Fryer and Kirk - [2011] FMCAfam 696

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FRYER & KIRK

[2011] FMCAfam 696

FAMILY LAW – Property settlement – both parties bankrupt – consideration of limited items for distribution including consideration of exempt property – each party retain property in their own possession – application otherwise dismissed.

Family Law Act 1975
Bankruptcy Act 1966, s.116(2)

Applicant:

MS FRYER

Respondent:

MR KIRK

File Number:

TVC 563 of 2010

Judgment of:

Coker FM

Hearing date:

17 June 2011

Date of Last Submission:

17 June 2011

Delivered at:

Townsville

Delivered on:

21 July 2011

REPRESENTATION

Applicant:

In Person

Respondent:

In Person

ORDERS

That the application for property filed by the wife on 26 May 2010 be dismissed.
That there be no order as to costs.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT TOWNSVILLE

TVC 563 of 2010

MS FRYER

Applicant

And

MR KIRK

Respondent

REASONS FOR JUDGMENT

These proceedings commenced on 26 May 2010 when Ms Fryer, whom I shall refer to as the wife, filed an initiating application seeking orders in relation to property settlement. The orders that she sought were in these terms:
(1)Property - Items in house to be divided fairly. Have listed items I need for me and my son.
(2) Fridge.
(3)Washing machine.
(4)Kettle, jug, toaster.
(5)Son’s double mattress.
(6)Son’s motor bike.
(7)Buffet.
(8)TV.
(9)Tallboy.
(10)Bedside tables.
(11)Queen bed.
(12)Tab top terracotta curtains.
(13)Brown floor rug.
(14)Spare key to Honda CRV and towbar.
(15)Lounge (three piece).
(16)Brown dinner set and stainless steel cutlery.
(17)Iron and ironing board.
(18) Transfer papers for Honda and van.
(19)To pay 50 per cent of outstanding bills for electricity and school fees when we were together. Total of $3681.85, half being $1840.92.
The respondent to the application is Mr Kirk. Again, for convenience, I shall refer to him during these reasons as the husband. The response filed by the husband on 25 June is short and to the point. Orders that are sought are as follows:
(1) That the application of the applicant be dismissed.
(2)That should the matter proceed it be determined that such property as the wife has be deemed appropriate for property distribution to her.
As is obvious from the nature of the application filed by the wife, the property of the parties is of virtually no compass whatsoever. In fact, both the husband and the wife are bankrupts. It appears clear from the material that is before the Court, that apart from a few chattel items, there is little for distribution between the parties. Noting that both parties are in fact bankrupt, it is necessary to of course comment upon what items are, in terms of the Bankruptcy Act 1966, exempt property and therefore available for distribution between the parties.
In that regard, the categories of exempt property are detailed pursuant to the provisions of section 116(2) of the Bankruptcy Act 1966. The property that is exempt pursuant to that legislation includes the bankrupt’s household property, property used by the bankrupt in earning income by personal exertion, the bankrupt’s primary means of transport, though the aggregate value of that means of transport should not exceed the amount prescribed by the regulations which, at the current time, is approximately $6700. The bankrupt’s policies of life or endowment insurance or the proceeds thereof and, in particular, superannuation entitlements and certain rights of the bankrupt to recover damages.
Here, as is obvious already from the property that is subject of the application, the items sought for distribution, exclusive of the claim in relation to school fees and payment of a share of an electricity account, comprises the household property of the parties, and it is suggested that there should also be some consideration of the position arising from motor vehicles in the possession of the parties.
In that respect the wife says that she owns a Honda CRV motor vehicle and estimates its value, at least as at the time of filing of her financial statement, at $3750. She also indicated that she had disposed of a van which had been in her possession, but says that that was disposed of for a very limited amount, approximately $100 as the van was unable to be otherwise sold.
The husband also deposes to having in his possession a Mazda BT50 motor vehicle with a value of approximately $20,000. It’s noted, however, and it must obviously have been the case, being aware of the provisions of the Bankruptcy Act 1966, in relation to exempt property, that the vehicle had liabilities attaching to it, such that its value at the time of bankruptcy was less than the amount prescribed by the regulations, approximately $6700.
In fact, the husband’s own evidence, and it seems to me that it should be accepted in this regard, is that at the time that he was declared bankrupt the vehicle was valued perhaps at $28,000 and at the time there was attaching to the property a chattel mortgage of approximately $28,000. The husband’s additional evidence, in relation to the chattel mortgage, is that it remains effective until some time in the year 2013, at which time there will be a “balloon payment” required to be made by him, in the vicinity of $10,000.
