Tozer and Tozer
[2010] FMCAfam 206
•10 March 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TOZER & TOZER | [2010] FMCAfam 206 |
| FAMILY LAW – Property settlement – small asset pool – no agreement regarding constitution of or contribution to pool – gambling – post-separation contribution. |
| Family Law Act 1975, s.79 |
| Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Kennon and Kennon (1997) FLC 92-757 Kowaliw and Kowaliw (1981) FLC 91-092 Norbis v Norbis (1986) 161 CLR 513 Pierce v Pierce (1998) FLC 92-844 Weir (1993) FLC 92-338 Williams & Williams [2007] FamCA 313 |
| Applicant: | MR TOZER |
| Respondent: | MS TOZER |
| File Number: | SYC 1544 of 2008 |
| Judgment of: | Altobelli FM |
| Hearing date: | 23 October 2009 |
| Date of Last Submission: | 23 October 2009 |
| Delivered at: | Sydney |
| Delivered on: | 10 March 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hodgson |
| Solicitors for the Applicant: | Gergis Solicitors |
| Solicitor-Advocate for the Respondent: | Mr Galluzzo |
| Solicitors for the Respondent: | Galluzzo Adriano |
ORDERS
The wife is to pay to the husband the sum of $68,965.00 within 60 days failing which interest will accrue on the said sum at the rate specified in the Family Law Act, its Rule and Regulations and the property at Property W is to be sold.
Simultaneously upon compliance by the wife with Order 1 the husband shall do all acts and execute all documents as are necessary to transfer to the wife the whole of his right, title and interest in the property situate at and known as Property W in the State of New South Wales.
If the wife does not comply with Order 1 above parties have liberty to relist before me on 7 days notice to obtain an order implementing the order for sale of the said property.
Each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.
The wife must refinance the St George debts and assume sole liability for and indemnify the husband against any liability arising from the Esanda Finance loan within 60 days.
The wife is henceforth solely responsible for payments of the mortgage and outgoings relating to the property.
In the event that either party fails, refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, then pursuant to s.106A, a Registrar or Deputy Registrar of the Federal Magistrates Court of Australia is hereby appointed to execute all deeds, documents and instruments in the name of the defaulting party and to do all such acts and things necessary to give validity and operation to such deeds, documents and instruments.
IT IS NOTED that publication of this judgment under the pseudonym Tozer & Tozer is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 1544 of 2008
| MR TOZER |
Applicant
And
| MS TOZER |
Respondent
REASONS FOR JUDGMENT
Introduction and Background
This is an application for alteration of property interest under section 79 of the Family Law Act, commonly known as an application for property settlement. The husband, who is a 49 year old [occupation omitted], is the applicant. The wife, who is a 49 year old [occupation omitted], is the respondent. The parties commenced cohabitation in July 1994, married in March 2005, and separated in November 2007 after a period of cohabitation lasting about 13 years. They have no children from this marriage, but both have children from previous marriages, all of whom have attained the age of 18 years.
Despite the fact that it is a relatively small pool of assets, the parties have been unable to agree about matters relating to the constitution of the pool of assets, and the assessment of contribution. Neither party makes a claim for an adjustment under section 75(2) of the Family Law Act. Neither party contended that their respective superannuation entitlements should be dealt with separately to their other assets. Indeed, it seems common ground that each party would retain their superannuation entitlements in specie.
It seems common ground that when the husband and wife commenced cohabitation in 1994 he moved into the wife’s home at Property A. At the time the wife had separated from her first husband and her two children from that marriage, [Y] aged 7, and [X] aged 9, were living with her. As part of the wife’s property settlement with her first husband, she acquired his interest in the property and then assumed responsibility for the mortgage.
It is unclear precisely what is the value of the wife’s interest in this property at the date of cohabitation, but in submissions counsel for the husband conceded that when the property at Property A was eventually sold in 1996 there was at least $70,000 derived from the same in respect of which the husband’s contribution could not be regarded as significant. Between 1994 and the date of sale of the Property A property in 1996, the husband contributed by way of weekly payments of about $200 as his contribution towards household expenses.
In 1996 the wife sold the Property A property and the parties purchased a block of land at Property W on which they later built what is now the former matrimonial home. The purchase of Property W, and the subsequent construction of the home, appears to have been funded primarily by way of the application of the sale proceeds of the
Property A property, and a loan from the St George Bank. The husband asserts that he also contributed an amount of $20,000 towards the acquisition and construction costs, which was derived from a workers’ compensation payment that he received at about that time. There are a number of issues about this contribution that will need to be considered in these reasons.
During the course of the marriage the parties were involved in a [omitted] business, purchased an investment property at Property R on which they then constructed a home, and the wife retrained as an [occupation omitted]. These matters are relatively uncontentious and whilst each of the husband and the wife had different interpretations of these events, nothing turns on them, and these events do not effect the ultimate assessment of contribution in this case.
The wife asserts that during the marriage the husband gambled substantial funds and in this regard made a negative contribution.
The applicant husband contends that he made substantial contributions throughout cohabitation, including the workers’ compensation payment of $20,000. In addition he contends that he contributed to the welfare of the wife’s two children from her first marriage, did substantial physical work at maintaining and improving their properties, and was able to facilitate the gaining of substantial cost benefits from a builder friend of his, Mr K, in relation to both the former matrimonial home and the investment property. Accordingly the husband’s case is that he in fact made a greater contribution than the wife to the extent of 2.5-5 per cent. He contends that in the final result it would be just and equitable for the former matrimonial home to be sold, and for the net sale proceeds to be divided equally with each party otherwise retaining all property in their respective possession or control, including their superannuation.
By contrast, the wife’s case is that she should receive 70 per cent of the net asset pool. The main basis of this is that she made a greater initial contribution to the pool by reason of bringing into the relationship her equity in the Property A property which was directly applied towards the former matrimonial home. In addition she contends that as the husband was addicted to gambling he incurred substantial losses during the marriage and that such losses should not be shared by her. She also makes a claim for post-separation contribution based on her paying the mortgage on the former matrimonial home, together with outgoings. The total result of these matters results in a claim for 70 per cent in her favour and she seeks the opportunity to purchase the husband’s interest in the former matrimonial home.
The evidence in this case consisted of the affidavits of the husband, the wife, Mr K, the builder of the homes, and the wife’s father. All were cross-examined.
Issues
Having regard to that broad outline the issues in this case are as follows:-
a)Some minor issues relating to the constitution of the pool of assets.
b)The assessment of contribution to take into account issues about initial contribution made by both the husband and the wife, contributions made during cohabitation, whether there was a negative contribution arising out of the husband’s gambling activities, and whether there should be a further assessment of contribution in the post-separation period.
c)Making a just and equitable order.
Applicable Law
The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole.
My discretion in this regard should be exercised having regard to the facts of this case.
I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
The wife raised what is, in effect, a waste argument. A succinct statement of the law in this regard is the statement by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76 644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Pool of Assets
I find the final pool of assets in this case to be as follows:-
| Assets | Value | |
| 1 | Property W (joint) | $480,000 |
| 2 | Furniture etc (wife) | $12,000 |
| 3 | Furniture etc (husband) | $2,000 |
| 4 | Boat & Trailer (husband) | $20,000 |
| 5 | Toyota Hilux (husband) | $15,000 |
| 6 | Suzuki Swift (wife) | $15,000 |
| 7 | Superannuation (wife) | $69,065 |
| 8 | Superannuation (husband) | $52,624 |
| Total Assets (super and non-super) | $665,689 | |
| Liabilities | ||
| 9 | St George Portfolio Loan (joint) | $180,911.50 |
| 10 | St George Business Loan (joint) | $34,905.06 |
| 11 | St George Investment Loan (joint) | $39,398.74 |
| 12 | Esanda Finance (joint) | $14,000 |
| Total Liabilities | $269,215.30 | |
| Total Net Assets | $396,473.70 |
I note that most of the items referred to in this balance are agreed. Item 12, a liability to Esanda Finance, has been inserted at $14,000 which is the higher of the two figures proposed by the husband and the wife. In the absence of evidence as to what the current liability to Esanda Finance is, it will cause less prejudice to the parties if it is included at the higher figure. The husband claimed an add-back of money spent by the wife shortly before separation on an overseas trip. By the time of final submissions this claim was very wisely withdrawn, particularly given the evidence that he himself had spent some moneys on a holiday of comparable value, shortly before separation.
The husband also submitted that there should be an add-back of legal fees paid by the wife. I disagree. There is no cogent evidence before the court establishing that any moneys that the wife held at the date of separation, were applied towards legal fees. Indeed, the evidence indicates that the most likely source of legal fees paid was moneys advanced to the wife by her own father. To the extent that either the husband or the wife sought to include in the balance sheet personal borrowings or liabilities in the post-separation period, I decline to include the same. The evidence indicates that it was more likely than not that any liabilities incurred in the post-separation period were of a personal nature. Whilst I will not entirely ignore the existence of these liabilities, it is not appropriate to include them in the balance sheet.
I particularly record in these reasons that I reject any asserted claim by either the husband or the wife relating to moneys advanced to the wife, by her father. From the wife’s perspective, I’m not satisfied that there is any liability to her father, or that it should be included in the balance sheet. It is more likely than not that there is no expectation that this money is to be repaid by the wife to her father. Insofar as the husband claims that repayments of money by the wife to her father should be added back, this claim is not established. The evidence indicates that moneys were provided to the wife by her parents as part of a convenient arrangement for her parents to structure their financial affairs on their retirement. There is no evidence to suggest, however, that any money provided by the parents to the wife, and then repaid, should be included in the balance sheet.
Accordingly, the total net assets in this case amount to $396,473.
Assessing contribution
As I indicated above, by the time of final submissions the counsel for the husband conceded that $70,000 from the sale proceeds of the wife’s property at Property A was applied towards the purchase of the Property W property. Whilst the wife’s case proceeded on the basis that her contribution was $72,000, the difference is negligible. In assessing the weight to be given to this initial contribution, I need to take into account that even though the property was purchased 14 years ago, it is still intact and, indeed, represents the parties’ largest asset. A contribution of $70,000 on a pool of assets which has an approximate value of $400,000 represents about 17.5 per cent of its current worth. This is, of course, but a rule of thumb and one must take into account the myriad contributions that occurred after the date of acquisition, a matter that I will consider below. Nonetheless, it must be recognised that this is a very significant contribution made by the wife and indeed, as Mr Galuzzo, the solicitor for the husband submitted, it is highly unlikely that the former matrimonial home could have been purchased without this contribution by the wife.
The husband’s case for contribution which off-sets or, indeed, exceeds the wife’s initial contribution is based on a number of factors. He worked throughout the marriage or was on workers’ compensation. At all relevant times, he contributed to the outgoings, including in the period prior to the purchase of the former matrimonial home. He made a contribution to the welfare of the family consisting of the wife’s children from another marriage. Moreover, he asserts that he made a contribution of $20,000 being the proceeds of his workers’ compensation payment. The workers’ compensation payment needs to be closely examined. The husband asserts it was contributed towards the deposit on the purchase of the block of land on which the former matrimonial home was subsequently constructed. The wife denies this. She concedes that he did receive a workers’ compensation payment, but says it was not applied by the husband towards the deposit and, apart from a few very minor items, was applied for the husband’s own benefit.
This is a case where, in the evidence of both the husband and the wife, they sought to minimise the contribution that each of them made. Whilst I am not in a position to make adverse findings of credit in relation to either or both the husband and the wife, there were aspects of the evidence that each of them gave that indicates that they were prepared, at times, to be selective in their disclosure to each other, and to the court, and to embellish the truth somewhat. I am surprised that the husband was not able to better document his claim for contribution through his workers compensation payment. Nonetheless, the fact is that the wife does not deny that he received these funds and I find that, on balance, it is more likely than not that he received at least $20,000 and it was applied towards the benefit of the family, particularly given that it was received at a time when they were constructing a house and there would have multiple miscellaneous and unplanned for expenses which arose.
A further limb of the husband’s claim for contribution relates to the benefits that he says he was able to obtain for them as a result of his relationship with Mr K a friend of his who was a builder and developer, and who ultimately constructed the former matrimonial home, and the investment property. The husband’s case for contribution in this regard was poorly conceived and implemented. Mr K gave evidence, particularly in terms of attempting to quantify the benefit that he says was received by the husband as a result of his friendship with him.
Mr K’s evidence was, however, quite unreliable. He could not be specific about the value of these so-called benefits. His memory and recollection seemed poor. At one stage he said words to the effect, “I am doing the best I can to estimate savings based on today’s value, and thinking back then.” After reviewing all of the evidence, and particularly hearing from Mr K, I find that the husband and wife probably did receive some unquantifiable benefit as a result of the husband’s relationship with Mr K, but there is no evidence to indicate that it was a substantial or significant one in this case. Nonetheless, it is a contribution that I take into account in a general sense.
The wife’s case is that the husband was addicted to gambling, that this was without her consent or support and knowledge, and that this amounted to a negative contribution made by him. It is clear that the wife’s case involved quite a considerable amount of evidence designed to attempt to establish and then quantify the extent of the husband’s gambling activities. When the evidence is carefully examined however, there remains a real doubt about the precise extent of the husband’s gambling activities. Whilst he sought to minimise the extent of this, I am satisfied that the wife sought to minimise the extent to which she was aware of the husband’s gambling and either supported or acquiesced in relation to the same. All of the schedules and asserted calculations produced by the wife as part of her case to demonstrate the extent of the husband’s gambling is quite inconclusive. At the end of the day the only reliable matter that the court can proceed on is a concession made by the husband’s counsel that the evidence indicate that over a period of about six years the husband seems to have used $53,000 for his own purposes and even then it is unclear how much of this was attributable to gambling. It does seem clear from the evidence produced that both the husband and the wife consumed alcohol regularly, attended clubs regularly and invested in race horses. The husband, through his counsel, concedes that the maximum loss on gambling was $35,000 over a period of six years which, he submits, amounts to about $120 per week. Counsel for the husband submits that even on a worse case scenario, this does not amount to waste or a negative contribution. The solicitor for the wife, in closing submissions, submits that the evidence indicates gambling losses of $134,067. I do not agree that that is what the evidence indicates.
The wife’s case for negative contribution and/or waste is not established on the evidence. Even if the husband was gambling $120 a week for a period of years I am not satisfied that, on the evidence before me, such expenditure was disproportionate to reasonable lifestyle expenditure by this family. Even the wife conceded in cross-examination that at no stage was there a default in the mortgage payments. She gives no evidence of inability to pay debts as and when they fall due. I am not satisfied, therefore, that any gambling expenditure in this case was incurred recklessly, negligently or wantonly, or with a view to minimise the value of that matrimonial assets.
Finally, the wife asserts that she made a post-separation contribution by paying all outgoings on the former matrimonial home since separation, including the mortgage. The husband does not dispute this but points out that the wife had the benefit of occupation of the property whereas he was paying rent/board for his accommodation. I do not believe it is appropriate to make an adjustment for post-separation contribution as asserted by the wife, in the circumstances of this case. She clearly had the benefit of occupying the former matrimonial home but to the exclusion of the husband, in this period.
Having regard to all of the matters set out above, whilst I agree that the wife’s initial contribution from the sale proceeds of Property A is a significant one, I also need to recognise that the diverse contributions made by the husband are also significant. In the circumstances of this case, however, an adjustment of 10 per cent in favour of the wife is still just and equitable. Accordingly, I propose to assess contribution at
60 per cent in favour of the wife, and 40 per cent to the husband.
A just and equitable order
If the wife receives 60 per cent this provides her with a net entitlement of $237,883. It follows that the husband receives $158,589. The wife has indicated that she wishes to retain the former matrimonial home, if that is possible. I detected no opposition from the husband in this regard, provided he could be paid his entitlement.
If the husband retains his furniture, boat, Hilux motor vehicle and superannuation he receives total assets of $89,624. This therefore requires the wife to pay him $68,965.
If the wife retains the former matrimonial home, and all of the joint liabilities, together with the furniture, her motor vehicle and superannuation, she receives net assets of $305,850. It is therefore not inconceivable that she could pay to the husband $68,967, whilst retaining the former matrimonial home. I will give her the opportunity to do so, but if she is unable to make this payment within 60 days, the former matrimonial home will have to be sold.
In the circumstances of this case, having regard to the parties’ financial and person circumstances, I am satisfied that the order is just and equitable.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: K Lambert
Date: 10 March 2010
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