Simon and Simon
[2017] FCCA 2338
•27 September 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SIMON & SIMON | [2017] FCCA 2338 |
| Catchwords: FAMILY LAW – Property – add backs – dispute regarding asset pool – no matters of principle. |
| Legislation: Family Law Act 1975, ss.75(2), 79 |
| Cases cited: In the Marriage of Biltoft [1995] FamCA 45 In the Marriage of DJM and JLM (1998) 23 Fam LR 396 |
| Applicant: | MS SIMON |
| Respondent: | MR SIMON |
| File Number: | MLC 8815 of 2016 |
| Judgment of: | Judge McNab |
| Hearing dates: | 22-23 June 2017 |
| Date of Last Submission: | 23 June 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 27 September 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr J. Williams |
| Solicitors for the Applicant: | Aberdeen Lawyers |
| Counsel for the Respondent: | Mr Weil |
| Solicitors for the Respondent: | Northside Lawyers |
ORDERS
That within 60 days (the due date):
(a)The Husband vacate the matrimonial home, and remove any possessions, including all workshop possessions, plant and equipment and debris, from the home, at his expense.
(b)The parties sign all documents and do all things for the Husband to transfer his right title and interest in the matrimonial home to the Wife.
(c)That contemporaneously with the transfer, the Wife shall discharge the joint mortgage and refinance the mortgage into her sole name and pay to the Husband an amount equal to 25% of the asset pool, being $107,632, inclusive of all assets and liabilities that each party is retaining, including all motor vehicles and chattels.
(d)If the Wife is unable to make the payment, or discharge the mortgage by the due date, the Husband be given 60 days from the due date to discharge the mortgage and pay the Wife the sum of 75% of the asset pool, being $322,897, inclusive of all assets and liabilities that each party is retaining, including all motor vehicles and chattels.
That in the event neither party can comply with the terms in paragraph 1, the house be listed for sale at a price recommended by an appointed real estate agent (as agreed) and the proceeds of sale shall be distributed as follows:
(a)Firstly to pay all costs and commissions;
(b)Secondly to discharge the existing joint mortgage;
(c)Thirdly to pay out the outstanding loan to the Wife’s parents of $51,500;
(d)Fourthly to pay out the credit card debt incurred during the relationship, plus interest on that debt;
(e)Fifthly, that the balance be distributed so that the Wife receives 75% of the entire asset pool (inclusive of all (non-super) assets and liabilities retained) and the Husband receives 25% of the asset pool (inclusive of all (non-super) assets and liabilities retained).
Subject to Trustee approval there be a superannuation split with the result that each party receives 50% of the parties' combined superannuation interests.
In the event either party refuses to sign any documents to effect compliance of their obligations under these orders then any such document to be signed by a Registrar of this Court pursuant to 106A of the Family Law Act 1975 in lieu of the party who has failed to sign pursuant to these orders.
The parties fie brief submissions in relation to costs (limited to two A4 pages) with the wife to file any submissions by 4pm 4 October 2017 and the husband to file any submissions by 4pm 11 October 2017.
The matter be adjourned to Federal Circuit Court of Australia on
31 October 2017 at 9.30amfor Mention.
AND THE COURT NOTES THAT:
The purpose of the adjournment is to allow procedural fairness to be accorded to the trustees of the relevant superannuation fund. In the event that evidence of procedural fairness is filed with Chambers prior to the adjourned date, orders will be made in chambers and the adjourned date vacated.
IT IS NOTED that publication of this judgment under the pseudonym Simon & Simon is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 8815 of 2016
| MS SIMON |
Applicant
And
| MR SIMON |
Respondent
REASONS FOR JUDGMENT
As Corrected
Introduction
This proceeding concerns an application for final orders in relation to the property of the marriage pursuant to s.79 of the Family Law Act 1975 (“the Act”). The husband is 41 years old (born (omitted) 1975) and is employed as a (occupation omitted) at the (employer omitted). The wife is 40 years old (born (omitted) 1976) and is involved in home duties caring for the parties’ three children. The initiating application sought orders in respect of parenting and property. The parenting issues have been resolved by final orders made by consent on 23 June 2017.
The parties commenced cohabitation in approximately 1997 and married on (omitted) 2006.
There are three children of the marriage aged 10, 7 and 4 years. The wife is the primary carer of the children.
The parties separated on 20 November 2015.
The initiating application was filed by the wife on 15 September 2016 and it has been the subject of a duty list hearing on 31 October 2016, a Conciliation Conference on 8 March 2017, a mention on 22 May 2017 and a final hearing on 22 June 2017 and 23 June 2017.
