Kutras and Kutras
[2009] FMCAfam 898
•26 August 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KUTRAS & KUTRAS | [2009] FMCAfam 898 |
| FAMILY LAW – Property – thirty-two year relationship – conflicting evidence about what happened to several significant cash sums – assessment of claim that the wife had a gambling problem during the relationship – assessment of contributions – whether any adjustment should be made in the wife’s favour for s.75(2) factors. |
| Family Law Act 1975, ss.75, 79 Federal Magistrates Court Rules, r.21 |
| Kennon & Kennon (1997) FLC 92-757 AJO v GRO (2005) FLC 93-218 |
| Applicant: | MS KUTRAS |
| Respondent: | MR KUTRAS |
| File number: | DNC8 of 2008 |
| Judgment of: | Terry FM |
| Hearing dates: | 19 & 20 February, 2 March, 2 & 3 April, 21 & 22 May 2009 |
| Date of last submission: | 22 May 2009 |
| Delivered at: | Darwin |
| Delivered on: | 26 August 2009 |
REPRESENTATION
| Counsel for the Applicant: | Ms Bowen |
| Solicitors for the Applicant: | Bowen Lawyers |
| Counsel for the Respondent: | Ms Allan |
| Solicitors for the Respondent: | Mary M Allan |
ORDERS
That the wife is declared the owner to the exclusion of the husband of the proceeds of sale of Property B and the husband shall sign all documents required to permit the wife to obtain the funds from the trust account in which they are held.
That within 42 days of the date hereof the wife shall:
(a)pay the amount required to discharge the loan secured by mortgage over Property V in the Northern Territory of Australia;
(b)pay all amounts owing to Darwin City Council and the Power and Water Authority in respect of the Property V property including the proportion of the 2009/2010 rates and outgoings attributable to the property but unbilled as at the date of payment to those authorities by the wife.
That forthwith upon the wife satisfying the husband that she has complied with Order (2) the husband shall sign all documents required to transfer to the wife at the expense of the wife the whole of his right title and interest in the Property V property.
That the wife shall indemnify the husband and keep him indemnified from liability for the said mortgage and for all rates taxes and outgoings owing in respect of the Property V property.
That the husband is declared the owner to the exclusion of the wife of:
(a)Property C within the municipality of [omitted], and in the Municipal area “[omitted]”;
(b)Property D within the municipality of [omitted] and in the Town Planning sector “[omitted]”;
(c)all furniture and chattels in the above properties;
(d)the Hyundai Elantra motor vehicle situated in Greece.
That unless specified in these orders and except for the purpose of enforcing payment of any money due under these orders or subsequent orders, each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in possession of each party and superannuation standing in their respective names.
That in the event that either party refuses or neglects to comply with the provisions of these orders the Registrar of the Federal Magistrates Court of Australia at Darwin is hereby appointed to execute all deeds and documents in the name of the defaulting party.
IT IS NOTED that publication of this judgment under the pseudonym Kutras & Kutras is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
DNC8 of 2008
| MS KUTRAS |
Applicant
And
| MR KUTRAS |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Kutras and Mr Kutras are unable to agree about how their property should be divided between them.
The parties separated in April 2007 after a thirty two year relationship. During the proceedings they exhibited extreme bitterness and hostility toward each other. Claim and counterclaim were made about gambling activities and missing money. Adult children have taken sides in the dispute.
The property pool consists of a real property in Australia, the proceeds of sale of a second real property in Australia, and two real properties in Greece.
The wife claimed that her contributions exceeded the husband’s and that there should be an adjustment in her favour for s.75 (2) factors. The wife sought 60% of a pool of assets which included certain add backs.
In real terms the wife said that she should receive the former matrimonial home at Property V, the sale proceeds of sale of the Property B investment property and the Property D property, and that the husband should retain the Property C property.
The husband claimed that his contributions exceeded the wife’s and that there should be no adjustment in favour of either party for s.75(2) factors. He sought 70% of a pool of assets which did not include any add backs.
In real terms the husband said that he should retain Property V, Property D and Property C and that the wife should receive the Property B sale proceeds.
The evidence
The wife relied on the following documents:
a) her application filed on 8 January 2008;
b)her affidavits filed on 14 January 2009 and 12 February 2009;
c) her amended financial statement filed on 12 February 2009;
d)the affidavit of her daughter Ms N filed on 12 February 2009;
e)the affidavit of her daughter Ms K filed on12 February 2009;
f) the affidavit of Ms S filed on 19 February 2009;
g) the affidavit of Mr N filed on 15 May 2009.
The husband relied on the following documents:
a) his response filed on 2 May 2008;
b) his financial statement filed on 2 May 2008;
c) his affidavit filed on 18 February 2009;
d) the affidavit of Mr S filed 31 March 2009.
All of the witnesses were cross-examined.
The wife was a most unsatisfactory witness. She was frequently non-responsive and argumentative during cross-examination. When challenged about such things as her gambling or whether she had kept sums of cash money for herself, her frequent response was “Can you prove it?” The wife was truculent even when asked to acknowledge simple non-contentious matters such as the date of death of the husband’s father.
It became clear as the evidence unfolded that some of the wife’s strongly held beliefs about financial matters were based on nothing more than gossip, hearsay, or misinterpretation of documents.
The husband was a more responsive witness during cross-examination and he was a somewhat more reliable historian than the wife. His detailed descriptions of the circumstances surrounding the purchase of Property V and other houses in Darwin, and the circumstances in which he received a gift from his father, had a ring of truth about them.
However the husband was relentlessly obstructive throughout the proceedings on the issue of obtaining valuations of the remaining two Greek properties. He admitted building illegally on land in Property C and giving bribes to officials. At times his evidence was no more credible than that of the wife.
The wife called two of the adult daughters to give evidence. They exhibited a strong bias in favour of the wife. Ms K related with approval an occasion when the wife undermined the husband after he suggested that his adult daughters who were living at home should make a modest financial contribution to the household. Both daughters accepted uncritically the wife’s mantra that any gambling problem she had was the husband’s fault because he took her to the Casino on their wedding anniversary sixteen years prior to separation.
The adult daughters cast some light on the wife’s gambling activities but I otherwise treat their evidence with considerable caution.
The wife’s witness Ms S and the husband’s witness Mr S were called to give evidence on the issue of gambling. Their evidence was unhelpful, simply because of its content.
General history
The husband and wife are both of Greek heritage. The husband came to Australia in 1974 when he was 24 years old and settled in Sydney. He had known the wife slightly in Greece and met her again in Sydney in 1974. The wife was then 18. The parties commenced living together in Sydney in 1975.[1] They returned to Greece in July 1977 to be married.
[1] Wife’s affidavit filed 12 February 2009 paragraph 2, Husband’s affidavit paragraph 5
They have five daughters, all of whom are now adults aged between about 22 and 32.
Between 1975 and 1985 the parties lived in Sydney, apart from a period of about a year around the time of their marriage when they lived in Greece.
The husband was a [tradesman] during the marriage. The wife was primarily occupied in home duties during the first decade or so. After the children were older she started to work outside the home, doing [work omitted].
The husband was keen to acquire real property. The parties purchased a home in Sydney which was later destroyed by fire. In 1982 the husband purchased a block of land in Athens, which was later subdivided into eight blocks.
In 1985 the parties moved to Darwin. Several properties were bought and sold in Darwin. Further properties were also purchased in Greece. In 1989 the husband bought a block of land at Property C from his sister, and in 1993 he purchased a property at Property D.
The husband made many trips to Greece. The family lived in Greece for a period of time in the early 1990’s and the husband and wife and two of the children lived in Greece for about six months in 2003.
In 1998 the husband and wife purchased [G] which operated in the Wharf Precinct in Darwin. The wife worked in the business with some assistance from the husband and the children. The business was sold in 2002 for something in the vicinity of $50,000.00. Each party claimed that the other had received and disposed of the majority of this money.
