Layman and Louise

[2007] FamCA 27

FAMILY COURT OF AUSTRALIA

LIMMEN & LIMMEN [2007] FamCA 27

FAMILY LAW – PROPERTY SETTLEMENT – Contributions – significant bequest by husband’s mother – significant gifts from wife’s brother – how they are treated – issues of credit of parties.

Chang v  Su  (2002) FLC 93-117.
Essex & Essex (No. 2) [2007] FamCA 639 (unreported)
Hickey and Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
L & L [2004] FamCA 1010 (Full Court - unreported)
Pellegrino & Pellegrino (1997) FLC 92-789
Perrett & Perrett (1990) FLC 92-10

APPLICANT: MRS LIMMEN

RESPONDENT: MR LIMMEN

FILE NUMBER: HBF 1620 of 2004

DATE DELIVERED: 16 January 2008

PLACE DELIVERED: Hobart

PLACE HEARD: Hobart

JUDGMENT OF: Benjamin J

HEARING DATE: 12, 13 & 14 December 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:	Mr Michael Trezise
SOLICITOR FOR THE APPLICANT:	Dobson Mitchell & Allport
COUNSEL FOR THE RESPONDENT:	Mr Tony Fitzgerald
SOLICITOR FOR THE RESPONDENT:	Fitzgerald & Browne

Orders

1. The husband do all acts and sign all documents and do all acts to transfer to the wife the whole of his right, title and interest in property situate and known as N in Tasmania, together with Holden Commodore motor vehicle registration no. … and the heavy vehicle.  Such documents to be signed and returned to the wife within twenty eight (28) days of being forwarded to the husband and to the husband’s solicitors.

2. The husband pay to the wife the sum of $528.00, within twenty eight days from that date of these orders.

3. Upon payment of the sum referred to in order 2 above, the wife do all acts and sign all documents and do all acts to assign to the husband the whole of her right, title and interest in the following:-

   (a)monies held in joint names of the parties with the C Bank, with an agreed value of $143,000.00, or the balance of that sum if the husband directs, authorises and gives effect to payment to the wife of the sum provided in Order 2 from such account ;

   (b)funds held in the husband’s name in the F Bank;

   (c)S Bank Brokerage (account …2);

   (d)S Bank Brokerage (account …1);

   (e)S Bank Brokerage IRA (account …3);

   (f)B Bank Brokerage (account …1);

   (g)B Bank IRA account (account …2); and

   (h)H Bank account in the name of the husband.

   IT IS DECLARED

4. The funds held in the accounts set out in order 3 above are, as against the wife, the property of the husband.

   IT IS FURTHER ORDERED

5. The wife indemnify the husband in relation to the Mastercard liability of about $4,400.00 and the Visa card liability of about $6,200.00

6. The husband indemnify the wife in relation to the taxation liability in America of about $8,793.00.

   IT IS FURTHER DECLARED

7. The husband shall be entitled, as against the wife, to the Ford F-150 and Isuzu Rodeo motor vehicles and the household contents and chattels in the husband’s possession.

   IT IS FURTHER ORDERED

8. Each party shall otherwise be entitled against the other to property (whether real or personal) in their possession or control (except as otherwise dealt with by these orders).

9. This matter be removed from the list of cases requiring determination.

10. All subpoenaed documents be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.

    IT IS CERTIFIED

11. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Benjamin delivered this day will for all publication and reporting purposes be referred to as Limmen & Limmen.

FAMILY COURT OF AUSTRALIA AT HOBART

FILE NUMBER: HBF 1620/2004

Mrs Limmen

Applicant

And

Mr Limmen  

Respondent

REASONS FOR JUDGMENT

1. These are proceedings between the wife and the husband in relation to property issues.  The wife seeks the orders to transfer the following assets to her sole name:-

   (a)property at N, which has an agreed value of $380,000.00;

   (b)monies held in a joint account with the C Bank, with an agreed value of $143,000.00;

   (c)Holden station wagon in Tasmania with an agreed value of $3,000.00;

   (d)Heavy vehicle with an agreed value of $7,500.00;

   (e)Wife’s household contents with an agreed value of $3,000.00;

   (f)Wife’s G bank account with an agreed value of $11,820.00;

   (g)Wife’s P Securities investments with a value of $56,435.00[1].

   [1] See Exhibit W3

2. The wife would be left with the liabilities from the credit card debts of about $10,600.00.  The husband would be left with the remainder of the assets and the tax debt of $8,793.00.

3. The husband seeks orders that the parties’ net assets, after taking into account the liabilities, be divided equally between them.  The wife would retain N property, her household contents, the Holden station wagon, a Toyota Hi-Ace van, the heavy vehicle, her G Bank funds and her P Securities investments.  The money held in the joint names of the parties with C Bank would be divided to give effect to an equal distribution.  The wife would retain the liabilities in relation to the credit cards and the husband would be pay the tax debt and retain the other assets.

