Lombard and Lombard
[2011] FMCAfam 339
•15 April 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LOMBARD & LOMBARD | [2011] FMCAfam 339 |
| FAMILY LAW – Property – whether payments by wife from joint bank funds after separation should be added back – whether family provision payment to husband from mothers estate after separation to be included as a matrimonial asset – whether effect on wife of husband's post traumatic stress condition to be taken into account when assessing contributions – relevance of husband ineligible for pension until 2020 because of compensation payment. |
| Family Law Act 1975 (Cth), ss.4, 75(2), 79(1), 79(2), 79(4)(a)-(d) Family Provision Act 1982 (NSW) |
| Hickey [2003] FLC 93-143 Towsend & Townsend (1995) FLC 92-569 |
| Applicant: | MR LOMBARD |
| Respondent: | MS LOMBARD |
| File Number: | DGC 2973 of 2008 |
| Judgment of: | Phipps FM |
| Hearing dates: | 21, 22 & 24 June 2010 |
| Date of Last Submission: | 16 July 2010 |
| Delivered at: | Dandenong |
| Delivered on: | 15 April 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Grant |
| Solicitors for the Applicant: | David Gibbs & Associates |
| Counsel for the Respondent: | Ms Stoikovska |
| Solicitors for the Respondent: | Pearsons Barristers & Solicitors |
ORDERS
That the real property at Property R, [R], Victoria be sold by an Estate Agent and in a manner to be agreed between the parties and if not agreed by an Estate Agent and in a manner nominated by the President for the time being of the Real Estate Institute of Victoria or his or her nominee and be applied as follows:
(a)the first to pay all costs commissions and expenses of the sale;
(b)second to discharge the mortgage and any other encumbrances affecting the real property;
(c)third to effect a distribution of the parties assets 55% to the husband and 45% to the wife noting the following:
(i)The husband is solely responsible to repay the cost of house repairs $35,440;
(ii)the husband has or has received the following assets:
Husbands motor vehicle $33,000
Boat and trailer with husband $12,000
Radio equipment with husband $ 9,100
Cash taken by husband at separation $30,090;
(iii)The wife has or has received the following assets:
Nett proceeds sale of wife’s motor vehicle $24,400
Cash retained by wife at separation $83,470
Wife’s superannuation $54,400.
That pending the completion of the sale:
(a)the Husband has the right to occupy the real property and pay all rights, taxes and like apportionable outgoings of the real property as they fall due;
(b)Neither party encumber the real property without the consent in writing of the other party.
That otherwise each is declared to have no interest in any property including bank accounts and superannuation in the possession or name of the other party, the contents of the property at Property R, [R] Victoria are deemed to be in the possession of the husband.
That there be liberty to apply in relation to the calculations of the amount to be paid to each party after sale of the property at Property R, [R], Victoria.
THE COURT ORDERS BY CONSENT:
That orders 1 & 2 inclusive of the orders made on 27 August 2008 by Federal Magistrate Walters be and is hereby discharged.
IT IS NOTED that publication of this judgment under the pseudonym Lombard & Lombard is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DANDENONG |
DGC 2973 of 2008
| MR LOMBARD |
Applicant
And
| MS LOMBARD |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Lombard who for convenience I will call the husband, and
Ms Lombard who for convenience I will call the wife, disagree about the distribution of their matrimonial property. The wife proposes that the assets, after adjustments, be divided 60% to her and 40% to the husband. The husband proposes that the assets, after different adjustments, be divided 55% to him and 45% to the wife.
Significant issues are:
a)The disposition of two sums of money totalling $409,576.01 deposited into the parties joint bank account in January 2008 and subsequently dispersed. The two sums are $381,101.01 deposited on 21 January 2008 and $28,475.00 deposited on 25 January 2008. The amounts were the balance then remaining of a superannuation payment of $104,742.37 and a $1,000,000 net payment received by the husband in settlement of a common law damages claim against the [omitted], his former employer. The money had been used in the purchase and sale of a number of properties. In 2008 the immediate source of most of the money was the sale of a property in [B] in New South Wales. The husband says the amount of $235,735 should be treated as cash retained by the wife and included in the matrimonial assets. The wife says the amount to be included is $71,470. The parties agree that the husband retained $30,090 in cash at separation and that it should be included in the matrimonial assets.
b)Whether a payment to the husband after separation in settlement of a claim made by him under the Family Provision Act 1982 (NSW) in respect of his mother’s estate should be included as part of the matrimonial assets. The net payment to the husband after payment of his costs was $150,000. The wife says after allowance of $29,300 for the husband’s living and legal expenses the amount of $120,770 should be included in the matrimonial assets. The payment and the order of the Supreme Court of New South Wales pursuant to which the payment was made are both after the date of separation. The wife says that because the husband’s mother died before separation the husband’s entitlement to the payment accrued prior to separation and so the payment is part of the matrimonial assets. The husband says it is a post separation payment and not part of the matrimonial assets.
c)The effect on any adjustment under s.79(2) of the husband’s claim that he is not entitled to a pension until 2020 because he received the $1,000,000 common law settlement.
The parties and their relationship
The husband was born [in] 1948 and is aged 62. The wife was born [in] 1955 and is aged 55. They commenced co habitation in 1987 and married in 1988. There are two children of the marriage, [X] born [in] 1992 aged 18 and [Y] born [in] 1994 aged 16.
Both parties were previously married. The husband has two adult children from his first marriage. The wife has none. At the time the parties met and married the husband was employed by [omitted] and the wife by [omitted].
The parties lived together in rented accommodation in [omitted], New South Wales until they purchased land in [L] in [B] for $14,000. Most of the money was borrowed. The husband says he put in no more than $2,500. The wife says that they contributed the deposit equally. Probably they each contributed. They borrowed $52,000 from St George Building society and built a house.
The wife resigned from her employment at the time of the birth of the parties’ first child and after that was full time carer for the children. The husband says she was a devoted and skilful mother.
In 1994 or 1995, after the wife had ceased employment, she withdrew her superannuation, an amount of $9,598.80. It was used to pay family expenses.
In 1999 the husband was in charge of [occupation omitted] in the [B] area. His employment required him to attend the scene of the [omitted] disaster on [date omitted] 1999. He says the incident was horrific and involved fatalities in dreadful circumstances.
The husband subsequently became ill suffering Post Traumatic Stress Disorder and was retired from the rail service on 1 December 2002. He has not worked since. The husband could not effectively deal with financial matters and the wife took control of family finances.
After the husband’s retirement the parties sold the property at [L] and purchased a five acre property at [omitted], Queensland.
On 28 December 2002 the [omitted] Superannuation Scheme (NSW) paid to the husband $104,742.37 being a partial invalidity benefit superannuation payment of $115,362.37 less taxation of $10,620. The superannuation payment was used in part to pay for the construction of a house on the property. They moved because the husband was distressed at living near where the [omitted] tragedy had occurred.
The husband’s common law claim against the [employer] was settled in 2003 and he received $1,000,000. That was placed in a Westpac BIT investment account. The husband says that at time the parties had a Westpac Bank account with a credit balance of approximately $50,000 being money from his superannuation payment.
The parties then purchased and moved to a property at [S], a suburb of Brisbane. The purchase price of $295,000 was paid from the compensation money. The parties moved because their daughter [X] had a difficult time adapting and because of the lack of specialist treatment for the husband.
In 2005 the parties returned to the [B] area in New South Wales. They moved in the hope that it would help [X]. She developed an eating disorder and was admitted to hospital. In [B] they purchased a home at [W] for $385,000, again using the husband’s compensation money. They still owned the two properties in Queensland. Both were rented.
In February 2007 the parties moved again, this time to Property G, Victoria. [X]’s condition again deteriorated and in January 2006 she spent four weeks in hospital in New South Wales. The purchase price was $388,000 again paid from compensation money. After the move to Victoria [X] had another period in hospital.
The home at [W] in the [B] was sold for $425,000. Settlement was on 18 January 2008. The proceeds of sale are the amounts of $381,101.01 deposited into the parties joint bank account on 21 January 2008 and $28,475.00 deposited on 25 January 2008.
The husband suffered a stroke in May 2008, possibly psychologically, not neurologically based. He was in hospital for several days. His general practitioner referred him to a psychiatrist at about this time.
The relationship between the parties deteriorated and the police came to the home on several occasions. The parties separated on 23 August 2008 when the husband left the matrimonial home. The wife obtained an intervention order on 25 August 2008. The husband stayed with friends and then camped on the [R] foreshore.
The husband says he made enquiries at the Westpac Bank, [R] and found that the credit balance in the joint account was about $36,000 when he had expected approximately $550,000. He commenced these proceedings.
On the evening of 20 September 2008 the husband drove his motor vehicle into the front of the home at [R] causing substantial damage. The wife and children were at home. They were not physically injured but very traumatised. They obtained an intervention order.
The husband was arrested and held in custody until 11 December 2008. At the [omitted] Magistrates Court on that day he was found guilty of Reckless Conduct Endangering Life, Breach of an Intervention Order, and Criminal Damage. He was sentenced to a term of imprisonment and fined $1,000. He had been in custody for 75 days. He says that he refused offers of bail. He was released immediately with the balance suspended for nine months.
The wife and children left the home and have lived in rented accommodation since. The husband has not seen the children since. The wife believes that when the husband drove his car into the house he was trying to kill her and the children and fears he will try again if he knows where they live.
Section 79
Section 79(1) of the Family Law Act 1975 (Cth) provides that in property settlement proceedings the court may make such order as it considers appropriate. The following sub-sections set out the considerations the court is to take into account in deciding what is appropriate. This is a four step process. First, determine what are the assets and liabilities of the parties, next consider the parties’ contributions taking into account the matters in s.79(4)(a)-(d), next consider whether an adjustment should be made taking into account the matters referred to in s.75(2) insofar as they are relevant, and finally consider whether in all the circumstances it is just and equitable to make the proposed order. The four step process is usually applied to superannuation and non superannuation assets separately, but there are cases where this may not be appropriate.[1]
[1] Hickey [2003] FLC 93-143. For superannuation C v C [2005] FLC 93-220
Assets and Liabilities
The assets as they exist at the time of the hearing are largely agreed. They are the former matrimonial home and some other physical assets. There are no current liabilities. The significant dispute about assets and liabilities lies in what add backs of money already expended should be included.
The husband’s proposal for assets is:
Property R, [R] $440,000
Husbands motor vehicle $ 33,000
Boat and trailer with husband $ 12,000
Radio equipment with husband $ 9,100
Cash taken by husband at separation $ 30,090
Nett proceeds of sale of wife’s motor vehicle $ 24,000
Cash retained by wife at separation $235,725
Wife’s superannuation $ 54,400
Piano $ 5,800
Social security retained by wife $ 90,000
Furniture and fittings $ 20,000
Total $954,115
The wife‘s proposal for the assets is:
Property R, [R] $440,000
Husbands motor vehicle $ 33,000
Boat and trailer with husband $ 12,000
Radio equipment with husband $ 9,100
Cash taken by husband at separation $ 30,090
Nett proceeds of sale of wife’s motor vehicle $ 9,400
Wife’s superannuation $ 54,400
Cash retained by wife at separation $ 71,470
Husband’s net inheritance $120,770
Total $780,230
Both parties accept that the husband is responsible for paying the cost of repairing Property R, [R] and replacing carpet, a total of $35,440.
There was much cross examination about the transfer out in January 2008 of $300,000, in three separate amounts of $100,000 each, from the parties’ Westpac Bank savings account. Eventually what occurred became clear. The amounts went first to a Maxi I Direct account in the parties’ joint names. In March 2008 $200,000 was transferred back to the savings account and then into two separate term deposits, one in the name of each child. These deposits and the remaining money in the Maxi I Direct account were used by the wife in the payments which are described later in these reasons. By the end of the hearing there was no longer an issue about how the amount of $409,576.01 had been spent. The issue was whether how much of the expenditure should be treated as add backs into the matrimonial property.
The written submissions on behalf of the husband refer to Weir & Weir (1993) FLC 92-338 and the statement by the Full Court of the Family Court of Australia at 78,593;
It seems to us that once it has been established that there has been deliberate non-disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about findings in favour of the innocent party.
The submission says that in this case the court cannot be certain where funds have been spent by the wife and that she has been untruthful and not forthcoming in many aspects of her evidence and so the Full Court’s statement should be applied.
The husband’s written submission contains a list of alleged failures by the wife to comply with her obligation of full disclosure including failures to comply with specific orders. The husband’s counsel cross examined the wife from a basis that the wife had not disclosed many documents. The wife had had several solicitors acting for her and some of the time had been self represented.
In the end, financial documents in evidence are a combination of annexures to affidavits and exhibits tendered during the hearing. The source for many exhibits is documents produced on subpoena by Westpac Bank. Many times, when it was put to the wife during the course of the hearing that she had not produced documents, she said she had, or that she had given them to the solicitor then acting for her. Some of the documents about which she was cross examined as not having produced were bank statements for the parties’ joint account, something the husband himself could have obtained from the bank.
An example of the dispute over production of documents is the wife’s evidence about events when the parties were at the court for an interim hearing. It was put to her that she had not produced certain bank statements. She said she had given the documents to counsel representing her on that day so that they could be copied by the husband’s lawyers. An inference which can be drawn is that if that had happened, the documents were then given to the husband’s lawyers, but the wife could not say if that was so. The only way this dispute could have been resolved was if the lawyers gave evidence, but that did not happen.
Another example is referred to in the husband’s submissions.
On 24 January 2008, $300,000 was transferred out of the parties Westpac One Main Savings Account with Westpac Bank in three amounts of $100,000 each. On 28 March 2008 $200,000 was transferred back in two amounts of $100,000 each and then into two separate term deposits, one in the name of each child. The wife was cross examined at length about the destination of the other $100,000. Eventually it became clear that in January 2008 the whole of the $300,000 had been transferred to another Westpac account in the name of both parties, the Maxi I Direct account, an account which paid higher interest. In March 2008 $100,000 and some interest remained in the Maxi I Direct account and was eventually dispersed in the manner the wife explained. There had been a considerable amount of cross examination before the wife, in response to my questions, produced from the documents she had with her the Bank statements for the Maxi I Direct account which showed what had happened.
The cross examination went for some considerable time before this happened. The wife speaks good, but not perfect, English. Reading the transcript with the benefit of having seen the bank statement, it is clear that throughout this part of the cross examination the wife was saying that the money went to the parties Maxi I Direct account. She was asked a number of times to produce the account into which she said the money had gone. She responded each time that she had, to be met with Counsel’s response that she had not. I cannot say whether she understood that she was being asked to produce the documents in the course of her evidence rather than whether she thought she was being asked if she had previously produced the documents.
Amongst other documents in evidence were bank deposit slips which have the Maxi I Direct account number on them. The Maxi I Direct account is a joint account, and so the husband himself could have obtained them from the bank. Since retiring from the railways he left the management of all financial matters to the wife, and so he may not have felt capable of conducting even basic enquiries.
The wife consistently answered that she had made all documents available to the husband’s lawyers. No evidence was called on behalf of the husband to the effect that documents which the wife said she had produced prior to the hearing had not been produced. I cannot make a positive finding that all documents held by the wife had been made available prior to the hearing. I am satisfied that the documents before the court show what happened to the money. I am satisfied that if the wife failed to make available any document, she did not do so deliberately. I am satisfied that the wife has not deliberately hidden or attempted to hide the destination of any money. The statement by the Full Court in Weir & Weir has no application in this case.
