J and J (Property - jewellery, ill health)
[2003] FMCAfam 4
•14 March 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| J & J (Property – jewellery, ill health) | [2003] FMCAfam 4 |
| FAMILY LAW – Property settlement – neither party working – husband disabled – both parties in poor health – valuation of retirement, compensation and other benefits received and in part spent by the parties – valuation of jewellery – disputed chattels – just and equitable. |
Family Law Act 1975 (Cth), s.79
Bremner (1995) FLC 92-560
| Applicant: | Mrs J |
| Respondent: | Mr J |
| File No: | SYM250 of 2002 |
| Delivered on: | 14 March 2003 |
| Delivered at: | Sydney by telephone to Wollongong |
| Hearing Dates: | 17 & 18 December 2002 |
| Judgment of: | Driver FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Moss |
| Solicitors for the Applicant: | Russell McLelland Brown |
| Counsel for the Respondent: | Mr R S Bell |
| Solicitors for the Respondent: | Atkins Jones |
THE COURT ORDERS THAT:
The wife transfer to the husband all of her right, title and interest in the former matrimonial home.
The wife vacate the former matrimonial home within 90 days.
The husband pay to the wife the sum of $80,359 within 60 days.
The husband and the wife otherwise be declared to be the sole owners of:
(a)any chattels, goods, furnishings, personal effects or other physical property which is in their respective possession as at the date of these orders; and
(b)any moneys, shares, debentures, choses in action or other incorporeal property which stands in their respective names as at the date of these orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY Heard in Wollongong |
SYM250 of 2002
| MRS J |
Applicant
And
| MR J |
Respondent
REASONS FOR JUDGMENT
Introduction
Mrs J and Mr J are in dispute about their respective property interests consequent upon their separation and divorce. The main matrimonial asset is the family home, which is unencumbered, and which both parties have continued to live in following their separation in 1998. Their son, JJ, also lives in the home while their daughter, SJ, lives elsewhere. Both JJ and SJ are adults. The husband is disabled and confined to a wheelchair. There is a common understanding between the parties that it would be sensible for the husband to remain in the home as substantial modifications have been carried out to facilitate wheelchair access. The husband seeks to maintain 75 per cent of the net matrimonial assets, including the home.
The wife seeks 65 per cent of the net matrimonial assets, which would require an adjustment of property interests in her favour and a substantial cash payment, essentially from accumulated superannuation funds held by the husband, which have vested in him. There was a dispute about substantial funds obtained by the wife from a compensation claim, inheritances and her mother. There was also a dispute about the value of jewellery purchased by the wife. There was a dispute about ownership of certain nominated chattels, which was to be the subject of an agreed statement after trial, but that was not forthcoming. I am now told that in relation to incidental property the parties are content for each to keep what they currently have.
Background
The husband was born on 10 August 1945 and the wife was born on 19 January 1946. They were married on 6 April 1968. JJ was born in 1972 and is now aged 30 years. SJ was born in 1974 and is now 28. In May 1998 the parties separated under the one roof. At trial, the wife sought to dispute the date of separation but I ruled that as the parties were divorced in 2002 on the basis of that date of separation, which was uncontested, an issue estoppel arises.
The only asset of significance that the parties brought into the marriage was a block of land to which the parties contributed equally. That block has since been sold and the funds used for other purposes. The husband also had two life insurance policies on his life, which he took out prior to the marriage. After the marriage the wife was nominated as the beneficiary and ownership of the policies was transferred to her. The husband has made payments into those policies for approximately 30 years.
The husband is a Vietnam veteran and his tour of duty was completed prior to the marriage. Both the wife and husband commenced employment in Sydney in 1968. The husband also worked part time at a leagues club. In June 1969 the parties moved to the south coast of New South Wales and initially lived in rented accommodation. The husband commenced working at steel works and the wife worked in retail stores. The present matrimonial home was purchased in October 1970. The wife says that the purchase price was approximately $13,500 and was partly funded by a war service loan of about $8,000. At this time the husband started selling life insurance and real estate and also worked at the leagues club. Later, the husband returned to work as a labourer.
Most of the household furniture was purchased between 1972 and 1976. The parties purchased furniture on credit and paid it off over time. The employment of both parties was interrupted from time to time during the early 1970s. In particular, the employment of the wife was interrupted by the birth of the two children. The husband worked for a time on tunnel construction jobs. He also worked on the natural gas pipeline in New South Wales in 1975 and 1976 and later worked as a coal miner. The wife recommenced work as a tutor in 1979 and also did leathercraft work. The husband worked for a time in Sydney at a coal loader. However, the husband mostly worked on the South Coast. During the 1980s the husband purchased additional furnishings for the home, partly funded by a loan. The husband’s employment continued until September 1998 when it was terminated due to his disability. The wife continued intermittent employment until 1988 when her employment was terminated due to a back injury.
Both parties have suffered various health problems. The husband received psychiatric care as early as 1968, apparently due to his Vietnam war service. He suffers from progressive paraplegia and is now confined to a wheelchair. The wife suffered a back injury at work in March 1987. She made a workers’ compensation claim for that injury. She has also suffered from psychological problems from time to time which has produced two apparent suicide attempts.
Both parties have received significant sums during the course of marriage. The wife received $6,000 from her grandmother’s estate in 1989, which she says was used for household expenses and to help fund her workers’ compensation claim relating to her back injury. The wife settled her workers’ compensation claim in July 1994 for $195,000, inclusive of costs. She received approximately $144,000 net and says that all of this money has been expended on the acquisition of chattels, including a car, home renovations and improvements, holidays, support for the children and general living expenses. The husband disputes this. The wife also received inheritances in 1999 of approximately $13,700. The wife says that money has also been spent while the husband alleges it is held on her behalf by her son. The wife also holds in her name in excess of $25,000 in a bank account which the wife says in fact belongs to her mother. The husband suggests that the money is the wife’s.
In 1994, the husband received a part pension from the Department of Veterans’ Affairs. When the husband’s employment was terminated in September 1998, following the parties’ separation, the husband received $147,000 in termination payments and superannuation. At this time the mortgage over the house was discharged. In 1999, the husband also sought and received increases to his war service pension and his disability pension from the Department of Veterans’ Affairs. The wife commenced receiving a Centrelink pension in 1999 as well.
The parties operated joint accounts and mixed their finances until May 1998 when separation under the one roof occurred. At that time the husband changed the accounts to his name alone. He had been, to that point, primarily responsible for the management of the family’s finances. The parties became distrustful of one another concerning finances and chattels. Certain chattels are said to have disappeared. The wife only concedes that two inconsequential items have been taken for repairs or placed out on loan. The husband concedes transferring paper records relating to his military research to a storage facility that he pays for. The wife concedes hiding $50,000 under the refrigerator in the home. She says that all of that money has been spent.
The wife, who is the applicant, relies upon her application filed on 13 February 2002 and her affidavit filed on 26 November 2002. She also relies upon an affidavit by a medical practitioner filed on 1 October 2002. That affidavit provides evidence of the wife’s back condition. The wife also relies upon her financial statement filed on 27 August 2002. At trial I issued a subpoena for JJ to attend and give oral evidence at the instigation of the wife. JJ did give oral evidence.
The husband relies upon his response filed on 25 March 2002, his affidavit filed on 16 September 2002, an affidavit by Dr Garth Nicholson (relating to his paraplegia) filed on 21 August 2002 and his amended financial statement filed on 15 April 2002. I also received an affidavit sworn by SJ in support of the husband, filed on 16 December 2002. Only the parties and JJ were cross-examined.
The law
The approach to the determination of an application under s.79 of the Family Law Act 1975 (Cth) (“the Family Law Act”) is well established by authority. The process ordinarily involves a three step procedure: first, identifying the property, liabilities and financial resources of the parties at the time of trial of the matter, secondly, evaluating the contributions made by the parties as defined in s.79(4)(a)-(c) and, thirdly, evaluating the matters contained in s.79(4)(d)-(g) insofar as they are relevant (which incorporates the s.75(2) factors).
In determining what order the Court should make under s.79 the Court must in addition be satisfied, in all the circumstances, that it is just and equitable to do so: s.79(2).
Consideration and findings
Identification and valuation of net property
The principal matrimonial asset is the house property which, the parties have agreed, is worth $235,000. Both parties currently have a half interest in that property. The wife also has a motor vehicle worth $10,000, shares worth $1,851 and a life insurance policy over the husband’s life valued at $5,866. In his affidavit, at paragraph 20, the husband stated that he was paid his superannuation on retirement in 1998, in the sum of $47,000, which he used to discharge the mortgage on his house. That is at odds with his financial statement, and other evidence, which establishes that the husband retains his superannuation in the fund, although he has partially drawn on it, and that he can draw on the rest at any time, subject to his undertaking to the Court not to do so until these proceedings are completed. The husband became entitled to $147,000 when he retired in 1998, comprising superannuation and redundancy benefits. He also sold some BHP shares. I accept that he used part of that money to discharge the mortgage on the house. The bulk of it he retains.
The husband had superannuation benefits totalling $116,166.35 as at 1 July 2001 and at trial the fund stood at $105,000, apparently following a partial withdrawal of funds by the husband. Subsequent to trial the husband’s solicitors submitted advice from BHP Billiton that the fund stood at $99,489.37, as a result of declining unit prices. Of that amount $60,461.65 is a non preserved cash benefit in the fund. The parties admit modest savings. The husband also declares a motor vehicle valued at $5,000 and shares, which he admitted at trial are worth approximately $6,800. The combined furniture of the parties is worth about $28,000. The wife declares antiques and deceased estate effects with a value of $3,500 although the husband says they are worth significantly more. The wife also declares jewellery valued at $2,000 which the husband asserts is worth between $25,000 and $30,000. The wife admitted at trial that the value in her financial statement is too low but she denied the husband’s estimate. The husband also asserts that the wife has available to her, at least as a resource, $25,000, which the wife allegedly holds on behalf of her mother, and a substantial part of her compensation settlement. The wife maintains that she spent all of her compensation money and that the money she holds for her mother is not available to her.
The only liability which the parties declare is a debt on the wife’s David Jones card of approximately $1,500.
I accept the parties’ valuations of the house property, their motor vehicles, their furnishings and accumulated savings. As to the wife’s jewellery, the estimate in her financial statement of $2,000 is a gross underestimate. The husband’s estimated value of $25,000 - $30,000 is based upon valuations mostly obtained by the wife at or around the time she purchased her jewellery items. Some of these valuations were provided by the vendor of those items and are substantially higher than the purchase prices, which are verified by receipts. However, most of the purchase prices asserted by the wife are not verified by receipts. The valuations were ostensibly provided for insurance purposes, although the wife did not take out insurance over her jewellery, apparently due to the cost of maintaining insurance. Valuations on jewellery are notoriously unreliable. Insurance valuations are particularly unreliable. I have better evidence of the value of several of these items in the form of receipts for what the wife paid for them. I discount the untested evidence of SJ as to what she recalls was paid for some of those items as it based upon her recollections only and the documentary evidence is better evidence. Based upon the receipts the insurance value of those items has been inflated from $4,900 to $14,600, or threefold. Allowing for a similar inflation in the other insurance valuations, the value of the wife’s jewellery is $10,000.
I will allow 10 per cent in addition for capital appreciation on these items. I find that the wife’s jewellery is worth $11,000. It follows that the wife underestimated the value of her jewellery by 550 per cent.
The wife valued her antiques and deceased estate effects at $3,500, which the husband also contests, although he was not able to produce any reliable evidence of the true value of those items. The wife was not particularly convincing in the witness box. Under cross-examination she was vague and, at times, contradictory in her recollections. Given the lack of credibility in much of her evidence about her assets, and her proven understatement of the value of her jewellery, I find that she has undervalued her antiques and deceased estate effects. In the absence of reliable evidence of the true value of those items, I assume that the undervaluation is of a similar order to the undervaluation of her jewellery. I will, accordingly, increase her valuation five fold to $17,500.
The wife was pressed to account for the $140,000 net compensation settlement she received. She could only clearly account for about $55,000 of that money. She also claims that some of the money was used to purchase jewellery. Some of it probably was. However, even if all of the jewellery purchased from 1994 came from that money that would still only account for $65,000, assuming an acquisition cost of $10,000. The wife admitted hiding $50,000 under the refrigerator in the home. She says that she drew on that money as she needed it and that it has all gone. I accept that the husband substantially withdrew his financial support for the wife after May 1998 and that she would have had extreme difficulty managing on her pension alone. She has inevitably drawn on her accumulated cash. I will make an allowance of $100 a week from May 1998 for 250 weeks for reasonable additional living expenses for the wife. That leaves $50,000 unaccounted for which I will add back into the wife’s assets in the light of her inadequate financial disclosure.
I will treat the money that the wife holds for her mother as a financial resource. Allowing for interest, that fund now stands at $26,606: exhibit H5. The money is held in the wife’s name and has been declared to be hers to Centrelink. In addition, the wife holds a power of attorney from her mother, who suffers from an advanced stage of Alzheimers. While the wife is subject to at least a moral obligation to her mother in respect of that money, she has the legal authority to spend it as she sees fit.
I will also treat as a financial resource the sum of $9,500 admitted as currently held by JJ, ostensibly on behalf of the wife’s mother. The wife has access to that money through her power of attorney and, given her mother’s Alzheimers, there is no real possibility of her mother giving instructions for the money to be dealt with on her own behalf. Once again, the wife, like JJ, has a moral obligation to her mother, but the wife has the legal authority to spend the money as she sees fit.
The financial disclosure of the husband has also been less than what it should have been. He failed to disclose certain items of jewellery, which I value at $2,383 (one third of the insurance valuations). It is very difficult to place an accurate value upon his military collectables, which have a sentimental as well as a monetary value. I found the husband to be generally a reliable witness in the witness box and I accept his valuation of $20,000 for his furniture and effects as including his military collectables. I also accept that he has adequately explained at trial the partial dissipation of his superannuation and disability payments. These included, rather surprisingly, the purchase of jewellery items for his wife after separation, which the husband values at $15,000. Allowing for some possible exaggeration in his evidence, I will attribute the value of $10,000 to those items. I accept the husband’s statement of the present value of his vested superannuation and other retirement benefits. Although presented by Mr Bell as a financial resource, this money is an asset available for division because it vested in the husband on his retirement. Indeed, he has partially drawn on it.
Accordingly, the current assets and liabilities of the parties are as follows:
Wife’s Assets
50 per cent interest in former matrimonial home $117,500
motor vehicle $10,000
life insurance $5,866
shares $1,851
furniture $8,000
jewellery purchased by wife $11,000
jewellery given to wife since separation $10,000
antiques and deceased estate effects $17,500
add back undeclared cash $50,000
Liabilities $1,500
Net assets $230,217
Wife’s financial resources
money held on behalf of her mother $26,606
money held by JJ $9,500
Husband’s Assets
50 per cent interest in former matrimonial home $117,500
motor vehicle $5,000
shares $6,800
savings $1,300
furniture and effects $20,000
superannuation benefits $99,489
jewellery $2,383
Liabilities nil
Net assets $252,472
Net marital assets $482,689
I find that the present total net marital assets of the parties are worth $482,689.
Contributions of the parties
This was a long marriage. The single asset brought into the marriage was owned equally by the parties. They have an equal interest in the matrimonial home. The husband was in more regular and remunerative employment than the wife but she contributed substantially as a homemaker and parent. The husband also made a contribution as a parent and manager of the family finances. Importantly, the wife cared for the husband as his paraplegia became progressively more serious and until the separation of the parties the wife received a carer’s pension.
The husband made a very substantial post separation contribution to the accumulation of matrimonial assets when he received his superannuation and redundancy benefits. However, the wife also made a contribution to the accumulation of that asset because of her support to the husband during his working life. Likewise, the wife made a very substantial financial contribution through her compensation settlement. However, the husband also supported his wife to enable her to undertake employment and supported her in pursuing her compensation claim. He made an equivalent contribution in the accumulation of that asset as the wife made to the husband in the accumulation of his retirement benefits. The wife also contributed financially through her inheritances.
The assessment of the respective contributions of the parties is not a strict mathematical exercise. The length of the marriage, the size of the asset pool, the responsibilities of parenthood and employment are all relevant and important considerations. As the Family Court Chief Justice observed in Bremner (1995) FLC 92-560:
“…when one considers cases of this sort, it should be remembered that they are not decided upon a pure mathematical basis, and looked at from the point of view of abstract justice, it would appear to me that in a case where the assets of the parties are… comparatively modest [in that case $360,000], there has been a 20 year marriage and two children, where both parties have worked as these people have, it is difficult to argue with a judgment which divides those assets equally.”
In this case we are dealing with a 30 year marriage during which both parties worked, accumulated comparatively modest assets and raised two children. Taking a global approach, an equal division of assets appears compelling.
I find that the overall contributions of the parties, taking account of contributions both financial and non-financial before marriage, during cohabitation and since separation have been equal. Prima facie, each party is entitled to 50 per cent of the net matrimonial assets.
Section 75(2) factors
Both parties are now aged 57 and in poor health. The husband suffers from paraplegia, is confined to a wheelchair, and his prognosis is relatively poor. He will require ongoing medical treatment and progressively increasing care as he ages. It is unlikely that the Department of Veterans’ Affairs would pay for that care as the husband’s condition is inherited, not caused by his military service. However, services can and have been provided through the Department at a discounted rate. The husband has the benefit of a substantially modified home which he should retain for his use. He also has a modified motor vehicle but that will almost certainly require replacement during the remainder of his life. Realistically, he has no employment prospects. He receives a reasonably generous combined pension benefit of $558.15 per week which is indexed to the CPI for the remainder of his life. This substantially exceeds his declared weekly fixed expenses.
The wife suffers from a serious back complaint stemming from her workplace injury. She is mobile but suffers substantial discomfort. Given her physical condition, her age and her time out of the workforce, her prospects of employment are effectively nil. She receives a very modest pension of $185 per week but this exceeds her disclosed weekly fixed expenses. She has available to her undeclared cash plus some saleable personal effects, in particular, jewellery.
Neither party is presently responsible for the care of any other person, although it is possible that the wife may become responsible for the care of her aged mother, who suffers from Alzheimers. The wife holds a power of attorney from her mother and so is responsible for at least the financial affairs of her mother. Her mother currently lives alone but that cannot continue much longer. The wife gave evidence that she has no idea where she would go if and when she leaves the former matrimonial home. She admitted, in response to a question from me, that she could go to live with her sister, at least for a short time. An option allegedly not considered by the wife is that she could move into her mother’s home to care for her. If for some reason that home is unsuitable it could be sold and a more suitable home purchased for them both. The wife would then become eligible for a carer’s pension. The wife was clearly well aware of the rules relating to carer’s pensions, having previously received one, based upon the care she formerly provided to her husband. The wife also has available to her financial resources in the form of funds held on behalf of her mother. There is, therefore, clearly the potential for the wife to be able to improve her position by obtaining accommodation at no cost and additional income through the carer’s pension. Nevertheless, the wife should receive a substantial cash settlement in order to pay out her share of the net marital assets.
Given the poorer state of health of the husband, his need for ongoing care formerly provided by the wife, and his need to replace in due course his specially adapted motor vehicle, there should be an adjustment in favour of the husband of 10 per cent. After that adjustment he is entitled to $289,613 and the wife is entitled to $193,076. There will be a payment by the husband to the wife of $80,359, taking account of his retention of the matrimonial home.
Is this just and equitable?
The husband retains an unencumbered home while the wife receives a substantial cash settlement which will provide a necessary source of funds for her. The husband should be permitted to retain a modest cash pool in order to pay for future care that he will need and a future modified motor vehicle. He can otherwise live on his pension. The wife should be able to live on her pension, her present assets and the cash settlement. She has the option of assuming responsibility for the physical care of her mother, which would give her accommodation plus additional income. Each will each retain their own chattels. I am satisfied that this outcome is just and equitable.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 14 March 2003
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