M & M
[2006] FMCAfam 424
•23 August 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| M & M | [2006] FMCAfam 424 |
| FAMILY LAW – Property – marriage of 25 years in duration – assessment of contributions – parties primary producers – relevance of husband’s failure to make full and frank disclosure of his financial position – relevance of financial contributions made by husband to children not of the marriage – parties both suffering health limitations and having limited employment skills – assessment of s.75(2) factors – just and equitable. |
| Family Law Act 1975 – ss.75(2), 79 Federal Magistrates Court Act 2000 – s.42 |
| Lee Steere v Lee Steere (1998) FLC 91-626 Ferraro v Ferraro (1993) FLC 92-335 Clauson v Clauson (1995) FLC 92-595 Wardman & Hudson (1978) FLC 90-466 Robb & Robb (1995) FLC 92-555 Russell v Russell (1999) FamCA 187 Danielian & Danielian [2003] FamCA 473 Waters & Jurek (1995) FLC 92-635 Briese & Briese (1986) FLC 91-713 Black & Kellner (1992) FLC 92-287 Weir & Weir (1993) FLC 92-338 Kennon & Kennon (1997) FLC 92-757 Townsend & Townsend (1995) FLC 92-569 England & England [2005] FMCAfam 204 Smith & Smith (1991) FLC 92-261 |
| Applicant: | G M M |
| Respondent: | G M |
| File number: | DNM345 of 2005 |
| Judgment of: | Brown FM |
| Hearing date: | 9 and 14 August 2006 |
| Delivered at: | Darwin |
| Delivered on: | 23 August 2006 |
REPRESENTATION
| Counsel for the Applicant: | Ms Terry |
| Solicitors for the Applicant: | Janet Terry Barrister & Solicitor |
| Counsel for the Respondent: | Ms Davis |
| Solicitors for the Respondent: | Davis Norman |
ORDERS
That within 60 days of the date of these orders the husband pay to the wife the sum of $215,000.00.
That contemporaneously with Order 1 hereof the wife transfer to the husband, at the husband’s expense, the whole of her right, title and interest in the following properties:
(i)**** C P Road T W being Lot * Hundred of C from Plan LTO **/*** and being the whole of the land contained in Certificate of Title Volume ** Folio ***
(ii)**** C P Road T W being Section **** Hundred of C in Registered Plan LTO **/*** and being the whole of the land contained in Certificate of Title Volume *** Folio ***.
That upon the transfer of the properties referred to in Order 2 hereof the husband shall forthwith discharge the mortgage to Northern Territory Housing Commission and the Commonwealth Bank of Australia secured against the aforesaid properties and shall obtain the removal of the wife’s liability to pay any and all liabilities pursuant to the said mortgages.
That the wife is declared the owner to the exclusion of the husband of:
(i)the 2002 Kia Rio Reg No. ******
(ii)the AXA shares in her name
(iii)the AXA Flexipol Benefit Progress Policy.
That the husband is declared the owner to the exclusion of the wife of:
(i)the 1986 Toyota Hilux 4WD.
That the husband within 28 days of the date hereof:
(a)pay direct to the Australian Taxation Office the sum of $3,201.25 owing by the wife for her tax for the 2004/5 financial year;
(b)procure the wife’s release from liability for all debts owing to CBFC Limited.
That the partnership trading under the name or style “G and G M” be dissolved effective 1 July 2006.
That the husband indemnify the wife in respect of all taxation due by her arising from the partnership referred to in the preceding order hereof for the financial year ending 30 June 2006.
That the husband is declared the owner to the exclusion of the wife of the contents of the joint Commonwealth Bank of Australia account.
The wife is declared the owner to the exclusion of the husband of the joint National Australia Bank account.
That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:-
(a)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date;
(b)Each party hereby forgoes any claim they may have to any superannuation benefits belonging to or earned by the other;
(c)All insurance policies to become the sole property of the owner named thereunder;
(d)Each party be solely liable and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
That in the event that either party refuses or neglects to comply with the provisions of these orders:
(a)the Registrar of the Family Court of Australia at Darwin is hereby appointed to execute all deeds and documents in the name of the defaulting party.
That all applications do otherwise stand dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
DNM345 of 2005
| G M M |
Applicant
And
| G M |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to the division of matrimonial property. The parties to the proceedings are G M M “the wife” and G M “the husband”.
The parties began to live together in mid 1980 and married in Berry Springs, near Darwin, on 30 June 1984. They finally separated on 29 January 2005, when the wife left the parties’ former matrimonial home.
The marriage produced two children, M I M born 24 September 1981 and N F M born 22 June 1986.
During most of the parties’ relationship, they lived at a property located at C P Road, T W. At this property, the parties operated a market garden and later a mango orchard. They produced eggs, mangos and other farm produce. In addition, the husband bought and sold caged birds and wholesaled birdseed. The parties derived their income from the operation of what both describe as “the farm”.
The farm and the plant and equipment to operate it – a tractor, sprayer, slasher, cool room, packing equipment and the like – are the parties’ most significant assets in financial terms. Although both parties have worked very hard, over many years, to acquire the land and plant, it seems unlikely that there will be sufficient assets to meet both parties’ future financial needs.
Both parties leave the marriage with few skills, other than those acquired working on the farm and both have health problems. The wife suffers from a depressive illness and an associated anxiety disorder. She is not able to work at present. The husband has degenerative changes in his lower back.
Ideally the husband would like to retain the farm and continue to work it. The wife has no objection to this but requires the husband to pay to her a sum of money for her interest in the farm. The parties are in vehement dispute as to what that sum of money should be. From the husband’s perspective, he will have to borrow the required sum against the security of the farm. It is possible it will be difficult for him to persuade any lending institution to loan him the required sum. It is his position that he does not have any great degree of financial latitude.
If the husband cannot raise the necessary sum, clearly the farm and its plant will have to be sold. The husband fears this will be a mutual disaster for both parties. Firstly, from his point of view, he will be deprived of the only means by which he is likely to be able to make a livelihood in future. Secondly, from the wife’s point of view, he fears that, if sold, the farm and plant are unlikely to realise their full market value at the present time and the costs of sale will be high, particularly if the plant is sold in a “fire sale”.
Accordingly, the size of the sum required to purchase the wife’s interest in the farm is of crucial importance to both parties. The husband hopes it will be of sufficient magnitude to allow him to borrow it. From the wife’s point of view, she wishes to have a large enough sum to be able to purchase some accommodation for herself and N. Given the extent of the parties’ assets and their current income earning capacity, it may be difficult to achieve both these objectives. For these reasons, the case is a difficult one, which presents no easy solution.
The husband is, ostensibly at least, not particularly adept at the keeping of financial records, so far as the farm is concerned. He claims the farm is currently running “in the red”, leaving him living very much from hand to mouth, reliant on financial assistance from family and friends and presently unable to pay the recurrent mortgage on the farm itself.
The wife does not accept this. It is her position that the farm is a viable and profitable concern and the husband has actively tried to conceal his true financial position, both from her and the court. She asserts the husband has, at best, been uncooperative or, at worst, deceitful in the provision of financial documents to her and the court and, as a result of the stance he has adopted in these proceedings, the court should infer his financial position is stronger and his income more reliable than he currently asserts. Whereas, on the other hand, because of her poor state of health and the fact that she is currently in receipt of social security payments, it is the wife’s position that her financial position is precarious.
M has a family of her own and is financially self-supporting.
N however has just started the first year of a bachelor of science degree at the Charles Darwin University. She has lived with the wife since the parties separated. Neither the wife nor N herself have pursued the husband for financial support for N whilst she is attending university. Although N receives a youth allowance, she remains somewhat financially dependent upon her mother and is likely to remain so for the next few years.
When the parties met, the wife had been in a previous relationship and had two children from that relationship, R A R and M P R. These two children lived with the parties during their marriage. R leaving home in 1988 and M leaving home in 1994. As a matter of law, Mr M had no legal obligation to support R and M, but he did provide financial support for them both.
In addition, for at least some time, the husband’s parents also lived with the parties. It is the wife’s position that she provided a significant level of care to the husband’s parents. The parties are in dispute as to how their various contributions made and to be made for N, in the period after the parties’ separation and in future and towards R and M and the husband’s parents during the marriage, should now be taken into account in these proceedings.
There are some disputes between the parties as to the extent of the pool of property available now to be divided between them. But a common valuation obtained in respect of the land and the farming plant has resolved the most serious areas of dispute between the parties. The pool of property is somewhere in the vicinity of $400,000.00. It is the wife’s position that she should receive 60% of this sum. She calculates the monies due to her as being $226,363.25.
The husband also asserts that he should receive 60% of the parties’ nett assets, if his preferred position is adopted by the court and, in particular, he retains the farm, he calculates he would be required to pay the sum of approximately $150,000.00 to the wife. At this stage, it would be the preference of both parties that the farm not be sold.
These proceedings are designed to resolve the various disputes between the parties and finalise their financial relationship with one another. In particular, the farming business is operated as a partnership. It will be necessary for this partnership to be dissolved. It is the wife’s position that the husband has failed to properly account to her for the operation of the partnership since the parties separated. There are also some issues relating to tax payable by the wife in respect of the partnership and who of the parties should pay that tax.
Documents relied upon
The wife commenced these proceedings by way of an application filed 10 August 2005. At trial she relied on the following documents:
i)An affidavit of herself filed on 4 July 2006;
ii)A statement of her financial circumstances filed on 4 July 2006;
iii)An affidavit of her treating doctor, Dr Ash Sankarayya filed 3 August 2006.
The husband responded to the wife’s application on 19 September 2005. At trial he relied on the following documents:
i)An affidavit of himself filed 24 July 2006;
ii)A statement of his financial circumstances filed 24 July 2006;
iii)An affidavit of his treating doctor, Dr Ash Sankarayya filed 8 August 2006.