Documents relied upon
The wife relied upon the following documents:
a)affidavit of Ms J filed 2 June 2017;
b)trial affidavit of the wife sworn 2 June 2017;
c)financial statement of the wife sworn 20 June 2017; and
d)amended application for final orders dated 20 June 2017.
The husband relied upon the following documents:
a)amended response to initiating application dated 16 June 2017;
b)financial statement of the husband dated 16 June 2017;
c)trial affidavit of the husband dated 16 June 2017; and
d)report of Ms S, family consultant dated 1 May 2017.
The parties
Both the husband and the wife presented as sincere and honest people who had become embroiled in a bitter family law dispute. Both were obviously upset by the fact that the dispute had got to the point of a hearing. Both regarded the other’s position on property matters as unreasonable.
Chronology of Events
In 1997, the parties commenced cohabitation at the wife’s parents’ property in (omitted), where they resided until approximately 2000. It is agreed that the parties did not pay rent for most of this time, following which they paid minimal rent to the wife’s parents between approximately September 1999 and July 2000.
The parties then moved into rental accommodation and joined finances.
In June 2002 the parties purchased a property in Property B, Victoria for the sum of $220,000 (“the Property B property”). The wife contributed $22,000 towards the deposit and household contents. The husband and wife were recorded as joint proprietors on the certificate of title of the Property B property.
The parties married on (omitted) 2006.
In July 2010, the parties purchased land in Property A for $225,000 using $22,500 drawn down from the Property B mortgage as the deposit.
In October 2010, the parties sold the Property B property for approximately $365,000 with the net proceeds of $266,692 paid into the parties’ joint savings account. The wife states in her outline of case that the property sold for $326,692.
In August or September 2011, the parties commenced building the matrimonial home on the Property A land which was completed in December 2011 (“the Property A property”).
In October 2012, the parties entered into a written interest free loan agreement with the wife’s parents for the sum of $30,000 for the purpose of reducing the mortgage on the matrimonial home. The loan was to be payable from July 2017.
From approximately 2012 until 2014, the husband did some (omitted) work for reward from the workshop at the Property A property. The wife states in her outline of case that the husband operated an additional business selling (omitted) on eBay.
The parties lived at the Property A property until separation on 20 November 2015. The wife and the children vacated the property on this date while the husband remained in the former matrimonial home.
The wife filed proceedings in this Court on 15 September 2016. Subsequently the parties attended a Conciliation Conference on 8 March 2017 but were unable to reach an agreement. The final hearing was heard before this Court on 22 June 2017 and 23 June 2017.
Approach to property proceedings
The Full Court in Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 identified the four-step process that the court is required to adopt in property matters under the Act:
a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s.79(4) of the Act;
c)to consider the factors as are relevant contained in s.75(2) of the Act; and
d)finally, determine whether the order the Court proposes to make is just and equitable to both parties.
This approach was approved by the Full Court in In Bevan & Bevan [2013] FamCAFC 116 where the Full Court of the Family Court of Australia considered the Hugh Court’s decision in Stanford & Stanford [2012] HCA 52.
The Pool
The parties agreed as to the value of the presently available assets.
| IItem Item | Possession | Valuation by husband | Valuation by wife |
| Assets (agreed value) | |||
| Property A property | Husband | $660,000 | $660,000 |
| Toyota (omitted) | Wife | $18,100 | $18,100 |
| Ford (omitted) | Husband | $7,000 | $7,000 |
| Ford (omitted), Ford (omitted), Ford (omitted), (omitted) Auto Parts | Husband | $36,000 | $36,000 |
| (omitted) motorbike | Husband | $3,500 | $3,500 |
| 8 x 5 cage trailer | Husband | $1,000 | $1,000 |
| Husband’s tools and equipment | Husband | $15,435 | $15,435 |
| Treadmill, jewellery, cubby, gym set | Husband | $1,030 | $1,030 |
| Wife’s jewellery | Wife | $100 | $100 |
| Husband’s household contents | Husband | $5,560 | $5,560 |
| Wife’s household contents | Wife | $1,370 | $1,370 |
| Assets in dispute | |||
| Tandem trailer (50% of value) | Husband | $750 | $750 |
| Husband’s cash draw down from mortgage post separation | Husband | $25,000 | |
| Cash withdrawn by husband from joint account post separation | Husband | $1,300 | |
| Liabilities | |||
| Mortgage | $314,748 | $314,748 | |
| Loan from wife’s parents | *the husband contends that the loan should be treated as a contribution by the wife | $30,000 | |
| Credit card loan | $3,746.25 | $6,618 | |
| Superannuation | |||
| (omitted) Super | Husband | $182,455.50 | $200,000 |
| (omitted) Super | Wife | $38,000 | $38,500 |
Treatment of loans from the wife’s parents for motor cars
The husband accepts that the wife’s parents made two advances of $12,000 and $9,991 to the parties for the purpose of assisting the parties to purchase new vehicles. In the wife’s outline of evidence, she submitted that the advances were loans. However during the course of proceedings, counsel for the wife conceded (properly in my view) that it was more appropriate to treat the monies advanced by the wife’s parents for the purchase of new cars as a contribution rather than a debt to her parents.
The wife’s proposal for final orders in closing submissions
In closing submissions counsel for the wife proposed that the assets of the marriage be distributed on the basis of there being a 75%-25% split in favour of the wife as follows:
| Husband retains | |
| Non Real Estate Assets | |
| Mortgage withdrawal | $25,000 |
| Ford (omitted) | $7,000 |
| Other Vehicles | $36,000 |
| Motor Bikes | $3,500 |
| Tools and other equipment | $15,435 |
| Tandem trailer | $750 |
| 8 x 5 trailer | $1,000 |
| Treadmill etc. | $1,030 |
| Household contents | $5,560 |
| $95,275 + tax returns | |
| Liabilities | |
| Nil | |
| Wife retains | |
| Assets | |
| (omitted) Toyota | $18,100 |
| Household contents | $1,370 |
| $19,470 | |
| Liabilities | |
| Documented loan to parents | $30,000 |
| Credit card debt | $6,379 |
| $36,379 $-16,909 | |
| House | |
| Equity | $346,000 |
| Wife receives: | |
| 75% asset pool ($403,563) | $302,672 + $319,581 |
| Add Backs | |
| Husband’s rental mortgage savings | $14,000 |
| Tax returns | $14,000 |
| Rates paid by wife when husband in occupation | $1,529 |
| $29,529 (75% = $22,146) | |
| Total | |
| Wife receives | $319,581 + $22,146 $341,727 |
The Husband’s proposal for final orders in closing submissions
In closing submissions counsel for the husband proposed that the assets of the marriage be distributed as follows:
| Husband retains | |
| Assets | |
| Ford (omitted) | $7,000 |
| Various cars and parts | $36,000 |
| Motor Bikes | $3,500 |
| Tools and other equipment | $15,435 |
| 8 x 5 trailer | $1,000 |
| Husband’s jewellery | $50 |
| Household contents | $5,560 |
| $68,545 | |
| Wife retains | |
| Assets | |
| (omitted) Toyota | $18,100 |
| Wife’s jewellery | $100 |
| Wife’s household contents | $1,370 |
| $19,570 | |
| Total | |
| Total gross assets – mortgage – credit card at separation *debt to Wife’s parents $30,000 not included as payment not required | $749,105 - $314,748 - $3,746 $430,611 |
| Option 1: 40% to husband | |
| 40% net assets + husband’s assets | Wife to pay husband $103,699 |
| Option 2: 50% to husband | |
| 50% net assets + husband’s assets | Wife to pay husband $146,760 |
| Option 3: 60% to wife | |
| 60% net assets + wife’s assets | Husband to pay wife $238,796 |
Issues to be determined
Should the $30,000 loan from the wife’s parents be identified as a liability in the family’s balance sheet or is it more properly characterised as a financial contribution made by the wife?
One of the difficulties in determining the issues in this case is that the parties have not maintained consistent positions in relation to particular issues. An example of this is a loan from the wife’s parents. In the husband’s outline of case file on 22 June 2017, the husband identified the debt of $30,000 to the wife’s parents as a liability to be deducted from the gross asset pool. In the running of the hearing, it was put that the loan was not a liability but should be taken into account as a contribution made by the wife.
The loan in question was dated 22 October 2012 and was from the wife’s parents to the parties. The agreement is in writing and is enforceable as a loan agreement. The husband stated in cross- examination that he had entered the agreement under duress but there is no evidence led to support this claim. The wife’s mother was not cross- examined in relation to that assertion and there was no evidence that the loan monies had not been advanced.
Whilst the wife’s mother, Ms J, gave evidence that she was not going to sue her daughter or ex-son-in-law for repayment of the $30,000, she also gave evidence that it was her expectation at the time the loan was advanced that the loan would be repaid.
The Court was not referred to any authority by either party in relation to the proper treatment of loans from parents.
In In the Marriage of Reynolds (1984) 10 Fam LR 388, the Full Court of the Family Court reviewed the authorities in relation to how the Court should determine the nature and significance of any alleged obligation of a party. The Court stated after referring to relevant authorities:
With respect, we adopt those remarks. Her Honour at 79–077 cites three examples: first, where it may be appropriate, either to discount a debt or disregard it, say where a liability cannot be precisely determined; second, where the liability is unlikely to be enforced; third, where the liability was improperly incurred, for example, to prejudice a claim under s 79.[1]
[1] In the Marriage of Reynolds (1984) 10 Fam LR 388, 393; see also In the Marriage of Biltoft [1995] FamCA 45 [57] and In the Marriage of Petersens ( 1981) 7 Fam LR 402.
