Humphries & Berry (SSAT Appeal)
[2008] FMCAfam 209
•30 April 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BARBER & BARBER | [2008] FMCAfam 209 |
| FAMILY LAW – Property – relationship and marriage of fourteen years – whether items of property should be notionally added back into asset pool – assessment of contributions – assessment of s.75(2) factors – just and equitable. |
| Family Law Act 1975, ss.75(2), 79 |
| Lee Steere v Lee Steere (1998) FLC 91-626 D & D [2003] FamCA 473 Kennon & Kennon (1997) FLC 92-757 |
| Applicant: | MS BARBER |
| Respondent: | MR BARBER |
| File Number: | ADC 2069 of 2007 |
| Judgment of: | Brown FM |
| Hearing dates: | 28 & 29 February 2008 |
| Date of Last Submission: | 29 February 2008 |
| Delivered at: | Adelaide |
| Delivered on: | 30 April 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr D Berman |
| Solicitors for the Applicant: | Norman Waterhouse |
| Counsel for the Respondent: | Mr B McQuade |
| Solicitors for the Respondent: | Tindall Gask Bentley |
ORDERS
Within forty-five (45) days of the date of these orders the husband pay to the wife the sum of Ninety-five thousand eight hundred and four dollars twenty eight cents ($95,804.28).
Contemporaneously with the payment referred to in order (1) hereof, the wife transfer to the husband the whole of her right, title and interest in respect of the property situated at and known as Property W, in the State of South Australia (hereinafter referred to as “the former matrimonial home”).
Upon the transfer of the property referred to in order (2) hereof, the husband shall forthwith discharge all mortgages and charges secured against the aforesaid property and shall obtain the removal of the wife’s liability to pay any and all liabilities pursuant to any such mortgage or charge and shall indemnify and forever keep the wife indemnified in respect of same.
The husband indemnify and keep the wife forever indemnified in respect of all liabilities and indebtedness arising from the operation of the fishery business previously operated by the husband.
The parties pay in equal proportion any capital gains tax arising from the sale of the South Australian Marine Scale Fish Fishery Licence [X] as a result of the contract of sale signed by the parties in February of 2008.
The wife is declared the owner to the exclusion of the husband of:
(i)The motor vehicle currently in her possession;
(ii)The moneys standing in the ING account currently standing in her name; and
(iii)The Telstra shares currently registered in her name.
The husband is declared the owner to the exclusion of the wife of:
(i)The motor vehicle currently in his possession;
(ii)The fishing boats currently in his possession;
(iii)The tractor currently in his possession; and
(iv)The tools currently in his possession.
The husband is to be responsible for the payment entirely of his 2006 tax year liability; all accountants’ fees relating to the preparation of that tax return and any other previous or subsequent tax returns; all Workcover charges relating to the fishing business, which he previously operated; and all fishing licence fees relating to the aforementioned South Australian Marine Scale Fish Fishery Licence.
In the event that the husband is unable to comply with order (1) hereof, the parties execute all necessary documents and do all necessary things to place the former matrimonial home on the market for a price of not less than $200,000.00 or such other sum as the parties mutually agree with the proceeds of sale to be paid as follows:
(a)Firstly, to pay the costs, commissions and expenses in relation to the said sale;
(b)Secondly, to discharge all mortgages on the property;
(c)Thirdly to pay any capital gains tax outstanding in respect of the sale of the aforesaid South Australian Marine Scale Fish Fishery Licence;
(d)Fourthly to distribute the balance of the proceeds of sale so that the wife receives 52.5% of the parties net assets and the husband 47.5% of the parties net assets taking into account the items of property to be retained by each party as set out in these reasons for judgment and the orders made therein.
In the event the sale referred to in order (9) becomes necessary, the husband is to pay, as they fall due, all regular instalments in respect of the mortgage, council rates, water rates and household insurance in respect of the former matrimonial home until the completion of the sale referred to in order (9) herein and pending such sale the husband be entitled to occupy the property.
In the event the parties are unable to agree upon the method of sale of the former matrimonial home as may be required by the operation of order (9) and the identity of any real estate agent required to affect such sale these issues be determined by the President of the Real Estate Institute of South Australia or his/her nominee.
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:
(a)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 this date;
(b)Each party hereby foregoes any claim they may have for any superannuation benefits belonging to or earned by the other;
(c)All insurance policies become the sole property of the owner named thereunder;
(d)Each party be solely liable and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
In the event that either party refuses or neglects to comply with the provisions of these orders:
(a)The Registrar of either the Family Court of Australia at Adelaide or the Registrar of the Federal Magistrates Court at Adelaide is hereby appointed to execute all necessary deeds and documents in the name of the defaulting party required to give effect to these orders.
All applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Barber & Barber is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 2069 of 2007
| MS BARBER |
Applicant
And
| MR BARBER |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to the division of matrimonial property. The applicant in the proceedings is Ms Barber “the wife”. The respondent is Mr Barber (“the husband”).
The parties began to live together in 1992 and married at W on 4 November 2000. They finally separated, in difficult circumstances, in late September 2006. A short time later, the husband was admitted to a psychiatric hospital, suffering from drug induced psychosis.
The wife has a child from an earlier relationship. He is S, born in 1990. S has lived with the parties for most of his life and has a close relationship with the husband, whom he regards as his father, although the two are not biologically related.
Besides S, the marriage produced another child. He is H born in 1994. H has lived with the husband since the husband’s discharge from hospital. S has also lived with the husband for significant periods of time. The wife has paid child support to the husband for the children.
During the last five years or so of the marriage, the husband was a self employed fisherman. From May 2000, the wife has been employed by Centrelink. As a result, her income is readily ascertainable. There is not the same degree of certainty about the husband’s income.
It is the wife’s position that, during the marriage, she made the greater financial contributions towards the family’s support, through the provision of her regular wages. It is her view that the husband’s business was not particularly successful and was in decline throughout the latter part of the parties’ relationship.
It is also the wife’s position that she provided the vast majority of the parenting required for the two children and was also the main homemaker. She is critical of the husband for using illicit drugs, drinking to excess and gambling during the parties’ relationship.
The husband does not accept these criticisms nor does he accept that the wife was the main financial provider during the relationship. Rather, it is his position that he worked hard in the fishing business and made a reasonable living from it, which largely went on family purposes. He asserts that both parties squandered money on gambling and illicit drugs.
In addition, the husband asserts that his income went to support S, when strictly speaking, he was under no legal obligation to provide such support for S. That responsibility residing, as a matter of the operation of the law, with S’s parents rather than with him.
It is common ground between the parties that, during the marriage, the wife kept the accounts of the husband’s business – a task for which the husband concedes he had no great personal aptitude. He believes that the wife took steps to manipulate the records to keep his income artificially low. As such, he asserts that the various balance sheets concerned do not reflect the business’s true income producing position. The wife does not accept that this is the case.
At the end of the parties’ relationship and marriage of some fourteen years, the pool of assets available for division between them is insufficient to meet both their present and likely future needs. The net pool, including superannuation assets, amounts to a sum of around $340,000.00. There are some disputes between the parties as to what is to be included in this pool and how a number of debts are to be treated.
In terms of value, the parties’ most significant asset is their former family home at Property W. It is worth $200,000.00, although it is subject to a substantial mortgage of $139,000.00. The husband would like to retain this property through the purchase of the wife’s interest in it.
The husband has sold his fishing licence. It is his position that he has been incapable of working the licence, since the parties separated, for medical reasons and because he has had to parent H and to a lesser extent S. His income has fallen as a result and he has been in receipt of a Centrelink benefit. In addition the parties’ liability for the mortgage, which in turn secures a business loan related to the fishing enterprise has increased. Other debts have also been incurred.
The wife does not necessarily accept that the husband is as incapacitated for work as he makes out, either in the period since separation or in the future. From her perspective, the end of the marriage and the conflict it has precipitated has left her stressed and incapable of working to the extent she previously did. She believes that a significant component of the parties’ recently incurred debt is due to the husband’s financial ineptitude and, as such, he should bear the responsibility of it now.
These various disputes have led to the parties having very different views as to the percentage terms of the division of their property between them. The wife asserts that it should be divided 55/45 percent in her favour,[1] largely because of her superior financial and home making contributions during the marriage.
[1] This was the outcome advocated by Mr Berman in his closing submissions.
On the other hand, the husband asserts that the available property should be divided 70/30 percent in his favour. He asserts that the parties’ various contributions during the marriage should be assessed as essentially equal, apart from his contribution in respect of S.
More importantly, he asserts that his prospective needs are likely to be significantly greater than those of the wife. In his submission, these factors call for a significant distribution of property in his favour.
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 19 April 2007 in the Family Court at Adelaide. Her application does not indicate the final orders, which she seeks, with any precision. Rather she seeks a percentage of the parties’ net assets and financial resources, as the court orders.
In her case outline document, tendered by her counsel Mr Berman, she seeks a 60/40 percent division of assets in her favour. In order to achieve such an outcome, she proposes that each party retain their respective superannuation interests and no splitting order be made.
The wife acknowledges that it is the husband’s preference to retain the former family home at W. She has no objection to such an outcome. However, she is pessimistic that the husband will be able to purchase her interest in the property. Accordingly, she seeks orders dealing with the sale of the property, if the husband is unable to raise sufficient funds to buy her out. Overall, she seeks the payment to her of a sum of money, either directly from the husband or as a result of the sale of the property.
Similarly, the husband has not specified, with any provision, in his response filed on 18 May 2007, the orders he seeks from the court. Again, he proposes that he receive whatever proportion of the parties’ net assets and financial resources as is ordered by the court.
It is his position that he should retain the former family home. He has clarified his position in his case outline document, tendered by his counsel Mr McQuade. He seeks a division of the parties’ net assets 70/30 percent in his favour.
The legal principles to be applied and the issues in the case
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 sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.
[2] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[3] The parties have been able to agree upon the valuation of most items of their property, particularly the W property. The value of the fishing licence has been determined by its sale.
[3] See Wardman & Hudson (1978) FLC 90-466; and Biltoft & Biltoft (1995) FLC 92-614
Regardless of this substantial level of agreement, there exist a number of issues between the parties regarding what should and should not be included in their pool of assets and liabilities and how a number of these liabilities should be dealt with. These issues can be summarised as follows:
·The wife operated a bank account with ING Direct throughout the relationship and afterwards. At separation, this account contained $23,100.99.[4] Currently the account contains around $18,000.00.
·The husband asserts that the amount at separation should be included in the parties’ pool of assets. On the other hand, the wife asserts that she has spent moneys to re-establish herself and the more recent figure should be utilised.
·At the present time, the amount owing to Bank SA, which is secured over the W property, comes to around $139,000.00. This sum is made up of two loans – an overdraft and a business loan. At separation, these two loans amounted to around $122,000.00.
·It is the husband’s position that the current figure should be regarded as the parties’ joint liability to the bank.
·On the other hand, the wife asserts that she negotiated with the bank for it to accept interest only on the loans concerned. As the husband was occupying the property concerned and operated the business to which the loans related, she believes that it was only reasonable that he should pay the comparatively modest amount to service the two loans. He did not do so. As a result, the wife contends that she should be entitled to an “add back” of the difference between the two sums ($17,000.00).
·At present the husband has a liability of $3,870.00 to the Department of Primary Industries and Resources in respect of his fisheries licence. The fee relates to the year 30 June 2008 and must be paid before the transfer of the fishing licence concerned.
·From the husband’s perspective, this should be included as a joint liability of the parties. From the wife’s point of view, this is a liability of the husband alone, relating as it does to the operation of the business after the parties’ separation.
·The husband also seeks to “add back” into the parties’ pool of assets, a sum of $2,000.00, which the wife has spent on legal fees.
[4] See annexure F to husband’s affidavit filed 6 February 2008
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 a party to the 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 home maker or parent.” It is clear from the authorities that this second kind of contribution 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.
In assessing the parties’ contributions to the acquisition of the assets of their marriage, it is necessary to consider whether the court should adopt a global approach or an asset by asset approach. In the former, the court assesses the parties’ contributions to their assets in a total or comprehensive manner. In the latter, the court assesses the parties’ contributions to individual items of property.
The global approach is the method generally adopted because it is usually the more convenient, particularly when the court is assessing different types of contributions – home making and financial – towards the acquisition of the various assets concerned.[5]
[5] See Norbis v Norbis (1986) FLC 91-712 at 75,268
The parties agree that the court should adopt a global approach to the division of their property, including their respective superannuation entitlements. Neither party proposes any splitting orders being made in respect of any of the superannuation concerned. The wife has a marked superiority in superannuation. She seeks to retain her superannuation.
The second step occasions controversy between the parties in the following major areas:
·The wife asserts that her financial contributions, during the marriage, in the form of her wage from Centrelink, have been markedly superior to those of the husband through his self employment as a fisherman.
·It is also the wife’s position that her contributions as a home maker, during the marriage have also been superior.
·The wife also points to other of her non-financial contributions, particularly in the assistance she provided to the husband in running his business and doing his books in support of her contention that her contributions overall during the marriage were superior.
·The husband does not accept that he failed to pull his weight during the marriage, either in a financial sense or in other ways.
·The husband asserts that his contributions in the period following separation have been superior to those of the wife, particularly as he has provided the vast majority of the parenting required by S and H.
·The husband places particular weight on the financial support he has provided for S, both prior to and after the parties separation, in circumstances where he had no legal obligation to provide such support.[6]
·Although she concedes that the husband has provided care for both children, in the period since separation, the wife assets that the husband’s other contributions in this period have been negative ones, particularly in regards to the increase in the parties’ level of debt.
·In this regard, an issue arises as to how the difference between the mortgage at separation and now is to be dealt with ($17,000.00).
[6] See Robb & Robb (1995) FLC 92-555
At the end of the second stage, the wife asserts that the parties’ matrimonial property should be divided 55/45 percent in her favour. On the other hand, the husband seeks the same percentage distribution of assets but in his favour rather than that of the wife.
The wife asserts that, although the marriage between the parties was one of significance length, her contribution must be regarded as objectively greater than the husband’s were – she earned more; did more parenting; and contributed to the husband’s books. In blunt terms, she submits the husband did not pull his weight financially. This, she argues, gives her an additional entitlement of 5%.
For his part, the husband asserts that the parties’ various contributions, although different in nature, must be regarded as essentially equal in nature. Both parties worked and pooled their resources. The only differential being his support for S over many years. This, he argues, gives him an additional entitlement of 5%.
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 fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. In the main, section 75(2) deals with the prospective needs of the parties. This area too, occasions controversy between the parties in the following areas:
·The husband points to the fact that he is currently responsible and will remain responsible for parenting the parties’ child H, aged 13 years [section 75(2)(c)].
·The husband also points to the fact that he is not currently working and does not have extensive work qualifications [section 75(2)(b)]. As such, he asserts he will struggle to find work in future.
·Both parties point to a level of emotional fragility, at the end of their marriage and the ensuing litigation process, as having consequences for their income earning capacity in the future, although neither has provided any expert medical evidence in this regard [section 75(2)(a)].
·It is the wife’s position that the husband has currently and did have from the date of the parties’ separation a capacity to earn a reasonable income for himself. She submits that the husband has chosen not to exercise this capacity for his own purposes, particularly to gain an advantage in these proceedings.
·The wife also points to the fact that, as a PAYG tax payer, she has been assessed to pay an appropriate level of child support for both S and H. Accordingly, she is providing and will continue to provide an appropriate level of financial support for these children [section 75(2)(na)].
·The husband argues that there will be an inevitable shortfall between whatever child support he receives from the wife and H’s financial needs in future and this burden will fall on him.
·The husband is thirty-nine years of age. The wife is thirty-five. Overall it is the husband’s position that the wife is likely to have a significantly greater income earning capacity than him for the remainder of the parties’ working lives. In his submission, this is a factor which calls for him to receive a greater proportion of the parties’ marital assets.
·The wife also points to the fact that she is currently working on a part-time basis at Centrelink and is reassessing her future there. Accordingly, she argues her employment situation is not as secure as the husband maintains.
·It is the wife’s position that the husband places too much emphasis on his provision of financial support for S given S’s age and the fact that he is now largely independent.
At the end of the third stage, it is the wife’s position that the various section 75(2) factor in favour of each of the parties largely cancel each other out. As such, it is her position that there should be no further distribution of assets in favour of either of the parties at the end of this stage.
On the other hand, it is the husband’s position that the various section 75(2) factor greatly favour him. As such, he seeks a further allowance of fifteen percent in his favour, at the end of the third stage.
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”[7] or of equalisation of assets or financial resources.
[7] See Waters & Jurek (1995) FLC 92-635 at 82,375
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 between them and the level of acquiescence in their relationship.[8]
[8] 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. It is difficult to place a monetary value on the contributions of a parent and homemaker, who receives no actual remuneration. The discretion I have is a wide one.
The evidence
The parties both gave oral evidence and each was extensively cross examined. The main body of their evidence was contained in their respective trial affidavits and statements of financial circumstances.[9] No other witnesses were called.