In 2002 the Greek government, in connection with the Olympic Games, compulsorily acquired the eight blocks of land in Athens. The husband received 230,000 euros. He used 70,000 to 80,000 euros to purchase a flat in Athens. What happened to the balance of the acquisition money was a source of dispute in the proceedings.
In 2004, a business called [D] was established in Darwin. The husband and wife were partners in the business although it was essentially a vehicle for the husband to work as a [tradesman]. The business was still in operation at the time of separation.
On 24 April 2007 the husband and wife separated. The wife continued to live in the former matrimonial home at Property V. The husband almost immediately went to Greece. He predominantly resided there until January 2009 when he returned to Australia for this hearing.
At separation the property of the parties principally consisted of five pieces of real estate, two in Australia (the former matrimonial home in Property V and the investment property in Property B) and three in Greece (the flat in Athens, and the properties at Property D and Property C).
The husband sold the flat in December 2007 for 76,383 euros. It was his case that he used the proceeds of sale mainly to assist in developing the Property C property. The wife disputed this claim.
The Property B investment property was sold during 2009 pursuant to orders made by this court, and the proceeds of sale are in trust pending resolution of the property proceedings.
Gambling
Each party made allegations about the other’s gambling.
The wife alleged that the husband was a frequent and heavy gambler.
The husband admitted that until 2000 he gambled on occasions.[2] He denied however that he ever had an addiction to gambling or that his gambling caused financial difficulties. He said that his gambling was in the nature of a recreational activity and that he only used surplus funds after commitments such as the mortgage were met and then only gambled small amounts.
[2] Husband’s affidavit paragraph 8, 31
I am not persuaded that there is any evidence that the husband had a gambling problem or that significant amounts of money were lost during the relationship as a result of the husband’s gambling.
The evidence of the wife and her witnesses about the husband’s gambling was vague and anecdotal. The parties acquired a reasonable pool of property during their marriage, and the husband was the driving force behind the purchase of property. This alone lends some credibility to the husband’s claim that he never had a gambling problem which was out of control.
It was the husband’s case that the wife had a gambling problem which caused financial loss to the parties during the relationship. He said that she often gambled away her entire week’s wages. He also claimed that two large sums of money disappeared during the relationship with nothing to show for it (most of the proceeds of sale of [G] and half of the acquisition money) and that it was reasonable to assume that the wife had gambled the money away.
The husband said that the wife began gambling in Darwin, first at the Casino and then also at clubs with poker machines, including Tracey Village and the Casuarina Club. It was his case that in the latter part of the marriage the wife “habitually took her wages straight to the clubs and lost them.” It was his case that the wife was losing $500.00 or $600.00 per week.
The husband said that on occasions he gave the wife money to go to Cash Converters to redeem jewellery. He implied that the wife had pawned jewellery to either obtain funds to gamble with or to replace what she had lost gambling.
Records from Cash Converters showed that on twenty nine occasions between January 2002 and November 2008 the wife obtained small amounts, usually $100 or $200, by pawning jewellery. The total obtained was $4,850.00.
The wife claimed that she pawned jewellery at Cash Converters because the husband did not provide her with sufficient money for the household. However she pawned jewellery on two occasions after separation in 2007 when the husband was in Greece.
Records from the Casuarina Club showed that the wife was a member between 4 August 2007 and 1 July 2008. A list supplied by the club showed that she won money in excess of $49.00 on 29 occasions. The wife’s counsel contended that these records suggested that the wife was a successful gambler, but without evidence of the amount the wife gambled the records of her winnings do not establish anything of the kind.
Ms N gave evidence that she had observed her mother attending at the Casuarina Club or Tracey Village to gamble. She said that her mother attended on average of once a week and that her mother told her that she spent up to $100.00 on each occasion. Ms N did not give any evidence about the period of time over which this occurred, the years in which it occurred or how she knew (other than from self serving statements made by the wife) how much the wife was gambling.
Ms K gave evidence that she remembered the occasion when the husband pressed the wife to go to the Casino for their wedding anniversary. During cross-examination, when challenged about whether she really recollected this occasion or was simply reciting something her mother had repeatedly told her, Ms K passionately replied:
“You kind of remember when your Mum got addicted to gambling for the first time.”
Ms K commented that she “saw mum going to clubs to play the pokies.”[3]
[3] Affidavit of Ms K filed 12 February 2009 paragraph 3p)
In oral evidence Ms K became very emotional when asserting that:
“We were the ones starving and not eating because he was taking her to the Casino”
The following exchange then occurred:
Ms Allen:“You blame your father for all your mother’s bad gambling?
Ms K: “Yes”
Ms Allen“And that gambling has been extensive hasn’t it?
Ms K:“Mmmhmm”
The wife minimised the extent of her gambling and denied that she had a gambling problem but she was not a witness of credit. It was also seriously advanced by her counsel as an alternative that if the wife had a gambling problem it was the husband’s fault because he persuaded her to go to the Casino in Darwin in 1990 or 1991 on their wedding anniversary and introduced her to poker machines. Ms N and Ms K professed to believe this piece of family mythology.
I was left with a distinct impression that on occasions during the marriage the wife was in the grip of a gambling problem. I do not accept that the husband was to blame for the wife’s problem.
The difficulty is that, as far as the evidence about the wife gambling away the whole of her wages is concerned, there was no evidence which would allow me to make a finding about how often this occurred and over what periods of time. This was partly due to the wife’s lack of frankness about this issue but in addition no attempt was made, either by the husband in his evidence or by his counsel in cross-examination of the daughters, to establish whether the problem was year in and year out, or spasmodic.
There is some reason to suppose that the problem may have been spasmodic. When giving evidence about the receipt of the acquisition money in 2003 the husband said that he thought at that time that the wife had beaten her gambling problem. Ms K commented that “When we had shop at the wharf, mum did not gamble much as she was too busy working.”[4]
[4] Affidavit of Ms K filed 12 February 2009 paragraph 3(s)
It is impossible for me to make any finding other than a general finding that on balance I am satisfied that the wife’s gambling of her wages deprived the household of some financial support during some periods of the marriage.
The proceeds of sale of [G]
[G] was purchased by the parties from Mr S for $65,000.00 in 1998.
In about 2002 the husband became embroiled in an argument with the Port Authority who controlled the Wharf precinct where the business operated. Largely as a consequence the parties decided to get out of the business.
The wife arranged the sale of the equipment. In her affidavit she said that she sold the equipment for $50,000.00.[5] In cross-examination the wife admitted that she had given the purchaser a receipt for $40,000.00. When asked why, she replied “because the man said he had already organised it with Mr Kutras.”
[5] Wife’s affidavit filed 12 February 2009 paragraph 8g
The wife received the purchase price in cash. In oral evidence she said that after she received the money she went home and put it on the table, and that the husband gave her a hug. She said that she was given only $400.00 of the sale proceeds and that husband kept the balance. The wife alleged that shortly after the sale the husband took a large amount of money to Greece strapped to his legs.
The husband said that he lost interest in the [business] after the dispute with the Port Authority and left the sale of the business to the wife. He said that the wife told him at the time that she had sold the equipment for $30,000.00. He said that he had since seen a document suggesting that it had been sold for $40,000.00.
The husband’s evidence was that the wife brought $30,000.00 home in cash and put it on the table. He said that he took about $8,000.00 and went out to buy a ticket to Greece. He said that when he returned home the balance of the money was no longer on the table. It was his case that the wife kept the balance of the money.[6]
[6] Husband’s affidavit paragraph 17
I am unable to determine which of the parties is telling the truth about what happened to the money from the sale of [G], if indeed either of them is.
As I cannot be satisfied that the wife retained the money it follows that I cannot be satisfied that the wife gambled away this large sum of money.
During closing addresses the wife’s counsel submitted that a loss had been occasioned on the sale of [G] and that this loss was attributable to the husband’s conduct. It was submitted that the loss should be taken into account when contributions were assessed.
There are many reasons why the business or the equipment might have been worth less in 2002 than in 1998. There was no evidence which would allow me to find that the husband’s dispute with the Port Authority had an impact on the value of the business.
The acquisition money
In about 2002 the Greek Government, in preparation for the Olympic Games, compulsorily acquired the eight blocks of land the husband owned in Athens. The husband was informed that he was entitled to 230,000 euros.
In about February 2003 the husband, wife and two of their children, Ms K and Ms O, travelled to Greece. They stayed in the Property D property. The husband said in oral evidence that he collected the 230,000 euros in cash and put it in a wardrobe and covered it with newspaper. The husband said that he was looking to buy another property in Greece and that he kept the money with him in cash so that he could use it for that purpose.
The wife and Ms K both admitted seeing a large sum of money in the wardrobe.
The husband’s evidence was that when he later checked the money he found 25,000 to 30,000 euros was missing. He said that he confronted the wife and she informed him that she had taken the money shopping. The husband gave superficially plausible evidence about having a terrible argument with the wife, telling her that their marriage was over and giving her half of the remaining money (about 100,000 euros) and taking the other half for himself.
The husband said that two to three months later the wife told him that she wanted to go back to Australia, but that her money was gone and she needed help with airfares. The husband said that he gave the wife 10,000 euros to help her to return to Australia. The wife returned to Australia in August 2003.
Although the husband’s story about his argument with the wife was superficially plausible, there were some problems with the husband’s evidence generally about this issue. It was his case that the wife had a serious gambling problem dating back to the 1990’s. It does seem a little odd that if the husband believed this he would have left such a large amount of cash where it was readily accessible to the wife.
The husband was asked about this in cross-examination. He said that at the time he put the money in the wardrobe he was afraid of the wife’s gambling but on the other hand thought she showed signs of beating her gambling problem.
The husband said that he used his share of the money to buy a flat in Athens (70,000 or 80,000 euros) and the Hyundai motor vehicle (13,500.00) and that he spent about 10,000 to 12,000 euros on the Property D property.
The wife denied receiving any of the acquisition money. However when it was put to the wife in cross-examination that she had taken the 25-30000 euros and received a further 100,000 euros from the husband, her answer was “Proof? Then, no.”
It was the wife’s case that the husband kept all the money. She said that in addition to buying the Athens flat he used some of the acquisition money to build on Property C. However this was mere speculation on the wife’s part. She did not visit Property C or see building work being performed at this or any other time. She did not produce any evidence to corroborate this claim.
It was the husband’s evidence that he built on Property C at a later time using money he earned in Greece. He said as follows:
“In 2004 I travelled to Greece on my own. I invited Ms Kutras to come with me. I wanted to build on the land in Property C.
Ms Kutras refused to come with me and insisted on remaining in Australia.
I worked in Greece for a time as a [tradesman] and used the income I earned to build in Property C. I spent the equivalent of AU $15,000.00 to AU $25,000.00 fencing and building on the Property C land. I connected power to the block although it is illegal and lived on the property”[7]
[7] Husband’s affidavit filed 18 February 2009 paragraph 23, 24
It was the wife’s case that she not the husband purchased the Elantra but she denied using any of the acquisition money to do so. She said that she had purchased the Elantra using a gift of 15,000 euros from her mother.
There was no mention of this gift in the wife’s affidavits, and in the brief summary of the wife’s case given by her counsel at the commencement of the hearing the wife’s counsel did not suggest that the wife had received any gifts during the marriage which should be taken into account when contributions were assessed. I do not accept the wife’s evidence about this gift.
I have considerable doubts about the evidence of both parties concerning what happened to the acquisition money. I accept that the husband retained at least 100,000 euros and used some of it to buy the flat in Athens. On the balance of probabilities I am satisfied that the some of the money was used to buy the Elantra. I am unable to be satisfied about what happened to the remainder of the money.
The sale of the Athens flat in December 2007
The husband sold the Athens flat on 14 December 2007 for 76,383 euros. This sum when received was the equivalent of about $127,000.00.
The husband was unrepentant about selling the property without consultation with wife, saying that “I brought it on my own and sold it on my own”.
The husband did not make any reference to the sale of the flat in his affidavit. During cross-examination he said that he had spent some of the money from the sale of the flat on Property D and “a lot of money I spent on corruption on the house in C.”
Photographs annexed to the wife’s affidavit show the Property C house was in a partially completed state in August 2006. It is not inherently unbelievable that the husband continued to work on the house when he returned to Greece in April 2007 after the parties separated.
It is not inherently unbelievable that the husband engaged in bribery in connection with the Property C property. Mr N, who gave evidence as to the value of the property, confirmed that the structure on the land was illegal and that it was not possible to get a building permit. He was scathing about the illegal building activities in the area but conceded that such illegal structures were common. The husband produced a document confirming that he had been prosecuted in Greece for building illegally.
Mr N also said that such illegal structures do sometimes eventually get permits.
The only reference to how much money the husband might have spent on bribery was in the following paragraphs in his affidavit:
“I did not obtain a permit to build on the land in Property C. A permit would not have been given to me if I had applied for one because there are regulations prohibiting building in bushland.
There are many problems with the house project. There is no approval to build a house and I have been to court several times about the issue. So far it has cost $50,000.00 in trying to deal with the red tape involved. I do not know how much it will cost to finish building the house and to fix up the legal problems.”[8]
[8] Husband’s affidavit paragraph 25, 26
The husband produced no documents to corroborate his evidence about how he had disposed of the sale proceeds of the flat.
In many cases failure by a party to produce any documentary evidence to confirm how a large sum of money was used would arouse considerable suspicion. However if some of the money was used for corruption a lack of paperwork is hardly surprising. In addition the evidence given in this case strongly suggests that receiving large sums of money in cash and keeping money in their home in cash rather than depositing it in a bank was nothing unusual for these parties. There was no dispute that on different occasions large sums of cash money were variously placed on the table, hidden in a wardrobe and hidden under a daughter’s cot.[9]
[9] Wife’s oral evidence about an event in Greece
Evidence given by the husband about building on the Property V property suggested that he tended to operate in a cash environment The lack of paperwork demonstrating how money from the sale of the Athens flat was used must be viewed against this background.
I am not persuaded that lack of paperwork alone should lead me to doubt the husband’s claim that the proceeds of sale of the Athens flat were used in connection with Property C and to a lesser extent Property D.
I am a little troubled by the husband’s failure to provide a break down of how he used the money from the sale of the flat, for example assigning some to bribes and some to materials. If the husband used any of the money for living costs this ought also to have been itemised.
However it was not suggested to the husband that he had any of the money from the sale of the flat hidden away anywhere or that he had purchased another property. The husband is particularly attached to the Property C property, describing it as his dream, and on balance I accept his evidence that the money from the sale of the flat went mainly into Property C, subject to a lingering concern that he may also have used some of the money to subsidise his own living expenses and meet his financial obligations.
Family violence and other conduct issues
It was the wife’s case that on occasions during the thirty two year marriage, but mainly when the parties lived in Sydney, the husband assaulted her. She also complained of being verbally abused and threatened. The wife’s daughters gave some corroborating evidence. The two daughters also related incidents in which they claimed that they or their sisters had been harshly or unjustly treated by the husband.
In Kennon & Kennon[10] Justices Fogarty and Lindenmayer considered the circumstances in which conduct (including family violence) might be relevant in property proceedings and said as follows:
[10] Kennon & Kennon (1997) FLC 92-757
“Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party’s contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties’ respective contributions within s.79. We prefer this approach to the concept of “negative contributions” which is sometimes referred to in this discussion.
In the above formulation, we have referred only to domestic violence, for the reasons which we indicated earlier, but its application is not limited to that.
………….
However, it is important to consider the “floodgates” argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this Court to fault and misconduct in property matters - a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.
………….
It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass… conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions). “
The wife gave no evidence that husband’s conduct impacted on her ability to contribute as homemaker, parent or wage earner. The wife gave no evidence which might have made the husband’s conduct relevant to a consideration of s.75 (2) factors, such as for example that the conduct had affected her ability to earn income in the future or had left her with substantial future medical needs.
The complaints by the daughters about the husband’s conduct toward them and their sisters were in the nature of personal attacks, which should not have been aired in the property proceedings between the husband and the wife.
The husband’s counsel objected to the evidence in the wife’s affidavit and the daughter’s affidavits which went to the husband’s conduct and the evidence was struck out of the affidavits.
The law applicable to the resolution of disputes about property settlement
Pursuant to s.79 of the Family Law Act, a court can make such orders as it considers appropriate altering the parties’ interests in property. s.79 (2) provides that the court shall not make an order under this section unless the court considers that it is just and equitable to do so.
The procedure usually adopted in determining applications for property settlement is:
i)to identify and value the assets and liabilities of the parties;
ii)to assess the contributions of the parties under s.79(4)(a), (b) and (c) and to express those contributions as a percentage;
iii)to consider the matters set out in s.79(4)(d),(e),(f) and (g), which include the matters in s.75(2), so far as they are relevant, and to determine whether any adjustment should be made as a result to the contribution based entitlements;
iv)to consider whether it is just and equitable to make the relevant orders.
In my view it is appropriate to follow this procedure in the present case.
Assets and liabilities
Potentially, the asset pool consists of the following:
Description
Whether an agreed inclusion
Ownership
Value
Property V Yes Husband 400,000 Proceeds of sale of Property B Yes Joint 164,117 Rest Superannuation Yes Wife 558.00 Property D property Yes Husband In dispute Property C property Yes Husband In dispute Hyundai Elantra Yes In dispute In dispute Furniture and home effects Property V Yes Joint In dispute Furniture and home effects Greek properties Yes Husband/Joint In dispute Tools of trade Yes Husband In dispute Proceeds of sale of Athens flat No Husband In dispute Proceeds of sale of [D] Van No Husband In dispute
Potentially, the liabilities consist of the following:
Description
Whether an agreed inclusion
Ownership
Value
Mortgage Property V Yes Husband 109,264.00 Debt to Ms M No Wife 4,000 .00 Debt to Ms N No Wife 6,000.00 Debt to Mr K No Wife 2,000.00 Fine owing to Greek Government No Husband 14,500.00 Debt to Greek Government as a result of overpayment in 2003 when the land in Athens was compulsorily acquired No Husband 58,257.00
The value of Property V was agreed.
The amount outstanding on the mortgage was agreed but the wife raised an issue about two transactions.
The wife claimed that in April 2005 the husband borrowed $20,000.00 against the property without informing her and used the money to travel to Greece. The wife’s claim was based on a bank document referring to the $20,000.00 which the wife attached to her affidavit[11] and speculation by the wife about how the funds allegedly obtained were used.
[11] Wife’s affidavit exhibit
The husband said that he did not borrow $20,000.00, rather he established an overdraft facility in this amount for the [D] business. The bank document was consistent with the husband’s evidence.
The wife did not produce a bank statement showing that the loan was increased by $20,000.00 in April 2005. She could have obtained bank statements for the relevant period by issuing a subpoena. I accept the husband’s evidence that he did not borrow $20,000.00, but established an overdraft facility for $20,000.00.
The wife next claimed as follows:
“Prior to the husband’s departure for Greece [the husband] borrowed $50,000 against the property at Property V. He took this money and used it for his sole use and benefit, to travel to Greece with.”[12]
[12] Wife’s affidavit paragraph 40
When questioned by her counsel pursuant to leave about the foundation for this evidence the wife said that she had seen the figure of $50,000.00 on a bank statement and that when she asked the husband about it he said that it was none of her business.
The bank statement for the relevant period was produced. It showed that on 20 April 2007 the bank advanced $49,505.00 to the husband and on the same day $24,992.67 was redeposited. The mortgage over Property V increased from $79,904.89 to $104,417.22, or by $24,512.33.
The husband was asked about this loan and insisted that “he did not get no one dollar in his hand.” The husband said that he borrowed the money to finish paying for building work carried out at the Property V property.
It was not in dispute that building work was carried out on the Property V property. The fact that part of the $50,000.00 was returned to the bank suggests that the money was borrowed for a specific purpose.
I accept the husband’s evidence that the advance obtained on 20 April 2007 was used for legitimate purposes connected with building work carried out on the Property V property.
Property B was sold prior to the completion of the hearing pursuant to consent orders made on 6 February 2009. During closing addresses I was informed that after payment of the mortgage and the costs and expenses of sale and after making an allowance for a debt to the Power and Water Authority about which the parties continued to squabble until the commencement of closing addresses, $164,117.02 was available from the sale of this property. It is reasonable to assume that this amount is invested and is earning interest.
Property B was an investment property which was purchased for $96,000.00 and sold for in excess of $200,000.00. Neither counsel called any evidence about or alluded in any way to the issue of the capital gains tax which might be payable on the Property B property, or how it might affect the financial position of the wife and husband respectively.
The wife has an interest in REST, a superannuation fund. She claimed that her superannuation was worth $558.00. No evidence was produced in support of this claim.
In the wife’s financial statement filed on 8 January 2008 she also said that she had $558.00 of superannuation. Given that the wife was employed at [B] for the ensuing twelve months it is difficult to accept that she did not accrue further superannuation after 8 January 2008. However the husband did not challenge the wife on this issue and the figure of $558.00 is the only figure I have. I intend to include the wife’s interest in REST in the pool at $558.00. Given the miniscule amount of superannuation it is not appropriate to place the superannuation in a separate pool.
The parties disagreed about the value of Property D and Property C.
In the early stages of the property proceedings the wife repeatedly said that she wanted the properties valued. The husband produced appraisals but would not agree to a joint valuation, and the wife claimed that she did not have sufficient funds to pay for a valuation on her own.
In January 2009 the wife applied for an order that the Property B property be sold and that she be permitted to use some of the sale proceeds to pay for a valuation. The husband consented to the sale of Property B property but would not consent to an order that some of the proceeds be used to pay for a valuation. In the end, although her application was entirely reasonable, the wife abandoned it and decided to apply to a contingency fund to obtain the money for a valuation.
A good deal of squabbling then took place over whether the husband needed to sign a Power of Attorney in favour of the wife’s solicitors in Greece before a valuation could be done. The wife’s counsel claimed that this was necessary so that the valuer could obtain essential documents. The husband was implacably opposed to signing a Power of Attorney, saying that it could be used to deal with the properties.
The wife’s counsel never satisfactorily explained why it was necessary for the husband to sign a Power of Attorney before a valuation could be done, but in any event eventually the issue was dropped. On 15 May 2009 the wife filed an affidavit by Mr N in which he gave his opinion of the value of the properties.
Mr N described himself as a “Real Estate Agent of Civil Contracts of the Estate Agents Association of Athens.”
The husband’s counsel objected to Mr N’s evidence being received, on the basis that he was not a licensed valuer and was not qualified to give expert evidence about the value of the properties.
Mr N is a real estate agent, but it was his evidence that there were no specialised valuers in Greece. The husband challenged this to an extent in cross-examination but Mr N did not change his evidence. I ruled that Mr N should be permitted to give evidence.
