Gillan and Gillan
[2006] FMCAfam 438
•4 August 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GILLAN & GILLAN | [2006] FMCAfam 438 |
| FAMILY LAW – Property proceedings – long marriage – no children – no assets of significant value owned by husband at time of marriage – farming property inherited by wife 40 years ago – pool in excess of one million dollars – adjustment added to the pool due to failure to provide full and frank disclosure of financial circumstances – adjustment for initial financial contribution. |
| Family Law Act1975 (Cth), ss.75(2), 79 |
| Bremner and Bremner (1995) FLC 92-560 Money and Money (1994) FLC 92-485 |
| Applicant: | MR GILLAN |
| Respondent: | MS GILLAN |
| File number: | MLM 3615 of 2006 |
| Judgment of: | Connolly FM |
| Hearing dates: | 3 & 4 August 2006 |
| Date of last submission: | 3 August 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 4 August 2006 |
REPRESENTATION
| Counsel for the Applicant: | Mr C.G. Gidley |
| Solicitors for the Applicant: | McNab McNab & Starke |
| Counsel for the Respondent: | Ms M.L. Smallwood |
| Solicitors for the Respondent: | Pearsons |
ORDERS
The Wife pay to the Husband the sum of $118,718.75 (“the payment”) on or before the second day of December 2006 (“the date”).
That contemporaneously with the payment:
(a)The Husband do all such acts and things and sign all such documents as may be required to withdraw the Caveat secured against the property, by him, at his expense and relinquish all right, title and interest in the property situate and known as Property B in the State of Victoria.
That in the event that the whole of the payment has not been made by the date then the Wife sign all documents and do all things necessary to sell the land more particularly described in certificate of title volume 2xxx folio 2xxx (known as the “Old House Block”) and upon settlement of the said sale the proceeds of the sale be applied:
(a)first to pay all costs, commissions and expenses of (the said trust transfer and) the sale;
(b)secondly to discharge any encumbrance affecting the real property;
(c)thirdly so much of the payment as is then outstanding together with interest thereon at the rate of 10 per centum per annum adjusted monthly from the date to the Husband;
(d)fourthly the balance to the Wife;
That pending the payment or completion of the sale:
(a)The Wife have the sole right to occupy the real property and during such right of occupation the Wife pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the real property as they fall due;
(b)The parties hold their respective interests in the real property upon trust pursuant to these orders; and
(c)Neither party encumber the real property without the consent in writing of the other party.
(d)There be liberty to apply with respect to the terms and conditions of sale.
That unless otherwise 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 superannuation and other property (including choses-in-action) 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.
The application of the Husband filed on the 20th day of April 2006 and the response filed on 14 June 2006 are otherwise dismissed.
THE COURT NOTES
That the parties intend these orders shall be as far as practicable finally determine the financial (and other) relationships between them and avoid further proceedings between them.
IT IS NOTED that publication of this judgment under the pseudonym Gillan & Gillan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 3615 of 2006
| MR GILLAN |
Applicant
And
| MS GILLAN |
Respondent
REASONS FOR JUDGMENT
The proceedings
This is an extempore judgment arising from the property proceedings initiated by the husband. The applications by the parties were significantly modified by the time the final submissions were made. The husband sought a payment based on an adjustment of the total pool of assets in the proportion of 60 per cent to the wife and 40 per cent to himself. The wife, on the other hand, sought an adjustment of 70 per cent, 30 per cent in her favour.
Each of the parties filed affidavits and statement of financial circumstances. There was substantial agreement about the pool of assets.
The background
The husband is 61 years of age. He is a truck driver and farmer. He currently lives at Property G. The husband has repartnered with Ms C who is a child care worker. The husband's income from his trucking business, G Transport, was $13,468 in 2004. He has not filed any tax return since that date. His partner's income is $475 net per week.
The wife is 62 years of age. She is a farmer and a housekeeper. She lives at Property B. As well as limited income from her farming pursuits, the wife earns income as a housekeeper with a number of neighbouring farmers and she also receives benefits from Centrelink. Her statement of financial circumstances discloses a total of $281 per week.
