Kee and Kee
[2008] FamCA 1054
•26 August 2008
FAMILY COURT OF AUSTRALIA
| KEE & KEE | [2008] FamCA 1054 |
| FAMILY LAW – PROPERTY SETTLEMENT - Future needs FAMILY LAW – PROPERTY SETTLEMENT - Contributions |
| Family Law Act 1975 (Cth) |
| Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355 Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 |
| APPLICANT: | Ms Kee |
| RESPONDENT: | Mr Kee |
| FILE NUMBER: | SYF | 4213 | of | 2006 |
| DATE DELIVERED: | 26 August 2008 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Judicial Registrar Johnston |
| HEARING DATE: | 17 and 18 June 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Gregory Johnston |
| SOLICITOR FOR THE APPLICANT: | Gergis Solicitors |
| COUNSEL FOR THE RESPONDENT: | Respondent in person |
Orders
That the husband forthwith do all things and execute all documents necessary to transfer to the wife the whole of his interest in the former matrimonial home situated at L folio identifier number ….
That simultaneously with the transfer referred to above the wife discharge the mortgage registered over the title of the home.
That the husband retain all his interest in the business known as S Business and withdraw the overdraft with Westpac Bank secured over the property at L.
That the husband as director and shareholder of S Business Pty Limited (“the company”) forthwith do all acts and things and execute all documents necessary to release the home at L as security for the bank overdraft of the company with Westpac Banking Corporation Ltd.
That the Applicant wife retain the whole of her right, title and interest in motor vehicle Nissan Patrol registered number ….
That the Respondent husband retain his right, title and interest in registered motor vehicle X….
That pursuant to s. 79 of the Act each party is declared to be the sole owner of all other items of property and superannuation in their possession and/or control respectively.
That the wife indemnify the husband in relation to all monies owing to the wife’s brother pursuant to the Deed of Loan Agreement dated 8 September 1998 between the wife’s brother and the husband and the wife.
That in the event that either party shall fail, neglect or refuse to execute any deed instrument or document to give validity and effect to these orders then upon the other party filing an affidavit setting out such failure, neglect or refusal a Registrar of the Sydney Registry of the Court is hereby appointed pursuant to Section 106A of the Act to execute any such deed, instrument or document in the name of the other party who defaults and to do all things necessary to give validity to the operation of the deed, instrument or document.
That all exhibits be released.
That both parties have liberty to re-list these proceedings on 7 days notice in relation to the implementation of these orders.
That the above orders shall not commence operation until 19 September 2008.
That both parties have liberty to re-list these proceedings prior to 18 September 2008 for further submissions in relation to the form of the orders only.
IT IS NOTED
that publication of this judgment under the pseudonym Kee & Kee is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 4213 of 2006
| MS KEE |
Applicant
And
| MR KEE |
Respondent
REASONS FOR JUDGMENT
Introduction and Applications
These are final property proceedings. Ms Kee, to whom for convenience I shall refer as “the wife”, seeks various orders in relation to property to the following effect.
i)A declaration that the parties owe Mr N the sum of $30,000 which is now due and payable to him.
ii)That the respondent husband pay such sum of $30,000 to the wife’s brother within 30 days.
iii)That the husband forthwith transfer to the wife his interest in the former matrimonial home at L.
iv)That simultaneously with the above transfer the wife discharge the mortgage over the title to the home.
v)That the husband retain his interest in the business known as S Business and that he withdraw the overdraft with Westpac Bank secured over the said home.
vi)That the husband as director and shareholder of S Business Pty Limited forthwith do all things and execute all documents necessary to release the said home as security for the bank overdraft of the company with Westpac Bank.
vii)That the wife retain her interest in registered motor vehicle Nissan Patrol ….
viii)That the husband retain his interest in registered motor vehicle X….
ix)That the husband retain his superannuation and the wife retain her superannuation.
x)That otherwise each party be declared the sole owner of all other items of property in their possession and/or control respectively.
xi)Certain other orders of a machinery nature.
On the other hand Mr Kee, to whom for convenience I shall refer as “the husband”, seeks orders to the following effect.
i)That the parties do all things necessary to cause the former matrimonial home at L to be sold.
ii)That upon the sale of the home the net proceeds after payment of the mortgage, real estate agent’s commission and legal costs on the sale be paid to the husband and the wife in equal shares.
iii)That the wife be declared to have a one half interest in the husband’s business known as S Business Pty Limited and (presumably) that there be a cash adjustment in favour of the wife to reflect her interest and that otherwise the wife transfer her interest in the business upon such cash adjustment.
iv)That otherwise the parties be declared the owner of property and superannuation within their possession and/or control respectively.
