Smith & Smith (No. 2)

FAMILY COURT OF AUSTRALIA

SMITH & SMITH (NO. 2)

[2007] FamCA 1348

FAMILY LAW – PROPERTY SETTLEMENT – Previous oral agreement by parties – Husband contends wife has no further claim for property settlement – Agreement not complied with by husband – Terms of agreement not just and equitable now – Agreement not a financial agreement within meaning of Family Law Act 1975 and does not oust jurisdiction of court under s 79

FAMILY LAW – PROPERTY SETTLEMENT – Contributions – Impact of husband’s gambling on parties’ finances and husband’s contribution – Husband suffers poor health and unable to work – Disparity in parties’ incomes and earning capacities - 10% adjustment in favour of husband due to s 75(2) factors – Assets divided 55%/45% in favour of wife

FAMILY LAW – PRACTICE AND PROCEDURE – Application for Leave to institute property proceedings out of time – Discussion of applicable principles in determining application for leave – Leave granted

Family Law Act 1975 (Cth)

Whitford & Whitford (1979) FLC 90-612
Hall & Hall (1979) FLC 90-679
Neocleous & Neocleous (1993) FLC 92-377
Frost & Nicholson (1981) FLC 91-051
Jacenko & Jacenko (1986) FLC 91-776
Tormsen & Tormsen (1993) FLC 93-392
Keith & Soukis [2007] FamCA 1017
Woodland & Todd (2005) FLC 93-217
Omacini & Omacini (2005) FLC 93-218
Chorn & Hopkins (2004) FLC 93-204
Townsend & Townsend (1995) FLC 92-569
Coghlan & Coghlan (2005) FLC 93-220
Lalor & Lalor (1990) FLC 92-164
Kowaliw & Kowaliw (1981) FLC 91-092

APPLICANT:

Mrs Smith

RESPONDENT:

Mr Smith

FILE NUMBER:

ADF

1006

2005

DATE DELIVERED:

5 November 2007

PLACE DELIVERED:

Adelaide

PLACE HEARD:

Adelaide

JUDGMENT OF:

Strickland J

HEARING DATE:

14 – 16 May 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Berman

SOLICITOR FOR THE APPLICANT:

Wallmans Lawyers

COUNSEL FOR THE RESPONDENT:

In person

ORDERS

That pursuant to Section 44(3) of the Family Law Act 1975 the wife be granted leave to institute proceedings seeking orders for property settlement.
That within EIGHT [8] weeks of the date of this order the husband pay to the wife’s solicitors on behalf of the wife the sum of ONE HUNDRED AND TWENTY THOUSAND THREE HUNDRED AND TWENTY DOLLARS [$120,320.00].
That contemporaneously with the payment by the husband of the said sum of ONE HUNDRED AND TWENTY THOUSAND THREE HUNDRED AND TWENTY DOLLARS [$120,320.00] the wife, at her cost and expense in all things, withdraw the caveat registered on the title to the house property situated at S.
That subject to these orders the husband retain as his sole property absolutely free of any claim, right, interest, demand or entitlement of the wife the following:
(a)    The house property situated at S;
(b)    The husband’s furniture and household effects;
(c)    The husband’s 1985 Ford Falcon utility;
(d)    The husband’s savings and investments;
(e)    Any other assets, real or personal held in the name of or on behalf of the husband.
The wife retain as her sole property absolutely free of any claim, right, interest, demand or entitlement of the husband the following:
(a)    The wife’s furniture and household effects;
(b)    The wife’s 1991 Ford Falcon motor vehicle;
(c)    The wife’s 2002 Ford Falcon motor vehicle;
(d)    The wife’s savings and investments;
(e)    The wife’s superannuation entitlement with Host Plus;
(f)     Any other assets, real or personal held in the name of or on behalf of the wife.
In the event of the husband failing to comply with paragraph (2) hereof then the said property at S be sold on such terms and conditions as the parties may agree and in default of agreement as determined by this Honourable Court, and from the net proceeds of sale the wife receive such sum as shall then be outstanding pursuant to paragraph (2) hereof together with interest thereon calculated at the rate fixed by the Family Law Rules, and the husband receive the balance.
That each party have liberty to apply for consequential orders.
That all applications be dismissed and removed from the active pending cases list.

IT IS NOTED that publication of this judgment under the pseudonym Smith & Smith is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADF 1006 of 2005

MRS SMITH

Applicant

And

MR SMITH

Respondent

REASONS FOR JUDGMENT

Introduction

I have before me an application by the wife for leave to institute proceedings for property settlement out of time and, subject to that application being granted, there are competing applications for property settlement before me arising from the wife’s Form 1 Application for Final Orders filed on 8 July 2005 and the husband’s Form 1A Response to an Application for Final Orders filed on 17 August 2005.
At the time of trial, the wife sought the following orders:
2.1Leave to commence proceedings for property settlement out of time.
2.2That on or before 28 days of the date hereof the husband do cause to be paid to the trust account of Wallmans Lawyers for and on behalf of the wife the settlement sum of $ [sic].
2.3That each party do otherwise keep such items of personalty and realty as may be held by each of them in their respective possession, power or control.
2.4That in default of the payment of the settlement sum the husband do forthwith cause the whole of the land comprised and described in Certificate of Title Register Book Volume … Folio … and situate at S in the State of South Australia to be placed on the market for sale by public auction or private treaty upon such terms and conditions as the parties may agree and from the net proceeds of sale derived therefrom the wife shall receive such sum as may be outstanding together with default interest at the rate of ten per centum per annum and the husband shall receive the balance remaining therefrom.
In his Form 1A Response filed 17 August 2005, the husband sought the following orders:
3.1That pursuant to Section 44(3) of the Family Law Act 1975 the husband be granted leave to issue an application for property settlement notwithstanding that more than 12 months has lapsed since the date of decree absolute.
3.2That the husband do pay to the wife such lump sum as is considered just and equitable by this Honourable Court, and
3.3Each party do thereafter retain free from any further claim by the other those assets and financial resources in their respective possession or control, and
3.4Any other order that this Honourable Court deems fit.
3.5That the wife do pay to the husband costs of and incidental to these proceedings.
On 14 May 2007 the husband indicated he wanted the wife’s application dismissed and no longer sought his own order for property settlement. I granted the husband leave to amend his Form 1A Response to provide that the only order he sought was that the wife’s Form 1 Application be dismissed. I did not require the husband to file an Amended Response.
In his final address the wife’s counsel calculated that the amount the wife was seeking to be paid to her by the husband was $162,249.00 on the basis of a net asset pool of $317,051.00, a percentage division of 60%/40% in the wife’s favour, and the wife already having assets to the value of $27,981.00.

Factual Background

The wife was born in May 1950 in Poland and is now aged 57 years.
The husband was born in October 1951 in Poland and is now aged 56 years.
The husband and wife grew up in the same village in Poland.
In 1980 the husband and wife were on separate working holidays in Austria when they met and began a relationship. At this time the wife was employed full time as a nanny and the husband was employed on a full time basis as mechanic.
The wife states the parties commenced cohabitation in a rental apartment in Vienna, Austria in late 1980. According to the husband they commenced cohabitation in July 1981.
Both the husband and wife applied for visas to remain in Austria, apparently due to the uncertain political situation in Poland at the time. In 1981 the wife was granted a visa to remain in Austria but the husband was unsuccessful in his application.
The husband and wife remained residing in Austria and in 1982 they both applied to emigrate to Australia or Canada. They were successful in their application to emigrate to Australia.
Before emigrating to Australia, the wife continued to work as a nanny until she became pregnant with the parties’ first child.
In May 1983 the parties’ son F was born in Austria and is now aged 24 years.
The husband, the wife and their son came to Australia in July 1983. They resided in rental accommodation for 3 months, before moving to rental accommodation in P.
During this time, the wife stayed at home to care for the parties’ son. The husband was unemployed following the parties arrival in Australia. The wife says this was for approximately 6 months, but the husband says he was unemployed until approximately July 1985 when he commenced to work full time as a mechenic.
The husband ceased this employment and opened his business in rental premises at L. The wife says this occurred in early 1985, but according to the husband it was in December 1986. The husband says during the time he ran his business, he would also purchase cars to restore and repair before reselling them. In fact he commenced doing this in August 1984.
On 14 May 1986 the parties’ daughter C was born and is now aged 21 years. Following this child’s birth the wife cared for both children at home.
In October 1987 the husband’s mother travelled to Australia from Poland for a holiday and resided with the parties. This enabled the wife to work on a causal basis as a cleaner at a hotel in Adelaide. The wife worked 25-30 hours per week during this time.
The wife says the parties moved into Housing Trust rental accommodation at N in 1988, and three to four months later moved to Housing Trust accommodation in W. The husband says the parties moved to N in 1986.
The husband’s mother returned to Poland in May 1988. The wife continued to work as a cleaner, arranging her work hours around the children’s school and child care.
In 1990 the parties purchased the former matrimonial home at H for approximately $72,000.00. The purchase was financed by way of a deposit, obtained through a personal loan with Bank SA, and a mortgage with Home Start for the remainder of the purchase price. The husband though says there was no loan required for the deposit and that he paid this from his savings.
According to the wife, the loan to Bank SA was repaid after approximately six months from the proceeds of sale of a motor vehicle.
The husband says he renovated the H property for two months before the parties moved into the property and he continued the renovations off and on after they moved in.
In December 1992 the husband suffered a heart attack and in February 1993 he underwent heart bypass surgery. The husband was no longer able to work full time and closed his business. The husband says he received approximately $2,500.00 from the sale of tools and automotive repair equipment. The husband began to receive a Social Security Sickness Benefit in January 1993 and from January 1994 the husband received a disability support pension.
According to the husband, in 1993 the wife also worked at a café for cash for approximately three months in addition to her work as a cleaner.
From 1993 the husband continued to purchase damaged cars, buying parts to repair the vehicles and then selling the repaired vehicles. According to the husband between August 1984 and May 2004 he purchased 38 vehicles. The husband says he also purchased seven vehicles in the name of the wife.
The parties married in February 1995.
The wife states that in 1995 she became aware that the husband had a gambling habit and had incurred debts. The wife says she obtained loans from the Polish Community Credit Union on three or four occasions for approximately $3,000.00 and on another occasion for $5,000.00 to pay the husband’s gambling debts. However, according to the wife, the husband told her he used this money to purchase and repair motor vehicles and that he used the proceeds from the sale of these vehicles to repay the debts.
The husband admits he had a habit of gambling at the casino between 1989 and 1998 but he says his gambling never affected his ability to pay the bills and expenses.
In 1995 the parties travelled to Poland as a family, according to the wife in an attempt to make a new start. The wife says the parties sold the majority of their possessions, furniture and effects and obtained a loan from the Polish Community Credit Union to pay off the husband’s debts and finance their trip.
The parties returned to Adelaide in November 1995. The wife resumed her employment at a hotel in Adelaide. The husband did not work and continued to receive his disability support pension.
According to the husband the parties separated under the same roof in 1995 or at the latest by 1 January 1996. The wife says that the parties did not separate until 1998/1999, although from 1996 they did make some changes to their living arrangements.
The husband says in 1997 the wife commenced working as a labourer on a farm on a cash basis in addition to her work as a cleaner.
In 1998 the wife and the parties’ daughter were involved in a car accident in which the wife’s motor vehicle was written off. The wife received $2,000.00 through her insurance and used this money to purchase a replacement motor vehicle.
In December 1998 the wife and children vacated the former matrimonial home and moved to rental accommodation.
In 2001 the wife received a compensation payment from the 1998 car accident. She received a net amount of $17,000.00 after deductions for legal fees, medical expenses, and the reimbursement of Centrelink benefits.
The wife says that after discussions with the husband regarding their finances she accepted his proposal to transfer her interest in the former matrimonial home to him for $25,000.00. On 27 August 2001 the wife signed a transfer of her interest in the former matrimonial home to the husband but the husband did not pay her the $25,000.00 and told her that he would pay her the money in installments. Then in October 2001 the husband told the wife that he would only pay the sum of $15,000.00 but he would restore her motor vehicle for her.
The husband says he paid the wife the $15,000.00 but the wife denies this and says he only paid her $10,000.00 in late 2001/early 2002. The husband did though repair her motor vehicle spending $3,000.00 on it.
The husband says that in 2001 he carried out improvements to the former matrimonial home, including organising plans and obtaining approval for the subdivision of the property and the building of two new homes.
In 2002 the wife sold the motor vehicle repaired by the husband for $11,300.00. The wife says this money, together with other money, was placed in accounts in the names of the children.
In July 2002 the husband suffered a stroke.
The parties’ divorce was granted in October 2003 on the husband’s application.
In February 2004 the husband suffered another heart attack.
The husband claims that on 3 May 2004 his friend Mr D lent him $20,000.00 to pay the balance of the deposit on the purchase of the house property at S. The purchase price was $220,000.00 and the total deposit was $22,000.00.
On 24 May 2004 the husband sold the former matrimonial property at H for $255,000.00. According to the husband, after paying out the mortgage he was left with a net amount of $222,026.00 from the sale. From that he had to pay the agent’s fees and other expenses.
The husband settled on the purchase of the property at S on 24 May 2004 using some of the proceeds of the sale of the former matrimonial property.
In June 2004 the husband travelled to Poland for two months.
In December 2004 the husband obtained a loan of $25,000.00 from the Polish Community Credit Union secured by way of mortgage over the title to the property at S. He claims that he then repaid Mr D the amount of $20,000.00.
On 8 July 2005 the wife filed a Form 1 Application for Final Orders seeking leave to commence proceedings out of time and final property orders.
On 17 August 2005 the husband filed a Form 1A Response to Application for Final Orders.
On 30 August 2005 the husband increased the mortgage by $25,195.00 taking it to $46,000.00. He says he used this money for house improvements, to travel to Poland and to give $2,500.00 to his daughter C.
In November 2005 the wife’s employer closed. The wife received a redundancy and long service leave payment of $3,600.00. According to the wife, this money was used to finalise payment of the children’s school fees.
In April 2006 the wife commenced cleaning homes privately. The wife continued to receive a Centrelink benefit.
Just prior to the commencement of the trial the wife secured employment as a housekeeper on a full time basis with a salary of $40,000.00 per year and superannuation of $3,500.00 per year.

The current circumstances of the parties

The wife

The wife lives in rented accommodation with her daughter C. C is undertaking a course of study full time and she has a casual job as well. The parties’ son F lives independently and he is undertaking a course of study at University.
The wife has now secured employment as a housekeeper on a full time basis with a salary of $40,000.00 gross per year and superannuation of $3,500.00 per year. She was due to start this job within a few days of the trial.

The husband

The husband resides in the house property at S.
The husband receives a disability support pension in the sum of $218.00 per week as at February 2006. Unfortunately, there is no more recent evidence before the court as to the amount of this pension.
The husband has a number of health problems ranging from frequent and regular chest pains to gout, to failing kidneys, to type 2 diabetes, to high blood pressure. He receives treatment from a number of health professionals and he takes a variety of medication for these conditions. He also has to be careful with his diet.

The issues in dispute

The parties were clearly at odds over whether the wife should have leave to institute the proceedings, although the husband made no specific submission about that and he initially sought leave himself.
The husband’s primary submission was that there were two agreements for property settlement reached between the parties, firstly on 15 December 1998 when the wife moved out of the former matrimonial home with the children and secondly in August 2001 when the wife transferred her interest in the former matrimonial home to the husband, and as a result there should be no order for property settlement in the wife’s favour.
The wife denies that there was any agreement reached on 15 December 1998 and she says that although there was an agreement between the parties in 2001, the husband did not carry out the terms of that agreement, that that agreement did not become the subject of a binding financial agreement or an order of this court, and that it cannot prevent the making of an appropriate order for property settlement now. The court is still required to refer to the asset pool at the time of the hearing, to assess the respective contributions of the parties up to that time, and to take into account the relevant Section 75(2) factors at that time.
In relation to the assets and liabilities of the parties the following disputes emerged from the evidence:
64.1Whether the mortgage to the Polish Community Credit Union should be included in the liabilities? The wife says that it should not be included because in effect the husband used the loan amounts for his own purposes. Alternatively, if the mortgage is included then the money spent by the husband from the loans obtained should be added back to the asset pool as a premature distribution of assets. The husband made no submission to me about this issue.
64.2Whether there is a loan due by the husband to Mr D in the sum of $10,000.00? The husband says that there is such a loan but the wife says otherwise.
64.3Whether the wife’s term deposits should be included in the asset pool? Although the husband did not raise it, the wife chose to leave out of the asset pool her term deposit of $12,000.00 and her 50% share of term deposits held in the names of the children. The wife’s share totals $10,304.00. The wife considers that these monies belong to the children, even though most of it originated from damages she received from injuries incurred in the motor vehicle accident in 1998, from the proceeds of sale of a motor vehicle purchased on her behalf and repaired by the husband, and from her savings. The only amount that came from the children was $7,000.00 that C received for damages for injuries she sustained in the same accident as the wife.
64.4Whether the wife has items of gold jewellery? The husband alleges that at separation the wife had and still retains gold jewellery worth approximately $5,000.00. The wife did not directly respond to this allegation, but the implication from her evidence is that she did not have such items of jewellery.
64.5What cash if any the wife took with her at separation? The husband alleges that the wife had $9,000.00 in cash but the wife does not concede that she had any money at all. Indeed, no cash is included in the asset pool that she says existed at separation.
64.6The husband travelled overseas to Europe in June 2004 for a period of approximately two months following the sale of the former matrimonial home. It is unclear on the evidence what funds the husband used to meet his travel costs but if he used some of the proceeds of the sale of the home then the question is whether that money should be added back as a premature distribution of assets.
64.7The motor vehicles and the furniture and household effects of each of the parties were valued by a single expert valuer, Mr E. His valuations were before me and neither party required him for cross examination. However, during the course of his final address the husband announced for the first time that he had sold his furniture in a garage sale for $1,500.00 five to six months previously. The issue is whether I should proceed on the basis of the valuations or this last minute announcement by the husband.
64.8The husband claims that when the wife left the former matrimonial home he had a social security debt of $500.00 and that he still had this debt at the time of the trial. The wife does not concede that the husband had any such loan.
64.9The husband alleges that the wife has $5,000.00 comprising her redundancy/termination pay from her previous employer. As referred to earlier the wife received $3,600.00 when she ceased her employment at the hotel. However, she spent this money in meeting school fees for the children.

