KRT and SJT
[2005] FMCAfam 246
•22 March 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KRT & SJT | [2005] FMCAfam 246 |
| FAMILY LAW – Property – initial contributions – costs of valuation – legal fees – waste – future needs. |
| Family Law Act1975, s.79 |
| In the marriage ofLee Steere (1985) FLC 99-626 In the marriage ofFerraro (1993) FLC 92-335 In the marriage ofClausen (1995) FLC 92-593 Pierce (1999) FLC 92-844 Russell v Russell (1999) FLC 92-877 Kowaliw (1981) FLC 76,642 Rossati (1998) FLC 92-804 Tomasetti (2000) FLC 93-023 |
| Applicant: | KRT |
| Respondent: | SJT |
| File Number: | PAM1619 of 2004 |
| Judgment of: | Ryan FM |
| Hearing date: | 16 March 2005 |
| Delivered at: | Parramatta |
| Delivered on: | 22 March 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr G. Thistleton |
| Solicitors for the Applicant: | Doherty Partners |
| Counsel for the Respondent: | Mr R. Greenaway |
| Solicitors for the Respondent: | Beverley Foster & Associates |
ORDERS
Within eight (8) weeks of the date of these orders the wife shall pay to the husband the sum of one hundred and fifty one thousand five hundred and ninety one dollars ($151,590).
Within twenty-one (21) days of the date of these orders the wife shall pay to the husband the sum of eight hundred and twenty five dollars ($825).
Simultaneously upon compliance by the wife with order (1) the husband shall do all acts and execute all documents as are necessary to transfer to the wife the whole of his right, title and interest in the property situate at and known as, “the East Hills property” in the State of New South Wales.
At the same time as the husband complies with order (3), the wife shall give the husband a discharge of the mortgage to Westpac Banking Corporation secured against the East Hills property in registrable form or alternatively a release from the mortgagee that releases the husband from any liability in respect of the mortgage.
In the event the wife fails to comply with Orders (1) and/or (4) the parties forthwith do all such acts and execute all such documents as are required to effect a sale of the property situate and known as the East Hills property in the State of New South Wales to be sold by private treaty at a price agreed upon between the parties and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee.
Upon the completion of the sale proceeds of the sale be applied as follows:
(a)To pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of the matrimonial home.
(b)Discharge of mortgage to Westpac Banking Corporation.
(c)Forty-one (41) per cent to the husband from which the husband must immediately pay the wife thirty five thousand five hundred and fifty two dollars ($35,552).
(d)Balance then remaining to the wife.
In the event that the matrimonial home has not been sold by or before a date three (3) months from the date of order (6) becomes operative then the husband and the wife shall forthwith make all such arrangements and do all such acts and sign all such documents and pay all monies equally necessary to procure a sale by public auction of the matrimonial home upon the following terms:
(a)The auctioneer shall be a real estate agent;
(b)The reserve price shall, unless agreed upon by the parties, be as proposed by the Auctioneer.
(c)Each party has the right to bid at the auction.
(d)Upon completion of the sale the proceeds shall be applied as set out in order (6).
Within twenty-one (21) days of these orders the wife shall make available for collection by the husband all furniture and personalty identified in exhibit F that belong to the husband or are to be transferred to him.
Within eight (8) weeks from the date of these orders the wife shall arrange for collection and sale by auction of items of furniture and personalty identified in exhibit F as those items to be sold at public auction. The auctioneer shall be nominated by the husband. The reserve price, if any, shall unless agreed upon by the parties, be as proposed by the auctioneer. Upon completion of the furniture auction the sale proceeds shall be applied as follows:
(a)To pay all removal costs, commissions and expenses of the sale;
(b)59 per cent to the wife.
(c)Balance then remaining to the husband.
Unless otherwise specified in these orders:
(a)Each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.
(b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
Until the husband has transferred his interest in the East Hills property to the wife or completion of its sale the wife has the right to occupy the property to the exclusion of the husband subject to wife paying the council and water rate instalments; household building and contents insurances; repayments in respect of any mortgage secured on the property as they fall due, keeping the property tidy, clean and in repair (having regard to its present condition) and permitting inspection by agents and prospective purchasers at all reasonable times.
The parties shall pay one half of the $825 due to M.J.Davis. In the event that one party has paid the total amount payable to M.J.Davis the other party shall reimburse the party who has paid the full amount within fourteen (14) days.
In the event that either party fails, refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, then pursuant to s.106A, a Registrar or Deputy Registrar of the Federal Magistrates Court of Australia is hereby appointed to execute all deeds, documents and instruments in the name of the defaulting party and to do all such acts and things necessary to give validity and operation to such deeds, documents and instruments.
Excluding exhibit F, all exhibits tendered in these proceedings be returned at the expiration of one calendar month unless an appeal is lodged. The husband’s solicitor shall notify the exhibits clerk all orders relating to exhibit F have been complied with at which time the exhibit shall be returned.
The solicitor who issued any subpoena collects that subpoenaed material and returns it to the owner within seven (7) days.
Subject to any application that may be made for costs all outstanding applications are dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAM1619 of 2004
| KRT |
Applicant
And
| SJT |
Respondent
REASONS FOR JUDGMENT
These reasons were delivered orally.
Introduction
These are proceedings for adjustment of property pursuant to section 79 of the Family Law Act 1975.
When the hearing commenced, there was an outstanding contact issue concerning the parties' two children, Kate (not her real name) and Heath (not his real name). During the first day of the hearing, parenting orders were agreed which essentially provide that the children will continue to live with their mother and enjoy regular and expanded contact with their father.
KRT, “the husband”, started the proceedings when he filed an application for final orders on 23 March 2004, which application he amended on 24 February 2005. Simply put, the husband proposes that the matrimonial assets are divided equally. During closing addresses, the husband's counsel submitted that the court would find that his client's section 79(4) and other factors were 60 per cent compared to the wife's 40 per cent and pursuant to section 75(2), order a 10 per cent adjustment in her favour. The husband claims he has made a greater financial contribution to the marriage. In particular he contends he made a greater initial contribution and during the 7 years before Kate's birth, he undertook significant to improvement to properties.
SJT, “the wife”, relied on her amended response, filed 1 March 2005. Essentially, she proposes that she receives 65 per cent of the matrimonial assets and the husband has the balance. Since separation, she and the children have lived in the former matrimonial home, which she is keen to retain. The husband agrees provided he is paid his share reasonably promptly and released from any liability arising from a mortgage to Westpac. If the wife is unable to pay out the husband, the parties agree that the former matrimonial home will be sold. The wife claims the party's contributions and other section 79(4) factors are equal. She says the husband's slightly greater initial contribution has been ameliorated by the effluxion of time. The wife contends that a 10 per cent section 75(2) adjustment is inadequate and that her circumstances warrant a 15 per cent adjustment in her favour. Two factors are emphasised. Firstly, that she has the full-time care of two young children and, secondly, the differences in the parties' earning capacity.
Short history
The husband was born in 1970 and is 34 years old.
The wife was born in 1972 and has just turned 33.
The parties married on 25 September 1993. They did not cohabit prior to their marriage.
Their first child, Kate, was born in 2000.
Their second child, Heath, was born in 2002.
The parties separated on 8 February 2004. Since separation, the children and wife have lived in the former matrimonial home.
The marriage still subsists.
Prior orders
On 14 May 2004, by consent, I made interim parenting orders, which are set out below:
1.The children Kate born in 2000 and Heath born in 2002 reside with the mother.
2.The father have contact with the said children each Saturday from 10 am – 4 pm commencing on 15 May 2004 until 19.6.04.
3.The father have contact with Kate from 9 am Saturday to 5 pm Sunday commencing on 3 July 2004 and each alternate weekend thereafter.
4.The father have contact with Heath from 9 am Sunday to 5 pm Sunday commencing on 3 July 2004 and each alternate Sunday thereafter.
5.That the father have contact with both children from 4.30 pm to 7 pm each Wednesday commencing on 3 July 2004.
6.Without admission the father will not have illegal substances at his residential premises at any time and will use his best endeavours to ensure that no other person is in possession of or use such substances at his premises.
7.That the father be substantially present during all periods of contact with the children and not permit the children to be in the care of R J.
8.That for the purpose of contact change over the mother shall cause the children to be delivered to the father at his residence at the commencement of contact and that the father shall cause the children to be returned to the mother at her residence at the conclusion of contact.
9.That for the period 15th May to 19 June 2004, the father will on the Monday following each contact occasion submit to a supervised urinalysis and provide a copy of the results to the solicitor for the mother forthwith upon receipt.
10.That as from 3 July 2004 the father will on the Monday following each contact occasion submit to a supervised urinalysis and provide a copy of the results to the solicitor for the mother forthwith upon receipt.
11.The father have contact with Heath on the first weekend contact following his birthday on 30.8.04 from 9 am Saturday to 5 pm Sunday, so as to coincide with contact with Kate for the same weekend, and each alternate weekend thereafter.
12.Liberty to either party to apply to the court on 24 hours notice to the court and the other side.
The next substantive parenting orders were made by consent on 14 December 2004, these orders are set out below:
1.The father have contact with the children Kate born in 2000 and Heath born in 2002 as follows:
(a)On 25 December 2004 from 2.00 pm to 6.00 pm Boxing Day;
(b)From 9.00 am on 1 January 2005 to 7.00 pm on Friday
7 January 2005;(c)Weekend contact to continue in accordance with interim orders made on 14 May 2004, on 15 January 2005.
2.The wife will deliver the children to the husband at the commencement of contact and the husband shall return the children to the wife’s home at the conclusion of contact.
3.The husband shall be substantially present during all periods of Christmas contact.
As I have already indicated, the parties reached final agreement concerning parenting matters on the first day of the hearing. By consent, orders were made on 16 March 2005 reflecting their agreement. These orders are set out below:
1.All previous parenting orders are discharged.
