Sadler and Mistry

[2015] FCCA 3407

FEDERAL CIRCUIT COURT OF AUSTRALIA

SADLER & MISTRY [2015] FCCA 3407

Catchwords:
FAMILY LAW − De facto property − small property pool − relevance of any other matter consideration.

Legislation:

Family Law Act 1975 (Cth), ss.90SM(3), 90SM(4), 90SF(3), 90SF(3)(r)

Applicant: MS SADLER

Respondent: MR MISTRY

File Number: DGC 1522 of 2014

Judgment of: Judge Phipps

Hearing date: 11 & 12 June 2015

Date of Last Submission: 12 June 2015

Delivered at: Dandenong

Delivered on: 18 December 2015

REPRESENTATION

The Applicant: Appearing on their own behalf

Counsel for the Respondent: Mr King

Solicitors for the Respondent: Belleli King & Associates

ORDERS

1. That on or before 31 March 2016 (the date) the applicant pay to the respondent an amount (not exceeding $45,000) equal to the then outstanding balance of money owing to the respondent’s mother originally lent by the respondent’s brother and refinanced by the respondent’s mother (the payment).

2. Upon receipt of the payment the respondent pay the amount to, or at the direction of, his mother.

3. Simultaneously with the payment of the amount the respondent execute all documents and do all things necessary to transfer all his right title and interest in the property at Property E to the applicant.

4. In the event that the whole of the payment is not made by the date the applicant and the respondent do all things necessary and sign all documents to sell the property and upon completion of the sale the proceeds of the sale be applied:

   (a)First to pay all costs, commissions and expenses of the sale;

   (b)Secondly to discharge the mortgage and any other encumbrances affecting the real property;

   (c)Third so much of the payment as is then outstanding;

   (d)Fourthly the balance to the applicant.

5. The respondent be solely liable and indemnify the applicant against all payments in respect of:

   (i)the (omitted) Mastercard in his name;

   (ii)the (omitted) bank debt (originally (omitted) Bank).

6. That otherwise unless specified in this order and save for the purposes of enforcing any monies due under these or any subsequent orders;

   (a)Each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders (the furniture, personal possessions and the like chattels in the property) being deemed to be in the possession of the applicant;

   (b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to this order.

7. Otherwise all extant applications are dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Sadler & Mistry is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

DGC 1522 OF 2014

MS SADLER

Applicant

And

MR MISTRY

Respondent

REASONS FOR JUDGMENT

Introduction

1. The applicant and the respondent were in a de facto relationship from 2005 until August 2013.  They disagree on the distribution of property.  The applicant was born on (omitted) 1957 and is 58 years of age.  The respondent was born on (omitted) 1983 and is 32.  When they commenced their relationship the applicant was 48 and the respondent 21.

2. The only significant asset is a property at Property E.  The agreed value is $340,000.  The mortgage is $253,784.50.  The respondent has a (omitted) Jeep purchased post separation.  The respondent had a Ford (omitted) motor vehicle at separation that was traded in on the Jeep.  The Jeep is under finance and has no net value.  I will not include it in the property pool.  The applicant has a (omitted) Mitsubishi.  Each of the parties places a value on it, both quite low, but there is no professional valuation.  I will treat it as having a nominal value and not include it in the property pool.

3. The applicant asserts that the respondent has a Nissan motor vehicle.  I am satisfied he does not own and never has owned such a motor vehicle.  The applicant may be referring to a motor vehicle at one stage that he used in the course of employment, owned by his employer.

4. The applicant asserts that the respondent has a boat.  The only evidence is a picture of the respondent and his wife on a boat on his Facebook page with a caption.  I am satisfied he does not own the boat.

5. Both parties have shares in their names in a company (omitted).  Each has a 10% holding in the company.  The shares have no value.  The company was attempting to market in Australia (omitted) the respondent worked for it for some time.  The venture was not successful.

