is no significant factual dispute between the parties as to the issue and appropriate concessions where made regarding financial dealings since separation.
Concessions had extended to a concession by Mr Faulkner as to the use of funds by him to not only apply towards purchase of the Property G property but the discharge by him of a line of credit account which had been maintained by the parties in prior years and to meet what where ultimately conceded as joint living and other expenses. To the extent that those funds where applied by the husband I am satisfied that they can and should be treated as a distribution of joint funds towards the discharge of a joint debt.
Legislative Framework
A four step approach has been established since the commencement of the Family Law Act 1975 in dealing with property proceedings (see Ferraro & Ferraro (1993) FLC 92-335 & AJO v GRO [2005] FamCA 707). The Court is required to:
a)Identify the pool of property (and usually to do so on the date of trial)
b)Assess the respective contributions of the parties
c)Determine what adjustment if any should be made due to a consideration of relevant factors under s.75(2);
d)Consider whether the outcome arrived at by such findings as have been made regarding the above three steps represent a just and equitable outcome and distribution of assets.
Section 79 of the Act (which invests the Court with power to make orders with respect to property adjustment), requires that the Court make such order as is just and equitable.
As was observed by the Full Court in Burgoyne& Burgoyne (1978) FLC 90-467:
“it is impossible for the Court to determine whether any particular order is just and equitable without first determining the nature and extent of the properties of the parties at the time the Court is making orders”.
What is the Asset Pool?
The asset pool available for distribution at the date of trial is largely agreed between these parties and is set out below.
| Asset | Value |
| Sale proceeds Property W | 259,220 |
| Property G | 725,000 |
| Partial distribution to wife | 380,789 |
| Hilux | 8,800 |
| Wife's shares | 26,410 |
| Husband's shares | 961 |
| Toyota Avensis | 18,000 |
| Husband's tools of trade | 5,000 |
| Total | 1,424,180 |
| Superannuation | |
| Wife's [1] | 14,225 |
| Husband's [2] | 53,200 |
| Total | 67,425 |
| Total Assets and Superannuation | 1,491,605 |
| Liabilities | |
| Debt to Ms F (wife's mother) | 23,756 |
| Mortgage Property G | 514,147 |
| Total | 537,903 |
| Nett available for distribution | 953,702 |
With respect to that asset pool there are a number of items referred to in the parties evidence which I have not included and I specifically deal with these as follows:
Bank Accounts:
Each of the parties have modest credit balances held by them in savings accounts at the date of trial.
It would appear to be common ground that at the date of separation the parties divided between them such modest savings as they held and that since separation each has continued to apply their income (whether from personal exertion, interest or otherwise) towards the accumulation of monies.
Since separation the wife has accumulated some small amount of savings. However, during this period I note that there has been a substantial contribution towards her support from Mr S and she has received a most modest level of child support.
Similarly Mr Faulkner has accumulated savings both in his own name and more substantially, although still modest, in his business account. However, with respect to the business account I note that there would be expenses which are clearly not in evidence before the Court but which as a matter of practical reality the husband would be required to meet from those funds including accumulated GST and tax liabilities, trade creditors and the like.
For the above reasons I do not propose to take into account or prescribe any value to the bank accounts that each party presently holds and each will retain their own.
Furniture
Each party makes allegations regarding who has retained what items of furniture and each ascribes a value to that which they believe the other party holds. However, there is no evidence of probative value as to the value of the items held and the best that I could do would be to make findings based on admissions against interests by both parties as to the furniture they hold and such admissions are largely equally and modest. Accordingly I again do not propose to include any value for furniture and personalty that each party retains.
Legal Fees
Whilst neither party cavils with the proposition that legal fees can and in some circumstances should be included as an add back or notional property (particularly when those fees have been met from an expenditure of matrimonial capital) neither party agitates for that approach in this case, nor would it appear warranted.
Mr Faulkner’s evidence is that his legal fees have principally been met by his parents save for one or two small amounts paid by him from his business account early in the conduct of the matter. Accordingly
Mr Faulkner has either received the benefit of those fees being paid as a gift or has a corresponding debt to his parents.
Ms Faulkner similarly has had the benefit of the largesse of Mr S in meeting legal fees paid by her or on her behalf to date and she gave evidence of a corresponding debt.
On the above basis I am satisfied that nothing would be achieved by seeking to include paid legal fees and that I could not justify doing so without including the corresponding debts and thus the exercise would produce no net difference.
