Scepetti and Scepetti
[2013] FamCA 903
•20 September 2013
FAMILY COURT OF AUSTRALIA
| SCEPETTI & SCEPETTI | [2013] FamCA 903 |
| FAMILY LAW – PROPERTY SETTLEMENT – Contributions – question of weight to be afforded to wife’s initial contribution – absence of appropriate valuation evidence – consideration of relevant section 75(2) factors. |
| Family Law Act 1975 (Cth) ss 75, 79, 81 |
| Stanford v Stanford [2012] HCA 52 Bevan & Bevan [2013] FamCAFC 116 |
| APPLICANT: | Mr Scepetti |
| RESPONDENT: | Ms Scepetti |
| FILE NUMBER: | PAC | 1979 | of | 2010 |
| DATE DELIVERED: | 20 September 2013 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 4 and 5 September 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Judge |
| SOLICITOR FOR THE APPLICANT: | Saldaneri & Associates |
| COUNSEL FOR THE RESPONDENT: | Ms Snelling |
| SOLICITOR FOR THE RESPONDENT: | Valenti & Valenti Solicitors |
Orders
That within 14 days from this date the husband and wife do all things necessary and sign all necessary documents so as to authorise and direct that the capital sum of $253,148 presently held on their behalf in a controlled monies account be paid as to $235,649 to the husband or as he may otherwise direct in writing and as to the balance of that capital sum to the wife or as she may otherwise direct in writing.
That within 14 days from this date the husband and wife do all things necessary and sign all necessary documents so as to authorise and direct that any interest accrued on the capital sum referred to in the previous order presently held on their behalf in a controlled monies account be paid on a pro rata basis as provided for in the previous order to the parties.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Scepetti & Scepetti has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 1979 of 2010
| Mr Scepetti |
Applicant
And
| Ms Scepetti |
Respondent
REASONS FOR JUDGMENT
The Proceedings
These are property proceedings between the applicant husband and the respondent wife under s 79 of the Family Law Act 1975 (“the Act”) following a cohabitation of just over 21 years with three children of the parties’ relationship.
A significant issue in the proceedings is the weight to be placed upon the wife’s initial contribution at the commencement of cohabitation.
At the commencement of the trial the applicant husband sought orders set out in his case outline (Exhibit A) that in summary provided as follows:
a)That the wife deposit to the controlled monies account held on behalf of the parties the sum of $32,800 being rental monies received by her to the exclusion of the husband, $43,900 being withdrawals from the parties line of credit and $15,000 as an adjustment in relation to the Toyota motor vehicle retained by the wife;
b)That thereafter the balance of the controlled monies account held on behalf of the parties the divided as to 60 per cent to the husband and 40 per cent to the wife;
c)That the townhouse property at Suburb 3 be sold after repair and that the net proceeds of sale be divided as to 60 per cent to the husband and 40 per cent to the wife;
d)That otherwise each of the parties retain assets in their respective possession or entitlement to the exclusion of the other; and
e)Costs.
At the commencement of the trial the respondent wife sought orders as set out in her Response filed on 14 August 2013 that in summary provided as follows:
a)That the wife be solely entitled to the whole of the balance of funds held in the controlled monies account on behalf of the parties;
b)That the husband pay to the wife the further sum of $71,000;
c)That the wife be solely entitled to the townhouse property at Suburb 3;
d)That the husband be solely liable for any capital gains tax assessed in relation to the sale of the townhouse property at Suburb 3;
e)That otherwise each of the parties retain assets in their respective possession or entitlement to the exclusion of the other; and
f)That previous costs orders in these proceedings be set aside and that each party pay their own costs of these proceedings.
Background
The parties commenced cohabitation upon marriage in mid-1988.
At this time the husband had a car but no assets of substance. The wife owned a half interest in a fibro cottage property at Suburb 3 gifted jointly to her and her brother by her parents.
At the commencement of cohabitation the husband was 22 years of age and the wife 21 years of age.
The husband is presently aged 47 and the wife is aged 46.
At the commencement of cohabitation the husband was in employment as a personal services specialist.
Throughout cohabitation the husband was self-employed either on his own account or in partnership with the wife except for a period of employment with the public service between May 1999 and January 2001.
At cohabitation the wife was employed as a clerk. Later she worked in the husband’s business for a period of time and then in 1992 the wife commenced employment at a business college and later commenced to work in a partnership that provided training skills. That partnership business was sold in June 1993 with the wife receiving $8000 from the proceeds of sale.
Otherwise the wife worked at various times in the husband’s business, part time as an administrative assistant, for some time as a marketing coordinator, later in a Registered Training Organisation, then for a disability organisation until early 2010, then for an employment company until September 2011. Thereafter the wife was off work until she obtained part time work in April 2012 in the area of personnel services. In January 2013 she commenced in that capacity full-time.
The Children
There are three children of the marriage. The eldest child W is now 19 years of age and living with the wife. He is estranged from the husband.
The second child L is now 18 years of age, suffers from Autism and from August 2011 has lived with the husband. The child has very limited verbal skills and is unable to communicate other than by gesturing and using two or three word phrases. The child attends B Special School.
As a consequence of events post separation the husband spent no time with L from January 2010 until May 2011 at which time the child commenced to spend time with the husband each Sunday from 9:00 am until 5:00 pm.
On 24 August 2011 the wife placed the child L in respite care. On 29 August 2011 the child commenced to reside with the husband on a full-time basis. From this time the husband has received Centrelink payments in relation to his care for the child that are on average about $550 per week. Since August 2011 the child had spent few overnight periods with the wife. The child has for the last two months spent one weekend a month with the wife.
In early 2013 the child’s behaviour deteriorated and he attacked his teacher and was suspended from school for four weeks. The child also attacked the husband and as a consequence the father was provided with respite care for a period of four days in February 2013 whilst the child’s behaviour was monitored. The child subsequently was prescribed epilum and his adverse behavioural episodes began to settle down. Notwithstanding the husband sought further assistance from the Department of Family and Community Services by way of respite care for the child in June 2013 and respite care was provided for a couple of days at that time.
On 16 August 2013 the child was suspended from school as a consequence of his behaviour for 20 school days. Subsequent to that suspension it was necessary for the husband to place the child in emergency respite care as his household was unable to provide full-time care for the child in the absence of the child attending school. Subsequent to completion of the school suspension the husband says that the child will return to his full-time care. The wife proposes that the child live with her after he turns 18 years of age. In that event the wife will be in receipt of the child’s disability benefit on his behalf.
Without the husband’s knowledge of the wife did on or about 28 August 2013 make application to the New South Wales Guardianship Tribunal for orders appointing her guardian and financial manager for the child L. That application remains unresolved.
The youngest child B is now 14 years of age and living with the wife. The child is presently in year nine. The husband has not seen the child since January 2010.
The Parties’ Separation
The parties separated on 4 October 2009. The husband left the matrimonial home and resided with his parents at Suburb 2.
There was significant conflict between the parties post separation. The husband in May 2010 was convicted of malicious damage and intimidation arising from incidents at the time of separation and was placed on a 12 month good behaviour bond. Subsequent to separation there was an apprehended violence order made for the protection of the wife and in December 2009 the husband was charged with a contravention of that order and a breach of his bail conditions. In September 2010 the husband was placed on a 12 month good behaviour bond in relation to these offences. In December 2012 the husband was charged with assault in relation to the wife and subsequent to hearing the husband was convicted of this offence on 23 February 2013 and fined the sum of $600.
The wife and children of the marriage remained in occupation of the matrimonial home until 24 September 2011.
The Concession as to Contributions
The parties concede that in relation to contributions the Court could regard the parties’ contributions during cohabitation and until separation to be equal, save for the weight to be afforded to the wife’s initial contribution of her interest in the Suburb 3 property that was subsequently redeveloped.
However it is necessary to set out in some detail the financial history of the cohabitation to put that initial contribution in context and to consider the parties’ other contentions.
The Cohabitation
In 1988 the parties purchased a vacant block of land at Suburb 4 for the sum of $47,500. The husband sold his motor vehicle for the sum of $6500 and applied those proceeds to the purchase with the balance of the purchase price being funded by the parties’ mortgage borrowing.
In about 1992 the parties further encumbered the land by way of mortgage and built a home on the property. Following marriage and during construction of the home of the parties resided with the wife’s mother.
The Townhouse Development
In early 1994 the parties’ home was sold with the net proceeds of sale being $190,000. The parties thereafter resided with the wife’s parents until February 1995.
In early 1994 the wife and her brother entered into a development arrangement with the owner next to their Suburb 3 property. Development consent was granted for the development of 15 townhouses on the combined site and construction was completed in early 1995.
The parties contributed the net proceeds of sale of their home to the development. The Suburb 3 property was used as security to borrow a further sum of $110,000 by way of mortgage to fund the development.
Following completion of the development the wife became the owner of four townhouses being numbers 1, 2, 5 and 8 that were subject to the outstanding mortgage of $110,000.
The parties commenced to occupy Townhouse 1 in February 1995.
Subsequent Property dealings
In April 1996 the parties purchased a second property at Suburb 3 (“the former matrimonial home”) for the sum of $150,000. The purchase price comprised their funds available at that time together with a mortgage of $140,000.
In 1997 the wife sold Townhouse 1 at Suburb 3 for the sum of $147,000 with those monies being paid in reduction of the outstanding mortgage debt. Subsequent to this sale the parties remained indebted by way of mortgage in the sum of $110,000.
In 1998 the wife sold Townhouse 2 at Suburb 3 for the sum of $180,000. Those funds discharged the parties’ mortgage indebtedness. The surplus funds were spent on the purchase of a motor vehicle and ongoing treatment in relation to the child L’s autism.
In February 2001 the parties purchased the personal services business known as “F Services” at Suburb 5 for the sum of $25,000. The parties drew down against the mortgage to fund the purchase price together with a further sum of about $20,000 for the purchase of stock and equipment.
In mid-2004 the parties purchased two shops at Suburb 5 for the sum of $148,500. The purchase price together with funds expended on renovations to accommodate the partnership business was drawn down from the parties’ mortgage facility. Following the completion of this purchase and renovation the outstanding balance on the parties’ mortgage was approximately $260,000.
In June 2006 the parties refinanced their then mortgage and borrowed the sum of $360,000 from the Bank of Queensland by way of mortgage and the further sum of $187,500 by way of a line of credit facility from the same bank. The bank took security over the former matrimonial home and one of the remaining townhouse properties.
In late 2007 the parties constructed a self-contained villa style accommodation on the rear of the former matrimonial home. The construction cost of about $70,000 was financed by way of a further drawing against the parties’ line of credit facility. The villa was thereafter tenanted until March 2010 at a rental of $150 per week.
The parties separated in October 2009 and subsequent to separation the wife remained in occupation of the former matrimonial home. The husband at first moved to reside with his elderly parents. In April 2012 the husband moved to his present residence at Town S on the New South Wales Central Coast.
Secured Debt at Separation
At the time of separation the home mortgage had an outstanding balance of $338,000 and the line of credit facility an outstanding balance of $16,000. Mortgage payments in relation to the home mortgage were $1165 per fortnight and the only payments due on the line of credit facility were payments of interest accrued each month.
After Separation
Subsequent to separation the husband apart from his obligation to pay child support made no financial contribution to the wife’s household or the parties’ liabilities in relation to the home mortgage and the line of credit facility. Mortgage payments subsequent to separation in relation to the home mortgage were deducted by bank authority from the line of credit account.
Subsequent to separation the husband commenced to trade on his own account as a personal services specialist, trading as “A Services”.
In February 2010 the husband was assessed to pay child support in the sum of $220.70 per month. That assessment continued until the child L came into his care in August 2011. Thereafter the wife was assessed to pay child support to the husband in the sum of $170 per month with that liability being reduced to $128 per month from 18 July 2013.
In March 2011 the wife remarried and her new husband commenced to occupy the former matrimonial home.
On 30 August 2011 the wife informed the husband’s solicitors that she would be vacating the former matrimonial home on 24 September 2011. Subsequent to vacating that property she forwarded the keys of the property to the husband by registered post. It was the wife’s expectation that the husband would move into the property as the child L had recently moved into the husband’s care.
In late September 2011 the wife vacated the former matrimonial home and the property thereafter remained vacant until its sale in August 2012. At this time the total indebtedness secured over the home by way of the home mortgage and line of credit was $443,000.
From September 2011 until April 2012 the wife was out of employment. She applied the rental monies received by her to the living expenses of herself and her household.
In November 2011 the wife became aware that the former matrimonial home had been placed on the market for sale by the husband. The wife proposed that she acquire the property at a value of $630,000. The husband made no response and the property remained vacant until its subsequent sale.
Prior to vacating the former matrimonial home the wife purchased with her now husband the property in the Greater Western Sydney region for the sum of $720,000. The purchase price comprised a mortgage advance of $350,000, a loan from the wife’s brother in the sum of $300,000 and the balance in cash from the wife’s new husband. Contracts for the purchase were exchanged in July 2011 and settlement was effected in late September 2011.
In October 2011 the wife traded in the parties’ Toyota motor vehicle which had been returned to her by the husband for the sum of $8000.
In March 2012 the husband sold his business for the sum of $10,000 with those funds being paid in reduction of the line of credit debt on 29 March 2012. The shop premises were thereafter tenanted until sale.
In March 2013 the husband remarried, having resided with his new partner since May 2012.
In May 2013 the husband commenced work as a self-employed personal services specialist on the Central Coast. He works at times that he is otherwise not required to care for the child L.
Subsequent to separation the remaining two townhouse properties were tenanted with rental payments being paid by the managing agent to the credit of the parties line of credit account, although later the wife redirected payments to her own account.
Sales of Properties
In 2012 the wife sold Townhouse 5 at Suburb 3 for the sum of $340,000. The net proceeds of sale $332,646 following settlement were then held in a controlled monies account pending outcome of these proceedings. This property was tenanted until its sale. The property Townhouse 8 has been vacant since August 2012, being in need of repairs.
In August 2012 the parties sold the former matrimonial home for the sum of $650,000. After payment to the Bank of Queensland of $472,517 to discharge the home mortgage ($336,231) and line of credit debt ($136,286) the net proceeds of $170,364 were placed in a controlled monies account pending outcome of these proceedings.
In December 2012 the parties sold the shops at Suburb 5 for the sum of $125,000 with the proceeds of sale plus accrued rent in the sum of $123,568 is being placed in the controlled monies account pending outcome of these proceedings.
Drawdowns on the Line of Credit
Subsequent to separation the husband drew down from the line of credit account the sum of $26,000 in late 2009. Those funds were used by him to purchase a motor vehicle; notwithstanding that on separation he had retained the parties Toyota motor vehicle. In May 2012 the husband’s new car was written off in a motor vehicle accident. The husband retained the insurance payout of $20,000 and applied those funds to his legal fees.
Post separation the wife withdrew over the period from February 2010 until February 2012 sums totalling $43,900 from the line of credit account and home mortgage.
On 12 February 2010 the wife withdrew $12,000 from the line of credit and applied those funds to payment of outstanding school fees for the children for the 2010 school year.
On 12 February 2010 the wife withdrew a further sum of $12,000 from the line of credit account and paid that sum to her mother. The wife’s mother had on 2 January 2009 deposited to the parties line of credit account the sum of $12,000 by way of loan. The wife spent that money over a period on living and other expenses. The wife’s mother subsequent to repayment of the $12,000 re-advanced the monies to the wife and she has thereafter expended those funds on living and other expenses for herself and the children but subsequently repaid those funds in instalments to her mother.
In July 2011 the wife withdrew from the line of credit account the sum of $15,800 to pay the children’s school fees for the 2011 school year. She thereafter withdrew a further sum of $4100 from the home mortgage account to pay school fees for the child Hope for term one in 2012 and to assist the eldest child with his HECS fees.
The Home Mortgage and Line of Credit Debts
At the date of sale of the former matrimonial home the home loan balance was approximately the same as it was at separation. The line of credit debt had increased from about $16,000 at the time of separation to about $136,000, an increase of $120,000. The parties had redrawn sums totalling $69,900 as set out above. Thus the increase in the parties’ overall liability in respect to the line of credit account apart from drawdowns is otherwise about $50,000.
Total payments to the home mortgage from separation to sale total $93,744 (Exhibit H) with only $50,000 of that attributable to the increase in the line of credit. Otherwise from her income including rentals the wife has serviced the balance of the payments and interest on the line of credit facility without contribution from the husband.
Interim Distributions
Subsequent to the various sales referred to above the husband has received interim distributions of $235,000. It was agreed that this sum be added back to the pool for adjustment purposes.
The wife received in November 2012 interim distributions totalling $110,000 together with a further sum of $13,626 that was a reimbursement to her of income tax paid on rental received in relation to the two remaining townhouse properties. It was agreed that the sum of $110,000 be added back to the pool for adjustment purposes.
The Law
The approach to the determination of an application under s 79 of the Family Law Act 1975 is set out in Stanford v Stanford [2012] HCA 52 and that decision was the subject of detailed consideration by the Full Court in Bevan & Bevan [2013] FamCAFC 116.
The Court should firstly identify the present assets, financial resources and liabilities of the parties.
The Court should then consider whether, having regard to the circumstances before it, it would be unjust and unfair not to make orders for alteration of the property interests of the parties having regard to the provisions of s 79(2) of the Act.
The Court can then proceed to consider the contributions by each of the parties as contemplated by s 79(a) – (c) of the Act.
Having determined the contribution-based entitlements of the parties the Court can then consider the various factors set out in s 75(2) of the Act and whether any further adjustment to the parties’ contribution-based entitlements is appropriate.
The Court is then required to consider the justice and equity of the proposed orders and whether in all the circumstances the orders to be made are appropriate.
The Property of the Parties – the present pool
The Court is first required to as a starting point identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing.
There is no dispute as to the present assets and liabilities of the parties being as follows:
Assets:
Wife Former matrimonial home, Suburb 3 $360,000
Wife Greater Western Sydney property (50%) $375,000
Wife Bank account $ 2,000
Wife Honda … motor vehicle $ 6,400
Husband KTM motorcycle $ 5,800
Joint Balance of controlled money funds $253,148
Liabilities:
Wife NAB Greater Western Sydney mortgage
(50%) $168,000
Wife Debt to Mr Z $300,000
Wife Debt housing commission overpaid rent $ 2,510
Superannuation:
Husband AMP superannuation $12,000
Wife Australian Super $10,400
Wife Supertrace $ 1,650
Wife Commonwealth Bank superannuation $ 3,100
Wife Rest superannuation $ 1,100
Wife BT superannuation $ 2,800
The Pool of Assets for Adjustment Purposes
As set out above in dealing with the history of the cohabitation and post separation period it is readily apparent that the present asset pool does not reflect appropriately the reality as to the benefits already received by the parties. It is contended on behalf of both parties that there should be various adjustments to the present pool to reflect the same.
The parties are in agreement that the following sums should be included in the asset pool for the purposes of adjustment orders:
Husband Line of credit withdrawal $ 26,500
Husband Interim property distribution $235,000
Wife Interim property distribution $110,000
The parties are otherwise in dispute as to a number of items that it was contended should be either added back to the asset pool for the purposes of adjustment, considered in the context of contributions or taken into account by reason of the relevant provisions of s 75(2) of the Act. These are considered below.
In Bevan & Bevan [2013] FamCAFC 116, the Full Court (per Bryant CJ and Thackray JJ) said as follows in relation to this issue at [79]:
79. We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property. Ultimately the question of notional add backs or whether circumstances are relevant for consideration under section 79(4) or section 75(2)(o) of the Act is a matter for judicial discretion in all of the particular circumstances of the case, with the Court mindful of the general guiding principle that “add backs” are more the exception than the rule.
The Contentious Items
The wife’s interest in the Greater Western Sydney region property and related liabilities:
It is contended on behalf of the husband that the wife’s interest in this property should be included in the pool for the purposes of adjustment. It is conceded on behalf of the husband that this was a post separation acquisition by the wife and that the husband made no contribution to the acquisition. The Court is not persuaded that the wife’s interest in the Greater Western Sydney region property should be included as contended as overall the asset presents a negative value to the wife by reason of her indebtedness to her brother and her obligation in relation to half the mortgage. It would be unfair to require the husband to bear any responsibility for that negative value by including it in the pool for adjustment.
It is further contended on behalf of the husband that if the wife’s interest is not included in the adjustment pool then ownership of the property and the circumstances of her cohabitation with her present husband are relevant in considering s 75 (2) factors. This contention is supported by the wife. The Court will consider the financial circumstances of the wife’s cohabitation with her new husband in the context of s 75 (2).
The sum of $25,000 to reflect rental payments received by the wife to the exclusion of the husband:
This it is contended on behalf of the husband is a notional figure. Having discussed the post separation period in detail above it is appropriate to consider this issue in the context of assessing post separation contributions as the rental payments were subsumed in the parties’ overall financial position including servicing of debt post separation.
The sums totalling $43,900 drawn down by the wife from the line of credit account:
Most of these funds were applied to payment of school fees or education expenses with the sum of $12,000 in repayment of the loan from the wife’s mother. It is conceded by both parties that the effect of the drawdowns is that both parties will share the payment of the additional liability thus incurred by reason of a diminution in the proceeds of sale of the home. It is not then appropriate to include such sums in a pool for adjustment or deal with them in any other way.
The sum of $24,300 asserted by the husband to be the rental payments received by the wife from the villa attached to the former matrimonial home:
The evidence does not substantiate the sum of rent alleged to have been received. The Court has referred to this post separation issue above and as with the other rental receipts considered above it is appropriate to consider this issue in the context of assessing post separation contributions.
The sum of $8,000 alleged by the husband to have been removed from the safe at the former matrimonial home by the wife post separation:
There is no evidence adduced as to this issue at all and neither party was cross-examined on the issue. This sum will be omitted.
The asset pool for adjustment purposes
The asset pool for adjustment purposes is thus as follows:
Assets:
Wife Former matrimonial home, Suburb 3 $360,000
Wife Bank account $ 2,000
Wife Honda … motor vehicle $ 6,400
Husband KTM motorcycle $ 5,800
Husband Line of credit withdrawal $ 26,500
Husband Interim property distribution $235,000
Wife Interim property distribution $110,000
Joint Balance of controlled money funds $253,148
Total: $998,848
Liabilities: 0
Superannuation:
Husband AMP superannuation $ 12,000
Wife Australian Super $ 10,400
Wife Supertrace $ 1,650
Wife Commonwealth Bank superannuation $ 3,100
Wife Rest superannuation $ 1,100
Wife BT superannuation $ 2,800
Total: $ 31,050
The asset pool of the party for adjustment purposes is $1,029,898.
Just and Equitable to Make Orders?
The Court is required to determine whether it is just and equitable to make a property settlement order. The Court needs to conclude that it would be unjust or unfair to leave the present property rights of the parties intact. In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship. In particular such a circumstance arises where both parties seek adjustment orders but are unable to agree as to same.
In this matter over the period of the parties’ relationship which was for some 21 years until separation the parties accumulated and dissipated joint property and property in their respective names. The strong inference being that such assets were accumulated for the common purpose of providing for their life into the future and in all probability ultimately for their children.
As a consequence of the parties’ separation, the interim distribution of part of the proceeds of various sales and the commencement of proceedings as to property settlement in which both parties seek disparate property adjustment orders identified above the Court is satisfied that it would be unjust and unfair not to make orders as to property adjustment under s 79 of the Act.
Assessment of Contributions
Having determined that it would be unjust and unfair not to make orders the Court should then consider the contributions made by the parties as defined in s 79(4)(a) to (c).
Both counsel concede on behalf of their respective clients that contributions by each of the parties from the commencement of cohabitation to the date of separation are equal save for the weight to be attached by the Court to the wife’s initial contribution of her interest in the property at Suburb 3.
On behalf of the husband it is submitted that contributions to date of separation should favour the wife 52 per cent to the husband’s 48 per cent. On behalf of the wife it is contended that contributions should favour the wife 65 per cent to the husband’s per cent. The wife contends that the introduction by her of the Suburb 3 property provided a springboard for the ultimate development of that property and the subsequent financial benefit that accrued to the parties.
It is for the Court to determine the weight to be attached to this initial contribution in the light of the myriad of other contributions of the parties over the period to separation which the parties concede are to be regarded as equal.
There is no evidence before the Court as to the initial value of the wife’s interest in the Suburb 3 property. The parties injected joint funds of $190,000 cash into the development together with borrowed funds of $110,000. The underlying equity of the wife in the property is not known.
The first sale was in 1997 shortly after completion of the development. That townhouse was sold for $147,000. The second sale was the following year in 1998 for the sum of $180,000. As the wife had retained four townhouses on completion of the development it could be contended that the overall value of the completed development was in the order of about $600,000 or so but no evidence was adduced by the wife. The parties’ contribution to this guestimate value comprised their cash of $190,000 and the mortgage borrowing of $110,000. The underlying value of the wife’s initial equity is not known nor is the “value added” to the property by reason of the development.
Three of the properties retained by the wife as a consequence of the development were sold at various times during the cohabitation. The sale of these three properties realised gross sales totalling $730,000.
The wife retains the remaining townhouse having an agreed value of $360,000. The capital benefit that has thus accrued to the parties over many years is in the order of $1,090,000 and after allowing for the initial mortgage borrowing of $110,000 the benefit to the parties has been in the order of $980,000.
Much of that sum has accrued by an increase in the value of the townhouses over time as evidenced by sales and the agreed value for the remaining townhouse. However a component of that increase in value reflects the growth in time of the parties’ initial joint capital contribution of $190,000 and the initial mortgage borrowing over a significant period of years.
The assessment of this issue is not assisted by the wife’s failure to adduce any evidence as to the value of her interest in the Suburb 3 property at cohabitation.
In addition the properties at various periods provided rental income to the parties that supplemented otherwise their respective incomes from salaried employment or self-employment.
Overall the initial contribution by the wife of the Suburb 3 property is deserving of recognition in assessing contributions to the date of separation. The Court assesses contributions to the date of separation as to 55 per cent to the wife and 45 per cent to the husband. Such an adjustment creates a disparity of about $100,000 between them.
As to the post separation period referred to above the husband contended that contributions should be regarded as equal, whilst the wife contended for a further adjustment of 5 per cent in her favour. In considering the detailed post separation history set out above there is nothing of substance to distinguish either party’s contributions over that of the other. No adjustment is called for.
Overall contributions favour the wife as to 55 per cent and the husband 45 per cent.
Section 75(2) Considerations
The Court is next required to take into consideration the various relevant factors set out in s 75(2) of the Act.
The following factors in this matter are relevant:
Age and health:
The wife is aged 46 and the husband aged 47. The wife is presently in full-time employment and does not assert any health circumstances that would prevent her from remaining in that employment. The husband does not assert any adverse health circumstances.
Income, property, financial resources and capacity for employment:
The present property, financial resources and liabilities of the parties have been set out above.
The wife is in full-time employment earning an annual salary of about $43,500 per annum and is provided with a company car. The wife is able to continue her current employment.
The husband is self-employed, having commenced a new business in May 2013. He is a qualified personal services specialist. He proposes to work in that self-employed capacity on a full-time basis subject to his obligations in relation to the care of the child L should the child remain within his household having now attained the age of 18 years.
In the 2010 financial year the husband’s gross income was $87,083 and after deductions his net profit was about $28,000. In the 2011 financial year his gross income was $101,029 and after deductions his net profit was $27,994. His deductions included salaries and wages paid to others of $29,936. In the 2012 financial year the husband’s gross income was $49,264 and his net profit was a deficit of $6672. His deductions included $25,736 for depreciation. His recent income has been modest.
In the 2013 financial year to the husband had no taxable income presumably as a consequence of the sale of his previous business, his relocation to his new residence, his care of the child L and his new business only having been open for a month or two before the end of the financial year.
The husband at least into the immediate future has a lesser income earning capacity than the wife.
Care of a child under 18:
The wife has the ongoing care of the youngest child B who is aged 14. The wife has the obligation to provide for the child’s accommodation and the totality of the financial support for the child in the absence of any child support paid by the husband.
Commitments for the support of another:
Both parties contend that the child L, now 18 years of age will move into their care. The evidence before the Court is that the child was shortly prior to hearing placed into respite care by the husband for the reasons referred to above. It is the husband’s expectation that the child will return to reside in his household once his suspension from school is over and the husband will continue to receive disability benefits on behalf of the child and departmental respite care from time to time. The husband’s position is supported by his new wife.
The wife has made application to the Guardianship Tribunal to become the financial manager and guardian of the child. That application is unresolved and indeed was made to the Tribunal without the knowledge of the husband. The wife’s evidence is that should L move into her care she will be able to continue full-time employment and she will receive disability benefits on behalf of the child and departmental respite care.
The wife’s new husband gives evidence that as at 17 August 2013 the child L had only spent two weekends in his household. He expresses willingness for the child to spend more time in his household but no expectation that such will be the circumstance or that the child will reside in his household full time.
The child is presently attending a special school near the husband’s residence. The husband and wife live more than 100 km apart.
The wife provides no evidence as to her future proposals for the child should he live in her household.
On balance the husband’s evidence is accepted and it is most probable that the child will return to reside in the husband’s household where he has resided since August 2011.
Financial circumstances of cohabitation with another:
The wife has remarried and resides in the Greater Western Sydney region property with her new husband, Mr V. He is 61 years of age and there are no children of their relationship. Mr V earns an income of about $75,000 per annum and has a car and phone provided to him by his employer. The circumstances as to the purchase of the Greater Western Sydney region home have been referred to above. Mr V has superannuation entitlements of about $200,000 and public company shares to the value of about $15,000. He provides financial support for the wife and the wife’s children who reside in their household. This relationship provides financial security for the wife into the future.
The husband has also remarried after residing with his present wife since about May 2012. The husband, his wife Ms G and her three children reside in a rented four-bedroom home and propose to purchase a home in the foreseeable future. His wife has recently obtained employment in the health care field.
The financial circumstances of the husband’s cohabitation with his new wife are somewhat problematic into the foreseeable future particularly with the child L being part of that household.
Child Support:
The youngest child of the marriage, H, resides in the wife’s household. Now that the child L has attained the age of 18 years the wife’s present child support obligation to the husband will cease and the husband will be assessed as to any liability to pay child support to the wife for H. Having regard to the husband’s financial circumstances referred to above the prospects of him being assessed as to child support into the foreseeable future are poor.
Overall on balance it is appropriate that there be an adjustment by reason of relevant s 75 (2) factors of 5 per cent in favour of the husband.
Section 79(4)(d): Effect of orders on earning capacity
Proposed orders as to property adjustment will have no effect on the earning capacity of either the husband or the wife.
Section 79(4)(g): Child Support
The parties previous obligations in relation to child support have been set out above and prospective future obligations in relation to child support have been considered in the context of s 75 (2) above.
Overall
Overall the pool of assets for adjustment is to be divided equally.
The overall pool for adjustment as set out above has a value of $1,029,898. The husband is thus entitled to the sum of $514,949.
He presently has in his possession or has received assets to the value of $279,300, leaving a balance of his entitlement in the sum of $235,649.
Just and Equitable
The Court is satisfied that the resultant outcome is appropriate and just and equitable in all the circumstances.
The adjustment entitlement of the husband can be paid from the controlled monies account with the balance of that account to be paid to the wife and the parties to receive a pro rata apportionment of any interest received on that account to date of distribution. Otherwise as the remaining townhouse property is in the name of the wife there is no other adjustment orders necessary as to that asset or the remaining assets held by each of the parties.
Such proposed orders meet the obligation under s 81 of the Act to finally determine the financial relationship between the parties and avoid further proceedings between them.
The Court will make orders accordingly.
I certify that the preceding one hundred and thirty-four (134) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 20 September 2013.
Associate:
Date: 20 September 2013
Key Legal Topics
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Family Law
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Civil Procedure
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