Sherman and Jones
[2008] FamCA 1279
•28 March 2008
FAMILY COURT OF AUSTRALIA
| SHERMAN & JONES | [2008] FamCA 1279 |
| FAMILY LAW - PROPERTY SETTLEMENT – Contribution – Section 75(2) – Just and equitable |
| Family Law Act 1975 (Cth) Sections 75 and 79 |
Marriage of Hickey (2003) 30 Fam LR 355 at 370
In the Marriage of Omacini (2005) 33 Fam LR 134
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) l2 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
Robb and Robb (1995) FLC 92-555
| APPLICANT: | Ms Sherman |
| RESPONDENT: | Mr Jones |
| FILE NUMBER: | SYF | 4685 | of | 2005 |
| DATE DELIVERED: | 28 March 2008 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Loughnan JR |
PLACE HEARD: Sydney
| HEARING DATE: | 25 and 26 February 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr B Richards |
SOLICITOR FOR THE APPLICANT: | Moira Ryan Lawyers Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Mr T Tockar |
SOLICITOR FOR THE RESPONDENT: | John R. Quinn & Company |
Orders
The husband shall do all things and sign all documents necessary to pay the wife an amount of $162,000 within sixty days of the date of these Orders.
The husband shall do all things and sign all documents necessary to cause the wife, within sixty days of the date of these Orders, to be released from any mortgage, guarantee, charge or lease associated with the properties known as and situated at D Street, Town B and G Street, Sydney and any other property in respect of which he has an interest, and to indemnify the wife in that regard.
In the event of a default by the husband of Order 1, he shall do all acts and things necessary to place the properties know as and situated at D Street, Town B and G Street, Sydney on the market for sale by public auction forthwith at reserve prices agreed between the Husband and Wife or failing such agreement as recommended by a valuer jointly appointed by the parties by agreement and failing agreement a valuer nominated by the President for the time being of the Real Estate Institute of New South Wales and the Husband and Wife are to forthwith do all acts and things necessary including the execution of all documents necessary for the sale of the said property by public auction and in particular are to:
(a)Place the said properties with an agreed auctioneer or auctioneers or in the default of agreement, H Limited (hereinafter called the Auctioneers) for the sale of the properties by public auction at the earliest possible date.
(b)Execute all documents requested by the Auctioneers for the sale of the said properties.
(c)Request the Auctioneers to recommend a reserve price to be placed on the said properties for the purpose of the auction sales and, unless they agree to the contrary, the parties shall accept that recommendation.
(d)Pay the Auctioneers equally any sums requested for advertising expenses in relation to the auction.
(e)Co-operate in every way with the Auctioneers in relation to the auction of the said properties.
(f)Attend at the auction sales and negotiate with the highest bidders in the event that the reserve price is not reached and accept the advice of the Auctioneers as to the acceptance of a price less than the reserve price.
(g)Execute Contracts for Sale.
(h)Execute all other documents necessary to complete the sale.
The Husband and Wife shall do all acts and things necessary to procure that upon the sale of the properties the payment of the proceeds of sale in the following manner and priority:
(a)In payment of agent’s commission and auction expenses (if any) due on the sales.
(b)In payment of legal costs of the sales,
(c)In discharge of the outstanding first registered mortgage balances.
(d)As to the net balance to be divided as follows:
(i)$162,000 to the Wife together with interest accrued on that sum in accordance with the Family Law Act; and
(ii)The balance to the Husband.
Other than in compliance with Order 1 or 3 the husband is restrained from selling, transferring, disposing of or further encumbering the Town B and Sydney properties without the consent of the wife as evidenced in writing.
Pending settlement in accordance with these orders the husband will pay and maintain all mortgage payments and all other outgoings in relation to those properties as and when they fall due.
Within thirty days the wife do all acts and things and sign all documents necessary to transfer to the husband her one-half interest, held jointly with the husband, in 400 Telstra shares.
Within thirty days the husband pay the overdraft account in the joint names of the parties or cause the release of the wife’s name from the account and indemnify the wife in that regard.
Except as otherwise provided in this Order, the husband and the wife are entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively.
10. The parties shall do all things, sign all documents and give all consents necessary to give full force and effect to these orders.
11. If either party refuses or neglects to sign or execute any document, instrument or writing or comply with any order contained herein after seven days of being required to do so, pursuant to Section 106A of the Act, the Registrar of the Family Court of Australia at Sydney be empowered to sign and execute such document, instrument or writing on behalf of either party as may be necessary to give full force and effect to orders herein.
12. By consent orders and notations are made in terms of the document titled “Proposed Orders” which is exhibit 17, as follows:
1. That within fourteen days the husband do all things and sign all documents to transfer to the wife the ownership of the ASG Scholarship Fund Account number … (the ASG account) held in trust for and on account of Y Jones, born … 1999.
2. That the wife is otherwise restrained from surrendering or drawing on the account save and except for the payment of the following expenses; school and tertiary fees, and school and tertiary books and any other educational expenses as agreed between the husband and wife as evidenced in writing.
3. That the wife will provide the husband with a copy of the relevant invoice and withdrawal documents within seven days of the transaction.
4. That with fourteen days the husband and wife do all things and sign all documents to transfer the ownership of 162 NAB Shares from the husband's name into the joint names of the parties to be held on trust for Y Jones.
NOTATIONS
A.That the Court notes that the payments from the ASG Account are not payments of child support and the husband will not apply to have such amounts set off against any current assessment at any time.
13. Leave is granted to either party to apply further in respect of the implementation of any of these orders on giving at least 7 days notice to the court and to the other party.
IT IS NOTED that publication of this judgment under the pseudonym Sherman & Jones is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 4685 of 2005
| Ms Sherman |
Applicant
And
| Mr Jones |
Respondent
REASONS FOR JUDGMENT
Ms Sherman (“the wife”) and Mr Jones (“the husband”) lived together for about eight years. Upon the breakdown of their marriage they cannot agree on a settlement of their property.
Applications
The wife seeks the following orders:
1. That within 30 days of the date of these Orders the husband do all things and sign all documents to pay the wife an amount of $250,000.
2. That within seven days the husband and wife do all things and sign all documents to transfer ot the wife the ownership of the ASG Scholarship Fund held in trust for and on account of [Y Jones].
3. That in the event of a default by the husband of Order 1 the husband forthwith do all acts and things necessary to place the properties at know as and situation (sic) at [D]Street, [Town B] and [G] Street, Sydney on the market for sale by public auction forthwith at reserve prices agreed between the Husband and Wife or failing such agreement as recommended by a valuer jointly appointed by the parties by agreement and failing agreement a valuer nominated by the President for the time being of the Real Estate Institute of New South Wales and the Husband and Wife are to forthwith do all acts and things necessary including the execution of all documents necessary for the sale of the said property by public auction and in particular are to:
3.1. Place the said property with an agreed auctioneer or in the default of agreement [H] Limited (hereinafter called the Auctioneers) for the sale of the property by public auction at the earliest possible date.
3.2. Execute all documents requested by the Auctioneers for the sale of the said property.
3.3. Request the Auctioneers to recommend a reserve price to be placed on the said property for the purpose of the auction sale and accept such recommended price.
3.4. Pay the Auctioneers equally any sums requested for advertising expenses in relation to the auction.
3.5. Co-operate in every way with the Auctioneers in relation to the auction of the said property.
3.6. Attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached and accept the advice of the Auctioneers as to the acceptance of a price less than the reserve price.
3.7. Execute Contracts for Sale.
3.8. Execute all other documents necessary to complete the sale.
4. That the Husband and Wife do all acts and things necessary to procure that upon the sale of the properties the proceeds of sale shall be paid in the following manner and priority:
4.1. In payment of agent’s commission and auction expenses (if any) due on the sale.
4.2. In payment of legal costs of sale.
4.3. In discharge of the outstanding first registered mortgage balances.
4.4. As to the net balance to be divided as follows:
4.4.1. $250,000 to the Wife and interest accrued in accordance with the Family Law Act
4.4.2. Balance to the Husband.
5. That other than in compliance with Order 1 or 3 the husband is restrained from selling, transferring or disposing of the [Town B] and [Sydney] properties without the consent of the wife as evidenced in writing.
6. That pending settlement with Order 1 or 3 the husband grants the wife a caveatable interest in the [Town B] and [Sydney] properties.
7. That pending settlement in accordance with Order 1 or 3 the husband will pay and maintain all mortgage payments as and when they fall due.
8. That within thirty days the husband do all things and sign all documents necessary to cause the wife to be released from any mortgage, guarantee, charge or lease within 14 days from the date of these Orders and indemnify the wife in that regard.
9. That within thirty days the husband pay the overdraft account in the joint names of the parties or cause the release of the wife’s name from the account and indemnify the wife in that regard.
10. Except as otherwise provided in this Order, the husband and the wife are entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively.
11. That the parties do all things, sign all documents and give all consents necessary to give full force and effect to these orders.
12. That if either party refuses or neglects to sign or execute any document, instrument or writing or comply with any order contained herein after seven days of being required to do so, pursuant to Section 106A of the Act that the Registrar of the Family Court of Australia at Sydney be empowered to sign and execute such document, instrument or writing on behalf of either party as may be necessary to give full force and effect to orders herein.
13. Leave to either party to have liberty to apply further in respect of the implementation of any or all of these orders.
14. That the husband pay the wife’s costs of and incidental to this Application.
The husband seeks: orders in accord with his Response filed 9 February 2006 by which he agreed to paragraphs 10 – 15 inclusive of the wife’s original application:
10. That within thirty days the husband do all things and sign all documents necessary to cause the wife to be released from any mortgage, guarantee, charge or lease within 14 days from the date of these Orders and indemnify the wife in that regard.
11. That within thirty days the husband pay the overdraft account in the joint names of the parties or cause the release of the wife’s name from the account and indemnify the wife in that regard.
12. Except as otherwise provided in this Order, the husband and the wife are entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively.
13. That the parties do all things, sign all documents and give all consents necessary to give full force and effect to these orders.
14. That if either party refuses or neglects to sign or execute any document, instrument or writing or comply with any order contained herein after seven days of being required to do so, pursuant to Section 106A of the Act that the Registrar of the Family Court of Australia at Sydney be empowered to sign and execute such document, instrument or writing on behalf of either party as may be necessary to give full force and effect to orders herein.
15. Leave to either party to have liberty to apply further in respect of the implementation of any or all of these orders.
He also sought the following further orders set out in his Response:
1.1. Transfer of Telstra shares to the Wife
That the husband do all acts and things and sign all documents and writings necessary to transfer to the wife his one-half interest, held jointly with the wife, in 400 Telstra shares.
1.2 Balance of matrimonial property
That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders each party be solely entitled to the exclusion of the other to all property in the possession of such party as at this date.
1.3 Appointment of Registrar pursuant to Section 106A
That in the event that either party refuses or neglects to comply with the provision of any order herein the Registrar of the Family Court at Sydney is hereby appointed pursuant to Section 106A of the Family Law Act to execute all deeds and documents in the name of either the husband or the wife and do all acts and things necessary to give validity and operation to the said orders.
1.4 Liberty to apply
That either party have liberty to apply on seven (7) days notice in the event of any difficulty arising out of the implementation and enforcement of these orders.
In addition by his Case Outline document the husband seeks an order that he be required to pay the wife $90,000 within 3 months of the orders being made.
Written evidence
The sworn evidence is:
Relied on by Applicant Wife
Affidavit/Document Date Sworn Date Filed Affidavit of Ms Sherman 21/05/2007 22/05/2007 Financial Statement – Ms Sherman 21/05/2007 22/05/2007 Affidavit of Ms Sherman 02/11/2007 02/11/2007
Relied on by Respondent Husband
Affidavit/Document Date Sworn Date Filed Affidavit by Mr Jones 21/05/2007 22/05/2007 Financial Statement – Mr Jones 21/05/2007 22/05/2007 Affidavit by Mr Jones 05/11/2007 06/11/2007 Affidavit by Mr Jones 08/11/2007 Not filed
Other Documents
Affidavit/Document Date Sworn Date Filed Affidavit of Single Expert Witness – Ms Z 10/08/2007 14/08/2007
Short History
The wife and husband are 44 and 51 years of age respectively. They started to live together in 1994, were married in1997, separated on 1 July 2002 and their divorce became final on 2 January 2006.
Children
There is one child of the marriage:
Y Jones who was born in 1999 and who was eight years of age as at the date of the hearing;
The husband has three adult children from an earlier relationship:
A Jones who was 25 years of age as at the date of the hearing;
N Jones who was 20 years of age as at the date of the hearing; and
L Jones who was 18 years of age as at the date of the hearing;
Background facts
In 1978 the husband commenced a business known as U Company.
In 1983 the business developed into retailing.
In 1986, through his business, the husband purchased a retail franchise known as the R Business.
On 11 September 1986 the husband commenced a superannuation policy with AMP.
In 1991 the husband and his previous wife separated.
That marriage was dissolved on 23 March 1993.
The parties commenced cohabitation in 1994. The wife then owned a Toyota motor vehicle, musical instruments and furniture and appliances. She says the husband owned 2/7ths of a business and a Ford vehicle.
The husband had been renting premises at Suburb C. On the commencement of cohabitation, the parties rented premises at Suburb W. The wife says that the husband’s children lived with parties from Sunday to Tuesday and half the school holidays initially and then for half of each week during school term and for half the holidays.
The wife says that the parties shared equally all household costs including rent, food, utilities, repairs, entertainment for parties and husband’s children.
In April 1995 the husband sold his business to Mr K. He sold the equipment, client list, staff list, computer, van and goodwill of his business for $53,000.
In 1996 the husband commenced work as a teacher at O School.
The parties were married on 26 September 1997.
In October or December 1997 the parties moved to premises at Suburb M.
In September or October 1998 the husband received a cash gift of $15,000 from his aunt, Ms P.
The child Y was born in 1999.
In September 1999 the parties moved to premises at Suburb E. The husband’s children came to live with the parties on a full-time basis upon their mother’s move overseas.
On 6 October 1999 the husband received an inheritance of $46,903.63 from his late aunt, Ms P.
On 15 November 1999 the husband purchased an investment property at G Street, Sydney for $429,000. The husband obtained a mortgage from T Pty Ltd, which was later refinanced with the National Australia Bank in the sum of $386,000 (the wife says it was $308,000). The husband says that on 4 February 1999, he paid the deposit of $21,450, on 1 August 1999 he paid stamp duty on the contract of $14,799, on 21 October 1999 he paid $1,489, being stamp duty on the mortgage and that on 12 November 1999 he paid $21,449.22, being the balance of the purchase price.
The husband says that the moneys paid by him came from proceeds of sale of his business and from the money gifted to him by his aunt.
The property was rented out, and the rental was applied towards the mortgage and statutory charges.
In February 2000 the parties moved to premises at Suburb X.
On 9 November 2000 (the wife says 8 June 2001) the husband purchased a unit, off the plan, at D Street, Town B, for $400,000. The husband says that he paid $1,200 to obtain a deposit bond. The husband gave a first mortgage in the sum of $308,000 to the National Australia Bank and a second mortgage of $33,000 to the vendor. The husband says that he refinanced with the NAB and increased the mortgage on the Sydney property by $14,000 from $386,000 to $400,000. The wife says that she was a co-borrower on the combined loan of $708,000. The husband says that the balance payable on completion, namely $45,000, was paid by way of cheques of $39,000 drawn on his business and $6,000 from his St George Bank account. He says that he also paid stamp duty of $13,494 and costs and disbursements of $1,975 between May and June 2001. The husband states that the moneys paid by him came from the balance of proceeds of sale of his business and from the inheritance from his aunt. The Town B property was leased and the rental applied to the mortgage and outgoings.
In 2001 the husband’s oldest child, A, moved to his own premises.
The parties separated on 1 July 2002.
On 24 September 2003 the husband received an inheritance of $225,348.07 from his late father. The husband gave the wife $5,000.
On 13 May 2004 (the wife says 30 September 2003) the husband acquired a half interest in a property known as F Street, Suburb Q. The total purchase price was $645,000 and the cost of the husband’s half interest was $322,500. The husband borrowed $258,000 from the Bank of Queensland, and the balance of his share of the purchase price was drawn from his St George Bank account. The money came from the inheritance from his late father. The Q property was leased, and the rental money applied towards the mortgage and outgoings.
In 2004 the husband purchased a business known as J Company for $25,000.
On 23 November 2005 (the wife says 17 August 2005) the husband and his sister received under the will of their aunt a property known as H Street, Suburb V. The property was leased and the net rental shared by the husband and his sister. The husband says the property was valued at $330,000, with his interest being worth $165,000.
On 2 January 2006 the parties’ divorce became final.
On 9 February 2006 the parties entered into parenting orders, whereby the child Y lives with the wife and spends time with the husband at times including:
· During school terms, every Friday from after school to Saturday to a time to be agreed and failing agreement to 12.00 noon; and
· Half school holidays.
On 11 August 2007 the husband sold his Saab motor vehicle for $13,800. He paid creditors and banked $4,000 to his business account.
On 9 October 2007 contracts were exchanged for the sale of the property at F Street, Suburb Q for $685,000. Of the husband’s share, $253,826 was paid to the Bank of Queensland in respect of the mortgage.
On 17 October 2007 the sale of the property at Suburb V settled. The husband received $161,222.69, plus $4,458.75 as a refund of the deposit after deduction of commission. The husband paid those moneys into his account with the St George Bank and has since used them to pay normal business expenses and also to reduce his mortgage on the B property. In the written submissions made on his behalf it is asserted that the husband paid $80,000 from the V property proceeds off the B property mortgage.
Credit and Submissions
The evidence of the witnesses
The only witnesses called for cross-examination were the parties.
It was conceded on behalf of the husband that the date of cohabitation was 1994, as the wife had asserted and not 1996 as the husband deposed in two affidavits.
The wife was not successfully challenged in cross-examination.
The husband’s failed to provide adequate disclosure of his financial circumstances. His business affairs appear to be chaotic and that did not hep with understanding his financial position.
In my view I cannot simply accept all of the evidence of one of the parties and reject all of the evidence of the other. Findings of fact must be made issue by issue.
Submissions
The written submissions on behalf of the wife are as follows:
1Property & Liabilities and Superannuation
Property Ownership Value [G] St Sydney Husband $ 475,000.00 [D] Street, [Town B] Husband $ 375,000.00 IAG Shares 314 @ $3.82 Wife $ 1,199.00 Telstra Shares 400 @ 4.69 Joint $ 1,876.00 Proceeds of [V property] Husband $ 161,222.69 Balance of Deposit $ 4,458.75 Proceeds from the sale of Q property / retained in J Quinn and Co trust account Husband $ 79,619.11 [U Company] Husband $ 28,000.00 [J Company] Husband $ 11,000.00 [Entertainment venture] Wife $ 12,000.00 ASG Scholarship Fund Husband $ 10,870.00 Chess Holdings in Name of Husband Husband $ 7,990.00 Add Back Proceeds of Sale of Saab Husband $ 13,800.00 Add Back Shares retained by Husband as at the Date of Separation Husband $ 18,468.00 Add Back Proceeds of Sale of NAB Shares Husband $ 13,800.00 Total $ 1,214,303.55 Liabilities NAB Mortgage – [Sydney property] Husband $ 400,000.00 NAB Mortgage - [Town B property] Husband $ 308,000.00 Total $ 708,000.00 TOTAL NET PROPERTY $ 506,303.55 Superannuation Ownership Value AMP Flexible Lifetime Husband $ 83,788.00 AMP Flexible Lifetime Wife $ 63,773.00 Total $ 147,561.00 Financial Summary Value Property $1,214,303.55 Liabilities $ 708,000.00 Superannuation $ 147,561.00 Total Net Pool $ 653,864.55 2Contribution Entitlements
The wife made direct and indirect financial and non-financial contributions to the assets of the parties by virtue of:
(a)At the commencement of cohabitation the wife had a Corolla motor vehicle worth $3,000, musical equipment with an approximate value of $1,200, furniture sufficient to furnish a home. The wife estimates the total value of her possessions was $5,250.
(b)The parties shared equally all the costs of living in the rented premises for the duration of the relationship. The husband’s three children lived with the parties throughout the relationship in various arrangements. Initially 5/14 days, then shared and then on a full time basis.
(c)The wife bore at least half of the household expenses, including the expenses that included the husband’s three children. The husband was also utilising some of his income in payment of his children’s private school fees and other expenses.
(d)The wife worked throughout the relationship and continuously supported herself financially, gave direct and indirect financial support to the husband’s children, and financial support to the child [Y].
(e)The wife made contributions to the welfare of the family (including the husband’s children) in her capacity as primary homemaker and parent.
(f)At separation the wife did not receive any share of a property retained by the husband as at the date of separation.
