Mazur and Mazur (No.2)
[2008] FMCAfam 487
•18 April 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MAZUR & MAZUR (No.2) | [2008] FMCAfam 487 |
| FAMILY LAW – Property – children live with one parent – where one parent relocated overseas - significant change in assets between separation and trial. |
| Family Law Act 1975 (Cth) |
| Kowaliw v Kowaliw [1981] FLC 91-092 Townsend v Townsend [2005] FLC 92-569 |
| Applicant: | MS MAZUR |
| Respondent: | MR MAZUR |
| File Number: | BRC 2551 of 2007 |
| Judgment of: | Burnett FM |
| Hearing dates: | 10, 11, 14, & 15 April 2008 |
| Date of Last Submission: | 15 April 2008 |
| Delivered at: | Brisbane |
| Delivered on: | 18 April 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Baston |
| Solicitors for the Applicant: | Wiltshire Lawyers |
| Counsel for the Respondent: | Mr Burridge |
| Solicitors for the Respondent: | Rigoli & Associates |
ORDERS
That the parties submit a draft minute of order giving effect to this judgment by 4.00pm on 25 April 2008.
IT IS NOTED that publication of this judgment under the pseudonym Mazur & Mazur is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 2551 of 2007
| MS MAZUR |
Applicant
And
| MR MAZUR |
Respondent
REASONS FOR JUDGMENT
This is the second part of the judgment in the matter of Mazur.
I delivered judgment and made orders in respect of the parenting orders on Tuesday. This part of the judgment concerns the property aspect of the application.
Earlier this week I dealt with the history of the marriage and I do not propose to restate it in any detail here but simply to make some broad observations. In this instance the marriage took place in September 1989 and the parties separated in about September 2004.
Since separation the children have remained with the mother and have, in effect, spent no time with the father, the father having, in about October or November of 2004, determined to relocate to Poland where has in effect commenced a new life. He has visited Australia on a number of occasions since then but there has been effectively no time spent by the father with the children through that period.
At the time of the commencement of the relationship neither party brought any assets of any significance into the relationship, neither party owned any assets of significance at the time.
At the time of separation the matrimonial assets were, in broad terms, a property at Property P, furnishings, a Subaru WRX motor vehicle, a Nissan 300ZX motor vehicle, an Emina car, a business, [Z], some cash totalling about $60,000, some chattels which were retained by the husband from the former matrimonial home, some stock and a work van, a Mazda motor vehicle and a small amount of superannuation.
By way of liabilities, there was a home loan with Fox Home Loans in respect of the former matrimonial home, a loan alleged to be owing to parents and assorted matrimonial debts to the tune of about $30,000. The matters I have just related can be found in a table which was submitted by Mr Baston for the wife in the course of his closing address.
Almost four years have passed between separation and trial and understandably there have been some significant changes to the assets comprising the property pool. As at the date of trial the relevant assets now extant are the former matrimonial home at Property P and the furnishings which the wife retained. The wife has since disposed of the Mazda motor vehicle and has purchased a Mercedes motor vehicle, she also owns a jet ski. She still retains a small sum in the way of superannuation. The liabilities still comprise the Fox home loan, the finance in respect of the acquisition of the jet ski and the Mercedes vehicle and the loan to the parents.
The debts which were extant at the time of separation have since been discharged. The Subaru, Nissan and Emina vehicles have been realised and the business [Z] has also been realised. The cash which was extant at the time of separation totalling approximately $60,000 has also since been dissipated by the parties.
That notional property pool, Pool B in Mr Baston's tables reflects broadly the present situation and indicates a pool of approximately $420,000 subject to the following matters which require determination.
First, there was an issue concerning a sum of $97,000 and the matter in which it should be allowed for in the property pool. That sum related to the motor vehicles which the husband retained and the proceeds of sale together with some cash in the sum of $15,000 received by the husband. Second is the question of the Mazda motor vehicle which was retained by the wife. Third is the question of the mortgage which at the time of separation was approximately $98,000 and which is now agreed at a value of $122,000. Fourth is the question of the allowance for the loan made to the parents and finally is the question of the matrimonial debts which total approximately $30,000.
Resolution of those matters together with the agreed assets which I will just touch upon shortly will bear upon the final calculation of the value of the property pool.
Dealing first with the issues in contention. The first concern is a series of assets which are identified in the table attached to Mr Baston's outline and which in total amount to $97,000. The values of the vehicles at $12,000 and $12,000 for each of the Subaru WRX and the Nissan 300ZX are agreed; so, too is the value of the Emina car at $8000.
A sum of $50,000 is alleged to have been collected by the husband on the sale of the business. The receipt of that sum is not accepted. The evidence demonstrates that a contract was entered into between the husband and a number of parties for the sale of an interest in the business. It seems the principal asset in the business was a telephone number which enabled the business to trade. That agreement provided for the husband to receive $50,000 by way of instalments. It is signed by the husband, it is also signed by the prospective purchasers.
There was no challenge taken in the course of the trial to the existence of that agreement. It is rather curious in its form. It is certainly very brief and clearly not an agreement settled by or with the assistance of lawyers, but appears to be enforceable. It appears from its perusal to be sufficiently clear as to give rise to an enforceable agreement between the husband as vendor and the prospective purchasers.
In those circumstances, and having regard to the terms of the agreement, the husband has either received $50,000 or has an effective chose in action entitling him to the receipt of $50,000. Accordingly in my view that sum should be allowed in the calculation of the property pool.
The next asset concerns the sum of $15,000 which was retained by the husband. Briefly the evidence was that the parties travelled to Poland in early 2004 for a holiday. At the time of their departure the husband was conducting the [Z] business. It appears that the husband had quite a successful business with a relatively strong turnover, something exceeding over half a million dollars per annum.
The evidence is that there was a sum of $60,000 kept by the parties in a pot plant outside the residence for the period of their time in Poland and that upon their return from Poland the $60,000 was recovered from the pot plant. It was then split between the husband and the wife with $15,000 distributed to the husband and $45,000 to the wife. The husband denies that particular assertion and asserts that in fact he gave the entire sum of $60,000 to his wife.
For reasons that I have earlier determined I do not accept the husband as being a particularly reliable witness and accordingly I reject his version of events and accept that of the wife which is to the effect that she received $45,000 and the husband received $15,000.
On that basis I accept that the value of assets which have been retained by the husband have totalled $97,000.
Dealing then with the sums of $15,000 and the $45,000 as this appears to be an appropriate juncture with which to deal with that matter. As I have earlier noted, the husband having retained $15,000 and the wife having retained $45,000, neither party has dealt with those sums in the context of the marriage. The $45,000 received by the wife for instance did not find its way into any of the schedules which have been prepared.
It seems to me having regard to the evidence that came before me concerning the circumstances of each of the parties following separation that there appears to be a reasonable explanation for the dissipation of these funds. For the husband's part he departed Australia and took up residence in Poland. At the time he ceased his business operations and the sum of $15,000 was used by him for living expenses following his separation. There is no accounting provided for that expenditure but in all the circumstances it does not occur to me as being an unreasonable amount of money to expend in the course of relocating from Australia to Poland and given the expenses that may have been incurred in the course of that particular conduct and allowing for time to resettle.
The wife, of course, also received $45,000. In her affidavit she deposes to the costs associated with the care of children and the maintenance of the house and herself. Those costs have to be considered in the context of there being no child support being paid by the husband, in the context of her discharging the various matrimonial debts which are provided for and will be spoken of shortly, together with general living expenses associated with maintaining a household for herself and her three children.
The question arises in the context of both instances whether there should be some allowance for an add-back and the principles briefly touched upon in the decision of AGO v GRO[1] and in particular where the Full Court made observations that where there has been a premature disposition of matrimonial assets. It followed the observations of the Full Court in Townsend v Townsend[2] where Nicholson CJ with whom Fogarty and Gordon JJ agreed, said:
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, in that case 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 and 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.
[1] [2005] FLC 93-218.
[2] [2005] FLC 92-569.
However their Honours proceeded then to consider circumstances where that may not necessarily occur and in that regard made reference to the decision of the Full Court in Kowaliw v Kowaliw[3] where there, Baker J stated as a statement of general principle "I am firmly of the view that financial losses incurred by the parties" - and this instance I think there is no difference between financial losses and premature dispositions - "in the course of a marriage whether such losses result from a joint and several liability should be shared by them except in the following circumstances" and in particular I refer to (b) where one of the parties has acted recklessly or negligently or wantonly with matrimonial assets the overall effect of which has reduced or minimised the value.
[3] [1981] FLC 91-092.
For reasons I have earlier outlined I am of the view that in this case the disposition of the funds by both the husband and the wife were for bona fide and legitimate purposes. On the one part for the husband; for the purpose of relocating and re-establishing himself, and for the wife on her part; for the last three and a half years in maintaining the household in the former matrimonial household in circumstances where she has received no support from her former husband and accordingly it seems to me in those circumstances that on either basis there should be no add-back in relation to those sums.
It follows that in respect of the $97,000 which is included in the list of assets retained by the husband only a sum of $82,000 should be added back and not the $97,000 as contended for by the wife.
The second asset in contention concerned the Mazda motor vehicle with a value of $5000. Aside from the valuation issue which I do not consider I need to resolve, the question is what allowance should be made in respect of that vehicle following separation. I accept the wife's evidence that the vehicle was used as a trade in for a Commodore which in turn was subsequent traded up for a Mercedes. The Mercedes has a present value of about $22,000 with an attendant debt of about $10,000, leaving equity of about $10,000 in the vehicle.
The additional equity of course has been accrued since separation and should not be considered in the overall context of the matrimonial property pool but acknowledging that the seed capital for the acquisition of that vehicle constituted the Mazda motor vehicle, the $5000 which was the value on trading should be included.
Third is the mortgage. At the time of separation the sum of $98,000 was outstanding on the mortgage of the matrimonial home. Since that time, because of the failure by the wife to make mortgage payments, the debt has escalated to $122,000. In other words an increase of over $24,000 over the intervening three and a half year period. That works out at about $6800 to $7000 per annum incremental growth in the value of the mortgage.
The mortgage has been allowed to increase incrementally, initially at first although in more recent times there have been sizeable efforts made by the wife to meet the payments. So much can be gleaned from an examination of the bank statements which are an exhibit to the wife's affidavit. They demonstrate that for the first couple of years the interest simply was permitted to capitalise which in turn, of course, had the consequent effect of increasing the compound factor on the capital. It can be said, of course, as I have noted, that since about late last year there have been regular payments made by the wife to the account there by bringing the current level of indebtedness under control.
Given the costs associated with the wife's maintaining the family which she did on her own account until about September last year, and when added to the $45,000 which she retained by way of cash, she had about $65,000 available to her over the past three and a half years to assist her in addition to her own income. In relative terms it seems that by reason of that she was able to enjoy a standard of living which the household had previously enjoyed.
It was not an unreasonable standard of living although clearly in the context of the parties having separated it was perhaps a better standard of living than might otherwise have been enjoyed. However of course, if the parties had not separated, it was a standard to which they were accustomed.
In those circumstances it does not seem to me that her failure to meet the interest payments was unreasonable, particularly in light of the fact that she enjoyed a modest salary as a [X], she had the ongoing expenses involved with her children and she was also burdened with the need to reduce the debts which were extant at the time of separation.
Overall it appeared reasonable to me for her to have drawn down on the mortgage in the manner in which she did. Once her financial circumstances were such that she was able to afford to meet the payments, she appears largely to have done so although I do acknowledge in saying that that she has not met the payments in their entirety. But in any event I am satisfied overall that her conduct has been reasonable and it does not occasion any need for an add-back on account of the increase in the level of the debt.
Fourth is the loan to the parents. The circumstances of the loan of $15,000 clearly suggest a gift on the part of the parents. There were no written terms, no interest was agreed, no repayment program was put in place. The agreement is in many respects uncertain in its terms.
It relies principally upon moral expectation of some kind which has not been formulated. In all of the circumstances it is in my view so vague as to represent a gift rather than a loan and in my view there should be no allowance for repayment of it in the matrimonial pool.
Next then are the debts which were extant at the time of separation. The debts are particularised in the wife's affidavit. She says that she was required to meet those debts and in fact did discharge those debts following separation. Although the wife has discharged the debt liability, in an accounting sense, the matrimonial estate still carries the liability. They have merely been collected together into one account such that within the matrimonial balance sheet the debts due by the parties, to the individual creditors, have been collected into one account with the wife being substituted for the various creditors. In my view their character has not changed and accordingly the debts should be allowed in full.
In summary I estimate then that the matrimonial pool is worth $471,970.56 which is made up as follows:
Property P, (valuation agreed)
$525,000
Furnishings(valuation agreed)
$10,000
Husband's add-backs being:
Subaru
Nissan 300
Emina
[Z] business
$12,000
$12,000
$8,000
$50,000
$82,000
Mazda
$5,000
Sunsuper
$1,265
Total:
$623,265
On the credit side of the ledger liabilities are as follows:
Mortgage on Property P
$122,000
Matrimonial debts
$29,294.44
Total:
$151,294.44
The net pool thereby has a value of $471,970.56.
In terms of resolving how the pool is to be distributed there is a well tried formula commencing with an assessment of the s.79(4) factors principally concerning contribution. Both parties, through their counsel, agree that upon an initial assessment of this matter when regard is had to both the direct and indirect contributions to assets which include factors involving the husband's employment, the wife's assistance and the assistance of her family in the acquisition of the former matrimonial home, the sale of a former matrimonial home which rendered a profit which enabled them to acquire greater equity in their present matrimonial home: and the non-financial contributions which in this instance perhaps more favour the wife in terms of her provision of child care and household services which enabled the husband to apply greater time and capacity to the development of his business enterprises, together with matters concerning the wife's greater contribution as a home-maker and parent: a 50:50 split would be the starting point at separation. I accept that that position is appropriate.
The real contest in this case concerned what weightings should arise on account of post-separation factors. The wife contends in her submissions that there should be an additional post-separation loading of 25 per cent on account of post-separation matters. In particular, she refers to the husband's behaviour in leaving the wife in October 2004, particularly with no financial support nor any social support and particularly by reason of his poor conduct not only in relation to alleged assaults but also poor parenting, leaving the wife with the additional burden of raising a teenage family of two daughters and one son without the assistance of the father.
So save for the matter of adjustments to the property pool calculation on account of the disposition of the matrimonial property pool which I have dealt with above, the real question is whether there should be any loading on account of the non-financial matters. I note in passing that the calculation of the add-backs has made allowance for the consequence of post-separation disposition of funds, for instance the wife has expended about $60,000 post-separation over three and a half years which I consider to be justified and accordingly to allow an additional loading for that direct additional financial burden now would effect a double dip.
In considering the reasonableness of her use of those funds I take account of the fact that there was no child support or other support afforded to her. Also in those factors I have given consideration to an allowance for the fact that she had the rent-free occupation of the former matrimonial home.
It seems then that the relevant non-financial matters pertaining to the additional parenting burden really relate to the fact that, as I have earlier found, the father did not involve himself with the children since separation. The children are teenage, they are at a difficult time in their lives; they are in need of a great deal of time of the mother as a parent, as a tutor and as a mentor. It is a challenge to be the parent of teenage children. The mother has had very limited support in the upbringing of the children and accordingly the absence of the father has imposed an additional burden upon her. In my view there should be an additional loading on account of that matter and I assess the loading at 10 per cent.
All up then, having regard to the s.79(4) factors, I assess an appropriate distribution of 60 per cent in favour of the mother.
Turning then to the s.75(2) factors, first the age and state of health of the parties. The husband is 41 and the wife is 37. The wife is in good health. The husband complains of ongoing health issues especially with respect to blood pressure. However, I note that despite these complaints he has been gainfully employed for most of his adult life in enterprises associated with the electronics business in which he holds a trade certificate.
He has demonstrated business flair; by that I mean he has for instance been prepared to operate businesses beyond his level of direct knowledge and competence; he has operated a bar or night club in Poland which failed for reasons that were really unrelated to the operation of his business but rather because of difficulties with the premises that he had. He appears to have been successful in the operation of the [Z] business which fell over really because of difficulties in the marriage rather than because the business itself was unsuccessful. The measure of that business of course can be seen by the fact that the parties enjoyed a good lifestyle, they enjoyed overseas trips and indeed had $60,000 cash available to them immediately upon the cessation of their relationship.
So despite the fact that the husband does have some complaints relating to health conditions, in my view they do not appear to have significantly impeded his capacity to get on with life and although I note the presence of them and the prospect that they may on occasions cause him difficulty, they do not deserve a great deal of weight.
Next is the question of income, property and financial resources of each of the parties together with their physical and mental capacity for gainful employment. So far as the husband is concerned presently the husband is not in employment. He has no income, he lives in Poland and I would assume because of his extant circumstances that he is supported by others. These matters, of course, are probably through choice on his part. As his employment history demonstrates he is a man who is reasonably enterprising and clearly has employment capacity.
His financial resources are represented by his entitlement to the matrimonial property assets which are tied up in these proceedings. Putting aside issues of his employability, it is fair to say that from the material, salaries in Poland are not high in relative terms. The evidence reflected at times in employment by him in Poland on a salary of about $7000 per annum. No doubt that is a feature of the local economy.
In ordinary circumstances one would not be unduly critical of someone wishing to leave Australia to return to his country of origin, notwithstanding the low income that he might receive, particularly given the fact that he now has a new family and no assets, but I take into consideration overall in respect of that matter the fact that in his choice of moving to Poland he has, in fact, elected to receive low income, to commence a new family and essentially make himself asset-free. I also note that by reason of his choice he puts himself beyond the reach of the child support system.
One could cynically suggest that the circumstances of the respondent suggest that he is seeking to avoid his obligations and to some extent to minimise his realistic economic capacity, for reasons related to this litigation.
For the mother's part her financial position of course is much stronger. The evidence suggests that she enjoys an income of about $45,000 per annum in her employment as a [X]. She has a history of employment which was recommenced following separation. She has now repartnered in recent times and her new partner of course enjoys a very comfortable income of about $130,000 per annum when allowance is made for the motor vehicle and bonuses paid to him.
Her circumstances are significantly better than those of the husband and there would be no reason to believe that she could not make her own way in the world, at least on her own part, without the need for further reference to the husband. However when one looks at her statement of financial circumstances it is apparent there is a small deficit there and it is apparent also that the deficit relates principally to the cost of her caring for her children. That matter does not escape my attention.
Next is whether any party has the care or control of a child of the marriage who has not attained the age of 18. In that regard I have already made observations that the mother has the control of three teenage children. Not only is there the time involved in caring for the children, she has to juggle her fulltime employment with her obligations to children who have the usual children-type activities involving sport and other extra-curricular matters for children of their age.
There has been historically no involvement with the husband and in fact by reason of orders made in the parenting aspects of the case, if anything, involvement by the husband in the parenting aspects will further complicate matters for the mother who will need to make time on those occasions when it is necessary for the husband and her to attend counselling in order to assist in implementation of the parenting orders particularly concerning [C] who at this stage is oppositional to time with his father. Clearly, to that end the mother has suffered a slightly greater burden than might otherwise be expected in the context of the usual case.
Next are the commitments of each of the parents that are necessary to enable the parties to support themselves. In this regard I note the husband's commitments related to his new wife and infant child. His financial statement is devoid of any helpful information which would assist the Court in assessing his situation. The mother's needs are set out in her financial statement and appear in my view quite justifiable and reasonable and of course it would seem, having regard to those matters set out in her affidavit, there is some need established.
Next are the responsibilities of either party to support any other person. In this regard I make the observation that the husband has the notional responsibility of supporting his new wife and child. One wonders how he does it with no income but in any event that is a matter on which the Court has not had the benefit of any evidence.
For the wife's part she of course has the three children who are aged 17, 16 and 13. They are all in high school. There is no reason to expect, given contemporary standards, that they will not pursue some form of higher education, even if it is at a TAFE and not at a formal tertiary level. On that basis it would seem that the wife has a further five to seven years of child support obligations in front of her.
Next is the question of whether there is eligibility for pensions or allowances and I take into account that in this case there are none.
Next, the question is where the parties have separated or divorced a standard of living that is in all the circumstances reasonable and again in this regard I have already made earlier observations. To date they have enjoyed a relatively good standard of living but it has not been any greater than that which has been previously enjoyed.
Next are the questions of the extent to which the payment of maintenance will increase the earning capacity of the parties. Again that consideration is not relevant in this case.
Next is the effect of any proposed order on a creditor; again, not relevant in this instance.
Next is the extent to which a party whose maintenance is under consideration has contributed to the income-earning capacity of property and financial resources of the other party. In this case I take account of the wife's contribution generally over the course of the marriage. I have already addressed that matter at an earlier time.
Next the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration. In this instance the marriage of course was one for 15 years; the wife was not in employment for most of that time although she has since obtained employment as a [X]. There was no evidence led to suggest that she is not earning in accordance with her potential.
Next is the need to protect the party who wishes to continue that party's role as a parent and in that regard I take particular note of the wife's conduct and intent in that regard, indeed, the unilaterally imposed responsibility upon her to do so.
Next, if either party is cohabiting with another, the financial circumstances relating to cohabitation. In this case I am aware that the wife's partner Mr C, earns gross $130,000 per annum. I have not been blessed with any evidence in relation to the earnings of the husband's partner.
Next are the terms of any order made which of course I have taken into account and then next, the question of child support which I have earlier noted is not being paid and it would seem will not be paid because of the husband's present circumstances.
Having regard to each of those matters it is in my view appropriate that there should be some weighting in favour of the wife on account of future maintenance needs in terms of s.75(2). In that regard I consider a weighting of 15 per cent should be allowed in favour of the wife in respect of those matters.
Grossed up then, the weighting works 75:25 in favour of the wife which on a pool value of $471,970.56 gives the wife a contribution allowance of $353,978 and the husband $117,992.
The next question of course then is whether such an apportionment is just and equitable. When one has regard to the length of the marriage, the direct financial contributions made by the parties, their indirect financial contributions and in particular the post-separation conduct, especially of the husband who left the wife with no support, made no efforts to provide support, made no effective efforts to relieve the wife with spending time with arrangements following separation, leaving the wife in circumstances where she effectively had to act as a receiver for the matrimonial estate, discharging the debts of the estate and assume full responsibility for other debts such as the home loan; casting her back into the workforce in circumstances which were not to be expected and ultimately calling upon her to juggle all those activities with her parenting needs and when regard is had to the drawings that were made by each of the parties at the time of separation or shortly thereafter, it seems in the final analysis to me that an apportionment of 75:25 which gives effect to the figures that I have already identified, represents a just and equitable outcome in all of the circumstances.
By way of conclusion before make formal orders I make the following observation. In the final analysis when the parties sit down to draft final orders and negotiate the terms of final orders they have to take into account that in terms of the matrimonial pool as I have already outlined it account needs to be made for the fact that the husband has already had an advance of $82,000 on his entitlement to $117,990.50. Accordingly in final terms the husband should receive a sum of $25,990.50 and that would only be on the basis that the wife retains all the assets which are now identified in the property pool save for those which the husband has already taken and she assumes full responsibility for all liabilities in the property pool including those which the wife has already discharged.
My formal direction to the parties now will be that they submit a minute of order which gives effect to the terms of my judgment but I make the following observation in the event that the parties need any guidance on this point, and that is, I will only order there be a sale of the former matrimonial home if the wife refuses or is unable to pay to the husband the sum of $25,990.50 and also refuses or is unable to provide the husband with either a complete discharge of the liability under the Fox Home Loans mortgage debt or a full and complete indemnity in respect of that debt.
So I will leave it to the parties to draft an order and submit it to my Associate within seven days of today's date.
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Burnett FM
Associate: Beverley Schmidt
Date: 19 June 2008
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