PALANCE & MARLEY
[2012] FMCAfam 271
•9 May 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PALANCE & MARLEY | [2012] FMCAfam 271 |
| FAMILY LAW – Property settlement – whether amounts spent due to husband’s drink driving should be added back – contributions – future needs – whether wife should receive a percentage of proceeds of sale or fixed sum – whether wife’s notional share of husband’s superannuation should be discounted because retirement in the distant future. |
| Family Law Act 1975, ss.90SF, 90SM |
| Hickey v Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; [2003] FamCA 395 In the Marriage of Kowaliw (1981) FLC 91-092 In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 NHC v RCH (2004) 186 FLR 240; (2004) 32 Fam LR 518; (2004) FLC 93-204; [2004] FamCA 633 |
| Applicant: | MS PALANCE |
| Respondent: | MR MARLEY |
| File Number: | MLC 4289 of 2011 |
| Judgment of: | Riley FM |
| Hearing dates: | 21, 22 & 23 March 2012 |
| Date of Last Submission: | 23 March 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 9 May 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr O’Connell |
| Solicitors for the Applicant: | M K Steele & Giammario |
| Counsel for the Respondent: | Mr Hall |
| Solicitors for the Respondent: | Robinson Gill |
ORDERS
The respondent pay to the applicant the sum of $83,836.38 (“the payment”) within 60 days (“the due date”).
ORDER BY CONSENT
The respondent discharge or transfer into his own name the (omitted) car loan presently in the joint names of the parties on or before the due date (“the discharge”).
ORDERS
Contemporaneously with the payment, the applicant transfer all her right, title and interest in the real property situated at and known as Property Q (“the real property”) being the whole of the land more particularly described in certificate of title volume (omitted) to the respondent at his expense (“the transfer”) and vacate the real property.
Pending the payment, the applicant maintain the real property in good order and condition and the respondent pay all instalments on the mortgage to the ANZ Bank, registered mortgage number (omitted) (“the ANZ mortgage”).
Contemporaneously with the payment, the respondent pay all such monies as may be required:
(a)to discharge the ANZ mortgage; and
(b)to pay all outstanding rates owing on the property at the date of the transfer including all legal expenses and costs attached to any arrears of rate payments.
In the event that:
(a)the whole of the payment has not been paid by the due date; or
(b)the (omitted) car loan has not been discharged by the due date; or
(c)all outstanding rates owing on the property and expenses and costs related thereto pursuant to order 5(b) hereof have not been paid by the due date;
then the real property be sold forthwith upon such terms and through such agent as is agreed between the parties and failing agreement within 14 days on any of those matters (including mode of sale, sale price and the agent), then any matters that have not been agreed be determined by an agent appointed by the President of the Real Estate Institute of Victoria, or his or her nominee.
Upon completion of the sale, if any, the proceeds be applied:
(a) firstly, to the costs, commissions and expenses of the sale;
(b)secondly, to discharge the mortgage and any encumbrance affecting the real property (including rates and taxes, costs and fees related thereto);
(c)thirdly, a sum to the wife equivalent to 62.5% of the asset pool less $9,500, together with interest at the rate of 10% per annum on that sum from the due date until the date of payment;
(d) fourthly, in payment of the (omitted) car loan; and
(e) fifthly, the balance to the respondent.
Pending the payment or completion of the sale of the real property:
(a)the parties hold their respective interests in the real property upon trust pursuant to these orders;
(b)each party be restrained from further encumbering the real property without the prior written consent of the other party;
(c)the respondent pay all instalments on the ANZ mortgage as they fall due; and
(d)the applicant have the sole right to occupy the real property.
The respondent indemnify and keep the applicant indemnified against all payments and liabilities in relation to:
(a)the ANZ bank personal loan;
(b)all outstanding rates owed in respect of the real property;
(c)the (omitted) car loan;
(d)any business in which the respondent has an interest (including any taxation liability); and
(e)any taxation liability related to the Property M unit owned by the respondent and sold in 2010.
Unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses in action) in the possession of such party as at the date of these orders (the furniture and chattels in the real property being deemed to be in the possession of the applicant);
(b)each party retain the superannuation in his or her own name;
(c)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; and
(d)any joint tenancy is hereby expressly severed.
