VV and KV
[2003] FMCAfam 332
•22 October 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| VV &K V | [2003] FMCAfam 332 |
| FAMILY LAW – Property – contributions – inheritances – probate granted on the basis that the husband has a life estate in specified property – husband asserts that he has a mere right to occupy – life estate is an asset – where valuation evidence of asset is not given – where a party has effective control of an asset that party has a responsibility to provide evidence of its value and the basis upon which the value has been calculated. |
Family Law Act 1975, ss.79(4), 75(2)
Jones v Dunkel (1959) 101CLR 298
Ghazal v GIO (NSW) (1992) NSWLR 336
Australian Securities Commission v AS Nominees (1995) 133 ALR 1 at 12
In the Marriage of Bonser (1988) 12 FLR 91-846
Oriolo and Oriolo (1985) FLC 91-653
In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626
In the Marriage of Ferraro (1993) FLC 92-335
In the Marriage of Clauson (1995) FLC 92-595
Russell v Russell (1992) FLC 92-877
Pearce v Pearce (1999) FLC 92-844
| Applicant: | VV |
| Respondent: | KV |
| File No: | SYM 70 of 2002 |
| Delivered on: | 22 October 2003 |
| Delivered at: | Wollongong |
| Hearing Date: | 31 July & 1 August 2003 |
| Judgment of: | Ryan FM |
REPRESENTATION
| Counsel for the Applicant: | Mr W Moss |
| Solicitors for the Applicant: | Robert Webley & Associates |
| Counsel for the Respondent: | Mr A Ladopoulos |
| Solicitors for the Respondent: | Cox Wiseman & Davidson |
ORDERS
That within three months of the date of these orders the wife pay to the husband the sum of $97,135.
Simultaneously with payment by the wife, the husband shall transfer to her the whole of his right, title and interest in “the property” situate in Wollongong. Additionally, the husband will give her at the same time either a discharge of mortgage in registrable form or evidence that the executors of the estate of H have accepted alternate security for the mortgage and the property no longer secures the mortgage.
In the event that the wife fails to comply with Order 1 the parties shall forthwith do all acts and things and sign all documents necessary to sell the property situate at Wollongong for sale by private treaty with a real estate agent at a price to be agreed upon between the parties and failing agreement to be determined by the president of the Real Estate Institute of New South Wales or his nominee.
That the proceeds of sale pursuant to Order 3 be disbursed as follows:
(a)In payment of the costs of sale including the real estate agents commission and legal fees;
(b)In payment of $50,000 to the estate of H in partial discharge of the mortgage;
(c)In payment of any outstanding rates and charges;
(d)In payment of 35 per cent of the net balance to the husband, from which the husband shall pay:
(i)$25,000 to the estate of the late H in full discharge of mortgage; and
(ii)$36,065 to the wife.
The wife shall nominate the real estate agent appointed to conduct the sale. In the event that the property has not sold, which is evidenced by an exchange of contracts, within four months of the property being listed for sale, the parties shall procure a sale by auction. The wife will appoint the auctioneer and the parties shall agree on a reserve price for the property sale. In the event that they are unable to agree the parties shall accept the advice of the auctioneer appointed to conduct the sale. The proceeds of sale shall be distributed in accordance with Order 4 including the auctioneer’s costs. In the event that the parties must pay an amount for advertising or other costs associated with the auction in advance of it, the parties shall share those costs equally.
Pending payment by the wife to the husband or the sale of the home, whichever is the former, the wife shall pay the rates and utilities on the property at Wollongong as and when they fall due.
All exhibits tendered in these proceedings be returned at the expiration of one calender month unless an appeal is lodged.
The solicitor who issued any subpoena collects that subpoenaed material and returns it to the owner within seven (7) days.
All outstanding applications are dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT WOLLONGONG |
SYM70 of 2002
| VV |
Applicant
And
| KV |
Respondent
REASONS FOR JUDGMENT
The proceedings
These are proceedings for the adjustment of property pursuant to section 79 of the Family Law Act 1975.
The Applications
VV (“the husband”) started the proceedings when he filed an application for final orders on 25 June 2001. That application was filed in the Family Court of Australia at Sydney. After the parties attended a conciliation conference the proceedings were transferred to the Federal Magistrates Court of Australia at Wollongong.
During his opening address the husband's counsel advised that his client sought orders to the following effect:
·That he keeps his interest in the Fairy Meadow property and a Toyota Camry motor vehicle.
·Upon the sale of the Wollongong property, after payment of selling costs and mortgage the husband would take an amount equivalent to give effect to an adjustment of 65 per cent of the total net assets in his favour.
