Sulter and Sulter
[2008] FamCA 1039
•11 November 2008
FAMILY COURT OF AUSTRALIA
| SULTER & SULTER | [2008] FamCA 1039 |
| FAMILY LAW – PROPERTY SETTLEMENT |
| APPLICANT: | Ms Sulter |
| RESPONDENT: | Mr Sulter |
| FILE NUMBER: | PAF | 1829 | of | 2005 |
| DATE DELIVERED: | 11 July 2008 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | STEVENSON J |
| HEARING DATE: | 5 & 6 June 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Livingstone |
| SOLICITOR FOR THE APPLICANT: | Lamrocks |
| FOR THE RESPONDENT: | In person |
Orders
That the parties do all things and execute all documents required to complete the sale of the property situate at and known as E property in the State of New South Wales and to distribute the proceeds of sale as follows:
1.in discharge of the mortgages to the St George Bank
2.in payment of legal costs of and incidental to the sale
3.in payment of agent’s commission and expenses
4.in payment of all arrears of council and water rates
5.in payment to the New South Wales Office of Fair Trading of an amount of $33,077
6.in payment to Y Leasing of an amount of $22,840
7.in payment of an amount equal to 63% of the balance then remaining to the husband
8.in payment of the balance of 37% to the wife
That the parties do all things and execute all documents required to effect the distribution of the net proceeds of sale of the property situate at an known as P property in the State of New South Wales as to 63% to the husband and the balance of 37% to the wife.
That, otherwise, each of the parties is declared to be solely entitled to all items of property in his and her respective possession at the date of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Sulter & Sulter is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAF 1829 of 2005
| MS SULTER |
Applicant
And
| MR SULTER |
Respondent
REASONS FOR JUDGMENT
The Proceedings
Mr Sulter (“the husband”) and Ms Sulter (“the wife”) are in dispute as to division of their matrimonial assets. Unfortunately, the failure of the wife’s business has resulted in a significant diminution of the value of the net pool of property. She and her business partner, Ms D, were the victims of fraudulent misappropriation of funds by a former employee. The consequence is that the business has been liquidated and they are left with substantial debts. There is a significant mortgage encumbrance on the former matrimonial home of the husband and the wife, which secured the loan taken out when she purchased her interest in the business.
In essence the husband sought orders to the effect that he receive all cash available to the parties and that he retain his Hilux motor vehicle and superannuation. Implicitly, the wife would retain her Mazda motor vehicle. The wife sought orders to the effect that she receive all available money, plus a payment from the husband of $40,000. She would retain her Mazda motor vehicle and the husband his Hilux, with each to keep their respective superannuation entitlements.
Background
The husband, who is now 39, and the wife, who is now 32, began a relationship in April 1997 and married in March 1999. They separated on 21 August 2005, according to the husband, or 11 July 2005 on the wife’s version of events. They have one child, a son, who was born in June 2003 and is now 5 years old. Pursuant to orders made by consent on 14 June 2007, the child spends 5 nights per fortnight and half of all school holidays with his father and otherwise lives with his mother.
In December 1998 the parties purchased jointly their former matrimonial home, E property for $262,000. They obtained a mortgage loan of $209,000 from RAMS.
In December 1998 the wife sold a property which she had purchased prior to the parties’ relationship. The sale price was $147,000, from which she received proceeds of approximately $48,120 (exhibit 3). This money was applied to the purchase of the E property and, otherwise used for the joint benefit of the parties.
In January 1999 the husband sold a property which he had acquired before the parties commenced their relationship. The sale price was $155,000 and the net proceeds amounted to some $70,000 to $80,000. The husband paid $55,000 to RAMS, which reduced the mortgage balance to approximately $153,500 (exhibit 5).
In June 1999 the parties purchased an investment property, P property, in the sole name of the husband. The purchase price of $185,000 together with acquisition costs, consisted wholly of borrowings. In 2002 or 2003 the parties refinanced all of their mortgage liabilities with St George Bank.
In May 2004 the wife and Ms D jointly purchased a sales business for $500,000, to which they each contributed $250,000. The wife’s share was borrowed from St George Bank, which took a second mortgage on the title to the E property.
