R and T
[2008] FCWA 35
•17 MARCH 2008
[2008] FCWA 35
| JURISDICTION | : | FAMILY COURT OF WESTERN AUSTRALIA |
| ACT | : | FAMILY LAW ACT 1975 |
| LOCATION | : | PERTH |
| CITATION | : | R and T [2008] FCWA 35 |
| CORAM | : | PENNY J |
| HEARD | : | 12 FEBRUARY 2008 |
| DELIVERED | : | 17 MARCH 2008 |
| FILE NO/S | : | PT 1353 of 2006 |
| BETWEEN | : | R Applicant |
| AND | ||
| T Respondent | ||
| Catchwords: |
Property settlement - lump sum damages claim contributed by Applicant - Respondent paid mortgages after separation - contributions equal - allowance to Applicant for s 205ZD(3) factors
Legislation:
Family Court Act 1997 - s 205ZD(3), s 205ZG
Category: Not Reportable
Representation:
Counsel:
| Applicant | : | Mr N Marsh |
| Respondent | : | Mr S Jones |
[2008] FCWA 35
Solicitors:
| Applicant | : | Julienne Penny & Associates |
| Respondent | : | Carr & Co |
Case(s) referred to in judgment(s):
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener)
(2003) FLC 93-143
[2008] FCWA 35
1 The parties, [Mr R] and [Ms T], commenced living together in the latter part of
1996 while living in [the Eastern states] and separated in February 2004 while living in Perth. They never married. During the relationship three properties were purchased all registered in [Ms T]’s name.
2 In 1997 [Mr R] suffered a work related injury while working at [an hotel] in [the
Eastern states]. He stopped working and, apart from attempting work for a few weeks recently, he has not worked since that time. As a result of his work related injuries, [Mr R] received a lump sum payout of his claim for personal injuries in the sum of $285,000. Of these sums $210,000 were put in [Ms T]’s bank account.
3 [Ms T] worked during the entirety of the relationship and was responsible for
sourcing and arranging the properties acquired during the relationship. She has been
responsible for the payment of the mortgage on all three properties since separation.4 [Mr R] says the parties’ assets should be divided 60/40 in his favour. [Ms T] says they should be divided 70/30 in her favour.
| The law | ||||||||
| 5 | The approach to be taken in relation to an application for property settlement | |||||||
| pursuant to s 205ZG of the Family Court Act 1997 is a four step process. Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143. Those steps are: | ||||||||
|
Assets and liabilities
6 The value of the properties has been agreed. The parties have not been able to
agree the value of [Mr R]’s furniture and effects in his possession, and whether the full
proceeds of sale of the [boat] should be added back to the asset pool.7 In relation to [Mr R]’s furniture and effects, [Ms T]’s case was that after [Mr R]
received his lump sum payout, he was extravagant in relation to items purchased by him. He accepted, for example, that he purchased a fishing rod for $1,000, but only used it once. [Ms T] says that upon separation [Mr R] was left with a number of items in his possession, including [various recreational equipment], [tools, a trailer,] and [electronic] equipment. She valued these items at $50,000. [Mr R] valued them at $10,000. Neither had a valuation of the items prepared.
8 I am satisfied that it is highly unlikely the items remaining in [Mr R]’s
possession are worth $50,000. I will accept his estimate that they are worth around
[2008] FCWA 35
$10,000. [Mr R], however, gave evidence that he has in the last few years sold some of the items that were left in his possession and which were accumulated during the course of the relationship. [Mr R]’s evidence was that he had sold [furniture] in the last six months for $2,000, [other furniture] for $350 about five months ago, a trailer for $500 about a year ago and two [canoes] for a total of $400 a year ago. I intend to add back the sum of $3,250 to take into account the items sold by [Mr R].
9 During the course of the relationship the parties bought two [boats]. The second
was bought after [Mr R] received his lump sum payment. The parties agree that the boat was sold after separation for $38,750 to [Mr M]. It is agreed that [Mr M] paid [Mr R] in cash. [Mr R] says that he provided one half of that sum to [Ms T]. [Ms T] states that she did not receive it.
10 In paragraph 33 of [Mr R]’s affidavit for trial, he states that in September 2005 he sold the boat for $38,000. He makes no mention of having paid any sum to [Ms T]. In my view, if such a sum had been paid by [Mr R], I have no doubt that he would have mentioned it in that affidavit. [Mr R] claims that he has a poor memory, which may well be the case, but I am sure he would have remembered handing over $16,000 in cash to [Ms T].
11 In his statement of assets and liabilities at trial in paragraph 39 of that affidavit
he lists cash received from the sale of [an inflatable boat] of $1,500 and proposes it be added back to the asset pool. He does not mention any cash received from the sale of the [boat], but does say it was sold. It was [Ms T] who attached to her affidavit documents showing that the [boat] has been sold. She also attached a statutory declaration from the purchaser, [Mr M], stating that he paid [Mr R] cash in the month of August 2005 in the sum of $38,750. In my opinion, this sum should be added back to the asset pool as an asset already received by [Mr R]. The assets and liabilities of the parties are as follows:
Assets:
[Property No 1] $535,000
[Property No 2] 435,000 [Property No 3] 310,000
[Small vehicle] 3,000 [4WD vehicle] 5,000 Furniture and effects in [Ms T]’s possession 11,000 Furniture and effects in [Mr R]’s possession 10,000 Add-back items sold by [Mr R] 3,250 Proceeds of sale of the [nflatable boat] 1,500
Proceeds of sale of [boat] 38,750
$1,352,500
Liabilities:
Mortgage secured against [property no 1] $150,040
[2008] FCWA 35
Mortgage secured against [property no 2] 143,309 Mortgage secured against [property no 3] 77,116
$370,465
Net Assets $982,035
Contributions
Financial contributions
12 At the time the parties got together they had no assets of any significance and
were living in a rental property. [Mr R] was working at the [hotel] and shortly thereafter [Ms T] commenced working there as well. At the time they commenced living together [Mr R] was earning approximately $61,500 per annum. [Ms T] was earning around $38,000. In September 2007 [Mr R] suffered from his work related accident. He ceased work and began receiving workers’ compensation, receiving $2,000 and $3,000 per month, after tax.
13 In July 1998 [Mr R] claimed damages for a motor vehicle accident. He received
$65,000 from the insurer in July 1998, $45,000 of that sum was used to retire debt, and
the balance of $20,000 was retained by him.14 In December 1998 the parties moved to Perth to live. They initially shared a
rental property with [Mr R]’s brother and then moved to a rental property in [the suburbs]. [Mr R] continued to receive his workers’ compensation payments and [Ms T] earned about $550 per week, working for [a company]. The parties then rented a duplex owned by [Mr R]’s parents in [another suburb]. In January 2001 [Ms T] ceased working for the [company] and commenced work at the [hotel] as a [waitress].
15 In late 2001 [Ms T] purchased [property no 3] for $66,000. She was eligible
for the first home buyer’s grant of $7,000, which was put towards the deposit and she had savings of approximately $2,000. She took out a mortgage of $61,000 in order to purchase the property. She and [Mr R] continued to reside in the rented property. [Ms T] paid the mortgage on [property no 3] and after 12 months it was rented. By this time [Ms T]’s weekly income was similar to that received by [Mr R].
16 In April 2002 [Ms T] purchased [property no 2] for $122,000. She paid a
deposit of $2,000 and took out a mortgage for $127,888. This property was tenanted immediately after settlement. The average rental from the property has been $446 per month, and the average mortgage payments have been $598 per month. The shortfall has been met by [Ms T].
17 In October 2002 [Ms T] increased the mortgage secured against [property no 3]
| by $20,000. These funds were used to purchase the first boat. The cost of the boat was $16,500, and the balance was used to pay stamp duty and other costs. | |
| 18 | In late October 2002 [Mr R] settled his damages claim. The sum of $210,000 was deposited into [Ms T]’s bank account. In total [Mr R] received $285,000. [Ms T] |
[2008] FCWA 35
says she was not aware of [Mr R] receiving any funds in excess of $210,000. The
funds received by [Mr R] were used in the following manner:
“(a) $30,000 to repay personal loans and credit card debts; (b) $38,000 towards the purchase of the new boat (after the trade-in of the boat previously purchased by the respondent) (c) $4,000 for boat accessories; (d) approximately $10,000 for furniture and household items; (e) $110,000.00 towards the purchase of [property no 1]; (f) $2,500 for the installation of security screens and polishing floor boards at [property 1]; (g) $9,000 for the purchase of a [4WD vehicle]; (h) $5,000 for repairs and improvements to the [small motor] vehicle; and the (i) purchase of sporting and leisure equipment [listing of various types of equipment] etc).”
19 In February 2003 the [property no 1] was purchased in [Ms T]’s name for the
sum of $230,000. As already stated, $110,000 of the funds received by [Mr R] were used to purchase that property and [Ms T] took out a mortgage in the sum of $130,000 to complete the purchase.
20 Around the same time [Mr R] surrendered his superannuation policy and received $15,000 which was put towards the construction of a car port. and the outgoings relating to it.
21 [Ms T] made all contributions on the mortgage repayments for [property no 1]
22 An application was made to subdivide the [property no 1] in late 2000. After the
parties separated, [Mr R] spent some of the funds received from the sale of the [boat] on completing some of the works required before the subdivision could go ahead. He did not complete the works and the approval for the subdivision has now lapsed.
23 In May 2004 [Ms T] increased the mortgage secured against the [property 2] by
$25,000. She gave $12,000 to [Mr R], who needed the funds to live. At that time the parties had separated and [Mr R] was not entitled to any social security payments. The balance of $13,000 was used by [Ms T] to repay her Mastercard. During 2004 [Ms T] paid a further $7,470 into [Mr R]’s bank account.
24 After separation [Mr R] continued to reside in the [property no 1], but met no
expenses or outgoings on that property until later in 2005. [Ms T] even met his Foxtel
payments for some months.
[2008] FCWA 35
25 In February 2006 [Ms T] increased the mortgage against the [property no 1] by
$25,000. [Ms T] used these funds to consolidate her debts and took a holiday. In evidence [Ms T] confirmed that when she was holidays she liked to gamble. When she went on holiday to [the Eastern states] in 2005 she said she may have gambled up to $7,000. In my view, the $25,000 borrowed in 2006 was mainly used for [Ms T]’s own benefit.
26 In 2006 [Ms T] and her new partner moved into [property no 2]. Thereafter, the
[property no 3] was tenanted and the income was received by her. She met the mortgage payments on all three properties. Since separation [Ms T] has reduced the mortgages by approximately $48,000.
27 The greater financial contribution to the accumulation of the parties’ assets was
made by [Mr R]. The lump sum payments received by him of approximately $285,000 was the source of the deposit for the [property no 1]. This sum allowed the parties to be relieved of any debt they had up to that time, they were able to purchase other lifestyle assets, in particular, the boat. Both parties contributed their incomes to their joint ventures during the course of the relationship, although [Mr R]’s income ceased in 2002. After separation [Ms T] has made a significant contribution by paying all of the mortgage at a time when there was significant growth in the value of property, and both parties now have the benefit of that growth in the form of the increased value of the properties.
Non-financial contributions
28 [Mr R] says that he completed works on the properties purchased by the parties
during the course of the relationship. He alleges that he contributed to the upkeep of all the properties with no assistance from [Ms T]. He says he replaced lino floorings and carpets in the [property no 2], cleared rubbish and supervised the roofing and tiling of the [property no 3]. [Ms T] disputes the level of involvement of [Mr R].
29 In support of [Mr R]’s claim for damages he filed an affidavit in 2002 as a result
of his work related injury. In that affidavit he described his level of fitness as follows:
“I spend most of the day at home. I feel tired all of the time. I don’t know whether my illness is causing me the tiredness or it is the medication, or both. My level of concentration is not good. I can’t engage in a conversation without losing my way. I don’t have much confidence. I sometimes feel terrified going out of my home. I feel much safer at home. Overall, I feel very unwell and I still have a sense of fear because of the experience I had with the first named defendant at [the place of employment].”
30 He went on to say:
“I had a very good relationship with my girlfriend, who is still with me, but the relationship is now a bit one sided in that she looks after me and I am not really contributing to the relationship as I want to.”
[2008] FCWA 35
31 [Ms T] has attached invoices which indicate that [Mr R] was not involved in the
repairs and maintenance to the home to the extent as was indicated by him. [Mr R] has accepted that as a result of his condition and/or medication his memory is not particularly good.
32 I am satisfied that much of the physical work around the rental properties was
done by tradesmen, but that both the parties supervised their work from time to time. Since separation there is no evidence that [Mr R] has been involved in maintenance or repairs to the properties at all, save for any work he has done around the [property no 1].
Contributions as home-maker
33 [Mr R] says that as he was home he was responsible for the home-making after
his injury in 1997. Given his description in 2002 of the manner in which [Ms T] was now looking after him, I accept her evidence that he did not do very much work around the house, but that he did do his own washing. [Ms T] mainly ate at [work].
Conclusions on contributions
34 There is no doubt that the lump sum received by [Mr R] was a significant boost
to the parties’ financial position. Previously, the properties bought by [Ms T] had been financed by a very small deposit and a large loan. Because of [Mr R]’s lump sum, they were able to pay almost 50% of the value of [property no 1] by way of deposit. On the other hand, the contributions made by [Ms T] since separation have been significant. If [Ms T] had not been prepared to continue to meet the mortgages on the three properties from her income, all the properties would have had to be sold upon separation, as [Mr R] had no income and could not contribute towards the mortgage payments or any other outgoings on the properties. During 2004 [Ms T] maintained [Mr R]. It appears that around 2005 he became eligible for social security payments again.
35 It is well known that property prices have gone up significantly between 2004 and the date of trial. It is because of the effort made by [Ms T] that the parties have been able to take advantage of the price increases. The result for [Mr R] has been that he has been able to live rent free in the [property no 1] for almost four years.
36 In my opinion, taking into account all these matters, the parties’ contributions to that point are equal.
Section 205ZD(3) factors
37 [Mr R]’s physical condition appears to have improved little since the settlement
of his claim in 2002. He is now aged 45 years. He attempted to obtain some work [in a kitchen] recently, but was unable to hold down the job. As stated previously, he has not worked since 1997. [Dr Y] in a reported dated 22 October 2007 set out the medical condition suffered by [Mr R]. He suffers from chronic reflux with a hiatus hernia. He suffers from loss of consciousness at times, for which he is still the subject
[2008] FCWA 35
of assessment. He has also suffered from depression and anxiety, made worse by the
court proceedings. He is currently receiving treatment by way of antidepressants.38 [Ms T], now aged 36, has recently re-partnered and given birth to a child. She is
currently not working because of her commitments as a home-maker. She has the capacity to continue earning at a similar rate as before the child was born of $67,000 per year. In my opinion, her present work capacity should be assessed in that sum. Her decision to have a child, which means she now has a limited earning capacity, is not something which should be visited upon [Mr R].
39 [Ms T] also has superannuation of $44,658, and [Mr R] has none. [Mr R]’s
superannuation of $15,000 was surrendered to obtain funds to build the car port for the
boat.40 [Mr R]’s capacity to earn in the future is limited. In my view, there should be a
further apportionment to him to take into account this factor of 10%. The assets of the parties should be divided so that [Mr R] retains 60% and [Ms T] 40%. Such an apportionment, in my view, is just and equitable in the circumstances.
41 The parties have asked that I determine the percentages upon which the assets
will be divided, and they will then draft the form of the order taking into account the
capital gains tax consequences of the sale of any property.
I certify that the preceding [41] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court
Associate
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