KV (“the wife”) filed her response on 14 August 2001. She agrees that the husband should retain his car and interest in the Fairy Meadow property. While she would like to retain the former matrimonial home the wife accepts that it must almost certainly be sold. The wife claims that the mortgage secured against this home is a ruse. During closing addresses her counsel indicated that the wife sought an outcome that gave her between 60–65 per cent of the net matrimonial assets.
The evidence
The husband relied upon the following evidence: -
·His affidavit sworn 8 May 2002 and his oral testimony;
·His affidavit sworn 22 July 2003 and his oral testimony;
·His financial statement filed 9 May 2002.
The wife relied on the following evidence: -
·Her affidavit sworn 21 May 2003 and her oral testimony;
·Her affidavit sworn 22 July 2003;
·Her financial statement sworn 22 July 2003.
Both parties tendered documents that became exhibits.
The principal issues raised in the proceedings
The principal issues raised in the proceedings were these: -
·Whether the husband's parents advanced all or only part of the purchase price for the matrimonial home.
·Whether the parties repaid the husband's parents and if so, to what extent.
·Whether the wife's property in Cypress is tenanted and available for sale.
·Whether the husband has an interest in a property in Greece, title to which has not yet been perfected.
·Whether the husband has a life interest in his late mother’s estate or merely a right to occupy the Fairy Meadow property.
Short history
The husband was born on 13 September 1951 and is nearly 52 years old.
The wife was born in Cypress on 15 February 1963 and is 50 years old.
The wife first came to Australia on 6 December 1983 for a holiday. She returned shortly before their marriage. The parties married on
26 February 1984 at Wollongong. The wife has lived in Australia ever since.
There is one child of their marriage, R who was born on 25 February 1985.
On 14 December 2000 the parties separated although continued to live in the same home. Thereafter the husband divided his time between the former matrimonial home and the Fairy Meadow property. He moved out of the former matrimonial home permanently in November 2001.
The parties have not divorced.
Chronology of relevant events
At the commencement of cohabitation the wife had a 50 per cent interest in a property in Cypress. Her parents purchased this property in about 1967/68. It comprised fields with a small cottage. This was her family home. Upon her father's death in 1973 ownership of the property was transferred to the wife and her sister as to a half share each. There is no evidence of the value of the property at that time or at cohabitation. The property was unencumbered. Upon their marriage the wife's mother gave the parties $1,000. The wife was not in paid employment and did not have any other assets.
The husband has sickle cell anaemia. He has received an invalid/ disability pension continuously since 1969. Other than his disability benefit, at the commencement of cohabitation the husband did not have any additional income. The wife claims that the husband had $50,000 in savings held in an account managed by his parents. There are no documents that corroborate her assertion. The husband denied her allegation and in circumstances where his only source of income for many years had been a disability benefit I do not accept the wife's claim. At the commencement of cohabitation the husband did not have any assets or liabilities. He lived with his parents where the wife joined him upon their marriage.
On 28 October 1984 the parties purchased their home at Wollongong. The wife did not speak English and the husband conducted this transaction on their behalf. Based on their discussions, the wife understood that the property was purchased in the parties' joint names. Unbeknownst to her, the husband ensured that he was the sole registered proprietor. Its purchase price of $75,000 was paid entirely from moneys provided by the husband's parents. In addition to the $50,000 that came from their savings, the husband's parents borrowed $25,000, which was paid over at settlement. It was only during the course of these proceedings that the wife became aware that on 19 October 1984 the husband executed a mortgage back to his parents securing repayment of $75,000. The mortgage re quires the husband to repay the principal sum, or so much as remained unpaid, on 19 October 2005. The mortgage was interest free[1]. The husband claims that no monies have ever been repaid in contrast to the wife’s claim that they repaid the $25,000 borrowed on their behalf.
[1] Annexure B, husband's affidavit, 19 May 2002
In 1987 the parties holidayed in Cypress and Greece. The wife says that her mother gave them $12,000 that they planned to use to repay the home loan. She says that she recalls seeing a cheque and that the husband deposited the moneys into an account that he had in Australia. She was not a signatory to the account and cannot recall its name. The husband denies the wife's allegation. The wife's mother did not give corroborative evidence. Counsel for the husband pressed the court to apply the rule in Jones v Dunkel[2] to the failure to call her mother. In Ghazal v GIO (NSW)[3] Kirby P, with whom Mahoney and Clarke JJA agreed, explained (at 343) the rule in Jones and Dunkel (supra) thus:
“The rule in Jones v Dunkel is one of commonsense reasoning. It provides that an unexplained failure by a party to call a witness may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted the case of the party who might be expected to call the witness. It is important to note that this is a facility. It is not an obligation in the reasoning of the decision-maker.”