Mr N visited the two properties in Greece and he was knowledgeable about their general appearance and location. He did not go inside the properties because they were locked. Given the husband’s lack of
co-operation throughout the proceedings on the issue of the valuations it is not surprising that he was not approached about giving access to the properties.
Mr N was cross-examined at some length and he proved to be a responsive and knowledgeable witness.
Mr N clearly demonstrated that he had taken into account that the building on Property C was illegal. He said that houses built in this way do sometimes eventually get permits and he said that “fifty to one hundred thousand houses” in Greece were built like this. He said that the house would be worth twice as much if it had a permit.
Mr N confirmed that the structure on Property D was very old. He said that the main value of Property D was in the land, but said that the house was able to be rented and to deliver an income stream and that he took this into account in valuing the property. He was aware of the location of a rubbish dump within a few kilometres of the Property D property.
Mr N gave evidence of investigating other sales in the areas where the two properties were located, although it is true that he did not list the comparable sales in his report.
Mr N’s evidence was that Property D was worth 125,000 euros plus or minus a margin of 10% and Property C 190,000 euros plus or minus a margin of 10%.
On 14 May 2009, the day Mr N swore his affidavit, 1 Euro equalled 1.8115 Australian Dollars. Using this exchange rate the value of the two properties was $226,437.00 and $344,185.00 respectively on
14 May 2009.
In closing submissions the husband’s counsel argued that, in preference to Mr N’s evidence, I should accept as the estimates in the husband’s financial statement that Property D was worth $100,000.00 and Property C $150,000.00, which the husband’s counsel argued were admissions against interest.
The husband’s estimates can be characterised as admissions against interest if the matter is viewed from the standpoint that the husband did not have to admit that the properties had any value at all. However the estimates were also self serving. The husband had a vested interest in properties he wished to obtain being included in the pool at the lowest possible value.
The husband failed to provide any admissible evidence of value. He would not agree to a joint valuation or to the sensible proposal that the Property B sale proceeds be used to fund a valuation. The two Greek properties comprise a very substantial part of the asset pool. Had the wife not obtained a valuation then in my view the only option open to me would have been to order the sale of the properties. However the wife did obtain a valuation. Mr N was a witness of credit and I accept his evidence about the value of the Greek properties.
I have therefore included the properties in the pool at $226,437.00 and $344,185.00 respectively. There is some artificiality about these figures however, as the exchange rate changes constantly and a small change in the exchange rate makes a big difference to the values. On 21 August 2009, 1 Euro equalled 1.71421 Australian Dollars. The value of the two properties on that exchange rate is $214,276.00 and $325,699.00 respectively, a difference of $30,647.00.
The Hyundai Elantra is in Greece. It was purchased in 2003 for 13,450 euros (which I was informed was about $25,500.00 AUD on the exchange rate at the time). The husband has been using the vehicle in Greece. Each party claimed that the Elantra was registered in their name.[13] No documents were produced to resolve this issue.
[13] Husband’s affidavit paragraph 20, wife’s affidavit filed 10 February 2009 paragraph 8(j)
Neither party provided any admissible evidence of the value of the vehicle. The wife attempted to rely on information obtained from the Red Book internet site. This site gives suggested trade and wholesale prices for vehicles in Australia. Leaving aside any other difficulties with this evidence, it simply cannot be assumed that the price which the vehicle would fetch in Australia is the same as the price the vehicle would fetch in Greece.
I cannot determine the value of the Elantra due to the failure of the parties to provide admissible evidence of its value.
There is furniture in the house in Property V, and furniture in one or both of the properties in Greece. The wife placed a high value on the furniture in Greece and a low value on the furniture in Property V. Neither party made any attempt to obtain a valuation either of the furniture under their immediate control or the furniture under the other parties’ immediate control.
I cannot determine the value of any of the furniture due to the failure by the parties to provide admissible evidence of value.
At separation the tools and equipment associated with [D], including [omitted] remained at the Property V property. Some of the more valuable equipment such as the [omitted] is now gone and is apparently in the possession of a third party. The wife alleged that the third party had taken the items while she was absent from the home and upon being challenged by one of the daughters claimed to have a right to the items.
The wife was not a witness of credit and her evidence about this matter was particularly unconvincing. I consider it more likely than not that the wife sold or bartered these items. However there was no admissible evidence about the value of the missing items and I am unable therefore to consider adding back their value to the pool.
Some [omitted] and some smaller items previously used in connection with [D] remain at the Property V property. On 6 February 2009 I made an order to facilitate the husband collecting these items. Even with the assistance of their solicitors, the parties were unable to carry this order into effect. No admissible evidence of the value of the items, which still remain at the Property V property, was provided.
At separation the husband sold the van belonging to [D]. He said that he received $1,500.00. The wife said that a false receipt was created and that she had been told that the husband received $4,000.00. The wife claimed that this amount should be added back to the pool.
I do not accept the wife’s evidence that the van was sold for $4,000.00. The wife was not a witness of credit and had no direct knowledge of the sale price. The issue therefore is whether the amount of $1,500.00 should be added back to the pool.
In AJO v GRO[14] the Full Court identified three categories of cases where it was appropriate to notionally add back to the pool assets which were said by the Full Court to "no longer exist". Those three categories were:
a)monies spent on legal fees;
b)monies disbursed by way of premature distribution of matrimonial assets; and
c)monies lost by one party either during or after the marriage as a result of a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or as a result of reckless negligent or wanton behaviours which had the effect of reducing or minimising the value of assets.
[14] AJO v GRO (2005) FLC 93-218
The argument by the wife’s counsel was that by retaining the van and then selling it and using the proceeds for his own purposes the husband had effected a premature distribution to himself of matrimonial assets.
Assets are not always added back to the pool however simply because they existed at separation and one party retained them to the exclusion of the other and then disposed of them. The decided cases have repeatedly stressed that parties are entitled to get on with their lives after separation.
The money from the sale of the van was a small sum when the overall asset pool is considered, and there was no evidence that it still existed. The husband paid many expenses and debts post-separation, including the balance of a debt owing to Mr S for the purchase of [G]. The husband had to get on with his life and re-establish himself away from the former matrimonial home. I am not persuaded that justice and equity requires that I add the amount of $1,500.00 back to the pool as a notional asset.
The wife next argued that the amount the husband received from the sale of the Athens flat should be added back to the pool.
I am satisfied on the balance of probabilities that the husband spent this money to a large extent on Property C, and Property C remains in the pool. In my view it is therefore not appropriate to add back the amount obtained from the sale of the flat to the pool.
Turning to the liabilities, the wife claimed that she owed a number of small post-separation debts and that these should be taken into account as relevant liabilities.
The wife claimed that she owed $2000 to Mr K her “boss at work” who she said had lent her money for living expenses and for payment of Property B and Property V mortgages. She also claimed that she owed money to her daughters Ms M and Ms N.
I do not accept that any of these amounts should be taken into account as relevant liabilities. The wife provided no detail about these alleged debts other than bare assertions. No evidence was given to establish that the money did in fact need to be repaid and if so when. Most of the money was allegedly borrowed for living expenses, and to include it as a liability would effectively be to require the husband to retrospectively pay spousal maintenance for the wife.
The husband sought to have two post-separation debts taken into account as relevant liabilities. He claimed firstly that he had been sentenced to five months jail because he had built illegally on the Property C land. It was his case that he could avoid going to jail by paying a fine, and he said that the potential fine was a relevant liability.
It is uncertain on the documents produced whether the husband will ever have to pay anything and if so whether it will be $14,500.00 as he claimed or some lesser amount. His evidence was that his lawyer had applied to have the penalty reduced. I am not satisfied that this alleged debt should be included as a liability.
