Huber and Costa
[2008] FMCAfam 1216
•4 December 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HUBER & COSTA | [2008] FMCAfam 1216 |
| FAMILY LAW – Property – marriage of 6 years – assessment of contributions – assessment of prospective needs – just and equitable – parties operated vineyard as primary producers – vineyard sold – husband entitled to apply for exceptional circumstances exit grant as a result of potential exit from farming enterprise – financial resource – husband convicted of growing marijuana on property – waste or negative contribution – small asset pool – contributions of parties’ parents – whether warranting special recognition in circumstances of the case – proceeds of crime application – notification to Director of Public Prosecutions. |
| Family Law Act 1975, ss.75(2), 79(4), 79B, 79C, 79E |
| Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-355; Clauson v Clauson (1995) FLC 92-595; Hickey & Attorney-General of the Commonwealth of Australia (Intervenor) (2003) FLC 93-143; Biltoft & Biltoft (1995) FLC 92-614 Kessey & Kessey (1994) FLC 92-495 Pellegrino v Pellegrino (1997) FLC 92-789 Pierce & Pierce (1999) FLC 92-844 Russell v Russell (1999) FamCA 187 Waters & Jurek (1995) FLC 92-635 D & D [2003] FamCA 473 C & C (2005) FLC93-220 SJS & NS (2005) 33 FamLR 109 |
| Applicant: | MS HUBER |
| Respondent: | MR COSTA |
| File Number: | ADC 5787 of 2007 |
| Judgment of: | Brown FM |
| Hearing dates: | 5 & 13 November 2008 |
| Date of Last Submission: | 13 November 2008 |
| Delivered at: | Adelaide |
| Delivered on: | 4 December 2008 |
REPRESENTATION
| Counsel for the Applicant: | Ms Huber in person |
| Counsel for the Respondent: | Mr Costa in person |
ORDERS
In full and final settlement of any claim that either party may have in respect of the settlement of matrimonial property:
The proceeds of sale of the former matrimonial home situated at allotment Property T in the State of South Australia be distributed as follows:
(a)such sum as is necessary to discharge the Esanda personal loan;
(b)the sum of $2,545.60 to the Adelaide Magistrate’s Court Litigants Fund pending the determination of the criminal confiscation proceedings against the husband;
(c)the balance to the wife.
The husband and wife sign all documents and do all things necessary to close all joint bank accounts, loan accounts and other credit card facilities in their joint names.
Pursuant to section 90MT(4) of the Family Law Act 1975 (as amended), this Honourable Court do allocate to the husband a specified amount of four thousand five hundred dollars ($4,500.00) out of the wife’s splittable interest in the Statewide Superannuation Trust member numbered [2] and:
(a)Pursuant to section 90MT(1)(a) of the Family Law Act 1975 (as amended) whenever the Trustee of the Statewide Superannuation Trust (“the Trustee”) makes a splittable payment out of the wife’s splittable payment in the Statement Superannuation Trust member numbered [2] the Trustee shall pay to the husband, his executors, administrators, beneficiaries heir or assigns the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount of four thousand five hundred dollars ($4,500.00) and that there be a corresponding reduction to the entitlement that the wife would have had in the Statewide Superannuation Trust but for this order;
(i)This order has effect from the operative time;
(ii)The operative time shall be the fourth business day after the service of this order on the Trustees
(iii)This order shall bind the Trustee of the said Statewide Superannuation Trust;
(iv)The Trustees of the said Statewide Superannuation Trust shall do all such acts and things and sign all such documents as shall be necessary so that, in accordance with the Family Law Act 1975 (as amended) and the Family Law (Superannuation) Regulations 2001, the Trustees can calculate the entitlement of, and make payment to the husband in accordance with this order;
(v)The terms of this sub-paragraph shall be binding upon the executors, administrators, beneficiaries, heirs or assigns of the wife.
In the event that the Trustee if unable to comply with any aspect of this order, the Trustee has liberty to re-list the matter on giving seven (7) days written notice to the parties.
The husband retain for his sole use and benefit without any claim from the wife the Toyota Hi Lux motor vehicle currently in his possession.
In the event the husband, his servants or agents make application for an exceptional circumstances exit grant or such similar or equivalent grant in relation to the previous operation by the husband of the vineyard enterprise then and in such case:
(a)The husband do forthwith upon the making of the application notify the wife of the same and provide to her a copy of such application;
(b)The husband do hereby authorise Centrelink and/or the appropriate Government agency to release to the wife and to provide to her all information she may request in relation to the said application;
(c)The husband do forthwith direct Centrelink or any appropriate Government Agency to pay the grant to the joint account of the parties and that the proceeds received shall thereafter be apportioned as follows:
(i)As to the wife sixty percent (60%) thereof;
(ii)As to the husband the balance then remaining.
(d)Each of the husband and the wife be restrained and an injunction granted restraining them from dealing with the proceeds of the grant contrary to the preceding sub-paragraph;
(e)The husband shall do all such acts and sign all such documents as shall be necessary for the husband’s compliance with the terms of this sub-paragraph.
Unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent order each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders.
A copy of these orders and the reasons for judgment herein be served on the Director of Public Prosecutions for the State of South Australia.
