HERBERT & BORDEN
[2014] FCCA 2323
•13 October 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HERBERT & BORDEN | [2014] FCCA 2323 |
| Catchwords: FAMILY LAW – Spousal maintenance – whether the wife is unable to adequately support herself – whether the husband is reasonably able to maintain the wife. |
| Legislation: Family Law Act 1975, ss.72(1), 74(1), 75(2), 75(3), 79, 79(2), 79(4) |
| Cases cited: Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116 Stanford v Stanford (2012) 247 CLR 108; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; (2012) 293 ALR 70; [2012] HCA 52 |
| Applicant: | MS HERBERT |
| Respondent: | MR BORDEN |
| File Number: | MLC 1639 of 2013 |
| Judgment of: | Judge Riley |
| Hearing dates: | 12 February 2014 and 12 and 21 March 2014 |
| Date of last submission: | 3 October 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 13 October 2014 |
REPRESENTATION
| Counsel for the Applicant: | The Applicant appeared in person |
| Solicitors for the Applicant: | The Applicant was not represented |
| Counsel for the Respondent: | The Respondent appeared in person |
| Solicitors for the Respondent: | The Respondent was not represented |
ORDERS
For the purposes of these orders:
(a)Mr Borden born (omitted) 1975 (“the husband”) is the member spouse (member number (omitted));
(b)Ms Herbert born (omitted) 1964 (“the wife”) is the non member spouse;
(c)“the Superannuation Fund” is (omitted) Super; and
(d)“the Trustee” means the trustee(s), person(s) or corporation(s) responsible from time to time for the management or investment of the Superannuation Fund.
Orders 3 to 6 of this order are binding on the Trustee.
The base amount to be allocated to Ms Herbert out of Mr Borden’s interest in the Superannuation Fund is $57,938.21 (“the base amount”).
In accordance with s.90MT(1)(a) of the Family Law Act 1975, whenever the Trustee makes a splittable payment from the interest held by the husband in the Superannuation Fund, the Trustee shall pay to the wife the amount which is calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount specified in order 3 hereof, and there be a corresponding reduction in the entitlement that the husband would have had but for these orders.
Order 4 has effect from the operative time.
The operative time for the purpose of these orders is the beginning of the fourth business day after the day on which a sealed copy of these orders is served upon the Trustee.
Until the happening of any of:
(a)the establishment of a separate account in the name of Ms Herbert in the Superannuation Fund; or
(b)the transfer or “rolling over” into another superannuation fund or superannuation account of the payment split created by order 4 hereof; or
(c)Ms Herbert satisfies a condition of release and is paid the payment split which was created by order 4 hereof; or
(d)Ms Herbert executing a waiver of rights within the meaning of s.90MZA of the Family Law Act 1975 in relation to the payment split created by order 4 hereof
Mr Borden be and is hereby restrained by himself, his servants or agents from executing a Death Benefit Nomination in favour of any person or doing any other act or thing which would render any part of his interest in the Superannuation Fund a “not splittable payment” within the meaning of Regulations 12 or 13 of the Family Law (Superannuation) Regulations 2001.
A copy of these orders be served forthwith upon the Trustee.
Within 14 days:
(a)the husband transfer to the wife his 2,100 Virgin shares, at the husband’s expense, or pay the wife $700;
(b)the husband pay the wife:
(i)
$11,400, being the weekly instalments of $300 that the husband acknowledged that he had failed to pay as at
3 October 2014; and
(ii)$165, being the amounts paid by the wife for statements of the husband’s current superannuation benefits; and
(c)the husband do all acts and things necessary to change his address and the address of (business omitted) (“in liquidation”) with all relevant agencies from Property H to an appropriate address.
The husband pay the wife spousal maintenance of $500 per week for 15 years indexed on 1 July each year in accordance with the Consumer Price Index.
Within 60 days, the husband and wife do all things necessary to seek to refinance the mortgage over Property H (“the property”), at the husband’s expense, so that the wife is solely liable for the mortgage over the property.
In the event that the wife is unable within 60 days to refinance the mortgage over the property, the wife arrange for the sale of the property through an agent of her choosing and at a reserve of her choosing.
Upon completion of the sale, the proceeds of the sale be applied:
(a)firstly, to pay all costs, commissions and expenses of the sale;
(b)secondly, to discharge the mortgage and any other encumbrance affecting the property; and
(c)thirdly, to pay the balance to the wife.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders;
(b)insurance policies remain the sole property of the owner/beneficiary named thereon/in;
(c)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(d)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 Herbert & Borden is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 1639 of 2013
| MS HERBERT |
Applicant
And
| MR BORDEN |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for property adjustment under s.79 of the Family Law Act 1975 (“the Act”). The delivery of the judgment in this matter has been substantially delayed by the wife’s difficulty in obtaining statements for the husband’s superannuation and difficulty in affording the trustees of the husband’s superannuation funds procedural fairness.
The husband and wife began living together in about October 2004. They were married on (omitted) 2006. They separated in about March 2011 and divorced on 18 May 2013. They had one child, X, who was born on (omitted) 2008. The wife had two children from a previous relationship, Y, who is 20 years old, and Z, who is 16 years old. Z has Asperger’s Syndrome and uses illicit drugs.
At the time of cohabitation, the wife owned and had substantial equity in the house which became the matrimonial home and which is now the only substantial asset of the parties, other than the husband’s superannuation. During the relationship, the house was heavily mortgaged for the purposes of the husband’s business. There were further borrowings from family members for the purposes of the husband’s business. The mortgage and borrowings remain largely outstanding.
The principal issues in the proceeding are:
a)whether money was lent by the wife’s father to the husband and wife or to the husband’s company;
b)whether there should be any property adjustment; and
c)whether the husband should pay the wife spousal maintenance.
The legislation
Section 79 of the Act gives the court power to alter the interests of the parties to a marriage in the property of the parties to that marriage. Sub-section 79(2) of the Act provides that:
The court shall 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.
Section 79(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the interests of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or 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 marriage 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 marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or 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 marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, 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 marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The matters to be taken into account under s.75(2) of the Act are as follows:
(a)the age and state of health of each of the parties; 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 marriage 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 (3), 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) where the parties have separated or divorced, 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
(ha)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 marriage 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 79 in relation to:
(i) the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; 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
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
The approach to applications under s.79
In Stanford v Stanford (2012) 247 CLR 108; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; (2012) 293 ALR 70; [2012] HCA 52, the High Court explained the proper approach to an application under s.79 of the Act as follows:
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. … The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order. (emphasis added)
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed23 that a power24[1] to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. …
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”.26[2] Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”.27 The question presented by s 79 is whether those rights and interests should be altered. (emphasis added)
40.Third, whether making a property settlement order is “just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”.28[3] To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act. (emphasis added)
23 (1956) 98 CLR 228 at 231–2; [1956] HCA 71 (Wirth).
26 Hepworth v Hepworth (1963) 110 CLR 309 at 317; [1964] ALR 259 at 264; [1963] HCA 49
28 Watson at CLR 257; ALR 560; Fam LR 11,305.
…
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4). (emphases added)
In Stanford, the critical fact was that the parties had not separated.
The wife had suffered a stroke and had moved into a nursing home, but the parties’ marriage was intact. It was the wife’s case guardian, a daughter from an earlier marriage, who sought the alteration of property interests.
The wife died while the judgment of the Full Court of the Family Court was reserved. Consequently, when the Full Court of the Family Court came to re-exercise the discretion, the wife had no future needs, but the husband did. The High Court noted at [47] that the courts below had not adequately considered the consequences for the husband of the orders made, namely, that his home would have to be sold.
Against that backdrop, the High Court emphasised that the just and equitable requirement of s.79(2) of the Act is not necessarily satisfied merely by a consideration of the contributions of the parties as described in s.79(4) of the Act. However, in the usual case before this court, where the parties have separated, the High Court acknowledged at [42] that the just and equitable requirement would be “readily satisfied”.
Following Stanford, it is no longer appropriate to think of “contribution based entitlements” or the “adjustment” based on future factors. Rather, the court is required to take into account all the relevant matters and then determine what order, if any, is just and equitable. It is also no longer appropriate to think of a pool of assets.1
1 Parkinson, Patrick Family Property Law and the Three Fundamental Propositions in Stanford v Stanford (2013) 3 Fam L Rev 80 at 88.
Additionally, and significantly for this case, the High Court emphasised that marriage, at common law, does not create a community of ownership: [39]. The rights a person might have in his or her partner’s property and income arise from the Act, notably s.79(4) and s.72(1) respectively.
In relation to income, s.72(1) of the Act provides that:
A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
In other words, there is not an absolute right to share equally in the income of a partner. Rather, such a right only arises where a person is not able to adequately support himself or herself and the other party is reasonably able to support the first-mentioned party. Consequently, there is no obligation to contribute all of one’s earnings to the matrimonial endeavour. However, if one party to a marriage spends a substantial part of his or her income on extraneous pursuits, it will obviously have an effect on that person’s contributions to the parties’ assets.
Stanford requires the following matters to be determined in applications brought under s.79 of the Act:
a)whether the parties have separated;
b)the assets and liabilities of each party;
c)the contributions of each party;
d)the future needs of each party;
e)bearing in mind all of the foregoing matters, whether it is just and equitable to make any orders altering the interests of the parties in their property; and
f)what orders, if any, are just and equitable in all the circumstances of the case.
Stanford does not require these matters to be addressed in any particular order. In most cases, it would seem rational to consider them in the order set out above. It does not seem to me to be possible to determine whether it is just and equitable to make an order altering the parties’ interests in their property without the other matters mentioned above having been previously determined. That seems to be clear from the opening words of s.79(4) of the Act, which are that:
In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account [the various matters set out in s.79(4)] … .
The approach outlined above is consistent with the decision of the Full Court of the Family Court in Bevan & Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116. I note that in that case, the Full Court said at [89]:
In our view, it will be less likely that the separate issues arising under s 79(2) and (4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order.
I also note that, in Bevan, at [79] the Full Court said, in relation to addbacks:
We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amendable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.
Whether the parties have separated
The parties agreed that they had separated.
The assets and liabilities
The parties agreed that the wife’s individual assets at the time of trial were as follows:
Wife’s Assets
Value
Property H
$1,100,000
Toyota (omitted)
$30,000
Household contents
$10,000
Wife’s total assets
$1,140,000
Wife’s superannuation
$0
Wife’s total assets plus superannuation
$1,140,000
The parties agreed that the wife’s individual liabilities at the time of trial were as follows:
Wife’s Liabilities
Value
credit card
$45,000
Wife’s total liabilities
$45,000
Wife’s total assets plus superannuation less liabilities
$1,095,000
The parties agreed that the husband’s individual assets at the time of trial were as follows:
Husband’s Assets
Value
2,100 (omitted) shares
$700
Household contents
$2,000
Ford (omitted)
$500
Husband’s total assets
$3,200
Husband’s superannuation (estimates)
(omitted) Super
(omitted) Super$50,000
$60,000Husband’s total assets plus superannuation
$113,200
The parties agreed that the husband’s individual liabilities at the time of trial were as follows:
Husband’s Liabilities
Value
(omitted) Bank business card
$12,500
Husband’s total liabilities
$12,500
Husband’s total assets plus superannuation less liabilities
$100,700
The parties agreed that they had no joint assets. They agreed that they had a joint liability consisting of the mortgage over Property H in the sum of $710,000.
The parties agreed that the wife’s father, Mr C, had lent $120,000 to $130,000 to someone but disagreed about the identity of the borrower. The wife said that she and the husband borrowed the money. The husband said that his company, (business omitted), borrowed the money. (business omitted) is now in liquidation. It appears to have no prospect of repaying any of its debts.
Mr C gave oral evidence. He said that he lent the money to his daughter and son-in-law for the purposes of the business conducted by the husband and wife, namely, (business omitted) (in liquidation). The wife also gave evidence that the money was lent by her father to her and the husband.
The husband gave evidence that Mr C lent the money to (business omitted) (in liquidation). The husband seemed to be under the impression that, because the money was lent for business purposes, it was lent to the business, (business omitted) (in liquidation). However, that does not follow. If a borrower chooses to spend borrowed funds on a particular purpose, that does not change the identity of the borrower.
The loan was not documented in any way. While it is not uncommon to lend money within a family without loan documentation, it would be very unusual to lend money to a company without loan documentation. Moreover, the husband did not produce any company records, such as a balance sheet, to show that the company was indebted to Mr C. The husband claimed that the debt to Mr C was on the liquidator’s list of creditors of (business omitted) (in liquidation). However, the husband did not produce that list to the court. More importantly, the husband did not produce any record from the liquidator to show that he had accepted the existence of any debt from (business omitted) (in liquidation) to Mr C. (There is a distinction between alleged debts and those that are accepted by the liquidator, or, if it comes to it, the insolvency court.)
In these circumstances, I do not accept that Mr C lent the money to (business omitted) (in liquidation). I accept Mr C’s evidence that he lent the money to his daughter and son-in-law. He gave his evidence with confidence. It accords with common human experience. The scenario suggested by the husband would be unusual and seems to be based on the husband’s view that the money must have been lent to (business omitted) (in liquidation) because it was ultimately used for the purposes of (business omitted) (in liquidation). As stated above, that does not follow.
I specifically accept that the money was lent to both the husband and the wife. The husband himself in cross examination asked Mr C about “the money that you passed on to us”. It seems to me to be clear that the money was lent to both the husband and the wife.
Mr C gave clear evidence that he expected the money to be repaid. That evidence was not challenged. Consequently, there is a joint liability of $120,000 to $130,000 to Mr C. It will be treated as a debt of $125,000.
The husband also said that his father had lent $150,000 to (business omitted) (in liquidation). The husband said that, although the money was lent to his company, he had felt a moral obligation to repay it.
He said that he had made a few repayments, but then stopped.
The husband said his father had said that the money could be repaid out of the husband’s inheritance. As the husband is an only child, the effect of the statement, and the husband’s understanding of it, is that the money will never have to be repaid to his father. As it is not a debt that will ever have to be repaid, it is not a liability that needs to be taken into account in these proceedings. That is so regardless of whether the true borrower was the husband and the wife jointly rather than (business omitted) (in liquidation).
The wife’s individual assets plus superannuation less liabilities have an agreed value of $1,095,000. The husband’s individual assets plus superannuation less liabilities have an agreed value of $100,700.
The parties have joint debts of $835,000. The combined total value of their assets less liabilities plus superannuation is therefore $360,700.
For completeness, I note the parties initially claimed that (business omitted) (in liquidation) currently has assets worth about $100,000 in a shipping container held at a storage facility. The wife claimed a charge over those assets. The matter was adjourned to enable the assets to be located and valued. However, it then transpired that the assets could not be found. The parties at that stage agreed that the assets of (business omitted) (in liquidation), and the charge, if any, were worthless. Consequently, they are not included in the parties’ combined assets.
Contributions
a. Initial contributions
The parties agreed that, at the commencement of cohabitation, the wife had:
a)Property H, encumbered with a mortgage of $40,000;
b)$25,000 in superannuation; and
c)a car worth $10,000.
The parties agreed that, at the commencement of cohabitation, the husband had:
a)$40,000 in superannuation; and
b)shares of $700.
The parties disagreed about what Property H was worth at the time of cohabitation. The wife estimated that, at that time, it was worth about $900,000 and the husband estimated that it was worth about $700,000. In the absence of expert evidence, it is not possible to attribute any particular value to the house at the commencement of cohabitation. However, it is sufficient to note that it now has an agreed value of $1,100,000 and that no major work was done on the house between the commencement of cohabitation and trial.
b. Contributions during cohabitation
Cohabitation occurred between 2004 and 2011. The wife stopped working at about the time of cohabitation. She was in receipt of Centrelink benefits and also received child support for her two children. From those sums, she paid the very small mortgage on
Property H, and other outgoings, utilities and household expenses.
The husband worked from 2005 onwards. The parties were married in 2006. The wife stopped receiving Centrelink benefits at the time of the marriage. X was born in 2008.
Also in 2008, the parties drew down $600,000 on the mortgage on Property H. That money was borrowed jointly. The borrowing was for the purposes of the husband’s business, (business omitted) (in liquidation). From that time, the husband paid the mortgage on Property H.
In 2010, the parties drew down a further $100,000 on the mortgage and in 2011 they drew down a further $50,000 on the mortgage. Both borrowings were for the purposes of (business omitted) (in liquidation).
Largely during cohabitation, the debt on the wife’s credit card grew to $45,000. The parties agreed that the debt was entirely for the purposes of the business of (business omitted) (in liquidation). That sum is still outstanding. Additionally, largely during cohabitation, the debt on the husband’s credit card grew to $12,500. The parties agreed that the debt was entirely for the purposes of (business omitted) (in liquidation).
Throughout the period of cohabitation, the wife’s family provided much of the food for the husband, wife, X and the wife’s two older children.
From the time of cohabitation, the wife was a full time mother.
The wife was predominantly responsible for looking after the garden and the house. The wife’s mother also assisted with running the household and caring for the children. The husband attended to home maintenance and occasionally mowed the lawns.
c. Contributions post separation
Since separation, X, who was 5 years old at the time of trial, has lived with the wife, and spent alternate weekends with the husband. The husband pays the wife child support of $275 per week. Those payments are now up to date.
Following separation, the wife has remained at Property H. She pays the mortgage of $3,000 per month, which is on an interest only basis. The wife after separation was able to withdraw her superannuation of $25,000 and used it to prevent foreclosure on Property H.
The wife also receives child support from the father of her two older children, a disability pension and a carer’s payment.
The husband was ordered by Judge Hughes to pay the wife $300 per week to be characterised at trial from 30 October 2012. The husband made some payments but as at 21 March 2014 he had not made eight payments, totalling $2,400. The husband said that he had not made the payments because the wife had sold an unregistered car that he had left at her place and kept the $2,000 proceeds of sale. The wife agreed that she had sold the car (after asking the husband to collect it) but said that she had used the proceeds to clean up some steel that the husband had left at her place.
I consider that the husband had no right to offset his obligation to pay the wife $300 per week pursuant to orders of this court against what he perceived to be the wife’s debt to him of $2,000. Even if that had been a real debt, the husband was obliged to comply with the orders of this court. In any event, the $2,000 was not a real debt. The husband abandoned the car at the wife’s home. She was entitled to get rid of it and use the proceeds to clean up other junk that the husband had left behind.
I consider that the $300 per week is properly characterised as spousal maintenance. As discussed below, the wife needed financial assistance from the husband and the husband had the capacity to pay $300 per week.
Between March and September 2011, the husband lived in his factory. In October 2011, he returned to the wife’s place, as a lodger. In November 2011, he began renting at (omitted), where he has remained.
Between October 2011 and December 2012, the husband paid $39,541 towards the mortgage, which was, of course, very largely a debt incurred for the purposes of his business.
The s.79(4)(d), (e), (f) and (g) and the s.75(2) factors
The wife is 49 years old and the husband at the time of trial was 39 years old.
The wife receives $1,211 per week, consisting of a parenting payment of $382, family payment of $85, $179 in child support for Z, $296 in child support for X and $269 per week as a superannuation pension that she has been able to access on compassionate grounds. The husband is employed at a salary of $2,300 per week (about $120,000 annually) and has a company car and telephone. His contract is due to expire in June 2014. However, there was nothing to suggest that he will not be able to obtain similar employment in the future.
The husband is healthy. The wife annexed to an affidavit a medical report dated 21 August 2013. It said that the wife has severe depression and anxiety requiring ongoing medication and counselling. It also said that the wife suffers from SLE (also known as lupus).
It manifests as joint pain affecting multiple joints and also affects her respiratory system causing shortness of breath. The report also said that the wife cares for her son, Z, who suffers from Asperger’s Syndrome and Obedience Compliance Disorder. The medical report concluded that the wife is:
…unable to work due to the above conditions.
It is not entirely clear whether the doctor meant that the wife was unable to work because of her own medical conditions or because of Z’s medical conditions as well. In any event, the wife said herself that it was mostly the need to provide extensive care for Z that prevented her from working. She said that he had serious behavioural issues that meant she could not be sure he would be at school during school hours. She could be called upon at any time to collect him.
The wife also annexed to an affidavit a report from a psychiatrist regarding Z. It said that he had Asperger’s Syndrome, sometimes used marijuana, and was angry and aggressive.
On 2 August 2013, a supervision order was made placing Z under the supervision of his mother from 2 August 2013 to 1 May 2014.
The wife said that, in these circumstances, she is unable to work.
The husband said that the wife is a trained (occupation omitted) and she could work part time if she wished. In any event, the husband said that he should not be penalised because the wife is caring for another man’s son.
I consider that the wife has no present capacity for appropriate gainful employment and will have no such capacity for the foreseeable future. The reasons for that are partly the wife’s own physical and mental conditions and partly Z’s physical and mental conditions. To the extent that may be necessary, I take into account the impact of Z’s conditions on the wife’s earning capacity under s.75(2)(o) of the Act. It is irrelevant that Z is not the biological son of the husband. The husband married the wife knowing she was Z’s mother and knowing that Z had certain conditions. One of the consequences of Z’s conditions, in conjunction with the wife’s own physical and mental conditions is that the wife is unable to work.
The property of the parties will be ascertained in these proceedings.
In terms of financial resources, both parties have a very supportive family. The wife gets help from her family in the form of food and child care. The husband and wife have both received loans from their families for the purposes of the husband’s business. The wife’s father, since separation, has provided the wife with about $20,000 or $30,000 of financial assistance.
The wife has the care and control of the one child of the marriage 12 days a fortnight and the father has the care and control of the child two days a fortnight.
The wife has the usual commitments to support herself, X and Z, who she has a duty to maintain. A corollary of the wife’s commitment to support Z physically and emotionally is that she cannot be in paid employment. The wife’s older daughter is independent. The husband has the usual commitments to support himself and X. The parties do not have any responsibility to support anyone else.
The wife, according to her financial statement sworn on 27 June 2013, receives a parenting payment at the rate of $382 per week, a family payment at the rate of $85 per week and a superannuation pension at the rate of $269 per week. The husband is not eligible for any pension, allowance or benefit paid by a government or superannuation fund.
In the circumstances of this case, a modest standard of living for both parties would be reasonable.
It is not suggested that either party wishes to undertake a course of education or training or establish himself or herself in a business.
In relation to 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, the wife seeks orders that the husband’s name be removed from the mortgage and that she retain Property H. The husband seeks orders that Property H be sold and the proceeds be divided between the parties as the court deems fit, or in the alternative, that the husband receive $50,000 and the wife receive the balance.
The orders that the husband seeks would have the effect of discharging the mortgage. The parties’ principal creditor would thus be paid out. There would also be sufficient funds to pay the $125,000 owing to the parties’ other major creditor, the wife’s father.
The orders that the wife seeks would relieve the husband of his liability for the mortgage. For the bank to agree to the mortgage being refinanced into the wife’s sole name, the bank would need to be satisfied that the wife would be able to meet the repayments on a $710,000 mortgage. That seems unlikely, given her financial circumstances, but she told the court that the bank was agreeable to that course.
The court can order the parties to attempt to refinance. However, the bank was not joined as a party to these proceedings. Therefore, the bank will not be bound by any order the court makes. The court cannot order the bank to accept a mortgage from the wife alone.
The bank may well prefer that the property be sold, so that it can recover its money. On the other hand, the wife is currently paying about $3,000 per month in interest only mortgage repayments. It may be that, with the assistance of her family, she will be able to meet the capital and interest mortgage repayments on Property H once this proceeding is finalised.
If Property H is not sold, it appears very unlikely that the $125,000 debt to the wife’s family will ever be repaid. The wife also has a $45,000 credit card debt, which consists largely of debts incurred for the husband’s business. The credit card debt could be repaid if the house were sold. It will presumably be difficult for the wife to repay that debt if the house is not sold. The husband has a credit card debt of $12,500. It would seem likely that, given the size of the husband’s earnings, that debt will be repaid regardless of the outcome of these proceedings.
It was not suggested that either party has contributed to the existing income, property, earning capacity or financial resources of the other. Having said that, the wife and her family have contributed a lot of money to the husband’s business. That money has essentially been lost. The husband has, in effect, contributed significantly to the wife’s level of debt.
The marriage lasted about six years. It was not suggested that the marriage has affected the earning capacity of either party.
The wife wishes to continue her role as a full time mother, for both X and Z.
Neither party is cohabiting with another person, except, in the wife’s case, X and Z. As discussed, the wife’s family assists her with food and groceries.
The terms of the property order, if any, to apply to the parties will be determined in this case.
The husband pays the wife $296 per week in child support.
There is no binding financial agreement between the parties.
There are no other facts or circumstances that the justice of the case requires the court to take into account.
Whether it is just and equitable to alter the parties’ property interests
The parties agreed that it would be just and equitable to alter their property interests in this case. In view of paragraph 42 of Stanford, the fact that the parties are no longer living in a marital relationship and the various findings made above in relation to contributions and future needs, I also consider that it would be just and equitable to alter the parties’ property interests in this case.
What order is just and equitable
Some of the orders sought by the parties are discussed above, in the context of the effect on creditors of the proposed orders. In addition, the wife initially sought 100% of the husband’s superannuation. However, at a directions hearing on 3 October 2014, the wife told the court that she now only seeks the $57,938.21 in the husband’s (omitted) Super Fund.
It seems to me that it is just and equitable in this case for the wife to have the assets that she seeks. They are the equity in Property H, the husband’s superannuation in (omitted) Super Fund, the Toyota (omitted) and the husband’s shares. The reasons for that are that the wife made an overwhelming initial contribution, the wife has greater future needs than the husband and the husband, for the purposes of his business, has to a large extent depleted the wife’s equity in her house.
Although the husband did make a contribution during the marriage, it pales into insignificance as against the wife’s very large initial contribution and her future needs. While the impact of a very large initial contribution may diminish over time, in the present case, the marriage was fairly short.
There will be an order for the husband to transfer all of his superannuation in (omitted) Super and his shares to the wife. It would be just and equitable for the husband to transfer additional assets to the wife. However, he does not have any, except for his household contents, a car of little value and a further $50,000 approximately of superannuation. The wife does not seek those items.
The court is not able to order the husband to pay the wife a sum of money from his future earnings by way of property settlement. Similarly, the court is not able to order the husband to repay Mr C from the husband’s future earnings. Although the husband might do the right thing in the future and repay Mr C, that seems extremely unlikely, given that the husband has no present intention of repaying his own father and given that the husband claims that he owes no money to Mr C.
In relation to Property H, there is no proper basis for the husband to receive a share of it. Although the husband contributed to the mortgage, it was a mortgage that was largely referable to his business debt. The husband’s mortgage repayments did not contribute to the wife’s equity in the property. On the contrary, the borrowings for the purpose of the husband’s business reduced the wife’s equity in the property.
It would be just and equitable for the husband to shoulder virtually the entirety of the debt on Property H. However, the reality is that it is a joint and several debt. If neither party pays the mortgage, the bank will foreclose. The wife wishes to retain the house. She is prepared to accept the whole debt on the house, on the basis that it will be hers alone.
I consider that it is just and equitable to allow the wife to attempt to refinance the property. If she is unsuccessful, the house will have to be sold. There will be orders accordingly, as well as orders of the usual kind.
The wife also sought orders that the husband change his address and the address of (business omitted) (in liquidation) with the relevant authorities. The husband does not oppose that order. It is proper that it be made.
The wife also sought an order that the husband pay the wife the costs of obtaining statements of his superannuation benefits. The husband did not oppose that order. It is proper that it be made.
Spousal maintenance
The wife sought retrospective and prospective spousal maintenance.
Section 72(1) of the Act provides that:
A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
The matters referred to in sub-s.75(2) of the Act are set out above and were considered in the context of the property application. I rely on that consideration for the purposes of the spousal maintenance application as well.
By virtue of s.75(3) of the Act, the court is required to disregard the wife’s entitlement to Centrelink benefits. The court is required under s.74(1) of the Act to take into account the specified matters and then make such order as it thinks proper.
The first question in relation to spousal maintenance is whether the wife is able to adequately support herself without spousal maintenance and without Centrelink benefits. It is clear that the wife is not able to adequately support herself without spousal maintenance and Centrelink benefits. Leaving aside the Centrelink benefits that she receives, the wife’s weekly income is $744. Her weekly outgoings, as disclosed in her financial statement sworn on 27 June 2013, are $925 for the mortgage (interest only), $885 for the credit card and $1,813 for other expenses. The other expenses include $540 per week for medical expenses, $400 of which is for children.
The husband cross examined the wife on her medical expenses but otherwise accepted all of the wife’s claimed expenses. In relation to the medical expenses, the wife clarified that she spends $140 per week on her own medical expenses consisting of $125 for a psychologist and $15 for antidepressants and lupus medication. The wife said that, at the time that she swore her financial statement, Z was seeing a psychiatrist twice a week at a net cost after rebates of $340 per week. However, Z at the time of trial was seeing a different psychiatrist who was charging $130 per week. The balance of the medical expenses was for X, who suffers from allergies, and needs antibiotics and antihistamines.
All in all, the wife’s current medical expenditure is $210 less per week than it was when she swore her financial statement. Consequently, her current weekly expenses are $925 for the mortgage (interest only), $885 for the credit card and $1,603 for other expenses, totalling $3,413.
However, allowance must also be made for the likelihood of the wife being required by the bank, once this litigation is finalised, to make repayments to reduce the capital outstanding under the mortgage. Assuming a 15 year repayment schedule, the wife would be required to make payments of approximately $1,500 per week, on my calculation, at the present (omitted) Bank standard variable interest rate. That would make the wife’s weekly expenses about $4,913 per week as against an income of $744, if spousal maintenance and Centrelink benefits are excluded.
As discussed above, the wife is not able to work due to her own medical and psychological conditions and due to the need for her to be available to assist Z with his medical and psychological conditions. I consider Z’s needs to be an “adequate reason” within the meaning of s.72(1)(c) of the Act.
The next question is whether the husband is “reasonably able” to maintain the wife. In his financial statement sworn on 11 August 2013, the husband said that he has a gross weekly income of $2,300. From that, he said he paid tax of $657, superannuation of $213, rent of $250, loan repayments to his father of $100, child support for X of $300 and other expenditure of $1,141, making a total of $2,661. That would mean that the husband has a weekly shortfall of $361.
Included in the husband’s other expenditure was an amount of $400 per week for accounting and legal expenses. The husband conceded in cross examination that he was no longer paying legal expenses.
He said that he was paying about $50 per week for accounting expenses. That would work out to about $2,600 for accounting expenses. That seems extraordinary, given that the husband is now an employee. I would not have thought that more than $10 per week would be required for the husband’s accounting expenses.
The husband also included in his other expenditure $100 per week for holidays and $100 per week for entertainment. That amounts to $10,400 per year for holidays and entertainment. In all the circumstances of this case, I consider that a figure of $50 per week for the husband’s entertainment and holidays would be more reasonable.
The husband also agreed in cross examination that he was no longer paying his father $100 per week in loan repayments.
Based on the above, there is a reduction of $390 per week for legal and accounting expenses, $150 per week for holidays and entertainment and $100 per week for loan repayments. That makes a total reduction of $640 per week. On those figures, the husband would have a weekly surplus of $279.
However, I also note that the husband said in his financial statement that he pays $213 per week in superannuation. As the husband has listed that in his personal expenditure, I assume that it is a personal and voluntary superannuation payment, rather than his employer’s compulsory superannuation payment. In all the circumstances of this case, it seems to me to be unreasonable for the husband to make additional superannuation payments. Adding the $213 to the $279 gives $492, or, rounded up, $500.
Consequently, in all the circumstances of this case, it seems to me that the husband would be reasonably able to pay the wife $500 per week in spousal maintenance.
The court often puts an end date on orders for spousal maintenance.
In this case, it seems to me to be very unlikely that the wife will ever be able to work, given her age and health issues, and given that Z is unlikely to ever be fully independent. In these circumstances, I consider that the husband should pay the wife spousal maintenance for 15 years. Because that is a long time, the spousal maintenance should be indexed in accordance with the Consumer Price Index on 1 July each year. The parties in this case have the capacity to do the necessary calculations.
In relation to the orders made by Judge Hughes on 30 October 2013 for the husband to pay $300 per week to be characterised at trial, I consider that that amount should be characterised as spousal maintenance. The husband conceded at a directions hearing on
3 October 2014 that he had failed to pay weekly instalments of $300 amounting to $11,400. The husband will be required to pay that sum within 14 days.
There will be orders accordingly.
I certify that the preceding one hundred and twelve (112) paragraphs are a true copy of the reasons for judgment of Judge Riley
Associate:
Date: 13 October 2014
24Given by s 21 of the The Married Women’s Property Acts 1890–1952 (Qld), a provision which
corresponded with s 17 of the Married Women’s Property Act 1882 (Imp).(Hepworth) per Windeyer J.
27 Hepworth at CLR 317; ALR 264 per Windeyer J. See also Wirth at 231–2 per Dixon CJ.
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Injunction
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Costs
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Fiduciary Duty
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