4. The parties agree that the wife should retain N property, the Holden, her household contents and effects in Tasmania, Toyota Hi-Ace, the heavy vehicle, her G Bank account and the P Securities Investment.  The wife will be liable for the credit card debts.  The husband would retain the remainder of the funds and investments subject to the orders made in this court and the husband would be liable for the outstanding tax.

5. In these reasons any statement of fact is to be regarded as a finding of fact unless the contrary intention appears in the context of the statement.

6. Unless specified as otherwise, amounts set out in these reasons are Australian dollars.

   Background

7. The parties married and commenced cohabitation in the United States of America in March 1984.  At the date of hearing the wife is aged 66 and the husband is aged 61.  The parties separated on 10 April 2002 and the marriage was dissolved on 9 May 2005.  Proceedings were commenced in the Family Court on 26 August 2004 and were heard on 12, 13 and 14 December 2007.

8. The parties moved to Tasmania in March/April 2001 and soon after found the property at N.  They agreed to purchase that property and the settlement of the purchase was completed in November/December 2001.  The parties subsequently separated in April 2002.  The wife continued to reside in Tasmania and the husband has returned to and resides in the United States of America.  Both parties are citizens of the United States of America.

9. When the parties met the wife was working in welfare services.  She remained in that employment until about 1989.

10. The husband had been a civil servant and retired in December 1999.  He had been employed for twenty five years with the State in America

11. There are no children of the marriage nor have either of the parties have children of any other relationship.  Neither party had been previously married although the husband had been in a previous relationship with a person whom I will refer to as “SA”.  This relationship ended in about 1980.

12. There is no issue that in about 1992 the wife’s brother commenced giving assets to the parties by way of stock market shares.  It is not in issue that the total value of the stock given to the parties by the wife’s brother, between 1992 and the date of separation, amounted to about $200,000.00 (USD[2]). 

    [2] United States of American dollars

13. There is an issue as to whether that ought to be credited as a contribution by or on behalf of the wife or whether the gift ought to be treated as an equal contribution.

14. During the course of the marriage the husband received two bequests, one from his maternal grandmother for about $50,000.00 (USD) and the other, he asserts, from his mother of about $482,564.00 (USD).  There is no issue as to the bequests; however there are issues as to the amounts, how they were applied and how they ought to be dealt with.

    The principles to apply

15. The Full Court in Hickey and Hickey and A-G for the Commonwealth of Australia (Intervener) [(2003) FLC 93-143] at 78,386, reiterated the preferred approach to the exercise of discretion in property matters, pursuant to s 79:

    39. “The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79 (4) (a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79 (4) (d), (e), (f) and (g), (“the other factors”) including, because of s.79 (4) (e), the matters referred to in s.75 (2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEL and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.

    40.Section 79, unlike s.78, requires the Court to consider the whole of the property of the parties, however and whenever acquired, notwithstanding that the parties may only seek an alteration of interest in some of that property. As a consequence of the first step in the preferred approach to the determination of the s.79 proceedings, each party to the proceedings has an obligation to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto: Oriolo and Oriolo (1985) FLC 91-653; Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338 and Tate v Tate (2000) FLC 93-047.”

16. Thus the approach in this case involves a number of steps:-

    a.The identification of the property and its value;

    b.An evaluation of the parties’ contributions having regards to
    ss 79(4)(a)(b) & (c);

    c.Consideration of any adjustment to that assessment having regard to the relevant matters in ss. 79(d),(e),(f) & (g) (“the other factors”) including the matters referred to in s.75(2); and

    d.A review of the outcome against a just and equitable requirement.

Credit of witnesses

1. The wife gave evidence in accordance with her affidavit filed on the 29 November 2006 and relied upon her financial statement filed on the 29 November 2006.  The wife gave additional evidence, by leave, that she is in receipt of social security benefits from the Government of the United States.  This amounts to about $216.00 per week[3].  She has $11,820.00 in the GBank[4].  She said that her brother continued to give her money from the 2002 separation and that she has received two payments of $11,000.00 (USD) and two payments of $12,000.00 (USD). In March or April 2006 her brother paid her a further sum of $14,000.00.

   [3] Exhibit W1.

   [4] Exhibit W2.

2. In terms of her investments the wife says that she has a portfolio with P Securities which as at 1 October 2007 totalled $56,435.00[5].  She gave evidence that there was a MasterCard liability of $4,400 and a Visa liability of $6,200.  The Wife was not challenged as to these amounts in cross-examination and I accept that evidence.

   [5] Exhibit W3.

3. The husband had left a Toyota Hi-Ace motor vehicle at N property at the time the parties separated.  The wife gave evidence that the Hi Ace was not driveable and was full of rust. She says that she gave the vehicle to a neighbour.  She says it had no value.  She also said that the husband had owned property at K in the US and that that property was leasehold property.  K was sold and the parties received no money from that sale.

4. The wife agreed that the husband received an inheritance from his maternal grandmother and purchased a shed.  She was not sure of the cost of the shed but she said that it was eventually given away to a friend.  The wife said the sum of $10,000.00 (USD) was spent on the K house and she is not sure what happened to the balance.