As can be seen, both parties have a common witness, Dr Sankarayya. It seems he has been both parties’ treating general medical practitioner over many years. Both the wife and the husband wished to call him to give evidence as to their respective medical condition and fitness to undertake paid work.
Given the adversarial nature of these proceedings, this caused me some concern. However, neither Ms Terry, counsel for the wife nor Ms Davis, counsel for the husband objected to Dr Sankarayya giving evidence and being cross-examined by the opposing counsel in respect of the medical reports he had separately provided in respect of the wife and the husband. Neither party sought to adduce additional evidence from Dr Sankarayya, in support of their respective client apart from that contained in the affidavit filed on his or her behalf and each chose to confine cross-examination to the contents of the other’s report.
In addition, counsel for each party provided a minute of the final orders sought at the commencement of the hearing on 9 August 2006.
In the wife’s case, she seeks the following orders:
“1.That the wife is declared the owner to the exclusion of the husband of:
(i)the 2002 Kia Rio Reg No. ******
(ii) the AXA shares in her name
(iii) the AXA Flexipol Benefit Progress Policy
2.That the husband is declared the owner to the exclusion of the wife of:
(i)the 1986 Toyota Hilux 4WD
3.That the husband forthwith deliver to the wife the following:
(i)the wife’s jewellery namely one diamond friendship band, one 3 diamond wedding ring, one 7 diamond ring in the shape of a crown and 4 pairs of earrings
(ii)the old school satchel containing photographs of the wife and her parents
(iii)the bird book belonging to the parties’ daughter N
(iv)the wife’s medical textbooks
(v)the 3 computer leads
4.That the wife forthwith deliver to the husband the following:
(i) the husband’s jewellery
5.That the husband sign all documents required to transfer to the wife his interest in National Australia Bank Account.
6.That the husband within 28 days of the date hereof:
(a)pay direct to the Australian Taxation Office the sum of $3,201.25 owing by the wife for her tax for the 2004/5 financial year;
(b)pay direct to Janet Terry Trust Account the amount of $10,000.00 to be held on account of tax payable by the wife for the 2005/06 financial year insofar as it is attributable to the partnership;
(c)pay direct to the wife an amount of $226,363.25;
(d)procure the wife’s release from liability for all debts owing to CBFC Ltd
7.That the partnership trading under the name or style “G and G M” be dissolved effective 1 July 2006
8.That contemporaneously with the husband complying with Order 5 the wife shall sign all documents required to transfer to the husband at the expense of the husband the whole of her right title and interest in:
(i)* C P Road T W being Lot * Hundred of C from Plan LTO **/*** and being the whole of the land contained in Certificate of Title Volume ** Folio ***
(ii)**** C P Road T W being Section **** Hundred of C in Registered Plan LTO **/*** and being the whole of the land contained in Certificate of Title Volume *** Folio ***.
9.That contemporaneously with the husband complying with Order 6 the wife sign all documents required to transfer to the husband her interest in the Commonwealth Bank Account No. ***** ********.
10.That the husband shall at the time of the said transfer refinance into his sole name the loans secured over **** C P Road by mortgage No. ****** in favour of Northern Territory Housing Commission and ****** in favour of National Australia Bank Ltd and the loan secured over **** C P Road by mortgage No. ****** in favour of Commonwealth Bank of Australia.
11.That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:-
(a)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date;
(b)Each party hereby forgoes any claim they may have to any superannuation benefits belonging to or earned by the other;
(c)All insurance policies to become the sole property of the owner named thereunder;
(d)Each party be solely liable and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
12.That in the event that either party refuses or neglects to comply with the provisions of these orders:
(a)the Registrar of the Family Court of Australia at Darwin is hereby appointed to execute all deeds and documents in the name of the defaulting party”
In the husband’s case he seeks the following orders:
“1.That the Wife transfer to the Husband all of her right title and interest in the properties situated at **** and **** C P Road, T W.
2.That contemporaneous with Order 1 hereof that the husband pay to the Wife an amount of 40% of the parties net asset pool or $150,000.00.
3.That each party return to the other personal belongings of the other party or extended family.
4.That the Husband pay and indemnify the Wife in relation to any taxation liability standing in the Wife’s name incurred as a result of the parties mango business.
5.That the partnership trading under the name “G and G M” be forthwith dissolved.”
The legal principles to be applied and the issues in the case
The process to be followed for the division of the parties’ property is well established by law.[1] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.
[1] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[2] The parties attended two conciliation conferences prior to this matter being fixed for hearing. In part, these conciliation conferences were unsuccessful due to the failure of the parties to agree on the value of the T W farm and the plant on it.
[2] See Wardman & Hudson (1978) FLC 90-466
On 11 July 2006, following an application by the wife, I made orders regarding the updating of a valuation obtained by the husband in respect of the farm and that a valuer attend at the property to value items of plant nominated by the wife. The expense of these two valuations was to be paid from joint matrimonial funds. This order has resulted in the following valuations coming to hand:
·The combined value of lots **** and **** C P Road, T W is $351,000.00;[3]
·The value of the plant on the farm is $62,330.00.[4]
[3] See Exhibit “B”, letter from John Morgan dated 8 August 2006.
[4] See Exhibit “A” valuation report of David Loveridge dated 2 August 2006.
In his valuation report, Mr Morgan notes that he has not been able to examine any comparable recent sales of properties in the T W area, with mango plantings, because there have in fact been no such recent sales. Mr Morgan also notes that there are currently many such properties for sale. He goes on in his recent report to opine as follows:
“This opens up a serious question as to why and the obvious answer is that unless the property comprises a large mango planting, it is virtually uneconomic/non-viable to continue to harvest this crop.
We note that many of the planted properties that have sold in the past have since had the plantings grubbed by the purchaser, which indicates that the plantings add no value and may in fact have been an impediment to the sale.”[5]
[5] See Mr Morgan’s report at page 2
Mr Morgan’s valuation includes an allowance for the mango trees, which are planted on the farm. However, if the land was sold on the basis that it was unplanted, it would possess a considerably lower value. In addition, Mr Loveridge, who valued the plant on the farm noted in his report that the values he has calculated for the various items of plant and equipment should be reduced in the order of 35% in the event of a forced sale. As a result of these matters, Ms Davis, counsel for the husband urges me to exercise “extreme caution” in respect of these two valuations.
Other areas of controversy between the parties, in respect of valuation issues, include the following matters:
·What value, if any, should be given to the caged birds kept by the husband at the farm?
·What value, if any, should be given to items of jewellery in the respective possessions of the parties?
·Should the items of jewellery and the birds be taken to effectively cancel each other out, as the husband contends?
·Does any fault or omission attach to one or other of the parties in the respect of the failure to obtain an appropriate valuation of the jewellery items and does this have any evidentiary consequences in these proceedings?
·Is it appropriate that the court ascribe a “red book” value as the current value of the wife’s motor vehicle?
·Should a sum of money be “added back” in to the parties’ pool of assets to represent monies taken by the wife from the former matrimonial home on separation?
·Should the wife’s taxation liability due to the partnership’s income for the year ending 30 June 2005 be listed as a joint matrimonial debt? If so, should a similar amount be included as a joint debt attributable to the husband’s liability?
·Should a sum of $5,935.00, representing a cheque received by the husband for the sale of mangoes in February of 2005 be included in the parties’ pool of assets?
Secondly, I must ascertain the contributions which each party has made towards those assets. Contributions fall into two broad categories. The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.” It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
This second step also occasions controversy between the parties in the following areas:
·It is the wife’s position that the parties’ respective contributions, during their long marriage, both working on the farm and providing care for M and N, should be regarded as essentially equal;
·On the other hand, it is the husband’s position that his contributions, particularly in the form of his work on the farm, are substantially greater than those of the wife and so call for a weighting in his favour in the distribution of the parties’ property;
·It is the husband’s position that he, although under no obligation to support them, provided significant financial support for R and M. Accordingly, it is his position that he is entitled to significant credit for these contributions.[6] A central question in this case is how those contributions are to be assessed.
·It is the wife’s position that she has made significant post-separation contributions, in the period of approximately 18 months since the parties separated, principally in the form of parental care and financial support for the parties’ child, N. She has made these contributions whilst in straightened financial circumstances. Whilst, on the other hand, the husband has maintained control of the parties’ assets and the income they produce. It is the wife’s position that the husband has failed to account to her properly for this income;
·The wife also points to the homemaking duties she performed for the husband’s parents, whilst they lived with the parties, as significantly counter-balancing the husband’s financial contributions made towards the support of R and M.
[6] See Robb & Robb (1995) FLC 92-555
Accordingly, at the end of the second step of the court’s deliberations, it is the wife’s position that the parties’ various contributions should be assessed in percentage terms as being 50/50. On the other hand, it is the husband’s position those contributions should be assessed as being 55/45% in his favour.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2) (o), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. In the main, section 75(2) deals with the prospective needs of the parties. This area too, occasions controversy between the parties in the following areas:
·The wife points to the fact that she is currently in receipt of Centrelink benefits and is suffering from depression and an anxiety disorder as being factors in her favour in terms of her need to receive an additional portion of the parties’ assets;
·In addition she points to the fact that she left school at an early age and has no formal qualifications. As a consequence, it is her position that she will find it very difficult to join the paid workforce in the foreseeable future and, at best, will only be able to achieve a low-paying job;
·On the other hand, the wife asserts that the husband is likely to be able to retain the farm and so will have a steady source of income from it. She concedes the husband has some physical problems with his back but points to the fact that he has been able to manage the required work on the farm up to this point and is likely to be able to do so in future;
·It is the husband’s position that the wife has acquired useful and marketable skills, whilst working on the farm, particularly in doing accounts and bookwork for a small business, as well as a significant amount of horticultural knowledge. Accordingly, he believes the wife has a significant capacity to earn an income in future in one of these fields;
·The husband asserts that the wife’s medical complaints are transitory and are likely to resolve in the near future, particularly when these proceedings are completed. On the other hand, he argues that his back problems are chronic and render him unlikely to be able to undertake paid work in future.
