Harrison and Cawley
[2013] FCCA 1594
•21 October 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HARRISON & CAWLEY | [2013] FCCA 1594 |
| Catchwords: FAMILY LAW – Application for alteration of property interests – de facto relationship – short relationship – one child – husband’s compensation verdict largest financial contribution – online spare parts business – assessment of contribution and future needs. |
| Legislation: Family Law Act 1975, ss.75, 79, 90SF, 90SM |
| Cases cited: Griffiths v Kerkemeyer [1977] HCA 45 MH v MZ (2005) FLC 93-226 |
| Applicant: | MS HARRISON |
| Respondent: | MR CAWLEY |
| File Number: | SYC 2527 of 2012 |
| Judgment of: | Judge Altobelli |
| Hearing dates: | 21-23 January 2013, 26 August 2013 |
| Date of Last Submission: | 26 August 2013 |
| Delivered at: | Sydney |
| Delivered on: | 21 October 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Blackah |
| Solicitors for the Applicant: | Warren McKeon Dickson Lawyers |
| Counsel for the Respondent: | Ms Goodchild |
| Solicitors for the Respondent: | Elizabeth Fleming & Associates Lawyers |
ORDERS
That within three (3) months from the date of Orders the husband shall pay to the wife, or as she may direct in writing, the sum of $95,679 (the Settlement Monies);
In the event that the husband fails to comply with Order 1, the parties shall do all acts and things and execute all documents necessary so as to effect a sale of the property situate and known as Property B in the State of New South Wales, being the whole of the land comprised in folio identified (omitted) (“the property”), for the best price reasonably obtainable in the following manner:
(a)List the property for sale by private treaty with (omitted) Real Estate (“the agent”) and the costs of and incidental to such appointment to be born equally by the parties as and when same fall due;
(b)The parties shall each cooperate in every way with the agent including (without limiting the generality of the foregoing):
(i)Making the keys available to the agent;
(ii)Allowing inspection of the property at all reasonable times requested by the agent;
(iii)Doing or saying nothing to hinder or prevent a sale being effected;
(iv)Ensuring the property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(v)Signing all documents requested by the agents in listing for sale of the property except a contract or agreement for sale which has not been authorised by the parties’ solicitors;
(c)The parties shall instruct Warren McKeon Dickson (“the solicitor”) to have the conduct of the sale of the property on behalf of both parties and the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
(d)The parties shall each execute a contract for sale in the form prepared by the solicitors at a price agreed upon by the parties or, in the absence of any agreement, at or above the price nominated by the agent;
(e)Neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the property or to any commission;
(f)The party not in possession shall be entitled upon reasonable notice once per fortnight to enter and view the state of repair of the property.
In the event the property fails to be sold after having been listed for sale by private treaty for a period of three (3) months from the date of first being listed for sale in accordance with these Orders then both parties shall take all necessary steps and execute all documents necessary to cause the property to be sold by auction at the earliest possible date at a price to be agreed on between the parties and failing such agreement to be determined by the President of the Real Estate Institute of New South Wales or his nominee.
Should the parties be unable to agree upon any matter relating to the sale of the property including (but not limited to) the price at which the property is to be offered for sale or sold, the reserve price to be set at an auction, or the agent or agents to have conduct of the sale, then the parties or either of them may appoint the President for the time being of the Real Estate Institute of New South Wales or his nominee to make such determination on their behalf and shall be jointly bound thereby and jointly bear the costs thereof.
That both parties will attend any auction which takes place in accordance with these Orders and negotiate with the highest bidder in the event that the reserve price is not reached and accept the advice of their auctioneers and/or real estate agents as to the acceptance of a price less than the reserve price.