Savings account money
In January 2008 the parties’ savings account had a balance of $409,580. None is left. The parties differ as to the amount which should be added back as part of the matrimonial property.
The money in the bank account was a matrimonial asset. When one party has, after separation, spent money which is a matrimonial asset, it may amount to a premature distribution of a proportion of the matrimonial assets. It may be put into the pool of assets on a notional basis and distributed. Re NHC and RCH (2004) FLC 93-204 at [20] citing Towsend & Townsend (1995) FLC 92-569 Nicholson CJ at 81,654.
The concept of adding back monies is the exception rather than the rule. In Re NHC and RCH the Full Court said at [24]:
24. We will refer again later in these reasons to the decision in Townsend, but we would in the present context draw attention to the following observations by later Full Courts:
“2.11 There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge. (Marker [1998] FamCA 42, 1 May 1998, per Baker, Kay and Chisholm JJ.)
...
46. Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. (Cerini [1998] FamCA 143, 8 October 1998, per Nicholson CJ, Ellis, Kay JJ.)”
Pre separation
The wife accounts for payments until 26 August 2008, in this way.
26 August 2008 is three days after separation and the day the husband withdrew the balance of money from the savings account.
Savings January 2008 $409,580
Less:
24.1.08MasterCard payment $ 35,000
19.2.08Legal fees re estate $ 10,000
19.2.08Mr T $ 15,000
12.3.08 Piano $ 5,800
31.3.08 MasterCard payment $ 30,000
22.8.08 MasterCard payment $ 6,000
26.8.08 MasterCard payment $ 30,000
Cash removed by husband $ 30,090
Computers for children $ 5,000
Monies expended to separation $166,890
Money to be accounted for post separation $242,690
The husband accepts the MasterCard payments as payments of joint debts, subject to school fees not being double counted and being reasonable. He accepts he withdrew $30,090 in August 2008.
$10,000 paid on 19 February 2008 is legal fees for the husband's claim for a provision from the estate of his mother. Subsequently the husband received a settlement of $150,000. He says that because it was received post separation it is not part of the matrimonial property. That issue is dealt with later in these reasons. The payment was not a private payment on behalf of the wife.
Mr T is a clairvoyant or spiritual adviser, to whom the wife paid money. He, according to the wife, was a considerable help to [X]. The husband wrote a letter to Mr T thanking him for his services for his help with [X]. The husband acknowledges he wrote the letter, but says that he was told to do so by Mr T. This was at a time when the husband was preparing the property at [W] for sale and Mr T came to the property. Whether he attended at the request of the husband is not clear, but the husband at the very least acquiesced in his attendance. The husband says that Mr T blessed the property and said that it was necessary to do so after the husband's mother died.
The husband accepts that it was reasonable to pay Mr T some money for his services, but nothing like $15,000. The husband alleges the wife paid him more, which the wife denies. The wife was cross-examined about amounts of money removed from automatic teller machines in the vicinity of the Melbourne Casino. It was put to the wife that this was money she was withdrawing to give to Mr T to use for gambling or for her own gambling. The wife denied both. She said the money was withdrawn for ordinary expenses.
There is no evidence of any additional money paid to Mr T other than any inference from the withdrawal of money from the bank account. The circumstances do not permit this inference. Even if the money was used for gambling, the amounts are not so large as to amount to extravagance or waste.
Mr T was not called to give evidence. Counsel for the wife stated at the commencement of the hearing that two affidavits by Mr T, which had been filed, were not relied upon. While I am entitled to conclude that if he was a witness his evidence would not have assisted the wife’s case, that does not permit me to find that money was paid to him in the absence of any other evidence of payment.
Mr T became involved with the family with the acquiescence of both parties. While the husband says that the letter he wrote was dictated to him by Mr T, he did write and sign it. Whether Mr T was a help to [X] or either of the parties, or had any skills which could help is not the point. The husband expected that he would be paid something. The wife says, at least by inference, that the payment was reasonable.
There is no evidence of the amount of time spent by Mr T, or how the amount is calculated. The significant consideration in determining whether the amount is a payment which should be added back to the matrimonial assets is that Mr T became involved with the family by the agreement of both husband and wife, and both were involved with him. The issue is not whether Mr T was paid a reasonable amount for his services. The issue is whether the payment by the wife was waste or extravagance such that it should be added back. I do not consider it was.
The wife purchased a piano for $5,800 for the children. It is in the former matrimonial home, but, according to the wife, damaged when the husband drove into the house. The purchase of the piano was a normal domestic expense. The piano is a matrimonial asset. The wife says it belongs to the children, but it was purchased with matrimonial funds and there is no evidence of an act of gift to the children. The $5,800 purchase price is not an add back. The piano is a matrimonial asset, although there is no evidence of its current worth.
The wife says that she purchased a computer for each child, at a total cost of $5,000. She produced a receipt for $2,399 for one computer only. She said she had searched for the receipt for the other computer but could not find it. Given the children’s ages and their stages at school, it is unlikely that the wife would purchase a computer for one and not the other. I accept her evidence that she purchased two, and I accept that it was not an extravagant expenditure.
