Laurie and Hurlock - [2011] FMCAfam 187

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LAURIE & HURLOCK

[2011] FMCAfam 187

FAMILY LAW – Property settlement – significant differences in initial contribution – short marriage – one young child living primarily with mother – consideration and application of principles with regard to contribution – consideration of significant section 75(2) factors – consideration of percentage variations arising from wastage argument.

Family Law Act 1975, ss.75(2), 75(2)(o), 79, 79(2) & (4)(a) to (g)

Pastrikos and Pastrikos (1980) FLC 91-987
In the Marriage ofLee Steere and Lee Steere (1985) FLC 91-626
In the Marriage of Ferraro (1993) FLC 92-335
In the Marriage of Clauson (1995) FLC92-595
In the marriage of Whitely and Whitely (1996) 92-684)
Russell and Russell (1999) FLC 92-877
Kowaliw and Kowaliw (1981) FLC 91-092
AB & GB (No. 2) 2005 FMCAfam 402
Re NHC & RCH (2004) FLC 93-204
Browne & Green (1999) FLC 92-873

Applicant:

MS LAURIE

Respondent:

MR HURLOCK

File Number:

TVC 1197 of 2009

Judgment of:

Coker FM

Hearing date:

17 February 2011

Date of Last Submission:

17 February 2011

Delivered at:

Townsville

Delivered on:

11 March 2011

REPRESENTATION

Counsel for the Applicant:

Mr Honchin

Solicitors for the Applicant:

L.A. Ward Legal

Solicitors for the Respondent:

Self-represented

ORDERS

That the Husband do all such acts and things and sign all such documents as may be required to transfer to the Wife at the expense of the Husband all of his right title and interest in the real property situate at and known as Property S (“the real property”).
That the Wife indemnify the Husband against all payments and liability pursuant to the mortgage to Bank of Queensland (“the mortgage”) and all apportionable rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind.
That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(i)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action and motor vehicles but excluding any superannuation entitlements) in the possession of such party as at the date of these orders (the furniture, personal possessions and like chattels in the real property) being deemed to be in the possession of the party;
(ii)monies standing to the credit of the parties in any joint bank account are to become the property of the Wife;
(iii)insurance policies remain the sole property of the beneficiary named therein;
(iv)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;
(v)any joint tenancy of the parties in any real or personal estate is hereby expressly severed;
(vi)the Wife retain her superannuation interests.
In accordance with section 90MT(1)(a) of the Family Law Act 1975 (the Act), whenever a splittable payment within the meaning of the section 90ME of the Act becomes payable to or on behalf of MR HURLOCK from his interest in the [P] Personal Plan, a sub-plan of the [P] Superannuation Fund (the Plan) MS LAURIE is entitled to be paid (by the Trustee of Plan) the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2011, using a base amount of $92,473.00 and there is a corresponding reduction in the entitlement MR HURLOCK would have had but for these Orders.
The operative time for Order 4 is four business days after the service of the final Orders on the Trustee.
That in the event that the HUSBAND refuses or neglects to execute a deed and/or instrument in compliance with the provisions of paragraph (1) of this order, the Registrar or Deputy Registrar of the Family Court of Australia at Townsville is hereby appointed pursuant to section 106A of the Family Law Act 1975 to execute all deeds and/or instruments in the name of the HUSBAND and do all acts and things to give validity and operation to the deeds and/or instruments.
That pursuant to Order 26 of the Family Law Rules this matter reasonably required the attendance of Counsel.

IT IS NOTED

That pursuant to Section 81 of the Family Law Act 1975 the parties intend that these orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT TOWNSVILLE