On settlement of the sale of the property, the proceeds of sale be paid in the following manner and priority:
(a)All costs and expenses of sale including legal costs and disbursements, agents commission, valuers fees, and auction expenses;
(b)In payment of the amount required to discharge the mortgage secured on title to the property in favour of Australia and (omitted) Bank being dealing number (omitted) (the mortgage);
(c)The amounts required to pay all municipal and water rates outstanding with respect to the property;
(d)In payment of the Settlement Monies to the wife plus interest thereon, calculated in accordance with the FamilyLaw Act and its Rules and Regulations, and calculated from the date being three (3) months after these Orders were made; and
(e)In payment of the balance remaining to the husband.
Whilst the husband is in occupation of the Property he shall do all acts and things necessary to keep the Property in a good state of repair and pay all outgoings with respect to the Property as and when they fall due, including but not limited to water and council rates and the mortgage.
Save as otherwise provided in these Orders the wife will be declared to have the sole right, title and interest at law and in equity of:
(a)Any other personal chattels, goods and other property which are, as at the date of these Orders, in her possession; and
(b)Any monies, shares debentures and superannuation entitlements, which stand in her sole name as at the date of these Orders.
Save as otherwise provided in these orders the husband will be declared to have the sole right, title and interest at law and in equity of:
(a)Any other personal chattels, goods and other property which are, as at the date of these Orders, in his possession; and
(b)Any monies, shares debentures and superannuation entitlements, which stand in his sole name as at the date of these Orders.
In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders then the Registrar of the Court is appointed pursuant to s.106A of the Family Law Act, to execute such deed or instrument in the name of such party and to do all things necessary to give validity and operation to the deed or instrument.
Either party is granted liberty to apply on seven (7) days’ notice regarding the implementation of these Orders.
IT IS NOTED that publication of this judgment under the pseudonym Harrison & Cawley is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
| MS HARRISON |
Applicant
And
| MR CAWLEY |
Respondent
REASONS FOR JUDGMENT
Introduction and Background
This matter is a bitterly fought out property settlement between a de facto couple who have allowed rampant emotion to get in the way of sensible compromise. The costs they have both incurred are quite disproportionate to the size of the pool of assets. The bitterness and enmity these two have shown towards each other is most unfortunate.
The applicant de facto wife (called “the wife” in these reasons) is 37 years old, describes herself as undertaking Home Duties, and her sole source of income is Centrelink and related benefits. She cares for the one (1) child of the relationship, X, who is six (6) years old. The respondent de facto husband (called “the husband” in these reasons) is 44 years old, describes himself as Unemployed, and claims to receive no income.
They commenced cohabitation in about (omitted) 2005, and separated in October 2010, though there was a period of subsequent cohabitation under the same roof.
In September 2002 the husband was involved in a (omitted) accident in which he sustained injuries. In 2007, or early 2008 he received just over $500,000 net as compensation ordered by her Honour Judge Bala of the NSW District Court. Shortly afterwards they purchased what became the former matrimonial home at Property B (called “the home” in these reasons). It was registered in the husband’s name only. The home was renovated. In 2009 the parties commenced an online business known as (omitted) in which they dealt with (omitted). They both worked in the business. He had previous experience in the industry. She was good at (omitted).
There is no question that the vast majority of the capital that went into the purchase and renovation of the home, and the establishment and working capital of the business, was the husband’s compensation verdict.
By 2010 the verdict had been consumed in its entirety. They had either used the money for the purposes stated above, or other purposes as alleged by the husband, or for living expenses. The parties borrowed a further $100,000 for business and living expenses but only $32,714 was actually drawn down.
The parties separated in October 2010. At that time they were jointly operating the online business from the home. It is common ground that the business stock then in existence and located in the home had a value of about $50,000. The harsh reality in this case is that whoever controlled the stock controlled the business and thus whoever was in occupation of the home controlled the business. An unseeming, undignified tug-of-war ensued over the next few months. She remained in occupation on separation, changed the locks, and operated the business from October 2010 to April 2012. In April 2012 by subterfuge he reclaimed the home, excluded the wife and X, and continued to operate the business.
