OGDEN & SCANLON
[2011] FMCAfam 49
•31 January 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| OGDEN & SCANLON | [2011] FMCAfam 49 |
| FAMILY LAW – Property – service by electronic means – undefended proceedings – nature of undefended hearing – assessment of contributions – just and equitable. |
| Family Law Act 1975, ss.79; 75(2) Federal Magistrates Act 199, ss.81; 87 Federal Magistrates Court Rules, rr.6.04; 6.06; 13.01A; 13.03A; 13.03B(2) |
| Taylor v Taylor (1979) 143 CLR 1 Russell & Russell (1999) FamCA 187 |
| Applicant: | MS OGDEN |
| Respondent: | MR SCANLON |
| File Number: | ADC2167 of 2010 |
| Judgment of: | Brown FM |
| Hearing date: | 16 December 2010 |
| Date of Last Submission: | 16 December 2010 |
| Delivered at: | Adelaide |
| Delivered on: | 31 January 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Howe |
| Solicitors for the Applicant: | Howe Martin |
| Counsel for the Respondent: | No appearance |
ORDERS
That by way of settlement of property or alteration of interests in property:
(a)The husband do transfer to the wife all of his estate and interest in the property situated at and known as Property N being the whole of the land comprised and described in Certificate of Title Register Book Volume [omitted] (“the former matrimonial home”).
(b)Contemporaneously with the transfer of the former matrimonial home the wife do take all such steps as are necessary to discharge Mortgage No. [9] and do indemnify the husband and keep him forever indemnified with respect to the same.
(c)That it be a condition of these Orders that if either party shall refuse or neglect to execute any Memorandum of Transfer or any other document necessary to give effect to the terms hereof in the proper form within seven days after the same shall have been tendered to that party by or on behalf of the other party then in such case a Registrar or Deputy Registrar of the Federal Magistrates Court of Australia, upon proof by affidavit of such refusal or neglect, is hereby appointed to execute and if in his or her opinion it shall be necessary to do so, to settle the same and do all such other acts and things and execute such other documents as shall be necessary to give full force and effect hereto.
(d)That within one month of the date of this Order (“the settlement date”) the wife do pay to the husband the sum of FOUR HUNDRED AND TWENTY FIVE THOUSAND DOLLARS ($425,000) (“the settlement sum”).
(e)In default of payment of the settlement sum, by the settlement date, the former matrimonial home shall be sold and the net proceeds of sale thereof shall be divided as to the settlement sum to the husband (together with any interest accrued pursuant to the Family Law Rules), and the balance thereof to the wife.
(f)That the wife do make available for collection by the husband the Mercedes 280SL motor vehicle and the Mercedes convertible motor vehicle presently situated at the property at Property N.
(g)That the husband and the wife do otherwise retain as their sole property absolutely all savings, motor vehicles, superannuation entitlements, interest in trusts, shares, or any other assets presently in their respective names or held in their respective possessions.
The solicitors for the applicant provide the respondent with a copy of these reasons for judgment at his last known email address.
All other applications be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Ogden & Scanlon is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC2167 of 2010
| MS OGDEN |
Applicant
And
| MR SCANLON |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment relate to the settlement of matrimonial property. The applicant in the proceedings is Ms Ogden “the wife”. The respondent is Mr Scanlon “the husband”.
The wife commenced these proceedings on 7 June 2010. At that stage, she sought the transfer of the parties’ matrimonial home, located at Property N, into her sole name.
The Property N property is currently registered in the parties’ joint names. It is subject to a mortgage in favour of the HSBC Bank Australia Limited. Concurrently with the transfer of the Property N property to her, the wife proposed that this mortgage be discharged and she would keep the husband indemnified in respect of it.
In addition, the wife proposed that the husband should collect two Mercedes motor vehicles, currently at the Property N property and retain those vehicles for his own use. Otherwise, the wife sought that each party retain, as their sole property, all items of property then in their respective possession, including superannuation entitlements, interests in any trusts, shares, savings and other items of personal property.
The husband’s attitude to this application is difficult to discern precisely, as he has taken no formal part in the proceedings to date. In these circumstances, the wife seeks that her application be dealt with on an undefended basis without any further opportunity being given to the husband to take part in the proceedings.
It is the wife’s case that the husband is well aware of these proceedings and has indeed made a proposal to compromise them, which proposal the wife has accepted. However, the husband has not followed through with his settlement proposal in order to bring it to fruition.
In these circumstances, it is the wife’s position that there is no prejudice to the husband if the matter proceeds, given that he has been given an ample opportunity to take part in it. In addition, it is her position that she is entitled to have the court determine her application and bring it to finalisation, notwithstanding the recalcitrance of the husband.
It is now the wife’s position that the court should make final orders in the terms of the putative settlement reached between the parties. It is her position that when the court considers all the relevant factual matters, this outcome represents a just and equitable one. The orders sought by the wife are as follows:
“That by way of settlement of property or alteration of interests in property:
The husband do transfer to the wife all of his estate and interest in the property situated at and known as Property N being the whole of the land comprised and described in Certificate of Title Register Book Volume [omitted] (“the former matrimonial home”).
Contemporaneously with the transfer of the former matrimonial home the wife do take all such steps as are necessary to discharge Mortgage No. [9] and do indemnify the husband and keep him forever indemnified with respect to the same.
That it be a condition of these Orders that if either party shall refuse or neglect to execute any Memorandum of Transfer or any other document necessary to give effect to the terms hereof in the proper form within seven days after the same shall have been tendered to that party by or on behalf of the other party then in such case a Registrar or Deputy Registrar of the Federal Magistrates Court of Australia, upon proof by affidavit of such refusal or neglect, is hereby appointed to execute and if in his or her opinion it shall be necessary to do so, to settle the same and do all such other acts and things and execute such other documents as shall be necessary to give full force and effect hereto.
That within one month of the date of this Order (“the settlement date”) the wife do pay to the husband the sum of FOUR HUNDRED AND TWENTY FIVE THOUSAND DOLLARS ($425,000) (“the settlement sum”).
In default of payment of the settlement sum, by the settlement date, the former matrimonial home shall be sold and the net proceeds of sale thereof shall be divided as to the settlement sum to the husband (together with any interest accrued pursuant to the Family Law Rules), and the balance thereof to the wife.
That the wife do make available for collection by the husband the Mercedes 280SL motor vehicle and the Mercedes convertible motor vehicle presently situated at the property at Property N.
That the husband and the wife do otherwise retain as their sole property absolutely all savings, motor vehicles, superannuation entitlements, interest in trusts, shares, or any other assets presently in their respective names or held in their respective possessions.”
Should the proceedings be determined in the husband’s absence?
The court has an obligation to ensure that parties to proceedings before it have an opportunity to participate in those proceedings. Before a person can be adversely affected by judicial order, he or she must be afforded an adequate opportunity to be heard.[1]
[1] See Taylor v Taylor (1979) 143 CLR 1
The parties married [in] 1991. They are the parents of two children [X] born [in] 1994 and [Y] born [in] 1998.
[X] attends boarding school at [A] School, in Victoria. [Y] attends
[B] School, in Adelaide. [Y] lives with the wife in Adelaide. [X] returns home to Adelaide for school holidays.
The husband is employed by a company called [omitted]. He undertakes contract work, as a [occupation omitted], around the world.
For much of the last nine years the husband has worked overseas in London, San Diego, Los Angeles and Oslo. The wife and children have remained in Australia.
At present, the husband is resident in Toronto, Canada and has been since January 2009. He was present in Australia during the Christmas period of 2009/2010, during which time, it is the wife’s position that the marriage between the parties broke down irretrievably.
The husband has not been in Australia since January of 2010. The parties did however meet, in company with [Y], in Los Angeles in early 2010. At that stage, the wife’s view that the marriage between the parties was over was reinforced.
In March of 2010 the wife instructed her solicitors to contact the husband to raise with him formally the issue of settlement of matrimonial property proceedings between the parties. The letter was sent electronically to the husband’s email address.
The wife deposes that she was told by the husband, during her visit with him in Los Angeles in April of 2010, that he had received the letter. However, the husband did not formally respond to it.
As a consequence, the wife’s solicitors again sent a letter to the husband’s email address on 4 May 2010. They requested a response from Mr Scanlon in twenty-one days, otherwise they warned their client would institute legal proceedings, in respect of matrimonial property settlement, without further notice to him.
Mr Scanlon responded to this email correspondence, again by email, on 24 and 25 May 2010. He indicated to the wife’s solicitors that he would be in Adelaide in July/August and wanted to discuss the matter further. On 29 May 2010, he emailed the wife directly, from an email address based in Sweden, stating (amongst other things) that he wanted “to work things out” with the wife.
By necessary implication, the wife was not satisfied with this response. She instructed her solicitors to institute property proceedings, which they did. The filing of the necessary application, an affidavit of the wife in support and a statement of financial circumstances was filed with the court on 7 June 2010 and made returnable on 13 July 2010.
On 16 June 2010, these documents were forwarded, by electronic means, to two of Mr Scanlon’s email addresses, by a legal secretary employed in the office of the wife’s solicitors.[2]
[2] See affidavit of Ms V filed 30 September 2010
Evidence available to me indicates that the husband received the documents in question. He emailed the court on 24 June 2010 in the following terms:
“I am Mr Scanlon and currently residing outside of Australia until October 2010.
I would appreciate if this hearing date – currently July 13th 2010 can be changes to allow me to return to Australia and attempt to resolve the family issues before any court hearing.
If after some time we have not resolved our differences then
I would be happy to proceed with a court hearing.
I am (in) no position to hire a lawyer and would rather represent myself if this matter had to proceed to court.
I trust you understand my position and look forward to your response.”
This email originated from one of the email addresses to which the wife’s application and supporting documents had been forwarded on 16 June 2010. Accordingly, I am satisfied that the husband is aware of these proceedings and has received a copy of the relevant documents concerned.
Mr Scanlon’s email was forwarded onto the solicitors for the wife, who subsequently advised that they were not disposed to the proceedings being adjourned, as Mr Scanlon requested. In those circumstances, the return date of 13 July 2010 was retained.
Mr Scanlon did not appear personally before the court on 13 July 2010 nor did he instruct a legal practitioner to appear on his behalf. In his absence, it was ordered that he file and serve a response, statement of his financial circumstances and an affidavit in support within 28 days. It was further ordered that a copy of the relevant orders be served on him, via email, at his email address. Further consideration of the matter was adjourned until 27 August 2010.
Mr Scanlon did not comply with the order for the filing of responding material. On 27 August 2010, the proceedings were further adjourned until 25 October 2010.
Prior the adjourned date, on 7 October 2010, the wife filed an application seeking that the proceedings be determined, on an undefended basis, in the absence of the husband. This application was supported by an affidavit of the wife’s solicitor.[3]
[3] See affidavit of Gregory Allen Howe file 7 October 2010.
Mr Howe’s affidavit indicated that he had been corresponding with the husband, via email, regarding a settlement of the proceedings between the parties. It was his understanding that the proceedings had in fact been compromised on the basis that the wife would retain Property N in consideration of the husband receiving from her the sum of $425,000.00. It was apparently also agreed that the husband would retain three specified motor vehicles.
In a letter dated 1 September 2010, from Mr Howe to Mr Scanlon, the wife’s solicitors confirmed the basis of the settlement, to which
Mr Scanlon had ostensibly agreed in an earlier email from him dated 27 August 2010. In his letter, Mr Howe wrote as follows:
“…We stress that it will be necessary for you to obtain independent legal advice on the settlement documents, as the Court will be very reluctant to male a Consent Order if you have no legal representation and you are not in a position to attend Court in person.
Whilst we understand that you may be reluctant to instruct a solicitor, there is really no choice but for you to do so.
