Tanner & Tanner (No. 2)

[2008] FamCA 286

FAMILY COURT OF AUSTRALIA

TANNER & TANNER (NO. 2) [2008] FamCA 286

FAMILY LAW  -  PROPERTY  -  wife psychiatrically unwell  -  husband’s contributions prior to marriage and after separation.

FAMILY LAW  -  SPOUSAL MAINTENANCE  -  effect of property orders on capacity to pay maintenance.

Family Law Act 1975 (Cth) ss 72, 79(a) to (g), 74, 75(2),(3), 90MT(1a), (4)
Family Law (Superannuation) Regulations 2001

Bevan v Bevan (1995) FLC 92-600
Mitchell v Mitchell (1995) FLC 92-601

HUSBAND Mr Tanner

WIFE: Mrs Tanner (by her Case Guardian Mrs Smith)

FILE NUMBER: MLF 1888 of 2005

DATE DELIVERED: 24 April, 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Brown J.

HEARING DATE: 3, 4 March, 2008

REPRESENTATION

COUNSEL FOR THE HUSBAND: Mr. Robinson

SOLICITOR FOR THE HUSBAND: Kennedy Wisewoulds

COUNSEL FOR THE WIFE: Mr. Marchetti

SOLICITOR FOR THE WIFE: Forte Family Lawyers

Orders

1. That on or before 24 June, 2008 the husband pay the wife the sum of $128,000 (“the payment”).

1. That pending the payment the husband hold his interest in the real property situated at R in the State of Victoria being the whole of the land more particularly described in Certificate of Title, volume … folio … (“the real property”) on trust pursuant to these orders. 

2. That  IT IS DECLARED  that as and from the date of payment the wife has no interest whatsoever in the real property. 

1. That in default of the payment on or before 24 June, 2008 the real property be sold altogether out of court (“the sale”) and the husband forthwith do all acts and things and sign all necessary documents to effect the sale of the real property and by way of consequential arrangements that shall be made for the purpose of effecting the sale :

   (a)the listing price for the real property shall be as agreed between the parties and if there is no agreement shall be as advised by a valuer (who is also a practising real estate agent) appointed by the President of the Victorian Division of the Australian Property Institute;

   (b)the real property shall be listed for sale by private treaty by an agent agreed to by the parties and if there is no agreement with the agent nominated to advise the value pursuant to the preceding sub-paragraph; 

   (c)in the event the real property has not been sold within three months of the date of default of the payment, the husband shall make all such arrangements and do all such acts and sign all such documents to procure a sale by public auction of the real property without reserve, such auction to take place within a further period of three months by an agent to be agreed, and failing agreement to be nominated by the wife;  and

   (d)the husband have the conduct of the sale. 

1. That upon completion of the sale the proceeds of the sale shall be applied as follows :

   (a)first, to pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding on the real property;

   (b)second, to discharge the mortgage encumbering the real property;

   (b)third, the sum of $128,000, together with compound interest thereon at the rate of 11.5% per annum adjusted monthly from the due date to the date of payment, to the wife;

   (c)fourth, the balance to the husband. 

1. That pending the payment or completion of the sale :

   (a)the husband have the sole right to occupy the real property and during such right of occupation he pay :

   (i)all council rates and water charges and like apportionable outgoings of the real property as they fall due;

   (ii)all household building and content insurance premiums as they fall due;  and

   (iii)all repayments in respect of the mortgage secured on the real property;

(b)the husband holds his interest in the real property upon trust pursuant to these orders;  and

(c)the husband not encumber the real property without the consent in writing of the wife, save that he may further encumber it for the sole purpose of borrowing funds to pay to the wife pursuant to the provisions of paragraph (1) hereof.

1. That the court allocate, as required by s.90MT(4) of the Family Law Act 1975, a base amount of $101,986 to the wife out of the husband’s interest in (account no.801176197) being a superannuation plan with Macquarie ADF Super/Rollover Plan (“the fund”).

1. That pursuant to s.90MT(1)(a) of the Family Law Act 1975, whenever the trustee of the fund (“the trustee”) makes a splittable payment out of the husband’s interest in the fund, the trustee shall :

   (a)pay to the wife or her administrators, executors, beneficiaries, heirs or assignees her entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and

   (b)make a corresponding reduction in the entitlement the husband would have had in the fund but for these orders. 

1. That paragraph (7) hereof have effect from the operative date, which is four business days after service of the sealed orders upon the trustee. 

1. That the trustee of the fund do all such acts and things and sign all such documents as may be necessary so that in accordance with the obligations set out under the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the trustee can calculate the entitlement of and make payment to the wife in accordance with paragraph (7) hereof.

1. That the wife do all such acts and things necessary, including but not limited to exercising her request pursuant to Rule 7A.06(1) of the Superannuation Industry (Supervision) Regulations 1994 for the rollover or transfer or the transferable benefits out of the husband’s interest in the fund to a fund of the wife’s choosing in accordance with Rule 7A.12 of the Superannuation Industry (Supervision) Regulations 1994.

1. That pursuant to Rule 14F of the Family Law (superannuation) Regulations 2001, any payments from the husband’s superannuation interest made after the trustee has rolled over or transferred the transferable benefits to a fund of the wife’s choosing, are not splittable payments.

1. `That, having been accorded procedural fairness in relation to the making of these orders, these orders shall bind the trustee of the fund. 

