MOREMAN & MOREMAN
[2013] FamCA 360
•24 May 2013
FAMILY COURT OF AUSTRALIA
| MOREMAN & MOREMAN | [2013] FamCA 360 |
| FAMILY LAW – PROPERTY – Contributions – contributions assessed in favour of the husband – where the husband made greater initial contributions in providing the former matrimonial home – where the parties’ contributions throughout the relationship were assessed as equal – where the parties and their children cohabited for the 12 years of their relationship and 16 months post-separation in the former matrimonial home FAMILY LAW – PROPERTY – Adjustment for future needs – where an adjustment was made in favour of the wife – where the husband would have the benefit of the former matrimonial home and the wife would need to find stable accommodation –where the husband had a greater income earning capacity and the flexibility of self-employment – where the wife had no financial supports and intended to work part-time for the foreseeable future – where the husband’s parents had provided him ongoing financial support – where parenting orders provided for both parties to have the children in their care for approximately equal amounts of time FAMILY LAW – PROPERTY – Pool of Assets – Addbacks – where the wife’s partial property settlement was added back to the pool of assets as a premature distribution of matrimonial assets – where an amount representing the wife’s reasonable expenditure from her interim property settlement was deducted from the pool of assets |
| Family Law Act 1975 (Cth) s 75 and s 79 |
| Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Omacini & Omacini (2005) FLC 93-218 Pierce & Pierce (1999) FLC 92-844 Stanford & Stanford (2012) FLC 93-518 |
| APPLICANT: | Ms Moreman |
| RESPONDENT: | Mr Moreman |
| FILE NUMBER: | SYC | 1821 | of | 2011 |
| DATE DELIVERED: | 24 May 2013 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Cleary J |
| HEARING DATE: | 22 March 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Kennedy |
| SOLICITOR FOR THE APPLICANT: | MCW Lawyers Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Mr T Hodgson |
| SOLICITOR FOR THE RESPONDENT: | Fox O’Brien Solicitors |
Orders
That within 90 days of the date of these Orders the husband shall pay to the wife the sum of $249,035.
That simultaneously with Order 1 the wife shall sign all documents and do all acts and things necessary to transfer to the husband all her right title and interest in the former matrimonial home known as and situate at M Street, Suburb N in the State of New South Wales being the whole of the land contained in Folio Identifier … (“the home”).
That simultaneously with the transfer referred to in Order 2, the husband shall do all acts and things and sign all documents necessary to pay out and discharge all mortgage loans secured against the home including but not limited to the mortgage to Heritage Building Society Limited secured against the home.
That within 90 days of the date of these Orders the wife shall sign all documents and do all acts and thing necessary to transfer to the husband all her right title and interest in the property known as and situate at O Street, Suburb N in the State of New South Wales being the whole of the land contained in Folio Identifier … (“the O Street property”).
That simultaneously with the transfer referred to in Order 4, the husband shall do all acts and things and sign all documents necessary to pay out and discharge all mortgages or loans secured against the O Street property including but not limited to the mortgage to ING Bank (Australia) Limited secured against the O Street property.
That within 90 days of the date of these Orders the wife shall sign all documents and do all acts and things necessary to transfer to the husband all her right title and interest in the property known as and situate at P Street, Suburb N in the State of New South Wales being the whole of the land contained in Folio Identifier … (“the P Street property”).
That simultaneously with the transfer referred to in Order 6, the husband shall do all acts and things and sign all documents necessary to pay out and discharge all mortgages or loans secured against the home including but not limited to the mortgage to ING Bank (Australia) Limited secured against the P Street property and Heritage loan number … secured against the P Street property.
That within 90 days of the date of these Orders the wife shall do all acts and things and sign all documents necessary to:
8.1resign from any office held in the company known as “[Q] Pty Ltd”, ACN … (“the company”); and
8.2transfer to the husband all shares held by the wife in the company.
That within 90 days of the date of these Orders the husband and the wife shall do all acts and things and sign all documents necessary to close the Heritage Building Society Limited Account Number …10 (“the Mortgage Crusher account”) and to distribute the proceeds to the husband.
That within 90 days of the date of these Orders the husband shall do all acts and things and sign all documents necessary to refinance in his sole name the Heritage Building Society Limited Account Number …5.1 and shall indemnify the wife in respect of the loan.
That within 90 days of the date of these Orders the husband shall do all acts and things and sign all documents necessary to discharge and close the Heritage Building Society Limited line of credit, account number …5.1 and shall indemnify the wife in respect of the loan.
That the parties otherwise be entitled to be the sole legal and beneficial owners of all other items of real and personal property of whatsoever nature and kind in their respective ownership, possession or control as at the date of these Orders including but without limiting the generality thereof money on deposit, shareholdings, insurance policies, motor vehicles, furniture, furnishings and effects and superannuation.
Pursuant to s 106A of the Family Law Act 1975 (Cth) in default of either or both of the husband and the wife doing all such things and executing all such documents as is necessary to comply with these Orders a Registrar of the Family Court of Australia, or such other person appointed by the Court, be authorised to do all acts and things and execute all such documents on behalf of either or both the husband and the wife an order that in the event that either party procures compliance with the Orders set out above by obtaining execution of the documents pursuant to this Order and then the parties procuring such execution of documents shall be indemnified by the other party for his or her costs and expenses incurred in obtaining such Order.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Moreman & Moreman has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC1821 of 2011
| Ms Moreman |
Applicant
And
| Mr Moreman |
Respondent
REASONS FOR JUDGMENT
Introduction
This is a dispute over the distribution of marital property. The applicant wife, Ms Moreman, is aged 41. The respondent husband, Mr Moreman, is aged 44.
The parties lived together for about six months before they married in February 1999. They separated within the family home in October 2010. In February 2012 the wife moved out of the home and the husband has remained living there. Accordingly the parties lived together in a relationship for a little over 12 years.
They have two children presently aged 12 and 9 years. Orders were made by consent in relation to parenting in November 2012. The arrangements are for equal shared parental responsibility and approximately equal time with each parent, a little more with their father.
By the commencement of the hearing, the parties had reached agreement on the structure of property settlement and the wife had abandoned her application for spouse maintenance. The single area of difference was the size of the cash payment to be made by the husband to the wife. The wife sought $454,571 the husband proposed $70,000.
The Evidence
The wife relied on the following documents:
(i)Minute of proposed orders[1] (replacing Amended Initiating Application filed 11 October 2011);
(ii)Affidavit of wife filed 12 March 2013;
(iii)Financial Statement of wife filed 12 March 2013.
[1] Minute of Proposed Orders (included in Exhibit 1)
The husband relied on the following documents:
(i)Minute of proposed orders (replacing Response filed 24 January 2012)[2];
(ii)Affidavit of husband filed 27 February 2013;
(iii)Financial Statement of husband filed 5 March 2013;
(iv)Affidavit of Ms R sworn 21 March 2013, filed in Court.
[2] Minute of Proposed Orders (included in Exhibit 2)
Neither party was extensively cross-examined which was appropriate. I formed the view that each was a straightforward witness and where evidence varied between them the explanation was differing perceptions and not untruthfulness.
Single Expert Reports – Mr S, Chartered Accountant
Mr S, the Single Expert prepared three reports, 24 August 2011, 17 January 2013 and 22 March 2013[3].
[3] Single Expert Reports of Mr S filed 28/02/2013;Exhibit 7
Mr S was required for cross-examination. With enormous goodwill and professionalism he had examined additional invoices overnight before the hearing and prepared a third report.
His evidence on the net goodwill position of the company allowed the Court to resolve the parties’ dispute over Item 9 in the balance sheet.
The Law
Alteration of Property Interests
The approach to the division of matrimonial property pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) is well established (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [39]).
With the delivery by the High Court of the decision in Stanford & Stanford (2012) FLC 93-518 there has been a sharpening of focus. Their Honours’ made the following statement at [35]:
In every case in which a property settlement order under s 79 is sought it is necessary to satisfy the Court that in all the circumstances it is just and equitable to make the order.
The decision leaves unambiguous that the requirement contained within s 79(2) is a preliminary enquiry that must be satisfied prior to the Court exercising its powers under s 79(1) of the Act (see Stanford & Stanford (above) at [48], [51]). However, the High Court indicated this would generally be satisfied by virtue of the fact that the parties have separated (See Stanford & Stanford (above) at [42]).
The High Court also went on to propound three principles to be applied in the exercise of s 79 of the Act (see Stanford & Stanford (above) at [37]-[40]):
1. The existing legal and equitable interests of the parties in the properties should be identified.
2. The power to make a property settlement order rests upon the law and not judicial discretion: do not assume that the parties’ rights to or interest in marital property are or should be different from those that then exist.
