W and W
[2007] FMCAfam 538
•31 July 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| W & W | [2007] FMCAfam 538 |
| FAMILY LAW – Alternation of property interests – contribution – post-separation contribution – negative contributions – waste issue. |
| Family Law Act 1975, ss.75, 79 |
| Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Kennon and Kennon (1997) FLC 92-757 Kowaliw and Kowaliw (1981) FLC 91-092 Norbis v Norbis (1986) 161 CLR 513 Pierce and Pierce (1998) FLC 92-844 Williams & Williams [2007] FamCA 313 |
| Applicant: | J R W |
| Respondent: | C T W |
| File Number: | SYM7059 of 2004 |
| Judgment of: | Altobelli FM |
| Hearing date: | 5 February 2007 |
| Date of Last Submission: | 26 April 2007 |
| Delivered at: | Sydney |
| Delivered on: | 31 July 2007 |
REPRESENTATION
| Counsel for the Applicant: | Ms Winfield |
| Solicitors for the Applicant: | Katie Smith, Solicitor |
| Solicitor Advocate for the Respondent | Mr Torok |
| Solicitors for the Respondent: | Andrew A Torok |
ORDERS
That within 28 days of the date of these orders, the Husband and Wife are to do all things necessary to effect a sale of the property at
22 P St, W in the State of New South Wales (being the whole of the land comprised in Certificate of Title Folio Identifier Lot XXX
DP XXXXX X) by private treaty at a price agreed on by them but failing agreement as determined by the President of the Australian Property Institute of NSW or his/her nominee.
On completion of the sale, the sale proceeds are to be applied as follows:
(a)To pay all costs, commissions and expenses of the sale, and to pay all council and water rates in relation to the property; and
(b)To pay all amounts owing to the St George Bank Ltd that are secured by mortgage against the property; and
(c)To pay 40 percent of the remaining balance to the Husband; and
(d)To pay the balance to the Wife.
If before 28 days of the date of these order the Husband and the Wife are able to reach agreement about the terms for the Wife acquiring from the Husband his interest in the said property, then within a period of 28 days from the date of reaching agreement the Husband will transfer his interest in the property to the Wife in return for the Wife paying to the Husband the sum agreed to, and also providing to him a discharge of the liabilities attributable to him secured against the property.
Each party is to be solely responsible for all other liabilities in their respective names whether such liabilities were incurred before or after separation.
Pending implementation by the Husband and the Wife of these orders, the Wife is to have the right to occupy the property to the exclusion of the Husband, provided she services all debts to the St George Bank Ltd secured against the property.
Unless otherwise specified in these orders:
(a)Each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.
(b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
The husband and the wife have liberty to restore the matter on seven (7) days notice before Federal Magistrate Altobelli as regards the implementation of these orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYM7059 of 2006
| J R W |
Applicant
And
| C T W |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for alteration of property interests under the Family Law Act (commonly known as a property settlement). The applicant is J R W and the respondent C T W. The issues that emerged from this case are as follows:-
a)Whether one party made a greater initial contribution at the commencement of their relationship such that this should be reflected in the final order for property settlement;
b)Contribution during the marriage and specifically whether the husband had engaged in waste, or negative contribution, as a result of participation in an unsuccessful business; alleged participation in gambling, and as a result of a motor vehicle accident which led to his conviction and serving a period of periodic detention;
c)Post-separation contribution and, in particular, whether having regard to the circumstances of the family the wife should receive an adjustment for her post-separation contribution in caring for the family and attending to the payment of joint debts at the time of separation;
d)Whether there should be an adjustment under s.75(2) of the Family Law Act in favour of the wife.
These were the main issues raised in this litigation. Where other less significant issues arose, they are dealt with in the course of these reasons.
Background
The husband, who is now 50 years old, and his wife, who is now 47 years old, commenced cohabitation in 1980 and then married in 1981. They separated in 1998, over nine years ago. A decree nisi was granted in January 2005, and the current application was filed by the husband later in 2005. The husband and the wife have two children,
A who is 24 years old now, but was 14 years old at the time of separation, and N who is 20 years old now, but was 11 years old at the time of separation. The husband and the wife had, as at the time of separation, been cohabiting for about 17 years.
During the marriage the husband worked in various jobs. Indeed, he was in full-time employment until sometime in 1995 when he lost his job as a result of a motor vehicle accident which occurred, it would seem, as a result of his drinking alcohol to excess at a work function in 1994. He pleaded guilty to culpable driving, lost his licence, and was sentenced to three years periodic detention as well as being ordered to pay legal costs, and reparation costs of about $11,000. Thereafter, he worked in a number of part-time jobs.
The wife appears to have been in full-time employment as at the time of cohabitation and marriage, and left full-time work once A was born in June 1983. She returned to full-time work in 1989, about two years after their second child, N, was born.
At the time of cohabitation and marriage the parties were renting a property at P, but subsequently purchased land in W on which they constructed an AV Jennings home. That home, located at 22 P Street, W, is owned by the husband and wife as joint tenants and continues to be the family home for the wife today. The husband and wife agree that the property has a value of $300,000 and is encumbered by a number of loans, the details of which will be referred to below. The other assets that currently exist include household contents of negligible value, the wife's 2001 Ford Laser motor vehicle that has a value of about $12,000 and some household contents in respect of which there was no evidence about value. In addition, the husband has superannuation entitlements valued at approximately $66,000 and the wife has superannuation entitlements valued at approximately $22,000.
In the husband's documents filed in these proceedings he describes himself as being employed in labour hire, but it was not clear to me during the hearing whether he was, in fact, in full-time employment. The wife is employed as a digital imager with a magazine company.
Add-backs
There was a potential issue about add-backs. The evidence indicates that in 1998 the husband received in excess of $20,000.00 representing the sale proceeds of AMP shares. For all practical purposes, those shares would otherwise be treated as property to which the wife had made a contribution as the source of their acquisition dates back to the period of cohabitation. The husband's evidence is that the wife also received AMP shares. The evidence did not take the matter further. The wife's evidence is that after separation she had access to long service leave entitlements and a retrenchment payment, both attributable to employment which predates the separation. The unsatisfactory state of the evidence makes it impossible for me to determine whether there should be an add-back in relation to any of these matters. The best I can do is to form an impression that if there are to be add-backs, they benefit the husband and the wife equally, or if there is a disparity, it is not such that would warrant any further adjustment.
History of increased borrowing during marriage
It is apparent that throughout the course of the marriage the husband and the wife frequently increased their borrowings. When they purchased the former matrimonial home they borrowed either 50, or 60 thousand dollars from St George Bank. The year before the husband had borrowed $20,000 from the State Bank to finance his involvement in the video business. The wife says this loan grew to about $30,000. In about 1990 the parties borrowed a further $25,000 from the St George Bank and used it to effect renovations to the former matrimonial home and/or to refinance the State Bank debt. It is common ground between the parties that between 1991 this loan had increased to about $47,000, but the wife says that this increase was partly attributable to paying the husband's gambling debts, and the husband says it related exclusively to further work to the home including a swimming pool. It is common ground between the parties that in 1997 they took a further loan from the St George Bank, but the husband asserts it was for dental care for A and school fees, whereas the wife asserts that it was for $12,000 to pay for dental work for A and the husband's gambling debts.
It seems agreed between the parties that in 1998, after separation, the wife borrowed a further $7000 against an insurance policy that they owned at the time, and used the moneys for a carport and pergola.
Applicable law
The preferred approach to the determination of an application under
s.79 Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter- related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss. 79(4)(d), (e), (f) and (g), (“the other factors'') including, because of s. 79(4)(e), the matters referred to in s. 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC 92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEL and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.
The wife raised what is, in effect, a waste argument in that, she says, the husband expended regular and not insubstantial money on gambling. A succinct statement of the law in this regard is the statement by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76 644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Identifying assets and liabilities and establishing values
Regrettably, the approach that was adopted by both the husband and the wife in these proceedings made it very difficult to establish even the basics of what property they had, what its value was, the applicable liabilities, etc. The material advanced in this regard was often incoherent and imprecise and it seems as if very little effort was made by the parties or their representatives to even attempt to reach common ground about the basics.