The parties married on 30 October 1971. They finally separated on 2 August 2004. There are no children of the marriage. At the commencement of the relationship, the husband had no assets of significant value. He was employed as a farm labourer. The wife was the owner of farming property which she inherited 40 years ago from her uncle, Mr B. It comprises approximately 770 acres and a house in which the parties have lived the entirety of their married lives. The wife continues to reside there. When the wife inherited the property, she sold a small parcel of land to pay the probate of $14,000.
During the marriage, the husband was employed as a truck driver and farm labourer initially. He was at that stage an employee and then, not very long after that, he became self-employed and up until the end of February this year, continued in that self-employed regime. He conducted his trucking business through a company, G Transport. He also worked on the farm where the parties lived the entire period of the marriage.
The wife was employed part-time as a cleaner and domestic assistant for a number of neighbours and she has continued doing that role to this date. She was also responsible for the care of the house and the garden, as well as being responsible for the care of the cats and dogs and poultry. She also worked on the property.
The law
The approach to the determination of an application under section 79 is well established by authority. It involves firstly identifying the property, liabilities and financial resources of the parties at the time of the hearing; secondly, evaluating the contributions made by the parties, as defined in section 79(4)(a) to (c); thirdly, evaluating the matters contained in section 75(2) insofar as they are relevant; and fourthly, in determining what order the court should make under section 79 the court must also be satisfied that it is just and equitable to do so.
Conclusions and findings
At the commencement of the proceedings, I was told that the parties had substantially agreed upon the pool of assets and its value. The only disagreement was whether the plant and equipment which had been valued by Lockwood and Co. should be included at fair market value or at auction value. I am satisfied that the appropriate valuation is the fair market value which should be able to be achieved according to the valuer. A reasonable period of time is allowed for the sale and the asset freely exposed to the open market.
The auction value is the minimum price one would expect to achieve at auction. The circumstance in this case is that the husband, who intends to retain all the plant and equipment, has no intention of getting rid of any of it in the near future, and if he decides to sell it ultimately, there is no reason to expect he will not be able to achieve a fair market value.
Accordingly, the pool of assets and values were as follows: the farm, $1,020,000; the husband's superannuation, $106,000; the husband's car, $34,000; the husband's National Bank account, $15,000; the wife's National Bank account, $5500; the wife's motor vehicle, $6000; the plant and equipment as valued by Lockwood at a fair market value, $249,950, making a total of $1,436,450.
After hearing the evidence of the parties, it was clear a number of adjustments needed to be made to the asset pool. Firstly, the wife did not include the value of some 500 to 700 sheep because she says they have little or no value. The husband, who raised the issue of the sheep, had done nothing to obtain a valuation and as a result, I am unable to attribute any value to them, although I suspect that they do in fact have little value, if I have regard to what the wife says about the drought conditions of the past few years.
While the husband conceded that he used $140,000 for the purchase of land acquired post-separation, his evidence was that the sale of the husband’s car had only achieved $30,000 and not $34,000, the additional funds came from a business account. This account had $8000 to $10,000 in it at separation and I have taken $9000 to be the adjustment. There was then a further amount to be added of $8750 which he had received for the sale of the tractor over and above what its fair market value had been included at in the valuation.
The husband had also acquired a caravan for $4000 and paid stamp duty and costs of an unknown amount on the land purchase. Further, he still had about $8000 in the business account, some of which of course may have been earned post-separation.
While I accepted that the oral evidence of both the husband and the wife was truthful, both parties, however, were at best very tardy about the disclosure of appropriate information about various aspects of their financial affairs. The wife, as I have indicated, provided no valuation for the sheep and the husband had no documentation for his bank account, superannuation benefits received and items sold.
Given all of the items not included in the original pool of assets, I have determined it is appropriate to add an adjustment in the sum of $24,000 to the pool, representing those additional items in the possession of the husband. I am comforted in adopting such an approach by what the Full Court said in Chang v Su (2002) FLC 93-117 in circumstances where there has not been a full and frank disclosure of financial circumstances by a party, it was open to the court to find that an indeterminate undisclosed amount was held by one of the parties.
In adding the $24,000 to the pool, the total becomes $1,460,450, of which the husband has retained $428,950, made up of $140,000 in his property, $249,950 in plant, $15,000 in his personal account and $24,000 in adjustments.
Both parties indicated as part of their final submissions that the contributions other than the wife's initial contributions of bringing the farming property into the marriage should be considered as equal. I accept that proposition. The wife, however, submitted that there should be an adjustment for this initial contribution of 20 per cent. The husband contended it should be 10 per cent.
The wife argued that the property was initially unencumbered and remained so and what was there now was substantially what she brought into the marriage. The husband, on the other hand, contended that he had worked on it during the marriage and done various improvements, including renovations to the house and building various sheds and maintaining the fences.
The wife also conceded that the husband was responsible for three‑quarters of the farming work and that he paid for fuel and various other farm expenses from his trucking business. There was no evidence as to any increased value of the property and what it can be attributed to.
The Full Court of the Family Court has looked at the issue of initial financial contributions on a number of occasions over the years. In Bremner and Bremner (1995) FLC 92-560, which was a 23-year marriage, the Full Court looked at the various approaches that have been adopted over the years. In that case, the parties were married in 1969 and separated in 1992. There were two children of the marriage. At the commencement of the marriage, the husband owned a block of land. Both parties worked throughout the marriage. The wife was primarily responsible for rearing the children. The trial judge assessed the parties' contributions as equal and made no adjustment for section 75(2) factors. The property was effectively divided equally between the parties.
The husband appealed to the Full Court. His main ground was the manner in which the trial judge dealt with his initial direct financial contribution of the block at the time of the marriage. The appeal was dismissed and in dismissing it, there were various discussions about some of the earlier decisions. In Money and Money (1994) FLC 92-485, which was decided in 1994, the Full Court of the Family Court said there were two approaches suggested towards significant initial contributions. Lindenmeyer J at page 81, 055 stated that:
“… the contribution by spouse A during the marriage can only be regarded as an offsetting contribution to an initial contribution by spouse B to the extent that the contribution made by spouse A during the marriage exceeds the contribution made by spouse B during the marriage.”
Fogarty J disagreed with that approach, stating at page 81, 054 that:
“…an initial substantial contribution by one party may be eroded to a greater or lesser extent by the latter contributions of the other party, even though those latter contributions do not necessarily, at any particular point, outstrip those of the other party.”
The Full Court preferred Fogarty J's approach. There was no evidence in that case of the value of the husband's land at the time of the marriage, although the court assumed that the value must have been low.
I am satisfied that it would be appropriate in this case to make an adjustment in favour of the wife for the contribution made by bringing the farming property into the marriage in the amount of 62.5 per cent to the wife and 37.5 per cent to the husband. That means that from the total pool of $1,460,450, the husband should receive $547,668.75, of which he has already received $428,950, leaving a payment of $118,718.75.
While I initially had some hesitation about the proposition that there should be no further adjustment for the section 75(2) factors, I bear in mind that both parties are of similar age, 61 and 62, and are nearing the end of their respective working lives. I also bear in mind the fact that while the husband has not disclosed his income for the last two years in 2005 and 2006, other than to say he earned not much more than in 2004. I accepted his evidence on that subject and that he has in February giving up his trucking business because of the increased overheads and stagnant state of remuneration with respect to interstate haulage. I also bear in mind that neither party has had more than a modest income for some considerable time.
To the extent that it might be argued that the husband's financial future is rosier than that of the wife because of his partner's income, the fact that he will receive significantly less from the asset pool than the wife in my view offsets any such advantage. Accordingly, I am satisfied that there should be no further adjustment from the section 75(2) factors.
In assessing whether an order that the wife pay the husband the sum of $118,708.75 and each otherwise retain the chattels and their respective possessions is otherwise just and equitable, it seems to me that such an order can be funded by the wife selling part of her land and yet not significantly diminishing her income. Such payment would also enable the husband to meet his needs by providing moneys to assist him to complete his house.
There should be 120 days for the wife to raise the funds. I am prepared to hear from counsel as to whether they can agree that a particular parcel of land can be sold in default of payment. There will otherwise be the usual provisions for the sale.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Connolly FM
Associate: Nadia Morales
Date: 5 September 2006
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