In this case the evidence is to the effect that the loan is unlikely to be enforced against the parties because of the circumstances they now find themselves in. A hard-nosed commercially minded parent could have given evidence that the loan would be enforced. Ms J gave the impression that she and her husband had done all that they could to assist the parties financially and would continue to do so into the future for the benefit of their daughter and grandchildren.
In the circumstances it is appropriate to record the loan as a contribution made by the wife and it is to be taken into account as such to its full extent. The mother in law, Ms J, was frank in her evidence but having regard to the manifest difficulties that her daughter and son in law were in she would not presently pursue repayment of a loan that is plainly enforceable. The Court does not wish to be seen to be undermining what are generous and good spirited financial arrangements simply because the recipients of the loan are in a matrimonial dispute.
Tandem car trailer
There was evidence given in relation to a tandem car trailer which was stored on the matrimonial property and used by the husband. He asserted that he had paid $750 as a half interest in the trailer which was worth $1,500 but that as the trailer was not registered in his name, it should not be taken into account as an asset. Clearly as he has possession of the trailer and has paid for half of it, irrespective of whether he is the registered owner, he still has an interest in it to the extent of 50% and that should be taken into account as an asset.
Credit card liabilities
At paragraphs [236] – [243] of her trial affidavit, the wife gave evidence that a balance of $5,842 which was incurred jointly prior to separation was transferred to a credit card in her name opened in December 2015. She gave evidence she has made payments towards the balance on that card and that the balance, with the addition of interest stands at $6,618. The husband did not give evidence that he had paid monies to reduce that balance and sought to argue that certain sums should be removed from the balance as they were identifiable as charges incurred by either the wife or the husband. I find that the charges were incurred jointly and the balance of $6,618 should be included in the asset pool. The Court was not given sufficient evidence to make the determinations sought by the husband.
Add backs
The wife contends that the following sums should be added back into the property pool:
a)add back rates paid on matrimonial home by wife: $1,529;
b)husband’s ATO rebate 2014/2015: $7,831;
c)husband’s ATO rebate 2015/2016: $6,691;
d)payments made by wife to joint credit card: $2,250;
e)difference between market rent and mortgage payment unilaterally reduced by the husband to interest only: $14,448;
f)cash earned by husband for (omitted) work from February to 20 November 2015: $35,000; and
g)cash reimbursed by friends and family for purchase of parts: $15,500.
The principles in relation to add backs are set out in the decision of the Full Court of the Family Court in Omacini & Omacini (2005) 33 Fam LR 134 at [30] (‘Omacini’). In that decision, the Full Court set out three categories of cases where it was appropriate to notionally add back to the pool of assets:
a)where matrimonial money has been expended on legal fees: In the Marriage of DJM and JLM (1998) 23 Fam LR 396;
b)where there has been a premature distribution of matrimonial assets: Townsend & Townsend (1994) 18 Fam LR 505; and
c)where a party has embarked on a course of conduct designed to reduce the value of an asset or has acted recklessly, negligently or wantonly with an asset, the effect of which has reduced its value: In the Marriage of Kowaliw (1981) 7 Fam LN N13.
Further, in Wilde & Wilde [2007] FamCA 1044 at [184] the Full Court notes that it is at the discretion of the trial judge as to whether money should be added back to the pool, but that this should be the exception rather than the rule.
The Full Court at [185] cautioned against adding back sums expended on reasonable living expenses to the notional pool of assets to be divided between the parties.
Should the $25,000 withdrawn from the mortgage by the husband following separation be added back to the pool of assets
The wife contended that the husband had previously recorded in an affidavit sworn 27 October 2016 that the sum of $25,000 is to be included in the asset pool. It was asserted that $25,000 should be added back because it was effectively wasted by the husband on expenditure that was unnecessary or not properly verified or at least applied to his expenses when he was earning income.
There is evidence that the husband drew down on the mortgage in order to pay for ordinary household expenses and purchase furniture, bedding and a fridge following separation. Those items are set out in paragraphs [134]–[136] of the husband’s trial affidavit sworn 15 June 2017.
