PJM and STM (No.3)
[2005] FMCAfam 69
•25 February 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PJM & STM (No.3) | [2005] FMCAfam 69 |
| FAMILY LAW – Property – assessment of contributions – comparison of contributions during the marriage – financial contributions – short marriage – parties cohabitated for five years and one month – where there are no children of the marriage. |
| FamilyLaw Act 1975 (Cth), ss.75; 77A; 79 |
| Ferraro & Ferraro (1992) 16 Fam LR1; (1993) FLC 92-335 McLay & McLay (1996) 20 Fam LR 239; FLC 92-667 Lee Steere & Lee Steere (1985) 10 Fam LR 431; FLC 91-626 Pastrikos & Pastrikos (1979) 6 Fam LR 497; (1980) FLC 90-897 Clauson & Clauson (1995) 15 Fam LR 693; FLC 92-595 Cahill & Cahill (unreported) CAF 431 of 2002 (7 March 2003, Coleman J) Pierce & Pierce (1998) 24 Fam LR 377; (1999) FLC 92-844 JEL & DDF (2000) 28 Fam LR 1; FLC 93-075 Russell & Russell (1999) FLC 92-877 Phillips & Phillips (2002) 29 Fam LR 128; FLC 93-104 |
| Applicant: | PJM |
| Respondent: | STM |
| File Number: | PAM 1693 of 2002 |
| Judgment of: | Scarlett FM |
| Hearing dates: | 7 & 8 October, 13 November 2003 |
| Date of Last Submission: | 13 November 2003 |
| Delivered at: | Sydney |
| Delivered on: | 25 February 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mrs Cotter-Moroz |
| Solicitors for the Applicant: | Elliot & Sochacki |
| Counsel for the Respondent: | Mr Maddox |
| Solicitors for the Respondent: | Ian Harper & Co |
ORDERS
The Orders made on 25 February are vacated.
That within two (2) months of the date of these Orders the husband pay to the wife the sum of $149,679.00 by way of property settlement.
That the husband be declared to be solely entitled to all right title and interest in the real property situate at and known as M A R M in the State of New South Wales.
That the husband indemnify the wife and keep her indemnified in respect of any mortgage to Defence Service Homes secured upon the said property at M A R M.
That the parties be declared to be solely entitled to all motor vehicles, furniture, furnishings, household goods, bank accounts, interests in any superannuation scheme standing in their own name or in their sole possession.
That within two (2) months form the date of these Orders the wife must do all things and sign all documents necessary to transfer to the husband all her right, title and interest in the parties’ jointly-owned TAB shares.
All documents produced on subpoena may be returned after one
(1) month.
All other applications save as to costs are dismissed and the matter is removed from the list of cases awaiting finalisation.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
PAM 1693 of 2002
| PJM |
Applicant
And
| STM |
Respondent
REASONS FOR JUDGMENT
Application
This is an application by the husband for a property settlement. In a Minute of Order submitted by his counsel on 7th October 2003, the husband seeks the following orders:
a)That the husband shall pay to the wife the sum of $50,000.00 within 28 days in full and final settlement of all financial matters between the parties.
b)That of the sum of $50,000.00 referred to in clause 1 above, the sum of $20,000.00 be attributable to lump sum spousal maintenance pursuant to s.77A of the Family Law Act.
c)That the order for spousal maintenance made on 29th November 2002 be vacated.
d)That otherwise each party be declared solely entitled as absolute owner of all property, both real and personal, in their respective possession as at the date hereof, including but not limited to their respective superannuation.
e)That the wife pay the husband’s costs.
f)Further or other orders as the Court deems appropriate.
In an outline of submissions submitted by the wife’s counsel,
Mr Maddox, on 13th November 2003, the wife sought orders that the property should be divided between the parties as to 75-85% to the husband and 15-25% to the wife.
Background
The parties were married on 5th December 1998. They had commenced to live together on 25th January 1997. The husband was born on
22nd November 1949 and the wife was born on 5th September 1953. There were no children of the marriage. The parties separated on
1st March 2002.
Whilst both parties were working full-time when they commenced cohabitation, the husband retired medically unfit from his employment with Australia Post in May 2001. Later that same year the wife, having previously undergone surgery for back problems, commenced to receive a disability pension.
On 7th May 2002 the wife commenced proceedings for spousal maintenance. On 9th July 2002, after an interim hearing, I made orders that the husband should spousal maintenance to the wife in the sum of $120.00 per week, payable fortnightly.
On 22nd October 2002, the husband filed his application for property settlement. On 29th November 2002, I made orders that the husband should pay to the wife the sum of $140.00 per week by way of spousal maintenance, payable fortnightly.
Issues
The issues between the parties are the weight to be given to the contributions by the parties during what was a short marriage, just over five years, and what, if any adjustment should be made for the matters contained in sub-section 75(2) of the Family Law Act. Both parties have medical problems.
The husband’s counsel, Mrs Cotter-Moroz, submitted that there were two particular matters in issue. The first was whether or not the husband was totally and permanently incapacitated.
The second issue is the treatment of the defined benefit of the husband’s pension, whether or not the value, some $248,774.00, would be treated as part of the property pool.
For the wife, Mr Maddox told the court that his client did not dispute that the husband was on a TPI pension. What was in dispute was whether or not he could do any work at all.
Evidence
The parties gave evidence by affidavit and were cross-examined. The husband’s treating general medical practitioner, Dr. K, gave evidence by affidavit and was subjected to cross-examination by telephone.
The relevant law
When a Court is determining an application under s.79 of the Family Law Act, the authorities make it clear that the Court should follow a three-stage process (Ferraro & Ferraro (1992) 16 Fam LR 1; (1993) FLC 92-335; McLay & McLay (1996) 20 Fam LR 239; FLC 92-667).
First, the Court should identify the property, liabilities and financial resources of the parties at the time of the hearing. Next, the Court should evaluate the contributions made by the parties as defined in
sub-sections 79(4) (a), (b) and (c), which cover the financial contributions made directly or indirectly by the parties, the contributions other than financial contributions made directly or on behalf of the parties, and the contributions made by the parties to the welfare of the family (see Lee Steere & Lee Steere (1985) 10 Fam LR 431; FLC 91-626).
Finally, the Court must evaluate the financial resources, means and needs of the parties, and the other matters set out in sub-section 75(2), so far as they are relevant (see Pastrikos & Pastrikos (1979) 6 Fam LR 497; (1980) FLC 90-897). When determining what order should be made, the Court must be satisfied that it is just and equitable to make that order (s.79(2)).
Where there is a claim for spousal maintenance as well as a property claim, the Court should apply a further step in the process. The spousal maintenance should only be considered after the s.79 application
(see Clauson & Clauson (1995) 15 Fam LR 693; FLC 92-595).
The matrimonial assets
The first matter to be considered is the value of the matrimonial assets at the date of the hearing. The parties are almost in complete agreement as to the value of the assets, with the exception of the treatment of the husband’s Commsec pension, valued at $248, 774.00.
The husband’s pension arises from his interest in the Defence Force Retirement and Death Benefits Scheme, arising out of his service in the Royal Australian Air Force. This interest is in the payment phase, payable as a life pension. In an affidavit sworn by S B on 7th October 2003, the gross value of the husband’s interest was set at $248, 774.21. For the purpose of these proceedings, I have disregarded the 21 cents.
For the wife, Mr Maddox of counsel submitted that the pension should be regarded as property and has been properly valued at $248,774.00. The fact that it is not immediately redeemable for cash is a factor which has been taken into account in arriving at the value.
Mr Maddox submitted that if his submission was not accepted, then the pension should be regarded as a huge financial resource. He referred to a decision by Coleman J in the Family Court in Cahill & Cahill CAF 431 of 2002, (7th March 2003), where the court had to consider a similar issue. In that case, the marriage was much longer and the assets slightly greater. The court allowed a s.75(2) adjustment in favour of the wife of $100,000.00 for this factor alone.
Using similar reasoning, Mr Maddox submitted that the Court should make an adjustment in favour of the wife for this factor alone in the range of $30,000.00 to $40,000.00.
In my view, it is inappropriate to consider the life pension as a financial resource when a value is available of the gross value of the pension. In the valuation attached to his affidavit, Mr B pointed out that the pension is in the payment phase. In my view, the intention of the Family Law Act is that such interests should be regarded as property.
I find the gross value of the matrimonial assets to be the following:
(a) M A R, M
$300,000.00
(b) Husband’s mortgage investment
$20,000.00
(c) Husband’s shares (TAB, Telstra, IAG)
$16,593.00
(d) Wife’s TAB shares
$866.00
(e) Joint TAB shares
$866.00
(f) Husband’s bank account
$297.00
(g) Wife’s bank account
$403.00
(i) Husband’s 1999 Holden motor vehicle
$32, 630.00
(j) Wife’s 1991 Holden Barina motor vehicle
$2,500.00
(k) Husband’s furniture and effects
$4,000.00
(l) Wife’s furniture and effects
$2,000.00
(m) Husband’s boat, trailer & motor
$6,4000.00
(n) Wife’s jewellery
$2,000.00
(o) Husband’s Australia Post super
$211,174.00
(p) Husband’s DFRDB pension
$248,774.00
(q) Wife’s MLC Employee Retirement
$11,352.00
TOTAL $859,855.00
The only liabilities of which there is evidence are the sum of $15,000.00, being the amount of the mortgage over the property at
M A R M, and the husband’s legal fees and disbursements amounting to an estimated $17,500.00. In my view, the proper approach is to disregard the estimated legal fees of the husband. The wife will also incur a liability for legal fees.
The only liability that I propose to take into account, therefore, is the sum of $15,000.00 secured by the mortgage. By deducting the sum of $15,000.00 from $859,855.00, I arrive at a net total of $844,000.00.
I note that the husband’s counsel submitted a case outline document in which the total value of the parties’ assets, other than the three superannuation amounts, was given as $388,258.00 a mathematical error seems to have occurred, because after three calculations of the total of those amounts I always arrived at a total of $388,555.00, which, when added to $477,300.00 for the three superannuation policies, came to a total of $859,855.00.
It is for this reason that I find the net value of the matrimonial assets to be $844,000.00.
The contributions by the parties
The agreed facts give a reasonably clear idea of the parties’ contributions to the matrimonial assets. It is clear that the husband made a significantly greater contribution than the wife did.
When the parties commenced to live together, the husband was the registered proprietor of a vacant block of land in Queensland. The land comprised about 100 acres. It was unencumbered and valued at approximately $25,000.00. The husband was solely responsible for meeting all outgoings and expenses relating to that land.
The husband sold the land in about September 1998 for approximately $25,000.00.
At the time the parties started to live together, the husband was the sole registered proprietor of a town house at J R, P, New South Wales. The husband met all the mortgage payments and other outgoings in respect of that town house.
When the parties started cohabitation, the wife moved into the husband’s town house. She had previously lived in rented accommodation. When the husband sold the town house, he deposited the net proceeds of sale into the parties’ joint bank account.
The husband’s late mother died on 19th September 1997. The husband was her sole beneficiary. The main part of the estate that went to the husband was the house situated at M A R M. That house was mortgaged to Defence Service Homes for an amount of about $8,160.00. The only other liability of the estate was the legal costs and expenses associated with finalising the estate. The husband paid out the amount owing on the mortgage, using funds that had come from his late mother’s estate.
The parties purchased a house at Q H, New south Wales in both names. To purchase that house, they borrowed the sum of $250,000.00. This sum was secured over the titles to the Q H property and the husband’s property at M. The husband met the mortgage repayments.
The parties lived in the house at Q H until about May 2000.
When the husband and wife did not live in the house at M, the husband rented it out. The rental payments were paid into a bank account in the husband’s name. Details of the payment of rent were as follows:
a)20th March 1997 to 1st July 1998 at $150.00 per week;
b)1st July 1998 to about May 2000 at $160.00 per week.
The parties moved into the house at M in about May 2000. The husband closed the bank account that was used for the collection of rent. The husband paid the balance of the account into the parties’ joint bank account. They sold the house at Q H for approximately $280,000.00.
When the parties commenced cohabitation, the husband owned a Toyota Camry motor car valued at approximately $15,400.00. In about June 1999, he traded that car in on a Holden Jackeroo. He received a trade-in value of $15,430.00 for the Camry. The balance of purchase price for the Jackeroo was about $33,870.00. The husband paid this amount.
He still has the Holden Jackeroo in his possession. It is valued at about $34,000.00.
When the parties commenced cohabitation, the husband owned a Suzuki motor cycle which was unencumbered.
In about June 1999 the husband purchased a 21 foot cabin cruiser.
He paid approximately $15,000.00 for this boat. He took the funds from his own personal bank account.
The husband sold the cabin cruiser in about the middle of 2000 for $16,000.00. He deposited the proceeds of sale in to the parties’ joint bank account. He used part of the proceeds, about $5,426.00, to buy another boat, with a motor and trailer. These items, valued at about $6,400.00, are in the husband’s possession.
The husband ceased his employment with Australia Post in about May 2001. He received severance pay of about $53,350.00, after tax.
He rolled that amount over into his superannuation fund with the Australia Post Superannuation Scheme. He was already in receipt of a Commsuper pension at the time the parties commenced cohabitation.
The husband’s pension is derived from his service with the Royal Australian Air Force. He served with the RAAF from 7th February 1967 until 1st July 1988. When he left the RAAF, he became eligible for a DFRB pension. He then went to work for Australia Post on a full-time basis. He was working at Australia Post when the parties commenced cohabitation and continued in that employment until about May 2001.
The parties separated on 1st March 2002. When she left, the wife withdrew the sum of $8,000.00 from the parties’ joint bank account and used it for her own purposes.
It is clear that the husband has made a greater financial contribution to the matrimonial assets, not only in real estate but in respect of his inheritance from his mother in late 1997. This is a significant factor in his favour (see Pierce & Pierce (1998) 24 Fam LR 377; (1999) FLC 92-844).[1]
[1] Incorrectly cited in Chisholm, “Australian Family Law”, Vol 1, Butterworths, Sydney, 2004, at s. 79.199 as (1998) FLC 92-844
The husband’s valuer stated in his valuation of the M property that its value had increased from $190,000.00 at the date of separation to $290,000.00 at 20th August 2003. Mr Maddox submitted that the major part of this increase in value came from the general increase in real estate prices on the NSW North Coast rather than from any particular contribution by the husband. He also submitted that it would not be just and equitable to attribute to the husband a contribution for the increase in value of the property, when he has had rent-free accommodation in the house since separation whilst the wife has been living in rented accommodation.
For the wife, Mr Maddox submitted that the range of contributions is 85 to 90% to the husband and 10 to 15% to the wife.
In my view, considering the overall history of the matter, the parties’ contributions should be assessed as 90% to the husband and 10% to the wife.
Section 79(4) (d)
The orders that I propose to make are unlikely to have any effect on the earning capacity of either party to the marriage.
Sub-section 75(2) factors
Sub-section 79 (4) (e) of the Family Law Act requires the Court to take into account “the matters referred to in sub-section 75(2) so far as they are relevant”. I have considered them all, although not all of them will be relevant to this case.
The first matter to be taken into account is that provided by sub-section 75(2) (a) – the age and state of health of the parties.
The husband was born on 22nd November 1949. He is now aged
55 years. The wife was born on 5th September 1953. She is now aged 51 years.
Both parties have had health problems. The husband retired medically unfit from Australia Post in 2001. He gave evidence of suffering back pain and knee pain in his final years at Australia Post. He told the Court that he had difficulty sitting for any long period of time. He cannot sit for more than 30 minutes without moving, he said. He said that he could not lift anything weighing more than 10 kilograms.
The husband also said that he suffered from depression. This was caused both by his inability to return to work and also by undergoing court proceedings for property settlement. In my view, the finalisation of court proceedings may assist in resolving part of any depression, but there still remains the fact that he cannot return to work.
The husband’s general medical practitioner, Dr I K, gave evidence by telephone. He said that he had been treating the husband since May 2001. Dr K told the Court that the husband’s back and knee are his two main problems. He said that the husband had a condition of the foot that produces an inflammatory reaction.
Dr K, when cross-examined about the husband’s ability to perform light duties, said that he would find it difficult to find a particular type of employment that the husband could successfully do. He said that the husband had pain whenever he had to sit for more than 20 minutes. Dr K went on to say that if one were to expect a person in the position of the husband to do a task for 4 hours or 8 hours without a break, he would not be able to do it. He said that he prescribed analgesic medicine for the husband, mainly Panadeine Forte.
The wife’s health is also problematic. She relied on the affidavit evidence of Dr. B S, sworn 18th September 2003, and Dr. M W, sworn 19th August 2002.
Dr. W deposed that he had been treating the wife since
August 2002. His diagnosis and prognosis were equally gloomy:
“Mrs M has a number of medical problems, including depression, back pain requiring surgery, ongoing severe pain in her right shoulder, thoracic outlet syndrome, severe bilateral plantar fasciitis and calcaneal spurs.
Mrs M is in constant pain from her shoulder and back pain, as well as her pain in both feet. She has right-sided sciatica. She also has quite severe depression. She has been granted an invalid pension via the Department of Social Security and is going to be reviewed in 4 ½ years time.
In my opinion Mrs M is totally incapacitated from work, and in my opinion cannot be expected to return to work for the foreseeable future, if ever. She continues to be under the management of various specialists, and continues to have investigations, and her management is one in which we are attempting to relieve pain and maintain function and mobility to the extent that is possible.”
Dr S is a consultant rheumatologist. He is a treating specialist for the wife. In his affidavit, sworn on 18th September 2003, his prognosis was also gloomy:
“With regards to prognosis:
She has continued to have intermittent ongoing low back pain. She still has residual left leg discomfort but is not certain how much this will fully improve. It will take another 3-6 months before we will be able to say this definitively.
Her left shoulder pain is unlikely to improve without further surgical intervention which she is reluctant to undergo at present as we are not certain that this will guarantee a successful outcome.
The cervical spondylosis and lumber spondylosis will not improve over time but should not cause any major functional limitations.
The plantar fasciitis at present is quite well controlled.
I am not in the position to make comment about long term management and prognosis associated with depression.”
Dr S’s views about the wife’s prospects and limitations on employment were not very encouraging:
She will be unable to do any heavy lifting.
She will have difficulty with light repetitive manual activities requiring twisting, bending or using the right arm above shoulder height.
She will be unable to be reliably employed in positions where she has to maintain prolonged static postures such as standing or sitting in one position.
Dr S went on to say that ideally the wife would be able to undertake positions where she was in a supervisory capacity or in a position where she was able to control the duration and repetition of the various components of the work activity. He felt that she may only be able to undertake some occupations in a part time capacity.
It is clear that both the husband and the wife have some ongoing medical problems, and it is unlikely that either one will be able to undertake gainful employment in the foreseeable future. Without in any way seeking to diminish the husband’s situation, it appears that the wife may be slightly worse off, but the difference is not great.
Neither party is currently employed.
There are no children of the marriage. Neither party has a duty to maintain any other person. There are no child support issues. Neither party appears to have entered into another relationship.
The husband is drawing a lifetime pension from Comsuper arising from his service in the RAAF. The wife now has an invalid pension. The husband’s superannuation assets are significantly greater than those of the wife.
The wife’s standard of living has dropped substantially. The husband’s standard of living remains virtually unchanged.
The parties cohabited for about 5 years; the duration of the marriage has not affected either party’s earning capacity. The earning capacity of each party has been seriously affected by their respective medical conditions.
There are no other facts and circumstances which, in my opinion, the justice of the case requires to be taken into account under sub-section 75(2) (o), nor is there any financial agreement binding on the parties.
There are, to my mind, grounds for a slight adjustment in favour of the wife, but only to the extent of a 10% adjustment. Accordingly, I am satisfied that the matrimonial property should be divided as to 80% to the husband and 20% to the wife.
Section 79(4) (f)
Section 79(4) (f) requires the Court to consider any other order made under the Family Law Act affecting a party to the marriage. On
29th November 2002 I made an order that the husband is to pay the wife the amount of $140.00 per week by way of spousal maintenance.
I have considered the overall financial situation of the parties and the property orders that I intend to make, and I consider that the maintenance order should continue unchanged.
Just and equitable
Sub-section 79(2) provides that the Court should not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make that order. The application of percentages does not necessarily result in a just and equitable result (see JEL and DDF (2000) 28 Fam LR 1; FLC 93-075).
The Full Court of the Family Court has said in Russell & Russell (1999) FLC 92-877 that it must be remembered “that under sub-section 79(2) of the Act, the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties’ assets”
(at page 86,439).
These decisions were followed in Phillips & Phillips (2002) 29 Fam LR 128; FLC 93-104, where the Full Court held that a just and equitable outcome has to be considered not in percentage terms, but in terms of the assets that the parties would eventually hold.
In this case, the husband is living in the home that was his mother’s home, and it would hardly be just and equitable if he were forced to sell it. He has received a superannuation payout from Australia Post and is in receipt of a lifetime pension from his service in the Air Force.
A just and equitable result for the wife would be for her to receive a lump sum of cash. She may well have to have further surgery. She is unlikely to obtain further employment. She will not have enough money to buy her own home in Sydney, but she did not have a substantial amount to contribute when she went into the marriage. She was living in rented accommodation when she commenced cohabiting with the husband in the home that he owned.
I have considered the overall asset position of the parties and I am satisfied that, in all the circumstances, the orders that I propose to make are just and equitable.
Conclusions
The wife will receive 20% of the net property of the parties, which I put at $844,000.00[2], which amounts to $168,800.00. The husband will receive 80%, or $675,200.00.
[2] See paragraph 24
The entitlement of the wife will comprise:
(a) TAB shares
$866.00
(b) bank account
$403.00
(c) Holden Barina motor car
$2,500.00
(d) Furniture and effects
$2,000.00
(e) Jewellery
$2,000.00
(f) MLC Retirement Benefit
$11,352.00
(g) Payment by husband
$149,679.00
TOTAL
$168,800.00
The husband will retain the property at M, his furniture, his Holden Jackeroo and his boat, motor and trailer.
Amendment under the “Slip Rule”
When I originally calculated the parties’ entitlements, I had not noticed the mathematical error to which I referred in paragraph 25. I also omitted to make allowance for the fact that there were jointly owned TAB shares to the value of $866.00. I regret the inconvenience to the parties.
I now intend to vacate the orders of 25th February 2005 under the
“Slip Rule” and issue a further set of orders with what I consider to be the correct figure to represent the amount to be paid to the wife. I will also make an order requiring the wife to transfer her interest in the jointly owned TAB shares to the husband.
I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Associate: S. Polley
Date: 28 February 2005
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