M and M

[2008] FCWA 6

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY COURT ACT 1997

LOCATION: PERTH

CITATION: M and M [2008] FCWA 6

CORAM: MARTIN J

HEARD: 20 & 21 AUGUST 2007

DELIVERED : 20 NOVEMBER 2007

PUBLISHED : 15 JANUARY 2008

FILE NO/S: PT 154 of 2005

BETWEEN: M

Applicant/Wife

AND

M
Respondent/Husband

Catchwords:

FAMILY LAW - settlement of property - contributions - liabilities - s 205ZH factors

Legislation:

Family Court Act 1997- s 205Z, s 205ZD(3) and s 205ZG

Category: Not Reportable

Representation:

Counsel:

Applicant:Mr Jones

Respondent: Mr Dutton

Solicitors:

Applicant:Elizabeth Wiese & Associates

Respondent: Dutton Legal

Case(s) referred to in judgment(s):

Biltoft and Biltoft (1995) FLC 92-614

Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143

Kowaliw and Kowaliw (1981) FLC 91-092

1The issue for determination was the [wife]’s application for settlement of property, first filed 13 January 2005, and amended on 4 April 2007 and 9 August 2007. The [husband] filed a Form 1A response on 15 March 2005, which was amended on 1 May 2007.

2At trial, the [wife] sought that the [husband] pay her a cash payment to effect a division of the net assets of the relationship as to 40% to her and 60% to the [husband]. She proposed that the [husband]’s home at [the suburban address], vest in the [husband] absolutely, with the usual indemnities, and that otherwise the parties retain the assets and superannuation entitlements in their respective possessions and indemnify the other with respect to any liabilities. In closing, her counsel submitted a payment of $70,000 to $80,000 to her would be appropriate if the current mortgage is regarded as a liability, and if not, the [wife] should be entitled to 25% to 30% of a net asset pool of about $265,000.

3The [husband]’s preferred position was that the application of the [wife] should be dismissed and the parties retain their respective assets. At trial, he was prepared to pay the [wife] the sum of $20,000 and he then retain the property at [the suburban address]. His first response had said he was proposing to pay the [wife] $6,000.

4On 20 November 2007, I made the following orders:

1.As and by way of property settlement, within 42 days, the [husband] pay to the [wife] the sum of $70,000.

2.Upon payment of this sum, the property situate at [the suburban address], and more particularly described in Certificate of Title Volume xxxx Folio xxxx vest in the [husband] absolutely and the [husband] indemnify the [wife] and keep the [wife] indemnified in respect of the mortgage thereon and all outgoings.

3.Each party otherwise retain the assets in their respective possession, and any superannuation entitlements they have.

4.Each party indemnify the other in respect of any liabilities they may have, including to their parents.

5.Until payment of the sum of $70,000 to the [wife], the [husband] be restrained by injunction from further encumbering or dealing with the property save to pay the [wife] the sum due.

6.There be liberty to apply in relation to implementation of these orders.

7.The applications otherwise be dismissed.

5The parties are also involved in proceedings in relation to their only child [Pamela]. The issue was resolved, on a temporary basis, by consent orders made, on the first day of the trial on 20 August 2007. The single expert witness, [Mr M], in his report dated 16 August 2007 had recommended the child spend two days per week with her father. He expressed considerable concern about the father’s negative attitude to the mother, and his unrealistic claim that the child live with him and have only supervised contact with the mother.

6The orders provided, until further order, the child live with the mother, the parents share equal parental responsibility for the child, and the child spend time with the father each alternate weekend from 6:00 pm Friday until 7:30 am Monday, and in the intervening week, from 6:00 pm Thursday until 7:30 am Friday. The child was also to spend a week of the October school holidays with her father. The matter was to be reviewed by the single expert witness in December 2007, and was otherwise adjourned to 12 December 2007 for further hearing. (I note that para 15 of the typed minute of Consent Orders filed 21 August 2007 does not, in this regard, accurately represent para 8 of the amended Minute handed up in Court.) On that date, the further report of the single expert witness was not available, and the matter was further adjourned to 30 January 2008.

