W and M
[2003] FMCAfam 21
•7 February 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| W & M | [2003] FMCAfam 21 |
| PROPERTY – Assessment of contributions – substantial gift by parent of one party – relationship of six years – no children – assessment of future needs. |
Family Law Act 1975, ss.75(2), 79, 79(4)(a) to (c)
Quaresimini & Quaresimini (1999) FamCA 1314
Pierce & Pierce (1999) FLC 92-844
| Applicant: | C W |
| Respondent: | P M |
| File No: | DNM2045 of 2002 |
| Delivered on: | 7 February 2003 |
| Delivered at: | Darwin |
| Hearing date: | 23 January 2003 |
| Judgment of: | Brown FM |
REPRESENTATION
| Counsel for the Applicant: | Diana Elliott |
| Solicitors for the Applicant: | Diana Elliott |
| Counsel for the Respondent: | Cecil Black |
| Solicitors for the Respondent: | Cecil Black |
ORDERS
That within 45 days of the date of these orders the husband pay to the wife the sum of $15,743.40.
That contemporaneously with the payment referred to in order 1 hereof the wife transfer to the husband the whole of her right title and interest in respect of the property being Section Hundred of Cavenagh and being the whole of the land contained in Certificate of Title Volume Folio and being the whole of the land known as and situated at 525 K Road, L in the Northern Territory, herein referred to as the (“former matrimonial home”).
That contemporaneously with the payment referred to in order 1 hereof the wife transfer to the husband the whole of her right title and interest in respect of the property being Lot Hundred of Cavenagh from Plan LTO contained in Certificate of Title Register Book Volume Folio and the whole of the land known as and situated at 320 K Road, L in the Northern Territory herein referred to as the (“mango farm”).
That the husband transfer and assign to the wife the whole of his right title and interest in respect of the 1981 Isuzu SBR truck registered number NT and the gooseneck trailer registered number NT.
That the wife retain for her sole use and benefit absolutely the whole of her right title and interest in respect of the 1996 Toyota Camry motor vehicle currently in her possession.
That each of the husband and the wife retain for their respective sole use and benefit absolutely their respective superannuation entitlements.
That each of the husband and the wife retain for their respective sole use and benefit absolutely, the reminder of property that each of them has in their respective power or control.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
DNM2045 of 2002
| C W |
Applicant
And
| P M |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to the settlement of matrimonial property. The applicant in the proceedings is C B W “the wife”. The respondent is P L M “the husband”.
The wife is 30 years of age. The husband is 29 years of age. They are both long-term residents of the rural area outside of Darwin and each has an interest in horses and equestrian sports. The wife in particular has experience working on cattle stations in the top end of the Northern Territory.
The parties met when they were both quite young in 1990. They became engaged on the 16th of May, 1992. However, they did not begin to live together on a permanent basis until the 27th of February 1995. Prior to that time, the wife was working at Tipperary Station and from time to time they lived together at Bees Creek and with the husband’s family. They were boyfriend and girlfriend. There is no dispute between them that they began to mingle their financial affairs from February of 1995.
The parties married in Darwin on the 4th of September 1999 and separated on the 25th of March 2001. Accordingly, for the purposes of these proceedings, the relationship between them was one of six years. They have no children. They both enjoy good health and both are permanently employed on a full time basis. The wife is a station hand at Maroke Station. The husband is employed by his father as the manager of a mango orchard.
This case concerns how the contributions, both financially and indirectly, of each of the parties to the acquisition of their matrimonial property should be assessed and how that property should ultimately be divided between them. Their major assets are their former matrimonial home at 525 K Road, L; an interest they have in a mango farm, a Toyota Camry motor vehicle and a trailer and truck used to transport horses. It is the husband’s position that the direct financial contribution, attributable to him, in the acquisition of those items, has been substantially greater than that of the wife. There is no dispute between the parties that the husband’s father, B L M “Mr M” made substantial gifts to the parties, which were instrumental in their acquisition of the K Road property. It is how Mr M’s contributions are to be taken into account in the final orders between the parties that is the central issue in this case.
Background
Mr M is an experienced businessman and mango farmer. For a number of years, he has run a building company in Darwin. His firm has experience in building domestic housing. He also owns mango orchards and a packing shed in Darwin. He has been successful in his business and is comfortably off. He is astute in his business affairs. He is also a generous parent, who wishes to make financial provision for his family in the most cost effective manner, both for himself and for them. He has used trusts in the past to distribute income between his three sons and their respective families. The wife was clearly included as a member of Mr M’s family during the time she was involved with the husband.
The parties in these proceedings aspired to a rural lifestyle on the outskirts of Darwin. They wanted a large block of land, which they could develop for themselves and their horses. They wanted land on which to build a house for themselves and to clear to plant pastures and to develop paddocks for their horses. Such a place was beyond their means when they began to live together. They had no savings to speak of and a limited capacity to borrow. Mr M wished to establish his son and daughter-in-law in the type of property they wanted. He wanted them to be firmly established financially in their life together. As a result, he was willing to give them a great deal of direct financial assistance and also help through his building company. He is however not blindly indulgent and wished the parties to make some contribution towards the acquisition of their home.