TVC 1197 of 2009

MS LAURIE

Applicant

And

MR HURLOCK

Respondent

REASONS FOR JUDGMENT

These proceedings have been before the Court for a considerable period of time. The initiating application was filed on 24 November 2009 by Ms Laurie, whom I shall refer to as the applicant. The initiating proceedings, however, referred only to issues in relation to matters of parenting. Subsequently, an amended application was filed on 20 May 2010 dealing with issues, both in relation to parenting, and also matters of a financial nature.
The response filed in relation to the proceedings by Mr Hurlock was filed on 11 December 2009. It related only to the initial application with respect to matters of parenting. The response to the amended application was on 28 June 2010.
Thereafter, there appears to have been a number of difficulties and delays in relation to the proceedings generally. The parties were able, in October of 2010, to finalise issues in relation to the parenting of their child, and orders by consent with regard to parenting were made. Thereafter, steps were taken, particularly with regard to the matter of property to attempt to resolve issues.
The application that was before the Court in relation to property was set out in the amended initiating application of 20 May 2010. The orders sought on behalf of the applicant with regard to property were as follows:
·The applicant receive 100 per cent of the matrimonial property.
·The respondent to pay the applicant’s costs.
·Such further or other order as this Court may deem neat.
The response, filed by the respondent in relation to the matter, at least insofar as property proceedings was concerned, was in these terms:
(1)That the property situated at Property K, Townsville and
Property S, Townsville, be sold, and the proceeds of sale applied:
a)To pay all costs, commissions and expenses for the sale.
b)To discharge the mortgage and any other encumbrance affecting the properties.
c)The balance to be apportioned as follows:
(i) Two-thirds to the applicant mother.
(ii) One-third to the respondent father.
(2)That the parties do all things necessary and execute all documents necessary to ensure the sale of the properties.
(3)That each party retain the motor vehicles, superannuation, bank accounts, furniture and personal effects currently in their possession for their sole use and benefit absolutely.
(4)That the parties will take all steps necessary to complete all documents necessary to transfer the motor vehicles to the party whose possession they are in currently within 30 days of the date of this order.
(5)That the parties agree to be responsible for all liabilities and indemnify the other party against any such payments in relation to the items listed in clause (3) of these orders.
(6)That each party be responsible for their own costs in relation to this matter.
In the end, the matter has proceeded to hearing. Unfortunately, there has been what I might refer to as a checkered history, in relation to the matter proceeding to a final hearing. Suffice it to say, that the position taken by the applicant, in relation to these proceedings, is that there have been enormous difficulties associated with the respondent’s cooperation with regard to the Court process. In particular, I note that on 19 October 2010 a conciliation conference was arranged to proceed. At that time, the applicant and her legal representatives attended, and the solicitor then on the record for the respondent attended. The respondent did not attend.
The matter was then adjourned to December 2010 for further consideration. A further conciliation conference was arranged for 2 December 2010. On that day, counsel appeared on behalf of the applicant, and again the solicitor for the respondent appeared. There was no appearance by the respondent on that day. The solicitor appearing for the respondent, Ms Johnson, was granted leave to withdraw as the solicitor on the record, indicating to the registrar that her client was aware of the date for the conduct of the conference, and that the respondent had “refused to attend”.
As a result of two unsuccessful conferences, the matter was referred back to the Court, and orders were then made on 13 December 2010 with regard to the matter being proceeded with as an undefended hearing. The matter was listed on 13 December 2010 as a result of the indication given by the registrar, of the position in relation to the matter, and the failure on two occasions of the respondent to attend upon the hearing of the matter. On 3 December 2010, correspondence was forwarded to the respondent and to the legal representatives for the applicant. The terms of that correspondence were as follows:
The registrar has advised of the difficulties in the conduct of the conciliation conference of this matter and has indicated that no further conference is recommended.
When the matter is next mentioned on 13 December 2010, the Court will require clarification of the position in relation to the financial proceedings and whether the matter should be listed for an undefended hearing.
On 13 December 2010, counsel for the applicant again appeared in relation to the matter, and there was no appearance by or on behalf of the respondent. As a result of that the matter was listed to proceed as an undefended hearing on 17 February 2011, and it was noted that if there were to be any further updating material in relation to the proceedings, including particularly material with regard to attempts to negotiate or to advise the respondent of the position in relation to the proceedings, that that information should be provided. Information was also provided in relation to possible means of communication and correspondence with the respondent.
As a result of that particular aspect of the matter, the legal representatives for the applicant communicated in identical terms with the respondent at a number of addresses. Correspondence was sent to the respondent at, [addresses omitted]. The attempts at communication at those various addresses was so as to ensure that the respondent was aware of the position taken by the applicant in relation to these proceedings.
In each of the items of correspondence the wording was identical and was as follows:
We write to inform you this matter has been listed to proceed as an undefended matter before the Federal Magistrates Court, Townsville, on 17 February 2011 at 9.30 am.
If you do not appear or you do not appear through legal representation before the Court at stated time then the Court may proceed and make Final or other Orders in your absence.
The affidavit filed by the legal representative for the applicant, Mr Leslie Allan Ward, makes reference to the fact that, whilst the correspondence was forwarded to those various addresses on 20 January 2011, only one of the items of correspondence was returned as unclaimed. That relates to the correspondence forwarded to Property K, on 20 January 2011. The solicitor for the applicant deposes to the fact that that letter was returned unclaimed on 9 February 2011.
The other correspondence forwarded to the solicitors previously on the record for the respondent, as well as to his place of employment and his last known address, [omitted], were not returned as unclaimed. In any event, it appears abundantly clear that the respondent became aware of the proceedings. That is obvious from the fact that apparently delivered by the respondent to the solicitors for the applicant, on

