MICHAELS & PELGER

[2021] FCCA 145

FEDERAL CIRCUIT COURT OF AUSTRALIA

MICHAELS & PELGER [2021] FCCA 145

Catchwords:
FAMILY LAW – Property – relationship of over 20 years where parties had no significant assets at commencement – parties both generally doing their best for most of the relationship – husband engendering significant debts in last few years – wife seeking addbacks of debts taken out without her knowledge or permission – debt position complicated by third party interests – wife seeking to retain matrimonial home – impossibility of final orders until outcome of wife’s position ascertained.  

Cases cited:

Stanford & Stanford (2012) 247 CLR 108

Applicant: MS MICHAELS

Respondent: MR PELGER

File Number: MLC 14268 of 2019

Judgment of: Judge Burchardt

Hearing date: 15 January 2021

Date of Last Submission: 15 January 2021

Delivered at: Dandenong

Delivered on: 5 February 2021

REPRESENTATION

Counsel for the Applicant: Ms Isaacson

Solicitors for the Applicant: O'Brien & Black

Counsel for the Respondent: Mr Scriva

Solicitors for the Respondent: Pentana Stanton Lawyers

ORDERS

1. That the parties each provide evidence to the Court of their capacity to refinance the mortgages registered over the real property known as and situate at B Street, Suburb C, Victoria, and to pay the other party such sum as is ordered by this Court.

2. That the Respondent be permitted to attend the property for the purposes of preparation of items stored at the property for sale, including but not limited to the following:

   (a)Motor Vehicle 1;

   (b)Motor Vehicle 2;

   (c)Motor Vehicle 3;

   (d)Refrigerated Truck;

   (e)Boat; and

   (f)Other such items as agreed by the parties. 

3. That the Respondent carries out the preparation of such items for sale on the property in a timely manner and once preparation for sale has been completed the Respondent shall advertise the items for sale on a suitable website until they are sold.

4. That the Respondent will negotiate with potential buyers and will facilitate the sale of items.

5. The Respondent shall provide at least 1 hour notice by way of text message to the Applicant prior to any attendance at the Property and the Applicant or a third party nominated by the Applicant must be present for the duration of the Respondent’s attendance at the property.

6. That any payment made by any buyer of any items sold by either party be made by bank cheque or direct bank transfer made out to Pentana Stanton Lawyers and that if by cheque this be deposited into the respective solicitor’s trust account’s as follows:

   A.Pentana Stanton Law Firm Trust Account

   BSB:  ...

   Account:  ...

7. The proceeds of sale of items at the Property shall be firstly allocated to payment of the following D Company business liabilities debts by negotiation and as many as can be cleared from the proceeds of the sale of these items:

   (a)E Company ref no. ... dated 31/03/2019 to the amount of $4,672 or greater;

   (b)F Company DATED 10/01/2020 to the amount of $2,508.44 or greater.

   (c)G Company Dated 19/6/2020 to the amount of $933.79 or greater;

   (d)H Company dated 31/3/2020 Account No. ...02 to the amount of $833.42 or greater;

   (e)J Company dated ref. ... dated 1/3/2020 to the amount of $188.76 or greater;

   (f)Bank K Leasing contract no. ...01 dated 2/04/2020 to the amount of $17,501.65 or greater.

8. That the Respondent be permitted to remove from the property and take into his possession the following concreting tools and equipment for use in his trade:

   (a)Formwork timbers;

   (b)Concrete hand tools as follows:

   (i)Screen;

   (ii)Rake;

   (iii)Shovels; and

   (c)Other such electric and hand tools as remain in the shed and shipping container at the property. 

9. That the Respondent be at liberty to obtain his own sworn valuation of the Property with such valuation to be available not later than 30/45 days from the date of these Orders.

10. The matter be adjourned to this Court for mention before Judge Burchardt on 28 June 2021 at 9:30am.

11. The parties have liberty to apply for an earlier court date if all items referred to in Order 2 are sold and the parties have provided proof of financial pursuant to Order 1.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

MLC 14268 of 2019

MS MICHAELS

Applicant

And

MR PELGER

Respondent

REASONS FOR JUDGMENT

Introductory

1. This is the property component of a dispute which originally also involved a parenting dispute.  To their credit, the parties were able to resolve the parenting dispute by consent orders made on 3 December 2020.  Their elder child, X, born in 2005 is to live with the father and their younger child, Y, born in 2008 is to live with the mother.  A program has been put in place whereby each child spends an alternate weekend from Friday to Sunday with the other parent, together with half the school holidays.

