WTR and Och
[2005] FMCAfam 191
•3 May 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WTR & OCH | [2005] FMCAfam 191 |
| FAMILY LAW – Property – short marriage – initial contributions – contributions – Parshen inference discussed – examination of financial records show husband did not contribute all income for the betterment of the family – obligation to give full and frank disclosure – future needs. |
| Family Law Act 1975 (Cth), ss.75, 79 Child Support (Assessment) Act 1989 |
| In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626 In the Marriage of Clauson (1995) FLC 92-595 Jenkins v Livesey [1985] 1 All ER 106 Luciano (2000) FamCA 401 |
| Applicant: | W T R |
| Respondent: | O C H |
| File Number: | PAM 1490 of 2003 |
| Judgment of: | Ryan FM |
| Hearing dates: | 13 & 14 April 2005 |
| Delivered at: | Parramatta |
| Delivered on: | 3 May 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr A. Givney |
| Solicitors for the Applicant: | Beilby Wager |
| Counsel for the Respondent: | Ms L. Henderson |
| Solicitors for the Respondent: | Sayan & Associates |
ORDERS
Within ten weeks of the date of these orders the wife shall pay to the husband the sum of thirty two thousand three hundred and ninety four dollars ($32,394).
In the event the wife fails to comply with Order (1) the parties do all such acts and execute all such documents as may be required to effect a sale of the former matrimonial home situate in Sydney’s upper north shore “the Upper North Shore home”, in the State of New South Wales to be sold by private treaty at a price agreed upon between the parties and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee.
Upon the completion of the sale proceeds of the sale be applied as follows:
(a)To pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of the matrimonial home.
(b)Discharge the mortgage to St George Bank.
(c)Ten per cent to the husband who shall immediately pay the wife $20,356.
(d)Balance then remaining to the wife.
In the event that the matrimonial home has not been sold by or before a date six (6) months from the date of these orders then the husband and the wife shall make all such arrangements and do all such acts and sign all such documents and pay all monies equally necessary to procure a sale by public auction of the matrimonial home upon the following terms:
(a)The auctioneer shall be a real estate agent nominated by the wife;
(b)The reserve price shall, unless agreed upon by the parties, be as proposed by the auctioneer.
(c)That auction will take place within three months of this order being operational.
Each party has the right to bid at the auction.
In the event that either party fails, refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, then pursuant to s.106A, a Registrar or Deputy Registrar of the Federal Magistrates Court of Australia is hereby appointed to execute all deeds, documents and instruments in the name of the defaulting party and to do all such acts and things necessary to give validity and operation to such deeds, documents and instruments.
All exhibits tendered in these proceedings be returned at the expiration of one calendar month unless an appeal is lodged.
The solicitor who issued any subpoena collects that subpoenaed material and returns it to the owner within seven (7) days.
Subject to any application for costs all outstanding applications are dismissed.
Any costs application shall be made within twenty-one (21) days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAM 1490 of 2003
| W T R |
Applicant
And
| O C H |
Respondent
REASONS FOR JUDGMENT
These are proceedings for the adjustment of property pursuant to s.79 of The Family Law Act 1975
The application
W T R (“the husband”) started the proceedings when he filed an application for final orders on 2 June 2004. At the end of the hearing, the husband’s counsel submitted that the court should find that the husband’s s.79(4) and other contributions are between 15-20 per cent and pursuant to s.75(2) order a 5 per cent adjustment in his favour. The husband agrees that the wife should have an opportunity to pay out his s.79 entitlement and only if she is unable to do so within a reasonable time frame would the court order the sale of the former matrimonial home.
O C H (“the wife”) filed her response on 7 September 2004. In short, she said that the parties should each keep their assets and she pays the husband $30,000.
The hearing
The applicant husband relied on the following evidence:
·His application filed 7 May 2004;
·His affidavit sworn 8 April 2005 and his oral testimony;
·His financial statement sworn 8 April 2005.
The respondent wife relied on the following evidence:
·Her response filed 7 September 2004;
·Her affidavits filed 7 September 2004 and 4 April 2005 and her oral testimony;
·Her financial statement filed 4 April 2005.
Both parties tendered voluminous documents.
The issues
The principal issues raised in these proceedings are:
·Whether the wife gave full and frank disclosure;
·If not, the consequences of her failure to fully disclose;
·The period of cohabitation;
·The husband’s earning capacity;
·The significance of the wife’s materially larger initial contribution;
·What adjustment, if any, should be made pursuant to s.75(2).
Short history
The husband moved in to the wife’s home as a tenant in mid 1995. Within a few months of doing so the parties’ relationship changed and in August 1995 they became engaged and commenced cohabitation as a couple. After a few weeks the husband returned to his parents home.
Shortly prior to their wedding the wife rented the home in Sydney’s upper north shore, the “Upper North Shore home”. The rent paid for the St George Bank mortgage instalments and most of the other outgoings. During the period that Upper North Shore home was rented it was virtually financially self supporting.
