Kennedy and Kennedy
[2001] FMCAfam 237
•16 November 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KENNEDY & KENNEDY | [2001] FMCAfam 237 |
| FAMILY LAW – Property – Mortgage to husband’s family set aside – Gelley & Gelley (No. 2) (1992) FLC 92-921 – Halabi & Artillaga & Ors (1994) FLC 92-470 – Pflugradt & Pflugradt (1981) FLC 91-052. |
| Applicant: | MS KENNEDY |
| First Respondent: | MR KENNEDY |
| Second Respondent: | MR COOPER |
| Third Respondent: | MS P COOPER |
| Fourth Respondent: | MS C COOPER |
| File Number: | ZM 3737 of 2001 |
| Judgment of: | Bryant CFM |
| Hearing date: | 12 July 2001 |
| Delivered at: | Bendigo (Castlemaine) |
| Delivered on: | 16 November 2001 |
REPRESENTATION
| Counsel for the Applicant: | Mr C Arnold |
| Solicitors for the Applicant: | Michael William O’Donnell, 220 Barkers Street, Castlemaine 3450 |
| Counsel for the First Respondent: | Ms B Tulloch |
| Solicitors for the First Respondent: | James Allan Middlemis JA Middlemis, 30 Myers Street, Bendigo Fax (03) 5443 9753 |
| Counsel for the Second, Third and Fourth Respondents: | Mr A Crozier-Durham |
| Solicitors for the Second, Third and Fourth Respondents: | Brian Thomas Heydon Remington & Co., 155 Barkers Street, Castlemaine 3450 Fax 5472 4155 |
IT IS NOTED that publication of this judgment under the pseudonym Kennedy & Kennedy is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BENDIGO |
ZM 3737 of 2001
| MS KENNEDY |
Applicant
And
| MR KENNEDY |
Respondent
And
| MR COOPER |
Second Respondent
And
| MS P COOPER |
Third Respondent
And
| MS C COOPER |
Fourth Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns completing applications for property settlement between the husband and wife and involves an application by the wife pursuant to s.106B of the Family Law Act to set aside a mortgage given by the husband in favour of the second, third and fourth respondents. The proceedings were commenced in the Family Court of Australia and were transferred on 13 February 2001 for hearing in the Federal Magistrates Court in Bendigo.
Assets
The parties agreed that the former matrimonial home which is registered in the name of the husband has a value of $85,000. The property is encumbered by a mortgage to the second, third and fourth respondents in respect of which it is asserted is owing the sum of $79,975 made up of:
Capital sum $30,000
Interest 49,700
Costs 275
Total: $79 975
The parties have some furniture and effects which have been divided between them but are the subject of a dispute and the husband has some modest superannuation. If the mortgage is not set aside as the wife seeks, then the equity in the former matrimonial home is $5,025.
The husband was born on (omitted) 1949 and is 52. The wife was born on (omitted) 1959 and is 42. The parties were married on (omitted) 1980 and separated on 14 July 1999. They have five children, V born (omitted) 1980; W born (omitted) 1983; X born (omitted) 1985; Y born (omitted) 1985 and Z born (omitted) 1987.
V is 20 and lives with the husband. He is employed and pays board to the husband. W is 18 years old and is in employment. He resides with the wife.
X lives with the wife and Y her twin – who is also 15 – lives with the husband. Z is 13 and lives with the husband.
In 1979 the parties became engaged. They moved to (omitted) to run the (omitted business) in June 1979. The freehold of the premises and the business had been acquired by the husband’s mother, Ms P Cooper. The parties were married on (omitted) 1980 when the wife was four months pregnant with V. Within a month of the marriage, the husband was diagnosed with malignant papaloma growing in his nasal cavity and underwent major surgery. At the time of the hearing the husband had just undergone his twenty-eighth operation to remove these papalomas.
The wife asserted that the husband’s mother had offered them the opportunity to work in the business in (omitted) and to acquire it and the freehold by paying off the mortgage. She asserted that it was because the mortgage payments were greater than the rent would have been that the parties got into financial difficulty.
While the husband was undergoing surgery, the parties had to have assistance in running the business and in January 1981 they left the business leaving considerable debts. In particular the parties themselves paid off a $10,000 debt relating to the business during the next nine years.
The evidence of Ms P Cooper was that she acquired the property so that the husband could run the milk bar and his friend, Mr H, could run the garage. The wife was not then on the scene and the husband was still married (although separated from his first wife). Ms P Cooper was unaware that the wife (then 19) would accompany the husband to run the business until she arrived. The arrangement was that the parties paid rent of $200 per week which was later reduced to $100.
In addition to paying off the costs of acquisition of the business, Ms P Cooper also agreed to pay $10,000 for the stock. When the parties left the business, the total which Ms P Cooper was left to pay including stock was $25,000. In order to make these payments, she borrowed $25,000 from the (omitted) Bank and assumed responsibility for the stock payments. She was able to on-sell some of the stock to meet some liabilities. In addition to these liabilities, the parties paid off another $10,000 in personal debts arising from the business.
The purpose for which the wife raised the issue of the running of the business was not entirely clear. However, if it was to suggest that she had made contributions which benefited the husband's family in some way, then I reject that contention. The onus is on the wife to establish that the parties had any interest in the business at all. The wife has failed to do so and I am satisfied that at all times the husband and wife were simply paying rent and running the business. When they ceased to do so, Ms P Cooper suffered significant financial loss and had to borrow to repay debts.
Between 1981 and 1989 the husband was on a disability pension and the family was financially struggling. During this time, the parties and children were assisted by the families of both the husband and the wife.
In 1984, Ms P Cooper and her husband purchased eight blocks of land in (omitted) for $10,000. Three of these blocks of a quarter-acre each were transferred to the husband. In about 1986, Ms P Cooper purchased a house for $3,500 with the intention of moving it onto one of the blocks owned by the husband, to provide a home for the Husband and Wife.
She subsequently paid for the removal of the house at a cost of $8,000 and paid for other items for the improvement of the house, including the cost of timber beams and the labour involved in joining them, the roofing and electricity installation.
The husband and wife did not in fact move into the home until 1989.
The wife’s mother also paid for some of the cost of the housing, including the tin for the roof. The husband obtained a first home buyers grant which enabled him to provide a septic system and a hot water service.
The husband and wife separated in late 1988 or early 1989. The wife asserts that the husband was conducting an affair from September 1988 and she learned of it in December. The wife’s affidavit is in different terms from the evidence that she gave at the hearing. In her affidavit she asserts that the husband obtained work in Melbourne in late 1988 and came home on weekends. She further says that by 1989 he told her that he could not afford to support the children and that she should apply for a pension. He then told her he was involved with another woman. She asserts that with the help of his mother and sister, there was a flurry to finish the house at Property H and on finding out that he was staying there with his new lady, she left Property H with the children, taking the car, furniture and possessions. She says that they reconciled in May 1989 after staying at her mother’s house and then subsequently moving into Property H. In her evidence, she said they separated in January and she left Property H in February and they reconciled in May.
On 19 December 1988, the husband executed a mortgage in favour of his father, his mother and his sister Ms C Cooper. The mortgage was for $30,000 with an interest rate of 12 or 14 percent, with interest only payable for a period of five years. The mortgage commenced on
1 December 1988 and the principal was payable on 1 December 1993.
The husband concedes that the parties were separated when the mortgage was executed. The mortgage was drawn by the solicitor for the second, third and fourth respondents, LAWRENCE ERNEST MUIR. Mr Muir has filed an affidavit in the proceedings which annexes some file notes made at the time of execution of the mortgage. Those notes indicate that the $30,000, the subject of the mortgage, was made up as follows:
House removal $12,500
Labour for roof 2,000
Tanks & hardware 5,000
Plumbing 5,000
Electricity 2,000
New roofing iron 1,500
Timber 2,000
Total: $30,000
The land itself was said to be a gift to the husband.
Ms P Cooper asserted that she borrowed from her credit union for the works undertaken on the house. It was acknowledged that some of the money was spent prior to the mortgage being executed, for example the removal of the house. Ms P Cooper asserted that she had spent the anticipated amounts and then was asked to put more money in and wanted protection for the amounts being advanced. She explained her husband being a mortgagee because he had contributed to the purchase of the vacant land in (omitted) and their daughter Ms C Cooper had also made a contribution to the improvement of the property by the purchase of various items including paint and by labour and other monetary donations to the husband and family. Ms P Cooper asserts that when the parties reconciled, the wife asked what she was paying in respect of the loan to the credit union and was told and offered to pay the $50 per week payment. Ms P Cooper asserts that she made only one payment. She conceded that at the time the mortgage was signed, a lot of the work had in fact already been done. I am satisfied on the evidence that the husband’s mother did in fact pay for the items alleged and borrowed at her own expense to raise funds which went towards the improvements to the house.
The wife was unaware of the mortgage at this time. She asserted that she recalled attending with the husband at the solicitor’s office at some later time where the question of a mortgage was discussed in the context of protecting the husband’s interests from a claim for increased maintenance from his first wife. None of the other witnesses agreed that any subsequent meeting with the solicitor had taken place and it is clear that the mortgage was executed in December 1988. Neither were there any notes from Mr Muir indicating that any later consultations had occurred. I am satisfied from the evidence that the wife’s recollection in this regard is wrong and no such conference took place.
The husband said that at the time the mortgage was executed, he was trying to reconcile with the wife and was quite prepared to sign whatever his parents requested to ensure that the money was forthcoming for the completion of the house. He said that his mother would not advance any further sums to him unless he signed a mortgage and as he wanted the family back and had to provide for plumbing, heating and other basic work, he had no choice but to sign the mortgage. When the house was first acquired and works would have been done on it, the wife’s mother paid for the tin for the roof and in about 1989 purchased a wood heater for the family. She also bought a secondhand car for the wife in 1984.
In about 1993, the parties needed to do an extension to the house and the wife’s mother financially assisted them. Significant extensions were carried out to the house which involved a new extension consisting of two bedrooms, lounge, laundry, landing and bathroom. It is conceded that the wife’s mother spent approximately $25,000 on the extension.
Then in 1988 the wife’s mother offered to pay for a renovation of the kitchen which included work done to the floorboards and frame and provision of new tiles, stove, floor coverings and an extractor fan. It was conceded that this cost approximately $14,000.
At some stage the wife appears to have learned about the mortgage but her evidence is not clear as to when this occurred. The wife’s mother says that in 1993 when she advanced money for the extension, she had discussions with the wife who confirmed that she would have some equity in the property and would have her name on the title. In her evidence she said that she asked the parties whether they owned the property and they agreed that they did. By this she said she meant whether they owed anything to the bank.
The wife said that she was led to believe that the mortgage had been “cancelled” or “released” after the extension had been put in, and that she had seen a document to this effect. She also said that her name had been put on the title. The husband and his family denied that any document was ever in existence. The wife was unable to be more specific or to give any further detail and I am unable to be satisfied on the evidence that such a document did ever exist. The husband conceded that the wife had raised with him the issue of putting the property in their joint names. He says that this request came from the wife’s mother and he enquired and made arrangements to do so and asked the wife to pay whatever was necessary but that she didn’t pursue the matter any further. He said that he had not discussed the mortgage with her and his recollection was that the first time they spoke about the mortgage was in July 1999.
I am satisfied that the wife did raise with the husband the issue of becoming a joint proprietor but the husband took no steps to implement this arrangement and quite possibly led the wife to believe that it had occurred.
The wife’s mother said that she didn’t think she would have advanced the money for the extension and subsequent renovations if she’d known there was a mortgage and particular if she’d known that Ms P Cooper was the mortgagee.
The wife’s mother’s evidence was that subsequent to the separation, Ms P Cooper rang her to tell her the parties had separated. Ms T asked what would happen to the money she had put in and was told by Ms P Cooper and subsequently by Mr Cooper, that she would get her money back. The phone call appears to have been to tell Ms T that the husband had been assaulted and was generally critical of the wife. Ms T said that she had not wanted the money back prior to the parties separating but once she learned they had separated, she felt that it was reasonable for what she put in to be repaid. She said there were two calls from Ms P Cooper.
Ms P Cooper admitted that she spoke to Ms T after separation but said there was only one conversation. Her version of the discussion was that up until then she did not know what Ms T had done for the parties and said that the husband had said that they would go 50/50 and that she would have to look after her parents and the husband would look after his.
Both mothers agreed that a conversation took place in which the issue of repayment was discussed. I am satisfied that there was an indication that the wife’s mother would have the money repaid to her. Although Ms P Cooper’s version of the conversation was somewhat different, the question of the parties getting back what they had put in was discussed and although the conversation was depicted somewhat differently by Ms P Cooper, I am satisfied that the import was consistent with Ms T’s evidence. I am also satisfied that Ms T would not have made the significant contributions that she made had she been aware that the Coopers already held a mortgage over the property for their contributions.
The wife’s application to set aside the mortgage
Section 106B of the Family Law Act 1975 provides:
“106B(1) In proceedings under this Act, the Court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or an interest of a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings which, irrespective of intention, is likely to defeat any such order.
106B(2) The Court may order that any money or real or personal property dealt with by any such instrument or disposition may be taken in execution or charged with the payment of such sums for costs or maintenance as the Court directs, or that the proceeds of the sale should be paid into Court to abide its order.
106B(3) The Court shall have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
106B(4) A party or a person acting in collusion with a party may be ordered to pay the costs of any party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.”
The Law
In Gelly and Gelly (No.2) [1992] FLC 92-291 at p. 79153, Treyvaud J listed the requirements which must be satisfied by a successful applicant in s 106B(1), (previously s 85:)
i)There are on foot proceedings under the Act or completed proceedings the orders from which still have force and effect;
ii)The instrument or disposition has been made, or is proposed to be made;
iii)The instrument or disposition is one of a series of transactions by which that disposition is carried out;
iv)The instrument or disposition is intended to defeat the order, existing or anticipated, and has that effect, or irrespective of intention, is likely to defeat such order;
v)The order defeated, or likely to be defeated, must be existing or anticipated, it is not an anticipated claim;
vi)Insofar as the order be anticipated, it is one anticipated by the reasonable disponer at the time of the disposition, properly considering all the circumstances of the case.
vii)The effect of the instrument or disposition is that the disponer lacks the capacity to satisfy the orders unless the instrument or disposition be set aside.
viii)The onus of proof, on a civil standard, is upon the applicant.
A mortgage is a disposition in this context. (Heath and Heath [1983] FLC 91-362.)
The question of how an “anticipated order” is to be determined was dealt with by Elliot J in Pflugradt and Pflugradt [1981] FLC 91-052 where the court determined that the elements of expectational forseeability in “an anticipated order” must be considered on objective rather than subjective basis, and requires the order to have the quality of being anticipated by the reasonable disponer at the time of the disposition properly considering all the circumstances of the case. The wife bears the onus of establishing to the satisfaction of the court that at the time of the transaction, a reasonable man with the knowledge which the husband had at the time of the disposition would anticipate that it was likely that the wife would initiate proceedings and that the reasonable man would foresee it as being likely that an order may have been made in those proceedings which would be defeated by the transaction.
The application of this principle involves the court in the consideration of the relationship of the parties at the time of the transaction and of the nature of the order which the wife may have reasonably expected if proceedings have been instituted at or about that time. In Halabi and Artillaga & Ors. (1984) FLC 92-470, the Chief Justice (at p. 885) said as follows:
“It seems to me that the section clearly contemplates two possibilities, one being that the instrument was made with the intention of defeating an order, and the second being that, regardless of the intention with which it was made, it did have the effect of being likely to defeat an anticipated order.
I consider that if the necessary intention has been demonstrated there is nothing in the section which imposes the further requirement that the instrument is likely to defeat such an order. However, I think that it is clear enough that if it cannot be shown if the instrument is made with the intention of defeating the order, or even if the contrary can be shown that it was not made with the intention of defeating the order, then it can still be set aside if it can be established that it was, at the time that it was made, likely to defeat any such order. I would add that I have difficulty in accepting the proposition of Treyvaud J, that in cases where it is necessary to show that the instrument or disposition is likely to defeat any such order, this cannot be done by demonstrating that the pool from which any such order is to be made is and was anticipated to be significantly reduced by the making of the instrument or disposition. I consider it self-evident that if the pool is significantly reduced, then in most cases the applicant will be likely to receive significantly less than would have been the case if the instrument or disposition had not been made”.
It is common ground that in 1993 when the principal became repayable, the husband’s parents did not seek repayment. Ms P Cooper said that at the time the parties could not afford to pay and as they had no means of doing so without a sale of the property, no claim was made. It is also common ground that not only was there no payment of any principle but there was no payment of any interest. Indeed, it is clear that the interest component of the mortgage now exceeds the principal. Ms P Cooper, however, concluded her evidence by saying that she hadn’t thought about the interest and would not expect to get all of the interest back.
In this case there are proceedings on foot under the Act. The instrument or disposition which the wife seeks to set aside is the mortgage signed on 19 December 1988 given by the husband in respect of the former matrimonial home to the second, third and fourth respondent.
The wife asserts that the mortgage was given by the husband with the intention of defeating an order. One of the difficulties faced by the wife in this case is that the disposition took place in 1988 and the separation did not occur until 1999 with the proceedings some time after that. The order must be anticipated by the reasonable disponer at the time of the disposition (see Gelly and Gelly (No.2) Supra). Whilst on the one hand it might seem on the surface to be reasonable for the husband to give a mortgage to his parents and sister, given the financial contributions made by them and the losses incurred in the running of the business, I am satisfied on the balance of probabilities that the wife has established that the mortgage was made to defeat an anticipated order, for the following reasons:
a)It is conceded that the parties were separated at the time of the giving of the mortgage;
b)When the parties reconciled, the husband did not tell the wife of the existence of the mortgage;
c)The Wife’s mother was allowed to make significant contributions to the property without being told of the mortgage;
d)No attempt was ever made by the husband to make payments of principal or interest and no claim for repayment was ever made until after the parties had separated;
e)There are inconsistencies in the amounts claimed as the basis for the security. Although the mortgage was partly to secure payments yet to be made, it was also partly to secure the cost of acquiring and transporting the home to the block. This occurred in 1986 and there was apparently no suggestion between 1986 and 1988 when the mortgage was executed, that the provision of the house and its transport was other than a gift. During this period the parties were together;
f)The husband’s father is a mortgagee and yet he made no contribution to any of the amounts alleged to be advanced. Ms P Cooper’s explanation for him being a mortgagee was that he had contributed to the acquisition of the land made available to the husband, yet it was never asserted that the land was part of the monies advanced and it was in fact conceded that the land was gifted to the husband.
g)Although the Wife sought it, the property was not transferred into joint names
Insofar as the anticipation of an order is concerned, it was reasonable at the time for the husband to anticipate there would be proceedings if the parties remained separated and that the wife would obtain an order. Given the value of the land at that time which was said to be between $6,000 – $7,000, the cost of the house and the amount of the mortgage, it must have been obvious at that time that the mortgage which was to include monies yet to be advanced, would exceed or at least equal the value of the property and therefore prevent any order from being made which would give the wife any share of the property if proceedings were commenced by her and the parties did not thereafter reconcile.
Ironically, since that time, the effect of the mortgage has become even more disadvantageous to the wife. This is due to two intervening factors. The first is that her mother has put money into the property, which if the mortgage were to stand would mean that in respect of these contributions, the wife could receive nothing and, secondly, as the result of non-payment of interest, the amount of the mortgage has increased considerably and indeed the interest component is greater than the principal. Nevertheless, it is necessary to consider the reasonable disponer at the time of the disposition and having regard to the fact that the parties were separated at that time, I am satisfied that on an objective test by executing a mortgage of that nature, as the husband did at that time, he could anticipate that in proceedings commenced by the wife, any order in her favour would be defeated.
In any event, irrespective of intention, the effect of the execution of the mortgage was likely to defeat an anticipated order for the reasons set out. In addition to those reasons, in my view it is clear that at the time of the execution of the instrument, it would have been clear to the husband that there was no equity in the property and thus no means of making an order under s.79 of the Family Law Act in favour of the wife. Although it could have been argued for the husband that the contributions to the acquisition of the property had come from his side of the family rather than the wife at that point, there remains of course the factors which the court must take into account under s.75(2) of the Family Law Act and those factors would have significantly favoured the wife. At the time the mortgage was executed, the wife had all five children living with her and no means of supporting herself. Any reasonable person in the context of a potential claim and order in favour of the wife would have appreciated that the effect of the mortgage being granted would be to deny the wife the opportunity to obtain an order in her favour.
In the circumstances, therefore, I am satisfied that the wife has satisfied the criteria for the operation of s.106B(1) and I propose to order that the mortgage dated 19 December 1988 be set aside.
Section 106B(3) requires me to have regard to the interests of and make any order proper for the protection of a bona fide purchaser or other person interested. Having come to the findings regarding the mortgage that I have, I am satisfied that the second, third and fourth respondents were happy to take advantage of the separation to advance their own interests and to some extent, those of the husband. I am satisfied that the orders ultimately made will enable the husband to repay most of the principal to his parents if he feels morally obliged to do so. As Ms P Cooper herself conceded that she did not require all the interest to be repaid, I am satisfied she would not be disadvantaged if the husband were not in a position to repay to her, if he wishes, principal and interest and that no injustice would occur to the third parties if the husband was not in a position to repay the interest.
Issues pursuant to s 79 and s 75(2)
The approach to the determination of an application under s.79 is well established by authority (Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Clauson and Clauson (1995) FLC 92-595). The process ordinarily involves a multiple-part procedure. First, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in s.79(4)(a) to (c). Thirdly, evaluating the matters contained in s.75(2) insofar as they are relevant.
In determining what order the court should make under s.79, the court must also be satisfied in all the circumstances that it is just and equitable to do so (s.79(2). In this matter, the funds for the acquisition of the former matrimonial home in (omitted) have come largely from the respective families of each of the husband and wife. The land was provided by way of gift by the husband’s mother to him and the house was acquired and transported in the manner already described. The husband’s family provided the sum of $30,000 as identified in the notes accompanying the affidavit of Mr Muir and the subject of the mortgage. The total cost of the amounts described in the mortgage and the land came to approximately $36,000. In addition, the husband’s mother suffered financial losses as a result of the earlier business venture which she had made available to the parties. These were important contributions because they enabled the husband to acquire the land and the home in which to house the family.
However, later in the marriage, the wife’s mother also made significant financial contributions for the benefit of the parties. This enabled them to put on an extension to the home which was necessary for the family and some years later to totally redo the kitchen. The husband conceded that the wife’s mother’s contributions totalled approximately $34,000.
Between 1981 and 1989 the husband was not working and was receiving the pension. In 1989, he commenced employment as a (occupation omitted) with the (employer omitted) and is currently employed by them as a (occupation omitted). He is in poor health and is still having operations for the nasal papalomas. The husband also takes medication for elevated blood pressure and has other complaints but nevertheless has been in his present employment for over 10 years and there was no suggestion in the evidence that he would not be able to continue in that employment.
The husband asserts that the wife is in good health and capable of obtaining employment. The wife was the primary carer for the children during the marriage and took on some part-time (occupation omitted) as the children got older. The wife had a thyroidectomy last year and is not in good health. There is no evidence that she has any skills, qualifications or experience which would enable her to obtain anything more than the most basic employment when her health permits. She gave evidence that although Y is presently living with the husband she wants to return to the wife. This evidence was not challenged. The wife resides in a Housing Commission home in (omitted).
The husband earns $562.00 per week from his employment. Of those children who are dependent, he has the care of Y and Z although Y may return to her mother. He has superannuation entitlements as at 30 January 2000 of $38,208.68 of which $18,080.35 is preserved.
Neither party took any issue with the contributions of the other, either in the role of homemaker and parent in the case of the wife, or in the role of breadwinner at least from 1989 onwards in the case of the husband. In Quaresmini and Quaresmini (1999) FamCA1314, Finn, Kay and Burr JJ said:
“The section 79 exercise is not a pure accounting exercise. It is an exercise in identifying the various matters to be considered under s 79 and weighing them up one against the other before reaching what is an appropriate order to be made, which order may not be made unless it is just and equitable. The manner in which disparate contributions are to be measured, especially including initial capital contributions has been the subject matter of much discussion.”
