GRANTLEY & JACQUES (No.2)
[2014] FCCA 1201
•9 May 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| GRANTLEY & JACQUES (No.2) | [2014] FCCA 1201 |
| Catchwords: FAMILY LAW – Property – undefended hearing – justice and equity. |
| Legislation: Family Law Act 1975, ss.90SF, 90SM |
| Norbis & Norbis (1986) FLC 91-712 Fearne & Fearne(No.2) [2012] FMCAfam 917 |
| Applicant: | MS GRANTLEY |
| Respondent: | MR JACQUES |
| File Number: | BRC 9586 of 2012 |
| Judgment of: | Judge Purdon-Sully |
| Hearing date: | 30 April 2014 |
| Date of Last Submission: | 30 April 2014 |
| Delivered at: | Brisbane |
| Delivered on: | 9 May 2014 |
REPRESENTATION
| Solicitors for the Applicant: | No appearance |
| Counsel for the Respondent: | Ms K Oakley |
| Solicitors for the Respondent: | Files Stibbe Lawyers |
ORDERS
That the net assets of the parties be divided twenty five percent (25%) to the Applicant and seventy five percent (75%) to the Respondent.
That in order to effect the division of the assets as prescribed in Order 1 hereof, the Applicant retain the following assets and the Respondent pay to the Applicant the sum of $93,521.00 (“the payment”) within sixty (60) days of the date of these Orders:
| (a) | 1996 Ford Laser motor vehicle | $3,000 |
| (b) | Bank accounts | $327 |
| (c) | Household contents | $1,000 |
| (d) | Superannuation | $1,621 |
| (e) | The payment from Respondent | $93,521 |
| TOTAL | $99,469 |
That the Respondent retain the following assets and liabilities:
| (a) | Former matrimonial home | $375,000 |
| (b) | Bank accounts | $639 |
| (c) | 1996 Excel Sprint motor vehicle | $1,400 |
| (d) | 1993 Ford Falcon motor vehicle | $1,300 |
| (e) | Household contents | $5,000 |
| (f) | [A] superannuation | $6,999 |
| (g) | [S] superannuation | $1,590 |
| (h) | The payment to the Applicant | ($93,521) |
| TOTAL | $298,407 |
That in order to facilitate the payment as referred to in Order 2 hereof, the Respondent be at liberty to obtain finance necessary to effect a division of the net assets as outlined above within sixty (60) days from the date of these orders. If the Respondent is able to obtain finance then contemporaneously with the payment as referred to in Order 2 the parties shall do all things to facilitate a transfer of the property situated at Property S, [S] (“the [S] property”) from the joint names of the parties to the name of the Respondent absolutely, subject to any mortgage that may be necessary such transfer to be at the cost of the Respondent.
That in the event the Respondent is not able to obtain finance necessary to facilitate an adjustment of the assets of the parties as ordered, then the [S] property be sold by private treaty on the following terms:
(a)That both parties be at liberty to list the property with up to two (2) agents as they may choose, for the property to be listed for sale at the price as recommended by the agent concerned; and
(b)That both parties sign all necessary documents to list the property for sale within seven (7) days of them receiving such documents, and return same to the agent concerned.
That if the [S] property is not subject to an unconditional contract for sale within the period of ninety (90) days from the date of listing, that property be sold by public auction on the following terms:
(a)The Respondent first be at liberty to nominate an agent to sell the property by public auction, and that the auction occur within the period of a further thirty (30) days;
(b)All expenses for advertising, the auctioneer and other related disbursements be paid equally by the parties on demand from the agent concerned;
(c)If, upon the first contract not being successful, the Applicant is then at liberty to nominate another agent of her choosing (but being an agent whom she had originally selected to list the property to private treaty) to conduct a subsequent auction, within the period of a further thirty (30) days;
(d)Thereafter, there shall continue to be auctions held for the sale of the property until the property is sold, with the Respondent and the Applicant nominating an agent of their choice for the further auction, alternately;
(e)The parties shall accept all reasonable recommendations of the listing agents and the auctioneers engaged for the sale of the property in terms of the proposed listing price and for the purposes of an auction including the proposed reserve.
