PAXTON & MAHY
[2013] FCCA 261
•15 May 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PAXTON & MAHY | [2013] FCCA 261 |
| Catchwords: FAMILY LAW – Property – just and equitable – contributions – workers compensation settlement – Centrelink preclusion period. |
| Legislation: Family Law Act 1975, ss.72, 74, 75, 79 Federal Circuit Court of Australia Act 1999,Pt 6, Div 5 |
| Cases cited: Bevan & Bevan (1995) FLC 92-600 Bremner and Bremner (1995) FLC 92-560 Clauson (1995) FLC 92-595 Clives and Clives (2008) FLC 93-385 C & C (2005) FLC 93-220 Ferraro (1993) FLC 92-335 Garrett and Garrett (1984) FLC 91-539 Hickey (2003) FLC 93-143 Kessey and Kessey (1994) FLC 92-495 Lee Steere (1985) FLC 91-626 OSF and OJK (2004) FLC 93-191 Parshen & Parshen (1996) FLC 92-720 Poulos and Poulos (1984) FLC 91-515 R v Watson; Ex parte Armstrong [1976] HCA 39; (1976) 136 CLR 248 Russell v Russell (1999) FLC 92-877 Stanford v Stanford (2012) FLC 93-518; (2013) 293 ALR 70 |
| Applicant: | MS PAXTON |
| Respondent: | MR MAHY |
| File Number: | LNC536 of 2010 |
| Judgment of: | Judge Roberts |
| Hearing date: | 15 February 2013 |
| Date of Last Submission: | 15 February 2013 |
| Delivered at: | Launceston |
| Delivered on: | 15 May 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr P McVeity |
| Solicitors for the Applicant: | McVeity & Associates |
| Counsel for the Respondent: | Not represented by a lawyer |
| Solicitors for the Respondent: | Not represented by a lawyer |
ORDERS
That the funds currently held in Account No. [A] with the Commonwealth Bank of Australia at Ulverstone in Tasmania in trust for MR MAHY (“the husband”) and MS PAXTON (“the wife”) be divided as follows:
(a)Firstly, by paying $50,000 (fifty thousand dollars) to the wife; and
(b)Secondly, by paying half of the remaining balance to the husband and half to the wife.
That the husband and the wife otherwise each retain their superannuation entitlements and any other property in their respective possession or control free from any claim by the other party.
IT IS NOTED that publication of this judgment under the pseudonym Paxton & Mahy is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BURNIE |
LNC 536 of 2010
| MS PAXTON |
Applicant
And
| MR MAHY |
Respondent
REASONS FOR JUDGMENT
These proceedings arise out of the marriage between the applicant and the respondent. For convenience I shall for convenience refer to them as “the wife” and “the husband” respectively, notwithstanding that they are now divorced and the husband has remarried.
Background
Where I refer to any fact in these Reasons, it should be regarded as a finding of fact unless a contrary intention is clear from the context.
The wife is aged 47 years and the husband is 50 years old. They commenced a dating relationship in early 1993 and the only child of their relationship was born at the end of that year (“the child”). They started living together in late 1994 and married in early 1997. They separated in May 2010 and were divorced in late 2011.
While they each have two children from earlier relationships, only one of the wife’s children lived with the parties for any length of time. The children from those previous relationships are now independent of the parties.
From the start of their cohabitation in late 1994 until their separation in May 2010, the parties lived in a house owned by the husband (“the [B] property”). The husband had purchased the [B] property in 1990 before he met the wife. After the parties separated, the wife continued to live in the [B] property until it was sold in 2012. The net proceeds of the sale of the [B] property are being held in trust pending the outcome of these proceedings.
Procedural history
On 31 August 2010 the wife filed an application seeking final orders for a property division between the parties of 75% to her and 25% to the husband. She also sought final and interim orders that the husband pay her spouse maintenance in the sum of $475 per week.
On 12 October 2010 she filed an amended application in which she also sought orders that would make the husband responsible for paying child support for the child.
The husband filed a response on 9 November 2010 in which he sought orders for:
·a division of property on the basis of 70% to himself and 30% to the wife; and
·a declaration that he be “not liable for administrative assessment of child support” with respect to the child.
