P and P
[2002] FMCAfam 180
•31 May 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| P & P | [2002] FMCA fam 180 |
| FAMILY LAW – Property adjustment pursuant to s.75(2) of the Family Law Act for husband’s superannuation pension – lump sum spousal maintenance. |
| Applicant: | K M P |
| Respondent: | M J P |
| File No: | (P) HBM 2242 of 2000 |
| Delivered on: | 31 May 2002 |
| Delivered at: | Launceston |
| Hearing Date: | 30 May 2002 |
| Judgment of: | Bryant CFM |
REPRESENTATION
| Counsel for the Applicant: | MR G. Doolan |
| Solicitors for the Applicant: | Doolan and Brothers 1st floor, 35 Stewart Street DEVONPORT TAS 7310 |
| Counsel for the Respondent: | MR P. McVeity |
| Solicitors for the Respondent: | McVeity and Assoc 63 Reigby Street ULVERSTONE TAS 7315 |
ORDERS
(1)The wife pay to the husband the sum of $7408 on or before 31 July 2002, "the payment".
(2)Upon receipt of the payment, the husband sign all documents and do all things necessary to transfer to the wife at her expense all his right, title and interest in the former matrimonial home situate at 1 J Court, U, Tasmania, and the wife indemnify the husband against all liability relating to the said property.
(3)The husband forthwith sign all documents and do all things necessary to transfer to the wife any interest he has in the Toyota Camry motor vehicle registration number CL9-219.
(4)The wife forthwith deliver up to the husband:
(a)the caravan and trailer,
(b)the bookcase, and sign all documents necessary to transfer to him any interest she has in these items.
(5)Each party shall be otherwise solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders, and for this purpose bank accounts are deemed to be in the possession of the party whose name appears on the bank's records thereof. Insurance policies are deemed to be in the possession of the owner thereof. Superannuation entitlements are deemed to be in the possession of the person who is named as the worker therein and pensions are deemed to be the property of the person in receipt of same.
(6)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
(7)This is an order to which section 77A of the Family Law Act applies:
(a)Part of the value of the property at 1 J Court, U, to be transferred to the wife, represents spousal maintenance;
(b)The portion of the value of the interest being transferred to the wife which represents spousal maintenance is $20,800 at the rate of $80 per week for five years.
(8)All exhibits be returned to the party who tendered them at the expiration of 30 days from these orders.
(9)The parties have liberty to apply by telephone mention in relation to costs.
(10)The applications otherwise be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
(P) HBM 2242 of 2000
| K M P |
Applicant
And
| M J P |
Respondent
REASONS FOR JUDGMENT
This case concerns property proceedings between husband and wife who were married and commenced cohabitation in 1991. They were together for nine years from 1991 to 2000. They are now aged 50 and 45 respectively and have one child, A, aged eight. They reached agreements about A’s arrangements. He lives with his mother and spends as a minimum alternate weekends from Friday to Monday and half the school holidays with his father.
Both parties were previously married. The wife has three children from her first marriage. Those children live with the parties for most of their cohabitation but only one child, R, aged 13, now lives with the wife and A. The wife does not work. She devotes herself to the care of the children and supports herself from a pension from Centrelink and family allowance. She and the children have continued to live in the former matrimonial home at U since separation.
The husband works for the Tasmanian Fire Services as a senior fire officer and has done so for the entirety of the parties' marriage. In 1998 he was diagnosed as suffering from non-Hodgkins lymphoma. Despite aggressive treatment involving at least seven treatments with chemotherapy, his prognosis remains poor. He appears to be in remission at present but his medication, designed to prolong his survival, causes symptoms and he suffers from chronic lethargy, fatigue, anxiety and depression. He retired from his employment in October 2000 as a result of his ill health. He was categorised by the Retirement Benefits Fund Board as being totally and permanently incapacitated and became entitled to an indexed pension which is now $39,520 per annum.
What each party wants
The wife, who is the applicant, wants the assets to be divided 80 per cent to her and 20 per cent to the husband but the crux of her case is that she wants to retain the house, and if possible the caravan. She also wants the husband to pay spousal maintenance of $100 per week. The husband wants the house and caravan to be sold and all assets divided equally between the parties.
