GORMAN & GORMAN
[2014] FCCA 1358
•10 July 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| GORMAN & GORMAN | [2014] FCCA 1358 |
| Catchwords: FAMILY LAW – Property – marriage of twenty-six years in duration – marriage produced three children – parties divided family responsibilities along conventional lines – husband was main breadwinner – wife was homemaker and parent – assessment of contributions – husband skilled (occupation omitted) who worked long hours and renovated properties – wife diligent parent and homemaker – parties’ contributions qualitatively different in nature – considerations relevant to how comparison is to be made – special contributions – assessment of section 75(2) factors – valuation issues – husband has embarked on process of renovation of investment properties owned by parties – appropriate date to value property – valuation issues in respect of motor vehicles – disclosure issues – assessment of credit – just and equitable. |
| Legislation: Family Law Act 1975 (Cth), ss.4, 42, 75 & 79 |
| Briese & Briese (1986) FLC 91-713 Watson & Ling [2013] FamCA 57 In the Marriage of DJM and JLM (1998) 23 Fam LR 396 Waters & Jurek (1995) FLC 92-635 D & D [2003] FamCA 473 Mallett & Mallett (1984) FLC 91-507 Figgins & Figgins (2002) FLC 93-122 Clauson & Clauson (1995) FLC 92-595 | ||
| Applicant: | MS GORMAN | |
| Respondent: | MR GORMAN |
| File Number: | ADC 1004 of 2013 |
| Judgment of: | Judge Brown |
| Hearing dates: | 28, 29 April, 30 May & 13 June 2014 |
| Date of Last Submission: | 13 June 2014 |
| Delivered at: | Adelaide |
| Delivered on: | 10 July 2014 |
REPRESENTATION
| Counsel for the Applicant: | Ms J Cocks |
| Solicitors for the Applicant: | Peter G Deegan |
| The Respondent: | In Person |
ORDERS
In full and final settlement of all claims for settlement of matrimonial property:
The proceeds of sale of the property known as and situate at Property S in the State of South Australia and being the whole of the land comprised and described in Certificate of Title Register Book Volume (omitted) Folio (omitted) (hereinafter referred to as “the former matrimonial home”) be applied as follows:
(a)in payment of all costs of and incidental to the sale of such property, including real estate agent’s fees, advertising fees, conveyancing costs and any associated fees;
(b)to discharge any mortgage secured upon the property;
(c)the balance then remaining to be disbursed as follows:
(i)55 per cent to the wife;
(ii)45 per cent to the husband.
Concurrently with the settlement of the sale of the former matrimonial home the husband pay to the wife the sum of TWO HUNDRED AND SEVENTY FIVE THOUSAND DOLLARS ($275,000.00).
Concurrently with the payment to the wife referred to in Order (2) hereof, the wife transfer to the husband her interest in the properties situate at and known as:
(a)Property F in the State of South Australia being the whole of the land comprised and described in Certificate of Title Register Book Volume (omitted) Folio (omitted) (hereinafter referred to as “the Property F property”);
(b)Property J in the State of South Australia being the whole of the land comprised and described in Certificate of Title Register Book Volume (omitted) Folio (omitted) (hereinafter referred to as “the Property J property”).
Contemporaneously with the transfer from the wife to the husband of the Property F property and the Property J property pursuant to Order (3) hereof, the husband is to discharge all mortgages secured against each such property and indemnify the wife in respect of all mortgages, charges and other outgoings relating to each such property.
Pending transfer of the Property F and Property J property from the wife to the husband pursuant to Order (3) hereof, the husband pay all outgoings in respect of each such property including, but not limited to, mortgage instalment payments, rates, taxes, levies and insurance.
Within 14 days of the date of the orders, the husband transfer to the wife all his right, title, interest and estate in and to the Mitsubishi (omitted) motor vehicle registration no (omitted) and thereafter the wife have the sole use and benefit of the aforesaid vehicle absolutely.
Pursuant to section 90MT(4) of the Family Law Act 1975 a base amount of $56,000.00 be allocated to the wife in respect of the husband’s superannuation interest in the (omitted) Super Scheme (hereinafter referred to as “the (omitted) Super Scheme”) and that pursuant to section 90MT(1)(a) whenever a splittable payment becomes payable in respect of that interest, the wife is entitled to be paid the amount to be calculated in accordance with the Family Law (Superannuation) Regulations 2001 in respect of that base amount and there is a corresponding reduction in the entitlement of the husband.
The Trustee of the (omitted) Super Scheme, the husband and the wife in accordance with the Family Law (Superannuation) Regulations 2001 shall do such acts and things and sign all such documents as may be necessary to calculate the payments entitlements of the wife in accordance with Order (7) to have effect from the operative time, which shall be the fourth business day after the day on which a sealed copy of these Orders is served on the Trustee of the (omitted) Super Scheme.
Including but without limiting the effect of the preceding orders hereto, the husband shall retain for his sole use and benefit absolutely free from any further claim or demand of the wife:
(a)any furniture and furnishings in his possession, power and control;
(b)any motor vehicle in his possession, including the Ford (omitted) and Ford (omitted) motor vehicles referred to in the Reasons for Judgment herein;
(c)any savings, shares and investment in his name;
(d)his tools of trade;
(e)personal effects;
(f)any other real and/or personal property and/or financial resources of the husband or in the husband’s name and/or possession not otherwise specified herein.
Including but without limiting the effect of the preceding orders hereto, the wife shall retain for her sole use and benefit absolutely free from any further claim or demand of the husband:
(a)any furniture and furnishings in her possession, power and control;
(b)any motor vehicle in her possession;
(c)any savings, shares and investment in her name;
(d)personal effects;
(e)any other real and/or personal property and/or financial resources of the wife or in the wife’s name and/or possession not otherwise specified herein.
Pursuant to s.106A of the Family Law Act 1975 the Registrar of the Federal Circuit Court at Adelaide is appointed to execute any necessary deeds or instruments required to be completed to give effect to these Orders in the event either party refuses or neglects to comply with any Order herein.
All applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Gorman & Gorman is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 1004 of 2013
| MS GORMAN |
Applicant
And
| MR GORMAN |
Respondent
REASONS FOR JUDGMENT
Introduction
1.The parties to these proceedings are Ms Gorman “the wife” and Mr Gorman “the husband”. The proceedings relate to the settlement of matrimonial property.
2.The parties married on (omitted) 1986. They have three children – X born (omitted) 1992; Y born (omitted) 1996; and Z born (omitted) 1998.
3.Of these children, only Z is directly dependent on his parents for financial support. X has recently begun a (occupation omitted) career; Y is studying (omitted) at University.
4.The parties separated, in difficult circumstances, between December 2012 and February 2013. Initially, they separated under the one roof of their former marital home, located at Property S, “the Property S property”.
5.The wife continues to live at the property, although it has been placed on the market for sale pursuant to an order made by this court on 29 April 2014. The progress of sale of the property has not been smooth, because there have been disputes about how the property should be sold and who should construct a pool fence required before the property can be transferred to a new owner. These issues, trivial in themselves, are indicative of the mistrust between the parties.
6.On 18 February 2013, there was an incident between the parties, at the Property S property, to which police were called. The wife alleges that she was assaulted by the husband. Mr Gorman has been charged with assault, but denies the offence.
7.The police, on Ms Gorman’s behalf, applied for an intervention order against the husband, which was granted by the Holden Hill Magistrates’ Court on 7 March 2013.
8.One of the practical consequences of this order was that the husband was excluded from the Property S property. Mr Gorman continues to feel hard done by because of the order which, in his view, “was unjustly applied and is being manipulated to facilitate separation”.[1]
[1] See husband’s Affidavit filed 23 April 2014 at paragraph 6.
9.My impression of Mr Gorman, formulated over four days of hearing, during which he has represented himself, is that he is deeply bitter at the end of the marriage between the parties and is struggling to come to terms with the consequences of the marital breakdown, both in an emotional and financial sense.
10.As a consequence, he is deeply resentful of the wife. This attitude has caused him to become passively resistant to any sensible and expeditious resolution of the proceedings. Notwithstanding Mr Gorman’s understandable difficulties adjusting to his new circumstances, Ms Gorman is entitled to have her application dealt with and the financial relationship between the parties concluded.
Background
11.Mr Gorman is a (omitted) and (omitted) by trade, as well as an accomplished handy person and “jack of all trades” so far as domestic building and renovation is concerned. Ms Gorman, to her credit, acknowledges Mr Gorman’s aptitude in this regard. She describes him as being “very handy”.
12.Mr Gorman is now fifty-two, having been born on (omitted) 1962. He has worked all his adult life, starting his apprenticeship with the (employer omitted), when he was sixteen and thereafter pursuing a twenty-seven year career with the (employer omitted).
13.In addition, he ran his own business, doing (omitted) work out of hours for private customers to supplement his (omitted) wages. Undoubtedly, he worked very hard.
14.At the time of separation, the husband was in poor health and at a low ebb emotionally. In November 2012, he had undergone major throat surgery to cure sleep apnoea. In the aftermath, he was diagnosed with depression. He has also recently had his gall bladder surgically removed.
15.As a consequence of these medical conditions, Mr Gorman has not been in regular employment of late. It is, however, the wife’s position that Mr Gorman has done some (omitted) jobs, for long standing customers, during the period since the parties separated, which he has attempted to hide from her and those advising her.
16.This issue is emblematic of the parties’ current mistrust of one another, which has significantly flavoured the proceedings before the court. It is the wife’s view, whether through malice for her or a desire to extract more from the parties’ marital assets than he is entitled to, the husband has embarked on a course of conduct to frustrate a fair outcome of the proceedings.
17.Ms Gorman is fifty-one years of age. She was born on (omitted) 1963. She left school after year 11 and found work as a (occupation omitted) for the (employer omitted) . She left the paid workforce shortly prior to the birth of X and thereafter has devoted herself to homemaking and parenting responsibilities exclusively until Z started school. Since then, she has had a number of part-time jobs.
18.It is Ms Gorman’s case that she was the spouse who was primarily responsible for tending to the children’s needs and making sure the family home ran efficiently. It is her case that she did the vast majority of the washing, cooking and cleaning for the family. To Mr Gorman’s great credit, he accepts that Ms Gorman was an accomplished homemaker. In his terminology, Ms Gorman deserves “accolades for what she did for the children”.