In my view, it is not clear that the $25,000, should be added back into the list of assets, rather that sum should be taken into account when considering contributions pursuant to s.75(2)(o) of the Act. This is the approach adopted in Watson v Ling [2013] FamCA 57 at [29]-[35] per Murphy J. The husband has had the benefit of those funds which are no longer available in circumstances where he had access to ongoing income. Some of the expenditure was not necessary (the $800 sound bar stands out and $1,000 spent on work clothing (without receipts or explanation) and there was no evidence that he could not fund the balance of purchases, birthday gifts and holidays from his income. In considering the amount I recognise that there has been an allowance as an asset accorded to household contents valued at $5,560 purchased by the husband out of the $25,000 that he withdrew from the mortgage. Therefore the mortgage withdrawal should be taken into account when considering contributions and subsequently the percentage split of available assets to the extent of $19,440.
Should ATO tax refunds in the sum of about $14,000 which were paid to the husband for the financial years 2014/15 and 2015/2016 be added back as an asset of the family
Having regard to the principles outlined above, I will not be minded to add back the ATO refunds in the sum of about $14,000 to the pool of assets of the parties however it is an amount that should be taken into account when considering contributions and any final adjustment of assets. In doing so, I take into account that the tax refunds arise from the use of assets of the marriage and during the course of the marriage. The husband has given evidence that he spent the tax return monies on:
(a)$3,500 brakes for the Ford (omitted) ( which were included on the vehicle when it was valued);
(b)$800 for a fridge;
(c)$760 on non-cosmetic dental work;
(d)$1,888.46 on mortgage repayments;
(e)$2,000 on legal fees;
(f)$1,491.13 for child support;
(g)the balance on food, petrol and sundry small purchases.
I accept that those monies are not presently available for distribution and will therefore be taken into account in considering contributions pursuant to s. 75(2)(o) of the Act.
The husband concedes that it is within the Court’s discretion to add back $2,000 of the Husband’s 2015/2016 tax return, being funds he expended on legal costs from those funds. In my view this sum should be added back to the property pool.
Should the husband add back to the asset pool $14,000 being savings that he has had the benefit of by reducing the mortgage repayments on the property to interest-only whilst having the benefit of occupying the family home
The wife contended that the sum of $14,000 should be notionally added back into the asset pool because that is a sum that he has had the benefit of by reducing the mortgage repayments on the family property to interest-only whilst having the benefit of occupying the family home. Counsel for the mother referred the Court to Vass and Vass [2015] FamCAFC 51 at [138] – [139].
The husband has had the benefit of living in the family home at the cost of about $271 per week when the estimated cost of rental of a similar property is about $450 per week.
The financial statement of the wife shows that she is paying $300 per week on rent and she has paid for school, uniform, medical expenses and extracurricular expenses, which I accept would cost about $200 per week.
I do not regard this amount as a matter to take into account to be added back to the asset pool but will take it into account when considering contributions. It is not in the nature of monies that fall within the exceptions identified in Omacini. I accept that since separation, which is the period to which the reduced mortgage payments apply, the wife has made a greater contribution to the cost of looking after and housing the children.
In view of my findings I conclude that the asset pool of the marriage is as follows:
| IItem Item | Possession | Amount |
| Assets (agreed value) | ||
| Property A property | Husband | $660,000 |
| Toyota (omitted) | Wife | $18,100 |
| Ford (omitted) | Husband | $7,000 |
| Ford (omitted), Ford (omitted), Ford (omitted), (omitted) Auto Parts | Husband | $36,000 |
| (omitted) motorbike | Husband | $3,500 |
| 8 x 5 cage trailer | Husband | $1,000 |
| Husband’s tools and equipment | Husband | $15,435 |
| Treadmill, jewellery, cubby, gym set | Husband | $1,030 |
| Wife’s jewellery | Wife | $100 |
| Husband’s household contents and jewellery ( $50) | Husband | $5,610 |
| Wife’s household contents | Wife | $1,370 |
| Husband’s legal fees added back | N/a | $2,000 |
| Tandem trailer (50% of value) | Husband | $750 |
| Total Non-Superannuation Assets $751,895 | ||
| Mortgage | $314,748 | |
| Credit card loan | $6,618 | |
| Total Liabilities $321,366 | ||
| Superannuation | ||
| (omitted) Super | Husband | $200,000 |
| (omitted) Super | Wife | $38,500 |
| Total $751,895-$321,366 = $430,529 | ||
Contributions
As with most things relating to this matter, there is a substantial dispute between the parties in relation to contributions made during the relationship. The wife submits that at the commencement of the relationship she had $47,000 in assets, comprising cash savings of $45,000 and a $2,000 car and that she contributed her entire savings of $45,000 to pay a deposit of $22,000 on their first home and stamp duty, and the costs of setting up the new home. The husband gave evidence that at the commencement of the relationship he had a car worth about $2,000 and a personal loan of $8,000.
