Taylor and Taylor
[2013] FMCAfam 176
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TAYLOR & TAYLOR | [2013] FMCAfam 176 |
| FAMILY LAW – Property – alteration of property interests – long marriage – gambling, part of extent of which is conceded – assessment of contribution – future needs. |
| Family Law Act 1975, ss.75, 79 |
| Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 AJO v GRO (2005) FLC 93-218 Stanford v Stanford (14 November 2012) [2012] HCA 52 |
| Applicant: | MR TAYLOR |
| Respondent: | MS TAYLOR |
| File Number: | SYC 1163 of 2012 |
| Judgment of: | Altobelli FM |
| Hearing dates: | 18 & 19 February 2013 |
| Date of Last Submission: | 19 February 2013 |
| Delivered at: | Sydney |
| Delivered on: | 11 March 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms Stevens |
| Solicitors for the Applicant: | Pelosi & Associates |
| Counsel for the Respondent: | Mr Blackah |
| Solicitors for the Respondent: | Watson & Watson Solicitors |
ORDERS
Within 90 days of today’s date the wife pay to the husband the sum of $241,973 in return for which the husband transfer to the wife all of his right, title and interest in and to the property at Property M unencumbered by any liability.
Should the wife be unable to comply with order 1 then:
(a)The husband shall be entitled to interest on the sum owing to him calculated in accordance with the Family Law Act, its Rules and Regulations, calculated from the 90th day after making these orders; and
(b)The following orders shall apply to the sale of the property.
In the event the wife fails to comply with order 1 the parties do all such acts and execute all such documents as may be required to effect a sale of the former matrimonial home situate and known as Property M in the State of New South Wales to be sold by private treaty at a price agreed upon between the parties and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee.
Upon the completion of the sale proceeds of the sale be applied as follows:
(a)To pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of the matrimonial home.
(b)To the husband $241,973 together with interest calculated in accordance with the above orders.
(c)Balance then remaining to the wife.
In the event that the matrimonial home has not been sold by or before a date six (6) months from the date of these orders then the husband and the wife shall make all such arrangements and do all such acts and sign all such documents and pay all monies equally necessary to procure a sale by public auction of the matrimonial home upon the following terms:
(a)The auctioneer shall be a (real estate agent);
(b)The reserve price shall, unless agreed upon by the parties, be as proposed by the Auctioneer.
(c)That auction will take place within six (6) months of the wife failing to comply with order 1 above.
Pending the sale of the property the wife shall be entitled to sole occupancy, but she is responsible for the payment of all rates, outgoings and utilities pertaining to or consumed on the said property.
The wife to indemnify and keep the husband indemnified as regards her MasterCard debt, and the husband to indemnify and keep the wife indemnified as regards all of his liabilities referred to in these reasons for judgment.
Each party otherwise retains in their possession or control and to the exclusion of the other all other property in their possession or control including their respective superannuation entitlements and potential claims to damages or compensation.
In the event that either party refuses or neglects to execute any deed or instrument required to give effect to these Orders a Registrar of the Federal Magistrates Court in Sydney is hereby appointed pursuant to Section 106A to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.
IT IS NOTED that publication of this judgment under the pseudonym Taylor & Taylor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA ATSYDNEY |
SYC 1163 of 2012
| MR TAYLOR |
Applicant
And
| MS TAYLOR |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for alteration of property interests under s.79 of the Family Law Act commonly known as a property settlement. The husband is the applicant, he is 57 years old and is a casual [occupation omitted] who currently lives with his elderly mother. The respondent is the wife. She is 58 years old, lives in the former matrimonial home in [M] an inner city suburb, and is unemployed. The parties married in 1979, separated under the same roof in 2010, and physically separated in September 2012. The marriage subsisted for over 30 years. There are no children.