5. As to paragraph 38 of the husband’s affidavit filed 4 April 2007 (“the husband’s affidavit”) the wife said she was aware he had received money from his mother’s estate but was not aware of the amount.  She does not know details of the money received or how it was spent.

6. In respect of paragraph 54 of the husband’s affidavit the wife said she was not aware of the loan of $80,000.00 (USD) by the husband from the estate of his late mother.  She said, however, that there was no need for the parties to borrow funds. 

7. The wife said she has not sold shares and not dealt with her shares.  The money previously held by her with S Bank was transferred to P Securities.

8. In relation to taxes in the United States, the wife said there are State and Federal income taxes and a taxpayer needed to be a resident of the State to obtain the benefit of resident tax.  She says she is no longer qualified as a resident of the State, and had not been a resident in that State since March 2001.  The wife lodged her 2002 IRS tax return and wanted to file her own tax returns separately.

9. The wife gave evidence clearly and consistently and made concessions where appropriate.  Counsel for the husband submitted that the wife’s evidence was tainted as she had shown significant dishonesty.  In that regard he referred the Court to paragraph 13 of the wife’s affidavit where she said that she established a business of her own providing home services.  It was “fairly lucrative and operated on a “cash only” basis”.

10. In evidence the wife resiled from this evidence and said that the “cash only” part of her business was after the premises she operated were abandoned and at a time when she was doing the work from home to home rather than at her premises.

11. The wife said in relation to that work she received $25.00 per home and the work was not consistent.  Her evidence seemed to be that she was earning about $1,000.00 per year from 1989 for three to four years.  The wife was frank in her admission that she did not pay tax on that sum over those years.

12. The husband gave evidence in accordance with the husband’s affidavit and in accordance with his financial statement filed on the 5 December 2007.  The husband said that in his first financial statement filed 24 May 2005 he had forgotten to put in the substantial B Bank accounts.  Counsel for the wife submitted that the husband would not have disclosed this information unless it was raised by the wife during the course of the proceedings.  I do not come to that conclusion.

13. Counsel for the wife also submitted that no clear picture has been painted as to the amount of monies the husband received from his mother’s estate nor did he provide details as to how that money was spent.  He submitted that the Court could not be satisfied as to the extent of the property and therefore could be less cautious than it would normally need to be.  He relied upon the principals set out in Chang v  Su (2002) FLC 93-117 and in particular paragraphs 57 to 71 and he specifically referred to paragraph 59 where the Court said:-

    “59.Counsel acknowledged that there exists a class of cases where the Court cannot be satisfied as to the extent of the property and can thus be less cautious than might otherwise be the position in making an order.

14. Counsel for the wife submitted that the evidence was such that I could infer that the husband had not made full and frank disclosure.  For the reasons set out later in these reasons I do not make such an inference.  From the evidence, it is clear that neither party endeavoured to budget and both parties spent without regard to their overall financial circumstances.  When the wife ceased receiving the income from the husband’s pension she continued living at the same rate, about $40,000.00 per annum and her savings were reduced accordingly.  I do not accept that the husband has failed to make full and frank disclosure.  I am not prepared to make a determination that his evidence ought to be treated as wholly unreliable although in some areas I may prefer his evidence to that of the wife and in other areas I may prefer her evidence in preference to his.

15. In paragraph 6 of the husband’s affidavit he was incorrect in terms of the purchase price on the K home and the amount he paid.

16. From the evidence I find that the husband and SA owned K as at the date of the marriage between the parties.  In January 1989 the husband purchased SA’s interest in K for $35,000.00 (USD).  In addition he paid out an existing mortgage to the H Bank of about $43,000.00(USD) and drew a further sum of $30,110.00(USD) for repairs to the property and for arrears of rent in respect of the leasehold.  I accept that the husband had a significant capital interest in that leasehold property at that time.  I find that the property was subsequently sold by the mortgagee and that the parties did not receive any capital benefit from it.  I accept that the property was tenanted from time to time[6].  That property was disposed of by the parties in about 2003 on the basis that they received no capital.

    [6] The K house was rented for about $1,400 (USD) per month and this was used to pay lease, land tax, municipal water rates & repairs

17. The husband’s evidence was not without blemish and submissions were made that he ought not to be believed particularly in terms of the borrowing of $80,000.00(USD) to purchase a property in Tasmania, alleged failure to supply documents, particularly in his failure to produce documents in respect of his mother’s estate.  This submission should be seen in the context of the accountant providing evidence from the United States during the course of the trial.

18. Whilst I have some concerns about some aspects of the husband’s evidence, I generally find that he was endeavouring to tell the truth and be frank in relation to the evidence he was giving.  I make no general adverse findings in respect of either party.

19. Evidence was given by Mr R, a Certified Practicing Accountant from America. He was cross-examined by telephone, during which time he confirmed the material set out in his affidavit filed on the 4 April 2007.  His qualifications were not challenged and I accept him to be a witness of truth.

20. Evidence was given by the husband’s sister in accordance with her affidavit filed 4 April 2007.  Initially, she was to give evidence via video-link from the United States; however, with the consent of counsel for both parties, this evidence was eventually given by telephone.  She was cross-examined by counsel for the wife.  Some of her evidence was different to that of the husband in terms of whether he asked to borrow $80,000 (USD) or whether she volunteered that sum and her views as to the knowledge of the wife about that loan.  I generally accept the evidence of the husband’s sister.

21. During the course of the trial the parties submitted that I should adopt an exchange rate of an Australian dollar buying 0.87c US in terms of converting US dollars to Australian dollars at the time of hearing.  I adopted that approach.

    Identification of property and its value

1. There were issues between the parties as to the extent and valuation of assets.  The pool of assets is as follows:-

N Property (agreed value)	$380,000.00
Husband’s Ford F150 motor vehicle (agreed value)	$1,300.00
Husband’s Isuzu Rodeo motor vehicle (agreed value)	$2,474.00
Wife’s Holden Station Wagon (agreed value)	$3,000.00
Husband’s household contents & other chattels (agreed value)	$5,900.00
Wife’s household contents & other chattels (agreed value)	$3,000.00
Toyota Hi-Ace  (determined by me)	Nil
Heavy vehicle (agreed value)	$7,500.00
Money invested in joint names of the parties with C Bank (agreed value)	$143,000.00
Husband’s F bank account[7]	$1,250.00
Husband’s S Bank account (…2) [8]	$1,834.00
Husband’s S Bank account (…1)	$   196.00
Husband’s S Bank IRA account (…3)	$18,870.00
B Bank account (…1)[9]	$1,220.00
B Bank IRA account (…2)[10]	$173,880.00
Wife’s G account[11]	$11,820.00
Wife’s P Securities Investments[12]	$56,435.00
Husband’s H Bank account (agreed amount)	$   140.00
Add-back sought by wife in relation to loan on purchase of N Property	Nil
Total assets	$811,819.00
LIABILITIES
Husband’s taxation liability	$8,793.00
Wife’s credit card liabilities with MasterCard & Visa	$10,600.00
Total liabilities	$19,393.00

[7] Exhibit H6.

[8] Exhibit H8.

[9] Exhibit H7.

[10] Ibid.

[11] Exhibit W2.

[12] Exhibit W3.

1. The net pool of assets is $792,426.00.

2. There was no evidence of superannuation other than the husband’s indexed life pension from America to which it was submitted, and I accepted, that it should be dealt with under the other factors.

3. The husband receives a pension entitlement at present of about $32,000.00 per annum (calculated in Australian dollars for the purpose of the hearing).  The husband’s evidence, which was not challenged, is that he pays Federal income tax of about fifteen per cent per year on that income.  This income increases two per cent each year.

4. There was said to be an issue about the wife’s credit card liabilities.  The wife incurred these liabilities subsequent to separation but which were applied in part towards supporting the wife from 2002 to the date of hearing.  The husband has met the minimum repayment on these credit card accounts from separation (except for a period of a few months during that course of that separation).  The wife had authorised the payment of these credit cards from their joint accounts however this authority was not acted upon.

5. There was an issue as to the amount of the credit card liability at the commencement of trial however the wife was not cross-examined on those amounts and as such I accept her evidence as to the credit card liabilities, that is she owes MasterCard and Visa card a total of $10,600.00.  I will include that as a liability when I come to the adjustment of property between the parties.

6. The wife sought an add-back of $80,645.00[13] as she claimed that there was no need to borrow monies from the Trust as there were sufficient monies to fund the purchase of N property and that the first she had heard of that liability was during the course of these proceedings.  This is the $55,000.00 (USD) paid by the husband to his sister, niece and nephew.

   [13] Being $55,000(USD) paid by the husband to his sister and his nephews after the commencement of these proceedings. The $80,465 being the exchange rate at that time.

7. The husband’s mother had died in 1999 and left the bulk of her estate to the husband and his said sister.  They were also co-trustees of the estate.  Her estate consisted mainly of savings accounts, the capital balance of some annuities, B Bank Brokerage accounts and residential property which was encompassed in a trust called L Family Trust (“the [L] Trust”).

8. The husband deposes that in October 2001 he borrowed that sum of $80,000(USD) from the L Trust.  This was supported by evidence from the husband’s sister, she confirmed material set out in her affidavit filed 4 April 2007.  The affidavit had annexed to it a copy of an agreement between the husband and his sister in respect of that loan

9. The husband was cross-examined as to the necessity for borrowing these funds.  He was somewhat vague as to the reason he borrowed the funds but there is evidence that the funds were paid into the S Bank account …1[14]. 

   [14] Exhibit H3

10. The evidence of the husband’s sister was that she and her husband had borrowed $30,000.00 (USD) from the trust one year before to buy their home and that when asked she was content to lend the money to the husband.  Her evidence was that the husband contacted her and requested the money to purchase the property in Tasmania.  She said the contact occurred when he was in Tasmania or America.  She said that the husband prepared a loan document[15].  The husband was challenged as to the veracity of this acknowledgment as was the husband’s sister.

