Westmore and Westmore
[2007] FamCA 164
•8 March 2007
FAMILY COURT OF AUSTRALIA
| WESTMORE & WESTMORE | [2007] FamCA 164 |
| FAMILY LAW - PROPERTY SETTLEMENT - Contributions |
| Family Law Act 1975 (Cth) |
Kowaliw & Kowaliw(1981) FLC91-092
Whiterod & Taylor(2006) FLC93-266
Townsend & Townsend (1995) FLC 92-569
| APPLICANT: | Mrs Westmore |
| RESPONDENT: | Mr Westmore |
| FILE NUMBER: | MLF | 2638 | of | 2005 |
| DATE DELIVERED: | 8 March 2007 |
| PLACE DELIVERED: | Melbourne |
| JUDGMENT OF: | Dessau J |
| HEARING DATE: | 19,20,21,22 February 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Davis |
| SOLICITOR FOR THE APPLICANT: | Tollhurst Druce & Emmerson |
| COUNSEL FOR THE RESPONDENT: | The husband in person |
Orders
1.That the husband shall pay to the wife the sum of $28,000 (“the first payment”) within 30 days of the date of these orders (“the first date”) and until the first payment is paid in full, the husband shall be restrained from selling, transferring, or further encumbering the property known as T save to effect a sale pursuant to the next paragraph of these orders.
2.That in default of the husband making the first payment by the first date then the husband shall forthwith do all acts and things to sell T and the proceeds of sale shall be applied:
(a)To pay the costs and commissions of sale;
(b)To discharge the mortgage to the ANZ Bank;
(c)To pay to the wife the balance of the first payment owing pursuant to paragraph 1 of these orders; and
(d)The balance to be paid to the husband.
That the husband shall pay to the wife the sum of $700,000 (“the second payment”) within 90 days of the date of these orders (“the second date”) and until the second payment is paid in full, the husband shall be restrained from selling, transferring, or encumbering the property known as E save to transfer it to the wife pursuant to the next paragraph of these orders.
That in default of the husband making the second payment by the second date then the husband shall do all acts and things to transfer to the wife at the expense of the wife all of his right title and interest in E and contemporaneously with the transfer the husband shall provide the wife with vacant possession of E.
That pending the transfer of E pursuant to the previous paragraph of these orders, the husband shall pay all outgoing rates and taxes in respect of it and shall maintain it in good condition.
That the Holden Statesman motor vehicle currently in the wife’s possession shall be made available for collection by the husband within 14 days from the date of these orders, together with all service records and accompanying documentation and contemporaneously with the collection of this vehicle the husband shall hand to the wife a bank cheque made payable to the wife in the sum of $16,000.
That the husband shall be restrained from removing or attempting to remove the said Holden motor vehicle from the wife’s possession until he has given her the bank cheque referred to in the preceding order.
That the Trustees of the CG SUPER PLAN, a sub plan of the M Super Trust, (hereinafter referred to as “C.G.S.P.”) is bound by these orders and required to do all such acts and things and sign all such documents as may be required to give full effect to these orders, it being noted that the Trustee was accorded procedural fairness in relation to the making of this order.
That the base amount allocated to the wife out of the superannuation interest held by the husband in the C.G.S.P. Fund is $171,574.
That, in accordance with Section 90MT(1) of the Family Law Act 1975, whenever the Trustee of the C.G.S.P. makes a splittable payment out of the superannuation interest held by the husband in the C.G.S.P., the Trustee shall pay to the wife, or her legal personal representative, the entitlement calculated in accordance with Part 6 of the Family Law (superannuation) Regulations2001, and there is a corresponding reduction in the entitlement the husband would have had but for this order.
That paragraph 8 of this order has effect from the operative time.
That the solicitors for the wife shall serve a sealed copy of this order upon the Trustee within 7 days.
The operative time for the purpose of this order is four business days from the date of service upon the Trustee of a sealed copy of these orders.
That the husband shall be and is hereby restrained by himself, his servants or agents from executing, and/or giving to the Trustee of the C.G.S.P. Fund, a binding death benefit nomination in favour of any person, or from doing any other act or thing, which would render any part of, or payment from, his superannuation interest in the C.G.S.P. Fund a “not splittable payment” within the meaning of regulations 12 or 13 of the Family Law (Superannuation) Regulations 2001 such as would defeat the wife’s entitlement pursuant to this order.
That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)Each party shall be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)Monies standing to the credit of the parties in any joint bank account are to be divided equally between the parties;
(c)Save as expressly provided for in these orders each party shall forego any claims they may have to any superannuation benefits and all other work related entitlements belonging to or earned by the other;
(d)Insurance policies shall remain the sole property of the owner named thereon; and
(e)Each party shall 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.
That otherwise all extant applications pending between the parties shall be dismissed.
That these proceedings shall be removed from the active pending list.
That pursuant to the Family Law Rules this matter reasonably required the attendance of counsel.
That the question of the wife’s costs shall be reserved for argument before me at 10.00am on 14 March 2007 and the wife’s solicitor shall provide the husband and the court a written summary of argument by 10.00am on 13 March 2007.
IT IS NOTED that for all publication and reporting purposes this case shall be known as WESTMORE & WESTMORE.
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLF2638 of 2005
| Mrs Westmore |
Applicant
And
| Mr Westmore |
Respondent
REASONS FOR JUDGMENT
The parties cannot agree on a property settlement after a 23-year marriage.
