Sutherland and Shriver
[2012] FMCAfam 502
•31 May 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SUTHERLAND & SHRIVER | [2012] FMCAfam 502 |
| FAMILY LAW – De facto property proceedings – small asset pool – assessment of contributions – assessment of section 90SF(3) factors – only significant asset available to be divided equity in former family home – property registered in sole name of respondent – two children of relationship aged 9 & 7 live with respondent – respondent has no capacity to borrow – should home be sold to provide applicant with modest sum – earning capacity – just and equitable. |
| Family Law Act 1975, ss.4, 4AA, 90SK, 90RA, 90RD, 90SF(3), 90SM(4) |
| Collins & Collins [1990] FLC 92-149 Clauson & Clauson (1995) FLC92-595 Waters & Jurek (1995) FLC 92-635 GH & CTH [2005] FamCA 734 |
| Applicant: | MR SUTHERLAND |
| Respondent: | MS SHRIVER |
| File Number: | ADC 1892 of 2011 |
| Judgment of: | Brown FM |
| Hearing date: | 9 May 2012 |
| Date of Last Submission: | 9 May 2012 |
| Delivered at: | Adelaide |
| Delivered on: | 31 May 2012 |
REPRESENTATION
| Counsel for the Applicant: | In Person |
| Counsel for the Respondent: | Mr Apps |
| Solicitors for the Respondent: | Women's Legal Service (SA) Inc |
ORDERS
It is declared that a de-facto relationship existed between the parties which ended on 10 November 2010.
In full settlement of all claims for de-facto property issues arising between the parties pursuant to Part VIIIAB of the Family Law Act 1975 it is ordered:
The respondent Ms Shriver retain for her sole use and benefit absolutely free from any further claim or demand from the applicant Mr Sutherland her entire interest in the real property located at Property S, [S] in the State of South Australia and being the whole of the land described in Certificate of Title Volume [omitted].
The respondent keep the applicant indemnified in respect of all outgoings arising in respect of the aforementioned property including all mortgages secured against the aforesaid property.
That as and from the date of this order, each party shall retain all assets which each now has when so ever or how so ever required; including but without limiting the effect hereto the respondent shall retain for her sole use and benefit absolutely free from any further claim or demand of the applicant:
(a)furniture and effects in her possession, power and control.
(b)any motor vehicle in her possession.
(c)any savings and investments in her sole name.
(d)any superannuation entitlement, long service leave, annual leave or other work related benefits.
(e)her personal effects.
(f)any other real and/or personal property and/or financial resources of the respondent in the respondent’s name and/or possession not otherwise specified herein.
Including but without limiting the effect hereof, the applicant shall retain for his sole use and benefit absolutely free from any further claim or demand of the respondent:
(a)the furniture and furnishings in his possession, power and control.
(b)any motor vehicle in his possession.
(c)savings, shares and investments in his name.
(d)any superannuation entitlement, long service leave, annual leave or other work related benefits.
(e)personal effects.
(f)any other real and/or personal property and/or financial resources of the applicant or in the applicant’s name and/or possession not otherwise specified herein.
The applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Sutherland & Shriver is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 1892 of 2011
| MR SUTHERLAND |
Applicant
And
| MS SHRIVER |
Respondent
REASONS FOR JUDGMENT
Introduction
These are de-facto property proceedings. Mr Sutherland “the applicant” and Ms Shriver “the respondent” have been significantly involved with one another; since the late 1990’s. They are the parents of two children: [X] born [in] 2002 and [Y] born [in] 2004.
The applicant describes the relationship between the parties as having been “rocky”. The respondent characterises it as being one marked by instability and volatility. She says she and Mr Sutherland frequently separated because of his violent behaviour towards her.
There is no dispute between the parties that they finally separated on 10 November 2010. At the time, the parties and the children were living at Property S, [S].
This had been the parties’ family home for many years. Initially, from about 2002, the property was rented from Ms Shriver’s aunt. However, in October of 2007, Ms Shriver purchased the property, in her sole name, for the sum of $120,000.00.
It is Ms Shriver’s position that the Property S property was purchased at a time when the parties were separated. She estimates that, during the parties’ relationship of around twelve years or so, they were separated for at least three years in total. The period of separation occurring around the time of the purchase of the Property S property being fifteen months in duration.
The respondent has deposed that she alone contributed the funds necessary to purchase the Property S property in the first place. This being a deposit of $20,000.00, made up of $7,000.00 received by way of a first home owner’s grant; a loan of $6,000.00 from members of her family; and her own savings of $7,000.00. The rest of the moneys coming from a mortgage provided by Home Start.
The applicant’s position is that “joint savings” and some of his “cashed in” superannuation went into the deposit and so he made a direct financial contribution to the acquisition of Property S.
Mr Sutherland also asserts that he contributed the entirety of his wages to joint family purposes, one of which was the payment of the recurrent mortgage on the Property S property.
In addition, Mr Sutherland has deposed that he increased the value of the property by undertaking renovations to it. He also says that he paid for insulation to be installed and for floors to be polished. As such, he denies Ms Shriver’s contention that he did not make significant contributions, both direct and indirect, during the parties’ relationship, which was of significant length.
Originally, the proceedings between the parties also concerned parenting arrangements between [X] and [Y]. These proceedings were fraught with difficulty and tension. One of the major difficulties arising from the fact that, on separation, Mr Sutherland was charged by police with a serious assault on Ms Shriver.
The respondent obtained a domestic violence restraining order against Mr Sutherland. It was also a condition of Mr Sutherland’s bail that he not contact Ms Shriver nor attend at Property S, [S]. Subsequently,
Mr Sutherland was charged with numerous counts of breaching his bail. He has been convicted of the assault but not as yet sentenced. The bail breaches also remain to be finalised.
It was Mr Sutherland’s position that [X] and [Y] should be parented in an equal time arrangement. Ms Shriver was opposed to such an outcome, which was not supported by a family report commissioned by the court.
In particular, evidence available to the family report writer indicated that [X] and [Y] have been attending the Child and Adolescent Mental Health Service for counselling since 2005, as a result of having been exposed to parental conflict and family violence.
This was the background to final orders being made by the court, on 21 February 2012, in respect of the children, with the consent of each of the parties. These orders provided as follows:
·[X] and [Y] live with the mother;
·The mother have sole parental responsibility for the children;
·The children spend time with the father on alternate weekends from Saturday morning until Sunday afternoon and from after school until 5.30pm on alternate Thursdays;
·The children spend five weeks of the school holiday with the father.
Accordingly, the children live predominantly with the respondent. She and the children have been living at the Property S property since shortly after separation. The applicant has rented accommodation for himself in [S].
Mr Sutherland has no formal qualifications but enjoys good health. In the past, he has had employment as a [occupations omitted]; and most recently as a self-employed [omitted]. He also acknowledges having been unemployed for significant periods during the parties’ relationship.
Ms Shriver has qualifications in [omitted]. She has also worked as a [omitted]. However the income she earned during the parties’ relationship was limited. It is her position that she has always been the main provider of care for the children.
At present, Ms Shriver works part-time, at a [business omitted], receiving $357.00 income per week, which she supplements with social security. Her major weekly expense is the mortgage payment on the Property S property of $279.68 per week.
Mr Sutherland has not been formally employed since the parties separated. He has no wish to move away from [S] because of his understandable desire to maintain his relationship with the children and see them regularly. However, in the past, when he was employed in the [omitted] industry, he worked away from [S] and was well paid.
[S] is a small community of around 1,000 people. It is a centre for the [omitted] industry. Although Mr Sutherland has lived in the town for many years, he is not from [S]. Ms Shriver was born in the town and has many relatives in it.
Mr Sutherland has deposed that he is unable to obtain work for himself in [S], particularly in the [omitted] industry, where he has experience, because of the opprobrium generated for him by Ms Shriver and members of her family in [S].
In these circumstances, his only source of income has been unemployment benefits and he has paid the statutorily fixed minimum amount of child support to Ms Shriver, which has been deducted from his social security payments.
In addition, Mr Sutherland is critical of Ms Shriver for preventing him from accessing his [omitted] and other tools of trade necessary for him to continue his work as a self-employed [omitted] in the period following the parties’ separation. He alleges that this led to the demise of his business, with significant debts, and compelled him to sell his [omitted] to recoup his losses.
For all these reasons, the relationship between the parties is currently one marked by an extreme level of mistrust and acrimony.
Mr Sutherland has represented himself during the property aspect of these proceedings. Ms Shriver has been represented by the Women’s Legal Service.
Mr Sutherland cannot be described as a person with a good head for figures or any well developed insight into financial matters. In addition, he complains that Ms Shriver retained the vast majority of the parties’ financial records following separation. For her part, Ms Shriver is suspicious about the circumstances surrounding the sale of
Mr Sutherland’s [omitted] equipment.
Neither party is in a position to provide extensive financial records, detailing their respective level of income during their relationship or to provide receipts and other documentation in respect of the very many items which were purchased during their relationship for the Property S property and for other purposes relating to it. Rather, each party now feels hard done by financially at the end of the relationship between them.
In all these circumstances, there are many factual disputes between the parties, which can be summarised as follows:
·What contributions did the parties make towards the purchase, preservation and improvement of the Property S property;
·What were the circumstances surrounding a $60,000.00 extension of the mortgage on the Property S property, in the period prior to the parties’ separation.
Ø Were the funds used for joint purposes?
Ø Or were the funds used to discharge Mr Sutherland’s credit card debts and to pay other liabilities arising from his [omitted] business;
·What is the value of the contents of the Property S property and how were those contents divided between the parties following separation.
·What was the value of the plant and equipment associated with the applicant’s [omitted] business and what has happened to that plant.
I acknowledge that these disputes are important to the parties but their resolution is now largely academic. No formal valuations have been undertaken in respect of the household contents and the various motor vehicles, tools, [equipment omitted] previously owned by the parties.
These various items were divided between the parties, in difficult circumstances, in the period after the parties separated. Some things have been sold. Each party now asserts that the ad hoc process of division of these chattels has unfairly favoured the other.
Given the absence of formal valuation evidence, I am unable to say who is right and who is wrong in this regard. No doubt however, the fact of separation has been financially deleterious to both parties. In each household, items have had to be replaced. Two households cannot live as cheaply as one.
In finalising these proceedings, the various chattels involved must remain where they currently lie and cannot be formally taken into account in these proceedings. Essentially, I do not have the necessary evidence to ascertain whether this division of chattels is a just and equitable one.
In any event, I suspect that, if the parties had undertaken a formal valuation of the household contents, it would have been a sobering exercise revealing that the current value of these items was far less than their replacement value.
This having been said, the practical difficulty created by this case comes into stark relief. The only asset of any worth available to be divided between the parties is the equity remaining in Property S, [S]. The property has been valued at $240,000.00. The mortgage secured against the property is around $175,000.00.
Besides the property, each party has extremely modest amounts of superannuation. The respondent has $4,410.48. The applicant has $2,491.00. Accordingly, the case centres on the $65,000.00 equity in the Property S property.
In his application filed on 23 May 2011, the applicant seeks that the “net assets of the relationship be divided equally between the parties”. More recently, he has asserted that he only wants what is “fair” from the proceedings. He considers an award of around twenty-five percent of the equity in the property as meeting this criterion.