1. That until the happening of any of :

   (a)the establishment of a separate account in the name of the wife in the fund;

   (b)the transferor rolling over into another superannuation fund the payment split created by paragraph (7) herein;

   (c)the wife satisfying a condition of release and being paid the payment split created by paragraph (7) herein;

   (d)the wife executing a waiver of rights within the meaning of s.90MZA of the Family Law Act 1097 in relation to the payment split created by paragraph (7) herein;

   the husband be and is hereby restrained by himself, his servants or agents from executing a death benefit nomination in favour of any person or doing any other act or thing which would render any part of his interest in the fund a “not splittable payment” within the meaning of regulation 12 or 13 of the Family Law (Superannuation) Regulations 2001 and the trustee of the fund give effect to this order.

1. That in the event a party refuses or neglects to comply with a provision of these orders :

   (a)the registrar of the Family Court of Australia in Melbourne is hereby appointed to execute all deeds and documents in the name of the defaulting party, and do all acts and things necessary to give validity and operation to these orders;  and

   (b)the party in default is ordered to pay any and all foreseeable damages to the other party caused by the default;  and

   (c)the party in default is ordered to pay all reasonable costs incurred by the other party for the purpose of enforcing this order and proving his or her damages.

1. That it shall be sufficient authority for the registrar to act pursuant to paragraph (15) hereof to have before him or her an affidavit sworn by the solicitor for a party, filed, and served on the other party, in which the solicitor deposes that the other party has refused or neglected to comply with a provision of this order and detailing the provision, the acts undertaken to have him/her comply and his/her response (or lack of a response).

1. That unless otherwise specified in these orders :

   (a)each party be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and for that purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s record thereof;  insurance policies are deemed to be in the possession of the beneficiary thereof;  superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for the payment out of such entitlements;  and the chattels in the real property are deemed to be in the possession of the husband;

(b)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

1. That paragraphs (2) to (5) of the orders made herein on 31 May, 2006 be discharged as and from this date. 

1. That the wife’s application for spousal maintenance is dismissed. 

1. That all extant property applications be otherwise dismissed.

1. That the property applications be removed from the List of matters awaiting finalisation.

1. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:   MLF 1888 of 2005

MR TANNER

Husband

And

MRS TANNER (by her Case Guardian MRS SMITH)

Wife

REASONS FOR JUDGMENT

1. The parties married in November, 1998.  They have three children.  E is 17, S is 14 and J is 6.  Until early 2003, all went well with the family.  The husband was employed in a managerial role, working hard and earning a reasonable salary.  The wife had primary responsibility for the home and children, and worked part-time.  In early March the wife was diagnosed with depression and ceased paid work.  She was admitted to the A Clinic for intensive psychiatric care and she has experienced debilitating psychiatric illness ever since.  These proceedings are brought through a case guardian.

1. After her diagnosis in early 2003, the husband did his best to hold the family together.  He continued in fulltime work but took over significant responsibility for the home and children.  The wife’s health fluctuated, and she was able to assist on occasions;  her illness took a heavy toll on her and on the family.  In June 2005 the Department of Human Services intervened, after the wife attempted suicide in J’s presence and was hospitalised.  Facing a protection application if she resumed occupation in the family home, the parties separated.  They have not lived together since.

1. For some months the husband maintained a hope that the wife’s condition would stabilise and, somehow, the family would be able to resume the life they had prior to her illness.  His evidence was of telling the wife in September 2005 that, from his perspective, the marriage was over;  given the wife’s mental state, the court cannot know whether she understood whatever it was the husband told her at that time.

1. In 2006 the husband filed a divorce application in the Federal Magistrates’ Court, deposing to a separation date of May 2005.  On 29 August, 2006, Federal Magistrate Riethmuller dismissed the application;  it is clear from the order that he did not find the grounds proven.  The order records (by notation) the parties’ agreement that the date of separation was 2 November, 2005.

1. After their physical separation, on 8 June, 2005, the husband initiated proceedings in this court seeking parenting orders, as required by DHS.  The children were placed in his care and all subsequent parenting orders provide for the children to live with him.  Sadly, the applications for parenting orders were contested, and the parties were both legally represented from the outset.  The wife’s legal costs were higher than the husband’s, which is unsurprising;  it is probable her psychiatric state made it very difficult for her solicitors to obtain instructions and for her to understand advice, and on at least one occasion in 2005 they foreshadowed the potential for the appointment of a case guardian. 

1. The parties agreed that their legal costs arising from the June 2005 application would be borne from joint matrimonial resources. 

1. It is clear from correspondence in August 2005 that the husband raised concerns about the nature and extent of the advice being given to the wife.  He was concerned that her solicitors might be considering property matters, which they denied in a letter dated 16 August, 2005, noting that, as they were instructed, “the parties intend the marriage to continue”.  Monthly legal bills continued to be paid but in late October 2005 the husband made it clear that he did not agree to the continuation of the funding arrangement.  That advice was communicated to the wife in early November 2005.

1. It is probable the parties then agreed that each would borrow from his or her parents to fund the litigation, and the parents would be repaid later.  I cannot say whether, by that, they meant repaid from joint funds, or from the sum each would receive from an eventual property settlement.