2. The wife (it was a de-facto relationship but is convenient to use the nomenclature) seeks that there be a division of the parties’ non-superannuation assets and liabilities as to 60 per cent to her and 40 per cent to the husband, excluding an expensive Motor Vehicle 4 bought by the husband in 2018.  The respondent husband submits that there should be an equal division of the parties’ property.  There is significant dispute about a number of outstanding debts.

3. For the reasons that follow, I think that the parties’ debts accumulated during the relationship should be the joint responsibility of the parties and those accumulated afterwards should stand where they lie at present.  The husband’s ute and associated debt should be excluded from the pool.  Otherwise, there should, in my view, be an equal division of the property between the parties.

Agreed or Controversial Matters

1. The wife was born in 1974 and is employed as a Carer.  The husband was born in 1976.  The husband’s employment is a matter, to an extent, in dispute.  The parties commenced cohabitation in 1997 and separated in January 2019.  The wife took out an intervention order on 25 July 2019.  As earlier indicated, X was born in 2005 and Y in 2008.

2. The wife has two other children, Ms Q, born 27 May 1993 and Ms U, born in 1994, to a prior relationship.  Given that cohabitation commenced in 2007 the children have in effect been brought up essentially as children of the marriage.

3. In 2001 they bought, and registered in the husband’s name solely, the former matrimonial home in B Street, Suburb C.  It would seem reasonably uncontroversial that the wife contributed $15,000 towards the deposit from an inheritance and the husband contributed $10,000, likewise from an inheritance.

4. As earlier indicated, the husband appears to have bought a relatively expensive ute in 2018 and the husband appears to have redrawn $100,000 in 2016. It appears that following the initial separation the husband equipped a shipping container as a residence on the matrimonial property and lived there until he was finally evicted. 

The Parties’ Affidavits

1. It should be noted that the evidence given in this case has, in one sense, been relatively sparse and it is appropriate to traverse what the parties said in their affidavit material about property issues in some detail.  In her first affidavit, dated 11 December 2019, the wife set out the history of the relationship noting that she considered the parties were separating on a final basis in January 2019, albeit that the husband did not leave until the intervention order on 25 July 2019.  Ms Q and her de-facto partner live in the former matrimonial home at B Street, Suburb C.  The wife deposed that at the commencement of the relationship she had no debts and owned a car and had about $21,000 in a savings account.  The husband had a car which was sold to pay outstanding legal fees.

2. The wife deposed that the husband worked in various casual jobs and from around 2004 was working full time as a casual factory worker at Employer V.  She deposed to the commencement of the husband’s business, D Company, in 2009 but deposed that to her knowledge it was not ever very profitable.  She deposed that from 2015 onwards the husband only worked a small amount of time and that it appeared to her that he spent more money than he makes.

3. The wife deposed to the purchase of the B Street, Suburb C property in 2001 for $148,000 and the deposit details, which I have already set out.  The balance was funded with a mortgage in the husband’s sole name.  The wife deposed to her being the primary home maker and to work conducted by both of the parties on the property.  The wife deposed that she was in reasonable health and the husband also, save for his alleged frequent drug use.

4. In this regard, she deposed that in 2015 the husband’s mood appeared to change and he was sleeping much less.  In around 2016 she found out the husband was using illegal drugs which she believed to be ice or speed.  She deposed to an alleged failure on the husband’s part to make a disclosure and her concern that he was seeking to deny her a just and equitable resolution.  At paragraph 58 she deposed:

   For the last 18 months, Mr Pelger has been making comments to me to the effect that, “you’re not fucking getting anything” and that he will sell the house, pay out all of his debts that he has incurred and then decide what I will get.

5. The wife went on to depose to the husband withdrawing $100,000 from the Commonwealth Bank mortgage without her knowledge and deposed that her understanding that the Commonwealth Bank might be seeking to take legal action to recover the moneys owed.

6. The husband’s responding affidavit, sworn 30 January 2020, like that of the wife is predominately concerned with parenting issues.  He likewise expressed concerns about the mother’s approach, noting at paragraph 26 that she was alleged to have said to him, “I don’t give a fuck about you; I don’t give a fuck about the kids.  As long as I screw you.”