Recently in Pierce and Pierce (1999) FLC 92-844, Ellis, Baker and O’Ryan JJ made reference to several of the authorities … their Honours said at page 85 881:
“In our opinion, it is not so much a matter of erosion of contribution but a question of what weight is to be attached in all circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife.”
In this case, both the families of the husband and wife respectively have made significant contributions, the husband’s family at an earlier time and the wife’s family at a later time. All those contributions were important and all were directed to the former matrimonial home. Having regard to those contributions and to the contributions of the parties, in my view it could fairly be said that the contributions in this reasonably long marriage have been equal.
I now turn to the matters under s.75(2). The matters which in my view are relevant under s.75(2) are as follows:
a)Age and state of health of the parties — the husband has health problems but these have not to date prevented him from working since 1989. There is no evidence that he will not continue to be able to work. The wife has had a thyroidectomy recently and is unable to work at the present time.
b)Capacity of the parties for gainful employment — the husband has a continuing capacity to earn at the current rate as a (occupation omitted). The wife as a result of her health, her lack of experience and qualifications and the role she played during the marriage has resulted in her having no employment at the present time and very little, if any, likelihood of being able to obtain employment from which she could support herself.
c)Parent control of children under the age of 18 — each of the parties has the care and control of some of the children. If I accept the wife’s evidence, Y is likely to return to her however Z at this stage seems to be staying with the husband. I take into account that each of the parties has responsibility for the support of the children in their care.
f)The husband’s superannuation — counsel for the husband submitted that it would not be unreasonable to add a further $6,000 for the current year to the husband’s superannuation, giving him an approximate benefit of $44,000 at the time of hearing. She argued that tax of 21.5 per cent should be deducted, leaving him with $35,400. It is the case, as submitted by the husband’s counsel, that the husband has been contributing to the superannuation for two years since separation, however, during that time he has had the benefit of the occupation of the property and his superannuation is a consequence of the employment which he had during the marriage and which, as a result of her role, is denied to the wife.
The wife sought through counsel in closing that the s.75(2) factors including the superannuation should result in the wife receiving 70 per cent of the assets of the parties.
In considering the orders, I must make orders which have a result which is just and equitable. In all the circumstances, if the husband has to house some of the children with the remaining funds to him, to apportion only 30 per cent to him would not produce a just and equitable result. In all the circumstances, having regard to the matters in s.75(2), the result should be a division of the proceeds of the sale of the house of 67 per cent to the wife and 33 per cent to the husband.
In making these orders, I return to the consideration of s.106B(3), that is, that the court must have regard to the interests of and make any order proper for the protection of a bona fide purchaser or other person interested. In this case I have ordered that the mortgage be set aside and thus the husband’s parents will not be entitled to the principal and interest although, as I have noted, Ms P Cooper indicated that she was not seeking repayment of all interest. If the proceeds of sale of the house amounted to $85,000, then the husband would receive approximately $28,000. He would be in a position to repay most of the principal to his parents if they required it of him. However, it is important, in my view, in this case to keep in mind that no repayment of capital was ever sought by the husband’s parents even though the principal was due in 1993, nor was any interest ever sought during the continuation of the mortgage and a concession that at least not all of the interest would be sought was made at the hearing. The parents seem to have been content to allow the position to continue for years and the first time a claim was made was after the parties had separated. It is common ground that the wife was not told about the mortgage and the third parties and the husband stood by and permitted the wife’s mother to make significant contributions to the improvements to the property, for which the husband particularly was well aware, knowing that the property was encumbered by the mortgage. Both parties are now in the position where they can, if required, or if they feel morally obliged, make some repayment to their respective parents. There was no evidence that the husband’s parents would insist upon the money being repaid if the mortgage were set aside and I am satisfied for those reasons that the second, third and fourth respondents do not require any further order under s 106B(3).
The remaining issue between the parties relates to chattels. The wife asserted that the husband had about 80 per cent of the household items and that in addition he had sold glassware, tins and other collectible items through his mother at a market. The wife produced photographs of these items. Ms P Cooper admitted to selling some items but said that they were of very little value and they were given to her to sell because they had been left behind by the wife in the home. Exhibit W2 is a list of property that the wife says ended up in the husband’s possession. The problem with it is that there was no valuation of those items. For her part the wife conceded that certain items were retained by her, including a fridge, stereo, VCR, toaster, microwave, some crockery and cutlery. Whilst I am satisfied on the evidence that there was not an equal division and that the husband acquired more of the furniture and chattels, there is no satisfactory valuation of the items and I am unable therefore to make any specific adjustment for these items. Such items that were sold by Ms P Cooper seem to have been of limited financial value. I am not satisfied that there should be any further adjustment in respect of the furniture and chattels. Nor am I satisfied that the evidence allows me to identify those items which are still in the possession of the husband and sought by the wife and I do not consider it appropriate to make any further order in relation to the return of chattels.
However, I will make an order that the husband return to the wife all her personal papers and belongings and any chattels which it is conceded are those of the wife.
Finally, the wife has an application for maintenance in the sum of $100. Very little evidence was directed to this issue. I am satisfied that the wife is unable to adequately maintain herself in the terms of s.72 of the Act. However, given the income of the husband and his responsibilities to support the children who live with him, I am not satisfied that the husband has any present capacity to pay spousal maintenance to the wife and accordingly, in my view, the application should be dismissed.
I propose therefore to make the following orders:
(1)That Mortgage No. (omitted) registered on 24 February 1989 on Certificate of Title Volume (omitted) Folio (omitted) whereby the second, third and fourth respondents are the mortgagees, be set aside pursuant to s.106B of the Family Law Act 1975.
(2)That the second, third and fourth respondents forthwith execute all documents and do all acts and things at their expense that may be necessary to remove or discharge Mortgage No. (omitted) from Certificate of Title Vol (omitted) Fol (omitted).
(3)That the husband pay to the wife the sum of $56,950 (“the payment”) within thirty (30) days of the date of these orders.
(4)That in the event that the husband has not made the payment to the wife on or before the due date for payment, the husband forthwith do all acts and things necessary to transfer to the wife and himself as trustees for sale his right, title and interest in the property at Property H being the land more particularly described in Certificate of Title Vol (omitted) Fol (omitted) upon trust to sell the property by public auction or private treaty on terms and conditions to be agreed by the parties and upon sale, to disperse the proceeds in the manner following:
(a)In payment of costs and expenses of the sale;
(b)In payment of adjustment of rates;
(c)In payment to the wife of 67 per cent of the proceeds then remaining;
(d)In payment to the husband of the balance and the husband be responsible for payment of any further encumbrance with respect to the said property;
(5)There be liberty to apply in relation to the terms and conditions of sale.
(6)Pending the payment to the wife or sale of the property whichever is the earlier:
(a)The husband have the sole right to occupy the property and during such right of occupation the husband pay all liabilities relating to the said property and all rates and apportional outgoings in respect to the property as and when they fall due and indemnify the wife in relation thereto;
(b)The parties hold their respective interests in the real property upon trust pursuant to these orders;
(c)The husband not encumber, deal with or otherwise dispose of his interest in the said property other than in compliance with these orders.
(7)That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(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 the date of these orders;
(b)Each party forego any claims they may have to any superannuation benefits belonging to or owned by the other;
(c)Insurance policies remain the sole property of the owner named therein;
(d)Each party be solely liable for and indemnify the other against any liability encumbering the item of property to which the other party is entitled pursuant to these orders.
(8)That the Husband deliver up to the Wife within 14 days all her personal papers and belongings and any chattels it is conceded are those of the Wife.
(9)That all applications otherwise be dismissed including but not limited to the wife’s application for spousal maintenance.
(10)That all documents produced under subpoena be collected by the solicitor who issued the subpoena and all documents be forthwith returned to their owner.
(11)That all exhibits be returned at the expiration of twenty-eight (28) days except if an appeal is lodged.
IT IS CERTIFIED
(12)That this was a matter which was reasonable to brief counsel as advocate.
I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of Bryant CFM
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