AND THE COURT NOTES THAT:
A.For the purpose of clarification of order 7(c) hereof, the “asset pool” shall be calculated as $149,338.20 plus the amount by which the sale price of the real property exceeds the $390,000 or minus the amount by which the sale price of the real property falls short of $390,000.
IT IS NOTED that publication of this judgment under the pseudonym Palance & Marley is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 4289 of 2011
| MS PALANCE |
Applicant
And
| MR MARLEY |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for property settlement. The parties were in a
de facto relationship from November 2003 (on the wife’s case) or February 2004 (on the husband’s case) until 26 January 2011. The relationship lasted about seven years, although there were two periods of separation, amounting to about seven months (on the wife’s case), or one period of separation lasting about eighteen months (on the husband’s case).
The parties have one child, X, who was born on (omitted) 2007. She is nearly five years old. She is expected to start school next year. The parties consented to orders on 7 February 2012 pursuant to which they are to have equal shared parental responsibility for X and X is to live with her mother and spend five nights a fortnight with her father.
Early in the relationship, the husband was employed full time as a (occupation omitted) and the wife was employed full time as a (occupation omitted). However, the wife stopped working when she was about seven months pregnant. The wife has not returned to work since then. Last year, she began a course to qualify as a (occupation omitted) in an (omitted). However, the wife did not complete the course. The husband, in 2008, during the relationship, started his own business as a (omitted). His gross earnings for the 2008, 2009, 2010 and 2011 financial years were disclosed to the Australian Taxation Office as $43,112, $33,429, $71,090 and $71,852 respectively.
The parties initially lived with the husband’s parents. However, in 2004, the husband bought in his own name a unit in Property M. The parties lived in the unit from 2004 until May 2007, except during the period or periods of separation, when the wife lived elsewhere. In May 2007, the parties bought in their joint names a house in Property Q. They lived there from around the time of its purchase until final separation.
The issues in dispute concern add backs, contributions, future needs, whether there should be a superannuation split and whether the wife should get a fixed sum, in the event the matrimonial home is sold, or whether she should get a percentage of the proceeds. There was a good deal of material concerning the husband’s alleged violence and abuse. However, the wife expressly resiled from any reliance on those matters in relation to the property aspect of the dispute.
The wife’s credibility
I do not consider that the wife was an entirely honest witness. In oral evidence, she claimed that she contributed $3,000 to the purchase of the Property Q property. The wife did not mention that in any of her affidavits, even though the husband had squarely said in his affidavits that he had bought the property with his savings, a first homeowners grant and a home loan, and even though she had addressed in her affidavits the purchase of the Property Q property. In fact, in paragraph 5 of her affidavit affirmed on 26 July 2011, the wife said that the husband bought the Property Q property. The wife detailed where she understood the purchase price had come from, without mentioning her alleged contribution of $3,000.
The wife did not produce any bank statements or other documents to support her claim to have contributed $3,000 to the Property Q property. She did not explain how she had managed to save that amount. The wife’s claim that she contributed $3,000 to the Property Q property has the hallmarks of recent invention. I do not accept that claim. I consider that the wife lied about this matter. Consequently, I do not consider that the wife was an entirely truthful witness.
The wife also claimed to have contributed $200 per week, partly for the mortgage over the Property Q property. This claim is discussed below. On balance, I do not accept it. However, I do not consider it to have been as clearly untruthful as the claim in relation to the $3,000.
The husband’s credibility
The husband gave categorical evidence that two cash withdrawals he made from the wife’s Westpac bank account, $7,000 on 24 May 2010 and $7,300 on 5 August 2010, were immediately deposited by him in the parties’ ANZ home loan account in reduction of their mortgage. The husband explained that the two banks were close to each other, the Westpac bank gave him cash in one or two envelopes, he walked the cash around the corner and he deposited it in the ANZ bank. When shown the ANZ home loan statement for the relevant period, he conceded, contrary to his earlier evidence, that he had not deposited the sums of $7,000 and $7,300 in the home loan account at all.
I consider that the husband’s claims to have deposited the two sums of $7,000 and $7,300 in the home loan account were deliberate lies. I consider that the husband intended to deceive the court by his lies and intended to obtain a financial advantage by his deceit, namely, by being awarded a larger percentage of the parties’ property pool.
In or about 2009, the husband lost his licence for 15 months for drink driving. In his oral evidence, the husband said he could not recall what his blood alcohol reading was. However, when pressed, he remembered that it was 0.15%. On any view, that is a very high reading. I consider that the husband’s initial answer was a deliberate failure to tell the court the whole truth, contrary to the affirmation that he had made.
After losing his licence for 15 months, the husband was convicted for driving a car while disqualified. He then told the court that he employed a friend for between $800 and $1,000 cash per week to drive him to and from work. The husband did not claim these payments as a business expense in his tax returns. The husband explained that he did not claim the $800 to $1,000 per week as a business expense, because, if he had done so, his friend would have been caught not paying tax on the earnings.
The husband, in the witness box, showed that he thought it was entirely natural that he would help his friend to avoid his lawful taxation obligations. The husband showed no awareness that, on his own evidence, he had been complicit in a fraud on the Commonwealth.
The husband’s evidence in relation to his driver indicates that the husband has a cavalier attitude to taxation obligations. His evidence about his own drink driving and driving while disqualified indicates that he has a cavalier attitude to road laws.
A certificate was provided to the court showing that, as at 9 February 2012, the husband was in arrears of child support in the sum of $5,810.39. The husband gave evidence to the effect that he was not really in arrears because he had been paying the mortgage on the former matrimonial home, where the wife and X were living. However, the husband did not pay the mortgage from separation in January 2011 until at least 26 July 2011 when he consented to orders that he do so. Notwithstanding that court order, a final notice from the ANZ bank shows that the husband was $4,850.34 in arrears on the home loan as at 7 February 2012. The husband brought the home loan up to date shortly before the trial.
Consequently, it appears that, for a considerable period of time, the husband was paying neither child support nor the mortgage. Even if he had been paying the mortgage, it is by no means clear that the mortgage payments would have been regarded as an offset for child support. The husband has never sought to have the position determined. If he had, it may have been that at least some of the mortgage payments would have been treated as spousal maintenance. In any event, the husband is seeking to keep the house and buy out the wife. Consequently, any mortgage payments that he might have made were to preserve an asset that he wants to keep. On the other hand, the wife has had the benefit of rent free accommodation.
Ultimately, the husband has allowed both his child support and his court ordered mortgage payments to go into arrears. Again, he has displayed a cavalier attitude to his legal obligations, including the legal obligation to pay for the support of his daughter and the legal obligation to comply with court orders.
For these reasons, I do not accept that the husband was a witness of truth. I consider that he lied to the court to improve his financial position. I consider that the husband has a very tenuous grasp on the concept of legal obligation. I consider that the husband was, overall, a significantly less truthful witness than the wife.
I have serious reservations about the husband’s evidence that he paid a driver $800 to $1,000 per week. If he had earnings of $71,000 per year at the relevant time, he would have had weekly earnings of about $1,365 before tax. It seems extraordinary that the husband would have paid such a large proportion of his earnings to a driver. However, it was not put to the husband that he had lied about the payments to the driver. Consequently, I accept the husband’s claims about these payments. They will be considered further in relation to add backs.
The legislation
Section 90SM of the Family Law Act 1975 (“the Act”) provides that the court may make orders altering the interests of the parties to the de facto relationship in their property. Sub-section 90SM(3) of the Act provides that:
The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 90SM(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the interests of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)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 de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)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 de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e)the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
Section 90SF(3) of the Act sets out the matters the court must take into account under s.90SM(4)(e). Section 90SF(3) of the Act provides that:
The matters to be so taken into account are:
(a)the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship); and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(o)the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i) a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii) a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship; or
(ii) a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q)any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t)the terms of any financial agreement that is binding on a party to the subject de facto relationship.
(4)In exercising its jurisdiction under section 90SE, a court must disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit.
The four step approach
In Hickey v Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; [2003] FamCA 395 at [39], the Full Court of the Family Court described the preferred four step approach in property matters in which the parties had been married. There is no reason to doubt that the same approach should apply in de facto matters. The court in Hickey said:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. First, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, the court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, the court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), ("the other factors") including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case ….
STEP 1: The assets and liabilities
The parties agreed that their assets and liabilities at the time of trial included the following items with the following values:
ASSETS
VALUE
Former matrimonial home
$390,000
Car
(in the possession of the wife)
$3,500
Furniture
(in the possession of the wife)
$5,000
Chattels
(in the possession of the husband)
$5,000
Motor Bikes (x 2)
(in the possession of the husband)
$2,000
(omitted)
(in the possession of the husband)
$1,000
Ford Ute
(in the possession of the husband)
$7,000
ADD BACK
Husband’s paid legal costs
$7,800
TOTAL ASSETS
(INCLUDING AGREED ADD BACK)
$421,300
LIABILITIES
Mortgage
$265,687
Rates
$6,200
Tax Debt
$22,263
Tax Debt
$8,000
Car Loan (on husband’s car)
$7,500
Personal Loan
$3,032
ANZ Credit Card
$3,155
TOTAL LIABILITIES
$315,837
ASSETS LESS LIABILITIES
$105,463
SUPERANNUATION
Husband’s
$17,594
Wife’s
$1,000
TOTAL SUPERANNUATION
$18,594
NET ASSETS PLUS SUPERANNUATION
$124,057
In addition, the wife submitted that there should be an add back of $29,000. That sum consisted of various withdrawals from the home loan between 21 October 2010 and 27 May 2011. (Separation was on 26 January 2011.)
Counsel for the husband said there should be no such add back, on the basis that the husband had allegedly adequately explained where the money had gone. Counsel relied upon the well known statement of Baker J in In the Marriage of Kowaliw (1981) FLC 91-092 at FLC 76,645:
If a party has acted in the manner to which I have referred earlier either by:
(a)embarking upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)acting recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value,
then such conduct in my view and the economic consequences which flow therefrom are clearly matters to which the Court may have regard pursuant to the provisions of sec. 75(2)(o).
If, on the other hand, losses of a financial kind have been suffered by the parties to a marriage in the course of pursuit of matrimonial objectives, such as the gaining of income or the acquisition of assets whether the liability for such losses be joint or several then, in my view, such losses should be shared by the parties (although not necessarily equally) and taken into account when altering property interests.
Counsel for the husband submitted that, on the authority of Kowaliw, at most, any money unaccounted for should be taken into account under s.75(2)(o) of the Act rather than treated as an add back.
The court then reminded counsel for the husband of In the Marriage of AD and AC Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569, where the Full Court said that it was appropriate in certain cases to treat funds as an add back, rather than as a s.75(2)(o) factor, and said that the categories of case in which add backs are appropriate are not closed. In Townsend, Nicholson CJ, with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
Although that statement by his Honour correctly crystallised the legal position so far as the case that his Honour was dealing with was concerned, it should not, in my view, be taken as meaning that in a case such as the present one, it is not appropriate to take the fact that a party has received funds into account simply because they had been expended in a way which does not fit within the categories described by his Honour.
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under s 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
Counsel for the husband said that the add back in Townsend involved a large amount of money whereas the amount of the alleged add back in this case is quite small. That does not strike me as being a relevant distinction. In this case, the alleged add back would add about 25% to the value of the pool. That is significant, on any view.
Counsel also said that Townsend involved a unilateral act post separation that had the effect of eroding the asset pool. In the present case, most of the relevant withdrawals from the home loan were made during the course of the marriage. However, that is beside the point. The authorities do not suggest that wastage or wanton conduct that leads to financial loss is immune from being the subject of an add back simply because it occurred during the relationship rather than after. Gambling is an example of wastage during the relationship that is routinely treated as an add back.
Counsel for the husband then referred to NHC v RCH (2004) 186 FLR 240; (2004) 32 Fam LR 518; (2004) FLC 93-204; [2004] FamCA 633. Counsel submitted that case was an effort by the Full Court to water down the enthusiasm of family lawyers for add backs, and reiterated that add backs are only appropriate in a confined category of cases. The Full Court said at [24]:
We will refer again later in these reasons to the decision in Townsend, but we would in the present context draw attention to the following observations by later Full Courts:
[2.11] There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.
[Marker [1998] FamCA 42 (1 May 1998, per Baker, Kay and Chisholm JJ).]
[46] While not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.
[Cerini [1998] FamCA 143 (8 October 1998, per Nicholson CJ, Ellis, Kay JJ).]
The Full Court in NCH v RCH then went on to consider in detail the circumstances in which it is proper to treat the legal costs of the current family law proceedings as an add back. In the present case, that issue has been resolved by consent. The live issues in the present case include the payment of fines incurred by the husband and the legal costs of criminal proceedings. It does not seem to me that NCH v RCH addressed those issues. Counsel did not refer the court to any particular passages of NCH v RCH. Clearly, paragraph [24] extracted above only concerns post-separation reasonable expenditure.
In relation to the point about wanton or negligent behaviour, counsel for the husband conceded that the husband had incurred fines for drink driving and driving while disqualified and had incurred legal expenses in the associated criminal proceedings. Counsel conceded the fines and legal costs amounted to $4,000.
Counsel also conceded, in accordance with the husband’s evidence, that the husband had spent $800 to $1,000 per week paying a driver to enable him to get to work. It was not clear for how many weeks this arrangement lasted. However, the husband’s driver’s licence was suspended for 15 months. During some of that period, the husband drove while disqualified. In the absence of clear evidence about the matter, and in view of the husband’s lies about using cash withdrawals from the bank to reduce the home loan, the court need not be slow to draw adverse inferences against the husband.
In all the circumstances of this case, I infer that the husband’s arrangement with the driver lasted for six months, that is, 26 weeks. I also infer that the husband paid the driver throughout that period at the top of the range the husband gave. That is, I infer that the husband paid a driver $26,000 because the husband lost his licence for 15 months for being grossly over the blood alcohol limit.
Counsel for the husband submitted that the husband driving a car grossly over the blood alcohol limit was not relevant wanton, reckless or negligent conduct because it did not involve wanton, reckless of negligent conduct in relation to the assets of the marriage. I regard that as a spurious distinction. One does not actually have to damage the house or gamble away the joint funds to behave in a way that is wanton, reckless or negligent in relation to matrimonial assets. If a party behaves wantonly, recklessly or negligently, and, in consequence, the matrimonial pool is depleted, the amount lost could properly constitute an add back. On the authority of Townsend, the categories of waste are not closed.
I note that the husband gave certain explanations for the draw downs, including Christmas presents, a dishwasher, renovations, holidays and the costs of establishing a new household. It is quite possible that the husband did spend at least some money on all of those things. Given the husband’s lack of honesty with the court, I do not accept that he spent all of the money withdrawn from the home loan on the items he claimed. He may well have paid for some or all of them from income. The court does not need to speculate on those matters. They do not alter the fact, as found, that the husband wasted $29,000 in consequence of driving while grossly over the blood alcohol limit.
I consider the $26,000 paid to the driver and the $4,000 paid in fines and the legal costs of the proceeding could properly be added back and included on the husband’s account. However, the wife only formally sought add backs of $29,000. This is odd, because the amounts she identified as unexplained withdrawals from the home loan account totalled $32,000. In any event, I consider that $29,000 should be added back.
The net asset pool
Consequently, the net asset pool is as follows:
ASSETS
VALUE
Former matrimonial home
$390,000
Car
(in the possession of the wife)
$3,500
Furniture
(in the possession of the wife)
$5,000
Chattels
(in the possession of the husband)
$5,000
Motor Bikes (x 2)
(in the possession of the husband)
$2,000
(omitted)
(in the possession of the husband)
$1,000
Ford Ute
(in the possession of the husband)
$7,000
ADD BACKS
Husband’s paid legal costs
$7,800
Husband’s wanton expenditure
$29,000
TOTAL ASSETS
$450,300
LIABILITIES
Mortgage
$265,687
Rates
$6,200
Tax Debt
$22,263
Tax Debt
$8,000
Car Loan (on husband’s car)
$7,500
Personal Loan
$3,032
ANZ Credit Card
$3,155
TOTAL LIABILITIES
$315,837
ASSETS LESS LIABILITIES
$134,463
SUPERANNUATION
Husband’s
$17,594
Wife’s
$1,000
TOTAL SUPERANNUATION
$18,594
NET ASSETS PLUS SUPERANNUATION
$153,057
Financial resources of the parties
The husband has a business from which he earns about $70,000 per year. Otherwise, the parties have no financial resources that were made known to the court.
STEP 2: Contributions
Initial contributions
The parties agreed that the wife brought no assets of substance to the relationship.
The husband claimed that at the commencement of the relationship, he had a Nissan (omitted) and about $10,000 in savings, being the total of a termination payment and the proceeds of sale of a motorbike. The wife disputed that the husband had $10,000 in savings at the commencement of the relationship. However, she acknowledged that the husband said that he had $10,000 in savings when he bought the Property M unit. She claimed that he saved the money during the relationship. I do not accept that claim. It strikes me as unlikely that he could have saved so much in such a short period of time. I accept the husband’s claim to have had $10,000 at the commencement of the relationship. There was no evidence about the value of the Nissan (omitted). I consider it to be likely that it was of modest value.
Contributions during the marriage
During the marriage, the husband worked as a (omitted). Initially, he was an employee, but later he started his own business. The wife initially worked in (omitted), but stopped work in about May 2007. After that time, the wife was the primary carer and homemaker. The husband also helped with childcare and did some small scale renovations of the home.
The parties initially lived with the husband’s parents. The wife said that she paid them $60 per week board. That payment did not go to the acquisition of the parties’ assets. It was a matter between the wife and the husband’s parents and concerned the costs associated with her living with them.
The husband bought the Property M unit in 2004. As discussed above, I do not accept the wife’s claim that she contributed $3,000 to the initial purchase price. I accept the husband’s evidence that he used his $10,000 savings, a first homeowners grant and a home loan in his sole name to purchase the unit.
There was a dispute as to whether the wife contributed to the mortgage repayments. She said she contributed $200 per week, some of which went towards the mortgage. The husband said that the wife lived with him rent free, because she was his girlfriend, but they split bills and food equally. I accept the husband’s evidence on this point. It seems to me to be plausible. The wife did not claim the $200 per week contribution until she began her oral evidence. I consider that the $200 per week went to the wife’s share of the couple’s living costs.
The husband owned the Property M unit, from 2004 until May 2007, shortly before X was born. During that time, the parties separated. The wife said there were two periods of separation, for four months from October 2005 until January 2006 and three months from June 2006 until September 2006. The husband submitted that the parties separated for 18 months, from July 2005 until January 2007. However, his affidavit evidence about this matter was set out at paragraph 4 of his affidavit affirmed on 30 January 2012 and is as follows:
Ms Palance and I separated first in July 2005 when she moved out of our unit. Ms Palance did not return to live with me in the unit until January 2007. During the intervening period she lived with friends in (omitted) before moving into the city. We saw each other on and off during this time. Ms Palance and I next separated for a period of approximately six months from early 2006 to in or about September 2006. We have also separated on various occasions for short periods. Final separation occurred between us on 26 January 2011.
It seems to me that the reference to January 2007 in the second sentence is a typographical error, and the husband meant to say January 2006. The husband denied that. But the paragraph makes no sense if the January 2007 date is correct.
The husband’s affidavit evidence, properly understood, claims that the parties separated for two periods of six months each, making a total of twelve months. The wife’s evidence is that they separated for two periods totalling seven months. I consider that it is likely that both parties have overstated their cases. I conclude that they separated for two periods totalling nine and a half months.
There was no suggestion that the wife contributed to the Property M property in any way when the parties were separated. As stated above, I do not accept that the wife made any direct financial contributions to the Property M property even when she was living there. The wife did not claim to have made any indirect financial or non-financial contributions, other than sharing in living expenses and presumably contributing to housework.
Consequently, I consider that the proceeds of the sale of the Property M property, which amounted to about $100,000, were substantially contributed by the husband. That sum was used to assist with the purchase of the Property Q property, which was bought in both names.
The wife did not work outside the home after the parties moved to the Property Q property. X was born very shortly after the move. From then on, the wife was the primary carer and homemaker and the father was the breadwinner.
Contributions post separation
The wife has continued to be the primary carer of X, although the father has had a considerable input into her care. The wife is not working outside the home. The husband has continued to work as a self-employed (omitted).
The wife and X have continued to live in the Property Q home post separation. The husband was ordered to meet the mortgage repayments. He allowed them to fall into arrears, but brought them up to date shortly before the trial. The wife and X have had the benefit of living in the house rent free while the husband has had the burden of paying the mortgage repayments, of about $1,000 per month, on a house he does not live in.
The husband is about $6,000 in arrears of child support.
Contribution based entitlements
The wife argued that the parties’ contributions were equal. The husband argued that his contribution was 57.5%.
I consider the contributions, during the relationship, and after the parties moved to Property Q, to have been equal. I also consider that the contributions post-separation were equal. The wife had somewhat more of the child care and the husband had somewhat more of the financial burden.
However, I consider that, in a fairly short relationship with a fairly modest asset pool, the husband’s initial contribution of about $10,000, and his acquisition of the Property M unit, with a minimal, if any, contribution by the wife, and the husband’s contribution of the proceeds of sale of the unit to the Property Q property are significant. I consider that the husband’s claim of a 7.5% adjustment for his extra contribution is entirely proper and more than reasonable.
STEP 3: the s.90SM(4)(d), (e), (f) and (g) and the s.90SF(3) factors
The wife argued that the future factors warranted a 30% adjustment in her favour. The husband argued that the future factors warranted a 7.5% adjustment in the wife’s favour.
The husband is thirty years old and the wife is thirty-one years old. Both parties are in good health.
The husband is able to earn over $70,000 per year. The wife began an (omitted) training course last year but did not complete it. There was some debate about when she would be able to resume her studies and attain the relevant qualification. Given that X will not start school until next year, I do not consider that it would be reasonable for the wife to begin a substantial work commitment until X is settled in school, about half way through next year. At that time, the wife could be expected to work outside the home. She said that, in aged care, she could earn between $17 and $20 per hour. If she worked full time, that would be about $35,000 to $40,000 per year or proportionately less, if she worked part time. On any view, there is a substantial discrepancy between the husband’s and the wife’s earning ability.
Under the consent orders that were made earlier this year, X is to spend nine nights a fortnight with the wife and five with the husband. Neither party has any other commitments or responsibilities.
The wife has a present entitlement to social security and may have some entitlement in the future depending on how much she earns.
During the relationship, the parties had a modest standard of living.
The issues of maintenance and creditors are not presently relevant.
The relationship lasted about six years, with some breaks. It does not appear that the relationship affected either party’s earning capacity. It was not suggested that the wife could have earned more now if she had not taken time out with X.
Both parties wish to continue with their roles as parents. The husband asserted that he is likely to have equal time with X in the future. However, that is speculative. I will proceed on the basis of the existing arrangements.
It was not suggested that either party is cohabiting with any other party.
The husband is about $6,000 in arrears of child support. As the husband is a self-employed person, it is to be anticipated that there will be considerable difficulty in recovering properly assessed amounts of child support in the future.
No financial agreements were made known to the court.
There are no other relevant facts or circumstances.
In my view, the differential in the parties’ earning abilities, the wife’s greater share of the child care and the husband’s poor history of paying child support warrant an adjustment in the wife’s favour of 20% of the property pool. The same considerations result in a 50:50 split of the parties’ combined superannuation.
STEP 4: What order is just and equitable
The effect of the findings and reasons is that the wife will receive 62.5% of the property pool and 50% of the superannuation. I consider that outcome to be just and equitable.
The parties agreed that the husband should be given the opportunity to buy out the wife’s share of the house. However, they were in dispute about whether, in the event the property had to be sold, the wife should get a fixed amount, as she submitted, or a proportion of the proceeds, as the husband submitted.
Given the vagaries in the property market at present, it seems to me to be inherently unfair to fix an amount that the wife must receive from the husband, regardless of the ultimate market value of the house. The orders will provide for the wife to receive a proportion of the proceeds of sale.
The parties were also in dispute about whether there should be a superannuation split. The husband sought that superannuation be split. The wife sought cash to the extent of 50% of the parties’ combined super.
There is no evidence that procedural fairness has been afforded to the superannuation trustee. There was no request for further time to provide the relevant material. Consequently, a splitting order cannot be made.
In that event, the husband submitted that the wife should not receive the full cash amount representing her notional share of the super. Rather, the husband submitted that the wife’s share should be discounted because the parties were both young and it will be a very long time before the husband can access his super.
It seems to me that both parties should share equally in the benefits and burdens of the parties’ combined superannuation. I see no justification for discounting the wife’s share.
Excluding superannuation, 62.5% of the property pool is $84,039.38. Adding half of the parties combined super makes a total of $93,336.38. That is the total amount the wife should receive. However, she already has:
a)superannuation of $1,000;
b)a car worth $3,500; and
c)chattels worth $5,000.
Deducting $9,500 from the $93,336.38 leaves $83,836.38. That is the amount the husband should pay to the wife. There will be orders accordingly.
I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Riley FM
Date: 9 May 2012
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