Background

7The [wife] is 36 years old and a [beautician]. The [husband] is 37 years old and an [technician]. The parties met in December 2000, and spent quite a lot of time staying in the [wife]’s rental accommodation until May 2001, when they commenced cohabitation in the property at [the suburban address]. At that time, the [wife] was working in a [business] in [the suburbs] and the [husband] was working [ in sales]. The child of the relationship, [Pamela], was born [in] March 2002.

8The [wife] gave up her job [in the business] after learning she was pregnant, and continued to work generally part-time as a [beautician], but sometimes full-time. She has worked part-time as a [beautician] since [Pamela]’s birth. The [husband] worked as a [sales representative], and part-time in his business, until November 2001, and since then has worked only in his [business], [MM]’s, from the [the home address].

9The parties separated, while continuing to live under the one roof, on 12 January 2004, and finally separated on 20 February 2004. Since separation, the [husband] has continued to reside in the [the suburban address] property. The [wife] moved to rental accommodation.

10The [husband] has remarried, in August 2006, to [Margaret], who is from [Europe]. The [husband] made several visits to [Europe] prior to his marriage, and [Margaret] did not come to Australia until January 2007. She had been working here doing clerical work until she left her job to return to [Europe] for two to three months, shortly prior to trial. I was informed she has a temporary visa. She did not give evidence in the proceedings.

11It is accepted the [husband] paid the [wife] $6,000 shortly after separation, from the sale of a [car] and a [utility] of which this was only part of the proceeds received. This included reimbursement to the [wife] of the sum of $1,500 being repayment for airfares incurred by the parties to visit the [wife]’s family in the Eastern States.

12The main focus in the proceedings between the parties has been on the issues regarding [Pamela]. The issue of settlement of property should have been resolved long ago, but was delayed partly because of valuation problems with respect to the home, complicated by the [husband]’s general lack of cooperation and practical problems, as he has been overseas so much. The [husband]’s general position throughout has been that the [wife] has no, or minimal, entitlement as she has not contributed to the [the suburban address] property, and the parties kept their funds separate, in that they had separate bank accounts during the relationship.

13In relation to the financial matters, the parties attended a conciliation conference on 20 June 2005, at which both parties were legally represented. Directions were made to ensure valuations and appraisals were obtained as to disclosure in an attempt to crystallise the real issues.

14The [husband]’s then solicitor, George Papamihail, did not attend the next conference on 1 August 2005, so it could not proceed.

15On 3 February 2006, the [wife]’s counsel and the [husband], who was then self‑represented, attended a procedural conference. The proceedings were included in the defended list and directions made to enable the matter to proceed to a pre‑trial conference on 26 June 2006.

16On 30 May 2006, the [husband] gave an undertaking to the Court not to further encumber or deal with the [the suburban address] property. The [wife] then became concerned about the [husband]’s borrowings, and that his intention was to further encumber the property as she received a notice as a result of her caveat, that a dealing was pending. The parties were involved in a review by the, then, Chief Judge on 28 June 2006. Shortly before this, the [wife] filed an application seeking that a licensed valuer have access to the property, among other things. The application also sought further disclosure.

17On 20 July 2006, it was ordered the [husband] do all things necessary to permit a licensed valuer to have access to the [the suburban address] property. The [wife] was to pay half the cost.

18By 1 August 2006, the [husband] was again represented by George Papamihail and Mr Dutton, his counsel at trial, was handling his case.

19On 18 August 2006, the matter was again placed in the list of matters awaiting allocation of a pre-trial conference and further directions were made to ensure the case’s readiness for trial.

20The [husband] was self-represented again from February 2007.

21By the pre-trial conference on 13 March 2007, neither party had filed their trial affidavits. The parties agreed to obtain an up to date valuation of the real estate.

22On 10 April 2007, the parties first appeared before me in the Duty Judge list. By then, the [wife] had filed her trial material and I extended the time for the [husband] to file his material to 1 May 2007 on which date his trial affidavit was indeed filed. The [husband] indicated he was then applying for Legal Aid.

23On 2 May 2007, I listed the matter for trial on 20 August 2007.

24On 18 June 2007, I ordered the appointment of an independent children’s lawyer. The independent children’s lawyer urgently applied for the appointment of a single expert, which application was granted. A report was urgently prepared which was instrumental in the children’s issues being resolved, for the time being, on 20 August 2007.