Background
The husband was born in January 1963 and he is therefore 45 years of age. The wife was born in March 1969 and she is therefore 39 years of age. The parties married in February 1994 and they separated in March 2005.
There are three children of the marriage namely R born in November 1996, W born in October 1998 and M born in January 2004. The children are therefore 11 years, 9 years and 4 years of age.
At the time of the marriage the wife’s property consisted of her savings of $35,000. She was also a registered owner of a one third interest in the property at L, her brother and sister each being the other one third owners. At this time the husband had no assets of significant value.
The wife described the circumstances of the parties’ marriage as being in the context of an elopement. After the marriage ceremony the parties went to Melbourne and stayed with a relative of the husband. On 19 March 1994 they went to Taiwan and lived with the husband’s family there for approximately ten months. Then they returned to Australia.
After their return to Australia the husband was ill with a bleeding ulcer for approximately six months.
In mid 1995 the husband commenced working as a tradesman. Later in 1995 it appears that there were very serious marriage difficulties. The wife became depressed and was admitted to Hospital for approximately one month. The parties subsequently reconciled.
In 1996 the parties moved into the property at L owned by the wife, her sister and her brother. This property had been purchased some years previously by the wife’s father for the wife, her brother and sister. The husband was reluctant to purchase the interests of the wife’s brother and sister in the property. But he eventually agreed to do this. The wife paid her father $30,000 from her savings referred to above. She was to pay her parents a further $20,000 for her interest in the property. But I accept her evidence that her parents forgave this $20,000 on the basis that they made a gift to her of this as a wedding present. The wife’s sister was soon to be married and wanted to sell her interest. The parties borrowed $55,000 from Westpac Banking Corporation. They paid $50,000 of this to the wife’s sister for her interest. The balance of $5,000 was used to purchase furniture and fund some renovations to the home. But this still left the acquisition of the interest of the wife’s brother. The parties entered into a loan agreement with the wife’s brother, prepared by a solicitor, which was to the effect, broadly, of the wife’s brother permitting them five years to pay him $50,000.
The parties undertook some renovations to their newly-acquired home. These included the husband replacing some of the roof timbers and some broken tiles, the parties did some painting and a substantial renovation of the kitchen.
In 1999 the parties’ elder child R was diagnosed with Autism.
In 2002 and 2004 the wife underwent carpel tunnel operations to each of her hands.
In August 2003 the wife deposited by way of two deposits within days a total of $20,000 into the bank account of her brother. It was common ground that this was by way of partial repayment of the monies the parties owed him in respect of his transfer of his interest in the home to them.
By 2004 the parties had sufficient savings to repay the wife’s brother the $30,000 balance of his loan. But the husband wanted to use the money to establish his own business, which ultimately he did.
To establish the business S Business Pty Limited, the husband used the $30,000 savings, he borrowed a further $9,000 against the mortgage and he used $5,000 from his termination of employment payment. He also opened a business overdraft account with Westpac Banking Corporation secured against the parties’ home with a facility of $25,000. He purchased some second hand equipment for $18,000, some sanding machines and other equipment. The wife undertook the bookkeeping and banking for the business. The husband also purchased a Nissan Patrol motor vehicle for the business.
As indicated above, the parties separated in approximately March 2005. The wife moved into the spare room and ceased undertaking work for the business.
In November 2005 an Apprehended Violence Order issued to protect the wife against behaviour of the husband. The wife and children left the home.
On 1 May 2006 an Apprehended Violence Order was made to protect the wife for a period of two years. The Local Court ordered that the wife and children were to have sole occupancy of the former matrimonial home and the husband was required to leave the home.
The husband had removed the Nissan Patrol motor vehicle from the wife. On 20 December 2006 this Court ordered the husband to return the said motor vehicle to the wife.
After separation the wife undertook some renovations to the home mainly to the bathroom. These renovations included installation of a toilet. Prior to this installation, the only toilet available to the family was outside the main residence. This renovation work was undertaken by the wife with the assistance of relatives. The wife said that she spent a total of approximately $5,000. This was used to purchase materials, to pay for petrol for another of her brothers to travel to the home to undertake most of the work and for some modest gifts for various relatives who helped with this work from time to time.
