Palmer and Palmer
[2008] FMCAfam 86
•8 February 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PALMER & PALMER | [2008] FMCAfam 86 |
| FAMILY LAW – Property – valuation of property – parties contributions – section 75(2) factors – just and equitable. |
| Family Law Act 1975 (Cth), ss.75(2), 79(4)(a)-(c) |
| In the Marriage of Omacini (2005) 33 FamLR 134 |
| Applicant: | MR PALMER |
| Respondent: | MS PALMER |
| File Number: | BRC 2059 of 2007 |
| Judgment of: | Lucev FM |
| Hearing dates: | 25 and 26 July 2007 |
| Date of Last Submission: | 26 July 2007 |
| Delivered at: | Parramatta via telephone link |
| Delivered on: | 8 February 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr RM Galloway |
| Solicitors for the Applicant: | Bruce Dulley Family Lawyers |
| Counsel for the Respondent: | Mr RI Cameron |
| Solicitors for the Respondent: | Harrington Family Lawyers |
ORDERS
That the Wife, Ms Palmer, retain the S Property and the I Property and pay to the Husband, Mr Palmer, the sum of $148,858.25 by 4.00pm on 31 May 2008.
If the sum referred to in order 1 is not paid by the time therein specified then the property at, I, Queensland be sold on the following conditions:
(a)That the property be listed for private sale and the Husband and Wife shall forthwith do all acts and things and sign all documents necessary to effect a private sale of the property and by way of consequential agreement for the purpose of effecting a sale.
(b)The listing price of the property shall be as agreed between the parties and if there is no agreement then as advised by a valuer nominated by the Chief Executive Officer of the Real Estate Institute.
(c)That the property shall be listed for sale by private treaty with such an agent or on such terms as may be agreed between the parties and failing agreement as nominated by the Chief Executive Officer of the Real Estate Institute of Queensland.
(d)In the event that the property has not sold by or before a date twelve (12) months from the date of this Order then either party may give notice to the other in writing that he or she requires the property to be sold by public auction and in that event the property is to be sold by public auction at a reserve price to be agreed upon between the parties or failing agreement as determined by a valuer as agreed between the parties. If the parties cannot agree to a valuer then as appointed by the Chief Executive Officer of the Real Estate Institute of Queensland and upon the terms and conditions set out in the following paragraphs hereto.
(e)The following terms and conditions apply to the sale by public auction:
(i)The parties shall employ a listing agent for such sale and agree upon a reserve price but failing agreement as determined by a valuer. If the parties cannot agree to a valuer then the valuer shall be as appointed by the Chief Executive Officer of the Real Estate Institute of Queensland.
(ii)The public auction will take place no later than eight (8) weeks after the notice referred to in sub-paragraph (d) above.
(iii)Following the first auction sale of the property, if the property does not reach the reserve price and the parties are subsequently unable to agree to the sale of the property shall be offered again for sale by auction with no reserve and in default of agreement between the parties in relation hereto, at a date and time agreed between the parties but no more than 6 weeks after the first auction.
(iv)Both parties are at liberty to attend the auction.
(v)Payments shall be made from the gross proceeds of the sale in the following order:
i.All costs associated with the conduct of the sale, shall be taken as a first payment;
ii.The sum of $148,858.25 shall be taken as a second payment and paid to the Husband, Mr Palmer; and
iii.The balance of the proceeds of the sale shall be paid to the Wife, Ms Palmer.
IT IS NOTED that publication of this judgment under the pseudonym Palmer & Palmer is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 2059 of 2007
| MR PALMER |
Applicant
And
| MS PALMER |
Respondent
REASONS FOR JUDGMENT
Introduction
1 The Applicant Husband, Mr Palmer[1] was born in January 1935.
[1] “Husband”
In January 1960 the Husband married Ms Palmer[2] born in September 1935.
[2] “Wife”
There are two adult male children of the marriage, W born in 1966 and N born in 1968.