As a result of these various factors, the wife asserts that she is entitled to a further distribution, in her favour, of the parties’ martial assets in the vicinity of 10%. On the other hand, it is the husband’s position that the various factors, which he cites, call for a further distribution of 5% of the marital assets in his favour.
Although the husband argues that his financial contributions made in respect of R and M should be assessed pursuant to section 79(4) (c ) of the Act, as R and M are technically not children of the parties’ marriage, it seems clear that this contribution must be considered pursuant to section 75(2)(o) of the Act.[7]
[7] See Robb & Robb (supra)
Finally in determining what order the Court should make under section 79, the Court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the Court must consider.[8]
[8] See Russell v Russell (1999) FamCA 187
In following the various steps required of me pursuant to section 79 of the Family Law Act, I bear in mind what was said by the Full Court in Danielian and Danielian[9] as follows:
“The task of the court in proceedings under s 79 is not akin to an accounting exercise. The task is to examine the facts of each case carefully to decide what is appropriate and just and equitable in the circumstances. There cannot be expected to be a universal answer to that question on any given set of facts. It is of the essence of judicial discretion that different minds may comfortably arrive at different conclusions. By and large, marriage is a joint venture where parties can expect to buffer each other from the winds of misfortune that blow during the course of their relationship. The degree of the buffer may depend on how much individual sailing they do without consultation or indeed contrary to the wishes of the other. But there can be no certain answer to how much that should be when applying s 79 principles.”
[9] Danielian & Danielian [2003] FamCA 473 at paragraph 49
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[10] or of equalisation of assets or financial resources.
[10]See Waters & Jurek (1995) FLC 92-635 at 82,375
At the outset, I am at pains to point out to the parties that the task I must undertake is not a simple accounting or arithmetical task. In the jargon of the times, I cannot “crunch the numbers” to come up with a division of their property, which is not open to challenge or incapable of different interpretation. The task, set out for me in this case, requires me to balance and compare contributions which are by their nature different. The discretion I have is a wide one.
The parties to property proceedings brought under the Family Law Act 1975 in this court, are under a duty to make a “full and frank disclosure” of their financial circumstances.[11] This duty has been described as being “fundamental to the whole operation of the Family Law Act in financial cases…”.[12] In Weir & Weir the Full Court of the Family Court said as follows:
“…the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contributions, or to properly assess section 75(2) factors.”[13]
[11] See Federal Magistrates Court Rules at Rule 24.03
[12] Per Smither J in Briese & Briese (1986) FLC 91-713 cited with approval by the Full Court in Black & Kellner (1992) FLC 92-287 at 79,133
[13] Weir & Weir (1993) FLC 92-338
Accordingly, the duty to make a full and frank disclosure, in financial matters brought under the Family Law Act 1975, does not arise merely by virtue of the rules or practice of the court but rather is a fundamental rule of law, which arises because of the necessity for the court in each property proceeding to consider all aspects of the financial circumstances of the parties concerned.[14]
[14] See Luciano & Luciano (unreported) Family Court (O’Ryan J delivered 8 May 2000) at paragraph 373
In appropriate cases, there may be adverse consequences for a party, if it can be shown that he or she has deliberately failed to make a proper disclosure of some material financial fact. Such a non-disclosure may result in the court drawing an adverse inference against the party, who has not made a proper disclosure. In Weir & Weir[15] the Full Court said as follows:
“It seems to us that once it has been established that there has been a deliberate non-disclosure…then the court should not be unduly cautious about making findings in the favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature…We should have thought that the courts jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.”
[15] See Wier & Wier (supra) at 79,593
The evidence
The husband was not a satisfactory witness. I accept that English is not his mother tongue. I also accept that he cannot be described as a sophisticated business person and it is clear that he does not have a high level of accounting skills. However, notwithstanding these difficulties, I am confident in the finding that he was deliberately uncooperative with the process of adjudication required by this court and failed to be frank in his dealings, both with the court and the wife, and indeed those advising her. I believe Mr M deliberately failed to provide copies of his financial records, which were germane to these proceedings and which had been requested by the wife’s solicitors.
The difficulties begin with the husband’s statement of financial circumstances. This document was filed with the court on 24 July 2006. However, the document bears as its swearing date the 19th of September 2005. Mr M himself could not explain this discrepancy. The error is likely to be attributable to his solicitor, as an earlier statement was sworn on this date and no doubt the subsequent statement was created by amending the prior document.
Much of the first statement of financial circumstances was not particularly helpful. In it, the husband indicated he did not know what his average weekly income or total personal weekly expenditure was. In terms of his income from a business or partnership, the following has been written against the relevant printed heading:- “nil income at present”
In her final submissions, counsel for the husband conceded her client’s second financial statement, which was the one he relied upon in these proceedings, was “all over the place”. I agree with that assessment. Certainly it does not gel with Mr M’ oral evidence. He spent a significant proportion of his evidence disowning the document and much of its contents. No-one provided me with any explanation as to why the document was “all over the place”, as Ms Davis described it.
The second statement of financial circumstances gives the husband’s estimated weekly wage, before tax, as $100.00 and his estimated weekly income from what is described as “G & G M Mango Farm” as $807.00. This equates to an income of about $47,000.00 per annum. In addition, the husband gives as his weekly amount of taxation payable the sum of $90.00; indicates that he has a liability to the TIO of $276.00 per week in respect of the parties’ home loan; and also indicates he is paying a sum of approximately $80.00 per week in respect of a Commonwealth Bank Visa Card.
In his oral evidence, the husband indicated that he had no income from any sources. He denied deriving any income from the sale of bird seed; doing welding; or from the sale of farm produce or mangoes. He indicated he was reliant on borrowings from family and friends to survive financially. However, his statement of financial circumstances disclosed no loan details or debts to such people and he did not reveal the actual identity of any of the people from whom he had purportedly borrowed money. In cross-examination he deposed that he “did not know how [he] came up with the figure of $807.00”.
In addition, the husband denied that he held a Commonwealth Bank Visa Card. In his evidence, he indicated that he only had a credit card with the National Australia Bank. He provided a single statement in respect of this credit card to Ms Terry, counsel for the wife, on the morning scheduled for the hearing to begin. He denied ever having paid any sums of money onto this particular credit card and when asked why he had provided only one statement page, he indicated that he “thought one page was enough”.
In addition, the husband confirmed that he had not been paying the parties’ mortgage on the farm property for some time because he did not have sufficient income to pay it. During his evidence, the husband frequently said that he had “no money”. He denied the existence of any bank accounts in his name other than a Commonwealth Bank account of which the wife is aware.
At separation, the parties held approximately $27,800.00 in a joint account. On 2 February 2005, the husband withdrew $26,000.00 of this sum and placed it in a Commonwealth Bank account in his sole name. The wife has provided some of the pages of the recurrent statement for this account in her affidavit material.[16] She has copies of the February, March, April, May, June, October, November and December 2005 statements. On the day of the hearing, the husband provided to her copies of the statements for March to July of 2006. Statements for June, July and September of 2005 and for January and February of 2006 are missing.
[16] See Annexures “C” and “D” to the wife’s affidavit filed 4 July 2006.
Between February and 28 June 2005, no deposits were made into the account and it was reduced to $7,258.88. On 1 October 2005, the account was reduced to approximately $300.00. However, in October of 2005, various sums to an amount of $32,893.00 were deposited into the account.
By March of 2006, the balance of the account was just over $7,000.00. A further sum of $13,343.05 was deposited into the account on 3 April 2006. The last balance available for the account was on 31 July 2006, indicating a balance of $5,158.90.
I am satisfied that the various deposits made into the account largely represented income derived by the husband from the sale of mangoes. I reach this conclusion because a number of deposits are indicated as being from Walkers International and Lamanna Adelaide. I understand both these entities are produce wholesalers.
In the Northern Territory, the mango season has two distinct phases. Firstly, some mangoes are produced in August/September. These are described as “early fruiting mangoes” and receive a premium price. However, the main component of the season is in November/December.
The husband denied that he had any such early fruiting trees. It was his evidence that his crop mainly was produced during the main part of the season. Accordingly, one would expect him to receive payment for his crop in the early part of each year. In my view, it is too convenient a coincidence that the husband has not provided his bank statements for January and February of 2006, when I would anticipate that he would have received payment for his crop. The husband was unable to provide any satisfactory explanation as to why the statements for this period were not available.
It is the husband’s evidence that the mango season for 2005 was a very poor one, both for him and the Northern Territory generally.[17] In his oral evidence, the husband deposed that although he had produced a crop, it had cost him more to produce the crop than what he had received from selling it. Apart from his bald assertion of this fact, the husband has provided no concrete evidence in support of it. The husband acknowledged that he kept records of the amounts he spent on fuel, fertiliser, picking expenses, and the like. He also acknowledged that he kept records of the amounts of money he received from time to time. However, he has not provided or produced any of these working records or done his tax return for the past financial year. Indeed, he has provided no tax records at all to give some sort of indication of the income produced by the farm in past years.
[17] See husband’s affidavit of evidence filed 24 July 2006 at paragraphs 27 and 28
In his evidence, the husband said he was “no good with paperwork”. This may be so. But in my estimation, the husband has a good idea of how the business is going and is quite canny where it is concerned. The husband acknowledged as much when he said “I don’t keep records but I have an idea how much it costs me to run the farm”. In the absence of a complete set of financial records, particularly recent bank statements, I do not accept that the farm is the financial liability the husband would have both the court and the wife believe it to be. Certainly, I do not believe that the business ran “in the red” in the period since the parties separated.
A case in point is the husband’s evidence in regard to the sale by him of bird seed, which was quite frankly implausible. The husband indicated he kept records of the bird seed he bought but not of what he sold. He acknowledged that he sold the bird seed for cash and when he purchased bird seed, he paid his supplier by means of a direct debit of cash into the suppliers account. He acknowledged that he sold bird seed to at least one pet shop in Darwin. However, the husband asserted he made no profit from the various transactions involved and was involved in the business only as a means to provide seed for his own birds. I do not accept that the husband would go to this trouble if there was not at least some potential for profit to him in it.
