Read & Read
[2005] FMCAfam 60
•22 February 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| READ & READ | [2005] FMCAfam 60 |
| FAMILY LAW – Property consideration of contributions – effect of husband's bankruptcy – purchase of husband's interest from trustee. |
Family Law Act1975, s.79
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
Hickey and Hickey (2003) FLC 93-143
In the Marriage of Ferraro 16 Fam LR 1
| Applicant: | JULIE MARGARET READ |
| Respondent: | LINDSAY ALAN READ |
| File No: | DGM 327 of 2000 |
| Delivered on: | 22 February 2005 |
| Delivered at: | Melbourne |
| Hearing dates: | 2 & 3 July, 21 & 22 October 2003 |
| Judgment of: | Phipps FM |
REPRESENTATION
| Counsel for the Applicant: | Mr McGowan |
| Solicitors for the Applicant: | Simon Parsons & Co |
| The Respondent appearing in person |
ORDERS
THAT the husband pay to the wife the sum of $2,658.46 on or before 31 July 2005.
THAT the wife, to the exclusion of the husband, is entitled to her interest in the land contained in Certificate of Title Volume 9562 Folio 136 being the former matrimonial home at Coalville Road, Narracan (the property).
THAT the wife, to the exclusion of the husband, is entitled to ownership of the two Arabian horses now at the said property and owned by the husband and wife and that insofar as it is necessary, the husband do all such acts and things and sign all such documents as may be required to transfer registration of the horses to the wife.
THAT otherwise, each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party at the date of this order (furniture, personal possessions, and like chattels in the property being deemed to be in the possession of the wife).
THAT the husband pay the wife’s costs subsequent to 27 June 2003 to be agreed and if not agreed to be fixed upon application to Federal Magistrate Phipps.
THAT otherwise all applications are dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
DGM 327 of 2000
| JULIE MARGARET READ |
Applicant
And
| LINDSAY ALAN READ |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for a property settlement.
The wife was born on 30 November 1958 and the husband on
16 October 1952. The parties were married on 25 August 1976. There is one child of the marriage, Roxanne Read born 9 July 1977. She has lived independently since 1996. The parties separated on one occasion in October 1995 and on another in November 1996.
In 1989 they purchased vacant land in Colville Road, Narracan. They built a house on it in 1993.
In 1992, the business of Read Speed was commenced by the husband and wife in partnership after the conclusion of the husband’s employment with the State Electricity Commission of Victoria. The husband deposited $17,000.00 of the termination payment he received with the Pyramid Building Society. The wife had part-time employment at a bowling club.
The business did not thrive and in October 1995 the husband went to Western Australia to work at mine sites. He returned to Victoria at Christmas and went back to Western Australia in January 1996. He came back to Victoria on 20 April 1996 and remained until 28 June 1996 when he went back to Western Australia.
When he went to Western Australia, the husband leased or allowed a friend to use the workshop. The friend payed half the rent and telephone and electricity. While in Western Australia, the husband worked on remote mine sites and for a period in Kalgoorlie. The parties’ daughter went to live with the husband in Western Australia in 1996.
On 16 April 1997, the wife paid $14,000.00 to the husband in the belief that agreement had been reached on a property settlement. The agreement which the wife believed had been reached was for the wife to pay the husband $17,000.00, $14,000.00 immediately and a subsequent instalment of $3,000.00, for the wife to keep the matrimonial home and take responsibility for the mortgage, each to keep their motor vehicles, the husband to keep the interest in a timeshare property at Phillip Island, the wife to keep the parties’ Arabian horses and horse float, money with Pyramid Permanent Building Society to be divided equally, the wife to keep her superannuation and the husband to keep a Ford Fairlane motor vehicle and tools.
Minutes of a proposed order were drawn up but never signed by the husband and an order was never made.
On 22 July 1999, the husband was made bankrupt on his own application. He is now discharged from bankruptcy.
Application for final property orders was filed by the wife on 30 November 1998. A Hearing was conducted in January 2001 and judgment given on 12 February 2001. That was set aside on appeal on 27 September 2002. The current hearing is the rehearing as a result of that appeal.
In June 2002, the husband’s trustee in bankruptcy offered to sell the interest of the bankrupt estate of the husband in the Coalville Road property for $28,255.16. On 30 July 2002, the wife transferred half of her interest in the Coalville Road property to her fiancé, Andrew John Mackie. On 4 March 2003, the wife and Andrew John Mackie refinanced the mortgage over the Coalville Road property and acquired the remaining half share from the husband’s bankrupt estate for $28,255.16.
The parties had an interest in a timeshare resort, Island Breeze Club Ltd. That was repossessed on 17 November 1999 because outstanding membership fees and penalties totalling $1,722.00 had not been paid. To purchase the timeshare interest, the parties had borrowed from Melbourne Credit Union. That was secured by a caveat over the matrimonial home.
The settlement of the transfer to the wife and Mr Mackie was on 4 March 2003. The amount owing on the mortgage to the Bank of Melbourne was the $71,519.06. The amount owing to Melbourne Credit Union was $10,000.00 and $28,255.16 was paid to the husband's trustee in bankruptcy. The valuation the trustee had obtained in June 2002 was $140,000.00.
The husband said he blamed his bankruptcy on the wife’s mishandling of money paid into the joint bank account while he was in Western Australia. The parties had maintained a joint bank account which was both a business bank account and personal bank account. The wife could sign cheques. She said she had little knowledge of the business, signing cheques when bills were given to her by the husband to pay.
The husband said that about $28,000.00 was deposited into the business account between 5 October 1995 and 11 November 1996. In an affidavit, he had alleged an amount of $43,000.00, but at the hearing it became apparent that the amount was about $28,000.00.
Both parties had prepared lists after examining cheques, cheque butts and bank statements. The husband’s case was that the wife had misused money. The wife’s case was that she had used the money as it had always been used, for both business expenses and living expenses. The husband had done a detailed examination of cheque butts and cheques. In this period, October 1995 to November 1996, the wife was writing the cheques and controlling the account. There may be some discrepancies, but no more than might be explained by clerical errors. Both the wife and the husband were cross-examined about a number of cheques. They show payments consistent with the wife’s case. That is, some payments were for the business, some were household and personal expenses such as medical expenses, telephone and rates.
The wife was continuing her part-time employment. Her income was not enough to sustain the household and the husband’s income was needed.
When the husband became bankrupt there were three business debts outstanding, Hussey Performance $1,800.00, Precision Engine Parts $900.00 and Jolley Real Estate $900.00, a total of $3,600.00. In addition, execution had been levied against a Ford Falcon GT motor vehicle for $3,000.00 and about $1,000.00 in unpaid fines. That was paid by drawing on a credit card the husband had obtained in Western Australia. The wife said that in addition to these payments, she used $300.00 from the credit card for a new washing machine because the old washing machine had stopped working.
The wife purchased a Ford Bronco motor vehicle in February 1996 for $18,000.00. She borrowed an amount of $15,000.00 and $3,000.00 was given to her by a friend. The loan document purports to be signed by the husband as well as the wife. The wife admitted that she had forged the husband’s signature on the document. She was charged with offences as a result of this and the matter has been finalised. The loan has been repaid, all payments made by the wife. She still has the Ford Bronco motor vehicle.
The parties owned Arabian horses. There was much cross-examination by the husband of the wife. She said that she had given two of the horses to Mr Mackie because she had not been able to afford the registration fee. Mr Mackie paid the fee, about $300.00, and the horses are registered in his name. The husband had purchased his bankrupt estate interest in the other two horses from the trustee. The trustee valued the horses at $1,000.00 and the husband paid $500.00. This was shortly before the hearing.
The husband disputed the wife's entitlement to give the two horses to Mr Mackie. I consider that this is not now a relevant issue. Whatever right the husband had to the horses was vested in his trustee. The wife claims no interest in the horses. They are registered in Mr Mackie's name and it is a reasonable inference that the trustee is not claiming an interest. I find that neither the husband nor the wife has any interest in the two horses registered in Mr Mackie's name. Even if that is correct, the only evidence of valuation is the price the husband paid for the other two. If the wife does have an interest in the horses, the value is about $500.00 and may be disregarded.
The husband claimed that the wife had sold furniture from the matrimonial home. The wife said she had sold some to raise money and had received about $700.00. She produced some receipts. The husband produced a proposal for home and personal insurance which put a value of $70,000.00 on residential contents of the former matrimonial home. I do not accept that as an admission against interest by the wife. I accept her evidence that she received about $700.00 from the sale of furniture and that she used it for living expenses. The rest of the furniture remained in the matrimonial home.
In 1999, the husband received a compensation payment of $23,500.00 for injuries caused while working. He said he had been off work for about eight months. He had borrowed money and used some of the payment to repay the loan. The rest he has spent on his general expenses. The money was received after separation and was in effect income. It is not part of the matrimonial property.
Property at the time of separation consisted of:
i)Matrimonial home, $122,500.00. This is the valuation the wife put on it. The husband obtained an opinion of market worth in August 2000 of $120,000.00 to $125,000.00. In an affidavit sworn 24 January 2001, the wife said she agreed with the valuation. Therefore, this range of valuation can be taken as agreed at that time. It is some time after separation, but it is the only valuation that is available. The midpoint is $122,500.00.
ii)Wife's Ford Bronco motor vehicle, $18,000.00. This is the wife's valuation. It is the price she paid for it some time before. Again, it is the best there is.
iii)Husband's GT Falcon motor vehicle, $15,000.00. This is the wife's valuation. I infer from the evidence that the husband does not dispute it.
iv)Time share interest, $7,000.00 was the amount owing on the loan for the time share interest. The wife put the same amount on it as a value. Given what subsequently happened, a reasonable inference is that it had no value.
v)Arabian Horses, $5,000.00. This is the wife's valuation. Given what subsequently happened it seems excessive. There is no valuation evidence from which a conclusion can be drawn.
vi)Horse float, $1,500.00. This is the wife's valuation. There is no valuation evidence from which conclusion can be drawn. The wife subsequently sold it and used the money to pay bills.
vii)Pyramid Investment. The wife put a value on it of $11,000.00 estimate. Subsequently about $4,500.00 was paid by the Pyramid liquidator to the parties. That is the better valuation. The amount went into the parties’ bank account and was spent.
viii)Wife's superannuation, $2,300.00.
ix)Fairlane motor vehicle. The wife put a valuation on it of $5,000.00. There is no valuation evidence from which a conclusion can be drawn.
x)Husband's tools. The wife valued them at $12,500.00. The husband said this was excessive. There is no valuation evidence from which a conclusion can be drawn.
xi)Husband's bank account $1,800.00.
xii)The wife's inheritance from her father $4,000.00.
Liabilities were:
xiii)mortgage matrimonial home, $80,000.00.
xiv)Business debts, $8,000.00. This is the total of the business debts at the time of the husband's bankruptcy plus the money paid when execution was levied on the Falcon motor vehicle.
xv)Melbourne credit union, $4,500.00.
xvi)Loan from wife's mother, $14,000.00. The wife describes it as such in an affidavit. Whether it existed and its nature was not investigated at the hearing, I am unable to make any finding about it.
Section 79 of the Family Law Act1975 defines the Court’s powers in determining applications for property settlement. Sub-section 2 of s.79 provides that:
“The Court shall not make an Order under this Section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.”
Section 79(4) sets out the matters the Court must take into account when considering what orders should be made for the alteration of the interest of the parties in property. Those matters include:
a)The financial and non-financial contributions made directly or indirectly by or on behalf of each party or by a child to the acquisition, conservation or improvement of any property of the parties;
b)The contribution made by a party to the welfare of the family including any contribution made in the capacity of homemaker or parent;
c)The effect of any proposed order upon the earning capacity of either party;
d)The matters referred to in sub-s.75(2) as far as they are relevant;
e)Any other order made under the Family Law Act affecting a party to the marriage or a child of the marriage; and
f)Any child support payable.
The approach to the determination of an application under s.79 is well established (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), the process ordinarily 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). Thirdly, evaluating the matters contained in s.75(2) in so far as they are relevant.
In determining what order the Court should make under s.79, the Court must be satisfied in all the circumstances that it is just and equitable to do so [Section 79(2)]. It is the justice and equity of the actual orders that the Court must consider; Russell v Russell (1999) FLC 92-877. In Hickey and Hickey (2003) FLC 93-143, the Full Court of the Family Court said the approach involved four inter-related steps.
Section 75(2) of the Family Law Act sets out the matters which must be taken into account by the Court when determining applications with respect to maintenance. This is the prospective element of the determination of the application for property settlement. The assessment of contributions during the marriage is the retrospective element.
In the Marriage of Ferraro 16 Fam LR 1, the Full Court said at page 23:
“A now well established line of authority in this Court indicates the approach normally to be taken in the exercise of the discretion in Section 79 proceedings. That approach is firstly to ascertain the property of the parties at the time of the hearing, then to consider “contributions” of the parties within paragraphs (a) – (c) of Section 79(4) and then consider the matters in paragraphs (d) – (g), more especially paragraph (e) which takes up by reference the provisions of Section 75(2) which are generally referred to as the “Section 75 Factors.”
The Court is therefore required to determine the following matters:
a)The assets, liabilities and financial resources of the parties to the marriage;
b)The relevant contributions of each of the parties;
c)The means and needs of each of the parties and the other prospective components to the claims of each of the parties pursuant to s.75(2) and then to identify if any alteration should be made to the entitlements of either of the parties having regard to the s.75(2) factors.
The Court must then consider whether it is satisfied that it is just and equitable to make the order.
At the time of the hearing, the matrimonial property was the wife's interest in the former matrimonial home, motor vehicles, the two Arabian horses and the furniture in the house. There was no evidence of any bank accounts or debts such as credit card debts. There was no up-to-date valuation of the wife's superannuation, but she is no longer working and so its value will have increased only because of earnings on the investment. It is unlikely to be more than $3,500.00.
The husband, who appeared for himself, raised several issues. The first was that the money he sent back from Western Australia should have been used to pay the business debts. His claim was that had that happened, he would not have had to go bankrupt. Although the husband did not put it this way, it would seem to be a matter that the Court is to take into account in relation to both contribution and the s.75(2) matters.
The wife's case questioned the husband's motive for making himself bankrupt. At the time, he wrote a letter to the wife's solicitors which suggested that he went bankrupt to attempt to frustrate the wife's property claim. The husband's motive is now irrelevant. What is relevant is how the bankruptcy and the circumstances in which it occurred effect the assessment which must be made in accordance with the principles set out above.
I see the argument the husband puts as this. The parties had joint debts. While in Western Australia he earned enough money to pay off those debts. The wife should have paid them but used the money for her own purposes. Therefore, the wife should be treated as having wasted that amount of money which would have paid off the debts, about $8,000.00 or it should be seen as a negative contribution by the wife.
The wife's evidence was that she was doing the best she could. She had to live, which included paying mortgage and outgoings on the matrimonial home. Apart from the money sent by the husband, she sold furniture and the horse float. A measure of the financial position she was in was that she was unable to pay the registration fee on the Arabian horses. She had an attachment to the horses and I consider that she would have paid the registration if she could. She said that she did not know of the existence of the outstanding debts. That is consistent with the evidence that while the business was operating, while she made out cheques to pay the bills, she did it for those that the husband presented to her. Apart from that, she said that she played no part in the business and knew little about its operation. The arrival of the sheriff’s or bailiff’s officers to levy execution for business debts was a surprise to her. That is consistent with her evidence that she knew little of the business.
I accept that the wife did know little of the business operation and that she did not know of the existence of the outstanding debts. Examination of cheques and bank accounts shows no unusual payment. The payments are consistent with the wife's evidence that she paid the money for living expenses and maintaining the family home. As the husband pointed out, amounts were spent which related solely to the wife. Medical and education expenses are an example. I accept that these were all reasonable payments by the wife in the circumstances.
There is no basis in assessing contributions or the s.75(2) factors for a finding that the wife wasted money or that she should be treated as having made a negative contribution.
The other issues the husband raised was the sale of the furniture from the matrimonial home and the value of the chattels in the matrimonial home, ownership and value of horses and the value of the wife's motor vehicle. These are dealt with in dealing with matrimonial property, contributions and s.75 (2) factors.
I consider the proper way to approach the calculation of the matrimonial pool is to value the wife's interest in the house at the amount paid to the husband's trustee, $28,055.16 and to attribute the trustee’s interest to the husband with the same value. A letter dated 18 June 2002 from the Official Receiver to the wife's sets out how that valuation was reached. The property was valued at $140,000.00. The mortgage to Westpac was $76,238.20 and the amount secured by the caveat to Melbourne Credit Union was $7,251.48. The two debts were calculated at 22 July 1999. Therefore, these values take into account the mortgage prior to the refinancing and the debt to Melbourne Credit Union. When the refinancing took place in February 2003, the amount paid to Westpac was $71,519.06 and to Melbourne Credit Union $10,000.00. The total secured debt was therefore a little less. Up to then, the wife and Mr Mackie had continued to make payments on the mortgage in accordance with the arrangement they had made with the bank. These payments are a matter going to contribution. The existing mortgage on the house in the names of Mr Mackie and the wife can be treated as irrelevant.
The husband says that he gave his GT motor vehicle to the daughter in 1996. Even if he did, it would be appropriate to include it in the matrimonial property. The husband produced documents which he said went to the value of the wife's motor vehicle, but there was no admissible valuation evidence. Since there is no reliable valuation evidence, I consider the appropriate approach is to treat the motor vehicles as cancelling each other out. The only other asset is the two Arabian horses valued at $1,000.00, now jointly owned by husband and wife. At the time of separation, there was a Fairlane motor vehicle and a utility. Both, it seems, have been disposed of. Any money went into the joint bank account or was used by the husband for his living expenses. I do not consider that either should be treated as part of the matrimonial property. Insofar as it is necessary to take them into account, they are taken into account as part of contribution assessment.
The wife has retained most of the chattels in the matrimonial home. There is no valuation evidence. I have already dealt with the insurance valuation which the husband sought to rely upon. I consider the appropriate way to deal with the chattels and contents of the house is to make an order that they become the property solely of the wife and treat them as a factor to be taken into account under s.75(2)(o) as a fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account. There is no point in ordering that they be sold and the proceeds divided. That would benefit neither the husband nor the wife.
That leaves the matrimonial property as the parties’ interest in the former matrimonial home, value, $56,110.32, the horses, $1,000.00, and the wife's superannuation, say $3,50.00, a total of $60,610.32.
So far as contributions are concerned, the parties were married in 1976 and separated in 1995 or 1996. The husband was the principal financial provider. The wife worked earning between $10,000 and $12,000 per year. The wife was the principal carer for the child. Until separation, the parties’ contributions were equal.
Subsequent to separation the wife remained in the matrimonial home. Payments on the mortgage got behind and the bank threatened action. Mr Mackie and the wife made arrangements with the bank to make payments and did so for a period of about four years until the refinancing was carried out. The husband by that stage was bankrupt.
Account has to be taken of what happened to the business. The husband, when he went bankrupt, included in his statement of affairs business debts already described off $3,600.00 and a credit card bill of $20,000.00. About $4,000.00 of this was attributable to business debts. Therefore, by his bankruptcy, the husband paid off the business debts. The wife has not been pursued independently of the husband's bankruptcy and the execution which was levied against the motor vehicle. I consider that post separation contributions have been equal.
The s.75(2) factors are the age and state of health of the parties, their assets and their income earning ability, and that the wife will have the contents of the house (to be taken into account under s.75(2)(o)). Neither party is in particularly good health. The wife says that she is unable to work and dependent upon Mr Mackie. There is no medical evidence. The husband says that because of his history of having made a compensation claim, he cannot obtain work in Australia and has been obtaining work on contract overseas. Again, there is no medical evidence. The wife has her interest in the matrimonial home and its contents. She has a home in which to live, although with a mortgage. The husband has no assets.
Overall, I think an adjustment should be made of 15% in favour of the husband because of the restrictions on his ability to work and because he has no home, unlike the wife. The home is furnished, including furnishings the joint property of husband and wife, which I will order, become the wife's property alone. 65% of $ 60,610.32 is $39,396.70. He has already received a payment to his trustee of $28,055.16. A further payment of $11,041.54 would be required to pay his entitlement. He has already received $14,000.00 paid to him by the wife. Therefore, the repayment of $2,658.46 is required to the wife. The wife retains her superannuation of $3,500.00 and her share of the Arabian horses, $500.00.
The result is a payment of $2,658.46 by the husband to the wife, and the wife retain her current share in the matrimonial home, she has sole ownership of the contents of the house, her motor vehicle, the horses and her superannuation. I consider that this order is just and equitable.
I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of Phipps FM
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