Kokoris and Kokoris
[2007] FMCAfam 556
•8 August 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KOKORIS & KOKORIS | [2007] FMCAfam 556 |
| FAMILY LAW – Property – marriage of over 20 years in duration – assessments of contributions – assessments of s.75(2) factors – just and equitable. |
| Family Law Act 1975, ss.75(2); 79; 90MT |
| Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335; Clauson v Clauson (1995) FLC 92-595 Russell v Russell (1999) FamCA 187 Danielian & Danielian [2003] FamCA 473 Waters & Jurek (1995) FLC 92-635 Pierce & Pierce (1999) FLC 92-844 Kennon & Kennon (1997) FLC 92-757 Ferraro & Ferraro (1992) 16 Fam LR 1 Levick & Levick unreported decision of Moore J delivered 31 January 2003 |
| Applicant: | MS KOKORIS |
| Respondent: | MR KOKORIS |
| File Number: | ADM3912 of 2006 |
| Judgment of: | Brown FM |
| Hearing date: | 31 July 2007 |
| Date of Last Submission: | 31 July 2007 |
| Delivered at: | Adelaide |
| Delivered on: | 8 August 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr Cole |
| Solicitors for the Applicant: | R J Cole & Partners |
| Counsel for the Respondent: | Mr Bowler |
| Solicitors for the Respondent: | Martin Robinson Solicitors |
ORDERS
That within 28 days of the date of these orders the husband pay to the wife the sum of one hundred and twenty thousand dollars ($120,000.00).
That contemporaneously with the payment referred to in order 1 hereof the wife transfer to the husband, at the husband’s expense, the whole of her right, title and interest in the property known as Property H in the State of South Australia and being the whole of the land comprised in Certificate of Title Register Book Volume 5xxx.
That upon the transfer of the property referred to in order 2 hereof the husband shall forthwith discharge the mortgage to the ANZ Bank Limited secured against the aforesaid property and shall obtain the removal of the wife’s liability to pay any and all liabilities pursuant to the same.
That pursuant to s.90MT(4) of the Family Law Act1975 a base amount of eleven thousand dollars ($11,000.00) be allocated to the husband in respect of the wife’s superannuation interest in the Exxx Superannuation Fund and that pursuant to s.90MT(1)(a) whenever a splittable payment becomes payable in respect of that interest, the husband is entitled to be paid the amount to be calculated in accordance with the Family Law (Superannuation) Regulations 2001 in respect of that base amount and there is a corresponding reduction in the entitlement of the wife.
That the Trustee of the Exxx Superannuation Fund the husband and the wife in accordance with the Family Law (Superannuation) Regulations 2001 shall do such acts and things and sign all such documents as may be necessary to calculate the payment entitlement of the husband in accordance with order (4) hereof. That order (4) of these orders have affect from the operative time which shall be on 31 August 2007.
That the solicitor for the wife’s serve a copy of these orders on the Trustee of the Exxx Superannuation Fund and the Trustee and the parties be given liberty to re-list the matter on giving seven (7) days written notice if the Trustee is unable to comply with the orders herein.
That if the husband fails to comply with order (1) hereof, the parties have liberty to re-list the matter and to seek consequential orders particularly regarding the sale of the property referred to in order (2) hereof on giving seven (7) days written notice.
That unless specified in these orders and except for the purpose of enforcing any payment of money due under these or any subsequent orders, each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of each party and superannuation standing in the name of each party as at this date.
That all applications herein be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Kokoris & Kokoris is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADM3912 of 2006
| MS KOKORIS |
Applicant
And
| MR KOKORIS |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to the division of matrimonial property. The applicant in the proceedings is Ms Kokoris. The respondent is
Mr Kokoris. Although the marriage between the parties was dissolved on 10 February 2007, it is convenient to refer to them as “the wife” and “the husband” respectively in these reasons for judgment.
The parties married in January 1984 and separated in October 2005, when the wife left the parties’ former family home situated at
Property H. The husband continues to live in Property H and wishes to retain it following the outcome of these proceedings.
Property H is subject to a mortgage in favour of the ANZ Bank. The necessary mortgage payments to the bank have not been paid for some time now and, as a result, the bank is threatening to foreclose on the mortgage. If this occurs, it is likely to be a financial catastrophe for both parties, as the sale of the property, in such circumstances, may not result in it reaching its full value.
The husband works in the Trade Industry. Since the parties’ separation, it is his position that he has not been in regular employment, as he has been emotionally distraught at the end of the parties’ marriage and, as a result, he has lost his “drive” for work. If the husband is to retain the home, it will be necessary for him to pay the wife a sum of money, which he will have to borrow against the security of Property H. The husband’s evidence is that he has a capacity to borrow up to $232,000.00.
The marriage produced two children S, who was born in March 1985 and A, who was born in March 1992. Obviously S is now an adult, and was aged around twenty, when the parties separated. However, he has not recently been in regular paid employment. A is currently in Year 10 at Uxxx High School. Both parties want her to complete her secondary education and if she wants to and is capable, to go on to tertiary studies.
Both children lived with the husband, in Property H, following separation. It is the husband’s position that both children, but particularly A were financially dependent upon him. More recently, in April 2007, A has gone to live with the wife, although she spends most weekends with her father and brother. There has never been any formal assessment of child support in respect of A. Both parties and indeed other members of her wider family, particularly her paternal grandparents, have apparently provided her financial needs from time to time.
The wife has been employed by Cxxx, since she left school at the age of fifteen. Currently, she is employed as the manager of Cxxx at Mxxx. She earns a gross weekly income of $851.00 or just over $44,000.00 per annum.
Given her many years of service with Cxxx, it seems likely that the wife will retain her current position for the foreseeable future. As a PAYG tax payer, her income is readily ascertainable. The husband’s income earning potential is more problematic. Over the many years of the marriage, he was a self-employed, subcontracting to a building firm. It is his position that his work, in this field, has been intermittent since the parties separated. Currently he is assisting his current partner in a cleaning business and is receiving only token wages.
The wife is suspicious of this state of affairs and the husband’s conduct, since the parties separated, particularly his failure to pay the necessary mortgage payments on Property H, when he has had the benefit of occupying it. She believes that the husband’s behaviour is calculated and designed to reduce the moneys he will have to pay her in settlement of these proceedings. It is her position that the husband has the capacity to earn a comfortable income for himself, which is likely to be greater than her salary for the foreseeable future.
Regrettably, in spite of the long marriage between the parties, the pool of property available to be divided between them is small, amounting to somewhere in excess of $250,000.00. The parties’ major asset is their interest in Property H. The wife also has entitlements to superannuation, in the Exxx Superannuation Fund, worth around $30,000.00. Due to his self-employment, the husband has minimal superannuation.
It is the husband’s position that the parties’ assets should be divided equally between them. However, he has no wish to receive a split of the wife’s superannuation and would prefer to minimise the cash payment required to acquire the wife’s interest in Property H.
On the other hand, it is the wife’s position that she should receive sixty percent of the parties’ assets and the husband forty percent of them. She would prefer to receive cash, for the most part, to achieve this outcome. Accordingly, she proposes that there be some split, from her superannuation, in the husband’s favour.
The wife is also apprehensive about the current unsatisfactory state of affairs regarding the mortgage arrears on Property H. She is fearful that, if the property is sold by a mortgagee’s sale, considerations of percentage splits of the proceeds, in her and the husband’s favour, may be meaningless, if the property is sold in a “fire sale”. She is concerned that, although the mortgage default is not properly attributable to her, she will be the victim of the husband’s financial brinkmanship.
The legal principles to be applied and the issues in the case
The process to be followed for the division of the parties’ property is well established by law.[1] The relevant legal principles are primarily contained in ss.79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.
[1] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial. The parties agree on the figures to be utilised. Largely, they have chosen to adopt many of the figures, which were ascertainable, as at the date of the parties’ separation, particularly in regards to the amount outstanding to the ANZ Bank. Accordingly, at the present time, the parties’ pool of assets and liabilities can be summarised as follows:
ASSETS
$
Property H
300,000.00
The wife’s motor vehicle
10,400
The husband’s motor vehicle
10,500
Husband’s furniture
5,000
Wife’s furniture
3,000
Wife’s savings at separation
1,335.82
Husband’s savings at separation
522.33
Total
330,758.15
LIABILITIES
ANZ Bank mortgage (at separation)
79,351.50[2]
Wife’s Citibank Visa Card (at separation)
5,000.00[3]
The husband’s Buyers Edge credit card (at separation)
2,728.31[4]
Husband’s taxation debt for year ending 30 June 2005
8,861.00
TOTAL
95,940.81
TOTAL NET ASSETS
234,817.34
SUPERANNUATION
Husband’s AMP superannuation (November 2006)
4,188.00
Wife’s superannuation with Exxx as at March 2007
29,728.37[5]
TOTAL SUPERANNUATION
33,916.37
[2] As at 3 July 2007, the full amount owing to the ANZ Bank was $84,933.82 – see Annexure C to the wife’s affidavit filed 25 July 2007
[3] At the present time, the wife asserts her indebtedness amounts to $30,505.00 – see the wife’s statement of financial circumstances filed 25 July 2007
[4] The husband estimates his indebtedness to Buyers Edge to be currently around $3,000.00 – see the husband’s statement of financial circumstances filed 19 June 2007
[5] As at 30 June 2005, the wife had accrued superannuation to the value of $20,334.43 – see Annexure E to the wife’s affidavit filed 25 July 2007
Although the wife is prepared to accept a valuation of $300,000.00 for the former matrimonial home, for the purpose of the present proceedings, it is her position that the property is likely to be worth more at the present time. This is an issue which I am unable to resolve in the context of the present proceedings. As previously indicated, the wife is concerned about the possibility of the property being sold pursuant to a mortgagee’s sale. It is possible for the court to order the sale of the property by private treaty. However, neither party is likely to benefit from such an outcome and I have not been advised of the likely costs relating to such a sale.
Secondly, I must ascertain the contributions which each party has made towards those assets. Contributions fall into two broad categories. The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.” It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
The parties did not cohabit before their marriage. At the time of the marriage, the husband was aged twenty-two and the wife was aged twenty. The marriage between the parties was of a significant length and produced two children. Neither party argues strongly that their respective contributions, during the marriage, should be regarded as anything other than essentially equal. There are however some areas of contention between the parties.
·The husband asserts he owned a block of land at Sxxx at the time of the parties’ marriage. This land was sold for $4,000.00. The husband asserts that this sum was utilised to purchase Property H in 1986.
·In addition, the husband asserts he was injured in an accident prior to the parties’ marriage. He contends that he received a compensation settlement of around $30,000.00, which again was allocated towards the acquisition of Property H.
·The wife asserts that the parties lived rent free, in a unit owned by her father, for the first two years of the parties’ marriage. She asserts that the savings attributable to this act of generosity, on the part of her father, count as a contribution for which she is entitled to credit.
·It is the husband’s position that he was largely responsible for financially supporting S and A, in the period following the parties’ separation.
·The wife is critical of the husband’s decision to forego regular employment following the parties’ separation and for allowing the mortgage on Property H to go into arrears. She points to the fact that the husband has had the benefit of living in the property, whilst she has had to secure rented accommodation for herself.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in s.75(2) of the Family Law Act 1975. Pursuant to s.75(2)(o), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. This step also occasions controversy between the parties.
·The husband points to the fact that, between October 2005 and April 2007, whilst A was in his care, he received no formal payments of child support, from the wife, in respect of A’s financial support. In his assertion, A is likely to remain financially dependent on the parties for a similar period of time in the future. He also points to the fact that she spends substantial and significant periods of time in his care. In such circumstances, he submits that considerations of A’s care do not require any additional distribution of property to be made in favour of either party.
·The wife takes a different view. In her submission, A is likely to be financially dependent upon her for some time to come. She categorises the husband as being likely to be resistant to the payment of any amounts of child support, for A, in future.
·It is the wife’s position that the husband will most likely resume his previous employment as a concreter and will be in a more financially advantageous position than her, when this occurs.
·As a result of these factors, and particularly because of the small extent of the party’s asset pool, the wife contends that there should be a further distribution of assets, in her favour, to a value of ten percent of the parties’ total asset pool.
·It is the husband’s position that there should be no such further distribution in favour of either party.
Finally in determining what order the court should make under s.79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[6]
[6] See Russell v Russell (1999) FamCA 187
In following the various steps required of me pursuant to s.79 of the Family Law Act 1975, I bear in mind what was said by the Full Court in Danielian and Danielian[7] as follows:
“The task of the court in proceedings under section 79 is not akin to an accounting exercise. The task is to examine the facts of each case carefully to decide what is appropriate and just and equitable in the circumstances. There cannot be expected to be a universal answer to that question on any given set of facts. It is of the essence of judicial discretion that different minds may comfortably arrive at different conclusions. By and large, marriage is a joint venture where parties can expect to buffer each other from the winds of misfortune that blow during the course of their relationship. The degree of the buffer may depend on how much individual sailing they do without consultation or indeed contrary to the wishes of the other. But there can be no certain answer to how much that should be when applying s.79 principles.”
[7] See Danielian & Danielian [2003] FamCA 473 at paragraph 49
The “overriding requirement” of s.79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[8] or of equalisation of assets or financial resources.
[8] See Waters & Jurek (1995) FLC 92-635 at 82,375
Although, as previously indicated, the husband does not assert that his alleged initial contribution of capital should be given “special recognition”[9], such as to merit an award of property, in percentage terms, in his favour, it is his position that it is a factor which should be given some weight in assessing the justice and equity of the final outcome. In this regard, it is his assertion that it is a factor which justifies an equal division of the parties overall assets. In this regard, he concedes that the contribution was made very many years ago.
[9] See Pierce & Pierce (1999) FLC 92-844
The documents relied upon
The wife commenced these proceedings on 19 December 2006. The husband responded to the application on 31 January 2007. The parties competing applications were originally fixed for final hearing before Federal Magistrate Morcombe on 17 and 18 July 2007. However, ultimately, the proceedings were fixed for hearing before me on 31 July 2007. In support of her application, the wife relied on the following documents:
i)An affidavit of herself filed 25 July 2007;
ii)A statement of her financial circumstances filed on 25 July 2007.
The husband relies on the following documents:
i)An affidavit of himself filed 19 June 2007;
ii)A statement of his financial circumstances filed on 19 June 2007.
Both parties were represented by counsel at the final hearing. In the wife’s case by her solicitor Mr Cole and in the husband’s case by Mr Bowler of counsel. Both Mr Cole and Mr Bowler provided a case outline to the court. The wife’s case outline revealed that she sought the following final orders:
“1.That by way of an Order for property settlement the former matrimonial home situated at and known as Property H in the State of South Australia being the whole of the land comprised in Certificate of Title Register book volume 5xxx be sold and the net proceeds of sale derived therefrom be divided as to 60% to the wife and 40% to the husband.
2.That the husband be solely responsible for all arrears of mortgage payments including legal costs owing and accrued to the ANZ Bank in respect to registered mortgage number 6xxx as and from the date of separation being the 4th day of October 2005.
3.That the husband do account to the wife in respect to personal property contained in the former matrimonial home.
4.That there be a superannuation splitting Order such that the result of the same be that the wife do receive 60% of the parties combined superannuation interest.
5.Such further or other Order as this Court deems just and proper in the circumstances.”
In the husband’s case, his case outline indicates that he seeks the following orders:
“That the net property assets and financial resources of the parties, including entitlements to superannuation be divided as to 50% to the husband and 50% to the wife.”
The evidence
The parties were the only witnesses who gave evidence in these proceedings. The wife seemed to me to be a pleasant and honest witness, who attempted to tell the truth about the parties’ financial circumstances, during their marriage, as best she recollected it. She appeared visibly upset at the possibility that the ANZ Bank will foreclose on the parties’ former family home.
The husband was an emotional witness. I do not doubt that he was powerfully affected by the end of the parties’ marriage. However, I am concerned that the emotions unleashed, at the end of the marriage, have informed his stance, both in these proceedings and his behaviour in the period since the parties separated. The husband seemed to me to be extremely ill disposed towards the wife and anxious to pay her the least amount of money possible, even if this meant financial hardship or even ruin for himself. These matters caused me to assume a level of caution about some aspects of the husband’s evidence.
The husband’s evidence, about his financial circumstances and his capacity to earn an income, was a mixture of refreshing and dramatic candour on the one hand and obstruction and evasion on the other. The husband stated that, when the wife left the marriage, he had “no drive to work hard again”. He further indicated that he gave up work because of the “stress” and so he could “relax”. The husband has provided no formal medical evidence to support any assertion that he was unable to work because of either physical or psychological difficulties. In my apprehension, he stopped work because he considered that this would be of assistance to him in the determination of the current proceedings.
The husband was evasive about how he has been financially supporting himself in the period since separation. He currently asserts that he has an annual income of $1,144.00 or $22.00 per week. This is apparently the income he receives from the cleaning business operated by his current partner Ms W, for whom he works occasionally. In his financial statement, filed on 31 January 2007, he ascribed a weekly income for himself, from concreting, of $500.00 per week or $26,000.00 per annum. His most recent tax assessment, for the year ending 30 June 2005, gave a taxable income of $46,340.00.
The husband conceded that he had done some trade work in the period since the parties separated. However, he continually asserted that his motivation for this field of work had left him because of the parties’ separation. He also asserted that his family, particularly his mother had supported him financially and provided food for himself and A in he period following the parties’ separation. I suspect that the husband’s financial situation has not been as dire as he has painted it. I also suspect that he has had other ulterior motives for not paying the necessary mortgage payments on the property, which are not related to financial incapacity.
I reach these conclusions for the following reasons. In answer to questions from me, the husband indicated that he would return to the Trade Industry as soon as the current proceedings were concluded. He also indicated that he had a capacity to earn between $300.00 and $400.00 net per day in this field. The husband has a relationship with a medium sized building firm and deposed that he is able to lay up to 36 square metres of concrete per day at a cost of $13.50 per square metre. The husband also indicated that this industry was strong at the present time.
I concede that the building industry is cyclical in its nature. I also acknowledge that this type of work is often interrupted by inclement weather. It is also the case that the husband is responsible for a number of outgoings in respect of his business, although he indicated that he did not see it necessary to take out workers compensation insurance for himself. The husband vehemently refuted any suggestion that he had ever, either recently or in the past, performed trade work for cash. In the context of these proceedings I am unable to resolve this issue definitively.
However, in my assessment, the husband has a capacity to earn a comfortable income in the Trade Industry. I reach this conclusion because the husband has many years of experience in this industry and assessed himself as an excellent worker. It also seems to be undoubtedly the case that he has many contacts in the building industry. At this point, I am unable accurately to quantify the extent of the husband’s income earning capacity. This is because, in my estimation, the husband has failed to be completely frank about his income earning capacity. At the very least, I believe the husband would be able to earn around $50,000.00 per annum.
Although the husband asserts his current financial circumstances are dire, he deposes that he has a capacity to borrow up to $232,000.00, through a mortgage broker organised by his cousin and on the basis of his income earning capacity. In this regard, the husband provided a letter addressed to his solicitor from his accountant, which read as follows:
“I act as the mortgage broker for the abovementioned client. I can confirm that Mr Kokoris has the capacity to borrow $232,000.00 with PLAN Lending subject to formal approval by the lender.”[10]
The husband freely conceded that he would be returning to the concreting industry, as soon as the proceedings between him and the wife were concluded.
[10] See Exhibit W1
The husband also acknowledged that he would never pay the wife any child support in respect of A. When this issue was put to him by Mr Cole, somewhat dramatically, he replied with a rhetorical question himself: “why should I pay child support for A. I will give her nothing”. By “her”, I took it that the husband meant the wife.
I should also point out that the husband deposed that he wanted to provide for A, when she was in his care, but on the proviso that no moneys were ever paid to the wife directly.
In this regard, the husband’s antipathy for the wife was palpable. Given his behaviour to date, I have no reason to consider anything other than that he would arrange his affairs to avoid any child support assessment. Given the nature of his employment, I consider that he would have ample scope to arrange his financial affairs accordingly.
I can well understand why the wife would see no point whatsoever in applying for child support for A in future.
As a result of all these matters, I consider that the wife is likely to be the more reliable witness of the two parties. However, there are few evidentiary disputes between them. In these reasons for judgment, findings of fact are made on the balance of probabilities, following my observations of the witnesses concerned. In what follows, statements of fact constitute findings of fact.
a) Chronology
The wife was born in November 1963. She completed Year 10 at high school but left during Year 11. When she was 15 and still at school, she obtained part-time work at Cxxx and began working there full-time, when she left school. She has remained working for Cxxx up to the present time, with her employment only broken by periods of maternity leave. She was on maternity leave for around a year after S was born and took a longer period of maternity leave, when A was born. Given her long period of employment with the company, she is obviously a valued employee. She has been the manager at Cxxx at Mxxx for the last 10 years.
The husband was born in October 1961. During the marriage, he was employed as a trade contractor, firstly with his father and more recently on his own account. The nature of his business is such that it does not require any extensive capital investment in tools of trade. For reasons already provided, I have no reason to consider anything other than the husband is a competent tradesman, who will be readily able to resume this employment, whenever he chooses. On balance, it seems likely that the husband’s income was marginally greater than the wife’s was during the marriage, as she took periods of maternity leave and was also employed on a part-time basis, from time to time. However, it seems undeniable that both parties utilised their respective incomes for family purposes, during the marriage.
After the parties married, I accept that they lived together in a unit owned by the wife’s father for a period of about two years. This must be accounted as a contribution nominally made by the wife. However, in all the circumstances of this case, it is hard to quantify the extent of that benefit. It is the wife’s position that both parties were saving during this period and ultimately both made some direct financial contributions towards the cost of the acquisition of Property H.
In his affidavit material, the husband does not directly depose as to his recollection of the circumstances surrounding the purchase of Property H making no direct reference at all to the Sxxx land or his compensation settlement. It is his position that the property was purchased for around $68,000.00, of which $40,000.00 was borrowed.
The wife does not dispute these figures. The wife cannot recall now where the balance of the purchase moneys came from. She asserts that she most likely made some direct contribution to the short-fall from her savings. She concedes that the husband received some moneys by way of compensation, for an accident in which he had been involved, but she herself cannot now remember how much the sum was.
As previously indicated, the husband asserts he directly contributed around $34,000.00, as a result of the sale of the Sxxx land and his compensation claim, towards the acquisition of Property H. I accept that some moneys were utilised from these sources to this end, but approach the exact quantification of the sum with some caution. The purchase of the land took place over twenty years ago. Inevitably, the memories of both parties will have faded and I suspect that the husband may have reconstructed some elements of his case in the light of the current proceedings.
The husband asserts that he was an actively involved parent, to both S and A, during the course of the marriage. In particular, he asserts that he tailored his working hours to care for the children. The wife does not specifically dispute this assertion. It is her position however, that the marriage between the parties was often unhappy and the husband was controlling of the parties’ finances during it.
However, it is not part of the wife’s case that she is entitled to any greater distribution of property, in her favour, along the lines outlined by the Full Court of the Family Court in Kennon & Kennon[11]. For this reason, the parties chose not to examine the wife’s assertion that the husband was frequently violent towards her during the marriage, in the course of the current proceedings.
[11] Kennon & Kennon (1997) FLC 92-757
At separation, the mortgage on Property H stood at $79,351.50. The required repayments amount to around $139.00 per week. It seems to be the case that, over many years, the parties have been paying in advance of this amount and at separation, the mortgage was paid well in advance.
As has previously been indicated, this is no longer the case. The ANZ Bank has placed the matter in the hands of its solicitors, who have issued a notice of demand to the parties, which indicates that the mortgage is currently in arrears in an amount of $2,630.20 plus costs of $863.50. As at 3 July 2007, the amount owing on the mortgage is $84,933.82. The parties were required to make a weekly payment of $139.77 on 5 July 2007. I have not been advised whether or not this payment has been made.
At separation, the wife took with her some items of property, including furniture. The husband has retained other items of furniture within the Property H. The parties have agreed on the value of the property in their respective possessions and neither seeks any further items of property. However, my apprehension is that the division of these items has accorded some ill will between the parties.
It is the wife’s position that she was anxious about how the husband would react to the end of the marriage between the parties. For that reason, she elected to leave Property H, without prior reference to the husband. Initially, she shared accommodation with a friend and more recently has begun renting a two bedroom unit for herself. She is presently paying rent in the sum of $300.00 per week. Currently this is her major expense per week. She pays tax of $167.00 per week. She estimates her personal expenditure as being a little less than her recurrent weekly income. However, she cannot be described as being in a strong financial position.
It is the wife’s position that, in the difficult and conflictual circumstances which prevailed following the parties separation, it was difficult for her to maintain contact with A. In addition, it is her position that she kept her address secret from the husband. Gradually, it seems that the wife spent more and more time with A.
It is also the wife’s evidence, which I accept, that she provided money to buy A’s school uniforms, books and provided other sums of money for her benefit. As previously indicated, in April of 2007, A elected to come and live with the wife, although she also spends most weekends with the husband and her brother S.
At the present time, the wife estimates that she pays up to $100.00 per week, which is directly attributable to expenses for A. She has not as yet paid A’s school fees but will shortly. The husband is critical of the wife for not paying any of A’s school fees prior to April 2007. The wife concedes this was so but points to the fact she provided other things for A, including a laptop computer.
S has previous employment experience working as an apprentice in the Hospitality Industry. He has also worked for his father and other tradesmen in the Trade industry. He has also been in receipt of unemployment benefits from time to time. It is the husband’s case that S has been largely unemployed since the parties separated. As a result, it is the husband’s case that S has been significantly financially dependent upon him. Given S’s age and the fact that he is entitled to unemployment benefits and has some income earning capacity, I have grave difficulties accepting that this is so, at least for the purpose of these proceedings.
The husband has re-partnered since the parties separated. His current partner is Ms W. The husband has lived with Ms W for the past twelve months or so. The two live together at Property H. As previously indicated, Ms W operates a subcontracting cleaning business, in which the husband is involved, on his case, to a marginal degree.
No evidence has been provided as to why Ms W does not make any contribution towards the mortgage expenses on Property H. At the present time, it is the husband’s case that he is significantly financially dependent on Ms W. For reasons already provided, I am somewhat dubious about this assertion. As far as I know, the wife has not re-partnered in the period since the parties separated.
The first step – the pool of assets
For the purpose of these proceedings, I find that the parties have the assets, including superannuation, as set out in paragraph 15 hereof. Given the parties consent, I accept that it is appropriate to largely deal with the matter on the basis of the parties’ assets and liabilities as at the date of separation.
The Second Step – assessment of contributions – Section 79(4)(a) to (c)
I now turn to the second of the steps in the exercise under s.79, namely an assessment of the parties’ contributions within the context of s.79(4)(a) to (c). These provisions are as follows:
“Section 79(4) In considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, the court shall take into account –
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of home maker or parent.”
Section 79(4) requires that the court look at the entirety of the contributions, both financial and non-financial, to the welfare of the family, as well as to the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation and improvement of any particular asset and maybe taken into account generally as contributions in a total sense. The task required of me pursuant to s.79(4) of the Family Law Act thus is to weigh and assess the disparate contributions of the parties to arrive at an outcome, which is both appropriate and just and equitable in all the circumstances. Contributions, which are different in quality and nature, must be compared. The exercise is not purely an arithmetical or accounting one.
The marriage between the parties was one of slightly in excess of twenty-one and a half years in duration. The marriage produced two children. During it, the husband was engaged in paid employment. The wife was also engaged in paid employment, interspersed with her pregnancies and maternity leave. It seems both parties contributed to the care of the children from time to time.
I accept that the husband brought into the marriage significant cash assets in the form of his compensation settlement and the proceeds of sale of the Sxxx land. The wife also made contributions, directly attributable to her, in the form of the unit, which was provided to the parties rent free from her father. Given the effluxion of time, it is now not possible to accurately ascribe the value of these various contributions.
Cases involving one party having made a significant initial injection of capital, where the marriage concerned has been of significant duration and which involve the court also having to assess non-financial contributions, made over the course of such a marriage, often pose particular problems for the court. The court must be careful not to undervalue the role of a home maker by giving undue weight to initial financial contributions.[12]
[12] See Ferraro & Ferraro (1992) 16 Fam LR 1 at 38
On the other hand, it my lead to injustice if, in a similar fashion, a major discrepancy in the respective contributions of initial capital is overlooked. In the past, there has been a tendency to suggest that such an initial contribution of capital is “eroded over time” by other factors, particularly home making contributions. The Full Court has pointed out that such a formulation is erroneous.
In Pierce & Pierce,[13] Ellis, Baker & O’Ryan JJ made reference to several of the relevant authorities. Their Honours said as follows:
“In our opinion it is not so much a matter of erosion of contribution but a question of what weight should be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions both of the husband and the wife. In considering the weight to be attached to the initial contribution, in this case the husband, regard must be had to the use made by the parties of that contribution.”
“…there is no principle that the length of the marriage leads to a likelihood that other contributions will outweigh or weigh equally with ‘a particular contribution’. It is a matter of assessing the contributions of all relevant kinds in each case to arrive at an outcome, which is both appropriate and just and equitable. In some cases particular contributions may be outweighed or equalled by other ones. In other cases particular contributions may be so disproportionate to other contributions as to merit special recognition.”
[13] Pierce & Pierce (1999) FLC 92-844 at page 85,811
In all the circumstances of this case, I do not think that the husband’s initial contributions of capital are so disproportionate to the other contributions of the parties that they merit such special recognition. I reach this conclusion because of the length of marriage between the parties; the uncertainty of quantifying these contributions; and the wife’s other significant financial and parenting contributions. In all the circumstances of this case, I access the various contributions of the parties, during the marriage, as being essentially equal.
The parties have now been separated for a period approaching two years. During that period I am satisfied both have made parenting and financial contributions in respect of A. The husband has had the benefit of living in the former matrimonial home but has reduced the parties’ level of equity in it. The wife has had to re-house herself, in rented accommodation, in difficult financial circumstances.
It is also the position that the wife has increased the level of her superannuation by $9,400.00 since separation or about a third of its current value. This in marked contrast to the husband’s efforts in regards to the former matrimonial home. This is another factor, which leads me to the view that the husband’s initial injection of capital should not be given special weight. Overall, I do not think there is anything so significant in either of the parties’ post separation contributions to merit a departure from my assessment that their contributions are to be regarded as equal overall.
The third step – section 75(2) factors – the prospective needs of the parties
I am now required to consider the various matters set out in s.75(2) and in particular to consider whether any further adjustment of property should be made in favour of either party as a result of these factors, which are as follows:
a) the age and state of health of each of the parties;
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;
c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
d) commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain;
e) the responsibilities of either party to support any other person;
f) subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under -
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) 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;
g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
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 adequate income;
(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; and
(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;
(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;
(l)the need to protect a party who wishes to continue that party’s role as a parent;
(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party;
(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
(o)any other fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties.
In my view, the s.75(2) factors are finely balanced. Considerations of age do not loom large in this case. Both parties are in their early to mid-forties and both are likely to have many years of productive life before them. I do not give credence to the husband’s assertion that he has lost the “drive” for work. No medical or psychological evidence has been provided by the husband in respect of this issue. In my estimation, both parties enjoy robust good health.
In this regard, both parties leave the marriage with an ability to earn a reliable income for the foreseeable future. The wife has an income earning capacity in the low to mid $40k. Her employment is secure but she is unlikely to secure any significant increase in salary. The husband probably has a capacity to earn slightly more than the wife, although he has not been completely forthcoming in this regard. He also has the benefit of self-employment, which is likely to reduce his taxation liability.
Between now and when A attains the age of eighteen years, which will be in March 2010, I am satisfied that more of the burden of providing financial support for her will fall on the mother’s shoulders than the father’s. A is in her teenage years, when very often the costs of supporting a child are at their greatest. The husband is likely to indulge A, when she is in his care, which will be frequently. However, in my assessment, he will be loathe to pay child support to the wife, who will be her principle carer and so the major burden of paying for her recurrent expenses, such as those which will relate to education and clothing, will inevitably fall predominantly on the wife. This is a factor which favours the wife.
Neither party, up to this stage, has formally sought a child support assessment in respect of A. The husband has said that he will never pay child support to the wife. In all the circumstances of this case, I do not take this as an empty threat. In Clauson & Clauson[14] the Full Court said as follows:
“The weight to be attached to a child support assessment will vary with the circumstances of each case, including the amount of the assessment, the financial circumstances of the parties, the needs of the children, whether the assessment is being paid regularly, and whether it is likely that it will continue to be paid at a regular and adequate rate in the future.”
[14] Clauson & Clauson (1995) FLC92-595 at 81,911
At this stage, the wife can see no utility in seeking an assessment of child support from the husband. Rather, she would prefer to receive an additional distribution of assets, in her favour, to compensate her for any child support, which she has foregone. This seems to be the major basis for the additional ten percent of the net assets, which she currently seeks. The court must be cautious about “double dipping”.
It is difficult to know what assessment there would be of child support payable for A in future. Clearly, she spends substantial and significant periods of time with both her parents. Mr Kokoris is likely to be reticent about his income earning capacity. In all these circumstances, I think the court should be cautious about putting to much emphasis on this factor, but it is one, in my view, which favours the wife.
Regrettably, the end of the parties’ marriage leaves neither of them in a strong financial position. The assets available to be divided between them are unlikely to satisfy their future financial needs. In particular, neither party is currently well prepared for retirement. The husband has practically no superannuation and the wife, despite her many years of constant employment with Cxxx, has a small sum put by.
The husband wishes to retain the former family home. In order to achieve this objective, he will have to borrow a further sum. The wife is presently living in rented accommodation. Whether she wishes to purchase accommodation for herself, in future, is an issue which was not explored before me. If she does, she will require a significant sum of capital, from these proceedings, in order to finance such a purchase.
At this point, I do not believe that either party has any legal obligation to financially support another person. In particular, although the husband may feel he has a moral obligation to support S, this is not equivalent to a legal responsibility. S is not pursuing any tertiary education. He is over eighteen years of age and capable of self-support. There is no evidence to indicate any special needs on his part.
In all the circumstances of this case, I believe there should be a further modest distribution of assets in the wife’s favour, which I quantify in the amount of five percent. In reaching this figure, I bear in mind the modest extent of the parties’ available assets; the likely discrepancy in earning capacity between them; the fact that A is likely to be more financially dependent upon the wife than the husband; and the fact that it is likely that the husband will retain the former family home and have the security of having a footing in the residential property market, which the wife may find difficult to achieve.
Section 79(2) – is this a just and equitable outcome?
The final step in determining property matters is to stand back and consider whether the proposed result is just and equitable. In this particular case, in order to ensure that the outcome is just and equitable, it is not open to the court to consider what the outcome should be merely in percentage terms. It is necessary for the court to consider the actual effect of the orders that will be made.
In any event, it is all very well to talk in percentage terms, as far as orders are concerned, but what matters to the parties is what the orders mean in dollars and cents and what effect they have on their long term aspirations. In cases, such as this one, where the pool of actual assets is small and so outweighed by the respective financial needs of the parties, the effect of orders becomes more critical.
The husband needs to know how much he will need to borrow to pay out the wife in order to retain the former matrimonial home. Given the threats of the ANZ Bank, this is a pressing concern, not only for him, but for the wife, who fears the consequences, if the bank moves to foreclose.
The parties total net assets, both immediately realisable and in the form of superannuation, total $268,733.71. Superannuation, the vast proportion of which is vested in the wife’s name, compromises about thirteen percent of this total. As has already been indicated, the husband wishes to minimise the actual cash payment to be made to the wife and, given her parlous financial circumstances, the wife wishes to maximise the sum she will receive. This tendency, on both their parts, is reinforced by the number of years until their likely retirement and the lack of any pressing need for superannuation.
The sorts of matters to be taken into account in determining how, between the parties, the relative amounts of superannuation as opposed to immediately realisable assets is set, in proceedings such as these, was discussed by Moore J in Levick & Levick[15]. In that case, Her Honour considered that the following factors were relevant:
· the purchase price of appropriate accommodation and re-housing costs for both parties;
· the need for a financial buffer for ordinary exigencies of independent living;
· the current level of the parties’ superannuation;
· the probability that the wife would be able to acquire appropriate superannuation benefits from her own future income;
· the husband’s substantial earning capacity and ability to borrow significant sums at favourable rates (from his employer).
[15] Levick & Levick unreported decision of Moore J delivered 31 January 2003
In this case, the husband currently has precious little superannuation. The wife has more but it is scarcely likely to provide for a comfortable retirement. The wife has no moneys to provide for her future needs. It is likely that she will want to put some moneys aside to maintain accommodation for herself in the future. In all the circumstances of this case, I consider that the parties’ immediately realisable assets and their total superannuation should be divided in the same proportion – that is fifty-five/forty-five percent in the wife’s favour. This will give both parties a mixture of superannuation and assets. It will also necessitate some split in the wife’s superannuation entitlements.
Fifty-five percent of the parties’ net non-superannuation assets is represented by the sum of $129,149.54 and forty-five percent by the sum of $105,667.80. The wife is deemed to have net assets in her possession to the value of $9,735.82 and the husband currently is deemed to have net assets to the value of $225,081.52. Accordingly, to bring about the necessary division, it will be necessary for the husband to transfer to the wife the sum of $119,413.72. I propose to round this sum up to $120,000.00.
The parties’ current total superannuation amounts to $33,916.37. Fifty-five percent of this sum is represented by the sum of $18,654.00 and forty-five percent by the sum of $15,262.37. The husband currently has superannuation to the value of $4,188.00. Accordingly, he requires a split of $11,074.37 to receive his entitlements. I propose to round this sum down to $11,000.00.
In all the circumstances of this case, I am satisfied that this represents a just and equitable outcome. Both parties retain a modest amount of superannuation. However, they both have time to add to their respective superannuation sums in the period between now and their respective retirements.
The wife will receive a sum of money, which should be sufficient to enable her to purchase a home for herself, if she so wishes. It will also provide her with some protection against future exigencies. The husband will retain the former matrimonial home and so remain engaged in the property market. He will have a considerable mortgage, most likely in excess of $200,000.00 but he will also retain a considerable equity in the property. He will not have the inconvenience and costs of having to obtain alternative accommodation for himself.
At the end of the day, after the many years of the parties’ marriage, I am well aware that there is no good news for either of them out of these proceedings. However, having considered all the various factors in this matter, I am satisfied that the outcome which I propose does represent a just and equitable outcome.
The husband has deposed he has the capacity to borrow a much greater sum than that which I have decreed is due to the wife. In such circumstances, if the husband is sincere in his evidence, it is not necessary for default orders to be made regarding the sale of the former matrimonial home.
It is also appropriate that the husband bear the financial consequences of the default on the mortgage. However, in order to safeguard the wife’s interest, I will set a short period of time in which the husband must pay her the sum determined and grant her liberty to re-list the matter, at short notice, if the husband fails to comply with the orders, so if necessary appropriate orders can be made for the sale of the house.
For all these reasons, the order of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 8 August 2007
and Clauson v Clauson (1995) FLC 92-595
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