W and W
[2002] FMCAfam 72
•19 March 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| W & W | [2002] FMCAfam 72 |
FAMILY LAW – Property settlement – matrimonial home and assets – transfer of rights in matrimonial home – division of personal property and contents of matrimonial home – contributions – section 75(2) factors.
Family Law Act 1975, ss. 72(2), 79.
| Applicant: | D C W |
| Respondent: | N S W |
| File No: | ZP1073 of 2001 |
| Delivered on: | 19 March 2002 |
| Delivered at: | Parramatta |
| Hearing Date: | 30 October 2001 |
| Judgment of: | Scarlett FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Greenaway |
| Solicitors for the Applicant: | Andrew Stuart And Associates PO BOX 57, Blacktown |
| Counsel for the Respondent: | Mr Maddox |
| Solicitors for the Respondent: | Levy Peatman Solicitors DX 8404, Ryde |
ORDERS
The respondent wife is to pay the Applicant husband the sum of $27,865.20 within three months from the date of these orders.
Simultaneously with the payment of the sum $27,865.20 referred to in order 1 hereof, the husband is to do all acts and things and sign all documents necessary to transfer to the wife the whole of his right, title and interest in the former matrimonial home situated at and known as 145 N Road, E, in the State of New South Wales.
The wife is to indemnify the husband in respect of the mortgage to Citibank over the said former matrimonial home at 145 N Road, E and in respect of the loan from the husband’s father C G W.
The husband is to indemnify the wife in respect of his Citibank Visa Card Account.
The husband is declared to be the sole legal and beneficial owner of all that parcel of land situated at and known as 146 M Street, S in the State of Tasmania.
The wife is hereby declared to be the sole legal and beneficial owner of all items of furniture and furnishings contained in the former matrimonial home and all other items personalty including all monies standing to the credit of the wife in any bank or building society, shareholdings, motor vehicles, entitlements to superannuation and any present and future expectation pursuant to a trust or estate, which items may presently be registered in the name of the wife or in her possession, other than as provided in these Orders, PROVIDED THAT the wife shall indemnify the husband and keep him indemnified in relation to any obligation attaching to any of the foregoing.
The husband is hereby declared to be the sole legal and beneficial owner of items of personalty including all monies standing to the credit of the husband in any bank or building society, shareholdings, motor vehicles, entitlements to superannuation and any present and future expectation pursuant to a trust or estate, which items may presently be registered in the name of the husband or in his possession, other than as provided in these Orders, PROVIDE THAT the husband shall indemnify the wife and keep her indemnified in relation to any obligation attaching to any of the foregoing.
All exhibits may be returned after the expiry of one month from the date of these Orders.
The Application is removed from the Pending Cases list.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
ZP1073 of 2001
| D C W |
Applicant
And
| N S W |
Respondent
REASONS FOR JUDGMENT
Application
The husband, who is the Applicant in these proceedings, seeks orders for property settlement requiring the parties to do all things necessary to sell the former matrimonial home at E and divide the proceeds in the following manner:
i)in payment of real estate agent’s or auctioneer’s commission and sale expenses;
ii)in payment of the necessary conveyancing costs;
iii)paying out the amount owing under the mortgage over the property;
iv)paying out an amount owing to Citibank Visa Card;
v)paying out a loan of $30,000.00 from the husband’s father;
vi)paying the wife the sum of $60,000.00; and
vii)paying the balance to the husband.
He also seeks orders declaring the wife to be the owner of all the contents of the former matrimonial home and declaring him to be the sole owner of a property in Tasmania. He proposes that the parties should be declared to be the owner of whatever items of personal property that they currently hold or is in their respective names.
In her Response, the wife seeks orders to the following effect:
(a)that the husband transfer the former matrimonial home to her in return for the payment by her to him of the sum of $15,000.00;
(b)that she indemnify the husband in respect of the mortgage over the former matrimonial home;
(c)that the husband indemnify her in respect of the loan from his father;
(d)that she be entitled to the contents of the former matrimonial home; and
(e)that each party be declared to be the owner of whatever items of personal property that they currently hold or is in their respective names.
Background
The Applicant husband was born on 21st May 1958; he is 43 years of age. The Respondent wife was born on 1st September 1960, which makes her 41 years old.
The parties commenced cohabitation in March 1993. They were married on 21st May 1994, the husband’s 36th birthday. There are two children of the marriage, daughters aged 7 and 6, having been born on 5th February 1995 and 9th March 1996 respectively. The parties separated on 9th September 1998. The children have resided with the wife since separation and continue to do so. A decree nisi dissolving the parties’ marriage was pronounced on 22nd October 2001. The decree became absolute on 23rd November 2001.
Issues
The issues between the parties are whether or not the former matrimonial home should be sold and the proceeds divided between the parties, or whether the wife should retain the former matrimonial home and buy the husband out. The wife claims that the elder daughter, K, should remain living in the former matrimonial home because of her special needs.
Evidence
The husband, who now resides in the State of Victoria, deposed in his affidavit that when the parties commenced cohabitation in about March 1993 he was employed as a stores supervisor earning between $28,000.00 and $30,000.00 per annum. He conceded that the wife was also in employment, but believed that she earned less than he did at that time.
The husband says that, at the time cohabitation commenced, he owned a one third share in a home unit in W R, which had been purchased in 1989 for $60,000.00, a parcel of land at S in Tasmania which he had purchased for $9,000.00. He also owned furniture and electric appliances which he valued at $3,000.00.
The husband concedes that the wife paid out some $11,500.00 for renovations to the home unit, and paid the sum of $4,300.00 off the amount owing on the land in Tasmania. He also concedes that the wife had purchased a motor car for $2,200.00 during the period of cohabitation.
After the parties were married, they purchased the former matrimonial home at E from the husband’s father for the sum of $165,000.00. The husband states that the father assisted them to purchase the home by agreeing to receive only $115,000.00 on settlement and ‘leaving in’ the sum of $50,000.00. This latter amount was a loan to be repaid within 12 months. The husband claims that the balance was financed out by way of a loan from the Westpac Banking Corporation and applying the husband’s share of the proceeds of sale of the W R home unit, which came to about $19,500.00.
The husband says that the wife stopped work in November 1994, some three months prior to the birth of their first daughter, K.
In 1995, the parties re-financed the loan over the home at E by borrowing an amount from Citibank Ltd sufficient to pay out the mortgage to Westpac. They also borrowed enough to repay the sum of $20,000.00 to the husband’s father and to have the kitchen renovated for $15,000.00. Later, in early 1996, the wife drew on the loan from Citibank to enable her to purchase a Ford station wagon.
The husband says that during the marriage he performed about 40% of the domestic tasks and about 20% of the parenting tasks. His salary went towards the upkeep of the family. He says that he continued to pay the mortgage payments on the home after separation. He was made redundant from his employment on 24th July 2001 and received a redundancy payout of $19,446.00, which he used to pay ongoing living expenses, mortgage repayments and child maintenance of $250.00 per fortnight.
At the time of the hearing he had not obtained another job, and in cross-examination he stated that he was not hopeful of obtaining employment.
The husband gave oral evidence in chief that he leased a Mitsubishi motor car for $362.00 per month. The car has a residual value of $5,500.00. He said that he had stopped making the mortgage payments on the home as he had run out of money.
In cross-examination, the husband said that he had moved to Melbourne because the cost of living was lower than in Sydney. The employment situation was no better than in Sydney. He had not been able to obtain either part-time or full-time work, although he had consulted three different employment agencies.
In support of his case, the husband relied on an affidavit by his father. In that affidavit, the father confirmed the loan of $50,000 to the parties, with the expectation that he would receive that amount, without interest, when funds were available. He also deposed to the fact that he had been repaid the sum of $20,000 in two instalments of $10,000.00, and that he expected to receive the balance when these proceedings were concluded.
The wife, for her part, deposed to the fact that the parties’ elder child, K, had been born prematurely and, as a result, has special needs. She has medical and intellectual difficulties, including a language disorder. This evidence was not disputed by the husband.
The wife says that K’s needs would best be met by her remaining at T Street Public School, as she does not adjust well to change. As a result, the wife wishes to remain living in the former matrimonial home. The wife says that she would not otherwise be able to remain living in the area where the former matrimonial home is situated.
The wife concedes that she had no “assets or savings of any significance”[i] at the time of the marriage. She admitted that the husband owned the land in Tasmania and had a one third interest in the home unit in W R, but says that he had substantial credit card debts. In fact, she claimed that he did not apply the proceeds of the sale of the W R unit to the purchase of the matrimonial home at all, but used the entire proceeds, which she claimed were only about $12,000.00, to pay off credit card debts. She says that she and the husband jointly renovated the unit prior to its sale.
The wife claims that the sum of $115,000.00 used to purchase the matrimonial home at E from the husband’s father came entirely from a loan from the Westpac Banking Corporation. She concedes that they owed the father $50,000.00, and that they repaid two instalments of $10,000.00 each. She concedes also that “the total current amount owing to the husband’s father is therefore thirty thousand dollars ($30,000.00)”[ii] so the parties do not dispute that this debt is owing.
The wife also says that she did a lot of renovation on the matrimonial home, whereas the husband did very little. She also says that she paid out the balance owing on the mortgage over the land at S in Tasmania out of her own savings. She has annexed a copy of the deposit receipt for that payment of $3,215.57, made on 4th November 1993. Her account of the refinancing of the former matrimonial home is that the parties drew down the sum of $142,778.27 from Citibank, out of an account that had a limit of $180,000. In 1997, she says, they drew down a further amount of $8,888.00, which was used to buy a new car for the husband. She says that he later traded this car in on his present car, although it now appears that the husband’s current motor vehicle is leased.
It is a part of the wife’s case that when the husband took over the handling of their financial affairs in October 1997, the amount owing under the mortgage to Citibank soon blew out from $166,150.74 to the limit of $180,000.00. The wife annexes to her affidavit a mortgage statement from Citibank, showing an opening balance of $168,279.37 on 8th December 1997, and a closing balance of $179,997.47 on
7th January 1998. She says that there were a number of withdrawals which were made by the husband for reasons not known to her.
It is also a part of the wife’s case that her husband was violent to her on a number of occasions during the marriage. She details several incidents between 1994 and September 1998, when the parties separated.
When they separated, the wife says that the husband paid the sum of $375.00 per fortnight into the Citibank mortgage account and paid another $250.00 into her St. George account. She says that he has made no payments to her since 3rd September 2001.
The wife has had a number of health problems since 1994, including vulval cancer, cervical cancer and breast cancer. She says that these are currently in remission.
The wife is particularly concerned about the welfare of their elder daughter, K. Both girls live with her, and will continue to do so. The wife called evidence from Mr G J, the Principal of the school which both children attend. It is an ordinary public school that has a special support unit attached. The child K is one of 30 special education children who are integrated into mainstream classes and not in the support unit. Her teacher is a kindergarten teacher with no special education qualifications. Some funding has been made available to provide for a separate adult to manage the child and give her some stability in the classroom. If the child goes to another school, Mr J believes that the additional funding for her would be able to be transferred to that new school. In any event, it is likely that the child would have a new teacher at the school.
Mr J believed that the child’s friends at the school were a calming influence for her. His comments were that, given her language delay and her propensity to become upset and disorientated, the child has a clear need for stability. He concluded by saying, in re-examination,
“I hope that over time we will teach her to be a more flexible child”. It is clear that the school is a positive influence on this child, but the Principal’s evidence hardly supports the proposition that no other school in the Sydney metropolitan area can meet this girl’s needs.
It is noteworthy that the wife gave evidence that she had received an approval in principal from a lender to finance the purchase of the husband’s share of the former matrimonial home.
Principles to be applied
When dealing with applications to vary property orders, courts exercising jurisdiction under the Family Law Act must not make an order under the provisions of section 79 unless satisfied that, in all the circumstances, it is just and equitable to make the order[iii]. Subsection 79(4) sets out a number of matters the court must take into account. They include:
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 of the marriage or either of them;[iv]
(i)the contribution (other than a financial contribution) made directly or indirectly or on behalf of a party to the marriage or a child of the marriage;[v]
(ii)the contribution made by a party to the welfare of the family, including any contribution made in the capacity of homemaker or parent;[vi]
(iii)the effect of any proposed order upon the earning capacity of either party to the marriage;[vii]
(iv)any relevant matters referred to in subsection 75(2);[viii]
(v)any other order made under the Family Law Act affecting a party or a child of the marriage;[ix] and
(vi)any child support under the Child Support (Assessment) Act 1989.[x]
In dealing with applications under section 79 of the Family Law Act, the Full Court of the Family Court has made it clear that there are three steps to be followed by a court.
First, the Court must identify the property of the parties and ascertain its net value.
Second, the court must look at the contributions of the parties, following the principles set out in section 79(4).
Third, the court then considers the relevant factors as set out in sub-section 75(2). This may involve an adjustment in favour of one or other of the parties. This approach has been laid down in cases such as Ferraro and Ferraro (1993) FLC 92-335 and McLay and McLay (1996) FLC 92-667.
The matrimonial assets
The gross assets of the parties are as follows:
1.Former matrimonial home (agreed value) $360,000
2.Land in Tasmania (agreed value) $11,000
3.Wife’s Ford motor vehicle $6,000
4.Husband’s motor vehicle (residual value) $5,500
5.Jewellery $1,000
6.Husband’s redundancy payment $19,446
7.Household effects $1,000
8.TOTAL: $403,946
From the gross assets, there must be deducted the parties’ liabilities, which are as follows:
1.Amount owed to Citibank $161,242
2.Amount owed to husband’s father $30,000
TOTAL LIABILITIES: $191,242
Subtracting the liabilities of $191,242 from the gross assets of $403,946, there leaves a net value of $212,704.00. The parties’ financial resources will later be taken into account. It is clear that the wife’s financial resources are minimal, being a superannuation policy with AMP worth only $67.00. The husband’s resources, being superannuation totalling $23,518.00, are substantially greater than those of the wife.
The contributions of the parties
The parties were together for five years. It is clear that the contributions favour the husband significantly outweigh those of the wife. The husband made the greater financial contributions by way of bringing into the relationship the land in Tasmania and the one-third share of the home unit at W R. In addition, the husband’s father made a contribution on behalf of the husband by lending the parties the sum of $50,000.00 as an interest-free loan to enable them to purchase the former matrimonial home. These would all be considered as contributions made by the husband pursuant to sub-section 79(4)(a).
The wife made non-financial contributions to the matrimonial assets by means of her renovating work on both the unit at W R and the former matrimonial home at E. These can be taken into account in the wife’s favour as contributions pursuant to sub-section 79(4)(b). Again, the wife can claim contributions as homemaker and parent pursuant to sub-section 79(4)(c), as it is common ground that she made the major contribution to the upbringing of the children, particularly taking into account the extra work involving the elder child K.
On balance, I am satisfied that the contributions favour the husband in the ratio of 60% to 40%.
Section 75(2) factors
Sub-section 79(4)(e) requires the Court to take into account “the matters referred to in sub-section 75(2) so far as they are relevant”.
I propose to consider them in order.
Commencing with the age and state of health of the parties[xi] I note that the husband is aged 43, having been born on 21st May 1958, and the wife is aged 41, having been born on 1st September 1960. The husband appears to be in good health, but the wife has given evidence of various forms of cancer, which are currently in remission. The health issue calls for a slight adjustment in favour of the wife.
The income, property and financial resources of each of the parties[xii] is a relevant consideration, as the wife is currently in employment, earning $800.00 per week, and the husband is unemployed. Against this, the husband’s financial resources are significantly greater than the wife’s, as she has virtually no superannuation at all, whilst he has superannuation policies with a total value of $23,518.00. It is clear, however, that the husband will not be able to access his superannuation until he has reached the age of 55 years, which will not be until May 2013. Whilst the husband is not currently in employment, it would be surprising if he were not able to obtain employment in the foreseeable future, considering his age, skills and work history. On balance, I am not satisfied that an adjustment is called for under this heading.
It is most significant that the wife has the care and control of the two children of the marriage, who have not attained the age of 18 years.[xiii] The husband has no children under his care and control. The two children are aged 7 and 6, so they will require parental support for nearly 12 years. In addition, the elder daughter has a disability which will require greater care on the part of the mother. I am satisfied that there should be a significant adjustment in favour of the wife under this heading.
When comparing the commitments of each of the parties that are necessary to enable that party to support themselves and a child or another person that the party has a duty to maintain,[xiv] it appears that the husband has no other person to support than himself. The wife has to support herself and the two children of the marriage. I am satisfied that the wife’s obligations in this regard have been taken into account in paragraph 44 of this decision, and I make no further adjustment under this heading.
Neither party has given evidence of any responsibility to support any other person.[xv]
In her Financial Statement filed on 25th October 2001, the wife gave evidence of receiving Family Allowance and disability allowance of $104.00 per week. Family Allowance is income-tested, and an income-tested pension, allowance or benefit should be disregarded pursuant to the provisions of sub-section 75(3). The husband, in his Financial Statement filed on 30th October 2001, claimed to have no income at all. There is no evidence that he is eligible for any pension, allowance or benefit.[xvi] I make no allowance under this heading.
The parties have separated and the marriage has been dissolved. The parties’ standard of living would appear to have dropped; that of the husband certainly appears to have.[xvii] No adjustment one away or the other is called for under this heading.
Subsections 75(2)(h) and (j) are not relevant to this matter.
The parties were together for five years and six months. The only effect on the earning capacity of either party is that the wife has the care of the two children of the marriage, who are of school age, which must place some limitation upon the sorts of employment that she can undertake. The duration of the marriage does not, on the evidence before the court, appear to have had any effect on the earning capacity of the husband.[xviii]
There is no need to make a separate adjustment to protect the wife in continuing in her role as parent, [xix] as her role in this regard has been considered under other headings.
Neither party is cohabiting with another person.[xx]
The terms of any order proposed to be made under section 79 concern this entire matter,[xxi] and will be dealt with once all relevant matters under sub-sections 75(2), 79(2) and 79(4) have been considered.
It is significant that any child support under the Child Support (Assessment) Act 1989 is referred to on two separate occasions, under sub-section 75(2)(n) and under sub-section 79(4)(g) of the Family Law Act. This does not, of course, that this factor must be considered twice, but can be taken by the courts as an indication of the importance placed by the Legislature on this issue. In this case, a child support assessment issued on 2nd October 2001,[xxii] but no payments have been made since September, on the wife’s evidence. It would appear to be unlikely that the husband would be in a position to pay child support until he is back in employment. Whilst I previously commented that it would be surprising if the husband did not regain employment, there is no evidence that he will be employed in the immediate future. Accordingly, the wife would seem to be facing a period of time when she will be supporting the children without any payments of child support, and an adjustment in her favour is called for under this heading.
There are no other facts or circumstances which, in my opinion, the justice of the case requires to be taken into account, [xxiii] nor is there any evidence of any financial agreement that is binding on the parties.[xxiv]
Taking all these matters into account, I am satisfied that the relevant factors pursuant to sub-section 75(2) of the Act call for a 30% adjustment in favour of the wife. As a result, I am of the view that the property should be divided in the ratio of 70% to the wife and 30% to the husband.
Conclusions
Having found that the wife should be entitled to 70% of the net assets of $212,704.00, it follows that her entitlement is worth a figure of $148,892.80. The wife wishes to retain the former matrimonial home for herself and the children, which is perhaps over-ambitious. The evidence suggests that, had it not been for the assistance from the husband’s father, the parties may not have been able to afford to purchase a home for that price. The wife has already given evidence that she could not afford to live in that area, even by renting. She estimated that the going rate for renting houses in that area was $400.00 per week.
If the wife wishes to retain the former matrimonial home, she will need to indemnify the husband not only against the mortgage over it, but she must take on the loan from the husband’s father as well. All the evidence shows that this was an interest free loan, of which $30,000.00 is still outstanding. Unless the husband’s father chooses to forgive the debt, the wife must be responsible for it, if she wishes to retain the house.
If the wife keeps the house, which has a net value of $168,758.00, and if she retains her car (worth $6,000.00), the jewellery (worth $1,000.00) and the household effects (also worth $1,000.00), she will be retaining assets with a total net value of $176,758.00. The husband will retain his motor vehicle, the land in Tasmania, and other items of personalty in his possession. As the wife’s entitlement amounts in value to $148,892.80, she will need to pay the husband the sum of $27,865.20.
If the wife cannot meet this requirement, then the house will need to be sold and the property divided between the parties, so that the wife receives 70% of the property and the husband receives the remaining 30%.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Associate: A. Coutman
Date: 19 March 2002
[i] Wife’s affidavit sworn 23rd October 2001, paragraph 10
[ii] Wife’s affidavit, paragraph 11
[iii] Section 79(2)
[iv] Subsection 79(4)(a)
[v] Subsection 79(4)(b)
[vi] Subsection 79(4)(c)
[vii] Subsection 79(4)(d)
[viii] Subsection 79(4)(e)
[ix] Subsection 79(4)(f)
[x] Subsection 79(4)(g)
[xi] Subsection 75(2)(a)
[xii] Subsection 75(2)(b)
[xiii] Subsection 75(2)(c)
[xiv] Subsection 75(2)(d)
[xv] Subsection 75(2(e)
[xvi] Subsection 75(2)(f)
[xvii] Subsection 75(2)(g)
[xviii] Subsection 75(2)(k)
[xix] Subsection 75(2)(l)
[xx] Subsection 75(2)(m)
[xxi] Subsection 75(2)(n)
[xxii] Annexure K to the wife’s affidavit of 23rd October 2001
[xxiii] Subsection 75(2)(o)
[xxiv] Subsection 75(2)(p)
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