Teague and Teague

[2017] FCCA 2251

FEDERAL CIRCUIT COURT OF AUSTRALIA

TEAGUE & TEAGUE [2017] FCCA 2251

Catchwords:
FAMILY LAW – Property – wife suffered serious brain injury and permanently resident in nursing home – disparity in contributions – section 75(2) factors.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79

Cases cited:

Stanford v Stanford (2012) 247 CLR 108

Applicant: MS TEAGUE

Respondent: MR TEAGUE

File Number: ADC 814 of 2016

Judgment of: Judge Young

Hearing date: 12 September 2017

Date of Last Submission: 13 September 2017

Delivered at: Darwin

Delivered on: 28 September 2017

REPRESENTATION

Counsel for the Applicant: Mr Childs

Solicitors for the Applicant: Alan Oxenham Barrister & Solicitor

Respondent: Appearing in person

ORDERS

1. That within 90 days the husband pay to the Public Trustee on behalf of the wife the sum of $125,000.

2. That within 30 days the husband provide to the Public Trustee on behalf of the wife any Certificates of Title or passports in the name of the wife which he has in his possession.

3. That each party otherwise retain all other real and personal property in their respective names or possessions.  

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DARWIN

ADC 814 of 2016

MS TEAGUE

Applicant

And

MR TEAGUE

Respondent

REASONS FOR JUDGMENT

1. This is a property matter. The applicant wife is 70 years old. She was born in the (country omitted). The respondent husband is 79 years old. He was born in Australia.

2. The parties met through an introduction agency. They first met in the (country omitted) in 1994, married and moved to Australia soon after. The husband was previously married. He has two adult children from that marriage but these parties do not have any children.

3. At the time of the marriage the wife did not own any property apart from a house lot in (country omitted) which was subject to a mortgage. Her equity at that time is unknown. The husband said in his trial affidavit that he gave her about $25,000 in 1997 to pay out the mortgage but he candidly said in oral evidence that he did not really remember how much he gave her. I will return to the reliability of the husband's evidence in a moment. At trial the (country omitted) property had an agreed value of $44,828.

4. The husband owned substantial property at the beginning of the marriage. He owned a small farm of (omitted) acres ((omitted) ha) outside Adelaide with a house. He also owned an investment unit in Property B and, it appears, a few breeder cattle and various cash investments and shares. The husband was retired or semi-retired and the cattle-breeding appears to have been on a small scale, perhaps no more than a hobby. He said he turned off about 20 yearlings a year. It is unclear whether the cattle breeding made a profit but it appears from a 2014 tax return in evidence that it was making a loss at that time.

5. The wife was very seriously injured in a single vehicle motor accident in (omitted) 2001. She suffered a severe traumatic brain injury which left her permanently and severely disabled. She has severe cognitive impairment and severe memory loss. She has severe right-sided weakness, permanent sight impairment and impaired mobility. She can walk with a walking stick. She requires assistance with showering, oral care, grooming, dressing and using the toilet. She has diabetes which is well managed. She is otherwise in good health. Her treating GP gave evidence that he was unable to predict her life expectancy but she was, according to him, not likely to die "any time soon". There is no evidence that her life expectancy is reduced and, according to actuarial evidence, normal life expectancy for a woman of her age is a further 19 years.

6. The wife has been assessed as lacking testamentary and legal capacity.

7. There was no evidence that the wife was entitled to compensation as a result of her motor accident. I assume that the explanation for this is that the accident occurred before the introduction of no fault motor accident compensation in South Australia.

8. The husband and the wife’s sister cared for the wife at home from 2001 until (omitted) 2009. She then entered a nursing home, initially for respite care, where she has remained since. The sister obtained a Guardianship Board order appointing her guardian and administrator of the wife’s estate in (omitted) 2009. The husband continued to visit the wife in the nursing home until about June 2010 when he was told he was no longer allowed to visit her. The reasons for that prohibition were not addressed in the evidence. The husband, it was clear from his evidence, did not seek separation but acquiesced in the arrangements. In cross-examination it was put to him that “separation” had effectively taken place from that time. He agreed. It seems to have been understood by everyone that the wife’s residence in the nursing home was permanent.

9. In May 2011, March 2013 and June 2016 the guardianship orders were varied so that the wife’s sister became a limited guardian covering healthcare and lifestyle and the Public Trustee was appointed full administrator of the wife’s estate, including for proceedings relating to divorce and property settlement.

10. In March 2016 the wife applied for a divorce which was granted in June 2016. The affidavit of the Public Trustee’s officer with the conduct of the matter said that the husband opposed the divorce but no response to the application was filed by the husband and the substance of the husband’s opposition is not stated in the affidavit. There is nothing in the court file to show the court was told that the wife had limited capacity at the time of the divorce application.

11. In September 2016 the wife applied for a property settlement and sought the appointment of the Public Trustee as litigation guardian. That order was made and the matter has proceeded under the direction of the Public Trustee. The wife has taken no active part in the proceedings and did not file an affidavit.  

12. This case shares some factual similarities with Stanford v Stanford[1]. In that case the wife, before her death, was admitted to a nursing home and then began to suffer from dementia. The parties “separated” but the separation was an involuntary one due to her illness. The husband had made financial provision for the wife in the nursing home. The wife commenced proceeding for property settlement by a case guardian and proceedings were then continued after her death by her children from an earlier marriage.

    [1] (2012) 247 CLR 108

13. In Stanford the husband submitted that the court did not have power under the Family Law Act 1975 (Cth) (“the Act”) to make a property settlement order where the marriage of the parties was “intact”. The majority of the Court rejected that submission and rejected the utility of the categories used by the husband of “intact marriage” and “breakdown” where the parties “lived apart with no prospect of resuming cohabitation and even though the wife’s dementia would inevitably affect the mutuality of the marital bonds between them”.[2]

    [2] Ibid 119, [34].

14. After observing that the requirements of subsections 79(2) and 79(4) of the Act should not be conflated the majority in Stanford said that in every case in which a property settlement order under section 79 is sought it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.[3] They said the expression “just and equitable” does not admit of exhaustive definition and while the power given under section 79 is not “to be exercised in accordance with fixed rules” three fundamental propositions must not be obscured.[4] First, it is necessary to consider whether, having regard to existing interests, it is just and equable to make a property settlement order.[5] Secondly, “the power is not to be exercised in an unprincipled fashion” and it is not to be assumed that the rights to or interests in marital property are or should be different from those that then exist.[6] Thirdly, whether it is “just and equitable” to make a property settlement order is not to be answered by assuming that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property fixed by reference to the matters set out in subsection 79(4), including financial and other contributions[7].

    [3] Ibid 120, [35].

    [4] Ibid 120, [36].

    [5] Ibid 120, [37].

    [6] Ibid 121, [39].

    [7] Ibid 121, [40].

15. The majority said that in many cases the just and equitable requirement will be readily satisfied because:

    “the husband and wife are no longer living in a marital relationship … [and] there is not and will not thereafter be the common use of property by the husband and wife …the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship”[8].  

    [8] Ibid 121, [42].

16. The wife submitted in this case that it was just and equitable to make orders because the common use of property by the husband and wife had ended and the assumptions that underpinned the existing property arrangements have been brought to an end by the separation of the parties. In my view, that submission does not adequately address the circumstances of this case. In Stanford the majority said, after the passage quoted above, that “By contrast, the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order”.[9] In my view the evidence in this case does not permit the conclusion that the separation of the parties was voluntary and there are indications that it was involuntary. These include that there is no evidence that the wife evinced any intention to end the marriage before her accident, that the wife was initially admitted to the nursing home for respite care and was, it appears, then too unwell or incapable to return home and that she lacked decision making capacity after her accident. Although I draw no inference from the fact, I note that there was no evidence of any inquiry about the wife’s capacity at the time of her application for divorce.

    [9] Ibid 122, [43].

17. However, an important factor in this case, and a crucial point of distinction from the facts in Stanford, is that the husband did not provide any financial assistance to the wife after she became a permanent resident of the nursing home. There was some evidence from the husband in cross-examination that the Public Trustee sought money from him for the wife’s support but this may have been a reference to the Public Trustee wanting to conclude a property settlement with him on behalf of the wife. In any event, neither party suggested that the husband had provided financial support and I find that none was provided after the wife became a permanent resident of the nursing home. It was not in real dispute that the wife’s financial needs in the nursing home were not completely met by her age pension and that there was a shortfall.

18. The majority judgment in Stanford at paragraphs [44] and [45] is apposite to the facts of this case:

    When, as in this case, the separation of the parties is not voluntary, the bare fact of separation does not demonstrate that the husband and wife have any reason to alter the property interests that lie behind whatever common use they may have made of assets when they were able to and did live together.  Common use of some assets may very well continue, as it did here when the husband made provision for the wife's care and accommodation.  Past arrangements that the parties have made about their property interests on the assumption, expressed or implicit, that those arrangements were sufficient and appropriate during the continuance of their marriage are not necessarily falsified.  If both parties are competent, it can still be assumed that any necessary or desirable adjustment can be made to their property interests consensually.  And if one of the parties has become incompetent it is not to be assumed that the other party lacks the will and ability to make those necessary or desirable adjustments. 

    Contrary to the submissions of the husband in this Court, there may be circumstances other than a voluntary separation of the parties marking the breakdown of their marital relationship in which a court may be satisfied that it is just and equitable to make a property settlement order.  For example, demonstration of one party's unmet needs that cannot be answered by a maintenance order may well warrant the conclusion that it is just and equitable to make a property settlement order.  It may be that there are circumstances other than need. 

19. The majority went on to say at paragraph [46] that in the circumstances of that case the needs of the wife might have been met by the provision of full time care, a further provision of money against future contingencies and the possibility, if needed, of making a maintenance order.

20. In this case the husband was not legally represented at the trial (despite telling me at various times in the months and weeks prior to the trial, in response to my urgings, that he intended to instruct lawyers). He was helped by a McKenzie friend, Mr B, who I permitted to assist because of the husband’s age and partial deafness. He did not present his case with any evident awareness of the principles in Stanford. While the husband did not submit that it was not just and equitable to make any order, he nevertheless submitted that an order for spousal maintenance was appropriate rather than an order for alteration of property interests. Accordingly, he raised, in substance, one of the principal submissions available to him on the basis of Stanford.

21. There was evidence that there is a shortfall between the wife’s income from an age pension and her accommodation charges in the nursing home. There is said to be a debt of $46,453 owed to the nursing home operator, (omitted), in respect of her past accommodation. The husband challenged the existence of this debt on somewhat technical and legally uninformed grounds but I am satisfied that there is likely to be an obligation owed in some amount. In addition, there was medical evidence that the wife’s life expectancy is not likely to be curtailed on the basis of her present condition and, according to actuarial evidence, normal life expectancy for a woman of her age is another 19 years.  The actuary calculated the capital sum necessary to meet the shortfall between the wife’s income and the expenditure on her behalf over that period as $48,700. That calculation was not challenged.

22. I am satisfied that the wife’s financial needs are not entirely met under the present arrangements. Notwithstanding that I am not satisfied that the separation of the parties was voluntary, I am satisfied that some alteration of property interests is just and equitable in order to meet the unmet needs of the wife.

