Felton and Felton
[2009] FMCAfam 662
•28 October 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FELTON & FELTON | [2009] FMCAfam 662 |
| FAMILY LAW – Property – financial contributions made prior to the parties’ relationship – whether loan from husband’s parents a matrimonial liability – parties joint registered proprietors of commercial property – lease over commercial property continuing – orders to finalise financial relationship between the parties. |
| Family Law Act 1975, ss.75(2), 79(1), 79(2), 79(4), 81 |
| In the Marriage ofHickey (2003) 30 Fam LR 355; (2003) FLC 93-143 In the Marriage of Pierce (1998) 24 Fam LR 377; (1999) FLC 92-844 |
| Applicant: | MS FELTON |
| Respondent: | MR FELTON |
| File Number: | MLC 11465 of 2008 |
| Judgment of: | Monahan FM |
| Hearing date: | 13 May 2009 |
| Date of Last Submission: | 14 May 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 28 October 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Whitchurch |
| Solicitors for the Applicant: | Aughtersons |
| Solicitor for the Respondent: | Mr Munt |
THE COURT ORDERS THAT:
Subject to Order 5 herein and any agreement between the parties to the contrary, the parties do all acts and execute all documents necessary to list for sale by private treaty the properties situate and known as Lots [omitted], Property G, [E], in the State of Victoria (“the commercial property”) by no later than 4.00 pm on 1 July 2011 at a reserve price agreed between the parties or failing agreement by no later than
4.00 pm on 31 July 2011 at a price fixed by the President for the time being of the Real Estate Institute of Victoria and upon sale to distribute the proceeds of sale as follows:
(a)in payment of real estate agents’ commission on the sale;
(b)in payment of any capital gains tax liability owing in respect of the disposal of the commercial property;
(c)in payment of proper legal costs and disbursements of and incidental to the sale; and
(d)in payment of the balance remaining to the wife 55% and to the husband 45%.
Subject to Orders 1 and 5 herein, in the event that contracts of sale of the commercial property by private treaty have not been exchanged by 4.00 pm on 1 July 2012 or within such further time that the parties may agree in writing, then the parties shall forthwith upon expiration of the said period of ninety (90) days do all such things and execute all such deeds, documents and instruments as may be necessary to procure a sale by public auction of the commercial property and the reserve price be as agreed between the parties or, failing agreement, as nominated by the auctioneer agreed to by the parties, or failing agreement, as nominated by the President for the time being of the Real Estate Institute of Victoria, and upon completion of the sale, the net proceeds be applied:
(a)in payment of auctioneers’ commission, expenses and advertising fees;
(b)in payment of any capital gains tax liability owing in respect of the disposal of the commercial property;
(c)in payment of all proper legal costs and disbursements of and incidental to the sale; and
(d)in payment of the balance remaining to the wife 55% and to the husband 45%.
In relation to Orders 1 to 2 herein, in the event that the parties cannot agree on the identity of the real estate agent and/or auctioneer to conduct the aforesaid sale by private treaty or auction sale, the real estate agent and/or auctioneer will be as nominated by the President of the Real Estate Institute of Victoria.
In relation to Orders 1 to 2 herein, in the event that the parties cannot agree on the identity of a solicitor and/or conveyancer to legally act for the parties in the conveyance of the commercial property, the solicitor and/or conveyancer will be as nominated by the President of the Law Institute of Victoria.
At any time prior to the sale of the commercial property by private treaty or auction, the husband may purchase the wife’s interest in the commercial property at a price agreed between the parties, and in that event, the husband will thereafter indemnify the wife in respect of any capital gains tax liability owing in respect of the commercial property.
Until such time as the commercial property is sold by private treaty or auction or the husband exercises the option to purchase the commercial property pursuant to Order 5 herein, the net rental proceeds (after payment of all rates and charges and agent fees) from the commercial property be distributed as at 1 July 2009 as follows:
(a)to the wife 55%; and
(b)to the husband 45%.