6. The applicant includes a number of things in her list of assets and liabilities.  She includes as assets of the respondent tools and toolboxes, model helicopters, canopies for the helicopters, a trailer, fishing, boating and golfing equipment, (omitted) business equipment and water tank/shower/furniture/electrical equipment et cetera.  The respondent acknowledges he has some of these items but there are no professional valuations only assertions by the applicant.  None of them are obviously of any saleable value and I will not include them in the list of assets.

7. The applicant includes in her list of assets an item, wages from (employer omitted) $5,000.  She alleges that these were wages earned by the respondent which he did not pay into the joint account.  There is no evidence that that money is currently held by the respondent and so it is not an asset.

8. The liabilities in addition to the mortgage and the loan from (omitted) Finance for the Jeep are a (omitted) Mastercard (in the respondent’s name), $4,171, a loan from the respondent’s mother (originally from his brother) $45,000 and (omitted) Bank personal loan (now (omitted) Bank) in joint names $4,461.  Apparently the loan originally was in joint names but the (omitted) Bank statements are addressed to the respondent.  The applicant asserts a loan, or loans, for schooling and other expenses of $22,000 and a loan from her mother for a holiday in (country omitted), $6,000.  There is no evidence of the (country omitted) loan apart from the applicant’s assertion.  If it was made there is no evidence the mother requires repayment.  There are no documents for the $22,000 loan.  From the applicant’s evidence they are all or mostly post separation.

9. I am not clear whether the applicant acknowledges the $45,000 as owing to the respondent’s mother.  At some points in her affidavits she does refer to it.  I am satisfied the loan exists.  It is described later in these reasons.  The parties purchased a block of land and moved a house on to it.  It then required substantial work of completion and renovation.  The parties had no funds and the respondent’s brother lent them $50,000.  Later the brother needed the money for a purchase of his own and the loan was refinanced by the respondent’s mother by taking a bank loan.  The respondent’s evidence is he has been paying it back in accordance with the loan repayments to the bank.

10. The respondent and his father worked on the completion of the house.  The respondent was working for his uncle who had a (omitted) business.  That business moved the house.  Tradesmen, friends of the respondent worked on the project, some reciprocating work that had been done for them by the respondent and so not charging.  The applicant, while apparently not acknowledging the loan, also asserts that the respondent spent the money on purchases for himself.  As a separate allegation she alleges wastage by the respondent and lists a number of withdrawals from the parties’ bank account by the respondent.  I am satisfied the evidence shows that this was money spent on materials and labour in the work on the house.  I am also satisfied that money was lent by the respondent’s brother and subsequently refinanced by the respondent’s mother and that there is now owing $45,000.  I am satisfied that the $50,000 borrowed was used in the work of completion and renovation of the parties’ property.

11. When the parties met the applicant owned a property at Property E.  She sold it and received $100,000 net according to her and $97,000 net according to the respondent.  She then purchased Property F for about $255,000 using some of the money from the previous property as a deposit and obtaining a mortgage.  Further funds were used to purchase a boat for the respondent and to put his utility motor vehicle finance onto the mortgage.  At the same time as the mortgage the parties obtained a (omitted) Mastercard.  Subsequently the boat was traded in on another boat.

12. The parties lived in the Property F premises for about four years and then sold it.  There is some dispute about the net amount received after its sale but that money, or some of it, was used as a deposit on a block of land at Property E.  The purchase price was $150,000 and the deposit was $15,000.  The parties then borrowed $135,000 to complete the purchase.  The house was moved onto the property and subsequently it was revalued and the mortgage increased.

13. The parties rented in (omitted) paying rent while they moved the house onto the block and completed its construction.  They moved in about 18 months later.  The house was moved at no cost.  It was done by the respondent’s uncle’s firm which subsequently sued.  Part of what the applicant alleges as assets is $10,000 paid for legal fees of this proceeding.  It is money spent and so cannot be property and it cannot be an add back into the property pool.  It was money spent in the course of the relationship on something the parties were unable to avoid.

14. The parties rented the Property E house commencing around July 2012 when the respondent became unemployed.  They moved in with a friend of the applicant.  The applicant moved back into Property E with her mother in August 2013.  The respondent said he was moving his things back into the property but decided to end the relationship.

15. I have already said I am satisfied that $50,000 was borrowed from the respondent’s brother.  The money is shown coming into the parties’ bank account and I am satisfied that it could have been the only source of funds for the completion of construction and renovation of the house moved onto the block.  The applicant appears to be saying that she did not sign any documents and says she knew nothing about it.  There is no loan document but there is satisfactory corroboration that the loan was made.  There is ample evidence of money spent on the house.  The respondent gave detailed evidence of the work done and how the money was spent referring to withdrawals from the parties’ bank account.

16. The parties had two holidays overseas during their relationship.  They went to (country omitted) for about seven weeks in 2008.  They obtained a personal loan of $15,000 and then used their (omitted) Mastercard.  They spent approximately $35,000 on the holiday.  In 2013 they went to (country omitted) and spent $6,000.

17. After the house was completed the parties increased the mortgage to about $260,000.  The mortgage was with (omitted) Bank.  The additional money borrowed included incorporating the loan for the Ford motor vehicle driven by the respondent and the (omitted) Mastercard which had financed the holiday to (country omitted).

18. One of the allegations of wastage by the respondent made by the applicant is an amount of $47,804 withdrawn from their bank account.  I am satisfied that was part of the transaction which paid out the loan on the Ford motor vehicle.

19. The $15,000 loan the parties took out for the (country omitted) holiday was on 1 June 2015 down to $4461.  It has been taken over by (omitted) Bank because it fell into arrears.  The respondent is paying $50 per week.

20. On the (omitted) Mastercard the balance owing at 18 May 2015 was $4,117 .05 and the respondent is paying that at $50 per week.

21. The applicant says she contributed $30,000 from bingo and (omitted) winnings.  The respondent alleges waste by the applicant on gambling and sets out the amount he says were withdrawn from the joint account and used at bingo and on “pokies”.

22. The applicant may well have had winnings.  They were used to purchase goods or otherwise spent on the parties’ relationship.  The amounts shown being withdrawn from the bank account, in total over $20,000, while quite large compared to the parties’ income, do not constitute such waste that they should be added back into the property pool.

23. Over the course of the relationship the applicant withdrew all of her superannuation, first as a hardship payment and then the balance when she retired.  Her (omitted) Super statement for the period 1 July 2009 to 31 March 2010 shows that on 1 July 2010 the balance was $116,432.31.  In the nine months to 31 March 2011 she withdrew $37,405.  She said this was a hardship withdrawal of $30,000 when she became unemployed and $8,000 tax.  The balance of 31 March 2015 was $83,487.75.  She withdrew that when she retired.  That money has been spent.

24. When the parties purchased shares in (company omitted) the respondent used money, $30,000, from his self-managed superannuation fund.  The applicant initially paid $60,000. $30,000 was repaid and so she invested $30,000 by purchasing shares.  Both parties recognise that the investments are worthless.  The applicant applies for the shares to be transferred to her. This is a pointless exercise and could not be done because it appears that the shares are held in the respondent’s self-managed superannuation fund.

25. I will exclude the two motor vehicles and the (company omitted) shares for the reasons already given.  Each party puts a value on the motor vehicles.  The respondent says his motor vehicle is valued at $45,000, the applicant, $55,595.  The finance owing is $45,000. The applicant says her motor vehicle is valued at $600, the respondent $1,500.  There are no professional valuations.  The respondent’s value of his motor vehicle equals the amount owing on finance.  The wife’s motor vehicle essentially has a nominal value.  The applicant has furniture which she values at $3,000.  There is no professional valuation and it is better to treat it as a financial resource.

26. The applicant alleges the respondent has a number of items.  He acknowledges the model helicopters and canopies and some tools.  There is some fishing and sport equipment.  None has a professional valuation and they are not items which, second-hand, have an obvious ready market.  I will not include them but again to some extent they are either a financial resource or can be taken into account either as that or as any other relevant matter.