14 February 2011, was correspondence dated that day, relating to issues in respect of parenting of the child of the relationship.
There was no reference whatsoever to issues with regard to the matter of property settlement, though one must assume, and I find, that the respondent was aware of issues proceeding before the Court. That is, of course, more abundantly clear by the fact that the day before this matter was to proceed in the Court, an affidavit was filed by the respondent, which passingly referred to matters contained within the evidence or affidavits sought to be relied upon by the applicant.
On 15 February 2011, immediately following receipt of the hand delivered correspondence of 14 February 2011, the solicitors for the applicant indicated their acknowledgement of receipt of that correspondence, but more particularly, advised of their intentions with regard to the proceedings on 17 February 2011. Referring to the correspondence with regard to parenting matters of 14 February 2011, they indicated that a copy of that letter would be sent to the applicant, but the correspondence of 15 February 2011, forwarded to the postal address which is attached to the correspondence from the respondent, says the following:
However, that is not the purpose of this correspondence.
It then goes on to make reference to specific matters with regard to the property proceedings and of the fact that this matter, in relation to undefended property proceedings, was to be heard at 9.30 am on 17 February 2011. As I indicated a little earlier, I was satisfied that correspondence had reached the respondent in relation to this matter. I am satisfied that by proper means, the respondent is aware of these proceedings and had the opportunity to appear in relation to the proceedings.
In fact, on the day that the matter came before the Court, it would appear that the legal representatives for the applicant were somewhat taken aback at the appearance, at the “eleventh hour”, of the respondent. More particularly, there was concern at the late filing of material, and in fact, the submissions made on the part of the applicant were to the effect that the proceedings should go ahead on an undefended basis, and that the material sought to be relied upon by the respondent should not be accepted, in light of its late receipt.
I ruled, at that time, that that was not an appropriate course to follow, and that if there was an adjournment sought and costs associated with the adjournment, that was an issue that could clearly be dealt with, but however, if the matter was to be proceeded with, by whatever means, on that day, then it should be upon the basis of the evidence, contained within the various affidavits filed by or on behalf of the respondent, being relied upon. Subsequent to that particular determination, it was directed that the parties should have, if possible, any final negotiations in relation to the proceedings, but that proved unsuccessful.
It was the position of both parties, however, that the matter should proceed on the evidence before the Court and submissions being made, notwithstanding the obvious difficulties with regard to there not being cross-examination in relation to the evidence of either the applicant or the respondent. The reason for that is understandable. The position that seems to be taken by both parties is to the effect that, at the very least, there is a negative amount of property for distribution between the parties, exclusive of superannuation.
Neither party wished for there to be any further delay in relation to the proceedings, nor did either party seek for there to be any further expense incurred as a result of delay. The position of the legal representatives for the applicant was to say that there should be finality, and that notwithstanding that there was a refusal to proceed on an undefended basis, that they were in a position to address, with regard to the stance taken by the applicant, in relation to the proceedings.
The respondent was specifically asked whether he wished to seek legal advice, either with the solicitors previously on the record, or alternative legal advice. The respondent indicated that that was not the position that he wished to take and that he sought for there to be some finality in relation to the proceedings.
Each party then addressed the Court in relation to the position with regard to this matter and to the orders that were sought. It was, of course, a difficult matter to deal with because of those limitations that arose in relation to how the matter was to be proceeded with, and in fact, challenges in respect of evidence. Unfortunately, the evidence sought to be relied upon by the respondent was difficult to follow, in the extreme.
The affidavit filed by the respondent on 17 February 2011 and dated 16 February 2011 appeared to be almost, what I might call, a “scatter gun” response, in relation to various matters that were contained within the affidavit material, filed by the applicant. It was clear that there were simply denials and disputation in relation to various matters that were sought to be relied upon by the applicant as supporting her case in relation to this matter. The only corroborative evidence available related to the position with regard to the rental of an investment property, situated at Property S.
The position of the respondent in that regard was to say that the applicant had refused to re-rent the property, at a time when that could happen, and reliance was placed upon the correspondence forwarded by email from the “rental managers”, on 5 November 2009. That correspondence simply indicated that notification had been received of the fact that the parties were separating, and that rent monies were to be directed to a particular account.
Thereafter, there appears to have been some continuing problems in relation to arrangements, and perhaps understandably, the rental manager, Ms W, indicated that she would withdraw from arrangements in relation to managing the rental of the property, because of the dispute between the parties. As a result of that, tragically, no rental income has been received in relation to the rental property, and liabilities in respect of the property, have continued to grow.
I, of course, had only limited opportunities in relation to this matter to form some view in respect of the evidence of each of the parties. Suffice it to say, that the information provided by the applicant in relation to the proceedings was of a far more comprehensible, and I think complete, nature than was the evidence of the respondent.
The applicant was able to detail a chronologically accurate history of the relationship between she and the respondent, including provision of particular information with regard to the length of the relationship, and what each party brought into the relationship. Whilst there were certain acknowledgements, and they were appropriate on the part of the respondent, there seems to have been a general looseness in relation to his evidence given in respect of this matter, and it was particularly referred to by counsel for the applicant, in relation to the basis upon which I should accept the evidence of the applicant over and above that of the respondent, whenever there was difference or difficulty between them.
As I say, it was a difficult matter to determine, but there appears to be a number of matters which do point toward the evidence of the applicant being a far more accurate reflection of what was the position, in relation to this matter. The main thrust of that argument, put on behalf of the applicant, was to the effect that a property, previously owned by the applicant in [M] was not transferred into the name of the respondent, though the respondent was adamant that that had occurred.

