GREY & GREY
[2005] FMCAfam 317
•18 July 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GREY & GREY | [2005] FMCAfam 317 |
| FAMILY LAW – Property – financial contributions – evaluation and assessment of parties’ respective contributions – significant parenting contributions post separation. FAMILY LAW – Property – superannuation – no splitting order sought – appropriate adjustment to property. |
| Family Law Act 1975, s.79 |
| Brandt (1997) FLC ¶92–758 Russell & Russell (1999) FLC ¶92-877 Tomasetti (2000) FLC ¶3-023 West & Green (1993) FLC ¶92-395 |
| Applicant: | KATRINA ANNE GREY |
| Respondent: | ROGER DUNCAN GREY |
| File Number: | MLM 10597 of 2004 |
| Judgment of: | Riethmuller FM |
| Hearing date: | 12 May 2005 |
| Delivered at: | Melbourne |
| Delivered on: | 18 July 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr Puckey |
| Solicitors for the Applicant: | Julian Teh |
| Counsel for the Respondent: | Mr Ramsay |
| Solicitors for the Respondent: | Howard Sheridan Cooney Harvey |
ORDERS
That the wife be solely entitled to the exclusion of the other to all property (including choses-in-action) owned by or in the possession of such party as at the date of these orders, together with the table, chairs and cabinet made by her father.
That the husband be solely entitled to the exclusion of the other to all property (including choses-in-action) owned by or in the possession of such party as at the date of these orders, save for the table, chairs and cabinet made by the wife’s father, which shall be delivered up to the wife within 21 days of these orders.
Each party retain, to the exclusion of the other any right title or interest in any superannuation fund in their respective name.
The husband do retain the balance of the proceeds of the sale of the home and business currently held in trust, save that:
(a)The husband indemnify the wife with respect to the taxation liabilities for capital gains arising out of the sale of the business of the parties.
(b)the sum of $6,000 remain in trust until the capital gains tax liability of the wife with respect to the sale of the business is discharged by the husband; and
(c)the husband be at liberty to apply all or part of the $6,000 to that purpose.
Both parties be granted liberty to apply for consequential orders as may be required.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BENDIGO |
MLM 10597 of 2004
| KATRINA ANNE GREY |
Applicant
And
| ROGER DUNCAN GREY |
Respondent
REASONS FOR JUDGMENT
This matter proceeded at the Bendigo circuit without the need for oral evidence, based upon various agreed facts from counsel and affidavit material.
The husband and wife each rely upon their application and response.
The wife relied upon her affidavit of 10 May 2005 and a financial statement of the same date.
The husband relied upon his financial statement filed 14 February 2005 and parts of his affidavits (not being the children's matters parts):
a)paragraph 13 of his affidavit filed 14 February 2005;
b)his affidavit sworn 1 April 2005, paragraphs 2-4, 6-7, 12-17, 23-38, 66-66, and 70.
The wife is 31 years of age and the husband 46. There are two children of the marriage:
a)James born 28 August 1995; and
b)Duncan born 27 April 2000.
The parties commenced cohabitating in December 1994 and were married on 18 March 1995. They separated in May 2004. The relationship therefore ran for approximately nine and a half years.
The law
Section 79 of the Family Law Act 1975 (‘the Act’) enables the Court to make such orders as the Court considers appropriate altering the interests of parties in the property. Section 79 of the Act sets out a number of significant matters that must be considered in order to determine what orders would be appropriate.
In Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC ¶93-143 the Full Court of the Family Court conveniently summarised the preferred approach as follows:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC 92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEJ and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.
The approach taken in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC ¶93-143 must now be read subject to the decision in C & C [2005] FamCA 429 (with respect to superannuation), where Bryant CJ, Finn and Coleman JJ said:
43. Thus, the way in which s 90ms is drafted leads us to the view that superannuation interests are another species of asset which is different from property as defined in s 4(1), and in relation to which orders also can be made in proceedings under s 79.
44. However s 90ms(1) does have the effect, in our view of requiring that in a case where the Court intends to make orders in relation to superannuation interests of the spouses, it must do so “under” s 79 (although s 90ms(2) makes it clear that the Court cannot make an order in relation to a superannuation interest except in accordance with Part VIIIb). In other words, the Court must apply to superannuation interests the matters to be taken into account under s 79.
…
63. …we consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in s 4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise). This of course is the approach which the trial Judge adopted in this case.
In undertaking the first step the various items of property should be identified with reasonable precision and value. However in the subsequent steps it is not possible to make an adjustment for each relevant factor with mathematical precision. This is clearly stated by Nygh J in G & G (1984) FLC ¶91-582 (at page 79,697), where his Honour said that:
It cannot be required of the Family Court that it assesses contributions with mathematical precision with respect to each item.