The operation of the business post-separation was a major factual issue in this case. In short she contends he took over what was a joint business and operated it to his sole benefit. He contends she took over a joint business and operated it to her sole benefit. They each contend that the agreed value of the stock at separation - $50,000 – should be treated as notional property of the other.
The other major issue in this case was assessment of contributions under s.90SM and future needs under s.90SF. By closing submissions counsel for the wife contended that, by the time of the hearing, contribution should be assessed as being equal, and that these should be a s.90SF adjustment in her favour of an extra 10%. In stark contrast counsel for the husband submitted that the wife’s contribution should be assessed at 15%, and there should be no adjustment under s.90SF. Having regard to these ambit claims it is not surprising the case did not settle, generated such emotional heat, and took up four (4) hearing days, even though the size of the pool could be as little as $397,000.
Assessing the credit of all the witnesses who gave evidence in this case is an issue. The wife gave evidence in her case. The husband gave evidence in his case, as did his brother, Mr S, and Mr G. The husband also sought to rely on an affidavit of Mr B sworn 15 January 2013. Mr B was not available for cross-examination so no weight is placed on his affidavit.
Applicable Law
There are a number of legal issues in this case that must be determined.
The first issue that arises is how to alter the parties’ interests in property. In this regard s.90SM(1)-(4) provides:
Alteration of property interests
(1) In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them--altering the interests of the parties to the de facto relationship in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the de facto relationship--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the de facto relationship; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the de facto relationship or a child of the de facto relationship, such settlement or transfer of property as the court determines.
Note 1: The geographical requirement in section 90SK must be satisfied.
Note 2: The court must be satisfied of at least one of the matters in section 90SB.
Note 3: For child of a de facto relationship, see section 90RB.
(2) If a party to the de facto relationship dies after the breakdown of the de facto relationship, an order made under subsection (1) in property settlement proceedings may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
(3) The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c) the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e) the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
The second issue that arises is assessment of any additional needs of the parties. In this regard s.90SF(3) states:
The matters to be so taken into account are:
(a) the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship ); and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;and the rate of any such pension, allowance or benefit being paid to either party; and
(g) a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party's role as a parent; and
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 90SM in relation to:(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(o) the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i) a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii) a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and(p) the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship; or
(ii) a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and(q) any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s) the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and(t) the terms of any financial agreement that is binding on a party to the subject de facto relationship.
In terms of the approach to a case under s.90SM and 90SF, the preferred approach to the determination of an application under s.79 of the Family Law Act 1975 continues to apply and is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by the husband in bringing property into the marriage. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In MH v MZ (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
In relation to add-backs, the applicable law can be found in decisions such as the Full Court's decision in Omacini & Omacini (2005) FLC 93-218 the Full Court decision that describes situations in which add-backs are appropriate.
30. To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-816 the Full Court said at 85,262:
“11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.”
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
“In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.”
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec.75(2)(o) to applications for settlement of property instituted under the provisions of sec.79.”
31. As the Full Court said in Browne and Green (1999) FLC 92-873 at 86,360:
“44. We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction – a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.”
Credit issues
The only witness whose evidence the court has no reservations about is Mr G. He gave his evidence in a matter-of-fact manner, displayed no partisanship, and was consistently cooperative and responsive.
The court has significant reservations about the evidence of the husband, the wife, and particularly the husband’s brother. Each of these witnesses was, at times and to differing degrees, unresponsive and uncooperative in evidence. For each of them disclosure, and compliance with orders and directions about disclosure, seemed optional. Each of them were quite cavalier in their responses in evidence at times.
The nadir of the wife’s evidence was on three (3) specific issues: her amazing reluctance to concede that the husband made any contributions at all in the relationship, her thoroughly unconvincing denials about marijuana use notwithstanding more objective evidence to the contrary, and her equally unconvincing denials about the nature and extent of her gambling activities. Despite this the court prefers the wife’s evidence about the violent tumultuous relationship she had with the husband, and about the operation of the business in the post-separation period.