When finally it became clear that no transfer into joint names had ever occurred, the only response that could be given by the respondent, in relation to the matter, was to say that there were monies borrowed by both the applicant and the respondent, secured against the property in [M], and that it was his understanding that the property was to be transferred into joint names, because borrowings were in joint names. Unfortunately there was no information or corroboration provided, in any respect, in relation to that particular aspect of the matter.
Additionally, it appears that there was a very real distinction to be drawn in relation to the interest held by each party in the investment property, situate at Property S. Whilst the parties both had an interest in the property, there was a very real distinction that was drawn, in relation to the proportional interest that each held. The applicant held 99 one-hundredths of the interest in the property, and the respondent held only one one-hundredth or one per cent, of the interest in the property.
The applicant says that that is a reflection of the very significant difference between what each contributed to the acquisition of that property, and in fact, to the very real distinction to be drawn between the contributions that each bought, in relation to the property of the parties, at the commencement of the relationship. The respondent’s position was simply to say that it was a reflection of the desire of the applicant to ensure that there was little, if any, of the parties’ joint funds available for distribution to the respondent’s former wife by way of child support, as a result of income received from the investment property.
Of course, the difficulty that arises in relation to accepting that particular aspect of the matter is that it appears clear, from the information that is available in relation to the proceedings, that the investment property never made money, that it was negatively geared, and as the respondent, in fact, indicated it was a situation where there was income distribution in accordance with a 99 to 1 percentage, as between the applicant and the respondent, but if it was to avoid payments to the respondent’s former partner in relation to any assessment of child support, then the greater advantage would clearly have been if, in fact, there were a greater percentage held by the respondent in the investment property.
I must say, that because of those points and the obvious difficulty and incongruity that arose in relation to that evidence, I am far more inclined to accept the evidence of the applicant in relation to any issues which are currently in dispute between the parties, than to accept the position taken by the respondent in relation to contributions. As I said, the evidence that was given on the part of the applicant was both chronological and comprehensive. She spoke of works performed upon various properties, including those already owned by her, and the various contractors or tradesmen who performed such works.
She acknowledged quite properly that certain work was done, generally of a non-skilled nature, by the respondent in relation to the property, including particularly the property at Property K and the formerly owned property in Property M, but it appears clear that, whilst there may have been some small contribution of a physical or non-financial nature in relation to those properties, there appears clearly to have been a situation where there was no financial contribution by the respondent, in relation to any liabilities attaching to those properties.
More particularly, insofar as the Property K property is concerned, the evidence is overwhelmingly to the effect that, following separation, the respondent continued to remain in the Property K property, and notwithstanding indications given on his behalf, no doubt upon instructions to his solicitors, he did not vacate the property until the very last minute, or in fact, after the last minute when regard is had to the sale of that property. He did not allow work to be performed upon the property, and certainly did not perform any even general maintenance in relation to the property, and did not make any contribution to the mortgage payments that were required in relation to the property, or the outgoings, including rates, insurances and the like.
The applicant, therefore, raises an argument with regard to waste, and there must be very real concerns as to the position taken by the respondent, in relation to this matter. The evidence appears overwhelmingly to the effect that he maintained occupation of the property without any contribution whatsoever to that property, notwithstanding that, at the very least, there was a half interest held by the applicant, and certainly it appears clear that, to all intents and purposes, the property was brought into the relationship, by the applicant. Whether, in fact, there was an initial contribution by the applicant’s parents to the deposit, in relation to the purchase of the property is, in respect of this determination, neither here nor there.
It is directly a contribution from the applicant or her family members, and there is no contribution whatsoever by the respondent in relation to the purchase.
Quite clearly, there was an enormous disparity between the position of the applicant and the respondent prior to the commencement of the relationship, and unfortunately, subsequent to the commencement of the relationship in or about June of 2005 and thereafter, for a period of about four years, there appears to have been a continuing disparity, both in relation, of course, to the initial contribution, but also in relation to what each party contributed, both financially and non-financially, to the acquisition, maintenance and development of the properties.
If nothing else, the respondent’s own admissions were to the effect that there was a situation where he allowed the property at Property K to deteriorate significantly whilst he was in occupation of the property, which lead to a radical drop in the agreed value of the property, and upon sale there was a very considerable shortfall in what might previously have been expected in relation to the sale of the property. Similarly, there appears to have been continuing dispute between the applicant and the respondent about arrangements with regard to the sale of the investment property at Property S.
I am more inclined, unfortunately from the respondent’s perspective, to accept that the respondent had been difficult in relation to making any arrangements with regard to sale of property, and that, with the deterioration in that property, the failure to receive rent as a result of the property not being tenanted, and a general drop in value as a result of market conditions, all of those losses are directly attributable to the circumstances that arise as a result of the failure by the respondent to appropriately recognise the difficult circumstances and situation that he and the applicant were in, and to act appropriately in relation to such circumstances.
It is a most unfortunate situation, particularly when one notes that the financial circumstances of the parties are such that, other than perhaps considering what each party brought into the relationship and what each party now takes out, exclusive of superannuation, there is, in fact, a negative which remains available for distribution, as between the parties. Responsibility must fall for that loss on one or other of the parties because it is clearly not one of those situations where there has simply been, through no fault of either of the parties, a deterioration in the financial viability of the parties, and a deterioration in relation to the value of the matrimonial assets.
Quite clearly, and most unfortunately, the recalcitrant behaviour of the respondent, particularly with regard to any steps in relation to the sale of the real property owned by the parties, has resulted in significant diminution of the value of that property, and as a result of that particular aspect of the matter, it is necessary to consider that there should be a significant variation arising in relation to what assets there may or may not be available for distribution between the parties.
THE LAW:
As I said, there are two issues to be considered in relation to this matter. I need, obviously, to look at the law in respect of financial determinations between husband and wife and, in that regard, the relevant law is as follows. Section 79 of the Family Law Act defines the court’s powers in determining applications for property settlement. Subsection (2) of section 79 provides that:
“The court shall not make an order under this section unless it is satisfied that in all the circumstances, it is just and equitable to make the order”
Section 79(4) sets out the matters the court must take into account when considering what orders should be made for the alteration of the interest of the parties in property. Those matters include:
a) the financial and non-financial contributions made directly or indirectly by or on behalf of each party or by a child to the acquisition, conservation or improvement of any property of the parties;
b) the contribution made by a party to the welfare of the family including any contribution made in the capacity of home maker or parent;
c) the effect of any proposed order upon the earning capacity of either party;
d) the matters referred to in subsection 75(2) as far as they are relevant;
e) any other order made under the Family Law Act affecting a party to the marriage or a child of the marriage; and
f) any child support payable.