The husband also denied that he was presently engaged in buying and selling caged birds for profit. The husband asserted that he had stopped this practice just before the parties separated, as he no longer had time for it anymore in the absence of the wife. I doubt this evidence.
Counsel for the husband put to the wife in cross-examination that she had removed many thousands of dollars in cash from the former family home at separation. The wife denied that this was the case but in her affidavit material, acknowledged that she had taken the sum of approximately $2,800.00 in cash when she left the farm. On balance, I consider it likely that the farming business, the sale of bird seed and caged birds did produce amounts of cash from time to time, which were kept at the parties’ home. I have no reason to believe anything other than that this practice continued after the parties separated. In my view, it is to the wife’s credit that she acknowledges that she did take this sum of money when the parties separated.
Overall, the evidence of the husband left me with a sense of disquiet and caused me to doubt much of its veracity. The tenor of the husband’s affidavit material, so far as it described the wife, was of a mentally unbalanced person, who was unreliable so far as her evidence was concerned and who had chosen to launch a “malicious assault upon [him].” In my view, his evidence went beyond the natural tendency of former spouses, in proceedings such as these, to maximise the extent of their own contributions and minimise those of their former partner.
In her affidavit material, the wife characterised the husband as being “excessively controlling and at time violent.” She detailed a number of specific incidents, when the husband had been violent towards her. The husband categorically denied these matters and pointed to the fact that an application brought by the wife in the Local Court at Darwin for a domestic violence restraining order had been dismissed.
It is not necessary for me to definitively resolve this issue in these proceedings. The wife has not sought to bring any common law proceedings for damages as a result of any assault she alleges she suffered at the husband’s hand nor has she sought to claim that her marital contributions were provided in unduly arduous circumstances and so worthy of greater weight as envisaged by the Full Court in the case of Kennon[18].
[18] Kennon & Kennon (1997) FLC 92-757
I am of course not bound by the finding of the Magistrate in the Local Court. However, in this regard, I note that the husband referred to the wife as follows:
“G has a fixation about guns and commonly referred to in the T W community as “the crazy lady with a gun”. G often behaved in a very eccentric manner in our community.”[19]
On any view, the aim of this evidence is pejorative and designed to undermine the wife’s credibility.
[19] See husband’s affidavit of evidence at paragraph 17
As is to be anticipated, the wife has a different slant on this aspect of the evidence. It seems to be the case that in past years mango growers in the T W area were confronted with a wave of “mango duffing”. This would occur when thieves would raid orchards under the cover of night and steal grower’s crops. The wife sought to protect her and the husband’s crop by patrolling the farm at night time with a firearm. Her behaviour was written up in the local paper and she achieved some notoriety for it.
The husband acknowledged the truth of these matters. Whatever one thinks of the wife’s conduct, it seems she was motivated by a desire to protect the family’s interests and the husband has somewhat disingenuously removed a significant element of the matter in an attempt to discredit the wife.
The husband has very little of a positive nature to say about the wife in his affidavit material. The tenor of his evidence is that the wife did not perform anything exceptional in the way of work in and around the farm. This is in marked contrast to the wife’s evidence. In addition, the husband essentially accuses the wife of malingering, so far as her contention, supported by Dr Sankarayya’s evidence, that she is suffering from a depressive illness. In his affidavit, he deposes as follows:
“I do not believe that G has any health problems that affect her ability to work. G simply chooses not to work.”[20]
I doubt the objectivity of the husband’s evidence in this regard. On balance, I also think it likely that he has overstated the current extent of his physical difficulties for tactical reasons in these proceedings.
[20] See husband’s affidavit of evidence at paragraph 26
The husband’s affidavit material was brief and lacking in detail. In contrast, the wife’s affidavit material was detailed and thorough. She was able to provide a more comprehensive history of the parties’ partnership, although it seems clear that the husband has retained possession of the vast majority of the partnership records, particularly its working ledgers and bank records.
The wife struck me as an honest but somewhat emotionally fragile witness. Overall, where there is a conflict between the evidence of the husband and the wife, I prefer the wife’s evidence. For the reasons provided above, I regard her as the more reliable witness in the case.
a) Background
The wife was born on 12 October 1957 in New Zealand. She left school at the age of 15. She fell pregnant with her first child when she was 16. She arrived in Australia in 1979, where she obtained some work as a bar tender. She has not been part of the paid workforce since 1980.
The husband was born on 16 August 1959. Apart from this fact, he has provided very little details about his background. It seems he has skills as a motor mechanic and welder. However it is the case that he has not worked as a mechanic since 1978. At the time the parties met in 1980, he was working as a fencer. It seems he has had other miscellaneous work from time to time.
It is common ground between the parties that neither had any assets of significant value at the time they met. The wife had financial responsibility for supporting R and M as their father, G R, was uncooperative and unreliable so far as the payment of maintenance was concerned.
R lived with the parties between 1980 and 1988. M between 1980 and 1994. R is now 32 and self-supporting. Sadly, M died of leukaemia in 1996. It seems clear that the parties and R and M, and later M and N operated as a family. There is nothing in the evidence before me to suggest that the husband differentiated between R and M on the one hand and M and N on the other.
In 1983 the parties purchased a 23 acre block of land at Lot *, **** C P Road, T W. The block was largely unimproved and contained a rudimentary dwelling. In 1984, the parties began to grow vegetables for sale. Later, they began to keep chickens, which produced eggs for sale and pigs.
It is the wife’s evidence, which I accept, that she was closely involved in clearing the land for the market garden. It was back-breaking work, involving clearing trees and bushes by hand with a tomahawk. When the vegetable plots began to produce vegetables, the wife picked and packed the vegetables. When produce was being picked, this involved extremely long hours. The husband was involved in the actual selling of the produce and its transportation. In addition, the wife was predominantly responsible for domestic tasks and cooking for the family.
Between 1985 and 1990, the parties raised pigs and had up to 200 pigs on the property. They also had between 1,000 and 2,000 egg producing chickens. R and M were expected to contribute towards the constant labour required to run such a farm, which seems to have been labour intensive. R was required to feed, water and clean the pigs. Both children were involved in egg collection and tending the chickens.
Lot *, C P Road was purchased for $47,000.00 through the Northern Territory Housing Commission. The adjourning property at **** C P Road was purchased in 1989/1990 for approximately $30,000.00 through vendor finance. Around this time, the parties decided to turn the market garden into a mango farm.
Again, this was labour intensive work, which was largely done by hand. The wife and M were closely involved in it. From 1986 onwards, the husband began to complain of having a bad back. This resulted in the wife and children doing more and more of the heavy work around the farm. This included fertilising the mango trees and lifting sacks of feed. At some time in the mid 1980’s, the husband successfully applied for what was then described as an invalid pension.
In the early 1990’s, the husband decided to commence a business buying and selling caged birds. As a result, a number of aviaries were constructed at the farm. I accept the wife’s evidence that she assisted in the construction of the aviaries. The husband’s interest in birds led him to acquiring distribution rights in the Northern Territory for a Queensland based seed company. It is uncertain precisely when this distributorship was acquired but it was probably about 3 or 4 years ago.
As has previously been indicated, the income produced by this business, and indeed from the buying and selling of birds, is an area of dispute between the parties and one in respect of which the evidence is far from clear.
Again, as has previously been indicated, the extent of the husband’s disabilities, arising from his back injury, are a source of some contention between the parties. It seems the husband injured his back in 1984, when he was working for the Northern Territory Government, collecting abandoned car bodies. He apparently strained his back when lifting such a car body with some other employees.
The wife confirms that she has often seen the husband in pain from his back and does not doubt the intensity of this pain. She does not dispute that the injury was from time to time extremely debilitating for the husband. However, it is also her evidence that the husband was able to do a lot of work around the farm and she regarded him as being a hard worker. It is also her evidence that Mr M had a good relationship with R and M.
In regards to the husband’s back injury, what is clear is that in early 2002, Centrelink determined to withdraw the disability support pension from the husband, after reviewing the relevant medical material available to it. The husband was unsuccessful in his efforts to review this decision.
Although the husband was in receipt of a disability pension for many years and the wife was assessed as being able to receive an associated benefit, the parties apparently continued to receive an income from the operation of the farm. At some time in 2001, Centrelink reviewed this situation and formed the view that the parties had been overpaid social security benefits because they had not properly declared their income. The parties were jointly assessed to repay the sum of approximately $5,000.00 to Centrelink.
The wife’s evidence is that the husband refused to repay this sum and she, in order to avoid court action, paid the necessary monies from her accumulated child endowment payments, which she had a practice of saving. I accept the wife’s evidence in this regard.
In 1997, the husband’s parents came to live with the parties at the farm. There is some dispute about how long they stayed. It is the wife’s case that the husband’s mother stayed for about 10 months and his father for about 18 months. On the other hand, it is the husband’s position that his mother stayed about 4 to 5 months and his father for about 10 months. In this regard, for reasons already provided, I prefer the wife’s evidence. I also accept that she was primarily responsible for the cooking and cleaning, which arose from their stay.
It is also the wife’s evidence, again which I accept, that she did the necessary book work and accounting for the partnership during the marriage. These duties included posting accounts received in a ledger; keeping a cash book in respect of deposits and payments; sending out invoices for goods supplied and paying invoices for goods received. The wife also liaised with the parties’ accountant regarding the preparation of the partnership’s taxation returns, particularly business activity statements.
The wife described these as “basic” bookkeeping skills. I accept this is so. It is also the wife’s case that she no longer has access to the records which she kept and those which she assumes were maintained after the parties separated. The wife is likely to have a knowledge of the various sources of income for the partnership both in the period before the parties separated and afterwards. It is her evidence, which I accept, that prior to separation, the parties derived income from selling mangoes; selling birds and bird seed; selling eggs and grafted mango trees; and selling various types of produce at the Palmerston markets during the dry season.
The husband has not challenged this evidence in any way nor has he provided details of income produced by these activities. In his evidence, he simply refutes that he has any such sources of income. In particular, he denies selling birds for profit any longer; asserts that the sale of bird seed subsidises his own caged birds only; and denies he any longer trades at the Palmerston market. As has previously been indicated, it is his evidence that in the past year he produced mangoes at a loss. In the absence of any definitive records, I do not believe the husband’s evidence in this regard.
The wife concedes that the amount of income produced by the farm each year by way of primary production, particularly in respect of mangoes is variable. She asserts, in her affidavit material, the farm produced as follows:
Year
Gross income from mangoes
Nett partnership income
2003
$ 161,504.06
$ 44,982.00
2004
$ 95,920.30
$ 10,466.35
2005
$ 154,593.12
$ 50,000.00
The husband has not produced any documentary evidence to refute these figures. In addition, the wife estimates that the partnership earned approximately $20,000.00 per annum from selling bird seed. The husband disputes this figure but again has provided no documentary evidence to support his position.
In my view, the evidence is such that I am persuaded that the farm did produce a comfortable level of income for the parties through its various activities. Clearly, as with all primary production, there were good years and bad years. However, it seems one of the strengths of the parties’ particular business was its diversification. I also accept, in order to produce this income, both parties had to work very hard indeed.
There is some evidence to support the wife’s assertion regarding the profitability of the business. This evidence includes the fact that a sum of approximately $28,000.00 was in the parties’ joint account at separation. It also includes the fact that in the wife’s 2005 income tax return, she is shown as having earned $30,871.00. I accept her evidence that she has not received any of the direct benefit of this sum, having left the marriage in January of that year. No doubt this sum was attributed to her by the professional accountants who prepared the partnership’s tax returns. In this regard, it is to my mind telling that the husband had not as yet prepared the taxation returns for the financial year ending on 30 June 2006.
b) Events since separation
After the parties separated in January 2005, the wife and N lived in a women’s refuge. They have left this refuge but still live in supported accommodation in the Palmerston area. The wife has been in receipt of Centrelink benefits since the parties separated. However, these benefits have been reduced because the Department of Social Security consider that the wife has an income from the partnership business which she nominally operates with the husband. This partnership has not as yet been dissolved. I accept that the wife has not received any income from the business since the parties separated and, as a result, she has been struggling financially.
During 2005, N was completing Year 12 at Casuarina Senior College. It was necessary for her to take two years to complete Year 12 because during 2004, she contracted Glandular Fever and Ross River Virus. She continues to suffer symptoms as a result of these illnesses and is currently precluded from obtaining a part-time job.
At the present time, N has commenced the first year of study in a bachelor of science degree at the Charles Darwin University. She is entitled to receive a youth allowance. In time, she hopes to become a forensic entomologist. The wife describes her as a “bright young person”. If N is to be successful in her ambition to become a forensic entomologist, it will probably be necessary for her to study interstate. The wife anticipates that N has six or seven years of study before her.
I accept the wife’s evidence that, although N receives a youth allowance, she is still dependent upon her mother to some extent. I also accept that the husband has made no financial contributions towards N’s support in the period since the parties separated. In all the circumstances of this case, I can understand why both the wife and N herself would regard any attempt to enlist some form of financial support from the husband as being a fruitless task. Although N is now to be regarded as an adult, I also accept the wife’s evidence that she continues to provide a considerable level of parenting support for N and to provide for her on a day to day basis.
At the present time, Centrelink accepts that the wife is unable to either obtain paid employment or to undertake training to assist her to obtain such employment. It would be the wife’s preference to be able to take up paid employment sooner rather than later. However, she describes herself as being “frightened” and “lacking in confidence” at the thought of being in the formal paid workforce.
As I earlier noted, my impression of the wife was of a vulnerable person, who was not particularly emotionally robust. Accordingly, I accept that the wife would like to work, particularly so that she would have some level of financial independence but finds the prospect of getting a job extremely daunting. In this regard, she is particularly sensitive about her lack of skills and qualifications. She points to the fact that she is unable to use a computer and has never worked in an office. In future, she sees herself working outdoors, possibly in a nursery.
The husband suggests that the wife could easily obtain work in the mango industry. In this regard, it is interesting to note that the wife deposed that she has an allergy to mangoes, which manifests itself in skin irritations. During the parties’ marriage, she managed this allergy through the wearing of overalls and other protective equipment. However, it would now be her preference to avoid mangoes in future. I accept her evidence in this regard.
Due to her low level of income, the wife is currently living with N in shared accommodation, which was organised by the women’s refuge in Palmerston. It is the wife’s ambition to purchase some form of accommodation for herself and N, after these proceedings are concluded. It was not my impression that the wife overstates her difficulties. I accept that the end of the parties’ long marriage has left her feeling isolated and vulnerable.
The husband has not provided a coherent account of what he has done in the period since the parties separated. He asserts that since the parties separated he has “tried my best to keep everything together financially.” He has not provided any details in support of this statement. It is the wife’s position that the husband has failed to account to her for income received from the business since the parties separated. I accept this is so. It is the husband’s position that the past mango season was an extremely poor one. In general terms, I accept that this was so. However, in the absence of definitive records, I do not accept that it was as bad as the husband states and that the farm has lost all prospects of viability in the future.
In the absence of any definitive account from the husband and in the absence of documentary records, it seems to me likely that the husband has been running the various aspects of the partnership business in the usual manner in the period since the parties separated. In these circumstances, there seems no proper reason to explain why the parties’ mortgage to the Territory Insurance Office has increased in the period since the parties separated. The husband asserts that he has not been able to pay the modest required monthly payments of $239.50 because of straightened financial circumstances. I do not accept that this is the case. Rather, I think the husband has desisted from paying the mortgage payments in an attempt to portray himself as being impecunious.
It should be noted however that the husband has been able to pay monies due to CBFC Limited in respect of monies borrowed by the parties to purchase a tractor and cool room for use on the farm.
c) The evidence of Dr Sankarayya
Dr Sankarayya gave his evidence in these proceedings by means of a telephone line between his rooms and the court. He has been the parties’ general medical practitioner for about 10 years. At the request of each of the respective legal advisors for the parties, he provided brief reports in respect of the condition of the husband and the wife.
In regards to the husband, Dr Sankarayya reported that he had prescribed him anti-inflammatory and pain relief medication for back problems. Dr Sankarayya had not had these complaints radiologically investigated but assumed they were due to degenerative changes in Mr M’ lower back.
The doctor anticipated that these problems would worsen steadily as Mr M aged and were likely to preclude him from any strenuous physical activity, particularly heavy manual work. He conceded that Mr M had not consulted him in respect of back problems since 29 November 2002.
In this report concerning the wife, Dr Sankarayya wrote as follows:
“I was first consulted by Mrs M in my capacity as her general practitioner on 31st January 1997. I have seen her on 39 further occasions since that date.
Mrs M is currently suffering from a depressive illness of moderate severity with an associated anxiety disorder. She has been treated with counselling by myself and has been prescribed Avanza 30mg to treat the depression. Unfortunately she was not able to tolerate this medication due to side effects and remains without any substantive medical treatment for her depression.”[21]
[21] See Dr Sankarayya’s report annexed to his affidavit filed 3 August 2006 at paragraphs 2 and 3
Dr Sankarayya regarded the wife’s depression as being moderate in its severity. He did not consider referring her to either a psychiatrist or psychologist because he believe that he himself had appropriate skills to deal with such a level of depression. He also deposed that it was now thought to be counter productive for medical practitioners to too readily prescribe anti-depressant medication in such cases.
Dr Sankarayya was confident that the wife’s condition would improve in time, most probably when the current proceedings had been resolved and her own domestic situation had improved. He conceded that there was scope for a “dramatic” improvement for Mrs M if her personal situation changed. I accept that this is so and accept the validity of Dr Sankarayya’s evidence in respect of both parties.
The first step – the pool of assets
The only evidence available in respect of the value of the T W property and the plant on it, is in the form of the reports of the appropriately qualified experts, which have been tendered in the proceedings. Counsel for the husband urges me to be cautious about these valuations but it is not the position of the husband that the property and its plant be sold.
Obviously, an infallible means of ascertaining the current market value of these items of property would be to place them on the market and see what price they command. However, as neither party seeks such an outcome, I can see no other option but to attribute the values attributed by the relevant experts to the land and its plant as being the appropriate valuation methodology at this stage.
There is no expert evidence in respect of the husband’s collection of caged birds at the farm. In her affidavit evidence, the wife has provided a list of 481 birds, which she believes the husband owned at separation. She ascribes a value of $60,000.00 to these birds.
In his material, the husband ascribes a value of $15,000.00 to the birds in his statement of financial circumstances and in his trial affidavit a value of $10,000.00. In this latter document he deposes as follows:
“The birds that I have have been collected by me for several years. Bird collecting is my hobby since I was a young boy. I believe that my birds would have a maximum value of $10,000.00 although this would depend on being able to find buyers. I would dearly like to keep my birds.”[22]
[22] See husband’s affidavit of evidence at paragraph 5
I accept that there are likely to be difficulties in obtaining an expert opinion in regards to something as unusual as the husband’s collection of birds. Obviously to the cognoscenti of such things, a value would be readily apparent. I simply do not have any independent evidence in respect of the birds. Although I suspect that the husband is liable to minimise their value, I propose to ascribe the lower value he gives to them for the sake of these proceedings. It seems to me that it is likely to be impracticable for the birds to be sold in order to ascertain their market value.
There is no credible evidence before me to indicate that the wife expropriated a significant sum of jointly owned monies from the parties’ former matrimonial home at separation. She herself concedes that she took the sum of approximately $2,800.00 at separation. This sum has long been used for her and N’s day to day living costs and the provision of accommodation for them.
