Gore v Roles
[2007] TASSC 18
•13 April 2007
[2007] TASSC 18
CITATION: GORE v ROLES [2007] TASSC 18
PARTIES: GORE, Michelle Gaye
v
ROLES, Martin John
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: BDR M28/2004
DELIVERED ON: 13 April 2007
DELIVERED AT: Hobart
HEARING DATES: 28 and 29 March 2007
DECISION OF: Master S J Holt
CATCHWORDS:
Family Law and Child Welfare – De facto relationships – Adjustment of property interests – Relevant considerations – Just and equitable.
Aust Dig Family Law and Child Welfare [496]
REPRESENTATION:
Counsel:
Applicant: T McGuire
Respondent: In person
Solicitors:
Applicant: Temple-Smith Partners
Respondent: In person
Judgment Number: [2007] TASSC 18
Number of paragraphs: 28
Serial No 18/2007
File No BDR M28/2004
MICHELLE GAYE GORE v MARTIN JOHN ROLES
REASONS FOR DECISION MASTER S J HOLT
13 April 2007
This is an application for an order for the adjustment of interests in respect of property pursuant to the Relationships Act 2003, s40. The applicant and the respondent were partners living in a personal relationship within the meaning of the Act between January 2000 and May 2004. There are two children of the relationship. Chelsea born 28 January 2001 and Meg born 24 May 2004. Having regard to these features there is no doubt that the pre-requisites set out in the Act, s37, for the making of an order for the adjustment of interests in respect of property are satisfied.
There was undisputed evidence of the following matters:
hThe applicant is aged 38 years. She is employed part-time as a sales assistant at Coles, New World Supermarket at Devonport.
hThe respondent is aged 37 years and is currently the recipient of a Commonwealth Government sickness benefit.
hAt the time the relationship commenced the applicant was the sole owner of a house at 49 Hiller Street, Devonport, which she had purchased for $60,000 in late 1997. A mortgage statement for March 2000 (a couple of months after cohabitation commenced) shows that at that time the mortgage debt was $51,704.45. The applicant also owned a 1990 model Toyota Corolla motor vehicle and household furniture and effects. She had 500 shares in Coles Myer which she had been able to acquire in 1994 through a Coles Myer sponsored employee share plan. These shares are currently worth about $8,000 and the balance currently outstanding on a loan from Coles to enable the applicant to acquire the shares is about $500. At the time the relationship commenced she had about $1,000, and no debts other than the mortgage debt and loan from Coles to fund the acquisition of the shares.
hIn addition to this property the applicant had a prospective entitlement to superannuation benefits. She had been a member of a superannuation scheme since about 1983. Her superannuation member statement shows that her withdrawal benefit as at 30 June 2006 was $31,327.82.
hThe respondent moved into the applicant's Hiller Street property in January 2000. He was a self-employed carpet and vinyl layer having his own motor vehicle and tools of trade. His business was successful. On 26 April 2000 he paid the sum of $10,000 off the applicant's mortgage loan and on 27 October 2000 he paid a further $8,000 off the loan.
hOn 28 January 2001 Chelsea was born.
hOn 16 February 2001 a contract was signed by the couple for the purchase of a small farm and house at Sheffield Main Road, Lower Barrington, for the purchase price of $125,500.
hOn 22 February 2001 the applicant redrew on her mortgage over the Hiller Street property the sum of $18,000 which had previously been paid off the mortgage by the respondent.
hThe purchase of the Barrington property was settled with mortgage finance being provided by Westpac. The total acquisition cost including stamp duty and legal costs was about $135,000. The starting mortgage debt was about $114,000. In short, the initial acquisition outlay was about $21,000.
hOn 31 July 2002 the applicant's Hiller Street property was sold for $69,500 and the net proceeds being about $16,000 was paid off the Barrington mortgage.
hThe couple had two bank accounts with Westpac. One was the mortgage account and the other was a joint account with either party being able to make withdrawals.
hWhilst the couple cohabited the applicant spent some of the time not working because of the birth of Chelsea. Otherwise she worked part-time for Coles paying her wages into the joint account out of which came weekly direct debits of about $210 to the credit of the mortgage account. The respondent however was the major contributor to the household running expenses.
hOn 9 May 2004 the applicant left the Barrington property and went to live with the respondent's parents at Latrobe. (The applicant says that this was the date of separation, but the respondent says that separation occurred on 26 May 2004 when the applicant told him that she did not wish to return to live with him at the Barrington property.)
hAt separation the applicant had a credit card debt of $985 and the respondent had a credit card debt of about $4,000.
hOn 9 May 2004 the mortgage account was in debit in the sum of $73,840.99, but it had a redraw facility allowing the account to be taken into a debit balance of up to about $105,000, meaning that redraws of about $31,000 were available.
hOn 9 May 2004 the joint account had a credit balance of $5,994.90.
hOn 10 May 2004 the respondent withdraw from the joint account $4,500.
hOn 18 May 2004 the respondent gave up work.
hOn 24 May 2004 Meg was born.
hOn 25 May 2004 the respondent transferred $25,000 from the mortgage account, to the credit of the joint account.
hOn 31 May 2004 the respondent withdrew $23,000 from the joint account.
hOn 3 June 2004 the applicant withdrew $1,500 from the joint account.
hOn 7 June 2004 the respondent transferred $2,500 from the mortgage account to the credit of the joint account and over the next few days several cheques were presented against the account totalling about $1,850.
hOn 10 June 2004 the respondent abandoned occupancy of the Barrington property in favour of the applicant.
hShortly prior to the separation the respondent had purchased some bricks to use on house renovations with the amount owing for the purchase being $3,660. On 17 June 2004 the respondent transferred $4,000 from the mortgage account to the credit of the joint account. A few days later cheque number 100018 for $3,660 was presented.
hBy 17 June 2004 the redraw facility on the home mortgage account had been virtually exhausted with the debit balance of the mortgage account then being $104,515.89.
hOn 12 August 2004 the applicant left the Barrington property taking all the furniture with her.
hThe respondent kept assets which were not household assets, namely, three panel vans (two of which were unregistered), a caravan, a tractor, a truck and some livestock.
hOn 1 September 2005 orders were made by consent in the Federal Magistrates Court whereby the applicant was to have custody of the children for about two-thirds of the time and the respondent to have custody for the other one-third.
hSince separation the applicant has paid some rates which fell into arrears, but otherwise up until November 2005 the respondent paid most outgoings on the Barrington property including the mortgage instalments.
hIn October 2005 the respondent asked the applicant to join with him in applying for a $25,000 increase on the Barrington mortgage so that the money could be used to renovate the property ready for sale. The applicant refused and the respondent ceased making the weekly mortgage payments in November 2005.
hOn 22 December 2005 the respondent was arrested for an alleged breach of a family violence order. He was refused bail.
hOn 30 December 2005 about six weekly mortgage payments had been missed and the joint account was in debit in the sum of about $3,600.
hThe accounts were not put back in order and the bank commenced arrangements for a mortgagee sale.
hIn June 2006 the respondent was released from custody following his arrest on 22 December 2005.
hOn 4 September 2006 the Barrington property was sold by Westpac for $205,000.
hOn 7 December 2006, pursuant to an order of the court, Westpac paid into court the balance proceeds of the sale being $78,190.66.
hThe parties now rent houses in Devonport. The applicant pays $160 per week for rent for her house and the respondent for his house pays $180 per week for rent.
hThe applicant continues to work part-time for Coles and for the year ended 30 June 2006 had earned about $16,000. In addition, depending upon her earnings from week-to-week, she receives a CentreLink benefit of between about $300 to $350 per week.
hThe respondent has not been in regular employment since May 2004 and is currently on a sickness benefit.
hNeither party pays child support.
The applicant claims that a just and equitable adjustment of the interests in respect of property is for her to have 75% of the proceeds of the mortgagee sale with the parties otherwise retaining the assets and resources which they currently have. In support she relies upon the following propositions:
hShe was a significant financial contributor to the acquisition of the Barrington property as she applied her equity in the Hiller Street property to a reduction of the Barrington mortgage.
hAt the time of separation the respondent redrew virtually all of the funds available for redraw on the mortgage account being about $31,000 and of this the only sum which the applicant took for her own benefit was the withdrawal of $1,500 on 3 June 2004.
hThe two children are young and the applicant is their primary carer. She receives no child support payments from the respondent.
hLittle or no allowance should be made in respect of the applicant's superannuation resource as that has been in existence for about 23 years and in comparison the period of cohabitation being about 4⅓years is short.
hNo adjustment should be made in respect of the Coles shares because they were acquired in 1994 well before the relationship commenced and the relationship has been of no relevance in their conservation.
hThe applicant's earning capacity is affected by her obligations as primary carer for the two children.
hThe respondent has a superior earning capacity. Throughout the relationship his earnings were significantly higher than hers.
hAlthough the applicant took all of the furniture shortly after separation the respondent had kept some assets. Those assets included three panel vans, two of which were unregistered, a caravan, a tractor, a truck and some livestock. There were also the bricks purchased for $3,660 for proposed renovations and some windows which were kept at the Barrington property and which were available for disposal by the respondent.
The respondent in his affidavit of 23 February 2007 said that he sought distribution in his favour of 100% of the money paid into court. By the conclusion of the case, however, he had modified his view and said in closing submissions that a just and equitable distribution would be a payment to him of 50% of the money paid into court.
In support of his case the respondent made a number of assertions of fact which were disputed by the applicant. In particular, the respondent made the following claims:
hAt the start of the relationship he had $25,000 in cash and a further $20,000 being money which his father had lent him when his father retired in 1998. The $20,000 is yet to be repaid to his father and he has none of the $45,000 left.
hThe sum of $18,000 redrawn by the applicant on her mortgage account on the Hiller Street property in February 2001 was not applied to the acquisition of the Barrington property and accordingly he ought have credit for this money as the redraw was only possible because of the $18,000 which he had earlier paid off the mortgage
hIn early 2004 there was about $8,000 kept in the house in cash being profits from the sale of farm produce, mainly potatoes. He gave this money to the applicant to lend to her brother so that he could get a deck put on his house.
hOf the $25,000 he redrew on the mortgage account in May 2004 he gave $6,000 in cash to the applicant.
hWhen the relationship ended he was left with a number of business and household debts which after giving the applicant $6,000 he paid exhausting the funds redrawn on the mortgage at the time of separation.
Further, the respondent says that he now has virtually nothing whereas the applicant has or has had the benefit of $85,000 in assets and resources being:
applicant's superannuation $31,000
applicant's Coles shares ($8,000 value less the balance owing on the
share loan being $500) $ 7,500
furniture kept by the applicant (replacement cost not present value) $10,000
mortgage redraw on Hiller Street $18,000
loan to the applicant's brother $ 8,000
cash given to applicant in May 2004 $ 6,000
the withdrawal made by the applicant from the joint account on 3.6.04 $1,500
the applicant's car $ 3,000
Total $85,000
Finally the respondent says that the adjustment should reflect a credit to be given to him for his attempt to persuade the applicant to agree to increasing the mortgage by $25,000 so that he could renovate the property improving its value ready for sale.
All of these matters raised by the parties, with the possible exception of the last, are matters which the Court can have regard to under the Act in considering what is an appropriate order for the adjustment of interests in respect of property. There was no submission to the contrary.
None of the factual bases underlining the applicant's arguments were in dispute. However, as I have said, most of the facts asserted in support of the respondent's arguments were in dispute.
The respondent said in his affidavit filed 26 October 2004 at par25:
"When I met Michelle I had $25,000 in cash which I had accrued as personal savings, my carpet laying business and work van, modest amount of household furniture, a large quantity of tools and $20,000 my father had lent me. I used the $20,000 to pay Michelle's mortgage in or about 1999. In or about 2000/2001 Michelle withdrew $20,000 against the mortgage on the Hillier [sic] Street property. I do not know what became of this money."
The applicant gave evidence that the respondent had told her that he had $4,000 not $45,000. She tendered bank statements showing that the amount paid off her mortgage was $18,000 and that that amount had been paid in two instalments. The first being a payment of $10,000 on 26 April 2000 and the second being a payment of $8,000 on 27 October 2000. No real detail was given by the respondent about the loan. There was no documentary evidence tendered showing either the existence of the money or the existence of the loan. There was no evidence as to the purpose for which the loan was given. The fact that the amount paid off the mortgage was in two instalments six months apart is consistent with the funds becoming available from earnings from the respondent's carpet and vinyl laying business, which the parties agreed was very successful at the time, rather than out of loan funds provided by the respondent's father.
The evidence contained in the applicant's bank statements is that the redraw by the applicant on the Hiller Street mortgage was $18,000 and not $20,000. The redraw occurred on 22 February 2001 which was within seven days following the couple signing the contract for the purchase of the Barrington property. The redraw was in the same amount as the respondent had earlier paid off the mortgage. It was within a month of the birth of the couple's first child, Chelsea. There was no evidence of what the applicant did with the money if it was anything other than giving it to the respondent to apply to the purchase of the Barrington property.
There was no dispute that about $8,000 was kept in cash in the Barrington house. There was no dispute that this money was the net proceeds of the sale of farm produce. There was no dispute that this amount was lent to the applicant's brother to assist him in building a new deck for his house. However, none of this is of assistance to the respondent because there is no evidence from him or any other source that the loan has not been repaid in full to him. Under cross-examination by the respondent the applicant said that her brother had repaid the borrowed money in full to the respondent. This is all the evidence there is on the subject.
The respondent said in his affidavit at pars, 6, 22 and 23:
"6… I consider that we separated on the 26th May 2004 as that is the day that Michelle told me she did not want to go back to our farm and wanted to stay with her brother.
…
22Prior to our separation on or about the 13th May 2004 I withdrew $25,000 from our mortgage account and transferred this sum to our Westpac Savings Account. I did this with Michelle's knowledge and consent. We intended to purchase a new car following Meg's birth as our car at the time was a Corolla and it was not large enough for a family of four. The balance left after purchasing the car was going to be used to assist with renovations on the property, to purchase baby items for Meg and to allow me to have 3 months off work to help care for Meg.
23As we separated shortly after I withdrew on the mortgage we did not purchase the car as we intended. I withdrew $6000 from the account and gave this to Michelle shortly before our separation on or about the 18th May 2004. I do not know what she used this money for. The balance of the money has been used to pay a variety of household bills and joint debts."
The applicant gave evidence that she did not consent to the withdrawal and that she did not receive the $6,000 as alleged. The bank statements show that the $25,000 was transferred from the mortgage account into the joint account on 25 May 2000 and on 31 May 2000 $23,000 was withdrawn from the joint account. It was common ground that this withdrawal was made by the respondent. There was no withdrawal of $6,000. No reason was advanced as to why the applicant, the day following the birth of Meg and the day before she told the respondent that she would not be returning home would have consented to the respondent increasing the mortgage liability by $25,000. If there had been any plans about buying a family car, renovating the house and the respondent taking paternity leave to look after the newborn baby they became irrelevant with the separation. The respondent had no documentary record or other proof of giving his recently estranged partner $6,000.
I am unpersuaded by the evidence that:
h the respondent brought into the relationship $45,000;
h the respondent is indebted to his father in the sum of $20,000;
hthe sum of $18,000 redrawn by the applicant on her mortgage account on the Hiller Street property in February 2001 was applied to any purpose other than the acquisition of the Barrington property;
hthe applicant has recovered, will recover, or might recover $8,000 from her brother for money lent to him;
h$6,000 was given to the applicant out of the funds redrawn on the Barrington mortgage in and around May 2004.
The respondent has produced no documentary evidence showing how he disposed of the sum of $23,000 taken out of the joint account on 31 May 2004. There is his assertion which I have not accepted that of this sum he gave $6,000 to the applicant. As to using $17,000 to pay bills I accept that as the respondent had ceased working that some or all of the $17,000 was eventually applied to the payment of bills, but nonetheless I consider that it is appropriate to treat the $23,000 withdrawn by the respondent as property of the couple which has already been distributed for the benefit of the respondent. I am of this opinion because it appears that bills in the past were covered without dipping into capital. The mortgage on the Barrington property started off at $114,000. It was reduced by $16,000 when the applicant's Hiller Street property was sold. By May 2004 it had been reduced to about $74,000. The only reason that part or all of the $23,000 might have been dissipated on expenses was that the respondent had decided to stop working. To reinforce my conclusion that the redraw if it was spent on bills was only so spent because the respondent decided to give up working is the respondent's own evidence. He said that the redraw was made with the intention of buying a family car, renovating the house and paying three months worth of household expenses whilst the respondent took paternity leave to help look after Meg.
I regard the $4,500 and the $23,000 taken by the respondent out of the joint account on 10 May 2004 and 31 May 2004 respectively and the $1,500 taken by the applicant out of the joint account on 3 June 2004 as interim payments to be taken into account in the final adjustment of the interests in respect of the property.
There were also redraws on the mortgage account made by the respondent of $2,500 on 7 June 2004 and $4,000 on 17 June 2004. Most of this money, however, was used in honouring cheques presented on the couple's joint account. One of those cheques was for $3,660 for the bricks purchased before the couple had separated. There is also evidence that for the purpose of renovations some windows had been purchased for about $2,000. Ultimately, the bricks and the windows were lost because it appears that they were left on the property at the time of the mortgagee sale. The amount paid by the respondent for the bricks and the windows roughly equates with the amounts of these two mortgage redraws. For this reason I have decided not to treat these two redraws as if they were interim distributions to the respondent.
There is also the fact that the joint account ended up in arrears of about $4,000 when it had been in credit at the time of separation. However, I have decided not to count this against the respondent as the weekly mortgage payments of a little over $200 were made by direct debits from this account and so if this account was not in debit the mortgage account would have been even further in debit.
The parties each have a modest motor vehicle and some furniture. I see no reason to divide that property and so I will exclude it from the pool of assets to be divided.
The applicant's Coles Myer shares were acquired by her well before the relationship commenced and the respondent has had no influence on the conservation of this asset. I accept the submission made on behalf of the applicant that this asset should be treated separately from the rest and retained by the applicant rather than being taken into account in any apportionment. The shares will be excluded from the pool of assets to be divided.
Taking into account interest earned the money in court, being the proceeds of the mortgagee sale of the Barrington property is in the vicinity of $79,000. I add to this the $4,500 and the $23,000 already taken by the respondent and the $1,5000 already taken by the applicant. Had these amounts not been taken by the parties the proceeds in Court being the cash equity in the Barrington property after the mortgagee sale would have been about $108,000. It is this equity which I have decided is the only property which should be apportioned.
In considering what is a just and equitable distribution of the assets I take into account:
h The Barrington property was the major asset.
h The parties both made substantial capital contributions to that property.
hDuring the relationship the respondent was by far the major financial contributor from income.
hThe respondent's earning capacity is likely not to be as good as it was prior to separation. He has not been in regular work since separation and although there was no evidence identifying his current illness or condition there was evidence that he currently relies for income on a sickness benefit.
hThe applicant has a long established employment record with Coles and continues to work at the Coles supermarket in Devonport part-time earning about $16,000 per year. In addition, she receives a CentreLink benefit of about $300 to $350 per week depending upon her earnings.
hThe respondent has no superannuation resource. His evidence was that he did have about $1,300 invested in accounts managed by the Retirement Benefits Fund Board, but that he cashed that in on a hardship application some time ago.
hThe applicant has a superannuation resource in excess of $30,000.
hThe respondent had the benefit of the Barrington property from 12 August 2004 until the bank took possession in 2006. During much of this time, however, the respondent met outgoings on the property including the mortgage instalments.
hSince separation the respondent only had the benefit of the Barrington property from early June 2004 to 12 August 2004. She did however later pay some rates arrears.
hThe applicant has the care of the two small children for about two-thirds of the time and the respondent for about one-third of the time. Neither makes child support payments.
The respondent contended that in deciding upon an appropriate adjustment I should take into account in his favour his attempt to borrow $25,000 in late 2005 to renovate the property with a view to increasing the price which might be obtained for it. I do not propose to take this matter into account. In light of the way in which the respondent had dealt with the mortgage account at the time of separation in May 2004 there was nothing unreasonable in the applicant refusing to join with the respondent in an application to borrow a further $25,000 from the bank. Even if the respondent had obtained the extra finance it is unlikely that he would have been able to undertake any substantial renovations prior to the mortgagee sale in any event. The respondent was in custody between 22 December 2005 and June 2006. By the time of this release in June 2006 the bank already had underway arrangements for a mortgagee sale.
Having regard in particular to the fact that the applicant has the care of the two small children for most of the time and the financial consequences of that I have decided that it is just and equitable that the apportionment should slightly favour the applicant.
As I have already said, there is about $79,000 in court being the balance proceeds of the mortgagee sale of the Barrington property. I have also explained my reasons for concluding that the sums of $4,500 and $23,000 taken from joint funds by the respondent and the sum of $1,500 taken by the applicant should be regarded as interim payments out of the asset pool. The total pool including these interim payments is $108,000. A just and equitable distribution is 55% to the applicant. That is $59,400. The applicant already has $1,500 of this and so rounded off the amount which will be ordered to be paid to her out of the money in court is $58,000.
I will hear the parties as to the precise form of the orders to be made and as to costs.
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