The approach to the determination of an application under section 79 is well established by authority (see, for example Pastrikos and Pastrikos (1980) FLC 91-987; In the Marriage ofLee Steere and Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC92-595 and In the marriage of Whitely and Whitely (1996) 92-684). The process ordinarily involves a multiple part procedure.
The court must first identify the assets, liabilities and financial resources of the parties and attribute a value to all assets, usually at the time of the hearing. Thereafter it must evaluate the contributions made by each of the parties as defined in section 79(4)(a) to (c). Finally, the court must consider the financial resources, means and needs of the parties, and other matters set out in section 75(2) in so far as they are relevant. An adjustment of the amount due to each party by way of contribution is then made by reference to the section 75(2) factors. It is not essential, however, that such an adjustment be made. Generally speaking, an adjustment is made because one party has greater needs and the other has stronger means. Section 75(2) is concerned with the process of arriving at a just and equitable result.
In determining what order the court should make under section 79, the court must be satisfied, in all the circumstances of the case, that the order to be made is just and equitable – not simply that the underlying percentage division of the net value of the parties is appropriate. In other words, in consideration of whether the overall result of the order in the property settlement proceedings, is just and equitable [see section 79(2)]. It is the justice and equity of the actual orders that the court must consider Russell v Russell (1999) FLC 92-877.
Section 75(2) of the Family Law Act sets out the matters which must be taken into account by the court when determining applications with respect to maintenance. This is the prospective element of the determination of the application for property settlement. The assessment of contributions during the marriage is the retrospective element.
In the Marriage of Ferraro (supra) the Full Court said:
A now well established line of authority in this Court indicates the approach normally to be taken in the exercise of the discretion in s79 proceedings. That approach is firstly to ascertain the property of the parties at the time of the hearing, then to consider “contributions” of the parties within paras (a) to (c) of s79(4), and then to consider the matters in paras (d) to (g), more especially para (e) which takes up by reference the provisions of s75(2) and which are generally referred to as the “section 75(2) factors”.
There is, however, another issue that needs to be considered before one looks at the distribution of matrimonial assets. The reason that it needs to be considered first, is that it is an argument in relation to the possible wastage or improper expenditure of the matrimonial property, as the wife alleges, by the husband. If the wife is successful in that argument, then there would be a considerable change in the assets and, more specifically, significant alteration to any distribution.
This argument was put on the part of the wife and I a mindful particularly, of the decision of his Honour, Baker J in Kowaliw and Kowaliw (1981) FLC 91-092, where his Honour specifically turned his mind to issues in relation to the position with regard to the possible wastage of matrimonial assets and, if found to be the case, responsibility in respect of same.
Baker J said, at page 76,644 of the decision in Kowaliw, the following:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties, or either of them in the course of the marriage, whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally), except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
In that particular case, his Honour examined, at length, the position with regard to the facts as they existed in relation to Kowaliw and, in fact, made a comment which I think is apposite in relation to these proceedings. He said:
I have no doubt that the husband's involvement in the company was an attempt by him, not only to produce income for the family but also to acquire assets of a business nature, with the whole object of improving the parties' overall financial position.
I would think that such comments are appropriate in relation to the husband in these proceedings.
More recently, Federal Magistrate Ryan, as she then was, in AB & GB (No. 2) 2005 FMCAfam 402 considered a number of previous decisions of the Full Court, including the more recent decision of the Full Court of the Family Court in Re NHC & RCH (2004) FLC 93-204 and drew additionally on the ex judicial writings of Justice Boland of the Appeal Court to distill a more comprehensive set of principles. Those principles were as follows:
(i)“The principles in Kowaliw is not a fixed code.
(ii)Kowaliw is a useful guideline for dealing with cases involving lost assets or income.
(iii)In cases involving waste there must be a proper reason for adopting a non Kowaliw approach.
(iv)If the losses occurred in the course of the pursuit of the objectives of the marriage then such losses should be shared by the parties although not necessarily equally.
(v)The economic consequences of waste must be dealt with in a just and equitable manner.
(vi)The economic consequences (loss) may be treated as a premature distribution of the asset pool and notionally added back as the asset of the party who had its sole benefit.
(vii)Taking the premature distribution into account in a general way pursuant to s.75(2)(o) and applying the cumulative outcome of the s.79(4) and s.75(2) findings to the smaller depleted asset pool may offend s.79(2) notions of justice and equity.
(viii)Where the asset pool had been seriously depleted it may be that only by giving the premature distribution is full dollar value that justice can be given.
(ix)The premature distribution concept is not restricted to post separation transactions.
(x)Where the monies have been shown to have been reasonably disposed of the notional add back approach should be the exception and not the rule.
(xi)Notional adjustments are not limited to wasted assets but may also include property that has been bona fide disposed of.
(xii)The source of the funds is relevant.
(xiii)Notionally included assets may include unascertained assets, even if the precise value is not known.
(xiv)Even if it does not involve waste, the economic consequences of a significant reduction in the asset pool must be considered”.
The set of principles outlined by Federal Magistrate Ryan, address comprehensively those matters which were raised by Justice Baker in Kowaliw (supra), over 20 years ago. In particular the fourth point detailed in AB & GB (No. 2) (supra) is worth further consideration. One of the factors to be considered is whether the losses occurred in the course of the pursuit of the objectives of the marriage. If it is found that such is the case, then such losses should be shared by the parties, though as Justice Baker indicated, it may not be on an equal basis.
As Federal Magistrate Ryan appropriately noted in the fourteenth point of the set of principles:
“Even if it does not involve waste, the economic consequences of a significant reduction in the asset pool must be considered”.
The wife has clearly sustained a reduction in the position that she was in, prior to the relationship. It is unfortunate that that is the case, as the general experience of all persons before the Court and certainly of practitioners, is that the division of the “matrimonial pie”, no matter how big that might be, results in concerns expressed by parties to proceedings, as to whether they are or are not, receiving their proper entitlements. When the matrimonial pool is significantly reduced, be that as a result of the action of one party intentionally or because of an unfortunate set of circumstances leading to loss, the concern expressed by a party, as is obvious in this particular matter, is significantly increased.
I am mindful, also of course, of the statement of Baker J in Kowaliw & Kowaliw (supra) at pages 76,643 to 76, 644 which were quoted, with support, by the Full Court, in Browne & Green (1999) FLC 92-873.
Marriage is, for most couples, an economic partnership. Married couples live together and work together with the ultimate object of purchasing a home, paying it off, acquiring other assets with the overall object of attaining a higher standard of living. The reported decisions in respect of applications for settlement of property under section 79 of the act, are unanimous that both parties should share the economic fruits of a marriage, having regard to the provisions of section 79(4) and section 75(2) although not necessarily equally.
Baker J then goes on to say:
Is not, however, the converse equally sustainable? In other words, should not financial losses incurred by parties to a marriage, or either of them, whether incurred jointly or severally, be shared by them in the same manner as the financial gains?
As a statement of general principle, I am firmly of the view that financial losses incurred by parties, or either of them, in the course of a marriage, whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances.
His Honour then went on to quote the circumstances to which I have already referred.
It is clear that there needs to be some consideration of the actions of the husband, it not being a case, certainly in this instance, where the course of conduct was specifically designed to reduce or minimise the value of the matrimonial assets, but as to whether the actions were reckless, negligent or wanton.