[9] The wife relied on her affidavit of evidence and her statement of financial circumstances both filed 14 February 2008. The husband relied on his affidavit of evidence filed 6 February 2008 and his statement of financial circumstances filed 19 February 2008
In addition, some documents were tendered into evidence. The most important of these were the husband’s tax returns and the financial statements for his business for the years ending 30 June 2004; 30 June 2005; 30 June 2006; and 30 June 2007.[10]
[10] See Exhibit A
The wife seemed to me to be an honest and credible witness. She acknowledged her own previous illicit drug use during the parties’ relationship. The wife was criticised for receiving child support and a portion of family tax benefit, in the period following separation, when she was not entitled to those payments, as the children concerned were in the care of the husband. As a result she had to repay moneys to Centrelink. It is said these matters affect her overall credibility. I do not agree.
The sums involved were small and they have been repaid. The circumstances surrounding the parties’ final separation were traumatic. I accept that the wife had to leave the parties’ former home with practically nothing. Shortly afterwards, the husband was hospitalised due to a serious psychiatric episode involving drug use.
Accordingly the situation was a volatile and uncertain one. I accept that the wife overlooked the Centrelink payment. It seems likely that she thought the children would return to her care. I do not think that it can be said that she was deliberately dishonest. Thus, these matters do not affect my assessment of her overall credibility.
One of the major threads of the husband’s case, contained in his affidavit material, is that the wife was disingenuous and manipulative, so far as money was concerned, during the parties’ relationship. He alleged that she was “deceptive” in regards to the operation of bank accounts;[11] had multiple telephone accounts, which she used to move funds around;[12] operated a business of which he was ignorant;[13] and broke into his home to steal financial records.[14] The import of all of this evidence was that the wife was laundering money, which she was siphoning off from his lucrative business, prior to the parties’ separation.
[11] See husband’s affidavit at paragraph 41
[12] Ibid at paragraph 48
[13] Ibid at paragraph 53
[14] Ibid at paragraph 63
All these concerns came to the fore, in the husband’s mind, after the parties separated. Prior to that time, he left all significant financial matters to the wife, without demur. In the period since, with time on his hands, he has subjected every record, to which he has had access, to intense scrutiny. A scrutiny which has produced heat but not necessarily light in his mind. The parties’ tense and unhappy circumstances have provided fertile ground in which the husband’s suspicions about the wife have grown exponentially.
In my view, there is no evidence to indicate that the husband’s fishing business was particularly lucrative. Certainly this does not appear to be the case from its financial records. In addition, in the period after the parties separated, when the husband has returned to fishing, he has not been able to earn a reasonable level of income from it.
The husband may have worked hard in the fishing business from time to time, he also may have sold significant amounts of fish but that does not necessarily mean he was earning a lucrative income. It seems to be the case that the husband had no real idea of what sort of income the business was producing, during the marriage. It is only in retrospect that he feels hard done by.
In his affidavit, the husband called upon the wife to provide him with an explanation of what he considered to be a series of irregular transactions, which had apparently come to his notice after the parties’ separation and when he himself had had an opportunity to trawl through a variety of documents, which the wife had left behind due to the sudden nature of her departure from the former family home. It seems to be the case that the husband had previously ignored these documents.
The husband is not a sophisticated person financially. He conceded that he has no great aptitude for reading and could not manage his own accounts. As a result, it is clear that he was content to leave all financial management to the wife, during the marriage. No independent person has been called to give evidence to suggest anything improper in the nature of the material the wife put together to give to Mr A, the husband’s accountant, for the preparation of the husband’s financial statements and tax returns.
It is only after the parties separation and when necessity has compelled him to resume responsibility for his own financial affairs that the husband’s suspicions, about the wife, have come to the fore, particular that she:
“… engineered it so that my income paid for most outgoings and our living expenses and it was shown as artificially low to enable the wife to claim the Centrelink benefit. The wife’s income on the other had was retained by her and transferred through several bank accounts in her name.”[15]
[15] Ibid at paragraph 31
The husband’s case was one of innuendo and suspicion, without any comprehensive evidence of any financial misbehaviour on the wife’s part. In my view, the wife was able to comprehensively refute all suggestions of improper financial management made against her. Clearly the wife was responsible for the management of the family’s finances during the marriage. The husband was content to entrust her with this task.
It is only after the parties’ separation and after the husband himself became painfully aware of the importance of both the wife’s bookkeeping and the input of her weekly wage to maintain the family’s finances that his suspicions about her have come to the fore.
In the straitened financial circumstances, which have prevailed in this period, it seems that the husband has had a tendency to seize on any circumstance or document, in the hope that it will support his theory that the wife has long been colluding against him financially.
On balance, it seems more likely to me that the husband has not been able to reach the obvious conclusion that the major reason for his current difficult financial circumstances is that two households cannot live as cheaply as one, particularly if he himself is not working.
The wife kept the husband’s books, which she took to his accountant for the completion of the husband’s business accounts and tax returns. The husband acknowledges that he did not oversee the accountant’s work, a task which was left to the wife. The husband signed what he was told to sign without demur. He saw his part of the business as doing the physical work of fishing and acknowledges that he had no aptitude for the administrative side, which he left to the wife.
Without in any way wishing to be disrespectful to the husband, he is naive and inept where money is concerned. He has also acknowledged use of illicit drugs, particularly amphetamines during the marriage and that he regularly visited the hotel in W. It is difficult, if not impossible, to ascertain how much these habits cost the husband.
The wife also acknowledges that she is not without fault in regards to drug use. In addition, both parties assert that the other had significant issues to do with poker machines during the marriage. Obviously all these activities have the potential to be expensive and to eat up funds. They are also the type of activities, which involve ad hoc expenditure which, for obvious reasons, is not usually accounted for in financial records.
It is my impression that the husband is somewhat lackadaisical where money is concerned. On the other hand, the wife was more closely involved in the parties’ finances and seems to have had a more weather eye for the parties’ level of expenditure. Both parties are likely to have been irresponsible with money from time to time but my impression is that the husband was the more so.
In such circumstances, the wife’s evidence is likely to be the more reliable regarding the parties’ level of income during the marriage and what it was by and large spent on. Now that the parties have somewhat acrimoniously separated, the husband has followed a normal human tendency, particularly in proceedings such as these, to assume some malign influence by the wife upon his discovery that his funds are more limited and his financial position more precarious than he previously considered.
I do not believe that the wife is either dishonest or manipulative. I do not accept that she has preyed on the husband’s naivety and has concealed moneys from him. To the contrary, I believe the husband’s attitude towards money and his abrogation of responsibility for his financial security have placed the wife in an invidious position, particularly in the period after the parties separated. She cannot now account for every dollar the parties’ received during their relationship other than to say the monies have largely been spent.
The wife has had a career of around seven years at Centrelink. As such, she is familiar with entitlements to social security and other tax benefits. She has a head for figures, having done some accounting courses.[16] More importantly, she has some commercial acumen and an ability to accept some level of financial discipline. I do not think that the husband necessarily has these attributes. The wife is simply more worldly than the husband, who is a fiscal naïf. I do mean this description of the wife to be interpreted with any sinister connotations.
[16] See wife’s affidavit at paragraph 8
The wife struck me as being a careful and methodical person. In contrast to the husband, she is the type of person who does think about the future in a financial sense. Bluntly put, the husband has no idea.
I believe the wife endeavoured to answer all the questions put to her honestly. Often the husband said he had no idea about a particular financial issue, asserting he was not “too good at reading”. As a result of all these matters, I believe that the wife is likely to be a more reliable historian than the husband, in regards to the vast majority of financial transactions, in respect of which the parties were involved during their marriage.
In these reasons for judgment, finding of fact are made on the balance of probabilities based on my observations of the parties and a consideration of the overall evidence. In what follows, statements of fact constitute findings of fact.
b) Chronology
The husband was born in 1968. The wife was born in 1973. Neither party has any tertiary qualification, although the wife did study at TAFE for a Certificate of Administration/Accounting.
Both parties left school at the age of 16. After leaving school, the husband was a storeman; trainee spray painter; driver’s assistant; and more recently a contract fisherman and deckhand. After leaving school, the wife had been employed as a cook. She had other causal part-time employment in hotels and cafes.
It is clear that neither party had any significant assets, when they commenced their relationship in 1992. However, I accept the wife had savings of around $2,500.00 at the time, which she had accumulated with a view to buying a house for herself and S.
My impression is that the wife has never been afraid of hard work. She met the husband when S was aged around 2½ years. She had separated from S’s father about six months earlier. After H was born in 1994, she remained at home to care for the children, for around about six months, at which stage she sought work at a fish café in W. She had this job for around six years and worked long hours. The wife has been in paid employment ever since.
It is the wife’s case that she was able to save from her income. I accept that this was so. I also accept that the husband had regular employment during this period. My impression is that he was less inclined to save or plan for the future. Without doubt, the wife worked very hard.
It is the husband’s position that his income, prior to 2000, was more regular and greater than the wife’s was. Neither party has produced any definitive financial records to support their respective contentions regarding their level of income during the early years of their relationship. It is not possible to resolve this issue definitively.
In any event, what is clear is that the parties purchased the former matrimonial home, situated at Property W in September of 1994 for a purchase price of $42,000.00. It is the wife’s case that she provided the deposit of $6,000.00 from her accumulated savings, with the balance being borrowed. It is also her case that she ensured that the regular mortgage payments were paid from her salary.
I accept that this was so. The husband had periods of unemployment, during the marriage. I am not critical of him in this regard. Much of the work he did was seasonal, being based in primary industries. The husband concedes that the wife was providing most of the family’s income in 2000, whilst he was studying for his coxswain’s ticket, after having been a deckhand previously, with another fisherman working out of W.
The husband’s evidence is that the position of a deckhand, on a fishing boat, can be an insecure and unsatisfactory one. Income depends on the catch. The work is seasonal. If one’s master is a lazy fisherman, the deckhand’s income suffers as a result.
I accept that the husband earned income prior to 2000. So did the wife. I accept both parties utilised their income for joint family purposes. However, the wife was more intent on the plan for the future and ensured that the mortgage was paid. It is also my impression that she wanted to take steps to ensure the family’s long term financial security.
In this regard, the opportunity for the wife to work at Centrelink was an important one, not only for the wife but for the family as a whole. The wife started at Centrelink in May 2000, as a full-time administrative assistant. The position offered her long term security and the possibility of advancement. She remains in the position.
The wife’s secure income enabled the husband to gain the necessary skills to start his own business as a fisherman. On the basis of the wife’s employment, the parties were able to borrow around $85,000.00 to purchase a fishing licence and establish a business.
In 1993, the husband and wife had purchased a 14 foot fishing boat. This was later used in the fishing business. The purchase price of the fishery licence was $75,000.00. The remainder of the $85,000.00 loan was utilised to operate the business. By 2004, the mortgage on the family home at W had been discharged. In order for this to occur, I accept that it was essential for the wife to have remained in full-time employment from the time the mortgage was taken out.
As I understand matters, the original 14 foot fishing boat was utilised to fish for squid. In order to catch other fish, the husband required a bigger boat. Accordingly, in 2003, the parties borrowed $120,000.00 in order to fund the purchase of a 28 foot fishing boat. This sum was borrowed from Bank SA and was secured against the former family home.
It is the wife’s case that originally the fishing business was fairly successful. However, from 2003 onwards, she became increasingly concerned that the husband was not fishing as much as he had previously and was spending more and more time in the hotel, where he would drink and gamble.
Neither party sought to lead any expert accounting evidence to establish the historical value of the fishing business. In my view, it is useful to examine the gross receipts received by the business from the sale of fish to form some view of its viability. The husband does not suggest that he sold his catch through any unorthodox channels or received cash payments for it. These figures reveal as follows:
Financial Year Gross Sales 2002/2003 $126,012.00 2003/2004 $105,559.00 2004/2005 $95,673.00 2005/2006 $81,675.00 2006/2007 $29,192.00
From these figures, I am satisfied that there was a slow and steady decline in the level of income produced by the business. I have not been provided with any expert evidence in respect of the state of fishery in the area off W. On balance, it seems more likely than not that the decline in profit was due to the fact that the husband was spending less time at sea. Whether this related to his drug and alcohol use is more difficult to elucidate.
It is the wife’s case that, in 2004, the husband began to use methamphetamines. The husband acknowledges the use of this drug. How could it be otherwise, given the circumstances of the parties’ separation and the husband’s subsequent hospitalisation? The wife also acknowledges her involvement with the drug, in conjunction with the husband.
The husband concedes that he went to the hotel from time to time. He denies his drinking was excessive. It is his case that it was the wife, who had issues to do with poker machines. These are difficult issues to resolve definitively in the circumstances of this case. Certainly, I think it would be imprudent of me to resolve these issues on the basis of credibility alone.
In any event, in the light of the wife’s candid admission regarding her own use of methamphetamines, she has abandoned any claim that her various contributions in the marriage were rendered more difficult by reason of the husband’s derelict behaviour and so called for a greater weighting in her favour.[17]
[17] See Kennon & Kennon (1997) FLC 92-757 at 84,294-5
Rather, it is the wife’s case that her total contributions, during this period of the marriage, were significantly greater than the husband’s were. Certainly her drug use does not seem to have impacted upon her income earning ability. Her income has steadily, if modestly increased, in the period in question. I accept that her income was as follows:
Financial Year Income 2002/2003 $38,000.00 2003/2004 $43,000.00 2004/2005 $45,000.00 2005/2006 $49,000.00
An analysis of the husband’s financial statements for the same period, shows a decline in income from the fishing business. As previously indicated, it is the husband’s position that the wife has, in some way, manipulated his records to ensure that his income has been kept artificially low. He believes that his business paid many of the recurrent expenses of the family and he is entitled to credit for this. An analysis of the husband’s financial records reveals the following:[18]
[18] See Exhibit A
Financial Year Gross profit Expenditure Profit 2003/2004 $86,787.00 $83,892.00 $6,067.00 2004/2005 $71,704.00 $72,391.00 $1,433.00 2005/2006 $74,438.00 $61,479.00 $13,970.00 2006/2007 $29,192.00 $39,651.00 ($12,618.00)
The major expenditure items in each year are depreciation,[19] repairs, interest paid and fuel. I accept that the business is likely to have produced more cash in the husband’s pocket, which could be utilised for the family’s benefit, than these figures present. For example, the considerable sums allocated towards depreciation are artificial in nature and both parties and S are likely to have benefited from fuel purchased on the business’ account. However, my assessment is that the business was not as successful as the husband believed, either then or now.
[19] for each of the years in question from 2003/2004 onwards depreciation is $21,381.00; $16,920.00; $14,083.00 and $12,253.00.
In all these circumstances, it seems to me to be an irrefutable contention that the wife’s regular and reliable income, from her employment at Centrelink was the main staple for the family’s financial support. In effect, it seems more likely than not that her wage kept the family afloat and provided for its day to day needs.
This is a common phenomenon in families involved in primary production. One spouse may work very hard, year in year out, on the land or sea without necessarily reaping exceptional profits in ever year, whilst waiting for a good year. Financial necessity compels the other spouse to seek a regular source of income. In the husband’s case, in respect of the years for which records exist, there do not appear to have been any good years. I accept the wife’s evidence that the business struggled.
One of the major sources of the husband’s suspicion of the wife is the source of her accumulated savings in the ING account, in her sole name. At separation, this account stood at the sum of $23,100.99. Given the parties’ overall financial situation, it is a significant sum.
I have not been provided with a full record of all the parties various bank accounts, including the ING account. However, my impression is that the wife is capable of exercising considerable financial restraint. As such, she seems to be capable of saving regularly. In addition, although each of the parties accuse the other of being profligate from time to time, it seems to be the case that the parties lived frugally. As such, I do not consider that the mere existence of this account necessary establishes that the wife was “creaming off” income from the husband’s business. It seems more likely that she was putting sums by against future exigencies.
b) Indirect contributions
The W property was renovated during the early years of the marriage. I accept that this was a joint enterprise and both parties took part in the work involved, as did the husband’s father. I have not been provided with any documents, which evidence the cost of these renovations, other than the wife believes that the parties’ mortgage was increased to cover them.
Both S and H suffer from haemophilia. Neither party has asserted that this has resulted in the children requiring more parental care. It is the husband’s position that the parties shared parental responsibility for the two children concerned and were equally involved for providing for their care. Certainly it seems to be the case now that both children have a close relationship with the husband, notwithstanding in S’s case, the lack of a biological relationship. In particular, S has worked for the husband, in his business, as a deckhand, since he has been about 15 years of age.
It is also the husband’s position that the parties shared household duties relatively equally. On the other hand, the wife asserts that she did the lion’s share of the household duties, with the husband doing some limited cleaning and ironing, under sufferance. Disputes about the performance of household chores are common in cases such as this one, where there is a significant level of animosity between the parties concerned.
It also seems to be a flavour of the wife’s case that she performed more of the “nuts and bolts” parenting of the children than the husband did. In the absence of independent corroborating evidence, disputes of this kind are difficult to resolve. On balance, it seems to me likely that both parties performed household chores and participated in the parenting of the children.
