Hadley and POCK (No.2)
[2011] FMCAfam 193
•29 March 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HADLEY & POCK (No.2) | [2011] FMCAfam 193 |
| FAMILY LAW – Property – identification of asset pool – the “Elias principle” – debt to Centrelink – failure to lodge tax return – legal costs – debt to Victoria Legal Aid – evaluation of contributions – wife’s borderline personality disorder – section 75(2) factors – just and equitable. |
| Family Law Act 1975 (Cth), ss.75, 79, 81, 90MC, 90MT Child Support (Assessment) Act 1989 (Cth) Federal Magistrates Act 1999 (Cth), Pt 6, Div 5 Federal Magistrates Court Rules 2001 (Cth), r.21.02(1)(b) |
| Bigelow & Reuter [2006] FamCA 1455 Re NHC and RCH (2004) FLC 93-204 Clauson and Clauson (1995) FLC 92-595 Clives and Clives (2008) FLC 93-385 C v C (2005) FLC 93-220 Elias v Elias (1977) FLC 90-267 Ferraro and Ferraro (1993) FLC 92-335 Hayne and Hayne (1977) FLC 90-265 Hickey (2003) FLC 93-143 Jordan & Jordan (1997) FLC 92-736 Lee Steere and Lee Steere (1985) FLC 91-626 OSF and OJK (2004) FLC 93-191 Parshen & Parshen (1996) FLC 92-720 Russell v Russell (1999) FLC 92-877 |
| Applicant: | MR HADLEY |
| Respondent: | MS POCK |
| File Number: | MLC 3517 of 2009 |
| Judgment of: | Roberts FM |
| Hearing dates: | 13 & 14 September 2010 |
| Date of Last Submission: | 14 September 2010 |
| Delivered at: | Launceston |
| Delivered on: | 29 March 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr James |
| Solicitors for the Applicant: | Plaza Legal |
| Solicitors for the Respondent: | Not represented |
ORDERS
That within six months of this Order MR HADLEY (“the husband”) must pay to MS POCK also known as MS HADLEY (“the wife”) the sum of fifty thousand dollars ($50,000) (“the payment”).
That in consideration of, and contemporaneous with the payment, the wife must do all acts and execute all documents submitted by the husband to transfer to the husband any interest the wife may have in the property situate and known as Property K in Victoria (“the property”).
That for the purpose of the transfer of the property as provided for in Order No. 2:
(a)the husband must obtain a discharge of any liability of the wife pursuant to any mortgage secured over the title to the property; and
(b)the wife must at her expense register a withdrawal of any caveat registered against the title to the property by Victoria Legal Aid in relation to legal costs incurred by her.
That contemporaneous with the payment the wife must do all acts and execute all documents submitted by the husband to transfer to the husband all her interest (if any) in [O] life insurance policy No. [omitted].
That the husband must pay and indemnify the wife from payment of any loan from his parents.
That having been accorded procedural fairness, the following Orders with respect to the husband’s superannuation and the splitting of such superannuation are binding upon the Trustees of the husband’s superannuation fund, namely [C] Super (Member no. [omitted]) (“the Fund”).
That there be a superannuation splitting order in accordance with section 90MT of the Family Law Act 1975 (Cth) with respect to the husband’s superannuation with the Fund in favour of the wife.
That the base amount allocated to the wife from the husband’s interest in the Fund is ten thousand dollars ($10,000) (“the base amount”).
That in accordance with section 90MT(1)(a) of the Family Law Act 1975 (Cth), whenever a splittable payment within the meaning of section 90MT of the Act becomes payable to or on behalf of the husband from his interest in the Fund, the wife is entitled to be paid (into a superannuation account nominated by her) by the Trustee of the Fund, the amount calculated in accordance with Part VI of the Family Law (Superannuation) Regulations 2001 using the base amount and there be a corresponding reduction in the entitlement that the husband would have had but for these Orders.
That these Orders in relation to the husband’s superannuation interest in the Fund have effect from the operative time.
That the operative time for the purpose of these Orders for the said splittable payment is four days after service of a sealed copy of these Orders on the Trustee of the Fund.
That within 14 days of becoming entitled to receive a superannuation benefit from the Fund, the husband will give the Trustee of the Fund:
(a)all such forms as necessary to enable it to determine the nature and quantum of the husband’s superannuation entitlement; and
(b)any other related information it may reasonably require.
