Patfull and Sheldon
[2010] FMCAfam 1377
•10 December 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PATFULL & SHELDON | [2010] FMCAfam 1377 |
| FAMILY LAW – Property settlement – de facto relationship – initial contributions – statutory interpretation of s.43(2) – add back. |
| Family Law Act 1975, ss.90SM, 4AA, 4(1)(c), 90SM(1), 90ST, 90SM(4), 90SF(3), 43(1)(a), 43(2) The Family Law Amendment (De Facto Financial Matters & Other Measures) Act2008 Acts Interpretation Act 1901, ss.15, 15AA, 15AB(1) |
| Accident Towing & Advisory Committee v Combined Motor Industries Pty Ltd [1987] VR 529 Standing Committee on Legal and Constitutional Affairs, The Senate, Family Law Amendment (De Facto Financial Matters and Other Measures) Bill 2008[Provisions] (2008) Pearce, D. C. and Geddes, R., Statutory Interpretation in Australia, 6th ed, (LexisNexis:2006) |
| Applicant: | MS PATFULL |
| Respondent: | MR SHELDON |
| File Number: | MLC11523 of 2009 |
| Judgment of: | FM Baker |
| Hearing dates: | 1 & 2 September 2010 |
| Date of Last Submission: | 2 September 2010 |
| Delivered at: | Hobart |
| Delivered on: | 10 December 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Howe |
| Solicitors for the Applicant: | Moores Legal |
| Counsel for the Respondent: | Mr Hutchings |
| Solicitors for the Respondent: | Jim McCarthy Lawyers |
ORDERS
Within 45 days from the date of this order, the husband pay the wife the sum of $276,233.00.
The wife remove any caveat that she may have lodged over the property situated at Property C in the State of Victoria, save for any caveat lodges for the purpose of securing payment.
In the event that the husband is not able to obtain finance to pay the wife the sum referred to in order 1 herein:
(i)The property situated at Property C shall be listed for sale;
(ii)The listing price shall be agreed between the husband and wife and failing agreement as determined by a valuer nominated by the President of Real Estate Institute of Victoria;
(iii)The property shall be listed for sale by private treaty with an agent to be agreed, and failing agreement, as determined by an agent nominated by the President of Real Estate Institute of Victoria;
(iv)That the husband and wife both forthwith do all acts and things and sign all necessary documents to effect the sale of the property.
The proceeds of the sale of the property be distributed as follows:
(i)To discharge any encumbrances affecting the property;
(ii)To pay all real estate agent’s costs, commissions and expenses of the sale of property;
(iii)To pay any council and rates outstanding in respect of the property;
(iv)To pay the solicitor’s costs in relation to the property;
(v)The balance to be divided between the husband and the wife so that the husband receives a sum which results in him receiving 57% of the asset pool and the wife receives a sum which results in her receiving 43% of the asset pool.
Pending completion of the sale of the property, the husband be liable for and indemnify the wife against all payments and liabilities in respect of the property including but not limited to all rates, taxes and outgoings of whatsoever nature and kind, and he shall indemnify and keep the wife indemnified in respect thereof.
The wife retain the following:
(i)Her [I] superannuation;
(ii)Her [I] allocated pension;
(iii)Her Honda Civic;
(iv)Account in Goldman Sach/JB Ware.
The husband retain the following:
(i)Any monies at bank in his name;
(ii)1992 Toyota motor vehicle;
(iii)1997 EL motor vehicle;
(iv)Caravan and boat.
Each party remain solely liable for their respective debt.
Each party sign all such documents and do all such things as may be required to implement the terms of this order.
That all extent applications be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Patfull & Sheldon is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT HOBART |
MLC11523 of 2009
| MS PATFULL |
Applicant
And
| MR SHELDON |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application by Ms Patfull for a property settlement pursuant to s.90SM of the Family Law Act 1975 as amended (“the Act”).
There was no dispute between the parties as to the existence of a de facto relationship within the meaning of s.4AA of the Act. They lived together from around October 1988, according to Ms Patfull, or sometime in October 1990, according to Mr Sheldon. They separated in August 2009.
I am satisfied that the parties lived together on a genuine domestic basis for more than two years and that, at the time of the filing of the application on 23 December 2009, both parties were ordinarily resident in Victoria during the relationship. I am therefore satisfied that this Court has jurisdiction to hear the application pursuant to Part VIII AB of the Act.
For ease of reading, I have referred to the parties, Ms Patfull as “the wife” and Mr Sheldon as “the husband,” throughout these reasons, as opposed to the more correct “de facto wife” and “de facto husband.”
The wife is 68 years old and is retired. She was formerly an [occupation omitted]. She receives an income from pensions and allowances. She lives with and cares for her ex-husband, Mr H, who suffers from cancer.