That upon the sale of the [S] property proceeds of sale shall be applied as follows:
(a)To the payment of any sales commissions;
(b)The payment of the legal expenses of the sale (and that [omitted] Solicitors be hereby agreed to act on the sale);
(c)The balance be paid nominally to the pool of assets for distribution as otherwise ordered or agreed such that from the net proceeds of sale the Applicant receive an overall division representing 25% of the net assets inclusive of the property listed in Orders 2 (a) to (d) and the Respondent to receive an overall division representing 75% of the net assets inclusive of the property listed in Orders 3 (b) to (g).
That until such time as the [S] property is sold, the Respondent be responsible for the maintenance of the property and the payment of rates and insurance.
That the Respondent be entitled to the sole possession of the [S] property, as against the Applicant, until such time as the property is sold.
That the Applicant, as against the Respondent, be entitled to retain all chattels and personal property in her possession as at the date of these Orders.
That the Respondent, as against the Applicant, be entitled to retain all chattels and personal property in his possession as at the date of these Orders.
That each party have liberty to apply on the giving of seven (7) days’ notice to the other with respect to the implementation of these Orders.
IT IS NOTED that publication of this judgment under the pseudonym Grantley & Jacques (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT AT BRISBANE |
BRC 9586 of 2012
| MS GRANTLEY |
Applicant
And
| MR JACQUES |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant initiated proceedings for de facto property settlement and parenting orders on 24 October 2012. In relation to property matters she sought a split of 60% of the parties’ net assets in her favour. The property proceedings were relisted for trial last Wednesday. However, the Applicant did not participate.
I am satisfied that she was aware of the proceedings. She participated in the proceedings until towards the end of last year when the matter was originally set down for trial on 29 January 2014 in relation to parenting and property matters. The Applicant was aware of that date because she wrote to the Court to explain why she was not present that day and did not intend to participate in the trial. The parenting matters were dealt with on a final basis at that time. However, the property part of the trial was adjourned to enable the Respondent de facto husband to amend his application and serve the Applicant with his further material.
That happened on 15 April 2014. I refer to the Affidavit of Service together with the Acknowledgment of Service which was filed by the Respondent on 24 April 2014.
The Applicant’s name was called three times and she is not present. As I said, she did not participate in the proceedings on 29 January 2014 and she wrote to the Court and said why. I accept that the course of this litigation has likely extracted a toll on her and on the Respondent, both people of limited financial means. The Respondent has borrowed heavily to fund his legal costs.
It has also exacted a toll on the children, as evidenced by the assessment of the family report writer, Ms B. I delivered my decision on the parenting matters on 30 January 2014. Those orders provided for the Respondent to equal shared parental responsibility after consultation with the Applicant and an opportunity for the children to spend time with their mother should she avail herself of that opportunity.
Happily, it appears that that is the case because the following month, one of the children, [Y], who had been estranged from her mother since separation, commenced to spend time with her and that is continuing. The Respondent gave oral evidence in that regard at the trial. [Y] is now spending alternate weekends with her mother.
Material relied upon
The Applicant has filed the following material:
a)Initiating application filed on 24 October 2012;
b)Her affidavit filed on 24 October 2012; and
c)Financial Statement filed on 24 October 2012.
The Respondent relies upon the material detailed in the amended Case Outline document of Ms Oakley, his Counsel, as follows:
a)Amended Response filed 20 December 2013;
b)His affidavits filed on 20 January 2014 and 11 April 2014;
c)Financial Statement filed on 20 January 2014; and
d)Affidavit of Service filed on 24 April 2014.
Ms Oakley also referred the Court to a number of cases, to which I shall later refer.
The evidence with respect to the parties’ history
The principal asset of the parties is the formal matrimonial home occupied by the Respondent and the children. It has a value of $375,000, pursuant to a joint valuation of [H] dated 24 January 2014, annexed to the affidavit of the Respondent filed on 11 April 2014.
This is a long relationship, lasting some 17 to 18 years. The parties cohabited from May 1994 to March 2014 with two separations, the first short and the second of about 12 months’ duration, although the Respondent’s evidence is that the parties continued a sexual relationship during that separation.
The parties did not marry. There are three children of the relationship, [X], aged 17, [Y], who will be 16 in [omitted] of this year, and [Z], who will be nine in [omitted] of this year.
