LANIGA & CARRON

[2018] FCCA 2613

FEDERAL CIRCUIT COURT OF AUSTRALIA

LANIGA & CARRON [2018] FCCA 2613

Catchwords:
FAMILY LAW – Property – Shaw v Shaw considerations – where repairs to matrimonial home not effected by Husband – where Husband had lived in home to the exclusion of wife – where value of home had diminished thereby – where splitting order made.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79(4)

Cases cited:

Dixons & Dixons (2012) 50 FAM LR 244
Money & Money (1994) FLC 92-485
Pierce & Pierce (1998) FamCA 74
Shaw & Shaw (1989) FLC 92-010
Wallis & Manning (2017) FLC 93-759

Applicant: MS LANIGA

Respondent: MR CARRON

File Number: BRC 9038 of 2016

Judgment of: Judge Egan

Hearing date: 14 June 2018

Date of Last Submission: 14 June 2018

Delivered at: Brisbane

Delivered on: 13 September 2018

REPRESENTATION

Counsel for the Applicant: Mr James

Solicitors for the Applicant: ABKJ Lawyers

Respondent: Self-Represented

IT IS ORDERED UNTIL FURTHER ORDER:

1. Based upon a total asset pool of $1,343,539 the wife is to receive the benefit of a property adjustment to the value of $688,946.

2. Each party shall provide a copy of a proposed final order (which they assert ought to be made) to the other party by 4.00pm on 14 September 2018.

3. The parties shall attempt to reach an agreed position in relation to the wording of the Final Order (reflecting the Reasons for Judgment). If no agreement is able to be reached then each of the parties is to send to each other party, and to the court, three (3) proposed orders setting out their three (3) best positions on or before 12.00pm on 17 September 2018.

4. That if by 12.00pm Monday 17 September 2018 the parties are unable to reach an agreed position in relation to the wording of the Final Order the matter shall be listed for handing down of final orders on 19 September 2018.

IT IS NOTED:

A.That it is intended that in respect of the order in paragraph 1 that no splitting order will be made in respect of the superannuation interests of either party unless there is agreement to do so.

IT IS NOTED that publication of this judgment under the pseudonym Laniga & Carron is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRC 9038 of 2016

MS LANIGA

Applicant

And

MR CARRON

Respondent

REASONS FOR JUDGMENT

1. Before me is an application for property adjustment orders filed on behalf of the applicant wife on 20 October 2016 by way of an amended initiating application.  The orders sought by the wife, as later refined in submissions made after trial, were contained in paragraphs 22 to 28 inclusive of that amended initiating application.  The husband filed a response on 30 September 2016.  The orders sought by him are contained in paragraphs 20 to 25 inclusive of that response.  The parties met in 1997 and married on 1998.

2. They separated in 2015.  There are two children of the marriage, a boy born on 2003, who is now almost 15 years of age, and a girl born on 2006, who is 12 years of age.  After separation, the parties lived for some time under the one roof.  An application for dissolution of marriage was filed on 12 March 2016 and an order decree nisi was made on 7 June 2016 for the dissolution of the marriage.  Soon after the commencement of proceedings in this Court, the Court ordered, on 1 November 2016, that, by consent, the wife was to receive the sum of $50,000.

3. The categorisation of that payment was to be determined by the trial judge.  As will become apparent later, that $50,000 amount is for the purpose of the calculation of the wife’s entitlement to be taken into account as a partial property settlement.  After November 2016, when the $50,000 payment had been received, the wife moved from the former matrimonial home situated at Property A, to a rental property at Property B.  She has continued to rent, having had the major care of the two (2) children of the marriage since that time, whilst the husband has continued to live in the former matrimonial home at Property A.

4. The husband has lived in that home rent-free and the home is unencumbered.  At the time that the parties commenced cohabitation, the wife owned a unit in Property D.  The unit was sold in about 2002 at a loss, albeit, that from the net proceeds of sale, the amount of $10,733 was realised.  That money was used for the benefit of the family by paying down a mortgage on a property, which they had purchased at Property C in the Australian Capital Territory.  It was also the subject of agreement at trial that to the extent that the wife had suffered a capital loss on the sale of that Property D unit, the loss was able to be offset against profits from the sale of shares purchased in the wife’s name.

5. The monies were also partly used to pay tax on such profits.  At the time of the commencement of the relationship, the husband owned a property at Property E in the Australian Capital Territory, as well as land at Property F.  He also had shares in an investment fund with a value of approximately $17,000.  The husband deposed that, at the time of marriage, the Property E property had a net equity of about $50,000 and that the Property F land had a net equity of approximately $9,000.  The husband’s shares in both (investment fund) and (shares), owned by him at the time of marriage, were sold in 2002 and 2006.

