N and I
[2003] FMCAfam 146
•7 May 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| N & I | [2003] FMCAfam 146 |
| PROPERTY – Small pool of assets – short marriage – husband’s initial superior contribution – spousal maintenance – both parties in receipt of income – consideration of reasonableness of any award. Family Law Act 1975, ss.72, 74, 75, 79 Lee Steere v Lee Steere (1998) FLC 91-626 |
| Applicant: | C N |
| Respondent: | F I |
| File No: | DNM2499 of 2001 |
| Delivered on: | 7 May 2003 |
| Delivered at: | Darwin |
| Hearing date: | 23 April 2003 |
| Judgment of: | Brown FM |
REPRESENTATION
| Applicant in person: | Ms C N |
| Counsel for the Respondent: | Ms J Terry |
| Solicitors for the Respondent: | Janet Terry Barrister & Solicitor |
ORDERS
That within 56 days of the date of these orders the wife transfer to the husband at the expense of the husband the whole of her right title and interest in 3/77 K C Karama being Unit 3 Lot **** Town of Sanderson from Plan UP **** and being the whole of the land contained in Certificate of Title Volume *** Folio ***.
That the husband refinance into his own name the loans secured by Mortgage No: **** registered over the said land in favour of the National Australia Bank and indemnify the wife and keep her indemnified from all liability for the said loan.
(i) That on or before the expiration of 14 days from this date, the wife do execute all deeds and instruments necessary to:
a.Transfer to the husband her entire shareholding in T S & R Pty Ltd A.C.N. ****;
b.Resign as director of the said company;
c.Transfer to the husband any interest in her loan account in the said company and do all other acts and things necessary to give validity and operation to the said deeds and instruments.
(ii)That as and from the date of such transfers, the husband indemnify the wife and forever thereafter keep her indemnified in respect of all or any liability of her in respect of the said company, and the said loan account, including the liability of the wife to the Commissioner of Taxation, howsoever such liability arises.
That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:-
a. Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the position of such party as at this date;
b. Each party hereby forgoes any claim they may have to any superannuation benefits belonging to or earned by the other;
c. All insurance policies to become the sole property of the beneficiary named thereunder;
d. Each party be solely liable and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
That the form 12 application of the wife filed 13th January 2003 for spousal maintenance be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
DNM2499 of 2002
| C N |
Applicant
And
| F I |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to competing applications for property settlement and an application for spousal maintenance by the wife. The applicant in both proceedings is C N “the wife”. The respondent is F H I “the husband”.
The parties are the shareholders in a scaffolding business, T S & R Pty. Ltd. “TSR”. The wife has resigned as a director of the firm but remains as a shareholder. The husband operates the business and receives an income from it. TSR is considerably in debt.
The parties are also the joint owners of their former matrimonial home at 3/77 K C, Karama. The property is worth $125,000.00, but is subject to a mortgage of approximately $97,000.00. It is also security for the business overdraft of TSR. Both parties are also guarantors for this overdraft, currently standing in excess of $120,000.00. There are apparently no other assets of substantial value available to be divided between the parties. Having briefly sketched the circumstances of the parties, it is clear that there is not a large pool of assets to be divided between them.
The matter is complicated by two other factors. Firstly, in June of 2000, the wife purchased a Nissan Pulsar motor car. Another car, owned by TSR, was traded in for the Pulsar to the value of $15,000.00. However, the wife was still required to borrow an amount of money from General Motors Acceptance Corporation Limited “GMAC”. A sum of approximately $18,000.00 is owed by the wife to GMAC, more than the vehicle is now worth. She is paying back this debt at the rate of $150.00 per week. The “bottom line”, so far as the wife is concerned, is that the husband should either pay the weekly amount that she owes to GMAC, until the debt is paid in full or that he should pay her a sum of $20,000.00, so that she will be able to discharge the debt herself.
Secondly, the husband has been charged with two sets of offences relating to the possession and trafficking of illicit drugs. In March of 2002, he was charged with the possession of a trafficable quantity of amphetamines, ecstasy and marijuana. He is due to stand trial in respect of these matters before the Supreme Court of the Northern Territory in May of 2003. On the 20th of September 2002, he was charged with a number of other drug offences. Several of these offences have been withdrawn by the police, however he still remains charged with two counts of the possession of the precursors to the manufacture of amphetamines. He also faces trial in the Supreme Court for these offences, but a trial date has not as yet been fixed. The husband intends to plead not guilty to all the offences. However, he acknowledges that, if convicted, it is highly probable that he will be imprisoned.
It is the husband’s position that there are not sufficient matrimonial assets to pay the sum of money to the wife that she currently seeks nor is he in a financial position to pay a weekly sum of money to the wife, as she seeks in the alternative. He argues that the wife has no insight into the true financial position of TSR and the financial position of the parties generally. Further, he argues that the wife has already received considerable financial benefits, from both himself and TSR, which render it neither just nor equitable for her to receive any further sums from him.
The wife has acted on her own behalf throughout these proceedings. She is suspicious of the husband and does not accept that the financial situation of TSR is as dire as the husband would paint it. Her suspicions have been heightened by reason of the criminal charges laid against the husband and, in particular, by reason of the fact that during a police raid on the former matrimonial home in September of 2002, the police seized the sum of $28,000.00 in cash from the husband. At the time, the police believed that the sum of money was the proceeds of some criminal enterprise. However, it seems that the police were not able to establish a sufficient evidentiary basis on which to retain the money. As a result, it was returned to the husband, who in turn has deposited it in his solicitor’s trust account. Those solicitors, who are not the solicitors who are retained by the husband in respect of these proceedings, are holding this sum in their trust account, on account of legal costs anticipated to be incurred by the husband in his forthcoming Supreme Court proceedings. The costs of two Supreme Court trials will be large. The husband is not legally aided in respect of either of the trials.
The applications
By way of her application for final orders filed on the 18th of September, 2002 the wife seeks the following orders:
1)The respondent to pay the applicant $20,000.00 as final payment.
2)The applicant to transfer her right and interest in the property Unit 3/77 K C on receipt of $20,000.00.
3)The applicant do all such acts and things and sign all such documents as may be required to transfer to the husband at the expense of the husband all her right and interest in the business T S & R and the husband indemnify the wife with respect to all liabilities and outgoings of the business.
By way of her application for spousal maintenance filed on the 13th of January 2003, the wife seeks the following order:
1)Until further order that the husband pay to the wife the sum of $350.00 per week spousal maintenance.
As I have already indicated, the wife moderated her position somewhat during the hearing of the matter and indicated that she would accept the sum of $150.00 per week by way of spousal maintenance from the husband, until her liability to GMAC had been satisfied. Accordingly, there is a considerable overlap between the wife’s two applications.
By way of his amended response filed on the 15th of April 2003 the husband seeks the following orders:
1)That within 56 days of the date of these orders the wife transfer to the husband at the expense of the husband the whole of her right title and interest in 3/77 K C Karama being Unit 3 Lot **** Town of Sanderson from Plan UP **** and being the whole of the land contained in Certificate of Title Volume *** Folio ***
2)That the husband refinance into his own name the loans secured by Mortgage No: **** registered over the said land in favour of the National Australia Bank and indemnify the wife and keep her indemnified from all liability for the said loan.
3)(i) That on or before the expiration of 14 days from this date, the wife do execute all deeds and instruments necessary to:
a.Transfer to the husband her entire shareholding in T S & R Pty Ltd A.C.N. ****
b.Resign as director of the said company
c.Transfer to the husband any interest in her loan account in the said company and do all other acts and things necessary to give validity and operation to the said deeds and instruments.
(ii)That as and from the date of such transfers, the husband indemnify the wife and forever thereafter keep her indemnified in respect of all or any liability of her in respect of the said company, and the said loan account, including the liability of the wife to the Commissioner of Taxation, howsoever such liability arises.
4)That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:-
a.Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the position of such party as at this date;
b.Each party hereby forgoes any claim they may have to any superannuation benefits belonging to or earned by the other;
c.All insurance policies to become the sole property of the beneficiary named thereunder;
d.Each party be solely liable and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders
5)That the form 12 application of the wife filed 13th January 2003 for spousal maintenance be dismissed.
The evidence
As directed, each of the parties filed an affidavit containing his or her evidence in chief, together with a statement of their respective financial circumstances. No other witnesses were called. The husband was represented by counsel in the proceedings, the wife was not. Both parties gave some additional oral evidence and each was cross-examined.
Although the wife remains deeply suspicious of the husband, she was unable to elicit from either the husband himself or any other source, evidence that indicated that the husband was in receipt of an income in addition to that which he asserted he received from TSR, currently an amount of $750.00 per week or that there were in existence any other assets of the parties available for distribution between them, besides those which the husband and she herself had disclosed for the purposes of these proceedings. The one exception was the sum of $28,000.00, which the police seized and which now reposes in his solicitor’s trust account on account of legal fees. In particular, the wife was unable to point to evidence that indicated the husband enjoyed a lifestyle and the trappings of wealth that belied his assertion that he was anything other than the sole proprietor of a struggling scaffolding business that was labouring under a weight of debt.
