Raine and Raine

[2010] FamCA 107

FAMILY COURT OF AUSTRALIA

RAINE & RAINE [2010] FamCA 107

FAMILY LAW – PROPERTY SETTLEMENT - Contributions - Gift by maternal grandmother to husband and children - Determination of children's interest - Creation of trust

Family Law Act 1975 (Cth)

Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143

APPLICANT: Mr Raine

RESPONDENT: Ms Raine

FILE NUMBER: LNC 571 of 2009

DATE DELIVERED: 17 February 2010

PLACE DELIVERED: Launceston

PLACE HEARD: Launceston

JUDGMENT OF: Benjamin J

HEARING DATE: 17 February 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT:

SOLICITOR FOR THE APPLICANT: Ms Trezise

COUNSEL FOR THE RESPONDENT:

SOLICITOR FOR THE RESPONDENT: No appearance

Orders

1. By way of an alteration of property interests the husband holds in trust for each of the children D Raine a 7/100^th share  and for J Raine a 7/100^th share as tenants in common of property H being the land described in Certificate of Title Volume … Folio … (‘H property’) subject to the following terms of trust:-

   a.This trust shall terminate upon both of the children attaining the age of 18 years or in the event of an intervening circumstance (such as the death or loss of capacity of one or other of the children) an alternate termination determined by a Court exercising jurisdiction under the Family Law Act 1975 (Cth). The date being the ‘termination date’.

   b.Upon reaching the termination date the husband shall notify the children of their entitlements pursuant to this order and the husband may at his election either:-

   i.Buy out the share of either or both children at a currant valuation by a valuer appointed for that purpose at the request of the husband or the children to the President of the Law Society of Tasmania, provided the purchase is completed within 6 months of the termination date, or

   ii.Within the said 6 month period transfer the legal title of the child or children’s 7/100^th interest to such child.

   c.The husband shall pay all rates and taxes on H property and keep it insured and in good condition pending the transfer or purchase within the 6 month period set out above.

   d.The husband shall be entitled to use the whole of the property as security to raise funds to pay out the wife in respect of this order. 

   e.This order shall be binding upon any executors, administrators and trustees of the husband’s estate.

2. The husband shall pay to the wife the sum of $52,936.66 within 18 months from the date of this order.

3. At the same time as the husband pays to the wife the money in accordance with Order 2 above;

   a.the wife transfer to the husband all that her right, title and interest in the H property, and

   b.contemporaneously with the transfer referred to earlier the husband register a Discharge of Mortgage number … executed by an authorised office of ANZ Banking Group Ltd such as to release the wife from all liability pursuant to the said mortgage loan.

   c.the husband pay and indemnify the wife from payment of all outgoings now or hereinafter falling due as capable of being charged against the title of the former matrimonial home including but not confined to rates and insurance premiums.

4. Within thirty (30) days of the date of this Order the wife sign all such documents as reasonably required by the husband or his lawyer to transfer to the husband her right, title and interest in the 1992 Mitsubishi utility motor vehicle registration number ….

5. Within thirty (30) days of the date of Order the husband sign all such documents as reasonably required by the wife or her lawyer to transfer to the wife her interest in the 2000 Toyota Camry wagon motor vehicle registration number ….

6. Except as otherwise provided in these orders each party is declared to have no further interest in the items of property in the possession the other.

7. Except as otherwise provided in these orders superannuation entitlements are deemed to be in the possession of the party in whose name it exists.

8. The parties must do all acts and execute all documents submitted by the other party to implement these orders.

9. In the event that a party refuses or neglects to sign a document pursuant to these orders then a Registrar of this Court is appointed to execute in the name of both or either party and do all acts and things necessary to give validity to any documents the wife or the husband is required to execute by these orders.

10. Liberty is given to the parties to apply in respect of implementation of these Orders, such liberty to apply for 20 months from the date of this order.

11. This case be removed from the list of cases requiring determination.

IT IS CERTIFIED

1. All subpoenaed documents be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.

2. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

IT IS NOTED that publication of this judgment under the pseudonym Raine and Raine is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT LAUNCESTON

FILE NUMBER:   LNC  571 of 2009

MR RAINE

Applicant

And

MS RAINE

Respondent

REASONS FOR JUDGMENT

Introduction

1. Mr Raine (“the husband”) commenced proceedings in the Family Court seeking property orders following the failure of his marriage to Ms Raine (“the wife”).  The wife has chosen not to participate in the proceedings.

2. The husband now seeks orders that the wife transfer to the husband her interest in a home at H in Tasmania, that the husband discharge the mortgage (against which there is no money outstanding) on the property and indemnify the wife, that the wife transfer to the husband her entitlement to about $1,300 in the bank, a car and furniture and that the husband be declared to be solely entitled to his superannuation and the wife solely entitled to hers.

3. As these proceedings are heard undefended there is no issue as to the pool of assets.  The husband says that having regard to all of the non-superannuation assets, these should be transferred to him and each party should retain their respective superannuation interests.

Background

1. The husband is aged 52 and is in reasonable health.  The wife is aged about 51.  The husband has no knowledge of the wife’s health although on the evidence it is clear that she is an alcoholic. 

2. The husband and wife commenced living together in 1984 and they married in April 1990.  There are two children of their marriage D aged 17 (in his final year of high school) and J aged 14 (in Grade 9 at high school).

3. The husband and wife separated on 14 August 2008, their marriage was dissolved by an order made in the Federal Magistrates Court on 10 December 2009.

4. Any statement of fact in these reasons is to be regarded as a finding of fact unless the contrary intention is clear from the context.

The wife’s participation in these proceedings

1. The proceedings were commenced by application filed 21 September 2009.  The application was personally served upon the wife, in Prison, on 25 September 2009.

2. The proceedings came before a Registrar of the Court on 28 October 2009 and from an affidavit of the husband’s solicitor, Ms Trezise, there followed a series of events. 

3. Firstly an endeavour was made to contact the wife by telephone on 28 October 2009, but that did not succeed.  On 30 October 2009 the solicitor for the husband received a telephone call from the wife who sought an extension of time to file her response.  The solicitor for the husband consented to that course and time was given to the wife to file her documents by 1 December 2009.  This was confirmed by letter.

4. There is evidence that the wife was released from Prison in November 2009 and since that time the wife has not participated in these proceedings.  She failed to attend at a conciliation conference on 14 December 2009 and as a consequence the proceedings were listed before me for possible undefended hearing on 9 February 2010.

5. I accept the facts set out in the affidavit of Andrea Trezise filed 8 February 2010.

6. The husband deposes that since the wife’s release from Prison, she has telephoned their home several times, and always sounded drunk.  The wife has informed the parties’ children that she is living with another man but has not disclosed where she is living.

7. In a conversation with the husband subsequent to her release from prison the wife said words to the effect “you can have the lot, you can just jam it”.  The husband says, and I accept, this was in response to his application for a property settlement.

8. I do not take this as an agreement to the orders that the husband seeks but simply an acknowledgement that the wife is aware of the proceedings and does not wish to participate in them.

9. When the matter was called before me on 9 February 2010 there was no appearance by the wife and I stood the proceedings over for determination to 9.30am on Wednesday 17 February 2010.

10. I am satisfied the wife knows about the proceedings and has had an opportunity to be involved in the proceedings.

The Relevant Legal Principles to be applied

1. The Full Court in Hickey and Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 78,386, reiterated the preferred approach to the exercise of discretion in property matters, pursuant to s 79:-

   39. The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEL and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.

   40. Section 79, unlike s.78, requires the Court to consider the whole of the property of the parties, however and whenever acquired, notwithstanding that the parties may only seek an alteration of interest in some of that property. As a consequence of the first step in the preferred approach to the determination of the s.79 proceedings, each party to the proceedings has an obligation to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto: Oriolo and Oriolo (1985) FLC 91-653; Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338 and Tate v Tate (2000) FLC 93-047.

2. Thus the approach in this case involves a number of steps:-

   (a)The identification of the property and its value;

   (b)An evaluation of the parties’ contributions having regards to ss 79(4)(a)(b) and (c) of the Family Law Act 1975 (Cth) (“the Family Law Act”).

   (c)Consideration of any adjustment to that assessment having regard to the relevant matters in ss 79(d)(e)(f) and (g) of the Family law Act (“the other factors”) including the matters referred to in s 75 (2) of the Act.

   (d)A review of the outcome against a just and equitable requirement.

The pool of assets

1. The husband discloses that the pool of assets is as follows:-

H property (as adjusted in accordance with these reasons)	$344,000.00
1992 Mitsubishi utility	$2,000.00
Toyota Camry wagon	$4,000.00
Furniture & contents	$8,000.00
Tools	$1,500.00
Bank account	$1,300.00
Husband’s MLC insurance policy as @ 24/8/2009	$43,103.94
Wife’s RBF Tas Superannuation	$174,374.31
Total	$578,278.25

1. The value of the H property was determined by a valuation of Herron Todd White on 6 November 2009. I accept that valuation and I accept that it is the value of the property for the purposes of this hearing.

2. The wife has an interest in a superannuation fund known as the RBF Contributory Scheme.  The data is said to be as follows:-

   §The fund does not have a compulsory preservation account.

   §The calculation date was 30 June 2009.

   §The member is the wife.

   §It notes the wife’s birthday as January 1959.

   §The wife has been in the service since June 1982.

   §The wife has a scheme benefit date of April 1988.

   §The benefit salary is $74,017.73.

   §The accrued Lump Sum Benefit multiple is 2.9257.

   §Retirement age is 65.

   §RBF investment account $1,104.60.

3. Z Actuarial, Consulting Actuaries, have valued the wife’s interest in the fund at $174,374.31. The actuaries have valued the wife’s accrued superannuation entitlements according to the methodology of the Family Law Act 1975 and Regulations.

4. The wife’s entitlement is under the “Contributory Scheme” which is a defined benefit scheme.

5. Under that scheme the actuaries say that benefits are based on the formula which takes into account salary, length of contributory service and a member’s contribution rate.  The contributory scheme was closed to new members on
   5 May 1999.  For a basic member contribution rate of five per cent, the yearly actuarial is twenty per cent of final average salary over the last three years of employment. 

6. Higher member contribution rates (up to a maximum of 15 per cent) can be elected, which results in a higher level of accrual.  Voluntary contributions can be made to the investment account.  Annexure B of the report of Z Actuarial dated 2 February 2010 sets out some details of the scheme.

7. The data for the valuation was obtained by the valuer based on the benefit statement as at 30 June 2009.  It has not been prepared by RBF using a “Form 6” response.

Contribution

1. The parties have been in a long relationship between 1984 and 2008. 

2. On the evidence I am satisfied that the husband’s initial contribution was greater than the wife’s.  At the time of cohabitation in 1984 the husband owned a block of land which he had purchased for $5,000, a 1982 Datsun Bluebird sedan valued at $9,000 and furniture and tools valued at $5,000.

3. He had some accrued superannuation benefits although the full details of this were not available to me.  At the same time the wife owned a second-hand Toyota sedan with a value of approximately $3,000.

4. The husband claims an additional allowance for contribution in terms of the purchase of an investment property during the course of the relationship.  I treat that as a contribution during the relationship and not a contribution solely by the husband.  The husband worked in various building jobs until 1991 when he started his own business and applied his then superannuation of about $4,500.00 to reduce the mortgage loan.

5. In 2005 the husband found the building work hard and saw a medical specialist who recommended he undergo back surgery.  The husband could not continue his paid building work.  He had income protection insurance and as such he was paid income for two and a half years whilst he looked for alternative employment. The husband is now employed in another industry and earns about $673 per week.

6. On the information before me it seems that the wife has been employed in the Tasmania State Government system since about 1982.  It is not clear whether she worked full time or part-time.  From the evidence of G Investigation Service it seems that the wife commenced employment as a student nurse in 1982, became a registered nurse in 1985, and developed her skills over the years.

7. The wife was de-registered as a nurse in December 2007.

8. Her de-registration seems to have arisen primarily out of her addiction to alcohol and its interaction with her employment.

9. In terms of her use of alcohol the husband says that prior to 2006 the wife was a steady drinker but by 2006 she was drinking heavily (this seems to accord with the report which was attached to the husband’s affidavit).  As a consequence the wife was often intoxicated and left the care of the children to the husband and behaved badly in terms of the children and the husband as set out in the husband’s affidavit.

10. In addition the wife was intoxicated at work.  Her driver’s licence was suspended twice for drink driving.  On one occasion the wife damaged another vehicle and the family needed to pay $1,800 and fines of about $1,500.

11. The wife has been, so far, unable to deal with her illness of addiction to alcohol.

12. Such is its impact upon her that the wife became aggressive and destructive.  On one occasion she attacked a motor vehicle and was charged with assault.  She received a suspended jail sentence but upon reoffending was sentenced to a term of imprisonment.  She was released from prison in late November 2009.

13. The wife is alienated from the parties’ children.

14. Since her de-registration in 2007 the wife has been on a pension of approximately $31,000 per annum but has not provided financial assistance for the children although she has now been assessed to pay $515 per month commencing January 2010.

15. There is evidence that the wife gambled some of the savings of the parties, at least to the extent of $4,000.  I am satisfied that the husband has had the primary responsibility for care and support of the children since at least separation.

16. In 2005 the wife’s mother paid out the mortgage on the former matrimonial home of $50,000.  The husband’s evidence is that the payment was a gift by the maternal grandmother to her grandchildren.

17. In her affidavit filed 8 February 2010 the maternal grandmother deposes, and I accept, that she contributed $50,000 to pay off the then house mortgage in 2005.  I accept her evidence that the payment was a contribution to the husband and the children.

18. Since October 2008 the maternal grandmother has provided $6,500 to help support the family.  In addition she has paid about $1,300 towards the husband’s legal costs and disbursements and $2,638 to enable the children to have a holiday in Queensland.

19. The maternal grandmother has also paid $4,323 to purchase school books and computers for the children.  She has paid money towards the children’s clothing and other expenses.

20. I am somewhat troubled in how to deal with the $50,000 paid by the maternal grandmother for the benefit of the children, into the home, by way of payment out of the mortgage.  It represents about 14 per cent of the current value of H property.

21. The husband concedes that the contribution was made not to him but to the children.  It seems to me that this is a resulting trust or constructive trust whereby the children have obtained an equitable interest in the property.

22. Having regard to the express desire of the husband to retain the home I determine that each of the children has a 7 per cent interest in the property and that such interest should be held on trust by the husband for each of the boys and that after the later of both children moving out of a home on a full time basis or the last of them attaining the age of 18 years, the husband shall be responsible to either pay them out their percentage interest at a valuation at that time (the husband to be responsible to maintain the whole of the property, pay rates, taxes etc without deduction from the capital share of each of the children).  Having made that determination, the 14 per cent interest to the children means that the equity of the parties in the property is $344,000. 

1. As such the parties’ equity in the H property is $344,000.

2. Having dealt with the $50,000 contribution by the maternal grandmother and having regard to the other facts and circumstances, in particular the difference in initial contributions and the post separation contributions I am satisfied that on a contribution basis the property should be distributed as to 53 per cent to the husband and 47 per cent to the wife.

The relevant other factors

The age and state of health of each of the parties

1. The husband is in fair health although he has had some difficulties with his back and earns a relatively modest income.  The wife has a significant illness in terms of her alcoholism.  The impact of this has meant that she is unable to work and that she is dependent upon her pension for her current income.  There is some evidence that the continuation of that pension may be susceptible to change. 

The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment

1. The husband is employed and earns a modest income.  The wife is seemingly presently unemployed and is in receipt of her pension referred to earlier. The property and financial resources of the husband and wife are as set out earlier in these reasons.  The wife has no capacity to work as a nurse bearing in mind her illness.

Whether either party has the care or control of a child of the marriage who has not attained the age of 18 years

1. The husband has the care of the two children of the marriage, one of whom turns 18 later this year, the other of whom is 14.  He is primarily responsible for the care of these children.  He receives help from the wife’s mother and may soon receive some child support.

Commitments of each of the parties that are necessary to enable the party to support:

(i) himself or herself; and

(ii) a child or another person that the party has a duty to maintain

1. I am not aware of the wife’s actual financial commitments but having regard to the evidence, I am satisfied that she has a commitment to maintain herself and will be required to make child support contributions as set out earlier.

2. Neither party has a responsibility to support any other person.

3. The husband has a commitment to support himself and the two children.

4. By reason of the orders made pursuant to these reasons the children have an interest in the home.

The eligibility of either party for a pension, allowance or benefit under:

(i) any law of the Commonwealth, of a State or Territory or of another country; or

(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;

and the rate of any such pension, allowance or benefit being paid to either party

1. The husband discloses no pension benefit or allowance and as such it is not a consideration on his behalf.  The wife is in receipt of the pension referred to earlier in these reasons.

Where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable

1. The inevitable result of the break up of the parties’ relationship and the surrounding circumstances, followed by a property settlement, will inevitably mean that the standard of living of the husband, wife and children will be detrimentally affected.   

The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration

1. The parties have been in a relationship (including marriage) for a long time.  However, each had trained and worked in their particular industries.  Each has been forced from that industry by reason of health.

The extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party

1. Contributions were dealt with earlier in these reasons.

The need to protect a party who wishes to continue that party's role as a parent

1. The husband wishes to continue in his role as primary carer of the teenage children of the marriage.  I have had regard to his desire to continue in this role.

Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage

1. An assessment has issued to the wife for child support.  No payments have been made in response to that assessment.  The wife has not otherwise paid child support since separation. 

Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account

1. The wife is retaining her defined benefit superannuation entitlement and I have had regard to the nature of that benefit, i.e. a pension and that it is not a benefit which she would normally be entitled to until after retirement.  It is in the nature of an income rather than a capital sum

2. As such, exercising the broad discretion I have under the Family Law Act I determine that the relative percentages of the parties (starting at contribution as to 47 per cent and 53 per cent in favour of the husband should be further adjusted in respect of the other factors so that the property is divided as to 60 per cent to the husband and as to 40 per cent to the wife.

Just and equitable

1. The total pool of assets is $578,278.25.  Of that sum the significant proportion of it in the wife’s hands is in terms of her defined benefit pension which may continue in respect of her current illness or may not and to which she is entitled to after retirement.  The superannuation is splittable.

2. The effect of a 60 per cent to the husband 40 per cent to the wife distribution would mean the wife is to receive $231,311.30, which is:-

Wife’s superannuation	$174,374.31
Wife’s motor vehicle	$4,000.00
Payment by husband to wife	$52,936.99
Total	$231,311.30

1. The result for the husband is:-

Husband’s equity in H property	$344,000.00
1992 Mitsubishi utility	$2,000.00
Furniture & contents	$8,000.00
Tools	$1,500.00
Bank account	$1,300.00
MLC superannuation	$43,103.94
Payment by husband to wife	($52,936.99)
Balance	$346,966.95

1. I consider that outcome as being just and equitable.

2. I have had regard to the wife retaining the whole of the superannuation interest and the payment out of that interest by way of periodic child support.

3. I have had regard to the husband’s financial circumstances and as a consequence of those circumstances and his need to borrow money, the last year of high school for his eldest child, I propose to allow him a period of eighteen months in which to raise the funds necessary to pay out the wife.

4. The husband seeks an order to enable him to withdraw the $1,300 from the joint account.  I propose to make that order.

I certify that the preceding seventy three (73) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin

Associate:     

Date:              17 February 2010