The husband’s business
I have not included any value for the husband’s business operated by him as a sole trader under the trading name “[G]”. There is not evidence as to the value of the enterprise and the husband’s evidence is clear that he is a sole trader with no employees and receives no other assistance. On that basis I am satisfied that the only amount that can or should be included is the value of tools of trade conceded by
Mr Faulkner as an admission against interest.
The line of credit loan
I have not specifically included this as a liability as:
a)It has been discharged
b)Whilst it was discharged by the husband from the funds that he received from the sale of the principal asset there has been the usage of those funds in total including the purchase of the Property G property
c)The funds otherwise retained by the husband where used by him to discharge the debt and represent the discharge of a joint liability by application of joint funds.
On the basis of the above and by reference to the above balance sheet I am satisfied that the assets available to divide between the parties, including superannuation and after allowance for agreed liabilities, is a sum of $953,702.
Asset by Asset or a Global Approach
It is asserted in Mr Faulkner’s case that I would approach his interest in the Property G property separate and distinct from all other assets of the parties and that I would adopt, by reference to Norbis & Norbis, an asset by asset approach at least in relation to that specific asset.
This argument would appear to be advanced on the basis that:
a)The husband received funds from the sale of matrimonial property and he chose to invest those funds in the Property G property;
b)The wife has made no contribution to the Property G property as the husband has purchased it post separation and through use of the funds that he retained;
c)To count the funds retained by the husband as well as the asset acquired by him would be a duplication and unfair (and I accept that portion of the submission unreservedly).
The Full Court has been clear in a number of authorities including Farmer & Bramley (2000) FLC 93-060 that post acquired assets are not excluded from consideration by the Court. This has been repeated in a number of other cases including Milankov & Milankov [2002] FamCA 195 and Bonnici (1992) FLC 92-272.
Whilst the Full Court had accepted in Norbis that an asset by asset approach can be taken in some circumstances caution was also urged. A number of categories are identified as appropriate for such an approach including in broad terms:
a)Where the parties had already informally divided property at separation and a lengthy period had then passed by finalisation of proceedings. I am not satisfied that the circumstances of this case would fall within that category as recognised in Z & Z (2005) FLC 93-241;
b)Where an asset had been received, particularly if received from a third party source, late in the marriage and an adequate or just and equitable settlement could not be achieved without adopting that approach (as recognised in Bonnici). Again I am not satisfied that such authorities would have application to this case.
c)Where the relationship has been short and the parties have not substantially intermingled their finances (such as referred to in McMahon & McMahon (1995) FLC 92-606). Again, that could not apply to the circumstances of this case.
d)Where valuation methodology, particularly with respect to superannuation, would produce an unjust outcome due to future exigencies and uncertainties (see C & C (2005) FLC 93-220). That also is not applicable in this case.
I propose to include the Property G property as part of a global distribution of assets between the parties and noting that the asset exists at this time, has come into being through a series of transactions between the parties and, again, as observed by the Full Court in Norbis, to do so would create an unnecessary complexity of considerations and would represent an injustice having regard to the balance of transactions that have occurred since separation particularly regarding child support.
Initial Contributions
Substantial issue arose as to how the contributions by each of the parties at the commencement of the relationship should be treated.
As indicated above there is no issue that the husband owned the Property W property at the commencement of the relationship. However, that property has changed substantially in nature since the relationship commenced and that has occurred through a number of circumstances including the intermingling of funds between these parties. It could not, in any way, be said that the Property W property at the time of its sale was the same as the property that the husband introduced to the marriage.
Agreement was reached between the parties at the commencement of the trial that the Property W property had a value of $305,000 at the date of marriage and subject to the mortgage then encumbering it.
The more substantial issue relates to the wife’s property at [R] and as to whether it should be valued historically as to its worth and equity at the commencement of cohabitation or whether the funds ultimately received and applied (not insignificantly towards the construction of the new Property W home) should be taken into account.
By reference to recent Full Court authorities such as Bania & Jacopo (No 2) [2011] FamCAFC 139 as well as older authorities such as Pierce & Pierce [1998] FamCA 74 and SJS & NS (2005) FLC 93-214 I am satisfied that I should approach the contributions of these parties by reference to the totality of same rather than seeking to individually quarantine particular transactions.
Authorities such as Pierce & Pierce and AJO v GRO I am satisfied that the initial contributions of each party are not a special contributions but simply contributions that have occurred at a particular point in time and which must be weighed and balanced against all other contributions made throughout the totality of the parties relationship with each other prior to hearing.