The explanations the husband gave for having the sum of $28,000.00, in answer to questions from me, were lame indeed, particularly when he made no reference to the sum of money in his affidavit of evidence in chief. Accordingly, I formed the impression that he was not completely frank in respect of his evidence before me. No doubt, he has much explaining to do in his forthcoming criminal proceedings. However, these are not those proceedings and it is not appropriate that I draw inferences against the husband, on the basis of suspicion alone.
The wife presented as gentle, naïve and unworldly. Certainly, she is convinced that she has been exploited by the husband during the marriage and that he has not told her the complete truth about TSR, which she believes is a thriving concern and worth a considerable amount of money. However, the only valuation in respect of this business, is a valuation obtained by the husband’s own accountant, which valuation he accepts. The only other financial records in respect of the company, which were provided to me, were its most recent trading, profit and loss statement and company tax return for the year ending 30th of June 2001, which indicated that it traded at a loss of $5,556.00, following a loss of $13,193.00 in the previous financial year ending 30 June 2001.
During the marriage, the wife worked for many hours in the administration of the business, for which she did not receive a direct wage. As a result, she believes that she is owed something by the husband, particularly as she now finds herself in some financial difficulties because of her personal level of consumer debt, mostly in the form of the money owed by her to GMAC. It is the husband’s position that her current financial position is largely of her own making and results chiefly from her decision to buy the Nissan Pulsar on credit, a decision which he opposed. Though the wife has a background in accounting and office work, she did not seem to me to be particularly sophisticated in respect of financial matters. The husband seemed to me to be much shrewder and far more financially aware than she.
Although the particular circumstances of the parties naturally give rise to them being suspicious of one another, there were few factual disputes between them, regarding their financial affairs. However, due to the fact that the wife has acted on her own behalf in these proceedings, she has not been in a position to conduct any independent forensic examination of TSR’s accounts and in particular what its financial outlook is likely to be in future, particularly in respect of the work it can expect. However, if the husband is incarcerated, all these matters will be come academic. The wife was not in a position to oppose valuations ascribed by the husband to the former matrimonial home; to TSR, and the current level of its debt; because she did not call any evidence herself in respect of any of these matters.
Having considered the evidence as a whole, I do not believe that it discloses that the husband and wife have any other significant assets and liabilities in addition to those set out in their respective affidavits or that the husband has access to income in addition to that which he has disclosed in his evidence. Accordingly, the pool of assets available to be distributed between the parties is small. Although, it may be unsatisfactory to the wife, the court cannot conjure up assets or income, where the evidentiary basis for those assets or income does not exist.
In these reasons for judgment, findings of fact are made on the balance of probabilities, having regard to the evidence and my observations of the parties and witnesses. In what follows, statements of fact constitute findings of fact.
The law applicable to applications for property division and spousal maintenance
Section 79 of the Family Law Act defines the Court’s powers in determining applications for property settlement. The approach to the determination of an application under section 79 is well established by authority[1]. The process involves a four-part procedure. First, the identification of the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, an evaluation of the contributions made by the parties as defined in section 79(4)(a) to (c) inclusive. Thirdly, an evaluation of the matters contained in section 75(2), in so far as they are relevant. Finally, in determining what order the Court should make under section 79, the Court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the Court must consider[2].
[1] See Lee Steerev Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335 and Clauson v Clauson (1995) FLC 92-595
[2] See Russell v Russell (1999) FamCA 1875
Pursuant to section 74 of the Family Law Act, the Court may make such order as it considers proper for the provision of maintenance for the wife, in accordance with the provisions of Part VIII of the Act. In particular, section 72 deals with the right of a spouse to maintenance and reads as follows:
“72 A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether –
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reasons of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason,
having regard to any relevant matter referred to in sub-section 75(2).”
The Full Court of the Family Court in Bevan & Bevan[3] determined that the approach to be taken in respect of applications for spousal maintenance was a four-step process as follows:
1) a threshold finding under section 72;
2) consideration of section 74 and section 75(2);
3) no fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit;
4) discretion exercised in accordance with the provisions of section 74 with “reasonableness in the circumstances” as the guiding principle.