It would be a relatively straight forward matter for you to instruct a solicitor to consent to an order in these terms. If you wish us to provide with the names of two or three competent, well regarded solicitors in Adelaide who can help you with that process, then we are happy to do so.
You meed to understand that the only way in which a settlement can be achieved is by an order of the Court and the Court will only make such an order if it is satisfied that each of the parties fully understands their rights and obligations and the proposed consent orders.“[4]
[4] See Annexure C to Mr Howe’s affidavit referred to above
Thereafter, Mr Scanlon wrote directly to the court indicating that he would not agree to any settlement of the proceedings until such time as the Property N property had been valued and there had been clarification of the wife’s entitlement in a trust. This correspondence was forwarded onto the solicitors for the wife.
The application seeking that the matter proceed on an undefended basis was served on the husband by email once again.[5]
[5] See affidavit Gregory Allen Howe filed 28 October 2010.
On 25 October 2010, in the absence of any appearance by or on behalf of the husband, the following orders were made:
The applicant is given leave to apply for final orders on the adjourned date.
Further consideration of the matter is adjourned to 16 December 2010 at 9:30am for a possible undefended hearing.
The time for the husband to file and serve a Response and Affidavit in support and a statement of his financial circumstances is extended to 1 December 2010.
A copy of the orders made today are to be served on the respondent by email at his last known email address.
Mr Scanlon has not complied with the order for filing responding material. As such, it is impossible to discern what is his formal position as to the appropriate outcome of these proceedings. In addition, I am satisfied that he has been put on notice that the proceedings may be formalised, on an undefended basis, without any further input from him.
I am also satisfied that Mr Scanlon has been advised of the necessity for him to comply, with the court’s directions, if he wishes to take part in the proceedings. A period of approximately six months has elapsed since Mr Scanlon was first formally advised of the wife’s application for property settlement. In the period since, he has not abided by any directions of the court or taken any formal role in the proceedings.
In these circumstances, on 16 December 2010, I decided that the matter should proceed on an undefended basis. The wife was represented by her solicitor Mr Howe. Following submissions from Mr Howe, the proceedings were adjourned until 31January 2011 to enable me to prepare reasons for judgment. These are those reasons for judgment.
Service
The Federal Magistrates Court is empowered to make rules to govern the operation of its practices and procedures pursuant to section 81 of the Federal Magistrates Act 1999. Section 87 sets out the scope of the court’s rule making power.
Rule 6 of the Federal Magistrates Court Rules deals with service. Pursuant to rule 6.06, service by hand is required of an application which starts a proceeding. However, pursuant to rule 6.04, the court has a discretion in relation to service and may authorise the service of a document in any other way or otherwise find that such document has been served.
Mr Scanlon is a [occupation omitted]. I am satisfied that he is adept with computers and has ready access to email. He is currently living in Toronto, Canada, where he is employed. He has corresponded with the court via email.
Given the nature of the correspondence which has passed between
Mr Scanlon and Mr Howe, the wife’s solicitor, and between
Mr Scanlon and the court, I find that Mr Scanlon’s preferred method of formal communication is via email.
This is not surprising given his occupation. It is also an efficient and speedy method of communication, particularly in the international context.
In all the circumstances of this case, I find that Mr Scanlon has been properly served with the wife’s initiating application and with copies of the various orders, including those directing Mr Scanlon to file responding documents.
The nature of an undefended hearing
Rule 13.01A of the Federal Magistrates Court Rules deals with the court’s authority to give judgment or make any other order against a respondent if that respondent defaults in complying with a court order or fails to take a step required in the proceedings.
Pursuant to rule 13.03A(2), a respondent is in default if he or she fails to:
·Give an address for service;
·File a response before the time to file such a response has expired;
·Comply with an order of the court;
·Defend the proceedings with due diligence.
Pursuant to rule 13.03B(2), if a respondent is in default, the court may:
·Give judgment or make any order against the respondent.
I am satisfied that the husband has failed to file a response in these proceedings and has otherwise failed to comply with other orders of the court. In these circumstances, it is axiomatic that he has failed to act with due diligence in the proceedings.
I appreciate that Mr Scanlon is outside of Australia. However, he is an intelligent and articulate person. He has access to modern forms of communication. He has been formally advised as to what is required of him in order to allow him to take part in these proceedings.
In order for Mr Scanlon to have proper input into these proceedings and for him to have the right to be heard it is necessary for him to file a formal document setting out the orders which he seeks, together with evidence, on oath of his financial circumstances.
The wife is entitled to these things, once she has initiated her proceedings, within a reasonable time frame, notwithstanding the fact that Mr Scanlon is outside of the jurisdiction. In addition, Mr Howe has informed Mr Scanlon of the desirability of him (Mr Scanlon) retaining legal counsel and has offered to help him in this regard.
In all these circumstances, it seems to me that, notwithstanding the fact that he is outside of Australia, it would be relatively simple for
Mr Scanlon to instruct legal counsel to appear on his behalf. It is not reasonable of him to expect the wife to wait until such time as he has returned to Australia for her to receive his input into the proceedings. She is entitled to have her application dealt with by the court in a reasonable time frame.
In all these circumstances, I find that it is appropriate that the wife’s application, for property settlement, be determined on an undefended basis, in the absence of the husband. In my view, it would be oppressive to the wife to adjourn the proceedings, in the possibly vane expectation that Mr Scanlon will choose to take part in them at some unspecified time in the future.
The Federal Magistrates Court is a court of private law. It determines disputes between parties according to law. In this case, according to the provisions of the Family Law Act 1975, which relates to the division of property following martial breakdown.
The court cannot compel a respondent to engage with litigation. It is however obliged to give a respondent the opportunity to put evidence before the court and contest any evidence relied on by the applicant.
However, a respondent, whether by intransigence or disinterest, cannot succeed in denying an applicant a just resolution, according to law, to his or her application by simply not taking part in proceedings in the manner in which the rules of court envisage.
However, the wife is not entitled, as a right, to the orders which she seeks, in default of the husband’s appearance in the proceedings. Rather, the onus remains on her to establish to the court that the orders which she seeks are just and equitable according to law.
Essentially, she must lead sufficient evidence to establish her case to the court and persuade it that the result she proposes is a just and equitable one. Otherwise the court should impose the result in the case it considers fair according to law and the evidence available to it.
The court’s preeminent responsibility is to ensure a just result between the parties, notwithstanding the failure of Mr Scanlon to participate in the proceedings. However, in the absence of rebutting evidence, the wife’s affidavit material is to be accepted by the court, unless it appears inherently unreliable or otherwise unsatisfactory.
The applicable legal principles
The process to be followed, for the division of the parties’ property, is well established by law.[6] The relevant legal principles are primarily contained in Section 79 and 75(2) of the Family Law Act 1975. I am required to follow a four step process.
[6] See Lee Steere v Lee Steere (1985) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-355; Clauson v Clauson (1995) FLC 92-595; Hickey v Hickey &Attorney-General of the Commonwealth of Australia (Intervenor) (2003) FLC 93-143;
In the first step, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[7]
[7] See Biltoft & Biltoft (1995) FLC 92-614
The second step involves the court ascertaining the contributions which each party has made towards those assets. Contributions fall into two broad categories.
The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.”[8]
[8] See Family Law Act s79(4)(c)
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2)(o), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
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.[9] Accordingly, the fourth step is for the court to take a step back and examine whether the orders it proposes are just and equitable.
[9] See Russell & Russell (1999) FamCA 187
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[10] or of equalisation of assets or financial resources.
[10] See Waters & Jurek (1995) FLC 92-635
The evidence
The wife relies on the following documents to establish her case:
i)An affidavit of herself filed 7 June 2010;
ii)A statement her financial circumstances filed 7 June 2010.
Obviously the contents of these two documents has not been tested by any cross examination emanating from the husband. Accordingly, the wife’s evidence is unchallenged. I have no reason to disbelieve the wife’s evidence, which did not appear to me to be inherently unreliable or implausible.
Step 1 – the pool of assets
The wife calculates that there are the following assets and financial resources available to be divided between them:
Assets
$
Property N
1,625,000.00
Wife’s term deposit
28,000.00
Wife’s Mercedes Benz motor vehicle
150,000.00
Husband’s 3 motor vehicles[11]
270,000.00
TOTAL
2,073,000.00
Liabilities
Mortgage to HSBC Bank
547,530.00
TOTAL NET ASSETS
1,525,470.00
Financial resources
Wife’s superannuation
48,000.00
[11] See wife’s affidavit at paragraph 22. I have utilised the lower valuation figures provided by the wife
It is a some what artificial exercise to calculate the pool of matrimonial property in this way. The wife believes that the husband has superannuation entitlements of his own. She does not know what is the extent of those entitlements.
The Property N property is also comfortably furnished. The wife has not deposed as the value of various furnishings in the home. She wishes to retain those items. It is however her position that a number of the most valuable items of furniture were given to her by her grandparents.
Step 2 – assessment of contributions – section 79(4)(a) – (c)
I now turn to the second of the steps in the exercise under section 79, namely an assessment of the parties’ contributions within the context of section 79(4)(a) to (c). These provisions are as follows:
“Section 79(4) In considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, the court shall take into account –
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of home maker or parent.”
Section 79(4) requires that the court look at the entirety of the contributions, both financial and non-financial, to the welfare of the family, as well as to the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation and improvement of any particular asset and maybe taken into account generally as contributions in a total sense.
The parties married on [date omitted] 1991. Neither had been previously married. They separated at the end of 2009. Accordingly the marriage between them was one of approximately eighteen years in duration. It is a marriage of significant length.
As previously indicated, the marriage produced two children. For much of the past nine years, the husband has worked overseas. In these circumstances, it is the wife’s position that she has discharged the vast proportion of parental duties for the two children and other homemaking responsibilities.
The wife is unaware of what is the husband’s current level of income or whether he has acquired other assets overseas. She herself is employed as a [occupation omitted] at [company omitted], a company controlled by her father. She receives a gross salary of $959.00 per week or around $50,000.00 per annum.
The wife has access to a bank account, standing in Mr Scanlon’s name, which she utilises for the payment of some household expenses. Otherwise, she utilises her own salary to pay these expenses. The wife concedes that the husband has paid the necessary recurrent mortgage payments, on the former family home, up to this stage.
Accordingly, it is the position that both parties have made significant direct financial contributions during the marriage. It is not possible for me to quantify those contributions in arithmetical terms. The wife cannot be regarded as having a large salary. It is her case however that she receives extensive financial support from her father.
The wife’s father is a wealthy person, who has been generous towards his daughter and the children. The husband has also benefitted from this generosity. The wife’s father paid for the cost of installation of a swimming pool at the Property N property. The cost was around $40,000.00. The pool was installed in 2005. It would seem axiomatic that this would have improved the value of the property in some way.
In addition, the Mercedes ML63 motor vehicle, which is currently in the wife’s possession, was a gift to her from her father in October of 2009. Accordingly, it is the wife’s position that the husband has made no contributions whatsoever towards the acquisition of this significant asset.
It seems to be the case that the wife enjoys a comfortable standard of living. It is her evidence that she purchases many items through the use of an American Express credit card. She uses this card to fund overseas travel for herself and the children and to pay for other of the children’s expenses, such as school uniforms and other education expenses.
The wife’s father pays the wife’s liability in respect of this American Express credit card regularly. The wife estimates that he pays in the vicinity of $100,000.00 to $120,000.00 per annum in this way. Accordingly the evidence indicates that the wife’s father makes a large and regular financial commitment to the running of the wife and children’s household in Adelaide.
It is also the wife’s case that her father contributed $150,000.00 towards the acquisition of the parties’ first family home in 1991. This was in the form of an interest free loan, in respect of which repayment has never been sought.
Finally, the wife’s father pays the children’s school fees. In the case of [X], these are significant, amounting to around $50,000.00 per annum. As he is not a boarder, [Y]’s school fees are less but remain a large commitment.
