Harris and Marino
[2007] FMCAfam 1014
•11 December 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HARRIS & MARINO | [2007] FMCAfam 1014 |
| FAMILY LAW – Property – contributions – husband’s much greater direct financial contributions – relatively short marriage. |
| Family Law Act 1975 (Cth) ss.75, 79 |
| Lee Steere (1985) FLC 91-626 Ferraro (1993) FLC 92-335 Clauson (1995) FLC 92-595 Hickey (2003) FLC 93-143 Coghlan (2005) FLC 93-220 Russell v Russell (1999) FLC 92-877 Cerini [1998] FamCA 143 Chorn & Hopkins (2004) FLC 93-204 Jordan & Jordan (1997) FLC 92-736 Elias v Elias (1977) FLC 90-267 Zappacosta (1976) FLC 90-089 Zyk and Zyk (1995) FLC 92-644 Hayne and Hayne (1977) FLC 90-265 |
| Applicant: | JOANNE MAREE HARRIS |
| Respondent: | FRANCO STEVENS MARINO |
| File number: | LNM 1030 of 2006 |
| Judgment of: | Roberts FM |
| Hearing date: | 9 July 2007 |
| Date of last submission: | 9 July 2007 |
| Delivered at: | Devonport |
| Delivered on: | 11 December 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr P McVeity |
| Solicitors for the Applicant: | McVeity & Associates |
| Counsel for the Respondent: | Mr T McGuire |
| Solicitors for the Respondent: | Temple-Smith Partners |
ORDERS
That JOANNE MAREE HARRIS (“the wife”) is to transfer to FRANCO STEVENS MARINO (“the husband”) all her title and interest (if any) in their former matrimonial home at Squeaking Point in Tasmania.
That within 21 days the husband is to transfer to the wife all his interest in the parties’ joint Bass and Equitable investment in the approximate sum of ten thousand and forty dollars ($10,040.00).
That within 60 days the husband to pay to the wife the sum of forty thousand seven hundred dollars ($40,700.00).
That the parties otherwise retain all property and superannuation interests in their respective possession or control free from any claim by the other.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DEVONPORT |
LNM 1030 of 2006
| JOANNE MAREE HARRIS |
Applicant
And
| FRANCO STEVENS MARINO |
Respondent
REASONS FOR JUDGMENT
The Court must decide how to divide the assets of FRANCO STEVENS MARINO (“the husband”) and JOANNE MAREE HARRIS (“the wife”). As applicant, the wife seeks a division on the basis of 40% to herself and 60% to the husband, whereas the respondent husband is seeking a division of 80% to himself and 20% to the wife.
Background
The parties started living together in March 1999. The wife, and her child from a previous relationship, had moved from Tasmania to Victoria in order to live with the husband.
At that time, the husband was conducting his own photographic business and he continued to do so. The wife did not work but she undertook the main homemaker role.
In May 1999 the husband purchased a home in Victoria using funds that he had received from a family law property settlement and the proceeds from the sale of a motor vehicle. He also borrowed funds by way of a mortgage in order to complete the purchase.
In 2001 the husband received an inheritance of $60,731 and he used that inheritance to discharge the mortgage loan. He also inherited his late father’s motor vehicle which he traded in for $6,000.
In 2002 the parties moved to Tasmania and the husband’s home in Victoria was sold. He used the funds from that sale to purchase another home in Tasmania without any need to borrow money.
The parties separated in March 2005 and are now divorced.
Relevant law
The Court’s approach to the determination of an application for the adjustment of property interests has been well established by authority[1]. It is essentially a multi-step process to:
a)identify the property, liabilities and financial resources of the parties (usually at the time of the hearing);
b)evaluate the contributions made by the parties as defined in section 79(4)(a) to (c) of the Family Law Act 1975 (“the Act”); and
c)consider the matters referred to in section 75(2) of the Act, if they are relevant.
[1] See Lee Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335, Clauson (1995) FLC 92-595, Hickey (2003) FLC 93-143 and Coghlan (2005) FLC 93-220.