There is no doubt that Mr M contributed the land on which the parties’ former matrimonial home was constructed. It is also his position and that of the husband that the actual house and stables that were constructed on the block were provided to the parties at cost. That is Mr M’s firm did not levy any direct charge from the parties for the actual construction cost of the property or make any profit in regards to it. Accordingly, it is the husband’s position that this was of great financial benefit to the parties and should be taken into account in the division of the parties’ matrimonial assets as a contribution made by or on his behalf.
During the course of their relationship, the parties acquired a second-hand Isuzu truck and gooseneck trailer. The gooseneck trailer is part horse float and part caravan. It provides accommodation and transport for eight horses and has separate accommodation for people. The gooseneck trailer was to be used by both of the parties to transport their horses to equestrian events. However, when it was purchased, it was severely run down and required a great deal of work to bring it up to scratch. The parties paid $15,000.00 for the truck and the gooseneck trailer. They now agree that the items are worth $31,000.00. The increase in its value is attributable to the work that they did on its renovation. However, the parties disagree as to the extent of the work that they each did on restoring these items.
Prior to the parties beginning to live together, the husband and his two brothers bought a virgin block of land at Lot 22 K Road, L. Later, the husband and his brother, David decided to develop their own mango farm, hereinafter referred to as “the mango farm” on the block. At this time, the registered proprietors of the piece of land concerned were changed and the wife and the husband each acquired a one fifth share in the land, on which the mango farm was then developed. During 2000, approximately 1,200 trees were planted together with the necessary irrigation. The owners of the mango farm borrowed $50,000.00 in order to plant the trees and install the irrigation. The parties share of this debt was $25,000.00.
The parties fundamentally disagree as to how their interest in the mango farm is to be taken into account in these proceedings. They also disagree in respect of its value. It is also the wife’s position that she made a substantial contribution towards the acquisition and development of the mango farm itself by assisting in the planting of the trees and working generally around the farm and in an administrative capacity in regards to the partnership that owned it. She also asserts that she has made an indirect financial contribution towards its acquisition. The husband does not accept the wife’s position. He asserts that she performed little, if any work, around the mango farm or in an administrative capacity for the partnership. This is another area of dispute between the parties.
The wife has obtained a valuation of the mango farm. The husband has not. Although the husband has not obtained his own valuation of the mango farm, he does not accept the wife’s valuation. In his view the valuation is inflated. Accordingly, it is his position that the mango farm should be placed on the market and its true value ascertained by sale. It was his evidence that his brothers, his brother’s spouse and his mother also agree that the property should be sold in this way. The wife does not agree. She is not willing to wait until the mango farm is sold to receive her interest, if any, in it. She wishes its value, as ascribed by her valuer, added to the pool of the parties’ assets and taken into account in the division of the parties’ property at this stage. This is another issue that is in dispute between the parties.
When the parties separated, the wife took with her the Isuzu truck and the gooseneck trailer, together with a Toyota Camry motor car. The Camry was purchased in large part with money provided by Mr M.
Putting aside the issue of the value of the mango farm, the parties agree as to the value of the remaining items of matrimonial property that are available to be distributed between them. These items are as follows:
525 K Road L (the former matrimonial home)
$260,000.00
Gooseneck trailer and Isuzu truck (wife)
$ 31,000.00
Toyota Camry motor vehicle (wife)
$ 8,000.00
B L (husband’s horse)
$ 3,500.00
Horse float (husband)
$ 1,500.00
Proceeds of sale of husband’s motorcycle
$ 500.00
TOTAL
$304,500.00
Although I appreciate that the husband does not concede the value of the parties’ interest in the mango farm, at this stage, in order to set the overall picture of the parties’ assets, it is added to the list, at the value attributed to it by the wife, namely $72,000.00 reflecting the parties’ two fifth share in its overall value of $180,000.00, as determined by the wife’s valuation.
The parties also agree that there is currently the sum of $164,300.00 owing to the Westpac Bank in respect of a registered mortgage on the former matrimonial home. In addition there is the sum of $25,000.00 owing by the parties in respect of an interest only loan secured against the mango farm. Accordingly, in nominal terms, putting aside the determination of the issue of the value of the parties’ interest in the mango farm for now and how it is to be determined, there is, a net amount of $187,200.00 to be divided between them.
It is the wife’s position that she wishes to retain the gooseneck trailer and Isuzu truck and the Toyota Camry (total value $39,000.00). Thereafter, it is her position that the total assets of the parties, including the mango farm at the value she ascribes to it, should be divided between them on a 55/45 percent basis in favour of the husband. She concedes that Mr M has made a contribution that should be taken into account in the husband’s favour. This is the reason the overall division favours the husband. This would necessitate the transfer of funds from the husband to her. Allowing for the agreed value of the Camry motor vehicle, the Isuzu truck and gooseneck trailer, a resolution of the matter on this basis would require the husband to pay to the wife the further sum of $45,240.00.
The husband wishes to retain the former matrimonial home. He has been living in the property since the parties separated. As has already been indicated, it is his position that the mango farm should be sold. Upon its sale, it is his position that the net value of two fifths of the proceeds should be divided 75/25 percent in his favour, between the parties. Of the remaining assets, it is his position that these, apart from the mango farm, should also be divided between the parties on a 75/25 percent basis in his favour. It is his position that such an apportionment reflects his superior contribution towards the acquisition of the assets, particularly as represented by the direct financial contribution of his father, Mr M. In round terms, putting aside the issue of the value of the mango farm, 25 percent of the net assets of the parties would be, in his view, roughly represented by the Isuzu truck, the gooseneck trailer and Camry motor vehicle, items which the wife wishes to retain. Accordingly, it is the husband’s position that no or little cash should be transferred from him to the wife, apart from 25% of the value of their interest in the mango farm, when it has been sold.
Both the parties have accumulated an entitlement to superannuation. As the parties are aware, the law relating to superannuation has recently been changed. However, neither party has provided the necessary valuation of their superannuation as required by the Family Law Regulations and neither, as it seems to me, has closely factored their superannuation into the orders that they seek from the Court. This is not surprising given that they are both still quite young and in comparative terms, the value of their respective superannuation funds is not very great. From the documents that have been provided to me, the wife’s superannuation is valued at $46,011.04, whilst the husband’s superannuation is valued at $25,177.88. In general terms each party proposes that the other should retain his or her superannuation. Certainly neither seeks a flagging or splitting order.
The issues
The issues for determination between the parties are as follows:
·How is the contribution of Mr M towards the acquisition of the former matrimonial home to be assessed. This is clearly the most important issue in the case.
·What value, if any, is to be attributed to the mango farm. Is it appropriate to make orders that the property be sold or should reliance be placed on the valuation obtained by the wife and that value factored into orders dividing the parties’ assets.
·How should the various contributions of the parties during the marriage be assessed – in particular what were the contributions of the parties to the renovations of the gooseneck trailer and truck; their improvements to the former matrimonial home and the work done by them in planting and maintaining the mango farm.
·How are the funds currently standing in the parties’ respective superannuation funds to be dealt with.
·What are the current liabilities in respect of the former matrimonial home and how is payment of those liabilities to be apportioned between the parties.
·Should there be any further apportionment in favour of one or other of the parties as a result of their likely future needs and positions in life.
The law
Proceedings for the division of matrimonial property are determined under section 79 of the Family Law Act. The approach to the determination of an application under section 79 is well established by authority (Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Clauson and Clauson (1995) FLC 92-595). 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). Thirdly, evaluating the matters contained in section 75(2) in so far as they are relevant.
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 and Russell (1999) FLC 92-877).
The evidence
The wife relied on the following affidavits of evidence:
i)Two affidavits of herself filed on 18 March 2002 and 20 January 2003;
ii)A statement of her financial circumstances filed 16 January 2002;
iii)Two affidavits of Clinton Ramm, a valuer filed on 26 November 2002.
The husband relied on the following affidavits:
i)Two affidavits of himself filed on the 27th of March 2002 and the 21st of January 2003;
ii)A statement of his financial circumstances filed the 27th of March 2002;
iii)An affidavit of his father B L M filed the 21st of January 2003;
iv)An affidavit of T A McC filed on the 21st of January 2003.
Both the husband and wife were pleasant, honest and straightforward witnesses. They do however have markedly different recollections of what occurred during their relationship. I do not think that there is anything sinister in this. It is not uncommon for parties to have different perspectives as to what occurred during their marriage, particularly in regards to the indirect contributions that each has made to the improvement of property. It is only human nature, in adversarial proceedings such as these, for the parties to maximise their own contributions and minimise those of the other. It seems to me that both parties were hard working individuals, who shared their in-coming funds together and contributed in different ways to the pursuit of the lifestyle of their choice. Both of them wished to pursue a rural lifestyle on the outskirts of Darwin and to keep horses. In this regard, both of them contributed to the realisation of this ambition.
Without doubt, there were literally thousands of transactions that arose as a result of their intermingling of funds and their decision to live together. As each of the parties will appreciate, it is neither possible nor appropriate, for there to be a minute dissection of every financial transaction in which they have been involved during their six year relationship and some final arithmetical reckoning made.
Neither of the parties impressed me as being particularly astute financially. They were happy to lead a comfortable life at the former matrimonial home and to pursue modest ambitions relating to horses and the general improvement of their property. The one witness who does clearly have business acumen is Mr M. He is a generous and indulgent parent. He is also an astute businessman and was anxious to minimise his own and members of his family’s liability to tax, through the use of his family company and trust. He is also a strong minded person, who has clear ideas as to what is likely to be in the best interests of his family. During her marriage to the husband, the wife was clearly included as a member of Mr M’s family. In a general sense, both the husband and the wife were content to leave the fine detail in respect of their financial affairs to Mr M, who was their generous but at times mildly domineering benefactor. I mean no criticism of him in the use of this description of him. The parties were the recipients of considerable largess from him and accepted that in financial matters, Mr M knew best. In one telling answer to a question from counsel for the wife, the husband indicated that in financial matters, “I am normally told by my father what will happen”. The wife in particular does not seem to have got her head around all of the financial intricacies in which the parties were involved during their relationship. As a result, generally speaking, I prefer the evidence of the husband and Mr M over that of the wife in respect of the fine detail of the specific financial transactions in which the parties were involved during their relationship.
In these reasons for judgment, findings of fact are made on the balance of probabilities, having regards to the evidence and my observations of the parties. In what follows, statements of fact constitute findings of fact.
Contributions during the relationship
a) Property at the commencement of the relationship
I am satisfied that the financial relationship between the parties commenced when they began to live together on the 27th of February 1995. Prior to that time the parties had been engaged for a number of years and had obviously been very close. They had lived together at the husband’s father’s home and had shared accommodation on an ad hoc basis in the rural area of Darwin. However, their financial relationship truly began in February of 1995.
At this time, the parties were both in their mid twenties and neither had property of any great value. They were both beginning to make their way in the world. Neither of them was in a markedly superior financial position to the other at the beginning of their relationship. The husband had a car worth $6,000.00. The wife had two horses and household items.
b) Work history of the parties during the relationship
The evidence is clear that both parties worked hard in the paid workforce during the vast majority of the relationship. The wife grew up on the land and has experience in station work. During a part of their relationship, the wife successfully studied for an associate diploma in environmental biology at the Northern Territory University. However, she continued to work on a part time basis as a technical assistant at the University whilst she studied and afterwards. Her salary at the University grew from $22,000.00 to $34,300.00 over time. At the present time she is working at Maroke Station as a station hand. Her annual salary is $30,000.00.
The husband was largely employed by his father during the course of the relationship. Initially he worked as a builder for his father’s building company and more recently he has been the manager of his father’s mango farm. The terms of his employment with his father varied from time to time. However, for lengthy periods of time he was provided with a company car, which was fully maintained by his father through one of Mr M’s companies. In 1997 the husband’s income was $35,000.00 per annum. It varied between $25,000.00 at the beginning of the relationship to $40,000.00 at its conclusion.
Apart from the times when the wife was studying and working only part time, it seems to me that the incomes of the parties were roughly the same. Once the parties had acquired the former matrimonial home, it was their practice for the mortgage payments and other large outgoings and bills to be paid for from the husband’s salary and for the wife to use her salary for food and general living expenses. This is a common practice with many married couples. The parties pooled their finances in this way and neither of them was left with any great surplus at the end of the week. Certainly, during their relationship, they were unable to save any significant sums and, as will be revealed in due course, they were not able to significantly reduce their borrowings.
c) Contributions by way of home making
The parties are both keen equestrians. During the course of their relationship, each of the parties had a number of horses. For the vast majority of the relationship Mr M paid the feed bill for both his and the parties’ horses. However, in the latter stages of the relationship, the wife used some of her income to pay for the feed for the parties’ horses.
It is the wife’s position that she was responsible for general housekeeping, including shopping and cooking. It is the husband’s position that, during most of the relationship, the parties engaged a cleaner who did a substantial amount of the housework. I do not think that a great deal turns on the question of contributions by the parties in respect of domestic duties. Both parties were engaged in paid employment during the relationship. I do not get the impression that either of them did an enormous amount of complicated cooking or cleaning. It seems to me that they were both very busy - with work, activities outside of the home, particularly horses; and in the wife’s case, her study. It seems to me that as they were both busy, the necessary amount of cooking, cleaning and washing was done by both of them and from time to time their cleaner. In this way they maintained a comfortable state of life. I do not think that it can be said that one of them has preformed an exemplary role in this regard, which as a result is markedly superior to the other.
d) The circumstances surrounding the acquisition of the former matrimonial home
The land on which the former matrimonial home was ultimately constructed was purchased in August/September 1995. The circumstances surrounding the purchase were out of the ordinary. When they first began their relationship, the parties had aspirations of owning a large rural block on which to run horses. At the time, such a block was beyond their means. They had no savings whatsoever. Mr M was looking for land on which to establish a mango orchard. In the middle of 1995, the parties discovered a piece of land at L Road, which seemed suitable for their purposes and for those of Mr M. The parcel of land that was available for sale consisted of 320 acres. Nominally, the purchasers of the 320 acres were G Pty Ltd, which is the trustee of Mr M’s family trust, the wife and the husband. However, the entire purchase was funded by Mr M. There is no dispute that the husband and wife put no funds whatsoever into the purchase of the land. The purchase price of the 320 acres was $150,000.00.
Later, the land was subdivided, so that Mr M could establish his mango orchard and the parties could have some land on which to build a house, stables and to develop paddocks for their horses. Mr M determined that he would take 120 acres for his orchard and the rest was left for the parties. Mr M paid the costs of the subdivision of the property and obtained the services of a valuer, in order to ensure that both subdivisions were of the same value. He wished to avoid any implications concerning capital gains tax regarding the division of the land in this way between his company and the parties. A separate certificate of title for the parties’ parcel of 200 acres was issued in about March of 1997. Thus the parties acquired a piece of land worth approximately $75,000.00, as a result of the direct gift of Mr M. On this land, the former matrimonial home was built, on a 20 acre plot and a number of horse paddocks were established around it.
Mr M was anxious that the parties should make some financial contribution towards the construction of the house. However, he did not want them to borrow beyond their means and, as a generous parent, he also wished for his son and daughter-in-law to have the type of house to which they aspired.
The house and stables were constructed in 1997. Mr M’s building company, P H, constructed the house. Mr M was instrumental in organising the construction. The parties themselves had very little input into the actual work involved in the construction of the house, which was completed by sub-contractors, retained by P or Mr M.
The parties themselves borrowed $120,000.00 from the National Australia Bank. This sum was secured by way of a first mortgage over the property and was paid in total to Mr M’s building company. However, I accept, that there is no accurate correlation between this sum and the actual construction cost of the house.
I accept what Mr M said in his evidence that the actual construction cost of the house and stables was in the vicinity of $215,000.00.[1] This evidence is supported by that of Mr McC.
[1] Affidavit of B L M paragraph 4
Mr McC is the sales manager of T P H. He has been employed by the company for about six years. It is his evidence that the likely cost of constructing the dwelling and stables at 525 K Road, L in 1997 would have been in the vicinity of $225,590.00. Mr McC has not inspected the property himself. His opinion is based solely on inspecting the architectural plans for the house and stable and estimating the likely costs in 1997 terms to build from those plans. [2]
[2] Affidavit of Mr McC paragraph 3 and 5
In my view, there is some artificiality in determining the exact dollar value of the building works that were done by Mr M, additional to the parties’ contribution of $120,000.00. What I think is clear is that both the parties and Mr M wished to construct the best possible house using the minimum amount of borrowed funds. Mr M was an indulgent parent, but he also wished his son and daughter-in-law to make a significant financial contribution towards the purchase of their home. However, there can be no doubt that his input both by the direct gift of land and indirectly, through the provision of additional labour and building material towards the construction of the house were of great significance. Without these contributions, the parties themselves would not have been able to purchase such a property. The donations of Mr M are the bedrock on which the parties’ present financial position is built.
The parties themselves did some work around the property. These works were significant, but in my view, there is no evidence to indicate that they have significantly increased the value of the property. The parties fenced the internal boundary with Mr M’s property. Mr M provided the fencing materials and both parties worked on the fence itself. They also erected a number of internal fences on their property in order to create some paddocks. These paddocks were sown with pasture. Due to her botanical studies at the University, the wife knew what were the right pastures to plant and she was integral to the establishment of the horse paddocks.
The parties also jointly constructed a garden and did some landscaping around the house. I do not believe that the evidence is such that I can say that one or other of the parties played a markedly greater role than the other in these various improvements. It seems to me that they both jointly wanted to create the garden and the horse paddocks and that both of them, to the extent of their abilities and strength made essentially equal contributions in this regard. The parties also kept a weather eye on Mr M’s adjoining property. Given his great generosity to them, in my view, it would have been churlish of them to do otherwise.
At a later stage, the parties extended their mortgage by a further $15,000.00 in order to install a spa at the former matrimonial home. Although the wife did the necessary research, so that the parties could acquire the best kind of spa for their situation and undertook the necessary negotiations with suppliers, the spa was installed by independent contractors and the parties themselves did no direct work.
e) The acquisition of the Isuzu truck and gooseneck trailer
The parties’ mortgage was extended by a further $15,000.00 in order to purchase a second hand Isuzu truck and a gooseneck trailer. The renovation of these items seems to have been a labour of love, particularly as far as the wife was concerned. Both parties have deposed that they took a major role in respect of this work. There can be no doubt that as a result of their labours, the value of the truck and trailer in particular have been substantially increased. Both of the parties have some skill in metal work and both, it seems to me, would have had the necessary enthusiasm for things equestrian, in order to embark upon the arduous project. The wife concedes that the husband did a number of things in respect of the renovation of the trailer that were beyond her physical capacity. She also worked long and hard using a variety of power tools, such as grinders in order to remove rust. It seems to me that the involvement of both parties in renovating the trailer was substantial. However, it seems to me, that the wife was probably more enthusiastic about the project than the husband and, as a result, she spent more time on it. However, in the over all scheme of things, I do not believe that this greater time she spent on the project, is of great significance.
f) The acquisition of the Toyota Camry motor vehicle
During the relationship, the husband was provided with a Ford Longreach Utility motor vehicle as part of his employment package with his father. This vehicle was leased by Mr M and provided to the husband for his personal use. In 1998, the wife wished to obtain a sedan type car for her and the husband’s use. As a result, Mr M arranged for the Ford Longreach Ute to be traded in on a Toyota Camry. The exact details of the transaction are unclear – that is whether or not Mr M paid out the residual value of the lease on the Longreach Ute at that stage or some earlier stage. However, there was a difference of some $8,000.00 between the value of the ute and the Toyota Camry. This difference came from the M Family Trust and was a gift from Mr M. He also largely contributed the ute, which was traded in to acquire the Camry. Thus the wife made no direct or indirect contribution towards the acquisition of the Toyota Camry motor vehicle itself. The husband’s contribution towards its acquisition was at best indirect, in that he acquired whatever interest he had in the original vehicle through his employment. However, there can be no doubt that the major source of the funds for the acquisition of the Toyota Camry was Mr M.
g) The acquisition of the Mango farm
In February of 1994, the husband and his two brothers D and B M purchased 40 acres of virgin bushland at 22 K Road, L. The purchase price of the block was $30,000.00 and the three brothers borrowed $35,000.00 for its purchase from the National Australia Bank. This loan has subsequently been paid back in full by the brothers. The husband and his two brothers engaged a contractor to clear the block. 30 acres were cleared and the husband and his brother David subsequently stick-picked the block.
The three brothers were each employed by Mr M. He arranged for the loan monies to be deducted regularly from their wages. This took place over a number of years, some of which coincided with the period of time during which the parties were cohabiting. The wife herself made no direct financial contribution towards the acquisition of the land.