As previously indicated, it is the wife’s position that she wishes to retain the former family home and will assume responsibility for the mortgage in respect of it. I was told that she anticipates her father will provide the monies necessary to purchase the husband’s interest in the property and will assist in respect in the discharge of the mortgage.
It is very often difficult, in hindsight, to glean what was the actual intention of the donor of a gift made in the context of a marriage, where the donor has blood ties to one of the parties to that marriage. The usual rule is that where the intention is unclear, the court should look to any special relationship between the donor concerned and one of the spouses and regard the gift as having been contributed by that party.[12]
[12] See Kessey & Kessey (1994) FLC 92-495 at 81, 149
However, as Chisholm J remarked in Pellegrino & Pellegrino,[13] it is frequently the case that, when parents make a provision involving one of their married children, they do not specifically formulate whether they intend to benefit their own child or both of the parties to the marriage concerned. In addition, it is invariably the case that a gift, in any event, results in some benefit to both of the parties to the marriage concerned.
[13] Pellegrino & Pellegrino (1997) FLC 92-789
In this case, it is the wife’s position has made significant gifts both to her individually and to the parties generally during the course of their marriage. In the circumstances of this case, it is her position that the court should calculate the contributions made by her father as being attributable to her, for the purposes of these proceedings. She deposes as follows:
“On the basis of the very substantial contributions made by my family, and on the basis of my husband’s income earning ability, I say that the assets of the marriage should be divided as to 75/25 in my favour.”[14]
[14] See wife’s affidavit at paragraph 37
On the basis of the evidence currently before me, I find that it was the intention of the wife’s father to benefit his direct kith and kin – his daughter and grandchildren – rather than the husband, although he was obviously a collateral beneficiary of this generosity.
Accordingly, I have come to the conclusion that the direct financial contributions made by the wife’s father to the welfare of the family in this case, ought to be regarded as contributions rendered on behalf of the wife.
When I examine the asset pool, as currently constituted, it is apparent that the wife’s various financial contributions towards the acquisition and preservation of those assets is significant and, on balance, likely to be more than those of the husband.
In particular, I find that the wife has contributed solely to the acquisition of her vehicle and has made significant direct financial contributions toward Property N. Her efforts in employment have led to the accumulation of her superannuation interests, albeit in a modest sum when compared to the parties’ other assets.
For reasons already provided, I accept that the wife’s parenting and homemaking contributions greatly outweigh those of the husband, who has been overseas for much of the marriage. One of the fundamental difficulties, which arise in matrimonial property proceedings, is that the court is asked to compare fundamentally different things in carrying out the section 79 exercise.
In Ferraro& Ferraro, the Full Court of the Family Court noted as follows:
“The task of evaluating and comparing the parties’ respective contributions where one party has exclusively been the breadwinner and the other exclusively the homemaker, is a most difficult one to perform because the evaluation and comparison cannot be conducted on a “level playing field”. Firstly, it involves making a crucial comparison between fundamentally different activities, and a comparison between contributions to property and contributions to the welfare of the family. Secondly, whilst a breadwinner contribution can be objectively assessed by reference to such things as that party’s employment record, income and the value of the assets acquired, an assessment of the quality of a homemaker contribution to the family is vulnerable to subjective value judgments as to what constitutes a competent homemaker and parent and can not be readily equated to the value of assets acquired. This leads to a tendency to undervalue the homemaker role.”[15]
[15] Ferraro & Ferraro (1992) 16 Fam LR 1 at 38
In this case, I must be careful not to underestimate the value of the wife’s contributions as a homemaker nor the contributions made to the welfare of the family as represented by her father’s payment of the children’s private school fees.
These factors, when coupled with the wife’s significant financial contributions made by herself directly and by other members of her family, particularly her father, lead me to the conclusion that the wife’s contributions, at the end of the second stage, have been significantly greater than those of the husband.
I would estimate her various contributions, in percentage terms as being comfortably in excess of 65%. I appreciate that given what the wife proposes, this estimation is somewhat academic.
