Ladd and Ladd
[2009] FMCAfam 1274
•1 December 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LADD & LADD | [2009] FMCAfam 1274 |
| FAMILY LAW – Property – whether husband leaving professional practice waste – whether husband’s dealing with superannuation fund waste. |
| Family Law Act 1975 (Cth), s.75(2) |
| Hickey [2003] FLC 93-143 Pierce & Pierce (1999) FLC 92-844 Money & Money (1994) FLC 92-485 |
| Applicant: | MR LADD |
| Respondent: | MS LADD |
| File Number: | MLC 1503 of 2009 |
| Judgment of: | Phipps FM |
| Hearing date: | 23 & 24 July 2009 |
| Date of Last Submission: | 24 July 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 1 December 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Pavone |
| Solicitors for the Applicant: | Kempsons Lawyers |
| The Respondent appearing in person: |
ORDERS
That upon the wife on or before 5 February 2010 (the date) refinancing the ANZ fixed loan of $96,000, the ANZ fixed loan of $105,000, the ANZ home loan of $300,000 and the ANZ business overdraft of $100,000 (the loans) so that the husband is discharged from all liability for the loans, the husband at the wife’s expense transfer to the wife all his right title and interest in the land known as Property W, [D] New South Wales and Property T, [D] New South Wales (the properties).
If the wife does not discharge the loans in accordance with paragraph 1 by the date then the properties be sold individually and forthwith in a manner and by an agent to be agreed and if not agreed as determined by the President for the time being of the Real Estate Institute of New South Wales or his or her nominee and the proceeds be applied:
(a)First in payment of the costs and expenses of the sale;
(b)Second in payment of rates and taxes and any other adjustments on settlement;
(c)Third in payment of the loans and discharge of the mortgages over the properties;
(d)Finally the balance to the wife.
That the wife to the exclusion of the husband is entitled to sole possession and ownership of:
(a)Each of the animals in the alpaca herd and the husband forthwith do all things necessary to transfer to the wife’s name any registration of ownership or similar registration for each animal;
(b)The furniture chattels and equipment now in and on the properties and the land known as Property W;
(c)The property situate and known as Property H, [D] and its contents;
That to the exclusion of the wife the husband is entitled to sole possession and ownership of;
(a)The Ski lodge interest;
(b)The Quintrex boat;
(c)The Ford Territory motor vehicle in his possession (the husband’s vehicle).
(d)The practice contents.
The husband is solely responsible for
(a)All the remaining lease payments on the husband’s motor vehicle and the Ford territory motor vehicle formerly driven by the wife;
(b)[F] partners accounting fees;
(c)His visa card account.
The wife is solely responsible for her visa card payments.
Otherwise each party is declared to have no interest in the property now in the possession of the other party.
That within 7 days the husband through his solicitors submit minutes of orders so that the [B] Superannuation Fund is split so that the wife has a separate superannuation fund of half the fund less $87,500 that fund to consist of Property D, [D] valued at $85,000 and the balance of cash.
THAT the husband file and serve written submissions as to costs by 4.00pm on 15 December 2009.
THAT the wife file and serve written submissions as to costs by 4.00pm on 15 January 2010.
THAT the question of costs is reserved.
THAT the further hearing is adjourned to a date or dates to be fixed for making of superannuation splitting order and determination of the question of costs.
IT IS NOTED that publication of this judgment under the pseudonym Ladd & Ladd is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 1503 of 2009
| MR LADD |
Applicant
And
| MS LADD |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Ladd, who for convenience I will call the husband, and Ms Ladd, who for convenience I will call the wife, disagree on the distribution of their property following their separation.
Issues
The specific issues in this case are;
a)Should a value be placed on the husband's former [healthcare] practice?
b)Should the Property A property be treated individually?
c)Has the husband wasted the superannuation fund?
d)Should the wife retain the farming property?
The issues must be placed in the context of the four step property consideration process.[1] The steps are:
What are the assets and liabilities?
What are the parties’ contributions?
What are the parties’ future needs?
Is the order just and equitable?
[1] Hickey [2003] FLC 93-143. For superannuation C v C [2005] FLC 93-220
Background
The husband was born [in] 1954 and is now aged 55. The wife was born [in] 1961 and is now aged 48. They commenced cohabitation in March or April of 1988 and married [in] May 1988 in [D].
There are three children of the marriage, [X] born [in] 1990, aged 19, [Y] born [in] 1998 aged 12 years and [Z] born [in] 2008 aged 8 years. A fourth child [B] born [in] 1992 is deceased.
At the commencement of the marriage the husband owned a property at Property J. There was one mortgage payment left which he made soon after the marriage. The husband says the property was worth about $90,000 at the time of the marriage. The husband owned furniture and a motor vehicle. The wife owned a unit in Property G some furniture and a motor vehicle.
The wife sold the Property G property soon after the marriage for $38,000. The net proceeds of $12,000 were used towards renovating the kitchen in the Property J property.
In 1996 the parties purchased a dual occupancy commercial building at Property C for $112,000. They spent $50,000 (according to the husband) and $60,000 (according to the wife) on renovations. They financed the purchase and renovations with a mortgage from the ANZ Bank and savings. The husband occupied one half as his professional office and the other half was rented.
In 1992 the parties established a self-managed superannuation fund, [B] Investments Pty Ltd. The Property C property was transferred into the superannuation fund. The property was sold in December 2004 for about $250,000. The husband rented the part of the property that was his [healthcare] clinic under a five-year lease expiring in December 2009.
In early 1990 the parties sold the Property J property for $165,000, and purchased the former matrimonial home, Property W, [D] for $205,000 using the proceeds from the Property J property and a mortgage with the ANZ Bank.
In 2000 the parties purchased an adjacent 7 acre block at Property D, [D] for $71,000. In 2005 they transferred the property into the self managed superannuation fund valuing it at $85,000.
In 2000 the parties commenced purchasing and breeding Alpacas, an activity largely carried on by the wife. The herd now consists of 54 animals valued at $24,500.
In 2001 the Superannuation Fund purchased a commercial property in [M] in New South Wales for $97,000. The husband used it for his [healthcare] clinic. In 2005 it was sold for $115,000.
In 2005 the parties rented a property in [F] where the husband lived during the week, returning to [D] on the weekends.
In 2007 the wife's parents transferred to her a property at Property A. She says it was worth $160,000 at the time. Some renovations were done. The wife says funds totalling $21,942 were spent. The wife says the husband did not assist with the renovations. He says that he helped clear up the property and moved a large quantity of firewood.
In early 2007 the parties purchased a 75 acre block next to the existing property for $272,500. They paid the deposit of $27,250 and borrowed a further $300,000 which was used to complete the purchase and to purchase some shares, some of which went into the superannuation fund.
The parties separated in August 2008. The husband moved to Melbourne and has worked in Melbourne as a [healthcare professional] since. The wife remains living at [D] with the two younger children.
At the time of separation the oldest child was concluding his final year as a border at a private Melbourne school. The husband continued paying the fees as well as the mortgage, leaving little money. They exceeded $40,000 for the year.
Should a value be placed on the husband's former [healthcare] practice?
The husband says that because of the drought and the associated economic downturn in southern New South Wales his [healthcare] practice was no longer viable and he had no choice but to move to Melbourne and obtain alternative employment. He says that the strain of working long hours and travelling was taking a toll on him.
The wife says that the [healthcare] practice was viable and should have been sold. She produced the patient list with addresses and said that at least that should have had some value.
The husband commenced as a [healthcare professional] employed by the [D] hospital in 1990. Still employed he commenced taking private patients and eventually left the hospital to work full-time in his private practice. He obtained premises in a number of towns in the southern New South Wales area. This practice was known as the [S] Clinic. He set up practices in other towns. His affidavit says he worked in the following practices:
a)[D] from 1980;
b)[R], New South Wales, from 1990 to 2001. He worked there for two full days per week;
c)[V], from 1998 to 2000 on Wednesdays;
d)[O], from 2007 to 2008. He worked two half days per week;
e)[E], from 2005 to 2008;
f)[I], from 2006 to2007 in a hospital for half a day per week;
g)[M], from 2003 to 2006.
The husband says he worked long hours from eight in the morning to nine at night on some days.
In 2005 the husband moved to a small flat in [F] in the day during the week. He returned to [D] at weekends. He did this until 2008. Finley is central to the other towns where he had practices.
The financial figures show a decrease in the income of the business prior to the husband moving to Melbourne. The husband says this was because of the drought and the bad financial circumstances. He says he had to move to Melbourne so that he could continue paying the mortgage payments and the eldest child's school fees.
The only evidence is that of the husband. There is no contradictory evidence and no reason to disbelieve the husband. There is no expert evidence that there was a market for the type of [healthcare] business the husband was conducting. There would need to be evidence that there were potential buyers of this type of [healthcare] practice in the [S] area or of the list of patients.
There is no basis for making any adjustment against the husband because he stopped practicing [healthcare] from his previous rooms.
Should the Property A property be treated individually?
The wife received a property from her parents as a gift in 2007. She says that at that time it was worth $160,000. The value now is $260,000, after some $21,000 was spent on renovations. The husband made some contribution to the cleaning up of the property. The eldest child and some friends have been living there paying rent.
The property does not have the characteristic of a separate asset apart from the other matrimonial property. Its nature is that of a gift or inheritance from one spouse’s family. Therefore, so far as contributions are concerned it is a contribution by that spouse but it is not separate from the rest of the property.
Has the husband wasted the superannuation fund?
The superannuation fund at the time of the hearing is $839,945. It consists of:
Shares $518.021.13
Cash $236,942.47
Property D, [D] $ 85,000.00
The wife claims that the husband's trading in shares lost a significant amount of money for the superannuation fund. At one stage the fund had a value of over $1 million. She claimed that his share trading was excessive and speculative, reducing the value of the superannuation fund, and that this should be taken into account.
The wife has analysed many of the transactions. She shows a number of occasions where the husband has purchased shares on behalf of the superannuation fund and the value of the shares has decreased almost immediately. Other than the wife's assertion and the tendering of the documents showing the trading history there is no evidence that as a whole the husband's trading in shares on behalf of the superannuation fund was unwise. In particular, there is no evidence of what the value might have been if a more conservative approach had been taken to share trading on behalf of the superannuation fund.
Values of shares on the share market, as is well-known, rose strongly until late 2007 and then dropped sharply. If the husband was trading excessively in speculative stocks he may have made substantially more profit to late 2007 than if he adopted a more conservative approach. There is no evidence whether a more conservative approach to investment in the superannuation fund means it would have had a greater value now. Waste by the husband is not established.
Should the wife retain the farming property?
The wife wishes to retain the family home and farming property, and keep the lifestyle for the children.
She proposes that they husband receive the Property A property and remain responsible for much of the debt. Her proposal was not precise, but it seems that she considers the husband should remain responsible for at least $200,000 of the debt. It appears also that she wants to retain it in preference to receiving any of the superannuation.
The submission on behalf of the husband at the end of the hearing was that there should be a 5% adjustment in favour of the wife for contributions and a further 10% for needs. The proposal was that he retain his Ford Territory and remain responsible for the lease payments on both vehicles. The proposal is that he retain the ski lodge and practice contents, that he be responsible for his visa debt and that the balance of payment to him be adjusted by taking it from the wife's share of the superannuation fund. He proposes that the wife receive as part of her portion of the superannuation fund Property D, [D] and the balance in cash.
The wife’s proposal is impractical even if reflecting an appropriate financial adjustment. The loans and overdraft are all secured against the real estate. The bank would not release a portion of them so that they can be solely the responsibility of the husband.
The submission in favour of the husband's proposal is that the wife could then negotiate with the bank. The bank might be prepared to take the Property A property as additional security. This would not disadvantage the wife. She wants to keep the family home in preference to superannuation. Even if she cannot she will have more immediate assets and it is in accordance with the husband’s proposal.
One other matter calls for comment. The wife complains that the Property C property and the [M] property were transferred into the superannuation fund at the expense of the family home. This is true, and from the wife's perspective, reduction of the debt on the family home may have been preferable. Nothing can now be done about past decisions to transfer the properties into the superannuation fund, to sell those properties and purchase shares.
What are the assets and liabilities
Property and values are largely uncontentious. The property Property W was valued and an affidavit filed by the valuer Mr. Henderson. He considered that each of the three lots comprising the property had a greater combined value than the property as a whole. The wife disputed this. The valuer was not cross-examined and therefore I accept his expert evidence. The values set out below are the individual values.
The alpaca herd was valued and an affidavit by the valuer Mr. Beer, was filed. At the commencement of the hearing there was an issue of whether the whole herd had been valued. This was resolved when the wife pointed out that females with young at foot were valued together and shown on the valuation as “& MC” or “& FC”, male cria or female cria, the name for alpaca young.
Included in the list of assets is the Ford Territory driven by the husband. The parties had two Ford Territory’s, both financed by lease. The wife’s was written off in an accident. Insurance paid $28,000 but there was $35,000 outstanding on the lease. The husband continued to make the payments on both leases. At the time of hearing the husbands Ford Territory was valued at $22,000 and the amount owing on the leases was $21,000. I will exclude both the Ford Territory and the lease payments and order that the husband continue to make the lease payments. His making of the lease payments after separation I will take into account as part of his contribution.
The husband included in his list of liabilities the lease payments still to be paid on the [healthcare] practice in [D]. That is more a practice expense than a liability and I will take payments into account as part of the husband's contribution
Assets and Liabilities
Property W $400,000
Property T$285,000
Property H$260,000
Alpaca herd $24,500
Land Cruiser $6,000
Ski Lodge$25,000
Furniture and household goods $12,000
Quintrex Boat $3,000
Practice contents $3,000
Total1,018,500
Liabilities
ANZ fixed loan $96,000
ANZ fixed loan $105,000
ANZ home loan $300,000
ANZ business overdraft $100,000
Husband’s visa $25,000
Wife's visa$8,000
[F] Partners (accounting fees) $9,000
Total Liabilities $643,000
Net Assets$375,500
Superannuation
[B] Investments Pty Ltd $839,945
Comprising
Shares$518.021.13
Cash$236,942.47
Property D$85,000.00
The total value of non superannuation and superannuation assets is $1,215,445. The superannuation is nearly 70% of the assets.
What are the parties’ contributions?
At the commencement of the relationship the husband had property valued at about $90,000 and the wife property with a net value of about $12,000. After a 20 year marriage the net value of non-superannuation assets, excluding superannuation is $370,168. The superannuation is $839,945. All the superannuation accumulated during the marriage.
Of the non-superannuation assets $260,000 is the property at Property H gifted by the wife's parents, and so a contribution by the wife in 2007. The wife puts its value at that time as $160,000.
At the commencement of the marriage the wife was working [in the Administration Industry]. She took maternity leave when the first child was born but did not return to work. Since then she has performed a homemaker and child carer role and undertaken a major share of the work in rearing and caring for the alpaca herd and the farm once that project started.
The husband made the major part of the financial contribution, working long hours in his [healthcare] practice. The wife assisted in his practice, although the extent is disputed. The husbands taxation returns show the wife was payed a salary of about $27,000 in the last few years of the marriage, money the wife says she did not receive. No doubt the money was spent on the family’s living expenses. The wife says she undertook accounting and administrative tasks. The husband says she only did the banking.
Each contributed to the family throughout the marriage, the husband having the principal financial role and the wife the principal homemaker and child carer role. The husband had a slightly higher initial contribution, but that had been eroded or offset by the end of the 20 year marriage.[2] Apart from the wife's contribution through the gift of the Property H property, the party's contributions are equal.
[2] Pierce & Pierce (1999) FLC 92-844 Money & Money (1994) FLC 92-485
The non-superannuation and superannuation assets should be considered separately as to both contribution and s.75(2) considerations[3]. Nothing in this case suggests that a different approach should be taken. This means that a substantial part of the net value of the non-superannuation is the wife's contribution of the Property H property in May 2007.
[3] C v C [2005] FLC 93-220
The Property H property had a value of $160,000 when transferred to the wife. The parties used $31,000 of their funds for renovations and did some work themselves and that combined with the short passage of time has increased the value to $260,000. About two thirds of the value is the Property H property.
Post separation the wife has continued to live on the [D] property caring for the two younger children and the farm. The husband continued paying the mortgage, car lease payments and [healthcare] practice lease payments until the end of 2008 and the eldest child’s private boarding school fees. The husband’s post separation contribution is slightly greater than the wife’s.
I consider that the wife’s contribution of the Property H property adjusts the assessment in her favour by 15% and the husband’s post separation contribution adjusts the assessment 2½% in his favour. The overall assessment is 62½% to the wife and 42½% to the husband.
All the superannuation has accumulated during the marriage. The parties’ contributions to superannuation are equal.
What are the parties future needs?
The relevant s.75(2) matters are these:
The age and state of health of each of the parties
The husband was born [in] 1954. He is aged 55. The wife was born in 1961. Her age is 48. Both husband and wife are in good health.
Income property and capacity for employment
The parties have the property the subject matter of these proceedings. The husband is a qualified and experienced [healthcare professional]. He is earning in excess of $100,000 per year, and is capable of doing so for the foreseeable future
The wife has not worked since the birth of the first child. Consequently she has limited skills and ability to obtain paid employment. She has knowledge skill and enthusiasm in the breeding of alpacas and farming. She will not have the capital to continue with this activity following the orders in this case.
Care of children
The wife has the care of the two younger children under the age of 18. They are aged 12 and 9.
Commitments for support and standard of living.
Each has the usual commitments to support themselves. The wife has the care of the children.
Effect of marriage on wife's income earning ability
The wife has not worked since the birth of the first child. Prior to that she worked [in the administration industry]. Consequently she does not have current skills or a work history for the last 19 years.
Child-support
The husband pays child support commensurate with his income.
All of these factors mean the husband has a much greater income earning ability which, although he is 55, will allow him to rebuild a capital base prior to retirement. He has an obligation to pay child support. The wife has a limited income earning ability and the care of the children. Taking all factors into account I consider an adjustment of 15% in favour of the wife is appropriate for the non-superannuation property.
Since the parties cannot access the superannuation until reaching retirement age these considerations do not apply to the superannuation. No adjustment for s.75(2) matters is appropriate.
Distribution
The wife receives 77½% of the non-superannuation assets and the husband 22½%. The wife receives $291,000 and the husband $84,500. The husband retains the ski lodge, $25,000 the Quintrex boat, $3,000 and the practice contents, $3,000, a total of $31,000. He remains responsible for his visa debt, $25,000 and I consider it just and equitable that he be responsible for the [F] Partners accounting fees of $9,000. The total debts for which he remains responsible are $34,000. The debts exceed the assets he receives by $3,000 so there must be an adjustment in his favour of $87,500.
Is the order just and equitable?
Initially I considered that the wife's proposal that she retain the family home was impracticable. However, she may be able to keep the home itself, Property W, even if Property T must be sold. She may be able to do this by selling Property H. If she can do this then it would be an advantage to her to retain Property D as part of her share of the superannuation fund. If the amount to be paid to the husband is taken out of the wife’s share of the superannuation fund this may assist her to retain the family home, because she does not have to find that money to pay the husband. Consequently, I will give the wife the opportunity to refinance some or all of the real estate. The husband proposes he receive his share of the assets in superannuation, so it does not disadvantage him.
I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate: Jan Smith
Date: 30 November 2009
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