[3] See Bevan & Bevan (1995) FLC 92-600
Background and chronology
The husband was born on the 7th of March 1962 and is 41 years of age. The wife was born on the 2nd of March 1964 and is 38 years of age. Both parties were born in the United Kingdom. The parties met in Sheffield in mid 1995. The husband had earlier migrated to Australia and had established himself in Darwin. He was visiting the United Kingdom when he met the wife. The parties married in Darwin on the 24th of August 1996. The husband paid the wife’s airfare to come to Australia. The parties separated in late 2000 between Christmas and New Year. The marriage between them was dissolved on the 21st of January 2002[4]. The parties do not have any children.
[4] The wife was the applicant in the proceedings for divorce. In her application for divorce filed 25 October 2001, she gave as the date of the parties’ separation the 18th of June 2000. The husband disputes this date of separation, however, he did not file a response to the application for divorce or appear at the hearing of the wife’s application. The date of separation given by the wife in her application for divorce was at odds with the evidence she gave before me at the hearing of her application for property settlement on 23 April 2003. No explanation was provided for the discrepancy in these two dates of separation.
When she met the husband, the wife was working in the accounts department of a department store in Sheffield. She owned a two-bedroom bungalow in Sheffield, which was heavily mortgaged. When she immigrated to Australia, this property was sold but she did not realise any monies from its sale after the payment of the mortgage and other expenses. She had no other significant assets to speak of at the commencement of her relationship with the husband.
The husband immigrated to Australia in 1989 and established himself in Darwin in 1995. At the start of the relationship between him and the wife, he had approximately $30,000.00 in the bank, a car worth approximately $5,000.00 and some items of furniture.
After leaving school in the United Kingdom, the husband was an apprentice bricklayer. He began this apprenticeship, when he was 16. In this work, he gained experience erecting scaffolding. He took these skills with him, when he obtained employment working underground in mines in the United Kingdom. However, he did not wish to pursue similar work when he arrived in Australia. In Australia, he used his scaffolding skills in the building industry in both Adelaide and more recently in Darwin. He has completed the necessary qualifications to obtain a license to erect scaffolding in the Northern Territory.
The husband commenced TSR in September of 1995. It was incorporated as a proprietary limited company on the 17th of May 1996. Initially the husband had two partners in the business, but they have long since left it. The wife became a director and shareholder of the company in December of 1996. She was involved in performing administrative tasks and doing book work for the company, throughout the parties’ marriage.
In the early part of 1996, after her arrival in Australia, the wife obtained part-time work at a gymnasium in Nightcliff and did cleaning. Later she got a job at a newsagency in Nightcliff. In September of 1996, she obtained a full-time position as a sales representative for Shamrock Chemicals, at a salary of $20,000.00 per annum together with the use of a company car and mobile phone. In June of 1997 she became the Territory manager of another chemical company, Calmans Pty. Ltd., at a salary of $28,000.00 per annum, together with the use of a company car and mobile phone.
Throughout the entire period of the marriage, the husband was involved in various businesses, involved in providing labour for the building industry in Darwin, particularly in respect of the erection of scaffolding. In particular, in April of 1997, he began Q S S. This business ceased to trade on the 30th of June, 1999. The parties also incorporated a company entitled C C H NT Pty. Ltd., on the 4th of March, 1999. Another person, Mr B S, was also a director and shareholder of this company, although he later resigned and surrendered his shareholding. On the 25th of May 2001, the parties sold their shares in C C H for the sum of $25,000.00[5]. TSR had earlier loaned C C H the sum of $50,000.00 as starting capital. This sum had been realised by the parties extending their mortgage on the matrimonial home situated at 3/77 K C, Karama. This sum was repaid to TSR, when the parties sold C C H.
[5] See Share Sale Agreement dated 25th of May 2001 between F H I and C I and K S tendered by the husband.
The wife resigned from Calmans Pty. Ltd in April of 1998 and thereafter began to work full-time for TSR. She remained working for the company until early February of 2000.
The parties purchased the former matrimonial home at 3/77 K C Karama, in February of 1997. The purchase price was $115,000.00. The purchase was funded by the provision of approximately $25,000.00 from the husband’s savings and the remainder was borrowed from the National Australia Bank, by way of mortgage secured against the property. During the course of the marriage, the parties purchased furniture for the property and improved it by the provision of air conditioning. Neither party has provided a formal valuation of the property. An appraisal of the property, dated the 12th of December 2001, which was tendered by the wife indicates that the property is valued between $120,000.00 and $125,000.00. Accordingly, the husband believes that the property is worth $125,000.00. The wife believes that it is worth $128,000.00 but has not provided any evidence in support of her submission. She believes that the husband has allowed the property to run down since the parties separated. There is no dispute between the parties that an amount of $96,872.12 is currently owing on the mortgage to the National Australia Bank. This includes the extension of the mortgage, which was used to finance the start up capital of C C H.
