Flinton and Flinton

[2016] FCCA 1536

FEDERAL CIRCUIT COURT OF AUSTRALIA

FLINTON & FLINTON [2016] FCCA 1536

Catchwords:
FAMILY LAW − Whether joint tenancy should be severed and made a tenancy in common − where parties remain living under the one roof after divorce − whether husband should transfer his interest in property to wife and husband vacate the property.

Legislation:

Family Law Act 1975 (Cth), ss.44(3), 75(2), 75(2)(o), 79, 81

Cases cited:
Bremner & Bremner [1994] FamCA 116; (1995) FLC 92-560

Applicant: MR FLINTON

Respondent: MS FLINTON

File Number: DGC 398 of 2008

Judgment of: Judge Phipps

Hearing date: 10 March 2016

Date of Last Submission: 10 March 2016

Delivered at: Dandenong

Delivered on: 24 June 2016

REPRESENTATION

The Applicant: Appearing on their own behalf

Counsel for the Respondent: Mr Stanley

Solicitors for the Respondent: Waters Lawyers

ORDERS

1. That pursuant to s.44(3) of the Family Law Act 1975 (Cth) the husband and the wife have leave to bring this application out of time.

2. That on or before 8 July 2016 the wife pay the husband the sum of $22,500.

3. That on or before 8 August 2016 (“the date”) the wife pay the husband the sum of $175,000 (the payment).

4. That contemporaneously with the payment:

   (a)The husband transfer to the wife all his right title and interest in the property known as and situate at Property W, Victoria;

   (b)The wife refinance the home loan secured by a mortgage over the Property W property so as to discharge the husband from all liability;

   (c)The husband vacate the property.

5. That unless specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders;

   (a)Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) and superannuation owned by or in the possession of such party as at the date of these orders (the furniture, personal possessions and like chattels in the property being deemed to be in the possession of the wife);

   (b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

6. In the event that the wife does not pay the sum of $22,500 or make the payment by the date each party has liberty to apply.

7. That pursuant to s.106A(1) of the Family Law Act 1975 (Cth) a Registrar of the Federal Circuit Court of Australia at Dandenong is appointed to do all acts and things necessary to give validity to any documents the husband is required to execute by these orders.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

DGC 398 of 2008

MR FLINTON

Applicant

And

MS FLINTON

Respondent

REASONS FOR JUDGMENT

1. The applicant husband and the respondent wife were married on (omitted) 1969, separated in February 2004 and divorced on 20 September 2006.  Notwithstanding this they remain living in the same house.  This is the third property application the husband has commenced.  He discontinued the first two.

2. The husband now proposes that the parties’ joint tenancy of the property at Property W, Victoria be severed and the parties become tenants in common in equal shares.  He proposes orders that the wife pay half of each monthly mortgage payment backdated from March 2013 and onwards and that within seven days the wife repay him the sum of $18,550 being her share of the mortgage from 3 August 2008 to December 2012.

3. The wife proposes that she pay the husband $176,500, the husband transfer his interest in the property to her, that she refinance the mortgage, that she pay the husband $2,500 representing half the value of the household items in the property and that otherwise each party retain funds in any bank account in their names and their superannuation.  The parties’ son is prepared to assist the wife to obtain a loan to make the payment to the husband.  The wife proposes that she have sole occupation of the house and that the husband move out.  She proposes that she pay him $20,000 immediately and the balance in 30 days.

4. Both parties propose an order pursuant to s.44(3) of the Family Law Act 1975 (Cth) granting leave to proceed with the application out of time.

5. The parties do not agree on the value of the Property W property.  In the husband’s financial statement filed on 13 May 2015 he values the property at $400,000.  The wife gives the same value in her financial statement.  The wife’s submission at the hearing was that this meant there was agreed value, or if not, the financial statements should be taken as admissions against interest.

6. The husband filed a document which he describes “Outline of the Case /balance sheet in which he values the property at $450,000E.  Given that this is now what he puts and that the financial statement was ten months old at the time of the hearing his figure of $400,000 cannot be taken as an admission against interest.  The application can be resolved assuming a valuation of $450,000.

7. The assets held at separation:

Asset	Value	Liability	Equity
Property W	$400,000 – $450,000	$40,000	$360,000 – $410,000
Husband’s Commodore Motor Vehicle	$3500 (husband’s value)	Nil	$3500
Total	$356,360

1. Assets acquired post separation:

Asset	Held by	Value
(omitted) Bank	Wife	$35,000
(omitted) Bank	Wife	$  8,500
(omitted) shares	Wife	$  1,848
(omitted) shares	Wife	$38,356
Total	$83,204

1. Liabilities incurred post separation:

Liability	Held by	Value
(omitted) MasterCard	Husband	[$25,051]
(omitted) MasterCard	Husband	[$17,259]
Total	[$42,310]

1. Superannuation:

(omitted) Superannuation – wife	$ 22,585
Husband’s superannuation	Nil
Total	$ 22,585

1. Each party at separation had about $60,000 in superannuation entitlements.  The property has normal furniture and household chattels.

2. In 1984 the wife, together with three others purchased a block or two blocks of vacant land in (country omitted).  The husband describes them as being land on top of a hill with no proper road access except a narrow dirt winding road.  The wife says she does not know if she is still one of the owners of this land.  Neither party suggests it has any value.

3. The husband is 76 years of age.  He is a disability/age pensioner receiving $480 per week.  The wife is 70 years of age.  She is an aged pensioner receiving $419 per week.

4. The parties married and commenced living together in (country omitted) on (omitted) 1969.  They have three children, X born (omitted) 1970, Y born (omitted) 1971 and Z born (omitted) 1972.

5. The parties moved to Australia in (omitted) 1986 and purchased the Property W property in (omitted) 1988.  The mortgage was paid in full in 1996.  The parties separated in February 2004 and divorced on 20 September 2006.  The husband commenced his first property application of 18 March 2008.  In mid-2008 the property was again mortgaged as security for a loan of about $65,000.  According to the wife, this was to repay loans and credit card debts of the husband.  The husband claims that at least some of the money was spent on renovations to the property.

6. The first property application was discontinued on 8 October 2008.  The husband commenced the second application in September 2013 and discontinued it on 15 May 2014.  He commenced the current application on 13 May 2015.

7. The husband, in his affidavit filed with his Initiating Application goes into much detail about financial matters during the marriage.  In Bremner & Bremner [1994] FamCA 116; (1995) FLC 92-560, Nicholson CJ said at [21]:

   I would also add that when one considers cases of this sort, it should be remembered that they are not decided upon a pure mathematical basis, and looked at from the point of view of abstract justice, it would appear to me that in a case where the assets of the parties are a comparatively modest $360,000, there has been a 20 year marriage and two children, where both parties have worked as these people have, it is difficult to argue with a judgment which divides those assets equally.

8. Here the asset pool is the same or less than the “comparatively modest $360,000” the Chief Justice refers to.  This case is 22 years after the Chief Justice made these remarks.  The marriage was longer; 35 years There are three children.  Both parties have worked.  The detail the husband gives is not needed.

9. The husband worked as a (occupation omitted) in (country omitted) and then as a (occupation omitted) in Australia until he was made redundant in 2002.  He received $72,000 redundancy payment and $65,000 in superannuation, although in his evidence the husband said “Superannuation 70 – 73, I don’t know”.

10. The wife worked for a year before the eldest daughter was born in (omitted) 1970.  She worked a further 10 months from (omitted) 1970 to (omitted) 1971.  She resumed working in early (omitted) 1973 after the youngest child was born and continued working until (omitted) 1986 when the parties left for Australia.

11. In Australia she worked for 10 months in a (employer omitted) from (omitted) 1987 to (omitted) 1988.  From (omitted) 1988 to (omitted) 2014 she worked in the (employer omitted) and then the (employer omitted), a total of 26 years with three years as a career break.  She took a two year break with loss of pay from July 1998 to July 2000 to look after two grandchildren.  Her daughter gave her $150 a fortnight towards maintaining her superannuation.  After her daughter had her third baby in (omitted) 1999 the daughter could no longer afford to pay her.  In 2012 she took six months long service leave on half pay then retired in 2014.

12. The parties’ affidavits make it appear as if they kept their finances separate.  The husband paid the mortgage while the wife paid rates and bills.

13. The steps under s.79 of the Family Law Act 1975 (Cth) are first to determine the assets and liabilities, then to determine whether it is just and equitable to make an order, next to consider contributions and finally whether there should be any adjustment for the considerations in s.75(2). The marriage comes to an end. The parties keep their financial affairs separate. Both apply for orders. It is just and equitable to make an order.

14. Section 79(4) contains the contribution considerations. They are the financial and non-financial contributions of each party to the acquisition preservation and maintenance of the property and contributions as homemaker and child carer. The outline of the history of the parties’ marriage set out above shows that this is a case where the parties’ contributions, up to the time of separation, were equal.

15. In June 2008 the parties Property W property was mortgaged again for a loan of some $66,000.  The loan was used to pay credit card and personal loan debts of the husband.  These were:

    (omitted) Bank personal loan                $17,470.81

    (omitted) Bank personal loan                      $10,572.92

    (omitted) MasterCard    $16,940.94

    (omitted) credit card                                  $11,200.13

    (omitted) credit card  $  9,984.69

    Total    $66,169.49

16. By this time the husband had spent his redundancy payment and superannuation.  When asked what happened to the superannuation he said it was to pay for life.  He went to (country omitted) in 2005, 2007 and 2009 and (country omitted) in 2003.  He claimed that his $65,000 redundancy payment was spent on work on the house.  A number of items were put to him adding up to about $15,000 which he acknowledged.  He appeared to say that there was some more but it was not a great deal.  That means that the husband spent $50,000 of his redundancy payment or a little less on his living.

17. The husband stated that he does not eat at home or prepare his own meals but goes to hotels although he has meals from about $10.  He acknowledged that he gambled.  The conclusion is irresistible that the husband spent much of the amounts which make up the $66,159.97 living beyond his means.  His income was his age/disability pension.  He was paying the mortgage payment of $700 a month but in February 2013 he stopped. The wife paid the rates and utilities and other outgoings for the house.  The husband paid for his telephone and internet.

18. The husband alleges that there was an oral agreement between the wife and him that they pay half the mortgage payments each.  Consequently his claim for half the mortgage payments from 2008 until 2013.

19. The wife says there was no such agreement, that it was for the husband to pay the mortgage because they were his debts.  The husband’s claim of an oral agreement that the wife pay half the mortgage payments is improbable.  The borrowed money was to repay the husband’s debts.  I am satisfied that there was no such agreement and that the wife’s agreement to mortgaging the property was so that that the husband could repay his debts.

20. The husband stopped paying in February 2013.  The bank served a notice of default and the wife paid $1,000 a month towards the mortgage over the months of May, June and July and she says it was possible she did so in August.

21. The parties’ affidavits contain much detail of how much each says they paid towards renovation, maintenance and repairs of the house and disputing the other party’s contentions.  The detail is not necessary.  Clearly each has contributed.

22. At separation each party had about $60,000 in superannuation.  When the wife retired she had $123,000 in superannuation.  $23,000 remains and the balance is in her bank accounts.

23. The wife’s case is that following separation contributions should be considered on an asset by asset basis.  That is correct.  The husband received $130,000 – $135,000 in redundancy and superannuation when he finished work.  The wife had $60,000 in superannuation at that time and when she retired in 2014 she had about $120,000.  The husband had spent his money as already described, some $15,000, or perhaps a bit more, on the house.  The wife had spent money on renovations and repairs as well and has paid rates, taxes and utilities.

24. The husband required a loan of $66,000 or thereabouts to pay debts he had accumulated by June 2008.  He now has further debts.  The only explanation is that he continues to live beyond his means and almost certainly some of it is spent on gambling.  The wife has largely retained her assets, not incurring debts.

25. In the circumstances an asset by asset approach after separation is appropriate.  The parties have separated and divorced and since separation have kept their finances separate.  The wife’s superannuation and savings are from the superannuation she had at separation and the superannuation she has accumulated since.  The husband had superannuation equivalent to the wife at separation and a $65,000 redundancy payment.  He now has only debts.  The husband has not contributed to the retention and accumulation of assets by the wife and the wife has not contributed to the husband’s debts.  The wife’s proposal that she retain her bank accounts and superannuation and the husband be solely responsible for his debts is the appropriate ones.

26. The wife proposes that the assets be divided taking into account the remaining amount of the mortgage loan, $40,000.  This makes each party equally responsible for the mortgage loan and gives each party half of the assets as they existed at the time of separation using present-day values.

27. The wife does not propose that the husband should be solely responsible for the mortgage.  If she did, an asset by asset approach after separation would mean the husband would be solely responsible for the mortgage.  The mortgage paid off debts he had accumulated by living beyond his means.  The wife did not benefit from the mortgage or have any involvement in the accumulation of debts by the husband that required the mortgage.  The mortgage was not a matrimonial debt.

28. If the wife had proposed that the husband be solely responsible for the mortgage and a value of $450,000 is used for the Property W property the result for the husband is very close to the same.  The gross value of assets would be $453,500.  Half that is $226,750.  The $40,000 mortgage would be deducted from the husband’s half share so that he would receive $186,750 if the property was divided equally between the parties.

29. The final step is to consider whether there should be any adjustment for s.75(2) considerations. On the wife’s proposal she will retain the house. She has $83,204 in savings and shares and the husband has $42,310 in debts. The husband will need to rent. The husband is 76 and the wife is 70. The husband gives a description of his poor health although there is no medical evidence. The parties incomes are more or less equal, both receiving pensions.

30. The husband’s debts are a consequence of his living beyond his means including by gambling. Regrettably, this means that there is a real likelihood that he will continue to do so and any payment he receives will be spent other than on the necessities of life. This is a matter I consider I should take into account under s.75(2)(o) as any other matter the court considers relevant. Another consideration is that his current debts have all accumulated since mid-2008 when his previous debts, with the cooperation of the wife, were paid out by re mortgaging the Property W property.

31. The wife’s financial position is stronger than the husband’s and even taking the husband’s extravagance into account I consider a 5% adjustment in the husband’s favour is appropriate.

32. There remains the question whether the property should be divided as the husband proposes, that is by the parties becoming tenants in common on the title to the Property W property and the parties remain living there. This would not satisfy s.81 of the Family Law Act 1975 (Cth) which requires the Court, as far as practicable, to make such orders as will finally determine the financial relationships between the parties and avoid further proceedings.

33. The husband has credit card debts of $42,310.  Other than his interest in the house he has no means of paying them.  His pension is insufficient.  There is a real likelihood that he will incur further debts.  Eventually the creditors will want to recover their money and while the husband has an interest in the home they have an asset against which they can execute.

34. There is a real likelihood that if the joint tenancy was severed and the parties had an interest as tenants in common the husband’s interest could be sold under execution of a court order or orders for his debts.  The wife, if she still had the assistance of her son, could purchase the husband’s half share at a court sheriff’s auction and then, as sole owner, evict the husband.  She could pay a price higher than any other bidder.  She would then own the property.  Any other bidder at the auction could only achieve a half interest as a tenant in common.

35. While there is no evidence before me a sheriff’s auction of a half interest of a tenant in common would achieve a lower price than a normal valuation, common understanding of this process is that the amount would be substantially lower.  There is a real likelihood, if not a probability, that the husband’s proposal of converting the title of the Property W property to a tenancy in common would result in his eventual eviction and the wife obtaining the whole property at a lower amount, probably a substantially lower amount, then she is offering the husband.

36. In the circumstances I am satisfied that the just and equitable order is as the wife proposes, that is that the husband transfer his interest in the property to her and she pay him $195,000, 55% of $356,360, the equity value of the parties property as that property existed at separation using current values using an evaluation of $40,000 for the Property W property.  In addition I will make the order the wife proposes that she pay $2,500 representing half the value of the household items in the Property W property (as ascribed by the husband).

1. The wife proposes that she pay the husband $20,000 immediately.  I will include the $2,500 in an order that she pay the husband $22,500 within 14 days.  The husband will have to find his own accommodation and I will allow him a further 30 days after he receives the $22,500.  Payment of the balance of $175,000 and transfer of the title will occur at the same time.

2. Neither party proposes an order that in default of any payment the property be sold.  I should not make such an order without giving them the opportunity to make submissions.  I will give each party liberty to apply in the event that any payment is not made.

I certify that the preceding forty eight (48) paragraphs are a true copy of the reasons for judgment of Judge Phipps

Date: 24 June 2016