In relation to the respective contributions of the parties there are a number of issues in dispute, as follows:
65.1The husband says that the wife retained for herself most of the income that she received and she rarely contributed any of the same to meeting the household expenses.
65.2The wife says that the husband was a compulsive gambler and he lost substantial money at the casino. As a result she had to meet the majority of the household expenses herself including the mortgage and she had to take out loans which she gave to the husband to pay off his debts. The husband says that his gambling had no impact on the household finances and the parties were still able to meet the same from his income.
65.3The wife says that the $8,000.00 deposit required for the purchase of the former matrimonial home was obtained by way of a personal loan but the husband says that he paid it from his income.
65.4There is a dispute as to the date of separation and that impacts on the respective contributions of the parties. The wife says that separation finally occurred in late 1998 or early 1999 when she left the former matrimonial home with the children, although she does agree that there were some changes to their family life from 1996 onwards. The husband though claims that separation occurred under the same roof in November 1995 or at the latest by 1 January 1996. He says that the wife then physically left the home with the children on 15 December 1998.
65.5There is a significant dispute as to who paid for what during cohabitation. The husband claims that his earnings, including from the sale of various motor vehicles, accounted for 90% of all expenses of the family. The wife denies this and says that she paid the majority of the expenses.
65.6The wife claims that the husband never deposited the money that he received from the sale of repaired motor vehicles into the parties’ joint bank account and she does not know what he did with this money but suspects that it was used for gambling. The husband concedes that he did not bank this money but he denies that he lost it gambling at the casino.
65.7The husband claims that the wife did not contribute to the mortgage repayments made after 1 January 1996. The wife denies that claim and she says that she made the mortgage repayments until she left the former matrimonial home in late 1998/early 1999, and in particular from the parties’ joint account to which she contributed her earnings and her Centrelink payments.
65.8During his cross examination the husband claimed that he paid the wife $200.00 to $300.00 cash per month for child support following separation. The wife denies this and she says he only paid the minimum amount of approximately $5.00 per week.
In relation to the Section 75(2) factors there was no dispute that there should be an adjustment in the husband’s favour because of the disparity in the parties’ incomes and earning capacities but there is no agreement as to the extent of that adjustment. The wife submits that it should only be 5% but the husband made no specific submission about this at all.

The principles applicable to the matters before the court

Leave to institute proceedings

Section 44(3) of the Family Law Act 1975 provides that proceedings for property settlement cannot be instituted more than 12 months after the granting of a divorce order except with leave of the court or consent of both parties.
Section 44(4)(a) of the Act provides that the court is not to grant leave unless it is satisfied that hardship would be caused to a party to the relevant marriage or a child if leave were not granted.

Property settlement

The provisions of Section 79 of the Family Law Act 1975 define the court's power and obligations in determining applications for property settlement. The court has a discretion to make orders altering the interests of parties in property, provided the court is satisfied that such orders are appropriate, just and equitable.
The court is obliged by the provisions of Section 79(4) of the Family Law Act 1975 to take into account the following matters:
70.1The financial and non-financial contributions made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them (sub-paragraph (a) and (b));
70.2The contribution made by a party to the marriage to the welfare of the family, including any contribution made in the capacity of homemaker or parent (sub-paragraph (c));
70.3The effect of any proposed order upon the earning capacity of either party to the marriage (sub-paragraph (d));
70.4The matters referred to in Section 75(2) so far as they are relevant (sub-paragraph (e));
70.5Any other order made under the Act affecting a party to a marriage or a child of the marriage (sub-paragraph (f));
70.6Any child support payable (sub-paragraph (g)).
Accordingly, in assessing the entitlement of each of the parties for property settlement, there is both a retrospective element relating to the contributions of each of the parties and a prospective element relating to matters referred to in Section 75(2).
According to guidelines established through a series of leading decisions, the court should determine the following matters on the evidence, that is:
72.1Firstly, the court must determine the assets, liabilities and financial resources of the parties to the marriage.
72.2Secondly, the court must consider all relevant contributions of each of the parties, and, where possible, the court should assign an entitlement of each of the parties arising as a result of those contributions.
72.3Thirdly, the court should then consider the prospective components of the claims of each of the parties arising as a result of the provisions of Section 75(2). The court should then identify what alteration, if any, should be made to the entitlement of each of the parties earlier assessed on account of contributions having regard to the relevant Section 75(2) factors.
72.4Fourthly, the court takes a step back and considers whether the proposed orders are just and equitable.

The evidence

The wife was represented by Mr Berman. The wife relied on her affidavit filed on 8 June 2006 and her Form 13 Financial Statement filed on the same date. She gave evidence and was cross examined.
The husband represented himself. He relied on his affidavit filed on 3 July 2006 and his Form 13 Financial Statement filed on 16 February 2006.
The husband called as a witness his friend Mr D. He filed an affidavit on 15 August 2006. Mr D gave evidence and was cross examined.
The husband also relied on the reports of Dr K and Dr M annexed to his affidavit filed on 22 September 2006. These reports were admitted into evidence by consent and neither of the doctors were required for cross examination.
There were two single expert valuers instructed in this case, namely Mr B, real estate valuer whose affidavit annexing his valuation report relating to the house property owned by the husband was filed on 13 July 2006, and Mr E whose report as to the value of the motor vehicles and the furniture and household effects of the parties was annexed to his affidavit filed on 13 July 2006. Neither of these expert witnesses were required for cross examination.
The wife gave her evidence well and she impressed me as a witness of truth.
However, the position is quite different with the husband. He was not a credible witness, and I prefer the evidence of the wife to that of the husband wherever there is a conflict.
Although the husband represented himself and required the services of an interpreter, he had had the benefit of legal advice when he filed his response, and subsequent to that he has had the assistance of one Mr P, a struck-off solicitor who has some notoriety in this court and who preys upon unsuspecting litigants in person and takes money from them in the guise of assisting them with their case and in particular by preparing their documents. Invariably though, and this case is no exception, Mr P prepares documents which are of little use to the litigant. They are always extensive and contain irrelevant and unnecessary material. For example the affidavit he prepared for the husband in this case occupies one entire volume of the court file. As a result there is always a significant waste of time in everyone having to read such a lengthy document and then sort out what is relevant and admissible and what is not.
In any event, whether it was the influences of Mr P I cannot say, but in this case I find that the husband lied to this court, that he exaggerated his evidence, that he made up answers as he went along, and he changed his evidence according to what suited his case. For example, I highlight the following:
81.1In cross examination the husband claimed that he paid the wife $200.00 to $300.00 cash per month for child support at her request. However, there was nothing about this in his affidavit, and it was not in his examination in chief, and nor was it put to the wife in cross examination. Further, when asked where the money came from he said it came from the sale of motor vehicles, and that he kept that money under his pillow. However, this does not sit well with his evidence as to the few number of cars that he purchased, repaired and sold after separation, and I find that it is simply unbelievable.
81.2The husband obtained approval to subdivide the former matrimonial home and to construct two dwellings thereon. He says in his affidavit that he employed an architect and a surveyor and a friend Mr J lent him the money to do this. However, if he in fact had the money that he claims to have had after separation he would not have needed to borrow money from Mr J. In any event, in cross examination he initially said he could not recall how much he borrowed but he then said it was $800.00 to $900.00 and that he repaid this out of the proceeds of sale of the former matrimonial home. However, there was nothing about this in his affidavit and no documents were produced by him in support of this claim.
81.3The husband made two overseas trips after separation, one in June and July 2004, and the other in 2005. However, his evidence as to what money he used to finance the first trip is confused and inconsistent. In his affidavit he did not say anything about the cost of this trip or where he obtained the funds. In cross examination he said he went to Poland, Austria, the Czech Republic and Egypt with his friend Mr D and the total cost was $5,000.00 to $6,000.00. Initially he said he borrowed this money from the Polish Community Credit Union, but then he said it was money “left over” after the sale of the former matrimonial home and the purchase of the property at S. He said there was $6,000.00 available but he then changed that to $2,700.00.
According to the settlement statement for the sale of the former matrimonial home there was an amount of $6,000.00 which the husband received, but I am not satisfied on the evidence that the husband used this money to fund the trip overseas, even if it did cost as little as $5,000.00 to $6,000.00.
The husband also made one other attempt to explain how he financed this trip. He said that he could have used the four months’ rent that he received for the former matrimonial home. However, again there was nothing in his affidavit about this and it was clearly thought up at the last minute and I reject it.
81.4The husband’s evidence in chief was that he borrowed $20,000.00 from his friend Mr D to put towards the deposit required to purchase the house property at S. However, Mr D’s evidence was that the husband borrowed this money to purchase a motor vehicle. He says that the husband even showed him the motor vehicle he purchased with this money. Further, the husband says that he repaid Mr D the $20,000.00 in December 2004 when he borrowed $25,000.00 when the Polish Community Credit Union, but Mr D’s evidence was that the husband repaid him when he sold the motor vehicle. Now, in the final analysis I find that the husband’s evidence about this particular amount of $20,000.00 is correct, but the evidence of Mr D raises the spectre of there being other monies borrowed and other motor vehicles purchased about which the husband has said nothing in his affidavit.
81.5The husband claims that the parties were separated under the same roof from at least 1 January 1996 until the wife and the children left the former matrimonial home on 15 December 1998. However, the evidence of Mr D puts the lie to these claims. He was a regular visitor to the parties’ home and he often went there unannounced. He saw nothing to indicate that the parties were separated and I reject the husband’s evidence in this regard. I find that the parties separated when the wife and children left the former matrimonial home, and, although the wife thought it was in January 1999, I find that that occurred on 15 December 1998.
81.6The husband claims that when the wife left the former matrimonial home in December 1998 the home was in an “extremely poor condition” and an example of this was “the bathroom had no walls”. However, again the evidence of Mr D put the lie to these claims. He said that the bathroom was serviceable and had walls. He also gave evidence as to the condition of the home which was quite inconsistent with what the husband was attempting to suggest. This was clearly an example of the husband exaggerating his evidence in order to bolster his case.
81.7The husband claims that when the wife and the children left she took all of the furniture in the house. The wife’s case is that the husband in fact moved her and the children to their rented accommodation and she took various items of furniture and effects, her personal belongings and the children’s furniture and belongings. Mr D corroborated this in his evidence, and then, in his final address the husband changed his position and agreed that the wife did not in fact take all of the furniture.
In relation to Mr D, his memory was poor and he was clearly mistaken in relation to at least one major factual issue. Further, I do not believe his evidence as to the husband’s gambling or as to an alleged loan of $10,000.00. With the former topic Mr D was misguidedly attempting to protect the husband, however in doing so inconsistencies emerged. For example, in his affidavit he said that he talked to the husband about his gambling on several occasions, but initially in cross examination he said that the husband “never” told him that he was gambling. He was also evasive in cross examination as to whether the wife complained to him about the husband’s gambling, and he claimed that not everything that he told Mr P was included in his affidavit.
In relation to the alleged loan, Mr D was vague and unconvincing in his evidence about the same. He was unable to recall when it was made or what it was for, and he prevaricated about when if ever the loan was to be repaid. In the end result, I do not believe that there was any such loan, but even if there was I am not satisfied that it is a loan that Mr D requires to be repaid.