    [15] Annexure to affidavit of husband’s sister

11. The husband said he arranged for the borrowings in anticipation of buying the property in Tasmania but did not use the funds.  The funds remained in the S Bank account and were eventually disbursed in accordance with the terms of the trust that is, $15,000.00 (USD) to each of his niece and nephew and $25,000.00 (USD) to the husband’s sister.  The balance of $25,000.00(USD) was retained by the husband as it was his part of his entitlement to his mother’s estate.

12. Whilst some of the evidence between the husband’s sister and the husband was different, it must be recalled that these were events which occurred many years ago and, on balance, I am satisfied that the loan was made to the husband, he decided to keep the money as an investment and then it was repaid some years later.  The husband did not pay the interest to the estate despite provided for same in the agreement.

13. There was an issue as to whether the wife knew about the loan from the L Trust.  On balance I prefer the evidence of the husband’s sister, the wife having visited and stayed with her in the United States after the loan was made.

14. I am satisfied that the loan was made and was appropriately repaid, that is $55,000.00(USD) to the other beneficiaries with the husband retaining $25,000.00(USD).  Accordingly, I will not be adding that sum back into the pool.

15. The husband claimed that included in the assets should be a Toyota Hi-Ace van which was acquired by him when he was in Tasmania.  He said this had a value of $2,000.00.  The evidence of the wife, which I accept, was that this vehicle was not in a saleable condition and was rusted.  The vehicle was towed away by a neighbour.  I accept that the vehicle has no value.

16. The husband has two accounts styled as “IRA” accounts.  These are retirement accounts where, apparently, citizens of the United States are encouraged to save monies.  The first of these accounts is with B Bank (account …2) which has a credit in it of $173,880.00 (Australian dollars)[16].  In addition the husband has an IRA account with S Bank[17] which has in it $18,894.00 (Australian dollars)[18].

    [16] See Exhibit H7

    [17] Exhibit H8

    [18] Exhibit H8

17. Evidence was given by the husband that these IRA accounts were retirement accounts which could not be accessed without tax penalty until after the account holder reaches a certain age. There was an issue during the trial as to that age.  The husband’s evidence was that he needed to be aged sixty one years and six months.  This would have meant he was entitled to those funds in February 2008.  In earlier correspondence and e-mails from the husband it was said that the relevant age was fifty nine and a half years of age[19].

    [19] See paragraph 3 of letter (Exhibit W16) and email from husband final dot point page 2.

18. The evidence of Mr R was that the husband was entitled to those funds at fifty nine and a half years.  I accept that evidence.  I do not make an adverse finding against the husband in terms of his mistake as to knowledge of this applicable date.

19. Counsel for the wife submitted that the pool of assets should include the following:-

S Bank Brokerage account …2	$57,000.00
S Bank Brokerage account …1	$57,600.00
B Bank Brokerage account …1	$134,000.00

1. In terms of that submission the wife relied upon the consolidated list of assets and liabilities prepared in these proceedings on 19 December 2005[20] .  The essence of the submissions by the wife’s counsel is that these funds have been either hidden or otherwise disposed of by the husband.  The sum totals $248,000.00.  Deducted from that ought to be the tax payable on the sale of the parties Microsoft shares in 2001 totalling about $63,760.00.00 (AUS) leaving a net “add-back” of about $184,000.00.00 (AUS).

   [20] Exhibit W4.

2. This argument is based upon the wife’s submission that no adequate explanation has been given as to the monies received by the husband in terms of his mother’s estate and how those sums were disbursed.  It is submitted by the wife that the husband has not made discovery of relevant documents.

3. On the evidence of the husband, he received about $482,564.00 in relation to his mother’s estate[21].  After the parties acquired N property the money left in the primary S Bank account was about $77,836.00(USD)[22].  Thus they had some $560,400.00(USD) available at that time.  Since that time the evidence is that the husband has paid about $100,000.00(USD) in tax, he contributed $49,000.00(USD) towards the home at N and $50,000.00(USD) was paid by way of accounting fees for the preparation of tax returns and legal costs.  Neither party sought add-backs in relation to legal costs although an opportunity was given in that regard.

   [21] See husband’s affidavit paragraph 38.

   [22] Exhibit W12.

4. There is no issue that about $200,000.00(USD) was spent in these ways reducing the pool to about $360,000.00(USD).

5. The parties had a practice of drawing monies against their investments upon which to live.  Between April 2002 and 2005 the husband drew against capital to meet his living expenses.  The whole of the husband’s retirement pension at that time was being paid to the wife.  Having regard to that evidence and the evidence of the husband that he was spending about $44,000.00(USD) per year in living expenses, perhaps more with rent.  In the five years since separation the husband was not in paid employment and would have spent in the vicinity of $200,000.00(USD) on his living expenses.  In the last two years he has been receiving a pension which would have reduced that amount by about $40,000.00(USD) to $50,000.00(USD). 

6. The husband gave evidence that he spent about $20,000.00(USD) on eye and oral surgery and travelling expenses of about $20,000.00(USD) coming and going to Australia.

