Kintcha & Brown
27 March 2009
FAMILY COURT OF AUSTRALIA
| KINTCHA & BROWN | [2009] FamCA 217 |
| FAMILY LAW – PROPERTY SETTLEMENT – Disclosure – Contributions – Adjustments |
| Family Law Act 1975 (Cth) ss 75, 79 |
In the marriage of Kowaliw (1981) FLC 91-092
In the Marriage of Doherty (1996) FLC 92-652
In the Marriage of Kennon (1997) 22 Fam LR 1
In the Marriage of Pierce (1999) FLC 92-844; 24 Fam LR 377
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of Omacini (2005) 33 Fam LR 134
In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569
In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) 12 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
In the Marriage of Coghlan (2004) 33 Fam LR 414
| APPLICANT: | Ms Kintcha |
| RESPONDENT: | Mr Brown |
| FILE NUMBER: | SYF | 4168 | Of | 2006 |
| DATE DELIVERED: | 27 March 2009 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Judicial Registrar Loughnan |
PLACE HEARD: Sydney
| HEARING DATE: | 10 & 11 March 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT WIFE: | Mr G. Watkins |
SOLICITOR FOR THE APPLICANT: | Milne Berry Berger & Freedman |
COUNSEL FOR THE RESPONDENT HUSBAND: | Mr P. Cook | |
| SOLICITOR FOR THE RESPONDENT HUSBAND | Moscardo Lawyers & Associates | |
Orders
Within 60 days of the date of these orders the wife pay to the husband or as he may direct $101,500 and that forthwith upon that payment the husband transfer to the wife all his right title and interest in the former matrimonial home situate at and known as W property in the State of New South Wales, being the whole of the land comprising Folio Identifier ….
Forthwith upon that transfer the wife shall discharge the mortgage secured on the former matrimonial home in favour of the St George Bank.
In the event that the wife does not comply with orders 1 and 2, forthwith upon her default the husband and the wife shall do all acts and things and execute all deeds documents instruments and writings necessary to sell the former matrimonial home by private treaty at a price agreed between the husband and the wife or failing such agreement then at a price nominated by a Valuer appointed by the President of the Real Estate Institute of New South Wales or his or her nominee and the parties shall accept the price nominated by such a Valuer as being the sale price of the matrimonial home.
The husband and the wife shall do all acts and things and execute all deeds documents instruments and writings necessary to list the former matrimonial home with an agent as may be agreed between the parties within 14 days of the wife’s default and in absence of such agreement then by an Agent nominated by the President of the Real Estate Institute of New South Wales or his or her nominee.
In the event that the matrimonial home is not sold by private treaty within 3 months from the date of listing with a Real Estate Agent for private sale then the husband and the wife are to forthwith do all acts and things necessary including the execution of all documents necessary for the sale of the matrimonial home by public auction and in particular are to:
(i)place the matrimonial home with an auctioneer as agreed between the parties and in default of such agreement such auctioneer as nominated by the President of the Real Estate Institute of New South Wales or his or her nominee (hereinafter called "the auctioneers") for the sale of the matrimonial home at the earliest possible date;
(ii)execute all documents requested by the auctioneers for the sale of the matrimonial home;
(iii)request the auctioneers to recommend a reserve price to be placed on the matrimonial home for the purpose of the auction sale and accept such recommended reserve price;
(iv)pay to the auctioneers equally, any sums requested for advertising expenses in relation to the auction;
(v)attend at the auction sale or sales and negotiate with the highest bidder in the event that the reserve price is not reached and accept the advice of the auctioneers as to the acceptance of a price less than the reserve price;
(vi)execute contracts of sale;
(vii)co-operate in every way with the auctioneers in relation to the auction of the matrimonial home; and
(viii)execute all other documents necessary to complete the sale.
The husband and the wife shall do all acts and things necessary to cause the proceeds of sale, after adjustments on sale, to be paid in the following manner and priority:
(i)in payment of the amount required to discharge the St George Mortgage Corporation Limited mortgage;
(ii)in payment of agent's commission and auction expenses (if any) due on the sale;
(iii)in payment of legal costs of sale;
(iv)in payment of 16.7% of the remaining balance to the husband; and
(v)in payment of the remaining net proceeds to the wife.
Pending the transfer or sale of the former matrimonial home in accordance with these orders, the wife shall indemnify the husband and keep him indemnified in relation to all mortgage payments, rates and outgoings of whatsoever nature and kind in relation to the property.
Except as otherwise provided in these orders the husband and the wife each be declared the sole legal and beneficial owners of all items of property or resource including but not limited to, money, motor vehicles, insurances, equities, shares, superannuation entitlements, debentures, furniture, furnishings, jewellery and personal effects currently standing to their respective credit or in the possession or control of each of them respectively.
Except as otherwise provided in these orders, the husband and the wife each be declared solely responsible in relation to any and all liabilities in their respective names.
10. In the event that either party refuses or neglects to sign any document, deed or instrument required to give effect to the orders referred to herein within 14 days of service of same upon him or her, then the Registrar of this Court in Sydney is empowered pursuant to Section 106A of the Act to execute such document, deed or instrument in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said document, deed or instrument.
IT IS NOTED that publication of this judgment under the pseudonym Kintcha & Brown is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 4168 of 2006
| MS KINTCHA |
Applicant
And
| MR BROWN |
Respondent
REASONS FOR JUDGMENT
After a marriage involving cohabitation of about 8 years the parties cannot agree on a settlement of their property. The parties are divorced but for convenience I will refer to them as the wife and the husband.
Applications
The wife seeks orders in terms of a Minute of Order incorporated in the case outline provided by her counsel as follows:
MINUTE OF ORDERS SOUGHT BY THE WIFE
1. That the husband forthwith transfer all his right title and interest to the former matrimonial home situate at and known as [W property] subject to the mortgage thereon to St George Bank to the wife.
2. That the husband be declared the owner of and the husband to have no claim upon:
a. All chattels, cars and items of personal possession held by the husband and other assets (including but not limited to superannuation) registered in his name.
3. That the wife be declared the owner of and the husband to have no claim upon:
a. All chattels, cars and items of personal possession held by the wife and other assets (including but not limited to superannuation) registered in her name.
The husband seeks orders in accordance with his Response as follows:
PROPERTY
18.That within 28 days of the making of these orders that the husband and the wife do all acts and things and execute all deeds documents instruments and writings necessary to sell the property known as [W property] being the whole of the land comprising Folio Identifier […] ("matrimonial property") by private treaty at a price agreed between the husband and the wife or failing such agreement then at a price nominated by a Valuer appointed by the President of the Real Estate Institute of New South Wales and the parties shall accept the price nominated by such a Valuer as being the sale price of the matrimonial home.
