Giang & Tram
[2021] FedCFamC2F 149
•8 October 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Giang & Tram [2021] FedCFamC2F 149
File number(s): PAC 320 of 2018 Judgment of: JUDGE NEWBRUN Date of judgment: 8 October 2021 Catchwords: FAMILY LAW – property adjustment – final orders made Legislation: Family Law Act 1975 (Cth), ss 75, 79 Cases cited: Kowaliw & Kowaliw [1981] FamCA 70; (1981) FLC 91-092
Aleksovski v Aleksovski (1996) FLC 92-705
Lotta & Lotta [2017] FamCA 50
Hamilton & Thomas [2008] FamCAFC 8
Division: Division 2 Family Law Number of paragraphs: 115 Date of last submission/s: 19 August 2021 Date of hearing: 2-3 August 2021 Place: Parramatta Counsel for the Applicant: Mr Avery-Williams of Counsel Counsel for the Respondent: Ms Reid of Counsel ORDERS
PAC 320 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR GIANG
Applicant
AND: MS TRAM
Respondent
ORDER MADE BY:
JUDGE NEWBRUN
DATE OF ORDER:
8 October 2021
THE COURT ORDERS THAT:
1.That within two calendar months after the date of these Orders the Wife shall pay to the Husband the sum of $208,925.
2.On payment of the above sum by the Wife to the Husband, the Wife is declared the sole owner of the property known as and located at B Street, Suburb C, NSW, Folio Identifier … (the property).
3.Failing payment of the above sum to the Husband by the Wife pursuant to Order 1 above, then both parties take all necessary steps and execute all necessary documents to cause the property to be sold by private treaty at the earliest possible date at a price to be agreed on between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or his nominee and that the proceeds of the sale be disbursed as follows:
(a)Payment of agent’s commission and advertising expenses and legal expenses of the sale;
(b)Payment of any monies due and owing to the mortgagee;
(c)The net balance to be divided between the parties as follows:
(i)67.5% to the Wife;
(ii)32.5% to the Husband.
With an adjustment in favour of the Wife of $1,025 to take into account the parties retaining their respective motor vehicles.
4.That in the event that the property fails to be sold by private treaty within a period of 3 months hereof, then each party take all necessary steps and execute all necessary documents to cause the property to be sold by auction at the earliest possible date at a reserve to be agreed upon between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or his nominee and that the proceeds of the said sale be disbursed as follows:
(a)Payment of agent’s commission and advertising expenses and legal expenses of the sale;
(b)Payment of any monies due and owing to the mortgagee;
(c)The net balance to be divided between the parties as follows:
(i)67.5% to the Wife; and
(ii)32.5% to the Husband.
With an adjustment in favour of the Wife of $1,025 to take into account the parties retaining their respective motor vehicles.
5.That on or before completion of the sale of the property the party residing therein will provide vacant possession, remove all items not included in the sale and ensure that the property is left in a clean and tidy condition.
6.Each of the Husband and the Wife shall be declared to be the sole and absolute owners at law and in equity of all items of furniture, furnishings, personality, chattels, jewellery and monies (whether held in cash or in deposit with any bank, building society, credit union or other financial institution) presently in each party’s possession, custody or control together with all contributions to or benefits or entitlements arising from membership of any fund of insurance or superannuation.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Giang & Tram has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE NEWBRUN:
INTRODUCTION
This was the final hearing of property proceedings between Mr Giang (hereafter “the Husband”) aged 56 years, and Ms Tram (hereafter “the Wife”) aged 55 years.
The Husband works as a factory worker.
The Wife works as a full time factory worker.
The parties hail from Country D
5The parties married in Sydney in 1998. There are two children of the relationship, Ms E aged 22 years and Mr F aged 20 years.
The parties finally separated in 2014.
The principal asset of the parties at the date of the hearing is the former matrimonial home at B Street, Suburb C, NSW (“the property”). The property is presently registered in the Wife’s name. There are also savings, motor vehicles and superannuation entitlements of the parties.
The Husband seeks property Orders, inter alia, that the Wife pay to him the sum equivalent to 35% of the net value of the property. He seeks Orders that each party be declared to be the sole and absolute owner of all personalty and superannuation in their respective possession, custody or control.
The Wife seeks by way of property Orders, inter alia, that the Wife pay to the Husband the sum of $40,000, and that the Wife be declared the sole owner of the property, and personalty located within the property.
At the final hearing, significant allegations of waste were made against the Husband related to gambling.
PARTIES’ PROPOSALS
The Wife sought Orders as set out in her Case Outline dated 28 July 2021.
The Husband sought Orders as set out in his proposed Minute of Order filed 27 July 2021.
