Lester & Lester

[2007] FamCA 246

FAMILY COURT OF AUSTRALIA

LESTER & LESTER [2007] FamCA 246

FAMILY LAW - PROPERTY - Settlement in relation to marriage

Family Law Act 1975 (Cth) - s 75(2), s 79

Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355
Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414

APPLICANT: Mrs Lester

RESPONDENT: Mr Lester

FILE NUMBER: SYF 3616 of 2006

DATE DELIVERED: 23 March 2007

PLACE DELIVERED: Sydney

JUDGMENT OF: Johnston JR

HEARING DATE: 7 December 2006

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Simpson, SC

SOLICITOR FOR THE APPLICANT: Newnhams Solicitors

COUNSEL FOR THE RESPONDENT: Mr Anderson

SOLICITOR FOR THE RESPONDENT: Blackshaw Lindsay, Solicitors

Orders

1. That within 42 days the wife pay to the husband the sum of $475 293.

2. That on and contemporaneously with the payment by the wife of the above sum the husband do all things and sign all documents necessary to cause his interest in the property situate at and known as V to be transferred to the wife.

3. That in the event that the wife fails to comply with order 1 above the following shall apply:

   (a)The husband and the wife shall forthwith place the said property on the market for sale by private treaty at a price agreed between the husband and wife and failing such agreement at a price equivalent to the mean of two valuations by registered valuers being members of the Australian Institute of Valuers, one obtained by and at the expense of the wife and one obtained by and at the expense of the husband, such valuations to be made not more than two (2) weeks apart from each other.

   (b)That in the event that the home is not sold by private treaty within six (6) months from the date of this order the applicant wife and the respondent husband do all acts and things necessary and execute all deeds documents instruments and writings necessary to procure the sale of the home by public auction and in particular:

   (a)Place the home with auctioneers selected by the husband for the sale of the home by public auction at the earliest possible date;

   (b)Execute all documents requested by the auctioneers for the sale of the home by auction;

   (c)Request the auctioneers to recommend a reserve price to be placed on the home for the purpose of the auction sale and accept such a recommended reserve price;

   (d)Pay to the auctioneers any sums required and requested for advertising expenses in relation to the auction;

   (e)Give such instructions to Blackshaw Lindsay solicitors for the preparation of an appropriate contract and other documents as are necessary for the sale of the home by auction;

   (f)Cooperate in every way with the auctioneers in relation to the auction of the home including making a key available, allowing inspection of the home at times requested by the auctioneers and ensuring that the matrimonial home is in a neat and clean condition at the time of inspection by prospective purchasers;

   (g)Attend at the auction sale of the home and negotiate with the highest bidder in the event that the reserve price is not reached;

   (h)Accept the advice of the auctioneers as to the acceptance of a price less than the reserve price;

   (i)Execute the contract of sale;

   (j)Execute all other documents necessary to complete the sale of the home.

4. That upon the sale of the home the husband and wife shall do all acts and things necessary to procure the payment from the proceeds of sale in the following manner and priority:

   (a)In payment of the agent’s commission and auction expenses if any due on the sale;

   (b)In payment of legal costs of sale;

   (c)Payment to the wife or as she may direct in writing 56.792 percent of the balance; and

   (d)The balance then remaining to the husband.

5. That to such extent as may be necessary both parties do all acts and things necessary to dissolve the partnership as from 1 July 2006 known as L Pty Limited and the wife transfer to the husband all her right, title and interest in any of the property of that partnership.

6. That the husband indemnify the wife as and from 1 July 2006 in respect of any of the liabilities of the partnership previously conducted in the name L Pty Limited.

7. That the wife do all things necessary to:

   (a)Transfer to the husband all her right, title and interest in the Mercedes Benz motor vehicle registration no. … ;

   (b)Assign to the husband such interest, if any, she may have in the Commonwealth Life Business Superannuation Bonds held by the Husband or the Husband and Wife jointly.

8. That each party otherwise be declared to be the owner to the exclusion of the other of any items of personalty or choses in action presently in the possession and / or control of each.

