Magee and Magee - [2008] FMCAfam 856

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MAGEE & MAGEE

[2008] FMCAfam 856

FAMILY LAW – Property settlement – dissipation of joint assets – waste by one party – consideration of “add backs” – principles to be followed – special circumstances of the case – nothing to show for the monies dissipated – consideration of payment greater than 100% of equity – inappropriate in circumstances – consideration of basis for an adjournment – factors to consider – need for finality.

Family Law Act 1975 (Cth), ss.75(2), 79(1),(2), (5), 79A, 106B, 81

Kowaliw & Kowaliw (1981) FLC 91-092
Walters & Walters (1986) FLC 91-733
Milankov & Milankov(2002) FLC 93-095

Applicant:

MS MAGEE

Respondent:

MR MAGEE

File number:

TVM 2867 of 2004

Judgment of:

Coker FM

Hearing dates:

21 & 22 May 2008

Date of last submission:

11 June 2008

Delivered at:

Townsville

Delivered on:

14 August 2008

REPRESENTATION

Counsel for the Applicant:

Ms Demack

Solicitors for the Applicant:

Madden Solicitors

Counsel for the Respondent:

Mr Betts

Solicitors for the Respondent:

The Brad Robins Legal Centre

ORDERS

The Husband forthwith do all acts and things necessary and sign all documents to transfer to the Wife all his right, title and interest in and to the properties situated at Property F[J]'sMr JMr JMr JMr J and Property G, subject to the existing mortgages (paid to the date of this order) and that all rates in relation to the said properties be paid to the date of transfer.
The Wife retain, to the exclusion of the Husband, the Daewoo motor vehicle in her possession.
The Wife retain, to the exclusion of the Husband, her chattels and personal effects presently in storage in Richmond and Charters Towers with the wife to have access to the storage shed/s at a time of her nomination to collect that property and the husband to arrange for the shed/s to be open and entitled to have an agent present during the removal.
The Husband forthwith do all acts and things necessary and sign all documents to transfer to the Wife any interest held by him or on his behalf in Coles/Myer shares.
Pursuant to paragraph 90MT(1)(a) of the Family Law Act, whenever a splittable payment becomes payable in respect of the Husband’s interest in the BT Funds Management Superannuation Fund and the Commonwealth Life Personal Superannuation Fund, the Wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, at the date of these Orders, in the sum of 100% and that there be a corresponding reduction to the entitlement the Husband would have had in the BT Funds Management Superannuation Fund and the Commonwealth Life Personal Superannuation Fund but for this Order.
The preceding paragraph have effect from the operative time and for the purposes of these orders the operative time shall be four days after the service of this order upon the Trustees of the BT Funds Management Superannuation Fund and the Commonwealth Life Personal Superannuation Fund, provided however that if the Trustees have not been afforded procedural fairness then the operative time be 28 days from the date of service of this order.
This order be binding upon the Trustees of the BT Funds Management Superannuation Fund and the Commonwealth Life Personal Superannuation Fund.
The Husband indemnify and keep the Wife indemnified, in relation to his tax debt currently outstanding to the Australian Taxation Office.
Each party otherwise retain all other assets and property currently in their respective possession, power or control at the date of these orders as and for their own property absolutely and that each party indemnify and keep indemnified the other in relation to any liability attaching to said property.
Each party have liberty to apply within 28 days of the date of this order in relation to any point of clarification in relation to the orders and in respect of costs.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
TOWNSVILLE

TVM 2867 of 2004

MS MAGEE

Applicant

And

MR MAGEE

Respondent

REASONS FOR JUDGMENT

I must say at the outset, that this is one of the most interesting, and unfortunately, most difficult matters that I have been called upon to adjudicate. It is on the face of it quite straightforward, in that it is an application for property settlement brought by the wife, Ms Magee in an application filed originally on 17 October 2005.
In that application the wife sought orders in very simple and straightforward terms. They were as follows:
i)That the wife receives 100 per cent of the matrimonial assets by way of property settlement and lump sum spousal maintenance.
ii)That the wife reserves her right to specify specific orders once disclosure has been made by the husband; and
iii)Such further orders as the Court deems fit.
In fact, nothing changed over the next two and a half or more years. There were a number of preliminary skirmishes, including an application for the respondent husband, Mr Magee or for the respondent husband's parents to be joined in proceedings, however, that application was unsuccessful. The wife's orders were clarified in the case outline which was filed on 16 May 2008. The orders that were sought were detailed in orders 1 through 12 within the case outline and they were in these terms:
1. That the property situated at Property F be transferred to the wife subject to the mortgage (paid up to date) and that all rates be paid up to the date of transfer.
2. That the property situated at Property G be transferred to the wife subject to the mortgage (paid up to date) and that all rates be paid up to the date of transfer.
3. That if the husband received a payout from the insurance company for damage to one of those properties then those monies be paid to the wife.
4. That the wife retain the Daewoo motor vehicle in her possession.
5. That the wife retain the household contents and have access to the storage shed at a time of her nomination to collect personal items.
6. That the husband transfer all Coles Mayer shares in his name to the wife.
7. That the husband transfer his Commonwealth Bank Superannuation Fund to the wife.
8. That the husband transfer the BT Super Fund to the wife.
9. That the husband sell all equipment in his possession taken from D or stored at [omitted] Garage in Charters Towers and all net proceeds be given to the wife with such sale to be effected within three months.
10.That the husband indemnify, and keep the wife indemnified, in relation to his tax debt currently outstanding to the Australian Taxation Office.
11.That the husband assume the liability currently owing by the wife to Roberts Nehmer McKee in the sum of $5,153.79.
12.That the husband make further financial provision to the wife as ordered by this Court.
Incredibly, as the hearing progressed however on 21 and 22 May 2008, the position of the wife changed and in fact there was even a suggestion, though it does not seem specifically to have been pursued, that there should be a partial property settlement, orders made in relation to certain property being transferred to the wife and for payments to be made by the husband to the wife, which were to then be further considered at a later time. I will address that particular aspect of the matter, at least insofar as it is necessary and relevant, later in these reasons.
In any event, the parties sought and it was perhaps appropriate that it occur, that there should be the opportunity for written submissions in relation to the final address to be made and specific delineation of the orders that were to be sought. The orders sought by the wife were detailed in the submissions on behalf of the wife received by the Court on 6 June 2008. Those orders were in these terms:
1. That the property situated at Property F be transferred to the wife subject to the mortgage (paid up to date) and that all rates be paid up to the date of transfer.
2. That the wife retain, to the exclusion of the husband, the Daewoo motor behalf in her possession.
3. That the wife retain, to the exclusion of the husband, her chattels and personal effects presently in storage at Richmond and Charters Towers with the wife to have access to the storage shed/s at a time of her nomination to collect that property and the husband to arrange for the shed’s to be open and entitled to have an agent present during the removal.
4. That the husband transfer to the wife his Coles Myer shares.
5. That, in a form of wording to be approved by the relevant Trustees of the BT and CBA Superannuation Funds, orders be made transferred to the wife all of the husband’s right, title and interest in and to those funds as at the date of these orders with the intent that the husband’s entitlements will be extinguished therein.
6. That the husband indemnify and keep the wife indemnified, in relation to his tax debt currently outstanding to the Australian Taxation Officer. That each party otherwise retain all other property in their respective possession or control at the date of these orders.
7. That the Husband shall pay to the Wife the sum of $255,000 (Two Hundred Fifty-Five Thousand Dollars). Such payment to be effected by the payment of not less than $1,500 per calendar month on the first day of the month, each and every month, until the judgment is satisfied. If the Husband realises either the G property or the machinery stored in Charters Towers, the proceeds of those sales are to be paid to the Wife. Any amount outstanding beyond fix years of the date of judgment to attract interest at the rate applicable to Family Law matters.
As can be seen, the wife's position in relation to the matter was somewhat variable and that is understandable in light of the very many concerns that arise with regard to the determination of this matter.