The wife also contends that a significant contribution was the fact that the parties were able to live rent-free with her parents from 1997 to 2000 (and thereafter at a reduced rent) and the value of that contribution was in the sum of about $60,000. The husband contends that although they did not pay rent for about two and a half years, he performed jobs around the house to assist his parents-in-law. The wife’s mother was gracious in acknowledging that the husband had performed work around the house and had worked hard in his job as a (occupation omitted) at (employer omitted).
I do accept that there was a benefit to the parties through being able to live rent-free or at a reduced rent with the wife’s parents from 1997 to 2000 although I do not value that in the sum of $60,000 which was the value contended for by the wife. Doing the best I can, I find that it would be more likely to be in the sum of about $40,000, based on a rental of about $300 per week however no basis has been put forward which could enable the Court to value the contribution with any degree of accuracy. I accept that the cost of obtaining admissible evidence on this point would exceed value of that evidence in the claim and in those circumstances the Court is doing the best it can to value the benefit. By his case outline the husband disputes that there was any tangible benefit to the parties derived from the circumstances of being provided rent free accommodation with his then wife to be for a three year period. That submission is spurious; it was not advanced at trial and is not accepted. Clearly the provision of rent free accommodation when a young couple are saving for a home is a tangible benefit.
I have regard to the loan made by the wife’s parents in the sum of $30,000 and the two advances made by the parents for the purchase of motor vehicles in the sum of $12,000 and $9,991 respectively being a total $51,991 as contributions made by wife.
In terms of non-financial contributions, the wife contends that she provided all child care and home duties as the husband was working full time and otherwise working in his workshop either for reward or as a hobby. She accepts that both parties landscaped the gardens on the new property and set up a vegetable patch and an orchard. She accepts that the husband assisted with the construction of the garden and mowed lawns and performed maintenance tasks around the property, as well as maintaining the family’s motor vehicles.
In relation to the assessment of contributions, the husband refers to evidence that he worked full time as a (occupation omitted) and contributed his wages to the benefit of the family; he earned additional income in overtime hours, and made additional repayments to the mortgage over the matrimonial home from July 2014 to 13 November 2015. He also refers to the contributions he made in relation to the landscaping of the matrimonial home (which was significant and involved the use of bobcats and laying gravel etc., and planting an orchard and fruit trees). He also points to his work around the house caring for the children, undertaking daily care activities, taking the children to sporting activities and otherwise generally attending to the welfare of the family through financial and non-financial contributions.
I accept the husband’s evidence that he was a devoted father in terms of his contributions during the course of the marriage. The wife contends that the contribution should be assessed 60% – 40% in her favour and points to the initial financial contribution made by her and the benefits conferred by her parents to the benefit of the parties.
The husband contends that there should be no adjustment to the wife for the parties living rent-free with the wife’s parents and that having regard to the level of his contributions made during the marriage in terms of working hard to earn income, both in ordinary time and over time, and his contributions in relation to looking after his children, that the contributions should be at assessed at 50% – 50%. He points to the length of the marriage as being a substantial factor in favour of a determination on that basis.
Having heard the evidence and considering the material, in my view, the contributions of the parents both in terms of the value of loans that they extended to the parties, and the provision of rent-free accommodation, provided a tangible financial benefit to the parties in the form of giving them the ability to save money in order to fund the deposit of the family home. I also take into account that the husband has had the use of S25,000 (net value $19,440) withdrawn from the joint bank account post separation, the value of tax refunds and the benefit of living in the matrimonial home paying an interest only mortgage repayment. Having regard to the value of those benefits, such an allowance should be made of 60% – 40% in favour of the wife in relation to contributions.
Section 75(2) factors
The husband, who is 42 years old, submits that the wife has not worked in paid employment since the birth of X on (omitted) 2007 and remains the primary carer of the children. Her current income inclusive of benefits is said to be approximately $43,000 per annum.
The father contends that when the youngest child of the parties commences school in 2018, the wife will have the capacity to work in paid employment. It is said that she has employable skills in (omitted), is in good health and has capacity to work.
The husband accepts that he is employed full-time with (employer omitted) and is likely to remain in that position. He states that he has the capacity to earn a taxable income of approximately $100,000 per annum, inclusive of overtime. He points to the fact that he pays child-support support at a rate of $251 per week. He also asserts that he suffers from chronic back pain although that does not presently affect his ability to work. The husband contends that in all the circumstances the wife should receive an adjustment of 10% for s.75(2) factors.
The wife submits in relation to s.75(2) factors that:
a)she has not worked in paid employment since the birth of her son X over 10 years ago;
b)even if the youngest child attends school next year, the children are too young to make their way to and from school, which will make it difficult to obtain employment;
c)the wife’s training in (occupation omitted) is 20 years old and she has no current qualifications in that area;
d)her income from Centrelink benefits is $520 per week and $27,000 per annum;
e)the husband has a history of failing to pay child support and the level of child support is dependent on his level of income;
f)in circumstances where he has dropped his income during the course of these proceedings, the wife contends that he may further reduce his income and thereby reduce child-support payments; and
g)in the last 18 months, the husband has not contributed to the children’s school, uniform, medical or extracurricular expenses, which cost the mother about $200 per week.
In relation to the husband’s income, the wife contends that he has an earning capacity from (employer omitted) of about $120,000 per annum and points to the husband’s 2016 tax return which showed gross income from (employer omitted) of about that sum. She also submits that he has the capacity to earn at least $20,000 per annum in his capacity as a (occupation omitted) performing work on (omitted) in non-working hours. It is also submitted that the husband has substantial annual and long service leave entitlements accrued.
In my view, the submission of the husband that the wife will be in a position to earn an income which is around the same level as the benefits that she receives at present is not supported by evidence nor is it realistic. The wife has primary care of three young children, she has not re-partnered and the capacity for a single parent to earn substantial income in unskilled work whilst caring for three primary school-aged children is limited. I accept that in years to come as the children grow older she will have an increased capacity to earn and may be able to undertake further training and/or study in order to take up work with a greater earning capacity. In my view there is a significant earning disparity between the husband and wife and that disparity is likely to continue well into the future. I do not accept the wife’s submissions that the husband has deliberately dropped his income or that he is deliberately avoiding paying child support.
Submissions were not put in relation to each of the subsections in s.75(2) of the Act. I make findings in relation to the matters under that provision as follows:
(a) The age and state of health of each of the parties
At the date of judgment, the husband was aged 42 and the wife aged 40 and each were in good health. There was no admissible evidence produced by the husband which would establish that any back injury that he had presently or in the foreseeable future would undermine his ability to earn income in his current occupation.
(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 parties’ property and financial resources are the property which is the subject of this proceeding. The husband has access to income of at least about $100,000 per annum, with the opportunity to increase that through over time or part time work. There is no physical or mental incapacity which would prevent either of the parties from obtaining appropriate employment.
(c) Whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
The mother has the substantial care of the three children of the marriage and the father spends substantial time with them each alternative weekend from Friday after school until 5:00pm Sunday and each Tuesday from 5:30pm to 7:30pm.
(d) Commitments of each of the parties that are necessary to enable the party to support: (i) himself or herself; and (ii) a child or another person that the party has a duty to maintain
This was not canvassed in evidence.
(e) The responsibilities of either party to support any other person
Neither party have a responsibility to support any other person other than the children of the marriage.
(f) Subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under: (i) any law of the Commonwealth, of a State or Territory or of another country; or (ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party
The wife has access to Centrelink benefits in the sum of $520 per week and the superannuation interests of each party are set out in the pool of assets at paragraph [20] herein.
(g) Where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
Both parties have experienced reasonable but modest lifestyles and it is expected that those lifestyles will be maintained as a consequence of the orders made herein.
(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
Maintenance is not an issue in this proceeding.
(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
Not 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
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
Not relevant.
(l) The need to protect a party who wishes to continue that party's role as a parent
Not relevant.
(m) If either party is cohabiting with another person—the financial circumstances relating to the cohabitation
No evidence has been led in relation to this sub paragraph.
(n) The terms of any order made or proposed to be made under section 79 in relation to: (i) the property of the parties; or (ii) vested bankruptcy property in relation to a bankrupt party
Not relevant.
(naa) The terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to: (i) a party to the marriage; or (ii) a person who is a party to a de facto relationship with a party to the marriage; or (iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or (iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii)
Not relevant.
(na) Any child support under the Child Support (Assessment)Act1989 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
The father has an ongoing obligation to provide child support and is paying it at the rate of $251.00 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 court takes into account the sums which the wife contended should be dealt with as add backs but which were determined to be treated as contributions and or a matter to be considered pursuant to s.75(2)(o) of the Act. It is appropriate to take those amounts in which the husband received or those monies which the husband has had the benefit of, including loans from the wife's parents, monies withdrawn from the joint bank account and, tax returns and savings made by paying the minimum mortgage repayments sum whilst in occupation the property.
(p) The terms of any financial agreement that is binding on the parties to the marriage
Not relevant.
(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage
Not relevant.
Having regard to the income differential between the parties, that the wife is the primary carer of the children and the difference in capital as a result of the contributions finding, I am of the view that a further adjustment in the sum of 15% is an appropriate adjustment for s.75(2) factors. I have made that adjustment having considered the moneys that the wife contended should have been included as “add backs” in considering contributions and in considering the justice of the case pursuant to S. 75(2) (o) of the Act.