The sales business employed a manager, one Ms J, who managed one of the products. In April 2007 the wife and Ms D became aware that Ms J was fraudulently misappropriating money from the business. They notified all relevant authorities of her conduct and a liquidator for the business was appointed.
The wife’s unchallenged evidence was that she and her partner will not receive any funds when the liquidation is completed and, in fact, they will be left with liabilities. The wife gave a personal guarantee for the lease on a telephone system and has incurred a debt of $22,840. Ms D was the guarantor for a lease in respect of a photocopier and judgment has been entered against her in the sum of $31,100. Another consequence of the business failure was that the Office of Fair Trading paid out $66,154 to clients of the business. The wife and Ms D have received notice from the Office of Fair Trading that they are required to repay this money and that they may become liable for further amounts.
A Toyota Prado motor vehicle was acquired in the sole name of the wife under a leasing arrangement with St George Finance. This vehicle was used by the husband and he paid the lease instalments.
After the separation the wife became aware that the husband had stopped making the lease payments and failed to insure the Prado. Not surprisingly, she was concerned that there was a large debt in her sole name and that the vehicle was uninsured. In April she removed the vehicle from the former matrimonial home, with the intention of insuring and then selling it. The sale was not effected until December 2006, however, and resulted in a net shortfall of about $4,000. The wife paid the finance instalments of $1,200 per month between April and December 2006 and she met the whole of the shortfall. It appears that she met the lease payments and the shortfall from funds drawn down on one of the parties’ mortgage accounts.
The parties sold the investment property at P in September 2007. The net proceeds of $51,709 are held by the solicitor who acted on the sale. $8,400 from the sale proceeds was used to discharge arrears accrued on one of the St George Bank loans secured on the E property. This loan appears to have been the original mortgage taken out when the property was purchased in 1998. The arrears accrued on the second loan, which was obtained to purchase the sales business, were not discharged from the sale proceeds at the same time.
The E property was sold for $440,000 in April 2008. Settlement of the sale had not been effected at the time of the hearing on 6 June 2008. From the sale proceeds the St George Bank loans, totalling $367,948, will be discharged and selling costs, amounting to about $12,940, will be paid. Arrears of council and water rates totalling $1,626 will be deducted from the sale proceeds as well. The net proceeds of sale of this property will thus amount to about $57,486.
During the hearing there was considerable focus on drawdowns made by each of the parties on the mortgage accounts after their separation. There is no doubt that they each withdrew relatively substantial sums from the mortgage redraw facilities attached to both the P and E properties. There was a real issue as to which of these funds should be added back to the list of assets.
In April/May 2006 the husband purchased a Hilux motor vehicle for $50,000. It seems that he borrowed approximately $17,000 from St George Finance and contributed cash of $36,000 (exhibit 2). The payout figure in respect of this loan was approximately $13,000 as at 6 June 2006.
Approach to these Proceedings
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.
I should make it very clear that I am not conducting an accounting exercise in these proceedings. It is inappropriate and, in fact, impossible for me to trace every dollar withdrawn by the parties from the mortgage accounts.
THE ASSETS, LIABILITIES AND FINANCIAL RESOURCES
The Assets
There was agreement in relation to the values of the following assets:
1.
E property
$440,000
2.
Net proceeds of sale of P property
$51,709
Otherwise, the values of assets were disputed and there was a substantial controversy over the addback of funds withdrawn from the two mortgage accounts.
The list of assets submitted on behalf of the wife was as follows:
1.
Net proceeds of P property
$51,709
2.
E property
$440,000
3.
2004 Mazda 6 (wife’s possession)
$24,400
4.
2005 Hilux (husband’s possession)
$40,650
5.
Home contents – husband
$10,000
6.
Home contents – wife
$2,000
7.
Bank account – husband
$2,160
8.
Add backs – husband
$73,885
9.
Add backs – wife paid legals
$16,096
$660,900
There was a dispute as to the value of the wife’s Mazda motor vehicle and the husband’s Hilux. This issue arose despite a notation in orders, made by consent on 9 March 2007, that “the husband and wife agree to the Red Book valuation being the value of the Mazda 6 motor vehicle and the Toyota Hilux”.
A “Red Book” valuation for a 2004 Mazda 6 motor vehicle was annexed to the wife’s affidavit sworn on 26 May 2008. The price range was $23,100 to $25,700, on a private sale basis. I will adopt the wife’s admission against interest as to the value of her car, which is $24,400. That figure is, in fact, the midpoint of the “Red Book” range.
There was in evidence a “Red Book” valuation of a 2005 Hilux (exhibit 20), indicating a range of $27,100 to $29,800. Nonetheless, the list of assets submitted on behalf of the wife purported to assign a value of $40,650 to the vehicle. This figure is either the agreed insurance payout (exhibit 2) or the midpoint of the “Red Book” valuation range for a 2006 Toyota Hilux. The copy of the insurance policy in exhibit 2 shows clearly that the husband’s car is a 2005 model. I will include the Hilux in the list of assets at a value of $28,450, which is the midpoint of the “Red Book” range for the correct model (exhibit 20).
At this point I note that I had a number of concerns about the submissions put on behalf of the wife. In my view, there were several matters put to me which were simply untenable. The contention as to the value of the husband’s motor vehicle is but one example. I make it absolutely clear, however, that I do not hold the wife responsible for these matters. She and the husband both impressed me as sincere people who did their best to assist the court.
The balance sheet submitted on behalf of the wife sought to include household contents of the husband at a value of $10,000. I was not informed of any basis for this assertion and, certainly, there was no evidence that the husband holds household contents to a value of $10,000. In fact, this submission sits most uncomfortably with the wife’s own evidence.
In her affidavit sworn 13 November 2007 the wife stated that the furniture was divided equally between the parties at the time of their separation. For no identified reason, the list of assets submitted on behalf of the wife nevertheless purported to include the husband’s and her own household contents at $10,000 and $2,000 respectively. This submission also apparently ignores the wife’s admission against interest, in her Financial Statement sworn 13 November 2007, that her household contents were valued at $5,000. I do not propose to include the household contents of either party in the list of assets in these unsatisfactory circumstances.
A difficult issue was the extent to which money removed from the two mortgage accounts by each of the parties should be added back to the list of assets. The wife annexed to her affidavit sworn 13 November 2007 a list of withdrawals allegedly made by herself and the husband from these accounts.
The wife alleged that the husband withdrew a total of $73,886. When her list was put to him in cross-examination he agreed that he had made all of the listed withdrawals, with the exception of three amounts totalling $253. Further, the husband said that a withdrawal of $1400 on 26 March 2007 was made by the St George Bank without his knowledge. I have no reason to reject his evidence in relation to these four withdrawals. I thus find that the husband withdrew $72,233 from the two mortgage accounts.
The husband prepared a breakdown of the way in which he expended the money which he withdrew from the two mortgage accounts. It appears that he intermingled the drawn down funds with his income, which complicates this exercise. As well, he placed some of the redraw money in an account in the name of the parties’ son, which he operated. Nonetheless, the breakdown prepared by the husband showed that he applied money for the following purposes after the separation:
E Property
1.
Mortgage repayments
$20,565
2.
Home Insurance
$2,800
3.
Council and Water Rates
$3,240
4.
Replacement of Door
$380
5.
Payment of Utilities
$430
P Property
1.
Mortgage Repayments
$2,060
2.
Council and Water Rates
$1,360
3.
Strata Fees
$1,120
Prado Motor Vehicle
1.
St George Finance
$17,460
2.
Insurance and Registration
$2,020
Hilux Motor Vehicle
1.
Cash Contribution to Purchase
$36,000
2.
Insurance and Registration
$4,410
3.
St George Finance Repayments
$6,220
Legal Fees
1.
Champion Legal
$4,000
Credit Cards
1.
ANZ card
$3,000
Transfers to the child’s Account
1.
$15,000
Purchase of Electrical Goods
1.
Camera and Hard Drive
$1,580
2.
Television Set
$4,420
Purchases for the child
1.
Bed
$1,750
2.
Clothes
$7,480
The wife annexed to her affidavit sworn on 13 November 2007 a document setting out how she spent the money withdrawn by her from the mortgage accounts. She provided an update to this document (exhibit 8) which showed that she withdrew a total of $67,510, which was expended as follows:
1.