The major difficulty with the husband’s evidence is how it conflicts with his brother’s evidence, especially about the operation of the business once he resumed control of it. Whatever arrangement he has with his brother is clearly a sham. He acknowledged that the business was “half mine” at the time he resumed control of it from the wife, but in the next breath asserted that he in fact had no interest in it as it was completely controlled by his brother. Then he conceded it was a “sort of” partnership in which all the income goes into his brother’s account in respect of which he had no interest. The husband and his brother’s evidence about the operation of the business post-separation is quite unconvincing. However there are aspects of the husband’s evidence the court does accept. He did make limited non-financial contributions in the relationship. He conceded that the relationship was a tumultuous one mainly because of the “troubled state” of his life, and because his “brain was scrambled”. He has minimised, however, the nature and extent of his behaviour towards the wife. He conceded that he said some loathsome things to the wife, that he drank alcohol to high levels, that he probably had an unrealised earning capacity, and that he has not been paying child support. He conceded in cross-examination that, together with his brother, he disposed of business records and a computer pertaining to the business, at the local tip. His denial about disposing of other personal property was unconvincing. Significantly he agreed in cross-examination that he and his brother changed the wife’s ebay account, which was critical to the operation of the online business, and removed her personal details, “to stop Ms Harrison trying to trade” because he regarded the business as still half-his.
As for Mr S, the husband’s brother, the only evidence of his that the court can accept is a statement that might be regarded as an admission, or is contrary to his own interest. At all relevant times in the witness box he exuded aggression, and a loathing of the wife, that coloured all of his evidence. In relation to the ebay business account he conceded that he “gained access” to it, reset it to his own password, and took over its operation because “it was Mr Cawley’s too”. He agreed that he sold parts that the husband and wife had previously been trying to sell. He disingenuously asserted that some of his own parts were in the garage of the home. The absolute nadir of his evidence was when he conceded that it had occurred to him that he was dealing in parts the wife had an interest in, and threw out the business computer, because he was “angry and annoyed” with her because of all “that had happened to my brother”. He agreed that he called the wife “a human liver fluke” and that he hoped “your father dies today”. The court also finds that during a lunch adjournment he said to the wife “you’re fucking gone”. The inescapable conclusion from the totality of the evidence is that the evidence of the husband’s brother, where it conflicts with that of the wife, is plainly unacceptable. Indeed it seems that the only person who benefited from this whole sordid affair is the husband’s brother.
Balance sheet issues
The court was presented with the following joint balance sheet at 11:25am on 21 January 2013, Day 1 of this matter.
Description
Wife’s value
Husband’s value
ASSETS
1
Home
Property B
320,000
320,000
2
Ms Harrison's Car
Toyota (model omitted)
?
2,500
3
Mr Cawley's Car
Ford (model omitted)
?
1,000
4
Motor Cycle
(model omitted)
?
6,000
5
(omitted)
Stock from business
?
50,000
6
(omitted) Bank
(omitted) Bank
?
150
TOTAL
379,650
ADDBACKS
7
Loss in Gambling
Ms Harrison’s spending of compensation funds for gambling – addback to wife
?
30,000
8
Legal Fees
Legal Fees Paid in Matter – addback to wife
16,693.92
TOTAL
46,693.92
LIABILITIES
9
Mortgage
With (bank omitted), secured over property
32,714.42
32,714.42
10
Debt to Ms S
Debt to Mr S for payment of rates and mortgage
?
7,882
11
Loan from Mr P
Alleged loan from Mr P
80,000
0
12
Loan from (omitted)
From (omitted)
1,200
0
13
Business debt
Alleged loss from (omitted) business
84,723
0
14
(omitted) debt
Fees
541
0
TOTAL
199,178.42
40,596.42
SUPERANNUATION
Member
Name of fund and type of interest
Wife’s Value
Husband’s Value
15
Ms Harrison
(omitted) Super (Accumulation)
9,078
0
16
Ms Harrison
(omitted) Super (Accumulation)
224
0
17
Ms Harrison
(omitted) Super (Accumulation)
3
0
18
Ms Harrison
(omitted) (Accumulation)
1,107
0
19
Ms Harrison
(omitted) (Accumulation)
522
0
20
Ms Harrison
(omitted) Super (Accumulation)
1,002
0
21
Ms Harrison
Misc funds (Accumulation)
7,000
0
22
Mr Cawley
(omitted) (Accumulation)
0
10,000
TOTAL
18,936
10,000
By closing submissions the parties agreed that there should be a new item 6A, proceeds of an insurance claim for lost stock, in the sum of $5,000, and collected by the wife.
The first issue relates to item 5, the stock from the business. Each contends that the other has this. The court finds that item 5 should be treated as notional property of the husband, not the wife. The court does not accept his evidence, or his brother’s evidence, about how this stock was dealt with post-separation. In all likelihood this stock was taken into the possession or control of the husband and/or his brother, and they either still retain it or have disposed of it to their own benefit. Their actions were, insofar as it related to the wife, piracy. Whilst the husband’s actions were disingenuous, especially when he conceded that his wife had an interest in this stock, his brother’s actions were plainly dishonest. It should be noted that the parties themselves agreed that the stock should be treated as having a notional value of $50,000. One wonders whether this is indeed the case. They engaged in Russian roulette in this regard. So be it. The parties are bound by the concessions they have made.
The husband contends that there should be an addback in the sum of $30,000 in respect of the wife’s gambling. He has not established a case in this regard. The wife probably did gamble during the relationship. Even if she did gamble, and even if she did say that she gambled $30,000, the evidence does not establish that it was a premature distribution of marital assets in that sum. On the evidence it is highly unlikely that it was $30,000 given the relatively small amount of capital that sustained the family over a period of years. The husband’s case was, in any event, that the $30,000 was his damages verdict. There is no direct or indirect evidence of this. If there was gambling, it may well have been funded from other sources of income.
At item 8 the wife concedes there should be an addback in the sum of $16,693.92 for legal fees she has paid. The court rejects the husband’s contention that he owes his brother $7,882 for payment of rates and mortgage. The evidence of both parties to this alleged loan is highly suspect. If the brother did, in fact, pay these liabilities, it is more likely than not that he used the proceeds of sale of stock owned by the husband and wife.
The wife has not established her case that she owes her father $80,000 for what is, in effect, post-separation living expenses. Her claim is inadequately particularised and not corroborated. There is no evidence of any demand for payment.
Little was said about the claim to include in the balance sheet a debt incurred by the wife for jewellery that she contends was taken by the husband. Indeed the wife’s case is that the husband took, and either retains or disposed of, a considerable quantity of personal property. No findings are available on the evidence in this regard. That is perhaps unsurprising given the dissatisfaction the court has with aspects of the evidence of both parties and the husband’s brother. In the circumstances the debt claimed at item 12 cannot be allowed on the balance sheet.
The wife’s counsel quite properly withdrew the claim to add back item 13 which is an alleged business loss, not a liability. It is unclear from the balance sheet whose debt is item 14, (omitted). The court will treat it as the husband’s as he owns and occupies the home.
There is no dispute about the remaining items on the balance sheet. The court thus finds the assets, liabilities and superannuation of the parties to be as follows:
| Home | H | $320,000 |
| Car | W | $2,500 |
| Car | H | $1,000 |
| Motorcycle | H | $6,000 |
| Stock | H | $50,000 |
| Bank account | W | $150 |
| Insurance claim | W | $5,000 |
| Legal fees paid | W | $16,693 |
| TOTAL ASSETS | $401,343 | |
| Mortgage | H | ($32,714) |
| (omitted) | H | ($541) |
| NET NON-SUPERANNUATION ASSETS | $368,088 | |
| Superannuation | H | $10,000 |
| Superannuation | W | $18,936 |
| TOTAL SUPERANNUATION | $28,936 | |
| TOTAL SUPERANNUATION AND NON-SUPERANNUATION ASSETS NET | $397,024 |
Assessment of contribution
Having regard to the relatively modest pool of assets, and the reality that most of its value is represented in terms of source by the husband’s damages award, it probably does not matter whether an assets by asset or global approach is adopted. The court chooses the latter as it is less artificial in its implementation.
It seems relatively uncontentious that at the time of cohabitation the parties had minimal assets. Indeed their respective superannuation interests probably represented most of their wealth, and was comparable.
In terms of financial contribution almost all of the non-superannuation assets can be traced back to the husband’s damages verdict. Even the wife does not contend to the contrary. Her case, however, is that she made a significant contribution in diverse ways, which can be assessed financially and non-financially, and which ultimately amounts to 50% by the time of the hearing. The first limb of the wife’s case is to contend that she constituted to the Griffiths v Kerkemeyer component of the verdict (ie. gratuitous care provided by a spouse). There is substance to this. Even counsel for the husband in closing submissions and by reference to the cases she cited, quite properly conceded this. The issue is quantifying same. Counsel for the wife contended that the evidence of the husband’s common law litigation demonstrates that about 22% of a gross verdict of $661,765 represents a gratuitous care component. On his analysis past gratuitous care was assessed at $16,520, and future at $130,340. Counsel for the husband did not cavil with this. Indeed it is an analysis quite consistent with page 7 of the judgement of Bala DCJ.
It must be remembered that this relationship was a short one, and the greater proportion of the Griffiths v Kerkemeyer component relates to a future that will not involve the wife, and which the husband will need to meet on his own. The net payment to the husband was just over $500,000, and the assets represented by this are of lower value. In the circumstances an assessment in the wife’s favour of 5% of the pool of assets, imprecise as it is, is as just and equitable as the evidence allows.
The second limb of the wife’s case emphasises the non-financial contribution the wife made during the relationship, and after separation to the date of the hearing. There is substance in this contention. The judgment of Bala DCJ, confirmed by the husband’s own evidence, indicates that even though he was at home most of the time there was little he could do in terms of homemaking and parenting, and even his involvement in the (omitted) business was limited to his sphere of expertise. The situation becomes even starker after separation when the wife is left to solely provide for her son and was exacerbated by the very high-handed, insensitive manner in which the husband excluded her, and X, from the home.
Moreover the court accepts that the husband’s own evidence establishes that the wife’s contribution during cohabitation was rendered more arduous by his aggressive, volatile and often irrational behaviour and not infrequent absences from the home. It is also easy to lose sight of what financial contribution the wife in fact did make. There was a $10,000 tax refund just before X was born, not challenged by the husband in cross-examination.
In the circumstances of this case, the wife’s contribution as set out above has to be assessed in a meaningful and not token manner. The court assesses her further contribution at 20%. As at the date of the hearing, therefore, contribution is assessed at 25%. The wife’s counsel’s contention of 50% is clearly implausible in the circumstances where the husband’s financial contribution was so significant. The husband’s counsel’s contention of 15% contribution to the wife is plainly inadequate on the evidence before the court.
Assessment of future needs
Counsel for the wife contends for a 10% adjustment in this regard, but for the husband no adjustment is contended for.
There is a clear disparity in the health of the parties, a matter explained in the judgment of Bala DCJ, and not seriously put in contention by the wife.
A modest pool of assets is being divided here – indeed possibly a very modest pool once legal costs have been paid. This makes any adjustment even more important in terms of its overall effect. Both parties have a capacity for appropriate gainful employment that they are not realising. The court’s strong impression is that both are focussed on this litigation, and seeking to maximise their own position so as to increase their prospect of attaining a greater share of the assets. There is no acceptable evidence to explain why the wife is not working, even on a part-time basis. Her skills in the (omitted) industry are still intact. She is clearly a capable, and adaptable, (omitted). Even though she is the primary carer for X, this does not negate her capacity for employment.