The husband be responsible for and indemnify the wife in relation to the payment of all rates and charges and agent fees due or accrued by
1 July 2009 in respect of the commercial property.
Within seven (7) days of the date of these Orders the husband shall authorize his solicitors, Alan J Munt to pay the following amounts from the net proceeds of sale of the former matrimonial home, being $230,196 held on trust, to:
(a)Mr F and Ms F the sum of $15,000;
(b)the Australian Taxation Office the sum of $ 20,000;
(c)the wife the sum of $107,357.80; and
(d)the husband the balance remaining being $87,838.20.
The husband forthwith retain all his interest in [P] Pty Ltd (“the business”) including his interest in all assets of the business.
The husband forthwith indemnify the wife against all liabilities in respect of the business.
The husband forthwith transfer to the wife at his expense all his interest in the Nissan Patrol motor vehicle.
Except as is otherwise provided in these Orders:
(a)each party is solely entitled to any real property, motor vehicle, monies on deposit, chattels, furniture, superannuation entitlements and items of personalty (including choses-in-action) in their respective ownership and/or possession as at the date of these Orders;
(b)insurance policies remain the sole property of the owner/beneficiary named thereon/in; and
(c)each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
All extant applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Felton & Felton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 11465 of 2008
| MS FELTON |
Applicant
And
| MR FELTON |
Respondent
REASONS FOR JUDGMENT
Introduction
Following the breakdown of their marriage, MS FELTON (“the wife”) and MR FELTON (“the husband”) are in dispute in relation to the division of their matrimonial property.
The matter came before me initially on 28 January 2009 and on that occasion various procedural orders were made by consent, including an order that the parties obtain a valuation of the two blocks of land in [E] and an order for a conciliation conference. Unfortunately, the parties were unable to resolve their dispute at the conference.
The matter came before me for final hearing on 13 and 14 May 2009. Both parties were legally represented at the final hearing.
In her ‘Minute of Proposed Orders’ handed up to the Court on the final day of the hearing, the wife proposes orders that the net proceeds of the sale of the former matrimonial home be applied to firstly repay outstanding loans to the husband’s parents and the Australian Taxation Office and the balance to then be paid to the wife. The wife also seeks orders that her interest in the [E] properties be transferred to the husband and contemporaneously, the husband pays her the sum of $120,000. The wife seeks an order that the [E] properties be sold if the husband fails to pay her $120,000. The wife also proposes an order that the husband indemnify her against all liabilities associated with the husband’s business and entities. The wife further seeks an order that both parties retain their respective superannuation entitlements and that the husband transfer his interest in the Nissan Patrol motor vehicle to the wife.
In his ‘Minutes of Proposed Orders’ provided to the Court on 12 May 2009, the husband proposes orders that the asset pool (comprising the net proceeds of the sale of the former matrimonial home, the [E] properties, the parties’ respective motor vehicles, business tools and horse related equipment) be divided 60% to the husband and 40% to the wife. The husband also proposes that the various outstanding loans and debts due, be paid from the net proceeds of the matrimonial home prior to the distribution of the asset pool to the parties. The husband further proposes orders that he retain for his sole use and benefit all of his right, title and interest in [P] Pty Ltd (“the Company”) and his motor vehicle.
Background
The applicant wife was born [in] 1966 and is currently aged 43 years. The respondent husband was born [in] 1965 and is currently aged 44 years.
The parties commenced cohabitation in 1988 and subsequently married [in] 1989 in Victoria. The parties separated on 8 November 2006 and a divorce order was made by me on the final day of the hearing.
Although neither party disclosed in their affidavits that either had
re-partnered following separation, it was clear from the subsequent oral evidence and submissions[1] that the wife now resides in a de facto relationship with her partner Mr G aged 42, and the husband similarly resides in a de facto relationship with his partner Ms C, aged 24.
[1] See husband’s ‘Case Summary Document’ filed in Court on 12 May 2009.
There is one child of the marriage, namely [X] born [in] 1992 (“[X]”) and one adult child of the marriage, namely [Y] born [in] 1990 (“[Y]”). [Y] currently lives with the wife and [X] lives with the parties on a week about basis.
Both the wife and the husband are in good health.
At the time of the hearing the wife was engaged in full time employment at [omitted]. During the relationship the wife has had several positions on a part time basis, including [omitted] and assisting the husband with his [P] business.