That there be liberty to each party and to the Trustee of the Fund to apply regarding the implementation of these orders affecting the interests of the husband and wife in the Fund.
That the husband must make reasonable efforts to locate the wife’s mother’s engagement ring, a mirror from her sister, a childhood Bible Story book, a quilt from the wife’s grandmother, a camphor chest, a crystal cake stand and any remaining [omitted] equipment and provide such of those items that he can locate to the wife within 60 days of this Order.
That within 60 days of this Order the husband is to provide to the wife the originals of all family photographs that he is able to locate and the husband is at liberty to take scanned electronic copies of those that he wished to retain.
That within 60 days of this Order the husband is to transfer to the wife all his right title and interest in a Toyota Camry motor vehicle formerly used by them jointly and registered [omitted].
That in the event that they have not already done so, the husband and the wife must each lodge an income tax return for the year ended
30 June 2005 with the Australian Taxation Office without delay, and for such purpose each is to provide the other with any information necessary to complete such an income tax return.
That unless specified in these Orders:
(a)each party is solely entitled to the exclusion of the other to all other property in possession of that party as at the date of these Orders;
(b)any claim that either party may have to any superannuation benefit belonging to or earned by the other is extinguished;
(c)all insurance policies become the sole property of the person in whose name the policy stands as owner;
(d)each party will be solely liable for and must indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
IT IS NOTED that publication of this judgment under the pseudonym Hadley & Pock (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 3517 of 2009
| MR HADLEY |
Applicant
And
| MS POCK |
Respondent
REASONS FOR JUDGMENT
The applicant is MR HADLEY and the respondent is MS POCK (also known as HADLEY). For convenience I shall refer to them as “the husband” and “the wife”, notwithstanding that they are divorced and the wife has allegedly remarried.
On 17 February 2011 I handed down a decision in relation to the parties’ competing proposals with respect to their children (“my earlier decision”).[1] This decision relates to their competing proposals for alteration of their property interests.
[1] [2011] FMCAfam 117
In his application filed 24 April 2009 the husband had sought orders in relation to both children’s and property matters. In my earlier decision, I explained that the reason for holding separate hearings was because Legal Aid Victoria had not granted the wife aid in relation to property matters. I do not need to say any more about that.
Applications
In his application the husband sough an order that “the former matrimonial home situate at Property K be transferred to the husband by the wife” without any payment or transfer to the wife. However, during his closing remarks, his counsel submitted that it would be appropriate for there to be additional orders providing for a superannuation split in favour of the wife with a base amount of $60,000.
The wife had filed a response in May 2010 seeking the following:
1. That the former matrimonial home … be transferred 2/3 to the Applicant Husband and 1/3 to the Respondent Wife.
2. That the Applicant Husband return to the Respondent Wife [a Toyota Camry] … or compensate the Wife to the amount of $5,255.00.
3. That the Applicant Husband transfer 50% of the proceeds in his Superannuation Plan to the Respondent Wife.
4. That the Respondent Wife transfer 50% of the proceeds in her Superannuation Plan to the Applicant Husband.
5. That the Applicant Husband repay the Centrelink debt of $12,067.20
6. That the Applicant Husband return to the Respondent Wife her personal property as listed in [an] attachment marked with the letter “A”.
7. That the Applicant Husband compensate the Respondent Wife for the household items that were not removed from the former matrimonial home … as listed in [an] attachment marked with the letter “B”
8. That Victorian Legal Aid be permitted to put caveat on the former matrimonial home … for repayment of the Respondent Wife's debt from previous court proceedings.
9. That each party bear their own costs incidental to these proceedings.
The wife was unrepresented during the property proceedings and, during her closing remarks, she suggested that a sale of the former matrimonial home could possibly be delayed until the children have all turned 18. I shall refer to that further below.
The evidence
The parties each relied upon one affidavit and a financial statement.
The husband had filed an affidavit in relation to both children’s and property matters on 9 March 2010 and a financial statement on 11 March 2010.
The wife filed her affidavit and financial statement on 21 May 2010. Although her affidavit dealt with both children’s and property matters, I had previously not allowed her to rely upon that affidavit in relation to the children’s matter. However, she relied upon paragraphs 118 onwards of her affidavit in relation to the property proceedings.
Each party also gave oral evidence, and there were no other witnesses.
Background
Where I refer to any fact in this decision, it should be regarded as a finding of fact unless a contrary intention is clear from the context.
The parties were married in July 1994 and separated at the end of January in 2008. They were divorced in 2009.
They have three daughters aged 15, 14 and 12 years, who have continued to live with the father since the parties’ separation. The wife also has a 19 year old son who lives independently.
On 17 February 2011 I made orders in relation to the parties’ daughters. Those orders provide for the husband to have sole parental responsibility for the girls and for them to continue living with him. I also ordered:
a)that the two older girls could spend such time with the wife as they chose; and
b)that the youngest is to spend time with the wife:
i)weekly on Wednesdays from 4.30 p.m. until 7.30 p.m.; and
ii)fortnightly from 4.30 p.m. on Friday until 6.00 p.m. on Sunday.
It is unlikely that the eldest child will spend any time with the wife, at least for the foreseeable future.
Prior to the parties’ relationship, the husband had purchased a unit in [B] in 1987 for $46,000. He sold that property in October 1994 and cleared $70,411.
The parties purchased the former matrimonial home in 1995 for approximately $131,000 and the husband contributed the proceeds from the sale of his [B] unit towards that purchase. A mortgage loan for $73,000 was obtained to fund the balance required and costs.
In the earlier years of their relationship the parties adopted what has been described as “traditional roles”; with the husband being the primary breadwinner and the wife being the primary homemaker but also obtaining part-time employment when she could. However, during the latter years of their relationship the wife’s mental difficulties reduced her ability to hold employment. She has been diagnosed as having borderline personality disorder (BPD) and I referred to that in more detail in my earlier decision.
At the time of the hearing the husband was unemployed and in receipt of Centrelink benefits. He had been previously employed as a [omitted] but became unemployed in September 2009, primarily because of his need to care for the children and his need to be available for proceedings in court.[2]
[2] Transcript 13 September 2010 at page 14
The wife was also in receipt of Centrelink benefits but she had plans to start a [omitted] business,[3] to which I shall refer in more detail below.
[3] Transcript 14 September 2010 at page 85
The husband’s earnings between 1 July 1999 and 30 June 2008 were as follows: [4]
[4] See Exhibits “H2” and “H5”.
Year ended 30 June Amount earned 2000 $40,553 2001 $48,237 2002 $54,744 2003 $51,774 2004 $51,833 2005[5] $50,753 2006[6] $67,134 2007 $55,760 2008 $54,513 [5] It appears that a Tax Return for this year was not lodged - Transcript 14 September 2010 at page 46
[6] Includes a lump sum paid on termination of $11,289
The wife’s earnings for the same period were: [7]
[7]See annexures “CMH75” to “CMH82” to her affidavit.
Year ended 30 June Amount earned 2000 $7,502 2001 $16,446 2002 $8,009 2003 $15,344 2004 $7,848 2005 Return not lodged 2006 $2 2007 Nil 2008 Return not provided
I shall refer to the facts of this matter in more detail when considering them in relation to the law that I must apply.
Relevant law
Section 79 of the Family Law Act 1975 (“the Act”) sets out the matters that the court must take into account when considering what orders should be made for the alteration of the property interests of parties. They include:
a)the financial and non-financial contributions made directly or indirectly by or on behalf of each party or by a child to the acquisition, conservation or improvement of any property of the parties;
b)the contribution made by a party to the welfare of the family including any contribution made in the capacity of homemaker or parent;
c)the effect of any proposed order upon the earning capacity of either party; and
d)the matters referred to in sub-section 75(2) as far as they are relevant.
The general approach to the determination of a property settlement application has been well established by authority[8]. It is essentially a multi-step process. The first step is to identify the property, liabilities and financial resources of the parties (generally at the time of the hearing). The second step is to evaluate the contributions made by the parties as defined in section 79(4) of the Act and the third step is to consider those matters contained in section 75(2) that are relevant.