1. On 3 April, 2006 the wife filed an amended response in which she sought spousal maintenance of $350 per week.  On 21 April, 2006 the wife filed a further amended response seeking an adjustment of property interests.  On 31 May, 2006 orders made, by consent, provided for the husband to pay spousal maintenance for the wife and for the transfer of a Mazda motor car to her by way of partial property settlement.  In addition to maintenance of $200 per week, the husband agreed to pay registration and insurance on the car, up to $86.70 per month for the wife’s mobile phone so long as he remained employed by G Company and to maintain her at the current level on his health insurance.

1. In the course of the proceedings orders were made for the wife to spend time with the children, initially on a supervised basis, and then unsupervised.  On 27 November, 2007 final parenting orders were made, by consent.  They provide for the children to live with the husband and for S and J to spend time with the wife on each alternate weekend, on each Wednesday night and up to one half of school holidays. 

1. The trial of the competing property applications commenced on 3 March, 2008 and concluded the following day.  On the afternoon of 6 March, 2008, on an urgent ex-parte application made by the husband’s solicitor, the court suspended all orders providing for the wife to spend time and communicate with S and J.  The evidence before the court was that the wife had driven her car, in which J was a passenger, into a pole.  J was at the Royal Children’s Hospital, in a condition then described as critical.  The husband was at the hospital with J;  he had been asked to obtain an order to preclude the wife attending the hospital, in the interests of J’s immediate medical demands.  Until further order, the wife was restrained from attending at the hospital, save with the consent in writing of the husband or of the medical practitioner responsible for J’s treatment.

1. At a hearing on 14 March, 2008 interim orders were made providing for the wife to have phone contact with J while she remained (as she then was) an inpatient in a clinic, and for time with him after her discharge, supervised by named family members.  By then J was out of hospital and back at school.  A judgment delivered on 14 March, 2008 summarises the background to and reasons for those orders.

PARTIES

1. Both parties are 43.  In a report dated 23 November, 2007, the wife’s treating psychiatrist, Dr. R, advised that the wife continued to have a depressive illness and to receive ECT treatment, anti-depressant medication (Lexapro), anti-depressant augmentation by Lithium to enhance the anti-depressant effect, and Seroquel, a tranquilizer.  ECT was being given at weekly intervals to maintain a euthymic mood and her ability to function.  At that time Dr. R said that with the combination of treatment, her prognosis was fairly good.  Dr. R did not think the wife then posed a risk to her children but she was not fit to engage in work on either a fulltime or part-time basis. 

1. In a subsequent report, dated 15 February, 2008, Dr. R advised of the impact of stress on the wife’s ability to think logically, sequentially and abstractly and upon her judgment, attention and discrimination.  Dr. R reported :

   It has been my observation that when she is under pressure, particularly when a visit to you (her lawyers) or to a legal hearing about her marital settlement, she becomes highly anxious and distressed, and is dysfunctional.  Her ability to discuss her symptoms and difficulties is markedly reduced and she has often sought admission to the Clinic.  She and her parents agree with this assessment and conclusion.  Consequently, it is my opinion that she does require a Legal Guardian.

1. Dr. E saw the parties in 2006 and prepared psychiatric assessments dated 3 April, 2006.  He noted the wife’s numerous attempts at suicide and the effects of her behaviour on her marriage, and on the children, particularly the girls.

1. The wife was living in rented accommodation at the time of the trial and had the support of her parents and a number of her siblings.  Doctors appointments, psychotherapy, therapeutic interventions, and ECT treatments (requiring overnight stays) consume her days.  Her history is of her psychiatric functioning worsening under stress, corroborated by Dr. E’s evidence of her hospitalisation after seeing him, the adjournment of the trial earlier this year, and, possibly, the events which resulted in J’s injury, two days after the trial concluded.

1. The husband is employed as an operations manager for P Pty. Ltd., a position he commenced on 13 August, 2007, earning some $100,000 per annum, plus superannuation.  He has significant parenting responsibilities.  The wife’s relationship with her two daughters is troubled and they are struggling with the impact of her psychiatric illness on the family and on them.  J’s relationship with his mother has been good but there is now a question mark over the nature and extent of the time she has with him, at least in the immediately foreseeable future.  The husband and children continue to live in the former matrimonial home at R.  Neither parent has re-partnered. 

EVIDENCE

1. Findings are made on the balance of probabilities having regard to the evidence and my observations of the demeanour of witnesses.  In what follows, statements of fact constitute findings of fact.

1. The wife relied on an affidavit and financial statements sworn by her and filed on 21 December, 2007, together with affidavits of her parents (Mr and Mrs Smith) filed on 24 December, 2007.  The wife also relied on paragraph 4 of an affidavit sworn by the husband on 24 March, 2006.  She relied on the reports of Dr. R and Dr. E, to which I have referred.  The wife’s psychiatric condition meant she could not reasonably be expected to give evidence.  The husband accepted that reality.  Her parents were cross-examined.  No-one sought to cross-examine the medical practitioners. 

1. The husband relied on an affidavit and financial statements sworn by him and filed on 19 December, 2007.  The husband also relied on paragraph 22 of an affidavit sworn by him on 28 November, 2005 and on paragraph 8 of an affidavit sworn by the wife on 16 November, 2005.  Reference was made to earlier financial statements and affidavits sworn by him.  He was cross-examined. 

PROPOSALS

1. The husband proposed that he receive 55% of the available pool of superannuation and non-superannuation assets and the wife 45%;  he sought a division in those percentages across both sets of assets.  For her part, the wife sought that she receive 55% of that pool, and the husband receive 45%, but structured (on the pools contended for by her) so that she receive 50% of non-superannuation assets and 66.5% of the superannuation assets.  While only 10% apart, the pools advanced by each were very different.  The wife also sought spousal maintenance. 

1. Neither party sought that contributions be assessed and adjustments made save on a global basis, an approach which was reasonable and will be adopted by the court.

LAW

1. I propose to adopt the now well established approach to the exercise of the discretion under s.79.  It is appropriate for the judge to identify the assets to be divided between the parties, identify the liabilities to be taken into consideration and then to determine the manner in which the assets ought to be divided having regard to s.79(4)(a), (b) and (c) considerations.  Then having considered (d) to (g) of s.79(4) the court should determine what further adjustments should be made having regard to s.75(2) considerations, and consider whether the outcome is just and equitable.

ACQUISITION OF ASSETS

1. Prior to their marriage, the parties bought a house in N, in March 1998.  Between then and their marriage in November that year the husband made the mortgage payments, and did considerable work on the property.  The wife, too, assisted with work on that property.  His evidence was of the wife contributing savings of $10,472 to that purchase, and of him contributing savings of $5,463.  Both parties owned cars.

1. The husband’s evidence was that the contributions he made towards the mortgage, prior to their marriage, exceeded those made by the wife, as his income was higher. 

1. When the parties married the husband was employed by L Company and the wife was working at a hospital.  Their daughter E was born in August, 1990.

1. The following year the husband inherited about $3,000 from his grandmother.  S was born in February, 1994.

1. In 1998 the wife’s parents gave $20,000 to the wife, and each of their other children.  The wife put some $15,000 of this sum into the mortgage and bought Coles Myers shares with the balance. 

1. Around that time or, possibly, earlier, the wife’s family gave an old circular leadlight piece to the parties.  It had some family history and it is likely it was given to the parties as the husband was studying lead lighting.  He and his teacher cleaned the piece and it was then set as the central image in a window, decorated with art nouveaux motifs.  The whole window was then inserted, behind an existing window, at the R home.

1. The husband’s evidence was of spending some $300 and undertaking many hours of work to restore the window. 

1. The R home had been purchased by the parties after they sold the N property, using the proceeds.  They then moved to Sydney, where the husband was working, and returned to Melbourne shortly prior to J’s birth in 2001.  The R home was rented while they were away.

1. In 2001 the husband left L Company and received a termination payment of $48,133.  As this related to the whole period of his employment with L Company, it included the three and a half years of employment prior to the parties’ marriage.

1. The husband also received a partial redemption from his superannuation in 2002, of $61,329 gross.  Again, this related to the whole period of his employment with L Company.  All funds he received as a consequence of leaving L Company were applied to reduce the mortgage and to meet household and family expenditure.

1. The husband’s evidence was of inheriting a firearm on his grandfather’s death in around 1985 and receiving $1,020 compensation when it was handed in under the government buy-back initiative in the 1990s.

ASSET POOL

1. The parties agreed on the following assets in the pool :

   R property  $460,000
   less mortgage  $142,000                  $318,000
   Mazda car – wife   18,250
   Ramsay Health shares – wife   10,900
   Superannuation

   Husband

   Macquarie                 $131,179

   Russell   57,197

   Total   188,376

   Wife

   Health Super             $5,428

   CARE   5,401

   HIP   3,358

   Commonwealth Life      872

   AUFfund       335

   Total   15,394

1. The parties were not agreed on whether the husband’s car should be included in the pool, whether the sums disbursed on legal fees until November 2005, and $10,000 superannuation accessed by the wife on hardship grounds after separation, should be notionally added back to the pool.  Nor could they agree on the way in which the leadlight glass window should be taken into account. 

Leadlight glass window

1. In a trial in which there was very little cross-examination, much of it went to the leadlight glass window, on which the husband and the wife’s parents may have displaced some sense of unhappiness and grievance. 

1. The evidence of the wife’s mother Mrs Smith was of being told by the husband that his teacher valued the window piece at between $3,000 and $5,000.  The wife’s father’s recollection was of a figure of $3,000.  The husband recalled only a conversation in which his teacher said the piece was priceless.

1. The wife’s mother estimated that the window would now have a value “in the order of $10,000”, describing it as a lovely feature of the R home.  There was no valuation evidence.

1. The husband’s starting position, as I understood it, was that the window should stay where it is.  To the extent that it has any value, that will have been included in the valuation of the real property.  The wife’s starting position was more amorphous, not moving beyond saying it should be taken into account.  The attribution by her of an estimated value of $10,000 may have been indicative of a view it should be included in the pool at that or some other figure, and apportioned to the husband as part of his found share of the assets.  Whatever the intention, much of the cross-examination went to the potential for the window to be removed.

1. In the witness box, the wife’s mother asserted that the window should be removed and provided to the wife.

1. On the second day of the trial counsel for the husband advised that his client was content for the window to be included in the pool at whatever figure the wife attributed to it.  The window would be removed, and form part of the wife’s share of the pool.  The position was clear;  it was not submitted that the window had to be included at the figure of $10,000 (the wife’s mother’s estimate) or $3,000 to $5,000 (the alleged estimate of the leadlight teacher).  It could have been included at only a few hundred dollars or, indeed, one dollar.  Faced with that proposal, counsel for the wife was instructed to seek an order that the window be removed and sold, and the value added to the pool, a solution at odds with the alleged sentimental value the piece has for the wife’s family. 

