Reed and Reed
[2008] FMCAfam 663
•27 June 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| REED & REED | [2008] FMCAfam 663 |
| FAMILY LAW – Property settlement orders – adjustment for care by one party of disabled child. |
| Family Law Act 1975, ss.75, 79 |
| Hickey & Hickey (2003) FLC 93-143 In the Marriage of Kennon (1997) 22FamLR 1; (1997) FLC 92-757 Mallett v Mallett (1984) 156 CLR 605 Norbis v Norbis (1986) 161 CLR 513 |
| Applicant: | MS REED |
| Respondent: | MR REED |
| File Number: | BRC 2931 of 2007 |
| Judgment of: | Wilson FM |
| Hearing dates: | 7 & 11 December 2007 |
| Delivered at: | Brisbane |
| Delivered on: | 27 June 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Waterman |
| Solicitors for the Applicant: | Bridges Family Law Specialists |
| The Respondent Mr Reed appearing in person |
ORDERS
That the net matrimonial property of the parties, found to be $427,698 be apportioned as to the wife $384,928.20 and as to the husband $42,769.80.
That to give effect to such apportionment:
(a)
That within 30 days from the date of this order, the husband and wife shall sign all necessary documents and do all necessary things to transfer to the wife at the expense of the wife, the husband’s right, title and interest in the property situate at
Property R, in the State of Queensland and more particularly described as [omitted] (“the property”) for her sole use and benefit absolutely and the husband will relinquish any claim or interest therein.
(b)That contemporaneously with the transfer referred to in order 2(a) hereof, the wife will do all acts and things and sign all documents necessary to refinance the mortgage on the said property and release the husband from any further liability in relation thereto;
(c)Within 60 days of the date of these orders the husband shall pay to the wife the sum of $28,021.20;
(d)The parties shall otherwise retain those assets and liabilities currently in their respective names.
The husband shall, as and from 11 December 2007, pay to the wife on behalf of the child [X] adult child maintenance in the sum of $319 per week, such sum to be adjusted quarterly in accordance with movements in the Consumer Price Index (All Groups Australia).
The husband shall pay the said maintenance to the wife on a fortnightly basis, in advance, to a bank account nominated by the wife.
Should either party refuse or fail to sign any document necessary to give effect to these orders, having first been requested to do so, a Registrar of this Court shall be authorised to execute such document pursuant to s.106A Family Law Act1975.
IT IS NOTED that publication of this judgment under the pseudonym Reed & Reed is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 2931 of 2007
| MS REED |
Applicant
And
| MR REED |
Respondent
REASONS FOR JUDGMENT
The applicant wife and the respondent husband were married [in] 1981. They separated on 5 May 2004 (according to the wife) or 15 March 2004 (according to the husband) and were divorced on 8 March 2006. They have two children. The older child, Ms J, is 24 years old and independent. The younger child, [X], aged 18, is profoundly disabled. The parties are unable to agree as to the division of their property and each asks the Court to make property settlement orders pursuant to s.79 Family Law Act 1975.
In Hickey & Hickey (2003) FLC 93-143 at [39] the Full Court of the Family Court of Australia stated:
“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 determine and resolve what order is just and equitable in all the circumstances of the case.”
In Mallett v Mallett (1984) 156 CLR 605, the High Court made it clear that s.79(1) and (2) of the Act confer on the Court a very wide discretion to make such order as thought fit, when satisfied that it is just and equitable to do so. Gibbs CJ, at 608, observed that there are some broad principles to which the court is required to give effect, and some circumstances which it is required to take into account. His Honour identified the principles as the need to achieve finality (s.81 of the Act) and that the parties to a marriage are equal in status. However, the Court expressly eschewed any presumption of an equal division of property, or that it should be the normal starting point for the exercise of the court’s discretion (Gibbs CJ at 610, Mason J at 625, Wilson J at 636, Deane J at 640-1, Dawson J at 648).
In Norbis v Norbis (1986) 161 CLR 513, the High Court reiterated that although s.79 of the Act confers a very wide discretion on the court, that discretion is not unlimited. Its exercise is conditioned on a number of matters: that the order is just and equitable (s.79 (2)); that the matters specified in s.79 (4) are taken into account; and the general principles embodied in ss.43 and 81 (see Mason J at 521). In Norbis the Court was primarily dealing with the argument as to whether an asset by asset approach or a global approach was appropriate to the determination of contributions. Not surprisingly, the Court concluded that no fixed rule could be applied. However, at 523 Mason J observed that: “there is much to be said for the view that in most cases the global approach is the more convenient” (see also Wilson and Dawson JJ at 530-532).
By her application filed 8 March 2007, the applicant wife sought the following orders:
“1.That the husband transfer the former matrimonial home situated at Property R to the wife.
2.That the husband transfer 90% of the funds currently held in his superannuation policy to the wife.
3.That the husband pay to the wife child maintenance for [X] born [in] 1989 at the rate of $400.00 per week after the child turns 18. That such maintenance be increased at the rate of inflation each year.
4.All such other orders as this Honourable Court deems meet.”
The orders sought by the wife at the final hearing were:
“1.1That within 30 days from the date of this order, the husband and wife shall sign all necessary documents and do all necessary things to transfer to the wife at the expense of the wife, the husband’s right, title and interest in the property situate at Property R, in the State of Queensland and more particularly described as [omitted] (“the property”) for her sole use and benefit absolutely and the husband will relinquish any claim or interest therein.
1.2That contemporaneously with the transfer referred to in 1.1 herein, the husband and wife will do all acts and things and sign all such documents to enable the husband to discharge the existing mortgage secured by the property.
2.That the husband pay to the wife child maintenance for the child [X] born [in] 1989, in the sum of $400 per week after the child attains the age of 18 for the rest of the child’s life. Such maintenance be adjusted to increase at the rate of CPI each year.
3.That the husband pay the wife’s costs of and incidental to these application.
SUPER SPLITTING ORDER
4.That for the purposes of Subsections 90MT(2), (3) and (4) of the Family Law Act, the base amount allocated to the Non-Member Spouse out of the interest held by the Member in the Fund is $102,600.
5.That, pursuant to paragraph 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the interest of the Member in the Fund, the Non Member Spouse or his/her administrators, executors, beneficiaries, heirs or assigns is entitled to be paid the amount (if any) calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, and there shall be a corresponding reduction in the entitlement of the Member to whom the splittable payment would have been made, but for these Orders.
6.That Order 4 and 5 has effect from the operative time.
7.That the operative time of these Orders shall be the beginning of the fourth business day after the day on which a sealed copy of these orders is served on the Trustee.
8.That the Trustee of the Fund, in accordance with the obligations set out under the Family Law Act 1975 and Family Law (Superannuation) Regulations 2001, shall do all such acts and things and sign all such documents as may be necessary to calculate the entitlement of, and make payment to, the Non Member Spouse in accordance with Orders 4 and 5 of these Orders.
9.All such other orders as this Honourable Court deems meet.”
In his Response, filed 30 April 2007, the husband seeks an order that the assets of the parties be divided equally.
By the time of final submissions the husband, who represented himself before me, had somewhat ameliorated his position, and accepted that the wife should receive a greater share of the assets than him.
The factor that looms largest in my decision as to how to apportion the matrimonial assets is the ongoing care requirements for [X]. [X] has, since his birth, been cared for substantially by the wife. I accept that since separation the wife has cared for [X] without any assistance from the husband. The wife will bear the ongoing burden of caring for [X] whilst she is physically able to do so.
[X] was born with severe brain damage. He has, since 2000, been completely bedridden and requires 24 hour care. He is unable to do anything to assist himself. To make things more difficult for the wife, who is [X]’s full time carer, [X] has uncontrolled muscle movements. This causes his limbs to move uncontrollably, with associated danger to the person trying to care for him.
[X] has complex, high support needs as a result of his disability.
Dr L reports that [X] has severe intellectual impairment, severe athetoid cerebral palsy, epilepsy and diabetes insipidus. As a result of his intellectual impairment and cerebral palsy [X] functions at a less than 12 month level with no verbal communication, minimal social responses and no independent mobility. His cerebral palsy is characterised by a marked movement disorder, particularly in the awake state but even during sleep. He exhibits constant movements of both upper and lower limbs in a pattern consistent with athetosis. This results in [X] being constantly agitated, having markedly disturbed sleep patterns and, in association with underlying increased muscle tone, has resulted in severe scoliosis which required surgical stabilisation and spinal fusion and metal rods. The combination of [X]’s intellectual impairment and physical impairment means that he is totally dependent on his family for nutrition, mobility and management of such fundamental functions as urination and defecation. Dr L concludes his report:
“[X] is a young man who will require ongoing care at a very high level. Given the severity of his problems, his long term prognosis is poor in that he will have a significantly shortened lifespan and will be permanently dependent on carers. Given the severity of his condition, his survival to this point in time is primarily related to the diligence of his family in providing the support that he requires.”
A DVD (exhibit1) was played to the court which graphically displayed [X]’s condition.
The assets and liabilities of the parties at the time of trial were the subject of some, but not total, agreement. The former matrimonial home, in which the wife and [X] continue to reside, has an agreed value of $445,000. There is an outstanding loan secured against the property by mortgage, with a balance of $83,140. The wife has, since separation, been responsible for the payment of the monthly loan instalments.
The husband has superannuation with a value at the date of trial of $114,953. The trustee of the husband’s superannuation fund has been accorded procedural fairness (exhibit 3) so that it is open to the court, if appropriate, to make a splitting order in respect of the husband’s superannuation.
The wife apparently has a motor vehicle, but no value has been ascribed to it. The husband has two motor vehicles, a Holden Jackaroo with an agreed value of $14,000, and a Holden HSVR8 worth $40,500 (exhibit 2) but in respect of which there is an outstanding liability of approximately $56,500.
Each party’s furniture and contents has been appraised (exhibit 2).
I accept the contents of the valuation report, which was not challenged. The wife has furniture and contents of $6,047, and the husband $3,300. In addition, the husband has a boat worth $8,600 and a trailer worth $795.
The husband contended that there was a collection of teddy bears in the wife’s possession some of which were collector’s items, the value of which should be included in the pool of property. I accept the wife’s evidence that the teddy bears belong to [X] and were either bought as gifts for him, or were made by the wife and her sister for him. I accordingly decline to include this property in the pool.
The husband contended that the wife had a substantial collection of jewellery worth in the order of $43,000. Photographs of some of the jewellery were put into evidence. Valuations of other pieces (apparently for insurance purposes) were also referred to. The wife accepted that she had jewellery, but said that she had brought a considerable amount of jewellery into the relationship. Early in the parties’ relationship the wife worked at [omitted]. The wife gave evidence, which I accept, that she has since given away various pieces of jewellery to her daughter and to others.
The wife accepted that she had purchased approximately $8,000 worth of costume jewellery through a television marketing company. The wife should not, in my view, be criticised for this. I rather suspect that this ‘retail therapy’ is one of the few outlets that the wife has had, due to her care of [X]. The wife said that she had purchased approximately half of her jewellery since separation.
Nevertheless the jewellery should be included in the pool of assets.
It has not been valued properly. For the sake of completeness I include the wife’s jewellery in the pool at a value of $15,000. In doing so I accept the wife’s concession that she purchased jewellery worth $8,000 and half of her jewellery was purchased after separation.
The wife contended that the husband had fishing and camping gear worth approximately $20,000. There was no valuation of any of this equipment. There was no specificity in what items were said to comprise this equipment. In the absence of such evidence and any proper valuation, I am unable to ascribe a value to this equipment.
The wife has a credit card liability of $13,000. The husband has a number of credit card liabilities according to his most recent financial statement:
St George Get Set Loan
$12,288
Westpac GM Visa
$16,348
St George Visa
$29,811
Coles Myer Mastercard
$14,532
GE Creditline
$9,142
It emerged from the evidence that the husband is entitled to an estimated tax refund of $14,264 for the 2006/7 year.
When all of these assets and liabilities are taken into account the pool of assets available for apportionment between the parties is $427,698. In my view, it is appropriate to use the global approach in this case and view the property as one pool. Some further observations need to be made about this.
As I have said, the wife has continued to make the mortgage payments for the former matrimonial home for the past four years. She and [X] have lived there. The wife has also paid for the outgoings associated with the property and for various items of repair.
The balance of the husband’s superannuation as at 1 January 2005 was $67,866.43. The husband has, since separation, contributed to his superannuation account by way of salary sacrifice.
At 15 April 2004 the balance of the wife’s credit card was $5,906.52 (exhibit 5). It has increased since separation to $13,000. I am satisfied from the wife’s evidence that she has used her credit card to meet a shortfall between her income and necessary living expenses for herself and [X].
The balance of the Westpac credit card debt was $9604.70 at 12 April 2004 (ex 4). The balance of the GE Credit Line as at 1 May 2004 was $7,327.77.
The balance of the Westpac GM Visa card was $9,604.70 on 11 May 2004. The husband has not explained how the balance increased to $16,348 by the time of trial.
An adjustment clearly needs to be made for these additional liabilities incurred by the husband since separation where no satisfactory explanation has been forthcoming as to the need for an increase in such indebtedness.
Sections 79(4)(a) – (c) of the Act provide:
“(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and…”
At the commencement of their relationship neither of the parties had any assets of substance. On the husband’s evidence, in his first affidavit the contributions of the parties were almost equal. In his second affidavit, the husband says that his contributions were more than the wife’s but neither was substantial. On the wife’s evidence she contributed more than the husband. Any disparity in initial contributions has well and truly been overtaken by the passage of time.
At the commencement of their relationship the parties lived with the wife’s parents until they had saved enough money to buy a parcel of land and build a house. The wife worked, apart from a short period after the birth of Ms J, until [X]’s birth. The wife has not been in paid employment since.
The husband has been employed throughout the relationship as a [omitted]. He continues in the same employment. The wife worked as a [omitted].
The parties moved into their own home in 1985. I accept that after [X] was born, an extension was built at a cost of $22,000, which was borrowed.
In 1993 the wife’s father passed away. Her mother sold her house and moved in to live with the parties, until she passed away in 1996.
A granny flat was constructed as a detached building at the property where the parties lived. The wife says that her mother contributed $50,000 to the cost of such construction. The wife says that her mother also paid for a swimming pool installed partly to assist with the care of [X]. This cost some $10,000. The husband says that the parties themselves paid for the building and the wife’s mother refunded them $40,000 to pay off their credit card debt and for the swimming pool. However, at paragraph 34 of his second affidavit the husband says the wife’s mother also paid for the pool. I do not think it is necessary to resolve the conflict in evidence. Both parties accept that the wife’s mother made a large cash contribution for the parties’ benefit.
The wife says that her mother also paid some $200 per week for groceries for the household. The wife says at paragraph 35 of her first affidavit:
“I relied heavily on the money my mother gave me, as the husband did not provide me with any money for the household expenses. She also paid for all our clothes and the children’s clothes and other living expenses.”
At paragraph 39 of his first affidavit the husband says “Ms Reed’s mother did give us money for some groceries from time to time although this was not a regular occurrence.”
I prefer the evidence of the wife to that of the husband. I accept that the wife’s mother assisted the parties greatly both in terms of financial benefits, and also in assisting in the care of the two children.
I should note, at this stage that there were substantial disputes between the parties as to the adequacy of disclosure. There were also disputes as to whether one or both of them had taken items of the other. These disputes did not assist me in my resolution of the dispute. The parties have two substantial assets: the former matrimonial home and the husband’s superannuation. In my view it does not assist in determining a just and equitable division of property for the parties to be squabbling over a few pages of credit card statements or items of jewellery, when it makes no difference to the outcome of the case.
The wife says that during the relationship the husband controlled all of the finances and she was not made privy to any information about their income or liabilities. The wife says that the only money she had access to was from accounts she held in trust for the children into which child endowment payments were made. This was approximately $20 per month per child. The wife says the husband regularly told her they did not have any money. She says her mother gave her money by which she purchased furniture, curtains and whitegoods for the home. This was denied by the husband who said that the wife had access to the bank accounts. Again, this dispute does not require resolution. There is no evidence that the husband has secreted away monies or wasted monies such that there should be a notional add back to the pool.
During the course of the marriage the husband bought and sold several boats, and motor vehicles. Whilst that may be so, this does not seem to advance the matter, as there is no evidence of any profits or losses made on these transactions or, more importantly, that the monies derived therefrom were not reimbursed to family funds.
I accept that the wife received a campervan from her mother which was sold and the proceeds were divided. I do not think it advances the case to resolve who did what with their share of these proceeds, which were modest.
I conclude that during the relationship, and particularly after the birth of [X], the husband and the wife’s mother contributed to the ongoing financial support of the household. I accept that the husband paid the mortgage, and the bills, so that he made a significantly greater financial contribution than the wife’s mother. Obviously, given that she had the care of the children, the wife did not make as significant a financial contribution as the husband.
I accept that the parties lived a modest lifestyle. I accept that the husband spent monies on his hobbies, including fishing.
The wife carried the burden of caring for the children, which in the case of [X] has been considerable. The wife says, and I accept, that the husband assisted little with the care of [X].
In his affidavit at paragraph 44 the husband says:
“During the relationship before I left for work I would lift [X] out of his bed in the morning. When I returned home from work I would put [X] on a potty chair and take him off when he had finished and I would also give him his last bottle for the night and carry him to bed and put him to sleep. Ms Reed did take care of [X] in all other ways. We had very little assistance from other family members apart from Ms Reed’s mother and our sister in law Ms P”
This reinforces my conclusion that the wife has borne the brunt of caring for [X].
In my view the wife’s contribution, particularly under s.79(4)(c) warrants an adjustment in her favour. Were it not for the wife’s care of [X], having regard to the length of the relationship and the parties’ respective roles in it I would have assessed their contributions as approximately equal. However, in my view, the wife’s care of [X] over 18 years warrants an adjustment of 15% in her favour.
I should add that, at the commencement of the hearing, the wife’s counsel indicated that an argument would be advanced in accordance with the principles discussed in In the Marriage of Kennon (1997) 22FamLR 1; (1997) FLC 92-757. However, such claim was later expressly disavowed. It is not necessary, therefore, for me to resolve the conflicting evidence about the parties’ behaviour towards each other during their relationship.
Sections 79(4)(d) – (g) of the Act provide:
“(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) 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.”
The husband is in secure and well paid employment. The orders I propose will not affect his earning capacity. The wife will not return to the paid workforce. Her life will involve her care of [X] for so long as she is physically able, or for the remainder of [X]’s life. The orders I propose will not affect the wife’s earning capacity.
The husband is 51 years of age. The wife is 48. There is no evidence other than that the husband is in good health. The wife suffers from back pain, no doubt exacerbated by years of having to manually handle [X]. She also suffers from arthritis in both hands and elevated blood pressure.
The wife has the ongoing obligation to support [X]. The husband has agreed to pay adult child maintenance of $319 per week adjusted to CPI.
The wife receives a carer’s pension. [X] receives a pension. Disability Services Australia provides nursing assistance four hours per week.
The husband lives in rented accommodation, with his second wife.
No evidence was led as to the husband’s wife’s financial circumstances.
Exhibit 12 shows that in the 2006/7 year the husband received total remuneration from his employment of $147,190. The husband says that his remuneration for that year was inflated because of his receipt of greater than usual commissions. Even allowing for that, the husband has a substantially greater earning capacity than the wife. The husband will be able, during his remaining working years, re-establish himself so as to be able to lead a reasonably comfortable lifestyle.
On the other hand the wife will not have the opportunity to re-enter the workforce and will live a near subsistence lifestyle, largely reliant upon government benefits and other assistance.
In my view, the s.75(2) factors warrant a further adjustment in favour of the wife of 25%.
A total apportionment of 90% of the assets to the wife would see her entitled to property valued at $384,928.20. The wife has contents and jewellery worth $21,047. She has a credit card liability of $13,000.
To effect such an apportionment to the wife would require property to be transferred to her of $376,881.20.
The net equity in the former matrimonial home is $361,860. I think it is important that the wife retain that property. It has been especially adapted to [X]’s needs. It allows the wife and [X] to have a number of pets. The wife and [X] are settled in the property. They have the support of the local community. Enquiries with the Housing Commission reveal a four year wait for suitable alternative accommodation.
An order that sees the wife receive the former matrimonial home, would also see her saddled with a liability that costs in the order of $800 per month to service. The wife will receive $319 per week from the husband for adult child maintenance. That will assist in meeting the mortgage repayments.
I do not think it is just and equitable to require the husband to pay a cash amount of more than $28,021.20 ($13,000 for the credit card debt and the difference between $376,881.20 and $361,860). The husband will be left with his superannuation, but also with significant credit card debts. A large part of the husband’s superannuation has been accumulated since separation, as have a large portion of the debts.
I think it is fair if the husband retains both the asset and the liabilities.
I am cognisant that the orders I propose will leave the wife without any superannuation. She will also have an asset that does not produce any income. The payment of $28,021.20 will provide a buffer for the wife against cashflow problems. She has been able, with difficulty to service the mortgage for the past four years, and I am satisfied that she will be able to do so in the future.
I think the most important consideration is ensuring that the wife and [X] have the security of their own home. I am confident that they can survive otherwise as they have done to date.
I was minded to order that part of the $28,021.20 be funded from the husband’s tax refund which I ordered to be preserved at the trial of this action. It seems that despite such order, the husband has dissipated these monies. There seems little point in taking the wife’s enforcement proceedings any further. The husband will pay the $28,021.20. If he does not then the wife can execute on the judgment, as she may be advised.
Having regard to the orders I propose, and having regard to the child maintenance to be paid by the husband I am not minded to order the ongoing payment of spouse maintenance. I note that no final order was sought to that effect.
Are the orders I propose just and equitable. The wife will receive the security of the former matrimonial home, albeit with some debt. She will receive a modest cash payment that she can use as she sees fit. She will, apart from the mortgage, be debt free. The husband will retain his superannuation and his credit card debts. Most importantly the husband will retain his considerable earning capacity for the foreseeable future.
The orders will be as set out at the commencement of these reasons.
I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Wilson FM
Date:
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