25On 15 August 2007, the [husband] sent an email to my Associate saying:

“I am asking the courts advice in requesting that the court trial date for the 20^th August at 10am be vacated and adjourned as I am in no position to represent myself in these matters and feel that I am being disadvantaged having to be self-represented against the other party. There are serious issues and evidence that needs to be addressed in detail with the assistance of professional representation relating in particular to the child matters of this case, and also the financial issues.

Over recent months the stresses on me relating in particular to issues and aspects in this case have exposed and bought about some serious health issues. Both my regular General Practitioner and conseling (sic) Psychologist have strongly recommended that I do not allow myself be placed under any further stresses and anxiety by being placed in a trial situation, self-represented. I have attached a letter from my GP, Dr [BG] stating his concerns.

I feel I have been placed and forced into a very awkward position here and need help for a fair and satisfactory resolution and outcome for all parties concerned. I simply do not have the capacity or required know how to action my concerns and to sufficiently represent myself without being disadvantaged in any way.”

26A letter from his GP, Dr [BG], was attached.

“This letter is to confirm that I am the treating medical practitioner for [the husband]. I am now treating him for severe anxiety and stress relating to his current court matters regarding custody and financial settlement with his ex partner. I understand he has been asked to represent himself in these matters as he does not yet have legal representation from Legal Aid.

I do not consider he is psychologically capable of representing himself at this time due to the stresses of his situation.”

27 There is also evidence that the [husband] suffers from migraines.

28I instructed my Associate to inform the [husband] that any application for an adjournment would be dealt with at the commencement of the trial when all parties were present.

29At the commencement of the trial, on 20 August 2007, the [husband] appeared represented by his former solicitor, Mr Dutton. A letter was tendered from [Dr D], a clinical psychologist, who said as follows:

“[the husband] has been seeing me over 7 consultations for stress and anxiety relating to financial difficulties and legal problems associated with the custody of his daughter.

During my contact with [the husband], he has improved in his management of anxiety, although there has been significant health implications resulting from the amount of stress he has been experiencing over the last year.

I have been in periodic contact with [the husband]’s General Practitioner (Dr [BG]) who has been treating him for health conditions associated with chronic stress and anxiety.

Although [the husband] has developed strategies to deal with this stress, I am of the opinion that he is not able to adequately represent himself in a legal capacity. My advice to [the husband] is to seek medical advice from his General Practitioner on his general health as soon as possible.”

30With the assistance of the independent children’s lawyer, and the parties’ counsel, discussions took place and, as previously mentioned, the issues regarding the parties’ child resolved on an interim basis.

31There was, apparently, some discussion about the property issues.

32When the hearing recommenced, counsel for the [husband] then advised that the [husband] was unable to be a witness as he was under medication, and he sought an adjournment on medical grounds. Counsel said he had no instructions to act on property issues, and was not prepared for trial. He requested an adjournment for 24 or 48 hours to “get up to speed”.

33I then indicated that I considered the matter not being complex, should proceed the next morning. I referred to the fact that everyone is under stress at trial in the Family Court, and I would need to have further evidence as to why the [husband] was not capable of proceeding or giving evidence. If the [husband] then still sought an adjournment on the basis of his mental health, I would expect an expert to be available for cross-examination on this issue. I was concerned about the risk of injustice to the [wife] if there were further delays – particularly since the [husband] has had the use of virtually all the parties’ assets, had incurred significant liabilities and had been intent on strongly maintaining the [wife] has no financial entitlement. It had been over two years since the commencement of the case, and during this time the [wife] has received nominal financial assistance from the [husband] – she was entitled to be very concerned about further delays in receipt of her financial entitlements.

34The next morning, the issue of an adjournment was not mentioned, and the trial proceeded in the normal manner. The [husband] was cross-examined for a lengthy period and, to me, appeared very focused and “on the ball”. I had no concerns at all as to his ability to understand, and be actively involved in, the proceedings.

Credibility

35The [wife]’s evidence was not really controversial, as her financial position and history was not really in dispute. I have no reason to believe she is not a credible witness.

36I accept that under cross-examination, the [husband] was quite credible in that he gave frank answers, although it is clear that in the past, he has been prepared to understate or overstate values and liabilities to assist his case – for example, his evidence that he included the [the suburban address] property in his financial statement at a value of $200,000 in March 2005, because it needed repair was clearly not believable, as around that time, he had been applying for credit and estimated the value as at least $260,000.