In view of this uncertainty and lack of assistance, doing the best I can, the pool of joint assets and joint liabilities is as follows:-
· former matrimonial home at W: $300,000
· wife's 2001 Ford Laser: $12,000
· household contents in the former matrimonial home: $5000
· husband's superannuation: $66,000
· wife's superannuation: $22,000
I do not propose to take into account the household contents in a case where so many years have elapsed since separation. The possibility for an ebb and flow in the disposal and acquisition of these chattels is too great. I will ignore same and leave them where they are. This means that the total non-super assets amounts to $312,000.00.
The total superannuation assets amount to $80,000.00.
The joint liabilities of the parties comprise the following:-
· Home loan;
· Portfolio loan;
· Get Set loan.
Each of these loans is secured against the former matrimonial home by way of mortgage to St George Bank Ltd. There was no coherent evidence before me that enabled me to ascertain precisely how much was owing.
It is also apparent that each of the husband and the wife have accumulated personal debts since separation and it was accepted by the parties, through their representatives, that subject only to the wife's claim for post-separation contribution, each of these personal debts accumulated since separation should be treated as the liabilities of the person who accumulated that liability. That was the best and indeed only way to proceed, having regard to the paucity of evidence about what these debts were actually used for.
Contribution issues
Initial contribution
The argument that one spouse had made a greater initial financial contribution than the other as at the time of cohabitation and marriage was only faintly raised. They started cohabiting in 1980. They each had minimal amounts of savings and personal property. The wife claims that she received assistance from her family relating to the wedding. I am satisfied that having regard to the relatively small nature of the contributions alleged and the amount of time that has elapsed since these contributions were made, there is no substance to any argument that either party made a greater initial financial contribution than the other.
Contribution during the marriage
Save for the issues to which I will specifically refer, I am satisfied that viewed in its broadest sense and thus encapsulating both direct and indirect, financial and non-financial contributions made by the husband and the wife between the period of cohabitation and separation (18 years), such contribution was equal. The husband was mainly (but not always) in paid employment. The wife was in paid employment at times during the marriage when she was not caring for the children. Whilst their respective contributions might be characterised in different ways, save for the matters referred to below, such contributions should be treated as being equal. There is no presumption of equality in this regard. A conclusion of equality is simply the commonsense outcome on the facts of a case like this.
The failed shop business
The first issue that possibly detracts from such a conclusion is the wife's argument that the losses incurred as a result of the husband's participation in a video shop business and which therefore resulted in a financial loss to the husband and the wife, is a loss that should be sheeted home to the husband only. The husband's evidence is that in 1983 he went into business with R A in establishing a video shop. In order to finance the business the husband obtained a personal loan from the State Bank of $20,000 with his mother acting as guarantor. In short, the business failed, it ceased trading, and the stock was sold. The husband's evidence is that the State Bank loan was able to be repaid using the proceeds of the liquidation of the stock, fixtures and fittings. The evidence of R A corroborates much of the husband's evidence, though Mr A is not able to comment on how the husband financed his contribution to the business venture. The wife's evidence about the business is that the husband borrowed $20,000 to finance the venture without her agreement, and that the debt grew to $30,000 with interest over the next five years. Whilst it is not explicit, the thrust of the wife's argument is that she contributed to the repayment of the loan, but as it was a liability that was incurred without her consent, the facts give rise to either a waste or negative contribution on the part of the husband, or an additional contribution on her part.
I accept that the business was financed by a loan that was subsequently repaid as a result of the joint endeavours of the husband and the wife. The wife's claim for an adjustment in contribution arising out of the failed business venture, irrespective of how such claim might be conceptualised, has no merit.
The applicable law on this issue is set out in the judgment of Baker J in Kowaliw & Kowaliw (1981) FLC 91-092 extracted at paragraph twelve of these reasons.
I find that there are no facts which would lead me to conclude that the husband had embarked on a course of conduct designed to reduce or minimise the value of matrimonial assets. I find that there are no facts that would lead me to conclude that the husband had acted recklessly, negligently or wantonly as regards the operation of the business. Indeed, I find that if the husband had been successful in the operation of the business, the wife would have clearly been entitled to make a claim under s.79 in relation to such business, just like any other piece of matrimonial property.
The gambling allegation
The wife's case was conducted on the basis that from at least 1983 the husband began gambling on poker machines despite the wife's objections to such conduct. This continued throughout the marriage. She asserts that debts were incurred, and increased, as a result of the husband's gambling activities. The wife asserts that the husband borrowed $9000 from Mr A, his employer, in relation to gambling and then had to repay the same in 1989 or 1990.
