RB and TB
[2004] FMCAfam 432
•2 November 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RB & TB | [2004] FMCAfam 432 |
| FAMILY LAW – Property – contributions – where parties conspire to defraud Centrelink – whether Centrelink debt is a joint matrimonial liability – whether funds drawn from mortgage after separation should be treated as husband’s sole responsibility – appropriate s.75(2) adjustment considered. |
Family Law Act 1975 (Cth), ss.60, 65, 68, 75(2), 79(4)
Child Support (Assessment) Act 1989 (Cth)
In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626
In the Marriage of Ferraro (1993) FLC 92-335
In the Marriage of Clauson (1995) FLC 92-595
Russell v Russell (1999) FLC 92-877
Farmer and Bramley (2000) FLC 93-060
Querasimu (1999) Fam CA 1314
Pearce v Pearce (1999) FLC 92 –844
| Applicant: | R B |
| Respondent: | T B |
| File No: | SYM396 of 2003 |
| Delivered on: | 2 November 2004 |
| Delivered at: | Parramatta |
| Hearing dates: | 15 January, 29 March & 2 August 2004 |
| Judgment of: | Ryan FM |
REPRESENTATION
| Counsel for the Applicant: | Mr. G Watkins |
| Solicitors for the Applicant: | Russell McLelland Brown |
| Counsel for the Respondent: | Mr W Moss |
| Solicitors for the Respondent: | Verekers |
ORDERS
That the parties forthwith do all such acts and execute all such documents as may be required to effect a sale of the matrimonial home situate and known as the Wollongong Property in the State of New South Wales to be sold by private treaty at a price agreed upon between the parties and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee.
Upon the completion of the sale proceeds of the sale be applied as follows:
(a)To pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of the matrimonial home.
(b)Discharge the mortgage to St George Bank.
(c)Forty (40) per cent to the husband from which he will immediately pay the wife $31,630 and an additional sum being sixty (60) per cent of the additional amount greater than $88,000 paid to St George Bank.
(d)Balance then remaining to the wife.
As partial compliance with order (1) above the wife’s solicitors shall receive on her behalf the sum of forty four thousand and fifty nine dollars and five cents ($44,059.05) from her share of the sale proceeds which monies they shall pay to Centrelink on the wife’s behalf.
In the event that contracts for the sale of the matrimonial home have not been exchanged by or before a date eight (8) weeks from the date of these orders then the husband and the wife shall make all such arrangements and do all such acts and sign all such documents and pay all monies equally necessary to procure a sale by public auction of the matrimonial home upon the following terms:
(a)The auctioneer shall be a real estate agent;
(b)The reserve price shall, unless agreed upon by the parties, be as proposed by the auctioneer.
(c)That auction will take place within two months of this order becoming operative.
Each party has the right to bid at the auction.
Unless otherwise specified in these orders:
(a)Each party is solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.
(b)Each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
Until completion of the sale the husband has the right to occupy the former matrimonial home to the exclusion of the wife subject to the husband paying the council and water rate instalments; household building and contents insurances; repayments in respect of any mortgage secured on the property as they fall due, keeping the property tidy, clean and in good repair and permitting inspection by agents and prospective purchasers at all reasonable times.
All exhibits tendered in these proceedings shall be returned at the expiration of one calender month unless an appeal is lodged.
The solicitor who issued any subpoena shall collect that subpoenaed material and returns it to the owner within seven (7) days.
Subject to any application that may be made as to costs, all applications are dismissed.
Any application for costs must be made within twenty-one days of today’s date. The party seeking costs shall contact my associate and make arrangements for the matter to be listed for argument during the Wollongong circuit sitting commencing 22 November 2004.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT WOLLONGONG |
SYM396 of 2003
| R B |
Applicant
And
| T B |
Respondent
REASONS FOR JUDGMENT
Introduction
These are proceedings for the adjustment of property. R B (“the husband”) started the proceedings when he filed an application for parenting orders on 10 February 2003 in the Family Court of Australia at Wollongong. T B (“the wife”) filed her response on 26 March 2003, which raised the issue of the adjustment of property. The parenting proceedings settled and on 29 October 2003 the court made final parenting orders. In essence, the orders provided that the parties’ two children would have contact with the husband for one half of each school holiday period and for not less than two nights during each four nights that he was rostered off. At all other times the children would continue to live with the wife.
Not long after the parenting orders were made, the wife told the husband that she wished to relocate and live with the children in Cowra. Notwithstanding that the proceedings were currently listed for trial in the Federal Magistrates Court, the husband initiated parenting proceedings in the Family Court of Australia. He sought and obtained interim orders restraining the wife from relocating with the children. When the matter came before me in January 2004 I was asked to adjourn the property proceedings until the parenting proceedings, which included the husband’s residence application, could be finalised. I declined. The parenting proceedings were transferred and listed concurrently with these proceedings.
During the family report process the parties reached agreement concerning the outstanding parenting issues. On 2 August 2004 the court made final parenting orders in the following terms:
1.The parties have joint responsibility for decisions concerning the long term care, welfare and development of the Amber born in 1995 and Lisa born in 1999 (“the children”).
2.Each party respectively be responsible for decisions concerning the day to day care, welfare and development of the children when they are in the care of such party.
3.The court notes that the wife is now living in Cowra and the husband is living in Wollongong with each party intending to remain at or near their current residence indefinitely.
4.The children live with the mother.
5.The father have contact with the children as follows:
(a) Each second weekend from between 7 pm and 8 pm Friday until 3 pm Sunday commencing on 13 August 2004;
(b) For half of each school holiday period;
(c) By telephone at reasonable times;
(d) By e-mail and/or Internet web cam at reasonable times when available; and
(e) Otherwise as agreed between the parties from time to time.
6.For the purposes of contact changeover the wife is to deliver the children to and collect the children from the husband at:
(a)Her mother’s residence at Wollongong; or
(b)If that is not available on any occasion then at the residence of the husband.
7.The wife may on not more than one occasion of weekend contact in any school term by notice in writing to the husband of not less than seven days alter the changeover point to McDonalds at Goulburn for that weekend only and contact for that weekend shall be from 6.30 Friday until 4 pm Sunday.
8.Either party enrols or registers either child in any activity or sport, which requires weekend attendance except with the consent of the other.
9.Each party be entitled to obtain direct from any school attended by either child copies of all reports, notices or correspondence relating to such child by arrangement with the school.
10.Each party is to ensure that the other is aware of any change to their residential address and telephone numbers as soon as practicable upon the change being proposed or effected.
11.Whenever either party intends to take the children away from that parties’ residential address for more than three nights such party shall provide the other with details of where the children will be staying and a contact telephone number for that period.
12.For the purposes of contact changeover at the wife’s mother’s address the wife shall advise the husband by telephone or SMS text message within fifteen minutes of her arrival.
13.In relation to long term decisions concerning either child including but not limited to education and/or health:
(a)The parties shall in the first instant consult in an endeavour to reach agreement; and
(b)If the parties are unable to agree they shall endeavour to reach agreement with the assistance of a counsellor or mediator from the Federal Magistrates Court or other agreed agency.
14.Each party otherwise ensure that they keep the other full informed of all relevant information concerning the children and their welfare.
Having made final parenting orders, the court then concluded the property proceedings. At the end of the hearing the wife contended that the court would find that the parties’ contributions and other s.79(4) factors were equal and pursuant to s.75(2) order a further 15 per cent adjustment in her favour. Relevantly, she submitted that the court would include her Centrelink debt as a joint matrimonial liability. The husband contended that the court would find that the wife’s contributions and other s.79(4) factors were 25 per cent, compared to his 75 per cent and order a maximum s.75(2) adjustment in her favour of 10 per cent.
The issues
The principal issues raised in these proceedings are:
·Whether the parties cohabited between December 1995 and late 1999 and resumed cohabitation again between June 2000 and September 2000.
·Whether the parties conspired to defraud Centrelink by having the wife claim a single parent’s benefit in reliance on the parties’ separation.
·Whether the husband threatened to disclose to Centrelink that the wife fraudulently claimed government benefits between December 1995 and late 1999 and June 2000 and September 2000.
·If the wife was entitled to receive Centrelink benefits during the period referred to, whether by disclosing to Centrelink that the parties cohabited the wife has recklessly established a debt that neither she nor the husband should be required to pay.
·Whether monies drawn down against the mortgage post-separation by the husband should be notionally added back, either partially or completely.
·Whether the husband has retained the overwhelmingly majority of household furniture, and its value.
·The wife’s financial future.
Background facts
The husband was born in 1971 and is 33 years old.
The wife was born in 1974 and is 30 years old.
The parties formed a relationship in 1991 and commenced cohabitation later that year. When they commenced cohabitation the husband was employed full time making kitchens for a firm in the area. The wife worked part time as a shop assistant. After living together for approximately six months in rented accommodation, the wife returned to her parents’ home and the husband moved into rented premises with a friend. At the end of this period of cohabitation neither parties had any assets of significance.
Although living separately, the parties’ relationship continued. In June 1995 they resumed cohabitation. The wife’s parents settled on the purchase of an investment property at Shellharbour in November 1995. Upon settlement the parties moved into the property, for which they paid $160 per week rent. At about the same time the wife stopped work in preparation for the birth of the parties’ first child. The husband had lost his job with the kitchen firm during the year and started with manufacturing company a few months prior to Amber’s birth.
The husband claims that the parties separated prior to Amber’s birth which allegation the wife denies.
The parties’ daughter Amber was born in 1995. Following Amber’s birth the wife took twelve months maternity leave. On 11 January 1996 the wife applied to the Centrelink for a sole parent’s pension. She told Centrelink that the parties’ had recently separated and that the husband had returned to reside with his mother.
The parties became engaged in June 1996 which engagement was later called off.
In about January 1997 the wife then returned to part-time work, working 13 hours per week for which she was paid $200 nett.
The wife told Centrelink that the parties separated for about three months in early 1997. I am satisfied that the parties separated for a short period although probably not as long as three months. During this separation the husband lived with his mother and the children remained with the wife.
In December 1997 the husband and his brother, S B, purchased an investment property at Mount Warrigal for $134,500. The property was purchased as tenants in common with S B having a 62 per cent interest and the husband the remaining 38 per cent. S B provided the entire deposit and $100,000 balance needed to complete the purchase was borrowed from ING Mercantile Mutual Bank[1]. After settlement the property was tenanted and the brother’s met the shortfall between income and outgoings equally.
[1] Exhibit M
The husband and his brother sold the property at Mount Warrigal in July 1998. From its sale, the husband received approximately $22,000.
In March 1999 the husband purchased a home at Wollongong “The Wollongong Property”. The property was purchased from a relative of the wife. The purchase price was $133,000[2]. When other costs are taken into account the total needed to complete the purchase was $139,487. The husband contributed $22,000, being his share of the Mount Warrigal proceeds and borrowed approximately $107,000 from St George Bank[3] to complete the purchase. The balance appears to have come from savings. The parties and Amber moved in to the Wollongong property shortly prior to their second daughter’s birth.
[2] Exhibit L
[3] Exhibit J
Their daughter Lisa was born in 1999. The wife took maternity leave and returned to work when Lisa was 10 months old. The wife returned to work, again working 13 hours per week.
The parties separated on 4 December 1999, which separation continued until about September 2000. During this separation the husband remained in the family home. The children lived with the wife at her grandparents home at Wollongong.
The parties married on 7 April 2001.
The parties finally separated on 22 September 2002. Upon the wife’s request, the husband vacated the family home and returned to his mother’s home for a few nights. He then returned to the family home. The wife and children left the home and until recently have resided at her parents’ home.
On 19 November 2003 this court ordered a Decree Nisi of Dissolution of Marriage, which became absolute on 20 December 2003.
The wife and children recently moved to Cowra where the wife has commenced cohabitation with C W.
Relevant law
The approach to the determination of an application under s.79 is well established by authority: See In the Marriage of Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-593. The process involves a multiple part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in s.79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. The court must then evaluate the matters contained in s.75(2) insofar as they are relevant; any other order made under the Act affecting a party or child; and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide or might be liable to provide in the future for a child to the marriage.
In determining what order should be made under s.79, the court must be satisfied in all the circumstances that it is just and equitable to do so: s.79(2). It is the justice and equity of the actual orders that the court must consider: See Russell v Russell (1999) FLC 92-877. In relation to parenting orders, the court must make an order that will promote the best interests of the particular child.
Assets, liabilities and financial resources as at the date of hearing
The parties agree on the value of some of the assets and liabilities.
I find that the assets, liabilities and financial resources as at the date of hearing are set out in the table below. Unless stated differently, the figures in the table are taken from the parties’ financial statements or are agreed between the parties.
| :Assets as at the date of hearing | $ |
| The Wollongong Property (H) (agreed) | 340,000 |
| 1988 Holden Commodore (H) (agreed) | 1,500 |
| 1991 Holden Commodore (W) (agreed) | 4,500 |
| 961 IAG shares (W) (agreed) | 4,074 |
| 1,083 IAG shares (H) (agreed) | 2,500 |
| MM Kembla Products Superannuation Fund (H) (agreed) | 29,662 |
| Rest Superannuation Fund (W) (agreed) | 7,961.63 |
| Husband’s savings | 200 |
| Wife’s savings | 980 |
| Husband’s household effects | 2,000 |
| Wife’s household effects | Minimal |
| TOTAL ASSETS | 393,377.63 |
| Liabilities as at the date of hearing | |
| St George mortgage (H) | 88,000 |
| Centrelink (W) | 44,059.05 |
| TOTAL LIABILITIES | 132,059.05 |
| NETT ASSETS | 261,318.58 |
There are a number of figures that require explanation. It was the husband’s contention that the court would find that the mortgage debt to St George Bank was $102,000. The parties agree that at the date of separation the mortgage debt was approximately $88,000. After separation, on 25 November 2002[4] without notice to the wife, the husband converted the St George loan, from a five year fixed interest loan to a standard variable interest loan. He said he did this in anticipation of paying the wife her s.79 entitlement. St George charged him $4,000 for breaking the loan, which $4,000 was added to the mortgage. In addition to the $4,000 increase, the husband withdrew funds, $2527 of which he says were used on a holiday to the United States and the balance in repayment of joint debts. He compiled a hand written note[5] which summarises his recollection of the disposition of the funds. The husband failed to produce any documents that corroborated his evidence concerning payment of joint liabilities. I accept the wife’s counsel’s submissions that corroboration would have been a relatively easy matter, given that the debts related to utilities, tradesmen and the like.
[4] Exhibit C
[5] Exhibit G
This was a highly contentious issue. There were many respects in which the husband’s evidence was contradictory. For example, in his affidavit sworn 13 October 2003 he claimed that he contributed an amount towards the deposit on Mount Warrigal. Yet during his oral testimony he claimed that he made no financial contribution towards the acquisition of Mount Warrigal. I do not accept that the husband used the monies drawn down from St George to pay outstanding matrimonial liabilities and am satisfied that the whole of the funds withdrawn were spent on his trip to the United States and personal expenses. The husband’s counsel submitted that at worst, the court would notionally add back the $4,000 fee imposed by St George Bank when he re-arranged the mortgage. Had he first consulted the wife and/or presented compelling evidence that this was financially advantageous in the long term, this submission may have succeeded. However, the husband’s evidence on this issue was generally unsatisfactory and I am not satisfied that the husband acted reasonably when incurring the $4,000 fee. He will thus be personally responsible for the increase in mortgage and only $88,000 will be treated as a joint matrimonial liability. The balance is nonetheless a relevant s.75(2) factor.
The wife contends that the husband has retained the majority of household furniture and personal effects. He denies this and says that shortly after separation the parties agreed that the wife would remove the items identified in his affidavit sworn 13 October 2003[6] and that these items comprised the majority of personalty owned at separation. The husband’s list shows that the only valuable items the wife removed were a computer, television, video, stereo, video camera and camera. I accept the wife’s evidence that the husband retained the majority of furniture, which will have included items such as refrigerator, washing machine, bedroom furniture, lounge room furniture and dining setting. The parties had a full compliment of household furniture and it seems plain that the wife removed only a small portion of it. The issue is complicated because neither party provided valuation evidence of the furniture remaining in the former matrimonial home. The husband concedes furniture, household effects and personal assets worth $2,000 which given the absence of evidence by the wife, is an admission against interest. There is no evidence of the value of the wife’s furniture. Although it probably works to the husband’s advantage, by finding that the wife’s furniture has minimal value the $2,000 that I found his assets are worth at least partially recognises that he has retained more valuable personalty than she has.
[6] Paragraph 27
The wife contends that the parties have a joint liability to her grandparents of $3,000. She says that in July 2002 they borrowed $3,000 from her grandparents in order to purchase a computer. The husband does not challenge the wife’s evidence that the computer was purchased with money advanced by her grandparents, and I accept that they made the advance that she contends. The issue is whether the monies advanced were by way of gift or loan. The wife provided no documentary evidence that corroborated her claim that the monies were advanced upon condition that they were later repaid. Once the issue became contentious, she needed to do more than rely on her uncorroborated testimony in order to prove that the money was repayable. In the absence of documentary evidence, she needed to adduce evidence from the lenders. She did not do so. Thus, the wife has failed to prove that the monies are repayable and hence failed to establish that the parties are jointly liable to her grandparents. Having failed to prove the debt, the wife has nonetheless established that her grandparents made a contribution on her behalf that must be taken into account.
The pivotal and most time consuming issue in these proceedings was whether the parties separated in December 1995. If they did separate the wife was entitled to apply for a sole parents benefit. If the parties continued to cohabit she was ineligible for this benefit. The wife called a raft of witnesses in support of her claim that the parties continued to cohabit. Compared to the husband’s witnesses the wife’s witnesses were generally more independent of the parties and their evidence was more compelling. Although denying that the parties cohabited, the husband conceded each of the factual matters alleged by the wife’s witnesses. His counsel submitted that these witnesses contributed little to the court’s understanding of whether or not the parties lived together. Breaking down their testimony into single events, it was submitted that the court had evidence of the husband having contact with the children and a continuing role in their lives after separation, but no more. The wife’s counsel contended that when the entirety of the evidence is taken into account a clear picture emerges that proves cohabitation.
When the wife filed her documents at the start of these proceedings, she made no mention that she owed a debt to Centrelink. Although she asserted that she contributed her Centrelink benefits to the family she failed to disclose how she established eligibility for the payments. At the outset I raised with the wife’s counsel my concern that the wife appeared have told one thing yet planned to run her case on an entirely different basis. It must have been plain to the parties and those advising them that there was a real prospect that the court may refer one or both of the parties to Centrelink in relation to possible fraud. I accept the wife’s evidence that after the proceedings commenced the husband telephoned her and told her that unless she agreed to his settlement offer he intended to report her to Centrelink and that she would go to gaol. Motivated by fear rather than conscience, on 19 December 2003 the wife made a statement to Centrelink[7] in which she revealed the deception. In her statement the wife says, “The periods I lived with the husband while in receipt of a pension are only approximate because they happened many years ago and to the best of my memory are from January 1996 when I first made a claim for pension after Amber was born continuing until approximately January 1997 when the husband moved out and went to live with his mother after he assaulted me…for the periods January 1996 to January 1997 and from May 1997 to December 1999 I was receiving a pension that I knew I had no entitlement to and I should have advised I was living with the husband. He had been the one to talk me into claiming the pension in the first place. When I had Amber, the husband was purchasing an investment property at Mount Warrigal with his brother and he explained to me the need to get the pension as all his money was being used to pay the mortgage on this investment property”. As a result of her statement Centrelink have determined that the wife must repay $44,059.05. This amount is made up as follows:
·Sole parent pension – From 11 January 1996 to 19 March 1998; $15,447.
·Parenting payment single – From 20 March 1998 to 29 September 2000; $15,365.51.
·Family payments – From 4 January 1995 to 30 June 2000: $12,208.91.
·Family tax benefit – From 1 July 2000 to 29 September 2000; $1,037.63.
[7] Attached to her affidavit filed 17 March 2004.
Throughout this period, the husband contends that he lived with his mother and brother at his mother’s home. The husband’s mother corroborates his evidence. She revealed that she owns a two-bedroom villa unit. She had one bedroom, the husband’s brother, S B, lived in the other. The husband says that he slept on a sofa bed in the living room and had two racks, which he used, as a wardrobe. The husband and his mother said they were aware that the wife was receiving social security benefits and knew that in order to remain eligible the parties could not cohabit. They understood that this meant that the husband was unable to stay at the wife’s home more than two nights a week. The husband says that he stayed at the wife’s home some, most weeks two nights a week. Often after nightshift, if the wife were working the following day, he would go directly to the wife’s home so that he would be in the home in the mornings when she left for work. This arrangement was designed to cause the least disruption for Amber and later Lisa and gave the children a sense of family unity. Because he stayed overnight he says it is unremarkable that others observed him relaxing at the home when they visited unannounced. Or that he had clothes hanging in the wife’s wardrobe, that he was observed sleeping in the wife’s bedroom, seen gardening, kept his boat there and the other indicia that suggested his presence at the home was regular and significant. The wife relies on these casual observations attested by others to corroborate her claim that the parties cohabited. She says the husband was not minding the children, he was living with the family full time and fulfilling his role as the children’s father whilst residing with her.
The significance of the wife’s witness’s evidence is enhanced by a number of factors. Firstly, the parties became engaged to marry in mid 1996. Although the marriage was a long time coming, their engagement signalled a strong relationship rather than merely parents cooperating for the sake of their children. The home purchased in March 1999 was purchased from a member of the wife’s family, signalling a personal nexus between the husband and the wife. The husband and his brother completed loan documents at the Shellharbour property in January 1997, which the wife witnessed[8]. The husband and wife jointly consulted a mortgage broker concerning the purchase of the Wollongong property, which broker visited them together. The broker prepared the loan application form based on her understanding that the parties were in a defacto relationship[9]. Although the documents were changed to show that the husband was living at his mother’s home I am satisfied that they were changed in order to continue the fraud on Centrelink, ensuring that as far as possible there was no extraneous evidence that they may be cohabiting. These were all significant financial transactions. I do not accept the husband’s evidence that these documents were completed at the Shellharbour Property with the wife’s participation merely for convenience. Considered with other evidence they corroborate in a real way that the parties were cohabiting.
[8] Exhibit M
[9] Exhibit J
Throughout the period the wife’s mother, R C, regularly visited the parties and saw clear evidence that they were cohabiting. Both parties made it clear that they lived together, by their words and actions.
The parties constructed an elaborate fraud by which they attempted to ensure that there was no evidence that Centrelink may latch upon in order to disentitle the wife from continuing to receive benefits. In pursuit of the fraud, the wife told them that the husband was paying child support directly to her. He gave the CSA his mother’s home address as his address[10]. The CSA issued an administrative assessment, which the wife told them the husband paid directly. Since their final separation the husband’s child support payments have fallen into arrears and payments have only been made after the wife registered his liability for collection by the CSA. He gives no satisfactory explanation for changed behaviour; that is why he previously made payments voluntarily and reliably compared with making payments only by compulsion after the wife says final separation took place.
[10] Exhibit B
The husband did not include the wife as a dependant for taxation purposes[11], nor did he include her on his health insurance. He told the RTA that his effective from 3 June 1995 he resided at his mother’s home[12]. These records do no more than document information given to the relevant department. There is no suggestion that the information was audited or checked in order to establish its integrity. Although in some cases this type of record might carry weight, here I am satisfied that the parties set out to create a paper trail in furtherance of their fraud and that the documents are part of the fraud. I have not overlooked that there are inconsistencies in the dates given by the wife to Centrelink and in her testimony. The husband says his evidence is more internally consistent concerning separation dates than the wife’s is, something, which he says should carry significant weight. I accept the wife’s testimony that her recollection of specific dates is somewhat hazy and that she has done her best to recall separations and reconciliations. On balance notwithstanding that the deficiencies in aspects of the wife’s testimony I prefer her evidence concerning the cohabitation issue.
[11] Exhibit D
[12] Exhibit A
I do not accept the husband’s submission that the wife has fraudulently claimed cohabitation during the contentious period in order to maximise her adjustment of property. Whilst she could not expect to run her case for property settlement to trial without real risk that she and probably also the husband may be referred to relevant authorities for investigation, her case is not materially enhanced by claiming cohabitation compared to post-separation contributions to the family. She exposed herself to potentially serious consequences in the sense that she may have been criminally charged and knows that forever after she will be subject to close scrutiny. This was not done lightly and the potential consequences undermine the husband’s claim that she has created a fictitious fraud for greater gain. Nor do I accept the husband’s submission that the wife has established a debt, which is tantamount to waste. The liability was established when the wife, with the husband’s complicity, claimed Centrelink benefits to which she had no entitlement. With the husband’s knowledge those monies were expended entirely on matrimonial purposes. By acknowledging the debt the wife has done no more than bring a continuing fraud to an end. This fraud has been a joint venture between the husband and the wife in every sense. The debt to Centrelink is thus a joint matrimonial liability.
Evaluation of contributions and other section 79(4) factors
Section 79(4) requires that the court looks at the entirety of the contributions, both financial and non-financial to the welfare of the family as well as to the acquisition, conservation and improvement of assets. Contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense. Farmer and Bramley (2000) FLC 93-060, Querasimu (1999) Fam CA1314. In relation to the parties contributions under s 79(4) a global approach is generally adopted rather than an asset by asset approach.
When the parties commenced their relationship in 1991 neither had any significant assets or liabilities. Both were teenagers and the wife had only recently finished school. Neither party suggests that during the first period of cohabitation either made any significant contributions. At the end of this first period of cohabitation neither party had any assets of significance.
When the parties resumed cohabitation in 1995 the wife owned a car worth about $2,000. The husband had established a small superannuation interest only a short time earlier, but otherwise had no assets or liabilities of value. For the first few months of the parties’ cohabitation in 1995 the wife’s income as a shop assistant was the family’s only income. The wife contends that from November 1995 the parties rented the maternal grandparents Shellharbour property at less than market rates. The wife’s mother, R C, makes the same claim. Neither the wife nor R C gave any basis for this claim. The wife’s parents only acquired the property in November 1995 and there is no evidence concerning its prior rental value. The evidence is not sufficiently persuasive to find that when the parties first rented the Shellharbour property that it was rented to them at an under value. However, the rent remained static during the four years that the parties were in residence and at some point it is likely that they paid less rent but market rate. This is a contribution by the wife’s family on her behalf.
From the time the husband obtained employment with MM Kembla he contributed all of his income to joint matrimonial purposes. After the wife took maternity leave she contributed money subsequently earned working part time and Centrelink benefits. The law is quite clear that a party cannot profit from a criminal act. Thus, the wife will have no credit for the monies fraudulently obtained from Centrelink, even although these were contributed to the betterment of the family. The wife claims that by living day to day on her Centrelink benefits, the husband was able to acquire savings, which he used in the acquisition of Mount Warrigal. Having originally claimed that he made a contribution towards the deposit on Mount Warrigal, the husband resiled from this position and said that his brother, S B, made the entire initial contributions towards its acquisition. If the wife wished to maintain her assertion that the husband used joint or sole bank accounts from which monies were paid towards the acquisition of Mount Warrigal, this matter could have been proved using bank records. In the absence of bank records or other reliable documents I am not satisfied the husband made any contribution towards the acquisition of Mount Warrigal. Nor as the wife claimed did the husband use all of his income to support Mount Warrigal after its purchase. It is clear from the husband’s bank records during the period that there were sufficient funds after the payment of outgoings on Mount Warrigal for the husband to contribute as substantial share of his salary to the family’s day to day living expenses.
An important issue in this matter is an assessment of the weight that should be attached to the husband’s contribution of Mount Warrigal. The husband’s brother, S B, gave the husband the opportunity to enter the property market at a time when the husband was unable to do so if reliant only on his own finances. This was a contribution made by S B on the husband’s behalf. It enabled the husband’s small regular contribution to the shortfall between income and expenses related to Mount Warrigal to be put to good use. His payments were small and the $22,000 he received from the sale of Mount Warrigal is predominantly the result of its acquisition and upward movements in the value of property. During his ownership of Mount Warrigal the parties did little work towards its improvement and the improvements do not appear to have affected its value. Without the $22,000 received from the sale of Mount Warrigal it is highly unlikely that the parties would have been able to acquire the Wollongong Property. The proceeds of Mount Warrigal are the seed capital for the subsequent purchase of the former matrimonial home. Thus the greater contribution to the sale proceeds derives from S B, on the husband’s behalf, the husband’s direct financial contribution. Comparatively the wife made a small indirect financial contribution. In the circumstances of these parties’ modest financial circumstances the husband’s greater contribution towards the sale proceeds is a significant contribution that must carry real weight. See Pearce v Pearce (1999) FLC 92 –844.
During their separations the wife supported the children without contribution by the husband. I do not accept that he paid any child support directly to the wife. During the separation following Lisa’s birth she purchased a new television and stereo system which along with furniture given to her by friends she bought back into the home when the parties reconciled in 2000.
At final separation the parties had approximately $2,200 in a Christmas account, which was distributed basically equally between them. They had a key card account from which the wife retained $500 and the husband retained the remaining $180. The husband retained the majority of funds held in the Bendigo Bank account, approximately $3,000 from which he later paid the wife $1,000.
Since separation the husband has lived in the home and paid the mortgage. The mortgage repayments are modest and the outgoings he has met on the Wollongong Property are in effect the price of occupation. His mother lives with him and she benefits from this arrangement.
Comparatively, the husband has made a greater direct and indirect financial contribution to the marriage.
There were few improvements made to either Mount Warrigal or the Wollongong Property. Both parties worked for a day or two only on Mount Warrigal preparing it for rental. Their contributions were equal. In relation to the Wollongong Property they spent about $4,000 on landscaping shortly before they moved into the home and erected a picket fence. Otherwise, the work done on the Wollongong Property was nor more than regular minor maintenance. In this regard the parties’ contributions were equal.
I accept the wife’s evidence that she was predominantly responsible for maintaining the interior of the home and caring for the children. Following Amber’s birth and until separation the wife either took maternity leave or worked no more than thirteen hours per week. This was in order to take care of the home and children. To a considerable extent her efforts freed the husband from substantial responsibility for the home and children, enabling him to pursue his career. Whilst the husband was undoubtedly a loving father his work limited his time and hence ability to play a substantial role as a home maker. When he was at home he spent time with the children in play and did some work around the house, predominantly maintaining the exterior of the home in which the parties lived. When the wife was at work the husband cared for the children and, when he was unavailable to do so because of his work commitments, the parties relied on family assistance. During separations the wife was overwhelmingly responsible for the children’s care other than those periods when the children exercised contact with the husband. At the date of final separation the wife’s contribution as a home maker and parent was greater than the husbands.
Since separation the children have lived with the wife and had regular contact with the husband. He does not always take the contact, which the orders entitle him to. Although entitled to contact at least two nights in each four that he is not working, he does not always do so. Thus although the husband has made a small contribution as a parent post-separation whilst the children have been in his care, by far the greater contribution as a home maker and parent post-separation has been made by the wife. Her contribution as a home maker and parent must be recognised in a real and substantial way. See Ferraro.
In Ferraro the Full Court highlighted the difficulty involved in evaluating and balancing fundamentally different activities. It also reinforced that the court’s task includes evaluating the significance of various contributions, the weighting of which ultimately a matter for the court. I have already made findings concerning the significance of S B’s contribution on the husband’s behalf of Mount Warrigal. Overall his financial contribution was greater than the wife’s was. Her diligent attention to the children and the home meant that the husband could pursue his career confident that their children’s daily needs were competently attended by the wife. He trusted the wife to largely meet their joint parental responsibility for the care of the children and accepted her judgment in relation to the daily matters necessary to run the home and the children’s lives. Their roles in the family were complimentary and her home maker and parent role is particularly significant. Both parties contributions must be acknowledged in a real way.
The orders I propose will not affect the earning capacity of either party.
Not long after the parties finally separated, the wife applied to the Child Support Agency for the administrative assessment of child support. For the period 30 September 2002 – 3 July 2003 the husband was assessed as liable to pay child support at the annual rate of $12,663. For the period 4 July 2003 – 31 August 2003 the husband was assessed as liable to pay annual child support of $10,318. For the period 1 September 2003 until 30 November 2004 his annual rate of child support is $10,102. Presently, the husband has $431.89 arrears of child support.
I find therefore that the parties total contributions and other factors should be assessed as being 45 per cent by the wife and 55 per cent by the husband.
Section 75(2)
Subsection (a). The husband is 33 years old and in good health. The wife is 30 years old and she too is in good health. I make no adjustment pursuant to the subsection.
Subsection (b). I have already made findings concerning the parties property and financial resources and do not repeat them. In addition the husband owes St George Bank an extra $14,000 over and above the $88,000 treated as a joint matrimonial liability. Since 1999 the husband has worked full time at MM Kembla as a machine operator. His employment requires that he work twelve hour shifts on a continuous eight day roster, with four days on and then four days off. He earns approximately $931 per week from which he pays the outgoings identified in his financial statement. His employment is apparently secure and appropriately renumerated. At the time of the hearing the wife was employed full time as a shop assistant. Her average weekly income from employment was $573. At that time she was also receiving social security payments, which I infer as a consequence of her revealing her earlier fraud or cohabitation with C W have now ended. The wife’s only other income is child support. With her move to Cowra, the wife will continue to work as a shop assistant although her hours will reduce and be limited to school hours. I infer that her income will reduce somewhat. The husband’s greater capacity to earn an income warrants an adjustment in the wife’s favour.
Subsection (c). Amber and Lisa attend the local Primary School. Amber is in third class and Lisa is in kindergarten. Throughout the marriage responsibility for the children has overwhelmingly fallen to the wife. The husband agrees that the children should live with her and day to day primary responsibility for their care will remain with her. Their ages mean they will be dependent upon her for many years to come. In Clauson (supra) the Full Court of the Family Court said, “In addition it should not be forgotten that the payment of child support in no way compensates the custodial parent for the loss of career opportunity, lack of employment mobility and the restriction on an independent lifestyle which the obligation to care for children usually entails”. These observations apply to this case. I make an adjustment in the wife’s favour pursuant to the subsection.
Subsection (d). Subsection (d) focuses on the financial needs of the parties including their financial commitment supporting the children. The wife has the modest expenses identified in her financial statement. By living with her parents after separation she was able to provide the children with accommodation even though her finances were limited. Because the children live with her the wife incurs greater costs associated with their care, which reduces considerably her disposable income. The wife uses all of her income supporting herself and the children. The husband has a greater income and his day to day necessary expenses is less than the wife’s. Overall the subsection requires an adjustment in the wife’s favour.
Subsection (e). Other than the children neither party has responsibility to support any other person. I make no adjustment pursuant to this subsection.
Subsection (f). I infer that subsequent to the wife’s disclosure to Centrelink and commencement of cohabitation with C W that her Centrelink benefits have ended. Neither party currently receives a pension, allowance, or benefit, from any superannuation fund or scheme. I make no adjustment pursuant to the subsection.
Subsection (g). Since separation the husband has maintained a comfortable standard of living, comparable at least to that which the parties enjoyed prior to separation. Since separation the wife’s standard of living has reduced. Without her parents willingness to provide accommodation, she had little capacity to provide an appropriate standard of living for herself and the children. Living with her parents, she has lost the amenity of her own home. She has not enjoyed the same comfortable standard of life that the parties had prior to separation. It is appropriate to make an adjustment in the wife’s favour pursuant to the subsection.
Subsections (h) – (k). These subsections do not arise.
Subsection (l). The wife has decided to return to the paid workforce and does not claim an adjustment pursuant to the subsection. Her work ethic and responsible attitudes must be commended. I have already taken into account aspects of the financial consequences of the wife’s care of the children. In the circumstances I make no adjustment pursuant to the subsection in the wife’s favour.
Subsection (m). The wife began dating C W on 2 May 2003. They are engaged and will marry on 20 February 2005. C W is store manager at Cowra. Although he swore an affidavit in support of the wife’s case, C W did not fully reveal his financial circumstances. Presently he is renting a home in Cowra and has leased a farm property, not far from the town. This is where the wife and children will live. C W has two children by his former wife with whom he has regular contact. It seems unlikely that C W would live in rental property if he owned his own home. As a salaried wage earner it is also likely that he pays child support in accordance with the child support formula. Whilst his affidavit is deficient in some respects, the overall picture indicates that C W lives on his income as a store manager and has yet to acquire significant assets. He is committed to the wife and contributes towards her support. The husband has not re-partnered. He resides with his mother. I make an adjustment in the husband’s favour pursuant to the subsection.
Subsection (n). Section 75(2)(n) achieves a cross referencing between s.75(2) and s.79. The outcome of assessment of contributions and other factors has resulted in the wife having 45 percentage of the assets compared to the husband’s 55 per cent. Neither party seeks a split of superannuation. These factors do not warrant an adjustment pursuant to the subsection.
Subsection (na). I have already made findings concerning child support. For so long as he is a salaried wage earner the husband is likely to pay child support in the amount assessed. I make an adjustment pursuant to the subsection in favour of the husband.
Subsection (o). There are no factors that warrant an adjustment pursuant to the subsection.
Subsection (p). This issue does not arise.
Having regard to all of the s.75(2) factors I find that it is an appropriate that there should be an adjustment in the wife’s favour of 15 per cent. This outcome reflects the cumulative outcome of the findings I have made pursuant to s.75(2). See Tomassetti (2002) FLC 93-032. Any lesser adjustment given the size of the asset pool would be notional.
Section 79(2) is this outcome just and equitable?
Because the court must consider the actual orders not just the percentage distribution under s.79(2) justice and equity in cases like this requires that the court stands back and looks carefully at the outcome of the s.79(4) and s.75(2) process. It is at this stage that the court considers the actual structure of the orders.
I will not repeat the findings made thus far. There are key findings that lead to my comfortable satisfaction that an outcome favourable to the wife 60 per cent compared to the husband’s entitlement of 40 per cent is just and equitable. These include that the children will continue to live with the wife and she will be overwhelmingly responsible for their day to day care. Although the husband will pay considerable child support, the payment of child support does not compensate the wife for the financial impact upon her of many years of childcare. The husband has a well-established job which produces a reasonable income. It is unlikely that the wife will earn a comparable income. In the years that lie ahead the husband’s financial security, because of his greater income and earning capacity is far more assured than the wife’s. The husband’s brother provided the money which enabled Mt Warrigal’s acquisition. In turn its sale proceeds provided the seed capital that enabled the parties to buy the former matrimonial home. This was a significant contribution on the husband’s behalf, which when balanced with all other relevant contributions results in my comfortable satisfaction that the husband’s contributions and other s.79(4) factors favour him. The wife’s contributions as a homemaker and parent in particular cannot be ignored and they too carry real weight.
When I stand back and examine the parties’ circumstances I am satisfied that an outcome 60 per cent to the wife and 40 per cent to the husband is just and equitable.
Structure of the orders
At the end of the hearing the parties agree that the husband should have the opportunity to pay out the wife’s s.79 entitlement and that the former matrimonial home should be preserved unless its sale is necessary. Rounded out sixty per cent of $261,318.58 (nett assets) is $156,791.14. The wife has assets comprising her car $4,500, IAG shares worth $4074, superannuation worth $7691.63 and $980 cash giving her total assets worth $17,245.63. She owes Centrelink $44,059.05 giving her $27,213.42 excess liabilities over assets. Thus, rounded out the husband must pay her $183,604.00. By way of crosscheck, the husband will have the house worth $340,000, car worth $1500, IAG shares $2500, superannuation worth $29,662, $200 cash and furniture of $2000 giving him total assets of $375,862 from which the St George mortgage of $88,000 must be deducted giving him, nett assets worth $287,862. Forty per cent of $261,318.58 is $104,257.00. $287,862 less $183,604.00 is $104,257.
Having been advised that judgment would be delivered, with the wife’s solicitors consent, the husband’s solicitors wrote to the court on
1 November 2004. They advised that the former matrimonial home is listed for sale and that the husband no longer sought to buy out the wife’s interest in the home. Both parties agree that they will have their s.79 adjustment from its sale proceeds.
The husband has been aware for many months that he would need to arrange his affairs to enable him to pay out the wife’s s.79 entitlement. As the property is already listed for sale the parties will have a further eight weeks within which to exchange contracts. If a sale is not effected within this time frame then the property must be sold at auction. The auction will take place no later than two months after the order for its sale become operative. Two months is sufficient time to adequately market the property and do all things needed to prepare it for sale by auction. The husband has had exclusive use of the valuable matrimonial assets and it would be manifestly unreasonable to require the wife to wait any longer. Because the parties have been so dishonest with Centrelink a portion of the wife’s entitlement sufficient to pay out Centrelink must be paid to the wife’s solicitors. They will honour her undertaking to Centrelink to repay the debt. Any other course leaves it open to one or both parties to have the debts taken into account but not actually pay it as the court intends.
Although the former matrimonial home has an agreed value, the nett proceeds cannot be known. Upon its sale the husband will incur selling costs. The total assets, excluding the former matrimonial home and mortgage, are $8,028.58. Sixty per cent of this amount is $4,817.48. Excluding the former matrimonial home and the mortgage, the husband has total assets worth $34,842. He is entitled to $3,211.00. Therefore, on the sale of the former matrimonial home when the husband receives his 40 per cent nett share, there will have to be an adjustment in the wife’s favour of $31,630 paid from it. This is the adjusting figure needed to ensure that the wife receives 60 per cent of the nett property.
The husband resides in the former matrimonial home and may continue to do so until its sale. Until the home is sold he must pay all insurance, mortgage instalments, rates and taxes upon the former matrimonial home as and when they fall due. The property must be properly maintained. If he defaults, the default must be paid out of his proceeds. This is the price of occupation.
For these reasons I make the orders identified at the start of this judgment.
I certify that the preceding seventy-nine (79) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate: S. Mashman
Date: 2 November 2004
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