Leave to institute proceedings out of time

The law in relation to this issue is relatively settled. The Full Court in Whitford & Whitford (1979) FLC 90-612 held that in any Application for Leave there are two broad questions, namely:
84.1Whether the court is satisfied that hardship would be caused, and if not then the matter cannot proceed any further.
84.2If the court is satisfied though that hardship would be caused then the court must exercise its discretion as to whether to grant leave or not.
In relation to the question of hardship, the following principles emerge from the authorities:
85.1Hardship is defined as meaning a “substantial detriment” (Whitford, supra; Hall & Hall (1979) FLC 90-679).
85.2What amounts to “substantial detriment” depends on the facts of the case (Neocleous & Neocleous (1993) FLC 92-377).
85.3An applicant may suffer hardship even if they are not in a position of need or poverty. The Full Court in Whitford (supra) said this at p.78,145:
“Hardship may be caused to an applicant if leave were not granted to institute proceedings, although the applicant is not in necessitous circumstances. Whatever the financial situation of an applicant may be, his or her loss of a prospective entitlement to property including money, or his or her inability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship.”
85.4To establish hardship an applicant needs to have a claim which is worthy of litigation (Hall, supra, at p.78,627). The applicant needs to have a reasonable claim and the question is whether there is a prima facie case at the time the application is made, and that is to be assessed on the facts presented by the applicant (Frost& Nicholson (1981) FLC 91-051; Jacenko & Jacenko (1986) FLC 91-776).
Once hardship is established, it is then a matter of the exercise of the discretion that the court has to grant or refuse leave. It seems that most, if not all of the factors considered under the issue of hardship can be relevant here as well. For example, the strength of the applicant’s case is obviously highly relevant. Other matters though that need to be addressed are the delay and the explanation for it, as well as any prejudice to the respondent.
In relation to the question of delay, the length of the delay is important, but the focus is more on any explanation for the delay. However, the delay and any explanation for it is just one factor to be taken into account and lack of an adequate explanation for the delay is not necessarily fatal to an Application for Leave (Tormsen & Tormsen (1993) FLC 93-392).
In relation to the question of prejudice to the respondent if leave is granted, it is of course necessary to balance this against the hardship to the applicant if leave is not granted (Frost& Nicholson, supra).
Turning then to the facts in this case, I consider that there would be a substantial detriment to the wife if leave is not granted. To quote from the Full Court in Whitford, the “loss of a prospective entitlement to property including money” and the wife’s “inability to have the financial and property relations of the parties adjusted or resolved” clearly constitutes hardship. One primary reason for this is that the husband induced the wife to transfer her interest in the former matrimonial home to him for a consideration which he did not in fact pay and which was not pursuant to any binding financial agreement. Thus if leave is not granted the wife may have no other remedy and the husband will remain the sole owner of that home. In this regard, this case is similar to the recent unreported Full Court decision in Keith & Soukis (2007) FamCA 1017, Bryant CJ, Finn and Boland JJ, delivered 31 August 2007.
I am satisfied that the wife here has a reasonable claim to be paid a substantial amount of money by the husband by way of property settlement and that the loss of that claim in the circumstances is a substantial detriment.
In reaching this conclusion I have put aside for the moment the effect of the alleged agreements between the parties when the wife left the former matrimonial home with the children in December 1998, and when the wife transferred her interest in that home to the husband in 2001. The husband of course argues that the effect of those agreements and in particular the second of them is that the wife has no further claim for property settlement. This of course could have been determined first, but in discussion with counsel for the wife it was considered that the Application for Leave should be addressed first.

Turning to the exercise of the discretion, I make the following comments:
92.1The divorce order was made on 17 October 2003, namely just under 21 months prior to the filing of the application. Accordingly, the application was approximately 9 months out of time, but of course it is not just a matter of looking at that period, but rather the entire period of time, including the time that the wife could have instituted the proceedings without leave.
92.2The wife gave an explanation for the delay, namely:
92.2.1The divorce order was made on the application of the husband and the wife did not attend the divorce hearing or seek any legal advice in relation to the same.
92.2.2The wife does not recall reading the relevant statement on the divorce certificate once she received the same in relation to the need to institute proceedings for property settlement within 12 months. English is not the wife’s first language and she did not understand the wording and the significance of this statement until it was explained to her by her solicitor.
92.2.3In relation to property settlement the wife did not seek any legal advice and she assumed that the parties were required to settle matters between themselves. It was not until early 2005 when an Australian friend explained to her that the Family Court was able to finalise property settlement matters between the parties.
92.2.4In March 2005 the wife arranged to consult a solicitor about property settlement and during the first appointment the solicitor explained to her about the need to institute proceedings within 12 months of the granting of the divorce order.
92.2.5In May 2005 the wife instructed her solicitors to file an application for leave to institute proceedings and for property settlement.
I find that this provides an adequate explanation of the delay in this case.
In relation to the question of prejudice to the husband, the husband failed to present any evidence suggesting any prejudice, and apart from his general submission that given the agreements that were reached, and the fact that on his case the wife has made no relevant contribution since January 1996 and that conversely he has made all the relevant contributions since that time, he made no specific submission on this topic. In particular, there was no evidence and no submission that the husband had organised his affairs in the expectation that proceedings would not be instituted.
In these circumstances I have no difficulty in exercising my discretion to grant leave to the wife to institute the proceedings for property settlement.

