Petridis and Petridis
[2008] FMCAfam 84
•13 February 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PETRIDIS & PETRIDIS | [2008] FMCAfam 84 |
| FAMILY LAW – Property – allegations of waste-contributions – s.75(2) adjustment. |
| Family Law Act 1975, ss.75(2), 79 |
| Coghlan v Coghlan (2005) FLC 93-220 Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Kowaliw and Kowaliw (1981) FLC 91-092 Norbis & Norbis (1986) 161 CLR 513 |
| Applicant: | MS PETRIDIS |
| Respondent: | MR PETRIDIS |
| File number: | WOC186 of 2007 |
| Judgment of: | Altobelli FM |
| Hearing date: | 13 November 2007 |
| Date of last submission: | 13 November 2007 |
| Delivered at: | Wollongong |
| Delivered on: | 13 February 2008 |
REPRESENTATION
| Counsel for the Applicant: | Ms Christie |
| Solicitors for the Applicant: | DGB Lawyers |
| Counsel for the Respondent: | Mr Clark |
| Solicitors for the Respondent: | Heard McEwan Lawyers |
ORDERS
That forthwith the parties do all things and execute all deeds, documents, instruments and writings necessary to forthwith sell the former matrimonial home situated at W in the State of New South Wales by private treaty at a price agreed between the parties or failing such agreement at a price equivalent to the mean of two valuations by registered valuers being members of the Australian Property Institute one obtained by and at the expense of the husband and one obtained by and at the expense at the wife, such valuations to be made not more than two weeks apart from each other.
In the event that the matrimonial home is not sold by private treaty within three (3) months from the date of this Order the parties within four (4) months from the date of this Order do all acts and things and execute all Deeds, documents, instruments and writings necessary to procure the sale of the matrimonial home by public auction and in particular:-
(a)Place the matrimonial home with an auctioneer agent nominated by the wife (hereinafter called “the auctioneers”) for the sale of the matrimonial home by public auction at the earliest possible date.
(b)Execute all documents requested by the auctioneers for the sale of the matrimonial home by auction.
(c)Request the auctioneers to recommend a reserve price to be placed on the matrimonial home for the purpose of the auction sale and accept such recommended reserve price.
(d)Pay to the auctioneers any sums requested for advertising expenses in relation to the auction.
(e)Give such instructions to the Solicitor for the husband for the preparation of an appropriate contract and other documents as are necessary for the sale of the matrimonial home by auction.
(f)Co-operate in every way with the auctioneers in relation to the auction of the matrimonial home including making a key available, allowing inspection of the matrimonial home at times requested by the auctioneers and ensuring that the matrimonial home is in a neat and clean condition at the time of inspection by prospective purchasers.
(g)Attend at the auction sale of the matrimonial home and negotiate with the highest bidder in the event that the reserve price is not reached.
(h)Accept the advice of the auctioneers as to the acceptance of a price less than the reserve price.
(i)Execute the contract of sale.
(j)Execute all other documents necessary to complete the sale of the matrimonial home.
That the parties do all acts and things necessary to procure that upon the sale of the matrimonial home the proceeds of sale be paid in the following manner and priority:-
(a)In payment of agent’s commission and auction expenses if any due on the sale.
(b)In payment of legal costs of sale including Solicitors acting for each of the parties in respect of the contract for sale.
(c)In payment of all Council, Water rates and other outgoings on the property.
(d)In payment to the wife 65 per cent of the proceeds then remaining.
(e)The balance to be paid to the husband.
That the husband pay to the wife from his share of the proceeds of sale of the matrimonial home the sum of $13,733.
That pending the sale of the matrimonial home the husband be responsible for and indemnify the wife in respect of all Council, water rates and other outgoings on the property and shall maintain the property in its current condition and state of repair.
That the husband forthwith do all acts and things necessary to transfer to the wife all of his right, title and interest in the 1992 Holden Commodore VP motor vehicle registration xxx-xxx.