19.That the husband and the wife do all acts and things and execute all deeds documents instruments and writings necessary to list the matrimonial home with an agent as may be agreed between the parties within 14 days of the date of these orders and in default of such agreement then by an Agent nominated by the president of the Real Estate Institute of New South Wales or his nominee.
20.That in the event that the matrimonial home is not sold by private treaty within 3 months from the date of listing with a Real Estate Agent for private sale then the husband and the wife are to forthwith do all acts and things necessary including the execution of all documents necessary for the sale of the matrimonial home by public auction and in particular are to:
(i)place the matrimonial home with an auctioneer as agreed between the parties and in default of such agreement such auctioneer as nominated by the President of the Real Estate Institute of New South Wales or his nominee (hereinafter called "the auctioneers") for the sale of the matrimonial home at the earliest possible date;
(ii)execute all documents requested by the auctioneers for the sale of the matrimonial home;
(iii)request the auctioneers to recommend a reserve price to be placed on each of the said properties for the purpose of the auction sale and accept such recommended reserve price;
(iv)pay to the auctioneers equally, any sums requested for advertising expenses in relation to the auction;
(v)attend at the auction sale or sales and negotiate with the highest bidder in the event that the reserve price is not reached and accept the advice of the auctioneers as to the acceptance of a price less than the reserve price;
(vi) execute contracts of sale;
(vii)co-operate in every way with the auctioneers in relation to the auction of the matrimonial home;
(viii) execute all other documents necessary to complete the sale.
21.That the husband and the wife do all acts and things necessary to procure that upon the sale of the matrimonial home the proceeds of sale shall be paid in the following manner and priority:
(i)in payment of the amount required to discharge the St George Mortgage Corporation Limited mortgage;
(ii)in payment of agent's commission and auction expenses (if any) due on the sale;
(iii) in payment of legal costs of sale;
(iv)by way of adjustment of property rights the balance to be divided between the husband and the wife as follows.
(a) 55% of the net proceeds to the wife;
(b) 45% to the husband;
22.That pending the sale of the matrimonial property and from 30 November 2005 the wife indemnify and keep indemnified the husband for all mortgage payments, rates and outgoings of whatsoever nature and kind in relation to the property.
23.That within 28 days from the date of these orders and pursuant to paragraph 90MT (1) (a) of the Family Law Act 1975 whenever a splittable interest within the meaning of section 90ME of the Act becomes payable to or on behalf of [the husband] from his interest in the AMP) Superannuation fund (member number […]) the Wife shall be entitled to be paid by the Trustee of the AMP Superannuation Fund an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using the base amount, at the operative date, and there be a corresponding reduction in the entitlement the Husband would have had in the AMP Superannuation fund but for this Order.
24.That the base amount referred to in order 23 above to be allocated to the Wife in these proceedings out of the interest of the Husband in these proceedings in the AMP Superannuation fund being 55% of the gross value of the Husband's interest in the fund.
25.That within 28 days of the date of these orders, the wife do all acts and things and execute all deeds documents instruments and writings necessary to cause to be transferred to the husband her interest in [D] Pty Ltd ACN […].
26.That the husband indemnify and keep indemnified the wife with respect to any and all Creditors, Causes of Action, and Tax Liabilities of [D Pty Ltd].
27.That except as otherwise provided in these orders the husband and the wife each be declared the sole legal and beneficial owners of all items of property or resource including but not limited to, money, motor vehicles, insurances, equities, shares, superannuation entitlements, debentures, furniture, furnishings, jewellery and personal effects currently standing to each of their credit or in the possession or control of each of them respectively.
28.That except as otherwise provided in these orders, the husband and the wife each be declared solely responsible in relation to any and all liabilities presently in the name of each of them respectively.
29.That in the event that either party shall refuse or neglect to sign any document, deed or instrument required to give effect to the orders referred to herein within 14 days of service of same upon him or her, then:
a)The Registrar of this Honourable Court be empowered pursuant to Section 106A of the Act to execute such document, deed or instrument in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said document, deed or instrument.
b)That in the event of any failure referred to in order 29 above, the party who has failed to comply with the request shall be responsible to pay the other party's costs of any such Application or Enforcement Order on an indemnity basis.
Notations
(a)Each of the parties hereby releases and forever quits claim to the other party and the whole of his or her estate and notional estate from and against all rights, if any, by or on behalf of that party to make any application or claim under or pursuant to the Family Provision Act 1982 of the State of New South Wales and any Act of the State of New South Wales or elsewhere replacing or amending the same or making like or similar rights to those under that Act and hereby indemnifies and covenants forever to keep indemnified the other part and his or her estate and notional estate from and against all such applications and claims.
(b)Each of the parties covenants to join in and support any request or application of the other (whether made in the lifetime or after the death of either or both of the parties) to the Supreme Court of New South Wales for the approval of that Court under section 31 of the said Family Provision Act 1982 to the releases herein contained or for any similar or like approval or sanction under any other applicable Act.
Events have overtaken the orders sought by the husband. For example, paragraphs 25 and 26 are impracticable as D Pty Ltd is now in liquidation. I gather from absence of submissions on the point and from the document “Husband’s Calculations” handed up during final submissions by his counsel, the husband does not seek a splitting order but seeks to retain the assets and superannuation interest in his possession and name and wants a settlement in the form of an adjusting payment either from the wife or from the net proceeds of sale of the home. Perhaps that is just as well as the splitting order sought in the husband’s Response is difficult to understand and unenforceable. There is no operative date or any indication that the trustee has been served.
Affidavits
The wife relied on the following documents:
Affidavit of the wife sworn 6 March 2009
Affidavit Ms L Kintcha sworn 6 March 2009.
Financial Statement sworn 6 March 2009The husband relied on the following documents:
Affidavit of the husband sworn 16 October 2008;
Financial statement of the husband sworn 16 October 2008;
Affidavit of Mr G Brown sworn 16 October 2008;
Affidavit of Ms J Brown sworn 16 October 2008.
Issues for determination
The issues for determination, are:
1.The adequacy of disclosure by the husband in relation to D Pty Ltd;
2.The balance of initial contributions;
3.The financial contributions of the wife through wages and injections of funds from her family;
4.The contributions made through the husband from his parents;
5.The treatment of the husband’s management of D Pty Ltd;
6.The overall proportions of contribution;
7.The extent of an adjustment to the wife under section 79(4)(d) – (g)
8.The time the wife should have to pay the husband out before a sale is effected of the former matrimonial home.
