M and M
[2003] FMCAfam 19
•29 August 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| M & M | [2003] FMCAfam 19 |
| FAMILY LAW – Application for property settlement – splitting order. |
Family Law Act 1975 (Cth), ss.72, 75, 75(2), 79, 79(4)(a), 79(4)(b), 79(4)(c)
Family Law (Superannuation) Regulations 2001
L Steere v L Steere (1985) FLC 91-626
Ferraro v Ferraro (1993) FLC 92-235
Clauson v Clauson (1995) FLC 92-595
Russell v Russell (1999) FLC 92-877
Waters & Jurek (1995) FLC 92-635
| Applicant: | L J M |
| Respondent: | C M |
| File No: | MLM 5629 of 2002 |
| Delivered on: | 29 August 2003 |
| Delivered at: | Melbourne |
| Hearing Date: | 6 December 2002 (receipt of written submissions regarding superannuation August 2003) |
| Judgment of: | Bryant CFM |
REPRESENTATION
| Counsel for the Applicant: | Ms Smallwood |
| Solicitors for the Applicant: | Pearsons |
| Counsel for the Respondent: | Ms Johnson |
| Solicitors for the Respondent: | Jeanne Gorman |
ORDERS
THAT the Husband forthwith transfer to the Wife at her expense his right title and interest in the property situate in the State of Victoria being the land more particularly described in Certificate of Title ("the property") and assign to the Wife his interest in the Contract of Sale with the Ministry of Housing upon being requested by the Wife to do so.
THAT the Wife indemnify the Husband against all liability relating to the property including but not limited to the mortgage registered thereon.
THAT the Husband indemnify the Wife against all liability to the Credit Union and continue to make all current payments (if any) to the Credit Union in respect of the Commodore Car Loan.
THAT pursuant to s.90MT(1)(a) of the Family Law Act 1975 (Cth) whenever a splittable payment becomes payable in respect of the interest of C M and the State Superannuation Fund ("the fund") the Wife be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount and there be a corresponding reduction in the entitlement of the said C M to whom the splittable payment would have been made but for these orders.
THAT the base amount allocated to the Wife in these proceedings out of the interest of the Husband in these proceedings in the fund is $20,000 dollars ("the base amount").
THAT the order have effect from the operative date.
THAT for the purposes of order 6 of these orders is 4 business days after the date of service of this order upon the Trustee of the fund.
THAT unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these and any subsequent orders:
(i)each party be solely entitled to the exclusion of the other to all property including choses in action in the possession of such party at the date of these orders;
(ii)each party hereby forgoes any other claim they may have in relation to any superannuation or other work related benefits belonging to or earned by the other of them;
(iii)any insurance policies become the sole property of the owner named therein; and
(iv)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled to pursuant to these orders.
THAT the order for maintenance made on 14 August 2002 be discharged from the date of these orders.
THAT the Husband pay maintenance to the Wife in the sum of $67.00 per week to be paid by the Husband in fortnightly payments of $134.00 commencing this day into the Wife's nominated bank account at the Commonwealth Bank.
THAT all extant Applications be dismissed.
THAT forthwith the Exhibits be returned to the parties responsible for tendering them.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 5629 of 2002
| L J M |
Applicant
and
| C M |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for property settlement between C M ("the husband") and L J M ("the wife"). The wife is seeking transfer to her of the husband's interest in the former matrimonial home (“the former matrimonial home”). She will indemnify him in relation to the mortgage of approximately $17,500 to the Ministry of Housing. She proposes that the husband indemnify her in relation to the other debts of the parties at separation and each party retain the other assets in their respective possession. She seeks that an order be made splitting the husband's superannuation to provide her with assets equal to 60 per cent of all of the assets of the parties (including superannuation). She also seeks spousal maintenance of $100 per week.
The husband concedes that the wife should retain the former matrimonial home subject to the mortgage. He proposes that he retain his superannuation (without any payment to the wife) and opposes any order for spousal maintenance.
Background
The husband and wife were married on 3 September 1972 and separated on 30 March 2000. The husband is aged 51 and the wife is 49. They have two children. Both of the adult children lived with the wife at the time of the hearing. L is employed as a maintenance worker and pays board to the wife. D receives Centrelink benefits. He was not paying any board to the wife. The husband is currently employed and has worked there since 1974. The husband has re partnered. He earns $868.21 gross per week. His partner also works and earns approximately $740 gross per week. She has two dependent children aged 17 and 15 and a 21-year-old son who is also living with them, at least some of the time.
The wife's income is provided by a disability pension. Her capacity to work is limited by her health. She also assists D by providing accommodation for him. D has been diagnosed with schizophrenia. He does not regularly take medication. His behaviour is very difficult for the wife to manage and involves at times physical confrontations. D is not responsible with money and the wife is unable to get him to pay a regular sum towards his board. Between February 2003 and August 2003, D lived with the husband but has since returned to the wife.
The proceedings
The husband commenced the current proceedings in June 2002. On 14 August 2002 an interim spousal maintenance order in favour of the wife was made for $100 per week. The hearing took place in December 2002, just prior to the Family Law (Superannuation) Regulations 2001 ("the Regulations") coming into effect. At the conclusion of the hearing the matter was adjourned for Judgment to be given after the Regulations had come into effect. A valuation in accordance with the Regulations was not provided until August 2003.
The law
Insofar as the applications relate to property settlement, section 79 of the Family Law Act 1975 (Cth) defines the court's powers in determining applications for property settlement. Subsection (2) of section 79 provides that:
"The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order."
The approach to the determination of an application under section 79 is well established by authority (see L-Steere v L-Steere (1985) FLC 91-626, Ferraro v Ferraro (1993) FLC 92-335 and Clauson v Clauson (1995) FLC 92-595). The process ordinarily involves a multiple-part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing; secondly, evaluating the contributions made by the parties as defined in section 79(4)(a) to (c); and thirdly, evaluating the matters contained in section 75(2) insofar as they are relevant. In determining what order the court should make under section 79 the court must be satisfied in all the circumstances that it is just and equitable to do so (see Russell v Russell (1999) FLC 92-877).
Section 75(2) of the Family Law Act sets out the matters which must be taken into account by the court when determining applications with respect to maintenance. This is the prospective element of the determination of the application for property settlement. The assessment of contributions during the marriage is the retrospective element.
The court is, therefore, required to determine the following matters:
a)the assets, liabilities and financial resources of the parties to the marriage;
b)the relevant contributions of each of the parties;
c)the means and needs of each of the parties;
d)the other prospective components to the claims of each of the parties pursuant to section 75(2); and
e)then to identify if any alteration should be made to the entitlements of either of the parties having regard to the section 75(2) factors. After determining the entitlement of each of the parties in relation to the alteration of property interests the court must then consider any application for spousal maintenance, if relevant.
Superannuation
On 28 December 2002 the provisions of the Family Law (Superannuation) Regulations 2001 came into effect. There were two significant differences following the coming to effect of the legislation. Firstly, superannuation is to be treated as property. Secondly, the court may make orders for splitting superannuation in appropriate circumstances. Orders made by the court will, if made appropriately under the legislation, be binding on the trustee of a fund.
This matter was heard in December 2002. At the time that the evidence concluded the legislation was to come into effect in less than four weeks. Neither party wanted the application adjourned further. The wife's position was that if her application was successful, then she should receive some portion of the husband's superannuation. In order that that would be binding on the trustees the order could not be made until the legislation took effect. In these circumstances the parties agreed that the handing down of a decision should be delayed until the legislation had come into effect and until the appropriate valuation of the superannuation as required under the Regulations could be provided to the court. It was anticipated that this would be done reasonably quickly after the coming into effect of legislation. As it turned out, the material was not provided until August 2003.
Evidence and findings of fact
Findings of fact are made on the balance of probabilities having regard to the evidence and my observations of the parties and witnesses.
I propose to deal with the evidence in relation to the various matters which I am required to consider under section 79(4) and section 75(2).
Assets, liabilities and financial resources
The former matrimonial home
Although there was some dispute to start with, the parties in the end agreed that the former matrimonial home had a gross value of $152,000, and with a mortgage of $17,500 and a net equity of $134,500.
The wife's motor vehicle
There was no expert evidence as to the value of the wife's motor vehicle. She valued this asset at $1200 which I accept as an admission against interest. However, I find on the evidence that the vehicle has been given to D in circumstances in which he requires a vehicle .It is not an asset available to the wife and I do not propose to take it into account as an asset of the parties to be divided.
The husband's long service leave
The husband has long service leave which he has cashed out and received $14,217.75. From that sum he paid legal expenses and other personal debts. Both parties agreed the amount received by the husband should be included as an asset.
Liabilities
Apart from the mortgage the husband has liabilities to the Credit Union of $14,455. That sum includes a motor vehicle loan and a consolidation of a some other debts.
Superannuation
At the time of the hearing the husband's superannuation constituted a financial resource and not property, but it became property for the purposes of the Family Law Act after the coming into effect of the superannuation legislation on 28 December 2002. The husband is a member of the Victorian State Superannuation Fund ("VSS"), a defined benefit fund, and his entitlement is in the Growth phase. He is entitled to receive a lump sum upon retirement, except in the case of disability when he becomes entitled to a pension.
Evidence has now been placed before the court as a result of the Regulations. That evidence indicates that the gross value of the interest as at 21 May 2003 is $145,210.34. A further valuation as at December 2000 has been provided. That valuation values the husband's superannuation as $113,893.82 as at 3 December 2000. A third valuation as at 30 March 2000 values the husband's interest at $105,471.08. The tax on these figures was not provided. Further information indicated that if the husband were to leave his current employer he would have access to a lump sum of $88,593.90 and if he were under 55 years at the time he withdraws any amount from superannuation he would incur a tax penalty unless he withdraws undeducted contributions. He has undeducted contributions of $29,807.12.
The differing dates upon which the valuations were sought arises from the fact that the parties separated on 30 March 2000. Hence, the husband argues that the court should consider his superannuation at that date. The Full Court has now said in many cases that the valuation of assets should take place at the time of the hearing unless there is some reason to depart from that position. I see no reason in this case to depart from that position. True it is that the husband has continued to make contributions to his superannuation fund since separation. However, the wife has not had the opportunity to contribute to a fund herself and because she has been dependent on a disability pension and spousal maintenance her income is modest.
The well known comments of Fogarty J in Waters & Jurek (1995) FLC 92-635 explain why this is so and why it would be unfair to the wife to turn back the clock, as it were, and consider the value of the superannuation when the parties separated. The wife has certainly resided in the former matrimonial home since separation. But, on the other hand, both parties have shared in any increase in the value of that property since that time. Whilst it is true that the husband's contributions have continued to be made to superannuation, there are other matters that affects its valuation which have their genesis in earlier times during his working life. In a long marriage such as this one, which was for 28 years, in my view there is no evidence nor any factor to suggest that the court should consider the assets at a time other than at the date of hearing.
Thus the assets of the parties to be taken into account are as follows:
1. Net Equity in the former matrimonial home
$134,500
2. Husband's long service leave
$14,217.75
3. Credit Union Liabilities ("Husband")
$148,717.75
$14,454.86
4. Net
$134,263.89
5. Plus Husband's Superannuation
$145,210.00
6. Total
$279,473.00
Contributions
The husband has worked through the marriage and has been the major financial contributor. The wife also worked as well as being the primary caregiver for the children until her health prevented her from continuing. Both parties agreed that contributions under section 79(4)(a), (b) and (c) have been equal and I need make no further finding about their contributions.
The credit of the parties
Some attack was made on the credit of the husband for non disclosure of his superannuation, but I am satisfied that he did not set out to deceive the wife in any sense.
Section 75(2) factors
(a) the age and state of health of the parties
The husband is aged 51 and the wife is aged 49. There is no suggestion that the husband is soon to leave his employment or is in other than good health. The wife is not in good health and receives a disability pension. She is unlikely to be able to support herself either now or in the future.
(b) the income, property and financial resources of each of the parties
The wife has only a disability pension available to her. The resources available to the parties are those which are set out in this judgment. The husband continues to work and earns approximately $837 a week. He lives in a de facto relationship and his de facto wife also works and earns about $740 per week. She is responsible for the support of her two children. It is clear from the evidence that the husband's earning capacity is reasonable and that the wife has no earning capacity at all. An adjustment, in my view, is required to reflect the fact that the husband has what appears to be secure employment and that the wife has no income earning capacity. The husband would also be in a position to continue to contribute to his superannuation.
Neither party has the responsibility of supporting any other person save that the wife has responsibilities to D. Her responsibilities to D place some financial obligation upon her and the circumstances are such that she is unlikely to be recompensed by him. However, D is an adult and there is no adjustment that I can reasonably make in relation to his support for which neither the wife nor the husband are really responsible in a legal sense. The uncertainty of where he will reside also mitigates against any adjustment for D.
Conclusions
Having regard to the husband's earning capacity compared to that of the wife, in my view, there should be some adjustment for the section 75(2) factors. An adjustment should be, in my view, approximately 5 per cent. The husband's income earning capacity is modest, he has liabilities to meet and he will not be receiving any presently realisable asset, which will disadvantage him in the short term.
A division of the net assets as to 55 per cent to the wife and 45 per cent to the husband would provide for the following outcome:
Net Assets
$279,473.00 x 55%
= 153,710.15
Less
$134,500.00 (net assets in wife's possession)
Balance
$19,210.15
I propose to make a splitting order which will provide the wife with the sum of $20,000.00 of the husband’s superannuation.
In considering whether this is a just and equitable result I take into account the following:
·That after payment of his liabilities, the differential in the parties' net income is not great;
·That the husband has the advantage of sharing his expenses with his de facto wife;
·The husband has the benefit of being able to continue to contribute to his superannuation fund so that upon retirement he will be in a better position than he is now;
·That the wife has D living with her and has little chance of being adequately remunerated for the support she provides for him;
·That the wife has the benefit of the existing assets, although she is unlikely to sell the house because of the low mortgage payment available to her; and
·The husband will have to wait for his superannuation, but he has an option to retire at 55 if he wishes to, and that is only a few years away.
Having regard to those matters, in my view, the wife should receive $20,000 dollars from the husband's superannuation which would provide her with about 55 per cent of the net assets of the parties.
Maintenance
The provisions in relation to spousal maintenance are set out in section 72 which requires the court to be satisfied that the applicant is unable to support herself adequately by reason of having the care and control of a child of the marriage who has not obtained the age of 18 years or by reason of age or physical or mental capacity for gainful employment or for any other reason having regard to the matters referred to in section 75(2).
In this case it was conceded that the wife is unable to support herself as a result of her physical incapacity for gainful employment. It was also conceded that as the wife is only seeking $100 per week an examination of her expenditure and needs was unwarranted because on any view her needs exceed $100 per week. Similarly it was conceded that in considering an order for spousal maintenance the court is to disregard any income tested pension, allowance or benefit paid to the wife. Thus, the wife is to be treated as if she has no income. By reason of the matters to which I have referred the question in relation to spousal maintenance was a question as to whether the husband had the capacity to pay the amount sought by the wife, or indeed any amount by way of spousal maintenance.
The husband's current income is $868.21 per week. His tax is $228.73 leaving a balance of $639.48. His superannuation contributions are $43.73 leaving a net available to him of $595.75. He has fixed commitments as follows:
i)car loan $40;
ii)Credit Union $94; and
iii)rent $125.
That leaves him with $336.75 to meet his day-to-day living expenses. He was not challenged about his expenses. His Response indicated he had expenditure of $851 per week. From this sum must be deducted the following:
i)fixed expenses already taken into account ($455);
ii)half the health cover which he pays for the whole family ($20);
iii)school fees and pocket money which he conceded were for his partner’s children ($66).
I find his reasonable expenses, including his entertainment, to be $310 per week. That would leave him with a balance of $27 per week from which he could contribute to the wife's support. However, the evidence was that the car loan would be completely repaid by mid 2003. That reduces his liabilities by $40 per week, and provides the husband with the capacity to pay maintenance of $67 per week. That payment would assist the wife in supporting herself.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Bryant CFM
Associate: Peter Smith
Date: 25 November 2003
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