The alleged agreements

The husband claims that there were two agreements reached between the parties, one when the wife left the former matrimonial home with the children in December 1998, and the other in 2001 when the wife transferred her interest in the former matrimonial home to the husband. The husband says that in effect, as a result of these agreements the wife has no further claim for property settlement.
The wife denies that there was any agreement reached as to property settlement when she left the former matrimonial home, and I accept her evidence totally in this regard. However, there was an oral agreement reached between the parties in 2001 and I need to address the effect of this agreement.
The husband says that in about August 2001 he wanted to be the sole proprietor of the former matrimonial home and he approached the wife seeking her agreement to transfer her interest therein to him. He says that the wife asked for some money and he paid her a total of $15,000.00 over a period of time. He says that he borrowed $10,000.00 from his friend Mr D and the balance of $5,000.00 came from the sale of a motor vehicle. He also says that he repaired and restored the wife’s motor vehicle. He claims that he spent $3,000.00 on parts, that he paid 12 months registration, and that it took him five weeks to complete the repairs and the restoration.
The husband of course did not tell the wife that he wanted the property in order that he could sub-divide the same and build two dwellings thereon. The wife says he told her that he wanted to refinance the mortgage and therefore he required the home to be registered in his sole name.
The wife says that the husband offered to pay her the sum of $25,000.00 which he claimed was one half of the equity in the home at the time. The wife did not query this and she did not seek any financial or legal advice, and she simply agreed to the husband’s proposal. She says that she also did so because the husband assured her the $25,000.00 would be sufficient to enable her to purchase a new home using this as a deposit.
On 27 August 2001 the wife signed the transfer. The consideration was described therein as “by mutual consent”. The husband then informed the wife that he did not have the money to pay her and he would have to pay her in installments. He then did nothing though and when the wife asked for her $25,000.00 he said that he would only pay her $15,000.00 but he would provide her with the renovated motor vehicle which he had previously encouraged her to purchase using her own funds. However, again he did not pay her anything until at the end of 2001/the beginning of 2002 he paid her the sum of $10,000.00. He did though repair and restore the wife’s motor vehicle.
At this point I make two comments:
102.1I accept entirely the evidence of the wife as to these transactions and I reject the evidence of the husband as to the same.
102.2This is not a financial agreement within the meaning of the Family Law Act, and thus it does not and cannot oust the jurisdiction of the court to grant relief under Section 79 of the Act.
The law is now relatively settled as to the effect of an informal agreement where there is a subsequent application pursuant to Section 79 of the Act. For example, in Woodland & Todd (2005) FLC 93-217, the Full Court said this at p.79,604:
“38. Where parties enter into an agreement concerning property, other than in agreement approved under the provisions of the Act or embodied in consent orders, and one party subsequently commences proceedings under s79 for an alteration of property interests, the Court must determine the application on its merits having regard to the factors as set out in s79(4) as they exist at the time of the hearing of the application under s79 and according to the law in force at that time and not, as to either of these two matters, at the time the agreement was made. There is no threshold test, before embarking upon the s79 exercise, to determine whether the earlier agreement was just and equitable at the time it was made according to the facts as they then existed and the law then in force. The earlier agreement should be considered (as an indication of what the parties may have regarded as just and equitable at the time), but its provisions only given effect if they coincide with an order which is just and equitable according to s79 at the time of the hearing.”
Of course, here the agreement was not complied with by the husband and this may be fatal in itself, but even apart from that, as will become apparent later in these reasons for judgment the terms of this agreement simply do not coincide with the orders which are just and equitable now.
Two matters though are relevant from the circumstances surrounding the agreement, namely:
105.1The husband became the sole proprietor of the property and that enabled him to ultimately sell the same and use the proceeds of sale as he saw fit including for the purchase of another property.
105.2The wife received the sum of $10,000.00 and the husband repaired and renovated the wife’s motor vehicle which she subsequently sold for $11,300.00.

The assets, liabilities and financial resources of the parties

At the date of commencement of cohabitation – 1980/1981 in Vienna, Austria

The husband had the following:
Assets
Cash savings  US$1,500.00
Liabilities  Nil
Financial Resources  NK
The wife had the following:
Assets
Cash savings  US$150.00
Liabilities  Nil
Financial Resources  NK
In relation to these assets, although only the husband presented any evidence about the same, I am not prepared to accept the accuracy of that evidence given my concerns about his credit.

At the date of separation - 15 December 1998

The assets, liabilities and financial resources of the parties were as follows:
Assets
The house property at H  NK
Furniture and household effects  NK
The husband’s motor vehicle  NK
The wife’s motor vehicle  NK
The wife’s claim for damages for injuries received in a motor
vehicle accident  NK
The husband’s cash  $3,000.00
The husband’s tools  $600.00
Liabilities
Mortgage to HomeStart  $65,692.00
Financial Resources
The wife’s superannuation entitlement with Host Plus                   $2,295.00
In relation to these assets, liabilities and financial resources I make the following comments:
110.1The husband remained living in the former matrimonial home at H and he paid the mortgage repayments and all other outgoings. The wife and the children moved into rental accommodation.
110.2The parties divided up their furniture and household effects with the wife taking the children’s furniture and effects.
110.3In 2001 the wife received $32,000.00 by way of damages for the injuries received in the motor vehicle accident in 1998. After payment of legal fees, medical expenses and the reimbursement of monies to Centrelink the wife was left with $17,000.00. She then drew on this amount to meet living expenses.
110.4In cross examination the husband claimed to have had $3,000.00 cash in his possession at the date of separation. Accordingly I have included this amount in the schedule of assets. The husband also alleges that the wife had cash of $9,000.00, but in this regard I do not believe him, and thus I have not included this amount in the schedule.
110.5The husband claimed that at separation the wife had gold jewellery worth $5,000.00, but again I do not believe him and I have not included this in the asset schedule. The only reference to it in the husband’s evidence was in a schedule in his affidavit.
110.6The husband alleged that he had a “social security loan” of $500.00. However there was no documenting evidence produced by the husband to support this claim and I reject it.

At the date of the hearing

I find that the relevant assets and liabilities of the parties to be taken into account are as follows:
Assets
The house property at S  $285,000.00
The husband’s furniture and household effects  $3,120.00
The husband’s 1985 Ford Falcon utility  $950.00
The husband’s cash at separation  $3,000.00
The amount received by the husband from the proceeds of
sale of the former matrimonial home  $6,018.00
The wife’s furniture and household effects  $7,805.00
The wife’s 1991 Ford Falcon motor vehicle  $1,000.00
The wife’s 2002 Ford Falcon motor vehicle  $11,500.00
The wife’s term deposit  $12,000.00
The money placed by the wife in term deposits in the
names of the children  $10,304.00
The wife’s superannuation entitlement with Host Plus                   $7,676.00
The amount received by the wife from the husband as
  part consideration for the transfer of her interest
  in the former matrimonial home to him.    $10,000.00
$358,373.00
Liabilities
Mortgage to the Polish Community Credit Union, allow             $30,000.00
In relation to these asset and liabilities I make the following comments:
112.1With the husband’s furniture I am proceeding on the basis that the same should be included at the value determined by the single expert valuer, and not in accordance with what the husband said from the bar table he sold the same for in a garage sale five to six months before the hearing. There is simply no evidence of this.
112.2The husband gave no evidence of what he spent the cash of $3,000.00 on. The onus was on him to satisfy the court as to what this money was used for and the reasonableness of that expenditure (Omacini & Omacini (2005) FLC 93-218; Chorn & Hopkins (2004) FLC 93-204). He has not done that and thus I consider it appropriate to add the cash back as a premature distribution of assets in accordance with the principles established by the Full Court in Townsend & Townsend (1995) FLC 92-569.
112.3According to the settlement statement produced by the husband in relation to the sale of the former matrimonial home the balance due to him at settlement was $6,018.89. At one stage the husband suggested that he used this money to fund his trip to Europe in June and July 2004, but to repeat, given the husband’s confused and inconsistent evidence around this topic I am not in a position to make a finding to that effect. However, that does not necessarily effect whether it should or should not be included in the pool of assets as an add-back. If it was used to fund the husband’s overseas travel then in my view there is no doubt that it should be added back. On the other hand, given that there is no evidence whatsoever as to what it may have been used for by the husband if it was not used for this purpose then it is in the same category as the cash of $3,000.00 referred to above, and equally it should be added back as a premature distribution of assets in accordance with the principles established by the Full Court in Townsend, supra.
112.4One of the wife’s motor vehicles is a 2002 Ford Falcon which was given to her by her brother subsequent to separation.
112.5There was no basis to exclude from this pool of assets the wife’s term deposit in the sum of $12,000.00. This is the amount that she has left from the damages that she received in relation to the injuries that she suffered in the motor vehicle accident in 1998, namely prior to the final separation.
112.6Similarly, there is no basis to exclude from this asset pool the wife’s share of the money that she placed in term deposits in the names of the children. To repeat, these deposits comprise the proceeds of sale of the wife’s motor vehicle, some of the wife’s savings and the damages received by C for injuries she sustained in the same accident that the wife was involved in in 1998. According to the wife’s Form 13 Financial Statement filed on 8 June 2006 her share of the monies in these accounts is $10,304.00.
112.7With the wife’s superannuation entitlement, given the value of the same and the size of the asset pool I consider it appropriate to include it in this asset pool and not in a separate pool (Coghlan & Coghlan (2005) FLC 93-220).
112.8Just as the husband gave no evidence in relation to how he spent the cash that he retained after separation and on that basis I have considered it appropriate to add the same back as a premature distribution of assets, the wife gave no evidence of what she used the amount of $10,000.00 for that she received from the husband in consideration of her transferring her interest in the former matrimonial home to him. Thus for the same reasons I add this amount back to the pool of assets.
112.9It is agreed that the current balance of the mortgage to the Polish Community Credit Union is $42,000.00. However, I do not consider that all of this amount should be included as a liability for the purposes of establishing the relevant net asset pool in this case. Well after separation, and well after he sold the former matrimonial home and purchased the house property at S the husband borrowed $25,000.00 from his credit union. I accept the husband’s evidence that he used $20,000.00 to repay a loan in that sum due to Mr D, but there is no evidence as to what the husband used the balance of $5,000.00 for. In the absence of such evidence I am not prepared to take this amount into account here.
In August 2005 the husband increased this mortgage by approximately $25,000.00. He deposed in his affidavit that he used that money for home improvements, to travel to Poland and to give $2,500.00 to his daughter C. In his affidavit he also claimed that he spent $20,000.00 on home improvements, but in cross examination he said that he only spent $10,000.00. Clearly it could not have been $20,000.00 given that in examination in chief he says that he spent $5,000.00 on the trip to Poland, that he in fact gave a total of $4,500.00 to his daughter who accompanied him to Poland, he used $500.00 to purchase his motor vehicle, and he spent further monies on a motor vehicle that he gave to his daughter. Thus, I proceed on the basis that the husband used $10,000.00 for home improvements, and it is only that amount out of the further borrowing of $25,000.00 that should be allowed as a liability here. The balance of that loan was clearly used for the husband’s own purposes which had nothing to do with the wife. She of course had no say in what money he paid to their daughter. Thus, I am prepared to allow a total of $30,000.00 of the amount borrowed from the credit union as a liability in this case. Alternatively, if the whole of the mortgage liability is included it would then be appropriate to add back all of the amounts save and except the amounts spent on home improvements and in repaying the loan to Mr D under the principles established by the Full Court in Townsend & Townsend, supra. I have determined though to adopt the first approach, taking into account how this affects both parties’ positions.
In relation to the $20,000.00 lent by Mr D, just to explain my finding, although there was the evidence of Mr D himself that the loan was for the purchase of a motor vehicle and that he was repaid from the proceeds of sale of that motor vehicle, I find that he was mistaken. Firstly there is no doubt that Mr D withdrew $20,000.00 from his Credit Union account on 3 May 2004 (see Annexure “RS26” to the husband’s affidavit filed on 3 July 2006). Next, there is no doubt that the husband paid $20,000.00 on 7 May 2004 as the balance of the total deposit of $22,000.00 required for the purchase of the house property at S (see Annexure “RS11” to the husband’s affidavit filed on 3 July 2006). The husband had paid an initial amount of $2,000.00 on 30 March 2004 (again see Annexure “RS11”).
With the purchase and sale of motor vehicles, the evidence of the husband, which I accept in this instance, is that he did purchase a 1991 Ford hatchback on 14 May 2004, but he only paid $1,500.00 for this motor vehicle. There is no evidence of the purchase of a Mazda motor vehicle at this time as recalled by Mr D, and nor was there ever an occasion when the husband purchased a motor vehicle for anything like $20,000.00.
Thus, the evidence all points to the husband’s version of the events in this regard being correct. Mr Berman of course says that I cannot accept that the husband is telling the truth about the purchase and sale of motor vehicles because if it is correct then he would not have had enough money from this source to make the payments that he says he did over the period particularly after 1993. That may be the case, but I consider it quite unlikely that even allowing for his evidence that he kept money from the sale of motor vehicles under his pillow that he would have had $20,000.00 available in May 2004 to put towards a deposit required to purchase the house property at S.
112.10In his affidavit the husband claimed that he owed Mr D $10,000.00. He said that he borrowed this money “gradually in installments” from Mr D and he then paid the same to the wife in three separate amounts namely $3,500.00, $2,500.00 and $4,000.00 being part of the total amount of $15,000.00 that he says he paid to the wife in consideration for her transferring to him her interest in the former matrimonial home. In Mr D’s affidavit he deposed that he lent the husband $10,000.00 in three amounts of $3,000.00, $5,000.00 and $2,000.00. He said that these monies were withdrawn from his Credit Union account but he could not recall when that was done. However, to repeat, I do not accept that these loans were made at all. Apart from the fact that Mr D was vague and unconvincing in his oral evidence about this, there is the obvious difference between the individual amounts, and unlike with the loan of $20,000.00 no Credit Union statements of Mr D were produced to support this claim.
112.11The husband still claims to owe $500.00 to Social Security, but again, in the absence of any evidence supporting this claim I am not prepared to include it in the liabilities.
112.12In his affidavit the husband makes further outlandish claims as to the wife’s assets. For example, he claimed that she has $15,000.00 in savings. There is no evidence in support of this claim and I reject it entirely. It is a similar position with his claim that the wife has gold jewellery to the value of $5,000.00.
112.13The husband also claimed that the wife had $5,000.00 received by her from her previous employer and being redundancy/termination pay. The wife did receive $3,600.00 when she ceased her employment at the hotel. However, I accept her evidence that she used this money to finalise accounts from the children’s schools. This can clearly be described as a reasonable expense and thus there can be no suggestion of this amount being added back to the pool of assets (Omacini supra; Chorn & Hopkins supra).

Contributions

I now turn my attention to the respective contributions of the parties pursuant to Section 79(4) of the Family Law Act.

Section 79(4)(a) and (b)

I have set out above the assets that each party brought into the relationship, but to repeat I am not convinced as to the accuracy of the same. In any event, it is of no real consequence given the minimal nature of those assets.
Following the commencement of cohabitation the husband made the following contributions:
115.1The husband was in full time employment as a mechanic in Vienna, Austria. However, he was unemployed for a lengthy period after emigrating to Australia. The husband then obtained full time employment as a mechanic and he remained in that position until he opened up his own business in December 1986. He then operated that business until December 1992. At that time he suffered a heart attack and he closed the business selling the plant and equipment for $2,500.00. Thereafter he received a sickness benefit for approximately one year and in January 1994 he commenced to receive a disability support pension.
From August 1984 until May 2004 the husband also purchased motor vehicles, repaired them and then sold them.
There is a significant issue as to what the husband did with his income. The wife says that the husband had a serious gambling habit and as a result he contributed very little of his income to meet the expenses of the family. She says that her earnings and payments from Centrelink were used to meet the majority of these expenses including the mortgage repayments. She also claims that she obtained three or four loans from the Polish Community Credit Union and provided that money to the husband to meet his gambling debts.
The husband concedes that he gambled at the Casino between 1989 and 1998, but he says that this never affected his ability to pay the household bills, the mortgage or the children’s school fees. Indeed, he claims that he made ninety per cent of these payments and it was the wife who did not contribute very much of her income towards the family expenses. However, I do not believe the husband, and I find that he has lied to the court about his gambling, the impact of that upon the family finances and also who was paying the family expenses. I find that as a result of his gambling habit he contributed very little to meeting the family expenses and it was the wife who primarily paid the bills and who had to fund the shortfalls in meeting the mortgage repayments and the school fees.
The extent and impact of the husband’s gambling on the household finances is clearly confirmed by the fact of the husband having to change his gambling habits dramatically after separation. He then had to meet his living expenses and pay the mortgage and he could not leave that to the wife any more. Thus, from attending at the Casino on a frequent and regular basis prior to 1998, thereafter he only attended once or twice a year.
The husband has produced various accounts and receipts as part of his case alleging that they corroborate his claim that he was making ninety per cent of all payments. However, all they show is that these accounts were paid and they do not establish in any way where the money came from in the first place.
115.2The husband claims that the $8,000.00 deposit required for the purchase of the former matrimonial home was paid from his income. However, I reject this and I find that it was met from a personal loan obtained by the parties and then repaid from the proceeds of sale of a motor vehicle.
115.3The husband says that he used the $2,500.00 that he received for the plant and equipment of his business to pay for fencing at the former matrimonial home and putting sixty tonnes of earth in the back yard. I accept his evidence in this regard.
115.4The husband says that he undertook work and labour in repairing and improving the former matrimonial home over a period of two months immediately following its purchase. He says he worked on weekends and evenings to complete this work. Thereafter, he continued to work on and off renovating the property and he was the one to attend to any repair work required there. Again, I accept his evidence in this regard.
115.5In relation to the purchase, the restoration and then the sale of motor vehicles, the husband purchased some of these motor vehicles in the name of the wife. He claims that it was the wife who then sold these motor vehicles and he implies that she kept the proceeds of sale, although he does say that she would usually put the proceeds towards living expenses. Again though I do not believe the husband and I find that he sold all the motor vehicles and he retained the proceeds, much of which he used to fund his gambling habit. Indeed, the husband said in cross examination that he did not put any of the money he received from the sale of the motor vehicles into a bank account let alone the joint bank account from which the wife paid the expenses.
The wife’s contributions under this heading were as follows:
116.1The wife was in full time employment as a nanny in Vienna, Austria until she became pregnant with the parties’ first child F. At that time she commenced to receive a maternity leave benefit payment from the Austrian Government. In Australia the wife cared for F until October 1987 when she commenced working on a casual basis at a hotel in Adelaide. She also obtained work as a cleaner after hours but she had to cease that work because the husband went to the Casino after his work instead of caring for the children. However, because of the failure by the husband to contribute much if anything of his income to the family finances the wife eventually had no choice but to obtain additional work. She commenced to work in a cafe on four evenings each week, but again she was not able to continue this for longer than a few months.
After the family’s trip to Poland in 1995 the wife resumed her employment at the hotel in Adelaide and it was not until 1997 that she obtained additional employment as a labourer at a farm. She continued with this employment until June 1999.
The husband claims that the wife kept her income for her own purposes and it was only after he closed his business in December 1992 that she contributed to the family expenses. However, he says that she ceased doing this altogether in November 1995. I reject these claims by the husband and I refer to my findings in paragraph 115.1 above. The wife contributed all of her income for the benefit of the family and indeed she had to do that because of the husband’s failure to contribute much if any of his income. Certainly after 1993 he did not contribute anything beyond his pension.
On the basis of the foregoing, I find that the wife’s contributions pursuant to Section 79(4)(a) and (b) of the Act outweigh the contributions of the husband. The primary reason for that is the husband’s gambling and the consequent lack of contribution to the family finances from his income. This of course was in addition to the effect on the family finances of the husband having to close his business because of his health difficulties. It was left to the wife to work and to use her earnings and Centrelink benefits to meet the ongoing expenses of the family.