Considering the matter as a whole, I find a split of 75% of the presently available assets pursuant to s.79(1) of the Act in favour of the applicant is just and equitable. In relation to superannuation funds, both parties contended that the superannuation should be equalised and split 50%. I do note that in the course of submissions counsel for the wife suggested that it was open to me if I thought appropriate to make an adjustment in favour of the husband in relation to superannuation. Given that the parties have prepared and conducted the trial on the basis of there being a 50% split of superannuation assets, in my view it is appropriate that the Court make those orders.
The effect of these orders is as follows: the wife receives $322,897 and the husband receives $107,632. That is affected by the husband retaining assets noted in the table at [51] as being his possession in the sum of $72,325.
In circumstances where both parties wish to retain the family home as a residence – who should retain the family home?
The wife seeks to retain the house on the basis that the parties planted out a (omitted) tree orchard and it has an extensive garden in which she grows organic food for her family. The photographs tendered into evidence supported her contention that she was a keen gardener and the photos also indicated it was quite a beautiful environment for the children to grow up in. Clearly a lot of time and effort had been put into setting up the garden, constructing and installing raised garden beds and planting the fruit trees. The work required to set that up was intensive and the husband in his affidavit refers to the work that he did in order to assist in landscaping the property for the purposes of setting up the garden. The wife contends that such an environment would be extremely difficult for her to set up in some alternative venue, particularly without the assistance of the husband.
The wife says that she is in a position to pay out the husband’s interest in the property and to service a mortgage with the assistance of funds from her parents who are drawing on superannuation funds to assist their daughter. I accept that they will do this.
The husband on the other hand contends that he has set up a large workshop with a purpose-built slab, connected three-phase power at the cost of about $15,000 and installed a hoist suitable to run an income producing (omitted) workshop. Whilst from the motoring enthusiasts’ point view it was an entirely suitable space and set up, no evidence was produced to the Court of the income produced by the husband’s activities save for $5,000 being “profit for labour” between 8 March 2010 and February 2014.[2] In addition, no evidence was produced from the husband’s employer, the (employer omitted) to support his claims that he was performing overtime work on behalf of the company in his home workshop. Further, the photographs tendered of the workshop showed it to be full of car parts, not well organised and certainly not presenting as a working, income-producing facility.
[2] Husband’s trial affidavit [181].
On balance, I believe it is more likely that that the husband will be able to locate premises from which he can undertake his hobby or alternatively, an income producing business. The difficulties associated with moving the equipment are less onerous than those that would be experienced by the wife if she was to try and set up a similar garden in alternative rented or purchased accommodation. I do not accept that any garden activity undertaken by the wife is to be anything other than for personal and family pleasure.
Further, given the husband has a long work history and a good consistent income it is likely that he will be able to borrow funds to fund the purchase of another house suitable for his needs – including one with a workshop. The wife is not in a like position.
For these reasons, I believe it is appropriate for the wife to retain the matrimonial home. The home will provide a settled environment for the children. It is convenient to schools and is a place that they are familiar with.
The choice between the competing proposals is not a simple one, but in circumstances where the parties could not agree, that decision has fallen on the Court and that decision has been made having regard to the competing positions posited by the parties.
Costs
The husband has expended $62,008.26 in legal fees and disbursements in conducting this litigation up to the second day of trial. The wife gave evidence that the last bill that she had prior to the final hearing totalled $70,000 and that she had been quoted the sum of $30,000 to conduct the final hearing.[3]
[3] transcript, 49 [10]-[15].
In my view, the legal fees expended by the parties are completely disproportionate to the value of the assets being argued over. There appears that there has been no proper consideration given to whether the expenditure of costs was proportionate to the value of that share of the assets which are being argued over.
I appreciate that the matter involved obtaining orders in relation to children and property however there seems to have been very substantial amounts of money wasted on valuing chattels and then arguing about the value of chattels and contributions etc. when the value of the legal expenses well exceeded the value of difference between the respective positions of the parties.
Given the amount of money that the parties have spent on legal costs, I would have thought that it would have been appropriate for there to have been very clear, concise submissions in writing, which would have assisted the parties and the Court to resolve the matter without the need for final hearing and a judgment of the Court. In view of the substantial sums spent by the parties, I will make orders allowing brief submissions to be filed on the question of costs (limited to two A4 pages) with the wife to file any submissions by 4pm 4 October 2017 and the husband to file any submissions by 4pm 11 October 2017. I will decide the question of costs on the papers. The Court would have been assisted if oral submissions had been made at the hearing on the question of costs so as to avoid the need for further submissions.
The Court makes the orders set out above to give effect to these reasons.
I certify that the preceding ninety-nine (99) paragraphs are a true copy of the reasons for judgment of Judge McNab
Date: 27 September 2017
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Procedural Fairness
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Remedies
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Natural Justice
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