The Husband and the Wife separated on 9 October 1997, and on 27 May 2005 their divorce became absolute.
This application seeks orders from the Court under Part VIII of the Family Law Act 1975 (Cth)[3] for the division of the property.
[3] “FL Act”
Application and orders sought
The Husband’s Case Outline indicates that the Husband seeks orders as follows:
a) That the property of the parties be divided equally.
b) That the Wife retain the properties at S and I and pay to the Husband an amount necessary to effect an equal division of the property.
c) That the property at, I, Queensland, be dealt with as follows:
That within thirty (30) days of the date of this Order, the wife give notice to the husband of confirmation of finance sufficient to refinance all outstanding liabilities and effect the above division of the matrimonial property such that she is able to retain the property.
If the Wife is unable to obtain sufficient finance to retain the property then the property be sold in accordance with the following paragraphs.
That the property at I, Queensland be sold on the following conditions:
· That the property be listed for private sale and the Husband and Wife shall forthwith do all acts and things and sign all documents necessary to effect a private sale of the property and by way of consequential agreement for the purpose of effecting a sale.
· The listing price of the property shall be as agreed between the parties and if there is no agreement then as advised by a valuer nominated by the Chief Executive Officer of the Real Estate Institute.
· That the property shall be listed for sale by private treaty with such an agent or on such terms as may be agreed between the parties and failing agreement as nominated by the Chief Executive Officer of the Real Estate institute of Queensland.
· In the event that the property has not sold by or before a date four (4) months from the date of this Order then either party may give notice to the other in writing that he or she requires the property to be sold by public auction and in that event the property is to be sold by public auction at a reserved price to be agreed upon between the parties or failing agreement as determined by a valuer as agreed between the parties. If the parties cannot agree to a valuer then as appointed by the Chief Executive Officer of the Real Estate Institute of Queensland and upon the terms and conditions set out in the following paragraphs hereto.
· The following terms and conditions apply to the sale by public auction:
i)The parties shall employ a listing agent for such sale and agree upon a reserve price but failing agreement as determined by a valuer. If the parties cannot agree to a valuer then the valuer shall be as appointed by the Chief Executive Officer of the Real Estate Institute of Queensland.
ii)The public auction will take place no later than eight (8) weeks after the notice referred to in sub-paragraph a) above.
iii)Following the first auction sale of the property, if the property does not reach the reserve price and the parties are subsequently unable to agree to the sale of the property shall be offered again for sale by auction with no reserve and in default of agreement between the parties in relation hereto, at a date and time agreed between the parties but no more than 6 weeks after the first auction.
iv)Both parties are at liberty to attend the auction.
v)All costs associated with the conduct of sale, shall be taken as a first payment from the gross proceeds of sale.
The Wife’s Case Outline simply seeks that the Husband’s application be dismissed.
Principles
In determining a property dispute it is necessary for the Court to:
a)identify and value the net property of the parties (usually at the date of the hearing);
b)consider the contributions of the parties within paragraphs (a) – (c) of section 79(4) of the FL Act;
c)consider the factors under section 75(2) of the FL Act;
d)consider whether the order proposed is just and equitable.[4]
[4] In the Marriage of Omacini (2005) 33 FamLR 134 at 147 per Holden, Warnick and Le Poer Trench JJ: [2005] FamCA 195 at para 46 per Holden, Warnick and Le Poer Trench JJ.
Valuation of property
There is a measure of agreement about the value of certain of the asset and liabilities.
The value of the following assets is a agreed and the Court accepts the values set out:
a)P Property - $900,000.00;
b)S property - $332,500.00.
The value of the following liabilities is agreed:
a)P Property mortgage - $900,000.00;
b)S Property mortgage - $332,500.00.
There is a dispute about various assets and liabilities as set out below:
B Property
The Husband says that there should be an add-back of $80,000.00 to the asset pool for the sale of the B Property by the Wife to one of the sons for $1.00 in 2002.
