GULLY & GULLY
[2005] FMCAfam 377
•1 August 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GULLY & GULLY | [2005] FMCAfam 377 |
| FAMILY LAW – Property settlement – long marriage – equality of contribution based entitlements – wife’s receipt of post-separation compensation awards – section 75(2) factors – net assets divided 57.5% to wife and 42.5% to husband. |
| Family Law Act 1975 (as amended), ss.79, 79(2), 79(4) |
Lee-Steere (1985) FLC
O'Sullivan & O'Sullivan [2004] FMCAfam 63
| Applicant: | JENNIFER ANN GULLY |
| Respondent: | ROBERT GEORGE GULLY |
| File Number: | ADM 566 of 2003 |
| Judgment of: | Lindsay FM |
| Hearing date: | 16 November 2004 |
| Delivered at: | Adelaide |
| Delivered on: | 1 August 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr H Leeson |
| Solicitors for the Applicant: | Stokes Legal |
| Counsel for the Respondent: | Mr D Wilson |
| Solicitors for the Respondent: | Stokes Legal |
ORDERS
That in full and final settlement of the claims of each party against the other for settlement of property or adjustment of property interests or otherwise pursuant to s.79 of the Family Law Act 1975 (as amended):
(a)the wife do within 28 days transfer to the husband all of her estate and interest in the former matrimonial home situate at and described as 32 Bolivia Crescent, Paralowie in the State of South Australia (hereinafter “the said property”) being Certificate of Title Register Book Volume 5085 Folio 228;
(b)contemporaneously with such transfer the husband do pay to the wife the sum of ONE HUNDERED AND ELEVEN THOUSAND TWO HUNDRED AND FIFTY-SIX DOLLARS ($111,256);
(c)that the husband do thereafter hold his estate and interest in the said property free from any claim or demand of the wife;
(d)that the husband do indemnify and hold the wife forever indemnified in respect of all monies owing by the parties or either of them to Homestart Finance in respect of the mortgage held by Homestart Finance over the said property;
(e)that the husband do indemnify the wife and hold the wife forever indemnified in respect of all monies jointly owing by the parties to National Bank Mastercard;
(f)that any property owned by or in the possession of or under the control of the husband including but without limiting the generality thereof his Comsuper superannuation proceeds, investments, shares, motor vehicles and chattels shall hereafter vest in the husband absolutely free from any claim or demand of the wife;
(g)that any property owned by or in the possession of or under the control of the wife including but without limiting the generality thereof her HESTA superannuation interests, investments, shares, motor vehicles and chattels shall hereafter vest in the wife absolutely free from any claim or demand of the husband;
(h)that should the husband default in the making of the payment described in sub-paragraph (b) hereof, then and in that event the said property shall be sold upon such terms and conditions as to price and otherwise as the parties may agree or as fixed by the Court and that the net proceeds of sale, after payment of all monies owing to Homestart in respect of any mortgage held by Homestart over the said property and after payment of agents commission and rates and taxes shall be disbursed in the manner following:
(i)firstly to the wife as to any amount of the sum referred to in sub-paragraph (a) which remains unpaid, together with interest from the date of default;
(ii)as to the then remaining balance, to the husband.
Liberty to apply.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADM 566 of 2003
| JENNIFER ANN GULLY |
Applicant
And
| ROBERT GEORGE GULLY |
Respondent
REASONS FOR JUDGMENT
These proceedings involve the competing applications by the parties for settlement of property.
The proceedings were instituted by the wife on 11 October 2002.
They came on for trial before me on 26 July 2004. I heard further evidence on 8 November 2004 and closing submissions on 16 November 2004.
The parties were both represented by counsel at trial. They each gave evidence and were cross‑examined.
I reserved my judgment on 16 November 2004. I regret that it has taken this length of time to deliver reasons for judgment, but the circumstances within this Registry wherein I have been the only Federal Magistrate on duty for extended periods since December 2004 account for the delay.
The parties married on 6 March 1971. They separated on 1 July 1999. That separation was a final separation. It was agreed by the parties that there had been nine previous separations of not more than three months on each occasion.
There are two adult children of the relationship, who were aged 32 years and 29 years at the time of trial and who are both financially independent of the parties.
