Mannus and Mannus (No.3)
[2012] FMCAfam 990
•14 September 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MANNUS & MANNUS (NO.3) | [2012] FMCAfam 990 |
| FAMILY LAW – Whether advance by husband’s father loan or gift – whether debts of business incurred after separation matrimonial debts. |
| Family Law Act 1975 (Cth), ss.75(2), 79, 81, 90MT Family Law (Superannuation) Regulations 2001, r.14F Superannuation Industry (Supervision) Regulations 1994, r.7A.06(1) |
| Hickey [2003] FLC 93-143 C v C [2005] FLC 93-220 Fosbery & Fosbery [2009] FamCAFC 51 |
| Applicant: | MS MANNUS |
| Respondent: | MR MANNUS |
| File Number: | DGC 2358 of 2010 |
| Judgment of: | Phipps FM |
| Hearing dates: | 23 & 24 July 2012 |
| Date of Last Submission: | 24 July 2012 |
| Delivered at: | Dandenong |
| Delivered on: | 14 September 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms Teicher |
| Solicitors for the Applicant: | Hayes & Associates |
| Counsel for the Respondent: | Mr Pinner |
| Solicitors for the Respondent: | Taylor Whelan & Whelan |
ORDERS
That the net proceeds of sale of Property H be dispersed as follows:
(a)$27,000 to pay Goods and Services Taxation on the sale of Property H;
(b)$7,685.21 to pay [A] superannuation;
(c)The balance to the wife.
The wife retain the amount of $9,101 being the net proceeds of sale of the [omitted] business “The [M]”.
That on or before 31 October 2012 (“the date”) the husband pay the wife the amount of $28,090.77 (“the payment”).
That upon the husband paying the amount to the wife at the expense of the husband, the wife do all things necessary to transfer to him all her right, title and interest in the property situate at and known as Property S, Victoria.
That if the amount is not paid on or before the date the property be sold by an estate agent and in a manner agreed and if not agreed by a real estate agent appointed by the President of the Real Estate Institute of Victoria or his or her nominee and in a manner determined by the appointed real estate agent and the proceeds paid as follows:
(a)Firstly in payment of the costs and expenses of the sale;
(b)Secondly to discharge the mortgage and any other encumbrances over the property;
(c)Thirdly to discharge the Bendigo Bank loan of approximately $4,308;
(d)Fourthly to pay the amount to the wife;
(e)Lastly to pay the balance to the husband.
That the husband be solely responsible for payment of and indemnify the wife against liability for:
(a)The mortgage to Bendigo Bank over the property;
(b)The Bendigo Bank loan;
(c)The amounts owing to:
(i) [L];
(ii) [T];
(iii) Origin Energy;
(d)Any income tax liability arising out of the [omitted] business “The [M]”.
That upon the wife transferring her interest in the property to the husband in accordance with paragraph 4 the husband and wife do all things necessary to discharge the mortgage over the property.
That the Court allocate, as required by s.90MT(4) of the Family Law Act 1975 (Cth), a base amount of $15,000 to the wife out of the husband’s interest in the [C] Super (Fund) ABN [1].
That pursuant to s.90MT(1)(a) of the Family Law Act 1975 (Cth) whenever [C] Super Pty Ltd ABN [9], the trustee of the [C] Super (Fund) ABN [1] makes a splittable payment out of the husband’s interest in [C] Super (Fund) ABN [1], the trustee shall:
(a)Pay to the wife, or her administrators, executors, beneficiaries, heirs or assigns, the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001;
(b)Make a corresponding reduction in the entitlement the husband would have had in the [C] Super (Fund) ABN [1] but for this order.
That order 7 has effect from the operative time.
That the operative time for these orders is four business days after service of the final sealed orders on [C] Super Pty Ltd ABN [9].
That the trustee of the [C] Super (Fund) ABN [1] shall do all such acts and things and sign all such documents as may be necessary so that, in accordance with the obligations set out under the Family Law Act 1975 (Cth) and Family Law (Superannuation) Regulations 2001, the trustee can calculate the entitlement of, and make payment to, the wife in accordance with order 5 of these orders.
That the wife shall do all things necessary, including but not limited to, exercising her request pursuant to r.7A.06(1) of the Superannuation Industry (Supervision) Regulations 1994 for the rollover or transfer the transferable benefits out of the husbands interest in the [C] Super (Fund) ABN [1] to a fund of the wife’s choosing.
That pursuant to r.14F of the Family Law (Superannuation) Regulations 2001, any payments from the husband’s superannuation interest made after the trustee has rolled over or transferred the transferable benefits to a fund of the wife’s choosing are not splittable payments.
Save as set out in this order each party is declared to have no interest in property in the possession or name of the other party.
IT IS NOTED that publication of this judgment under the pseudonym Mannus & Mannus (No.3) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DANDENONG |
DGC 2358 of 2010
| MS MANNUS |
Applicant
And
| MR MANNUS |
Respondent
REASONS FOR JUDGMENT
Introduction
The husband and wife cannot agree on a property settlement. The principal issues are:
a)Whether amounts advanced to them by the husbands father and mother and the wife’s mother were loans or gifts;
b)Which debts of their former [omitted] business are matrimonial debts.
Property provisions
Section 79(1) of the Family Law Act 1975 (Cth) provides that in property settlement proceedings the court may make such order as it considers appropriate. The following sub-sections set out the considerations the court is to take into account in deciding what is appropriate. This is a four step process. First, determine what are the assets and liabilities of the parties, next consider the parties’ contributions taking into account the matters in s.79(4)(a)-(c), next consider whether an adjustment should be made taking into account the matters referred to in ss.79(4)(d), (f) and (g) and s.75(2) insofar as they are relevant, and finally consider whether in all the circumstances it is just and equitable to make the proposed order. The four step process is usually applied to superannuation and non superannuation assets separately, but there are cases where this may not be appropriate.[1] In Hickey the Full Court said at [39]:
39. The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC 92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEJ and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.
[1] Hickey [2003] FLC 93-143. For superannuation C v C [2005] FLC 93-220
The relationship
The wife was born [in] 1977 and is aged 34. The husband was born [in] 1975 and is aged 35. The parties commenced cohabitation in November 1998, married [in] 2003 and separated on 24 January 2010. There are two children of the marriage, [X] born [in] 2006 aged eight and [Y] born [in] 2007 aged four. A consent order of 1 November 2010 provides for the husband and wife to have equal shared parental responsibility for the children, for the children to live with the wife and to spend time with the husband each alternate weekend from 6.00pm Friday until 6.00pm Sunday, an additional weekend every two months and three non-consecutive weeks during the husbands annual leave.
The parties commenced living together in 1998 in a property owned by the husband at Property N. He purchased the property for $60,000 in 1996 with a deposit of $15,000 and a loan for the balance. He owned a motor vehicle which he values at $5,000. The unit was furnished. The husband was qualified as a [omitted] and at about the time the parties commenced living together started working as a sales representative. The wife had just completed her university degree and obtained employment after the parties commenced living together.
About a year after the commencement of the relationship the parties purchased a property at [F] for $120,000. The purchase price was financed with a mortgage over the property and the unit at Property N. The parties moved into the [F] property and rented the Property N property.
In 2005 the parties moved to the Bendigo area. The [F] property was sold and the net proceeds of approximately $65,000 were used to purchase a block of land at [S]. The former matrimonial home at [S] was built in 2008 and 2009 funded by a mortgage of $245,000 from the Bendigo Bank. The Property N property was sold in 2005 and the net proceeds used to purchase a [omitted] business “The [M]” in Property H, for $38,000. But parties worked full time in the business until the birth of the first child after which the wife worked part time doing banking preparation, payment of accounts and bookkeeping.
At first the premises from which the [omitted] business was conducted was leased. On 26 March 2007 the parties purchased the freehold for $200,000 financed by a loan of $140,000 from the Bendigo Bank and $92,336.65 from the husband’s father. This included an amount for Goods and Services Taxation which was payable by the husband and wife in addition to the purchase price of $200,000.
When the parties separated the mother left the matrimonial home with the children and lived initially with her mother in [omitted]. She and the children now live in rented housing in [omitted]. The wife is studying for [qualification omitted] but otherwise cares for the children. The older child commenced primary school this year and the younger child is at kindergarten three days a week.
After separation the husband remained in the former matrimonial home and working in the [business omitted]. He dissolved the partnership and opened a new bank account. Subsequently he obtained employment as a [omitted] at $100,000 a year and placed a manager in charge of the business. The business was not successful with a manager, and the husband returned. The freehold of the shop and the business were on the market for some time. The business was not sold and was closed, the contents sold at a clearing sale and subsequently the freehold was sold. The net proceeds of each sale are held in solicitors’ trust accounts.
The husband has re partnered with Ms G. They have a child born [in] 2011. The husband works as a [omitted]. He has completed the formal training and is working as a [omitted] but because he [omitted] he is classified as a trainee. His partner works 3 days a week as a [omitted].
Loan or gift by husband’s father
The parties purchased the freehold of the [business] in March 2007. On the 22 March 2007, the day before settlement, the husband’s father provided a cheque for $92,336.65 payable to "The [M]". With a loan of $140,000 from the Bendigo Bank this provided the purchase price for the property.
The wife says that she was opposed to purchasing the freehold because it would mean more debt. She said she had little to do with the discussions. She says her understanding always was that the husband’s father was gifting the money.
She says that she signed the acceptance of the Bendigo Bank letter of offer dated 21 March 2007 for the loan of $140,000. It contains a special condition:
The facility is subject to the Bank receiving written confirmation from [Mr Mannus’s] father, that the money he has received as a deposit for the purchase of the security property is a non-repayable gift
The wife says that the husband's parents came to stay after negotiations had taken place between the husband and the Bendigo Bank. She said that the husband’s father asked her to sit down at the computer and type a letter which he dictated to her. The letter is:
To whom it may concern,
I, Mr M of the above address, gift my son [Mr Mannus] and daughter in law [Ms Mannus] the deposit for the purchase of Property H, as a non-repayable gift.
If you require any further information, please do not hesitate to contact me,
Yours sincerely,
Mr M
The letter was signed by the husband’s father and was given to the Bendigo Bank. The husband’s father wrote out and signed the cheque for $92,336.65.
The wife says that after settlement of the purchase on 26 March 2007 she spoke with the husband's mother. She said she was concerned that the security of the family was being tested. She said the husband's mother told her not to worry. She said that her husband would not ask for the money back and she would make sure it did not happen.
The husband and his father say that it was always clear that the money from the husband’s father was to be a loan. They say that the owners of the rival [business] in Property H, wanted to purchase the freehold and that would put the parties out of business once their lease came to an end. The husband’s father gave more detailed evidence about the discussions than his son. He said it was discussed within the family at the kitchen table in his home, at the husband’s and wife’s home and in the [business]. He says that the wife was present at a number of discussions about the need to buy the freehold otherwise his son and daughter in law would lose their business and that he, the husband’s father would lend them the money. He lent the money and had to borrow it using his bank over draft. He said it was not a gift to the parties and could not have been because he was borrowing the money himself.
He acknowledged that he signed the letter to the Bank saying that the money was a gift. He said he did what was necessary to secure his son and daughter in law’s business.
The husband’s evidence is less detailed. He says that the wife always understood the money from his father was a loan.
On 5 December 2011, by application in a case, the wife applied for an order that the former matrimonial home and the freehold of the [business] be sold and there be a partial distribution of the proceeds to her. On 5 December 2011 I ordered that the freehold of the [omitted] business be sold and that the proceeds of sale be distributed:
a)Firstly to pay all sale expenses, including estate agent and legal costs;
b)Secondly, to discharge the mortgage to Bendigo Bank;
c)Thirdly, pay to the husband’s father the sum of $100,000 in full payment of debt and the husband’s father is to provide withdrawal of caveat;
d)Fourthly, to pay any debts of the [omitted] business;
e)Fifthly any balance to be paid to the wife.
In addition I gave directions for the valuation of the former matrimonial home and fixed the application for final hearing and gave directions for the filing of affidavits and an Outline of Case.
Both parties were represented at this hearing, the wife by her solicitor. The wife’s solicitor stated in the course of submissions that there was a $100,000 loan debt owing to the husband’s father. At the beginning of the wife’s evidence in the final hearing she said that she had given the solicitor instructions to make this acknowledgment. She said she did this because she was told the husband’s father would not withdraw the caveat unless he was paid and her financial position was such that she needed to receive some money as soon as possible.
About two weeks after the separation the husband came to the wife’s residence by agreement to collect the children for them to spend the weekend with him. He gave the wife a solicitor’s letter and Deed of Acknowledgment of Debt and wanted her to sign it. She did not. She took it to her solicitor, took advice and did not sign it. The deed described a loan by the husband’s father to the husband and wife of $72,336.65 plus interest.
Two other documents relevant to the issue of loan or gift are part of the evidence. The first is a form of loan agreement between the husband’s father and mother and the husband and wife which describes a loan of $70,000, interest at 7.99% fixed for three years payable monthly and an initial term of 10 years. It is not signed. The wife said that she had seen it but could not say when.
The second is an acknowledgment signed by the husband and wife dated 22 March 2002 that the solicitor named in the document had signed a certificate of advice in relation to the mortgage at their request, that they attended the office of the certifying solicitor and that they received the explanations referred to in the certificate.
On 6 June 2007 the sum of $20,000 was paid from the parties’ business account to the husband’s father. The source of the funds was a Goods and Services Tax refund. The husband says that he and the wife agreed that it should be repaid to the husband’s father. The wife says she queried the husband why the money was not paid off the loan from the bank.
The argument that the money was a gift is supported by the letter signed by the husband’s father stating that it is a gift and the acceptance of the Bank’s letter of offer signed by the husband and wife with a special condition that the deposit is a gift from the husband’s father. The wife says that she had little to do with the discussions about the purchase of the freehold of the shop other than to be opposed to it. On her evidence the principal involvement was to type the letter dictated to her by the husband’s father.
On the other hand there is an admission by statement made by a solicitor in open court and in accordance with instructions that the payment was a loan. The wife’s explanation that she agreed to the payment of $100,000 to the husband’s father because that was the only way money could be released suggests that she gave instructions that the money was to be treated as a loan. The solicitor who appeared on that day did not give evidence.
I am satisfied on the balance of probabilities that initially the husband’s father proposed to lend the parties $70,000 and that the husband too intended it to be a loan. I am satisfied that the wife, while she may have been present during some discussions, was not an active participant. Probably those discussions took place between the husband and his father during family gatherings. The wife described the family as one where the men were the dominant ones. That may not have been the case but it was her perception.
The contents of the loan document which the wife said she had seen but could not remember lead to the conclusion that it was prepared prior to the husband’s father signing the letter stating the amount was a gift. The loan document refers to a loan of $70,000. This with a loan of $140,000 would satisfy the purchase price plus stamp duty and some expenses. $20,000 for Goods and Services taxation, stamp duty, bank fees and other fees meant that the husband and wife needed to provide $92,336.65 to their solicitors for settlement. The only source of funds was the husband’s father. The inference is that the loan document for $70,000 was prepared prior to the husband’s father signing the letter and providing the cheque for $92,336.65.
The husband’s father dictated the letter to the wife and then signed it. I am satisfied that for entirely admirable reasons he was prepared to do what was necessary to secure the future of his son and daughter-in-law and their family. Therefore, since the bank required the money to be a gift he was prepared to make a gift. There was no attempt to prepare another loan document until after the parties had separated which is further evidence that the husband’s father accepted that the money had to be a gift.
The repayment to the husband’s father of $20,000 when there was a refund of that amount for Goods and Services Tax is understandable. The wife said that this happened because they were a [business omitted] and therefore did not pay Goods and Services Tax. I do not see it necessary to analyse the complexities of the taxation legislation to reach a conclusion that the explanation sounds correct. Therefore it was a money out money in situation and given that the husband’s father had borrowed the amount of $92,336.65 through his overdraft it was a reasonable family arrangement to transfer the refund of $20,000 to him. The family were all on good terms at that stage and the probability is that the husband’s father’s attitude was that he had helped his son and daughter in law when they needed help and if the positions were ever reversed they would do the same for him. Whether it was a gift by the husband and wife to the husband’s father, or part repayment of a loan does not need a decision.
However my conclusion that the transfer of $92,336.65 is a gift cannot bind the husband’s father. He is not a party to the proceedings and for him the issue of loan or gift has been resolved. He has been repaid. The amount of $100,000 paid to him from the proceeds of sale was repayment of the loan plus interest. The evidence shows that on 5 December 2012 he agreed to accept $100,000 and to withdraw the caveat he had lodged against the title. The wife agreed to this and carried out her part of the agreement by having her solicitor acknowledge a debt of $100,000.
An order cannot be made in this proceeding that the $100,000 be recovered from husband’s father nor that it be treated as matrimonial property held by the husband. The money is not available to the parties.
It is not necessary to decide whether in proceedings in which the husband’s father was a party the $100,000 could be recovered from him, but insofar as I can make an assessment on the evidence I have, the probability is that it could not. The husband’s father's primary defence to a claim that the money was a gift would be that the dispute between his son and his daughter in law was settled by agreement on 5 December 2011. That is, there is a contract of settlement. In consideration of the husband’s father agreeing to withdraw the caveat and accept an amount of $100,000 in full payment of the loan plus interest the husband and wife agreed to pay that amount.
Loan by husband’s mother
When the parties built a house the husband’s mother provided $10,000 for the installation of water tanks and the connection of power. The wife says it was a gift, the husband says it was a loan. There is no evidence that the husband's mother has requested repayment.
The husband’s mother did not give evidence and there is no evidence that she was unable to do so. I am entitled to assume that if the husband’s mother did give evidence it would not have been favourable to the husband's case. In these circumstances the application of the evidentiary test of balance of probabilities leads me to the conclusion that the $10,000 was a gift or that the husband’s mother is not pursuing repayment.
Loan by wife's mother
The wife claims that her mother lent the parties money which should be treated as a matrimonial debt and re-payed to her mother. The amounts are $3,028.00 in March 2009 for a lounge-suite set and $1,525.65 for veterinary bills for their dog [omitted]. The husband says he first learnt of the loan when the lounge suite was delivered and acknowledges that the wife’s mother paid for treatment for [omitted] but otherwise does not admit that they are loans. There is no affidavit from the wife’s mother nor evidence from the wife of request by her mother for payment. The wife has the onus of proving that they are loans. The items paid for might, by their nature, be gifts by parents to children and I am not satisfied that the wife has discharged the onus on her.
[Business] contents
Auctioneers conducted a clearing sale of [omitted] equipment on 4 April 2012. The net proceeds are $9,101.12 now held in the wife’s solicitor’s trust account. The Sale Summary lists a number of items as Goods Passed In - Not Sold with values against some and "no bid" listed against others. The total of those values is $2,125. The wife's case is that the unsold items with a value of $2,125 should be included as part of the matrimonial property.
The husband says that all of the items except one of the [omitted] have gone to the tip. He had nowhere to store them. The [omitted] remained in the premises when they were sold.
While the Sale Summary does give a value to some of the items they were not sold at the clearing sale and have not sold subsequently. There is no basis for saying they have or had any value in the possession of the husband.
Business debts
The husband says that there are outstanding debts of the business:
GST on Commercial sale $ 27,000
Income tax on business $ 2,855.59
[L] $30,546.30
[T] $ 6,003.93
[A] superannuation $ 7,685.21
Origin Energy $ 2,345
Total $76,436.03
The husband says that the debts should be taken into account and so should be included as liabilities for the purpose of determining the matrimonial property. The wife acknowledges that Goods and Services Tax must be paid but says that only liabilities at separation should be taken into account and that the balance are debts solely of the husband incurred after separation. She says that at separation the debts of the business were about $15,000 and that that is the amount which should be allowed in addition to the Goods Services Tax.
The [omitted] business, “The [M]” ceased trading as a partnership on 22 February 2010 and after that the husband conducted it as a sole trader. A letter dated 17 March 2010 from [omitted] Accounting Pty Ltd, the accountant and taxation agent for the business, attached to the wife's affidavit affirmed on 9 July 2012 shows this to be what occurred. The business ceased trading in mid April 2012.
The evidence of debts at the time of separation and on 22 February 2010 is sparse. The only documentary evidence is annexed to the husband’s affidavit sworn on 22 May 2012.
There are no documents for income tax. A statement dated 2 April 2012 from [L] to “The [M]” for the period 31 January 2012 to 1 April 2012 has an opening balance of $24,343.44 and a closing balance $30,756. The statement lists nine-invoices and three payments. The statement does not list the times the amounts have been outstanding but a substantial part was outstanding for more than 30 days. Purchases in February 2012 were $7,146.78 and in March 2012 $7,470.71. The repayments on the statement are 2 February 2012, $3,758.63, 21 February 2012, $2,079.38 and 7 March 2012, $3,194.04.
A statement dated 5 April 2012 from [T] to “The [M]” has an opening balance of $6,420.11 on 4 December 2011 and a closing balance of $6,003.93 on 6 April 2012. The statement lists four payments and numerous invoices. The amount outstanding over thirty days is $4,317.97
The superannuation debt is unpaid compulsory superannuation contributions for employees of the business. The evidence is emails extracts from payroll records and calculations and summaries prepared by the accountants. Of the $7,685.21 $1,504.50 is for amounts prior to 28 February 2010.
There is no document for the Origin Energy electricity bill.
The evidence does not show whether the [business] was trading with either or both of [L] and [T] prior to 22 February 2010, nor does it show whether fresh accounts were opened when the business ceased to be a partnership. Assuming that the [business] was trading with the two suppliers prior to 22 February 2010 and that no fresh accounts were opened the pattern of trading shown in the statements from [L] and [T] shows that the balance outstanding must be for invoices dated well after 22 February 2010.
There is no evidence of the period to which the electricity bill relates. A reasonable inference is that it is for a period well after 22 February 2010 otherwise the supply would have been cut off.
The basic principle is that assets and liabilities should be calculated at the date of the hearing. Assets and liabilities to which a party has made no contribution are generally not included and so the wife’s argument is that since she was not part of the business from 22 February 2010, effectively from the time of separation, she has made no contribution and should not be liable for debts incurred by the business after that time. The husband’s argument is that he maintained all the property of the parties, paying the mortgage on both premises and continued to operate the business in the hope that it could be sold as a going concern and therefore recover more money than ultimately was recovered.
There is a wide discretion in determining the pool of property[2]. The issue is whether the husband behaved reasonably. Except for the time when he was employed at $100,000 a year his only source of income was the business. An order for the sale of the real estate was made in December 2011. The business was not doing well and the knowledge that it was coming to an end would not have helped. It was not particularly profitable even prior to separation.
[2] Fosbery & Fosbery[2009] FamCAFC 51 at [70]
The income tax liability appears to be a liability of the husband alone. He does not state it is so but since he operated the business alone from 22 February 2010 the inference is that it is and incurred after separation. The husband should remain solely liable for this amount
There are two elements in determining what other debts should be included. The first is whether the husband acted reasonably and the second is the financial position of the parties. The husband hoped to sell the business as a going concern. Whether this was a reasonable hope is a matter of speculation and in the circumstances I accept that he acted reasonably. Whether he diverted money to his own expenses rather than pay the debts of the business and whether that was reasonable is difficult to determine. What he did do was obtain employment at $100,000 a year yet had to return to the [business] because employing a manager was unsuccessful. The wife gave evidence that prior to separation when she was paying accounts it was a balancing act, sometimes having to select which of the outstanding bills should be paid.
I accept that the husband acted reasonably in continuing to operate the business and that the outstanding accounts of the business should be included as liabilities of the marriage.
Property and liabilities
The property is:
Assets
Property S, $310,000.00
Net proceeds of sale of Property H $ 64,752.00
Net proceeds of clearing sale of [business] $ 9,101.00
Total $383,853.00
Liabilities
Mortgage to Bendigo Bank $238,112.00
Bendigo Bank Loan $ 4,308.00
GST on Commercial sale $ 27,000.00
[L] $ 30,546.30
[T] $ 6,003.93
[A] superannuation $ 7,685.21
Origin Energy $ 2345.00
Total $316,092.51
Wife’s superannuation $5,707
Husband’s superannuation $31,000
The net non-superannuation assets are $67,852.56. The parties are agreed on a superannuation spitting order allotting $15,000 of the husband’s superannuation to the wife.
Contributions
The history of the relationship including the purchase of property and the [business] have already been described. The husband an initial contribution of the property at Property N. He purchased the property in 1996 about two years before cohabitation commenced in 1998. He purchased the property for $60,000 in 1996 with a deposit of $15,000 although the amounts are described as approximate. He owned a motor vehicle which he valued at $5,000. His initial contribution was something in excess of $20,000 since the net value of the property at the commencement of cohabitation would have increased.
After the commencement of cohabitation the husband continued working as a sales representative and after some time the wife obtained employment. In 2005 the parties moved to [E], sold the two properties which were then owned, purchased the [omitted] business and block of land and built the matrimonial home. After the birth of the first child in 2006 the wife was the principal child carer and home maker but worked in the business by dealing with accounts and banking.
The husband made the majority of financial contributions, which included his initial contribution. The effect of this initial contribution diminished over the 11 years of the relationship and the wife's contribution as home maker and child carer is balanced against the greater financial contribution by the husband. After separation the wife had the principal task of caring for the children with only a small financial contribution from the husband. The husband continued to pay the mortgages and other outgoings on both properties while having the benefit of living in the former matrimonial home. All of these considerations mean that contributions are equal.
Section 75 (2) and just and equitable
This is a case where there is a small property pool and the adjustment should be assessed in monetary terms not percentage terms.
The husband has a higher income earning ability than the wife. He is currently a trainee [omitted] but expects to become more skilled and so have a reasonable income. He has previously earned $100,000 per year as a [omitted] but says positions of that sort do not exist in the [B]/[E] area. Nevertheless, he does have the potential of a higher income if he moves to Melbourne.
The wife has tertiary qualifications but little experience. The husband has a new relationship and a child of that relationship. The wife has the care of the two children and a more limited income earning ability. I accept that she does not have a partner with whom she is living.
The husband is living in the former matrimonial home and his income is such that the probability is that he will be able to retain it. The wife has little prospect of purchasing her own property and so must rent.
A combination of the s.75(2) and the just and equitable considerations means that the proper result is that the wife receive the whole of the net value of the parties’ assets.
Section 81 requires the court, as far as practicable; to make orders as will finally determine the financial relationships between the parties. Net proceeds of clearing sale of [business] $9,101 is in the wife’s solicitors trust account following earlier orders and should remain with the wife. The net proceeds of sale of Property H $64,752 should be used to pay the Goods and Service Tax on commercial sale of $27,000 which is a joint liability and [A] superannuation of $7,685.21 which is a statutory liability and arguably a joint liability if appropriate notices have not been given notwithstanding the termination of the partnership. The balance remaining will be:
Net proceeds $64,752.00
Less
GST $27,000.00
Superannuation $ 7,685.21
$34,085.21
Balance $30,666.79
The balance of the business liabilities are commercial debts and are the husband’s liabilities although the creditors may allege they are joint debts if they have not been notified or otherwise learnt of the dissolution of the partnership. The just and equitable way to put the division of assets into effect is to make the husband solely responsible for the balance of the debts, including the mortgage and the loan from the Bank of Bendigo and for the balance of the amounts held in trust to be paid to the wife. The balance of the net proceeds of sale, $30,066.79, should be paid to the wife.
She will then have received $39,761.71 and so must receive a payment of $37,998.78 from the husband:
Proceeds of clearing sale $ 9,101.00
Balance of sale shop $30,666.79
$39,761.79
Net assets $67,852.56
Less $39,761.79
Balance $28,090.77
I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Phipps FM
Date: 14 September 2012
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