37It is possible the [husband] has not disclosed all his assets and he has certainly disposed of a number of assets and not properly accounted for the proceeds. He has given no reasonable explanation for the increase in his liabilities since separation. However, I am not satisfied that his present financial position is significantly better than he now claims.

Assets and liabilities of the parties

38Pursuant to s 205ZG of the Family Court Act 1997, in proceedings with respect to the property of de facto partners, the Court may make such order as it considers appropriate altering the interests of the parties in property. The Court shall not make an order unless it is satisfied, in all the circumstances, it is just and equitable to do so.

39The legislative provisions are virtually identical to the like provisions in relation to applications for settlement of property between parties to a marriage. It was not suggested that the approach in this case should be any different from that had the parties remarried, and the proceedings brought under the Family Law Act.

40The preferred approach in applications for property settlement under the Family Law Act was recently set out in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143:-

"The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s79. That approach involves four interrelated steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss. 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss. 79(4)(d), (e), (f) and (g), (''the other factors'') including, because of s. 79(4)(e), the matters referred to in s. 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case."

41The relevant provisions are s 205ZG(4) of the Family Court Act, the equivalent of s 75(2) of the Family Law Act being s 205ZD(3).

42The [wife]’s position as to the asset pool at trial was set out in her Papers for the Judge. The [husband]’s position was included in an updated financial statement handed up to the Court on 21 August 2007.

43It was eventually agreed that the property at, [the suburban address], should be included at an agreed value of $365,000, although, as previously mentioned, the [husband] had previously substantially undervalued the property.

44In her Papers for the Judge, counsel for the [wife] sought to include as assets, items, mainly vehicles, which the [husband] says he has purchased and/or sold. He had sold a [motor vehicle] in August 2005, the [husband] said for $2,500, it having been purchased during the relationship, and [another motor vehicle] for $23,000, which had been purchased, since separation, for $23,500. He had purchased a [another vehicle] for $13,000 in June 2004 – the [husband]’s evidence was this was “unlicensed and in a million pieces at his place”. He had sold [yet another motor vehicle] for $9,000 and purchased a [utility] for $2,000 and sold it for $4,950. A [small car] had been bought and sold at modest cost.

45The [husband]’s position at trial, was that the only vehicles he had were the [motor vehicle], which he said was worth $2,500, and was unlicensed, and a 1969 [motor vehicle].

46In addition, the [husband]’s evidence was he had sold a [motorbike] to his father for $6,000, to be set off against a debt he owed his parents as he could not otherwise pay them. The figures in his financial statements were ambiguous but he said its market value was $8,500. It had been purchased in May 2003 for $12,000.

47A [boat] had been sold to his mother for $8,000 in September 2005, although the [husband] had, in December 2005, lodged a loan application to a bank saying it was owned by him and worth $90,000. It had been purchased for $13,500 in 2003, and then required repairs. Although the parents’ evidence was that neither item has been used by them, their evidence was that they planned to use them in the future, and that had been keen to receive some payment for the debts owing to them.

48The [wife]’s position was that the [husband]’s actions were taken to artificially reduce the extent of the asset pool, and that the items should be included in the asset pool at $12,000 and $8,000 respectively. The assets should be included as the [husband] had increased the mortgage on the home to purchase the items for about $25,000, and this outstanding liability should not be brought to account if these assets are not included.

49I have determined that the liability should be included, and these assets not included as I accept the [husband] probably has borrowed substantial further sums from his parents and given them the assets to reduce the extent of the debts, rather than necessarily, to reduce the extent of the asset pool. The fact that the [husband] has divested himself of these assets to meet debts which should be no responsibility of the [wife] has an impact on my determination as to the parties’ respective contributions.

50I accept the [husband]’s business of [MM]’s probably has minimal value. I have not included the parties’ tools of trade as being probably now of negligible value, although the [wife]’s evidence is the [husband] expended considerable sums in purchasing equipment, including electronic equipment.

51The parties have modest superannuation at similar levels.