The husband has a gambling problem. The nature and extent of it is in dispute. The parties have substantial debts. The husband, as part of his case, conceded personal responsibility for $128,000 of these debts. He concedes that, for all practical purposes, this proportion of the debt should not be attributed to the wife. He does not concede that the debt is attributable to his gambling, but that is the inescapable inference to be drawn from all the evidence. Indeed it is a finding the court makes. The real issue in this case is establishing the true nature, extent and impact of the husband’s gambling on the property settlement process ie. establishing the pool of assets and liabilities, assessing contribution, and establishing whether, and if so the extent, of any special needs factors.
Background
The former matrimonial home was purchased at about the time of marriage in 1979 with the assistance of a mortgage. This mortgage was paid off in 1989, partly with the assistance of money the husband received from a redundancy package, and from his father. The home was renovated. Both parties were employed, and unemployed at various times in the marriage. From 1999 the wife did not work at all. The husband worked, but on a part-time or casual basis. The husband received in 2004 an inheritance from the estate of his late father. There is contention about what happened to this money. This will be discussed below. In September 2010 the wife was injured in a motor vehicle accident. Her claim for compensation in this regard has not been finalised.
The wife wishes to retain the home and is, somehow, prepared to pay the husband $150,000 in order to acquire his share. The husband says it should be sold and that he receives one half of the net sale proceeds.
The court will need to make findings about:
a)The constitution of the pool of assets and liabilities, particularly the extent of any add-backs for various debts; and
b)The nature and extent of the husband’s gambling and its related debts; and
c)Assessment of contribution for financial and non-financial contributions; and
d)Assessment of s.75(2) considerations, particularly in view of the parties’ ages, the wife’s personal injuries claim, and the husband’s earning capacity; and
e)The just and equitable order to make, particularly given that the wife wishes to retain the home.
Evidence
Each party relied on affidavits they swore and filed in the case. The husband also relied on an affidavit from his brother, Mr T. Each of these people was cross-examined. Various documents were tendered in evidence.
Applicable Law
The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances; and
The court acknowledges that the High Court’s recent decision in Stanford v Stanford (14 November 2012) [2012] HCA 52 may signal a departure from the approach described above. To the extent that this may be the case it has no bearing on the outcome of this case.
In relation to add-backs, the applicable law can be found in decisions such as the Full Court's decision in AJO v GRO (2005) FLC 93-218 that describes the situations in which add-backs are appropriate.
30. To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-816 the Full Court said at 85,262:
“11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.”
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
“In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.”
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec.75(2)(o) to applications for settlement of property instituted under the provisions of sec.79.”
31. As the Full Court said in Browne and Green (1999) FLC 92-873 at 86,360:
“44. We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction – a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.”
Balance sheet issues
At the commencement of the hearing the court was presented with the following joint balance sheet:
| Joint Balance Sheet Note: This document can be sent by electronic means between the parties prior to it being filed at court. | Name | MR TAYLOR and MS TAYLOR | |
| File No | (P)SYC1163/2012 | ||
| Date | 18/02/13 | ||
| Before | FEDERAL MAGISTRATE ALTOBELLI | ||
| Ownership | Description | Wife value | Husband value | Agreed/Disputed | ||
| ASSETS | ||||||
| 1 | Husband & Wife | Property - Property M, [M] (Single Expert) | $625,000.00 | $625,000.00 | Agreed | |