19.Since 2007, Ms Gorman has had a variety of jobs. Most recently as a (occupation omitted) with the (employer omitted). She was made redundant in February 2013, at which stage her average gross pay was $469.22.[2]
[2] See Annexure B to the wife’s Affidavit filed 31 March 2014.
20.At present, the wife is working, on a part time basis, as a (occupation omitted). She earns $540.00 gross per week. In addition, she receives government benefits to augment her income in an amount of $166.00 per week. It is in these circumstances, the wife contends it is inevitable that the Property S property be sold, as she cannot afford to retain it.
21.Mr Gorman has been assessed to pay $32.58 child support per month for Z. This is based on an adjusted taxable income of nil for Mr Gorman; and one of $16,914.00 for Ms Gorman. In these circumstances, it is the wife’s position that Z will remain financially dependent upon her for the next few years.
22.In these circumstances, it is Ms Gorman’s case that her modest level of income, when combined with her responsibility for Z, militate in favour of the parties’ matrimonial assets being divided slightly in her favour.
23.Although Ms Gorman acknowledges that the husband is not currently engaged in full time employment, she believes that, in the foreseeable future, he will be able to resume work as a (occupation omitted). In this context, she would categorise his income earning capacity as being markedly superior to hers.
24.In all these circumstances, it is her position that the parties’ marital assets should be divided 55/45 per cent in her favour. As previously indicated, Mr Gorman was employed by (employer omitted) in its (omitted) for a significant number of years.
25.As a consequence he has accrued superannuation entitlements of approximately $150,000.00. The wife’s superannuation entitlements are more modest, being around $30,000.00 in value.
26.It is the wife’s position that there should be a splitting order made, in respect of the husband’s superannuation, in order to bring about an equalisation of the parties’ respective superannuation holdings, which would be appropriate given the length of the marriage between the parties.
27.At one stage, in these proceedings, Mr Gorman was represented by solicitors, who prepared a response on his behalf. On the face of the documents at least, the parties are not a significant distance apart. In his response,[3] the husband proposes an equal division of the parties’ assets.
[3] Husband’s Response filed 1 November 2013.
28.However, during the course of the hearing itself, Mr Gorman has resiled significantly from this position. Whilst acknowledging Ms Gorman’s outstanding contributions as a parent and homemaker, it appears to be his position that his overall contributions as the family’s breadwinner should be assessed as being superior to those of Ms Gorman.
29.In these circumstances, he contends that the parties’ marital assets should be divided, at the very least, 55/45 per cent in his favour and more properly it should be close to 60/40 per cent.
30.In order to fully understand Mr Gorman’s position, it is necessary to provide more detail regarding the parties’ financial relationship together. During the course of their marriage, the parties purchased several residential properties, which were renovated and then sold at a profit.
31.It is Mr Gorman’s case that he was the main protagonist behind this enterprise and did a great deal of the building and renovation work required, which saved the parties significant expense. Often this work was done at weekends or at night time. Further, it is Mr Gorman’s case that what work was beyond his skill, he organised and supervised personally, again saving expense for the parties.
32.Although he does not put it as such, it appears to be Mr Gorman’s case that these various contributions, when coupled with his other direct financial contributions as a wage earner, should be given special recognition by the court.
33.Essentially, it is Mr Gorman’s case that his endeavours as a (occupation omitted) are out of the ordinary and significantly outweigh the wife’s contributions, made over many years, as a parent and homemaker.
34.In this context, Mr Gorman is opposed to there being any equalisation of the parties’ superannuation holdings. It is his position that his financial contributions towards the parties’ current total superannuation are significantly greater than those of the wife. In these circumstances, he contends that any split made by the court, from his (omitted) Superannuation, in the wife’s favour, should be modest.
35.The parties’ differing views about how their respective marital contributions should be assessed by the court are not the end of the controversies between them. They also differ about what the future is likely to hold for each of them, particularly in a financial sense.
36.Mr Gorman does not believe that he will be able to return to work as a (occupation omitted) any time soon. As he is now approaching his mid-fifties and the work he has done in the past has been physically demanding, he contends that it is unlikely he will be able to work in this field again, given the inevitable decline in his constitution.
37.In these circumstances, he believes the wife’s prospects are not necessarily more problematic than his own. In addition, he points to the fact that Z is sixteen years of age and so not likely to be financially dependent on his parent for much longer. Accordingly, he opposes that there be any weighting made in Ms Gorman’s favour for factors arising under section 75(2) of the Family Law Act.
38.The parties also have significant disagreement about the extent of their matrimonial property and how it is to be valued, particularly what is the fairest date on which to fix a valuation. These disputes are complex and how they are to be resolved depends, to some extent, on findings of fact required to be made by the court following its assessment of the credibility of each of the parties.
39.At the end of their relationship, besides the Property S property, the parties owned two other investment properties. These properties are located at Property J “the Property J property” and Property F, “the Property F property”.
40.During the course of the parties’ marriage, the Property F property was tenanted and Mr Gorman oversaw its maintenance. Property J is more recently purchased. In addition, each property was subject to a mortgage. In the case of Property F, in favour of the (omitted) Bank; in the case of Property J, in favour of the (omitted) Credit Union.
41.In themselves, the properties in question are unexceptional residential properties, each located in an ordinary suburban setting. They are each similar to many other properties, which are frequently sold in the suburbs where they are located. As such, it should be routine for each of the parties to reach an agreed value in respect of them.
42.This has not proved to be the case. The parties disagree about the value of each these two properties. Each has retained a valuer to value the properties in question. In the wife’s case, Mr O, who inspected each property in January 2014. In the husband’s case, Mr A, who inspected them in September of 2013.
43.Mr O, in his valuation of the Property F property described its condition as being “gutted internally” [4] in the sense that it had been stripped of much of its “second fix”. In these circumstances, he adopted a method of valuation known as the summation method.
[4] See Valuation Report dated 24 January 2014 of Mr O at page 4
44.It being his view that it would have been inappropriate to value the property by means of comparing it to similar properties, in the locale recently sold to arrive at a value by means of comparison with sales of comparable properties. This being the most common method of valuation of suburban property.
45.However, it was Mr O’s opinion that, given the state of the Property F property, there were no similar properties, recently sold, available to him to provide suitable comparisons. Accordingly, he adopted the alternative methodology of a summation valuation.
46.By means of this method, he ascribed a value to each aspect of the property – the land; the dwelling itself; and external improvements and sundries, such as a shed and fencing and totalled them. However, in respect of the house, as it was in a “gutted” condition, he applied a 30% discount on its valuation.
47.This led Mr O to arrive at a valuation, at the date of inspection, of $380.00 per square metre for the house itself. This being 70% of what he considered it per square metre value of $546.20, prior to the removal of its second fix. It is this calculation which is controversial.
48.There is no doubt that the person who is responsible for the removal of the second fix at the Property F property is Mr Gorman. He takes considerable umbrage at the description of the property as “gutted”. In his view, the changes are not significant and are easily remediated. It is also his position that the property is certainly habitable.
49.His valuer, Mr A did undertake a process of comparing the property to others recently sold in its location. By means of such comparison, Mr A arrived at an as is valuation, in September 2013, of between $380,000.00 and $400,000.00.
50.However, much of this exercise is beside the point. Both Mr O and Mr A agreed that it is problematic for any vendor to sell a property in a state of semi-renovation. Vendors prefer to buy either a completed property or one which is open to being renovated. I accept that the Property F property is currently semi-renovated.
51.From the wife’s perspective, Mr Gorman embarked upon this process of renovation without any reference to her, after the parties had separated. In these circumstances, it is her case that the fair means for the court to allocate a value for the Property F property is to extrapolate backwards from Mr O's January 2014 valuation to reach its pre-renovation value, with its original mid 1970’s fit out. This exercise produces a valuation of $441,500.00.
52.From the husband’s perspective, this valuation is both inflated and unfair to him. It is his case that, prior to their separation, he and the wife had an agreement to renovate the Property F property, as they had done with other properties in the past, with him doing much of the work.
53.The wife rigorously refutes this assertion. It is her case that she had no input into what she would categorise as the husband’s unilateral decision to begin extensive renovations on the Property F property. In particular, she characterises the decision as one of financial imprudence, given that it was no longer possible to tenant the property in question, as it was essentially uninhabitable.
54.This situation placed her under a deal of financial stress. Up until early April of 2013, the mortgage on the property was paid in advance, as rent received was credited to the mortgage. There is a dispute between the parties as to when the lease ended. The wife asserts it was mid-February of 2013; the husband asserts it was December.
55.This controversy has some relevance to the issue of whether the wife did or did not know of the renovation plans and whether those arose before or after the parties’ separation. It is Ms Gorman’s case that the first she knew of the renovations was when she received Mr O’s valuation report, in early 2014.
56.The wife was able to negotiate a hardship moratorium with the Bank concerned, after the tenancy ended. However up until 5 January 2014 she paid the sum of $4,049.40 in respect of mortgage payments to the (omitted) Bank.[5] In addition, she paid other outgoings arising in respect of the property including land tax and council rates.[6] There is no controversy that the husband did not make any mortgage or direct financial contributions towards the property until 2014.
[5] See wife’s affidavit filed 31 March 2014 at paragraph 30
[6] See Exhibit B
57.It is the wife’s case that the husband has been entirely disingenuous about the renovations at Property F. She believes that he has significantly reduced the value of the property either to spite her or more probably so that he can acquire the property at a significantly reduced value, which he can then recoup by renovating the property and then selling it.
58.Although Mr Gorman’s formal application does not specify it, his position to the court, at final hearing, is that he wishes to acquire the wife’s interests in both the Property F and Property J properties. In these circumstances, it is the wife’s case that the husband has a vested interest in ensuring that the value of these properties is as low as possible, hence his removal of much of the second fix at the Property F property.
59.In this context, she points to various examples of Mr Gorman’s conduct, since the parties’ separated, which she asserts demonstrates his mala fides both towards her and the court process and provide corroboration of her position that he is intent on securing a financial advantage over her come what may. These include the following:
·His failure to provide proper discovery of financial documents, particularly his working banking account(s);
·In this context, she points to her contention that the husband has worked in the period since the parties separated, which she supports by means of an internet banking statement which she has obtained;
·What she asserts was his unilateral action in embarking on renovations on both investment properties;
·His disingenuous attitude towards renovations completed on the bathroom and toilet at the Property J property;
·His passive resistance to the sale of the Property S property; and
·His disposal of a (omitted) trailer, which he removed from the former matrimonial home after the parties separated.