2.The children Kate born in 2000 and Heath born in 2002 reside with the mother.
3.The father have contact with Kate and Heath in accordance with orders 4 to 18 hereof.
4.From 5 pm Friday to 5 pm the following Sunday extending to
6 pm in daylight saving time and each alternate week thereafter commencing on Friday 25 March 2005, provided however where contact falls on a long weekend other than Easter contact shall extend to the specified time on the following Monday.5.From 4.30 pm on Wednesday until 5 pm on the following Thursday and in each alternate week thereafter commencing on 30 March 2005 subject to the matters appearing in the notation to these orders.
6.Commencing 2005 for both children for 1 week in the April, June/July and September/October school holidays being that week that is agreed in writing 14 days before the commencement of the relevant holiday and if not the first week in odd numbered years and the second week in even numbered years and for 2 weeks in the Christmas school vacation commencing 27 December 2005 and each year thereafter.
7.The contact in orders 4 and 5 is suspended during school holidays.
8.In the event that the father has contact during the first week of the school holidays (other than during the Christmas break) weekend contact shall recommence on the first weekend following resumption of school and on the second weekend when the father has contact during the second half the school holiday. Following the Christmas holiday period of contact, weekend contact shall resume on the first weekend of term one (1).
9.Following contact in the first week of the school holidays (other than Christmas) Wednesday contact shall recommence on the second Wednesday of the school term and following contact in the second week the Wednesday contact shall recommence on the first Wednesday of the school term. Following the Christmas holiday contact Wednesday contact shall recommence on the second Wednesday of the school term.
10.On Fathers’ Day between 9 am and 6 pm if not a contact weekend.
11.The father shall return the children to the mother at 9 am on Mother’s Day if same is a contact weekend.
12.From 3 pm Christmas Day to 6 pm Boxing Day in 2006 and each alternate year thereafter and from 4 pm Christmas Eve to 3 pm Christmas Day 2005 and each alternative year thereafter.
13.On the father’s birthday if not a contact period from 4 pm to 8 pm and similarly for the mother if her birthday falls on a contact period.
14.To both children on each of their birthdays from 4 pm to 8 pm in odd numbered years.
15.If either child’s birthday falls during a contact period then contact shall be suspended for the period from 4 pm to 8 pm on that day, and the father shall deliver the children to the mother.
16.That for the purpose of contact changeover the mother shall cause the children to be delivered to the father at his residence at the commencement of contact and the father shall cause the children to be returned to the mother at her residence at the conclusion of contact.
17.During periods of contact the father shall carry a mobile phone which shall be activated at all times with a voice mail facility. The father shall return calls and text messages from the mother as soon as practicable.
18.The father have telephone contact with the said children at all reasonable times.
19.The mother shall sign such authorities as are necessary to permit any of the father, L T and R J to collect Heath from his child care facility on Thursday afternoon.
20.The mother shall provide to the school all necessary authorities to permit the father to:
(a) obtain all copies of school reports;
(b) obtain all notices issued by the children’s schools;
(c) obtain school photographs;
(d) obtain details of parent teacher nights; and
(e) to collect Kate from school on the Thursday afternoons pursuant to order five (5) herein.
21.Neither party will have illegal substances at their residential premises at any time and will use their best endeavours to ensure that no other person is in possession of or uses such substances at their premises.
22.Neither party shall remove the children from the State of New South Wales without the consent of the other, but such consent shall not be unreasonably refused.
23.Each party shall notify the other of any proposed trip during contact greater than 200 kilometres from the parties’ residence.
24.The mother to provide to the father with appropriate medication for any present condition that the children might have during any period of contact except that both parties shall keep asthma medication for Heath. The father shall provide a school uniform for Kate and Heath when he commences school.
25.Both parties shall attend on Dr Williams, paediatrician for such periods as that doctor shall consider necessary to monitor the physical condition of the child Kate, in particular in relation to any eating disorder and will attend such other health professional as Dr Williams may refer them to.
26.Neither party shall denigrate the other in the presence nor hearing of the children and neither party shall permit the children to be in the presence of other persons denigrating the other party.
The hearing
The parties' agreement on parenting matters renders a considerable portion of the affidavit evidence irrelevant.
The applicant husband relied on the following:
·Part of his affidavit and all of his financial statement, filed 24 February 2005 and his oral testimony.
·The affidavit of Jonathan Alford, filed 25 February 2005. This witness was not cross-examined and I accept his evidence.
·Identified parts of the affidavit of L T, filed 24 February 2005. This witness was not cross-examined and I accept her evidence.
The respondent wife relied on the following:
·Her affidavit and financial statement, filed 24 February 2005, and her oral testimony.
·Identified parts of the affidavit of D L, filed 1 March 2005. This witness was not cross-examined and I accept his testimony.
Both parties tendered a number of documents.
The issues
The principal issues raised in these proceedings are:
·Whether the husband made a greater initial contribution and, if so, it's significance;
·Whether from the time the parties became engaged the wife contributed $100 per week towards the husband's investment unit;
·The significance of the improvements carried out by the husband to the parties' home;
·Minor issues concerning the asset pool;
·What adjustment should be made pursuant to section 75(2).
Relevant law
The approach to the determination of an application under section 79 is well established by authority. See In the marriage of Lee Steere (1985) FLC 99-626. In the marriage of Ferraro (1993) FLC 92-335. In the marriage of Clausen (1995) FLC 92-593.
The process involves the multiple part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in section 79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. I must then evaluate the matters contained in section 75(2) in so far as they are relevant. Any other order made under the Act concerning a party or child and any child support under the Child Support Assessment Act (1989) that a party to the marriage is to provide or might be liable to provide in the future for a child to the marriage. In determining what order should be made under section 79, the Court must be satisfied that, in all the circumstances, it is just and equitable to do so [79(2)]. It is the justice and equity of the actual orders that the Court must consider. See Russell v Russell (1999) FLC 92-877.
Assets and liabilities at the date of the hearing
The parties reached agreement on the value of most of their assets, liabilities and financial resources.
I find that the assets, liabilities and financial resources as at the date of hearing are as set out in the following table:
| Assets as at the date of the hearing | $ |
| The East Hills property (Agreed) (Joint) | 660,000.00 |
| Sale proceeds of the Liverpool investment unit (Agreed) (Joint) | 34,359.00 |
| Savings (W) (Agreed) | 2,000.00 |
| 1991 Corolla (H) (Agreed) | 500.00 |
| 1999 Camry (W) (Agreed) | 13,700.00 |
| Southcorp shares (H) (Agreed) | 3,480.00 |
| IAG shares (H) (Agreed) | 4,680.00 |
| First State Superannuation (W) (Agreed) | 31,058.74 |
| Visy Industries Super Fund (H) (Agreed) | 65,467.00 |
| Furniture and personalty (H) (Agreed) | 4,700.00 |
| Furniture and personalty (W) (Agreed) | 10,894.00 |
| Paid legal fees (W) | 10,000.00 |
| TOTAL ASSETS | 840,838.74 |
| Liabilities as at the date of hearing | |
| Westpac mortgage, East Hills (Joint) (Agreed) | 203,544.00 |
| Mastercard (H) (Agreed) | 5,765.00 |
| Capital gains tax on Liverpool sale | 1,396.10 |
| HSBC card (W) (Agreed) | 1,800.00 |
| TOTAL LIABILITIES | 212,505.10 |
| NETT ASSETS | 628,333.64 |
There are a number of findings that require explanation. Firstly, the appropriate treatment of the wife's paid legal fees. After separation, the wife transferred an IAG share portfolio, acquired during the course of the marriage, to her father. The share portfolio was transferred the listed price calculated by reference to the Australian Stock Exchange listing. The shares were transferred at their full value. She paid the sale proceeds towards her legal fees. From her own income, the wife has paid a further $6000 to $7000 legal feels. During the closing submissions, the husband's counsel agreed that the entire $10,000 paid towards legal fees should be notionally added back.
Applying the principals outlined in Farnell (1996) FLC 92-681, I am satisfied that the paid legal fees should be added in to the asset pool and treated as the wife's asset. Because I have notionally added in the full $10,000, I do not separately add in the value of the shares transferred by the wife to her father. Taking that course would be double-counting because it forms part of the $10,000. The husband has not paid any of his legal fees. His outstanding fees are a relevant section 75(2) factor.
Second, furniture and personalty which is a surprisingly contentious issue. The parties have furniture and personalty the total value of which is $19,569. The items are identified in Jonathan Alford's valuation. Of these items, the parties agree that there are items worth $573 that belong to members of the wife's family and should not be included in the asset pool. On a duplicate copy of Mr Alford's valuation[1], the wife's counsel drew square boxes around items which the parties agree will be sold at auction. These items are valued at $3400. Thus this amount must also be deducted from the Alford valuation. The wife contends that items in the children's bedrooms and their belongings should not be taken into account. I do not agree. Because the children live with the wife, she properly retains these items. Unlike the husband, she is spared the expense of acquiring duplicates. Although the items are used by the children, the items are part of the wife's household goods and are hers to dispose of as she determines. Legal title rests with the wife. Accordingly, the items identified as used by the children form part of my findings concerning furniture owned by the wife.
[1] Exhibit F
The next issue is the cost of the Alford valuation. The husband retained RHAS Brokers and Valuers to value the parties’ personalty and furniture. The report, also known as the Alford valuation, cost $4125. Prior to retaining RHAS, the parties retained Citywest Valuers and Property Consultants. This may be the debt referred to as belonging to M Davis. This less comprehensive report[2] valued the furniture at $7390. Because personalty and other items were excluded, neither party relied on the Citywest valuation. The husband retained RHAS.
[2] Exhibit G
I found deciding this issue quite difficult. Had the husband failed to provide the valuation, the court would not have had relevant valuation evidence. Failing agreement between the parties, the likely outcome would have been an ordered sale of all furniture and personalty. By letter dated 11 February 2005, the husband's solicitors advised the wife's solicitors that their client did not accept the earlier valuation and had instructed RHAS to complete a second valuation. There was no request made in this initial correspondence asking that the wife jointly retain the valuer. By letter dated 16 February 2005, the wife's solicitors observed that the husband had removed a quantity of tools from the former matrimonial home. They wrote:
Would you please ensure that RHAS Valuers are instructed to include in their valuation all tools and electrical equipment the husband has in his possession, including those items removed by the husband from the former matrimonial home on 7 March 2004.
The effect of this request was to expand the parameters of the valuation. In accordance with the wife's request, the items referred to in her solicitor's letter were valued. Reading the report, it is clear the vast majority of items valued were located at East Hills and inspected and valued at the husband's request. He should bear the cost of valuing those items. However, because the valuer also undertook tasks at the wife's later request, she should bear those costs. It appears that about 80 per cent of the work undertaken by Mr Alford was at the husband's request and approximately 20 per cent at the wife's request. As a consequence, the wife will pay 20 per cent of the cost of Mr Alford's report and the husband will pay 80 per cent.
Evaluation of contributions and other factors
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 the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense.
During cohabitation and since separation, both parties have made contributions that fall in section 79(a) through (c) inclusive. The parties became engaged in 1992. Upon their marriage they started living together. Until their marriage each lived at their parent's homes. At the commencement of cohabitation, the wife was a full-time university student undertaking a Bachelor of Education degree. She also worked part-time as a receptionist in a medical practice, working afternoons and weekends. I do not know how much she earned from her part-time employment. The wife purchased a 1978 motor vehicle in 1989 for $3200, part of the purchase price being borrowed from her parents and repaid long before the marriage. The wife said she also had savings, personal effects and superannuation. It is likely that the value of each of these items is minimal. The wife was unable to afford to pay her university fees as she studied and incurred a HECS debt, which was $7900 when the parties married. The wife contends that from the time of their engagement she gave the husband $100 per week to pay onto the mortgage on his investment property, a claim that he denies. The wife produced no documentary evidence corroborating her claim.
At the commencement of cohabitation, the husband was working full-time in a supervisory capacity. He had between $4000 and $5000 in savings, a 1981 XD Fairmont Ghia, modest superannuation, tools and an investment property at Wylie Park. The husband is a qualified fitter and machinist who completed his apprenticeship prior to marriage. He owned an extensive range of hand tools and electrical tools. His apprentice package of tools cost $7000 which he had paid for and supplemented prior to marriage. I am satisfied that his tools were worth at least $7000. I am also satisfied that the value of the husband's car was worth more than the car the wife brought into the marriage. The husband purchased the Wylie Park property[3], on 14 June 1991, for $69,000. The husband paid the 10 per cent deposit, stamp duty, legal costs and disbursements from his savings, all up about $11,000. He borrowed $62,000 from St George Bank in order to complete the purchase. Upon settlement, the property was tenanted and the income received applied to the mortgage. The husband's mother said she usually paid the mortgage with money the husband provided fortnightly from his wages. Her evidence was not challenged. As I have earlier indicated, I accept this evidence.
[3] Exhibit B
The wife says that as well as saving for the wedding and a holiday in Indonesia, she was able to meet her own expenses and pay $100 per week to the mortgage. Her oral testimony differed somewhat and she retreated from the evidence given in her affidavit to the effect that the mortgage was paid every week and that she contributed every week. In her oral testimony she said she paid $100 two or three weeks a month. The husband denies this and says that the wife's claim is inconsistent with her having a sizeable HECS debt and only working part-time. I agree with this submission. Thus, I am satisfied the husband alone contributed to the mortgage and other costs of the Wylie Park property prior to marriage.
By the time the parties commenced cohabitation, the Wylie Park mortgage had reduced to about $40,000. Upon marriage, the parties pooled their financial resources and earnings. The wife took responsibility for managing household bills and accounts. Throughout the marriage the parties contributed all of their earnings to joint matrimonial purposes. The husband's equity in Wylie Park gave the parties a good start. After the husband prepared Wylie Park for their occupation, the parties moved in. Thus, from the outset of their marriage their money worked for them and was not wasted on rent. More relevantly, the husband's equity in Wylie Park provided, in effect, the seed capital for home purchases that followed. Thus, it is claimed the husband made a greater initial contribution, as well as contributing assets that have real significance. His initial contribution, having regard to the principals espoused in Pierce v Pierce (1999) FLC 92-844, must be taken into account in a real way. But for his initial contribution, the parties are unlikely to have been able to acquire their subsequent property as soon as they did or on terms as advantageous.
The husband refinanced Wylie Park in December 1993 with State Bank. In early 1994 the parties purchased vacant land at Casula, for $82,000. They contracted with Impala Homes to build a home which they moved into during December 1994. The total cost of the home and land package and supplementary costs was $189,444. The husband sold Wylie Park on 2 December 1994 for $78,000. From the sale proceeds, $51,000 was paid onto the State Bank mortgage secured against Casula.
The parties lived in the Casula property until late 1997. During occupation the husband carried out improvements identified at paragraph 39 of his affidavit. He:
“Installed a Hills clothes line. Constructed a paved area from the laundry exit to the clothes line. Installed a shaded garden area and a semi-automatic watering system. Constructed raised garden beds running the whole length of the backyard and the whole length of the courtyard. Building a log retaining wall styled construction. Established the gardens with Australian natives. Installed two garden beds in the front yard. Excavated the front and back yards to allow the lawn to be contoured. Installed couch lawn to the front and back yards, including the installation of a semi-automatic watering system. Installed a letterbox. Installed lighting in each of the rooms and a front door chime.”
After the parties moved to Casula, the husband was primarily responsible for developing and maintaining the exterior of the property whilst the wife was substantially responsible for maintaining the interior of the home in the sense she performed the vast majority of the housework. It was submitted, and the husband agreed, that the wife assisted him with the improvements to the property. For example, by handing him tools as he worked and providing meals and refreshments during his breaks. Whilst this contribution must be recognised, the significant contribution to the improvements made to the property is those made by the husband.
The parties sold Casula for $260,000 in late 1997. After discharging the mortgage they received $164,740. In February 1998, they purchased vacant land at East Hills for $159,000. They contracted with Masterton Homes, paying $170,000 for their home. The Casula sale proceeds were used to effectively pay out the RAMS mortgage borrowed to purchase the land.
At paragraphs 45 and 46 of his affidavit, the husband identifies the improvements he made to the East Hills property. I incorporate these paragraphs into these reasons. These improvements contributed in a real way to the increased value of the East Hills property. The husband agreed with the wife's counsel's contention that her father also made improvements at the East Hills property. Primarily preparing and partially building a swimming pool. Whilst this work is a contribution made on the wife's behalf it is nowhere nearly as significant as the work completed by the husband. The swimming pool at the East Hills property was incomplete at separation. After separation, the husband offered to complete it, which offer the wife rejected. The pool and back garden are incomplete. I have no doubt that the present condition of the pool and back garden adversely affect the properties value. However, I do not accept the husband's Counsel's submission that this amounts to waste in a Kowaliw (1981) FLC 76,642 sense.
In October 2001, the parties purchased an investment unit in Liverpool, “the Liverpool investment unit” for $245,000. The parties acquired the property as tenants-in-common, with the husband owning 99 per cent and the wife 1 per cent. The parties borrowed $260,000 from Westpac in order to complete the purchase, pay stamp duty and associated fees. From the time the Liverpool unit was acquired the property was tenanted to the Department of Housing. The rental received was less than the monthly mortgage repayment and the shortfall was met from the parties' combined income. The property was negatively geared and the husband was able to offset the rental loss against his other income. The parties sold the Liverpool investment unit on 28 June 2004 for $305,000. The mortgage to Westpac was discharged from the sale proceeds. The balance remaining of $34,359.58 is held in the husband's solicitor's Controlled Monies Account on trust for the parties. The parties agree that the husband should take the entire Controlled Monies Account as part of the overall adjustment of property.
Having completed his 2004 taxation return, the husband was assessed as liable for capital gains tax on the Liverpool investment unit for $5538.24. He was entitled to a refund on his 2004 taxation return of $4142.14. The ATO withheld the refund and the husband must now pay an additional $1396.10. The parties agree that the amount payable for capital gains tax is a joint matrimonial liability. This approach reflects of the principals established by the Full Court in Rosarti [1998] FLC 92-804.
Since separation, the wife has retained exclusive use of the former matrimonial home. She has made the payments identified at paragraph 78(a) to (i) of her affidavit.
At separation the husband withdrew $3000 from the parties' joint savings account in order to meet the costs of setting up a rented home in Chipping Norton. Given that the wife retained control and exclusive use of the vast majority of the parties' valuable assets, it is reasonable that the husband had a small sum of money in order to rehouse himself. Neither party contends that those monies should be notionally added back in the asset pool, I agree.
The husband worked full-time throughout the marriage as well as acquiring additional qualifications as a tool maker. Until late 1999 he worked an average 10 to 12 hour day, six to seven days a week. He reduced his hours somewhat following Kate's birth. Having left his former employer he immediately started with M M, where he worked until about September 2003. After a brief period working as a sub-contractor, he started his present position as a Project Manager. At annexure (i) to the husband's affidavit, he identifies the monies earned during the marriage.
The wife worked full-time as a primary school teacher following her graduation in mid-1993. At the end of 1999 she took 12 months maternity leave. She then returned to work two days a week until she took another 12 months paid maternity leave shortly before Heath's birth. In July 2003 the wife returned to work two days a week. At some point the wife extended her hours and presently she works three days per week. The wife plans to return to work full-time in 2008 when Heath starts school. The wife holds a full-time position with the Department of Education and should she decide to do so, she is able to immediately resume full-time employment.
Following Kate’s birth the parties organised their family along fairly traditional lines with the husband taking primary financial responsibility for the family and the wife taking primary responsibility for the children’s care and home. Prior to Kate's birth, the husband was primarily responsible for maintaining the exterior of the parties' homes and improving them, and the wife was primarily responsible for maintaining the interior of the parties' homes. This pattern continued after Kate's birth.
Kate's birth was obviously traumatic for the wife and for the following nine months the wife underwent a series of operations in order to address birthing damage. During this time, the husband had greater responsibility in the home than he had previously or subsequently. However, it is plain that from Kate's birth, overwhelmingly responsibility for the home and the children fell to the wife. As Ferraro's case makes clear, the wife's contribution as a homemaker and parent must be treated in a real and substantial way. Her contribution as a homemaker and parent has continued after separation because the children have resided with her and although they exercise regular contact with the husband, she has been overwhelmingly responsible for their care.
When I stand back and examine the parties’ contributions, one sees that throughout the marriage the husband made a greater financial contribution than the wife. Also, he made a greater contribution to the improvement and maintenance of the matrimonial assets than the wife.
The wife made a greater contribution as a homemaker and to the welfare of the family.
Evaluating their contributions, it is clear that the husband's greater initial contribution is particularly significant. As I have already found, his ownership of the property at Wylie Park introduced the seed capital for the later favourable property transactions which has stood the parties in such good stead. Thereafter, both parties earned consistent income and applied all of the income they earned to the betterment of the family. These contributions, in conjunction with the husband's contributions as a homemaker, to the welfare of the family and the conservation and improvement of the matrimonial assets, are considerable. They must be balanced against the wife's lesser financial and non-financial contributions towards the assets but significantly greater contributions towards the welfare of the family.
The orders I propose will not affect the earning capacity of either party.
Since separation the child support paid by the husband has varied. The Child Support Agency commenced assessment and collection of the husband's child support liability in April 2004. The initial assessment was $557 per month. The wife objected to the assessment and the husband then provided the CSA with various estimates of his income. His assessed liability rose to $724.17 per month and then $1134 per month. When the husband lodged his 2004 taxation return, the Child Support Agency reassessed his child support liability and he is now assessed to pay child support at $1381.42 per month for the period 1 March 2005 to 31 May 2006. The wife expected to receive the first payment of this increased amount in early 2005.
I find that the parties' total contributions and other section 79(4) factors should be assessed as being 56 per cent by the husband and 44 per cent by the wife.
Section 75(2)
The wife is 33 years old and in good health. The husband is 34 years old and also in good health. As I have already indicated, the wife is a university qualified teacher with many years teaching experience. It is plain that she has a well-established career. The husband is a fitter and machinist, as well as a tool maker. He has experience as a supervisor and as a project manager.
The parties' income, property and financial resources are set out in their financial statements. Presently, the husband's income is greater than the wife's. This reflects two factors. Firstly, the wife works part-time. Secondly, the husband's career generally produces greater income than the wife's. The husband's Counsel contended that the wife's capacity for career advancement is manifest. Attached to the husband's affidavits are copies of relevant Teaching Awards, which it was contended the wife could be expected to eventually earn. The point that is lost is the effect on the wife of career breaks by virtue of maternity leave and working part-time. Even though she intends to return to the paid workforce full-time in 2008, her care of the children has the capacity to adversely impact upon her career. In Clausen, the Full Court held:
“In addition, it should not be forgotten that the payment of child support in no way compensates the custodial parent for the loss of career opportunity, lack of employment opportunity, and the restriction upon an independent life-style which the obligation to care for the children usually entails.”
Although the wife works as a teacher and her teaching hours are broadly compatible with the hours the children attend school, there will be exigencies that will nonetheless impact upon the wife's career. For example, if the children are sick, responsibility for arranging the children's care falls to the wife. She must either take time off herself, or arrange for others to do so. Transporting children to and from school and making arrangements for out of school care if she has after school related activities will primarily fall to the wife. It will not be as easy for the wife to undertake additional training, for example, attending courses after-hours in order to supplement her professional skills and enable her to keep up to date. This is the type of scenario that the Full Court, in Clausen's case, was at pains to ensure is not overlooked. I am satisfied that, as a consequence of the wife's substantially full-time care of two young children, there should be a significant adjustment in her favour pursuant to section 75(2)(c).
Other than the children, neither party has a responsibility to support any other person.
Both parties have a duty to maintain the children. I have already made findings concerning the child support the husband will pay. The amount that he will pay is significant and it is likely that the husband will pay child support for many years to come. Notwithstanding this, the reality is that because the children live with the wife, she will be called upon to exhaust a greater share of her income supporting the children than the husband will, a factor that cannot be overlooked.
I have already made findings about the outcome of the contributions phase which I do not repeat.
There are two factors that require consideration under s.75(2)(o). The first is the husband’s failure to produce any financial records relating to his current bank account. I do not accept the husband does not have a bank account or that he does not have records relating to it. He received the notice a Notice to Produce his records, albeit late, but he must have understood that full and frank disclosure required him to reveal the place where he does his banking and his account’s records. Given his income, I am satisfied that it is likely the husband does have some savings, the details of which have not been disclosed to the court. This is a factor that must be taken into account in the wife's favour pursuant to section 75(2)(o).
Both parties' parents have assisted them in the children's care. After Kate's birth, the wife was very unwell and both families rallied, assisting to the extent that they could. For a period more recently, but prior to separation, the husband's mother routinely cared for the children one day a week. These are factors where the effort made by the wife's parents, are taken into account in the wife's favour and the effort made by the husband's mother, in particular, must be taken into account in the husband's favour.
Regarding all of the section 75(2) factors, I find it appropriate that there should be an adjustment in the wife's favour. Having regard to the findings made in her favour, and balanced by those made in favour of the husband, the appropriate adjustment to make in the wife's favour is 15 per cent. This outcome reflects the cumulative outcome of the findings I have made pursuant to section 75(2). See Tomasetti (2000) FLC 93-023. Any lesser adjustment, given the modest asset pool, would be notional.
Section 79(2) — Is this a just and equitable outcome?
The outcome of section 79(4) and section 75(2) has resulted in a distribution favourable to the wife 59 per cent as compared to the husband's 41 per cent. I am satisfied it is just and equitable within the meaning of section 79(2). The reason for this is that the section 79(2) exercise requires that I give proper weight to wife's financial future, having regard to her care of the children compared to the husband's capacity to earn a greater income through his employment. His initial financial contribution was greater than hers, and in effect was the foundation that enabled the parties to acquire their subsequent home. Both parties worked to improve and maintain the homes in which they lived and both worked hard to secure their family's future. Overall the outcome reflects the party’s contributions and their differing financial future. It is just and equitable in the sense referred to in s.79(2).
Structure of the Orders
The net assets to be distributed are $628,333.64 including superannuation. Neither party asks that any superannuation interest is split. Although I am not asked to split the superannuation interest it is agreed that I should make adjustment from other property in relation to it.
The wife is entitled to 59 per cent of the net assets which is $370,716.84. The wife has the following assets:
·Former matrimonial home at $660,000
·Savings at $2000
·Toyota Camry at $13,700
·Superannuation at $31,058.74
·Furniture at $10,894
·Paid legal fees of $10,000
·Total assets being $727,652.74
She has the mortgage of $203,544 and the HSBC credit card of $1800, giving total liabilities of $205,344. This means the wife has net assets of $522,308.74.
The husband has:
·Sale proceeds of the Liverpool unit $34,359
·His car worth $500
·Southcorp shares $3,480
·IAG shares $4,680
·Superannuation $65,467
·Furniture $4,700
He has total assets of $113,186. The husband’s liabilities are his credit card at $5,765, capital gains tax of $1,396.10, which total $7,161.10. His net assets are thus $106,024.90. Therefore the wife must pay the husband $522,308.74 less $370,716 which is $151,591. By way of cross checking $257,616 less $1,060.24 is $151,591.
In separate transactions the wife must pay the husband 20 per cent of Mr Alford's account which is $825. That amount must be paid within 21 days. The Alford debt being incurred by both parties, there is no reason why the husband or Mr Alford should wait longer for payment.
The parties will equally pay the debt to M J Davis. I was unable to see what that debt related to. It is possible that one has paid the full account and the amount due must be reimbursed to that party within 14 days.
The wife will have eight weeks to pay out the husband's interest in the former matrimonial home. She has made enquiries with a bank and eight weeks is sufficient time for any moneys to be raised. Any longer has the husband waiting too long to receive his proper share of the matrimonial assets. At the same time as the wife pays the husband the moneys to which he is entitled, he must give her a transfer in registrable form transferring his interest in the former matrimonial home to her. Simultaneously the wife must give the husband a discharge of the Westpac mortgage or a release from the mortgagee in relation to it. It is clear that the parties’ relationship is acrimonious and it would be inconsistent with the provisions contained in section 81 to leave them connected financially in any way.
If the wife cannot pay the husband his entitlement within eight weeks then the former matrimonial home will be sold. Although it has an agreed value its net proceeds of sale cannot be known. The total assets excluding the home and mortgage are $171,871.64. Of these the wife has net assets worth $65,852. She should have $101,404.26. The husband has net assets worth $106,024 but should have $70,467. Therefore from the sale proceeds he must pay the wife an adjusting amount of $35,552.
Pending settlement or sale of the former matrimonial home the wife must maintain the property in its current state of repair and meet all expenses including insurance, associated with it. This is, in effect, the price of occupation.
In relation to personalty I have made orders for the parties to join in the sale of those items that are to be sold by auction. To avoid problems the husband will nominate the auctioneer and the auction must take place within eight weeks. Within 21 days the wife must make available for collection by the husband those items identified in exhibit F as belonging or transferable to him. The parties will otherwise keep all items that they have and are responsible for any liabilities in their sole name.
I am satisfied that this outcome is just and equitable in the meaning of s.79(2).
For these reasons I make the orders identified at the start of this judgment.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate: S. Mashman
Date: 30 May 2005
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