| 2 | Husband | Motor Vehicle - MAZDA NEO 2010 | $11,000.00 | $11,000.00 | Agreed | |
| 3 | Husband | [I] Shares | $2,595.00 | $2,595.00 | Agreed | |
| 4 | Husband | [T] Shares | $249.28 | $249.28 | Agreed | |
| 5 | Husband | Commonwealth Bank Account [2] | $5.00 | $5.00 | Agreed | |
| 6 | Husband & Wife | Household Contents | $1,750.00 | $10,000.00 | Not Agreed | |
| 7 | Wife | Sydney Credit Union – [8] | $200.00 | $200.00 | Agreed | |
| Total | $ 640,799.28 | $649,049.28 | ||||
| ADDBACKS | ||||||
| 8 | Wife | Husband’s waste on gambling | E $162,305 | NIL | Not Agreed | |
| 9 | ||||||
| Total | E $162,305 | NIL | ||||
| LIABILITIES | ||||||
| 10 | Husband | Commonwealth Bank Personal Loan | E$45,420.00 | $45,420.00 | Agreed | |
| 11 | Husband | St George Bank Car Loan - $11,301.75 | E$11,301.75 | $11,301.75 | Agreed | |
| 12 | Husband | ANZ MasterCard Credit Card | E$6,842.81 | $6,842.81 | Agreed | |
| 13 | Husband | Citibank Credit Card | E$11,202.86 | $11,202.86 | Agreed | |
| 14 | Husband | Coles/GE MasterCard - Credit Card | E$18,939.04 | $18,939.04 | Agreed | |
| 15 | Husband | St George MasterCard - Credit Card | E$5,980.82 | $5,980.82 | Agreed | |
| 16 | Husband | Westpac Ignite – Credit Card | E$9,154.28 | $9,154.28 | Agreed | |
| 17 | Husband | Aussie Credit Card | E$6,154.78 | $6,154.78 | Agreed | |
| 18 | Husband | American Express -Credit Card | E$2,976.84 | $2,976.84 | Agreed | |
| 19 | Husband | HSBC- Credit Card | E$10,716.08 | $10,716.08 | Agreed | |
| 20 | Husband | Mr T – Debt | NIL | $45,000.00 | Not Agreed | |
| 21 | Wife | MasterCard Commonwealth Bank | E $33,000.00 | $33,000.00 | Agreed | |
| Total | $161,689.21 | $206,689.21 | ||||
| SUPERANNUATION | ||||||
| Member | Name of Fund | Type of Interest | Wife/de facto partner’s value | Husband/de facto partner’s value | ||
| 22 | Husband 100% | [C] Super | Accumulation | $46,012.29 | $46,012.29 | Agreed |
| 23 | Husband | [L] Super | Accumulation | $62,366.76 | $62,366.76 | Agreed |
| 24 | Wife | [A] Super | $227.00 | $227.00 | Agreed | |
| 25 | Wife | [S] Super | $694.00 | $694.00 | Agreed | |
| 26 | ||||||
| Total | $109,300.05 | $109,300.05 | ||||
| FINANCIAL RESOURCES | ||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |||
| 27 | Wife | Motor Vehicle Accident Claim | NIL | $40,000 - $70,000 | Not Agreed | |
| 19 | ||||||
| Total | $40,000 - $70,000 | |||||
Item 6 in the balance sheet is for household contents. No expert evidence was adduced. The wife’s figure of $1,750 will be adopted as an admission against interest.
It will be noted that the total value of the husband’s liabilities above (items 10-20 inclusive) is $183,000. In her closing submissions counsel for the husband conceded that the court should apportion responsibility to the husband only of 70% of this debt ie. $128,000. In other words it was contended on the husband’s behalf that only $55,000 should be notionally included as a joint debt on the balance sheet. The wife opposes this and contends that even the $55,000 represents the husband’s gambling debt and should not be sheeted home to her even as a joint debt. As it turns out, and for reasons explained below, the court accepts the wife’s contention in this regard. With the exception of item 11, the husband’s car loan (of which there is undisputed evidence) none of the husband’s debts, items 10-20, should appear on the balance sheet. He will be responsible for the payment of these debts out of his share of the property settlement.
The wife contended that there should be an add-back of $162,305 at item 8. By the time of closing submissions her counsel conceded that the gambling losses could not possibly be calculated, and any adjustment would need to take this into account in another way. It follows that item 8 is not allowed.
By the time of closing submissions the wife’s counsel conceded that item 21, the MasterCard debt in the wife’s name, should appear as a joint debt in the balance sheet. What evidence there was about this debt confirmed that it was quite properly characterised as a joint debt.
To the extent that the husband sought to, somehow, assess the value of the wife’s compensation claim at item 27 of the balance sheet, there is no evidence to support this. Item 27 is not allowed.