Mortgage Repayments
$5,950
2.
Expenses related to the Prado motor vehicle
$14,590
3.
Renovations to the P property
$11,900
4.
Payment of legal costs
$14,620
5.
Credit card payments
$16,182
The husband spent approximately $32,000 on mortgage repayments and other outgoings related to the two real estate assets after separation. In addition he spent approximately $66,000 on motor vehicles, including a cash injection of $36,000 into the purchase of the Hilux.
The case advanced on behalf of the wife sought to include the Hilux as an asset and also to add back the drawn down funds which were applied to its purchase. I can see no proper basis whatsoever for this approach, which is clear “double dipping”. As well, the submissions on her behalf sought to add back of all drawn down money expended by the husband on mortgage repayments and other outgoings in respect of the two properties, yet to exclude from the list of assets all drawn down funds similarly expended by the wife. Again, I can see no justification whatsoever for this approach.
I appreciate that there was an apparent intermingling by the husband of redrawn funds and his income. The fact is, however, that he made mortgage repayments and met outgoings on the two properties. He also paid motor vehicle finance instalments and made a cash contribution to the purchase of the Hilux. In my opinion, it is simply an untenable proposition that all of the money expended by him for these purposes be added back to the list of assets and treated as premature distribution to him. To do so would be to give the husband no credit at all for these post-separation contributions.
The wife expended approximately $12,000 on renovations to the P property. This work included the installation of air conditioning, carpeting, painting and turfing of the back yard. I accept that she spent this money to make the property a comfortable home for herself and the child. As the husband had occupation of the E property, I will not add this money back to the list of assets.
The husband made a Visa credit card payment of $3,000 on 27 February 2006 from drawn down funds. His evidence was that the debt covered expenses incurred primarily by the wife. The evidence does not enable me to make a finding as to who incurred this liability and in what circumstances. I would note, however, that the husband included a Visa card debt of approximately $3,000 in his Financial Statement sworn 14 December 2005, that is, five or six months after the separation. The wife included a Visa card debt of approximately $2,000 in her Financial Statement sworn 31 October 2005, that is, some four or five months after the separation. It thus seems to me to be more probable than not that the parties incurred this credit card debt during their cohabitation. It would be unfair to the husband, therefore, to add this sum of $3,000 back to the list of assets.
The husband spent $1,750 on a bed for the child. He was obliged to provide proper sleeping accommodation for the child. That expenditure seems reasonable to me and this amount will not be added back. The same cannot be said of the purchase of $7,480 worth of clothes for the child. This amount will be added back to the list of assets.
Between 29 August 2006 and 3 March 2008 the husband paid legal fees of $26,250 to a former solicitor. He said that all of this money came from his income and there was no evidence to the contrary. A copy of his solicitor’s account was in evidence (exhibit 13) and suggests that he did pay this sum by instalments.
The wife’s legal fees of $14,620 have clearly been paid from funds drawn down from the mortgage account. Exhibit 8 shows a payment of $10,000 to her solicitors and $4,620 to her barrister. I do not know how the figure of $16,096 in the written submissions provided on her behalf was calculated. I will thus add back $14,620 to the list of assets, on account of the wife’s paid legal costs.
The husband admitted that he paid $4,000 from drawn down funds to a solicitor who had previously acted for him. Clearly, this payment should be included in the list of assets and the husband, in fact, made this concession.
The wife paid a total of $16,182, from drawn down funds, to meet credit card debts between November 2007 and June 2008. These debts were incurred by her more than two years after the separation of the parties. There was no suggestion that the husband was in any way involved with these liabilities. I was not told why this money should be omitted from the list of assets. It seems to me that there should be an add back, in the absence of evidence as to the nature of the credit card debts.
The case advanced on behalf of the wife sought to include as an asset a bank account balance of the husband of $2,160. The only possible evidentiary basis for this proposition was an admission by him in cross-examination that his account had this credit balance on 26 May 2008. He said that he did not know the current balance. I do not accept that it is proper to include a previous balance of the husband’s bank account in the list of present assets.
Each of the parties has a superannuation benefit. The wife annexed to her affidavit a statement of her MLC benefit as at 30 June 2007, showing a balance of $39,838. She also annexed a statement of the husband’s SASS benefit as at 29 September 2005. There was no better evidence as to the husband’s superannuation. His “personal account balance” as at that date was $37,014. I do not know the source of the figure $85,936 which appeared in the submissions on behalf of the wife. Doing the best I can on the available evidence, I find that the wife has an MLC superannuation benefit of $39,838 and the husband a SASS fund of at least $37,014.
I thus find the assets of the parties to be as follows:
Non Superannuation Assets
1.
E property
$440,000
2.
P property
$51,709
3.
Mazda 6 motor vehicle
$24,400
4.
Hilux motor vehicle
$28,450
5.
Husband’s legal costs paid from redrawn funds
$4,000
6.
Wife’s legal costs paid from redrawn funds
$14,620
7.
Money withdrawn from mortgage account by husband and spent on clothes for the child
$7,480
8.
Credit card payments by wife from redraw funds
$16,182
$586,841
Superannuation Assets
1.
Wife’s MLC benefit
$39,838
2.
Husband’s SASS benefit
$37,014
$76,852
The Liabilities
It is clear that the wife has a liability to the New South Wales Office of Fair Trading. On 29 February 2008 the wife received a letter indicating that the Office has paid out a total amount of $66,154, due to the failure of the sales business (annexure F to the affidavit of the wife sworn on 26 May 2008). She said that she believed that Ms D had received an identical letter.
The total amount claimed by the Office of Fair Trading is $66,154. There was no indication that this figure is some apportionment between the wife and her former business partner of the total liability. There is the prospect that further claims amounting to a total of $207,485, may be met by the Office, which will increase the liability of the wife and Ms D.
The business debt of $31,100 in relation to the photocopier is in fact that of Ms D, who gave a personal guarantee for the lease. The arrangement is that Ms D pays the debt by monthly instalments of $676 and the wife reimburses her for 50%. Nonetheless, the balance sheet submitted on behalf of the wife purported to include the whole of this liability as a debt of the parties to these proceedings. I was not told why this approach was justified.
Similarly, the whole of the business debt of $22,840 in relation to the telephone system was included in the balance sheet submitted on behalf of the wife. The evidence indicated that she solely gave a personal guarantee for this lease agreement. There was no evidence from the wife as to any arrangement for payment of this debt to the leasing company or as to any arrangement for contribution by Ms D.
In fact, therefore, the wife is technically liable only for the liability in relation to the telephone system and not for the photocopier debt. It seems to me that I can only include in the list of liabilities a debt for which the wife is responsible at law. This approach should not result in an injustice to her. It seems to me that it would be most unlikely that she would voluntarily contribute to a debt in the name of Ms D, if there is no similar arrangement between them in regard to the liability for the telephone system. In fact, Ms D cannot compel the wife to contribute to the photocopier debt. Similarly the wife cannot compel Ms D to contribute to the debt for the telephone system.
The debt to the Office of Fair Trading is problematic for two reasons. Firstly, there is no evidence as to any arrangement between the wife and Ms D for payment of the total amount due as at 29 February 2008. Secondly, there is a real possibility that this amount may increase if additional claims are allowed by the Office.
It does not seem to me to be appropriate that the whole of the claim made by the Office of Fair Trading be included as a liability for present purposes. According to the wife, the Office has made a demand to each of herself and Ms D for payment of this amount. It seems to me that the best I can do is to include an amount of $33,077 in the list of liabilities, which is one half of the total amount claimed. On the evidence available to me, to do otherwise would be to sheet home to the husband and the wife a liability of Ms D.
Otherwise there was agreement as to the parties’ liabilities, which I find to be as follows:
1.
St George loan account 125 …
$94,594
2.
St George loan account 027 …
$273,354
3.
Legal costs on sale of the E Property
$960
4.
Agent’s commission and costs on sale of the E Property
$11,280
5.
Arrears of council rates in respect of the E Property
$950
6.
Arrears of water rates in respect of the E Property
$676
7.