That in accordance with Section 90MT(1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the superannuation interest of Mr Petridis in the B Superannuation Fund, Ms Petridis is entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $238,095 and there shall be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for this Order.
(i)That the operative date for the purpose of this Order shall be the date four working days after the day upon which this Order is served upon the Fund by ordinary pre-paid post.
(ii)That the Trustees of the B Superannuation Fund do all acts and things and sign all such documents as may be necessary to:
(a)Calculate in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement created for the wife in clause (7)(i) of this Order; and
(b)Pay the entitlement whenever the Trustee makes a splittable payment out of the husband’s interest in the B Superannuation Fund.
That unless otherwise specified in these Orders:-
(a)Each party be solely entitled to the exclusion to the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these Orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s record thereof; insurance policies are deemed to be in the possession of the beneficiary thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements, and the chattels in the real property are deemed to be in the possession of the husband.
(b)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.
That in the event of either party neglecting or refusing to sign all or any necessary instruments to give effect to these Orders or any of them, either party is at liberty to apply, pursuant to Section 106A of the Family Law Act, to the Court to seek appointment of an Officer of the Court or other person to execute the deed or instrument in the name of the person to whom the direction was given and to do all acts and things necessary to give validity and operation to the said deed or instrument.
Leave granted to re-list on seven days notice as regards implementation, interpretation, and/or enforcement of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Petridis & Petridis is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
WOC186 of 2007
| MS PETRIDIS |
Applicant
And
| MR PETRIDIS |
Respondent
REASONS FOR JUDGMENT
Introduction
This case is an application for alteration of property interests under s.79 of the Family Law Act, commonly known as an application for property settlement. The applicant wife is Ms Petridis, a 43 year old disability pensioner. The respondent husband is Mr Petridis, a 44 year old electrician. The issues in dispute between them are relatively discrete. Indeed, I was very surprised that this matter could not settle without the need for a full hearing, and judicial determination.
Background
The husband and the wife married in December 1985 and separated in June 2005. They cohabited for a period of about 20 years. They have two children, D who is 20 years old and is for all practical purposes financially self sufficient and M who is 17 and who is currently in year 12. The pool of assets available and resources available to the parties is, save for one minor issue of add-back, agreed. As will be seen, the largest asset available to the parties is the husband’s B superannuation entitlements, followed by the former matrimonial home at W.
The agreed pool of assets is as follows:-
| Schedule of assets, liabilities, superannuation and financial resources | |
| Joint W Property | $250,000 |
| Husband Household contents | $3,055 |
| Citicoast Credit Union | $6,972 |
| 500 B shares | $4,625 |
| Tools | $500 |
| Boat and Trailer | $2,616 |
| Box Trailer | $500 |
| Motor Vehicle | $5,000 |
| B superannuation entitlements | $366,300 |
| Bonus Saver Account | $1,383 |
| Wife Motor Vehicle | $3,000 |
| 8,971 S Shares | $3,543 |
| Liabilities | Nil |
The total non-superannuation assets of the parties is, therefore $281,194. The total superannuation assets available to the parties is $366,300. The combined pool of assets is, therefore $647,494.
The wife's application is that she should receive 70 per cent of the net assets and resources available to the parties. The husband's application is that there should be an equal division of property between them.
Having regard to the issues that were identified for determination a detailed financial history of the marriage is not necessary at this stage. Where historical matters are relevant, I will deal with it at the appropriate juncture.
Issues
Three discrete issues emerged from the evidence and from the submissions provided by Ms Christie, counsel for the wife, and Mr Clark, counsel for the husband. Those three issues can be expressed in the form of the following questions:-
1)Should money that the husband alleges the wife spent on gambling be added back to the property pool?
2)Should there be an adjustment in the husband's favour for greater contribution that he asserts he made during the course of the marriage?
3)What adjustment should there be in favour of the wife pursuant to s.75(2) of the Family Law Act?
