Rush& Midgley
[2016] FCCA 1725
•14 July 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RUSH& MIDGLEY | [2016] FCCA 1725 |
| Catchwords: FAMILY LAW – Property settlement – apportionment of debt – one party to be solely responsible for debt entered into immediately prior to separation in parties’ joint names. |
| Legislation: Family Law Act 1975, ss.75(2), 79(4) |
| Applicant: | MR RUSH |
| Respondent: | MS MIDGLEY |
| File Number: | ADC 2839 of 2013 |
| Judgment of: | Judge Mead |
| Hearing date: | 11 & 12 March 2015 |
| Date of Last Submission: | 12 March 2015 |
| Delivered at: | Adelaide |
| Delivered on: | 14 July 2016 |
REPRESENTATION
| Counsel for the Applicant: | Self-Represented |
| Counsel for the Respondent: | Self-Represented |
ORDERS
In full and final settlement of any claim that either party may have or hereafter have against the other for settlement of property:
(a)On or before 16 September 2016 the respondent do pay to the
1. applicant the sum of $41,694.00;
(b)Contemporaneously with the payment referred to in paragraph 1(a) hereof:
(i)The applicant transfer all his estate and interest both at law and in equity in the former matrimonial home situate at and known as Property A to the respondent for her sole use and benefit absolutely free of any further claim by the applicant; and
(ii)The respondent do all things necessary to pay out and effect a discharge of the mortgage over the said property in the parties’ joint names to (omitted) Bank, the debt owing to (omitted mortgage insurer) in the joint names of the parties, the debt owing to (omitted finance service) in the joint names of the parties and outstanding council rates with respect to the said property in the joint names of the parties to the exoneration of the applicant and thereafter indemnify the applicant in respect of all such liabilities at the cost in all things of the respondent.
(c)The applicant otherwise retain all items of personalty including but not limited to shares, savings, investments, superannuation entitlements, motor vehicles, chattels and effects in his possession and or control for his sole use and benefit absolutely free of any claim by the respondent.
(d)The respondent otherwise retain all items of personalty including but not limited to shares, savings, investments, superannuation entitlements, motor vehicles, chattels and effects in her possession and or control for her sole use and benefit absolutely free of any claim by the applicant.
(e)The parties pay and discharge all debts in their respective names to the exoneration of the other of them and forever keep the other of them indemnified in respect of such debts.
(f)In default of payment to the applicant by the respondent of the sum referred to in paragraph 1(a) hereof in accordance with the terms of that order the respondent pay interest on all or any of the said sum that shall remain unpaid from time to time until payment is made in full at the rate of ten percent per annum.
(g)In the event that the respondent fails to comply with the terms of paragraph 1(a) for a period in excess of one (1) calendar month from the date on which the payment is due then the said property at Property A shall be sold on such terms and conditions as the parties may agree and the proceeds of sale shall be apportioned as follows:
(i)As to all costs and fees associated with the said sale;
(ii)As to the amounts required to discharge the parties’ joint liabilities to (omitted) Bank, (omitted mortgage insurer), (omitted finance service) and outstanding council rates with respect to the said property;
(iii)As to the sum of $41,694 together with interest at the rate of ten percent per annum from the date of default until the date of settlement to the applicant;
(iv)As to the balance to the respondent.
In the event that either party shall refuse or neglect to sign any document as shall be necessary to give full force and effect to this order then and in such case upon proof of such failure or refusal by affidavit a Registrar of Deputy Registrar of this court is appointed pursuant to section 106A of the Family Law Act 1975 (as amended) to sign all such documents and do all such things as shall be necessary to give full force and effect to this order.
That all extant applications be otherwise dismissed.
Liberty to either party to apply as to consequential orders.
IT IS NOTED that publication of this judgment under the pseudonym Rush & Midgley is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 2839 of 2013
| MR RUSH |
Applicant
And
| MS MIDGLEY |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to these proceedings are Mr Rush and Ms Midgley. At the time of trial they were both self-represented litigants. They were unable to agree on a division of their property. Prior to trial both parties had been legally represented from the commencement of the proceedings in August of 2013. They had undertaken extensive negotiations in an attempt to resolve their differences but without success.
Both parties trial affidavits were prepared with the assistance of legal advice but by the time the applicant filed his affidavit in response he was representing himself.
Background
The parties met in or about early 2000 and commenced cohabitation in April 2000. The parties did not marry. The parties finally separated in January 2011.
There are three children of the relationship, [X] aged nearly 14 years at the time of trial, [Z] aged nearly 12 years at the time of trial and [Y] aged 10 ¾ at that time. It was common ground that at the time of trial the children were living with their parents on the basis of five nights per fortnight with their father and nine nights per fortnight with their mother.
As at the time of trial the applicant’s evidence was that he had been working on and off for about three and a half months at (omitted) in Victoria (occupation omitted). His evidence was that he was earning $600 to $800 per fortnight “in hand” and was still in receipt of minimal Centrelink benefits. He expected that particular seasonal work would continue for about one and a half months and then he was hoping to obtain other seasonal work, if necessary interstate.
At the time of trial the respondent was working casually as a (occupation omitted) at (employer omitted) in Adelaide. She deposed to income as at 25 August 2014 of $741 per week consisting of wages in the sum of $401 and family tax payments in the sum of $340.
As the result of the inability of the parties to resolve their differences it is necessary for the court to make orders for settlement of property as the parties both own assets and have liabilities in their joint names. To make such orders the court will need to make findings as to the value of the asset pool to be divided between the parties, findings as to the contributions of each of the parties to the asset pool both during the period of cohabitation and post-separation and findings as to any adjustments that may be made to either party on account of the factors set out in section 75(2) of the Family Law Act 1975 (as amended). The orders must effect justice and equity as between the parties.
Asset Pool
The parties were agreed as to the value of the majority of the assets that form the non-superannuation asset pool for the purposes of these proceedings.
The former matrimonial home at Property A was valued at $430,000 (as is) by Mr C of (omitted property valuers) by way of his valuation dated 29 April 2014. The valuation was annexure “GAR-5” to the applicant’s affidavit filed 6 August 2014. Mr C opined that the property may be worth $440,000 if certain works were completed. There was no evidence at trial that the works had been completed as so I ascribe a value of $430,000 to that property.
The parties were agreed as to the value of the respondent’s 54 (omitted) shares and the applicant’s 204 (omitted) shares. They were agreed as to the value of the respondent’s (omitted) motor vehicle and the applicant’s (omitted) motor vehicle.
The applicant deposed to the (omitted vehicle) having been sold for $7,500, with the respondent in her trial affidavit conceding that amount although expressing a belief as to a greater sale price.
The parties were in dispute initially as to the value of a (omitted) trailer to the extent that the applicant ascribed a value of $4,500 to the trailer, with the respondent ascribing a value of 20,000 in her trial affidavit. In discussions between the parties and the bench at the commencement of the proceedings the respondent conceded the value of $5,000 and accordingly I find it is appropriate to ascribe a value of$5,000 to that item.
There was dispute between the parties as to the status to be afforded to the (omitted) motor vehicle in the respondent’s possession.
At separation in January 2011 the respondent retained the (omitted) motor vehicle. On 4 September 2013 the vehicle was repossessed because she was unable to make the payments. At that time the respondent was not in receipt of any child support. Shortly thereafter she received just in excess of $10,500 being her half share of the net sale proceeds of the Property B property, together with Child Support arrears from the husband’s share of the Property B sale and his taxation return refund.
With respect to the value of the respondent’s (omitted) motor vehicle, the parties were agreed on a value of $13,000 but it was the case of the respondent that $1,400 should be deducted from that amount, such that a value of $11,600 should be ascribed to the vehicle in circumstances where it had been damaged. No evidence was adduced by the respondent such as to satisfy me that the applicant should be found to be responsible for the damage justifying a reduction in the value.
Notwithstanding these issues, the respondent was required to pay the sum of $4,847.33 to recover the vehicle (Annexure “J” to respondent’s affidavit filed 25 August 2014) and she then borrowed the sum of $10,170 from her father to pay out the loan on the motor vehicle. I find that the (omitted motor vehicle) should not be included in a calculation of the parties’ assets notwithstanding it was retained by the respondent as there was no equity in the vehicle at separation.
It was common ground that each party had received the sum of $10,572 in late September 2013 being an equal share of the net proceeds of a property owned by the parties at Propety B in the South East.
The only other two issues in respect of which there was any contention related to a payment received by the respondent following upon the cessation of her employment at (employer omitted), and a payment made by the respondent in respect of an Optus telephone account in respect of which she sought reimbursement.
It was the respondent’s case that the payments the applicant alleged he made into the joint (omitted) Bank account to assist with the children’s expenses between January and July of 2011 were irregular limited payments, usually in the sum of about $20. In July 2011 the respondent received the sum of slightly over $4,000 from (employer omitted). That was not in dispute, with the respondent acknowledging in paragraph 186 of her trial affidavit that it was her payout from her 14 years employment at (employer omitted) and that it was utilised by her on living expenses for her and the children.
In circumstances where the respondent was required to wait for over two years until she received her child support entitlements and during which time she was responsible for the care of the children, the amount received by the respondent from (employer omitted) should not be included as an asset.
It is not in dispute that between approximately January 2011 and November 2011 the respondent incurred mobile telephone costs in the sum of $1,105.28 with Optus that were ultimately paid by the applicant. It was the respondent’s case that in circumstances where the applicant did not provide her with any accounts in relation to the telephone charges, she was not prepared to pay any of the costs. I do not intend to make any adjustments in respect of this payment for the same reasons as contained in the previous paragraph relating to the financial circumstances of the respondent and the children immediately post separation.
Taking all those matters into account I find that the non-superannuation asset pool for the purposes of these proceedings is as follows:
Asset Value Former matrimonial home: Property A $430,000
(valuation)
54 (omitted) shares (respondent)
$591(agreed
value)
204 (omitted) shares (applicant)
$1,200 (agreed
value)
(omitted) motor vehicle (respondent)
$500 (agreed
value)
(omitted) motor vehicle (applicant)
$3,000 (agreed
value)
Proceeds of sale of (omitted vehicle) (applicant)
$7,500
(respondent conceded applicant’s
value)
(omitted) trailer (applicant) $5,000
(respondent conceded applicant’s
value)
Proceeds of sale of Propety B property (applicant) $10,572 Proceeds of sale of Propety B property (respondent)
$10,572
TOTAL $468,935
The superannuation interests of the parties for the purposes of these proceedings were as follows:
Applicant Value (omitted) Superannuation $14,150 (omitted) Superannuation $3,992 TOTAL $18,142 Respondent Value (employer omitted) Superannuation $56,321.73 (omitted) Superannuation $8,023.03 TOTAL $64,344.76
Liabilities
The parties were agreed as to the amount owing in respect of the mortgage over the Property A property at trial, the balance owing in respect of the respondent’s (omitted) Bank credit card debt and the applicant’s (bank omitted) credit card debt and the amount owing with respect to council rates in relation to the Property A property.
At the time of trial the parties also jointly owed money firstly to (omitted mortgage insurer) finance arising from a shortfall in respect of the sale of a property the parties owned at Property C and secondly to (omitted finance service) with respect to a (omitted vehicle) loan. It was the husband’s case that both debts, which were in the parties’ joint names, should be taken into account as liabilities for which the parties were equally responsible. It was the wife’s case that the husband should be solely responsible for the (omitted finance service) loan and the (omitted mortgage insurer) loan. Both debts were clearly liabilities of the parties as at the date of trial.
I will consider the question of attribution of liability for both of those loans when considering the question of the parties’ contributions both during the course of the relationship and post separation.
The respondent submitted in her opening remarks that the applicant was also indebted to her father in the sum of $7,500 being funds advanced to assist the husband to purchase a (omitted vehicle) (the subject of the (omitted finance service) debt) in December 2010 and to pay the insurance on the (omitted vehicle) in January 2011.
It was the applicant’s case that the funds were a gift to him from the respondent’s father without the knowledge of the respondent. The respondent conceded that she had no knowledge of the monies being advanced to the applicant husband by her father, and in the absence of any evidence as to a claim by the respondent’s father for repayment of such monies at any time I am not satisfied that they should be included as a debt of either the applicant or the parties jointly.
Taking those matters into account I find the labilities of the parties for the purpose of these proceedings to be as follows:
| Liability | Amount Owed |
| Mortgage over Property A property | $175,755.25 |
| (omitted finance service) debt | $71,171.20 |
| (omitted mortgage insurer) Debt | $26,380.25 |
| Respondent’s (omitted) Bank credit card debt | $5,000.00 |
| Applicant’s (omitted) credit card debt | $13,000.00 |
| Outstanding council rates over Property A property | $2,600.00 |
| TOTAL | $293,906.70 |
Taking all those matters into account I find that the total non- superannuation asset pool is $468,935. The parties’ liabilities total$293,906.70.
The parties’ superannuation assets total $64,344.76. In circumstances where the values of the superannuation entitlements were calculated at a time approximately four years post separation, during which time the applicant had been substantially without employment and had contributed little to his superannuation fund whereas the respondent had continued her regular part time employment and therefore contributed to her fund, I find that it is appropriate to treat the superannuation pool as a separated pool for the purposes of assessing the contribution. I will address that matter further in my findings as the contributions.
Contributions
There was no real dispute between the parties that during the period of cohabitation from 2000 until January of 2011 the parties each made significant financial and non-financial contributions to the acquisition of their assets.
In either late 2000 (respondents case) or February 2001 (applicants case) the parties purchased the former matrimonial home at Property A for somewhere between $185,000 (applicant) and $190,000 (respondent).
It was the respondent’s case that she contributed approximately $18,000 to the purchase of the property, with the balance borrowed by way of a loan from (omitted). The applicant did not dispute that the respondent had utilised her savings towards the deposit, but said that the shortfall between the purchase price and the mortgage amount was $16,500 to which he contributed 70% and the respondent 30%.
Neither party tendered any documentation to support their claim, but it was common ground that the respondent had received the sum of $16,000 from her father (in or about September of 2000) by way of him purchasing her interest in a property they jointly owned following upon the death of her mother.
In circumstances where the relationship continued for some ten years at least after the purchase of the property, I am not satisfied that anything turns on the original capital contribution of either of the parties, which on the account of both of them was modest.
The husband worked throughout the period of the parties cohabitation and generally contributed his income to household expenses as well as mortgage payments, firstly in respect of the Property A property, then also with respect to the Propety B property and ultimately also with respect to the Property C property.
At the time the parties commenced cohabitation and during the period of the relationship the husband worked as an (occupation omitted) until approximately January 2010, when he commenced trading with his own (omitted) business, initially working a sub-contractor for (company omitted).
The respondent was working in (occupation omitted) for (employer omitted) and she continued to do so over the period of the relationship, taking time off to have each of the parties three children. She also undertook some work on a very limited basis doing (occupation omitted). She continued working at (employer omitted) until approximately July of 2011, some six months after separation. She then moved to work for (employer omitted) on a casual basis, in circumstances where on her evidence, which was unchallenged, it gave her more flexibility with her employment hours. The respondent worked on a permanent part-time basis throughout the period of the relationship while not on maternity leave.
There is no dispute that the applicant was on call for 24 hours per day seven days a week at least up until when he commenced his own business. Although there was some difference between the parties as to what role the applicant played with respect to parenting and home making, there was no real dispute that the respondent made the major contribution in that regard. The respondent’s income was also utilised towards the family expenses.
In or about July of 2005 the parties purchased property at Propety B. The respondent’s evidence was that the purchase price was $23,000 (paragraph 31 of her trial affidavit). The applicant’s evidence was that the property cost $42,500 (paragraph 13 of his affidavit in reply). The purchase price was secured over the Property A property.
Apparently due to difficulties arising from the distance between Propety B and Adelaide the idea of building a holiday house on the land was shelved, and in 2008 (applicant) or 2009 (respondent) the parties purchased a property at Property C. It was the applicant’s case that the cost of the property was $65,050. The respondent deposed to a cost of $23,000 (the same price she attributed to the Propety B property). No evidence was tendered by either party to support their contentions.
It was common ground that the parties built a two storey (omitted) house on the property, which, according to the respondent, cost about $221,000. It was the applicant’s case (paragraph 15 of his affidavit in reply) that the land cost $65,050, the house cost approximately $150,000 and that the parties funded these purchases initially by way of extending the security on the Property A property to purchase the land, but ultimately by borrowing $234,000 from (omitted) Bank to pay out the original loan for the land and consolidate the cost of the land and the house in one loan.
On the applicant’s case the house and land cost $215,050 with the respondent’s case being that the total cost was $244,000. The evidence was unclear as to how the total loan amount came to $234,000.
In either January 2010 (applicant) or sometime in 2009 (respondent) the applicant ceased working as an (occupation omitted) and commenced his own (omitted) business trading as (omitted) and (omitted).
He deposed in paragraph 30 of his trial affidavit to commencing to work as a sub-contractor for (company omitted) on the basis of that company supplying (omitted) and referring work to him. His business and (company omitted) were then to share equally in the profits generated from that work. He deposed to a further term of the agreement being that at the end of 12 months he would be able to purchase (omitted) from (company omitted) and thereafter retain any monies that he earned for his own benefit.
The contract into which the applicant had entered with (company omitted) apparently did not work well for the applicant, such that in or about October of 2010 the applicant decided not to continue working under the contractual arrangement. (company omitted) alleged that he had incurred a debt to them in the sum of $40,385.
The respondent’s evidence was that when the applicant commenced the contractual arrangement with (company omitted) it was on the basis that the applicant asserted to her that he would make more money and that he was prepared to work hard to support the family.
It was her evidence that he wanted to base the business at the Property C property because he was working in that area and it would be easier for him to operate a tow (omitted vehicle) from the Property C property. She said that she could see that there was money from (employer omitted), (omitted) and other large companies going into the parties joint bank account and the applicant seemed to be working every day leaving home early and arriving home late at night. She assumed the business was going reasonably well and had no reason to believe that it was in trouble.
It was the respondent’s evidence that by 2010 the relationship was having difficulties and that during that year the applicant was spending significant amounts of his time at Property C, with she and the children being at the Property A property most of the time.
In paragraph 42 of her trial affidavit the respondent deposed to knowing little about that business arrangement and to not knowing about any financial difficulties that arose from that arrangement until she was told by the applicant that he was going to be sued for the sum of approximately $20,000. There was no evidence from either party that the mortgage commitments either with respect to the Property C property or the Property A property were not being met during 2010.
The respondent deposed to never seeing any documents evidencing the dispute between the applicant and (company omitted), although that was disputed by the applicant. In any event in was common ground that the dispute between the applicant and (company omitted) was ultimately resolved by way of (company omitted) buying the Propety B property and paying to the parties some $21,145.18.
The parties were not able to agree as to how to divide those funds until approximately late September of 2013, when a consent order was made in these proceedings to the effect that they were each entitled to half of the funds. Almost immediately thereafter the Child Support Agency sought the funds the husband received, being slightly in excess of $10,500, to offset child support arrears which by that time had accrued in the sum of $11,303.68. The Child Support Agency ultimately took from the husband’s share of those funds the sum of $5,572.59, with the balance of the arrears being paid to the respondent in full from a taxation refund that the applicant received in January 2014. The Propety B property had been sold in October 2011, some two years prior to the distribution of the net sale proceeds.
In or about December 2010, some two months after the applicant ceased the contractual working arrangements with (company omitted), he and the respondent agreed that he would continue working on his own account. For that purpose he would need a (omitted vehicle). The respondent agreed that in December of 2010 she complied with the husbands request for her to jointly sign with him a loan application for finance from (omitted finance service). This loan was in the principle sum of $50,000, with the loan being taken over four years and with total interest payments of $17,384.96. The total amount repayable inclusive of the interest and establishment fees was $67,752.96 to be paid on a monthly basis over 48 months at the rate of $1,411.52.
The purchase price of the (omitted vehicle) was $55,000. It was common ground that the respondent’s father, without the knowledge of the respondent, offered to assist the applicant in the purchase of the (omitted vehicle) by providing $4,000 necessary to make up the sale price. Those funds were paid to the owner by the respondent’s father on 23 December 2010. On 31 January 2011 he paid a further $3,508.04 to (omitted) Insurance Brokers for the insurance on the tow (omitted vehicle). The respondent was not aware of either of these payments at the time they were made.
The parties separated in January 2011, less than one month after the purchase of the (omitted vehicle) and the taking on of a joint loan in the sum o $55,000 plus interest. Within a fairly short time after separation the parties had essentially agreed that the applicant would remain living in the Property C property and the respondent and the children in the Property A property, with each party being responsible for the mortgage repayments and outgoings on each of the respective properties until they could resolve their differences. The applicant retained possession of the (omitted vehicle) and had complete control over the finances generated from his business.
The (omitted vehicle) was purchased from a vendor in Victoria who had advertised it for sale via the internet. The applicant said in paragraph 33 if his trial affidavit “…unfortunately the (omitted vehicle) was not in as good condition as I first thought and did not hold its value.” The applicant’s business was not successful. He deposed to being in arrears to the extent of approximately $3,500 on the (omitted finance service) loan by approximately October 2011. He deposed to only earning enough money to support himself and not being able to afford the maintenance on the (omitted vehicle), such that by mid-2013 the (omitted vehicle) had been defected and he was unable to generate the funds necessary to repair the (omitted vehicle). The applicant ceased operating the business on 30 June 2013.
By August of 2013 the (omitted finance service) loan stood at $60,753 and as at the date of trial the parties agreed the balance of the loan was $71,171. In cross-examination in answer to a question from the court the husband’s evidence was that (omitted finance service) commenced charging interest again in December 2013 after a moratorium, with interest accumulating at the rate of $21.96 per day.
When the (omitted vehicle) was purchased it came with a trailer which had an agreed value at trial of $5,000. This was still in the possession of the husband and in storage at (omitted) according to the applicant’s evidence in cross-examination, with the full knowledge of (omitted debt collectors).
By June 2013, as well as being in arrears with the (omitted finance service) debt, the applicant had not been making payments with respect to the mortgage on the Property C property. After negotiations with the (omitted) Bank with respect to that issue he drew down on his superannuation fund in the sum of $12,100 to achieve a net sum of $9,200 which was paid into the (omitted) Bank mortgage account over the Property C property to avoid a mortgagee sale. He was also able to reduce monthly payments due to hardship, with a suspension of payments for some months and then (by January 2014) a reduction in the monthly repayments to $500 per month until the property was sold in May 2014.
Following an order by consent dated 26 February 2014, the property at Property C was sold in May 2014, two weeks after an unsuccessful auction, for the sum of $200,000. The outstanding mortgage at the time of sale was $214,818.85 resulting in a shortfall, as at 22 August 2014 (paragraph 104 of the respondent’s trial affidavit), of $28,360.62. At the date of separation the mortgage over the Property C property was $216,804. By the time of settlement of the sale of the property, the mortgage had been reduced to $214,819 by the applicant and there was ultimately a shortfall of approximately $28,360. At the time of trial the liability to the (omitted) Bank, which had been taken over by (omitted mortgage insurer), was agreed at $26,380.25. The respondent claimed that the applicant had failed to service the Property C property loan such that the mortgage at separation was $189,000 and at settlement $214,819 (paragraph 127 of the respondent’s trial affidavit).
Annexure “I” to that same affidavit is a copy of the (omitted) Bank mortgage account transactions relating to the Property C property from 25 February 2011 to 8 July 2011. Such transaction statement evidences that approximately one month post separation the mortgage balance was $216,804.50. It was common ground that the amount required to discharge the mortgage at settlement was $214,819.
I am satisfied and find that at the time the parties separated in January 2011 they had contributed equally to the acquisition, preservation and conservation of their various assets acquired in their approximately 11 years of cohabitation. There was no suggestion by either party that the other of them had not worked hard or had done other than contribute their income to household expenses with the respondent playing the greater role in homemaking and parenting in circumstances where the applicant worked long hours.
As I said earlier herein when making findings as to the asset pool, the difficulty arose in relation to how the court should treat the (omitted finance service) and (omitted mortgage insurer) debts.
I do not accept the respondent’s assertion that the liability of the parties in respect of the Property C property increased post separation. The amount required to discharge the mortgage at settlement was approximately $2,000 less than the balance owing at the date of separation in January 2011. In addition to the respondent’s assertion that post separation the husband had caused the mortgage over the Property C property to increase, which assertion I find to be unfounded, the respondent asserted there should be an adjustment in her favour in the sum of $9,000 being funds removed by the applicant from his superannuation fund post separation. I accept the evidence of the applicant however that those monies were used to pay arrears on the mortgage, which ultimately assisted both parties and that no such adjustment is justified.
I note that each of the parties had complaints against the other of them with respect to the sale price achieved for the Property C property. I am not satisfied on the evidence of either party that in circumstances where they were separated and where the relationship between them was acrimonious that any blame or corresponding financial responsibility should be attributed to either of them with respect to the state of the property when presented for sale, any delays in the sale process itself or the expectations of the parties with respect to a reasonable sale price.
Taking these matters into account I find that the parties should be equally liable for the (omitted mortgage insurer) debt being the shortfall on the sale of the Property C property.
I do not however take the same view with respect to the (omitted finance service) debt. The parties entered into the agreement with (omitted finance service) to borrow funds for the purpose of purchasing a (omitted vehicle) for the applicant to use in generating income for the family. This occurred approximately four weeks prior to separation.
On the evidence of both parties there were significant problems in the relationship well prior to December of 2010. I find that the idea for the purchase of the (omitted vehicle) to continue running the towing business was primarily the applicant’s. I find that he would have been well aware at the time of entering into the contract with (omitted finance service) with the respondent that their relationship was “on rocky ground”.
I accept that the respondent signed the documents and agreed to enter into the financial arrangements with (omitted finance service), but there is no doubt that post January 2011 she had no control over or knowledge whatsoever of the financial situation of the applicant. By that time their respective financial arrangements were quite separate from the other of them.
The respondent said in paragraph 37 of her trial affidavit that the parties had separate bank accounts except for one joint account. Further in paragraph 65 of the same affidavit she referred to the applicant having correspondence regarding his financial matters forwarded to a post office box. That was confirmed by the applicant in paragraph 41 of his affidavit in reply, when he referred to having done so for security reasons and, after separation, because the respondent was keeping mail that was not addressed to her and he wanted to protect his privacy and security.
On the applicant’s own evidence he was already in arrears with respect to the (omitted finance service) loan in the sum of $3,500 by approximately October 2011 (paragraph 54 of his trial affidavit). He deposed to the respondent’s solicitor being made aware by correspondence in December 2011 and January 2012 that his business was in trouble and he could not meet the (omitted finance service) repayments (paragraph 56 of his trial affidavit). He said that the respondent was aware at that time that the debt was accumulating significant interest daily.
The respondent had no information about what income was being generated by the applicant, what his capacity to repay the loan was, or any ability to have input into any efforts the husband could have made significantly earlier than mid-2013 when the (omitted vehicle) was defected to sell the (omitted vehicle), discharge as much of the (omitted finance service) loan as possible and perhaps minimise the parties debt.
The (omitted vehicle) was not sold until January 2014 and then for only $7,500. The vehicle cost $55,000 in December 2010. Although the applicant deposed to the (omitted vehicle) not being in as good a condition as he believed it to be when he purchased it, there was no evidence that he took any action against the vendor in that regard or determined or tried to sell the vehicle earlier than three years after purchase, perhaps for a higher figure.
The actions taken by the applicant were all without consultation with the respondent. He made no effort to work with her or take any action to minimise potential loss to both parties.
I find that the applicant should be solely responsible for the debt to (omitted finance service) arising from the purchase of the (omitted vehicle) and trailer.
In relation to the question of the parties’ superannuation entitlements, I find that they should be divided between the parties as to 70% thereof to the wife and 30% thereof to the husband. The superannuation entitlements of both parties are very modest. The value of the superannuation as I have said earlier was calculated at a time some four years post separation during which time the respondent had contributed regularly and the applicant had contributed little if anything to his superannuation in circumstances where he had been self-employed at separation and in difficult financial circumstances such that he was not contributing to superannuation.
Taking all these matters into account I find that the parties contributions with respect to non-superannuation assets and liabilities both during the marriage and post separation should be assessed as equal save that the debt to (omitted finance service) in the joint names of the parties I find, for the reasons given, is not a debt in respect of which it could be said that respondent had or could have had any responsibility. Accordingly I find it is a liability that should be met solely by the applicant.
Section 75(2) Factors
At the time of trial the applicant was aged nearly 48 years and the respondent aged nearly 43 years. There was no evidence that either party suffered ill health or was otherwise not able to engage in appropriate gainful employment. Both parties were so employed at the time of trial although the applicant’s employment was not secure.
I have made findings as to the property of the parties and am satisfied that neither party has any other significant financial resources. Both parties earn modest incomes, which I am satisfied is reflective of the position throughout the period of their relationship.
The parties’ three children live with the applicant five nights per fortnight and with the respondent nine nights per fortnight. Both parties are responsible for the care of the children during those times. Both parties have a responsibility to support themselves and the children whilst they are in the parties’ care and there was no evidence to suggest that the parties are not able to meet those commitments.
The wife deposed to income at the time of trial of $28,000 in paragraph 142 of her trial affidavit but in her statement of financial circumstances to a weekly income of just $401 per week from employment equating to an annual income of just under $21,000. In addition she deposed to receiving Family Payment in the sum of $340 per week. It was the husband’s evidence at trial that he was in receipt of a NewStart allowance and had been since 30 June 2013. He also gave evidence in answer to questions of the court that he was earning $600-$800 per fortnight in hand at the time of trial and to his Centrelink payments having been accordingly reduced. It was clear that both parties were in receipt of Centrelink benefits at a fairly minimal level at the time of trial and that such a situation was likely to continue.
In terms of the parties having a standard of living that in all of the circumstances is reasonable, at the time of trial the respondent remained living in the former matrimonial home at Property A with the children. The Property C property had been sold, and it was the applicant’s evidence that whilst in Adelaide he lived with his mother, at his partner’s house, or at a caravan park but whilst working as he was at the time of trial interstate (omitted vehicle) driving he shared accommodation with other people. The respondent disputed that evidence and alleged that whilst in South Australia the applicant resided with his partner.
In cross-examination the applicant said that he spent about two nights a week at his partner’s house when he was in Adelaide and of the remaining time about three nights per week at his mother’s home. The applicant’s evidence as contained in his trial affidavit was that his partner has four children of her own and it was for that reason he did not live full time with her in her accommodation. It was his evidence that he is not a de facto relationship with Ms M and that she rents her (omitted) accommodation. I accept his evidence in that regard.
I have found that the applicant should be solely responsible for the debt to (omitted finance service), which is substantial and at the time of trial was in the sum of approximately $71,000. The Court must ensure that it takes into account the effect of any proposed order on the ability of (omitted finance service) to recover the debt from the applicant.
I am satisfied that neither party at the time of trial was co-habiting with another person.
With respect to child support, it was the respondent’s evidence contained in paragraph 141 of her trial affidavit that she was paying child support to the applicant in the sum of $12 per week. The children spend significant and substantial time with each of their parents. I have already referred earlier herein to the lack of child support paid to the respondent by the applicant between the date of separation and January 2014, at which time the respondent had received two lump sum payments from the Child Support Agency and the Australian Taxation Office respectively that effectively discharged child support arrears as at that time.
On the evidence before me at trial neither party will ever be in a position to pay any significant child support to the other parent and to a significant extent the parenting costs of the children are shared as a result the sharing of the physical care of the children.
Taking all of those matters into account I am not satisfied that there should be any adjustment to either party on account of section 75(2) factors.
Conclusion
The value of the parties’ non superannuation assets available for distribution between them for the purposes of these proceedings is $468,935. The liabilities that I have found to be the joint liabilities of the parties total $222,735. I have found that the (omitted finance service) liability in the parties’ joint names should be the sole responsibility of the applicant and for the purposes of these proceedings I fix that at $71,171. The parties’ net assets available for distribution between them excluding the (omitted finance service) liability total $246,199.50 (rounded to $246,200). This would result in each party retaining net assets to the value of $123,100.
It was the evidence of the respondent that she wished to retain the former matrimonial home and that she was able to borrow a maximum of $315,000 to refinance the property, which must be inclusive of a payout in full of the (omitted mortgage insurer) and (omitted finance service) debts.
At separation the wife has retained possession of the former matrimonial home at $430,000, together with her shares at $591, her motor vehicle at $500 and her share of the Propety B property sale proceeds in the sum of $10,572. The wife has therefore retained in her possession or control assets to the value of $441,663.
The wife also has the associated liabilities of the mortgage in the sum of $175,755, the (omitted mortgage insurer) debt in the sum of $26,380, a credit card liability agreed at $5,000, and outstanding council rates agreed at $2,600. If those liabilities are deducted from the value of the assets she retains she would retain assets with a net value of $231,928.
The applicant has retained his shares, his motor vehicle, the proceeds of sale of the (omitted vehicle) and the (omitted) trailer. In addition he also received $10,572 from the sale of the Propety B property but had an agreed credit card liability of $13,000. That results the applicant having retained net assets in his possession or control in the sum of $14,272.
To effect an equal division of the parties’ net assets the respondent would be required to pay the further sum of $108,828 to the applicant. From those funds it would be necessary for the applicant to discharge in full the (omitted finance service) debt in the sum of $71,171
I accept the evidence of the respondent that in order to be approved for refinancing the (omitted finance service) debt would have to be discharged. That debt would be discharged at settlement, being a debt in the parties’ joint names. In those circumstances, the payment of $108,828 to the applicant would necessarily be reduced by the sum of $71,171.
The respondent would therefore be required at settlement to discharge the mortgage in the sum of $175,755, discharge the (omitted mortgage insurer) debt in the sum of $26,380, discharge the (omitted finance service) debt in the sum of $71,171 and pay to the applicant the sum of $37,657 being the balance of the payment due to him of $108,828 less the (omitted finance service) debt. That would require the respondent to refinance in the sum of $310,963.
The respondent would be required to pay to the applicant the further sum of $6,604 to effect a division of the total of the parties’ superannuation assets as to 70% to the respondent and 30% to the applicant. Such a payment however would take the amount required by the respondent at settlement to $317,567. I am satisfied that the amount of $6,604 should be reduced to $4,037 so as to ensure the best opportunity for the respondent and the children to remain in the former matrimonial home.
I consider such an adjustment is just and equitable in circumstances where the children spend the majority of their time in the household of the respondent, she earns modest income, and I am satisfied bears the major share of the financial responsibility for the children. A division of the parties’ assets as I have determined will result in the following outcome:
Assets retained by the respondent Value Former matrimonial home $430,000 Shares $591 Motor vehicle $500 Propety B property sale proceeds $10,572 Total $441,663 Liabilities assumed by the respondent
Mortgage $175,755 (omitted mortgage insurer) debt $26,380 Credit card debt $5,000 Outstanding council rates $2,600 Total $209,735 Net assets retained by respondent $231,928
Assets retained by the applicant Value Shares $1,200 Motor vehicle $3,000 Proceeds of (omitted vehicle) $7,500 (omitted) trailer $5,000 Proceeds of sale of Propety B property $10,572 Total $27,272 Liabilities Credit Card $13,000 Net assets retained by applicant $14,272
The combined value of the net assets retained by each party it can be seen is in round figures $246,200. To effect an equal division the respondent would be required to pay to the applicant $108,828. If the respondent is to retain the former matrimonial home the (omitted finance service) debt must be paid at settlement. The applicant’s asset position will therefore be as follows:
Assets retained by the applicant Value Shares $1,200 Motor vehicle $3,000 Proceeds of (omitted vehicle) $7,500 (omitted vehicle) trailer $5,000 Proceeds of sale of Propety B property $10,572 Payment to (omitted finance service) on behalf of applicant $71,171 Payment to applicant from respondent on account of equal adjustment of non-superannuation assets
$37,657
Total $136,100 Liabilities Credit Card $13,000 Net assets retained or nominally retained by applicant
$123,100
Assets retained by the respondent Value Former matrimonial home $430,000 Shares $591 Motor vehicle $500 Propety B property sale proceeds $10,572 Total $441,663 Liabilities assumed by the respondent Mortgage $175,755 (omitted mortgage insurer) debt $26,380
(omitted finance service) debt on behalf of applicant $71,171 Credit card debt $5,000 Outstanding council rates $2,600 Payment to applicant $37,657 Total $318,563 Net assets retained by respondent 123,100
In addition to the payment of $37,657 to the applicant by the respondent on account of non-superannuation assets, the respondent is required to make an additional payment of $4,037 to the applicant by way of adjustment of the parties’ superannuation entitlements in accordance with the reasons contained in paragraph 98. The payment to the applicant will therefore total $41,694.00.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of Judge Mead.
Date: 14 July 2016
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Family Law
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