On the 22 July 2011 I made orders by consent that inter alia provided for the husband to pay interim spouse maintenance at the rate of $175 per week (“the maintenance order”) and a declaration that the wife was entitled to administrative assessment of child support for the child payable by the husband.
The matter was then set down to hearing in October 2011. However, for various reasons this matter did not come on for a final hearing until 15 February 2013.
At the start of the hearing the wife was seeking orders that would provide her with:
·75% of the “matrimonial property and liabilities”;
·ongoing spouse maintenance; and
·arrears of interim spouse maintenance pursuant to the maintenance order.[1]
[1] See the wife’s Case Outline dated 28 March 2012
In his submissions at the end of the hearing, her counsel submitted that the wife should receive:
·65% of the asset pool; and
·a continuation of spouse maintenance “if there is a capacity to pay” (or alternatively a “topping up” of the wife’s share of the asset pool).[2]
[2] Transcript at page 98
At the start of the hearing the husband was seeking orders as follows:[3]
[3] Application in a Case electronically filed by the husband on 29 January 2013
1. 70% of total pool to husband 30% of total pool to wife
2. Full amount of spousal maintenance to be repaid to the husband
3. All legal costs paid by the wife
4. Recovery of money for rates paid by husband on property
5. Wife to pay water services account for property
6. Wife to pay outstanding house repayments for the property.
By the end of the hearing, the husband was still seeking a division of the asset pool on a 70/30 basis in his favour.
Applicable law
Spouse Maintenance
The law in relation to spouse maintenance is governed primarily by sections 72, 74 and 75 of the Family Law Act 1975 (‘the Act”). The inter-relationship of those sections has been the subject of much discussion in many cases, but it seems clear from Bevan & Bevan[4] that to make an award of maintenance requires the following:
a)A threshold finding under section 72;
b)Consideration of sections 74 and 75(2);
c)No fettering principle that a pre-separation standard of living must be automatically awarded where the Respondent’s means permit; and
d)Discretion exercised in accordance with the provisions of section 74, with “reasonableness in the circumstances” as the guiding principle.
[4] Bevan & Bevan (1995) FLC 92-600
Property
Prior to the recent High Court case of Stanford v Stanford,[5] the general approach to the determination of a property settlement application appeared to have been well established by authority as a multi-step process.[6] The steps were said to involve:
a)Firstly, an identification and valuation of the property, liabilities and financial resources of the parties;
b)Secondly, an evaluation of the contributions made by the parties as defined in section 79(4) of the Act;
c)Thirdly, a consideration of any relevant matters under subsection 75(2) of the Act; and
d)Fourthly, before making an order adjusting property interests, being satisfied in all the circumstances that it is just and equitable to do so under subsection 79(2).[7]
[5] Stanford v Stanford (2012) FLC 93-518; (2013) 293 ALR 70
[6] See Lee Steere (1985) FLC 91-626; Ferraro (1993) FLC 92-335; Clauson (1995) FLC 92-595, Hickey (2003) FLC 93-143 and C & C (2005) FLC 93-220
[7] Also see Russell v Russell (1999) FLC 92-877
In a review of the Stanford decision Melbourne barrister, Minal Vohra said:
The High Court turns our well-understood concept of the requirement that the order be just and equitable as the fourth step in sec 79(4) proceedings on its head. This, the High Court reminds us is not what the Act actually states.[8]
[8] Sound Education in Family Law, February 2013
Martin Bartfelt QC of the Victorian Bar said this in a recent paper:
It follows from the application of these principles that the focus of the enquiry commences by determining whether it is just and equitable to make any order. Or put another way, having regard to what the parties each own, whether such ownership is legal or equitable, should the court disrupt that scheme of ownership by interposing an adjustment of property interests.[9]
[9] “Stanford and Stanford - Lots of Questions - Very Few Answers” by Martin Bartfelt QC, 15 March 2013
In Stanford, at paragraph 37, their Honours French CJ, Hayne, Kiefel and Bell JJ said:
37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
That clearly suggests that being satisfied “in all the circumstances” that it is just and equitable to make an order is not the last in a series of four steps and, with the benefit of that hindsight, it may have been wise for judicial officers over the years to have heeded the words of former Federal Magistrate Walters[10] when he said that “the testing of any proposed orders by reference to section 79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and there is no fourth step in that sense.”[11]
[10] Now Justice Walters of the Family Court of Western Australia
[11] OSF and OJK (2004) FLC 93-191 at paragraph 16
I note also that in paragraph 40 of Stanford, their Honours went on to say:
40. Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”.[12] To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
[12] R v Watson; Ex parte Armstrong [1976] HCA 39; (1976) 136 CLR 248 at 257
I will refer further to the facts of this matter in the light of the legal principles that I must apply.
