Martin and Martin

Case •

[2011] FMCAfam 1221

•

22 November 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MARTIN & MARTIN [2011] FMCAfam 1221
FAMILY LAW – s.79 – Property adjustment – addbacks – long marriage.
Family Law Act 1975, ss.75, 79
AJO v GRO [2005] FamCA 195; (2005) FLC 93-218; (2005) 33 Fam LR 123
Gollings v Scott [2007] FamCAFC397
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143, (2003) 30 FamLR 355
In the marriage of Lee Steere (1985) FLC91-626
In the marriage of Ferrarro (1993) FLC 92-335
In the marriage of Clauson (1995) FLC 92-595
Russell and Russell (1999) FLC 92-877
Teal & Teal [2010] FamCAFC 120
Applicant: MS MARTIN
Respondent: MR MARTIN
File Number: SYC 4572 of 2010
Judgment of: Foster FM
Hearing date: 19 October 2011
Date of Last Submission: 19 October 2011
Delivered at: Newcastle
Delivered on: 22 November 2011

REPRESENTATION

Counsel for the Applicant: Ms Nash
Solicitors for the Applicant: Brian Quinn & Associates
Solicitors for the Respondent: Self represented

ORDERS

  1. That the husband and wife within one month from this date do all necessary things and sign all necessary documents to sever the existing joint tenancy in relation to the property Property BProperty B to the effect that the husband and wife shall thereafter hold their interest as tenants in common in equal shares.

  2. That the husband and wife within one month from this date do all necessary things and sign all necessary documents to sever any existing joint tenancy in relation to the property at Property P, Philippines to the effect that the husband and wife shall thereafter hold their interest as tenants in common in equal shares

  3. That the husband and wife within one month from this date do all necessary things and sign all necessary documents to transfer to [W] their interest in [A] policy [2].

  4. That the wife within one month from this date the wife do all necessary things and sign all necessary documents to transfer to [Z] her interest in [A] Policy [1].

  5. That the Husband and the Wife do all things and execute all necessary documents and to take all steps to effect the sale of the property situate at Property T (“the property”) forthwith and for that purpose the following specific provisions apply:

    (a) The property shall be placed on the market for sale with a selling agent (and in the event that the parties do not agree on the selling agent to be employed then within 7 days from this date, the Husband shall nominate three (3) such selling agents within a further 7 days and the Wife shall select within a further 7 days one of the selling agents nominated by the Husband to be the selling agent employed by the parties) by private treaty at a price to be agreed between the Husband and the Wife or such amount as may thereafter from time to time be agreed and in the event that the Husband and Wife do not agree, either at the time the property is first placed in the hands of agents for sale or at a later  time, as to the price at which the property should be offered for sale by  private treaty the parties shall accept the reasonable recommendation of the selling agent as to the price at which the property should be offered for sale.

    (b) In the event that an offer is made to purchase the property at a price lower than the price at which the property is offered for sale and the parties do not agree as to whether or not the offer should be accepted then the parties shall accept the recommendation from the selling agent in this regard.

    (c) In the event that the property is not sold by private treaty pursuant to the last preceding sub-clauses within 3 months from the date of these orders the Husband and the Wife shall forthwith take all necessary steps to sell the property by public auction pursuant to the following sub-clauses and the property shall be resubmitted for sale by public auction at 2 monthly intervals until sold.

    (d) The property shall be placed in the hands of a reputable real estate agent practising as an auctioneer within the area of the property and in the event that the parties do not agree on the auctioneer to be employed the Husband shall nominate three (3) such auctioneers and the Wife shall select one (1) of the auctioneers nominated by the Husband to be the auctioneer employed by the parties.

    (e) The Husband and the Wife shall execute all such documents as may be necessary to authorise the selling agent or auctioneer to sell the property.

    (f) In the event that the parties do not agree as to the reserve price to be placed on the property at the auction the Husband and the Wife shall accept the recommendation of the auctioneer.

    (g) The parties shall pay equally to the auctioneer any sums reasonably required for advertising expenses in relation to the auction.

    (h) The Husband and the Wife shall attend at the auction sale and in the event that the property is not sold shall negotiate with the highest bidder in the event that an offer is made below the agreed reserve price and the parties do not agree as to whether or not it should be accepted then the terms of paragraph (b) above shall be applied.

    (i)On either a sale by private treaty or a sale by auction both parties shall execute the contract for sale, the transfer of land and  any other necessary documents in relation to the sale and the discharge of any  mortgages.

    (j) Both parties shall co-operate in every way with the agent in relation to sale by private treaty or by auction including allowing inspection of the property at times reasonably requested by the agent.

    (k)The Husband and Wife shall authorize and direct that the proceeds of sale be applied in the following manner:

    (a) to pay all costs, commissions and expenses of the sale;

    (b) in payment of the balance to the husband and wife equally.

  6. That within 7 days from this date the husband and wife do all things necessary to authorise and direct that funds held in trust by Logical Legal be paid as follows:

    (a)As to the sum of  $161,981 to the wife,

    (b)As to the balance then remaining to the husband

  7. The Court otherwise declares that the parties have divided between themselves in specie all their other property including their furniture and furnishings, their jewellery and other personal effects, chattels, cash on hand and including their cash at bank and building society and that they have no right title or interest in or to any such items presently in the possession of or under the control of the other including any entitlements to superannuation.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYC 4572 of 2010

MS MARTIN

Applicant

And

MR MARTIN

Respondent

REASONS FOR JUDGMENT

Applications

  1. These proceedings concern property proceedings between the applicant wife and the respondent husband.

  2. The applicant wife relied upon the following documents:

    a.  Initiating application filed on 20 July 2010

    b.  Financial statement filed on 20 July 2010.

    c.  Her affidavit filed on 5 September 2011

    d.  Affidavit of Mr B filed on 5 September 2011

    e.  Affidavit of Ms B filed on 5 September 2011

    f.  Affidavit of Ms S filed on 5 September 2011

    g.  Affidavit of Ms A filed on 30 September 2011

  3. The respondent husband relied on the following documents:

    a.  Response to initiating application filed on 17 August 2010

    b.  Financial statement filed on 17 August 2010

    c.  His affidavit filed on 17 August 2010

    d.  His affidavit filed on 19 September 2011

  4. The applicant wife in her application filed on 20 July 2010 sought a final order as to property to the effect that the respondent pay to the applicant a sum of money equivalent to 70% of the net matrimonial pool available for division between the parties as determined by the court

  5. The respondent husband in his response filed on 17 August 2010 sought the following orders:

    a.Grant leave that the respondent husband be allowed to be reimbursed or be indemnified of about $55,000 for ordinary and necessary expenses he incurred such as costs of office suppliers, computing, transportation, mailings, photocopying, research, telephone, legal fees, witness fees, court fees and other expenses, like out of pocket expenses related to the carriage of his claim against [A] from year 1996 two-year 2010.

    b.Grant leave that the settlement money coming from [A] be apportioned in the ratio of 80% for the respondent husband and 20% for the applicant wife as explained in respondent husband's affidavit.

    c.Grant leave accepting shares of ownership of the respondent husband on real estates, properties, investments and others as listed on financial statements submitted by both parties to be made, natural and or security so the money is coming from [A] as settlement be released under the care of the respondent husband.

    d.Grant leave that all existing assets, properties including liabilities as listed on financial statements of both parties be apportioned to 50:50 ratios.

  6. Needless to say it was necessary at the commencement of the proceedings and to seek some particularity from the parties as to the precise orders sought by them and the asset pool that was contended by each of them for the purposes of division.

  7. The at the commencement of the proceedings the respondent husband was unrepresented, however as a consequence of the need to identify the order sought by each of the parties and the issues outstanding in relation to the asset pool the husband was thereafter and during the course of the proceedings assisted by the duty legal aid solicitor.

  8. After some discussion between the parties and agreement was reached that the intention of each of the parties was to achieve an equal division of the asset pool. A draft asset pool (Exh A) was provided for discussion purposes and following further discussions between the parties the asset pool contended for by the parties was as follows:

Asset  Value
Jt Property T 500,000
Jt 25% interest Property BProperty B 145,000
H [A] shares (1723 @ 4.20) 7,236
W [A] shares (1062 @ 4.20) 4,460
W 50% [A] shares jt with [Y] (175 @ 4.31) 754
W 50% [A] shares jt with [Z] (143.5 @ 4.31) 618
H [I] shares (294 @ 2.98) 877
W [A] Policy ([3]) 91,062
Jt [A] Policy ([2]) 17,072
W 50% [A] Policy ([1]) jt with [Z] 674
W [A] Superannuation 72,048
W [U] Super 11,239
Jt Property P, Philippines 113,023
H Property S, Philippines 43,023
W 10% Interest in property [N], Philippines 2,775
H Trust Account Funds Logical Legal 302,709
W 1995 Toyota sedan 1,500
H Kayak and Bike 1,500
H Contents Property B 2,500
W Contents Property T property 2,500
H ADDBACK: Superannuation withdrawal 01.05.2008 93,016
H ADDBACK: Sale Toyota HiAce 10,000
H ADDBACK: Medicare Refund 62,500
Liabilities:
Jt Mortgage Corp Pty Ltd (Property B) 92,223
Jt [A] arrears Policy [2] 2,688
W [A] arrears Policy [3] 4,025
W 50% [A] arrears Policy [1] 605
W [A] Superannuation Policy [4] debt 12,090

The items set out above italicised and in bold are the 3 items the subject of dispute between the parties in the composition of the overall asset pool.

Background

  1. The wife was born [in] 1951. She is presently 59 years of age not working and devotes her time to home duties.

  2. The husband was born [in] 1941 and is aged 69 years. The husband is in fair health.

  3. The parties commenced cohabitation and were married in November 1971. In August of 1981 the parties and their then children migrated to Australia to live permanently.

  4. The parties separated on 7 December 200. Prior to final separation that they were other periods of separation between December 1997 and March 1998 and thereafter from August 2004 to February 2005.

  5. There are 4 children of the marriage, [W] now aged 39 years, [X] now aged 37 years, [Y] now aged 35 years and [Z] now aged 33 years.  All of the children live independently from the parties

  6. At the commencement of cohabitation in November 1971 that the wife was a full-time student and a husband that was employed as a [omitted] in the Philippines

  7. At the commencement of cohabitation the wife had little or no assets. The husband at the time of cohabitation was the owner of the property at [S] in the Philippines. The husband still owns that property today and it has an agreed value of $43,023. For years this property was occupied by the husband's parents and his siblings. In 1973 the dwelling on the property was substantially destroyed by a typhoon. The parties paid for the reconstruction of the dwelling which was then reoccupied by the husband's family. In 1997 the parties paid from the joint funds a lump sum payment to discharge the mortgage is secured over the property which at that time was substantially in arrears. This property remains registered in the name of the husband alone.

Employment

  1. Following the conclusion of her studies the wife commenced employment as a [omitted]. Thereafter she commenced part-time additional employment as an [omitted]. The wife's employment as an [omitted] later became full-time and she continued this employment until the parties migrated to Australia in 1981.

  2. The husband continued his employment as a [omitted] and also commenced part-time additional employment as an [omitted] until the parties migrated to Australia in 1981.

  3. Upon coming to Australia the wife obtained employment with [omitted] for a short period and thereafter she commenced to assist her husband in his employment with [A] until he retired from that employment on 29 November 1996. The wife thereafter obtained employment with [S] Proprietary Ltd until about July 1997.

  4. After migrating to Australia the husband and obtained employment as an [omitted] with [A]. He followed this occupation until his retirement from [A] on 29 November 1996. Following the cessation of his employment with [A] the husband obtained employment with [S] Proprietary Ltd until July 1997 at which time he ceased all employment.

  5. In 1995 during the period of his employment with [A] the husband made a claim on the income protection insurance policies affected by [A] on behalf of their [occupation omitted]. The husband's claim was based upon his consistent work which over a period of years resulted in him suffering from glaucoma. The husband commenced to receive some benefits from [A] in 1995 but those benefit payments were unilaterally stopped by [A] in about October 1995.

  6. In 1986 the parties incorporated the husband's activities as an [occupation omitted] and he thereafter traded through a company known as [Mr Martin] Pty Ltd, until that company was deregistered in 2003 some years after his retirement from [A]. In her role in assisting the husband in his [occupation omitted] activities the wife was an employee of the company.

  7. The husband thereafter through the company continued to work with [A] until the final termination of his employment on 29 November 1996.

  8. Over the years of cohabitation and it is common ground that the wife undertook the roles as primary homemaker and caregiver for the


    4 children of the marriage. This was in addition to her significant efforts in assisting the husband in his activities as an [occupation omitted].

  9. Following termination from [A] the husband received certain lump sums by way of eligible retirement payments and a sum from [A] in relation to the purchase of his client register. The parties also sold various [A] shares that they have acquired over the years to meet their living expenses during this period.

  10. As the party’s capital funds are diminished it was necessary for the wife to return to full-time employment. In 1999 she obtained employment with [omitted] for about 4 months and thereafter obtained employment as an [omitted] until December 2002 at which time she finally ceased employment.

Matrimonial home

  1. In 1983 the parties purchased the property at Property D. The purchase price was $85,000. The purchase price was funded by way of a loan as to the 10% deposit from the wife's sister and the balance obtained by way of mortgage advance. The parties subsequently repaid the loan from the wife’s sister.

  2. In 2003 the parties sold the Property D property for the sum of $725,000. The proceeds of sale were used to purchase the present matrimonial home at Property T for the sum of $420,000. The surplus capital funds were used by the parties over the ensuring years to meet living and other expenses as by this time neither party was in employment.

Investment Properties

  1. During the period of cohabitation in Australia the parties bought and sold several investment properties. The first of these properties was at [G] and the second property was at Property B, NSW, in which the parties purchased a 25% share. In 2002 the Property B property was sold and the parties applied the proceeds of sale to repurchase a 25% interest in the same Property B property.  The gross purchase price of this property was $515,000 with the purchase price financed by way of a capital contribution of $35,000 from each of the purchaser couples together with a secured mortgage borrowing.

  2. In 1997 the wife and the child [W] purchased an investment unit at [D] for $170,000. The wife from matrimonial funds contributed $56,000 to the purchase with the balance being borrowed by her son. The property was sold in 2005 for $306,000. The husband and wife each received $48,000 from the sale proceeds.

  3. The wife also inherited a 10% interest in her family home at [N], Philippines following the death of her parents in 2000.

Credit

  1. The wife in her evidence was clear and forthright. Where she could her assertions were corroborated by relevant documents. She answered questions directly and did not prevaricate. The court accepts her as a witness of truth.

  2. The husband on the other hand, giving him some latitude as an unrepresented litigant, gave evidence in a manner that was evasive and unclear. He was vague and unresponsive in his answers. He had no doubt recourse to primary evidentiary documents being his own banking and other records but none were produced to corroborate his assertions as to the many impugned transactions. He purported to attach documents to his affidavit from his brother and another to assist his evidence but such documents were inadmissible and could be given no weight. His brother was available to give evidence and there was no cogent reason why he was not on affidavit or indeed present to give evidence. The court can only assume that the brother’s evidence would not have assisted the husband.

  3. Where there is any conflict between the uncorroborated evidence of the husband and the evidence of the wife the court accepts the evidence of the wife.

The Property P property

  1. In March 2005 the parties acquired a further investment property at Property P, Philippines. The circumstances of the purchase of this property are a matter of dispute between the parties and will be referred to below.

  2. The wife asserts that the purchase price of this property was about $70,000 and was funded equally by the parties. The title deed to the property evidences a transfer of the two titles to the parties jointly being registered on the 11th April 2005 and then the 9th August 2005. The wife asserts that funds were contributed from her CBA Cash Management account (Exh C) and her St. George Cash Management account (Exh B) with the husband’s contribution from his Westpac Deeming Account (A). The Exhibits disclose the relevant withdrawals.

  3. The husband asserts that no funds were paid at the time of purchase but that funds were advanced by his brother to the parties. The husband asserts that he later repaid his brother later by bank cheque and cash.

  1. The court accepts the wife’s evidence.

[A] Superannuation

  1. The husband in October 2006 withdrew his superannuation from [A] in the sum of $70,043 with the funds being deposited into his Westpac Maxi Direct account. On the 1st May 2008 the husband withdrew from this account the sum of $93,016. In cross examination the husband asserts that these funds were held in cash in a vault at the Property T home (Transcript HXMN at p8.5, p9.10).

  2. He asserts that from this sum he paid to his brother $35,000 in cash and drew a bank cheque to repay his brother the balance of $35,000 and took these funds and the cheque to the Philippines in 2009. The bank cheque was in fact drawn in favour of the husband on the 6th July 2009, not his brother. Otherwise the husband asserts that funds were expended by him on eye surgery, living expenses and “other obligations”.

  3. The husband asserts that he lost the bank cheque. The cheque was cancelled by his bank and funds re-credited to his Westpac eSaver account on the 24 November 2009. From this account he transferred $33,476 on the 12th March 2010 to his Westpac Deeming Account. Thereafter the husband withdrew those funds in four transactions by the 17th March 2010. The application of those funds is unexplained save for a document RM-028 annexed to the husbands affidavit. The husband contends that the funds were in repayment of a debt accrued by reason of funds remitted to the husband’s family in the Philippines by a Ms. N on behalf of the husband. The court will addback the sum of $33,476 to the asset pool for division.

  4. On the 24 November 2009 the husband purchased a further bank cheque in the sum of $35,000. This cheque was also payable to him. The ultimate fate of this cheque is not clear. The source of funds for this cheque is not clear. The husband produced no banking records that could clarify the impugned transactions. The inference is that the funds for this bank cheque came from the balance of funds in the vault in cash.

  5. The court rejects the evidence of the husband as to his asserted payment of $35,000 cash to his brother and this sum will be added back to the pool for division.

  6. Accordingly the total sum of $68,476 from the superannuation funds will be included in the asset pool for division.

[A] Proceedings

  1. In 2004 the husband commenced proceedings against [A] in the Supreme Court of NSW claiming damages until age 65 arising from the termination of his income protection and business insurance payments by [A] in 1995. Those proceedings were compromised in August 2010 with the husband receiving $625,000 inclusive of costs.

  2. After costs and other deductions the husbands solicitors now hold in trust the sum of $302,709. The parties agree that these funds are included in the asset pool for division.

Medicare Refund

  1. Following settlement of the husband’s [A] claim a sum of $62,500 was remitted to Medicare and later refunded in full to the husband on the 14 June 2011. It is the withdrawal of these funds on the 14 September 2010 and later disposition of these funds that is in dispute.

  2. The husband asserts that he procured a further bank cheque to his brother in the sum of $35,000 and repaid a further debt owed by him in the sum of $33,500. No documents were adduced by the husband to corroborate his assertions although such banking records are of recent origin.

  3. The court does not accept the evidence of the husband and the sum of $62,500 will be included in the asset pool for division.

Toyota Hi-ace Van 

  1. In 2006 the husband sold the parties Toyota Hiace van for the sum of $10,500. The husband later used these funds to renovate and repair his sister’s home in the Philippines.

  2. Notwithstanding that the funds were utilised some time ago the sum of $10,500 will be included in the asset pool for division.

Addbacks: The Law

  1. In AJO v GRO[2005] FamCA 195; (2005) FLC 93-218; (2005) 33 Fam LR 134 and Gollings v Scott [2007] FamCAFC 397 the Full Court identified three clear categories of cases where it was appropriate to notionally add back to the pool assets which were said by the Full Court to “no longer exist”. Those three categories were:

    (a) monies spent on legal fees;

    (b) monies disbursed by way of premature distribution of matrimonial assets;
    (c) monies lost by one party either during or after the marriage as a result of a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or as a result of reckless negligent or wanton behaviours which had the effect of reducing or minimising the value of assets.

    The court is comfortably satisfied that the funds referred to above should in all the circumstances be added back to the pool.

The Adjusted Asset Pool:

  1. As to the assets, the parties agree that the investment property at Property B subject to the existing mortgage and the Property P, Philippines are to be retained in both names.

  2. Otherwise the parties agree that the jointly held [A] policy ([2]) on the life of [W] be transferred to [W] and that [A] Policy ([1]) the wife holds jointly with [Z] on the life of [Z] be transferred to [Z].

  3. The parties agree that the home at Property T is to be sold and the proceeds divided equally.

  4. Accordingly the adjusted asset pool for division is as follows:

Asset  Value
H [A] shares (1723 @ 4.20) 7,236
W [A] shares (1062 @ 4.20) 4,460
W 50% [A] shares jt with [Y] (175 @ 4.31) 754
W 50% [A] shares jt with [Z] (143.5 @ 4.31) 618
H [I] shares (294 @ 2.98) 877
W [A] Policy ([3]) 91,062
W [A] Superannuation ([4]) 72,048
W [U] Super 11,239
H Property S, Philippines 43,023
W 10% Interest in property [N], Philippines 2,775
H Trust Account Funds Logical Legal 302,709
W 1995 Toyota sedan 1,500
H Kayak and Bike 1,500
H Contents Property B 2,500
W Contents Property T property 2,500
H Superannuation withdrawal 01.05.2008 68,476
H Sale funds Toyota HiAce 10,000
H Medicare Refund 62,500
$685,770
Liabilities:
W [A] Superannuation Policy ([4]) 12,090
$673,680

The Law

  1. The approach the court is required to adopt in determining an application under section 79 of the Family Law Act for adjustment of property interests is well established by authority (Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143, (2003) 30 FamLR 355. In the marriage of Lee Steere (1985) FLC91-626, In the marriage of Ferrarro (1993) FLC92-335, In the marriage of Clauson (1995) FLC 92-595.

  2. The process ordinarily involves a four-staged process. Firstly the court must identify the property, liabilities and financial resources of the parties at the time of the hearing. The court then considers the contributions made by the parties as defined in section 79 (4) (a) to (c). Thirdly the court must consider the future needs of the parties by having regard to the provisions of section 75(2) in so far as they are relevant. Finally in determining what order the court should make the court must be satisfied in all of the circumstances that it is just and equitable to make the order, s.79(2). It is the justice and equity of the actual orders that the court must consider. (Russell and Russell (1999) FLC 92-877, Teal & Teal [2010] FamCAFC 120 (25 June 2010).

  3. However in the present proceedings the parties agree and the court accepts that there should be an equal division of the pool as finally determined by the court. After overall more than 37 years of marriage, 4 children and no special issues as to contribution or s.75 (2) factors, such a result is clearly indicated.

  4. The pool for adjustment purposes is in the sum of $673,680. Each party is entitled to receive $336,840.

  5. The husband presently has assets (including notional assets) to the value of $498,821. He is required to adjust to the wife the sum of $161,981 to achieve equality.

Conclusion

  1. For the above reasons I will make the orders set out in the beginning of this judgment.

I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Foster FM

Date:  22 November 2011

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Omacini & Omacini [2005] FamCA 195
Teal & Teal [2010] FamCAFC 120