    Asset pool

23. The assets and liabilities of the parties at trial and their respective values were largely agreed.

Assets	Wife	Husband	TOTAL
Property A	$650,000
Property B	$340,000
(omitted) Bank account	$38,990
(omitted) Bank account	$35,169
(omitted) Cash Management account	$7,372
(omitted) shares (370)	$28,397
(omitted) shares (640)	$3,148
Cattle (12)	$13,200
Farming plant and equipment, and Toyota (omitted), Hyundai vehicle and Daihatsu (omitted)	$52,000
Husband’s household contents	$1,000.00
(country omitted) property	$44,828
(omitted) Bank account	$348
Total	$45,176	$1,169,277	$1,214,453
Liabilities
Account with Public Trustee	$2,346
(omitted)	$46,453
Net assets	($3,623)	$1,169,277	$1,165,654

1. Some of these items require further explanation. The husband did not admit owning the (omitted) shares. He said he could not remember if he owned such shares or not. I accept that the husband is suffering from some loss of memory due to his age. I accept as truthful his evidence that he does not remember. On the morning of the trial he disclosed bank statements that show receipt of (omitted) dividends of $821.40 on 1 October 2015 and $732.60 on 31 March 2016. Having regard to the dividend history of the (omitted) shares, this equates to ownership of 370 shares. The value ascribed to the shares is the value of 370 shares at the time of trial.

2. The husband also challenged the existence of the wife’s debt to (omitted), the operator of the nursing home in which the wife lives. The evidence about this was unclear. It may be that the Public Trustee as the wife’s guardian is legally liable for that amount rather than the wife. This was not the subject of any evidence. However, if so the Public Trustee would presumably be entitled to an indemnity from the wife’s estate.  Regardless of the precise legal obligations, I am satisfied that the wife or her estate is subject to some obligation. The husband did not take any point about that but did adduce evidence from a witness who had experience as a consultant in the nursing home industry. The witness claimed that in the absence of an "ACAT" (presumably standing for ‘Aged Care Assessment Team’) assessment, the nursing home could not accept the wife into residential care. He asserted that the wife’s residence in the nursing home was "illegal" under the Aged Care Act 1997 (Cth). No party made submissions about this point. I am satisfied that there is likely to be either a debt or an equitable obligation owed in respect of the wife’s accommodation charges in the nursing home. It appears that the charges were deferred for some years on the basis of the foreshadowed property proceedings and that is the basis of the amount claimed as a debt owed to (omitted).

3. The other factor about the debt or obligation is that the actual amount is unclear. It appeared from the evidence that the wife may be entitled to what was described as a "hardship" reduction in her accommodation fees. No witness, including the Public Trustee’s officer responsible for the wife’s case, was able to adequately explain how this might operate. I am satisfied on the balance of probabilities that there is likely to be a debt or obligation approximating the amount claimed although it might be that there will be some reduction in this amount at a later time.

   Contributions

4. The husband and the wife did not work from 1994 to 2001 apart from what appears to be a few weeks’ (employment omitted). The husband pursued his cattle breeding but, as noted, I am doubtful that this was profitable. They appear to have lived on the husband’s savings and investment income. They appear to have had a rather conventional division of labour with the wife cooking, cleaning and caring for the house. She also grew vegetables. The husband ran the hobby farm and attended to "outside" tasks. By all reports they were a happy couple during this period.

5. After the wife’s injury in 2001 it was necessary to provide full-time care for her. The husband arranged for the wife’s sister, Ms J, to come from the (country omitted) in late 2001. In 2002 Ms J's two children, then aged about six and four, came from the (country omitted) to live with her. The husband paid for the sister’s expenses in coming to Australia and paid the children's school fees in the (country omitted) until they came to Australia. He paid for a migration agent to assist her in her application for permanent residence. He provided rent-free accommodation and he provided a motor car for the sister throughout the time she and her children lived in his home.

6. After the wife’s injury she apparently received a part disability pension and the husband received a carer's pension. The sister received a carer’s payment initially but then received a carer's pension when she became a permanent resident in 2003. She continued to receive that pension until she left the home in March 2007. At that stage she was working two days a week in a (employer omitted). It is not clear what income the husband received after 2003 but it may be that he was receiving a part age pension as he was at the time of trial.

1. By the time of Ms J’s departure in 2007, the relationship between the husband and her had soured. Ms J claimed the husband had wrongly accused her of stealing. She was clearly hostile to the husband and I approach her evidence cautiously. She said she did "everything" for the wife, including showering, emptying her commode and cooking for the wife and the husband. Although she did not say so, she was also cooking for herself and her children. She also said she helped around the house including painting and cleaning.

2. The sister said that the husband did "nothing" for the wife. That was challenged by the husband’s adult son who was a frequent visitor to the home. He said that over the time from Ms J’s arrival in Australia in 2001, to her departure from the home in 2007, she became less involved in caring for the wife and more involved in her own employment and care for her children. He said the husband took on more of the load of caring for the wife.

3. The son said that he witnessed the husband preparing meals for the wife and said that he understood that on occasions his father helped the wife shower and helped her dress and laid out clothes for her. He said that Ms J was often absent from home towards the end of the period that she lived there. The son was not required for cross-examination on his affidavit and I accept his evidence.

4. My impression of the situation is that in the early stages the sister was very active in caring for the wife but as time went on and she found employment and interests outside the home and her children grew older her involvement in caring for the wife declined. Further, there was a period of about 2 ½ years from the sister's departure in (omitted) 2007 to the wife entering nursing home in (omitted) 2009 when the husband was significantly responsible for caring for the wife. The sister said that she continued to visit the home to care for the wife during this period. However, she was in part-time employment for this period and, according to the son, rarely present when he visited.

5. After Ms J’s departure from the home in (omitted) 2007 to (omitted) 2009, I am satisfied the husband was significantly responsible for the wife’s care but given the limitations of the evidence I do not think I can find on the evidence that he was primarily so. I accept the son’s evidence about the sister being often absent but that is not necessarily inconsistent with her continuing to provide some care for the wife.

6. The period when the wife made non-financial contributions, primarily as a homemaker, was about seven years from the marriage in (omitted) 1994 to her accident in (omitted) 2001. Counsel for the wife submitted that I should treat Ms J’s work as a carer for the wife as part of the wife’s contributions, at least to the extent that the husband directly benefited from Ms J’s efforts in cleaning and cooking. There was no doubt a degree of benefit to the husband in Ms J’s presence but he also provided a home for Ms J and her children and other support and assistance to her. The whole purpose of Ms J’s presence was to care for the wife, who could not care for herself, and any benefit to the husband through cooking and cleaning and the like was ancillary to the wife’s care. I consider an approach that looks only to the benefits that the husband received as a result of the wife’s tragic circumstances and describes these as “contributions” on the part of the wife is artificial.

7. The financial contributions were overwhelmingly the husband's during the relevant period although after her injury the wife received a part disability pension. There was no evidence of the amount. The carer's pension was initially paid to the husband and then to the sister. It was unclear what happened after the sister’s departure but as she asserted that she continued to visit and help the wife, although not every day, it may be that she continued to receive the pension. The evidence was unclear about that issue.

8. The husband also said that he made a significant contribution to the wife’s (country omitted) property by providing money to pay out the mortgage. In his trial affidavit he asserted he gave the wife $25,000 from his savings but in his oral evidence he candidly confessed he did not remember how much he gave her. I think he is likely to have made a significant financial contribution to the (country omitted) property but I am unable to decide on any precise figure.

9. Having regard to these matters particularly to the overwhelming financial contributions made by the husband and the limited period of the wife’s non-financial contributions, I find the wife’s contributions to the time of separation (constituted by the commencement of her permanent residence in the nursing home) were 10%. The wife has not made any post separation contributions.

   Section 75(2) factors

10. Both parties appear to be in reasonable health and I have no reason to doubt that they will reach a normal life expectancy. For the wife that is about 79 years. The husband is presently 79 years old. Although there was no evidence about his health, he appeared to be healthy apart from a decline in memory and partial deafness.

11. The husband receives a part age pension of $310 a week. He receives rent payments of $248 a week and receives interest of about $35 a week.

12. The wife receives an age pension of $444 a week.

13. The evidence was that the wife will spend the rest of her life in the nursing home. According to the Public Trustee’s officer responsible for her case, her weekly expenditure is $1,051.68 a fortnight ($525.84 a week) including an allowance for hairdressing and personal items. The actuarial evidence adduced by the wife assumed expenditure of $26,600 a year ($511.53 a week) arriving at a shortfall of $3,504 a year, rounded to $3,500. The discrepancy in the weekly amounts of expenditure was not explained in the wife’s evidence.

14. The actuary calculated that the shortfall between income and expenditure equated to capital sum of $48,700, using a 3% discount rate, required to make up the shortfall if the wife was to reach normal life expectancy of 89 years. I accept that calculation.

15. The wife’s future needs are modest. However, the wife should have at least an amount sufficient to enable the existing debt for her accommodation to be paid and a capital to account for the shortfall in income over expenditure for her future care. It was submitted by the husband that her future care needs could be dealt with by an order for spousal maintenance. The difficulty with that approach and my reason for rejecting it is that the husband himself might die and the liability for spousal maintenance would cease pursuant to section 82 of the Act.

16. The husband is also significantly dependent on his savings. However, he appears to have the capacity to pay a lump sum to the wife. His cash savings and easily realisable assets such as cattle amount to about $126,000 in value. The husband may also have some capacity to borrow against his investment property.

17. I propose to make a further adjustment in favour of the wife for section 75(2) factors. The principal considerations are that the wife should have an amount to discharge the existing nursing home debt or obligation and to provide for her future maintenance and some amount for other future contingencies.

18. The nursing home debt or obligation and the small amount outstanding on the Public Trustee’s account are $48,799. The capital sum for future needs is $48,700. I consider that a further $50,000 should be available for other future contingencies. One contingency is that the wife may live longer than normal life expectancy. Another is that the cost of the wife’s care may increase. If so, the capital amount calculated by the actuary will be insufficient and there should be some buffer to deal with that possibility. Part of the amount required will come from the proceeds of sale of the (country omitted) property once the Public Trustee sells that property. There was no evidence of any applicable taxes or the likely costs of sale on the (country omitted) property but there is a possibility that they will consume a significant part of the modest value of that property. I would not expect any sale to be straightforward given that the wife’s incapacity and the authority of her guardian to undertake the sale will need to be established in some way to the satisfaction of the purchaser and the relevant authorities. If the costs of sale were $20,000, for example, the final figure for the wife below would be reduced by $20,000.

19. After taking into account the (country omitted) property, I consider that there should be a transfer to the wife of $125,000. This equates to a further adjustment of 4% of the net assets excluding the (omitted) debt or obligation.  

20. This produces the following result.

Assets	Wife	Husband	TOTAL
Property A	$650,000
Property B	$340,000
(omitted) Bank account	$38,990
(omitted) Bank account	$35,169
(omitted) Cash Management account	$7,372
(omitted) shares (370)	$28,397
(omitted) shares (640)	$3,148
Cattle (12)	$13,200
Farming plant and equipment, and Toyota vehicle, Hyundai vehicle and Daihatsu (omitted)	$52,000
Husband’s household contents	$1,000
(country omitted) Land	$44,828
(omitted) Bank account	$348
Husband’s payment to the wife	$125,000
Husband’s payment to the wife	($125,000)
Total	$170,176	$1,044,276	$1,214,452
Liabilities
Account with Public Trustee	$2,346
(omitted)	$46,453
Net	$121,377	$1,044,276	$1,165,653

1. The wife also seeks the return of her passport and the title documents for the (country omitted) property and I will make those orders as well.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Judge Young

Date: 28 September 2017