SAA & SUA
[2005] FMCAfam 599
•9 November 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SAA & SUA | [2005] FMCAfam 599 |
| FAMILY LAW – Property – application for property adjustment pursuant to s.79 – identifying net asset pool – no valuation provided for husband’s business – stock from wife’s business removed by husband – compensation and damages payments to husband post–separation. FAMILY LAW – Parenting – shared care arrangements for children. |
| Family Law Act 1975 |
| Aleksovski & Aleksovski (1996) FLC 92–705 Jones v Dunkel (1959) 101 CLR 298 |
| Applicant: | SAA |
| Respondent: | SUA |
| File Number: | SYM 6066 of 2004 |
| Judgment of: | Sexton FM |
| Hearing dates: | 26 & 27 October 2005 |
| Delivered at: | Parramatta |
| Date of Last Submission: | 27 October 2005 |
| Delivered on: | 9 November 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr A Jamieson |
| Solicitors for the Applicant: | Watts McCray |
| Counsel for the Respondent: | Mr G Rich |
| Solicitors for the Respondent: | Carters Solicitors |
BY CONSENT THE COURT ORDERS THAT:
The parties have joint responsibility in consultation with each other for making decisions about the long term care, welfare and development of AA, born 18 May 1998 and GA, born 21 July 1999 [“the children”].
Each party have sole responsibility for making decisions as to the day to day care, welfare and development of the children whilst in that party’s care.
The children reside with the wife for half of all gazetted school holidays being the first half of the school holiday periods in odd numbered years and the second half of the school periods in even numbered years.
The children reside with the husband for half of all gazetted school holidays being the second half of the school holiday periods in odd numbered years [including the December 2005/January 2006 holidays] and the first half of the school holiday periods in even numbered years.
Both parties do all things necessary to ensure that the children are permitted to contact either parent at reasonable times by telephone and each party do all things necessary to facilitate such contact and such telephone contact to be at the request of the children.
In the event that the children or either of them become ill or injured, the parent with whom the children are residing is to inform the other parent as soon as reasonably practicable in the circumstances about any significant injury, medical or health issue concerning the child or children.
The parties are to keep each other informed as to the children’s school progress, school activities and functions in a prompt manner.
The parties agree not to denigrate the other party or members of the other party’s family to or in the presence of the children or either of them nor allow any other person to do so.
The parties with whom the children live during school holiday periods shall provide to the other in writing prior to absence on holidays a contact telephone number and the address at which the children will be residing.
THE COURT FURTHER ORDERS THAT:
The children shall reside with the husband during school terms as follows:
(a)Subject to Order 10(b) from Friday after school, or from 5 p.m. if a child is too ill to attend school on the Friday, until Monday before school or until 9 a.m. if a child is too ill to attend school.
(b)Once in every calendar month from Thursday after school or from 5 p.m. if the child is too ill to attend school on the Thursday until Saturday at 6 p.m, being the first Thursday of each calendar month unless otherwise agreed between the parties.
The children shall reside with the wife during school terms at all other times.
The parties to vary these orders at any time by agreement between them.
Unless otherwise agreed between the parties, for the purpose of changeover:
(a)The husband shall collect the children from school on Thursday or Friday afternoon (as applicable) and return the children to school on Monday mornings.
(b)The wife shall collect the children from school on Monday afternoon and deliver the children to school on Thursday or Friday morning (as applicable).
(c)The wife shall collect the children from the husband’s residence on Saturdays.
(d)The husband shall collect the children at the commencement of his holiday residence periods and the wife shall collect the children at the commencement of her holiday residence periods.
Pursuant to section 65DA(2) of the Family Law Act 1975 the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders are set out in Annexure A and these particulars are included in these orders.
Property orders
Within 7 days of order, the husband shall deliver to the wife’s solicitors the whole of the stock, being glass beads, removed by him from the wife and referred to in the letter annexed to the wife’s affidavit sworn 24 May 2005 marked “A”.
In relation to the wife’s motor vehicle:
(a)Within 7 days of order, the wife shall do all things necessary to sell the Hyundai motor vehicle in its damaged condition at auction through Pickles [Telephone: 9774 4066] or, if agreed between the parties within 4 days of order, via an alternative auctioneer, and to notify the husband of the dates of auction.
(b)The wife be permitted to bid at the auction.
(c)Within 7 days of receipt of notice of sale, the wife shall notify the husband of the sale price and details of the costs of sale and to forward to the husband an amount equivalent to 45% of the net sale proceeds.
Within 2 calendar months of order [“the date of settlement”] simultaneously the husband shall:
(a)pay to the wife by way of property settlement the sum of $57,804.00.
(b)provide the wife with a stamped executed Transfer in relation to the property in the metropolitan area [the home];
(c)discharge the loan in joint names secured by way of mortgage on the home [“the mortgage’];
(d)make available for collection by the wife or her agent the whole of the contents of the home and transfer his interest in those items to the wife.
Simultaneously with the husband’s compliance with Order (17) the wife shall:
(a)do all acts and things and sign all documents necessary to discharge the mortgage and transfer to the husband all her right title and interest in the home;
(b)vacate the home;
(c)remove or cause her agent to remove the contents of the home.
The husband be restrained from removing any of the contents of the home prior to the date of settlement.
In the event any items to which the wife is entitled in accordance with order (18) have not been collected by the date 14 days from the date of settlement, those items shall be declared the property of the husband.
