Ziano & Ziano

FAMILY COURT OF AUSTRALIA

ZIANO & ZIANO

[2007] FamCA 339

FAMILY LAW - PROPERTY - Settlement in relation to marriage

Family Law Act 1975 (Cth)

Sobluksy and Sobluksy (1976) FLC 90-124
Kennon and Kennon (1997) FLC 93-757
Sheedy and Sheedy (1979) FLC 90-719
Fisher and Fisher (1990) FLC 92-127 at 77,846
Kowaliw and Kowaliw (1981) FLC 91-092
Mead and Mead (1983) FLC 91-354
T & T [2003] FamCA 863

APPLICANT:

Mr Ziano

RESPONDENT:

Mrs Ziano

FILE NUMBER:

SYF

2489

2004

DATE DELIVERED:

4 April 2007

PLACE DELIVERED:

Sydney

JUDGMENT OF:

O'Ryan J

HEARING DATE:

19 and 20 March 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Stewart

SOLICITOR FOR THE APPLICANT:

Watts McCray Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Taylor

SOLICITOR FOR THE RESPONDENT:

Luk & Associates

Orders

The property settlement order made on 21 July 2006 be discharged.
Pursuant to s 79 Family Law Act 1975 (Cth):
2.1The Husband forthwith do all acts and things and execute all documents and writings necessary to transfer to the Wife unencumbered all his interest in the former matrimonial home situate at and known as E.
2.2The Husband and the Wife forthwith do all acts and things and execute all documents and writings necessary to cause the monies in the controlled monies account representing the net proceeds of sale of the investment property at M:-
2.2.1   $147,399.60 to the Husband;
2.2.2   $65,238.61 to the Wife; and
2.2.3   55 per cent of the balance (if any) to the Husband and 45 per cent of the balance (if any) to the Wife.
2.3Subject to the terms of this order each of the Husband and the Wife be declared the sole legal and beneficial owner of all other property including superannuation interests in his/her possession and/or control and/or ownership respectively as at the date of this order.
2.4The Husband do all acts and things, execute all documents and writings and pay all moneys necessary to indemnify and keep indemnified the Wife in respect of all claims. actions, suits or demands that may be made against the Wife arising out of or in relation to any financial claim against the parties and/or the Husband and/or the Wife by the Husband’s mother and/or father.

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 2489 of 2004

Mr Ziano

Applicant

And

Mrs Ziano

Respondent

REASONS FOR JUDGMENT

Introduction

Before me for hearing are applications for property settlement.

Applications

On 21 July 2006 Judicial Registrar Johnston made an order for property settlement pursuant to s 79 Family Law Act1975 (Cth). An application for review was then filed on behalf of the husband. The respondent is the wife. On 19 September 2006 the Judicial Registrar made an order staying paragraphs 1, 2, 3, 5, 6, 7 and 8 of the order he made pending the hearing of the application for review.
The final order sought by the Husband is now set out in a minute which I received during the course of the hearing. The final order sought by the Wife is set out in a minute attached to a summary of argument filed on her behalf on 16 March 2007.

Property proceedings - relevant principles

The approach to the determination of an application pursuant to s 79 of the Family Law Act is well established by authority. Section 79(2) provides that I shall not make an order under the section unless I am satisfied, in all the circumstances, that it is just and equitable to make the order. I am required in considering what order, if any, I should make to take into account the respective contributions of the parties referred to in paragraphs (a), (b) and (c) of s 79(4); the effect of any proposed order upon the earning capacity of the parties; the matters referred to in s 75(2), so far as they are relevant; any other order made under the Act affecting a party or a child; and any child support under the Child Support (Assessment) Act1989 (Cth).

Introductory overview of proceedings

I received a joint case summary document which I was told exhaustively sets out all of the relevant marital and financial history. I also had the benefit of a summary of argument filed on behalf of each party.
The Wife was born in May 1963 and the Husband was born in July 1967. The parties were married in April 1994. They separated in February 2004.
There are two children of the marriage, an elder son born in November 1996 and a younger son born in April 1999. Final parenting orders were made on 5 August 2004.
There are issues in relation to the extent and value of the assets of the parties. It is agreed that the parties have assets of a gross value of $1,617,128.68. However, there is an issue as to what unsecured liabilities should be included when determining the net assets. The Husband contended that I should deduct a total of $233,878.72 whereas the Wife contended I should deduct $152,743
As to the matters of contribution being the matters in s 79(4)(a), (b) and (c) of the Act the Husband’s case is that I should assess the contribution based entitlements of each party expressed as a percentage of the current net assets of the parties at 70 per cent to the Husband and 30 per cent to the Wife. The Wife’s case is that I should assess the contribution at 55 per cent to the Husband and 45 per cent to the Wife.
As to what I often refer to as the ‘other factors’, being the matters in s 79(4)(d), (e), (f) and (g) of the Act the Husband’s case is that if I made the finding as to contribution based entitlement sought by him then there should be an adjustment in favour of the Wife having regard to these other factors of five per cent of the net assets. The Wife’s case is that if I made the finding as to contribution based entitlement sought by her then there should be an adjustment in her favour, having regard to the other factors, of 15 per cent of the net assets.
The Husband seeks an entitlement of 65 percent of the net assets and sets out his reasons in the summary of argument filed on his behalf. The Wife, for reasons set out in the summary of argument filed on her behalf, seeks an entitlement of 60 per cent.
The Husband contended that the significant matters which support his entitlement to a greater share of the net assets are his contribution of the greater assets he had at the commencement of the relationship and the contributions made by his parents.
There are also issues in relation to how the entitlement of each party should be satisfied. In particular this relates to which party should receive the matrimonial home.
The parties have incurred costs well in excess of $250,000. The Wife has paid legal costs of $61,009. According to her costs memorandum (Exhibit C) she will incur a further $62,750 which includes counsel’s fees for the hearing before me. Thus the Wife has anticipated total costs of $123,759. To pay her costs the Wife obtained $22,409 from her sisters and $38,600 from G Pty Ltd. The Husband has incurred legal costs and disbursements up to and including the first day of the hearing of $116,281.93. As well, there are unbilled costs of $7,314.12 and further costs up to and including the conclusion of the hearing of in the vicinity of $2,500 to $4,500. According to the costs memorandum of the Husband (Exhibit B) it is estimated that including goods and services tax the Husband will incur further costs during the final hearing of $8,910 for counsel, $2,970 for further work undertaken by counsel, $7,623 for costs of the instructing solicitor’s appearance and $1,221 for the costs of a law clerk. The Husband has anticipated total costs of $142,771 or $144,771. According to the costs memorandum the Husband has paid $101,447.77 of which $96,187.77 has been paid by his parents, his brother and an aunt.

Background

The parties were married in April 1994. The Husband contended that at the commencement of the relationship he had savings of a total of $294,842.04. He also had a motor vehicle and a superannuation interest. The Husband attached to his affidavit a copy of a record from the National Australia Bank of a term deposit no. … for $25,808.27 which was lodged for a term of 30 days to mature on 23 March 1994. The Husband also attached a copy of a National Australia Bank record of term deposit no. … for $267,899.17 lodged for a term of 30 days and due to mature on 22 April 1994. There was also in evidence a copy of the Husband’s income tax return for the year ended 30 June 1993 disclosing that in this year he had interest income of $15,424. He also had interest income in the year ending on 30 June 1994. I am satisfied that the Husband had significant assets at the commencement of the relationship.
The Wife contended that at the date of marriage she had savings of approximately $18,000 in an account with Advance Bank, as it was then known, and an account with N Investments. In February 1994 the Wife received $10,400 from an insurance theft claim. I accept the Wife’s evidence as to the assets she had at the commencement of the relationship.
The Wife contended that the parties received about $8,000 in wedding gifts and in cross-examination this was admitted by the Husband.
Between 1985 and July 2004 the Husband worked at P Company as an electrician and auto electrician. The Husband commenced with P Company as an apprentice auto electrician.The Husband is also a licensed mechanic.
At the commencement of the relationship the Wife was working full-time as a sterile technician at A Company where she remained until August 1996. The Wife had previously worked as a telemarketing consultant and a sales and promotions manager.
After the parties were married they resided at R Company which was owned by the Husband’s parents. The Husband contended, and I accept, that the parties lived in this unit for about six months rent free.
During the relationship the Husband was always in paid employment and the Wife was in paid employment from time to time. In his affidavit of March 2005 the Husband set out a schedule which he contended disclosed his gross income, including rental income for the financial years ended 30 June 1994 to 30 June 2004. It becomes necessary to look at his tax returns because the schedule did not include taxable income. The Husband conceded that it did not disclose taxable expenses or any tax refunds. For these reasons I found the schedule unhelpful. The Wife provided a schedule of her taxable earnings for a number of financial years.
In mid October 1994 the parties purchased the matrimonial home at E for a price of $290,000. The Wife became a joint tenant of the home in December 1994.
In his affidavit the Husband contended that in order to pay the costs of purchasing the E home he obtained a loan for $130,000 from his parents and the balance he contributed from savings he had at the commencement of the relationship. The Husband said that he also paid all legal costs and stamp duty. I accept the Husband contributed to the equity in the home funds he had at the date of marriage. However, there is an issue as to the amount of the loan from the Husband’s mother. The Wife gave evidence that the Husband told her that an amount of $150,000 was borrowed from his mother. Ms Z gave evidence that in mid 1998 the Husband’s mother told her that she had lent the parties $150,000 for their first home which they had already paid.
The loan from the Husband’s mother whether for $130,000 or $150,000 was repaid within three and a half years. The Husband contended that the Wife did not contribute to repaying the loan from his parents and the loan was repaid from his wages. Evidence was given by the Husband’s mother, Mrs Z that the loan for $130,000 was repaid “in cash” over approximately four years although there was no regular schedule of repayments. The Wife contended that she deposited her earnings to the credit of a joint account with the M Credit Union and the Husband’s earnings were used to repay the loan from his mother. I accept the evidence of the Wife. Ms Z gave evidence that in 1996 the Husband told her that the parties were living off the Wife’s wages and repaying the Husband’s mother from his wages. In cross-examination this was admitted by the Husband.
In May 1996 the parties purchased a painting by a famous Australian artist for $340.
In 1996 the Wife ceased employment with A Company and in November 1996 the elder son was born.
In July/August 1997 the Wife commenced a business called “[M Company]”.
Between March 1998 and June 1998 the Wife undertook casual employment with F Pty Ltd.
On 8 March 1999 the parties purchased at auction a property at M1 and M2 (one title) for a price $414,000. The Husband contended that he contributed approximately $18,000 from his income and borrowed an amount of $350,000 from the National Australia Bank. The Husband contended that on 8 March 1999 his parents paid $41,400 being the 10 per cent deposit and on 31 March 1999 they paid an amount of $22,600 which was the balance required to complete the purchase. The Husband contended that the amounts paid by his parents were loans. The Wife admitted that the Husband’s parents provided $64,000 but she contended that this was a gift.
Between March 1999 and February 2000 the parties renovated the M properties. The Husband and his mother gave evidence about the work done.
The Husband contended that between March 1999 and February 2000 his parents paid a total of $60,443.99 for renovation expenses. In addition, on 12 October 1999 the Husband’s parents lent the parties $10,000 to assist with the payment of costs of the renovations. Thus the Husband contended that the parties received $70,443.99 from his parents to pay for the renovations. The Wife disputed the total amount received. The Wife also disputed that any of the payments were loans.
