SAMUEL & KARLSEN
[2018] FCCA 2541
•12 September 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SAMUEL & KARLSEN | [2018] FCCA 2541 |
| Catchwords: FAMILY LAW – Parenting and property proceedings – parenting orders made by consent at trial – marriage of 16 years – two children of the marriage – equal contributions – modest asset pool – just and equitable for an adjustment of property interests – husband has capacity to engage in gainful employment – wife has responsibility for the care of the children – adjustment of property interests as to 65% in favour of the wife and 35% in favour of the husband. |
| Legislation: Family Law Act 1975, ss. 75, 79, 81 |
| Cases cited: Dobbs & Dobbs [2018] FamCAFC 174 Forth & Hoddle [2008] FMCAfam 1318 H & T [2002] FMCAfam 209 Maybury & Maybury [2011] FMCAfam 540 Norbis v Norbis (1986) 161 CLR 513 Saleh & Saleh [2005] FMCAfam 133 Stanford and Stanford (2012) 247 CLR 108 Sutherland & Shriver [2012] FMCAfam 502 |
| Applicant: | MS SAMUEL |
| Respondent: | MR KARLSEN |
| File Number: | MLC 10059 of 2017 |
| Judgment of: | Judge A Kelly |
| Hearing dates: | 20 & 21 August 2018 |
| Date of Last Submission: | 22 August 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 12 September 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Allen |
| Solicitors for the Applicant: | Morgan Legal |
| The Respondent appeared in person. |
ORDERS
By 4.00pm on Wednesday, 26 September 2018, the applicant file and serve a minute of proposed order to give effect to these Reasons for Judgment.
By 4.00pm on Wednesday, 17 October 2018, the respondent file and serve a brief submission not exceeding 3 pages indicating where he agrees or disagrees with the applicant’s minute of proposed order.
Subject to paragraph 4 of this Order, the proceeding be listed for mention on Monday, 10 December 2018, for the making of final orders.
The parties be at liberty to file orders which they agree give effect to these Reasons for Judgment.
IT IS NOTED that publication of this judgment under the pseudonym Samuel & Karlsen is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 10059 of 2017
| MS SAMUEL |
Applicant
And
| MR KARLSEN |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment explain my conclusions respecting the parties’ claims for an adjustment of property interests made pursuant to s 79 of the Family Law Act 1975 (Cth) (Act).
In short, I have concluded that the parties’ asset pool should be adjusted such that 65% of those assets are allocated to the wife and 35% are allocated to the husband.
Background
The parties are of (omitted ethnicity). The applicant wife is aged 35 years and is in good health. The respondent husband is aged 45 years and is also in good health. Each of the parties have tertiary qualifications which they obtained in the course of their marriage. The wife holds a (qualifications omitted) while the husband holds a (qualifications omitted).
On 2001, the parties married in (country omitted). There was some dispute concerning the financial arrangements relating to the parties’ wedding. The wife accepted that it was traditional in (nationality omitted) culture for the husband to pay for the wedding and agreed that he had done so. The wife accepted that the husband had brought a wedding dress to (country omitted) for the wedding, but disputed the husband’s valuation of the dress at $8,000.
There are two children of the marriage aged 13 and 4 years of age respectively. They are in apparently good health.
The parties consider themselves to have had a traditional marriage, whereby the wife attended to shopping, cooking, cleaning and the care of the home, while the husband pursued his career in (employment omitted) working for (employer omitted).
Each of the parties pursued tertiary studies in the course of the marriage. Each party supported the other in the course of their respective studies. The wife obtained her (omitted qualifications) in 2012 and commenced work in the fourth quarter of 2013. The husband also undertook study for a (qualifications omitted) in (studies omitted).
After 14 years of marriage, the parties had saved enough monies to place a deposit for the purchase of a property at Property A (Property). The deposit paid was $100,000. The balance of the purchase monies were obtained by way of loan from Bank 1. The loan was secured by mortgage.
The parties separated on 30 January 2017, after a marriage of ~16 years.
Following the parties’ separation in January 2017, the wife remained in the matrimonial home for a further period of three months. The parties were separated under the one roof during that period. The wife contested the husband’s assertion that she made no contributions during that three month period and maintained that she had continued to cook, clean and care for the children throughout that period.
The parties were also in dispute concerning the value or amount of furniture which had been taken by the wife when she moved out of the matrimonial home.
In May 2017, the parties’ eldest son moved out of the mother’s home to live with the father. He later returned to live with the mother.
On 10 August 2017, the husband contacted the wife by email to discuss travel arrangements to (country omitted) in December 2017. To that end, the husband sought to renew the elder child’s passport.
On 25 August 2017, the husband arranged an appointment with a Family Relationships Centre. The wife failed to attend that appointment. Again on 16 October 2017, the wife failed to attend a further mediation arranged with a Family Relationships Centre.
On 21 September 2017, the husband, without notice to the wife, executed a contract of sale of the Property for a sale price of $690,000.
On 25 September 2017, the wife ascertained that the husband had applied for a renewal of the elder child’s passport and had done so by forging the wife’s signature on the application. The husband accepted that he had used the wife’s signature in this way, but said that each of the parties did this “all the time”. The wife was concerned that the husband intended to relocate to (country omitted), a non-Hague Convention country. An investigation of the matter by Customs was not pursued.
On 30 September 2017, the husband was made redundant.
On 20 October 2017, the wife lodged a caveat over the Property.
The fact of the sale of the Property was revealed to the wife in consequence of the caveat which she had lodged. Settlement on the sale of the Property occurred on 21 November 2017 and the net proceeds of sale are held in the trust account of solicitors appointed by the husband.
Procedural History
On 28 September 2017, the wife filed an initiating application seeking parenting and property orders.
On 25 October 2017, the husband filed a Response, Financial Statement, Notice of Risk and answering affidavit. Included in the Response, orders were sought including the following:
Agreement
4.As per the marriage contract, the husband pays the wife AU$19,000 (value of 50 English Gold Coins) which was agreed upon if a divorce occurred.
5.The property (Property A), and its liabilities will be the sole property and responsibility of husband.
6. The husband monthly pay maintenance to the mother for his son. . . until he becomes of age.
7. The Applicant wife is not required to pay maintenance
Superannuation
8.Neither party reserve the right to amend the Superannuation Slitting (sic) Order and their superannuation fully stays their property and remains unchanged. (Emphasis in original)
In the event, the husband did not pursue claims for relief in those terms. The husband gave evidence that he had obtained the draft agreement from the internet and adapted it to his needs.
On 6 November 2017, orders were made by consent for the children to live with their mother and spend time with their father on alternate weekends. The children were placed on the airport watch list. An order was made for the appointment of an Independent Children’s Lawyer. The proceeding was set down for trial. Orders were made for the parties to attend a conciliation conference.
It is evident that the parties have made extensive efforts to resolve their disputes by negotiation, but have done so to no avail.
A Conciliation Conference convened by a Registrar on 29 January 2018 was not successful.
On the first day of the hearing, the parties were able to resolve their parenting orders by consent and an Order was made in the terms which they sought. Counsel for the Independent Children’s Lawyer supported the making of the orders, and accordingly was discharged on that day.
The parties were also able to agree upon an interim order which provided for an equal adjustment of their superannuation interests.
Each of the parties gave evidence and were cross-examined. I found the evidence of each party to be unsatisfactory in various respects. I also consider that they had been less than candid in making full disclosure of their financial position.
The Property
I am prepared to accept that the parties contributed jointly to the payment of the deposit for the Property. Such contributions were made either by way of direct financial contribution or by way of non-financial contribution in the period that it took them to save for that deposit.
I further find that they each contributed in the same manner set out in [28] above to the reduction of the mortgage liability on the Property.
As concerns post-separation contributions, I accept the husband’s evidence that he worked hard to maximise the price which could be achieved upon the sale of the Property.
Motor vehicles
The parties have two motor vehicles. The husband’s motor vehicle is a 12-year-old Motor Vehicle A having an agreed value of $5,000.
The wife’s motor vehicle is a Motor Vehicle B which is subject to a lease liability. The parties sought to occupy much time disputing the value of this vehicle. Their evidence was quite unsatisfactory. Orders were made directing the wife to file an affidavit providing independent evidence of the value of a vehicle of the make and model in question and of the current amount of the lease liability.
The affidavit filed by the wife on 22 August 2018 proved that the vehicle had a probable range of values based upon it being assessed in As New, Very Good, Good, Average, Fair or Poor condition. Upon the available evidence, I find the following:
Value $35,570 (private)
$30,320 (trade in)
Lease liability $34,688.86
It follows that the equity in the wife’s motor vehicle, if any, is minimal.
Bank accounts
The husband gave little discovery and adduced no evidence concerning any bank account. He did, however, prove a MasterCard liability of $15,000, which liability was agreed.
The wife tendered in evidence a series of bank statements relating to an account maintained by her with the Bank 2. While the bank statements proved the current balance of her account was $900, they also proved that the wife had withdrawn $8,000 shortly before the trial. The wife’s explanation for that withdrawal was unconvincing. I find that it is appropriate to add that sum back to the property pool.
Jewellery
The parties were also in dispute concerning jewellery which the husband had given to the wife. The parties were in dispute as to the quantity or value of the jewellery. While the husband had raised this issue by his affidavits before trial, the question had not been addressed by the wife until counsel became involved in preparation for trial.
On Sunday, 19 August 2018, the wife transmitted a black-and-white photo of the jewellery to a jeweller in (country omitted) for the purposes of obtaining a valuation. The (nationality omitted) jeweller provided a valuation, which the wife tendered in evidence. It ascribed a value of US$7,500. The husband adduced no independent proof of the value of the jewellery. However, the husband was disadvantaged by the late production of this valuation and the inability to test it by cross-examining the valuer. It is necessary to convert the valuation to Australian currency values.
In addition, the parties were in dispute in relation to other jewellery which was not included amongst the items photographed and valued on 19 August 2018. The parties’ version of events in relation to this unvalued jewellery changed in the course of the hearing. At one point it was suggested that the missing jewellery included diamonds that had been sent back to (country omitted). The wife’s affidavits contained no reference to diamonds. It was also suggested from the witness box that the jewellery had been hidden in a concealed compartment in furniture, in a property that was tenanted by the parties, and had mistakenly been left in that compartment when the parties vacated the property. The wife suggested that the parties had returned to that property with the permission of the letting agent, but discovered the jewellery was missing. I find that the claim in respect of the missing jewellery is not proved.
Furniture
The parties were also in dispute in relation to the value of their furniture. The husband ascribed value of $27,000 to the parties’ furniture. The wife made no allowance for the furniture at all.
No independent proof of the value of the chattels was provided. While I am not satisfied that the furniture had a current value of $27,000, I am prepared to accept that the wife took the substantial share of the furniture when she left the Property and that a lesser proportion of furniture was retained by the husband. Some value must be attributed to the furniture which was acquired by the parties during the course of their relationship.
Liabilities
The parties were agreed on the husband’s existing credit card liability.
Each of the parties gave evidence to having taken out loans from various members of their family and friends and relied upon these “loans” to explain the withdrawal of significant sums from their bank account or otherwise to buttress their claims to be living in a parlous financial state. None of the affidavits filed before the trial by either party addressed in any detail their having taken out any loans, nor did their financial statements do so.
However, the husband’s trial affidavit did exhibit a money transfer of $3,585 which had been made to him by his brother from Town A, NSW, on 9 August 2017. The forms exhibited to the husband’s affidavit in support of this “loan” include an Inmate Payment Form: Request to Send Money Out, which stated that the purpose of the payment was for his brother “being transferred to Victorian prison to complete sentence”. While this topic was not explored at trial, the text of that document undermines a conclusion that the transfer of money was made by way of loan to the husband. Instead, as I find, it was made to enable the husband’s brother to complete his sentence of imprisonment in a Victorian prison.