Is a spouse maintenance order appropriate?
Section 72 of the Act states::
A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason,
having regard to any relevant matter referred to in sub-section 75(2).
In this matter it is very clear to me that the wife is unable to support herself by reason of physical incapacity for appropriate gainful employment. Her doctor’s affidavit evidence was that she “continues to live with a chronic pain syndrome and suffers daily ongoing disability”. His professional opinion was that “she does not have the capacity to return to employment and that her future likelihood of return to the workforce is uncertain” and he viewed the wife’s disability as “a long-term event”.
When he was asked by the husband whether he had changed his mind about the wife’s ability to work at any time in the future, his answer was that his opinion had not changed.[13]
[13] Transcript at page 23
It is therefore clear to me that the wife meets the threshold test of being unable to support herself adequately as referred to in section 72 of the Act. However, that is not the only test in that section. It also refers to a party to a marriage being liable to maintain the other party “to the extent that the first-mentioned party is reasonably able to do so”. Clearly, I need to decide whether the husband has an ability to maintain the wife.
Paragraph 54 of the husband’s trial affidavit sets out his current income of $7,431 per month. His tax is $1,859, so his net income is $5,472 per month, or $1,262 per week.
Paragraph 55 sets out some of his weekly household expenses. I have excluded the figure given for “Child Support Assessments” because:
·the child is now 19 years old; and
·the stated figure also includes his interim spouse maintenance liability.
The total of the remaining items in paragraph 55 is $1,236 per week. That must mean that he has only $26 per week for all other expenses, including clothing costs, pharmaceutical expenses and medical, dental and optical expenses. While some of his expenses include his support of his current wife’s children (for whom he does not appear to be financially responsible under either the Family Law Act 1975 or the Child Support (Assessment) Act 1989), it is still clear on those figures that the husband does not have the financial capacity to pay periodic spouse maintenance.
I therefore consider it to be more appropriate to take account of the wife’s inability to support herself when considering the section 75(2) factors in relation to property matters.
Is it just and equitable to make any order adjusting property interests?
I am of the view that the answer to this question is obvious. That is because the funds being held in trust come from the sale of the [B] property which was registered in the sole name of the husband. Consequently, if no order is made altering the parties’ property interests, the husband would by law be entitled to the entirety of those funds. However, it is clear from the orders being sought by the husband for a 70/30 division that he acknowledges the justice and equity of the wife being entitled to at least some proportion of those funds.
The asset pool
It is difficult to be definitive about the make up of the non-superannuation asset pool in this matter. That is because both parties’ circumstances have changed quite significantly since separation.
I am satisfied that the wife retained the majority of the household furniture and effects when they separated. She also retained a motor vehicle. At that time, the husband retained a motor vehicle and a motorcycle. It is not possible for me to work out with any degree of precision the values of what they retained. However, I am satisfied that there was some degree of equality.
The parties are in dispute about how much money each of them retained at the time of separation. There is no dispute that the husband took cash in the approximate sum of $10,000 from the safe in the [B] property at that time. However, the wife says that he also talk a further sum of $9,935 that the wife had received by way of a superannuation payment. He disputes that, and states that she retained that money because he retained a sum of $10,000 that he took from the safe.
The parties have not provided me with any documents or other corroborating evidence to support their versions of what happened at that time. Consequently, I must decide which of the two versions is more likely to have occurred, and on balance I find that the husband’s version is more believable. I therefore find that at the time of separation the parties each retained similar amounts of money.
In view of these findings, it seems appropriate to me to only include the net proceeds of sale of the [B] property in the non-superannuation asset pool. As at 1 February 2013, those proceeds were $166,882.66.[14]
[14] See Exhibit “W1”
It is also difficult to ascertain the true value of the superannuation asset pool. That is because neither party provided any documentary evidence in relation to their superannuation entitlements. However, the husband’s Financial Statement filed in November 2010 showed that he had an interest at that time worth $31,645, and in the witness box he conceded that he had accumulated more superannuation since then and that he “would have another fund with about 15 grand in it”.[15] It is therefore reasonable to assume that the husband’s superannuation entitlements are in the vicinity of $47,000 at this time.
[15] Transcript at page 87
The only evidence that I have in relation to the wife’s superannuation entitlement is to be found in her financial statement filed in August 2010. At that time she estimated her entitlement to be worth $5,000. While the husband submitted that it would have increased in value since that time, I note that the wife has not been working and superannuation accumulation funds have not performed very well in recent years. I therefore conclude that the wife’s superannuation entitlement would not exceed $6,000.
Contributions
The husband was the owner of the [B] property before the parties commenced their relationship. Annexure “A” to his affidavit shows that he purchased a property in 1990 for $60,500. The property was subject to a mortgage liability. In his affidavit, the husband states that he had used some funds received by way of compensation for a shoulder injury to reduce that mortgage liability to $53,000. Unfortunately, I have no evidence of the value of the [B] property when the parties commenced cohabitation (approximately 4 years after the husband had purchased that property). However, it is clear that he had some equity in that property and that his initial contributions were greater at the start of the relationship.
During the period of cohabitation both parties were at times employed, in receipt of Centrelink benefits or in receipt of compensation payments. Both parties contributed financially but I do not have sufficient information from either party to quantify their financial contributions. However, it is clear that the assessment of contributions is not an exercise of mathematical precision. In Hayne and Hayne, Pawley J said:
In matters such as this one cannot approach the problem with an eye for meticulous detail. It should rather be dealt with broadly so that the end result can be said to be just and equitable.
I also note that in Parshen & Parshen, their Honours Ellis, Finn and Purdy JJ said the following:
In our view, in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to the provisions of s79 that moneys howsoever received by a party during the course of the parties’ cohabitation, are used by that party for the benefit of the family unit. Such moneys, in those circumstances, thus constitute a financial contribution by the party who received the moneys. [17]
[17] Parshen & Parshen (1996) FLC 92-720 at page 83,665
I am also satisfied that both parties played their part as homemakers and parents, although it is clear that the husband has made no contribution as a parent since separation, apart from compulsory Child Support payments.
Consequently, when I weigh up the parties’ overall contributions, I conclude that while the husband's initial contributions were greater than those of the wife, her contributions as a parent after separation act as a balancing factor. The only conclusion that I can draw is that the parties contributed equally, notwithstanding that some of their contributions may have been different in nature.
I gained the impression from the closing submissions made by counsel for the wife and by the husband that they both accepted that contributions were equal.[18]
[18] See pages 97 and 102 of the Transcript.
Consequently, if this matter was to be decided on the basis of contributions alone, an adjustment would need to be made to provide for equality and the net proceeds from the sale of the [B] property would be divided equally between the parties. However, such matters are not decided only on an assessment of the parties’ contributions.
Subsection 75(2) factors
As mentioned above, the husband is aged 50 and the wife is 47 years old.
The husband is employed as a [omitted] and he has a gross income in the vicinity of $90,000 per annum.
The wife is not employed and I am satisfied from the medical evidence provided by her doctor that she is not capable of being employed, even if an employment opportunity became available.
In July 2012 the wife settled a workers compensation claim for a lump-sum payment. After paying her legal costs, and a Medicare repayment, she received a balance of $144,500 to support herself during the period in which she is precluded from receiving any Centrelink benefits (exclusive of medical and related expenses for which she received an additional $24,000).[19] She conceded under cross-examination by the husband that she had also received an earlier lump-sum of approximately $33,000.[20]
[19] See paragraphs 24 and 25 of her affidavit.