In her response, filed on 1 August 2011, the respondent proposed that she receive eighty percent of the parties’ net assets. However, at trial, it is her position that considerations of justice and equity dictate that she should retain the entirety of the equity in the Property S property.
In this regard, it is her case that she and the children require stable accommodation to provide for their ongoing financial security. It is her evidence that she has no capacity to borrow further sums to pay any moneys to Mr Sutherland and it would be grossly inequitable to her, in all the circumstances of the case, if the Property S property was to be sold.
In support of her position, she points to the modest equity in the property; her assertion that Mr Sutherland can only be regarded as having made limited contributions to that equity; and her significant prospective financial needs, particularly the fact that Mr Sutherland is not likely to provide her with any significant level of financial support for the children.
These proceedings are directed towards the resolution of the matters in dispute between the parties and finalising the financial relationship between the two of them.
The legal principles applicable and issues arising
The provisions relating to the division of property, following the breakdown of a de facto relationship, are contained in Part VIIIAB of the Family Law Act 1975.
Pursuant to the provisions of the Commonwealth Powers (De Facto Relationships) Act 2009 (South Australia) the State of South Australia has conferred its authority to make laws relating to the breakdown of de facto relationships to the Commonwealth of Australia, pursuant to the provisions of section 51(xxxvii) of the Constitution of the Commonwealth.
Accordingly, for the purposes of section 90RA of the Family Law Act South Australia is both a participating jurisdiction and referring State for the purposes of the application of Commonwealth legislation to de facto relationships. The applicable South Australian legislation commenced on 1 July 2010.
The Family Law Amendment (Validation of Certain Orders and other Measures) Act2012 has removed any uncertainty about the validity of the federally based legislation regarding de facto property matters. The applicable legislation came into effect on 10 April 2012 and provided that the jurisdiction of the court, as far as the referral of South Australian legislation is confirmed, took effect from 1 July 2010.
As the parties acknowledge that the relationship between them finally ended in November of 2010, there is no controversy that they are each entitled to seek remedies in this court pursuant to the de facto property provisions contained in the Family Law Act.
Both the applicant and the respondent are seeking orders, which would lead to the alteration of property interests between them pursuant to section 90SM of the Act. Such orders fall within the definition of de facto financial cause contained in section 4(1).
De-facto relationship is defined in section 4AA of the Act. It arises if the persons concerned are not legally married to each other but, in all the circumstances of their relationship, they are a couple who have lived together on a genuine domestic basis.
There are some other legislatively prescribed pre-conditions arising before a court may make a declaration as to the existence of a de-facto relationship. Firstly, there is a geographical requirement. Both the parties to the relevant de-facto relationship must be ordinarily resident in a participating jurisdiction, when the application for alteration of property orders was made [section 90SK].
Secondly, the de-facto relationship in question must be at least two years in duration; or to have produced a child; or have involved substantial contributions – either financial or non financial; or that the relationship in question has been registered as a de facto relationship under a prescribed state law.
In this case, neither party contends anything other than that a de-facto relationship existed between the parties. Although the relationship was marked by periods of separation, there is no dispute that it was longer than two years in duration. Significantly, there can be no doubt that the relationship produced two children. The parties concerned have lived in South Australia, a participating jurisdiction, for the entirety of their relationship.
In these circumstances, it is not necessary that the court make a declaration, pursuant to section 90RD, that a de-facto relationship existed between the parties. There is no controversy between the parties that the provisions of Part VIIIAB have been engaged on the application of Mr Sutherland.
The provisions relating to the alteration of the property interests of de facto partners, on the breakdown of their relationship, are analogous to those provisions applicable to the parties to a marriage. The court is required to follow a number of steps. Importantly, the court must not make an order altering the property interests of former de facto partners unless, in all the circumstances, it is just and equitable to do so [section 90SM(3)].
The relevant legal principles are primarily contained in section 90SM(4) and section 90SF(3) of the Family Law Act 1975. This sections mirror section 79(4) and section 75(2). It is essentially a four step process.
In the first step, I must ascertain what are the parties’ assets and liabilities as at the date of trial. Apart from issues relating to the division of chattels between the parties, to which I have already eluded, there little controversy under this first consideration. The asset pool is limited to the parties’ equity in the former family home and modest amounts of superannuation.
The second step involves the court ascertaining the contributions which each party has made towards those assets. Contributions fall into two broad categories. The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the de facto relationship to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship, including any contribution made in the capacity of home maker or parent.”[1]
[1] See Family Law Act s.90SM(4)(b)
The second step creates controversy between the parties in the following major areas:
·what, if any, were Mr Sutherland’s direct financial contributions to the deposit, which was used to purchase the Property S property;
·what was the extent of his direct financial contributions to the improvement and preservation of the property;
·is it the case, as Ms Shriver contends, that her direct financial contributions were much superior than those of Mr Sutherland, particularly as at the time the property was purchased the parties were living apart;
·what have been the parties’ various home making and parenting contributions during the relationship and in the period afterwards.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 90SF(3) of the Family Law Act 1975. The court must also have regard to the factors set out in section 90SM(4)(d) to (g), which deal with the effect of any proposed order on the earning capacity of the parties concerned and the implications of any child support assessment.
Pursuant to section 90SF(3)(r), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
In the main, section 90SF(3) deals with the prospective needs of the parties. This area also creates some controversy between the parties in the following areas:
·Ms Shriver points to her responsibility to parent [X] and [Y] given the contents of the order of 21 February 2012 as being a factor which significantly favours her;
·Pursuant to the order, she will have predominant responsibility for parenting the two children. It is her case that she is likely to discharge this responsibility with little, if any financial assistance from Mr Sutherland;
·Ms Shriver also points to the fact that she is likely to remain a modest income earner for the foreseeable future, even if she does return to full time employment;
·In these circumstances, it is Ms Shriver’s position that her and the children’s on-going security demand that she retain the entirety of the equity in the Property S property, given its modest monetary value and her inability to access further finance;
·Mr Sutherland points to his current unemployment as a factor favouring him. It is his case that the importance of his relationship with the children – both to him and to them – dictates that he must remain living in [S] and in this area his employment prospects are limited.