On the whole of the evidence I am not prepared to make affirmative findings that either party has an existing liability for any loan to family or friends of the kind which they referred to.
Property pool
Doing the best I can with the available evidence, I find the parties’ property pool to be as follows:
Assets
Value
Net proceeds of sale of matrimonial home
$165,638
Motor Vehicle B
$33,000
Motor Vehicle A
$5,000
Wife’s bank account
$9,000
Jewellery
$11,000
Furniture – husband
$5,000
Furniture – wife
$10,000
Sub-total
$238,638
Liabilities
credit card – husband
$15,000
Motor vehicle lease
$34,700
Sub-total
$49,700
Total pool
$188,938
As noted above, the parties agreed in consent orders to an adjustment of their superannuation interests. The net effect of those orders is as follows:
Husband’s superannuation $154,772
Wife’s superannuation $ 21,864
Total $176,636
Equalisation by consent orders $ 88,318
Accordingly, a sum of $66,454 will be transferred to the wife as a result of the consent orders adjusting the parties’ superannuation interests.
Having identified the parties’ existing property interests, I consider that it is just and equitable that there should be a property adjustment: Stanford and Stanford (2012) 247 CLR 108 (Stanford), [31], [44].
It is just and equitable because one or both of the parties have chosen that they should no longer continue to live in their relationship. For that reason the parties no longer have the common use of their property, towards the acquisition of which they each made contributions over the period of their relationship. The express or implicit assumptions which underpinned their relationship, including that they would be able to consensually adjust their interests in such property, are at an end: Stanford, [41]-[42]. A just and equitable adjustment of their interests is therefore appropriate.
Contributions
I find the parties had a traditional marriage as they both described it, where the husband pursued his career at (employer omitted), while the wife undertook the role of homemaker and parent. The husband was not critical of the wife in the quality of her cooking, cleaning, shopping, and general care of the parties’ home. Both of the parties supported the other during their pursuit of tertiary education, including during their masters degrees which they undertook over a period of several years. In addition, the wife was the primary carer of the parties’ children.
As I observed during the course of the trial, non-financial contributions are no less valuable than financial contributions.
Each of the parties made contributions toward the acquisition, conservation and improvement of the matrimonial home.
Post-separation contributions
The wife has had the primary responsibility for the children since separation, the youngest of whom is now aged four years.
The parties were in dispute as to their relative financial contributions towards the children’s education and other needs, but in general were agreed that each of them respectively, was responsible for the care and upkeep of the children whilst they were in their care.
Contextually, it is important to recognise that the children are in the care of their mother for the majority of the time. The Family Report, affidavits and parties’ evidence confirms that this is so. Although the elder child will spend time after school with his father until he is picked up by his mother, the vast majority of the children’s time is spent in the care of the wife. The wife will continue to have this ongoing responsibility for the children until they attain their majority.
I assess the parties’ contributions, financial and non-financial, to be equal.
Section 75(2) factors
It is common ground that the parties’ financial circumstances are modest. I accept the wife’s submissions that in some senses, the smaller the asset pool the more critical the non-financial contributions of the parties become: H & T [2002] FMCAfam 209, [19] (Bryant CFM, as her Honour then was); see also Maybury & Maybury [2011] FMCAfam 540, [191] (Coates FM); Forth & Hoddle [2008] FMCAfam 1318, [52] (Coates FM); Saleh & Saleh [2005] FMCAfam 133, [41] (Sexton FM). As those decisions illustrate, the principles respecting the treatment of small asset pools may apply irrespective of whether the marriage or relationship was of short or long duration.
Each of the parties is relatively young and enjoy good health.
The husband had been on a reasonable income at (employer omitted). Following his redundancy, the husband held a number of jobs and by his initial affidavit sworn on 20 September 2017, deposed to an income of $62,000.
Whilst the husband has been made redundant from (employer omitted), he has continued to pursue employment opportunities. An investigation of the extent of the husband’s present financial position was complicated by the fact that he had only filed, but not served, his trial affidavit and current financial statement. It was only by an examination of the court file on the electronic portal that the wife’s counsel discovered the filing of these documents on the business day immediately before trial. While the husband’s original financial statement disclosed an average weekly income of $1,150, his more recent financial statement disclosed an income of $574 which included a new start allowance of $324.
Whilst the husband is presently investigating other employment opportunities, I am satisfied that he has the capacity to engage in gainful employment and that he will do so. His conduct since being made redundant at (employer omitted) demonstrates that he has actively pursued employment opportunities. He is well capable of earning a reasonable income. It is true that the husband is some ten years older than the wife, however he is not of an age where his prospects of future income earning are negligible or likely to diminish in the near future.
The husband’s stated expenses and current income do not reconcile. Whilst I have serious reservations about the adequacy of the parties’ financial disclosure, I am satisfied that each of them has a capacity to work in the future.
The wife’s taxable income in the year ended 30 June 2017 was $47,651. The wife’s trial affidavit disclosed that her current annual income is $73,238. The bank statements adduced in evidence indicate that the wife is also in receipt of Commonwealth family benefits which are modest.
The most important factor in this case arises from the wife’s responsibility for the care of the children who are both still quite young: Sutherland v Shriver [2012] FMCAfam 502, [132] (Brown FM). Each of the children is in good health. As stated above, the elder child is now aged 13 years and the younger is aged 4 years.
For so long as the husband is not in employment, the burden of providing for the children will fall commensurately upon the wife.
By the proposed separation agreement prepared by the husband in March 2017, he had suggested that the wife should provide the primary residence for the children and “shall have the day to day responsibility for the guidance and upbringing of the children.”
The husband’s submissions and evidence focussed upon his time and care of the elder child for whom he has bought gifts, computer screens and the like. The wife deposes that the husband refuses to spend more than 30 minutes at a time with the younger child. A notable feature of the evidence was the comparative absence of evidence of the father’s contact with the younger child.
As at February 2018, the husband was advancing a claim by email with the wife that he would move to Sydney and take the children with him. However, I am satisfied that the husband does intend to maintain a constant and meaningful relationship with his children.
The evidence in relation to the parenting issues is also relevant. The parties’ consent parenting orders acknowledged that the elder child goes to his father’s home after school and is collected by the wife once she has finished work. The father is to spend time with the children on alternate weekends and for half of school holidays.
The parties were in dispute as to the payment of the elder child’s school fees. I decline to make a finding as to which of them was being truthful on this issue. In the end, each of them had made some payments and, as the parties seemed to accept, it is probable that they cannot afford to send their children to a private school in the future.
I consider that it is appropriate to make an adjustment of 15% in favour of the wife in respect of s 75(2) factors. An adjustment of that magnitude is relatively modest in circumstances where the wife will have to bear the majority of the responsibility for the children’s care: cf Dobbs & Dobbs [2018] FamCAFC 174, [17].
Conclusion
It is then necessary to frame orders to give effect to those conclusions. An adjustment of property interests in in this case equates[1] to:
[1] The calculation of the parties’ adjusted interests has been calculated in rounded numbers.
a)a net sum to the wife of 65%: $122,810
b)a net sum to the husband of 35%: $ 66,128
Total asset pool $188,938
To achieve that result, it is necessary to take account of the parties’ liabilities also.
Orders are required which will allocate the asset pool in a manner that is consistent with the parties’ possession of their respective assets and their responsibility for particular liabilities. In the making of final property orders it is well recognised that it is desirable to make orders that avoid the sharing of particular assets: Norbis v Norbis (1986) 161 CLR 513, 521 (Mason and Deane JJ). So too, it is usually preferable to avoid the making of orders which effect a continued sharing of liabilities.
The parties are directed to bring in short minutes of orders to give effect to these reasons for judgment. Those orders should achieve as far as is practicable, a final determination of the parties’ financial relationship and thereby avoid further proceedings between them: see s 81.
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 12 September 2018
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