[8] See Lee Steere (1985) FLC 91-626; Ferraro (1993) FLC 92-335; Clauson (1995) FLC 92-595, Hickey (2003) FLC 93-143 and C v C (2005) FLC 93-220
In determining what order the court should make under section 79, the court must be satisfied in all the circumstances that it is just and equitable to do so.[9] It is the justice and equity of the actual orders that the court must consider and this has sometimes been referred to as “the fourth step”.[10] In Russell v Russell, the Full court said:
Furthermore, it must be remembered in this regard that under s79(2) of the Act, the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties' assets. Indeed we take the opportunity to emphasise that in what his Honour has termed ''the fourth stage'', that is, the consideration of whether the result is just and equitable, it is the justice and equity of the actual orders not of the percentage distribution which must be considered. [11]
[9] See Sub-section 79(2)
[10] See Hickey (2003) FLC 93-143 and Russell v Russell(1999) FLC 92-877
[11] (1999) FLC 92-877 at page 86,439
However, I agree with Federal Magistrate Walters that “the testing of any proposed orders by reference to section 79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and there is no fourth step in that sense.”[12]
[12] OSF and OJK (2004) FLC 93-191 at paragraph 16
In the same decision (OSF and OJK) he went on to say:
The problem with considering the application of section 79(2) as a stand alone requirement or consideration is that it is impossible to determine what factors may direct the court in its consideration of what may or may not be a just and equitable result in proceedings. Nygh J, in early cases, referred to concepts such as “palm tree justice” or “a soup kitchen approach” in relation to subjects such as these. It is impossible to look at the question of whether an order or a result is “just and equitable” without measuring or assessing that consideration by some yardstick. The approach set out in section 79 requires that the court use the considerations in section 79(4) as the yardstick, and not other (wholly undisclosed) considerations.[13]
[13] Paragraph 18
Since the end of 2002 courts have been required to treat any superannuation interest as “property” for the purposes of property settlements between parties to a marriage and in appropriate cases courts may “split” superannuation interests. [14]
[14] See sections 90MC and 90MT of the Act
The asset pool
At the start of the hearing, counsel for the husband provided me with a handwritten “balance sheet” setting out what he said were the parties’ assets, liabilities and financial resources. For convenience, I have identified that document as Exhibit “H9”. It sets out the following:[15]
[15] I have changed the layout slightly.
Assets Property K $300,000 Toyota Camry $500 Contents of home $2,000 Life insurance [O] $10,255 $312,755 Liabilities Mortgage (at separation) $49,784 Visa (at separation) $3,577 Car loan from parents (balance at separation) $7,580 $60,941 Net $251,814 Superannuation Husband - [C] $62,704 at 11/9/10 Husband - [O] $2,853 at 13/8/09 $65,557 Wife – [H] at 12/09 $4,060 $69,617 Property and Superannuation $321,431 Other liabilities – legal costs, Centrelink Wife - Centrelink $12,067 Wife – Victoria Legal Aid $30,000 Husband – loan for legal costs (total has been $60,000) $36,000
I will make further comment in relation to those assets and liabilities below.
I was not provided with any proper valuations of Property K (“the former matrimonial home”). The husband bases his estimate of its value at $300,000 upon market appraisals of some age. However, the wife had said this at paragraph 118 of her affidavit:
118. In response to paragraph 97 of [the husband’s] affidavit I say our home is worth more than $300,000.
At paragraph 134 she also said:
In response to paragraph 106 of [the husband’s] affidavit I say the house is worth more however, [Mr Hadley] has not cared for it.
However, the wife did not provide any valuations or even market appraisals. Further, in her financial statement filed 21 May 2010 she had stated her half-share of the value of the former matrimonial home to be worth $150,000. This was the subject of some discussion at the start of the hearing, and at that time the wife said to me:
…in relation to the financial statements, as you’re aware I’m a recipient of Legal Aid. If my property value was actually valued at more than $150,000, being my share of the property, I would not receive any Legal Aid assistance. So that was also one of the reasons why the property valuation was kept down to $300,000.
In this regard, I refer to the decision in Jordan & Jordan[16] where Chisholm J referred to the “Elias principle”.[17] He said that the principle could be stated in the following way:
When a party has made representations of fact to third parties and has gained advantage from so doing, it is open to the court in subsequent proceedings under s 79 of the Family Law Act to decline to accept from that party evidence which contradicts those representations.
[16] (1997) FLC 92-736
[17] See Elias v Elias (1977) FLC 90-267
Having regard to that principle and the fact that the wife provided no valuation evidence at all, I consider that I must accept that the former matrimonial home is worth $300,000.
Neither party provided any professional valuation evidence in relation to the home contents or the Toyota Camry either.
The wife stated in her financial statement that the contents of the former matrimonial home were worth $15,000. In his financial statement the husband appeared to say that they were worth $2,000, but when cross-examined by the wife, the husband stated that his estimate at $2,000 was for his half, and that a total of $4,000 “sounds about plausible”.[18] I therefore accept that as a fair estimate, that concession having been made by the husband against his interests.
[18] Transcript 14 September 2010 at page 65
In her financial statement, the wife stated that the Toyota Camry was worth $6,000. The husband had said it was worth $500. However, when he was cross-examined, the husband stated that his estimate at $500 was for his half-share, and conceded that the full value was “somewhere around” $1,000.[19] I find that $1,000 is a fair value, because it is not registered, nor is it in running order, with estimates of the cost of repairs being either $4,000 or $6,000 (being verbal quotes obtained by the wife and the husband respectively). I note also that the wife would like to have the Toyota Camry transferred to her because she believes that she could get it repaired using the proceeds of an expected insurance claim.[20]
[19] Transcript 14 September 2010 at page 67
[20] Transcript 14 September 2010 at page 88
It appears that the liability to Centrelink arose because neither party lodged an income tax return for the year ended 30 June 2005 (even though the husband believed initially that he had). An account from the Australian Government Assistance Office[21] states the following under the heading “Why this amount is payable”:
This account is for the full amount of the Family Tax Benefit you were paid between 1 July 2004 and 30 June 2005, because you and/or your partner have still not lodged your income tax return or told us that you don’t have to lodge one for 2004-2005. This means we will not be able to check that you receive the correct amount of the Family Tax Benefit for this year.
[21] Annexure “CMH 102” to the wife’s affidavit
I am pleased to say that by the end of the hearing the parties were in agreement about cooperating in relation to the lodgement of their 2005 income tax returns. It would appear that the husband’s income for 2005 was slightly less than it was in 2004, and the wife’s income was significantly less because she ceased employment in 2004 as a result of difficulties arising from her BPD. Consequently, I conclude that the Centrelink debt was likely to be discharged when the parties lodged those returns. I will make an order requiring them to lodge those returns, if they have not already done so.
Outstanding legal fees are not generally taken into account as a liability when compiling the net asset pool.[22] That is probably even more appropriate in this case, as the wife’s liability to VLA arose substantially as a result of proceedings that were a direct result of her BPD upon her behaviour. To her credit, the wife admitted her responsibility in relation to incurring those costs. When it was put to her in cross-examination that those legal costs had been incurred because of her behaviour and not any behaviour of the husband, she answered directly: “That’s correct”.[23]
[22] See Re NHC and RCH (2004) FLC 93-204
[23] Transcript 14 September 2010 at page 86
I therefore propose to exclude the Centrelink debt and the parties’ legal costs in my assessment of the asset pool.
I also propose to include the liabilities at the levels they were at the time of the parties’ separation, and not make a contribution adjustment for any reduction in those liabilities by the husband.
Although the superannuation values may have changed since that information was obtained, I conclude that it would have been very little because there has been no contribution by either party or any employer for some time.
I conclude that the non-superannuation asset pool is as follows:
Assets: Former matrimonial home $300,000 Toyota Camry $1,000 Contents of home $4,000 Husband’s life insurance $10,255 Total $315,255 Liabilities: Mortgage balance $49,784 Visacard debt $3,577 Car loan from husband’s parents $7,580 Total liabilities $60,941 Net value of non-superannuation pool $254,314
The superannuation pool is as follows:
Husband’s superannuation $65,557 Wife’s superannuation $4,060 Total $69,617
Contributions
It is clear that the husband has made significantly greater direct financial contributions than the wife. At the start of the relationship, he owned a unit in [B] which he had purchased in 1987 for $46,000. He sold that unit and cleared $70,411 from the sale. As a result, when the parties purchased the former matrimonial home in the year following their marriage, the husband was able to contribute a capital sum that at that time was worth almost half the total cost of that property, and comprised the entirety of the parties’ equity in it.
