Stanic and Stanic
[2007] FamCA 1492
•7 December 2007
FAMILY COURT OF AUSTRALIA
| STANIC & STANIC | [2007] FamCA 1492 |
FAMILY LAW – PROPERTY – Settlement in relation to marriage
Family Law Act 1975 (Cth)
| APPLICANT: | Mr Stanic |
| RESPONDENT: | Ms Stanic |
| INDEPENDENT CHILDREN’S LAWYER: | Legal Aid Commission of New South Wales |
| FILE NUMBER: | PAF | 1808 | of | 2003 |
| DATE DELIVERED: | 7 December 2007 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Justice Stevenson |
| HEARING DATE: | 30 & 31 July 2007 1 August 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Schroder |
| SOLICITOR FOR THE APPLICANT: | Coleman & Greig |
| COUNSEL FOR THE RESPONDENT: | Mr Jackson |
| SOLICITOR FOR THE RESPONDENT: | Aitken Lawyers |
| COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: | Ms Reynolds |
| SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: | Ms O'Donnell |
Orders
I make the following orders:
That the husband do all things and execute all documents necessary to effect the sale of the property known as …, H in the State of New South Wales and to distribute the proceeds of sale as follows:
1. in payment of agent’s commission and expenses
2. in payment of legal costs and expenses incidental to the sale
3. in payment of any legal costs and expenses owing by the husband to the solicitors acting on the subdivision of the property
4. in discharge of the Esanda debt
5. in payment of $20,000 to the husband and $10,000 to the wife
6. in payment to each of the parties of one half of the balance then remaining
That the husband do all things and execute all documents required to effect the transfer to the wife of the whole of his interest in the Jeep Wrangler motor vehicle.
That, otherwise, each of the parties is declared to be solely entitled to all items of property in his and her respective possession.
That each of the parties is declared to be solely responsible for all liabilities in his and her respective names, subject to these orders.
IT IS NOTED that publication of this judgment under the pseudonym Stanic & Stanic is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAF 1808 of 2003
| MR STANIC |
Applicant
And
| MS STANIC |
Respondent
REASONS FOR JUDGMENT
the proceedings
The parties to these proceedings are Mr Stanic and Ms Stanic. On 13 November 2003 they consented to orders for settlement of their property. By his Amended Application filed 23 February 2006, the husband sought to vary those orders pursuant to section 79A of the Family Law Act. He also sought to discharge an order that he pay spouse maintenance of $400 per week, to the wife until she received a sum of $1 million pursuant to the property orders.
The husband’s Amended Application also sought parenting orders in respect of three of the parties’ four children, namely:
S born in December 1990 (16)
V born in November 1997 (10) and
P born in April 1999 (8)
The Amended Response filed by the wife on 26 June 2007 sought the dismissal of the husband’s application pursuant to section 79A and an order that he pay her costs of those proceedings. The wife also sought parenting orders in relation to S, V and P.
The parenting issue was settled on the first day of the hearing, when orders were made as follows:
·that the children live with the father
·that V and P spend time with the mother on alternate Saturdays from 9:00am until 5:00pm extending to 10:00am on Sunday once per month, provided that S is present until she turns 18 years of age
·that, when S turns 18, the children’s time with the mother extend until 10:00am on Sunday once per month, provided that they are both present
·that the Independent Children’s Lawyer provide to the father the name and contact details of appropriate agencies to assist the children to deal with the mother’s mental health issues, and the father to organise an appointment for the children with one of those agencies
·that the parents have shared parental responsibility
There thus remained for determination the application of the husband pursuant to section 79A. In final submissions his counsel provided a Minute of Order, which sought to set aside the orders of 13 November 2003. The fresh orders sought would bring about the following result:
· completion of the subdivision of a parcel of land at H
· sale of the allotment to which the husband thereby becomes solely entitled
· the discharge of all presently existing liabilities of both parties
· payment of the balance as to 62.5% to the husband and 37.5% to the wife
The wife filed an Application in a Case on 20 July 2007. She sought orders that the husband pay to her $35,800, being arrears of spouse maintenance, and that he discharge a debt of $41,000 to Esanda Finance, which related to her Jeep motor vehicle. This application was expressed to be an enforcement of the orders made on 13 November 2003. By consent, this application was stood over to the date of delivery of my judgment in the section 79A proceedings.
BACKGROUND
The husband, who is now 52, and the wife, who is now 38, began to live together in 1985 or 1986. They married in May 1987 and separated in 2002. There may have been a period of separation under one roof between March 2002 and December 2002. The wife and the four children moved out of the former matrimonial home on 18 December 2002.
There are four children of the marriage, S (16), V (10), P (8) and their sister T who is now 19. All of the children lived with their mother from December 2002 until April 2004, when T went to live with the husband. S, V and P have lived with their father since 10 November 2005.
At the commencement of cohabitation the husband owned land at E, on which was a partially built house. In 1987 the husband borrowed $52,000 to complete the home and the family lived there until it was sold in 1995.
In 1989 the husband, who works in the automotive industry, started a business known as “[F Pty Ltd]”. The business operated from a factory unit at W, which was owned by his parents. The parties purchased the factory unit for around $90,000 in 1995.
The E property was sold in 1995, at which time it was unencumbered. The husband said that the sale price was $220,000 and the wife said that the figure was $280,000 to $300,000. For reasons which will become apparent, I am of the view that the husband’s recollection of the sale price is more likely to be accurate than is that of the wife.
In 1995 the parties constructed a house on a 5 acre allotment known as the H property. This property was owned by the husband’s parents, Mr & Mrs Stanic Senior. They paid for the building work with the proceeds of sale of the E property and their savings of about $50,000.
The husband’s parents separated in 1998 and commenced litigation concerning settlement of their property. One of the assets was the land at H, upon which the husband and wife had constructed their home. They intervened in the case between the husband’s parents.
