Vusic and Vusic

[2012] FamCA 554

FAMILY COURT OF AUSTRALIA

VUSIC & VUSIC [2012] FamCA 554

FAMILY LAW - PROPERTY - Settlement in relation to marriage – Contributions – valuation of overseas property – gambling

Family Law Act 1975 (Cth) – s 75(2), s 79

Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693
Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414
Ferraro and Ferraro (1993) FLC 92-335; 16 Fam LR 1
Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355
Kowaliw and Kowaliw (1981) FLC 91-092
Lee Steere and Lee Steere (1985) FLC 91-626; 10 Fam LR 431

APPLICANT: Ms Vusic

RESPONDENT: Mr Vusic

FILE NUMBER: SYC 2049 of 2009

DATE DELIVERED: 20 March 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston J

HEARING DATE: 22, 23 & 24 August 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gould

SOLICITOR FOR THE APPLICANT: Gayle Meredith & Associates

COUNSEL FOR THE RESPONDENT: Mr Bell

SOLICITOR FOR THE RESPONDENT: Fox & Staniland

Orders

1. That the husband and wife forthwith do all things and sign all documents necessary to list the property situate at L, New South Wales (“the former matrimonial home”) for sale by private treaty for 10 weeks including the following:

   1.1.they shall appoint a local real estate agent as agreed between them;

   1.2.the listing price for the sale shall be as agreed between them and failing agreement as recommended by the agent;

   1.3.if the former matrimonial home fails to sell by private treaty within 10 weeks, they shall do all necessary things to list the property for sale by public auction and the reserve price for the auction shall be as agreed between them and failing agreement $1,075,000.

   1.4.in the event that the bidding at the auction does not reach the reserve price they may negotiate with the highest bidders or any other interested person and effect a sale of the property at a price which is not more than 5 percent below the reserve price;

   1.5.if the former matrimonial home remains unsold, they shall do all things and sign all documents necessary to immediately re-list the property for sale by public auction again, on a date nominated by the agent and at a reserve price as recommended by the agent;

   1.6.they shall instruct Fox & Staniland to act in relation to the sale or such other solicitor/conveyancer as they might otherwise agree;

   1.7.they shall co-operate in every way with the agent including:

   1.7.1.making the key available to the agent;

   1.7.2.signing all documents requested by the agent to sell the property;

   1.7.3.executing a contract for sale in the form prepared by the solicitors having the conduct of the sale at the sale price;

   1.7.4.allowing inspection of the property at all times as requested by the agent;

   1.7.5.doing all necessary repairs or improvements as recommended by the agent;

   1.7.6.ensuring the property, including the grounds, are in a neat and clean condition at the time of inspection by the agent and prospective purchasers;

   1.7.7.doing or saying nothing to hinder or prevent a sale being effected.

2. That on settlement of the sale of the former matrimonial home the proceeds of sale shall be paid in the following manner and priority:

   2.1.all costs and agreed expenses of the sale including legal costs and disbursements, agent’s commission, advertising expenses and auction expenses;

   2.2.the amounts required to pay all municipal and water rates outstanding with respect to the former matrimonial home;

   2.3.discharge the formal matrimonial home mortgage;

   2.4.53 percent to the wife and 47 percent to the husband.

3. That the husband and wife forthwith do all things and sign all documents necessary to list the property situate at R (“the Eastern European property”) for sale at a price agreed by them and failing agreement not less than AUD100,000,

4. That on settlement of the sale of the Eastern European property the proceeds of sale shall be paid in the following manner and priority:

   4.1.all costs and agreed expenses of the sale including legal costs and disbursements, any agent’s commission and advertising expenses;

   4.2.53 percent to the wife and 47 percent to the husband.

5. That the wife is declared the sole owner of the … Holden … motor vehicle.

6. That the husband and wife are declared pursuant to s 79 of the Family Law Act 1975 (Cth) the sole owners respectively of all other property or superannuation in their possession and/or control.

7. That all exhibits be released.

8. That both parties have leave to relist these proceedings by arrangement with my Associate in relation to the implementation of the orders.

9. That in the event that either party refuses or neglects to sign any deed or instrument necessary to give effect to these orders, a Registrar or Deputy Registrar of this Court is hereby appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to sign such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.

10. That the above orders not commence operation until 18 April 2012.

11. That both parties have leave to relist these proceedings at a time not later than 17 April 2012 by arrangement with my Associate for the purpose only of making any further submissions about the form of the orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Vusic & Vusic has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2049 of 2009

Ms Vusic

Applicant

And

Mr Vusic

Respondent

REASONS FOR JUDGMENT

1. These are final property proceedings.  The parties are Ms Vusic and Mr Vusic.  For convenience I shall refer to them as “the wife” and “the husband”. 