Applicable law
The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
1)Identify and value the property, liabilities and financial resources of the parties; and
2)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
3)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
4)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
The husband raised what is, in effect, a waste argument in that, he says, the wife withdrew $20,346 from the parties joint account which should be added back into the pool of assets, which the wife spent on gambling. A succinct statement of the law in this regard is the statement by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76 644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) 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.
Add-back for monies allegedly spent on gambling?
The totality of the evidence indicated that after separation the wife spent money on gambling, including poker machines at a number of clubs, including the B Sporting Club. Indeed, the wife did not deny this. The evidence did not establish precisely how much was spent on gambling. By looking at the pattern of withdrawals on the parties' bank account it was possible to establish that no more than $7,000 could have been gambled. The evidence indicates that there were multiple withdrawals of small amounts on club premises, often on the same day. The wife agreed that some part of this money was used on gambling and the husband's counsel asked me to infer that all of these payments were spent at the clubs, primarily for gambling. His submission was that this was waste and that these monies were spent at a time when the husband was solely responsible for the care of the children.
Ms Christie argued that after a long marriage it was artificial in the extreme to seek to add back $7,000 out of a property pool of almost $650,000.
A difficulty in the husband's case is that there is no evidence quantifying how much was gambled. The wife agrees that some of the money was, but not all of it. Hers is the only evidence in this regard, and it was not challenged by the husband's counsel. Moreover, the amount gambled is hardly consistent with a course of conduct embarked on by the wife which was designed to reduce or minimise the value of matrimonial assets. Accordingly, the husband has not established waste in accordance with the well established principles set out in Baker J’s decision in Kowaliw and Kowaliw (1981) FLC 91-092.
Greater contribution by the husband?
Counsel for the husband quantified the husband's claim for greater contribution at about five per cent. This was said to be based on the husband's slightly better asset position at the time of cohabitation, his significantly greater financial contribution during the marriage, and his at least equal contribution in a non financial sense during the marriage. Curiously, counsel did not refer to superannuation in this context.
The difficulty with the husband's submission is that this is a long marriage and the evidence indicates that whilst the nature of the contribution made by each the husband and the wife may well be intrinsically different, a characterisation of the value of those contributions must inevitably be equal. Thus, for example, the husband was able to make a greater financial contribution during the marriage because the wife was able to care for the children and support him in his work. The husband did not assert the wife did not do this in this case. The weight to be given to any greater financial contribution at the commencement of a 20 year relationship is negligible at most, and in reality nil. This is not just because of the passage of time, but because of the extent and diversity of the contributions of both parties that took place during their marriage. This couple did what most couples do - they worked very hard both together and individually. Whilst there is certainly no legal presumption of equality of contribution after a long marriage it is frequently the conclusion that arrived at as a result of a commonsense assessment of the diverse and disparate contributions undertaken by each of the parties.
In any event, attempting to quantify the greater contribution as asserted by the husband is fraught with uncertainty. The problem with logically quantifying a claim for greater contribution in cases such as this is demonstrated by asking the question: why five per cent? The sum of five per cent is equivalent to between $30,000 and $35,000. However, a five per cent adjustment on a significantly greater pool results in a much greater figure, even though the additional contributions might be identical. How could such a greater figure be justified? I think this illustrates the logical fallacy in attempting to quantify the value of the claim to greater contribution during a long marriage. I do not accept the husband's claim for greater contribution during the marriage. I accept the wife's submissions that contribution during the marriage, in the broad sense, should be equal.
Section 75(2) adjustment to the wife?
The wife sought an adjustment in her favour of 20 per cent. The husband sought an adjustment of 10 per cent, such an adjustment being conceded during closing submissions.
The wife is 43 years old and is on a disability pension. The evidence indicates that she has not been in paid employment since separation, but she has been doing extensive volunteer work at P.