[2] (1959) 101 CLR 298
[3] (1992) NSWLR 336
Despite the passing of the Evidence Act 1995 (Cth) a Jones v Dunkel (supra) inference may still be drawn (See Australian Securities Commission v AS Nominees)[4]. From the wife's perspective, this transaction is the most significant financial transaction undertaken on her behalf during the marriage. Although difficult, I would have expected evidence in the wife's case that corroborated the withdrawal of moneys from the wife's mother's account and payment of them by the wife's mother to the husband. I am satisfied that the wife’s mother’s evidence would not have assisted her case. In the circumstances, I am not satisfied that the $12,000 was paid to the husband.
[4] (1995) 133 ALR 1 at 12
During the 1987 holiday the parties stayed with the wife's family in Cypress and in a property at Greece. At that time, the wife says the husband’s parents owned the property and that he has subsequently inherited it. In 1998 the husband, his mother and the parties' daughter holidayed in the same property.
Both parties agree that the husband had a serious alcohol addiction until at least 1992. He drank beer and whisky. The wife gave a somewhat exaggerated account while the husband tried to minimise the seriousness of his addiction. I do not accept the wife’s claim that he drank a box of beer every day. However I am satisfied that he drank to excess very frequently, often to the point where he collapsed and was vomiting. When drunk he was abusive towards her and expected that she clean up after him. The money he spent on alcohol was money the parties could ill afford to waste. In 1992 the husband lost his licence after being convicted of drink driving. He had previously been placed on a good behaviour bond in 1989/90 for a drink driving offence. This time his taxi driver's licence was suspended. He did not seek its renewal. The husband was ordered to attend Orana House where he undertook a three-month residential program related to his alcohol addiction. The husband claims that he has been sober ever since. The wife agrees that he was sober for about two months after his discharge but says that he resumed abusing alcohol after that time. On this issue I prefer the wife’s account. She seemed sad when she recounted this aspect of their married life and her gravity and demeanour impressed me as more credible than the husband’s glib denial.
About six or seven years after they moved into the Wollongong property, having had an argument with his parents, the husband told the wife that the home was in his name alone and that his parents had somehow protected his interest. He told her that he had made a commitment to them that he would not disclose this information to her. During his oral testimony he explained that these steps had been taken to “avoid all of this”, that is the wife’s claim for section 79 orders.
After the husband lost his licence he stopped his part time taxi driving. When their daughter started school, the wife took occasional domestic work within the local community. She worked one or two hours per week until 1999. For a number of years she did casual work at a take-away shop and worked as a casual cleaner at a Greek school and the church hall. The husband helped her cleaning the school and church hall.
On 4 July 1994, the wife executed a power of attorney appointing her sister as her attorney.[5] The wife says that the power of attorney was executed because she was the registered owner of a car in Cypress, which had been involved in a motor vehicle accident. Because she was in Australia she appointed her sister to manage the ensuing litigation and insurance issues. The power given to her sister is more extensive than merely dealing with the consequences of a car accident. It includes the power to deal with property in Cypress, except inheritances, execute a mortgage, conduct litigation and do all things that the wife could. The husband claims that this document corroborates his assertion that the wife earns income from her Cypress property which income and asset her sister manages.
[5]Exhibit A
The husband's father died on 24 May 1997. Probate of his will was granted on 7 September 2001[6]. The effect of his will was that the husband and his mother took the estate in equal shares. Thus the husband received a one half interest in the Fairy Meadow Property,
C Pty Ltd and the property in Greece.
[6] Exhibit B
The parties separated on 14 December 2000.
On 19 December 2000 the husband's mother executed her will. The will provided that the estate was devised to trustees. It devised that the husband has the right to occupy the Fairy Meadow Property, which right includes the right to receive income. The trustees have the power to lease or mortgage the estate and to apply income or capital for the maintenance, education, advancement or benefit of a beneficiary. Upon the husband's death the trust asset vest in R, provided she attains the age of 25.
The husband's mother died on 5 February 2001. Although the husband denies that he has a life estate, probate was granted on the basis that the husband took a life estate and that R received the whole of the estate in remainder[7]. The mortgage debt was proved in the estate and identified in the inventory of property when probate was granted. As at
20 August 2001 the estate had a gross value of $257,866.78 and a net value of $257,766.78.
[7] Affidavit of executor sworn 20 August 2001, Annexure D husband's affidavit
In these proceedings the husband’s counsel submitted that the husband did not acquire a life estate rather that he took a lesser interest, either a right to occupy or a mere right of residence. Previously the husband asserted that he had a life estate. In response to a request for answers to specific questions, on 5 December 2001[8] the husband’s solicitor wrote “as previously disclosed our client has a life estate in his late mother’s estate”. The husband has a companionable relationship with at least one the executors. For example the executors relied on his information alone when determining whether the mortgage had been repaid. They have made minimal trust distributions to him as he explained “they are waiting until these proceedings are over”, I infer before they give him access to regular distributions that may demonstrate that he has reliable trust income. If the husband believed that probate was granted on a false basis, as far as his interest was concerned he could have taken action in the Supreme Court to rectify the error. There is no evidence that he has raised this issue with the executors. In the whole of the circumstances I am satisfied that the grant of probate definitively characterises the interest and that there is no cogent basis to go behind it.
[8] Exhibit C
Both counsel agreed that the husband’s life estate was able to be valued however neither party provided any valuation evidence. Because of its absence the wife's counsel submitted that the court would treat the husband's interest in his late mother's estate as a financial resource. In my opinion the life estate is an asset for section 79 proceedings. Although the life estate does not give the husband an interest in the fee simple he has an absolute right to have the use occupation and enjoyment of the real estate and net income earned from the residue. This is not a matter of discretion by the trustee’s. Should the remainderman wish to sell the property, for example, and he agreed to do so she would have to pay out the husband’s life estate. The absence of valuation does not change the characterisation of an asset to a financial resource. An obligation to give full and frank disclosure of an asset means more than merely revealing its existence. Where a party has effective control of an asset or the information concerning it, that party has a responsibility to provide evidence of its value and the basis upon which the value has been calculated. In the Marriage of Bonser[9]. Valuation of this interest ought not to have been a complicated or expensive exercise. The estate assets are few and values recently determined. The husband’s failure to produce this evidence is a factor that attracts the principles in Oriolo and Oriolo[10]. As neither party sought to adjourn the hearing so that a valuation could be obtained I must determine the matter on the basis of the available evidence. I will take this issue into account under s.75(2)(o).
[9] (1988) 12 FLR 91-846
[10] (1985) FLC 91-653
Relevant law
The approach to the determination of an application under section 79 is well established by authority (In the Marriage of Lee Steere and Lee Steere[11]; In the Marriage of Ferraro[12]; In the Marriage of Clauson[13] the process ordinarily involves a multiple part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in section 79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. I must then evaluate the matters contained in section 75(2) insofar as they are relevant, any other Order made under the Act affecting a party or child and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide, or might be liable to provide in the future, for a child to the marriage.
[11] (1985) FLC 91-626
[12] (1993) FLC 92-335
[13] (1995) FLC 92-595
In determining what order the court should make under section 79, the court must be satisfied in all the circumstances that it is just and equitable to do so [section 79(2)]. It is the justice and equity of the actual orders that the court must consider. Russell v Russell[14].
[14] (1999) FLC 92-877
Assets at the date of hearing
The parties reached agreement as to the value of most assets.
I find the assets, liabilities and financial resources of the parties as at the date of the hearing are as identified in the following table:
Assets as at the date of hearing
$
Wollongong property
360,000
Fairy Meadow property (half share) 167,500 1987 Toyota Camry (H) 2,000 1990 Holden Commodore (W) 4,000 Property in Cypress (W) (half share) 102,000 Property in Greece (H) NK Husband’s life estate NK TOTAL ASSETS 635,500 Liabilities as at the hearing Mortgage to estate of H (H)
75,000
NET ASSETS 560,500
I am satisfied that the husband has a one half interest in a house in Greece. His father had treated the property as his own and the husband used it each time he visited Greece. The husband's father died two days before his planned departure for Greece during which trip he had intended to perfect and formally take title to the property. The husband's evidence concerning this particular issue was highly unsatisfactory. Eventually, he conceded that he had taken his father's interest in the property, at least one half of it. He then claimed to have orally relinquished his interest in the property to his mother and asserted that R inherited the property via his mother’s estate. In response to request for answers to specific questions, on 5 December 2001[15] the husband made no mention of the alleged oral gift to his mother. I do not accept that he gave his interest in the property to her. Thus I am satisfied that the husband has a half share in the property in Greece. As well as the house, the property appears to have grounds attached, which the husband's cousin has worked for many years.
[15] Exhibit C
The wife's counsel submitted that the court would find that this property had an equivalent value to that owned by the wife. This property is in Greece whereas the wife's property is in Cypress. The wife's property has been cared for and occupied, rates have been paid. Rates have not been paid on the property in Greece for 46 years. I am not satisfied that I could reasonably find in accordance with the wife's counsel's submission. Rather, I am satisfied that it is highly likely that the husband could perfect his title to his interest in the property in Greece and that he has an asset, which must be taken into account in a real way.