In determining what orders the Court should make under section 79, the Court must also be satisfied that it is just and equitable in all the circumstances to do so.[2] This is often referred to as the fourth step and has been described by one commentator as “the overriding caveat”[3].
[2] See section 79(2) and Russell v Russell (1999) FLC 92-877.
[3] See Australian Family Law & Practice, Vol. 2 at ¶37-640
The Asset Pool
At the start of the hearing it was suggested that the parties had agreed upon the composition and value of the asset pool. However, it soon became apparent that their agreement did not really extend to the value of the parties’ superannuation. Correspondence had passed between solicitors prior to the hearing which suggested that there may have been agreement about superannuation values. However, the husband’s counsel submitted that I should take into account the actual values of the superannuation rather than any agreed values. In my view, that is the correct approach.
I will deal with the non-superannuation and superannuation assets separately - see Coghlan[4].
[4] (2005) FLC 93-220
The non-superannuation assets
The agreed non-superannuation assets were as follows:
Former matrimonial home $270,000 Vehicle sale proceeds (wife) $500 Wife’s chattels $3,000 Husband’s chattels $3,000 Joint B & E investment $10,040 Wife’s savings $4,000 Husband’s savings $600 Total $291,140
It was the husband’s view that an additional sum of $3,451 should be included in the asset pool, that sum being funds in an account to the credit of the wife’s son (presumably in trust). Those funds are Child Support payments made by the boy’s father.
In my view it is not appropriate to include that sum in the parties’ asset pool. Neither party has contributed directly to it, and if applied correctly for the benefit of the wife’s son, neither party will benefit directly from it.
The husband was also of the view that I should “add back” a sum of approximately $2,000 that he says the wife took in cash upon separation. In his affidavit, the husband stated that just prior to separation he discovered a bundle of cash that the wife had been hiding from him and he annexes a photograph of that cash that he took at the time. When she was cross-examined, the wife conceded that she had taken cash of approximately $2,000.
In the unreported decision of Cerini[5], Nicholson CJ, Ellis, Kay JJ said at paragraph 46:
Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.
[5] [1998] FamCA 143 (8 October 1998)
In Chorn & Hopkins[6], Finn, Kay and May JJ appeared to endorse those remarks.
[6] (2004) FLC 93-204
In this matter, there is no evidence that that sum of $2,000 still exists separately from the other assets listed at paragraph 12 above. Nor is there any evidence that the wife used that money other than to meet normal living costs. I am therefore of the view that I should not add that sum of $2,000 back into the asset pool.
Consequently, the total value of the non-superannuation assets is $291,140.
The superannuation
Documents tendered to the Court show that the husband’s superannuation account balance as at 30 June 2006 was $8,605. He was not able to produce a more recent statement than that. However, given that the hearing was on 9 July 2007 and statements are generally produced some time after the end of each financial year, I do not find that surprising.
On the other hand, the wife had specifically sought an up to date statement from her superannuation fund. As a result, the document provided by her showed her preserved benefit to be worth $17,443 on 4 July 2007.
While the wife’s superannuation interest appears to be worth approximately twice that of the husband, neither interest can be said to be very valuable.
Contributions
At the start of the relationship the wife had domestic furniture and a motor vehicle worth approximately $5,000. She claimed to have had $7,000 owing to her in unpaid child support. However, an annexure to her affidavit reveals that a sum of $7,000 was paid to her some months before cohabitation commenced and from answers given by her in cross-examination, I conclude that she used much of that $7,000 to move herself and her son from Tasmania to Victoria in order to start living with the husband.
Not long before the parties started living together, the husband had received a sum of $45,000 from a family law property settlement. He used some of that to purchase a motor vehicle, which was subsequently sold. The proceeds of that sale, together with the balance of his family law settlement were used by him to purchase a home in Victoria. As mentioned above, the husband later paid off the mortgage on that home when he received an inheritance.
It is clear therefore that the husband contributed virtually all the capital payments in relation to that home in Victoria.