The application and response herein be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Huber & Costa is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 5787 of 2007
| MS HUBER |
Applicant
And
| MR COSTA |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties in these proceedings are Ms Huber (formerly Costa) “the wife” and Mr Costa “the husband”. The proceedings relate to the division of the parties’ matrimonial property.
The parties married in November of 2001. At the time, both were 22 years of age. Neither had any assets of significant worth. During their marriage, the parties lived on a ten acre vineyard near [T]. They purchased this property, about a month before their marriage, for the sum of $120,000.00.
The marriage between the parties produced two children. They are [J] born in 2002 and [R] born in 2004. On 6 February 2008, the parties agreed on final orders in respect of arrangements for the care of these two children. Pursuant to these orders, [J] and [R] were to live predominately with their mother and spend four nights per fortnight in the care of their father.
The parties formed a partnership to grow grapes, for wine production, at their vineyard home. They supplied grapes to Southcorp. The husband did most of the agricultural work required to tend the vines on the property. The wife did the books for the business.
Like many couples involved in primary production, each had a job away from the vineyard and utilised the income these jobs produced for joint family purposes. The wife was engaged in [omitted], taking off only brief periods of time after [J] and [R]’s birth. The husband was employed as a [omitted].
For around six years, the vineyard made reasonable money. However, in 2006 there was a glut of grapes. Around this time, the parties lost their contract to supply grapes to Southcorp. More recently, grape producers in the [T] area of South Australia, including the parties themselves, have suffered hard financial times due to the severe drought.
The parties separated finally on 5 August 2007, after a marriage of around six years. In the previous December, the husband had been charged with cultivating a commercial quantity of cannabis and the possession of a quantity of dried cannabis and cannabis resin at the parties’ vineyard home at [T].
The husband pleaded guilty to these charges in the District Court of South Australia and was sentenced to an eighteen month term of imprisonment, which was entirely suspended provided he was of good behaviour for a further period of eighteen months. Following this conviction, the Director of Public Prosecutions has commenced proceedings against the husband pursuant to the Criminal Assets Confiscation Act 2005.
As the parties’ home was utilised by the husband for the criminal enterprise, in respect of which he was convicted, the Director of Public Prosecutions is entitled to pursue an application to forfeit the husband’s interest in the property to the Crown. It is not suggested that the wife had any involvement in the husband’s offending. Certainly, the Director of Public Prosecutions is not pursuing any action against her.
The Director of Public Prosecutions agreed that the [T] vineyard could be sold and fifty percent of the net proceeds released to the wife. However, it would appear to be the Director’s position that the Crown is entitled to confiscate or receive a sum equal to fifty percent of the parties’ net interest in their formal family home, representing the husband’s interest.[1]
[1] See annexure C to the wife’s affidavit filed 8 November 2007
The end of the parties’ marriage sees neither of them in a strong financial position. After the payment of a mortgage due on the [T] property and the payment of other expenses related to its sale, the property has realise the modest sum of $36,264.73. The only other significant asset, which the parties have, are modest amounts of superannuation and a Toyota Hi Lux motor vehicle.
It is the wife’s position that she should receive sixty percent of the parties’ net assets, particularly because she is likely to bear the major burden of providing financial support for [J] and [R], with little assistance from Mr Costa, who is presently unemployed.
On the other hand, it is the husband’s position that the parties’ assets should be divided evenly. In support of his case, he points to the fact that his father provided a sum of $18,000.00 which was utilised by the parties to pay the deposit on the [T] vineyard in 2001. In addition,
Mr Costa senior advanced another sum of $18,000.00, which was utilised to purchase the parties’ motor vehicle.
Other controversial issues have arisen between the parties. Two of these relate to the husband’s potential entitlement to apply to the Commonwealth Government for what is known as an exceptional circumstances exit grant arising from of his previous self employment as a primary producer in the grape growing industry; and whether the parties have any money due to them as a result of a transfer of their water entitlements relating to their vineyard to the wife’s father.
These proceedings are designed to resolve these various disputes between the parties and, as far as possible, finalise their financial relationship with one another.
Applications
The wife commenced these proceedings on 8 November 2007. The orders she seeks are as set out in her further amended initiating application filed 8 October 2008. In general terms, she proposes a sixty/forty percent distribution of the parties’ net assets in her favour.
She has a significantly larger amount of superannuation than the husband. In order to achieve this outcome and also to ensure that she retains some liquid assets, she proposes that there be a $4,121.00 split from her superannuation in the husband’s favour.
The wife acknowledges that the parties’ water entitlements were transferred to her father in October 2007. However, it is her position that her father did not utilise this entitlement and so no monies are due to the parties from Mr H and now, with the sale of the property concerned, any rights the parties had in respect of the water entitlements, have lapsed.
It is also the wife’s position that the husband is likely to apply for the exceptional circumstances exit grant from the grape growing industry. She herself has already unsuccessfully applied for the grant, which was refused to her on the basis that she has not derived a significant proportion of her income, from the farm enterprise, in the past.
