Stretton and Midgen
[2008] FMCAfam 1175
•17 October 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| STRETTON & MIDGEN | [2008] FMCAfam 1175 |
| FAMILY LAW – Property – short marriage – financial relationship prior to cohabitation and marriage – in relation to superannuation whether one pool or two pool approach should be used. |
| Family Law Act 1975, ss.90AE(1)(a), 79(4), 75(2) |
| Ferrero & Ferrero (1993) FLC 92-335 C v C (2005) 33 Fam LR 414 |
| Applicant: | MS STRETTON |
| Respondent: | MR MIDGEN |
| File Number: | PAC 6949 of 2007 |
| Judgment of: | Henderson FM |
| Hearing date: | 10 October 2008 |
| Date of Last Submission: | 10 October 2008 |
| Delivered at: | Albury |
| Delivered on: | 17 October 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Sansom |
| Solicitors for the Applicant: | Watts McCray Lawyers |
| Counsel for the Respondent: | Mr Campton |
| Solicitors for the Respondent: | Swaab Attorneys |
ORDERS
The wife be paid a sum of $134,055, together with 62.5% of the interest earned since the date of the hearing, from the proceeds of sale of the former matrimonial home, and the balance to the husband.
That within 14 days of the date of these orders:
(a)The wife do all acts and things necessary to cause the Subaru Forester motor vehicle to be transferred into the sole name of the husband.
(b)The husband do all acts and things necessary to cause the Toyota Echo motor vehicle to be transferred into the sole name of the wife.
(c)Each party indemnify the other in respect of any costs thereto.
Pursuant to s.90AE(1)(a) and on an undefended basis as against Ms M and Ms R, Ms M and Ms R be directed to substitute the husband, Mr Midgen, for both parties in relation to the debt owed to Ms M and Ms R by the parties.
As between the husband and wife and subject to the above order, the husband and wife shall each respectively retain all interest and entitlement to all personal property now in their possession, including all shares, debentures, units in unit trusts, monies in bank accounts, building or credit union accounts standing in their sole name, and all interests in life insurance policies and superannuation funds standing in their name.
THE COURT NOTES THAT:
These Orders have been amended pursuant to rule 16.05(2)(e) of the Federal Magistrates Court Rules 2001.
IT IS NOTED that publication of this judgment under the pseudonym Stretton & Midgen is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ALBURY |
PAC 6949 of 2007
| MS STRETTON |
Applicant
And
| MR MIDGEN |
Respondent
REASONS FOR JUDGMENT
This is a property application heard on 10 October 2008 at Parramatta. Mr Sansom of Counsel appeared for the wife and Mr Campton of Counsel for the respondent husband. There are no children of this marriage.
The issues were:
a)Whether I deal with the liquid and superannuation assets as one property pool or as separate pools.
b)The contribution based entitlement of the husband, having regard to:
i)His initial financial contribution in paying the mortgage on the jointly owned land solely for 12 months prior to cohabitation which was the date of marriage;
ii)The monetary benefit of the interest free loan of $100,000 provided to the parties by his parents, which loan has been repaid;
iii)The cash and superannuation in his possession at cohabitation, which cash was injected into the pool; and
iv)A contribution he asserted post separation by way of further improving the home and maintaining the home, including paying the mortgage.
c)The contribution based entitlement of the wife, having regard to:
i)Her cash injection of $90,000 in two parts, $70,000 at the commencement of marriage and $20,000 shortly thereafter;
ii)Whether there should be any adjustment to the wife having regard to the husband's sole occupation of the home following separation; and
iii)Whether there should be a further add back to the husband in addition to the $4,282 of $1,200 which the wife asserts he could have earnt had he placed the $1000,000 he drew down from the mortgage into a high interest bearing account.
The parties agreed to an order under s.90AE(1)(a) in relation to the debt owed by the parties to the husband's parents and that order will be made by consent between them and on an undefended basis against the paternal parents.
The short facts are that the parties commenced cohabitation at marriage on 11 March 2006. They separated on 26 June 2007. This is a cohabitation of 15 months. However, as Mr Campton submitted to me, they had had a financial relationship prior to cohabitation.
The parties agreed to run the hearing by way of submissions and the evidence before me was as follows:
a)For the wife:
i)Her amended application and affidavit filed on 19 September 2008,
ii)Her financial statement of 18 December 2007; and
iii)Submissions by Mr Sansom;
b)For the husband:
i)His response of 6 February 2008,
ii)His affidavit and financial statement of 18 September 2008;
iii)Submissions by Mr Campton
c)The agreed list of assets and liabilities
Short Chronology
The husband is aged 31 years of age, the wife is 27.
The husband joined his superannuation fund in 1993 and had $29,339.89 in that fund at August 2006 being 6 months after the date of marriage.
The wife was involved in a motor vehicle accident in 1999.
The parties commenced a relationship some two years later in 2001.
In 2002, the wife received a significant sum from her compensation payment and she netted about $70,000.
The parties had a short separation prior to their marriage, but they resumed their relationship in August 2003.
On 9 December 2003 they entered into a loan agreement with the husband's parents for a loan of $100,000. That loan agreement is attached to each party's affidavit.
The parties acquired land at [K] on 23 December 2003 at a cost of $387,000. They obtained a mortgage of $200,000. The husband contributed $29,400 cash from the sale of shares and his savings into the property and the loan of $100,000 from his parents. The wife contributed $70,000 cash.
The wife was engaged at university fulltime during the whole of 2004, completing her Degree, and it was the husband who solely made the mortgage payments on the land in 2004.
In 2005, the parties engaged a builder to build their home at a cost of $194,966. They drew down on their mortgage over the land, took out a line of credit secured over the [K] property, and applied $21,000 from their joint savings to fund the building of the home.
The parties’ respective financial contribution to the cost of the home came about prior to cohabitation and marriage. Thus it is clear that the parties had a significant financial relationship three years before their marriage and cohabitation.
The wife received $20,000 in 2006 from a Public Liability compensation claim and paid that money to reduce the debt over the home.
The parties married in March 2006 and commenced cohabitation.
The parties separated on 22 June 2007.
On 13 October 2007, the husband drew down $100,000 from the parties’ mortgage and placed the money into an account in his name. He maintained that money in his own account for a time. He only earned interest at a nominal rate. Since separation his parents have re-lent him the money to assist him to purchase another home in September 2008.
The wife's motor vehicle was damaged during the marriage and the claim paid after separation. The husband provided her with a cheque of $7,060 from the NRMA Insurance Company.
The parties sold their home on 28 July 2008 and netted $200,930.93. This money has been placed in an interest bearing account pending the final hearing.
The assets and liabilities were agreed:
ASSETS Balance of proceeds of sale of the home $200,930 plus interest Subaru and the husband's possessions $14,000 Toyota Echo in the wife's possession $1,500 Husband's TAB shares $411 Add back of the insurance proceeds paid to the wife $7,060 Add back of the interest paid after the draw down of $100,000 mortgage $4,282 The husband’s superannuation $44,855 The wife’s superannuation $18,634
The wife seeks an additional $1,200 be added back to the assets in the husband's name on the basis that had he put that money in a higher interest bearing account than just a cheque account, they would have had that money to divide between them as well.
I will deal with the additional interest of $1,200 the wife seeks to be added back to the pool in the husband’s possession during the decision.
The law
This is a short marriage and there is substantial authority that the manner in which I should determine the parties' entitlement is to give back to each of them what they put in and then divide the balance having regard to their contribution based entitlement during the marriage. This is particularly so where, as here, there are no children.
However, neither party contended that this was the appropriate method by which to determine the parties’ contribution based entitlement to their present property. Secondly, Mr Campton’s submission that although cohabitation was only 15 months, their financial relationship began in 2003 and was thus five years supports the contention that I ought to deal with this matter in the traditional way being the application of the four-step approach under s.79(4) to the total asset pool.
On the facts of this case I am of the view that that is the most appropriate way to deal with this matter so as to do justice and equity between the parties.
Each agrees there are no s.75(2) factors in either party's favour. Each are working and earning income.
The wife contended her contribution based entitlement to be between 62.5 and 65 per cent of the assets as a whole including superannuation.
The husband contended I should approach the assets as two pools. The first being the liquid assets which he asserts he should receive between 50 and 55 per cent and the second being the parties’ superannuation which he asserts they each retain.
This is a property application and from decisions such as Ferrero & Ferrero (1993) FLC 92-335 and C v C (2005) 33 Fam LR 414 I am required under the law to take a four-stage approach under s.79(4).
The first stage is to identify the matrimonial property, its value and nature.
The second stage is to assess the value of the parties' contributions to that property expressed as a percentage based upon
a)Section 79(4)(a) an assessment of each parties direct financial contribution to their assets;
b)Section 79(4)(b) an assessment of each parties indirect contribution to their assets; and
c)Section 79(4)(c) an assessment of the contribution as parent and homemaker of each during the marriage.
The third stage under s.79(4)(e) is to determine whether, having regard to the factors under s.75(2), I ought vary the assessed percentage entitlement of either party to take into account their future needs. This is not relevant in this matter.
The fourth stage is to look back at the consequences of the proposed orders to determine if they are just and equitable in all the circumstances.
The first issue I will determine is whether the superannuation of each is regarded as property in the same way as the liquid assets; that is the one pool or the two pool approach. The husband contended the two pools, the wife contended the one.
I favour the two pool approach in this matter for the following:
The first is the husband had acquired more than 50% of his present superannuation entitlement of $44,855 prior to cohabitation and their financial relationship beginning.
Secondly, the wife had no superannuation prior to cohabitation and both parties superannuation has increased or grown by almost the same amount during co-habitation. The wife now has $18,634 in superannuation and the husband's superannuation has increased by some $16,000. Thus there has been an equality of contribution to each party’s superannuation by the other during the marriage with a small advantage to the wife over the husband.
Thirdly, the parties are very young. They have many years before they can access their superannuation and their ultimate superannuation is unable to be ascertained.
Fourthly, a division of assets in a marriage is not done on a strict mathematical approach.
In light of these facts and particularly that the increase in each party's superannuation is almost an identical I propose to deal with the superannuation assets as a separate pool to the liquid assets.
I will have regard to the superannuation in each party’s hands in my determination of whether the orders I propose to make are just and equitable.
The husband's initial financial contribution is $45,000, being $29,400 from savings and cashed in shares and paying the wife's share of the mortgage in 2004 at a cost of $15,000. There is then the contribution of the interest free loan from his parents of $100,000 for a period of
4 years. I note the loan has been repaid.
The wife's initial financial contribution is $90,000 cash. The husband’s is $45,000 plus the 4 year interest free loan. On these figures, the wife has clearly made a superior direct financial contribution to the parties' asset base over that of the husband and I find her contribution based entitlement for her direct financial contribution to be 62.5 per cent and the husband’s 37.5 per cent.
Both parties agree that during their marriage their non financial and financial contributions were equal and there will be no adjustment for that factor.
Since separation, the husband has been in occupation of the home. He paid $29,000 towards the mortgage; however the mortgage repayment was set at $37,000. He has carried out some finishing work to the house at some small cost and some effort to himself. I do not see, contrary to his assertion, that these matters have resulted in him making a significantly superior contribution to the ultimate value of the matrimonial home than would be the wife’s contribution in permitting him sole occupation of the home to her exclusion.
I propose no further adjustment in relation to those matters.
I find there are no factors which would agitate I make a further adjustment to either party for parenting and homemaking and there are no s.75(2) factors.
In relation to the additional $1,200 the wife asserts I add back to the husband's pool, I do not accept that submission. These matters are not dealt with on a strict mathematical approach. It is not an accounting exercise. This is a marriage, not a business. The fact that the husband could have perhaps earned $1,200 or more or less interest than he did is not made out on the evidence. There was no independent evidence to support the submission other than an assertion of likely bank interest rates.
The husband has accepted the add back of interest earned by him of $4,282 and I find no further add back to be warranted.
The question is whether an order which provides to the wife 62.5 per cent of the liquid assets and her present superannuation and the husband 37.5 per cent of the liquid assets and his superannuation results in a just and equitable order in all the circumstances.
62.5 per cent of the liquid asset pool of $228,183 is $142,615. The wife is already seized of her car worth $1,500 and $7,060 from the insurance claim. This would result in a payment to her from the monies in trust of $134,055 (excluding her share of the interest) and to the husband $66,875 (excluding his share of interest).
Adding the wife's $134,055, her car and proceeds of the insurance claim to her superannuation of $18,634 gives her a total pool of $161,249
Adding the husband's $66,875, his superannuation of $44,855, the Subaru car of $14,000, shares of $411 add the interest add back of $4,282 gives him a total pool of $130,423.
I find the division of assets I have proposed based upon the parties' past contribution to be an order that is just and equitable in all the circumstances
To look at the results of this order in another way the wife has been repaid her $90,000 cash injection. The husband has been repaid his $29,400 cash injection, and the $15,000-odd mortgage payment that he paid on behalf of the wife in 2004. They have shared in the profit of the relationship having regard to their contribution based entitlements on a 60/40 basis in favour of the wife.
This approach results in almost the same outcome as that which I have determined to be proper from an application of the four stage approach under section 79(4) of the Act.
Going now to the superannuation in each party’s name. The wife has $18,634 and the husband $44,000. I do not propose to further adjust their contribution based entitlement to their liquid assets having regard to the disparity in their superannuation entitlement for the following:
Each have retained the superannuation they earnt during the marriage which was close to equal. There is no basis on the evidence for the wife to receive any share of the husbands superannuation acquired prior to co-habitation. Neither can access their superannuation funds for many years and this asset is of limited real financial benefit to each at this time.
In all the circumstances, I find the orders proposed to be just and equitable.
I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of Henderson FM
Associate: A. Morris
Date: 30 October 2008
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