In his affidavit the Husband contended that the expenses were paid for by his parents “in cash as required during the renovation process. My mother gave me all receipts and invoices they had in respect of the costs they incurred so that we could keep records for tax purposes”. The Husband contended that all these records were left at the former matrimonial home which he vacated when the parties separated. He contended that the receipts were kept and filed by the Wife during the renovations. He also contended that his tax return does not reflect all expenses incurred with respect of the M properties in the first year. He said this was because most of the fixtures were replaced by new materials that would render them as capital expenditures and thus could not be claimed as maintenance or repairs which could then be claimed as deductions in the parties’ income tax returns. I have some difficulty with this evidence. The properties were acquired as an investment and given the liability for capital gains tax I would assume that accurate and reliable records were kept of all expenditure given the liability for capital gains tax on any capital gain.
The evidence is very unsatisfactory. The parties agree that renovations were undertaken in relation to the M properties. However, there is an issue as to the cost and the source of money to pay this cost. The Husband’s mother attached to her affidavit a schedule which in my opinion is inadmissible and no primary documents were produced. In his tax return for 30 June 1999 the Husband claimed $10,106 for repairs and maintenance which included $3,997 for fencing and $4,381 for hardware items. I do not know if these amounts are included in the amounts said to have been paid by the Husband’s parents for so called capital expenditure as opposed to maintenance and repairs. It is agreed that the parties will pay capital gains tax on the capital gain from the sale of the two properties and an accountant has calculated that the total acquisition costs include a total of $45,500 for the costs of renovations. In conclusion, I accept that the Husband’s parents provided funds to assist with the payment of the costs of renovations of the properties and that the amount received was not less than $45,500. I am not prepared to make an allowance for amounts greater than the amount that will be disclosed to the Australian Taxation Office.
The Husband also contended, and I accept, that he undertook physical work in respect of the renovations to the M properties over a period of approximately 12 months. The property was purchased as one house but was originally built as two semi-detached properties. At the time of purchase there was only one title. The property was in a dilapidated state and required extensive renovations. The Husband gave evidence of the type of work which he and his parents undertook with the assistance of his brother which included installation of a new kitchen, replacing ceilings and extensive plumbing work. I am not going to set out all of the categories of work undertaken. The Husband said, and I accept, that the parties also employed contractors for bricklaying, cement rendering, tiling, concreting, roof repairs, floor polishing, carpet laying and fencing and that he supervised the subcontractors. The Husband contended that he would go to the property almost everyday, when his employment and family commitments permitted, to work at the property. He also said that his parents worked very hard in relation to the renovations as did other members of the paternal family. I accept the Husband’s evidence as to the physical work done by him and members of his family.
The property became known as M1 and M2 and when both properties were rented the total rent was $650 per week. The Husband contended that at the time the mortgage instalments were $388 per week. Thus, subject to other expenses, the parties had a net return after payment of the mortgage.
In April 1999 the younger son was born.
In 2000 the Wife established a business selling “knick-knacks” at a local market on weekends.
In 2002 the elder son started primary school and the younger son started attending pre school three days per week.
In 2002 the Wife undertook a course of study for three days per week at a TAFE for a real estate management diploma. As well, during this period the Wife worked part time at a real estate agency called X Company. I note that according to his tax returns for 30 June 1999 and 30 June 2000 the Husband also undertook a TAFE course.
In August 2003 the Wife established a real estate agency business called “[D Company]” in partnership with Ms N. The partners renovated office premises to be occupied by the agency and the Husband undertook considerable work in relation to these renovations.
The Husband contended that in November 2003 the parties borrowed $7,038.45 from his parents to pay land tax bills on the M properties.
The Husband contended that from mid November 2003 to mid February 2004 during the school holidays he was primarily responsible for caring for the children. He contended that he took annual leave and long service leave along with his rostered days off to enable him to undertake this task.
The Wife contended that prior to separation the children were attending after school care for at least six months which both children enjoyed. However, after separation the Husband continued to use the after school care services without any contributions towards the cost. The parties had a telephone conversation during which the Wife requested that the Husband provide the Wife with some money to pay for the after school care and the Husband refused. He told the Wife that he did not want the children going to after school care. However, the children continued to attend after school care and the Wife paid the cost. However, after approximately five months the Wife had to take the children out of after school care as she could not afford the continuing cost. After the parties separated the Husband ceased depositing monies to the credit of the joint account.
The parties separated in February 2004. When the parties first separated the Husband lived with his brother at L. The Wife remained in the matrimonial home.