During the marriage, the parties were both able to derive benefits from being directors and shareholders of TSR. In particular, the company purchased cars for each of them; each was able to obtain fuel for those cars on the company’s account; and their telephone accounts were paid by the company. The company also made contributions to superannuation funds established on behalf of each of the parties. At the present time, the husband has approximately $8,200.00 in his superannuation fund and the wife has the sum of $10,919.78 in her fund.
TSR’s main area of business is erecting scaffolding on building sites around Darwin and supplying the labour to erect that scaffolding. The builders involved, or TSR itself, will hire the necessary scaffolding from one of the large building equipment suppliers in Darwin. TSR does not own any scaffolding itself. The firm has only one employee at present, a bookkeeper, who works between 30 to 50 hours per week, depending on the firm’s needs. Otherwise TSR contracts with a number of sub-contractors, as necessary, to erect and dismantle the necessary scaffolding to satisfy its contracts. Hence the nature of its work as both a provider of scaffolding and labour. At the present time, the husband is drawing a sum of $750.00 from the company each week.
The parties had two separations during their marriage. The first was in February of 2000. The second was in mid 2000, shortly after the wife had purchased the Nissan Pulsar motor vehicle. The wife went to Adelaide for about four weeks, whilst the husband remained in Darwin. However, the parties reconciled, when the wife returned to Darwin. The husband paid the wife’s costs to return. However, after that time, the husband was unwilling to have the wife extensively involved in the running of TSR, as he no longer trusted her financial judgement.
The purchase of the Nissan Pulsar motor vehicle was a bone of contention between the parties. The husband was opposed to the purchase, which he believed was extravagant. Prior to its purchase, the wife had been using another vehicle, which was nominally owned by TSR. This vehicle was traded in on the new Nissan Pulsar, at a value of $15,000.00. The husband wanted this sum reimbursed to TSR, but it was not. The wife financed the rest of the purchase, through a loan advanced by GMAC. She was the instigator of the loan, which is in her name alone. However, TSR paid the monthly instalments, due to GMAC, up until the parties separated and for five months after.
b) Events since separation
As has already been indicated, C C H was sold in May of 2001, several months after the parties had separated. The wife was anxious to realise monies for her own use at the time. The husband wished to return all the proceeds of sale to TSR, which was not faring well financially at the time. The wife insisted that she received her share of the proceeds of sale in cash. She received the sum of $10,500.00, plus a computer which had been owned by the business and which was valued at $2,000.00. The wife herself had not paid any cash into the company, when it was formed. The husband paid his share of the proceeds of the sale back to TSR.
The wife resigned as a director of TSR on the 8th of May 2001, around the time that the sale of C C H was finalised. I accept the husband’s evidence that at this time he believed that the parties had essentially finalised their financial dealings with one another.
Between the date of separation and the 8th of May 2001, TSR paid the monthly instalments on the Nissan Pulsar to GMAC. The company also continued to pay the wife’s fuel expenses and her mobile phone bill, until it cancelled these arrangements, also in May of 2001. I accept the husband’s evidence that he also paid a $3,000.00 visa card bill, which related to the wife’s personal expenses, which she had incurred on a subsidiary visa card in his name.
My impression of the wife is that although she had worked in the business and done its accounts, she did not have an accurate appreciation of its financial position. In this respect, I accept the husband’s evidence that the wife was prepared to draw whatever cash she could from the business, without any thought for the what might be the financial ramifications for the business.
In this regard, I accept the husband’s evidence that the wife used TSR funds to pay a provisional tax bill in her name, which amounted to $8,000.00. She was duly reimbursed the sum of $7796.88 on the 18th of December 2000. This sum she paid into a bank account in her name without any reference to TSR. She retained the funds for her own use.
The wife did not use any of the proceeds of the sale of C C H to reduce her level of indebtedness to GMAC. Rather, she used a portion of the money to visit her family in the United Kingdom.
Since the parties separated, the wife has been able to obtain regular employment. In January 2001 she got a short-term job with Sterling Property Services. She then worked, in an administrative capacity, for Northern Territory Rehabilitation Services for a period of sixteen months. She started at a salary of $31,000.00, but this was increased to $33,000.00 per annum. In September of 2002, she travelled to Brisbane, where she obtained work as a personal assistant. However, she did not like living in Brisbane and returned to Darwin. On her return, she was able to obtain an administrative position with S & N C, at a salary of $35,000.00 per annum. She continues to occupy this position. She was involved in a serious relationship with another person for approximately fourteen months, but this relationship has now ended.
The introduction of the GST in mid 2001, caused a down turn in the building industry in Darwin. As a result, TSR came under financial pressure, due to its lack of capital and high reliance on borrowings. On the 18th of September 2001, the National Bank, its major creditor, appointed KPMG, as managers of TSR’s accounts with the Bank. Subsequently, the Bank froze TSR’s overdraft and Mr I was permitted to open another trading account for the company, which did not have an overdraft facility. On the 5th of June 2002, the National Australia Bank served a winding up notice on TSR and, at the same time, served a notice of intention to exercise its power of sale over the K C unit, pursuant to the mortgage on that property. The husband has not been able to reduce the overdraft account, which remains frozen. When the account was frozen, it stood at an amount of $109,601.80. Since that time, the debt has incurred a further sum of interest of $11,240.72 and legal fees of $300.00, amounting in total to $121,142.52. The Bank has exercised forbearance in respect of the mortgage on the Karama unit.
As I have already indicated, the wife has not performed her own independent valuation of TSR. The only valuation that exists was performed by Mr Fong, an accountant retained by the husband, who has in the past been involved with the company in providing accounting services to it. Mr Fong did not believe that the business had any good will value, as its operating results for the year ending 30 June 2001, indicated an operating loss of $5,556.00 prior to tax. Accordingly, in Mr Fong’s view, the only value the business had was in the form of its chattels, equipment and furniture and more particularly in the form of motor vehicles and a crane and its attachment. These values were taken from the company’s balance sheet and led Mr Fong to reach the conclusion that the “walk in walk out” value of the business was $100,000.00. However, neither of the parties has obtained a current valuation of the company’s two major assets, a truck and a mobile crane.
I have already outlined some of the circumstances surrounding the seizure by the police of the sum of $28,000.00 from the Karama property, when it was raided on the 20th of September 2002. In my view, it is unusual for a legitimate business person to have such a large sum of money, in cash, at his home premises. The police concerned in the raid obviously shared this view and for this reason seized the money. However, it has been returned to the husband and now reposes in the trust account of the solicitors retained by him for his criminal proceedings, Messrs Withnall Maley, on account of anticipated legal fees for his forthcoming Supreme Court trials.
Earlier in these reasons for judgment, I described the explanation the husband gave to the Court for his possession of this sum of money as being lame. He indicated that the sum related to the sale of a Suzuki Jeep; a sum of money he had received in cash, due to work he did in removing and transporting a house from one location to another; sums of money he had saved from his drawing from the business; and advances from his current partner, who had recently been working in the sex industry and, as a result, had been receiving large amounts of cash in return for her services. As I say, none of these matters were mentioned in his affidavit in chief and the impression that I gained from his answers, was that he was, to a large extent, manufacturing his evidence in the witness box.
However, regardless of what the source of the money was, the wife is not able to point to the existence of any other sums of money that the husband has not disclosed in his affidavit material. Although it is open to the husband to remove the money from the trust account of Withnall Maley, he will still remain indebted to the firm for services provided to him up to the present time. Presumably, a portion of the $28,000.00 has already been consumed by legal fees. Because of the uncertainty of the source of this money and, in particular, because it seems clear that it was obtained by the husband after the parties separated, it does not seem to me to be appropriate to add this sum back into the parties’ pool of matrimonial assets, available to be distributed between them. In addition, it seems to me that, in a very real sense, the sum has been expended by the husband, both in respect of past and anticipated legal fees.
c) The parties present circumstances and future prospects
The wife is aged 38 years of age. She has demonstrated that she has been able to find suitable, permanent employment for herself in the period since the parties separated. She is currently earning a sum of $35,000.00 in a position which she has occupied since September of 2002. This is a permanent position and the wife reports that she is “going well” in the position.
At the present time her major weekly expenses are her rent of $160.00 per week; the amount due to GMAC in respect of the Nissan Pulsar of $150.00 per week and monies she owes to AGC, Buyers Edge and Visa in respect of whitegoods that she has purchased. Due to the level of her consumer debt, she currently finds herself in somewhat straightened financial circumstances. Certainly, it seems that her standard of living has fallen since she and the husband separated and she herself has had to assume the burden of a number of her recurrent living expenses, particularly those related to the running of her car.
I accept that the wife has been anxious about both these proceedings and the level of her debt. She has attended both her general practitioner and a psychiatrist and has been prescribed anti-depressant medication. She did not seem to me to have a particularly resilient personality. However, the fact remains that she has not been forced to leave the workforce because of any illness. I anticipate that she will be able to continue to work and receive a modest salary for the foreseeable future.
The husband is aged 41. He is in good health. He has re-partnered since the parties separated. His present partner is Ms K T. She is not presently employed and, as a result, is supported entirely by the husband.
The husband seemed to me to be an intelligent person, who knew a good deal about the building industry in Darwin. He indicated that to successfully contract for scaffolding jobs in Darwin required a lot of skill and involved a high degree of risk. He obtains work in Darwin by word of mouth and as a result of his reputation. He has a number of contracts at the present time, including one valued in excess of $110,000.00, to provide scaffolding for a multi-storey office development in Darwin. However, there was no evidence lead before me that would enable me to ascertain the level of profit that the husband will derive from these various contracts.
Neither the husband nor TSR has completed its tax returns for the financial year ending the 30th of June 2002. However, the husband indicated that he believed that the company would have a liability for tax of approximately $30,000.00. He himself owes tax of $11,144.45 as at the 31st of January 2003. This debt remains unpaid and is accruing interest at the rate of 11.84% per annum.
I accept that TSR is a company that has traded on its overdraft since its inception and has been able to provide a comfortable standard of living for both parties, for the duration of their marriage. However, there is no evidence before me to indicate that, in the near to middle future, it will produce significant sources of income for the husband. I have no doubt that it owes considerable sums of money to its major creditor, the National Australia Bank and is, to a large extent, being allowed to continue to trade at the Bank’s whim.
The husband’s own immediate future is problematic. I have no way of gauging the strength of the evidence that will be lead against him at his forthcoming Supreme Court trials. However, if found guilty, a term of imprisonment for him does not seem to be beyond consideration. In those circumstances, there can be no doubt that TSR would fail, without the presence of its major guiding force, in the form of the husband.
The assets and liabilities of the parties
The marriage between the parties, of some four and a half years, has not resulted in the acquisition of assets of a significant value, after the deduction of the monies owed in respect of those items.
The wife did not provide a value in respect of the Nissan Pulsar motor vehicle. However, both she and the husband agree that its value is now outstripped by the monies owed in respect of it to GMAC. In those circumstances, it is difficult to include it, in the list of the parties’ assets. However, I can take into account the fact that the wife is currently required to pay the sum of $150.00 per week in respect of the vehicle.
Accordingly, I find that the assets and liabilities of the parties are as follows:
ASSETS
3/77 K C, Karama
$125,000.00
T S & R Pty. Ltd
$100,000.00
Furniture (in possession of husband)
$ 5,000.00
Husband’s superannuation
$ 8,200.00
Wife’s superannuation
$ 10,919.78
TOTAL
$249,119.78
LIABILITIES
Mortgage on 3/77 K C, Karama
$ 96,872.12
Business overdraft
$121,142.52
TOTAL
$218,014.64
Accordingly, a net amount of $31,105.14 is available to be distributed between the parties. On any view, the asset pool is small.
Assessment of contributions
The wife does not contest that she had no significant assets at the commencement of the relationship between the parties and that the husband contributed the full amount of the funds that the parties placed into the former matrimonial home. It also seems to me to be clear that the husband was the major impetus behind TSR. After all, he had the necessary expertise in the scaffolding industry and did the majority of the heavy work involved on building sites.
The wife also worked hard during the marriage, particularly when she had her sales representative job and was doing bookwork for TSR after hours. The parties shared household duties, however, as is often the case, I accept that the wife assumed a bigger burden of these tasks than did the husband.
During the marriage, TSR was able to provide both the husband and wife with a comfortable standard of living, by providing to each of them, a number of benefits, such as the use of a motor vehicle each and the provision of fuel and mobile phones. One of the inevitable consequences of the breakdown of the marriage between the parties has been that the standard of living of each of them has diminished.
Since the parties separated, the wife has derived a number of considerable benefits from TSR. These include the payment of her fuel and recurrent car payments, until May of 2001; the payment of her provisional tax, which she did not reimburse; and the receipt by her of the proceeds of sale of C C H and the computer, a total sum of $12,500.00. The payment of these two last amounts had implications for the fiscal liquidity of TSR.
Bearing in mind all these factors, it seems to me that the contributions of the husband during the marriage and afterwards have been significantly greater than those of the wife. In reaching this conclusion, I particularly bear in mind the significant amount of assets that the husband had at the commencement of the marriage. In my view, this sum, when contrasted with the amount of assets that are available to be distributed at the marriage’s conclusion, amount to a contribution that is so disproportionate to the wife’s contributions, as to merit special recognition[6].
[6] See Pierce & Pierce (1999) FLC 92-844 at page 85,811
In addition, the amounts of money the wife has received since the parties separated are significant and, once again, call for allowance to be made in favour of the husband. In all those circumstances, it is in my view appropriate, to assess the contributions of the parties, pursuant to section 79(4), as being 70/30 per cent in favour of the husband.
Section 75(2) factors
The parties in this case are of a similar age. Neither of them has any children to support. Both parties leave the marriage with significant debts, when compared with their level of income. However, both parties leave the marriage with an ability to earn a reasonable income in future.
Although the wife feels aggrieved at the level of consumer debt under which she currently labours, it is clear to me that to a large extent, she has been the author of her own destiny. She did not choose to use any of the proceeds of the sale of C C H to reduce her level of indebtedness. Her current annual salary of $35,000.00 is not significantly less than the amount of drawings the husband takes from TSR, which on my calculations amount to $39,000.00 per annum.
The husband has something of an entrepreneurial bent, a characteristic that is not without risk, especially when his current predicament is considered. In future, he may make a lot of money in the building industry or he may go bust. He may also end up serving a term of imprisonment. In my view, it is difficult to prognosticate what the future holds in store for the husband. Certainly to date, his endeavours in the building industry do not seem to have netted him a significant amount of wealth. However, in future, it is likely that he will at least be able to earn a living as a builder’s labourer.
In all the circumstances of this case, I do not believe that the various factors set out in section 75(2), call for any further apportionment of the parties’ matrimonial capital, meagre as it is, in favour of one or other of the parties.
The application for spousal maintenance
Both parties in this case are in receipt of regular amounts of income. Their annual salaries are roughly equivalent. Section 72 of the Family Law Act requires a party to a marriage to maintain the other party, only if, the other party is unable to reasonably financially support him or herself. The wife in this case does not have the care of a child and is not currently incapacitated, either by age or for any other reason, from earning an income for herself. In those circumstances, I do not consider that she has overcome the threshold posed by section 72.
It is clear to me that the wife feels aggrieved that she has gone from a state of affairs in which TSR paid for her car, to one in which that burden has fallen on her own shoulders alone. The essential thrust of both her applications before the Court, is that it is only right and proper that the husband, either in person or through TSR, should resume the burden of paying for her car. Bearing in mind the circumstances surrounding the acquisition of the Nissan Pulsar, I do not believe that this is a position that can be reasonably maintained. Given the age and state of health of both parties and their roughly equivalent income, it would not be reasonable for the husband to be required to pay spousal maintenance to the wife. For that reason, her application for spousal maintenance must be dismissed.
Conclusions
Thirty percent of the net assets of the parties available for distribution between them, amounts to the sum of $9,331.54. This is slightly less than the value of the wife’s superannuation, which she currently retains. The husband has proposed in his orders sought that he should retain both TSR and the former matrimonial property and indemnify the wife in respect of all liabilities that are associated with these two assets. The sad reality of the parties’ current situation is that if the former matrimonial home was sold, it is likely that this would result in no funds being realised, because of the level of debt and the difficulty that would be associated with finding a buyer for TSR and the risk that its assets would have to be sold in a fire sale. In addition, any indemnity offered by the husband to the wife, will not bind third parties. As a result of all these matters, the future financial position of both parties is parlous indeed. The sad fact remains that at the end of the day, neither of the parties has ready access to any asset that could be easily liquidated to realise a significant amount of capital. There simply are no assets of the parties available to satisfy the orders sought by the wife, in her application for property orders. The wife is suspicious of the husband. No doubt, in all the circumstances of this case, she has ample reason to be suspicious of the husband. However, the Court cannot act on the basis of the wife’s suspicions alone, in the absence of tangible evidence.
In the period from the date of separation until May of 2001, the wife was able to extract some significant sums from TSR. It is not true to assert that she walks away from the marriage with nothing. She took $10,500.00 from the proceeds of C C H. She chose not to reduce her level of indebtedness to GMAC. In all these circumstances, orders that would result in the parties maintaining the assets that they currently hold, seems to me a just and equitable result.
For all these reasons, the orders of the Court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: Lynnette Chin
Date: 7 May 2003
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