Having regard to the court’s findings above, the balance sheet will be:
| Balance Sheet Note: This document can be sent by electronic means between the parties prior to it being filed at court. | Name | MR TAYLOR and MS TAYLOR | |
| File No | (P)SYC1163/2012 | ||
| Before | FEDERAL MAGISTRATE ALTOBELLI | ||
| Ownership | Description | Value | ||
| 1 | Husband & Wife | Property - Property M, [M] (Single Expert) | $625,000.00 | |
| 2 | Husband | Motor Vehicle - MAZDA NEO 2010 | $11,000.00 | |
| 3 | Husband | [I] Shares | $2,595.00 | |
| 4 | Husband | [T] Shares | $249.28 | |
| 5 | Husband | Commonwealth Bank Account [2] | $5.00 | |
| 6 | Husband & Wife | Household Contents | $1,750.00 | |
| 7 | Wife | Sydney Credit Union – [8] | $200.00 | |
| Total | $ 640,799.28 | |||
| 8 | Wife | Husband’s waste on gambling | NIL | |
| 9 | ||||
| Total | ||||
| 10 | Husband | Commonwealth Bank Personal Loan | - | |
| 11 | Husband | St George Bank Car Loan | $11,301.75 | |
| 12 | Husband | ANZ MasterCard Credit Card | - | |
| 13 | Husband | Citibank Credit Card | - | |
| 14 | Husband | Coles/GE MasterCard - Credit Card | - | |
| 15 | Husband | St George MasterCard - Credit Card | - | |
| 16 | Husband | Westpac Ignite – Credit Card | - | |
| 17 | Husband | Aussie Credit Card | - | |
| 18 | Husband | American Express -Credit Card | - | |
| 19 | Husband | HSBC- Credit Card | - | |
| 20 | Husband | Mr T – Debt | - | |
| 21 | Wife | MasterCard Commonwealth Bank | $33,000.00 | |
| Total | $596,497.53 | |||
| Member | Name of Fund | Type of Interest | Value | |
| 22 | Husband 100% | [C] Super | Accumulation | $46,012.29 |
| 23 | Husband | [L] Super | Accumulation | $62,366.76 |
| 24 | Wife | [A] Superannuation | $227.00 | |
| 25 | Wife | [S] Superannuation | $694.00 | |
| 26 | ||||
| Total | $109,300.05 | |||
| Ownership | Description | Value | ||
| 27 | Wife | Motor Vehicle Accident Claim | - | |
| Superannuation assets | $109,300.05 | |||
| Non-superannuation assets | $596,497.53 | |||
| Total assets | $705,797.58 | |||
Husband’s gambling
The issue in this case is not whether the wife knew about the husband’s gambling activities, but whether she was aware of the full extent and nature of the same such that she should share in the losses in the same way that parties to a long marriage jointly suffer “the slings and arrows of outrageous fortune” (Hamlet, Act III Scene 1).
The husband and wife lived a modest life in a modest home in a modest inner city suburb. They had modest incomes and lifestyles. There were no exotic cars, clothes or holidays. A big night out constituted a visit to Sizzlers, a family restaurant, and then to the St George Leagues Club. The wife contends, and the court accepts, that whilst she did not know exactly how much her husband gambled, she had no reason to believe it was anything but a modest amount that was within their modest means. She no doubt was reassured by the fact that they were mortgage-free within 10 years of borrowing to buy their house. She deposes, and the court accepts, that he “never wanted to be questioned where the money for gambling was coming from”. He would disclose his winnings, but not his losses. Nonetheless she was aware that for the husband, he regarded going to the TAB as “going to church”, and that she regularly purchased his daily Scratchie tickets, and his form guides so he could bet on the races on the weekend. She contends, and the court accepts, that it was only on the breakdown of the marriage that she began to understand the extent of her husband’s gambling and gambling related debts. The wife gave evidence in a clear, consistent and convincing manner. At its highest point cross-examination elicited a concession by her that she was aware of the husband’s pattern of gambling but could “not control it as he was earning the money”. Indeed she insisted, convincingly, that the husband was secretive about financial matters. The court accepts the wife’s evidence about gambling issues.