I will deal with that particular aspect of the matter during the reasons to be given with regard to the assets of the parties.
The first step, therefore, is to consider the assets of the parties as at the conclusion of the relationship. The best information that can be ascertained in that regard is the details of the assets of the parties contained within paragraph 17 of the affidavit of the applicant filed on 20 May 2010. There the applicant says that the assets were comprised of:
-    House situated Property K, valued $350,000;
-    A 2005 Ford Territory motor vehicle valued at approximately $17,000;
-    A 2007 ford Falcon XR6 motor vehicle valued at $17,000;
-    Investment unit the Property S, valued at approximately $400,000;
-    Furniture and personal effects valued at approximately $6,000;
-    Respondent’s Superannuation entitlement – then unknown;
-    Applicant’s Superannuation entitlement valued at approximately $64,500.00.
The applicant also says that the liabilities of the parties included a liability of $470,000 attaching to the investment unit situate at Property S, and a line of credit with the Bank of Queensland secured against the properties in the sum of $130,000. A mastercard debt totalled $13,000. A small additional amount remained outstanding to Les Wright Real Estate, of approximately $1800.
Since separation and to the date of hearing, the house at Property K has sold and returned approximately $315,000. That was received by the mortgagee but left a debt still of approximately $350,000. Additionally, the value of the Property S apartment has diminished and as best as can be assessed a shortfall after sale will remain of approximately $50,000.
Suffice it to say, that exclusive of superannuation entitlements, the position in relation to this matter is that the assets of the parties fall far short of the liabilities that attach to the property of the parties.
The applicant’s position, therefore, in relation to the matter, is to suggest that if one is to look at all the property in relation to the parties, that appropriate orders would be for all property to be transferred to her and for her to indemnify the respondent in relation to such properties. The applicant then proposes that she renegotiate, as best she can with the lending institution, any additional liabilities over and above that which might attach to the sale of investment properties or otherwise, but that an adjustment be effected which would provide for a splitting of the respondent’s interest in the [P] Personal Plan, a sub-plan of the [P] Superannuation Fund, which is operated by the respondent’s employer.
The applicant says the appropriate distribution would be for there to be a base amount of $92,473 which constitutes the value of the respondent’s interest in the [P] Superannuation Plan as at 8 February 2011. The calculation is done on the basis that the applicant would be retaining a liability, and would indemnify the respondent, to an amount of approximately $50,000 to $60,000 in relation to mortgages attaching to properties owned by the parties, be they the home in which they previously lived at Property K, or the investment property at Property S, subject to its sale as soon as possible.
Additionally, the applicant says that there needs to be consideration of the fact that, for a period of approximately 17 months, the respondent remained in occupation of the residence previously jointly occupied by them, but provided no contribution whatsoever in relation to the mortgage or other liabilities attaching to the property, including rates, insurances and the like. Additionally, the applicant says that there was a joint liability in relation to the payment toward any mortgage attaching to the investment property, as well as, in relation to rates, insurances and the like, and again that the respondent has not made any contribution towards such expenses, but as a result of the non-contribution, the liabilities have increased, and the proposal put forward by the applicant, in regard to the liabilities, is that she should take all of them as and for her own obligation, absolutely.
The final orders, therefore, proposed by the applicant in relation to the resolution of this matter, are contained within the draft property orders which were handed up to the Court on the day of hearing. The terms of those orders are as follows:
(1)That the RESPONDENT do all such acts and things and sign all such documents as may be required to transfer to the APPLICANT at the expense of the RESPONDENT all of his right title and interest in the real property situate at and known as Property S (“the real property”).
(2)That the APPLICANT indemnify the RESPONDENT against all payments and liability pursuant to the mortgage to Bank of Queensland (“the mortgage”) and all apportionable rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind.
(3)That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(i)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action and motor vehicles but excluding any superannuation entitlements) in the possession of such party as at the date of these orders (the furniture, personal possessions and like chattels in the real property) being deemed to be in the possession of the party;
(ii)monies standing to the credit of the parties in any joint bank account are to become the property of the APPLICANT;
(iii)insurance policies remain the sole property of the beneficiary named therein;
(iv)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;
(v)any joint tenancy of the parties in any real or personal estate is hereby expressly severed;
(vi)the APPLICANT retain her superannuation interests.
(4)In accordance with section 90MT(1)(a) of the Family LawAct 1975 (the Act), whenever a splittable payment within the meaning of the section 90ME of the Act becomes payable to or on behalf of Mr Hurlock from his interest in the [P] Personal Plan, a sub-plan of the [P] Superannuation Fund (the Plan) Ms Laurie is entitled to be paid (by the Trustee of Plan) the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulation 2011, using a base amount of $92,473.00 and there is a corresponding reduction in the entitlement Mr Hurlock would have had but for these Orders.
(5)The operative time for Order 4 is four business days after the service of the final Orders on the Trustee.
(6)That in the event that the RESPONDENT refuses or neglects to execute a deed and/or instrument in compliance with the provisions of paragraph (1) of this order, the Registrar or Deputy Registrar of the Family Court of Australia at Townsville is hereby appointed pursuant to section 106A of the Family Law Act 1975 to execute all deeds and/or instruments in the name of the RESPONDENT and do all acts and things to give validity and operation to the deeds and/or instruments.
IT IS CERTIFIED
(7)That pursuant to Order 26 of the Family Law Rules this matter reasonably required the attendance of Counsel.
THE COURT NOTES
(8)That pursuant to Section 81 of the Family Law Act 1975 the parties intend that these orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
As best I can assess considering the information now available, the net assets of the parties, exclusive of superannuation, is an indicative amount. I say that because the property at Property K has been sold and the proceeds of sale have been paid toward reduction of mortgage liabilities. The only real property therefore remaining is the apartment at Property S. The current amount owing is $352,113.33 and past estimates would now place that property at a value of about $300,000. There is a shortfall therefore in excess of $50,000. Other assets are also of a diminishing nature. Furniture and personal effects have been retained by each party, though not necessarily to equal value but it would be impossible to place any real value upon them for the purposes of determining a property settlement. The only other items of personalty would then be motor vehicles and again they are of diminishing value and have little effect upon a change in the financial circumstances of the parties either individually or jointly.
Insofar as the superannuation entitlements of each party are concerned, there are still some areas of information which are lacking. As best as can be calculated, however, the applicant has superannuation with [omitted] Super valued at approximately $64,500 and superannuation is held by the respondent in his [P] Personal Plan in the sum of $92,473. Combined, there are possible future resources of approximately $150,000 but after deduction of the liabilities which are immediately due and owing, what remains for distribution as best it can be assessed, is a future entitlement with a current value of about $100,000.
As to the second step, I am required to look at contributions made in relation to the acquisition, maintenance and improvement of the assets of the parties. It is clearly the case that the applicant bought into the relationship significantly more than the respondent. The respondent, in fact, appears to acknowledge that that was the case. The applicant says, in her affidavit of 20 May 2010, that the respondent brought into the relationship a cash sum of approximately $7000, superannuation of limited value, and a motor vehicle which was subsequently sold to effect a payment out of property settlement to his former partner. Some other furniture and personal effects were also held by the respondent.
The applicant, however, owned the property situated at Property M which was sold in January of 2007 for $315,000, and after payment of a mortgage attaching to the property, realised an amount in the vicinity of $240,000, after expenses associated with sale and the payment of the mortgage. The house property at Property K was valued at the commencement of the relationship, it is said by the applicant, at $240,000, and additionally there was a Toyota Corolla motor vehicle owned by the applicant, as well as furniture and personal effects.
The applicant acknowledges that there was a mortgage attaching to the property at Property K, but that basically there was a significant equity in that property, somewhere in the vicinity of $200,000. The applicant says, and I accept, that there was an enormous disparity between the contribution that was made by her to the relationship, at its commencement in June of 2005, and that which was made by the respondent.
The evidence is limited, but it is clear that there is an acknowledgement of the ownership of those various properties to which I have referred, and very clearly there is therefore an enormous difference between what the respondent brought into the relationship and what the applicant brought into the relationship. At the very least, it would appear that the difference would be somewhere in the vicinity of 95/5 in favour of the applicant, and I find that that is an appropriate consideration of what each brought into the relationship at the commencement of that relationship.
Thereafter, it is necessary to consider issues in respect of each party’s contributions during the relationship, and again there appears, unfortunately, to have been a significant difference between what each contributed, at least insofar as there is any consideration of the increase in the value of the assets.
The evidence appears, clearly, to be to the effect that the respondent was determined to purchase chattel items and personalty including motor vehicles, and the evidence also appears to be to the effect that the motor vehicles were purchased and sold, unfortunately, it would seem, on almost every occasion, at a loss, and as a result of that there was a general dissipation of the value of what might have been brought into the relationship at its commencement or during the period of the relationship.
Additionally, and I think significantly, it appears acknowledged that the applicant received an inheritance during the period of the relationship, and that inheritance by the applicant from her grandfather’s estate was utilised generally by the parties, but it would seem primarily, for the sole purposes of the respondent.
The respondent says that there were, in fact, borrowings made in that regard, and therefore, liabilities attaching to properties increased. However, I am, in light of the findings previously made by me in respect of the evidence of both the applicant and the respondent, far more inclined to the view that the respondent, in fact, utilised funds that were made available to him, perhaps out of love and affection by the applicant, to purposes which were solely of his determination, and more particularly, which were almost exclusively of a nature which lead to significant reduction in value. The purchase of motor vehicles, to which I have already referred, was clearly an example of that particular aspect of the matter.
More particularly, and I must say, significant, in relation to this determination, is the situation that existed from September of 2009, when the parties separated. The applicant left the property which had been previously owned by her, though it appears that it was transferred into joint names. Notwithstanding the fact that it was, at least, still half owned by her, and that she was receiving no benefit whatsoever in relation to the property, there was no payment whatsoever made by the respondent in relation to mortgage and other liabilities attaching to the property, situate at Property K.
Rather, and it is acknowledged by the respondent, the property was allowed to deteriorate, such that it appears clear that there was a significant reduction in the value of the property, as a result of the stance taken by the respondent. Similarly, there appears to have been a determination on the part of the respondent that he would not contribute in any way, shape or form to other liabilities of the parties, and perhaps in relation to the investment property at Property S, that is understandable in light of the fact that he only held a one per cent share in the value of the property.
Notwithstanding that, however, there was a deterioration in the properties, and as a result of that, the parties now find themselves in a situation where liabilities attaching to immediately receivable property, outweighs the value of that property, and I accept that it is in the vicinity of $50,000 to $60,000.
There has been a situation where the contribution, therefore, by the applicant has, in all respects, far outweighed the contributions of the respondent, and in fact, it would appear, in light of the fact the respondent has refused to make any real or proper contribution to liabilities attaching to properties, that there has been a deterioration in value which is, to all intents and purposes, directly attributable to the actions and behaviours of the respondent.
There is, therefore, suggested on the part of the applicant, though it is not pressed to any great extent, that there is significant wastage and deterioration in respect of the assets of the parties, as a result of the actions and behaviours of the respondent. Unfortunately, I am inclined also to that particular view in relation to the proceedings. The applicant has been left in a situation where she has not been able to fully service the liabilities attaching to property occupied by the respondent or an investment property which has been attempted to be sold, but which has been the subject of continued dispute, if not difficulties, between she and the respondent.
As a result of that, the properties have deteriorated and opportunities for sale, which have been sought have been clearly unable to be taken up. The respondent has said that such opportunities missed have, in fact, been as a result of a lack of determination on the part of the applicant to take such opportunities up, and to properly act with regard to the sale of assets, so as to best realise any interest held in them. I am more inclined, however, to the view to which I have already alluded that the difficulties inherent in this matter have arisen, almost exclusively, as a result of the determined nature of refusal and objection on the part of the respondent to cooperate in relation to meeting the liabilities of the parties or reducing those liabilities, through sale of assets.
It is a factor that is significant in relation to this matter, and obviously affects significantly the interests that each party holds in the assets of the relationship. I am satisfied, therefore, that it is proper that there should be an adjustment, when one considers not only the initial contributions to the relationship, but the detrimental actions that have occurred in relation to this matter, such that there should be a further small adjustment, though there is only a small proportion available for further adjustment in favour of the applicant.
The applicant seeks orders that she should receive the entirety of the matrimonial assets, inclusive of superannuation entitlements. I am of the view that that is an appropriate course to follow in relation to this matter, particularly when one considers that, to all intents and purposes, in 2005 the respondent came into the relationship with very limited assets and liabilities, whilst the applicant came into the relationship with significant assets and limited liabilities, but that at this time the circumstances have changed so radically that there is little, if any, equity held in the material assets of the parties, and if there were not an adjustment of a very significant nature effected in relation to superannuation, it would be a situation where, in fact, the applicant would have sustained the entirety of the loss in relation to the matrimonial assets of the parties whilst, without any real or proper contribution whatsoever, the respondent has, in fact, sustained a steady growth in relation to his asset base.
It is appropriate that there should be a further adjustment therefore, and in my view, that would be a minimum of five per cent, which remains available for distribution as between the parties, and therefore the appropriate consideration of contributions, toward the end of the relationship and following separation, is that the contribution of the wife should be fixed in the sum of 100 per cent of the matrimonial assets, and the contribution of the respondent fixed in a percentage of 0 per cent of the matrimonial assets.
In light of that particular determination, it is not necessary, of course, to go into adjustments that would be effected as a result of the provisions of section 75(2) of the Family Law Act as they would not in any way favour the respondent.
Suffice it to say, that on the findings that I have already made, and in particular with regard to concerns that have been indicated as arising with regard to, not only child support, but more particularly additional contributions to be made by the respondent to the needs of the child, I am satisfied that, if those matters which are contained within section 75(2) were to be applied in relation to this matter, there would, in fact, be a further adjustment to be effected in favour of the applicant.
The final step, therefore, is to determine whether, in fact, the distribution of property 100 per cent in favour of the applicant would be just and equitable in all the circumstances. There is little that needs to be considered there. The parties have both suffered significant losses as a result of the deterioration and diminution of their financial affairs. The applicant is 40 years of age and is a [occupation omitted]. The respondent is about to turn 40 years of age and is a [occupation omitted]. The fact is that, if five years or six years after the commencement of the relationship the circumstances of the parties were assessed, only one party has sustained an enormous change in their financial circumstances. That is the applicant.

