M and M - [2001] FMCAfam 290

FEDERAL MAGISTRATES COURT OF AUSTRALIA

M & M

[2001] FMCAfam 290

PROPERTY SETTLEMENT – Undefended hearing – valuation and sale of property – discharge of debts – future needs of wife and children – just and equitable.

Family Law Act 1975 (Cth) s.79

Applicant:

JMM

Respondent:

File No:

ZN3167 of 2001

Delivered on:

29 November 2001

Delivered at:

Newcastle

Hearing Date:

29 November 2001

Judgment of:

Driver FM

REPRESENTATION

Solicitors for the Applicant:

Mr C Boyd

Aubrey Brown Partners

No appearance by the respondent husband

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
NEWCASTLE

ZN3167 of 2001

JMM

Applicant

And

Respondent

REASONS FOR JUDGMENT

Introduction and background

This is an application for adjustment of property interests by the applicant wife, JMM (“the wife”). I heard the matter as an undefended matter on 29 November 2001 and pronounced the annexed orders. I indicated at that time that I would reserve reasons for my decision and publish them later, which I now do.
The application by the wife was filed in this Court at Newcastle on 9 May 2001. The wife sought orders relating to a proposal to sell the former matrimonial home at South Kempsey (“the home”), occupancy of the home pending sale, distribution of proceeds from the proposed sale and transfer to the wife of a Toyota Landcruiser motor vehicle in the possession of the respondent husband. The husband was served on 27 June 2001 but there was no appearance by the husband when the matter was called over in July 2001. The matter was set down for an undefended hearing on 13 August 2001 but on the husband’s application the matter was adjourned. On 15 August 2001 the matter was further adjourned to permit the husband to file documents in response to the application by 14 September 2001. At the same time the matter was set down for a conciliation conference. No documents were filed by the husband and the husband failed to attend the conciliation conference. Federal Magistrate Donald then set the matter down for an undefended hearing on 29 November 2001. I heard the matter on that day due to the unavailability of Federal Magistrate Donald.
When the matter was heard on 29 November 2001 it transpired that some of the orders originally sought by the wife had been overtaken by events. In particular, on 15 October 2001 the mortgagee over the home, Aussie Home Loans Limited, had written to the parties giving final notice for payment of arrears due under the mortgage, in default of which the mortgagee threatened mortgage recovery proceedings. This final notice was tendered as an exhibit (exhibit A1). The orders finally sought by the wife at trial on 29 November 2001 were the orders made by the Court on that day.
The wife was born on 17 August 1961 and is now 40. The husband was born on 31 October 1959 and is now 42. The parties were married on 26 April 1986 and separated on 26 December 2000.
There are two children of the marriage: KRM, born on 9 June 1990 and now aged 11 and KM, born 29 June 1994 and now aged 7. Both children live with the wife.
The husband is unemployed and apparently in receipt of a disability pension. The wife is employed as a library technician.
The uncontested evidence of the wife is that at the time of their marriage the husband and she owned a motor vehicle but apart from that neither had any significant assets. The husband’s vehicle, a Suzuki Sierra, was worth approximately $10,000 and the wife’s vehicle was worth approximately $8,000. Prior to the birth of their first child the parties went on a three month European holiday to which the wife contributed $4,000 directly through the sale of her car. The parties also borrowed $20,000. Both the parties were in employment at the time of the marriage and continued in full time employment until the birth of KRM on 9 June 1990. The wife ceased work at that time to care for the child while the husband continued to work on a full time basis. The wife resumed work approximately six months later. The wife ceased work again when KM was born on 29 June 1994. Once again, the wife resumed work approximately six months later.
In early 1990 the parties purchased a house at Lake Munmorah for approximately $65,000. This was funded by gifts of $5,000 each from the parties’ parents and a loan of $65,000 from the Wyong Shire Council Credit Union. A residue of money was used to pay for repairs and agent and solicitors fees.
The husband leased a Holden Rodeo motor vehicle for a two year term commencing in 1991 and returned the vehicle at the end of that term. In 1994 the wife purchased a Corolla motor vehicle for $17,000, which was financed 100 per cent by a loan from the Wyong Shire Council Credit Union. This and another personal loan were consolidated and together with the mortgage the total indebtedness of the parties was then $98,000.
Early in 1997 the parties purchased five and a half acres of vacant land in South Kempsey for $48,000, funded 100 per cent by a loan from the Wyong Shire Council Credit Union which extended the parties’ indebtedness to approximately $130,000. In late 1997 the parties sold their then matrimonial home at Lake Munmorah for $165,000, using the proceeds to pay off their debts. Some $20,000 was used to build a shed at the South Kempsey property which was habitable by the parties.
Up to 1997 the wife worked as a library technician in Wyong. The husband worked as a plasterer until mid 1996 when he ceased work due to an undiagnosed injury and went on a disability pension. The wife subsequently worked at Port Macquarie.
The parties occupied rented accommodation at Crescent Head for six months following the sale of the former matrimonial home until they moved into the shed at the South Kempsey property. In March or April 2000 the parties borrowed $80,000 from Aussie Home Loans Limited to build upon the land at South Kempsey. At the time of separation in December 2000 approximately $50,000 had been spent to get the home to lock up stage. It is unclear what, if anything, remains due to the builder of the home, which is not yet complete. Following separation the husband continued to reside at the property but the wife is uncertain whether the husband is living in the shed or in the uncompleted home.
In 1999 the wife obtained employment in Kempsey. At that time she worked full time from 8.30am until 6.00pm. She also cared for the two children. Following separation the wife and the children initially resided with the maternal grandfather on the Central Coast and subsequently moved into rented accommodation at Chittaway Bay. The wife pays $140 per week rent for this property. The wife made one mortgage payment on the home at South Kempsey in January 2001 but has not been able to make any further payments. The wife believes that no repayments have been made on the mortgage since February 2001.
Following separation the husband retained the Suzuki Sierra motor vehicle which was the only vehicle of the parties at the time. Following separation that vehicle was stolen and with the proceeds of an insurance payment the husband purchased a Toyota Landcruiser currently in his possession. The wife’s father purchased her a Ford Laser motor vehicle for $500 in March 2001 which is still in the possession of the wife.
The wife has attempted to facilitate contact between the husband and the children but these attempts have not been successful. The wife receives no financial support from the husband. She understands that he has been assessed to pay $21 per month by the Child Support Agency but no payments have been received. The wife currently works two days per week as a library technician.
The only significant assets of the marriage available for distribution are the home at South Kempsey and two motor vehicles. The wife values the Toyota Landcruiser motor vehicle at $8,500. The value of the other motor vehicle in the possession of the wife is approximately $500. The wife has obtained two market appraisals upon the home (exhibits A2 and A3). These provide an estimated range in the value of the home at between $100,000 and $159,000. For the purposes of these proceedings I accept a valuation of $150,000. Aussie Home Loans Limited, the mortgagee, is currently owed approximately $83,000. Other matrimonial debts include a car loan from Coastline Credit Union in the amount of $9,361. This loan is in the name of the wife solely although payments have been made by the husband since separation. A further $18,000 borrowed privately by the husband to purchase the Suzuki Sierra motor vehicle (which was stolen) is still apparently substantially outstanding, although the precise amount of the debt owing is not known, and, indeed, it is not clear whether that is still a debt that is legally owed.