The evidence the wife advanced in support of these assertions is contained in her two affidavits, one filed on 24 January 2007, and the other on 9 May 2006. Much of this evidence was in inadmissible form. Leave was granted to adduce some evidence-in-chief.
Part of the evidence the wife sought to lead in relation to the quantification of what she asserts were payments made in relation to the husband's gambling debts was the annexure A to her affidavit filed 24 January 2007. This document consists of a list of cheques allegedly drawn by the husband between the period 21 December 1989 and 29 December 1997. The vast majority of these cheques were drawn payable to cash. One cheque was drawn payable to Akai. A total of nine cheques were drawn payable to R A.
The wife's evidence-in-chief about the gambling focussed on the husband's absences from work and the admissions that she asserts he would make on returning home to the effect that he had been in a club gambling or playing poker machines. She asserts that conversations to this effect occurred frequently from 1983 to the date of separation. Specifically in relation to the alleged loan from his employer, Mr A, in relation to gambling debts, her evidence was that sometime late in 1989, after the children had gone to bed, the husband disclosed that he had been gambling and owed a lot of money and specifically: "I owe R around $9000." The wife asserts that the husband said that he would pay this amount by instalments. She also gave evidence about the alleged discussions with her husband about his gambling problem, and the need for him to attend Gamblers Anonymous.
The husband's evidence about his gambling is contained in his affidavit filed 11 May 2006. I reproduce paragraphs 64-67 of that affidavit.
64. I am aware from correspondence and other documents filed by the wife that she has made allegation that throughout the marriage I had a gambling addiction problem, which led to wastage of funds.
65. I did gamble on licensed premised during the marriage. I would play poker machines. During the latter part of the marriage that would be once or twice a week.
66. I did not gamble more that we could afford, save on one occasion, when I spent way too much money. I lost more than half my pay packet. As a result of that incident, and the wife’s concern, I went to Gambling Anonymous on one occasion.
67. Thereafter I ceased the gambling, mainly on the basis that we were not able to afford it due to the motor vehicle accident and the additional costs involved in that and that I was doing Army Reserve and periodic detention on weekend.
I granted leave to the husband to adduce evidence-in-chief to respond to the wife's evidence about the payments allegedly made to Mr A. To put this evidence in context, it is necessary to point out that according to the wife, nine cheques were allegedly drawn to Mr A between
21 December 1989 and 11 September 1992. The largest payment was on 11 September 1992 for the sum of $5891. The total payments allegedly made to Mr A were $8396. The husband's evidence-in-chief was that he had inspected the cheque butts but he had no recollection of drawing cheques to Mr A, or the reason for the payments. He acknowledged that he and Mr A were in business together in the video store. In short, the husband's evidence was that he did not draw any cheques to Mr A, and does not know why payments were made.
Mr R A filed an affidavit on 23 March 2007 in which he acknowledges that the husband and he entered into a business venture together, namely, a video shop. His evidence is that he had his own funds that were applied towards this business, and that he thought J had borrowed money for the purposes of his contribution. In his affidavit he specifically refers to the assertion in the wife's affidavit of cheques having been drawn to him and paid to him in the period referred to above. His evidence at paragraph 8 of his affidavit is that: "I say those cheques were not received by me." At paragraph 9 he asserts: "I did not receive the cheques as alleged or at all." At paragraph 10 he asserts: "J did not borrow money from me during the course of his employment or at all."
The wife's solicitor, Mr Torok, cross-examined the husband on this particular issue. The husband agreed that he was in business with Mr A but did not know why payments were supposedly made to him, and firmly denied that he had incurred a gambling debt, the repayment of which was evidenced by the cheque butts. Moreover, the husband firmly denied the wife's assertions about his own admissions in relation to gambling that led to a credit card being cut up. The husband's recollection was that a credit card was cut up, but it was because they had received a new one. He agreed that he had attended Gamblers Anonymous on three occasions. In this regard it should be noted that the assertion put to him by Mr Torok is that he had attended Gamblers Anonymous between four and six occasions. In cross‑examination he frankly conceded (as he did in his affidavit) that he had gambled half his pay packet on one occasion only and that it was this incident that prompted him to go to Gamblers Anonymous. He frankly conceded the possibility that some part of the parties' credit card debts could be attributable to gambling losses but, according to the husband, he gambled within limits. He concedes that they had financial difficulties during the marriage, but the husband asserts these difficulties were not attributable to his gambling activities, but the failure of the video shop business, and the later motor vehicle accident.
Mr Torok had the opportunity to cross-examine Mr A in relation to his evidence. I record that I granted to the husband's counsel, Ms Winfield, leave to adduce evidence-in-chief from Mr A to respond to the wife's evidence about her conversations with him. His evidence was that he did not recall the conversations asserted by the wife and that he had gone through all of his records and as a result of that confirmed that the husband owed him no money, once the business was wound up. Mr Torok's cross-examination of Mr A was quite thorough, particularly in relation to the efforts that Mr A made to search for and retrieve the records for the relevant period. Mr A's evidence was resolute – after they ceased to be in business, the husband repaid him no moneys at all. The husband owed him no money at the relevant time. Indeed, Mr A's evidence was that if the husband owed him the sort of money asserted by the wife, "I would not have let him leave the business."
Doing the best I can with conflicting evidence, I accept the evidence of the husband contained in paragraphs 65 to 67 of his affidavit filed
11 May 2006. The husband did gamble in licensed premises during the marriage, usually on poker machines. Towards the latter part of the marriage, that would be once or twice a week. On one occasion he spent more than half of his pay packet, as a result of which he went to Gamblers Anonymous. After the motor vehicle accident he ceased gambling.
I accept the husband's evidence even though I note there are inconsistencies between his affidavit where he asserts he went to Gamblers Anonymous once, and his oral evidence where he recalls attending three times.
In relation to the payments allegedly made to R A, such payments are not established. They are firmly denied by Mr A who I regard as an independent witness whose recollection of business and financial matters I accept.
The wife has failed to prove her case, on this issue. So far as annexure A to her affidavit is concerned, she has failed to establish that these payments were made by the husband or that they related to gambling debts. Indeed, it seems to have been conceded by Mr Torok, in a question he asked of the husband, that the wife had been drawing the cheques to Mr A, so it was not even asserted that these payments were being made by the husband himself. In this regard, the husband firmly denied that he had made such payments himself.
Accordingly, the husband gambled during the marriage and apart from one occasion only it did not appear to cause unacceptable financial pressures on this family. That is not to say the family did not experience financial stresses – the financial loss arising out of the failure of the video shop business led to an increase in their indebtedness, and as will be discussed below, so did the motor vehicle accident. On the available evidence, however, the wife has failed to establish that the husband's gambling activities amounted to waste, or negative contribution on the husband's part.
The motor vehicle accident
The husband's evidence about the circumstances of the motor vehicle accident is set out in paragraphs 31-36 of his affidavit filed 11 May 2006. I extract that evidence:
31. In 1994 I had a serious motor vehicle accident. I was employed at that time with Akai. I had been drinking at a work related function.
32. I pleaded guilty to culpable driving. The matter was not finalised until about a year later in 1995. I continued with my employment until about one month prior to the sentencing in 1995. The insurance company involved was the Tokai Marine and Fire Insurance. I had to pay a total of $8,077.87. The arrangement was reached that I would pay them $200.00 over month from October 1995 to September 1995 and then a balloon payment of $5,677.87 to finalise the matter.
33. I engaged solicitors, Messrs Ian Rolfe and Associates, of Manly in relation to the criminal proceedings. The total paid to them was $2,135.00.
34. Prior to being in Court I lost my job. When I left I received $7,000.00 to $8,000.00 from Akai, being accumulated leave and other entitlements. That was applied to the payment of outstanding bills.
35. I was sentenced by the Court. I lost my Licence and I received three years periodic detention. I also met the out of pocket expenses.
36. Initially Akai was to meet the expenses, but they later withdrew their consent from that arrangement and I was responsible. All up I estimate some $11, 000.00 was spent.
The submissions made on behalf of the wife in relation to these events were basically that the losses incurred had to be absorbed by the family and that the husband's conduct should again be regarded as wasteful, or as a negative contribution. In any event, as a result of his periodic detention for three years and loss of licence, this resulted in the husband making a reduced contribution, particularly in a non-financial sense.
There is no doubt that the motor vehicle accident was attributable to the husband's consumption of alcohol but that does not, in my opinion, amount to the type of conduct referred to by Baker J in Kowaliw[1], referred to above. Whilst the husband was found culpable for his actions, it does not mean that it was intentional. There is clearly a degree of recklessness, but not such as to warrant an adjustment as sought by the wife. Without condoning the husband's actions in any way, and without seeking to minimise the impact of his actions not just on his family, but on other parties, it would be most unwise for this Court to make any form of adjustment under s.79 of the Family Law Act based on a tragic incident to which excessive alcohol consumption played a part. If this Court were to embark on an exercise that adjusts a contribution having regard to conduct which is so closely linked to tragedy, the assessment of that impact is fraught with difficulty. It needs to also be acknowledged, of course, that conduct plays such a limited role in property and financial proceedings, for very good policy based reasons. At a human level, one can understand the wife's strong feelings arising out of the consequences on the family of this motor vehicle accident. The cumulative effect of a failed business, the husband's alleged gambling activities, and this motor vehicle accident is such that the wife would, understandably, want to seek some adjustment or acknowledgment of what she has been through. It is not the role of this Court to do that and s.79 is not the appropriate vehicle in any event. To the extent that the family suffered a financial loss as a result of the motor vehicle accident, it is not a loss that should be sheeted home solely to the husband. To the extent that the husband's periodic detention may have detracted from the non‑financial contribution he would otherwise be making at home, is it not of such significant weight as to alter the overall findings I have made about equality of contribution in the broadest sense, between cohabitation and separation. The weight to be allocated to different types of contribution in a relatively long marriage is not a scientific exercise.
[1] Kowaliw and Kowaliw (1981) FLC 91-092
Post-separation contributions
The wife's claim to a quite substantial adjustment for post-separation contribution stems from the fact that there was such an extensive period of time that elapsed between separation in 1998, and the determination of this matter. It is acknowledged and indeed an agreed fact that during the relevant period the husband paid child support of $56,500. For all practical purposes he made no other financial contributions. The wife and the children had the benefit of the occupation of the former matrimonial home and, indeed, the wife continues to have that benefit. The wife argues that after separation she borrowed moneys to construct a carport and pergola on the property, purchased a water heater, spent money on fencing, a toilet, a stove, and various other minor matters. The wife argues that for the vast majority of the time following separation, the husband has had no contact with the children, thus increasing the responsibility on her, and the contribution that she has made to the welfare of the family. During this period, the wife had to deal, on her own, with servicing the joint debts as at the time of separation, sickness and accidents affecting the children, being involved in a motor vehicle accident herself, being retrenched from work herself, paying outstanding school fees, and various other matters referred to in her affidavit.
The husband's own evidence is that at the time of separation there were financial pressures on the relationship and that the matter deteriorated rapidly. His evidence is that he was by no means satisfied with the situation wherein he did not have time with his children but that, in effect, the situation rapidly descended to such lengthy periods of no time with the children that it became irretrievable. He acknowledges that at separation the wife was left with the mortgage to St George, the portfolio loan to St George and credit cards in their respect names.
In the wife's affidavits, she gives evidence about the need to borrow against an insurance policy in order to do work on the home, purchase a computer for the children, and of the financial struggle that she had in keeping the children at the schools that they were attending at the time of separation.
Clearly it was a financial struggle for the wife. The issue is not whether a post-separation contribution was made, but how it should be quantified, particularly having regard to the benefit that she received as a result of remaining in the former matrimonial home, as well as taking into account the child support that was paid by the husband.
In the wife's cross-examination she agreed that, on average, the weekly payment she was making pursuant to the three loans secured against the property was $194. Whilst Ms Winfield steadfastly attempted to get the wife to concede that, based on the wife's knowledge, she would have had to pay more than that amount by way of rental for the property, the wife declined. In any event, it is doubtful whether the wife could have given expert evidence of this nature. Whilst it is clear she received the benefit of continuing to reside in the former matrimonial home, the quantification of the value of that is impossible. In cross-examination the wife also steadfastly refused to acknowledge that by not taking steps towards property settlement immediately after separation, and allowing the wife and children the opportunity to reside in the home, he was making a contribution towards their welfare.
I observe that this would have been an appropriate, sensible concession to make, and irrespective of whether the situation was created advertently, or inadvertently, the fact is the wife and the children received a benefit.
The wife attempted to quantify in her evidence the actual expense incurred post-separation. The manner in which she attempted to do that in her affidavit was ruled inadmissible. At the hearing of the case I was then presented with a shopping bag consisting of bundles of various accounts and invoices, no doubt intended to prove the nature and extent of the contribution in a financial sense made by the wife after separation. She conceded in cross-examination that she benefited from these expenses as well as the children. She acknowledged that she received various forms of social security payments during the period. She disposed of some shares and borrowed against an AMP policy and used these funds towards these post-separation expenses. When it was put to her in cross-examination that there was never a time when she could not pay for groceries, the wife responded that it happened on occasion, but it was not a regular occurrence. When cross-examined about the bundles of documents produced by the wife in support of her claim she was able to explain the significant credit balances that appeared from time to time in the bank accounts.
I was forced to review all of the bundles of invoices and accounts tendered on behalf of the wife including council rates, telephone accounts, internet accounts, school fees, water accounts, credit card statements, bank statements, etc. One can only form an overall impression from this vast quantity of evidence (a quantity of evidence that, I state, was completely disproportionate to the issues in this case, and the size of the property pool). The overall impression from a review of these documents is that whilst the period after separation was a financially stressful one for the mother, she seems to have managed very well. For example, whilst many accounts, including council rates, were not paid on the due date, they were paid relatively soon thereafter.
I conclude that, overall, this is a case where the post-separation contribution factors favour the wife. Even though she has had the benefit of occupying the former matrimonial home, she has had to bear the responsibility for servicing the debts secured against it and has had the almost exclusive role in providing for the children, subject to the child support paid by the husband. The real challenge is quantifying such post-separation contribution. I find that an adjustment in her favour of 10 per cent takes into account all of the contribution matters referred to above, and specifically recognises the larger burden that fell on the wife's shoulders in caring for the children until their majority. That is not to fail to recognise the husband's contribution by way of child support. Rather, it is to recognise that the actual costs of raising the children were significantly greater (a matter in respect of which I take judicial notice based on the available research) and also the fact that the wife preserved the former matrimonial home, as the major asset. It also reflects the evidence from the wife, which I accept, that she incurred various personal debts on credit cards, after separation, for the purposes of funding the separation. The award of 10 per cent for post-separation contribution recognises this, in global terms.
Section 75(2) factors
On behalf of the wife it was asserted that there should be a s.75(2) adjustment in her favour for 5 per cent. This was strongly resisted by the husband. The evidence I had before me at the time of the hearing is that the husband was substantially unemployed and that his only assets of substance consisted of his interest in the former matrimonial home, and his superannuation. By contrast, the wife is in full-time employment and has an income from that employment of almost $50,000 per annum. She has no dependant children. She has her own superannuation entitlement. She is comfortably servicing her liabilities based on her income. Whilst her financial statement filed 24 January 2007 refers to a deficit between weekly income and expenditure, on closer examination it seems to me that the claim for all other expenditure at item 32 is a global, unsubstantiated claim. There is nothing about the age, and state of health of each of the parties that would warrant a s.75(2) adjustment in favour of either of them. The wife's income, property and financial resources, together with her proven capacity for appropriate gainful employment contra-indicates a s.75(2) adjustment in her favour. The wife no longer has the care or control of a child under the age of 18. The evidence indicates that she is well and truly able to meet the commitments reasonably necessary to support herself. There is nothing about the standard of living that was enjoyed by this family that would indicate towards a s.75(2) adjustment. The duration of the marriage appears to have no effect on her earning capacity. The wife does not appear to be cohabiting with another person, and the evidence is unclear about whether the husband is cohabiting with another person, but at the end of the day it makes no difference as to whether there is a s.75(2) adjustment. Overall, whilst a claim for a s.75(2) adjustment in favour of the wife, quantified at five per cent, was advanced on her behalf it has no foundation and no such claim is appropriate.
