Penzel and Penzel
[2011] FMCAfam 75
•31 January 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PENZEL & PENZEL | [2011] FMCAfam 75 |
| FAMILY LAW – Property – long marriage – substantial initial and later contributions – failure to provide evidence of new partner’s financial position. |
| Family Law Act 1975, s.75(2) |
| In the Marriage of Aleksovski (1996) 20 Fam LR 894 K.R. Handley, Estoppel by Conduct and Election (Sydney: Sweet & Maxwell/Thomson, 2006) |
| Applicant: | MR PENZEL |
| Respondent: | MS PENZEL |
| File Number: | CAC 795 of 2009 |
| Judgment of: | Neville FM |
| Hearing date: | 13 May 2010 |
| Date of Last Submission: | 11 August 2010 |
| Delivered at: | Canberra |
| Delivered on: | 31 January 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Nash SC |
| Solicitors for the Applicant: | Watts McCray McGuiness Eley |
| Counsel for the Respondent: | Mr Millar |
| Solicitors for the Respondent: | Farrar Gesini & Dunn |
ORDERS
Within 21 days, the parties are to provide the Court with a certified copy of Orders that reflect the distribution of property 59% in favour of Mr Penzel and 41% in favour of Mrs Penzel.
In the absence of agreement, the orders sought by Mrs Penzel shall apply, subject to them reflecting a payment that will conform to the percentage distribution referred to in Order 1.
In the absence of an Application within 14 days of the date of these Orders, an Order will be made that each party is to pay their own costs of the proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Penzel & Penzel is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAC 795 of 2009
| MR PENZEL |
Applicant
And
| MS PENZEL |
Respondent
REASONS FOR JUDGMENT
Introduction
The scope of the dispute in this property matter is quite narrow. In the light of long-standing Full Court authorities such as Bremner and Pierce,[1] the dispute might be stated as essentially being confined to what weight the Court should give to the substantial contributions that the Husband brought to the relationship in circumstances where there was a long marriage and the financial contributions came courtesy of (a) property and investments of the Husband’s parents and (b) property and investments that were inherited by the Husband.
[1] Bremner& Bremner (1994) 18 Fam LR 407; In the Marriage of Pierce (1998) 24 Fam LR 377.
Added to this general statement of issues are the following considerations: (a) the Husband quite fairly conceded that during the course of the marriage the Respondent Wife was not only the homemaker and primary carer of the couple’s two children (now aged 22 and 16 years respectively, both of whom continue to live with their Mother), but also (b) the Husband also conceded that during the marriage Mrs Penzel contributed to the farm business as well as to the welfare of both of his parents.
Save for one matter, there was little disagreement in relation to the composition of the asset pool. Generally stated, the Court is here dealing with a property pool in excess of $4,000,000 in a marriage of 21 years.
Mr Penzel seeks Orders that would result in a split of that pool 70/30 in his favour. Mrs Penzel seeks Orders that would result in a 50/50 split. The detail of the Orders sought is set out below.
One other matter should, and can be noted conveniently here. In addition to the unfortunate circumstance of parties to a long marriage feeling compelled to litigate to resolve property issues, as I have indicated, the actual issues in dispute were relatively few in number. Unfortunately, one area of evidence was not, in my view, properly addressed.
Mr Penzel has formed a new relationship with Ms B. They live together. Her two children reside on a regular basis with their Mother and Mr Penzel. Regrettably, no affidavit was filed by Ms B. The Court only learnt something of her financial circumstances in the course of cross-examination of Mr Penzel. This was regrettable. The failure to provide such relevant evidence from Ms B in property proceedings was a clear breach of the Court Rules in relation to proper and full disclosure, as well as established judicial principle that deals with such matters.[2] I come back to this dimension of the proceedings when dealing with the evidence.
[2] The duty to make full and frank disclosure is set out in full in this Court’s Rules. See Federal Magistrates Court Rules2001, generally, Part 14, and in family law proceedings in particular, see Part 24, and notably r.24.03. For a very recent discussion of the duty of disclosure, admittedly in the context of the rules applicable in the Family Court, see the reasons of Cronin J in Carmel-Fevia v Fevia (2010) 43 Fam LR 405 especially at [55]. Among many cases, see Oriolo & Oriolo (1985) FLC ¶91-653 p.80,256, Gould & Gould (2007) FLC ¶93-333 and In the Marriage of Chang & Su (2002) 29 Fam LR 406. These cases suggest that there is an especially wide discretion available to the Court in circumstances where there has been non-disclosure.
These reasons proceed as follows: (a) Orders Sought; (b) Narrative of the Relationship; (c) The Asset Pool; (d) Contributions; (e) Consideration of Section 75(2) Factors; and (f) Just and Equitable Order.[3]
[3] Generally, see AJO v GRO (2005) 33 Fam LR 134 at p.147 [46].
Orders Sought
The Husband’s Orders Sought are as follows:
HUSBAND’S PROPOSED ORDERS
1. That within 30 days the Husband do all things necessary to transfer to Mrs Penzel at her expense all of his interest in the property being title reference [omitted] known as Property G, in the State of New South Wales.
2. Within 30 days the Husband do all things and sign all documents necessary to do the following:
(a) Transfer his shareholding interest in [M] Pty Ltd to
Mrs Penzel; and(b) Resign as Director of [M] Pty Ltd
3. That within 30 days the Husband do all things and sign all documents necessary to transfer to Mrs Penzel his shareholding interest in shares in Century, AMP and AFI.
4. That within 30 days the Husband do all things and sign all documents necessary to refinance the Bank of Queensland contract number [omitted] secured on the Toyota Hilux motor vehicle so as to fully release Mrs Penzel from all liability in respect to that loan.
5. That within 30 days Mrs Penzel do all things and sign all documents necessary to transfer to the Husband her interest in the ING One Answer investment policy number [omitted] owned jointly by the parties.