2. The wife seeks orders to the following effect:

   ·That the husband transfer to the wife his interest in the former matrimonial home and that the wife refinance the mortgage secured thereon;

   ·An order splitting the wife’s interest in Superannuation Fund S so that the husband be entitled to be paid an amount calculated using a base amount of $25 000 and consequential orders;

   ·That the husband be declared the sole owner of the Eastern European property, the Kia motor vehicle, the Mitsubishi motor vehicle and all other property in his name or within his control;

   ·That the wife be declared the sole owner of the Holden motor vehicle and all other property in her name or within her control;

   ·An enforcement order; and

   ·That the husband pay the wife’s costs of these proceedings.

3. On the other hand the husband seeks orders to the following effect:

   ·That the former matrimonial home be sold and the net proceeds of sale after paying agent’s commission and costs of sale, rates adjustment and discharge of the mortgage, be paid 55 percent to the husband, a further adjustment to ensure that the husband receives 55 percent of the overall net assets of the parties and the remaining balance be paid to the wife;

   ·That the parties sell the Eastern European property and after paying agent’s commission and costs of the sale including legal costs of the sale the proceeds be paid to the parties in equal shares;

   ·That each party be declared the sole owner of all other property in their possession or in their control respectively;

   ·That each party indemnify the other in respect of liabilities in their name respectively;

   ·Certain enforcement orders; and

   ·That the wife pay the husband’s costs of these proceedings.

Background

1. The husband, 58 years of age, and the wife, 49 years of age, were married and commenced cohabitating in 1982.  They were both born in Eastern Europe. 

2. There is an issue about when they separated.  The husband said separation occurred in February 2003, the wife said separation occurred in February 2008.  I shall refer to this again below.  Their divorce became final in mid 2009.

3. There are three children of the marriage, now all adults.  They are M, V and A.  They are 26, 24 and 18 years of age respectively.

4. At the time of marriage, the wife was employed as a linguist and the husband was employed as an academic.  The wife had savings of approximately AUD80 000 and the husband had some debts.  They lived in rented accommodation in Eastern Europe.

5. Shortly after the parties’ marriage, they purchased a vacant block of land in Eastern Europe (“the Eastern European property”) for the approximately equivalent sum of AUD30 000.  This was funded from the wife’s savings.  The property was registered in the husband’s name because the wife was no longer a citizen of a country in Eastern Europe at the time of its purchase.

6. The parties subsequently had a home constructed on this land.  They have never resided in the property.  The husband undertook some of the work on construction of this home.  At one point in time the husband’s sister and her family lived there until 1992 when war broke out. 

7. In early 1985, the wife came to Australia for a holiday and decided to stay.  The husband followed some months later.  The parties resided with the wife’s parents rent-free for a few years.

8. After her arrival in Australia, the wife commenced employment in personal services and remained in such employment for a period of approximately twelve months.  The husband worked as a tradesman on a contractual and self-employed basis.

9. In September 1985, the parties purchased an investment property from the wife’s parents in Sydney (“ Sydney Investment Property A”) for $60 000.  The parties obtained a loan on mortgage from the Westpac Bank.  They leased the property out and applied the rental income towards the mortgage repayments and other outgoings.  The wife asserted that this property was sold to them below value but this has not been established.

10. In 1986, M was born.

11. In 1986, the wife commenced employment in office management and remained in such employment for approximately 15 months.

12. In 1987, V was born.

13. Between 1988 and 2008, the wife was employed full-time in administrative support..

14. In April 1988, the parties sold Sydney Investment Property A for $107 000.

15. In February 1989, the parties purchased a vacant block of land in Sydney (“the former matrimonial home”).  They applied the proceeds of sale of Sydney Investment Property A towards the purchase price and obtained a mortgage from the Westpac Bank to pay the balance.

16. The parties then arranged for the construction of a house on the land.  Upon completion of the construction, the parties moved with the children from the wife’s parent’s residence to reside at the property.

17. In 1993, A was born.

18. In September 1997, the parties purchased an investment property in an outer Brisbane suburb (“the Brisbane investment property”) for $187 500.  They obtained a mortgage for $201 000 from the Bank of Melbourne.  They leased the property and applied the rental income towards the mortgage repayments and other outgoings.

19. In October 1997, the parties refinanced the mortgage over the former matrimonial home, discharging the mortgage from the Westpac Bank and obtaining a loan in the sum of $169 000 from the Bank of Melbourne.

20. In September 1998, the parties purchased a vacant block of land in Sydney (“Sydney Investment Property B”)for $239 500.  They obtained a loan of $439 500 from the Bank of Melbourne using their other property also as security to fund the purchase price and the cost of construction of a house on the land.  Upon completion of the construction, the parties moved with the children to reside at this property.  They leased the former matrimonial home and applied the rental income towards the mortgage repayments.

21. In January 2000, the parties increased this loan to $480 000 including for the purpose of facilitating the purchase of a motor vehicle.