This litigation was finalised by consent orders made on 14 August 2000. In summary, these orders provided for a subdivision of the H property into two equal parts, one of which was to contain the house built by the parties. The husband was constituted the registered proprietor of this parcel, subject to a life estate to his father. The husband’s sister, Ms B, was constituted the registered proprietor of the other parcel, subject to a life estate to Mrs Stanic Senior.
In January 2001 the husband’s father died. He and his sister were the executors of his will and beneficiaries in equal shares of his estate. Late in 2002 the husband received an inheritance of approximately $195,000. There was a dispute as to the use which he made of this money. I will consider this issue below, to the extent possible on the material presented to me.
The subdivision was incomplete when the husband’s father died. He maintained that his mother and sister were uncooperative in completing the work, to the point where he commenced litigation in December 2003. These proceedings were resolved by consent orders made on 10 February 2004, which provided that the three parties engage a particular company to undertake the subdivision in accordance with the orders made on 14 August 2000. The orders provided for the costs to be apportioned as 50% to Mrs Stanic Senior and 25% each to the husband and his sister.
On 18 June 2003 the husband and the wife entered into parenting orders by consent. The effect of these orders was that S, V and P live with their mother and spend time with their father each third weekend and for half of school holidays. These orders did not include T, who was 15½ years old at the time and had opted to live with her father.
On 13 November 2003 the financial issues between the parties were resolved by consent orders. In summary, these orders provided as follows:
· the husband was to implement the existing orders for subdivision of the H property and to sell the allotment of which he became the sole registered proprietor
· from the net proceeds the husband was to cause the discharge of the mortgage on the factory unit at W and pay out the overdraft of the business “[F Pty Ltd]”, together with a debt to Esanda Finance in relation to a Jeep Wrangler motor vehicle
· thereafter the wife was to receive $1 million and the husband the balance of the sale proceeds of the new allotment
· the wife was to transfer to the husband her interest in the W factory unit
· the husband and the wife were to become solely entitled to a Harley Davidson motorcycle and the Jeep Wrangler motor vehicle respectively
· the husband was to make repayments to Esanda Finance until the discharge of the Jeep Wrangler debt
· the husband was to pay spouse maintenance of $400 per week until subdivided property was sold and the wife received $1million
In April 2004 the wife and the three girls moved back into the H property, which had been vacated by the husband and T. According to the husband, the three children spent more time with him than provided in the 2003 orders and sometimes lived with him for up to three continuous weeks. On other occasions, he said that he had no contact with the children for up to a month and at these times he did not know their whereabouts. According to the wife, the children saw their father about once per month until December 2005.
In 2005 the husband began to receive disturbing, seemingly irrational text messages from the wife. In May 2005 she said to him: “I am going to kill you and the kids”. He said that she attended his workplace and screamed abuse at him and damaged property. On 10 May 2005, on the application of a police officer, an apprehended violence order was made against the wife for the protection of the husband for 12 months.
On 9 November 2005 the husband attended a meeting with an officer of the Department of Community Services in relation to the children. On 10 November 2005 he received a text message from the wife in these terms:
“now cum and take ur kids. And we will c u in court. 4 the murder of the don, and the murder of […]. its called dna. im sing a memory and airline tickets. 77’: 78’...yet ur dads passport doesn’t indicate that he flew! now do u really want my kids.”
On receipt of this message, the husband arranged for T to collect the three girls from their mother’s home. She did so and they have since lived with their father.
On 19 December 2005 the husband received a voicemail message from the wife, stating: “I am going to pick up the kids”. That afternoon, he attended the children’s school with an officer of the Department of Community Services. He also instructed his solicitors to make an urgent application for orders that the children live with him. An ex parte order was made that day, to the effect that all prior parenting orders were suspended and that the father have continuous contact with the children until 22 December 2005. The wife was present and legally represented on that day and the existing orders were continued until 17 January 2006.
On 23 November 2005 the husband commenced proceedings pursuant to section 79A. The wife filed a Response on 22 December 2005 and the husband filed an Amended Application on 23 February 2006.
On 17 January 2006 a Judicial Registrar heard competing applications for interim parenting orders. It was ordered, pending further order, that the children live with their father and that V and P spend time with their mother each Saturday.
On 6 March 2006 the parties consented to orders for the sale of the factory unit. These orders were expressed to be made pursuant to section 105 of the Family Law Act and provided that the proceeds of sale be applied as follows:
·payment of selling costs
·discharge of the mortgage
·payment of $30,000 to the solicitors acting on the subdivision of the H property
·payment of arrears of spouse maintenance from 5 November 2005 until settlement of the sale
·$200 for registration of the wife’s Jeep
·50% of the balance to the solicitors for each of the parties
The factory unit was sold for $180,000, with settlement taking place on 22 September 2006. $141,600 was applied to discharge the mortgage and about $23,300 was paid to the solicitors acting on the subdivision.
The husband closed his business around the time when the children came to live with him. In his oral evidence he said the business ceased operation in late 2004/early 2005. It may be that he closed the business before the children moved into his care. His evidence was that the wife’s behaviour made it difficult for him to operate the business in 2005 and that his responsibility to care for the children made it impossible for him to continue after November 2005.
During the hearing the husband said that the solicitors acting on the subdivision had advised him during the previous week that the process was in its final stages. It should now be the case that he is the sole registered proprietor of one of the two allotments.