In addition, it is clear from paragraphs 21 and 22 above that the husband’s direct financial contributions from his earnings were significantly greater than those of the wife. However, in saying this I do not mean to under-value the wife’s financial contributions in any way. In this regard, I am of the view that there is a parallel to be found in the decision in Bigelow & Reuter in which Kay J (sitting as the Full Court of the Family Court of Australia) said of a wife’s contributions:
What was the relevant finding is that the wife, whatever she was doing in the course of the relationship, was not able to earn money at the same rate that the husband was able to earn, but there is nothing to indicate that she was not pulling her weight in terms of effort and endeavour.[24]
[24] [2006] FamCA 1455 at paragraph 25
I also note that in Parshen & Parshen, their Honours Ellis, Finn and Purdy JJ said the following:
In our view, in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to the provisions of s 79 that moneys howsoever received by a party during the course of the parties' cohabitation, are used by that party for the benefit of the family unit. Such moneys, in those circumstances, thus constitute a financial contribution by the party who received the moneys.
To her credit, the wife acknowledged that her income from paid employment had ceased solely because of her actions.[26] However, I do not accept that during the marriage she was earning $10,000 per year clear of expenses from her [omitted] activities.[27] She does not appear to have declared that sort of income to the Australian Taxation Office (ATO) and I note that the Elias principle referred to above arose from a decision which held that a party cannot be heard to say one thing to the ATO and yet another thing to a court in Family Law proceedings.[28]
[26] Transcript 14 September 2010 at page 83
[27] Transcript 14 September 2010 at page 83
[28] Elias v Elias (1977) FLC 90-267
The husband said this about the wife’s contributions as a homemaker and parent:
She was unable to care for the children during the marriage and I was by and large responsible for caring for the children and attending to household chores as well as working.[29]
[29] At paragraph 105 of his affidavit
While I find that to be true in relation to the last five years of the parties’ relationship, I do not accept that such a statement holds true for the whole relationship. The wife’s BPD appears to have become a significant problem in or about 2003. Certainly, by 2004 her anti-social behaviour was causing significant difficulties. It is therefore reasonable to infer that the father’s involvement in domestic matters had to increase from about that time.
Consequently, I find that in the earlier years of the marriage the wife made the greater contributions as homemaker and parent. However, in 2003 or 2004 the husband assumed the dominant role and that continued until the parties separated at the end of January in 2008.
It is clear also that the father has played the role of homemaker and parent exclusively for the last three years since the parties separated. In addition, he has done that without any financial contribution from the wife. That is a post-separation contribution that cannot be ignored.
When I weigh up the parties’ contributions, I cannot help but conclude that the weight to be attributed to the husband’s contributions must be significantly greater than that to be attributed to the wife’s contributions. However, it is clear that the assessment of contributions is not an exercise of mathematical precision. In Hayne and Hayne[30], Pawley J said:
In matters such as this one cannot approach the problem with an eye for meticulous detail. It should rather be dealt with broadly so that the end result can be said to be just and equitable.
[30] (1977) FLC 90-265 at page 76,415
In a similar vein, the Full Court said in Clives and Clives:
We accept that the task to be undertaken by a trial Judge in assessing weight to be attached to initial contributions, and other contributions, is not always an easy one and not discharged by a strict accounting exercise.
Overall, I assess the weight of contributions in this matter as being 75% by the husband and 25% by the wife.
However, divisions of property under the Act are not decided upon contributions alone. I must now consider any of the factors set out in sub-section 75(2) of the Act that are relevant.
Sub-section 75(2) factors
In my opinion, the relevant sub-section 75(2) factors are as set out below.
The age and state of health of each of the parties
The husband is 46 years old and the wife is nearly 40 years old.
There is no evidence that would suggest that the husband has any health difficulties. On the other hand, the wife has been diagnosed as having BPD. She is also clearly overweight, but I have no evidence of how that affects her health.
The income, property and financial resources of the parties
The property and financial resources of the parties are set out above. The pool is clearly not large and it is of some concern that the parties’ outstanding legal bills (which are not included in the pool) amount to nearly a third of the net value of the pool.
The physical and mental capacity of the parties for appropriate gainful employment
There is nothing to suggest that the husband does not have the necessary physical and mental capacity for gainful employment. However, the reasons why his employment was terminated were explained by him as follows:
I was called into the office by my then boss, and basically told that he had had enough of all the proceedings, and everything that had been going on with the family situation with attending to the children’s needs and the legal ongoing battles.[32]
[32] Transcript 13 September 2010 at page 14
This decision of mine should put an end to the proceedings in this Court and, as far as I am aware, the parties are no longer involved in proceedings in other courts. While I appreciate that the children may have some special needs for ongoing counselling arising out of their relationship with their mother and her BPD, I note that the youngest child will turn 13 this year. I therefore conclude that the husband should be able to return to work shortly.
In my opinion, the mother’s capacity for appropriate gainful employment is limited by her mental health. However, she said that she would be resuming her [omitted] activities. Her words were:
Within the next month I’m moving into a new property. I’m setting up a business. I have arranged with the landlord for the installation of a [omitted] for my business, and I will be returning to work.[33]
[33] Transcript 14 September 2010 at page 84
When questioned further, she said:
I’m going to be setting up a legitimate business with an ABN … declaring my income and doing my BAS. Hopefully it will make some money.
I am afraid that I do not share her confidence in relation to her [omitted business], because her history does not suggest that such an enterprise will be a good earning proposition. I consider it far more likely that the wife will continue to need the assistance of Centrelink benefits for her income. (However, one can only hope that I am proved to be wrong.)
Whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
Clearly, the husband has the exclusive and continuing care of three children who are all still at school.
The commitments that are necessary to enable a party to support himself or herself, and any child that the party has a duty to maintain
Clearly, both parties need to support themselves and they each have legal obligations to support their three children. However, the reality is that the father has been totally responsible for financially supporting those children since the date of separation, without the payment of any Child Support by the mother.
In view of the Orders that I made on 17 February 2011 and what I have said above about the mother’s capacity for gainful employment, it is likely that the father will continue to be totally responsible for financially supporting the children for some years to come, with little or, more likely, no financial help from the mother. That is a very significant factor in my consideration of this matter.
Where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
Unfortunately, the small size of the asset pool does not really allow any significant change in standard of living to be effected by an adjustment of property interests.
The effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt
As mentioned above, the husband seeks orders for a transfer of the former matrimonial to him, and a split of his superannuation with an allocation of a base amount of $60,000 to the wife. While it is easy to understand why the husband would prefer to resolve the wife’s claim without making any cash payment to her, the combination of those two orders would effectively nullify VLA’s caveat (‘the caveat”) against the title to the former matrimonial home.
I am not suggesting that the husband intended to deprive VLA of that to which they are entitled, but I repeat that the orders sought by him would essentially have that effect.
In accordance with usual practice, VLA required the wife to provide an equitable charge over her property in order to cover the legal costs that she incurred. VLA’s entitlement to lodge a caveat against the wife’s interest in the former matrimonial home is supported by that equitable charge.
VLA’s policy of making reasonable efforts to recover costs is soundly based. I have said many times (usually in relation to cost arguments) that legal aid funding does not come from a bottomless pit. I think that I can take judicial notice of the fact that all legal aid bodies in Australia have limited finite resources that are insufficient to meet the needs of all applicants for legal aid funding. Consequently, it is inevitable that there will be deserving cases that will not qualify for grants of legal aid. It follows that every dollar recovered by any legal aid body is a dollar that can be used to fund a deserving cause.
However, there are other reasons why I am not disposed towards satisfying the wife’s entitlement solely with a split of superannuation and I shall refer to those below.
If either party is cohabiting with another person - the financial circumstances relating to the cohabitation
The wife has apparently remarried. Her husband is a Pakistani whom she met on the Internet. At the time of the hearing of this matter he was still in Pakistan with no apparent entitlement to live in Australia. At that time the wife was not cohabiting with him and the financial effect of any future cohabitation with him remains unknown. I simply do not know whether it would fall on the credit or debit side of the ledger.
Any child support under the Child Support (Assessment) Act 1989 that a party has provided, is to provide, or might be liable to provide
This has already been referred to at paragraphs 70 and71 above.
Discussion
When I weigh up all the relevant sub-section 75(2) factors, I find that the wife has clearly identifiable needs and an inability to meet those needs. She is likely to be dependent upon the State for assistance for a considerable time to come. However, the husband is likely to continue maintaining the children without financial support from the wife for a considerable time, and even if he obtains reasonable employment in his chosen field, his past income suggests that he will also be entitled to some assistance from the State. I find that this is a factor that requires a further adjustment of 5% in his favour.
It is therefore my decision that the husband is entitled to 80% of the net property and financial resources (described under the heading “The asset pool” above), and the wife is entitled to 20%.
I do not consider it to be appropriate to allocate any more that 20% of the superannuation to the wife. Her needs are more immediate than that and she has indicated that she has been unable to use the hardship provisions of superannuation law to gain access to any superannuation.
By my calculation, if the wife is to have superannuation that equates to 20% of the total, she should receive (in round figures) a split of the husband’s superannuation with a base amount of $10,000.
In relation to the net non-superannuation asset pool of $254,314, a division of 20% is $51,000 (also in round figures). The wife wants the Toyota Camry worth $1,000, so I will award that to her and order the husband to pay her the balance of $50,000.
I am aware that the husband says that he would have difficulty borrowing funds, given his unemployed status. However, I am of the view that he would be able to borrow an additional $50,000 with the former matrimonial home as security, especially if he returns to work, as I expect he will do.
Having said that though, I am of the opinion that there should be a reasonable “lead time” for him to re-organise his life and his finances. I am therefore prepared to allow a period of six months for him to raise that sum.
As mentioned at paragraph 6 above, the wife had suggested during her closing remarks that if a sale of the former matrimonial home was to be contemplated, it could possibly be delayed until the children have all turned 18.
When she was being cross-examined, the wife had said that she did not want the house sold. Her words were:
I would hate to see the sale of the house, a home is a very important place, especially for my children. [34]
[34] Transcript 14 September 2010 at page 80
Then later during her closing submissions to me, I asked the wife to clarify that and she said: “I’ve heard in several cases that sometimes the courts have waited until the children are 18, and then the family home has been sold …”. I then asked her whether she wanted me to make such an order if I considered it to be appropriate and she replied:
Under the circumstances it may be. It may be a possibility that that is something that [you] may consider, given the needs of the children, and as a mother, I don’t want to be selfish. I don’t want to force the sale of the house, but I need to move on as well, your Honour.[35]
[35] Transcript 14 September 2010 at page102
I note that those generous comments by the wife were made in the light of a suggestion that the husband may not be able to obtain sufficient funds to pay her out. However, I am of the opinion that he should be able to pay her out, in light of the value of the former matrimonial home and the equity in it. Further, such an order would be contrary to the spirit of section 81 of the Act, which provides that “the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.”
Chattels
In relation to the chattels listed in the Annexure “A” to the wife’s Response, the husband was generally willing to let the wife have those that he could locate. The wife did ask questions about some of the specific items listed, but she did not ask about them all. I am prepared to make orders for the husband to give her those items that he said she could have, provided that he can locate them.[36] They are the wife’s mother’s engagement ring, a mirror from her sister, a childhood Bible Story book, a quilt from the wife’s grandmother, a camphor chest, a crystal cake stand and any remaining [omitted] equipment. I will require the husband to make reasonable efforts to locate them.
[36] Transcript 14 September 2010, pages 58 to 63
The husband also generously stated that she could have the originals of all family photographs, provide that he could have scanned electronic copies of those that he wished to keep.[37] I will make provision for that in the orders.
[37] Transcript 14 September 2010 at page 61
The husband will probably need a little time to collate and scan the family photographs and I consider 60 days to be adequate. I will therefore make provision for all chattels that can be located to be given to her within that time frame.
Justice and equity
Set out at the start of these Reasons are the orders that I will make to provide for what is set out above. Irrespective of whether sub-section 79(2) of the Act provides a “fourth step” or not, I am satisfied that the orders are just and equitable for the purposes of that sub-section.
Procedure
I heard this matter in Melbourne but I will be delivering this decision from Tasmania. My Associate will provide copies of these Reasons and the Orders to the husband’s legal representatives and to the wife by email or fax (provided that she is given appropriate information to enable her to do so).
The husband has applied for a costs order, whereas the wife seeks an order that the parties each be responsible for paying their own costs. If the husband wishes to pursue his costs application, he should do so within 28 days in accordance with Rule 21.02(1)(b) of the Federal Magistrates Court Rules 2001. That can be done by contacting my Associate to arrange for a listing of the matter. The application can then be heard either by telephone or video link in accordance with Division 5 of Part 6 of the Federal Magistrates Act 1999 or when I am next sitting in Melbourne (currently scheduled for 6 June 2011).
I certify that the preceding ninety-six (96) paragraphs are a true copy of the reasons for judgment of Roberts FM
Date:
[25] (1996) FLC 92-720 at page 83,665
[31] (2008) FLC 93-385 at paragraph 44
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