If the husband successfully applies for the grant, he will receive a sum of $150,000.00. It is the wife’s position that the husband satisfies all the necessary criteria to receive the grant. If he does receive it, it is her case that considerations of justice and equity dictate that she should receive a portion of it.
The husband responded to the wife’s application on 23 November 2007. He has not formally set out his preferred outcome in these proceedings. However, it is his position that he has no current plans to apply for the exceptional circumstances exit grant but, if he did, the compensation payable pertains to him alone, as it is he who will have quit the grape growing industry.
Further, it is the husband’s position that Mr H Senior is indebted to the parties in the sum of around $11,000.00, which relates to the transfer to him of 10,000 kilolitres of water, belonging to him and the wife, in October 2007.
Both parties represented themselves in the final hearing, which took place on 5 November 2008. The wife’s case was well prepared. She relied on her trial affidavit filed 8 October 2008. In addition, she tendered into evidence before the court a number of documents which relate to the parties’ financial circumstances.
The husband has previously had solicitors acting for him. In the main, these solicitors have assisted him in the respect of the children’s issues arising between the parties. The husband has not filed any updated affidavit material since November 2007. He did not tender any additional documents to the court. As previously indicated, his initial response did not set out the particular property orders, which he sought.
Evidence
Both parties seemed to me to be basically honest and frank witnesses. However, without doubt, the wife’s case was more thoroughly prepared, apart from the fact that she did not make reference to the issue of the forfeiture application. In my estimation, she appeared to have a greater level of insight into the issues surrounding the exceptional circumstances exit grant and the transfer of the water licence to Mr H Senior and to be less embittered about the parties’ current circumstances.
However, at the end of the day, there are few disputes of facts between the parties. Sadly, the assets available for distribution between them are meagre indeed. The practical consequences of an equal division as opposed to one which is sixty/forty percent in the wife’s favour are slight.
It is the husband’s case that he is unlikely to apply for the special circumstances exit grant, as he is likely to take up an opportunity to operate another fruit block, presently owned by his grandfather. I have some reservations that this statement is likely to be true. As such, I am concerned at the potential for some injustice to be accorded to the wife, if the court does not deal with this issue in some way.
In addition, it seems clear that the Director of Public Prosecutions contends it is entitled to a sum equal to half of the proceeds of sale of the [T] vineyard. In these circumstances, the husband contends that it would be an injustice to him, if the wife received more than half of these proceeds as his likely indebtedness of fifty percent of its proceeds, to the Director of Public Prosecutions will remain.
As previously indicated, there is no suggestion that the wife was involved in any way at all in the husband’s criminal enterprise. In fact, it is the husband’s evidence that information provided by the wife to the police resulted in the detection of his criminal activities in the first place.
In all these circumstances, I am concerned that, if I accede to the husband’s submissions, it will result in the wife being penalised in some way for the husband’s criminal activities, which occurred independently of her and without either her consent or knowledge. I do not think that this would be fair to her.
Pursuant to section 79B of the Family Law Act the applicant in any property proceedings is required to inform the court of any proceeds of crime order or forfeiture application. The wife has done so. Pursuant to section 79C the court has power to stay any property proceedings pending the decision of the relevant Director of Public Prosecutions to become involved to preserve its rights.
I was concerned, following hearing the evidence in this case, that the Director of Public Prosecutions may not be aware of the date scheduled for final hearing and that potentially the wife may receive more than 50% of the net proceeds of sale of Property T.
Accordingly on 13 November 2008 I called the matter back on and made the following orders:
“During the period of the adjournment the Registry Manager of the court at Adelaide is directed to inform the Director of Public Prosecutions for the State of South Australia that the court intends to finalise matrimonial property proceedings brought by the wife against the husband which may affect property subject to a proceeds of crime order or forfeiture application brought by the Director of Public Prosecutions for the State of South Australia against the respondent husband.
If the Director of Public Prosecutions for the State of South Australia intends to intervene in these proceedings pursuant to section 79E of the Family Law Act 1975 he is to directed to do so on or before 4 December 2008.”
On 19 November 2008 the solicitor dealing with the matter within the Director of Public Prosecutions’ Office wrote to the court in the following terms:
“This is to confirm that the Director will abide with the distribution of monies as determined by the Family Court. However, should His Honour determine that any of the monies referred to above be distributed to Mr Costa, given the existence of our restraining order under the Confiscation Act, that his share instead be paid into the Adelaide Magistrates’ Court Litigants Fund pending determination of the confiscation proceedings.”
Both parties gave additional sworn evidence in these proceedings and each was crossed examined by the other. Accordingly, I had an opportunity to observe each of the parties at close quarters. In these reasons for judgment, findings of fact are made on the balance of probabilities following my observations of each of the witnesses concerned. In what follows, statements of fact constitute findings of fact.
The applicable legal principles
The process to be followed, for the division of the parties’ property, is well established by law.[2] The relevant legal principles are primarily contained in Section 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of steps.
[2] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-355; Clauson v Clauson (1995) FLC 92-595; Hickey &Attorney-General of the Commonwealth of Australia (Intervenor) (2003) FLC 93-143;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[3] The only significant area of dispute between the parties concerns whether or not there is a debt owed to the parties by Mr H, in respect of the water allocation transferred in October 2007.
[3] See Biltoft & Biltoft (1995) FLC 92-614
Secondly, I must ascertain the contributions which each party has made towards those assets. Contributions fall into two broad categories. The first kind is contributions to the property; financial contributions and non-financial contributions, made directly or indirectly by or on behalf of the parties to a marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section “The contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of homemaker or parent.” [4]
[4] See Family Law Act Section 79(4)(c)
It is clear from the authorities that this second kind of contributions must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
The second step occasions controversy between the parties in the following major areas:
·It is the husband’s position that his father contributed a sum of around $18,000.00 towards the deposit paid on the purchase of the [T] vineyard in 2001. Given the nature of his relationship with his father, he contends that this is a contribution to which he alone is entitled.[5]
[5] See Kessey & Kessey (1994) FLC 92-495 and Pellegrino v Pellegrino (1997) FLC 92-789
·It is the husband’s position that this contribution is so disproportionate to the other of the parties’ contributions that it now merits “special recognition”, in his favour.[6]
·The husband raises similar issues in respect of the payment of $18,000.00, which his father advanced to him in 2002 in order to purchase a Toyota Hi Lux motor vehicle, which he retains.
·Although the wife is not able to confirm the exact amount of the donations made by Mr C Senior, she concedes that significant payments were made by him.
·However, it is her position that members of her family also made significant financial contributions to the parties, for which she is entitled to take credit now.
·More importantly, it is the wife’s case that her contributions, both as a wage earner and home maker, were considerably greater than those of the husband. It her case that she discharged the vast bulk of the responsibility of parenting of [J] and [R], both before and after the parties separated.
·It is the wife’s case that the husband had significant difficulties with the use of cannabis and depression during the marriage. In these circumstances, she contends that her overall martial contributions were significantly greater than those of the husband and out weigh any of his direct financial contributions, including those made on his behalf by his father.
·It is also the wife’s position that the husband’s criminal conduct has been a financial disaster for the parties and, to some extent, he must be counted to have either wasted marital assets or to have made a “negative contribution” towards the parties’ current financial circumstances.
·In this regard the wife points out that she contributed considerable sums towards the parties’ mortgage, after separation, although she was not living at the property.
·It is the husband’s position that he was equally involved in caring for [J] and [R] during the parties’ marriage.
·It addition, he asserts that he performed the vast majority of labour on the parties’ vineyard, as well as regularly earning a good income as [omitted].
[6] See Pierce & Pierce (1999) FLC 92-844 at 85,811
At the end of the second stage, it is the wife’s position that her contributions overall are greater than those of the husband but she is prepared to accept that the court is likely to regard them as being fairly equal, particularly given the small extent of the available assets.
On the other hand, it is the husband’s position that his contributions are greater, particularly given that his father has contributed around $36,000.00, which allowed the parties to acquire the [T] vineyard in the first place, as well as the Toyota Hi Lux motor vehicle. As such, he says that the court should accord him a greater percentage of the parties’ net assets, at the end of the second stage, than it accords to the wife.
The third step involves the assessment of the parties prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975). Pursuant to section 75(2)(o) the court is entitled to take into account “Any facts or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.”
The third step creates controversy between the parties in the following areas:
·It is the wife’s position that she will bear the major responsibility financially for [J] and [R], including the payment of [J]’s private school fees.
·Up to this stage, it is her case that she has received only a token amount of child support from the husband and given his recent work history, this situation is unlikely to change. The husband is currently in arrears in respect of the applicable child support assessment.
·The husband is currently unemployed. He points to the fact that his criminal convictions renders it difficult for him to obtain paid employment for himself.
·He categorises the wife as having skills in [omitted] and, as such, having a greater income earning capacity than him.
·The wife acknowledges that she has part time employment as the co-ordinator of the [omitted] in [T]. However, it is her case that this provides her with only a modest income and it is unlikely that she will make the transition to full time employment in the near future, particularly given the ages of [J] and [R].
·It is the husband’s position that he provides a significant component of the care of these two children. As such, he contends that it is artificial for the court to rely on the number of nights the children spend with him, rather it should look to the days concerned.
At the end of the third stage it is the husband’s position that no further allowance should be made in respect of either party pursuant to any of the factors in section 75(2). On the other hand, it is the wife’s position that there should be a further adjustment, of ten percent, in her favour.
Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[7]
[7] See Russell v Russell (1999) FamCA 187
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[8] or of equalisation of assets or financial resources.
[8] See Waters & Jurek (1995) FLC 92-635
At the outset, I am at pains to point out to the parties that the task I must undertake is not a simple accounting or arithmetical task. In the jargon of the times, I cannot “crunch the numbers” to come up with a division of their property, which is not open to challenge or incapable of different interpretation.
Marriage is by and large a joint enterprise. How much buffer spouses must give one another, when financial set backs occur, must depend on the degree of consultation and acquiescence in their relationship.[9]
[9] See D & D [2003] FamCA 473 at paragraph 49
The task, set out for me in this case, requires me to balance and compare contributions which are by their nature different, within the framework of a marriage. Many contributions in a marriage, such as being a homemaker, do not result in the direct acquisition of assets. They are also difficult to value. The discretion I have is a wide one.
Background
The wife was born in 1979. The husband was born in 1979. They began to live together in October of 2001 and married in November 2001.
Shortly prior to their marriage they purchased the vineyard situated at Property T. The purchase price was $120,000.00. On balance, I accept that the husband’s father, Mr C Senior provided the husband with the sum of $18,000.00 as a twenty first birthday present, which was utilised to pay the necessary deposit.
The purchase of this property was part of a larger purchase. At the same time, the wife’s parents, Mr and Ms H purchased an adjoining but larger block for a greater price. The entire area of both properties were then divided equally between the parties and Mr and Ms H, who must be accounted to have contributed more money to the overall purchase. In this way the wife asserts that her parents assisted her and the husband.
I accept that this was so. It is not possible to ascertain, in monetary terms, what was the extent of the assistance. However, the impression that I have is that both Ms Huber’s family and Mr Costa’s family wished to assist the young couple financially, at the time of their marriage.
The wife has qualifications in [omitted]. The husband left school at fifteen to undertake an apprenticeship as a [omitted]. He has completed this apprenticeship and is now a qualified [omitted].
During the marriage, the husband was primarily responsible for tending the vines at the parties’ property. The wife was in paid employment, as a [omitted], in [T]. She took three months maternity leave following [J]’s birth and eight months maternity leave following [R]’s birth.
It is the wife’s case that the parties’ vineyard was too small to provide full time employment, for an active and young person, such as
Mr Costa. Mr Costa confirms that, during the marriage he was regularly employed away from the parties’ vineyard, as a [omitted]. It seems clear to me that the parties shared their respective incomes and regarded their marriage as a joint enterprise.
In the early years of the parties’ marriage, the vineyard was largely successful. On average it provided as annual income of around
$30 - $40,000.00 per annum, before tax. One year was particularly lucrative, providing an income of around $70,000.00.
The parties were fortunate to have a contract to supply their fruit to Southcorp. I accept that the wife had a subsidiary role in regards to the physical work of the vineyard but was extensively involved in its management and administration. The parties operated the vineyard as a partnership.
It is the wife’s case that she did the majority of the parenting of [J] and [R] and performed most of the household tasks. She concedes that the husband did most of the outdoor maintenance. It is her case that the husband was highly dependant on marijuana and suffered from periods of depression, which impacted upon his ability to contribute to the family. I do not disbelieve the wife’s evidence in this regard.
As has been previously indicated, the vineyard became unprofitable in the later years of the parties’ marriage. This period coincided with the worsening drought. Around this time, the relationship between the parties fell into difficulties and they separated for periods of time in December 2006 and for the first five months until May 2007. During these periods, the wife and children left the former matrimonial home but the wife continued to pay the mortgage payments required on the property.
In December of 2006, police raided the property and located 475 cannabis plants; a quantity of dried cannabis leaf; and some cannabis resin; in a shed on the property. This was the basis of the subsequent charges and convictions against Mr Costa.
It is Mr Costa’s case that the parties lost the contract to supply Southcorp, prior to this incident, due to an over supply of grapes in the market. This may be so but the criminal charges did not assist
Mr Costa to run the vineyard as a going concern and he has not been part of the paid work force for some years now. Accordingly, the parties came under greater and greater financial pressure.
The [T] property was sold in February of this year, recouping the parties a sum just in access of $36,000.00 after the payment of the mortgage concerned. More recently, the parties have auctioned the plant and equipment, which related to the operation of the vineyard.
They recouped around $8,000.00 but this was insufficient to clear their other debts, particularly a personal loan with Esanda. Currently the parties owe Esanda $5,900.00. The company is pursuing Ms Huber for this debt.
[J] is attending a private school, [school name omitted] in [T]. The wife is unable to meet the necessary fees, which are currently $1,171.00 in arrears. It seems unlikely that Mr Costa will be able to contribute towards these fees as he remains unemployed.
It was in October of 2007 that the wife agreed to transfer the parties’ entitlement to 10,000 kilolitres of water to her parents for the 2007/2008 irrigation season. It is the wife’s case that her parent’s never utilised the water allocation, which was temporary and has now lapsed.
The husband does not accept this to be the case but he is unable to call any specific evidence to rebut the wife’s position. On balance, I prefer the wife’s account and find that the parties do not have any cause of action against Mr and Mrs H Senior in respect of these water rights.
Apart from the proceeds of sale of the former family home, the parties’ other significant assets are the Hi Lux motor vehicle, currently in the husband’s possession; and their entitlements to superannuation. The wife has provided a Red Book valuation in respect of the Hi Lux. The value provided is $16,000.00. In the absence of any other evidence, regarding the value of this vehicle, I propose to accept this valuation.
It is the husband’s evidence that the car was worth around $34,000.00, when it was purchased new in 2002. It is the husband’s case that his father provided the parties with $18,000.00 towards its purchase, with the remainder coming from their savings. I accept that this was so.
At present, the wife has an amount of $16,176.00 in the Statewide Superannuation Scheme. The husband has a sum of around $3,200.00 in the same scheme. Accordingly, neither party can be regarded as being in a strong position, so far as superannuation and preparation for retirement are concerned.
The only other relevant items of martial property are the various pieces of furniture and other household effects, which each of them retains. The wife asserts that she has items to the value of $650.00 and the husband has items to the value of $997.00. Given the modest sums involved and their proximate parity, I do not propose to take these items of property into account or to include them in the parties’ pool of assets.
Another dispute exists between the parties regarding a number of items of jewellery, which were purchased for or given to either the wife or children. These items of jewellery have been valued at $600.00 by the wife.
The wife says the husband has the items concerned. The husband says the wife has them. I am unable to resolve the issue satisfactorily in the context of these proceedings and accordingly do not propose to include the jewellery as an item of the parties’ matrimonial property.
Neither party has re-partnered since their final separation in August 2007. The marriage between the parties was dissolved on 30 September 2008. Currently the husband is in receipt of a Newstart Allowance. He receives $460.00 per fortnight. At present he is living with his parents.
The mother is employed as the co-ordinator of the [C]. She has held this position for about twelve months. She calculates her annual salary at around $30,000.00. It is not possible for her to extend her hours at the Centre, due to its hours of operation. The mother and children are living in rented accommodation in [P]. The mother’s rent is $95.90 per fortnight.
The mother deposes that she is currently fit and well. Certainly she appeared so to me. The husband refutes any suggestion that he continues to suffer from depression. It is his evidence that he is not currently taking any medication or is in receipt of any specific medical treatment.
As previously indicated, the husband has qualifications as a [omitted] with particular skills in [omitted]. I would have thought that people with his qualifications would have been sought after in the rural areas of South Australia.
The husband was not in a position to refute my suggestion but indicated that he had not been able to obtain such employment because of his criminal convictions, which were well known in the small communities of the [T] area.
There is currently an assessment of child support in place in respect of [J] and [R]. It is based upon a provisional child support assessment income of $36,504.00 for the husband and one of $32,351.00 for the wife. This translates to a weekly payment of child support by
Mr Costa to Ms Huber of $47.95. As previously indicated, Mr Costa is currently $561.00 in arrears.
Mr Costa points to the fact that the Child Support Assessment is based on a higher wage than his Centrelink entitlements. This is so. However, it would seem to me to be the case that Mr Costa has not been proactive in respect of advising the Agency of his current financial affairs. It reinforces my impression that he is not likely to be particularly forthcoming in respect of providing for the children’s financial needs in future, particularly so far as their school fees are concerned.
The exceptional circumstances exit package is an initiative of the Commonwealth Government to assist farmers in severe financial difficulty, who have decided to leave the land. It represents a one-off, taxable payment of up to $150,000.00 for those farmers, who sell their farm enterprises and make the necessary application prior to 30 June 2009.
The wife has applied for such a grant but was refused it on the basis that she left the parties’ farm enterprise because of her separation from the husband, prior to which her main source of income was the wages which she had derived as a [omitted] worker. It was also found that she had not contributed a significant part of her labour to the farm concerned.
It is the wife’s case that the husband would satisfy the necessary criteria which pertain to the grant. Firstly, it is clear that he has provided a significant part of his capital and labour to the vineyard, in the past and secondly he derived a significant level of income from it. Finally, it is her position that, with the sale of the vineyard, he has quit the grape growing industry.
The husband does not specifically refute the first two suggestions but contends that he has not as yet made a concluded decision to exit from the agricultural industry as a self employed farmer. In particular, he deposes that he is considering taking up another vineyard, which is currently operated by his grandfather, who is elderly and approaching retirement.
The exceptional circumstances exit grant cannot be regarded as one of the parties’ matrimonial assets. At best, it represents a future financial resource, for which the husband alone can apply. However, if the husband is successful in obtaining this grant, it will represent a significant financial advantage for him.
Neither the court nor the wife can compel the husband to apply for the grant. I am somewhat suspicious of the husband’s assertion that he is not likely to apply for it. Rather, I am concerned that, because of his bitterness towards the wife, he may leave it to the last moment to apply for the grant, in the hope that she will be caught unawares.
Although the Commonwealth Government do not consider that the wife is entitled to her own grant, in my view, if the husband does successfully apply for his own such grant, the wife must be regarded as having contributed, in some way, to the husband’s entitlement to apply for such a grant in the first place.
I reach this conclusion for the following reasons. Firstly, the wife was an equal and joint proprietor in the vineyard itself and was part of the partnership, which operated it. Secondly, the wife has made both direct and indirect contributions, which have allowed the husband to generate his income, at least in part, from the farm enterprise.
In all the circumstances, I accept the wife’s submission that it would potentially be a grave injustice to her, if the husband was able to apply for the exit grant, after these proceedings are finalised and keep the entire amount of the benefit for himself.
I am fortified in this conclusion, when I consider the current extent of the parties’ pool of marital assets and by the fact that the husband’s criminal conduct is likely to have significantly reduced the viability of the vineyard, to the wife’s overall detriment.
Accordingly, I propose to regard the exit grant as a potential financial resource of the husband, to which the wife has made significant contributions. As such, although the grant cannot be included in the pool of assets, I propose making orders in respect of it, in the event a sum relating to the grant comes into the husband’s hands after 30 June 2009.
I accept the wife’s evidence that between 26 May 2007 and 5 August 2007, she contributed $4,165.00 towards the parties’ mortgage on the vineyard and a further sum of $1,450.00, after the parties final separation, which were contributions made, whilst she was not living at the vineyard.
Step One – the pool of assets
On the basis of the evidence and the findings I have made in respect of it, I find that the parties have the following items of property available to be divided between them:
Property $ Proceeds of sale of the vineyard 36,264.00 Toyota Hi Lux (in husband’s possession) 16,000.00 Total 52,264.00 Liabilities Esanda 5,900.00 Net assets 46,364.00 Superannuation Assets Wife’s superannuation 16,176.00 Husband’s superannuation 3,200.00 Total superannuation 19,376.00
I have placed the parties’ superannuation in a separate pool to their other assets, in accordance with the principles laid down by the Full Court of the Family Court in C & C.[10] This is so that the parties’ contributions towards their superannuation can be assessed differently to the contributions which they have made to their other more conventional items of property.
[10] C & C (2005) FLC93-220
It seems to be the case that the husband’s prior employment has precluded him from making any significant contributions towards the accumulation of superannuation. On the other hand, the wife has been in PAYG employment for much of her career and, as such, her various employers have contributed towards her superannuation. It also seems to be the case that the wife made contributions towards her superannuation in the period prior to her marriage to the husband.
Step Two – assessment of contributions
In support of his position, the husband points to the fact that his father, through his generous gift of $18,000.00 enabled the parties’ to acquire the vineyard in the first place. I agree that this was so but do not accept that this contribution should be given special recognition, at this stage, particularly given that Mr and Mrs H Senior also made significant gifts to the parties, at the beginning of their marriage.
I find the wife to have been hard working during the parties’ marriage. In particular, she has contributed her regular wages, earned away from the vineyard, to the family. In addition, it is my finding that she has been an exemplary parent, who has provided most of the care for [J] and [R] and performed most of the household tasks required.
I accept that in the early stages of the parties’ marriage, the husband also worked hard, both in the vineyard and away from it. However, it seems that in more recent times, his conduct has resulted in the reduction of the value of the vineyard and he has not been in a position to contribute towards its upkeep. This was particularly so following his apprehension for cannabis cultivation.
I accept that the wife played no part in the husband’s decision to use the parties’ property to cultivate cannabis. Accordingly, the husband’s conduct has the potential to significantly reduce the extent of the pool of assets actually available to be divided between the parties. This must be accounted a “negative” contribution on his part.[11] It would be fundamentally unfair to the wife if she was penalised as a result of the husband’s criminal behaviour.
[11] See SJS & NS (2005) 33 FamLR 109
In the period following separation, the wife has continued to bear a greater proportion of the responsibility for parenting the parties’ children. She has also continued to make direct financial contributions towards the mortgage on the vineyard, prior to its sale. It seems to me that it would be fundamentally unfair to the wife if she was to be penalised because of the husband’s criminal activity.
The husband also points to his father’s gift in 2002, which enabled the purchase of the Toyota Hi Lux vehicle. Mr Costa retains this vehicle. His father is not pressing him for any reimbursement of the debt involved. Given the time when this contribution was made, some
six years ago now, and the extent of the parties’ meagre assets, I do not think that it would be just and equitable to give any special weight to this particular contribution now.
Overall, given the length of the marriage between the parties and the extent of their respective contributions, I consider that it would be just and equitable to assess their contributions as being essentially equal, as the wife contends. I think it would be unfair, in all the circumstances of this case, if the husband was to gain an advantage, at this stage of the proceedings, because of the contributions made by his father in 2001 and 2002, given his significant negative contributions overall.
Stage Three – the prospective needs of the parties – section 75(2)
Both parties are young. As such, each is likely to have many years of productive life before him or her. In particular, the husband has provided no evidence to indicate that his health is in any way compromised.
The wife has skills in [omitted]. These enable her to generate a modest income for herself. Given her responsibility to parent [J] and [R], who are in the early years of primary school, it is unlikely that she will be able to either extend her hours or move into a more lucrative area of employment.
The wife will continue to live in a rural area of South Australia where employment opportunities are limited, particularly while the drought continues. Given that the [C] is open on a part-time basis only and is likely to remain so, it seems unlikely that Ms Huber’s hours of employment there will be extended in the medium term.
Accordingly, Ms Huber will struggle financially for the foreseeable future. As such, it is likely to be difficult for her to maintain a comfortable and financially secure life for herself and the children. For the foreseeable future, she is likely to remain in rented accommodation.
Mr Costa has qualifications as a [omitted]. It is his case that his criminal convictions act as an impediment to him obtaining employment in this field. I doubt that this is the case. Rather, I consider that he is somewhat reluctant to make active attempts to find employment for himself because of the emotional shocks to which he has been subject as a result of the end of his marriage and his apprehension for cannabis cultivation.
The husband does not appear to me to be particularly well motivated in respect of the payment of child support. Certainly, to date, his track record has been poor, although he has been in receipt of unemployment benefits.