The B Property is the last of three properties purchased by the Wife in early to mid 1960 each costing a thousand pounds. The properties were purchased with the proceeds of an inheritance upon the death of the Wife’s parents.
Two of the properties at B were sold in the late 1990’s by the Wife to meet the debts of the failed I business.
The Wife sold the remaining property to one of the sons for $1.00. The property appears to have been worth in the vicinity of $70,000.00-80,000.00 at the time of the sale to the son.
In circumstances where the B Property was purchased with the proceeds of the Wife’s parents inheritance, there is no evidence of the Husband contributing to its upkeep in the succeeding years, and the other two B properties similarly purchased and kept by the Wife were sold to pay the debts of the Husband’s failed I business, a sale to the son of the final property for nominal consideration is unsurprising. The sale occurred after separation but before divorce. In those circumstances the Court does not consider it appropriate to add back the B property to the asset pool.
Husband’s inheritance
The Wife argues that an inheritance of $36,130.50 received by the Husband on the death of his father in 2003 should be included in the asset pool.
The Husband says that the inheritance has been used in repaying a debt to the woman who was his partner after separation (Ms Y) and on living expenses. Ms Y loaned monies to the Husband to help fund the litigation.
Given the nature of the monies received and the purposes to which they have been put the Court does not consider that they can now be added to the asset pool.
Barge proceeds
The Wife argues that the proceeds of the sale of a barge, some $56,000.00, received by the Husband (whether or not on behalf of I is not clear) in the period 2000 to 2003 should be included in the asset pool.
The Husband says that only $49,689.00 was ever received, and the balance is not being pursued.
The funds received were distributed in payment of various fees (registration fees for the barge and ASIC fees), outstanding wages for employees of I, debts and distributions (presumably repayment of loans) to persons including the Wife.
In the circumstances the Court does not consider that monies received and subsequently distributed in this way ought to now be added to asset pool.
Wife’s debt to a friend
The Wife argues that she is liable to a friend of hers for a debt of $16,500.00 for money borrowed by the Wife to pay legal fees associated with the I litigation, and that this should be included in the valuation of the property as a liability.
It is appropriate to include this in the pool as a liability.
Balance of the Husband’s debt to Butts and Barkley pursuant to deed
The Wife argues that she is liable pursuant to a deed for the balance of the Husband’s debt to his solicitors, Butts and Barkley, in the sum of $3,500.00, and that this ought to be treated as a liability.
It is appropriate to include this in the pool as a liability.
Husband’s debt to Wife pursuant to guarantee
The Wife argues that there is a debt of $4,600.00 which ought to be treated as a liability.
It is appropriate to include this in the pool as a liability.
Wife’s Superannuation
The Wife has accrued superannuation entitlements in UniSuper from her employment. There is a dispute about the value of the superannuation, but on the best evidence available the Court considers the value to be $271,076.00. This sum should be included in the asset pool.
The Court was asked to consider an order for splitting of the superannuation. At the time of separation in 1997 the value of the Wife’s superannuation seems to have been around $50,000.00. Since then her employer has continued to make compulsory contributions. All of the contributions relate to the Wife’s employment, that is one hundred percent of the contributions are hers. A personal superannuation fund that the Wife had she closed in 1997 withdrawing approximately $25,125.00. It is likely that sum would have grown considerably in recent years had it not been withdrawn. This sum was used to pay the unpaid wages of employees of the Husband’s failed I business. As indicated elsewhere the Wife has also expended considerable sums in payment of the Husband’s litigation (and other) debts. In all the circumstances there will not be a superannuation splitting order.
Husband’s debts to Butts and Barkley
The Wife argues that the Husband has a debt of $40,079.00 which ought to be treated as a liability.
The Husband says that the debt is $33,579.00, but agrees that it ought to be treated as a liability.