In the event the husband fails to comply with Order (17) by the due date, the husband and the wife shall forthwith do all things necessary to effect a sale of the home by private treaty with a real estate agent agreed between the parties or failing agreement within 7 days by an agent appointed by the Real Estate Institute of New South Wales at a price agreed between the parties and failing such agreement at a price to be determined by the President of the Australian Property Institute of New South Wales or his nominee at the husband’s cost.
Upon the completion of the sale the proceeds to be distributed in the following order and priority:
(a)In payment of all legal costs, commissions, and agent expenses (including advertising expenses) in relation to the sale;
(b)In adjustment of rates and other outgoings in accordance with usual conveyancing practice;
(c)In discharge of the loan secured by way of mortgage to National Australia Bank registered on the title of the home;
(d)In payment to the husband of $10,946;
(e)In payment to the wife of 55% of the balance then remaining;
(f)In payment to the husband of the balance.
In the event the home has not been sold by or before a date three (3) months from the date Order (21) becomes operative then the husband and the wife shall make all such arrangements and do all such acts and sign all such documents and pay all monies equally, necessary to procure a sale by public auction of the home upon the following terms:
(a)The auctioneer shall be a real estate agent;
(b)The reserve price shall, unless agreed between the parties, be as proposed by the auctioneer;
(c)Upon completion of the sale the proceeds shall be distributed in accordance with Order (22) herein.
In the event the home be sold in accordance with Orders (21) – (23) :
(i)The wife be permitted to remain living in the home until the date of settlement of the sale.
(ii)The “date of settlement” shall be the date of settlement of the sale.
The husband be entitled to the monies owed by Mr MW and be responsible for repayment of the loan to the parties from Mr RA and indemnify the wife in relation to that loan.
Except as otherwise provided in these orders, the husband and the wife retain all other items of property currently in the possession or control of each of them respectively.
Except as otherwise provided in these orders, the husband and the wife remain liable for any debts, howsoever arising, in their own name at the date of these Orders and in this respect shall indemnify, keep indemnified and hold harmless the other from any liability in relation thereto.
In the event the husband or the wife refuses or neglects to comply with any of the Orders herein, the Registrar of this Court at its Parramatta Registry be appointed pursuant to section 106A of the Act to execute, in the name of the husband or the wife as the case may be, all deeds and instruments necessary to give effect to the orders herein, or any of them, and do all acts and things necessary to give validity and operation to the said deeds and instruments.
All exhibits tendered in these proceedings be returned at the expiration of one calendar month unless an appeal is lodged.
The solicitor who issued any subpoena collect that subpoenaed material and return it to the owner within 14 days.
All outstanding applications are otherwise dismissed and the matter removed from the list of cases awaiting finalisation.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
SYM 6066 of 2004
| SAA |
Applicant
And
| SUA |
Respondent
REASONS FOR JUDGMENT
Introduction
This case is about parenting arrangements for AA 7 and GA 6 and about property settlement. The parties separated in October 2000 though continued to live with the children in the same home. The wife made the decision to end the marriage. The father hoped for reconciliation until early this year when the wife sought a divorce. Since then the parties have had little communication. There is considerable tension between the parties. The husband has largely taken over the care of the children and made it difficult for the wife to participate in the children’s activities without involving them in the inter-parental conflict. In April the parties had a physical altercation in the presence of the children and the husband started these proceedings. Both parties seek orders for the children to live with the other parent each week but they cannot agree on the precise arrangements. The children attend APS and both parties intend to remain living in the metropolitan area. The wife wants the home to be sold, while the father wants the opportunity to retain the home if financially possible. Both parties otherwise agree to retain the individual assets and liabilities they presently hold. The parties disagree about the value of the pool of assets to be divided and disagree about the percentage of the net assets each should receive.
The husband is 35 and the wife 32. Both migrated from Turkey, the wife in 1974 and the husband in 1995. They started living together when they married on 4 May 1995. They disagreed about the date of their separation. However, as the court made a finding in the undefended divorce proceedings that the parties separated in October 2000, this court is bound by that finding on the authority of the High Court decision in Brewer v Brewer (1953) 88 CLR 1. The parties divorced in May 2005.
Issues concerning parenting
The court must decide what parenting orders are in the best interests of the children which in this case requires consideration of these questions:
a)What are the children’s wishes and how much importance should the court give those wishes?
b)What is the nature of the relationship between the children and each parent and other people in the children’s lives?
c)What is the capacity of each parent to provide for the needs of the children?
d)What is the likely effect of any change in the children’s circumstances?
e)What attitude has each parent shown to the responsibilities of being a parent?
f)What parenting arrangements would minimise the risk of there being further court proceedings about the children?
Evidence and findings
What are the children’s wishes and how much importance should the court give those wishes?
The children are 7 and 6. According to Ms Pitts who prepared the family report “neither AA nor GA was able to give a view about their future residence arrangements.”
What is the nature of the relationship between the children and each parent and other people in the children’s lives?
Both parties acknowledged the importance of the children’s relationship with the other parent. However, I take into account Ms Pitts’ observations at interview:
“both children gave some indication of having a closer, more positive relationship with their mother than with their father.”
Ms Pitts observed both children to be more cooperative, relaxed and communicative with their mother. AA showed a wish for physical closeness with her mother. She strongly identified with her mother and valued her mother’s attention. During the interviews, when required to select one family member to accompany her if she left the family, AA chose her mother. Ms Pitts believed AA tended to disassociate from her father.
Ms Pitts said there was some evidence to suggest GA identified more with his father but he seemed frustrated more often with his father. GA nominated his mother as the “nicest person in the world”.
I am satisfied the children are close to both parents though I accept Ms Pitts’ evidence that both indicate a closer more positive relationship with their mother than their father. There was no evidence about other significant persons in the children’s lives.
What is the likely effect of any change in the children’s circumstances?
As the parties are presently living in the same home, it is inevitable the children’s circumstances will change as a result of these proceedings.
I am favourably impressed by both parties’ intention to remain living in the metropolitan area, near the children’s school to cause the least possible disruption to the children’s day to day routine. The husband said he hoped the wife would live close by to him. Both parties sought orders for the other parent to have significant time with the children.
I am satisfied both parties will make efforts to minimise the impact on the children of their change in circumstances. Both parties demonstrated a strong commitment to the children’s welfare.
What is the capacity of each parent to provide for the needs of the children?
Neither party questioned the other’s capacity to provide for the needs of the children, though the husband believed the wife has not prioritised the children’s needs ahead of her own, particularly in recent months. I am satisfied both parties have the capacity to provide for the children’s needs.
What attitude has each parent shown to the responsibilities of being a parent?
The parties have understandably found their living circumstances difficult particularly in recent months since they have divorced. They hold different views as to what has occurred. The husband said the wife was focused on her business and personal interests rather than the children. He said she had lost interest in him and the children, taking no part in the children’s activities. The wife said she did not interfere in the husband’s care of the children because it means involving the children in the parties’ differences and causing the children distress and confusion. She said the husband has effectively blocked her out. He insists the children go everywhere with him even when they make it clear to him they want to stay with her. He has taken over the tasks she used to perform, even to the point of returning home from work to take the children to school, when she is available to take them. The husband told Ms Pitts he would not let the wife take them because “he did not want her to do it for the divorce.” The wife decided to minimise such conflict for the children’s sakes and therefore has been spending a lot of time in her room or away from the house. I prefer the wife’s evidence on this issue.
The husband takes the children to activities four afternoons and one evening each week. The wife thinks this is too much for them - two afternoons would be reasonable. Ms Pitts agrees with the wife that the children presently do not have enough time to play, relax, do their homework and get to bed at a reasonable hour. The wife told Ms Pitts she wanted the children in her care during the week to ensure they have more free time to play and interact with other children.
Ms Pitts is concerned the husband might have difficulty encouraging the children’s relationship with the wife whereas the wife has a better understanding of and commitment to the importance of maintaining the children’s relationship with the husband. I am persuaded the husband has a better understanding of the importance of the wife’s role in the children’s lives since receiving the family report. He acknowledged the need for the children to spend more time with their mother.
What parenting arrangements would minimise the risk of there being further court proceedings about the children?
Given the parties reached agreement on almost all parenting issues and both have demonstrated a strong commitment to the children’s welfare, I am not satisfied this is a relevant factor in this case.
Conclusion
The husband wants the children to live with him from Thursday afternoons each week until Monday mornings but to have an occasional weekend without them. He says the children enjoy swimming on Thursday afternoons and he wants this activity to continue for them. He believes the wife should make herself available for the children on some weekends instead of always putting her work first. Despite her assurance that the wife would take the children to swimming, the husband is not persuaded they will attend.
The wife wants the children to spend the school week with her and for changeover to occur on Friday afternoons. Both parties agree the children should live with the husband until Mondays before school. The wife does not want their school routine disrupted between Monday and Friday. She believes the children are involved in too many after school commitments and that once a week for tennis and once a week for swimming is enough. The wife says she will be happy to take the children to swimming on Thursday afternoons. She agrees there could be some benefit to the children spending time with her on a weekend but said her preferred option is for the children to spend weekdays with her and weekends with the husband. If she were to spend any weekend time with the children, she would prefer a Sunday as she is busier at work on a Saturday than a Sunday.
The wife’s counsel argues that the children should spend weekdays with the wife and weekends with the husband. The wife is available during the week to care for the children. The husband will be free to work longer hours to build his business without the responsibility of the children. Also the wife will provide the children with a more age-appropriate balance between their extra curricular activities and time for relaxation and homework after school.
Ms Pitts believes it is generally less disruptive for children to spend weekdays in one household in a consistent routine. She agreed with the husband’s counsel that it was probably not critical whether changeover occurred on Thursdays or Fridays. She thought it important for the children to have some weekend time with their mother.
I have given considerable weight to Ms Pitts’ observations about the nature of the children’s relationship with each parent. I have concerns the husband has not appreciated the need for the children to spend more time with the wife. He has involved them in activities four afternoons each week at times they could have spent with the wife, particularly given her absence on weekends while working. The husband commented on AA behaving quietly and GA being naughty but did not seem to recognise the pressures the children have been under. It is inevitable the children have been adversely affected by the tension between the parties living separated in the same home for so long. I have given some weight to Ms Pitts’ concerns that the husband may not promote the children’s relationship with the wife if the children lived with him for the majority of the time.
I accept the recommendation of Ms Pitts that the children reside with the wife for most week nights during school terms and with the husband on most weekends. However, I find the husband’s request for an occasional weekend off most reasonable and share his view that the children would benefit from some leisure time with their mother apart from school holidays. I have some concerns that the wife has shown a reluctance to compromise her working hours to ensure the children have time with her on some weekends, despite the findings in the family report, particularly about AA. Whilst I accept that the wife has wanted to minimise conflict within the household for the children’s sakes, I find she has to an extent neglected her responsibility to the children in doing so. I have made an order for the children to spend part of one weekend a month with the wife which will mean the wife will be unable to work in the market on those Sundays. I encourage the wife to consider the long term impact of spending so little of the children’s leisure time with them.
Issues concerning property
The approach to the determination of an application under section 79 of the Family Law Act 1975 is well established by authority (In the Marriage of Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595) and involves consideration of these questions:
a)What were the assets, liabilities and financial resources of the parties and their values at the time of hearing?
b)What were the financial and non-financial contributions made directly or indirectly by or on behalf of each party to the acquisition, conservation or improvement of the property of the parties?
c)What was the contribution made by each party to the welfare of the family including contributions made in the capacity of homemaker or parent?
d)What is the effect, if any, of any proposed order upon the earning capacity of each party?
e)What matters referred to in sub-section 75(2) of the Act are relevant and what adjustment, if any, should be made as a result of these factors?
f)Have there been any other orders made affecting a child or either party and is child support payable or likely to be payable in the future for the children of the marriage?
g)After consideration of these matters, is it just and equitable to make the actual orders?
Evidence and findings
What were the assets, liabilities and financial resources of the parties at the time of hearing and their values?
During the course of the hearing, counsel for both parties provided to the court a joint list of assets and liabilities marked agreed and in dispute. Neither sought to include the proceeds of bank accounts or paid legal fees. Those items have therefore been excluded from the list of assets and liabilities for division.
The parties ask the court to determine the value of the items marked “in dispute.”
| Assets at the date of hearing | $ |
| Property known as and situate in the metropolitan area | 405,000.00 |
| Furniture | 10,000.00 |
| Jewellery held by wife | In dispute |
| Wife’s superannuation | 3,000.00 |
| Wife’s business, IM | In dispute |
| Wife’s motor vehicle | In dispute |
| Husband’s superannuation | Nil |
| Shares in STPL | In dispute |
| Monies owed by friends of husband | In dispute |
| Mortgage on home | (280,000.00) |
| Monies owed to RA | (5,000.00) |
| Wife’s ANZ mastercard | (4,220.00) |
| Wife’s Westpac mastercard | (2,825.00) |
| Husband’s mastercard | (13,141.00) |
The parties agreed the wife will receive the entire contents of the home in the metropolitan area and that each will retain assets and liabilities held in their respective names.
The wife’s counsel raised an issue as to the husband’s credit. Counsel put to the husband, and he agreed, that he acted dishonestly in forging his wife’s initials on an application for finance form from AMJ Finance to the National Australia Bank in April 2004. The husband said he forged his wife’s initials with her consent because she was unavailable to sign for herself. The husband also conceded he exaggerated his assets and their value on the form to give the parties a better chance to secure the loan, including an assertion that he has a superannuation entitlement of $25,000.00 which he has never had. He also gave his income as $7,500 per month, “I asked my boss to write for me showing high income.” He said he knew that amount was a lie. The wife denied giving consent to the husband to forge her initials on the application form [Exhibit 12] but said she understood the assets were correctly stated as at the date of the application. The parties agreed both signed the loan documents at the National Australia Bank for the increase in the home loan. I am satisfied the loan application included false information, known to the husband and that the husband forged his wife’s initials on the loan application. Whilst I am strongly critical of the husband for his dishonest conduct, I am not satisfied his conduct affected his credit on the evidence he gave as to the issues in dispute in these proceedings.
Wife’s motor vehicle
The parties agreed prior to hearing to the value of the wife’s motor vehicle, a 1996 Hyundai Lantra at $5,000.00. However, the wife said in evidence that her car was stolen the weekend before hearing and returned to her the day before hearing, badly damaged. The car was not comprehensively insured. The wife did not provide the court with any evidence as to its value in its damaged condition. She said the ignition had been removed, parts around the steering wheel removed, the lock broken and the car scratched and dented from the front door to the back panel on one side. Counsel for the wife submitted the value would be negligible. Counsel for the husband did not agree. In the absence of any evidence as to the value of the Hyundai Lantra in its present condition, I have ordered the car be sold at auction and the proceeds apportioned. See Smith and Smith (1991) FLC 92-261.
Monies owed from friends of husband
In his Financial Statement sworn 21 April 2005, the husband deposed to being owed $25,000.00 by three friends. In a later affidavit he deposed to having since been repaid $20,000.00 and to still being owed $5,000. In oral evidence the husband said he lent $10,000 to a Mr AS, $10,000 to a Mr MW and $5,000 to a Mr RMO. He said Mr AS and Mr RMO had repaid their debts but Mr MW still owes him $5,000. The wife said she had no knowledge of the loans. In the absence of other evidence, I find the husband is owed $5,000 of the $25,000 he lent to others.
Jewellery held by wife
The husband contended that the wife holds jewellery belonging to him with a value of $5,000: two men’s rings with glass diamonds, an engagement ring, a double chain gold bracelet and a handmade watch. He says the jewellery was held in an ANZ safety deposit box and that he saw the wife put his jewellery into the box with about 30 gold coins. In 2004 he saw the box at their home, empty, and he does not know what has happened to his jewellery. The wife denies ever putting the husband’s jewellery in the safety deposit box and says there were about 10, not 30 gold coins in the box. She says that with the husband’s permission, she traded in the gold coins and some of her own jewellery for about $1,600 when overseas. She has no knowledge of the jewellery referred to by the husband. The husband says he consented to the wife selling some jewellery kept in the box but only jewellery which belonged to the wife. I am not satisfied that the wife has sold or is holding the husband’s jewellery, nor is there any evidence before me as to the value of this jewellery. I do not accept the husband’s counsel’s submission that an amount of $5,000 should be added to the net asset pool, nor that it should be taken into account on behalf of the husband, in some general way.
Wife’s business
The wife started a jewellery business in October 2003 called IM, making beaded jewellery and selling it at the markets on Saturdays and Sundays each weekend. The business was not formally valued for these proceedings. The wife estimated the value of her business at $30,000 made up of $20,000 in stock and $10,000 in retail licences. The husband accepted the wife’s valuation at $30,000 for the purpose of these proceedings. The wife contends that the husband is holding $10,000 worth of her stock, being glass beads, and that her business should therefore be valued at $20,000. The husband acknowledged removing some of the wife’s stock of beads a few months ago. He said he had bought those particular beads at the end of 2003 for $1500 US. He estimated the value of the stock he took from the wife at $400. He said his wife was well aware the beads are in a box in the garage of their home and that she was free to retrieve them at any time. He said the stock he removed was not the stock the wife purchased for $20,000 in September 2004 on her trip to Turkey. The wife said she looked for the box of beads in the garage on the evening of the first day of hearing, but as there were other things in the garage, she was unable to reach all the boxes. The wife agreed the husband has paid for the majority of the stock since she started the business but said she had never sighted any invoices or receipts. She said she has also bought stock and continues to do so. The wife’s counsel submitted that the court should be satisfied the husband is holding $10,000 worth of stock, on the basis of the wife’s evidence that he took half the stock. Counsel relied on a letter dated March 2005 annexed to the wife’s affidavit in which the wife’s solicitors requested the return of the stock and estimated its value at $10,000. Counsel submitted it was open to the husband to refute that value and in the absence of such evidence, the court should infer, on the authority of the High Court decision in Jones v Dunkel (1959) 101 CLR 298, such a valuation would not have assisted the husband’s case. I do not accept the wife’s counsel’s submission. I accept the husband’s counsel’s submission that the wife estimated the value of her business at $30,000 and the husband accepted her estimate. The husband says the stock he removed is available to the wife and he agrees to an order that it be returned to her. There was no challenge to the husband’s evidence that the stock removed by the husband is available to the wife and no evidence that any part of that stock is missing.
I find the wife’s business has a value of $30,000. I have ordered the husband to return the stock held in a box in the parties’ garage to the wife’s solicitors.
Husband’s business
The husband deposed to being the sole director and shareholder of a company known as STPL. In oral evidence he said he was one of two directors, the other being Mr MM, a previous owner of the company. The husband was an employee of the company before being appointed a director in November 2004. He paid nothing for his shareholding. This evidence was unchallenged. The company provides tiling in commercial and residential property developments and employs six tilers. A few months ago the company attempted to establish a business distributing PVC windows which the husband said failed. The husband operates the business from his home organising quotations, submitting tenders for work and when necessary supervising the tradesmen.
In cross-examination the wife’s counsel questioned the husband extensively as to the company’s operations and as to the veracity of his evidence about the financial benefits he receives from the company. In relation to its operations, he questioned the husband about a factory leased by the company in May 2005 but terminated a few weeks before trial, about efforts made by the company to purchase flat knitting machines, about the contents of the company website [Exhibit 7] and about the company’s involvement in the Sydney Home Show in May 2005. On the whole, I accepted the husband’s evidence on these issues. I am not persuaded that the company is conducting operations beyond those disclosed by the husband. In relation to the financial benefits he receives from the company, the husband deposed to earning $500.00 per week net of tax and to the company meeting his telephone and motor vehicle expenses. He agreed he bought the children a motor bike for $650.00 about a year ago [Exhibit 6]. He said he meets the costs of the home mortgage at $415.00 per week, the household utility accounts, the council rates, food at about $100.00 per week, tennis lessons for the two children at about $19.00 per week and most of the children’s other expenses. He says his wife has made no contribution to these expenses apart from buying some food. He says he has met the shortfall between his income and expenses by using his credit card and funds from his worker’s compensation claim repaid to him by his friends during this year. The wife adduced no evidence to challenge the husband’s assertions about these matters. The wife has not satisfied me to the requisite standard that the husband has failed to disclose the extent of the financial benefits he receives from the company.
The evidence in relation to the value of the shares in the company is unsatisfactory. The husband had an obligation to provide the documents necessary to enable a formal valuation to be prepared. The parties agreed to a joint valuation by Mr ID, consultant forensic accountant to EPL. Mr ID provided a report dated 6 September 2005 [Exhibit 4]. Mr ID said in his covering letter to the husband’s solicitors:
As outlined in my report, I do not have the necessary information to place a value on the business.
However, as outlined in my report, I consider the appropriate method of valuation of the company is using the net tangible assets method.
Mr ID listed the documents he relied on and the further documents he required to place a value on the company. Those documents were not provided by the husband as they should have been and it is therefore not possible to place an accurate current value on the business. I take the husband’s failure to fulfil his obligations in this regard into account under section 75(2)(o) of the Act later in these reasons. As neither party sought to adjourn the hearing so that a valuation could be obtained the court is required to determine the matter on the basis of the available evidence.
Mr ID was provided with copies of invoices for work done by the company, copies of suppliers’ invoices for goods and services, bank statements and cheque butts, the company’s 2004 taxation return, the quarterly business activity statements for the 2005 financial year. Mr ID also examined Business Benchmarks for Tiling Contractors. Mr ID was not provided with prior period balance sheets. To assess the net tangible asset backing of the company Mr ID needed to establish the written down value of non-current assets, cash at bank, trade creditors, work in progress, contract retentions owing, trade creditors, tax liability, bank and finance company liability. He did, however, prepare an analysis on the basis of the information supplied. The tax return for 2004 showed a loss of $22,857. The 2005 business activity statements indicated there would be a loss in 2005 in the vicinity of $30,000. Reported sales in the 2004 financial year were $815,575 and the estimated sales (excluding GST) in the 2005 financial year were $546,850. Based on his examination of invoices and bankings, Mr ID considered those figures fairly represented the sales in those two financial years. In his view the level of gross profit was low in the 2004 financial year and the level of overhead expenses in that year appeared reasonable. He said in view of the apparent losses incurred by the company, its value “could well be negative”.
In cross-examination, the husband said he made every possible effort to provide Mr ID with all documents he needed to prepare the valuation. He provided every receipt, tax invoice and financial document generated since he became a director of the company in November 2004. He gave his solicitors all the documents he was able to obtain from the previous directors. He authorised the company accountant to provide any document requested by his legal representatives, the wife’s legal representatives or Mr ID. He denied propositions put by the wife’s counsel that he had obstructed the valuation process. I accept on the basis of the husband’s evidence and a letter dated 21 September 2005 from the husband’s solicitors to the company accountants requesting all documents sought by the joint valuer and by the wife’s solicitors [Exhibit 9] that the husband made at least some efforts to obtain the financial information sought by Mr ID. I am not persuaded however that he did all he could. By way of example, the husband gave no satisfactory explanation for his inability to provide the payout figures on the company vehicles from GE Finance. Nor did the husband have any explanation for his failure to have the individual company assets valued. The husband said there is approximately $40,000 owed to the company but the debtors are bankrupt and the company has incurred legal costs in chasing the funds. He does not expect the company to receive the funds owed.
The company balance sheets for the years ending June 2004 and 2005 were tendered in evidence [Exhibit 5] though had not been prepared at the time of Mr ID preparing the valuation. According to the depreciation schedule attached to the company balance sheet of
30 June 2005, the company owns a petrol mower, computer, a Rodeo motor vehicle 2003, two mixers, a computer system and an oscillating saw. The husband says the company also owns small grinders which have a working life of about one year, two wheelbarrows, a plasma television set, a fridge, a microwave, a DVD player all purchased second hand as well as plastic chairs and plastic tables. He said he paid approximately $2,200 for the television set, $100 for the DVD player, $700 for the fridge but has no knowledge of their market value now. The company leases 3 vehicles with GE Finance guaranteed by the two former directors of the company, MS and MM. The husband uses one vehicle, the workmen another and Mr MM the third. The husband tells the court even if the vehicles are sold, there will be monies owing to GE Finance. There was no evidence before the court as to the payout figures on the three vehicles. The husband provided no satisfactory evidence as to why this was not provided. I do not accept that GE Finance would not speak to him as “my name was not on the documents.” Mr MM is still a director and could have readily authorised the information being provided or a subpoena could have issued. I am not however persuaded by the wife’s counsel’s submission that I should draw an inference against the husband on this issue on the authority of Jones v Dunkel.
The wife’s counsel submitted the evidence supported a finding that the company’s assets were $33,554 [balance sheet June 2005] in addition to the value of the plasma television set and the value of the monies owed to the company. He argued the shareholders loan of $19,757 should be excluded from the liabilities. The husband’s counsel contended that this would be unfair given that on a winding up, the shareholders loan funds may be required to meet other liabilities particularly given Mr ID’s view that the company may have a negative value and the husband’s evidence that the motor vehicles have a negative value. I am not persuaded that either view is supported by the evidence. Nor am I prepared to speculate given the paucity of the evidence provided on these matters.
I am satisfied on the evidence of Mr ID that the company should be valued using the net tangible assets method. There was no evidence to support a finding that a value can be attributed to goodwill. Based on the only evidence available as to the value of the assets not listed in the balance sheet of the company for the year ending June 2005, I find the value of the television set, fridge and DVD to be equivalent to the husband’s estimated purchase prices of a total of $3,000. I otherwise find the value of the company to be the value of its net tangible assets as at 30 June 2005, being a value of nil. I therefore find the company to have a value of $3,000. However, the 2005 balance sheet of the company includes a shareholders loan in its liabilities of $19,657. The company therefore owes the husband $19,657. I find the husband has an asset of $19,657 which will be included in the net assets to be divided between the parties.
I find that the assets, liabilities and financial resources of the parties as at the date of hearing are as identified in the following table:
| Assets at the date of hearing | $ |
| Property known as and situate in the metropolitan area | 405,000.00 |
| Contents of home | 10,000.00 |
| Jewellery held by wife | Nil |
| Wife’s superannuation | 3,000.00 |
| Wife’s business, IM | 30,000.00 |
| Wife’s motor vehicle | To be sold and proceeds apportioned |
| Husband’s superannuation | Nil |
| Shares in Husband’s company, STPL | 3,000.00 |
| Monies owed to Husband by STPL | 19,657.00 |
| Monies owed to husband by Mr MW | 5,000.00 |
| Mortgage on home | (280,000.00) |
| Monies owed to husband’s brother | (5,000.00) |
| Wife’s ANZ mastercard | (4,220.00) |
| Wife’s Westpac mastercard | (2,825.00) |
| Husband’s mastercard | (13,141.00) |
| Total net assets | 170,471.00 |
I therefore find the known assets of the parties available for division between them to be as set out in paragraph 40, being a total of $170,471.00.
Contributions
The court must consider all the contributions, both financial and non-financial to the acquisition, conservation and improvement of the parties’ assets as well as to the welfare of the family before and after separation. The court must consider the contributions in an overall sense both before and after separation. The Full Court said in Sippel & Sippel [2004] FamCA 201:
There is nothing in the Family Law Act or deriving from binding authority about the application of section 79 that requires a separate assessment of matters occurring post separation in arriving at an assessment of contributions.
Financial contributions
After a 5 year period of cohabitation, the parties separated 5 years ago but have continued to live in the same home. There was minimal dispute between the parties as to the financial history of the marriage both before and after separation. The husband has continued to meet the mortgage payments on the home, pay the utilities and necessary day to day expenses. He has provided the finance necessary for the wife to establish her business. He has provided the finance necessary for the wife and children to travel to Turkey and for the wife’s parents to visit Australia. The parties made no significant changes to their financial arrangements as a result of their separation.
At the date of marriage the husband contributed an estimated $5,000 in savings. This initial contribution was largely offset by the wife’s cousin lending the parties $5,000 to assist them to set up a home and the wife’s family helping the husband find employment. From soon after marriage, the husband worked full time as a cleaner until starting his own office cleaning business NCSPL in 1996. The wife also worked full time until AA was born in 1998. Both parties contributed to the purchase of their first and second homes and jointly borrowed purchase funds. The husband received worker’s compensation payments after an accident in October 2000 and the wife worked part-time. The husband next worked as an employee of STPL before taking over ownership of the company. He has a current net income of approximately $500 net each week. The wife has been working in her own business since November 2003 and has a net average income of $300 each week. She agreed with the husband’s counsel that she lost money from the business in the 2005 financial year and relied on her pension benefits to meet expenses. In the absence of any evidence to the contrary, on the authority of Parshen & Parshen (1996) FLC 92-720, I assume both parties contributed their incomes to the benefit of the family.
The husband suffered two accidents which resulted in compensation, the first before separation and the second at the time of separation. The husband was injured in a motor vehicle accident on 7 June 1999 which forced him to reduce his hours of work in the cleaning business. As a result of the accident it is not contested that he received damages of $39,373.25 on 7 June 2004 [Exhibit 3]. On 29 October 2000, the husband fell down a lift shaft at work. His cleaning business went into liquidation leaving debts of approximately $50,000 which were later repaid by the parties by extending their home loan. The husband underwent three operations and spent approximately 15 months at home, unable to work. The wife worked part-time and the husband received worker’s compensation payments of $400.00 per week. The husband settled his worker’s compensation claim on 20 December 2002 [Exhibit 2] for $35,000.00 made up as follows: $15,000 in respect of 20% permanent loss or use of right leg at or above the knee including loss below the knee; $7,500 in respect of 10% permanent loss of use of left leg at or above the knee including loss below the knee; $12,500 in respect of pain and suffering.
The authorities make it clear that these awards, the compensation award being for loss of earnings and pain and suffering, should be regarded as a contribution by the husband, particularly given the proximity of both accidents to the date of the parties’ separation. The Full Court in Aleksovski & Aleksovski (1996) FLC 92-705, said at 83,437
In our opinion, in most cases, a damages verdict arising from a personal injury claim, whenever received, is a contribution by the party who suffered the injury. It should not be considered in isolation, for the reason that each and every contribution, which each of the parties makes to the relationship, must be weighted and considered at the same time.
The husband used the compensation funds he received in early 2003 to pay for the wife’s travel overseas with the children, to pay for repairs to the wife’s mother’s unit in Turkey and to repay debts including arrears of mortgage. He invested $15,000.00 in his own business. He paid $1,500 US towards stock for the wife’s business and $7,000 for the wife to buy two market stalls. The husband used $15,000 from the funds from his motor vehicle accident in June 2004 to buy stock for the wife’s business in addition to meeting the costs of her trip to the Mediterranean and Turkey in September 2004. The husband lent $25,000 to three friends. He otherwise used the funds to meet credit card debts and to meet day to day living expenses.
I agree with the husband’s counsel that the husband has made the greater financial contributions to the property of the parties. He has contributed compensation and damages awards in the sum of $35,000 and $39,000 which he has used in part for the wife since separation in financing the establishment of her business, in financing her travel and in meeting the major costs of the household. I do take into account however, that as a result of the husband’s accidents the parties suffered substantial debts from the cleaning business and the wife has contributed to repayment of those debts. The husband’s counsel submitted the husband should be credited with 65% for financial contributions. The wife’s counsel submitted that on the basis of financial contributions, the parties’ contributions are equal.
It is not the usual approach to apportion separate percentages to the financial and non-financial contributions of the parties. It is necessary to weigh and assess the contributions of all kinds made by each of the parties throughout the period of their cohabitation and since separation and then translate such assessment into a percentage of the overall property of the parties [Aleksovski & Aleksovski (1996) FLC 92-705].
Non-financial contributions
The wife deposed to providing the husband with administrative assistance when they set up the cleaning business in 1996. Neither party adduced any other specific evidence about the parties’ non-financial contributions apart from their contributions as parents and homemaker. I have therefore considered these contributions under that heading.
Contributions as homemaker and parent
In his affidavit sworn 3 February 2005 the husband deposed to the wife doing most of the cooking, washing and ironing. He said he shared the cleaning and the care of the children. The husband said he started taking a substantial role in the children’s care after his accident in October 2000 and more particularly after November 2003 when the wife started her business which required her to work on weekends. Between November 2004 and March 2005 the wife cared for her terminally ill father so relied on the husband to look after the children. The wife acknowledged the husband has had the majority care of the children in 2005, attending their activities with them four days every week after school and spending the whole of every weekend with them.
According to the wife, the children spent more time with her in their early years and periods of 8 months and 3 months respectively in 2002 and 2003 in her sole care while they lived overseas. She acknowledged the husband’s assistance with the children after his accident in October 2000 and since she has been working on weekends. I am satisfied that both parties have played a substantial role in the children’s day to day care, but that until early this year the mother has taken the majority responsibility for their welfare and for household tasks. This is a contribution that must be given proper weight.
What is the effect, if any, of any proposed order upon the earning capacity of each party?
The property orders that I propose making in this matter will not affect the earning capacity of the wife. It will however be necessary for the wife to operate her business from a different residence.
In assessing their respective contributions overall, I find the assets of the parties should be apportioned 60% to the husband and 40% to the wife.
What matters referred to in sub-section 75(2) of the Act are relevant?
I have considered each of the relevant factors listed in section 75(2) of the Act. The husband is 35 and the wife 32 years. Both parties are working in their own businesses. The husband has a higher earning capacity than the wife. Despite his two accidents, the husband can work full-time and the wife has no health issues. The wife has a negligible interest in a superannuation fund. The husband has no superannuation. The children will spend most weekends with the husband and most weekdays with the wife. I agree with the wife’s counsel that the wife will face the substantial costs of re-housing when the home is sold or transferred to the husband. The wife will lose the amenity of owning her own home. The wife will be required to meet her day to day expenses and household bills from a modest business income and government entitlements. The husband on the other hand, has the benefit of a business which has the potential to generate a higher income, particularly with his increased available time to work. I make an adjustment in the wife’s favour in relation to this factor.
As stated earlier, as the husband did not provide the financial documents necessary for the valuer to prepare a valuation, it is not possible to put a precise value on the husband’s company. It may be that this has prejudiced the husband rather than the wife, but nevertheless I find the husband’s failure to comply with his obligation to fully disclose his financial position, requires an adjustment in the wife’s favour pursuant to section 75(2)(o).
The wife’s counsel submitted the wife is entitled to an overall 80% of the net asset pool. He said the wife is financially fragile and has a restricted earning capacity as a result of her care of the children. He submitted the property will have to be sold and the wife will have to pay rent. He said given the modest size of the net asset pool, the wife should receive most of it. I do not find the evidence supports this submission.
The husband’s counsel submitted that each party should receive 50% of the net assets available for division, based on a 65% contribution entitlement to the husband and a 15% adjustment in favour of the wife.
Have there been any other orders made affecting a child or either party and is child support payable or likely to be payable in the future for the children of the marriage?
There are no previous orders and no evidence as to either party’s likely child support obligations once these proceedings are finalised. However, on an application of the child support formula, it is likely the husband will bear some responsibility for child support.
In assessing the section 75(2) factors I find a just and equitable result requires the wife to receive by way of adjustment in her favour a further 15% of the matrimonial assets. The wife will therefore receive 55% of the net assets overall.
Is the result just and equitable?
Section 79(2) provides that:
The Court shall not make an Order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.
The wife asks for an order that the home be sold, or if retained by the husband, that the joint loan secured by mortgage be discharged. The wife does not seek to retain the home.
The husband says he will approach Westpac Bank for a loan to refinance the home loan and make a payment to the wife. Although he has as yet made no inquiries, he is hopeful that his application will be successful as a result of his relationship with the bank through his company. He asks for the opportunity to retain the home if he can obtain the necessary finance. I will give the husband the opportunity to retain the home, but if he is unable to do so within 2 months, the home will be sold.
Assuming the husband is able to borrow the necessary funds, the husband will receive the home subject to mortgage, and the additional assets held in his name. For the wife to receive 55% of the net assets the husband will be required to pay her $57,804.00. This means he will have the assets and liabilities set out in this table:
| Assets to be retained by husband | $ |
| Property in metropolitan area | 405,000.00 |
| Monies owed by Mr MW | 5,000.00 |
| Monies owed by STPL to the husband | 19,657.00 |
| STPL | 3,000.00 |
| Mortgage on home | (280,000.00) |
| Mastercard debt | (13,141.00) |
| Debt to husband’s brother | (5,000.00) |
| Proportion of net sale proceeds of wife’s Hyundai | 45% share |
| Payment to wife | (57,804.00) |
| Total | 76,712.00 |
The wife will have the assets and liabilities set out in the following table:
Assets to be retained by wife | $ |
| Contents of the home | 10,000.00 |
| Superannuation | 3,000.00 |
| Proportion of net sale proceeds of Hyundai | 55% share |
| Wife’s business | 30,000.00 |
| ANZ Mastercard debt | (2,825.00) |
| Westpac Mastercard debt | (4,220.00) |
| Payment from husband | 57,804.00 |
| Total | 93,759.00 |
In the event the husband is unable to discharge the home loan and meet his obligations to the wife, the home will be sold. The asset pool will change taking into account the costs of sale and the sale price. If the value of the home and the mortgage to the National Australia Bank is deducted from the net asset pool, the asset pool is $45,471. The wife is to receive 55% of the overall pool so she must receive $25,009 of the asset pool excluding the home and mortgage and 55% of the net sale proceeds of the home. The wife will have the contents, her superannuation, her business and her two credit debts which is a total of $35,955, $10,946 more than her entitlement to the assets excluding the home and mortgage. The husband is to receive 45% of the net asset pool excluding the home and mortgage so must receive $20,462 of the net pool excluding the home and mortgage and 45% of the net sale proceeds of the home. The husband will have monies owed by Mr MW, monies owed by STPL, his business, his credit card debt and the debt to his brother which is a total of $9,516. So the husband will need $10,946 from the sale proceeds in addition to 45% of the net proceeds of sale.
I am satisfied that in all the circumstances, the orders set out at the beginning of these reasons are just and equitable.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of Sexton FM.
Associate: Collette McFawn
Date: 9 November 2005
0
2
1