In my view, these monies have been disbursed and accounted for through legitimate expenses. In these circumstances, I do not think that the retention by the wife of this sum after separation and her use of the monies in the period since can be regarded as a “premature distribution” of marital assets to her in the sense used by Nicholson CJ in Townsend & Townsend.[23] Accordingly, I do not believe that this sum should be “added back” into the parties’ pool of assets.
[23] See Townsend & Townsend (1995) FLC 92-569 at 81,654
The issue of jewellery was a contentious one as far as both parties were concerned. The wife sought the return to her of a number of specific items. The husband had a similar request. Over the luncheon adjournment, I urged the solicitors concerned to have a round table discussion about the various items concerned, each of which was liable to have emotional significance for the party concerned.
The wife returned a number of items of jewellery to the husband. The husband indicated that he did not know where the items sought by the wife were now. In those circumstances, the wife did not pursue her application for the return of the items of jewellery she sought in her case outline document.
The wife had provided to the husband a list of items of jewellery in her possession. Some of these items were gifts to her from her first husband and other family members, which had been had been her possession prior to the parties commencing their relationship. When requested to do so, the wife provided a list of this jewellery to the husband’s solicitor.
Thereafter, there was an ineffectual exchange of correspondence as to how this jewellery should be valued. It was the wife’s position that she could not afford the expense of such a valuation and, if the husband required it, he should pay for it. In my view, the onus was on the husband to pursue the valuation but he did not do so. The fact remains the jewellery in question has not been valued. Accordingly, in my view, I cannot hypothesise about its value. In any event, I am not concerned that its omission from the parties’ pool of assets will result in any great injustice to one or other of the parties.
Each of the parties has a motor vehicle. In the husband’s case, he has a Toyota Hi Lux. He ascribes a value of $3,000.00 to this vehicle. The wife accepts this sum.
The wife has a Kia Rio motor vehicle. The wife ascribes a value of $5,750.00 to this vehicle. This value is derived from a “red book” value taken from the internet. The difficulty with such a value is that it is a generic one and does not allow for any specific qualities the vehicle in question may or may not have. The “red book” gives a range of sale prices, depending on the circumstances of the sale and the condition of the motor vehicle concerned.
In England & England[24] Roberts FM accepted such a “red book” value on the basis that it was the only evidence available in respect of the motor vehicle involved in the case. In other cases, other Federal Magistrates have adopted the process approved by the Full Court in Smith & Smith[25] and ordered the sale of the vehicle in question, as the only true means of ascertaining its value.
[24] See England & England [2005] FMCAfam 204
[25] See Smith & Smith (1991) FLC 92-261
In this case, the value of the wife’s motor vehicle is not likely to be of great significance in these proceedings, particularly when compared with the value of the real property concerned. I also suspect that if the wife’s vehicle was sold at auction, it would not necessarily reach the best possible price and the wife herself would suffer considerable hardship as a result of the loss of her vehicle.
Pursuant to section 42 of the Federal Magistrates Court Act 2000 the court is directed to proceed without undue formality and must endeavour to ensure that the proceedings before it are not protracted. In this case, the husband has not seen fit to obtain an expert valuation in respect of the wife’s motor vehicle.
The vehicle has been in the wife’s possession since 2003/2004. The husband ascribes a value of $8,000.00 to the vehicle but does not indicate how he has reached this sum. In all the circumstances and given the ethos the court is directed to have, it seems to me that the “red book” valuation provides the best and most pragmatic way of valuing the vehicle. I propose to adopt it.
The husband estimates the value of the household contents at Tumbling Waters as being $2,000.00. The wife accepts this valuation.
On 3 February 2005, a cheque in the sum of $5,935.50 payable to both parties was received from Walkers International in respect of a number of trays of mangos sold in Melbourne. In her affidavit material, the wife deposed that this cheque had not been banked and she had not been provided with any information regarding it. The husband deposed that the cheque had not been cashed and he believed that the monies were still owed to the partnership. In those circumstances, I propose to include the sum in the parties’ pool of assets but regard it as an item of property retained by the husband.
A considerable bone of contention arose between the parties regarding the contents of their joint Commonwealth Bank account. This was the account from which the husband removed $26,000.00 shortly after the parties separated. Thereafter the account was frozen, however on 11 July 2006, I ordered that this account be used to finance the updated valuation of the T W property and additional items of plant on it. Thereafter, I directed that the funds could be used to pay the parties’ joint liability to the firm of accountants which had provided accounting advice in respect of the operation of the partnership business.
I was told on the day of hearing that the balance on the account could be checked overnight and the relevant figure could be tendered as an agreed fact between the parties. Unfortunately the parties’ solicitors were unable to agree on what the appropriate figure was and the matter had to be relisted. The bone of contention was an amount which related to legal costs arising from a summons the lawyers for the accountants concerned has issued to recover their professional fees. The sum was $321.00.
The wife opposed the deduction of this sum from the account balance but she was prepared to include it as a joint liability. In my assessment the liability is most properly the husband’s responsibility, seeing he has had the benefit of the parties’ assets since separation and has had the means to pay the accountant’s bill as demonstrated by the Commonwealth Bank Account in his name.
Otherwise, the parties agree in respect of their other items of property. They are also in substantial agreement about their liabilities, particularly to the TIO in respect of the home mortgage and to CBFC Limited in respect of the business loan for the cool room and tractor.
I also propose to include the wife’s taxation liability for the partnership income ascribed to her for the financial year ending 30 June 2005. The husband has not provided any evidence in respect of whether he has a similar debt. In my view, the onus was on him in this regard and if he fails to discharge that onus, he does so at his own peril.
For all these reasons, I find that the parties’ pool of assets and liabilities available to be distributed between them is as follows:
Assets
$
T W Farm
$ 351,000.00
Plant
$ 62,330.00
Birds
$ 10,000.00
Husband’s car
$ 3,000.00
Wife’s car
$ 5,750.00
AXA shares
$ 2,045.00
AXA life insurance
$ 8,364.00
Household contents
$ 2,000.00
Walker International cheque
$ 5,935.00
NAB bank account
$ 647.89
CBA joint account
$ 3,497.28
Total assets:
$ 454,569.17
Liabilities
$
Legal costs
$ 321.00
TIO mortgage
$ 35,250.00
CBFC Limited loan
$ 9,332.90
Wife’s 2005 partnership liability
$ 3,201.95
Total liabilities:
$ 48,105.85
Net Assets
$ 406,463.32
I note that the wife has not sought to include in the parties’ pool of assets, the contents of the husband’s Commonwealth Bank account. The most recent statement in regards to this account gives a balance of $5,158.90, as at 31 July 2006.
The Second Step – Assessment of Contributions – Section 79 (4)(a) to (c)
I now turn to the second of the steps in the exercise under section 79, namely an assessment of the parties’ contributions within the context of section 79(4)(a) to (c). These provisions are as follows:
“Section 79(4) In considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, the court shall take into account –
(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 to the marriage 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 parties to the marriage or either of them;
(b)the contribution (other than a 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 to the marriage 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 parties to the marriage or either of them;
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of home maker or parent.”
Section 79(4) requires that the court look at the entirety of the contributions, both financial and non-financial, to the welfare of the family, as well as to the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation and improvement of any particular asset and may be taken into account generally as contributions in a total sense.
The task required of me pursuant to section 79(4) of the Family Law Act thus is to weigh and assess the disparate contributions of the parties to arrive at an outcome, which is both appropriate and just and equitable in all the circumstances. Contributions, which are different in quality and nature, must be compared. The exercise is not purely an arithmetical or accounting one.
The relationship and subsequent marriage between the parties was a long one, being almost 25 years in length. In terms of assets, the parties began their relationship from a low base. Everything they have subsequently acquired and achieved, in terms of their present level of property and wealth, has come about through mutual hard work and effort during their marriage.
I have no difficulty in reaching the conclusion that both parties lived frugally during their marriage and devoted their full efforts to safe guarding and improving their assets and providing for their family. They pooled their income and efforts for the common good of their family. It is difficult to see how one party can be regarded as having made substantially more contributions during their marriage. In my view, the evidence is clear that the farm was a common enterprise.
It is clear to me that the farm was labour intensive and much of this labour was arduous indeed. The wife was integral to the farm’s development from its inception. She played her part in clearing the land and tending the crops. The husband also worked very hard, in spite of his back complaint. The wife concedes this fact but also indicates that the husband’s incapacity at times required her to do a significant amount of heavy work. It is to the credit of both parties that they developed the market garden and then the mango orchard from scratch. The parties could not have achieved this without each other.
The wife played a larger role than the husband in providing care for M and N and did the larger proportion of the household tasks. I accept her evidence that these roles, when combined with her responsibilities on the farm, often meant that she had few hours sleep, particularly at harvest time.
Bearing in mind these various factors, I have very little difficulty in reaching the conclusion that the parties’ various contributions at this stage should be regarded as being essentially equal. However, it is the husband’s position that the court should depart from such an assessment because of his obvious and considerable financial contributions made towards the wife’s two children from her earlier relationship, R and M.
In a formal sense, neither R nor M were Mr M’ stepchildren and accordingly, pursuant to section 66M of the Family Law Act 1975, he had no legal duty to maintain them. That duty lay with R and M’s biological father, Mr R, as well as the wife herself. I know very little about Mr R and his financial circumstances. The wife only acknowledges that he was uncooperative in respect of the payment of maintenance for the two children concerned.
It seems to be the case that when the parties began to live together, Mr M was aware of the circumstances surrounding R and M’s relationship with Mr R and the issue of their financial support. Nonetheless, he welcomed the two children into his life. This is of course to his credit but it is also largely self apparent that, if Mr M wished to pursue his relationship with Mrs M, he would have had to include the two children in it.
In assessing the husband’s claim under section75(2)(o) I have considered what was said by the Full Court of the Family Court in Robb & Robb[26] as follows:
“In considering whether the justice of a case requires some act done by a party to be taken into account under s. 75(2)(o), the Court should, we think, have regard primarily to the existence or otherwise of any legal obligations, as between the parties, in relation to the doing of that act, and also, perhaps, to ordinary notions of justice and equity between the parties.
In this case, the wife had a legal duty to maintain the children of her prior marriage, which duty had primacy over the duty of any other person, other than the children’s father, to so maintain them: ss. 66A and 66B of the Act.
The husband, on the other hand, had no legal duty to maintain these children at any time during the marriage because, by s. 66G, a step-parent has such a duty only if he or she is a guardian of the child, or has custody of the chid by an order of a court, or a court having jurisdiction under Part VII of the Act by order determines that it is proper for the step-parent to have that duty. None of those preconditions existed in this case.
Accordingly, in contributing to the support of these children the wife was merely honouring a legal obligation which she owed to the children, whilst the husband, in making his contribution, was acting essentially as a volunteer assisting the wife in the discharge of her legal obligations. Upon that basis, whilst we consider the justice of the case clearly required the husband’s contribution to be taken into account under s. 75(2)(o), the same cannot be said of the wife’s contribution. In making that contribution the wife was in no way discharging or assisting to discharge any legal obligation of the husband.
Turning, then, to ordinary notions of justice and equity, we are of the view that such notions do not call for any allowance to be made in the wife’s favour, in the property proceedings between the husband and wife, because she honoured her legal obligation to maintain her own children of a prior marriage. We believe that a failure to make such an allowance would not offend the ordinary reasonable man or woman’s notions of justice.”
[26] Robb and Robb (1995) FLC 92-555 at 81,547
Undoubtedly, it was the case that part of the family’s income, which I suspect was often modest, was used to support R and M. Given the finding I have made about the wife’s role in producing income at the farm, this income was not solely produced by the husband alone. Nonetheless, the husband’s financial contributions towards the support of R and M, is a factor which can be taken into account in Mr M’ favour. I note however the contribution was voluntarily made. Essentially R and M were a natural part of the family and were part and parcel of Mr M’ relationship with the wife.
In addition, both R and M made their own contributions on the farm. I do not regard these contributions as token. Clearly both the wife and particularly the husband, regarded it as incumbent on R and M to pull their weight around the farm. I accept the wife’s evidence that both children did so. In my view, these factors considerably weaken the husband’s claim that he is entitled to a significant proportion of the parties’ joint marital assets because of his financial contributions towards the support of R and M.
In addition, the wife argues that her contributions made in the 18 months or so since the parties separated, in respect of N are markedly superior to those of the husband. I agree with the wife’s submissions in this regard. She has provided considerable emotional and parenting support to N in difficult circumstances. She has had only a very limited income and no financial support from the husband whatsoever. On the other hand, he has retained all of the parties’ assets and the income which they have produced. Due to his lack of disclosure, I am not in a position to definitively determine what that income has been. I am however satisfied that it is likely to have been considerably more than the income received by the wife.
Bearing in mind these various factors, I consider that the parties contributions, at this stage, should still be regarded as being essentially equal.
The third step – section 75(2) factors – the prospective needs of the parties
I am now required to consider the various matters set out in section 75(2) and in particular to consider whether any further adjustment should be made in favour of either party. The section 75(2) factors are as follows:
(a) the age and state of health of each of the parties;
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
(d) commitments of each of the parties that are necessary to enable the party to support:
i) himself or herself; and
ii) a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
(f) subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under -
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain adequate income;
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
(l)the need to protect a party who wishes to continue that party’s role as a parent;
(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party;
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any other fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties.
Sub-section (a) – The wife will be 49 in October. The husband is just 47. Thus neither party can be regarded as anything other than of middle years. They are both likely to have many years of productive life before them. However, both parties place particular emphasis on their respective current state of health and argue that this is a factor which calls for some weighting in his or her favour at this stage of the court’s deliberations.
The medical evidence in this case is not particularly extensive. Dr Sankarayya was placed in an invidious position. He has been both parties’ general medical practitioner for many years. He has a professional relationship with both parties to maintain in future, which relationship must necessarily include a modicum of both sympathy and loyalty. It is not a position from which it is easy to deliver an objective opinion or assessment.
The husband has been troubled by his back injury over many years. I note however that it has been some years since he specifically consulted Dr Sankarayya in regards to it. It is also of some significance that those responsible for assessing disabilities for the purpose of Commonwealth funded income support schemes have downgraded the level of Mr M’ level of impairment for such purposes.
All in all, I accept that the husband has a significant injury in respect of his back. The injury seems to have been stable for many years. Of most importance, it does not seem to have prevented the husband working on the farm; wholesaling bird seed; and buying and selling caged birds. I accept the wife’s evidence that, when his symptoms are alleviated, he is capable of working very hard indeed. However, it seems to be the case that he has to be careful in regards to heavy lifting.
I also accept that the wife is currently not at all well and is exhibiting signs of severe emotional fragility, which are directly attributable to the marriage. It seems likely that, once the significant stresses in her life have been alleviated, her condition will improve markedly. One of those stressors is the current proceedings and the anxiety which they have necessarily precipitated.
One aspect of that anxiety is the husband’s failure to participate properly in the proceedings. However, I do not think that it can be guaranteed that the wife’s depression and anxiety will suddenly lift, when the case is finished. In my assessment, although obviously the future cannot be predicted with any certainty, it will take her some time to get back on to an even keel emotionally. In this regard, it is interesting to note that the husband’s assessment of the wife, when the parties first met, was of an emotionally unstable person.[27]
[27] See husband’s affidavit of evidence at paragraph 8.
It also of significance that Centrelink accepts that the wife is not currently capable of employment possibilities or of undergoing re-training. So the difference between the parties at present is that the husband’s health does not currently preclude him from earning some level of income, whereas the wife’s level of health does. This is a significant difference between them.
Sub-section (b) – In the context of this case, the matters for consideration under this heading are closely related to those under the preceding heading. Over very many years, the parties have been self-employed in a “niche” industry. Undoubtedly both have skills in that industry, which can perhaps be conveniently described as a “cottage industry” but those skills are not easily transferable to other employment, particularly in the context of this case, where the parties have been involved in market gardening for the vast majority of their lives and neither has any other significant skills on which to fall back on.
This really is the nub of the third stage of the proceedings. If the husband does retain the farm, as he wishes, he will have the means of producing some level of income for himself in future. However, whether this will be possible is uncertain. The husband has compounded that uncertainty by his lack of disclosure in this case, particularly about his capacity to borrow. There is a conflict between his assertion that he wishes to retain the farm and his evidence that it is currently of reduced value because of its limited income producing capacity. At the end of the day, his lack of cooperation in these proceedings may result in him being “hoist on his own petard”.
In my assessment, the wife is likely to find it particularly difficult to find paid employment in the future. I accept that her confidence in herself is very low and likely to remain so for some time. She has no formal qualifications and has not been an employee for 25 years. In those circumstances, it is likely to be extremely difficult for her to get work, even in a time of falling unemployment rates and, in the Northern Territory at least, economic confidence. I do not believe her book keeping skills are likely to be attractive to a prospective employer. Her ability to re-train is likely to be limited. Accordingly, at best, she is likely to be restricted to unskilled jobs in future, most probably in a nursery or as a cleaner.
The husband has more confidence in himself. He has the skills of a bush mechanic, able to do welding and small engine repairs. But again, given the period he has been out of the paid workforce, he is not likely to be a particularly attractive prospect to an employer, particularly if it is known he has a pre-existing physical disability.
Where the parties differ is that, if the husband retains the farm, he will have assets which potentially will be able to keep him in employment for many years to come and so provide him with a regular source of income. Although the amount of that income will be variable. On the other hand, the wife will be compelled to look for employment in the wider workforce, where her employment skills are not particularly attractive. In essence, self-employment is likely to be the best option for both of the parties but this is an outcome which is only open to the husband at present.
At the present time the income produced by the farm is unclear. At least in his statement of financial circumstance, filed in association with these proceedings, the husband attributed an income of about $47,000.00 per annum from it. I believe there to be some income from the birdseed business and other sources. The husband has failed to be frank in his subsequent evidence about what that income actually is. He has failed to produce the appropriate records. There are perils in such a course, one of which is that the court will infer his financial position is better than he would want either the court or wife to know. In all the circumstances, I believe such an inference is open to the court and I make it.
For obvious reasons, the husband wishes to minimise the income producing capacity of the farm. His evidence is that it is currently nil and the mango orchard itself is a liability. Given his lack of frank disclosure and the omissions in his evince, I do not accept that.
In my view, the husband has been deliberately opaque about his capacity to borrow against the security of the farm and particularly the farm’s economic capacity. In these circumstances, his counsel urges me to be cautious about the value of the farm, particularly in respect of the comments made by Mr Morgan about the attractiveness of mango plantations for prospective buyers. However, Mr Morgan’s valuation is the only value I have.
I acknowledge that it is far from certain whether the husband will be able to borrow a significant sum to pay the wife her entitlements, as assessed against this value. But the husband has been instrumental in creating that level of uncertainty. In my assessment, the husband wishes to retain the farm both because he sees it as being financially viable in future and because, from his perspective, it is the best vehicle for the maintenance of his future financial security.
Accordingly, I assess the factors under this sub-heading as being markedly in favour of the wife receiving some additional portion of the parties’ marital assets. The wife will be in future subject to the vagaries of the employment cycle. Although I concede that primary production is also necessarily one of a cycle of ups and downs, in my assessment, the husband will be more secure because of the financial resources which he wishes to retain. The farm will continue to produce some income and the husband has both the skills and physical ability to maximise that income. As I have already mentioned, one of the strengths of the farm is its diversity of income producing streams.
Ms Terry, counsel for the wife, also submitted that it may be open to the husband to sell a portion of the farm in order to satisfy the wife’s claim. Whether such an outcome would enable the farm to remain financially viable is a matter which I cannot assess. Ultimately that must be a matter for the husband and any financial institution which he may choose to approach in regards to a loan.
In reaching the conclusions I have under this sub-section, I bear in mind that it is my assessment that the husband’s age and current state of health are most suited to him continuing to work the farm and to operate his bird seed and bird sale business from it. That is the most logical reason why Mr M would wish to retain the property. In so doing, he tacitly acknowledges that it will be difficult for him in the paid workforce, which is the situation which confronts the wife.
Whether the husband will be able to retain the farm is uncertain to me. It may well be a financial misfortune for both parties if the farm and its plant are sold now. Too a large extent, the husband has engineered that uncertainty. His behaviour has forced the wife to the brink of this situation. It would be unfair if he could now benefit from it.
Sub-section (c) – This is not a relevant consideration in this case.
Sub-section (d) – It is my assessment that both parties have a facility to live extremely frugally. The wife has some responsibilities to provide for N. She receives a youth allowance and is likely to do so for the foreseeable future. It also seems likely that, once her health has improved, she will be able to obtain some part-time employment, whilst she pursues her tertiary studies. If N remains at university, which seems likely, the wife will most probably allocate a portion of her financial resources towards N’s support. However, in all the circumstances of this case, I do not think that these considerations are significant.
Sub-section (e) – This is not a relevant consideration in this case.
Sub-section (f) – Neither party is prepared for retirement. Accordingly, I do not think the factors for consideration under this sub-heading favour one party more than the other. At the present time, the wife is in receipt of social security payments as her only source of income. This is likely to be the case for some time to come. Pursuant to section 75(3), this is a matter which must be disregarded. However, it is interesting to note that the husband, who professes to have no income, has not been compelled to apply for social security benefits. He has been able to live off the resources produced by the farm.
Sub-section (g) – At the present time, I accept that the wife is in extremely straightened financial circumstances. She is living in shared accommodation. She is receipt of social security payments, which were initially artificially reduced because of an allowance for income which she did not in fact receive. Her ambition to purchase her own home is a modest and understandable one. It is also likely to be the best means to provide her with some measure of security in her old age.
On the other hand, the husband continues to enjoy the standard of living, which the parties enjoyed during their marriage. It seems likely that, if he is able to retain the farm, this situation will continue indefinitely. The only level of uncertainty being what will be his level of debt and his necessary recurrent commitment to service such a debt.
Sub-section (h) – This is not a relevant consideration in this case.
Sub-section (ha) – This is not a relevant consideration in this case.
Sub-section (j) and (k) – The marriage between the parties was a long one. As a result of it, the wife has been out of the paid workforce for approximately 25 years. In my assessment, the wife’s hard work has been instrumental in creating the parties’ current asset position. The matters for consideration under these sub-headings favour the wife.
Sub-section (l) – This is not a relevant consideration in this case.
Sub-section (m) – This is not a relevant consideration in this case.
Sub-section (n) – The fact that it is unclear whether the husband will be able to borrow sufficient monies to pay the wife her entitlements pursuant to her claim under section 79 is a difficulty in this case. I have already alluded to this difficulty.
Sub-section (na) – This is not a relevant consideration in this case.
Sub-section (o) – I have already considered the husband’s contributions towards providing support for R and M.
Sub-section (p) – This is not a relevant consideration in this case.
Conclusions on section 75(2) factors
At the end of the parties’ long marriage, the wife finds herself unemployed, in receipt of social security payments and living in shared rented accommodation. Her employment skills are limited and she is in fragile emotional health.
At least in his statement of financial circumstances, filed in these proceedings, the husband deposed that he had an income of approximately $47,000.00 per annum. In his evidence to the court, he deposed that his income is actually currently inconsequential and he is reliant on family and friends for his financial support. I do not believe him. In my assessment, he has failed to make a full and frank disclosure of his current financial position. He does so at his peril.
For the reasons provided, I am satisfied that currently the husband does receive a comfortable level of income from the farm and its associated activities. I use the expression “comfortable” advisedly bearing in mind the husband’s frugal habits. He has a capacity to live on a small income. The husband wishes to retain the farm because he appreciates its value to him to pursue his chosen lifestyle.
In my assessment, if the husband does retain the parties’ farming property, notwithstanding the uncertainty about how the husband will maintain any mortgage which he may be compelled to take out on the property, he will be significantly more financially secure than the wife in future. He will have a source of income. Given her difficulties, the wife may well not.
In my assessment this is a factor which calls for a further distribution of assets in the wife’s favour in the range of between 6 and 7.5%. In my assessment, the wife’s financial future is extremely precarious, certainly more so than the husband’s is. However, given the extent of the property pool and the husband’s difficulties, both in terms of his back complaint and limited employment skills, I consider that the apportionment of 10%, which is the amount sought by the wife cannot be justified, notwithstanding the husband’s lack of disclosure. At the end of this third step, I cannot loose sight of the fact that the husband’s financial future is not without its pitfalls.
Section 79(2) – is this a just and equitable outcome?
The final step in determining property matters is to stand back and consider whether the proposed result is just and equitable. In this particular case, as in all cases, in order to ensure that the outcome is just and equitable, it is not open to the court merely to consider what the outcome should be in percentage terms alone. It is necessary for the court to consider what the actual effect of the orders will be. At the end of the day, what the court has to do is to look at what the orders mean in terms of dollars and cents and how they will affect the aspirations of each of the parties concerned.
In this case, because of the failure of the husband to be frank about his financial circumstances, it is difficult to know what the actual outcome of the case will be. Essentially whether the parties’ most significant asset – the farm and its plant and equipment – will have to be sold and whether this will result in a considerable erosion of the parties’ financial position, as previously assessed in these reasons for judgment.
It is not uncommon for parties in proceedings such as this to “stick their heads in the sand” or to wish to put of the evil hour, for as long as possible, so far as the resolution of the proceedings is concerned. This is understandable. Usually there is no good news for either of the parties at the end of proceedings to do with the division of matrimonial property.
So it is in this case. Scarce, yet hard earned, marital assets must be divided between the parties. Quite simply, there are not sufficient assets to meet both parties likely future financial needs. Accordingly, the end of the parties’ marriage and the conclusion of these proceedings is likely to be the harbinger of a period of financial austerity for them both.
For the past eighteen months or so, the wife has been enduring such austerity. In my assessment, the husband’s position has been more comfortable because he has retained control of virtually all of the parties’ assets, which during their long marriage provided their financial sustenance.
In my assessment, quite deliberately, the husband has obscured his current financial position. He has failed to confront openly the issue of the amount of money he is likely to be able to borrow against the security of the farm. He has been uncooperative in disclosing the income the farm and its associated activities have produced since the parties separated. As a consequence, it is uncertain what the ultimate outcome of this case will be. This is far from satisfactory from the wife’s point of view and placed her in an invidious position. She believes the farm is a viable and profitable entity, which should provide attractive security for any prospective lender. The husband asserts otherwise but has provided no actual concrete evidence in this regard.
In the circumstances, the court has no alternative other than to act on the basis of the asset pool as found. I am satisfied that overall, during their long marriage, the parties’ contributions, in their various forms, should be regarded as equal. I am further satisfied that the wife’s prospective needs, if the husband retains the farm, are likely to be greater than the husband’s are.
The uncertainty about whether the husband will be able to retain the farm in future is one of his own making. He has an obvious vested interest in attempting to minimise the income earning capacity of the farm and its attractiveness to a prospective lender. It is in his obvious interests to present himself as being as destitute as possible. I am satisfied that his desire in this regard is at odds with the requirement that he make a full and frank disclosure of his financial circumstances in this case. For the reasons provided, I am satisfied that he has failed to discharge his obligations in this regard.
In such circumstances, the court, to use the terminology adopted by the Full Court in Weir & Weir “should not be unduly cautious about making findings in the favour of the innocent party.” In the absence of definitive evidence from the husband, I have formed the view that the farm can both sustain the husband financially in future and is likely to provide sufficient security for a lending institution to advance monies to Mr M. Given the findings I have made about the wife’s likely future financial position, I am satisfied that it is just and equitable that she receives a greater proportion of the parties’ marital assets than the husband.
It is hoary saw of equity that he who would seek equity must have clean hands. I am satisfied that the husband does not have such clean hands in his conduct of these proceedings and it would be unjust and inequitable for the wife to suffer any potential diminution of her claim because of his conduct.
57.5% of the parties’ nett assets is represented by the sum of $233,716.41. From this figure must be deducted the sum of $16,806.89 representing assets already in the wife’s possession namely her car ($5,750.00); the AXA shares ($2,045.00); the NAB account ($647.89); and the AXA life insurance policy ($8,364.00); leaving a balance due to her of $216,909.52.
I propose to round this sum down to $215,000.00 and to allow a period of sixty days to enable the husband to raise this sum.
Neither the husband nor the wife seeks at this stage that orders should be made to cover the eventuality if the husband is unable to raise the necessary sum. It would appear to be in both parties’ interests to avoid the farm property being sold.
The husband should indemnify the wife in respect of the monies due to the TIO and CBFC in respect of monies borrowed against the security of the farm and the plant and equipment on it. In addition, it is my view that the husband should assume responsibility for all taxation liabilities in respect of the income received from the partnership in the years ending 30 June 2005 and 2006, as he has received all such income. The wife’s tax liability for 2005 is known and the husband should pay it. The husband should indemnify the wife in respect of the tax due for the year ending 30 June 2006, this sum is currently unknown, accordingly I do not propose to accede to Ms Terry’s application that the husband forward her office the sum of $10,000.00 in anticipation of the amount likely to be due.
As these lengthy reasons for judgment demonstrate, I have not found this a particularly easy case to determine. However, I am satisfied that the orders I propose represent a just and equitable outcome of these proceedings. For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding two hundred and nine (209) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: C White
Date: 23 August 2006
and Clauson v Clauson (1995) FLC 92-595
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