I accept the wife's evidence that her mother has lived in her property for many years. The husband's case is that the property is tenanted and that it produces an income, which is managed by the wife's sister. In support of his case he relied upon the valuation of the property where Mr Y said “The house is rented. The tenant is not taken into account according to the instructions received.” The husband claims to have seen banker's drafts whereby the wife’s sister transferred rent moneys to her and relies on statements attributed to the wife as to occupation of the property. The husband did not provide any corroborative evidence as to the banker's drafts or accounts into which they were paid. This should have been a relatively uncomplicated procedure. The wife was adamant that her mother lived in the Cypress home and has done for many years. She agrees that the property has been renovated and repaired but says that these repairs were paid for by her mother. The valuer does not identify the tenant nor rent paid. The wife was so clear about this issue and at a loss to understand the reference to tenants by the valuer, unless he was referring to her mother, that I accept her evidence. The wife proposes that her mother will continue to live in the property indefinitely.
The wife says that she and the husband repaid his parents the $25,000 advance. She says that they paid about $600 each month to the husband’s parents. Her description the manner in which she saved to repay this loan was compelling. The wife described severe financial deprivation, only ever buying second hand clothes, for years pasta as her diet, taking ironing when she could to earn extra money to repay the husband’s parents. She conceded that the parties might not have paid $600 every month and that some months they paid all they could manage. She thought that the loan was repaid within three years, although conceded to counsel for the husband that it may have been longer. The husband shrugged his shoulders and said he was unaware that his parents had been repaid. He denied that he handed over any money and claimed that the entire mortgage is outstanding. Although the wife was cross examined to some effect on this issue in terms of detail and source of funds, I am satisfied that the essential truth of her testimony that the parties repaid the $25,000 advanced over about three years after they moved into their home should be accepted. Because she was unaware that the husband’s parent’s had a mortgage secured on the property she did not know to press for a partial release or documentary evidence that the monies were repaid. As far as she was concerned she was the joint owner of the property and repaid a personal family debt about which there was no written account. The fact that she took no further action to protect her interests is satisfactorily explained. Even if she had been made aware of the mortgage with her limited English language skills and effective social isolation in Australia, I doubt that she had the knowledge or resources to protect her interests.
Because probate of the husband’s mother’s estate is granted on the basis that the entire mortgage debt is outstanding, the husband’s counsel submits that the entire debt is a joint matrimonial debt. From the earliest days of this marriage the husband contrived with his parents to protect his assets from any potential claim from the wife, no matter how legitimate. This is evident from the manner in which title to the home was registered, his lie to the wife that she was a joint owner and executing the mortgage while keeping its existence secret. And also the manner in which five days after the parties separated his mother left her estate intending as the husband pointed out to avoid giving him property as his father had done. I am satisfied that the husband misled the executors when he told them that no monies had been paid in reduction of the capital secured by the mortgage. I do not accept the husband’s counsel submission that because the monies were not repayable until 2005, this corroborated the husband’s claim that no monies had been paid. The payment date is the date upon which payments are due, it did not limit the parties capacity to make earlier repayments.
The executors are obligated to recover the full amount of the debt. While the husband may believe that he can persuade them not to do so, the executors have an obligation at law for which R will probably hold them accountable. All the husband need do is refuse to pay on demand and because the mortgage is secured against the Wollongong property the executors can enforce against it. Should she own the property the wife may have a potential claim for equitable relief as to $25,000. Otherwise, other that by adjustment under the Family Law Act there is little she can do to rectify the difficulty orchestrated by the husband. On balance I am satisfied that I should treat the whole of the debt as a joint matrimonial liability. However the circumstances by which the $25,000 forms part of the liabilities will be further addressed pursuant to section 75(2).
Section 79(4) contributions and other factors
An important issue in this matter is the assessment of the weight that should be attached to the wife’s initial contribution. In Pearce v Pearce[16] the Full Court of the Family Court held:
“In our opinion it is not so much a matter of erosion of contribution, but a question of what weight is to be attached, in all the circumstances, to the initial contribution. 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.”
[16] 1999 FLC 92-844
I have already made findings about the assets held by each party at the commencement of cohabitation. The only asset of any significance was the wife’s property in Cypress. There is no evidence of its value. During cohabitation the property has been improved, although with the wife’s personal approval, funded entirely by her mother. I am not satisfied that the property has ever provided an income and thus to some extent the wife’s mother may have contributed to its present value. More relevantly the parties have not made any continuing contribution beyond permitting an asset that the wife may have been able to sell to be continually used by her mother. In this later regard the parties are both assessed as having made a continuing contribution to the property. A situation akin to the non contributor spouse vis superannuation. However this later contribution moderates to only a very small extent the significance of the wife’s initial contribution. But for the gift from her parents of the Cypress property I am satisfied that the parties would not have ever acquired a similar property, so too without her mother’s support of the property and its improvements these could not have been afforded. On balance the wife made a significant initial and continuing financial contribution the value of which is almost equal to the current value of the asset.
As I have already found the husband’s parents intended to provide for their son and granddaughter, preserving his and their property from the wife. The terms of their wills reflect a clear intention to contribute to his, and to an extent R’s welfare. Similar intent is revealed in the way they loaned the $50,000 and maintained the lie that the Wollongong property was registered jointly with the wife. These contributions, that is the inheritances and $75,000 loan are contributions made on behalf of the husband. As $25,000 was repaid quite promptly it is not as significant a transaction as the other factors are. Without the initial $50,000 it is highly unlikely that the parties would have been able to acquire their own home. Their financial circumstances were parlous and I consider it unlikely that they would have accrued sufficient savings and maintained a home. Repaying the husband’s parents $25,000 was gruelling and it is unlikely that other (larger) loans could have been similarly serviced over a longer period. Because of the initial loan, the parties had secure accommodation and did not waste money paying rent. Such money as they had worked for them. They acquired an asset that grew in value, partly through their own efforts maintaining it but also because of capital gain. The parties use of the $50.000 interest free since 1984 is a significant contribution by the husband too which I attribute substantial weight.
So too is his inheritance from his late father’s estate. Regrettably I do not have valuation evidence for the property in Greece and cannot fully analyse the extent of this contribution made entirely on the husband’s behalf. Similar issues arise with the husband’s life estate. This is a contribution made entirely by him. Because I do not have evidence of its value, I cannot analyse the true significance of this contribution by comparison to other contributions. Both parties have contributed to this difficulty. In my opinion although the husband was specifically obliged to provide evidence of its value, the wife had sufficient information to carry out her own valuation. Curiously she chose not to do so and to an extent she has contributed to the courts difficulty in this exercise. Thus in two areas I am satisfied that the husband has made exclusive contributions to matrimonial assets, the value and comparative significance of which I am unable to determine. His interest in the property in Greece and life estate will be further considered pursuant to section 75(2).
The fact that the husband made these major financial contributions does not make him the sole contributor to matrimonial assets. Section 79(4) requires that the Court look at the entirety of the contributions, both financial and non-financial, to the welfare of the family as well as to the acquisition, conservation and improvement of those assets. Those contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense.
Comparatively the husband's financial contributions outweigh the wife's financial contributions significantly. She made the initial financial contribution to which I have already made reference and thereafter contributed all her pension and earned income to the betterment of the family. The husband retained comparatively significant sums of money that he spent on alcohol. Whether an addiction, illness or favourite pass time is irrelevant, he wasted money that these parties could ill afford – over the wife’s objection. His alcohol abuse meant that in order to survive financially the wife had to spend every cent she received on the family. I accept that after they separated and while they were still in the home the parties paid the rates and utilities equally but that the wife paid for all R’s expenses with virtually no help from the husband. After his final departure from the home the wife maintained it. The wife’s long term financial contribution to the property and support of the family cannot be ignored.
The wife's contributions were primarily as a homemaker. She maintained the interior of the home and attended to the family's day-to-day housekeeping. She was overwhelmingly responsible for R’s care, receiving little help over the years from the husband. His capacity to help was impaired by his ill health and alcohol abuse. When ill he required hospital treatment and his illness left him weak and considerably unable to attend to household matters and maintenance. The wife diligently attended him when he was ill and took care of him when he was drunk. In spite of his protestations to the contrary I am satisfied that throughout the marriage the husband greatly abused alcohol and that the wife’s contribution as a homemaker was made under extremely arduous circumstances. Getting him to bed, cleaning up after he was sick, changing sheets and the like with such regularity that it was a fundamental part of her homemaker role.
The husband made an insignificant contribution as homemaker and to the welfare of the family. He cooked from time to time and did occasional work about the property. Comparatively, the wife's contribution as homemaker and to the welfare of the family during the marriage substantially exceeds the contribution made by the husband. Her contribution must be given significant weight. See Ferraro[17].
[17] 1993 FLC 92-335
The orders I propose will not affect the earning capacity of either party.
After separation, the wife applied for an administrative assessment of child support. The husband paid $22 per month in accordance with the assessment. R is now over the age beyond which the husband is liable to pay child support.
I find therefore that the parties' total contributions should be assessed as being 62 per cent by the husband and 38 per cent by the wife.