The wife’s property at [R] would certainly appear to have had a lesser value at the date of cohabitation than when it was ultimately sold. However, I still consider that it is inappropriately and unjustly artificial to seek to crystallise the value of that asset at any particular point in time when there is not dispute that at the time that the property was liquidated and funds introduced to the benefit of both parties (in constructing a new home at Property W) that the property had increased in value and then realised $154,000. That is the amount that the parties received the benefit of not some lesser amount.
If the property had created any substantial burden which had required financial or other contribution by the parties my approach may well have been different. However, the evidence of Ms Faulkner, which I accept (and to some extent as is corroborated from material produced by her whether by annexure to her affidavit or tendered):
a)The property was tenanted from cohabitation to sale;
b)The rent paid by tenants met and funded the property including mortgage payments and other outgoings; and
c)The parties where not required to make any additional contribution to meet short falls or the like.
In short the property was revenue neutral from cohabitation until its ultimate sale and as a consequence represented an asset which simply accumulated in value through no effort or exertion by either party but rather through the passage of time and fluctuations in real estate markets.
The Husband certainly asserts that he had made a greater contribution as at the date of cohabitation and that this contribution should not be rendered nugatory through the passage of time. However, again by reference to authorities such as Pierce & Pierce and AJO v GRO, I am satisfied that:
a)The funds ultimately introduced by the wife from the sale of the [R] property placed their respective initial contributions, once realised, in relatively equal standing.
b)The asset which the husband introduced was been so intermingled and so changed through joint endeavours and intermingling of initial contributions as to be indiscernible;
c)The injection of funds by the wife from the sale of the [R] property, in large part, made the construction of the new home possible and
d)The contributions as a whole made during the relationship and including the substantial and direct and indirect financial contributions made by the wife as a consequence of the reduced interest rates on loans from her parents on flexible terms as well as gifts from her father outweigh those of the husband.
Whilst the parties have been at odds with respect to their contributions during their relationship I note and accept Mr Faulkner’s evidence as to his working hours during the relationship being 10 – 12 hours a day for 5 – 6 days per week. On that basis and by irresistible inference the majority of homemaker and parent contributions must have been made, at least as to quantum, by Ms Faulkner. Ms Faulkner had at all times during the relationship the primary care of these children, limited her work hours or abandoned paid employment and, accordingly, reduced or abandoned her income and ongoing employment entitlements and history to her detriment and so as to provide as a homemaker, parent and wife.
Having regard to all of the above matters I have difficulty in accepting the Husband’s assertion that his contribution has been greater and, indeed, I am satisfied that the wife’s contribution has been greater.
Post separation I am satisfied that the wife has similarly had the burden of the children’s care and has done so with extremely modest financial assistance from Mr Faulkner. During a period in time when Ms Faulkner was receiving an amount of approximately $100 per month in child support (and it had only increased to that amount some time after separation) Mr Faulkner was in a position to purchase his present home at Property G and to do so by meeting mortgage payments of approximately $850 per week. At that time Mr Faulkner’s contribution towards the children’s expenses (and accepting that the children were spending time with Mr Faulkner for five nights per fortnight and accordingly receiving some benefit from that accommodation expense) Mr Faulkner was making a contribution of less than $20 per week for the children’s care, maintenance and support.
Having regard to the contributions made by the parties at all times in their relationship and on an ongoing basis I accept the argument as to Ms Faulkner’s contribution in the range of 60%.
Section 75(2) Adjustments
Section 75(2) requires that I consider a number of matters which would, but for the present financial circumstances of Ms Faulkner’s cohabitation, substantially and significantly favour her.
It is argued in Mr Faulkner’s case, if I apprehend it correctly, that as
Ms Faulkner has, as it were “married well”, that I should temper any adjustment in her favour or, indeed, make an adjustment in
Mr Faulkner’s favour bearing in mind the substantial financial resource that Mr S represents to Ms Faulkner. I am not satisfied that this can or should occur at least to the extent that it would produce an adjustment in Mr Faulkner’s favour. I am satisfied, however, that I must take the financial circumstances of that cohabitation into account and that it could well have the affect of tempering the adjustment that I might otherwise make in favour of either party.
Each of the parties are of similar age and state of health.
Neither party has any impediment to gainful employment in the future although, by reference to s.75(2)(l), I note that Ms Faulkner presently wishes to continue in the role of homemaker and parent particularly whilst these children are very young.
Ms Faulkner has the primary care and control of the children of the relationship, particularly during the working week, and wishes to continue to do so.
Both parties have commitments necessary to enable them to support themselves and their children but no other person.