Some child support assessments have issued but these have been in only a very modest amount. For example on 11October 2006 the husband was assessed to pay the monthly amount of $26.67 for the children for the period from 9 October 2006 to 8 January 2008. The husband is currently paying $28.95 per month child support for the three children.
On 14 February 2008 this Court made orders by consent that the children live with their mother and spend time with their father each weekend from 4pm Saturday to 6pm Sunday as well as half of each school holidays and certain special days.
Issues
There is an issue about whether the wife’s brother has been repaid the whole amount of the $50,000 the subject of the loan agreement between himself and the parties made in September 1998. The husband says that he understands that the whole amount of $50,000 has been repaid. He says that this is because he had a conversation to this effect with the wife’s brother at the twenty-first birthday party of the wife’s brother’s nephew.
The wife’s brother filed an affidavit and was cross-examined by the husband in respect of his depositions. The wife’s brother has denied that the $50,000 has been repaid and denied that the husband and he had any such conversation as that asserted by the husband. The wife’s brother said that the wife repaid $20,000 of the loan by deposits of $10,000 to his account on 22 and 25 August 2003. The wife annexed to her affidavit copies of relevant entries in the Westpac Bank passbook of her brother.
The wife said that she repaid her brother $20,000 in the circumstances deposed to by her brother. The wife said that there is still $30,000 outstanding on the loan.
The only evidence that $30,000 remains outstanding to the wife’s brother is contained in the assertions by both the wife and her brother. There is no objective evidence to support their assertions. The wife’s brother said in relation to a number of questions by the husband that he could not recall suggested events. He said at least a couple of times during the course of his examination that his memory was not that good. Despite this, I prefer his evidence and that of the wife on this point over that of the husband.
In these circumstances, I am not persuaded that the $50,000 owing by the parties to the wife’s brother pursuant to the loan agreement has been repaid except to the extent of the $20,000 thereof.
There is also an issue about whether when the husband left the former matrimonial home, he took all the wife’s gold jewellery that had been given to her by him and his parents. This was asserted by the wife who said that this jewellery consisted of a thick gold necklace with a large cross, a large sapphire and ruby ring and a Swiss watch. The husband denied that he had taken any of the jewellery. There is no other evidence to support the wife’s assertions. I am not persuaded that the jewellery was removed as suggested by the wife.
There is another issue about whether certain funds in bank accounts in the name of the husband’s father should be added back to the pool of property available for division. There are two accounts in the name of the husband’s father. These are Westpac Banking Corporation accounts, firstly, number 21-… and number 60-…. It is submitted on behalf of the wife that the total of deposits of monies into those accounts is $45,510.
The husband’s explanation for those accounts being opened is as follows. He said that his business was three months behind paying the accounts of his major supplier. He said that he owed this supplier in excess of $10,000. He said he endeavoured to borrow further monies but no financier was prepared to loan him funds without someone being prepared to provide a personal guarantee on the loan. The husband said that he asked his father, who lives in Taiwan, to assist him. He said that his father came to Australia, looked at the business and they opened an account into which his father deposited approximately $28,000. The husband was cross-examined in respect of deposits and withdrawals from the accounts. The husband said that his father in Taiwan was gambling with people in Australia and when the Australians lost, they put funds into the account.
It is clear that the account number 21-… was commenced with a deposit of $28,160 on 3 April 2006. There have been many movements on that account. The movements on account number 60-… are much more modest.
I must say the husband’s explanation is very difficult to accept at least so far as the gambling is concerned. The husband has not filed any material from his father to support his claims in this regard. Nor has he put any evidence before the Court from any other source to support his assertions. In circumstances where I am unable to accept what he says about the gambling, I take the view that it is more likely than not that his explanation about the loan of 28,160 from his father is false. In these circumstances, in my view, it is more likely than not that the source of the $28,160 was funds available from the husband’s business. I shall add these back to the pool of available property. But I am not persuaded that it is appropriate to add back the entirety of the $45,510. To do so would be to assume that the husband has had the use of the entirety of these funds for his own purposes as distinct from using at least some of the money for the purposes of his business.
I also note as a matter of convenience, at this point, that the wife borrowed an amount of $27,000 from the ANZ Bank for the purposes of providing funds to pay her legal costs. But I do not propose to include this amount in the liabilities. To do so would also, in fairness, require adding back the same amount as an asset in the hands of the wife.
The Applicable Law
The Court must be satisfied that in all the circumstances it is just and equitable to make an order. This is provided by s.79(2) of the Family Law Act 1975.
The Full Court of this Court in its decision in the case of Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355 said as follows:
“The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335 (and various other well known authorities).”
Despite some criticism of this decision by the majority of the Full Court in Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414, see for example paragraphs 36 and 37 at page 79,641 and paragraph 63 at page 79,646, in my view it is not incorrect to take the approach to the hearing of property proceedings as described in Hickey above.
Property available for division
The property available for division between the parties consists of the following:-
| Asset | $ |
| 1. L property | 370,000 |
| 2. Home contents | 5,000 |
| 3. 1998 Nissan Patrol | 15,000 |
| 4. Wife’s Jewellery | 2,000 |
| 5. S Business Pty Limited (includes plant equipment, vehicle and $27,500 overdraft) | 45,000 |
| 6. Add back accounts in husband’s father’s name | 28,160 |
| 7. Legal costs paid by husband | 4,180 |
| Superannuation | |
| 8. Wife’s Westpac super | 5,877 |
| 9. Husband’s entitlements | 34,735 |
| _____________ | |
| $509,952 |
The liabilities are as follows:-
| Liabilities | $ |
| 1. Home mortgage | 41,817 |
| 2. Debt to wife’s brother | 30,000 |
| _____________ | |
| $71,817 | |
| Surplus | $438,135 |
Contributions
As indicated above, at the time of marriage the wife had savings of $35,000.
She gave $30,000 to her parents as part payment for her $50,000 share in the former matrimonial home at L and, in effect, they gave her the remaining $20,000 of the $50,000 share as her wedding present. This meant that the wife then had a one third interest in the home.
The wife worked in a factory in Taiwan for a short period.
At the time of marriage the husband did not have any assets of significant value.
After the parties returned to Australia and the husband overcame his ill health, he started working as a tradesman. He continued this type of work throughout the marriage ultimately establishing his own business in 2004 as indicated above. The husband was the major breadwinner for the family.
But the wife also worked in the husband’s business from its inception. She undertook the bookwork, the banking, and occasionally assisted with some of the physical tasks required such as sanding and packaging products.
From time to time members of the wife’s family assisted with child-minding to free the wife to attend to her work at the business. The wife’s parents assisted with some provision of modest funds including modest loans from time to time.
A significant contribution was made by the wife’s brother not requiring the parties to pay interest on his loan.
The wife was the primary homemaker and parent. She made the overwhelming parenting contribution. This is not to suggest that the husband did not assist with the children. He did to some extent. But his primary responsibility was earning income and he was very busy with this particularly after he established his business.
The parties also undertook renovations to their home. They were both involved in this. I am satisfied that, overall, the husband did more of this than the wife even taking account of her renovations following the parties’ separation.
I am comfortably satisfied that upon consideration of the totality of the parties’ contributions overall, before and after separation, the wife has made substantially greater contributions than the husband. In particular, this is because the wife owned a one third interest in the former matrimonial home very early in the marriage, because of the wife’s much greater contributions to the children after separation, because of the low level of child support paid by the husband, because of the fact that the wife’s brother had not charged the parties interest on his loan and because of the wife’s overwhelming contribution to the welfare of the children.
It was submitted on behalf of the wife that the Court should assess the wife’s contributions overall as having been 65% and the husband’s contributions 35%.
I accept that the contributions have been almost at these levels. In my view, the contributions overall have been 63% by the wife and 37% by the husband for the above reasons.
s 75(2) matters
The wife is 39 years of age and she is in good health. She has not worked in paid employment since very early in the marriage. The wife said that she hopes to be able to work once the youngest child M commences school, probably next year. This would be part time. The wife has worked as a kitchen hand, laundry attendant and as a nurse’s aid.
The wife’s income is $669 per week from various government benefits and the very modest child support paid by the husband referred to below.
The wife has not provided full details of the expenditure required to support herself and the three children. But I can take judicial notice of the fact that it would be difficult for her to support herself and them on an income of $669 per week.
On the other hand the husband is 45 years of age. He is also in good health. He says his weekly income is $2,600 and his expenditure is $1,932. But this appears to include costs of renting his apartment and business premises. The expenditure estimate appears not to include his personal expenditure.
A very significant s.75(2) matter is the fact that the wife is the children’s primary parent and that they live predominantly with her. On all present indications, the wife is more likely than the husband to have the major responsibility for the care of the children until they attain adulthood. In particular, two of the children have special needs. R has been diagnosed as being on the Autism spectrum. He was having speech therapy until December 2007 at the subsidised rate of $40 per week. But the wife has not been able to continue funding this because she has had legal fees to pay. R will commence high school next year. The wife would like to enrol him in the Autistic Association school class at Balmain. But it costs $2,600 per year which she is unable to afford.
M has been diagnosed as suffering from Oppositional Defiance Disorder.
The husband is currently paying only $28.95 per month child support for the three children.
He sees the children every Saturday afternoon until Sunday afternoon.
On present indications, the husband is likely to continue paying child support at a modest rate. But on the basis of a valuation of his business of $45,000, based on the valuer’s view of maintainable earnings of the business, it might be that the husband would be assessed to be liable to pay a level of child support more in line with a proper share of what the children need.
Also relevant to the Court’s consideration of relevant matters under s.75(2) is the fact that, on the basis of the above finding about the parties’ contributions, there would be a significant imbalance of property in favour of the wife.
The most significant matters are the fact that it is most likely that the wife will continue to have the major responsibility for the children, the fact that two of them have special needs which places very considerable demands on the wife and the limit which these responsibilities are likely to place on the wife particularly in terms of her capacity to be available to earn income. The husband does not appear likely to face such constraints.
It was submitted on behalf of the wife that taking proper account of all relevant s.75(2) matters, the Court should make an adjustment of 25% of the available property in favour of the wife.
I must say I am unable to accept this submission. In my view, such a significant adjustment would not be proper in this case even given the fact that the pool of available property is modest. It must be remembered that the finding on contributions by the wife is 63%, which in broad terms means that on this basis alone, the wife is to enjoy almost double the property to be made available to the husband based on contributions. This must mean that in order to achieve a just and equitable order the Court could not make a s.75(2) adjustment at the higher end of the range.
In all the circumstances of this case, in my view, the appropriate adjustment of available property to be made in favour of the wife is 12%.
Conclusion
The wife is to have 75% of the property available for division between the parties. As indicated above, the available property has a value of $438,135. Seventy-five percent of this is $328,601.
The wife has the following property.
$ 1. Home Contents 5,000 2. 1998 Nissan Patrol 15,000 3. Jewellery 2,000 4. Westpac Superannuation 5,877 _____________ $27,877
To achieve property with a value of $328,601, the wife would require an additional $322,631 of property ($328,601 - $27,877 = 300,724).
The wife is most anxious to endeavour to retain the former matrimonial home, particularly to accommodate the children who are very comfortable there. The home has equity of $298,183 ($370,000 - $41,817 - $30,000 = $298,183).
This amount of equity in the former matrimonial home ($298,183) is very close to the amount of additional property which would be required to provide the wife with 75% of the available property ($300,724).
In the circumstances, in my view, a just and equitable order would be achieved if the Court was to make orders to the effect that the wife retain the property and superannuation she has in her possession as described above, and the husband was required to transfer his interest in the home to the wife. The wife would have to indemnify the husband in respect of the mortgage and the outstanding balance of the loan from her brother.
On the other hand the husband is to have 25% of the property available for division. This is property with a value of $109,534.
The husband has the following property.
$ 1. S Business Pty Limited 45,000 2. Add back accounts in husband’s father’s name 28,160 3. Legal costs paid by husband 4,180 4. Husband’s superannuation 34,735 _____________ $112,075
This is $2,541 more than $109,534 which represents the value of the 25% of available property. In all the circumstances, however, I do not propose to order the husband to make a payment of $2541 to the wife.
Effect of the proposed orders
The orders I propose will be to the effect that the husband transfer his interest in the former matrimonial home to the wife. The wife will assume responsibility for the mortgage and the remaining portion of the loan from her brother.
The husband will retain his business including its liabilities.
Each party will otherwise retain the other property and superannuation in their possession and/or control.
Such orders will not affect the income earning capacity of either the husband or the wife.
The wife will have to arrange for a new loan to discharge the mortgage and she will have to manage the loan from her brother. I am confident that she will be able to do this. This will ensure that the wife and children will be able to have consistency of accommodation.
On the other hand, the husband will be able to enjoy the fruits of his business. This has provided him with a reasonable standard of living. In time, he should be able to save sufficient money to be able to place a deposit on appropriate accommodation for himself.
In all the circumstances, in my view the orders I propose will achieve a just and equitable outcome as required by s. 79(2) of the Act.
I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Johnston
Associate:
Date: 26 August 2008
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Injunction
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Costs
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