Step Three – section 75(2) factors – the prospective needs of the parties
I am now required to consider the various matters set out in section 75(2) and in particular to consider whether any further adjustment should be made in favour of either party.
Given the nature of the hearing before me, it is difficult to assess the various section 75(2) factors applicable. What I can say is that the wife is in modestly paid but obviously secure employment. She does not assert that she is in anything other than robust good health.
Whether the husband’s employment is secure is unknown to me, as is the state of his health. In addition, I do not know the level of remuneration or his state of preparedness for retirement through the accumulation of superannuation or other assets which he may liquidate when he has left the full time workforce.
What I do know is that he is currently employment as a [omitted] and has been so for at least the last nine years. His talents in this field have led him to be employed in a number of overseas countries. I acknowledge that it is likely to be imprudent, on my part, to assume that this employment is well remunerated. However, it does not appear to be the case that the husband lives in impoverished circumstances.
The wife is fortunate that her father is wealthy and well disposed towards her and the children. As such, it seems likely that she will remain financially secure for the foreseeable, if not indefinite, future. The wife’s father is willing to assist her in the provision of the substantial sum of money which she proposes to pay to the husband to secure his interest in the former matrimonial home.
If I accede to the wife’s proposal, it will mean that the husband will receive a large sum of money and will retain three motor vehicle of significant worth. These assets will provide him with a considerable bulwark against future financial exigencies.
Having considered all the evidence currently available to me, albeit that evidence is not comprehensive, I have come to the view that no specific adjustments are warranted pursuant to the provisions contained in section 75(2).
Step Four – section 79(2) – what is a just and equitable outcome?
The final step in determining property proceedings is to stand back and consider whether the proposed result represents a just and equitable outcome. Considerations of justice and equity must inform each step of the court’s process and the overall result.
It is all very well to talk in percentage terms, so far as property orders are concerned, but at the end of the day what matters to the parties is what the orders mean in dollars and cents and what effect they will have on their respective long term aspirations and living standards.
The wife’s proposal is that the husband should receive the sum of $425,000.00 and retain the two Mercedes motor vehicles and the Porsche motor vehicle, which she conservatively values at $270,000.00. This represents assets to the value of $695,000.00 and is a sum which I calculate to be just over 45% of the net asset pool.
In the past, the husband has indicated a willingness to compromise the proceedings on this basis, although he has not followed through with the necessary procedural steps to ratify such an agreement and he has apparently recanted from it subsequently.
I am aware that the parties’ asset pool, as currently constituted, does not include any superannuation referrable to the husband nor does it specifically include any items of property in his possession overseas.
Given that I have calculated that the wife is entitled to a share of the assets, by dint of her various contributions, which is greater than 55%, I am persuaded that the result represents a fair one, so far as the husband is concerned, particularly given his failure to take an active part in the proceedings.
He will receive a large sum of cash. He remains in employment. He has the three motor vehicles which I understand are vintage motor cars and so likely to maintain their value more readily than other more conventional motor cars.
I also consider it is a just and equitable result from the wife’s perspective for two main reasons. Firstly, it is the result she herself proposes In all the circumstances of this case, I do not think it is appropriate that I discount her preferred outcome, because it is a sum less than the one I have provisionally calculated as being an appropriate one. The prejudice is to her not the husband.
Secondly, the wife is financially secure as a result of her relationship with her father and his willingness to provide for her and the children. As such, the wife will enjoy a comfortable standard of living for the foreseeable future.
In these circumstances and given her desire to complete the proceedings sooner rather than later, I can understand why she would propose and welcome a discounted settlement from her perspective.
In all these circumstances, I consider that the orders proposed by the wife represent a just and equitable outcome in this case.
Given the husband has not taken part in these proceedings, in my view, it is appropriate that the court appoint a court official to execute any necessary documents to give effect to the terms of the orders I propose to make.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgement.
I certify that the preceding one hundred and sixteen (116) paragraphs are a true copy of the reasons for judgment of Brown FM
Date: 31 January 2011
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