M and M
[2007] FMCAfam 631
•20 September 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| M & M | [2007] FMCA fam 631 |
| FAMILY LAW – Property – contribution – initial contribution – future needs. |
| Family Law Act 1975, ss.75(2), 79, 90ME, 90MT, 106A |
| Farnell (1996) FLC 92-681 Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Norbis & Norbis (1986) 161 CLR 513 Pierce & Pierce (1998) FLC 92-844 Williams & Williams [2007] FamCA 313 |
| Applicant: | RM |
| Respondent: | BM |
| File number: | SYM5207 of 2006 |
| Judgment of: | Altobelli FM |
| Hearing dates: | 9 & 10 May 2007 |
| Date of last submission: | 10 May 2007 |
| Delivered at: | Sydney |
| Delivered on: | 20 September 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr Trout |
| Counsel for the Respondent: | Mr Kearney |
| Solicitors for the Respondent: | JB Stevenson and Co |
ORDERS
That within seven (7) days of these Orders the Husband and the Wife are to do all things necessary to cause the net sale proceeds of
13 G Close, PK held in trust for them to be distributed as follows:
(a)A payment to EW of $2,000; and
(b)A payment of 99.5 percent of the balance to the Wife; and
(c)A payment of the remaining balance to the Husband.
That within three calendar months of the date of these Orders the Husband shall pay to the wife the sum of $58,713.00.
That in the event the Husband does not comply with Order 2 herein, then forthwith each of the Husband and the Wife do all acts and things and sign all necessary documents to cause the property known as and situated at 12 PS Lane, C in the state of Queensland (“the C Property”) to be sold and that for the purpose of such sale:
(a)The listing agent be as agreed between the parties, or failing agreement at a price recommended by the President of the Real Property Institute of Queensland; and
(b)The list price be as agreed between the parties, or failing agreement at a price recommended by the President of the Real Property Institute of Queensland or their nominee; and
(c)There be liberty to apply in relation to the terms and conditions of the sale in the even of dispute as to the same.
That in the event of sale of the C property, the proceeds be paid as follows:
(a)In payment of all agent’s commission and expenses of the sale (including auction expenses if any); and
(b)In payment of the legal fees on sale; and
(c)In payment of such amount, if any, as is required to discharge any encumbrance registered on the title of the property; and
(d)In payment of 31 percent of the balance remaining to the Wife; and
(e)In payment of the balance to the Husband.
That each party is to be responsible for their own respective capital gains tax liability resulting from the sale of the Western Australian property, if so assessed.
That pursuant to s.90MT(1)(a) of the Family Law Act 1975 (“the Act”), whenever a splittable payment within the meaning of s.90ME of the Act becomes payable in respect of RM ’s (“the Husband’s”) interest in Military Superannuation and Benefits Scheme (“the MSB”), the Wife is entitled to be paid by the trustee of the MSB an amount calculated in accordance with the regulations, using a base amount, as at the date of these orders, in the sum of $71,000.00 and that there be a corresponding reduction to the entitlement the Husband would have been entitled to receive but for these orders.
That the operative date for Order 6 above is four business days after the service of the final orders on the trustee of the MSB.
That it is declared that except as otherwise provided herein each party have the sole right, title and interest in:
(a)Any chattels, goods, furnishing and other property which are, at the date of these Orders in their possession respectively; and
(b)Any moneys, shares, debentures which stand in their sole names respectively at the date of these Orders.
That in the event either party refuses or neglects to execute and deed or instrument, the Registrar of this Court be appointed pursuant to s.106A of the Act to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed or instrument.
Parties have liberty to apply on seven days notice as regards the interpretation or implementation of these Orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC5207/06
| RM |
Applicant
And
| BM |
Respondent
REASONS FOR JUDGMENT
Introduction
This case is an application for alteration of property interests under s.79 of the Family Law Act commenced by the husband, RM . The respondent is his wife, BM. He is 37 years old and she is 36 years old. They started living together in Western Australia in March 1997, married in Brisbane on 21 February 1998, and their final separation was on 10 February 2005.
There are two children of the marriage, B who is 7 years old, and L who is 5 years old. Pursuant to parenting orders made 20 July 2005 the children live primarily with their mother, but spend time with their father.
Background
On 20 August 1990, about seven years before the husband and the wife commenced cohabitation in Western Australia, the husband joined the Royal Australian Navy. Between 1992 and 1997 the husband and his mother purchased land at C (1992), and a house at D (1995), both in Queensland. Thus, at cohabitation the husband had superannuation as a result of his service with the Royal Australian Navy, and an interest in the property at C and D. One of the issues in this case was to identify, and if possible to attribute a value to those assets, as at cohabitation. Apart from those assets, neither the husband nor the wife had any other assets of significant value at that time.
In 1998 the husband was posted to Sydney, and they relocated there. The parties married on 21 February 1998 in Brisbane. In about June 2000 there was a series of transactions between the husband, and his mother, as a result of which he transferred his interest in the D property to his mother, and at the same time his mother transferred her interest in the C land to the husband. This transaction was a complex one, and much evidence, including cross-examination, was focused on these transactions. I will discuss this below.
By 1 January 2001 the husband was posted back to Western Australia and later that year they purchased the property at 13 G Close, PK, and made that their matrimonial home.
However, by January 2004 the husband was posted back to Sydney as a result of which the family (including the two children who were born in the meanwhile) had to relocate to Sydney.
Unfortunately, on 10 February 2005 the husband and the wife separated, and the wife and the children moved to Brisbane to live with her parents.
The present proceedings were commenced on 8 April 2005 and interim orders were made by Judicial Registrar Johnston in the Family Court on 6 June 2005. These orders do not have an impact on the present proceedings. In December 2005 the matrimonial home in Western Australia was sold, and the net sale proceeds deposited into a solicitor's trust account.
The Issues
The main issues in this case are as follows:-
a)Identifying, and if possible attributing a value to the assets at cohabitation;
b)Assessing contribution during the period of cohabitation;
c)Identifying, and then assessing any future needs that arise under s.75(2) of the Act;
d)Establishing a just and equitable manner of effecting an alteration of property interests having regard to the presence of superannuation assets, and non-superannuation assets.
The Applicable Law
The preferred approach to the determination of an application under s. 79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by the husband in bringing property into the marriage. In this regard, I need to consider the decision of the Full Court in Pierce and Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce and Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 27, 28, 29 and 32 stated
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) …28.…said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
Identifying assets and liabilities and attribution value
At the commencement of the hearing Mr Trout, counsel for the husband, and Mr Kearney, counsel for the wife, each provided me with a list of assets and liabilities.
I reproduce the schedule of assets and liabilities prepared on behalf of the wife, to which additions were made orally. I will identify below the differences that existed as between the two lists. They were not substantial. Where findings are necessary, I make them below.
Final Schedule of Assets and Liabilities
| Property | Title | Wife Asserts | Husband Asserts | A/D | |
| 1 | 12 PS Lane, C | Husband | $190,000 | $190,000 | A |
| 2 | Proceeds of sale of West Australian property | Joint | $165,022 | $162,750 | |
| 3 | 2003 Holden Zafira | Husband | $18,000 | $18,000 | A |
| 4 | 1994 Daihatsu Mira | Husband | $1,000 | $1,000 | A |
| 5 | Zurich Life Insurance policy | Husband | $10,000 | $10,000 | * |
| 6 | Household Contents | Husband | $7,773 | $7,773 | A |
| 7 | Household Contents | Wife | $5,182 | $5,182 | A |
| 8 | ANZ bank account | Wife | $100 | ||
| 9 | Australian Defence Credit Union Account | HUSBAND | $210 | $210 | * |
| 10 | ANZ bank account | Husband | $151 | $151 | * |
| 11 | Add-back – sale proceeds IAG shares | Husband | $2,600 | $2,177 | |
| 12 | Add-back paid legal costs and disbursements | Wife | $2,134 | ||
| 13 | Add-back paid legal costs and disbursements | Husband | $40,000 | ||
| 14 | Gross Assets | $402,172 | $437,243 | ||
| Less Liabilities | |||||
| 15 | Unpaid taxation | Husband | $7,526 | $5,651 | D |
| 16 | ANZ loan | Husband | Nil | $42,389 | D |
| 17 | ANZ visa | Husband | Nil | Nil | A |
| 18 | Buyer’s Edge | Husband | Nil | $15 | D |
| 19 | Personal Loan EW | Joint | $2,000 | ||
| 20 | ANZ visa | Wife | $3,500 | ||
| 21 | Debt to Wife’s Parents | Wife | $3,500 | ||
| 22 | Gross Liabilities | $16,526 | $48,055 | ||
| 23 | Net Assets | $385,646 | $389,188 | ||
| Superannuation | |||||
| 24 | Military Superannuation and Benefits Scheme | Husband | $284,023 | $283,500 | |
| 25 | Zurich Retirement plan | Husband | $12,502 | $11,178 | |
| 26 | Q Super | Wife | $9,290 | $9,290 | A |
| 27 | Mercer Wealth Solutions Super Trust | Wife | $7,132 | $7,132 | A |
| 28 | AMP Flexible Lifetime Super Plan | Wife | $294 | $294 | A |
| 29 | Australian Super | Wife | $5,081 | $5,671 | |
| 30 | LG Super | Wife | $1,811 | $1,811 | |
| 31 | Care Super | Wife | $1,029 | $1,029 | |
| 32 | Gross superannuation | $321,162 | $319,905 |
In relation to this joint list of assets and liabilities I make the following observations and findings:-
a)Item 2, the proceeds of sale of the former matrimonial home in Western Australia is invested in a solicitor’s controlled moneys account. Accordingly, the actual balances at today’s date will not affect the outcome if I decide to apportion that fund as between the parties, based on a percentage.
b)I was advised by counsel that agreement had been reached in relation to items 6 and 7, household contents. It was agreed I should simply make a declaration to the effect that the household contents in the respective possession and control of each spouse should remain where it is. Henceforth, these items are to be excluded for the purposes of this decision.
c)The wife, at hearing, asserted that the value of the IAG shares at item 11 was $2,600.00. There is an issue about whether the sale proceeds of the shares should be added back. The husband states in his financial statement filed 18 April 2007 at paragraph 59 that he disposed of the IAG shares and that he received $2,600.00 for the shares should be notionally attributed to the husband.
d)Even though items 12 and 13 referred to paid legal costs and disbursements, the husband argues that paid legal costs should be added back, but the wife argues there should be no add back. The evidence indicates that legal fees of the husband were incurred and paid after separation, using a personal loan. There is no evidence to indicate that an asset in existence at separation was used to fund legal fees. The reality is that, regrettably, both the husband and the wife have incurred significant legal costs. The most equitable outcome is for there to be no add-back of legal fees paid, and for the liability each has for legal fees to be ignored in the alteration of property interests: Farnell (1996) FLC 92-681.
e)Item 15 represents capital gain tax that is payable. However the evidence did not establish that capital gains tax was, in fact, payable. There was no evidence to indicate that a property would need to be sold in order to meet an obligation created by these orders. Accordingly the unpaid capital gains tax is not allowed as a deduction. If there is a tax liability, each party should bear it as and when assessed.
f)Item 16 is an ANZ loan obtained by the husband, principally to pay legal costs. He wants this liability included, but the wife says that it is a post separation liability which should not be reflected in an alteration of property interests between them. Indeed, similar issues arise in relation to items 19, 20 and 21. The details of the ANZ loan are set out in Mr Trout’s written submissions at item 18. If the amount used to pay legal fees is excluded, for the reasons set out above, this leaves a balance of $7,389.00. The husband spent $1,950.00 to pay out a loan to GE Finance in relation to his laptop computer, and $1,200.00 to purchase furniture and fittings. The evidence seems to indicate that he is in possession of these items, so I will not allow this part of the loan as a liability of the parties. The balance, $4,239.00, was used to make loan repayments on the former matrimonial home. The ANZ loans were obtained in October 2005 and February 2007, but the former matrimonial home was sold in December 2005, so it seems quite unlikely that the ANZ personal loan was used for the stated purpose. Even if the funds were used to pay the loan relating to the husband’s motor vehicle, the Holden Zafira, I would not be convinced that it is just and equitable to include this part of the ANZ personal loan as a relevant liability. On balance the evidence seems to indicate that this loan should be treated as a personal post-separation liability of the husband, and excluded from the relevant pool.
g)For basically the same reasons, I treat items 20 and 21 as post-separation personal liabilities of the party who incurred them, that should not be taken into account in the present context.
h)Item 19 is more difficult. At paragraph 12 of the affidavit of EW, the wife’s mother, she deposes to having lent to the husband and wife $2,000.00 on 12 March 2004. The cross-examination of the witness did not detract from her evidence – indeed it merely strengthened the joint nature of the loan. Even though I was left wondering whether this was a loan that was, indeed, expected to be repaid, the cross-examination did not address the issue. Accordingly, the personal loan of $2,000.00 will be treated as a joint liability in the present context.
i)In order to simplify and clarify the situation, I propose to simply disregard the assets at items 8, 9 and 10, the liabilities at items 17 and 18, and the superannuation at item 28. I am satisfied that no prejudice will be caused to either party if I do this, and that it will not detract from the just and equitable exercise of my discretion.
As a result of the findings I have made above, the schedule of assets and liabilities now looks like this.
Final Schedule of Assets and Liabilities
| Property | Title | Value |
| 12 PS Lane, C | Husband | $190,000 |
| Proceeds of sale of West Australian property | Joint | $165,022 |
| 2003 Holden Zafira | Husband | $18,000 |
| 1994 Daihatsu Mira | Husband | $1,000 |
| Zurich Life Insurance policy | Husband | $10,000 |
| Add-back – sale proceeds IAG shares | Husband | $2,600 |
Gross assets: | $386,622 | |
Personal Loan EW | Joint | $2,000 |
Gross Liabilities | $2,000 | |
Net Assets | $384,622 | |
Superannuation | ||
| Military Superannuation and Benefits Scheme | Husband | $284,023 |
Zurich Retirement plan | Husband | $12,502 |
Q Super | Wife | $9,290 |
Mercer Wealth Solutions Super Trust | Wife | $7,132 |
Australian Super | Wife | $5,081 |
LG Super | Wife | $1,811 |
Care Super | Wife | $1,029 |
Gross superannuation | $320,868 |
Financial Summary
| 14 | Gross Assets | $386,622 |
| 22 | Gross Liabilities | $2,000 |
| 23 | Net Assets | $384,622 |
| 32 | Gross Superannuation | $320,868 |
| 33 | Net Assets and Superannuation | $705,490 |
Identifying, and if possible attributing a value to assets at cohabitation.
A major issue in the case is assessing the initial contribution by the husband made by bringing into the marriage his interest in the properties at C and D.
C Land
The husband makes the point that this was a property that was purchased by him and his mother in 1992, five years before cohabitation.
It was purchased for $37,500.00. The single joint expert registered valuer indicates that its fair market value as at 1 March 1997 (about the time of cohabitation) was $40,000.00 and its current market value is $190,000.00. It was encumbered at the time of cohabitation.
The wife's evidence in this regard is that she was not much involved in the negotiations and the transactions between the husband and his mother relating to the properties. The wife concedes that the husband made a greater financial contribution at cohabitation, but disputes the extent of that contribution, particularly having regard to the later dealings with the property as between the husband and his mother. There is no evidence from the wife about the husband's equity in the property was.
The husband's evidence (paragraph 41 of the affidavit filed 18 April 2007) is that he and his mother borrowed $25,000.00 to purchase the C property and that his mother paid the balance of the purchase price, stamp duty and legal costs. He says that between May 1992 and February 1995, they both made the mortgage payments.
Even though the husband’s written submissions assert at paragraph 9(c) that he and his mother borrowed the sum of $25,000.00, at paragraph 46 of the husband's affidavit filed 9 June 2006 he asserts that they jointly borrowed $33,753.00 with his mother putting in the balance of the deposit, paying legal costs and stamp duty. He then asserts at paragraph 47 that both he and his mother equally paid the mortgage payments between 1992 and 1995 but after January 1995 his mother paid all the mortgage payments. Also, at paragraph 47, he asserts that his mother paid council rates and the cost of slashing between 1992 and June 2000.
As it is agreed between the parties that by 1 March 1997 the C land was worth $40,000.00, on the husband's evidence the equity in that property could have been, by the time of cohabitation, either approximately $6,000.00 or $15,000.00.
The evidence of the husband's mother, Ms Q-M, is contained in her affidavit filed 18 April 2007. At paragraph 2 she confirms that C was purchased jointly with Mr M in 1992 for $37,500.00. She annexes documentation which clearly establishes the purchase price, and that there was a mortgagee, Beneficial Finance. Her evidence is that she believes that $25,000.00 was borrowed to fund the purchase. Annexed to her affidavit is a Queensland Teachers' Credit Union statement dated 5 June 1992, just a few months before settlement, indicating that she had in May an opening balance of $7,000.00, that on 28 May she drew a cheque for $3,750.00 and that on 5 June she had a balance of $4,195.00.
The receipt for the deposit, dated 23 May 1992, indicates payment of $3,750.00. I conclude that the money for the deposit came out of her account. There is a letter from Beneficial Finance dated 6 July 1992 which reflects a loan to the husband and his mother for $25,000 to purchase the land.
It was vacant land when they bought it and she gives evidence at paragraph 5, for example, that she paid for the erection of the garage, the excavation of the dam, etc, which she says were the only improvements made to the property between May 1992 and June 2000.
One would have thought that the evidence in the affidavits seems to be pointing towards the correctness of the husband's assertion, ie between his mother and himself as at the time of cohabitation there had to have been some equity in the property at C. The extent of the equity is not entirely clear from the affidavits.
In the husband's cross-examination the following emerged. In the husband's last affidavit, i.e. the one filed 18 April 2007, the husband was given leave in examination in chief to correct a mistake at paragraph 41. That paragraph 41 in his later affidavit is different to paragraph 46 in his affidavit filed 9 June 2006. In paragraph 41 of the later affidavit he asserts that the property was purchased for $37,500.00 and a loan obtained for $33,752.67.
In chief, however, he asserted that the correct figure was $25,000.00 not $33,752.67. Having regard to the importance of this issue in the litigation it is rather surprising that such a fundamental mistake was made. In cross-examination he asserted that he had realised the error to paragraph 41 over the weekend prior to the hearing and denied that it was a result of the discussion in Court on the morning of this hearing (referring to my opening discussions with counsel about the fundamental issues in the case and the evidence in support of them).
The husband agreed in cross-examination that he had sworn three times that the loan was $33,752.00. He agreed that it was a very precise number and explained that the figure of $33,752.000 was calculated by reference to the purchase price, less the deposit and that his error was picked up when he looked at the State Bank statement. I suspect that in this regard he is referring to the annexure to his mother's affidavit which indicates the existence of that $25,000.00 loan to them from Beneficial Finance (a division of State Bank)). When pressed by Mr Mr Kearney, in cross-examination to explain where he got the figure of $33,752.00 the husband said that he got the figure after discussions with his mother and that it was how he remembered it.
His evidence was that he recalled his mother telling him that that was the amount of the loan because he was away at sea at the time. In this regard, it is interesting to note that the contract dated 25 May 1992 is signed by the mother for and on behalf of her son, which is at least consistent with the husband's evidence that he was away at the time.
Further, in cross-examination, it is clear that the husband was involved in preparing her affidavit, bearing in mind that he was self representing at the time. He agrees he typed it up and he agrees that in the preparation of his mother's affidavit he was referring to the documents that are annexed thereto. He agreed that before 13 April 2007, he had available to him documents indicating that there was a loan for $25,000.00, but his affidavit was sworn on 18 April and at paragraph 41 he nonetheless deposes to a loan of $33,752.67. The husband says this was an oversight on his part.
It is indeed unusual that the husband asserted at the commencement of cross-examination that he had realised the error over the weekend when it is clear that he had this information available to him before he swore his latest affidavit. It was put to him that the reality was he had no idea what the loan was. The husband said the loan was taken out more than 10 years ago. He recalls a loan of $37,000.00 in total, but I think he meant $33,000.00 in total.
When it was put to him that he didn't have any independent recollection of the loan he said that he came to the figure of $33,000.00 as his mother had said the deposit was paid and they borrowed the rest and he simply calculated it on that basis. When he was reminded of the fact that he was asserting that he had borrowed $33,000.00 his answer was that the bank records indicate it was only $25,000.00. It was suggested to him there was another loan and he denied this, however, he acknowledges he was away at sea at the time.
He agrees that he was a party to a loan for only $25,000.00 and that there is no other information about another loan and again asserts that the figure of $33,752.00 was based on what his mother had told him in the sense that she had put on the deposit and he believed at the time that "we had loaned the rest of the amount". His evidence was clear: “I can assure the Court that nothing else was borrowed - only $25,000.00”.
Mrs TM gave evidence by telephone. Paragraph 12 of her affidavit was read out to her and read:-
"The C property was transferred into RM 's sole name as this was an investment we had entered into jointly and I believed it should be retained by RM because of his assistance and generosity, both in this purchase and the purchase of the D property. It was never my intention this property be transferred to or shared with anyone else outside of my own children."
Mr Kearney, counsel for the wife, suggested to her that her that her son had indeed assisted her and was generous in helping. She replied that she paid for the C land and most of D. When Mr Kearney asked her to explain what she meant by "R's assistance and generosity" in paragraph 12, she said that "He allowed me to get a loan" and that because of her age, with less than 10 years before retirement, she couldn't otherwise have got the loans. She agreed in cross-examination that she didn't have the savings to buy the land on her own, other than the deposit.
She agreed that she paid the deposit. She agreed that she paid the costs of purchase. She then agreed that beyond that she needed to borrow money to purchase the properties. She agreed that the land could not have been purchased, and she could not borrow, in her own name and needed RM. It was put to her that RM helped repay the loan on the C property and her response was "I paid all of the money for the C land." She was quite specific in saying it included all the mortgage payments and specifically for the period 1992 to 1995.
The husband’s mother had filed an earlier affidavit in these proceedings. This one filed 9 June 2006 was read as part of the wife's case. She asserts that she paid all the regular mortgage payments for C from 1995 to 2000 and that between May 1992 and February 1995 she and RM contributed equally to the mortgage. However, at paragraph 4 of her affidavit filed 18 April 2007 she says that between May 1992 and June 2000 she made all regular mortgage payments in relation to the loan.
In paragraph 47 of the husband's affidavit filed 9 June 2006 the husband's evidence is that between 1992 and 1995 the mortgage payments were paid equally and after 1995 she, the mother, was solely responsible for mortgage payments. Curiously, the evidence of the husband in his later affidavit from paragraphs 41 onwards, takes a significantly different way of presenting it. For example, at paragraph 41, instead of asserting that he made mortgage payments he says that as a result of co signing the mortgage he received "the responsibility of half the mortgage payments".
Going back to the mother's cross-examination, however, when it was put to her that RM said that her evidence in this regard was wrong her response was that she cannot remember RM paying the mortgage. In cross-examination Mr Kearney read out to her paragraph 4 of her first affidavit which says that between May 1992 and February 1995 RM and the mother equally contributed to the mortgage payments. She was asked: "Was that evidence wrong?" Her response was: "I made the payments".
When asked to explain her evidence at paragraph 4 of the affidavit of June 2006 her response was:
If RM made any payments it was only one or two and that I can't remember saying what I said at paragraph 4. As far as I am concerned I made the payments on the land and I can't remember saying that.
She went on to refer to RM and herself having a joint bank account at that time, i.e. around 1993 or 1995 and that money was used for other things besides the land. It was put to her that between 1992 and 1995, therefore, RM was paying her some money to which she responded "yes". It was put to her that these payments had nothing to do with the C property. She responded, "Correct." She went on to say that "It wasn't that mortgage it was the D property."
It was then put to her that she said that RM only paid the D property mortgage to which she said, "Yes, that is true." But she otherwise could not explain paragraph 4 of her June 2006 affidavit. She acknowledged that she paid a lot of money toward C, that she provided the records to her son and that she did contribute to the affidavit but he typed it up. She denies, quite firmly, that RM made equal mortgage payments on C up until 1995. She denies, quite firmly, that he was paying $600 per month on the C mortgage. Indeed, when it was suggested to her that part of the agreement was that she took over the mortgage of C she said that she was already making the payments for C.
Mr Kearney then put it to Mrs Q-M that there was, in general term s, an agreement that in order for her to buy out the property in which she was living at D, RM would take out a loan and buy the property and in return she was to make the mortgage payments for the property known as C, as well as pay the rates and maintenance, and that as a result of that agreement RM purchased the D property. However, Mrs Q-M firmly stated that D wasn't associated with C at all and it was not the arrangement. Indeed, she agreed with Mr Kearney that the first time she has heard of it was from him in cross-examination.
Mr Kearney then read out paragraph 6 of her affidavit, filed 18 April 2007, which contains her own evidence about the arrangement.
6. In December 1994, the property I had happily rented as my residence since 1988, 43 H St D, became available for sale. Not wishing to move, and after discussions with RM because I was approaching retirement age I was unable to find a financial institution who would loan me the money outright. RM then offered to take out a loan and purchase the property. In return I was to pay all the mortgage payments for the property known as the C property and also pay the rates and any maintenance required on that property. When agreement was reached between us, RM then purchased the D property.
She said that she had already said that some of the money was contributed to the C property and she felt that the questions she had been asked has mislead her. She denied that she had just made it up but admits she could have been confused. She said that what is in her affidavit is correct. When it was suggested to her that perhaps she and her son had made up a story that would help him in this case she said that she is not considering her son but merely her own interests and all the money that she had paid out.
When it was put to her that she wanted to make sure that her son's ex wife did not get anything in that property she agreed, especially when the property belongs to her. Mr Kearney reminded her that she said that she had given him property because of his generosity. She replied, "No, that is not right, he was not generous." However, she agreed it was to her advantage at that time in her life, working as a part-time teacher, she was not prepared to move to C and therefore an arrangement that enable her to say at D was to her advantage.
However, she firmly denies that her son put in more money to the C property than her. When put to her as to whether she denies that during that time her son made extra payments to the mortgage she said she is not aware of it and it can't have happened as she made most of the mortgage payments.
All of this evidence is confusing. I think Mrs Q-M was genuinely confused and was finding it hard to recall what precisely happened at the time. On balance, there is no evidence of another loan and the only objective evidence I have indicates that there was one loan of $25,000.00 relating to the C land. Despite all the conflicting evidence the balance of probabilities seems to favour that there being equity in the C property but it could not have been substantially more than the difference between the purchase price and the amount borrowed. It could not have been more than $15,000.00 approximately, in the context of a jointly owned property. At the time of cohabitation, therefore I find the husband interest in the C property to be no greater than $7,500.00.
D Property
Apart from establishing what was the precise nature and extent of the husband's interest in the C land, the next issue is undertaking a similar exercise in relation to his interest at the property at 34 H Street, D. The husband's evidence in this regard starts at paragraph 42 of his affidavit filed 18 April 2007. By way of summary his evidence is that in late 1994 the house that his mother was renting at D was listed for sale. He decided to purchase the property thus allowing his mother to continue residing there. The husband asserts that he and his mother had a verbal agreement that instead of paying rent to him on the D house that she would, instead, pay half the mortgage payments on the C property and that she would be solely responsible for property maintenance and rates on the D property.
The husband asserts that he was also responsible for the mortgage payments on the D property. He says the property at D was purchased for $88,000.00 on 23 February 1995 and that he borrowed $82,000.00 to fund the purchase with a deposit of $8,800.00 being paid for by his mother. The husband's evidence in this regard is also contained at paragraph 49 of his affidavit filed 9 June 2006 and this evidence is consistent with his later affidavit.
The husband's evidence is that once the purchase of the D property was completed, the mother was living in the D property and was paying the mortgage on the C property. The husband was paying the mortgage on the D property.
The husband's mother deposes in her affidavit of 13 April 2007 at paragraph 6 in terms similar to that asserted by the husband. She confirms that she paid the deposit of $8,800.00, the legal fees and stamp duty associated with the purchase, and that RM borrowed the $82,000.00. When the purchase of D was completed she continued to live there and the agreement between RM and herself was that he, RM, would meet the mortgage payments on D, that she would pay no rent, but she would be solely responsible for the payment of council rates, water rates, repairs and renovations to the D property.
In paragraph 9 of her affidavit she asserts that she spent about $10,000.00 on materials and labour repairing the roof, fencing, installing a new hot water system to replace the old one which failed, and various other matters.
In cross-examination the husband's evidence was that he was not paying the mortgage on the C property at the same time as he was making the mortgage payments on the D property - in other words, one mortgage payment substituted for the other. At the time that D was purchased his evidence was that his mother took over the fortnightly payments of $165.00 per fortnight, attributable to him, on the C property.
The mortgage on the D property was $837.00 per calendar month which he agreed was higher than what he was paying for the C property and in relation to the D property he agrees that his mother was not making a contribution, and that she was living there otherwise rent free. He agreed, therefore, that whilst he was paying $837.00 per calendar month on the D mortgage all he was getting back in return was the $331.00 per calendar month that his mother was paying on his share of the C property, as well as the payment of maintenance and rates on the C property.
He agreed that, apart from these financial adjustments, she was living there rent free. Initially, the husband agreed in cross-examination that he made irregular extra payments in relation to the D property from his earnings but when it was put to him that such payments were to the detriment of money otherwise available to the household he explained that he was confused in his earlier answers and that in fact he only made regular payments on the D mortgage. He then specifically denied the wife's allegation that $6,000.00 was paid off as a lump sum payment on that mortgage after cohabitation and he denies knowing about a $2,000.00 extra payment on the C property on March 1999.
He also denied an extra $1,000.00 paid off the C property on 7 April 1999. It was put to him that what the husband was in fact doing was helping his mother out - he had some extra money and he opted to help her out in term s of retirement. He agreed to this, but denied that he was using extra income for this purpose.
The next part of this increasingly complicated arrangement is that, according to the husband, he and his mother agreed that her share in the C property would be transferred to the husband in June 2000, that he would transfer the D property to his mother, that his mother would discharge the mortgage on the C property by paying the amount of $4,672.39, and that the mother would discharge the mortgage over the D property in the sum of $72,283.00. All of this occurs, of course, three years after cohabitation.
In paragraph 43 of the husband's affidavit filed 18 April 2007, he explains that the payments made by his mother came out of her retirement funds and he asserts that the effect of these transactions was simply a swap of their shares in the said properties, with the only payment by him being the stamp duty and transfer costs of the C property, which amounted to about $6000. At paragraph 47 he asserts that he felt that the extra equity he would receive from the transfer of his mother's share in the C property was far greater than the $7000 profit he could receive from the sale of the D property because, according the husband, the D property was purchased for $88,000 in 1995, but was valued at $95,000 at the time of the transfer.
In the husband's affidavit filed 9 June 2006 the evidence is contained at paragraphs 51 onwards. The evidence is basically the same. He basically says that once the transaction was completed he had the C property unencumbered. As he asserts at paragraph 58 of his first affidavit, three years and two months after the commencement of cohabitation he was the sole owner of the C property, unencumbered by any mortgage. Bear in mind the husband's evidence is that from February 1995 when the D property was purchased, his mother was paying the mortgage on the C property.
However, from the purchase of the D property in February 1995 he was solely responsible for the repayments of that mortgage. Cohabitation commenced in March 1997. Between March 1997 and June 2000 the husband was making the mortgage payments on the D property. Whilst he received the benefit of the C property, to which he had made no mortgage payments, clearly on any common sense reckoning of the matter the consideration for him receiving the C property was giving up any interest he had in the D property, an interest derived (at the very least) from the fact that he had been making mortgage payments.
Given that between cohabitation and June 2000, a period of at least three years, these mortgage payments had been made during that period, it becomes hard for the husband to assert that the wife made no contribution. That doesn’t make it easier, of course, to quantify what that contribution was, or precisely what his interest was at the time of cohabitation.
The affidavit of Mrs Q-M refers to these transactions in paragraphs 10-12 and it is interesting to note the emphasis she clearly places in paragraph 12 on the transfer of the C property to RM to be retained by him "because of his assistance and generosity, both in this purchase and the purchase of the D property. It was never my intention this property be transferred to, or shared with anyone else outside of my own children."
In cross-examination the husband denied that he was attempting to keep the C property out of this case, or to minimalise its significance (from the perspective of contribution made by the wife). He agreed, however, that marital funds were applied to that property during the relationship and that those funds could have been used for other things and that it was artificial to separate out the C property as he had done and keep it entirely apart from the rest of the marital assets.
When Mrs Q-M was cross-examined about the transaction, she asserted that her son was only paying the D property mortgage and not the C property mortgage (but the time period is imprecise). She agreed that once the D property was purchased she stayed there and took over the mortgage for C, except that she asserts that she was already paying the mortgage for C. She seemed unclear about the terms of the agreement and needed to be reminded about paragraph 6 of her own affidavit.
I think her evidence was genuinely confused, rather than deliberately attempting to obfuscate. When it was put to her that she received the D property and he got the C property because it was to her advantage she agreed that it was to her advantage because she could not move to C at that time and she was only working part-time as a teacher. When it was put to her that it was certainly not to her detriment to transfer C to her son her response was to the effect that it was only meant to keep the property in the family.
She denied, however, that RM had put more money into the property than she had and she said it could not be the case that her son had made extra payments in relation to that mortgage.
How can all of this evidence be somehow reconciled and understood? Let us consider what the wife's evidence is in relation to all of this. She agreed in cross-examination that she never personally paid money off the mortgage on the C property and that it was always paid out of her husband's bank account.
She made the same concession in relation to the D property. She agreed that she discussed the C property with her husband, was aware that he had a share in it before marriage but did not know the extent of it. She was aware there were two properties and that as a result of dealings between the husband and his mother it resulted in the C property being owned by the husband. She admitted that she was not involved much in this transaction.
The wife's cross-examination about these transactions I think correctly reflect that she simply was not aware of what was going on. The evidence contained in her affidavit at paragraphs 25 onwards really does not assist in telling us anything new. Her information clearly comes from post-separation investigations. Interestingly, at paragraph 31 of her affidavit she made the unchallenged assertion that the value of the husband's equity in the D property at the time of transfer to his mother was not less than $22,717.00. She asserts, and this is consistent with the husband's own evidence, that after cohabitation the mortgage on D was paid by the husband.
Clearly the D property had equity in it at the time of transfer, but the transfer of this interest to the mother by the husband was offset by the fact that he received an interest in the C property to which he had not, strictly speaking, made financial contribution. It must be acknowledged, however, that it is impossible to conduct a tracing exercise on the state of the evidence. Once can only come to a common sense and reasonable impression having regard to the evidence.
Conclusion
When the transactions in relation to the D property and the C property are viewed in their entirety, and with the benefit of hindsight, the husband received the unencumbered C property in June 2000. It is an agreed fact that the said property was worth $40,000.00 as at 1 March 1997. It is clear that the wife had made some contribution to the property as a result of the husband making mortgage payments to the D property after cohabitation through to June 2000.
It is clear that the husband’s contribution to each of the properties was limited, as it’s highest, to contributing towards mortgage payments. I am satisfied that he did not contribute equity to the purchase price or make lump sum repayments off the mortgages.
As indicated above, I find that at cohabitation the husband’s legal interest in the C land was approximately half the equity at that time, $7,500.00. The C land probably increased in value by the time of the 2000 transactions with his mother. The only evidence I have of the value of the husband’s share in the C land is the annexure BMM3 to the wife’s affidavit filed 31 March 2006. This document is a copy of the Transfer document from the husband’s mother to the husband. Whilst the consideration is stated to be “natural love and affection”, stamp duty was paid on a notional or attributed value of $62,000.00, for the mother’s share.
I accept that the best evidence I have of the value of the husband’s share in the D property in June 2000, when he transferred it to his mother, is the annexure BMM 2 to the wife’s affidavit filed 31 March 2006. This is the copy of the transfer between the husband and his mother. The consideration is stated to be $72,283.88 but the stamp duty was paid on a value of $95,000.00 for the husband’s share. The figure of $72,283.88 is the amount owing to the mortgagee in relation to this property (this is the evidence of all witnesses). This means that the only evidence I have of the value of the husband’s interest in the D property is $22,716.12, being the difference between $95,000.00 and $72,283.88.
The outcome of these transactions is that by mid 2000 the husband had become the unencumbered sole proprietor of the C property which was probably valued at about $124,000.00 at that time, based on the stamp duty paid on the Transfer. He had, however, divested himself of an interest in the D property that had a gross value to him of half x $190,000.00 = $95,000.00, less half the mortgage over that property (1/2 x $72, 283.00 = $36,141.00) meaning an equity of $58,859.00).
On a simple mathematical approach, by mid 2000 the husband was almost $65,000.00 ahead, so to speak. Whilst his mother’s interest in staying at D had been satisfied, the husband had nonetheless clearly benefited by taking advantage of the greater equity in terms of alteration of property interests under s.79 of the Act. The consideration that flowed out of all these transactions was not limited to that of the husband and his mother. When family law jurisprudence of contribution is considered in the context of contract law jurisprudence about consideration, the wife too provided consideration which resulted in the benefit to the husband and his mother. In particular, for the three year period from the date of acquisition of D to it’s transfer, she contributed under s.79(4) to the mortgage payments that the husband made to either or both of the C and D properties.
The real challenge in this case is in attempting to justly and equitably attribute a value to the husband’s interest in the C land, whilst taking into account the complex facts and consideration referred to above. The husband’s equity in the C land increased in value from $7,500.00 at the time of cohabitation to almost $65,000.00 three years later. It is impossible to be mathematically precise, particularly having regard to a complex interplay of facts, the diverse nature of contributions made by the husband, his mother, and the wife, as well as the impact of the passage of time and inflationary forces. Doing the best I can I believe that the dollar value to be attributed to the husband’s interest in the C is $45,000.00, after taking into account the contribution the wife is deemed to make for the three year period leading up to the transactions between the father and his mother in 2000.
This means that, in broad terms. His contribution at the commencement or during the early stages of the relationship was significantly greater than that of the wife.
Applying the principles referred to in Williams & Williams [2007] FamCA 313 (as discussed above) to the facts of this case, what becomes apparent is that I must give appropriate recognition to the value of the C property at the time of hearing rather than simply pay attention to its initial value at the time of commencement of cohabitation. C is still in existence as an asset to be considered in these proceedings. However, in so doing it is equally important to give recognition to the myriad other contributions that both the husband and the wife have made during the period of their relationship. Thus, I cannot, despite Mr Kearney's submission, ignore the greater financial contribution of the husband to the C property. Even if the dollar value of his contribution by 2000 was $45,000.00, the fact is that the same asset is now worth $190,000.00 and his initial greater financial contribution to it needs to be recognised by reference to its current value.
However, it would be equally wrong to accede to the submissions of Mr Trout on behalf of the husband and to treat the husband's initial contribution as so overwhelming that it completely ignores the myriad contributions that the wife had made later in the marriage.
The sum of $45,000.00 represents, in round terms, 25 percent of the current value of the C property. But to attribute that value in assessing the husband’s contribution is to fail to give it appropriate recognition to the present value of the property. It is fairer under the circumstances to assess the value of the husband’s initial contribution to C, today, at half its value. As I find that contribution during cohabitation was, save for the matters expressly referred to above, equal, this means that the wife’s contribution to C was no greater than 25 percent, and the husband’s 75 percent.
Assessing contribution during the marriage.
The total period of cohabitation was just under eight years. Throughout this entire period the husband served in the Royal Australian Navy. His income meant that from a financial contribution perspective, he made the greater financial contribution during the period of cohabitation. For example, during this period he received a retention bonus which was used to reduce liabilities. His employment in the navy also gave them access to rental accommodation for the family, at a reduced rate. However, the wife also worked during the period of cohabitation, initially full-time, and then part-time in between the birth of the children.
In terms of non-financial contributions during the marriage, including as home maker, and parent, it is clear that the wife made the greater contribution. The husband was away at sea for periods of time.
Whilst it may well be the case that the husband made the greater financial contribution, and the wife the greater non-financial contribution, looking back on the relationship, at the time of the final separation the conclusion must be that the husband and the wife's contribution is equal. That is not because there is any presumption of equality. It is simply a commonsense outcome based on the realities of the diverse contributions made by the husband and wife during the marriage.
Section 75(2) future needs.
Both the husband and the wife are relatively young. The wife, of course, has the primary responsibility to care for two young children. The husband has a secure and relatively well paid position in the Royal Australian Navy. The wife is working part-time. There is significant disparity in their income, and in their earning capacity. The husband has re-partnered, and has the responsibility to provide for a new child to that relationship, a matter that is no doubt reflected in the level of child support that he has to pay to the children of this marriage.
Moreover, when one has regard to the assets that each of the husband and the wife will receive as a result of this alteration of property interests, and when one also has regard to the husband's superannuation entitlements, even after a split in favour of the respondent wife, he is in a much stronger financial position. Mr Trout, on behalf of the applicant husband, submitted that the s.75(2) adjustment for the wife should be seven per cent. That is inappropriate under the circumstances, for the reasons set out above.
Mr Kearney submitted that the s.75(2) adjustment in favour of the wife should be 30 per cent of the non-superannuation assets. That figure is excessive, and not just and equitable under the circumstances. I think that a s.75(2) adjustment in favour of the wife to the extent of 20 per cent of the non-superannuation assets is appropriate.
Adjustment of superannuation assets
The wife has a relatively minor superannuation entitlement to the value of approximately $25,000. The husband's superannuation entitlement has a value of approximately $296,000. Of that sum, by far the greatest proportion is contained in his military superannuation, which has a value of $284,000 approximately. Having regard to the size of the superannuation assets, compared to the total value of the pool, it is inevitable that I will have to split the husband's military super. Accordingly, I will leave each of the other superannuation funds where they are. They are roughly of equal value. I will therefore only make the necessary adjustments out of the largest fund, the military superannuation and benefit scheme.
The husband contributed to this superannuation plan as from the time he joined the navy, and continues to do so. Accordingly, he had made contributions for a period of 80 months prior to the commencement of the relationship, and 27 months after the end of the relationship through to the time of the hearing. The fact of his greater contribution is incontrovertible. In the husband's submissions, he suggested that if the wife received approximately 42 per cent from the non-superannuation assets, it would be just and equitable to give to her a split in the husband's military super of a base amount of $70,000.
On his calculations, therefore, he had contributed to the super fund for 80 months prior to the commencement of the relationship, for 95 months during the period of cohabitation, and for 27 months after separation. On the simple mathematical approach of dividing the current value of the superannuation by the total number of months during which contributions have been made, 202 months, the value of the superannuation on a monthly basis is $1405. This means that during the 95 months of the period of cohabitation, the notational value of the superannuation was $133,475. It is interesting that roughly half of this equates to the $70,000 base amount sought by the applicant husband. One suspects that this was the methodology used by the husband in arriving at this figure.
It was apparent from the evidence that the value of the husband's interest in the fund as at 30 June 1987 was $53,289.
The respondent wife's submissions in relation to the superannuation split was that it should be a percentage split allocating to her 30 per cent of the interest of the husband in his scheme. The period of cohabitation represents just under half of the total period of contributions being made to the fund. Viewed from this perspective, a more appropriate adjustment, expressed as a percentage, would be 25 per cent, rather than 30 per cent. I am satisfied that this represents a just and equitable reflection of the contribution she has made.
Final alteration of property interests
Non-superannuation Assets
Contribution
| Asset | Value | Husband | Wife |
| C | $190,000 | 75% - $142,500 | 25% - $47,500 |
| Sale proceeds | $165,022 | 50% - $82,511 | 50% - $82,511 |
| Other (less liabilities) | $29,600 | 50% - $14,800 | 50% - $14,800 |
| $384,622 | $239,811 | $144,811 |
Future Needs
Adjust 20 percent in favour of the wife: 20% x $384,622 = $76,924.40
Husband Wife
$239,811 $144,811
-$(76,924) +$76,924
$162, 887 $221, 735
Less Assets in Possession ($190,000)
($18,000)
($1,000)
($10,000)
($2,600)
Payment to wife: $(58,713) $58,713
Superannuation Assets
| Asset | Value | Husband | Wife |
| Military Superannuation | $284,000 | 75% - $213,000 | 25% - $71,000 |
As is apparent from the table at paragraph 96 above, it is appropriate in this case to use the assets by asset approach to assessing contribution. The complex evidence relating to the husband’s initial contribution to the marriage justifies this approach. Of course s.75(2) factors are adjusted as a percentage of the total pool of assets.
It is appropriate to give to the wife 25 percent of the husband’s military superannuation, and leave her with her own other superannuation entitlements of approximately $24,000.00. A base amount of $71,000.00 is appropriate, as opposed to a percentage split. This superannuation fund is not in the payment phase. There is no indication that it will be in the payment phase in the indefinite future. The husband should be entitled to the benefits of future length of service and promotion. There is no prejudice to the wife in establishing the base amount of $71,000.00.
There is one liability only that needs to be paid out of the settlement. The loan to EW is to be paid out of the net sale proceeds before that fund is distributed between the husband and the wife.
The wife’s entitlement to non-superannuation assets is, therefore, $221,735.00. If she receives all of the sale proceeds of the former matrimonial home, less the debt to EW, that will give her $163,022 and an entitlement to a payment of $58,713.00 from the husband. The husband will be given three months to pay this to the wife, failing which the property at C will need to be sold to fund the payment. Of course it is likely that the sale proceeds will have increased beyond $165,022. Rather than re-list the matter for the purposes of ascertaining the current balance, I am satisfied that giving her 99.5 percent of the current balance as at the date of these orders will do justice and equity between the parties.
The net effect in percentage terms of these orders is as follows:
Husband Wife
Non-superannuation assets only: 43% 57%
Superannuation only[1] 71% 29%
Total superannuation and non-superannuation: 55% 45%
[1] Wife’s total superannuation: $95, 343.00, Husband’s total superannuation $222,525.00
Having regard to all of the evidence I am satisfied that this outcome is just and equitable under the circumstances. In particular it equitably meets the short term and long term needs of both the husband and the wife, to the extent that this is possible on the facts of this case.
I certify that the preceding one hundred and three (103) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate:
Date:
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