3. One or other of the parties does not have the inevitable right to have the property of the parties divided between them. Nor the right to an interest in marital property fixed by reference to the matters in
s 79(4).The approach identified by the High Court means that having identified the asset pool by a valuation of the assets and identification of associated liabilities, the Court should ask itself whether having regard to those existing interests, is the Court satisfied that it is just and equitable to make a property settlement order. This fairly gives rise to the question should the position be left untouched, or would it be just and equitable to make an adjustment.
In this case both parties acknowledge that an adjustment should be made.
The second principle appears to take the matter a little further that having considered all of the matters in s 79(4) and consequently s 75(2), the Court must again ask itself is it just and equitable to make an adjustment, on account of the matters identified or not.
The third principle suggests that there is no presumption of inevitable alteration.
Accordingly, I must consider the four following factors as set out below:
i.Identify the assets and liabilities of the parties (“the Asset pool”) and consider whether an adjustment is necessary.
ii.Analyse the contributions of the parties during the relationship up to the date of the hearing.
iii.Consider the application if any of the factors in s 75(2) of the Act by way of adjustment and consider having analysed the contributions and needs of the parties whether any adjustment should be made.
iv.Consider whether the overall distribution proposed is just and equitable.
Identify the assets and liabilities of the parties
The net asset pool was asserted to be as follows in the final Single Balance Sheet:
Own Description Wife’s value Husb’s value ASSETS 1 J [The home] $1,008,750 $1,008,750 2 Joint [The O Street property] $380,000 $ 380,000 3 Joint [The P Street property] $826,666 $ 826,666 4 Joint Heritage Mortgage Crusher account 11711728L65 $6,576 $ 6,576 5 Wife Westpac account …28 $379 $ 379 6 H St George Bank account …73 $2,046 $ 2,046 7 Wife … Jeep … $10,000 $ 10,000 8 Joint [Q] Pty Ltd NIL NIL 9 J Loan from the parties to [Q] Pty Ltd $153,862 $ 153,862 Total $2,388,279 $2,388,279 ADDBACKS 11 W Proceeds of the loan from husband's parents and legal fees added back $ 169,500 $ 200,000 12 H Solicitor’s fees $ 33,133 NIL 13 H Counsel’s fees $ 7,431 NIL 14 H Law Society of NSW Hearing fee $ 990 NIL 15 H Legal Aid Commission $ 1,650 NIL 16 H Federal Magistrates Court filing fee $ 243 NIL Total $ 212,947 $ 200,000 LIABILITIES 22 J Heritage mortgage for [the home] $192,709 $192,709 23 J Heritage loan for [the P Street property] …65 $435,146 $435,146 24 J ING loan for [the O Street property] …78 $760,529 $760,529 25 J ING loan for [the P Street property] …67 (included in 24) (included in24) 26 J Heritage business Loan $54,700 $54,700 28 H Loan – [Ms R] and [Mr R] $183,500 $196,880 Total $1,626,584 $1,640,584 SUPERANNUATION M’ber Name of Fund Type of Interest Wife’s value Husband’s value
31 H CBus Accumulation $89,602 $89,602 32 W ING …15 Accumulation $38,107 $38,107 33 W ING …75 Accumulation $2,999 $2,999 34 W ING …14 Accumulation $3,300 $3,300 Total $134,008 $134,008
Notes
Item 11: Husband contends figure $200,000 as per partial property settlement. Wife says $30,500 spent on rehousing and general living expenses for herself and children.
Items 12-16: Husband contends legal fees not included as paid from loans, income and holiday pay. Wife disputes.
Adjustments to joint Balance Sheet
By the conclusion of the evidence, there were four areas of dispute in the balance sheet.
Item 9 - Debt owed by the company to the parties
That is the figure identified and not varied by Mr S during cross-examination. The husband had found a reference to a further loan of $15,000 from his parents in 2006. I accept the evidence of Mr S that without knowing more about how the loan was applied, it would be overly simplistic and wrong to simply deduct it from the figure which represents the amount the company could repay to the parties. The figure remains unchanged.
Item 11 – Addback of partial property settlement
There was a payment ordered on 30 January 2011 for the husband to pay to the wife $200,000 by way of partial property settlement. By the date of hearing, the wife had $118,000 of that sum remaining. She asserted that $30,500 of the original payment had been expended on reasonable living expenses such as rent, expenses of relocation from the family home and a trip away.
The husband pressed for the inclusion of the whole amount of $200,000. The wife submitted for $169,500.
The decision of Omacini & Omacini (2005) FLC 93-218 at [30] clearly recognises that where there has been a premature distribution of matrimonial assets as has happened here, it is appropriate to notionally addback that property into the parties’ joint asset pool. However, that decision is also authority for the proposition that the mere fact that a party has expended money realised from assets does not justify the expenditure being added back without more. A trial Judge must make some assessment of the reasonableness or otherwise of the expenditure (Omacini & Omacini (above) at [39]).