6. The proceeds of sale in the amount of approximately $30,000 were used for the benefit of the parties to the marriage.  The Court finds that the husband had contributed to a significantly greater extent than the wife in percentage terms to property at the date of marriage.  The weight to be given to that finding will be addressed later.  In that regard, I have had regard to the cases of Money & Money (1994) FLC 92-485 and Pierce & Pierce (1998) FAM CA 74 and cases of a like nature.  At the time of marriage, the wife was a (occupation omitted) working for the (employer omitted).

7. Her income as a (occupation omitted) was approximately $37,000 per annum.  The husband, at the time, was working for a company called (employer omitted).  He earned an income of approximately $70,000 per annum.  The wife’s position with the (employer omitted) was made redundant in about 2000.  The wife started to receive a “(employer omitted) pension”, which was in the amount of approximately $300 per fortnight.  It is accepted that the benefit of that pension was applied toward joint expenses until separation.  The wife then commenced full-time study for a (studies omitted) at the University, which was finalised in 2001.

8. She was later able to obtain work as an (occupation omitted).  Whilst studying, the wife worked, at times, (employment omitted), earning approximately $300-350 per week from such employment.  In about 2000, the wife received a payout from the (employer omitted) in relation to a redundancy and unused recreational and long service leave in the amount of approximately $30,000, which amount was used to reduce indebtedness in respect of the Property E property at which the parties were residing at the time.

9. In about 2001, the parties purchased a home at Property C at a cost of approximately $248,000.  The parties borrowed the sum of approximately $200,000 toward such purchase.  The wife’s parents contributed a small amount to assist with the upgrade of facilities at the home after its purchase.  In about 2001, the parties sold the Property E property in the Australian Capital Territory.  The net proceeds of sale were in the amount of approximately $50,000, such funds being used to pay down the Property C mortgage.

10. In 2002, the wife received compensation for an orthopaedic injury in the amount of approximately $20,000.  Again, that payment was used to reduce the mortgage indebtedness on the Property C property.  The wife also received a compensation payment in the amount of $15,400 in respect of the permanent impairment, which amount was also used to pay down the mortgage on the Property C property.  In about 2002, the wife commenced full-time work with the (employer omitted), where she earned approximately $45,000 per annum.

11. Those monies were paid toward joint household expenses as well as in respect of reduction of the Property C mortgage.  In 2002, the husband sold the shares in (investment fund), applying it to the mortgage, as referred to earlier.  In or about late 2002, the husband started working for (employer omitted) after some months off work.  In 2003, the wife stopped work to have the parties’ first child.  The wife returned to part-time work with (employer omitted) in late 2004.  The money earnt from that employment was used by the wife toward joint household expenses.

12. In 2006, the wife stopped work to have the parties’ second child.  The husband also sold the shares for approximately $21,000, those moneys being applied to the paying down of the mortgage on the Property C property.  Since 2006, the husband’s earnings, up until 2016, were as follows:

    a)2006 – $90,428

    b)2007 – $109,592

    c)2008 – $27,808

    d)2009 – Nil

    e)2010 – $10,000 (Commonwealth benefits)

    f)2011 – $54,579

    g)2012 – $12,392

    h)2013 – $9,938

    i)2014 – $8,637

    j)2015 – $6,394

    k)2016 – $7,830

13. It is clear that the husband’s income for the 2007 financial year in the amount of $109,592 is a clear reflection of the husband’s earning capacity.  That earning capacity has not been realised since the husband stopped work in 2007 to study for a (studies omitted) at University.  It is evident that the husband’s earnings have substantially decreased since that decision was made.  The wife worked part time between 2006 and 2011, when she obtained work as a (occupation omitted) at the (employer omitted).

14. The wife’s income throughout that time was applied toward joint expenses.  The husband and the wife, throughout the period of their marriage up until separation, have jointly cared for the two children of the marriage, albeit, that it is without question that the wife has been the greater provider of care in that regard.  It is noted that parenting proceedings are on foot and that, unless resolved, the question of parenting will be decided by a Court in due course.  There is no doubt that the wife contributed to the finances of the family as best she could, albeit that her capacity to earn income throughout the whole of the marriage was less than the husband’s.

