M and M
[2000] FMCAfam 88
•21 December 2000
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| M & M | [2000] FMCA fam 88 |
| PROPERTY SETTLEMENT – Debt by third party – Asset pool – Contributions |
| Applicant: | Z M (S) |
| Respondent: | M M (M) |
| Intervener: | I B |
| File No: | ZB3273 of 2000 |
| Delivered on: | 21 December 2000 |
| Delivered at: | Brisbane |
| Hearing Date: | 15 December 2000 |
| Judgment of: | Baumann FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Hanlon |
| Solicitors for the Applicant: | Twohills Lawyers |
| Counsel for the Respondent: | Mr Fleetwood |
| Solicitors for the Respondent: | Jones Mitchell Lawyers |
ORDERS
The husband shall transfer his interest in the former matrimonial home at 95 M Road, B W to the wife or as she may direct, in exchange for a payment to him of $58,500.
The wife shall simultaneously with the transfer referred to in paragraph 1, cause the current loans from Westpac Bank, GE Finance (formerly AVCO) and AGC (collectively called “the said loans”) to be discharged or refinanced so as to release the husband of his liability and thereafter the wife shall indemnify the husband against any claims arising from the said loans or the property.
The wife shall pay the said sum of $58,500 by 21 February 2001.
That if the wife is unable or unwilling to pay the said sum then the property at 95 M Road, B W is to be sold and the net proceeds of sale after discharge of the said loans shall be distributed between the husband and wife so as to effect a division of matrimonial property identified in the reasons for judgement, in the proportions of 65% to the husband and 35% to the wife.
That pending the sale of the said home, the wife shall be entitled to enjoy sole use and occupation of the property and the wife shall be solely responsible for all payments of the said loans and all rates, house insurance and other charges running with the ownership of the property.
That the wife shall make available for collection by the husband, all his tools, currently in her possession.
That the wife shall relinquish any claim or interest in any other property, superannuation entitlement, chattels, motor vehicles or bank accounts in the husband’s possession at the date of this order.
That the husband shall relinquish any claim or interest in any other property, superannuation entitlement, chattels, motor vehicles or bank accounts in the wife’s possession at the date of this order.
The husband shall be solely responsible for any claims arising under the Acknowledgment of Debt dated 18 April 1989 and shall indemnify the wife against any such claims or demands.
There shall be no order as to payment of any of the costs incurred by the intervener.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
ZB3273 of 2000
| M Z (S) |
Applicant
And
| M M (M) |
Respondent
And
| B I |
Intervener
REASONS FOR JUDGMENT
Introduction
The applicant Z M (“the wife”) filed an application in the Family Court of Australia on 9 November 1999 seeking an order for property settlement. The respondent M M (“the husband”) by his response filed 14 January 2000 sought different orders for property settlement.
The parties attended a conciliation conference which did not resolve the matter and subsequently, by order of the Family Court, the matter was transferred in this court.
On 9 November 2000, the husband’s mother I B (“the intervener”) sought and obtained leave to intervene in the proceedings. No written application seeking any particular relief was filed prior to the hearing. In fact, as a preliminary matter, Counsel for the intervener, sought leave to make an oral application for judgement against the husband to the extent of $50,000. The husband’s Counsel said he could not “oppose” the application. After hearing argument I decided that the intervener would not have leave to bring that application.
Immediately thereafter, Counsel for the intervener sought leave to make a further oral application. Counsel said that none of the parties would be surprised by the application, particularly as the intervener had identified the relief sought in her affidavit of 12 October 2000 (see paragraph 8). I gave leave to the intervener to make an oral application.
Orders sought
All parties complied with the trial directions save for an application by the wife to file and rely upon one further affidavit. I refused the request. The parties did file their case outline, detailing the material upon which they relied at trial and also the orders sought which were:
a)The wife sought an order that:
i)The husband transfer his interest in the former matrimonial home to the wife;
ii)The wife pay $10,500 to the husband;
iii)The wife accepts responsibility for the debts, save the alleged debt of the intervener;
iv)The husband should pay the wife $12,807.50 (being half of the wife’s estimated post separation contributions);
v)The husband shall accept responsibility for the alleged debt to the intervener;
vi)Each party retain other property and superannuation in their possession.
b)The husband sought an order that:
i)The former matrimonial home be sold;
ii)Upon sale, after discharge of the Westpac mortgage and payment of the sum of $50,000 to the intervener, the net proceeds be divided equally;
iii)The wife shall be responsible for the AGC and AVCO debts;
iv)Each party retain other property and superannuation in their possession.
c)The intervener in the case outline sought an order that the former matrimonial home be sold and from the net proceeds, the intervener be paid the sum of $50,000. Mr Westbrook conceded that the more appropriate order was that:
i)The husband shall pay to the intervener $50,000;
ii)Further, or in the alternative, that the husband is indebted to the intervener in the sum of $50,000;
iii)Costs.
History
The history is not, save for the issues to be determined, seriously in dispute. Both parties were born in Yugoslavia, the husband on 19 May 1954 (now aged 46 years) and emigrated to Australia with his parents in 1970. The wife was born on 2 October 1952 (now aged 48 years) and she emigrated to Australia under the husband’s sponsorship, in March 1973.
In November 1972 the husband and his parents purchased property at 8 D Street, S S for approximately $16,500, substantially with the benefit of moneys borrowed from Bendigo Building Society. They commenced residence of the home at the time of purchase.
The parties resided in the S home after the wife’s arrival in Australia until it was sold in April 1989. The home was shared by the intervener and her late husband initially, until the husband’s father died in August 1979 after which the intervener vacated in May 1980.
The home at S welcomed the marriage of the parties on 3 August 1974 and the subsequent birth of the parties’ children J (in 1975) and K-A (in 1982).
The wife’s parents arrived in Australia in November 1988 for an extended visit, however, due to the outbreak of war in Yugoslavia and other tensions in their homeland they have remained in Australia and have continued to live with the wife.
In April 1989 the S home was sold for $125,000. On or about 18 April 1989, the husband signs an Acknowledgment of Debt in favour of the intervener for $50,000.
In May 1989 the parties purchased in their joint names the former matrimonial home at 95 M Road, B W.
On 28 April 1999, the parties separated. Until August 1999 the husband contributed to household expenses. In early 2000, the Ford Falcon in the husband’s possession was stolen and a claim for indemnity under the motor vehicle insurance was made and paid to the husband.
Relevant law
The approach to the determination of an application pursuant to s79 of the Act, is well established by authority (see LEE STEERE (1985) FLC 91‑626; FERRARO (1993) FLC 92-335, DAUUT and RAIF (1994) FLC 92‑503; PRPIC (1995) FLC 92-574; CLAUSON (1995) FLC 92-595; WHITELY (1996) FLC 684 and DOIG (1999) FLC 92-869) which requires the adaptation of a “three step process”:
a)Determine the extent and value of the property, liabilities and financial resources of the parties at the time of trial (see TOWNSEND (1995) FLC 92-569; BILTOFT (1995) FLC 92-614;
b)Consider what contributions have been made by the parties within s79(4)(a), (b) and (c);
c)Consider what is identified as the “other factors”, being the matter in s79(4)(d), (e), (f) and (g), including by reference to s79(4)(e) the matters in s75 (2) (LEE STEERE (supra) FERRARO (supra) WATERS and JUREK (1995) FLC 92-635).
Finally, s79(2) requires the court to be satisfied that in all the circumstances, it is just and equitable to make an order.
Issues to be determined
After discussion with the parties when certain concessions were properly made as to the value of assets and the like, it emerged that the following issues required determination:
a)The existence of the alleged debt of $50,000 to the intervener and how it should be treated;
b)The respective contributions of the parties under s79(4) and an assessment of those contributions to trial;
c)Any adjustment for s75(2) factors;
d)The form of orders that are just and equitable.
In respect of these issues all the parties were cross-examined and gave some limited further evidence. I was satisfied that although the taking of evidence from the intervener would have been assisted by an interpreter, the witness gave clear evidence and seemed to understand questions properly put to her. The parties agreed to proceed without an interpreter when the person retained for that purpose was not available at the appropriate time.
Acknowledgement of debt
This document signed by the husband was tendered as Exhibit 1. Whilst the affidavit of the wife raises concerns as to the date of its execution, production of the original coupled with the testimony of the witness, retired solicitor JOHN KELVIN BENNISON, leads me to a finding that the document is dated 18 April 1989.
The circumstances of the creation, intention and enforceability of the document was the subject of evidence from the husband, the wife and the intervener, which is summarised, with my findings, as follows:
a)The intervener says she requested and instructed her solicitor to prepare the document. I accept she did so. In this regard, although the affidavit of Mr Bennison was relied upon as corroboration, it did not amount to corroboration as a result of his admission that he had no independent recollection of the events leading up to creation of the document and had not inspected any old file notes;
b)The document, addressed to the intervener provides that:
“I, M M of 8 D Street, S S in the State of Victoria HEREBY ACKNOWLEDGE receipt from you of the sum of FIFTY THOUSAND DOLLARS ($50,000.00) being half of the net proceeds of sale of the property at 8 D Street, S S which stood in our joint names and I undertake to repay the said sum to you when called upon to do AND WE DO HEREBY CHARGE all our interest in any real estate owned by us with repayment of the said sum.
I FURTHER UNDERTAKE that this Acknowledgment shall bind my Executors and Administrators and if and when called upon by you I will sign seal and execute such documents as you may require and at my expense to further secure the repayment to you of the said sum of FIFTY THOUSAND DOLLARS ($50,000.00) or such sum as shall then be owing by me to you.”
c)The intervener says that when the husband told her in 1989 that he wanted to sell the S home and move to Queensland, she “agreed to lend my half share of the sale proceeds from the property” to her son to assist him in purchasing a home. She says it was never her intention to make a gift of her share of the sale proceeds. It is common ground that the net proceeds of sale were $102,045. The intervener denied a conversation, alleged by the wife (but not in her affidavit of evidence in chief) that the intervener “left the house” to the parties “because they deserved it and had helped them”. This conversation was alleged to have occurred in the kitchen of the home.
d)The intervener made it clear that her intention in having the document signed by her son was because “I didn’t want to lose my $50,000 – it is my money”. She said she did not demand it before July 1999, but acknowledged the separation of the husband and wife was the trigger for the demand. In a striking comment under cross-examination, Mrs B, said she didn’t wish to give the wife anything, saying:
“Why should I give her anything.”
From this comment I inferred the intervener did not see her legal interest in the home at S improved, by the contributions of the husband and wife from early 1973 to 1989, including the nine years after she vacated before its sale.
e)The husband says he regards himself as indebted to his mother for $50,000. He said he discussed the document he signed with the wife, but when pressed he was unable to recall when he did so. He also denies any conversation in the kitchen about the home being “gifted” as alleged by the wife;
f)Whilst he says he always believed that he owed the money, when asked about how the quantum of the debt was determined he remarked:
“If she asks for $50,000 I agree to $50,000.”
I infer again from his remarks that he either felt powerless to argue with his mother’s demand at the time she sought his execution of the acknowledgment of debt or did not think he would have to repay it.
g)Some support for the last comment comes from exhibits 2, 3, 4 and 5, which are applications for finance signed by the husband, incorporating statements as to their accuracy but not revealing the mother’s debt. The applications are representations to third parties as to the husband’s financial circumstances. Counsel for the husband valiantly sought to encourage the husband to say that he did not include the mother’s debt because, the demand had not crystallised. The husband was not sure in re-examination what his Counsel was trying to achieve for him and his answers reflected that confusion;
h)The wife says simply she did not know of the alleged debt and claims it is not fair because of the contributions she and the husband made to the S home. She also says (at paragraph 15 of her affidavit) that:
“M and I continued to assure me that the S property also belonged to me, even though I was not registered as a proprietor. They told me there was no point in including my name on the title deed, as it would be unnecessary waste of money on lawyers’ fees.”