The husband and his brother, D decided to plant a mango orchard on the cleared land. B was apparently not interested in this project. As a result, the husband’s mother became involved in the project and acquired B’s interest. At the same time, it was decided to change the persons who were involved in the land to include not only Mrs M but also the wife and D’s wife and the certificate of title was amended accordingly. As a result, in early 2000, the husband’s mother, the husband himself, the wife, D M and his wife each were registered as the holder of a one fifth share in the property. The parties had an informal partnership agreement to use the land as a mango orchard. Accordingly, around this time some 1,200 mango trees were planted on the property. Money was borrowed to purchase these trees and to sink a bore and provide irrigation for the trees.
The wife played some part in the planting of the trees, which took place over approximately two weekends. She also did some minor administrative work in respect of the informal partnership between the various owners of the block. However, I am satisfied that the major work that was done in respect of the mango farm was provided by the husband and his brother, D.
The parties themselves and D M and his wife borrowed $50,000.00 from the National Australia Bank in order to finance the improvements on the property. This was an interest only loan and has not been repaid. Accordingly, the liability of the parties in respect of this loan is $25,000.00. The interest payments in respect of the loan were paid by the husband from his bank account, this being the parties’ accepted method of dealing with recurrent major debts involving their mortgages.
As the trees that have been planted on the block are only two years old, they are not as yet producing fruit. They are an investment for the future.
h) The evidence of Clinton Ramm
The wife called evidence from Mr Ramm as to the value of the mango orchard. Mr Ramm is a certified practising valuer, who holds a Batchelor of Business in Property (Valuation and Property Management) from the University of South Australia. He has over five years experience as a valuer. He inspected the mango farm on the 16th of October 2002. In his opinion, the property had a market value of $180,000.00. By the term market value, Mr Ramm meant the following:
“Market value is the estimated amount for which an asset should exchange on the data valuation between a willing buyer and a willing seller in an arms length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.”
Mr Ramm gave evidence that he undertook his valuation of the property by means of the summation method. By which method he reached the following conclusions in respect of the property:
i) The unimproved capital value of the land
$90,000.00
ii) Fencing
$ 5,000.00
iii) Additional irrigation
$ 5,000.00
iv) Bore
$10,000.00
v) 1,200 trees and irrigation fixtures at $60.00 per tree
$72,000.00
I accept that Mr Ramm has the necessary qualifications to undertake this valuation. I accept the basis on which he formed his opinions as to the items listed above. He was extensively cross-examined as to the basis on which he reached his conclusion. He maintained his position in the face of this cross-examination. However, the husband called no evidence from a suitably qualified person to rebut that evidence.
Neither the husband nor Mr M accepts this valuation. In particular, Mr M gave evidence that, as an experienced mango farmer in the Darwin area, he personally would not pay such a sum for trees that were not as yet producing fruit. It is essentially on the basis of this evidence that the husband wishes the mango farm to be placed on the market. It being, in his view, unfair to allow the wife to rely on the valuation of Mr Ramm.
In my view, the husband proceeded at his own peril in these proceedings, without obtaining his own valuation. There was ample time for him to obtain such a valuation. This matter was fixed for hearing in June of 2002. In addition, at that time, I made orders that, in the event of any dispute between expert valuers as to the value of any real property, the expert valuers were to confer no less than 21 days prior to the hearing. The wife filed Mr Ramm’s valuation on the 26th of November, 2002. In my view, the husband cannot say he was taken by surprise by this valuation. I do not consider that it is appropriate for me to blithely accept what Mr M says in regards to the orchard. The best evidence of its value is provided by Mr Ramm. Mr Ramm’s evidence is not contradicted in specific terms. He undertook an organised and methodical valuation of the property, based on his experience gained from valuing rural properties in the Darwin area and from speaking with the suppliers of irrigation equipment and his knowledge of bores and fences. He accepted that the trees were not at their maximum anticipated value and took this into account. In the circumstances, I propose to accept Mr Ramm’s valuation of the property as $180,000.00. Accordingly, the parties’ interest in the property is currently valued at $72,000.00. Their joint liability in respect of the mortgage on the property is $25,000.00.
I accept that the property market in respect of mango farms generally in the Darwin area is “soft” at the present time. In Mr Ramm’s view the property is likely to sell for the value he has given it probably within twelve months. However, there can be no certainty that the property will in fact sell quickly.
In his evidence, the husband indicated that he, his brother D and D’s wife and his mother all wished to sell the property as soon as possible. However, I did not hear any specific evidence from any of these parties, apart from the husband himself in this regard. The wife has a jaundiced view about the prospect of waiting for the mango farm to be sold and is concerned that the parties involved may change their minds in respect of its sale. Certainly none of them, apart from the husband himself, can be bound by orders of this court, as they are not parties to the proceedings.
i) The parties’ superannuation
As has already been indicated, the wife has superannuation valued at $46,011.04. The husband has superannuation valued at $25,177.88. Although these funds are now to be regarded as property, neither party has provided the required valuation, pursuant to the Family Law Regulation of either of these funds, nor has either of them proposed any splitting or flagging order in respect of the funds themselves. Both parties anticipate that the other will retain his or her future entitlement to superannuation. As there are ample assets to distribute between the parties, I propose not to include the superannuation funds in the assets available for distribution. I have reached this conclusion on the basis that I do not have the required valuation of the funds and that I can, in any event, take them into account pursuant to section 75(2) of the Family Law Act.
j) Events since separation
The parties separated on the 25th of March 2001, when the wife left the former matrimonial home. The wife has retained in her possession the Isuzu truck, the gooseneck trailer and the Toyota Camry motor vehicle. The husband has continued to live in the former matrimonial home.
It is the husband’s position that the parties jointly owe the Shire of Litchfield some $3,844.00 in respect of rates on the former matrimonial home. This includes a road levy of $2,800.00. Further, the husband alleges that the wife owes rates of $961.00 in respect of her share in the mango farm and some $1,670.00 in respect of her share of costs incurred by the partnership in respect of running the orchard.
In my view, the parties’ liability for the rates of the mango farm in the sum of $1,922.00 and the road levy of $2,800.00 should be taken into account as joint matrimonial debts.
The assets and liabilities of the parties
Accordingly, I find that the total amount of the assets of the parties is as follows:
(1)ASSETS (as per list in paragraph 15) $376,500.00
(2)LIABILITIES as follows:
(i)Mortgage to Westpac Bank $164,300.00
(ii)Mortgage to Westpac Bank on mango farm $ 25,000.00
(iii)Road levy on former matrimonial home $ 2,800.00
(iv)Parties liability for rates on mango farm $ 1,922.00
TOTAL $194,022.00
Accordingly, the net value of the assets available to be distributed between the parties is $182,478.00.
Assessment of contributions during the marriage
I now turn to the second of the steps in the exercise under section 79, namely an assessment of the parties’ contributions within the context of section 79(4)(a) to (c). These provisions are as follows:
In considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, the court shall take into account –
a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent.
This was a relationship of some six years. Both of the parties were engaged in paid work during the whole of the relationship and each contributed the full amount of his or her wages towards joint family purposes. They made joint decisions about how their combined funds were to be spent. The husband used his wages for the major expenses related to the mortgage, the mango farm and the rates and other outgoings in respect of both properties. The wife contributed her wages towards more general household expenses, especially food and things that were needed for the garden, especially plants and seed. In this sense, the contributions of the parties in a direct financial sense were approximately equal. Although the husband’s salary was greater and from time to time the wife worked on a part time basis, the disparity in wages was not significant or prolonged for any extended period of time.
It also seems to me that they contributed approximately equally, in their different ways, to the improvements made at the former matrimonial home. I do not think that the evidence indicates that one party stood back and let the other do everything around the home. The wife had input into the choice of shrubs and pastures. She did a lot of gardening. She assisted with fencing. The husband did much of the heavy work around the home. Both kept an eye out for anything untoward occurring on Mr M’s property next door. At other times, they paid people to do work for them. They were both involved in decisions made to improve the property and each took part in the work involved. They are both handy and mechanically minded people.
During the course of their relationship, the level of the parties’ borrowings has increased. $120,000.00 was initially borrowed to finance the construction of the former matrimonial home. A further $15,000.00 was borrowed for the spa and $15,000.00 again for the Isuzu truck and gooseneck trailer. Finally, a further $8,000.00 was borrowed to consolidate debts and buy the husband’s horse, B L. At the current time, the amount owing on the mortgage is $164,300.00. Accordingly, it cannot be said that the direct financial contributions of the parties have reduced their level of overall indebtedness during the relationship. At best they have been treading water in respect of the repayment of their debts. However, without the donation of the land on which their home was built, the parties would not have had sufficient security to borrow any money in the first place.
There is no doubt that the work done on the Isuzu truck and gooseneck trailer has substantially increased their value. It was a labour of love from the wife’s point of view. However, it is clear to me that the husband also had input into this work. He did the heavy work that the wife could not physically manage. Because of the importance of the gooseneck trailer to her equestrian interests, I suspect that the wife’s input into the work was greater than the husband’s. However, that is not to down play the importance of the husband’s input. Without his assistance, the wife would not have been able to do the work that she did.
I have found that neither party had a markedly superior role in performing domestic duties around the home, although I suspect that the wife probably did more than the husband. But this was clearly not her defining role in the relationship. She worked outside of the home too and contributed her wages. The parties spent what they earned, without too much thought and pursued their joint interests.
The wife had some limited input into the mango farm. She was part of the partnership team but not a major player. During the early stages, the fact that she was earning and paying recurrent household expenses and buying food, groceries and some of the gardening requirements from her wages, allowed the husband to concentrate his salary on paying the mortgage and the borrowing in respect of the mango farm itself.
Were it not for the involvement of Mr M, I would assess the contributions of the parties as being approximately equal during the marriage. However, in my view, the evidence is clear that were it not for the assistance, both direct and indirect, provided by Mr M, the parties would not have the assets that they do, to be divided between them now. Mr M’s generosity to them was the bedrock on which the parties’ asset position has been based.
Mr M donated a parcel of land worth some $75,000.00 to the parties, with no obligation on their part to repay any of its value. It can only be regarded as a generous gift. Such a sum represents approximately 25% of the parties’ gross worth. Mr M also donated his firms profit on the construction of the former matrimonial home. This sum cannot be accurately calculated, but in my view it is a significant sum. I accept Mr McC’s evidence that apart from the GST, building costs have not significantly risen in Darwin since 1997. Using the present value of the house and subtracting the cost of the land involved and the parties’ direct financial input through the mortgage, including the installation of the spa, this contribution is worth approximately $50,000.00. I do not accept that this is necessarily the value of Mr M’s contribution because it does not take into account the work done by the parties themselves in improving the property through landscaping and the planting of the horse pastures. However, this contribution remains a significant matter.
Without Mr M’s significant gifts, the parties would not be where they are now financially. They would have had not security against which to borrow the large amounts of money that they have. These are contributions that must be factored into calculations on the husband’s side of the ledger. In my view, they are significant indeed.
In Quaresimini & Quaresimini (1999) FamCA 1314, the Full Court said:
“The section 79 exercise is not a pure accounting exercise. It is an exercise in identifying the various matters to be considered under section 79 and weighing them up against the other before reaching what is an appropriate order to be made, which order may not be made unless it is just and equitable. The manner in which disparate contributions have to be measured, especially initial capital contributions, has been the subject of much discussion.”
Recently in Pierce & Pierce (1999) FLC 92-844; Ellis, Baker & O’Ryan JJ made reference to several of the authorities. Their Honours said at FLC 85,811:
“In our opinion it is not so much a matter of erosion of contribution but a question of what weight should 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 both of the husband and the wife. In considering the weight to be attached to the initial contribution, in this case the husband, regard must be had to the use made by the parties of that contribution.”
“…there is no principle that the length of the marriage leads to a likelihood that other contributions will outweigh or weigh equally with ‘a particular contribution’. It is a matter of assessing the contributions of all relevant kinds in each case to arrive at an outcome which is both appropriate and just and equitable. In some cases particular contributions may be outweighed or equalled by other ones. In other cases particular contributions may be so disproportionate to other contributions as to merit special recognition.”
As I have already indicated, this was a relationship of some six years. During that time, through their own direct financial contributions, the parties have not been able to significantly broaden their financial base. In these circumstances, I consider the contribution made by Mr M to be so disproportionate to the other contributions of the parties themselves that they do merit special recognition. To do otherwise would be to deny the reality of the parties’ situation. I do not believe that it would be either just or equitable to disregard the significant contributions that has been made by Mr M to the parties’ assets. In my view, the consequence of Mr M’s contribution towards the parties’ acquisition of the former matrimonial home through his contribution of the land and the construction of the house, leads me to the conclusion that the assets of the marriage should be divided between the parties on a 70/30 percent basis in favour of the husband.
Section 75(2) factors
I am now required to consider the various matters set out in section 75(2) and in particular to consider whether any further adjustment should be made in favour of either party.
The wife is 30 years of age. The husband is 29 years of age. Accordingly, they are both young and have many years of productive life before them. Both of them are in good health.
The husband is in secure employment with his father managing his father’s mango orchard and business. The husband has spent a large proportion of his working life in his father’s employment. There can be no doubt that his future employment with his father is relatively secure.
The wife has considerable experience in station work. This is the type of work she loves. She enjoys outdoor work and being involved with horses. She also has a tertiary qualification in horticulture. In the past, she has always been able to find work that is amenable to her. I can see no reason in future why this should not continue to be the case. In my view, the evidence indicates that the wife is likely to have a modest but comfortable income for the foreseeable future. The husband is likely to always be able to rely on his father for both employment and possibly financial assistance in future.
The wife also has a significant amount of superannuation, which will be unaffected by these orders. As I have found, she is likely to remain in the paid workforce for sometime and will be able to build on this base of superannuation in future. Due to the generosity of his father, the husband will take significantly greater assets out of the marriage than the wife. He is likely to remain living in the former matrimonial home for the foreseeable future. The mortgage on this property, although substantial, will be within his means.
I must also remember that each of the parties is entitled to a reasonable proportion of the assets of the marriage to maintain a standard of living that is reasonable in all of the circumstances. The future aspirations of the wife are modest. She would like to be able to purchase a block of land on which to live. In the short-term, she would like to park the gooseneck trailer on such a piece of land and live in it. The orders that will be made envisage the payment to the wife of a modest amount of capital. This may form the basis on which she realises this ambition. She will also have the Isuzu truck and the gooseneck trailer itself, items to which she is clearly attached and which she will be able to use effectively in future. The wife also takes the Toyota Camry motor vehicle, an item to which she has made no direct financial contribution. It being largely a gift from Mr M. Through her efforts it is likely that she will again increase their value.
Bearing all these matters in mind, I am not of the view that it is necessary for there to be any further apportionment of the assets of the parties in favour of either of them.
Conclusions
For reasons already provided, I am of the view that the mango farm should be included in the parties’ pool of assets at the value attributed to it by Mr Ramm. I do not believe that it would be fair to the wife to postpone the liquidation of her share in the matrimonial property until such time as the mango farm is sold. I accept Mr Ramm’s valuation of the property as an appropriate one.
Accordingly, 30 percent of the net matrimonial assets is represented by the sum of $54,743.40. The wife has already in her possession assets to the value of $39,000.00. Accordingly, this means that the wife should receive a further sum of $15,743.40 from the husband. The husband will retain the former matrimonial home. This is his wish and has been the state of affairs since the parties separated. I do not consider that it is likely that this property will have to be sold in order for the husband to pay the wife this sum.
The legislation confers upon me a discretion to make orders that I consider are just and equitable in all the circumstances, taking into account all relevant statutory considerations. Bearing in mind Mr M’s large contribution towards the acquisition of the parties’ assets and the length of time of their relationship itself, I am satisfied that a division of the assets of the parties on a 70/30 percent basis, does represent a just and equitable settlement of their competing claims.
For all these reasons the orders of the Court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: Lynnette Chin
Date: 7 February 2003
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