Finally, in determining what order the court should make under section 90SM(4), the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders to be made that the court must consider.
Mr Sutherland, who has acted for himself in these proceedings contends that it is “only fair” that he should receive some portion of the equity contained in the Property S property. Initially, he sought a sum representing 50% of this equity but he has now modified his position and would accept a sum representing 25%.
Ms Shriver wishes orders to be made which would see her, in effect, receive 100% of the existing equity. It is her case that, in the unusual circumstances of this case, such an outcome would be a just and equitable one. She points to the fact that the equity in the property is small in dollar terms and she has made the more significant contributions to it and has the greater future needs.
However, more subtly, it is her case that it would be fundamentally unfair to her for Mr Sutherland to force the sale of the property to recoup what is likely to be an extremely modest sum of money for him, in circumstances where she is unable to borrow any money to pay him out but has a compelling need for accommodation for herself and the children.
Implicit in Mr Sutherland’s position is the contention that although it may be difficult for Ms Shriver (and indeed the children), if the Property S property is sold, if this has to be done to secure his just entitlements, so be it. Essentially, he argues that Ms Shriver’s understandable hope that she should retain her current accommodation should not be permitted to become the basis on which his proper claim is defeated, as this would be fundamentally unfair to him.
There is an expectation that proceedings such as these should finalise any financial relationships arising and, as far as is possible, constitute a “clean break” between the parties concerned [see section 90ST]. In this case neither party proposes any form of deferred outcome, which may turn on a change in the financial circumstances of either of them.
Sometimes the hardest property cases for the court to determine involve matters where the pool of property potentially available to be divided is small but the needs of the parties concerned are great. This is one such case. It raises difficult issues as to what is the proper outcome in terms of justice and equity.
The Evidence
The parties themselves were the only witnesses who gave evidence in these proceedings. In these reasons for judgement, findings of fact are made on the balance of probabilities. In what follows, statements of fact constitute findings of fact.
Mr Sutherland relies on the following documents:
i)An affidavit of himself filed 23 May 2011;
ii)A statement of his financial circumstances filed on 23 May 2011.
Ms Shriver relies on the following documents:
i)An affidavit of herself filed 1 August 2011;
ii)A statement of her financial circumstances filed on 1 August 2011.
In addition, a number of documents were tendered into evidence. The most significant of these are recent tax returns of each of the parties and a valuation of the Property S property. The valuation provided is $240,000.00.
These various documents: the affidavits of each of the parties; and their oral evidence in court; constitutes the evidence on which this case must be determined. The court must make any necessary findings of fact on the basis of this evidence.
There are many factual issues arising between the parties as to financial matters in their relationship. These are likely to be matters of emphasis rather than to relate to credit or honesty alone. For obvious reasons, each party is likely to emphasise the factors which assist their respective case and discount or overlook matters which do not.
In general terms, I consider Mr Sutherland to be an honest person. However, he remains in a state of emotional adjustment following the traumatic end to the parties’ relationship, to which it seems clear that he did not react at all well. As such, he remains bitterly disposed towards Ms Shriver. This has consequences for his level of objectivity about financial issues between the parties.
Mr Sutherland concedes that he does not have access to many financial records. It also seems to me that he is not a person, who has a ready facility to exercise fiscal restraint or remain vigilant about financial matters. Essentially, for these various reasons, I do not think that he is the most reliable financial historian.
On the other hand, in my estimation, Ms Shriver is likely to be a more reliable person as to financial matters, which occurred in the parties' relationship. She is less likely than Mr Sutherland to shape her evidence to achieve her desired outcome in these proceedings. I found her to be a credible witness with a greater degree of insight and understanding of the ins and outs of the parties’ finances, when they were together.
Mr Sutherland was born [in] 1976. Ms Shriver was born [in] 1976. The parties met in 1997 and started to live together in 1999. Their relationship was unstable and frequently unhappy. I accept that this has had emotional consequences for [X] and [Y].
Ms Shriver’s evidence is that she had to seek psychological counselling for the children, in 2005, as a consequence of their father’s violent behaviour. I accept this evidence. I also accept that Ms Shriver provided more of the “nuts and bolts” parenting and homemaking for the children, during the parties’ relationship.
It is a significant matter that the Property S property, when purchased, was registered in Ms Shriver’s sole name. This indicates that the enterprise was one which emanated with her and, as such, it is more likely than not that she contributed more of the initial deposit from her own savings and by way of advance from members of her family.
The property was purchased in October 2007. I accept that the purchase occurred at a time when the parties had been separated for a significant period of time – months rather than weeks or days. It is also significant that the mortgage concerned is in Ms Shriver’s name alone. This indicates that the mortgage was granted on the basis of her financial circumstances alone.
Accordingly, I accept the most significant item of property, currently available to be divided between the parties, originated solely as a result of Ms Shriver’s efforts. This is a significant factor. Without Ms Shriver’s efforts, it seems highly probable that the parties would not have any property available to be divided between them in these proceedings.
The parties had lived in Property S for many years prior to its purchase. The property belonged to Ms Shriver’s aunt. No doubt it had to be furnished and equipped with the necessities of life.
The parties struggled financially from time to time. Both were regularly out of the workforce and relied on social security. During these periods, I accept the parties pooled their financial resources and purchased items of property in common together.
In this sense, I accept that Mr Sutherland made regular direct financial contributions, which benefited Ms Shriver and the children. At times, he was the family’s main breadwinner. It also seems to be the case that, particularly when he was employed as a [omitted], he was making good money.