Superannuation
Both the husband and the wife in their respective application and response invite me to make orders in relation to the former matrimonial home by way of property settlement, but otherwise leave their respective superannuation entitlements where they stand. Of course, there is a disparity in the value of each other's superannuation entitlement and the evidence is that the husband had accumulated super up until the time of separation and in that regard I find the wife made a contribution in the general sense towards the accumulation of that superannuation. Even though the parties have sought orders that leave the superannuation where it is, I did not take this as being an invitation by either of them to simply ignore the impact of the superannuation in terms of the overall property settlement order. Indeed, I record that I have expressly taken into account the fact that a discrepancy exists. However, exhibit 4 shows that as at September 1999, a relatively short period after separation, the husband's superannuation entitlements stood at $31,000.00. Most of the wife's superannuation was accumulated after separation. The only issue, therefore, is whether the contribution that I deem the wife to have made to approximately $35,000.00 worth of superannuation at the time of contribution is one that ought to be explicitly acknowledged in the final analysis. It is not possible to be scientific when an adjustment is taking place so long after separation, but it is necessary for me to deal with this matter in a just and equitable fashion. On the facts of this case, I think justice and equity is best achieved by leaving the superannuation where it is, but also leaving the wife's 2001 Ford Laser motor vehicle where it is, thus making no separate adjustments in relation to any of these items. In other words, if my final conclusion is that the wife is entitled to 60 per cent by way of alteration of property interests under s.79 of the Family Law Act, that percentage should be applied to the value of the former matrimonial home, i.e, $300,000.00, less the joint liabilities secured against the property.
Conclusion
The final pool of assets therefore consists of the former matrimonial home with an agreed value of $300,000.00. Should it be necessary for the former matrimonial home to be sold in order to implement the effect of these orders, the three joint liabilities secured against the property are to be paid. In this regard, all liabilities secured by the mortgage to the St George Bank are to be paid. I received precious little assistance from the parties in identifying precisely what these liabilities were but, doing the best I can, it is my understanding of the evidence that the home loan, the portfolio loan, and the Get Set loan are all secured by the mortgage to St George and it is these liabilities that I intend be discharged on the sale of the property. All other liabilities are to be borne by the party who incurred them.
Just and equitable outcome?
It is almost impossible in this case to conduct the final stage of the alteration of property interests exercise, namely, checking whether the final outcome is a just and equitable one. It is almost impossible on the facts of this case because of the unsatisfactory evidence about what, precisely, the liabilities were at the time of the hearing. I record that the summary of argument filed on behalf of the wife, and the husband's outline of case document filed on his behalf, were singularly unhelpful. There is almost a $40,000.00 discrepancy between the liabilities that each of the parties assert should be paid from the sale proceeds. There was no explanation in the evidence as to what this is attributable to. The submissions made in this regard did not assist me. What I can rely on is that the husband asks me to make orders for the sale of the former matrimonial home and for the payment to him of one half of the net sale proceeds after the payment of "7(iv) amount required to discharge the registered mortgages secured on the said property in favour of St George Bank." The order he seeks clearly contemplates that whatever the liability secured on the property is, it is to be paid before he receives the share that I adjudicate he is entitled to. As it is, the final conclusion I reach is that a 40 per cent adjustment of the sale proceeds in his favour is the just and equitable outcome. Of course, this means the wife is receiving 20 per cent more, a conclusion I find is just and equitable having regard to all of the circumstances set out above.
The wife should have the opportunity to retain the former matrimonial home and to pay the husband out having regard to the effect of the orders that I intend to make.
In conclusion, a just and equitable outcome in this matter results in the husband receiving a 40 per cent interest in the net pool of assets identified above (comprising as it does, for the most part, the value of the former matrimonial home), with each party retaining their own superannuation entitlements, and with each party bearing the sole responsibility for any personal debts incurred in their name at any time, either during cohabitation or after the separation. The very lengthy period of time that elapsed between separation and the commencement of these proceedings, as well as the further delay in then hearing the matter, has resulted in a much greater degree of complexity than would otherwise have been necessary. The complexity was not just a legal and factual one, but an emotional one, my sense being that there are many unresolved emotional matters between these parties. The wife certainly did not assist in facilitating a resolution of this matter by raising various contribution/waste-type arguments all of which, ultimately, were unsuccessful.
I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Lisa Molloy
Date: 31 July 2007
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