The law

The approach to the determination of an application under s.79 of the Family Law Act 1975 (Cth) (“the Family Law Act”) is well settled. Three clear steps are involved. These are:
(1)identification and valuation of the net property of the parties;
(2)consideration of the contribution of the parties, having regard to paragraphs (a) to (c) of s.79(4) of the Family Law Act; and
(3)consideration of the s.75(2) factors (s.79(4)(e)) together with any relevant application of paragraphs (d), (f) and (g) of s.79(4).
In addition, before making any order, the Court must be satisfied that in the circumstances it is just and equitable to do so.

Evidence and findings

As already noted, the evidence of the applicant wife was not contested. The financial circumstances of the husband were not disclosed by him, and I am reliant upon the limited information available to the wife. I find that the assets, liabilities and financial resources of the parties to be as follows:
Wife’s assets
Share of former matrimonial home (50%)  $75,000
Savings  $600
Wife’s Ford Laser motor vehicle   $500
Jewellrey   $500
Furniture and household effects   $500
Sub total   $77,100
Husband’s assets
Share in former matrimonial home (50%)  $75,000
Toyota Landcruiser motor vehicle  $8,500
Subtotal  $83,500
Liabilities
Wife and husband’s joint liability to
Aussie Home Loans Ltd  $83,000
Wife’s liability to Coastline Credit Union  $9,361
Total  $92,361
Financial Resources
Wife’s local government superannuation  $18,000
Husband  Not known
Total  $18,000

Parties’ earning capacity

The wife earns $613 per week before tax including gross salary of $260 per week and a further $353 per week in family assistance and in parenting payments (if made). The wife has fixed expenses of $159 per week. The husband receives a disability pension but the amount of this is not known. It is not known whether the husband has any other form of income.

Contributions

Neither party brought significant assets into the marriage. During the marriage the contributions of the parties should be regarded as being equal up until mid 1996 when the husband ceased work and went on a disability pension. The result was that the parties became more reliant upon the wife’s income, in addition to her contribution as a homemaker and mother. However, I have no reliable information on the precise financial and non financial contributions of the parties during the period of cohabitation and, on the basis of the available limited material, I find that the contributions of the parties up until the time of separation should be regarded as being equal.

Section 75(2) factors

Since separation the wife has been solely responsible for the care of the children, and in doing so she has had no financial support from the husband. I accept that the wife is currently able only to work part time and accordingly her income earning capacity is modest. The earning capacity of the husband is similarly modest, given his apparent injury. The only assets of significance are the home and the two motor vehicles. The Landcruiser in the possession of the husband is substantially more valuable than the Ford Laser in the possession of the wife. The sale of the home could realise gross proceeds of $150,000 but there are substantial liabilities due to Aussie Home Loans as well as a debt to the Coastline Credit Union. It is important that there be an orderly sale of the home in order to realise the maximum value of the asset and to discharge debts. Given that no payments on the mortgage of the home have been made since February 2001 and that the mortgagee is threatening to take possession of the home and sell it there is a risk that an orderly sale and maximum realisation of the asset will become a lost opportunity. It is in the interests of both parties and the children that the maximum value of the property be realised and that outstanding debts be discharged.
The only significant alteration to the property interests of the parties which I have made is to order that the residue of the proceeds of the sale of the home be paid to the wife. The percentage value of that alteration is presently unknown, as the home has not yet been sold. The wife requires those residual proceeds for the ongoing support of herself and of the children. The husband will retain the more valuable Toyota Landcruiser motor vehicle which is apparently free of debt. He should be able to continue to support himself on his disability pension.

Is this just and equitable?

The husband has taken virtually no part in these proceedings although he has had several opportunities to do so. He has continued to occupy the home although he has apparently made no payments on the mortgage. He has been assessed as liable to pay child support but has made no payments. In the circumstances, it is just and equitable that the husband be required to vacate the home and for the wife to be appointed trustee for sale of the property so that there can be an orderly sale and a discharge of debt. It is also just and equitable that any residue remaining following the discharge of debt be paid to the wife for her benefit and for the benefit of the children.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Driver FM

Associate:

Date: 12 December 2001