MADIGAN & MADIGAN

[2015] FCCA 1467

FEDERAL CIRCUIT COURT OF AUSTRALIA

MADIGAN & MADIGAN [2015] FCCA 1467

Catchwords:
FAMILY LAW  ̶ Where only property is household goods and appliances and superannuation  ̶  whether it is just and equitable to make an order in respect of the household goods and appliances.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79, 90MT(1)(a), 90MT(2)

Bankruptcy Act 1966 (Cth), s.166
Bankruptcy Regulations 1996 (Cth), r.6.03

Stanford v Stanford [2012] HCA 52; (2012) CLR 108

Applicant: MR MADIGAN

Respondent: MS MADIGAN

File Number: DGC 3542 of 2013

Judgment of: Judge Phipps

Hearing date: 24 April 2015

Date of Last Submission: 24 April 2015

Delivered at: Dandenong

Delivered on: 4 June 2015

REPRESENTATION

Solicitors for the Applicant: Appearing on own behalf

Solicitors for the Respondent: Appearing on own behalf

ORDERS

1. That the husband send a copy of this order to (omitted) Super, the Trustee of the wife’s superannuation fund for the purpose of providing procedural fairness to (omitted) Super by giving (omitted) Super notice that subject to the response of (omitted) Super the court intends to make the superannuation order set out in the Minutes of Proposed Superannuation Order set out hereunder with any amendments proposed by (omitted) Super.

2. That upon receipt of a response from (omitted) Super the husband file and serve an affidavit that he has complied with paragraph (1) and annexing any letter in response.

3. That upon compliance by the husband with paragraph 2 and subject to the response of (omitted) Super the court will make an order in terms of the Minutes of Proposed Superannuation Order with any amendments proposed by (omitted) Super without further hearing.

4. The application is adjourned to 31 July 2015.

5. Otherwise the husband’s Initiating Application filed 22 May 2014 is dismissed.

Minutes of Proposed Superannuation Order

1. That this order is binding upon (omitted) Super as Trustees of (omitted) superannuation scheme.

2. That pursuant to s.90MT(1)(a) of the Family Law Act 1975 (Cth) whenever a splittable payment becomes payable in respect of the superannuation interest of the Ms Madigan, (omitted) Membership Number (omitted), the member spouse in (omitted) Super:

   (a)Mr Madigan (non-member spouse) shall be entitled to be paid an amount calculated in accordance with part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount of $3,600 (provided that such base amount shall not exceed the value of the interest determined under s.90MT(2));

   (b)there be a corresponding reduction in the superannuation interest of the member spouse to whom the splittable payment would have been made but for the order.

3. That the operative time for these orders is four business days after service of the final sealed orders on (omitted) Super.

4. That there be liberty to apply to each party and the Trustee in relation to the implementation of the orders affecting the superannuation interest.

   The court notes that the order is made in this form because neither party was represented and did not provide the name of the Trustee or the proper name of the superannuation fund.  The making of the order is dependent upon the husband obtaining from the Trustee of the wife’s superannuation fund the full name of the Trustee and of the fund and acknowledgement from the Trustee that it has been provided with procedural fairness.

IT IS NOTED that publication of this judgment under the pseudonym Madigan & Madigan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

DGC 3542 of 2013

MR MADIGAN

Applicant

And

MS MADIGAN

Respondent

REASONS FOR JUDGMENT

Proposals and introduction

1. The husband proposes that certain items of household furniture and appliances now in the possession of the wife be transferred to him and that there be a splitting order so that he receives half the wife’s superannuation.  The wife proposes no orders be made.

2. Both parties were self-represented and so put no legal argument.  This case raises the threshold question of whether it is just and equitable to make any orders.

3. The High Court of Australia in Stanford v Stanford [2012] HCA 52; (2012) CLR 108 said that after determining the parties’ property the next step is to determine whether it is just and equitable to make an order.