Secondly, the husband gave evidence that the government had appealed against the decision made in 2002 that he should receive 230,000 euros for his eight block of land in Athens. His evidence was that on 17 March 2009 the Athens Court of Appeal handed down a decision in which they fixed the value of the properties at 198,178.16 euros and ordered that the husband repay 32,159.81 euros to the government.
I accept the husband’s evidence that the court order was served on his solicitor in Greece on 3 April 2009, so that he was not able to put evidence of this matter before the court at an earlier date.
The wife was placed in a difficult position by the late production of this evidence. However she did not seek an adjournment in order to investigate the matter or place evidence before the court about the availability of and prospects of a further appeal.
The husband was adamant that he could not appeal as this was already an appeal decision.
The wife argued in the alternative that the husband alone should be responsible for this debt, because he alone had received and disposed of the acquisition money.
For reasons given earlier I am not satisfied that the husband did in fact receive all of the acquisition money. I am satisfied that this debt is owed and should be taken into account as a relevant liability.
For the sake of consistency I have used the same exchange rate as that used for the Property D and Property C properties in converting this amount owed into Australian dollars and as a result will include it in the pool at $58,257.00.
I am satisfied that the assets are as follows:
Description
Ownership
Value
Property V Husband 400,000 Proceeds of sale of Property B Joint 164,117 Rest Superannuation Wife 558 Property D Husband 226,437 Property C Husband 344,185 Hyundai Elantra In dispute Cannot be determined due to lack of evidence Furniture and home effects Property V Joint Cannot be determined due to lack of evidence Furniture and home effects Greek properties Husband/Joint Cannot be determined due to lack of evidence Remaining assets of [D], situated at Property V Husband Cannot be determined due to lack of evidence Total 1,135,297
The liabilities are as follows:
Description
Ownership
Value
Mortgage Property V Husband 109,264 Debt due to Greek Government Husband 58,257 Total 167,521
The pool available for division is thus net $967,776.00
Contributions
At the commencement of cohabitation neither party had any significant assets.
The husband was the primary income earner for the first ten years of the marriage, while the family lived in Sydney.
After the parties moved to Darwin, the husband was in employment for most of the time, although there was a period when he was in receipt of a disability pension. During this period the parties ran into some financial difficulties.
The wife did some work as a [omitted] while the parties lived in Sydney but made a minimal financial contribution during this period. After the parties moved to Darwin the wife was regularly employed doing [work omitted]. She worked in [G] between 1998 and 2002.
The wife claimed that she did most of the cooking, cleaning, shopping and washing during the relationship. I accept this evidence. The husband to his credit commented that “Ms Kutras was a good wife and mother in many ways.”[15] I also accept however that the husband did some cooking and that he did the gardening and maintenance work on the properties the parties lived in from time to time.
[15] Husband’s affidavit paragraph 8
The husband was instrumental in carrying out improvements on properties owned by the parties. For example he did some of the physical work on and otherwise organised the building of a verandah and shed and office at Property V.
During cross-examination evidence emerged about the husband carrying out physical work on the Greek properties from time to time, although there was no evidence about this in his affidavit. The wife said that she had assisted also but it is likely that the wife’s assistance was minimal, if for no other reason that that she lacked the husband’s trade skills.
In most respects the parties made equal but different contributions during the thirty two year relationship. For at least a decade the wife was the primary homemaker and parent while the husband was the primary financial provider. After the children were older the wife also joined the workforce. Both parties worked in and around the home in accordance with their aptitudes and interests and in accordance with the lines on which they conducted their marriage.
The wife’s counsel submitted that contributions should be assessed as having been 55% by the wife and 45% by the husband. This submission appeared to be based on a claim that the husband’s conduct during the marriage had made it more onerous for the wife to carry out her duties as homemaker and parent, that the parties made a loss on the sale of [G] as a result of the husband’s conduct, and that the husband had taken the entire proceeds of sale of [G].
There was no evidence that the wife’s capacity to carry out her duties as homemaker and parent were made more onerous by the husband’s conduct and lack of that evidence led to the passages in the wife’s affidavit about the husband’s conduct being struck out. There was no evidence that the husband’s conduct caused a loss upon the sale of [G] and I am not satisfied that the husband retained the proceeds of sale of [G].
I am not satisfied that the wife is entitled to any adjustment in her favour in respect of contributions during the marriage.
The husband argued that three matters should result in the court assessing his contributions during the marriage as having exceeded the wife’s.
Firstly the husband argued that he should be given credit for vigorously pursuing the acquisition of real property during the marriage. He said that the wife was frightened of borrowing money, did not support his desire to acquire real estate and reneged on her promise to contribute financially to repayments for the Property B property.
The wife’s case was that she was not reluctant to be involved in the purchase real property, rather the husband excluded her from involvement.
I found the husband’s evidence on this issue more convincing. He gave particularly credible evidence about the circumstances surrounding the purchase of real properties in Darwin with his daughters. I am satisfied that the husband was the driving force in the acquisition of real properties. I do not accept however that in the context of a thirty two year marriage where each party made different but important contributions, the husband should be assessed as having made a greater contribution because it was his drive and ambition which resulted in the real properties being acquired.
Secondly the husband argued that whereas he unstintingly contributed his income to the support of the family during the marriage the wife often spent her weekly wages on gambling and also gambled away two large sums of money.
For reasons given earlier I am not satisfied that the wife gambled away any large sums of money. However I am satisfied that on occasions the wife spent her wages on gambling rather than on the support of the family.
The wife’s evidence was that the husband paid the bills and she paid for the groceries and it follows that if the wife gambled away her wages hardship would have been caused for the family. Ms K’s evidence about the children ‘starving’ because money had been spent on gambling was compelling. She admitted that her mother had gambled extensively during the marriage. I am satisfied that the wife’s gambling placed a burden on the family on occasions.
Thirdly, the husband said when he was in Greece just prior to his father’s death in 1993 his father gave him the equivalent of $15,000.00 which he used toward the purchase of Property D [16].
[16] Husband’s affidavit paragraph 15
In cross-examination it was put to the husband that his family were poor and that his father would not have been able to make such a gift. The husband was not shaken about this evidence in cross-examination. I accept his evidence that he received this money from his father and used it to assist in the purchase of Property D.
I am satisfied that the husband’s contributions during the marriage exceeded those of the wife as a result of the issues of gambling and the family gift.
Post separation contributions
The husband said that at separation the wife agreed to make the mortgage payments on Property V property. In her affidavit the wife said that she did meet “all the mortgage payments and outgoings.” [17]
[17] Wife’s affidavit filed 12 February 2009 paragraph 27
During cross-examination however the wife admitted that she had not made a mortgage payment until April 2008. The payment book confirmed that after making one payment on 2 April 2008, the wife made no further payments until 6 June 2008. The payments the wife did make were the equivalent of $100.00 per week and later $125.00 per week, well below the required repayment of $233.00 per week.[18]
[18] Exhibit D
The mortgage repayments were $9,349.00 in advance at separation. This has been used up and whereas the mortgage debt was $104,417.22 at separation it is now $109,624.00.
The husband said that he left $5,000.00 with his daughter Ms O when he went to Greece which “could be used to meet mortgage payments.” He did not give any evidence about where this money came from.
The husband also said that he sent two sums of money to Ms O while he was in Greece to help with the mortgage. To corroborate this claim the husband annexed to his affidavit two very bad photocopies in Greek, and I cannot determine from those documents how much money he sent.
The money the husband left with Ms O in April 2007 was acquired prior to separation. While he was in Greece the husband was in receipt of rental from Property D, and he sold the Athens flat. I cannot exclude the possibility that one or both of these were the sources of the money sent to Ms O. Although the husband is entitled to some credit for taking steps to meet his financial obligations after separation, there was no evidence that he used post separation income to meet those obligations.