The husband conceded in cross-examination he has some capacity for employment, a fact reflected in the verdict he received. When their respective capacities for employment are contrasted, there can be no doubt hers is greater than his in terms of breadth of employment opportunities, though not necessarily in terms of income because she will be caring for X.
The single most distinguishing future needs factor is, in fact, the care of X. The husband has willingly done little to assist in this regard in the post-separation period, and even acknowledged he could have done more. There was no challenge to the wife’s evidence that about half of her weekly living expenses are attributable to X’s needs. X started school this year. The harsh reality in this case is that there is little prospect of the husband making a meaningful contribution on a weekly basis towards this, even if child support were assessed, because he is unlikely to earn a significant income. The husband has no other person he is obliged to support.
The husband declares no income, an assertion the court does not accept for reasons explained above. His verdict though does preclude him from Centrelink benefits for a few more years. He has the skills in the (omitted) industry to earn a living but the court urges him to reconsider the sham arrangement he has with his brother which seems to deliver to the husband questionable benefits.
Both parties have modest superannuation entitlements. Experience does teach that he might have greater prospects of accessing his early than she does, but this is by no means a significant consideration in the present context.
There are no issues of standard of living, or the payment of maintenance in this case.
It was a short relationship, a matter repeatedly emphasised by counsel for the husband, but it produced a child who is only five (5) years old and who will, on the basis of the evidence presently before the court, be dependent on his mother only for 13 years – indeed the 13 most expensive years of his life.
Even if an adjustment is made as proposed by the wife, the husband leaves the relationship with a significantly greater share of the assets and thus has a much stronger foundation from which to re-establish his life. He, no doubt, will regard this relationship as a financial disaster for him given the erosion of his verdict. One cannot help but wonder whether the husband would have found himself in precisely the same position that he is in now even if he had never met the wife. This is pure speculation of course, informed however by close observation of him during this litigation. The verdict was never going to sustain him for the rest of his life – it was plainly inadequate for that. He did not give the impression of being highly self-motivated – indeed precisely the opposite. Perhaps the husband needs to take a reality-check on his life before considering his response to the outcome of this case.
Another harsh reality of this case is that the pool of assets is so modest and it may well be difficult for the husband to pay to the wife her share as ordered by the court without selling the home. Having said that there is a real absence of transparency about the financial relationship he has with his brother so no finding can affirmatively be made that he cannot pay her out.
When all these competing considerations are balanced out, the stand-out factor pointing towards a 10% adjustment in the wife’s favour is that she will have the care of X with little meaningful financial assistance from the husband. Even this 10% adjustment is modest when measured in dollar terms.
Just and equitable
A final award in the wife’s favour at 35% gives her $138,958 less the value of the assets already in her control ie. $43,279. The payment to her would thus be $95,679. The court has no doubt that if the wife knew she was to be awarded 35% her counsel would contend for a further just and equitable adjustment in her favour. The court does not accept this. It would not be just and equitable from the husband’s perspective on the evidence before the court. He will somehow have to fund a significant payment to the wife in circumstances where he says he has no income, has a mortgage, and has legal fees to pay. He then must live off the balance. A sale is almost inevitable, but he will have three (3) months to pay the wife following which interest will accrue in the usual manner, and the home will need to be sold.
The orders proposed by the wife are set out in her counsel’s Case Outline document dated 16 January 2013. They will form the basis of the orders made in this matter. They are sufficiently prescriptive to ensure a proper implementation of what the court intends. The time frames will be amended to reflect the court’s intention as set out in these reasons. The level of emotion between the parties is still very high. The court would not be surprised if enforcement becomes an issue. Liberty to apply will be granted in terms of that sought.