Assets and liabilities

1. The only asset is Property E occupied by the applicant with an agreed value is $340,000.  The liabilities are:

Liability	Amount
Mortgage Property E	$  253,784
(omitted) Mastercard (respondents name)	$     4,171
(omitted) Bank personal loan (joint names)	$     4,461
Loan - applicants brother (now mother)	$    45,000
Total	$  307,416

1. The net asset pool is $32,584.

2. The applicant has no superannuation.  The respondent has $3,200.

Just and equitable

1. The first step is to consider the requirement of s.90SM(3) of the Family Law Act 1975 (Cth), that is whether the court is satisfied that, in all the circumstances, it is just and equitable to make an order. Both parties agree that the relationship has broken down. The basis on which they lived together and shared finances no longer exists. Both wish to bring their financial relationship to an end by orders under the s.90SM.

Contributions

1. Section 90SM(4) requires the court to take into account the financial and non-financial contribution made by on behalf of a party in the acquisition, conservation or improvement of any of the property, and any contributions made in a homemaker role.

2. At the commencement of the relationship the applicant was employed earning $24 per hour.  She says this was as (occupation omitted) of (employer omitted) five hours a day and an extra two hours a week on (omitted) on a Saturday.  The respondent says this was employment as a (omitted).  Whatever it was it was casual work.  The respondent was employed as a (omitted) earning about $750 net per week.  Now the applicant is studying and has government benefits of $519 a fortnight.  She is studying and hopes to be able to set up her own business.  She says she has loans of $22,000 approximately which he describes as mainly schooling fees, business set up bills et cetera.

3. In 2012 the respondent commenced work with (employer omitted).  He earned $250 per week plus a Newstart top up of $215 per week.  He says this was for 12 months.  The applicant says it was 16 months.  Now he is employed as an (occupation omitted) earning $960 per week.  He is married and his wife earns about $300 per week.

4. The applicant says she was employed throughout the relationship.  The respondent says she had periods out of work.

5. The property pool is very small. The issue of contributions is of little relevance and I will not make an assessment.  The applicant made initial contribution of either $97,000 or more $100,000. She had over $100,000 in superannuation.  The respondent had about $30,000 in superannuation or a little more.  The parties lived beyond their means so that now, despite both earning, with some breaks, throughout the relationship the net value of assets is now $32,584.  Arguably because of the applicant’s initial contribution assessment of her contributions would be greater.

Section 90SF(3)

1. Given the small asset pool the real significance is the s.90SF(3) considerations. The respondent is much younger than the applicant and is employed as an (occupation omitted) earning $960 per week. Given his work history he has skills which make him employable. The applicant, when the relationship commenced, was working as a (occupation omitted). She is undertaking a (omitted) course in the hope of establishing a business. She is 58 and her income earning prospects do not seem good.

2. She lives with her elderly mother and her mother’s pension makes the mortgage payments of $1,800 a month.  She says she is borrowing money to be able to keep going financially.

3. Repayment of the loan from the respondent’s mother must be borne by the only asset, the house.  The loan money was used to complete the house and so contributed to its value.  Arguably the mother could claim she has an equitable charge against the house.  This is a relevant consideration as any fact or circumstance which, in the opinion of the court, the Justice of the case requires to be taken into account –s.90SF(3)(r).  The applicant wishes to retain the house.  If she cannot a reasonable inference is that she and her mother may face hardship.  I will allow some time, until 31 March 2016, for the payment to be made.

4. The credit card debt and loan debt are relatively large compared to the respondent’s income but manageable.  He has a greater earning capacity, $3,200 in superannuation, and he does have the benefit of various chattels and items in his possession paid for during the relationship.  These can be balanced against the furniture and household chattels in the house which will remain with the applicant.

5. The respondent’s greater earning capacity plus his having various chattels and items paid for during the relationship mean that he should be responsible for the other debts, the credit card and joint loan.

6. The applicant makes a claim for spousal maintenance.  She has not shown that she does not have the ability to support herself adequately.  The respondent remains liable for loans totalling about $8,500 and has been meeting their repayments on the loan from his mother.  There is no basis for making an order for spousal maintenance.

I certify that the preceding forty one (41) paragraphs are a true copy of the reasons for judgment of Judge Phipps

Date: 18 December 2015