The wife was married twice before she commenced a relationship with the husband. Her first marriage was to Mr H. She has three adult children by that marriage; Mr M (“Mr M”), Mr J (“Mr J”), and Ms K (“Ms K”). She did not receive a property settlement in respect of that marriage. Her second marriage was to Mr P. They were married for 10 years. When they separated, the wife retained a property at [F] (“the [F] property”).
The husband is 74 years old and is retired. He was formerly a [omitted]. He currently receives a pension.
The husband has been married once, and has an adult daughter by that marriage, Ms S (“Ms S”). Ms S has recently completed a prison term, and will soon be living with the husband, as part of her rehabilitation process.
At the commencement of cohabitation the husband owned a property located at Property C (“the Property C property”). During their relationship, the parties cohabited at the Property C property. The husband still lives at the Property C property.
Background
The parties do not agree the date of the commencement of their relationship. The wife contends that the date was 10 October 1988. The husband contends that it was sometime in October 1990.
At the commencement of cohabitation the husband owned two properties; the Property C property and a property located at [P], which he relinquished as part of a property settlement with his ex-wife.
The wife owned the [F] property, subject to a mortgage. She leased it. In 1998 she paid off the mortgage and in 2000 she sold it. From the proceeds of sale, the wife purchased a car and deposited money into an allocated pension.
In 1990 the wife purchased an investment property at [S] with Mr J (“the [S] property”). The wife and Mr J leased the [S] property. In 2002 they sold it. In 2005 the wife gave $50,000.00 to Ms K.
During the relationship, the parties did not have a joint bank account. Although they pooled their incomes for their living expenses, the levels of their contributions are in dispute. The wife asserts that she made significant contributions; the husband asserts that she did not.
During the course of the relationship both parties retired. The husband received an aged pension, and occasionally did [omitted] work. The wife received a partner’s pension, a pension from the German government, and the allocated pension.
The parties currently receive the following incomes:
·The wife receives an aged pension and a carer’s allowance totalling $400.00 per week. She receives income from a pension fund of $121.00 per week. She also earns interest from shares and investments amounting to $13.00 per week. She has a total income of $534.00 per week.
·The husband receives an aged pension of $336.00 per week.
Issues
The wife contends that the gift of $50,000.00 to Ms K was a gift from both parties. The husband contends that it was a unilateral gift from the wife, and that it should be added back to the asset pool.
The husband contends that the Court should adopt an asset-by-asset approach because neither party has made any significant contribution to the assets of the other party. He submitted that only the Property C property was inhabited by the parties, and that the wife’s financial contribution towards that property was negligible.
The parties dispute the amount of the cash adjustment to be paid by the husband to the wife. The wife seeks an adjustment of $360,000.00. The husband seeks a division of the assets, including the disputed sum of $50,000.00, 70% in his favour.
The main issue regarding the adjustment is the weight to be attached to the respective contributions of the parties.
The wife asserts that the assets should be divided equally because:
·Although they had separate bank accounts, the parties pooled their incomes during the course of the relationship. The wife earned more than the husband, and spent more than he did on joint living expenses.
·The wife was the primary homemaker during the relationship.
The husband asserts that there should be an adjustment in his favour for the following reasons:
·His initial contribution of the Property C property.
·The wife did not significantly contribute to joint living expenses.
·The parties devoted equal efforts to homemaking.
Evidence
The wife relied on the following:
·Affidavits of wife filed 23 December 2009 and 13 August 2010.
·Financial Statement of the wife filed 16 August 2010.
·Affidavit of Ms K.
·Affidavit of Mr J filed 10 August 2010.
·Affidavit of Mr M 10 August 2010.
The following paragraphs were struck out:
·Affidavit of wife filed 23 December 2009: paragraph 16, from the second sentence to the end of the paragraph; paragraph 17.
·Affidavit of Mr M: paragraph 6, from the second sentence to the end of the paragraph; paragraph 7; paragraph 8; paragraph 9, second sentence.
·Affidavit of Ms K: paragraph 12, the words “and that he encouraged it.”
The husband relied on the following:
·Affidavits of the husband filed 19 May 2010 and 31 August 2010.
·Financial Statement of the husband filed 19 May 2010.
·Affidavit of Ms S filed 31 August 2010.
The following paragraphs were struck out:
·Affidavit of husband filed 19 May 2010: paragraph 2.15 from the second sentence; paragraph 2.16.
·Affidavit of husband filed 31 August 2010: paragraphs 9, 10 and 11.
Only the husband and wife were required for cross-examination.
Law
The Family Law Amendment (De Facto Financial Matters & Other Measures) Act2008 introduced the concept of “de facto financial cause” to the Act. “De facto financial cause” is defined in s.4(1) of the Act. The relevant sub-paragraph for property proceedings is sub-section (c). It reads as follows:
proceedings between parties to a de facto relationship with respect to the distribution, after the breakdown of the de facto relationship, of the property of the parties or either of them;…
Section 90SM(1) of the Act provides that in property settlement proceedings after the breakdown of de facto relationship, the Court may make such order as it considers appropriate. The Court must not make an order unless it is satisfied that, in all the circumstances, it is just and equitable to do so. The court must, as far as practicable, make orders that will bring the financial relationship between the parties to an end.[1]
[1] Section 90ST, Family Law Act 1975
Section 90SM(4) of the Act provides the considerations which the Court must take into account, including financial and non-financial contributions, made directly or indirectly by or on behalf of a party to the de facto relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them. The Court is also required to consider the contribution made by a party to the welfare of the family and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent. The Court is required to consider the effect of any proposed order upon the earning capacity of either party to the de facto relationship, and the matters referred to in s.90SF(3) of the Act, so far as they are relevant.
Section 43 argument
Counsel for the husband submitted that, there is, or may still be, some difference in the way the courts should treat de facto relationships and marriages. He submitted that, in this matter, weight should be placed on the agreement of the parties to keep their assets separate, and on the fact that the parties never made a joint investment or had a joint bank account. He submitted that there may be a difference in the way the court considers contributions, or that there may be an impact on the consideration of what is just and equitable in this case. He submitted that, if the Court accepts his submissions, the difference in this matter is less than a 5% adjustment. He further argued that, were the Court to treat a property settlement between a de facto couple and a married couple in the same manner, it would be a significant erosion on the institution of marriage in a legal sense, and not what was intended by the Act, nor what it achieved.
Counsel referred to s.43(1)(a) of the Act. Section 43(1)(a) reads as follows:
(1) The Family Court shall, in the exercise of its jurisdiction under this Act, and any other court exercising jurisdiction under this Act shall, in the exercise of that jurisdiction, have regard to:
(a) the need to preserve and protect the institution of marriage as the union of a man and a woman to the exclusion of all others voluntarily entered into for life;
Following the introduction of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (the amending Act), the operation of s.43(1)(a) is modified by s.43(2). Section 43(2) reads as follows:
(2) Paragraph (1)(a) does not apply in relation to the exercise of jurisdiction conferred or invested by Division 2.
The “Division 2” referred to in s.43(2) is Part V, Division 2 of the Act, which invests the court with jurisdiction over de facto property matters.
In support of his argument, Counsel for the husband submitted that the legislature created a scheme for de facto property matters within the Act that is parallel to, but separate from, the scheme dealing with marital property matters. Counsel for the husband submitted:
[The legislators] didn’t, as I believe would have been open to them, simply create another enacting provision which brought in the referred powers and indicated that they should be treated, or should be heard, effectively, along the Division 1 or ss.79-75(2) factors. Yes, they duplicated the words, for all intents and purposes, of those sections, but they created a separate division.
Counsel for the husband referred to the report of the Senate Standing Committee on the amending Act.[2]
In response to the Committee's questions on this issue, a representative of the Department responded that the government's position was that the Bill does not undermine the institution of marriage:
The government's position is very clear on the importance of marriage, and the Attorney and the Prime Minister have made a number of statements in that regard. Clearly the government does regard marriage as a fundamental institution...They are separate things, the de facto relationship and the marriage relationship, in this legislation. It may be that they are treated in a very similar way, but they are separate things in the legislation.[3]
[2] Standing Committee on Legal and Constitutional Affairs, The Senate, Family Law Amendment (De Facto Financial Matters and Other Measures) Bill 2008[Provisions] (2008)
[3] Ibid, p.19
The Acts Interpretation Act1901 governs how Acts are to be interpreted. I refer particularly to ss.15, 15AAand 15AB(1). Section 15 reads as follows:
Every Act amending another Act shall, unless the contrary intention appears, be construed with such other Act and as part thereof.
Section 15AA reads as follows:
In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.
Section 15AB(1) reads as follows:
(1) Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:
(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b) to determine the meaning of the provision when:
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable.
The Explanatory Memorandum to the amending Act[4] (“the Explanatory Memorandum”) expresses the objective of the amending Act as follows:
The primary objective of the Bill is to extend the financial settlement regime under the Act to parties to a de facto relationship.[5]
[4] Explanatory Memorandum, Family Law Amendment (De Facto Financial Matters and Other Measures) Bill 2008 (Cth)
[5] Ibid, p.1
Regarding s.43(2) in particular, the Explanatory Memorandum reads:
Section 43 of the Act sets out principles that a court must have regard to when exercising jurisdiction under the Act. These principles are broadly stated, including the principle in paragraph 43(a) regarding the `need to preserve and protect the institution of marriage as the union of a man and a woman to the exclusion of all others voluntarily entered into for life'. The effect of items 34 and 35 is to add a new subsection 43(2), providing that paragraph 43(1)(a) does not apply in relation to the exercise of jurisdiction in relation to de facto financial causes by courts conferred with that jurisdiction under Division 2 of Part V.[6]
[6] Ibid, pp.14-15
Additionally, I refer to the second reading speech of the amending Act, (“the second reading speech”) and in particular to the following paragraph:
This much needed reform will give separating de facto couples the same rights as divorcing couples under the comprehensive Commonwealth family law system.[7]
[7] Commonwealth, Parliamentary Debates, The Senate, 1 September 2008, 46-7 (Senator Conroy, Minister for Broadband, Communications and the Digital Economy)
Conclusions regarding s.43 argument
As I understand it, the husband’s argument is that this Court should disregard s.43(2) because it is contrary to the purpose expressed in s.43(1)(a). This raises an issue of statutory interpretation. Counsel for the husband did not submit that s.43(2) is ambiguous or otherwise requiring interpretation.
When considering legislation, the Court is responsible for its interpretation, and is not bound by the arguments of Counsel.[8] As observed by Kirby J in Coleman v Power[9]:
It is not the judicial obligation to put specifically to the parties… every rule of statutory construction relevant to the performance of the judicial task. Subject to considerations of procedural fairness, this court may adopt a construction of legislation that has not been argued by the parties, and a fortiori is not restricted to the interpretive principles argued by their representatives.[10]
[8] Accident Towing & Advisory Committee v Combined Motor Industries Pty Ltd [1987] VR 529 per McGarvie J at 547
[9] (2004) 209 ALR 182
[10] Pearce, D. C. and Geddes, R., Statutory Interpretation in Australia, 6th ed, (LexisNexis.:2006) pp. 5-6
The words and meaning of s.43(2) are clear and unambiguous. In my view, there exist no grounds for a departure from an ordinary reading of s.43 and Division 2 of Part V of the Act applies. An ordinary reading of s.43 is as follows:
a)The jurisdiction of this court over de facto relationships is conferred by Division 2 of Part V of the Act.
b)Accordingly, s.43(2) applies in this case.
c)The effect of s.43(2) in this matter is that the court is not required to have regard to the principle outlined in s.43(1)(a).
As per s.15AB(1) of the Acts Interpretation Act, the Explanatory Memorandum and the second reading speech are extrinsic materials to which this Court may refer when determining the meaning of s.43. The Explanatory Memorandum confirms that the purpose of the amending Act is to grant power to the Court to make orders in relation to the property of de facto partners. The second reading speech makes it clear that the legislators intended to give de facto couples the same rights as married couples. Neither of these extrinsic materials are inconsistent with the Report of the Senate Standing Committee to which I was referred by Counsel for the husband.
I find that the authority of Moore & Moore[11], to which Counsel for the husband referred, does not assist the Court. Division 2 of Part V of the Act was inserted by the amending Act which commenced on 1 March 2009. Section 43(2) was inserted by the amending Act. The judgment in Moore & Moore was delivered 25 January 2008. The obiter remarks of Carmody J precede the commencement of Division 2 and s.43(2), and are not applicable to legislation that was not in force.
[11] Moore v Moore [2008] FamCA 32
I therefore intend to apply the ordinary meaning of s.43 of the Act.
Add-backs
The Full Court of the Family Court in AJO v GRO[12] identified three categories of cases where the Court has determined that it is appropriate to notionally add back into the property pool assets that no longer exist. They are:
a)Where parties have expended money on legal fees;[13]
b)Where there has been a premature distribution of matrimonial assets;[14] and,
c)Where one of the parties has embarked on a course of conduct designed to reduce or minimise the effective value or worth of the matrimonial assets or where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.[15]
[12] (2005) FLC 93-218
[13] DGM & JLM (1998) FLC 92-816
[14] Townsend & Townsend (1995) FLC 92-569
[15] Kowaliw & Kowaliw (1981) FLC 91-092 as per Baker J at 76,644
In de facto property proceedings the Court may make such order as it considers appropriate. I consider that it is appropriate to apply the same principles, referred to above in matrimonial property proceedings, in this matter.
In April 2005 the wife gave $50,000.00 to Ms K. The wife’s evidence was that the husband encouraged her to give Ms K the money. The wife said that:
… Ms K was in financial strife because she was buying a house and [the husband] and I both discussed helping her out. She needed this $50,000.00. We both discussed it, and he encouraged me – said, “Yes, of course. She’s your daughter; you’ve got to help her out.” And so I did.
The wife said that the gift to Ms K came from the funds she had acquired following the sales of the [F] and [S] properties.
The husband’s evidence was that he told wife that the money was her money to use it how she wanted. He said that as she would be leaving the money to her daughter when she died, she should give it to her when she needed it.
The wife gave evidence that the parties viewed the Property C property as a shared asset. She was challenged about this during cross-examination, and agreed that, during the early years of the relationship, there was an agreement between the parties that their respective properties would pass to their respective children upon their deaths. She said:
The first couple of years, two or three years, he would say, “Look, I want my house to go to my children, and your house can go to yours.” But that was within the first… the beginning of the relationship.
In about 2000, the wife made a will to the effect that her assets would be left to her children. However, she did not agree that the husband also made a will around that time, leaving his assets to his children. The husband’s evidence was that he made a will in 1994 after making the agreement with the wife.
I accept the husband’s evidence that he encouraged the wife to give
Ms K the funds because, at that time, he believed that the parties were treating their assets separately. I accept that the parties had agreed, early in the relationship, to leave their respective property to their respective children. At the time the gift was made, the husband believed that the parties were treating their assets separately. The provisions of the wife’s will, which she made in 2000, are consistent with the husband’s belief.
Both parties are seeking a division of all their assets, contrary to what the husband believed was their agreement. Over the course of the relationship the parties’ respective views changed. They made contributions to each other’s property and shared expenses during the relationship. In these circumstances, I am of the view that the sum of $50,000 should be added back. It was a premature distribution of funds encouraged by the husband, only because of his belief at that time as to separation of the assets.
The parties have agreed the value of the balance of the asset pool. Together with the add-back, it is as follows:
Property C (H) $840,000.00 (H)
Monies at bank (H) $49,000.00 (H)
1992 Toyota (H) $2,200.00 (H)
1997 EL (H)$3,500.00 (H)
Caravan and Boat (H) $5,000.00 (H)
[I] Superannuation (W) $48,785.00 (W)
[I] Allocated Pension (W) $84,316.00 (W)
Honda Civic (W) $7,000.00 (W)
Account in Goldman Sachs – JB Were (W) $4,000.00 (W)
Add-back$50,000.00
Total$1,093,801.00
The wife conceded that a loan from Mr M of $14,500.00 should not be included in the pool.
Asset by Asset or Global Approach?
In de facto property proceedings, the Court may make such order as it considers appropriate. The usual approach in property proceedings between married parties is for the court to consider the property of the parties as an overall pool. It is open to the court to undertake the asset by asset approach. In Norbis v Norbis[16] Mason and Deane JJ, with whom Brennan J agreed, said:
…Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient. It follows that the Full Court is quite entitled to prescribe that approach as a guideline in order to promote uniformity of approach within the Court. In saying this we are not to be understood as denying the legitimacy of the trial judge's ascertainment in the first instance of the financial contributions of the parties by reference to particular assets. It is difficult to conceive how the trial judge in many cases could otherwise take account of such contributions as he is required to by s.79(4)(a) of the Act…
…Again, it seems to us that it will depend on the circumstances of the particular case, though in the majority of cases the global approach will be the more convenient and for this reason the Full Court is entitled to prescribe its adoption as a guideline in the majority of cases. The Family Court has rightly criticized the practice of giving over-zealous attention to the ascertainment of the parties' contributions, and we take this opportunity of expressing our unqualified agreement with that criticism, noting at the same time that the ascertainment of the parties' financial contributions necessarily entails reference to particular assets in the manner already indicated. [17]
[16] (1986) FLC 91-712
[17] at p 75,168
In my view it is appropriate to apply these principles in this de facto property proceeding. The parties’ de facto relationship continued for around 19 years. The parties pooled their income for their joint expenses. Both parties have made direct and indirect financial and non-financial contributions to the acquisition, conservation and improvement of the property of the parties (see further in these Reasons).
I am of the view that, to determine the just and equitable alteration of the property interests of the parties, I should adopt a global, and not an asset by asset approach to the assessment and valuation of contributions.
It was agreed that the wife’s superannuation entitlements should be included with the assets in the one pool. I consider that this is appropriate, as the wife has retired and has access to her entitlements.
Initial contributions
The husband submitted that his assets amounted to over 80% of the asset pool at the commencement of the relationship. The husband submitted that the initial contribution of the Property C property was “massive”, and that I should adopt a Pierce & Pierce[18] and Williams & Williams[19] approach and view the contributions made by the parties during the relationship in light of that contribution.
[18] (1999) FLC 92-844
[19] [2007] FamCA 313
The wife twice estimated the value of the Property C property at the commencement of the relationship. In her affidavit filed 23 December 2009 she estimated its value at $250,000.00. In her affidavit filed 13 August 2010, she estimated its value at $160,000.00. The husband did not provide an estimate of the value of the Property C property at the cohabitation date.
In Pierce & Pierce[20] the Full Court considered how the assets brought into a marriage by the parties to that marriage are to be treated. At page 85,881 their Honours stated:
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home…[21]
[20] Op Cit
[21] Ibid, at p.85,881
In Williams & Williams[22] the Full Court stated:
We think that there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in so doing it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.[23]
[22] Op Cit
[23] Op Cit at para.26
The Full Court referred to another Full Court decision of MH & MZ[24], in which the court in allowing an appeal in a property case where a pool of assets of $1.12 million had been assessed for contribution purposes as 75% in favour of the husband and 25% in favour of the wife. The Court stated:
Such an assessment ought adequately recognize that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bring into consideration the myriad of other contributions each made in the course of their relationship.[25]
[24] (2005) FLC 93-226
[25] Ibid, at p. 79,730
The weight to be attributed to initial contributions and other contributions is not required to be a mathematical or accounting exercise. In Clives & Clives[26], the Full Court said:
We accept that the task to be undertaken by a trial judge in assessing weight to be attached to initial contributions, and other contributions, is not always an easy one and not discharged by a strict accounting exercise…[27]
[26] (2008) FLC 93-385
[27] Ibid, at p.82,936
The wife’s evidence
The wife gave evidence that the relationship commenced in October 1988. She had booked a trip to the U.S.A., and the husband persuaded her not to go. She gave the ticket to her ex-husband. She moved out of her house at [omitted] to live with the husband. He told her to move in with him because she was working at [omitted] and his home was closer to her work.
At the date of cohabitation the wife was working and earning an income from her employment at [omitted]. She owned a home at [F] worth around $73,000.00 and she had a mortgage of around $11,000.00 secured over it. She conceded during cross-examination that there was around $60,000.00 equity in the property.
The wife leased the [F] property and used the rental income to meet outgoings including mortgage payments, council rates, water rates and insurance. The surplus was used for joint expenses. She paid off the mortgage in about 1998.
The wife sold the [F] property in 2000. The net proceeds of sale amounted to $130,000.00. Of the net proceeds of sale the wife gave her daughter Ms K $50,000.00. She also purchased the Honda motor vehicle currently in her possession. She purchased an allocated pension from [I] with the balance. The wife denied that she had sold the [F] property because she had rented it to a number of bad tenants. She said that she thought they could invest that money and add to their pension fund, and use it for spending purposes and their lifestyle.
In 1995 the wife purchased the [S] property with her son, Mr J. The property cost approximately $79,000.00. A mortgage was obtained to assist the purchase. Mr J paid most, if not all, of the deposit. The wife could not remember exactly how much money she put towards the initial purchase, however said that it was very little.
The [S] property did not make a profit. Mr J paid most of the shortfall between rent and outgoings. He also made regular payments to reduce the mortgage on the property.
The wife retired in early 2001.
In December 2002 the wife and Mr J sold the [S] property. They divided the proceeds of sale equally. The wife received approximately $58,000.00. She placed this sum in the [I] superannuation fund.
During cross-examination, the wife disagreed that the parties treated their money as separate. She said whatever she had, she shared. The wife agreed that, although the parties had looked into buying a property together during the early 90’s, they had had never purchased any large, joint assets. She disagreed that she purchased the [S] property with
Mr J because the parties had not purchased a joint property. She gave evidence that she and the husband had investigated the purchase of a property in Queensland even after she had purchased the [S] property.
There was little evidence of the financial contributions of the parties during the relationship. The only documentary evidence of the parties’ income was a profit and loss statement of the husband’s business for the year ended 30 June 1998, and the husband’s tax assessment for the year ended 30 June 1999. Both of these documents were tendered by the wife.
The wife gave evidence that during 1997, 1998 and 1999 she earned around $38,000.00 - $39,000.00 per annum. She had been working for over 27 years. She believed that the husband earned roughly $6,000.00 - $7,000.00 over that same period and that after 1999 he earned a similar annual income. He worked for cash-in-hand on jobs from home.
Subsequent to her retirement, the wife obtained a partner’s allowance which was an equal amount to a pension. She received about $350.00 per fortnight in 2001. She was not drawing her superannuation at that stage. After she paid off her mortgage, she saved the rent. She could not recall how much, and estimated $150.00 per week.
The wife contends that she spent more of her income on joint living expenses than the husband and continued to do so following the parties’ retirements.
The wife paid the household bills with her credit card. If, when the credit card statement arrived at the end of the month, she did not have enough money to clear the debt, the husband covered the shortfall. However, the wife stated that this was never a “half-and-half” arrangement. She said:
If the bill came to $1,500, then I would have enough. But if it came to $2,000, he would give me, say, $500 towards it. Or he might have given me $600, to give me an extra $100. It was never half. It was maybe a third or a quarter – it just depended on the expense for the month.
The parties did not have joint bank accounts. The wife stated that the husband gave her this money in one of two ways, sometimes in cash, and sometimes by access to his Keycard account.
During cross-examination, the wife agreed that, in her first affidavit, she deposed that the parties divided the household expenses along roughly equal lines, although she paid more. However, she also agreed that, during her evidence in chief, she claimed to have paid “a lot more” than the husband. She did not agree that her evidence had changed between her first affidavit and the trial. She did not agree that the husband would regularly pay half. She said, “When it came to bills, it just wasn’t half, at all.”
During cross-examination, the wife disagreed with the husband’s contention that he paid the expenses related to the Property C property. She said that she paid council rates, car insurance, car registration, home insurance, gas and water.
The wife is an amateur [omitted] and agreed that the husband often drove her to [omitted].
The wife agreed that the husband had painted the Property C house inside and out, once during the relationship. She also agreed that he used to tend the garden, although she did so also, by tending the fernery and pot plants. The wife agreed that the husband performed all the maintenance on the Property C property. He did repairs to the house and the cars. She said that she sometime gave him money for parts.
The wife asserted that she was the principal housekeeper during the relationship. She did most of the shopping, cooking, cleaning and laundry. She also organised the household accounts. She came home and prepared the lunch. The wife said that the husband prepared lunches only very occasionally. The wife did the ironing. She cleaned the house most of the time and said that the husband rarely helped clean the house. She denied that he helped with the washing and ironing.
During cross-examination, the wife agreed that her financial situation had improved over the course of the parties’ relationship. She agreed that she had thought the sale of the [F] property was a wise financial decision at the time. She also stated that she had sold it because she believed she had a home at Property C.
The parties went on three overseas holidays together. The wife agreed that the husband contributed money towards those holidays, stating that they pooled their money.
In 2008 the wife spent two months visiting the United Kingdom and Germany. She paid for the flight using frequent flyer points. She stayed with family and friends.
On another trip the wife returned to Germany for approximately two months. She paid for these flights, rather than using frequent flyer points. She stayed with family and did not pay for anything. The only expenses she incurred were airfares, travel insurance, souvenirs and gifts.
The wife agreed that during the parties’ relationship she had maintained a strong friendship with her former husband, Mr H, because of their children. Their friendship involved shared celebrations; for example, at Christmas and birthday parties.
The wife has been living at Mr H’s house for over one year. Mr H is currently in hospital. She shares living expenses with him, and is currently receiving a carer’s pension. The wife gave evidence that he owns the house, which he has said he intends to leave to his children when he dies. The wife gave evidence that there is no provision for her in Mr H’s will. She has not consulted with a lawyer regarding any rights she may have to challenge his will.
The husband requested that the wife return financial documents to him. The wife gave evidence that she does not have in her possession any of his financial documents, apart from the two financial documents which were tendered. I accept her evidence that she does not have any documents in her possession.
The wife was questioned about the financial positions of her sons. She agreed that Mr J earns a good salary, but said that he also has significant debts and is required to make large maintenance payments to his ex-wife. She knows that Mr M owns a house, secured by a mortgage. He has a [omitted] business. She does not know his financial position beyond that. Mr M has lent her money to cover her legal fees in the current case. She disagreed that her sons lent her money during the relationship.
The husband’s evidence
The husband gave evidence that the parties started cohabiting in October 1990. At the commencement of the relationship the husband owned the Property C property.
The husband deposed that the wife did not contribute to the financial costs of the Property C property, namely maintenance, rates, water-rates, and insurance. He said that she spent most of her financial resources on her children. The husband said he paid the rates and his car registration. They shared petrol costs. He never saw the wife’s credit card or her financial dealings.
When the bills came in for his truck, car or boat, he would pay the wife. He would also contribute to day-to-day living expenses and food. The wife would take his full pension out of the bank and give him $80.00 back. This sum was shared between the two of them. He would pay her money for the house and the rest of the money would be divided up. He would give her money to buy food.
The husband was able to claim his car and truck registration as a business expense. He was able to pay his bills from his income. He paid the wife quarterly for bills relating to his vehicles. He gave her access to his Keycard account, and she would withdraw money for day-to-day living expenses as needed. He did not know how much money she withdrew.
The husband said that the wife was not the principal homemaker during the relationship. Although he did not cook, he contributed to cleaning. He agreed that the wife organised the accounts. He admitted the wife was a good cook. Whilst she did cooking, he would make lunch and evening meals, as the wife got home after 6.00pm. She cooked the meals when they had visitors.
The husband agreed that he and the wife had been overseas on at least three or four occasions. He said he paid his own costs and on one occasion gave $1,600.00 to the wife to help pay for her airfare.
The husband admitted that he is seeking to include the wife’s assets in the asset pool. He did not admit that he regarded their assets as joint. The wife had her own business and properties. In 1994 he discovered the wife had brought a property in [S]. He knew nothing of her dealings when she went to her financial advisor.
He denied that he was annoyed about the wife giving away the money to Ms K. The only thing he was annoyed about was that the money was not there for day-to-day expenses.
The husband has received an aged pension for 10 years. The amount of his pension reduced when the wife obtained a partner’s allowance. The wife earned more, but he did not know how much. He made a will after his daughter died in 1993. The parties had an agreement to make wills.
Conclusion as to contributions
Whilst the commencement date of cohabitation is not of any great significance, due to the length of the parties’ relationship, I accept the wife’s evidence of the commencement date of cohabitation as October 1988. The wife gave a reason for remembering the date and she was not challenged about it.
In respect of the husband’s initial contribution of the Property C property, I attach weight to it. There was no evidence that it was encumbered at the date of cohabitation. It enabled the parties to have a home throughout their relationship. It is the major asset of the parties. Whilst there was no evidence of its value at the commencement of cohabitation, the wife estimated that it was worth $160,000.00 or $250,000.00. It is now worth $840,000.00.
The wife made an initial contribution of the [F] property, in which there was equity of around $60,000.00. She spent surplus income, received from the [F] property, on joint expenses for the parties. The proceeds of sale of $130,000.00 were contributed to the asset pool and to living expenses.
The wife’s income was substantially higher than that of the husband until her retirement in 2001. The wife contributed the sale proceeds of the Seaforth property of $58,000.00 to the asset pool.
I find that both parties contributed to their joint expenses. I accept the husband’s evidence that he gave the wife the money to cover his bills. However, the wife also used her income to contribute towards their expenses.
The wife made an indirect financial contribution towards the conservation of the Property C property by contributing to household accounts. Whilst the husband’s income paid the rates on the property, the wife paid other living expenses. This enabled the parties to live a comfortable lifestyle and to travel interstate and overseas.
I find that the wife was the primary homemaker during the relationship. I accept her evidence that she was responsible for most of the cooking, cleaning, washing and ironing. She was responsible for the payment of household accounts. She also assisted with the maintenance of the garden of the Property C property.
The husband maintained the Property C property, including painting the inside and outside of the home on one occasion. He was responsible for repairs to the home and to the cars. He maintained the garden. The husband made contributions towards the [F] property by performing regular maintenance tasks at the property.
Since separation, the husband has had the advantage of living in the Property C property.
I find that, having regard to all the contributions of the parties, that the husband made a greater contribution as a result of his initial contribution of the Property C property. I have weighed this up with the wife’s initial contribution and both parties’ subsequent contributions. I assess the contributions as 57% in favour of the husband and 43% in favour of the wife.
Relevant section 90SF (3) factors
The wife is 68 years old and receives an aged pension and a carer’s allowance totalling $400.00 per week. She receives income from a pension fund of $121.00 per week. She also earns interest from shares and investments amounting to $13.00 per week. She has a total weekly income of $534.00 per week.
The wife lives with her former husband Mr H. She is his carer as he is suffering from cancer.
The husband is 73 years old and receives a pension income of $336.000 per week.
The husband has prostate cancer. He is having treatment for cataracts. He suffers from hearing loss and skin problems.
As set out in his Statement of Financial Circumstances, the husband has the commitments of $359.00 per week. The wife has weekly commitments of $307.00 per week. She has the benefit of sharing some of her weekly expenses with her former husband.
The husband will be providing accommodation to his daughter, Ms S, who has been released from prison. As part of her rehabilitation program, she will live with the husband. There is no evidence that the husband will be responsible for supporting her financially.
The effect of the findings as to contributions is that the husband will receive assets to the value of $623,467.00 (rounded up). The wife will receive assets to the value of $470,334.00 (rounded down).
Conclusion as to s.90SF (3) factors
Neither party submitted that there should be an adjustment for s.90SF(3) factors. I consider that these factors do not favour either party.
Is the order just and equitable?
To make an order under s.90SM the Court must be first satisfied that, in all circumstances, it is just and equitable to do so. It must stand back and look to the overall result to ensure that it is just and equitable.
As a result of my findings the wife will receive assets, which amount to a value of $470,334.00, as follows:
·Her [I] superannuation $48,785.00
·Her [I] allocated pension $84,316.00
·Honda Civic $7,000.00
·Account in Goldman Sachs/JB Ware $4,000.00
·Add back $50,000.00 (Notional)
·Plus cash payment from husband $276,233.00
Total$470,334.00
The husband will receive assets, which amount to a value of $623,467.00 made up as follows:
·Property C $840,000.00
·Monies at bank $49,000.00
·1992 Toyota $2,200.00
·1997 EL $3,500.00
·Caravan and boat $5,000.00
Total $899,700.00
·Less cash payment to wife $276,233.00
Total $623,467.00
The husband wants to retain the Property C property; however, he may not be able to obtain finance. In that event, the property will need to be sold and the husband will need to re-house himself.
I will give the husband 45 days to ascertain whether he can obtain finance to pay the wife. If he cannot, the house will need to be sold.
Both parties will have a capital base to re-establish themselves, with that the husband’s exceeding the wife by $153,133.00.
I am satisfied that this result is a just and equitable one between the parties.
I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of FM Baker FM
Date: 10 December 2010
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