R and R

[2001] FMCAfam 163

FEDERAL MAGISTRATES COURT OF AUSTRALIA

R & R [2001] FMCAfam 163

FAMILY LAW – Property – Value of Property – Financial contributions during marriage – Property settlement – set aside orders – superannuation –
Family Law Act 1975 s75 (2), s79, s79 A(1A), s79 A(1)(a), s79 (4), s106.

Sommerville and Sommerville (2000) FLC 93-042, Drew and Drew (1985) FLC 601, Banhidy and Banhidy (1983) FLC 91-302, Partrikos and Pastrikos (1980) FLC 90-879, McCabe and McCabe (1995) FLC 92-634, Lee Steere and Lee Steere (1985) 91-626, Ferraro and Ferraro (1993) FLC 92-335, In Marriage of Clauson (1995) FLC 92-595, McLay and McLay (1996) FLC 92-667, Mallet and Mallet (1984) FLC 91-507, Campbell v Kuskey (1998) FLC 92-795, Horsley and Horsley (1991) FLC 92-205.

Applicant: C L R

Respondent: M R

File No:   ZP 1173 of 2000

Delivered on: 19 July 2001

Delivered at: Parramatta

Hearing Date: 18 and 19 January

Judgment of: Scarlett FM

REPRESENTATION

Counsel for the Applicant: Mr Sansom

Solicitors for the Applicant: Mr Dowd Watts McCray Solicitors,
DX 8224 Parramatta

Counsel for the Respondent: Mr Campton

Solicitors for the Respondent: Ms Picker Matthews Dooley and Gibson, Solicitors DX 8104 Blacktown

ORDERS

1. The orders for property settlement made by consent in the Family Court of Australia at Parramatta on 29 April 1994 are set aside.

2. The respondent husband shall pay to the applicant wife by way of property settlement the sum of $83994.50 within one month from the date of this Order and upon such payment the applicant wife shall transfer to the respondent husband the whole of her right title and interest in the former matrimonial home situate and known as F Street S W being the whole of the land in Folio Identifier 70/11653 subject to the existing mortgage encumbrance to the Colonial State Bank.

3. Subject to Orders 1 and 2 hereof the respondent husband is declared to be solely entitled to:

   (a)all personal property now in his possession or control;

   (b)all accounts at the Colonial State Bank standing in his name; and

   (c)all interest in the Westpac Lifetime Superannuation Service standing in his name.

4. Subject to Orders 1 and 2 hereof, the applicant wife is declared to be solely entitled to:

   (a)all personal property now in her possession or control including Subaru Liberty motor vehicle registered number MMN 573;

   (b)all accounts at the Colonial State Bank standing in her name; and

   (c)all interest in the Zurich Superannuation Fund standing in her name.

5. In the event that either party refuses or neglects to execute any deed or instrument, the Registrar of the Federal Magistrates Court is appointed pursuant to Section 106A of the Family Law Act 1975 to execute such deed or instrument in the name of such party and do all acts and things necessary to give validity and operation to the deed or instrument.

6. Time for lodging appeal is to run from the date of delivery of reasons.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PARRAMATTA

ZP 1173 of 2001

C L R

Applicant

And

M R

Respondent

REASONS FOR JUDGMENT

Application

1. This is an application by the wife for orders:

   a)

   setting aside the orders for property settlement between the parties made by consent in the Family Court at Parramatta on

   
   

   29 April 1994; and

   b)seeking that the husband pay to the wife an amount equal to half the value of the former matrimonial home and that the wife should transfer her interest in the property to the husband subject to the existing mortgage.

2. Other orders were sought to the effect that each party should otherwise retain their interests in personal property, bank accounts and superannuation. The respondent husband opposed the orders sought, asking that the wife’s application should be dismissed.

Background

1. The wife was born on 8^th May 1947, so she was 53 years of age at the time of the hearing. The husband was aged 52 years, having been born on 8^th January 1949. The parties commenced cohabitation in mid 1985, living together at the husband’s flat in G. According to the husband’s account, they initially separated in June 1986.