6. That within 30 days Mrs Penzel do all things and sign all documents necessary to transfer her interest in the partnership Mr & M Penzel and the Hilux motor vehicle NSW registration number [omitted] to the Husband at the expense of the Husband.
7. That within 30 days the Husband will do all things necessary to transfer to Mrs Penzel at her expense all of his interest in the property at [2] Property Y, in the State of New South Wales.
8. That the Husband be as against Mrs Penzel sole legal and beneficial owner of:
(a) the property known as Property T comprising folios: [omitted];
(b) The property at [1] Property Y, in the State of New South Wales;
(c) Plant and equipment and household furniture and effects located at the “Property T” and [1] Property Y, properties;
(d) The assets of the Mr & Ms Penzel partnership, including plant and equipment, livestock, funds in the farm bank account and the Hilux motor vehicle;
(e) Guns; and
(f) His [omitted] superannuation entitlements.
9. That Mrs Penzel be as against the Husband the sole legal and beneficial owner of:
(a) Plant and equipment not previously owned by the Husband’s parents and household furniture and effects at the property at Property G; and
(b) Her [omitted] superannuation entitlements.
10. That Mrs Penzel will make available to the Husband within one week of being asked to do so, at a time agreed between the parties, personal items belonging to the Husband, including his motor bike, as well as the items formerly belonging to his parents stored in the container and shed at the Property G property
11. That unless otherwise specified in these Orders:
(a) Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party at the date of these Orders;
(b) Insurance policies remain the sole property of the beneficiary named therein; and
(c) Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
Mrs Penzel’s Orders sought are as follows:
WIFE’S PROPOSED ORDERS
1. That within 30 days the Husband do all things necessary to transfer to Mrs Penzel all his interest in the property being title reference [omitted], known as Property G, in the State of New South Wales (“the Property”).
2. That the Husband pay to Mrs Penzel the sum of $895,300 (“the Payment”) on or before 30 days from the date of the Orders (“the Due Date”).
3. That if the whole of the Payment has not been made by the Due Date:
(a) The Husband shall, in addition to the Payment, pay Mrs Penzel interest on the Payment or the amount outstanding from time to time at the rate prescribed by the Family Law Rules to be calculated from the Due Date to the date of Payment.
(b) The Husband do all things necessary to effect sale of the property known as Property T comprising folios [omitted] (‘the Property).
(c) If the Husband and Wife are unable within a period of 14 days after the Due Date to reach agreement as to the manner, conditions or amount for which the Property shall be sold, the Husband and Wife do all things necessary to effect the sale of the Property by private treaty at the market value determined in accordance with Order 12(e) at the earliest possible date.
(d) The Husband and Wife place the Property with an agent for sale to be agreed between the Husband and Wife or in default of agreement with an agent (“the Agent”) nominated by the President of the Real Estate Institute of the ACT.
(e) The market value of the Property shall be as agreed between the Husband and Wife, or failing agreement shall be $2,420,00 as per the joint valuation.
(f) If the Property is not sold within three months of the Due Date or if the Property is sold and the sale subsequently does not proceed to completion the Husband and Wife do all things necessary to offer the Property immediately for sale by public auction by the Agent, the reserve price being the market value determined in accordance with Order 3(e).
(g) The Husband and Wife execute all documents requested by the Agent as auctioneers for sale of the Property by auction.
(h) The Husband and Wife execute a contract of sale.
(i) The Husband and Wife cooperate in every way with the Agent in relation to the auction of the Property including making the keys available for an inspection of the Property at times requested by the Agent and ensuring that the Property is in a clean and neat condition at the time of inspection by the prospective purchasers.
(j) If the Property is not sold at the auction within 21 days thereafter the Husband and Wife shall meet the market price and sell the Property at the best price then obtainable.
(k) During the period that the Property is being offered for sale the Husband shall allow prospective purchasers to inspect the Property at all reasonable hours by appointment.
4. That the Husband and Wife do all things necessary to cause the proceeds of the sale of the Property to be distributed as follows:
(a) To pay all costs commissions and expenses of sale.
(b) To pay the usual rate adjustments.
(c) To pay the amount required to discharge the Mortgage.
(d) Subject to any adjustments necessary pursuant to Order 4(b) above to pay so much of the Payment as is then outstanding together with interest in accordance with Order 3(a) to
Mrs Penzel.
(e) To pay the balance to the Husband.
5. That the time limits and the terms and conditions for sale set by these orders may be varied by the parties by written agreement.
6. That liberty be reserved to either party to apply to the Court on seven days’ notice to the other with respect to the terms and conditions of the sale.
7. That if either party refuses, fails or neglects to execute any document necessary to put these Orders into effect14 days after being requested to do so, and any such refusal, failure or neglect is proved by Affidavits filed and served by or on behalf of the party alleging this, the Registrar of the Family Court at Canberra be and is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute such document in the name of such party.
8. That within 30 days the Husband do all things and sign all documents necessary to do as follows:
(a) Transfer his shareholding interest in [M] Pty Ltd to Mrs Penzel;
(b) Resign as a Director of [M] Pty Ltd.
9. That within 30 days the Husband shall do all things and sign all documents necessary to transfer to Mrs Penzel his interest in the ING One Answer Investment Policy [omitted] owned jointly by the parties.
10. That within 30 days the Husband shall do all things and sign all documents necessary to transfer to Mrs Penzel his shareholding interest in shares in Century, IAG, AMP and AFI.
11. That within 30 days the Husband shall do all things and sign all documents necessary to refinance the Bank of Queensland contract number [omitted] secured on the Toyota Hilux motor vehicle so as to fully release Mrs Penzel from all liability in respect to that loan.
12. That within 30 days Mrs Penzel do all things and sign all documents to transfer her interest in the partnership Mr & Ms Penzel to the Husband at his expense.