[20] See page 32 of the Transcript.
I am satisfied that the wife was confused when she stated in her affidavit that her Centrelink preclusion period is a four year period.[21] It is clear from Exhibit “H1” that it is for 152 weeks, expiring on 16 July 2015. However, her confusion probably arose from the fact that her compensation lawyer refers to “the next four years” in a different context in that Exhibit.
[21] Paragraph 25
The wife’s evidence was that she had used her compensation payment to:
·reimburse her mother $11,000 for financial support that she had provided;
·purchase a car for $13,000;
·pay off her debts of approximately $60,000; and
·meet living expenses and a variety of household bills.[22]
[22] Paragraph 26 of her affidavit
She said that she had only $30,000 of her compensation payment available for her support,[23] and that evidence was not seriously challenged.
[23] At paragraph 27
While I have noted above that the husband does not appear to be financially responsible for the support of any of her children under either the Family Law Act 1975 or the Child Support (Assessment) Act 1989, he does have an obligation to support his current wife. I accept his evidence that she is now not working because of health difficulties but I do not have any medical evidence about the significance of those difficulties.
The wife has not re-partnered.
Subsection 75(2)(g) requires me to take into account “a standard of living that in all the circumstances is reasonable” but that does not mean that a pre-separation standard of living must be automatically awarded.[24] In any event, it is clear to me that the husband’s financial circumstances are such that it could not be considered. I have found that he does not have the capacity to pay ongoing periodic maintenance.
[24] Bevan & Bevan (1995) FLC 92-600
Having said that, it is quite clear to me that the husband’s financial circumstances are significantly better than those of the wife and there needs to be an adjustment in the wife’s favour. It is also clear that she will need assistance to ensure that she is able to meet her needs, at the very least until her Centrelink preclusion period ends in July 2015. In relation to that, I accept the submission by the wife’s counsel that I should look at the quantum of the subsection 75(2) adjustment rather than think only in percentage terms. He referred me to the decision in Clauson, where the Full Court of the Family Court said:
There is, we think, at times a tendency to assess s. 75(2) factors in percentage terms without considering its real impact, and we think there is legitimacy in the views expressed in more recent times that the Court has tended to operate in this area within artificially delineated boundaries. That is, it appears almost to be inevitable that the s. 75(2) factors will be assessed in a range between 10% and 20%. A number of cases will justify an assessment outside those parameters and in any event it is the real impact in money terms which is ultimately the critical issue.[25]
[25] Clauson & Clauson (1995) FLC 92-595 per Barblett DCJ, Fogarty and Mushin JJ at page 81,911
Conclusions
In the circumstances, I am of the view that a just and equitable resolution of this matter is to divide the proceeds of the sale of the [B] property as follows:
a)firstly, by paying an initial lump sum of $50,000 to the wife; and
b)secondly, by dividing the remaining balance equally between the husband and the wife, which will mean that they will each receive approximately $59,000 from the remaining balance of approximately $118,000 (inclusive of interest).
The parties will otherwise retain their superannuation entitlements and the property in their respective possession or control free from any claim by the other.
I will make orders to provide for what I have said above.
Procedure
I heard this matter in Burnie but I will be delivering this decision in Launceston during a mention of the matter by telephone (primarily because the husband lives in Queensland). My Associate will provide copies of these Reasons and the Orders by mail and/or by electronic means.
If any costs application is to be made, it should be made within 28 days in accordance with Rule 21.02(1)(b) of the Federal Circuit Court Rules 2001. That can be done by contacting my Associate to arrange for a listing of the matter, to be heard by telephone or video link in accordance with Division 5 of Part 6 of the Federal Circuit Court of Australia Act 1999.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Judge Roberts
Associate:
Date: 15/5/13
[16] Hayne and Hayne (1977) FLC 90-265 at p. 76,415. Also see Garrett and Garrett (1984) FLC 91-539, Poulos and Poulos (1984) FLC 91-515, Bremner and Bremner (1995) FLC 92-560, Clives and Clives (2008) FLC 93-385 and Kessey and Kessey (1994) FLC 92-495
Key Legal Topics
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Family Law
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Equity & Trusts
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