Masters and Masters
[2010] FMCAfam 209
•18 March 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MASTERS & MASTERS | [2010] FMCAfam 209 |
| FAMILY LAW – Property – alteration of property interests. |
| Family Law Act 1975, ss.75(2), 79 |
Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Norbis v Norbis (1986) 161 CLR 513
Pierce v Pierce (1998) FLC 92-844
Williams & Williams [2007] FamCA 313
| Applicant: | MR MASTERS |
| Respondent: | MS MASTERS |
| File Number: | SYC 5295 of 2008 |
| Judgment of: | Altobelli FM |
| Hearing date: | 16 December 2009 |
| Date of Last Submission: | 16 December 2009 |
| Delivered at: | Sydney |
| Delivered on: | 18 March 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Di Bello |
| Solicitors for the Applicant: | V L Macri Lawyers |
| The Respondent: | Self-represented |
ORDERS
That within 60 days of the date of these Orders, the husband and the wife do all acts and sign all documents necessary to discharge at the wife’s expense mortgage registered number [8] to the Westpac Bank which is registered on the property at Property M NSW (“the Property M property”) and the wife pay to the husband the sum of $35,647.
That simultaneously with Order 1 herein, the husband shall sign all documents and do all things necessary to transfer to the wife all his right, title and interest in the Property M property.
Pending compliance by the wife with order 1 herein, the wife shall make all payments of mortgage, council rates and water rates in respect of the Property M property.
In the event that the wife fails to comply with order 1, then within a further 60 days;
(a)The husband shall pay to the wife the sum of $29,353.00, and
(b)The husband and the wife do all acts and sign all documents necessary to discharge at the husband’s expense mortgage registered number [8] to the Westpac Bank which is registered on the Property M property.
Simultaneously with Order 4 the wife shall sign all documents and do all things necessary to transfer to the husband all his right, title and interest in the Property M property.
In the event that the husband and the wife are unable to comply with these orders, the husband and the wife do all acts and sign all documents necessary to sell the Property M property and by way of consequential arrangements that shall be made for the purpose of effecting the sale;
(a)The list price and the minimum sale price shall be as agreed between the parties and if there is no agreement the listing price and the minimum sale price shall be advised by a valuer nominated by the President of the Australian Property Institute of his nominee.
(b)The property shall be listed for sale by private treaty with a real estate agent as agreed between the parties and if there is no agreement the agent shall be nominated by the President of the Australian Property Institute of his nominee.
(c)If the property has not been sold within 3 months of the date of these orders the husband and the wife shall do all acts and sign all documents necessary to list the property for sale by auction and if there is no agreement as to the reserve sale price then the reserve sale price shall be determined by the President of the Australian Property Institute or his nominee.
(d)The wife’s solicitor or conveyancer shall have the primary carriage of the conveyancing for the sale of the Property.
Upon completion of the sale of the property the husband and the wife shall do all acts and sign all documents and give all instructions necessary to apply the proceeds of sale in the following order:
(a)To pay any council rates and water rates outstanding.
(b)To pay all real estate agents and legal costs, commissions and expenses of the sale and solicitors costs of the sale.
(c)To pay Westpac Bank in discharge of mortgage registered number [8].
(d)To pay to the husband and the wife an amount that represents the alteration of property interests effected by these orders and reflected in the reasons that accompany these orders, but if they are unable to this, leave is granted to relist the matter before me on 21 days notice.
That the husband shall retain and be declared the sole legal and equitable owner of all his superannuation entitlements with Westpac Super.
That the wife shall retain and be declared the sole legal and equitable owner of all her superannuation entitlements with HESTA.
Except as otherwise provided herein, each party shall retain for their sole use and benefit all assets, chattels and monies in any bank accounts in their custody and control or standing in their name.
Except as otherwise provided herein, each party shall pay all debts in their respective names.
In the event that either party fails, refuses or neglects to sign any document or give any necessary consent to give effect to these orders then the Register of the Federal Magistrates Court at Sydney is empowered pursuant to section 106A of the Family Law Act 1975 to sign any such document and give any such consent on behalf of the defaulting party.
IT IS NOTED that publication of this judgment under the pseudonym Masters & Masters is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 5295 of 2008
| MR MASTERS |
Applicant
And
| MS MASTERS |
Respondent
REASONS FOR JUDGMENT
Introduction and Background
This is an application for alteration of property interests under section 79 of the Family Law Act, commonly known as an application for property settlement. The applicant is the husband, and the respondent the wife. There is a very small net pool of assets. The wife represented herself at the hearing of this matter, though was represented by lawyers at an earlier stage of the proceedings.
The applicant husband is 42 years old and the respondent wife 33 years old. They commenced cohabitation in November 2000 and then married in December that year. Shortly before they commenced cohabitation the husband became the sole owner of a property at Property N which had passed to him by survivorship after the death of his first wife in 1998. At about the same time the husband in these proceedings purchased in the wife’s sole name a house and land package at Property M on which the current former matrimonial home was constructed. They borrowed the full purchase and construction costs using the husband’s Property N property as part security. In March 2001 they moved into the former matrimonial home and continued to live there, apart from brief periods of separation, until
8 June 2008 when separation took place and the husband vacated the property.
In April 2001 the husband sold the Property N property and received about $160,000 net, of which $160,000 was applied in reduction of the mortgage on the Property M property.
Throughout the course of the marriage both the husband and the wife worked in different roles, and to their respective capacities. They had two children, [X] who is now eight years old and [Y] who is now five years old. The wife took time off to have the children.
During the period of the marriage the husband and the wife entered into the usual and normal transactions that one would expect in a marriage. They purchased motor vehicles. The husband changed jobs. Over the years they borrowed additional moneys on the equity which they had in the Property M property and used it for holidays, to fund vehicle purchases, to effect home improvements and to pay taxation liabilities.
In October 2004 they purchased a house and land package at
Property H in Queensland, probably for negative gearing purposes. It was purchased in the husband’s name and they borrowed all of the purchase price together with the expenses associated with the purchase.
By the time of the separation in 2008 the parties had borrowed additional funds to fund lifestyle as well as taxation liabilities. Shortly after separation the tenant at the Property H property vacated the property, and a few months later it was sold for an amount less than the amount that was then owing to the mortgagee, Westpac. Indeed, there was a shortfall of about $40,000 on the sale of the Property H property, which was left secured against the former matrimonial home at Property M.
None of the matters to which I have referred above are in dispute. In particular, the wife does not dispute the significant financial contribution made by the husband as a result of the asset that he owned in his own name, and unencumbered, at the time of cohabitation.
Notwithstanding this, the wife who was representing herself at the time of the hearing, sought an order that the former matrimonial home be transferred to her with no payment to the husband. Indeed, she sought an order the effect of which would have been that not only the husband transfer the property to her for no consideration, but that he continue to carry part of the mortgage debt. She maintained this position up until the close of submissions but at that time, when faced with the reality that the order she sought could not possibly just and equitable under section 79 of the Act, she attempted to change her position to now seek a super splitting order which would have seen the husband receive the wife’s superannuation. In addition she sought to amend her application to seek lump sum child support for a period of five years. I declined her application to amend in this regard as it was clearly unfair from the husband’s perspective to meet this claim during final submissions.
The husband’s position was, in the first instance, that the property be transferred to him in return for an indemnity in relation to the mortgages secured against the home. Alternatively, the husband sought an order that the wife pay to him $40,000 in return for a transfer to him of the home and a discharge of his liability of rising out of the mortgage.
A number of issues arise from the evidence. There are some minor balance sheet issues to which I will shortly refer. The main issue will be assessing contribution and specifically the weight to be given to the husband’s initial contribution by way of his ownership of the
Property N property. There are issues about an adjustment under section 75(2) of the Act with the husband conceding that there should be a 10 per cent adjustment in favour of the wife, but the wife asking for a substantially greater adjustment, though she could not articulate a figure to me during submissions. The final issue is whether a just and equitable order could be made on the facts of this case that would give either party the opportunity to retain the home. As will be seen, the financial circumstances of both parties are so parlous that the most likely outcome is that neither party could retain the home though even the husband conceded that the wife should be given the opportunity to do so, subject to a just and equitable order in his favour.
The evidence in these proceedings consisted of the affidavits of the husband and the wife, and their respective financial statements. Both parties were cross-examined.
Applicable Law
The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by the parties. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
Balance sheet issues
I find the balance sheet to be as follows in this case:-
| ASSETS | $ | ||
| 1. | Home at Property M | Joint | 470,000 |
| 2. | Husband’s superannuation | H | 31,925 |
| 3. | Wife’s superannuation | W | 37,269 |
| 4. | Husband’s motor vehicle | H | 1,000 |
| 5. | Wife’s motor vehicle | W | 10,000 |
| Superannuation assets | 69,194 | ||
| Non-superannuation assets | 481,000 | ||
| TOTAL ASSETS | 550,194 | ||
| LIABILITIES | |||
| 6. | Mortgage Westpac – Property M | 362,000 | |
| 7. | Mortgage Westpac – Property H | 43,000 | |
| 8. | Husband’s CBA personal loan | 10,000 | |
| 9. | Wife’s personal loan | 18,000 | |
| TOTAL LIABILITIES | 433,000 | ||
| Net assets | 117,194 | ||
| Represented by: Superannuation: Non-superannuation: | 69,194 48,000 |
Items 1-7 were agreed items as between the husband and the wife. In relation to item 8 the husband sought the inclusion of his personal loan in the sum of $21,500, as a joint liability. His evidence about this loan is set out at paragraphs 53-58 of his affidavit sworn 27 November 2009. A close examination of this evidence indicates that the loan in question was taken out at or shortly after separation and seems to have been used for post-separation acquisitions for the husband. Doing the best I can on the limited evidence it seems as if about $10,000 of this personal loan went towards paying out joint liabilities, and this is the amount I am prepared to allow as item 8 in the balance sheet.
There was also a dispute about item 9 being a personal loan owed by the wife to her mother. She claimed the full amount of $28,000, but then conceded that $10,000 of this was used to pay legal fees which I am not prepared to concede as an appropriate joint liability on the balance sheet. I accept the rest of the wife’s evidence that the $18,000 was quite properly used by her to preserve and maintain the former matrimonial home, and specifically to pay the mortgage in circumstances where the husband did not do so. In addition, the wife spent moneys for the benefit of the family during this period. I recognise, of course, that the wife and children had the benefit of occupation of the home during this period. However, there is no doubt from the evidence that the wife “did it tough” during the post-separation period, with the husband providing an inadequate level of support given the needs of his family.
The oldest child, [X], suffers from mild autism and thus has special educational needs. In the circumstances of this case, I’m prepared to allow, as a joint liability appearing on the balance sheet, the sum of $18,000, although I recognise that it would be, in effect, “double-dipping” to then allow the wife a claim for post-separation contribution.
The net assets in this case therefore amount to $117,194, most of which is represented by superannuation, in a case where neither party sought a super split until the closing moments of the case.
Assessing Contribution
Even the wife conceded that the husband made the greatest financial contribution. Indeed, the value of his initial contribution, $160,000, is greater than the net value of the current assets. The parties received the benefit of this less than 10 years ago and there can be no doubt that without this contribution, they would not have most of their non-superannuation assets. The evidence is clear that the wife made the greatest contribution as homemaker and parent, and she certainly made a significant contribution through her employment, as did the husband. These other contributory factors pale into insignificance, however, having regard to the value of the husband’s initial contribution.
In closing submissions for the husband, his solicitor submitted that, overall, contribution should be assessed as to 70 per cent in the husband’s favour because of the greater financial contribution he made. It is hard to argue with this figure and, indeed, if he had sought a greater adjustment in his favour, such a claim would have warranted close consideration indeed.
On the facts of this case, an adjustment of 70 per cent in the husband’s favour for contribution is just and equitable, having regard to the overwhelmingly greater financial contribution that he has made.
An Adjustment Under s.75(2)?
The husband concedes that a 10 per cent adjustment should be made, and the wife asserts it should be greater, but was not able to articulate a figure. In his financial statement sworn 27 November, the husband describes himself as a pool sales consultant earning about $500 per week. As the wife was self-represented, I did not have the benefit of any cross-examination about this. He says he is paying child support in the sum of $20 per week and that there is otherwise a deficit between his income and expenditure of $112 per week. No other person is dependent on the husband.
In the wife’s financial statement sworn 26 November, she deposes to a total income of $1,507 per week which consists of Centrelink benefits of about $580 per week, and the rest made up of her income and benefits from various jobs as a residential worker and social educator. I must say that the wife’s financial statement is very unclear as to what, precisely, she receives by way of child support from the husband and it’s quite possible that her financial statement over-represents this amount.
The two children are dependent on her and it is clear that she is getting some financial assistance from her mother towards payment of living expenses. It is clear beyond doubt that a substantial part of her expenses relate to meeting the needs of the children and that only a fraction of this is met by the husband.
The husband, through his solicitor, conceded that at least 10 per cent was appropriate as an adjustment based on her care of the children, particularly having regard to one child suffering autism. I think, however, the husband clearly understates the extent to which the wife has greater needs than him arising out of the need to care for the children, including accommodating them. The wife seems to have done an extraordinary job in the post-separation period of keeping the children in a stable home environment in a situation where there has been little support from the husband.
This is a very small pool of assets where an adjustment of 10 per cent would represent a mere $11,719. In these circumstances, an adjustment of 20 per cent under s.75(2) is appropriate.
Just and Equitable
Having regard to my findings about contribution and s.75(2) factors referred to above, I find that there should be a 50:50 property settlement as between the parties.
I record here that it seems to have been part of the wife’s case that the husband should retain sole responsibility for the $43,000 shortfall from the sale of the Property H property. No reason was advanced why this should be the case, as a matter of law. There was no evidence of any waste on behalf of the husband, for example, arising out of this shortfall. The shortfall from the sale of the negatively-geared property was properly part of the liabilities in the balance sheet and should be borne equally between the parties.
The wife’s position was that she ought to be given the opportunity to retain the former matrimonial home. The husband agreed that she should be given this opportunity. If the wife retains the home and its liabilities, she would have the benefit of an equity of about $65,000. When the value of her motor vehicle and superannuation is added to that, her total entitlement would be $112,269, out of which, of course, the personal loan (which is her debt) needs to be deducted, thus meaning a net entitlement of $94,269. In order to obtain 50 per cent of the net assets and liabilities – $58,597 – she would have to pay to the husband $35,672.
Conversely, if the husband receives a payment of $35,672, to which is added his superannuation of $31,975, and the value of his car, $1,000, and is then deducted his personal loan of $10,000, that means his entitlement is $58,647.
I must say that it is highly unlikely on the evidence before me that the wife could refinance the debts secured over the home into her own name, together with raise $35,672 to pay to the husband. Nonetheless, even the husband concedes she should be given the opportunity to do so.
He suggested 60 days, and I think that is appropriate under the circumstances. Accordingly, I will make orders to the effect that the wife has 60 days in which to refinance the existing Westpac debts into her name only, and pay to the husband $35,672 in return for a transfer of the home to her. If she fails to do so within 60 days, then the husband has 60 days in order to pay the wife her entitlement which, on my calculations, would be $29,378 (representing the total value to the husband of the equity in the home, his superannuation and motor vehicle, less his personal loan, and then deducting $58,672 being his share of the net pool of assets).
If neither party can afford to buy the other out at the end of two 60 day periods, or if the parties agree that the property should simply be sold, then I will give leave to the parties to relist the matter before me if they are unable to agree as to an appropriate form of order to reflect the alteration of property interests referred to in these orders. By the time that this stage of the orders are implemented, the value of the property will crystallise as a result of the sale on the open market. In these circumstances it is not feasible for me to draft an order with precision that implements the alteration of property interests I intend pursuant to these orders.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Monique Robb
Date: 18 March 2010
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