The husband is engaged in full time self-employment as a [omitted]. Prior to commencing his own business, the husband was employed at a [omitted] business in [E] owned and operated by his parents.
Both parties provided the Court with a chronology listing significant events in the parties’ relationship. The parties were not in dispute, or in any significant dispute, in relation to the following:
·1986: husband purchases the vacant land in Property N, [E] and thereafter commences construction of two home units;
·1988: the parties commenced cohabitation (and marry in 1989);
·1990: [Y] is born; wife ceases full-time employment to be primary caregiver;
·1992: [X] is born; parties purchase property at Property B, [E] for $101,000 (subject to a mortgage of $100,000);
·1994: Property N, [E] home units sold, with the net proceeds ($138,000) being used to purchase an interest in commercial property at Property G, [E] (“the commercial property”); husband establishes his [omitted] business, [P] Pty Ltd (and wife assists with some administrative duties);
·1996: wife commences part-time work as a [omitted];
·1999: the parties enter into an agreement with the husband’s parents and husband’s brother to petition the commercial property and the parties become joint registered proprietors of lots [omitted];
·2000: the parties sell Property B, [E] for $260,000, and purchase property at Property P, [A] (“the former matrimonial home”) for $335,000; parties subsequently commence substantial renovation works;
·2006: the parties separate; the husband remains in the former matrimonial home and the wife and the children move into rental accommodation at Gembrook;
·2007: the wife and children return to the former matrimonial home (May-November); the parties borrow $15,000 from the husband’s parents to assist with renovation and associated works at the former matrimonial home (this loan remains outstanding); and
·2008: the husband allegedly borrows $30,000 from his parents “to assist with payments towards the property and marital debts”;[2] the wife alleges that the husband did not “notify the wife of the line and [did] not provide details as to the application of those funds”;[3] the parties sell the former matrimonial home and, after discharging the mortgages owing in respect of the former matrimonial home and the commercial property, they realise net proceeds of $230,195.95 (these funds are currently held on trust for the parties by the husband’s solicitor).
[2] Ibid.
[3] See wife’s ‘Outline of Case Document of Applicant’ filed 12 May 2009.
The issues
Broadly speaking, the following issues were in dispute at the hearing:
·the husband’s financial contributions made prior to the parties’ relationship;
·the parties’ respective contributions made during their relationship (and following the breakdown of their relationship); and
·the parties’ respective future needs and obligations.
There are also unresolved issues between the parties in relation to the following matters:
·what is the realisable value of the commercial property;
·whether the husband should purchase the wife’s interest in relation to the commercial property; and
·whether the loan of $30,000 by the husband’s parents is a relevant matrimonial liability.
Evidence of the parties
Both parties provided the Court with affidavit and oral evidence.
In addition, Mr C, a certified practising valuer, gave oral evidence in relation to his valuation and report for Property G, [E] which was annexed to his affidavit sworn 11 May 2009 and filed 12 May 2009.
Applicant wife’s evidence
The following documents were relied upon by the wife:
· Initiating Application filed 18 December 2008;
·Wife’s Affidavit sworn 16 December 2008 and filed 18 December 2008 (“her affidavit”);
·Financial Statement sworn 16 December 2008 and filed 18 December 2008;
· Outline of Case Document filed 12 May 2009; and
·Minutes of Proposed Orders provided to the Court on 14 May 2009.
Respondent husband’s evidence
In support of his response, the husband relied upon:
· Response filed on 2 February 2009;
·
Husband’s Affidavit sworn on 27 January 2009 and filed on
2 February 2009 (“his first affidavit”);
·
Financial Statement sworn on 27 January 2009 and filed on
2 February 2009;
·Husband’s Affidavit sworn on 11 May 2009 and filed on 12 May 2009 (“his second affidavit”);
·Affidavit of Mr C sworn on 11 May 2009 and filed on 12 May 2009;
· Case Summary Document filed on 12 May 2009;
· Chronology of Events provided to the Court on 12 May 2009; and
· Minutes of Proposed Orders provided to the Court on 12 May 2009.
The law – the four steps
Section 79(1) of the Family Law Act 1975 (“the Act”) provides that the Court may make such order as it sees fit altering interests in matrimonial property. The Court’s discretion is not unlimited and must be exercised in accordance with the factors set out in the legislation and more specifically, section 79(4).
The preferred approach to the exercise of the discretion has been outlined in numerous decisions of the Full Court of the Family Court, more recently in cases like In the Marriage ofHickey (2003) 30 Fam LR 355; (2003) FLC 93-143. That approach involves four interrelated steps:[4]
·Step 1: identify and value the parties’ property, liabilities and financial resources as at the date of the hearing;
·Step 2: identify and assess the parties’ ‘contributions’ within the meaning of section 79(4)(a), (b) and (c) and determine the parties’ contribution-based entitlements expressed as a percentage of the net value of the parties’ property;
·Step 3: identify and assess the relevant matters referred to in section 79(4)(d), (e), (f) and (g) (the other factors) including, because of 79(4)(e), the matters referred to in section 79(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution-based entitlements of the parties established at Step 2; and
·Step 4: consider the effects of those findings and resolve what order is just and equitable in all of the circumstances of the case.
[4] L Young & G Monahan, Family Law in Australia, 7th ed, LexisNexis Butterworths, Australia, 2009, pp. 614-615.
Step 1: – the asset pool
Following submissions by Counsel and questioning by the Court, the following tables represent the agreed (and disagreed (**)) assets and liabilities of the parties:[5]
[5] Transcript, 14 May 2009, page 96 (lines 24-44), page 97 (lines 1-44) and page 98 (lines 1-26); also see wife’s ‘Outline of Case Document of Applicant’ filed 12 May 2009.
Assets
Valuation
Net proceeds of sale of former matrimonial home at Property P, [A]
$230,196
Property G, [E]
To be determined
Nissan Patrol (driven by wife)
$8,000
Nissan Navarra (driven by husband) (subject to finance)
$26,000
Wife’s superannuation
$13,640
Husband’s superannuation
$20,000
*Business tools, horse float, saddles and associated equipment[6]
Agreed division
Total
To be determined
[6] The Court was advised by the parties’ legal representatives that there was agreement that these assets were valued at approximately $15,000 and that the parties had further agreed that the wife would retain the horse float, saddles and associated equipment and that the husband would retain the business tools: see Transcript, 14 May 2009, page 97 (lines 2-17).
Liabilities
Valuation
**Loan between husband and his parents (disputed by wife)
To be determined
Loan between parties and husband’s parents
$15,000
Debts due to Australian Taxation Office ([P] Pty Ltd and [F] Pty Ltd)
$16,893
Total
To be determined
There was no apparent disagreement between the parties over the division of personal effects.
Clearly, the Court must now finally determine the available asset pool in light of the evidence. Two sub-issues arise for determination:
·what is the value of the commercial property; and
·whether the alleged loan of $30,000 between the husband and his parents is a matrimonial liability (“the disputed loan”)?
The commercial property
As previously noted, a certified practising valuer, Mr C, gave oral evidence in relation to his valuation report for the commercial property, following his inspection carried out on 21 March 2009. In his report, Mr C noted the following caveat to his valuation:
“the six allotments are all leased to [company omitted] on a long-term lease and as such the land in question could not be sold without the encumbrance of the lease. In other words before these allotments could be sold individually the lease would have to be ended.”
Based on the current rental income, Mr C values the entire property (i.e. comprising all six allotments) at between “…$750,000 - $820,000 or $125,000 - $140,000 per allotment.”
Mr C then speculates in his report that if the six allotments could be individually developed, then each lot might have a “land value of $150,000 - $170,000”. He then concludes his report with the following statement:
“In my opinion, the current market value of these allotments as individual allotments is minor, however, as part of the whole site and if a portion of the lease is attributed on a land area basis then each allotment should attract a value equal to one sixth of the total property value.”
During cross-examination by Mr Whitchurch for the wife, Mr C conceded that the simultaneous sale of all six allotments to the one buyer or developer was the only really commercially sensible outcome.[7]
[7] Transcript, 14 May 2009, page 88 (lines 15-19).
In response to questions from me, Mr C reiterated his opinion that the entire property would only realise between $750,000 and $820,000 in the current market.[8] Nevertheless, the witness was also of the view that the parties might realise a higher price if the entire property was sold to the current tenant, [company omitted], as they are already established on the site.[9]
[8] Ibid, page 90 (lines 15-18).
[9] Ibid, page 90 (lines 20-21).
Given Mr C’s evidence, the Court accepts that the commercial property would be currently valued at between $250,000 and $273,000. In the absence of agreement between the parties, the Court finds that the current value of the commercial property is $261,500.
The disputed loan
In his first affidavit, the husband asserts that the proceeds of the disputed loan were used “to pay mortgage payments and other debts” whilst he resided in the former matrimonial home.[10] In paragraph 1 of his second affidavit the husband states:
“… there was a further loan by my parents to enable me to make mortgage payments and other payments prior to the sale of property. That further loan was made on 19.2.08 for $30,000. That money was paid into my business account on 19.2.08. Annexed hereto and marked with the letters “PF2” is a copy of the statement.”
[10] Husband’s first affidavit, paragraph 5(c) (husband incorrectly asserts that the loan was in the amount of ‘$35,000’).
The document “PF2” is a relatively comprehensive loan document that was signed by the husband and the husband’s parents and was witnessed by the same person whose identity was not disclosed. The loan document’s authenticity was not the subject of any challenge by the wife.
The loan document clearly evidences that on 19 February 2008, the husband’s parents (MR F and MS F) lent the husband the sum of $30,000 on an interest-free basis, but repayable on demand. Although not unusual, it is unfortunate given the present dispute that the author of the loan document, and the purpose of the loan, is not disclosed in the document.
The wife makes no specific reference to the disputed loan in her affidavit apart from her comment in paragraph 9 that her “solicitors have requested details of these liabilities, including any loan agreements…” The wife was not specifically asked about the disputed loan in her oral testimony. The disputed loan was, however, the subject of submissions by the wife’s counsel, Mr Whitchurch.
Under cross-examination, the husband acknowledged that the proceeds of the disputed loan were deposited by him into the bank account for his business, [P] Pty Ltd, and that shortly thereafter the husband used $10,000 to pay down his credit card liabilities.[11] The husband however denied that these liabilities represented business expenses.[12] Under later cross-examination, the husband did admit that the disputed loan is recorded as a business loan in his company’s books.[13] Given this admission, Mr Whitchurch asked the husband:[14]
“So any expenses and so on in relation to that might be claimable as a tax deduction of some description, if there were interest or something like that on it?”
“I don't know. I leave the accountant to do that. I just point out that it's not income and it's a loan to the company.”
[11] Transcript, 13 May 2009, page 49 (lines 41-42).
[12] Ibid, page 50 (lines 4-7).
[13] Transcript, 14 May 2009, page 76 (lines 19-20).
[14] Ibid, page 76 (lines 22-25).
While I am satisfied that the husband borrowed and received $30,000 from his parents, I am not satisfied that the loan should be treated as a relevant matrimonial liability for the following reasons:
·Firstly, the Court notes the parties are in agreement that they borrowed $15,000 in mid-2007 from the husband’s parents to assist with renovations and related expenses for the former matrimonial home. A copy of the relevant loan document, signed by the parties and the husband’s parents, which the Court assumes was prepared by the parties themselves, was attached as exhibit “PF1” to the husband’s second affidavit. This earlier loan agreement was entered into after the parties separated but while the parties were living under the one roof in the former matrimonial home; a property that was still undergoing renovations;
·Secondly, there was no evidence that the wife knew of, or consented to, or was even asked to consent to, the disputed loan being made;
·Thirdly, there was no evidence before the Court from the husband’s parents as to their understanding as to the purpose underlying the need for the disputed loan;
·Fourthly, unlike the 2007 family loan, there is no evidence that the disputed loan funds were used to assist with renovations and related expenses for the matrimonial home; and
·Fifthly, while the husband denied that the proceeds of the disputed loan were used to pay debts relating to his business, he did acknowledge that the disputed loan is recorded as a business loan in his company’s books.
The Court therefore finds that the net available property pool totals $524,336 as follows:
Assets
Valuation
Net proceeds of sale of former matrimonial home at Property P, [A]
$230,196
Property G, [E]
$261,500
Nissan Patrol (driven by wife)
$8,000
Nissan Navarra (driven by husband) (subject to finance)
$26,000
Wife’s superannuation
$13,640
Husband’s superannuation
$20,000
Total
$559,336
Liabilities
Valuation
Loan between parties and husband’s parents
$15,000
Debts due to Australian Taxation Office ([P]/[F] Pty Ltd)
$20,000[15]
Total
$35,000
[15] The wife accepted a figure of $20,000 for these proceedings: see Transcript, 14 May 2009, page 102 (line 40).
Assets
$559,336
Liabilities
$35,000
Net assets
$524,336
Step 2: contributions
It is clear from the evidence that the parties have, throughout much of their relationship, specialised their respective roles into that of significant ‘breadwinner’ and significant ‘homemaker and parent’. This is quite a normal and sensible division of labour in our society that usually advances both the financial prosperity, and the welfare, of the couple and their children. While there is no presumption that such specialised roles equalise for contribution assessment purposes,[16] an outcome favouring equality is not unusual in cases involving long relationships following an analysis of the evidence relevant to section 79(4)(a)-(c).[17] Of course, such an outcome may alter following consideration of the other section 79 factors, in particular section 79(4)(e).[18]
[16] Mallet v Mallet (1984) 156 CLR 605; In the Marriage of Ferraro (1992) 16 Fam LR 1; (1993) FLC 92-335; In the Marriage of McLay (1996) 20 Fam LR 239; (1996) FLC 92-667.
[17] In the Marriage of McLay (1996) 20 Fam LR 239 at 248-250 (per Nicholson CJ, Fogarty and Dessau JJ).
[18] Ibid, p.250.
Apart from his contributions through his employment, the husband asks the Court to accept that he made a significant initial financial contribution by bringing the Property N, [E] properties into the relationship. Moreover, he is arguing that his post-separation contributions, in paying the mortgage payments for the former matrimonial home until its sale, should be recognised.
Financial and non-financial contributions
It is clear that both parties have made financial and non-financial contributions to the acquisition, conservation and improvement of their matrimonial property. This is particularly so given their mutual investment of their earnings into their property pool and the labours associated with their various home renovations. The husband, through the parties’ decision to specialise their respective roles, has been able to significantly contribute more of his income and energy into making relevant financial and non-financial contributions than that of the wife.
As indicated, the husband understandably asks the Court to consider his pre-relationship contributions. There is no dispute that the husband brought into the relationship his interest in the Property N, [E] properties that were subsequently sold to finance the parties’ interest in the commercial properties.
The wife, understandably, asks the Court to consider her own contributions, not just to the Property N unit they occupied in the early days of their relationship, but her own competing contributions that act to erode the significance of the husband’s pre-marriage contribution.
In relation to this ‘erosion’ of contributions issue, I note the case of In the Marriage of Pierce (1998) 24 Fam LR 377; (1999) FLC 92-844 where the Full Court stated:[19]
“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…”
Clearly some weight must be attributed to the sale proceeds of the Property N units being used to fund the purchase of the commercial property. Of course, this all occurred 15 years ago and the value of the commercial property does not appear to have appreciated greatly.
[19] In the Marriage of Pierce (1998) 24 Fam LR 377 at 386-387; (1999) FLC 92-844 at 85,881 (per Ellis, Baker and O’Ryan JJ).
The husband has also asked the Court to recognise his post-separation contribution in paying the mortgage payments for the former matrimonial home until its sale in 2008. The parties agree that they separated in November 2006 but that they subsequently lived under the one roof for approximately six months during 2007. The parties disagree, however, as to whether the husband borrowed $30,000 from his parents in February 2008 for purposes that included making mortgage payments in respect of the former matrimonial home. The Court has already found that this loan is not a relevant matrimonial liability. Had the Court found otherwise, it would be difficult for the husband to argue that he made a post-separation contribution while this loan remains outstanding. In any event, the husband had the benefit of the property post-separation while the wife was living in rented accommodation. Consequently, this particular contribution does not form an extra contribution over and above the financial and non-financial contributions that the husband has made in relation to the acquisition, conservation and improvement of the former matrimonial home.
