LR and HGC
[2002] FMCAfam 36
•1 February 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LR & HGC | [2002] FMCAfam 36 |
| FAMILY LAW – Property settlement – failure of respondent to appear at trial – competing s.75(2) factors. |
| Applicant: | LR |
| Respondent: | HGC |
| File No: | ZM 5259 of 2001 |
| Delivered on: | 1 February 2002 |
| Delivered at: | Melbourne |
| Hearing Date: | 1 February 2002 |
| Judgment of: | Walters FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Buchecker |
| Solicitors for the Applicant: | Graeme Freeman |
| Counsel for the Respondent: | No Appearance |
| Solicitors for the Respondent: | Not Represented |
ORDERS
The husband do forthwith transfer to the wife all his share and interest in the following:
(a)the furniture and the household goods presently in the possession of the wife;
(b)the Toyota Corolla motor vehicle presently in the possession of the wife;
(c)the motor scooter presently in the possession of the wife; and
(d)the superannuation entitlements of the wife, present and future.
The wife do forthwith transfer to the husband all her share and interest in the following:
(a)the furniture and household goods presently in the possession of the husband;
(b)the cash at bank held by the husband at the Bank of Melbourne;
(c)all of the AMP shares held by the husband; and
(d)the Term Insurance Policy held by the husband with AMP.
The husband indemnify the wife against any and all liability that she may have to the Bank of Melbourne in respect of the joint account of the parties held at the Bank of Melbourne.
The husband forthwith do all such acts and sign all such documents as may be required to transfer to the wife all of his right, title and interest in the former matrimonial home known as and situated at Mount Waverley in the State of Victoria, (“the Real Property”) to be held by the wife on trust for sale pursuant to the provisions of the within orders.
The Real Property be forthwith sold altogether out of Court (“the sale”), and the proceeds of the sale be applied:
(a)firstly, to pay all costs, commissions and expenses of the said trust transfer and the sale;
(b)secondly, to discharge the mortgage and any other encumbrance affecting the real property; and
(c)thirdly, the balance to be divided and paid in the proportions of:
(i)73 per centum thereof to the wife; and
(ii)27 per centum thereof to the husband.
Liberty be reserved to either party to apply with respect to the terms and conditions of and the execution of the sale.
All extant applications otherwise be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
ZM 5259 of 2001
| LR |
Applicant
And
| HGC |
Respondent
REASONS FOR JUDGMENT
(Ex Tempore)
Introduction
I have determined that it is appropriate for me to deal with this matter on an ex tempore basis. For the sake of the transcript I wish to record that the Reasons that I shall give will necessarily be somewhat inelegant, and I reserve the right to amend where necessary to ensure that the Reasons are as I would prefer them to be.
Before the Court today is the wife's amended application for property settlement filed 28 November 2001.
The matter proceeded on an undefended basis. The husband did not attend court. He was called at the commencement of the hearing this morning and did not answer that call. Notwithstanding orders made by Federal Magistrate Connolly on 17 December 2001 to the effect that the husband serve his response to the wife's application for property settlement and an affidavit in support by no later than 4.00 p.m. on
14 January 2001, the husband did not file any such documents. Indeed, the only document filed by the husband in these proceedings is a form 17 sworn by him on 17 December 2001 and filed on that day.
The orders made by Federal Magistrate Connolly on 17 December 2001 (at a time when the husband was present in person) include an order to the effect that the wife be at liberty to apply to have the matter proceed on an undefended basis in the event of the husband failing to file his Response and supporting affidavit by the due date. After hearing the wife’s counsel today, I gave her leave to proceed on an undefended basis.
Because the husband did not attend the hearing today, I was deprived of the opportunity of seeing him and hearing his evidence and giving weight to matters which he may have wished to put before me in argument. It follows that in endeavouring to draw appropriate conclusions, and in giving these Reasons, I have had to rely primarily on the material supplied by the wife, on the evidence which she gave in court and on the submissions presented to me on her behalf by her counsel.
Material Relied Upon
The documents relied upon by the wife comprised her amended application filed 28 November 2001; her affidavit sworn 27 November 2001 (filed 28 November 2001); the information sheet filed 25 May 2001; and the form 17 filed 25 May 2001 (the document having been sworn on 22 May 2001). Apart from the exhibits, these were the only documents relied upon by the wife in the proceedings. The orders sought by the wife in relation to property settlement were primarily those set out in the amended application, although I was advised by counsel for the wife that some alteration was necessary to those orders. In the end, the wife's case was put to me on the basis that the asset pool, as I find it to be, should be divided on the basis of 65 per cent to the wife and the balance to the husband.
Background
The husband and the wife were married on 1 May 1981. They separated on 18 September 2000. There are two children of the marriage; a girl born on 16 August 1986 and a boy born on 18 August 1988. The children attend the Mount Waverley Secondary College, and are in good health.
The wife is aged 45 and the husband is aged 49.
The wife is a primary school teacher. Her income is as described in her financial statement and in the affidavit filed in these proceedings.
The husband is a medical practitioner. I have been advised that the husband has been struck off or disbarred and is no longer able to practise in his profession. His form 17 filed on 17 December 2001 reveals that the husband is currently unemployed. He describes the quantum of his salary or wages as “nil”. From his form 17 it would appear that his only source of income at that time comprised certain dividends from shares held by him.
The financial history of the marriage is described in paragraphs 5 to 8 of the wife's affidavit. I do not propose to dwell upon that history in these Reasons. That is because the wife conceded, both in the affidavit (see paragraph 8) and during the course of the hearing, that the parties' contributions — being their contributions under the various subheadings described in section 79(4) of the Family Law Act — were equal from the date of commencement of cohabitation until the date of the trial.
In my opinion, and in any event, this case turns on the proper application of the section 75(2) factors.
The Law
The general approach that should be adopted by the court in relation to property settlement has been described in a great many cases (see, for example Pastrikos (1980) FLC 91-987, Lee Steere (1985) FLC 96-626, Ferraro (1993) FLC 92-335, Clauson (1995) FLC 92-595, Whitely (1996) FLC 92-684), and especially JEL & DDF (2001) FLC 93-075, at paragraphs 123 to 152 of the decision).
The court must first identify the assets and liabilities of the parties. It must then attribute a value to each of those assets and liabilities, usually as at the date of the hearing. Thereafter it must assess the extent of each party's contributions under the various subheadings described in section 79(4) of the Family Law Act. Finally, the court must consider the financial resources, means and needs of the parties, and the other matters set out in section 75(2) so far as they are relevant. An adjustment of the amount due to each party by way of contribution is then made by reference to the section 75(2) factors. It is not essential, however, that such an adjustment take place. Generally speaking, an adjustment is made because one party has greater needs and the other has stronger means.
In relation to the contribution of the parties under section 79(4) generally, it has been held that a global approach will usually be more convenient than an asset‑by-asset approach, although if considered appropriate, the application of an asset-by-asset approach does not of itself amount to an error of law (see Norbis (1986) FLC 91-712).
Section 75(2) is concerned with the process of arriving at a just and equitable result. It follows that there may be circumstances in which the justice and equity of the case, and the specific provisions of section 75(2), support an adjustment in a party's favour for matters which cannot comfortably be described as being of financial or economic significance (see McMahon (1995) FLC 92-606).
Under section 79(2), the court is required to be satisfied that the order to be made is just and equitable, not simply that the underlying percentage division of the net value of the parties assets is appropriate. In other words, in the consideration of whether the overall result of property settlement proceedings is just and equitable it is the justice and equity of the actual orders and not of the percentage distribution which must be considered (see Russell (1999) FLC 92-877).
I bear in mind all these principles as I proceed to consider the evidence before me and the orders that should be made in these proceedings.
Assets and Liabilities
During the course of the trial the identity and value of each item of property was ascertained. The assets and liabilities are, I find, as follows:
Former Matrimonial Home
Less: amount owing on mortgage
$
$
285,000.00
(82,975.00)
$
202,025.00
Husband’s AMP shares
$ 32,000.00
Husband’s cash at bank
$ 13,100.00
Husband’s furniture
$ 6,000.00
Husband’s motor vehicle
$ 5,500.00
Surrender value of the husband’s
life policy (see exhibit “W3”
being the letter from AMP to this
court dated 17 December 2001)
$ 46,230.00
Parties joint account with the
Bank of Melbourne (overdrawn
by $490.00)
$ -490.00
Wife’s furniture
$ 5,000.00
Wife’s motor vehicle
$ 2,000.00
Wife’s scooter
$ 1,000.00
Total $ 312,365.00
There can be no doubt that there is an obligation on both parties in property settlement proceedings to make a full and frank disclosure of all relevant financial matters (see, for example, Black v Kellner (1992) FLC 92-287 and Weir (1993) FLC 92-338). If it is clear that there has been a non disclosure, then the court should not be unduly cautious in making findings in favour of the "innocent" party (see Stay (1997) FLC 92-751).
Although it cannot be said that the husband has actively misrepresented his financial position, I find that he has failed to cooperate in the process that the court must implement an order to determine the issue of property settlement. He has left the wife and the court to their own devices, as it were. He gave neither the opportunity to explore further the superficial description of his financial position that is to be found in his form 17. Nor did he see fit to attend court for the purpose of affirming the form 17 and thereby putting it in evidence. To the extent that it may be relevant in these proceedings, I infer from the husband’s unexplained failure to attend at trial that any evidence that he could have given or otherwise presented to the court would not have materially assisted his case. I do not infer, however, that such evidence would necessarily have been unfavourable to his case.
I am aware that the husband has asserted — in his form 17 — that he has a current income tax liability of amounting to $64,461.00. The alleged liability was not accepted by the wife, and the husband’s non-attendance at court precluded her from testing the veracity of his assertion in this regard, by way of cross examination. No documents were produced by the husband to support his assertion that the alleged liability actually exists, and it was not corroborated in any other way. Further, I do not know the period over which the alleged liability occurred. It may, for example, relate to the period after the parties separated. Having regard to the matters to which I have referred in this and the preceding paragraph of these Reasons, I find that the husband has no such tax liability. Alternatively, and if I am wrong in that regard, I find that the tax liability properly relates to income earned and retained by the husband since the date of separation and that it is therefore not a liability that should be taken into account in these proceedings. Alternatively, I find that it is too vague and/or uncertain for the court to take into account (which necessarily follows, it seems to me, from the view that I have expressed to the effect that husband’s unexplained failure to attend at the trial leads to the inference that any evidence that he could have given or otherwise presented to the court in relation to the alleged debt would not have materially assisted his case).
In the circumstances of the present case I conclude, as I have indicated above, that the net value of the assets presently available for distribution between the parties is $312,365.00.
As I have indicated above, it was not in issue that the parties' contributions in all their various guises were other than equal from the commencement of cohabitation to the date of trial. Having heard the wife and having re-read her affidavit, I am satisfied — in any event — that contributions were indeed equal on the basis of the evidence before me. It follows that an appropriate division of the parties' assets available for distribution between them at the present time — on the basis of contribution alone — would be 50 per cent to the wife and 50 per cent to the husband.
Section 75(2) Factors
So far in considering the question of property settlement, I have addressed the question of contribution only. Quite clearly, the court is entitled to make an adjustment to a party's property settlement entitlement on the basis, inter alia, of both parties' respective means and needs. The Family Court has, however, been critical of "shorthand terms" being used to describe the last step in the property settlement exercise, preferring to refer to it simply as "the section 75(2) factors" (see Clauson, supra). In essence, section 75(2) is concerned with the process of arriving at a just and equitable result (see Waters v Jurek (1995) FLC 92-635 — although, note the slightly different form of words used by the Full Court in JEL & DDF (2001) FLC 93-075, at paragraphs 123 to 152).
I turn now to consider the various section 75(2) factors to the extent that they may be relevant.
The age of the parties has been referred to earlier in these Reasons. The case before me is that both parties are in good health.
The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate employment is the next factor to be considered under section 75(2). The wife's income is described in the material before me. In the broadest sense, her annual income is in the order of $50,000.00 gross. The husband's income is unclear. Given that he has been struck off or disbarred, and having regard to the matters contained in his form 17, it would appear that the husband has no significant income at the present time.
The property of the parties has already been described in these Reasons. Insofar as financial resources are concerned it is apparent that the husband has no obvious financial resources. The wife has her superannuation entitlements — to which I will refer later in these Reasons. Insofar as the physical and mental capacity of the parties for appropriate gainful employment is concerned, it is clear that the wife has the capacity for appropriate gainful employment and that she is exercising that capacity to the full. The husband — in theory — has the capacity to earn a relatively significant income. It would appear, however, that the husband — because he has been disbarred from his profession — has lost his earning capacity for the time being.
No admissible evidence was placed before me as to the precise circumstances surrounding the husband's suspension or striking off. The Medical Board’s reasons were not provided to me. There was no more than a hint or indication that the reason why the husband has been struck off may have had something to do with his relationship with or treatment of a patient. If that is the case, then it seems to me to be unlikely that the husband will be able to obtain employment in the health care field in the foreseeable future. He may be able to obtain employment in some other area. Suffice it to say that on the basis of the evidence now before me, there must be serious doubts and concerns regarding the husband's capacity for appropriate gainful employment, the emphasis being on the word "appropriate" when regard is had to his medical qualifications. Unfortunately, the evidence does not allow me to reach any firm conclusions in this regard — and I do not even know whether he has been struck off or disbarred permanently, or whether he has been suspended for a finite period of time.
I find on the basis of the material before me that the likelihood is that the husband will have considerable difficulty obtaining employment in the foreseeable future due to the fact that he has been disbarred, struck off or suspended from his profession, and due to his age. Even if the husband does obtain employment in the future, I find that it is unlikely that he will earn as much as the wife presently earns, and indeed I find that it is likely that he will earn considerably less than her (in the short term, at least).
The next fact to be considered is whether either party has the care or control of a child of the marriage who has not attained the age of 18 years.
The evidence is that the children resided with the husband for approximately one year following the date of separation and that since that time they have resided with the wife. It is clear, therefore, that the wife has the responsibility for the care, supervision and accommodation of the children. On the basis of the material before me, I find that it is likely that the wife will continue to have that responsibility in the short and long term and that she is unlikely to receive significant support in that regard from the husband. The evidence is that the husband sees his daughter, but that he has limited contact with his son.
I am required to consider the commitments of each of the parties that are necessary to enable that party to support himself or herself and a child or another person that the party has a duty to maintain. There has been no evidence presented to me to the effect that either of these parties has an obligation to maintain anybody other than himself or herself and the children. Insofar as the financial position of the wife is concerned, it is described (albeit briefly) in her statement of financial circumstances (see, in particular, Parts A and B of the form). Insofar as the husband is concerned, it is difficult to identify his financial commitments from the document that he has filed (although I have read and had regard to Part B of his form 17).
The husband makes reference to a payment in respect of superannuation, but it is unclear whether that comprises a payment in respect of an actual superannuation scheme or in respect of the life policy referred to above as part of the asset pool. The husband also makes reference to either mortgage instalments or rent at the rate of $204.00 per week. It is apparent that if the former matrimonial home is to be sold, then the husband will no longer have that financial commitment, although he will certainly be left with some form of financial obligation to provide accommodation for himself. He makes reference to council rates and income protection insurance. If the home is sold and if the husband is no longer practising in his profession, then these items appear to me to be of little weight.
The husband makes reference, as well, to school fees and levies which relate to the children, but having regard to the fact that the children now reside with the wife, it seems to me that these do not properly comprise financial commitments of the husband. At the end of the day, it would appear that the husband's financial commitments are modest. The wife's are certainly not modest in that she has the obligation to maintain the children — probably without any significant support from the husband.
I have already recorded that on the basis of the material before me, neither party has the responsibility of supporting any other person apart from the children.
I bear in mind, as I must, that each of the parties is entitled to a standard of living that is reasonable in the circumstances of the case. Unfortunately, in this case the asset pool is modest, and as so often occurs, there is too little available to be apportioned between the parties in a way that will ensure a high standard of living for each of them. It seems to me that what is important in this case is the fact that the wife has a secure, ongoing earning capacity and that, subject to the expenses that she has in relation to the children, her income should ensure that — whether she rents or purchases accommodation — her standard of living will be reasonable. If the husband does have an earning capacity, then it is apparent that, with whatever assets he receives from the property settlement proceedings now before me, he will have a base upon which to build.
I am required to consider the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration. This is a case in which it would appear that the duration of the marriage has not affected the earning capacity of either party.
I am required to give consideration to the need to protect a party who wishes to continue that party's role as a parent. In the context of this case, that does not appear to be a significant consideration.
I am required to consider the financial circumstances relating to the cohabitation of either party with any other person. In this case I have not been provided with any evidence to the effect that either party is cohabiting with another person.
I am also required to consider the eligibility of the parties under any superannuation fund or scheme. The husband has no superannuation entitlements. The wife's superannuation entitlements are described in exhibit “W2” — which comprises a letter from the Government Superannuation Office to the wife dated 13 December 2001. Under the heading Resignation and Dismissal appears the following paragraph:
As at 13 December 2001 an immediate refund of contributions and interest of $34,395.00 plus preserved contributions and interest of $14,076.00 are payable on permanent retirement from the workforce. In addition, a deferred lump sum of $45,294 is payable at age 55 and will grow in the interim in line with movements in the consumer price index.
In the next paragraph, the following appears:
New legislation that became effective on 1 July 2001 provides an additional option on resignation. Prior to reaching age 55 you have the option to convert your deferred benefit into a discounted present-day value lump sum. A discount factor of 4 per cent compound per year for the period between your current age and age 55 is applied to the conversion.
In this instance, assuming a resignation date of 13 December 2001, the discounted benefit would be a preserved lump sum of $30,387.00. This amount relates only to the deferred benefit and is additional to the refund of personal contributions and interest. The deferred benefit must be rolled over to another complying superannuation fund. Opportunity for an immediate lump sum payable to another complying superannuation fund continues and can be applied for at any time after resignation and before minimum retirement age.
The wife's entitlements at retirement at ages 55 and 65 are described in the letter. If she were to retire at age 55 and permanently leave the workforce, the wife would receive a lump sum, according to the letter, of $212,822.00. The letter also deals with certain benefits that the wife would receive on retrenchment. Importantly, had she been retrenched as at 13 December 2001, she would have received an immediate lump sum payment of $82,689.00 plus a preserved lump sum of $37,367.00 (payable from age 55 and on permanent retirement from the workforce).
It is apparent from the passages that I have referred to in the letter from the Government Superannuation Office that, in the context of these proceedings, the wife's superannuation entitlements are very important indeed. They give her a degree of financial security that the husband does not appear to have.
I am required under section 75(2) to have regard to any child support that a party to the marriage has provided, is to provide or might be liable to provide in the future. In this case, having regard to the material before me it is questionable as to whether the husband will provide any child support in the foreseeable future (or at all). It would appear that the husband has no income at the present time and is therefore unable to pay child support. If the husband later obtains employment and is able to maintain that employment, then the provisions of the child support scheme will take effect and the husband will pay such child support as the formula dictates, subject of course to the rights of each of the parties to apply to vary that amount for one reason or another.
There are no financial agreements that are binding on the parties, and in my view there are no other facts or circumstances which the justice of the case requires be taken into account.
I conclude that the most significant of the section 75(2) factors are the following:
(a)The children of the marriage reside with the wife and are likely to continue to reside with her for years to come.
(b)The wife's earning capacity appears to be significantly greater than that of the husband (at the present time, at least).
(c)It is unlikely that the husband will be able to provide the wife with any child support, and if he does provide child support, then on the basis of the material before me, it is likely to be modest; and
(d)the wife has significant superannuation entitlements, which the husband does not have.
On the basis of the evidence before me, and having regard to the fact that the purpose of the section 75(2) adjustment is to assist the court with the process of arriving at a just and equitable result, I conclude that no adjustment should be made to either party's entitlement on the basis of contribution alone. I would feel considerable discomfort in the context of these proceedings if I were to order an adjustment for the section 75(2) factors in either direction. It seems to me that the factors which favour each of the parties balance each other out to a significant degree. If I were to make any adjustment at all in favour of one or other of the parties, then it would be a very minor adjustment and, in my view, would have the potential of causing an injustice.
I am conscious that the husband can be regarded as having contributed to the wife’s present superannuation entitlements, and I am not unaware of the provisions and anticipated effect of the Family Law Legislation Amendment (Superannuation) Act 2001. The reality is however, that the wife has to work for a further 10 years or so before she is eligible to retire and receive her entitlements. Even if I were to treat the wife’s superannuation entitlements as an asset capable of being divided between the parties at this stage, it seems to me that justice would dictate that an adjustment be made to the resulting notional split — in the wife’s favour — to ensure that the overall result is just and equitable. It is for this reason that I have made (amongst others) the comments appearing in the preceding paragraph of these Reasons.
Conclusion
It follows that the orders that should be made in these proceedings must be to the effect that the wife retains her superannuation entitlements — but that the remaining asset pool (comprising, in total, an amount of $312,365.00) should be divided equally between the parties. The evidence before me is that if the husband retains the items that I have described as being "his", together with the liability attached to the joint account, then he will be left with net assets valued at $102,340.00. If the wife retains the assets that I have described as "hers", then she will retain assets worth a total of $8,000.00. The adjustment between these parties in order to achieve equality of the asset pool must therefore be constructed per medium of the net proceeds of sale of the former matrimonial home.
On the basis of the evidence before me it is clear that each party should receive assets to the total value of $156,182.50. The wife is retaining assets to the value of $8,000.00. It follows that she should receive a further $148,182.50. If this figure is to be expressed as a percentage of the net value of the former matrimonial home, then it is apparent that she should receive 73.35 per cent of the net proceeds of the sale of the former matrimonial home. I propose to round that figure down to 73 per cent.
Orders
I propose to hear counsel as to the precise terms of the orders to be made to give effect to these Reasons.
I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of Walters FM
Associate: Paul O'Halloran
Date:
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