Short History
As at the date of hearing the wife and husband were 37 and 40 years of age respectively. They commenced living together in October 1995 and were married in October 1997. The parties separated on 29 November 2005. Their divorce became final on 22 Sept 2007
Children
There are three children of the marriage:
H who was born in April 2001 and as at the date of the hearing he is 7 years & 11 months of age;
N who was born in August 2002 and as at the date of the hearing she is 6 years & 7 months of age;
L who was born in January 2004 and as at the date of the hearing he is 5 years & 2 months of age.
Background facts
In 1989 the husband obtained a Bachelor Degree in Commerce majoring in Accounting.
In about 1991 the wife obtained a Bachelor of Arts Degree, with a Psychology Major and commenced work as a Cadet.
In 1993 the wife commenced work at her parents’ company, S Company.
The parties commenced cohabitation in October 1995. The husband was employed as a sales representative with K company earning a gross salary of $37,000 plus a company car. His superannuation interest was $20,000 as at 30 June 1996. The husband continued employment at K company until July 1997 earning bonuses during that time of approximately $20,000.
At the commencement of cohabitation the husband says he had savings of approximately $1,500. The wife had household furniture and contents together with the use of a car and phone provided by her employer.
The wife continued to work in her family’s business, S Company.
The parties opened a joint account at the St George Bank for the purposes of saving towards purchasing a house and an overseas trip.
In December 1996 / January 1997 the parties spent $13,000 on an overseas trip.
In July 1997 the parties purchased the property known as W property for $322,500. The husband conceded in cross-examination that the wife’s evidence about the sources of funds for the purchase price and associated costs was correct. The sources were as follows:
i.$8,000 from the husband’s Westpac Bank account;
ii.$30,000 from the husband’s mother;
iii.$31,000 of the wife’s moneys;
iv.$25,000 by way of gift from wife’s parents;
v.$250,000 borrowed from the Advance Bank.
It was put to the husband that the $8,000 in his Westpac Account was joint savings. He rejected that proposition. He said that the parties lived on his salary and made savings through the wife’s income. He says that the $8,000 came from a sales bonus from his employer. It is not necessary to identify the source of those funds, the effect is the same either way.
The husband’s employment with K company terminated and he received a payment of $1,200 for accumulated holiday pay.
The husband commenced employment with T Company. The husband received a gross salary of $47,000 per annum together with a car allowance and bonuses.
The parties were married in November 1997.
In February 1998 the parties drew down $30,000 from the mortgage for renovations to the former matrimonial home.
The wife supervised the renovations, designed the interior, sourcing materials, furnishings and equipment.
In January 2001 the parties established a business called D Pty Ltd.
In April 2001 the parties’ first child, H, was born.
The wife returned to work in June 2001, taking H with her.
In June 2001, D Pty Ltd commenced trading. It operated from an office and warehouse space provided by the wife’s mother. The husband had the day to day conduct of the business while continuing to work for T Company.
In July 2001 the parties purchased an investment property known as E property for $445,000. This was funded by way of borrowings, using the equity in the W home as security. This property was “negatively geared” with a shortfall of approximately $5,160 per annum met from the parties’ joint funds.
At the end of 2001 the wife fell pregnant with N. She subsequently ceased paid employment to become a full time mother.
In 2002 the wife’s mother deposited $80,213 into parties’ St George Mortgage account
In May 2002 the parties borrowed a further $150,000 to finance renovations.
In August 2002 the parties’ second child, N was born.
In 2002 the parties undertook further renovations to the property with the parties obtaining an owner/builder permit. The renovations involved the construction of a second storey. The wife managed the Development Application through the Council. She obtained quotes and dealt with tradespeople. She attended the site daily and supervised all work. The husband assisted from time to time with the wiring, working with the electrician. The husband also assisted the tiler from time to time.
During the renovations the parties resided with the wife’s mother. The wife’s mother provided board and all food, free of charge.
The wife became a sports instructor.
The husband continued working full time at T Company until November 2002 when his employment ended. The wife contends that the husband was sacked. The husband says he resigned. It is not possible to resolve that issue. Immediately prior to him leaving T company, the husband’s base salary was $85,000 plus bonuses and a car allowance.
The husband then worked in the business until 2006 on a full-time basis.
On 30 June 2003 the wife received a distribution from the Kintcha Family Trust of $68,331. Those moneys were applied to family living expenses.
In January 2004 the parties’ third child, L, was born.
On 30 June 2004 the wife received a distribution from the Kintcha Family Trust of $50,000. Those moneys were applied to family living expenses.
On 7 September 2004 the husband underwent open heart surgery. The husband’s father gave the parties $10,000 to meet expenses whilst the husband recovered. The husband was unable to resume full time work for 3 months. The husband suffered from depression and was given medication for that condition and saw a counsellor.
In 2005 the wife obtained accreditation with her sport’s Teachers’ Association. She commenced teaching classes at various centres throughout Sydney.
The parties separated on 29 November 2005. The husband moved to rented premises, paying $430.00 per week. The wife remained in the former matrimonial home.
On 6 May 2006 the husband’s father lent the business $50,000, secured by a deed of charge.
In 2006 the wife applied for Child Support. The husband declared his income at nil and in July 2006 he was assessed to pay $26.67 per month. The wife appealed that decision and the Registrar assessed the husband’s income at $70,000 per year resulting in an assessed liability of $1,000.00 per month. The husband appealed and advised he was only earning $28,000 per annum. The husband’s weekly payments are now $125.00.
In September 2006 the parties sold the E property for $540,000. The parties made a capital gain of $95,000 on this property. Those moneys were applied to the outstanding mortgage with St George Bank.
On 24 January 2007 the business ceased trading and an administrator was appointed. At that time the mortgage secured against the former matrimonial home stood at $573,088.
On 1 February 2007 the husband commenced employment with Y Company with a salary of $32,000 plus commission. In March 2007 the husband commenced residing with his parents.
On 22 July 2008 orders were made in relation to the children providing for children to live with the husband as follows:
Week 1:With husband Tuesday overnight and 10 am Saturday until commencement of school Monday
Week 2:Wednesday overnight.
Otherwise the children live with the wife.
The parties’ divorce was granted by the Federal Magistrates Court on 21 August 2007. The divorce became final on 22 September 2007.
On 19 November 2007 the business went into liquidation and the former administrator was appointed Liquidator.
In September 2008 the husband commenced to reside with his partner. However he still resides with his parents one weekend per fortnight.
Credit and Submissions
The evidence of the witnesses
The only witnesses called for cross-examination were the parties and the husband’s mother.
Much of the wife’s case fell away at the point of final submissions and therefore much of her evidence was not relevant. Nevertheless there are some relevant factual disputes and therefore it is appropriate to comment on credit.
The wife was not a good witness. She was prone to advocacy in her evidence, both oral and written. On several occasions her answers in cross-examination extended beyond the scope of the question to what she presumably believed was a telling point on that or another issue. She was at least careless in relation to her evidence about D Pty Ltd paying rent to her mother. At paragraph 47 of her affidavit she deposed that the company “paid no rent or (sic) made any contributions towards outgoings and utilised the packaging, shipping and materials without cost.” That statement was made after the wife read her mother’s affidavit from which it appears that after operating for 2 years, D Pty Ltd paid $300 per week to the wife’s mother for the use of facilities and services. Further, there is no suggestion in the wife’s mother’s affidavit that there was any prior demand or agreement in relation to the payment of rent or expenses.
When challenged on the issue, the wife’s response was to say that she was unaware that she had omitted to qualify her statement with “for the first few years .”
In paragraphs 26 and 31 of her affidavit the wife describes contributions made by her and on her behalf and sought to give the impression that there was no double counting in those paragraphs. There was in fact double counting.
The husband was a poor witness. On several occasions he gave an unqualified answer to a question and within minutes gave a qualified answer to a similar question. Without any provocation from counsel for the wife, the husband was irritable during cross-examination. Thus when a passage of the wife’s affidavit was put to the husband he responded with words to the effect “we did not object to that paragraph, did we?”.
There was no substantive challenge to the evidence of the husband’s mother.
Submissions
The written submissions on behalf of the wife are to the following effect:
The wife proposes that the husband receive the following assets:
St George Bank [account no …] (husband’s name)
$ 900.00
Husband’s contents (in his current) property
$ 8,000.00
AMP Flexible Super Plan [account no …] (h)
$ 59,508.00
Motor Vehicles
30% of 2006 Holden Astra (wagon) […]
(motor vehicle registered in the name of husband’s partner […] )
$ 7,100.00
Add backs
Husband’s redraw against mortgage
$27,444
$102,952.00
This is a division as to the wife 84% and the husband 16%.
Summary of argument
1. The wife made a significant financial contribution to the property and welfare of the parties.
a. The wife contributed 75% of the initial equity in the property at [W]: (Half of joint savings ½ being $4,000, moneys provided by her parents $56,000 of a total equity of $81,500)
b.The wife, through gifts and distributions from her mother received a further amount of $218,693 between 2002 and 2004 which was used by the parties for payment of living expenses.
c.The husband wasted approximately $130,000 between 2002 and 2006 by drawing down from the parties joint St George Mortgage account and paying to his business [D Pty Ltd] which made a loss from it’s inception and continued to lose funds until it was eventually wound up. The husband, has acted “recklessly, wantonly or negligently” with matrimonial assets the overall effect of which is to reduce their value within the Kowaliw principles. [1]
d.The wife made a greater contribution by way of homemaking and parenting to the welfare of the parties.
e.The contributions by the wife were made under oppressive conditions, at times, which would lead a finding of greater weight being given to those contributions. [2]
[1] Kowaliw (1981) FLC para 91-092
[2] Doherty and Doherty (1996) FLC ¶ 92-652
The wife contends for a contribution based entitlement of 80:20 in her favour.
S 75(2) factors
1.The wife has the majority care of the 3 children of the marriage who are very young.
2.The husband has paid child support (average $30 per week, per child) well below the realistic cost of raising the children.
3.The husband’s low child support is likely to continue for the remainder of the children’s upbringing.
4.The care of the 3 children has reduced the wife’s earning capacity.
5.The wife has on a contribution based entitlement the majority of the property. But for this, the wife would be entitled to a substantial adjustment in her favour.
The wife contends for an adjustment under s 75(2) at 4% in her favour. If the court were to make findings as to a lower contribution based entitlement, the wife’s s 75(2) adjustment in her favour ought be significantly increased.
In final submissions the wife’s counsel said that the wife did not press any case based on waste such as is identified in In the Marriage of Kowaliw, nor any case in relation to conduct such as in In the Marriage of Doherty or In the Marriage of Kennon. Nevertheless the wife maintains a differential assessment of contributions, in part based on the husband’s conduct of the business, D Pty Ltd.
The wife seeks a division of the order of 84% to her and 16% to the husband. However, it is submitted for the wife that the contributions favoured her in the proportions 80% compared to 20% by and on behalf of the husband and there should be a 5-10% adjustment to the wife under section 75(2). The calculation of contribution includes the fact that the wife made 68% of the initial contribution and in accordance with the reasoning in In the Marriage of Pierce, the purposes for which the wife’s mother’s injections of funds were applied, warrants a dollar for dollar allowance for those contributions. As to section 75(2) it is submitted that the parties are in a similar position as far as their new partners go but the difference between them is the demands place on them by the children. This, it is submitted warrants an adjustment of between 5% & 10%. The wife seeks 60 days to make any payment to the husband.
The written submissions on behalf of the husband put the list of assets and liabilities as follows :
Asset
Husband’s Value ($)
Wife’s Value
W property (joint)
1,180,000
1,180,000
St George Bank […] (H)
900
Holden Astra Reg […] (H as to 1/3 share)
7,100 (E)
Household contents ([W property]) (joint)
22,500(E)
Household Contents (H)
8,000(E)
Household Contents (W)
5,000
Total:
1,218,500
1,185,000
Liabilities
Mortgage [W] (joint)
286,500 (E)
286,500
Capital gains tax re [E] property (joint)
1323
1323
Debt owed by guarantor of [D] Pty Ltd in Liquidation) to Australian Capital Finance
8629
8629
American Express (W)
7000
Visa (W)
2305
Total:
296,452
305,757
Superannuation
Fund Husband’s Value Wife’s Value
AMP Flexible Lifetime- […] (H) $51,395 Australian Superannuation Fund (W) 17,422 Total
$51,395 17,422
It is submitted for the husband that the overall result should be in the range 60% - 65% to the wife and 35% - 40% to the husband. This is based on a finding on contribution of 55% - 60% by the wife and an adjustment to her under section 75(2) of 5% - 10%.
The approach in proceedings under section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. First, I am to make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I should identify and assess the contributions of the parties within the meaning of s 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. Third, I should identify and assess the relevant matters referred to in s 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. Fourth, I should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. [3]
[3] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370
There is no mention of steps in section 79 but it is convenient to approach the exercise of discretion in a structured way. As I say, the Full Court has supported such an approach.
The property of the parties at the date of the hearing
The Court is required to make a finding as to the property of the parties. That involves identifying assets and liabilities and financial resources and their values.
Disclosure
The wife calls into question the adequacy of the husband’s disclosure in relation to D Pty Ltd. The question here is - what obligation does the husband have to produce the recent financial records of a company now in liquidation? He has been required to provide recent records to the liquidator. The wife obtained the issue of a subpoena to the liquidator. I gather that the liquidator did not produce the required documents. I should say that nothing about that process is in evidence. There is no evidence before me as to the terms of the subpoena, the date of service on the liquidator etc. I was not told about any request made by the wife to have the husband directly approach the liquidator. On the face of it, the husband provided relevant documents within his care or control. He does not need to do more than that.
Stepping back from it - it is not asserted by either party that the company has a value. The relevance of the books must therefore relate to another issue. It is not entirely clear what that issue would be. The wife formally abandoned her claim in relation to waste incurred due to the husband’s conduct of the business. As was pointed out in submissions on behalf of the husband, the wife has abandoned her claim for waste but still wants findings consistent with such a claim.
In my view the husband has met his obligation of disclosure.
Add Backs
There are circumstances whereby assets are included in the list for division although they no longer exist. In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
[30] To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back moneys expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any moneys that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
Preliminary distributions to the parties after separation
The husband drew $27,444 from the joint account after separation and the wife retained $23,770. In accordance with the principles outlined in In the Marriage of Townsend above I will read those amounts back into the list of assets.
Paid legal costs
The husband has paid $12,663.85 to his solicitor[4] from his post separation earnings. The wife has paid $54,044.15 in costs from funds lent to her by her mother[5].
[4] Memorandum of costs - exhibit 2
[5] Memorandum of costs - exhibit 2
In accordance with the approach referred to in In the Marriage of DJM and JLM above, moneys applied to the costs of the proceedings would normally be read back into the list of assets in circumstances where, but for that payment the pool would have been greater. The issues of costs as between the parties is properly a matter for the court and one party should not normally be expected to contribute to the legal costs of the other, independent of the consideration of that issue by that court.
On the other hand where the source of the moneys was borrowings, the payment would not normally be read back into the list of assets. Here I will read back into the list of assets the costs paid by the husband. He discloses a surplus of income over outgoings, has some savings and no consumer debt. On that basis it is likely that the pool would have been greater but for the payment. I will not read back the amount paid by the wife as she has a debt in the same amount.
I find that the assets are:
Assets Value S property (joint) $1,180,000 Wife’s savings $130.00 Household Contents (W) $5,000 Wife’s drawing from the joint account at separation $23,770 Australian Superannuation Fund (W) $14,683 St George Bank Acc (H) $900 Holden Astra (H as to 1/3 share) $7,100 Household Contents (H) $8,000 AMP Flexible Lifetime (H) $51,395 Husband’s drawing from the joint account at separation $27,444 Husband’s paid legal costs $12,663.85 Total $1,331,085.85
Liabilities:
The parties agree the relevant liability is:
Liabilities Amount Mortgage W property (joint)
$571,635 $571,635.00
Net assets
The net assets have a value of $759,450.85 ($1,331,085.85 - $571,635).
Financial Resources
There is no evidence that either of the parties has any financial resources. The wife’s mother gave evidence from which I infer that it is unlikely there will be any further distributions to the wife from the Kintcha Family Trust. The trust owns S Company, which is being sold. The wife’s mother hopes the sale proceeds will pay out the company’s overdraft and her mortgage. She does not anticipate that the trust will operate in the future or make any further distributions. She plans to wind up the trust once all of the sale proceeds are received. That will be in about 12 months.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets[6]. There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties[7].
[6] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[7] In the Marriage of Shewring (1987) l2 Fam LR 139
As to whether the Court should apply the considerations in section 79(4) to the assets globally or asset by asset, the authorities have it the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that that:
“… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.”
Here the submissions were made on a global basis and I will deal with the assets globally.
Section 79(4)(a) Contributions
Financial contributions, both direct and indirect were made by each of the parties.
Wife’s financial contributions
The wife brought no significant savings into the marriage.
The unchallenged evidence of the wife contained in her affidavit is that her taxable income from 1995 to 2002 was as follows:
Year ending 30 June Taxable Income 1995 $22,334 1996 1997 $17,753 1998 $20,729 1999 $19,564 2000 $40,154 2001 $48,871 2002 $30,753
There is no explanation in the affidavit as to why no income is recorded for 1996. As to 2002, it is the evidence of the wife’s mother that the wife ceased paid employment with her company on 31 May 2001. She goes on at paragraph 8 of her affidavit:
“At that time the business paid her long service leave and termination pay in the amount of $29,127.”
The wife does not say when she ceased work but says that it occurred when she was pregnant with N (born August 2002) and having trouble coping with work while looking after H. In fact the termination payment was deposited into the parties’ home loan account on 31 May 2002. That suggests that the evidence of the wife’s mother may be one year out. Termination of the wife’s employment in 2002 would explain her 2002 income tax return showing income in the form of salary or wages from S Company. That income figure for 2002 must incorporate the taxable components of the termination payment.
In 2003 the wife’s taxable income was $68,331 in the form of distributions from the Kintcha Family Trust. In 2004 her taxable income was $48,501 made up of distributions from the Kintcha Family Trust of $50,000 minus a small deduction for the negatively geared property. The wife says that since 2005 her primary source of income has been teaching sport. The wife gives no evidence about her income for the 2005 or 2006 financial years. The husband says that the wife’s taxable income for the 2005-2006 year was $19,516.
Finally, there were injections of funds made through the wife from her mother.
The wife’s parents separated in 1999 / 2000. The wife’s mother deposes to the following payments made by them or by her, for the benefit of the wife:
Payment date
Amount 1995 $8,000 1996 $12,000 1997 $25,000 1997 $25,000 4 April 2002 $35,000 1 November 2002 $40,294 11 June 2003 $9,730 16 September 2003 $50,000 12 November 2003 $9,660 23 January 2004 $9,430 12 May 2004 $9,872 21 October 2004 $50,000 $283,986.00
In addition, for some periods the wife’s mother paid for:
Øa fully maintained motor vehicle and the expenses associated with a mobile telephone – for the use of the wife following the termination of her employment with the wife’s mother’s company;
Øa cleaning service for the parties’ home at a cost of $80 per week;
Øan ironing service;
Ømarriage counselling for the parties and counselling for the husband;
Øa home computer and internet service;
Ørent free use of business premises (an air-conditioned office, part of the warehouse space and a car park) for D Pty Ltd for 2 years;
Øthe cost of the wedding;
Øa gas barbecue and outdoor setting;
Ønew furniture for H’s room; and
Øa dishwasher.