1. The reality is that the court cannot know what value, if any, the window added to the valuation of the former matrimonial home;  to give it a discrete and separate value may well be valuing it twice, particularly if it is the feature the wife’s family contend.  In my judgment, it is preferable to consider the window when assessing contributions.  The raw material (the central motif) which gives value to the window, was a contribution made by the wife.  The skill and work was a contribution of the husband;  the window as a whole is a significantly larger piece than the initial component.  The funds expended were matrimonial funds. 

1. I add (and this is not a reason for the decision) that the window forms part of the home in which the family lived happily for some time, and which now houses the husband and children.  Although the parties sought different orders, it was no part of the wife’s claim that the house should be sold.  The girls’ relationship with their mother is troubled and recent events will have complicated those aspects.  When considering this decision, both parties, and the wife’s family, may like to reflect on the potential effect on the children were they to be told that the window was to be removed from their home and sold, at their mother’s demand.

The husband’s car

1. The wife sought that the husband’s car be included in the asset pool at the estimated value put on it by him in his form 13, being $12,000.  The husband submitted that it should not be included in the pool.

1. The husband’s evidence was of selling the Ford Territory car he was then driving in June 2006, following the orders requiring the payment of spousal maintenance for the wife.  The car was sold for $39,500, and the sum due under the lease was $40,400;  he thus incurred a loss of $900.  He then leased a 2004 Commodore from his then employer, G Company, at a lower rate than he had been paying for the Territory.  When he ceased employment with G Company in July 2007, he bought the Commodore for $13,100, being the residual payment due under the lease.  The sum for the car came from the termination payment he received at that time of $29,200 nett.  He applied that sum to pay out the lease on the car, discharge a credit card debt of approximately $8,000, pay household bills and meet legal expenses.

1. His evidence was that some $15,000 of the termination pay represented cashed out annual leave.  At the time of the parties’ separation in November 2005, he submitted he had accrued annual leave of $7,600 gross, or $5,300 nett.  A $10,000 bonus related to a project he was persuaded to stay on and complete at the very end of his time with the company. 

1. I am satisfied the car should be included in the asset pool and the post separation contributions made by the husband can be considered when assessing contributions of all kinds.

Furniture

1. The husband’s evidence was that the furniture has been roughly equally divided between the parties, save items in the children’s rooms and belonging to them.  The wife’s mother gave evidence of items provided by her, which were incorporated into the parties’ home, and the husband was cross-examined about those.  Nothing persuades me that these should be taken into account in the asset pool.  Similarly, I place no weight on the claims relating to an AFL jumper or a signed Commonwealth Games T-shirt.

Notional add-backs

1. Matrimonial funds (whether savings or draw downs on the mortgage) funded legal expenses for the husband of $12,700 and $19,300 for the wife.  The husband sought that these be included in the asset pool.  The wife agreed that she also received between $3,000 and $4,000 for her own support.  The husband sought to notionally add back $3,500 for these funds.

1. Counsel for the husband argued strongly that the court should find that the parties separated in September 2005 and that it was the date of separation which was most relevant when considering whether these sums should be added back into the pool.  The husband agreed that, at different times, he dated the separation at May 2005, June 2005 and September 2005.  The last date was certainly raised by him as long ago as 2006.  I can only speculate as to why he included the date he did in the divorce application.  As the wife could not be cross-examined, it was not possible to ascertain whether she agreed that the husband told her the marriage was over in September.  If he did, that would fix the date for the purpose of a divorce.  It is not necessary for both parties to believe the marriage has broken down.

1. The husband’s explanation for agreeing (before Federal Magistrate Riethmuller on 29 August, 2006) that separation occurred on 2 November, 2005 was that he did not wish to cross-examine the wife about the separation and was prepared to make that concession.  The agreed date is not part of an order but it is a notation to an order, and one on which the parties might reasonably rely thereafter.  I do not find that it creates an estoppel, as it was not recorded consequent to a court finding, but it is a matter to which I have regard. 

1. Perhaps more importantly, particularly in relation to the legal expenses, is the nature of the agreement reached by the parties.  It was not the husband’s case that, when he told the wife the marriage was over in September, he also told her that all bets were off in relation to legal expenses.  His evidence was that that occurred in early November and he gave an explanation which related to problems arising from the wife’s insistence on counter-signing cheques or other documents. 

1. In relation to the living expenses, I do not propose to add them back into the pool.  I have regard to the circumstances in which the wife lived after she had to move from the family home, which included a period of residence at V Clinic.  The order for spousal maintenance was not made until 31 May, 2006 and while I accept the husband provided other financial assistance at times, in my view that was reasonable expenditure on her part. 

1. Nor do I propose to notionally add back the sums expended on legal fees in 2005.  There is sufficient uncertainty about the date of separation, and sufficient certainty about the agreement that was reached, and the date on which the husband resiled from the agreement, to make that reasonable.  I take into account the fact that $10,323 of the wife’s legal costs were incurred to pay an account dated 30 November, 2005, and some considerable part of that may have related to work done that month, after the husband terminated the agreement.  In the absence of evidence as to the period in which each monthly account related (that is, was it for work done to the last day of the month, when the account was dated, or to an earlier time in the month?) I will take this into account when considering all contributions made during the marriage and thereafter. 

