Zammitt and Lennon

[2009] FamCA 234

FAMILY COURT OF AUSTRALIA

ZAMMITT & LENNON [2009] FamCA 234

FAMILY LAW – PROPERTY SETTLEMENT – undefended hearing – history of the wife failing to comply with orders and case management directions – where the wife resiled from a prior agreement reached with the husband as to property settlement – where the parties’ liabilities exceed the value of the property – where the parties have incurred significant costs in the proceedings – contributions of the parties – consideration of s 75(2) factors – just and equitable to make the orders proposed by the husband

Family Law Act 1975 (Cth) ss 75(2) & 79

APPLICANT: Mr Zammitt

RESPONDENT: Ms Lennon

FILE NUMBER: ADF 196 of 2004

DATE DELIVERED: 17 March 2009

PLACE DELIVERED: Adelaide

JUDGMENT OF: Dawe J

HEARING DATE: 17 March 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms R.L. Croydon

SOLICITOR FOR THE APPLICANT: Croydons

COUNSEL FOR THE RESPONDENT: N/A

SOLICITOR FOR THE RESPONDENT: Women’s Legal Service SA Inc.

Orders

1. I make orders in terms of the minutes this day signed by me, with the amended engrossed copy to be provided for my signature later today.

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

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADF 196 of 2004

MR ZAMMITT

Applicant

And

MS LENNON

Respondent

EX-TEMPORE REASONS FOR JUDGMENT

1. This is an application by the husband in relation to property settlement.  When the matter was before me on Friday, 13 March, I ordered that the matter be heard on an undefended basis.  The wife was present at that time.  She has not appeared this morning and is not represented. 

2. I proceeded therefore to hear the matter.  I have received certain exhibits and submissions from counsel for the husband in relation to the property settlement proceedings.  Even though these proceedings are undefended, it is necessary for me to ensure that the orders that I make are just and equitable in all of the circumstances, in accordance with the provisions of the Family Law Act.

3. The provisions of section 79 require that the Court take into account matters when deciding what orders would be just and equitable in all the circumstances. 

4. In this matter it is necessary to note that proceedings have been on foot between the parties for some time.  One of the features is the lack of compliance by the mother in relation to orders and case management directions, with a view to preparing not only the financial matters for trial but the more significant issues in relation to the welfare of the children.

5. On 13 March 2009 I made final orders in relation to the two older children of the parties, M and H, which provided that they live with the father and that he be solely responsible for their future welfare.  There were certain orders made which were made at the same time, with a view to encouraging the elder children to spend time with the mother.  The question of final orders in relation to the youngest child L has been adjourned to further dates, with steps to be undertaken in the meantime.

6. The property settlement proceedings mainly involve the one significant asset of the parties; namely, the property at P.  There are substantial liabilities which are secured over that property.

7. A document filed by the wife in these proceedings in December of last year indicated there could be a final agreement which would provide for the husband to become the sole owner of the property at P on condition that he meet the securities registered over the property so far as they relate to the mortgage and his liability for Legal Services Commission debt, that the property be released from any security being the debt owing by the wife in relation to her Legal Services Commission fees.  However, when the wife appeared before me on 13 March 2009 she resiled from that prior agreement and indicated that she was not prepared to consent to orders which would put into effect that arrangement.

8. In view of the history of the matter I ruled that it should proceed on an undefended basis.

9. I therefore turn to the matters which need to be taken into account.  I set out the assets and liabilities of the parties.  The assets currently available for division are mainly the property at P, which has been the subject of an appraisal in February of this year, putting its value somewhere in the region of $72,000 to $77,000, incorporating all of the improvements which have been carried out on the property.  That amount has been averaged to $74,500.  The furniture, furnishings and other articles have been divided between the parties, and the counsel for the husband indicates that the wife retained a significant number of those. 

10. The husband also had a Holden Camira, which is now registered in his sole name.  It is estimated to be worth only $200 because it is unroadworthy and unregistered.  The material before me indicates that a 1978 Commodore was sold approximately two months prior to separation for $800 and that neither of the parties had any superannuation interest or entitlement at separation.

11. In the wife's document by way of a Statement of Financial Circumstances filed in this Court in December 2006 she refers to a 1987 Ford motor vehicle on which she puts a value of $2000 and household contents of $5000.  She also refers to an indebtedness of some $4000 in relation to S Company, which appears to relate to photographs, although the material before me does not immediately tell me when that liability for the photographs was incurred.  They are the only assets to be brought into account. 

12. The liabilities of the parties at separation included the mortgage over the property at P which was then approximately $15,000, Coles Myer credit card of over $1500, a GE credit card of $1700 and a personal loan of nearly $4600.  The current liabilities are now the remaining credit union mortgage of $13,644 and the debt due by the husband to his late mother's estate of $9000.

13. The material before me indicates that the liabilities in relation to the credit cards and personal loan were discharged by payment by the husband after separation, primarily using moneys which he borrowed from his mother.  His mother is now deceased, having died in February 2007.  Counsel indicates that he is obliged to make the repayment in order to meet the debts due in relation, in part, to the payment of the funeral for his late mother.

14. It is also significant now that the parties have incurred significant costs in relation to the Family Court proceedings.  The husband owes at least $25,000 to his current solicitors by way of costs in relation to the Family Law proceedings and the sum in excess of $27,600 to the Legal Services Commission for the provisions of services to the husband for these Family Court proceedings.  The Legal Services Commission has secured their interest over the property at P.  The wife also owes the Legal Services Commission a sum in excess of $13,700, which is also currently secured by way of a charge over the P property. 

15. It is clear from the letter before the Court, however, that, following negotiations on behalf of the husband and the wife, the Legal Services Commission have agreed to release the property from the charge which secures the debt due by the wife, retaining of course the charge which will secure the debt due by the husband if it is not paid.

16. The material before the Court also indicates that the husband has made inquiries and has been informed that he has the capacity to borrow moneys secured against the P property.  The letter from Bernie Lewis Home Loans indicates that he has the potential to borrow $54,600, if the property is transferred to his name.  Obviously the husband has to take into account his capacity to meet the repayments of any such borrowings.

17. The matter comes before me on the basis, therefore, that if the Court takes into account the averaged value of the property at P at $74,500 and then deducts from that value the mortgage currently outstanding, the debt due to the mother's estate, the debt due to the husband's solicitors and the debts due to the Legal Services Commission, these would exceed $75,200. 

18. There is therefore no equity in relation to the realisable assets of the parties.  That is a significant factor which needs to be taken into account in relation to the type of order that would be just and equitable in all the circumstances.

19. I turn to the question of contributions.  The evidence before the Court indicates that the parties commenced a relationship in 1990, married in 1995 and separated in November 2003. 

20. Nothing of significance is put to me about any disparity in relation to initial contributions or contributions during the period of the relationship.  However, there is significant reference to contributions of the parties since the separation.  In particular, the husband carried out substantial improvements to the property at P, adding essential items such as a bathroom and a kitchen, which have increased the value of the property.  In particular, an appraisal of a real estate agent says that without these improvements the property would be valued at somewhere between 30 and 40 thousand dollars.

21. The husband has also made significant contribution in relation to the family in his role as father to the children, since that time.  I do not ignore the fact that the mother has also made a contribution in relation to the care of the children, in particular the child L, from time to time and that she made a contribution during the period of the relationship.

22. I turn to what I have indicated to be the significant factors in relation to the section 75(2) factors which are required to be taken into account. The wife is now 37 and the husband is now 43. The husband is in receipt of a disability pension and has therefore a limited income and earning capacity.

23. The wife, in her evidence before me on Friday, said that she had not consulted a doctor, nor was she receiving any medication, and that had been the case since January of last year.  She is however in receipt of a parenting allowance from the government.  There is no other information concerning the current state of her health (although that information may be forthcoming if she complies with the orders of the Court which have been outstanding for a considerable period of time, relating to children's issues).

24. Both of the parties seem to be dependent upon government pensions.  Their property and financial resources are very limited.

25. The physical and mental capacity of each of them for appropriate gainful employment appears to be on an equal basis, to the extent that the husband is on a disability pension and has the need to provide for the two children who are in his care; the wife is currently in receipt of a parenting pension and is currently providing for the care of L.

26. I have already taken into account the obligations of the parties currently to care for the children and their commitments that they have in relation to the children.  Neither party has, on the evidence before me, a responsibility to support any other person other than the children. 

27. In relation to the significance of the other factors required to be taken into account, the significant factor is the need for the father to continue to be able to provide for the care of the two children in his care and the financial circumstances as previously outlined in relation to the debts owing in relation to the mortgage and Legal Services Commission. In particular, subsection (o) of section 75(2) requires that I take into account any fact or circumstance which the justice of the case requires to be taken into account.

28. This is an unusual matter in which the legal expenses of the parties are a factor which needs to be taken into account, bearing in mind that if an order were made for the sale of the property there are unlikely to be any funds currently available for division between either of the parties.  This would at the same time render the husband and older children in need of other accommodation.

29. In these unusual circumstances I am therefore satisfied that it is just and equitable to make the orders proposed by the husband.  I have not done the usual calculations of percentage divisions, which might indicate that the parties should be allocated certain percentages by way of contributions and certain percentages in relation to their ongoing needs. 

30. If that exercise were done it would not be unreasonable, for instance, to say that the wife should receive something in relation to 25 to 30 per cent of the assets based on a contributions basis.  However, when one did the calculations it would be more than appropriate to say that that small figure of 25 to 30 per cent of the net assets (ignoring the matters in relation to the husband's private costs) would be eaten away by the factors which relate to the ongoing needs of the husband to provide for himself and the two older children of the marriage.  The property will be released from the charge concerning the wife’s debt to the Legal Services Commission if the property is transferred to the husband but would not be released from that security if the property were to be sold.

31. More significantly it is appropriate to disregard any such mathematical calculation on the basis that there would be no funds to be divided between the parties if the property were sold.

32. I am satisfied that the material before me indicates that the husband's capacity to discharge the mortgage and current loans which he has, including his indebtedness to his lawyers and his Legal Services Commission and existing mortgages, such that he does not have the capacity to borrow any further funds which would allow him to make a payment to the wife. 

33. Bearing all of those factors in mind, and in particular in the unusual circumstances of this case, I make the orders for property settlement which have been provided to me in final form today by Ms Croydon. 

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe

Associate: 

Date:  30 March 2009