The husband commenced employment with Australia Post in February 1978. His employment with that organisation was terminated in July 2004. I did not hear a great deal of evidence about what led to his termination, other than it involved a physical altercation with another employee. At the time of his termination of employment he was receiving a salary of approximately $71,000 per annum. He had been on a like income in the years following separation. During the course of his employment with Australia Post he acquired a superannuation interest in the ComSuper fund.
The wife was employed as a kitchen hand until the oldest child was born. She was absent from employment for two years following the birth of that child and returned to full‑time work until the youngest child was born. She then had six months away from employment and returned to full‑time work either as a kitchen hand or as a bakery assistant.
At the time of trial she had been employed by her then employer Eurest for two and a half years. I received in evidence, without objection from the husband, an affidavit of the wife which described recent developments with respect to her employment. Eurest was a contractor providing kitchen services to Southern Cross Care. On 20 October 2004 Eurest advised the wife and other employees of Southern Cross Homes of the fact that Southern Cross Care had made the decision to cease to contract kitchen services to Eurest. Eurest indicated that, as a result of the loss of that contract, a number of their employees would be offered redundancy. The correspondence also indicated that a number of employees could expect to be offered employment by South Cross Care, who were making their own arrangements with respect to the employment of kitchen staff. At the time of trial it was unclear whether or not Southern Cross Care would offer the wife a continuation of her employment at that organisation, but it was certainly possible.
The Law
The general approach to be adopted by a court exercising jurisdiction under Part VIII of the Family Law Act has been described in many cases. The Court must begin by identifying the property of the parties. It must attribute a value to each item of property, which value is usually referrable to the date of hearing. Thereafter it must assess the contributions each of the parties have made to the acquisition or conservation of the property under the various subheadings described in s.79(4) of the Family Law Act. Finally, the Court must consider the financial resources, means and needs of the parties and the other matters set out in s.75(2) of the Family Law Act, insofar as they relevant.
A consideration of the s.75(2) factors may lead to an adjustment of the contributions based entitlements of the parties, but it is not essential that such an adjustment takes place. In general terms, an adjustment will be made because one party has greater needs and the other party has stronger means. However, this is not to be understood as simply the application of some form of "needs test". The decision of the Full Court of the Family Court in Lee-Steere (1985) FLC 91-626 explains the way in which the Court reaches a just and equitable determination and emphatically rejects the concept of a property settlement being based upon the parties' needs as distinct from a strict application of the factors set out in s.79 of the Act.
Section 79(2) of the Family Law Act provides as follows:
“The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”.
This has led to the suggestion in a number of cases that there is some fourth step involved in the adjudication of property disputes involving the application of an overriding "just and equitable requirement". However, the approach I take to this matter is that the just and equitable requirement relates to the form of the relevant orders. Section 79(2) is expressed in negative terms. It indicates that, before pronouncing orders, the Court must be satisfied that the application of the various factors referred to in s.79 has led to an outcome which is just and equitable. If a consideration of the outcome reached by the application of the various matters referred to in s.79 does not lead to such an outcome, then the application of those principles has to be revisited until the outcome is one that is just and equitable. This is very far from being an overriding fourth step in the process. I have been particularly assisted in the consideration of the extent to which s.79(2) involves a necessary "standing back" and consideration of the overall impact of the award by the discussion of same to be found in the judgment of Walters FM in O'Sullivan & O'Sullivan [2004] FMCAfam 63.
The resolution of this dispute was assisted by the number of facts which the parties were able to agree and, in particular, the fact that they were able to provide me, through their counsel, with a schedule of agreed assets and liabilities.
That schedule indicates the net asset position to be as follows:
Assets
(a)Former matrimonial home at Paralowie $173,000.00
(b)
Husband's termination payment received
2 July 2004 $ 9,291.37
(c)
Wife's interest in HESTA superannuation
(accumulated benefit scheme) $ 17,820.00
(d)
Husband's lump sum ComSuper benefit
received August 2004 $ 97,620.97
Liabilities
(e)
HomeStart mortgage secured over former
matrimonial home $ 56,862.00
(f)National Australia Bank MasterCard debt $ 12,100.00
Net Assets $228,770.34
In addition, it was agreed that the husband had the benefit of an indexed pension for life (an interest in the payment phase) arising out of his participation in the ComSuper scheme worth $19,628.30 per annum as at the date of trial.
Whilst the above schedule arises from a document put to me with the consent of each of the parties, it in fact transpired that there was some disagreement between them as to the value to be attributed to the husband's termination payment. The husband's counsel contended that, of that sum, I should only take into account the sum of $2,400. The husband points to the fact that the termination payment of $9,291.37 was the only income that the husband received during the period when his employment had been suspended following the altercation referred to above. He says that the termination moneys were utilised by him during a five‑ to six‑week period between his termination and the final processing of his superannuation. The wife says I should take the total figure into account.
The resolution of this matter was also assisted by the fact that the parties agreed that the contributions based entitlements of each of them were equal. For this reason, it is unnecessary for me to recite the matters relating to the history of the marriage as they relate to employment, the sale of one home and the purchase of another and other matters relevant to their financial history.
There was one aspect of the financial history of the relationship that was, however, the subject of some dispute, and that was the extent to which I should take into account various payments received by the wife post‑separation. It was agreed that the wife had received three separate payments in the nature of compensation or damages post‑separation. Firstly, the wife was involved in a motor vehicle accident in February 1999. In July 2001 she received a gross payment of $27,299. That sum included an amount for pain and suffering, calculated at $15,600, gratuitous assistance of $700, future medical expenses of $700, a contribution to her costs of $2,000, a contribution to her disbursements of $729 and an amount of $8,00 attributable to future economic loss.
I proceed upon the basis that the parties were agreed that the sum of $2,000 should be deducted from that, as being the moneys payable by the wife to her solicitors, which leaves a net payment of approximately $29,299.
In addition, the wife sustained an injury during the course of her employment in May of 1997. For a time she was receiving weekly income maintenance payments of $220 gross, but that liability was redeemed by way of a capital payment pursuant to s.42 of the WorkCover legislation in the sum of $29,500.
The wife also received a payment in relation to that same injury pursuant to s 43 of the WorkCover legislation. That payment was in the amount of $20,590.70. That payment was received in September 1999 and resulted in a net benefit to the wife after the payment of legal fees in the amount of $17,925. That payment was made on account of what was described as a loss of function of 15 per cent of the lower back and lumbar spine, 10 per cent in relation to her left hip and 10 per cent in relation to her right hip.
It was common ground that all of these moneys had been expended by the wife by the date of trial.
The husband's position was that the receipt by the wife of those moneys (which, I repeat, were all received post‑separation but some of which related to events towards the end of the marriage) should be disregarded but only upon the basis that I concomitantly disregard the husband's future entitlement to a pension.
The wife's position was that the moneys should be left altogether out of account in establishing the asset pool. That submission was put upon the basis that some of the moneys were awarded for pain and suffering and some of them related to economic loss and reflected the circumstance that the wife has relied upon those moneys to support and supplement her living expenses. In this regard, the wife pointed to the circumstance that since separation, which I remind myself was almost six years prior to the conclusion of the trial, the wife had to find money to pay for various rental accommodations, whereas the husband had remained in occupation of the former matrimonial home. The evidence was that the husband had been servicing the relatively modest amount owing to HomeStart in respect of the mortgage as at the date of separation.
The position was that each of the parties suggested that I leave out of the asset pool the moneys received by the wife. The husband asked me to do it contingent upon my accepting his submission as to the disregarding of his pension entitlement. Presumably, if I do not disregard his pension entitlement, the husband is proposing that I include all of the moneys received by the wife in the asset pool.
The wife, for her part, was suggesting that the moneys received by the wife post‑separation should be disregarded as they serve to equalise, to some degree, the disparate incomes earned by the parties in the years that have passed since separation.
The husband sought orders that would divide the net assets of the parties (according to the asset pool calculated by him) equally. Taking into account the assets that each of the parties had, that worked out to a payment to the wife in the sum of $90,000, in return for which she would transfer to him her interest in the former matrimonial home. He proposed that thereafter the parties would retain the assets that they had and, in particular, that the husband would retain free from any claim or demand by the wife his ongoing entitlement to a pension.
Neither party sought any form of splitting order in relation to the husband's pension entitlement.
The wife promoted orders which would see the net assets of the parties (on the basis of an asset pool calculated in the way she proposed) divided as to 75 per cent to her and 25 per cent to the husband.
In other words, she would see one‑half of the net asset pool divided equally between them and she would then retain the other half of the asset pool in its entirety. The net effect of such an order would be a payment by the husband to the wife in the sum of $150,000, in consideration of which she would transfer her interest in the home to him. The wife would retain her assets and the husband retain his.
In practical terms, and on the basis of the wife's calculation of the asset pool, this would mean that the wife would have assets of $167,280 and the husband would have assets of approximately $49,000 plus the benefit of his termination payments in the amount of $9,200.
The parties, each in their own way, have taken a broad-brush attitude to the resolution of certain issues. I do not criticise them for that. However, it does not absolve the Court of responsibility for determining each of the disputed issues in accordance with law.
Firstly, as to the husband’s termination payment, I propose to include the sum of $5,000 in the asset pool. That reflects a reasonable amount of income for him to draw for the period when his employment was in limbo and he was not otherwise receiving an income.
As to the wife’s receipt of monies in the period following separation, firstly, I should disregard, of course monies used to meet legal costs and medical expenses. That leaves on my calculations, the following sums:
Motor vehicle accident (pain and suffering and future economic loss)
$ 23,600
Section 42 payment
$ 29,500
Section 43 payment
$ 18,000
Total
$ 61,100
Clearly, they are not sums to which the husband has made any contribution. They are sums which are part of the wife’s total circumstances post-separation. At least $37,500 of the above sum was awarded to her to compensate for future loss of earnings. So, when I assess her future needs I must take into account that at least that part of her circumstances which reflect her history of work and non-work injuries have been compensated. Similarly, the injury she sustained at work in May 2004 was, at the time of the trial, the subject of a weekly payment of compensation (reflecting her reduced capacity for employment) and also the subject of a further s.42 redemption payment and/or s.43 lump sum disability payment.
These sums have mitigated somewhat the wife’s relative lack of remuneratively attractive employment. The lump sum pain and suffering award and disability payment have also served so to do.
Against that, almost six years passed between separation and the trial date and the continuing impact of the receipt of these monies must be taken to have significantly diminished.
The wife is now aged 55 years. I proceed upon the basis that she will have available to her the equivalent of an income equal to working a near full week in the field of her employment, which is that of kitchen duties. I say the equivalent because she will presumably receive part of her income in the form of weekly payments of compensation, redeemed or otherwise.
The husband earned between $65,000 and $71,000 per annum in the period following separation until his dismissal. He will receive an indexed pension for life in the amount described earlier in these Reasons. He is now 60 years of age. His pension will, of course, be taxable in the usual way. I think that is a matter of which I can take judicial notice.
I find that the net asset pool is constituted as follows:
Former matrimonial home at Paralowie
$173,000
Mortgage
$ 56,860
Mastercard debt
$ 12,100
Husband’s termination payment
$ 5,000
Husband’s lump sum Comsuper benefit received August 2004
$ 97,620
Wife’s superannuation interest (Hesta)
$ 17,820
Total
$224,480
The balancing act is one that has to be undertaken with some care, and involves an appreciation of both what has occurred since the parties separated some six and a half years ago, and their future earning capacities and financial resources.
The health of the wife to the extent it has been impacted upon by her motor vehicle accident and her work injuries I know about only to the extent to which it was reflected in the various awards. She has a residual capacity for employment as above-described notwithstanding those injuries.
The husband suffers from diabetes. I was not told much more than that about his health. He lost his employment on account of an incident at work. He has not secured alternative employment and he is certainly employable though his scope for employment is now limited by his age.
Doing the best I can to take into account all of the circumstances identified above, it seems to me that an award to the wife of 57.5 per cent of the asset pool would achieve a just and equitable accounting of their respective s.75(2) factors, bearing in mind the equality of their contribution based entitlements over this long marriage.
57.5 per cent of the asset pool is $129,076. The wife has assets worth $17,820. The husband will have to pay her $111,256. His net position, taking into account all of the other assets and liabilities which will be left with him, will be $95,404.
Taking into account the $100,000 invested he would need to refinance an amount of approximately $80,000 and service that with his pension or other employment, or sell the house and move to more modest accommodation.
It is not clear to me whether the husband is presently enjoined from dealing with the superannuation monies he has received. The orders I have proposed would see the house sold in the event of a default in payment, but it may be that a more appropriate order would see the husband restrained from dealing with the amount invested other than to comply with the payment order to the wife. It may be necessary to make a similar order for injunction in relation to his dealing with his estate and interest in the matrimonial home. Because that matter is unclear, I will give the parties liberty to speak to the form of the orders with respect to default.
For the foregoing reasons, I make the orders set out at the beginning of these Reasons.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Lindsay FM
Associate:
Date:
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