Withdrawal of superannuation benefits

1. The wife received a nett distribution of $7,850 from the $10,000 she withdrew from her interest in Health Super in May 2007.  Her evidence was of applying those funds to living expenses, and tax.  She has been in receipt of spousal maintenance and other payments, and I take into account the evidence that the husband continued to pay her mobile phone bill after changing his employment, which he was not obliged to do.  Her expenses are high, particularly those for medication and other necessities arising from her illness.  Nevertheless, I do propose to include that sum in the pool.  Her ongoing financial needs will be considered when assessing s.75(2) factors, both in relation to property distribution and spousal maintenance. 

LIABILITIES

1. The only matrimonial liability noted in the aide memoir submitted on behalf of the husband was the sum of $1,000 due on his credit card at separation.  That figure is included in his affidavit filed 19 December, 2007.  In the absence of any submission to the contrary, and notwithstanding the fact that the sum is not included in the list of assets and liabilities tendered by counsel for the wife, I include it as a matrimonial liability.  I do not include the current credit card debts of the parties as  matrimonial liabilities.

1. The husband owes his parents some $12,000, of which approximately $7,000 has been expended on legal fees after November 2005.  $3,000 was expended on a family holiday and the balance on items such as a television, a refrigerator and lounge suite.  The husband deposed that he must repay those sums once the proceedings conclude. 

1. The wife’s parents paid significant sums by way of legal fees for her, after November 2005.  They paid $19,300 to Aitken, Walker and Strachan, prior to the transfer of her file to her current solicitors.  Save for counsel’s fees (in an amount I cannot quantify) those solicitors have been acting on credit.  In her form 13 sworn on 20 December, 2007 she estimated outstanding legal costs at $34,000.  The wife’s evidence was that funds provided by her parents for this purpose were a loan, and thus she would have to repay them.

1. Counsel for the husband cross-examined the wife’s parents with the apparent aim of satisfying the court that either a personal liability of the wife would be forgiven (that is, the debt arising from payment of her legal fees) or that her parents constitute a financial resource, to be taken into account when determining her financial position.  Insofar as the cross-examination went to the question of funds advanced for legal fees, I proceed on the basis that it is a debt of the wife but not one that is likely to be demanded immediately.  The wife’s father candidly agreed that his daughter would have trouble repaying the loan and he would consider discussing it with his wife.  Pressed further, about buying his daughter a house, he responded (in my view, reasonably) by referring to the husband’s abrogation of his responsibility to support his daughter, an obligation the husband took over when he married her.  As the husband’s case appeared to be run on the basis that his parents would demand immediate repayment of the debt owed to them, I act on that basis.

ASSET POOL
           Assets
           Equity in R property    $ 318,000
           Car  -  wife   18,250
           Car  -  husband   12,000
           Ramsay Health shares   10,900
           Superannuation accessed by wife       10,000
  $ 369,150
           Superannuation – Husband    $188,376
           Superannuation – Wife   $  15,394                   $ 203,770
           Total Assets  $572,920

Liabilities
           Credit card debt at separation  $   1,000
           Nett Assets  $571,920

FINANCIAL RESOURCES

1. I have earlier adverted to cross-examination relating to the financial position of the wife’s parents.  In certain circumstances, probable entitlements under a will or a family trust have been found to constitute a financial resource of a party.  Cross-examination going to those things may be relevant but I can see no relevance in asking a parent about the source of a cash sum, paid more than a decade ago or, indeed, more recently.  It is not wealth which is the issue, but intention.  I do not doubt the wife’s parents have done much to assist the wife and will, to the best of their ability, do so again.  When the wife saw Dr. E she was estranged from them and it is to their credit that they have provided the level of financial and emotional support they do.  That said, the wife is one of a large number of children, and her mother adverted to this fact and the entitlements of the other children.  I proceed on the basis that the wife is fortunate to have a supportive family but not that the obligation to support her is somehow transferred from her husband (to the extent he is able to do so) to them. 

CONTRIBUTIONS

1. I turn to the second of the steps in the exercise under s.79, namely an assessment of the parties contributions within the context of s.79(4)(a) to (c).  These provisions are as follows :

79(4)In considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, the court shall take into account -

(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;

(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of the, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;

(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent;

1. The husband sought a loading by virtue of the fact that he paid all or more of the mortgage payments in the eight month period between taking possession of their first home and the marriage.  That needs to be offset against the fact that the wife’s contribution to the deposit was roughly double his.  I do not find it appropriate to give the mortgage payments the weight sought. 

1. The husband brought superannuation and work-related benefits to the marriage.

1. Until the wife became ill in 2003, the parties worked co-operatively to support the family.  It was not suggested their contributions were other than equal in that period, save as a consequence of third party contributions.

1. I do place weight on the gift of a capital sum of $20,000, a significant part of which went into the mortgage.  The shares bought by the wife with the balance of those funds are represented in the asset pool, and constitute about 3% of non-superannuation assets.  Balancing that against the husband’s inheritance ($3,000) and money from the gun buy-back ($1,020) the scales of contribution during the marriage might slightly favour the wife at the time she became sick, although it is important not to over-value financial contributions at the expense of non-financial ones. 

1. There is no doubt that after the wife became sick, the husband had to make a greater contribution.  He maintained the obligation to support the family financially but had to take on a major home making and parenting role from 2003 and, eventually, the whole of that role, save for the relatively few occasions on which the younger children have been with their mother.  From the wife’s perspective, and that of her family, such an assessment may seem unfair, and as if she is being punished for incapacities arising from matters over which she has no control.  However, the court cannot ignore the reality and makes that finding of a significant additional contribution by the husband without any criticism of the wife. 

1. I take into account the funds provided to each of them in the last months of the marriage and, on the husband’s case, the period immediately following his decision that the marriage was over, and the additional funds to which the wife had access.  I also take into account the circumstances relating to the acquisition of the car in the husband’s possession.

1. The court needs to consider the submissions relating to the pre-contribution components of the termination pay and superannuation the husband received after leaving L Company in 2001.  I do not accept as sound the simplistic calculation advanced by counsel for the husband which would take no account of the nature of superannuation growth, or the increasing seniority of an employee, reflected in higher remuneration (as opposed to simple inflationary rises).  I do take into account the fact that the husband was employed by L Company for three and a half years prior to the parties’ marriage and thus brought to the marriage entitlements which, in due course, accrued to the benefit of the parties and increased the sum which he would otherwise have received had that employment commenced on their marriage.  That is a contribution to which weight should be given.  Further, weight must be given to his post-separation superannuation contributions.  His superannuation makes up a little over 35% of the total assets.

1. Balancing all factors, I find that the husband’s contribution to superannuation and non-superannuation assets should be assessed at 60% and the wife’s assessed at 40%.

SECTION 79(4)(d) to (g)

1. I turn to the matters referred to in s.79(4)(d) to (g).

   (d)the effect of any proposed order upon the earning capacity of either party to the marriage;

2. There is no evidence financial orders will impact on the earning capacity of either party.

(e)the matters referred to in sub-section 75(2) so far as they are relevant;

1. I will consider each of the relevant paragraphs :

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

1. The husband is 43 and in good health.  The wife, too, is 43.  I have previously summarised the evidence in relation to the wife’s health.  Her prognosis could not be said to be good. 

(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;

1. The husband is earning an annual salary of $100,000, plus superannuation, which brings it to about $109,000.  Bonuses can be paid but his evidence is that none has been paid by the company in the last three years.  He is earning a little less in that job than he was in his previous one but I accept as sound the reason he changed employment.

1. The mortgage on the r property is presently $142,000 and he deposed to paying $242 per week.  He has made enquiries from NAB, as a result of which he believes he could borrow additional funds up to, at the top end, $275,000 to $280,000.  Calculating likely repayments on a mortgage of $253,000, he would be paying $524.38 per week over twenty years.

1. Counsel for the wife put to the husband that he could look at a continuing line of credit, or an interest-only mortgage, or a mortgage over thirty years.  Having regard to the husband’s age, the last is unlikely to be a bank’s first choice.  On the husband’s own evidence there would have to be some doubt about his potential to meet the additional mortgage payments, as his evidence was that he has been going backwards financially while making spousal maintenance and other payments for the wife.  Nevertheless, he was confident he could do so if relieved of the present obligation to pay periodic maintenance and other expenses of the wife.

1. The wife has no income-earning capacity and I cannot find that is likely to change.  Her parents have assisted her financially in the past and may do so again.  She is presently dependant on payments made by the husband and Centrelink.

(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;

1. The wife’s health means that she is unlikely to be playing a significant parental role in the near future.  It is to be hoped she will be able to resume spending regular time with J and that S will spend more time with her, too.  The husband will bear the brunt of parenting.

(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;

1. The husband was challenged about some of his commitments, a challenge in which I do not find much substance.  The children are involved in numerous extra-curricular activities.  He has lost 35 kilograms in the last 18 months, necessitating some clothes purchases.  I have no doubt he has been doing his best to provide as stable and secure environment as is possible for the children, in difficult times. 

1. E will be 18 in August.  It was put on behalf of the wife that the husband will not then be financially responsible for her or that E will, at least, be in a position to substantially support herself.  The husband’s evidence was of E hoping to undertake tertiary study.  She currently has a job at a supermarket, doing one, and sometimes two, shifts.  His legal obligation to her may end when she is 18 but it is unlikely that that will reduce his weekly expenditure by very much at all.

(e)the responsibilities of either party to support any other person;

1. Neither of the parties has a responsibility to support anyone outside the immediate family.

(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 or 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;

1. The husband receives Centrelink payments, as does the wife.  I have earlier referred to the parties’ respective superannuation entitlements.

(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;

1. It is not unusual for the standard of living of parties to fall after divorce but it is important that one party not bear the brunt of that fall.  At the moment, the wife’s living conditions do not match those of the husband.

(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;

1. There is no evidence that the wife has the capacity to retrain and I accept her evidence insofar as it relates to her nursing qualification.

(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;

1. For many years the wife’s acceptance of the primary role of homemaker and parent enabled the husband to advance his career.  His evidence was of only taking two weeks leave a year, in order to “cash out” the balance, and that is indicative of the division of labour that operated in their then agreed “partnership”.  I have no doubt that the husband has struggled to balance the demands of his employment and those of parenting over the last years.  The fact remains that he did take an earning capacity from the marriage, a valuable asset.

(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;

1. It is not the marriage which has affected the wife’s earning capacity, but her illness.

(l)the need to protect a party who wishes to continue that party’s role as a parent;

1. I take into account the problems experienced by S, evidenced by her attendance at a school for disadvantaged students.  She is doing well there and it is hoped she will return to a mainstream school, whether S School or elsewhere.

