Hoyer and Gallagher
[2015] FCCA 2562
•18 September 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HOYER & GALLAGHER | [2015] FCCA 2562 |
| Catchwords: FAMILY LAW – Property proceedings – short relationship and small property pool – what debts of the parties are to be treated as debts of the relationship. |
| Legislation: Family Law Act 1975, ss.128(5), 79, 79(2), 79(4) Child Support (Assessment) Act 1989 (Cth), ss.159, 159A |
| Coghlan & Coghlan (2005) FLC 93-220 In the marriage of Kowaliw (1981) FLC 91-092 |
| Applicant: | MS HOYER |
| Respondent: | MR GALLAGHER |
| File Number: | DGC 3484 of 2013 |
| Judgment of: | Judge Jones |
| Hearing dates: | 26 November 2014 & 29 July 2015 |
| Date of Last Submission: | 29 July 2015 |
| Delivered at: | Dandenong |
| Delivered on: | 18 September 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr Stanley |
| Solicitors for the Applicant: | Meier Denison Guymer |
| Solicitors for the Respondent: | Self Represented |
ORDERS
The respondent is issued a certificate under s.128 of the Evidence Act 1995 in respect of the whole of the evidence given in relation to Annexure “H6” to the applicant’s affidavit filed 13 March 2014 and paragraph 11 of the affidavit filed by the respondent on 5 February 2014.
The funds held by the Victorian Property Settlements from the proceeds of the sale of Property P, Victoria be transferred to the applicant.
The applicant bear the liability and indemnify the respondent for the (omitted) Loan.
The applicant indemnify the respondent for any debts in her name.
The respondent retain the Toyota Land Cruiser and Commodore Utility motor vehicles.
The respondent indemnify the applicant for any debts in his name.
Otherwise, all extant applications are dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Hoyer & Gallagher is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DANDENONG |
DGC 3484 of 2013
| MS HOYER |
Applicant
And
| MR GALLAGHER |
Respondent
REASONS FOR JUDGMENT
Introduction
This decision concerns an application by Ms Hoyer (“the applicant”) for orders under s.79 of the Family Law Act 1975 (“the Act”) to alter the property of the relationship with Mr Gallagher (“the respondent”).
The property pool is very small and the issues in dispute between the parties largely centre around the responsibility for debts or liabilities each party asserts accumulated during the course of their relationship.
Both the applicant and respondent are 41 years of age having been born on (omitted) 1974 and (omitted) 1974 respectively. The parties commenced their relationship in (omitted) 2009, married on (omitted) 2011 and separated on 17 July 2013.
Evidence
The respondent was originally legally represented but by the time of the commencement of final hearing was self-represented. At the first hearing date he made submissions regarding matters which were relevant to the Court’s determination of the property proceedings which were unsupported by affidavit material or updated financial statements. No material had been filed by him since his legal representatives withdrew. As the respondent was self-represented, I explained the nature of the proceedings, the matters the Court must have regard to in determining the application and the obligation on him to have probative evidence in support of his claims regarding the property pool, his contributions to that property pool and any matters relevant to s.75(2) matters.
As he was self-represented the proceedings were adjourned part heard to enable him to better prepare his case. At the adjourned hearing date, however, the respondent had still not filed updated affidavit material and produced limited material for the Court’s consideration.
The applicant relies on:
a)her affidavits filed on 4 December 2013, 11 November 2014, 17 June 2014 and 13 March 2014;
b)her financial statement filed on 17 June 2014; and
c)the following exhibits:
i)W1 – (omitted) Bank statements in the name of Mr Gallagher (6 February 2012 to 7 January 2014);
ii)W2 – (omitted) Bank credit card statements in the name of Ms Hoyer (2 February 2011 to 1 June 2011);
iii)W3 – (omitted) Bank Visa card statement in the name of Ms Hoyer (2 October 2010 to 1 November 2010 and 3 April 2012 to 1 May 2012).
The respondent relies on:
a)his affidavit filed 19 June 2014;
b)his amended financial statement filed on 19 June 2014; and
c)the following exhibits:
i)H1 – correspondence dated 28 July 2015 from (omitted) Super to the applicant;
ii)H2 – the Australian Taxation Office printout of Super accounts in the respondent’s name;
iii)H3 – (omitted) Transactions statement dated 26 June 2014;
iv)H4 – Notice issued by Sheriff’s office Victoria dated 2 July 2015;
v)H5 – (omitted) Super statement in applicant’s name dated 31 December 2009 (account..(omitted));
vi)H6 – (omitted) Super statement in applicant’s name dated 30 June 2012 (account….(omitted)).
Both the applicant and the respondent were cross-examined.
