Lawrence and Lawrence

[2016] FCCA 812

FEDERAL CIRCUIT COURT OF AUSTRALIA

LAWRENCE & LAWRENCE [2016] FCCA 812

Catchwords:
FAMILY LAW − Division of assets − sale if not refinanced.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79, 79(4), 90ME, 90MT(1)(b)

Family Law (Superannuation) Regulations 2001 (Cth), Part 6

Applicant: MR LAWRENCE

Respondent: MS LAWRENCE

File Number: DGC 1673 of 2014

Judgment of: Judge Phipps

Hearing dates: 5 & 21 October 2015

Date of Last Submission: 21 October 2015

Delivered at: Dandenong

Delivered on: 14 April 2016

REPRESENTATION

Counsel for the Applicant: Mr Turner

Solicitor for the Applicant Ms Roach

Solicitors for the Applicant David Gibbs & Associates

The Respondent: Appearing on their own behalf

ORDERS

1. That within 30 days of the date of this order the Husband and the Wife do all necessary acts and things and sign all necessary documents to affect the sale of the real property known as Property L (Lot 2) being the whole of the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted) as follows:

   (a)Unless otherwise agreed Lot 2 shall be listed for sale by private treaty with such real estate agent as is agreed between the parties and failing agreement within 14 days from the date of this order with (omitted) Real Estate;

   (b)The list price of Lot 2 shall be such amount as agreed between the parties and failing agreement within 14 days of the date of this order the amount of $200,000;

   (c)The period for which the property will be listed with the real estate agent will be 60 days (the listing period);

   (d)The contract of sale shall provide for completion as agreed between the parties and if not agreed 30 days.

2. That in the event that a contract of sale for the sale of Lot 2 is entered into during the listing period the following shall apply:

   (a)Simultaneously with the settlement of the contract of sale:

   (i)The husband will sign all documents and do all things necessary at the expense of the wife to transfer to the wife his interest in Lot 1, Property L being the whole of the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted) (Lot 1);

   (ii)The wife will refinance the mortgage over Lot 1 so as to discharge the existing mortgage and release the husband from all liability for any mortgage over Lot 1 and Lot 2.

   (b)The proceeds of sale shall be applied as follows:

   (i)In payment of the costs and expenses of the sale;

   (ii)Provided the wife complies with paragraph 2(a)(ii), in payment to the husband of the sum of $79,875 plus 50% of the subdivision and valuation expenses pursuant to the interim orders made on 13 July 2015 and the balance to the wife;

   (iii)If the wife is able to comply with paragraph 2(a)(ii) the balance remaining shall be paid at the direction of the wife;

   (iv)If the wife is unable to comply with paragraph 2(a)(ii) the balance remaining after payment of the costs and expenses of the sale shall be paid to reduce the balance owing under mortgage number (omitted) to the (omitted) Bank (the mortgage).

3. That if a contract of sale for Lot 2 is entered into during the listing period and the wife is unable to comply with paragraph 2(a)(ii), or if a contract of sale for Lot 2 is not entered into during the listing period:

   (a)Paragraph 2(a)(i) does not apply;

   (b)Within 30 days of the settlement of the sale of Lot 2 or the expiry of the listing period, as the case may be, the Husband and the Wife do all necessary acts and things and sign all necessary documents to affect the sale of the real property known as Lot 1, Property L (Lot 1) being the whole of the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted), with Lot 1 being listed with such real estate agent as is agreed between the parties and failing agreement within 14 days from the date of this order with (omitted) Real Estate.  The sale shall be in a manner and with a reserve price as agreed between the parties and if not agreed as determined by the real estate agent with which Lot 1 is listed: and upon completion of the sale of Lot 1 the proceeds of sale be applied:

   (i)In payment of the cost and expenses of the sale;

   (ii)To discharge the mortgage and any other encumbrances affecting the real property;

   (iii)To pay to the husband the sum of $79,875 plus 50% of the subdivision and valuation expenses pursuant to the interim orders made on 13 July 2015 and the balance to the wife.

4. That in accordance with s.90MT(1)(b) of the Family Law Act 1975 (Cth) whenever a splittable payment within the meaning of s.90ME of the Act becomes payable to or on behalf of Mr Lawrence from his interest in the (omitted) Superannuation Fund, the Trustee of the Fund will pay to the wife the total amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth) using a base amount of $3,967.00 and there will be a corresponding reduction to the entitlement the husband would have had in the Fund but not for this order.