Given the acrimony of the dispute between them now, it is perhaps inevitable that they should currently have such differing view about the parenting of the children and the performance of household tasks. What is however clear is that, during the years of their relationship they regarded themselves as a family. As such, I do not think that either one of them can be regarded as a “passenger” in the marriage. In my assessment, both contributed.
However, on any view, the wife must have been a busy person. She worked full-time. It seems to be the case that she did the family’s budgeting and shopping. Of great importance is the fact that she also did the husband’s books, something which he was incapable of doing himself. It also seems to be the case that she fully supported the husband in achieving his ambition to go into business as a fisherman.
c) Events between separation and now
At the present time, the wife’s annual salary is $55,169.00. She is currently working part-time, having taken 16 weeks leave at half pay. She describes having a shoulder injury and feeling stressed at work. She has provided no formal medical evidence in respect of either of these conditions.
The wife deposes that she is currently receiving counselling to assist her with coming to terms with the various stressors in her life, which include the current proceedings. Her leave arrangements with Centrelink will conclude in June of this year. In her words, whether she will return to full-time work at Centrelink “depends on [her] mental health”.
As previously indicated, there has been considerable controversy between the parties regarding the payment of child support for the children in the period since separation and who of them should be entitled to various government benefits in the form of family allowances. In March of 2007, the wife was assessed to pay child support for both S and H in an amount of $743.00 per month, based on a child support income for her of just over $47,000.00. It is clear that H has lived in W, with the husband, consistently since the parties separated. He is at school at W.
The position is more complicated, so far as S is concerned. He has left school. For extended periods of time in 2007, it seems that he lived with a girlfriend or his mother in the Adelaide area. He was away from W between February and November of 2007. More recently, he has returned to live in W, although he had plans to travel on a working holiday, with a friend to NSW. This project came to an end when he was involved in a car accident.
Although S has returned to live in the former family home in W, it seems to be the position that he is receiving a New Start allowance. It also seems to be the case that he is looking for work for himself and leads a largely independent life. He has done some fruit picking in M. As such, I do not think that considerations for his future financial support loom large in this case. S is likely to lead a life of his own choosing from now on.
I accept that the wife left the former family home, on 26 September 2006, taking only a small hold-all containing some of her clothes. I reject any suggestion that she took significant sums in cash with her. She did however, have access to the ING account, which she utilised to pay re-establishment costs for herself in rented accommodation in Adelaide.
Initially, the wife was compelled to live in a women’s shelter. She was fortunate that her employer was able to find her a position in its Adelaide office. Accordingly, although the circumstances of the parties’ final separation were extremely traumatic, the wife was able to maintain her paid employment.
Arrangements for the care of H were extremely fluid in this period. The husband was hospitalised for a time. Obviously, in such circumstances, he was unable to care for H, who spent some time with his mother and in the care of friends at W. Ultimately, H decided that he wanted to continue to live in W and maintain his friendships and schooling in the town.
The wife does not formally seek to change these arrangements for H’s care, although she has some reservations about them. H spends regular periods of time, with his mother in Adelaide. As previously indicated, there is an assessment by which the wife pays the husband child support for him, which is based on the wife’s income.
Between September 2006 and now, the balance of the wife’s ING account has reduced to around $18,000.00. It is the wife’s position that she has utilised this sum in paying costs to re-establish herself in Adelaide. However, she also acknowledges that she spent around $1,500.00 in private investigators fees, which related to inquiries she had made regarding the level of care the father was providing to H.
It is the husband’s position that this indicates that it would be imprudent for the court to accept that the reduction of the account in question is represented by the wife’s living expenses alone. On this basis, he argues that considerations of justice and equity should dictate that the difference between the account at separation and now should be notionally “added back” into the parties’ pool of assets and the sum involved regarded as a premature and unjustifiable distribution of assets in the wife’s favour.
It was in November of 2006 that H returned to live with the husband in W. Shortly afterwards, the husband applied for a child support assessment for both him and S. As previously indicated, the assessment was based on an income of $47,004.00 for the wife and one of $886.00 for the husband. It resulted in a monthly assessment of $371.50 for each child or $743.00 in total.
Given the circumstances of the parties’ separation, I can understand why the wife would be concerned about the arrangements for H’s care and why she would be concerned about the husband’s ability to care for him. Accordingly, I do not think it extraordinary that she would seek the services of a private investigator to monitor these matters. As she herself indicated, she hoped that H would return to her care.
Although the wife had access to an income, following her relocation to Adelaide, I accept that she left the former family home with practically nothing. In very difficult circumstances, she had to re-house and re-equip herself. Her expenditure in this period does not appear to me to be either unreasonable or excessive. Her only real recourse to meet this expenditure was either through accessing the ING account or by borrowing from friends. She utilised both these sources.
The wife concedes that she continued to receive a family tax benefit of $80.00 per fortnight and a carer’s allowance of $92.00 per fortnight from the date of separation until some time in January 2007. She was not entitled to these payments. She has attended to repayment of the overpayments involved. I accept her explanation that, at the time, she was more concerned about issues to do with her safety, following her flight from the family home than correcting the social security irregularities. In addition, as I have previously indicated, I accept that arrangements for H’s care, during this period were not fully settled.
The wife concedes that she is currently in arrears in respect of child support for H. As at the date of trial, the sum involved was $1,433.00. I accept the wife’s evidence that she has had difficulty coping emotionally in the last year or so. These proceedings have been stressful and difficult for her. In such circumstances, I have no reason to believe that she has elected to reduce her level of work for any sinister motive. Her level of remuneration, if and when she returns to full-time work, will be around $55,000.00 per annum. Her leave arrangement with Centrelink comes to an end in June of this year.
Since the parties separated, the wife has formed another relationship. The person concerned, Mr M is a roller door installer. The wife lived with him for a time, but they are now living apart. Whether they will reconcile their relationship is unclear to me.
The husband has re-partnered since the parties separated. He lives with his partner, Ms H in the former family home at W. Ms H has four children aged 2, 3, 8 and 11, who live with the husband and Ms H. Ms H is not in paid employment. She receives family payments and child support.
The husband is currently in receipt of social security payments. He receives $387.00 per fortnight. He concedes that he did some fishing in 2007 but was confined to squidding, which is not particularly remunerative and is done in the smaller of his boats.
Schnapper fishing is more lucrative but requires more outlays. It also requires the bigger boat, which is not seaworthy. The husband has no resources to have it repaid. The smaller boat needs a new motor but the husband has been refused a loan to buy this. These various factors and his stress at the end of the marriage have led to the decline of the fishing business and the ultimate sale of the licence.
Mr Barber sold the fishing licence, in March of 2008, for a net amount of $165,000.00. He still has his boats, which he would like to retain in the longer term but it is likely to be difficult for him to return to the fishing industry, other than as a deckhand.
It is the wife’s position that the husband could have applied himself more effectively to the fishing business, in the period after the parties separated. She is disinclined to believe his accounts of the technical difficulties which he says he has encountered in operating his boats. Perhaps the husband could have shown more application to his business, I do not know. I accept however that he was shocked and disorientated by the end of the parties’ marriage. It appears to be the case that he “buried his head in the sand”, as the business unravelled and its major creditor became more pressing.
The wife is highly critical of the husband for failing to lease the fishing licence, during much of 2007, when it became apparent to all concerned that the husband was either unable or unwilling to operate it. I accept the wife’s evidence that she was approached by a fisherman to lease the licence in July of 2007. The husband had a similar approach, which would have enabled him to receive a sum of around $300.00 per week.
During the marriage, the parties allocated a sum of around $1,400.00 towards payment of the business loan secured against the former family home. The wife was well aware of the implications of not paying the loan. Accordingly, she approached Bank SA to negotiate an arrangement whereby the bank would accept interest only payments on the loan of around $160.00 per week. She herself had no capacity to pay the full amount required pursuant to the loan agreement. The husband was uncooperative with this arrangement and, as a result, the mortgage secured against the former family home has increased by around $17,000.00.
At the date of separation, I accept that the fixed business loan stood at $110,681.00 and the overdraft was around $11,000.00. Currently the parties agree the total amount owing is around $139,000.00. It seems clear that the wife did all she could to avoid the parties’ liabilities blowing out but that the husband was incapable of attending to his affairs. It is his position that this was due to emotional frugility, but he has provided no medical evidence to this end, although he has deposed that he was prescribed antidepressant medication.
Regrettably, the impression that I have of the proceedings is that they have been particularly acrimonious and protracted, notwithstanding the comparatively small pool of property available to be distributed between the parties. It is also regrettable that both parties have incurred considerable legal fees in regards to the proceedings. The wife deposed that she has paid around $2,000.00 in legal fees. I have not been provided with exact details of the husband’s legal costs. The husband wishes the wife’s costs paid to date to be “added back” in the parties’ pool of assets.
The parties will incur a liability for capital gains tax following the sale of the fishing licence concerned. The exact amount of the tax has not as yet been assessed. It is likely to be somewhere around $14,000.00. The parties agree that this should be a joint liability.
A number of other debts remain outstanding following the end of the fishing business. Although he initially sought to claim them, the husband concedes that some expenses related to a Telstra telephone account, should not be included. The wife concedes that the husband’s income tax liability for the year ending 2006, a sum of $870.00 and his accountant’s fees of $1,034.00 should be included as joint liabilities of the parties.
The husband has been remiss in attending to the payment of statutorily mandated Workcover payments, since the parties separated. Proceedings have been taken against him in the Magistrates’ Court to recover a sum of $1,305.00. Of this sum only $49.19 relates to the period of the parties marriage. The husband concedes that this amount only should be included as a joint liability.
In addition, the husband has a liability of $3,870.00 to the Department of Primary Industries and Resources in respect of licence fees for the fishing licence. Apparently these fees must be paid prior to the transfer of the licence concerned. I would have thought that at least a component of the fee would be the responsibility of the licence’s purchaser and some adjustment would be made in this regard. Neither counsel was able to enlighten me in regards to this issue.
Step One – the pool of assets available for division
The parties agree that Property W is valued at $200,000.00 and is currently subject to a mortgage of $139,000.00. It is also common ground that the ING account is now around $18,000.00, after having been $23,000.00 at the time of separation.
The Full Court of the Family Court[20] has identified three areas where it is appropriate to notionally “add back”, into a pool of matrimonial property, assets which no longer exist. The circumstances are as follows:
·Where matrimonial assets have been utilised to pay the parties’ legal fees, thus diminishing the pool of assets available to be distributed between them and so creating a situation where the normal rule whereby each party should bear his or her own costs is defeated.[21]
·Where there has been a premature distribution of matrimonial assets.[22]
·Where one of the parties has embarked on a course of conduct either recklessly or with the direct intent to reduce or minimise the effective value of some item of matrimonial property.[23]
[20] See AJO & GRO (2005) 33 Fam LR 134 at 144
[21] See In the Marriage of DJM and JLM (1998) 23 Fam LR 396
[22] See In the Marriage of Townsend (1994) 18 Fam LR 505
[23] See In the Marriage of Kowaliw (1981) FLC 91-092 at 76,644
In regards to the third of these categories, it has been pointed out by the Full Court that this principle represents a guideline for the court rather than a fixed code, bearing in mind the discretionary nature of the jurisdiction created by section 79 of the Family Law Act.[24] In my view, each of the categories, regarding the notional adding back of assets, is to be regarded in the same way. Accordingly whether an item of property, which no longer exists, is to be added back must depend on the circumstances of the case concerned and on an overall consideration of the justice and equity of the situation.
[24] See In the marriage of Browne & Green (1999) 25 Fam LR 482
It is the husband’s case that the difference between the ING account at separation and now should be notionally added back into the parties’ pool of assets as it represents a premature distribution in the wife’s favour, which needs to be taken into account in the final disposition of this matter. I do not agree.
The wife was entitled to utilise matrimonial property for her own day to day living expenses and to re-establish herself following the parties’ separation. After all, the husband has had the sole benefit of living in the former family home.
In these circumstances, I do not think it would be in accordance with principles of justice and equity for this sum to be added back. For the reasons already provided, I do not think that the entire sum is tainted, in some way, because the wife used a portion of it, ($1,000-$1,500) to retain a private investigator.
At the outset of the hearing, neither party seemed greatly concerned about the prospect of adding back legal fees. Only the wife has quantified her legal fees. In all the circumstances, I do not think it would be fair to add back only the wife’s legal fees.
It is the wife’s position that the equity in the former matrimonial home, which has been lost as a result of the husband’s actions between separation and now, should be notionally added back into the parties’ pool of assets and be treated as a benefit nominally received by the husband alone. She categorises the husband’s behaviour in failing to lease the fishing licence; failing to agree to an arrangement whereby interest only on the business loan could be paid; and otherwise failing to operate the fishing business amounts to reckless, negligent or wanton behaviour of the type categorised in Kowaliw by Baker J.
In Kowaliw Baker J indicated that, as a matter of general principle, financial losses, either individually or jointly incurred by parties during the course of their marriage, should ordinarily be shared by them. In the circumstances of this case, I believe that I should be careful in how I deal with the husband’s conduct, in respect of the business, between the date of separation and now. I think it would be an unduly simplistic analysis to regard the husband as having wasted the sum of $17,000.00 and that he should thus be regarded as having had the benefit of this sum.
Although the Full Court has generally disproved of the notion of “negative contributions”[25], it is my view that, given all the circumstances of this case, it would be preferable to deal with the consequences of the husband’s conduct between the date of separation and now under the second step of the process, which deals with the assessment of the parties’ respective contributions rather than through the exercise of adding back assets.
[25] See In the Marriage of Spiteri (2005) 33 Fam LR 109 at 119
For these same reasons, I believe that the moneys owing to the Department of Primary Industries & Resources should be treated as a joint liability of the parties.
Otherwise, the parties are in agreement about the extent of their pool of matrimonial assets and liabilities. They have agreed on the value of the fishing boats, in the husband’s possession and the value of their respective motor vehicles and other items.
Accordingly, I find that the parties have the following pool of matrimonial assets and liabilities.
Assets $ Property W 200,000.00 Husband’s household contents 3,000.00 Wife’s motor vehicle 4,500.00 Husband’s motor vehicle 8,000.00 Fishing boats (husband) 12,900.00 Fishing licence 165,000.00 Husband’s tractor 3,000.00 Husband’s tools 1,000.00 Wife’s ING account 18,000.00 Wife’s Telstra shares 700.00 Total 416,100.00 Superannuation Wife’s superannuation 60,438.00 Husband’s superannuation 10,080.00 Total superannuation 70,518.00 Total assets 486,618.00 Liabilities Mortgage 139,000.00 Husband’s 2006 tax liability 870.00 Husband’s accountant’s fees 1,034.00 Fishing licence fee 3,870.00 Workcover charge 49.19 Total liabilities 144,823.19 Net assets 341,794.81
Step Two – assessment of contributions
This is not a case where there was any significant discrepancy in the financial positions of the parties at the outset of their relationship. Neither of them was in a strong asset position when they met. The wife had a modest level of savings, but I do not think that this is significant in the overall disposition of the case.
As I have found, the wife is a hard worker and was part of the paid workforce during the vast majority of the marriage. It is my finding that it was the wife’s financial discipline and particularly the reliability of her regular wage from Centrelink which enabled the W property to be initially paid off and for the husband then to fulfil his aspiration of entering the fishing industry, as the proprietor of a business rather than as an employee.
I accept that the husband worked hard, in the early years of the marriage. He also had periods of unemployment, one of which was utilised to enable him to acquire the necessary qualifications to become a professional fisherman. Without the wife’s financial support, the husband would not have been able to achieve this goal.
Initially, the fishing business was successful but the relevant financial records indicate that it was a business in decline throughout the latter years of the marriage. On the other hand, the wife’s income was reliable and increased, albeit modestly, from year to year. For the reasons already provided, I do not accept that the husband’s income was manipulated by the wife or has been kept to artificially low levels by any machinations on her part. Rather, it is my assessment that she was the financial mainstay of the family.
The wife, in addition to her own paid employment, also assisted the husband in the administration of his business. The husband was unable to perform these administrative tasks himself. The husband sees the wife’s assistance only in negative terms now. I do not think that this is an accurate assessment. Rather, it is my estimation that the wife contributed usefully to this aspect of the parties’ marriage.
Both parties made many and varied contributions during the marriage. Both were involved in providing care for H and S. Both were involved in the early renovations at the Property W property. However, it is my finding that the wife’s activities were more integral to the family’s stability and ongoing financial security.
Her counsel described the wife as the “back bone” of the family. I accept this was so. She was more involved in providing for the children than the husband; her income was essential for the family to remain financially afloat; and she supported the husband in his business activities.
For reasons that are not easily discernable, throughout the latter years of the marriage, the husband increasingly was unable to provide as much income as he had done. He concedes that he was using illicit drugs and drinking during this period. He denies that this was the reason for the decline in his income. He points to the fact that the wife also used illicit drugs. However, in my view, the difference between the two parties is that the wife’s income remained reliable. The husband’s did not.
Accordingly, putting aside issues to do with the husband’s provision of financial support for S, it is my assessment that the wife’s overall contributions, during the marriage, are superior to those of the husband by a marked degree.
The husband has been a constant figure in S’s life since he was a toddler. S is now an adult but continues to live with the husband. Over many years, the husband has fathered S without complaint or comment. In his mind, no differentiation exists between S and H and the husband’s income was made available to both children without restriction. The husband’s financial support and parenting of S must be counted as a significant contribution on his part.
I concede that, in many ways, it is artificial to distinguish between the husband’s contributions to S, on the one hand and H on the other, when in the minds of the parties themselves, there was no distinction between the children. But, in a strict legal sense, Mr Barber was under no legal obligation to support S. That duty resided with Ms Barber and Mr R, S’s biological parents.
I also acknowledge that, in the reality of the parties’ situation, it was not possible to excise S, in some way, from the family’s accounts. The parties pooled their funds and applied them to family purposes. Obviously S was an integral part of the family and so seamlessly received the benefits of the parties’ pooled resources. Mr R did provide some child support for S but it does not seem to have been as consistent and reliable as the husband’s contributions, which flowed because he was an ever present feature of S’s life.
It is also undoubtedly the case that Mr Barber gave his support and love to S unbegrudgingly and unconditionally. His responsibilities to S were part and parcel of his relationship with the wife. Pursuant to section 75(2)(o) the court is entitled to take into account the existence or otherwise of a party’s legal obligation to support another person but this must be done within a framework of “ordinary notions of justice and equity”.[26]
[26] See Robb & Robb (1995) FLC 92-555 at 81,547
As such, in accordance with what the Full Court said in Robb, the wife is not entitled to any weighting in her favour in respect of her parenting and other contributions made regarding S, which she was legally obliged to make, in conjunction with Mr R. To use the Full Court’s terminology the husband is to be regarded as a “volunteer”, who assisted the wife in the discharge of these obligations. I doubt that at the time, the husband was consciously motivated by such altruistic considerations. Rather S was part and parcel of his life.
Accordingly, I have come to the view that the husband is entitled to some credit, in the overall scheme of things, in respect of the contributions he has made during the marriage, so far as S is concerned. Bearing in mind ordinary notions of justice and equity, particularly the circumstances of the parties’ relationship, I do not think that these contributions should be given an inordinate amount of weight.
The parties have been separated for around eighteen months. During that time, the husband has parented H almost exclusively, albeit he has had some financial support, in the form of child support, from the wife. He has also had the benefit of living in the former family home during this period.
However, in my view, he has not discharged the financial obligations which flow from this privilege. The husband has either passively or actively allowed the financial position of the parties to erode in this period by his failure to take any steps to either satisfy or mitigate the claims of Bank SA, arising from the business loan. It seems to me that he has been suffering a state of financial paralysis.
As previously indicated, it is difficult to know, in the absence of specific medical evidence, whether this paralysis has its root cause in some pathological or psychiatric condition. The husband has said he was depressed. I accept that in the ordinary usage of the term he was. However, in this state, he has failed to utilise the fishing licence properly and allowed the mortgage to increase by $17,000.00. This would not have occurred if he had leased the licence and followed the wife’s counsel of seeking the bank’s agreement to accept interest only payments on the loan involved.
On the other hand, the wife has found herself in a difficult position financially. She has had to rehouse herself, after what was obviously a traumatic separation. Financial circumstances have compelled her to keep working. She has made financial provision for both children.
On my calculations, the husband’s actions have resulted in a reduction of the parties’ non-superannuation assets of around 6%. This is probably a conservative estimate. Certainly, the husband has not directly contributed to any increase in the wealth of the parties, rather his actions have allowed that wealth to diminish. In all the circumstances, notwithstanding the husband’s sole parenting of H, it is my view that a consideration of the post-separation contributions, including negative ones, favours the wife.
The task required of me pursuant to section 79(4) of the Family Law Act is to weigh and assess the disparate contributions of the parties to arrive at an outcome, which is both appropriate and just and equitable in all the circumstances. Contributions, which are by there nature and quality different, must nonetheless be compared. The exercise is not a pure accounting one.[27]
[27] See Q & Q [1999] FamCA 1314 delivered 17 March 1999 at paragraph 37
These tasks are not easy to perform in respect of an exemplary parent or homemaker, who receives no actual salary for the labours he or she performs. The court must be careful to avoid a tendency to undervalue non-financial contributions made by homemakers and parents.[28] In addition, the task must be performed when members of society hold very different views as to the nature of marriage and the economic consequences of divorce.[29]
[28] See Ferraro & Ferraro (1992) 16 Fam LR 1 at 38
[29] See Mallet v Mallet (1984) 156 CLR 605 at 607-8
In this case, it is my view that the wife, in common with many parents and spouses in this day and age, has been the back bone of the family concerned in this case. She has been both a wage earner and a homemaker. Her regular and consistent wage has been integral to the family’s financial survival. In addition, it seems to me more likely than not that she has performed more of the “nuts and bolts” parenting within the family unit. In addition, she has assisted the husband in the running of his business. Most importantly, it is my view, that her financial discipline has enabled the parties to be in the financial position, which they currently enjoy.
On the other hand, particularly of late, it seems that the husband has “dropped the ball”, so far as financial matters are concerned. The precise reason for this is unclear to me. There may be no precise reason and it may be as a result of a combination of factors – the husband’s drug and alcohol use; his psychological fragility; or cyclical forces in the fishing industry.
The result of these various considerations is that it is my view that the wife’s overall contributions must be considered to be significantly greater than those of the husband. At the end of the second stage of the proceedings, I assess the parties’ respective contributions as being 57.5%/42.5% in the wife’s favour.
In many cases, there is always some possibility of an overlap between some of the steps, in the multi-step process of dividing matrimonial property. In particular, section 75(2)(o) empowers the court to take into account “any fact or circumstances, which, in the opinion of the court, the justice of the case requires to be taken into account.”
I am conscious that the matters relating to the husband’s parenting and provision of financial support for S are more properly considered under this subsection, as indeed are some of the contributions of the husband, which I have ascribed as being negative ones. In performing the task required of me, I must be conscious of such potential overlaps and avoid the potential of a double accounting.
Step Three – section 75(2) factors – the prospective needs of the parties
Sub-section (a) – The husband is almost forty years of age. The wife is thirty-five. I do not think that the discrepancy in their ages is of any moment in the circumstances of this case. Ordinarily, I would expect both of them to have very many years of productive life before them.
Presently, both parties assert that they face an uncertain financial future because of physical and psychological frailty. Neither has produced any expert medical or psychological evidence in regards to this issue. Accordingly, I approach it with some caution.
Sub-section (b) – The wife is regarded as a career public servant. She has worked for Centrelink since 2000. Centrelink arranged alternative employment for the wife, as a senior customer service advisor, in one of its Adelaide offices, following the parties’ traumatic separation. She receives an annual salary of $55,169.00.
Currently the wife is on 16 weeks leave, on half pay, from Centrelink. She ascribes the need for this leave to the mental stress she is currently suffering and a shoulder injury. She deposes that she will reassess her future with Centrelink, when her leave expires, in June of this year. She vehemently denied that she is currently under any cloud, at Centrelink, because of her employment performance.
In my view, it is more likely than not that the wife will regain her mental equilibrium once these proceedings have concluded. It seems to me likely that she is a valued member of staff at Centrelink and has a long term future with that department. This is likely to guarantee her a secure income for the foreseeable future. In any event, the skills the wife has obtained at Centrelink are likely to be of assistance to her in gaining alternative employment, if she should so wish.
The husband is currently unemployed. He has qualifications in the fishing industry but is unlikely to return to that industry on a self-employed basis. I accept his evidence that employment as an employed deckhand, on a fishing boat, is hard work, which is not particularly well paid. At present, the husband seems disinclined to return to this kind of work.
Prior to joining the fishing industry, the husband worked in a number of unskilled positions. In future, he would like to obtain employment in the building industry or on the land. He has considered undergoing training to equip him to operate either a bobcat or front-end loader.
Like the wife, I consider the husband is coming to terms emotionally with the end of the parties’ relationship and the difficult circumstances which followed. In my assessment, the husband is now ready to consider a return to the active workforce. He conceded, in his evidence, that he was now ready for work. I suspect these proceedings have acted as something of a brake on this intention.
In the absence of specific medical evidence, I am unwilling to accept that either party faces significant health or mental restrictions in regards to the pursuit of future employment. However, in my assessment, the wife is significantly better placed in the employment market than the husband. She has a job and current administrative skills.
On the other hand, the husband is essentially unskilled. The most significant “asset” a party can take out of a marriage is a reliable income earning capacity.[30] In this case, the wife has such an asset, whereas the husband’s future is more problematic. These considerations favour the husband.
[30] See Clauson & Clauson (supra) at 81,911
Sub-section (c) – H will be fourteen years of age in June. He attends High School. No evidence has been provided as to his academic potential and how long it is likely he will remain at school or whether he will go on to some form of tertiary study.
Although S left school early and entered the workforce, I think it would be unwise of me to assume that H will follow a similar course. In this regard, I think I should pay heed to the fact that school retention rates have increased throughout the country, in the last decade or so, and more often than not nowadays children stay at school until Year 12.
It is the husband’s case that his responsibilities to parent H place a significant restriction on his capacity to re-enter the workforce. However, it seems to me, given H’s age, that these responsibilities will not constitute a significant bar to Mr Barber returning to the workforce. However, I note that as a teenager, H is in a period of life where his recurrent expenses are likely to be significant.
The husband, of course, does not bear the financial responsibility for maintaining H alone. He is entitled, as he has done, to claim child support from the wife. Accordingly, the husband has not been and is unlikely to remain totally bereft of financial assistance in respect of providing for H.
Sub-section (d) – Both parties appear to live modestly and neither has any unusual expenses. S has recently turned eighteen. During much of 2007, it seems he was living independently of the parties. He is currently living with the husband. It seems to me likely that S is largely financially independent.
Sub-section (e)
– The husband has re-partnered since separation.
Ms H is a single parent of four children. She is not currently employed and does not own any real estate. She supports herself through social security payments and child support. The husband is under no legal duty to support any of Ms H’s children. However, he and Ms H are likely to pool their financial resources.
The wife did form a significant relationship following the end of the parties’ marriage. However, she is not currently living with Mr M. In my view, the matters which fall for consideration under this heading are not greatly relevant.
Sub-section (f) – As a result of her employment by Centrelink, the wife has been able to accrue a significantly greater amount of superannuation than the husband. Accordingly, she is currently much better placed for retirement than him.
However, given their respective ages, both parties are some way away from retirement and so, theoretically have time to accrue further superannuation and make financial provision for their later years. Accordingly, the considerations under this heading favour the husband but not to a marked degree.
Sub-section (g) – One of the sad consequences of the end of the marriage between the parties is an inevitable reduction in the standard of living for them both. It is trite, but true nonetheless, that two households cannot live as cheaply as one. What is important, in respect of this subsection, is that any drop in standard of living should not be borne disproportionately by one party.
The husband would like to retain the W property. He is not currently working and accordingly may find it difficult to borrow any significant sums of money in future. He has deposed to a capacity to borrow between $50,000.00 and $60,000.00.
The wife also no doubt, wishes to be left with sufficient funds to purchase accommodation for herself. If she retains her present employment, which seems likely, she will be a more attractive borrower than the husband. However, it is my view that overall the considerations which fall under this heading do not greatly favour one party over the other.
Sub-section (h), (ha), (j), (k) & (l) – I do not think that any of these subsections have any application in the present case.
Sub-section (m) – Only the husband is currently cohabiting with another person. Ms H derives some benefits from her cohabitation with the husband, as she and her children are able to live in the parties’ former family home. Otherwise, given that both the husband and Ms H are in receipt of social security payments, it is likely that they live under conditions of severe financial austerity.
Sub-section (n) – The parties’ pool of assets is likely to be insufficient to meet the prospective needs of both the parties. However, each will retain a significant portion of the pool.
Sub-section (na) – The weight to be attached to a child support assessment will vary in the circumstances of each particular case concerned. The court is directed to look at the amount of the assessment, the financial circumstances of each of the parties, the needs of the children concerned and whether child support is likely to be paid regularly and at an adequate rate in future.[31]
[31] See Clauson & Clauson (supra) at 81,911
The wife’s level of income is readily ascertainable and amenable to the application of the child support legislation. As such, it is likely that the husband will continue to receive a proper level of financial support, in respect of H, for the foreseeable future.
Sub-section (o) – I have already made reference to this subsection.
Sub-section (p) – This is not relevant.
Conclusions – section 75(2) factors
I am satisfied that, upon an overall assessment of the section 75(2) factors, an adjustment in favour of the husband is appropriate. The greater difficulty is in assessing what that further distribution should be, in percentage terms, given the reasonably small extent of the property pool and the fact that it is unlikely to satisfy the needs of both 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.
Bearing in mind the husband’s more limited employment capacity and his responsibilities to parent H; I believe that a further distribution of property of 5% is warranted in the husband’s 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.
In this case neither party has sought a splitting order in respect of the wife’s superannuation. Accordingly, it is the position of each of the parties that the court should take a global approach in respect of the division of their total property, both superannuation and non-superannuation assets.
As a result of the first step of the process involved in dividing the parties’ marital property, I have calculated their total net assets to amount to a sum of $341,794.81. As a result of the second and third steps, I have found that the wife is entitled to 52.5% and the husband 47.5% of this sum. 52.5% of the parties’ net non-superannuation and superannuation interests is represented by the sum of $179,442.28 and 47.5% by the sum of $162,352.53.
If the wife retains her car ($4,500.00; the ING account ($18,000.00); the Telstra shares ($700.00); and her superannuation ($60,438.00); she will have assets worth $83,638.00. Accordingly, she will require a further payment of $95,804.28 to achieve a 52.5% split in her favour. Such a sum is potentially available, from the proceeds of sale of the fishing licence.
If the husband retains the net equity in the former family home ($61,000.00); his household contents ($3,000.00); his motor vehicle ($8,000.00); his fishing boats ($12,900.00); the tractor and tools ($4,000.00); and his superannuation ($10,080.00); he will have assets to the value of $98,980.00. If he pays all the liabilities, as calculated at paragraph 144 hereof ($5,823.19); it will leave him with a net amount of assets of $93,156.81.
If a payment is made to the wife, from the proceeds of sale of the fishing licence, as envisaged above, it will leave the husband with a little over $69,000.00. If this sum is utilised to discharge the moneys secured against the former family home, it will leave a mortgage of around $70,000.00, which is above what the husband has deposed is his likely capacity to borrow, particularly if he remains out of the paid workforce.
However, in my view, it does not appear to be an unachievable or unrealistic outcome, from the husband’s point of view. Whether he is able to satisfy this outcome, without the sale of the former family home, is a matter for him. It will require some application and financial discipline on his part.
The major draw back of this outcome is that there will be a significant discrepancy in the parties’ respective level of superannuation and so their preparedness for retirement. The wife, being more financially astute, is more focussed on this aspect of the proceedings than the husband. He has not sought any split, in his favour, from the wife’s superannuation, being, in his turn, more focussed on issues to do with the W property.
Accordingly, the division of property, which these orders potentially envisage, leaves the husband with this property but the corollary of the outcome is that the husband will not have any great stores of superannuation. Given the parties’ respective positions in the case, I am not greatly troubled at this outcome, on the basis of considerations of justice and equity.
If the husband is able to borrow the sum envisaged, it will leave him secure in the former family home, which he will be able to utilise to provide accommodation for H, unless there is some major change in arrangements for his future care, which does not seem likely at this juncture. From the husband’s perspective, I consider that this is a just and equitable outcome.
On the other side of the coin, the wife will have cash of about $110,000.00. Although, in this day and age, it cannot be considered a large sum of money, in my view, it will provide her with a sufficient deposit to purchase accommodation for herself, if she should so wish. On balance, I consider it likely that she will continue working for Centrelink and will have a capacity to service a mortgage in future.
As earlier indicated, she will have the basis of a significant nest egg of superannuation, on which she can build in the future. In my view, given the overall circumstances of this case, this represents a just and equitable outcome, from the wife’s point of view.
The relationship and subsequent marriage between the parties was one of fourteen years. In the overall span of human life, it is a significant period of time, which in the case of these parties represents the period during which one would normally expect them to lay the bedrock of wealth on which they would plan for and build their financial security for later years.
In this sense, their separation represents a financial catastrophe for them both. The major difficulty, in this case, is that there are simply not enough assets to go around. In the short to medium term, both parties face a period of financial austerity. However, both have many years of productive life before them, in which to regroup financially. In addition, these proceedings leave the parties relatively equally equipped financially, although in different ways. Overall, I am satisfied that the outcome, which I envisage, represents an appropriate one when all the circumstances of this case are considered.
I can well understand why the husband would want to retain the former family home at W. He has lived in the property for many years. It is his home. W is where he expects to live in future. However, if from a financial point of view, he is unable to maintain the property, it will have to be sold so that the wife can receive her appropriate entitlements, at the end of the parties’ financial relationship with one another.
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 two hundred and nineteen (219) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 30 April 2008
and Clauson v Clauson (1995) FLC 92-595
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