9. That liberty be reserved to apply on 7 days notice regarding any further implementation of these orders.

10. That in the event that either party refuses or neglects to execute any deed or instrument necessary to give force and effect to all or any of these orders the Registrar of the Family Court of Australia at Sydney be appointed pursuant to section 106A of the Act to execute such deed or instrument in the name of the wife and to do all other acts and things necessary to give validity and operation to the said deed or instrument.

11. That all exhibits be released.

12. That the above orders not commence operation until 13 April 2007.

13. That both parties have leave to re-list these proceedings prior to 13 April 2007 by arrangement with the Associate to Judicial Registrar Johnston in relation to the form of the orders only.

FAMILY COURT OF AUSTRALIA AT  

FILE NUMBER: SYF 3616 of 2006

Mrs Lester

Applicant

And

Mr Lester

Respondent

REASONS FOR JUDGMENT

Applications

1. Mrs Lester, to whom for convenience I shall refer as “the wife” seeks orders to the following effect:

   (1)That the wife pay to the Husband the sum of Three Hundred and Fifty Thousand Dollars ($350 000) on or before the expiry of one hundred and twenty (120) days.

   (2)That on and contemporaneously with the payment by the wife of the sum the subject of order 1 hereof that the husband do all acts and things and execute all documents necessary to cause the husband’s interest in the property situate at and known as V to be transferred to the wife.

   (3)In the event that payment is not made by the wife pursuant to order 1 within the time limited by that order the former matrimonial home shall be sold and from the net proceeds of sale the husband shall be paid $350 000 together with interest thereon at the rate prescribed pursuant to the Family Law Regulations and the balance shall be paid to the husband.

   (4)To such extent as may be necessary both parties do all acts and things necessary to dissolve the partnership as from 1 July 2006 known as L Pty Limited and the wife transfer to the husband all her right, title and interest in any of the property of that partnership.

   (5)That the husband indemnify the wife as and from 1 July 2006 in respect of any of the liabilities of the partnership previously conducted in the name L Pty Limited.

   (6)That the wife do all things necessary to:

   (a)Transfer to the husband all her right, title and interest in the Mercedes Benz motor vehicle registration no. … ;

   (b)Assign to the husband such interest, if any, she may have in the Commonwealth Life Business Superannuation Bonds held by the Husband or the Husband and Wife jointly.

   (7)That each party otherwise be declared to be the owner to the exclusion of the other of any items of personalty or choses in action presently in the possession of each.

   (8)That liberty be reserved to apply regarding any further implementation that may be necessary of orders 1 to 2 hereof.

2. On the other hand Mr Lester, to whom for convenience I shall refer as “the husband” seeks orders to the following effect:

   (1)That the application of the wife filed 10 August 2006 be dismissed.

   (2)That the applicant wife and the respondent husband do all acts and things necessary to forthwith place the former matrimonial home known as and situate at V (hereafter called “the home”) by private treaty at a price agreed between the husband and wife and failing such agreement at a price equivalent to the mean of two valuations by registered valuers being members of the Australian Institute of Valuers, one obtained by and at the expense of the wife and one obtained by and at the expense of the husband, such valuations to be made not more than two (2) weeks apart from each other.

   (3)That in the event that the home is not sold by private treaty within six (6) months from the date of this order the applicant wife and the respondent husband do all acts and things necessary and execute all deeds documents instruments and writings necessary to procure the sale of the home by public auction and in particular:

   (a)Place the home with auctioneers selected by the husband for the sale of the home by public auction at the earliest possible date;

   (b)Execute all documents requested by the auctioneers for the sale of the home by auction;

   (c)Request the auctioneers to recommend a reserve price to be placed on the home for the purpose of the auction sale and accept such a recommended reserve price;

   (d)Pay to the auctioneers any sums required and requested for advertising expenses in relation to the auction;

   (e)Give such instructions to Blackshaw Lindsay solicitors for the preparation of an appropriate contract and other documents as are necessary for the sale of the home by auction;

   (f)Cooperate in every way with the auctioneers in relation to the auction of the home including making a key available, allowing inspection of the home at times requested by the auctioneers and ensuring that the matrimonial home is in a neat and clean condition at the time of inspection by prospective purchasers;

   (g)Attend at the auction sale of the home and negotiate with the highest bidder in the event that the reserve price is not reached;

   (h)Accept the advice of the auctioneers as to the acceptance of a price less than the reserve price;

   (i)Execute the contract of sale;

   (j)Execute all other documents necessary to complete the sale of the home.

   (4)That upon the sale of the home the husband and wife shall do all acts and things necessary to procure the payment from the proceeds of sale in the following manner and priority:

   (a)In payment of the agent’s commission and auction expenses if any due on the sale;

   (b)In payment of legal costs of sale;

   (c)Payment to the husband or as he may direct in writing the sum of $705 030;

   (d)The balance then remaining to the wife.

   (5)That within seven days of the date of these orders the wife do all acts and things and execute all deeds, documents, instruments and writings necessary to procure the transfer to the husband free of all encumbrances the Mercedes Benz motor vehicle registration number … presently at the home and in the possession of the wife, and do all acts and things necessary to permit him to remove the motor vehicle from the premises in which it is garaged.

   (6)That the wife forthwith do all acts and things and execute all deeds, documents instruments and writings necessary to transfer to the husband any interest held by her in L Pty Ltd, and/or to dissolve the partnership known as L Pty Ltd, and to resign from any position held by her in L Pty Ltd.

   (7)That the wife do all things necessary to assign to the husband such interest if any she may have in the Commonwealth Life Business Superannuation Bonds held by the husband or the husband and wife jointly.

   (8)That other than as herein provided, the husband and wife each remain the sole legal and beneficial owners of all other items of property presently in their respective possession or control including but not limited to money, shares, real property, motor vehicles, entitlements to superannuation, furniture, furnishings and personal effects.

   (9)That in the event the wife refuses or neglects to execute any deed or instrument necessary to give force and effect to all or any of these orders that the Registrar of the Family Court of Australia at Sydney be appointed pursuant to section 106A to execute such deed or instrument in the name of the wife and to do all other acts and things necessary to give validity and operation to the said deed or instrument and that the wife pay the costs of the husband on a solicitor / client basis in relation to the obtaining of the Registrar’s signature pursuant to these orders.

   (10)That the wife pay the husband’s costs of and incidental to this application.

Background

1. The wife was born in July 1936 and she is therefore 70 years of age.  The husband was born in November 1951 and he is therefore 55 years of age.

2. The parties married in October 1981 and they separated in May 2006.  There are no children of the marriage.  But the wife has three adult children from her previous marriage, K (48 years), B (46 years) and P (43 years).

3. At the time of marriage the wife’s property consisted of savings of approximately $60 000 and some furniture.  The wife had at that time recently received in excess of $45 000 by way of property settlement in respect of her previous marriage.  The wife had no liabilities.  The wife was working as a part-time gymnasium assistant.

4. At that time the husband’s property consisted of savings of approximately $3500.  The husband was working as a fitter and turner.

5. The husband’s employer moved his business to D.  So the parties commenced their married life in rented accommodation at C.  The wife gave up her employment in the Eastern Suburbs as it made no sense to try and commute from C.

6. In approximately November 1981 the parties purchased the property at P for $68 000.  This was funded from the $60 000 being the wife’s savings and a mortgage of $20 000 from St George Building Society.  The $20 000 loan paid for the balance of the purchase price, legal fees, stamp duty and some renovations.  These consisted of painting, new carpet and the parties had a swimming pool installed.

7. In approximately February 1982 the wife commenced working for G Co. 

8. In early September 1983 the wife’s mother died.  The wife ceased working at G Co to support her father.

9. In October 1983 the husband ceased working as a fitter and turner and commenced working with the wife’s brother as fisherman.

10. Shortly after this time, the parties became caretakers at a new home unit block at M.  They decided to establish a cleaning business being a partnership under the style of L Pty Ltd.

11. The husband ceased working on the oyster farm and did the bulk of the work involved in the caretaker work.  He then started to generate contracts for similar cleaning work. 

12. In October 1986 the parties sold their P property, the net proceeds being approximately $85 000.  They then purchased the home unit at E for $96 000.  This was funded from the net proceeds of sale of P and a loan on mortgage of $30 000.  The M units caretaker responsibilities required a caretaker to be available 24 hours each day.  So the parties arranged for the wife’s son P to occupy the caretaker unit rent-free on the basis that he would undertake the caretaker’s duties at night. 

13. For a short time the wife’s brother Mr B became a partner in the business.  But he ceased this work in late 1990 and returned to working as a fisherman.

14. When the wife’s brother was working in the business the wife commenced working at a large department store.  The wife subsequently underwent surgery for a heart valve replacement.  After recovering from this operation the wife assisted the husband with the cleaning business.  The parties sold their E property in February 1990 for $202 500 the net proceeds of sale being approximately $200 000.  The parties then moved into a granny flat at the residence of the wife’s son B rent-free.

15. In July 1990 the parties purchased the property at V for $338 000.  This was funded from the net proceeds of sale of E, the parties’ savings of approximately $12 000 and a loan on mortgage of $130 000.

16. By 1998 the parties had repaid the mortgage. 

17. In 1999 the parties paid approximately $10 000 for the husband’s mother and sister to visit them in Australia from their home in Colombia.

18. Sadly, the wife’s father died in November 1999 and the wife and her brother each inherited a one half interest in his home at W.

19. In February 2000 the parties borrowed $80 000 from the Commonwealth Bank.  The sum of $40 000 was used for bathroom renovations and the balance was used to fund the lease of a Mercedes Benz vehicle and a work vehicle for the business.

20. In November 2000 the husband sold some of the cleaning contracts for approximately $15 000.  The husband paid the $15 000 towards reducing the business loan.

21. In approximately January 2001 the wife suffered a stroke.  She lost the full use of her left hand temporarily.  During this period the wife’s daughter K helped the wife with some of the domestic work.  A cleaning lady also assisted for a period.

22. As indicated above, in May 2005 the parties separated.  The husband left the former matrimonial home and commenced residing with the wife’s brother Mr B at W.

23. A couple of months later the husband moved into the caretaker’s unit at the M units.  The wife’s son P had vacated that accommodation and commenced living at the former matrimonial home with the wife.

24. During the period from separation until 27 July 2006 the wife withdrew a total of $11 200 from the business account.  This is an average of approximately $175 per week.  The wife also had the use of a Westpac Visa credit card.

25. On 29 August 2006 orders were made to the effect that the husband pay the wife $300 per week and such has continued to the present time.

The Applicable Law

1. The Court must be satisfied that in all the circumstances it is just and equitable to make an order. This is provided by s.79(2) of the Family Law Act 1975.

2. The Full Court of this Court in its decision in the case of Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355 said as follows:

   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 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 (and various other well known authorities).

3. Despite some criticism of this decision by the majority of the Full Court in Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414, see for example paragraphs 36 and 37 at page 79,641 and paragraph 63 at page 79,646, in my view it is not incorrect to take the approach to the hearing of property proceedings as described in Hickey above.

Property available for division

1. The property available for division between the parties consists of the following:-

$
1.        Former matrimonial home at V	1,100,000
2.        Wife’s half share of property at W	450,000
3.        Wife’s savings in Commonwealth Bank account	5,028
4.        Wife’s interest in monies in Commonwealth Bank Business account	674
5.        Honda Jazz motor vehicle (to wife)	8,000
6.        Wife’s legal costs paid (add back)	15,618
7.        1996 Mercedes Benz motor vehicle (to husband)	30,000
8.        Ford Econovan (to husband)	6,000
9.        Husband’s savings in Commonwealth Bank	14,000
10.      Husband’s interest in monies in Commonwealth Bank Business account	674
11.      Husband’s tools	500
12.      E Pty Ltd	0
13.      Husband’s Superannuation	36,778
14.      Husband’s legal costs paid (add back)	28,000
_____________
$1,695,272

Liabilities

1. The wife has a liability of $6000 to her son P for monies borrowed to pay for part of her legal costs.

2. The net property available for division is therefore $1 689 272 ($1 695 272 - $6000 = $1 689 272).

Contributions

1. It was submitted on behalf of the wife that because the wife’s inherited interest in the property at W came quite late in the marriage, the Court should consider the parties’ contributions to this asset separately from its consideration of the contributions to the remaining property.

2. The difficulty with this submission, in my view is that the Court is dealing with a long marriage in this case and that usually in such circumstances the Court has used the global approach in determining contributions.  I propose therefore to assess contributions using the global approach.  But I shall refer again to the submission by learned senior counsel.

3. I have referred to the general work histories of each of the parties and to their business.  Each of the parties has worked hard and commensurately with their reasonable capacities.  Their earnings have been applied to the purposes of their household apart from some modest gifts to family members on both sides.

4. The marriage has been long in its duration as I have said.  The period over which the parties have earned their incomes and made financial contributions has therefore also been long.  Homes have been bought and sold and the parties have been assisted in their various home purchases by loans which they have repaid.

5. But there was a considerable imbalance in their initial contributions because the major part of their first owned home, namely at P, was funded from the wife’s savings the major portion of which came from her property settlement with her former husband.

6. A much more significant disparity in their contributions is reflected in the very valuable inheritance by the wife of her half interest in the W home.

7. In my view, therefore, it is appropriate for this Court to assess the financial contributions by the wife to have been much greater than those of the husband.  I shall refer to this again below.

8. Both parties have made contributions to their welfare as a family unit by way of homemakers.  Each has undertaken part of the domestic work.  The wife asserted that during the marriage she was responsible for the majority of the household duties.  But in my view, the husband was also involved in performing such tasks including undertaking cooking by barbecue, walking the dogs, attending to maintenance of the garden and doing some of the other domestic work.  Having said this, while I am satisfied that both parties have made such contributions, I have the view that the wife did more of the domestic work than the husband.  Accordingly, in my view, her contributions to the welfare of the parties have been slightly greater than those of the husband in this regard.

9. As I have said, the marriage was a long marriage and each of the parties has worked hard.  For these reasons, had it not been for the imbalance in initial contributions and the inheritance, the parties’ contributions over the long period involved would have been assessed as having been equal.  In my view, the initial imbalance in their contributions has not simply disappeared or completely lost its significance.  But because of all the parties’ contributions over the long period since this initial contribution, the imbalance upon final assessment for this initial contribution above can only be modest in my view.

10. In my view, the wife’s inheritance assumes considerable significance in the assessment of contributions.  As indicated above, the wife inherited her half interest in the W property upon her father’s death in November 1999.  This was a little more than five years before the parties separated which, as was submitted on behalf of the wife, was quite late in the marriage.

11. There is no evidence of the husband having made any direct contribution to this property.  The wife’s brother lived in the property and the wife appears to have been content for her brother to have the exclusive use of the property.  There is no evidence of the wife or the husband having spent any money in relation to this property.

12. In these circumstances, in my view, the only contribution which the husband has made which is relevant in relation to the W property is by way of his contribution to the welfare of the parties pursuant to s 79(4)(c) of the Act.

13. In all these circumstances, in my view, the wife has made considerably greater contributions overall than the husband.  In my view their contributions overall have been 65 percent by the wife and 35 percent by the husband.

14. If I had approached this assessment of contributions in the manner suggested by learned senior counsel by the wife, namely by assessing contributions in relation to the inherited property separately from the other property, I would have arrived at the same result.  This is because in relation to the inherited property, I would have found the wife to have made almost the entire contributions thereto.  In relation to the balance of the property, I would have found there to have been a small imbalance in favour of the wife.

s 75(2) matters

1. The wife is 70 years of age and there are some problems in terms of her health.  As indicated above, she has had heart surgery.  She takes a considerable amount of medication apparently to assist her cardio-vascular system and to improve bone density.  The wife has not worked for many years and describes herself as “retired”.  In my view, given the above factors, one could not reasonably expect the wife to work again in the paid workforce.

2. On the other hand the husband is 55 years of age.  He is in reasonable health.  He has continued to operate the parties’ business and estimated his total average income to be $2000 per week.  On present indications, in my view, the husband should have the capacity to earn income at approximately this level for many years.

3. The husband paid a considerable amount of the school fees for the wife’s daughter K.  The wife’s son P lived with the parties for many years.

4. The parties lived in a granny flat owned by the wife’s son B rent-free for approximately five months.

5. The wife has lived in the former matrimonial home since separation and continues to live there with her son P.  P ought to be able to share some of the household expenses.

6. The husband lives in the caretaker’s unit at M and so long as he is able to retain the position of being caretaker one would expect him to continue to reside there.

7. As indicated above, the husband has paid the wife $300 per week since August 2006.

8. On the basis of these factors alone, one would anticipate the need to set-off some amount of the available property to the wife to take account of the husband’s continuing capacity to earn income as against the wife’s lack of such income-earning capacity.  But the Court must also take account of the fact that based on contributions, the wife will enjoy a much more substantial proportion of the available property than the husband.  In my view this offsets the husband’s stronger income-earning capacity.

9. Accordingly, in my view it would not be appropriate for there to be any set-off of property in favour of either party taking account of the relevant matters pursuant to s 75(2) of the Act.

Conclusion and fourth step

1. The wife is to have 65 percent of the property available for division ($1 689 272) which is property with a value of $1 098 027. 

2. The wife has the following property:

$
1.        Half interest in W property	450,000
2.        Savings	5,028
3.        Half monies in Commonwealth Bank Business account	674
4.        Honda Jazz motor vehicle	8,000
5.        Legal costs paid (add back)	15,618
___________
$479,320

1. But the wife has a liability to her son P of $6000.  Accordingly the wife has net property with a value of $473 320.

2. To achieve property with a value of $1 098 027 the wife will require further property with a value of $624 707 ($1 098 027 - $473 320 = $624 707).  This will come from the former matrimonial home at V.  The home has a value of $1 100 000 and it is unencumbered.  If the wife was to retain the home she would need to pay the husband $475 293 ($1 100 000 - $624 707 = $475 293).

3. On the other hand the husband is to have 35 percent of the available property.  This is property with a value of $591 245.

4. The husband has the following property:

$
1.        Mercedes Benz motor vehicle	30,000
2.        Ford Econovan motor vehicle	6,000
3.        Savings	14,000
4.        Half Commonwealth Bank Business account	674
5.        Tools	500
6.        Superannuation	36,778
7.        Legal costs paid (add back)	28,000
__________
$115,952

1. The husband has no liabilities.

2. To achieve property with a value of $591 245 the husband will require further property with a value of $475 293 ($591 245 - $115 952 = $475 293).  This will either be paid to him by the wife or the former matrimonial home will be sold and the proceeds divided in appropriate proportions between the parties.  The appropriate proportions would be 56.792 percent to the wife and 43.208 percent to the husband.

3. The wife said that in order to endeavour to pay the husband for his interest in the former matrimonial home, she would sell the W property and if necessary seek some assistance from her son P.  I propose to allow the wife 42 days to attempt to do this.  If she is unable to raise the necessary funds to pay the husband for his interest in the home it will have to be sold.  In my view, on either scenario, the wife will be able to accommodate herself and provide for herself adequately.

4. On the other hand, the husband will have an amount in the vicinity of $475 293 in addition to his property as described above.  He would be able to use this to provide accommodation or invest it for his future requirements.  He will probably continue to earn income at the sort of level which he has been achieving for many years.

5. The orders I propose will not affect the husband’s income-earning capacity.

I certify that the preceding sixty-seven (67) paragraphs are a true copy of the Reasons for Judgment of Judicial Registrar W P Johnston.

Associate:     ____________________

Date:              23 March 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as LESTER & LESTER