Savage and Savage

[2007] FamCA 523

FAMILY COURT OF AUSTRALIA

SAVAGE & SAVAGE [2007] FamCA 523

FAMILY LAW - PROPERTY – Long marriage - Inheritances

Family Law Act 1975 s 75(2), s 79, ss (4)(a),(b), (c), (d), (g)

Pierce v Pierce (1999) FLC 92-844
Norbis v Norbis (1986) FLC 91-712

APPLICANT: Mr Savage

RESPONDENT: Mrs Savage

FILE NUMBER: DGF 1325 of 2005

DATE DELIVERED: 4 June 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Brown J

HEARING DATE: 26 March 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Weil

SOLICITOR FOR THE APPLICANT: Jane M Curtis & Associates

COUNSEL FOR THE RESPONDENT: Mr Holmes

SOLICITOR FOR THE RESPONDENT: Warren, Graham and Murphy

Orders

(1)That the real property situate at and known as B1 in the State of Victoria (the former matrimonial home) be sold altogether out of court (the sale) and the husband and the wife forthwith do all acts and things and sign all necessary documents to effect the sale of the B1 property and by way of consequential arrangements that should be made for the purpose of effecting the sale:

(a)The managing real estate agent(s) shall be as the parties agree in writing within 14 days hereof or, in default of agreement, shall be nominated by the president for the time being of the Real Estate Institute of Victoria;

(b)The reserve price for the B1 property shall be as agreed between the parties in writing within 14 days of the appointment of the agent or, in default of agreement, as recommended by the agent;

(c)Within 14 days of the appointment of the agent the parties shall agree in writing as to whether the B1 property be sold by public auction or private treaty and, in default of agreement, it shall be sold by the method recommended by the agent;

(d)The contract of sale of the B1 property shall provide for a deposit of 10% payable on the signing of the contract and the balance to be paid on a date agreed by the parties, or failing agreement, 60 days thereafter;

(e)If the parties are unable to agree in writing upon any necessary further or other terms and conditions of sale, or on any necessary work to be done on the property prior to sale, the terms and conditions, and the work, shall be as recommended by the agent, in writing;

(f)The solicitor to have the conduct of the conveyance of the B1 property shall be as agreed in writing by the parties within 14 days hereof or, in default of agreement, shall be nominated by the President for the time being of the Law Institute of Victoria; and

(g)Each of the husband and wife (by themselves, their servants or agents) shall be at liberty to offer or bid to purchase the B1 property PROVIDED THAT he or she gives to the other not less than 7 days prior notice in writing of his or her intention to do so and, if any such offer or bid is to be made in the name of an agent, identifies such name to the other party, in writing.

(2)That upon completion of the sale the proceeds shall be applied as follows:

(a)To meet any adjustments as between the vendors and purchaser;

(b)To pay all costs, commissions and expenses of the sale, including advertising expenses and conveyancing charges;

(c)To discharge all registered mortgages and encumbrances;

(d)To pay (or to reimburse the party who has paid) any costs expended on preparing the B1 property for sale, as agreed or recommended pursuant to paragraph 1(e) hereof (and the balance then remaining shall be referred to as the net proceeds of sale);

(e)To pay to the husband such part of the balance as is necessary to make up the husband’s entitlement pursuant to paragraph (4) hereof, less the sum due to the wife pursuant to paragraph (b) hereof, which shall be paid to her; and

(f)To pay the balance to the wife.

(3)That for the purpose of these orders, “the pool” shall be calculated by adding the net proceeds of sale of the B1 property to the sum of $356,238.00.

(4)That the husband’s entitlement pursuant to these orders shall be equivalent in value to 45% of the pool.

(5)That the husband’s entitlement shall be made up as follows:

(a)Assets and superannuation in his possession or control found to have a value of $15,378.00;

(b)Allocation of the base amount of $35,000.00 pursuant to paragraph (8) hereof; and

(c)Such part of the net proceeds of sale as is necessary to make up his entitlement pursuant to paragraph (4) hereof.