This observation was approved by Mason J (as his Honour then was) and Deane J in Norbis & Norbis (1986) FLC ¶91-712. This observation has regularly been repeated by the authorities: see for example Brandt & Brandt (1997) FLC ¶92-758 and Farmer & Bramley (2000) FLC ¶93-060. Of course, ‘Judges [and Federal Magistrates] are obliged to exercise their discretion judicially and should explain the broad nature of their reasoning that leads to their conclusion’: see Figgins & Figgins (2002) FLC ¶93-122.
With respect to the final step it is important to note that it is the justice and equity of the actual orders that the Court must consider: see Russell & Russell (1999) FLC ¶92-877.
The pool of assets
It is agreed between the parties that the following assets are contained within the pool of matrimonial assets:
a)sale proceeds of a business and home $221,047;
b)the husband's superannuation $167,000;
c)money withdrawn from mortgage accounts by the wife since separation $120,000;
d)payment of the lease on the husband's motor vehicle $33,266;
e)the wife's superannuation $5300
It is agreed between the parties that the taxation consequences of the sale of the business will result in a capital gains tax liability of somewhere in the vicinity of $6000. At this stage the parties are unable to precisely determine the amount of tax payable on the sale of the business. It is agreed that this sum of money be held in trust to meet that liability with the balance to be distributed to the parties. This appears to me to be a sensible way to approach what is a minor issue in this case.
There are two issues relating to the pool:
a)whether or not the wife's 2003/2004 tax liability of $2,454 should be considered a debt that comes off the pool; and secondly
b)whether or not the husband's furniture should be added to the pool in the sum of $5000.
The ‘add backs’ to the pool (items (c) and (d) in paragraph 13) are agreed.
The parties conducted a kennel and cattery business and engaged in income splitting which resulted in payments being made to both the husband and wife (which provided a taxation advantage to the parties). The taxation liability has arisen substantially during the relationship. In my view it is a debt that ought to be taken into account in the pool.
With respect to household assets and effects, the wife says that she has no household effects but owns a horse she values at $300 (see the wife's financial statement).
The husband in his financial statement sets out that the household contents in his possession are $5000. In the absence of any other evidence I propose to take the figure of $5000 as chattels for the husband and $300 as chattels for the wife. It must be remembered that the chattels in possession of the husband would, to a considerable extent, relate to the fact that the children require furniture and effects. However, this is more appropriately considered as a 75(2) factor than an adjustment to the pool (given the state of the evidence in this case).
I therefore find that the pool of property is as follows:
a)sale of proceeds of business/home $221,047
less the wife's 2003/2004 tax return ($2,454)
sub total $218,593
b)money withdrawn by the wife since separation $120,000
c)payments of the lease on the husband's motor
vehicle $33,266
d)furniture in the husband's possession $5,000
e)wife’s horse $300
Total $377,159
The pool of superannuation is:
a)the husband's superannuation $167,000
b)the wife's superannuation $5,300
Total $172,300
Contributions
Section 79(4) of the Family Law Act requires consideration of the contributions of the parties. The relevant parts of section 79(4) are as follows:
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 homemaker or parent.
It is relevant when considering the various contributions to also consider the times when those contributions are made. For example see the discussion in Pierce & Pierce (1999) FLC ¶92-844 where the court was considering the weight to be given to various contributions having regard to the time of the contributions, and the importance of those contributions.
In this case the parties have made significant contributions in various ways over the years.
At the commencement of the relationship the husband owned rural property which was purchased in 1988 for $180,000. It had a mortgage at the commencement of cohabitation of around $43,000. It was sold in December 1999 for $280,000 (net), that is the sum of $280,000 was realised after the payment of sale expenses, etc.
There is no valuation of this property as at December 1994 however it was clearly a significant asset for the parties’ benefit. It is suggested by counsel for the wife that the increases in the value of the property from purchase to sale should be approached on a pro rata basis (similar to the calculations with respect to superannuation in West & Green (1993) FLC ¶92-395), to come to a notional contribution figure of around $175,000. In the absence of any other evidence this appears to be me to provide some guidance as to the significance of this contribution, although it is clearly not the preferred approach of the Court (if there is appropriate evidence).
It is accepted that the wife brought to the relationship a small amount of money, a car and some furniture.
In 1995 the husband received a termination payment of $13,000. In 1998 the wife received a worker's compensation payment of $20,000.
Throughout the relationship both parties contributed in their own ways working and caring for the children.
Following separation the children remained with the father.
In December the mother arrived to take the children to the beach for the day and left from New South Wales to Victoria bringing proceedings in the Bendigo Registry of the Court in February. The result was that the mother had the children in her care for 14 weeks. During this time the mother drew significant sums on the joint mortgage. The husband says that at the time that this occurred, the mortgage was nearly nil, the wife says the mortgage was around $11,000 to $12,000.
The mortgage was frozen by the parties (by consent) in August 2004 and the husband had agreed to allow the wife to withdraw $8000 so that she could have a motor vehicle in October 2004. On this occasion the wife took $14,000.
In December 2004 she stated that she would return the children to the husband if he agreed to a property proposal.
The wife used a copy of the husband's signature without his knowledge or consent for further transactions in December and January where she withdrew $40,000 on each of two occasions.
Precise amounts are not of particular significance as it is agreed that the wife drew $120,000 from the mortgage.
The husband's counsel stated that the husband had to litigate the children's issues and ultimately the children have returned to his care, which has been a significant cost upon him. It does not appear to me that it would be appropriate in property proceedings to make an adjustment in favour of one party or the other with respect to the costs of that litigation as it was open to the Court during that litigation to make such cost orders as may have been appropriate.
However, the husband has made significant parenting contributions post separation, particularly given the steps taken by the mother with respect to parenting which would have caused much disruption and upset for the children.
In summary I am of the view that the husband has made significant initial contributions. These are contributions which must be taken in the context of the case where the property the husband brought to the relationship was used as security to buy other property and ultimately sold so as to realise its cash value to be utilised in the relationship.
I find that the parties made substantially equal contributions during the course of the relationship.
The husband has received no child support since separation and is unlikely to in the future. The conduct of the wife since separation coupled with the lack of child support leads to the conclusion that the husband has made greater contributions to the welfare of the family and children than the wife, since separation. In addition, the husband continued to operate the business until recently. However, the husband was, until recently, in occupation of the matrimonial home.
I find that the husband has made substantially greater contributions since separation.
Counsel for the wife relied upon Pierce (1999) FLC ¶92-844 with respect to the issue of initial contributions. Pierce's case involved a marriage of 10 years duration in which the husband brought $226,000 into the home at the commencement and the wife around $11,000. This resulted in a pool of around $320,000. The Full Court assessed the contributions of the husband at 55 percent.
Counsel for the wife submits that having regard to the principles in Pierce's case the initial contributions of the husband must be recognised, and that a contributions assessment of 60/40 in favour of the husband would be appropriate. Counsel for the husband contends for a contributions assessment of 65/35.
The figure of 65/35 is perhaps best explained by an arithmetic calculation whereby the contribution of the husband at the commencement of the relationship of $175,000 represents some 30 per cent of the asset pool. If the parties are considered to have contributed equally thereafter, further contribution by each party would be in the order of 35 per cent, leading to a contribution by the husband of 65 per cent and the wife of 35 per cent.
This arithmetic method does not, on its face, necessarily account for the change in significance of contributions over time or the difficult task of comparing differing types of contributions during and after the relationship. This can be seen in a number of the reported authorities dealing with the question of initial contributions in matrimonial matters, for example:
a)In Chorn (2004) FLC ¶93-204 dealing with a pool of $653,000, an eight year marriage, the wife contributed initially $285,000. On an arithmetic basis this would make her contributions (assuming that the contributions during the relationship were substantially equal) as 72 per cent. The Court allowed 62.5 per cent.
b)In Kirby (2004) FLC ¶92-188 the husband made an initial contribution of $23,547, and during the course of the relationship made further particular contributions totalling $67,620. The pool was $517,387.00. The contributions that were assessed by the Court were 50/50 in circumstances where the parties had been in a relationship for 15 years.
c)Similarly, in OSK (2004) FLC ¶93-194 an initial contribution by the wife of $12,000 in a 19 year relationship did not result in an overall difference in contributions from 50/50.
However, not all cases result in assessments that are different from an arithmetic calculation. For example, in Brandt (1997) FLC ¶92-758 following a 16 year relationship where the wife had brought $30,000 at the commencement and later contributed $6000, the overall assessment of 62.5 per cent was around the same as an arithmetic calculation. Similarly in Rosati (1998) FLC ¶92-804 contributions by the husband of $336,000 during an 18 year relationship resulted in a contribution assessment only 1 per cent different to an arithmetic calculation (see also Tomasetti (2000) FLC ¶93-023).
Whilst an arithmetic calculation provides a perspective on the contributions to the pool of the parties it is not to be elevated to the position of a rule or principle. The Act requires a contribution based assessment having regard to the matters set out in s 79, which necessarily requires the weighing up of financial and non financial contributions, many of which cannot have a precise arithmetic or valuation assessment placed upon them in dollar terms.
Having regard to the decision of the majority in the Full Court in C & C [2005] FamCA 429 it is appropriate that I assess contributions to the property pool separately from the superannuation pool.
In this case I assess the contributions of the parties to the property pool as 35/65 in favour of the husband.
There is no evidence as to the times of the contributions to the husband’s superannuation fund, however the parties’ relationship represents less than half of the husband’s working life. In the absence of information as to the dates of contributions it would be inappropriate to assume that contributions only started on marriage, rather than when employment commenced.
Doing the best that I can with the limited evidence on this issue, with respect to the superannuation pool, I assess the contributions of the parties at 60/40 in favour of the husband.
Section 75(2) factors
In this case both parties have a considerable working life in front of them.
It appears unlikely that the wife will work again as she has been on worker's compensation payments since 1998. These payments are between $180 and $250 per week. The wife, however, has re-partnered and is in a de facto relationship with a de facto who earns $500 per week. The wife and her de facto have a property into which she has contributed significant amounts. In the children's proceedings she deposed to the comfort of the home and her investment in the renovations.
The father, on the other hand, is almost entirely responsible for the children. It is unlikely there will be more than $260 per year paid in child support in the future. Given the distance between the parties it is unlikely there will be a great deal of contact between the children and the mother (certainly not to the levels which would result in substantial contribution to the day to day care of the children).
One of the children suffers from cerebral palsy which requires him to wear callipers on the right hand side of his body. He requires new callipers from time to time (around each six months) and takes medication to avoid seizures. He receives physiotherapy and occupational therapy and as deposed to by the husband in the following terms:
66.I have been involved with my sons in all aspects of their lives. When James was born he was bottle fed and as I was not working for the first 6 months of his life I was able to share in the night feeding of James with the Applicant. We did this arrangement by one of us doing one night on and one night off. When the Applicant was working nights at Westpac and Woolworths I put James to bed and settled him if he was disturbed. I always prepared both of the boys school lunches and still prepare both of the boys lunches each day. The only occasions when I did not do this was when I was away. I would also read to the boys on most nights. If either of the boys woke or was sick it was always “dad” that they called out for.
67.Since I have been caring for the boys on my own, even though I was running a business 7 days a week, I ensured that James made all of his medical appointments and continued with his swimming of exercised ever Saturday (sic). I would arrange through friends and neighbours to assist me in looking after the business while I took care of the boys needs.
68.I have arranged for James to see the Occupational Therapist at Kempsey District Hospital on 12 April 2005 to be measured for a new hand brace. I have also mad an appointment for him to see Dr Pattison in Sydney on 15 April 2005 to enable him to be measured for a new leg brace. This appointment is at the Children’s Hospital at Randwick. The appointment should have been in January however James was with the Applicant in Victoria. James also has a scheduled appointment with his Paediatrician Dr McDonald at Kempsey on 4 May 2005.
The child has a special integration aide at school and the father maintains a high involvement at the school.
The husband, not surprisingly, intends to remain the full time carer of the children. It appears to me to be unlikely the husband would in the future be able to realistically maintain more than part time employment. The husband is intending to purchase a home to house himself and the children from the proceeds of the property proceedings. Both counsel made submissions with respect to the prices of home in Kempsey, however, there is no evidence before me. As such I am not able to make a finding of fact in this regard.
In this matter I must also have regard to the fact that the superannuation is not a presently available asset. The superannuation consists of $172,000 out of the overall pool, which represents a substantial proportion of the overall pool.
Neither party has sought a splitting order nor notified the trustee, rather requesting me to determine the case without the ability to adjust the parties’ superannuation interests. This results in the husband retaining $167,000 from the asset pool in superannuation which will not be available to him for some years. This is in circumstances where the husband has two children to care for, one of which has special needs.
In my view having regard to the fact that no splitting order is sought there should be an adjustment in favour of the husband of only 3 to 5 percent.
Just and equitable
It is important that I consider the overall effect of the assessments and adjustments I have found appropriate.
I also note that it is expected that there will be tax liability on the sale of the business in a sum less than $6,000. This should be met by the husband from the sale proceeds.
I calculate that the wife's share if there be a 5% adjustment in favour of the husband is approximately as follows:
a)30 per cent of $376,859 = $113,148
b)less distribution to wife $120,000;
c)plus $2,454 (wife’s tax liability for business);
d)balance of ($4,398) owing to the husband.
The wife's share, if there be a 3% adjustment in favour of the husband would be around:
a)32 per cent of $376,859 = $120,691
b)less distribution to wife $120,000;
c)plus $2,454 (wife’s tax liability for business);
d)balance of $3,145 owing to the wife.
When looking at the matter as a whole I am satisfied that it is ‘just and equitable’ that the wife retain the property in her possession (and her present superannuation interests or entitlements) without further adjustment, and that the husband retain the property and (and his present superannuation interests or entitlements) together with the proceeds of sale of the home and business (and the unascertained tax liability).
With respect to the specific furniture made by the wife’s father (a table, chairs and cabinet), these items have significance as keepsakes for the wife. They are not substantial in the scheme of the pool. It is just and equitable that she retain them.
I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
Associate:
Date:
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