13. That unless otherwise provided for in these Orders
Mrs Penzel retain her sole right, title and interest in the following:
(a) The furniture, household effects, equipment and tools located at the Property G property, excluding the contents of the shipping container;
(b) Funds in any bank account in her name;
(c) Her superannuation entitlements.
14. That unless otherwise provided for in these Orders the Husband retain her sole right, title and interest in the following:
(a) Real property registered in his name (‘Property T’, [1] and [2] Property Y);
(b) Funds held in a bank account in his sole name;
(c) Funds in the farm bank account;
(d) Plant and equipment located at the Property T property and [1] Property Y;
(e)The contents of the shipping container;
(f) His superannuation entitlements.
Narrative of the Relationship
The Husband was born in 1961 and, at the time of the hearing was aged 48 years. Mrs Penzel was born in 1965 and at the time of the hearing was aged 45 years.
The parties married in 1987. They separated in November 2008 at which time, as I have already indicated, Mr Penzel left the marital residence and began to live with Ms B.
At the date of the marriage in 1987 Mr Penzel and his parents were joint tenants of a property known as Property G. At that time also,
Mr Penzel had a one third interest, as tenant in common with each of his parents, in another property known as Property T.
In September 1998, Mr Penzel's Mother died. Probate of her will, which was made on 31 July 1981, was granted in February 1999. Pursuant to the terms of that will, she appointed Mr Penzel's Father as executor; she left the whole of her estate to him. Accordingly, upon her death her interest in Property G passed by survivorship to Mr Penzel and his Father as the surviving joint tenants. Her one third interest as tenant in common in Property T passed to the Husband’s Father so that he thereafter held an interest as tenant in common as to two thirds with Mr Penzel who continued to have a one third interest as tenant in common in that property.
On [date omitted] 2005 Mr Penzel's Father died. Probate of his will, which was made on 20 August 1999, was granted to Mr Penzel on
30 June 2005. By this will, Mr Penzel's Father appointed Mr Penzel as his executor and left the whole of his estate to him. The will provided that in the event that Mr Penzel did not survive his Father by 30 days, or did not inherit from him for any other reason, then Mrs Penzel was appointed executrix and trustee and was to hold the whole estate upon trust to divide it equally among such of Mr Penzel’s children as survived him and attained their majority.
Upon the death of his Father, Mr Penzel obtained the entire interest in the property known as Property G, being the surviving joint tenant. He also obtained the entire interest in the property known as Property T in which he already held a one third interest as tenant in common and obtained his Father’s two thirds interests as tenant in common under his Father’s will. Mr Penzel also inherited from his Father investments to the value of approximately $711,000, some stock, vehicles and plant, and the properties known as [1] and [2] Property Y.
I have already noted that there are two children of the marriage, [X] who was born in 1989, and [Z], who was born in 1994. I have also noted that the children have continued to live with their Mother since the separation of their parents. [X] is employed as an apprentice [omitted] and [Z] remains at school. Unfortunately, [Z] is now estranged from his Father. It seems not contested that apart from his modest income as an apprentice [omitted], [X] is cared for and financially supported by Mrs Penzel. She also provides the care and financial support for [Z]. Thus far, little has been paid by Mr Penzel in the way of child support but, in the course of his evidence, he indicated that he would be paying child support and had no opposition to doing so.
Asset Pool
One matter needs to be addressed prior to detailing the asset pool.
In the course of the hearing there was very brief cross-examination of Mr Penzel in relation to funds received from the sale of some sheep, and the use of those funds by both parties, for example in relation to the payment of some legal fees.[4] Some little time after the trial both parties provided written submissions in relation to this issue of ‘double counting.’
[4] See Transcript (13th May 2010) pp.27-28.
When Mrs Penzel’s Amended List of Assets and Liabilities was provided to the Court at the trial it included reference to sheep of $46,000 and proceeds of sale of $54,000 (total: $100,000), as well as to each party having expended $15,000 on legal fees up to that time. The net balance from these proceeds obviously equalled $70,000. These figures were put to Mr Penzel and he agreed with them.[5]
[5] Transcript (13th May 2010) p.40.
In such circumstances, I accept the submissions that Mr Penzel should not now be able to depart from what was put to him at trial and which he accepted.[6]
[6] See further the Written Submissions on behalf of Mrs Penzel, filed 11th August 2010.