Fees on discharge of mortgage to St George Bank
$700
8.
Office of Fair Trading
$33,077
9.
Y Leasing for business telephone
$22,840
10.
St George Finance Limited – for Hilux motor vehicle
$13,023
$451,454
Financial Resources
Neither party has a financial resource.
THE CONTRIBUTIONS OF THE PARTIES
It seems to me that I should treat the superannuation and non-superannuation property of the parties as separate pools. The reason is that the evidence does not enable me to make findings as to their respective contributions to the superannuation assets. I do not know the present balance of the husband’s fund, nor am I aware of the period over which the wife made her contributions. In these circumstances, and where neither party seeks a splitting order, I will leave the superannuation benefits intact in the hands of the husband and the wife respectively.
Both parties claimed to have had savings at the date of their marriage. The husband said that he had approximately $41,000 and the wife maintained that she had about $10,000. Neither party could produce documentary evidence to verify the amount of their savings. It was submitted on behalf of the wife that I should reject the husband’s evidence that he had $41,000 in savings, because he also had a substantial mortgage on his home. I do not accept this submission, as the husband was adamant that he did have this money and he may well have chosen to accrue savings despite having a mortgage liability.
I see no reason to reject the evidence of either party as to their pre-marriage savings. The wife said that she recalled during the course of her oral evidence that she had a term deposit at the Commonwealth Bank, as well as a Streamline Account. I accept that she genuinely remembered the existence of her term deposit only while giving her evidence. I thus find that the wife had savings of approximately $10,000 and the husband of about $41,000 as at the date of marriage.
As noted above, each of the parties owned a piece of real estate at the commencement of their relationship. The wife received a net amount of approximately $48,120 when her property was sold and the sale of the husband’s home yielded net profits of $70,000 to $80,000. There is no doubt that they both applied money from the sale of their respective properties to the acquisition of the former matrimonial home at E.
At the time of the marriage the wife’s parents made a gift of $10,000 to the parties. The evidence did not reveal the precise use made of this money. There was no suggestion, however, of any use other than for the joint benefit of the parties.
Shortly after the marriage the husband sold his jet ski for $6,500. Again, there was no evidence of the precise use made of the sale of these proceeds but nothing suggested a purpose other than for the parties’ joint benefit.
Each of the parties had a superannuation benefit at the date of their marriage. The evidence did not reveal the quantum of these entitlements. The husband began to contribute to his fund in December 1990. The evidence did not indicate when the wife began to make her superannuation contributions.
The husband was employed by S Company throughout the relationship. He also carried out some paid work as a tradesman. The parties had a business known as “Sulter Services”, in which the husband did the trade work and the wife kept the books of account.
The parties’ investment property at P was purchased entirely with borrowed funds. The mortgage repayments must have come from their incomes or rental paid by tenants, until the wife took up occupation of the property after separation.
The wife was employed in a sales agency from a time very shortly after the marriage. In 2004, she purchased the ill-fated business jointly with Ms D.
In order to fund the purchase of the sales business the husband and the wife jointly borrowed $250,000 from St George Bank on the security of their home at E. Obviously both parties must have executed all necessary documents and given all required consent to raise this finance.
There was a dispute as to whether the husband should assume responsibility any part of the St George Bank debt or the other liabilities connected to the sales business. He maintained that these debts should be the sole responsibility of the wife. He relied on the fact that he played no role in the operation of the business. He also emphasised that the business failed after the separation. The wife contended that these liabilities should be borne equally.
In Browne and Green (1999) FLC 92-873 the Full Court referred to “guidelines” for the appropriate treatment of liabilities, as established in Kowaliw and Kowaliw (1981) FLC 91-092, where Baker J said:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of the marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.”
It is most unfortunate that the investment in the sales business has substantially depleted the husband and the wife’s assets rather than augmented their wealth. They decided together that the wife would purchase a half interest in the business, however, and they utilised the security of their jointly owned former matrimonial home. There was nothing at all in the evidence to suggest that the wife acted recklessly, negligently or wantonly or embarked upon a course of conduct designed to reduce the value of the matrimonial assets. In my view, both parties must be seen as victims of the criminal conduct of Ms J. These observations apply to the St George Bank loan and the debts to the Office of Fair Trading and Y Leasing.
In my view, the husband and the wife decided to invest in the sales business as an element of their matrimonial partnership. The reality is that the husband could have expected to share in the profits of that investment, if the business had been successful. In practical terms, they both decided to go down the path of that investment and they should now share equally in the outcome.
The evidence did not address the homemaker and parent or non-financial contributions made by the parties during their cohabitation. They both seem to have been hardworking, family oriented people on the evidence available to me. Obviously, though, their level of cooperation with each other would have diminished as the relationship broke down. I am prepared to assume that they both contributed to the care of their son, the housework and the maintenance of their matrimonial home.
It seems to me, and I find, that the contributions of the parties were equal as at the date of separation. On behalf of the wife it was submitted that post separation contributions favour her by 10% to 15% because of the failure of the husband to maintain the E property and the fact that he allowed arrears of mortgages and rates to accrue. It was further pointed out that the wife has been the primary carer for the child and it was alleged that the husband has failed to pay child support at a proper level.
The fact is that the child spends five nights per fortnight with his father and the rest of his time with his mother. He divides school holiday time equally between his parents. The wife’s evidence in her affidavit of 26 May 2008 was that the husband pays a primary amount of $75 per week by way of child support, plus $45 per week on account of arrears.
The husband said that he “did some silly things”, which he regrets, after the separation. He said that the breakdown of the relationship was “the worst thing that has ever happened to me”. In turn, his behaviour triggered a reaction in the wifewhich led her to draw down on the mortgage accounts, for example, and to take possession of the Prado motor vehicle. It seems to me that both parties were caught in the dynamics of a very difficult separation process.
I am not persuaded that post-separation contributions favour the wife by 10% to 15% or, indeed, at all. It is true that the child spent more time with her but the husband also cared for him and paid child support. He continued to work and intermingled his income with the money which he withdrew from the mortgage accounts. Each of the parties had the benefit of occupation of one of their real estate assets. I thus find that the contributions of the parties were equal as at the date of trial.
SECTION 75(2) FACTORS
section 75(2)(a): the age and state of health of each of the parties;
The husband is 39 and the wife is 32 years old. They are each in good health.
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 wife is not presently in paid employment. She wishes to maximise her time with the child before he starts school next year. She considers it unlikely that she will be able to work in the sales industry in the future. Her licence expired in August 2007 and she has not applied for a renewal. She believes that any such application would be refused because of the liquidation of her business. With her admirable work history, however, I regard it as likely that she will return to paid employment in the near future.
The husband has a long history of employment with S Company. He has qualifications as a tradesman. It was suggested on behalf of the wife that he “[gave] false evidence in relation to his income” but this submission seems to be untenable, if proper regard is paid to the evidence. This proposition seemed to be derived from a comparison of the husband’s Financial Statement sworn on 26 May 2008 and his pay slip dated 7 June 2008 (exhibit 10).
In his Financial Statement, the husband deposed that he earns an income of $550 per week before tax. In oral evidence he said that this figure is actually his net weekly income without overtime. He explained that he no longer wishes to work additional hours and prefers to spend as much time as possible with the child.
If careful regard is paid to the husband’s pay slip, its contents are compatible with his Financial Statement and oral evidence. According to the pay slip, his total gross income for the year to date was $74,620 and total tax paid was $21,343, leaving a total net income of $55,366. My analysis ignores the unwarranted assumption made in the wife’s case that the “total gross” figure does not include the “total overtime” amount of $21,343. $55,366 equates to approximately $560 per week, which is close to the figure of $550 per week in the husband’s Financial Statement.
It should also be noted that the “net pay $750.80” amount in the pay slip is the fortnightly amount which remains after deduction of child support. The submission that the husband deliberately understated his income conveniently ignores this fact. For these reasons I reject the submission that the husband “gave false evidence as to his income”. I am satisfied that he earns approximately $550 net per week but has the capacity to increase this amount by way of overtime work.
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;
section 75(2)(na): whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
The wife has the responsibility to care for the child for the majority of the time but the husband pays child support of $120 per week, which includes an allowance for arrears. The child spends five nights per fortnight and half of school holidays with the husband, as already noted.
section 75(2)(d): commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii)a child or another person that the party has a duty to maintain;
The commitments of each party to support themselves are somewhat fluid at present, particularly in the case of the husband. He is currently seeking rental accommodation following settlement of the sale of the E property.
The wife lives in a home owned by her partner. She pays no rent but contributes regularly to the expenses of the household.
section 75(2)(e): the responsibilities of either party to support any other person;
Each of the parties is responsible for the support of their child.
section 75(2)(f): subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party;
Neither party is in receipt of a pension or periodic superannuation allowance.
section 75(2)(g): where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
The unfortunate liquidation of the wife’s sales business has depleted the net property of the parties. There has been a consequent effect on their standard of living. On the other hand, they both have a history of hard work and it seems to me that they are likely to re-establish themselves financially when relieved of the stress of these proceedings.
section 75(2)(h): the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
section 75(2)(j): the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
section 75(2)(k): the need to protect a party who wishes to continue that party’s role as a parent;
Neither of these factors has any relevance to the present proceedings.
section 75(2)(m): the terms of any order made or proposed to be made under Section 79 in relation to the property of the parties;
As noted, the wife lives in a de facto relationship with her partner. He is a self-employed tradesman who owns a home. He earns approximately $400 per week, according to the wife.
section 75(2)(n): any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
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; the terms of any financial agreement that is binding on the parties.
section 75(2)(p): the terms of any financial agreement that is binding on the parties.
These factors have no relevance to the present proceedings.
It seems to me that an adjustment in favour of the wife, on account of section 75(2) factors, is warranted. She has a greater proportion of the child’s care and, historically, the husband has earned a larger income. I accept that he wishes to spend as much time as possible with the child at present, as does the wife. It is my view, however, that they will both resume their previous pattern of hard work in the relatively near future.
The wife receives financial benefits from her de facto relationship, including rent-free accommodation in her partner’s home. The husband, on the other hand, must rehouse himself forthwith.
These considerations lead me to the conclusion that a relatively modest adjustment in favour of the wife is warranted. I find that the appropriate allowance is 5% of the net pool of property.
CONCLUSION
The result is that I find that the net pool of non-superannuation property should be divided in the ratio of 45% to the husband and the balance of 55% to the wife. 45% of the net pool equals $60,924 and 55% equals $74,463.
The husband has:
1.
Hilux motor vehicle
$28,450
2.
Paid legal costs
$4,000
3.
Drawn down funds
$7,480
and will retain the St George Finance liability of $13,023. He thus has net property to the value of $26,907 and requires an additional $34,017.
The wife has:
1.
Mazda motor vehicle
$24,600
2.
Paid legal costs
$14,620
3.
Drawn down funds
$16,202
$55,202
She thus requires an additional $19,261 to bring up her entitlement of 55%.
I propose to order that all of the liabilities, with the exception of the St George Finance vehicle loan, be paid from the proceeds of sale of the E property. These debts total $438,431, which means that about $1,569 will be available for distribution between the parties, along with $51,709 from the sale of the P property. Together these sale proceeds will amount to about $53,728.
It seems to me that it is preferable to order the distribution of this money on a percentage basis, as interest will have accrued on the sale proceeds of the P property and there may be refinements to the rate adjustments when the E property sale is settled. The husband’s entitlement of an additional $34,017 is about 63% and the wife’s required amount of $19,261 equals approximately 37% of the total net proceeds of sale of the two parcels of real estate.
Orders to this effect will mean that the wife will be relieved of debt and will have an unencumbered motor vehicle, together with cash of just over $19,000. The husband will have a motor vehicle with an equity of approximately $15,427, which he could discharge if he so chooses. In that event he, too, would be free of debt and have an unencumbered motor vehicle and cash of about $21,000. I can see no better way to achieve justice and equity between the parties.
I certify that the preceding ninety six (96) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson
Associate:
Date: 11 July 2008
Key Legal Topics
Areas of Law
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Family Law
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Property Law
Legal Concepts
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Remedies
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Costs
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Jurisdiction
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Statutory Construction
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