Quite simply, the property available for distribution between the parties, if necessary, is of the most limited value. I detail these particulars in relation to this particular matter because it is reflective of the tragic circumstances that these parties find themselves in, and the impossibility of affecting any real resolution as between the husband and the wife as a result of a property settlement.
As I have indicated, with both parties being bankrupt, there is little other than these chattel items for distribution between the parties. In fact, the wife’s own application sought initially for there to be a distribution to her of various items as listed in the application, but in the brief outline that was filed by her on 30 May 2011, she indicated that she now sought the replacement value of household goods, in the sum of $18,000. The reason that that is indicated by her is that she sought the items she says at the time of filing for she and her son, so as to enable them to move into a unit, but after the passing of a considerable period of time, there would be little benefit to her in that regard, and therefore she sought the cash component in relation to such items.
Of course, when certain questions were directed to her by me in relation to this matter, she acknowledged that the items were not worth $18,000 at the present time, if at all, but were rather the replacement values in relation to them. Again, it is significant that that should be referred to in relation to this matter because it again unfortunately emphasises the very minor nature of the distribution sought to be effected, in relation to the property of the parties.
Before turning to what might be the appropriate course to follow in relation to this matter, it is important that I should comment upon the brief evidence that was given in relation to these proceedings. The wife’s evidence was contained within her affidavit filed in support of the application on 26 May 2010. In that affidavit the wife gives a quite lengthy recitation of issues in relation to the separation between she and the husband and the hurt that she says she feels, as a result of what she considers her unjust removal from the residence, by the husband.
There is little, however, that assists, for example, in relation to any evidence with regard to the means by which the assets came in to the possession of the parties or, for example, any assistance whatsoever in respect of what might or might not have been the respective contributions of the parties.
One would think, however, that with the relationship being a de facto relationship, and it is acknowledged that it is a de facto relationship in excess of 14 years, that the limited items that are the subject of these proceedings would be items that were purchased by the parties during the period of their relationship.
I also had the opportunity to see the wife in the witness box and to, at least form some assessment of the genuine nature of the claim made by her, in relation to this matter. Quite simply, I was troubled by some of the indications sought to be relied upon by her in relation to this matter because she provided to me photographs of what she says were the assets of the relationship, being four photographs annexed to her case outline document of 30 May 2011. However, the photographs appear to be photographs that were taken in January of 2002.
In other words, some nine and a half years prior to the actual date of hearing, and certainly nearly eight years prior to the date of separation. There can be little, if any, reliance therefore placed upon what might or might not have been shown in those photographs, as to the quality or nature of the contents of the residence, at the time of separation or thereafter. Similarly, the photographs that were also shown, which the wife said were indicators of the state of the residence and the contents of the home, at the time that she came to collect items are undated and, interestingly, seem to show a quite dishevelled and unkempt nature of the home without any acknowledgment, to any real extent, that certain items might already have been removed.
Suffice it to say that I was troubled by the nature of the mother’s evidence in relation to many of those issues and I must say that whilst I understand the hurt that must be experienced, no doubt, by both parties as a result of the breakdown in the relationship and the limited assets for distribution as between them, I gained the distinct impression that the degree of hurt or anger was to a significant extent affecting the evidence, in relation to these proceedings.
In particular, the wife detailed that part of her claim related to the payment of school fees as well as electricity charges, which she says fell upon her as a result of non-payment by the husband. Again, I should indicate that I am not so comfortable with such evidence in relation to that particular aspect of the matter and they are not, I would think, matters that can easily be resolved, particularly by way of a property settlement and particularly in light of the fact that both parties are now bankrupt.
The husband’s evidence in relation to this matter was, I thought, a little more reliable than that which was provided by the wife. I gained the distinct impression that the husband had attempted to effect a genuine distribution of household items and chattels as between he and the wife and that, as he suggested, the photographs that were sought to be relied upon, particularly relating to the state of the home and the assets that were left, were not an accurate reflection of what was actually left by the husband in the property.
In any event, the indications given by him were, and I accept, that he took only very limited amounts of assets and chattels from the home because, having become bankrupt himself, when departing, he had virtually nowhere to go, and therefore nowhere to put the various items. I am more inclined, therefore, to accept the husband’s evidence in relation to the distribution effected between the husband and the wife, and I must say that there is some legitimacy arising from the complaints made by the husband that if, as appears to be the case, the wife went bankrupt some 18 months prior to him, then there was little that could be done after he also went bankrupt other than to perhaps try and limit the devastation that this family experienced.
There has been a very limited distribution between the parties. There has been involvement of the trustee in bankruptcy, such that what remains is only a very small smattering of the assets that the parties might have been able to accumulate. I am being asked by the wife, therefore, to effect what could only be described as, “social engineering”, in relation to provision to her of an amount equivalent to the replacement value of limited assets rather than their actual value. I am not inclined to do so, nor would that be the proper course to follow.
I am also not intending to make lengthy determinations in relation to what might or might not have been the assets of the parties. The unfortunate situation here, is that with both parties acknowledging that they have no superannuation, with both parties acknowledging that they are bankrupt, with both parties acknowledging that they have a motor vehicle in their possession, but continuing liabilities in relation to it such that there is little, if any, equity and with both parties acknowledging, though to different extents, that there has been some distribution of assets of a chattel nature as between the two of them, that there is little more that could or should be done in relation to a property distribution.
In that regard, and I do not mean to be disrespectful to either of the parties, but particularly to the wife, I am being asked to effect some distribution of the ravages of the past deterioration of the relationship and of the financial circumstances of the parties, and I do not in the circumstances consider that that is appropriate. Nor is there any basis upon which any further order could or should properly be made. The husband suggests that the appropriate course is for the application by the wife to be dismissed. Each party has retained what little there could properly be found from the assets of the relationship and I am satisfied that that is in all the circumstances the best that could be expected in relation to this matter.
The claims for payments in relation to school fees and payments in relation to an electricity account are beyond, in my assessment, a proper exercise of the discretion of the Court, in relation to a property settlement. They are liabilities that apparently and clearly arose prior to the husband becoming bankrupt, and it is not appropriate then for any orders to be made by this Court in relation to payments that have been made by another.
In my view, that would be an inappropriate distribution of assets that properly should have been included in any claim on the part of creditors from the estate of the husband. I am far more inclined to the view that what little remains in the possession of each party should be retained by each party, with no other orders made in relation to property settlement.
I intend therefore to order simply that the wife’s application of 26 May 2010 be dismissed with no order as to costs. It would also be appropriate, however, to note that if, as claimed by the wife, there is a child support debt in excess of $13,000 owing by the husband, in relation to support of the child [X], then it is appropriate that with his whereabouts now being known and his acknowledgment, under oath, that he is in employment, that appropriate steps could and should properly be taken by the Child Support Registrar to seek to recover any and all properly due and owing moneys in relation to child support.
To that end, whilst I do not intend to make any order, I note that the husband acknowledged under oath that his postal address for the purposes of proceedings was [omitted] and that he would be notified by his mother, who resides at that residence, of any correspondence. It would seem that if there is some payment to be made it should properly relate to child support due and owing by the husband for appropriate support in relation to the child, but I make no other comment in that regard. Otherwise, the orders of the court will be as follows:
(1)That the application for property filed by the wife on 26 May 2010 be dismissed.
(2) That there be no order as to costs.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Coker FM

Date: 21 July 2011