MATERIAL RELIED UPON
The Wife relied upon the following documents:
(a)Case Outline filed 28 July 2021;
(b)Affidavit of Wife filed 18 February 2021;
(c)Financial Statement of Wife filed 26 February 2021;
(d)Response filed 6 March 2018 (to Amended Initiating Application filed 20 November 2020);
(e)Wife’s written submissions dated 17 August 2021.
The Husband relied upon the following documents:
(a)Case Outline filed 27 July 2021;
(b)Affidavit of Husband filed 31 December 2020;
(c)Financial Statement of Husband filed 20 November 2020;
(d)Affidavit of Husband’s sister Ms G Giang filed 31 December 2020;
(e)Husband’s Tender Bundle, headed Tender Bundle-2;
(f)Husband’s proposed Minute of Order filed 27 July 2021;
(g)Amended Initiating Application filed on 20 November 2020;
(h)Husband’s written submissions dated 18 August 2021.
Certain documents were tendered in evidence:
(a)Exhibit A: Joint Balance Sheet;
(b)Exhibit B: Page 2-3 of the Applicant Husband’s Tender Bundle;
(c)Exhibit C: Page 10-12 of the Applicant Husband’s Tender Bundle;
(d)Exhibit D: Page 1 of the Applicant Husband’s Tender Bundle;
(e)Exhibit E: Page 14-15 of the Applicant Husband’s Tender Bundle;
(f)Exhibit F: Page 18, 35 and 36 of the Applicant Husband’s Tender Bundle;
(g)Exhibit G: Page 21-22 of the Applicant Husband’s Tender Bundle;
(h)Exhibit H: Page 6-8 of the Applicant Husband’s Tender Bundle;
(i)Exhibit I: Page 27-30 of the Applicant Husband’s Tender Bundle;
(j)Exhibit J: Page 31-32 of the Applicant Husband’s Tender Bundle;
(k)Exhibit K: Page 24 of the Applicant Husband’s Tender Bundle.
EVIDENCE
At the outset, in relation to the financial extent of the Husband’s gambling activities during the parties’ relationship, and the content of historical banking records of one or both of the parties, the Court should state that it found both parties’ recollections in this regard to be unreliable.
The Court, accordingly, in making findings in relation to the financial extent of the Husband’s gambling activities during the parties’ relationship, places considerable reliance upon the objective financial records adduced by the parties in evidence, together with admissions against interest made by the Husband.
The Husband came to Australia with his family as refugees in 1979 when he was 14 years. He is illiterate and cannot read or write except for his name, date of birth, and address, and simple words and phrases in Language H, Language J and English. He is able to converse in simple English as he has learned from conversations at his workplaces in Australia. He has received no formal training or education in Australia. He only had a few years of primary education in Country Ds. At the final hearing, he gave his evidence through an interpreter.
The Wife came to Australia with her family in 1989.
When the parties met in about 1996, the Husband was working as a general labourer and the Wife as a general labourer. They married in 1998. They separated in 2014.
The property was purchased by the parties in 2001. Mortgage finance with Financial Services Company K was taken in the sum of $200,000.
The parties had a joint bank account with Commonwealth Bank, which was in existence following the commencement of their relationship. Each parties’ pay was paid into this joint account from at least November 2003. The mortgage loan from Financial Services Company K was paid out of this account. In the second half of 2004, debits were made on this account to pay the Husband’s Bank L personal loan repayments of some $451 each month.
Each week the Wife gave the Husband a cash amount of about $200 for his personal expenses. The rest of the Husband’s income was used by the Wife for mortgage repayments, family and children’s expenses. The Wife managed the finances of the family. The Wife’s pay went into her own bank account.
The Husband continued to work as a general labourer and he worked night shifts for about 9 years with regular overtime. The Wife continued to work as a general labourer at a salary much less than the Husband’s.
The Husband borrowed money from credit cards and personal loans without informing the Wife. In 2004 he owed Bank L about $30,000 most likely relating to his gambling.
In about 2004, the Wife found out about the Husband’s above indebtedness relating to his gambling. The parties’ agreed that they would increase the mortgage by $30,000 to pay off the Husband’s debts and he would sign a document not to borrow money from credit cards and personal loan.
Also at this time, in about 2004, the Husband signed documents effecting a transfer of his interest in the property to the Wife; at this time the property was valued at about $330,000. On the balance of probabilities, noting that the Husband speaks language L and the solicitor assisting the parties’ with the transfer document also spoke language L, and accepting the Wife’s evidence in relation to the transfer of title from the Husband to her, the Husband was probably aware that he was transferring his interest in the property to the Wife at this time.
Also at this time, in about 2004, the mortgage loan over the property was refinanced through Bank L by the Wife in the sum of $155,000, with the loan account 00 in the Wife’s name.
A joint bank account in the parties’ names with Bank L was established at about this time.
In 2005, the Husband’s personal loan to the Bank L was 2005 being Annexure B to the Wife’s Affidavit). It is likely that the Wife repaid and discharged this personal loan at about this time, and in this regard the Court refers to the copy customer receipt from Bank L dated 2005 being part of Annexure B to the Wife’s Affidavit.
In April 2008 the Husband borrowed about $5,391 from ANZ and in September 2008 he borrowed $9,165 from ANZ. These were personal loans and probably relating to the Husband’s gambling.
The Husband suffered a workplace injury to the middle finger of his right hand and in 2009 he received a workers compensation lump sum payment of about $43,000. About $36,500 of this sum was paid into the parties’ home loan account, and at least $5,600 was applied towards the Husband’s gambling debts.
After this work injury the Husband received weekly benefits of about $600 per week from Insurance Company M until about June 2010. Then he received Centrelink benefits until he obtained full-time employment in 2011. The Husband continued to work night shifts 6 days a week.
The Wife usually kept the Husband’s key card for their joint bank account. There were times when the Husband demanded his key card back and he then used it to withdraw money from this joint bank account. The key card would then be returned to the Wife.
In 2012, the Husband borrowed about $21,948 from Bank L, by way of personal loan, most likely to pay his gambling debts. By November 2013, his borrowings in this respect was some $16,023. The loan was repaid by about August 2014, probably through a further personal loan of the Husband with Bank L (see immediately below) at about this time, with a discharge payment of some $11,900.
In about August/September 2014, the Husband borrowed about $22,500 by way of personal loan from Bank L to pay personal loans relating to gambling debts; with these borrowings he repaid the above sum of $11,900 and took a “loan advance” of $10,404.
Especially in the months leading to the parties’ separation in 2014, the Husband made substantial withdrawals for gambling from the parties’ joint account with the Bank L. Between about March 2012 and about the end of 2014, the Husband withdrew at least about $78,719 in relation to gambling activities (the Court refers to the Husband’s summary of bank statements from the joint account during this period-see annexure F to his trial affidavit, as well as the Wife’s copies of bank statements 63, 65, 76, 77-see annexure E to her trial affidavit).
The parties’ joint account with Bank L was closed in late 2014. Thereafter, the Wife made the loan repayments on the property from her own account with Bank L(..82).
The Wife, post separation in about late 2017, paid $2,500 for the painting of the internal walls of the house.
The Husband lost his job in 2018 and he has not been able to obtain full-time employment. He has been on call with Centrelink and another employment agency which has provided him with work a few days a week.
The only amounts of money the Wife has received from the Husband were child support payments of about $190, later reducing to about $153, and eventually about $8 in mid-March 2018.
After the parties’ separation in 2014 the Husband moved in with his sister, and he pays her a nominal amount a week for food and accommodation.
The Wife performed the vast majority of homemaker duties during the parties’ relationship, including shopping, cooking, washing and ironing. The Husband’s maintenance including gardening work was minor compared to the Wife’s performance of homemaker duties.
BALANCE SHEET
The Court now sets out the joint balance sheet Exhibit A.
Balance Sheet
Name
GIANG and TRAM
File No
PAC320/2018«COURT__Court_Display»
Note: this document can be sent by electronic means between the parties prior to it being filed at court.
Date
02.08.2021«COURT__Hearing_date»
Time 9:30 am«COURT__Hearing_time»
Before
Ownership Description Wife Husband ASSETS 1. W Family home – B Street, Suburb C NSW $650,000.00 $650,000 2. H Motor vehicle - Motor vehicle 1 $2,000.00 $2,000.00 3. W Motor vehicle 2 $1,000.00 $1,000.00 4. H Savings account $200.00 $200.00 5. W Savings account $23,000.00 $23,000.00
Total $ 676,200.00 $676,200.00
ADDBACKS 6.
Total
LIABILITIES 7. W B Street, Suburb 2, NSW $4,000.00 $4,000.00 8. H Personal Loan - Bank L $25,000.00 $25,000.00
Total $29,000.00 $29,000.00
SUPERANNUATION Member Name of Fund Type of Interest Wife Husband 9. W Super Fund O $87,000.00 $87,000.00 10. H Super Fund P $15,000.00 $15,000.00 11. H Super Fund Q $25,000.00 $25,000.00
Total $ 127,000.00 $127,000.00
FINANCIAL RESOURCES Ownership Description Wife Husband
Total $ 0.00 $ 0.00
Wife Husband ASSETS $676,200.00 $676,200 .00 ADDBACKS $0 $0 LIABILITIES $29,000.00 $ 29,000.00 Total $647,200.00 $647,200.00 Including Super $774,200.00 $774,200.00
There is a lack of evidence as to whether items 4 and 5 represent matrimonial assets of the parties; they should be removed from the balance sheet. There is no persuasive evidence that item 8, the Husband’s personal loan for $25,000, represents a matrimonial debt and it too should be removed from the balance sheet.
The revised balance sheet is now set out:
Balance Sheet
Name
GIANG and TRAM
File No
PAC320/2018«COURT__Court_Display»
Note: this document can be sent by electronic means between the parties prior to it being filed at court.
Date
02.08.2021«COURT__Hearing_date»
Time 9:30 am«COURT__Hearing_time»
Before
Ownership Description Wife Husband ASSETS 1. W B Street, Suburb C, NSW $650,000.00 $650,000.00 2. H Motor vehicle 1 $2,000.00 $2,000.00 3. W Motor vehicle 2 $1,000.00 $1,000.00
Total $653,000.00 $653,000.00
ADDBACKS 4.
Total
LIABILITIES 5. W B Street, Suburb C, NSW $4,000.00 $4,000.00
Total $4,000.00 $4,000.00
FINANCIAL RESOURCES Ownership Description Wife Husband
Total $ 0.00 $ 0.00
Wife Husband ASSETS $653,000.00 $653,000.00 ADDBACKS $0 $0 LIABILITIES $4,000.00 $4,000.00 Total $649,000.00
$649,000.00
Accordingly, the parties’ net non-superannuation assets, representing the property, $650,000, cars, $3,000, and its associated mortgage loan, $4,000, is the net sum of $649,000. The parties’ superannuation total $127,000.
LEGAL PRINCIPLES
In Lotta & Lotta [2017] FamCA 50 Foster J stated:
281. The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19, Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203.
282. The Court must identify the existing legal and equitable interests of the parties’ in the property, the liabilities and financial resources of the parties’ at the time of the hearing and then whether it is just and equitable to make a property settlement order.
283. Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
284. There is no presumption that one or other party has the right to have the property of the parties’ divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4). The Court needs to conclude that it would be unjust or unfair to leave property rights intact under s 79(2) of the Act.
285. In many cases this requirement is readily satisfied where the parties’ are no longer in a marital or defacto relationship and, thus, for example, the common ownership or use of property by Respondent and Applicant will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
286. In particular, such a circumstance arises where both parties’ seek property adjustment Orders but are unable to agree as to same. Here the Applicant seeks an order for adjustment of property and the Respondent contends that there should be no such adjustment.
287. It is thus important to ascertain the present property and resources of the parties’ so as to facilitate a consideration of the s 79(2) question.
288. In some circumstances it is not possible to determine whether it is just and equitable to make adjustment Orders as to the parties’ present property rights without a consideration of s 79 (4) matters.
289. Section 79(4) requires a consideration of the contributions made by the parties’ as defined in s 79(4)(a) to (c). The Court must then consider s 79(4)(d) to (g) in particular the subjective considerations as to the parties’ by having regard to the provisions of s 75(2) in so far as they are relevant (s 79(4)(e)).
290. The Court can then consider the “justice and equity” of the actual Orders to be made: Russell & Russell [1999] FamCA 1875; (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate Orders” as provided for in s 79(1) of the Act.
Section 79(2) of the Act
The Court is satisfied that it is just and equitable in this case to alter the property interests of the parties in light of the breakdown of their relationship, the fact that they will no longer have the joint use and enjoyment of their property, and the fact that the continuance of the current legal ownership of their property would not afford them justice and equity. The parties join in seeking Orders for property adjustment.
Contributions
The Court adopts a two pool approach in respect to non-superannuation assets and superannuation assets in circumstances where there are significant contribution disparities as to each pool, but moreover where both parties make no contentions relating to contributions to the other party’s superannuation entitlements, seek no splitting Orders regarding such superannuation, and seek Orders that each party be entitled to retain their own superannuation entitlements.
Contributions: Pool A non-superannuation assets
The parties’ each brought into the relationship a car and modest savings of about $10,000.
In 1999 the parties purchased a property at Suburb R in joint names of $93,000. They borrowed $75,000 from Commonwealth Bank and utilised joint savings of $25,000. In 2001 the parties’ sold this property for $125,000. At the same time they purchased in joint names the property at B Street, Suburb C, NSW. They borrowed $200,000 from Financial Services Company M with the balance of $65,000 coming from the sale of the Suburb R property.
During the parties’ relationship, both parties worked in paid employment as factory workers. Viewing the matter holistically, both parties’ contributed their employment income towards repayment of the various home mortgage loans and/or towards payment of living expenses for the family and, accordingly, the Court would assess their respective direct and indirect financial contributions towards the 2 real estate properties as being approximately equal. In this context, the Court has not overlooked that the parties’ incomes differed during their relationship, and that the Husband’s income usually exceeded that of the Wife’s.