Husband’s financial contributions
At the commencement of cohabitation the husband had about $1,500 in savings and an interest in superannuation. By 30 June 1996 that interest stood at about $20,000.
The husband was in paid employment during the marriage. He says that his income was as follows:
Ø1996 & 1997 $37,000 pa plus car allowance and $20,000 in bonuses
Ø1997 to 2002 starting at $47,000 pa plus car allowance and bonuses and ending at over $152,000 pa with a $18,000 car allowance
When the husband’s employment with K company terminated and he received a payment of $1,200 for accumulated holiday pay.
In January 2001 the parties established D Pty Ltd and the company started trading in June 2001. In November 2002 the husband resigned from his paid employment with T Company and until 2006 he ran the parties’ company, D Pty Ltd. There is no evidence in relation to the business paying the husband an income. The business ceased to trade in January 2007 and went into liquidations in November 2007.
On 1 February 2007 the husband commenced paid employment as a Salesperson with Y Company on $32,000 plus commission.
The husband’s mother provided $30,000 for the purchase of the W property in July 1997. The evidence is that it was intended as a gift but some of it was repaid. The husband’s mother conceded that the repayments could amount to $7,600. Thus the net advance to the parties from the husband’s mother was $22,400.
In September 2004 the husband’s father gave the parties $10,000 to assist with living expenses while the husband was unable to work, following his heart surgery.
In May 2006 the husband’s father lent D Pty Ltd $50,000 for 3 years at an interest rate that was 1.5% over the Westpac indicator Loan Rate. The loan was secured by a deed of charge. $13,000 was repaid by the business in 2007. The husband’s father subsequently accepted an offer from the liquidator of a payment of $26,245. I take it that amount was accepted in full satisfaction for the loan. Thus the husband’s father is out of pocket by about $10,500 plus interest.
Section 79(4)(b) contributions
This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions.
In 1997 both parties took time off work and in respect of the W property they removed carpets, polished floors, painted and moved furniture. The husband says he removed a bricked-in safe from the fire place. In relation to 1998 renovations the wife designed the alternations, instructed the draughtsman and saw the plans through council. The wife was solely responsible for sourcing materials, furnishings and equipment. There were further renovations in 2002. The renovations involved the construction of a second storey. The wife managed the Development Application through the Council. She obtained quotes, selected and dealt with tradespeople. She attended the site daily and supervised all work. The husband assisted from time to time with the wiring, working with the electrician. The husband also assisted the tiler from time to time.
During the renovations the parties resided with the wife’s mother. The wife’s mother provided board and all food, free of charge.
The wife managed the E investment property. She advertised the property for rent, interviewed prospective tenants and conducted inspections. She collected the rent and paid outgoings. She arranged for the maintenance of the property and kept the accounts. The wife selected the real estate agent who sold the property and instructed the solicitors who acted on the sale. She arranged for the cleaning and repair of the property and assisted in the sales campaign.
The wife’s parents’ company provided clothing and footwear to the husband from 1995 to 2005.
The husband’s father prepared all of the BAS (s)tatements for D Pty Ltd, involving one days work every quarter during the life of the business. He also spent 4 hours every 2 weeks on tasks such as paying wages, reconciling the bank statements, meeting PAYG requirements and regular stocktaking. In 2005 and 2006 the husband’s father spent one day each week working in the business.
Section 79(4)(c) contributions
This provision deals with contributions in the form of parent and homemaker contributions.
The wife was the primary care giver for the children and the primary homemaker. The evidence of the husband in relation to parenting is contained in paragraphs 104 to 108 inclusive of his affidavit. In summary he says:
Øat all relevant times he was engaged in paid work on a full-time basis;
ØAfter N’s birth in August 2002 and until separation, his care of the children increased. He came home early two nights a week to care for the children so the wife could go to work or attend sporting classes. On those nights he bathed the children, cooked dinner, fed them and put them to bed. Every Sunday afternoon the wife went to instruct and participate in a sporting class. He bathed the children, cooked their dinner and put them to bed;
ØFrom August 2002 to separation the wife went away at least three weekends and one period of 5 days and 5 nights. During those periods the husband had sole care of the children;
It appears that the wife substantially agrees with the husband’s evidence on this issue and it follows from that evidence that at all other times the wife was largely responsible for the children. For example it is her unchallenged evidence that she alone got up at night to tend to the children.
The parties both give evidence about assistance given by their parents with the children. There is no scope under this provision for a parenting or homemaker contribution to be made on behalf of a party. As with contributions to children who are not children of the marriage, these contributions can be referred to under section 75(2)(o).
As to the homemaker role the wife says, without complaint on behalf of the husband, that she was solely responsible for maintaining the home. She did the grocery shopping, cooking, maintenance, household paperwork, and healthcare insurances and claims. The husband occasionally assisted by cooking a barbecue and sometimes did the dishes. Prior to November 2002 the husband regularly travelled with his work. On most Saturdays the husband was engaged in competitive sports. During the summer months there was also a twilight racing program. The husband generally went racing on Fridays and attended Sunday race meetings and various events.
Conclusion on Contribution
The parties agree that the contributions made by and on behalf of the wife were greater than those made by and on behalf of the husband. The wife’s case is that the contributions favour her in the proportions 80% to 20% by the husband. The husband contends that the wife’s contributions were in the range 55% - 60%.
In part, the wife’s claim is based on the losses associated with the business, D Pty Ltd. In final submissions the wife’s counsel said that the wife did not press any case based on waste such as is identified in In the Marriage of Kowaliw, nor any case in relation to conduct such as in In the Marriage of Doherty or In the Marriage of Kennon. I take it however that the wife seeks a differential assessment of contributions, in part based on the husband’s conduct of the business, D Pty Ltd.
The wife’s case is that about $244,000 was drawn on the mortgage for the benefit of D Pty Ltd and that $92,000 was paid back. In cross-examination the husband estimated that $200,000 might have been drawn on the mortgage for the business and that an estimated $100,000 was paid back. He conceded that the amount paid back could have been $92,000.