1. The burden of parenting obligations cast on the husband is illustrated by the recent injuries experienced by J.  It is the husband who will bear the brunt of J’s care as he recovers and deals with the stress of the accident.

(m)if either party is cohabiting with another person - the financial circumstances relating to the cohabitation;

1. There is no evidence either party has re-partnered.

(f)any other order made under this Act affecting a party to the marriage or a child of the marriage;  and

1. There are no other relevant orders, save for the parenting orders.  The question of spousal maintenance will be considered separately.

(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, or is to provide, for a child of the marriage.

1. The husband has not sought child support from the wife and she has no capacity to pay it. 

CONCLUSION

1. Taking all of these matters into account it is my view that a just and equitable result requires the wife to receive by way of adjustment an additional 10% percent of the whole asset pool, taking her entitlement to 50% of all assets.

1. Fifty percent of the assets is $285,960.  The wife has assets of $39,150 (including the $10,000 superannuation she accessed) and superannuation of $15,394, totalling $54,544.  She is thus entitled to $231,416.  The wife owes the husband $1,100 for Dr. E’s report and $330 for valuation fees.  Deducted, her entitlement is $229,986. 

1. The current mortgage is $142,000.  If the husband were to refinance and borrow $280,000, $138,000 (less borrowing expenses) would be available to pay to the wife.  On his preferred figure of $253,000, $111,000 (less borrowing expenses) would be available.  The wife did not seek the sale of the R home and the balance would have to come from his superannuation, by way of a splitting order.  The wife would not routinely be able to access any such benefit for many years but her significant health problems may fulfil a condition for early release.  I do not act on the basis that will occur, but it must be a possibility.

1. I propose to order the husband pay the wife $128,000 now.  If raised by additional borrowings, the then mortgage would rise to some $270,000.  This will impose financial demands on the husband, but he wishes to retain the family home, and it should be within his reach.  He has years of employment ahead of him and were he to receive a bonus, that could go into the mortgage to reduce indebtedness.  The wife accepted the reality that part of her entitlement would have to come out of the husband’s superannuation;  it was never her case that the R home should be sold, save as a default provision.  The funds she will receive can only be a nest egg, unless her family can assist in ways which would allow borrowings to purchase a residence (albeit modest), or capital to do that.  The balance due to the wife will come via a splitting order of the husband’s superannuation.  Each of the parties will retain responsibility for debts owed to family members, legal fees and on credit cards.  I am satisfied that orders in these terms are just and equitable, within the constraints of the case.

SPOUSAL MAINTENANCE

1. The wife sought spousal maintenance, relying generally upon the shortfall between her expenses and income.  From 2009 the wife sought $240 per week, with a provision for annual CPI increases.  For the period between trial and 31 December, 2008 she sought maintenance by way of weekly payments of $55, plus the allocation of a further sum of $10,000 from the husband’s superannuation interest. 

1. Section 72 of the Family Law Act 1975 imposes a duty on a party to maintain the other if reasonably able to do so and if that other party is unable to support himself or herself adequately by reason of one of the factors set out in the section. Section 74 enables the court to make such order as is proper and it is further required to take into account the matters referred to in s.75(2), one of which (s.75(2)(n)) provides that the court shall have regard to the terms of any order made or proposed to be made under s.79 in relation to the property of the parties. In Bevan  v  Bevan (1995) FLC 92-600 at 81,981 the Full Court set out the law as being :

   . . . that an award of spousal maintenance requires

   1. a threshold finding under s.72

   2.        a consideration of s.74 and 75(2)

   3.no fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit;  and

   4.discretion exercised in accordance with the provisions of s.74, with (reasonableness in the circumstances) as the guiding principle.

1. As the Full Court noted in Mitchell  v  Mitchell 1995 FLC 92-601 at 81,995, the threshold question of whether an applicant can support him or herself adequately is not to be determined by any fixed or absolute standard but having regard to the matters referred to in s.75(2). Nor is the question to be determined upon a subsistence level.

1. Much of the wife’s income presently comes from Centrelink benefits.  Section 75(3) of the Act provides that in exercising its jurisdiction under s.74, a court shall disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit. 

1. There is no doubt the wife is unable to support herself adequately, notwithstanding the property orders which will be made.  Her Centrelink payments must be disregarded, as required by s.75(3)of the Act.  The question is the husband’s capacity to pay. 

1. The s.75(2) factors have previously been considered.  I must also consider the consequences of the property orders made, which will require significant borrowings which will, in turn, substantially increase the mortgage commitments of the husband.  His superannuation entitlement will be reduced to a total of $86,390 after the allocation to the wife of a base figure of $101,986, (the balance of her property entitlement) from his Macquarie fund.  Taking all matters into account, I am not satisfied he has the capacity to continue to pay any sum by way of spousal maintenance, whether by periodic payment or payment of specified expenses.  Given the purpose of spousal maintenance, the wife’s application for another $10,000 from the husband’s superannuation (which will not vest for many years) is curious, but it may have been premised on a perceived capacity to satisfy a condition for early release of superannuation.  Whatever the intent, I have taken that superannuation asset into account when considering the wife’s application for maintenance.  The existing orders, made on 31 May, 2006, will be discharged.

I certify that the preceding
102 paragraphs
are a true copy of the reasons for
judgment herein of the
Honourable Justice Brown AM.

Dated the           day of            2008.

…………………………………………
Associate.