TORRENCE & MCCANN
[2019] FCCA 2260
•23 August 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TORRENCE & MCCANN | [2019] FCCA 2260 |
| Catchwords: FAMILY LAW –Property – marriage in excess of twenty years – marriage produced three children two of whom are now adult – assessment of contributions – contributions assessed as being equal – parties’ major asset is their former family home – wife seeks to retain home to provide accommodation for herself and dependent child – wife has recently returned to paid workforce and is a modest wage earner – husband was major breadwinner during marriage – husband diagnosed with end stage renal failure – husband requires dialysis three times per week – wife has limited capacity to borrow – husband likely to face difficulties maintaining employment due to ill health – husband seeks sale of house in order to liberate capital to support himself and provided accommodation – husband currently living with relatives – wife contends it would be unfair for property to be sold depriving her of the security of accommodation in circumstances in which she child support is likely to be irregular – parties have disparity of superannuation – mix and match of assets – assessment of parties’ different but significant prospective needs – what is just and equitable outcome in circumstance where asset pool is modest but needs of parties are great. |
| Legislation: Family Law Act 1975 (Cth), ss.75(2), 79 Evidence Act1995 (Cth), s.140 |
| Cases cited: Bevan & Bevan [2013] FamCAFC 116 Biltoft & Biltoft (1995) FLC 92-614 Clauson & Clauson (1995) FLC 92-595 D & D [2003] FamCA 473 Ferraro v Ferraro (1993) FLC 92-335 Fox v Percy (2003) 214 CLR 118 Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 Lee Steere v Lee Steere (1985) FLC 91-626 L & L (2006) FLC 93-254 Pierce & Pierce (1999) FLC 92-844 Russell & Russell [1999] FamCA 1875 Stanford v Stanford [2012] HCA 52 Steinbrenner & Steinbrenner [2008] Fam CAFC 193 Wardman & Hudson (1978) FLC 90-466 Waters & Jurek (1995) FLC 92-635 Watson & Ling [2013] FamCA 57 | ||
| Applicant: | MR TORRENCE | |
| Respondent: | MS MCCANN |
| File Number: | ADC 3325 of 2018 |
| Judgment of: | Judge Brown |
| Hearing date: | 9 July 2019 |
| Date of Last Submission: | 26 July 2019 |
| Delivered at: | Adelaide |
| Delivered on: | 23 August 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Pengallo |
| Solicitors for the Applicant: | Polson Legal |
| Counsel for the Respondent: | Mr Jordan |
| Solicitors for the Respondent: | Jordan & Fowler |
ORDERS
In full and final settlement of all claims for settlement of matrimonial property:
Within sixty (60) days of today’s date the husband do transfer to the wife, at her expense, all his interest, both in law and in equity, in the former matrimonial home situated at B Street, Suburb C, in the State of South Australia and being the land contained in certificate of title … (hereinafter referred to as “the former matrimonial home”).
That contemporaneously with the transfer referred to in order (1) above, the wife pay to the husband the sum of sixty five thousand dollars ($65,000.00).
Upon the transfer of the former matrimonial home contemporaneously with the payment referred to in order (2) the husband and wife shall forthwith discharge the mortgage secured against the former matrimonial home and the wife shall keep the husband indemnified in respect of such mortgage and all other outgoings and liabilities in respect of the former matrimonial home.
Including but without limiting the effect hereof, the husband shall retain for his sole use and benefit absolutely free from any further claim or demand of the wife:
(a)the furniture and furnishings in his possession, power and control;
(b)the AMP life policies in his name;
(c)any motor vehicle in his possession;
(d)all savings, shares and investments in his name;
(e)any superannuation entitlement, long service leave, annual leave or other work related benefits, standing in his name;
(f)his personal effects; and
(g)any other real and/or personal property and/or financial resources of the husband or in the husband’s name and/or possession not otherwise specified herein.
Including but without limiting the effect hereof, the wife shall retain for her sole use and benefit absolutely free from any further claim or demand of the husband:
(a)the furniture and furnishings in her possession, power and control;
(b)any motor vehicle in her possession;
(c)all savings, shares and investments in her name;
(d)any superannuation entitlement, long service leave, annual leave or other work related benefits, standing in her name;
(e)her personal effects.
(f)any other real and/or personal property and/or financial resources of the wife or in the wife’s name and/or possession not otherwise specified herein.
All applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Torrence & McCann is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 3325 of 2018
| MR TORRENCE |
Applicant
And
| MS MCCANN |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment relate to the finalisation of matrimonial property matters, following a long marriage between the parties concerned.
Mr Torrence “the husband” and Ms McCann “the wife” first met in 1993 and were married on … 1994. They finally separated, in difficult circumstances, in mid-2017. Accordingly, the relationship between them is one well in excess of twenty years.
Their marriage produced three children: Ms M, now aged 24, who has a successful career as a health care worker; Ms N, now aged 20, who works part-time and is a student, but also faces some challenging medical issues; and X, who will be 15 in this coming ….
The wife is a devoted and capable parent, who left the paid workforce when she was pregnant with Ms M, returning to employment when X was 11 and had started at High School. During this period, the husband was the family’s main breadwinner. There is no dispute that his wages were contributed to joint family purposes.
At present, X lives with her mother in what was the parties’ former marital home, located at B Street, Suburb C. This property has been the family’s home since 1998. The husband left the home, when the parties finally separated.
X currently attends Suburb D High School. She suffers from dyslexia, which was diagnosed at an early age. It may be necessary for her to receive support from a tutor to help her with her school work. It is the wife’s case that X’s special needs are likely to require a significant level of on-going financial support.
The husband’s occupational qualifications are as a labourer. He was employed throughout the period of the marriage. During his career, he worked for various enterprises, but in addition, from time to time, he conducted businesses in partnership with the wife and other members of his family.
Although the wife was not a wage earner, it is her case that she was integrally involved in the business conducted by the husband. She did the accounts for the business and even helped out on site when needed. At the same time, she was an exemplary home-maker and parent.
The husband also presents as a person devoted to the welfare of his children. He helped with maintenance around the home and played an active role in the parenting of Ms M, Ms N and X, as well as being the family’s breadwinner.
In short, the evidence is unequivocal that the marriage between the parties was one of equals and neither can be regarded as having been a passenger or a spouse, who did not pull their weight. Rather, each contributed to the greater good of their family in a variety of ways, which complimented the other’s contributions.
As such, the relationship between the parties is to be regarded as being conventional in nature. I do not mean this in any pejorative sense. Rather the parties divided their responsibilities – one being focussed on the home and parenting; the other on providing financial support. As such, the activities of each, while different in nature, were essential to the greater good of the family, which they had established together and to which they were equally committed.
When the parties began their relationship, they were each aged in their mid-twenties. Neither came into the relationship with any significant level of asset backing; nor did either receive any significant injections of cash, related to an inheritance or other windfall, during their marriage.
In all these circumstances, if the case was to be determined on the basis of contributions alone, it would be axiomatic that each should receive one half of their marital estate. However, notwithstanding this analysis, this remains a problematic and challenging case for two predominant reasons.
Firstly, the pool of assets available to be distributed is a modest one. Secondly, the prospective needs of each of the parties, for different reasons, are great indeed and, as a consequence, there is a significant probability that those needs will not be satisfied by any orders, which the court makes.
The parties agree that the B Street, Suburb C property is worth $410,000.00.[1] It is subject to a mortgage, in favour of the Commonwealth Bank (“CBA”), in a sum of $154,162.00, leaving an equity of around $255,000.00.
[1] See affidavit of Loretta Polson filed 14 May 2019 attaching valuation of A Valuer dated 18 December 2018
The property has been Ms McCann and X’s home for many years. For obvious reasons, the prospect of seeking new accommodation for herself and X is a daunting one for Ms McCann. She does not relish the prospect of losing the security of owning her home and becoming a renter of accommodation, in her early fifties. Fundamentally, it is her view that such an outcome would be very unfair to her.
Mr Torrence is currently living with his brother. Earlier, he and Ms N shared rented accommodation in Suburb F, but they were unable to meet the rent required and were forced to surrender the lease. The reason this was so is because Mr Torrence is currently far from well and faces an uncertain medical future.
Mr Torrence has been diagnosed with end stage renal failure and requires regular dialysis, which commenced in … of 2019. For obvious reasons, his illness impacts upon his ability to earn his income, particularly in the physically rigorous field of labouring. It is his case that although it may be desirous that the B Street, Suburb C property remain in Ms McCann’s ownership, this should not occur at the cost of what is a fair outcome for him in the case.
With the requirement to undergo dialysis, Mr Torrence had to quit the workforce. Ms N suffers from an extremely rare medical condition, …, which render her liable to suffer dislocations and seizures.
In these circumstances, Mr Torrence and Ms N could not afford to rent together. For obvious reasons, Mr Torrence would prefer not to be dependent on his brother for accommodation. He has also borrowed money, from family, to keep his head above water financially.
At present, Mr Torrence must attend at the Royal Adelaide Hospital for dialysis on three occasions per week, either during the day or at night. Ideally, Mr Torrence would like to be able to undergo dialysis at home. However, in order to do so, he needs either the security of his own accommodation or a long and secure lease, which he can service financially whether he is or is not in employment.
Ms McCann is a capable and hard working person. She has some qualifications, now fairly dated, in health care. As previously indicated, her career has been interrupted by parenting responsibilities and the period during which she was been involved in the administration of a small mum and dad enterprise. Her employment opportunities are also limited by her current responsibilities to parent X.
Around about the time of the parties’ separation, when Mr Torrence left the B Street, Suburb C home, Ms McCann changed her employment. She is currently employed as an office worker. She earns a salary of approximately $60,000.00 per annum.
It is Ms McCann’s position that, due to his severe illness, it is improbable that Mr Torrence will be able to remain permanently employed, whilst X concludes her secondary education and remains dependent upon her parents for financial support.
In these circumstances, she is doubtful that Mr Torrence, through no fault of his own, will be able to provide her with either reliable or financially significant payments of child support. Therefore the burden of supporting the child will fall largely on her shoulders. From her perspective, this is the most important consideration in the case.
As a consequence of these factors, it is Ms McCann’s submission that considerations of justice and equity dictate that she should receive more than fifty percent of the parties’ marital assets. She proposes that she should receive sixty-five percent of a net pool, excluding superannuation, which she calculates to be $328,000.00.
From her perspective, it is essential that she be in a financial position to retain the B Street, Suburb C home, in order to provide long-term accommodation security for her and X. She proposes that she purchase Mr Torrence’s interest in the property for $60,000.00 and take over the current joint mortgage.
Other practical considerations impact upon the issue of what sum Ms McCann will be able to advance to Mr Torrence in order that she retains the property concerned. Given the current level of the mortgage and her income at present, the wife has a limited capacity to borrow.
Ms McCann has deposed that the CBA is prepared to advance her a further $70,000.00, in addition to the current mortgage of $154,000.00, in order to enable her to purchase Mr Torrence’s interest in the property. Mr Torrence does not consider the sum proposed will be sufficient to meet his own accommodation needs.
In addition, it is Mr Torrence’s view that, given his complex medical issues and the impact of them on his earning capacity, it would not be fair for there to be any allowance made, in respect of either party, arising from an assessment of their likely prospective needs. In his assessment, each parties’ future needs are significant and, as such, have the consequence of cancelling each other out.
Apart from their interest in the B Street, Suburb C property, the parties have entitlements to superannuation. Given his more consistent employment history, the husband’s superannuation is significantly greater than that of the wife. He has superannuation, standing in his name, to a value of $147,000.00; whilst the wife has superannuation of $51,500.00.
The wife proposes that the parties’ superannuation entitlements be equalised and she pay the husband the sum of $60,000.00, in order to acquire his interest in the former matrimonial home. She has however, through her counsel Mr Jordan, expressed an openness to receiving a lesser split of superannuation, if this results in her retaining the B Street, Suburb C property.
On the other hand, it is Mr Torrence’s position that his former wife has overstated the relevance of issues to do with child support. At present, notwithstanding his significant health issues, the husband has returned to the workforce and is currently receiving an income of around $79,000.00 per annum.
In these circumstances, Mr Torrence contends that he will continue to provide financial support for X, until she turns 18 years of age. Accordingly, his counsel Ms Pangello, submits that there is a very real risk that, for the court to engineer an outcome, which will see the wife retain the former home, a significant injustice is likely to be inflicted upon Mr Torrence, who will be deprived of his proper entitlement to a share of the parties’ matrimonial capital.
In these circumstances, Ms Pangello submits that the only realistic outcome open in this case is for the B Street, Suburb C property to be sold and the proceeds divided equally between the parties. In these circumstances, Mr Torrence would not oppose an equalisation of the parties’ superannuation entitlements.
These proceedings are directed towards resolving this complex case involving finely balanced considerations of justice and equity. Given the small extent of the asset pool, I am acutely aware that small calibrations in assessing percentages are liable to have far-reaching consequences for each of the parties concerned. In this context, I must regard considerations of fairness as my lodestone in assessing what is the appropriate set of orders to be made.
The legal principles to be applied
The process to be followed for the division of the parties’ property is well-established by law.[2] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975 (Cth). I am required to follow a number of specific steps.
[2] See Lee Steere v Lee Steere (1985) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
In the first step, I must ascertain what are the parties’ assets and liabilities available to be divided between them. The normal rule is that those assets are to be determined as at the date of trial.[3]
[3] See Wardman & Hudson (1978) FLC 90-466; and Biltoft & Biltoft (1995) FLC 92-614
In the second step, I must ascertain the contributions, which each party has made towards the matrimonial pool of assets, as I have found them, following the first step. Contributions fall into two broad categories.
The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the 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.”[4]
[4] See Family Law Act s 79(4)(c)
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
At this second step stage, the task set for me requires the balance and comparison of a multiplicity of contributions, many of which are necessarily different in nature, within the framework of a marriage.
Many contributions in a marriage, such as being a homemaker, do not result in the direct acquisition of assets. They are also difficult to value in absolute dollar terms.
In contrast, the monies contributed by a wage earner are easier to quantify. However these difficulties do not absolve the court of its obligation to undertake the required assessment of contributions. The court’s discretion is a wide one but must be exercised judicially.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act. Pursuant to section 75(2)(o), the court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[5]
[5] See Russell & Russell [1999] FamCA 1875 at [80]
Accordingly the fourth step is for the court to take a step back and examine whether the orders it proposes are just and equitable. These considerations must also inform each of the preceding steps. [6]
[6] See Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39] and Bevan & Bevan [2013] FamCAFC 116 at [60]
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[7] or of equalisation of assets or financial resources.
[7] See Waters & Jurek (1995) FLC 92-635 at 82,376
It is clear that this orthodox stepped approach remains current, notwithstanding the High Court’s decision in Stanford v Stanford.[8] In Stanford the High Court placed significant emphasis on section 79(2), which actively prevents the court from making an order, in respect of property, unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing. This follows from the use of the prohibitive words “shall not” in the relevant section.
[8] Stanford v Stanford [2012] HCA 52
In Stanford the High Court warned of the potential danger of a court conflating its responsibilities arising under section 79(2) & 79(4). The court’s fundamental responsibility is to make a just and equitable order. The High Court said as follows:
“The expression ‘just and equitable’ is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.” [9]
[9] Ibid at [35]–[36]
In this context, it is the wife’s position that it would not be just and equitable, in all the circumstances of this case, for an order to be made compelling the sale of the B Street, Suburb C property, which would deprive her and X of their home.
On the other hand, Mr Torrence contends that it would not be just and equitable for him to be deprived of a settlement of property which does not properly recognise the extent of his contributions during the lengthy marriage between the parties. In Lee Steere & Lee Steere[10] the Full Court of the Family Court observed that any order which “would deprive a party substantially of what he or she is entitled to by reason of contribution would not normally be considered just and equitable.”
[10] Lee Steere & Lee Steere (1985) FLC 91 – 626 at 80,077
Although the multi-step process envisaged by Hickey remains relevant it is less prescribed as a consequence of what was said by the High Court in Stanford. In this context, I respectfully adopted what was said by Murphy J in Watson & Ling namely:
“As a result of those matters, the Court’s approach to s 79/s 90SM may be less compartmentalised than what a strict or unthinking adherence to four (or three) “steps” might otherwise reveal. The task is essentially holistic; is it just and equitable in the particular circumstances of the particular relationship or marriage under consideration to make an order and, if so, its terms must similarly meet that criteria. Of course, holistic though the approach is, it must be referenced to what the Act requires and care must be taken to ensure that the Court’s reasons make that clear.” [11]
[11] Watson & Ling [2013] FamCA 57 at [13]
As was discussed by the Full Court in Bevan, whether it is just and equitable to make any particular property order is invariably inextricably interwoven with questions of contribution arising under section 79(4) and the parties’ financial and relationship history with one another.
The evidence
In these reasons, which follow, findings of fact are made on the balance of probabilities, from my observation of the demeanour of each of the witnesses concerned.[12] I have tried to reach my conclusions on credibility and reliability on the basis of contemporary materials, objectively established facts and importantly, on the apparent logic of events.[13]
[12] See Evidence Act1995 (Cth) at section 140
[13] See Fox v Percy (2003) 214 CLR 118 at 129 [31] per Gleeson CJ, Gummow and Kirby JJ
This is not a case which turns on credit. There are few, if any issues of major evidentiary substance, in dispute between the parties. In my assessment, each party is a decent and hard working person, who endeavoured to provide an honest and unblemished account of the material and fiscal aspects of their marriage and their respective current financial situations.
In my view, the most significant feature of the case is that, as a consequence of their separation and Mr Torrence’s illness, they have been thrown into a financial crisis, which must be both stressful and confronting for each of them. This crisis presents no easily ascertainable solution, certainly not one which will provide a sufficient degree of financial security for each of them.
Notwithstanding the catastrophe and uncertain financial future, which currently faces each of them, the parties remain respectful of one another and did not attempt to undermine the extent of the contributions of the other, during their long marriage.
Mr Torrence presented as a stoic and determined person, who derived a significant component of his own personal identity from working hard in his chosen field of endeavour. It is particularly difficult for him to contemplate a life without employment or being able to provide directly for himself and his family.
In this context, it was suggested that Mr Torrence’s decision to return to the workforce a few weeks before this hearing and a few days after he had completed his trial material, in which he had indicated he was unable to work, was contrived in some way and directed towards circumventing the main thrust of the wife’s case, which was that she would not be likely to receive child support from him for the remainder of X’s infancy.
In my assessment, Mr Torrence is not such an artful person. Nor is he the kind of person who would be inclined to manage his affairs to escape his proper legal obligations, particularly in respect of the financial support of any of his children, all of whom he loves deeply. I was impressed with the frankness of Mr Torrence’s evidence.
There is absolutely no suggestion that he is attempting to take advantage of his illness in the context of these proceedings. To the contrary, he was able to convince the Royal Adelaide Hospital to transfer him from diurnal dialysis service to the nocturnal one, so he could return to the workforce. His evidence, in respect to the stresses this placed on him, both mentally and physically, was compelling.
In this context, I have absolutely no doubt that he proposed the sale of the B Street, Suburb C home because he can see no viable alternative to it. From his perspective, this is the only outcome, which will provide him with the sum he needs to provide him with a modicum of dignified self-support, in the light of his very significant and debilitating illness.
The same can be said of Ms McCann. Although my impression was that she remains emotionally shaken, as a consequence of the parties’ separation, she does not bear any strong feelings of resentment towards Mr Torrence. Each party has deposed to providing support for Ms N, from time to time.
As such, I do not consider the wife is seeking the orders, which she does in this case, with any intent to spite Mr Torrence or to gain advantage over him to satisfy some unspecified ulterior motive. Rather it is because she thinks that the orders are appropriate, particularly given X’s age and vulnerability. She, like the husband, is a devoted family person.
For obvious reasons, it is considerations of this kind, which make the case all the more difficult. There are simply not enough physical assets to go around to adequately secure the financial future of each of the parties.
It is horrifying to consider Ms McCann and X having to move into the rental market, following the sale of their home of many years. It is equally horrifying to contemplate Mr Torrence living hand to mouth, whilst he goes through his regular sessions of dialysis, without the dignity of his own home.
Background
The husband was born in Town O on … 1970; the wife was born in Adelaide on … 1967. Both parties left school early. The husband’s first job was working for his family’s business. The wife, after work at a business, successfully completed a course in health care.
The parties met in 1993 and began to live together shortly afterwards. At the time, each had a car and some modest items of personal property. Mr Torrence owned a house but concedes he had no equity in the property. He was living with his parents, when the parties met.
The wife received a $30,000.00 settlement, arising from a worker’s compensation claim, arising from a shoulder injury, in the early years of the parties’ marriage. She does not contend that this payment should be given any special recognition in the court’s assessment of each party’s financial contributions.[14]
[14] See Pierce & Pierce (1999) FLC 92-844
Ms M was born on … 1995. At the time, the wife continued to work occasional night shifts as a health care worker but in the main she was focussed on activities in the home. Ms N was born on … 1998.
In early 1998, the husband and his brother took over their family’s business. 1998 also marked the parties’ purchase of the land on which the B Street, Suburb C property was subsequently constructed. The husband sold some shares to finance the purchase and construction, with the rest being borrowed. The family moved in mid-1999.
In 2001, the husband and wife commenced a business doing small contracts, as partners. The husband provided most of the labour required, whilst the wife did the accounts. X was born on … 2004.
Shortly afterwards, the parties decided to close their business and the husband began work for a company. He has worked as a labourer, but has also supervised the work of others. It seems to be the case that he is very adept at what he does, but prefers to be on site rather than in an office.
Mr Torrence continued to work up until and after the parties separated. He lived with relatives on a temporary basis until he started to rent accommodation at Suburb F with Ms N. Ms N has had a complicated medical history. She is a coeliac and experienced some psychological issues when she was in secondary school.
More recently, she has studied health care and currently aspires to be a health care worker, which she is studying online. Her health went into steep decline after the parties separated and it was at this stage she was diagnosed, by a geneticist, with ….
She has required multiple hospitalisations and has had to have a finger and two shoulder reconstructions. As is to be expected, she is required to undergo a wide variety of tests, including scans. She has been covered by both her father and her mother’s private health insurance but this insurance has not covered all the out of pocket expenses relating to her impaired health.
The impression I have is that Ms N felt conflicted by her parents’ separation. She has lived with each of them, since separation and each of them has provided her with financial support. At present Ms N is living with her cousin. To her great credit, Ms N has been able to pursue some part-time work, whilst she studies and remains active playing sports. She sounds like a remarkable young woman.
During the first half of 2018, Ms N lived with her father, at Suburb F, whilst he was in the workforce doing labouring work. His ill health and the need for him to undertake thrice weekly dialysis, from … of 2019 onwards, brought this arrangement to an end.
During this period, it is the husband’s case that he provided a great deal of financial support for Ms N, whilst she struggled with her health. It is also conceded by Ms McCann that she received some child support from Mr Torrence for X, whilst he was working, but she has not received anything, in this regard, since April. The relevant assessment was around $270.00 per week.
Ms M is self-supporting. However she and her boyfriend have returned to live at the B Street, Suburb C home. This suits both them and Ms McCann. Ms M and her boyfriend are saving to buy their own home, a project which Ms McCann is happy to support. They also help her out with some of the major household bills.
However, in this regard, I accept the wife’s evidence that she does not see Ms M’s continued occupation of her home as playing any major part in providing financial assistance to her. From her perspective, this is a short term measure, which will come to an end when Ms M has saved enough for a deposit. In this respect, Ms McCann is disinclined to charge her daughter full board and lodging given her desire to help Ms M.
Following separation, the parties agreed on the division of a boat and a caravan – the husband kept the boat; the wife kept the caravan, which she has subsequently sold. Each had a car of equivalent value. The wife further alleges that the husband took items, from the shed at the B Street, Suburb C property, which he told her he sold for $10,000.00, a circumstance, which the husband denies.
I have not been told what the nature of the items in question was. I am troubled by the opacity of the evidence regarding the issue. If the husband did receive $10,000.00, which appears doubtful, the sum is long spent. In my view, there is no equity in adding back this sum or tabulating the other items specifically into the relevant pool of assets.
Other than these items, the parties agree that the husband has three life insurance policies, with AMP, in respect of which he pays a nominal weekly premium. He ascribes a value to these policies of just over $44,000.00, in his financial statement.[15] His evidence was difficult to follow as to how easily he could surrender these policies.
[15] See husband’s statement of financial circumstances filed 3 June 2019 at item 39
Under cross examination, from Mr Jordan, he deposed that he could only access the policy if he had a terminal injury. He also indicated that he had tried to redeem the policy but had been denied access to them because the insurer (AMP) did not consider his condition to be terminal.
In his affidavit material, the husband deposed that his father had purchased him two policies, when he was younger and they had a surrender value of $12,635.51 and $12,023.59 respectively. Clearly this is a much smaller sum than that attributed by the husband in his financial statement, which the wife is prepared to accept.
In these apparently contradictory circumstances, I called the matter back on in order to see if the parties could clarify the issue. This was done on 22 July 2019 and thereafter the parties agreed to jointly inquire of AMP what was the situation with the policies concerned.
It is now a jointly held position that there are in fact four policies concerned, which have a current surrender value of $48,617.41. The benefit payable on Mr Torrence’s death would be $165,000.00, which would be paid into his estate. I have not been advised if he has prepared a will and, if so, who are his beneficiaries.
In these circumstances, I propose to include the premiums, in the parties’ pool of assets, at a value of $48,617.41. It is not likely to be a prudent financial decision for Mr Torrence to cash in the policies, so far as his estate is concerned.
I also understand there is likely to be a payment if Mr Torrence is diagnosed as being terminally ill. Again, this is not likely to provide him with a great deal of personal financial consolation. It would appear to be the case that AMP do not regard Mr Torrence’s condition to be a terminal one at present. Whether this situation will change, in the foreseeable future is unknown to me. As will be demonstrated, in due course, the evidence currently available does indicate Mr Torrence has a reduced life expectancy.
For obvious reasons, given the current parlous state of his health, it would be sensible for Mr Torrence to hold out, for as long as possible, before cashing in the policies. If he does not cash in the policies, the maximum benefits pertaining to them are unlikely to provide him personally with any great financial solace. That benefit will go to his estate.
At present X sees her father intermittently. This seems to be the source of some conflict between the parties. Mr Torrence hopes that X will come and live with him at some stage in the future. These are not parenting proceedings but, in general terms, it would appear to be the case that the co-parenting relationship between Mr Torrence and Ms McCann is currently compromised.
X’s health seems to be good other than that she requires braces for her teeth. Ms M has provided a quote, in this regard, of $8,000.00. Health Insurance is likely to pay around two thirds of this sum. From Ms McCann’s perspective, it is inevitable she will have to meet this cost, which will represent a significant burden for her.
The husband’s health and current circumstances
In 2001 the husband fell ill and was hospitalised. He does not believe that his condition, at the time, was correctly diagnosed. As such, he soldiered on, believing the fatigue he was experiencing, at the time, was the consequence of hard work and growing older.
In 2011 he returned to his general medical practitioner and was diagnosed with stage 4 renal failure. Since that time, his level of kidney function had been in gradual decline. The cause of his illness has been attributed to the overuse of anti-inflammatory analgesics, alcohol consumption and obesity. In the past, he has experienced pain relating to various injuries sustained to his knees.
His condition has been exacerbated by high blood pressure and gout. He has managed to lose weight in the past but has put the weight back on. Mr Torrence has also been diagnosed with reactive depression and been prescribed anti-depressant medication on two occasions. The first episode was when he was diagnosed with renal failure; the second occasion occurred within the context of his marital separation and was fortunately short lived.
Mr Torrence was referred by his solicitor to Dr G, a consultant rehabilitation physician, in May of 2019 for a medico-legal assessment.[16] Dr G had access to Mr Torrence’s medical records at the Royal Adelaide Hospital, where Mr Torrence attends for dialysis. His renal failure has been attributed to glomerulosclerosis or, in lay terms, the hardening of the small blood vessels in the kidneys. The Hospital has confirmed the diagnosis of gout and hypertension.
[16] See Annexure LP 2 to the affidavit of Loretta Poulson filed 14 May 2019.
Dr G confirms Mr Torrence’s own evidence that his renal failure is chronic and permanent. The only treatment which will provide a cure for his illness is a kidney transplant. Mr Torrence is on the waiting list for a transplant but is not guaranteed to receive one. At best, he may have to wait two years and at worst several years for a compatible kidney donation. There can be, however, no guarantee in this regard.
In the meantime, the only treatment which will preserve his life is haemodialysis, which he requires three times per week and will continue to do for the remainder of his life, unless he receives a successful transplant. Each session of dialysis takes a minimum of 4½ hours to complete. The need to undertake dialysis has significant implications for the quality of Mr Torrence’s life.
He experiences fatigue; cramping and numbness in his legs; and headaches. For obvious reasons, these symptoms cannot be helpful to the maintenance of Mr Torrence’s psychological equilibrium. For obvious reasons, the need for such regular and intrusive treatment must have significant implications for Mr Torrence’s capacity to earn a living.
In my assessment, Mr Torrence was stoic in his descriptions of the various travails inherent in his treatment. Initially, Mr Torrence commenced on dialysis during the day. However, he successfully petitioned the RAH to undertake dialysis on a nocturnal basis. The Hospital put on an extra place for him alone on this basis. At present he undertakes dialysis between 9.00 pm and 4.00 am on each Tuesday, Thursday and Saturday.
It was in this context, Mr Torrence was able to obtain work, through a labour hire firm, at Employer H Pty Ltd. He commenced there on … 2019 and works a 38 hour week on an hourly rate of $40.00. This equates to an annual salary of $79,040.00.[17]
[17] See Exhibit A – Mr Torrence’s most recent payslip
On the occasions he has dialysis on a weekday, Mr Torrence goes straight to work after leaving hospital, often after having had very little sleep, due to the discomfort associated with his treatment. How frank Mr Torrence has been with his employers, about his situation, is not clear to me. In his evidence, Mr Torrence indicated that he finds this situation very tiresome but he is coping just with it.
It is the contention of counsel for the wife that this employment was a temporary ruse, on Mr Torrence’s part, to deflect her argument that she is likely to receive no child support, from the husband, for X, for the remainder of her childhood.
I did not take it as such. In my assessment, Mr Torrence’s determination to keep working come what may and provide whatever financial support for his family and himself he can is genuine and not feigned. In his words, which I accept are credible, Mr Torrence needs the money because he wants his own house.
In addition, he is also a person who derives a significant component of his self-identity and self-esteem through work and providing for himself and others. However, notwithstanding his determination and pride, it would be naïve, on my part, to assume that Mr Torrence can easily maintain what I regard as a gruelling regime of work and treatment. It was Dr G’s opinion that the level of fatigue occasioned to Mr Torrence would affect his capacity to work.
At present, Mr Torrence’s greatest aspiration is to be able to undertake home dialysis. He will be eligible for this but needs some form of secure accommodation to do so. I accept that such an intervention will greatly improve the quality of Mr Torrence’s life. It is not an unreasonable aspiration.
My assessment of Mr Torrence is supported by Dr G who reported as follows:
“Mr Torrence has a high work ethic and values supporting his family. The impost of his medical condition restricting his work capacity is causing him distress. He is highly motivated to return to work. However, from a medical perspective it would be to Mr Torrence’s advantage to abstain from a return to work until his medical condition has stabilised and his blood pressure has normalised. I estimate this will take four to six weeks. In the future Mr Torrence will have a reduced work capacity due to his chronic renal failure and the demands of dialysis and the associated fatigue.”[18]
[18] See affidavit of Loretta Polson filed 14 May 2019 at Exhibit LP2
As is axiomatic, Mr Torrence has not heeded this advice. Rather, he has agitated the RAH to be able to undergo nocturnal dialysis and then gone out to obtain work for himself. In my assessment, Mr Torrence is not the sort of person who shirks his responsibilities or who would manipulate his difficulties for any tactical reason. He is working because, in his view, he has no viable alternative.
For obvious reasons, the management of Mr Torrence’s condition, in Dr G’s opinion, will be greatly assisted by him having his own home and some level of self-dependence. This would improve his mood and ability to optimise his health. In this context, I accept Mr Torrence’s evidence that he does not enjoy being dependent on the kindness of relatives for the provision of accommodation.
Mr Torrence wishes to be self-reliant. In his trial affidavit, Mr Torrence deposed as follows:
“I initially lived in the granny flat at the rear of my brother’s home at J Street, Suburb K. My brother and his wife are now renting another house at Suburb E and I am living them. My brother and his wife provide and continue to provide me with practical support. I live with them rent free as I have no income.
I do not want to be a burden upon my brother and his family. I want to establish myself in my own home and I want to buy furniture. At the present time I don’t have any household furniture apart from bed and a fridge and some cupboards and a TV.”[19]
[19] See affidavit of the husband filed 14 May 2019 at [22] – [23]
I accept Mr Torrence’s evidence that he has borrowed $2,000.00 from his mother; $2,000.00 from his brother; and a further $2,000.00 from another family member to assist him through his present financial crisis. None of these loans are formally documented but I accept Mr Torrence feels a moral responsibility to repay them. The loans are significant to reflect the fiscal hardship currently being experienced by Mr Torrence.
One major factor currently exacerbating Mr Torrence’s financial circumstances is the cost of his medication. Mr Torrence has been prescribed a raft of medication to prevent gout and promote healing after dialysis. His medication costs him $130.00 per month. Dr G estimates the on-going cost of treatment required by Mr Torrence to be $6,000.00 per annum.
Mr Torrence has made an application to the NDIS for assistance for his medical treatment but has been advised that he is not regarded as a person with a disability per se. As such, he is reliant on what assistance is available to him through Medicare.
Accordingly, on any view, Mr Torrence faces an uncertain future so far as his health is concerned. Dr G estimates that his life expectancy is reduced by 10%. I was not provided with any elaboration on this figure. It is a sensitive issue, in respect of which I hope to be respectful. In addition, the figure is likely to be affected by the possibility of a successful kidney transplant.
There is no evidence available to me to indicate that Mr Torrence would willingly extricate himself from any responsibility to pay child support for X. In the past, he has been a PAYG taxpayer and his income has been readily amenable to the application of child support formulation.
In addition, I accept his evidence that, when Ms N and he were sharing accommodation, he assisted her with her medical expenses relating to her condition. Fortunately, it appears to be the case that her condition has stabilised and she is able to support herself. She appears to be a remarkable young person.
The evidence indicates that Mr Torrence has some managerial experience, in his employment, from the time he operated his own business. In addition, when he worked for others, he discharged a wide range of administrative responsibilities. At present, he is operating machinery and directing others in this regard on site. His personal preference appears to be a hands on person.
In the past, in 2018, when he became aware of how seriously his health was compromised, Mr Torrence began a course to equip him to teach others the vocational skills involved in his business. He did not complete the course but could theoretically return to it.
The reason he did not complete the course was because he did not deliver the required assignments. In these circumstances, which have coincided with his need for treatment, Mr Torrence has not been involved with the course since … of 2018. I mean Mr Torrence no disrespect, but in my assessment, he is likely to struggle in the vocational area and indeed in higher management. These things are not his bag.
Mr Torrence was disappointed that his condition was not diagnosed earlier so that more active treatment could have been involved in his care at an earlier stage. In these circumstances, he sought legal advice as to whether he had a cause of action against his general medical practitioner.
The cost of this advice was approximately $20,000.00, which was obtained by drawing against the B Street, Suburb C mortgage. Ultimately, the advice was not to proceed with litigation. Ms McCann complains that it was not her decision to obtain the advice.
This may be so. It also may be the case that the wife’s current position is influenced by the current proceedings. What is clear to me is that the relevant decision was made whilst the parties were in a relationship and was not made clandestinely by the husband alone, although the wife may have challenged the wisdom of the move – both at the time and with the wisdom of hindsight.
As such, I am satisfied that the legal expenditure concerned is to be regarded as arising from a joint marital decision. As was pointed out in D & D, marriage is by and large a joint enterprise. How much buffer spouses must give one another, when financial setbacks occur, must depend on the degree of consultation and acquiescence in their relationship.[20]
[20] See D & D [2003] FamCA 473 at [49]
This was not a unilateral decision. No doubt it was a difficult and emotionally laden one. However, the relevant decision was made within the confines of the parties’ marriage. That it turned out ultimately to be a poor one is not something which, in my view, can be sheeted home to one party alone within the context of these proceedings. In my view, this would not be a just and equitable approach.
The wife’s current circumstances
As previously indicated, Ms N has faced a difficult situation as a consequence of her compromised health. It is the wife’s evidence that these problems first manifested when Ms N was at high school in 2010 and precipitated a significant psychological response leading Ms N to struggle at school.
It is also the wife’s evidence that X has also struggled at school from time to time. She too had to change her secondary school. Ms McCann attributes many of X’s problems to her dyslexia.
The parties’ separation, for obvious reasons, was a difficult time for all concerned, including the children. Ms McCann returned to full time employment in … of 2017 approximately two months prior to the date of final separation. She did not return to health care work, instead obtaining a job as an office worker with a firm.
In this period Ms N returned to live with her mother in the parties’ former family home. In addition, Ms M also returned home, with her fiancé, Mr L, whilst the two saved for a deposit to put down against their own home purchase. As at the date of hearing, Ms M and Mr P do not formally pay rent to Ms McCann but contribute towards joint household expenses.
It seems to be a mutually satisfactory arrangement. However, it is likely to come to an end in the not so distant future. As such, the wife will not be able to rely on receiving some form of financial assistance from Ms M and Mr P for an indefinite period. In any event, as is her entitlement, given the ties of love and loyalty which bind her to Ms M, Ms McCann is not inclined to pursue her daughter for the full worth of the financial assistance being provided.
At separation, the B Street, Suburb C mortgage was approximately $10,000.00 in advance. Ms McCann subsequently used this sum to provide for her needs in the short to medium term. After about three months, she began to make mortgage payments again and the mortgage is once again in advance of what is required by about $10,000.00. In my view, this state of affairs is attributable to the wife’s thrift and financial acumen.
Ms N’s health went into sharp decline following the parties’ separation. She had to have a finger and two shoulder reconstruction operations. She received some of her treatment as a public patient but also had some private treatment, which was paid for by her mother. Ms N left her mother’s home in … of 2018, initially moving in with a girlfriend. As previously indicated, she also spent some time living with her father.
I am not in a position to make an accurate accounting of which parent provided what for Ms N in the period since July of 2017 and attribute exact figures in this regard, which can be tabulated now. In any event, the process in which I must engage is not to be regarded as a strict arithmetical or accounting one. I am, however, satisfied that both parties have provided financial support for Ms N, since their separation, as a consequence of their love and mutual feelings of obligation towards her.
Issues in respect of child support have been a shared source of conflict between the parties since their separation. This is explicable given the straitened financial circumstances each has faced. Initially, Mr Torrence was assessed to pay child support in an amount of $270.00 per week for X. Since that time, there have been several reassessments as his financial and employment situations have changed.
I accept Ms McCann’s evidence that it has been difficult for her to budget when the amount of child support due to her has been variable. However, I also accept that these variations have been due to matters beyond Mr Torrence’s control, largely his compromised health, which has impacted upon his capacity to work.
It is Ms McCann’s evidence[21] that she has “no expectation of receiving future child support” from Mr Torrence for X. In this context she relies on expert statistical evidence that the average cost of maintaining a child is $969.00 per week. It is on the basis of this evidence that she seeks a significant adjustment of property in her favour.
[21] See wife’s affidavit filed 19 June 2019 at [55]
She has not received any significant sums of child support since the middle of May in 2019 and for much of this year the amount provided has been the statutory minimum. As previously indicated, she greets Mr Torrence’s recent return to fulltime work with some scepticism, particularly in regards to its long term sustainability. I share her doubts in this regard given the severity of the husband’s illness.
X has had limited time with her father since separation. The parties disagree about why this is so and what its implications will be in future. The wife suggests that X is unwilling to do so; the husband suggests that she is being unduly influenced by her mother.
I am not in a position to resolve this issue, which seems peripheral to the main subject matter of these proceedings, other than it is my finding that it is more likely than not X will continue to live mainly with Ms McCann for the remainder of her minority and, as such, Mr Torrence will have some form of child support liability for her.
Ms McCann’s evidence is that it is unlikely X will get an after school or holiday job due to her dyslexia. To the contrary, she may have to engage a tutor to assist X with her studies as she is presently struggling with her school work.
In my view, X’s capacity to provide what must be regarded as at best an extremely small amount of what will be required to support her cannot be regarded as an important issue in the case. In any event, it would seem to me that if X does earn anything she should be the most influential voice in determining how that money is spent.
At present, Ms McCann’s weekly income is $1,153.00, which equates to an annual salary of just under $60,000.00. Her major items of expenditure, after personal income tax, relate to the mortgage - $300.00 weekly or around 25% of her annual income; and rates relating to the property - $82.00 per week or around 7% of her annual income.[22]
[22] See wife’s statement of financial circumstances filed 30 May 2019 at items 21 & 22.
In these circumstances, it is axiomatic that the prospect of the B Street, Suburb C mortgage being extended must have very significant financial implications for Ms McCann who is already facing challenging circumstances in this regard. As previously indicated, it is her evidence that the Commonwealth Bank, the current mortgagee, has informed her that it is willing to extend the mortgage only by an amount of $70,000.00.
Otherwise, Ms McCann has the usual items of expenditure applicable to a person in her position. She has private health insurance and household and motor vehicle insurance. Her estimate for the costs of food for herself and X is the modest amount of $200.00 per week. In these circumstances, it is not difficult to reach the conclusion that every dollar counts in Ms McCann’s household. It is essential that Ms McCann continues to be employed.
Although Ms McCann has private health insurance, it will not cover the full cost of providing orthodontic treatment shortly to be required for X. As previously indicated, Ms M is involved in health care work and has advised that the likely costs of the treatment will be $8,000.00 of which insurance will pay one third leaving a gap of around $5,700.00.
Ms McCann has re-partnered. Her current partner did not provide evidence in the case and nor was Ms McCann’s evidence in regards to her relationship with him subject to any cross-examination. The person concerned is employed as a professional. He and Ms McCann do not live together and it is her evidence that they do not share a financial relationship. I accept this evidence, which was not challenged.
The wife has superannuation in an amount of $51,523.00, which is reflective of her lengthy periods of time outside of the conventional workforce. Such a sum will not equip her for a self-reliant retirement. The husband’s superannuation is also modest in this regard but is still three times that available to the wife.
Step One – The pool of property
The wife acquired some AMP shares when that entity de-mutualised. The shares have an estimated value of $223.00. The wife estimates her household chattels to be worth in the order of $4,000.00. As previously indicated, issues in respect of a caravan and a boat and trailer have been agreed. The items taken by the husband from the shed are, in my view, shrouded by a large degree of opacity. I do not propose to take any of these items into account in the relevant pool of property.
There is no controversy surrounding the value of the B Street, Suburb C property, which was subject to a formal valuation. The parties’ respective motor vehicles have the same value. I propose to put in the husband’s AMP life policies at their surrender value as agreed between the parties. The amount owing on the mortgage to the CBA and the level of each party’s superannuation is also uncontroversial.
In real terms, the only property and financial resources which can be subject to the court’s order are the B Street, Suburb C property; the husband’s life insurance policies; and the parties’ superannuation. In these circumstances, the parties’ pool of assets and liabilities is to be calculated as follows:
Item
Value
B Street, Suburb C
410,000.00
Husband’s AMP Life Policies (surrender value)
48,617.41
Total Assets
458,617.41
Liabilities
Mortgage to CBA
154,162.00
Net Assets
$304,455.41
Superannuation
Husband’s superannuation
147,061.00
Wife’s superannuation
51,523.00
Total Superannuation
$198,584.00
Total of Superannuation and Assets
$503,039.41
Step Two – Assessment of Contributions
The marriage between the parties concerned in this case was around twenty four years in duration. It produced three children. At the relationship’s commencement, neither party owned assets of any significant value. What they own now was derived during their marriage.
The evidence unequivocally indicates that both the husband and the wife were fully committed to their family and its security, both in a financial and homemaking sense. The husband was the family’s main breadwinner, working in his area of expertise in a variety of settings. The wife was the person who provided the majority of the parenting and homemaking duties.
In addition, when the husband was self-employed, the wife assisted in the business in every way open to her. As such the marriage was one of equals. In these circumstances, the only reasonable conclusion open to the court is that the parties’ various but disparate contributions provided during their long marriage should be regarded as equal.
In addition, in the difficult period since their separation, there are no factors which indicate that any deviation should be made from this assessment. The wife has had the occupation of the former family home but has made the necessary mortgage payments on it. The evidence indicates that this has been a period of financial privation for her.
The same considerations apply to the husband. He has had severely compromised health and has had to rely on the support of his family for his accommodation. He too has had to live in an extremely difficult financial situation.
Accordingly, as with many cases, the weight of decision making, in the current matter, turns on a consideration of the various factors arising under section 75(2) of the Act, which in general terms require the court to make an assessment of what the future will hold for each of the parties concerned in financial terms.
For obvious reasons, this is a difficult task, which is exacerbated by the fact that both parties face a problematic future. Put simply, there are inadequate assets available to provide each of them with a sufficient financial bulwark, given their immediate prospective need to provide accommodation for themselves.
As matters currently stand, in order to achieve an equal division of the non-superannuation assets, if the husband was to retain his life policies at their surrender value, it would be necessary for the wife to purchase the husband’s interest in the B Street, Suburb C property for the sum of $106,610.30, which is approximately $35,000.00 more than her capacity to borrow.
In all these circumstances, in my view, I must be careful not to manipulate the section 75(2) factors to achieve an outcome designed to avoid an unpalatable one which necessitates the sale of the property concerned. Clearly, this would not be an equitable approach to the problem arising in the case.
It may also be the case that the proper equitable outcome will turn on the mix and match of superannuation and non-superannuation assets between the parties depending on their respective needs and the date on which each of them will need to have recourse to superannuation for retirement purposes. Similar considerations are likely to apply to the life insurance policies standing in the husband’s name.
Step 3 – the prospective needs of the parties
I am now required to consider the various matters set out in section 75(2) and in particular to consider whether any further adjustment should be made in favour of either party. The section 75(2) factors are mainly, but not only, prospective in nature. They are as follows:
(a) the age and state of health of each of the parties; and
(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; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(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; and
(e) the responsibilities of either party to support any other person; and
(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; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(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 adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(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; and
(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; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any other fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties.
I will address the section 75(2) factors, as relevant.
Paragraph (a) – this is a central consideration in the case. The wife will be fifty two years of age in a few weeks’ time. She enjoys good health. Accordingly, it is more than likely she has at least a decade of productive work, in the paid workforce, before her. During this period she will be able to contribute to superannuation and pay down debt.
It seems improbable that the husband will have such an opportunity. He is forty nine years of age and in extremely poor health. His ability to remain fully engaged in the workforce is dependent on receiving a kidney transplant, which cannot be guaranteed. His life expectancy is significantly reduced.
Dr G’s opinion is that Mr Torrence’s work capacity is reduced due to his chronic renal failure and the demands of dialysis, which causes him marked fatigue. This is notwithstanding Mr Torrence’s high work ethic and desire to keep working. However, the reality is that his chosen field of employment has hitherto been physically demanding.
In these circumstances, Mr Torrence is likely to find it difficult to be able to pay down debt or contribute to superannuation. Rather, in my assessment, there is a significant likelihood that he will be compelled to retire permanently from the workforce sooner than he would otherwise have planned and he will be compelled to access his superannuation sooner than anticipated.
Mr Torrence does not seem to have actively contemplated these challenging options preferring to focus on his strong work ethic and doing what he can in the short to medium term. However, in my view, it would be imprudent of me to disregard the diagnosis provided by Dr G, who has advised against Mr Torrence returning to work at this stage.
In short, the wife has time before her in the workforce to overcome the financial disaster which the end of the parties’ marriage represents, whilst, on the other hand, the husband is not likely to have such an opportunity available to him. Accordingly, in my view, this factor strongly favours the husband.
Paragraph (b) – the husband is obviously very good at what he does. He has been engaged in the labouring industry since he left school, learning his skills at his family’s business, which he subsequently took over. He has also worked for other enterprises in the field of labouring.
Ms McCann is the best person to provide evidence regarding Mr Torrence’s general aptitude for employment, particularly away from direct field work. Her evidence was that Mr Torrence found a desk job stressful and unsatisfying. She did not think he had any great interest in teaching his trade skills. Her view was that his preference would be to have an onsite job.
This view is supported by the evidence. Notwithstanding the significant issues surrounding his health and its treatment, Mr Torrence has obtained such a hands on position for himself in labouring. I have significant reservations that he will be able to maintain this position in the long term given the requirement that he undergo dialysis three times per week.
These reservations also apply to Mr Torrence either having some form of administrative position in the labouring industry or teaching his skills. Work onsite is likely to be physically challenging. However, it also seems to be the case that it will be difficult for Mr Torrence to transition to some other form of employment. He is likely to remain debilitated for the foreseeable future.
In these circumstances, I am of the view that there exist significant questions as to whether Mr Torrence has sufficient physical and mental capacity to earn an income in the short, medium and longer term, unless he has a transplant. Dialysis maintains Mr Torrence’s life but does not provide him with a permanent cure. I accept that this treatment is physically arduous and has created its own challenges for Mr Torrence. A kidney transplant would transform his situation but this is cannot be assured.
On the other hand, Ms McCann is in permanent employment, albeit in a semi-skilled administrative role. She presented as a pleasant, well-motivated person. As such, she is likely to be able to remain in the workforce for the next ten to fifteen years barring unforeseen exigencies. I would anticipate that she will be able to earn around $60,000.00 per annum, which will increase in line with inflation.
I appreciate that this is to be regarded as a modest income. However, it is likely to be assured. I am not in a position to prognosticate in regards to the possibility of her being promoted, as this was not an issue canvassed at trial. It does not appear to be her intention to re-train at this stage.
Accordingly, in my assessment, Ms McCann has a greater degree of financial security than Mr Torrence for factors which are attributable to the latter’s extremely compromised health. It has been said, by the Full Court, that the most valuable “asset” a party can take out of a marriage is “a substantial, reliable income-earning capacity”.[23]
[23] See Clauson & Clauson (1995) FLC 92-595 at 81,911
In my view, Ms McCann has a reliable, if not a substantial income-earning capacity for the reasonably foreseeable future. Mr Torrence has neither a reliable nor a substantial capacity in this regard. Again the factors arising under this consideration favour the husband.
Paragraph (c) – at the present time, Ms McCann has the sole responsibility for parenting X, who is a teenager at secondary school. She will have this responsibility for the next three years or so. These responsibilities may impact upon Ms McCann’s capacity to offer herself for overtime or promotion generally.
However, this was not an issue examined in the evidence. In any event, X is not of an age at which she is likely to require a significant degree of supervision out of school hours. X will require expensive orthodontic work and probably some tutoring support because of her dyslexia. Accordingly, the factors arising under this consideration favour the wife but for a finite period of time.
Paragraphs (d) & (e) – these considerations do not apply to the parties’ current situation. The parties have voluntarily assisted Ms N with her medical issues. The current financial relationship between Ms McCann and Ms M is symbiotic in nature.
Paragraph (f) – the issues which, in my view, fall for consideration under this heading are sensitive in nature. Dr G is of the view that Mr Torrence’s life expectancy is significantly reduced and that his capacity for full time arduous work is compromised both by the need to have dialysis and the fatigue which it precipitates.
How the predictions regarding life expectancy will play out is, of course, unknown to me. I wish Mr Torrence every success in his pursuit of a transplant and otherwise hope the process of treatment he is undergoing in respect of his blood pressure, gout and renal condition adds to his quality of life. It may well be the case that Dr G proves to be mistaken.
However, it would be prudent for Mr Torrence (and indeed the court) to make his necessary financial plans in the light of his current condition and prepare for the possibility that he may not be able to remain in the paid workforce for as long as he would like. As such, he needs to consider whether he will be able to service a mortgage for what is the usual period of such loans.
In these circumstances, although it may not be palatable to him, Mr Torrence may be compelled to retire sooner from the paid workforce than he would have otherwise anticipated. Such a retirement would trigger the release of his superannuation. Accordingly, it may be better for Mr Torrence to retain as much of the parties’ jointly accrued superannuation as possible because he will need to access it far sooner than would Ms McCann.
I have not been provided with the actual life policies relating to Mr Torrence. In blunt terms, to let them mature on the occurrence of his death would be of no assistance whatsoever to Mr Torrence personally. Similar concerns may arise if a greater benefit is payable in the event Mr Torrence is diagnosed with a terminal illness, within the terms envisaged by the policies, which terms are, as I say, unknown to me.
Again, in these circumstances, it may behove Mr Torrence to consider liquidating the policies concerned, if he retains them, as Ms McCann proposes. Such a course would provide him with a reasonable sum of money, which could be directed to resolving his accommodation issues on some basis.
Given the small asset pool, on the one hand and the significant needs of each of the parties, on the other, it seems to me that the court must be as creative as possible, within proper parameters of equity, in its mix and match of assets.
Paragraph (g) – this consideration recognises that one of the inevitable consequences of the end of the majority of marriages is a drop in living standards for the individuals concerned. This is a particularly important consideration in the current case as it is the underpinning of Ms McCann’s position that she should be able to retain the B Street, Suburb C property.
It is trite, but true nonetheless, that two households cannot live as economically efficiently as one. What is important is that any drop in living standards should not be borne disproportionately by one party more than the other. The end of the parties’ marriage has been an economic misfortune for each of them.
The end of the parties’ marriage has been financially challenging for both the husband and wife. Mr Torrence has been forced to live with relatives for extended periods. Ms McCann has had the benefit of remaining living in the B Street, Suburb C home, although she has had some limited assistance from Ms M in this regard.
From Ms McCann’s perspective her future economic and emotional security and that of X depend on her being able to continue living in the parties’ former family home. If the property has to be sold, there will be selling costs. Accordingly, there will be a diminution of marital capital rather than an agglomeration of it.
In addition, if Ms McCann is in a position where she has to obtain alternative accommodation for herself and X, there will be costs associated with this. On any purchase, there will be stamp duty levied and additional borrowing costs. As such, any purchased home is likely to be a step down from the present one. Once circumstances have taken a person off the property ladder, it is inevitable that he or she will have to re-join it on a lower rung.
This is the nub of Ms McCann’s case. She implicitly argues, I think, that it would be fundamentally inequitable if, through the forced sale of B Street, Suburb C, both parties are forced into a situation of becoming renters. As such, considerations relating to how she and X have lived until now, in the security of the home, are now relevant to what orders the court should make.
On the other hand, it is Mr Torrence’s case that ordinary considerations of propriety dictate that he should be in a position to secure some form decent form of accommodation for himself so that he can undergo dialysis in his home. From his prospective, this cannot be regarded as an outlandish proposal. I accept that home dialysis will immeasurably improve the quality of his life and is the outcome best calculated to ensure he remains in the workforce for as long as practical – which will also financially benefit the wife and X.
Mr Torrence has not provided any details of how much money he needs to be able to purchase a modest home for himself. I can understand why this is so. It will depend on what he can borrow, which in turn depends on his employment situation. Due to the issues surrounding his health, significant question marks must arise in respect of Mr Torrence’s capacity to service a mortgage.
In addition, Mr Torrence has not ruled out the possibility of renting accommodation for himself if such accommodation is sufficiently secure to allow him to have home dialysis. Accordingly, the range of the sums required by Mr Torrence to satisfy his prospective accommodation needs is unclear to me.
In contrast, Ms McCann is clear in her requirements and how much she can afford to achieve them. She will take on the existing mortgage on the B Street, Suburb C property but can only extend the borrowing by a further $70,000.00.
In my view, the argument that for both parties to be placed in a position requiring them to either purchase and rent alternative accommodation for themselves, in the current circumstances, would constitute an inequitable burden on the wife, is a powerful one. It is persuasive that the court should do whatever it can, within the framework of what is fair, to avoid the unnecessary liquidation of important assets.
I appreciate this argument is not likely to appear compelling to Mr Torrence, whose current circumstances compel him to live very much from hand to mouth. But, in my view, it is not necessarily either fair or appropriate for misfortune to be vested equally upon everyone – if such an outcome can be avoided. Regrettably, there is only one home available and it is currently being occupied by Ms McCann and X.
Ms McCann has a clear proposal as to how this status quo can be maintained. On the other hand, whilst accepting the difficulties of Mr Torrence’s position, he is not able to provide an obvious means of providing the accommodation he requires other than by selling the B Street, Suburb C property so that its capital may be liberated.
However, the other side of the coin is that Mr Torrence is not to be deprived of an equitable share of marital capital just because of Ms McCann’s understandable aspirations to retain the B Street, Suburb C property. If Mr Torrence’s legitimate claims, for a proper share of the parties’ marital property, cannot be satisfied without the sale of the property because Ms McCann cannot raise sufficient funds against it, regrettable though this may be, the property must be sold.
Again, in my view, the current difficult and tightly constrained circumstances of the parties dictate that the court should be as creative as possible in how it distributes their assets. At the end of the day, this distribution is likely to be guided by the different needs of the parties, at their respective stages in their prospective working lives.
However, at the end of a long marriage, in which both parties concerned have made very many significant and myriad contributions, it is clearly the case that both should be able to access a reasonable standard of living. For each of them, what can be considered reasonable depends to a very large degree on the manner of their future accommodation.
Paragraphs (h), (ha), (j), (k), (l), (m), (n) & (naa) – I do not propose to address these considerations directly, given the issues arising in this case. Neither Mr Jordan nor Ms Pangallo made direct reference to them and nor will I.
Paragraph (na) – the weight to be attached to a child support assessment will vary in the circumstances of each particular case concerned. The court is directed to look at the amount of the assessment, the financial circumstances of each of the parties, the needs of the children concerned and whether child support is likely to be paid regularly and at an adequate rate in future.[24]
[24] See Clauson & Clauson (supra) at 81,911
I have already indicated my acceptance of Mr Torrence’s evidence that, if he is assessed to pay child support, he will willingly do so. It is probable that he will be a PAYG taxpayer, if he is working, and therefore his rate of pay will be easily ascertainable and so readily amenable to the application of the child support formula.
However, I also accept that there is a very real probability that, due to his ill health, Mr Torrence may not be able to be regularly and reliably employed and, in these circumstances, the amount of child support to be levied against him will be small and so unable to supply any of X’s financial needs.
In such circumstances, the burden of supporting X will inevitably fall upon Ms McCann’s shoulders and it will be a heavy one. In addition to possible tutoring expenses and orthodontic treatment, X is currently in her last years of high school. As such, she is likely to have many expenses relating to her education, extramural activities and social life.
As the parent providing her residence and supplying her day to day care, it will be to her mother to whom X will turn if she needs some money to attend a school event or to satisfy some other exigency of teenage life. Ms McCann is likely to place her own needs behind those of X. Over the course of the next three years or so, the cost of supporting X is likely to amount to many thousands of dollars. On any view, this is a factor which greatly favours Ms McCann.
Paragraphs (o), (p) & (q) – I do not consider that there are any facts or circumstances, arising in this case, to which I have not already alluded, which need consideration. There are no applicable financial agreements.
I have not been advised as to the parties’ current liability for legal costs. Ms McCann indicated a liability for around $12,000.00 in her financial statement. Mr Torrence’s financial statement is silent in this regard. As with all cases involving small pools, the court is always concerned about the proportionality of costs to the issues arising in the case.
At the end of the day, the requirement that the parties pay their lawyers may derail the court’s well-meaning intentions in regards to how it has determined that its final orders should be constructed in order to accord justice to the parties concerned.
Conclusions on section 75(2) factors
This is a difficult and finely balanced case as a consequence of the modest extent of the parties’ assets given the extent of their respective prospective financial needs. Each of them needs the security of long-term accommodation – the husband so that he can have dialysis at home; the wife so that she can provide a home for herself and X.
Mr Torrence is a person in early middle age who faces the prospect of his working career being cut short because he has fallen chronically ill. In most cases, this would entitle him to a further adjustment of property in his favour, particularly as the evidence indicates that Ms McCann has a reasonable capacity to support herself financially through engagement in the paid workforce.
But this is an idiosyncratic case, which requires its own individual consideration of what is just and equitable. Although Ms McCann has an income earning capacity, the claims on her income will be significant, particularly in respect of the need to support the parties’ teenage child, X.
Finally, an outcome which sees each party consigned to the rental housing market for a potentially lengthy period has the potential to be perceived as being a particularly arbitrary and high handed one, in the sense that both parties’ future prospects will be blighted and the pool of property diminished.
Balancing all these factors, I have come to the conclusion that there should be no further distribution made, at least in percentage terms, in favour of either party, at the end of the third stage. Rather, I should turn to the mechanics of the distribution of property – both actual assets and superannuation – to determine how to best resolve the equitable issues this case throws up.
In basic terms, I have determined that Ms McCann’s legitimate expectation of retaining the B Street, Suburb C property does not necessarily trump Mr Torrence’s legitimate need for sufficient cash to re-house himself to enable him to undergo home dialysis in circumstances in which his wage earning capacity is likely to remain severely compromised, perhaps forever.
In my view, these issues are not to be resolved by approaching the case in purely percentage terms. Rather, I propose to turn to the assets themselves, having determined that the parties’ respective needs, although different in material terms, are to be considered equally compelling in respect of their potency.
In Steinbrenner & Steinbrenner,[25] Coleman J observed as follows:
“Given the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion, whether it be in the assessment of contributions in the matrimonial cause, assessment of damages in a personal injuries case, or determination of compensation in a land resumption case…”
[25] See Steinbrenner & Steinbrenner [2008] Fam CAFC 193 at [234]
I am currently at the point in the judgment at which the court must make the metaphorical leap from words to figures or from abstractions to what is concrete. After all, it is all well and good to talk in percentages, so far as orders and outcomes are concerned. But what matters to the parties is what the orders mean to them in dollars and cents and what effect they have on their long-term plans and aspirations.
This leap from abstraction to the concrete must be undertaken in terms of what is just and equitable to each of the parties concerned. It will also envisage what is the overall mix of assets, debts and superannuation, given the respective situations of each of the parties concerned. It is a particularly difficult task given the small extent of the property pool.
The relevant factors to be considered in determining how any mix of assets, between parties, is to be made up, when final orders are being determined, are likely to include the following:
·the purchase price of appropriate accommodation and rehousing costs for each of the parties concerned;
·the need to provide some form of financial buffer to cover each of the parties concerned in respect of the ordinary exigencies arising from independent living;
·the current level of the parties’ superannuation and any discrepancies thereon;
·the probability of the parties being able to acquire appropriate superannuation benefits from any future income; and
·any discrepancies in the income earning capacity of the parties concerned, which will have implications in respect of any capacity to borrow monies in future in order to finance the purchase of future accommodation.[26]
[26] See L & L (2006) FLC 93-254
As previously indicated, Ms McCann knows what form her future accommodation should take and how much she can afford to borrow to achieve it. She wants the former family home and can afford $70,000.00 in order to purchase Mr Torrence’s interest in it.
Given his health situation, which restricts his employment prospects, Mr Torrence is likely to need some nest egg or cash resource to provide him with some form of bulwark if his health takes a turn for the worst. I accept his evidence that he is currently living on a knife edge so far as his financial and accommodation security are concerned.
It may be the case that Mr Torrence will not be in a position to borrow funding to enable him to purchase a home long term, if he is unable to work. He may have to look elsewhere in this respect, difficult though this may be. If Mr Torrence is able to continue working and receiving an income commensurate with what he is currently receiving, well and good. Necessarily, in such circumstances, any prospective lender is likely to look upon him favourably.
Such an outcome, in my view, must be approached with a high degree of caution, given Dr G’s views. I sincerely hope the doctor is unduly pessimistic in this regard. However, the fact that it is feasibly possible for the doctor to be wrong in his assessment requires the court, in my view, to be especially careful before making any order which would require the home to be placed on the market, given the calamitous consequences this would have for Ms McCann.
In this context, although I greet it with some scepticism, I note that it was the thrust of Mr Torrence’s evidence that he intends to keep working notwithstanding his health issues. Neither Dr G nor I challenge the strength of Mr Torrence’s work ethic.
It is also possible that Mr Torrence may be able to fully recover his health, if he has a transplant. I hope he does so. Again, if this occurs, it would be unfair for Ms McCann to have been deprived of the opportunity to retain the B Street, Suburb C property if Mr Torrence is able to be completely rehabilitated and so return to his comparatively well paid employment.
In his current difficult circumstances, it is likely to be more useful for Mr Torrence to retain as much of his superannuation as possible particularly if he is compelled to retire from the workforce due to ill health prematurely. I know this is not his desire or plan. However, if he does do so, he will be able to access his superannuation. This may enable him to purchase some extremely modest form of accommodation.
In addition, if cashed in, the life insurance policies may be able to serve the same end. In short, Ms McCann, given her income security is better placed to service some form of debt; whilst Mr Torrence needs to be extremely careful about taking on debt at this stage.
Ms McCann is not at the stage of her working life at which she must closely consider her retirement needs. It would, of course, be prudent for her to have as much superannuation as possible. However, the tenor of her case is that her greatest need, at the present time, if for security of accommodation for herself and X.
Mr Torrence is off the housing ladder, as a consequence of the end of the parties’ marriage. I acknowledge that this is a difficult and confronting situation for him. However, if the same fate befalls Ms McCann it will be extremely difficult for her to re-engage with the property market given her circumstances. Superannuation is a less compelling need for Ms McCann at present than it is for Mr Torrence.
In all these circumstances, I propose to lump in the parties’ superannuation and non-superannuation assets into one pool and divide it in approximately equal terms. As indicated above, the applicable sum is $503,039.41. One half of this sum is represented by a sum of approximately $250,000.00.
If Mr Torrence retains his superannuation ($147,061.00) and the life policies at surrender value ($48,617.41), he will have assets to the value of $195,678.41. As indicated above, if his health does deteriorate to the extent that he is forced to leave the workforce, the superannuation can be converted to cash immediately. Although it may not be economically prudent to cash the life policies, these are analogous to cash.
In order to ensure Mr Torrence receives his proper entitlements I propose that Ms McCann purchase his interest in the B Street, Suburb C property for the sum of $65,000.00. This outcome will provide Mr Torrence with a significant cash sum – potentially well over $110,000.00 (in the event that he cashes in his life policies), which should go a long way to answer his accommodation difficulties.
In addition, if he continues working, he will have the security of superannuation. However, if ill health forces him from the workforce, he can further utilise his superannuation to provide for accommodation. Clearly, such an outcome envisages him being on some form of social security for the remainder of his life. This cannot be an attractive option for a person with the undoubted work ethic of Mr Torrence.
On the other hand, Ms McCann will have no financial nest egg to buttress her from any unforeseen exigencies of life. She will have modest stores of superannuation. On the other hand, she will have that which she sees as being most central to her and X’s on-going financial security – her own home, albeit one with a sufficient level of debt attached to it.
This certainly cannot be regarded as an ideal outcome for her. However, unlike Mr Torrence, her health is good and she is likely to have many years of productive life before her in which she can pay down the debt and add to her superannuation. In addition, although it cannot be assured, I would hope that the property market will ensure that the B Street, Suburb C property appreciates in value over the remainder of Ms McCann’s working life.
As I have said, the difficulty of re-entering the property market, once a person of modest means has exited it, is a significant factor in this case and one which requires the court to be mindful of what is an equitable outcome, in the case, given the competing and manifold claims of each of the parties concerned.
Similarly, the outcome is far from perfect so far as Mr Torrence is concerned. However, in my view, the outcome proposed gives him the highest level of flexibility in respect of approaching the various financial problems currently confronting him, given his severely compromised health.
In all the circumstances, I am satisfied that the outcome proposed is a just and equitable one. For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding two hundred and forty-three (243) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 23 August 2019
Clauson v Clauson (1995) FLC 92-595; and Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386
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Family Law
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Equity & Trusts
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