In particular, the final orders sought by the wife with regard to a payment of $255,000, was set out in terms which could only be interpreted as being utilised by way of an alternative to an adjournment of proceedings, pursuant to the provisions of section 79.5 of the Family Law Act.
The wife's orders in relation to payment of money, at least as were sought by her, were that such payment of $255,000 was to be effected by the payment of not less than $1500 per calendar month on the first day of the month, each and every month until the judgment is satisfied but it was also sought that there should be provision for the amount in its entirety, to be paid within five years of the date of judgment and that any amount outstanding was then to attract interest.
There is of course, a concern that must arise there with regard to the uncertainty as to what might or might not be paid, in that even if $1500 was paid per month for a period of five years, that only totals approximately $90,000 and therefore, on the figures proposed by the wife, an amount of $165,000 could remain outstanding indefinitely with provision for interest to be charged but of course, no provision for how it might be subsequently required to be collected.
I will, as I say, turn to such matters later in these reasons. The respondent to the application is Mr Magee. The husband's response in it's first instance was detailed in the response to an application for final orders filed on 10 October 2005, in relation to property matters. Again, it was very simple but became more complex as the matter progressed.
It was in these terms:
i)That the matrimonial property pool be divided on a 50/50 basis.
ii)That there be no orders as to spousal maintenance.
iii)Such further or other orders as this honourable Court thinks fit.
Later, and in this instance there was no case outline filed, the husband more specifically considered his position in relation to the matter. In his trial affidavit filed on 2 May 2008, the husband set out basically what he proposed in relation to property, at the time of trial. At paragraph 22 of the trial affidavit filed 2 May 2008, he says:
I do not see why we even need a trial in this case because I am prepared to agree to orders for the wife to have all of the assets, even including my superannuation, provided she indemnifies me in relation to any liabilities (including capital gains taxes, if any) attaching to those assets. I am effectively offering to give her 100 per cent of the asset pool and do no see what more I can do. A trial in this case is just going to cost us more money than the proceedings already have.
In the husband's final submissions in relation to this matter, he finally and more specifically sets out the orders that were proposed by him in relation to the finalisation of property matters as between he and the wife. Those orders were in these terms:
1. That the real properties located at Property F in the State of Queensland, and Property G in the State of Queensland, each be listed for sale with a real estate agent forthwith at a price not less than $150,000.00 or at such lower price as nominated by the wife.
2. That the husband do all acts and things, and sign all documents, necessary to enable the listing and sale of the properties.
3. That the sale proceeds of the properties, after deduction of the associated mortgages, be disbursed in the following order of priority:
(a) in payment to the Australian Taxation Office of the husband’s income tax liability for FY 2004 through FY 2007, in an amount not exceeding $30,000.00;
(b)the balance to the trust account of the wife’s solicitors with the husband to have no interest in and to those monies
4. That the wife retain, to the exclusion of the husband, the Belarus Tractor and two trucks presently stored at TC.
5. That the wife retain to the exclusion of the husband, the Daewoo motor vehicle in her possession.
6. That the wife retain, to the exclusion of the husband, her chattels and personal effects presently in storage at Richmond and Charters Towers, with the wife to have access to the storage shed/s at a time of her nomination to collect that property and the husband to arrange for the shed/s to be open and entitled to have an agent present during the removal.
7. That the husband transfer to the wife his Coles Myer shares.
8. That, in a form of wording to be approved by the relevant Trustees of the BT and CBA Superannuation funds, orders be made transferring to the wife all of the husband’s right, title and interest in and to those funds as at the date of these orders with the intent that the husband’s entitlements will be extinguished therein.
9. That each party otherwise retain all other property in their respective possession or control at the date of these orders.
As is obvious from that breakdown, the position in relation to the matter is quite complex but also, on the face of it, quite simple. The husband says that the wife should receive the entirety of the matrimonial assets, but at the time should receive a corresponding responsibility in relation to all liabilities that might attach to the assets. The wife's position is to say that the husband has indulged in a concerted and determined process of waste of the matrimonial assets and that she should not be required to bear the brunt of the losses or reduction in assets that have occurred.
Obviously it is necessary for me to consider the position and the assessment of the witnesses, in relation to this matter. There are criticisms that can and should be made of both parties. The wife was not the most impressive witness I have ever seen. She became almost immediately in the witness box, agitated and angry when questioned in relation to issues with regard to her current circumstances, including her relationship with Mr B, the gentleman with whom she now resides. She was asked whether he provided support for her and she responded that he did not.
It was clear, however, as questions progressed, that Mr B owned the residence that the wife and children were living in and the wife was most uncooperative in relation to provision of answers with regard to that particular aspect of the matter. I noted that she appeared to become quite argumentative and was determined to, no matter what, get her point and position across in relation to what she considered to be, the unreasonable actions of the husband.
It was clear that the wife had “an axe to grind”. She was not prepared to admit that there may have been certain benefits received by her, whilst living with the husband on the property owned by his parents. She indicated, for example, that whilst there was a bulk fuel bowser available at the property, she never used it. I must say that I find that incredible, in that the wife also indicated that there were serious financial concerns experienced by she and the husband during the period that they were living together on the property owned by the husband's parents and I find it far more likely than not, that with a resource available such as the provision of fuel, that she would have utilised that whenever it was available to her.
The wife was, as I say, an aggressive witness. She was clearly unhappy with the circumstances that existed and that was obvious in much of her demeanour before the Court. Just as clearly however, there was much that could explain the grievances that she complained of.
The wife and the husband were in a relationship for a period of about 10 years. They met in 1992 according to the wife's material, commenced cohabitation in the latter part of 1992, married in 1994 and separated on 31 January 2003. They were in fact divorced on 11 December 2004 and no doubt, it was that which led to the institution of proceedings for property settlement on 10 October 2005.
The parties had three children. Those children, [names omitted] all live with the mother. At the time that the parties commenced their relationship, the wife had already been in a relationship and it appears agreed that when she came into the relationship with the husband, she brought in significant assets. The wife says in her material that she had a motor vehicle and some chattels and an amount of about $250,000, from property settlement. The husband says that it was about $175,000, but in light of certain aspects of the evidence that was given in respect of this matter, I'm far more inclined to the view that the wife's figure in relation to bringing a significant sum, probably $250,000 into the relationship, is the amount that was brought in.
The husband brought very little into the relationship. He had a motor vehicle and he had employment and accommodation on the property owned by his parents known as "Property D". The husband remained, along with the wife, living at the property following marriage but the wife subsequently commenced living away from the property, when the children's educational requirements became known.
As I say, the parties separated in January of 2003 however, prior to separation, the D property was sold. That occurred on or about

16 August 2002
. Whilst the parties were not living under the same roof, it appears conceded and agreed that they were still in a matrimonial relationship. The husband had no interest in the property, D. However, it was clear that he, in partnership with his mother and father, had a one-third interest in plant equipment and livestock, all of which was situated at Property D. The contract for sale indicated that there was a component relating to the plant, equipment and livestock in the sale of the property and it appears clear from the information now held, that the amount that was apportioned in relation to those items was $887,700.
The husband says that he is unclear as to the amount that he may have received in that respect, and there certainly is some indications that monies were paid to him following the sale of the property, plant, equipment and livestock. The amount as best able to be recollected by the husband and ascertained from bank records, indicates that that was $256,640.44. The husband's father, Mr M however, in an affidavit sworn on 23 July 2006, indicates that the husband received one-third of the sale's proceeds in relation to plant, equipment and livestock and that amount would therefore be $295,900, a difference of approximately $40,000 between that which is able to be assessed from bank records and that which appears to arise from the evidence given by Mr M snr.

In any event, it is unclear where that sum of approximately $40,000 may have gone but in the end, it is perhaps not necessary for a more in depth inquiry to be made, or findings to be made. The fact is that of the $256,640.44 received on 13 September 2003 in its entirety, those monies were dissipated by the husband, without any recognition of entitlements by the wife. As I say, therefore, the wife has a basis upon which she could obviously be distressed at the circumstances she now finds herself in.
Early in the relationship, approximately 15 years ago, the wife was in a position where she owned chattels, a motor vehicle, and had a sum of $250,000 available to her. At the conclusion of the marriage and therefore, at the end of the relationship, she says she left with virtually nothing from the marriage, other than a few items of clothing and personal items, as well as the children and their personal items. Everything else, she says, remained in the possession of the husband.
The husband has no cash, at least to any real extent at this time and it is clear that whatever might be able to received by the wife, falls far short of what might have been expected to have been available to her, had she never entered into the relationship with the husband. As I say, therefore, it is clear that there can be an explanation for the wife's position and attitude in the witness box. I do not mean to be disrespectful of the wife either, when I say that there may be some degree of angst on her part, which leads to the very negative impression given in relation to any perceptions held with regard to the husband and his family.
Some of that was evidenced, for example, when the wife was questioned about the property or items that were left by her at

Property D, at the time of separation. Certain items were said to be in storage. There appears to be evidence, that a very considerable number of chattel items were held in storage sheds and that the wife had the opportunity to assess what those items were. She was asked what the items might be and very briefly indicated that they included a sewing machine, quilts that she had made, jewellery cases and equipment that she said that she had lent to the husband.
Despite repeated attempts to arrange collection of such items, there appear to have been difficulties, perhaps as a result of the behaviours of both the husband and the wife, which have meant that some five years or more after separation, the wife has still received virtually nothing from those chattel items, held in storage. There were obviously, therefore, concerns in relation to the wife and to her evidence but there were also explanations as to why that might have occurred.
Now to the evidence of the husband. I should say at the outset, that I had some concerns as to the husband's intellectual capacities, in relation to this matter. It was clear from very many of the answers that were given, that the husband had little or no real appreciation of the circumstances that existed. It was also clear, that he was an unreliable witness. His assessment in relation to almost all matters to do with the financial workings of the relationship, fell far short of what one might have even basically expected, to have been in existence.
The husband is 55 years of age. He was worked during the whole of his working life, as a stockman on the property owned by his parents until August of 2002. Subsequently he has not worked and whilst no medical evidence whatsoever was provided, it appears clear that he has not been in a position to obtain employment, subsequent to the sale of the property at D. The husband was a most difficult witness to assess.
It was clear, for example, that he had little appreciation of financial matters and when taken step by step through evidence, in relation to receipt of monies and reinvestment of monies, the husband took on an almost vacant gaze, in relation to such matters and was unable to provide any explanation whatsoever as to how funds might have been used or reinvested or otherwise dealt with. At one stage, for example, the husband became agitated and suggested that the accounts that were being referred to were not even his accounts, although when again taken on a step by step process through the transactions, it became clear that the accounts were those which had been used by him.
Another time he became adamant that he had not dealt with certain amounts of monies, reinvesting term deposits and the like and that that must have been dealt with and done by his parents. However, when they gave evidence in relation to this matter, it was clear that they had not been involved to any real degree in relation to the administration of the husband's financial circumstances, though one would have thought, and it was certainly touched upon by counsel for the mother, that some real consideration should have been given as to the provision of a financial guardian for the husband.
The husband was difficult in the extreme. The husband, it appeared, had provided little if any assistance in relation to the ascertaining of the financial circumstances of the parties. The husband's evidence fell so far short of what could have even, in any respect, been appreciated as proper cooperation in relation to financial circumstances that one struggles to understand how this matter could have been properly, if at all, prepared.
What is clear is that the husband dissipated, in their entirety, the real assets of the parties, particularly following the sale of the property D. Whether the husband received an amount of approximately $295,000 or whether he received an amount of $256,000 is, to all intents and purposes, irrelevant. There is very little, if any, left. The husband in his affidavit seeks to set out some explanation of where some of those monies might have gone but almost entirely, there is absolutely no financial documentation provided which corroborates any of the indications given by the husband. His evidence was, without doubt, the most nonsensical and unable to be appreciated, I have ever had the misfortune to see.
The husband was not an educated man. The husband was not a sophisticated financial person and, in fact, if anything he was the most financially inept person I have encountered. It was clear that he had wasted enormous amounts of money. He had no experience whatsoever in relation to the share or stock market but had, as he said, "dabbled in the market" but appeared, of course, to have nothing that remained from any of those ventures made by him in relation to the stock or property market. He was a disaster waiting to happen and whilst it is a tragedy for the husband, it is a far greater tragedy for the wife and the children.
The husband appears, certainly since separation, to have existed on a weekly or monthly basis, as a result of the generosity of his parents. They received some millions of dollars as a result of the sale of the D property. The husband is their only surviving child. It is expected that they would provide for him, and particularly in circumstances where he does not, for example have other alternate employment, and therefore little capacity to provide for himself, it is understandable but what their actions have done is to lead the husband into a life of a spendthrift and a wastrel.
There is no control placed upon him. There is no expectation that the husband would even consider what he might or might not need to do, in relation to the budgeting of his finances. It appears very clear, that certainly since the sale of the D property, the husband has received tens of thousands of dollars from his parents, whenever that might be needed. Counsel for the mother, in fact, detailed monies that had been received by the husband from his parents.
It is clear that those monies have been provided simply for day to day expenses. The parents already provide him with a fully subsidised motor vehicle, a residence in which he is to live, and in fact because of monies received by him, there is at least some assessment for the payment of child support in relation to the three children but that is also paid, in its entirety, by the husband's mother. The husband has absolutely no financial acumen nor does he have any checks or balances, in relation to what he might or might not do with regard to property.
That is of course evidenced even more fully, in the circumstances that now exist, with regard to the properties owned by the parties as investment properties. As was set out in submissions on behalf of the wife, the parties purchased two rental properties in Charters Towers. The submissions made by counsel for the wife are apposite. They have had in the past, tenants in them although, at this time, neither property is habitable. Property F was damaged by fire a couple of years ago. Property F is insured and the husband chose not to claim on the insurance. The husband gave evidence that it was such a small claim that he thought that the work could be done by himself.
He also gave evidence, in evidence-in-chief, that he needed the work done in a hurry. The husband has not done the work in a hurry. Indeed, the husband has done very little and the work is not only grossly incomplete but is grossly substandard. The husband has provided some receipts to indicate monies, which have been spent. The receipts totalled $1481.11. The husband says he spent much more than that and that receipts came in a lot of different piles, but that he could not produce those anymore and was not able to say how much they were, but that it was a lot more than what had been produced.
The house in G is not presently habitable, as it does not have a kitchen or a bathroom. The husband says that he has been working on that house, by putting a dividing wall in a part of the house such as to create a further bedroom and a pantry. The photographs of the dividing wall were tendered and it is clear that the work is substandard and does not create an enclosed bedroom.
The house at G, has been said by a valuer to be worth no more than a $150,000 in its present state. The loan taken out by the husband in November 2007 is in the sum of $120,000. The house is now encumbered to 80 per cent of its said market value. There is no explanation from the husband as to how he spent the money which he received from the further encumbrance. Indeed, there is nothing to indicate how the husband has spent any of the monies which he has borrowed against the G property. It is noted that the original loan was for $33,000. The financial statement sworn for trial purposes deposed to a loan of $56,000. There is no explanation of or document which indicate why the loan went from $33,000 to $56,000 and what the husband used that money for.
There are no mortgage documents or bank statements which show how that money has been paid off. There is nothing within the bank statements which have been disclosed, which show regular payments of any mortgages.
A week before the trial the husband's solicitors advised that the G property had been placed on the market without any reference to the wife. The husband seems to have done this of his own volition.
The F property is also valued at around the $150,000 mark. The repairs which the husband has been slowly effecting to the property are substandard. Mr J gave evidence of the standard of the repairs, which included that tiles have been placed on top of carpet.
In his most recent financial statement the husband says that the mortgage over the F property is still in the order of nearly $48,000. No documents have been disclosed which support that assertion. No documents have been disclosed which show what payments have been made on that mortgage, at any point in time post separation.
These two assets have been in the control of the husband since separation. The wife's position has been quite clear at all times, that having left the marriage with no money and with no assets and with three children to attend to and provide for, she has not been in a position to contribute at all to the maintenance of the mortgages or the physical maintenance, of the properties.
The husband had access to nearly $300,000 and failed to attend to payments to do with the G property. The F property was damaged by fire and the husband has failed to use the insurance, which is properly there for that very reason. The houses have not been tenanted because they are not habitable. These actions have all been due to the acts or omission of the husband.
The wife's position in relation to this, as in relation to all of the other matters that have been referred to is understandable. The husband's behaviours have been outrageous. He has acted, as I said, as a spendthrift and a wastrel. He has acted specifically to satisfy his own wishes and intents and, as a direct result of those actions, has deprived his wife and children of all that might properly have been available and utilised by them, in relation to their future care.
The husband should, without doubt, be utterly ashamed of his behaviour in relation to this matter and unfortunately, I might add, so should his parents. I gained the distinct impression that they were aware of the wasting behaviours of the husband. During the whole of his life, he has been coddled and cared for by them and yet when their own grandchildren were clearly, as a result of his behaviours, to suffer and to lose out in the future, they did absolutely nothing whatsoever to take into control, the behaviours of the husband.
The husband has acted in the most deleterious manner. He has acted entirely without consideration of the effects of his behaviour and of the consequences of those behaviours. As I said, the husband should be absolutely ashamed in every respect, for the actions taken by him and of the dreadful waste that has occurred and of the obvious consequences that flow, not only of course to the wife, but to the children. The husband, in his response, is self serving in the extreme when he says that he could do no more than to offer in its entirety that which he does from the property that remains.
It of course fails completely to recognise the outrageous nature of the behaviours taken by him and the consequences that then flow in relation to this matter.
Other witnesses were called in relation to these proceedings. An expert, Mr J, principal of “J's Real Estate and Livestock” in Charters Towers, gave evidence as to the position with regard to both the F and G properties. In a nutshell he indicated that they were uninhabitable, that they had not been in any way properly maintained and that work had not been completed notwithstanding years of suggestions by the husband that he was attending to such work.
Mr J indicated that the assessments in relation to both of the properties were in the vicinity of $150,000 at the present time, but that if work were properly and competently completed in relation to them, then the value of such properties might increase to $170,00 but of course, there needed to be consideration of how much it would cost to bring the properties up to a habitable condition.
There was tendered, through Mr J, copies of his appraisals and photographs were also provided in relation to the properties. They showed that the properties are clearly uninhabitable. They are obviously in a most dilapidated state and the work, apparently sought to be effected by the husband in a workman-like manner, falls so far short of what could have been expected that it is outrageous in the extreme, particularly when in fact the damage to the F property is the subject of insurance and no claim or call has been made upon it. It is an appalling situation and is simply one more indicator of the most inappropriate behaviours of the husband.
Also required to give evidence in relation to this matter were the husband's parents. Mr M is the husband's father. He was required to give evidence under subpoena issued by the wife. He was clearly a witness who did not wish to be in attendance. The evidence that he gave was, I think, honest but at the same it was given in what one could only describe as an uncooperative and obstructive manner.

Mr M senior, failed entirely to recognise the gravity of the situation that had arisen, as a result of the actions of his son.
It was put to him, for example that considerable amounts of monies had been provided to his son, from accounts operated by Mr M senior.

Mr M senior indicated that he wasn't sure what had been paid. He didn't know what was occurring and when asked whether he was, in fact, simply wilfully not answering questions, he indicated that he couldn’t do so, because he didn't have bank particulars available to him.
It was clear that Mr M was a far more financially astute gentleman, than was his son. Sadly, I have grave concerns as to the legitimacy of the answers that were given by Mr M senior. He indicated that the monies that were being given by him and his wife to the husband in these proceedings, were loans but not necessarily required to be paid back. In fact, his indication was that, “unless there was some falling out between he and his son”, the monies would not be paid back. But when push came to shove, and he was challenged as to how that might occur, it was clear that Mr M knew that the monies that were given to the husband were not loans but rather gifts, because there was absolutely no prospect whatsoever of the monies being returned.
The husband's mother, Ms M, was also required pursuant to subpoena issued by the wife, to give evidence in relation to this matter. Ms M was, I thought, the most impressive of all witnesses called from the husband's side, though of course, technically, they were appearing as a result of the subpoenas issued by the wife.
Ms M was asked specifically whether the various monies that were being paid and provided by she and her husband to the husband in these proceedings, were called loans rather than gifts, so that it was obvious that there would be nothing available to the wife. Ms M indicated that that was not the case and that they were loans, but when asked how they might be paid back, she indicated that it was not a matter that she had any involvement in and that her husband would organise that.
As I have indicated, I already gained the distinct impression that the use of the term "loan" was simply for the purposes of ensuring that there was some prospect or possibility of getting monies back from the husband but of course there was no real prospect of that occurring.

Ms M senior was, as I say, a more impressive witness than either the husband or Mr M senior, but she also clearly viewed the husband's position in relation to this matter with rose coloured glasses.
When she was asked whether she was aware that he had spent $250,000 or more in 15 months, she indicated that she was not aware of that. When asked whether she knew that she and her husband, in the last three years or so, provided him with somewhere in the vicinity of $180,000, she indicated that she had not added the monies up. Then when asked whether she accepted that her son was not good with money, she said that that was not at all the case and that she and her husband did not manage the husband’s affairs. But as questioning went on, it became clear that there was at least some degree of recognition of the difficulties and that the husband had no financial acumen whatsoever.
The nub of this case however, was centred on one question that was directed to Ms M senior by counsel for the husband. She was asked whether, with her son being the only child remaining alive, she and her husband would leave everything to her son. It was answered by Ms M senior in a rather circumspect way in that she said, that she and her husband had "not decided".
It was clear that the only recipient of monies from the estates of Mr and Ms M senior would be the husband. That would obviously be a considerable amount but one must wonder when that might occur and how that might occur. There are, for example, a number of contingencies that might arise in relation to the matter such as, of course, the husband in these proceedings predeceasing his parents, which would lead to other questions arising.

It might also be that the estate of Mr and Ms M senior might be distributed, other than in its entirety to the husband, including of course, some provision to their grandchildren, the children in this matter. The fact is, of course, that there is no certainty in that regard and it is a matter that must be considered in relation to the determination of these proceedings.
As can be seen from the comments made by me in relation to this matter, there are enormous difficulties that arise in relation to the proceedings. The position taken by the wife, particularly as outlined in the submissions in relation to the proceedings, clearly indicate that at least some consideration should be given to, in some way, delaying the responsibilities with regard to the payment of property settlement.
I am mindful in that respect of the legal principles that need to be looked at, both in relation to issues with regard to the distribution of property as between the parties as well those matters that need to be considered with regard to what is commonly referred to as, "add backs" in relation to property. In other words, has there been waste and should it be in some way re-included in the financial whole, that is available for distribution between the parties.
The relevant legal principles are those which are contained within section 79 and section 75(2) of the Family Law Act. The Court must ascertain what the parties assets and liabilities are at the date of trial. The second step is then to consider the contributions that each party has made towards those assets and those contributions can be contributions either of a financial or of a non financial nature, to the family. Contributions to property include financial and non financial contributions made directly or indirectly by or on behalf of a party to the marriage and to the acquisition, conversation or improvement, of the property of the parties.
Contributions to the welfare of the family are the contributions made by a party to the marriage, constituted by their roles as homemaker or parent. The authorities make it clear that contributions to the welfare of the family must be given appropriate weight and are not treated as a token matter or as a contribution, which is of inherently less value than a financial contribution to property.
In assessing the parties' contributions to the acquisition of the assets of their marriage, the Court must consider issues with regard to whether a global approach or an asset by asset approach, is appropriate. The global approach is the more common or generally adopted position in relation to proceedings. Once contributions have been assessed, a third step or stage is required to be looked at which is an assessment of the parties' future needs by reference to the factors which are set out in section 75(2) of the Family Law Act.
Finally there is a fourth step which is a general overview required to be looked at, in order to ensure that justice and equity are met. In this matter there is a very strong argument put in relation to whether there should be the add backs to which I have referred. I have been referred particularly to a number of decisions including that which perhaps started the consideration of such matters which was Kowaliw & Kowaliw (1981) FMC 91-092. In that case, Baker J said the following:
As a statement of general principle I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage, whether such losses result from a joint or several liability should be shared by them (although not necessarily equally) except in the following circumstances:
1.Where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effected value or worth of matrimonial assets; or
2.Where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
As is perhaps obvious from the comments that I have already made in relation to this matter, the husband has acted recklessly, negligently and wantonly with matrimonial assets. The assets have been dissipated. The value of the matrimonial pool has been greatly reduced. There needs obviously then to be considered, what can be added back but there is a further consideration that must be looked at in relation to this matter.
The fact is, that even if the add backs are given and noted, there is nothing more to distribute in relation to the property of the parties, other than what is available at the current time. The monies received by the husband, either from the sale of cattle and plant and equipment or from further borrowings, have been spent and as best as can be seen, there is no further property available from that spending.
The assets of the parties, though the subject of dispute as to how and when to be distributed, appear generally to be agreed. The assets are as follows:
i)the two properties at G and F, with a current value of approximately $300,000;
ii)plant and equipment apparently in storage at Charters Towers with a value of perhaps $7000;
iii)the Daewoo motor vehicle now owned by the wife;
iv)chattels in storage of unknown value;
v)the husband's Coles Myers shares apparently still held;
vi)the husband's CBA superannuation fund with a value of approximately $20,000
vii)the husband's BT superannuation fund with a value of approximately $75,000
viii)the wife's CBA superannuation fund with a value of about $1000
The total value of assets therefore is in the vicinity of $400,000, though it is unclear as to what might be the value of the chattels that are currently in storage. The mortgages attaching to the real properties are unclear. It appears that there is about $120,000 secured over one mortgage and the second mortgage secured over the F property is in the vicinity of $48,000 as best one can assess. The total value of liabilities therefore is in the vicinity of $170,000, exclusive of the tax debt.
The best information that has been able to be provided in that regard is that the husband's taxation liabilities for the years ended 30 June 2004, 2005, 2006 and 2007 is $9346.44. However, attaching to those are penalties for failure to lodge returns which total $2200 as well as general interest charges and what appears from recently provided documentation, to be what is called an integrated client account, in the sum of $6876.90. The total therefore that is owing in relation to the husband's taxation liabilities is $21,040.58. From the husband's perspective he says that that should be paid by the wife. I will obviously turn to those matters in due course.
The assets of the parties however, as best one can assess, are as set out previously herein.
When one turns to the issue of contribution, there are enormous concerns that arise. The parties were in a relationship for a little over 10 years. The wife brought in, it would appear, about $250,000 in cash, plus some chattel items and a motor vehicle. It appears agreed that the husband brought in virtually nothing, though it is unclear whether the husband did, at the time that the relationship was commenced, already hold the interest in plant, equipment and livestock to which I have previously referred. Again, no information was provided in that regard.
Either way, whatever might have been any interest held by the husband in livestock, plant and equipment, it was received back by him at the time of sale of the property D. The husband received that money and utilised it entirely for his own purposes.
The monies that the wife brought into the relationship, appear generally to have been utilised during the relationship, both for day to day living expenses, it being clear that the husband was at no time well remunerated whilst working on the property owned by his parents, but also appears to have been used for certain joint ventures, including for example, a hay bailing business that the parties attempted to establish as well as of course, to some extent being utilised toward the purchases of the rental properties at F and G, in Charters Towers.
Quite obviously, the wife brought significant additional monies into the relationship over and above that of the husband, which were able to be utilised during the relationship. As I say, if the husband had an interest in the livestock, plant and equipment, at the time of commencing the relationship, it was not generally utilised during the period of the relationship but was capitalised following separation and received in its entirety, by the husband.
The parties no doubt, during the period of the relationship, otherwise contributed each in their own way. The wife, perhaps far more significantly towards the household needs including parenting and care of the children and the husband worked on the property, in his capacity as a stockman.
Each contributed as best they could in a physical manner in that regard. But when one considers the fairly limited duration of the relationship and the enormous initial contribution made by the wife, as well as the significant wasting of matrimonial assets by the husband, there should be an enormous distribution in favour of the wife, such that when one considers the contributions up to the time of separation, one would think that the only appropriate factor would be an 80/20 distribution in favour of the wife.
I find that is, in all the circumstances appropriate particularly when one considers both the initial contribution and the significant issue of waste that arises in relation to this matter.
Of course, the third stage needs also to be considered, which are factors in relation to the future circumstances of the parties and, in addition, those matters which are specifically set out in section 75(2) of the Family Law Act.
The husband, as I’ve found, has limited prospects. It is trite to suggest that he could obtain employment. It is clear that the husband has limited capacities in relation to future employment. He worked for the entirety of his working life on the property owned by his parents. Since August of 2002 he has not worked. He has received the support of his parents and has, of course, had the significant monies that were received following the sale of plant, equipment and livestock.
The husband has little future prospect in relation to earning income and it would appear clear that that is even accepted by the Child Support Agency, in that the assessment of child support to be provided and paid by the husband for the children, is as best one can calculate based on monies received by him, from his parents. The husband has limited future earning capacity.
Unfortunately, the wife's circumstances are just as serious. She has responsibility for the care and supervision of the three children of the relationship and it would appear clear that the husband has little interaction with the children. What is obvious therefore, is that neither has strong prospects for the future, in relation to earning capacity.
The children are young. The youngest of the three children only 8 years of age. The wife has an enormous future responsibility in relation to the children and even if the husband were to continue to make contributions, which are presently made by his parents towards the support of the children, the wife still takes on the vast majority of the responsibilities, both financial and emotional, in relation to the care and supervision of the children.
There is little prospect for the future. Section 75(2)(O) is significant here. It relates to the issue of waste. It is a general catch all that can be utilised in relation to circumstances that arise in relation to property proceedings and it looms large in this matter. As is obvious from the comments already made in this judgment, the husband has outrageously wasted and stripped the matrimonial pool, such that it is a factor which must weigh very heavily in relation to any determination.
Quite obviously, when those matters are considered, there must be a variation of the contributions already calculated and, of course, the parties in fact recognise that, in that both seek 100 per cent of the total value of the matrimonial assets being distributed to the wife. I would think that a 20 per cent adjustment pursuant to the provisions of section 75(2) is a minimal amount and, of course, I intend to make such an adjustment, such that in the final wash up the distribution should be 100 per cent of the matrimonial assets in favour of the wife and zero per cent of the matrimonial assets of the husband.
When one turns to the fourth stage of any determination in relation to such proceedings, there also must be a consideration of the justice and equity of the distribution, to be effected. One would normally think that after a marriage of this period there would be an obvious requirement for one party or the other to receive some percentage of the matrimonial assets, even if it were only very small.
The husband's acknowledgement that he should not receive anything of the assets, however they might be calculated is appropriate and is perhaps the first inkling or recognition by the husband, of the dreadful injustice that he has perpetrated upon the wife and children, in relation to this matter. In any event, the husband is not left destitute.
He is left in the exactly the same position as he previously was in. Namely, he has a home and a motor vehicle provided by his parents. He has a significant allowance provided by his parents and he has the bulk of his obligations, including even child support, met by his family. There is no change in the circumstances of the husband and the justice and the equity of a distribution of the entirety of the matrimonial assets to the wife, is quite appropriate.
Normally that would be the end of the determination, in relation to a matter such as this but that is not the case in this particular matter. There is, as is obvious from the submissions that have been made, very different positions taken, in relation to what should occur insofar as the calculation of the assets and liabilities, and therefore the calculation of the distribution is concerned.
It is most unusual, if not unheard of that there would be a suggestion of a distribution of more than 100 per cent of the matrimonial pool to one party. I'm mindful of the comments of his Honour Lindenmeyer J in Walters & Walters (1986) FLC 91-733, when commenting about limitations upon the power of the Court and, in particular, limitations with regard to distribution of property.
At page 75-343 the judge said:
The wording of section 79(1) itself in my opinion clearly limits the application of the Court's power to property existing at the time of the hearing.
In my opinion, section 79(1) does not give the Court a power to order a settlement out of property which does not exist and could only be brought into existence by the exercise of an alleged borrowing capacity.
Circumstances are different here, in that there is obviously no borrowing capacity, particularly if all of the existing matrimonial property is transferred to the wife. But what does exist is the prospect or possibility of further loans or gifts from the husband's parents, but there is, of course, no obligation upon them to provide such monies and it would be, in my assessment, a nonsense to make an order requiring the payment of monies which there is no guarantee of or capacity to pay.
Counsel for the father, in fact, indicated that there was only one decision able to be located by him, in relation to an order for a payment greater than 100 per cent of the matrimonial pool. In that case, Milankov & Milankov(2002) FLC 93-095, there was an unusual situation, in that, once there was an add back into the pool of monies expended by the husband on legal costs, the award to the wife was greater than 100 per cent of the matrimonial pool but the fact is, that in that case, the husband had a very significant earning capacity and was in a position where he therefore could, and it was found should, borrow additional amounts over and above the assets of the parties, as at the time of hearing.
But that was a crucial factor, in relation to the matter. The judge in Milankov (supra), made a positive finding that the husband had an earning capacity of at least $150,000 per annum and therefore had a capacity to pay, what might be required to be paid by way of loan repayments.
The circumstances here are very different and whilst I sympathise very much with the position of the wife in relation to this matter, I am not at all enamoured of a suggestion that there should be an order for a payment, which to all intents and purposes could not, in any way, be funded by the husband, of his own volition.
The other issues that need to be considered are, what could or should be effected in relation to the payment of the mortgage or mortgages attaching to the properties and taxation liabilities.
It's suggested on the part of the wife, that orders should be made which require the husband to transfer the F property to the wife, subject to the mortgage but that it be paid up to date and that all rates be paid up to the date of transfer.
The wife would then, apparently take on the continuing obligations in relation to that mortgage. Clearly it could not be transferred free of the mortgage because firstly, the mortgagee appears not to have been served and therefore been given the opportunity to be heard in relation to the proceedings and their security is over the property, not over the payment capacity of one party or the other.
What is suggested in relation to the G property, is that the husband retain that property, but if it were to be sold, any proceeds of sale immediately be made available to the wife. That course arises from the fact that it is subject to a very significant mortgage, but there does appear, at least on the face of it, to be some small equity, in relation to the property.
If the husband were to cease payments, and that is unfortunately a very real prospect, it already having been clear that the husband has no capacity whatsoever for money management, then the mortgagees would quite properly be able to take action in relation to the property.

I am far more inclined therefore, to a view that any property which might be transferred would have to be transferred, subject to the mortgages.
To order otherwise would, to all intents and purposes, impose the mortgage on the husband's parents. It would be impossible to enforce. The husband could obviously take no steps in relation to the matter, and it would be clear that if that were the case and the parents of the husband did not take steps to pay the mortgage, then there would be obviously no other alternative open to the mortgagee, than to exercise their rights, in relation to the property.
It would therefore be, a recipe for disaster. The wife should more properly be in a position where she could receive the property and to act as she considered appropriate, with regard to either sale or refurbishment, for the purposes of rental or sale.
The second issue is far more vexed. It relates to the husband's tax debts. As best one can assess, the vast majority of those tax debts arise from monies received by the husband from the sale of plant and equipment, as well as cattle. As I noted previously, the personal taxation returns indicated amounts outstanding for the financial years ended 30 June 2004 through to 30 June 2007 of $9346.44. It's not clear whether there are capital gains tax liabilities which are not calculated but there are penalties and other fees and charges, which take the total of the husband's liabilities to $21,040.48. They are exactly that, the husband's liabilities.
It would be a nonsense in the extreme to suggest that the wife should be responsible for the payment of those liabilities, when the husband has, as I have already found, wantonly and wilfully wasted and dissipated the entirety of monies received by him, during the relationship. The difficulty of course is, that if the husband takes no steps with regard to the payment of taxation, then the Australian Taxation Office has its own position to protect, in relation to the matter.

If the husband, as it was suggested on the part of the husband, partitioned for bankruptcy, a course which would be open to him, then one would expect the bankruptcy trustee could very quickly make application to set aside the orders, under section 106B of the Family Law Act or alternatively, to make application under the provisions of sections 79A. That is a risk that the wife might face, in relation to the matter but it is a determination that would need to be made by the Australian Taxation Office or the bankruptcy trustee, at the time that the husband defaulted.
One would hope that he would not default, in relation to the payment of the liabilities for personal tax. If there is any semblance of decency on the part of the husband and perhaps, unfortunately one might think, also on the part of his parents, then it would not be a case where he would simply again, step away from the obvious responsibilities that he had, in relation to the payment of his taxation liabilities.
He has received almost completely the benefits of the income and resources of the property and in particular, the sale of livestock and cattle. It would be an outrageous injustice upon the wife, to make her responsible for the payment of the husband's taxation liabilities.
I do not intend to make such an order. There is no guarantee in the future, as to what the position might be in relation to the husband's taxation liabilities but as I say, if there is any failure on the part of the husband to meet those obligations and rather to then visit the liability upon the wife, then it is once again, a damning indictment on the husband and his behaviour generally.
I therefore find myself in a position where I am asked to consider a distribution of greater than the matrimonial pool. Whilst I, of course, sympathise with the position of the wife in relation to this matter, it would be in my assessment, a grave error at law to make an order for payments which are beyond the capacity of the husband. It is very different to the situation that I referred to in Malinkov (supra). There is no personal capacity on the part of the husband to pay.
It is not a situation where there could or should be an adjournment of the proceedings. An adjournment, pursuant to the provisions of section 79(5) would be based on considerations such as a likely change in financial circumstances which could be reasonably foreseen to occur.
In this instance, the only likely change in financial circumstances would be a change in the husband's financial circumstances, as a result of the death of the husband's parents. It would be, in my view, most improper for the Court to consider that to be a future possible basis, upon which the proceedings should be adjourned.
In that regard, in any event, I note that there is no specific order sought by the wife, with regard to the adjournment of the proceedings and perhaps in the clear light of day, the wife and her legal representatives accepted at the time that submissions were drafted, that it would be an error of law and a most inappropriate circumstance to act upon.
Section 81 of the Family Law Act requires, that when a marriage fails, the associated financial relationship between the parties to the marriage should end as well. Section 79(5) needs to be exercised sparingly and only in appropriate circumstances. This is not one of those circumstances.
The only basis upon which that could occur, would be if the husband's parents were not well and it was expect that they would not live long, and of course, that there was a direct intent on their part, to ensure that the entirety of the estate went to the husband. There is no evidence in relation to either of those factors and in my view, it would therefore be inappropriate to take any other step, than to make orders which would bring, as best one can hope, an end to the financial relationship between the husband and the wife.
For those reasons, therefore, the orders that I intend to make in relation to this matter will be:

I certify that the preceding one hundred and twenty (120) paragraphs are a true copy of the reasons for judgment of Coker FM

Associate: C Herbst

Date: 14 August 2008