Q and Q
[2003] FMCAfam 470
•22 October 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| Q & Q | [2003] FMCAfam 470 |
| CATCHWORDS: FAMILY LAW – property – relevance of monies from the husband’s claim for personal; injuries –relevance of the husband’s conduct towards the wife - discussion of the principles in Kennon (1997) FLC 92-757. |
| Applicant: | A B Q |
| Respondent: | C D Q |
| File No: | CAM3058 of 2002 |
| Delivered on: | 22 October 2003 |
| Delivered at: | Canberra |
| Hearing date: | 11 & 12 September 2003 |
| Judgment of: | Brewster FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Gill |
| Solicitors for the Applicant: | Farrar Gesini & Dunn, Solicitors |
| Counsel for the Respondent: | Ms Piscioneri |
| Solicitors for the Respondent: | G J Piscioneri & Co, Solicitors |
ORDERS
That by 25 November 2003 the husband pay to the wife the sum of $93,000.
That upon payment of this sum the wife transfer to the husband her interest in the property known as W. (“the home”).
That if the husband does not pay this amount to the wife the parties take all steps necessary to sell the home and to divide the net proceeds of that sale between them in the proportions 72% to the husband and the balance to the wife.
That the parties take all steps to sell the motorcycle sidecar in the possession of the husband and to divide the proceeds of that sale between them in the proportions 67.5% to the husband and 32.5% to the wife.
That subject to Order 4 as against the other each party is entitled to retain all chattels presently in his or her possession and all choses in action in his or her name.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAM2058 of 2002
| A B Q |
Applicant
And
| C D Q |
Respondent
REASONS FOR JUDGMENT
Introduction
This judgment concerns competing property applications.
At the outset I indicate that a few days before the commencement of the hearing the wife applied for an adjournment of the proceedings. The basis of this was that she was said to be suffering from stress to the extent that it might impair her capacity to present her case adequately when giving evidence or instruct her lawyer. I refused that application. From my observations during the hearing the wife had no difficulty in providing instructions to her lawyer in Court. When she gave evidence she did so in a cogent and lucid manner. I was given no indication whatsoever that she was in any way handicapped in this litigation by stress.
Background
The husband is aged 46 and the wife 44. They were married on 22 November 1979. There are six children of the marriage, three of whom are under the age of 18 years. These three are L who was born on……. 1987 and is therefore aged 16, M who was born on ………. 1988 and who is therefore aged 15 and N who was born on ……….. 1990 and is therefore aged 13.
In early 1980 the parties bought a block of land at W and built a house on this property which became the matrimonial home.
In 1991 the husband lost his right arm in an industrial accident. He sued his employer and in 1994 received damages of $350,000.
The parties separated on 28 May 2002 when the wife left the former matrimonial home.
The wife now lives with a Mr T. The husband has not repartnered.
Further relevant facts will emerge in the balance of this judgment.
The approach to be taken
I propose to approach this matter using the usual four stage process. The first stage involves making a finding as to the parties' assets and liabilities. The second stage involves the consideration of contributions of various types made by the parties and if appropriate making an alteration of vesting property interests on this basis. The third stage involves the consideration of such of the matters set out in s 75(2) as are applicable and again, if appropriate, altering the interests of the parties in property on this basis. The fourth stage involves an overview of the result derived from the second and third stages to determine if overall that the result is just and equitable.
The property pool
I find that the pool is as follows:
(a) The W property $350,000
(b) Landcruiser (husband) 22,500
(c) Toyota (husband) 6,000
(d) Harley Davidson motorcycle (wife) 20,000
(e) Husberg motorcycle (wife) 6,500
(f) KTM motorcycle (husband) 5,200
(g) Husband’s contents 5,000
(h) Wife’s contents 500
(i) Proceeds of sale of a motorcycle (husband) 12,000
(j) Cash at separation (husband) 15,000
(k) Funds in bank accounts at separation (wife) 31,028
(l) Wife’s jewellery 1,500
Total 475,228
The wife has a Hyundai motor vehicle but the debt on this exceeds its value.
The wife has superannuation entitlements of $7,600. I do not propose to include this in the pool as the reality is that it is a financial resource and not a fund that can be accessed.
There is a motorcycle sidecar in the possession of the husband. The parties cannot agree on its value. I propose to order its sale and a division of the proceeds. It appears that its value is modest.
At separation the husband had a credit card debt of $3,500 and the wife a credit card debt of $1,400 and a debt to AGC of $899.
These debts total $5,799. The pool is therefore $469,429.
Contributions
At times each of the parties worked in paid employment and at other times each was not in paid employment and contributed solely as a homemaker and parent. Subject to what will appear later in this judgment I do not regard one type of contribution as having more significance than the other.
The block of land at W cost $7,000. The wife applied an inheritance of $4,000 towards this. Given that the land was acquired in the order of twenty years ago the significance of this initial contribution has been very much eroded by the passage of time. Nevertheless, it is a matter which weighs in the balance as it enabled the parties to acquire the W property. It is appropriate when considering an initial injection of monies into a marriage to have regard to the use to which they were put: Pierce (1999) FLC 92-844.
As I have indicated, in 1994 the husband received an amount of $350,000 by way of damages for the loss of his arm. In his affidavit he details the way the money was used and I accept his evidence in that respect. Essentially this is to the effect that an amount of $151,900 was spent on improvements to the house. A second storey was added, a new kitchen and central heating were installed and a shed constructed. An amount of $13,000 was applied to discharge the mortgage on the property. Other monies were applied to purchase chattels. Some of these appear to be quite extravagant, for example, $55,000 was spent to acquire two motorcycles. However these purchases would have been for the benefit of the wife and the children. The husband could not ride a motorcycle after his accident but the wife and the children were very involved in motorcycle riding. Other monies were spent in living expenses.
Some of the husband's damages monies were lost. This is because he took it upon himself to lend a Mr A V the sum of $40,000. This was apparently to enable Mr V to buy a business. It seems that the purchase did not proceed but Mr V nevertheless retained these monies and spent them. Only $2,000 has been recovered and it appears that the balance is lost. I am satisfied that lending money in these circumstances was extremely foolish. I would not categorise it as wanton or reckless dissipation of funds such as to attract the principle in Kowaliw (1981) FLC 91-092. However, in the circumstances, I consider it unjust to disregard the fact that part of the husband's damages monies did not go to the improvement of property or to the welfare of the family. It would be unjust to, in effect, give the husband the benefit of this component of the award and to increase his contribution base entitlement accordingly. Accordingly, I propose to treat the award as notionally having been $312,000.
The husband's damages claim was settled and there is no break-up of the monies he received. I can infer, however, that they would have comprised the following:
(a)Past loss of income.
(b)Future loss of income.
(c)Pain and suffering and loss of amenities of life.
(d)A Griffiths v Kerkemeyer component.
It is obvious that the settlement was in the nature of a compromise. If liability had been admitted or was obvious I cannot imagine that the husband would have been advised to settle for $350,000. In such circumstances he would have been awarded much more had the matter gone to trial. I infer that either liability was not clear cut or that there was a significant likelihood that any award would be reduced by reason of contributory negligence. This means that when I come to estimate in some way the quantum of each of these components I must discount that quantum.
The component of the damages that would have related to loss of income from 1991 to 1994 or loss of income for the period from then until separation does not of itself, in my opinion, have any special significance. As I have indicated, I do not regard contributions made by a party by way of bringing in income as more significant than a contribution as a homemaker or parent. The fact that a party may receive monies representing wages in a lump sum does not put this in a different category to persons who earn wages by way of weekly or fortnightly payments. However, there can be a significance of a different type attached to the receipt of this money. It is sometimes the case that a person is injured but nevertheless able to perform household duties and fulfil the role of a parent. Given that that party is at home and has more time to devote to these tasks the Court might be prepared to infer that the injured party's domestic contributions exceeded the domestic contributions of the other party who might be in employment. The injured party is therefore effectively making a double contribution, on the one hand as a provider of money and on the other as the principal homemaker or parent.
The husband would have me make an adjustment on this basis. He claims that he quickly learned to compensate for the loss of his arm and was able to perform significant homemaking duties, notwithstanding his injury. I reject the husband's contention that he was able to perform significant household tasks from a period shortly after his accident. Documents prepared for his damages claim in 1993 tell a different story to the one related by the husband to me at the hearing. For example, in a report dated 6 September 1993, a consultant psychiatrist, Dr Hugh Veness, reports that:
Simple tasks like using a knife and fork, tying his shoelaces, doing up buttons and zips are either beyond him or are very difficult. Even showering, washing his hair and dressing is much more difficult with only his left upper (sic) limb intact. It is difficult even to sign a form at the bank. Consequently, a lot of things have been taken over by his wife.
In addition a Statement of Particulars filed in May of 1993 indicates that at that date he was unable to do any housework except vacuuming.
I accept however that at some stage after his damages monies were received, the husband was able to perform significant household duties. The evidence does not enable me to put a date on this. I am satisfied from the material provided that in 1993, some two years after the accident, his ability to perform household tasks was severely compromised but at some time after this date he became able to make a significant contribution to the domestic tasks of the household. I infer that by reason of the severe limitations he was said to suffer in 1993 it would have been some considerable time after this. From this point onwards his award of damages for loss of earnings does assume the significance that I have indicated. However I believe that the husband’s disability was likely to have reduced his capacity to perform domestic tasks and this tempers the significance of his “double contribution.”
A component of the award would have represented pain and suffering and loss of amenities of life. I imagine that this was a substantial part of the award. This does have special significance in that it is a contribution over and above normal contributions which a party makes during a marriage. That part of the award which relates to loss of earnings after the parties separated also has a special significance as a contribution by the husband.
As I have indicated, part of the verdict would have represented a Griffiths v Kerkemeyer component. From the Statement of Particulars it appears that a claim was made for over $23,000 on this basis up to the date of that document. Moreover the Statement claimed that the wife's Griffiths v Kerkemeyer type contributions were continuing. Judging by the limitations it described the husband as labouring under this was to be expected. This component of the damages is of course a contribution by the wife.
The difficulty is that, as I have mentioned, there is no break up of the damages. Much of my task consists of guesswork.
The wife worked in paid employment during the marriage and also contributed as a homemaker and parent. The husband and one of the parties' children gave evidence that her homemaking contribution was very limited. I do not accept this evidence. I find no basis for treating the wife's homemaking and parenting contributions as being less than that of the husband. As I have indicated, the only basis on which I place greater weight on those contributions made by the husband was that he had more time on his hands to apply himself to these duties and therefore, after he overcame his handicap and was able to contribute significantly to household tasks his contributions in this respect exceeded those of the wife.
I find that from the time of the husband's accident until some time after 1993 when he regained his ability to perform domestic tasks, the wife provided the great bulk of the household tasks. I propose to take this account. I acknowledge that I should not double count as part of the additional work she undertook would have been reflected in the Griffiths v Kerkemeyer component of the husband's award.
The wife contends that I should make an adjustment in her favour based on the principles set out in Kennon (1997) FLC 92-757. Kennon was a case where the husband had been guilty of domestic violence towards the wife. I do not accept that this has occurred in the present case. It was submitted on behalf of the wife however that I should apply Kennon even if I did not find that there was domestic violence. The wife said, and I accept her evidence in this respect, that after the accident the husband was moody, depressed, irritable and prone to outbursts of anger. The report of Dr Veness would indicate that this was continuing as late as 1993. This she says, and I accept her evidence as to this also, that this had an impact on her and made her homemaking contributions more onerous.
Kennon, as I have indicated, is a case where there was domestic violence. The Full Court held that if domestic violence by one party to a marriage makes the contributions of the other more onerous, account can be taken of this. It seems to me there could be three possible principles of law that could be derived from that case. These are:
(a)A narrow principle that would confine the case to actual domestic violence.
(b)A middle position to the effect that where the conduct of a party, whether in the form of domestic violence or otherwise, makes the contributions of the other party more arduous, account can be taken of this.
(c)A wider principle which would be to the effect that contributions are not to be measured in absolute terms but to be weighted in accordance with the difficulty under which a party might labour in making those contributions.
The solicitor for the wife could not point to any authority taking the “Kennon principle” beyond cases of domestic violence.
There is support for the middle position in the joint judgment of Fogarty and Lindenmeyer JJ in Kennon. Their Honours at page 84,290 stated that whilst their discussion would refer only to domestic violence “it is not intended to be confined to that issue.” They went on to say “It (ie domestic violence) is the most obvious example of a wider and more general category of conduct which may be relevant within s 79." When at page 84,294 they summarised their conclusions, that is that domestic violence is relevant if it makes the victim’s contributions more arduous, went on to say that although in this formulation they had referred only to domestic violence “for the reasons which we indicated earlier .… its application is not limited to that.”
For my part however I am not enamoured of the middle position and, despite Their Honours rejection of the floodgates argument, to which reference will be made below, I am not quite sure where it would lead. For example, a wife discovering her husband was having a sexual relationship with another woman might suffer stress or depression and might find her performance of homemaking and parenting tasks more arduous as a result. Is this to be taken into account? It seems to me that to do so would, by a backdoor, be reintroducing the concept of fault into property division. In addition it could lead to problems in defining the categories of conduct that would come under this version of the “Kennon principle.” The case of Le Broque v Le Broque [1964] 3 All ER 464 might stand as a warning of the difficulties that might be encountered. In that case the wife at first instance was granted a divorce on the grounds of the husband’s cruelty. The cruelty arose from the husband’s submissive and taciturn personality which meant that he would never engage in a dispute with the wife. If she began a dispute he would shrug his shoulders and leave the room. This so frustrated the wife that she developed an ulcer. Doubtless she found the performance of her homemaking duties were made more onerous as a result. While the decision was reversed on appeal the fact that the wife succeeded at first instance is illustrative of the subjectivity involved in assessing the turpitude or otherwise of a party’s conduct. So far I have assumed that the conduct that might fall for consideration would involve some aspect of fault. This appears to be the thrust of the judgments in Kennon and Fogarty and Lindenmeyer JJ rejected any “floodgates” argument saying (at page 84,294) that the principles they were laying down should “only apply to exceptional cases…..” If however it were not to be so confined then the circumstances that might arise for consideration could be wide ranging. A decision of, for example, a husband that the marriage was over and to leave the wife might cause her depression and make her task post separation in caring for children more onerous.
The third possible principle has some jurisprudential logic. If an analogy were drawn to syllogistic reasoning, Kennon would be seen as an example of a minor premise and that there is an overreaching and major premise which would encompass this minor premise, namely the principle I have articulated above. I have to say that although the adoption of the third principle would put Kennon in a more appropriate jurisprudential framework, that is as being akin to a minor premise, the concept that contributions are not to be measured in absolute terms but should be weighted according to capacity is, as far as I am aware, not a concept that has ever been applied in any context other than domestic violence. Moreover it was not a principle envisaged by the court in Kennon. The court in that case confined its analysis to cases where the conduct of a party was in issue.
If the answer is that the first principle is the true principle to be extracted from Kennon, it is not applicable in this case. If the answer is that the third principle represents the law then, in this case, it cuts both ways. The wife's performance of her domestic tasks was made more difficult and arduous by the husband’s irascible personality and depression. The husband's performance of domestic tasks was made more difficult and arduous by his only having one arm. If the third principle represents the law I would make no adjustment either way. As I have indicated, I am not attracted to the second principle which if applied would justify an adjustment in favour of the wife. I confess that I am not happy with the jurisprudence in Kennon but I acknowledge that I am bound by that case. I would regard myself, however, as bound only to follow the ratio decidendi of that case which, notwithstanding the reference to “a wider and more general category of conduct” and the statement that the principle is not limited to domestic violence, must be the first principle.* I do not believe that I am required to expand this ratio to encompass what I call the middle position.
* I acknowledge that technically it is incorrect to refer to this principle as the ratio of the case. The trial judge found that the wife’s contributions were not made more arduous by reason of the husband’s violence. The analysis by the Full Court was therefore obita dicta. However there is dicta and there is dicta. I would regard myself in an appropriate case as free to depart from dicta from an appeal court that consisted of a statement in the nature of a throwaway line. I am doing this here in that I am disregarding the reference to wider categories of conduct. I do not believe it would be appropriate to refuse to follow carefully reasoned analysis by an appeal court such as is found in this case on the basis that it is dicta.
Kennon was the subject of discussion by the Full Court in C v C (1998) FLC 92-824. This was an appeal by a husband who contended in one of the grounds of the appeal that the trial judge “wrongly failed to take into account the nature and state of the so called marriage of the parties.” He asserted in support of this that an allowance should have been made in his favour for the fact that the household in which the parties lived was an unhappy one contributed to significantly by the fact that the husband was involved in continuous extra-marital sexual relationships, caused he claimed, by the “impotence” of the wife. The Full Court in dismissing this rather bizarre ground said as follows:
Subject to the considerations expressed in Kennon v Kennon …….we fail to see that the degree of happiness within the household and the contentment that each party had within the course of their relationship is a relevant consideration under s 79(4)(a),(b) or (c). It may become relevant if, as a result of the unhappiness within the household, one or other of the parties does not make appropriate contributions towards the welfare of the family or that contributions take on an even larger significance because of the difficult circumstances in which they are made. (my underlining).
Again this is pure dicta which is in the nature of what I have called a “throwaway line.” It would be possible to garner support for the third principle set out above from the underlined words. They could be taken to indicate that if contributions by a party are made more onerous by the fact that they were performed by an unhappy person, whatever the reasons for the unhappiness, those contributions have a “larger significance.” I imagine however that the court intended them to be read in the context of the facts in Kennon. In the circumstances I do not propose to have regard to this authority.
I therefore make no adjustment on the basis of the “Kennon principle.”
After separation the younger children resided with the husband in the former matrimonial home. This continued until 2003 when L began to, in the husband's words, "oscillate" between the two households. Later in the year - the husband says in July and the wife in May - L moved in full time with the wife. The other two children remained with the husband.
The wife's financial statement filed in October 2002 reveals payment of child support of only $15 a week for the three children although she says that for a time she also bought groceries for the children. Even accepting this I find that post-separation contributions as a parent favour the husband.
I summarise my findings on contributions as follows. I am satisfied that during the marriage the husband's contributions should be given more weight than those of the wife. In the main this is because of the very substantial injection of capital through his damages monies although his “double contribution” is a factor. However the damages monies have to be seen in context. The marriage lasted for more than twenty two years and during this time both parties contributed in various ways to the acquisition, improvement and preservation of property and to the welfare of the family. That part of the award that related to loss of earnings during the marriage has no special significance. Moreover, there would have been a Grifffiths v Kerkemeyer component to the award. I take account of the additional contributions made by the wife when the husband was disabled. I take into account post separation contributions which favour the husband.
In the result I make a contribution based adjustment of seven and a half percent in the husband’s favour. The pool is in the order of $470,000 so this is the equivalent of about a $70,000 difference between the parties’ entitlements on a contribution based division.
Section 75(2) factors
Since separation the husband has had the benefit of occupying the former matrimonial home which is unencumbered. The wife has had to pay for accommodation. This is a relevant factor.
As I have indicated, presently the husband has a responsibility for caring for the youngest two children and the wife has a responsibility for caring for L.
Whilst the future cannot be predicted, I propose to proceed on the assumption that the present arrangements will continue until each child attains the age of 18 years. It is appropriate therefore to make an adjustment in favour of the husband to reflect his responsibilities for the two youngest children which exceed those of the wife with respect to L and can be expected to last longer than those of the wife.
I am required to have regard to the fact that as a result of the contribution based division there is a discrepancy in the parties’ capital. See Gray v Price (unreported, Finn J, Appeal EA 92 of 2001) at paragraph 52.
The most significant issue under this heading is the income earning capacities of the parties.
The husband is not in employment and is in receipt of a disability support pension. He receives $220 a week from this source. He is also in receipt of a family payment of $342 a week.
The husband is a motor mechanic by trade. He has little formal education, having left school in the first year of high school. In the accident in 1991 he lost the whole of his right arm. Given this fact, it is difficult for me to understand how he could work as a motor mechanic. Notwithstanding this the wife maintains that he has an earning capacity and indeed there is evidence to support this contention. Since his accident he has had employment. In 1993 he was employed as a foreman in an earthmoving workshop for six months. In 1994/95 he did some weekend work as a contract diesel fitter for the G Shire Council. And in 1995/96 he worked as a truck mechanic. He has had other jobs from time to time. He has not, however, worked for some time and has now been given a disability pension. He says that one of the problems he has encountered in recent times in getting any work is that his condition results in his employer having to pay higher insurance premiums.
I am satisfied that there is no way the husband could compete on equal terms as a mechanic with an able bodied person and I accept his evidence that there are problems now in relation to insurance which would deter potential employers. I am satisfied that it is unlikely he will obtain employment in the future.
The wife is employed in the hospitality industry. She has worked in a number of positions since separation. At present she works at the B Golf Club for 15 hours a week at a rate of $14.50 per hour. She also works from time to time in a hotel and earns between $70 and $100 a week from this. She says she does not wish to work full time and that she finds her responsibilities for looking after her household precludes this. She says she also has commitments in working on a rural property owned by her partner's parents. I do not accept that these are valid reasons why she cannot work full time. Her household at present consists of her partner, Mr T, who is not in employment, and L who is aged 16. The work she does on Mr T's parent's property is not paid work and it appears that she does this because she has an interest in farming activities. It is a matter for the wife, of course, whether or not she chooses to work full time but, for the purposes of assessing her earning capacity, I find she could do so. If she were to work 40 hours a week at $14.50 an hour she would have an income of $580 a week.
The wife has a small amount of superannuation. However if she continues to work her employer will continue to contribute to superannuation. The husband has no capacity to acquire superannuation.
It is apparent that the s 75(2) matters favour the husband. I propose to make an adjustment of ten percent in his favour under this subsection.
Overview
For this exercise I am not concerned with precise figures. On the basis of the division I have foreshadowed the husband would receive 67.5% of the pool of about $470,000 and the wife 32.5%. In money terms this results in the husband receiving in the order of $317,000 and the wife in the order of $153,000, a difference of about $164,000. In all the circumstances I consider this to be appropriate.
Conclusion
The pool is $469,429. The husband’s 67.5% of this amounts to $316,864. He has property and notional property in his possession of $65,700 leaving a balance of $251,164. The wife’s 32.5% amounts to $152,564. She has property and notional property in her possession of $59,528. This leaves a balance to be paid of $93,036 which I round off to $93,000. The husband may acquire her interest in the home for this sum. In the event that he is unable or unwilling to do so the home will have to be sold. The husband’s $251,164 amounts to 72% of the value of the home and on such a sale he is to receive this proportion of the sale proceeds.
It may be that if the husband is unable to buy out the wife she would want to buy him out. She may have access to finance through sources of which I am unaware. I propose to take out the Orders set out at the commencement of this judgment in fourteen days. If the wife seeks provision for her to do this her solicitor should advise my associate within this period and I will amend the Orders accordingly.
I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of Brewster FM
Associate:
Date: 22 October 2003
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