2. The husband purchased a house in S W, using funds he had obtained from an earlier property settlement and borrowing the balance of the purchase price. The husband says that the parties resumed cohabitation in mid 1987, when the wife moved into the house at S W with him.

3. The parties married on the 31^st December 1989. The parties separated on 1^st November 1993, but remained living under the one roof. Property proceedings were commenced, and by virtue of consent orders made on 29^th April 1994, the wife became entitled to the sum of $40,000.00.

4. On 29^th May 1994, the wife received the sum of $40,000.00 pursuant to the orders and vacated the former matrimonial home. She commenced to reside with a niece.

5. The parties remained in touch with each other, and in early 1995 took a holiday together at the Murramarang resort. In October 1996 the husband travelled to the United Kingdom. Whilst he was away, the wife moved back in to the former matrimonial home, without his consent, according to the husband. The husband returned from the United Kingdom on 13^th November 1996. The wife was still living in the former matrimonial home. The parties resumed their relationship as husband and wife.

6. The parties finally separated in May 2000.

The preliminary application

1. At the commencement of the hearing, Mr Campton of Counsel, for the husband, sought that the wife should be required to proceed on the basis that her application was brought under the provisions of

   
   

   s. 79A(1)(a) of the Family Law Act, which was set out in her affidavit sworn on 28^th November 2000. In that affidavit, prepared in answer to a Request for Answers to Specific Questions, the wife said that she claimed that there had been a miscarriage of justice by reason of “any other circumstances” as set out in the section. These circumstances, she said, were:

   “That the parties resumed cohabitation in or about November 1996 and finally separated in May 2000.

   By resuming cohabitation in or about November 1996, the parties impliedly, by their conduct consented to the Orders of

   
   

   29 April 1994 being discharged within the meaning of Section 79A(1)(a) of the Family Law Act 1975.”

2. When the hearing commenced, Mr Sansom of Counsel for the wife indicated that he intended to proceed on the basis of an application under section 79A(1A) of the Act. He said that the particularisation of the proceedings as being under Section 79A(1)(a) was an error. Mr Campton, for the husband, opposed that course being taken. He claimed that this change in the case was fundamental and that the husband was taken by surprise and was prejudiced by finding out on the day that the case which was required to meet was different at law from the case which he was led to believe that he would be facing. Accordingly, he said, the wife was now estopped from commencing the case on a different basis.

3. Mr Sansom conceded that if the wife were obliged to commence her case on the basis of an application under Section 79A(1)(a), as erroneously, pleaded, she would be unsuccessful, He said that there was no prejudice to the husband, as he was always aware of the factual basis of the wife’s claim.

4. In a preliminary decision at the conclusion of the first hearing day, I held that that the wife should be permitted to commence her case on the basis of the amendment proposed. I held as follows:

   “The wife has a claim the factual basis of which is clear. I am of the view that it was incorrectly pleaded notwithstanding the very clear warning signals sent out by the husband’s solicitors. For her to be deprived of the chance to bring this case before a court would be a substantial prejudice to her. Against this the husband has been placed in a position, despite his clear warnings, where he has been misled through no fault of his own as to the legal basis but not the factual basis of the wife's cause of action. He should be given the opportunity to meet that case. I am not of the view, however, that the interests of justice require that the wife’s case should in effect be dismissed because the facts are relatively clear. I am of the view that the wife should be permitted to amend the legal basis upon which she brings her application and that her factual evidence which would be in a relatively small compass should be heard. It may well be that at the conclusion of the wife’s case the husband finds that unless he were granted a timely adjournment he would be deprived of the opportunity to bring evidence that he was not aware that he had opportunity to bring to meet the case as it now stands. Or it may well be that the husband would be deprived of the opportunity to prepare certain submissions at law which at the beginning of the case he was not under the impression that it would be necessary for him to bring.

   I am of the view that if the husband were to bring an application for an adjournment at the conclusion of the wife’s case then the court should give that favourable consideration. There may of course be a costs penalty but the costs penalty I would have thought would result in less in the way of costs being thrown away than bringing to an end the wife’s case at this stage. I have had the opportunity to read the affidavit material. In making this decision I am not bringing any comment whatsoever upon the strength of the factual case which the wife seeks to bring before the court except to say that I am of a view that it is an arguable case.”

5. The evidence in the case proper commenced the following morning. The husband did not seek an adjournment at the end of the wife’s case but commenced his own case.

Evidence

1. The wife was the only witness in her own case. She deposed in her affidavit that she and the husband had resided together as husband and wife in the former matrimonial home from the time he returned from the United Kingdom on 13^th November 1996 until they separated under the one roof in approximately May 2000. She further said that she had moved out of the home on 7^th June 2000.

2. The wife said that her initial contribution to the joint assets was a motor car and personal belongings. She conceded that the husband had said that he had approximately $40,000.00 as proceeds of the property settlement with is former wife. The husband and his daughter by a previous marriage decided to purchase the property at S W, without consulting her about it. She moved into the house later.

3. The wife deposed that she had been employed on a full-time basis from November 1996 until the date of the hearing. She said that the husband paid for expenses such as the mortgage and council rates, whilst she paid for groceries, clothes, soft furnishings, manchester, food, wine, vitamins, hardware and small electrical appliances. She also claimed a non financial contribution by way of cooking, cleaning, ironing, washing, sewing and general household duties. She also said that the husband’s two sons by his previous marriage, resided with them for several years. The older of the two boys came to live with them in 1988 and the younger boy came in 1990. The two boys were at school at the time.

4. It was the wife’s evidence that she had moved out of the former matrimonial home in May 1994 and resided at Prospect until

   
   

   1^st October 1996. She claimed that she and the husband gradually resumed their relationship, including their sexual relationship, until she moved back into the former matrimonial home on 1^st October 1996.

5. The wife admitted in her affidavit that she had received the sum of $40,000.00 from the husband pursuant to the orders made by the Family Court on 29 April 1994. These orders were made as a result of a Form 12A Application for Consent Orders. Both parties were legally represented, the wife by Ross Selvaggio & Associates and the husband by Matthews Folbigg, Solicitors. The date of separation was given as 1 November 1993.

6. The wife said that she used the $40,000.00 to pay off her car, purchase furniture and furnishings, spend money on home upkeep and pay for daily living expenses.

7. The wife deposed in her affidavit that she obtained a loan of $4,100.00 from the husband.

8. In his affidavit, the husband gave evidence that was similar in many ways to that of the wife. He disagreed with her account of resuming cohabitation in October 1996. He said that in August or September of that year the wife approached him, saying, “I have a proposition to put to you about moving back in. I can give you $5,000.00 now to help with the mortgage and pay you $150.00 per week rent. This is what I am currently paying. I will also pay half of the household costs. Don’t answer me now. Think about it.” He said that he did not reply but that had planned to travel to the United Kingdom in October and November 1996. He did not ask the wife to occupy the home whilst he was away nor did he consent to this occupation. Nevertheless, when he returned in November he found that the wife had moved back into the home. The relationship “quickly changed into a husband and wife type of relationship”.

9. The husband did not agree with the wife’s claims about the extent of her contributions, either financial or non-financial. He said that he paid for a lot more items, he reimbursed her for the cost of any clothing she purchased for him, and she borrowed a total of $6,000.00 from him. He said that she had repaid $3,000.00 of that money.

10. In short, the husband said that they lived separate lives, although he paid for everything. He said that he received a redundancy payout in November 1998, which amounted to $24,845.26. He used part of this money for air-conditioning and renovations and gave $5,000.00 of it to the wife on 9^th November 1998.

11. In cross-examination, the wife admitted that she had been unemployed for a period of about 9 months, between finishing her employment with Mobex and commencing working for Samsung in November 1996. She denied that she had paid a cheque for termination of employment benefits into an account in her former surname and kept if for her own use. She denied the husband’s account that she had offered to pay $5,000.00 plus rent of $150.00 per week to move back into the former matrimonial home in august or September 1996. She said that she did not have $5,000.00 at that time. She agreed that she did not ever pay the husband $150.00 per week by way of rent, although she said that she had been paying that amount in August and September 1996. I am not of a view that the wife’s evidence was greatly shaken by cross-examination.

12. The husband was cross-examined at some length on the circumstances of the wife’s moving back into the former matrimonial home. He denied that he had given the wife any keys to the home when he left for the United Kingdom, saying that she had retained a set when she left. He maintained his contention that the wife had approached him with a proposition about moving back into the home.

13. The husband agreed that on his return from the United Kingdom, notwithstanding the fact that he had not consented to the wife’s moving into the home, they had no conversation about her being there. His explanation was “I didn’t object to her being there”[1]. His description of the circumstances of the wife’s reoccupation was as follows:

    [1] Transcript, 19.1.01, page 55

    (Mr Sansom) “But certainly it was the case that you agree you had no objection to her being there?---(The Husband)That’s correct.

    You didn’t, to use the colloquial, front her about it when you got back?---Of course not, she picked me up from the airport.

    That’s right and how was that arranged, sir? Did you ring her or did she ring you?---I rang her.

    Where did you ring her, at work?---No, I rang her at home.

    Whose home?---My home.

    And you rang her, did you, from the United Kingdom?---That’s correct, yes.

    In the expectation that she’d be there?---On the first or second try she wasn’t there.

    But you got her on the phone?---Yes certainly.

    And she was at your home?---Yes.

    The home that you didn’t ask her to occupy nor consent?---That’s correct.”[2]

    [2] Transcript 19.1.01, page 56

14. In the light of this evidence, the husband cannot be heard to say that there was no consensual resumption of cohabitation.

Principles to be applied

1. The first question to be resolved is whether the parties have by their actions consented to the earlier orders being discharged. The relevant section of the Family Law Act is section 79A(1A), which relates to the discharge of earlier consent orders. The section says:

   “A court may, on application by a person affected by an order made by a court under section 79 in proceedings with respect to the property of the parties to a marriage or either of them, and with the consent of all the parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.”

2. The application of section 79A(1A) has been considered by the Full Court of the Family Court in McCabe and McCabe (1995) FLC 92-634. In McCabe, the circumstances were that the parties had separated in 1989. Property orders were made by consent in July of that year. They later reconciled and notified the Family Court. They separated again in 1993 and in 1994 the wife applied to have the 1989 orders set aside. The Full Court, constituted by Fogarty, Finn and Kay JJ, held that it was clearly open to the trial Judge to reach the conclusion that the circumstances disclosed a consent by the parties to set the orders aside and enable the Court to make a new order. In cases of this nature conclusions about the intention which should be attributed to the parties will depend upon the particular circumstances of each case. There is no doubt that parties can expressly or by their conduct consent to the discharge of prior orders so as to enable the Court to make a fresh property order.  

3. In Sommerville and Sommerville (2000) FLC 93-042, Nicholson CJ referred with approval to the decision in McCabe, and also applied the principles set out in Drew and Drew (1985) FLC-601 and Banhidy and Banhidy (1983) FLC 91-302 in dealing with a case where the parties separated in 1991, had consent property orders made that same year, reconciled in 1992, and finally separated in 1996. His Honour said: “When these principles are applied to the present case I think that there are strong grounds for concluding that the parties, by their conduct, consented to the setting aside of the original order”.[3]

   [3] at 87665 and 87666

Conclusion

1. I am satisfied that the parties resumed their marital relationship from 13^th November 1996, the date when the husband returned to the United Kingdom. The wife had moved back into the former matrimonial home in the husband’s absence. This was not done without the husband’s knowledge. On his own evidence, he telephoned there, from Great Britain, to ask her to pick him up from the airport on his return to Sydney. The husband would hardly have gone to the trouble and expense of ringing from the other side of the world if he did not have some expectation that the wife would be found in the home. His explanation that he did not object to the wife returning to the home, without his consent and in his absence, seems to be a huge understatement. Not only did he not object, he permitted her to remain and recommenced a sexual relationship.

2. The resumption of the marital relationship, not just for a few weeks but for over three years, can only be seen as a consent by the parties to the earlier property orders being discharged. I am satisfied that the orders made by consent on 29^th April 1994 should be discharged.

Property proceedings – principles

1. In property proceedings, the court must look to the provisions of Section 79 of the Family Law Act. Section 79(1) says:

   “In proceedings with respect to property of the parties to a marriage or either of them, the court may make such order as it considers appropriate altering the interests of the parties in the property, including an order for a settlement of property in substitution for any interest in the property and including an order requiring either or both of the parties to make for the benefit of either or both of the parties or a child of the marriage, such settlement or transfer of property as the court determines”.

1. In making such orders, the court must be mindful of Section 79(2), which states that “The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”, and Section 79(4), which sets out a number of matters to be taken into account by the court in deciding what order should be made, including:

   a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage;

   b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage;

   c)the contribution made by a party to the marriage to the welfare of the family;

   d)the effect of any proposed order upon the earning capacity of either party to the marriage; and

   e)the matters referred to in sub-section 75(2) so far as they are relevant.

2. The process which a court must undertake was set out by the Full Court of the Family Court in Pastrikos and Pastrikos (1980) FLC 90-897. The Full Court held that under section 79, the Court has to embark on a dual exercise. The first part of the exercise is to determine the nature and, as far as possible, value of the property of the parties in issue. Then the court proceeds to make some assessment of the extent of each party’s contribution to those assets. The second part of the exercise is to consider the financial resources, means and needs of the parties and the other matters set out in section 75(2) so far as is relevant. This approach, which has more recently been described as a three-stage approach, has been followed in later decisions (Lee Steere and Lee Steere (1985) FLC 91-626, Ferraro and Ferraro (1993) FLC 92-335, In the Marriage of Clauson ((1995) FLC 92-595, McLay and McLay (1996) FLC 92-667).

3. The question of the contribution by the parties has been considered by the High Court of Australia in Mallett and Mallett (1984) FLC 91-507. The Full Court of the Family Court has held that it is important to identify the parties’ assets and liabilities before considering contributions and section 75(2) factors (Campbell v. Kuskey (1998) FLC 92-795). The parties’ contributions must be separated from the relevant section 75(2) factors (Horsley and Horsley (1991 FLC 92-205).

Assets and liabilities

1. I find that the assets of the parties are as follows:

   a)..... the former matrimonial home.................................... $270,000.00

   b)..... the wife’s Subaru motor car........................................ $17,500.00

   c)..... husband’s business account....................................... $20,000.00

   d)..... husband’s personal bank account................................ $1,200.00

   e)..... husband’s household effects......................................... $3,000.00

   f)wife’s personal bank account........................................ $1,500.00

   g)wife’s household effects................................................. $2,000.00

   Total Assets....................................................................... $315,200.00

2. I find that the liabilities of the parties are:

   a)..... mortgage on former matrimonial home..................... $14,531.00

   b)..... husband’s Visa Card debt............................................. $5,000.00

   c)..... wife’s personal loan........................................................ $5,000.00

   d)..... wife’s Visa Card debt.......................................................... $80.00

   e)..... wife’s GE Finance debt..................................................... $600.00

   Total Liabilities..................................................................... $25,211.00

3. Accordingly, the net asset pool amounts to $289,989.00.

Contributions

1. Mr Sansom, for the wife, submitted that the Court should look at contributions over the entire length of the marriage, and not just from the time when the parties reconciled, which appears to be

   
   

   13^th November 1996. I believe this submission to be correct, as section 79A(1A) empowers the Court either to vary the original order or “set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside”.

2. The duration of the marriage, and of the prior cohabitation, amounts to a total of approximately eleven and a half years, taking into account the periods of separation. The husband’s financial contribution over that period was slightly greater, taking into account his initial capital contribution and his greater income over the period of time the parties cohabited.

3. Against this, the wife also worked full-time for a significant period of time during the marriage, albeit at a lesser rate of income. She was without employment for a period of about 9 months in 1991 and 1992 after she left Mobex and before she commenced work with Samsung Electronics.[4] It can be seen that the husband made the greater financial contribution over the marriage.

   [4] Transcript 19.1.01 pages 28 and 29.

4. The wife claims a contribution as a homemaker, which the husband in his evidence sought to downplay in his affidavit (paragraphs 19, 20, 23, 24, 25 and 27). The husband’s daughter and two sons by his previous marriage lived with them for various periods of time, and the wife says that she performed household services and acted in the homemaker role. I am satisfied that her evidence should largely be accepted on this point.

5. The wife’s homemaker role combined with her paid employment, which brought income into the household, brings her contribution over the total period of the cohabitation to a position where I assess the wife’s contribution as being 45% and the husband’s 55%.

Section 75(2) factors

1. It is only at this stage that the court looks at section 75(2) factors.

   
   

   I find the following matters to be relevant under this heading.

2. The age and state of health of the parties is of relevance (section 75(2)(a)). The wife is slightly older than the husband. She was born on 8^th May 1947, so she has now attained the age of 54 years. The husband was born on 8^th January 1949, so he is aged 52 years. The only evidence before the Court indicates that the husband is in good health[5] but that the wife has been told by her general medical practitioner that she may need a hip replacement in 12 months’ time. [6]The wife was not cross-examined on this issue. It would appear that a hip replacement for a woman now aged 54 would create some difficulty and I consider that a small adjustment should be made in favour of the wife.

   [5] Paragraph 48 of the wife’s affidavit sworn 12.10.2000

   [6] Paragraph 47 of the wife’s affidavit sworn 12.10.2001.

3. The income, property and financial resources of the parties is also of relevance. The husband’s evidence shows that his income has consistently been higher than that of the wife, and this state of affairs can be expected to continue. The husband’s superannuation is a financial resource that far outweighs that of the wife. The husband has an interest of some $52,110.00 in the Westpac Lifetime Superannuation Service whilst the wife has an interest of approximately $18,000.00 in the Zurich Super Fund. A small adjustment should be made in favour of the wife.

4. Neither party has a child or any other person for whom they are responsible [section 75(2)(d) and (e)], nor is either party eligible for a pension, allowance or benefit [section 75(2)(f)].

5. There was no evidence presented that showed that there would be any appreciable or immediate change in the parties’ standard of living. I do not believe that an adjustment is due under section 75(2)(g), or any other sub-section.

6. All in all, the section 75(2) considerations favour the wife, albeit slightly. I am satisfied that there should be a 5% adjustment in favour of the wife pursuant to the section 75(2) factors.

7. Taking all these matters into account, the ratio of contributions adjusted by the 5% 75(2) adjustment, leaves the parties with an equal share of the property.

Conclusion

1. What the wife should receive, therefore, is 50% of the asset pool of $289,989.00, which comes to $144,994.50, less those items that she has already received. She currently has a motor car worth $17,500.00, $1,500.00 in the bank and household effects of $2,000.00. These amounts total $21,000.00.

2. The sum of $21,000.00 should be subtracted from the amount of $144,994.50, leaving an amount of $123,994.50. The only other matter to be taken into account is the fact that the wife has received the sum of $40,000.00 already, as a result of the earlier consent orders.

3. Mr Sansom submitted for the wife that, in effect, some or all of that amount should be subtracted from the figure of $123,994.50, because the wife has had the use of the money. I am of the belief that the whole of the amount of $40,000.00 should be subtracted from the sum of $123,994.50 to which I have held the wife is entitled. She received the money by way of a settlement of property, and for no other reason. The fact that she has spent it all is not a matter that the court can take into account.

4. It is just and equitable, in my opinion, for the whole of the amount of $40,000.00 to be subtracted from the sum of $123,994.50 which constituted the wife’s entitlement. It is for these reasons that I make the following orders.

I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of Scarlett FM

Associate:

Date: