Harry and Harry and Anor

[2018] FCCA 155

FEDERAL CIRCUIT COURT OF AUSTRALIA

HARRY & HARRY & ANOR [2018] FCCA 155

Catchwords:
FAMILY LAW – Property – modest asset pool – bulk of equity in a property in (country omitted) – uncertainty of realisation.

Legislation:

Family Law Act 1975, s.75(2)

Applicant: MS HARRY

First Respondent: MR HARRY

Second Respondent: MS A HARRY

File Number: DNC 568 of 2015

Judgment of: Judge Young

Hearing date: 18 January 2018

Date of Last Submission: 18 January 2018

Delivered at: Darwin

Delivered on: 23 January 2018

REPRESENTATION

Applicant appearing in person

First Respondent appearing in person

No appearance by or for the Second Respondent

ORDERS

1. That within 30 days of the date of these Orders the parties do all things and sign all documents and papers necessary to cause the property situated at and known as Property A, Northern Territory, being the whole of the property contained in Certificate of Title Volume (omitted) Folio (omitted) (“Property A property”) to be sold at the earliest possible date.

2. That upon the sale of the Property A property, the sale proceeds be disbursed as follows and in that priority:

   (a)In payment of agents commission, advertising expenses, conveyancing adjustments and legal expenses of the sale;

   (b)Discharge of all mortgages secured on title;

   (c)In payment of costs incurred in relation to the nomination of a real estate agent (if any) and in payment of costs in relation to determination of value or selling price by the President of the Real Estate Institute of the Northern Territory or his/her nominee.

   (d)In the event that there is a profit on the sale, the proceeds of sale are to be divided so that the parties share in the profit to the extent of his or her interest in the property that is 38.5% to each of the wife and husband and 23% to the second respondent

   (e)In the event that there is a loss on the sale, the husband do indemnify and keep indemnified the wife for the entirety of the loss.

3. That the husband be entitled to receive the rent on the Property A property but do indemnify and keep indemnified the wife for any mortgage repayments in respect to the Property A property until the sale of the property.

4. That within 30 days of the date of this order the husband will do all acts and sign all documents as are necessary to cause the Toyota (omitted) motor vehicle registration number (omitted) to be transferred to the sole name of the wife and the wife do indemnify and keep indemnified the husband and second respondent in relation to all liabilities in respect of this motor vehicle, whenever and howsoever arising.

5. That pursuant to the s.90MT(1)(a) of the Family Law Act1975, whenever a splittable payment becomes payable with respect to the husband’s superannuation interest in (omitted) Super Member Number (omitted) (“fund”):

   (a)The wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 as to thirty-one thousand three-hundred and ninety-eight dollars ($31,398) out of the husband’s fund; and

   (b)There be a corresponding reduction in the entitlement of the husband, or such other person to whom a splittable payment may be made, would have had in the fund, but for these Orders.

6. That the operative time for the order contained in Order 5 is four (4) business days after the day on which a sealed copy of these Orders is served on the Trustee of the Fund.

7. That the Trustee, the husband and the wife, shall do all such acts and things and sign all such documents as may be necessary to pay the entitlement created in paragraph 5 of these Orders in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001.

8. Except as otherwise provided in these orders each party is declared to retain all interest in and entitlement to other property in their possession and have no further interest in the items of property in the possession of the other.

IT IS NOTED that publication of this judgment under the pseudonym Harry & Harry & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DARWIN

DNC 568 of 2015

MS HARRY

Applicant

And

MR HARRY

First Respondent

MS A HARRY

Second Respondent

REASONS FOR JUDGMENT

1. This is a property matter. Both parties were unrepresented. Both parties failed to comply with trial directions to file a case outline. They did not provide a table of assets, liabilities and financial resources or list any contributions claimed or contended for, provide a list of section 75(2) factors relied on nor did they make any useful submissions on these factors.