The Husband contended that on 5 March 2004 he paid $400 in respect of the mortgage on the M properties.
After separation the Husband ceased making any contribution to the joint account and the Wife contended that she had to borrow money from her family to support the children. The Husband disputed that the Wife had to borrow money from her family to support the children. The Husband contended that the Wife had two bank accounts with the Commonwealth Bank and at the time of separation the Wife had a total of $11,500 in these accounts.
The Wife contended that after separation the parties had a telephone conversation during which the Husband said that he would be collecting the rentals from the M properties and the Wife did not agree and said that the rent should be split between them. The parties however, were unable to agree and finally the Husband said that he would look after M2 and the Wife could look after M1 and the Wife agreed. At the time M1 was vacant and the Wife then located tenants for the property and a lease commenced on 27 March 2004 for a rental of $320 per week. The Wife paid the council and water rates for the properties from the rental income she received and other expenses.
Between 27 March 2004 and 25 August 2008 the Wife collected the rent from M1 being $320 per week.
The Husband contended that after separation for approximately three months he collected the rent from M2 and applied the income towards payment of the mortgage. This evidence appears to contradict other evidence in relation to arrears of the mortgage and alleged loans from the Husband’s parents.
In April 2004 the Husband withdrew funds from the joint M Credit Union account.
The Wife contended that in April 2004 the Husband threatened to leave his employment if the Wife pursued child support payments. The Wife contended the parties had a conversation during which the Husband, amongst other things said that if the Wife continued with her request for child support then he would leave his employment and open up his own business and “I will make sure that you don’t get a cent”. This was denied by the Husband in cross examination. However, the Wife telephoned the Child Support Agency and reported what the Husband had told her.
In May 2004 the Husband commenced to live with his parents in their home at G. It is a 6 bedroom home. The Husband’s parents are now living elsewhere.
The Husband contended that in May 2004 the tenants of M2 vacated the property and at the time the loan from the National Australia Bank was in arrears in the amount of $2,489.69. An issue that arises is the reason why arrears had accrued. In any event, subsequent to May 2004 there was considerable correspondence passing between the parties’ respective solicitors in relation to the rental of the M properties. The Wife was requesting that the properties be rented and the Husband did not agree at least in relation to M2.
The Husband contended that on 29 June 2004 his parents lent the parties $4,043.28 to pay the M mortgages. The Husband contended that at the time the arrears in respect of the mortgage on the title of these properties were $4,043.28. He contended, as previously seen, that the mortgage instalments were $388 per week. The rent from M1 was $320. The Husband contended that the total rent for both properties was $650 per week. Thus, it follows that the rent from M2 was $330 per week. On the basis that the Husband was receiving the rent from M2 and the Wife was receiving the rent from M1 then there was a deficiency of approximately $58 per week in respect of the mortgage instalments. I struggled to understand why the arrears of the mortgage became $4,043.28.
The Husband also contended that on 20 July 2004 his parents lent the parties $1,555 to pay the M mortgage.
On 28 July 2004 the Husband resigned from his employment with P Company. The Wife contended that the Husband left employment to avoid child support as threatened. The Husband contended that he left his employment in order to regain shared care of the children of the marriage.
The Husband contended that after he ceased employment with P Company he commenced a business called “Y Company”. The business provides services as a qualified electrician and auto electrician. The business has not been a success.
On 5 August 2004, after a hearing on that day, Lawrie J made the following parenting orders:
1.      That Orders 2, 3 and 5 of 28 June 2004 are vacated.
2.      That the two children of the marriage, namely [an elder son] born [in] November 1996 and [a younger son] born [in] April 1999 shall reside equally with both parents as follows:
a.in alternate weeks from after school on Monday to before school on the following Monday with the formal residence of the children changing at noon on Monday
b.with the parent who does not have the residence of the children to have contact with the children by collecting the children after school on each Wednesday and returning the children to the school on each Thursday
c.in relation to the short school holidays, the parent who has the residence of the children on the last day of school shall have the children in the first week of the short school holidays and shall deliver the children to the other party on Monday morning at 9.00 am on the middle day of the holidays
d.in relation to the Christmas holidays, the parent who has the children on breakup day is to have the first of the holidays and the same will apply midway through, the children are changed over.
3.      That either party may telephone the children at the home of the other parent at any reasonable time.
4.      That the parties may vary the above orders by agreement in writing to accommodate holiday contact and other special events.
The Husband contended that on 11 August 2004 his parents lent the parties $1,555 to pay the M mortgage.
On 25 August 2004 orders were made to the effect that the parties sell the properties at M1 and M2. Pending the sale of the properties the Husband was to collect the rental and use it to meet outgoings including meeting the mortgage instalments. The parties were required to contribute in equal shares to any shortfall between the income and expenses.
After 25 August 2004 the Husband collected the rent from both M1 and M2. From May 2004 the property at M2 was vacant. The Husband contended that he collected the rent which was used to pay the mortgage and other outgoings on the properties.
In February 2005 the parties received an offer to purchase M1 for $517,000. The Wife gave evidence of a conversation the parties had about the offer and the Husband refused to accept the offer. The Wife was prepared to accept the offer. The Husband subsequently changed his mind and indicated that he was prepared to accept the offer however, the prospective purchaser was no longer interested in acquiring the property. It was subsequently sold in April 2006 for a price of $450,000.
In August 2005 the Wife ceased employment/operation of real estate business.
In October 2005 the Wife commenced employment with an agency called “[W Company]”.
Between October 2005 and 21 February 2007 the Wife was employed on a casual basis as a process worker by C Company.
In April 2006 the property at M1 was sold for $450,000. The net proceeds after payment of the mortgage and all other outgoings was placed into a controlled monies account with a Family Law firm in the joint names of the parties in the sum of $210,271.80.
On 21 July 2006 Judicial Registrar Johnston made an order pursuant to s 79 of the Act after a two day hearing on 4 and 5 May 2006.
On 22 February 2007 a contract for sale of M2 for a price of $480,000 was exchanged.
On 26 February 2007 the Wife obtained casual employment working two days a week for L Company. She received $208 net per week. She has recently terminated this employment but hopes to reinstate the position if one is still available as soon as these proceedings are concluded.

Financial circumstances

The first step is to determine the extent and value of the assets of the parties at the time of the hearing.

Issues – financial circumstances

It is agreed that as at 30 June 2006 the Husband’s superannuation interest had a withdrawal benefit of $274,619.47. The interest probably has a greater current value because in the year ended 20 June 2006 the value of the interest increased from $252,770.598 as at 1 July 2005 and this included investment earnings of $21,608.
There is an issue about the whereabouts of the famous Australian artist’s painting which had been in the former matrimonial home. The parties attended an auction in May 1996 and purchased three items. One was a the above oil painting for which they paid $340. It is clear that the painting had been hanging in the former matrimonial home. The Wife contended that the Husband removed the painting when he attended the home approximately one month after the parties separated. The Husband denied that he removed the painting and that he has it in his possession. The Judicial Registrar was unable to resolve this issue and I am in the same position. The evidence does not enable me to make a finding against the Husband about this matter. In any event, as the Judicial Registrar said even if the Husband has possession of the painting, under the orders I propose to make the Wife will have the enjoyment of most of the contents of the former matrimonial home.
The Husband seeks that an amount of $158,635.72 be included as a liability of the parties to his mother or parents. The Husband and his mother contended that the parties have borrowed the following amounts:
·8 March 1999            Deposit for M Property  $41,400
·31 March 1999           Balance of purchase of M property  $22,600
·1999-2000                 Renovation of M property  $60,444
·12 October 1999        Repayment of loan from Wife’s sister  $10,000
·November 2003          Amounts for payment of land tax  $17,038
·29 June 2004             Mortgage instalment  $4,043
·20 July 2004              Mortgage instalment  $1,555
·11 August 2004         Mortgage instalment  $1,555
I am satisfied that the Husband’s mother or parents provided $64,000 to assist with payment of the costs of purchase of what became M1 and M2 properties. The amount has not been repaid. There is no evidence of any loan agreement made between the Husband and or the Wife and the Husband’s mother or parents in relation to the repayment of this amount. There is no evidence that any demand or request for repayment has ever been made. I note that the Husband’s Mother contended that she spoke to the Husband and said that it was “fair” that when the M properties were sold that the amounts be repaid. The Husband gave no evidence about this conversation. The only evidence of any discussions between the parties about repayment of the amounts is from the Wife who contended that the Husband said that unlike the loan to acquire the matrimonial home the parties did not have to pay back the loans for the M properties. The Wife’s version is corroborated by the fact that unlike the loan for $130,000 or $150,000 no repayments have been made of any portion of the amounts lent to purchase the M properties. I have no doubt that if it were not for the separation of the parties then no issue of repayment would have arisen. However, notwithstanding the absence of evidence I will allow for the amount in the liabilities of the parties and by so doing it will have a significant bearing on how I treat this amount as a contribution by the Husband.
I am satisfied that the Husband’s mother or parents provided not less than $45,500 to assist with payment of the costs of renovation of what became M1 and M2 properties. However, as with the amount of $64,000 the amount has not been repaid. There is no evidence of any loan agreement made between the Husband and or the Wife and the Husband’s mother or parents in relation to the repayment of this amount. There is no evidence that any demand or request for repayment has ever been made. No repayments have been made of any portion of the amount. There is no evidence of any discussions between the parties about repayment of the amount. I have no doubt that if it were not for the separation of the parties then no issue of repayment would have arisen. However, as with the amount of $64,000 notwithstanding the absence of evidence I will allow for the amount in the liabilities of the parties and by so doing it will have a significant bearing on how I treat this amount as a contribution by the Husband.
There is then the amount of $10,000 paid on 12 October 1999. The Husband’s mother said that it was a further loan to enable the parties to repay a loan from the Wife’s sister. The Husband gave no evidence about a loan from the Wife’s sister and he simply said that the amount was a further loan towards the renovations. However, the Wife gave evidence that her parents gave the parties an amount of $5,000 and then the Husband’s father came to the parties’ home and gave the parties $10,000 which he said was a gift. The Mother gave evidence of the conversation the parties had with the Husband’s father. No evidence was given by the Husband’s father. I accept the evidence of the Wife.
There are then the amounts of $17,038 said to be loans for the payment of land tax. The Husband said that the amount was $7,038.45 and the Husband’s mother said it was $17,038.45. This discrepancy was not explained. However, the Judicial Registrar found that the amount was $17,038. As well, no evidence was given explaining why the payments were made by the Husband’s parents. The payments are said to have been made in November 2003 and thus they were made before separation. The evidence is very unsatisfactory. The Husband’s tax return for 30 June 2003 reveals total rental income of $7,540 and property expenses of $9,966 which include a payment of $7,955 for land tax. The Wife’s income tax return for 30 June 2003 reveals rental income of $8,580 and property expenses of $2,547. Thus I assume that the total rental income was $16,129 and total expenses of $12,513. The Husband’s tax return for 30 June 2004 reveals total rental income of $7,074 and property expenses of $12,819 which include a payment of $4,259 for land tax. The Wife’s income tax return for 30 June 2004 reveals rental income of $7,425 and property expenses of $5,605. Thus I assume that the total rental income was $14,499 and total expenses of $18,325. There is no corroborative evidence about the payment or why it was made.
There are then the mortgage instalment payments made after separation of a total of $7,153 in June-August 2004 being payments of $4,043, $1,555 and $1,555. The evidence about the rental of the M properties is also very unsatisfactory. However, at the conclusion of the hearing I was given a schedule that suggested that between March and August 2004 the Wife received gross rental income of $7,360 and after expenses received a net $5,789. In the period February 2004 to May 2004 the Husband received gross rent of $3,960 and made five payments of $1,555 in the period March to August 2004. However on the basis that the Husband’s parents paid $7,153 then on one view the Husband made no payments and retained the gross rental income. The Husband ceased to make payments to the joint account at the time of separation and did not resign his employment until the end of July 2004. He gave no evidence explaining why the amount of $7,153 had to be borrowed from his parents. The evidence is unsatisfactory.
The Wife contended that I should include as liabilities the following amounts:
·Credit card  $12,500
·Loan from Ms C  $25,000
·Loan from Ms G  $40,000
These amounts are disputed by the Husband.
As at May 2006 the Mother contended that the following amounts be included:
·Credit card  $12,500
·Loan from Ms C  $25,000
·Loan from Ms G  $5,000
In her recent financial statement the Wife contended that she had the following liabilities:
·Income tax assessed  $42,226
·G Company  $43,000
·Credit card  $12,500
·Loan from Ms C  $25,000
·Loan from Ms G  $40,000
·Legal costs  $35,000
As seen the Wife’s costs memorandum reveals that she had paid legal costs of $61,009 and to pay her costs she obtained $22,409 from her sisters and $38,600 from G Company. This evidence is also unsatisfactory. However, I accept that although the Wife remained in the matrimonial home she has had very limited income from employment and that she has had to borrow funds to meet living expenses. The Husband ceased to make payments to the joint account at the time the parties separated. The Wife has had limited income since that time.
Notwithstanding the unsatisfactory state of the evidence I have come to the conclusion that I will include as liabilities the amounts of:
·Purchase of M property  $64,000
·Renovations loans  $45,500
·Payment for land tax  $17,038
·Mortgage instalments  $7,153
·Credit card  $12,500
·Loan from Ms C  $25,000
·Loan from Ms G  $40,000
In my view, this is a just approach given the concerns about the loans for the payment of land tax and mortgage instalments, the significantly greater income of the Husband in the period February to late July 2004, the Wife’s limited income and the lack of evidence as to how the amounts borrowed were expended.
Both the Husband and the Wife have incurred a capital gains tax liability in respect of the sale of the investment properties M1 and M2 and the quantum of such liabilities was agreed. As well, it is agreed that an amount of $7,950 should be included for the costs of sale of M2.

Conclusion - financial circumstances

In my opinion, for the purposes of these proceedings, the parties have the following assets and liabilities:
Assets$
·Former matrimonial home (h/w)  630,000.00
·Anticipated proceeds of sale of M2 property (h/w)  480,000.00
·Controlled money account as at 15.3.07 (h/w)  212,638.21
·Holden Commodore Motor vehicle (w)   2,000.00
·Mazda motor vehicle (h)   1,700.00
·Furniture and contents (w)  10,000.00
·Furniture and contents (h)  685.00
·Savings (h)  30.00
·Savings (w)  485.00
·Superannuation interest (h)            274,619.47
·Superannuation interest (w)              4,971.00
Total1,617,128.68
Less
Liabilities
·Loans from Husband’s parents (h)  133,691.00
·Credit card (w)              12,500.00
·Loan from Ms C (w)              25,000.00
·Loan from Ms G (w)              40,000.00
·Estimated legal costs/expenses associated re sale of M2 property (h/w)               7,950.00
·Capital gains tax payable (h)  30,911.00
·Capital gains tax payable (w)       36,382.00
Total  (286,434.00)
Balance$1,330,694.68

Contribution

The period of cohabitation was about 10 years and there are two children of the marriage
At the commencement of the relationship the Husband had significantly greater assets than the Wife including a superannuation interest.
After the parties were married for a period of time they had the benefit of occupation of a property owned by the Husband’s parents.
I am satisfied that the Husband’s mother or parents lent the parties at least $130,000 or $150,000 to pay for the purchase of the matrimonial home and although the loan was repaid within a short period it remains a matter of contribution which I take into account on behalf of the Husband. It provided the parties with the opportunity to acquire the home.
The Wife has paid outgoings on the former matrimonial home since separation but she has also had occupancy of the home since that time.

I am satisfied that the Husband’s mother or parents provided $64,000 to assist with payment of the cost of purchase of what became M1 and M2 properties and $45,500 to pay for the renovations. Although the amounts will be repaid they remain a matter of contribution which I take into account on behalf of the Husband. However, the weight that I give to these contributions is significantly less than the weight I would have given to the payments if they had been treated as a gift.
I take into account in favour of the Husband the gift of $10,000 which the parties received from the Husband’s father to pay for the costs of the renovations of the M properties.
I take into account in favour of the Wife the amount of $5,000 received from the Wife’s parents that was used to pay the costs of the renovations of the M properties.
Both parties were working at the outset of the marriage. The Husband continued to work full time throughout the marriage until after separation. Over the period he earned a significantly greater amount of income than the Wife.
There is then the issue of gambling and the funds spent by the Husband on his motor vehicle hobby. The marital conduct of parties is not specifically referred to in s 79 of the Act and as a general proposition the marital behaviour of parties is not of itself relevant to applications under s 79:-Sobluksy and Sobluksy (1976) FLC 90-124. However, there may be circumstances in which marital conduct may be relevant and taken into account. If the conduct of a party towards the other had a significant adverse impact upon the other parties’ contributions to the marriage or made the other parties’ contributions more arduous than they ought to have been then this may be relevant:-Kennon and Kennon (1997) FLC 93-757. As well, certain types of behaviour which have a direct connection with financial matters may be relevant. In Sheedy and Sheedy (1979) FLC 90-719 Nygh J. said at 78,872 that conduct may be relevant “…if it has financial consequences, such as financial misbehaviour resulting in the waste or suspension of family assets…”:-see also Fisher and Fisher (1990) FLC 92-127 at 77,846. In Kowaliw and Kowaliw (1981) FLC 91-092 Baker J. said at 76,644:-
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of the marriage whether such losses result from a joint or several liability should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
(c) Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
Examples of this type of conduct may include circumstances where the drinking and gambling of one party has led to the failure of a business or the dissipation of assets. In Mead and Mead (1983) FLC 91-354 the marriage had lasted approximately 20 years and Asche S.J. found that throughout the marriage, and particularly the time the parties conducted a business, the husband although he earned money and bought it into the household spent by far the greater part of that money on himself in drinking and betting and, was a positive detriment to the wife in her attempts to conduct the business. Asche S.J. found at 78,369 that the conduct of the husband was relevant to the extent of the financial contributions of both parties. In Kowaliw and Kowaliw (supra) Baker J. also said at 76,644-645:
It does seem to me however that if a party has either by deliberate act or by economic recklessness reduced the value of assets available for distribution then the economic consequences which flow therefrom, including the resultant burden to the other party are directly relevant to a consideration of the respective contributions of the parties contemplated by s 79(4).
It follows that in certain circumstances what I will call financial misconduct or financial misbehaviour may be taken into account in a number of ways. It may be taken into account by the notional inclusion of an amount at step one of the preferred approach (M and M [1998] FamCA 42) or when assessing the contributions at step two of the preferred approach or perhaps when considering the other factors at step three of the preferred approach.
This case also raises the issue of whether the pursuit of a hobby which does have some economic consequences may at some point be relevant for the purposes of a property settlement application. In T & T [2003] FamCA 863 Rose J. said:-
The husband has spent money on an old model Holden in restoring and maintaining it by using the parts of another car. I accept his evidence that such car restoration has been his hobby in which he has spent about $12,000 exceeding the agreed value of $7,000. This hobby was undertaken over a period of some years during cohabitation. Like many hobbies and sporting activities, it cannot be measured in merely money terms. I do not find that it was wasteful or extravagant, as contended on behalf of the wife.
As to the gambling by the Wife I had a great deal of documentary evidence about this matter. The Husband contended that the Wife wasted through gambling, a significant amount of money which otherwise would have been available for the purposes of the family. The Wife conceded that she often played poker machines. There was evidence that the Wife withdrew funds from an automatic teller machine at S Club on many occasions. The Wife agreed that she often visited the club and played poker machines there. She also said that she used the automatic teller machine at the club because this was a convenient source of cash. The Wife contended that she did not use all the cash withdrawn at the club for the purpose of playing poker machines. However, certain player records of S Club show that amounts were paid to the Wife for gaming machine payments during 2003 and 2004 being winnings. It is speculation on my part but I have difficulty in accepting that consistent use of poker machines could be described as a profitable activity or result overall in a profit. However, notwithstanding the amount of material put into evidence I am unable to safely conclude that the Wife’s gambling is relevant either to the extent of the contributions of her earnings from paid employment or the reckless, negligent or wanton dissipation of funds. In fact there is no evidence that the family suffered in some way either economically or otherwise.
Further, and in any event there is then the Husband’s motor vehicle interest. Ms Z gave evidence that to her observation the Husband spent most of his evenings when he was not working in the garage working on his Mazda racing car. The Husband used to go racing with friends at K as it was his hobby. The Husband used to take his modified racing car out late at night with friends to K. On one occasion he told Ms Z that he spent at least $40,000 on the vehicle. She observed that in the garage of the matrimonial home there was a significant number of tools and electrical equipment and that there was an alarm system installed in the garage. The Wife put into evidence various documents which reveal that the Husband may have spent approximately $25,000. However, as to this activity the evidence does not enable me to safely conclude that the Husband’s expenditure could be described as relevant either as to the contributions of his earnings from paid employment or the reckless, negligent or wanton dissipation of funds. In fact there is no evidence that the family suffered in some way either economically or otherwise. At varying times during the relationship the Wife undertook gambling as an activity and the Husband obviously spent considerable time and money on his motor vehicle hobby.
I take into account the significant physical work the Husband and members of his family undertook in 1999 and 2000 in relation to the renovations of the M properties.
The Wife contended that during the relationship she was the primary caretaker of the two children. She contended she was the primary homemaker and performed the bulk domestic and household tasks. She gave some evidence of what she did. She also contended that she was the one with primary responsibility for the care of the children. I accept the evidence of the Wife. The Husband was in full time paid employment and he gave evidence of his work roster. He had day shifts, afternoon shifts and night shifts. As well in 1999 and 2000 he spent time away from the home working on the renovations to M properties. There is then the evidence of Ms Z about the Husband’s involvement with his motor vehicle interest.
Both parties made contributions to the welfare of the family constituted by themselves and the children and as homemakers and parents. The Husband involved himself in the care of the children both before and since separation. Since separation the parties have shared the care of the children. However, I am satisfied that the Wife has made a far greater contribution than the Husband.

Conclusion - contributions

In my view, the significant matters are the Husbands contribution of the assets he had at the commencement of the relationship and the financial and non financial assistance received from members of his family. In all the circumstances, I assess the contribution based entitlements of the parties, expressed as a percentage of their net assets as 35 per cent or $465,743.14 to the Wife and 65 per cent or $864,951.54 to the Husband. This is a disparity of $399,208.40

Other factors

The Wife is older than the Husband. The Husband is aged 40 years and the Wife is aged 43 years. Both parties are in good health.
The Husband swore a financial statement on 7 March 2005 disclosing a total average weekly income of $363 and total personal expenditure of $518 per week. His income included rent from M1 property of $320 per week and family tax benefit of $43.25. He did not disclose any income from his business Y Company. I also note that in this document he disclosed in the liabilities a loan from his mother which he described as a personal loan but said that the amount of the debt was “nil”.
The Husband swore a further financial statement on 6 February 2006 in which he disclosed a total average weekly income of $235 and total weekly personal expenditure of $544. As to his income he disclosed a family tax benefit of $85 and an estimated $150 per week from his business Y Company. In relation to liabilities he disclosed an amount owing to his mother of $79,000 being one half of the debt. He also disclosed a liability of $137,000 to members of his family. I assume that it means that he borrowed $137,000 from his family after separation.
The Husband swore an amended financial statement on 16 March 2007. He gave evidence that he conducts as a sole trader the business “[Y Company]” and that his usual occupation is electrician. He contended that he has a total average weekly income of $242 being an estimated $150 from his business and $92 family tax benefit. He conducts the business at G property where he currently lives. In his judgment of 21 July 2006 the Judicial Registrar found that the Husband said that he hoped to be able to earn between $30,000 and $40,000 “next year”. This did not come to pass. The Husband contended that he has total personal expenditure of $699 per week. It includes $662 per week for various expenses which are identified in Part N of the financial statement. The weekly expenses include $165 for food, $40 for household supplies, $75 for motor vehicle, petrol, maintenance and car parking or fares and $130 for entertainment/hobbies and $45 for holidays. In the amended financial statement the Husband also contended that during the proceedings he has had to borrow money from his parents, his brother Mr Z and his aunt Ms L to meet property costs, legal expenses and assist him in meeting child support obligations and weekly outgoings. He contended that the total is $159,349 and that he has made no repayments.
The Wife swore an amended financial statement on 19 March 2007 and she contended that she is no longer in paid employment and has a total average weekly income of $351 being the family benefit(s). The Wife attached to her financial statement particulars of average weekly expenses being a total of $625 per week. I observe that she claimed an amount of $170 per week for food and household supplies, $50 for motor vehicle expenses including petrol and maintenance and $100 for entertainment/hobbies.
In conclusion I accept that at the present time although there is a disparity in the amount of income of the parties it is not significant. However, I am of the view that having regard to his qualifications, background and experience the Husband has a greater earning capacity than the Wife.
As a result of my findings as to the contribution based entitlements of the parties the Husband has greater assets than the Wife. The Husband’s superannuation interest probably had a value greater than $274,619.47
Both parties will have significant responsibilities for the care, support and accommodation of each child.
I also take into account that as required the Husband will have the assistance of his family. From time to time the Husband’s parents have provided significant funds. Since mid 2004 the Husband has had the benefit of accommodation provided by his parents. As well, the Husband has received from members of his family and in particular his parents significant amounts to pay expenses.

Conclusion – other factors

In all the circumstances, having regard to the age of the parties, the greater earning capacity of the Husband, the significantly greater assets of the Husband and the assistance the Husband will probably continue to receive from his family I am of the view, that there should be an adjustment of 10 per cent or $133,069.47 of the net assets of the parties to the contribution based entitlement of the Wife

Effect of orders

The Wife will receive an entitlement of 45 per cent or $598,812.61 which will comprise the following:-
Assets$
·The matrimonial home   630,000.00
·Holden motor vehicle   2,000.00
·Furniture and contents   10,000.00
·Savings as at date of hearing   485.00
·Superannuation interest                4,971.00
·Payment from controlled money account   65,238.61
Total712,694.61
Less
Liabilities
·Credit card              12,500.00
·Loan from Ms C              25,000.00
·Loan from Ms G              40,000.00
·Capital gains tax payable      36,382.00
·
Total  (113,882.00)
Balance$598,812.61
The Husband will receive an entitlement of 55 per cent or $731,882.70 which will comprise the following:-
Assets$
·Anticipated proceeds of sale of M2 property   480,000.00
·Controlled money account as at 15.3.07   147,399.60
·Mazda motor vehicle single   1,700.00
·Furniture and contents   685.00
·Savings   30.00
·Superannuation interest            274,619.47
Total904,434.07
Less
Liabilities
·Loans from Husband’s parents   133,691.00
·Estimated legal costs/expenses associated re sale of M2 property                      7,950.00
·Capital gains tax payable      30,911.00
Total  (172,552.00)
Balance$731,882.07
Both parties have to pay further legal costs.
The Husband will bear sole responsibility for payment of all amounts that have to be paid to his parents.
The Wife will receive the former matrimonial home because she has lived in the property since separation and I have no doubt that the Husband, if necessary with assistance from his parents, will be able to obtain accommodation.
In all the circumstances, having regard to all relevant statutory considerations, I am of the opinion that the outcomes identified above are just and equitable.

I certify that the preceding 119 paragraphs are
a true copy of the reasons for judgment
of the Honourable Justice O’Ryan

………………………………………………………..
Associate:
Date: 4 April 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as ZIANO & ZIANO

[2007] FamCA 339

4 April 2007

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