Nachtigal and Nachtigal
[2010] FMCAfam 1390
•29 October 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| NACHTIGAL & NACHTIGAL | [2010] FMCAfam 1390 |
| FAMILY LAW – Property – length of the relationship – bearing of the number of periods of separation through the course of the relationship – contributions. |
| Acts Interpretation Act (Qld) Family Law Act 1975 Property Law Act 1994 (Qld) |
| Statutory Interpretation in Australia, 6th Ed, Pearce and Geddes |
| Applicant: | MR NACHTIGAL |
| Respondent: | MS NACHTIGAL |
| File Number: | BRC 9074 of 2009 |
| Judgment of: | Burnett FM |
| Hearing dates: | 21 & 22 October 2010 |
| Date of Last Submission: | 29 October 2010 |
| Delivered at: | Brisbane |
| Delivered on: | 29 October 2010 |
REPRESENTATION
| The Applicant appeared on his own behalf |
| Solicitors for the Respondent: | Bushnell & Power Lawyers |
ORDERS
Subject to the following orders that the applicant pay the respondent the sum of $159,352.00, to be paid within ninety (90) days of the date of this order.
That the applicant pay the respondent’s costs of 7 October 2010 assessed in the sum of $2,785.00, such sum to be paid within ninety (90) days of the date of this order.
That the costs of the trial be reserved.
That the applicant be at liberty to sell the property at Property W upon the following basis:
(a)The property immediately be listed for sale with at least one real estate agent principally conducting the business of residential real estate sales in the Ipswich area;
(b)The property be listed for sale at a price as recommended by the first appointed real estate agent;
(c)The property not be subject to contract for a sum less than $256,000.00 without leave of the court or by agreement;
(d)The applicant inform the respondent of the agent or agents appointed for sale and authorise her or her solicitors to speak with the agent and request reports of the agent concerning the marketing and/or sale of the property;
(e)The applicant inform the respondent of any offer to purchase and not accept any offer to purchase within 24 hours of such offer unless authorised in writing by the respondent to accept such offer but may accept the offer after the passing of 24 hours.
That the solicitors for any contract for the sale of the property are to be the respondent’s solicitors on the record.
Any settlement funds net of sale expenses received in respect of the sale of the property are to be held in the solicitor’s trust account pending further order.
That the matter be listed for mention at 9.30am on 31 January 2011 in the Federal Magistrates Court of Australia at Brisbane.
IT IS NOTED that publication of this judgment under the pseudonym Nachtigal & Nachtigal is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 9074 of 2009
| MR NACHTIGAL |
Applicant
And
| MS NACHTIGAL |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
Introduction
These parties seek orders pursuant to s.79 of the Family Law Act. The applicant’s application does not formally disclose what is sought but broadly he complied with directions issued in respect of property matters and attended court, seeking to pursue such orders. The orders sought by the husband are in terms of those contained in an email forwarded by him, to my chambers, before the hearing, which is marked exhibit 6.
The wife seeks orders that the assets be split 50/50, but otherwise made claims in terms of the matters particularised in her response. I take the wife’s submissions at the conclusion of trial as constituting the orders now sought.
For reasons which will be expanded upon shortly, the principal issues in this case are:
a)what can broadly be described as the length of the relationship and, in particular, the bearing of a number of periods of separation through the course of the relationship had in terms of the estimation of its length;
b)matters in respect of contribution, in particular, having regard to an agreement which was entered into between the parties following their first separation, that being a purported separation agreement.
Background
At the time of trial, the husband was 33 and the wife was 31. They met in mid-December 2000 in New Zealand, their country of origin. In January 2001, they commenced living together in Australia in a de facto relationship. The husband had earlier relocated to Australia at about that time to pursue greater economic opportunities. That is, he had come to Australia shortly before January 2001 being sometime in September 2000.
Initially, when the parties settled in Australia, they settled on the north coast hinterland before later re-settling in Brisbane. At the time of the commencement of their relationship they had no assets to speak of. The household balance, short in fact, evidenced net negative equity. That is, at the time that the parties commenced their relationship they were each subject to liabilities, principally to the New Zealand Government in respect of student loans.
The parties did not agree on the quantum of the husband’s outstanding student loan liability at the time of the commencement of the relationship, he alleging that it was at about NZ$20,000. I will make findings on that matter later. But, in any event, those matters are not of great moment in the overall scheme of things. Otherwise, the balance sheet position of the parties, at the commencement of the relationship, is detailed in exhibit 1.
Initially, the husband found employment as a [omitted] and the wife was employed as a [omitted]. Shortly after arriving in Australia, the husband succeeded in obtaining a [omitted] qualification and then commenced employment in that field. At about the same time, the wife commenced full-time employment in [omitted]. They both worked. That included the husband’s self-employment as well as the wife’s [omitted] employment.
In March 2002, the parties purchased a property at [1] Property G which is near Ipswich. They were assisted in that purchase by their entitlement to a first home buyer’s grant. Although there was no specific evidence as to the detail of these matters, I infer that there would also have been some other capital provided by the parties, no doubt accumulated from the savings following their employment. Additionally, there were bank borrowings used to fund the acquisition. The property was run down and the intention of the parties was that the property would be refurbished, renovated and on-sold for profit.
Insofar as the house was on a large allotment, the intention was that at least the land would be sub-divided. On 28 July 2002, the husband inherited £10,000. This sum was also applied to the renovation of the Property G property. Otherwise, other improvements were made to the property by the parties. The husband undertook much of the trade work and the wife assisted with the less skilled associated tasks. Although the husband seeks to claim all the credit for the improvements effected to that property, he has made no allegations of indolence against the wife.
The circumstances of these parties appear to reflect a typical domestic partnership, wherein each party brought to bear individual strengths and weaknesses which provided synergy and mutual compensation in respect of the relative weaknesses and strengths of the opposing partner. During the trial, the husband demonstrated a patent lack of insight into these matters. It seems to have escaped his attention that, without the wife’s presence undertaking the tasks that she did – which may not necessarily have included actual renovating tasks – her input had the effect of improving his productivity, by relieving him of both the need to be concerned with those additional, and perhaps less significant, tasks as well as the burden of them.
The husband, in that regard, did not impress me. He was, in my view, grasping and petty; so much was evidenced by his approach to some of the issues concerning debates about the assets of the marriage which took place prior to the commencement of the hearing of evidence in general. For instance, the debate was distracted by the husband’s contest about trifling sums in the scheme of this proceeding, sums which were largely inconsequential. That was also evidenced by debate in the course of trial and the evidence he gave in respect of trial.
For instance, when queried about paragraph 22 of the wife’s affidavit, his view was her contribution was that it was worth nothing which, in my view, evidenced his unreasonable attitude and failure to afford a reasonable allowance for the wife’s contributions, generally, in relation to those matters.
For the second half of 2002, the wife was pregnant with the parties’ first child. That child was born [in] 2003. The wife continued in employment until shortly before that birth.
In mid-2003, a second property was purchased by the parties at Property W. This property was one which also required extensive renovation and re-work. It was purchased as a rental proposition at the time although, for about three months following its acquisition, the husband attended to the necessary renovation and repair works to bring the property to a tenantable standard.
Difficulties arose between the parties in 2003, and in early 2004 the wife and husband decided to separate. The wife took the child of the relationship and returned to New Zealand. At that time, she took very little with her by way of money and other items. She took only personal items for herself and the infant child.
The state of the parties’ financial circumstances at separation are not specifically identified. Putting aside matters in dispute, it can be seen that there had been substantial improvement in the household balance sheet by reference to the acquisition of the properties. Although, it is to be acknowledged that there had also been incurring of the attendant debt associated with the acquisition of those assets. It will be remembered that, at the commencement of the relationship, the parties had a net negative equity of about NZ$25,000 dollars.
By the time of that first separation, the parties had acquired two pieces of real estate and had effected substantial improvement to both of them. That, of course, puts aside general capital appreciation in the context of what was then a booming property market. In addition, it should not be forgotten that there had arguably been an equal application of both financial and non-financial matters to the improvement of those properties, given the division of labour within the household and application of earnings.
The principle sources of capital for the acquisition of the properties, as I say, had been equal, in part, because of the provision of a Commonwealth Government funded first home owner scheme grant, as well as the wages of the parties. Some credit, however, has to be allowed to the husband for the £10,000 bequest. It follows that, at the time of that initial separation, there was some significant equity in the household balance sheet, a matter which I will again address in some detail shortly. At that time, the husband contacted a solicitor and arranged to have a separation agreement prepared.
The agreement was prepared and executed by both parties. Purportedly, that was done pursuant to s.266 of the Property Law Act (Qld). The material provisions of the agreement provided that the wife would transfer all of her right title and interest, including associated liability in the two pieces of real estate, to the husband. And in exchange, she would receive a sum of $40,000. The parties performed that agreement.
It can be seen by reference to the material, and, in particular, the valuation material contained within – as an annexure to the husband’s affidavit of 24 September that, at the time of that first separation, the Property G property had a value of approximately $160,000. The Property W property had a value of about $175,000, giving a total value of $335,000. There was at the time a loan due to the RAMS mortgage lending service of $223,000, leaving a net equity of $112,000. It is apparent, quite plainly, that the wife relinquished her entitlement to a claim for a larger share in that equity at what would seem to be, a significant discount having regard to her contributions.
From January 2004 to September 2005, the parties’ relationship was somewhat unsettled. The wife removed herself from Australia and returned to New Zealand to live with her parents. She did this until July 2004.
However, in the interim, there were two visits by the husband to the wife. The first was in February for about a week, and the second was in April for something a little less than a week. The husband spent time with the wife and it appears that, during the course of those visits, normal conjugal rights were resumed – or at least the wife asserts so, and I have no reason to disbelieve the wife’s assertion in respect of those matters. In July 2004, the wife returned to Australia until December 2004 initially to visit the husband. However her stay was extended principally because the husband was suffering from a psychiatric disorder and she wished to care for him and did so.
He had attempted suicide on a number of occasions shortly after her return and the wife, feeling the burden of her relationship with the husband, determined to stay on and give it a go. They effectively appear to have reconciled for the period from July 2004 to December 2004, at least on the wife’s version of events, which I accept, and particularly having regard to the circumstances giving rise to that period of reconciliation. In December 2004, the wife then returned to New Zealand and she remained there until June 2005, that is for a period of approximately six months.
During that time, the husband visited the wife on numerous occasions. During that time, there was much discussion about reconciliation. Ultimately, in September 2005, the wife returned to Australia, and took up residence with the husband. The parties then married on [date omitted] 2007.
Although as I have already noted there was some debate on the part of the parties concerning the matter of reconciliation I am satisfied of and accept the wife as a more reliable witness in respect of these matters.
First, it simply does not accord with common sense that the parties would spend lengthy periods of time with each other – that is living with each other, if there was not some serious attempt being effected at reconciliation. Second, the circumstances particularly surrounding the visit between July and December accords with common experience. The situation being that the husband, at that time, was suffering from a psychiatric malady which, no doubt, induced emotions of compassion on behalf of the wife toward the husband.
She also had, of course, the burden of having had the child of their relationship living with her, without any of the usual husbandly support, since January 2004 and, no doubt, was feeling the burden of that matter. Given that the parties had separated, it does not surprise me that there were these events of reconciliation and separation until the parties ultimately apparently reconciled in September 2005.
So far as these proceedings are concerned, what is also of equal significance throughout this period is what the wife did with the $40,000 that was paid to her in performance of the separation agreement.
The wife’s evidence is that the money was spent on living expenses – and that is particularly for the purchase of household items, being furnishings, a motor vehicle and Trans-Tasman travel to maintain the relationship with the husband. Except for those sums that were expended on living expenses, the wife swore that all the capital expenditure was subsequently repatriated to the domestic partnership upon its resumption in September 2005. By that, I mean all the household items were either brought back to Australia or, as in the case of the motor vehicle, it was sold and the capital was made available to the parties.
There has been no suggestion by the husband that there had been any excessive or unreasonable use of the $40,000 by the wife in its expenditure. It is also interesting to note, in terms of considering this sum of $40,000, that when the husband relocated to New Zealand to formally commence reconciliation with the wife in September 2005, he took with him $29,000 to assist him in setting himself up in New Zealand. That was to purchase a car and other items necessary for relocation. One can assume that $30,000 presents as a reasonable benchmark again to measure the wife’s expenditure.
Putting aside, then, the capital required by the husband to effect a relocation to New Zealand, that would leave $10,000 to the wife for living expenses which, for a period of approximately 18 months, which seems to be quite reasonable. Accepting the statement by the husband as to his requirements it is in my view, therefore, difficult to understand the husband’s criticism of the wife’s use of the funds for the same purpose.
As I have noted the parties commenced co-habiting again in September 2005, before returning to Australia some time following in or about March 2007. [In] 2007, another child was born, giving the parties then two children. Following their return to Australia, the parties resumed residence at Ipswich and continued on much as before, with the wife assuming principally the parenting and household roles, and the husband assuming responsibility as the principal or primary breadwinner. That situation ensured until separation.
At the time of separation, the assets reflecting the household balance sheet are largely those reflected in exhibit 2. And the position at trial is that which is reflected in exhibit 3.
I will come back to address an anomaly in relation to the respective balance sheet situations shortly.
Claims and counter claims are made by each of the husband and wife about contributions to various aspects of their life together. The wife says she did all the housework and the husband none – this is at least following the advent of children. The husband says the wife never pulled her weight with respect to improvement of the investment assets. From the material, I am satisfied that each of the parties’ views of these matters, have been clouded by their emotions concerning the relative notional values of their respective skill sets, with each skill set being assessed from a personal and individual perspective than rather by reference to an objective evaluation particularly in the context of a functioning partnership, which is what they ordinarily would have had.
What is important here is that neither party says that the other did not pull their weight. It follows, in my view that, having regard to their respective skills, they each made broadly equal contributions in the context of their division of labour.
Coming in to the issues of fact. As I have earlier noted, the issues largely concern matters of initial contributions and time of separation. So far as the value of the assets and liabilities of the parties, at the respective times, there were some small issues in which I will broadly deal with.
First, to address the dispute in respect of exhibit 1 which solely related to the value of the husband’s tax liability to the New Zealand government for a student loan. The husband’s total liability, as at the date of trial, to the New Zealand government was approximately $25,784. That was made up of loans – a student loan sum, a GST sum and an income tax sum. By reference to the current exchange rate, that sum equates to approximately $20,000. That sum has grown, it would seem, over the period of the relationship but, in broad terms, I will adopt a figure of negative $20,000 for the position at the commencement – as I have noted earlier, it does not make a lot of difference in the overall result, given the length of the relationship.
The other matters in contention at the date of separation include contention about the quantum of a bank account. I will accept the sum of $50, although there is no independent evidence in respect of it. So far as the value of the business, [N] Proprietary Limited, is concerned it has a book value of $10. It is significant to note that in the book value – or in the value of the business in its latest accounts has the inclusion of a motor vehicle and also the debt attached to the motor vehicle. The motor vehicle is a work vehicle and it would seem, having regard to that factor, that the depreciation allowance provided for in the books of the company affords a reasonable allowance.
The books, of course, are not audited but, in the absence of any valuation, I will adopt the value of $10 being the equity evidenced in the accounts of the company. I note that the company is, in essence, simply an incorporation of the husband as a self-employed tradesman. It, in effect, carries and ought carry no goodwill to allow for that fact. Ultimately, if the husband ceased working, the business would fail and there would be no realisation. On that basis, it seems that adopting $10 is a realistic approach. The books of the company show that there are monies owed to him by the company that are in the order of $8391.81. And I will adopt that figure as a debt due by the company to the husband and accordingly, that sum represents an asset in the household balance sheet.
So far as liabilities are concerned, there was a contest in respect to the wife’s MasterCard. She says it is a thousand dollars. I will simply adopt that figure. So far as the state of accounts are concerned, as at the date of trial, there is not a significant difference between the accounts as at final separation and trial. However, I am told and will accept that the bank account at the trial – that is the [A] account – has a value of $462 and that will be allowed. The [B] account has a balance of $4 and that sum will be allowed. The business I have already assessed at $10 and there will be no change to that.
The monies owed to the husband by the company have been reduced in the company’s books to $1902.73 and that sum will be allowed. Otherwise, all the other figures are as per exhibits 2 and 3. The only other matter that needs to be addressed is an anomaly which appears on an assessment or an examination of the accounts. Having regard to other facts which I will address in a short time, the net position on the balance sheet for the funds at separation produces equity of $638,067.00. The net equity position produced before add-backs on the trial date balance sheet is $312,709.00. That is a difference of almost $300,000.00.
It appears to me that the basis of that anomaly is to be found in the accounting for [1] Propety G and [2] Property G. An examination of the valuation reports obtained indicates that Property G valuation incorporated a land area of something in excess of one thousand square metres. It can be seen, by reference to that matter, that the valuations which have been obtained in respect of Property G have permitted a doubling up in the final separation, or the exhibit 2, balance sheet. It seems, from my review of the valuations, that [2] has, in fact, a value of $115,000.00 – as is shown in the balance sheet exhibit 3 – but [1] Property G itself had a total value, including [2], of about $300,000.00 or something in that order.
There is clearly a doubling up there. That seems, from my reckoning, to have been allowed for by implication in the difference between exhibit 2 and exhibit 3 given the sale of [1] Property G. It can be seen that the indebtedness to the bank has been reduced by approximately 260-odd thousand dollars, which roughly equates with the value of Property G and the indebtedness to the bank. It can be seen from the papers that the loans were all subject to security provided by Property G.
It seems likely that on sale the bank required the surplus funds on the sale of the [1] Property G property to be applied in its entirety – to the reduction of the mortgage over the properties. That, again, confirms my view that, in broad terms, there has been an overstatement in the exhibit 2 balance sheet of the Property G property interests. Those figures, I acknowledge, are very rough. Nobody made any submissions to me in relation to that matter. And I have tried to do the best I can, having regard to the material that has been put before me and not having been assisted by the parties on this point.
It follows then that the position at trial is broadly this; as outlined in exhibit 3 the total assets of the parties are $441,379.00, and total liabilities are $136,029.00. There are some $7,359.00 in superannuation assets and there are $16,000.00 in add-backs. That gives a total estate of $328,709.00.
So far as the figures are concerned then, in terms of the separation issues as I have earlier noted, the husband challenged the reconciliation issue. He says that there was no reconciliation. So, in effect, by reason of the section 266 agreement, he says that the position should be assessed from the time of the commencement of the relationship which would, on his reckoning, be in or about September 2005, meaning it would be a very short relationship, wherein the husband had introduced essentially all the assets and the wife had none.
On that basis, the husband should walk away with the lion’s share of what is now on the table. As I have earlier noted there were, over that 18 month period when the parties were separated, numerous instances where the parties lived together, spent time together and for one lengthy period lived together, and otherwise conducted themselves as parties who had not entirely resolved their matrimonial differences. So much, I think, is manifested by what happened following their reconciliation in September 2005 when the parties ultimately married and determined to have another child.
It should be noted that, during that period of separation, the husband bought and sold another property. That is a property at [M]. That that transaction appears to be financially internal transaction, which does not bear upon the figures here. Whatever profit the husband derived from the purchase and sale on that property and/or improvement of it – seems to have disappeared out of the family balance sheet.
In any event, the issue also raises another matter and that is the efficacy of the deed and the bearing it should have upon the way in which these matters ought be calculated. However before expressly dealing with that deed, I should first make this observation; I accept the wife’s evidence that the husband kept all the financial information to himself. That, I should say, is consistent with the way in which evidence has come to this Court. The husband has filed his affidavits which include almost 800 pages of financial material. The wife has filed none. The wife says she was kept in the dark about financial matters, and having regard to the parties’ disclosure obligations her disclosure of financial material – or of no financial material would be entirely consistent with the position of somebody who says they had none.
By contrast the husband has filed significant financial material which indicates that indeed he was the driving force on financial matters. The husband also impressed me as being someone who was somewhat more commercially savvy than the wife, and acted in accordance with that commercial acumen. He was more inclined to watch these matters more closely. So much is also consistent with the husband’s somewhat petty attitude to financial matters demonstrating to my mind, a high degree of appreciation of financial matters and their significance.
These matters are significant in the context of this dispute and the question of the bearing of the s.266 agreement.
Section 266 of the Property Law Act (Qld) as it then was dealt with de facto relationships and provided for separation agreements. Section 265 provided that a separation agreement was one made between de facto parties in contemplation of anything that affected their relationship, and are dealing with all or some of the de facto’s financial matters.
Section 266 then went on to prescribe what was then described as a “recognised agreement”. It was expressed in these terms:
“The recognised agreement of de facto partners is a co-habitation or separation agreement of the de facto partners. That (a) is written – that is a written agreement. And (b) is signed by the de facto partners and witnessed by a justice of peace (qualified) or solicitor, and (c) contains a statement of all significant property, financial resources and liabilities of each of the de facto partner and when the de facto signs the agreement.”
Sub-section (2) provides that:
“Whether all significant property, financial resources and liabilities of a de facto partner are stated depends on whether the value of the value of a property, financial resource or liability of the de facto partner that is not stated as significant given the total value of the de facto partner’s stated property, financial resources and liabilities.”
These deeds have significance because if they are not enforceable unless they accord with the terms of s.266.
A review of the deed, which is contained in the material, demonstrates that there are no values ascribed to any of the items listed in the deed – that is the respective assets or liabilities. As I stated earlier, I accept the wife had no actual knowledge of values of assets or liabilities at the time of the deed and therefore, one can infer the effect of the matters detailed in the deed. If she had, she may not have not entered into it, knowing the significant difference between that which the husband was getting and that which she was getting that I have identified earlier in the judgment.
That is particularly given, as I have earlier noted, that in broad terms the household balance sheet as at the date of the first separation suggested, equity of about $112,000. After all, it should not be forgotten that at the time this deed was executed, the wife had not only provided her own contributions by way of wages and savings and other non-financial contributions, but she had also permitted the use of her entitlement to the Commonwealth first home owners’ grant, an entitlement which she will not be able to enjoy again.
The husband contends, however, that the deed fulfils the statutory requirements of section 266. He says it does not need to incorporate the values in respect to the various assets and liabilities that I described. I do not agree with that proposition. I have already outlined s.266. However it clearly requires some interpretation of the meaning of the provision itself. In particular, one has to consider what is meant by the term, “statement” where it appears in s.266(1)(c), given that the agreement must contain a “statement” of all significant property, financial resources and liabilities.
The term “statement” itself is not defined in the Property Law Act nor in the Acts Interpretation Act (Qld). The Macquarie Dictionary defines “statement” in these terms under the definition of “statement”:
“2. A communication or a declaration in speech or writing setting forth facts, particulars, etcetera.
3. Commerce. An abstract of an account, as rendered to show the balance due.”
The Act is, to some extent, arguably ambiguous in respect of what is meant by the term, “statement”, in the context in which it is employed. It can be seen there are two possible interpretations open. Section 14A of the Acts Interpretation Act (Qld) which, I might note, is reflected in the Commonwealth Act as well – now permits a purposeful approach in interpreting an Act of Parliament. It is interesting to note the commentary in relation to these matters to be found in “Statutory Interpretation in Australia” sixth edition by Pearce and Geddes, particularly the learned author’s discussion commencing at paragraph 2.5.
In broad terms, it calls for an examination of the purpose of the Act. Relevantly s.114A states in sub-section (1):
“In the interpretation of a provision of an Act the interpretation that will best achieve the purpose of the Act is to be preferred to any other interpretation.”
That immediately takes the inquirer to an examination for the purposes of – in particular – Part 19 of the Property Law Act 1994. Section 255(a) of the Property Law Act provides in these terms:
“255. Main purposes of Part 19
This Part has the following main purposes –
(a)to facilitate the resolution of financial matters at the end of a de facto relationship.”
If the purpose of s.266 is to facilitate the resolution of financial matters at the end of a de facto relationship, then that purpose can only be best achieved by understanding the definition of “statement” when using that term in s.266 in a financial or commercial sense. On that basis, it would seem then that having regard to the definitions available in the Macquarie Dictionary, that the best definition is that which follows point 3, that is, “an abstract of an account as rendered to show the balance due”.
It follows that definition should be applied to the term “statement” in s.266(1)(c) in respect of the:
“Significant property, financial resources and liabilities of each party when they sign the agreement.”
For this to occur values have to be ascribed to the assets and liabilities. The wife could not have had a true understanding of the effect of the agreement in the absence of that information. In this instance they were not. It follows, in my view, that the agreement is not a recognised agreement.
Accepting the agreement is not a recognised agreement, the agreement of 25 February 2004 is not enforceable in the context that is contended for by the husband. It follows that while I take in to account the alteration of interests between the parties that may have occurred following the executory phases of that agreement, the agreement itself does not assist me.
Those matters, subject to an assessment of whether or not there has been any waste or other unreasonable use of the assets, would not bear upon the commencing position of the parties for the purpose of assessing relevant respective contributions. In my view, by reason of the history of the relationship of these parties, despite the fact that there had been a period of separation, the agreement does not, in my view, impact upon the overall approach that ought to be adopted to the assessment of contribution generally and ought not to distract from affording the wife due allowance for her contributions which the agreement otherwise sought to deny her.
It follows, then, that the relationship between the parties ensued between January 2001 and March 2009, save for two periods of separation in 2004 and 2005, totalling 12 months in aggregate. That is, that the parties’ relationship continued for approximately seven years. The assets and the liabilities of the parties have given rise to an estate worth approximately $329,000 at trial, including an allowance for add-backs and recognising both the payment by the wife pursuant to the purported agreement, her subsequent reapplication of funds upon the resumption of the relationship and the application of funds by both the husband and wife to ongoing maintenance during the period of matrimonial disruption.
Looking then to the section 79 approach, which requires, in particular, a consideration to matters at section 79 sub-section (4) – sub-section (2) and sub-section (4), and dealing first with the financial contributions made directly or indirectly by parties to the marriage, to the acquisition, conservation or improvement of any property, I note there has been largely – initially an equal contribution although the husband was responsible for the larger share of debt at commencement. There was equal effort by way of indirect financial contribution by the provision of labour to those matters.
I also note that the husband enjoyed a £10,000 bequest, which was applied to the improvement of assets, particularly during the early stage of their relationship, when they were each earning money, there was also application of that funding to the improvements. There is no suggestion by either party against the other in respect of wastage. I note that, throughout the course of their relationship, some property was bought and sold. For instance, the [M] property. But that occurred internally and ought not impact overall on the final balance sheet.
Clearly, if there was any profit in that transaction, the profit retained from that transaction would have been reflected in an increase in the net assets. For instance, cash or a conversion into a reduction in liabilities such as by the discharge of a loan. Those matters are not plain from the material, the accounts all being intermingled and incomplete, but broadly it would seem – in the absence of any discrete allegation concerning wastage – there is nothing there.
In terms of non-financial contributions, made directly or indirectly, by either party to the marriage to the acquisition and conservation or improvement of any of the property, including events that occurred since the separation, I note that in particular, when the wife ceased to work and commenced a family, which occurred shortly before the birth of the first child the focus of her efforts were overwhelmingly directed to the maintenance of the house, to domestic responsibilities and also to assisting the husband in the pursuit of the joint enterprise of improving the property in which they resided, as well as the investment property, with a view to future financial gain.
Although the respective financial and non-financial contributions, when measured one against the other may appear to be unequal, in my view, one equally offsets the other, on the basis that the only way they could be assessed as being unequal is if there was a rating of a superior value of one activity when measured against the other. That is by the husband’s application of his own labour as an indirect financial contribution against the allowance for the wife by way of her indirect financial contribution.
It is difficult to ascribe the opportunity cost of the husband’s labour, having a much greater commercial value than the value of the services provided by the wife given that neither were – are or could be described as particularly high skilled occupations. Although the husband refuses to recognise the value of the wife’s contribution, her indirect financial and non-financial contributions, the wife did provide services as a homemaker and parent. I have earlier noted that the purpose of any partnership is to achieve something greater than the sum of the parts and that appears to me to have been the outcome here.
The husband needs to acknowledge and recognise that, without the wife’s input, he would not likely be in a position where he would be able to argue about the presence of two properties.
Having regard to the nature of the orders that I propose, there is nothing that, in my view, would impact upon the earning capacity of either party to the marriage, which then before considering matters of s.75(2) suggest to me that overall in this instance the split of the matrimonial pool should be 50/50.
Going then to the s.75(2) factors, both these parties are relatively youthful. Both enjoy good health. They are both ably employed or able to be employed. The wife receives – or did receive – some parenting assistance. I am not certain of the husband’s position in that regard. The wife presently lives in rented accommodation, as does the husband. By reason of orders that have been made by the Court – they share the care of their children on an equal basis. Subject to the distribution of the matrimonial pool, they will each have available to them adequate financial resources to either make a fresh start or pursue other opportunities.
Given the orders of the Court, there is really no need to factor in any allowance to protect the role of one party against the other as a parent. It follows that the s.75(2) factors – which can be advanced by each party, one against the other, if you have regard to the otherwise equal status in all respects of the relevant considerations –suggests to me that their competing claims balance each other out and that it follows there should be no particular allowance made in relation to s.75(2) matters.
Finally there must be consideration of whether or not a 50/50 split then is a just and equitable split. Having regard to the factors that I identified above, I am of the view that a 50/50 split of the assets, as is proposed by me, will afford a just and equitable outcome, particularly having regard to the capacity of the husband to utilise these resources for other commercial-type activity.
It follows, then, that I will order that as the assets are presently owned by the husband, that the husband pay the wife a sum of $159,352 and that sum is made up as follows. The 50/50 split is $164,354. One then has to deduct the wife’s superannuation which she can retain – that is $6,002.00. Add-back the liability – the MasterCard liability of $1,000.00 – gives a sum of $159,352.00.
Effect to this order can only be given by the sale of some real estate. The husband claims the sale of the real estate will be subject to capital gains tax. There was no reliable evidence as to the quantum of this liability.
To afford the husband an opportunity to crystallise the quantum of such tax, I will put in place a regime for the sale of a property. In the event of its sale I will review the sum due to the wife to allow for the sale expenses and tax liability which crystallise on the sale of the property. However for that to occur the property must be subject to unconditional contract by 31 January 2011.
The wife seeks costs for an interlocutory application. There is a presumption in these sorts of proceedings each party bears their own costs. However, the court has a discretion open to it under s.117(2) which is required to consider the financial circumstances of the parties. I am mindful of the fact that this is a property settlement application. The parties do have the means to pay an order for costs, that neither parties is assisted by legal aid. The applicant here is self-represented. I know he may feel he is disadvantaged but that is a matter that he elected to do. He did have lawyers acting for him, at some stage.
In any event, he brought an application seeking:
a)to split off an issue for discrete determination; and
b)to adjourn the trial.
The issue for discrete determination was most appropriately dealt with within the trial and I do not think would have made any real difference to the outcome of the trial even if it had been disposed of discretely. So, his pursuit of the application, in my view, was unnecessary and wasteful of resources on the part of the wife.
He has been entirely unsuccessful in the application. So far as the application, also concerned an application for an adjournment of the trial. He was unsuccessful in that regard as well. It follows, in my view, that he ought pay the cost of that application which I assess under the scale at $1,465.00 plus the daily hearing fee. I will also allow for a half day plus the loading. The applicant’s fee is $1,320.00 giving a total of $2,785.00. So, the total sum payable, including costs of the application on 7 October, will be $162,137.00. And my order will be that it be paid within 90 days and I will otherwise reserve the costs of the trial.
I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 29 October 2010
0
0
3