7. The father did depose, at paragraph 28, to previous use of ice, speed and marijuana and that he had tested positive to marijuana on 15 January 2020.  He deposed to engaging with drug and alcohol counselling to address his issues with marijuana.  He denied an alleged attempt to suicide in 2019.

8. The husband deposed to the purchase of the B Street, Suburb C property in 2001 for $148,500.  He alleged that at the time the property was purchased, the wife was not working and that he was the main financial contributor of the relationship.  He deposed to trying to sell the property in June 2019 but to being obstructed by the wife and that the Commonwealth Bank had issued a writ in the County Court.  He also complained about not being allowed to attend the property to collect his work tools and work equipment he required and that as a result he was unable to work and had had to go back on to Newstart through Centrelink.  As is apparent, and to an extent like the wife, his affidavit really said little about financial matters.

9. The husband’s next affidavit, sworn 17 March 2020, was in support of an application in a case to sell the property.  He complained that following the intervention order, which he said the applicant brought falsely, he was displaced and was unable to work, had had to sack all his staff and had been unable to make repayments to the mortgages.  He went on to seek an urgent sale, not least because of the writ filed in the County Court by the bank.  He also sought the release of his business equipment from the property as a matter of urgency.

10. The wife’s responding affidavit was dated 19 March 2020.  She complained of a failure on the part of the husband to negotiate.  She also deposed that he was entitled, pursuant to the intervention order, to attend to collect his possessions.  She deposed that the respondent had in his possession many of his tools, his excavator, his truck and his Motor Vehicle 5 ute.  She went on to depose that the husband did not work on a full time basis since around June 2018 as a result of his drug abuse and that he had no employees from that time onwards.  She opposed the sale of the property.

11. The husband’s trial affidavit, sworn 2 November 2020, largely repeats previous material.  He did depose, at paragraph 4, to having good prospects of full time work if the pandemic “resides” [sic] through Company N which he had been advised would start in late 2020.  He complained of the wife’s alleged excessive alcohol consumption.  Much of the affidavit addresses the parenting dispute that was still then ongoing.  He deposed to have difficulties in taking drugs tests that had been ordered of him for various reasons.

12. At paragraph 77 he deposed that on or around 25 May 2020 his excavator, valued at $23,000 in the asset pool set out in his case outline, had been stolen from a job site.  The theft had been reported to Victoria Police but there was nothing they could do.  Insurance had rejected his claim.

13. The husband went on to detail a number of non-financial contributions he had made to the matrimonial home, essentially involving work performed by him on it.  No great emphasis was given, however, to those matters in the actual hearing.  I note that at paragraph 84 he deposed that in June 2020 he managed to get a regular two days per week work earning approximately $1,000 per week which has enabled him to save rent and bond for a new rental property.  He went on to depose to the success of his business, D Company, and its demise following his eviction from the matrimonial home.  He deposed that he might be able to reduce the total of $450,000 of matrimonial debts by negotiation.  He sought the sale of the property and payment out of debts.

14. The wife’s responding affidavit, dated 14 December 2020, relevantly takes issue with the non-insurance of the excavator.  She appends, as exhibit “-1”, an insurance document covering the period from July 2019 to July 2020.   The wife took issue with the amount of non-financial contributions alleged by the husband.  She went on to depose that since separation she had paid $440 to the Commonwealth Bank mortgage each month and that she was not aware of the second mortgage.  She deposed that her daughter, Ms Q, had paid $450 to the second mortgage each month in lieu of rental payments except for March and September 2020.

15. She went on to depose to the alleged wastage on the husband’s part.  She referred to the refinance on 26 September 2016 of an additional $110,000 on the mortgage paid directly to the husband’s bank account.  She deposed that he had withdrawn at least $9,000 in cash per month and transferred over $10,000 to other bank accounts under his control and $1400 at the lottery centre. She deposed that only $2,900 of the $110,000 had been applied to existing liabilities.

16. She deposed that the husband has spent a significant amount of money from 2016 onwards on gambling, psychics/mediums, adult services and alcohol and asserted wastage in total of $198,000.  She complained of lack of disclosure on the husband’s part.  She proposed that she retain the matrimonial home (transferring the second mortgage as well as the first mortgage into her sole name) and that she pay out the caveat lodged by Company P registered on the property in the sum of just under $21,000 and pay the outstanding Region N council rates of approximately $10,000.  She proposed that the husband retain his business and indemnify her in respect of any related liabilities and that he retained his various motor vehicles and chattels.