The children, as I earlier observed, reside with the Respondent and their time with their mother since separation has been problematic. The family report writer, Ms B – and I read her report – expressed the view that both parents had to accept responsibility for that situation. However, it is fair to say that she was critical of the father.
I mention this in the context of the history, but also as a relevant fact in these proceedings, as there is no persuasive evidence to suggest that the mother has abandoned the children or did not attempt to spend regular time with them since separation and this is notwithstanding her decision to withdraw from the proceedings in November of 2013. I referred to that in the reasons with respect to the parenting orders I made. If I recall correctly, I found at the time I made the parenting orders that given the history of the mother’s involvement in the lives of the children and their close relationship with her up until separation, it was likely that her decision to withdraw from the proceedings did not herald a decision to withdraw from the lives of the children. That appears to have been the case given the situation that shortly thereafter emerged with [Y].
At the date of the commencement of their cohabitation, the parties were very young and had no assets of any significance. The Respondent was working for a [omitted] company and the Applicant was only about 17 years of age. They thereafter appear to have engaged in relatively low paid work. They lived with the Respondent’s parents for a period of time in Victoria, before relocating back to Queensland.
It was a fairly traditional relationship. The Applicant assumed the responsibility for the care of the children when they came along and the primary homemaker role. However, she was in paid employment before the eldest child was born and for some periods of time thereafter. The Respondent was, however, the principal breadwinner of the family.
The Respondent sadly suffered a back injury in March of 1999 at a time when the mother was pregnant with her second child. In 2001 he received a net amount of $297,000 after repayment to Centrelink, a WorkCover payment of $23,565 and solicitors’ fees. This enabled the parties to purchase land and build a home at [S]. They were in rented accommodation until their home was completed in March of 2002.
The funds received by the Respondent were applied then for the benefit of the family in the purchase of land and the construction of the matrimonial home and the home was unencumbered. The Respondent’s evidence is that as a result of the receipt of his payout, he was the subject of a Centrelink preclusion period. However, on his evidence, the Applicant was able to access Centrelink benefits to support herself and the children.
On the Respondent’s evidence, he returned to work as a [omitted] in 2002 and remained in that position until about 2009, also working a second job in 2004 and 2005 as an [omitted].
In mid 2011 the Respondent received a further payment of $28,000 in relation to his back injury, which he also applied to the benefit of the family. The Respondent received a further modest payout of $10,000 late in the relationship, again as a result of a back injury.
The parties separated for a short period for about three to four months when the Applicant was pregnant with their first child. From July 2009 to July 2010, the parties again separated, with the Applicant and the youngest child living with her mother. On the Respondent’s evidence, however, they continued their relationship during this period. It was at this time that the Applicant returned to employment.
The Respondent engaged in a period of study, undertaking a course in [omitted] and he undertook some further [omitted] courses in 2010 and 2011. Following their reconciliation for a period of some six months before their separation, the parties affected a role reversal, at which time the Applicant became the breadwinner for the family and the Respondent a homemaker.
When the parties separated they were living in the former matrimonial home at [S]. The Applicant re-partnered following separation and left the home. In her Financial Statement filed on 24 October 2012, she discloses her employment as a [omitted], with an income of $648 per week.
Following separation, the Respondent continued his role as homemaker and carer of the children. He continued that role for the two years to trial, as the three children remained in his care with at least the eldest two estranged from and having little contact with their mother. His income was a disability pension. The Respondent’s evidence at paragraph 21 of his affidavit filed on 20 January 2014 is that he has not been in paid employment since 2011.
Notwithstanding his back injury, his evidence at [90] and [91] of his affidavit filed on the same date, 20 January 2014, is that he earned an average taxable income of $19,376 for the years 2005 to 2011, inclusive – although I think there is one year that is not included.
During the parties’ relationship the respondent deposes to his son, [name omitted], a child from an earlier relationship also living with the parties for a period of time. His evidence is that [name omitted] had behavioural problems and eventually went to live with his parents.
At trial, the house remained the significant asset. The parties’ other assets consisted of cars, modest furniture and nominal bank savings and superannuation interests.
I assess the value of the non-superannuation pool at $387,666.82 and the superannuation pool at $10,210.77 making total assets of $397,877.59. I refer in this regard to paragraph 3 of the affidavit of the Respondent filed on 11 April 2014.
I have excluded the Respondent’s loans, totalling $52,000 and the debt to Legal Aid in the sum of $3,300, which cannot properly be classified as matrimonial debts, conceded by Ms Oakley for the Respondent. These were debts acquired by the Respondent post-separation to meet either the payment of his legal expenses or a payment to the Independent Children’s Lawyer associated with these proceedings.
In relation to the debt of $52,000, the Respondent’s evidence is at paragraph 99 and 100 of his affidavit filed on 20 January 2014, inter alia, that he borrowed from Westpac by way of a personal loan the sum of $50,000 in December of 2013 to repay an earlier loan secured by him, inclusive of interest, of $28,048 with the balance $15,000, being paid to his lawyer and the sum of $6,000 being at call. His evidence is also that he borrowed $2,000 from his sister for legal fees.
I have also included in the net pool the Applicant’s superannuation interest in the sum of $1,621.77, reflected in her Financial Statement filed on 24 October 2012. This figure did not appear in the Respondent’s calculation of the net pool. I did not raise it with Ms Oakley at the time because it was not brought to my attention until I read the Applicant’s Financial Statement. However, I cannot imagine that there would be any dispute about including the Applicant’s superannuation in the pool.
The pool of assets
I find the assets of the parties to be as follows, in rounded figures:
| a) | [S] home | $375,000 |
| b) | Husband’s bank account | $639 |
| c) | Husband’s Excel car | $1400 |
| d) | Husband’s Ford Falcon | $1300 |
| e) | Husband’s household contents | $5,000 |
| f) | Wife’s bank accounts | $327 |
| g) | Wife’s Ford Laser | $3,000 |
| h) | Wife’s household contents | $1000 |
| i) | Husband’s [A] Super | $6999 |
| j) | Husband’s [S] Superannuation | $1,590 |
| k) | Wife’s [S] Superannuation | $1,621 |
I conclude that the total assets to be divided between the parties has a value of $397,876 in rounded figures.
This is a case where justice and equity require that the superannuation and non-superannuation assets should be considered together given the length of the relationship and the modest value of the parties superannuation interest (Norbis & Norbis (1986) FLC 91-712).
The matrimonial home remains debt free. At the time of the filing of her Financial Statement the Respondent was residing in rented accommodation. We do not know what her current situation is, although I think there was some evidence in her affidavit that she filed at the time as to what she and her partner were intending to do in the future. We do not know what current situation is. However, her filed Financial Statement disclosed a person of modest means. Whilst she was residing with her partner who was, on her evidence, contributing to the household, he likewise presented with a modest income, although nothing else is known of his financial circumstances, including any capital assets, save that, as I said, he and the Applicant were living in rented accommodation at the time she swore her Financial Statement.
The Respondent has had the benefit of rent free accommodation, save that he has been meeting the outgoings on the property. On his evidence, those outgoings are modest, certainly less than what the Applicant disclosed as her weekly rental commitment of $250. However, the Respondent had the care of three children, which was a significant post-separation contribution by him.
Both parties have modest superannuation, although the disparity favours the Respondent. Both have a car, indeed the Respondent has two cars. I should pause to note that with respect to the superannuation, I am informed by Mr Hall from the bar table that his client’s understanding is that the mother may have cashed in her superannuation, however there is no evidence of that before me. I according propose to include the wife’s superannuation interests in the pool. Even if she has cashed in her interests, I do not see that in the context of the issues I shall identify and the determination that I am about to make that that would do an injustice to her if she has, in fact, cashed in her superannuation entitlements, of which there is no evidence.
Both parties have a car, indeed the Respondent has two cars. Both have modest household contents.
The Applicant discloses modest debts including a credit card debt of $5,571. However, there is no evidence as to whether that debt was accumulated during the relationship, so I have no included it in the net pool. It was not sought by the Respondent to be included in the net pool.
I have earlier referred to the Respondent’s debts. Whilst I have not included those in the pool for the reasons that I have discussed, they are matters that properly can be taken into account under section 90SF(3) of the Act.
The Applicant’s evidence in her affidavit filed on 24 October 2012 was that she was paying child support of $29.55 per week at that time. The oral evidence of the Respondent at trial is that he is receiving child support from the Applicant.
Legal principles
The Court has power to alter interests of parties in their property. The Court must, however, consider that it just and equitable to make such an order. In this case, it is just and equitable and I am satisfied that the requirement of section 90SM(3) of the Act is met.
The significant asset of the parties is, as I have said, the former matrimonial home, which is registered in their joint names. The Respondent, on his evidence, made a significant direct financial contribution to the purchase of that home and seeks a weighting in his favour as a consequence. The parties’ relationship has now ended and both have approached the Court to seek its assistance or at least both did, up until November of 2013.
The principles relevant to the adjustment of property under the Act were considered by the High Court in Stanford & Stanford [2012] HCA 52 as further considered by the Full Court in Bevan & Bevan [2013] FamCAFC 116.
In the decision of Price & Jamieson [2013] FamCA 816, Faulks DCJ at [31] considered the applicability of the principles in Stanford (supra) to the law relating to property settlement in de facto relationships, concluding that there were no substantive differences between the provisions of the Act that apply to married couples and those provisions that apply to de facto couples.
In exercising its discretion and in deciding what orders altering the parties’ interests should be made, the Court is required to take into account the matters set out in section 90SM(4) of the Act, which include contributions, as well as any relevant matters in section 90SF(3).
On the Respondent’s proposal, the Applicant would receive 15% of the net pool, with a transfer to the Respondent of her interest in the matrimonial home, with the Respondent afforded an opportunity to obtain finance within 60 days. In the event that he is not able to do that then the home would be sold.
On his proposal, this would equate to a cash payment to the Applicant of $55,000, on the submissions of Ms Oakley. Each party would otherwise retain the assets they have.
I am not satisfied on the evidence, however, that such an adjustment would effect a just and equitable outcome and I shall give the reasons for that now.
This is a long relationship where it is unchallenged that the Applicant gave birth to and was the primary carer for three children until shortly before separation. The Respondent was the breadwinner and both made significant contributions over the course of a long relationship. Those contributions in the context of the Applicant, primarily as homemaker and parent and the Respondent, primarily as breadwinner also involved a significant direct financial contribution by the respondent in the form of his damages payout.
From 1999 the Respondent suffered back problems associated with his injury, the pain associated with that not having fully resolved to this day, on the medical evidence. As at March 2013 the Respondent was reporting significant restriction of his lumbar spine. It is a reasonable inference that his injury had some impacts for him during the relationship given the nature of that injury. On his own evidence there were periods when he was unable to work. However, there were also lengthy periods of time when he did return to the workforce.
The receipt of his payout was a significant contribution which weighs substantially in his favour, applied as it was for the benefit of the family, it also being the source of the funds for the construction of the matrimonial home, which was the significant asset of the parties at trial.
However, it is not a contribution that can be considered in isolation, given the Applicant’s own contributions as a homemaker and parent over the course of a lengthy relationship.
Further, I must also take into account that the principal part of the payout was received about 10 years before the parties separated. Authorities such as Crawford & Crawford (1979) FLC 90-647 and White & White (1982) FLC 91-246 draw a distinction between contributions made at particular points in a relationship and as noted in Aleksovski & Aleksovski (1996) 20 Fam LR 894 at [903], whilst a damages payment is a contribution by the party who suffered the injury:
“It should not be considered in isolation, for the reason that each and every contribution, which each of the parties makes to the relationship, must be weighed and considered at the same time.”
There are a number of Full Court authorities which deal with the relevant legal principles which the Court must apply in assessing the weight to be given to competing contributions. I have mentioned Crawford (supra). I also mention Money & Money (1994) FLC 92-485 and Cabbell & Cabbell [2009] FamCAFC 205.
In this case, the Applicant resided in the home which became the matrimonial home, for some years before separation, her contributions as the primary homemaker before and after the construction of the home and her financial contributions by way of income prior to separation. That is not to suggest that the Respondent did not also make homemaker and parenting contributions in addition to his contributions of income from his damages payout. He did, however, there is no persuasive evidence to suggest that the Applicant’s contributions as de facto partner, homemaker and parent over the 10 or so years following the receipt of the principal part of the personal injuries payout were not substantial, albeit, I find, having not fully eroded at separation, given the quantum of the respondent’s direct financial contribution in the form of the damages payout and the further payments received by him later in the relationship and the use to which such payments were put.
In terms of the parties’ post-separation contributions, in this case the contributions by the Respondent to the home and the children over the two years since separation loom large, as it was a contribution made at a time of upheaval and stress for the children. I assess that contribution as requiring some adjustment in his favour.
Taking into account all of these factors and acknowledging that any assessment of contribution is not capable of precise mathematical calculation (see Zyk& Zyk (1995) FLC 92-644) which, in the circumstances of this case, would have the potential to do an injustice to the Applicant, given the quantum of the Respondent’s direct financial contributions and the value of the net pool and taking into account the fact that the Applicant’s homemaker contributions cannot be quantified in dollar terms, it must be viewed as being significant over a long relationship, and acknowledging that in assessing contribution, one is not always comparing like to like, apples to apples or oranges to oranges, so to speak (Pierce & Pierce (1999) FLC 92-844), I assess the parties’ contributions to trial as being 60% in favour of the Respondent and 40% in favour of the Applicant. A weighting of 10% in the Respondent’s favour reflects a disparity of just under $80,000 of net assets of $397,876.
I make a further adjustment of 15% in favour of the Respondent under section 90SF(3) for his care of his children into the future, his health issues and the fact that he has been out of the workforce, on his evidence, since 2011.
In reaching this conclusion I have considered a number of factors as being relevant. The incomes of the parties, as disclosed in their filed material, are not dissimilar, accepting as I do that the Respondent is on a disability pension and the Applicant is in paid employment.
Both parties are in their late thirties. By the time that the youngest child reaches his majority the Respondent will be 48 or thereabouts. Whilst I accept that the Respondent’s back injury precludes him from engaging in particular forms of work, it did not stop him from securing some employment following his injury or from undertaking courses to retrain. While the latter may not have led to consistent employment, presumably he would not have undertaken the courses if he did not view them as being likely productive of income and, further, I am unable to ignore the timing of the separation in the context of the period within which he was retraining and then the subsequent impact of the separation on him and his need to care thereafter for the children, the eldest two of whom were estranged from their mother.
Whilst these factors are a matter of balance and weight, of course, and whilst the Respondent has health issues which I accept has impacts for his ability to gain employment, the history evidences a work ethic, he is relatively young and the children are of school age.
The Applicant also has some health issues, with no evidence, however, of any impact of that on her ability to work.
The Respondent seeks to retain the matrimonial home. Given his level of indebtedness, his maximum borrowing capacity based on his income is about $164,649 which would result in a monthly repayment of $1,148. Whilst this would likely result in expenses which exceed his income based on the expenses disclosed in his Financial Statement, I accept that the extra expenditure is not significant. In light of the submissions of Ms Oakley for the Respondent, it appears that the Respondent is of the view that he would be able to manage the additional expenditure.
If the home is sold, the Respondent will be required to secure accommodation in the rental market. He deposes to a likely rental expenditure of $350 per week which, on his evidence, he would not be able to meet on his disability pension. However, he will, of course, receive a capital sum by way of property settlement. There is no evidence as to what income that sum would likely generate or whether the receipt of a capital sum would have any impacts upon his disability pension entitlement. Further, the Respondent’s evidence as to the quantum of rent he would be likely to pay is, on his evidence, based on comparable properties in the [S] area and “…the approximate rent for a four bedroom property, with two bathrooms, or a bathroom plus ensuite, plus a double lock up garage would be in the order of $350.00 per week.” (See paragraph [101] of his affidavit filed 20 January 2014.)
However, the matrimonial home is a three bedroom, two bathroom dwelling with a pool (see description of property by [H]) and there is no evidence as to the availability of or the costs of obtaining cheaper accommodation, for example, a three bedroom, two bathroom home or a three bedroom, two bathroom apartment or a three bedroom, two bathroom townhouse style accommodation.
Further, I am unable to ignore that the Respondent has evidenced a borrowing capacity, including the capacity to obtain an earlier personal loan, notwithstanding his income at the time being a disability pension, or a limited income.
In the end, the net assets of the parties have a value and notwithstanding the Respondent’s understandable desire to retain the home, the Applicant has an interest in that home and the Court is required to achieve a just and equitable outcome having regard to the contributions of both parties and a consideration of relevant future needs factors.
Faced with an application for property settlement and a net pool which had only one significant asset, namely the home which he was seeking to retain and whilst on a limited income with a knowledge of his health issues and the likely impacts for him of obtaining employment into the future as a result of that, the Respondent chose to borrow a significant sum – about $50,000 – as recently as December 2013. Whilst I acknowledge a proportion of that paid out, I think, a previous personal loan of $28,000 or thereabouts which he secured post-separation, a significant proportion appears to have been applied towards legal costs. That was a choice he was entitled to make, however, a consequence of doing so is an impact on his ability to borrow to pay out the Applicant and a reduced capacity to raise funds to do so because of the existence of the loan and the need to include that in his borrowings.
In the particular circumstances of this case I am not persuaded by the argument that because the Respondent has only a limited capacity to pay out the Applicant, that weight should be given to the quantum of such capacity to enable him to do so where, on a limited income, he chose to borrow heavily and was the only party who benefited from that decision and where he must have realised that it may have impacts for his ability to retain the home.
Ms Oakley for the Respondent referred the Court to the following cases, Sutherland & Shriver [2012] FMCAfam 502 and Fearne & Fearne (No.2) [2012] FMCAfam 917 in the context of the Respondent’s submissions with respect to retention of the home and the relevance of his borrowing capacity in that regard. However, every case, of course, turns on its own facts and the Court has a broad discretion in altering property interests, albeit a discretion which must be, of course, exercised judicially.
I am not persuaded that the facts in Fearne (supra) or Sutherland & Shriver (supra) enable me to conclude that I should make the orders sought by the Respondent. Both cases are distinguishable on their facts in my view. For example, the wife in Fearne had two children aged eight and six who had special needs and were likely to be dependent on her possibly beyond childhood. It was found that the husband was unlikely to pay child support, that he had psychological problems and was an inconsistent parent. The net pool was about $120,000, so a very modest pool. The wife and children faced an uncertain future and a pressing need for accommodation and any sale costs would have eroded an already modest equity. These were clearly matters appropriate for the judge to make a determination in favour of the wife who, the judge noted in her reasons, had acted for herself in the proceedings in the context of her modest income and a modest pool.
Sutherland& Shriver is an unusual case. It was accepted by the Court that it would be unfair for the husband to force the sale of the home to recoup an extremely modest sum of money for him when the wife and the children had a compelling need for accommodation and in light of what was assessed to be the catastrophic effects for her and the children if the home was to be sold. The children were ten and eight. The husband had paid not only limited child support, but it was found he was unlikely to do so in the future and would do whatever he could to avoid doing so. The Court also expressed the concern that the husband, who was not well disposed to the wife, had persisted in his application for a small sum of money to cause upset to the wife. These were all relevant factors in reaching the decision made, however the circumstances of this case are different.
I place limited weight on the submission that the Court should also have regard to the Applicant’s lack of engagement at trial. Her lack of engagement only came about towards the end of 2013 and her explanation for that was not only before the Court but was explained to the Respondent’s lawyer in an email communication to him. In the circumstances where the report writer identified the difficulties that the parties’ separation had posed for the children, I do not view that the Applicant’s decision to withdraw from the conflict and the impacts that she viewed that as having on herself and the children as being in the same category as a litigant who, through lack of engagement, has made it difficult for a party to achieve an expeditious and just outcome, increasing the costs of that party as a result.
Further, the Respondent was not ready to proceed with his property proceedings in January when the matter was listed for trial. Whilst the Respondent is entitled to disclosure, that important principle should not be viewed at some purist level, devoid of the realities of any connection to a discernible prejudice to the Respondent in preparing his case or any unjust enrichment or advancement of the Applicant’s position at the expense of the Respondent.
This is a case where the significant asset was always the home occupied by the Respondent. Further, these parties were always people of limited means, earning limited incomes. At the time of the swearing of her evidence, as I said, the Applicant was a [occupation omitted], living in rented accommodation with her partner. Her Financial Statement disclosed her partner’s income as $785.84 a week. Further, notwithstanding the Applicant having re-partnered and the Applicant not having made disclosure of matters to do with the joint financial circumstances of her household, the Applicant’s evidence would suggest that her partner, as I said, earns a modest income.
The factors that do, however, favour the Respondent and require an adjustment in his favour are, as I have said earlier, his ongoing responsibilities to care for and accommodate three children and his health issues. I am not, however, able to conclude that the Respondent’s care of the children is likely to be without any input from the Applicant. [Y] is now spending regular time with her mother. The eldest is not, however, he is 17 and will dictate his own course. He is only 12 months short of adulthood.
The youngest is eight. The evidence of the family report writer, Ms B, was that he had a good relationship with his mother up until separation, however had been caught up in family conflict and had been influenced by his elder siblings. Whilst there is, of course, no crystal ball, the probability is that at age eight and with his sister now spending regular time with her mother that he, too, is also likely to spend time with her in the future. It would be a dangerous thing to allow an eight year old to determine his own course on these matters.
The second factor that requires an adjustment is the Respondent’s health issues. I referred to that earlier in the balancing factors that I have taken into account or considered. On the balance of probabilities, I am unable to conclude that the Respondent will never again re-enter the workforce. However, I accept that his injury has impacts for him and he will be unable to work in a capacity which requires lifting or other work that would have impacts for his back. I also acknowledge the length of time he has been out of the workforce and the nature of the work he undertook when he was in paid employment. There was some concession, if I recall, by Ms Oakley from the bar table during the course of submissions in the context of the Applicant retaining the home, that he may have to re-enter the workforce if he was to retain the home.
I accept that the Respondent has had some depression arising from the separation. However, hopefully with treatment - he has been seeing a specialist - and with the cessation of these proceedings that condition will improve.
Both parties have very limited superannuation. I am just recapping some of the other relevant factors. However, the Applicant will have the opportunity to build upon her interest to retirement because of her employment.
Both parties have similar incomes. I mentioned that earlier although the Respondent is on a government benefit. Notwithstanding his limited income he evidenced some capacity to raise finance.
With respect to the applicant’s income, there is no evidence to suggest that she will earn a significantly higher level of income into the future. The only evidence before the Court is that she was a [occupation omitted] and the unchallenged history appears to be that she engaged in historically low income-generating employment during the relationship.
The contribution factors favour the Respondent.
I have taken into account the modest pool. I have acknowledged the Respondent’s preference to remain in the home and the impacts of the sale of the home on him and the three children if they have to enter the rental market.
I have otherwise considered the various factors raised by Ms Oakley, Counsel for the Respondent, in her considered and thorough submissions, however, I am not persuaded that a further adjustment in favour of the Respondent as sought by her on top of the 65% adjustment for contribution factors sought would achieve a just and equitable outcome.
Nor does the respondent’s desire to retain the home and the other factors advanced on his behalf enable me to conclude that those matters should deprive the Applicant of her proper entitlements after 17 to 18 years of contribution to the parties’ assets and taking into account the future needs factors that I have identified.
So I find that a further adjustment of 15% to the Respondent’s contribution entitlements as assessed based on the relevant section 90SF(3) factors meets the demands of justice and equity. Based on that assessment and my assessment of contribution there would be an overall adjustment of 75/25% of a net pool of $397,876 representing a disparity in favour of the Respondent of about $198,938.
On this division, the Applicant would receive assets with a value of $99,469 and the Respondent would receive assets with a value of $298,407.
On that division, the Applicant would receive the following: Ford Laser $3,000, bank accounts $327, household contents $1,000, superannuation $1,621 and the cash adjustment from the Respondent of $93,521 to make up her total assets on a 75/25 split, her total assets being $99,469.
The Respondent would receive the following: the house at $375,000, bank accounts $639, Excel Sprint $1,400, Ford Falcon $1,300, household contents $5,000, his super with [A] $6,999, his [S] superannuation $1,590 and he will have to pay the cash adjustment to the Applicant of $93,521 which makes a total of $298,407 to him.
I am satisfied that orders affecting an alteration of a parties’ interest based on that mix of assets would effect a just and equitable outcome.
I shall provide the Respondent with an opportunity to pay out the Applicant. If he is not able to make a cash adjustment to her of $93,521 within 60 days then I order the house to be sold on the terms as detailed in his Case Outline document.
I shall publish my reasons.
I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of Judge Purdon-Sully
Associate:
Date: 19 June 2014
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