7. There is money left in the accounts which must reflect the monies made available through the wife’s brother and through the husband’s late mother’s estate.  I do not accept that there is evidence sufficient for me to make the findings sought on behalf of the wife with regard to adding these sums back nor am I satisfied that there is evidence that the husband has intentionally concealed assets.  Accordingly, I will not be adding back those sums sought by the wife.

8. Some criticism was made of the husband when Mr R, the accountant, disclosed part of the mother’s estate was a capitalisation of annuities payable to the husband’s late parents.  From the evidence of the accountant I find that those capital sums were paid to the husband in terms of his entitlement under his late mother’s estate as was the proceeds of sale of her home and shares.  The fact that the husband is not clear on how the money was spent is not such as would, in my view, base a finding as sought by the wife.

Contributions

1. At the commencement of the relationship the husband had commenced his entitlement to his pension having worked ten years with the US civil service.  The husband had a one half share in the K property which he acquired, as set out earlier, from SA.  This property involved significant contributions by the parties and was described by the husband as a “money pit”.  However it did allow the parties to purchase other properties and use the K property as security for that purpose. 

2. This property was rented from time to time but involved the parties in expense.  The husband asserts that he had an equity in that property of about $110,000.00 at the time he paid out SA.  He based this upon his evidence of the value of the property when they acquired it at $220,000.00.  I have concerns about the quality of that particular evidence.  There is no satisfactory evidence as to the value of K at 1989.  The only evidence of value was in relation to the sale of the property some years later and the parties received no capital.  I give little weight to the contribution of this property by the husband to the property of the parties at the commencement of the relationship.

3. Each of the parties owned modest cars at the time they commenced living together and had personal effects.  The husband had an interest in the K property which I have referred to above which, on balance, was not a significant asset for the parties except for their ability to borrow in respect of another property.

4. The wife’s brother provided to the parties the sum of about $200,000.00(USD) during the course of the marriage.  This was in the form of shares.  I find that this was a contribution by or on behalf of the wife.  The fact that the money was given to the parties as an apparently legitimate tax minimisation scheme by the wife’s brother does not derogate from the source of those funds.  The funds were invested with S Bank and were invested primarily in shares in Microsoft.  At one stage these shares achieved a value of about $497,000.00(USD) when the 3,940 Microsoft shares reached a sale price of $116.75(USD).  This was in November 1999.

5. In 2001 the parties needed to sell the majority of these shares to purchase N property.  The parties had about 4,120 Microsoft shares of which 3,166 were sold for $60.00(USD) returning capital of $189,858.00(USD).  The parties had been using a margin account to fund their living expenses and out of that sum about $105,000.00(USD) was paid to the parties and used for part of the purchase price of N property in Tasmania and the balance of about $85,000.00(USD) was used to pay out the then margin loan.

6. I regard this contribution as a contribution of about $200,000.00(USD) on the part of the wife.  Chisholm J in Pellegrino & Pellegrino (1997) FLC 92-789 analysed a series of cases considering how gifts from relatives of parties should be treated.  He said that donating parents

   “are happy to benefit both parties”.  He went on to conclude:-

   My reading of the authorities is that in such cases it is normally appropriate to treat the provision as a contribution made by or on behalf of the spouse whose parents made it.

7. In the unreported Full Court decision of L & L [2004] FamCA 1010 the Full Court said:-

   148. The correct approach to gifts coming from the family of one of the parties is a matter of settled law.  That approach requires that the gift be treated as a contribution on behalf of the parties from whose family the gift originated: Gosper & Gosper (1987) FLC 91-818 referred to.  While an exception is sometimes made where the gift is bestowed for the benefit of both parties, that exception ought not to apply in the circumstances of this case.

   Counsel for the wife submitted that the exception should apply in this case.  With respect I do not accept that submission.  It is clear to me that the gift would not have been made to the parties but for the relationship between the husband and his family, and the exception referred to in Lorriman would likewise not apply in this case.  I find that the gifts were made for the benefit of the husband.

8. In Essex & Essex (No. 2) [2007] FamCA 639, I said the following:- 

   37          There is no difference in this case and as I have said earlier, the gifts were made for the benefit of the wife.  It was argued that because the intent of the gift was to save […] tax it should be treated as contribution by each party”.

9. The factual situation is that the wife’s brother gave the parties each about $10,000.00(USD) a year for ten years.  When the parties’ relationship broke up the gifts made by the wife’s brother were then made to his sister alone.  Irrespective of the reasons he made the gifts they were intended to benefit the wife and they did so.

10. I also have regard to the evidence that the wife’s brother provided $46,000.00(USD)[23] to the wife during the first four years after separation and $14,000.00 in 2007.  I have had regard to those contributions.

    [23] Two payments of $11,000.00(USD) and two payments of $12,000.00 (USD).

11. In her affidavit the wife deposes[24] that she applied her S Bank IRA account which she had in her name to reduce a margin liability.  Her evidence was that these funds were received from her late mother’s estate and from her employment.  That sum, of about $32,106.00(USD), was transferred to reduce the margin liabilities.  This was a contribution by the wife.