2. The list of assets and liabilities provided with these reasons was prepared by me from an examination of the documents and a discussion with parties.

3. The second respondent, the husband's mother, did not participate in the proceedings and did not appear.

4. The position of the applicant wife set out in her initiating application was that the property at Property A, should be transferred to the husband and she sought a superannuation splitting order in her favour from the husband's superannuation fund, presently standing at $71,050, in the amount of $23,000. She also sought the transfer of a Toyota car to her.

5. The husband’s position set out in his amended Response was:

   a)that the property at Property A should be sold and any profit or loss be divided according to the respective interests of the husband and wife in the property (38.5% each, the remainder being owned by the husband's mother).

   b)that the wife contribute to the shortfall in rental against mortgage payments and outgoings on the Property A property  pending sale.

   c)that the wife repay the husband's mother $26,950 for the deposit on the Property A property.

   d)that the wife repay $2,000 into the children's bank account allegedly removed by her. The wife said this had been returned and the husband did not press this.

   e)that the husband transfer to the wife the Toyota (omitted) car.

   f)a superannuation splitting order in favour of the wife for $22,000 but to be reduced by any shortfall of the sale proceeds against the mortgage debt on the Property A property.

Background

1. The wife and the husband are 39 years old. The wife was born in (country omitted) and the husband was born in (country omitted). They met in 1998 and then began living together in (country omitted). They moved to (country omitted) in 2000 and married in 2001. They separated in mid-2013 but the wife did not move out of the former matrimonial home until October 2013.

2. The husband is employed as a (occupation omitted) with a (employer omitted). He earns about $114,000 a year.

3. The wife is presently completing a (omitted) degree and is hoping to take up a post as a (occupation omitted) this year. Apparently she has the promise of a job subject to (employer omitted) approval as she has still one unit to complete the degree. She expects to complete that in (omitted). If she is employed as a (occupation omitted) she will earn about $70,000 a year.

4. The parties have three children: 14, nine and seven years old. The children are the subject of a consent order that provides for an equal time arrangement. The husband pays child support. The child support assessment will change, of course, once the wife begins (employment omitted).

5. The husband has worked throughout the marriage. The wife has worked apart from times when she has been responsible for the children and for a period in 2013 when she was ill. Over the past three or four years she has been a full-time student.

The Property Pool

1. The husband owned an inherited unit in (country omitted) at the beginning of the relationship and still owns it.

2. The parties purchased a property in the (country omitted) in 2003. That was sold in 2006 and they purchased another property in the (country omitted). That was sold in 2015 and the net proceeds divided with $36,000 to the wife and $35,000 to the husband.

3. In February 2013 the parties purchased a property at Property A, in shares as to 77% to them and 23% to the husband's mother.

4. The husband's affidavit refers to having reached an agreement with the wife to repay the husband's mother $70,000 – apparently because she had helped fund the purchase of the Property A property. The evidence about the financial assistance was vague. No evidence was given by the husband's mother. The wife denies that there was any agreement to repay money. I am uncertain about what precise financial transactions were involved. The wife did not challenge that some financial assistance was given but she did not concede there was an agreement to repay.

5. There were other contested elements about the extent of the husband's mother's assistance to the parties. The wife denied that the husband's mother paid out a $15,000 car loan. In any event, the husband's evidence on this was vague, merely claiming that his mother "assisted".

6. It appears that the husband's mother has provided assistance to the parties although I have difficulty identifying exactly what that assistance has been and on what terms it was provided but it appears to have been significant. It may be that the $26,950 referred to in the husband's application is the amount he claims was advanced. In the absence of evidence that it was a debt I am not prepared to make an order that the wife repay that or any other sum.

7. The husband occupied the Property A property after separation and, from 2014 or 2015, lived there with his new partner. In November 2016 the husband and his partner left the Property A property and purchased another property at Property B, with the mother. His mother owns 50% of the new property.

8. The Property A property remained vacant for four months until March 2016 after the husband vacated the home. The husband has paid the mortgage and received the rent from the property. He said there was a shortfall on the rent over mortgage repayments of $71 a week and in addition he has paid rates and other outgoings. This is about $4,000 a year. It is unclear why the property has not been sold to date. It is also unclear why the husband decided that it was best to vacate the property and take on new borrowings. He said he had done so after consultation with the mother.

9. The husband appears to have about $42,000 equity in the Property B property but he owes his mother an almost equivalent amount for money she advanced to him to permit the purchase.

10. The husband annexed a valuation of the Property A property made in May 2016 to his trial affidavit. This valued the property at $500,000. There is no updated valuation. The wife did not seek to cross-examine the valuer but attempted to rely on an appraisal from a real estate agent putting a value of $499,000 on the property.

11. The husband also tried to rely on hearsay evidence from his financial broker to the effect that the mortgagee bank had valued the Property A property at $460,000 in August 2016.

12. The husband's valuation is almost 2 years old. I do not know what the Property A property might be worth now. The Darwin property market has been depressed for some time and it may be that the property is only worth $460,000. In one sense it does not matter because both parties wish to sell that property.

13. Apart from the value of the Property A property, there was little of significance in contest between the parties. The husband asserted that the wife had some remnant of the $36,000 she received from the sale of the (country omitted) house. She said she had $13,000 left held as money in the bank. I accept her evidence. The wife suggested that the husband had money in (country omitted) but there was no evidence of that although I assume he received some rent from his unit in (country omitted). There is no evidence of the amount and I would imagine it was relatively modest.

14. Both parties were content to treat the superannuation as part of a single pool. The husband had about $22,000 in superannuation at separation and the balance has grown since.

Contributions

1. Both parties have worked except when the wife has been at home caring for the children. In recent years the wife has almost completed a (omitted) degree and expects to begin her (omitted) career at the beginning of this school year. I find non-financial contributions are equal.

2. The position of the parties, other than superannuation, is marked by a high level of indebtedness. The bulk of their net equity is made up of the husband’s (country omitted) property. Depending on what is realised on the sale of the Property A property there may be a small profit or a deficiency on the sale.

3. The husband said that his mother provided significant financial support to the parties throughout the marriage. It is difficult to see that this is reflected in any existing asset other than the husband's interest in the Property B property, which is balanced by his indebtedness to his mother. Nevertheless, I accept that the mother did provide some assistance although I cannot determine how much. I accept that the bulk of the equity of the parties is represented by the husband’s (country omitted) property that he owned before the relationship began.

4. Other than this the most significant financial interest is the husband’s superannuation. In my view the wife should be seen as having made a contribution to that not only during the marriage but after separation by reason of her responsibility for care of the children for half the time, at least, thereby permitting the husband to pursue his career, especially when the children were younger. Taking into account the modest asset base I find that the overall contributions were 65% by the husband and 35% by the wife.

s.75(2) factors

1. The parties are in good health. The husband earns about $114,000 year. He says that his employment is not certain in the future because it is dependent upon the (employer omitted) renewing his employer’s contract this year. There was no other evidence on that point. The husband’s partner, according to his financial statement, earns $420 a week. The wife hopes to begin (employment omitted) this year on a provisional licence pending the completion of one unit in her degree. If so she will learn about $70,000 a year.

2. Taking into account, in particular, the disparity of income and resources between the parties and section 75(2)(g) and the duration of the marriage and what appears to have been a consequent effect on the income earning capacity of the wife under section 75(2)(k) and the modest property pool, I would ordinarily consider that there should be a 15% adjustment in favour of the wife leading to an overall division of 50% each.

3. However I will not make that order. There are two factors that I take into account. The wife has not sought such an order and she seeks simply to be relieved of liability for any loss on the Property A property. She specifically sought an order that the Property A property be transferred to the husband but he wishes to sell the property and I consider that is reasonable. In substance, the wife seeks to be indemnified for any loss on the sale of the property.