52As touched on already, there was a significant issue as to what extent the [husband]’s liabilities should be brought to account. Since separation, the debts secured by the property had substantially increased, and the [husband] says he has incurred other debts. His overseas trips to [Asia and Europe] have not only incurred costs, although he says these have been fairly modest, but the extent of his work in the business has reduced when he has been away, and this has reduced his income.

53At separation, the balance owing with respect to the mortgage on the former matrimonial home was about $100,000, and for the [wife] it was submitted this was the only liability which should be taken into account in assessing the net asset pool because:

•the [husband] had repaid sums owing to his parents to reduce the level of his net assets when he was not required to do so as the loan documentation indicated the time of the loan was over 10 years;

•the [husband] had incurred substantial debts for purposes of his own, including the overseas travel;

•the [husband] had been far from frank about his financial position, probably because he did not want to pay the [wife] anything, if possible, as he considered she had not contributed financially to the relationship, and, he said, she had had significant problems in parenting [Pamela]. This may have affected his behaviour in increasing and repaying debt and disposing of assets.

54The [husband]’s position was that his current debts of $216,484 in relation to the mortgage, $35,134 to his parents, including money borrowed for legal fees, and about $33,500 in credit cards, should be taken into account, plus a number of sundry debtors totalling about $7,715. He had, in 2005, paid his parents back the $33,500 he then owed them, shortly after the [wife] commenced proceedings – this money had been raised by extending the mortgage. It is apparent this was to ensure the parents were repaid, once the [wife] had made a claim on the property. Some of the debts had been increased for trips, but otherwise he did not explain in detail, how his debts had increased so much.

55It is well established that the normal practice in determining the value of the assets of the parties is to deduct from the gross value the total liabilities, but there are circumstances where it is open to the Court to discount or disregard a liability if uncertain or unreasonably incurred (Biltoft and Biltoft (1995) FLC 92-614). If one party has entered into a course of conduct designed to reduce or minimise the effective value or worth of the parties’ assets or acted “recklessly, negligently or wrongly” that party can be held responsible for liabilities incurred. (Kowaliw and Kowaliw (1981) FLC 91-092).

56It is apparent that the [husband] by his conduct has recklessly increased the liabilities, mainly through his lack of his application to his business but also by his profligate expenditure – he has clearly been living way beyond his means since separation. To put the most generous view on this, this could have been because he genuinely believed the [wife] had no, or minimal, entitlement to property settlement, and so it did not matter what he did with his assets. I consider it more likely, although this was part of his reasoning, that he was also taking action with the intent of reducing the net asset pool to reduce the possibility, or extent, of the [wife]’s claim. As it turns out, fortunately, market forces have meant the position is not nearly as bad as it could have been.

57The most obvious expense has been his overseas trips which, for example, led to him being away from Australia for 10½ weeks in 2006, at a direct cost which, at a minimum, was $15,000 and probably substantially more. While the [husband] is entitled to get on with his life, I do not accept the [wife] should bear any responsibility for the liability incurred by him in this regard, and as a result of his failure to properly exercise his earning capacity since separation.

58In the present case, I accept that it is appropriate to take into account, in assessing the appropriate value of the net asset pool, only the liabilities in existence at separation, being the mortgage and the [husband]’s debt to his parents at that time. Although some of the mortgage debt was incurred to pay for the purchase of the [motor vehicle] and the [boat] as previously mentioned, I have not included them in the asset pool, even though they have clearly been sold, probably slightly under their true value, to the [husband]’s parents, as the credit received for them was deducted from the alleged further liability to the [husband]’s parents, which I have not further taken into account as a liability in assessing the value of the net asset pool, but have considered the position overall in relation to contributions. This also means that whether the parents really have lent the [husband] as much as he claims is of minimal significance, since he will bear responsibility for any further debts incurred.

59Since I have decided not to take into account in assessing the net value of the pool, the [husband]’s later increased liabilities, I have not taken into account either the monies spent and received by him for buying and selling vehicles, although it would appear he may have made a profit in this regard.

60The position in relation to legal fees was that, at trial, the [wife] had received accounts of $33,904, and had paid $22,980 according to her costs notification letter. However, I was informed, in fact, she had borrowed $30,000 from her parents towards her fees, and paid $12,000 to $13,000 herself. Counsel fees of $6,778 had been accrued, of which $6,173 had been paid. It was then estimated unbilled costs were $5,087 not including the cost of the trial.