By contrast the husband’s evidence about gambling was quite unconvincing. He was an unimpressive witness who struggled to recall even recent details about financial matters. His first affidavit sworn 20 February 2012 says nothing about his gambling activities and debts. In his affidavit of 2 February 2013 he conceded a poor recollection of facts in his first affidavit. In response to the wife’s allegations about his gambling he clearly sought to minimise the same. He said “I did gamble in the 1980s” but that by about 1990 he had reduced his betting to “no more than $40-50 per week, which comprised of scratchies, lottery ticket and a bet on a Saturday at the TAB”. He concedes that from 2000-2009 this increased to “about $60 per week”. He asserts that since 2009 “I only buy a lotto or powerball ticket”.
The husband contends that in the 1980s they had “very little credit card debt” but in the 1990s their income declined and they increasingly relied on credit cards. “By the late 1990s I was paying off credit cards with credit cards…By around the early 2000s I was struggling to meet the minimum repayments…”.
The husband’s father died in 2004 and shortly prior to his death, his “father’s assets of $168,000 were transferred into a joint account in the names of my brother and me”. He asserts that after payment of funeral expenses, a burial monument, and some debts of his father, $90,000 was left over. The husband agreed that he used all of this money “for living expenses and to pay off credit cards” but, notwithstanding this assertion, he was “not reducing the debts, only paying off the interest”.
The court does not accept the husband’s evidence for the following reasons:
a)His evidence is quite inconsistent with the concession made at the hearing that he should, in effect, be responsible for $128,000 of what would otherwise be joint debt.
b)The nature and extent of the husband’s gambling is evident from the copy of the ledgers he kept at his late father’s request and which are annexed to the wife’s affidavit. If one looks only at the 1988 ledger, bearing in mind that this records TAB betting only, the husband was betting up to 6 out of 7 days. His own records indicate he outlaid $17,645.50 that year but his gross income in the financial year 1987 was $20,765, and in the financial year 1988 was $19,070.
c)In other words he was spending most of his income on gambling in the relevant period. His own records indicate that his gambling losses in 1988 amount to $6,003.88. In 1987 the outlay was $21,838 and loss $3,689.64. In 1986 the outlay was $13,981 and loss $1,721. This evidence suggests that the husband’s gambling in this period was pervasive and uncontrolled, at a time when the husband concedes that his own father told him that he disapproved of gambling and warned him “You can’t make a profit betting”. This was a prescient statement. It is no wonder that the husband had substantial credit card debt in the 1990s, but it was incumbent on him to be more precise about this. All of the credit card evidence he adduced merely demonstrates that in recent years he was even struggling to pay off the minimum payment. There is no evidence before the court to demonstrate that the credit card debt in existence today is the same as, or even derived from, the credit card debt he deposes existed in the 1990s. If the husband’s evidence about a drastic reduction in gambling were true, and if the court accepts the husband’s evidence about his father’s inheritance, it is hard to understand why there remains today such high debts that are clearly attributable to gambling. As it turns out, neither of the assumptions made about the husband’s evidence in the previous sentence are in fact accepted by the court.
d)The nadir of the husband’s evidence was his cross-examination in relation to his father’s inheritance. He was plainly unconvincing in this regard. Regrettably the court must find he was lying. He cannot account for the $168,000 in any satisfactory manner. He cheated his own brother out of his share of the inheritance, and then sought to characterise it as a “loan” from his brother, clearly a loan the brother did not expect to be paid back. He had sole control of these monies. The husband failed to call to give evidence in support of his case the only person who might possibly corroborate even a fraction of his evidence – his mother. The court finds that the husband appropriated to his own use $168,000 being both the husband’s and his brother’s inheritance from their late father. If he had these monies available to him from 2004 onwards, and given that none of it exists now, and if he had in fact reduced the level of his gambling as he asserts from 1990, then why does the husband still have such high gambling related debts? The husband cannot satisfactorily explain either what he used these monies for, or how the gambling debts remain so high today. The court finds that it is more likely than not that the husband’s gambling did not abate when he said it did, and that the inheritance was itself gambled away.