The applicant had significant assets at the commencement of the relationship, and at the conclusion of the relationship has, exclusive of superannuation entitlements, only liabilities. The respondent had limited assets and limited superannuation, and if the orders that are proposed to be made by me in relation to this matter were to be effected, the respondent’s circumstances would be little, if at all, changed as a result of the orders, but even with any adjustment being made the applicant will be significantly affected by the changes that have occurred.
Unfortunately, those significant effects would be of a negative nature, and it is particularly noteworthy that the orders that are proposed by the applicant in relation to this matter will, in fact, leave her with liabilities directly attaching to herself, whilst the respondent will be left with no liabilities and be able to do what is, perhaps, best described as “start afresh”. The applicant will start from a position of great difficulty in that it is clear that she will have significant liabilities which will need to be taken into consideration in respect of any future financial steps taken by her, including, of course, purchase of a residence.
Whilst the applicant might then have future entitlements in relation to superannuation, short of being able to satisfy the superannuation trustees of the various issues in relation to hardship, there is little likelihood that there would be any capacity to receive monies prior to retirement, and therefore the applicant will bear the full financial effect of the liabilities, as opposed to the respondent now and into the foreseeable future. It is an unfortunate situation in that neither party will leave with any real asset base at the conclusion of the relationship.
Whilst the respondent will have limited superannuation entitlements, it is clear that the respondent will also correspondingly have no immediate liabilities attaching to him so that he can straight away

re-establish himself, particularly in light of the fact that he has current remunerative employment. The applicant will have significant liabilities which will need to be dealt with and considered in relation to all future financial dealings by her, but there is, at least, some minimal compensation that is available in that regard as a result of her at least having a pool, which can be utilised by her in relation to superannuation and future entitlements.
I am satisfied that in all the circumstances that is a just and equitable resolution in relation to this matter. Accordingly, therefore, I intend to make orders in terms of orders (1) through (6) of the proposed property orders which have been put forward by the applicant in relation to these proceedings. Additionally, I certify for counsel as being reasonably required in relation to the attendance upon this matter, and note that the orders are, pursuant to the provisions of section 81 of the Family Law Act, a determination which as far as practicable will finally determine the financial relationship between the applicant and the respondent.

I certify that the preceding ninety-six paragraphs (96) paragraphs are a true copy of the reasons for judgment of Coker FM

Associate:

Date: 11 March 2011