(g)The wife has primarily and substantially supported [Y] since their lengthy separation(5 ½ years) without any noteworthy contribution from the husband on a financial basis.
(h)The husband exercised time spent with [Y] infrequently until Orders were made by consent in 2006. Prior to that time the wife had the care of [Y] except for one day per fortnight when the husband took care of the child.
(i)The husband has built on the assets he retained at separation and accumulated other assets which the wife bore the financial burden in caring for [Y].
(j)The wife has shared in the risks associated with properties by way of mortgage liability, in being a joint mortgagor for the properties at [Town B] and … Sydney.
3Section 75(2) Factors
(a)The wife is 43 years of age and is in good health.
(b)The wife is not tertiary qualified and relies on her employment deriving from [part-time work]. She has a limited capacity to increase her income from its current level particularly in circumstances that she has the overall care of [Y] (all except less than 2 days per fortnight) and her desire to remain available to care for [Y] outside school hours. [Y] is only aged 8 years and currently in primary
(c)The wife will have an major(financial and non-financial) burden in maintaining [Y]. It is likely that the husband will continue to arrange his financial affairs having the effect that he will make little contribution towards the costs of [Y].
(d)The wife bears the costs of accommodation with [Y] alone. The wife will continue to have significant costs in housing herself and the child in the future.
(e)The husband has a significantly greater earning capacity than disclosed in his taxable income. The husband has longstanding employment with [O] School and is tertiary qualified... There are no reliable indicators of the true performance of the husband’s business or the husband’s real income.
(f)The wife made contributions to the welfare of the husband (sic) children in her capacity as homemaker and parent.
(g)The husband has disposed of various assets accumulated prior to separation without the wife’s prior knowledge and consent and retained the benefit from all funds received.
4Conclusion
As at the date of Hearing the contributions (financial and non-financial) expressed as a percentage from the date of cohabitation to the date of separation and then from the date of separation until the date of final Hearing would lead to a finding in the proportion as follows;
40% to the wife and 60% to the husband.
Predicated on the above finding in relation to contributions, it is submitted that there ought to be a further adjustment, given the matters under Section 72 of between 15 % and 20%[1] in favour of the wife.
Thus, the just and equitable division of the pool of property would be in the proportion of 60% to the wife and 40% to the husband.
[1] This does not take into account any allowance in the event that the court concludes that the husband has not made a full and frank disclosure.
The written submissions on behalf of the husband are as follows:
(A)CURRENT FINANCIAL CIRCUMSTANCES
Assets
Description
Ownership
Wife’s Value
Husband’s Value
Agreed Value
[Sydney property]
H
475,000.00
475,000.00
475,000.00
Property at [Town B]
H
375,000.00
375,000.00
375,000.00
CBA (CDIA Investment)
H
1,189.77
St George Bank Cheque Account
H
2,225.32
St George Bank Savings Account
H
187.09
Bank of Qld Mortgage Offset
H
6,277.29
Household Furniture
H
3,000.00
Business known as [U Company]
H
28,000.00
28,000.00
28,000.00
Business known as [J Company]
H
11,000.00
11,000.00
11,000.00
Solicitors’ Trust Account (proceeds of sale of property)
H
79,619.11
Solicitors’ Trust Account (Legal Fees)
H
10,157.83
AMP Super
H
83,788.82
400 Telstra Shares
W
1,960.00
Sydney Credit Union
W
189.00
314 IAG Shares
W
1,953.00
Solicitors’ Trust Account (Legal Fees)
W
1,475.00
Household Contents
W
3,710.00
[Entertainment venture]
W
12,000.00
12,000.00
12,000.00
AMP Super
W
63,773.00
Total:
974,060.00
1,087,445.20
901,000.00
Liabilities
Description
Ownership
Wife’s Value
Husband’s Value
Agreed Value
Mortgage:[Sydney] property
H
400,000.00
400,000.00
400,000.00
Mortgage: [Town B] property
H
228,000.00
($80,000 paid from proceeds of sale of [V] property)
Levies: [B] property
H
1,848.18
[Water Authority]
H
129.74
Body Corporate Demand to comply with zoning conditions in respect of property at [Sydney] – furniture and fittings
H
29,900.00
Maintenance Costs: [B] property
Carpet
Painting
H
3,500.00
1,400.00
NAB Overdraft
H
1,444.75
Mastercard
W
4,328.00
Borrowings from [Y’s] account
W
3,500.00
Total:
407,828.00
666,222.67
400,000.00
NET ASSETS
566,232.00
421,222.60
501,000.00
Commentary:
1.In order to establish the precise asset pool, updated figures need to be obtained in respect of:
(i)The Telstra shares;
(ii)The wife’s Credit Union account;
(iii)The IAG shares;
(iv)The amount in the Trust Account of the wife’s solicitors;
(v)The value of the wife’s superannuation entitlements;
(vi)The wife’s Mastercard balance.
Also, agreement will have to be reached regarding the value of the
parties’ household items.
3.Having regard to the above table of assets and liabilities, it appears as if the net asset pool is in the vicinity of $486,454.60 (assets of $1,160,505.20 less liabilities of $674,050.67).
(B)DIFFERENT ORDERS
At the hearing, the husband will seek orders in accordance with his Response filed on 16 February 2006, save that he will also seek an order that he pay to the wife the sum of $90,000.00 within three (3) months of the orders being made.
(C)EFFECT OF THE ORDERS SOUGHT BY THE HUSBAND
1.If orders are made as sought by the husband, the wife will be possessed of assets worth $167,232.00.
2.This equates to 34.4% of the net asset pool.
(K) CONTRIBUTIONS
1. Having regard to:
(i)the husband’s initial contributions;
(ii)the husband’s inheritances;
(iii)the husband’s post-separation contributions;
(iv)the make-up of the asset pool;
(v)the duration of cohabitation;
(vi)the paries’ respective contributions as parents and homemakers,
it is submitted that the husband’s contribution-based entitlement heavily outweighs that of the wife.
2.It is submitted that on a percentage basis, the husband’s contributions should be assessed at 73%.
(D)SECTION 75(2) ADJUSTMENT
1.The wife will have the primary care of [Y].
2.She will nevertheless be able to work and earn.
3.There is little difference in the parties’ respective capacities to generate income.
4.The wife is younger than the husband by some 7 years.
5.The husband will have a greater share of the asset pool.
6.In the circumstances, it is submitted that 7% adjustment in favour of the wife would be appropriate.
(M) JUST AND EQUITABLE RESULT
It is submitted that an outcome as proposed above would reflect a just and equitable result.
The approach in proceedings under section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. First, I am to make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I should identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, I should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. [2]
[2] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370
The property of the parties at the date of the hearing
Generally the Court is obliged to identify and value assets and liabilities at the date of the hearing. Care is needed in departing from that approach. That is not to say that assets and liabilities are always identified as at that date. There are circumstances, which the Court has found in other cases, have justified the inclusion of property that no longer exists, in the pool of property for settlement. In In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
[30] To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
The assets and their values are largely agreed. As to the disputed issues:
Proceeds of sale of NAB shares
The husband sold 340 National Australia Bank shares in June 2007 for $13,833.30. It is his case that he bought those shares for his sons with $10,000 they inherited from his father’s estate. On 4 July 2007 $13,833.30 went into his account number ...678. On 5 July 2007 two payments of $5,000 went into a J Company account, each transfer being endorsed for one of the children. He says that he then distributed that $10,000 for the benefit of the boys. He says that he did not give them all of that sum but gave them part and applied the rest for their benefit. The husband could not specifically account for the remaining $3,833.30 but his evidence is that all of the proceeds were applied to the benefit of the boys.
In my view these funds should be omitted from the pool to be divided. It is not disputed that the funds used to buy the shares originated in an inheritance of the boys.
ASG funds and NAB shares held for Y
There is an interest with the Australian Scholarship Group for the benefit of Y with a value agreed at $10,870. The husband holds a number of National Australia Bank shares with a value of the order of $5,821. The value was a calculation based on the stock exchange value during the hearing. During submissions the parties agreed that the interest and the shares would be isolated from the pool of assets and orders could be made in terms to be agreed between the parties to secure the application of those assets for Y’s benefit.
On 20 March 2008 the following agreed form of orders was provided to my chambers by the parties:
PROPOSED ORDERS
1. That within fourteen days the husband do all things and sign all documents to transfer to the wife the ownership of the ASG Scholarship Fund Account number … (the ASG account) held in trust for and on account of [the child Y] born … 1999.
2. That the wife is otherwise restrained from surrendering or drawing on the account save and except for the payment of the following expenses; school and tertiary fees, and school and tertiary books and any other educational expenses as agreed between the husband and wife as evidenced in writing.
3. That the wife will provide the husband with a copy of the relevant invoice and withdrawal documents within seven days of the transaction.
4. That with fourteen days the husband and wife do all things and sign all documents to transfer the ownership of 162 NAB Shares from the husband's name into the joint names of the parties and held on trust for [the child Y].
NOTATIONS
A. That the Court notes that the payments from the ASG Account are not payments of child support and the husband will not apply to have such amounts set off against any current assessment at any time.
There is provision in Section 79 for property settlement orders to be expressed in favour of a child of the marriage. It is not suggested that Y contributed to the assets represented in the pool below but these orders are agreed by the parties. I will incorporate those terms into the orders.
Add back funds held by Husband at separation
Separation occurred in 2002. It is an agreed fact that the husband had access to the following funds at that time.
Asset Amount U Company $2,295.29 CDIA Account $6,015.00 St George Bank Term Deposit $7,070.25 U Company Account $3,952.81 $19,333.35
In my view it is dangerous to simply add back these funds. This is a case where separation was nearly six years ago. There is a risk of double counting the moneys in the business accounts because those funds may be traceable through to the values allowed for the businesses today. To the extent the funds have been applied to living expenses, they would normally not be read back. The use by the husband of joint funds since separation is dwarfed by the injections of funds through him since separation. Any unfairness to the wife that might arise from this approach can be addressed in assessing the net impact of the husband’s contributions.
Household Furniture of the husband
It is submitted for the wife that the husband’s furniture has a value of $5,500. The argument is that the husband put a value of $3,000 on the furniture and he recently spent $2,500 on a lounge and other items. The husband’s argument is that the recently bought furniture could not be worth what was paid for it and he would concede his furniture at $3,900. I cannot take the approach offered on behalf of the husband. His estimate for the original furniture is the value of the furniture because it is a value accepted by the wife. She does not accept the estimate of $900 for the recently purchased furniture. One way of ascertaining the value of recently purchased items is to adopt the purchase price. In the absence of any other evidence I find that the furniture has a value of $5,500.
$13,800 being the sale proceeds of a Saab motor vehicle
The husband sold the Saab in about August 2007 for $13,800. It is submitted for the wife that it was a marriage asset and the proceeds should be brought to account. For the husband it is argued that the proceeds should not be brought to account as they were applied to living expenses save for $4,000 which was put into the business and therefore is reflected in the value of the business. I will adopt the approach proposed on behalf of the husband. The general approach is to identify the assets and their value at the date of the hearing. Had the $13,800 been in cash or in a bank account on the day of separation and had it been applied to the normal living expenses of either party, it would not have been added back. It is no different with funds in the form of the proceeds of sale of personalty. The issue more complicated in relation to that part of the proceeds that were applied to the business. Albeit an agreed valuation, the business was valued prior to the injection of $4,000. The valuation was made on a net asset backing basis and so may be sensitive to such an injection. Here, I am inclined to ignore the injection. So much has happened since separation that it would be dangerous in this instance to simply add back moneys that no longer exist. Any unfairness that might arise from this approach can be addressed in assessing the net impact of the husband’s contributions.
Paid Legal Fees
In accordance with the approach referred to in Omacini above I will include the paid legal costs of the parties. To do otherwise would be to require them to contribute to the legal fees of the other party. That should not happen except by reference to section 117.
The assets are:
Assets Value Sydney property (H)
$475,000.00
Town B property (H)
$375,000.00
400 Telstra Shares (Joint)
$1,876.00
Business known as [entertainment venture] (W)
$12,000.00
314 IAG Shares (W)
$1,999.00
Sydney Credit Union (W)
$530.92
Household Contents (W)
$3,710.00
Solicitors’ Trust Account (Legal Fees) (W)
$15,975.00
Wife’s legal costs paid (W)
$10,786.00
Proceeds of V property or investment into H car
$30,000
Solicitors’ Trust Account (proceeds of sale of property) (H)
$79,619.11
Business known as U Company (H)
$28,000.00
Business known as J Company (H)
$11,000.00
CBA (CDIA Investment) (H)
$1,189.77
St George Bank Cheque Account (H)
$2,245.56
St George Bank Savings Account (H)
$187.09
Bank of Qld Mortgage Offset (H)
$1,277.00
Household Furniture (H)
$5,500.00
Solicitors’ Trust Account (Legal Fees) (H)
$10,157.83
Total $1,066,053.28
Although I was left in some doubt about whether there is an agreement in relation to the value of the wife’s interest, on the basis of a concession against interest I am satisfied that the parties have the following superannuation interests:
Superannuation Assets Value AMP Super (W) (concession against interest) $67,903.81 AMP Super (H) $83,788.82 Total $151,692.63
Liabilities:
Many of the liabilities are agreed. As to the disputed liabilities:
Refurbishment costs of Sydney Apartment
The husband’s case is that he has been quoted $29,900 to do certain works to the apartment in order that it can be rented out as a serviced apartment. The problem is that there is no evidence of any requirement to incur that expense. The husband knew of the expense in November 2007 and made no attempt to inform the other side until the case outline documents were prepared in the days before the hearing. Tendered documents were consistent with the husband having that necessary expense involving about $22,000 for furniture, fittings and appliances and the rest in painting and carpet. However, it is unfair to require the wife to address that evidence when it is sprung on her at the last minute. For that reason, among others, I rejected the tender. Further, the husband runs the apartment as an investment. Should he ever be in a position to earn an income, he can claim expenses such as this against that income. Thus the effective cost to him of this work will be less than $29,900. Next, the husband was intending to acquire assets with $22,000 of the expense. There is no suggestion in the husband’s case that he intended to bring those assets to account. Why include the price if the purchased goods are not also included? True it is that they may be depreciating assets but that does not mean they have no value immediately after their purchase. Finally, in the event that it was allowed as a relevant expense there is no evidence of the impact of that expenditure, if any, on the valuation of the property, which is an agreed figure based on the opinion of an expert given over a year ago. It was the husband’s responsibility to present this evidence to the Court and he made no effort to do so.
Sundry costs for Town B property
The husband has spent about $5,500 on the B property. His evidence that the work was done and the expenses actually incurred was not successfully challenged. I will allow the expenses to be included in the list going to make up the net assets of the parties.
The liabilities are:
Liabilities Amount Mastercard (W)
$9,184.16
Borrowings from Y’s account (W)
$13,194.00
Mortgage: Sydney property (H)
$400,000.00
Mortgage: Town B property($80,000 paid from proceeds of sale of V property) (H)
$228,000.00
Levies: B property (H)
$1,848.18
Water Authority (H)
$129.74
Maintenance Costs: B property (H)
Carpet
$2,110.00
Maintenance Costs: B property (H)
Painting $1,400.00
$1,400.00
NAB Overdraft (H)
$1,444.75
$657,310.83
Net assets
The net non-superannuation assets have a value of $408,742.45 ($1,066,053.28 - $657,310.83). The superannuation is worth $151,692.63.
Financial Resources
There is no evidence that either of the parties has any financial resources.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets[3]. There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties[4].
[3] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[4] In the Marriage of Shewring (1987) l2 Fam LR 139
As to whether the Court should apply the considerations in section 79(4) to the assets globally or asset by asset, the authorities have it the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that that:
… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.
The submissions were made on the basis of there being one pool of assets. In any event the imbalance in superannuation interests is relatively small. I will apply the section 79(4) considerations to one pool combining superannuation and non-superannuation assets.
Contributions
Section 79(4)(a) Contributions
Financial contributions, both direct and indirect were made by each of the parties.
The complicating factor in this case is that the capital injections made on behalf of the husband exceed the value of the current assets.
At the commencement of cohabitation in 1994 the wife owned a Toyota motor vehicle, musical instruments and furniture and appliances.
The following injections of funds were received through the husband:
Date Source of funds Value April 1995 Proceeds of sale of business owned at cohabitation $53,000 September/October 1998 Cash gift from his aunt, Ms P $15,000 6 October 1999 Inheritance of from his late aunt, Ms P $46,903.63 24 September 2003 Inheritance from his late father $225,348.07 23 November 2005 or 17 August 2005 Inheritance from his late aunt, Ms FF of a one half interest in V property. Sold in 2007 for $161,222.69, plus $4,458.75 $165,681.44 Total $505,933.14
Subject to comments made later in these reasons, I think that is the best way to treat the injections. It could be argued that the husband’s inheritances should be traced through into the Sydney, Q and B properties and that their values at some point, represent the injections of funds. However, unlike the original injections, the wife contributed to those properties. She is a co-borrower in relation to those properties and contributed where a shortfall of rent over outgoings resulted in an impost on the family budget or affected the husband’s capacity to provide support after separation.
The husband’s superannuation contributions commenced in 1986.
Each of the parties was in paid employment during the marriage. The wife was self employed when the parties met and throughout their relationship apart from six months around Y’s birth. She taught at ML one evening a week. I am not sure how long that work continued. After Y’s birth she worked two or three days at a High School during school hours and as Y grew older the wife took on more night time work until she was regularly working two to three nights each week. The wife’s income was applied to family purposes and she gives unchallenged evidence about a strict division of family expenses between herself and the husband, at least in the early days of the marriage.
Throughout the marriage the husband taught (as a self-employed teacher) at O School and he had freelance work as an entertainer. The husband has undertaken that work through a business call U Company. He sold the part of that business at the start of the marriage. Since 2004 the husband has also worked through his business, J Company. The husband describes that business as a specialist employment agency.
It is not possible to reconcile the husband’s evidence about his income and outgoings. It is the husband’s evidence that he has no income and no personal outgoings. Before cross-examination commenced I drew the attention of his counsel to the danger of leaving the husband with the level (lack) of disclosure in his latest Financial Statement. Nothing was done over the two days of the hearing to repair the situation. I am left with the inferences that arise from the background facts.
It is the husband’s evidence that his business/es have run at a loss for the last three years. The pattern of his taxable income over the years of the marriage is disclosed to be:
Years ending 30 June Taxable Income 1995 $8,276 1996 $15,980 1997 $11,965 1998 $13,322 1999 $10,398 2000 $13,539 2001 Nil 2002 Nil 2003 $6,209 2004 $2,032 2005 $3,830
The husband’s 2006 Individual Tax Return declares a loss of over $40,000. That was made up of a loss of $27,246 on his rented properties and a trading loss on his business activities of $12,839. His 2007 Individual Tax Return declares a loss of $112,450 of which $40,660 is the loss on his rented properties and $71,790 is the trading loss of his business activities. In that return the business activities are broken down to the two entities. U Company (the vehicle for the husband’s entertainment work and teaching) made $70,917 and had expenses of $34,704, leaving a profit of $36,213. J Company (the employment agency), however, earned $514,096 and had expenses of $622,099, leaving a loss of $108,003.
There is no evidence as to the level of the wife’s income over the years of cohabitation but there is a suggestion that she may have earned less than the husband. At one point she deposes to having to repay an overpayment of Family Benefit “because [the husband] ended up earning too much”. It is the husband’s case that the expenditure on his boys each year from 1999 to separation was in the range $10,000 to $16,000. Where did that money come from? Even allowing for the wife’s income contributing to the household, that suggests that the family always ran at a considerable loss.
Neither of the parties gave evidence about undisclosed income. That leaves the explanation for the household deficit to be that the family, and since separation, the husband, lived on capital.
The husband cannot succeed with an argument that he should have full credit for injections of funds received at around the time of separation and since, if he used those moneys in part to subsidise his business/es and to live on. Not only were the injections of funds received at or about the time of separation applied to these purposes but so was family capital. As is referred to earlier in these reasons, the $13,800 being the proceeds of sale of the Saab motor vehicle and the funds held in various accounts at the time of separation (referred to at paragraph 58 above) were wholly or in part applied to the businesses or living expenses. In this way the wife has contributed to the husband’s support since separation.
Thus the real question is the net effect of these contributions. The lack of evidence about the husband’s living expenses makes it difficult to estimate the quantum of funds applied to that purpose. The husband was not required to complete that part of the Financial Statement setting out the detail of living expenses such as food and household supplies but he was obliged to disclose the fixed expenses associated with his accommodation, private use of a motor vehicle, insurance premiums, the cost of servicing personal debt etc. His evidence in each case is “Nil”. That is likely to be false evidence. The husband must have some private (non-business) expenditure of that type. He does not say that he has those expenses and he meets them from capital or debt or that someone else pays them for him. His evidence is that he does not have those expenses. Notwithstanding that these are not maintenance or child support proceedings, in my view, where he discloses no income, the husband needed to go beyond the literal requirements of the Rules and give evidence about all of his living expenses and how he meets them.
It can be safely found that the husband’s financial contributions exceeded those made by or on behalf of the wife. The imbalance is less than it might have been as the husband used much of the funds inherited by him to invest in an unprofitable business and for his living expenses.
Section 79(4)(b) contributions
There is no evidence of significant non-financial contributions that are not caught by section 79(4)(c).
Section 79(4)(c) contributions
The husband’s children from his first marriage are not deemed children of the marriage for the purposes of this paragraph. Therefore contributions to them cannot be recognised here. However, the wife’s contributions to the husband’s children can and should be recognised under section 75(2)(o) – see Robb and Robb (1995) FLC 92-555.
The wife was and is the primary carer for the child Y. Parenting contributions were made over nine years, about three years during the parties’ cohabitation and for about six years since. The issue in dispute between the parties is as to the extent of the husband’s contributions. The wife would have it that the husband’s contribution was minimal because he was rarely available. At one point the husband made arrangements so that he could be at home on a Friday, when Y was in child care. Even when the wife worked at night, it is her evidence that the parties retained a baby sitter.
It is agreed that the wife did the cooking. It is the husband’s case that he regularly mopped and vacuumed and that the boys helped with some chores. The wife conceded that the husband did his ironing (after he complained that she did not do it well enough). The wife says that she did the laundry. She cannot rule out that the husband did some of the cleaning and laundry but it is her case that if he did, it was rare. She did most of the household cleaning, including vacuuming, sweeping the hard surfaces and cleaning bathrooms. Apart from two months early in the marriage the parties did not hire a cleaner. At Suburb X there were five bedrooms and three bathrooms to clean. The wife attended to the preparation of Y’s food, bathed her, played with her, took her to clinics and cared for her. She was with her each day and attended to her most nights. Later the wife enrolled Y in dance class and took her to jazz, ballet and tap classes. She drove her to other activities. The wife now prepares all of Y’s meals and nearly always collects her from school. She takes her to the library and to any extra curricular activities. The wife volunteers at Y’s school as a class helper. She attends all parent teacher meetings. The wife attends and pays for Y’s dance classes, costumes and ancillary costs.
Since separation Y spends time with the husband overnight each Friday and for half the school holidays. That is the arrangement nominated in the parenting orders and the husband says he spends time with the child in accordance with the orders. Thus Y spends about one seventh of the time with the husband during the school term and half of the school holidays. That is not to say that he does not love Y or that he and Y do not have a good relationship. The issue here is parental contributions,
The wife had the main role as parent and homemaker and she made the greater contribution of that type.
Conclusion
For the wife it is submitted that the contributions were made in the proportions 40 per cent by her and 60 per cent by the husband. For the husband it is submitted that they were in the proportions 73 per cent by him and 27 per cent by the wife.
The financial contributions made by and on behalf of the husband were greater than those made by and on behalf of the wife. They each had paid employment and the husband brought in over $500,000 in cash and property. Nearly $400,000 of those injected funds, or about the same value as the net non-superannuation assets, came after separation. Since separation the husband has lived on the funds injected into the marriage through inheritances. He has also applied those funds to J Company, which makes a significant loss. The wife made the greater contribution as parent and homemaker and she continues to make the greater parenting contribution.
The reality of this case is that there would be little property to settle if there had not been injections of funds on behalf of the husband. In that situation and notwithstanding the fact that an undisclosed part of those funds has been used by the husband since separation, the submission made on his behalf is likely to be closer to the mark than that of the wife. I find that the parties contributed in the proportions 70 per cent by the husband and 30 per cent by the wife.
The other matters in Section 79
Once contributions have been assessed, the other factors in section 79(4) need to be considered.
Dealing with the matters identified in the legislation:
Section 79(4) (d)
Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the parties. I don’t think this consideration has much of a bearing on the matter. The fact is that the properties and J Company all make a loss. Far from an adverse impact, if the husband was required to sell all or any of them his financial situation may improve. The wife has no income producing assets.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in Section 75(2) would seem to be paragraphs (a), (b), (c), (k) and (o).
(a) the age and state of health of each of the parties;
First, as to the age and state of health of each of the parties. The wife is 44 years of age and the husband is 51. There is no evidence about their health.
(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;
The wife’s income is $699 per week made up as follows:
Source Amount Income earned through entertainment venture $695 Dividends $4 Total $699.00
Since she swore her Financial Statement the husband resumed making some payments of child support. The wife lives with the parties’ daughter, Y. The child has had income in the past but does not currently earn any money.
The wife’s fixed expenses are as follows:
Expense Amount Superannuation contributions AMP $80.00 Rent $300.00 Unit levies $3.00 Public liability insurance – SLE Worldwide $4.00 Personal accident insurance – AIG $1.00 Personal accident insurance – AIG $3.00 Motor vehicle registration – Hyundai motor vehicle $8.00 Credit card payments $20.00 All other payments $725.00 Total $1144.00
Evidence about the wife’s assets and liabilities is set out earlier in these reasons.
The husband’s evidence about his financial circumstances is found in his Financial Statement of May 2007. Despite the age and paucity of the document being pointed out, no effort was made to update that document in writing or orally. He says that he is a self employed businessman and has no income and no liabilities, save that against item 19 “Income Tax” there is the note – “Please see attached list”. That was not much help, the attached lists are headed:
“Property less mortgages”
In 2004 the “Bank account list is as of 20.05.07”
“Assets (other)”
“Liabilities”
The final annexure is the husband’s tax return for the year ended 30 June 2006. That tax return declares a loss of $40,085 arising from two sources of income. First, there is rental income of $85,013 with various deductions totalling $112,259 leading to a loss of $27,246. Next, there is the income from U Company of $535,790 with various deductions totalling $548,629 leading to a loss of $12,839. The business expenses are:
Expenses Amount Contractor, subcontractor and commission expenses $383,117 Superannuation expenses $568 Rent expenses $23,211 Interest expenses $5,649 Depreciation $3,322 Motor vehicle expenses $6,030 Repairs and maintenance $280 All other expenses $126,452 $548,629.00
In 2004 when seeking finance for an investment property the husband let a bank think his income was $222,996 per annum[5].
[5] Bank of Queensland exhibit 13
The husband’s Income tax return for the 2007 is in evidence through being tendered in the wife’s case during submissions. As is referred to above the return declares a loss of $112,450. The breakdown of the business losses of $71,790, is a profit of $36,213 from his teaching and entertainment activities and a loss by J Company of $108,003.
The husband’s financial circumstances are a mystery to me. On the face of it he is going out backwards, with business losses growing each year.
The husband lives with his son, A. A has no income. The husband’s fixed expenditure is apparently entirely reflected in the table set out above.
There is no evidence of the husband’s other expenses, nor of any source from which they are met. For example he does not assert by his Financial Statement that he pays any child support. It is my understanding that it is his case that he does pay child support. Evidence about his assets, liabilities and resources is set out earlier in these reasons.
As to his earning capacity, in my view that is not adequately reflected in his current financial circumstances. It is possible that the husband is committed to growing J Company into a vehicle that will make a profit. His turnover has increased over the last two years and it may be that there is a critical mass generated at a particular turnover which will change the ratio of income to expenses.
The lack of disclosure in the husband’s case is likely to result from a desire to understate his circumstances. Given the background facts - the husband having formal qualifications, the parties relying on his income for periods during the marriage and the long term arrangement with O School, in my view the husband has a greater earning capacity than the wife.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
Y is nine years of age and is in Year 4. Therefore she is likely to have the best part of nine years until she completes her secondary education. Significantly more of Y’s care falls to the wife than the husband. The aspects of parenting requiring close supervision will diminish but there remains a considerable parenting role.
(d) commitments of each of the parties that are necessary to enable the party to support:
himself or herself; and
a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out the evidence of the wife’s expenses. There is no evidence of the husband’s personal expenses.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
any law of the Commonwealth, of a State or Territory or of another country; or
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;
Neither party receives an income tested benefit. Each of the parties has superannuation interests.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is little evidence in relation to the standard of living of the parties during the marriage.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
There is no evidence that either of the parties intends to undertake further study.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
This is not relevant.
(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;
The wife gave up her paid employment for a period around the birth of Y.
(l) the need to protect a party who wishes to continue that party's role as a parent;
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
The wife lives with the parties’ daughter Y. She has previously undertaken some work but currently has no income and therefore is fully supported by the wife.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
The husband is assessed to pay $73 per week.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
The wife made a valuable contribution to the children of the husband’s first marriage. The wife says that at first the boys lived with parties from Sunday to Tuesday and half holidays and then for 50 per cent of the time. In September 1999 the husband’s children came to live with the parties on a full-time basis upon their mother’s move to the USA. The wife gives evidence about the complexity of the parenting task in relation to the boys, including the need to attend upon the police and school authorities at times.
The wife set the table most nights and nearly always cooked a “family type dinner”. The husband’s father came to dinner at least once a week. The wife hosted Christmas for the husband’s extended family on at least three occasions. The wife made the boys’ school lunches every day, made birthday cakes and organised their parties. She attended appointments with the boys when they visited doctors or similar professionals, school events and major sporting events.
This was a significant contribution.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the parties.
Section 79(4)(f)
I have set out the parenting orders made in these proceedings.
Section 79(4)(g)
This is already taken into account above.
Conclusion
It is agreed that there should be an adjustment in favour of the wife for these matters. The submissions on behalf of the wife would have the adjustment to a combined pool being in the range 15 per cent – 20 per cent. The husband thinks that the adjustment should be 7 per cent. I accept that in each case, those submissions are made on the basis that the other findings pressed on the Court by each party are also adopted.
In my view the relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above, are:
Ø The wife is seven years younger than the husband;
Ø The husband has marginally more assets tied up in superannuation, although as a percentage of his assets overall, superannuation represents a smaller percentage of his assets;
Ø The husband’s financial position is better than that of the wife. His asset position based on contributions alone is stronger than that of the wife and although it is not reflected in his current circumstances, his earning capacity is greater than hers;
Ø The child Y is nine years of age and significantly more of Y’s care falls and will fall to the wife;
Ø The wife made a valuable and for this purpose, unmatched, contribution to the husband’s sons.
Despite the difference in their ages, these factors favour an adjustment in favour of the wife. The point of this adjustment is not to put the parties on an equal footing but to recognise the matters to which I have referred. In my view a proper adjustment would be 15 per cent.
Just and Equitable
Based on their contributions and the other matters in s 79 the appropriate division of both the superannuation and non-superannuation pools is a division that is about 45 per cent to the wife and 55 per cent to the husband. Finally, I must consider whether it would be just and equitable within the context of s 79 if the net assets of the parties were divided in those proportions.
The net assets have a value of $560,435.08 ($1,066,053.28 + $151,692.63 - $657,310.83).
In order to receive 45 per cent of those assets the wife would receive about $252,196. The wife has or has had the benefit of the following:
Assets Value Business known as [entertainment venture] (W)
$12,000.00
314 IAG Shares (W)
$1,999.00
Sydney Credit Union (W)
$530.92
Household Contents (W)
$3,710.00
Solicitors’ Trust Account (Legal Fees) (W)
$15,975.00
Wife’s legal costs paid (W)
$10,786.00
AMP Super (W)
$67,903.81
Mastercard (W)
-$9,184.16
Borrowings from Y’s account (W)
-$13,194.00
Total $90,526.57
In order to bring her to 45% she should receive an additional $161,670 from the remaining assets. I would round that figure to $162,000.
She will continue to owe her unpaid legal fees.
That would leave the husband with the following assets and liabilities:
Assets Value Sydney property (H)
$475,000.00
Town B property (H)
$375,000.00
400 Telstra Shares (Joint)
$1,876.00
Proceeds of V property or investment into H car
$30,000
Solicitors’ Trust Account (proceeds of sale of property) (H)
$79,619.11
Business known as U Company (H)
$28,000.00
Business known as J Company (H)
$11,000.00
CBA (CDIA Investment) (H)
$1,189.77
St George Bank Cheque Account (H)
$2,245.56
St George Bank Savings Account (H)
$187.09
Bank of Qld Mortgage Offset (H)
$1,277.00
Household Furniture (H)
$5,500.00
Solicitors’ Trust Account (Legal Fees) (H)
$10,157.83
AMP Super (H)
$83,788.82
Mortgage: Sydney property (H)
-$400,000.00
Mortgage: Town B property($80,000 paid from proceeds of sale of V property) (H)
-$228,000.00
Levies: B property (H)
-$1,848.18
Water Authority (H)
-$129.74
Maintenance Costs: B property (H)
Carpet
-$2,110.00
Maintenance Costs: B property (H)
Painting $1,400.00
-$1,400.00
NAB Overdraft (H)
-$1,444.75
Payment to the wife
-$162,000
Total $307,908.51
Putting to one side the lack of proportionality between the costs incurred by the parties and the value of the net assets of the parties, the outcome I have identified would be a just and equitable result.
Conclusion under Section 79
The parties propose different time limits for the husband’s payment. I will give the husband 60 days to make the payment. There is no obvious fund from which the husband can pay the wife and time may be needed to make the necessary arrangements. The husband sought an order that he be required to pay the wife $90,000. I was not told the source of those funds but it may be that the same source would accommodate the payment of $162,000 as ordered. In accordance with the general scheme proposed on behalf of the wife and so that the orders are self executing, I will provide for the sale of the Town B and Sydney properties in the event that the payment is not made. It is likely that neither property by itself has sufficient equity to provide for the payment, thus both will be sold. Neither of the parties wants to retain the Telstra shares. I will leave them with the husband. His financial position is stronger than that of the wife and he may be able to afford to keep them.
I certify that the preceding one hundred and forty three (143) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 28 March 2008
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Consent
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Constructive Trust
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Injunction
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Costs
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Jurisdiction
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