    [24] Paragraph 16 wife’s affidavit

12. The husband deposes that when his mother died he received a bequest of $482,564.00(USD).  Included in that sum was the $25,000.00(USD) not repaid on the loan from the trust.

13. The evidence of Mr R was the value of the estate to the husband and his sister was about $550,000(USD) each.  I accept the husband received between $480,000.00(USD) and $550,000.00(USD) from his mother’s estate.  This money was invested in various ways and used by the parties.  In evidence the husband said this money was used for travelling expenses, living expenses, travelling to America, travelling to Australia and included relocating to Australia.  It is not an issue that the husband provided the whole of his pension to the wife from the date of separation until about 2005.  This involved payments to her of about $2,500.00 to $2,700.00 per month.  The wife had an annual expenditure of about $40,000.00 per year.  The husband had a similar expenditure in US dollars.

14. The husband incurred significant tax liabilities for a number of reasons.  The first was that he did not lodge income tax returns for the tax years 1998 to 2005.  As a consequence, (excluding the 2001 and 2002 tax years) he had a tax liability of about $12,253.00(USD)[25].

    [25] See paragraph 14 of the affidavit of Mr R.

15. In 2001 the parties purchased the property at N.  They paid $210,000.00 to purchase that property and incurred stamp duty of about $6,000.00.  To fund that purchase the parties sold the Microsoft shares (referred to earlier).  This provided approximately $105,000.00(USD) to the purchase plus $49,000.00(USD) from the husband.

16. As a consequence of selling those shares, the parties incurred a Federal and State Tax liability of $55,462.00(USD)[26].  This could have been less about $8,000.00 (USD) had the wife agreed to lodge a joint income tax return[27].

    [26] See paragraph 16 of Mr R’s affidavit.

    [27] See paragraph 17of Mr R’s affidavit.

17. Mr R’s evidence was that the US taxation authorities would have required payment of the capital gains tax by the husband as the wife was out of the jurisdiction.  It was therefore prudent for the husband to include the whole of the capital gain in his income tax return.

18. Unfortunately the wife had lodged a 2002 taxation return on a single basis and it was not possible for her to lodge an amended income tax return for 2001 as a joint return as it was said by Mr R to be “statute barred”.    The whole of the tax of $55,462.00(USD) was a tax debt incurred by the parties.

19. In 2002 the husband incurred State and Federal taxes of $39,431.00(USD).  This arose by virtue of the estate of his late mother.  Some annuities were transferred to him as part of the estate and there was tax payable on those annuities.  The amount the husband received from his mother’s estate was reduced by that sum of about $40,000.00(USD) in tax.

20. The wife has had the benefit of occupation of the former matrimonial home at N from separation to date.  The purchase of that property was contributed as to $105,000.00(USD) out of the Microsoft shares (which were provided by the wife’s brother) and $49,000.00(USD) of the husband’s money from his mother’s estate.  I find that both parties worked on the property after it was acquired although the husband has not done such work subsequent to separation.  The husband provided support to the wife by virtue of his pension until 2005.

1. I make no criticisms of the wife in not signing joint tax returns.  There was an issue as to whether the husband asked the wife prior to separation or shortly after separation.  I make no negative finding against the wife in that regard.

2. Each party made various contributions in their own way both financial and non-financial other than these contributions.  The husband received a bequest from his maternal grandmother of $50,000.00(USD).  Of that $30,000.00(USD) was lost through a broker.  Of the balance of $20,000.00(USD), $10,000.00(USD) was used in repairs to the K home and $10,000.00(USD) was used to buy a shed for the wife’s business, which shed was not erected and was subsequently given away.  I treat this bequest from the husband’s grandmother as a contribution of about $20,000.00(USD) by the husband.

3. The contributions of the parties in terms of their employment were essentially equal except in terms of the husband’s pension from the US after he retired in 1999.  The wife undertook a role as housewife and carer.  They both worked in different ways in terms of improvement of the properties of the parties.

4. At the time the parties commenced living together they lived in accommodation provided through a friend of the wife.  This accommodation was rent free on behalf of the wife and involved a small rental payment (not a commercial payment) on the evidence of the husband.  I prefer the wife’s evidence in this regard and I find this was a contribution by the wife by way of providing accommodation.

5. On balance and after considering all of the evidence I find that contributions by the parties were equal. 

   Other factors

6. The husband is in receipt of a US State Retirement Pension which in Australian dollars is approximately $32,000.00 per year.  From this he is liable for Federal taxes in the United States of about fifteen per cent which leaves him a net income of about $27,300.00 per year. From the evidence it is clear that the husband accumulated this benefit over the twenty five years from 1974 to 1999.  The husband was married to the wife from 1984.  About sixty per cent of the time that the husband was working to create the entitlement to this pension, he was living with the wife.  I have had regard under s75(2)(o) of the Act that forty per cent of the husband’s entitlement to the retirement pension accumulated in the years before the parties commenced cohabitating. 