The Law
Property proceedings are governed by section 79 of the Family Law Act 1975 ("the Act"). The process of determining the parties' entitlements requires a 4 step process involving the following:
(1)The identification of the net property of the parties and an assessment of its value. In this case there is a dispute as to the value of the wife's car, the value of the caravan, and whether certain heirlooms and jewellery should be included in the pool of assets. The husband's lump sum payments received at the time of his resignation and how they should be treated is also an issue:
(2)Consideration of the contributions made by the parties including direct and indirect contributions, both financial and non-financial, and contributions made to the welfare of the family including contributions as home-maker and parent. There is a factual dispute as to the initial contributions each of the parties made to the marriage. Otherwise the issues relate to how the various contributions made during the marriage should be assessed.
(3)Consideration of the circumstances which relate to present and future needs of the parties, their resources, means, capacities and obligations. There is an issue as to what weight should be given to the wife's needs and lack of income-earning capacity and responsibility for the children versus the income but needs of the husband, although I think it is fair to say that counsel for the husband conceded that the wife should get some adjustment for these factors.
(4)Finally, the court must consider whether the result arrived at by the application of the first 3 steps process will result in a just and equitable outcome.
The final matter then to be determined is the wife's claim for spousal maintenance. The wife must establish that she is not able to adequately support herself in terms required by the Act, her proper needs, and the husband's capacity to pay. The focus in this case is mainly, although not entirely, on the husband's capacity to pay.
The evidence
The assets and liabilities that the parties agreed were not in dispute are as follows:
(1)The former matrimonial home at 1 J Court, U, which was agreed has a value of $133,000;
(2)The balance of the proceeds of the sale of the car which he had at separation retained by the husband, $5000;
(3)Furniture in the wife's possession excluding a bookcase which is to go to the husband, $4400; furniture in the husband's possession, $4125, and a gold cutlery set, $1630.
As to the liabilities, it was agreed that the wife pay debts attributable to the marriage of $3524 and the husband pay debts of $8032.
I now turn to disputed values. The first item is the caravan. The parties had previously reached agreement about the value of the caravan at $12,500. That agreement was reached some time ago when the parties anticipated that the matter would have come on for hearing earlier than it did. The wife gave evidence that in the interim she has tried to sell the caravan in situ during last summer, advertising it at $13,000, but had no offers. She now values it at $10,500. Because of the cost of maintaining it at the caravan park at Greens Beach she recently removed it from that site and the husband believes that in doing so she has reduced its value. It is clear from her evidence which was really unchallenged, that it was not selling on its site, although efforts had been made to do so, and I am satisfied that the efforts made by the wife were reasonable in all the circumstances. The husband himself asserts that it has diminished in value, at least from the value he attributed to it, by its removal from the caravan site, and having regard to his view, I think it is reasonable to accept the wife's valuation of $10,500.
The second issue is the wife's car. The wife values the car at $2750. This value is in dispute. A dealer was called and gave evidence by phone. His evidence was that he would acquire the car for $2750. However, he also indicated that was not its retail price, and that he would endeavour to sell it for about $4000. He said realistically it was worth about $3900 if a buyer was available. He said that if it was advertised and sold privately that would also be its value if a buyer could be found. As there is no indication that there is any pressure to sell the vehicle, indeed, the expectation is that the wife will retain it, the value of the vehicle should be its retail value, and I find the value to be $3900.
When the husband resigned his employment he received two lump sums. The first sum was from the Retirement Benefit Fund and was $11,769. The second sum was $18,652, which was made up of some ordinary pay leading up to the resignation period, long service leave, and annual leave. The total of these two amounts is $30,421. The husband has spent these sums and has borrowed further amounts and at the moment his liability is, in respect of the borrowing, $14,500.
The wife argues that the sums he received should be brought to account in their entirety. The husband argues that they should not be brought to account at all. It is reasonable in my view to disregard the fortnightly payment which was part of the husband's income when he received the lump sum. That would reduce the lump sum to $28,315.
The husband was able to indicate where some of those funds, but not all of them, went. He bought furniture for $8000 which has been taken into account in the assessment of furniture in his possession, and to include it again would, in my view, be double dipping. He paid off the pre-separation loan of about $8000 from these funds as well. Given that the furniture has been taken into account at its present value, I propose to deduct from the amount he received $8000 for furniture and a further $8000 for the loan that he repaid, but I will not take into account the liability again as a separate liability. If those two sums are deducted then the balance available was $12,315.
The husband asserts that from this sum he paid a further $8000 for his legal fees but he is not able to further particularise where the rest of the money went or why it was that he was living beyond his means and incurring further debt. I do not intend to deduct the legal fees from the sum to be brought into account. The wife also paid legal fees and had no such sum available to her.
The husband has also bought and sold several cars at a loss of at least $4000 on these transactions. He was not able to explain where the balance went and he had retained no records. In addition, he has had some work this year and has had $4700 gross available to him. Given that he has had the opportunity to repay debts and purchase furniture from his lump sum entitlements, although modest, is a regular income and greater than the wife's and his inability to live within his means is inexplicable.
In my view, the balance of moneys received by him after deduction only of the cost of the furniture and the repayment of the loan, should be brought into account and treated as an asset of the parties for distribution. That sum is $12, 315.00.
Contributions
The wife asserted that the husband brought into the marriage in initial savings the sum of $35,000. This sum, together with moneys that she brought in, were used to purchase the first property acquired by the parties at W Drive, B. She said that it was her recollection that the husband had brought in $35,000 in savings in circumstances in which he asserted it was considerably more. It is clear from her evidence, however, that she has relied largely upon documents which enabled her to reconstruct events in preference to her memory.
The house at W Drive was acquired in June 1991 at a cost of $117,500. There was a deposit of $2000 which the wife was able to identify as coming from her and the documents indicated that the parties borrowed $80,000. That would leave a payment of $35,500 to be made to effect settlement and by this means the wife deduced that the husband's contribution was $35,000. The wife conceded there were renovations done almost immediately to the home. It is clear that the loan was not increased for this purpose.
The husband's evidence was that they borrowed more than was necessary and thus he contributed more, and the wife had no explanation as to how they funded the renovations and landscaping which was carried out. The husband asserted that he had a strong recollection that they had each agreed prior to the acquisition of the house that they would put the same amount into the property so that their contributions were equal. He asserted that they both contributed $50,000.
When the property the wife had owned in R was sold later in 1991, she received $98,308. She repaid her aunt $25,000, leaving $73,308. She also purchased a car for $13,000. Contribution of funds by her went directly into the purchase of W Drive by virtue of the fact that she paid a lump sum to reduce the mortgage from approximately $80,000 to $25,000 or $30,000 thousand dollars. This is the means by which the husband says that she contributed $50,000 as he did.
I am not satisfied that either of their assertions are completely accurate. As I have indicated, the wife's calculations and reconstruction as to what happened is one possible version but it does not account for the moneys available for renovations. The husband's evidence that more money was contributed initially, and that the borrowings were greater than that necessary is also plausible. He had a strong recollection of what the parties contributed and I find that he made a contribution of $50,000.
However, in saying that the wife has only contributed $50,000, he has on the evidence in my view, underestimated her contribution. The documents produced by the wife show that what she contributed was approximately $73,000 after she had repaid her aunt. Part of that money went into the purchase of a car and part of it went in to reduce the mortgage liability. Both parties had some furniture and some modest savings. At that point the wife's contribution was closer to $80,000 as she had sold another vehicle owned by her for $7000 and the husband's was about $50,000.
The following year the husband received a bequest from his father's estate of $50,000 and some furniture which has been described in the proceedings as heirlooms. These funds were, as were the wife's funds, used for the benefit of the family. Overall, in this period of one to three years, both contributed funds from sources outside the marriage. The husband's funds contributed total about $100,000. The wife's total approximately 80,000. Both parties made contributions subsequently, both financial and to the welfare of the family, and in the capacity as parent and homemaker.
The Full Court in a number of cases has dealt with the question of how initial contributions should be considered. They must be considered against the subsequent contributions that each of the parties make and I take into account the subsequent contributions in this case. In the end I find there is an imbalance in the initial contributions in favour of the husband, while given the source of funds and the husband's subsequent contributions, should reflect a modest imbalance in his favour.
During the marriage the parties had what might be described as traditional roles. The husband was the breadwinner and did little around the house and some work on the exterior. The wife had virtually all the responsibility for the household and the care of the children, especially as the husband was required to work long hours and shifts.
The husband, for his part, was the sole financial contributor, and although the father of the wife's three children paid child support, after the first couple of years of their upkeep, there is no doubt that their support was being subsidised by the husband. The wife received $200 per week for the children. At first there were three and then two dependent children and this sum apparently did not vary until the time when she has only one child with her when the sum reduced to $100.
In my view, however, both parties made contributions during this time and the contributions that each made during this period do not require any further adjustment.
The final matter in relation to contribution relates to the husband's pension which he receives as a result of his retirement from his employment. It is a factor that the husband was in the fund for approximately 16 years before the marriage. There is no evidence as to what was accumulated in what years and whether there are any periods, either before or after cohabitation, which are more or less significant in terms of accruing benefits.
It is, however, significant that the period of service and entitlements was a lengthy one which occurred prior to the marriage as well as during the marriage and I take that into account in considering section 75(2) factors that are relevant in this case.
Having regard to all of the contributions, particularly the early contributions, in my view they warrant a 5 per cent adjustment in favour of the husband.
I now turn to the factors under section 75(2). I refer only to those matters which are relevant in this case.
The age and state of health of the parties
The ages of the parties are not terribly disparate although the wife is slightly younger than the husband. She is in good health. The husband is not in good health. His prognosis is poor and there is no indication that his life expectancy will be a lengthy one.
The income property and financial resources of each of the parties, and physical and mental capacity of each of them for appropriate and gainful employment.
Despite the fact that the husband has recently had a casual job, I am satisfied that the husband, other than when this sort of work might be available, and when he is well able to do it, he does not have the capacity for gainful employment. He receives a pension which is presently $39,520 per annum and is indexed. There are some tax benefits attaching to it as not all of the pension is taxed.
He receives $760 per week gross and pays tax of $136, leaving $624, or an after-tax income of $32,448 per annum. It is income which is guaranteed for his life and which he will receive no matter what happens. Whilst it is a relatively modest income, it is important in my view that he has this income which is secure. He will, in all likelihood, have medical expenses which have to be met at some stage. The extent of them is uncertain at this point.
The wife, on the other hand, has only a pension and she receives child support from the husband and maintenance of $100 for R. The Act requires that under section 75(2) I should consider whether either party has the care or control of the child of the marriage who has not attained the age of 18 years. In this case the wife has two children; one of whom is a child of the parties, and one of whom is her child. Both of them are relevant for these purposes.
She has, to this point, devoted herself to the care of the children and she has not actively sought employment. She is doing some volunteer work in the school canteen, which I don't regard as being an alternative to employment. Nevertheless, one would expect her to start looking for employment in the future by looking to retrain in herself to rejoin the workforce in the short to medium term, or perhaps by engaging in some course of study which will enable her to ultimately support herself.
She has one child who is eight and one child who is 13. In five years' time R will be 18 and she will have only A in the household who will then be 13. That is an appropriate period in my view in which she should be looking to retrain herself or otherwise engage in some study which will enable her to find some work after that time.
The other factor which is relevant to the financial resources of the parties is the husband's life insurance. It was of concern to me that in view of the husband's illness the wife might have needs in the future if she were not to receive child support in the event of his death. However, the husband has a life insurance policy. It diminishes with each year of his life, but taking into account the time between now and when A turns 18, if the husband were to die this year, for example, it would produce a sum which is close to that which the wife is currently receiving by way of child support, so I can be fairly certain that, even in the event of the husband's death, there will be some child support available from his estate to assist in A's future support.
I take into account under section 75(2) that the wife is receiving a pension. Recently the husband has applied to Centrelink and received a modest payment of $17 on account of the time that A is with him. It is somewhat curious legislation, and I attribute no criticism to the husband in seeking to have it paid to him as it is available, but what it does is reduce the funds available to the other parent.
In this case in my view the factors that have to be balanced up in particular are the husband's secure income and the obligations that the wife has to care for two children, but in particular for their child, for another 10 years. In view of these obligations, and the fact that the husband has a continuing income while she does not, they warrant in my view an adjustment of 20 per cent in the wife’s favour.
Taking into account the adjustment in the husband's favour of 5 per cent in relation to contribution, that would result in an adjustment in the wife's favour of 15 per cent, or 65 per cent of the assets to the wife and 35 per cent to the husband.
Having made findings about the disputed assets, the assets available for distribution as a result of those findings are as follows:
(1)The former matrimonial home at U, $133,000;
(2)The balance of the proceeds of the car the husband sold at separation, $5000; furniture in the wife's possession, $4440; furniture in the husband's possession, $4125; the gold cutlery set, 1630; the wife's car 3900; the caravan, 10,250; the husband's lump sum, 12,315. That is a total of 174,660. Deducted from that can simply be the liabilities that the wife is paid of $3524, leaving net asset of $171,136.
Leaving aside the caravan, the wife will be retaining the car, the furniture and the cutlery, which totals $9970, less the liabilities paid by her of 3524, leaving a balance of $6446. If she is to retain the house, which she wishes to do, then the inclusion of that asset results in the wife retaining assets of $139,446. Sixty-five per cent of that sum is $111,238 that will leave the wife with a balance to pay to the husband of $28,208.
Having regard to the matters in section 79(4), I am satisfied that it is a just and equitable result but I now need to turn to the question of spousal maintenance. The approach to spousal maintenance is described in Bevan v Bevan. Section 72 of the act sets out the threshold test. It is for the wife to establish that she is entitled to maintenance because she is unable to support herself whether;
(a)by reason of having the care and control of the child of the marriage she has not attained the age of 18 years or;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment or for any other adequate reason, having regard to the relevant matters in section 75(2).
(c)for the purpose of considering whether the wife has an income, I am obliged to disregard any income-tested pension allowance or benefit.
In this case the wife has the care and control of two children who have not attained 18. The youngest child is the child of the parties and is only eight. As I indicated when I considered the matters under section 75(2), in my view it is not unreasonable for the wife to continue her role as full-time parent at this stage, although as I have indicated, that period should in my view, and subject to other matters that might arise in the interim, conclude at the expiration of the five-year period when A is 13 and R is 18. I am satisfied then that the wife has satisfied the test in section 72 and is need of maintenance.
The wife is seeking the husband pay $100 per week towards her maintenance. There was no significant argument about this sum, it being accepted by the husband that $100 would not be the full amount of the cost of her support and the focus thereafter was on the husband's capacity to pay.
The husband's financial position is set out in a financial statement which was filed on 27 May shortly before the hearing. It indicates that he has, both from Centrelink and his pension, a total weekly income of $778. The tax payable by him is $136, leaving $642. The expenses that he has set out total $723, leaving him on the face of it with a shortfall of $81. Part of his expenses include loan repayments of $80. This is the loan to which I previously referred. It is a loan obtained by the husband after expenditure of the lump sums that he received in October 2000, and without any precise explanation as to how it was incurred, other than that it was for expenses and to supplement his living expenses. Whilst his income is a modest one, nevertheless there is no real explanation as to why the husband was required to supplement his income from borrowings.
If it were not for the loan repayment of $80 then he would be living within his means even if it meant at face value that he was “breaking even”. However, there are within his expenses, some discretionary items which should be taken into account and which in my view are not necessary commitments. Without particularising them all to a dollar figure, I refer in particular to the following matters:
(1)The husband is presently paying medical insurance for A and some of the gap cover for him. The wife would have as part of her pension at least the basic cover, and that is something which he is not required to meet.
(2)The husband also claims amounts for holidays, boat expenditure, gifts and books, which, in my view, are discretionary. Without applying a dollar figure to each of those items, it is apparent in my view from considering his expenditure, that he would be able to meet a payment of $80 per week to the wife. In my view that is an appropriate payment of maintenance to her. Over a period of five years at $4160 per annum, that would total $20,800 in maintenance
Although neither of the parties sought a lump sum, I raised with them during submissions the possibility of a lump sum being ordered. Both parties indicated that they would be content with a lump sum order rather than a periodic sum. Indeed, the husband expressed a preference for this. In my view, there are reasons in this case why a lump sum is more appropriate than a periodic payment. The main reason is that although I have found that the husband should have a capacity to pay, the fact is that at the present time he is meeting loan repayments of $80 per week, and as a result of that it would create difficulty for him to meet periodic payments.
Secondly, as the wife has a liability to the husband created by these orders, there is a lump sum from which payment can be made, that is, effectively by offsetting the amount payable to the husband by the amount of maintenance that I have indicated which, over a five-year period, which is the period for which I intend to order, it would be $20,800. The effect of that will be that instead of the wife paying to the husband the sum of $28,208, after deduction of lump sump maintenance of $20,800, there will be a payment to the husband of $7408.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Bryant CFM
Associate: Peter Smith
Date: 1 July 2002
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