17. The husband filed what was described as a response affidavit, sworn 4 January 2021.  He set out the assets and liabilities as he would have them.  He deposed that he had sustained a back injury in 2018 which impacted his capacity to work for six months and caused financial difficulty, lack of proper accounting by Ms Q and the difficulties arising from the intervention order.  He deposed that he needed a lump sum to enable him to negotiate with creditors to reduce penalties and the like.  He gave slightly different figures for the inheritances of the parties in 2000.  He deposed to the income of his business, D Company, having gone from $83,000 in 2014 to as high as $304,000 in 2018 but down again to $136,000 in 2019.  He deposed that his business had no realistic value as it had not operational for over 12 months.

18. He deposed that the Bank T judgment debt stood at $60,000, although the actual causation of this debt is not dealt with in any detail.  He deposed to having spent much less on psychic internet services and has said that both parties engaged in this and denied failures to disclose.  He went on to depose that he sought everything be sold, debts paid in full and the balance distributed 50/50.  Having said that, however, he went on to assert he could retain the tipper truck and Motor Vehicle 3 ute and take responsibility for the debt associated with them, being the Finance Company liability.

19. Unsurprisingly, this provoked a further affidavit from the wife, dated 14 January 2020.  In my view, this affidavit does not take the matter much further.  It should be observed that the parties’ affidavits are not structured in a way that is easy to follow and much of it consists of self-serving analyses or assertions of the parties’ financial history.

The Exhibited Material

1. Exhibit A1 is a complaint filed by Company P in the Magistrates Court of Victoria for a claim worth $20,903.74.  The respondent is the husband.  It is, in substance, an action for goods sold and delivered to the husband’s business.

2. Exhibit A2 is a writ of seizure and sale out of the Supreme Court of Victoria dated 26 February 2020 which notes that on 10 December 2018 the Magistrates Court of Victoria ordered the husband to pay $48,458.27 to Bank T together with costs and interest and that a total payable in excess of $58,000 was then extant.

3. Exhibit A3 is a letter from Perry Weston Lawyers to Pentana Stanton Lawyers dated 17 April 2020 dealing with the non-provision of drug screens on the husband’s part.

4. Exhibit A4 is a list of sales by client of D Company for the quarter 1 to quarter 4 2019 showing sales in total in excess of $125,000 and amounts owed of $33,900.

5. Exhibit R1 are medical records relating to the husband from Region W Health in 2018 and a CT of the lumbar spine from January 2020.  A 2018 report notes back pain on the husband’s part.  A CT scan by Dr Z notes some disc bulges and:

   a fracture through the anterior support aspect of the L3 vertebral body with slight loss of vertebral body height of approximately 10% in keeping with a superior end plate fracture.

The Submissions Made and Evidence Given In Court

1. What follows is taken from my notes. 

2. The wife sought leave to rely upon a lately obtained valuation report because the wife seeks to retain the property.  A joint valuation had been proposed and it was thought that the value of the property was agreed.  The husband had valued the property at $575,000 in his financial statement and in his affidavit of 7 January 2020 at $600,000.  Counsel for the respondent objected to this affidavit and indicated that he had been seeking to sell the home since 2020.  I defer consideration of that aspect of the matter until a later point.

3. Counsel for the wife, in opening submissions, referred to this being a long relationship having commenced in 1997.  She traversed the children and the spend time arrangements.  She submitted problems emerged in 2015 to 2016 when the husband started using ice heavily.  The liabilities for the parties increased substantially but the applicant did not know.  The 2001 mortgage was $148,000 but was increased by $96,000 in 2016.  This second loan, taken out in September 2016, was in the husband’s sole name.  The wife conceded that some of this was spent on legitimate expenses.  About $20,000 remained unexplained.

1. The parties’ positions were equal at the start.  The husband took on the two prior children.  The dispute was really about the pool.  The husband bought was described as a souped up ute in about the time of separation and took out a loan in September 2018 for $100,000 principal and $40,000 interest to make this purchase.  He already had debts.  The Motor Vehicle 4 ute was bought irresponsibly without the wife’s consent.  He values it at $50,000.  The wife’s position is that he should keep the ute and also the debt to Finance Company Loans associated with it which is now worth $114,000.  A further $30,000 paid to that loan should be added back because it was not applied to any of the debts of the relationship.

2. The next issue was the excavator which it was submitted the husband had hidden at a job site.  The wife’s position is that it was not stolen or that the insurance had not been sufficiently pressed.  There were minor debts arising from the husband’s business which the wife says should be paid equally but capped.  The parties’ contributions at the start were equal.  The wife seeks an adjustment because of the husband’s drug use.  She also seeks an adjustment in respect of future needs.  She earns $42,000 per annum whereas the husband’s capacity is greater.  He earned $1,000 in two days recently.  X is 15 and Y is 12.  The wife seeks a 60/40 division as she wishes to keep the property.

3. The wife was called and adopted her affidavits and financial statement as true and correct.  Under cross-examination the wife asserted the husband lost money in 2015 because of his ice use.  There was no problem before then and she had not noticed any problems with ice until 2016.  She found ice in his vehicle.  She asked him what it was.  She does not use illicit substances.  Separation took place in 2016.  This was in her prior affidavits.  He left in July and went to live with his sister and came back in November.  He had not bought the ute by then.

4. They separated again in 2018 and the ute was bought in September 2018.  He was living in his container and refused to leave.  There was no reconciliation thereafter.  The husband was removed in 2019 by the intervention order.  It was reasonable he purchased nothing further when the debts were so high.  He was not working at the time.  It is not true that he needs a flashy vehicle.  It is a collectors item car and should not be used, save as a weekend vehicle and not for work.  That is what he had told her it was for.

5. It was put to her that the husband wants to move from being a labourer as a result of a back injury.  The wife said that the back injury was 12 months after he had bought the ute.  He has a greater earning capacity.  He can work two days a week for $1,000.  She could not say if his back would affect his earning capacity.

6. Counsel cross-examined about the alleged extravagance of the husband’s lifestyle.  The wife said the husband always spends more than he earns and particularly in the last six years.  She disagreed that $49,000 spent over two years was for business expenses.  She had been through his bank accounts and credit cards.  He would buy many things he could not afford.  He bought a brand new tipper truck when he already had one and was not working.  He used to gamble.  Hundreds of dollars went on overseas lotto, eBay and jewellery.  There were items he had taken out of the safe in her container.  It was put to her that this was not in her affidavit.  The witness conceded this but said she was just answering the question.

7. She would occasionally help the husband send invoices out.  He had told her it was not her business.  He should have repaid his finances before he spent money.  He spent a ridiculous amount on his own expenses.  Ordinarily, they would be jointly liable but this was really unfair.  She said there should be an adjustment because she has the younger child.  Y is in high school this year.  There is no child support passing between them.  X has only two years to go.  X has had difficulties and has been quite unhappy and stressed and is 15 years old.

8. She did not agree that the husband’s care of her other two children equalises the parenting contributions.  She did not believe it was possible to steal the excavator that did not work.  She could not be sure.  There were no police reports.  She had asked for them earlier in the week.  There was no re-examination.

The Evidence of the Husband

1. Counsel was content to rely upon the case outline.  The husband was called and adopted his trial affidavit and financial statement as true and correct.  In evidence-in-chief, he was asked questions about objects in the safes.  He said there were some stamps he had bought for the children and some old coins only worth their face value.  He denied excessive expenditure on eBay.  Most of the stuff was in the safe.  He needed the tip truck.  He had had to pay fees of $8,000 for delivery of his work goods in one month.  The ute was also necessary.  He has got into civil contract work.  He has a contract with the Company L at Suburb M and with Company N.  You cannot turn up in an old beaten up work ute.

2. The husband was examined about his back issues.  He said he went to the O Hospital.  There was no rehabilitation.  He just got back to work.  He had to be careful on light duties.  He cannot do labouring work like he used to.  He said he broke L2 and L3 and scraped the side off the third vertebrae.  He had shrunk 10 millimetres.

3. The husband went on to say that the excavator was working.  It had had an overheating problem but could be moved.  He thought the sworn valuation of the property was extremely low. 

4. Under cross-examination, the husband conceded that there had been separation prior to 2018.  He said that he was still living in the container and had been removed from the home in May 2019.

5. When cross-examined about the stamps and coins, the husband said there was nothing else of value.  There were some rings but the majority of the stuff was still in the safe.  There was jewellery, rings and a bracelet still there.  There was a silver ring.  He took another ring when he left and took it to the pawn shop.

6. He denied selling the Motor Vehicle 5 for $10,000.  He sold it for $8,900.  He was at the matrimonial home when that was sold in 2019.  The wife has gems in a blue container which were in a blue toolbox.