The husband's counsel quite properly conceded that there should be a 10 per cent adjustment in the wife's favour to reflect a significant difference in the respective earning capacities of the husband and the wife. The husband was earning at least $90,000 per annum, and probably more this year. A 10 per cent adjustment also reflects the fact that she has been out of the paid workforce for a long time and faces a significant issue in terms of employability. I agree that an adjustment of at least 10 per cent is appropriate to reflect the matters referred to above.
The wife's case for a 20 per cent adjustment reflects not just the matters conceded on behalf of the husband, but is based on health issues. The evidence about the wife's health is contained in the affidavit of Dr G, a clinical psychologist, filed 17 October 2007. The admission of this evidence was strongly opposed on behalf of the husband. In summary, Mr Clark's submissions on behalf of the husband were that Dr G' report was largely based on assumptions, makes a diagnosis she is not qualified to give, provides no evidence to support what she asserts, and has far more prejudicial than probative value. Mr Clark further objected to a tender of various Centrelink documents that are referred to in the annexure D to the affidavit of Dr G.
Ms Christie submitted that Dr G' report, together with the Centrelink documents were relevant and probative documents from a treating psychologist who had seen the wife several times. In any event, she urged that the evidence could be admitted subject to weight and that Dr G was available to be cross-examined.
I allowed the admission of the affidavit from Dr G and the supporting documents. The supporting documents were business records, and admissible as such. As Dr G was going to be available for cross-examination there would be no prejudice to the husband because he would have the opportunity to directly undermine the report and thus diminish the weight that might otherwise be given to it. I indicated to Mr Clark my observation that the report contained observations which were clearly admissible.
Notwithstanding Mr Clark's objection to this evidence, and my having to rule on it, he then decided that he did not require Dr G for cross-examination. That does not mean that I unequivocally accept every aspect of this evidence. I agree that it contains many conclusions, the basis for which, were not stated in the affidavit. However, there are also clear observations from a clinical psychologist who has had quite extensive dealings with the wife. The evidence indicates that the wife is undergoing a cognitive behavioural anxiety management program.
Dr G assessed the wife as having a severe disability and being unable to sustain open employment. Indeed, she comments that the wife is barely able to look after her activities of daily living. She is of the view that the wife will require at least 30 sessions of treatment at a cost of $150 per session, though Medicare will meet $110 for 12 sessions per annum. Dr G records that the wife reported to her symptoms including intrusive dreams, tangential thought, magical thinking, rapid emotional change and decomposition, rocking, suicidal thoughts, decompensation when harassed and anger. The other documents admitted tend to confirm that the wife does suffer from some form of psychiatric illness or disorder which might include depression and anxiety.
I record in my judgment that throughout the course of the hearing the wife was rocking back and forth constantly. This is consistent with either the report given by the wife to Dr G or the observations made by Dr G herself.
I formed the view that the wife does suffer from some form of condition that will, for all practical purposes, exclude her from the paid workforce, even if she were able to re-enter the workforce after 20 years. I also find that the wife will have to incur not inconsiderable medical expenses in order to assist her in dealing with her condition.
The real question, of course, is quantifying the s.75(2) adjustment.
I agree with Ms Christie's submission that even though the wife has re‑partnered, the evidence indicates that this does not advantage her, or significantly reduce her s.75(2) claim. The wife is living in housing commission accommodation and her partner is also a disability pensioner.
The husband is clearly in a superior financial condition. He has a much higher income, has significant accumulated long service leave benefits and even after a super split he will be able to continue to grow his superannuation as a result of contributions he can make from his income. Nonetheless, at least for the next year he is solely responsible for providing for their oldest daughter, M.
I accept Ms Christie's submission that in real terms all the wife will have in financial terms is what she receives out of this property settlement, and that is most likely to be invested in acquiring her own home. By comparison, whatever the husband receives out of the settlement, will simply be the foundation for the accumulation of future wealth which is generated by his earning capacity and his relative youth.