The wife, in her affidavit, provided an itemised summary of her expenditure of the $200,000. Leaving aside the amount associated with legal costs, the wife’s expenditure of the partial property settlement up to the date of trial amounted to approximately $30,500[4].
[4] Affidavit of the wife filed 12/03/2013, para 28(e)-(o); Balance Sheet, Notes to Item 11
The wife had moving costs ($200), rent to pay ($15,600) and the need for some furniture upon her relocating to a new residence ($1099.71). She went on holidays ($6,200) and in the course of the year, certain other incidental expenses arose, including a car accidents claim ($1,629) and presents for the children ($1,100).
There is nothing to suggest the wife’s expenditure was anything other than necessary and reasonable. The amount she seeks to have deducted represented monies she has drawn on to pay rent and other costs when her income was insufficient to meet those expenses. Therefore the sum of $169,500 will be added back.
Items 12-16 – Husband’s legal fees
The wife pressed for the total sum of $43,447 to be added back. The husband expended this amount on legal costs and disbursements.
His position was that he had met those expenses from post separation income and/or loans from his parents, which were not sought to be included as matrimonial debts.
In my view the evidence supports his assertion. Accordingly, these items will be excluded.
Item 28 – Loan from the husband’s parents
Disagreement over this figure arose during submissions. There was a concession during the husband’s cross-examination that rental income from the granny flat on the home property had been paid directly to the husband’s parents for a little over a year. The parties disagreed as to how that payment to the husband’s parents should be taken into account. The wife pressed for the whole sum of $16,500 to be deducted. The husband raised principal and interest.
There was a stated unexamined obligation on the husband to pay interest at seven per cent on the whole of the loan[5]. It seems reasonable to assume that the rental income was received by the husband’s parents as undifferentiated payment of principal and interest. The husband had stated that he was one of three brothers who all had assistance from their parents and he did not get special concessions over them. I accept interest would be expected at some level. Accordingly, I accept the calculation of counsel for the husband of and reduce the loan to $196,880. It would be unreasonable to regard the whole of the payments as principal as submitted on behalf of the wife.
[5] Affidavit of Ms R sworn 21/03/2013, para 4
Accordingly, I find the net asset pool to be as follows:
Assets $2,388,279
Add backs $ 169,500
Superannuation $ 134,008
Total $2,691,787
Less liabilities $1,639,964
Net Total $1,051,823
Contributions at commencement of cohabitation – s 79(4)
Cohabitation began in 1998 with the wife moving in to live with the husband in the Suburb N property purchased by him five years prior. In 1993 the husband had paid $207,000 for the property, of which $173,000 was borrowed. He built and fitted out a granny flat at the rear of the property, which the parties lived in for two years. He then undertook repairs and improvements to the house and grounds[6].
[6] Affidavit of the husband filed 27/02/2013, para 4(i); Affidavit of the wife filed 12/03/2013, paras 10, 12, 14-15
When they began living together the wife had about $9,800 in superannuation and no other assets[7]. The husband had equity in the home and the business, Business Q, which he still owns and operates. Significant weight must be given to the provision of the home by the husband (Pierce & Pierce (1999) FLC 92-844 at [28]-[30]).
[7] Affidavit of the wife filed 12/03/2013, para 11
The parties commenced their cohabitation in the granny flat at the rear of the property and in 2000, the parties moved into the house, which became the family home.
During the course of the relationship, both parties contributed to their full capacity. The wife left her paid employment to assist the husband in running the business. He continued to work fulltime in this self employment. After about four years the business was incorporated. An industrial unit was purchased in 2003 and a further investment was made in 2009 by the purchase of a second industrial unit leased to eight tenants.
Renovations were undertaken on the house. Both parties were involved in the planning organising and decision making. Tradesmen were organised largely by the husband.
As the children were born the wife continued to work in the business, but to a lesser extent, as she assumed the majority of their care.
There is a disagreement over the extent to which the wife did continue to work in the business. I accept she made a real contribution both in the business and through paid employment at times.
Likewise, I accept that the husband made a significant contribution to the welfare of the family by his care of the children.
Both parties worked hard and continue to be committed to the care of their children.
Post separation
On 3 October 2010 the parties separated, but continued to both live in the family home. They lived together whilst separated for 16 months, both attending to the needs of the children. Ultimately, the wife moved out of the home in February 2012.
At that time the husband borrowed $200,000 from his parents which was paid to the wife by way of partial property settlement.
The interests of the parties to their assets should be adjusted to reflect the contribution made by each of them equally during the marriage. Taking into account the provision of the home initially by the husband and an equal contribution over 12 years, I assess the contributions at 65:35 in favour of the husband.
(iii) Relevant s 75(2) factors for adjustment
The parties are in their early forties and in good health. Each has the physical and mental capacity for employment.
The current occupation of the wife is as an office administrator for a company in the local area. She works 18 hours per week for which she earns about $450 per week. She receives $200 per week as child support from the husband.
The husband continues in self employment within his trade company. He has average income from all sources of about $2076 per week.
The wife is likely to earn less than the husband at least whilst the children are at school. Her earning capacity has been affected by periods out of the paid workforce and re-entering at the same level.
Both parties have the care and control of their two children shared between them almost equally.
Neither party has a Commonwealth benefit.
Each party has superannuation, about $90,000 for the husband $43,000 for the wife. This position is unlikely to change in the short term. Neither party will be in a position to make substantial contributions for some years for different reasons, debt in the case of the husband and low income for the wife.
The husband has remained in the home, continues to run a business and has associated debt. The wife has a need to establish permanent accommodation of a reasonable standard.
Both parties strongly wish to continue an active role as a parent. Their parenting orders made on 29 November 2012 by consent reflect that wish.
The mother has a commitment to the care and interests of the children and is likely to work part-time for some years in order to continue in her role as parent in the way she has been doing: taking them to sport and tutoring, helping with their homework. She does not have family support.
The father has a very similar involvement and commitment to the children. He has the assistance of his parents and the slightly greater flexibility which comes with self employment.
I do not accept the submission that the mother could and should work fulltime. The circumstances of the parties are different although their involvement with the children is much the same.
The relationship of the parties endured for 12 to 14 years including a period of living apart in the same house, probably to the benefit of the children although awkward and difficult for the parties
Taking all these factors into account especially the ongoing disparity in income, I consider there should be an adjustment in favour of the wife of 10 per cent.
Accordingly, the assets of the parties will be divided in the ratio of 55 per cent to the husband and 45 per cent to the wife.
The net asset pool is $1,051,823.
- The husband is to receive 55 per cent $578,503
- The wife is to receive 45 per cent $473,320.
(iv) Is the outcome just and equitable?
The applicant wife will retain the following assets:
5
Westpac account …28
379
7
… Jeep …
10,000
11
Proceeds of interim payment
169,500
32
ING …15
38,107
33
ING …75
2,999
34
ING …14
3,300
Total
224,285
Plus cash payment from husband
249,035
Total net share
$473,320
The respondent husband will retain the following assets and liabilities:
Assets:
1
The home
1,008,750
2
The O Street property
380,000
3
The T Street property
826,666
4
Heritage Mortgage Crusher account
6,576
6
St George Bank account …73
2,046
8
Q Pty Ltd
Nil
9
Loan from parties to Q Pty Ltd
153,862
31
CBus Superannuation
89,602
Total assets
$2,467,502
Liabilities:
22
Heritage mortgage for the home
192,709
23
Heritage loan for the P Street property …65
435,146
24
25
ING loan for the O Street property …78 and the P Street property …67
760,529
26
Heritage Business Loan
54,700
28
Loan – Ms R and Mr R
196,880
$1,639,964
Cash payment to the wife
249,035
Total liabilities
$1,888,999
Assets
Less Liabilities
$2,467,502
$1,888,999
Total net share
$ 578,503
Conclusion
The wife will have a cash sum of about $360,000 toward accommodation, being the actual balance of the $200,000 advance payment, being the remainder of the interim property settlement of $118,000 together with the cash payment of $249,035 provided for in these orders. Otherwise she has a car, and superannuation accessible in 15 to 20 years.
She will be debt free initially, but will most likely have to borrow to afford accommodation in the local area.
The husband will have the home property which he has now owned for 20 years, the business and its premises, the investment industrial unit and his superannuation accessible in about 20 years.
He will be carrying a high ratio of debt and will probably rely on the forbearance of his parents in relation to priority of repayments. He has the capacity to earn his current income or more for the rest of his working life.
I consider that the division of property is just and equitable on those bases and make orders accordingly.
I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cleary delivered on 24 May 2013.
Associate:
Date: 24 May 2013
Key Legal Topics
Areas of Law
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Family Law
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Property Law
Legal Concepts
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Remedies
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