It is not easy to reconstruct precisely what periods of employment each party had during their relationship and what was the nature of that employment from the records currently available. Mr Sutherland has had a variety of jobs. He has been employed as a [occupations omitted]. He has qualifications in [omitted].
When the parties met, Ms Shriver was a student. She has some work experience as a [omitted]. More recently, she has been employed in the [omitted] industry and has qualifications in this regard. It is important to note that currently she has a student financial supplement scheme debt, owing to the Australian Government, in a sum of around $10,000.00.
Both parties, it would seem, have pursued the types of employment, which are likely to be available in a small country town, on the coast. I accept that such a community is not likely to provide the depth and diversity of employment opportunities offered in a larger centre.
Without wishing to cause any offence, Mr Sutherland struck me as a “knock about sort of bloke” who was likely to be able to set his hand to many unskilled and semi-skilled jobs. It is his evidence that he has some handyman skills. In this regard, I accept that he did general repairs and painting around the Property S property. He also cut out and concreted salt damp damage and did gardening at the home, including the planting of an orchard there.
Ms Shriver has been assiduous in keeping her taxation records.[2] These reveal the following taxable income figures.
[2] See exhibit I
30 June 2010
$12,591
30 June 2009[3]
$13,895
30 June 2008[4]
$17,250
30 June 2007
$15,237
30 June 2006
$12,629
[3] The applicable taxation return indicates that Ms Shriver received a single parenting payment for the period from 1 July 2008 to 23 January 2009.
[4] The relevant tax return indicates that Ms Shriver received a single parenting payment for the entire taxation year in question.
Mr Sutherland has provided taxation returns for the years ending 30 June 2010; 2009; 2008 and 2007. These indicate an income in the mid-$40k’s in 2009 and 2008 – the years in which Ms Shriver’s records indicate that she was receiving a single person’s parenting allowance.
Otherwise the years 2006, 2007 and 2010 indicate very modest levels of income, commensurate with him receiving social security. It seems to be the case that Mr Sutherland commenced a period of self employment, as a [omitted], in the period 2009/2010, which coincided with the parties resuming their relationship together.
The advent of the [omitted] business required an input of capital, which was significant given the financial circumstances of the parties. [Equipment omitted] were purchased. Mr Sutherland entered a finance agreement to purchase a tray-top utility. Importantly, Mr Sutherland had to enter into a sub-licence agreement, approved by the South Australian [omitted] Authorities, to enable him to [omitted]. There were fees and levies involved.
It is common ground between the parties that, when they resumed their relationship in sometime in 2008/2009, the mortgage arrangements in respect of the Property S property were re-negotiated. The mortgage was changed from Home Start to the ANZ and an additional amount of $60,000 was advanced against the security of the property. This apparently coincided with an increase in the value of real property in [S].
What precisely happened to this amount of $60,000 is unclear. It seems to be the case that much of it went to discharge credit card debts, standing in Mr Sutherland’s name. He asserts that these debts were joint family debts.
I accept that no doubt some component of the debts can be traced to the purchase of household goods but suspect that other moneys related to the [omitted] business and other individual debts of Mr Sutherland, which had arisen during periods when the parties were separated. At any rate, at the present time, there are no tangible assets remaining which can be related to this debt.
Although I do not doubt that Mr Sutherland applied himself as best he could to the [omitted] business, it does not seem to have been an overall success. [Omitted] is, at the best of times, often a perilously difficult enterprise. The parties finally separated, in tumultuous circumstances, in November 2010. This event seems to have killed the [omitted] enterprise.
Mr Sutherland criticises Ms Shriver for depriving him of access to his [equipment omitted] around this time. He asserts that if he had access to these items, he would have been able to keep [omitted]. This may be so but, in my view, it is a simplistic analysis.
Mr Sutherland did not react well to the end of the relationship. I accept that he was charged with a serious criminal offence arising from an assault on Ms Shriver. In addition, I also accept that he faces a further twenty-two charges, which relate to breaches of his bail and a restraining order in Ms Shriver’s favour.
In all these circumstances, it seems clear that Mr Sutherland was in no fit emotional state to go back to work. It also seems to be the case that, to some extent, Mr Sutherland’s behaviour polarised the community of [S], many of whom are closely related to Ms Shriver. Accordingly, in my view, it is simplistic to blame Ms Shriver for the demise of the [omitted] business. It failed, in large part, because of Mr Sutherland’s own behaviour and conduct.
I accept that Mr Sutherland cashed in a portion of his superannuation entitlements in 2009. He liquidated an amount of around $3,700. In addition, I accept that he purchased insulation for the Property S property and paid for the polishing of floors there.
Mr Sutherland is currently in receipt of a new start allowance. His major recurrent expenditure is his rent of $200. Whether this sum is paid weekly, fortnightly or monthly is unclear to me. However, on any view, Mr Sutherland is currently struggling financially.
I also accept that Mr Sutherland’s behaviour has polarised the [S] community and caused him to be estranged from members of
Ms Shriver’s family in the town, who are likely to be influential in some of the employment decisions arising there.
However, I doubt that Mr Sutherland’s employment prospects are as dire as he currently maintains. But I think I would be naïve to think anything other than that his current complex criminal proceedings consume a significant portion of his time and add to his current level of emotional fragility.
Ms Shriver is currently employed, on a part-time basis, by the [omitted]. She is earning a gross salary of $357.00 per week, which is augmented by social security allowances. Her major recurrent expense is her weekly mortgage payment of $279.68 per week.
Ms Shriver owns a 1996 Mitsubishi Magna motor vehicle, which is worth $1,000.00. Mr Sutherland owns a Triton tray-top utility. I accept his evidence that this vehicle is in a poor condition, as a result of having been frequently immersed in salt water and is subject to a debt close to its worth.