5. The operative time for order 4 is seven (7) business days after the service of the final order on the Trustee of the Fund.

6. That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any monies due under these or any subsequent orders:

   (a)Each party be solely entitled to the exclusion of the other to all property (including chooses-in-actions) in the possession of such party as at the date;

   (b)Monies standing to the credit of the parties in any joint bank account are to be divided equally between the parties;

   (c)Each party forgoes any claim they may have to any superannuation benefits belonging to or earned by the other;

   (d)All insurance policies remain the sole property of the beneficially named thereunder;

   (e)Each party be solely liable for and indemnify the other against any liability encumbering any item of the property to which that party is entitled pursuant to these orders;

   (f)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

7. That each party has liberty to apply in respect of the implementation of these orders.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

DGC 1673 of 2014

MR LAWRENCE

Applicant

And

MS LAWRENCE

Respondent

REASONS FOR JUDGMENT

1. The husband’s and the wife’s major asset is the former matrimonial home, Property L (Lot 1), and the subdivided block behind, Property L (Lot 2).  They dispute how this property should be dealt with in their property application.

2. The husband was born on (omitted) 1972 and is aged 43.  The wife was born on (omitted) 1976 and is aged 39.  The parties commenced cohabitation in 1999 married on (omitted) 2002 according to the husband and on (omitted) 2002 according to the wife and separated on 12 April 2013 according to the husband and in January 2013 according to the wife.  They have one child X born (omitted) 2002.

3. The wife has two children from a previous relationship, Y born (omitted) 1992 and Z born (omitted) 1994.  They lived with the parties throughout the relationship so there was the one family unit.  Y continues to live with the wife and X; and Z lives independently.

4. Following separation the wife remained living in the former matrimonial home with the child.  He spends time with the husband four nights a fortnight, each alternate weekend from Thursday night to Sunday night and in the intermediate week on Thursday night.  He spends time during the school holidays.

5. The husband proposes assets and liabilities as follows:

Asset	Ownership	Value
Property L (Lot 1)	Joint	$ 315,000
Property L (Lot 2)	Joint	$ 200,000
(omitted) Utility	Husband	$     9,000
Honda (omitted)	Wife	$     9,000
Total assets	$ 533,000

Liabilities	Ownership	Value
Mortgage	Joint	$ 320,000
Husband’s personal loan	Husband	$     4,862
Husband’s tax liability	Husband	$   19,254
Total liabilities	$ 344,116
Net assets	$ 188,884
Superannuation	Ownership	Value
(omitted) Super	Husband	$   13,259
(omitted) Super	Wife	$     5,325
Total superannuation	$   18,584

1. The husband has a personal loan taken out after separation with a balance of about $14,500.  He used the money to pay legal expenses and to purchase items to set up his own home, including for the child.  The wife has a loan, originally $12,000, which she used for cosmetic surgery.  Neither party proposes either loan be included as a matrimonial debt.

2. The husband proposes that the house and the subdivided block of land be sold and the net proceeds be divided equally between the parties.  He would retain his liability for the personal loan and the taxation debt and each party would retain the motor vehicles.  He proposes the superannuation be equalised.  The submission on behalf of the husband is that the division of non-superannuation net assets as he proposes would result in a division of those assets 55% to the wife and 45% to the husband.

3. The wife wishes to retain the house with the mortgage and she proposes that this be done by selling the block of land and the proceeds be paid to the husband.  She says this will result in a division of the assets 70% to her and 30% to the husband.

4. Section 79 of the Family Law Act 1975 (Cth) provides for the division of property. The court must not make an order unless it is satisfied that in all the circumstances it is just and equitable to make the order. The parties’ relationship has come to an end and the basis upon which they had joint finances has ended. Both parties apply for an order. It is just and equitable to do so.

5. The next step is to determine the assets and liabilities.  The value of the two properties is proved by a valuer’s affidavit and report.  The amount of the mortgage is agreed.  The husband’s personal loan of $4,862 is acknowledged to have been taken out for the purpose of paying expenses associated with the subdivision.

6. The taxation debt is proved by statement from the Australian Taxation Office.  The wife says it was incurred following separation and so should not be treated as a matrimonial debt.  The wife says that the husband should have more superannuation, he should be paid superannuation by his employer.  The wife also alleges that the husband has more income than is disclosed by his taxation returns and assessment.  The husband owns an (omitted) Holden motor vehicle.  The wife alleges it should have some value.

7. The husband works as a (occupation omitted) for (employer omitted).  He is employed as a subcontractor and is paid a percentage of each quote.  His evidence is that he does not receive superannuation or holiday pay.  I am satisfied from the husband’s evidence that he is not paid superannuation.  The wife asserts that he should be and the husband asserts that he is not entitled to it.  I do not need to make a finding which is correct because I am satisfied the husband has not been paid superannuation by (employer omitted).

8. After separation the husband moved to rental premises and pays $1,256 rent per month.  The wife and child remained in the former matrimonial home. The husband paid child support and continued making about half the mortgage payments April 2014.  He says he could not afford to make his quarterly taxation payments and so incurred the tax debt.  He says he believes the amount is referable to income earned both before and after separation.  He acknowledged that on 22 August 2013 taxation records show he was in credit $926.  He acknowledges that before separation he drew $4,000 from the mortgage to pay his tax bill.

9. Initially there was a dispute about how long the husband continued making mortgage payments.  The mechanism was that the wife paid $600 a month into the husband’s account and an automatic debit paid the monthly instalments.  In the end, bank statements show that the husband continued contributing up until April 2014.  The mortgage payment was $1,087 per month so the wife paid more than half.  The bank statements show that the husband continued contributing until April 2014.  Payments then went into arrears and subsequently arrangements were made with the bank to pay interest only. The wife has since made the interest only payments.

10. The taxation office records show that the husband’s taxation debt was incurred subsequent to separation. It is difficult to determine whether any of it was for a period prior to April 2014 when the parties finances were to some degree still combined. Despite this it is not a debt incurred during and so associated with the course of the marriage. It should not be included as a matrimonial debt. It is something to be taken into account under s.75(2) of the Family Law Act 1975 (Cth).

11. The husband describes the (omitted) Holden as having rust in every panel.  It is not going.  He says it would cost more to restore that it would be worth in a restored condition.  While this is not an expert valuation it is the best indication available in the evidence.  It has no value.

12. The husband includes his personal loan of $4,862 as a matrimonial debt.  It should not be included as a matrimonial debt.  It is the balance remaining from a loan of approximately $5,000 the husband took out after the order of 13 July 2015 to pay for the remaining subdivision and valuation expenses.  Paragraph 1 of the consent part of the order provided for the parties to do what was necessary to complete the subdivision of the property and concluded with this:

    with all outstanding costs in relation to the subdivision of the land to be shared equally between the parties and to be paid by the husband in the first instance with the Wife’s share to be paid out of her share of the final division of assets.

13. Paragraph 3 of the order by the court on 13 July 2015 required the parties to obtain a valuation of the property with a similar provision for payment of the cost of the valuation.

14. The evidence that the husband took out the loan to cover these subdivision and valuation costs is from paragraph 3 of his affidavit affirmed on 25 June 2015.  He says that so far costs of subdivision had been paid by drawing on the joint mortgage, by agreement between the wife on him.  He says he estimates it will cost approximately $5,000 for completion and says that he is prepared to pay the costs provided he is reimbursed for those additional costs after the property is sold.  The order of 13 July 2015 provides for those costs to be shared equally.  The husband’s outline of case treats the balance of the loan as a matrimonial debt.  The provisions of the order of 13 July 2015 mean that he should be reimbursed half that amount.  To include the loan as a matrimonial debt and then order that the payment to the husband of half the costs of the subdivision subsequent to 13 July 2015 and half the cost of valuation is the double counting.

15. The next step is to consider the matters contained in s.79(4) of the Family Law Act 1975 (Cth), the financial and non-financial contributions to the acquisition preservation and maintenance of the property and contributions as homemaker and in caring for the children.

16. The parties had little in the way of assets at the commencement of their relationship.  The husband owned a caravan which he sold for $1,000.  The parties purchased the property in Property L in May 2007 for $220,000.  They obtained the first home owners grant but otherwise relied on money borrowed on mortgage.

17. The husband’s parents gave the parties $20,000 which was spent on renovations.  In April 2015 the husband obtained payment from her superannuation fund, (omitted) Super of $14,135.76.  She used $8,250 of that amount towards the mortgage which at that point was in arrears.  The Bank had served a default notice.  She used the rest for her general expenses.  Following separation the wife and child remained living in the former matrimonial home and, as already described, the parties shared the mortgage payments until April 2014.  The husband pays child support.

18. The husband worked throughout the relationship.  The wife to a lesser extent.  She did not work from one week prior to the birth of the child until the child was 18 months old.  Otherwise she worked part-time.  She studied to obtain (omitted) qualifications and work part-time so that she could look after all the children and the house.  After, the mortgage was converted to interest only in 2015 and the wife has been making those payments.

19. The parties’ financial arrangements throughout the marriage, the division of household tasks and the care of the child was by mutual agreement.

20. While the husband made a greater financial contribution, the wife contributed financially to the extent that she could consistent with having a child and caring for the child.  The husband, through his parents, made a contribution early in the ownership of the house of $20,000 while the wife contributed $8,250 at a later stage after separation.  The assessment of contributions is that they are equal.

21. The relevant matters under s.75(2) are the parties income and earning ability, the wife’s care of the child and the payment of child support by the husband. The wife works in disability support. At the time of separation her income was $35,526 a year. At February 2015 her salary was $43,160. The husband’s 2014 tax return shows an annual gross income of $68,918.

22. The wife says that the husband’s income was more, $104,915 in 2013/2014.  She produced a schedule which she says lists the husband’s invoices for a year.  The total is higher than the amount in the husband’s taxation return.  The husband has demonstrated that two of the amounts in this schedule are overstated.  An invoice dated 29 May 2014 for $17,808.30 is in the wife’s schedule.  The invoice, produced by the husband, is for $1,708.30.  The wife’s schedule includes an amount of $5,403.30 for July 2013.  The invoice, produced by the husband, shows $2,830.50.  The amount the wife includes is the sum of the GST exclusive total ($2,573) and GST inclusive total ($2,830.30), double counting. 

23. The husband says that the amounts the wife has used are GST inclusive.  The wife annexes correspondence which shows that the invoice books were discovered by the husband but they are not part of the evidence.  If the invoices were prepared properly they do include GST and there is no reason to doubt the husband’s evidence.  When the wife’s schedule is adjusted for the errors the husband has demonstrated and for GST the amount is close to the husband’s tax return.  I am satisfied his income is as stated in his tax return, about $70,000 a year.

24. The husband pays child support of $100 each week.  He has purchased clothing and some other items for the child.  The wife receives the family tax benefit.

25. The wife has the greater cost in the care of the child.  Her greater share in caring for the child limits her ability to work to a certain extent.  The net value of the property pool is relatively small.  The husband’s liabilities, the personal loan and his tax liability, total little over $20,000, although he will be compensated for half the personal loan as reimbursement to the wife’s share of the costs and expenses to complete the subdivision and valuation.  Taking into account the parties relative income earning potential, the relatively small size of the property pool and the wife’s greater responsibility in caring for the child the proper adjustment is 12½ % in favour of the wife.  The overall division is 62½ % to the wife and 37½ % to the husband.

26. The assets and liabilities are:

Asset	Ownership	Value
Property L (Lot 1)	Joint	$ 315,000
Property L (Lot 2)	Joint	$ 200,000
(omitted) Utility	Husband	$     9,000
Honda (omitted)	Wife	$     9,000
Total assets	$ 533,000

Liabilities	Ownership	Value
Mortgage	Joint	$ 320,000
Total liabilities	$ 320,000

Net Assets  $ 213,000

Superannuation	Ownership	Value
(omitted) Super	Husband	$   13,259
(omitted) Super	Wife	$     5,325
Total superannuation	$   18,584

1. The wife’s share of the net non-property assets is $133,125 and the husband’s $79,875.  The superannuation funds are to be equalised.

2. The remaining issue is what is the just and equitable way of putting into effect this result.  On 13 July 2015 the parties agree to a consent order that the husband and wife do what was necessary to complete the subdivision of the property with all outstanding costs to be shared and paid by the husband in the first instance with the wife’s share to be paid out of her share of the final division of assets.  They then agreed that Lot 2 should be sold and, after paying the costs and expenses of sale, the proceeds be applied in reduction of the mortgage.

3. The wife now proposes that the husband’s share of the assets be paid from the proceeds of sale of Lot 2 and that she retain Lot 1, the former matrimonial home.  For this to be done the wife would have to refinance the mortgage so that the husband has no liability under the mortgage.  She should be given this opportunity provided it can be done within a reasonable time.  If she cannot Lot 1, the former matrimonial home must be sold to discharge the mortgage.  This does not disadvantage the husband.  It is just and equitable and I will make orders accordingly.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Phipps

Date:  14 April 2016