Post separation
The wife accounts for the balance of $242,690 as follows:
House repairs for damage by husband $ 33,850
Replacement of carpet damaged by husband $ 1,590
12 months rent in the advance $ 32,265
School fees, final payment [P] School $ 1,595
Cost of removalist [R] to Melbourne $ 2,000
School fees first instalment 2009 $ 15,660
School fees second instalment 2009 $ 11,775
School fees third instalment 2009 $ 13,775
School fees first term 2010 $ 13,280
School uniforms [X] and [Y] $ 2,650
School textbooks $ 1,800
Orthodontist deposit $ 2,900
Private health insurance $ 2,220
MasterCard, dentist, chemist, petrol $ 13,600
Food at $270 per week $ 10,260
Total $159,220
The wife’s written submission included an amount of $12,000 for legal fees. The wife's counsel conceded that these fees are to be added back.
This leaves an amount of $83,470 accepted by the wife as add backs to the asset pool and treated as distributed to the wife.
House repairs
The husband accepts that the repairs to the house and replacement of carpet were paid out of the parties joint funds and that that he is responsible for them.
Rent
The wife paid $32,265, 12 months rent in advance and bond for premises at Property K, [K]. The rent was $2,390 per calendar month. The term of the lease was 12 months commencing 27 October 2008. The husband's case is that this was extravagant and a lesser amount, calculated at the rate of the wife’s current rent, should be allowed.
The wife left the former matrimonial in [R] with the children after the husband drove his car into the front of the residence. She said she was afraid for her life and the children’s lives, and that a police officer advised her to leave. Because she had no rental history she had to pay 12 months rent in advance. She said she made seven applications before obtaining the premises in Property K. The premises were larger than she needed for herself and the two children, but she had an arrangement with a cousin to live there and pay some of the expenses. The arrangement did not work out.
Although the wife was cross-examined about the reasonableness of her belief that the husband had attempted to kill her and the children, the fact is that she had to move with the children. The husband’s car put a hole in the front of the house. The house had significant damage. The husband asserts that he believed that the wife and children where not in the house at the time he drove into it. Whether he did or did not the wife's belief that she and the children were at risk from the husband if they remained in [R] is understandable. In the circumstances, the move of some considerable distance, from [R] to [K] was reasonable in the circumstances.
The wife had to find alternative premises at short notice. She believed she would receive assistance with the rent. The amount she payed in the circumstances is not so high that it amounts to extravagance or waste.
The husband does not concede the cost of the removalist. The wife needed a removalist to move furniture and possessions. The amount she payed is not extravagance or waste.
School fees
Both children attended [P] School in 2008. They attended [M] School in 2009 and both commenced at [omitted] High School in 2010. After a short time [X] moved to [F] School. [X] has a 90% scholarship at [M] School in 2011.
The husband knew the children were attending [P] School in 2008 and consented to their attending. There is an issue about what forms he signed, but he did know, and agreed that they should attend.
Fees at [P] School for each child were about $5,000 per term. The husband says the wife told him it was $5,000 per year. The wife says she told the husband it was $5,000 per term. At the time any conversation about fees took place the party's relationship had deteriorated. The husband's state of health, never good, was deteriorating. He acknowledges that his state of health gives him memory problems. Neither party purports to give a verbatim account of any conversation. I do not consider that the wife would deliberately mislead the husband about the amount of the fees. She had no need to because she controlled the finances. The probability is that a figure of $5,000 was stated by the wife. She knew she was referring to the amount for each term. The husband, when he gave his evidence, remembers as an amount for each year. Given his illness and the effect on his memory I cannot find one way or the other whether he heard the wife’s statement at the time it was made as an amount per year or as an amount per term. I cannot make a finding of an agreement about fees, but I am satisfied that the wife did not deliberately deceive the husband about fees and that the husband agreed that the children attend [P] School.
The husband did not know what arrangements the wife made for the children's schooling after the parties separated. The children received some partial scholarships, and the amounts paid for fees were of the same order as the payments to [P] School. The wife made payments by credit card or cheque. The source of funds for payment is the money which had been placed into term accounts in the name of each child.
The issue is not whether the husband consented to the amounts paid for school expenses, although if there was clear evidence of his consent it would be relevant. The issue is whether the amounts should be added back into the matrimonial property because there was waste or extravagance by the wife.
To somebody outside the family the amounts paid for private education may appear unwise. The husband's illness prevented him from working. The wife had little if any ability to earn an income. The payment the husband received contained an amount for loss of future earnings and so it was, in effect, the family's income needed for day-to-day expenses. But the question is not whether the payments were unwise. The question is whether they should be treated as waste or extravagance in the context in which the Full Court uses those words.
The wife did not spend the money on herself. She did not give the money away. The money was spent on the parties’ children's education. [X] had a serious illness, an eating disorder, for which she had been twice hospitalized. Her happiness or contentment in education was important to her health.
School fees paid after separation are $54,490, plus uniforms $2,650 and textbooks $1,800. At separation the parties owned a house free of debt and about $250,000 cash in bank accounts. Soon after the husband received $150,000 from his mother’s estate. The children were in their final years of schooling. I do not consider the amounts spent on the children’s education expenses were waste or extravagance.
The same considerations apply for school uniforms and school textbooks. I do not consider the amounts spent on these, $2,650 and $1,800, were waste or extravagance.
Other payments
The Orthodontist deposit of $2,900 was a legitimate expense. I accept the wife’s evidence that it was paid.
The wife took out private health insurance for herself and the children at a cost of $2,220. The husband says he was paying insurance and this was unnecessary. The wife says he cancelled it, or at least she thought he had. The parties may have been doubly insured, but that does not amount to waste or extravagance by the wife.
The wife claims as legitimate expenses MasterCard payments for dentist, chemist, petrol $13,600 and food at $270 per week $10,260. The wife’s income is a pension of $502 per fortnight, family allowance of $337.40 per fortnight. The eldest child received $207 a fortnight youth allowance, a total of $1046.40 per fortnight.
The husband's closing submissions say that an amount of $90,000 Social Security amounts paid to the wife should be included in the assets. The submissions say that the wife has not accounted for these funds and there is a period of about 90 weeks to be accounted for. This amount should be $45,000 not $90,000, because the payments are fortnightly.
The Social Security payments cannot be included themselves, because they are not, on any view, a matrimonial asset. They may be relevant to determining whether some of the payments claimed by the wife to be made out of the savings accounts are legitimate expenses, or are waste or extravagance
The wife claims to have paid the first 12 months rent, purchased food, and paid dentist chemist, petrol and medical insurance expenses from the savings accounts. She does not seem to claim that all these expenses since separation have been paid from the savings account. She receives about $27,872 a year in Social Security payments, her only income. She now pays $340 a week rent, an amount which the husband's submission accepts as reasonable. She has been keeping herself and two teenage daughters. The husband has no income and so no ability to pay a child support payment.
Her yearly rent is $17,690, which leaves a little more than $10,000 per year for all other expenses. Consequently she has supplemented payment of living expenses for herself and her daughters from the savings accounts. She claims an extra $23,000 for food, chemist, dentist and petrol since separation. Therefore she has spent $10,000 in a year, $192 per week, on expenses other than rent food and education.
The $13,600 MasterCard expense for chemist, dental and petrol is not broken down any further. Given that she had private health insurance and should have received some assistance or concessions for chemist and possibly dental because she received social services, it is hard to accept that she spent $13,600, or $261 per week on these expenses only. If she did not, then her claim is that she spent this amount, $13,600, plus $10,000 of Social Security payments on expenses other than rent food and education. That is $23,600 or $453 per week.
Some of this amount of $453 per week is clothing, entertainment and incidentals for her and two teenage daughters. There may have been some additional expenses associated with education. This is in the context of one daughter being unwell and the wife having to care for both children in the absence of the husband. The wife produced documents showing she had paid insurance payments for the matrimonial home up to 2010. She may have made some other payments. In all these circumstances, I do not consider that there has been waste or extravagance.
After separation the wife sold the motor vehicle she had at the time for $24,400. She then purchased another motor vehicle for $15,400. She says that only the difference, $9,000, should be included in the assets. The husband says the whole $24,400 should be included.
The wife's evidence about why she says this is so became rather confused because she talked about a motor vehicle accident. Except for the $500 excess her insurance paid for the repairs, and so the accident is irrelevant to the question of what is to be included in the assets. The wife owned the motor vehicle at separation. Now its value is represented by a motor vehicle of a lesser value plus cash. Logically, the amount of $24,400 should be included in the matrimonial assets.
The wife says that the husband has some [omitted] Shares. She produced a dividend payment statement for the period 1 January 2005 to 30 June 2005 addressed to the husband showing 414 shares at 14 September 2005 at a price of $5.43 per share, a total share value of $2,248.02 per share. No later evidence was produced. The husband does not admit that he still owns the shares. He was not asked about them. The wife controlled the parties’ finances and should know the history of the shares after 2005. They may still be in the husband's name, but there is no positive evidence that they are and I cannot make a finding that that is the case.
The wife says she payed $36,500 in legal fees. The amounts to be added back against her from the savings accounts includes these legal fees, so no additional provision is necessary.
Inheritance
In March 2009 the husband received $150,072.40, the net proceeds less legal costs of his claim against the Estate of his late mother under the provisions of the Family Provision Act1982 (NSW). His mother died on 14 November 2006.
The husband argues that because it was received after separation it should not be included in the matrimonial assets. The wife argues that the husband's entitlement to a share of his mother's estate “vested” when she died which was before separation. The wife argues that she assisted with the mother's care and so contributed to the acquisition by the husband of the amount $150,072.40.
The husband’s written submission refers to the statement by Kirby P (as he then was) in Tsivinsky and Tsivinsky [1991] NSW CA in which His Honour referred to the generality of expression in the Family Provision Act1982 (NSW)which makes it virtually impossible for professional advisors to be sure what orders might be made. The husband’s submission says that until a proceeding is compromised or a judicial decision made property does not vest in a litigant making an application.
The parties are in dispute about the extent to which the wife assisted with the care of the husband’s mother prior to her death. The wife says that she visited the mother, helped cook for her and helped care for her. The mother lived in Sydney. The husband accepts that the wife cooked for his mother and provided care on the two occasions when the mother stayed with the family in Queensland. After the parties moved back to [B] the husband acknowledges that the wife helped clean the mother’s home and helped with her personal care, but said it happened only occasionally. The wife says it was more frequent.