Although, it is my estimation that, on balance, the husband is likely to have a superior income earning capacity to that of the wife, it is also my view that Mr Costa is likely to be disinclined to exercise this capacity to its full extent. As such, the wife is likely to receive only limited amounts of child support from him and she herself will remain primarily responsible for providing for [J] and [R], who will remain financially dependent upon her for many years to come.
The husband has indicated that it would be his preference to remain as a self-employed primary producer, in the [T] area, growing grapes or some other type of fruit. For the reasons already provided, I am somewhat dubious about this. However, if it turns out to be true, it will mean that the husband is likely to be a modest income earner in future and also have the capacity to cloud his actual income by means of his self-employment as a primary producer.
As I have already indicated, it is my impression that, for all sorts of complicated reasons, Mr Costa is not particularly well disposed towards Ms Huber. As such, he is unlikely to be particularly forthcoming to her about his financial circumstances in future or to assume the full level of his proper financial responsibility for [J] and [R].
I am satisfied that, upon an overall assessment of the relevant section 75(2) factors, a further adjustment in favour of the wife is appropriate. The greater difficulty is assessing what that further distribution should be, in percentage terms, given the small extent of the property pool available and the fact that it is grossly inadequate to satisfy the needs of either of the parties.
It is all very well to talk in percentage terms, so far as orders are concerned, but at the end of the day, what matters to the parties is what the orders mean in dollars and cents and what affect they have on their respective long term aspirations. In cases such as this one, where the pool of assets available to be distributed between the parties is modest, the proper adjustment, in respect of factors after contribution, often becomes more critical.
For these reasons, the Full Court has commented that the centre of gravity, in the determination of property cases, has shifted towards the assessment of section 75(2) factors and, as such, courts such as this one, have been directed to give the provisions concerned “real rather than token weight”.[12]
[12] See Waters & Jurek (1995) FLC 92-635 at 82,376
The wife is an essentially unskilled worker, living in rented accommodation, with the primary financial responsibility of caring for two children aged six and not quite four.
She receives little in the way of child support for the two children and is unlikely to receive any such financial support, from the husband, in the foreseeable future.
As a result of these considerations, it is my view that the applicable section 75(2) factors greatly favour the wife. However, the reality of the situation is that the parties’ pool of assets is so small that this advantage has only limited practical consequences.
In all the circumstances of this case, I see no reason to reach any conclusion other than that advocated by the wife that there should be a further distribution of the parties’ marital assets of ten percent in her favour.
Conclusions – section 79(2) – is this a just and equitable outcome?
The final step in determining property proceedings is to stand back and consider whether the proposed result represents a just and equitable outcome. Considerations of justice and equity must inform each step of the court’s process and the overall result.
The major unknown factor, in this case, is whether the husband will or will not apply for an exceptional circumstances exit grant. If he does, he will receive a financial resource to a possible value of $150,000.00. Such a sum will dwarf the parties’ modest pool of assets.
For the reasons provided, I am satisfied that proper considerations of justice and equity dictate that the wife should receive a substantial proportion of this contingent asset. In these circumstances, I agree with the wife’s submission that the grant should be divided 60/40% in her favour.
Such a capital sum is likely to provide the wife with some measure of financial security, which she presently sorely lacks. It may also enable her to purchase some form of appropriate accommodation for herself.
I reject the submission that the grant is applicable only to the husband as it is he alone who is potentially quitting the field of primary production. The end of the parties’ marriage has meant that the wife to has had to leave the vineyard and make new arrangements for herself. In my view, in these circumstances, she is entitled to receive a significant proportion of the husband’s grant.
For obvious reasons, the wife has a more pressing need for cash than for superannuation. In these circumstances, it seems appropriate that the parties’ total superannuation should be divided 60/40% in the wife’s favour. This will mean that the husband receives a modest split from the wife’s superannuation.
The parties’ net non-superannuation assets amount to $46,364.00. Forty percent of this sum is represented by $18.545.60 and sixty percent by $27,818.40. In the form of the Hi Lux motor vehicle, the husband has assets in his possession to the value of $16,000.00. Accordingly, to receive his entitlements, he will require to receive a sum of $2,545.60 from the proceeds of sale of the [T] vineyard.
The parties’ total superannuation amounts to $19,376.00. Forty percent of this sum is represented by the figure of $7,750.40 and sixty percent by the sum of $11,625.60. The husband has in his control superannuation to the value of $3,200.00. Accordingly, he requires the sum of $4,550.40 to achieve the outcome proposed, I will round the split down to $4,500.00.
It is the husband’s position that such an outcome will leave him indebted to the Director of Public Prosecutions. This will be so. But in my view it is the husband’s criminal conduct alone, which has resulted in the situation and it would be fundamentally unfair to the wife if she was to be deprived of her proper entitlements because of the husband’s conduct.
I am satisfied that the outcome, which I propose, represents a just and equitable outcome for the parties’ concerned. As the Director seeks I will direct that the cash monies due to the husband, pursuant to these orders, be paid into the Adelaide Magistrates’ Court Litigants Fund and the Director be provided with a copy of these reasons for judgment.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and thirty-one (131) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 4 December 2008
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