March and March
[2012] FMCAfam 18
•1 February 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MARCH & MARCH | [2012] FMCAfam 18 |
| FAMILY LAW – Property settlement – whether wife made premature distribution of matrimonial funds – husband with serious intellectual disability. |
| Family Law Act 1975, ss.75(2), 79(2), 79(4) |
| Hickey v Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; [2003] FamCA 395 In the Marriage of R E and I E Jones (1990) 99 FLR 238; (1990) 14 Fam LR 19; (1990) FLC 92-143 In the Marriage of Omacini (2005) 191 FLR 317; (2005) 33 Fam LR 134; (2005) FLC 93-218; [2005] FamCA 195 In the Marriage of Townsend (1994) 18 Fam LR 505 ; (1995) FLC 92-569 In the Marriage of Weir (1992) 110 FLR 403; (1992) 16 Fam LR 154; (1993) FLC 92-338 |
| Applicant: | MS MARCH |
| Respondent: | MR MARCH (BY HIS LITIGATION GUARDIAN, MS D) |
| File Number: | MLC 5705 of 2010 |
| Judgment of: | Riley FM |
| Hearing dates: | 12, 13 and 14 December 2011 |
| Date of Last Submission: | 14 December 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 1 February 2012 |
REPRESENTATION
| Counsel for the Applicant: | Neil James |
| Solicitors for the Applicant: | Rose Mary Brondolino & Co |
| Counsel for the Respondent: | Shawn Brown |
| Solicitors for the Respondent: | James Harris Lawyers |
ORDERS
Within 14 days, the husband pay the wife $604.
The husband indemnify the wife in respect of the monies secured by mortgage over the former matrimonial home and in respect of the joint personal loan from Westpac Banking Corporation.
Otherwise, each party retain the assets, liabilities and superannuation in his or her name.
IT IS NOTED that publication of this judgment under the pseudonym March & March is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 5705 of 2010
| MS MARCH |
Applicant
And
| MR MARCH (BY HIS LITIGATION GUARDIAN, MS D) |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for property settlement. The wife seeks an adjustment of 60:40 in the husband’s favour. The husband seeks orders that each party keep the assets and liabilities he or she holds. That would mean that each party would retain about $27,000 in superannuation and, otherwise, the husband would retain the former matrimonial home and a good deal of debt and the wife would retain a half share of a property in the Philippines and a smaller amount of debt.
Basically, the husband argued that, during the marriage, from 2002 to 2009, the wife sent more than $100,000 to the Philippines. He said that the pool of matrimonial assets was modest and the wife should not get any more money. The wife conceded that she had sent $81,168 to the Philippines during the course of the marriage. However, she said she sent the money with the husband’s knowledge and consent to support her family. As such, the wife said that the money was legitimately sent to the Philippines and it should not be treated as an add back or in any other way detract from her reasonable share of the matrimonial assets.
Background
The husband has a congenital intellectual disability. He works full time in a (omitted). He earns $608 per week if he works normal hours but can earn $800 per week if he works overtime. A psychiatric report from Dr K., which was unchallenged, said that the husband:
a)is just short of being retarded;
b)has a dependent personality disorder;
c)has difficulty expressing disagreement with others, because of his fear of loss of support or approval;
d)could very easily be manipulated by a partner;
e)will agree to follow someone who is pressuring him;
f)would do anything to avoid a person’s disapproval;
g)is unaware of financial matters;
h)does not have the intellectual capacity to understand:
i)a mortgage or its responsibilities; or
ii)a credit card or how to use one;
i)has no major behavioural difficulties;
j)is entirely dependent on his family; and
k)has had depression (possibly as a result of the breakdown of his marriage).
The husband is unable to live alone. He is fortunate to have a very close and supportive family. In 1990, when the husband was about 29 years old, his parents decided to sell to him their family home in (omitted). It was valued at about $115,000. However, the husband was able to buy it from his parents for $50,000. The husband took out a loan for that purpose. The house was rented out, while the husband lived with his parents in their new home. The husband, on the advice of his parents, put all of his wages in a bankbook. The mortgage repayments were made from the husband’s earnings. The loan was paid off by 2000, albeit with the last $5,000 being paid by the husband’s father.
In 2000, one of the husband’s work colleagues put him in touch with a woman in the Philippines. The husband and the woman began writing to each other. In January 2001, the husband went to the Philippines to meet her. They got married within a few days of the husband’s arrival in the Philippines. The husband returned to Australia while arrangements were made for a spouse visa for the wife.
The husband’s mother borrowed some money from a friend to pay for the wife’s air ticket to come to Australia. The wife arrived in Australia in about June 2001. The husband and wife lived at the husband’s parents’ home until December 2001, when they moved to the husband’s house in (omitted). The husband’s mother said that she treated the wife like a daughter. She said that she never saw the husband and wife fighting and they seemed happy together.
All went well until the husband’s family discovered in June 2009 that the couple were greatly in debt. The wife left the matrimonial home a few days later on 20 June 2009. The parties cohabited for about eight years in total.
The wife had trained in the Philippines to be an (omitted). However, in Australia, she was unable to find work until March 2002, when she began working at (omitted) as a (omitted). Later, the wife got a second part time job at a (omitted). She also sold (omitted). Her earnings in total were somewhat less than the husband’s over the course of the marriage. In terms of household chores, the wife cooked and cleaned and the husband mowed the lawn and gardened.
The Australian Transaction Reports and Analysis Centre (“AUSTRAC”) records clearly show that, between 23 January 2003 and 9 December 2010, the wife sent a total of $71,754 overseas. Of that, $11,479 was sent overseas by the wife after separation. Consequently, during the marriage, the AUSTRAC records clearly show that the wife sent $60,275 overseas. The AUSTRAC records show that the wife sent overseas amounts of between about $100 and about $4,000 at irregular intervals. Most of the amounts were between $100 and $300.
In any event, the wife conceded that she sent overseas, in the approximately eight years of the marriage, $81,168. That figure is $20,893 more than the AUSTRAC records clearly indicate.
In addition to the amounts that the AUSTRAC records clearly show the wife sent overseas, there are two AUSTRAC documents recording transactions on 22 February 2006. The first shows that the wife withdrew $18,000 from an ANZ Banking Group Ltd account in (omitted) on 22 February 2006. The second shows that she deposited $18,500 into a Commonwealth Bank of Australia account in the name of (omitted). (omitted) was one of the companies that the wife acknowledged that she used to send money overseas.
The husband’s advisers initially understood that both the $18,000 and the $18,500 had also been transferred overseas. However, the AUSTRAC records do not show that. They show that the $18,000 was withdrawn from a local account and the $18,500 was deposited into an account in the name of an entity that the wife used to transfer money overseas.
The wife claimed to know nothing about the two transactions on 22 February 2006. She implied that the two transactions were wrong, and that AUSTRAC records were sometimes wrong, as demonstrated by the fact that they missed transfers of $20,893 that she had conceded.
The wife volunteered that she sent $1,300 overseas in 2002, before the AUSTRAC records started, and she said that she sent additional funds between 2003 and 2009 that AUSTRAC had not recorded. The wife produced and relied on records from (omitted) and (omitted). She said they were the only two entities that she used to transmit funds overseas.
However, the AUSTRAC records show that the wife also used other entities to transmit funds overseas, namely, (omitted) and (omitted) to (omitted). The wife said that these two entities were “under” (omitted). She produced no documentary evidence to support that assertion.
(omitted) records, on their face, only include amounts sent to Mr H. The wife sent money to other people as well, namely:
a)Ms R, of
(omitted),(omitted) University;b)(omitted), of (omitted);
c)Mr J, of (omitted);
d)Ms J, of (omitted);
e)Mr M, of (omitted), Ms R;
f)Mr P, of the Equitable PCI Bank, (omitted);
g)Ms G, of (omitted); and
h)Mr A, of (omitted).
More significantly, for present purposes, the (omitted) records do not include an amount of $350 that the AUSTRAC records show was transmitted to Mr H by (omitted) to (omitted) on 19 March 2004. Consequently, I do not accept the wife’s claim that (omitted) to (omitted) was “under” (omitted). I consider that the wife sent money overseas by agencies in addition to (omitted) and (omitted). Clearly, the wife did not disclose the records of (omitted) and (omitted) to (omitted). Consequently, I need not be too cautious in drawing adverse inferences against the wife: In the Marriage of Weir (1992) 110 FLR 403; (1992) 16 Fam LR 154; (1993) FLC 92-338.
I also consider, because of her (omitted) to (omitted) claim, that the wife was not an entirely honest witness. I am reinforced in that conclusion by the wife’s claim that the husband did not really have a significant intellectual disability. She maintained that he was simply a little slow. In view of Dr K.’s unchallenged evidence, that is not a maintainable position. Having seen the husband in the witness box, I consider that it would be obvious to anyone within a few minutes of meeting the husband that he had a significant mental disability. The wife, of course, lived with him for about eight years. It is inconceivable that she would not have known about his significant disability.
No one was able to explain the discrepancies between the AUSTRAC records and the wife’s transfer records with any confidence. As a very substantial example, according to the AUSTRAC records, the wife sent no money overseas between 30 August 2005 and 16 April 2007. During that period, the wife’s (omitted) transfer records show that she transferred $40,600.
It is unfortunate that the husband’s solicitors were only instructed shortly before the hearing. If they had had more time, they may have been able to analyse the available information more thoroughly and undertake further investigations as appropriate. However, on the material available to the court, the amounts transmitted year by year appear to be as follows.
In 2002, the AUSTRAC records show no funds transmitted by the wife. Similarly, the (omitted) records do not indicate that the wife sent any money overseas in 2002. However, the (omitted) records show that the wife transmitted $1,300 overseas to Mr H in 2002. I accept that the wife sent at least that amount overseas in 2002.
In 2003, the AUSTRAC records show that the wife transmitted $4,757 overseas. The wife’s (omitted) records do not show that she sent any money overseas in 2003. The wife’s (omitted) records indicate that she transmitted only $3,458 that year. The discrepancy in this case may be explained by the fact that the (omitted) records, on their face, only record amounts transmitted by the wife to Mr H, while the AUSTRAC records include various other recipients as well.
The AUSTRAC records for 2003 show that, of the $4,757 the wife sent overseas in 2003, $1,560 was sent to someone other than Mr H. Therefore, the amount of $1,560 must be added to the amount of $3,458 that the (omitted) records show that the wife sent to Mr H. That totals $5,018. That is $261 more than the wife conceded. That is partly explained by the fact that the AUSTRAC records do not include two amounts that appear in the (omitted) records, namely, $100 on each of 7 May 2003 and 28 May 2003.
In these circumstances, I consider that the wife sent overseas in 2003 at least $5,018.
In 2004, the AUSTRAC records show that the wife transmitted $9,932 overseas. The wife’s (omitted) records indicate that she transmitted no money overseas in 2004. The (omitted) records show that the wife transmitted only $200 overseas to Mr H in 2004. Nevertheless, the wife accepts that she transmitted $9,932, as the AUSTRAC records show. That confirms that the wife was using other entities to transfer money. It also raises the possibility that the wife transferred overseas a lot more than the amounts that she has admitted. In any event, I accept that the wife transmitted at least $9,932 overseas in 2004.
In 2005, the AUSTRAC records show that the wife transmitted $21,373 overseas. The wife’s (omitted) records do not indicate that she sent any money overseas in 2005. The wife’s (omitted) records show that she transmitted $17,549 overseas in 2005. Nevertheless, the wife concedes that she transmitted the AUSTRAC amount of $21,373 overseas in 2005.
However, I am unable to accept that $21,373 is the total amount that the wife transmitted overseas in 2005. That is because the AUSTRAC and (omitted) records cover different periods, with some overlap.
The AUSTRAC records show that the wife transmitted $21,373 overseas between 6 January 2005 and 30 August 2005. The (omitted) records show that the wife transmitted $17,549 overseas between 15 June 2005 and 28 December 2005. The amounts sent during the overlapping period between 15 June 2005 and 30 August 2005 amount to about $3,694, according to the (omitted) records, or $2,349, according to the AUSTRAC records. The amounts sent in the overlapping period according to the AUSTRAC records appear to correlate to the total of a number of smaller amounts that appear in the (omitted) records, but not all of them.
It appears, therefore, that the wife sent overseas in 2005 both the amount of $21,373, as shown in the AUSTRAC records, and the amount of $17,549, as shown in the (omitted) records, less the amount of $2,349 that appears in both sets of records. That totals $36,573 transmitted in 2005. I consider that the wife transmitted overseas at least $36,573 in 2005. I do not know how AUSTRAC could have missed the transactions in the latter part of 2005. Perhaps the transactions were recorded under a different name or under the same name with a spelling error in it. However, this is mere speculation.
In 2006, the AUSTRAC records indicate that the wife sent no amounts overseas. The only AUSTRAC records for 2006 concerning the wife are two significant cash transaction reports for 22 February 2006. The first shows $18,000 withdrawn from an ANZ account. The second shows $18,500 deposited into a Commonwealth Bank account apparently in the name of (omitted). The AUSTRAC records show no corresponding international transfer. The wife’s (omitted) records do not indicate that the wife sent any money overseas in 2006.
However, it appears that the wife concedes that she sent $24,745 overseas, and that figure apparently relates to 2006. That amount, plus $150, is reflected in the (omitted) records. I consider that the wife sent at least $24,895 overseas in 2006, being the amount reflected in the (omitted) records. Again, I do not know how AUSTRAC could have missed all of the overseas transactions in 2006. AUSTRAC certainly did not report that the $18,500 went overseas. It may have gone overseas in small amounts over the course of the year, in transactions that AUSTRAC did not attribute to the wife. The wife may have taken it with her in the form of cash when she went to the Philippines. However, I have no evidence from which to draw such conclusions.
In 2007, the AUSTRAC records show that the wife sent $9,473 overseas. The wife concedes that amount. Her (omitted) records do not indicate that the wife sent any amounts overseas in 2007. However, her (omitted) records show that the wife sent overseas in 2007 three additional amounts that do not appear on the AUSTRAC records. Those amounts total $1,850, consisting of:
a)$100 on 19 January 2007;
b)$1650 on 31 January 2007; and
c)$100 on 2 March 2007.
Therefore, I consider that the wife sent overseas in 2007 at least the $9,473 shown in the AUSTRAC records, plus the additional $1,850 shown in the (omitted) records. That totals $11,323 for 2007.
In 2008, the AUSTRAC records show that the wife sent overseas $12,085. The wife conceded that she sent $7,126 overseas in 2008. The (omitted) records do not indicate that the wife sent any money overseas in 2008. The (omitted) records show that the wife sent $5,595 overseas to Mr H in 2008. From the AUSTRAC records, it appears that the wife also sent about $1,400 overseas using (omitted) in 2008.
The wife’s only explanation for discrepancies between the AUSTRAC records and her records was that AUSTRAC clearly makes mistakes. While it is clear from this case that AUSTRAC sometimes misses transactions (possibly because of the misspelling of the sender’s name), there is no reason to believe that AUSTRAC generates transactions out of thin air. I see no reason to doubt that the wife sent overseas all of the amounts shown in the AUSTRAC records for 2008. Accordingly, I consider that the wife sent at least $12,085 overseas in 2008.
In 2009, the AUSTRAC records show the wife sent $2,655 overseas before separation. The wife conceded that she sent $2,462 overseas in 2009. She may have meant that as the pre-separation figure. The (omitted) records do not indicate that the wife sent any money overseas in 2009. The (omitted) records indicate that the wife sent $2,430 overseas to Mr H in 2009 before separation. The AUSTRAC records show that, in addition, the wife sent to Mr H in 2009, before separation, $99 on 1 June 2009 and $138 on 5 June 2009. In any event, I see no reason to doubt the AUSTRAC figures. Consequently, I consider that in 2009, the wife sent at least $2,655 overseas before separation.
In summary, I consider that the wife sent at least the following amounts overseas:
a)2002: $1,300;
b)2003: $5,018;
c)2004: $9,932;
d)2005: $36,573;
e)2006: $24,895;
f)2007: $11,323;
g)2008: $12,085;
h)2009: $2,655 pre-separation.
TOTAL: $103,781.
I say “at least” because it is clear that AUSTRAC did not identify all of the amounts the wife sent overseas, and it is clear that she used entities other than the two she admitted, being (omitted) and (omitted), to transmit funds.
$103,781 over eight years averages about $249 per week. The wife did not send money every week. Sometimes, the wife sent about $100, and sometimes she sent several hundred dollars. On one occasion, in 2008, which was before separation, the wife sent $3,876. The $103,781 contrasts with the amount of $81,168 that the wife admitted sending in total.
The wife also submitted to the court her income tax assessments for the duration of the marriage. Those records show that, during the years ended 30 June 2002 to 30 June 2009, the wife had a total taxable income of $224,553, and a total after tax income of $188,950.39. More particularly, the income tax assessments show the following:
Year
Wife’s taxable income
Wife’s net income
2001/2002
$6,559
$6,559
2002/2003
$23,504
$19,758.08
2003/2004
$24,777
$20,908.17
2004/2005
$29,831
$24,262.24
2005/2006
$25,013
$21,372.39
2006/2007
$31,149
$26,341.11
2007/2008
$35,324
$30,133.98
2008/2009
$48,396
$39,615.42
TOTAL
$224,553
$188,950.39
That works out to an average after tax income of $454 per week during the eight years of the marriage. The wife sent overseas about 55% of her after tax income during the marriage. The wife maintained that the husband knew about all of the amounts of money that she sent overseas and agreed to them. Based on the psychiatrist’s report, I consider that the husband was unable to give informed consent. Even if he had agreed, his consent would have been without an understanding of the consequences and would have been a reflection of his desire to please.
The husband gave evidence. He said that 500 cents is worth more than $5. He did not understand the question about how many seasons there are in a year. He said there are seven weeks in a month. He was unable to tell the time on the court clock. He said his date of birth was 19.8.71. He said the “8” meant it was on Friday. He said he had never used a credit card and had never used an ATM. He said a credit card was just a plastic card.
Having seen the husband give evidence, and having heard his responses to questions about truth and lies, I am satisfied that the husband understood that he was required to give truthful evidence and that he would not deliberately have told a lie or attempted to deceive the court. However, I consider that his evidence was not entirely reliable, because of his intellectual disability and because of his suggestibility and desire to please.
The wife said in her affidavit that, in 2002, she and the husband agreed that she would send part of her earnings to her sister to repay the amount the sister had spent on the husband and wife’s wedding. As already discussed, I do not consider that the husband was able to give genuine consent to any such arrangement. In any event, “part” would not normally mean more than half and the wife clearly sent a lot of money overseas for other purposes and to other people. In her oral evidence, the wife said that the husband agreed to each transaction. For the reasons already discussed, I do not accept that the husband gave genuine consent.
The wife said she sent $1,300 in 2002 to repay her sister for the wedding and $4,757 in 2003 for her nephews’ and niece’s school fees and to assist her sister in her (omitted) business. The wife claimed that, during the marriage, she sent about $20,000 overseas for her nephews’ and niece’s tuition fees.
The wife said, and it was not disputed, that in 2003, the husband and wife decided to start a family. However, the wife was unable to get pregnant. It was eventually discovered that she had uterine cancer, as a result of which the wife had a hysterectomy.
In late 2004, the husband and wife borrowed $158,000 from the bank, ostensibly for renovations. The loan was secured by a mortgage over the matrimonial home.
In addition to the $158,000 borrowed for the renovations, the husband wanted a new car. His family helped with the choice of a vehicle. He bought a new car later in 2004 for $22,000. The purchase was funded by money borrowed from the bank and added to the mortgage. That made a total borrowing secured against the house of $180,000.
It was not clear from the evidence, but the borrowing for the car was apparently via a (omitted) Line of Credit. The amount outstanding on that line of credit is now $36,000.
The husband argued that the renovations that were undertaken on the former matrimonial home were not worth $158,000. He implied that the wife had used the additional money for her own purposes. The husband relied on a valuation of the property that said it was now worth $360,000 and, if no renovations had been undertaken, it would have been worth $340,000. The husband relied on this evidence to argue that the renovations must have cost about $20,000.
However, this does not take account of a number of factors. Firstly, the valuer does not appear to have been told exactly what the renovations were. The wife said that some of the work that was done consisted of new plastering, new architraves and painting. Such things may not have appeared to be renovations.
Secondly, the valuation evidence does not take account of the well-known concept of overcapitalisation. It is possible that a lot more than $20,000 was spent on the renovations, but the expenditure did not result in improvements that significantly added to the appeal of the house to prospective buyers.
Thirdly, the renovations were done by the husband’s cousin, Mr S. Mr S did not provide a receipt for his work. There was no written contract. It is possible that Mr S grossly overcharged the husband and the wife for the work that he did. This possibility is given added credence by the facts that Mr S has refused to provide any documentation relating to his work and the husband’s family are no longer speaking to him.
It seems to me to be likely that Mr S took advantage of the husband and wife, and charged much more for the renovation than going rates. It also seems likely that the husband and wife overcapitalised to an extent. In addition, however, as detailed below, the wife conceded that a lot of money was spent or sent overseas in 2005. It seems obvious that some of the borrowed funds were spent on the extraordinary items conceded by the wife. (By “extraordinary items”, I mean not ordinary day to day living expenses.)
As the figures above show, the wife sent a lot more overseas in 2005, after the loan was obtained, than she did in previous or subsequent years. Also, while the tax year does not correlate to the calendar years into which the amounts sent overseas have been broken down, it is clear that, in 2005, the wife sent at least $36,573 overseas even though her after tax annual earnings at the time were in the order of about $21,000 to $25,000.
Regarding the extraordinary items conceded by the wife, she said that she and the husband went to the Philippines for a holiday in 2005. She said that they decided to renovate a property in the Philippines that she had been given by her parents. She said that $21,000 had been spent on excavations, building, airconditioning and furniture for the Philippines property. It seems that the wife’s sister lived in the house and the wife and her sister are now equal shared owners of the house.
The wife said that in 2005 and 2006, she spent $11,000 on dialysis for her father. She also said that she paid $10,000 for a fiesta in her village to give thanks for surviving her cancer. The husband’s family was invited but only his sister Ms H attended. The wife also said that in 2006 she and the husband had two island holidays in the Philippines that cost about $12,000.
There was an unspecified amount for the holiday in the Philippines in 2005. The two island holidays in 2006, the fiesta, the dialysis and the renovations in the Philippines, on the wife’s figures, cost $54,000. Not all of that money would be included in the amounts sent overseas. Some of it was simply spent, the wife said, by credit card. Having said that, the fact remains that the wife sent overseas, over the whole of the marriage, at least 55% of her earnings.
The wife also said that she returned to the Philippines in June 2007 because her father was gravely ill. The wife said that she wanted the husband to come with her, for moral support, but his father would not permit it. The wife said that she paid for this trip by extending a personal loan, which she repaid at the rate of $170 per week. The wife’s father died in November 2007. The wife said she wanted to go back for the funeral, but the husband’s parents stopped her going.
In 2009, the wife said her mother was diagnosed with lung cancer. The wife said that she and the husband agreed to help with the cost of medical treatment. She said they spent $8,000 on medical treatment.
In June 2009, the husband’s employer had less work available and the husband’s working hours were reduced. The husband’s sister, Ms H decided to apply for a disability pension for the husband. Centrelink required bank records. After some pressure, the wife showed the records to Ms H. Ms H then learned about the extent of the debt that had been incurred by the husband and wife. The husband’s family were very angry with the wife. She left and obtained intervention orders against the husband’s two sisters and his father. The wife continued to take food to the husband at his house. She was then served with an intervention order for harassing the husband.
Ms H discovered that the husband and wife had substantial debts which are presently agreed to be as follows:
Commonwealth Bank home loan
$137,000
(omitted) Bank line of credit
$36,000
Husband’s CBA Visa
$10,700
Husband’s Westpac Mastercard
$12,782
Wife’s Westpac Visa
$5,409
Wife’s CBA Mastercard
$5,764
Wife’s Citibank Visa
$7,282
Joint Westpac personal loan
$12,408
TOTAL LIABILITIES
$227,345
The evidence did not explain precisely what the debts were at the time of separation, but I understand them to have been much the same.
The husband’s evidence, which I accept, was that he has never had a credit card and does not know how to use one. The clear inference is that the wife obtained credit cards, in the husband’s name as well as her own, and used them all. The parties presently have $41,937 in credit card debt. Similarly, the husband had no capacity to obtain a personal loan. I infer that the wife obtained the personal loan and decided how the money was spent, even though the loan is in joint names. It has $12,408 outstanding. Added to the credit card liability, that totals personal debt of $54,345.
The home loan and (omitted) line of credit total $173,000 and is secured against the house. It is a slight reduction on the $180,000 that was initially borrowed, on the wife’s evidence.
Ms H has a different version of events to the wife. However, her affidavit evidence consisted of her adopting the affidavit evidence of a family friend, Ms D., who is the husband’s litigation guardian. Much of that evidence was given in the abstract.
For example, Ms D. said:
It was revealed that in addition to money, packages with goods purchased by the wife were also sent regularly to her sister and mother in the Philippines.
It is unclear how this information became known, when it became known, who it became known to, how often packages were sent or, as Ms D. herself said, how much money was spent on the relevant goods. However, based on the large credit card and personal loan debts incurred by the wife, it seems to be fair to infer that a significant proportion of that money was used by the wife to buy goods to send to her relatives overseas.
Ms H said that the wife bought land in the Philippines. That land does not appear to have become one of the agreed assets. Accordingly, I take that issue no further.
However, Ms H also said that the wife did not renovate a property she was given by her parents. Ms H said the wife paid for renovations to her mother’s house, where the mother and sister were living, and also built a new house adjoining the mother’s house that the sister and her family moved into. Ms H said that the wife has now inherited half of the land that has on it both the mother’s house and the new house that the sister lives in. Ms H also said that the wife paid for the construction and fitting out of an area in one of the houses that is used by the sister as a (omitted).
I accept Ms H’s evidence on these matters. Ms H has actually been to the Philippines and seen the arrangements. I have no reason to doubt her credibility. The wife said that the renovations to the property in the Philippines cost $21,000. That is an extraordinary amount, given that the property is now said to be worth $16,922.
I am not confident that the wife did spend the amounts that she claimed on the various items that she claimed. They seem a lot, by the standards of a third world country. The wife provided no documents to substantiate her claims. As indicated above, I do not accept that the wife has been entirely honest with the court, particularly by not disclosing her records with (omitted) and to (omitted).
The legislation
Section 79 of the Family Law Act1975 (“the Act”) defines the court’s powers in determining applications for property settlement. Sub-section 79(2) of the Act provides that:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 79(4) of the Act sets out the matters the court must take into account when considering what orders should be made for the alteration of the interests of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)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.
The matters to be taken into account under s.75(2) of the Act are as follows:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
The four step approach
In Hickey v Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; [2003] FamCA 395 at [39], the Full Court of the Family Court described the preferred four step approach in property matters as follows:
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. First, 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. Second, 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. Third, 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. Fourth, 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 ….
STEP 1: The assets and liabilities
The parties agreed that their assets and liabilities at the time of trial were as follows:
ASSETS
VALUE
Property W,
$360,000
Wife’s 50% interest in Philippines property (P749,568 = A$16,922 x 0.5)
$8,461
Husband’s Nissan motor vehicle
$6,500
Contents of home
$5,000
TOTAL ASSETS
$379,961
LIABILITIES
Commonwealth Bank home loan
$137,000
Commonwealth Bank (omitted) line of credit
$36,000
Husband’s CBA Visa
$10,700
Husband’s Westpac Mastercard
$12,782
Wife’s Westpac Visa
$5,409
Wife’s CBA Mastercard
$5,764
Wife’s Citibank Visa
$7,282
Joint Westpac personal loan
$12,408
TOTAL LIABILITIES
$227,345
ASSETS LESS LIABILITIES
$152,616
SUPERANNUATION
Wife's Super
$26,907
Husband’s Super
$28,570
NET ASSETS PLUS SUPERANNUATION
$208,093
The net asset pool
Consequently, the net asset pool, including superannuation, is $208,093. It was suggested by the husband that the wife had secreted other assets or funds in the Philippines. That suggestion was not crystallised into a clear submission.
However, for the reasons given below, I consider that, in addition to the agreed assets, there should be an add back of $78,821 on the wife’s account.
Financial resources of the parties
It was not suggested that the parties have any financial resources other than their earnings.
STEP 2: Contributions
Initial contributions
At the commencement of the marriage in January 2001, the husband had an unencumbered house worth $125,000 and no debts. The house became the matrimonial home. The wife brought no possessions of significant value to the marriage.
Contributions during the marriage
During the marriage, the wife was initially unable to work and she then worked part time. She later got a second part time job and also sold (omitted). The husband and wife both now earn about $800 per week. For a large part of the marriage, the husband earned considerably more than the wife.
Additionally, as discussed above, the wife sent overseas just over half of her average after tax weekly earnings during the course of the marriage. Consequently, the earnings of the husband that were contributed to the household were more than twice the amount that was contributed by the wife. In rough terms, it seems that, over the period of the marriage as a whole, the husband contributed about 75% of the average weekly household income and the wife contributed about 25%.
There were no children of the marriage. The wife did most of the cooking, cleaning and other household chores and the husband mowed the lawn and did gardening. As far as keeping the household running is concerned, I consider that the wife contributed substantially more than the husband.
The wife acquired, during the course of the marriage, a half share in a property in the Philippines. The wife claimed to have spent $21,000 renovating it, even though she said it is now worth about $16,000, and her share is worth about $8,000. On the wife’s own evidence, the Philippines property has been a financial drain.
The parties incurred a great deal of debt during the course of the marriage. As discussed, the husband has, and has always had, a significant intellectual disability. He was unable to incur debt by himself and appears to have had no inclination to incur debt. Consequently, I conclude that the various debts incurred by the parties were incurred largely at the wife’s instigation.
The exceptions to this would be the $22,000 borrowed for the car and a certain amount for the renovation of the matrimonial home. They appear to have been joint decisions. The car seems to have been for the benefit of both parties. Similarly, both parties had the benefit of the renovations. The husband’s family appears to have approved of the renovations, although they do not accept that $158,000 was spent on them.
Unfortunately, absolutely no records were provided to the court substantiating how much was spent on the renovations. That is, there were no contracts, no receipts and no bank records. I am unable to accept the wife’s claim that $158,000 was spent on the renovations. As discussed, I did not find the wife to be an entirely credible witness. It seems completely implausible that about half the value of the house could have been spent on largely superficial changes to the house.
Even allowing for Mr S having grossly overcharged, it seems to me that a figure of $80,000 is more likely to have been the amount spent on the renovations. Consequently, there is another $78,000 that is unaccounted for.
There was a good deal of money spent and, presumably, debt incurred, on holidays in the Philippines. The husband and the wife had a holiday in the Philippines together in 2005, which cost an unspecified amount, and a further holiday in the Philippines together in 2006 spent on islands. The wife said that the second holiday cost $12,000. The holidays may have been an extravagance that the parties could not realistically afford, but they presumably both got the benefit of them. Again, there was no documentary evidence of how much the holidays cost. In the circumstances, I estimate that the first holiday cost $6,000, on the assumption that the parties stayed with the wife’s relatives rather than at resorts.
Consequently, the debt that was for the parties joint benefit was:
a)$22,000 for the car;
b)$80,000 for the renovation of the matrimonial property; and
c)$18,000 for holidays together.
That is $120,000 in total. Of the approximately $227,000 that the parties presently owe, about $107,000 was incurred for reasons other than their joint benefit.
Contributions post separation
The husband continued post-separation to pay the mortgage and outgoings on the former matrimonial home, even though he returned to his parents’ house to live.
The wife continued to send money overseas post-separation, at least until the end of December 2010. In that eighteen month period, she sent about $11,479 overseas. That averages about $147 per week, compared with an average of $249 per week during the marriage. That is, post separation, the wife sent overseas about 59% of the average weekly amounts she is documented to have sent during the marriage. Having said that, the wife was earning more post separation than she had during the early part of the marriage.
The wife sent money overseas even though she has significant credit card debts in her own name. Counsel for the wife submitted that this indicated that the wife was genuine in her need to support her family overseas. However, amounts were also sent post-separation in the context of an ongoing property dispute. The real test will be if the wife continues to send money overseas once the proceedings are finalised. That, of course, is something that cannot be known.
Contribution based entitlements
There was discussion at the trial about how the wife’s handling of the couple’s money should be treated. The husband argued that the wife had engaged in a reckless and wanton course of conduct that amounted to wastage. He said that the wife had prioritised her Filipino family over her joint enterprise with the husband. He said that the s.75(2) factors favour the husband. He said that the orders the court should make are that each party should keep the property and debts that are in his or her possession.
It was not clear what the husband proposed should become of the joint mortgage or the joint personal loan. Moreover, the husband, through his legal advisers, did not analyse the case in accordance with the approach set out in Hickey. Additionally, as counsel for the wife pointed out, the husband seemed to be arguing for an add back, but did not say how much.
Counsel for the wife also submitted that the husband did not specify a proper basis for an add back. Counsel referred to In the Marriage of Omacini (2005) 191 FLR 317; (2005) 33 Fam LR 134; (2005) FLC 93-218; [2005] FamCA 195 at [30], where the Full Family Court said:
To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees… .
(b)Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505 ; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c)In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13 ; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
In relation to Townsend, counsel submitted that the reason for the add back was that the husband had not given a reasonable explanation for the disappearance of the $148,000 that he had obtained for the sale of a taxi licence. The husband in Townsend did offer an explanation. At Fam LR 507, it is said that the husband stopped working after separation and spent some of the money on the living expenses of himself and the children, and a large part of the money repaying debts and paying legal costs for the custody proceedings.
Notwithstanding that explanation, the Chief Justice, with whom Fogarty and Jordan JJ agreed, said in Townsend at Fam LR 509 to 510:
It was argued by Mr Golding for the husband that it would be inappropriate to bring those moneys into account, and in support of that proposition he relied on the remarks of Baker J in Kowaliw (1981) 7 Fam LN 13 ; [1981] FLC 91-092 at FLC 76,645. In that case his Honour commented as follows:
If a party has acted in the manner to which I have referred earlier, either by:
(a)embarking upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)acting recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value,
then such conduct in my view and the economic consequences which flow therefrom are clearly matters to which the court may have regard pursuant to the provisions of s 75(2)(o).
If, on the other hand, losses of a financial kind have been suffered by the parties to a marriage in the course of pursuit of matrimonial objectives such as the gaining of income or the acquisition of assets, whether the liability of such losses be joint or several then, in my view, such losses should be shared by the parties (although not necessarily equally) and taken into account when altering property interests.
Although that statement by his Honour correctly crystallised the legal position so far as the case that his Honour was dealing with was concerned, it should not, in my view, be taken as meaning that in a case such as the present one, it is not appropriate to take the fact that a party has received funds into account simply because they had been expended in a way which does not fit within the categories described by his Honour.
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under s 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband's receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
Importantly, the Full Court in Townsend made it clear that the categories of case in which it would be proper to bring assets into the pool on a notional basis are not closed. And, importantly for this case, the Full Court made it clear that an explanation for a premature distribution of assets is not enough. It may still be the case that a party to a marriage has used for himself or herself assets of the marriage in which the other party has a legitimate interest.
Counsel for the wife also referred to the case of In the Marriage of R E and I E Jones (1990) 99 FLR 238; (1990) 14 Fam LR 19; (1990) FLC 92-143. In that case, the wife argued that the husband had recklessly and wantonly disposed of the proceeds of sale of a property by giving some of the proceeds to the adult children of the relationship and some by way of a donation to his church. The Full Court considered that the amounts so distributed should not be treated as an add back. The Full Court considered that the husband, during the marriage and with the wife’s acquiescence, had used the property for the financial benefit of the children and had made donations to the church.
The present case is distinguishable. Even if the husband in this case did acquiesce, he was unable to understand the consequences of his agreement. Counsel for the wife asked, rhetorically, what was the wife to do in such a situation? The answer is obvious. She should have discussed her intentions with the husband’s family and been entirely open with them about her and the husband’s financial affairs.
I consider, in the exercise of the broad discretion that applies in such cases, that the wife has given to herself a premature distribution of part of the amount that she sent overseas.
In my view, if a person marries someone from overseas, it is reasonable for that person to go home now and then to spend time with family and friends. It is unquestionably reasonable for the person to go home for significant events, such as serious illnesses and funerals. It is also reasonable that, if someone marries a person from a third world country, that person should be able to financially assist his or her family at home.
However, it is all a matter of proportion. Regard must be had to the financial circumstances of the parties. It is not reasonable to put the husband and wife into substantial debt to pay overly generous amounts for the benefit of relatives overseas.
In all the circumstances of this case, I consider that the outer limit of reasonableness would have been for the wife to send overseas for the benefit of her relatives an average of $60 per week, for all purposes, including health care, tuition and renovations. That works out at $24,960 over the eight years of cohabitation. The wife in fact sent overseas at least $103,781. The difference is $78,821. That amount should be added back and attributed to the wife’s account.
I acknowledge that the husband did not formally seek an add back. However, it was implicit in his submissions, and the wife’s counsel met the argument in any event.
I also acknowledge that the amount of the debt in this case suggests that the wife may have sent a good deal more money overseas than the AUSTRAC records indicate. The wife could have taken large amounts of money overseas in cash when she went to the Philippines, as people notoriously do. It is also possible that the parcels the wife sent to her family contained items of very significant value. Based on Weir, the court need not be unduly cautious in making findings adverse to the wife. However, it was not made known to the court how much the parties actually spent on their ordinary living expenses. Accordingly, it is unclear whether the parties were living beyond their means, in addition to the wife sending large amounts of money overseas.
Counsel for the wife argued that the value of the husband’s initial contribution of an unencumbered house had been offset over time by the value of the wife’s contributions as a homemaker. I accept that the wife provided the bulk of the homemaker functions. It must also be acknowledged that, by all accounts, the wife cared for the husband very well. The husband earned somewhat more than the wife over the course of the marriage. She sent over half of her earnings overseas, but some of that money is to be added back.
This is a very difficult and unusual case. However, taking into account all relevant matters, I consider that the contributions of the parties should be assessed at 70% for the husband and 30% for the wife.
STEP 3: the s.79(4)(d), (e), (f) and (g) and the s.75(2) factors
The wife said that the future factors were evenly balanced. Both parties are in good health and both are earning roughly the same amount. The wife is 45 years old and the husband is 40 years old.
The husband argued that the future factors are tipped in his favour, because of his intellectual disability.
It is obvious that the husband will continue to need support in the future. He is unable to live alone. He presently lives with his mother. In time, if he does not marry again, he will probably have to live with one of his siblings. However, there was no suggestion that there would be any cost involved. It seems that the husband will be able to continue to work for the foreseeable future.
In all the circumstances, I do not consider that there needs to be any adjustment for future factors.
STEP 4: What orders are just and equitable
Both parties seemed to be of the view that they should each retain their superannuation. I agree that such a course is just and equitable in all the circumstances of this case.
I consider that an alteration of non-superannuation property interests in accordance with the parties’ contributions is just and equitable in this case. It is just and equitable that the husband retains his house and the debt secured over it, as well as his credit card debts and the parties’ joint personal loan. The husband did not suggest otherwise. It is just and equitable that the wife retains her share in the house in the Philippines and her credit card debts.
The wife submitted that it was ludicrous that she should leave a marriage of eight and a half years with nothing but debt. However, she will keep her share of the house in the Philippines, which she brought to the marriage. Also, this was not the usual marriage, where the parties pool their resources and build up assets over the course of the relationship. In this case, the parties have less than they started with. The husband, at the commencement of the relationship, owned a house outright. He now owns only about half of it. That is largely due to the wife’s conduct.
The net non-superannuation assets, including the add back, are $152,616 plus $78,821, which equals $231,437. 70% of $231,437 is $162,006. 30% of $231,437 is $69,431. Consequently, the husband and wife will each retain the assets indicated and the husband will have to pay the wife $604.
The husband will retain:
ASSETS
VALUE
Property W
$360,000
Husband’s Nissan motor vehicle
$6,500
Contents of home
$5,000
TOTAL ASSETS
$371,500
LIABILITIES
Commonwealth Bank home loan
$137,000
Commonwealth Bank (omitted) line of credit
$36,000
Husband’s CBA Visa
$10,700
Husband’s Westpac Mastercard
$12,782
Joint Westpac personal loan
$12,408
TOTAL LIABILITIES
$208,890
ASSETS LESS LIABILITIES
$162,610
LESS PAYMENT TO WIFE
$604
FINAL TOTAL
$162,006
The wife will retain:
ASSETS
VALUE
Wife’s 50% interest in Philippines property (P749,568 = A$16,922 x 0.5)
$8,461
Add back
$78,821
TOTAL ASSETS
$87,282
LIABILITIES
Wife’s Westpac Visa
$5,409
Wife’s CBA Mastercard
$5,764
Wife’s Citibank Visa
$7,282
TOTAL LIABILITIES
$18,455
ASSETS LESS LIABILITIES
$68,827
PLUS PAYMENT FROM HUSBAND
$604
FINAL TOTAL
$69,431
I will hear the parties on the form of the orders to give effect to these reasons.
I certify that the preceding one hundred and twenty-two (122) paragraphs are a true copy of the reasons for judgment of Riley FM
Date: 1 February 2012
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