At the date of the hearing some of the Property V council rates were unpaid. The husband paid $600.00 to the Council and entered into an agreement to pay the balance of $727.91 then outstanding. The wife also said that she had made arrangements to pay the outstanding rates.
The wife said that after separation she paid $1,500.00 for new cupboard doors in the kitchen and $3,500.00 for laying tiles (which had been purchased prior to separation). She claimed that she did some internal painting using paints from the shed. No documents or details were provided and there was no evidence that this work increased the value of the home.
After separation the management of the Property B property fell to the wife. The wife did not successfully manage the property. The mortgage fell into arrears and the rates were not paid. There were periods when the property was not tenanted.
It was put to the wife that she had collected the rent from the tenants of the Property B property in cash and only deposited some of it into the bank. It was put to her that she had used some of the rent for gambling. The wife denied this and said that she had tried her best but simply had bad luck with tenants.
The wife was not a witness of credit but it is possible that her story about the difficulty with tenants is true. I am not able to make a finding one way or the other on the state of the evidence that the wife neglected the Property B property and pocketed some of the rental.
After separation the husband paid a debt of $3,480.00 which was owed by the parties to Mr S dating back to the time the parties purchased [G]. He did not give any evidence about the source of the funds.
I am satisfied that the husband made efforts to meet his financial obligations post-separation and it is to his credit that he continued to contribute to payments and outgoings for the Property V property even though he was not living there. Balanced against this however must be that some or all of the money the husband used to meet those obligations was money acquired during the relationship or rental from or proceeds of sale of assets acquired during the relationship.
The wife failed to make any payments on the home for the first twelve months and then made payments below the required rate. As a result the mortgage debt increased. I am not persuaded that the work the wife did at the house makes up for the wife’s failure to regularly pay the mortgage. There was no evidence that the work delivered a financial gain to the parties, whereas the failure to pay the mortgage resulted in a financial loss. In my view the husband’s post separation contributions slightly exceeded the wife’s.
Conclusion about contributions
The husband’s counsel submitted that contributions should be assessed as 70/30 in the husband’s favour.
I am satisfied that the husband’s father did make a gift to the husband which was used in the purchase of Property D. The husband’s counsel argued that the gift was about half the value of Property D at the time it was purchased and that therefore the value of the gift should be assessed as if it were equivalent to half of the current value of Property D.
I do not accept that this submission. I consider that it is appropriate to view the gift as an amount of about $15,000.00 which came in about half way through the marriage and which must be considered in proportion to an asset pool of net $967,776.00.
I am satisfied that the wife had a gambling problem during the marriage and that this did on occasions cause hardship for the family. The wife did not gamble throughout the thirty two year marriage however and I am not satisfied that she gambled away large sums of money. I find that her gambling affected her ability to contribute financially on a day to day basis during some parts of the marriage.
It is impossible to assess how much was lost to the family in dollar terms as a result of the wife’s gambling. I take into account however that the wife was less than frank about her gambling and minimised its effects on the family, and that it is partially the result of the wife’s lack of frankness that I am unable to precisely assess the financial and non-financial impact on the family of the wife’s gambling.
I am satisfied that the husband made a greater contribution than the wife post-separation. The mortgage on Property V increased by $5,000.00 between separation and the date of the hearing which would not have happened had the wife, who was in sole occupation of the home, regularly made the modest repayments required.
I do not consider that any of the above matters should result in a 30% adjustment in favour of the husband. The asset pool is $967,776.00. The parties were married for thirty two years. They acquired a reasonable amount of property and brought up five daughters. The wife’s lack of frankness about her gambling makes an assessment of contributions difficult, but taking into account the wife’s gambling of her wages, her inadequate contribution after separation which led to the mortgage increasing by $5000.00 and the gift from the husband’s father, I consider that there should be an adjustment of 2.5% in the husband’s favour.
On the basis of contributions therefore the wife is entitled to 47.5% or $459,693.60 and the husband is entitled to 52.5% or $508,082.40.
Section 75(2) factors
I am next required to consider the matters in Section 79(4)(d) – (g) of the Family Law Act as far as they are relevant.
There are no child support considerations and there are no other orders affecting the parties which I need to take into account. An order that the wife retain the Property V property may mean that the husband has to rent business premises if he remains in Darwin and wants to operate a business. However the husband will still be capable of earning an income.
As to the matters referred to in s.75(2), the wife is 54. She is employed as a casual [in the hospitality industry]. The wife said that her current income was $480.00 per week gross.
The wife provided copies of her income tax returns for the financial years ended 2005, 2006 and 2007. Her taxable income for those years was $21,210.00, $16,993.00 and $14,033.00. It was the wife’s case that this demonstrated that she had a very modest income earning capacity.
Given my findings about the wife’s credit and given the propensity of these parties to deal in cash, I am not satisfied that the taxable income shown in the wife’s income tax returns is necessarily a true indication of the wife’s income earning capacity.
In any event, between October 2007 and 15 January 2009, the wife worked at [B].[19] In her financial statement filed on 8 January 2008 the wife said that she was earning an average of $944.00 gross per week in this employment.
[19] Wife’s affidavit filed 12 February 2008 paragraph 30(b)
The wife’s evidence was that she left her job at [B] because of her health. She said inter alia that she found herself unable to continue in a job which required her to [omitted].
In her affidavit, the wife claimed that she was suffering from a variety of health problems, including diabetes, Hepatitis A Serology, c6-7 disc lesion and major depression.
The wife annexed to her affidavit a letter from her treating GP, Dr G which listed four current medications prescribed for the wife, and four conditions for which the wife had been treated in the past. The wife did not however provide a medical report from Dr G or any other doctor containing evidence about the conditions from which the wife was currently suffering and the effect those conditions had on her capacity to work as a chef or in any other employment.
Interestingly, the wife claimed in her affidavit that “major depression” affected her ability to work. However the summary provided by Dr G lists “major depression” as a condition for which the wife was being treated in July 2007. The wife subsequently obtained the job at [B] and held it for 15 months, until just prior to the hearing.
I am not satisfied that the wife adequately explained why she had left her well paid employment at [B] a month prior to the commencement of the hearing, or why she was able to work as a [omitted] but not as a [omitted].
I accept that the wife has limited education, that she is an indifferent English speaker and that she lacks qualifications. However the wife is only 54 years of age. She has a long history of employment and has worked as [occupations omitted]. She was earning an average of $944.00 per week gross until a month prior to the hearing. She provided no medical evidence to support her claim that ill health forced her to resign from her job at [B].
The wife was not a witness of credit. I find that the wife has an earning capacity of $944.00 per week or $49,088.00 per annum.
The husband is 58. Prior to separation in April 2007 he was working as a self-employed [tradesman].
In his 27 May 2008 financial statement which was sworn in Greece the husband described himself as a [tradesman] and stated that his total average salary or wages before tax was $846.00 per week or $43,992.00 per annum. He provided no other information about the nature and extent of his employment in Greece between April 2007 and January 2009. He did not file an updated financial statement.
There was very little information available about the husband’s past income. The wife attached to her affidavit a 2007 tax return for the [D] business which showed that the business made a loss. The husband was not in Australia for part of this financial year. The only other indication of the profitability of the business was that in 2006 $16,933.00 was distributed to the wife from the partnership. It is not unreasonable to assume therefore that the total declared net profit for the partnership that year was $33,866.00 and that this was generated from the husband’s efforts.
I am not convinced that this is however a true indication of the husband’s income earning capacity for the same reasons that apply to the wife, namely my reservations about credit and the parties’ propensity to deal in cash.
In his affidavit the husband said that he intended remaining in Darwin after the hearing and re-establishing himself doing house painting and repair work. He did not provide any information about the income which he expected to earn. I am not convinced that the husband will remain in Darwin, given the extent to which he has lived (and worked) in Greece in the past and given his attachment to the Property C property.