Section 79(4)(c)

I have little difficulty in finding that overall the wife was the primary caregiver to the children and that at all times she attended to almost all of the domestic tasks in the household, including prior to emigrating to Australia. I find that the husband’s greatest contribution to the care of the children was in the period when neither party was working after emigrating to Australia. During that time it would be fair to say that the parties shared the care of their first child F. Thereafter though, and until the closure of his business, the husband did very little by way of caring for the children. He was often absent from the home gambling at the Casino and on several occasions he didn’t return home at night at all. This placed an even greater burden on the wife in working, running the household and caring for the children.
The most the husband would do when he was at home was take the child F to school in the mornings. The wife used to take C to a child care centre by bus and then take another bus to work. In the afternoon she would take the bus from work to the child care centre to collect C and then take another bus to collect F and they would travel home together on yet another bus.
There was a period of time, namely from October 1987 to May 1988 when the husband’s mother lived with the parties. She was able to assist the wife in caring for the children during the day.
Following the closure of the husband’s business the wife concedes that the husband did assist her with the care of the children. In particular he did take the children to and from school and transported them to and from sport practices and friends’ homes. However, the majority of the care still fell to the wife to provide. The husband had serious health issues and not only did the wife have to assist him but he was not able to contribute in the same way as he could have if he was healthy.
There is no doubt on the evidence that the wife’s contributions under this heading far outweigh the husband’s contributions.

Post-separation

The wife and the children resided in rented accommodation after leaving the former matrimonial home. The child F is now living independently but the child C is still living in the rented accommodation with the wife. The wife of course has paid the rental and other charges for this accommodation without any assistance from the husband.
In relation to child support the husband has paid the minimum amount of $5.00 per week and left the wife to meet the entirety of the children’s expenses beyond that. To repeat, I find that the husband lied to this court in claiming that he paid $200.00 to $300.00 cash to the wife per month to assist with the costs of the children.
The husband remained living in the former matrimonial home until he sold the same in May 2004. Up until then he made the mortgage repayments and paid all other outgoings including rates and taxes without any contribution from the wife.
The husband, with the assistance of his friend Mr J, undertook the work required and met the costs of obtaining approval to subdivide the former matrimonial home and to build two dwellings thereon. He also undertook various improvements to this home preparatory to the proposed sub-division. He was assisted in this by Mr J, Mr D and his son F.
With the majority of the proceeds of sale of the former matrimonial home the husband then purchased his current home at S. He borrowed $20,000.00 from Mr D to pay the majority of the deposit and he subsequently borrowed money from the Polish Community Credit Union to repay this loan. Later still he increased the mortgage to fund the cost of improvements to that home. He spent $10,000.00 on these improvements including the cost of whitegoods and kitchen appliances. The husband has since met the mortgage repayments that relate to these loans.
Subsequent to separation the wife continued to be the primary caregiver to the children and she was responsible for paying their private school fees.
The husband spent time with the children after the separation. He saw them up to three times a week and including at the wife’s rented accommodation.
When F turned sixteen years of age the husband taught him to drive and helped him obtain his licence. He then provided him with a motor vehicle that he had left over from his business. He repaired it and he has serviced it ever since.
When C turned sixteen years of age in 2003 the husband also taught her how to drive and helped her obtain her driver’s licence. He also gave her a motor vehicle, he repaired this car and he has serviced it ever since.
The husband has helped the children out with money for the purchase of text books and for the registration and insurance on their motor vehicles. Further, he gave a total of $4,500.00 to C when they were in Poland together in 2005.
In 2001, without revealing his true intentions, the husband entered into an agreement with the wife that she would transfer to him her interest in the former matrimonial home and he would pay her $25,000.00. The wife duly transferred her interest but the husband failed to pay the $25,000.00. In fact he only paid $10,000.00 and he repaired a motor vehicle purchased by the parties’ son on behalf of the wife at the suggestion of the husband. The husband says that he paid her $15,000.00 but I do not believe him. I do accept his evidence though that he spent $3,000.00 in repairing the wife’s motor vehicle and that it took him five weeks to complete.
To repeat, after purchasing his current house property the husband spent $10,000.00 on improvements. He also undertook some of the work and labour himself with the assistance of Mr J and his son F.
In relation to this period of time I find that the contributions should be assessed as being equal. Although the wife had the care of the children without specific financial support from the husband, the husband paid her $10,000.00, he met the mortgage payments required in relation to the former matrimonial home, he attended to the work and met the expense required to obtain approval for sub-division of the property and the construction of two dwellings thereon, and he has met the mortgage repayments relative to the amount required to repay the loan of $20,000.00 to Mr D and to meet the cost of improvements to the home at S. In addition, he has undertaken work and labour at that home in order to improve the same.

Conclusion on contributions

The wife’s counsel submitted that the contributions should be assessed at 65%/35% in the wife’s favour. The husband though did not make any submission about this issue save and except to confirm that on his case he has made the far greater contributions and the wife’s application for property settlement should be dismissed.
The summary of my findings is that the initial contributions were inconsequential, the wife has made the greater contributions during cohabitation pursuant to Section 79(4)(a) and (b) of the Act, the wife’s contributions during cohabitation pursuant to Section 79(4)(c) far outweigh the husband, and the post separation contributions are equal.
In weighing up all of the contributions of the parties I consider that they should be assessed at 65%/35% in the wife’s favour. She had to work and contribute her earnings because of the husband’s compulsive gambling and his failure to contribute all of his income to meet the family expenses, and she shouldered almost the entire burden of running the household, attending to the domestic tasks and caring the children. It is quite apparent that the household only functioned because of the input of the wife. Thus, the weighting in her favour is amply justified.

Section 75(2) of the Family Law Act

I now turn as Section 79(4)(e) of the Act dictates to the individual matters to be taken into account pursuant to Section 75(2). The sub-paragraphs that are relevant are (a), (b), (f), (na), and (o).

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

The husband’s case is that he is in an extremely poor state of health. In summary he says he suffers from:
“
·severe diffused coronary artery disease with daily recurring angina chest pain;
·two past instances of myocardial infarctions/heart attacks;
·chronic glomerulo nethritis (inflammation of the kidneys);
·hypertension and high blood pressure;
·hypercholesterolemia;
·recurrent attacks of gout;
·Type 2 diabetes (non-insulin dependent).”
The medical evidence relied upon by the husband supports the presence of most of if not all of these conditions, and this was not seriously challenged by the wife. There is though a question mark over the extent of these conditions and the impact of the same on the husband.
The relevance of the husband’s state of health is whether he is thereby prevented from engaging in appropriate gainful employment, and I will address that issue shortly.
In relation to the wife, just prior to the hearing she had an operation on her feet but she was recovering from that. Apart from this there were no health issues raised in the wife’s case.

(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 husband does not work and he receives a disability support pension. There is no evidence as to how much that pension was at the time of the trial, but in his statement of financial circumstances filed on 16 February 2006 he deposed to it being $218.00 per week.
The husband suffered a heart attack in December 1992 and that led him to close his business. Initially he received sickness benefits, but then from January 1994 he commenced to receive the disability support pension.
The husband says that his state of health prevents him from engaging in appropriate gainful employment. Since 1994 the only work he has done has been to purchase, repair and sell motor vehicles, and to service motor vehicles belonging to his friends and his family. He says that he is still able to perform a basic service on a motor vehicle but he has had to give up restoring motor vehicles. He says his health is deteriorating and his physical ability to work on motor vehicles is becoming “non-existent”.
I find that the husband is able to work on motor vehicles but his state of health certainly prevents him from doing this on a commercial basis. Further, there would be no prospect of him obtaining employment in the industry. He also has no marketable skills in any other area. Thus I proceed on the basis that he has no realistic capacity for appropriate gainful employment.
In relation to the wife, her position changed dramatically just prior to the trial. To repeat, she obtained full time employment as a housekeeper earning $40,000.00 gross per annum with superannuation of $3,500.00 per annum. Thus, clearly she has the capacity for appropriate gainful employment and there will be a significant disparity in their respective incomes.
In relation to the property of the parties I set out the same in paragraph 111 above. However, it must be remembered that that is not a precise schedule of their current assets and liabilities given that there are various add backs and not all liabilities have been taken into account. In any event, the schedule still comprises most of the parties’ current assets and liabilities, and as a result of my findings on contributions the wife is entitled a greater percentage of the net assets than the husband is. Thus there is a disparity here that needs to be taken into account.
Neither party has any financial resources.

(f) 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; …

The husband is currently eligible for and in fact is receiving a disability support pension. To repeat, there is no evidence as to how much the pension is currently but in February 2006 it was $218.00 per week.
It is apparent from the evidence before the court, including the medical evidence, that the husband will continue to receive this pension for the foreseeable future.
On the other hand, the wife was eligible for and did receive Centrelink benefits prior to her securing full time employment. As a result of that employment though she is no longer eligible for these benefits.
Although it is relevant to know the benefits that the husband is entitled to, that does not provide a further basis for adjustment given that the disparity in their respective incomes has been taken into account under sub-paragraph (b).

(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 a marriage;

I have referred already to the child support that the husband has provided in the past, and I have taken that into account in assessing the respective contributions of the parties. There is no longer any liability for child support and thus there is no basis for taking this factor into account here.

(o) Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;

There are two issues here, namely:
156.1The husband remained living in the former matrimonial home after the separation. He met the mortgage repayments and the outgoings until he sold this property in May 2004, and then he used most of the proceeds of sale to purchase the property at S. He was able to do that because in 2001 he took a transfer from the wife of her interest in that property. He paid the wife $10,000.00 and repaired a motor vehicle for her albeit the agreement was that he would pay her $25,000.00.
Initially the property at S was unencumbered, but in December 2004 the husband obtained a loan of $25,000.00 secured by way of mortgage. The husband then made repayments off that mortgage until he increased the same in August 2005 by obtaining a further loan of approximately $25,000.00. He then made the repayments off this increased loan, and all the while of course he met the rates and taxes and other outgoings.
Throughout this time the wife, and initially both children, but now only one child have lived in rented accommodation.
In these circumstances, should there be some adjustment in the wife’s favour for the fact that the husband has had the “advantage” of living in the former matrimonial home and then the home at S while the wife has had to rent?
In my view there should be no adjustment for this circumstance, and to be fair, although the wife’s counsel briefly referred to this in his final address, the wife did not seek a specific allowance for it.
The relevant authority is Lalor & Lalor (1990) FLC 92-164, where the Full Court confirmed that the court has a broad discretion, but the court must look closely at the fact of departure and the financial consequences for each party of such departure. Here, the financial consequences have been well catered for in my assessment of the respective contributions of the parties and in the adjustment that I propose to make for the other relevant factors arising under Section 75(2) of the Act. There is no need or basis for any further adjustment.
156.2The case of Kowaliw & Kowaliw (1981) FLC 91-092 established that financial losses incurred during the marriage should be borne equally by the parties unless one of the parties has deliberately reduced the value of the assets or has acted recklessly, negligently or wantonly with the assets and thereby reduced their value. In either of these circumstances that conduct is relevant under Section 75(2)(o).
This principle is relevant to the gambling losses of the husband, but I consider that the same have been sufficiently taken into account already in my assessment of the respective contributions of the parties and there should be no further adjustment for the same.

Conclusion on Section 75(2) factors

The wife’s counsel submitted that there should be a 5% adjustment in the husband’s favour as a result of the disparity between the parties’ incomes and earning capacities.
The husband, as with the assessment of the respective contribution of the parties, made no specific submission about this, and simply maintained his position that the wife’s application should be dismissed leaving each party to keep what they have.
There should be an adjustment in the husband’s favour, but I consider it should be 10% and not 5% as proposed by the wife. The relevant Section 75(2) factor is the disparity between the parties’ incomes and earning capacities, and their property. There are significant disparities here and they need to be adequately recognised.

Section 79(4)(d), (f) and (g)

Next, I am obliged to consider the effect of my proposed orders upon the earning capacity of either party (Section 79(4)(d)); any other order made under the Act affecting a party to the marriage or a child of the marriage (Section 79(4)(f)); and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide or has provided for a child of the marriage (Section 79(4)(g)).
In relation to the first matter, the evidence does not indicate that the earning capacity of either party will be affected by the proposed orders.
In relation to the second matter, there is no other order to be taken into account.
With the third matter, I have already taken that into account and there is nothing further to be addressed.

Conclusion

The net assets of the parties should be divided 55%/45% in the wife’s favour.

Just and equitable

Pursuant to Section 79(2) of the Act, the court cannot make an order unless the court is satisfied that in all the circumstances it is “just and equitable” to make the order. To assess that I need to stand back and consider the practical effect of my proposed orders (Waters & Jurek (1995) FLC 92-635), JEL & DDF (2001) FLC 93-075; Phillips & Phillips (2002) FLC 93-104).
The net asset pool comprises a monetary equivalent of $328,373.00. Thus, the effect of my decision is that the wife is entitled to net assets to the value of $180,605.00, and the husband is entitled to net assets to the value of $147,768.00.
The wife has had, currently has, and seeks to have the benefit of assets totalling $60,285.00 calculated as follows:
Assets
Furniture and household effects  $7,805.00
1991 Ford Falcon motor vehicle  $1,000.00
2002 Ford Falcon motor vehicle  $11,500.00
Superannuation entitlement with Host Plus  $7,676.00
Money received from the husband  $10,000.00
Term deposit  $12,000.00
Money held in the accounts of the children  $10,304.00
Total  $60,285.00
Liabilities  Nil
The husband has had, currently has, and seeks to have the benefit of net assets totalling $268,088.00 calculated as follows:
Assets
The house property at S  $285,000.00
Furniture and household effects  $3,120.00
1985 Ford Falcon utility  $950.00
Cash at separation  $3,000.00
Amount received from the proceeds of sale of the former
matrimonial home    $6,018.00
Total$298,088.00
Liabilities
Mortgage to Polish Community Credit Union, allow  $30,000.00
Net  $268,088.00
Thus, the husband will have to pay to the wife the sum of $120,320.00.
There was no evidence presented, and there were no submissions made as to the source from which the husband could pay the amount that the wife is entitled to. On the basis though that he retains the house property at S the only option would seem to be for the husband to borrow on the security of that property. However, this is a matter for him. He will have to work through the figures and determine ultimately what he does. In this context I note that he has been able to borrow money from his friend Mr D in the past, and may be that is a source of finance for him. Clearly though, if he is able to borrow from a financial institution, he will have his work cut out servicing the loan required given the current balance of the mortgage, and it is a very real possibility that he may have to sell up.
In the end result, the husband will either retain the property at S but subject to a substantial mortgage or he will sell the property and use the net proceeds to secure alternative accommodation. He says that he has sold his furniture and that his motor vehicle is unregistered. However, I do not necessarily accept this and I find it difficult to believe that the husband is living in the home with no furniture and without the use of a motor vehicle.
With the wife, she will have $120,320.00 to put towards secure accommodation rather than renting, or to invest if she prefers to have the income. She will also have her furniture and household effects, a motor vehicle and a very modest entitlement to superannuation.
On this analysis it could be said that the wife will come out of these proceedings with a better result than the husband, but of course that is not the point here. Any assessment of what is just and equitable must be undertaken in the knowledge of the reasons for the proposed orders. In this instance, a primary reason for the disparity in entitlement is the husband’s gambling habit and his failure to contribute his earnings to the family finances leaving the wife to go out to work and to in effect support the family. There are many other reasons as well which are apparent from what I have said to date in this judgment, and I will not repeat them. However, viewed in this light there is nothing unjust or inequitable in the orders that I propose.

I certify that the preceding 173 numbered paragraphs are a true copy of the reasons herein of the Honourable Justice Strickland

Associate

Date: 5 November 2007.

[2007] FamCA 1348

5 November 2007

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