Maguire & Richter
[2009] FMCAfam 85
•6 February 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MAGUIRE & RICHTER | [2009] FMCAfam 85 |
| FAMILY LAW – Property – marriage of approximately four years in duration – weight to be given to level of disparity in parties’ asset position at commencement of marriage – assessment of contributions – wife has emigrated from Germany to Australia – wife has property and pension entitlements in Germany – assessment of section 75(2) factors – whether wife entitled to weighting because of social dislocation arising from her relocation to Australia – just and equitable. |
| Family Law Act 1975, ss.75(2), 79, 117 |
| Richter & Maguire [2008] FMCAfam 214 Ferraro v Ferraro (1993) FLC 92-355; Browne v Green 29 Fam LR 428 Penfold v Penfold (1980) 5 Fam LR 517 |
| Applicant: | MR MAGUIRE |
| Respondent: | MS RICHTER |
| File Number: | ADC 189 of 2008 |
| Judgment of: | Brown FM |
| Hearing date: | 19 January 2009 |
| Date of Last Submission: | 19 January 2009 |
| Delivered at: | Adelaide |
| Delivered on: | 6 February 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr D Whittle |
| Solicitors for the Applicant: | Cardone & Associates |
| Counsel for the Respondent: | Ms R Croydon |
| Solicitors for the Respondent: | Croydons |
ORDERS
In full and final settlement of all claims between the parties for settlement of property:
The wife provide to the husband a notice of removal of caveat number [1] together with the necessary fee to effect the removal of caveat number [1] lodged on her behalf in respect of the former matrimonial home being the property contained within Certificate of Title Register Book Volume [5] Folio [5] and of which the husband is the registered proprietor.
The husband do all things necessary to transfer to the wife free of all encumbrances his interest in the 2003 manufactured Daewoo motor vehicle currently in the wife’s possession.
The husband retain free of further claim for the wife:
(i)His interest in the aforementioned former matrimonial home;
(ii)His superannuation interest;
(iii)All insurance policies, moneys standing in his name in any bank or financial institution and any other financial investments in his name;
(iv)All items of furniture, tools, vehicles, motorcycles;
(v)The ski boat and other items of personality of whatever nature currently in his possession, other than the items specified in order 5 hereof.
The wife retain free from any further claim by the husband the following items:
(i)Her interest in the property in Hamburg in the Republic of Germany;
(ii)All insurance policies, superannuation entitlements, both in Australia and Germany and all moneys standing in her name in any bank or financial institution;
(iii)The aforementioned Daewoo motor vehicle;
(iv)All other items of personal property of whatsoever nature currently in her possession.
The husband within fourteen (14) days of the date of these orders deliver to the wife the following items:
(i)The two iron flowers;
(ii)The two coir doormats;
(iii)The metal green ivy hooks from the bathroom;
(iv)The fly curtain and curtain rail;
(v)The magnifying mirror.
The applications herein be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Maguire & Richter is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT Adelaide |
ADC 189 of 2008
| MR MAGUIRE |
Applicant
And
| MS RICHTER |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Maguire “the husband” and Ms Richter “the wife” are in dispute as to how their matrimonial property is to be divided between them, at the end of their marriage.
The parties met in [L], in the Riverland area of South Australia, in late 2001, whilst the wife was on sabbatical leave from her employment as a [omitted] in Hamburg, Germany. She stayed at Mr Maguire’s house in [L] for two or three months, before returning to Germany.
The parties remained in touch with one another. In October 2002, the wife returned to [L] for a brief holiday, at the end of which the husband proposed marriage to her. In July of 2003, the husband travelled to Germany and the parties were married in Hamburg on 10 July 2003.
The wife migrated to Australia in February of 2004 and has lived in [L] ever since. She left behind a number of assets in Germany, particularly a half interest in a house in Hamburg, which she owns with her first husband, Mr S. She also has entitlements in the German civil servants pension scheme.
However, there is no dispute between the parties that, in monetary terms, the husband brought considerably more assets into the marriage than the wife, particularly in the form of his house located at Property L, [L] and his savings, much of which have been used in extending the Property L property and in living expenses.
The parties’ separated, in difficult circumstances, in May of 2007. For a number of months they lived separately but under the same roof of the Property L property. The wife, who had part-time employment as a [omitted], found it financially difficult to move out.
These circumstances lead to a spousal maintenance claim by Ms Richter, which was vigorously contested by the husband. The application was dismissed, by me, on 14 March 2008.[1]
[1] See Richter & Maguire [2008] FMCAfam 214
At the time, Mr Maguire, who is in his early sixties, was not working. As such, I came to the conclusion that it would be inequitable to expect him to dip into his capital to provide financially for the wife, who was in employment, albeit on a part-time basis.
Mr Maguire continues to be unemployed. He wants to keep living at the Property L property, which is unencumbered and has been his home for many years. Besides his home, the husband’s next most significant asset, in financial terms, is his accrued superannuation, which is currently worth just under $95,000.00.
From the wife’s perspective, the end of the parties’ marriage sees her emotionally fragile and vulnerable. It is her case that she will be unable to undertake full-time work, as a [omitted], for some time into the future and suitable [omitted] positions, in the Riverland are scarce.
It is also her position that she has suffered a considerable degree of dislocation to her life because of her migration to Australia following her marriage. As such, it is her case that she is currently in a parlous financial position because of her limited income and because she is compelled to live in rented accommodation, whilst the husband’s living arrangements are secure.
Although the wife has assets in Germany, it is her case that these are currently inaccessible to her – the house in Hamburg is rented to a secure tenant and the rent received is being used to repay a debt; in addition, her pension entitlements have not yet crystallised, as she is currently fifty-three years of age and remains in the paid workforce.
The marriage between the parties was comparatively brief – around four years. In general terms, the parties agree that, given the length of the marriage and the fact it produced no children, each of them should retain the items of property, which they brought into the marriage. In arithmetical terms, this is close to a 75/25 percent division in the husband’s favour.
So far as the husband is concerned, this should be the end of the court’s involvement in the matter. The wife does not agree. It is her position that her current straitened financial circumstances warrant a further distribution of ten percent of the current value of the parties’ pool of assets to be made in her favour.
It is the husband’s case that the parties’ pool of assets is essentially modest and, as such, is likely to be insufficient to meet the pressing financial needs of both parties. A further distribution of property, in the wife’s favour, can only realistically be made by an allocation from the husband’s superannuation, which will be realised shortly, as he is approaching his sixty-fifth birthday, and due to health issues, is unlikely to return to paid employment.
In these circumstances, it is the husband’s case that his financial needs are more pressing than those of the wife. He has, to all intents and purposes, retired from the workforce. As such, he has no reliable source of income.
In such circumstances, he asserts it would be fundamentally unjust to him to allocate any portion of his superannuation (or indeed compel him to realise his home), when he has sore need of both assets in his retirement and the wife, notwithstanding her current lack of accessible capital, does have access to a reliable stream of income provided by her employment.
In support of her case, the wife places significant emphasis on the level of dislocation she has suffered in her life and finances as a result of moving to Australia to pursue a marriage with the husband. It being the case that, almost certainly, the wife would have been more financially secure if she had remained living and working in Germany and, as such, consolidating and increasing her entitlements in the German pension scheme.
For his part, the husband asserts that the wife’s decision to come to Australia was one which was considered and freely made by her.
As such, it would be inappropriate to make any allowance for its detrimental consequences now because of the marriage’s failure. Rather, the decision should be considered an unfortunate one with the benefit of hindsight in respect of the parties’ separation but otherwise regarded as a necessary corollary of their marriage together.
These proceedings have been bitterly contested. As a result, each of the parties has incurred substantial legal fees. In the husband’s case, an amount of at least $22,500.00. In the wife’s case, a sum of at least $17,000.00. The unfortunate irony being that this total amount is close to the sum sought by the wife in these proceedings.
An earlier hearing date (1 December 2008) could not be utilised effectively because the wife’s solicitors had failed to file and serve the wife’s trial documents as ordered. The husband has made an application for costs in the sum of $3,900.00 to reimburse for his costs wasted by this omission.
In addition, the wife has sought the return to her of a number of items of property. Chiefly woodworking equipment of modest value. The husband objects to the return of these items citing the late raising of the issue with him and the paucity of evidence relating to the provenance of these articles to justify his position.
These proceedings are designed to resolve these various disputes between the parties and, as far as possible, finalise their financial relationship with one another.
The applicable legal principles
The process to be followed, for the division of the parties’ property, is well established by law.[2] 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 steps.