61The position in relation to the [husband] was that he had paid $24,694 to his previous solicitors by 1 May 2007, and his evidence was it later increased to $28,000, and he still owed his former solicitor, George Papamihail $2,134. He owed Clairs Keeley less than $1,000. He owed his parents $26,751 for funds borrowed to pay legal fees. They had put $5,000 into the trust account of the [husband]’s counsel at trial.

62It was not suggested there should be any add-backs for legal fees paid. Both parties are in a similar position to the extent, the fees are a liability, I propose to take them into account in considering s 205ZD(3) factors.

63According to the [wife]’s position at the time, I should take into account the position at trial as being as follows:

[wife]	[husband]
[The home at the suburban address]	365,000
[Motor vehicle]	3,000
[Motor vehicle]	(E)14,000
[Utility]	12,000
[Motor vehicle]	500
[Motorbike]	12,000
[Motor vehicle]- sold August 2005 – proceeds of sale	2,500
[Motor vehicle]	4,000
[Motor vehicle]- sold by [husband]	23,000
[Boat] – sold September 2005 – proceeds of sale	8,000
Bank Accounts	Nominal	NK
[MM]’s	NK
Work tools	500	NK
Furniture and chattels	800	800
Liabilities
Mortgage – [the home at the suburban address]]	216,484
Loans from parents	30,538
Car loan	4,800
Superannuation	13,942	12,172

64For the [wife], it was submitted that the net asset pool should be regarded as being about $265,000.

65As a result of my conclusions, I have determined the asset pool to be taken into account is as follows:

[wife]	[husband]
[the home at the suburban address]	365,000
[Motor vehicle]	3,000
[Motor vehicle]	500
[Motor vehicle]	(E)2,500
Furniture and chattels	800	800
3,800	368,800
Car loan	4,800
Mortgage at separation	128,633
Loan to parents at about time of separation	33,500
Net assets	-1,000	206,667
Superannuation	13,942	12,172

66I therefore have determined the total net assets should be regarded as being $205,667 without including the parties’ modest superannuation entitlements which are of similar value, which each party is to retain.

Contributions – s 205ZG(4)(a), (b) and (c)

67In considering what order (if any) should be made under s 205ZG(1), the court shall take into account:

(a)the financial contribution made directly or indirectly by or on behalf of a de facto partner to the de facto relationship or a child of the de facto relationship to the acquisition, conservation or improvement of any of the property of the de facto partners or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the de facto partners or either of them;

(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a de facto partner or a child of the de facto relationship to the acquisition, conservation or improvement of any of the property of the de facto partners or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the de facto partners or either of them;

(c)the contribution made by the de facto partners to the welfare of the family constituted by the de facto partners and any children of the de facto partners, including any contribution made in the capacity of homemaker or parent.

68The [wife]’s position, in closing, was that she should be entitled to about $70,000 to $80,000, however achieved. It was submitted the contributions during the relationship were equal. The [husband]’s position was that the [wife] had made very little contribution towards the assets of the parties, particularly the home which he owned prior to the commencement of cohabitation at [the suburban address], [the suburban address], and which comprised, by far, the greatest asset.

69At the commencement of cohabitation, the [wife] had a [motor vehicle] worth about $3,000, savings of about $1,000, superannuation of about $6,000 and personal effects.

70The [husband] had purchased the [home at the suburban address] from his parents about 18 months prior to the commencement of cohabitation. He had some vehicles subject to finance, some furniture, modest savings and superannuation.

71As to the [husband]’s equity in the home, at the commencement of cohabitation, the [husband] had been renting the property from his parents for since 1992, and his evidence is his parents spent considerable time and money on repairs and renovations and general home improvements. In June 1999, he purchased the property from them for the sum of $120,000. It was not suggested that the purchase price of $120,000 was not a realistic value in mid 1999. The [husband] was unable to obtain a loan from the Commonwealth Bank for the full mortgage amount, so his parents lent him $20,000 and he obtained a mortgage for the balance of about $104,000. The [husband]’s evidence was that, in total, he owed his parents about $33,500 prior to the commencement of cohabitation. For the [wife], it was submitted that, at the commencement of cohabitation, he had minimal equity in the property.