22. In June 2002, the parties discharged the loan from the Bank of Melbourne secured over Sydney Investment Property B and obtained a loan in the sum of $500 000 from the National Australia Bank.  They also discharged the loan from the Bank of Melbourne secured over the former matrimonial home and obtained a loan in the sum of $360 000 from the National Australia Bank.  Those funds were used to discharge the loan from the Bank of Melbourne secured over the Brisbane investment property and that property remained unencumbered.

23. In December 2002, the parties sold Sydney Investment Property B for $880 000.  They applied $302 425 from the proceeds of sale towards the repayment of the first loan from the National Australia Bank.  The balance of the loan was then secured over the former matrimonial home and the previously approved facility in the sum of $500 000 was reduced to $200 000.  From this time, there were two loans secured over the former matrimonial home owing to the National Australia Bank, they were:

    ·A loan with a balance of $211 000; and

    ·A loan with a balance of $210 000.

24. At the end of December 2002, the parties’ solicitor acting on the sale of Sydney Investment Property B transferred the net proceeds of its sale into an account held at the Westpac Bank in the name of the wife.  The wife says that those funds were used for general living expenses and applied towards the loan facilities secured over the former matrimonial home.  She says that she opened a separate account with the Westpac Bank and deposited a sum of approximately $492 000 into that account.  I shall refer to this matter again below.

25. Upon completion of the sale of Sydney Investment Property B, the parties moved with the children to reside at the former matrimonial home.  They lived on the first floor of that property and continued to lease the ground floor.   

26. As indicated above, the husband said that in February 2003, the parties separated albeit he continued to reside at the former matrimonial home.  I shall refer to this again below.

27. The wife and children went on a holiday to New Zealand in 2003.

28. In May 2003, the parties purchased a vacant block of land in the Gold Coast, Queensland (“the Gold Coast vacant block”) for $185 000, using some of the proceeds of the sale of Sydney Investment Propety B. 

29. In September 2003, the parties sold the Brisbane investment property for $157 500.  The sale proceeds were applied towards the repayment of the loan from the National Australia Bank secured over the former matrimonial home.  The parties also consolidated the loan facilities secured over that property.  From this time, there was a single loan secured over the formal matrimonial home with a balance of $419 000 owing.

30. In November 2005, the wife applied $29 123 from a National Australia Bank facility towards the reduction of her credit card debt.  Such credit card debt related to the construction of the house on Sydney Investment Property B as well as the family’s living expenses.

31. In 2007, the wife suffered a mishap which has caused some disability to her left leg.  I shall refer to this again below.

32. As indicated above, the wife said that in February 2008 the parties separated.  The husband agreed that on this date he moved from the former matrimonial home.

33. Since July 2008, the wife has worked in administrative support only on a part-time basis. 

34. In October 2008, the parties sold the Gold Coast vacant block for $342 000.  The proceeds of sale were deposited into an account held at the Westpac Bank in their names.  

35. On 7 January 2010, the wife initiated these proceedings.

The Date of Separation

1. The husband said that the parties separated in February 2003 when he moved out of the former matrimonial bedroom and commenced sleeping on the lounge. 

2. He said that this was in the context of the parties having had an argument about what to do with the sale proceeds of Sydney Investment Property B. The property was sold in December 2002 as I have said.  The husband thought that the net proceeds of sale had been deposited into a joint account.  The husband said that the wife had informed him that she had put the money into an account in her name.  The husband said that from that time in early 2003 until he left the former matrimonial home in 2008 he slept on the couch in the loungeroom. 

3. The husband said that from that time there was no affection between the parties.  They did not attend holidays together, did not spend time together as a family, did not attend functions together, not even church.  He said that at M’s 21^st birthday party he and the wife attended separately and that from the wife’s speech on that occasion at the church it was clear that they were separated although still living together.  In addition, the husband said that his brother and his brother’s wife attended the home in early 2003 and endeavoured to encourage the wife and him to reconcile, but to no avail.  The husband said that the parties ceased a sexual relationship in early 2003. 

4. On the other hand the wife denied that the parties had separated in early 2003.  She said that she and the husband continued sleeping in the matrimonial bedroom.  She said that they continued to have a sexual relationship until late 2006.  She also said that there was no difference in the way that the parties conducted their financial affairs after 2003 until they separated in February 2008, compared with the period prior to early 2003.  But the wife did concede that there was a lead up to the parties’ separation in 2008.  From this I inferred that the marriage had been deteriorating for some time prior to 2008. 

5. I am unable to resolve the parties’ detailed differences in their evidence about this matter.

6. In any event the actual date of separation is not essential in the determination of what is just and equitable. It is the contributions and s 75(2) matters which are important. I am not persuaded that the parties separated in 2003. And little appears to have changed in terms of the parties’ contributions over the period from 2003.

The Husband’s Alleged Gambling

1. The wife alleged that during virtually the entirety of the course of the marriage the husband spent considerable sums of money playing poker machines at clubs and hotels and betting on race horses. 