I also accept Mr Sutherland’s evidence that he has sold his [equipment omitted] for modest sums, which he has used to finance his day to day living expenses. I am not in a position to conclude that these various transactions are anything other than legitimate.
As previously indicated, Ms Shriver initially proposed that the parties net assets be divided 80/20 percent in her favour. I accept that she has approached the ANZ Bank and inquired as to whether she would be able to extend the mortgage on the Property S property in order to advance some moneys to Mr Sutherland. The ANZ has declined her request on the basis that she has insufficient income to service any such advance.[5]
[5] See exhibit F
Whether Ms Shriver could borrow moneys from another source, including members of her family, was not an issue which was examined in the course of these proceedings. By necessary implication, it would appear to be Ms Shriver’s position that she would prefer to maintain her borrowings at their current level.
Step One – the pool of assets
It is not a difficult task to tabulate the pool of assets available to be divided between the parties. For reasons already provided, items of furniture and white goods from Property S, informally divided between the parties, cannot be included in the pool in the absence of valuation evidence.
I decline to add back into the pool any sums to represent
Mr Sutherland’s [equipment omitted], which I accept have been sold and the proceeds utilised in funding his ordinary living expenses. I also decline to include the parties’ respective motor vehicles given the modest value of these vehicles and the fact that Mr Sutherland’s motor vehicle is encumbered by debt.
In all these circumstances, I find the parties pool of assets to be as follows:
Assets
$
Property S, [S]
240,000
Mr Sutherland’s superannuation
2,500
Ms Shriver’s superannuation
4,410
Total Assets
246,910
Liabilities
ANZ Mortgage
175,500
Ms Shriver’s student loan
10,100
Total Liabilities
185,600
Net Assets
61,310
Obviously, the most striking factor of this table is the modest pool of assets.
Step two – assessment of contributions
Section 90SM(4) requires that the court look at the entirety of the contributions, both financial and non-financial, to the welfare of the family, as well as the acquisition, conservation and improvement of those assets. Contributions not required to be tied to the acquisition, conservation and improvement of any particular asset and may be taken into account generally, as contributions in a total sense.
The relationship between the parties was one of significant duration. It must be accounted to be about a decade. It produced two children. It was also marked by significant difficulties and periods of extended separation.
For reasons already provided, it is my finding that the majority of homemaking and parenting responsibilities for [X] and [Y] devolved onto Ms Shriver. I accept however that Mr Sutherland loves both children and was involved in caring for them during the parties’ relationship.
I also accept that, for most of the time, the relationship between the parties was one which provided emotional and financial support for each of them and accordingly was one where the parties pooled and shared their resources. For significant periods of time, Mr Sutherland was the family’s main breadwinner, particularly when he was working as a [omitted] earning good money.
However, it is my finding that, in the period leading up to the purchase of the Property S property, these various contributions did not lead to the direct acquisition of any items of property now available to be divided between the parties. It seems more likely that the period of the parties’ relationship from 1999 to 2006 was one in which they struggled financially.
The raw data of what the parties were earning in the period after 2007 indicate two years in which Mr Sutherland earnt a reasonable salary. However, these periods seems to coincide with times when the parties were separated and Ms Shriver was receiving social security.
After the parties resumed their relationship and Mr Sutherland commenced self-employment as a [omitted], Ms Shriver’s equity in the Property S property was significantly diluted by the decision to extend the mortgage. This decision, I accept, was initiated more by the applicant than the respondent and did not translate into any tangible assts available now. The [omitted] business does not appear to have been successful.
Although it is my finding that, particularly in the latter stages of the parties’ relationship, some financial decisions made by Mr Sutherland led to a diminution rather than an accretion of relationship assets, I accept that, in totality, he made significant non-financial and financial contributions to the relationship. This must fallow from my finding that the parties’ relationship was a joint enterprise.
However, on balance, it is my finding that, in percentage terms,
Ms Shriver’s overall contributions were superior. As I have already observed, the Property S property was purchased during a period in which the parties were separated.
I accept that Ms Shriver was the guiding force behind the purchase of the property and contributed the necessary seeding capital. Without her efforts, there would be precious little to be divided between the parties now. It is also my view that Mr Sutherland’s direct contributions towards the acquisition and preservation of this property were not great.
Although Mr Sutherland paid for insulation in the property and did maintenance around it, I do not think these contributions significantly counter the efforts of Ms Shriver overall. He did not contribute to the diminution of the mortgage on the property. To the contrary, he added significantly to the mortgage and has left Ms Shriver with the responsibility for it.
Accordingly, it is my finding that the parties’ overall contributions, during their relationship and afterwards, should be assessed 60/40 in Ms Shriver’s favour. In this regard, I note that Ms Shriver has been paying the necessary mortgage payments on the property since the parties separated and has been largely parenting the two children alone.
Step Three – section 90SF(3) factors – the prospective needs of the parties
I am now required to consider the various matters set out in section 90SF(3) and in particular to consider whether any further adjustment should be made in favour of either party. In cases involving small pools of property, matters relating to the prospective needs of the parties concerned are invariably critical.
Considerations relating to the age and health of each of the parties are not significant in this matter. Both are in their mid thirties and enjoy good health. As such, both have ample time in which to rectify the financial vicissitudes resulting from the end of their relationship together [section 90SF(3)(a)].
Regrettably, both parties leave the relationship in poor financial shape. Although both Mr Sutherland and Ms Shriver must be described as being young, they are each nonetheless far from ready for retirement.
In Ms Shriver’s case, whatever is the outcome of these proceedings, she will be left with a significant burden of debt, which given her current economic circumstances, she will find it difficult to service.
Both parties are likely to be modest income earners for the remainder of their working lives. In Ms Shriver’s case, it is highly probable that she will secure further qualifications in [omitted] and, as [X] and [Y] progress through primary school, she will assume full-time employment in this industry.
Ms Shriver is a pleasant and competent person. She enjoys working with [omitted]. As such, it would seem more likely than not that she will have assured employment for the foreseeable future. However, given [Y] is not eight years of age, her assumption of full-time employment may be a few years off yet.
For reasons already provided, I accept that Mr Sutherland did not adjust well to the end of the parties’ relationship and this has had significant implications for his capacity to obtain and retain employment. However, I do not accept that he is destined to an indefinite future of unemployment, either in [S] or otherwise.
Notwithstanding his likely criminal conviction, as a result of the assault on Ms Shriver, I consider Mr Sutherland to be highly employable, albeit in unskilled areas of work. He has experience in the [omitted] industry, which is undergoing a period of sustained growth at the present time.
I can appreciate the dilemma which currently confronts Mr Sutherland. He loves [X] and [Y] and, as a consequence, he has no wish to move away from [S]. Employment prospects, particularly in the [omitted] industry, are likely to be better away from [S].
If Mr Sutherland remains living in the remote [omitted] area of South Australia, his best employment prospects lie in [omitted]. These are likely to be seasonal areas of employment, which will provide modest levels of remuneration.
Accordingly, at this juncture, it is my assessment that both parties have an appropriate level of physical and mental capacity to allow each of them to obtain gainful employment. However, the likely areas of future employment endeavour for both Mr Sutherland and Ms Shriver are in areas which are notoriously underpaid and which are subject to seasonal vagaries. [section 90SF(3)(b)]
The most significant factor in this case is that Ms Shriver will remain the parent who will provide the majority of care of the parties’ two children. As [X] is approaching his tenth birthday and [Y] will be eight in October, Ms Shriver is unlikely to be discharging her parental responsibilities for many years to come.
Ms Shriver will bear the burden of delivering and collecting the children to and from school; making any necessary arrangements for their care before and after school, if she is working; and tending to them in the event that any of them are ill. It is her work schedules and employment prospects, which will be disrupted because of her responsibilities to care for the children.
These various responsibilities, relating to a child’s health, education, socialisation and general wellbeing have been described as “myriad”[6]. I agree with this description and given the form of the children’s orders made in this matter in February 2012, these myriad and onerous responsibilities will fall almost exclusively on Ms Shriver.
[6] See Collins & Collins [1990] FLC 92-149 at 78,043
Inevitably, these various responsibilities will impact on the hours of paid work which Ms Shriver can take on and so on her prospects of promotion. I appreciate that, in this day and age, these difficulties confront many working parents and, too a large extent, Ms Shriver’s future employment is likely to be of a type which will more accommodate her responsibility for the children than many others.
However, the fact remains that Ms Shriver will carry out nearly all of the parental responsibilities for [X] and [Y] and this inevitably must have an impact on her financial and “bottom line”. It will not be so easy for her to seek promotion or to undertake additional duties. It is likely to be difficult for her to find time to study to obtain qualifications in her career advancement. She will not be able to travel easily to where employment prospects are open to her.
The factors arising under this consideration [section 90SF(3)(c)] are significant in this matter and when coupled with the father’s likely response to any future child support assessment [section 90SF(3)(q)] are factors which militate strongly in favour of Ms Shriver.
For complex reasons relating to the end of the parties’ relationship and the orders which have subsequently made in respect of [X] and [Y],
Mr Sutherland is not well disposed towards Ms Shriver. Up to this stage, he has made only limited payment of child support, which has arisen only as a result of the statutorily based deduction from his social security entitlements.
In my assessment, he is likely to be unwilling to provide financial support for the children for the foreseeable future. Regrettably, it is my assessment that he will do whatever is open to him to avoid paying child support. His capacity to engage in casual employment, in rural based industries, may also make any income received by him difficult to be assessed for child support purposes.
In Clauson & Clauson[7] the Full Court said as follows:
“The weight to be attached to a child support assessment will vary with the circumstances of each case, including the amount of the assessment, the financial circumstances of the parties, the needs of the children, whether the assessment is being paid regularly, and whether it is likely that it will continue to be paid at a regular and adequate rate in the future.”
[7] Clauson & Clauson (1995) FLC92-595 at 81,911
The payment of child support does not fully compensate a parent for the loss of career possibilities and financial advancement, which are often a lot of the parent who has the principle responsibility for the day to day of the children.
In this case, at best, Mr Sutherland is likely to provide only limited child support for [X] and [Y]. Accordingly, Ms Shriver a modest income earner, will bear the overwhelming proportion of the responsibility for providing for [X] and [Y] financially.
The years of adolescence, when the children have moved from primary school to secondary school and are likely to be engaging in all manner of extramural activities are likely to be the most expensive years in this regard. They are yet to come for [X] and [Y]. In addition, these are the years when children most need to have clothing and shoes replenished and replaced, not always on the basis of necessity but very often at the dictates of fashion and peer pressure.
One of the inevitable outcomes of the end of a relationship is an inevitable decline in the standard of living of the parties concerned unless they are well resourced financially. That is not the situation in the present case. On any view, both parties are currently struggling financially – Ms Shriver with her recurrent mortgage payments and
Mr Sutherland with his rent payments, which he understandably regards as being “dead money”.
At the present time, Mr Sutherland feels aggrieved at his perception that the financial vicissitudes arising from the end of the parties’ relationship have fallen more on his shoulders than on Ms Shriver’s. This may be so but Mr Sutherland has not helped himself with his conduct to Ms Shriver during this period.
For understandable reasons, Ms Shriver wishes to retain ownership of the Property S property, which she sees as her and the children’s major source of security, both financially and in terms of accommodation, for the indefinite future.
It is implicit in her case that she sees the retention of the property as being the major factor which will enable her to maintain her current standard of living, not only for herself, but also the children. [section 90SF(3)(g)].
In my view, it would be grossly inequitable, in all the circumstances of this case, if the court was to compel the sale of this property to secure payment to Mr Sutherland of a modest sum of money which he is likely to be able to earn if he applies himself to such a task, in a relatively short period of time.
In contrast, given Ms Shriver’s circumstances, it is likely to take her a significant period of time to garner sufficient moneys to re-enter the housing market. Having obtained a foothold on the lowest run of the home owning ladder, I accept that it is imperative to Ms Shriver’s future financial security that she maintains her modest equity in the Property S property.
At the risk of repetition, I point out again that the pool of assets to be divided between the parties is very small. In such circumstances, it is often artificial in the extreme, to talk of percentage splits. What is of imperative importance to the parties is what such percentage splits mean in dollar terms and what effect they have on their future aspirations and financial security.
In this case, primarily because of her responsibilities, both financial and parental, in respect of [X] and [Y], I have come to the conclusion that the various considerations arising under section 90SF(3) favour
Ms Shriver to a marked degree. I would translate these conclusions into an allowance of at the very least somewhere in the vicinity of twenty percent.
Conclusions
It is all very well to speak in percentage terms prior to making a final property order but the ultimate function of the court is to consider what is the potential consequence of any order it makes in terms of what is just and equitable. In so doing, the court is not obliged to slavishly follow any findings regarding percentages in its crafting of what is considers to be an appropriate order.
Given the pool of assets available, an 80/20% division in the respondent’s favour would require Ms Shriver to find a sum in the vicinity of $12,200.00 or face the sale of the Property S property. I accept Ms Shriver does not have access to borrowings in this amount.
In the greater scheme of things, when consideration is given to the amount of money Mr Sutherland has previously demonstrated he has the capacity to earn each year, it is not a significant sum. However, in order to secure it, Ms Shriver is likely to lose the ownership of the Property S property, with potentially catastrophic consequences for both herself and the children. I do not consider that this would be an equitable outcome in all the circumstances of this case.
Mr Sutherland has acted for himself, in these proceedings, as he is entitled to do. He remains aggrieved with Ms Shriver, whom he considers has spoilt his life. His account of his outcome of his assault charged against Ms Shriver and the remaining criminal charges outstanding against him was not convincing. To the contrary, in my estimation, he was somewhat shifty when questioned about these matters.
In all these circumstances, I am gravely concerned that Mr Sutherland has persisted with his property application, rather than walk away from the modest pool, because he wishes to cause the utmost dislocation and upset to Ms Shriver. I do not think that it is to his credit that he would easily countenance the sale of the Property S property in order to ensure receipt for himself of what can only be regarded as a small sum in the greater scheme of things.
The Full Court has commented, in the context of the analogous provisions which deal with the division of property between married parties that the centre of gravity, in the determination of such cases, has shifted towards the assessment of factors arising under section 75(2), which is replicated largely by the provisions of section 90SF(3). As such, the Full Court has directed that courts such as this one, are to give such provisions “real rather than token weight”.[8]
[8] See Waters & Jurek (1995) FLC 92-635 at 82,376
Although, it is not a common occurrence, there are some cases where the overall considerations in justice and equity dictate that one party alone should retain the vast majority of available property. Such cases are likely to arise where the pool of property is small and where factors after contribution significantly favour one party over the other.
In my view, this is one such case. For reasons already provided, I am satisfied that factors at contribution favour Ms Shriver. I am also satisfied that a proper consideration of the various matters arising under section 90SF(3) also massively favour her.
I acknowledge that the relationship between the parties has been a financial debacle, so far as Mr Sutherland is concerned. Undoubtedly, he leaves the relationship with little other than a sour taste in his mouth. However, the fact remains that he is thirty-six years of age and has many years before him to rectify his current parlous financial affairs. He is healthy and has skills. He has sufficient time to turn the page and start a new.
Given that the Property S property is registered in Ms Shriver’s sole name and given my finding that her endeavours enabled the parties to obtain the property in the first place, in my view, it would be grossly inequitable if she was to be compelled to sell the property.
I am fortified in this view by the fact that the mortgage on the property was extended, it would seem largely at Mr Sutherland’s instigation, to pay some of his debts and enable him to go into the [omitted] business, which had a disastrous outcome coinciding with the tumultuous ending of the parties’ relationship. In large part, Ms Shriver will bear the financial consequences of this decision alone because she will remain responsible for the extended mortgage secured against the property.
The property was purchased around five years ago for $120,000.00. In that period, it has doubled in value. The available equity arising in the property does not appear referable to any specific financial contributions emanating from Mr Sutherland (or indeed Ms Shriver). However the fact remains Ms Shriver’s efforts resulted in the acquisition of the property in the first place and she has a pressing need to retain it because of [X] and [Y], who are financially reliant on her.
The difficulty arising from a small property pool is that it may render any resulting adjustment arising as a consequence of section 90SF(3) “hopelessly inadequate”. This must not be allowed to overwhelm such factors and derive a party of his/her proper entitlements.[9]
[9] See GH & CTH [2005] FamCA 734
In my view the section 90SF(3) factors favouring Ms Shriver dictate that she should retain the entirety of the equity in the Property S property. To compel the sale of the property would result in these factors being given only token weight.
It is also appropriate that each party should retain their respective superannuation entitlements and any items of property currently in their respective possession. Ms Shriver will also leave the relationship with responsibility for her student loan, although it seems unlikely that the Commonwealth will press for its repayment in the foreseeable future.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and sixty-seven (167) paragraphs are a true copy of the reasons for judgment of Brown FM
Date: 31 May 2012
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