60.The husband has been living in the Property J property since around mid-2013. This property has also been subject to some renovations, but not as extensively as those at Property F. These renovations also occasion controversy.
61.The parties purchased the property in June of 2012. The purchase price was $208,000.00. It is a former Housing Trust property, which Mr A described as providing a “basic standard of accommodation”. The parties agree that the property was purchased as a renovation opportunity.
62.In January of 2014, Mr O was not able to inspect the bathroom and toilet at the property as Mr Gorman had sealed them off. The reason provided by Mr Gorman for this was that he was in the process of clearing asbestos. The import being that renovations on the areas concerned had not as yet been completed. He maintained this position at trial.
63.This is not Ms Gorman’s evidence. It is her position that she inspected the property in January 2014 and observed that the original mosaic tiled floor and fit out had been replaced by new tiling; built in bath; shower alcove; and dual flush toilet.
64.On the basis of this evidence, although he was unable to inspect the bathroom and toilet in question, Mr O valued the property, as is, in January 2014 at $238,000.00. Mr O used recent sales figures of comparative properties to reach the value.
65.In addition, in reaching this valuation, Mr O included a square 74.5 square metre metal shed, which Mr Gorman had begun constructing after separation and some new fence posts and fencing placed on the front boundary. In his trial affidavit, Mr Gorman has deposed that he has spent $10,000.00 on the shed and $6,500.00 on the front fence.
66.Interestingly, Mr A, who inspected the property in September 2013 noted that there had been a complete update of all wet areas at the Property J property. In addition, he noted other elements of refurbishment throughout the property, including repainting and up‑dating of the kitchen.
67.As these elements were then not present, he did not include the shed or fence. In these circumstances, Mr A valued the property at $215,000.00 as at 2 September 2013. Mr Gorman continues to press the court to adopt Mr A’s valuation in preference to that of Mr O.
68.It is common ground between the parties that Mr Gorman drew down the sum of $68,488.79 from the mortgage secured against the Property F property. He has not accounted to the wife as to how this sum has been utilised. Certainly no accounting has been made as to whether it has been used to fund any or all of the renovations commenced at either of the investment properties.
69.It is Mr Gorman’s evidence that he has had virtually no income since the parties separated. He has not claimed social security and according to him has been supporting himself through loans and gifts from family and friends. Ms Gorman acknowledges that since February of 2014, she has paid no further mortgage payments in respect of either Property F or Property J.
70.The wife calculates that she has spent the sum of just under $5,000.00 in respect of outgoings directly related to the two properties. She concedes that Mr Gorman has been paying the mortgage payments on both properties during 2014. In these circumstances, she categorises the parties’ respective contributions to the mortgages to be equal for all intents and purposes.
Conduct of proceedings
71.These proceedings have taken far longer to be finalised than their level of complexity warrants. The delay is solely attributable to Mr Gorman. The wife commenced the proceedings in March of 2013. They were listed for their first directions hearing on 13 May, on which occasion Mr Gorman was ordered to file his answering material within 21 days.
72.No responding material was filed by him until November of 2013. In the meantime, he failed to attend a court ordered conciliation conference scheduled for July 2013, after indicating his willingness to attend. Another two conciliation conferences failed to produce agreement.
73.A case which, at the most, should have occupied two days took up four. In my assessment, the controversy arising about the value of the two investment properties, which required evidence from both Mr O and Mr A, can be best described in the old Australian word furphy. When the issue is deconstructed, it has no substance whatsoever.
74.Regrettably, in my assessment, Mr Gorman’s attitude to these proceedings is best summed up as being one of passive resistance. He presents as a man with a chip on his shoulder, who is deeply resentful towards his wife and the consequences of her bringing these proceedings.
75.He is however, in my assessment, not a deeply calculating or cunning person. His level of dishonesty, although not to his credit, was almost transparent in its simplicity and resulted, more often than not, in Mr Gorman metaphorically shooting himself in the foot. The problem for the court is in discerning what is fact and what is fiction from his evidence, as there does not always appear to be a rational basis for his apparent deception.
76.The most rational explanation for Mr Gorman’s unacceptable behaviour in these proceedings is that he remains deeply shocked at the demise of his marriage and continues to struggle emotionally with adjusting to his new circumstances. As such, he does not always think clearly. For his emotional situation, the court can only record its sympathy.
77.However, be this as it may, Ms Gorman is entitled to have her application determined appropriately and an end brought to the financial relationship between the parties. In addition, Mr Gorman is required to be frank about his financial situation and honest in his evidence. If he is not, there are liable to be consequences.
78.The parties to property proceedings, brought under the Family Law Act, in this court, are under a duty to make a “full and frank disclosure” of their financial circumstances.[7] This duty has been described as being “fundamental to the whole operation of the Family Law Act in financial cases…”[8]
[7] See Federal Circuit Court Rules at Rule 24.03
[8] Per Smither J in Briese & Briese (1986) FLC 91-713 cited with approval by the Full Court in Black & Kellner (1992) FLC 92-287 at 79,133
79.In Weir & Weir the Full Court of the Family Court said as follows:
“…the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contributions, or to properly assess section 75(2) factors.”[9]
[9] Weir & Weir (1993) FLC 92-338
80.Accordingly, the duty to make a full and frank disclosure, in financial matters brought under the Family Law Act, does not arise merely by virtue of the rules or practice of the court but rather is a fundamental rule of law, which arises because of the necessity for the court, in each property proceeding arising before it, to consider all aspects of the financial circumstances of the parties concerned.[10]
[10] See Luciano & Luciano (unreported) Family Court (O’Ryan J delivered 8 May 2000) at paragraph 373
81.In appropriate cases, there may be adverse consequences for a party, if it can be shown that he or she has deliberately failed to make a proper disclosure of some material financial fact. Such a non-disclosure may result in the court drawing an adverse inference against the party, who has not made a proper disclosure.
82.In Weir & Weir[11] the Full Court said as follows:
“It seems to us that once it has been established that there has been a deliberate non-disclosure…then the court should not be unduly cautious about making findings in the favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature…We should have thought that the courts jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.”
[11] See Weir & Weir (supra) at 79,593
Credit and Findings
83.I do not think that Mr Gorman has been completely frank in his evidence to the court. On the other hand, Ms Gorman presented as a methodical and organised person. Unlike Mr Gorman, she is meticulous in the records she maintains, including her diary. She presented as wearied and resigned by the proceedings but honest and realistic about their outcome. Her evidence is far preferable to that of the husband.
84.In respect of the major factual issues in dispute in the case – when the lease at Property F was terminated; if and when the renovations were done at the bathroom/toilet at Property J; and most significantly, whether there was or was not agreement to renovate Property F; I prefer the evidence of Ms Gorman to that of Mr Gorman.
85.In regards to this last issue, Mr Gorman relies on the lease of the property, which was for six months and was executed on 29 June 2012. Ms Gorman’s evidence is that the tenants concerned over held, vacating the property in the following February.
86.She was present when the property was inspected in connection to the release of the security bond. She noted the relevant appointment in her diary, the date being noted being 10 February 2012. Ms Gorman’s evidence is that she attended to the majority of the parties’ financial affairs, it being her position that she had some aptitude in this area given her years of employment with the (employer omitted).
87.Her evidence in this regard was totally compelling. In addition, it was her evidence, which I accept, that the property, although not enjoying the most modern of amenities was suitable for rental as it was. Again I accept this evidence. In these circumstances, particularly given the fact the parties were separated, it made no sense for her to have agreed to renovate the property.
88.From her perspective, a more rational decision would have been to pursue a further tenant for the property, so that the necessary mortgage payments could be defrayed, pending a resolution of the parties’ matrimonial property proceedings. In these circumstances, I have no difficulty coming to the conclusion that the decision to remove the second fix from the Property F property was entirely one which originated with Mr Gorman.
89.In this context, I do not accept his evidence that the removal of such things as cornices; the ceiling in one of the bedrooms and the entrance; and the removal of tiling and amenities from the bathroom; is to be regarded as cosmetic. In this regard, the fact that Mr Gorman takes umbrage at Mr O’s use of the word gutted and makes much of the fact that Mr O made an error in his mis-description of a straw ceiling in the rumpus room and his concession that the kitchen could be utilised is irrelevant.
90.The fact is that Mr Gorman removed significant fittings from the property, which in my assessment rendered it un-tenantable. A view also held by Mr O. In addition, in the more than two years since the parties separated, the property has produced no income.
91.Regardless of the husband’s skills as a renovator and builder, the works commencement by him have not concluded and can have no beneficial implications for the wife. In these circumstances, I am also satisfied that the husband’s actions have significantly reduced the value of the property from what it was in February of 2012, the last time the wife physically entered it.
The Valuation Evidence
92.Mr O has been a valuer of property in South Australia for forty-one years. He is a past president of the Valuers Division of the Real Estate Institute of South Australia and has lectured in principles of valuing at the University of South Australia. On any view, he is highly qualified and expert in his field. I accept his evidence and reject Mr Gorman’s criticisms of him and his methodology, particularly in regards to the Property F property.
93.Mr A is less experienced in valuation, having obtained his qualifications in 2000, but is nonetheless highly experienced in his field, having valued literally hundreds of residential properties in the northern suburbs of Adelaide over the preceding decade or so. Accordingly, I accept that he was qualified to give the expert evidence which he gave.
94.However, the essential feature of the valuation evidence in the case was that the two valuers concerned were asked to do different tasks at different times. As such, they were at cross purposes. Mr A, in general terms, characterised the process of valuation as being as much an art as a science. I agree with that as a statement of principle. He also considered that he and Mr O were very close in their views in respect of each of the properties concerned. Again this seems to be so.
95.One other aspect of commonality in respect of the valuation evidence in this case, which I regard as being fundamental concerns Mr A’s agreement with Mr O that it much more difficult to sell a property which is in the process of being renovated than it is to sell a property that is amenable to renovation or one on which the renovation has been completed.
96.Accordingly, as a matter of general expertise, both valuers accept that a partially completed renovation has negative implications for the value of a residential property and did so in the case of Property F. In his valuation, albeit indirectly, Mr O turned his mind and expertise to the question of valuing the property in its pre partially renovated state.
97.In this context, his evidence that it was impractical to consider comparative sales to value the property, as there were no comparative sales of partially renovated properties in the relevant locale, appears to me to be compelling.
98.In these circumstances, I accept the logic of his evidence that the only appropriate mechanism for valuing the property was the summation method, which involved valuing the partially renovated building in isolation, by considering the pre-renovation value, on a per square metre basis, and then applying a discount to that value in recognition of the semi completed nature of the renovations.
99.On this basis, Mr O calculated the building to be 238 square metres (Mr A agrees). In a pre-renovated state, he valued the property at $546.20 per square metre. He discounted this sum by 30% in recognition of the incomplete renovation, arriving at a figure of $382.30 per square metre, which he used to reached his as is figure, at the actual date of valuation, of $400,000.00, which included $290,000.00 for the land (arrived at by reference to comparative sales) and $15,000.00 for external improvements.
100.As a consequence, on the assumption that the items removed from the property were in good condition, allowing the undiscounted figure for the building, Mr O calculated a figure of $441,500.00 for Property F prior to the removal of the various items of second fix.
101.Mr O, of course, did not see the building prior to the removal of many items of second fix. Neither did Mr A. In my view, the most reliable witness who did see the property, prior to Mr Gorman’s self-directed actions, was the wife, who saw the property in the context of a bond inspection. Her evidence, which I accept, was that the property was in good condition. In my view, this evidence fills in any deficits in regards to the retrospective nature of Mr O’s valuation.
102.Whilst recognizing the difficulties implicit in valuing a residential property in the throes of renovation, Mr A did believe it was possible to value Property F by reference to comparative sales in the area. For his part, Mr O quibbled with some of the comparisons selected on the basis of disparities in plot size and the age of the buildings selected. However the major difference between the two valuers was methodology.
103.Mr A accepted that the internal condition of the property was extremely poor, both internally and externally. He confirmed that it required extensive repairs and maintenance to be fit for full time habitation. In these circumstances, he considered that properties in the condition of the Property F property “generally sell well below what have otherwise been expected”.
104.This led him to an as is valuation as at September of 2013 of $340,000.00. This sum was not reached through any direct consideration of the value of the building in it pre-renovated state, counter to the approach adopted by Mr O.
105.The two valuers were asked to confer in respect of the differences arising between them. Regrettably this proved to be a purposeless exercise as, given the nature of the evidence, the question at issue for the court was the value of the property at the time of separation rather than now or at the date of the valuations concerned.
106.In his oral evidence, Mr A was asked to consider this issue, which was not the subject of his written report. He considered the topic from the perspective of a potential purchaser, whom he estimated would have to spend between $40,000.00 and $60,000.00 to bring the property back to where it would have been. This led him to a pre‑renovation value of between $390,000.00 and $400,000.00.
107.Whilst appreciating the difficulties implicit in valuing a property in the condition in which valuer found the property at Property F and with all due respect to Mr A, the methodology applied by Mr O appears to me to be far more rigorous and far more amenable to being directed toward securing a value at the date of the parties’ separation, which for reasons upon which I will elaborate in due course, appears to me to be the equitable date on which to fix a value of the Property F property.
108.I reach this conclusion because I accept that Ms Gorman did not authorise the renovations in question. Mr Gorman acted independently in this regard. His actions had obvious and deleterious implications for the value of the property concerned. If, in future, he does complete the renovations and is able to sell the property at a profit, he will secure these benefits alone.
109.On the other hand, if a current valuation is utilised, Ms Gorman will suffer the negative consequences of Mr Gorman’s unilateral actions and none of the potential benefits. This is fundamentally unfair to her. I am satisfied that Mr Gorman is and was well aware of the implications of his actions, which do him no credit. For these reasons, I find that the just and equitable value to be utilised for the Property F property is $441,500.00.
110.The disparity in valuation in respect of Property J is a more confined and less complex issue. At the end of the day it matters little whether or not Mr O inspected the sealed off bathroom and toilet at the property. He acted on the assumption, which I find to be valid that these rooms had been renovated and the value of the property improved.
111.Mr A also valued Property J on the basis that these areas were new. Accordingly the difference in the two valuations concerned is more reflective of a difference in the time of valuation rather than in differences in methodology or approach.
112.In early September 2013, Mr A on the basis of comparative sales arrived at a value of $215,000.00 for the property. Approximately four months later, Mr O, using the same methodology reached a figure of $238,000.00.
113.However, in his evidence, Mr A conceded that since he had inspected the property there had been a rising market. He also accepted that the shed and fence had not been in situ at the time of his valuation. These items were present at the time of Mr O’s valuation.
114.Mr A also accepted that the property had been improved by the addition of a shed, new boundary fencing and gardening, although he had not personally inspected these things. In these circumstances, he wrote, in response to the court’s direction that the two experts confer, that he was unable to comment on Mr O’s valuation without revisiting the property and any relevant comparative sales, which he had not done.
115.In these circumstances, there is no challenge to Mr O’s more contemporary opinion that the appropriate value for the Property J property, which includes a renovated bathroom and toilet, is $238,000.00. For these reasons, this is the value I propose to use for the purposes of these proceedings.
Motor vehicle and other chattel valuations
116.The parties’ former matrimonial home is fully equipped with furniture and other accoutrements of general living. Given the circumstances of the parties’ separation, Ms Gorman currently retains the majority of these items, which have not been formally valued.
117.In December of 2013, the wife’s solicitor wrote to the then solicitor for the husband proposing a division of the furniture. The husband did not respond to that proposal. During the course of the hearing, I urged him to consider his position in regards to the division of the household contents but regrettably no compromise was reached.
118.Mr Gorman commenced self-employment as a (occupation omitted) in October of 2005. He has accumulated significant plant and equipment, which the wife believes are valued in excess of $10,000.00. However the equipment has not been formally valued. Mr Gorman does not accept the wife’s estimation of value, which he dismissed as “speculation”.
119.I accept the wife’s evidence that he has been able to retrieve most of the plant from the former matrimonial home, apart from a lathe, which he inherited from his late mother. Ms Gorman has no interest in the lathe, which is of considerable weight and difficult to move. She is open to the husband making arrangements to collect it, at his own expense, once settlement of the former matrimonial home is imminent.
120.In the absence of either agreement on the value of these various items or a formal authoritative valuation, I do not consider that I can make any order other than that the various items remain where they are. The only alternative is for the husband to accept the wife’s proposal as to division. If he does, it will be necessary for him to arrange for collection of these items.
121.The parties agree that they consensually sold a (omitted) caravan, in February 2010, for the sum of $37,500.00. The proceeds were divided so that the wife received the sum of $31,000.00 and the husband received $6,500.00. It is appropriate that this sum be added back into the parties’ pool of assets and recognition made of how the funds were disbursed.
122.The husband has a Ford (omitted) van in his possession, which he has utilised in connection with his business. It is subject to a loan in favour of (omitted), which is agreed to be $9,540.82. Both parties have provided (omitted) valuations purporting to be referrable to the vehicle in question. The wife’s preferred value is $25,000.00; the husband’s $17,000.00.
123.The discrepancy is typical of the manner in which these proceedings have been conducted and creates a dilemma for the court. (omitted) provides a cheap and informal mechanism for valuing motor vehicles, which is often utilised by parties in family law property matters to provide a pragmatic means of valuing motor vehicles.
124.It is not authoritative in the sense that it does not provide an idiosyncratic valuation of any vehicle concerned. Rather the particulars of the vehicle in question are entered into an internet site and range of values provided in respect of how the vehicle in question is to be sold, specifically as a trade in or through private sale. Other variables include the condition of the vehicle and the number of kilometres it has travelled.
125.In many cases, where there is no specific valuation for a particular motor vehicle, the court has been prepared to accept (omitted) valuations. In particular, in England & England[12] Roberts FM (as he then was) accepted such a (omitted) value on the basis that it was the only evidence available in respect of the motor vehicles involved in the case. I adopted the same approach in Herbert & Herbert.[13]
[12] England & England [2005] FMCAfam 204
[13] Herbert & Herbert [2006] FMCAfam 254
126.I have never previously come across a case creating controversy about (omitted) values per se. The only explanation for the differences in value in respect of the same vehicle is that the parties must have typed in different information about it into the (omitted) website.
127.In this particular case, in their respective valuations, the parties have provided very different information about the value of the vehicle when new. In the husband’s case he attributes a recommended retail price of $35,990.00; whilst the wife has provided a figure of $49,900.00.
128.Whether this accounts for the current discrepancy or whether it is some other factor, I am unable to ascertain. However the problem must be resolved one way or other. Obviously an infallible means of ascertaining the current market value of the motor vehicle in question would be to place it on the market and see what price it commands.
129.This was the approach approved by the Full Court in Smith & Smith,[14] where the court said as follows:
“…where the state of the evidence makes the process of valuation hazardous or uncertain, or where there are wide differences between legitimate valuations because of a volatile market or peculiarities relating to the specific property or otherwise, the ascertainment of value by judicial process may become too uncertain and the preferable course is to order the sale of the property so that its real value can be revealed by market forces.”
[14] Smith & Smith (1991) FLC 92-261 at 78,759
130.However such an approach may itself be flawed or unfair to one or other of the parties. It may involve a level of expense disproportionate to the value of the vehicle itself. More importantly, there may be pragmatic reasons rendering it unfair to dispose of the vehicle in question. Mr Gorman may have a pressing need for the vehicle, for all I know and it may be difficult or expensive for him to obtain an alternative one.
131.In Herbert I referred to what I described as the ethos of the Federal Magistrates Court (as this court was then entitled) particularly the direction in section 42 of its empowering legislation, which directed that it must proceed without undue formality and endeavour to ensure that the proceedings before it are not protracted. This imperative resulted in me electing to adopt a (omitted) valuation in the case concerned.
132.In this case the only evidence of valuation is in the two disparate informal valuations. It seems problematic to compel the sale of the vehicle in question to resolve the issue. In these circumstances I propose to adopt the valuation of the wife on the basis that I have found her to have the more probity of the parties concerned.
133.Similar issues arise in respect of a Mitsubishi (omitted) motor vehicle, which the wife has and wishes to retain. The irony being that although it does not suit, she advocates the higher value for the vehicle in question, which I will adopt. The value in question is $3,300.00.
134.The husband sold a Holden (omitted) motor vehicle post separation. The parties disagree about the sale price. In this regard, I prefer the evidence of the wife and will add back the sum of $19,000.00 to represent a premature distribution of assets. I am fortified in this view by the fact that the husband falsely indicated to the court that the vehicle in question had six cylinders when in fact it had eight.
135.As previously indicated the parties are in dispute about the value of a (omitted) trailer and the circumstances surrounding its sale by the husband. The wife’s evidence was that the husband removed the trailer from the Property S property without discussing the issue with her and in breach of the police intervention order.
136.She deposes as to her belief that the trailer was worth at least $3,500.00 and was unencumbered. Mr Gorman deposed that he had sold the trailer and “got $1,750.00” for it. He was unable to produce any receipt to this effect. In these circumstances, there is no independent or objective evidence regarding the value of the trailer.
137.Ms Gorman’s figure is based on her belief. As far as I know she has no particular expertise in the area of trailer valuation, nor has she provided any context as to how her belief has been formed. On the other hand, the husband acted unilaterally in respect of the trailer and has expropriated its value for himself. I have found him to be an unreliable witness. In these circumstances, it goes against the grain to prefer his evidence, particularly as it arose against a background of self-help.
138.However, if his evidence is correct and the trailer was sold to a third party, at arm’s length, in a bona fide sale, the sum received is likely to be a proper reflection of the value of the trailer. In these circumstances, particularly bearing in mind that the trailer is no-longer in the possession of either party and the sum relating to it is comparatively modest and has been utilised, I have come to the conclusion that the appropriate course is to add back the sum said by Mr Gorman to have been received for it, namely $1,750.00.
139.Much of the evidence regarding the value of other of the parties’ various items of personalty was similarly unsatisfactory. The husband attempted to portray himself as the victim of the wife’s unreasonable conduct in this regard. I did not find her so. To the contrary, I found the husband to be evasive in his evidence. It seems to me that the overall uncertainty in this areas suits him more than the wife and is more his creation than hers.
140.This issue is best exemplified by the issue of cash kept in the former matrimonial home. The husband agrees that he did keep cash savings at home, which the wife believes were in excess of $10,000.00. The husband retained the savings, which cannot be tabulated into these proceedings because of uncertainty about their extent. A fact which, in my view, favours the husband.
141.The parties agree on their respective holdings of superannuation – in the husband’s case $139,888.00; and in the wife’s case $27,537.92. The parties agree on their level of indebtedness in respect of the mortgages secured against the Property F and Property J properties.
The evidence regarding the husband’s earnings post separation
142.The husband has been a self-employed (occupation omitted) since 2005. He has not produced any documentary evidence to establish his level of income of the period since in the form of taxation records and the like. In his evidence to me he indicated that he had been very good at his work. I accept this to be the case.
143.It is Mr Gorman’s current position that he is physically and mentally incapacitated to such a degree that he cannot resume his previous employment as a (occupation omitted). The independent evidence in support of this contention is contained in two brief medical reports from his general medical practitioner, dated 17 May and 11 October 2013.
144.Both diagnose depression, which is indicated to have been present since 2011 and which is “directly affecting his ability to work and motivation”. The doctor is unable to prognosticate how long Mr Gorman’s depression will last. In his own evidence, Mr Gorman has deposed that he has been prescribed anti-depressive medication, which he continues to take.
145.I accept that Mr Gorman has been medically depressed for a significant period of time, but on the evidence available to me it is difficult to gauge the aetiology of this depression, particularly when Mr Gorman will be able to return to some form of employment.
146.My impression of Mr Gorman is that he derived a great deal of personal satisfaction, in the past, from following his trade as a (occupation omitted). In addition, it seems a reasonable inference to draw from his actions in beginning renovation work at both the Property F and Property J properties that he believes he can do some work, even if it is limited in nature and subject to self-direction.
147.Mr Gorman denies that he has received any meaningful income from employment in the period since the parties separated. He deposed that he had done some freebies and been out with his brother in the (omitted) van but was not running a business and was not trading. In addition, he indicated that he had elected not to attempt to claim any benefits from Centrelink, notwithstanding the fact that he had no income.
148.This evidence was not congruent with the statement for the Business Access Account, for the period from 31 July 2013 to 23 March 2014, which Ms Gorman had in her possession and some detail of which was put to Mr Gorman.[15] The statement included a number of payments from (employer omitted). Mr Gorman accepted that there was a system for (occupation omitted), such as him, to invoice (employer omitted) for work on the (employer omitted) site when called out for a private client.
[15] See Exhibit E
149.In addition there were other deposit entries with notations indicating (occupation omitted). In this context, it is my finding that Mr Gorman’s claim that he had no income from (occupation omitted) or only a modest level of income is more likely than not to be disingenuous. In addition, Mr Gorman accepted that, prior to the parties’ separation, he was sometimes paid in cash for (occupation omitted) jobs.
150.In all these circumstances, it is difficult to gauge what has been Mr Gorman’s level of income during the past eighteen months or so. As I have previously indicated, in cases involving incomplete disclosure of financial information, the court should not be unduly cautious about drawing adverse inferences.
151.In my assessment, Mr Gorman’s attitude to these proceedings has been one of passive resistance. He has refused to do what was required to commission a person to fence the swimming pool at Property S, which needs to be done if it to be sold. He has resisted the appointment of an agent for the property.
152.Although Mr Gorman is not motivated to provide accurate and proper details of his income to Ms Gorman, I accept that his subterfuge in this regard is not sophisticated. I also accept that he remains incapacitated, to some degree, as a consequence of his depression and sadness at the end of his marriage. In these circumstances, it seems more likely than not that he has had some earnings and done some work for old established clients but cannot be considered to have re-embarked on full time employment.
The Legal Principles Applicable
153.Part VIII of the Family Law Act is the part of the Act dealing with property, spousal maintenance and maintenance agreement. The major provisions relating to marital property division are contained in sections 79(1); 79(2); 79(4); & 75(2) of the Act.
154.Pursuant to section 79(1) the court is authorised to make such order as it considers appropriate in order to alter the interest of the parties to a marriage in relevant property.
155.The expression “property” is defined in section 4(1) in relation to the parties to a marriage or either of them as meaning “…property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.”
156.Pursuant to section 79(2) the court is actively prevented from making such an order unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing. This follows from the use of the prohibitory words “shall not” in the relevant section.
157.Section 79(4) provides the mechanics of how a court is to make an order altering marital property interests. It provides seven matters [in paragraphs (a) – (g)] to be considered, as relevant.
158.Paragraphs (a); (b); and (c); categorise contributions made by marital partners, which are relevant. Paragraph (d) directs the court to take into account the effect of any order upon the earning capacity of either party to the marriage concerned.
159.Paragraph I directs the court to consider a list of matters contained in section 75(2), which are germane to spousal maintenance or the prospective positions of the parties concerned by reference to their respective financial resources, means and needs.
160.Finally, Paragraphs (f) and (g) apply to child support and previously made parenting orders, as relevant. There is some overlap between these various provisions and not all will be applicable in every case.
161.Until recently, the position in respect of the process to be applied to the resolution of matrimonial property cases was said to be well settled, as it required the application of a preferred approach. This approach entailed a four step process, described by the Full Court as follows:
·identification and valuation of the property of the parties;
·identification and evaluation of contributions to the property (including property no longer owned by the parties) – the contribution phase – section 79(4) (a) to (c);
·identification and assessment of the various matters in section 79(4)(d) to (g) including to the extent they are relevant, the matters in section 75(2) – the prospective needs phase;
·considerations of justice and equity.[16]
[16] See Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39] and Bevan & Bevan [2013] FamCAFC 116 at [60]
162.The general applicability of this four step process has been recast, to some extent, in the light of what has been said recently by the High Court in the matter of Stanford v Stanford, in which courts such as this one were warned of the danger of conflating the considerations arising under sections 79(2) and 79(4) – the essential precursor to any order resulting in the alteration of matrimonial property interests being that it was just and equitable to do so. [17]
[17] Stanford v Stanford [2012] HCA 52 at [35] – [36]
163.In Stanton the High Court indicated that, in the vast majority of matrimonial property cases, the requirements of section 79(2) will be readily satisfied, largely as a result of a consideration of the circumstances of the parties concerned, particularly the nature of their separation.
164.So it is in the present case. Clearly the marital relationship between the husband and the wife has come to an end. There is no-longer any common use of their property. They now lead separate lives. In all these circumstances, it is clearly just and equitable that orders be made pursuant to the provisions of section 79(4). [18]
[18] Ibid at [42]
165.In Bevan the majority of the Full Court (Bryant CJ and Thackeray J) said as follows:
“Although the High Court did not disapprove the four step process, we accept it did not approve it either... However, the High Court’s decision serves to refocus attention on the obligation not to make an order adjusting property interests unless it is just and equitable to do so.
…
Stanford will also serve as a reminder that the four step process ‘merely illuminates the path to the ultimate result’.”[19]
[19] See Bevan (supra) at [65] and [71]
166.From this, I take it, the four step process remains a valid approach in the vast majority of cases, provided care is taken not to overlook the requirement that all orders altering property interests in proceedings arising under the Act be justice and equitable.
167.Contributions arising pursuant to section 79(4)(a)(b) & (c) (the so‑called second step) can be broadly categorised under two headings. The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
168.The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.”[20]
[20] See Family Law Act s79(4)(c)
169.It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution, which is inherently less valuable or important than a financial contribution to property.
170.Although, Mr Gorman does not express it as such, it is clear that is his case that his contributions under section 79(4)(a) & (b) in direct financial form as a breadwinner and through his work on renovating and improving the various properties owned by the parties during their lengthy marriage are greater than those of Ms Gorman as a home maker and parent, which fall to be assessed under section 79(4)(c).
171.This has been a controversial topic, in the relevant jurisprudence, for some time and has most recently been the subject of discussion by the Full Court of the Family Court in Hoffman & Hoffman.[21] I will return to this case and this issue in particular, when I turn to assess the parties’ respective contributions in due course.
[21] Hoffman & Hoffman [2014] FamCAFC 92
172.Section 79(4)I mandates the court to have reference to the matters listed in section 75(2) of the Family Law Act 1975. In the main the factors there listed deal with each of the parties’ prospective needs (the so-called third step).
173.It should further be noted that, pursuant to section 75(2)(o), the court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
174.Under the rubric provided by section 75(2)(o), the court is provided with a discretion to deal with property, which it is convenient to describe as being notional in nature, in the sense that the property in question no longer exists.
175.Such property usually is confined to one of three categories – money spent in paying legal fees, which unfairly diminishes the matrimonial asset pool;[22] the premature distribution of matrimonial assets;[23] and money or assets wasted through reckless conduct. [24]
[22] See In the Marriage of DJM and JLM (1998) 23 Fam LR 396
[23] See In the Marriage of Townsend (1994) 18 Fam LR 505
[24] See In the Marriage of Kowaliw (1981) FLC 91-092 at 76,644
176.In Watson & Ling Murphy J said as follows:
“Where the Court has determined that it is just and equitable to make an order pursuant to s 79(2) or s 90SM(3) and there is clear evidence that one party has engaged in conduct and, but for that conduct, the legal and equitable interests of a party or the parties (or the value of those interests) would have be significantly greater, justice and equity may require recognition of the unfairness inherent in those circumstances in the terms of the orders to be made.
How might that be recognised? First, consistent with existing authority, it can be recognised pursuant to s 75(2)(o) (cf s 90SF(3)I) (see, for example, Omacini & Omacini (2005) FLC 93-218, Browne & Green (1999) FLC 92-873 and Cerini). Secondly, it might be contended that it might be recognised within the assessment of contributions. This Court has long eschewed the notion of “negative contributions” (see, for example, Antmann & Antmann (1980) FLC 90-908). Nevertheless, it might be argued that the “non-dissipating party” can be seen to have made a disproportionally greater indirect contribution to the existing legal and equitable interests (for example to their preservation) if it is established that, but for the other party’s unilateral dissipation, those existing legal and equitable interests would have been greater or had a greater value.
The assessment of the circumstance under discussion is, ultimately, a matter of discretion (see, for example, Cerini at [46] and Townsend at 81,654). Equally, however, authority dictates that it will be “the exception rather than the rule” (Cerini at [46]) that a direct dollar adjustment equivalent to the amount of the alleged dissipation of the pool is made to the otherwise entitlement of a party. It may be that aspects of the erstwhile treatment of legal fees pre-Stanford (see, for example, Chorn & Hopkins (2004) FLC 93-204) will require further consideration in an appropriate case.
Importantly, of course, as has been emphasised in many authorities including those cited above, not every dissipation by a party can be seen to involve an affront to justice and equity; again the circumstances of the individual relationship must be assessed.” [25]
[25] Watson & Ling [2013] FamCA 57 at [33] – [34]
177.It is the wife’s case that the husband’s actions in embarking upon what I have found to be the unilateral renovation of the Property F property in particular have resulted in a diminution of the value of that property from the date of the parties’ separation. For the reasons already provided, in my view, it would be grossly unfair to the wife if the court did not utilise the property’s historical value for the purpose of these proceedings.
178.In addition, it seems axiomatic that the husband’s withdrawal of the sum of approximately $68,500.00 from the parties’ mortgage – a sum in respect of which he has provided no clear accounting, must be regarded as a premature distribution of assets, which can be notionally added back into the parties’ pool of matrimonial assets.
179.As appears clear from the re-stated principles appearing in Stanton, the “overriding requirement” of section 79 is that considerations of justice and equity should inform the process envisaged therein. The exercise I must undertake is not a “process of social engineering”[26] or of equalisation of assets or financial resources.
[26] See Waters & Jurek (1995) FLC 92-635
180.At the outset, I am at pains to point out to the parties that the task I must undertake is not a simple accounting or arithmetical task. In the jargon of the times, I cannot “crunch the numbers” to come up with a division of their property, which is not open to challenge or incapable of different interpretation. My responsibility is to exercise the discretion reposing in me according to considerations of justice and equity.
181.Marriage is, by and large, a joint enterprise. How much buffer spouses must give one another, when financial set-backs occur, must depend on the degree of consultation and acquiescence in their relationship.[27]
[27] See D & D [2003] FamCA 473 at paragraph 49
182.The task, set out for me in this case, requires me to balance and compare contributions, which are by their nature different, within the framework of a marriage. Many contributions in a marriage, such as those relating to being a homemaker or a parent, do not result in the direct acquisition of assets. They are however integral to the wellbeing of a family. They are also difficult to value. The discretion I have is a wide one. It is however not an exercise in “palm tree justice”.[28]
[28] See In re: Watson: ex parte Armstrong (1976) FLC 90-059 at 75,270
183.In this context, the following comments of Gibbs CJ in Mallett & Mallett [29] remain apposite:
“Decisions in particular cases of that kind can, however, do no more than provide a guide; they cannot put fetters on the discretionary power which the Parliament has left largely unfettered. It is necessary for the Court, in each case, after having had regard to the matters which the Act requires it to consider, to do what is just and equitable in all the circumstances of the particular case.”
[29] Mallett & Mallett (1984) FLC 91-507
Step One – the pool of assets
184.For the reasons provided above, I propose largely to adopt the asset pool as identified by the wife through her counsel Ms Cocks, particularly in respect of the value of the various motor vehicles owned by the parties and the two relevant investment properties.
185.I will include the Property S property at the sum of $750,000.00. There is no controversy about this sum. In any event, as an order has been made directing the sale of the property, it is to be anticipated that the market will assign a proper value for it. In these circumstances, I find the parties’ pool of marital assets to be as follows:
Assets $ Property S 750,000.00 Property F 441,500.00 Property J 238,000.00 Ford (omitted) van (husband) 25,000.00 (omitted) trailer (disposed of by husband) 1,750.00 Proceed of sale of caravan 37,500.00 Proceeds of sale of Holden (omitted) 19,000.00 Mitsubishi (omitted) (wife) 3,300.00 Ford (omitted) (husband) 12,000.00 Monies withdrawn from Property F mortgage by husband 68,488.79 Total 1,596,538.79 Liabilities Mortgage on Property F 110,383.00 Mortgage on Property J 162,842.00 Loan secured on Ford (omitted) 9,540.82 Total Liabilities 282,765.82 Net Assets 1,313,772.97 Superannuation Husband's (omitted) Super 139,888.00 Wife's (omitted) Superannuation 27,537.92 Total Superannuation 167,452.92
Step Two – assessment of contributions – section 79(4)(a) – (c)
186.I now turn to the second of the steps in the exercise under section 79, namely an assessment of the parties’ contributions within the context of section 79(4)(a) to (c). These provisions are as follows:
“Section 79(4) In considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, the court shall take into account –
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of home maker or parent.”
187.Section 79(4) requires that the court look at the entirety of the contributions, both financial and non-financial, to the welfare of the family, as well as to the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation and improvement of any particular asset and maybe taken into account generally as contributions in a total sense.
188.The marriage between the parties was one of significant length, being around twenty six years in duration. It produced three children. As I have already indicated, I accept that Mr Gorman was the family main breadwinner and worked very hard to provide for the family.
189.For the majority of the marriage, he was employed as a (occupation omitted) for the (omitted). He describes his wages as low but deposes that he worked in a private capacity after hours and on weekends to augment his regular wage.
190.To use Mr Gorman’s language, it is his position that he was “not a normal nine to five guy”. I accept that Mr Gorman did work very hard and kept long hours, contributing all his earnings to joint family purposes.
191.However, whilst he was so working, it is clear that Ms Gorman kept the home fires burning and provided care for the parties’ children, which Mr Gorman accepts she did diligently and more than competently.
192.In my view, within the context of the parties’ marriage, these contributions, whilst different in nature were largely complementary of one another. The parties mutually agreed to have a family. Six years spans the period of their children’s births. Necessarily the children required care, whilst Mr Gorman was at work. Ms Gorman and the children required financial support. To a large extent, one could not have survived without the other. In these circumstances, in my view, the following comments of Fogarty J in Waters & Jurek remain apposite:
“In most marriages, there is a division of roles, duties and responsibilities between the parties. As part of their union, the parties choose to live in a way which will advance their interests – as individuals and as a partnership. The parties make different contributions to the marriage, which the law recognizes cannot simply be assessed in monetary terms or to the extent that they have financial consequences. Homemaker contributions are to be given as much weight as those of the primary breadwinner…” [30]
[30] See Waters & Jurek (1995) FLC 92-635 at 82,379
193.In Hoffman the Full Court rejected any notion that his Honour was suggesting that homemaker contributions must be given the same weight as those of a primary breadwinner. Care however must be taken not to undervalue such contributions because they do not directly result in capital accumulation. In this context, the Full Court approved the following passage from Figgins & Figgins:
“We reject the concept that there is something special about the role of the male breadwinner that means that he should achieve such a preferred position in relation to his female partner. To do so is to pay mere lip service to gender equality. Marriage is and should be regarded as a genuine partnership to which each brings different gifts. The fact that one is productive of money in large quantities is no reason to disadvantage the other.”[31]
[31] See Figgins & Figgins (2002) FLC 93-122 at 89,302
194.Essentially, in Hoffman, the Full Court rejected the notion of guidelines, for trial courts such as this one, in assessing disparate marital contributions. What is required is for the court to give close consideration to all forms of contributions arising under section 79(4) (a) to (c) bearing in mind the differences in quality arising between them.
195.Accordingly, one form of contribution cannot be regarded as innately superior to another. In this context, the Full Court approved the following passage from Ellis J in Figgins:
“In my view, the Act is expressed in gender neutral language. In a consideration of the just and equitable requirement referred to in s 79(2), the Court must take into account and assess the matters set out in s 79(4) in a manner which does not on the one hand discriminate against or on the other hand advantage a spouse on the basis of gender or on the basis of the role undertaken by a spouse within the marriage.”[32]
[32] Ibid at 89,308
196.Ms Gorman is not to be disadvantaged because her role as homemaker and parent did not produce income. She undertook these duties with Mr Gorman’s acquiescence and in pursuance of the parties’ mutual decision to have a family. In addition, when she was able to do so, she undertook part time employment.
197.The wife also assisted the husband in the operation of his (omitted) business, both before and after his period of (omitted) employment. She asserts that she took telephone inquiries; paid accounts; occasionally delivered goods and tools to sites; and performed banking and book-keeping duties. In my assessment the parties were both very busy and fully occupied during their marriage. As such, neither can be described, in any way, as a passenger.
198.I accept that the husband also renovated and improved the various properties which the parties have owned during their marriage. In addition, he kept the Property F property in a good state of repair, which enabled it to be regularly tenanted from 2002 onwards. As previously indicated it is the husband’s case that these contributions have greatly increased the parties’ store of joint capital and, as such, merit some form of special recognition.
199.In the absence of specific evidence directed to this issue, it is impossible to calculate a specific sum which is referrable to these various contributions. I accept however they are important contributions which must be considered by the court.
200.The parties met when they were young – the husband was nineteen and the wife was eighteen. The wife concedes that she had few assets of any value at this time. The husband had been employed since the age of sixteen. He purchased his first home at (omitted) a few years prior to the parties’ marriage in 1986.
201.The parties disagree about the purchase price[33] but agree it was sold in 1985 for $52,000.00, after it had been renovated, largely by the husband but with some minor assistance from the wife, including sewing curtains and gardening. At the time of sale, the property was mortgage free. The wife asserts that she contributed $8,000.00 from her savings to reducing the mortgage.
[33] The husband asserts $30,000.00; the wife asserts $19,000.00.
202.In all these circumstances, I accept that the parties were able to purchase their first jointly owned property, which was a vacant piece of land at Property J on which they constructed a home around the time of their marriage. The parties borrowed from the (omitted) Bank to fund this enterprise.
203.There is no evidence available to me to calculate, in exact dollar terms, what sum was realised from the sale of the husband’s first property now nearly thirty years ago. I accept that the husband’s endeavours in this regard were important and were integral to the purchase and construction of the parties’ first jointly owned home. However I also accept the wife’s evidence that she made her own direct financial contributions as well as indirect ones toward this property.
204.In the past, it has been suggested that disparities in capital, at the outset of a marital relationship, become less significant as the duration of the marriage concerned increases. It was sometimes said that such contributions were liable to erode over time. The Full Court has not endorsed such a formulation.
205.In Pierce & Pierce,[34] Ellis, Baker & O’Ryan JJ made reference to several of the relevant authorities. In the case, their Honours said as follows:
“In our opinion it is not so much a matter of erosion of contribution but a question of what weight should be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions both of the husband and the wife. In considering the weight to be attached to the initial contribution, in this case the husband, regard must be had to the use made by the parties of that contribution.”
“…there is no principle that the length of the marriage leads to a likelihood that other contributions will outweigh or weigh equally with ‘a particular contribution’. It is a matter of assessing the contributions of all relevant kinds in each case to arrive at an outcome, which is both appropriate and just and equitable. In some cases particular contributions may be outweighed or equalled by other ones. In other cases particular contributions may be so disproportionate to other contributions as to merit special recognition.”
[34] Pierce & Pierce (1999) FLC 92-844 at page 85,811
206.I do not consider that the husband’s currently inchoate initial contribution of capital, in the form of the proceeds of sale of his original property, is so disproportionate to the other contributions made both by him and Ms Gorman in the subsequent marriage that it now requires some form of special recognition in the court’ deliberations.
207.In reaching this conclusion, I recognise it was the base for the parties’ first jointly owned property. However, I find that the wife did make some direct financial contribution towards the property and, as such, its purchase and development must be regarded as being something of a joint enterprise between the parties.
208.She also provided other forms of support for the husband in respect of the property. In these circumstances, in my view, it would be unfair to the wife to give some special weighting, in the husband’s favour, to the contribution represented by this property.
209.The parties’ first jointly owned home was sold and another property was purchased, also at Property J. Again this was sold in 2003 and the proceeds used to purchase the Property S property. I accept that each of these properties was improved by the efforts of the husband and sold at a profit. However I have not been provided with any specific calculations in this regard.
210.As Mr Gorman acknowledges, Mr Gorman is a very handy person. His contributions towards improving the various properties was integral to the parties being able to sell them successfully and in the case of Property F being able to keep it tenanted. I also accept he improved the former family home.
211.However, he did not perform these duties unsupported. Ms Gorman assisted where she could and more importantly supported him by managing the parties’ home and parenting their children. When able, she took part-time work. In these circumstances, I have no doubt that the marriage between the parties was a genuine partnership of equals, with each contributing to his or her maximum capacity.
212.In these circumstances, the court is presented with the “exquisitely difficult task” of assessing contributions which are qualitatively different. A task which has been likened to comparing apples with carrots. However, in conducting the required comparison, the duration of the marriage is relevant. The comparison does not require forensic examination.
213.Having considered the various matters raised by each of the parties, including the length of their marriage, with its fundamental underpinning that the husband would be the breadwinner and the wife would be the main homemaker, I have come to the conclusion that their respective contributions should be assessed as equal.
214.In addition, I would assess the parties’ respective post separation financial contributions as being relatively equal. In the first year of the parties’ separation, the wife negotiated a moratorium on the parties’ mortgage. She also paid outgoing in respect of the rental properties to a value of around $5,000.00. She has had the benefit of living in the Property S property.
215.Mr Gorman has paid the mortgage payment more recently. He has also had the benefit of living in the Property J property. As previously indicated, he has not provided any evidence regarding the disbursal of the monies withdrawn by him from the Property F property.
216.Finally, it seems to me to be just and equitable, bearing in mind the length of the marriage between the parties, that there be an equalisation of their superannuation holdings. Given the age at which the parties began their marriage, it is the case that Mr Gorman acquired the vast majority of his superannuation entitlements during the marriage.
217.In addition, it is clearly the case that, by dint of her family responsibilities, Ms Gorman was compelling to leave the paid workforce for many years and so forego the opportunity to acquire superannuation in her own name. For these reasons, it is proper that there be the order sought by the wife equalising the parties’ superannuation. This will require a split from the husband’s superannuation in the wife’s favour.
Section 75(2) – the prospective needs of the parties
218.I am now required to consider the various matters set out in section 75(2) and in particular to consider whether any further adjustment should be made in favour of either party. The section 75(2) factors are mainly, but not only, prospective in nature. Specifically, they are as follows:
(a) the age and state of health of each of the parties;
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
(d) commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
(f) subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under -
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain adequate income;
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
(l)the need to protect a party who wishes to continue that party’s role as a parent;
(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any other fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties.
219.The parties are of a similar age, at which more of their working lives is behind rather than before them. In this context, the failure of the parties’ marriage has been a financial calamity for each of them.
220.Ms Gorman is a pleasant person, who enjoys good health. She is currently in part time employment and receives a modest salary. She is likely to remain secure in this position and hopes to extend her hours. However, although she appeared to me to be capable and sensible, she has few formal skills, having left school fairly early and not having subsequently acquired any academic qualifications. As such, she is likely to remain a modest income earner until her retirement.
221.Mr Gorman is a skilled (occupation omitted). He is however fifty-two years of age. I accept that much of his work is physical in nature and is likely to become more challenging as he ages. The fact remains he has been employed in the (omitted) industry for over thirty years. As a result of his self-employment, he has an established customer base. He acknowledges that he is good at what he does and he likes doing it.
222.I accept that Mr Gorman suffers from a range of health complaints. The most serious of these is his depression. As previously indicated, the precise aetiology of his depression is not known to me. However, clearly the difficult emotional circumstances surrounding his separation and the aftermath of the proceedings must have played a part in his currently less than ideal psychological health and level of functioning.
223.I would anticipate that, with time and the resolution of these proceedings, Mr Gorman is likely to regain his emotional equilibrium and return to paid employment, probably, as before, on his own behalf. Again, as I have observed earlier, the fact that Mr Gorman began to renovate the parties’ investment properties indicates some belief, on his part, that he is capable of doing some work.
224.It has been said by the Full Court that the most valuable “asset” a party can take out of a marriage is “a substantial, reliable income-earning capacity”.[35] Although I accept that there remain some question marks surrounding Mr Gorman’s capacity (and willingness) to return to the workforce, it seems to me that by dint of his trade skills he is significantly better equipped so far as income-earning capacity is concerned than is Ms Gorman. Accordingly, in my view, this criterion [section 75(2)(b)] significantly favours the wife.
[35] See Clauson & Clauson (1995) FLC 92-595 at 81,911
225.The parties’ third child Z continues to live with the wife. Z has recently turned sixteen. He is still at secondary school. I have not been advised what plans he has in respect of his future education. It seems more probable than not that he will remain financially dependent on his parents for the next two years. At that stage, whether he will seek employment or pursue tertiary or vocational studies is unknown to me.
226.It would seem to be the case that Z is reasonably self-dependent, given his age. As such, direct responsibilities for his care are unlikely to impinge directly on Ms Gorman’s employment obligations. Z will be able to get himself to and from school and does not need intensive supervision before and after school.
227.However, Ms Gorman will still have to provide Z with his meals, accommodation and other forms of support to a significant degree. As a teenager, no doubt Z has many interests and needs which are potentially expensive to accommodate. He will need clothing and have extramural activities which he wishes to pursue. There will be educational expenses. As Mr Gorman shares the same premises with Z, inevitably she will be the go-to person so far as the satisfaction of these financial needs for Z is concerned.
228.Since the parties’ separated, it is clear that Ms Gorman has provided the vast majority of the financial support required for Z. Child support from Mr Gorman has been spasmodic, meagre and when provided only done so under compulsion. At present the assessment is based on a child support income of nil for Mr Gorman, which has resulted in an assessment of $391.00 per annum.[36]
[36] See Exhibit F
229.Such a sum will not provide significantly for any of Z’s needs. As a consequence, he will continue to look to his mother to supply his needs and she will not be in a position to deny him. Accordingly, it is my finding that Ms Gorman’s obligation to support Z financially will place significant pressures on her household for at least the next two years and has done so since the parties separated.
230.The weight to be attached to a child support assessment will vary in the circumstances of each particular case concerned. The court is directed to look at the amount of the assessment, the financial circumstances of each of the parties, the needs of the children concerned and whether child support is likely to be paid regularly and at an adequate rate in future.[37]
[37] See Clauson & Clauson (supra) at 81,911
231.The evidence indicates that Mr Gorman is not well motivated towards paying child support for Z. The only sum of child support so far recovered from him has been a modest one, recouped by means of garnishment from Mr Gorman’s bank account. In addition, Mr Gorman is likely to remain in some form of self-employment for the future.
232.Mr Gorman acknowledges that he has been paid in cash in the past. For reasons already set out, I am of the view that he is likely to remain poorly motivated in respect of providing both to the wife and the Child Support authorities proper details of his financial circumstances, on which a proper child support assessment can be based.
233.In my view, Ms Gorman’s responsibilities to care for Z [section 75(2)(c)] and the level of child support she is likely to receive from Mr Gorman [section 75(2)(na)] are significant factors in the wife’s favour at this stage of the court’s deliberations. I would assess these considerations justify a further award of 5% being made in the wife’s favour, in respect of the parties’ non superannuation assets.
234.It seems more probable than not that the parties will enter upon retirement at about the same time – in ten to fifteen years or perhaps a little longer. In my assessment, such a period of time will enable each of them to make further financial provisions for retirement. In these circumstances, I do not propose to make any further split, in the wife’s favour, out of the husband’s superannuation to reflect any factor arising under section 75(2).
Conclusions
235.The final step in determining property proceedings is to stand back and consider whether the proposed result represents a just and equitable outcome. Considerations of justice and equity must inform each step of the court’s process and the overall result.
236.It is all very well to talk in percentage terms, so far as orders are concerned, but at the end of the day what really matters to the parties is what the orders mean in dollars and cents and what effect they have on their long term aspirations and level of financial security.
237.In cases involving relatively modest pools of assets, small shifts in percentage calculations can have dramatic consequences for the parties concerned. For this reason, in order to do justice and equity to each of the parties, it is important for the court to consider the practical implications of the orders which it proposes to make.
238.I have determined that the parties’ non superannuation assets are to be divided 45/55% in the wife’s favour. Property S property is on the market, which will ultimately determine what it is worth. It is unencumbered by mortgage. In round terms, if the value currently ascribed to it is correct, the wife will receive around $412,500.00, less her half share of selling costs and the husband $337,500.00, again less selling costs.
239.The remaining net pool of assets I have calculated comes to a sum of $563,772.97. If the husband is to retain 45% of the parties’ net assets, he needs to hold assets to the value of $253,697.84; and if the wife is to have her entitlements, pursuant to this decision, she needs to receive assets and cash to the value of $310,075.13.
240.The husband wishes to retain both the Property F and Property J properties. If they are transferred subject to their existing mortgages, he will retain equity in Property F to a value of $331,117.00 and equity in Property J to a value of $75,158.00. This totals $406,275.00.
241.In addition, he has assets worth a further $123,197.79 in the form of the Ford (omitted) van, less debt related ($15,459.18); the proceeds of sale of the trailer ($1,750.00); his share of the proceeds of sale of the caravan ($6,500.00); proceeds of sale of Holden (omitted) ($19,000.00); the Ford (omitted) ($12,000.00); and the monies attributable to him drawn down from the Property F mortgage ($68,488.79).
242.Accordingly, at present, Mr Gorman holds net asset to a value of $529,472.97 as opposed to $34,300.00 so far as Ms Gorman is concerned, who has her share of the proceeds of sale of the caravan ($31,000.00) and her Mitsubishi (omitted) motor vehicle ($3,300.00).
243.In these circumstances, if there is to be no liquidation of either Property F or Property J, as is Mr Gorman’s preference, he will have to transfer to Ms Gorman the sum of $275,774.95. Whether he will be able to raise this sum, against the security of the two properties concerned, particularly given his current employment position is not clear to me.
244.If Property S sells, for the price anticipated, he should be able to manage it. He will have two properties worth around $680,000.00 and proceeds of sale from the former family home of in excess of $320,000.00 less current mortgages of approximately $275,000.00.
245.If he uses his share of the proceeds of sale of the former family home to pay Ms Gorman her entitlements he will be in an analogous financial position to the one he currently occupies but with either some modest amount of cash or the facility to reduce his level of indebtedness slightly.
246.The question for the court now is how it should construct its final orders in respect of the payment of the sum of $275,774.95 to Ms Gorman – should the payment be required to be made concurrently with the sale of the Property S property in order to mandate Mr Gorman to pay the sum from his share of the proceeds or should he be granted more latitude to raise the sum in question through a rationalisation of his other debts or even potential sale of one of the investments properties which he wishes to retain.
247.The difficulty with the latter option is that Mr Gorman has not always conducted himself with the upmost propriety and transparency in these proceedings to date. To the contrary, my finding has been that he continues to bear a considerable sense of grievance towards Ms Gorman. In these circumstances, I have significant misgivings that he will cooperate in the implementation of these orders to ensure that their intent is fulfilled.
248.In particularly, I am concerned that he may not take the necessary steps to release Ms Gorman from liability in respect of the mortgages secured against both the Property F and Property J properties. In addition, it is potentially unfair both to Ms Gorman and Mr Gorman to use these properties as the source of a compulsory payment of $275,000.00 to Ms Gorman, if he defaults on any payment order regime.
249.I reach this conclusion for the following reasons. Firstly, the calculation of the sum to be paid to Ms Gorman is calculated on the value of Property F, in particular, at around the date of the parties’ separation. Its value at sale may be radically different. It may possibly be more as a consequence of the effort of Mr Gorman in renovating it. He should reap the rewards of his effort. It may possibly be less as a consequence of the as yet incomplete renovations. Again Mr Gorman should shoulder this loss, which is solely attributable to his actions.
250.Secondly, Mr Gorman has consistently maintained the position that he wishes to retain both properties. Accordingly, it should be up to him to determine if and when the properties are to be sold and he should bear any selling costs arising. These factors militate in the sum required to be paid to Ms Gorman being made concurrently with the distribution of the proceeds of sale of the Property S property. In addition, in my view, this also provides the most seamless approach.
251.Mr Gorman obviously sees some potential in the Property F and Property J properties, whether as renovation opportunities or tenantable properties is unclear to me. Either way, in my assessment, his abilities as a tradesman will enable him to make the best of these opportunities. Either he will sell one of the properties after he has renovated it and live in the other or he will tenant one and live in the other. As such, I am satisfied that he will have some security of accommodation in the short to medium term.
252.In addition, for reasons already provided, I am satisfied, notwithstanding Mr Gorman’s protestations to the contrary, that he has some capacity for employment as a (occupation omitted), particularly when he has regained his psychological equilibrium following the conclusion of these gruelling proceedings.
253.Ms Gorman accepts that the Property S home no longer suits her requirements and must be sold. She wishes to have sufficient funds to purchase a modest home for herself and have access to sufficient cash savings to provide a buffer for herself against unforeseen exigencies.
254.The outcome I envisage will provide this for her. She will receive just under $700,000.00 in cash. It is to be hoped that she will be able to find accommodation of her preference with this sum, which will not require any significant level of borrowing, on her part. Given her employment situation, it would be imprudent of her to assume any significant level of debt.
255.Given the length of the marriage between the parties and its nature as a partnership of equals, it is appropriate and fair, I think, that they approach the prospect of retirement with a similar level of preparedness, at this stage. In these circumstances, I am satisfied that an equalisation of superannuation holdings represents a just and equitable outcome.
256.As I have remarked earlier, I accept that the end of the parties’ long marriage has been a financial disaster for each of them. Scarce and hard won assets must now be divided between them. Each must now make separate arrangements in respect of their accommodation and individual preparations for their retirement. It is trite to point out, but true nonetheless, that two individuals cannot live with the same financial expediency as a couple.
257.The wife’s preference has been to approach the case on the basis that she wishes to liquidate assets and make arrangements to accommodate herself afresh. The husband has wished to retain properties in which he sees potential. I have attempted to recognise both parties’ preferences and bear in mind an equitable mix of assets and superannuation, which is proper in all the circumstances of the case.
258.Like all other factors in this case, the overall composition of any particular set of final property orders, in terms of the proportion of non-superannuation as opposed to superannuation assets and how debts are to be apportioned between parties, as with the percentage basis of such awards, must be determined by considerations of what is just and equitable in the overall circumstances of the case.
259.The relevant factors in determining how the mix of assets and debts between parties is made up is likely to include the following:
· the purchase price of appropriate accommodation and rehousing costs for each of the parties concerned;
· the need to provide some form of financial buffer to cover each of the parties concerned in respect of the ordinary exigencies arising from independent living;
· the current level of the parties’ superannuation and any discrepancies thereon;
· the probability of the parties being able to acquire appropriate superannuation benefits from any future income;
· any discrepancies in the income earning capacity of the parties concerned, which will have implications in respect of any capacity to borrow monies in future in order to finance the purchase of future accommodation.[38]
[38] See L & L (2006) FLC 93-254
260.The wife will have sufficient sums to rehouse herself and to put away something of a nest egg. She has some superannuation. Given that her income is likely to be less than the husband’s over the next decade or so, I consider the result, which I envisage, represents a just and equitable outcome.
261.The husband leaves the marriage with a significantly greater level of debt than the wife. To a large extent, this is his choice. Whether he will be able to capitalise on his wish to retain the two properties in question, in the longer term, is uncertain to me. I accept, however, that he has the innate skills so to do.
262.Accordingly the properties have the potential to provide him with a level of financial security going into the future. As such, again, I am satisfied that the result I envisage represents a just and equitable outcome from the husband’s perspective.
263.On my calculation, the husband has the capacity to raise the sum required to provide the wife with her proper and equitable entitlements, following the end of the lengthy marriage between them. Whether he chooses to do so by channelling some or all of his proportion of the proceeds of sale of the former matrimonial home or in some other way is a matter for him.
264.However for the reasons provided I am satisfied that it is appropriate that arrangements be made to sever the parties’ financial connections with one another sooner rather than later and this requires the payment of the wife of her remaining cash entitlements, which I will round down to $275,000.00 at the time of settlement of the sale of the Property S property.
265.For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgement.
I certify that the preceding two hundred and sixty-five (265) paragraphs are a true copy of the reasons for judgment of Judge Brown
Associate:
Date: 10 July 2014
Key Legal Topics
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Family Law
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Equity & Trusts
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Remedies
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