Hadjidemetriou and Lescouriou
[2008] FamCA 222
•4 March 2008
FAMILY COURT OF AUSTRALIA
| LESCOURIOU & HADJIDEMETRIOU | [2008] FamCA 222 |
| FAMILY LAW – PROPERTY - Settlement in relation to marriage |
| Family Law Act 1975 (Cth) |
| Kowaliw & Kowaliw (1981) FLC91-092 C & C (2006) FLC 93-269 De Angelis & De Angelis (2003) FLC 93-133 Hall & Tudor (aka Hewitt & Tsonga) [2008] FamCAFC 8 |
| APPLICANT: | MRS LESCOURIOU |
| RESPONDENT: | MR HADJIDEMETRIOU |
| FILE NUMBER: | MLF | 1121 | of | 2006 |
| DATE DELIVERED: | 4 MARCH 2008 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | DESSAU J |
| HEARING DATE: | 14, 15, 19 FEBRUARY 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | MR JACKSON |
| SOLICITOR FOR THE APPLICANT: | ARCHER & SAPOUNTZIS |
| COUNSEL FOR THE RESPONDENT: | MR SERRA |
| SOLICITOR FOR THE RESPONDENT: | GPZ LEGAL |
Orders
IT IS ORDERED
Capitalised Spousal Maintenance
This is an order to which s 77A of the Family Law Act 1975 applies.
The husband shall pay to the wife the sum of $75,750 by way of capitalised spousal maintenance, such sum to be paid on or before 5 May 2008 (“the date”).
Property
That the wife shall pay to the husband the sum of $142,600 (“the payment”) on or before the date.
That contemporaneous with the payment:
(a)The husband shall transfer to the wife at the expense of the wife his interest in the land at T in the State of Queensland;
(b)Each party shall at their own cost withdraw any caveats lodged by them or solicitors acting on their behalf over real property registered in the other party’s name or real property which is to be retained by the other party following these orders; and
(c)The wife shall indemnify and keep the husband indemnified in relation to any liabilities over the property at B in Melbourne (“the [B]”) registered in her sole name, the property T in the State of Queensland, and the property at R in the State of Victoria and the husband shall indemnify and keep the wife indemnified against any liability in relation to the property at D in the State of Victoria.
That in the event that the whole of the payment has not been made by the date then the wife shall sign all documents and do all things necessary to transfer to the husband the B property to be held on trust for sale (“the sale”) and upon completion of the sale, the proceeds of the sale shall be applied:
(a)First to pay all costs, commissions and expenses of the trust transfer and the sale;
(b)Secondly to discharge any mortgage or encumbrance affecting the B property;
(c)Thirdly to pay to the husband so much of the payment as is then outstanding together with interest thereon at the rate prescribed in the Family Law Rules; and
(d)Fourthly to pay the balance to the wife.
That pending the payment or completion of the sale:
(a)The wife shall have the sole right to occupy the B property and during such right of occupation the wife shall pay all out-goings in relation to the B property as they fall due and shall indemnify and keep the husband indemnified in relation to same; and
(b)The wife holds her interest in the B property upon trust pursuant to these orders and shall not encumber the B property without the consent in writing of the husband until the payment has been made in full.
That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or subsequent orders:
(a)Each party shall be solely entitled to the exclusion of the other party to all other property in the name or the possession of such party as at the date of these orders; and
(b)Each party forgoes any claims they may have to any superannuation benefits belonging to or earned by the other.
That the parties’ applications shall otherwise be dismissed and the case removed from the list of cases awaiting finalisation.
That pursuant to the Family Law Rules this matter reasonably required the attendance of counsel.
IT IS NOTED that publication of this judgment under the pseudonym Hadjidemetriou & Lescouriou is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLF 1121 of 2006
| Ms Lescouriou |
Applicant
And
| Mr Hadjidemetriou |
Respondent
REASONS FOR JUDGMENT
The husband and the wife are seeking a property settlement after a marriage in which they lived together for 28 years. The wife also seeks spousal maintenance. The authorities make it clear that I should determine the property settlement before dealing with maintenance.
There are four steps for me in a property case.
The first is to establish the assets and liabilities. In this case they were mostly agreed, save in relation to a sum allegedly gambled away by the wife. The amount lost was in dispute, as was whether it should be notionally added back into the pool, or considered when I turn to the second step of determining the parties’ respective contributions.
As to that second step, at the start of the case the wife said that contributions were 60/40 in her favour, taking into account her greater contribution at the outset and her superior contribution as home-maker and financial provider during the marriage. By the end of the case, her counsel submitted that if gambling losses are considered at this point, then “at worst” it would bring contributions back to 50/50.
The husband said that each party contributed broadly similar amounts at the start of the relationship, and made different but equal contributions in the course of the marriage, so that I should approach contributions on the basis of a 50/50 division. If the wife’s gambling losses are not added back into the pool but treated instead as a negative contribution, then contributions should be dealt with on a 60/40 basis in the husband’s favour.
As the third step, I must consider the range of factors under s 79(4) and s 75(2) of the Family Law Act.
The wife said there should be an adjustment of 10% in her favour, to reflect the undisputed evidence that her health now precludes her from working, while the husband’s earning capacity is good.
The husband said that although he has recently purchased a business, his earning capacity is limited by age, poor English, an injured shoulder, and a lack of qualifications. At the start of the case he said there should either be no adjustment, or only a modest adjustment of 5% in the wife’s favour. By the end of the case he said that overall it was appropriate to treat each party’s position as equal.
The fourth and final step for me is to arrive at a property settlement that is just and equitable in all the circumstances. The wife said that as she brought into the marriage the home in which she is living in B, she should retain it, along with her car. The husband said that he should receive a substantial payment from the wife, even if the B property must be sold to effect that payment. I will deal with the detail below.
The wife also applied for spousal maintenance. Under s 72 of the Family Law Act I must consider her need for maintenance and the husband’s capacity to pay. Her need was admitted by the husband. His capacity to pay was disputed. The wife claimed $300 per week but argued that she could have no faith that the husband would meet periodic payments. Accordingly, she sought a lump-sum, or capitalised amount.
BACKGROUND
The husband is aged 58. He has just recently purchased a shop, and is drawing $725 per week as his salary. There is a dispute as to whether that is all that he earns. The wife is aged 60 and is in receipt of an invalid pension.
The parties married on 1 March 1976. They separated on 10 October 2004 and were divorced in 2007.
They have one adult independent child, who is 30. The wife’s two children from a previous relationship, aged 45 and 43, lived with the parties from the time cohabitation commenced. They were aged 13 and 12 at the time.
MATERIAL RELIED UPON
The wife relied upon the following documents:
·Her amended application for final orders filed 27 June 2006
·Her affidavits filed 22 January 2008 and 14 February 2008
·Her financial statement filed 22 January 2008
·The affidavit of Dr C filed 3 August 2006
·The affidavit of Dr A filed 3 August 2006
·The affidavits of Dr M filed 3 August 2006 and 21 January 2008.
Other than the wife, none of the witnesses were required for cross-examination.
The husband relied upon:
·His amended response filed 4 August 2006
·His affidavit filed 30 January 2008
·His financial statement filed 30 January 2008
THE ASSETS AND LIABILITIES
The parties agreed on the majority of the assets, being the wife’s home in B, the husband’s home (and mortgage) in D, his business, and her car.
After separation the parties sold a property in E. The net proceeds of just under $500,000 were kept in an interest bearing account. Via various interim distributions, the wife received $350,500, the husband $200,500. These will be considered as part of the pool, with an agreed adjustment to avoid “double-counting”.
I will set out the agreed assets and liabilities in detail below. Before that I need to deal with the issue of the wife’s gambling losses. First, there was a very small issue about two modest assets: real estate in R and in Queensland.
Real Estate in R and Queensland
At the start of the case counsel agreed that the parties had interests in one property in Queensland and one property in R, both of “minimal” value. It was agreed that they should be left out of the pool of assets. I am dealing with them now only because the husband suggested in evidence that they had some worth and should be sold and the proceeds divided, whilst the wife proposed they should be transferred to the husband towards his share of the property settlement. I am satisfied that neither position is reasonable.
In her trial affidavit (at para 83), the wife swore that although the husband’s assertion that the parties’ share in the Queensland property was valued at about $7,500 (in evidence he said around $10,000), after payment of outstanding rates, costs and the like, she did not believe that their interests would be of any significance.
As to the R property, she swore (at para 84) that prior to separation she entered a terms contract of sale for the purchase of land in R. She paid $6,000 towards the purchase. She had not been able to keep up with payments after separation and she believed that pursuant to the terms of the contract, the property now remained the sole property of the vendor.
The wife’s account satisfies me that she probably has no interest in the R land. That was really unchallenged. Her proposal then that her interest be transferred to the husband is not a sensible one. Nor is his proposal that the property be sold.
I am satisfied too on the wife’s account that any interest in the Queensland property, in which she and her husband are the registered proprietors with three of her family members, is of little value. She was not cross-examined in any significant way about that. As the other tenants in common are her close relatives, there is likely to be little joy for the husband in owning (meagre) shares in that property. For completeness, in due course I will order that the husband transfer his interest to the wife at her expense.
The Wife’s Gambling
That leaves the issue of the wife’s gambling losses. She conceded she lost just under $77,000. The husband said it was around $177,000, calculated from bank statements and most particularly the debt built up, mainly after separation, over the B property. The wife was cross-examined at length about it. I am satisfied that she substantially understated her losses. However, the evidence does not disclose the precise sum that she lost.
Overall, the wife was vague and unhelpful in her evidence. She conceded she had a gambling problem. In cross-examination she said it was “not much of a problem” before separation, but she conceded the loss of $77,000, being the sum that bank statements revealed was withdrawn directly from poker machine venues. Otherwise, she commonly responded “How can you prove it?” in response to questions as to whether multiple withdrawals, sometimes on the same day, were used for gambling. And although her affidavit of 14 February 2008 purported to set out in minute detail the tracing of monies into and out of her relevant accounts – in order to attribute the rising debt to causes other than gambling losses – it was of no evidentiary value to support her case once she said in evidence that it was neither compiled nor understood by her. She could not adopt it.
Despite the vagueness in the wife’s evidence, there were cornerstones in the evidence that led me to conclude that between 2003 and 2006, she was gambling substantially more than she conceded.
First, in September 2003 she took out a line of credit with Suncorp Metway over the B property. I accept she told the husband it was for $30,000 – for a car and renovations – when in fact she accepted an upper limit from Suncorp of $225,000. At separation she had used $76,700-odd of that line of credit. By the time the loan was repaid from the distribution received by the wife in late May 2006, it stood at $177,000.
The wife conceded that between 1 September 2003 and 1 May 2006, she made cash withdrawals against the Suncorp Metway account of just over $216,500. She agreed that in the same period, she spent about $51,000 on her personal living expenses and $77,000 on gambling. She agreed that a sum of nearly $90,000 was therefore “unaccounted” for.
Listening to her own admissions of gambling, what she ultimately told a psychiatrist, and taking into account several examples of specific days when she withdrew up to five lots of $200 (such as in late November 2004) without any adequate explanation, as well as admissions in cross-examination that “some” ATM withdrawals were for gambling, I find that much of that unexplained sum was probably lost to gambling. She admits too that some of the interest ($18,300-odd) paid to Suncorp Metway during that period, related to gambling debts. Overall, I cannot be definitive about the precise amount attributable to the wife’s gambling, and accordingly I do not propose adding it back into the pool. I will deal with it below.
Conclusion re the Pool of Assets and Liabilities
The agreed assets are as follows:
·The B house (in the wife’s name) $480,000
·The D house (in the husband’s name) $390,000
·The husband’s business $211,000
·The husband’s superannuation $ 18,800
·The wife’s car $ 5,000
·Interim distribution to the wife $350,500
·Interim distribution to the husband $200,500
$1,655,800
As to the liabilities, it is agreed that the mortgage on the husband’s property is $357,000. It is also agreed that as the husband paid $90,000 towards his mortgage from the distribution of property he received in October 2006, the sum of $90,000 should be deducted from the pool so that is not double-counted. Similarly, the sum of $177,000 paid by the wife from the distribution to the G property mortgage must not be double-counted and should be deducted.
Accordingly, I find the pool of assets for distribution is $1,031,800. It is arrived at by taking into account the assets set out above at $1,655,800, less the husband’s mortgage of $357,000, and with those sums of $90,000 and $177,000 deducted.
CONTRIBUTIONS
Contributions at the Start of the Marriage
The wife claims credit for bringing property in at the start of the marriage. She says her B property was worth between $30,000 to $35,000, and that she had other modest assets and minimal liabilities. The husband’s case was that her property was worth about $35,000 but that it had a mortgage of about $5,000, paid out by him from the proceeds of sale of properties owned by him at the start of the marriage.
The husband owned two properties for several years prior to marriage, one purchased for $10,900, the other for $12,500 (his evidence is supported by documentation). He also claimed to have other modest assets at the time. It was his case that several months after the marriage he sold the properties and netted an amount of about $30,000 once the mortgage was paid. The relevant transfers of land (attached to his affidavit) showed a total consideration of $30,000, but he said that was after a generous allowance for chattels upon which no stamp duty was payable.
The wife agreed that the husband had those properties, purchased by him for the sums that he claimed. She said though that he had minimal equity in the properties when they were sold. There was no documentary proof either way.
It is not surprising that there was some imprecision in relation to the details of properties and their value at the time of or in the early days of the marriage. That reflects the fact that 28 years passed between the time of the marriage and separation, compounded by the passage of several years’ since.
That passage of time persuades me that any disparity between the parties as to what each brought into the marriage was of little consequence. The evidence does not lead to a finding that there was a huge disparity. In the course of a 28-year marriage it cannot make a significant difference when it comes to contributions.
The wife is locked into the simple view that she brought the B property into the marriage, and therefore she should take it out of the marriage. I have no reason to believe that the proceeds of sale of the husband’s properties were used for purposes other than family needs and/or wealth creation, just as the B property was retained and at various times used to produce family income by way of rental.
Contributions in the Course of the Marriage
The husband claimed that in the final analysis each party made equal contributions. The wife claimed that she made the superior contribution both financially and as home-maker. I formed the view that the contributions were equal but that it had suited the wife’s case to argue otherwise. She knew she was at risk in relation to the issue of gambling, and appeared to be looking for ways to “off-set” that, when it came to findings on contributions.
It would be unrealistic to conclude that the parties’ contributions were other than equal in the course of this very long marriage. I am satisfied that two successful businesses were initiated by the wife, but both parties worked very hard towards their success. The wife alone handled a third business towards the end of the marriage, but the husband was engaged in other work. Various tax returns that were tendered persuaded me that both parties earned income for most of the time in the marriage.
I am satisfied that each party contributed to raising the children. The wife’s case was that she did so “virtually single-handedly”. I do not accept that was the case. Although the children – most particularly the parties’ daughter – accompanied the wife to work on many week-ends, the husband often went home to care for the family during the week while the wife stayed later at work. They shared the family responsibilities.
It is important that the husband contributed towards the support, both in financial and non-financial terms, of not only the parties’ daughter, but the wife’s two children from a previous relationship. The wife seemed to under-estimate that contribution. It is also important that there were times when the parties separated, and the wife bore the lion’s share of the responsibility without assistance. The husband seemed to under-estimate the impact of that and the contribution on the wife’s part.
All these factors lead me to conclude that the parties made different but probably equal contributions.
The Gambling Losses
That brings me to the question of the gambling losses and their impact on contributions.
Although each counsel made different submissions as to how I should treat gambling losses, the consensus was that if they were not added back to the pool, they could be considered when dealing with contributions. I note that such losses could be brought into account under s 75(2)(o) of the Act, but as both counsel proceeded on the basis that I consider them under the umbrella of contributions, that is how I have proceeded.
The Family Law Act does not specifically refer to “fault” as a factor in a property case. However, the financial impact of a party’s conduct has been considered since the early days in this court’s jurisprudence. In Kowaliw and Kowaliw (1981) FLC 91-092, Baker J said that financial losses incurred by a party in the course of a marriage should be shared by the parties, except where one party “has acted recklessly, negligently or wantonly… the overall effect of which has reduced or minimised …” the value of matrimonial assets. That position has been repeated in authorities since.
Both counsel referred me to the Full Court’s recent decision in C and C (2006) FLC 93-269. In that case the wife was diagnosed with depression in 1995 and from May 1999 she used matrimonial funds on gambling. The trial Judge accepted that the wife was unable to control her compulsive gambling behaviour, and was not satisfied that her conduct was sufficiently reckless, negligent or wanton to warrant an add-back of her gambling losses. He held that such an add-back would improperly impose a form of strict liability which was inconsistent with the nature of marriage and the marriage contract. The Full Court (Bryant CJ, Warnick and Boland JJ) found that the psychiatric evidence at trial was sufficient to support the trial Judge’s finding that he could not find the wife’s behaviour to be reckless, negligent or wanton.
In C v C the Full Court emphasised that the “essential question” was whether the overall evidence about the wife’s gambling losses demonstrated conduct which should result in the wife bearing the entirety or some other proportion of the losses. The Court cited with approval the passage in DeAngelis (2003) FLC 93-133 to the effect that every case must depend on its own particular circumstances.
The Full Court most recently considered the issue of gambling in Hall and Tudor (aka Hewitt and Tsonga) [2008] FamCAFC 8. It is not apposite in the sense that it related to a finding of “modest” losses, and arose in the context of an appeal as to whether or not the trial Judge’s reasons were sufficiently transparent as to the weight he attached to those losses. But it is apposite in the sense that the Full Court again referred to DeAngelis, under-lining that each case turns on its particular circumstances. The Full Court held in Hall and Tudor, that as gambling was no more than the family’s “normal form of entertainment”, and the amounts involved were so low, the trial Judge was not justified in making any adjustment to the parties’ entitlements.
I have already dealt with the issue as to the amount of gambling losses in this case. The wife concedes nearly $77,000 but my finding is that the losses were probably closer to the sum of $177,000 alleged by the husband. There is no suggestion that gambling was a normal part of the parties’ entertainment or socialising. There was no suggestion that the husband was conscious of the extent of the wife’s gambling. The gambling occurred within an easily identifiable time-frame and had a significant impact in terms of diminishing the assets for distribution, in light of the specific debt incurred over the B property. And it was conceded by counsel for the wife that the medical evidence in relation to the wife’s gambling fell short of that in C and C.
Although the wife blamed her gambling on depression, and in turn she blamed her depression on the husband, the independent or expert evidence about gambling was not extensive. She consulted a general practitioner, Dr C, in 1999. She presented with a medical history of anxiety and depression. Dr C referred her to a psychiatrist in June 1999. There was no reference in the general practitioner’s report to gambling. On the evidence, it was well before the wife incurred substantial gambling losses. On 21 March 2006 the wife consulted another general practitioner, Dr A. Dr A formed the opinion she was suffering from depression and referred her to a psychiatrist. There was no reference to gambling, although by then she had suffered substantial losses.
A psychiatrist, Dr M, first saw the wife on 5 April 2006. She noted the wife as presenting with a five-year history of major depression which had deteriorated in the past six months. The psychiatrist set out the various characteristics of the illness as reported by the wife. Again there was no reference to gambling. When the psychiatrist wrote a report on 23 June 2006 to the effect that the wife suffered a major depressive illness and panic disorder and could not attend court, there was still no reference to gambling.
On 8 January 2008 Dr M prepared a report, indicating that she had seen the patient regularly since early 2006. The psychiatrist then diagnosed a dependent personality disorder, major depressive disorder, and secondary impulse control disorder. She described the wife as being extremely dependent on her ex-husband and becoming depressed and self-destructive when she could no longer rely upon him, and that her impulse control behaviour was secondary to her depression, that is she started to gamble as a result of her husband’s treatment.
The doctors were not called for cross-examination. Although I can accept their evidence at its highest, there was as I noted a concession by counsel for the wife that the evidence fell short of the evidence before the Court in C and C. There was no reference at all to gambling until the wife gave her account to the psychiatrist at a time after the gambling losses had been incurred, and well down the track of this litigation.
I assess the medical evidence in the light of all the evidence. I have had the benefit of listening to and watching the wife in cross-examination. Her evidence led me to doubt her veracity, as to what she presented to court, and correspondingly as to the history she presented to the psychiatrist. I assess her assertion that her gambling was simply the husband’s fault, in the light of all her evidence. She unreasonably minimised the husband’s contributions financially, and in terms of his care for the family. She was not honest about her gambling debts. She was clearly distraught about the marriage break-down and very critical of the husband for “causing” it. Accordingly I would view with some suspicion or cynicism her own account of and/or rationalisation of the cause of her gambling.
I am satisfied that the wife’s gambling has diminished the matrimonial assets. The B property owned throughout the marriage was only encumbered in the very last part of cohabitation. I accept that the wife did not tell the husband that she had taken a line of credit for over $200,000. He thought it was for a maximum of $30,000. He did not know that by separation the line of credit already stood at almost $77,000 and by May 2006, it was at $177,000.
Counsel for the husband submitted that $177,000 was equivalent to about 17% of the pool. He correctly conceded that a strictly arithmetical approach was not appropriate, but sought that the wastage by the wife be reflected in a 60/40 split on contributions, in the husband’s favour. When I observed that it would create a differential of 20%, he said he “couldn’t quibble” if his client received “a bit less”, but was not more specific.
Although counsel for the wife argued that I should consider the gambling losses as just a part of the marriage contract, he did then concede that the gambling losses should be “weighed in the balance” so as to reduce the wife’s superior (but unspecified) contributions to a position of equal with the husband.
Conclusion re Contributions
I am satisfied that the parties’ contributions, but for the gambling losses, are equal. I am satisfied that there should be an adjustment in the husband’s favour as a result of those losses that so directly reduced the pool in this case. I propose reflecting that adjustment at this stage, as contemplated by both counsel, although I would arrive at a similar conclusion if I were to deal with the issue pursuant to s 75(2)(o) of the Family Law Act. In the context of being uncertain about the precise amount lost by way of gambling, I propose adjusting the parties’ contributions to reflect a 55%/45% contribution in the husband’s favour.
SECTION 75(2) FACTORS
The wife is 60 and suffers depression. The medical evidence is clear that she cannot obtain gainful employment. She presently has no income other than an invalid pension. She is living in the three-bedroom property at B. The property is unencumbered.
The husband is 58 and several weeks ago took possession of a shop business. Although he draws $725 per week by way of earnings, I am satisfied that there is substantially more profit available to him. It is no secret that I found the husband’s evidence on this topic unimpressive. His counsel could not support it or find a positive gloss for it. There is no doubt that the husband was trying to understate the monies he will receive from the business.
After the husband claimed that he received $725 per week by way of drawings, he was cross-examined about the staff he employed. He replied that he employed about three “young kids” and paid each of them $10 per hour. Each worked three hours per week. He thus paid a total of $90 per week. He said he employed two extra boys on week-ends. Each worked six hours. He paid them in total $120 per week. His wage bill was therefore about $210 per week.
The husband was then directed to the vendor’s statement in relation to the business. He was withdrawing the same salary as the vendor. His attention was drawn to the fact that the vendor paid between $1,200 and $1,400 per week in salaries to other staff/family members. Having conceded that he was only selling slightly less per week than the vendor, and that the business was taking $7,200 to $7,500 per week, much in line with the vendor’s statement, “the penny dropped” for the husband. He realised that it was easy to see that there was some $1,000 per week available to him by way of profits, over and above the salary he chose to draw.
The husband then changed his evidence. He said that he “thought” he employed six people not five. The sixth person worked eight to ten hours at week-ends. When it was put to him that he must accordingly pay a maximum of $310 per week in wages, he said “maybe” he employed a seventh child for three to four hours. At that point, the husband’s changing evidence about his business staffing, his prevarication, and the very long delays before he answered questions, led me to doubt his evidence. It also persuaded me to caution him as to his right not to incriminate himself in relation to serious criminal offences. He sought the advice of his lawyer, and with the consent of the wife’s counsel, they were able to confer on that limited topic. When the case continued several days’ later, he was cross-examined further about the wages.
With the passage of several days, the husband’s evidence had not improved. He then said he had six staff. He had paid them personally on the previous Sunday. By this time it was only Tuesday, but he could not remember exactly what he had paid. He paid them from the till and paid them “either $1,000 or $700”. He could not remember how long the staff had worked in the preceding week. He changed the number of hours that the employee who worked the longest had worked. He changed the hourly rate. He changed the gender of the staff, having told me previously that one was a girl but telling me then that all were boys.
It is impossible to be definitive about the precise amount available to the husband, but it would appear from the vendor’s statement that the husband is paying up to $1,000 per week less in wages, a sum that must then be available to him. I note that he has only just entered the business. However, on his own account, the figures are so far holding steady with those supplied by the vendor. He does have experience in business. And this is an established, not a new business. All that reduces the risk, and enhances the prospect that the business is likely to continue to prosper.
In assessing the husband’s income-earning capacity it is fair to consider a number of other features. One, as urged by his counsel, that he speaks imperfect English, is in my view no impediment to the husband. He has always managed to work and to earn, despite any language difficulties. It is fair though to take into account his age. At 58, there must be more inherent risks to his health than if he were substantially younger. It is also fair to take into account a genuine shoulder injury, and the limitations he has in the use of one arm. And it is fair to take into account, and support as reasonable, his desire to retire at 65. All that said, there is a significant disparity in the parties’ positions in the short-term. The wife has no income-earning capacity. The husband has a good income-earning capacity.
In assessing the husband’s expenses, I accept he has a mortgage to meet. Otherwise, I have no confidence that the husband was honest about his living arrangements. He told me that he had been living with his sister for a year, but later changed his evidence to say that it was only one week, once it was apparent to him that he had claimed various living expenses in his financial statement which would not be true if he were living with her. In any event, he conceded that although his brother is currently living in his home rent-free, he would soon be able to rent out his property to receive $300 per week.
I have already noted the wife’s focus on keeping the B property. Her desire to do so is understandable. However, in my view she had not applied her mind to it with any reality. She gave no evidence about enquiries as to potential assistance. She had made no enquiries about borrowing against the property, for example by a “reverse mortgage”. She provided no evidence of substance about any costs associated with re-housing, or what would be available to her. She simply asserted that her depression would worsen if she had to live in a property smaller than this three-bedroom home, although she has no-one other than herself to house. And she said she is attached to her two pet dogs and would not be permitted to keep them in a unit. That struck me as an uninformed view, given that there may well be various options for a smaller home or a unit in which pets would be allowed. So far as I could tell on her evidence, she had not enquired about that. It is not something she had turned her mind to simply because her mind-set is, as she said through counsel, “she brought the property into the marriage and she should be able to retain it.”
In assessing how each party can move into the future, I am conscious that the husband is housed, although he has a substantial mortgage for which he is responsible. I am conscious too that the wife’s position would be brighter, had up to $177,000 not been lost to gambling debts from the monies the parties received by interim distribution upon the sale of their property at E. That said, I have already taken that into account and must be careful that the wife is not penalised twice.
I conclude that there should be a 5% adjustment in the wife’s favour. That is to reflect the disparity in the parties’ income-earning capacities, but taking into account that it may be over a relatively short number of years, compared to a younger couple. It also reflects some limitations in the husband’s capacity, and the risks to him in his working life in light of his age.
CONCLUSION RE PROPERTY SETTLEMENT
If each party is to retain 50% of the assets, the wife must pay the husband the sum of $142,600. That is on the basis that she would retain the B property at $480,000, her car at $5,000, and the distributions she has already received of $350,500 (less the “double-counting” of $177,000). That is a total of $658,500 or 63.8% of the assets. The husband would retain his D property at $390,000, his business at $211,000, his superannuation at $18,800, and the $200,500 distribution he has received (less the “double-counting” of $90,000 and his mortgage of $357,000), a total of $373,300 or 36.2% of the pool.
The wife has not proposed any way to raise the sum to pay out the husband in order to retain the B property. It may or may not be a course available to her. She did not really give any detail about efforts made through family, a reverse mortgage, or any other arrangement. In an ideal world, a party can retain the home in which they are living, particularly one that has been a part of their lives for so very long and is dear to them. However, I cannot achieve a just and equitable settlement in this case by simply ignoring a substantial sum that is due to the husband. The wife should have some time to raise that sum and in the event that she is unsuccessful, then the B property will need to be sold. The wife will be able to re-house herself, albeit in smaller premises, with the balance of her share of the property.
As noted above, it is not reasonable for the wife to propose that the husband acquire her interest in the R property and/or the Queensland property, to partly satisfy his share of the property settlement. I am not satisfied that she has any interest in the R land to transfer. I am not satisfied that there is sufficient worth in her share in the Queensland property to warrant its transfer, nor is it likely to be practicable for him to hold a share in a property with her close relations. The wife should retain any interest in R. The husband should transfer his interest in Queensland. That is the practical course to ensure no future issues about that property. The wife herself says it is worthless. Accordingly, it should in no way affect the sum of $142,600 that she must pay the husband.
SPOUSAL MAINTENANCE
The wife seeks $300 per week by way of maintenance. Her incapacity to support herself is conceded. I am satisfied it is a reasonable sum. Her financial statement shows expenditure of $570 per week.
I am also satisfied that the husband has the capacity to pay that amount, in light of my findings about his business income, as well as his capacity to obtain rental on his property, if he chooses.
The wife’s claim that periodic maintenance should be capitalised, as she can have no confidence that the husband will comply with an order, is reasonable in light of his approach to the evidence as to his capacity.
The husband intends working if he can until the age of 65 years. That is reasonable. Counsel for the wife did not take issue with it. It is seven years away. A payment of $300 per week for that period produces a capitalised sum of just over $109,000. Counsel for the wife acknowledged that there should be a discount in the husband’s favour in light of the immediate cash payment but said that overall the capitalised sum should be reduced by a total of about 20%, or $21,840. On that basis the wife would receive a sum of around $87,200.
Counsel for the husband submitted that using discount tables and a discount factor of 7% the sum payable would be $85,750, but it should be discounted further given the newness of the husband’s business, his age, and the risks associated with it and his injured shoulder. In all, counsel for the husband argued that if the wife is to receive capitalised spousal maintenance reflecting a periodic payment of $300 per week, she should receive half, or $54,500.
I am satisfied that to arrive at the capitalised sum, the discount factor should apply as argued by counsel for the husband, to reflect the wife receiving a lump sum in advance. I am satisfied too that there should be a further small reduction to take into account valid risks, including to the husband’s health and due to the newness of the business that the husband has entered. It does create some uncertainty, albeit less uncertainty in the context of an on-going business than if he were simply starting a business from scratch. I propose discounting the sum payable to the wife by about 10% or $10,000, in that regard. Accordingly, the husband must pay the wife the lump-sum of $75,750 by way of spousal maintenance.
That capitalised spousal maintenance sum will be reflected in the orders. It will be due on the same day that the wife must make the property settlement payment to the husband. Logically one will off-set the other so that the wife will need to pay a sum of $66,850 to the husband.
ORDERS
The orders I propose, subject to submissions as to form, are as follows:
Capitalised Spousal Maintenance
10.This is an order to which s 77A of the Family Law Act 1975 applies.
11.The husband shall pay to the wife the sum of $75,750 by way of capitalised spousal maintenance, such sum to be paid on or before 5 May 2008 (“the date”).
Property
12.That the wife shall pay to the husband the sum of $142,600 (“the payment”) on or before the date.
13.That contemporaneous with the payment:
(a)The husband shall transfer to the wife at the expense of the wife his interest in the land at T in the State of Queensland;
(b)Each party shall at their own cost withdraw any caveats lodged by them or solicitors acting on their behalf over real property registered in the other party’s name or real property which is to be retained by the other party following these orders; and
(c)The wife shall indemnify and keep the husband indemnified in relation to any liabilities over the property at B (“the [B] property”) registered in her sole name, the property at T in the State of Queensland, and the property at A in the State of Victoria and the husband shall indemnify and keep the wife indemnified against any liability in relation to the property at D in the State of Victoria.
14.That in the event that the whole of the payment has not been made by the date then the wife shall sign all documents and do all things necessary to transfer to the husband the B property to be held on trust for sale (“the sale”) and upon completion of the sale, the proceeds of the sale shall be applied:
(a)First to pay all costs, commissions and expenses of the trust transfer and the sale;
(b)Secondly to discharge any mortgage or encumbrance affecting the B property;
(c)Thirdly to pay to the husband so much of the payment as is then outstanding together with interest thereon at the rate prescribed in the Family Law Rules; and
(d)Fourthly to pay the balance to the wife.
15.That pending the payment or completion of the sale:
(a)The wife shall have the sole right to occupy the B property and during such right of occupation the wife shall pay all out-goings in relation to the B property as they fall due and shall indemnify and keep the husband indemnified in relation to same; and
(b)The wife holds her interest in the B property upon trust pursuant to these orders and shall not encumber the B property without the consent in writing of the husband until the payment has been made in full.
16.That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or subsequent orders:
(a)Each party shall be solely entitled to the exclusion of the other party to all other property in the name or the possession of such party as at the date of these orders; and
(b)Each party forgoes any claims they may have to any superannuation benefits belonging to or earned by the other.
17.That the parties’ applications shall otherwise be dismissed and the case removed from the list of cases awaiting finalisation.
18.That pursuant to the Family Law Rules this matter reasonably required the attendance of counsel.
I certify that the preceding eighty three (83) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau
Associate:
Date:
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