Subject only to and in the light of this brief discussion, the following list of assets and liabilities should be taken as agreed as between the parties and accepted by the Court:
| Assets | ||
| Real Property | ||
| Property T | E$2,420,000 | Valuation |
| Property G | E$1,050,000 | Valuation |
| [1] & [2] Property Y | $420,000 | Valuation |
| [M] Pty Ltd | ||
| (a) [Vehicle] $200,000 less loan $147,000 - $53,000 | ||
| (b) Kluger motor vehicle $25,500 less loan $2,970 - $22,530 | ||
| (c) Office furniture, tools - $3,200 | $78,730 | Valuation |
| Mr & Ms Penzel Partnership | ||
| (a) Plant and equipment - $23,200 | ||
| (b) Livestock - $46,000 sheep and $54,00 proceeds (less $15,000 each party withdrew in Feb 2010 for legal fees) - $70,00 | ||
| (c) Toyota Hilux motor vehicle - $26,000 less QLD bank loan $15,967 - $10,035 net | $103,235 | Valuation |
| 3,329 AFI shares @ $4.99 at 12/5/10 - Mr & Ms Penzel | $16,611 | |
| 769 IAG shares @ $3.76 at 12/5/10 - Mr & Ms Penzel | $2,891 | |
| Century Australia Investments - CYA 13,603 @ 0.795 at 12/5/10 | $10,814 | |
| 1,054 AMP shares @ $5.95 at 12/5/10 - Mr Penzel | $6,271 | |
| ING Managed Funds - Mr & Ms Penzel at 12/5/10 | $78,973 | |
| Husband's CBA account number ending …[1] | $5,091 | |
| Wife's CBA account number ending …[2] | $2,933 | |
| Wife's Netbank Saver account number ending …[3] | $18 | |
| CBA business account ([M] P/L) number [4] | $9,182 | |
| CBA business account (farm account) number ending …[5] | $13,635 | |
| Household furniture and effects at the Property G Valuation | $9,800 | |
| Tools at Property G | $7,140 | |
| Items in the container and shed at Property G Valuation | $2,210 | |
| Husband's motor bike and personal items valuation | $2,050 | |
| Guns | $14,740 | |
| Total Assets | $4,254,324 | |
| Liabilities | ||
| Commonwealth Mastercard (wife) | $990 | |
| ANZ - Visa (wife) | $13,000 | |
| Woolworths Everyday Account (wife) | $1,400 | |
| [Z]'s school fees for Term 1 and Term 2 2010 | $2,009 | |
| Total Liabilities | $17,399 | |
| Total Net assets | $4,236,925 | |
| Superannuation | ||
| Husband's [omitted] superannuation interest at 29/1/10 | $25,952 | |
| Wife's [omitted] superannuation interest at 12/2/10 | $20,610 | |
| Total Superannuation | $56,562 | |
| TOTAL INCLUDING SUPERANNUATION | $4,293,487 | |
| ADDBACKS | ||
| Funds taken by Husband | $17,046 | |
| Husband's legal fees Feb 2010 from farm account | $15,000 | |
| Wife's legal fees Feb 2010 from farm account | $8,000 | |
| TOTAL | $40,046 | |
| TOTAL WITH ADDBACK | $4,333,533 |
Evidence of the Parties
Evidence of Mr Penzel: Mr Penzel confirmed that he was now working as a [omitted]. Although his employment is described as full time casual he confirmed that he usually works five days each week and sometimes on a weekend. His current payslips became Exhibit A.
The following matters may be noted summarily from the very brief evidence of Mr Penzel.
Mr Penzel confirmed that he had made what in effect amounted to a complaint to the Department of Transport in relation to the care and attention to a [vehicle] which he had operated with Mrs Penzel. He said that the complaint was motivated because he was “angry” with Mrs Penzel because, in his view, she was not paying the care and attention to the [vehicle] which he formerly did. He said that he looked after it “like a baby.”
The issue of the [vehicle] is relevant in this respect: under the Orders sought it is clear that Mrs Penzel will continue to conduct the [transport business] under the contract that she has with the NSW Department of Transport. It will be her principal means of income.
The next matter addressed in his brief cross-examination related to his use of funds, after separation, from the farm account. He confirmed that he took $8,000 from the farm account and put it into his personal account. He continued to take from that ‘farm account’ an ongoing amount of $500 per week.
He confirmed that, thus far, he had paid $15,000 in legal fees.
Turning to the discussion of his relationship with Ms B, he confirmed that they are in a de facto relationship and that they are both living at [1] Property Y in [omitted]. He confirmed that in relation to outgoings on that property that Ms B was paying nothing. In response to further questions he confirmed that Ms B owns a property near [omitted]. It would appear that that property is jointly owned with her former Husband. Mr Penzel confirmed that property proceedings between
Ms B and her Husband were due to commence “soon” but otherwise there had been no arrangement or agreement in relation to assets as between Ms B and her Husband.[7]
[7] See the discussion at Transcript (13th May 2010) pp.28-32.
In answer to further questions Mr Penzel confirmed that Ms B had an interest in her Husband’s business known as “[B].”
Mr Penzel agreed that Ms B was “richer than he thought she was.”[8]
[8] Counsel for Ms Penzel tendered a business name extract for [B] as well as a title search for Lot [omitted], Deposited Plan [omitted]. These became Exhibits D & E respectively.
Mr Penzel was then taken through parts of his financial statement. He confirmed that there were a range of expenses not listed in the financial statement which are to do with food and living expenses in relation to Ms B and her children.[9]
[9] See Transcript (13th May 2010) pp.33 ff.
The next area of discussion with Mr Penzel concerned the contributions of Mrs Penzel in the course of the marriage. Reasonably readily he acknowledged that not only when his parents needed help, and presumably when Mr Penzel was not around, Mrs Penzel assisted his parents more generally.[10] He also confirmed that Mrs Penzel assisted with hand feeding the sheep during times of drought, and also when he was away doing other work. He also agreed that particularly after Mr Penzel's Mother died, Mrs Penzel became fully involved in the preparation of business papers in relation to the family properties, and seemingly in day to day collation of such material for forwarding to the family’s accountants.
[10] Transcript (13 May 2010) p.36.
In the course of cross-examination Mr Penzel confirmed that during the lifetime of his parents when he worked on the family properties he was not paid. He agreed that this was so because, as their only heir he knew that he would receive the family properties in due course, and therefore there was no reason for him to be asking for any payment given that the properties were run as a family business between his parents and himself.[11]
[11] Transcript (13 May 2010) p.38.
After Mr Penzel’s Mother died, Mrs Penzel took over paying the wages for shearers and organising matters relating to tax and superannuation. Likewise he agreed that after Mr Penzel's Mother’s death, Mrs Penzel started doing Mr Penzel Senior’s bookwork in relation to the operation on the farm which included matters relating to GST.
Mr Penzel confirmed that his former Wife also cooked meals for his Father, drove him to appointments such as with the family accountants, shopped for him and organised for cleaning of his house. And, after
Mr Penzel's Father died, Mrs Penzel was the person primarily responsible for dealing with the solicitor concerning probate and the administration of the deceased estate.[12]
[12] Transcript (13 May 2010) p.41.
Mr Penzel also confirmed that after his Father’s death, Mrs Penzel was involved in shearing and crutching of the sheep. Mr Penzel agreed that she (a) kept records about stock sales; (b) sometimes assisted to pen the sheep; and (c) drafted the lambs from the ewes. More generally,
Mr Penzel agreed that throughout the marriage Mrs Penzel regularly assisted in the farm work in addition to her responsibilities as Wife and homemaker.[13]
[13] For the general discussion regarding the range of matters associated with farm work attended to by Mrs Penzel, see Transcript (13 May 2010) pp.41-43.
Not insignificantly, there was discussion about superannuation and the fact that neither of the parties had accumulated much of it in the course of the marriage. Mr Penzel agreed with the proposition that there was not too much concern in this regard because, later in life, he would have available to him, the value of the properties and whatever other assets would come to him from his parents.[14]
[14] See Transcript (13th May 2010) p.44.
Likewise, he agreed that, in the course of the marriage, he said to
Mrs Penzel words to the effect that “we don’t need to put money away for superannuation. Property T will be our superannuation.”[15]
[15] Transcript (13 May 2010) p.44.
The one area where Mr Penzel was less than clear concerned the times when Mrs Penzel earned income from work away from the farm. While he would not concede that any funds so earned (no quantification of such funds was specified but it is unlikely to be a figure of any great significance) he would only say that he did not know what Mrs Penzel did with the funds. In answer to questions from the Bench he confirmed that she was not taking separate holidays from such funds, nor was she a gambler, nor was she a drinker: therefore the greater likelihood, I infer, is that, to the degree that Mrs Penzel earned funds from paid employment, they were more likely than not to have been used for the benefit of the family.
Mr Penzel also, very readily, agreed that Mrs Penzel was very diligent in attending to all family and business matters in the course of their marriage.[16]
[16] Transcript (13 May 2010) p.47.
As also previously indicated, Mr Penzel said that he does not currently pay child support for the children, but expects to do so after he speaks further with his lawyers.[17]
[17] Transcript (13 May 2010) p.49.
Evidence of Mrs Penzel: In the course of Mrs Penzel’s very short and limited cross-examination, she confirmed that pursuant to an agreement with Mr Penzel that was negotiated early in 2010, she would conduct the [transport] business that the couple had formerly run, and that Mr Penzel would conduct the farm business. The [transport] business operates for 201 days per year.
There was quite some discussion of, and distinction attempted to be drawn between, on the one hand, funds received by Mrs Penzel from wages from a family company from which living and other expenses were paid, and on the other hand, the fact that the source of these funds was from a joint account. The relevant company is styled [M] Pty Ltd. Mrs Penzel was at pains to point out that funds she received from which expenses were paid were pursuant to wages that she drew. Senior Counsel for Mr Penzel sought to emphasise the fact that whatever the source of funds used by Mrs Penzel the originating source were the joint funds of the parties.
The only other matter of relevance addressed in the course of the very brief cross-examination of Mrs Penzel simply confirmed that she expected to continue to earn $500 per week from running the [transport business] pursuant to the contract with the NSW Department of Transport.
Contributions
I have already indicated the various interests in property that Mr Penzel had at the commencement of his relationship with Mrs Penzel. By any measure they were significant in fact and the expectations in futuro. For her part, at the commencement of their marriage she owned a motor vehicle and some household furniture.
At the time of commencement of their marriage, Mr Penzel was employed as a [omitted] in a business owned by his Father. He also worked on the farm business operated by his parents on the two properties. Mrs Penzel was employed in the retail industry but stopped work just prior to the birth of their first child, [X], in 1989. I have already indicated the reasonable inference that Mrs Penzel applied her income from employment to meet the living expenses of the parties at the time.
In the course of Mr Penzel’s work as a [omitted] he was sometimes required to be away from home which, thereby, led to Mrs Penzel having the full time care of the children while ever Mr Penzel was away.
In 1992 the parties set up a company known as [M] Pty Ltd to operate a [omitted] business. The company purchased a [vehicle] and contracted out Mr Penzel’s services as a [omitted]. Mr Penzel [occupation omitted] while Mrs Penzel undertook the bookwork associated with the business while continuing to be the full time carer for [X] and, after September 1994, for [Z] as well.
In 1995, the parties sold the [vehicle] and purchased a [equipment omitted]. This work required Mr Penzel to be away from the family home, often working the [equipment omitted]. Mrs Penzel continued to care for the children and to attend to the bookwork associated with the operation of the company.
In 1999, the [equipment omitted] were sold. The parties purchased a [vehicle] to operate a [omitted] together. Mr Penzel drove the [vehicle] while Mrs Penzel did the bookwork associated with that business.
As I have already noted, since the marriage of the parties (and for some time prior to their marriage) the Husband and his parents conducted their farm business on the two properties owned by the Husband and his parents and lived on those properties. The Husband provided his share of the properties to his parents to use for the purposes of the business. The Husband worked in the farming business in all aspects of farming to promote the business.
The parties and their children lived on properties owned by the Husband's parents during the marriage until the Husband's father died in January 2005. Apart from assistance the Husband provided his parents during the marriage, I have also previously noted that
Mrs Penzel also provided assistance in relation to the farm business and to the welfare of the Husband’s parents.
Summarily stated, Mrs Penzel provided assistance handfeeding sheep in drought and provided help with basic tasks such as opening a jar because of difficulties the Husband's parents had with their hands. After the Husband's Mother died Mrs Penzel undertook the book work for the shearing including paying wages and calculating tax and superannuation. She commenced attending to the book work in relation to the farm and to her father-in-law's personal affairs as well as undertaking the book work for the business owned by the company. In August 1999 the Husband's father appointed Mr Penzel and Mrs Penzel as attorneys under a power of attorney for him. In February 1999 the Husband's father gave authority to Mrs Penzel to operate his bank account to assist her in attending to payment of creditors, and also gave her authority to liaise with his accountant in relation to the preparation of BAS statements and tax returns for her father-in-law.
During the marriage it was the practice of both parties and their children to attend at the farm when there was significant work to be carried out such as shearing, crutching, drenching, lamb marking, penning and mustering. Mrs Penzel was present on these occasions in participating including performing tasks such as driving to town to collect drenches and other necessary items for the work. She also prepared lunches, made cakes and other food for shearers in addition to her home-making responsibilities.
From about 2000 when GST was introduced, Mrs Penzel established a computerised programme to use for her father-in-law's farm business. She also gave substantial assistance to him with regard to paying contractors, household expenses, tax instalments, cooking his meals, driving him to appointments and doing shopping when he was unable to do it for himself. Mrs Penzel also liaised with her father-in-law's solicitor and the solicitor's secretary to attend to tasks associated with probate of the Will.
To varying degrees, both parties did painting and gardening work at Property G when the Husband's parents lived there. Mrs Penzel also helped with fencing at Property T. She performed maintenance work at the property known as [1] Property Y while she was living there.
At the time of marriage Mrs Penzel was engaged in paid employment in the retail industry. She continued this work until just prior to the birth of [X]. She then resumed part time work when [Z] began pre-school and [X] was at school and continued that work until 2000.
In 2000 Mrs Penzel ceased paid employment to enable her to spend time assisting the Husband's father in relation to the farm business, in particular concerning the accounts and book work and the consequences of the introduction of GST and the need to prepare BAS statements.
From 28 May 2007 until 29 September 2008 Mrs Penzel undertook part time employment [in the hospitality industry] on a part time basis. However, she was required to cease that work due to the demands of the [transport] contract, the need to continue to perform the household chores, the book keeping for the farm and run the household for the family. From each period of paid employment during the marriage, in my view on the limited but unchallenged evidence available to the Court it is proper to infer that Mrs Penzel applied her income to meet the living expenses of the family.
Throughout the marriage Mrs Penzel was the primary carer of the children and performed the homemaking duties such as cooking, laundry, shopping, cleaning and all other tasks necessary for the maintenance of the household. For various but unspecified periods of time Mr Penzel was absent from the home performing his work as a [omitted] and Mrs Penzel cared for the children on her own. The Husband worked in the [omitted] businesses operated by the parties as well as working in the farm business and following the death of his father, the farm business conducted by the parties through their partnership.
Since separation Mrs Penzel has continued to undertake the book work for the partnership and the company. She pays the wages for contractors for shearing and crutching and liaises with the accountant for the parties. She has attended to maintenance and supervision of the bank accounts of the parties. She has also attended to meeting the requirements of the Ministry of Transport in relation to the [transport] contract including reporting requirements and procedures. The Husband has continued to [operate the equipment] and clean it. Apart from those duties Mrs Penzel has attended to all of the administrative tasks associated with the operation of the business conducted by the company.
Since separation Mrs Penzel has also performed the primary role in relation to the care of the children. I accept that she continues to provide emotional and financial support to both children and particularly to [Z]. She has attended to meeting [Y]'s expenses for school fees, uniforms, books and excursions, although it should be noted that some funds for school fees and other items have come from the joint account of the parties. Mr Penzel has not provided any child support in relation to [Z] although one tax refund available to him was applied to meet child support.
Although [X] is an apprentice [omitted] it has been necessary for
Mrs Penzel to continue to provide him with financial assistance for medical insurance, medical and dental bills and some clothes.
At the time of separation the parties were undertaking renovations at Property G. Mrs Penzel has continued to be responsible for liaising with the builders and overseeing the work.
Discussion: In evaluating the contributions the parties made during the marriage and following separation the Court is required to evaluate the contributions made by Mr Penzel in relation to the interests he had in the properties at the date of marriage, the additional interests he acquired in those properties during the marriage and the assets inherited from his father in 2005.
With respect to the property held at the date of marriage the Court has the guidance provided by Bremner and Pierce, to which I have earlier referred, in determining the treatment and evaluation or ‘weight’ that should properly be given to the initial contributions.[18] In addition to these authorities, I note the following.
[18] See also In the Marriage of Aleksovski (1996) 20 Fam LR 894 at p.903 (Baker & Rowlands JJ), and Kay J at pp.910-913.
A recent discussion of relevant authority in relation to contributions in a long marriage is found in the Full Court (Kay, May & Boland JJ) decision of MVB v SDB, which also discusses and adopts the earlier discussions in Ferraro & Ferraro and Pierce.[19] Thus, in MVB v SDB, especially at pp.257-258 [64] – [67], the Court said:
[64] The weight to be given to disparate contributions, particularly in a very long term marriage such as this one is subject of well known authority: see Mallet v Mallet (1984) 156 CLR 605 ; 52 ALR 193 ; 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1 ; (1993) FLC 92-335. In Ferraro the Full Court at Fam LR 38; FLC 79,572 noted the difficulty in comparing parties’ respective contributions, albeit not having regard to, as in this case, a significant external injection of funds, as follows:
The task of evaluating and comparing the parties’ respective contributions where one party has exclusively been the breadwinner and the other exclusively the homemaker, is a most difficult one to perform because the evaluation and comparison cannot be conducted on a “level playing field”. Firstly, it involves making a crucial comparison between fundamentally different activities, and a comparison between contributions to property and contributions to the welfare of the family. Secondly, whilst a breadwinner contribution can be objectively assessed by reference to such things as that party’s employment record, income and the value of the assets acquired, an assessment of the quality of a homemaker contribution to the family is vulnerable to subjective value judgments as to what constitutes a competent homemaker and parent and can not be readily equated to the value of assets acquired. This leads to a tendency to undervalue the homemaker role.
[19] MVB v SDB (2005) 33 Fam LR 246; Ferraro & Ferraro (1993) FLC ¶92-335. See also the Full Court discussion of Ferraro in McLay (1996) 20 Fam LR 239.
[65] Later in the judgment the Full Court adopted with approval the passage in In the Marriage of Dawes (1989) 13 Fam LR 599 ; (1990) FLC 92-108 which we find is apposite in this case (Ferraro at Fam LR 33–4; FLC 79,568):
The passage from Dawes, supra, at Fam LR 613; FLC 77,729, is a recent authority of the Full Court emphasising the significance in cases of this sort under para (b) of the contribution which a wife and homemaker makes to the business assets controlled by the husband.
The Full Court said:
“Although it is difficult, as it always is in such cases, to put one’s finger squarely on what led his Honour to so undervalue the wife’s contribution, we think that one significant matter which did so was that he failed to give any weight to the fact that the wife’s performance of her role as homemaker and parent during the 30 years of cohabitation was not just a contribution under s 79(4)(c) (which he subsequently recognised to some degree) but was also a significant contribution under s 79(4)(b).”
[66] In Mallet, above, Gibbs CJ said that the balancing of financial and homemaker contributions depends “entirely on the facts of the case”. The High Court rejected equality as a starting point, with Mason J (with whom Deane J concurred) noting instead that (at CLR 625; ALR 209; Fam LR 462):
… the court must in a given case evaluate the respective contributions of husband and wife under para (a) and (b) of s [79](4), difficult though that may be in some cases. In undertaking this task it is open to the court to conclude on the materials before it that the indirect contribution of one party as homemaker or parent is equal to the financial contributions made to the acquisition of the matrimonial home on the footing that that party’s efforts as homemaker and parent have enabled the other to earn an income by means of which the home was acquired and financed during the marriage. To sustain this conclusion the materials before the court will need to show an equality of contribution — that the efforts of the wife in her role were the equal of the husband in his.
No doubt a conclusion in favour of equality of contribution will be more readily reached where the property in issue is the matrimonial home or superannuation benefits or pension entitlements and the marriage is of long standing. It will be otherwise when the property in issue consists of assets acquired by one party whose ability and energy has enabled the establishment or conduct of an extensive business enterprise to which the other party has made no financial contribution and where the other party’s role does not extend beyond that of homemaker and parent.
[67] Although the acquisition of the cane farm and the inheritance were not initial contributions of the husband, we do not disagree with the trial judge’s reference to the principles enunciated in In the Marriage of Pierce (1999) 24 Fam LR 377 ; (1999) FLC 92-844, particularly at [28] when the Full Court said:
[28] 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 …
The principles set out in the cases to which I have just referred should be applied to the facts and circumstances of this case, recognising too that mathematical precision does not readily or easily attend such discretionary assessments, particularly where, as here, there is a very long marriage involved.[20]
[20] See the Full Court’s comments in Garrett & Garrett (1984) FLC ¶91-539 at p.79,372 (Evatt CJ, Lindenmayer & Strauss JJ).
In considering the initial contributions, it should be recognised that they were made at the commencement of a marriage extending for
22 years followed by approximately 18 months of separation in which contributions have continued to be made. It should also be recognised that on the evidence of both parties there appeared to be no distinction made at any time during the marriage concerning who was obtaining the benefit of any particular task performed by either of the parties and whether the performance of the task was specifically rewarded in some way. Consequently, while the parties did work in the farming business operated with the Husband's parents, and Mrs Penzel made substantial contributions to the welfare of the Husband's parents, in particular his father, it appears to be the case that none of these services were the subject of any specific remuneration or reward.
It was submitted that that was understandable given the nature of the family relationship. Mr Penzel was the only son of his parents and a co-owner of both properties. Upon his father ceasing to operate the farming business the parties immediately commenced operating the farming business in a partnership of their own names. However, it seems likely from the evidence that this effected no practical change since they merely continued the activity conducted on the property prior to the death of the Husband's father, being an activity in which they were both quite active (as were the children of the marriage) for years prior to the death of the Husband's father.
It was also submitted that the parties obtained benefits from occupation of property owned in part by the Husband's parents, and the Husband's parents obtained the benefit of farming properties which were in part owned by their son. I have no difficulty with such submissions.
In my view, they also obtained the benefit of assistance from their daughter-in-law in the ways described earlier in these reasons. It was further submitted that it was understandable that neither of the parties, nor the Husband's parents, would have turned any of their minds to the question of who was ahead at any particular point in time in terms of provision of services or assets by any of the parties to the others. It was, as Mr Penzel agreed in cross-examination, where ‘everybody helped everybody in the family.’[21]
[21] See Transcript (13th May 2010) p.42.
In the light of the limited and unchallenged evidence, in my view the reality was that the parties to the marriage and the parents were working for a joint enterprise with a joint objective of ultimately benefiting the parties to the marriage who would ultimately benefit their children.
In this regard it is significant that superannuation was not accumulated since, as Mrs Penzel alleged, the farm was to be the superannuation for the parties. In the light of Mr Penzel’s evidence (noted earlier in these reasons) I have no difficulty accepting this view.
I accept, up to a point, that there is some risk in a case such as this of undervaluing the contributions made by Mrs Penzel in circumstances where they are not capable of mathematical calculation (as I have said), especially over the course of a long marriage. On the other hand, the contributions of Mr Penzel constituted by the initial property brought into the marriage and the property subsequently inherited are capable of mathematical calculation to some degree.
In the light of the authorities to which I have earlier referred, I must have proper regard to the weight to be apportioned to the significant financial contributions of Mr Penzel, as well as to different contributions brought by Mrs Penzel over the course of the long marriage. The words of Kay J in Aleksovski are apposite in this case. His Honour said:[22]
In my view whether the capital sum was acquired early in the marriage, in the midst of the marriage or late in the marriage, the same principles apply to it. The judge must weigh up various areas of contribution. In a short marriage, significant weight might be given to a large capital contribution. In a long marriage, other factors often assume great significance and ought not be left almost unseen by eyes dazzled by the magnitude of recently acquired capital. A party may enter a marriage with a gold bar which sits in a bank vault for the entirety of the marriage. For 20 years the parties each strive for their mutual support and at the end of the 20 year marriage, they have the gold bar. In another scenario they enter the marriage with nothing, they strive for 20 years and on the last day the wife inherits a gold bar. In my view it matters little when the gold bar entered the relationship. What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship. Just as early capital contribution is diminished by subsequent events during the marriage, late capital contribution which leads to an accelerated improvement in the value of the assets of the parties may also be given something less than directly proportional weight because of those other elements.
[22] 20 Fam LR at p.910.
Having regard to the matters I have noted, together with the contributions made post separation, in my view the assessment of contributions should be made as to 63% in favour of Mr Penzel and 37% in favour of Mrs Penzel.
Section 75(2) Factors
Mr Penzel is aged 48 years and Mrs Penzel is aged 44 years. There was no suggestion that either party has any health issues.
In my view, Mr Penzel has a reasonably significant earning capacity from a number of kinds of work. He is a [omitted], although, perhaps, his opportunities (or need) to [occupation omitted] might be taken to be rather more limited than it once was. It may be assumed that he has reasonably substantial experience in each of these occupations. I understand that he is also a [omitted].
Mrs Penzel has had some experience in the paid workforce during the marriage although it is rather limited, and has had some experience in the workforce since the year 2000. On the evidence, it would appear that she has quite limited earning capacity and lacks any formal qualifications. It is likely that she cannot obtain any substantial employment unless she is able to undertake some form of training to provide her with skills or qualifications for work. That said, her unchallenged evidence suggested a certain contentment with her lot in running the [transport] business.
I regard the lack of superannuation, and the evidence of Mr Penzel in this regard, as a significant factor to be taken into account. While still relatively young, the parties, and Mrs Penzel in particular, by relying on the long-term expectation of access to funds raised from the family properties (sold or mortgaged), have foregone significant superannuation contributions that, in other ‘employment circumstances’, would have meant that their superannuation would have been steadily accruing.[23]
[23] In my view, I do not need to canvass any related issue of ‘estoppel’ that might be thought to arise on the basis of the representation and or conduct of Mr Penzel in relation to what Mrs Penzel might reasonably expect in terms of future security from the family properties. Such matters were not addressed by either Counsel in the course of the trial. On such representations and their consequences, the judicial locus classicus is the judgment of Dixon J in Grundt v Great Boulder Proprietary Gold Mines Limited (1938) 59 CLR 641 at pp.674-676. Generally, see the detailed discussion in K.R. Handley, Estoppel by Conduct and Election (Sydney: Sweet & Maxwell/Thomson, 2006).
I accept that by her performance of the role as principal homemaker and parent during the long marriage of the parties Mrs Penzel made a substantial contribution to the earning capacity of Mr Penzel by freeing him to undertake the work which he has performed throughout the marriage.
Mrs Penzel continues to provide the full time care of [Z] and will do so into the future. She is also responsible for his financial support.
As previously noted, Mr Penzel does not pay child support for [Z] and, with the exception of a tax refund taken to meet child support, he has not paid child support to date.
Mr Penzel resides in a relationship with Ms B. Mrs Penzel does not know the financial circumstances of their cohabitation. As previously observed, I regard the failure to provide evidence of Ms B’s financial circumstances as a significant breach of the disclosure requirements in proceedings in this Court. The failure to do so made Mrs Penzel’s, and the Court’s, ability to deal with all of the relevant facts in this matter that much more difficult. The consequences of such a significant (and easily remedied) omission are set out in the authorities to which I have earlier referred, such as Chang & Su.
Having regard to the matters I have addressed in these reasons, in my view a modest adjustment in Mrs Penzel’s favour of 4% should be made under s.75(2) of the Act.
Such an adjustment would result in a final adjustment of the net asset pool of 59% in favour of Mr Penzel and 41% in favour of Mrs Penzel.
In my view, in the light of the evidence, and in particular the earning capacities and other talents of, and the assets available to, Mr Penzel, the findings I have made and the orders made in consequence of them, will not unduly affect Mr Penzel’s capacity to earn his living or to maintain his other financial responsibilities.[24]
[24] Cf.Elsey v Elsey (1997) FLC ¶92-727.
Conclusion: Just & Equitable Order
In my view, having regard to the length of the marriage, the respective contributions made by each of the parties and the s.75(2) factors to which I have referred, as well as having regard to the not insignificant omission in relation to Ms B’s financial circumstances, such an adjustment is a just and equitable order.
I repeat the observations of Kay J already noted from Aleksovski: “What is important is to somehow give a reasonable value to all of the elements that go to make up the entirety of the marriage relationship.”[25] In my view, a percentage adjustment of the kind I have indicated (59% to Mr Penzel, and 41% to Mrs Penzel), justly and equitably reflects the myriad of factors that went to constitute this long, and sadly ended, marriage between the parties, as well as the assets, resources of different kinds, and the responsibilities they continue to bear. An order reflecting this percentage division will be made.
[25] 20 Fam LR at p.910.
Having regard to (a) the order I have indicated will be made as to the percentage distribution, and (b) the detail of the respective orders sought by each of the parties (set out earlier in these reasons), within 21 days the parties are to provide the Court with a certified copy of orders that reflect the distribution of property in specie and in relation to the balance of payment to be made to Mrs Penzel. In the absence of agreement, the orders sought by Mrs Penzel shall apply, subject to them reflecting a payment that will conform to the percentage distribution I have ordered.
Unless an application is made within 14 days of the date of these reasons, an order will be made that each party is to pay their own costs of the proceedings.
I certify that the preceding ninety-two (92) paragraphs are a true copy of the reasons for judgment of Neville FM
Associate:
Date: 31 January 2011
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