I assess that having regard to all of the above matters a s.75(2) adjustment in favour of the wife in the sum of 20 per cent is just and equitable.
Implementation of the settlement
In terms of implementing the orders, on behalf of the husband,
Mr Clark submitted that whatever the final percentage is, it should not be applied uniformly across superannuation and non superannuation assets. He said that to do so would be unfair to the husband because he has made contributions to his superannuation before marriage, and after separation. He did not raise this issue in the context of assessing contribution. Ms Christie submitted on behalf of the wife that I should apply the final assessment of contribution and future needs across the whole pool.
It was agreed that as at the date of the hearing the husband's superannuation had a value of $366,300. The husband's superannuation information form is dated 20 November 2006 and it indicates that as at that date the superannuation had a value of $314,550. The form also indicates that even though the husband joined B on 11 January 1982, he did not become a member of the superannuation fund until
1 May 1983. Given that the parties married in 1985, no adjustment needs to be made to reflect those initial contributions. I was not given any evidence about the value of the husband's superannuation entitlement as at the date of separation in June 2005. That is unfortunate. I am left to infer that the superannuation might have grown as much between the date of separation and the date of the superannuation information form, as it did between the date of the hearing and the date of the superannuation form. Certainly, in the latter period the superannuation grew by just over $50,000. It might have grown by a similar figure in the preceding period, but I just do not know.
In Coghlan v Coghlan [2005] FLC 93-220, at page 79646 the Full Court said that I should take into account a number of relevant matters including the relationship between years of fund membership and cohabitation; actual contributions made by the fund member at the commencement of cohabitation, at separation, and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse's present and/or future entitlements under the fund.
This is an unusual case in that the evidence clearly indicates that since separation the wife has been making no contribution to the family, because of her disability. She obviously has also not been making a contribution to the accumulation of the husband's superannuation. In these circumstances, therefore, it would be quite unjust, and inequitable to the husband not to reflect his greater contribution to the accumulation of superannuation after separation. However, it is almost impossible to be mathematically precise because the husband failed to advance evidence he could clearly have obtained. The pool of assets available to these parties is comparatively modest.
I propose to make an adjustment in the husband's favour of 5 per cent across the combined superannuation and non superannuation asset pool to attempt to reflect this superannuation adjustment. Accordingly, the wife will receive 65 per cent of the total pool, and the husband 35 per cent, and I am satisfied that this adequately reflects the husband's greater contribution to the accumulation of superannuation since separation and makes the order just and equitable.
If the wife receives 65 per cent of the total pool, from her perspective this means she should receive a total payment of $420,871 less the value of her car and shares leaving her with $414,328
The orders sought by the wife seek 70 per cent of the net sale proceeds of the home together with a further payment of $13,561.10 designed to give her an appropriate share of the other assets owned by the husband. She is content to receive the balance by way of super-split from the husband’s fund. I accept that her needs at this stage are to adequately re-house herself and that it is appropriate to give her a 65 per cent share of the sale proceeds of the house, and 65 per cent split of the superannuation. The husband is in a much better position to re-establish himself after the sale of the home. His financial statement filed 7 November 2005 discloses a surplus of income over expenditure of $1099 per week. He thus has a very strong capacity to borrow and re-purchase if that is what he wants to do.
The wife will therefore receive 65 per cent of the net sale proceeds of the home, and a 65 per cent split of the husband’s superannuation entitlement. The wife will also need to receive a further payment from the husband to reflect her 65 per cent share of other assets held. The combined value of both parties non-real estate and non-superannuation assets is $31,194. The wife’s entitlement is: 65% x $31,194 = $20,276. From this, of course, should be deducted the value of items the wife already has, totalling $6,543. The net additional payment from the husband to the wife is, therefore, $13,733. The husband will have the opportunity to pay this out of his share of the sale proceeds of the home.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Lisa Molloy
Date: 13 February 2008
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