The husband and intervener deny these assurances were given.
I find on the evidence that:
a)
The Acknowledgment of Debt is authentic and was signed on
18 April 1989;
b)That the intervener strongly holds the view that she is entitled to $50,000 from her son, but has no insight into the contributions made by the husband and wife since 1973 and rights which might flow from those contributions;
c)The intervener did not either gift what she saw as her share of the proceeds of the house, or the house in its entirety as alleged by the wife;
d)The husband did not share with the wife any of the dealings with his mother, including the signing by him of the Acknowledgment of Debt. This is consistent with the evidence of the wife (which I accept on this point); the failure to disclose the debt to the bank and the denial to his daughter on or about 7 July 1999, detailed in the affidavit of J I M (at paragraph 4).
The intervener may well be able to sue in a court of competent jurisdiction on the document. She can only claim against the husband. I note the husband acknowledges the debt. She cannot, in my view, seek to trace her claim into the equity of the M Road property, nor has she sought to do so.
I am not satisfied that I should apply the “ELIAS principle” (arising from the decision in ELIAS (1977) FLC 90-267 which was recently described by Chisholm J in JORDAN (1997) FLC 92-736 as being:
“That when a party has made representations of fact to third parties and has gained advantage from so doing, it is open to the court in subsequent proceedings under s79 of the Family Law Act to decline to accept from that party evidence which contradicts those representations.”
Rather than bringing the debt into account as a liability against the matrimonial pool of assets, I take the view that:
“because of the circumstances surrounding the incurring of the liability it ought in justice and equity to be wholly or partly disregarded in determining the appropriate order to make under s79 as between the parties to the marriage” (BILTOFT (1995) FLC 92-614 @ 82,125).
I shall bring into account, what I consider to be the intervener’s claim and the manner in which that claim is relevant in the s79(4) contributions and s75(2) factors.
Asset pool
Arising from the analysis of the intervener’s claim, and accepting concessions on the value of assets and other liabilities by the parties, the pool is as follows:
a)ASSETS
i)House at M Road (joint)............................... $185,000
ii)Toyota Corona (wife)........................................ $7,000
iii)Ford Fairlane (husband)................................... $6,500
iv)Tools (wife’s possession)................................. $2,000
v)Furniture (wife)................................................... $9,845
vi)Furniture (husband)........................................... $2,305
vii)Total Assets :.............................................. $212,650
b)LIABILITIES
i)Westpac mortgage......................................... $96,754
ii)AGC.................................................................... $7,626
iii)GE Finance (formerly AVCO).......................... $1,772
iv)Total Liabilities :......................................... $106,162
c)NET ASSETS........................................................ $106,500
d)FINANCIAL RESOURCES
i)Husband’s gross superannuation.................. $31,194
ii)Wife’s gross superannuation......................... $23,907
Section 79(4) contributions
The history of the living arrangements of the parties with, firstly the husband’s parents and thereafter with the wife’s parents make the assessment of contributions more challenging than might otherwise be the case. The subtle inference was that it is the “custom” for extended family to share accommodation and expenses in this way.
The evidence establishes the following relevant contributions to the time of trial:
a)The husband, at the time of co-habitation owned jointly with his parent the S home. The equity in the home was minimal at that time;
b)From the commencement of co-habitation until 1989 the parties lived in the S home save for a period of approximately three months;
c)Both parties worked throughout this period save for the wife’s maternity leave. I am satisfied that all the income of the husband and wife was pooled with income of the parents of the husband to meet not only living expenses, but also expenses associated with the home, including mortgage repayments, rates and other charges;
d)This “pooling of income” was affected by the ill health of the husband’s father, culminating in an inability by them to contribute to the home (save for their pension) from November 1978. The father’s tragic early passing in August 1979, further increased the pressure on the income of the husband and wife, which was further exacerbated by the intervener’s loss of her pension entitlements in November 1979;
e)The intervener, who was a relatively young widow, commenced a new relationship with her husband Mr B and after receiving a compensation payment of $23,000 from the Victorian Railways Department, she vacated the home in May 1980 and subsequently married Mr B;
f)I am satisfied that no part of the compensation payment was contributed to the “family pool”. I am also satisfied that from approximately November 1979, the intervener made no substantial contributions to the matrimonial pool of assets. I am unable, on the evidence, to estimate the net value of the husband’s inheritance which comprised a one-sixth share in the S home, less any share of the debt to Bendigo Building Society. Considering the minimal equity the parties had at acquisition some six years earlier and considering the sale price of the home some 10 years later (after some significant improvements) at $125,000, I believe it is reasonable to infer the value of the inheritance was less than $10,000, noting that a one-sixth interest in the net proceeds in 1989 would have been worth only $17,000;
g)I accept that from approximately 1983 to the date of separation the parties did improvements to the S property (particularised at paragraph 18 of the wife’s affidavit); purchased the M Road home in May 1989; and built additions to that home with the benefit of additional loan funds from Westpac;
h)The wife’s parents commenced living with the family from November 1988. They still live with the wife in the former matrimonial home. Her parents’ capacity to make a contribution was limited by the resources at their disposal – initially a cash sum of approximately $7,000 and then certain government assistance. I find that such resources would have met the majority of their personal living expenses, but were insufficient to constitute any contribution to the matrimonial pool of assets. In this regard the affidavit of M M, the wife’s mother, was of some assistance in corroborating the extent of the non-financial contributions and confirming the level of the financial resources of the wife’s parents;
i)I accept the wife was the principal care-giver to the children and home-maker;
j)Post separation the wife has made some payments which I accept were accurately detailed at paragraph 33 of her affidavit. The wife and the family have had the use and benefit of occupation of the home and the husband has received the benefit of a reduction in the loan payouts to Westpac, AVCO and AGC. Whilst I acknowledge the husband did make some contribution to the family income, post separation, I find that the contribution ceased in approximately August 1999;
Weighing up all these facts, but for the inheritance and initial contributions between 1972 and late 1979 by the intervener (and her late husband), I would have found those contributions to the date of trial as equal. Allowing for those contributions, which favour the husband, I adjust the property available as to 60% to the husband and 40% to the wife.
Section 75(2) factors
Both parties are of similar age, enjoy good health, have gainful employment and similar levels of financial resources available to them. Their adult children are healthy and capable of supporting themselves. Accordingly I find neither party has any commitment to support any other party.
The only factor which I believe should disturb a finding of no adjustment for s75(2) factors is the obligation which I will impose on the husband to meet the debt to this mother which he unilaterally assumed by execution of the Acknowledgment of Debt. Whilst it is not necessary for me to make a finding as to the level of debt which the husband may ultimately be required to meet to this mother, I certainly observe that the sum of $50,000 is significantly greater than the entitlement of the intervener arising from an equitable assessment of the parties’ contributions between 1973 and 1989. This factor is relevant under s75(2)(o) and I assess a further adjustment in the husband’s favour of 5% is proper.
Just and equitable
In summary, I believe it would be proper just and equitable for the property identified in paragraph 25 of these reasons, be distributed as to 65% to the husband and 35% to the wife. The wife has expressed a right to attempt to refinance the home in which she lives, arising from this order. I intend to give her two months from this date to do so, otherwise the former matrimonial home will be sold and after payment of the debts, the proceeds will be divided as set out in the order.
The payment required to be made by the wife to the husband of $58,500 is calculated as follows:
a)35% of $106,500 =......................................... $69,225
b)Less
i)Ford Fairlane......................................... $6,500
ii)Tools....................................................... $2,000
iii)Furniture$2,305..................................... 10,805
c)
Total :................................................................ $58,420
...................................................................say $58,500
I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate:
Date:
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