7. At present the husband is not paying US State tax on that pension as it is a State Pension and is State tax free if the husband remains a resident of the State, which on the evidence of the husband and Mr R in that he has a residence in that State and votes in that State.  The evidence of the husband’s accountant was that as long as this continues he would not be liable to pay State tax on that pension.  The evidence of the husband is that he will continue to be a resident of the State for the purpose of income tax.

8. The wife is in receipt of social security from the US Government of about $11,232.00 Australian dollars per year.   The evidence of the husband is that he is not entitled to social security as he did not pay money for such benefit in the United States.  From his evidence, I find that social security is an entitlement of US taxpayers who make payments during their working lives to the Federal Government of the United States, which the wife did.

9. The wife’s social security payments are somewhat different from Australian pension entitlements, which are not contributory, and US Social Security should be treated akin to a retirement pension.

10. The difference in income of the two parties is about $16,000.00 per year.  The husband is not entitled to social security benefits as he had built up his entitlement to the pension.  I have had regard to the significant difference in the income between the parties that is, $16,000.00 per year.  In his submissions counsel for the husband referred me to Full Court decision in Perrett & Perrett (1990) FLC 92-101 where the Full Court said that:-

    “A pension, such as a retirement pension of the husband, ought to be treated as a “continuing and permanent financial resource under s75(2) and to treat it accordingly”[28]

    [28] Page 77,660

11. I have had regard to this financial resource of the husband in terms of the other factors under s79.

12. The evidence of the wife is that she is professionally qualified in her home State in the US and that those qualifications are interchangeable between States.  The wife worked in the emergency department of a hospital in her home State.  The wife gave evidence that she had renewed her certification but had not pursued that renewal within the State of Tasmania.  The wife’s Australian visa enables her to work twenty hours per week in paid employment.  The wife’s evidence was that she assisted in looking after injured wildlife and cares for animals.  She also provides first aid in her local community.  I find that the wife has an earning capacity as a welfare worker and has not exercised that earning capacity.

13. The wife raises no issue as to her health and neither party have any other person to support.  As indicated earlier the husband has a pension of which I have given regard.  The husband has an earning capacity but there is no sign that he is exercising that earning capacity.  The husband makes no complaint about his health and has access to both his IRA accounts.  The wife is older than the husband and whilst she does have an earning capacity that may be limited as she becomes older.

14. The husband is in receipt of a US State Retirement pension, which in Australian dollars gives him an income of approximately $32,000.00 per year with a net income of $27,300.00 per year.

15. It was argued, on behalf of the husband, that the wife has the benefit of the funds provided by her brother.  This ought to be treated as a financial resource to the wife.  In essence this is a gift to the wife, each year by her brother.  This gift has been made to her since separation and had been made to the wife and the husband for about ten years prior to their separation in April 2002.

16. This is different to a pension where there is an obligation to pay whilst a party is alive.  Whilst these gifts have been constant during and after the marriage, they are absolutely at the discretion of the wife’s brother.  This is a financial resource but I give it little or no weight in the context of the other factors.

    Just & equitable

17. Having regard to all of the facts and circumstances in this case I propose to make an adjustment in favour of the wife of seven per cent.

18. The effect of my determination is that there will be a division of property as to fifty seven per cent to the wife and forty three per cent to the husband. Fifty seven per cent of the pool of assets $451,683.00 and forty three per cent is $340,743.00.

19. In those circumstances the wife would receive the following:-

N property (agreed value)	$380,000.00
Holden station wagon	$3,000.00
Wife’s household contents	$3,000.00
Toyota Hi-Ace	$0.00
Heavy vehicle	$7,500.00
Wife’s G bank account	$11,820.00
Wife’s P Securities investments	$56,435.00
Total	$461,755.00

1. The wife would be left with the taxation liabilities of $10,600.00 making a net amount in the wife’s hands of $451,155.00. Fifty seven per cent of the pool is $451,683.00.  Therefore the husband would need to pay the wife the sum of $528.00 so that the wife would receive fifty seven per cent of the asset pool.

2. The husband would retain the following:-

Ford F100 motor vehicle	$1,300.00
Isuzu Rodeo motor vehicle	$2,474.00
Husband’s household contents	$5,900.00
Money invested in joint names with C Bank	$143,000.00
Husband’s F bank account	$1,250.00
Husband’s S Bank account (…2)	$1,834.00
Husband’s S Bank account (…1)	$196.00
Husband’s S Bank account (…3)	$18,870.00
B Bank account (…1)	$1,220.00
Husband’s B Bank IRA account (…2)	$173,880.00
H bank account	$140.00
Total	$350,064.00

1. The husband would be left with taxation liability of $8,793.00 making a net amount in the husband’s hands of $341,271.00.  From this the husband would need to pay the wife $528.00, leaving a net balance of $340,743.00, which is 43% of the total asset pool.

2. I am of the view that this is just and equitable.

I certify that the preceding 107 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin

Legal Associate     :          

Date  :          16 January 2008.