The standard of living that both parties are presently maintaining favours Mr Faulkner as Ms Faulkner is clearly in a better position having regard to the assets, resources and income available to her through Mr S and the support, that without challenge, he is providing to her. However, Mr Faulkner has also, since separation, been able to establish himself in comfortable accommodation of equal standard to that previously enjoyed albeit he has an ongoing mortgage cost as a consequence.
The orders that would be made by me would not in any way affect any third party creditor or any third party on any basis.
The parties have been married for a moderate length of time and certainly in excess of the statistical average.
The earning capacity of the parties has not been affected negatively by the relationship. Mr Faulkner has asserted that both through his efforts and those of his parents (in providing accommodation and child minding) that Ms Faulkner has been assisted in completing her education and, accordingly, enhancing her future earning capacity. I do not accept that this is a relevant consideration in the context of this matter and to place any substantial weight upon this indirect contribution towards Ms Faulkner completing a course of study that she had already embarked upon at the time of marriage would be to obviate against the very nature of marriage and its bedrock of mutual support by each to the other.
I must take into account the financial circumstances of Ms Faulkner’s present relationship with Mr S particularly noting the income and assets that he has disclosed. However, I am satisfied that this does not cause Mr S to adopt or inherit the obligation to support the two children of the relationship which he has, to a large extent, take on of necessity since separation as Ms Faulkner has not been in paid employment and has not received any significant child support. Mr S has been happy to meet that obligation but it is not his obligation but rather that of the children’s parents. Ms Faulkner has borne the brunt of that obligation.
Overall I am satisfied that a balancing of all relevant s.75(2) considerations would result in a 5% adjustment in Ms Faulkner’s favour.
I accept that Ms Faulkner has an earning capacity at present should she wish to return to full time [omitted]. However, Ms Faulkner has never held a full time [omitted] position, has largely worked in casual or part time employment and for limited periods of time and, in any event, has given clear evidence that she wishes, at this point in time, to continue as a full time homemaker and parent at least until her children are a little older and without having to then place them into day care or before and after school care when she is available and able, through the lucky circumstance of her relationship with Mr S, to be so available.
Justice and Equity
The Full Court has made clear, through authorities such as Clauson & Clauson (1995) FLC 92-595 that the Court has a broad discretion but that such discretion must be exercised by looking back upon the proposed division and being satisfied that it is just and equitable and that it represents a division of assets and resources between the parties which reflects their contributions and which addresses and meets their future need.
The Full Court has similarly clear through authorities such as C & C that the Court can deal with superannuation interests in such manner as it considers appropriate in the specific context of each case.
In this case neither party has urged the Court to make an order for superannuation splitting and the entitlements of each party, though disparate, are modest. There is no evidence before the Court of procedural fairness having been given to any superannuation fund and, accordingly, I am satisfied that I can and should proceed with the approach urged by the parties to simply include the value of superannuation as part of the total pool for division and for each to retain such modest benefits as they have.
Overall and having particular regard to:
a)The fact that Mr Faulkner has been able to rehouse himself since separation;
b)The fact that Ms Faulkner will continue with the substantial full time care, particularly during the working week, of the two children of the relationship who are quite young and;
c)The overall contributions made during the relationship including the substantial and direct and indirect contributions made by, through or on behalf of the wife by her parents that the adjustment that would be arrived at through the findings of contribution and s.75(2) adjustments as I have referred to above are appropriate and just and equitable.
Accordingly I propose to make orders which will result in a 65%/35% division of the present pool of property available for distribution.
On the basis that the net asset pool has a value of $953,702
Ms Faulkner would then need to receive $619,906.
Ms Faulkner already has the benefit of:
a)a partial distribution of funds from the sale of the Property W property - $387, 789
b)her motor vehicle - $18,000
c)her shares - $26,410
d)her superannuation - $14,225
Total $439,429
If the value of assets held by Ms Faulkner ($439,429) are deducted from the amount she is entitled to receive ($619,906) then Ms Faulkner will need to receive a further sum of $180,477.
From the invested funds of $259,220 the parties agree that
Ms Faulkner’s mother is still owed a sum of $23,756 and this must accordingly, be paid from that sum and deducted before distribution to the parties. This would leave a net amount available to divide between the parties of $235,464.
If Ms Faulkner is to receive $180,477 from this fund then this would represent, by a rounding of percentages, a 75%/25% division of that fund and I propose to order accordingly.
I certify that the preceding one hundred and one (101) paragraphs are a true copy of the reasons for judgment of Harman FM
Date: 19 September 2011
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