[2] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-355; Clauson v Clauson (1995) FLC 92-595; Hickey &Attorney-General of the Commonwealth of Australia (Intervenor) (2003) FLC 93-143;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[3] There are few, if any, significant disputes between the parties regarding the items to be included in this pool and the current value of those items.
[3] See Biltoft & Biltoft (1995) FLC 92-614
The one area of controversy concerns values at the commencement of the parties relationship and what is the appropriate date to mark that point – the date of the parties actual marriage (July 2003) or when they began to live together, in Australia (February 2004).
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 the parties to a 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 homemaker or parent.”[4]
[4] See Family Law Act Section 79(4)(c)
It is clear from the authorities that this second kind of contributions 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.
In assessing the parties’ contributions to the acquisition of the assets of their marriage, it is necessary to consider whether the court should adopt a global approach or an asset by asset approach. In the former, the court assesses the parties’ contributions to their assets in a total or comprehensive manner. In the latter, the court assesses the parties’ contributions to individual items of property.
The global approach is the method generally adopted because it is usually the more convenient, particularly when the court is assessing different types of contributions – home making and financial – towards the acquisition of the various assets concerned.[5]
[5] See Norbis v Norbis (1986) FLC 91-712 at 75,268
Although the marriage between the parties was brief, when compared to the average length of marriages in this country and although the parties have kept items of property discrete from the other, particularly in terms of the wife’s assets in Germany, the parties agree that it is appropriate that a global approach be taken to the assessment of their various contributions in this case.[6] In this particular case, I am satisfied that such a global approach will allow equity to be served.
[6] See McMahon & McMahon (1995) FLC 92-606 at 82,043
The second step does not appear to create a great deal of controversy between the parties. The wife acknowledges that the husband brought in considerably more assets, in terms of value, than she did and this factor must mean that his contributions will be counted as greater than hers.
The husband’s position is that, putting aside his initial injection of capital, his contributions during the marriage have been greater than those of the wife. However, he does not formally wish to pursue this aspect of his case, it being his position that the parties’ various assets should fall where they now stand and it would be both unrealistic and unfair to expect the wife to pay him any sum of money as a result of his superior contributions during the marriage.
At the end of the second stage, the parties are in general agreement that their various assets should be divided 75/25 percent in the husband’s favour. This will mean that he retains the former family home; his current entitlements to superannuation; and the other items of property currently in his possession.
It would also mean that the wife would retain her interest in the Hamburg property and her future entitlements to a German pension. No cash would have to be transferred between the parties. However, as previously indicated, the wife wishes to have conveyed to her a number of chattels currently in the husband’s possession.
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 facts or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.”
The wife relies upon the provisions of section 75(2)(o). It is her case that considerations of justice and equity demand that she receive an additional distribution of the parties’ assets to compensate her for the dislocation to her life and the loss of opportunities to her in Germany, occasioned by her marriage to the husband and relocation to Australia.
As previously indicated, the wife seeks an additional distribution of property to her equal to ten percent of the parties’ total pool of net assets. She calculates this sum as being around $50,000.00. As previously indicated, it is her case that the husband has access to such a sum in the form of his superannuation entitlements.
It is the husband’s case that it would be unjust and inequitable for there to be any further distribution of property, in favour of either of the parties, by reason of any section 75(2)(o) factor. In any event, given his age; state of health; and retirement from the paid workforce; it is his case that these various factors generally favour him.
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.[7]
[7] See Russell v Russell (1999) FamCA 187
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”[8] or of equalisation of assets or financial resources.
[8] See Waters & Jurek (1995) FLC 92-635
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.
Marriage is by and large a joint enterprise. How much buffer spouses must give one another, when financial set backs occur, must depend on the degree of consultation and acquiescence in their relationship.[9]
[9] See D & D [2003] FamCA 473 at paragraph 49
Documents relied upon
The husband commenced these proceedings on 17 January 2008. He relies on the following documents:
i)An affidavit of himself filed 13 November 2008;
ii)A statement of his financial circumstances filed 13 November 2008;
iii)An affidavit of his daughter, Ms W filed 24 November 2008;
iv)An affidavit of a property valuer, Mr D filed 24 November 2008;
v)An affidavit of Mr C, an actuary filed 25 November 2008.
Mr D gave evidence of the value of the former family home both in February 2004 and October 2008. His view was that the property was worth $294,500.00 at the earlier date and is now worth $410,000.00. These values are not controversial.
In addition, Mr D was asked to value a property previously owned by the husband and located at Property C, [L]. The property was sold in April 2004 for $80,000.00. Mr D valued it, as at July 2003, at $77,500.00. Again, these values are not controversial.
Ms W was not required to attend at court for cross-examination.
She was a joint co-owner of the Property C, [L] property. She gives evidence regarding her and her father’s financial contributions towards this property, particularly moneys which were deposited into an interest saver account relating to the mortgage on the property.
Mr C is an actuary who valued the wife’s interest in the German state employee’s pension scheme. Again, his evidence is not controversial between the parties and he was not required to attend at court for cross-examination.
The wife relies on the following documents:
i)An affidavit of herself filed 15 December 2008;
ii)A statement of her financial circumstances filed 15 December 2008;
iii)An affidavit of her daughter, Ms R filed 5 May 2008;
iv)A medical report of Dr H dated 29 February 2008;
v)A psychological report of Mr S dated 19 January 2009.
Of these various witnesses, only the husband and wife gave additional oral evidence and were cross-examined by counsel for the other party. In particular, neither Dr H nor Mr S, who gave evidence in respect of the wife’s psychological health, was required for cross-examination.
The various affidavits outlined above; the two medical reports; the additional oral evidence of the parties; and a number of documents which were tendered into evidence, particularly some of the husband’s bank statements; form the evidence on which this case is to be determined. In these reasons for judgment, findings of fact are made on the balance of probabilities, following my observations of each of the parties concerned. In what follows, statements of fact constitute findings of fact.
The evidence
This is not a case which relies on findings of credibility. Both the husband and wife seem to me to be honest and candid witnesses, who told the truth about their marriage, as they each saw it. My impression is that they each attempted to make a success of their marriage but regrettably were unable to do so. Necessarily, in the presentation of their respective cases, each has placed different emphasis on what they regard as important in their relationship and its demise.
The wife places emphasis on her straitened financial circumstances now; the difficulty she has experienced in obtaining appropriate work for herself, in Australia; and her understanding, which she derived from the husband, that she would be financially secure in Australia. Something which has not come to pass, given the end of the marriage between the parties. It is the wife’s case that she gave up a great deal, particularly in terms of her financial security, to come to Australia.
The husband places emphasis on what he sees as the support he gave to the wife in her coming to a new life in Australia; his early indication to her that he was not a wealthy man; and his attempts to make his home comfortable for the wife, at considerable expense to himself, activities which are not particularly useful to him now. It is his case that it is now open to the wife to either return to live in Germany or remain living in Australia. What she chooses is a matter for her.
Both parties feel hard done by now at the end of their marriage and at the changes that marriage has wrought to their previously settled and comfortable single circumstances. I have no reason to doubt the validity of each of their respective levels of grievance. However, it is not my function to attribute fault for the failure of their marriage and thereafter allocate responsibility between them now for their mutually difficult circumstances.
The parties met via the agency of the husband’s sister, whilst the wife was on her sabbatical to Australia. She has an interest in the Murray Darling river system. It was happenstance that she was able to stay with the husband at his home in [L], which is on the banks of the River Murray.
Thereafter, a relationship developed between the parties, which both were keen to explore regardless of their different backgrounds and the difficulties which might ensue. The wife revisited the husband in Australia. The husband visited the wife in Germany. I do not think it can be said that they proceeded precipitatively with their relationship.
It was difficult for the husband to contemplate living in Germany.
He did not like the cold. He does not speak German. In the absence of the language, it would have been difficult for him to find employment.
In these circumstances, if the wife wanted to pursue marriage with the husband, she would have to come to Australia. She speaks English well. She apparently has an interest in and an affection for Australia. Accordingly, the wife’s decision to immigrate to Australia was one she took jointly with the husband and which was freely made on her part. Thereafter, in Australia, the parties pooled their resources and supported one another.
The move was not without its risks. However, some level of risk is a necessary corollary of many aspects of human endeavour, including marriage. One party to a marriage is not necessarily to be penalised because things do not work out between the parties concerned as envisaged. As the Anglican Book of Common Prayer has it, marriage is “for better or worse, for richer or poorer”.
The husband has provided some of his bank records. He has also attempted to reconstruct his financial position, at the time the parties began their relationship with one another. I accept the accuracy of this reconstruction and the truth of the husband’s evidence as a financial historian.
In my view, there is no useful distinction to be drawn between the parties, property positions in July of 2003 as opposed to February 2004. The husband began to prepare his home in anticipation of the wife’s arrival there both before and after the marriage. Accordingly both dates have some relevance.
In particular, I accept the truthfulness of the husband’s evidence that he did not attempt to hector the wife into attempting employment which she did not feel was suited for her or to work longer hours. I also accept the husband’s evidence that, during the parties’ marriage, at times when he was unemployed, he actively sought employment but was unsuccessful because of a combination of his age, state of health and past experience.
In addition, I do not think that the wife has exaggerated her level of difficulty in Australia. She does not strike me as a particularly robust person emotionally. It must have been very difficult for her to start a new life in Australia, which was distinct and different from her experience in this country, whilst on holiday.
My impression is that, particularly in the early stages, both parties did their best to make the marriage a success. The wife attempted to find work for herself and is undoubtedly an accomplished homemaker. The husband wished his home to be as commodious and comfortable as possible. He spent a great deal of time, effort and money to make it so.
It is implicit, in these various findings, that the husband did not in any way attempt to trick the wife about what his life was like in Australia. In my view, he has acted honourably throughout. Similarly, I do not think that it can be said the wife has ever attempted to take advantage of the husband. It is sad that the marriage between the parties failed. Inevitably, as is invariably the case when marriages fail, this has significant financial implications for the parties concerned.
a) Chronology
The husband was born in 1944 in Barmera. The wife was born in 1955 in Hamburg. The wife completed tertiary qualifications, at the University of Hamburg, in 1979. She specialised in [omitted].
The husband left school early. He has experience in [omitted], in the Riverland region. He is also [omitted], an interest which he shares with the wife. My impression of the husband is that he is something of a “jack of all trades”.
Both parties have been previously married. The husband married in 1965 and has two adult children. His first marriage broke down in 1990.
The wife married her first husband, Mr S in November 1982. Her only child, Ms R was born in 1983. Ms R is currently in Australia, whilst she is pursuing tertiary studies in Brisbane.
The wife separated from Mr S in December 1988. Around five years earlier, the wife and Mr S had purchased a property in Hamburg. The wife and Ms R lived in this property following Ms Richter’s separation from Mr S, although it remains in their joint names.
Initially, following her qualification, the wife found it difficult to obtain full-time employment, in Hamburg, as a [omitted]. No doubt her responsibilities for Ms R also affected her employability. However, in September of 1993, she obtained permanent employment with the Hamburg [omitted] Department. For many years, she worked on a part-time basis, with the Department, in Germany.
An opportunity arose for the wife to take sabbatical leave from the German [omitted] Department in August 2001. Ms R had recently turned 18 years of age. The wife had an interest in the geography of the Murray Darling Basin.
As a result of these factors, the wife elected to take sabbatical leave in Australia of one year in duration. She was entitled to continue to receive six-seventh of her income, provided she repay the sum to the Department within seven years. It was not necessary for her to resign from her employment to take the sabbatical leave.
The wife came to [L] in December of 2001 and met the husband. She stayed in his home and a friendship began between them. The wife stayed in the husband’s home between February and May 2002. She then returned to Germany but the parties remained in touch.
The wife returned to Australia in October of 2002 for a ten day holiday. It is immaterial whether this was at the instigation of the husband or was the wife’s idea. What matters is that the wife came to Australia and at the end of the visit, the husband proposed marriage to her, which proposal was accepted. The wife acknowledges that she felt that she had a “special relationship” with the husband and her feelings were reciprocated.
Over the following Christmas, the husband travelled to Germany to stay with the wife and meet her family. He returned to Australia in January 2003. A short time later, he lost his employment as a [omitted] in the [L] area, due to a difference of opinion with senior management of the company concerned.
The husband returned to Hamburg in July of 2003 and the parties were married there on 10 July 2003. The parties lived together, in Hamburg, until September 2003, when the husband returned to Australia. The wife was unable to come with him as she was committed to her employment until 30 January 2004. Thereafter, the wife took leave without pay from the Hamburg Department of [omitted].
At that stage, the wife was entitled to take leave without pay for a period of six years, provided she repaid her sabbatical leave debt.
It was also necessary for her to continue to pay her private health insurance, in Germany, to ensure continuing benefits in the event of her return to live in Germany. The sabbatical debt was around A$53,000.00.
I accept that the wife was hesitant about coming to Australia and taking such an extended period of leave from her secure employment. It would be surprising if she did not have some level of reservation about such a significant move. However, the wife acknowledges that it was largely impractical for Mr Maguire to begin a new life in Germany.
b) The parties’ respective financial positions at the commencement of their marriage
The husband purchased the land which the former matrimonial home was constructed in 1993. Over the following years he constructed a modest house, on the property, in which he lived alone. After the wife accepted his proposal of marriage, he began to extend the property.
Mr D values this property, as at February 2004, at $294,500.00.
In addition, the husband had savings of just over $108,000.00, when the parties married in July 2003. Just under $36,000.00 of this sum was held in an interest saver account related to the Property C, [L] property. The remainder was in a cheque account ($28,000.00) and a term deposit ($44,300.00).
The husband purchased Property C in May 1999 with his daughter,
Ms W, who owned the property next door [Property W]. The purchase price, plus expenses, was just over $46,000.00. Mr Maguire paid a deposit of $1,500.00, the remainder being borrowed by way of first mortgage secured against the property.
At the same time as the mortgage was set up, the interest saver account was activated. The husband utilised his savings, in this account, to ensure that a minimum amount of interest was levied in respect of the mortgage. Accordingly, Ms W made no direct financial contributions towards the acquisition of the property.
The property was rented out. The rental payments received being utilised to reduce the principal of the mortgage. At the date of the marriage, the amount outstanding on the mortgage was $17,500.00. The property had accumulated since its acquisition and Mr D values it, as at July 2003, at $77,500.00. Accordingly, the husband’s legal half share was worth $38,750.00.
Besides his savings and items of real property, the husband had accumulated superannuation worth approximately $70,000.00; a number of motor vehicles, motorcycles and a ski boat worth, in his estimation, $14,500.00; and furniture, contents, tools and other items worth around $6,500.00.
In total, the husband values his worth, at the date of marriage, as being somewhere in the vicinity of $500,000.00. In round terms, I accept this figure. At the time of marriage, Mr Maguire was in his late fifties. The sum represented the efforts of his working life, up to that stage.
In 2001, prior to taking her sabbatical leave, the wife estimates she had savings of around A$30,000.00. It is common ground that this sum had reduced to around A$24,000.00 at the time of the parties’ marriage. In addition, as has previously been indicated, the wife was indebted to the Hamburg Department of [omitted] in the sum of A$53,000.00 which related to her sabbatical leave.
In addition, she had her half interest in the property in Hamburg; which she owned with Mr S. The parties agree, in general terms, that this property is worth A$160,000.00.
Finally, the wife had her entitlements in the German civil servants pension scheme. There is no evidence as to the value of this pension entitlement, when the parties married. The wife also had some items of jewellery, antique plates and silverware, as well as some furniture. These items have not been expertly valued. However, in round terms, the wife acknowledges that her property in net terms, excluding her superannuation entitlements, was worth around about $136,000.00, when the parties married.
Accordingly, there was a marked disparity, in the husband’s favour, in terms of asset backing, when the parties married. The wife concedes that the quantum of assets, which the husband brought into the marriage, is a contribution which, in the overall context of this case, is a favour which merits “special recognition”, in the husband’s favour, in the court’s deliberation.[10]
[10] See Pierce & Pierce (1999) FLC 92-844 at 85,811
c) Contributions during the marriage
Mr Maguire was not employed following his return to Australia in August 2003. Earlier, in July 2003, he sent a sum of $6,000.00 to the wife in Germany to cover the wedding expenses and other costs relating to the wife’s immigration to Australia.
In addition, in September of 2003, the husband spent a sum of $14,000.00, accessed from his cheque account to purchase a Daewoo Kalos motor vehicle for the wife’s use, when she came to Australia and which she still retains.
For much of 2003, due to his unemployment, the husband lived on his savings. As a result, his savings diminished. However, I do not think it can be said that Mr Maguire led an extravagant lifestyle during the period.
Unfortunately, in November 2003, the husband suffered a motor vehicle accident, which exacerbated a pre-existing back condition. This was another factor which delayed his return to the paid workforce.
However, in early 2004, he began working with [omitted]. He remained in this employment until the end of September 2007. Thereafter he had a short term position with [omitted], which did not work out. His last position was with [omitted], which expired in February of 2008, shortly prior to the determination of the interim spousal maintenance proceedings.
As previously indicated, the husband was anxious to make the home at [L] as comfortable for the wife as possible. The earlier renovations, which he had begun himself prior to the parties’ wedding, were delayed when it was discovered that the works done did not comply with the necessary building regulations.
Accordingly, in February 2004, the husband contracted with appropriate trades’ people to complete the envisaged extensions. The costs were funded from Mr Maguire’s savings. He estimates the costs as being in the vicinity of $70,000.00. In the husband’s expression, the property concerned was transformed from a “bachelor pad” to a home suitable for a married couple.
It is also the husband’s case that he, from his savings, paid for a holiday to Germany for the parties and generally subsidised a comfortable lifestyle for the parties during the marriage. He is critical of the wife for being prodigal with the use of a credit card, which he funded on her behalf. For her part, the wife’s position is that she had been given to understand the husband was financially secure and, in any event, the expenses concerned cannot be regarded as exceptional.
Inevitably proceedings between former marital partners invoke strong feelings. Such emotions are likely to inform how parties recollect past events and, when those events need to be reconstructed, for the sake of adversarial proceedings such as these, it is only to be expected that such a subsequent reconstruction will favour the party making it.
Both parties have, I think, followed the natural human tendency, in proceedings such as these, to maximise their own contributions and minimise those of the other. The marriage between the parties necessarily involved a period of re-adjustment for them both. The husband concedes that the wife wanted to make the matrimonial home more to her taste. This must have involved some level of expense. The husband did not actively demur from this expenditure.
The husband concedes that the wife was a very good homemaker. He praises her cooking. It is the wife’s position that she performed the vast majority of the household duties. The husband asserts that he regularly did the washing up and vacuuming and played his part.
Disputes of this kind are common in bitterly contested matrimonial property proceedings. In the absence of independent corroborating evidence, they are difficult to resolve. Without wishing to appear sexist, it is commonly the case that men overstate the extent of their homemaking attributes and contributions.
In this particular case, I am satisfied that the parties regarded their marriage as a partnership, to which each contributed, no doubt in different ways. I do not think that either the husband or the wife can be regarded as a passenger in that marriage, who was tended by the other. Both play a part in maintaining the domestic fabric of the marriage.
Similar disputes arise regarding gardening done at the former matrimonial home, particularly the establishment of a forty square metre garden. It is the wife’s case that this was all her work and was a considerable undertaking, which has necessarily increased the value of the property concerned.
The husband concedes that the wife did establish a garden but contends that the wife has overstated how long it took – he says a few days rather than months – and the value of the work done. It being his case that regrettably the garden has long since perished due to the protracted drought.
The wife was also in paid employment during the marriage. It is the husband’s case that the wife lacked confidence in her ability to [occupation omitted] in Australia, something which he respected and accordingly, he did not place her under any pressure to seek full-time employment. However, it is a significant element of his case that his wages provided for the vast majority of the parties’ day to day needs and funded a comfortable lifestyle.
This seems to be the case. Initially, upon her arrival in Australia in February 2004, the wife worked one day per week at the [L] [omitted]. This was later increased to 1.5 days per week from the first [early] 2007. In addition, from October 2005 onwards, she had one day per week [occupation omitted].
With the husband’s acquiescence, the wife used her income to pay off her debt to the German [omitted] Department. The husband was anxious that this debt be cleared as quickly as possible. The wife made some offer to contribute towards the cost of the renovations at their home. However, the husband declined this offer because he did not wish to complicate the financial relationship between the parties. They each operated separate bank accounts during their marriage.
It is also the husband’s position that he indirectly supported the wife’s daughter Ms R because Ms Richter was able to utilise some of her income to pay Ms R’s expenses. She was a student in Germany for much of the parties’ marriage and was living in Ms Richter’s home in Hamburg.
Like the wife, the husband characterises the marriage as a financial misfortune for him. It is his case that the parties lived beyond their means and, as such, he was robbed of the opportunity to consolidate his finances in the run up to retirement. It is clearly the case that the husband did liquidate a large proportion of his savings during the marriage.
In particular, in April of 2004 the husband and Ms W sold both Property C and Property W properties. The amount received for both properties was $175,000.00, although Property C was regarded by the husband and Ms W as being worth $70,000.00. After the payment of necessary expenses, the husband received the sum of $30,175.91 on 10 May 2004. This sum has been spent.
During the marriage, the wife undertook a TAFE course in [omitted]. She has not pursued any opportunities to work in this field and seems unlikely to do so. It is her case that there is not a great demand for eco tourism, at present, in the Riverland area.
a)d) The wife’s German pension entitlements
The wife’s superannuation entitlements are held in a defined benefit scheme. That is her future entitlements, pursuant to the scheme, will be calculated by reference to the number of years service she has completed with the Hamburg [omitted] Department. She is only eligible to access her benefits at retirement age, which is sixty-three years.
Mr C has valued the wife’s future entitlements pursuant to the prescribed methodology provided by the Family Law (Superannuation) Regulations 2001, which is applicable to pension interests in the growth phase. Mr C has assumed that the pension will be payable for life and indexed. Neither the wife nor her counsel have said anything to the contrary.
Mr C has valued the wife’s entitlements using three possible scenarios. Firstly, if the wife remains living in Australia indefinitely and her years of service with the Hamburg [omitted] Department remain as they were on 1 February 2004. Secondly, if Ms Richter returns to full-time employment, with the Department on 1 February 2010, the date on which her leave without pay period expires. Thirdly, what would have been the position if Ms Richter had remained in constant employment, in Germany and had not come to Australia.
Using these scenarios, he has calculated monthly gross pension figures, in Euros, for each and using these figures has then calculated a gross value of the pension pursuant to the applicable methodology.
This achieves the following results. If Ms Richter does not return to Germany (her currently preferred option), her gross monthly pension will be 743.79 Euros, which gives a gross value of 97,770.66 Euros.
Secondly, if Ms Richter resumes her employment in February 2010 and works through to her expected date of retirement in July of 2020, her monthly pension will be 1,641.57 Euros, which equates to a gross value of 215,783.19 Euros.
Thirdly, if Ms Richter had not interrupted her employment, she would have been entitled to a pension of 1,984.74 Euros per month, which equates to a total value of 260,892.63 Euros. Mr C has converted each of these figures into Australian dollars, as at the date of his report in November of 2008. In the intervening period the Euro has appreciated against the Australian dollar.
There is no controversy between the parties regarding any of Mr C’s calculations. Mr Whittle, counsel for the husband has converted these figures into Australian dollars as at the date of the hearing.
e) Events since separation
The parties separated, in difficult circumstances, under the same roof, in May of 2007. At the time, the wife was only in limited part-time employment. She had no savings. It was her case that she could not afford to move out without some form of recurrent financial support from the husband. It was also her case that it was emotionally untenable for her to remain living in the home.
As previously indicated, the husband stopped working in March of 2008. At that time, it was his case that his savings were almost totally exhausted and his prospects of further employment were limited due to his age and state of health. This was the background to the wife’s application for spousal maintenance, which was ultimately dismissed on 14 March 2008.
As a result of financial necessity, the wife has increased her hours of work. She currently works 1.5 days per week at the [omitted]; 1 day per week at the [omitted]; and half a day at week at the [omitted].
At present, Ms Richter receives an average weekly salary from her various sources of employment of $824.00. This equates to a salary in the low $40k’s. Her major weekly expense is her rent of $190.00. She has no savings to speak of.
The husband has been in receipt of unemployment benefits since March 2008. He receives $236.00 per week. It is his evidence, which I accept, that his expenses currently exceed his income and, as a result, he has been forced to dip into capital to fund his ongoing living expenses.
Recently, he has had to fund some repairs to his home and purchase a pump. However, his greatest expense to date has been legal fees, which have been in excess of $22,000.00. He has borrowed a sum of $18,000.00 from his sister to pay these fees. I accept that he has both a moral and legal responsibility to repay this debt.
The wife has not as yet paid any legal fees. However, she has been billed an amount of $17,000.00, which sum does not include amounts to be charged for the current trial. She has no savings to pay these costs. For his part, the husband’s savings now stand at $3,200.00.
Due to the financial downturn and turmoil in world stock prices, the husband’s superannuation is declining rather than appreciating in value. It was worth $96,000.00 at the end of last year but now is worth $94,300.00. This is not a helpful sign for the husband, as he contemplates his retirement. In addition, due to the drought, citrus trees planted in an orchard at his home are unproductive and likely to remain so.
On 4 June 2007, the wife and Mr S rented their house in Hamburg.[11] The monthly rental is 750 Euros. Prior to leasing the property, it was necessary for extensive renovations to be done, particularly the installation of a new central heating system and flooring. Mr S funded these works at a cost of around A$25,000.00.
[11] See exhibit H7
The wife is funding her share of these works by directing her half of the rent to Mr S. The debt in question will be repaid in about sixteen months time. In addition, Ms Richter and Mr S are channelling
100 Euros per month into a sinking fund to cover future expenses on the property.
It is Ms Richter’s evidence, which the husband is not in a position to contradict, that the property has been rented to a couple who have young children. Ms Richter deposes that it is practically impossible to evict such a family pursuant to the applicable German law. The lease in question does not specify a termination date. Accordingly, it is
Ms Richter’s evidence that, for all practical purposes, she is unable to liquidate her interest in the property.
However, from April of 2010 she will be receiving 310 Euros per month as her share of the rent. This currently equates to just over A$600.00. Obviously the sum will change with fluctuations in the exchange rate.
f) The parties’ health
It is the wife’s case that the parties difficult separation and her current circumstances in Australia have left her psychologically vulnerable and with an impaired capacity to work. In support of her position, she relies on two medical reports from her general medical practitioner,
Dr H and her psychologist, Mr S.
Dr H wrote of the stresses in Ms Richter’s life in the early part of 2008. He thought her unfit to work any more than half time. He urged her to find alternative accommodation for the good of her psychological health.
In the period since this report, the wife has modestly increased her hours of work. In the past, prior to the parties’ separation, the wife rejected an offer to work full-time at the [omitted]. She was concerned that her [omitted] skills would be tested, particularly given that English was not her first language. Mr Maguire supported the wife’s decision in this regard.
Mr S has been seeing the wife since August of 2007. He reported that the wife has been prescribed some medication to relieve the symptoms of anxiety and depression and he himself has been utilising cognitive behaviour therapy to assist with these symptoms.
In his report, Dr H wrote as follows:
“Ms Richter currently works as a [omitted] in [L] on a part time basis. I have had reasons to visit this [workplace omitted] on occasions, and have found it to be a quiet, caring, and sympathetic working environment. I have no doubt that
Ms Richter could possibly in twelve months return to full time duties in such an environment. The other [workplaces] in [L] represent “tougher” work environments, and are much larger [workplaces]. In these environments Ms Richter would possibly find [occupation omitted] more difficult and would take longer to return to full time work duties, perhaps two to three years.”[12]
[12] see Exhibit W1
The husband has not provided any expert medical evidence in regards to his health. He has however deposed that he suffers from arthritis in his wrists and knees and suffers constant back pain. As a result, he has limited movement in his wrists, which prevent him pruning and operating a pop rivet gun. Given his previous employment, these are significant disabilities.
In addition, his back injury makes it difficult for him to use a spade or bend. He also experiences pain whilst sitting or driving. The husband also described having a significant level of impairment in his hearing. This was readily apparent during his oral evidence in court. He finds it difficult to use a telephone.
The husband, notwithstanding his various health issues, continues to lead an active life. He seemed to me to be a positive person. Last year he volunteered, through Rotary to visit the Solomon Islands, where he assisted in the construction of accommodation. Shortly, he is due to travel to South America to take part in a motorcycle touring holiday.
I do not think that Mr Maguire is overstating his disability for the sake of these proceedings. Rather, I accept his evidence that he is a person who likes to remain active and not to dwell on his problems. I also accept that he has been active in his attempts to seek paid employment. However, his age and current health issues are significant impediments to him obtaining employment.
g) The miscellaneous chattels
The wife was late in filing her principal affidavit for the trial in this matter. Her counsel, Ms Croydon has assumed responsibility for this omission, which came about because of problems in her office. In conjunction with the wife’s trial affidavit, filed on 15 December 2008, she presented a schedule which contained sixteen items she wished to be returned to her from the former family home.
The husband’s trial affidavit material was filed on 13 November 2008 in anticipation of the trial originally scheduled for 1 and 2 December 2008. As a consequence, he was not able to respond to this issue until the rescheduled date for the hearing on 19 January 2009.
The husband is prepared to deliver five of the items sought to the wife. However, Ms Richter still requires the following items to be forwarded to her: a router; a circular table saw; a mitre circular saw; a handheld circular saw; a planer; a fan heater; four strong magnets; some timber shelving; and a leather bike suit.
In addition, the wife wishes the husband to make arrangements for half of the Qantas frequent flyer points, accumulated with the Visa card used by the parties during the marriage, to be transferred to her. She also wishes the parties to exchange irons.
These various issues consumed a significant proportion of the hearing time. It is the husband’s case that he purchased the woodworking tools, which have no great value. The wife concedes that this is so. It is his case that he owned the fan heater prior to meeting the wife and the bike suit was manufactured for him personally, at his sister’s instigation, in Bali.
He deposed that the magnets were worth, at most, $5.00 each. He objected to the transfer of the frequent flyer points, if indeed they could be transferred, on the basis that he had paid the recurrent instalments on the card in question, which had enabled the points to be earned in the meantime.
So far as the iron was concerned, the husband indicated that he was currently using his late mother’s iron, which had sentimental value to him. On clarification, the wife indicated that she sought a German iron, which she thought she might have left in the pantry at the former matrimonial home. The husband indicated that he would look for it and if it was located he would forward it on to the wife.
I accept these items of property are important to the wife. From the husband’s point of view, these matters were raised at a late stage and it is his position that the items in question should rest where they are. I accept the husband’s evidence in regards to these various items and do not propose to make any specific order in respect of them. I will make the necessary orders requiring the husband to deliver the items to the wife which he is willing to give her.
Step One – the pool of assets
The parties are in agreement regarding the value of the most substantial assets relevant to these proceedings in the form of the Property L, [L] property; the husband’s superannuation; the half share in the property in Hamburg; and a number of shares and other bank accounts.
In addition, the parties own a number of motor vehicles, largely in the husband’s possession. No expert valuations have been obtained in respect of these various vehicles. Only one valuation is in dispute, which relates to the wife’s Daewoo Kalos motor vehicle. The husband estimates its value at $5,500.00. The wife has consulted a second hand motor vehicle dealer who ascribes a value of $4,500.00 to the vehicle in question. I will utilise the wife’s preferred figure.
The wife estimates her jewellery, silver cutlery, furniture and other furnishings, which were hers prior to the marriage at $20,000.00.[13] The husband is prepared to accept this figure.
[13] See wife’s affidavit filed 15 December 2008 at paragraph 72
The husband has in his possession a number of motor vehicles and motorcycles, in varying states of repair. In total he estimates their worth as being $15,250.00. The wife estimated the value of these various vehicles, at the time of the parties’ marriage, as being $11,000.00. In all the circumstances, I propose to accept the husband’s valuations.
The husband also has a ski boat, the contents of his home and a variety of tools. He values these various items at $9,700.00. The wife thinks this figure is conservative, but again no expert evidence has been provided. Apart from the items discussed earlier, the wife does not seek a transfer of these items and is content to let them remain where they are.
In these circumstances, in my view, the value of these various items is largely academic. They do not have significant value and were acquired by the husband prior to him meeting the wife. They are important to him but are likely to be difficult to sell at full value.
The husband has debts to ANZ Visa and [L] IT in an amount of $2,245.00. More importantly, from his perspective, he owes his sister Ms B the sum of $18,672.00, which relates to his legal costs to date. As previously indicated, his total legal fees are $22,547.00, the difference being funded from his previous savings.
If the debt is included, it is the husband’s position that his legal fees paid to date should be notionally “added back” into the parties’ pool of assets. The Full Court of the Family Court has identified a number of circumstances where it is appropriate to notionally “add back”, into a pool of matrimonial property, assets which do not exist or cannot be proved to be still existing.[14]
[14] See AJO & GRO (2005) 33 Fam LR 134 at 144
One of these areas is where matrimonial assets have been utilised to pay legal fees, thus diminishing the pool of assets to be divided between the parties to a marriage and so creating a situation where the normal rule whereby each party should bear his or her costs is defeated.[15]
[15] See In the Marriage of DJM & JLM (1998) 23 Fam LR 396
In this case, each of the parties has a debt of at least $17,000 to $18,000 arising as a result of legal costs. In the husband’s case the debt is owing to his sister. In the wife’s case it is owing to her solicitor. In my view these sums largely cancel each other out. I propose adding back the sum of $3,875.00 representing legal fees paid by the husband from the asset pool.
Superannuation issues loom large in this case. In these circumstances, it is appropriate that the parties’ superannuation be placed in a separate pool to their other assets, in accordance with the principals laid down by the Full Court in the Family Court in C & C.[16] This is so the parties’ respective contributions made towards the accumulation of their respective superannuation entitlements may be assessed separately to contributions made towards other of their more “conventional” assets.
[16] C & C (2005) FLC 93-220
This is so one or other of the parties’ contributions to that superannuation may be given “proper recognition”. In order to ensure this “proper recognition”, it is necessary for the court to consider what is the “real nature” of the relevant superannuation interest – namely whether it is likely to be received as a recurrent pension or a lump sum or in some other manner.
The husband’s superannuation will be received by him as a lump sum upon his permanent retirement from the workforce. At present his superannuation entitlements amount to $94,358.00.[17] The wife has acquired modest amounts of superannuation, in accumulation funds, during the time of her employment in Australia. The value of this superannuation is $9,586.00.
[17] See exhibit H4
Likely to be more controversial is the issue of the appropriate value to be allocated to the wife’s German superannuation given the open-ended nature and uncertainty of the wife’s future entitlements. Because of the offshore nature of this fund it is not amenable to being split, between the parties, pursuant to the applicable Australian legislation. Accordingly, the benefit will always remain with the wife.
The wife’s evidence is that she intends to remain living in Australia for the foreseeable future. She is now well settled in [L], where she has made friends and enjoys the lifestyle. I accept this evidence. In these circumstances, it seems appropriate to adopt the lowest figure calculated by Mr C for the value of the wife’s German superannuation entitlements.
However, there is a different intrinsic nature in the quality of the parties’ respective superannuation entitlements. On crystallisation of her entitlements, the wife will be entitled to an assured and indexed pension for the remainder of her life. This will provide her with a measure of financial security, which is lacking to the husband given that he will receive a one-off cash payment when he redeems his superannuation. I will return to this issue when assessing the applicable section 75(2) factors.
For all these reasons, I find that the parties’ pool of assets, available to be divided between them, is as follows:
175. Property L, [L] *[18]
176. 410,000.00
177. ANZ Access cheque account *
178. 3,281.00
179. ANZ savings account *
180. 42.00
181. Elders account *
182. 44.00
183. Incitec shares *
184. 442.00
185. 110 CBA shares *
186. 3,008.00
187. Isuzu utility *
188. 1,000.00
189. 1992 BMW *
190. 4,000.00
191. 1962 Zetas *
192. 3,500.00
193. Suzuki VX800 *
194. 2,500.00
195. Yamaha Virago *
196. 2,500.00
197. Two BMW motorcycles *
198. 1,000.00
199. Suzuki 350 *
200. 750.00
201. Daewoo Kalos
202. 4,500.00
203. Furniture and contents *
204. 5,000.00
205. Ski boat *
206. 3,500.00
207. Tools and sundry items *
208. 1,200.00
209. Half share of house in Hamburg
210. 160,000.00
211. Wife’s furniture and affects
212. 20,000.00
213. Legal fees (add back) *
214. 3,875.00
215. Total
216. 630,142.00
217. Liabilities
218.
219. Husband’s Visa card
220. 1,117.00
221. [L] IT
222. 1,128.00
223. Total liabilities
224. 2,245.00
225. Net Assets
226. 627,897.00
227. Superannuation
228.
229. Husband’s superannuation
230. 94,358.00
231. Wife’s Australian superannuation
232. 9,586.00
233. Wife’s German pension
234. 192,454.00
235. Total Superannuation
236. 296,398.00
[18] an * this denotes items in the possession of the husband as at the date of trial
Step Two – assessment of contributions
The marriage between the parties was about four years in duration, during which period the parties lived apart for a significant period of time. Due to a number of factors, chiefly the short duration of the marriage, the parties were unable to accumulate any significant assets during it.
To the contrary, it is the husband’s position that his asset position declined during the marriage and it is only due to inflationary factors, relating to the Property L property, that the parties’ asset pool has increased during the period of their marriage. I agree with his assessment in this regard.
One of the striking features of this case is that almost entirely the assets available for distribution between the parties were acquired by each of them, independently of the other, prior to the commencement of their relationship together. In terms of the non-superannuation assets, the husband has directly contributed about seventy percent of their current worth and the wife around thirty percent.
During the marriage, the husband was in more reliable and full-time employment than the wife. I also accept that he utilised a significant amount of his savings accumulated prior to marriage in supporting the parties’ comfortable lifestyle.
For her part, the wife utilised her income, with the husband’s ascent, to reduce her debt to the Hamburg Department of [omitted]. Her direct financial contributions, during the marriage, were modest. For these reasons, I accept that the husband’s direct financial contributions, both before and during the parties’ marriage were considerably greater than those of the wife.
For reasons already provided, I accept that both parties regarded their marriage as a bona fide partnership. As such, both made contributions to ensure the other’s ongoing well being. As such, I assess the parties’ non-financial and home making contributions as being essentially equal.
The parties’ superannuation, as I have assessed it, is worth $296,398.00. Of this sum, the wife has contributed slightly in excess of sixty-eight percent. However, in my view, such an analysis is highly artificial. As I already observed, the intrinsic nature of the parties’ future superannuation entitlements is essentially different.
More importantly, the vast majority of the parties’ entitlement to superannuation was accumulated in the period prior to their marriage. In the wife’s case during her service with the Hamburg [omitted] Department. In the husband’s case, in a variety of positions held by him prior to 2004.
In all these circumstances, in my view, it would be equitable to assess the parties’ contributions to their respective superannuation funds individually and assess those contributions to their respective funds as being total.
The wife has accumulated less than $10,000.00, in superannuation, during her five years living in this country. For much of the marriage, the husband was in full time employment. Necessarily he accumulated more superannuation than the wife. He estimates he added around $20,000 to his fund in the period of the marriage.
In monetary terms, there is not a gross disparity in the amount of superannuation acquired by the parties during the period of their marriage. Rather, the vast proportion of their superannuation was acquired prior to the parties’ marriage. In these circumstances, I do not consider that it would be just and equitable to make any changes in how that superannuation is held at this second stage.
In any event, the German superannuation is not amenable to any splitting order. In my assessment, it is more appropriate for the court to consider the ramifications of the divergence in the parties’ superannuation holdings at the third step of the proceedings.
Step Three – 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:
the age and state of health of each of the parties;
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;
whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
a child or another person that the party has a duty to maintain;
the responsibilities of either party to support any other person;
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
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;
where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
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
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;
the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
the need to protect a party who wishes to continue that party’s role as a parent;
if either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; orvested 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
any other fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
the terms of any financial agreement that is binding on the parties.
Given the circumstances of this case, I will concentrate on the following provisions of section 75(2) – (a), (b), (d), (f), (g), (k), (n), & (o).
Sub-section (a) – The husband is sixty-four years of age, the age at which most Australian citizens are either contemplating retirement or have retired from the workforce. As I understand matters, Mr Maguire has worked for the vast majority of his adult life, largely in the [omitted] field.
I accept that Mr Maguire suffers arthritis in his wrists and has a back condition. These are ailments which are likely to have implications for his ability to work in a [omitted] setting. In addition Mr Maguire has a hearing impediment and finds it difficult to sit down for long periods of time. These factors and his previous work experience do not make him an attractive prospect for a sedentary occupation.
Ms Richter is fifty-three years of age. It appears to be the case that she is physically in good health but is psychologically stressed by her current circumstances and, as a result, is prone to suffer depression and anxiety.
However, she has been seeking appropriate medical and psychological treatment for these conditions, which are gradually resolving. I have no reason to think anything other than that with the conclusion of these stressful proceedings, her psychological wellbeing will improve. It is unlikely that Mr Maguire’s various physical ailments will significantly alleviate with the conclusion of these proceedings.
Sub-section (b) – Ms Richter is in permanent, albeit part-time employment. She has qualifications in [occupation omitted], which are recognised in this country. She speaks English very well indeed.
I accept that Ms Richter is not a psychologically robust person. As such, it is daunting for her to consider full-time employment in a [omitted]. I also accept that there are a limited number of [omitted] in the Riverland area, which Ms Richter would find attractive as potential employers.
However, over the next twelve months or so, Mr S believes that
Ms Richter would be able to return to full-time employment. It is the case that she has developed a relationship with both the [workplaces omitted], where she appears to be a valued [omitted].
As a result of these factors, I have no reason to doubt that Ms Richter has the required physical and mental capacity to retain her currently meaningful and rewarding employment. At present, it provides her with a reasonable income stream.
As the Full Court of the Family Court recognised in Clauson[19] the most valuable “asset” which a party can take out of a marriage is a substantial, reliable, income earning capacity. In this case, it seems to me, that Ms Richter’s income earning capacity is far more assured than Mr Maguire is.
[19] See Clauson & Clauson (1995) FLC 92-595 at 81,911
He is currently in receipt of unemployment benefits. He is very close to the age at which he will be entitled to claim an aged pension. His arthritis and back injury preclude him from pursuing his previous forms of employment. It is a time of rural downturn in the Riverland because of the prolonged drought.
In the form of her property in Hamburg, the wife has a significant future financial resource. I accept that her interest in the property cannot be easily realised. However, in a little over a year’s time, it will provide her with a reliable income stream.
The husband’s most significant financial resource, apart from the former family home, is in the form of his accumulated superannuation. In this day and age, a sum of around $100,000.00 cannot be regarded as adequate to maintain any person in comfortable long-term retirement, particularly given the current levels of life expectancy in this country.
The reality therefore is that Mr Maguire will be dependant upon some form of state provided income support, most probably in the form of an aged pension, for the remainder of his life. His only other option is to sell the Property L property and move into cheaper accommodation. At present, this is not an appealing option to him.
The wife is some years away from retirement. She is likely to have at least seven years remaining to her in the paid workforce. During this period, she is likely to be able to consolidate her holdings of superannuation in an accumulation fund.
For personal reasons, it is the wife’s preference to remain living in Australia, although she is likely to be better off financially if she returns to live in Hamburg and resumes her employment with the [omitted] Department there. However, notwithstanding this decision, upon her retirement, the wife will have an entitlement to a recurrent and indexed superannuation pension for the remainder of her life. This is a significant financial resource.
The capitalised value of this fund, pursuant to the legislatively mandated methodology is A$192,454.00 if the wife does not contribute any more years of employment to the Hamburg Department of [omitted]. In my view, this valuation is somewhat artificial in its nature. A more realistic approach is to look at the recurrent monthly amount the wife will receive from the age of sixty-three until her death.
In 2009 dollars she will receive A$1,457.81 per month. This figure will increase due to inflationary factors. The German state guarantees its payment regardless of the length of the wife’s life or any future contraction in global financial markets – protracted or otherwise. The open ended nature of this entitlement confers a considerable future benefit on the wife. It is not beyond the bound of possibility that the wife will receive the pension for a period in excess of twenty years, eighty-three years being the average live expectancy for women in Australia currently. [20]
[20] Australian Bureau of Statistics 2004 life expectancy at birth for females
Whatever is the ultimate outcome of these proceedings, the wife will retain this form of financial “safety net”, which is a very significant resource indeed. Its receipt will ensure that the wife remains significantly better off than a person on an aged pension alone and its receipt will mean that the wife’s old age has some semblance of financial security.
The marked difference, between the parties, at this stage, is that the husband has secure accommodation, whereas the wife does not. She is reliant on rented accommodation and is likely to remain so for the foreseeable future.
However, the wife is not without capital. She has her half-share in the Hamburg property. I accept her evidence that this asset is not easily liquidated. However, I doubt that this situation will remain so for the indefinite future. At some stage, the property will be sold liberating the wife a significant capital sum, which, if she wishes, she can allocate towards the provision of housing for herself.
Sub-section (d) – Both parties appear to me to live modestly. Their expenses for self support are unexceptional. I do not think Mr Maguire can be criticised for travelling overseas to either the Solomon Islands or South America, particularly as his son is funding this latter trip.
Sub-section (f) – One of the difficulties in this case is that, at the present time, the husband is more financially secure than the wife but as time unfolds it is likely that the wife will have far more scope to consolidate her financial security and so the balance of financial security will fall in her favour. In my assessment, the wife has the potential to have a more financially secure retirement than the husband, who will have limited savings and superannuation.
In his imminent retirement, the chief staple of Mr Maguire’s income is likely to be the aged pension. On the other hand, the wife will be able to augment any entitlement she has to Australian social security payments with her German indexed pension, during her retirement.
Sub-section (g) – One of the sad consequences of the end of the marriage between the parties is an inevitable reduction in the standard of living for them both. It is trite, but true nonetheless that two households cannot live as cheaply as one. What is important, in respect of this subsection, is that any drop in standard of living should not be borne disproportionately by one party.
It is the wife’s position that she has suffered a more significant diminution in her standard of living than the husband in the period since separation. I accept that this is so. The husband has had the benefit of living in the former matrimonial home, but he owned this property prior to the parties’ marriage.
It is also the case that the wife has been at a significant disadvantage following separation, because she has been compelled to live in an environment where she feels herself to be “amid the alien corn”. However, the wife freely chose to come to Australia and pursue a new life here. It is also open to her to return to Germany, where she has secure employment awaiting her.
At present, the wife can see many attractions of remaining living in [L]. She has made friends in [L]. She apparently enjoys the lifestyle and climate of Australia. Accordingly, I do not think that the matters which fall for consideration under this subheading are highly determinative in this case.
Sub-section (k) – The marriage between the parties was a comparatively short one. The wife has had some level of employment throughout it. She has also been able to adapt her German qualifications to Australia. As such, she has a capacity to earn a reasonable level of income for herself.
Sub-section (n) – At the end of the second step, I determined that the parties should essentially retain the assets currently in their respective possessions. The husband wishes to retain the Property L property. The wife does not seriously challenge such an outcome. However, she wishes to receive a payment of cash, with a view to being able to purchase some form of accommodation for herself. The only source of such a payment can be the husband’s superannuation.
At this juncture, I believe it would be fundamentally unfair to the husband to deprive him of such a significant component of his superannuation, particularly given his age and lack of employment prospects.
At the second stage, I also determined that the wife should retain her interest the Hamburg property and her future entitlements to superannuation. The significance of such a determination is that the wife is likely to be able to consolidate her financial security in future, whereas the husband will be compelled to draw down on his stores of capital, which are modest.
Given the conclusions, which I reached at the end of the second step, I do not think that considerations of justice and equity dictate that there should be any departure from this outcome.
Sub-section (o) – The end of the parties’ marriage has been a financial disaster for each, a disaster compounded by the ruinous expense of these current proceedings. Both parties will leave the marriage with a significant level of debt relating to these legal proceedings.
In my view, this financial disaster has touched each of the parties in equal measure, but in different ways. The husband has a large and extended home, which is no longer suited to his individual needs, but which provides secure accommodation for him. However, he has little other financial resources to buttress him in his retirement and to cover unforeseen exigencies.
On the other hand, the wife has no permanent accommodation for herself and in the short to medium term little possibility of buying any such accommodation in the [L] area, whilst she remains in part-time employment and has no liquid savings to speak of. However, her financial position is likely to improve as her retirement approaches.
The wife complains about the social consequences of the failed marriage from her point of view. She has been transplanted from her native soil and given up opportunities there. However, this was a decision she freely made and, although it is not likely to be more financially advantageous to her to remain in Australia, she has chosen not to return to Germany. By necessary implication, she can see some advantages to her of living in this country.
I am satisfied both parties entered the marriage with a genuine intention to make it succeed. As a result, both made compromises to this end. Now both suffer consequences as a result of the marriage’s failure. I do not think that these various factors, when balanced against each other, justify any further distribution of property in either parties favour.
Conclusions – section 75(2)
Having considered all the relevant section 75(2) factors, as outlined above, I have come to the conclusion that, in general terms, these factors favour the husband. His future seems to be one of inevitable financial decline, as he grows older. Whereas the wife’s situation is likely to be one of growing financial security.
However, the reality of the situation is that the wife has no access to any source of funds to pay the husband any money. The husband concedes the truth of this situation and, to his credit, does not seek any adjustment in his favour at the end of the third step.
In these circumstances, I do not think it appropriate to make any adjustment, in favour of either of the parties, pursuant to any section 75(2) factor, either individually or in combination.
Conclusions – section 79(2) – is this a just and equitable outcome
The final step in determining property proceedings is to stand back and consider whether the proposed result represents a just and equitable outcome. Considerations of justice and equity must inform each step of the Court’s process and the overall result.
It is all very well to talk in percentage terms, so far as orders are concerned, but at the end of the day what matters to the parties is what the orders mean in dollars and cents and what effect they have on their respective long term aspirations.
The outcome, which I envisage, sees the husband retaining the property which he had largely acquired prior to the parties commencing their relationship together. However, during the course of the parties’ marriage, it is likely that his financial position has eroded markedly. Certainly, for the reasons provided, I am satisfied that he faces an uncertain future.
The wife too will also retain assets, which she brought into the marriage. One of these assets is her German pension entitlements, which will provide her with a secure and indexed income stream at sixty-three years of age. In my view, this is a very significant asset indeed.
In addition, in the form of her half interest in the Hamburg property, the wife has a source of capital, which is likely to appreciate (although in the current financial environment this cannot be guaranteed). In the short term, this property will also provide the wife with another stream of income, in the form of the rent which it will produce.
However, in my view, the greatest differential between the parties is that the wife is currently in secure paid employment and is likely to be able to increase her hours of work over the next year or so. The overwhelming probability is that the husband’s working life is behind him.
In these circumstances, I am satisfied that an outcome which sees the parties essentially retaining items of property, currently in their respective possessions, represents a just and equitable outcome.
Costs
Unusually in this case, two financial mediation conferences were arranged. The first on 7 May 2008. The second on 26 August 2008. Neither was successful.
The original trial dates (1 & 2 December 2008) were allocated on 14 May 2008. The respondent wife was directed to file and serve her trial material (including an updated statement of financial circumstances) by 17 November 2008, which was later extended to 27 November 2008.
It is common ground that the wife did not comply with this order until 15 December 2008. The report from Mr S was tendered without objection from Mr Maguire, on 20 January 2009.
The trial scheduled for 1 December 2008 could not proceed. On the morning, Ms Croydon applied to adjourn the proceedings. I was told by her that the wife’s trial affidavit was imminent. At that stage, I stood the matter down in the hope that the parties might nonetheless explore settlement opportunities, given their mutually straitened circumstances and the level of their respective need.
These discussions were unfruitful. In all these circumstances, it is in my view apparent that the court gave the parties every opportunity to resolve the matter. It is a source of concern to me that each of the parties’ level of indebtedness for legal costs is high, given their financial circumstances.
The Federal Magistrates Court, in common with most other civil courts in this country, over-lists matters on a daily basis. This is so court time is not wasted in the event of case settlement.
On 1 December 2008 another case was scheduled before the court for final hearing. This case proceeded to hearing and occupied the two days also allocated to this matter. On that basis, Ms Croydon submits that it would be unfair to allow either her or her client to assume the burden of the husband’s costs, which were wasted because the hearing would not have been able to proceed in any event, regardless of the wife’s failure to file her trial material.
It is the husband’s case that he has acted reasonably throughout these proceedings and has complied with all orders of the court. He filed his trial material on 13 November 2008. Later, on 24 and 25 November 2008, his own affidavits were augmented by those of Mr C and Mr D, who were not required for cross-examination and whose evidence was ultimately accepted by the wife.
In all these circumstances, it is the husband’s position that he has complied with all court orders pertaining to him and was ready to proceed on 1 December 2008. His solicitor had briefed counsel, Mr Whittle to appear on his behalf and Mr Whittle had set aside time to prepare the matter, for which the husband is now financially liable.
In addition, it is the husband’s position that he was robbed of the opportunity to have meaningful settlement negotiations with the wife because he was not fully appraised of her position in the matter as she had not filed any current affidavit material. In these circumstances, the husband asserts that he has been put to expense in respect of the hearing wasted on 1 December 2008 and accordingly the wife should pay his costs fixed in the sum of $3,900.00.
Ms Croydon concedes that her client’s affidavit material was not filed as directed. It is her position that this omission was not due to any fault on the part of her client, but was due to the fact that she (Ms Croydon) was unwell and was lacking professional staff, in her office, at the relevant times.
The making of a costs order is governed by section 117 of the Family Law Act which provides as follows:
“Costs
(1) Subject to sub-section (2) and sections 117AA and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order (if any) should be made under sub-section (2), the court shall have regard to:
the financial circumstances of each of the parties to the proceedings;
whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
whether any party to the proceedings has been wholly unsuccessful in the proceedings;
whether either party to the proceedings has, in accordance with section 117C or otherwise, made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
such other matters as the court considers relevant.”
Section 117 (1) abolishes, for the purposes of Family Law Act proceedings, the general rule that in civil proceedings costs follow the event. Section 117(2) then provides the court with a general discretion to make costs orders if it is of the opinion that there are circumstances that justify it in so doing. Section 117(2A) sets out the matters that the court shall have regard to.[21]
[21] See Browne v Green 29 Fam LR 428 at 432
The discretion in respect of costs placed in the court pursuant to section 117 is a wide one, which must be exercised having regard to the matters set out in section 117(2A) so far as they are relevant.
In the case of In the marriage of I and I (No.2)[22] the Full Court said as follows:
[22] In the Marriage of I and I (No.2) 22 Fam LR 557 at 558
“Section 117 confers upon the court a broad discretion in relation to costs. That discretion is one which the Court should not seek to fetter. As was pointed out by the High Court in Penfold v Penfold[23]:
[23] Penfold v Penfold (1980) 5 Fam LR 517 at 582; FLC 90-800 at 75,053
It is an accurate description of s 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to s 117(2). As subs (1) is expressed to be subject to subs (2), the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Subsection (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs.”
It is now appropriate to consider whether there are any such justifying circumstances present in this case by reference to the specific criteria as set out in section 117(2A).
The parties’ financial circumstances are poor. Clearly, this is not a case where one of the parties has exercised a financial superiority over the other to secure the outcome, which he or she prefers. From both parties’ points of view, the prolongation of these proceedings has compounded their respective financial difficulties.
Due to the nature of these proceedings, neither party was in receipt of legal aid and both are responsible for funding the legal costs involved.
The hearing of 1 December 2008 was delayed as a result of a combination of factors. One of these was the failure of the wife to file her trial material in a timely manner. The other factor was that there were concurrent demands on the court’s time on the date scheduled.
Both parties were entitled to seek the court’s adjudication of the dispute between them. However the efficient administration of justice, particularly in Family Law matters, relies on the parties concerned and their legal representatives, making a bona fide attempt to resolve the matters in dispute between them. This is particularly so where the costs of the litigation involved grow to the point where they are out of proportion to the magnitude of the issues involved.[24]
[24] In this regard see “Best Practice Guidelines for Lawyers Doing Family Law Work” August 2004 published by the Public Affairs Unit, Australian Government Attorney-General’s Department Publication number 31/03. This document was produced by Family Law Section of the Law Council of Australia and the Family Law Council and provides guidelines for lawyers involved in family law practice as to what constitutes “best practice”. These guidelines do not create new duties for lawyers or override lawyer’s existing duties either to their clients or as officers of the court. The guidelines apply to proceedings in the Federal Magistrates Court. Guideline 1.2 in Part 7, which deals with Property/Spousal Maintenance reads as follows:
“In respect of matters relating to financial issues, the principles of proportionality should be borne in mind at all times. It is undesirable for the legal costs involved in any case to be disproportionate to separating couples’ financial position.”
The late filing of material makes settlement negotiations fraught with difficulty. One party, who has complied with directions feels loathe to negotiate in the absence of the other’s evidence, as he or she feels that the “playing field” for such negotiations is not a level one.
Such circumstances very often heighten suspicions between the parties concerned, which are again very often already high. As such, the inevitability that a final hearing will be required is increased, notwithstanding that such an outcome may be financially detrimental to each of the parties concerned and the costs involved are disproportionate to what is at stake.
In all these circumstances, I have come to the view that some accommodation needs to be made in the husband’s favour in respect of his costs wasted on 1 December 2008.
The Court has a wide discretion as to the calculation of costs. Pursuant to rule 21.02(2) of the Federal Magistrates Court Rules:
In making an order for costs in a proceeding, the Court may:
set the amount in costs; or
set the method by which the costs are to be calculated; or
refer the costs for taxation under order 62 of the Federal Court Rules or under order 38 of the Family Law Rules; or
set a time for payment of costs, which maybe before the proceeding is concluded.
However, pursuant to Rule 21.10:
Unless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
Costs in accordance to schedule 1; and
Disbursements properly incurred.
Pursuant to Rule 21.15:
The Court or a Registrar may certify that it was reasonable to employ an advocate, or more than 1 advocate, to appear for a party in a proceeding.
Rule 21.07 also empowers the court to make an order for costs against a lawyer involved in any proceedings before it. Ms Croydon asks me to refrain from making such an order at this stage. However, her unequivocal indication to me is that her firm will bear any cost order imposed.
Mr Whittle has calculated the amount of costs sought on behalf of the husband pursuant to schedule 1 of the Rules. I do not think that it can be said that all of the husband’s costs incurred on 1 December 2008 have been wasted. Preparation is never totally wasted.
In my view, a sum of $2,000.00 is an appropriate measure of the costs, which should be awarded to the husband as a result of the wife’s failure to file her affidavit material on time. At the request of Ms Croydon, I will not make a formal order to this end.
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 fifty-eight (258) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 6 February 2009
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