4. She also seeks a superannuation split in her favour of $23,000 from the husband’s superannuation interest. She did not explain the basis for arriving at that figure but I consider that a splitting order to equalise the superannuation interests is just and equitable.

5. The other factor is that it is not apparent that the husband would have the capacity to make any significant payment to the wife. His only unencumbered asset is in (country omitted). There was no evidence about how that might be sold or whether borrowing against it was feasible or whether the proceeds could be transferred to Australia.

6. I propose to make orders that will see the wife indemnified for any loss on the sale of the Property A property and if there is any profit, which may be unlikely, she is to share in the profit to the extent of her interest in the property, that is, 38.5%.

7. I have set out in the following tables the effect of a 50-50 split depending on whether $500,000 or $460,000 is realised on the sale.

Assets	Wife	Husband	Total
1	Property A, valued at $500,000 by the husband in May 2016 (owned jointly as to 77% by the husband and wife and as tenants in common with the husband’s mother owning 23%	$192,500	$192,500
2	Property B, (owned as tenants common as to 50% by the husband and 50% by his mother)	$287,500
3	(country omitted), property.	$87,000
4	Wife’s Toyota car	$7,000
5	Husband's Ford (omitted) car.	$45,000
6	Wife’s savings.	$13,000
$212,500	$612,000	$824,500
Liabilities
7	Mortgage on Property A	$181,125	$181,125
8	Mortgage on Property B	$245,000
9	Ford (omitted) finance debt	$44,800
10	Wife's HECS debt	$20,450
11	Husband’s debt to his mother	$41,700
($201,575)	($512,625)	($714,200)
Net	$10,925	$99,375	$110,300
Superannuation
12	Husband's (omitted) Super	$71,050
13	Wife's (omitted) Super	$8,253
$8,253	$71,050	$79,303
Total	$19,178	$170,425	$189,603
If 50/50
Plus payment to wife	$75,623 (including super split $31,398)
Less payment to wife	($75,623)
$94,801	$94,802	$189,603

Assets	Wife	Husband	Total
1	Property A valued at $460,000 by the husband in August 2016 (owned jointly as to 77% by the husband and wife and as tenants in common with the husband’s mother owning 23%	$177,100	$177,100
2	Property B (owned as tenants common as to 50% by the husband and 50% by his mother)	$287,500
3	(country omitted), property.	$87,000
4	Wife’s Toyota car	$7,000
5	Husband's Ford (omitted) car.	$45,000
6	Wife’s savings.	$13,000
$197,100	$596,600	$793,700
Liabilities
7	Mortgage on Property A	$181,125	$181,125
8	Mortgage on Property B	$245,000
9	Ford (omitted) finance debt	$44,800
10	Wife's HECS debt	$20,450
11	Husband’s debt to his mother	$41,700
($201,575)	($512,625)	($714,200)
Net	($4,475)	$83,975	$79,500
Superannuation
10	Husband's (omitted) Super	$71,050
11	Wife's (omitted) Super	$8,253
$8,253	$71,050	$79,303
Total	$3,778	$155,025	$158,803
If 50/50
Plus payment to wife	$75,623 (including super $31,398)
Less payment to wife	($75,623)
$79,401	$79,402	$158,803

1. If there were to be an equal division the amount to which the wife would be entitled would be well in excess of any amount for which the husband is likely to be required to indemnify her. Assuming a sale price of $460,000, and ignoring costs of sale, an indemnity of about $4,000 would be required.

2. In the event of a sale at $500,000 the wife’s share of the profit would be about $11,000.

3. In giving effect to the orders the wife will receive about 22% of the total pool, including superannuation. While this is less than what I would ordinarily consider to be appropriate, it is more than she seeks and on that basis I consider it just and equitable and I will make orders accordingly.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Young

Date:  23 January 2018