The Court accepts the Wife’s figure as correct and the sum of $40,079.00 will be treated as a liability
Husband’s debt to Thompson
The Husband asserts that there is a debt of $10,000.00 which ought to be treated as a liability, and the Court accepts this ought to be so treated.
Value
The Court has excluded alleged debts for some smaller amounts which were not specified or known or readily ascertainable.
Doing the best it can the Court considers that there are assets valued at $1,503,576.00, and liabilities of $312,710.00. The net value of the pool is therefore $1,190,866.00.
Parties contributions under section 79(4)(a) – (c)
The marriage was a long one of 37 years until 1997. In that regard it can be said that any initial contributions, or any contributions by one party or the other early in the marriage, might be eroded over time.[5] It must also be said that in a general sense the parties must take the good with the bad and share (but not necessarily equally) the liabilities.
[5] Money and Money (1994) FLC 92-485; Bremner and Bremner (1995) FLC 92-560; Pierce and Pierce (1999) FLC 92-844.
It is also fair to observe that in a long marriage the Court’s focus might more naturally fall on the major assets and liabilities, and that smaller items initially contributed such as ordinary cars and small amounts of superannuation might not assume much importance in the final analysis. So too allegations that assets like silverware, crystal and bone china were liquidated by one party (in this case the Husband) 45 years ago. In this case there is no proof, merely allegation, and such serious allegations simply cannot be properly tested so long after the event.
The Husband brought to the marriage the land on which the S property was built. It is not known if the land was encumbered. He also brought land in M in Victoria bit this was sold very early in the marriage.
A house was built on the S Property at a cost of about six thousand dollars.[6] The property was put in joint names. The property was enhanced by the purchase of an adjoining block, which was amalgamated onto the title. Sometime in the 1960’s the property was mortgaged to fund the Husband’s business “S Sales”. In the early 1970’s when this business went bad the Wife sold another property at G, so that the bank did not foreclose on the family home. The G property had been put into joint names with the Husband, but had been purchased with money inherited by the Wife on the death of her parents. The balance of the proceeds of the sale of the G property ($11,000.00) went to fund the building of a house at the P Property. Thus the property that the Husband brought into the marriage was saved by the sale of a property the Wife had purchased with her inheritance moneys, and a house was built on the P Property with the balance of the proceeds of the sale of the property purchased with the Wife’s inheritance. In 1995 the S Property was mortgaged to fund the purchase of a second ferry for the Husband’s I business. In 1998 the property was remortgaged involving a transfer of the Husband’s interest to the two sons of the marriage so as to prevent foreclosure on loan default by the Husband arising from the failure of the I business. Since that time the Wife has paid the mortgage on the S property.
[6] Three thousand pounds at the time.
The Wife purchased the P Property in 1974 for $13,300.00 with a ten percent payment and further payments over the next ten years. The property was mortgage free by December 1984. Despite paying for the property the Wife had it put in joint names with her Husband. As indicated above the Wife spent $11,000.00 of the proceeds of the forced sale of the G property (which had been bought with her inheritance from her parents) to build a house on the property. On the evidence (and particularly that of the Wife and M) the Court is satisfied that the overwhelming majority of the design, construction and labouring on the building of the P Property was done or organised or supervised by the Wife. The Husband may have made some contribution, but on all the evidence it does not appear to have significant. Eventually the P Property was mortgaged to secure loans for the I business. In 2000 the P Property was transferred to the Wife, secured by two mortgages. The Wife has been solely responsible for the mortgage payments on the P property since at least that time (that is, 2000). Moreover, on the evidence she went through substantial hardship and sacrifice to maintain the mortgage payments on the P and S properties, at one point in 2004 not owning a motor car and not being able to afford new clothes or go on a holiday.
Husband’s failed business ventures
The Husband has had a number of failed business ventures during the marriage.
In the early 1960’s the Wife funded the purchase by the Husband of a postal service into and out of Brisbane and surrounding country areas. The business failed.
Later the Husband commenced S Sales, the purchase mortgaged against the S Property. As explained above the Wife had to sell property purchased with her inheritance from her parents to ensure that the bank did not foreclose on the family home.
The I business was a fast ferry business. It was, essentially, the Husband’s business (there were others involved but they are not relevant for present purposes). As the business expanded in the early 1990s the P Property and S Property were both mortgaged to fund the expansion, and in particular the purchase of ferries, a barge and infrastructure. A property at V which was in the joint names of the Husband and the Wife but which had been purchased with the money Husband had received on cessation of employment with P&O Stevedores was also mortgaged to fund the I business.
The I business collapsed when the relevant local authority refused to renew its permit to operate. It is not necessary to traverse the history of the litigation that followed. Suffice to say that I sued the local authority and lost with costs. I then sued its solicitors for professional negligence and lost with costs. The litigation by I was professionally advised at all times and the professional negligence action was conducted by Senior Counsel.
The Wife has paid in excess of $30,000.00 for legal fees incurred by I, and still has various debts outstanding (see above) associated with the litigation. To fund the litigation the properties at S and P have had to be re-mortgaged, and it is the Wife who has been paying those mortgages since separation.
Put shortly, on each occasion the Husband has been involved in a failed business he has either been bailed out or supported by the Wife (even after separation) who has had to sell or mortgage property she has paid for or prevented foreclosure on, and then (certainly post separation) make the mortgage repayments herself.
Post separation contributions
The Wife has made significant post separation contributions.
She has maintained the payment of the mortgages on the S and P properties. The Court accepts that the Wife has paid considerable sums on the mortgage and upkeep of these properties. She is the one who maintained and kept these properties since separation. Whilst the Court does not accept that she has spent a sum which would appear to exceed her net income in some years on those properties the Court does accept that the outlays would have been considerable, and certainly in excess of $200,000.00.
The Court accepts that the Wife has paid many of her Husband’s creditors since separation and that the total sum paid exceeds $70,000.00.
Employment
Both parties were employed during the marriage. The Wife ultimately ran her own business as a landscape architect, and also worked as a lecturer at a University. Since 1992 she has earned considerably more than the Husband each year.
The Husband was employed throughout the marriage until 1992. In the years 1986-1992 he had especially remunerative employment on the waterfront. Since 1992 he says that he has only earned $6,000.00-8,000.00 from employment (that in the years 1999-2001) and that in the years 1992-1998 whilst at the I business he was paid no salary.
The Wife therefore appears to have maintained the Husband in the final five years of the marriage prior to separation.
Domestic contributions
On the evidence the Court is satisfied that the Wife was responsible:
a)throughout the marriage for the running of the family home at the S property and the maintenance of the P Property; and
b)the primary care of the children whilst they were at home.
Assessment
The Court recognises that marriages are partnerships and that even following separation there may be to varying degrees joint contributions. In this case however the overwhelming preponderance of the evidence indicates that:
a)the Wife has been responsible for ensuring that the S and P Properties (which are the principal property assets) were not lost to the mortgagors;
b)the other major asset, the Wife’s superannuation, has substantially accrued since separation;
c)the Wife maintained the Husband, particularly over the last five years of the marriage when he had no income, and to a significant degree since separation by partially paying for the I litigation and paying many of the Husband’s creditors; and
d)the Wife made the major domestic contribution, while working herself.
In all the circumstances there must be a very substantial adjustment in favour of the Wife. In the Court’s view that adjustment should be forty percent.
Section 75(2) factors
The section 75(2) factors relevant to these parties are set out and discussed below.
Age and health
The Husband is now aged 73. The Husband has had a heart attack in recent years.
The Wife is now aged 72. The Wife has had treatment for illnesses including depression arising from the stresses associated with the separation and divorce and the litigation involving the I business.
Income, property and financial resources and employment capacity
The Husband is on welfare benefits of $302.50 a week. He is effectively retired, but earns a small income from the sale of antiques and collectibles at fairs and markets, but at a level which does not impact upon his welfare benefits. He owns no property and has no superannuation. He appears to have his rent subsidised to some degree by Ms Y. Such money as he has received in recent years (for example, the proceeds of the barge sale and the inheritance) has been spent on general living and other expenses.
The Husband’s capacity for future employment is limited by his age, and he is of an age where many people of that age will have retired.
In short, the Husband has a limited income, next to no property or financial resources and very limited future employment capacity, and in any event is well past the “usual” retirement age.
The Wife earns more than a $1,000.00 a week as a lecturer at the University. She has been in continuous employment for many years at the University, and works privately as a landscape consultant as well. She is however of retiring age, and evinced an intention to do so within the next few years.
The Wife owns the P Property and pays its outgoings. She jointly owns and has exclusive use of the S Property, on which she pays all of the outgoings. The Wife has a reasonable sum of superannuation. The Wife’s capacity for future employment is limited by her age, and she is of an age where many people of that age will have retired. However, her employment capacity is, by reason of her ongoing employment and capacity to work privately greater than that of the Husband, up until the time that she elects to retire.
In short, the Wife has a reasonable income, not insignificant property and financial resources, significant outgoings and a future employment capacity limited only by her age and probable retirement in the next few years, but, in any event, she is well past the “usual” retirement age.
Children
There are no children of dependent age.
Commitments, support responsibilities and standard of living and financial circumstances of cohabitation
With no dependent children each party’s future commitments and responsibilities are essentially for themselves only.
The Husband lived with a new partner, Ms Y, for about six years following separation. The Court accepts that although they appear to have an ongoing relationship it is not a relationship of cohabitation for relevant purposes.
Superannuation and pension entitlements
The Wife’s entitlements are dealt with above. The Husband appears to have no superannuation.
Assessment
The Husband’s resources are very limited after such a long marriage and with a property pool of this size. It might be that he is the author of his own disaster in many respects. Nevertheless, having considered the s.75(2) factors, and in particular having regard to his health, limited means and the Wife’s ongoing employment and income earning capacity (albeit only for a few more years) the Court considers that there should be an adjustment in favour of the Husband in the amount of five percent.
Whether the order proposed is just and equitable
For convenience, under this heading the Court will consider the Wife’s “equitable” claim that a letter given to her by the Husband on separation meant that she was to have the S and P properties and the husband was to be released from the debt. The letter was apparently passed to the Wife’s solicitor, but is now lost. The Husband says that the arrangement was one entered into for asset protection purposes because of the I business litigation.
Without the letter there is no evidence of precisely what was proposed. The oral evidence is vague, and frankly somewhat unsatisfactory. That is unsurprising: the events took place in the heat of the day of separation. In all the circumstances the Court cannot be satisfied on the available evidence as to what was said or what was in the letter. In would therefore not be safe to draw any conclusions concerning the issue. Therefore the Wife’s “equitable” claim cannot be upheld.
The proposed order arising from the Court’s conclusions above will distributes the asset pool 85 per cent to the Wife and 15 per cent to the Husband. To reflect that there will be an order that the Wife retain the S and P properties, and pay the Husband $148,858.25 by 4:00pm on 31 May 2008, failing which the P Property is to be sold or auctioned and the proceeds distributed to allow the Husband to be paid the $148,858.25.
The Court considers the order to be just and equitable when considered as a whole, although not without some doubt as to whether there might be an adjustment back in favour of the Wife because of her overall role and contribution during the marriage and after separation. In the final analysis the Court considers the order properly reflects all the diverse circumstances of this matter.
Orders
There will be orders that the Wife pay the Husband $148,858.25 by 4:00pm on 31 May 2008, failing which the P Property is to be sold or auctioned and the proceeds distributed to allow the Husband to be paid the $148,858.25.
I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate:
Date: 8 February 2008