Contributions as homemaker and parent
As has been previously noted, in addition to her contributions made pursuant to section 79(4)(a) and (b), I am satisfied that the wife was the primary homemaker for the parties and the primary carer of the children. Consequently, I find that she has made a significant contribution to the family pursuant to section 79(4)(c).
Global or asset-by-asset assessment of contributions
Given the length of the parties’ relationship, and its history, the ‘global’ approach to the assessment of contributions is the most appropriate to the parties’ circumstances.
Step 3: section 75(2) and related factors
The parties are both aged in their early forties, in good health and have re-partnered.
The parties share the care for their youngest child [X], now aged 17 years, and their eldest child [Y], now aged 19 years, resides with the wife. Both children are full-time students. Despite the shared care of [X], the husband has been assessed and is paying child support. Of course, this statutory liability will cease shortly. That having been said, the Court acknowledges that both parties will, in all likelihood, financially assist both their children in the years ahead, and certainly in the short to medium term.
The wife is now working full-time as a [in the Retail Industry] at [omitted]. Her financial statement discloses a before tax wage of $620 per week. There is no evidence before me that the wife’s employment is not secure or that she would be unable to obtain a similar position in the retail industry despite the current economic climate.
The husband is an experienced [omitted] and runs his own business. His financial statement discloses a before tax wage of $1,000 per week which presumably includes not just his income from his paving business but the net rent received from the commercial property. There is no dispute between the parties that the husband should not retain the business. In any event, the husband would have an argument under section 79(4)(d) for such an outcome if financially possible.
In light of the available evidence, and in particular the income disparity between the parties that is likely to continue into the future, I am satisfied that a modest adjustment of 7.5% in favour of the wife under section 75(2) is warranted given the parties’ circumstances into the foreseeable future.
Final step: justice and equity
Section 79(2) of the Act provides that:
“The Court shall not make an Order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.”
The Court is satisfied that, on a contributions analysis, the husband’s contributions do marginally outweigh that of the wife (in percentage terms 52.5% in favour of the husband and 47.5% in favour of the wife). In addition, the Court is satisfied that a further adjustment of 7.5% in the wife’s favour to reflect section 75(2) and related factors is warranted. In other words, the wife should receive money or assets to the value of 55% of the overall net property pool[20] and the husband the balance (i.e. 45%). Based on current agreed and determined valuations, this represents an amount of $288,384.80 in favour of the wife and $235,951.20 in favour of the husband.
[20] As mentioned in footnote 6 above, the net property pool excludes the wife’s horse float, saddles and associated equipment and the husband’s business tools. I also note that the husband’s motor vehicle is subject to finance.
The principal assets for division between the parties are, of course, the proceeds of the sale of the former matrimonial home and the commercial property.
There is no apparent disagreement between the parties that, subject to a just and equitable division of the principal assets, each party should retain the other property in their respective possession including their current motor vehicles and superannuation policies, any monies standing to their respective credit in any bank or financial institution, and any furnishing and household effects in their respective possession. In addition, there is no disagreement that the husband should retain the paving business and its related assets and indemnify the wife in respect of all its business liabilities (subject to payment of the agreed tax debts). There is also no disagreement that the agreed tax debts, and the $15,000 loan by the husband’s parents, should be paid from the proceeds of the sale of the former matrimonial home.
In her minute of final orders sought, the wife seeks orders that the husband in effect purchase her interest in the commercial property with funds including the entire balance of the net proceeds of the sale of the former matrimonial home (after payment of the admitted loan of $15,000 to the husband’s parents, and the business debts due to the Australian Taxation Office being agreed at $20,000). The logic behind this request is the reality that, to quote Mr Whitchurch, “these blocks of land are under the control of the Felton family. My client is one out.”[21] In contrast, the husband is seeking that each party retain one lot, either to sell independently if able, or more likely, to be sold collectively at a future date.[22]
[21] Transcript, 14 May 2009, page 103 (lines 28-29).
[22] Ibid, page 104 (lines 1-2).