Section 79 of the Family Law Act governs property cases. There are four steps for me:
(a)First I must establish the pool of assets. In this case the valuation of assets is broadly agreed, but there are substantial disagreements as to how various assets should be treated, and whether certain sums should be notionally added back into the pool.
(b)Then I must determine the parties’ contributions, financial and non-financial, direct and indirect. In this case there is disagreement as to how to treat the husband’s financial contributions at the start and during the relationship, his parents’ contributions, and the wife’s interest in a property she owns with her parents. The wife says overall contributions should be approached on the basis of 55%/45% in her favour. The husband says different aspects should be approached in different ways, with him getting credit as to 60%/40% in relation to initial contributions, 60%/40% in relation to other financial contributions, and the wife getting credit as to 60%/40% in relation to home-making.
(c)I need to consider a number of other factors under s 79(4) and s 75(2) of the Act, including the parties’ present and future needs, income-earning capacities, responsibilities and resources. In this case the husband says there should be no adjustment in either party’s favour. The wife says there should be an adjustment of 10% in her favour. She argues that the husband has a significantly higher income-earning capacity than her. The husband says she can work, but that he has little capacity for gainful employment, other than casual building work, given the stress that he has suffered, and the care that he must give to the parties’ 17-year-old son who is very badly affected by the divorce.
(d)Finally, I must arrive at a decision that is just and equitable in all the circumstances. There is disagreement as to how that can be achieved, both as to quantity, and as to who should retain the former matrimonial home. But it is agreed that the husband’s superannuation should be split on a 50/50 basis.
BACKGROUND
The husband is Mr Westmore. He was born in Mauritius and is nearly 50. He was an IT expert and manager earning about $140,000 per annum with C Limited. In late 2004 he took a redundancy package after 25 years. He now does casual work as a handyman, and claims that he earns an average of about $300 per week. He also receives rentals from investments properties of about $500 per week, and about $147 in share dividends.
The wife is Mrs Westmore. She is aged 48 and was born in Argentina. She is a student in the second of a two-year TAFE diploma in interior design, and is also engaged in home duties. She receives family allowance and rent assistance of $191 per week and about $75 in dividends.
The parties married in February 1982. They separated in June 2005. Accordingly they lived together for 23 years. They divorced in September 2006.
They have three children. The older son is 20. He is a student at the University. The daughter is 15. She is in Year 11 at high school. The older son and daughter live with the wife and see their father. Then there is a younger son. He is 17, lives with the husband, and is neither at school nor in work. Sadly, he is estranged from his mother.
MATERIAL RELIED UPON
The wife relies upon the following documents:
·Her Outline of Case Document filed 19 February 2007
·Her Amended Application filed 29 September 2006
·Her Financial Statement filed 6 November 2006
·Her affidavit filed 6 November 2006
·The affidavit of her father filed 6 November 2006.
The husband relies upon the following documents:
·His Amended Response filed 30 November 2006
·His affidavit filed 15 November 2006
·His Financial Statement filed 15 November 2006
·The affidavit of his father filed 21 November 2005
·The affidavit of his brother S filed 21 November 2005
·The affidavit of his brother J filed 18 November 2005
·The affidavit of his mother filed 30 November 2006.
The wife was represented by counsel. The husband represented himself. He was impressive in his meticulous organisation of documents and attention to detail.
Counsel for the wife made fair and sensible concessions to assist the husband, for example by addressing first in final submissions, but without in any way compromising his responsibility to his client.
THE ASSETS AND LIABILITIES
The parties agree:
·The former matrimonial home at E in which the husband and I live is valued at $700,000.
·The property at T in the husband’s name, previously owned by his brother J, is valued at $400,000, with a mortgage of $293,000 and therefore an equity of $107,000.
·The property at R in the husband’s name, for which he has signed a contract of sale to his sister R, is valued at $350,000. It has a mortgage of $203,000 and therefore an equity of $147,000.
·The property at N2 in which the wife has a one-third interest as a tenant-in-common with her parents is valued at $325,000, so that her share is $108,333.
·The husband’s Nissan tray-truck and HQ station-wagon are valued at $11,700.
·The wife’s Holden Statesman registered in the husband’s name is valued at $16,000.
·The husband’s current C shareholding (7033 shares) is valued at $97,774.
·The husband’s current ANZ Mortgage Saver Account has a credit of $8,800.
·An ANZ on-line investment account in the husband’s name is currently $17,400.
·The wife’s current shareholdings (with the parties’ older son) are valued at $60,275.
·The bank account in the name of the wife and the children is currently $24,973.
·There should be an add-back of $5,000 for legal fees paid by the wife from family monies.
·The husband’s superannuation entitlement as at 19 February 2007 is $343,148.
There are the following disputes:
·How to deal with the property at N, transferred by the husband to the parties’ 17-year-old son.
·The wife says that the husband allowed the property at N1 to remain untenanted for 12 months and on a calculation of the rent achievable on the property, a total of $10,400 should be notionally added back into the pool.
·The wife says the sum of $229,000 should be notionally added back into the pool, being the proceeds of shares sold by the husband since separation.
·The wife says that various aspects of the husband’s transaction with his brother to purchase his property at T are not as he claims, and there may be add-backs to the pool.
·The husband says that the equivalent of $16,126 worth of shares has been dissipated or lost by the wife since separation and should be added back into the pool.
·The husband claims that his parents made loans to the parties, totalling $30,000, and that the loans, calculated out to $198,690 taking into account increased value over the years, should be added back to the pool.
·The husband says that a further liability should be added into the pool to cover capital gains tax on his sale of C shares, the transfer of N1 to his son and the transfer of T to his sister, being $110,000.
The property at N1
This property was purchased in the husband’s name in 1992 for $97,500. He borrowed $75,000 from the ANZ Bank towards the purchase. It is agreed that by 28 May 2004 the mortgage stood at about $40,000 when the husband legitimately extended the loan by a further $100,000 to take up C Limited share options.
During the marriage, the property was tenanted. From about July 2005 (just after separation) until July 2006 the property was vacant. The expert valuer swore that the fair market rental was $200 per week. The husband said that soon after separation he offered for the wife, P and E to live in the property but she refused, simply saying it was “too smelly”.
The husband swore that he put the house on the market but after four months he had received “only one serious offer” so that on 8 November 2005 he wrote to the agent to withdraw the property. In paragraph 10 of Annexure D of his trial affidavit he swore:
“After careful consideration and consultation with family members I decided to gift the property to my son, [younger], living with me after being rejected and abandoned by his mother [in] June 2004. The property was given to him out of love and affection and in order to secure his financial future as he is suffering from depression and with only Year 10 education, very limited opportunity to earn a decent living.”
To effect the transfer to the younger son, the husband had to arrange for the $150,000-odd mortgage to be paid out. He said his parents agreed to make a loan of that sum to the younger son, using what the paternal grandfather described as his “life savings”. As the ANZ bank would not transact with a minor, the paternal grandparents paid the sum into the husband’s account for him to clear the mortgage. The husband says that his parents propose registering a mortgage over the property to protect their investment, but the Titles Office will not accept the mortgage until after the younger son turns 18. He says the transfer to the younger son took place on 14 July 2006 when the property was valued at $290,000. Although the wife had a caveat on the property, she allowed it to lapse and the transfer was registered within about a month.
The husband’s case is that as the younger son is the parties’ son, it is reasonable that the property was transferred to him, the wife should be satisfied with that, and quite simply, the property should be left out of the pool of assets. What that logic fails to take into account, amongst other things, is that the younger son is one of three children, his mother’s opinion was not sought, and as it happens he is strongly alienated from his mother and aligned with his father. The husband’s conduct in relation to this property is unimpressive. It is a sad reflection of how difficult he has found the separation, and of his bitterness, and very sadly, how the younger son has been used as a pawn in the process.
The wife agreed that, soon after separation, the husband told her she could move into the property. But as he made it clear that the property was about to be sold, she decided not to move in for just a short period. Her account is well supported by a letter attached to the husband’s affidavit at page 27. Significant parts of the letter were blacked out. The full text tendered in court supported the wife’s version that the husband informed her that the property was in fact on the market. I accept that the wife quite reasonably did not want to move in only to have to move out again.
It was not that the wife could do without assistance at that time. She and her daughter were living in the garage of her parents’ home at N2. The husband concedes that he notified the Council that they were living in the garage, the upshot of which was an eviction notice to the wife. He denied that he intended their eviction, but there was no other reasonable explanation for making that report to the Council. It reflected very badly on him. It was at a time when he controlled the majority of the family assets and the wife was without paid work, child support, and accommodation, relying on savings, investments, and the help of her family in temporarily housing her, her daughter, and older son.
The wife’s claim that the wife simply rejected the prospect of living in the N1 property is further undermined by a letter dated 1 December 2005 from the wife’s solicitor to the husband. It advised him that if the property were not sold pursuant to a pending offer, she required the property to be tenanted, or for her to have its sole use.
In any event, the husband’s claim that he only decided to sell the property to the younger son after he was unable to obtain a reasonable price for it on the market did not ring true. In the second half of 2005 the husband was offered an amount of $290,000, precisely in line with the sworn valuation at the time, and then the sum of $300,000. His evidence was evasive. It led me to conclude that he was not being truthful. When cross-examined as to when he was told about particular offers, and when he withdrew the property, he prevaricated about what was in writing and what was not, and what the agent had previously led him to believe the property would fetch. The chronology in reality was simple and straightforward. He made it complicated because it reflected so poorly on him that when offered an amount equivalent to or in excess of the valuation at the time, he simply withdrew the house from the market, and instead transferred it to the younger son.
I note that after the transfer the child was properly advised in writing by the wife’s solicitors that his rights could be protected by his own legal advice or legal representation in this case. The husband not only dismissed that out of hand on behalf of the younger son, but interpreted the letter as a “low and callous act” orchestrated by his mother against their younger son. That overlooked that he had put the child in the difficult position he faced, and that the younger was being fairly and properly advised that his interests could be protected. The husband showed no appreciation of his younger son, by then the owner of the property, having separate rights from him.
The wife’s claim that the husband had threatened her that he would do what was necessary to ensure that she did not receive a fair property settlement is supported by an analysis of this transaction. That attitude was also evident in a letter written by him to the wife’s parents in late 2006 when he referred to the wife trying to “get her hands on my [emphasis added] money”. That gives me an insight into his view of family money.
The wife is not asking for the transfer to be set aside. Rather, her Counsel describes the transaction as “inappropriate”, and submits that the amount “wasted” on the transaction should be added back into the pool, relying on the decision of Baker J in Kowaliw and Kowaliw (1981) FLC 91-092, affirmed many times by the Full Court, and recently in Whiterod and Taylor (2006) FLC 93-266. The principle is that financial losses incurred by parties or either of them, should be shared, except:
“(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.”
I am satisfied that the transfer to the younger son, having reaped $150,000 rather than $290,000 (the sworn valuation at the time), means that $140,000 has been lost to the parties, or “wasted” by the husband, be it by design, or recklessly, negligently or wantonly on his part. Whichever, the effect has been to reduce the value of the asset to the parties.
I do not agree with Counsel for the wife that the current valuation of $300,000 is the relevant one. As she is not asking for the transaction to be set aside, I must look at the time when it occurred. The proper value was $290,000, and it was therefore a sum of $140,000 that was wasted, given that the husband received only $150,000.
I also do not agree with Counsel for the wife that the wasted sum should be added back into the pool at this point. According to Kowaliw’s case, the wastage is relevant under s 75(2)(o) of the Act. Accordingly, the sum will not be added back to the pool but I will return to it below under that relevant sub-section.
The lost rental on N1 - $10,400
I have already outlined the unimpressive way that the husband dealt with this property. I am satisfied that from about July 2005 until the transfer of the property in July 2006 the husband made no genuine effort to have it tenanted, and he was reckless or wanton in that regard. The matrimonial assets have been reduced by the amount of the rental that should have been received. Accordingly, on the Kowaliw principles as set out above, I conclude that the sum of $10,400, calculated according to the independent expert’s opinion of fair market rental, should also be considered under s 75(2)(o) of the Act.
The proceeds of the husband’s share sales - $229,000
The husband took up C share options, in June, September, and December 2004, and in February 2005. It is common ground that he used family savings, and an increase of $100,000 on the mortgage over N1 to pay for the shares. That liability is properly included in calculating the pool of assets.
It became clear in the course of evidence that since separation he has sold shares worth $229,000, and has used the proceeds. That sum must be brought into account by being notionally added back into the pool. (See Townsend and Townsend 1995 FLC 92-569 as to a premature distribution of matrimonial assets.) Although that is not how the husband calculates the pool of assets, he was not able to provide any real argument against it.
The husband’s purchase of T
There was a protracted transaction between the husband and his brother J whereby the husband purchased the property at T from his brother. It needs to be considered.
Brother J and his wife separated some years ago and coincidentally their property case was heard before me in December 2003. There were orders made to effect their property settlement. While the parties in this case were still living together, the husband agreed that he would buy the home in which J was living, so that J would have the funds required to pay out his ex-wife, but J and his children could continue to live there. The husband and his brother say that the purchase price was $375,000. I will return to that.
It is clear that in September 2004 the husband obtained a $300,000 loan from the ANZ Bank in order to pay for the property. After that:
·A cheque for just over $260,000 was paid directly to brother J’s former wife, O
·The brothers conducted a transaction between themselves in relation to a couple of motor vehicles, so that overall the husband paid J a further $6,000
·The husband paid J $5,000 in October 2004
·The husband paid J $50,000 in early 2005
·The husband paid J $30,000 on 16 October 2006
·The husband paid J $68,000 on 24 October 2006
·Between October 2004 and October 2006, J lived in the property rent-free. Upon the independent expert’s assessment of fair market rental, a sum of $28,680 would have been payable for that period.
The husband paid J a total of $159,000 in addition to the $260,000 paid directly to O, a total of $419,000. That is $44,000 more than the purported purchase price, explained on the basis that contemporaneously with the purchase, J loaned the husband $44,000, so that sum also needed to be re-paid.
In J’s property case, it was agreed that J owed “his family” the sum of $44,000. He then made a loan of precisely that sum to the husband at the time that he agreed to sell him this property. The husband’s version, that the bank required that he have that sum in his account before they would advance a $300,000 loan, was improbable. The bank loan was more likely dependent upon secured equity than upon a relatively small sum in his account which he was free to transfer within a few days. That is in fact what occurred. Within days, he used it to buy shares.
I heard evidence from the husband, his brother, and his father about this loan. It was hard to know what to make of it all except that the money was certainly paid into his account, and it has been re-paid. The husband’s family’s version was that monies owed by J to other family members were directed to the husband who then re-paid them, so that they ultimately found their way back to the husband’s father at the end of last year. That version finds support in notes the wife says she found on the husband’s computer, that I am about to consider in detail. Next to the sum of $44,000 there are the words “mum and dad’s”.
It is likely that the husband needed help to buy shares at a time when he was otherwise helping his brother by buying his house. Although an apparent lack of candour about that raises suspicions, ultimately there was no argument for any add-back in relation to this sum.
It does appear though that the husband has paid J more than was truly owing in relation to the purchase of T. The reasonable inference is that he has done so to re-direct monies from share sales since separation, by making it look as if about $100,000 has found its way into that real estate asset. But I do not accept the husband’s version as to how this transaction unfolded.
The wife relies on notes that she said she took from the husband’s computer shortly before separation in June 2005, when she happened upon a particular screen which he had temporarily left unattended. The husband denies that they were figures created by him, or that they were a true representation of the T purchase. When I first saw the notes (in Exhibit W4), I was concerned that they were vague, and that they might have related to unsettled figures, in terms of negotiations at various times. However, I have had the chance to consider them carefully, and am satisfied they do genuinely reflect this transaction between the brothers.
The brothers concede that the notes accurately record some payments between them. I do not accept the husband’s claim that the wife could have simply put those figures together from family discussions she had overheard. The transactions were taking place in the later stage of the marriage when there was little inclusion of the wife in financial matters, and when she had not been keen on this particular purchase. Moreover, the notes contain specific dates as well as details. The level of detail, the conceded accuracy of many of the figures, and my view that the wife’s evidence is overall more truthful than the husband’s, satisfies me that these notes came into being in the way the wife claims, and that they were the husband’s record of how he paid for this property.
The notes support the probability that the husband fully paid J for the property before the parties separated. They recorded a purchase price of $360,000 with a note “purch 360” at the top of the page. It is likely that, contrary to the brothers’ claim that the purchase price was $375,000, it was discounted, as sale costs were avoided. The notes then show “Rent 2/9/04-2/9/06” at “24”, close to the actual figure foregone in rent (again slightly discounted). They show – accurately – “260, 325” to O. They show – accurately – “payment to [J]” at “$5,000”, and then “Balance on house 70,675”.
What follows is a series of figures that seem to be about the car transaction described by the brothers in evidence, again with some of the detail conceded as accurate. The next part of the notes show:
“[The husband] owes [J] 10 Oct 04 60,837
Cheq […]
23/3/05 Payment to (indecipherable) for [J] 50,000
``Transfer to mum and dad 10,000
[The husband] owes [J] 23/3/05 837.00”
It was the wife’s evidence that the husband asked her to deliver the $50,000 cheque to his brother in March 2005. Her evidence on that point was confirmed by J saying that she brought the cheque to him. I accept her evidence that at the time he handed the cheque to her, the husband said that it cleared the debt to his brother. The notes support that, save for a very small sum of $837 then outstanding. The husband denies saying that to the wife. I prefer her account that he did.
I find on the balance of probabilities that the property was paid for before separation, and the equity in it is properly included in the pool of assets. I agree with Counsel for the wife that the $100,000 paid since separation should not be added back into the pool, because it has already been added back by bringing in the monies from the sale of shares. However, I disagree with Counsel that there should be a sum of $28,680 added back for the forbearance of J’s rent on the property. Relying on the wife’s notes of the transaction, that has already been taken into account between the brothers in the reckoning of the payment for the purchase of the property, and the equity built up before separation.
The wife’s share loss of $16,126
The wife tendered a chart that showed she had sold shares since separation in order to cut her losses when particular share prices were falling. The husband was critical of her for that decision, saying that if she had held onto the shares, they could have improved in performance. He said her loss of $16,126 should be added back into the pool. I disagree.
The sale of shares was a reasonable exercise of judgment on her part, advised by the parties’ son P, who at all times during and since cohabitation was the advisor in relation to share investments. She did not embark upon a course of conduct designed to reduce or minimise the effective value or worth of the shares, nor was she reckless, negligent or wanton in dealing with them in a way that reduced or minimised their value. (See Kowaliw & Kowaliw, referred to above.)
The loans from the husband’s parents
The husband claims that his parents made a loan to him and his wife in the sum of $20,000 to purchase the land at G at around the time of marriage, and a further loan of $10,000 in September 1985 towards the purchase of the land at E. He wants substantial credit for those amounts when I come to consider contributions. For present purposes, he wants the sum of $198,690 added into the pool as a liability to be met by the parties. He has calculated the increase from $30,000 according to inflation and notional profits.
The wife agreed those amounts were borrowed, but gave cogent evidence about re-paying them to the husband’s parents. She described a ritual of attending church with them every Sunday, having lunch afterwards, and handing over money which was then entered into a small notebook kept by the husband’s mother, recording the full payment in due course of those loans.
The husband and wife’s evidence on the repayment of the loans is at complete loggerheads. For reasons I have already given, I find her the more credible. I am fortified in that view by the evidence of family members called on behalf of the husband.
The husband’s father’s evidence was vague. He had little independent knowledge of most of the matters in his affidavit, the detail having been provided to him by the husband. He agreed that there was a notebook, and he agreed there were Sunday payments as the wife said. He spoke of many loans to the parties that were entered into the notebook, and repaid, but he could give no details as to the time, the amount, or when they were re-paid. He said he could not produce the notebook as the pages were destroyed once loans were re-paid. Interestingly, although these were the major loans, he could produce no records of them. He said there had never been any request for re-payment. He said he would not have asked for re-payment had the family remained together.
The husband’s mother also agreed there was a notebook but that only the smaller loans were recorded. She had not retained it. She said there was no record kept of the larger loans, and was adamant that the $30,000 had not been re-paid.
The husband’s family members are strongly aligned to the husband. They have clearly closed ranks around him. He himself swore a number of times how close they were and how much they treated family money as belonging to all of them. They obviously share his anger and distress that the wife did not want the marriage to continue. That is evidenced by how they assisted the transfer of the N1 property to the younger son, who was only just turning 17 at the time, by providing their life savings to do so. Those factors, combined with my doubts about the husband’s veracity, lead me to accept the wife’s version that, like all other smaller loans, the loan of $30,000 was re-paid during the marriage.
Capital gains tax $110,000
The husband claims that the sum of $110,000 should be brought into the pool as a liability for capital gains tax payable by him in relation to the sale of C Limited shares, the transfer of N1 to his son, and the pending transfer of the R property to his sister.
I accept that capital gains tax will be payable. I cannot accept the sum proffered by the husband as calculated. He failed to produce his 2005 income tax return. He conceded deferred tax losses of $11,768 in his 2006 income tax return. In the absence of expert evidence as to the precise capital gains tax that will be payable, and some will be dependent upon the transaction of R to the husband’s sister actually concluding, I do not propose including $110,000 as a liability. However, in making adjustments below, I must take into account that he husband will face capital gains tax liabilities.
Conclusion as to the Pool of Assets
Accordingly, I find the pool of assets as follows:
·E $ 700,000
·T (in the husband’s
name, valued at $400,000 less a mortgage of
$293,000) $ 107,000
·The property at R
(in the husband’s name, valued at $350,000, with a
mortgage of $203,000) $ 147,000
·The wife’s one-third interest as a tenant-in-common
with her parents in the property at N2
(the total value being $325,000) $ 108,333
·The husband’s Nissan tray-truck and HQ Holden $ 11,700
·The Holden Statesman currently being used by the
wife but registered in the husband’s name $ 16,000
·The husband’s remaining 7033 C Limited
Shares $ 97,774
·The husband’s ANZ Mortgage Saver Account $ 8,800
·The husband’s on-line investment account $ 17,400
·The wife’s share portfolio $ 60,275
·The bank account in the name of the wife and the
children $ 24,973
·An add-back of $5000 used by the wife to pay legal
fees $ 5,000
·An add-back in relation to share proceeds received
by the husband since separation $ 229,000
Total $1,533,255
There is otherwise the husband’s superannuation at $343,148.
CONTRIBUTIONS
Although there were many minor matters raised in the course of the affidavits, they were ultimately treated as part and parcel of a long marriage, so that the only issues of significance became:
·The husband’s’ initial contributions
·The husband’s financial contributions otherwise during the relationship, including his parents’ loans
·The wife’s contribution to N2
The husband’s initial contributions
I accept the husband’s version that he contributed $12,000 and the wife contributed $8,000 to the initial purchase of the G land, just prior to marriage. His records support that. He said that he should be credited on the basis of a 60%/40% split in relation to that. With the effluxion of time, that is an over-simplified approach.
The husband’s other financial contributions
In his submissions, the husband suggested that again he should be credited 60%/40% in relation to other financial contributions, taking into account his parents’ loan. I have already made my finding in relation to the alleged outstanding $30,000 loan (claimed by him as expanded out now to $198,690). I am satisfied that his parents did offer help early in the marriage by advancing the loan, but that it, like subsequent smaller loans, was re-paid in full.
In any event, it is false to do the sorts of calculations that the husband attempted, to persuade me that a very high percentage of the parties’ profit on properties was directly referable to his parents’ assistance. That is not to belittle their assistance, which should be recognised, but it is unrealistic to calculate out massive sums as the husband attempted to do. The benefits of inflation and/or a rising property market cannot be traced back like that so that one party claims the full credit to the exclusion of the other party.
The wife’s interest in N2
This property was purchased by the wife’s parents before the parties married. They included her on title as a tenant-in-common, to the extent of a one-third share. They still live there. The wife agrees that ultimately she will obtain her share but that may be some time off and I can take that into account in relation to the s 75(2) and other factors below.
When it comes to contributions, I am satisfied that this asset falls into a different category from other assets and the husband did not appear to take issue with that. From the time the relationship between these parties commenced, they have not put any money into this property.
Conclusion re contributions
I accept Counsel for the wife’s submission that the wife’s interest in N2, so far as contributions are concerned, is 100% in her favour.
As to the balance of assets, I find after a marriage of some 23-plus years, the parties’ contributions are overall equal, with a small adjustment due to the husband given that his initial contribution and his parents’ help with loans helped them with a financial start upon which they built with their hard work. The husband was a good bread-winner. The wife worked hard in the home.
Counsel for the wife proposed a 55%/45% split to reflect the wife’s N2 interest. That would mean a differential of more than $168,000. That is unfair to the husband. The better course in my view is to take a global approach in relation to all assets, save that the wife’s contribution to N2 should be regarded as a 100% contribution as between the parties.
As to the other assets, a small adjustment of 52.5%/47.5% in the husband’s favour is appropriate.
SECTION 75(2) AND OTHER FACTORS
The wife seeks a 10% adjustment in her favour. The husband says there should be no adjustment.
Although she is not legally obliged to do so, the wife meets some of her older son’s expenses while he is at university. She also has responsibility for the parties’ 15-year-old daughter. She is in Year 11, will incur about $10,000 more in school fees, and proposes to go on with tertiary study. The husband has responsibility for 17-year-old younger son. At present he is neither studying nor working. What he will do is unclear on the evidence. It may be that once this case is over, he will be given the emotional space to decide.
Although throughout the marriage the husband was the bread-winner, and since the marriage he has had control of the majority of family assets, he has paid no child support. That is relevant both under s 75(2)(o) of the Act, and as the predictor that none will be paid in the future.
A central issue is each party’s capacity for gainful employment. I am satisfied that the husband has a higher capacity than the wife. He was well qualified and well experienced in the IT field, earning around $140,000 per annum when he was made redundant. There was some dispute as to whether the redundancy was or was not voluntary. Redundancies can be dressed up in different ways, but the only primary document, a letter from C Ltd, does not suggest that the husband simply chose to leave, but as he claimed, there was a restructure and his redundancy was a result of it.
The husband claims that he suffered stress leading up to the redundancy and that he still suffers stress so that he is unable and unwilling to return to work in IT, despite the fact that he has been offered consultancies since separation. He produced no medical evidence. He conceded his psychiatrist would not support his claim that he could not return to his former employment.
His evidence about his current work as a handyman was extremely evasive. He could not give straightforward answers as to what he is doing, how much he is doing, what is available, and how much he earns.
The lack of medical evidence, combined with his evasive evidence about his current work, and his long-term excellent work record, leads me to conclude that it is probable that whether it is through IT or some other means, the husband is likely to again realise a good income-earning capacity once these proceedings are over. His income may be less than his last salary, which may have related in part to the high management level he worked up to in that organisation. But it is still likely to be higher than the wife’s income-earning capacity.
The wife has been out of employment for 18 or 19 years. She is presently in the second year of an interior design course at TAFE. She hopes that early on she will earn about $25,000 per annum and that in due course that will increase to $40,000 to $50,000. She is making a genuine effort to re-qualify, in the difficult circumstances of not qualifying for a pension due to investments, and having to live off assets since separation.
The wife’s employment was apparently a sore point between the parties in the last years of the marriage. The husband was keen for her to resume employment, although he agrees that early on the mutual decision was taken for her to remain at home with the children. She worked hard in that regard, caring for the children while the husband worked hard at his job during the day, and studied at night. Whatever the rancour between them as to her employment in the closing stages of the marriage, the wife cannot be criticised since, in that she quickly started to study in order to gain qualifications with a view to supporting herself.
In terms of superannuation, it was agreed that the husband’s superannuation entitlement will be split so that each party will have an equal share of that security in the future. The wife will also have her interest in N2 realised, but that may be well into the future.
I take into account that the wife will have legal fees to be met, although I have not been told of a precise amount. The husband is not in the same position, as he has represented himself. However, I was told that the wife proposes to make an application for at least some of her legal fees to be paid by the husband, and it was agreed that such application should be dealt with after these reasons for judgment. I cannot guess at the outcome but for now there is some uncertainty as to who will have liability for legal fees.
As noted above, the parties had different approaches to the question of capital gains tax. It is clear that the husband will pay capital gains tax on the sale of various assets. Although the amount is uncertain, claimed by him at $110,000, and by the wife at a significantly less but uncertain figure, I will bear it in mind. I agree with the submissions for the wife that it has been at his choice alone that he has sold shares, the N1 property to his son, and the R property to his sister. Still, had that not been the case, properties were likely to be sold for the purposes of these orders and of course capital gains tax would be payable on investments.
Primarily it is each party’s income-earning capacity that sets them apart in terms of their prospects. That said, they are approaching 50 and it may be that neither will have many years of maximum earnings.
I must take into account the size of the pool in deciding adjustments. In this case it is sufficiently large that even a relatively small adjustment will have a substantial impact. That, coupled with the husband’s capital gains tax responsibilities, means that putting to one side the N2 property to be retained by the wife, she should receive an adjustment of 5%, to receive overall 52.5% of the other assets.
Pursuant to my findings above, I must turn to the amounts wasted by the husband, totalling $150,400. In my view the only fair approach under s 75(2)(o) of the Act is for the wife to receive an additional sum of $78,960 (rounded up to $79,000), representing 52.5% of the wasted sum.
CONCLUSION
I must stand back to consider the above assessments, to ensure that the amount, and the structure of orders, is just and equitable.
Before turning to a division of the remaining assets, I note a consent order that the husband will pay to the wife the sum of $16,000 and she shall return the Holden Statesman to him, an agreement they reached in view of their different perspectives as to the value of the car. In light of that agreement, I propose putting that modest asset and transaction to one side.
Leaving aside the wife’s interest in the property at N2, as well as the car, a division of the remaining assets on a 52.5%/47.5% basis in the wife’s favour would give her $739,684, and the husband $669,237. If the wife then receives a further sum of $79,000 for her share of assets wasted by the husband, she should receive property equivalent to $818,684, and the husband, $590,238.
It is agreed that the husband will retain:
·The T property $107,000
·The R property $147,000
·Cars $ 11,700
·C Limited Shares $ 97,774
·His ANZ Mortgage Saver account $ 8,800
·His On-Line Investment account $ 17,400
Total $389,674
The husband has already received share proceeds of $229,000, so that he effectively has had or retains assets of $618,674 from the pool.
The wife will retain her share portfolio of $60,275, savings of $24,973, and she has had the use of the $5,000 added back in relation to her legal fees, a total of $90,248. She requires a further sum of $728,436 to make up her share of $818,684.
The wife wants her share to be met by a transfer of E to her ($700,000), with a cash payment by the husband to meet the balance. The husband wants to retain E, and proposes selling shares, R and T to pay out the wife. His proposal was put on the basis that he would only need to meet a payment to the wife of $300,000-odd, but in fact he needs to meet considerably more. If he cashed up available assets (T, R, C Limited shares) and added the cash from his two bank accounts, he would raise a total of $377,974, well shy of the amount he must pay to the wife.
The parties are obviously attached to the former matrimonial home. It is always hard to make a decision about such a property. To order its sale is the least desirable course, given the costs that would be incurred and lost to the parties. I would be satisfied to allow the husband to retain that property as the settled home in which he and the younger son have now lived for several years since separation, if he were able to pay out the wife. To that end, I am prepared to allow the husband a reasonable time to raise the money. In the event that he is unable to pay, the property must then be transferred to the wife.
I will allow the husband that opportunity although the evidence did not deal with the possibility. I am satisfied that is most likely because he had not fully turned his mind to a realistic assessment of what the wife was likely to be owed by him at the end of this case. He may not have fully reflected upon the impact of wastage and add-back arguments and the effect on the outcome. He has a family that helps each other in any way possible. Accordingly I will allow him the option of raising the money to pay out his wife.
The husband must pay the wife an additional $28,000 (rounded down from $28,436) within 30 days of the date of these orders. That will be available to him through savings, the pending settlement on the R property or if need be, the sale of shares. Within 90 days from the date of these orders he must pay her $700,000 and in default of payment in full, he must transfer to her his interest in E.
In my view these orders are just and equitable in all the circumstances. The husband see less of the remaining assets than he would like, but that reflects his unilateral use and wastage of some assets since separation.
THE ORDERS
The orders I propose, subject to submissions as to form, are as follows:
1.That the husband shall pay to the wife the sum of $28,000 (“the first payment”) within 30 days of the date of these orders (“the first date”) and until the first payment is paid in full, the husband shall be restrained from selling, transferring, or further encumbering the property known as T save to effect a sale pursuant to the next paragraph of these orders.
2.That in default of the husband making the first payment by the first date then the husband shall forthwith do all acts and things to sell T and the proceeds of sale shall be applied:
(a) To pay the costs and commissions of sale;
(b) To discharge the mortgage to the ANZ Bank;
(c) To pay to the wife the balance of the first payment owing pursuant to paragraph 1 of these orders; and
(d) The balance to be paid to the husband.
3.That the husband shall pay to the wife the sum of $700,000 (“the second payment”) within 90 days of the date of these orders (“the second date”) and until the second payment is paid in full, the husband shall be restrained from selling, transferring, or encumbering the property known as E save to transfer it to the wife pursuant to the next paragraph of these orders.
4.That in default of the husband making the second payment by the second date then the husband shall do all acts and things to transfer to the wife at the expense of the wife all of his right title and interest in E and contemporaneously with the transfer the husband shall provide the wife with vacant possession of E.
5.That pending the transfer of E pursuant to the previous paragraph of these orders, the husband shall pay all outgoing rates and taxes in respect of it and shall maintain it in good condition.
6.That the Holden Statesman motor vehicle currently in the wife’s possession shall be made available for collection by the husband within 14 days from the date of these orders, together with all service records and accompanying documentation and contemporaneously with the collection of this vehicle the husband shall hand to the wife a bank cheque made payable to the wife in the sum of $16,000.
7.That the husband shall be restrained from removing or attempting to remove the said Holden motor vehicle from the wife’s possession until he has given her the bank cheque referred to in the preceding order.
8.That the Trustees of the CG SUPER PLAN, a sub plan of the M Super Trust, (hereinafter referred to as “C.G.S.P.”) is bound by these orders and required to do all such acts and things and sign all such documents as may be required to give full effect to these orders, it being noted that the Trustee was accorded procedural fairness in relation to the making of this order.
9.That the base amount allocated to the wife out of the superannuation interest held by the husband in the C.G.S.P. Fund is $171,574.
10.That, in accordance with Section 90MT(1) of the Family Law Act 1975, whenever the Trustee of the C.G.S.P. makes a splittable payment out of the superannuation interest held by the husband in the C.G.S.P., the Trustee shall pay to the wife, or her legal personal representative, the entitlement calculated in accordance with Part 6 of the Family Law (superannuation) Regulations2001, and there is a corresponding reduction in the entitlement the husband would have had but for this order.
11.That paragraph 8 of this order has effect from the operative time.
12.That the solicitors for the wife shall serve a sealed copy of this order upon the Trustee within 7 days.
13.The operative time for the purpose of this order is four business days from the date of service upon the Trustee of a sealed copy of these orders.
14.That the husband shall be and is hereby restrained by himself, his servants or agents from executing, and/or giving to the Trustee of the C.G.S.P. Fund, a binding death benefit nomination in favour of any person, or from doing any other act or thing, which would render any part of, or payment from, his superannuation interest in the C.G.S.P. Fund a “not splittable payment” within the meaning of regulations 12 or 13 of the Family Law (Superannuation) Regulations 2001 such as would defeat the wife’s entitlement pursuant to this order.
15.That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(i) Each party shall be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(ii) Monies standing to the credit of the parties in any joint bank account are to be divided equally between the parties;
(iii) Save as expressly provided for in these orders each party shall forego any claims they may have to any superannuation benefits and all other work related entitlements belonging to or earned by the other;
(iv) Insurance policies shall remain the sole property of the owner named thereon; and
(v) Each party shall 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.
16.That otherwise all extant applications pending between the parties shall be dismissed.
17.That these proceedings shall be removed from the active pending list.
18.That pursuant to the Family Law Rules this matter reasonably required the attendance of counsel.
I certify that the preceding ninety-three (93) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau
Associate:
Date: 8 March 2007
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Family Law
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