During the course of cross-examination of the respondent, it became apparent that consideration was required to be given to the operation and the effect of s.128 of the Evidence Act 1995 (Cth) (“Evidence Act”). The circumstances were as follows. The respondent filed an affidavit on 5 February 2014 where he deposed at [11]:
“11. As to paragraph 13 of the wife’s affidavit, I have said that I have never earned less than $70,000 during the period of the relationship and I did have two very good years where I earned approximately $140,000 per annum.”
The respondent confirmed in cross-examination that he was referring to the period 2009 to 2013 and that the statement was true and correct.
The respondent was shown Annexure H6 to the applicant’s affidavit filed 13 March 2014. Annexure H6 is a copy of a response to the Child Support Agency and stamped with the date 2 August 2011. On the first page is a written statement in which, the payee is identified as Ms T and the payer is identified as Mr Gallagher. Two children with the surname Gallagher are also listed.
The respondent gave evidence that the signature at the end of the document was “very similar to my signature” and that the photocopies in annexure H6 were true and correct copies of the original document. The respondent confirmed that he understood before signing the document that giving false or misleading information was a serious offence.
Extracts from the written statement were read to the respondent by the applicant’s Counsel. These were:
· “As a sole trader I am now able to take on a small amount of work that will not aggravate the injury…”
· “In regards to the property at Property P, this was purchased solely by my WIFE with monies received from the sale of the property she owned for several years before our meeting, I did NOT contribute any monies to this purchase.”
· “Due to my wife earning a considerable income you will see that part of her salary goes into the account where the mortgage is drawn from and she pays this in full along with the finance of HER VEHICLE.”
· “Once again due to my WIFES considerable income she is able to support us financially as she is fully aware that I am only able to provide a limited income due to the serious nature of my ongoing injury”
The Court takes note of the fact that under the Child Support (Assessment) Act 1989 (Cth), it is an offence for a person to make a statement that is false or misleading in a material particular, such offence occasioning penalties including imprisonment for up to 6 months: see s.159 and 159A of the Child Support (Assessment) Act 1989 (Cth).
As the respondent was self- represented, I explained to him that he had a right to object to answering any questions in relation to the documents contained in Annexure H6 and paragraph 11 of his affidavit filed 5 February 2014, on the basis that it may tend to prove that he has committed an offence that is liable to civil penalty. The respondent stated that he objected to giving evidence in relation to the documents contained in H6. I determined that there were reasonable grounds for the respondent’s objection. I explained to the respondent that the Court will give a certificate pursuant to section 128 of the Evidence Act under specified circumstances and the effect of that certificate.
The respondent stated he was willing to give the evidence provided a certificate is issued by the Court under s.128 of the Evidence Act to him in respect of that evidence.
I am satisfied that the evidence of the respondent in relation to the documents contained in H6 and paragraph 11 of his affidavit filed 5 February 2014 may tend to prove that the respondent has committed the offences identified and that these are offences under Australian law.
In light of the oral evidence given by the respondent, I find the respondent has made an objection to disclosure of the whole of his evidence in relation to the documents contained in H6 and paragraph 11 of his affidavit filed 5 February 2014, and that the grounds for the objection are reasonable.
The potential offence arises from statements made under Child Support proceedings in Australia and matters deposed by the respondent regarding his income earning capacity during the parties’ relationship for the purposes of property proceedings under the Act. In these circumstances there is no potential offence that could arise from the disclosure of the information by the respondent under a foreign law.
The evidence is clearly relevant evidence to these proceedings in respect of the determination of the financial contributions of the parties during the relationship and into the future, as well as the respondent’s credibility. I am satisfied that the interests of justice require the evidence be given.
In these circumstances, I am satisfied that the requirements of s.128(5) and (6) of the Evidence Act are met. Accordingly it is appropriate for the Court to make an order that the respondent be given a certificate under s.128 of the Evidence Act in respect of the whole of his evidence in relation to the documents contained in H6 and paragraph 11 of his affidavit filed 5 February 2014.
The respondent’s explanation for the apparent contradiction between his evidence given in his affidavit filed 5 February 2014 at [11] that he, “had never earned less than $70,000” and had had two good years earning $140,000 per annum and his written statement to the CSA, was unconvincing. Initially, he stated that the matters deposed in his affidavit referred to turnover figures not profit figures but conceded this was not the case when paragraph 11 of his affidavit filed 5 February 2014 was again read to him. He denied that he was attempting to change the evidence he had given to the Court or to the CSA.
He agreed that he had not contributed to the initial purchase price of the Property P property. His explanation for the contradiction in his evidence in these proceedings that, during the relationship, he had financially supported the wife through the payment of the mortgage, and his statement to CSA that it was the wife’s “considerable income” which enabled both of them to be financially supported, was also unconvincing. At one point, the respondent conceded that he was trying to mislead the CSA, but later he stated that he did not type the letter.
The applicant gave her evidence in a straightforward manner and I found her to be a credible witness. The respondent’s credibility was adversely affected by the manner in which he dealt with the apparent contradictions between his affidavit evidence and the written statement in Annexure H6. Generally, therefore, where there is a dispute between the oral evidence of the applicant and the respondent, I prefer the applicant’s evidence. I note that, in addition, much of the evidence given by the respondent in his affidavit, which was the subject of dispute in these proceedings, was unsupported by probative documentary evidence. This was so, even though he was provided with an opportunity to obtain probative evidence during the period the proceedings were part heard. This had the consequence of adversely affecting the quality of the evidence he gave.
Full and Frank disclosure
The applicant complains that the respondent has failed to provide full disclosure of relevant financial information, including bank statements of accounts in his or his businesses’ names, business records and income tax returns.
The respondent does not deny this. He says he was unable to access his records because post separation the wife smashed his computer so that he can no longer access records. The applicant denies she engaged in this conduct. In any event, I do not find this to be an acceptable reason as the respondent could have taken alternative steps to acquire much of the information.
Whatever the real explanation, the fact is that it is very difficult for the Court to make findings about the precise earnings of the respondent from the businesses he operated during the relationship and post-separation.
Parties Proposals
The applicant proposes the following orders:
a)That the wife retain her (omitted) Land Cruiser Motor vehicle.
b)That the Funds retained in the Victorian Property settlements be transferred to the wife.
c)That the wife be responsible for:
i)The (omitted) Finance loan; and
ii)The (omitted) Personal Loan.
d)That the husband retain all motor vehicles in his possession and indemnify the wife for any debts in his name.
The respondent proposes the following orders:
a)That the (omitted) Loan be paid from the proceeds of the sale of the former matrimonial home held by Victorian Property Settlements.
b)That the balance be divided 50% to the applicant and 50% to the respondent.
c)That the husband indemnify the wife from all Child Support and ATO debts.
Assets and liabilities
Section 79 of the Family Law Act 1975 (Cth) provides for the division of property. The first step is to determine the parties’ matrimonial assets and liabilities.
The applicant claims that the following are the interests of the parties in the property of the relationship:
Asset Ownership Value Net proceeds from sale of Property P (former matrimonial home)
Joint $63,106.00 (omitted) Toyota Land Cruiser Motor Vehicle Respondent $10,000.00 (omitted) Mitsubishi van Respondent $6,000.00 (omitted) Motor Bike
(sold during proceedings)Respondent
$4,000.00 Commodore Utility Respondent $12,000.00 (omitted) Campervan
(proceeds of sale on 8 April 2013Respondent $21,000.00 Total Assets $116,106 Liabilities (omitted) Finance Loan
(previously (omitted) Bank Loan)Joint $25,000.00 (omitted) Personal Loan
(deficit from sale of Jeep Wrangler [$9,000.000] and credit cards [$3,000.00])$12,000.00 Total Liabilities $37,000.00
The respondent claims that the following are the interests of the parties in the property of the relationship:
Asset Ownership Value Net proceeds from sale of Property P (former matrimonial home)
Joint $63,106.00 (omitted) Toyota Land Cruiser Motor Vehicle Respondent $6,000.00 (omitted) Mitsubishi van Respondent $6,000.00 (omitted) Motor Bike
(sold during proceedings)Respondent
$4,000.00 Commodore Utility Respondent $10,000.00 (omitted) Campervan
(proceeds of sale on 8 April 2013Joint:
Applicant $10,000.00
Respondent
$11,000.00
$21,000.00 Total Assets $110,106 Liabilities (omitted) Finance
(previously (omitted) Bank Loan)Wife $25,000.00 Civic Compliance Husband $66,473.00 Total $91,473
Neither party sought orders to split the parties interest in superannuation. In their trial affidavits, neither party sought to include their superannuation interests in the property pool. However, at the adjourned hearing the respondent submitted that the value of the parties’ interests in superannuation should be included in the property pool.
The issues in dispute in determining the property pool are:
a)should the parties’ interest in superannuation be included in the property pool;
b)The valuation of certain vehicles;
c)Whether the proceeds from the sale of the campervan were distributed between the parties;
d)Whether the (omitted) Personal debt in the name of the applicant should be treated as a debt of the parties;
e)Whether the husband’s Civic Compliance debt is a debt of the parties.
Superannuation
The applicant estimates her present superannuation interest is around $50,000.
The respondent’s superannuation interest is $38,515.60 comprising (exhibits H1 and H2):
a)a superannuation benefit of $18,515.60 with (omitted) Super;
b)a superannuation benefit of $19,704.15 with (omitted); and
c)$296.90 benefit with (omitted) Super Rollover fund.
The respondent deposed in his affidavit filed 19 June 22014, that his superannuation interest at the commencement of the relationship was $5,838.22. In view of the fact that, until the adjourned hearing date the respondent had not disclosed the three funds he had an interest in, this estimate of his interest at the commencement of the relationship is unlikely to be accurate.
The respondent produced a statement by (omitted) Super for the applicant (membership number ending (omitted)) (exhibit H6) which recorded a balance at 1 July 2011 of $40,479.80. The applicant deposes that her superannuation at the commencement of the relationship was around $35,000.00. The applicant did not produce any statement from the superannuation fund to support this.
The respondent argued that the bulk of the applicant’s superannuation benefit was accumulated during the relationship. For this he relied on a statement by (omitted) Super for the applicant (membership number ending (omitted)) recording a balance at 1 July 2009 of $4,838.22 (exhibit H5). The applicant’s evidence was that this showed that there were two accounts in her name, she was not sure why and she expected that both were consolidated at some time.
Neither party made submissions regarding the matters the Court must have regard to when deciding whether superannuation should be treated as separate pool and whether a splitting order should or should not be made. In Coghlan & Coghlan (2005) FLC 93-220, it was held (at [65]) that where the “separate pool” approach is adopted, and even if a superannuation splitting order is not sought, it will be extremely prudent (in the interests of achieving just and equitable orders) to consider the contributions which have been made under ss.79(4)(a), (b) and (c) by both parties to both their superannuation interests and then to consider whether an adjustment (or further adjustment) to their interests is required on account of the other factors in s.79(4) (notably the s.75(2) matters).
Given the age of the applicant and the respondent when they commenced their relationship, the short duration of the relationship and their working history, it is to be expected that the bulk of their superannuation interest likely accumulated prior to the commencement of the relationship. In these circumstances, I am satisfied that their interests in superannuation should be treated as separate from the other interests in property. I will have regard to the matters specified in s.75(2) of the Act.
Debts during the relationship
In the decision of In the marriage of Kowaliw (1981) FLC 91-092 the Full Court of the Family Court held that financial losses incurred by the parties or either of them in the course of their marriage should be shared by them (although not necessarily equally) unless one of the parties has embarked upon a course of conduct designed to reduce the value of the assets or where one of the parties has acted recklessly, negligently or wantonly with the assets causing a reduction or minimisation of their value. This is often referred to as “waste”.
In Kowaliw, Baker J made the following comments on the topic of “waste” 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.”
At 76,644 of Kowaliw, Baker J reiterated his earlier comments by stating:
“If a party has acted in a manner to which I have referred earlier… then such conduct in my view and the economic consequences that flow therefrom are clearly matters to which the Court may have regard pursuant to the provisions of sec 75(2)(o).”
The applicant claims that she incurred debts during the relationship arising from the loss of the trade-in value of a Jeep she purchased during the relationship and the discharge of a personal loan over that Jeep post separation when she purchased another car. The loss incurred she estimates to be $9,000. She also claims she incurred credit card debts during the course of the relationship in the amount of $3,000. These debts are consolidated in the (omitted) Personal loans. The respondent disputes that these are debts of the relationship on the following basis. Firstly he submits that the loss in relation to the Jeep was incurred post separation. Secondly, he alleges that he paid out all the credit card debts of the applicant during the relationship.
Turning to the debt associated with the Jeep. There is no dispute that the Jeep was purchased during the relationship by the applicant taking out a personal loan. After a trade-in of a Nissan (omitted) the total of the loan was of $35,00.00. The applicant’s weekly repayments were $250.00. The applicant says that post separation she was not in a position to afford the repayments on the loan and decided to trade-in the Jeep for lower priced motor vehicle. She deposes that the difference between the trade-in value of the Jeep and the payout of the personal loan on that Jeep was $9,000.00.
I am satisfied that this financial loss incurred by the applicant flowed directly from the financial arrangements entered into for the purchase of the Jeep during the course of the relationship. The fact that the crystallisation of the loss occurred post separation does not, in my view, change the characterisation of the debt or financial loss; that being, that it was incurred during the relationship.
The respondent has put nothing to support his argument that the applicant could continue to afford the repayments on the Jeep. In fact, on the evidence that is agreed, the applicant was carrying debts from the relationship; namely, the (omitted) personal loan. Her undisputed evidence is that she also lost her employment and has since separation worked casually. In those circumstances, I am satisfied that the course she engaged in, that being trading in the Jeep for a lower valued vehicle and extinguishing a proportion of the personal loan over the Jeep was commercially sound. Consequently, I am satisfied that the difference between the trade-in value of the Jeep and the payout of the personal loan on that Jeep (a loss of $9,000) should be treated as a debt of the parties.
I shall next consider the wife’s claim that a $3,000.00 credit card debt should be treated as a debt of the relationship. The applicant says that, during the relationship, she had two credit cards, a (omitted) MasterCard and an (omitted) Bank MasterCard. Her evidence is that at the time of separation the balances on the (omitted) Bank credit card was $3,000.00. She tendered a statement from her (omitted) Bank credit card, which record at 27 June 2011 a balance of $2,509.42. She said that this debt arose from a payment for the couple’s wedding and trip to (country omitted). She said that this balance remained unchanged from June 2011 until separation in 2013. The applicant did not produce copies of statements of the credit cards at the date of separation. The respondent says that he paid all the balance of the applicant’s credit card on 6 October 2011.
Both the parties have failed to produce relevant evidence to the Court to support their case. The applicant’s evidence is in relation to mid 2011 whilst the respondent was not able to produce a relevant statement in support of his argument. In these circumstances, I am not prepared to find that the balance on the applicant’s credit card at the end of the relationship was $3,000.00.
Accordingly, I would find that the debt of the relationship under the (omitted) Personal loan is $9,000.00.
Turning to the Civic Compliance debt. The respondent says that during the relationship, the applicant controlled the finances. He says that during the relationship both of them drove vehicles registered in his name, particularly during the period of time the applicant’s vehicle was off the road for repairs. As the vehicles were in his name, all road traffic infringement penalties were charged to him. He says that during the relationship he was aware of a small number of East Link fines and penalties which he paid upon learning of their existence. He deposes since separation he has obtained statements from the Department of Justice Infringements Court. Annexure G-6 to his affidavit filed 19 June 2014 is a copy of a document issued by the Department of Justice Infringements Court, Sheriff’s office. This document records a total amount outstanding of $19,410 at 13 November 2013.
He says that he was not aware that he had accumulated fines in relation to the vehicles registered in his name until after separation when the fines issued by Civic Compliance Victoria had accumulated and attracted penalty interest. In these circumstances, he argues that the debt should be treated as a debt of the relationship.
The applicant denies that she controlled the finances of the relationship. She gave evidence in cross-examination that she did occasionally drive the respondent’s vehicle but that she never drove on the EastLink tollway. When put to her that she drove his vehicle when her car was being repaired, the applicant said that she borrowed her father’s car during this time. She asserts that at the commencement of the relationship the respondent had fines in the amount of $20,000.
The respondent tendered an exhibit, H4, being a “Seven Day Notice” issued by the Sheriff’s Office Victoria (“the Notice”). The unpaid amount specified in the Notice is $66,473. The Notice specifies that payments in person or by phone are to be made to Civic Compliance Victoria. The respondent asserts that this is the total amount he now owes as a consequence of failing to pay the Citylink penalties which he accrued during the relationship.
I am not satisfied that Exhibit H4 is probative evidence of that which the respondent seeks to assert. The Notice is not addressed to any person and does not particularise the source of the unpaid amount. It is apparent that it arises from a Civic Compliance, however, no motor vehicles and the registration numbers are identified nor the basis for the fines.
On the evidence before me, I am unable to be satisfied that the Notice is evidence of the accrued penalties flowing from the non-payment of fines that were incurred in relation to motor vehicles registered in the name of the respondent during the parties’ relationship.
The evidence before the Court is not probative evidence which would support a finding that the amount of $66,473 recorded in the Notice is a debt flowing from the non-payment of traffic infringement fines incurred during the relationship.
I turn to consider the debt of $19,410 at 13 November 2013 recorded in Annexure G-6. The Annexure is difficult to read as part of the printout is not included in the copy. The original has clearly been highlighted, however, in the copy, the highlighted areas appear as dark grey to black smudges that are mostly impossible to read. The data that is not included in the copy or which is smudged are the dates of the infringement and the amounts of fines. Given the state of the evidence I am unable to determine when fines were incurred and how much they were.
I am only able to find, having regard to Annexure G-6, that on 21 December 2009 the outstanding amount of fines were $250.30 and at 13 November 2013 the total outstanding amount was $19,410.00. I am satisfied that during the course of the relationship fines and penalties for traffic infringements accrued and that these were predominantly for the offence of driving a vehicle which was unregistered for a tollway on the EastLink Freeway. There appears to be three motor vehicles involved all registered in the name of the respondent. Most of these fines were incurred at the commencement or the end of the day in question.
I am satisfied that the fines were unlikely to have occurred whilst the applicant was driving any of the registered motor vehicles. However, this does not mean that the debt incurred was not a debt of the relationship.
There is no dispute between the parties that during the relationship the respondent was working and applied his income from working to the benefit of both parties. I am satisfied I can infer that a large part of the fines were incurred by the respondent during the course of his work. He worked as a (occupation omitted), which work would require him to travel to various sites where he performed his work.
I am satisfied in these circumstances that the penalties incurred should be treated as a debt of the relationship subject to two qualifications:
a)it is apparent from Annexure G-6 that a significant proportion of the fines arose because the vehicles in question were not connected to an East Link account. The failure of the respondent to take what is reasonable action to connect vehicles registered in his name to an East Link account, is conduct that in my view the applicant should not bear responsibility for;
b)I am not satisfied, given my credibility findings, that the applicant controlled the parties’ finances as the respondent alleges. I do not accept that the respondent was not aware that he would be accumulating fines when he was driving vehicles not connected to an East Link account on the East Link freeway.
In my opinion the applicant should bear some responsibility for the debt but that the debt should not, because of the respondent’s conduct be borne equally. I am satisfied, having regard to all the circumstances that the applicant should share responsibility for a quarter of the debt or $4,852.50. Accordingly, I will treat $4,853.00 as a debt of the relationship.
Valuation of Motor Vehicles
Counsel for the applicant informed the Court (during the proceedings on 26 November 2014) that, in the absence of a valuation of the (omitted) Commodore, she would accept the respondent’s valuation of $10,000.00.
The valuation of the (omitted) Landcruiser motor vehicle is in dispute. The respondent’s estimate is set out in his amended Financial Statement in the absence of evidence regarding its value I accept his estimate.
Proceeds of Sale of the Campervan
The parties agree that a campervan was purchased using the funds of the parties in the first half of 2012 and was sold in or around July 2013 for an amount of $21,000.00 (exhibit W1). The applicant says that she did not receive any of the proceeds of sale. The respondent says that he distributed to her around $10,000.00 in cash. He says this cash amount would not be evident as withdrawals from any bank accounts as he paid her using cash amounts from (omitted) jobs.
For reasons set out earlier I prefer the evidence of the applicant on the issues in dispute. Consequently, I find that the proceeds of sale were retained by the respondent.
Assets and Liabilities of the parties
I find that the property pool at the date of the commencement of the hearing is as follows:
Asset Ownership Value Net proceeds from sale of Property P (former matrimonial home)
Joint $63,106.00 (omitted) Toyota Land Cruiser Motor Vehicle Respondent $6,000.00 (omitted) Mitsubishi van Respondent $6,000.00 (omitted) Motor Bike
(sold during proceedings)Respondent
$4,000.00 Commodore Utility Respondent $10,000.00 (omitted) Campervan
(proceeds of sale on 8 April 2013)Respondent $21,000.00 Total Assets $110,106 Liabilities (omitted) Loan
(previously (omitted) Bank Loan)Joint $25,000.00 (omitted) Loan
$9,000.00 Civic Compliance $4,853.00 Total Liabilities $38,853.00
The value of the net assets of the relationship is therefore $71,253.00.
Just and equitable
Section 79(2) provides that the Court shall not make an order unless it is satisfied that in all the circumstances it is just and equitable to make the order. Both parties propose the making of a property order. The parties’ relationship has come to an end and the basis upon which they shared ownership of property and finances is over. In the circumstances it is just and equitable to make an order.
History
Once matrimonial assets and liabilities are established and the determination made that it is just and equitable to make an order, the Court must next consider contributions and then the matters under s.75(2). These require reference to the history of the parties’ relationship and their employment and income during that time.
Contributions
Section 79(4) of the Family Law Act 1975 (Cth) provides for the consideration of contributions. These are the financial contributions made directly or indirectly by or on behalf of a party to the acquisition and conservation or improvement of any of the property of the parties, the contribution other than a financial contribution made in the same way, the contribution by a party to the welfare of the family including any contribution made in the capacity of homemaker or parent and the effect of any proposed order upon the earning capacity of either party.
At the commencement of the relationship the applicant owned a property situated at Property A, Victoria (“the Property A property”) which the applicant says had a net value of around $81,000.00. The applicant said that she owned a motor vehicle which she subsequently traded-in for $7,000.00. The respondent said that at the commencement of the relationship he owned two motorcycles and a motor vehicle, which were sold for $30,000.00 shortly thereafter. He deposed that he believed the loan for the car was around $15,000.00 to $16,000.00. He deposed that he had $20,000.00 in savings from a lump sum payment from a work injury in 2009. He has annexed to his affidavit correspondence from his solicitors setting out an offer for settlement (G-1). He did not produce any bank statement to support his claim that he had this saving. I am not prepared to find that he had this saving.
Property A property was sold in 2010. The respondent maintains that he made substantial contributions to the renovation of the property. The applicant denies this, saying that it was already renovated. Given my findings regarding the parties’ credibility and in the absence of documentary material produced by the respondent, I accept the applicant’s evidence.
The net proceeds from the sale of the Property A property were $57,998.07 which was applied to the purchase of a property at Property P, Victoria (“the former matrimonial home”). The purchase price of the former matrimonial home was $470,000. The applicant says that the net proceeds of sale of the Property A property was used for the deposit and difference between the purchase price and the loan obtained by the parties in order to effect settlement. The respondent claims the amount contributed by the applicant from the proceeds of sale were $27,659. On the basis of the documentary evidence (Annexure’s H-3 and H-4, to the applicant’s affidavit filed 17 June 2014), I accept the applicant’s evidence.
During the relationship:
a)In October 2011, the respondent received a second lump sum common law payment of $138,000. His evidence is that he paid off the parties’ credit cards and paid $130,000.00 off the mortgage over the former matrimonial home. The applicant agrees that this money was credited against the home loan account but says that amounts were subsequently re-drawn by the respondent into the joint account. From this account she says a transfer of $13,600 was made to the Respondent’s business, (omitted) business account. She also claims payments were made for the purchase of the Land Cruiser in March 2012, the Campervan in April 2012 and for expenses associated with the Holden Utility, an expenditure totalling around $45,000.00. The respondent agreed in cross-examination that he used the funds for the Land Cruiser and Campervan but denied he applied monies to the business and repairs for the Holden Ute which he says were paid for by the business. I am satisfied that monies were transferred to the business from the joint account. On the bank statements produced to the Court it is evident there were regular transfers from the joint account to the business and I am satisfied that it is probable that there was such a transfer in this period. Consequently, I am satisfied that around $56,000.00 of the lump sum payment was used for the business and to purchase vehicles retained by the respondent.
b)The applicant says that she deposited an amount of $14,991.22 in early 2012 which she received by way of inheritance, to the parties’ joint account and from which payments were made to install a pool at the former matrimonial home, for ducted heating and for the payment of the respondent’s tax and a winch (Annexure H-5, Affidavit filed 17 June 2014). She says it was also used to repay the parties’ credit card, the remainder being applied for the joint benefit of the parties.
Both parties worked during the relationship. It appears that the applicant took time off from work after the death of her father, she says from November 2011 to January 2012. In 2011, the respondent took time off for a knee reconstruction. He says he took three months off, the applicant says it was six months. There is no dispute that the respondent, who worked as a (occupation omitted), earned a larger income during the relationship. I am satisfied that the applicant’s earnings as well as earnings from the respondent’s business, (omitted), were paid into a joint savings account, from which the mortgage repayment amounts were paid. I am also satisfied that, during the relationship, monies from the home loan were (by drawdowns) transferred to the parties joint account and from that account applied to support the (omitted) business and applied to the benefit of the parties. In other words, there was an intermingling of the parties earnings for the purpose of supporting the husband’s business, the preservation of the assets and the parties’ daily living expenses.
I am satisfied that the applicant’s initial contribution by way of the application of the proceeds of sale of the Property A property to purchase the former matrimonial home, in circumstances where the relationship was very short, should be given weight. No doubt the respondent then contributed by his greater earnings and using some portion (probably around $70,000.00) of his second lump sum payment to reduce the mortgage over the former matrimonial home. However, it is unlikely the parties would have been in a financial position in the first place to purchase the former matrimonial home without the applicant’s contributions from the net proceeds of sale of the Property A property. I also take into account the documentary evidence which demonstrates that the applicant later applied the monies she received by way of inheritance to the improvement of the former matrimonial home.
Taking into account the evidence, I find that both the direct and indirect contributions of the parties during the relationship were equal.
The applicant remained in the former matrimonial home after separation until its sale. The respondent says that he alone paid the mortgage repayments and that the applicant deliberately hindered the sale so as to reduce the sale price. I reject his evidence that the applicant deliberately vandalised the property. The applicant did not impress me as a person who would engage in conduct to reduce the value of the most valuable asset of the relationship. Annexure H-3 to the applicant’s affidavit filed 13 March 2015 contains copies of statements from the parties’ (omitted) Bank Home Loan account ((omitted)) for the period May 2013 to January 2014 when the mortgage over the former matrimonial home was discharged. H-3 shows that mortgage payments were paid from separation (July 2013) at $542.00 a week until 14 October 2013. No further payments were made until settlement of the former matrimonial home. I find therefore that after separation the respondent contributed around $5,420.00 by way of mortgage repayments. The applicant maintained she expended monies on the upkeep of the property and its preparation for sale. I accept her evidence.
After the parties separated, the respondent established a new company, (business omitted) Pty Ltd (“(business omitted)”). The applicant deposed that documents produced on subpoenas by various (but not all of the) clients of (business omitted) disclose payments to (business omitted) for the period from September 2013 to March 2014 totalling $97,367.60. She also deposed that documents produced on subpoena by the (omitted) Bank of statements of accounts in (business omitted)’s name for the period October 2013 to March 2014 disclose credits totalling $93,957.77.
Overall, I am satisfied that the parties’ contribution to the property of the relationship was equal.
Section 75(2)
The relevant considerations under s.75(2) are:
a)the age and state of health of each of the parties;
b)the income property and financial resources of each of the parties and the physical or mental capacity of each of them for appropriate gainful employment;
c)whether either party has the care and control of the child of the marriage was has not attained the age of 18 years;
d)the commitments of each of the parties necessary to enable a party to support himself or herself and the children;
e)a standard of living that in all the circumstances is reasonable;
f)the duration of the marriage and the extent to which it has affected the earning capacity of the party;
g)the need to protect a party’s wishes to continue that party’s role as parent;
h)if either party is cohabiting with another person the financial circumstances relating to the cohabitation;
i)any child support paid;
j)any fact or circumstance which in the opinion of the Court of justice of the case was to be taken into account.
The parties are both 41 years of age. The applicant is in good health. The respondent says that he can no longer work in his previous employment as a (occupation omitted) because of the accumulated effect of work injuries. He has however not produced any expert medical evidence to support this. He presently resides in (omitted), living with his new partner working casually in a (employer omitted) which his partner owns. He agreed in cross-examination that their relocation to a regional area was a lifestyle choice. His income from working casually is limited but it is apparent that he is able to rely on her financial support.
Based on her financial statement filed 17 June 2014, the applicant has an earning capacity in full time employment that of around $58,000.00 per annum. I am satisfied that the respondent is able to earn the income he earned prior to preparation. In his affidavit filed 5 February 2014 at [11] he deposed that he, “had never earned less than $70,000” and had had two good years earning $140,000 per annum. I am satisfied that the earning capacity of the respondent is at least around $70,000.00 per annum.
There are no children of the parties’ relationship. The respondent has two children, under the age of 12, from a former relationship. It does not seem to be in dispute that his assessed Child Support payments are in arrears. The respondent’s evidence is that his Child Support payments varies depending on how much is in his saving account.
The applicant has a greater interest in superannuation in an amount of around $11,500 which she will not access for some time. The respondent’s present earnings are limited but this is because he has chosen to work casually as a (omitted) and not in work for which he is qualified. His income earning capacity is greater than the applicant.
Having regard to all the circumstances, I would not make any further adjustments for s.75(2) factors.
What orders are just and equitable
I have decided that an equal division of the property of the relationship is just and equitable.
The net assets of the property pool are $71,253.00, 50% is $35,626.50.
The respondent benefits or has benefited from two motor vehicles and the proceeds of sale of his motorbike and the (omitted) Campervan. The total value of this is $47,000.00 which is in excess of the value of the property pool he is entitled to by an amount of $11,374.00.
The respondent’s proposed orders would result in each party receiving 50% of $38,106.00 ($63,106.00 less the (omitted) Loan). Each party would thereby receive $19,053. He already benefits from $47,000.00 of the net assets of the pool. If he were paid $19,053, he would in effect receive $66,053. That is, he would receive 93% of the net assets. This is clearly not just and equitable and for this reason I reject the respondent’s proposed orders.
The applicant’s proposal would result in her receiving, after she discharges the (omitted) Finance debt, $38,106.00 which is around $2480.00 in excess of her entitlements or 53% of the net property pool.
The respondent says that the applicant will benefit from her proposal because she will be able to consolidate her debt and incur a smaller liability than under his proposal. No doubt this may well be true, however, the applicant’s proposal accords with the alteration in their property interests which is just and equitable. In order to ensure the alteration is just and equitable under the respondent’s proposals, an order would be necessitated that the respondent pay the applicant $30,427.00 ($66,053.00 less $35,626.00). Such an order would require the transfer of the $19,053 to the applicant and a requirement the respondent pay the residual. These orders are likely unworkable. By comparison, standing back and having regard to all the circumstances, the applicant’s proposal which involves a minor adjustment in her favour, is just and equitable.
Conclusion
Given these considerations, I am satisfied that the applicant’s proposed orders best achieve a just and equitable result and are the appropriate orders I should make pursuant to s.79 of the Act.
I certify that the preceding ninety-six (96) paragraphs are a true copy of the reasons for judgment of Judge Jones
Associate:
Date: 18 September 2015
Key Legal Topics
Areas of Law
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Civil Procedure
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Evidence
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Property Law
Legal Concepts
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