15. In mid-2013, the husband received a distribution from his father’s estate in the amount of approximately $290,000.  It is conceded by the wife that those funds, in part, were mingled with income received by the wife through her employment, and otherwise, in large part, applied toward the benefit of the family.  It will also be noted that the husband received a distribution from his grandmother’s estate in the amount of approximately $80,000 on or about 12 April 2017, which, of course, was well after the date of separation.

16. The Court will deal with the question of how those inheritances shall be dealt in due course.  When looking at the question of how the contributions of each of the parties are to be assessed, I have had regard to previous decisions of the Family Court, including Shaw & Shaw (1989) FLC 92-010 at 77, 292; Dixons & Dixons (2012) 50 FAM LR 244;  and Wallis & Manning (2017) FLC 93-759. Those cases reflect the different stances which have been adopted by Courts when assessing what is a just and equitable order in circumstances where contributions between the parties have differed during the course of the marriage, and where the main care giver in respect of the children has a lesser capacity to earn income into the future.

17. It is the case that post-separation the wife continued to contribute at least half of her income toward the upkeep of the family, up until she left the former matrimonial home in about November 2016.  The husband has not effectively worked full time since 2012.  He did have an intention to commence working as a (occupation omitted) and attributes his wife’s reluctance to agree to his construction of a shed to his not being able to fulfil that desire.  However, if he had really intended to follow that field of endeavour, I would have thought it possible that between 2012 and the present time he could have arranged for the rental of another shed or other appropriate premises for him to start up such a business, but he has not done so.  

18. Exhibit 8 is a small record of the husband’s activity on a website / post page entitled, “(name omitted)” in May 2018.  The contents of that exhibit indicate a familiarity with (employment omitted) far and beyond that of most people.  In the light of the husband’s qualifications and past experience, it is not known why he hasn’t continued to work in the field which, as at 2007, enabled him to make a substantial income, but which since 2012, he has not re-associated with.

19. Exhibit 2 is a (employer omitted) payslip indicating that the wife received for the period of two weeks from 21 October 2017 to 3 November 2017, the sum of $1,287.00.  Added to that should be some salary sacrifice for superannuation payments.  The wife continues to be able to be fully employed, and is in good health.  She is in a relationship, albeit one where she is not either partly or fully supported.  It is likely that such relationship will continue and result in perhaps a full-time relationship in the future.  In any event, the wife is relatively young and in a position to re-partner.  I consider that her prospects of doing so are greater than those of the husband.

20. The husband has a debt in the amount of approximately $24,000 associated with his study for a (studies omitted).  The wife has, similarly, a number of debts.  During the course of the trial, a schedule was handed up setting out valuations of property.  Apart from the Property A former matrimonial home at the time of separation, agreement was reached in respect of every other item on the schedule.  The Property A property item was on page 1 of the schedule. The schedule was the subject of questioning from the bench as to whether the parties would agree on values for the purposes of trial, and to their credit, they did so.

21. The valuations agreed upon were as follows, wife’s bank account, $4,987; Husband’s bank account, $152,039;  Husband’s shares, $84,776;  Husband’s vehicle, $1,000; truck, $8,500;  Wife’s vehicle, $10,000; Camper trailer, $3,000; Wife’s rental bond, $1,500; Wife’s jewellery, $500;  Wife’s furniture, $7,000; Husband’s furniture, $20,000;  Wife’s Super Fund 1, $36,500;  Wife’s Super 2 superannuation, $48,000; Wife’s Super Fund 3 pension/superannuation, $123,293; Husband’s superannuation, $373,720.

22. It has been held in a large number of cases that one cannot, as a judge, adopt too technical an approach in the assessment of amounts which ought to be taken into account for the purposes of property adjustment proceedings.  Suffice to say in this case, I have excluded from consideration for the purposes of the property pool the amounts of $84,776 in respect of shares, $1,000 in respect of the husband’s vehicle, $1,000 in respect of the husband’s vehicle, $8,500 in respect of the husband’s truck, $10,000 in respect of the wife’s vehicle, $3,000 in respect of the camper trailer, $1,500 in respect of the rental bond, $500 in respect of the wife’s jewellery, $7,000 in respect of the wife’s furniture, $20,000 in respect of the husband’s furniture.  In all of the circumstances, it is considered appropriate that to the extent that each party is in possession of such property, either liquid or personalty, such parties should retain the benefit of such property.

23. Similarly, as to the indebtedness of the parties in respect of the wife’s outstanding credit card debt, at trial in the amount of $5,200, the husband’s HECS debt in the amount of approximately $24,000, and the husband’s Visa debt, in the amount of $1,400, those debts should remain part of the liability of the respective parties who are obliged to make payment in respect of same. Arguments about addbacks in respect of the wife’s alleged liabilities to Company Pty Ltd, and the wife’s car, respectively in the amounts of $10,000 and $4,500, are not accepted. Neither are the submissions by the wife that there should be an addback in the amount of $82,351 for alleged unilateral withdrawals by the husband, allegations which, on the evidence, were not established.  I will deal with the question of addbacks in respect of the wife’s outstanding legal fees in due course.

24. As to the husband’s inheritances, the sum of $78,000 - $78,750 received by him from his grandmother’s estate on about 12 April 2017 ought, in my view, not to be taken into consideration for the purpose of the assessment of any property pool.  There is no evidence that the applicant played any substantial part in the husband’s grandmother’s life.  The inheritance was received well after the date of separation, and is too remote to properly have any part of it considered as matrimonial property for the purpose of assessment.  As to the amount received by the husband in mid-2013, that amount was mixed in part, and used in large part, toward the benefit of the family.  It is about twice the amount of moneys held by the husband in his bank account agreed at the time of trial in the amount of $152,039.

25. To the extent that it was not so mingled, and is not represented by savings of the husband for that amount, namely, the difference between $152,039, and $289,351, that amount of about $140,000 should be excluded from the property pool, and not taken into account.  I have had regard to the decision of the Full Court of the Family Court in Bonnici v Bonnici (1992) FLC 92-272 when arriving at that conclusion. At paragraphs 33 and 34, it was said as follows:

    33. The consideration of the three central questions earlier referred to call in each case for the exercise of discretion by a trial judge.  That discretion is exercised not by reference to whether property might conveniently be described as “an inheritance”, or “after-acquired”.  But, rather, by reference to the nature, form and characteristics of the property in question, and the nature, form and extent of the parties’ contributions of all types across the entirety of their relationship.

    34.In respect of the last point, it is important to emphasise that the categorisation of property as “an inheritance”, or as “after-acquired” property often leads to an erroneous argument that unless contributions to that property can be established, the property should be “excluded from consideration”.  As we have said, that argument is erroneous by reason of ignoring the fundamental premise that section 79 is directed to all of the existing legal and equitable interests in the property of the parties, or either of them without exclusion of any of those interests.

26. Having regard to the above passages, it is appropriate that it is recognised that at least to about one half of the husband’s inheritance received in 2013, that it should not form part of asset pool inclusion.  As to superannuation, it was submitted on behalf of the husband that the Super Fund 3 pension should be valued at an amount greater than that which it is because it has had a value of $230,148 attributed to it by one Mr T.  Whilst having so identified the superannuation entitlement, it was noted by Mr T that the valuation was a notional calculation of “payment phase interest”, and that, as a fortnightly pension, was assessed as if converted to an annual equivalent,  such that it would have a different value to an actual payout value.  It is appropriate in cases such as the present to value the superannuation interest on the basis of the payout value, which, as agreed by the parties at the hearing, was in the amount of $123,293.

27. It is to be noted that no splitting order is sought in this matter, in respect of the Super Fund 3 pension.  It is further noted, however, that the pension has a value, and, at least if assigned, would have at least that value as agreed at the hearing.  It ought to properly be treated as property therefore.  As to the former matrimonial home situated at Property A, the husband asserts that the property should have a value of between $270,000 and $300,000 as assessed by one Mr J.  Mr J gave evidence at trial confirming that for the purposes of valuation, he did not enter the former matrimonial home because of the constraints put upon him by the husband in that regard. 

1. However, Mr J opined in his report at page 5 as follows:

   If the property was considered to be in an “average” condition its value may have been in the order of mid-$500,000 price range.

2. Indeed, on 1 December 2015, the property report of Valuers valued the property at $525,000.  The property has reduced in value over the time since separation because vital repairs have not been effected to the property.  The state of the property was so concerning to his Honour Judge Howard that he made orders restricting the attendance of the two children of the marriage at the property due to safety reasons.  In circumstances where it is obvious that a property is going to be valued for the purposes of Family Court proceedings and, further, in circumstances where it is obvious that a property needs to be repaired, then it is incumbent upon the party occupying the property to carry out those repairs.

3. As it is, the City Council has taken action to cause the property to be put into a good state of repair, and in due course that no doubt will be done.  Why the husband chose not to do what was right in all of the circumstances only he knows. 

4. Referring to the matters in section 79(4) of the Family Law Act 1975 (Cth) (“the Act”) it is commented as follows:

   a)The parties have made the financial contributions directly and indirectly which have been earlier referred to.  The mother has been the main care giver in respect of the children, but each of the mother and the father have contributed substantially toward the care of the children, and both are to be commended in that regard.  They have each, to their respective capacities, contributed to the acquisition, conservation and improvement of each of the properties owned by the parties during the course of the marriage.  It is the case that the husband made the greater contribution at the outset and that he, up until 2007, was by far the higher income earner in the marriage.  The wife did contribute to the extent that she was able.  She continued to contribute after 2012 when the husband, effectively, ceased work.  She has the future responsibility of the day to day care of the children, which must be taken into account.

   b)The parties, as referred to earlier, made non-financial contributions toward the acquisition, conservation and improvement of the properties.  Each of them worked both around the properties to improve and maintain them during the course of the marriage, and each of them had a keen interest in maximising opportunities by paying down mortgages as and when it was possible.  The contributions in that regard were equal.

   c)Each of the parties contributed equally to the welfare of the family and to the children of the marriage, save that since separation there has been what would appear to be a reduction in contact between the husband and the two children of the marriage, primarily because of his having adopted a stance whereby he won’t repair the former matrimonial home at Property A as and when required.  The wife has been the major home maker and parent since separation.

   d)The proposed order in this matter will not, in the Court’s view, affect the earning capacity of either party.  It may influence the husband to take active steps to repair the property which, at present, is suffering because of lack of attention in that regard.

   e)As to the matters referred to in section 75(2) of the Act, the parties are in a good state of health and are each able to continue working until retirement. The income, property and financial resources of each of the parties is as set out above, and each of the parties have the capacity to be engaged in gainful employment. The wife is likely to have the predominant care and control of the children of the marriage up until the time of trial of parenting proceedings, which is perhaps likely to be listed in about six months’ time.

5. Each of the parties are able to meet the commitments to repay loans which have been referred to earlier in the judgment.  The husband does not have to support another person and will, if he maximises his opportunities, be able to make maintenance payments in respect of the two children of the marriage, at least up until the time of trial in the parenting proceedings.  The wife has a partner who, though not supporting the wife in any financial sense, is, nonetheless, supportive of her.  Her prospects for remarriage or re-partnering are, in that regard, good.

6. She is in receipt of ongoing Super Fund 3 payments and she has superannuation entitlements which will continue to grow as she continues to be employed.  Each of the parties are able to maintain a standard of living commensurate with that which they enjoyed prior to separation.  The marriage was over a period of some 17 years.  The duration of the marriage has not affected the earning capacity of either party.  It is the case that since separation the wife has continued to have the predominant care of the two children of the marriage.

7. She is in a rented property which she has funded.  She has ongoing responsibilities in that regard.  She ought to have that contribution recognised in any property adjustment order.  That interest is assessed at as a 10 per cent uplift of the property pool in accordance with Shaw v Shaw principles.  The property pool, as assessed by the Court, is as follows:  Property A property $525,000;  wife’s bank account, $4987;  husband’s bank account, being about 50 per cent of the inheritance from the father, $152,039;  wife’s Super Fund 1 superannuation, $36,500;  wife’s Super Fund 2 superannuation, $48,000;  wife’s Super Fund 3 superannuation/pension, $123,293;  husband’s superannuation, $373,720.  A subtotal in the amount of $1.263539 million.

8. There should be add backs.  The wife’s liabilities leading up to and including trial for legal fees are in the amount of $87,000.  It is considered appropriate that an amount of $30,000 should be allowed as an add back in that regard.  In arriving at such figure, I attribute the sum of $30,000 as being appropriate because it reflects the extent to which it is just and equitable to do so, having regard to how the wife has had to sacrifice expenditures on herself and the children for the purpose of her paying those legal fees in circumstances where the requirement for her to do so arose out of the matrimonial relationship.

9. Similarly, the husband has been living rent free at Property A for about two and a half years.  If one allows a notional rent of $400 per week over that period of time, a rental which is less than the amount paid by the wife for rent over the corresponding period, then one arrives at a sum of approximately $50,000.  The use which the husband has had in respect of the property must be taken into account for property adjustment purposes.  Accordingly, if one then considers that based on the husband’s greater contributions, assessed in the amount of 55 per cent, as opposed to the wife’s 45 per cent, the wife’s interest is calculated at $604,592.55.

10. However, due to the Shaw v Shaw considerations, the wife’s interest must be increased by 10 per cent in the amount of $134,353.90, such that the total reached is $738,946.  As indicated earlier, the $50,000 already received by her ought also to be taken into account, resulting in an adjustment to the wife in the amount of $688,946.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Judge Egan

Date: 21 September 2018