The Husband suffered a workplace injury to his right hand and in 2009 he received a workers compensation lump sum payment of about $43,000. About $36,500 of this sum was paid into the parties’ home mortgage loan account. Thereafter, and from about mid-2009, the Wife solely made the mortgage loan repayments, and the Husband’s income was utilised by the parties for the family’s living expenses, to the extent that such income was not used by the Husband for gambling related activities.
In Aleksovski v Aleksovski (1996) FLC 92-705, a majority of the Full Court of the Family Court of Australia, stated, inter alia:
In our opinion, in most cases, a damages verdict arising from a personal injury claim, whenever received, is a contribution by the party who suffered the injury. It should not be considered in isolation, for the reason that each and every contribution, which each of the parties’ makes to the relationship, must be weighed and considered at the same time.
The Husband contended that the payment of at least $36,500, referred to above, and paid to reduce the parties’ mortgage loan for the property at Suburb C, should be considered as a discrete financial contribution by him. On the other hand, the Wife contended that such payment should be seen in the context of the Husband contributing less employment income towards reduction of the parties’ mortgage loan following his work injury.
At the outset, the Court observes that the Husband’s workers compensation lump sum payment was not a damages verdict from a personal injury claim. There is a lack of evidence as to how the Husband’s workers compensation lump sum payment was calculated; for example, there is no evidence as to whether the lump sum comprised a component for pain and suffering or whether it comprised lost past and/or future earnings.
The Husband’s own evidence was that following the work injury he received weekly benefits in the sum of about $600 per week from Insurance Company M from February 2009 until June 2010. The Husband’s wages for the years 2009 to at least 2014 were reduced from previous wage earnings during the years from 2004 to 2008. The Husband’s workplace accident had occurred in about late 2008/early 2009, some 10 years after the parties’ marriage, and the Court observes that the parties’ relationship subsisted up until August 2014. In the circumstances, the Court would not ascribe any particular weight to the Father’s payment of $36,500 to the reduction of the parties’ mortgage loan but rather treats it as part and parcel of his financial contributions towards reduction of the parties’ mortgage loan, again taking into account in particular that his employment income would appear to have reduced in the years following his work injury.
Since separation in 2014 the Wife has been solely responsible for all mortgage repayments, and has maintained the property at Suburb C.
The Wife’s homemaker and parent contributions during the relationship were considerable and far superior to those of the Husband. Post separation, the Wife solely made contributions in these respects. Her contributions in this regard, both during the relationship and post separation, were contributions of substance.
It was common ground that during the parties’ relationship the Husband expended significant monies on gambling. Both parties’ contended that such gambling expenditure should be taken into account as an adjustment in favour of the Wife under section 75(2)(o) of the Act, however they differed significantly as to the extent of such adjustment. This gambling issue shall be considered under section 75(2) below.
The Husband contended that the Wife’s contributions to trial date should be assessed at 60%, and the Husband’s 40%. A similar submission was made by the Wife.
Overall, assessing the parties’ respective contributions holistically, in relation to the non-superannuation assets, the Court assesses contributions to the net non-superannuation assets, totalling $649,000, as at the date of final hearing, in favour of the Wife at 60% to the Husband’s 40%. This creates a disparity of $129,800 in relation to non-superannuation assets.
Pool A: Section 75(2)
The Wife, aged 55 years, would appear to be in reasonable health (for example, she continues in full-time employment) although she has had treatment, including surgical treatment, in relation to certain health conditions. She adduces no health professional evidence in relation to these conditions.
The Husband is aged 56 years. At the beginning of his trial Affidavit he describes his occupation as “worker”. The Husband changed his employment in 2017; he states that it is due to his cholesterol and diabetes “illness” for 9 years, however, there is no health professional material or indeed any other significant independent material before the Court to support this allegation.
As to earning capacity of the parties, the Husband’s annual income usually exceeded that of the Wife until February 2018 when the Husband lost his job. The Husband does not adduce evidence as to why he lost this job. Since that time he has not been able to obtain full-time employment, however he does not adduce any significant evidence as to why this is the case noting that he had previously worked as a general labourer for a long time. He has received both benefits from Centrelink and paid employment for the last two years. When he can obtain employment income he receives about $700 a week.
The Wife, on the other hand, remains employed as a general labourer with a company with whom she has been working for over 24 years. She earns $940 gross per week on average.
The Wife’s income earning capacity is presently superior to that of the Husband but not considerably so, and again, the Husband has not put any relevant evidence before the Court as to why he is unable to usually work in full-time employment apart from his bare assertion that his cholesterol and diabetes “illness” has led to this position.
The Wife, apart from the property, merely owns an old car, savings of $23,000, and superannuation of $87,000. Again, she works as a general labourer full-time earning $940 per week gross.
The Court observes that the Husband is living with his sister and pays only a nominal weekly board in the sum of $200 per week. He owns an old car, savings of $200, superannuation of $40,000, and has a personal loan of $25,000 owing to Bank L. It can be seen that his financial resources are significantly less than the Wife’s. Again, the Husband’s work, historically, has usually been that of a General labourer.
The Wife received minimal financial support from the Husband in relation to the children’s maintenance post separation. The daughter Ms E turned 18 years in 2017 and the son Mr F turned 18 years in 2018. The Wife asserts that Ms E and Mr F are financially dependent upon her; they are both engaged in tertiary studies. However, the Wife asserts that her net employment income is sufficient money for herself and the two adult children to maintain a modest lifestyle. The Court further observes that the Wife’s Financial Statement filed 26 February 2021 refers to the children each earning $150 on average per week.
The Husband asserts that he has received both benefits from Centrelink and paid employment for the last two years. He asserts that he has been on call with Centrelink and another employment agency which has provided him work a few days a week. His Financial Statement filed 20 November 2020 states that he receives Job Seeker benefits of $440 per week and rental allowance of $80 per week. His trial Affidavit states that his current income is about $400 a week if he cannot obtain work and $700 a week if he gets work.
The Wife has a modest lifestyle, which she should be able to maintain.
As for the Husband he lives with his sister. He does not adduce evidence that such accommodation is tenuous or short term. He does not adduce significant evidence relating to his lifestyle or standard of living, apart from historical gambling. He has modest superannuation. His financial resources are significantly less than those of the Wife. Prospectively, the Husband’s financial future is probably less satisfactory compared to the Wife.
The Court should now deal with the Wife’s wastage contentions made against the Husband by reason of his gambling throughout the parties’ relationship.
The Wife contends there has been relevant wastage by the Husband by reason of his gambling expenditure and related loans, when one has regard to legal principles set out in the decision of Baker J in Kowaliw, discussed immediately below.
The case which has come to define the scope of “waste” in the family law context is the frequently cited case of Kowaliw & Kowaliw [1981] FamCA 70; (1981) FLC 91-092 (“Kowaliw”).
In Kowaliw, Baker J made the following comments on the topic of “waste” at [10]:
[10] As a statement of general principle, I am firmly of the view that financial losses incurred by parties’ or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties’ has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties’ has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
[11] Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79.
At [18] and [19] of Kowaliw Baker J reiterated his earlier comments by stating:
If a party has acted in a manner to which I have referred earlier … then such conduct in my view and the economic consequences that flow therefrom are clearly matters to which the Court may have regard pursuant to the provisions of sec. 75(2)(o).
In Hamilton & Thomas [2008] FamCAFC 8 the Full Court of the Family Court of Australia stated:
34. In De Angelis and De Angelis [1999] FamCA 1609; (2003) FLC 93-133; (1999) 30 Fam LR 304, Lindenmayer and Finn JJ observed:
76. We agree that gambling is for some people a form of entertainment and that a party can be no more criticised for spending money on it than the other party can be criticised for spending money on sporting or other forms of entertainment...
35. Whilst their Honours then went on to say “however every case must depend on its’ own particular circumstances”, in our view, the circumstances of this case are apposite to the first observation, namely that for this family the gambling undertaken was no more than their normal form of entertainment and that the amounts involved were not so disproportionate as to, in our view, justify the trial judge in making any adjustment to the entitlements to the pool of assets of either of the parties’.
36. Over the course of the marriage of some 4 and a half years, the Wife’s losses at $100 a week would have totalled approximately $23,000. Offset as against those losses were the Husband’s losses of an unidentified amount. The losses had to be viewed in light of two key findings, firstly that these parties’ had non-superannuation assets of over $800,000 and superannuation assets of a further $500,000, and further the finding at paragraph 131 that “it was part of their lifestyle to attend at clubs on a regular and frequent basis”.
37. In our view there was nothing so disproportionate in relation to the losses incurred by the parties’ in the lifestyle that they chose, that would make it appropriate for there to be an adjustment of the available capital upon the breakdown of the marriage. More is required than simply the existence of gambling losses. There needs in our view to be some element of wastage that is disproportionate to the positive contributions being made by each of the parties’.
Ultimately, both parties’ sought to quantify the extent of the Husband’s gambling expenditure including related loans throughout the relationship. Their contentions differed.
On the balance of probabilities, the Court finds that the following monies were borrowed in relation to gambling debts of the Husband and/or likely spent on gambling activities by him, during the parties’ relationship, as described below:
(a)In 2004 the Husband owed Bank L around $30,000 having borrowed money from credit cards and personal loans (the Husband’s evidence at paragraph 41 and 42 of his Affidavit). (The Court observes that Annexure B to the Wife’s Affidavit merely refers to one loan with a balance as at in 2005 in the sum of about $19,000).
(b)In 2008 the Husband borrowed about $5,391 from ANZ and a further sum from ANZ in September 2008 of $9,165, both advances through personal loans to the Husband. These two amounts total $14,556.
(c)In 2012 the Husband borrowed about $21,948 from Bank L through a personal loan (see Exhibit I).
(d)In 2014 the Husband borrowed about $22,500 from Bank L through a personal loan, however $11,900 of this amount was used to repay the balance owing on the above borrowing of $21,948 and only $10,404 represented net extra debt by the Husband in relation to gambling (see Exhibit J referring to refinancing of part of the above May 2012 borrowing, $11,900, and a loan advance of $10,404)
(e)Between 2012 and about the end of 2014, the Husband withdrew at least about $78,719 in relation to gambling activities (the Court refers to the Husband’s Affidavit, paragraphs 49, 50, in particular paragraph 50 (e), Annexure F, the Husband’s summary of bank statements from the parties’ joint account with Bank L during this period, in particular his summary of his own withdrawals from this account from Statement 63 to Statement 77, as well as the Wife’s copies of bank statements 63, 65, 76, 77 in her annexure E).
(f)In summary, adding the above relevant figures, a total of about $155,627 is reached for gambling expenditure. (The Court notes the Husband in his written submissions contended for a total gambling figure of about $140,000 and the Wife contended in her oral submissions for a finding of about $173,000 for such expenditure.)
By reference to the value of the property of $265,000 at its purchase in 2001, its value of $330,000 in 2004, and its present value of $650,000, the mortgage debt for the property of $200,000 in 2001, and Bank L refinancing loan of $155,000 in about 2004, it can be seen that this sum of about $155,627 is significant, without even taking into account bank interest paid on the gambling related loans. The Court finds that the Husband’s gambling related expenditure, for this particular family with its financial circumstances (eg the parties’ respective wages, and the Wife gave the Husband $200 each week for his personal expenses) was unreasonable and amounted to wastage.
Submissions were made by the Husband relating to what was contended to be reasonable gambling entertainment expenditure, averaged out annually, over the parties’ relationship, which submissions are not accepted. The Court accepts the Wife’s submissions in this regard, in a general sense. The Husband, taking the figure of $155,627, had gambled about $191 per week (about 814 weeks in their relationship).
The Court observes that the property is now valued at $650,000. The mortgage liability is only $4,000. The financial consequences for the parties of the Husband’s gambling probably represented a loss of opportunity for the parties to firstly, have paid off the mortgage liability more quickly, and secondly, the loss of opportunity for the parties to save funds.
On the evidence before the Court, the Court finds that but for the Husband’s gambling related expenditure, the mortgage debt relating to the property probably would have been repaid earlier and probably by at least separation, and thereafter at least the Wife would have probably accumulated increased savings (see further below).
Accordingly, the Court finds that the husband committed wastage within the Kowaliw sense, which should be taken into account by the Court pursuant to section 75(2)(o).
Absent Kowaliw, and in any event, the justice of the case requires this gambling expenditure to be taken into account in the Wife’s favour pursuant to section 75(2)(o) because the found gambling expenditure represented such a significant sum by contrast to the property’s value and related mortgage debt, both present and historically, and the financial circumstances of this family.
The Wife had refinanced the property in 2004 in the sum of $155,000 to Bank L. The sum of about $155,627, (see above) had probably been incurred for gambling related expenditure during the parties’ relationship. Putting aside bank interest payable over that period in relation thereto (for which there is no detailed evidence and noting the parties did not attempt to calculate such interest in any event), then it can be seen that at least by separation date in 2014 the mortgage loan over the property would probably have been repaid. Again, it is likely that post separation the Wife would have accumulated increased savings once the mortgage debt had been repaid and without any mortgage repayment obligation. The Wife was in full-time employment post separation, and to date, as she had been during the parties’ relationship. Her Financial Statement filed 26 February 2021 refers to a weekly payment for the mortgage of $193 or $10,036 per annum.
If one assumes the mortgage debt for the property had been repaid, but for gambling related expenditure, by separation in 2014, with the Wife saving $10,036 per annum over the last 7 years by not having to make mortgage repayments, a figure of about $70,252 is reached.
As to the likelihood of the Wife accumulating savings after the mortgage debt had been repaid, which the Court accepts (contrary to the Husband’s submissions), the Court takes into account, inter alia, that the Wife has herself accumulated savings of $23,000 as at trial date; she personally conducted a modest lifestyle (for example, she retains a motor vehicle 2 valued at $1,000); she has been in regular full-time employment over the course of 24 years with the one employer; her persistent concern historically in relation to the Husband’s gambling activities and its affect upon the family’s finances; and her prudent handling of the family’s finances including provision of limited weekly monies to the Husband for his personal expenses. Having made those comments, the Court nevertheless takes into account the real chance that the Wife may well have spent some modest part of her savings (again, assuming the mortgage debt had been repaid by separation) on the children’s maintenance noting the limited child support being received from the Husband.
In relation to this gambling issue, the Court takes into account that it probably would have been reasonable for the Husband to have spent a modest sum each week on gambling related expenditure; a modest portion of his $200 per week personal expenses allowance from the Wife would probably have been reasonable.
The Husband ultimately contended in oral submissions that an adjustment under section 75(2)(o) in favour of the Wife, in relation to gambling related expenditure by the Husband, should result in an adjustment to the value of 10%. He contended that the Husband’s personal section 75(2) factors justified an adjustment in his favour of 5%. Accordingly, the Husband submitted that a net 5% adjustment under section 75(2) in favour of the Wife should be made.
The Wife submitted that a section 75(2) adjustment in her favour should be made overall between 20-30%. She submitted that the final adjusted contribution finding in favour of the Wife should be 85 – 90%.
Taking into account all the above matters under section 75(2), there should be an adjustment in favour of the Wife of 7.5%. This creates a disparity of $48,675 in favour of the Wife in relation to non-superannuation assets ($649,000). This results in an adjusted contributions finding of 67.5% in favour of the Wife, creating a disparity in her favour of $227,150.
Contributions: Pool B superannuation assets
There is a paucity of evidence relating to the history of the growth of the parties’ respective superannuation entitlements.
No party sought a formal superannuation splitting order.
The Husband’s superannuation entitlements are $40,000. The Wife’s superannuation entitlement is $87,000.
The parties sought an Order that they each retain their respective superannuation entitlements.
Each party made their own contributions to their own superannuation funds.
There is no evidence of direct financial contributions made by one party to the other’s superannuation entitlement either during the relationship or post separation to date. Neither party made any submission to the contrary.
There is no persuasive evidence of any significant indirect contribution made by either party to the other’s superannuation entitlement either during the relationship or post separation to date. Neither party made any submission to the contrary. In any event, even if there could be found to exist some indirect contribution by either party, it is unquantifiable by reason of the paucity of evidence before the Court.
The Court finds that the parties’ made no relevant contributions to the other’s superannuation entitlement. Each party should retain their own superannuation entitlements.
Pool B: section 75(2) superannuation assets
There is a disparity in the parties’ respective superannuation assets.
The Court refers to its discussions above, relating to section 75(2) under Pool A.
Both parties’ are in their mid 50s with many years ahead of income earning potential before retirement. The Court refers to the parties’ present respective incomes. There is no call for an adjustment under section 75(2) by reason of the parties’ disparate superannuation entitlements.
Justice and equity
The parties’ shall retain their respective superannuation assets.
There shall be, in favour of the Wife, a 67.5% division of the net non-superannuation assets.
The Husband’s 32.5% of the net non-superannuation assets, $649,000, is $210,925. The Wife’s 67.5% of $649,000 is $438,075.
In relation to the non-superannuation assets, should the Wife retain:
(a)The property, together with its mortgage debt, net $646,000,
(b)Car $1,000,
Leaving her $647,000, with the Husband retaining:
(a)Car, $2,000,
then the Wife will be required to make a cash payment to the Husband of $208,925. She should have two months to make this payment, otherwise the property should be sold. The Court recognises that the Wife, by reference to her Financial Statement, probably has no capacity to pay the Husband the above sum.
In the event that the property is sold, then the net proceeds of sale of the property, after payment of the mortgage debt, and sale expenses, shall be divided between the parties as to 32.5% to the Husband and 67.5% to the Wife, with a minor adjustment for the Wife’s car of $1,000 and the Husband’s car of $2,000.
The Husband can utilise the sum he receives pursuant to the Court’s orders to, inter alia, pay off debt of $25,000. He remains living with his sister apparently without difficulty. He has superannuation of $40,000. The parties are in their mid50s and the Court refers to its discussions above relating to their respective earning capacities.
The Wife, if the property is sold, can utilise her share of the proceeds of sale to possibly purchase residential premises or at least rent such premises. She has savings of $23,000. She has superannuation entitlements of $87,000.
The Court is of the view that its proposed property adjustment Orders will represent a just and equitable property settlement between the parties.
The Court’s Orders will reflect the above matters. Should the property be sold at a price greater than the parties’ agreed value of $650,000 then the parties can make adjustments consistent with these Reasons.
I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Newbrun. Associate:
Dated: 8 October 2021
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