7. The husband was cross-examined about an excel sheet taken from PayPal.  He said the sapphire diamond ring had been sold at the pawn shop.  The ruby earrings were in the blue container.  A ruby solid gold ring was in the container.  He went on to say that everything was in the blue box.  These jewellery items were bought in 2018 for the children.  At the price he got them for they were not expensive.

8. The husband was cross-examined about the alleged debt to Company P of $20,000.  He said that the $14,000 slab had to be re-laid and that Company P were liable for this.  When it was put to him that Company P said he owed $17,000 in 2018 in the County Court proceeding he responded with words to the effect, “that’s what they say”.  He was aware of the complaint in the Magistrates Court in January 2018 and was aware some moneys were owed but Company P owed him $14,000.

9. He was cross-examined about the warrant of seizure and sale.  It was put that $50,000 was payable.  He attributed this to mistakes made by his eldest daughter, Ms Q, in doing the books.  They paid Ms Q $500 a week.

10. The husband denied having a serious drug problem.  He had a problem in the past when he used ice and speed and marijuana.  He spent money on them.  This was not to benefit the family.  He said, nonetheless, that he continued to provide for the children.  He had not lied about drug tests.  He told the family reporter he had not consumed ice for one year.

11. The husband was cross-examined about the Region N council rates.  There was an agreement that the wife would pay the rates.  This was the only thing she had to pay.  It was agreed she would pay $50 per week.  Ms Q was there when this agreement was made.  He was happy to pay everything else.  He had paid her telephone until 26 April 2019.  It was previously in the name of the business but was changed to her.

12. The husband conceded refinancing for $93,000 in September 2016.  He also agreed that he had taken out a $110,000 loan at the same time on 26 September 2016.  That went into his account ...51.  When it was put that there was $90,000 one month later, he appeared to suggest he had paid $20,000 to the Australian Tax Office.  Cross-examination then moved to the excavator.  It appeared to me to emerge that there is indeed insurance cover for up to $20,000 for that machine.

Final Submissions by Counsel for the Respondent Husband

1. Counsel was, essentially, content to rely upon the case outline.  The husband denied any drug problem.  If it was true, it would cast doubt on his earning capacity.  He had taken steps to deal with the problem when he did.  He cannot return to labouring.  His success in business is uncertain.  So far as valuation was concerned, he had sought to sell because he had thought it was worth $600,000.  The husband said he can purchase it for $540,000 and seeks to buy it.  The wife’s capacity to purchase it is uncertain.  She relies upon her sister’s guarantee.  The husband’s sister will buy it and the property should be sold.

Submissions for the Wife

1. Counsel noted that the husband had made $1000 in two days working for the Company N.  He has a greater earning capacity even if he does have a bad back.  She opposed the husband buying the property.  The wife has been residing there since 2019 and paying the liabilities.  She relied upon the outline of case.

Brief Observations about the Witnesses

1. The wife was an excellent witness who responded directly to the questions put to her.  It was impossible, however, to avoid the clear impression that she remains very angry with the husband for his wastage and the financial pressure she perceives this to have put the parties under.

2. I regret to have to say that the husband did not make a good impression as a witness.  He was often unclear in his answers.  He answered questions with questions of his own.  Some of his answers, such as those concerning the warrant of seizure and sale, were glib and unpersuasive.  He was evasive when cross-examined about the extra loans he had taken out and I did not find his endeavours to explain his failure to disclose properly at all convincing.

Findings about the Facts

1. Much of what occurred is not really disputed.  The parties met and commenced cohabitation in 1997.  The wife’s two children from the previous relationship were only aged three and four and I accept that they were brought up by the husband as his own children and he deserves credit for this.  The husband was not engaged in particularly remunerative employment throughout the relationship, at least until he commenced his own business in 2009.  The wife was plainly the primary homemaker throughout, although she also worked for much of the relationship.

2. The parties bought the matrimonial home in B Street, Suburb C in 2001 and the parties’ contributions were, to all effects and purposes, equal even though there is some minor disputation as to exactly who contributed how much.  The husband and wife undoubtedly did a certain amount of work on the property over the years but, in my opinion, these were just part of the warp and woof of the marriage and do not give rise to any loading in favour of either party.  Indeed, I did not understand either party expressly to suggest that this was the case.

3. The parties had briefer periods of separation in the years leading up to 2019, but on any view of the matter, by January 2019 at the latest  the husband was living in a container on the former matrimonial property and he was finally evicted from the property altogether when the intervention order took place in July 2019.

4. Despite the husband’s rather glib denials, I have no hesitation in accepting the wife’s evidence that the husband changed in about 2015 to 2016 and it would seem that his use of ice must have been prevalent throughout this period.  Nonetheless, these assertions need to take into consideration the fact that the turnover of the husband’s business was increasing dramatically up until COVID.  Where the drug use seems to me to have operated on the parties’ circumstances more particularly is his increased, and unbeknownst to the wife at the time, accumulation of debt.

5. The husband took out a second mortgage in September 2016 in the sum of $110,000, of which $20,000 appears to have been applied to a taxation debt.  It is conceded that some of that money has been applied to the parties’ joint needs but it is said that there is a short fall of some $20,000 that cannot be accounted for.

6. The husband undoubtedly took out a loan and interest in a total sum of approximately $140,000 to purchase his new ute in May 2018 to which approximately $34,000 has been applied but could have been spent on other joint family expenses.  The wife asserts that the husband has been generally wasteful in his expenditures and I have to say that I have found his answers about his expenditures generally glib and unpersuasive.

7. Nonetheless, I am not in the position to say exactly how much of what is now owed globally may stem from the husband’s asserted expenditures from time to time.  There is nothing to show me exactly what the various credit card and other debts were as at the time of separation.  Indeed, even the time of separation is far from wholly clear.  In the end, I am more persuaded by the wife’s evidence that she considered the relationship at an end in January 2019. 

8. Against this background, I turn to the decision in Stanford & Stanford (2012) 247 CLR 108.

Stanford & Stanford (2012) 247 CLR 108.

1. The courts first task is to ascertain the legal and equitable interests of the parties, and determine whether a property adjustment is appropriate. In this instance, each of the parties seeks that there be a property adjustment, and it is sufficient to say in the circumstances it is plainly just and equitable that there be one.

The Property Pool

1. The first item in the property pool plainly is the former matrimonial home.  There is a sworn valuation of it of the sum of $540,000 which each of the parties wish to retain at that value.  Given that the husband’s true position is that the property is worth $600,000, this seems to me to represent a very real difficulty.  I will return to this aspect of the matter in due course.

2. Thereafter, things get more difficult.  There is the excavator which has been stolen but appears to be susceptible of the $20,000 insurance claim.  There is a Truck R purchased for approximately $70,000 in May 2018 which has no valuation.  The husband’s case outline estimates a value of $50,000.

3. There is the husband’s ute, which his case outline values at $50,000.  There is a further Motor Vehicle 5 ute which the husband’s case outline values at $3000 and a further Motor Vehicle 1 ute worth about $1500.  There are two vehicles, both valued by the husband at $1800 and a ute worth about $2,000.  There is a Truck S worth about $1,000 and a boat also about $1,000.  The husband’s case outline values his tools and concrete material worth around $5,000.

4. It should be noted that the husband seeks to sell all of these, except the ute and the Truck R tipper truck.  I note that the wife asserts that there are miscellaneous items belonging to the husband at the B Street, Suburb C property which she seeks to be sold worth an estimate of $10,000.  The wife also asserts money is owed to D Company in the sum of $33,932 which appears consistent with the exhibit to which I have referred.

5. There are an all too considerable number of debts. The first debt is the original home loan which counsel, in final submissions, assured me was now worth $99,713.  There is the second CBA loan which appears to be approximately $112,000.

6. The wife asserts that these are in arrears in a sum of $10,555 but they must be subsumed, realistically, within one or other of the two overarching figures already given.

7. There is the Finance Company Loan for the ute in the sum of $111,246.  There is a debt to Company P in the sum of $20,903.  There are outstanding council rates in the sum of $10,182.  There is the debt to Bank T in the sum of $58,418.  The wife asserts, and it has not been denied (and, in fact, is admitted in the husband’s case outline) of $17,500 to Bank K in relation to the excavator.

8. There are a number of other smaller debts relating to the Company P business which are set out in the wife’s case outline.

9. Finally, I note the wife’s application to add back $34,000 spent on repaying the Finance Company loan on the new ute. In my view the ute and its associated debt should be excised from the pool. I do not accept the husband’s evidence that the ute was necessary for his business. Having heard and seen him give his evidence I have no doubt that the purchase was an act of self-indulgence.