The parties married on 19 November 1995. The parties resumed cohabitation and moved into the husband’s parents unit they rented at Ryde. The husband’s parents were overseas for three months. They paid the rent for the entire period before they departed, which enable the parties to live rent free for the period. Upon the husband’s parents return in January 1996 the parties moved to a rented unit at Berala. When the parties married the wife owned her home in Sydney’s upper north shore which it is agreed was worth $320,000. The home was subject to a mortgage to St George Bank of $80,000. This home was and remains the parties’ principal matrimonial asset.
The parties separated in May 1996. They disagree whether they reconciled eight months later or in December 1997. During cross-examination the husband explained that he knew the parties needed to be separated for twelve months before they could divorce. If they had separated for this period he intended to commence divorce proceedings. However, he was adamant the parties resumed cohabitation a few months before Christmas and lived together in the wife’s rented room in western Sydney. The husband agreed that on the resumption of cohabitation the parties agreed to study at TAFE. Both planned to study at the same time. Presented with the wife’s TAFE enrolment form[1] showing enrolment on 25 February 1998, the husband claimed complete memory loss concerning the issue. I do not accept he cannot remember whether the parties started TAFE and its correlation to the resumption of cohabitation. Rather, the husband seemed determined to avoid answering questions, knowing the answers would damage his case. By comparison, there are no contradictions in the wife’s evidence concerning this issue. The wife travelled overseas to visit her parents. She was unshaken concerning the period of separation and resumption of cohabitation. On balance I am satisfied the parties resumed their relationship in late 1997 and moved into Upper North Shore home together in early 1998.
[1] Exhibit F
On 17 January 2001 the husband injured his back at work.
The parties finally separated on 1 April 2001. Although separated they continued to live in the former matrimonial home. During the hearing the wife’s counsel cross-examined the husband at length concerning the hypothesis that he lived basically full time in staff quarters at a Northern Sydney Hospital between 24 April 2002 and 30 June 2004[2]. There is no doubt that he rented a room at the hospital during this period, the issue is whether he lived primarily at the hospital or the home. The wife’s counsel’s contention is inconsistent with the wife’s evidence. On a number of occasions in her affidavits the wife says that although separated, the parties resided at her home until the husband was removed by police on 3 June 2004. During this period the wife says the husband occasionally stayed overnight at the hospital. Although the husband denied that he ever stayed overnight, I am satisfied that he did. His hospital room cost $80 each week. The husband earned only a modest income and could not afford unnecessary expenditure. I do not accept that he rented the room merely to use during the day while at work. The wife did not resile from her evidence. I am satisfied that although the husband rented a room at the hospital he did not live there. During this period he overwhelmingly spent his time at the home.
[2] Exhibit E
The husband was retrenched in December 2003 and has not had paid employment since. At present he is receiving periodic workers compensation payments.
A decree nisi of dissolution of marriage was ordered on 7 July 2003. The decree nisi is predicated on separation under the one roof, commencing 1 April 2001[3]. Although sworn on 31 May 2002, the husband’s divorce application was not filed until 8 April 2003. Thus the application does not assist in deciding the parties living arrangements between end May 2002 and early April 2003.
[3] Exhibit B
The husband vacated the home in June 2004.
Altogether the parties cohabited as a couple for 47 months. The husband boarded with the wife for a short period prior to their marriage. The parties lived in the wife’s home albeit separated for
38 months.
Relevant law
The approach to the determination of an application under s.79 is well established by authority (In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595. The process involves a multiple part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in s.79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. I must then evaluate the matters contained in s.75(2) insofar as they are relevant, any other order made under the Act affecting a party or child and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide, or might be liable to provide in the future, for a child to the marriage.
One of the important issues concerns the parties’ obligation to make full and frank disclosure, which means that they are required to disclose all material facts. In Weir v Weir (1993) FLC 92-338, the Full Court said at 79,593 “This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black v Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make full and frank disclosure of their financial affairs.” See also Junti (1986) FLC 91-759 and Mezzacappa (1987) FLC 91-853. And further on: “Irrespective of any obligation created by the Family Law Act or the Family Rules that we have identified, in our opinion the obligation of full and frank disclosure applies because of the duty of the Court to consider all of the circumstances of the case. See Jenkins v Livesey (1985) 1 All ER 106. This is particularly important in cases where the financial circumstances of the parties may be relevant. It is not sufficient for a party to simply adhere to the obligations specified by the rules of court. If the relevant rules are deficient in identifying an aspect of a party's financial circumstance then this is not a basis for a plea that there was non-disclosure because the rules did not identify an aspect of a party's circumstances that may be relevant.”
In the matter of Luciano (2000) FamCA 401, O'Ryan J summarised the principles that emerge from these cases as follows.
·“In proceedings in the Family Court in relation to financial matters, there is an obligation of each party to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto.
·The obligation arises because of the necessity for the court in such proceedings to consider all aspects of the financial circumstances of each party.
·The obligation is not created by the rules or the practice of the court and the rules simply set out the procedure by which that obligation may be fulfilled.
·If there is a deficiency in the practice adopted for the purpose of making such a disclosure, mere compliance with the requirements of the relevant rules if deficient, is not enough.
·If there is non-disclosure in the relevant sense then the failure to disclose undermines the whole process of adjudication of the proceedings in relation to financial matters.
·A finding of non-disclosure may in appropriate cases, depending on the circumstances, result in the other party being granted without more, the relief sought.”
Although O’Ryan J referred to proceedings in the Family Court, the same principles apply to all financial proceedings brought under the Family Law Act 1975, irrespective of the court in which they are determined.
Assets, liabilities and financial resources as at the date of hearing
The parties agree on the value of most of their assets and liabilities.
I find the assets, liabilities and financial resources as at the date of hearing are as set out in the table below[4].
[4] Exhibit A
Unless identified differently, the figures are taken from the parties’ last financial statements.
| Assets | $ |
| The Upper North Shore Home (W) (Agreed) | 567,500 |
| Commonwealth Bank account (H) (Agreed) | 5 |
| St George Bank account (H) (Agreed) | 5 |
| 1994 Honda motor vehicle (H) (Agreed) | 8,000 |
| Household contents (H) (Agreed) | 2,000 |
| Australian Conference Association Superannuation Trust Australia (H) (Agreed) | 7,568 |
| ACA Superannuation Plan (H) (Agreed) | 4,036 |
| Compensation payment (H) (Agreed) | 7,290 |
| Redundancy payment (H) (Agreed) | 7,000 |
| St George Bank (W) (Agreed) | 2,042 |
| 181 Sercel Australia Pty Limited shares (W) (Agreed) | 5,430 |
| 400 Telstra shares (W) (Agreed) | 2,000 |
| 1988 Ford Telstar (W) (Agreed) | 100 |
| Household contents (W) (Agreed) | 1,000 |
| Add back wife’s undisclosed savings | 10,000 |
| STA Superannuation (W) (Agreed) | 21,000 |
| Commonwealth Rollover Superannuation (W) (Agreed) | 9,588 |
| TOTAL ASSETS | 654,564 |
| Liabilities | |
| St George Bank mortgage (W) (Agreed) | 40,000 |
| L N L (W) (Agreed) | 2,000 |
| ANZ Viza card (W) (Agreed) | 800 |
| TAFE fees (W) (Agreed) | 550 |
| RTA (W) (Agreed) | 233 |
| St George Bank (H) (Agreed) | 8,000 |
| TOTAL LIABILITIES | 51,583 |
| NETT ASSETS | 602,981 |
The main issue concerning the asset pool is whether the wife owes her father $66,000. The wife alleges that between 1986 and 1994 she borrowed approximately $66,000 from her parents. Primarily, these funds were advanced to enable the wife and her former husband to buy the Upper North Shore home. The wife’s mother has passed away and her father did not give evidence. During closing addresses, the wife’s counsel agreed that although the wife feels a moral obligation to repay any advances made by her parents, there is insufficient evidence upon which the court could find that she has a legal obligation to do so. Relevantly, the wife’s financial statement is silent about any debt to her father or mother’s estate. There is no loan agreement. The monies were advanced many years ago and there is no evidence of demand for repayment. Even if I was satisfied that these funds had been advanced, there is insufficient evidence to allow the court to conclude that the debt remains outstanding. As a consequence, I am satisfied that the wife does not have an outstanding liability to her father of $66,000.
After separation, but whilst the parties lived in the former matrimonial home, the husband received lump sum compensation and redundancy payments. Although he has spent the proceeds, applying the principles in Townsend (1995) FLC 92-569 the parties agree that the money should be notionally added back.
Later in these reasons I explain why I have notionally added back $10,000 undisclosed savings.
Although the wife drew down on the mortgage to pay $7,000 legal fees I was not asked to notionally add back these monies. I infer that the reason for this is that the equity in the property was significantly established prior to separation. Even so, the issue of outstanding legal fees is a relevant s.75(2) factor.
Section 79(4) contributions and other factors
Section 79(4) requires that the court looks at the entirety of the contributions, both financial and non-financial to the welfare of the family, as well as the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense. Farmer and Bramley (2000) FLC 93-060, Querasimu (1999) Fam CA1314.
In relation to the parties contributions under s.79(4) a global approach is generally adopted rather than an asset by asset approach. Neither party submitted that the court should depart from the usual global approach which approach is clearly the appropriate methodology for this matter. Norbis (1986) FLC 91-712.
At the commencement of cohabitation the husband had approximately $10,000 savings. This included $1,500 in a Commonwealth Savings Bank account held as a condition of his visa. His remaining savings were in a bank account and cash kept at home. Throughout the marriage both parties kept sizeable cash savings at home. The husband owned a 1979 Honda motor vehicle, jewellery and had meagre superannuation entitlements. The wife owned her home in Sydney’s upper north shore, household furnishing and effects worth approximately $4,500, an engagement ring worth approximately $2,100 and modest superannuation. Because the wife worked in the Australian workforce approximately ten years longer than the husband, although her superannuation was modest it was greater than his. The husband claims that while he boarded with the wife she required him to contribute to the cost of furniture and carpet she recently purchased. The wife denies doing so. Later in these reasons I explain my disquiet about aspects of the husband’s evidence concerning contributions. In this instance, the circumstances of his alleged contributions are unusual and unfortunately his overall testimony is not sufficiently compelling that I am able to determine this issue in the husband’s favour.
When the parties commenced cohabitation the wife was employed by GEC Marconi as a quality inspector. The husband was employed as a process worker with GEC Marconi. By late January 1996 the husband had resigned his employment. After 1-2 months, he obtained casual cleaning work.
The husband’s income for the period spaning the parties’ relationship is set out below:
·Financial year ending 30 June 1995 taxable income $23,113 (or $448 per week). During this year the husband paid the wife board. The parties only cohabited as a couple for about 4 weeks.
·Financial year ended 30 June 1996 taxable income $17,695 (or $340 per week). The parties cohabited for 6 months, during which the husband was unemployed for between 1 and 2 months.
·Financial year ended 30 June 1997 taxable income $17,380 (or $334 per week). The parties did not cohabit.
·Financial year ended 30 June 1998 taxable income $7,000 ($134 per week). The parties lived together as a couple for 7 months.
·Financial year ended 30 June 1999 taxable income $2,242 ($43 per week). The parties lived together as a couple the entire year.
·Financial year ended 30 June 2000 taxable income $17,639 ($339 per week). The parties lived together as a couple the entire year.
·Financial year ended 30 June 2001 taxable income $24,213 ($465 per week). The parties lived together as a couple for 9 months.
·Financial year ended 30 June 2002 taxable income $24,386 ($468 per week). The parties were separated the entire year.
·Financial year ended 30 June 2003 taxable income $25,676 ($493 per week). The parties were separated the entire year.
·Financial year ended 30 June 2004 taxable income $31,113 ($598 per week). The parties were separated the entire year.
These weekly figures are the annual taxable income divided by fifty two weeks. In some years the husband worked only part of the year and in others his taxable income increased because of lump sum payments. In those years where the husband earned above the tax free threshold taxation will have been levied. The husband’s income for either the 2002 or 2003 financial year includes $7,000 lump sum workers compensation payment. His income for the financial year ended 30 June 2004 includes his redundancy payment. Although the husband did not disclose these lump sum payments – they were only discovered via subpoenas issued by the wife - he disclosed his entire taxable income. Although regrettable, nothing turns on his failure to fully delineate the components of his total income. His failure to tell the wife and keep the money for his exclusive use is a separate issue. Cross-examined about his capacity to contribute to joint matrimonial expenses, the husband intimated that as well as declared income, he received undeclared cash wages. There is no compelling evidence that he had additional sources of income and I do not accept his evidence.
The wife’s income for the period covering the parties’ relationship is set out below[5]:
[5] Exhibit J
·Financial year ending 30 June 1995 taxable income $24,818 (or $477 per week).
·Financial year ended 30 June 1996 taxable income $32,974 (or $634 per week).
·Financial year ended 30 June 1997 taxable income $32,049 (or $616 per week).
·Financial year ended 30 June 1998 taxable income $30,537 ($587 per week).
·Financial year ended 30 June 1999 taxable income $28,585 ($549 per week).
·Financial year ended 30 June 2000 taxable income $31,542 ($606 per week).
·Financial year ended 30 June 2001 taxable income $37,961 ($730 per week).
·Financial year ended 30 June 2002 taxable income $38,560 ($741 per week);
·Financial year ended 30 June 2003 taxable income $35,561 ($683 per week);
·Financial year ended 30 June 2004 taxable income $39,163 ($753 per week).
The husband had difficulty securing employment in his chosen profession and essentially took process or cleaning work where it was available. His work history is set out in paragraph 16 in his affidavit. Although the husband had periods where he was unemployed and the parties were totally reliant on the wife’s income, his unemployment generally arose through lack of opportunity, not idleness.
One of the contentious issues is whether the husband contributed all his income to joint matrimonial expenses. The wife alone paid the mortgage and the rates. The husband says he paid half telephone and half electricity expenses and either all or about $100 a week towards groceries. He says he also gave the wife between $200 and $300 per month towards general living expenses. Other than during separations, once or twice a month he took the wife out to dinner. After the parties resumed cohabitation in late 1997 the husband also contributed to gardening expenses. He said his contributions continued during the post separation co-occupation period. It is not surprising that the husband is without corroborative evidence for expenses he claims he met. Basically he always used cash and reimbursed the wife. That the wife has records showing she paid for utilities and gardening expenses entirely merely reflects that the parties used her credit cards. These accounts do not refute the possibility the husband also contributed. The court must thus consider other evidence in order to determine this issue.
Using $250 per month as a median monthly payment means the husband contributed about $9,000 per annum to routine household expenses. In 1998 and 1999, the husband earned $11,242 and cannot have contributed $9,000 per annum. The husband made no concession that he did not contribute to the full extent claimed during these two years. Obviously he did not. This finding casts a shadow over the husband’s entire evidence concerning his financial contributions to the household. When the parties cleaned and painted the Upper North Shore home before returning to live there, they purchased paints and other hardware. I accept the husband paid half of these modest costs. The parties improved the backyard and the husband contributed half of the costs of plants and hardware. He has little recollection of actual costs and I am far from persuaded that the amount spent was anywhere near $15,000. His evidence on this issue was exaggerated. Examination of photographs shows a pretty rear garden[6] constructed from a slightly run down site[7]. However, the improvements do not involve expensive plants, turf or landscaping. While the wife probably underestimated expenditure, her far more modest figures are likely to be much closer to the mark.
[6] Exhibit G
[7] Exhibit C
Examination of the husband’s St George Bank everyday account[8] is revealing. Early in his evidence the husband said this was his only account. However, after examination of the statement failed to reveal specific deposits he disclosed he also has a CSB savings account. Before the husband started work at the Northern Sydney Hospital his account shows that he was receiving Centrelink Newstart payments.
I do not know how the husband established entitlement. The wife said the parties separated for a few weeks in 2000, which the husband denies. It appears she may be wrong about the year although correct about separation. In any event, after May 1999 the husband’s account shows regular deposits from the hospital and modest, regular cash withdrawals. Relevantly, the account balance steadily increases. On 20 May 1999 the husband’s bank balance was $35.94. By 29 June 2000 it was $8,375.45. The husband withdrew $5,000 on 1 July 2000 for a deposit on a car. On 4 July 2000 he borrowed $10,000 which he used for the car. The total cost of the car was $14,000. After the car’s purchase the husband’s account balance was $8,658. From this time on his bank balance continues to climb, with the majority of his income being saved as well as paying $552 per month on his car loan. From this period the account also shows reasonably regular $1000 withdrawals. The husband kept these monies in cash at home. This is in the period leading up to the parties separation during which it appears the husband was saving money he would use after separation. This account corroborates portions of both parties evidence. It shows that the husband spent income on household living expenses. It also shows that he did not contribute to the extent he claimed every week and that he kept a considerable portion of his income secreted. This corroborates the wife’s evidence the husband contributed financially when he felt like it and not otherwise. On balance I am not satisfied the husband used all of his income for joint matrimonial purposes in the twelve months prior to separation.
[8] Exhibit D
In Parshen v Parshen (1996) FLC 92-720 the Full Court of the Family Court held, “In our view in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to the provisions of s.79 that monies how so ever received by a party during the course of the party’s cohabitation, are used by that party for the benefit of the family unit. Such monies, in those circumstances, thus constitute a financial contribution by the party who received the money”. These principles apply during the first three years the parties cohabitated as husband and wife. As a rough guide, I have multiplied the number of months of cohabitation in each financial year by the husband’s average weekly taxable income. Excluding initial contribution this means that during the four years the parties cohabitated the husband contributed $48,965. I have rounded this down to $40,000 after deducting a portion of the lump sums the husband withdrew from his account in the lead up to final separation. Because I have used average weekly earnings, caution must be maintained as during three of these years the husband did not work a full year and in some years the parties were separated for a period. Nonetheless this calculation is a useful guide. During the same period the wife earned $117,431. Apart from their initial contributions, the other financial contributions during the period are the husband’s sole contribution of three months rent free accommodation at Ryde. Plus the wife’s rental income which paid the Upper North Shore home’s outgoings. There was a tiny shortfall paid from her salary. Because it was small and her income greater than the husband’s, his indirect contribution is miniscule. During this period the wife’s financial contributions, through earnings greatly exceeded the husband’s. Presently, the husband earns more on average each week than his average weekly income earned throughout the period. He says he cannot meet his own expenses on $328 per week even though he lives with his parents and does not pay board. This comparison shows that the husband’s financial contributions are highly unlikely to have covered his own expenses. I accept that during the 1998 and 1999 financial years the husband was heavily reliant on the wife’s financial support and his financial contributions were significantly less than his own costs. During this period the wife’s financial contributions are particularly significant. Cohabitation was actually a financial drain and her income maintained the home and substantially supported the parties.
During the period that the parties lived separately and apart in the Upper North Shore home, the husband’s contribution was no more than his half share of the electricity, telephone and his own groceries. I do not accept that he gave the wife additional payments. He kept his lump sum payments secret from her, indicating his concern to keep his money for his sole use. Throughout the period he also paid $80 per week for a room at the hospital and $552 per month on his car. He had cash savings at home, which at separation amounted to $5000. Considered with his exaggerated evidence concerning contributions during 1998 and 1999, I am persuaded that I should accept the wife’s evidence concerning his contributions during the post 1 April 2001 period. This period was totally financially advantageous to the husband. He lived more cheaply than he could have lived anywhere. He had rent free accommodation. From the wife’s perspective this was a one way street in a contributions sense. Other than the small contribution the husband made to part of his actual expenses he retained his income for his own use. The wife retained her income, but spent probably the greater part of it supporting the home and meeting household expenses. This period of financial contributions on her behalf is a matter that carries significant weight. Concerning the husband’s contributions I do not accept the Parshen (supra) inference applies during this period.
Since separation on 1 April 2001, the wife has drawn down on the mortgage by about $40,000. Between April 2004 and February 2005 alone she withdrew $36,000[9]. She has paid her solicitors $7,000, discharged credit card debts and paid the modest shortfall between her expenses and income. During cross-examination the wife initially denied that she had cash at home. As cross-examination concerning drawn downs on the mortgage continued the wife admitted that she had cash at home. She explained her money at home is private money. Initially, she said she did not know what cash amount she had at home. The wife then said she had $7,000, later claiming that it was no more than $4,000. Regrettably, the wife did not disclose any cash held at home in either of her financial statements. The wife understood her obligation to give full and frank disclosure and in this instance deliberately decided against doing so. When I suggested the court might adjourn so the parties and their lawyers could travel together to the home and count this money, the wife seemed unfazed. She appeared to accept that this course would be undertaken. Watching her reactions carefully, she seemed to portray confidence that her calculation of the funds at home would withstand scrutiny. I am unable to precisely calculate the cash amount that the wife currently has at home. It is likely to be considerably less than $40,000 and more than $7,000, probably somewhere between $7,000 and $10,000. I will address this issue further pursuant to s.75(2)(o). In these circumstances I will add back $10,000. Although this may seem harsh, in non disclosure situations the court need not be overly conservative. See Black and Kellner (supra).Too cautious an approach can lead to injustice.
[9] Exhibit N
Neither party made significant non-financial contributions to the acquisition, conservation and improvement of the Upper North Shore home. Over a period of 4-8 weeks in late 1997/early 1998 they cleaned the home after tenants vacated and painted it. This involved painting two bedrooms, the lounge room, the kitchen, bathroom and study. I do not accept the wife’s evidence that she performed the majority of the painting. The husband was unemployed and it is more likely that the parties shared the work equally. The wife is an enthusiastic gardener and encouraged the husband to help her landscape the back garden. Photographs of the back garden show that it has been well prepared and is picturesque. The wife’s description of the garden and work involved minimises the real effort both parties made. Rather than the wife’s minimalist approach, I prefer the husband’s evidence that the parties spent many weekends improving the back garden. Notwithstanding their efforts, although the results are pleasing, the landscaping has not contributed to the property’s increased value. The point is though that the work was done and is a relevant contribution.
During cohabitation the husband did most of the grocery shopping and the majority of the cooking. The wife did most of the washing, ironing and cleaning. During cohabitation their homemaker contributions are equal. After the husband injured his back he was unable to do anything around the home. This situation lasted for about six months. While he was incapacitated the wife solely cared for the home and housework. From about August 2001 the husband performed his own cooking and washing and the wife did hers. Other than his cooking and washing the husband did nothing else about the house. Thus after separation the wife’s s.79(4)(c) contribution exceeds the husbands. This is not a matter however where non financial homemaker contributions are significant.
Both parties contributed all of their assets held at the commencement of cohabitation and income during cohabitation to joint matrimonial purposes. During cohabitation, when work was available and his health permitted it, the husband worked full time. Throughout cohabitation the wife worked full time and her income always exceeded the husbands. After separation, but whilst the parties lived at the Upper North Shore home, the husband received two lump sums to which I have already made reference. As these amounts have been added into the asset pool and are notionally available for distribution they comprise a contribution on the husband’s behalf. Three months rent free accommodation is a contribution made solely by the husband. The Upper North Shore home rental income is a contribution made by the wife. The parties cohabited for too brief a period for their indirect contributions to carry real weight. To a small extent indirect superannuation contributions favour the wife.
A pivotal issue in this matter is an assessment of the weight that should be attached to the wife’s initial contribution. In Pierce v Pierce (1999) FLC 92-844. The Full Court of the Family Court held, “In our opinion it is not so much a matter of erosion of contribution, but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution”. The wife’s ownership of Upper North Shore home is pivotal to the parties’ capacity to enjoy a reasonable standard of living and build up their marital assets. Her ownership of the Upper North Shore home enabled her to increase the family income, earned through rentals that almost entirely serviced the properties outgoings. The parties had modest incomes and at no stage during cohabitation was there sufficient income to enable them to save even a deposit for a home comparable to the Upper North Shore home. During the years of cohabitation and their separations, the Upper North Shore home has significantly increased in value. There have been few improvements to the family home and it is probable that its increased value is reflective of upward movements in the Sydney property market. This is a marriage in which the wife’s initial contribution and the parties’ financial contributions are particularly significant. The wife’s submissions intimated that the husband did nothing more than pay his expenses, basically that his modest financial contribution was no greater than if he had boarded with the wife. The submission had the flavour of an argument that because the husband did not directly contribute to the home, then it followed he made no relevant contribution. This is inconsistent with the principles in Farmer & Bramley (supra) summarised above.
In Ferraro (supra) the Full Court highlighted the difficulty involved in evaluating and balancing fundamentally different contributions. It also reinforced that the court’s task includes evaluating the significance of the various contributions, the weighting of which is ultimately a matter for the court. The wife’s initial contribution of the home and its subsequent capital growth is the single most significant contribution to this marriage. Even combined, the totality of all of the husband’s contributions cannot offset the wife’s contribution of the home. In fairness, the husband does not suggest that his contributions are anywhere nearly equal to the wife’s. Not only is the wife’s total financial contributions vastly greater than the husband’s, these contributions are highly significant and must carry considerable weight. Added to this enormously significant contribution, is the wife’s greater financial contribution during cohabitation and three years after separation when the parties contributions overwhelmingly favour the wife. I have already found that overall the wife’s non-financial contributions exceed the husband’s. The non-financial contributions are, however, modest and compared to the financial contributions considerably less significant.
The orders I propose will not affect the earning capacity of either party.
There are no children and thus child support issues do not arise.
As I have already indicated I must take into account and balance all of the parties’ contributions. This means that the husband is not required to prove a nexus between his financial contributions and the home.
It is immediately apparent that this involves quantifying and balancing different activities, something that does not lend itself to mathematical precision or formulaic scheme. Nor is there an artificial separation whereby contributions initially made are inherently more valuable than those made later. Taking into account all of the matters referred to, I find therefore that the parties’ total contributions should be assessed as being 5 per cent by the husband and 95 per cent by the wife.
Section 75(2) factors
The wife is 41 years old and in good health. The husband is also
41 years old. In early 2001, the husband injured his back at work. After a reasonably brief period when he was unable to work, the husband resumed full time work as a process worker. He continued full time work until he was retrenched in December 2003. By that time, the husband’s medical practitioners had placed him on light duties. This relates to his earlier back injury, only scant details of which are in evidence. I do not know how long the current certification for light duties will continue, or the long term ramifications of his back injury. In June 2004 the husband was forcibly detained in a psychiatric ward at Hornsby Hospital. He received treatment for approximately eight days and has not needed treatment since. The absence of medical evidence creates difficulty for the husband’s contention that his health is likely to materially impact on his capacity for future paid employment. While I accept his health has created limitations to date, I cannot be satisfied that he has health difficulties long term. I make no adjustment pursuant to subsection (a).
I have already made findings about the parties’ assets and financial resources. The husband has outstanding legal fees of about $20,000 and the wife’s are paid up to trial. The parties’ income is identified in their financial statements. The husband’s sole source of income is workers compensation, from which he receives approximately $328 each week. The wife earns approximately $758 per week. She has worked with her current employer for many years, during which she has achieved promotion on a number of occasions. I infer the wife is a well regarded employee and that her financial future through paid employment is far more certain than the husband’s. Although the husband has a reasonable understanding and capacity in the English language, English is not his first language. Since migrating to Australia in 1993 he has not secured employment in his chosen profession, as a dietician. It appears he is unlikely to do so. Other than his employment at the hospital, the majority of the husband’s employment has been for block periods of about six – seven months. With an inconsistent work history, modest language difficulties, absence from the paid work force for four years the prospects that he will secure full time employment are difficult to determine. With reasonable diligence he may be able to obtain part time or casual work. The totality of his circumstances, however, warrant an adjustment in his favour pursuant to subsection (b).
Subsection (c). Does not arise.
Subsection (d). This subsection focuses on the financial needs of the parties. The husband lives frugally and his income is fully expended on day to day necessary expenses. The wife tired of living frugally and since separation has spent more than she earned on her day to day expenses. She buys nice clothes and enjoys going out. There is no evidence that suggests she is wasteful or extravagant. However, comparatively, the husband needs all of his income in order to maintain a modest standard of living. Proportionately, his necessary commitments are greater than the wife’s. In those circumstances it is appropriate to make an adjustment pursuant to the subsection in his favour.
Subsection (e). Neither party has a responsibility to support any other person.
Subsection (f). Neither party receives an allowance or income of the type referred to in the subsection.
Subsection (g). Since separation, the wife’s standard of living is unchanged. The husband’s standard of living is reduced in a sense that he no longer has the amenity of his own home and resides with his parents. However, the parties’ cohabitation was reasonably short and the husband’s living arrangements comparable to those he lived only a few years prior to separation. There is no proper basis upon which the court would make an adjustment pursuant to the subsection.
Subsection (h) – (l). These subsections do not arise.
Subsection (m). The husband lives with his parents. He does not pay rent or board and I infer that his parents subsidise his accommodation and living expenses. It is likely that they will continue to do so. Neither party contends, however, that these factors warrant an adjustment pursuant to the subsection. I agree.
Subsection (n). By virtue of my contributions finding, the wife will receive a vastly greater share of the matrimonial property than the husband. At the conclusion of the contributions phase, the husband has few assets, only moderately more valuable than he owned when the parties commenced cohabitation. Because the period during which the husband cohabited and simultaneously contributed to the acquisition, conservation and improvements of the parties’ assets is relatively short, this moderates the significantly wide gap in their asset position. Although not a weighty consideration, the factor warrants an adjustment pursuant to the subsection.
The only other matter requiring consideration is the wife failure to fully disclose her cash kept at home. It is unlikely that her non-disclosure is greater than $10,000. Balanced against the non-disclosure is my satisfaction that the monies kept at home are sourced from the wife’s income earned post-separation and contributions to the mortgage.
I have notionally added the $10,000 back into the asset pool. Because the funds are added back, I am not satisfied that there should be further adjustment under s.75(2)(o).
Having regard to all of the relevant s.75(2) factors, it is appropriate that there should be in the husband’s favour of 5 per cent. This outcome reflects the cumulative outcomes of the findings I have made pursuant to s.75(2). See Tomasetti (2000) FLC 93-023.
Section 79(2) is this a just and equitable outcome?
The outcome of the s.79(4) and s.75(2) phase has resulted in a distribution favourable to the wife 90 per cent as compared to the husband’s 10 per cent. This is a just and equitable outcome within the meaning of s.79(4). The reason is that the s.79 exercise requires that the court gives proper weight to the parties’ financial and non-financial contribution. In this regard, the wife’s initial contribution was pivotal to the parties’ financial security. The period during which the husband contributed to the acquisition, conservation and improvement of the parties’ assets is relatively short. I am not satisfied that post-separation and before he vacated the Upper North Shore home, the husband contributed more than his lump sum payments (albeit retrospectively). He used his income to meet his necessary living expenses, including repaying his car loan and had the benefit of occupation of the home without making any contribution to it. The increased valued of the home is overwhelmingly attributable to the wife’s ownership of it and the period during which any capital gain coincides with contributions by the husband is limited. Because his contributions are so limited the capital gain is a contribution made almost entirely by the wife. Not only are the wife’s financial contributions greater than the husband’s, so are her non-financial contributions. I have already explained that this is a matter in which I consider financial contributions carry greater weight than non-financial contributions. The husband’s financial future, having regard to his limited assets and opportunity for full time employment is more uncertain than the wife’s. The wife has secure appropriately paid employment that is likely to endure. When one looks at the total property and the benefits the husband has received, to confer any greater benefit on him would be a grave injustice to the wife. When all these factors are balanced the outcome is just and equitable.
Structure of the orders
The wife will be ordered to pay the husband his s.79 entitlement within ten weeks. This gives her sufficient time to make arrangements with her bank. If the wife fails to pay the money to which the husband is entitled, the former matrimonial home must be sold.
The husband has net assets including notional add backs of $27,904. Ten per cent of $602,981 is $60,298. The wife must pay the husband the difference between $60,298 and $27,904, which is $32,394. In the event she fails to do so, the Upper North Shore home will be sold. Although it has an agreed value, the net proceeds cannot be known. The net assets excluding the Upper North Shore home is $75,481; ten per cent of which is $7,581. The husband has assets worth $27,904, therefore, on the sale of the property when the husband receives his ten per cent share he will have to make an adjustment to the wife of $20,356.
The home will be sold using commonly applied orders, requiring the wife to take all necessary steps in a reasonable time frame.
Pending settlement, the wife must maintain the former matrimonial home, as well as pay rates and taxes as and when they fall due. If she defaults, she must make good the default.
In most financial matters upon making final orders I dismiss all outstanding matters. However, in this case it may be that a party wishes to apply for costs. So that this issue is determined before these orders must be complied with, I have abbreviated time under the rules for costs applications. Any party seeking costs must apply within
21 days.
For these reasons I make the orders identified at the start of this judgment.
I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate: S. Mashman
Date: 3 May 2005
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