e)An inference of continued gambling can be drawn from an examination of the husband’s own evidence in the form of copies of his credit card statements for 2008-2010 (exhibit A1). For example on 1 November 2010 the husband used his Commonwealth Bank MasterCard to obtain not just one, but two ATM cash advances from 7-Eleven at [M] for $600 and $700 respectively, this incurring fees totalling $19.50 for those two transactions, and an interest charge of 21.490%. He deposes that his income at the time was $800 per week before tax. The frequency of cash advances on this credit card is impossible to reconcile with any explanation that attributes it to being expenses and household bills. It is more likely than not, particularly having regard to all the other evidence in this case, that the cash advances were either being used to fund ongoing gambling, or were used to pay off credit cards which were themselves used for gambling.
f)The court cannot accept the husband’s contention that any part of the credit card debt, or of the husband’s liabilities at items 10 and 12-20 of the balance sheet, were for joint purposes. These debts were most likely incurred by the husband personally in his gambling activities. In any event the item 20 alleged debt owing to the husband’s brother was clearly not regarded by the brother as a debt owing to him, a matter conceded in cross-examination by the brother.
Contribution
In closing submissions counsel for the husband agreed that once the balance sheet was adjusted by reference to liabilities the husband conceded should be borne solely by him, contribution would be assessed in his favour as to 60:40. This finding would reflect his greater earnings in the marriage, the lengthy period the wife was not working, the $10,000 gift from his father, and his termination payment, both used to pay off the mortgage in 1989.
The court does not accept that at the end of a long marriage such as this one the matters submitted have the effect contended for. The effect of the submission is that the husband should receive an extra 10%, or approximately $70,000, based on cash contributions that are relatively small in quantum, and relatively small even if measured by reference to the value to the parties at the time. The husband and wife, when they worked, earned modest incomes. The fact that in the last third of the marriage the wife adopted a homemaker role is not something that warrants the adjustment sought. Her non-financial contribution cannot be down-valued as contended for by the husband.
In closing submissions counsel for the wife submitted that provided the impact of the husband’s gambling was property included under s.75(2)(o), contribution should be assessed as equal. The court finds that contribution should be assessed as equal.
Future needs considerations
The husband submitted that there should be no adjustment under s.75(2) at all. Counsel submitted that both parties are approaching retirement or have retired. The husband’s earnings are modest, so disparity in earning capacity is negligible. Moreover the fact of the wife’s injuries is offset by her personal injuries claim. Counsel maintained there were no other indicators for a s.75(2) adjustment either way.
On behalf of the wife it was submitted that there should be a 10% adjustment in her favour. Her counsel emphasised the wife’s poor health, particularly as a result of the injuries she suffered in the motor vehicle accident. He also emphasised that the husband’s gambling activities, which were unquantifiable both in terms of quantum and impact on the pool, must have inevitably reduced the pool of assets available for distribution, thus warranting a s.75(2)(o) adjustment in the wife’s favour. Implicit in this submission was the contention that the husband had not properly disclosed his finances.
The court makes no adjustment in the wife’s favour for the injuries she suffered in the accident on 24 September 2010. Exhibit R2 is a report from Dr H dated 3 July 2012 prepared for the insurer, who is presumably the defendant in the wife’s claim. It is the only medico-legal report on her physical injuries, though annexed to the wife’s affidavit of 12 February 2013 there are copies of radiology, psychology, physiotherapy and treating doctor reports. It is somewhat odd that the wife would rely on Dr H’s report as the most comprehensive of the expert reports. Dr H opines that it is “very unlikely that she would be left with more than 10% whole person impairment” though he concedes she might be left with some residual loss of movement of her left shoulder and possibly “10% upper extremity impairment”. It is quite unsatisfactory that the court is left to interpret this medical evidence unassisted so far as assessment of the possible compensation the wife might receive. The court cannot accept her counsel’s submission that on the available evidence she would have no entitlement to general damages, and no entitlement to recover economic loss as she was not working at the time of her accident. These are matters for appropriate expert evidence, not submission. In the circumstances, making an adjustment in the wife’s favour for the health problems she suffers from the motor vehicle accident is not possible. The court has no idea what she might recover from her compensation claim.
The s.75(2)(o) column in relation to the husband’s gambling is a difficult one to assess. Counsel for the wife acknowledged a comment from the bench that such an adjustment could easily be double-counted, even triple-counted, at the stage of excluding debts from the asset pool, and then at the stage of assessing contribution, as well as under s.75(2)(o). Counsel’s submission was that the s.75(2)(o) adjustment covered other things, especially that the asset pool was smaller than it should have been due to the husband’s gambling. This is a submission far easier to make than prove. Once the known gambling debts are excluded from the pool, it is harder to discern the impact on the part of the husband’s gambling. The only liabilities on the balance sheet are ones the court has found to be joint. In theory the argument could have been made that the wife’s credit card liability could have, and should have been avoided, by more judicious and responsible financial management by the husband. There is inadequate evidence to support this. The court declines to draw that inference. What other evidence is there, therefore to suggest the asset pool would have been enlarged? The parties lived a modest life. Once the wife stopped working it would be unrealistic to expect there to have been savings that were squandered by gambling. There is no evidence of the value of superannuation diminished as a result of gambling. There is no evidence of the house being of less value. Even if the husband had not gambled away his father’s inheritance it is hard to see what difference this would make in circumstances where there is no discernable argument that the wife contributed to this inheritance. Thus even if the inheritance were not only added back into the pool (not something that was contended for) the most likely outcome is that the wife would have received nothing of it.
Whilst the court is sympathetic towards the wife, and can understand her desire to enlarge her claim so that she might have the opportunity to retain the home, a s.75(2)(o) adjustment for gambling is not punitive in nature – it must have some objective basis. The basis advanced on her behalf was that the husband’s gambling activities diminished the asset pool. Once the gambling debts of the husband are removed off the balance sheet, and thus not included in the pool, it cannot be said that the pool has been diminished. In the circumstances of this case there can be no s.75(2)(o) adjustment for gambling.
In any event there are counter valuing s.75(2) considerations. The court cannot ignore the fact that the husband is left with debts to service totalling $183,000. A substantial part of his property settlement will probably be committed towards paying this debt. That this is a gambling debt is not pertinent in this context.
Just and equitable
It is just and equitable to alter the parties’ interests in their property as the parties are separated, and for the reasons set out above: Stanford [2012] HCA 52 para.42.
Is the outcome proposed above just and equitable? The court has found that contribution should be assessed as equal and that there are no s.75(2) adjustments to be made. All of the parties’ assets, including superannuation, should therefore be divided equally. No splitting order was sought so thus the husband should keep his superannuation intact, with any necessary adjustment to be made from his share of the home. The total net assets are valued at $705,797.58. The wife should get half of this, $352,898.79. Her counsel proposed on her behalf that she retain the liability, which is appropriate in the circumstances. If she kept the home, her assets would be:
Item
Asset
Value
1
Property M
$625,000
6
Contents
$1,750
7
Credit Union Account
$200
21
MasterCard
($33,000)
24
[A] Superannuation
$227
25
[S] Superannuation
$694
$594,871
Wife’s entitlement is
$352,898
Payout to husband
$241,973
She would need to pay out the husband $241,973. Whilst this is unlikely, the court will nevertheless give her the opportunity to do so within three (3) months, provided she pays all outgoings on the home until payment to the husband, or settlement of the sale of the home.
The husband would therefore receive:
Item
Asset
Value
2
Mazda
$11,040
3
[I] shares
$2,595
4
[T] shares
$249
5
CBA account
$5
11
Car Loan
($11,301)
22
[C] Superannuation
$46,012
23
[L] Superannuation
$62,366
$110,926
Payment from wife
$241,973
Husband’s entitlement:
$352,899
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate:
Date: 11 March 2013
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