This issue raises the practicality and effect of making either one of the orders sought by the parties. If the Court agreed to the wife’s request, then the husband would be left with no immediate funds to assist in his re-establishment and would have to shoulder the entire uncertainty relating to a future sale of the commercial property. In the event that the Court agreed to the husband’s request, then an outcome that produces a ‘clean break’ financially between the parties is unlikely to occur in the short to medium term.
Section 81 of the Act seeks to end the financial relationship between the parties provided such a result is both reasonable and practicable. The section states:
“In proceedings under this Part, other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage, the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.”
While the provision is a relevant consideration in making a property order, it is neither a ‘head of power’ nor an absolute requirement.[23] The practical effect of the provision is that the Court must endeavour to make an order that finalises the financial relationship between the parties, but it does not require the Court to make an order that achieves finality.[24]
[23] In the Marriage of Crapp (No.2) (1979) 5 Fam LR 47 at 61; (1979) FLC 90-615 at 78,184 (per Fogarty J; Pawley and Dovey JJ agreeing).
[24] L Young & G Monahan, Family Law in Australia, 7th ed, LexisNexis Butterworths, Australia, 2009 p. 611.
Given Mr C’s evidence,[25] this issue is complicated by the reality that a simultaneous sale of all six allotments to the one buyer (e.g. [company omitted]) or developer appears to be the most commercially sensible outcome. The Court has no evidence before it that such an outcome is likely, at least in the short to medium term, and nor is there any evidence from the relevant members of the Felton family that they may be interested in acquiring the parties’ interests in the commercial property.
[25] Transcript, 14 May 2009, page 88 (lines 15-19).
The potential sale of the commercial property is further complicated by the reality that the current tenant, [company omitted], has in effect a 12 year lease (being a ‘3 x 4 year’ lease), with a further eight years to run on it.[26]
[26] Ibid, page 79 (lines 43-44) and page 80 (lines 1-4).
On the positive side, there is an income stream flowing from the commercial property due to the rent received from [company omitted].
Conclusion
Given these circumstances, the Court is satisfied that the fairest way forward is to make an order that the commercial property be sold in the near future and that the net sale proceeds be divided 55% to the wife and 45% to the husband, with the husband having the option to purchase the wife’s interest at any time prior to the sale of the commercial property at an agreed price. Until such sale or transfer of the property to the husband, the wife is to receive 55% (and the husband 45%) of the net rent received for the commercial property with such payment to commence as from 1 July 2009.
The Court is satisfied the timing of the proposed sale of the commercial property needs to factor in the current lease, the parties’ need to re-establish themselves and the current economic climate. Consequently, unless the parties agree to the contrary, there will be orders requiring the parties to arrange for the commercial property to be marketed for sale by private treaty no later than 1 July 2011. Unless the parties agree to the contrary, there will be orders to ensure its sale by auction in the event that the property is not sold by private treaty by 1 July 2012. As stated previously, the husband will have the option of purchasing the wife’s interest in the commercial property for an agreed price prior to its sale by private treaty or auction.
In relation to the net proceeds of sale of the former matrimonial home ($230,196) there will be an order directing the husband to authorise his solicitors to pay the following amounts from the moneys held by them on trust for the parties:
a)to Mr F and Ms F the sum of $15,000 being moneys owed by the parties pursuant to the loan agreement dated 26 June 2007;
b)to the Australian Taxation Office the sum of $20,000 being moneys owed by [P] and its related companies; and
c)to the parties the balance then remaining in the said trust account in the proportion 55% to the wife and 45% to the husband.
As indicated, there will be orders that each party retain the other property in his or her respective possession including their current motor vehicles and superannuation policies, any monies standing to his or her credit in any bank or financial institution, and any furnishing and household effects in his or her possession. The husband will retain the [P] business and related assets and indemnify the wife in respect of any business liabilities. The husband will be required to cause the Nissan Patrol vehicle to be transferred to the wife.
In addition, each party will be required to indemnify the other with respect to any debts and liabilities standing in that party’s sole name.
There will be Orders of the Court to reflect this decision.
I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of Monahan FM
Associate: Matthew Raggatt
Date: 28 October 2009
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