M and M
[2003] FMCAfam 136
•28 April 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| M & M | [2003] FMCAfam 136 |
| FAMILY LAW – Property settlement – contribution – short marriage – no children. Family Law Act 1975, ss.75(2), 79 Ferraro (1992) 16 Fam LR 1; (1993) 92-335 |
| Applicant: | D L M |
| Respondent: | P J M |
| File No: | PAM 3146 of 2002 |
| Delivered on: | 28 April 2003 |
| Delivered at: | P |
| Hearing Dates: | 29 & 30 October 2002 |
| Judgment of: | Scarlett FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Shaw |
| Solicitor for the Applicant: | Mark Brown & Associates |
| Counsel for the Respondent: | Mr Schroder |
| Solicitor for the Respondent: | Marsdens |
ORDERS
The Respondent is to pay to the Applicant the sum of $28,230.00 within one month of the date of these Orders.
In the event that the Respondent fails to comply with Order 1 he is to take all necessary steps and sign all necessary documents to cause the property situate at and known as 3 C Avenue, H in the State of New South Wales being the whole of the land in Folio Identifier 1018/806958 to be sold by private treaty at the earliest possible date at a price to be agreed between the parties and failing such agreement to be determined by the President of the Real Estate Institute of New South Wales or his or her nominee and that the proceeds of sale be disbursed in the following manner:
(a)in payment of legal costs and real estate agent’s commission on the sale;
(b)the discharge of any mortgage;
(c)the sum of $28,230.00 to the Applicant; and
(d)the balance to the Respondent.
In the event that the Respondent fails to comply with Order 1 within the time provided by that Order, the Respondent shall pay to the Applicant from his share of the proceeds of sale in addition to the sum of $28,230.00 interest on all amounts outstanding calculated from one month from the date of these Orders at the rate provided by Part 22 of the Federal Magistrates Court Rules 2001.
The Applicant and the Respondent are to do all acts and things and give all consents and execute all documents and instruments necessary to give effect to these Orders.
In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders within ten (10) working days of being requested to do so, the Registrar of the Federal Magistrates Court is appointed pursuant to section 106A of the Family Law 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 to the deed or instrument.
The Applicant and the Respondent are declared to have the sole right, title and interest in:
(a)all chattels, goods, furnishings, motor vehicles and other property in their respective possession; and
(b)all moneys, shares, debentures, insurances or superannuation policies standing in their respective sole names at the date of these Orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT P |
PAM 3146 of 2002
| D L M |
Applicant
And
| P J M |
Respondent
REASONS FOR JUDGMENT
The Application before the Court was commenced by the filing of an Application by the wife in the Family Court at P on 8th December 1998. In her amended Application filed in that Court on 21st May 2002 the wife seeks orders for settlement of property to this effect:
a)that the husband pay to her the sum of $80,000.00;
b)that if he fails to do so within one month, the parties shall submit the property at 3 C Avenue, H for sale;
c)that the net proceeds of sale should be paid as to $80,000.00 to the wife and the balance to the husband;
d)that the husband should pay interest at on any amount unpaid to the wife after one month at the rate of 10 per cent per annum;
e)that the Registrar of the Court should be appointed to execute any deed or instrument necessary to give effect to the orders in the place of either party who fails to do so; and
f)the parties should retain any chattels in their possession and any moneys in their respective names.
The Respondent relies on his Response, filed in the Family Court on 21st January 1999, in which he asks for an order “That the Applicant Wife’s application be dismissed with costs.”
The hearing of the proceedings was deferred for a period of 12 months by virtue of consent orders made on 25th August 1999, by consent, due to the fact that the Respondent had commenced proceedings in the Compensation Court of NSW seeking an award of compensation for a work-related injury.
The Application was listed for a final hearing in the Family Court on 22nd August 2002, but was not able to be reached due to the illness of the Judicial Registrar. Accordingly, the Application was transferred to this Court and listed for hearing on 29th October 2002. The evidence was completed that day and counsel made submissions the following day.
Background
The husband was born on 14th April 1955 and the wife was born on
1st August 1966. They commenced cohabitation on 25th May 1993 and were married on 26th March 1994. The parties separated on 25th April 1996. There are no children of the marriage.
The parties initially resided together in a caravan rented by the wife. Their assets were relatively modest, except that the husband had entered into a contract to purchase the property at 3 C Avenue, H and build a home on the property. The husband completed the purchase on 1st July 1993, and the parties moved into the home on 7th July 1993.
The husband sustained a work injury to his back on 23rd July 1994, and a further injury on 26th June 1995. On 22nd November 1995 he underwent surgery to his back. He had further surgery on 6th February 1996. The parties separated on 25th April 1996.
Since the parties separated, the husband has had surgery to his back on three more occasions.
The husband commenced compensation proceedings in the Compensation Court of New South Wales on 5th February 1999. The wife had already commenced these proceedings on 8th December 1998, and they were deferred by consent to await the outcome of the proceedings in the Compensation Court.
The husband’s compensation proceedings were finalised on 24th July 2001, when he received an award of $196,000.00. He used $105,584.00 of that money to discharge the mortgage over the H property.
The wife has formed a new relationship. The husband has not re-partnered.
Issues
The issues between the parties are the extent of the contribution made by the wife and the extent of the husband’s post-separation contribution to the property. Mr Schroder of counsel, for the husband, submits that an issue is the financial position of the wife after the parties separated as shown by her employment and the employment and assets of her new partner.
Principles to be applied
When dealing with applications to vary property interests, courts exercising jurisdiction under the Family Law Act must not make an order under the provisions of section 79 unless satisfied that, in all the circumstances, it is just and equitable to make the order.[1] Subsection 79(4) sets out a number of matters the Court must take into account. They include:
a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties of the marriage or either of them;[2]
b)the contribution (other than a financial contribution) made directly or indirectly or on behalf of a party to the marriage or a child of the marriage;[3]
c)the contribution made by a party to the welfare of the family, including any contribution made in the capacity of homemaker or parent;[4]
d)the effect of any proposed order upon the earning capacity of either party to the marriage;[5]
e)any relevant matters referred to in subsection 75(2);[6]
f)any other order made under the Family Law Act affecting a party or a child of the marriage;[7] and
g)any child support under the Child Support (Assessment) Act 1989.[8]
[1] Section 79(2)
[2] s. 79(4)(a)
[3] s. 79(4)(b)
[4] s. 79(4)(c)
[5] s. 79(4)(d)
[6] s. 79(4)(e)
[7] s. 79(4)(f)
[8] s. 79(4)(g).
In dealing with applications under s.79, the Full Court of the Family Court of Australia has made it clear that there are three steps to be followed by a court, including, of course, the Federal Magistrates Court:
a)the Court must identify the property of the parties and ascertain its net value;
b)the Court must examine and evaluate the contributions of the parties, following the principles set out in s.79(4)(a) to (c); and
c)the Court must then consider the relevant factors set out in s.75(2). This may involve an adjustment in favour of one or other of the parties.
This approach has been laid down by the Full Court of the Family Court in a number of cases, including Ferraro (1992) 16 Fam LR 1; (1993) FLC 92-335, and McLay (1996) 20 Fam LR 239; FLC 92-667.
The matrimonial assets
The significant asset in this case is the property at 3 C Avenue, H. It was agreed that the property has a value of $250,000.00. The property is unencumbered. The title to the property is in the sole name of the husband.
The husband’s other assets, as they appear in his financial statement, consist of his credit union balance of $14,763.00, his 1997 model Mitsubishi Magna motor car which he values at $13,000.00, and his furniture, furnishings and household effects, to which he gives a value of $4,000.00. By comparison, the wife’s assets consisted of household effects worth $1,500.00 and a balance of $280.00 in a bank account. Her debts amounted to an overdraft of $1,156.00 with the Community First Credit Union.
The husband’s financial resources were a Masterkey Superannuation policy with the MLC with a value of $8,742.00 and an item described in his financial statement as “Credit Union – Transport Workers” with a value of $8,500.00. The wife’s financial resources were modest. She disclosed two superannuation policies, one with AMP Super valued at $2,738.00 and the other with First State Super valued at $2,822.00. The wife does not own a motor vehicle.
Each party disclosed that they owed money to their legal advisers for these proceedings. I have not added those amounts back, as they appear to be amounts owed and not yet paid. It appears that I should follow the dicta of Kay J in Farnell (1996) 20 Fam LR 513 at 535; FLC 92-681 at 83,080, where his Honour said:
“The notional inclusion of costs already paid on account, or the exclusion of costs owing as a liability, is in my view a proper exercise of judicial discretion and well within the normal method by which property cases should be determined.”
I propose to disregard the amounts owed by the parties for legal costs for the purpose of these proceedings, for the reasons set out above.
I find that the parties have the following assets:
a)3 C Avenue H (agreed value) $250,000.00
b)Husband’s Credit Union account $14,673.00
c)Husband’s 1997 Mitsubishi Magna motor car $13,000.00
d)Husband’s furniture, furnishings and household effects $4,000.00
e)Wife’s bank balance $280.00
f) Wife’s household effects $1,500.00
Total gross assets $283,453.00
I find that the parties’ liabilities consist of the wife’s overdraft with the Community First Credit Union in the sum of $1,156.00. By deducting that amount from the total of the gross assets I arrive at a net total of $282,297.00.
Accordingly, I am satisfied that there is a total of $282,297.00 available for distribution.
The contributions of the parties – section 79(4)(a) to (c)
The Court is required to take into account three different types of contributions made by or on behalf of any party to the marriage (or a child of the marriage where relevant). Sub-section 79(4)(a) requires the Court to consider the financial contribution made directly or indirectly to the “acquisition, conservation or improvement of any of the property.” Sub-section 79(4)(b) requires the Court to consider the contribution other than a financial contribution to the “acquisition, conservation or improvement of any of the property.” Sub-section 79(4)(c), on the other hand, requires an examination of the contributions made by the parties to the welfare of the family, “including any contribution made in the capacity of homemaker and parent.” In this case, as I mentioned earlier, there are no children of the marriage.
The wife gave evidence by way of two affidavits, sworn on 29th May and 22nd August 2002. She also gave oral evidence. She deposed to the husband’s assets at the time their relationship commenced as the land at H, a Holden utility and a “Household of furniture”. It was also her evidence that when the parties commenced their relationship, she owned some furniture and had savings of approximately $1,000.00.
The wife conceded that the husband had contributed the money for the purchase of the home and land package and had borrowed the sum of $126,000.00 to assist him in this enterprise. It is her case that, when the parties moved into the house when it was completed, she carried out almost all of the domestic tasks such as cooking, washing, ironing and cleaning.
The wife also claimed that she did a lot of work in making items for the interior of the house, helped by her aunt and a girlfriend. She deposed to having done a considerable amount of labouring work in constructing the garden area, including assisting with the construction of such things as a pergola, a fishpond and a retaining wall. Her brother assisted them in such projects as the construction of a waterfall, a pond and laying turf in the back yard.
The wife also gave evidence about assisting the husband with his difficulties caused by his back injury. She deposed to giving him back massages, helping with his back exercises and changing his dressings after his various bouts of surgery. After each operation, the wife said that she would provide a variety of services equivalent to “almost full time nursing for a period of about a week.”[9]
[9] Wife’s affidavit sworn 29th May 2002, paragraph 21.
The wife also deposed to contributing financially to the household, as she worked as a child care worker and, on a part time basis, as a function organiser at the L Catholic Club. It was her evidence that her wages were used for such purposes as purchasing groceries, paying bills and purchasing clothes.
In her later affidavit, sworn 22nd August, the wife reiterated her claims about the amount of her contribution to the marriage. She deposed that she had sold some furniture when they commenced to live together and used the money for general household purposes. She denied his claim that she had made no contribution to the household expenses. The wife also deposed to paying a lot of the expenses of the parties’ wedding. Members of her family, such as her parents and her sister, made a number of contributions of cash and materials.
In her oral evidence, the wife gave evidence that her financial situation has worsened. She was put off from her employment and she has separated from the man with whom she had resided in a de facto relationship. She is currently working at house cleaning and working on a part time basis in a restaurant.
In cross-examination, the wife stated that her former de facto had asked her to leave his parents’ mobile home where she had been residing, but she had nowhere else to go. She denied that she had been exaggerating the extent of her contribution to the marriage. She denied that she had chosen not to work, saying that she was trying to find a job. If she had full-time work, many of the financial pressures affecting her would disappear.
The husband gave evidence by affidavit and was cross-examined by Mr Shaw of counsel for the Applicant. He deposed that TNT employed him as a driver at the time he met the wife. He had no real estate and only a small amount by way of savings. He had some furniture and household effects. He commenced to reside in a caravan with the wife on 25th May 1993. The wife paid the rent for the caravan.
The husband set out the details of his contract with the builders, A.V. Jennings, to purchase a land and home package at H. He deposed that he provided the deposit of $11,400.00 from his own funds and he borrowed the sum of $126,080.00 from the Commonwealth Bank of Australia. The purchase was settled on 7th April 1993 and he and the wife moved into the newly completed house on 7th July 1993.
The husband sets out in some detail in his affidavit of 27th June 2002[10] all the landscaping and construction work that he undertook. He said that he had help from a number of friends in doing the work. He denies the extent of the wife’s assertions about the physical labour that she did.
[10] At paragraph 15
It is the husband’s contention that he and the wife retained separate finances throughout their time together. He said, but the wife denied, that he paid all household bills for utilities and other services. He denies the extent of the wife’s contributions to the domestic work such as ironing and cleaning.
It is a significant part of the husband’s case that he is in poor health as a result of a back injury sustained in his employment. He says that he has exacerbated this condition through subsequent injuries. In support of this claim, he provides evidence by way of reports from an orthopaedic surgeon, P E. G, dated 16th September 1996, 6th February 1997, 22nd July 1997 and 3rd October 2000. He has also provided a report dated 4th July 1998 from one C G. M, from the S I Centre.
The husband has undergone surgery to his back on five occasions between 22nd November 1995 and 2nd May 2000. On 3rd October 2000, Dr G considered that the husband had a 55 per cent permanent impairment to his back with a 20 per cent loss of efficient use of his left leg. TNT terminated his employment on medical grounds by means of a letter dated 22nd July 1999, giving him four weeks notice. He has not worked since.
The husband received an amount of a little over $196,000.00 as compensation for his injuries on 24th July 2001. He used part of this money, the sum of $105,584.56, to discharge the balance of the mortgage on the home at H. He is not entitled to any social security payments as a result of that payment. In cross-examination by Mr Shaw, the husband said that he “wouldn’t have a clue” as to how much of the compensation money he had left, but thought he might have $,4000.00 or $3,000.00.
In his submission on behalf of the wife, Mr Shaw put that the wife had made more of a contribution than the husband was prepared to acknowledge, and said that the wife sought some 25 per cent of the net value of the assets. Her brother’s considerable efforts should be seen as a contribution on behalf of the wife, and she herself had been in employment until the parties separated. He submitted that the parties had pooled their earnings. She had made, he said, “a not inconsiderable financial contribution to the household.”
For the husband, Mr Schroder submitted that the party who receives damages payments is regarded as making the sole contribution for those damages. He referred to the decisions of the Full Court of the Family Court in James (1984) FLC 91-357 and Aleksovski (1996)
20 Fam LR 894; FLC 92-705. A damages verdict arising from a personal injury claim, whenever it is received, is regarded as a contribution by the party who suffered the injury.
He submitted that the wife’s contribution was exaggerated and that the husband’s contribution should be assessed at 90 per cent and the wife’s contribution at 10 per cent. In his earlier Outline of Case Document submitted when the matter was before the Family Court, I note that he claimed that the contributions favoured the husband in the ratio of
85 per cent to 15 per cent.
I am of the view that the contributions significantly favour the husband. The wife took very little in the way of assets into the marriage, but I am satisfied that she did work during the marriage and did make a significant contribution to the marriage in her role as home maker, although it was over a relatively short period of cohabitation.
I am satisfied that the husband’s contribution to the assets should be assessed at 85 per cent and the wife’s contribution should therefore be assessed at 15 per cent.
Sub-Section 75(2) factors
Sub-section 79(4)(e) requires the Court to take into account “the matters referred to in sub-section 75(2) so far as they are relevant”.
I will consider the relevant considerations in order.
Sub-section 75(2)(a) requires the Court to take into account the age and state of health of each of the parties.
The wife was born on 1 August 1966 and is therefore aged 36 years. She is in reasonably good health, although she described her health in cross-examination as “so-so”, saying that she had problems with the veins in her legs. The husband was born on 14th April 1955, so he has just attained the age of 48 years. There is ample medical evidence that he is in poor health due to his back problems, which makes it unlikely that he will ever again be a productive member of the workforce.
Sub-section requires the Court to take into account the income, property and financial resources of each of the parties and their physical and mental capacity for gainful employment.
The husband has the property at 3 C Avenue, H, a motor car, some money in the credit union being the amount left over from his compensation payment, and no job. His physical capacity for gainful employment is not at all favourable due to his back injury, and he is not entitled to any assistance from Centrelink until November 2004. Until then, he has to live on his compensation money.
The wife’s financial position is not favourable, either. She was dismissed from her employment with P T Tours, and at the time of hearing was earning the sum of $185.00 per week doing house cleaning and working as a waitress on a Friday night. She has an overdraft debt that effectively wipes out her assets. She has little in the way of formal employment qualifications and was, at the date of hearing, seeking full-time employment, but with nothing on the horizon.
Neither party has the care and control of a child of the marriage, and there are no child support issues. Sub-sections 75(2)(c), (l) and (na) are not relevant.
The parties only have to support themselves (sub-sections 75(2)(d) and (e)).
The husband will not be eligible to apply for any Centrelink benefits until 16th November 2004. As the wife is in part-time employment, she is not entitled to any pension, allowance or benefit. Both parties have small superannuation policies, but neither is of an age that would allow them to claim on their superannuation (sub-section 75(2)(2)(f)).
Sub-section 75(2)(g) requires the Court to consider, where the parties have separated, a standard of living that in all the circumstances is reasonable. The parties enjoyed a reasonable standard of living during their time together, but this standard of living appears to have dropped since separation. The husband is obliged to live on his savings, and the wife would be homeless if she were to leave the mobile home which belongs to her former de facto partner’s parents.
Sub-sections 75(2)(2)(h), (j) and (k) do not appear to me to be relevant.
On the evidence before me at the hearing, neither party was cohabiting with another person. The wife’s subsequent de facto relationship has apparently come to an end. Sub-section 75(2)(m) would not appear to be relevant.
Sub-section 75(2)(n) refers to the terms of any order made or proposed to be made under section 79 in relation to the property of the parties. No order has yet been made.
There are no other facts or circumstances which, in my opinion, the justice of the case requires to be taken into account (sub-section 75(2)(o)), nor is there any financial agreement that is binding on the parties.
Counsel for the applicant submits that she has nothing to show for her years of labour during the marriage. He submits that, taking all matters into consideration, the proper order to make would be to award the wife somewhere in the range of 20 to 25 per cent of the value of the assets. He submitted that this would be a just and equitable outcome, bearing in mind the provisions of sub-section 79(2).
Counsel for the respondent husband submits that the sub-section 75(2) factors so favour the husband that he should be entitled to the whole of the assets. His health is relatively poor, there are no children to provide for, and the wife is capable of supporting herself. He submits that these factors point to at least a further 10 per cent adjustment in favour of his client.
In reply to the point made by Mr Shaw about a just and equitable order pursuant to sub-section 79(2), Mr Schroder submitted that the husband had a limited capacity to borrow an amount of about $17,000.00 from friends, and an order anywhere the amount sought by the wife would require him to sell the house.
I have considered the submissions. In the paragraphs above I have set out those factors that I consider to be relevant in considering whether to make an order under section 79. I am not persuaded that the wife should not receive anything, but I am satisfied that the sub-section 75(2) factors favour the husband by a significant amount. Taking what I consider to be a conservative view, I find that a further 5 per cent is called for, which means that the wife should receive 10 per cent of the net assets, being an amount of $28,230.00.
The wife will have to pay her legal expenses out of this amount, which will diminish the amount that she will actually receive in the hand. Nevertheless, she will still receive a lump sum of cash, which will help to stabilise her life until she obtain employment and accommodation.
Taking all the relevant matters into consideration, despite the sub-section 75(2) factors favouring the husband, I would not be satisfied that an order that the wife were to receive no amount at all would be just and equitable. I am satisfied that it would be just and equitable to make an order that the wife should receive the sum of $28,230.00.
I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Associate:
Date: 28 April 2003
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