(6)That the husband pay to the wife a sum equivalent to one half of the sum paid at settlement of the sale of the B1 property to discharge the second mortgage registered over the B1 property, such sum to be paid as provided in paragraph 2(e) hereof.

(7)That paragraph (8) has effect from the operative time.

(8)That in accordance with paragraph 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment is payable to the wife in respect of her interest in H Super, Member Number … , the husband is entitled to be paid an amount calculated in accordance with the Family Law (Superannuation) Regulation 2001, using a base amount in the sum of $35,000.00, and there is a corresponding reduction in the entitlement of the wife to whom the splittable payment would have been made but for these orders.

(9)That this order binds the trustee of H Super, H Super Pty Ltd, to observe the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulation 2001.

(10)That the operative time for the purposes of these orders is 4 working days after service of a sealed copy of these orders upon the trustee of H Super, H Super Pty Ltd.

(11)That the wife be and is hereby restrained by herself, her servants and agents, from making any binding death benefit nomination to the trustees of H Super in favour of any person, or doing any act or thing which would have the effect of, in any way, reducing the value to the husband of the splitting order made herein.

(12)That each party and the trustee have liberty to apply in relation to the implementation of orders made herein which effect the superannuation interest.

(13)That pending the completion of the sale:

(a)The wife have the sole right to occupy the B1 property and during such right of occupation she pay all rates and taxes and like proportional outgoings of the B1 property as they fall due;

(b)The parties hold their respective interests in the B1 property upon trust pursuant to these orders; and

(c)Neither party encumber the B1 property without the consent in writing of the other party;

(14)That unless otherwise specified in these orders:

(a)Each party be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears in the bank’s record thereof; insurance policies are deemed to be in the possession of the beneficiary thereof; superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or work in future produces the condition for the payment out of such entitlements; and the chattels in the B1 property are deemed to be in the possession of the wife; and

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

(15)That the wife relinquish any entitlements she may have in the business of J Business and the husband shall indemnify the wife and forever thereafter keep her indemnified in respect of all or any liabilities in respect of the said business, including any liability to the Commissioner of Taxation, howsoever such liability arises.

(16)That each of the parties do all acts and things and execute all necessary documents and give all consents necessary to give effect to these orders and in the event a party refuses or neglects to comply with a provision of these orders:

(a)The Registrar of the Family Court of Australia at Melbourne is appointed to execute all deeds and documents in the name of the party in default and do all acts and things necessary to give validity and operation to these orders; and

(b)The party in default is ordered to pay any and all foreseeable damages to the other party caused by his or her default; and

(c)The party in default is ordered to pay all reasonable costs incurred by the other party for the purpose of enforcing this order and proving his or her damages.

(17)That if a party has lodged a caveat over any piece of real property in which the other party has an interest (legal or equitable), he or she provide (at his or her expense) a signed withdrawal of such caveat in registrable form at settlement of the sale of the B1 property and pay all costs necessary to register such discharge of caveat or caveats.

(18)That a party be at liberty to make an application for costs of and incidental to these proceedings by filing written submissions within 28 days hereof and:

(a)The other party have a further 28 days in which to make written submissions in answer; and

(b)The party applying for costs have a further 28 days in which to make any written submissions in reply.

(19)That each submission filed pursuant to paragraph (18) hereof have endorsed on the coversheet the date on which that submission was served on the other party.

(20)That within 24 hours of the filing of any submissions pursuant to this order, the party filing it fax a copy to the associate to the Honourable Justice Brown on facsimile number … .

(21)That all extant applications be otherwise dismissed and removed from the list of matters awaiting finalisation.

IT IS CERTIFIED

(22)That pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGF 1325  of 2005

Mr Savage

Husband

And

Mrs Savage

Wife

REASONS FOR JUDGMENT

1.The parties married in January 1974 and separated in January 2004, some 30 years later.  The Court is asked to determine their competing property applications.

PARTIES

2.The husband will be 65 in July.  He presently lives in a unit in P, which is owned by Ms S and has been on the market for months.  His evidence was that Ms S is a friend, but not one with whom his is in an intimate relationship.  Asked whether it was likely Ms S would move to another property with him, he said he doubted he could answer the question and that they had “not really had any serious discussions about the future”. 

3.The husband continues to undertake painting work through the business J Business and deposed to a modest income of some $200 per week from that source. 

4.The wife is 54 and is employed as a manager on a salary of some $52,000.  She and the parties’ youngest child, son T, live in the former matrimonial home at B.  T turned 18 in April 2007 and is working for a local cabinet maker. 

EVIDENCE

5.Findings are made on the balance of probabilities having regard to the evidence and my observations of the demeanour of witnesses.  In what follows, statements of fact constitute findings of fact.

6.Each of the parties relied on an affidavit and financial statement sworn by him or her.  Each was cross-examined.  The husband was more generous about the wife than she was about him but I am satisfied both did their best to give honest answers to questions.   Where their evidence differs, it is likely to be the result of inaccurate recollection rather than anything more sinister.

PROPOSALS

7.The husband sought that the wife pay him $270,000, in addition to the sum of $50,000 which he sought be allocated to him in one or her superannuation funds.  In return, he would transfer his interest in the former matrimonial home to her and indemnify her in respect of liabilities for the business, which are secured over that property by registered second mortgage.

8.For her part the wife proposed that the husband receive 60% of the nett proceeds of the sale of the former matrimonial home and be allocated a sum equivalent to 45% of the wife’s current entitlement in one of her superannuation funds, represented by a base amount of $37,903.95. 

CHRONOLOGY

9.Both of the parties came from farming families.  When they married the husband was on a farm at K, which had been owned by his grandfather.  His grandfather’s will left a life interest to the husband’s father and the beneficial interest to the husband and two of his siblings.  He and a brother leased the farm from his father, who held the life interest.

10.Soon after the parties’ marriage they built a house on that property, using borrowed funds.  Their recollection of the sum borrowed differed.  It was a one bedroom home, designed so that additional rooms could be added later, which they were; the husband undertook much of the building work.

11.When the father’s father died in 1979, he and his siblings inherited the property, stock, plant and equipment.  To adjust interests between the siblings, the property was sub-divided, the husband retaining a freehold interest in 85 acres.  The family lived on the property until about 1982, when a drought and economic downturn effectively forced them off the land.   The entitlement to the farm was the husband’s, through inheritance, a contribution made on his behalf.

12.When the parties married the wife was in paid work as a teacher and save for periods around the birth of their four children, she remained in paid employment for the bulk of the marriage.  The husband agreed that her employment generated more funds then his varying paid roles.

13.The parties’ daughter, A, was born in 1975;  their sons, B, D and T were born in respectively, 1980, 1985 and 1989. 

14.The family did not thrive financially on the farm, with problems exacerbated by the drought and general economic conditions.  In about 1982 the wife’s father offered the wife a 5 acre block of land in B1, an offer which was accepted.  The husband agreed that initially his father-in-law wanted the land to be in his daughter’s name only.  However, he asked her to approach her father and have it put into joint names as they were going to use the proceeds of the sale of the farm to build a house on the land.  He agreed that her father was trying to help his daughter out, but said he “hoped he had some respect for her husband”.  His evidence was that the land was then worth about $25,000 but there was no corroboration of that.  I treat the land as a contribution made on behalf of the wife. 

15.In early 1983 the farm was sold.  The husband’s recollection was that he received $160,000 for the sale of his share of the farm, plus the proceeds of the sale of some stock, plant and machinery.  The wife’s recollection was that they received $160,000 all up.  The copy contract of sale, tendered by the husband, shows a sale price of $160,000 and included some plant and equipment but no stock.  He recalled a debt of $50,000 at that time; her recollection was of a debt of $60,000.  No evidence was adduced which would enable the Court to find one party’s recollection more accurate than the other’s.  It was common ground that the sale of the farm interest provided sufficient nett funds to build a house on the B1 property, and to buy a boat and a car.  About $70,000 went towards building the house; the wife’s evidence was that $15,000 went on the car and $5,000 on the boat.  The husband and a sub-contractor built the house.  The family lived in that home for the balance of the marriage. 

16.After trying a few jobs in town, and periods of unemployment, the husband settled on a maintenance business which grew into a painting business, conducted as J Business.  It must have generated some income; at one point the husband employed another person and their son, B, was also involved with the business for a while.  The husband did concede the truth of the wife’s evidence that she had to use her earnings to provide funds for that business from time to time and it is probable that the wife’s earnings provided the stable financial base for the family.  On occasions additional money was drawn on the mortgage to prop up the business.  

17.In 1989 the husband suffered life threatening injuries when working on a car.  He was in hospital for some weeks and his recovery took at least twelve months.  When he resumed work his capacity was limited and it probably has remained limited.  Whether for that or other reasons, his business did not generate a large income thereafter.

18.After the accident the parties borrowed against the former matrimonial home; T was born only a few months later and the wife, too, was out of paid work for part of that year.  Her evidence was of also borrowing $10,000 from her father at that time, evidence I accept.  She nursed the husband through his convalescence.

19.The first mortgage on the property now stands at about $82,000.  Since separation in January 2004 the wife has made payments due on that mortgage, paid the rates and maintained the property.  A second mortgage was taken out after the parties separated.  That may have been part of a refinancing of an overdraft then owed by the husband’s business (he spoke of an existing overdraft of up to $20,000) but his evidence was unclear.  I am satisfied that when the second mortgage was arranged it was agreed that responsibility for it was to be the husband’s alone.  Some of the funds were used to cover liabilities of the business (the husband spoke of the need for funds to pay superannuation entitlements and severance pay for an employee) and some went directly to the husband to re-establish himself away from the family home.  At one stage some $38,000 was due on the second mortgage, but at the time of trial the figure was $27,741.  It was common ground that the husband would be responsible for the whole of that debt.  He has made payments on the second mortgage since separation, and paid the insurance on the former matrimonial home.

20.Although T was 14 when the parties separated, an assessment was never sought from the Child Support Agency, probably because the wife accepted the reality that the husband’s income earning pattern was unlikely to improve after separation.  She was solely responsible for T’s care (and that of D until he turned 18) and paid his school fees and all necessary expenses.

21.In 1995 the wife’s father moved to live with the family, where he remained until his death on … October, 2000.  I accept the wife’s evidence of the contribution he made by the provision of meat and groceries and of the practical assistance (doing farm accounts and farm chores) she provided for her parent’s farm.  Pursuant to his will the wife received a property at B2 and a quarter interest in two other properties, one at B3 and the other at B4.  She also received $56,027 in cash from the estate in November 2001 and a 25% interest in shares, now valued (her interest) at $995.  Part of the cash went to prop up the husband’s business and part went into general household expenses, including making mortgage payments. 

22.Counsel for the husband sought to paint those acquisitions as ones which the deceased intended to make to both of the parties, a characterisation I do not find to be supported by the evidence.  It was open to the wife’s father to bequeath property to the parties jointly;  after he was requested to do so, he transferred the land at B1 into the joint names of the parties in 1982 and could have achieved the same result by a joint bequest.  He did not do so.  He contributed meat and groceries when he lived with the family, in a home built on land he had provided.  I do not find the husband made a specific contribution to the assets which the wife acquired pursuant to that estate. 

23.In 2001 the wife also received about $9,000 for long service leave and other employment entitlements.  That sum was paid into the husband’s business bank account and used in his business.  Long service leave is part of an employee’s indirect remuneration to which the other spouse may have made a contribution during the period of the marriage that relates to that employment.  As with other earnings of the wife, it went into the household.

24.The real estate at B4 was originally a 5 acre block. The wife’s evidence (in para 13 of her affidavit) was that it (she may have meant part of it) was sold in 2003 and her share of the proceeds, some $20,000, was given to the parties’ daughter to assist her in purchasing a house.  Later evidence cast doubt on the source and amount of funds paid to the daughter.  Cross-examined, the wife said $27,000 of the cash received from the estate went to the daughter for her house.  Between 28 June 2001 and 7 January 2002 the wife paid $8,420.00 into their son, B’s, bank account, and these funds probably came from estate funds.  I am satisfied that the balance of the cash  and 2003 sale of  property in B4 went into the marriage.

25.After separation the wife paid off family credit card debts of $3,100 and $2,900.

LEGAL PRINCIPLES

26.I propose to adopt the now well established approach to the exercise of the discretion under s.79.  It is appropriate for the judge to identify the assets to be divided between the parties, identify the liabilities to be taken into consideration and then to determine the manner in which the assets ought to be divided having regard to s.79(4)(a), (b) and (c) considerations.  Then having considered (d) to (g) of s.79(4) the court should determine what further adjustments should be made having regard to s.75(2) considerations, and consider whether the outcome is just and equitable.

ASSETS AND LIABILITIES

27.Save for the value to be attributed to the wife’s car, the parties agreed on the assets and their values in the pool.  I include her car at $500, being the figure in the wife’s financial statement, which is an admission against interest.  The figure for the husband’s car, business and boat is taken from his financial statement. 

B1   $345,000
B2  $170,000
Wife’s interest in B3  $ 42,500
Wife’s interest in B4           $ 22,000
Husband’s car, business and boat  $   9,000
Wife’s car  $     500
Wife’s shares           $     995

$589,995

Superannuation assets
Wife (accumulation fund)                   $   84,231
Wife (defined benefit fund)                 $   20,634
Husband (accumulation fund)             $     6,378
  $111,243
Total assets  $701,238

Liabilities

First mortgage over B1  $ 81,803
         Second mortgage over B1  $ 27,741.22
  $109,545

Nett assets  $591,693

CONTRIBUTIONS

28.A number of submissions went to the issue of contributions.  On behalf of the husband it was submitted that contributions of all kinds should be assessed as equal.  He submitted that he had received his inheritance towards the beginning of the marriage and the wife had received hers towards the end, and each should be treated in the same way.

29.The wife submitted that contributions should be assessed on an asset-by-asset basis, rather than globally, and the husband’s contribution by way of his inheritance be reflected, along with all other contributions (save the wife’s late inheritance) when determining his share of the former matrimonial home.  On that analysis the real property acquired by the wife in 2001 would be quarantined, a course firmly opposed by counsel for the husband.  In the alternative, counsel for the wife submitted that were a global approach to be taken, there would have to be a significant imbalance in the finding of contributions. 

The husband conceded that the wife earned more money than him during the marriage and that she was very good with the children.  His evidence was of doing most of the work on the farm, albeit with some help from the wife.  He worked to build their first house and the subsequent extensions and on the house in B1.  The wife bore the brunt of the parenting role and worked in full-time employment outside the farm for most of the marriage.  She also assisted with farm work.  She has been primarily responsible for looking after T since separation and for supporting him. 

30.In Pierce v. Pierce (1999) FLC 92-844 at p. 85,873 the Full Court considered the weight to be given to initial financial contributions, commencing with a consideration of the trial judge’s reference to Money and Money (1994) FLC 92-485, as follows :

25:       In addition to referring to a short passage from the judgment of Fogarty J in Money and Money (1994) FLC 92-485, the trial judge noted that the passage was cited with approval by the Full Court (Nicholson CJ, Baker and Tolcon JJ) in Bremner and Bremner (1995) FLC 92-560.

26.       In Way and Way (1996) FLC 92-702, the Full Court (Barblett DCJ, Finn and Butler JJ) said at 83,404 :-

‘In the subsequent full Court decision in Bremner all three Judges expressly preferred the approach taken by Fogarty J in Money over that taken by Lindenmayer J in the same case.  Thus, and notwithstanding the attempts by Counsel for the husband in this case to demonstrate that there was some inconsistency between what Fogarty J said in Money and what was actually said in the joint judgment of the Full Court in Lee Steere, we regard the law in this area as now settled by the statement by Fogarty J in Money (and subsequently accepted by all members of the Full Court in Bremner) that ‘… an initial contribution by one party may be “eroded” to a greater or lesser extent by the later contributions of the other party even though those later contributions do not necessarily at any particular point outstrip those of the other party’.’

27.       However, it is important to put that quotation in it correct context.  Fogarty J in Money and Money (supra) said at page 81,054 :-

‘I am unable to agree with the criticism in his Honour by the passage in his judgment immediately after that quotation or of his analysis of the issues involved.  In an appropriate case, in my view, an initial substantial contribution by one party may be ‘eroded’ to a greater or lesser extent by the later contributions of the other party even though those later contributions do not necessarily at any particular point outstrip those of the other party.  I feel, if I may say so with respect, that his Honour'’ formulation to the contrary is unrealistic and does not correspond with common experience in the Court in many of these cases.

I think it is legitimate for me to say, as I was a member of the Full Court in Lee Steere and Lee Steere (1985) FLC 91-626 that His Honour has read too much into the passage to which he refers and that the term ‘off-setting contribution’ does not necessarily mean ‘greater contribution’. It simply reflects the circumstance that the respective contributions of the parties over a long period of marriage ‘offset’ the significance which might otherwise be attached to a greater initial contribution by one party. This is, in my view, made clear by the Full Court in White and White (1982) FLC 91-246 where that court pointed out that the principle in Crawford and Crawford (1979) FLC 90-647 is that the original contribution should not be carried forward as a mathematical proportion; ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be later factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.’

28.       In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution.  It is necessary to weight the initial contributions by a party with all other relevant contributions of both the husband and the wife.  In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.  In the present case that use was a substantial contribution to the purchase price of the matrimonial home:  See also Campo and Campo (unreported, Full Court (Ellis, Lindenmayer and Finn JJ), Sydney, delivered 19 May 1995 at pages 21 and 22 of the joint judgment) and Zahra and Zahra (unreported, Full Court Sydney, delivered 3 October 1996, per Ellis J at page 10).”

31.The contribution of the farm proceeds was a significant contribution, whether a then net $100,000 or a bit more.  The parties subsequently mortgaged the property acquired using those funds and it was the family home for some 21 years.  The wife’s financial contributions in that period exceeded the husband’s and she made the major parenting and home-making contribution.  In the time the family lived in the house at B1 both parties contributed to its maintenance and preservation.  The husband’s business required regular injections of funds, from sums earned and inherited by the wife, and draw downs on the mortgage.

32.The wife’s interest in real estate, acquired by inheritance from her father after his death in October 2000, constitutes just under 40% of the whole of the net asset pool.  I do not find it appropriate to quarantine those real  properties or, as submitted by the wife, make a finding that the parties contributed jointly to the property at B1 and in so doing acknowledge the contributions made by their respective families up to and including 2000.  On the other hand, I do not find substance in the husband’s submission that contributions of all kinds should be assessed as equal. 

33.While there is no doubt that the court can take an asset by asset approach (Norbis v Norbis (1986) FLC 91-712) I am satisfied that to do so in this case would be to over-emphasise and over-value financial contributions during a long marriage. A finding as to contribution is not an accounting exercise. On the other hand, financial contributions are relevant. Of the superannuation assets, the wife’s paid work resulted in 94% of the now total.

34.I have no doubt each contributed as best they could when they were together.  Taking into account those contributions, the late and significant contribution by way of the wife’s inheritance, and the contributions made by her as a parent and homemaker since separation I find that contributions of all kinds should be assessed in respect of the total asset pool as being made as to 62.5% by the wife and 37.5% by the husband. 

SECTION 79(4)(d) to (g)

36.     I turn to the matters referred to in s.79(4)(d) to (g).

(d)the effect of any proposed order upon the earning capacity of either party to the marriage;

37.It is unlikely the earning capacity of either party will be affected by orders made in this matter. 

(e)the matters referred to in sub-section 75(2) so far as they are relevant;

I will consider each of the relevant paragraphs :

(a)     the age and state of health of each of the parties;

38.The husband will be 65 in July this year and will be eligible for an aged pension.  He sustained serious injuries in 1989 and common sense suggests that the residual effects he carries will worsen as he ages.  I am satisfied that he was candid when he said that he liked his work but it takes too much out of him, and the reality is that the painting business has never been a great financial success.    No medical evidence was called.

39.The wife is almost 12 years younger than the husband and there was no evidence that her health was other than reasonable.

(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;

40.The husband’s evidence was of earning only about $200.00 per week from his painting business.  Enquiries made by him suggest that his Centrelink entitlement would be around $225.00 per week.   If he continues doing any work in the painting business it is likely that it will be minimal, and to supplement the pension.

41.The wife has a commendable work history in the hospital sector.  She is presently employed on a contract but she has maintained employment for many years and is clearly a very able woman.  Her evidence was of a salary of $52,000.00 “something”.  Tendered documents showed a taxable income of $34,249.00 for the year ending 30 June 2006 and reportable fringe benefits with a grossed up value of $29,999.00.  She has the capacity to continue in paid work for some years.

(f)subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under -

(i)any law of the Commonwealth, of a State or Territory or of         another country;  or

(ii)any superannuation fund or scheme, whether the fund or    scheme was established, or operates, within or outside        Australia;

and the rate of any such pension, allowance or benefit being paid to either party;

42.I have summarised the parties’ respective superannuation entitlements.  At the conclusion of the trial I made orders requiring the parties to file a minute of the orders each sought in respect of the wife’s superannuation entitlements together with proof that procedural fairness had been accorded to the trustees of each relevant superannuation fund, which was done. 

43.I have also referred to the husband’s entitlement to a Centrelink pension once he turns 65.  Presumably he can then access his own superannuation benefit of $6,378.

(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;

44.This is an important factor. On the husband’s evidence, he is reduced to living in a room in a unit which is owned by a friend but which is currently on the market.  His evidence was that he would like to purchase a unit in the B/P area, which he believed would cost around $250,000.00.  He has made no enquiries about borrowing funds, asserting that he could not borrow.

45.The wife (and T) will have to leave the former matrimonial home when it is sold, and acquire another residence, whether to rent or buy.  All three pieces of other real estate are vacant land.

(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;

46.This was a long marriage but it is not the marriage which has affected the husband’s earning capacity. 

(m)if either party is cohabiting with another person - the financial circumstances relating to the cohabitation;

47.The husband’s evidence was that Ms S works as a receptionist.  She is 53 or 54, about the same age as the wife.  There was no other evidence of their financial arrangements. I must find that his answer when asked about whether Ms S was likely to move to another property with him appeared disingenuous.  I can make no findings about the nature of their relationship.  On his evidence she is currently providing him with accommodation and the court could not rule out the potential for her to do so in the future.

(n)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, or is to provide, or might be liable to provide in the future, for a child of the marriage; and

48.No child support was paid for T after separation.  He is presently working for a cabinetmaker in the local area, albeit still living with his mother. 

CONCLUSION

49.Taking all these matters into account it is my view that there needs to be an adjustment in the husband’s favour so he receives 45% of the parties’ assets.  He has a very limited earning capacity and his health is not good. His own superannuation is negligible.  More commonly it is the wife who is vulnerable in those respects after a long “traditional” marriage, but in this case it is the husband.  A 7.5% adjustment in his favour is, in my judgment, warranted.

50.The former matrimonial home will need to be sold.  Until that is done a specific asset pool available for distribution cannot be formulated.  The agreed value of the home and the current liabilities contained in the asset pool set out in paragraph 26 of this judgment will be replaced by the actual net figure realised from the sale.

51.It was common ground that the husband is to be solely responsible for the second mortgage, which is currently just under $28,000.  That can be achieved by him reimbursing the wife one half of the sum paid to discharge that mortgage on settlement.  Although the parties spoke in terms on him indemnifying the wife in respect of the second mortgage, the reality is that there is no asset that could secure the loan once the former matrimonial home is sold and in the absence of evidence to the contrary, the court must assume the bank will require the discharge of both registered mortgages. .

52.Of the assets in the pool, the husband’s superannuation and other assets represent $15,378.

53.Given the make-up of the asset pool, the bulk of the husband’s entitlement will have to come from the proceeds of sale of the former matrimonial home.  Although the wife has other assets, she is one of a number of owners of two of the real properties and her financial interest in those is not large.  She will have to move from the former matrimonial home. She should not be left absolutely bereft of cash and taking a disproportionate part of her entitlement in superannuation which, given her age, she will not be able to access for some time.  Conversely, the receipt by the husband of any part of his entitlement which comes from the wife’s superannuation interests will be deferred until her retirement, which may be many years away.  These competing interest need to be balanced.

54.Orders can contain a formula to take account of the net figure realised after the sale of the former matrimonial home.  However, if the husband is to be allocated a part of the wife’s superannuation, that base figure allocated to the husband in the wife’s superannuation fund will need to be fixed.

55.The court has an obligation to ensure that orders it makes are just and equitable. While approximate, as the proceeds of sale may be more or less than the figure used in these calculations, the orders proposed would have the following effect.

56.Assuming the parties realise $225,000 from the sale of the former matrimonial home, the asset pool would be:

Cash  $225,000     

Wife’s Real Property Interests            $234,500

Husband’s  Car, Business & Boat      $    9,000    

Wife’s Car  $      500

Wife’s shares  $      995

Total  $469,995

Superannuation Assets   $ 111,243

Total  $581,238

57.Were the husband to receive 45% of this he would entitled to $261,557.  He has assets (I include his small superannuation fund as a realisable asset given his age) of $15,378, leaving a balance of $246,179.  If $35,000 were to be allocated as the base amount in the wife’s superannuation fund, he would then be owed $211,179, which would be paid from the net proceeds.  He would have to reimburse the wife a sum equivalent to half the second mortgage, which is likely to be a bit less than $14,000.

58.For her part the wife would retain the inherited real properties and her car and shares, totalling $235,995. She would retain $69,865 in superannuation entitlements and receive the balance of the cash from the proceeds which, on these figures, would be some $13,821.  Her total entitlement would be $319,681 and she would, in addition, be reimbursed half the second mortgage discharge figure.

59.The husband may be able to acquire modest accommodation with his cash entitlement; the wife could sell B2 and put that, with the cash received, towards a house.  He would retain his business, car and boat and would have the buffer of an entitlement under her superannuation in due course, as would she.

60.This can be contrasted with the respective outcome if the parties obtained the orders sought by them.  The wife proposed that the husband receive 60% of the net proceeds of the sale of the family home (60% of $225,000 is $135,000) and be allocated a base figure of $37,903 in her superannuation, a total of $172,903, or 30% of the total asset pool.  From this he would need to reimburse her half the second mortgage figure.  The 40% differential between their respective entitlement represents the approximate percentage her inherited assets bear to the whole.  The effect would then be to quarantine the whole of that bequest from an otherwise 50/50 split. That would not be just and equitable.

61.For his part he sought $270.00 plus a base allocated figure of $50,000, a total of $320,000, or (of the asset pool including the notional net proceeds) 55% of the pool, from which he would reimburse her half the second mortgage.  Even taking into account a necessary adjustment in his favour for s.75(2) figures, that would not acknowledge the wife’s contribution to the asset pool made by the bequest and other contributions.  It would not be just and equitable.

62.Doing the best I can, I am satisfied the orders proposed achieve the statutory obligation, and are just and equitable.

I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Brown

Associate: 

Date:  04/06/2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as SAVAGE & SAVAGE