WILDE & LEWIS

[2012] FMCAfam 545

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WILDE & LEWIS [2012] FMCAfam 545

FAMILY LAW – De facto relationship property orders sought – significant pre-relationship contributions from de facto husband’s parents – s.90SF(3) of the Family Law Act 1975 (Cth) matters which provide a weighting in favour of the de facto wife – calculation of asset pool – costs order.

Family Law Act 1975, ss.90SF(3), 90SM
Federal Magistrates Court Rules 2001 (Cth), sch.1

Applicant: MS WILDE

Respondent: MR LEWIS

File Number: MLC 2081 of 2011

Judgment of: Hartnett FM

Hearing dates: 22, 23 and 24 May 2012

Delivered at: Melbourne

Delivered on: 15 June 2012

REPRESENTATION

Counsel for the Applicant: Mr Duckett

Solicitors for the Applicant: Kelly & Chapman

Counsel for the Respondent: Mr Williams

Solicitors for the Respondent: Aaron Eidelson

THE COURT ORDERS THAT:

1. The de facto husband pay to the de facto wife the sum of $450,690.40 on or before 23 July 2012. Interest in respect of any outstanding sum shall apply at the rate prescribed in r.17.03 of the Family Law Rules 2004 (Cth).

2. Contemporaneously with the payment pursuant to order 1 hereof the de facto wife transfer all her right title and interest in the property known as and situate at Property L in the State of Queensland to the de facto husband and the de facto husband refinance the property solely into his name.

3. Each party do all acts and things and sign all necessary documents to give effect to these orders and remove any caveats to enable settlement and payment to occur.

4. Each party be and is hereby restrained from encumbering or further encumbering the real properties situate at:

   (a)Property A in the State of Victoria;

   (b)Property V in the State of Victoria; and

   (c)Property L in the State of Queensland

   save for compliance with these orders or other court order.

5. Each party indemnify the other in respect to any liabilities standing in their respective names.

6. In the event the de facto husband has not paid his one half of the valuation fees in respect of the valuation obtained for the real properties then he forthwith pay to the de facto wife’s solicitor for payment out to the de facto wife the sum of $1,320.

7. Each party otherwise retain all assets in their respective names, including superannuation.

8. There is liberty to the de facto wife to apply on short notice for the sale of Property A and/or Property V and/or Property L in the event the de facto husband fails to comply with order 1 herein.

9. Within 30 days hereof the de facto husband pay to the solicitors for the de facto wife the following sums by way of costs:

   (a)the sum of $3,500 in the de facto wife’s costs thrown away on 22 May 2012; and

   (b)the sum of $20,000 in the partial payment of the de facto wife’s costs incurred in relation to establishing the existence of a de facto relationship and being in the sum of $10,000 toward Counsel’s fees and an amount of $10,000 toward her Solicitor costs.

10. All exhibits tendered in the proceedings be returned to the applicant or the respondent after the expiration of the appeal period.

IT IS NOTED that publication of this judgment under the pseudonym Wilde & Lewis is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLC 2081 of 2011

MS WILDE

Applicant

And

MR LEWIS

Respondent

REASONS FOR JUDGMENT

1. These reasons are to be read in conjunction with reasons delivered by me in this same proceeding and on 7 October 2011. The earlier reasons supported the making by the Court of a Declaration that:

   “(1) Pursuant to ss.90RD and 4AA of the Family Law Act 1975 (Cth) a de facto relationship existed between the applicant and respondent during:

   (a)the period from April 1995 until November 2009; and

   (b)the period from July 1992 until April 1995 but not for the total duration of this period, and this being a matter to be further considered at trial.”

   Many of the factual findings that go to the history of the relationship are contained in those reasons and are not repeated here.

2. The applicant seeks property orders pursuant to s.90SM of the Family Law Act 1975 (Cth) (‘the Act’). The applicant de facto wife relies upon further affidavits sworn by her on 14 May 2012 and 17 May 2012. The respondent relies upon his earlier affidavit together with affidavits sworn by him on 8 May 2012 and two sworn on 20 May 2012. In addition, he swore an updated financial statement on 18 May 2012 and relies upon affidavits sworn by Mr H on 4 April 2012, Mr C on 17 May 2012 and Mr B, psychologist sworn on 1 May 2012. The earlier documents relied upon by the parties are as set out in the de facto wife’s outline of case document filed 23 May 2012. The parties obtained mutually appointed valuations of their three real properties such that those values are agreed. All valuations were carried out in the month of May 2012.

Asset pool

1. The asset pool is as follows:

The former matrimonial home situate at Property A in the State of Victoria (registered in the de facto husband’s sole name) (‘the Property A property’)

$715,000

Property V in the State of Victoria (registered in the de facto husband’s sole name) (‘the Property V property’)

$270,000

Property L in the State of Queensland (registered in the joint names of the parties) (‘the Property L property’)

$250,000

Shares (in the de facto husband’s name)

$21,773

Push bikes and tools (in the de facto husband’s possession)

$900

Mitsubishi Lancer (omitted) (in the de facto wife’s name)

$1,500

Ford (omitted) (in the de facto husband’s name)

$6,000

(omitted) motor bike (in the de facto husband’s possession)

$5,300

(omitted) motor bike (in the de facto husband’s possession)

$4,000

De facto wife’s distribution of $50,000 being an advance on property settlement and being borrowings over the Property V property

$50,000

TOTAL

$1,324,473

Liabilities

Mortgage over the Property L property

$89,845

Mortgage over the Property V property

$66,000

TOTAL

$155,845

Superannuation

(Note: no superannuation split was sought by either party)

De facto husband

$45,000

De facto wife

$20,000

TOTAL NET ASSETS INCLUDING SUPERANNUATION

$1,233,628

Add back: (sought by the de facto wife)

Savings at separation taken by the de facto husband

$72,348

Monies drawn down by the de facto husband post separation against the Property V property

$16,000

Proceeds of sale of Mazda motor vehicle (sold 2010)

$10,500

1. At trial the de facto husband proposed orders that he pay to the de facto wife the sum of $350,000 (he claimed this to be 35 percent of the asset pool. In fact, $431,769.80 was 35 percent and $409,019.80 was 35 percent without the inclusion of superannuation. These calculations ignored the ‘add back’ funds disposed of by him) within 90 days. Through his Counsel he subsequently did not oppose a 60 day settlement. The Court in closing indicated to the parties that a 60 day settlement period would commence from the last day of hearing being 24 May 2012. Contemporaneously, the de facto wife was to transfer her interest in the Property L property to the de facto husband and otherwise each party would retain their respective assets, superannuation entitlements and liabilities. The de facto wife, during the course of the trial, ultimately sought orders that the de facto husband pay to her a sum equal to 40 percent of the parties’ net asset pool, save for the superannuation entitlements of the parties which she sought be divided equally between the parties. The quantum of the pool as described by the de facto husband was disputed by her. Otherwise she agreed with the orders sought by the de facto husband. She also sought a costs order of $43,737.98 together with an order for her costs thrown away on 22 May 2012 by virtue of the de facto husband’s non-preparedness for trial.

2. The history of the relationship is set out in my earlier reasons. The asset pool of the parties at the time of trial is as referred to in the preceding paragraph. The parties’ current income position is that the de facto husband is employed as a (occupation omitted) in receipt of income deposed to by him on 18 May 2012 in the sum of $457 per week - $23,764 per annum gross. His expenditure significantly exceeds his income. His income is reduced currently by virtue of him having had an operation some three months ago which has significantly precluded him from working. The de facto wife is employed as an (occupation omitted) in receipt of income of approximately $37,596 per annum gross. She has the support of the parties’ son X with little assistance from the de facto husband. Recently however X was able to access funds held by the parties on his behalf. Such monies, withdrawn by him on his mother’s instructions without consultation with his father, totalled approximately $3,700. These monies were contributed to significantly by the de facto husband’s parents. The de facto husband is happy for X to have the benefit of such funds and they are not included in the asset pool. They are a form of provision for X though and more so by his father.

Contributions

1. Around the commencement of the period of cohabitation, the contributions of the de facto husband significantly outweighed the de facto wife. The de facto wife had no real assets. She had a small income, in the sum of $22,765 for the financial year ended 30 June 1993 but this income was lower than in previous years because the parties spent some part of that financial year travelling. The de facto husband was unemployed but later and in 1995 worked for “(omitted)” for two years before commencing to (occupation omitted). The parties lived in various places together and occasionally apart between July 1992 and 1 April 1995. On 1 April 1995, they took up residence in the former matrimonial home situate at Property A in the State of Victoria. The home was purchased outright with the totality of the funds provided by the de facto husband’s parents. They advanced the sum of $170,000. The parties and their son X who was born on (omitted) 1995 lived in this home until November 2009. This was a period of approximately 14 and a half years where they incurred no mortgage or rental payments. No significant renovation was undertaken in respect of this property albeit home improvements were carried out by the parties. Its value is now $715,000. This is an amount which represents just over 61 percent of the net asset pool excluding superannuation.

2. The parties concede their overall contributions were equal during the period of cohabitation up until the time of separation in November 2009, save for further cash payments made on the de facto husband’s behalf by his parents which are referred to hereafter. I note the affidavits of Mr H and Mr C relate to mainly parenting (but include some other) issues during that period, and they are supportive of the parties’ mutual concession that they contributed equally. Both the de facto husband and the de facto wife contributed directly and indirectly and equally overall to the acquisition, maintenance and improvement of their assets, and to the welfare of their family and the care of their son X during this time, save the de facto wife acknowledges in part the further direct financial contributions of the de facto husband’s parents.

3. Whilst the parties resided together the de facto husband was mainly gainfully employed and the de facto wife at home caring for their son X until she re-entered the workforce part-time and generally on a low wage in the later years of cohabitation. The parties’ combined income was never high and it enabled them to cover their necessary living expenses, some debt and little else. In 2000, the de facto husband commenced running an (omitted) business. His parents gifted him the sum of $65,000 to purchase a (omitted). In conjunction with this gift, the de facto husband borrowed the sum of $69,484 to establish the business. The de facto husband then employed at least one other (omitted) and both he, and in a more limited way the de facto wife, ran the business. In early 2004, the (omitted) business and licence was sold for the sum of $280,000. This sale was a very profitable one. Subsequently, a (omitted) business was purchased in 2006 for $32,500 (being part of the sale proceeds) to provide the de facto husband with an income. This purchase price was for the purchase of the Ford (omitted) motor vehicle owned by the de facto husband presently and for good will. In the intervening years of 2004 and 2005, the de facto husband had engaged in share trading, applying approximately $100,000 of the sale proceeds of the (omitted) and business to this endeavour. In each year his taxable income was a loss. At separation the shares held by him were in the sum of $41,938. That share portfolio now has a current further reduced value of approximately $21,773.

4. The Property V property was purchased in 2002 for the sum of $124,000 plus stamp duty and expenses. The property was purchased in the de facto husband’s sole name. A deposit of $12,400 was paid by the de facto husband and a mortgage obtained with the St George Bank. It was in excess of $100,000. The mortgage repayments were met in part by rental income, the property being continually tenanted. This mortgage was paid out by the de facto husband with the assistance of funds provided by his parents in the total sum of approximately $55,000. He then borrowed further against this property in the sum of $16,000 which he applied to his own credit card debt acquired post separation and the payment of his legal fees. The de facto husband was asked in cross-examination whether there was any credit card debt at separation and he answered that he did not know before suggesting it might be something similar to the $16,000 he had some time later drawn down. There was no credible evidence before the Court that a credit card debt existed at separation. The sum of $50,000 which was paid to the de facto wife in these proceedings as an advance on property settlement was obtained by further increasing this borrowing. All rental receipts for the property post-separation have been paid to the de facto husband.

5. The Property L property was purchased by the parties in 2004 as joint proprietors for the sum of $227,250. The de facto husband paid an amount of $120,000 towards this purchase being part of the proceeds of sale of the (omitted) business. The balance of the purchase price was obtained by way of mortgage from the Commonwealth Bank in the sum of approximately $120,000. The de facto husband has subsequently applied further lump sums totalling approximately $15,000 or $16,000, with these two further lump sums being monies given to the de facto husband by his parents. The de facto wife claimed to be unaware of these advances. The Property L property has been tenanted since purchase with the rental income exceeding the mortgage repayments by $71 per week. Such sum has been paid to the de facto husband who then applied same to the rate and other payments associated with the property. There is then a shortfall which has been met by the de facto husband, and on occasion the parties equally.

6. Post the separation in November 2009, the de facto wife and the parties’ son X have resided in rental accommodation whilst the de facto husband has remained in occupation of the former matrimonial home in Property A. He has continued thus in rent free accommodation whilst attending to rate payments and other like outgoings of the property, whilst the de facto wife (with X in her care) has expended $1,950 in rent monthly, together with other utility expenses. This is ongoing and has continued for approximately two and a half years. The de facto wife has received little by way of child support payments from the de facto husband for her support of the parties’ child X and this is a financial burden to her of the past, and will be in the future.  The current assessed amount is in the sum of $21.38 per month. In addition, in the intervening period since separation, X has spent only 64 nights overnight with his father. The de facto wife has earnt between $30,639 per annum gross and her current income of $37,596 per annum gross in the years since separation. She works a four day week with the totality of her income spent on supporting herself and X. The de facto husband has earnt little since separation, considerably less than the de facto wife and he has applied monies saved during the cohabitation period to his own needs.

Add backs

1. Dealing with the issue of the further drawdown by the de facto husband of the sum of $16,000. These monies were applied unilaterally by the de facto husband to his own debt and the payment of his legal fees. They should be added back to the pool of assets available for distribution between the parties.

2. The de facto husband sold a vehicle shortly after separation and received the sum of $10,500. He did not account to the de facto wife for same. He used such monies to generally support his lifestyle. This was at a time when the de facto wife was paying a bond, taking up rental accommodation and had the major financial support of X. Such monies should be added back to the pool with the de facto husband accounting to the de facto wife in relation to such sale proceeds.

3. At separation the de facto husband had under his control an amount of $72,348 in various bank accounts. He has expended the totality of these funds over time and failed to disclose same to the de facto wife. He has also had a share portfolio and retained all bank interest payments and dividend payments with respect thereto without any accounting to the de facto wife and has not explained in any satisfactory way the decline in the value of his shares save by reference to the poor performance of the share market generally over this time. No specific and necessary detail was provided by him. However, in the intervening two and a half years over which he has expended such funds he has earnt a low income (including his net rental receipts), lower than the de facto wife’s, and has been psychologically unmotivated to improve his financial situation. He has continued to live a relatively frugal life. To add the totality of this sum back to the asset pool would erode his entitlement to a higher share of the assets in circumstances where his parents have made significant contributions to its acquisition and he has applied funds to its maintenance post separation. There must be some accounting back to the de facto wife but of a lesser sum. This of course is a discretionary exercise but I propose to allow him an amount of approximately $26,000 for his own support and post separation maintenance of assets being approximately $200 a week over approximately two and a half years. Thus the amount to be added back shall be $45,348.

S.90SF(3) of the Act matters

1. It is important that the de facto wife and X have a standard of living that in all the circumstances, including that of a relatively lengthy relationship, is reasonable. The de facto wife remained at home and curtailed her employment opportunities to care for X and support the family unit. She continues to work part-time to provide the necessary emotional and physical support to X that part-time work affords her. She is much older than the de facto husband and shall reach retirement age sooner. The de facto husband has had available to him most of the parties’ assets since November 2009 to assist in his own support and the de facto wife has been denied this opportunity. This is because the asset pool was considered by the de facto husband as his solely and structured to give him for the most part, sole control. The s.90SF(3) of the Act matters are weighed in favour of the de facto wife but do not equal the weighting the Court gives to the contributions made on behalf of the de facto husband and in particular the effective unimproved value of the former matrimonial home.

1. The de facto wife seeks an equal division of superannuation entitlements, but in the circumstances of the case and in the de facto wife receiving a payment now with her superannuation entitlements in tact for the future, the justice and equity of an order would require that these entitlements be included in the total pool and divided as 40 percent to the de facto wife and 60 percent to the de facto husband.

2. I propose to divide the asset pool including superannuation and the ‘add backs’ referred to herein (which total $71,848) in the apportionment of 60 percent to the de facto husband and 40 percent to the de facto wife giving the de facto wife an amount of $522,190.40 some of which she has already received and is in her possession. The de facto wife has the amount of $1,500 in a motor vehicle, $50,000 in an advanced payment, and $20,000 in superannuation entitlements. The apportionment recognises the significant direct financial contributions made on behalf of the de facto husband including in particular the former matrimonial home which has increased significantly in value over time. On the other hand, there is the de facto wife’s support of the parties’ son X since November 2009 and continuing. The orders are just and equitable in that they provide an opportunity for the de facto wife to accommodate herself and X in the future and an opportunity for the husband to retain the former matrimonial home to which he has made a significant contribution through the generosity of his parents. 

Costs

1. The de facto husband’s Counsel accepted that a costs order in the amount of $3,500 be awarded against the de facto husband for the effective loss of the first day of the trial, and I so order. An additional sum of $10,000 recognises the costs of Counsel for the earlier trial which was necessitated by the de facto husband’s argument that the Court had no jurisdiction. I consider that sum appropriate with reference to this Court’s scale of costs as set out in sch.1 of the Federal Magistrates Court Rules 2001 (Cth) (‘the Rules’). The awarding of a further sum was requested by the de facto wife and considered by the Court. Costs are a discretionary matter and the Court is mandated to consider those matters set out in s.117(2A) of the Act. The de facto husband was wholly unsuccessful in, and his conduct extended, the earlier trial. But some of the evidence given on behalf of the de facto wife was not sufficiently probative and other of it was necessary for a trial as to the alteration of property interests. So all of the costs claimed should not be paid by the de facto husband in circumstances where otherwise each party would pay their own costs. The quantum claimed should also be referable to the scale as set out in the Rules. I consider a further amount of $10,000 for solicitors’ costs in the exercise of my discretion is just and equitable and takes into account the parties’ respective financial circumstances at this time and as a consequence of these orders.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Hartnett FM

Date:  15 June 2012