In my view this argument is not available to the wife. I accept there is a question of assessing the quality of contributions but here, whatever misgivings the wife may have had from time to time, she co-operated with the establishment and running of the business. When the business moved from her mother’s warehouse she located the new premises, sourced the necessary furniture and equipment and set up the office. Her mother provided rent free accommodation for 2 years. The wife’s mother provided business advice to the husband. The wife and her mother provided very significant financial support to the family during the period the business operated. The wife says she knew about the potential conflict between D Pty Ltd and the husband’s employer, T Company. No doubt, had the business been a success, the wife would have argued that it was a joint effort. There is nothing in the preliminary report of the liquidator that points to any wrongdoing by the husband. Indeed the report simply refers to problems identified by the husband being the impact of the Company’s banker reversing a fraudulent credit card transaction and inherent cashflow bottlenecks due to perishable and slow moving stock.
The economic outcome of marriages is not always a positive one. Here the evidence suggests that D Pty Ltd was to a considerable extent, a joint effort. Indeed, without the contributions and support of the wife and her mother, the business is unlikely to have been able to trade for as long as it did.
It is likely that the parties would have been found to have made equal contributions if there were no injections of funds from outside the marriage. That is to say that the husband’s greater income from paid employment may have been balanced against the wife’s greater non-financial and parent and homemaker contributions. The injections of funds were in summary:
On behalf of the husband
Ø$22,400 from his mother in 1997;
Ø$10,000 from his father in 2004; and
Ø$10,500 of the funds advanced in 2006 plus interest, being part of a loan that was never repaid by the D Pty Ltd.
On behalf of the wife
Ø$68,331 in 2003 and $50,000 in 2004 by way of trust distributions;
Ø$283,986 in various payments over the course of the marriage from the wife’s mother;
Øthe value of advances from the wife’ mother in the form of:
Ø a fully maintained motor vehicle and the expenses associated with a mobile telephone;
Ø a cleaning service for the parties’ home at a cost of $80 per week;
Ø an ironing service;
Ø marriage counselling for the parties and counselling for the husband;
Ø a home computer and internet service;
Ø rent free use of business premises (an air-conditioned office, part of the warehouse space and a car park) for D Pty Ltd for 2 years;
Ø the cost of the wedding;
Ø a gas barbecue and outdoor setting;
Ø new furniture for H’s room; and
Ø a dishwasher.
The injections made by and on behalf of the wife were over $300,000 more than those made on behalf of the husband. The assessment of contributions is not a mathematical exercise but in a net pool of assets worth $759,450.85 there must be proper recognition of such an imbalance. The timing of the contributions and the application of the funds are proper matters to be taken into account[8]. The injections of funds came in over time and they were applied to the equity of the W property and to other family purposes. A $300,000 injection did not create a $300,000 asset.
[8] Mallett v Mallett above; In the Marriage of Pierce (1999) FLC 92-844; 24 Fam LR 377.
Weighing these things up I find that the contributions were made in the proportions 65% by the wife and 35% by the husband.
The other matters in Section 79
Once contributions have been assessed, the other factors in section 79(4) need to be considered.
Dealing with the matters identified in the legislation:
Section 79(4) (d)
Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the parties. There is no relevant effect.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in Section 75(2) would seem to be paragraphs (a), (b), (c), (j), (m), (na) and (o).
(a) the age and state of health of each of the parties;
First, as to the age and state of health of each of the parties. The wife and husband are 37 and 40 years of age, respectively. The husband had heart surgery for an aneurism in 2004. He had treatment for depression and counselling for anger management. Prior to his heart surgery the husband had been diagnosed with serious Clinical Depression.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The wife’s income is $651 per week made up of $550 from her work as a self employed sports instructor and $101 (soon to be $125) in child support payments.
The wife lives in the former matrimonial home with the parties’ children, her partner, Mr I and for some periods, his two children. Mr I earns $3,800 per week. The children have no income. The wife benefits from $2,000 per week paid by Mr I for mortgage payments and living expenses, including food, utilities, bills, cleaning, internet and Foxtel payments. The wife benefits from $240 per week paid by her mother in the form of $200 per week for car expenses and $40 per week in telephone charges.
The wife’s fixed expenses are as follows:
Expense Amount Income tax $100.00 Mortgage on the former matrimonial home $760.00 Rates $50.00 Home and contents insurance - NRMA $20.00 American Express (min payment $120) $820.00 Visa card – St George Bank (min payment $20) $250.00 Total $2000.00
Evidence about the wife’s assets and liabilities is set out earlier in these reasons. The wife seeks to retain the W property. That would involve continuing to service a mortgage of more than $500,000 together with any further sum that has to be paid to the husband. The wife must be confident of having the capacity to meet such a significant commitment. Mr I provides that resource now.
There was no issue in the trial about the wife not exercising her earning capacity.
The husband earns $1,000 per week by way of wages as a Salesman for Y Company. He lives with his partner who earns $1,450 per week. By his Financial Statement the husband swears that his partner does not pay any expenses for his benefit. In cross-examination he said that she pays mortgage instalments on her home and that he lives there with her. In his affidavit the husband says that he and his partner share expenses.
By his Financial Statement the husband puts his expenditure in the following unlikely terms:
Expense Amount Income tax $0 Health insurance – HCF $40.00 Child support $125.00 All other expenditure $380.00 Total $545.00
In cross-examination the husband was asked about his income tax and he said that he does pay income tax. I was not told how much income tax he pays. As to accommodation, the husband generally lives with his partner, who owns her own home.
It was not suggested to the husband that he is not exercising his earning capacity. It should be noted however that the husband earned more than his current income in each year from the late 1990’s to 2002. Without objection or challenge on his behalf, the wife gives evidence about the husband’s constant mental health issues, rage attacks and tendencies to alcohol abuse. The only impact those matters would have on the husband’s earning capacity, would be negative.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
The parties have three children under 18. The children spend four nights each fortnight with the husband and 10 nights with the wife. The wife is able to make arrangements for her paid employment around the needs of the children.