The Case for the Applicant Husband on the Section 79A Application
The husband contended that circumstances of an exceptional nature have arisen since the making of the orders on 13 November 2003 in relation to the care, welfare and development of the children such that they or he would suffer hardship if the orders are not varied or set aside. His case rested on section 79A(1)(d) which provides as follows:
Section 79A(1)(d): in the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order;
The Case Outline filed on behalf of the husband expressed the alleged “circumstances of an exception nature” as follows:
“…..the mother has suffered an illness to the extent that she has no capacity to care for the children. The children have been placed in the father’s care which has resulted in him
· ceasing to have an income so as to care for the children
· losing assets so as to meet debt
· further there has been delay in the implementation of the orders for subdivision not due to the actions of either party which has resulted in the husband having to bear the expense of the subdivision solely. Due to his not being able to work to care for the children he has had to liquidate assets to pay for the subdivision.”
This Case Outline expressed the alleged “hardship” as follows:
“If the orders are not set aside the result for the children would be that they would be cared for by a parent for the vast majority of the time without assets, without income and at the same time the other parent would have 100% of the assets. The residential parent would not have the financial capacity to meet their housing or day to day needs.”
Counsel for the husband submitted that the change in the children’s circumstances was “not created by the husband nor contemplated by the wife” and “only contemplated by the husband early in 2005”. He drew a comparison between the circumstances of this case and the reported decision of Sandrk and Sandrk (1991) FLC 92-260.
In Sandrk orders for property settlement were made on 22 May 1989, when two children aged 9 and 7 were living with their mother and spending little or no time with their father. From about June 1989, however, the children began to see their father on alternate weekends. They spent some time with him in the August/September 1989 school holidays and refused to return to their mother. On 5 September 1989 the father was granted “continuous contact”, pending further order.
On 8 September 1989 it was ordered that the children spend Monday to Friday with their mother and each weekend with their father. They ran away from school on 11 September 1989 and stayed with their father from that point. His Honour Justice Gee said (at p.78,748)
“The significance of those incidents is that it appears that neither party was prepared for these events to happen. The evidence establishes that it was because the boys wished to change custody and that they did so. There is a suggestion, so far as their comments are concerned, that it may have been due to what they perceived behaviour of B[their mother’s companion] towards them. Be that as it may, they said they do not wish to return and they voted with their feet and since then they have remained with the husband and they have only seen the wife on one occasion.”
In the case for the husband it was emphasised that he in no way initiated or caused the change in the children’s living arrangements. It was stressed that neither party contemplated that the children would move from their mother to live with him, when property orders were made on 13 November 2003. It was contended that the fact was that the change in the children’s circumstances came about solely because of the wife’s mental illness and resulting incapacitation.
Essentially the husband’s argument was that the present situation is distinguishable from an instance of children electing to change their residence after the making of property orders, which is not an unusual event. The circumstances in which these three children moved from the care of their mother to their father were outside the contemplation and beyond the control of both parties. It was said that the requirement of “exceptional” circumstances is thus fulfilled.
The contention as to “hardship” was that most, if not all, of the presently available net assets of the parties will be vested in the wife if the orders of 13 November 2003 stand. The husband’s capacity to provide proper accommodation and day-to-day financial support for the children will be seriously compromised due to a lack of capital and the fact that he has no income other than social security benefits. He maintained that his responsibility to care for the children has resulted in the closure of his business and an increase in his level of debt.
The Case for the Respondent Wife on the Section 79A Application
The wife sought the dismissal of the husband’s application to vary or set aside the 2003 orders. The contentions on her behalf seem to be as follows, in summary:
· a simple change in the arrangements for the care of children is not sufficient to constitute “circumstances of an exceptional nature”
· the husband contemplated a change in the children’s residence in May 2005 but “nothing happened until November 2005”
· the evidence did not establish “a real change in the husband’s financial circumstances”
· the husband has made no real or satisfactory attempts to improve his financial position by engaging in paid employment
It was thus apparent that the wife disputed that the husband had established “circumstances of an exceptional nature” and that he and/or the children would suffer “hardship”.
Circumstances of an Exceptional Nature
In Simpson and Hamlin (1984) FLC 91-576 the Full Court said:
“What amounts to exceptional circumstances is very much a question of fact and degree.”
Their Honours agreed with the Trial Judge’s reasoning that:
“The occurrence of a change in the responsibility for the daily care and control of children of a marriage, after the making of a property order under section 79 of the Family Law Act can not be held of itself to be an unusual circumstance. The ordinary vicissitudes of life coupled with the difficulties that parties to marriage often experience in the task of restructuring their lives following the dissolution of their marriage and the division of their assets, and their obligations to the support of each other and the support, care and control of their children, frequently create situations in which it is desirable having regard to the children’s welfare that such a change occurs.”
The evidence as to the circumstances in which the children came into the care of their father in November 2005 was scant, after proper objections were taken to his affidavit sworn on 1 December 2006. The evidence so excluded could have been adduced in proper form. There can be no doubt that the task of counsel for the husband was made more difficult by the necessary exclusion of this material from his affidavit.
After objections were taken to the affidavit of the husband, the evidence established the following:
·he “became increasingly concerned about the behaviour of the wife” at an unspecified time but, certainly, in 2005
·The wife attended his workplace and “screamed abuse [at him] and damaged property” at an unspecified time but on several occasions
·on 10 May 2005 an apprehended violence order was made for his protection against the wife, on the application of a police officer.
·the apprehended violence order followed “ongoing harassing and threatening phone calls” from the wife at his workplace and on his mobile telephone
·in about May 2005 the wife said to him: “I am going to kill you and the kids”
·throughout 2005 until about March/April 2006 he received numerous text messages from the wife which were “frequently grabbled [sic] and illogical”, for example on 23 March 2006: “Mr [X] missing since 1979. [V] u done him in 1989 Dubbo zoo and clubhse. [C] s dead. That leaves u and I met Mr [X] in 1986. Ur worth 27 million, the 4 men in the oval”
·on 9 November 2005 he attended a meeting with officers of the Department of Community Services at the request of Mr A, a caseworker assigned to the family
·on 10 November 2005 he received from the wife the text message referred to above, which began: “now cum and take ur kids” and he then sent T to collect the three girls from their mother’s home
·on 19 December 2005 he received a voicemail message from the wife, stating: “I am going to pick up the kids” and he then attended the children’s school with two DOCS officers
·he was then interviewed by two detectives but “declined to press charges against the wife because in my experience should I have done so her behaviour would have deteriorated and the conflict escalated. This behaviour includes ongoing and harassing and threatening phone calls and on occasions attendance at my residence and workplace. On these occasions the respondent mother behaves in a loud, aggressive manner screaming abuse at me in front of others”
·after interim orders were made on 17 January 2006 V and P spent time with their mother each Saturday, with no overnight time until final orders were made by consent on 30 July 2007
·The husband first contemplated that the children may live with him in May 2005, when the wife said to him: “I am going to kill you and the kids”
·The wife did not contemplate that the children would move to live with the father at the time when the orders were made on 13 November 2003.
I am satisfied, and I find, that any change in the children’s circumstances was completely outside the contemplation of either party when the orders for property settlement were made on 13 November 2003. I accept that the husband first had concerns about the wife’s ability to care for the children in 2005 and, in fact, his evidence in this regard was unchallenged. It seems that officers of the Department of Community Services played a pivotal role in the change of the children’s circumstances. The available evidence satisfies me that the husband did not initiate or cause a reversal in the children’s living arrangements.
As I have said, I am satisfied that the change in the children’s circumstances was not within the actual contemplation of either party when the orders were made on 13 November 2003. I am satisfied further, and I find, that the change could not reasonably have been contemplated by the parties or either of them at that time, when viewed on an objective basis. It seems to me that the events which led to the children’s move to live with their father could not be described as part of the “ordinary vicissitudes of life” which occur after the breakdown and restructure of families. In the particular circumstances of this case, I find that the circumstances which have arisen in relation to the care, welfare and development of the children, since the orders of 13 November 2003, are “exceptional” within the meaning of section 79A(1)(d).
HARDSHIP
To consider the issue of “hardship”, it seems to me that I need some appreciation of the effect on each of the parties of the implementation of the existing orders. There are a number of difficulties with this exercise. For example, there was no evidence before me of the likely selling costs of the H property. These costs are likely to be substantial, given the agreed value of $1.1million. Further, there would probably be substantial argument about the implementation of the orders in light of events which have transpired in the intervening four years.
Order 6 of 13 November 2003 provides as follows:
“6. That, as between the husband and the wife, and subject to the above orders, the husband and the wife shall each be solely entitled to:
(a) all personal property now in his or her respective possession or control
(b) all shares, debentures, units in unit trust, bank, building society or credit union accounts staying in his or her sole name respectively
(c) any interest in any life insurance policy or superannuation fund standing in his or her sole name respectively”
The husband sold shares for $50,000 to $55,000 at an unknown time after the date of the orders. In the absence of any documentary evidence as to the sale price, I will adopt a figure of $52,500 for the purposes of the present exercise.
The Harley-Davidson motorcycle was sold by the husband in mid-2005 for $15,000. The sale proceeds of the motorcycle and the shares may be treated as assets in the hands of the husband.
As noted above, the factory unit at W was sold by the husband in September 2006, and the net proceeds of about $23,300 were paid to the subdivision solicitors. No proceeds remained to be distributed to the solicitors for the parties, in accordance with the orders made on 6 March 2006. There is thus no amount to be included as an asset for the present purposes.
The business “[F Pty Ltd]” has ceased operation. The mortgage, which included the overdraft, was discharged when the factory unit was sold in September 2006. Accordingly, these amounts would not be deducted before the sale proceeds of the H property are distributed between the parties.
The Esanda debt, for the Jeep Wrangler motor vehicle would be discharged from the sale proceeds in accordance with order 1(d). The payout figure is about $41,000.
The balance sheet would thus seem to be approximately as follows, for the purpose of the present exercise, if the proceeds of sale of the shares and motorcycle are added back:
Assets
1.
The H property
$1,100,000
2.
Commonwealth Bank account (H)
$80
3.
1994 Mitsubishi motor vehicle (H)
$1,200
4.
2001 Jeep Wrangler motor vehicle (W)
$5,000
5.
Proceeds of Sale of Shares (H)
$52,500
6.
Proceeds of Sale of Harley Davidson motorcycle (H)
$15,000
TOTAL:
$1,173,780
Liabilities
1.
Esanda Finance
$41,000
Net Pool $1,132,780
The wife would receive the Jeep motor vehicle and $1million from the sale proceeds of the H property. She would thus take about 89% of the net pool as calculated above. She has current debts totalling $24,495. The reality of the wife’s financial position thus would be that she would have net liquid funds of approximately $975,000 and a motor vehicle. There was no evidence of outstanding legal fees.
The husband would bear the whole of the selling costs and the Esanda debt, as these amounts would be deducted before the proceeds of sale are distributed between the parties. The wife would receive a sum certain of $1million and the husband only what remained of the balance of $100,000, after payment of the selling costs and the Esanda debt. The value of the H property means that the selling costs would be substantial. It is thus probable that the husband would receive little or nothing from the sale proceeds. Notionally, he would receive the proceeds of sale of the shares and the motorcycle and he would keep his car and bank balance. He would notionally receive, at best, approximately 11% of the net pool as calculated above.
The husband currently has liabilities totalling about $36,122, which include outstanding school fees. He has spent all of the money which he received from the sale of the shares and the motorcycle. The reality of his present situation is, therefore, that he has little or no capital and significant debts. The implementation of the existing orders may improve his situation, at best, by allowing him to pay out his debts. He would still have little or no capital with which to provide for himself and the children.