The wife sought a 5% adjustment in her favour for s.75 (2) factors mainly on the basis of the husband’s alleged superior income earning capacity. There is simply no evidence on which I could find that the husband has a superior income earning capacity to the wife.
I am satisfied that the wife is able to earn an income sufficient to support herself (provided that she does not gamble excessively). If she receives 47.5% of the pool of property she ought to be reasonably assured of an unencumbered home as part of the property settlement.
The husband is four years older than the wife. There was no evidence that his earning capacity exceeded the wife’s. He also is reasonably assured of retaining an unencumbered residential property as a result of these proceedings.
Absent anything which may arise from a consideration of s.75 (2) (o), I am not persuaded that it is appropriate to make an adjustment in favour of either party for s.75 (2) factors.
Section 75(2)(o) provides that the court must 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.
Under this heading the court frequently considers whether either party has committed waste.
The wife complained that the husband had made fifteen trips to Greece during the marriage. Clearly there was an expense associated with these trips, but the wife did not object to the trips during the marriage and accompanied the husband several times. Had it not been for the husband’s regular trips to Greece the two Greek properties which make up half the pool of assets might not exist or might not have been improved and developed.
I am not satisfied that there should be any adjustment in the wife’s favour because the husband spent money on frequent visits to Greece.
The husband alleged that the wife had gambled away two large sums of money, namely the money from the sale of [G] and almost half of the acquisition money. The husband’s evidence that large sums were gambled was entirely speculative. In any event for reasons given earlier while I cannot discount the fact that the wife received this money, I am unable to be positively satisfied that she did.
The husband complained about the wife disposing of equipment owned by the painting business. I strongly suspect that the wife did do so. However the husband made no effort to establish the value of the lost equipment and given the size of the asset pool I am not persuaded that this action by the wife should result in any adjustment in the husband’s favour.
I am of the view that there should be no adjustment for s.75(2) factors in favour of either party. As a result the husband remains entitled to $508,082.40 and the wife to $459,693.60.
How are the assets to be divided?
Each party wanted to retain Property V and each party wanted to retain Property D. I therefore need to first consider which party should be given the option to retain each property.
The husband was instrumental in the purchase of Property V and he was instrumental in improvements being carried out on the property. The shed and office on the property would be very useful to him in the running of his business as a [tradesman] if he remained in Darwin. He was most upset at being forced to leave Property V at the time of separation.
However although the husband said that he intended to remain in Australia, he has strong ties with Greece. He lived there for much of the last two years and is particularly attached to the Property C property. I am not convinced that the husband will remain in Darwin.
Property V has been the wife’s home since separation two years ago. She does not want to move out of the home and be put to the trouble of finding another home. The wife is much more likely that the husband to remain predominantly in Australia.
In my view if the wife wishes to retain Property V she should be given the option to do so.
The wife said that the Property D property was almost next door to where her mother and other family members lived. She did not otherwise explain why she wanted to retain Property D or express any intention to perhaps live there in the future. The wife has visited Greece far less frequently than the husband during the past thirty four years. There was nothing to suggest that the wife had any particular emotional attachment to the Property D property.
The husband chose the Property D property originally and used money given to him by his father to assist him to acquire it. He was instrumental in doing work on the property over the years and in managing it for more than twenty years. The husband has lived in Greece for much of the last two years and is much more likely than the wife to settle permanently in Greece. In my view if the husband wishes to retain Property D he should be given the option to do so.
It is questionable in any event whether it would be practicable for the wife to retain Property D as well as Property V given my findings about her entitlements overall. If she received both properties, she would not only receive none of the cash from the sale of Property B but would need to pay money to the husband. She would also need to refinance the mortgage of $109,264.00, and pay her legal fees.
Neither party provided comprehensive information about their paid and estimated unpaid legal fees but in her financial statement filed in January 2009 the wife said that she owed $17,116.00 in legal fees. The wife said in oral evidence that she had not made any inquiries about her borrowing capacity.
The wife’s entitlement to a property settlement can be met from the assets in Australia and in my view the preferable outcome, and one least likely to lead to enforcement difficulties, is for the wife to receive her entitlement in that fashion.
If the wife receives Property V and the Property B proceeds, and retains her superannuation, she will have assets to the value of $455,411.00. This is $4,282.60 short of the wife’s entitlement but if she also receives the interest earned on the Property B sale proceeds this amount will be partially made up. I do not know how much the interest will be, but given the likely small shortfall after the wife receives the interest and the fact that the husband has no readily identifiable funds to pay an amount to the wife, I do not intend to order that the husband make a payment to the wife.
The husband will receive Property D and Property C, but will be required to find the money to pay the debt to the Greek government of about $57,000.00.
There are of course other assets namely the Elantra, the furniture in Greece and at Property V and items previously belonging to [D] situated at Property V. The practical solution given the location of these assets is for the wife to retain the furniture at Property V and for the husband to retain the Elantra and the furniture in Greece. As the parties have found it impossible to arrange for any [omitted] and equipment at Property V to be collected by the husband I intend to order those items now become the property of the wife, who is in possession of them.
Whether the proposed orders are just and equitable
If the wife receives Property V and the Property B proceeds, she should have sufficient to pay out the Property V mortgage. She will have a home, and she has the capacity to earn an income sufficient for her support. She may have to deal with a tax bill as a result of her legal entitlement to half of the Property B proceeds upon sale of the property, but I was given no information about how much that might be. If she is required to borrow a small sum this should not be beyond her reach or cause her to lose her home.
The wife will also retain the furniture at Property V.
If the husband retains Property D and Property C, he will receive no cash. He will have to find from somewhere the money to pay the debt owing to the Greek government, and he also may find himself with a capital gains tax bill as a result of the sale of Property B.
The husband will also retain the Elantra and the furniture in Greece.
The wife may feel aggrieved about this outcome. It will see the husband receiving an income earning property as well as home. He will retain the Elantra and will be relieved of the liability to pay her a very small sum. However there may well be enforcement difficulties if I make an order that the Elantra be sold and the proceeds divided or if I order the husband to pay money to the wife, and this would result in the proceedings between the parties dragging on instead of being finalised. There is also a potential injustice to the husband inherent in an outcome whereby he receives properties the value of which has been calculated on the exchange rate of the Euro and the Australian dollar at a particular point of time. I am satisfied that in all the circumstances the orders I propose to make result in a just and equitable property division.
The husband will also no doubt feel aggrieved about the outcome. In his eyes he worked and planned for more than thirty years to acquire and develop a portfolio of real properties, without any assistance from the wife and sometimes in the face of opposition by the wife. In his eyes it will seem grossly unfair that wife should receive almost the same share as himself of the assets the parties now own, when he considers that she was not only a drag on his efforts to acquire property but a drag on the family finances as a result of her gambling problem.
Nothing will change the husband’s view, but I cannot ignore the fact that the parties were married for thirty two years and brought up five daughters, and that the wife was the primary homemaker and parent and also worked outside the home for much of the marriage.
In closing submissions the wife’s counsel said that the wife was seeking an order that certain items in Greece which belong to the children be returned to the children. The children are all adults and if they have property in Greece which is in the husband’s possession they will need to arrange with the husband for the return of that property.
I intend to order that the wife not only discharge the Property V mortgage but discharge all the outstanding council rates and power and water rates, before the home is transferred to her.
In her 10 February 2009 affidavit the wife indicated that she sought an order for costs. I do not intend to deal with that issue at the present time. If either party wishes to make a costs application they may do so within 28 days pursuant to r.21.02(b) of the Federal Magistrates Court Rules.
For all the above reasons the orders of the court will be set out at the beginning of the judgment.
I certify that the preceding two hundred and sixty (260) paragraphs are a true copy of the reasons for judgment of Terry FM
Associate: Barbara Cameron
Date: 26 August 2009
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