72The [husband] accepted, under cross-examination, that he would have had no excess of assets over liabilities at the commencement of cohabitation, except for some superannuation.

73The [husband] had first registered and carried out trading in the business [MM]’s in December 1995. It is a mobile home-based business, specialising in [equipment sales and service].

74During the relationship, the [husband] initially worked for wages as [in sales] for a [company] on an annual salary package, including a vehicle, of approximately $80,000 plus bonuses. He also ran his business part‑time, but in November 2001, gave up his employment and continued in the business from the [home in the suburbs].

75The [wife] was initially working in a [business] and worked part-time as a [beautician] during the relationship. She worked full-time from August 2001 to January 2002 while she was pregnant. Shortly after [Pamela]’s birth she worked on Saturdays, and in August 2002, on Thursdays and Saturdays. She received some Centrelink family payments which varied from $110 - $250 per fortnight. She ceased work in August 2003. In December 2003, she commenced working part-time on Thursday afternoons (when the father’s mother cared for the child). In October 2003, the [wife] had a [private business], but by early 2004, decided it was not economically viable.

76The parties’ evidence as to their respective taxable incomes during the relationship were:

To	[wife]	[husband]
June 2001	16,518	26,580
June 2002	14,642	30,421
June 2003	4,193	7857
June 2004	10,536	17,462
June 2005	21,036	5,800
June 2006	21,742	13,777

77The [husband]’s evidence was that he invested in stock. The accounts of the business show a profit of $17,452 to June 2004, a loss of $15,180 to June 2005, and a profit of $13,777 to June 2006.

78The [wife] claimed it was also a relevant consideration that during the relationship the [husband] had “an obsession” for motor vehicles and there were a number of purchases and exchange of motor vehicles during the relationship. The [husband] also ran a boat. I accept that these were a drain on the parties’ finances.

79In early 2003, the [husband] increased the mortgage on the home by $29,000, to purchase the [34 ft boat] for $13,000 (he said it had a seized engine) and the [motorcycle] for about $13,500, the extra money being taken out for living expenses.

80In late 2001, the parties sold the [wife]’s [motor vehicle] for $3,000, and a [new car] was purchased. This was sold in 2003 and [another car] purchased. This was sold in April 2004 for $9,000.

81The [wife] was also largely responsible for the day to day running of the household, including paying bills and tracking finances.

82It is not in dispute that the [husband] paid the mortgage payments, rates and taxes and utilities for the [the suburban address] property during the relationship, and has paid the outgoings on the property since.

83The monies earned by the [wife] were used to pay for household and living expenses, entertainment expenses and trips. Sometimes, the [husband] gave the [wife] housekeeping.

84Neither party claimed they made any significant indirect contribution to the property after the commencement of cohabitation.

85As to contributions as homemaker and parent, the [wife] has made by far the greater contribution in this regard, although the [husband] was also substantially involved. The [wife]’s unchallenged evidence was that she undertook virtually all the housekeeping duties except for washing some dishes and she also did the gardening and mowing the lawn. Both parties had been involved in painting [Pamela]’s room. The [wife] also undertook paying the bills. The [husband] has criticised the quality of the [wife]’s parenting, but did not pursue this issue at trial as affecting the [wife]’s contribution based entitlement.

86Overall, I regard the contributions of the parties during the relationship as being approximately equal.

87As to contributions since separation, the [husband]’s earnings have been modest and he has incurred significant additional liabilities to which I have already referred which I have decided not to include in assessing the net value of the asset pool.

88An issue of significance in relation to contributions, is what credit each party should be given, having regard to the fact that the [husband] received a significant benefit from his parents in relation to the acquisition of the former matrimonial home, in that he would not otherwise have been able to acquire it, and he was the registered proprietor of the property before he met the [wife], although it was accepted he had no excess of assets over liabilities at the commencement of cohabitation.

89While the increase in the value of the property is very largely attributable to market forces, for the [wife], it was accepted that the [husband] must be given substantial credit for this.

90I have concluded that on the basis of contributions, overall, the property should be divided between the parties as to 20% to the [wife], and 80% to the [husband], which was what was sought by the [wife] in this regard.Section 205ZD(3) factors

91Pursuant to s 205ZG(4)(e) of the Family Court Act 1997, I must take into account the matters referred to in s 205ZD(3) of the Act so far as they are relevant, and adjust any distribution based on contribution to ensure that the division of property between the parties is just and equitable.