4. The husband (the applicant) proposes that he have the following now in the possession of the wife:

   a)1× 3 seater lounge suite with matching footstool and cushions;

   b)1× 27’’ Apple iMac Computer with cordless mouse and numeric keyboard;

   c)1× Apple 13’ MacBook Laptop Computer with external CD drive and Apple mouse;

   d)1× (omitted) All-In-One Colour Inkjet Printer;

   e)1× (omitted) 81cm LCD colour TV;

   f)1× (omitted) 440 Ltr Upside Down Stainless Steel Refrigerator;

   g)1× (omitted) Front Load Washing Machine;

   h)1× (omitted) Clothes Dryer;

   i)1× Bedside Table;

   j)1× (omitted) Digital Camera including 2× Lens, 1× Carry Bag and/or accessories;

   k)1×Dress Ring;

   l)1× (omitted) Shelving Unit with inserted doors (5 shelves high ×5 wide);

   m)2× (omitted) Cabinet Lighting-value $19.95 each;

   n)2× (omitted) Shelving Units (five shelves high ×1 shelf wide;

   o)1× (omitted) Shelving Unit (two shelves high by 2 – wide;

   p)1× (omitted) Shelving Unit;

   q)1× (omitted) External/Portable ITB Hard Drive;

   r)(omitted) four-door Grey Hatchback with four alloy wheels;

   s)Rent Bond for (omitted);

   t)equal division of proceeds of ex-wife’s superannuation fund.

5. The wife lives in (omitted).  These premises are rented in the wife’s brother’s name and are the premises where the parties lived prior to separation.  All the items the husband claims are in these premises and were there prior to separation.

6. Only the wife has superannuation.  Her financial statement records that she has $14,000 in superannuation, $4,000 with (omitted) Superannuation and $10,000 with (omitted) Superannuation.

7. The husband proposes that the wife’s superannuation be split 50% to him and 50% to the wife.  Initially the wife’s proposal was that the superannuation be split but it became clear that during the hearing that she was proposing only the amounts she received in superannuation during the parties relationship, an amount of $7,196.41, be split.

8. Ultimately the wife’s proposal is that there be no orders.  At the commencement of the hearing she proposed that she be paid half the proceeds of sale of (stock omitted) in the husband’s possession from their business (omitted) as well as half the superannuation.  Upon hearing during the husband’s evidence that he had sold the (omitted) on eBay for several hundred dollars she changed her proposal to one that there be no orders.  She says there were (omitted) with a retail value of $30,000.

9. The husband does not propose using the goods for himself.  He proposes selling them to raise funds to set up a small business buying and selling goods on the internet.

10. He was retrenched from his employment in 2012 and now relies on Newstart for his income.  He says at his age he cannot get employment.

11. The wife is studying and working.  She receives income of $400 per week from her employment and $218 a week Austudy, a total of $618 per week.

Background

1. The husband was born in (omitted) 1957 and is aged 57.  The wife was born in (omitted) 1964 and is aged 50.

2. The parties met in (omitted) 2007 and started living together in (omitted) 2008.  Both parties owned a residence at that stage, the wife in Property T and the husband in Property L.  The wife sold her house in Property T and moved in with the husband.  The husband was employed full-time with a (employer omitted) and the wife worked as a (occupation omitted) with the (employer omitted).

3. There is some dispute about what happened when the wife moved into the husband’s home.  The wife says that they used the proceeds of her home to renovate and paid the husband’s credit card.  She says the majority of her items were sold to consolidate two homes together and that they both travelled to (country omitted) and (country omitted) and that was paid for with the proceeds of the sale of her home.  She says her car was sold and the applicant purchased his son’s car.

4. The husband says that the proceeds of sale of the wife’s house was used to pay the mortgage, repay loans, pay $10,000 for a student exchange program for the wife’s daughter, $15,000 on the overseas holiday and $7,000 on a new entertainment system including Plasma TV.  He says his credit card was used for renovations.

5. The parties married in (omitted) 2008.  The parties combined their finances although the extent to which each contributed is disputed.

6. In late 2009 the parties set up a (business omitted).  The wife says she ceased working at the (employer omitted).  The husband says she became unemployed.  Whatever happened the husband’s Property L home was sold to set up the (business omitted) and the parties moved into rental accommodation.

7. The wife worked full time in the business and the husband part-time.  He was made redundant from his employment in June 2012 and his ex-employer went into liquidation in 2013.

8. The husband became bankrupt in 2010.  He says his bankruptcy will come to an end in June 2015.

9. The (business omitted) failed.  The wife says it moved out of its shopfront premises in (omitted) in January 2012 because of unpaid rent and that she then operated the business from home for 3 months and then ceased operating.  Each party blames the other for the failure of the business.

10. The parties separated in March 2012.  The wife says that they continued to live in the same residence and reconciled in 2012.  She says that they moved to (omitted), to a rental property.  The husband cashed in his superannuation, according to the wife in December 2012.

11. The husband says there were many attempts at reconciliation.  Both agree that the relationship ended permanently in August 2013.  The husband says there were more attempts at reconciliation but it was all over in March 2014.

12. The wife says that the household goods and furniture were divided by agreement by the husband taking what he wanted.  The husband says he was told by the wife what he could take.  He says he took:

    Plasma TV

    TV Cabinet

    Blu-ray player

    DVD and Blu-ray movies

    Study Desk

    Personal Computer

    Laptop

    Pace Printer

    Desk

    Under desk filing cabinets × 2

    Bedside table

    Chest of drawers

    the remaining unsold (stock omitted)

    Two suitcases of clothing

    His car.

13. The wife’s list of what the husband took has some differences.  She says he took two desks and two Personal Computers.  She says he took an iPad an iPhone and a Nokia phone, a solid wood TV unit with an original cost of $1,000.  She says the television had a retail price of $10,000 when purchased and was purchased with the proceeds of the sale of her home.  She says there were 20 (stock omitted) with a retail value of $30,000.  Amongst other things the husband disputes the value of the television set

Husband’s argument.

1. The husband’s argument is that he paid for the purchase of the items he wants to recover from the wife.  The payments were made by a combination of cashing in his superannuation, salary sacrifice when he was employed and by borrowing money.

2. Payment for items of matrimonial property is only part of the consideration in an application under s.79 of the Family Law Act 1975 (Cth). It is an element in the consideration of contributions unders.79(4) but not the only consideration.

Husband’s bankruptcy

1. The husband is bankrupt.  I will assume for the purpose of this proceeding that he has notified his bankruptcy trustee of this application.  He said in evidence that his bankruptcy trustee had told him he had no interest in the goods.  The Bankruptcy Trustee has not applied to intervene.

Just and Equitable

1. In Stanford v Stanford [2012] HCA 52; (2012) CLR 108 the High Court of Australia said that when considering an application under s.79 of the court must first ascertain the party’s legal and equitable interest in property and then consider whether it is just and equitable to make an order. It might be said that in this case it is just and equitable to make an order because of what the High Court of Australia said at [42]:

   In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).

2. In this case the parties’ situation meets what the High Court of Australia says.  But then, the High Court of Australia says at [46]:

   As has already been emphasised, nothing in these reasons should be understood as attempting to chart the metes and bounds of what is "just and equitable". Nor is anything that is said in these reasons intended to deny the importance of considering any countervailing factors which may bear upon what, in all the circumstances of the particular case, is just and equitable. In particular, as the Full Court pointed out[31] in its first judgment in this matter, the magistrate erred in not taking account of the consequences that would follow for the husband if a property settlement order were to be made in the terms which were sought on behalf of the wife. The husband would be required to sell the matrimonial home, in which he was still living, despite the needs of his wife then being met by the provision of full time care, a further provision of money against future contingencies and the possibility, if needed, of making a maintenance order.

3. The husband seeks orders in respect of both physical property and superannuation.  While he identifies property in the wife’s possession there is property in his possession which he removed from the former matrimonial home.  There is no admissible evidence of valuation of any of that property.  The husband in his oral evidence gave estimates of the value of each of the items he claims could be obtained on eBay, a total of about $6,000.  The husband has no professional qualifications as a valuer and so I cannot take that value into account.

4. The same applies for the property in the possession of the husband.  There is no valuation.

5. While the husband says that he paid for all the property he now claims I cannot assume from the evidence that at the point at which the parties separated he was the sole owner of the property.  The items were purchased by the parties’ relationship and their marriage was intact.  It may be that the items were jointly owned.

6. There is a similar consideration for the items in the possession of the husband.  Some items apparently came from the wife’s house in Property T.  The television set in the husband’s possession was purchased with the wife’s funds.  Since the wife brought the items and the funds into the parties’ relationship and marriage while it was intact it may be that these items were jointly owned.

7. The property in the possession of each party must be taken into account if there is to be an order made.  The state of the evidence is such that a valuation cannot be made.

8. A significant consideration is that the husband is bankrupt. His bankruptcy may be about to come to an end but that does not alter the legal effect of his bankruptcy. Under s.166 of the Bankruptcy Act 1966 (Cth) the property of the bankrupt at the commencement of the bankruptcy and acquired by him after the commencement of the bankruptcy is property divisible amongst his creditors. The section does not apply to the bankrupt’s household property, but while the items the husband is claiming are items of the type described in r.6.03 of the Bankruptcy Regulations 1996 (Cth), the husband does not intend to use them as household property but sell them, and so they do not meet the definition.

9. The husband says that the bankruptcy trustee says he has no interest in these items. That is almost certainly correct. The cost of the bankruptcy trustee realising the value of those items by sale would likely far exceed the amount he would recover. That does not alter the legal position.

10. A significant consideration is that most, if not all, of the items the husband wants are items considered necessary for a reasonable standard of living for a person such as the wife. It would be a curious result if the husband, by proceedings under s.79, was able to deprive the wife of items which, if the wife became bankrupt, she would be able to retain. This is in circumstances where the wife has limited funds and limited income and could only replace them by borrowing.

11. One of the items the husband claims is the rental bond for the premises where the wife is living.  This is not current property in the sense that it is not immediately recoverable.  In addition, its recovery is conditional upon the terms of the lease.  While the wife is a person unlikely to damage the property where she lives or not take proper care of it she  might default in payment of the rent.  She currently has an income and so can pay the rent but her financial position is not strong.

12. The combination of these factors means that it is not just and equitable to make an order in relation to the physical property including the rental bond.

Superannuation

1. Superannuation is generally considered separately from physical assets, and in this case that is the appropriate thing to do.

2. The evidence about superannuation is the wife’s financial statement filed 10 April 2015 and a copy of an email from (omitted) Super, of 23 April 2015.

3. The wife’s financial statement lists two superannuation statements:

   a)(omitted) Superannuation $4,000

   b)(omitted) Superannuation $10,000.

4. The email lists payment received from the wife’s employer from 1 May 2008 to 15 January 2010.  These total $7,196.41.  The wife says she obtained this email because she proposed the husband should receive half the superannuation that she received during the marriage.  She changed her proposal during the hearing when she learnt that the husband had sold the 20 (stock omitted) for much less than she considered reasonable.  Her original proposal was that she receive half the proceeds of the sale of the (stock omitted).

5. The husband accuses the wife of extravagant spending in insisting on new furniture when the parties moved residence and insisting on overseas travel.  Whether the spending was extravagant or not he agreed to it and both received the benefit.  The (business omitted) failed financially but not because the wife did not work hard.  The criticism the husband has is of the wife’s business practices.  He was particularly critical of her spending many hours on (duties omitted) for which she did not charge.  The wife is critical of the husband in the way he worked in the business.  Neither alleges the other did not put effort into the running of the business.

1. Prior to commencement of the business both parties were employed and contributed their earnings to the common endeavour of their marriage.  The wife received superannuation contributions during the marriage as did the husband but he has cashed his in and spent it on various items for the parties.

2. So far as any adjustment under s.75(2) is concerned the wife’s financial position is better than the husband’s but it does not justify any adjustment.

3. The evidence I have is that the wife currently has about $14,000 superannuation and she received contributions of $7,196.41 during the parties’ relationship.  There may have been some investment earnings but I cannot make that assumption.  The best I can do in the circumstances it is a splitting order for half of that amount, $3,200.

4. The wife’s withdrawal of her proposal for the husband to have half superannuation because of the small amount he received from sale of the (stock omitted) makes no difference on the question of superannuation.  There is no evidence that in the circumstances the husband could have got a greater return.

5. There is no evidence that the wife’s superannuation fund, (omitted) Super, has been provided procedural fairness.  Other than the name (omitted) Super, I do not have the exact name of the Trustee or the exact name of the fund.

6. I will make an order which contains a draft superannuation order as best as can be done and then order that the husband send a copy of it to (omitted) Super and then file an affidavit annexing (omitted) Super’s response.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Judge Phipps

Date:  4 June 2015