2. The wife said that since 1995 the husband’s gambling increased.  She said that on numerous occasions she raised this subject with him and asked him to stop.  She said that he said he would stop gambling but he never did.

3. The husband conceded that he has been involved in gambling on poker machines and through betting on racehorses at TAB facilities.  He said that up to 2008 when he left the former matrimonial home he might have lost up to $5000 gambling.  He said that he lost “perhaps more” after he left the home.

4. The husband conceded that over many years he withdrew money from his ANZ Bank account at Eftpos facilities in Clubs and TAB outlets.  But he said that only some of this money was spent on gambling. 

5. The wife undertook an analysis of the husband’s ANZ Bank statements which showed that from July 2005 until February 2008 when the husband left the home, he withdrew amounts to a total of $14 500 from Eftpos facilities at TAB outlets.  A similar analysis was undertaken in relation to withdrawals from ATMs at establishments such as clubs and hotels which offer patrons poker machine facilities.  The total withdrawals between December 2006 and separation in February 2008 were $3483.  The two amounts came to total withdrawals for the period of $17 983.  The withdrawals for the period after separation were significantly higher. 

6. I shall consider this matter further below in the context of s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).

Value of the property in eastern europe

1. I have referred above to the circumstances of acquisition of land and construction of a home thereon in Eastern Europe.

2. Unfortunately the parties have been unable to agree on the value of this property. 

1. The wife filed valuation reports on affidavit by two civil engineers in Eastern Europe who are accredited by relevant courts in Eastern Europe to make valuations in respect of properties of this nature. 

2. The first valuation was by Ms H a civil engineer and valuer in Eastern Europe dated 1 October 2010.  Ms H had inspected the property on 30 September 2010.  In her opinion the property has a value of KM239 282 which is the equivalent of AUD169 746.

3. The second valuation was by Ms G also a civil engineer and valuer accredited by the appropriate courts in Eastern Europe dated 27 April 2010.  Ms G inspected the property on 27 April, 2010 and in her opinion the property has a value of KM247 620 which is the equivalent of AUD175 661.

4. The third valuation was that which was arranged on behalf of the husband by Mr L a civil engineer and valuer.  This valuation was dated 27 August 2010.  In the opinion of Mr L

5. the property has a value of KM147 154.  This is the equivalent of approximately AUD104 000.

6. It is clear that the house on the land is in a seriously damaged condition.  The parties indicated that the building sustained serious damage during the war period from 1992 to 1995 and later squatters had occupied the building.  From the photos and from the valuation reports it is clear that all the doors and windows in the house have been removed.  The structure is without floors, bathrooms have been destroyed and the various utilities such as electricity and plumbing have been destroyed.  But both Ms H and Ms G said that the property is in an attractive location only twelve kilometres from a large capital city.  Ms G said that not only is the property in an attractive location but it is in an area which is being populated after the war and many people are moving there. 

7. I must say that I prefer the valuations of Ms H and Ms G to that of Mr L.  Both Ms H and Ms G conduct their businesses from the city area close to the property.  On the other hand, Mr L conducts his business from a city approximately one hundred and fifty kilometres away.  Somewhat more troubling than this is the fact that Mr L said that he was an acquaintance of the husband’s brother, that the husband’s brother drove him to the property and he, that is, Mr L was not really very familiar with the area in which the property is located. 

8. I also had a sense that during his cross examination Mr L seemed to be talking down the value of the property, somewhat emphasising the problems with the building and the site, whereas I thought Ms H and Ms G gave a much more balanced account of what the property offered.  Both Ms H and Ms G, when informed about the value attributed to the property by Mr L, said without hesitation that was a low valuation. 

9. In all the circumstances I have no hesitation in preferring the valuations of Ms H and Ms G over that of Mr L. 

10. Out of the two valuations I prefer the valuation of Ms G.  Firstly, it was later in time.  But in my view there is another reason for it to more likely reflect the proper value of the land.  This is because Ms H said that properties in the area appreciate a minimum of five percent in their value each year and for this reason she thought the property would now have a higher value than she attributed to it.  In my view this would bring it broadly into line with the valuation of Ms G.

11. Accordingly, I find the property in Eastern Europe to have a value equivalent to AUD175 661. 

12. Having said this, as I indicated to the parties during the course of submissions, I propose to order a sale of this property so that its precise value is not critical in the proceedings.  I propose to do this because neither of the parties wishes to retain the property or to have what they appeared to me to regard as somewhat of a burden to need to attend to the administrative work involved in achieving a sale of the property.  In these circumstances I regard it as being fair to allocate this responsibility to them both. 

Credit

The wife

1. The wife answered questions in a forthright manner.  She demonstrated a reasonable grasp of detail and gave me the impression that she wanted to be precise in her responses.  At times such precision also included unresponsive material which would appear to favour the wife’s case.  But the wife said that she was “really bad with years and numbers”. 

2. Having said this I regard the wife as a witness of the truth.  My only reservation is one of degree in terms of the wife’s opinions not always being accurate.  This is because she has such a poor regard for the husband that she had great difficulty in giving him any credit for having made much of a contribution at all during the marriage.  For example the schedules she prepared of some of the mortgage repayments attributed the totality of the rent received from the tenants of the parties’ property in a manner which indicated that mortgage repayments from rent received came from her own sources rather than from the joint enterprise of herself and the husband.  This was because the wife declared those rental payments as her income rather than attributing half thereof to the husband.  The wife said that the parties’ accountant advised that this was the most tax effective manner with which to deal with rental income. 

The husband

1. The husband required the services of an interpreter.  He has also had a recent change of solicitors.  He answered questions in a responsive manner.  He failed to include in either of his financial statements any reference to an ANZ Bank account.  His explanation was that he gave all the details to his solicitors and the solicitors must have left those out of the documents.  I find myself unable to accept this explanation.  Obviously this must cast something of a cloud over the veracity of his evidence.  But generally I regard him as a witness of the truth. 

The wife’s parents

1. Each of the wife’s parents filed an affidavit and were cross-examined by telephone.  Each of them gave responsive answers and I was impressed with each of them as witnesses.  I regard them as being truthful. 

M and V

1. These sons of the parties swore affidavits in support of their mother’s case.  Their evidence was of marginal relevance and the husband had the sensitivity not to instruct his counsel to cross-examine them.  I draw no inference from the failure of the husband to cross-examine his sons in these circumstances.

Mr Z and Ms O

1. These persons were involved with the construction of the parties’ property at Sydney Investment Property B.  Their evidence was of marginal relevance. 

The Applicable Law

1. Sub-section 79(1) of the Act provides that in property settlement proceedings, the Court may make such order as it considers appropriate.

2. Sub-section 79(2) provides that the Court shall not make an order under the above sub-section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

3. There is a long-standing preferred approach to the determination of an application brought pursuant to the provisions of s 79. This involves four inter-related steps. Firstly, the Court should make findings about the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.

4. This approach has been confirmed in numerous cases in this Court including for example Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355; Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 and Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693.

Property Available for Division

1. The parties were able to agree on the value of the former matrimonial home.  But they were unable to agree on how several of the assets and numerous of the liabilities ought to be treated.

2. The parties were unable to agree on the value of the contents of their respective homes.  There were no valuations of such property.  So I have omitted these from the balance sheet as I indicated during final submissions I would do.

3. I have also omitted all outstanding legal costs including the $240,000 said by the husband’s former solicitors to be owed by the husband.  That matter is the subject of dispute between the husband and his former solicitors. 

4. I refer above to the value of the property in Eastern Europe and how I have arrived at its value for the purposes of these proceedings. 

5. There are two motor vehicles which the wife purchased for the parties’ sons M and V.  The cars in question are an Audi and a BMW.  It was submitted on behalf of the husband that the money spent in respect of these vehicles should be added back as against the wife.  But I have decided not to do so.  The parties purchased a BMW motor vehicle for M, the source of the funds being the proceeds of sale of Sydney Investment Property B.  This was purchased before they separated.  The wife paid a deposit for the Audi for V.  The husband did not wish to take any responsibility for the funding of this vehicle.  However, it is clear from the husband’s cross examination that he had agreed with the wife that they would purchase a vehicle for both boys.  In my view in all the circumstances, and particularly the fact that the parties had agreed about this before the husband left the home, it is not unreasonable for the husband to take some responsibility for the Audi.  I propose not to include either vehicle in the balance sheet.

6. I do not propose to add back the proceeds of sale of Sydney Investment Property B as submitted on behalf of the husband.  I note that the parties agreed that the wife had the use of $131 167 of these funds at the time the parties separated in February 2008.  The wife has accounted for how this money was spent.  Much of the money was spent on ordinary living expenses and the costs of the children.  In these circumstances, in my view it would be quite unfair to add this money back as against the wife.

7. In relation to the liabilities, the wife’s NAB credit card liability is $17 600.  I note that there was more than $16 000 owing on this as separation.  In my view this liability should be included at $17 600. 

8. The wife has other credit card liabilities to a total of $54 638.  I propose to allow these liabilities for the reason that the wife has only been working two hours per day four days per week and receiving a much reduced salary.  She has had the major responsibility for the children with the husband only paying modest child support.  I accept that this is why the wife’s credit card liabilities are so high. 

9. I shall allow the wife her taxation liability.  But I do not propose to allow the $30 000 loan from M.  This loan was to assist the wife to pay her legal costs and possibly some other expenses.  In any event both parties will have to meet their legal costs including, in the wife’s case, M’s loan. 

10. The husband’s motor vehicle has been brought into the assets and in my view it is reasonable that he be permitted the liability thereon of $5800. 

11. The husband will have to repay whatever is outstanding to his former solicitors.  This was unclear at the hearing.

12. Therefore the property and superannuation available for division between the parties is as follows:

Assets	$
1.         Former matrimonial home	1,075,000
2.         Eastern European property	175,661
3.         Westpac Bank account	168,000
4.         Wife’s  motor vehicle	750
5.         Wife’s Westpac bank account	146
6.         Wife’s funds in solicitors trust account	25,000
7.         Wife’s interim property settlement (balance $55,000) (add back)	55,000
8.         Wife’s paid legal costs (balance) (add back)	52,203
9.         Husband’s Kia motor vehicle	14,000
10.      Husband’s Mitsubishi motor vehicle	500
11.      Husband’s business	5,000
12.      Husband’s ANZ Bank accounts	350
13.      Husband’s funds in solicitors’ trust account	1,117
14.      Husband’s interim property settlement (add back)	80,000
15.      Husband’s paid legal costs (add back)	4,800
_____________
$1,657,527

Liabilities	$
1.         NAB mortgage on Sydney Investment Property B	373,702
2.         NAB loan on Sydney Investment Property B	24,428
3.         Wife’s NAB Visa Gold	17,600
4.         Wife’s CBA Mastercard	3,962
5.         Wife’s Aussie Mastercard	5,936
6.         Wife’s Jetstar Mastercard	8,335
7.         Wife’s HSBC Visa	1,953
8.         Wife’s Citibank Platinum Visa	12,857
9.         Wife’s ANZ Mastercard	7,288
10.      Wife’s Citibank Gold Visa	7,208
11.      Wife’s American Express	7,099
12.      Wife’s Tax liability	7,308
13.      Husband’s loan on Kia motor vehicle	5,800
_____________
$483,476

Superannuation
1.        Wife’s Superannuation Fund S	100,647

1. Accordingly, the available assets including superannuation have a total value of $1 758 174.  Subtracting the liabilities of $483 476 leaves net assets with a value of $1 274 698.

Contributions

1. This was an area of great difference between the parties.  On the one hand it was submitted on behalf of the wife that the Court should find her contributions overall to have been 70 percent.  On the other hand it was submitted on behalf of the husband that the Court should assess the parties’ contributions overall as having been equal.

2. The wife said that at the time that the parties married she had savings of approximately $80 000.  The wife said that these monies consisted of her savings and also various gifts which her parents had made by depositing monies into her account with a bank in Eastern Europe.  The wife said that she had endeavoured to obtain copies of her bank statements in respect of the account but she was unable to locate documents for such an old account.  There was an issue about this matter.  However, having heard the wife and each of her parents give evidence about this matter, I accept the wife’s assertions in this regard. 

3. The wife’s financial circumstances at marriage contrasted markedly with those of the husband.  In fact the husband had a liability which the wife’s father paid for him. 

4. There was also an issue about whether the wife’s parents sold Sydney Investment Property A to the parties at a price less than the market price.  The wife asserted this.  Having heard the evidence of the parties and also the wife’s father about this matter I am not persuaded that this property was bought for any price lower than its market value.

5. I accept that the wife’s parents contributed approximately $20 000 towards the construction of Sydney Investment Property B.

6. In relation to the property in Eastern Europe, the husband said that he undertook a considerable amount of work on that property.  The wife denied this saying that the parties had engaged tradesman to undertake the work.  The wife subsequently conceded in cross examination that the husband had undertaken work on the property.  There was a period of a couple of months when he moved into the property and the wife conceded that he did work during that period.  The husband said that he prepared the building site, assisted with concreting work, did some carpentry work and various other tasks.  I accept this.

7. The husband assisted by undertaking direct work towards the construction of the home on the land at the former matrimonial home.  This included preparation of the site and footings, general labouring work, most of the rendering, tiling, painting and fencing.

8. The husband also undertook some of the same sort of work in relation to the Sydney Investment Property B project.

9. Having made these observations, it is important to note that the wife also made significant contributions to these Sydney building projects.  I am satisfied that she organised and paid tradespersons and acted somewhat like a project manager.

10. The wife earned more income than the husband.  There is no question that she worked extremely hard over many years working double shifts in her job in administration support.  The husband worked also in his business as a tradesman.  The wife was very critical of the husband’s achievements at work suggesting that he worked hard when work was on but she suggested that he ought to have been able to find more jobs.  The wife was also quite reluctant to concede that the husband had made much of a contribution at all over this long marriage as I have said.  I must say that the wife has failed to persuade me that the husband has not made a reasonable effort at his full time work.

11. Both parties have made significant contributions to the welfare of their family consisting of themselves and their three children.  But I am satisfied that the wife has made a greater contribution than the husband in this regard.  The husband conceded that the wife was the children’s primary parent.  But he cared for the children when the wife was working shiftwork and he involved himself in their extra-curricular activities.

12. This marriage was a long marriage and I am satisfied that each of the parties has worked hard for the overall benefit of their family subject to some concern which I have about the husband’s gambling which I shall refer to below.  If it were not for a few matters, in my view, it would be appropriate to assess the parties’ contributions overall as having been equal. 

13. But they have not been equal.  In my view, the assessment of contributions must fall slightly in favour of the wife.  I say this because although many years have gone by since the wife made her initial contribution comprising her $80 000 savings, in my view, this imbalance has not entirely lost its significance.  And the wife’s parents have assisted the parties over the years.  In addition, there is no question that the wife made a greater contribution following separation than the husband.  This was by reason of her having the responsibility for the major care of the children.  True it is that the wife had the benefit of the former matrimonial home including receiving the rent from the tenant.  And she also had the use of substantial funds from the sale of Sydney Investment Property B.  She has attended to the payment of the mortgage, the utilities and the other household expenses.  The husband has only paid a very modest amount of child support. 

14. In these circumstances, in my view, the assessment of contributions overall falls in favour of the wife.  But only by a modest amount given the duration of the marriage.  In my view the appropriate percentage is 3 percent. 

15. I assess the wife’s contributions overall as having been 53 percent and those of the husband as having been 47 percent.

s 75(2) matters

1. The wife is 49 years of age.  There are some difficulties in her health.  The wife has intermittent pain in her left knee and thigh as well as intermittent pain in her lower back.  The start of this was a mishap suffered by the wife in November 2007.  Since that time the wife has experienced severe pain in her leg.  She has attended upon numerous physiotherapists, an orthopaedic surgeon Mr D and the Pain Clinic at a Sydney hospital.  She has also been treated with Cortisone injections.

2. In February 2010 the wife had a knee arthroscopic repair operation but has continued to experience pain.  She has difficulty standing or sitting for lengthy periods and the pain affects her concentration.

1. Her condition continues to be managed and monitored by her general medical practitioner Mr J whose current assessment is that the wife is fit to work part time 2 hours per day.

2. As indicated above, the wife has been working in administrative support with Company F for many years but since April 2010 she has been working 2 hours per day 4 days per week.  Her employer has notified her that they are reviewing her situation and are considering terminating her employment.

3. The wife’s income is $863 per week consisting of $463 from her part time employment and $400 received from rent.

4. The wife has no formal qualifications.

5. The husband is 58 years of age and he also has some difficulties in his health.  He underwent psychological assessment by Mr C, consultant psychologist, recently.  Mr C has assessed the husband as suffering from a major depressive disorder and generalised anxiety disorder.

6. Mr C has prepared a treatment plan for the husband but said that until the stress of these proceedings is behind the husband he will not be in an appropriate state to commence the treatment.  Mr C said that once the litigation is completed the husband might experience some temporary alleviation of his condition but he would almost certainly re-lapse because the underlying causes are not only the marriage breakdown and the litigation but problems with work, estrangement from the parties’ son and some other factors. Mr C does not expect any real improvement in the husband’s condition without the treatment.

7. The husband’s income is $800 per week from his business.  He has child support arrears of $802. 

8. Each of the parties has some limitation in terms of their capacity for earning income.  At present the husband is able to work more than the wife.  But the wife said this was not the situation during their marriage.  If the wife is able to resume full-time work, one would think that her income-earning capacity would be stronger than that of the husband.  And, at 49 years of age compared with 58 years for the husband, the wife should have more income-earning years ahead of her than the husband.

9. But her working capacity remains unclear.  So it is difficult to make predictions about this matter.  In these circumstances, I am unable to find that one party has a stronger capacity for earning income than the other.

10. Clearly the husband has spent money on his gambling activities, both in betting on poker machines and racehorses, and this has occurred over many years.  He has withdrawn significant amounts of money at clubs, hotels and TAB facilities, often several withdrawal transactions in a day as I have said.  He said that most of the money he withdrew was not spent on gambling.  Yet it is difficult to believe that his planning in relation to non-gambling expenditure was so poor that he found it necessary to make several withdrawals in the same day when he was at a club or other venue offering gambling facilities.

11. The difficulty is that it is impossible to know how much the husband has spent on gambling.  And how much he lost as opposed to how much he won. 

12. It is clear from the decision of this Court in Kowaliw and Kowaliw (1981) FLC 91-092 that the Court can take into account pursuant to s 75(2)(o) of the Act, financial conduct which involves reckless, negligent or wanton behaviour. In my view the husband’s behaviour could be described as somewhat wanton. Accordingly, although the expenditure lost in this activity cannot be quantified, in my view it is more probable than not that money has been lost. In these circumstances, this is to be taken into account pursuant to s 75(2).

13. But I do not propose to make a set-off of available property in favour of the wife on account of the money lost in gambling for the following reasons. I propose to allow the wife the entirety of her liabilities. As indicated above, I propose also to regard the BMW and Audi motor vehicles as being gifts from both the husband and the wife to their sons in spite of the husband’s strong opposition to such a course. So I take this into account pursuant to s 75(2)(o) of the Act.

14. I also take into account the fact that the husband has a very large liability to his former solicitor although the quantum of this is in issue between the husband and his former solicitor.

15. In all these circumstances I do not consider it appropriate to make a set-off of property in favour of one party or the other taking account of relevant s 75(2) matters.

Conclusion and Fourth Step

1. The wife is to have 53 percent of the net assets.  This is property and superannuation with a value of $675 590 (53 percent of $1 274 698 = $675 590).

2. I propose to treat both items of real estate and the mortgages in a separate pool of assets from the non-real estate assets.  This is because they will have to be sold and one cannot be certain what the net proceeds of sale will be.  The wife is to have 53 percent of the net proceeds of sale of those items and the husband is to have 47 percent thereof.

3. Using the values I have attributed to those items ($1 075 000 + $175 661 = $1 250 661) and deducting the mortgages therefrom ($373 702 + $24 428 = $398 130) provides a net value of $852 531 ($1 250 661 = $398 130 = $852 531).  Fifty-three percent of this equals $451 841 and 47 percent of this equals $400 690.

4. The non-real estate assets, including superannuation, have a value of $507 513.  But the liabilities are $85 346.  These net assets therefore have a value of $422 167 ($507 513 - $85 346 = $422 167).  Fifty-three percent of $422 167 is $223 749.  Forty-seven percent of $422 167 is $198 418.

5. The wife has the following:

$
1.         Motor vehicle	750
2.         Westpac bank account	146
3.         Funds in solicitors trust account	25,000
4.         Interim property settlement (add back)	55,000
5.         Paid legal costs (add back)	52,203
6.         Superannuation	100,647
____________
$233,746

1. But the wife also has the following liabilities:

$
1.         NAB Visa Gold	17,600
2.         CBA Mastercard	3,962
3.         Aussie Mastercard	5,936
4.         Jetstar Mastercard	8,335
5.         HSBC Visa	1,953
6.         Citibank Platinum Visa	12,857
7.         ANZ Mastercard	7,288
8.         Citibank Gold Visa	7,208
9.         American Express	7,099
10.      Tax liability	7,308
___________
$79,546

1. The wife therefore has net assets including superannuation with a value of $154 200 ($233 746 - $79 546 = $154 200).  The wife requires $223 749 of the non-real estate assets.  To achieve this the wife needs an additional $69 549 ($223 749 - $154 200 = $69 549).  This can be paid from the Westpac Bank account.

2. On the other hand the husband is to have 47 percent of the non-real estate assets and superannuation.  As indicated above, this would be $198 418.

3. The husband has the following:

$
1.         Kia motor vehicle	14,000
2.         Mitsubishi motor vehicle	500
3.         Husband’s business	5,000
4.         ANZ Bank accounts	350
5.         Funds in solicitors’ trust account	1,117
6.         Interim property settlement (add back)	80,000
7.         Paid legal costs (add back)	4,800
_____________
$105,767

1. But the husband has the $5800 liability in respect of his motor vehicle.  Therefore the husband has net non-real estate assets with a value of $99 967 ($105 767 - $5800 = $99 967).

2. To achieve $198 418 the husband requires a further $98 451 ($198 418 - $99 967 = $98 451).  This can be paid from the Westpac Bank account.

3. Accordingly, both the former matrimonial home and the property in Eastern Europe will be sold and the net proceeds of sale paid to the parties in the proportions of 53 percent to the wife and 47 percent to the husband.

4. The money in the Westpac Bank account will be paid to the parties in the proportions of 69 549 : 168 000, which is 41.398 per cent to the wife and 98 451 : 168 000, which is 58.602 percent to the husband.

5. Otherwise the parties shall retain the other property in their possession and/or control respectively including in the case of the wife, her superannuation.  And each shall be responsible for their liabilities other than the mortgages.

6. As I have said, the wife ought to achieve a payment of approximately $440 000 (taking account of sale costs) from the net proceeds of sale of the real estate.  She will have her other property to which I have referred less liabilities and a payment of approximately $69 549 from the Westpac Bank account.

7. This might be sufficient to fund the purchase of a modest home.  But the wife still has significant legal costs to pay.  If not, the money could be used to rent a home or otherwise to fund her living expenses.

8. On the other hand, the husband will receive a payment of approximately $390 000 (also taking account of sale costs) from the net proceeds of sale of the real estate items.  He will have his other property including his business and approximately $98 451 from the Westpac Bank account.  But he will also have considerable indebtedness to manage bearing in mind that he must owe a substantial amount to his former solicitor, although the final amount is not clear.

9. The husband could use this money to purchase a modest home or as he might see fit.  As I have said, the husband should be able to undertake some work, even perhaps on a part time basis, for some years.

I certify that the preceding one hundred and thirty-six (136) paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johnston delivered on 20 March 2012.

Associate:     

Date:              20 March 2012