92The [wife] sought an adjustment of 10% in her favour for these factors and sought between $70,000 and $80,000. The [husband] did not specifically refer to this issue.

93The [wife] is 36 years old and the [husband] is 37 years old. Both are in good health and there was no suggestion that they are not capable of employment, although the [husband]’s general practitioner has said he has been suffering from “severe anxiety and stress” relating to the court proceedings. The [wife] has received some psychological treatment in the past.

94The [wife]’s evidence was that her income presently comprises part‑time earnings of $522 per week gross ($446 net), plus a family tax benefit of $197 per week. She was not actually receiving any child support payments from the [husband]. Having regard to her child care responsibilities, she is fully exercising her earning capacity.

95The [husband]’s position was that he was earning approximately $136 per week from his business. According to his financial statements, the first being filed on 15 March 2005, his income has varied with a high of $620 per week. His position is that he is able to deduct, from his business income, a number of expenses since he works from home. At the moment, and for some time, he clearly has not been fully exercising his earning capacity. His commitments, according to his last financial statement, are mortgage payments of $500 per week, rates, and nothing else, which is clearly inaccurate. I have concluded his reasonable earning capacity, taking into account his commitment to care for the child, as being at least $600 per week.

96Neither party has any commitments to support any other person other than the child of the relationship, apart from any obligation the [husband] has to support his present wife. There is no evidence to suggest she is not able to support herself.

97While the [wife] is working, earning a reasonable income, her income earning capacity is affected, to a fairly limited extent because of the nature of her work and the sharing of the child’s care, by her obligations to care for the child of the parties. The [husband]’s earning capacity is so affected, to a lesser extent.

98Neither party has any significant superannuation entitlements, and their modest entitlements are at a similar level.

99The [wife] has been sharing accommodation with her brother [Ronald]. I do not know if this is still the case. Her parents live in [the Eastern states] and she returns to [the Eastern states] to visit them regularly. The [husband] has remarried and his wife has been in employment. If she is in Australia, she should be able to contribute to the expenses of the household.

100It was not suggested that any payment made would improve the [wife]’s earning capacity.

101The [wife] has, after an initial period of shared care, had the primary care of the child of the parties, with minimal financial support from the [husband], and having regard to the [husband]’s attitude, this is likely to continue to be the case. When challenged on his lack of responsibility in this regard, he said he put $500 to $600 in an account for the child. He obviously resents paying the [wife] anything.

102Having regard to this, in particular, I accepted that there should be payment of a further $70,000 which is an adjustment for s 205ZD(3) factors of about 13.5% to take the [wife]’s entitlement to about one-third of the asset pool. (I appreciate this is a marginally greater percentage than mentioned when making the orders.) The [wife] would then receive net assets of about $69,000, and the [husband] assets regarded as being about $136,667.

Effect of orders and the fourth step

103In the event the property was divided on this basis, the position would be as follows:

[wife]	[husband]
[The home at the suburban address]	365,000
[Motor vehicle]	3,000
[Motor vehicle]	500
[Motor vehicle]	(E)2,500
Furniture and chattels	800	800
3,800	368,800
Car loan	4,800
Mortgage at separation	128,633
Loan to parents at about time of separation	33,500
Net assets	-1,000	206,667
Payment to be made:	+70,000	-70,000
69,000	136,667
Superannuation	13,942	12,172

104Both parties will retain substantial liabilities to their parents, currently of a similar amount of about $30,000 to $35,000. The [husband] will retain a number of other liabilities which I determined should not be included in assessing the net asset pool, but I accept are probably owing.

105In addition to the additional sum owing on the mortgage of about $88,000, these total, approximately, about another $40,000, including some additional minor legal fees. The [wife] will also have a modest credit card debt to meet.

106I appreciate that the reality of the situation is that the [husband] may then have only minimal, if any, excess of assets over liabilities, subject to any arrangements with his parents, and their validity.

107Subject to any costs order, the [wife] will have only about $40,000 once her parents are repaid. For the reasons I have referred to in this judgment, I have concluded that, in the circumstances, this is a just and equitable division of the parties’ property.

I certify that the preceding [107] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate