S and S
[2003] FMCAfam 359
•1 September 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| S & S | [2003] FMCAfam 359 |
| FAMILY LAW – PROPERTY – Declaration of rights – contributions – future needs – just and equitable. Family Law Act 1975 (Cth) ss. 74,75, 79 Lee Steere and Lee Steere (1985) FLC 91-626 |
| Applicant: | M W S |
| Respondent: | S M S |
| File No: | LNM 2438 of 2002 |
| Delivered on: | 1 September 2003 |
| Delivered at: | Devonport |
| Hearing date: | 24 July 2003 |
| Judgment of: | Roberts FM |
REPRESENTATION
| Counsel for the Applicant: | Mr B Trafford |
| Solicitors for the Applicant: | McGrath & Co. |
| Counsel for the Respondent: | Mr G Williams |
| Solicitors for the Respondent: | Walsh Day Williams |
ORDERS
That the parties’ property at 66A Moody Street, Burnie in Tasmania and described in Certificate of Title Volume 134493 Folio 2 be sold for the best price that may be reasonably obtained and the proceeds of such sale be distributed as follows:
(a)firstly, to meet the necessary costs and expenses associated with the sale, inclusive of real estate agents’ and legal fees;
(b)secondly, to pay any amount still reasonably owing to the Commonwealth Bank following the sale of the parties’ jointly owned property at 7 F R, Newnham in Tasmania;
(c)thirdly, to pay 75 percent of the resulting balance proceeds to the Husband; and
(d)finally, to pay the then remaining balance to the Wife
That the Husband and the Wife do all such acts and things as may be reasonably necessary to effect a sale of the property within a reasonable period.
That the parties have liberty to apply in relation to the implementation of these Orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
LNM 2438 of 2002
| M W S |
Applicant
And
| S M S |
Respondent
REASONS FOR JUDGMENT
Applications
These proceedings were commenced by an Application filed by M W S (“the Husband”) on 18th June 2002. In that document he sought an order that the Respondent S M S (“the Wife”) transfer to him all her right, title and interest in the residential property located at 66a M Street Burnie in Tasmania (“the property”). He also sought orders on an interim basis for exclusive possession of the property.
On 7th August 2002 the Husband filed an Amended Application and in that document he no longer sought a transfer of the Respondent’s interest in the property to him, but instead, sought a declaration pursuant to Section 78 of the Family Law Act 1975 that all and any right, title or interest of the respondent in “the property was only ever held in trust by the respondent for the benefit of the applicant”.
On 8th August 2002 the Wife filed a Response in which she sought a transfer of the Applicant’s interest in the property to her and the payment of spouse maintenance to her “at a rate determined by the Court”.
Background
The Husband was born in 1963 and the Wife was born in 1957. They were aged 39 years and 46 years respectively at the date of the hearing.
The parties commenced living together in Queensland in 1994 and they were married in April 1997 in Launceston, Tasmania.
The Wife had been previously married and at the time that cohabitation commenced she had three children who were born in 1981, 1983 and 1984.
During their relationship, the parties separated on many occasions, with their final separation being on 12th June 2002.
On 21st October 1994, which was only a few months after the parties started living together, the Husband was severely injured in a workplace accident. It is his unchallenged evidence that several tonnes of plant and equipment fell on him, shattering his leg, smashing his jaw and damaging the left side of his face. He also received damage to his spine and hips. As a result of these injuries he still cannot hear in his left ear and he suffers from regular pain. However, at the time of swearing his only affidavit filed in the proceedings (1st August 2002), he was not taking any medication or receiving any medical treatment. He has not worked since that accident and I accept that he is unable to work as a result of the injuries he received.
In 1995 the Husband, the Wife and her three children moved from Queensland to Tasmania and they bought a house in Launceston with the assistance of loans from a friend and the Trust Bank.
When the parties married in 1997 they had no significant property interests or money other than their equity in that Launceston house.
In early 2001 the Trust Bank’s successor, the Commonwealth Bank foreclosed on the mortgage because the parties could not keep up the mortgage payments. It appears to be accepted by both parties that after the sale they still owed the bank approximately $38,000.
The Husband had commenced worker’s compensation and common law damages claims against his employer in the Supreme Court of Queensland and those proceedings were settled when the Husband signed a discharge on 2nd July 2001 in which he agreed to accept the sum of $475,000.
On 23rd July 2001 the Husband and the Wife entered into a contract to purchase the property in Burnie for $120,000.
The Husband received $275,021.21 as part of his personal injuries settlement on 3rd September 2001 and that sum was paid into the parties joint account with the Island State Credit Union (“the joint account”). Although it is not entirely clear from the state of the evidence what happened to the remaining balance of his personal injuries settlement in the sum of nearly $200,000, the Husband’s evidence is that he had to repay Centrelink $60,000 and a total of $112,500 in outstanding loans.
On 6th September 2001 the Husband paid the sum of $120,000 to the solicitors acting for the parties in the purchase of the property. That was paid by cheque drawn on the joint account and approximately two weeks later the costs associated with the purchase in the sum of approximately $6,800 were also paid from the joint account.
Shortly after purchasing the property, the parties had an argument and the Husband says that he decided to leave. He then spent some months away from home. However, in November 2001 he sought legal advice and his solicitors wrote to the Wife asking her to move out of the house. She did that at the end of November 2001 and the Husband moved back in. The Wife rented another house in Burnie and lived there with her three children.
In January 2002 the Husband travelled to Queensland to visit family and on 13th January 2002 he received a telephone call from the Wife in Tasmania. She informed him that her eighteen year old son had been electrocuted and was in a coma in hospital. The Husband hastily returned to Tasmania and stayed at the Wife’s rented property for a few weeks. The Wife’s son died from his injuries on 27th January 2002.
Shortly thereafter the Wife and the children moved back into the property with the consent of the Husband.
On 12th June 2002 the parties separated for the last time when the Husband left the property. Two days later he consented to orders in the Burnie Magistrates Court restraining him from approaching the Wife or the property. His consent was given on the basis that he denied the allegations made in the Wife’s application for restraining orders.
The Husband then moved into a hostel and filed his Application a few days later.
On 7th October 2002 the parties consented to an interim order which gave the Husband exclusive occupation of the property from 9th October 2002. He continues to live there and the Wife and two children (who are now both adults) reside in rented accommodation in Launceston.
In late 2001 the Wife had become a bankrupt on the basis of her own debtor’s petition. However, she successfully applied to have that bankruptcy annulled in January 2003.
The Law
In this matter, the Husband is seeking a declaration under Section 78 of the Family Law Act 1975 (“the Act”) that
“all and any right, title or interest of the respondent in (the property) was only ever held in trust by the respondent for the benefit of the applicant”.
Section 78 states that:
“in proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property.”
However, I shall detail below my reasons why that section is not applicable in the manner put forward by the Husband’s legal representative.
Section 79 of the Act defines the Court’s powers in determining applications for the alteration of the property interests:
“with respect to the property of the parties to a marriage or either of them”.
Sub-section 2 of that Section provides that the Court shall not make an Order unless it is satisfied that, in all the circumstances, it is just and equitable to do so.
The Court’s approach to the determination of an application for the adjustment of property interests has been well established by authority. See Lee Steere and Lee Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335 and Clauson (1995) FLC 92-595. It is essentially a multi-step process: 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 Section 79(4)(a) to (c) and thirdly, evaluating the matters contained in Section 75(2) if they are relevant.
It is also clear from Russell v Russell (1999) FLC 92-877 that the Court must also look at the overall result to see whether it is “just and equitable” in accordance with section 79(2) of the Family Law Act 1975.
Relevance of Section 78
The Husband’s legal representative submitted that, because the Husband had “contributed all the funds” for the purchase of the property from his damages settlement, a resulting trust arose whereby the Wife holds her legal interest in that property in trust for him. He relied upon the High Court decisions in Calverley v. Green (1984) FLC 91-565 and Muschinski v. Dodds (1985) DFC ¶95-020.
In Calverley v. Green, Gibbs C.J. said at 79,561:
“As I have indicated, the general rule that in the situations mentioned it is presumed that a resulting trust arises in favour of the purchaser, or in favour of two purchasers in the proportions in which they contributed the purchase money, is subject to the exception created by the presumption of advancement. ''It is called a presumption of advancement but it is rather the absence of any reason for assuming that a trust arose or in other words that the equitable right is not at home with the legal title'' : Martin v. Martin (1959) 110 C.L.R. 297, at p. 303 ; in other words, it is ''no more than a circumstance of evidence which may rebut the presumption of resulting trust'' : Pettitt v. Pettitt (1970) A.C. 777, at p. 814 . The presumption arises when a husband makes a purchase in the name of his wife, or a father in the name of his child or other person to whom he stands in loco parentis.”
At page 79563 Gibbs C.J. also said:
“However, both the presumption of advancement, and the presumption of a resulting trust, may be rebutted by evidence of the actual intention of the purchaser at the time of the purchase: see Charles Marshall Pty. Ltd. v. Grimsley (1956) 95 C.L.R. 353, at pp. 364-365. Where one person alone has provided the purchase money it is his or her intention alone that has to be ascertained.”
In Muschinski v. Dodds, Gibbs C.J. said the following at page 75247:
“The equitable rules relating to the creation of a resulting trust in a case such as the present were recently considered by this Court in Calverley v. Green …….. For present purposes, it is sufficient to state them as follows. Where, on a purchase, a property is conveyed to two persons, whether as joint tenants or as tenants in common, and one of those persons has provided the whole of the purchase money, the property is presumed to be held in trust for that person, to whom I shall, for convenience, refer as ''the real purchaser''. However a resulting trust will not arise if the relationship between the real purchaser and the other transferee is such as to raise a presumption that the transfer was intended as an advancement, or in other words a presumption that the transferee who had not contributed any of the purchase money was intended to take a beneficial interest.”
It should be pointed out that neither of the two High Court cases referred to above related to situations where the Family Law Act 1975 was applicable.
In my view, the reliance by the legal representative for the Husband upon Section 78 is misconceived. Even if I was to declare that the Wife held her interest in the property in trust for the Husband, he would still need to rely upon Section 79 to have the legal interest of the Wife transferred to him. To my mind, reliance upon Section 78 places an unnecessary step in the legal process.
It was quite clear from the evidence that the Husband not only placed the settlement funds into a joint account, he also took advice from a firm of solicitors prior to placing the title to the property in joint names. Consequently, if it were necessary, it would not be hard for the Court to conclude that a presumption of advancement is appropriate.
Further, it was clear from the evidence that the Husband intends to sell the property as quickly as possible after this matter is determined. It would be pointless to declare that the Wife holds her interest in the property in trust for him when the Court could just as easily order that it be sold.
Evidence & Findings
The parties appear to be agreed about what the assets and liabilities are for the purposes of this matter. The only asset of any significance is the property, which the parties agree is worth $140,000.
The only liability of consequence is the sum still owing to the Commonwealth Bank arising from the foreclosure in relation to the parties’ Launceston property. That debt was originally $38,000, but the Husband’s unchallenged evidence is that he has paid $19,000 of that, which he considers to be his share. It therefore appears that the remaining $19,000 is still owing, and there is likely to be some interest that has accrued. However, the exact total is not known.
At this point I should comment that I was not impressed with the way in which either party’s case was run. For example, neither party was in a position to inform the Court of the exact sum owed to the Commonwealth Bank and it is clear that that should have been ascertained by one or both of the parties prior to this matter coming on for hearing. However, it is my intention to deal with that liability in a just and equitable way that will make it unnecessary to know its exact quantum. I shall refer to that further below.
In relation to the parties’ contributions, it is perfectly clear that the Husband has made substantial financial contributions from the sum of $275,021 that he received in September 2001. However, it is also clear that he has not made the entirety of the financial contributions to the marriage. The Wife worked throughout the marriage as a casual in the hospitality industry. It is the Husband’s evidence that she:
“typically worked 3 to 5 months each year as a receptionist or a waitress”.
She also was in receipt of Social Security Benefits and maintenance for the children. It is unfortunate that, apart from the quantum of damages received by the Husband, neither party provided any detailed evidence to the Court about the quantum of their financial contributions. However, it is clear from the statement of the joint account that was an exhibit in the proceedings that the Wife’s carer’s pension and the children’s youth allowance were also paid into that joint account.
The Wife is claiming to have made contributions as a homemaker that were well in excess of the usual homemaker contributions. In this regard, I have no hesitation in accepting that her contribution was substantial. There is clear evidence that after the Husband’s workplace accident, the Wife made substantial contributions to his rehabilitation. Annexed to the Wife’s affidavit material is a copy of a document written by the Husband in support of his personal injuries claim that is entitled “The day I went to work and shouldn’t have”. In that document the Husband says:
“My wife and kids have stuck by me twenty four hours a day watching me come back from the dead rebuilt and and (sic) gave me all the support I needed when the chips were down. That is what kept me going.”
It is the Wife’s evidence that between his accident in 1994 and when the Husband had surgery in 1998:
“he could not walk, wipe his bottom, do his shoe laces, do anything for himself.”
Although the Husband disputed the Wife’s claim that she wiped his bottom, I accept that she did all that she claims. Further, it is quite clear that the Husband conceded that he heavily relied upon her support and care for some years after his accident “especially in the early days”.
In a document prepared by the solicitors acting for the Husband in relation to his personal injuries claim those solicitors stated:
“The Plaintiff estimates that his wife, and sometimes his children currently provide gratuitous care and assistance of between 30 and 40 hours per week. On the basis that the gratuitous assistance is valued at $10.00 per hour, the Plaintiff makes a claim for past Griffiths v Kerkemeyer damages of between $69,600 and $92,800. The Plaintiff makes a continuing claim for Griffiths v Kerkemeyer damages at the rate of between 30 and 40 hours per week for a period of approximately forty years. Assuming the value of the Griffiths v Kerkemeyer services are between $300 and $400 per week, appropriately discounted on the 5 percent tables and further discounted to reflect contingencies, the Plaintiff claims the sum of $200,000 by way of future Griffiths v Kerkemeyer damages.”
Griffiths v Kerkemeyer is reported at (1976-1977) 139 CLR 161.
It is quite clear that in relation to his personal injuries action, the Husband and his legal advisers placed a high value on the Wife’s
“gratuitous care and assistance of between 30 and 40 hours per week”.
However, the Husband settled his claim, so no particular sum was attributed to a Griffiths v Kerkemeyer component. Further, it is quite clear that the parties did not stay together:
“for a period of approximately forty years”.
It is clear from the evidence that the Husband has made a much greater direct financial contribution than the Wife. The property could not have been purchased if he had not received his damages settlement. It is also the case that he has contributed significantly from that damages settlement to the renovation and improvement of the property. It is not significant that he paid funds into Mathew’s account in order to pay for those renovations or improvements.
On the other hand, the contribution by the Wife as a homemaker was significantly out of the ordinary and that should be properly recognised. It is clear from the authorities that generally homemaker contributions should be recognised in more than a token way. In this case the relationship lasted only eight years, but the Wife’s homemaker contribution was well in excess of that which is usual.
I am therefore of the view that if this matter was to be decided on contributions alone, the net property would be divided on the basis of 65 percent to the Husband and 35 percent to the Wife. However, I am also required to take into account the factors under Section 75(2) of the Act.
It is clear to me that neither party is employable at this time. However, the Wife is in receipt of Centrelink benefits but the Husband is precluded from receiving Centrelink benefits until 2005. It is therefore clear that his need for support is currently greater than that of the Wife.
Section 75(3) states that in exercising jurisdiction under Section 74, the Court shall disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit. In this particular matter, I do not intend to make any orders under Section 74 because, firstly, the question of spouse maintenance was not actively pursued and, secondly, it is quite clear that the Husband has no capacity to pay spouse maintenance.
It is my view, therefore, that it is appropriate to take into account the entitlement of the Wife to Centrelink benefits and the current lack of such an entitlement of the Husband.
Although this marriage was not a particularly long one, it was clearly a tragic marriage. The result is that both parties require support from what is a relatively small asset pool.
As mentioned above, I need to take into account the liability to the Commonwealth Bank in relation to the shortfall when the parties’ former home in Launceston was sold. The Husband says that he has paid his half share of that liability. However, it is clear that the parties entered into that loan jointly and I have no doubt that the liability is both joint and several. In the circumstances, it does not seem appropriate to me for the Wife to be liable to pay out that balance (which is not accurately known) from her funds alone. In those circumstances, it seems appropriate to me to order that the property be sold and that the proceeds be divided after the Commonwealth Bank has been paid.
In my view, because of the greater need of the Husband, it is appropriate for the balance proceeds to be divided on the basis of 75 percent to the Husband and 25 percent to the Wife.
Neither party’s legal representative made submissions about the manner in which the property should be sold. Consequently, I will grant liberty to apply if the parties are not able to agree upon the manner in which the orders are to be implemented.
I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of Roberts FM
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