10. It is however simply not possible to ascertain the extent to which the $34,000 refers to pre and post separation amounts. Further, and in any event, I think that leaving the entire Finance Company debt with the husband is sufficient penalty for his self-indulgence.

Contribution Issues

1. This was a relationship of some 20 plus years, where the parties had very little at the start and neither party made any capital contribution of particular note.  The husband, to his credit, took on the two young children of the wife as his own and assisted in their upbringing.  As I have already indicated, the husband worked throughout the relationship, at least until 2018 when he says his back started to impact upon him.  The wife worked as best as she was able from time to time.  The inescapable conclusion is that the contributions of the parties should be treated as equal, (leaving aside obviously the debts incurred by the husband from 2016 until separation).

Future Needs

1. I accept that the husband is likely, when these proceedings are finally over, to have a greater earning capacity than the wife.  Hers is relatively fixed by her level of qualifications and she still has the primary care of a much younger child and will do so for some years to come.  In my opinion, the wife should be granted a five per cent loading in respect of future needs.  Her health is generally good and although the husband’s appears to have been impacted to some extent by back injury, his earnings with Company N and the optimism he ultimately could not conceal while giving his evidence as to his future prospects suggests that he will do well in the future.  A seven per cent loading in the wife’s favour is in my view appropriate.

How is this to be Achieved

1. This, in truth, is where the real difference between the parties lies.  The husband says that the entirety of the parties’ possessions, (apart from his ute and the Truck R), should be sold (presumably without, wholly personal chattels and whitegoods).  The resulting lump sum would thus be ascertained and then a negotiating process should be embarked upon to reduce their debts.  It is immediately apparent that this is a manifestly unsound way to proceed.  Not only does it not give the parties anything like finality, but it is highly likely to lead to all sorts of further disputation given the parties’ capacity to quarrel over valuations and, indeed, over what items even actually exist in respect to some of the chattels such as jewellery.

2. The court must try and bring this matter to an end.  In my view, the wife should be permitted to endeavour to re-finance the mortgage and should she fail to do so, the husband should be given the same opportunity.  I note that it is the wife’s position that she will pay out the debt to Company P and the debt to Bank T, undoubtedly because these are established debts that must be paid. 

3. It should be noted that the debts to those two bodies appear to arise solely from the operation of the business and, in a sense, the wife would need to obtain credit for the husband’s notional half share thereof.  The various minor debts are proposed to be paid jointly by the wife and I accept that that is so.  There is little methodology to the apportioning of debts like the rates and, to put the matter bluntly the whole thing is such a mess, it is really very hard to work out what ought to be done.

1. What I propose to do is to make clear my general view as to the liabilities of these parties and to give the parties an opportunity to consider their position in the light of these findings.  I would much prefer to make final orders but feel unable to do so at this time.

2. It is quite clear that the husband took out the second mortgage without the wife’s knowledge and I accept that at least $20,000 of that has not been properly accounted for by the husband.  That should be added back.

3. As earlier indicated, the entirety of the $144,000 loan for the ute is a responsibility of the husband alone and he should pay it.  I did not find his evidence as to why he needed this vehicle at all convincing, but the fact is it is his.  The debt is his alone.

4. The husband says he may be able to negotiate a number of the debts down and he puts in issue the debt to Company P.  There is no evidence to support his assertion that there will be an offset of $14,000 beyond his mere assertion that this was the case.  I am not persuaded that it exists. Indeed, I would observe that much of what the husband had to say struck me as being entirely aspirational and unreasonably optimistic.

5. It is not satisfactory that a party be in a position to achieve final orders on a valuation that is, in truth, significantly in dispute.  The husband must either accept the $540,000 value or provide a sworn valuation of his own which I will then, if he thinks it is worth more, determine.  If he is prepared to allow the wife to endeavour to re-finance the $540,000 then should she be unable to do so I would be prepared (on the basis that what is sauce for the goose is sauce for the gander) to enable him, thereafter, to endeavour to purchase it out also.

6. In the circumstances, I am going to adjourn this matter for a period of time to enable the wife to see whether she can obtain finance to pay out the debts she proposes to pay out and I will relist the matter when that has been done.  It is readily apparent that the circumstances of these parties are thoroughly confusing and the process of working out an appropriate adjustment to reflect my overarching conclusion that there should be a 57/43 division is going to be a complicated one.

I certify that the preceding eighty-eight (88) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Associate:

Date: 5 February 2021