The husband has an ongoing responsibility to provide accommodation and financial support for S, V and P. There is no real prospect at all that he will receive child support from the wife. Since the children went to live with their father, her employment has been limited to a casual job between November 2006 and April 2007. She worked at a business known as “[N Company]” for two days per week initially and then also on Saturdays. Her income now consists solely of social security benefits.
The husband also relies on social security benefits. It may be that he could make greater efforts to find suitable paid employment but the reality is that the care of the children falls entirely to him. They spend only three Saturdays and one overnight period per month with their mother.
Having regard to these matters, I am satisfied and I find that exceptional circumstances have arisen in relation to the children, since the making of the November 2003 orders, which will result in hardship for both the husband and the children if those orders are not set aside or varied. The stark reality is that the parent with whom the children spend very limited time will be left with practically the whole of the presently available assets, whereas the parent with almost sole responsibility for their care will have no capital base and, at best, relief from present debts.
I am thus satisfied as to “exceptional circumstances” and “hardship”. It is not sufficient for an applicant for orders pursuant to section 79A to establish that circumstances have arisen, since the making of an order, relating to the care, welfare and development of a child which will cause hardship to the child or the carer if the order is not set aside or varied. It is then necessary that I consider, in the exercise of my discretion, whether the orders of 13 November 2003 should be set aside or varied.
The Exercise of Discretion
In Simpson and Hanlon the Full Court said:
“The importance of bringing and end to litigation remains an important consideration and the remarks of Mason J remain applicable to paragraph D mutatis mutandis. To paraphrase His Honour’s remarks: ‘it is not sufficient that it appears that circumstances have arisen of an exceptional nature resulting in hardship to the applicant, the court must consider in the exercise of its discretion whether that hardship is of such a serious nature and results in such inequity that it can only be rectified by the extreme step of setting aside or varying an existing order of the court…..’”
It seems to me to be obvious that the existing orders create hardship for the husband and the children. There is little or no prospect of the hardship being corrected by any means other than a variation or setting aside of the existing orders, for example, by an order for lump sum child support. The wife’s own unfortunate situation means that she is unlikely even to be in a position to pay a modest amount of periodic child support, let alone a lump sum.
In my view, it is relevant to the exercise of discretion that the husband commenced the present proceedings only two weeks after the children came to live with him. He could hardly have taken this action any more quickly. There thus is no question of unexplained delay on his part.
I regard as relevant, also, that neither party has restructured their financial affairs in reliance on the existing orders. Perhaps the sole explanation is the delay in finalisation of the subdivision. The reality is that these financial decisions are yet to be made by the husband and the wife.
I am acutely conscious of the sound and strong public policy considerations of bringing an end to litigation. I am also bound, however, to consider the need to do justice between the husband and the wife. In the particular circumstances of this case, I conclude that the inequity created by the existing orders is so serious that there should be a setting aside and that fresh orders should be made. Certainly, I do not take this step lightly.
I regard it as appropriate to set aside, rather than vary, the existing orders for two reasons. Firstly, the financial events which have transpired in the intervening four years must be carefully considered, if justice and equity between the parties is to be achieved. Secondly, a relatively significant degree of intervention in the existing orders is necessary to rectify the imbalance which currently exists.
APPROACH TO SETTLEMENT OF PROPERTY
According to guidelines established through a series of leading decisions, the Court is required to determine the following matters on the evidence:
·firstly, the assets, liabilities and financial resources of the parties to the marriage are to be determined
·secondly, all relevant contributions of each of the parties, within the meaning of paragraphs (a) to (c) of section 79(4) must be identified and weighed against each other
·thirdly, the matters in paragraphs (d) to (g) of section 79(4), particularly paragraph (e) which takes up by reference the provisions of section 75(2) must be considered and a determination made as to what, if any, alteration should be made to the entitlements of the parties earlier assessed on account of contribution
·finally, an order under section 79 must not be made unless the Court is satisfied that, in all the circumstances, it is just and equitable to make the order.
THE ASSETS
The parties agree as to the identity and value of the following assets:
1.
The H property
$1,100,000
2.
Commonwealth Bank account (H)
$80
3.
Mitsubishi motor vehicle (H)
$1,200
4.
Jeep Wrangler motor vehicle (W)
$5,000
The wife contended that the following amounts should be added back to the list of assets and treated as premature distributions to the husband:
1.
Proceeds of sale of shares
$55,000
2.
Part of the husband’s inheritance
$135,000
3.
Increase in the mortgage on the factory unit
$135,000
Proceeds of Sale of Shares
As noted above, the husband’s evidence was that he sold certain shares for $50,000 to $55,000 at an unspecified date after the orders of 13 November 2003. In the absence of any documentary evidence, I will adopt as the sale price the median figure of $52,500.
The only evidence from the husband as to the sale of shares came in cross-examination. In his Financial Statement sworn on 6 May 2003 he disclosed shares beneficially owned by him to the value of $16,000. In oral evidence he said that he received $50,000 to $55,000 from the sale of shares. He said that he used these funds to pay spouse maintenance and to meet his expenses and as “money for her to get another place”.
In her affidavit, the wife acknowledged that she received $10,000 from the husband pursuant to interim orders made by consent on 18 June 2003. These orders provided, inter alia, that the husband pay to her an amount of $10,000 as “part property settlement” within 14 days. The wife said that she used this money for rent and to meet living expenses. It may be that these funds came from the proceeds of sale of shares but the state of the evidence makes it impossible for me to determine whether that was so.
Realistically, I can only speculate about what happened to the proceeds of sale of the shares. It may well be that the wife received some of the proceeds. She conceded that she received $10,000 from the husband, which she used to purchase furniture and pay a bond and rent in advance. The husband said that he used part of the sale proceeds to meet living expenses and pay spouse maintenance. Otherwise, the state of the evidence makes it impossible for me to determine precisely the fate of this money. In these circumstances, it seems to me that it would be dangerous to add back the proceeds of sale of the shares and I do not propose to do so.
The husband’s Inheritance
In late 2002 the husband received an inheritance of approximately $195,000 from the estate of his father. He said that he used the money as follows:
·
purchase of a Harley-Davidson motorcycle
$20,000
·
payment out of the overdraft of the business “[F Pty Ltd]”
$30,000
·
payment of an AGC debt for the construction of a swimming pool at the H property
$10,000
·
payment out of the mortgage on the factory unit
$25,000
·
payment of a pre-separation American Express debt
$18,000
·
payment to the wife for bond and rental
$5,000
·
cash payment to the wife
$40,000
·
cash payment to the wife
$50,000
Total:
$198,000
The wife agreed that the husband made the following payments from his inheritance:
·
purchase of the Harley-Davidson motorcycle
$20,000
·
payment out of the business overdraft
NK
·
payment of credit card debts
$30,000
As noted, she conceded that she received an amount which she used for living expenses, which she recalled to be $10,000.
The wife denied that she received a total of $90,000 in cash from the husband’s inheritance. She said nothing about the husband’s contention that he discharged the mortgage on the factory unit. Her counsel maintained that this amount should be added back in the absence of documentary evidence of this payment. She said that the husband’s father provided an unspecified amount for the swimming pool, which I infer was a denial that he paid out the alleged AGC debt. She said, further, that the husband purchased shares from his inheritance but she gave no details.
No documents were tendered to corroborate either party’s evidence as to the use made of the husband’s inheritance. In particular, there was no documentary evidence in the husband’s case to corroborate his allegation of two substantial cash withdrawals from banks and payment to the wife of amounts of $40,000 and $50,000. No documents were tendered in the case for the wife to support her allegation that the husband purchased shares from his inheritance. No written evidence was provided to establish how much was paid by the husband to discharge the business overdraft and the mortgage on the factory unit.
I should note, at this point, that the husband gave some explanation for his failure to produce financial documents such as bank records. He said that his financial documents “were all left in the house and vanished”. The wife conceded that she removed some documents from the home and said: “I took documents before the separation – I believed they were mine as well as his. I gave these documents to my former solicitor.”
In her affidavit the wife said that the husband used part of his inheritance “in payment of the Commonwealth Bank loan on [F Pty Ltd]”. It was not clear whether she was referring to the mortgage on the factory unit or the business overdraft.
It seemed to be common ground that the husband used part of the inheritance to discharge credit card debt. The wife said that she recalled a pre-separation debt to American Express, which the husband claimed to have paid out from the inheritance. I have no reason to doubt his evidence that he paid an American Express liability of $18,000 from this source, in light of the wife’s concession.
I have no reason to doubt the husband’s evidence that he paid $30,000 to discharge the business overdraft and $25,000 to pay out the mortgage on the factory unit. I have no reason to doubt his evidence that he paid out an AGC debt of $10,000 which was incurred for the construction of the swimming pool at the H property. It seemed that he took the opportunity created by his inheritance to reduce his overall level of debt.
The evidence given by the husband as to how he used the inheritance from his father seemed to me to be inherently credible, with the possible exception of his allegation that he made two cash payments to the wife totalling $90,000. In summary, he said that he used the inheritance money to discharge debts and to make financial provision for the wife when she and the children moved out of the former matrimonial home. As well, he purchased a Harley-Davidson motorcycle.
The husband’s evidence that he made two payments of $40,000 and $50,000 in cash to the wife gives rise to suspicion. It may seem fanciful that the wife would elect to take such a large sum in cash, rather than by way of a deposit into a bank account. On the other hand, this story would seem to be a very strange concoction on the part of the husband.
The husband said that the parties were required to provide 24 hours notice to the banks for these cash withdrawals. He said the first withdrawal of $40,000 took place at the Commonwealth Bank at D and second of $50,000 at the Commonwealth Bank at M.
$90,000 is a significant amount of money. It would have been possible for the husband to have obtained documents from the relevant banks to corroborate his evidence of the two cash withdrawals. No reason was offered for the failure to offer any corroboration of his evidence of these alleged payments of cash. I am thus left only with the word of one party against the other and, in these circumstances, I consider it dangerous to make a finding that the wife received $90,000 in cash from the husband’s inheritance. I will not add back this amount as a premature distribution to the wife. Neither will I add this amount back as an asset in the hands of the husband. He received his inheritance five years ago and has since been required to shoulder significant financial burdens, with no assistance from the wife.
I accept that the wife received an amount of $5,000 when she left the former matrimonial home, which also came from the inheritance. Clearly, she used these funds to meet expenses of herself and the children and I will not add back this amount.
I will add back an amount of $10,000 paid by the husband to the wife pursuant to the interim orders made on 18 June 2003. These orders stated specifically that this payment was “by way of partial property settlement”. Further, I will add back to the list of assets the proceeds of sale of the Harley-Davidson motorcycle. The husband sold the motorcycle in 2005 and has had the benefit of this money.
I will not include in the list of assets the wife’s household contents, to which she ascribed a value of $2,000 in her Financial Statement. The husband entered “nominal” as to the value of his household contents in his Financial Statement. In my view it would be unfair to the wife to include her contents of $2,000, on the basis of an admission against interest, and to omit the husband’s similar property only because he failed to provide an estimate of its value.
The Increase in the Mortgage on the Factory Unit
In his Financial Statement sworn on 6 May 2003 the husband estimated the mortgage payout figure at $6,000. By the time the property was sold in 2006 the mortgage had increased to $141,600. The wife alleged that the increase of $135,000 should be added back to the list of assets and treated as a premature distribution to the husband.
The explanation provided by the husband for this increase in the level of the mortgage debt was relatively scant. Effectively, he said that he could not afford to make the repayments and refinanced early in 2006. Further, he said that the wife’s behaviour made the ongoing operation of his business impossible. His unchallenged evidence was as follows:
“Following the 2003 orders I was unable to continue operating my business. [the] respondent wife would arrive at my premises and harass me and my staff and customers. She would abuse my customers and made rambling statements about people getting the ‘brown chair’. She would say that they were not helping her with her problems and ramble on about the right hand of God and make nonsensical statements. She would be loud and attract attention to herself and create an incident by her arrival. She would arrive suddenly and leave suddenly without explanation. Following the orders I continued as much as possible to make payments towards our outstanding debts.”
In my view, the reality was that the husband found himself in a very difficult financial position after the children suddenly came into his care late in 2005. He had practically no opportunity to accommodate the demands of his business with his responsibility to care for the children. There was no respite while the children were in the care of the wife, as their time with her was very limited.
It seems to me that it would be inappropriate and unfair to treat the increase in the mortgage debt as a notional asset which has been distributed to the husband. He was trying to cope with a difficult situation when the debt increased, in circumstances where he received no financial assistance at all from the wife. He was left with responsibility to service all of the debts of the parties, as well as make payments of spouse maintenance. I do not propose to add back this sum of $135,000 to the list of assets.
I thus find the assets of the parties to be as follows:
1.
The H property (H)
$1,100,000
2.
Commonwealth Bank account (H)
$80
3.
Mitsubishi motor vehicle (H)
$1,200
4.
Jeep motor vehicle (W)
$5,000
5.
Proceeds of sale of the Harley-Davidson motorcycle (H)
$15,000
6.
Payment to the Wife pursuant to orders of 18/6/03 (W)
$10,000
TOTAL:
$1,131,280
LIABILITIES
The liabilities were agreed as follows and I so find:
1.
Esanda Finance
$41,000
2.
MasterCard (H)
$437
3.
GE MasterCard (H)
$12,990
4.
GE Buyers Edge (H)
$4,800
5.
Australian Taxation Office (H)
$13,095
6.
Unpaid School Fees (H)
$4,800
7.
St George Visa Card (W)
$5,008
8.
Integral Energy (W)
$4,837
9.
NSW Police Fine (W)
$1,350
10.
Loan from Mr G (W)
$7,800
11.
Loan from Ms R (W)
$5,500
TOTAL:
$101,671
There was a dispute as to whether these liabilities should be taken into account, for the purpose of determining the value of the net pool of property. This issue was rendered more difficult by the paucity of evidence in relation to the circumstances and time at which these various liabilities were incurred.
On behalf of the wife, it was contended that all of these liabilities should be left out of account. It was submitted on behalf of the husband that all of the present liabilities of each of the parties should be taken into account, as they either existed at the date of separation or have since been incurred in reasonable circumstances.
As far as I can tell, neither party has incurred liabilities in unreasonable circumstances since the separation. I make that observation bearing in mind the difficulties in which the state of the evidence leaves me. It seems to me that the most appropriate course is to take into account all of the liabilities of each of the parties, when the value of the net pool of property is determined.
FINANCIAL RESOURCES
There was no suggestion that either party possesses a financial resource.
THE CONTRIBUTIONS OF THE PARTIES
At the commencement of cohabitation in 1986 the husband owned the property at E, on which there was a partially constructed house. It was agreed that he borrowed $52,000 to complete the building of the home and that this loan was paid off between about 1986 and 1995.
Both parties were engaged in full time employment when they began to live together. The wife worked in administration and she also had a part-time job in retail. The husband was in full time employment in the automotive industry, until he started his business in 1989.
The wife continued to work in administration until 1987, when she became pregnant with the parties’ first child T. She returned to casual employment in retail after T’s birth and resumed her job in administration between 1988 and 1989.
From 1991 the wife did paid childcare work. This job paid about $16 per hour and her average work rate was about 25 hours per week.
The wife left the paid workforce after the birth of the parties’ third child in December 1990. She then devoted herself to the running of the household and the care of the children.
The husband operated his business from a factory unit at W, which was owned by his parents. The parties purchased this property in 1995 for $90,000, most or all of which was borrowed from the Commonwealth Bank.
The E property was sold in 1995 for $225,000, according to the husband, or $280,000 to $300,000, according to the wife. In any event the sale proceeds were used to construct the house on land at H owned by the husband’s parents. The evidence did not reveal the total cost of the construction of the house or the precise source of this money. The best indication is that the funds came from the parties’ joint savings of about $50,000 and the proceeds of sale of the E property, as the husband alleged.
In 1998 the husband’s parents separated and his father moved into the parties’ home. It seems that he stayed with them until about 2000, when he purchased a home following a property settlement with his ex-wife.
The wife said that she cooked, cleaned, washed and ironed for the husband’s father while he lived in the parties’ home. She said also that she helped him with his family law proceedings by attending appointments with his solicitor, as he had difficulty speaking English. Her evidence as to these matters was unchallenged.
The wife said, further, that she cared for the two children of the husband’s first marriage, J and L, born about 1981 and 1976 respectively. Her unchallenged evidence was that these children spent alternate weekends with her and the husband and that J lived full time with them between about 1993 and 1996.
In summary, I am satisfied that the parties adopted traditional and complementary roles during their relationship. The husband was the major income earner and the wife was the homemaker and primary carer for the children. Her domestic role expanded at times to include responsibility for the husband’s father and the children of his first marriage.
Both of the parties made their income available for the acquisition of their assets and the support of the family. The wife’s opportunity to earn income from paid employment was necessarily limited by the demands of her role as homemaker and primary carer for the children. Similarly, the husband’s full time work curtailed his opportunity to care for the children and assist with the household tasks.
On behalf of the husband, emphasis was placed on his initial contribution of the E property. It was submitted that this contribution justifies a finding of 65% in his favour.
In my view, the difficulty with this submission is that the E property was encumbered at commencement of cohabitation and the parties spent the next 8 years paying off this mortgage. It was not clear whether there was an encumbrance on the property before the husband borrowed $52,000 to complete the construction of the house. There was no evidence of the value of this property at the commencement of cohabitation, which means that there can be no calculation of the equity which then existed.
The relationship endured for 16 years and four children were born to the parties. The wife made significant contributions during the relationship, which included her assistance to the husband’s children and his father. In these circumstances, I regard a finding of 65% contribution in his favour as unwarranted and unjustified.
It was further submitted on behalf of the husband that his inheritance should be treated as “after acquired property”, to which the wife made no contribution. It is true the husband received his inheritance in the same year as the parties’ separation. As I have said, however, the wife gave unchallenged evidence of her assistance of various kinds to the husband’s father between 1998 and 2000.
Having regard to all of the contributions made by both parties and weighing these factors against each other, I conclude that there is a slight imbalance in favour of the husband. In summary, I have regard to his initial contribution of the E property and the fact that he received his inheritance very late in the marriage. I find that contribution should be assessed at 55% to the husband and 45% to the wife.
SECTION 75(2) FACTORS
I have considered all of the factors set out in section 75(2) but I will refer only to those matters which appear to me to be relevant to the present proceedings.
section 75(2)(a): the age and state of health of each of the parties
The husband is 52 and the wife is 37 years old. There was no evidence that the husband suffers from any health problems. I have referred already to the evidentiary problems as to the wife’s health but the husband’s counsel said in submissions words to the effect:
“[The husband] accepts that [the wife] has difficulties and needs funds to house herself without a mortgage.”
Section 75(2)(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 maintained that his responsibility to care for the children prevents him from engaging in paid employment. I accept that his work opportunities are curtailed in this way but I am of the view that he could make greater efforts to find suitable paid employment.
Since the separation the wife has had only a casual job at N Company, which ceased in April 2007. Her unchallenged evidence was that part of the reason for the termination of her employment was that she made a mistake in failing to collect in excess of $200 for a sale from a customer. Another difficulty was that she was required to work on Saturdays and could not negotiate with the husband to change her time with the children to Sundays.
Each of the parties currently relies on social security benefits as their sole source of income. In my view, there is a much greater prospect that the husband will return to the paid workforce than is the case with the wife.
section 75(2)(c): whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
The husband has practically sole responsibility to provide care for the children of the marriage. The youngest two children, P and V, are only 8 and 10 years old respectively. As recently as 30 July 2007, final orders were made by consent which provide that V and P spend very limited time with their mother. Nothing in the evidence indicated that the children’s time with their mother is likely to become more substantial in the foreseeable future.
section 75(2)(o): any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
On the available evidence, the husband will be required to shoulder all responsibility for the children’s financial support. Nothing suggested that the wife will be able to make even a modest contribution by way of periodic child support.
Each of the parties will be credited with notional assets which no longer exist. These amounts are $15,000 for the husband and $10,000 for the wife.
All of these matters persuade me that a modest adjustment in favour of the wife is warranted on account of section 75(2) factors. A concession to that effect was made by counsel for the husband, who submitted that an adjustment of 2.5% in her favour was warranted. In my view, an adjustment of 5% would more adequately address her needs, when balanced against the husband’s responsibilities for the children.
CONCLUSION
I thus find that the net pool of property should be divided equally between the parties. The Esanda debt clearly existed at the time of the separation and will be discharged from the proceeds of sale of the H property, prior to the distribution of the remainder between the parties. Otherwise the parties will be responsible for payment of the debts in their respective names.
Orders to this effect will leave each of the parties with liquid funds from which they can discharge their debts and purchase a home, if they so wish. In effect, each of the parties will have the opportunity for a “fresh start”.
The husband would take the following assets:
1.
Commonwealth Bank account
$80
2.
Mitsubishi motor vehicle
$1,200
3.
Proceeds of sale of Harley Davidson motor cycle
$15,000
$16,280
and he would have the following liabilities:
1.
Mastercard
$437
2.
GE Mastercard
$12,990
3.
GE Buyers Edge
$4,800
4.
Australian Taxation Office
$13,095
5.
Unpaid school fees
$4,800
$36,122
He would thus have real and notional property with a negative value of $19,842 before he receives a distribution from the sale of the H property.
The wife would take the following assets:
1.
Jeep motor vehicle
$5,000
2.
Payment from husband pursuant to orders of 18/6/03
$10,000
$15,000
and she would have the following liabilities:
1.
St George Visa card
$5,008
2.
Integral Energy
$4,837
3.
NSW Police fine
$1,350
4.
Loan from Mr G
$7,800
5.
Loan from Ms R
$5,500
$24,495
She would thus have real and notional property with a negative value of $9,495 before she receives a distribution from the sale of the H property.
The value of the net pool of property is $1,029,609, of which 50% is $514,805. To achieve an equal division, it will be necessary for the husband to receive $19.842 and the wife $9,495 from the net proceeds of sale of the H property before the distribution of the balance between them. These payments would come after the discharge of the Esanda debt and, obviously, payment of the costs of sale. There was no evidence as to whether there are any outstanding legal costs due to the solicitors acting on the subdivision. Any such costs should be paid prior to the distribution of the sale proceeds between the parties.
These calculations are imprecise because I was given no evidence of the costs of sale of the H property. For that reason, I will round off the adjustments referred to in paragraph 126 to $20,000 to the husband and $10,000 to the wife. The result will be that each of the parties will probably receive liquid funds in excess of $500,000 from the proceeds of sale of the H property. I cannot be any more precise because of the lack of evidence of the sale costs. This outcome seems to me to be just and equitable in all of the circumstances known to me.
I certify that the preceding one hundred and twenty nine (129) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson
Associate
Date: 7 December 2007
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