(d) commitments of each of the parties that are necessary to enable the party to support:
himself or herself; and
a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out the evidence in relation to the parties’ expenses.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
any law of the Commonwealth, of a State or Territory or of another country; or
any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
As is recorded above, the wife receives the Family Allowance and the parties have interests in superannuation interests.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is little evidence in relation to the standard of living of the parties during the marriage.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
This is not relevant.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
This is not a significant aspect of the case.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
No maintenance is sought. As to a contribution to a party’s earning capacity, the wife deposes to having made an in depth study and practice of sport for approximately 7 years. In mid 2005 she attained accreditation with the sport’s teaching association. In other words the wife obtained her experience and qualifications during the marriage. When she left her mother’s business in 2002 she commenced teaching on a regular basis at locations throughout Sydney as well as working with high profile clients. It is an agreed fact that where she could not make other arrangements, the husband assisted with the children in order that she could pursue that vocation. This involved at least one afternoon/evening a week when the husband worked as an employee. In the normal course this would be seen as a factor favouring an adjustment to the husband. It is not clear that the wife’s earning capacity teaching sports is as good as or greater than what was the case in her earlier careers. However, in the literal terms of the provision, the husband has contributed to the wife’s earning capacity.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
No maintenance is sought.
(l) the need to protect a party who wishes to continue that party's role as a parent;
Neither of the parties seeks to make this case. In fact, the wife makes her work arrangements around the needs of the children. The children are 7, 6 and 5 years of age respectively. They will require close supervision from the parties for some years to come.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
Each of the parties has a new partner. The wife’s fiancé earns $3,800 per week and has two children to support. The husband’s partner earns $1,450 per week and is paying off her home. Without knowing more it is not possible to assess the medium or long term financial impact of the parties’ new arrangements.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
The husband says he pays $125 per week and the wife says she receives $101 per week. The husband was asked about this and responded to the effect that his assessed liability had recently increased. I take it then that the assessment is for $125.00 per week and that rate has yet to flow through to the wife.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
The parties both give evidence about assistance given by their parents in relation to the children. The husband asserts that his mother minded the children on about 100 occasions during the marriage. The wife characterises[9] that contribution as follows:
“[the husband’s] mother [J Brown] would make occasional visits after [L] was born and would sometimes mind the kids for 2 hour intervals while I went to teach a class to earn additional income.”
[9] Paragraph 110 of the wife’s affidavit.
Neither of the parties was cross-examined on this issue.
As to the wife’s family, it is the wife’s evidence that her mother and her aunt were a constant presence in the children’s lives. They were always on call to lend a helping hand with the children. When the parties lived with the wife’s mother while renovations were undertaken to the former matrimonial home, the wife’s mother assisted with the new born N and 15 month old H. When the husband underwent heart surgery in 2004 the wife’s mother moved into the W home and she and the wife’s aunts provided round the clock care for the husband and the children.
The wife had the use of the former matrimonial home after separation. She also had a tenant in the property for more than 6 months. By March or April 2008 the wife’s current partner, Mr I has lived in the home and for some of the time, so do his two children. From the date of separation until March 2007 the husband lived in rented premises and thereafter he lived with his parents. Since about September 2008 the husband has mostly lived with his current partner. He spends alternate weekends at his parents’ home.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the parties.
Section 79(4)(f)
I have set out above the effect of the parenting orders of 22 July 2008.
Section 79(4)(g)
I have referred to the child support position.
Conclusion
The parties agree that there should be an adjustment in favour of the wife in the range 5% - 10%. The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:
Ø The distribution of property in accordance with the assessment of contributions will leave the wife with more assets than the husband;
Ø The wife has the preponderance of day to day care of the children of the marriage. They are 7, 6 and 5 years of age;
Ø The husband has contributed to the wife’s earning capacity;
Ø The wife had the use of the former matrimonial home after separation while the husband rented accommodation, then lived with his parents and his current partner.
These matters compensate for each other to some extent. In my view there should be a 7.5% adjustment to the wife.
Just and Equitable
Neither of the parties presses for a splitting order in relation to superannuation. An order of that type was included in the husband’s Response but was not pressed in final submissions.
The net assets have a value of $759,450.85. If they were divided in the proportions 72.5% to the wife and 27.5% to the husband, the wife would receive about $550,600, leaving the husband with about $208,850. The husband has or has had the benefit of :
Assets Value St George Bank Acc- (H) $900 Holden Astra (H as to 1/3 share) $7,100 Household Contents (H) $8,000 AMP Flexible Lifetime (H) $51,395 Husband’s drawing from the joint account at separation $27,444 Husband’s paid legal costs $12,663.85 Total $107,502.85
In order to bring him to 27.5% the husband should receive a further $101,347.15. I will round that figure to $101,500. He will owe any personal debts including his legal fees.
The wife wants to retain the W property. On that basis she would have or would have had the benefit of the following:
Assets Value W property (joint) $1,180,000 Wife’s savings $130.00 Household Contents (W) $5,000 Wife’s drawing from the joint account at separation $23,770 Australian Superannuation Fund (W) $14,683 Mortgage W property -$571,635 Total $651,948.00
She will need to pay $101,500 to the husband and refinance the home. If that is not possible the W property must be sold and the balance of the parties’ entitlements could then be met out of the proceeds of sale of that property. The agreed equity in the property is $608,365 ($1,180,000 - $571,635). In order that the parties both share in any profit or loss on the sale, the husband’s share of the proceeds should be the approximate proportion that $101,500 is to the agreed equity, which is about 16.7%.
The wife will be left with any personal debts.
The husband has more of his assets tied up in the form of superannuation than does the wife. That means he will not have ready access to those funds for many years. On the other hand he has access to the preferential taxation treatment of assets held in that form. Of the parties, the husband alone has the foundation of a self funded retirement.
In the context of these proceedings, those arrangements are just and equitable.
Conclusion under Section 79
Contributions were made by the parties during more than 13 years. The parties built up assets and are bringing up three young children. They both had paid employment, made non-financial contributions and made contributions to the family. Contributions were made on behalf of the parties by their parents. Far greater contributions came from the wife’s parents, and in the later years, from the wife’s mother, than was the case from the husband’s parents. I am satisfied that the contributions by the wife and on her behalf represented nearly twice those made on the husband’s side. The parties agree that there should be an adjustment to the wife based on the non-contribution elements of section 79(4) and I have adopted an adjustment in the middle of range they proposed. Those findings translate to an adjustment to the husband of $101,500 or the proportion that amount represents of the equity in the W property. The parties agree that the wife can have the opportunity to retain that property.
As to the terms of the orders, the wife seeks 60 days to make any payment to the husband. The husband seeks that the payment be made within one month of the orders. I will require that the payment be made within 6 weeks.
I certify that the preceding one hundred and sixty five (165) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 27 March 2009
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Family Law
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Property Law
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Civil Procedure
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Jurisdiction
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Procedural Fairness
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Injunction
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Res Judicata
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