In 2006 the mother was admitted to the [omitted] and then the [omitted] Hospital. The husband says he visited almost every day, and the wife says she accompanied him. The husband acknowledges that the wife visited his mother, but not as frequently she says. Given the husbands’ illness and difficulty with being in public the probability is that he was mostly accompanied by the wife.
After about two months in the [omitted] Hospital the mother moved to the [omitted] Nursing Home in [B], close to where the parties lived. The evidence of both husband and wife is that they both visited frequently.
The wife did not provide the mother with daily care. The mother did not live with the parties. The evidence shows that prior to entering hospital and a nursing home she lived in her own residence and was assisted by professional carers. The husband acknowledges that the wife was an excellent mother and consistently with this I consider she would have treated her mother in law well. However any care and assistance the wife gave was, on either version of the evidence, limited. It came when both parties visited the husband's mother. The wife did not consistently assist the mother on a daily basis such as in the provision of meals, or assistance in dressing and bathing. The occasions when the mother stayed with the family in Brisbane are a normal incident of family life, not a special provision of care for the husband's mother.
In Bonnici & Bonnici (1992) FLC 92-272 the Full Court of the Family Court, (Nicholson CJ, Nygh and Tolcon JJ) said at [40] that funds received by the husband from an inheritance late in the marriage were clearly property. The court continued:
41. The more difficult issue in this case is as to whether the same should be treated differently from other types of property in which the parties clearly have an interest.
42. The answer, we consider, must depend upon the circumstances of individual cases. If, for example, in the present case, there had been no other assets than the husband's inheritance, but the wife had, as his Honour found, clearly carried the main financial burden in the support of a family and also performed a more substantial role as a homemaker and parent than the husband, then it would clearly be open and indeed incumbent upon a Court to make a property settlement in her favour from such an inheritance.
43. A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question.
44. The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances. Such circumstances might include the care of the testator prior to death by the husband or wife as the case may be or other particular services to protect a property. See James and James (1978) FLC 90-487. But there was no evidence of this in the present case despite submissions by counsel for the wife to the contrary. Accordingly, we think that in the present case the monies received by the husband from the sale of the freehold and from his uncle's estate should not be brought into account.
The amount received by the husband in this case has all been spent, much of it on legal expenses in these property proceedings and the earlier criminal proceedings. Except for the amount of $30,090 the husband withdrew from the savings account on separation, the inheritance has been the husband’s only source of funds. None is available for a payment to the wife should that be an appropriate order.
The wife did not contribute significantly to the husband's inheritance payment. Whether the payment "vested" before or after separation is of little significance. What is significant is that the entitlement arose, at the earliest, late in the relationship and payment was received after it terminated. The wife's care of the mother prior to her death was limited and the wife did not contribute to the protection of the mother’s property, which was principally her former residence. There is no other consideration which could be the unusual circumstances the Full Court refers to in Bonnici.
The husband claims that the wife removed most of the contents of the former matrimonial time when she left. He values them at $20,000. The wife says she took what she needed for herself and the children and left the rest for the husband. None of the contents in the possession of each party has been valued. Each has possession of some. I cannot determine whether the division has been equitable. The evidence does not suggest anything of unusual value and so if there was not an even distribution any disadvantage to either party is insignificant. I will not include the contents in the possession of either party.
The piano is a matter of contention. It remains in the property at [R]. The wife says it was damaged when the husband drove his motor vehicle into the house. It has not been valued. The considerations which apply to the other chattels apply equally to the piano and I will treat it in the same way.
The matrimonial property is
Property R, [R] $440,000
House repairs $ 35,440
Husbands motor vehicle $ 33,000
Boat and trailer with husband $ 12,000
Radio equipment with husband $ 9,100
Cash taken by husband at separation $ 30,090
Nett proceeds of sale of wife’s motor vehicle $ 24,400
Cash retained by wife at separation $ 83,470
Wife’s superannuation $ 54,400
Total $721,900
Contributions
Section 79(4)(a),(b),(c) and (d) require that I consider the financial and non financial contribution made directly or indirectly by each party to the marriage to the acquisition, conservation or improvement to the property of the parties to the marriage, the contribution made by a party to the marriage to the welfare of the family including as homemaker or parent; and the effect of any proposed order upon the earning capacity of either party to the marriage.
The parties lived together for 21 years, from 1987 until August 2008. The husband’s evidence eventually was that he made an initial contribution of $2,500 to the $10,000 for the purchase of the block of land in [L] and the balance was borrowed. The wife claims in an affidavit that she paid $7,000 from her savings and the husband borrowed the balance. Whether this is correct was not a topic of cross examination of the wife but the way the issue was pursued on her behalf suggests that she was not maintaining this position. I have already said the parties probably contributed equally to the deposit, and so I treat the parties’ initial financial contributions as equal.
I have already described the history of the parties’ relationship, the birth of their children their residential arrangements, employment and the husband’s illness. I take all those matters into account.
After the commencement of the relationship the husband's financial contributions were his earnings from his employment in [omitted] until his resignation in 2002. After that his contribution was his superannuation payment of $104,742.37 and his compensation payment of $1,000,000.
The compensation payment was a compromise. There is nothing which shows what the component parts are. It probably consists of past economic loss, future economic loss and pain and suffering. It may include a component for services provided by the wife to the husband he would otherwise have to pay for. I take it into account and take into account that the husband has made no financial contribution since.
The wife's financial contribution was her earnings from her employment until just before the birth of the parties’ first child and a $9,598 superannuation payment in 1994 or 1995. Her income was about the same as the husband’s. She has made no financial contribution since the birth of the first child.
The wife was the principal home maker and child carer. The husband had many appointments with doctors and psychiatrists. The wife accompanied him. Part of the consequences of the husband's post Traumatic Stress Disorder was that he could not travel by train or attend shopping centres or similar crowded places. His anxiety at times was such that he was physically debilitated. The husband took medication. The husband acknowledged that at times the wife took responsibility for his medication and medical appointments because he could not do it himself. He acknowledged that at times this placed great strain on the wife and that at times he was very difficult to live with.
In December 2006 the eldest child [X] had Orthodontic treatment which went badly. She then became ill and eventually was diagnosed with an eating disorder. She was admitted to hospital in January 2007 and again when the parties moved to Victoria. The wife was principally involved in her care.
The final submissions on behalf of the wife submit that I should take into account the husband's conduct as a consequence of his illness in assessing the wife's contribution. The submissions rely on Kennon v Kennon [1997] FLC 92-757. In that case Fogarty and Lindenmayer JJ said at 92-757:
Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s.79. We prefer this approach to the concept of "negative contributions" which is sometimes referred to in this discussion.
Their Honours referred to domestic violence, but they said the application of the statement is not limited to that.
Fogarty and Lindenmayer JJ said that the cases to which the statement applies are exceptional. Here the wife's role in the family was made considerably more difficult by the husband's illness. Clearly the statement cannot apply to every marriage where one party has a debilitating illness. The wife alleges events, particularly in the last few months, which, if correct, would meet the definition of family violence contained in s.4 of the Family Law Act 1975 (Cth), but none amounts to the course of conduct which their Honours refer to. The husband's behaviour as a result of suffering from Post Traumatic Stress Disorder did not have such a significant adverse effect on the wife that I should take it into account in assessing contributions.
The wife submits that I should take into account that her contribution subsequent to separation has been greater. She has been solely responsible for caring for the children, although not completely in the financial sense because she had access to considerable sums of money which were matrimonial assets. In this sense, the husband's financial contribution to the family continued after separation because the original source of these funds was the $1,000,000 compensation payment. The wife continued her role in caring for the children. The husband, since his release from prison, has lived in the matrimonial home. I take all these matters into account. There is no distinction between contributions made by the parties before separation and after separation.
The marriage was a long one, 21 years. The parties had very little at the commencement of their relationship. Their financial contributions until the birth of the first child were equal. In making this assessment I take into account the wife's lump-sum superannuation contribution in 1994 or 1995.
After the birth of the first child the wife performed the role of homemaker and child carer. This task became more difficult after the husband's illness commenced in December 2002. The wife's contribution in this role matches the husband's financial contribution. Overall, the parties’ contributions are equal.
I include the wife’s superannuation with the other assets. The wife is 55 and not working. There is no evidence of when she can access the superannuation but it should be reasonably soon if not straight away.
Section 75(2)
The relevant matters are the age, state of health and earning ability of the parties. Relevant for the wife is that she has the care of one child under the age of 18.
The husband is 62 and cannot earn income. The recent history of his health is described in an affidavit and report from his doctor. I do not need to set it out because the wife’s submissions accept that the husband cannot work and earn an income and will never be able to do so. The husband produced documents which showed that he had applied for a disability pension and received a reply from the Social Security authorities that because of his compensation payment he was not eligible for any social security payment until December 2020 when he will become eligible for the old-age pension. The wife submits that he has not challenged this finding and submits that I should not accept that he is ineligible for any social security benefits. I have no way of assessing what prospects the husband has of challenging the ruling. The evidence I have is that the husband has been given official notification that he is ineligible for any Social Security payment until December 2020. I therefore proceed on the basis that this is correct and that until that time the husband has no source of income.
The wife is 55 and has not worked for 18 years. Realistically she cannot now obtain paid employment. She has the care of a child under the age of 18 years and that will continue for another two years. Her income is, and will continue to be, limited to Social Security payments, but she does have, and will continue to have, an income. The wife has superannuation of $54,000, which because of her age she will have access to soon if not immediately The husband has none
The pool of assets is not large. Realistically the house will have to be sold. Neither party is likely to have the ability to purchase a residence of their own. The husband will have to use his share to live until he is eligible for a pension. The husband’s income situation is significant, but not such that he should have a large adjustment in the assets. The wife has continuing care of a child under the age of 18 and this has to be taken into account. A proper adjustment is 5% in favour of the husband.
Just and equitable
The overall result is a payment to each party applying the requirements of s.79 and is just and equitable
I certify that the preceding one hundred and fourteen (114) paragraphs are a true copy of the reasons for judgment of Phipps FM
Date: 15 April 2011
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