Section 75(2)
Sub-section (a). The husband is nearly 52 years old and is in poor health. He suffers a blood disorder that has necessitated many admissions to hospital for treatment throughout his adult life. The wife describes herself as anxious and depressed and says that she has lower back problems and pain. It is difficult for her to bend and lift heavy objects. Both have had health difficulties sufficient to enable them to receive a disability pension in their own right for many years. Neither party has the capacity to ever work in the paid workforce again. I make no adjustment pursuant to the sub-section.
Sub-section (b). I have already made findings about the parties assets, liabilities and financial resources and do not repeat them. The wife receives $223 per week from a disability pension. In his financial statement sworn in 2002 the husband indicated that his pension produced $210 per week. Both parties receive the same type of pension. I infer that the husband receives a pension payment equivalent to that received by the wife. The difference arises because her material is more current than his. The husband is also entitled to receive the income from his late mother's estate. C Pty Ltd currently has approximately $113,720 invested with the Commonwealth Bank. The investment produces between $257-$294 interest per month. The husband explained that the trustees are awaiting the completion of these proceedings before distributing regular income from C to him. They have made two payments, for valuation expenses associated with these proceedings and car expenses. Taking a median point, I am satisfied the husband will have at least an additional $275 per month for the rest of his life. There is no evidence that this may have an effect upon the quantum of his pension. I am satisfied that the husband has a one half interest in a small house in Greece. The husband's cousin has worked the property for many years, from which I infer that the property is able to produce an income. However it is reasonable the his cousin continue to use the property and should the husband decide that he need do so he may perfect title and possibly earn additional income. Of greater significance is the husband’s life estate. I have already dealt with the income. For the rest of his life he will have secure and appropriate accommodation at virtually no cost to him. I make an adjustment in favour of the wife pursuant to the sub-section.
Sub-section (c). This issue does not arise.
Sub-section (d). Both parties have sworn financial statements that identify their reasonable expenses. The husband's financial statement was prepared on the basis that he was still living at the Wollongong property and does not relate to his current situation. When the income from the estate is taken into account, his commitments are likely to be within his income. The wife lives modestly and other than rates has no additional fixed expenditure. Her total income is less than the husband’s and I am satisfied that she spends all of her income on her and R’s necessary commitments. I find that the sub-section requires an adjustment in the wife's favour.
Sub-section (e). Neither party has a legal responsibility to support any other person. R is studying full time and lives with the wife. R earns about $100 per week which moneys she probably spends on herself. The wife's counsel claimed that an adjustment could be made in favour of the wife pursuant to this sub-section. I do not agree. I make no adjustment pursuant to the sub-section.
Sub-section (f). Both parties receive a disability pension. Neither has any superannuation. I make no adjustment pursuant to the sub-section.
Sub-section (g). Both parties have lived frugally and neither is wasteful. Since separation both have maintained their pre-separation standard of living. The husband is more likely to maintain his current standard of living than the wife is. In future she will probably suffer a reduction in her standard of living because she will either need to support a small mortgage or otherwise live in a lesser property. However, I have already taken into account under sub-section (b) the husband's greater income and entitlement to live in the estate property and pursuant to sub-section (n) will consider the terms of the section 79 orders. In those circumstances, I do not make a further adjustment pursuant to this sub-section.
Sub-sections (h) - (l). These sub-sections do not arise.
Sub-section (m). The wife lives with R and it is likely that R will continue to live with her mother whilst she is undertaking tertiary studies. Presently R has an income from part time employment but not the resources to live independently. As a student, R will have expenses that she must meet and it is probable that she relies on the wife's provision of accommodation, including utilities, and most of the household expenses. R's cohabitation is financially burdensome for the wife. To the extent that it has not already been addressed I make an adjustment pursuant to the sub-section in favour of the wife.
Sub-section (n). I have already made findings as to the outcome of the section 79(4) phase and do not repeat them. The husband is liable to repay the estate $75,000 an amount $25,000 greater than it should be. He has achieved this outcome in a deliberate attempt to minimise the wife’s section 79 claim by limiting the size of the asset pool. He may well have to repay the full amount and to a considerable extent is hoist on his own petard. Whether described as waste or simply recognised as conduct that has clearly disregarded the adverse effects on the wife’s entitlement does not matter. I am satisfied that the husband must take full responsibility for $25,000 of the mortgage. The orders will ensure that he indemnifies the wife and that her financial interests are protected until the $25,000 is repaid or forgiven. Thus in addition to the section 75(2) adjustment for other matters that will be made in favour of the wife, pursuant to this sub-section I make a $25,000 adjustment in her favour.
Sub-section (na). The husband paid child support of $5 per week subsequent to separation. I make no adjustment pursuant to the sub-section.
Sub-section (o). Because I do not have evidence of the value of the husband’s life estate justice requires, nonetheless, that it be taken into account in a meaningful way. While to a significant extent this has already been addressed the husband’s life estate is also a valuable asset, more than the mere right to residence or occupation that his counsel asserted. I do not have evidence of the husband’s life expectancy. Even if it is compromised because of his poor health, he has an asset that is particularly significant. I make an adjustment in favour of the wife as a consequence of the husband's life interest. The same issue arises with Greece. I have dealt with the fact that the husband may be able to derive an income from it, however it also has a capital value, the quantum of which is not in evidence. In material respects the husband failed to meet his obligation to fully disclose the extent of his financial position. It is feasible that addressing this issue pursuant to section 75(2) by way of a percentage adjustment does not do full justice to the wife compared to the value of the assets that the husband will retain. Regrettably this is a situation to which she has contributed by failing to adduce relevant valuation evidence. I make an adjustment in the wife’s favour pursuant to the sub-section.
Sub-section (p). This issue does not arise.
Having regard to all of the section 75(2) factors, I find it appropriate that there should be an adjustment in the wife's favour having regard to sub-section 75(2)(b), (d), (m), (n) and (o). The appropriate adjustment to make in the wife's favour is 25 per cent and a further $25,000. Other than the $25,000 the most significant adjustment are those that relate to the husband's interest in the life estate, Greece and his financial future compared to the wife’s. This outcome reflects the cumulative outcome of findings I have made pursuant to section 75(2). See Tomasetti.
Section 79(2) – Is this a just and equitable outcome?
That the outcome of section 79(4) and section 75(2) has resulted in the distribution favourable to the wife 65.8 (63 percent and $25,000) per cent as compared to the husband’s 34.2 per cent, I am satisfied it is just and equitable within the meaning of section 79(2). The reason for that is that the section 79 exercise requires that in addition to her financial contributions I must give proper weight to the wife's non-financial contributions, particularly in her role as parent and homemaker. She was primarily responsible for rearing R and her contribution as a homemaker was made for many years in arduous circumstances. The husband financial future is comparatively secure by reason of his inheritance. He made important contributions by virtue of the initial loan from his parents and his subsequent inheritances. He also has the benefit of assets the value of which he did not reveal.
I accept the wife’s counsels submission that the wife needs every cent to which she is entitled so that she can rehouse herself. Reliant upon a pension she has only a small capacity to make mortgage repayments, even if a lender could be located. However section 79(2) does not entitle me to make further adjustments beyond the entitlements derived from the outcome of the section 79(4) and section 75(2) phase for reasons already addressed there. Justice and equity is achieved through this exercise and further adjustment in the wife’s favour is not available under this section.
The net assets to be distributed are $560,500. The wife will retain her car, household furnishings and property at Cypress. The mortgage is not repayable until 2005. The husband has property that the trustee could properly accept as security for the mortgage. This possibility is provided for in the trust. The husband will be required to request this of the trustee and if the trustee does not act accordingly, the husband will have to discharge the mortgage or come to another arrangement that releases the wife from any risk that property to which she is entitled is subject to the mortgage.
The wife is entitled to net assets worth $368,865.00. This figure is calculated by notionally adding back $25,000 to the net asset pool before dividing it 63 percent to the wife. If she retains the home she has assets worth $462,000. The husband has assets the total known value of which is $169,500. These comprise his share in the Fairy Meadow property and his car. By making him responsible for the mortgage he has net assets of $119,500 (less the $25,000 he will pay). He is entitled to $216,635. Thus the wife must pay him $97,135. I will allow her three months within which to do so.
I will give the wife the opportunity to acquire the husband’s interest even though as she cannot afford commensurate periodic mortgage repayments it is unlikely that the wife will be able to make this payment. In which event the house must be sold. Although the property has an agreed value, the net proceeds cannot be known. Excluding the home and adding back $25,000 the net asset pool is $225,500. The wife will have assets of $106,000 and the husband will still have assets of $119,500. Sixty three percent of this means the wife should have $142,065. Hence there must be an adjustment by the husband taking into account the assets that he retains. The adjusting figure is $36,065. Thus the husband must pay her an additional $36,065 from his share of the net proceeds of sale. On a sale of the home the executors will probably demand that the mortgage be paid out before they give a discharge of the mortgage. The parties will give $50,000 from the sale proceeds and the husband the additional $25,000 before he receives his share. This I am satisfied gives a just and equitable outcome.
For these reasons I make the orders identified at the start of this judgment.
I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate:
Date: 22 October 2003
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