The husband continued his work as a photographer until the business ceased operating at the end of 2000. In his evidence, he claimed that he had supported himself, the wife and her son from his income from that business. However, his taxation records show that his photographic business produced the following profits or losses (losses in brackets):
Financial year
Profit or loss
1997
$6,812
1998
$6,867
1999
$488
2000
$5,892
2001
($189)
The husband says that his business was “very successful”. However, his taxation records clearly show otherwise and it does not surprise me that the business was not sold.
In Jordan & Jordan[7] Chisholm J referred to the “Elias principle”[8]. His Honour 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.
[7] (1997) FLC 92-736
[8] See Elias v Elias (1977) FLC 90-267
From the representations that the husband made to the Australian Taxation Office, it is clear that he was suggesting that his business was not particularly successful. Consequently, I do not accept his assertion now that his photographic business was “very successful”. Instead, I accept the wife’s evidence that her entitlement to Centrelink benefits also contributed to family finances.
The husband used the proceeds of sale of the Victorian home to purchase a home in Tasmania. That home is unencumbered and it has increased in value from its purchase price of $140,000 to the agreed current value of $270,000. There is no evidence to suggest that either party has made any direct contribution to that increase in value. I therefore conclude that the increase in value is the result of an overall increase in real estate values in the area.
It has been said that such increases are “windfalls”. In this regard, McCall J said in Zappacosta[9]:
On consideration I am of the view that if a property appreciates, as obviously this one has, but not due to any particular effort or act of either of the parties, then the reason why the property did so appreciate is not relevant to the question of what interests the Court may decide that the parties to the marriage should have in it when exercising jurisdiction under sec. 79 of the Act. It is simply a windfall and, accordingly, in my view neither party has any greater or lesser claim to the benefits of the windfall.
[9] (1976) FLC 90-089
However, in Zyk and Zyk[10], Nicholson CJ, Fogarty and Baker JJ said:
In common parlance a windfall is used to describe a chance or unexpected benefit which the people involved neither anticipated nor made any effort towards.
[10] (1995) FLC 92-644
I note that much of the increase in the value of the land in Zappacosta was due to rezoning and not merely due to an overall increase in property prices. However, in this matter, there is no evidence of any rezoning or of any other unexpected or unanticipated cause of increase in value. I am therefore of the opinion that any increase in value should be attributed according to the parties’ other contributions.
It is therefore clear that the husband made a much greater contribution to the increase in value of the former matrimonial home because of his direct contribution of all the funds to purchase the second home in Tasmania.
However, it is clear that the assessment of contributions is not an exercise of mathematical precision. In Hayne and Hayne[11], 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.
[11] (1977) FLC 90-265 at p. 76,415
Considering that this was a relatively short marriage, I conclude that although the parties contributed approximately equally towards the welfare of the family unit while they were living together, the husband’s much greater direct financial contributions would entitle him to a distribution of the non-superannuation assets on the basis of 80% to him and 20% to the wife.
Section 75(2) factors
Both parties are now employed in sales and earn very similar incomes.
Although the wife has her son to support, it is not appropriate to make an adjustment under section 75(2), because the husband is not his father. (In this regard, I note that after separation the wife reached an agreement with her son’s father by which she was provided with a motor vehicle in lieu of a reasonably significant lump sum. The value of that motor vehicle is not included in the asset pool set out above.)
Consequently, I have no difficulty in concluding that both parties’ counsel were correct in submitting that there should be no adjustment for section 75(2) factors.
Conclusions
I conclude that an appropriate division of the assets is for the husband to retain 80% and the wife 20% of the value of the non-superannuation assets and for them to otherwise each retain their superannuation interests without adjustment. Although I have noted those superannuation interests favour the wife, neither is particularly valuable.
The non-superannuation assets have a total value of $291,140. If the wife is to receive 20% of that, she should retain assets to the value of $58,228.
The wife has the motor vehicle sale proceeds, her chattels and her own savings, which have a total value of $7,500. If she retains the joint B & E investment for her benefit, she would have a total of $17,540. Consequently, she would need almost $40,700 more to make up her entitlement of to a 20% distribution.
When I consider this matter in the light of section 75(2), I consider that it is just and equitable for the husband to pay her that additional $40,700 in order to finalise this matter.
The orders set out at the start of these Reasons give effect to my conclusions.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of Roberts FM
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