Orders
That within three (3) months from the date of Orders the husband shall pay to the wife, or as she may direct in writing, the sum of $95,679 (the Settlement Monies);
In the event that the husband fails to comply with Order 1, the parties shall do all acts and things and execute all documents necessary so as to effect a sale of the property situate and known as Property B in the State of New South Wales, being the whole of the land comprised in folio identified (omitted) (“the property”), for the best price reasonably obtainable in the following manner:
a)List the property for sale by private treaty with (omitted) Real Estate (“the agent”) and the costs of and incidental to such appointment to be born equally by the parties as and when same fall due;
b)The parties shall each cooperate in every way with the agent including (without limiting the generality of the foregoing):
i)Making the keys available to the agent;
ii)Allowing inspection of the property at all reasonable times requested by the agent;
iii)Doing or saying nothing to hinder or prevent a sale being effected;
iv)Ensuring the property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
v)Signing all documents requested by the agents in listing for sale of the property except a contract or agreement for sale which has not been authorised by the parties’ solicitors;
c)The parties shall instruct Warren McKeon Dickson (“the solicitor”) to have the conduct of the sale of the property on behalf of both parties and the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
d)The parties shall each execute a contract for sale in the form prepared by the solicitors at a price agreed upon by the parties or, in the absence of any agreement, at or above the price nominated by the agent;
e)Neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the property or to any commission;
f)The party not in possession shall be entitled upon reasonable notice once per fortnight to enter and view the state of repair of the property.
In the event the property fails to be sold after having been listed for sale by private treaty for a period of three (3) months from the date of first being listed for sale in accordance with these Orders, then both parties shall take all necessary steps and execute all documents necessary to cause the property to be sold by auction at the earliest possible date at a price to be agreed on between the parties and failing such agreement to be determined by the President of the Real Estate Institute of New South Wales or his nominee.
Should the parties be unable to agree upon any matter relating to the sale of the property including (but not limited to) the price at which the property is to be offered for sale or sold, the reserve price to be set at an auction, or the agent or agents to have conduct of the sale, then the parties or either of them may appoint the President for the time being of the Real Estate Institute of New South Wales or his nominee to make such determination on their behalf and shall be jointly bound thereby and jointly bear the costs thereof.
That both parties will attend any auction which takes place in accordance with these Orders and negotiate with the highest bidder in the event that the reserve price is not reached and accept the advice of their auctioneers and/or real estate agents as to the acceptance of a price less than the reserve price.
On settlement of the sale of the property, the proceeds of sale be paid in the following manner and priority:
a)All costs and expenses of sale including legal costs and disbursements, agents commission, valuers fees, and auction expenses;
b)In payment of the amount required to discharge the mortgage secured on title to the property in favour of (omitted) Bank being dealing number (omitted) (the mortgage);
c)The amounts required to pay all municipal and water rates outstanding with respect to the property;
d)In payment of the Settlement Monies to the wife plus interest thereon, calculated in accordance with the FamilyLaw Act and its Rules and Regulations, and calculated from the date being three (3) months after these Orders were made; and
e)In payment of the balance remaining to the husband.
Whilst the husband is in occupation of the Property he shall do all acts and things necessary to keep the Property in a good state of repair and pay all outgoings with respect to the Property as and when they fall due, including but not limited to water and council rates and the mortgage.
Save as otherwise provided in these Orders the wife will be declared to have the sole right, title and interest at law and in equity of:
a)Any other personal chattels, goods and other property which are, as at the date of these Orders, in her possession; and
b)Any monies, shares debentures and superannuation entitlements, which stand in her sole name as at the date of these Orders.
Save as otherwise provided in these orders, the husband will be declared to have the sole right, title and interest at law and in equity of:
a)Any other personal chattels, goods and other property which are, as at the date of these Orders, in his possession; and
b)Any monies, shares debentures and superannuation entitlements, which stand in his sole name as at the date of these Orders.
In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders then the Registrar of the Court is appointed pursuant to s.106A of the Family Law Act, to execute such deed or instrument in the name of such party and to do all things necessary to give validity and operation to the deed or instrument.
Either party is granted liberty to apply on seven (7) days’ notice regarding the implementation of these Orders.
I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Date: 21 October 2013
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Injunction
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Jurisdiction
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Procedural Fairness
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