S and S - [2001] FMCAfam 119

FEDERAL MAGISTRATES COURT OF AUSTRALIA

S & S [2001] FMCAfam 119

PROPERTY SETTLEMENT – in relation to marriage.

Applicant:

K L S

Respondent:

N M S

File No:

ZP1530 of 2001

Delivered on:

10 August 2001

Delivered at:

Parramatta

Hearing Date:

8 August 2001

Judgment of:

Scarlett FM

REPRESENTATION

Counsel for the Applicant:

Ms Green solicitor of Hermann and Green solicitors, 194 Canley Vale Road, Canley Heights NSW 2166

Solicitors for the Applicant:

Mr Di Lizio solicitor of Di Lizio & Associates, DX11345 Hurstville.

ORDERS

The respondent husband is to transfer to the applicant wife all of his right title and interest in all shares in NRMA, St George Bank and John Fairfax Limited and all Telstra warrants standing either in his sole name or in the joint names of himself and the wife within one month from the date of this order.
The respondent is to indemnify the wife in respect of the mortgage over the former matrimonial home at 200 R H Road, North R H to Permanent Custodians and in respect of the loan secured over the Macquarie Geared Investment portfolio standing either in the name of the respondent or in the joint names of the applicant and the respondent.
The respondent is to pay to the applicant within one month from the date of this order the sum of $521.
The respondent is to deliver to the applicant furniture to the value of one half the value of the furniture contained in the former matrimonial home within one month from the date of this order. The items to be decided by the parties on the basis of alternate choices commencing with the applicant.
Simultaneously with the respondent’s compliance with orders 1, 2 and 3 hereof the applicant is to transfer to the respondent all of her right title and interest in the former matrimonial home situate at and known as 200 R H Road, North R H and all of her right title and interest in the shares in the Macquarie Geared Investments portfolio.
Pending the transfer to the respondent referred to in order 5 hereof the husband continue to pay as they fall due all regular instalments in respect of the said mortgage to Permanent Custodians, council and water rates and household insurance in respect of the former matrimonial home.
Each party is declared to be entitled to any cash, bank account, superannuation and interest in racehorses currently standing in their respective names.
The applicant and the respondent are to do all acts and things and give all such consents and execute all such documents and instruments as may be necessary to give effect to these orders.
In the event that either party refuses or neglects to execute any deed, document or instrument within 14 days of being called on to do so then the Registrar or a Deputy Registrar of the Federal Magistrates Court of Australia is appointed pursuant to section 106A of the Family Law Act to execute such deed, document or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed, document or instrument.
I order a transcript of my reasons for decision.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA

ZP1530 of 2001

KERRY LOIS SEATON

Applicant

And

NEIL MICHAEL SEATON

Respondent

REASONS FOR JUDGMENT

The matter before the court is an application by the wife for a settlement of property. The orders that the wife seeks, or wife originally sought, included the sale of the former matrimonial home and specific orders relating to shares held in the names of the parties and has also raised the issue about credit card debts. The husband seeks that the wife transfer to her her interest in the former matrimonial home subject to the current mortgage and that she transfer to him her interest in shares in the Macquarie geared investment portfolio, again subject to the substantial loan to Macquarie whilst he transfer certain shares to her and that the parties divide the furniture equally between them and the parties otherwise retained their interest in cash, bank accounts and superannuation.
The marriage between the parties was a long one. They in fact commenced cohabitation as long ago as late 1976 or early 1977. They purchased a home unit jointly in 1977. They were married on

18 July 1978. They separated just before Christmas, on 22 December
2000. The separation was marked by a violent incident which the husband has gone on record to say that he regrets and I am satisfied that violence was not a characteristic of the marriage and that these circumstances were in fact atypical. The husband has remained living in the former matrimonial home with the bulk of the furniture. The parties are of a similar age, the husband being slightly older. He is 46, the wife is now 44. There were no children of the marriage but there were two foster children taken into the home. They have since moved on although D went only about 18 months ago and they are now living independently.
The circumstances were that during the long marriage and cohabitation both parties worked, both parties provided to the household. The husband tended to earn more than the wife. The wife has made a reasonably substantial contribution as a homemaker.
There are issues relating to the husband’s hobby or interest of horse racing, of gambling on the horses. The wife attributes to this the large degree of debt that the parties have incurred and complained that in fact over the years the husband has wasted money on horse racing. To perhaps add insult to injury the husband has purchased shares in various racehorses now apparently worth about $3000 and intends to continue with this pastime. There is no doubt that whilst the parties have acquired some assets they have also acquired a substantial degree of debt so that the net equity the parties have is comparatively small. The husband for his part says that he hasn’t lost large amounts of money in gambling. True it is that he bet but he bet only what he could afford to bet and his estimate was that over the years he has about broken even. There is no doubt that the parties have made substantial use of credit and there is certainly evidence to show that the husband was the main organiser of the credit arrangements. The wife has admitted in evidence that many of these financial arrangements she did not fully understand.
That said, the court has a task in assessing assets, contributions and what should be an appropriate distribution. There are a variety of considerations the court must take into account. In property matters the court must look to the provisions of section 79 of the Family Law Act. Section 79 subsection 1 says:
In proceedings with respect to property of the parties to a marriage or either of them the court may make such order as it considers appropriate altering the interests of the parties in the property including an order for settlement of property in substitution for any interest in the property and including an order requiring either or both the parties to make for the benefit of either or both the parties or a child of the marriage such settlement or transfer of property as the court determines.
Also in making such orders the court must be mindful of section 79 subsection 2 which states that the court shall not make an order under the section unless it is satisfied that in all the circumstances it is just and equitable to make the order and subsection 4 which sets out a number of orders to be taken into account by the court in deciding what order should be made including the financial contribution made directly or indirectly by or on behalf of a party to the marriage, contributions other than the financial contribution made directly or indirectly by or on behalf of a party to the marriage, contributions made by a party to the marriage for the welfare of the family, the effect of any proposed order upon the earning capacity of either party to the marriage and the matters referred to in subsection 75(2) so far as they’re relevant.
The process which a court must undertake has been set out by the Full Court of the Family Court in Pastrikos v Pastrikos reported in 1981 FLC 90-897, being Chief Justice Evatt and Pawley and Yuill JJ held that under section 79 the court has to embark on a dual exercise. The first part of the exercise is to determine the nature and as far as possible value of the property of the parties in issue. Usually the whole of the parties property will be relevant. Then the court proceeds to make some assessment of the extent of each party’s contribution to those assets. The second part of the exercise is to consider the financial resources, means and needs of the parties and the other matters set out in section 75(2) so far as is relevant.
The result of this exercise reflects the party’s contribution to property, party’s needs or a combination of both factors. The High Court of Australia has considered the question of contributions by the parties to a marriage in Mallett v Mallett reported in 1984 FLC cases 91-507. The judgment sets out a number of principles. (a) there is no rule, principle or guideline that where assets built up by the joint efforts of the parties to a marriage over a significant period equality is a convenient starting point, (b) the contribution made by the wife as a homemaker and parent should be recognised not in a token way but in a substantial way, (c) the respective values and contributions made by one party as homemaker and parent and the financial contribution made by the other must depend entirely on the facts of the case.
We can go right back to the decision of the Full Court of the Family Court in Crawford v Crawford reported in 1979 FLC 90-647 where the court held that since the basic examination under section 79(4) is a contribution either financial or as homemaker or parent the legal title to a particular property may have little significance when the court is considering what alterations of property will be necessary to carry out the intention of section 79. Again, the contribution of a wife as parent or homemaker is intended by the Act not to be recognised not in a token way but in a substantial way and relevant in this case the longer the duration of the period of cohabitation the less weight needs to be given to the initial contribution of capital by either spouse at the beginning of the marriage and there are also decisions relating to the husband’s savings to be considered as fruits of the marriage.
It is clear the trial judge, or in this case Federal Magistrate, has a clear obligation to identify the parties assets and liabilities before considering contributions and the factors under section 75(2). This was held in Campbell v Cuskey, a recent decision of 1998 FLC 92-795. In fact in Horsley v Horsley in 1991 FLC 92-205 the Full Court of the Family Court criticised the trial judge for making no attempt to separate the contributions of the parties pursuant to section 79 from the relevant section 75(2) factors. Whilst we are dealing with authorities, the husband’s solicitor has referred me to the decision of Kovaliw v Kovaliw reported in 1981 FLC 91-092. That dealt with the issue of whether unwise financial decisions by one party should be regarded as the responsibility and the cost of one party and the court held generally that where there are business decisions that are unfavourable in most cases if the parties share in the fruits of the marriage that they must also share in the disadvantages unless there are cases and there was one instance in Kovaliw where the actions by one party are so reckless and so economically inept that it would not be just and equitable to require the other party to bear that responsibility.
The particular case there was that the husband had negotiated with a prospective purchaser of the former matrimonial home, had allowed that purchaser to enter the property and reside there for a year rent-free and the purchaser never actually purchased. This action was so far outside the realms of what was permitted that the court was critical of the husband in that case and made an adjustment in the wife’s favour. In general if there are unfortunate financial decisions however that don’t reach this level of seriousness the court would not normally penalise one party to the exclusion of the other.
So clearly the first matter the court must look at is what are the assets. There is one issue here as to the credit card debts. The wife complains that credit card debts which are of a substantial amount were drastically increased after the date of separation. She says that’s entirely down to the husband. Indeed, joint credit card debts immediately prior to the separation were in fact set out by the husband as amount to $28,177 on the husband’s cards and $266 on the wife. By the time of the hearing less than a year later that amount had jumped to a staggering $45,000. The wife makes the point that the higher figure with the drastic increase incurred after the separation should not be taken into account, that the court should look at the figure at the date of separation.
The wife of course is critical of the husband for wasting money generally on gambling. I am not satisfied that there is evidence to show that there have been losses of any substantial amount as a result of the husband’s gambling. True it is that boxes of unsuccessful betting tickets have been provided but the fact is that successful winning betting tickets aren’t kept. They must be handed in to collect the money. There is evidence that the wife had received sums of money from time to time as wins, $100, $200, at times she admitted even more in cross-examination. The wife also admitted that there hadn’t been instances where bills or instalments hadn’t been paid as a result of the husband losing money on horse racing. Indeed on specific instances, one occasion where the husband had bet at the trots on two horses and they’d collided eliminating both of them, he clearly lost money on that race, but indicated that he still came out on top for the night. I am not satisfied that the evidence is sufficient to show a substantial waste by the husband.
There is certainly evidence that a huge amount of money seemed to be spent in renovations on the house which went on for a considerable period of time, much of it being done by the husband with no beneficial effect on his mood. The wife in one of the more poignant pieces of her evidence described on-going renovations and the husband being in a bad mood for ten years. It would appear the former matrimonial home has been over-capitalised but there are many houses throughout Australia that have been over-capitalised and real estate prices being what they are in different areas every dollar spent on renovations or improvements to the home is not reflected necessarily in a corresponding increase of a dollar value of the real estate.
I am of a view, however, that the substantial increase in the credit card debts between the date of separation and the date of the hearing is a matter that should not be sheeted home to the wife. I find the assets as follows: former matrimonial home $220,000; shares (a) Telstra warrants $6150, (b) NRMA $1548.24, (c) St George $7486.51, (d) John Fairfax $6352. There are other shares which were included in the portfolio of Macquarie Geared Investments with a total value of $52,375.83. Other assets included the interest in the race horses $3000, the wife’s bank account $202, the husband’s bank account $1120 and furniture in the former matrimonial home in the custody of the husband $5000. Total assets amounting to $303,234.58.
Liabilities I find: the mortgage to Permanent Custodians $178,000, the loan from Macquarie Geared Investments $50,000, the husband’s credit cards at the date of separation $28,177, wife’s credit cards at the date of separation $266. Total liabilities $256,443. This leaves a net equity of $46,791.58. In addition the parties financial resources include the wife’s superannuation with a value of $43,466, the husband’s superannuation with $92,000-odd. In each case motor vehicles have been provided by their employers.
I look at the question of contributions. The parties had little when they started. There was an initial capital contribution of a Holden Panelvan by the husband. I am of the view, however, applying the principles of Crawford v Crawford that the length of the marriage and the joint responsibilities undertaken by the parties as income earners and the wife’s capacity as homemaker would tend to reduce the impact of that initial contribution substantially and I am of the belief that such a long period of cohabitation, nearly 25 years, that the parties have reached a degree of equality as far as contributions are concerned. What the court next must do is look at factors under section 75(2) of the Family Law Act.
The parties are aged 46 and 44. They are both in good health, both have a capacity for employment, neither now has the care of any dependent children. The husband’s income-earning capacity is somewhat higher than that of the wife’s. There is no reason why the wife cannot continue to obtain gainful employment. The only relevant figure which emerges from the 75(2) factors is the imbalance in the interest in superannuation of the husband and the wife. I note the ages of the parties and the reality is that the date when either party could collect their superannuation is of course a considerable number of years into the future. Nevertheless I am of a belief that a small adjustment for section 75(2) factors should be made in favour of the wife. I am of the belief however that that should be a small adjustment and I have placed it at 3 per cent.
I am of the belief that the appropriate distribution should be that the husband receives 47 per cent of the assets which I have found and that the wife should receive 53 per cent. In the case outline document Mr Di Lizio for the husband suggested a distribution in accordance with the husband’s wishes which would involve the wife receiving the shares, keeping her bank account, receiving half of the furniture. The husband would retain the former matrimonial home but he would have to refinance it, that he would retain those shares in Macquarie Geared Investments but would take the liability for the loan in favour of them. I would comment there that Macquarie Geared Investments shares were valued at the date of the hearing at $52,375.83. The evidence was that a full $50,000 was owing on them.
The husband in his evidence admitted that it would be possible for him to maintain those assets and refinance them, although it’s quite clear that he would be stretching his borrowing capacity to the limit. It may well be that the husband finds that this arrangement may create difficulties for him but I am satisfied that it is a not impossible proposal and that the husband would need to consider it. I would comment, however, that the difference between the credit debts that the court has found of $28,177 at the time of the separation and the $45,000 that they now amount to, the bulk of which is on cards in the husband’s name, is a debt that the husband must continue to bear and the wife should not in fact have to bear any responsibility for the increase after the separation. The horses or the shares therein were purchased over a period of time from before the period of separation. I am of a view that the last thing the wife would want to receive would be the shares in the horses and as the husband is going to incur the debt for the shares in horses he should clearly get the horses.
There would need to be, looking at the net equity, the husband’s entitlement would be $21,720.87; the wife’s entitlement would be $24,493.75. This can be arrived at by the husband retaining the former matrimonial home, the shares in the Macquarie Geared Investments portfolio, the shares in the horses, half the furniture and a proportion of the money in the bank account. He would be responsible for the mortgage to Permanent Custodians, the loan from Macquarie, credit card debts of $28,177 at the date of separation and of course the additional credit card debt that’s been incurred on his card since then. The wife would receive the shares, she’d retain the money in her bank account, would receive half the furniture and there would be a cash adjustment which I calculate at $521 which the husband would be required to pay.

The liability the wife would bear would be the Citibank card debt of $266 at the date of separation and that card debt is slightly larger now.

I certify that the preceding twenty-three(23) paragraphs are a true copy of the reasons for judgment of Scarlett FM

Associate:

Date: