ZOLLER & CORNWELL
[2019] FCCA 2178
•19 August 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ZOLLER & CORNWELL | [2019] FCCA 2178 |
| Catchwords: FAMILY LAW – Property proceedings – parties involved in a relationship of eighteen years in duration – relationship produced four children aged from 16 years to 2 years – children live with husband due to default orders made – wife has not taken part in property proceedings – nature of undefended hearing – husband alleges wife has addiction to methamphetamines – husband recently retrenched – most significant asset former family home subject to mortgage – husband seeks to retain home to provide accommodation for himself and the children – husband has no capacity to borrow due to retrenchment – contributions during lengthy relationship conceded to be equal – assessment of prospective needs – considerations of justice and equity. |
| Legislation: Family Law Act 1975 (Cth), ss.75(2), 79, 80 |
| Cases cited: Bevan & Bevan [2013] FamCAFC 116 |
| Applicant: | MR ZOLLER |
| Respondent: | MS CORNWELL |
| File Number: | ADC 3906 of 2018 |
| Judgment of: | Judge Brown |
| Hearing date: | 16 July 2019 |
| Date of Last Submission: | 16 July 2019 |
| Delivered at: | Adelaide |
| Delivered on: | 19 August 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Zoller |
| Solicitors for the Applicant: | In person |
| Counsel for the Respondent: | No appearance |
| Solicitors for the Respondent: | Not relevant |
ORDERS
As and from the date of this order, the husband retain for his sole use and benefit, absolutely free from any further claim or demand of the wife subject to order (2) hereof, the property located at A Street, Suburb B (“the Property”).
An interest in the sum of $45,000.00 in the Property be granted to the wife by the husband and wife, to be secured by charge or equitable mortgage at the husband’s own expense, which sum is required to be paid by the husband to the wife in the event that:
(a)the property is sold; or
(b)the property is unsold as at 16 August 2024; or
(c)the husband discharges the existing mortgage on the Property and re-finances same;
whichever event occurs earliest.
In the event that the husband does not pay the sum of $45,000.00 as required by order (2) hereof, the Property is to be sold and the proceeds of sale are to be distributed as follows:
(a)Firstly, in payment of all charges incurred in respect of the sale of the Property;
(b)Secondly, in discharging the mortgage secured against the Property; and
(c)Thirdly, the remainder to be distributed 70% to the husband and 30% to the wife.
In the event the husband is able to make the payment of the sum of $45,000.00 referred to in order (2) hereof to the wife, without the sale of the Property, the husband and the wife concurrently with such payment to the wife, shall do all things to transfer to the husband, at his expense, all her interest, both in law and in equity, in the Property.
Upon the transfer of the former matrimonial home pursuant to order (4) hereof and contemporaneously with the payment referred to in such order the husband and wife shall forthwith discharge the mortgage secured against the former matrimonial home and the husband shall keep the wife indemnified in respect of such mortgage and all other outgoings and liabilities in respect of the Property.
As and from the date of this order the husband will be liable for the payment of all rates, taxes and other outgoings in respect of the Property including all mortgage payments, as they fall due, and will keep the wife indemnified in respect of them.
Pursuant to section 90XT(1)(a) of the Family Law Act 1975 (Cth) there be a splitting order, in the sum of thirty one thousand one hundred dollars ($31,100.00), made in the wife’s favour out of the funds currently standing in the husband’s name in his Super Fund C Trust.
The trustee of the chosen super fund do all things necessary to give effect to order (7) hereof and within twenty eight days (28) of the making of this order to rollover the sum to be split in the wife’s favour to the superannuation fund as nominated by the wife.
The wife will serve a copy of these orders on the trustee of the husband’s Super Fund C within twenty eight days (28) of the date of these orders and thereafter the aforesaid trustee has liberty to relist the matter in the event that the trustee is unable to comply with order (7) hereof.
The trustee of the Super Fund C and the wife in accordance with the Family Law (Superannuation) Regulations 2001 shall do such acts and things and sign all necessary documents as are required to calculate the payment entitlements of the wife in accordance with order (7) hereof.
As and from the date of this order the husband retain for his sole use and benefit, absolutely free from any further claim or demand of the wife:
(a)all furniture and effects in his possession, power and control;
(b)all motor vehicles in his possession;
(c)any savings and investments in his sole name;
(d)any superannuation entitlement, long service leave, annual leave or other work related benefits, subject to the provisions of order (7) hereof;
(e)his personal effects; and
(f)any other real and/or personal property and/or financial resources of the husband or in the husband’s name and/or possession not otherwise specified herein.
As and from the date of this order the wife retain for her sole use and benefit absolutely free from any further claim or demand of the husband:
(a)all furniture and furnishings in her possession, power and control;
(b)any motor vehicle in her possession;
(c)any savings, shares and investments in her name;
(d)any superannuation entitlement, long service leave, annual leave or other work related benefits;
(e)her personal effects; and
(f)any other real and/or personal property and/or financial resources of the wife or in the wife’s name and/or possession not otherwise specified herein.
Within twenty eight days (28) of these orders being personally served on the wife by the husband or his agent, the wife may bring an application to have this judgment set aside on the basis it was made in her absence, pursuant to the provisions of Order 16.05 of the Federal Circuit Court Rules 2001 (Cth).
In the event that either party refuses or neglects to sign or execute any deed or instrument in accordance with these orders, the Registrar of the Family Court at Adelaide be appointed pursuant to section 106A of the Family Law Act 1975 (Cth), to sign or execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed or instrument, upon lodgement of the deed or instrument and the filing of an affidavit of the requesting party as to said neglect or refusal.
Subject to any application necessary as a consequence of the orders and subject to any application made by the wife pursuant to order (13) hereof all applications for property are dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Zoller & Cornwell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 3906 of 2018
| MR ZOLLER |
Applicant
And
| MS CORNWELL |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment relate to the settlement of matrimonial property proceedings on an undefended basis, in circumstances in which the pool of property is modest and the prospective needs of each of the parties concerned are likely to be significant indeed.
The chief difficulty arising in the case is that there is limited evidence from one of the parties and, as a consequence, it is extremely difficult to gauge what her future needs will be and overall what is a fair outcome.
On the other hand, it would be unfair to the party who is agitating for the case to be finalised and who has demonstrated a pressing need for settlement, if the case was unduly prolonged or postponed indefinitely in the nebulous and possibly forlorn hope that the other party will engage with the adjudication process in future, after already having been given such an opportunity.
It is invariably disturbing when the court is called upon to make orders, in respect of issues of significance to the parties concerned, in the absence of one of them. For obvious reasons, such an outcome has the potential to be criticised later for having the appearance of unfairness.
It is a trite proposition, but not without a level of truth, that there are always two sides to every story and a counter-argument to every proposition, both of fact and law, put forward in any court case.
For this self-apparent reason, the court must be careful about finalising proceedings in the absence of one party. However, from time to time, it is necessary to do so, most often when one party simply refuses to engage or is unable to do so because his or her life is in a state of disarray.
Mr Zoller “the father” and Ms Cornwell “the mother” are the parents of W born … 2003; X born … 2004; Y born … 2016; and Z born … 2017. Mr Zoller is the applicant. He agitates for final property orders to be made. Ms Cornwell has not taken part in the case in recent times.
The parties began their relationship together in 2001 or 2002. They married in … 2008 and finally separated on 20 July 2018. They are not as yet divorced. At present, the four children are in the care of their father pursuant to an ex parte order made on 6 March 2019. They spend limited, if any, time with their mother.
The parties agree that the last period of their relationship was categorised by a shared use of methamphetamines. It is the father’s position that he has overcome his substance abuse issues, whilst the mother remains in the grip of an addiction to Ice, which renders her emotionally reactive and unable to fulfil her parenting responsibilities for the four children concerned.
As a consequence of an interim order made by Judge Kelly on 2 October 2018 and the final order referred to above, made by me, the children live with their father. No definitive orders have been made for the children to spend time with their mother other than on terms to be agreed between them. It is the father’s position that the mother has not interacted with the children for a significant period of time.
The relationship between the parties was one of significant length. It is the father’s evidence that the parties, in happier times, divided their responsibilities, for their family, along conventional lines. He was the family’s financial bread winner; whilst the mother attended to the care of the home and had some outside employment as a labourer.
Neither party had any assets of significant value when they began their relationship. During their marriage, they were able to acquire a family home, located at A Street, Suburb B. It is registered in the parties’ joint names and subject to a mortgage in favour of the D Credit Union.
The father and the children concerned are currently living at the A Street, Suburb B Property and Mr Zoller is paying the mortgage payments due on it, together with all other outgoings and has done so since the parties separated, although he has not lived in the home for the entirety of this period.
The father estimates that the property is currently worth $230,000.00 and the amount currently outstanding on the mortgage is $106,000.00. The father has given evidence that the property was originally purchased for $100,000.00. The parties borrowed more than the property was worth to acquire it. The original mortgage amount was $125,000.00. The surplus borrowings were used to fund acquisition costs and to purchase a motor vehicle.
From the husband’s perspective, his employment, as a professional at the Employer E at Suburb F, enabled the parties to be able to purchase the property in the first place. Mr Zoller worked for Employer E for approximately sixteen years but was retrenched from the firm in early 2019, when Employer E changed from operating on a two shifts per day basis to a single day shift operation.
During the parties’ relationship, they refinanced the mortgage on the A Street, Suburb B Street property on two occasions, with borrowings utilised to purchase a caravan. However, from Mr Zoller’s perspective, few inroads were made in respect of paying down the mortgage and increases in the property’s value are attributable to market forces rather than to any direct interventions of the parties themselves.
After a period of unemployment, Mr Zoller has recently been able to find casual work as a tradesman. He is paid $27.50 per hour and works 38 hours per week. When he is at work, Y and Z are either cared for by members of his family or attend day care. The older children are usually at school. It remains his position that Ms Cornwell does not currently engage with the children.
The relevant applications
Against this difficult background, the father commenced proceedings on 20 September 2018 seeking orders in respect of both children and the settlement of matrimonial property issues. It was his position that he should have sole parental responsibility for the children, who should live with him at the former family home located at A Street, Suburb B.
He also sought an injunction that would have had the effect of restraining Ms Cornwell from attending at the A Street, Suburb B property; it being his position that she was prone to attend at the home, when under the influence of drugs, and be abusive and threatening towards him. In this context, he alleges that the mother has daubed offensive graffiti on the garage door of the premises.
Essentially, it is implicit in the father’s position that the mother’s time with the children should be restricted until such time as she has demonstrated that she is no longer suffering from an addiction to illicit drugs and has otherwise got her life in order. It is his position that, as matters currently stand, her life is not under control.
Mr Zoller also sought final property orders. Initially, he proposed that in consideration of the receipt of the sum of $40,000.00, Ms Cornwell should transfer her interest in the A Street, Suburb B Street property to him and he would keep her indemnified in respect of the mortgage on the property.
Otherwise, he proposed that each party should keep the assets and the financial resources standing in their respective names. By dint of his longer and more consistent employment in the workforce, Mr Zoller has accrued superannuation to a value of approximately $130,000.00; whilst Mr Cornwell has superannuation to a value of $18,000.00.
In her response, filed on 4 October 2018, Ms Cornwell proposed that the sum of money to be paid to her for the transfer of her interest in the A Street, Suburb B property to Mr Zoller should be $100,000.00 and otherwise there should be an order equalising the parties’ current superannuation holdings.
The parties were referred to a conciliation conference in early January of 2019. At this stage, each was represented. Following the conference, the case was due to return to court on 12 February 2019. Since the conference both parties have ceased to be legally represented, however, the father has attended court on his own behalf, whilst the mother has not. For obvious reasons, this creates a dilemma as to what the court should do in the absence of Ms Cornwell.
It is currently the father’s position that his financier has advised him that it is no longer prepared to advance him further sums in order to purchase Ms Cornwell’s interest in the A Street, Suburb B property. This is because of his retrenchment and the lender’s concern that Mr Zoller may not be able to meet the required mortgage payments.
In these circumstances, Mr Zoller proposes that he retain the A Street, Suburb B property and keep Ms Cornwell indemnified in respect of the mortgage concerned but not otherwise provide her with any monetary consideration for the transfer of the most significant property item of what must be considered a lengthy relationship.
Mr Zoller does, however, propose that there be a split from his superannuation, into Ms Cornwell’s superannuation in an amount of $30,000.00. He would also want to retain two cars, a boat and campervan, which are in his possession at present.
The parties are each in their late thirties[1] and so many years away from retirement from the workforce. As such, it is unlikely that their entitlement to access superannuation will crystallise for at least twenty years or so.
[1] The husband was born on … 1982. The wife was born on … 1981.
In these circumstances, for obvious reasons, issues to do with superannuation are likely to have academic interest only for each of them. In purely practical terms, superannuation will not provide either of them with accommodation or any form of financial support in the short to medium term.
It is the father’s position that he is unlikely to receive any financial assistance, from Ms Cornwell, for the care of the four children concerned. In addition, he (and they) have a pressing need for secure accommodation. In these circumstance, the underpinning of his case is that it would inequitable for the court to make an order which would require the sale of the A Street, Suburb B Street property and so deprive him, W, X, Y and Z of the security of the home on which each of them are likely to be emotionally dependent.
The situation following the parties’ separation seems to have been difficult and chaotic. Initially, the parties and the children continued to live, whilst separated, under the same roof of the A Street, Suburb B property. However, from Mr Zoller’s perspective, this was both logistically and emotionally untenable and he and the children moved to alternate accommodation.
In March of 2019, Ms Cornwell apparently left the A Street, Suburb B property and Mr Zoller and the children returned there to live. Mr Zoller continued to maintain the mortgage, notwithstanding the periods he was not living in the property.
On 12 February 2019, Registrar De Corso ordered both parties to file an affidavit, setting out their respective positions as to what had occurred in the apparently tumultuous circumstances since the proceedings were instituted. Mr Zoller complied with this order but Ms Cornwell did not.
Similarly, on 6 March 2019, Mr Zoller appeared in court; whilst Ms Cornwell did not. I was satisfied that she was aware of the adjourned date. In these circumstances, given the concerns raised by Mr Zoller regarding Ms Cornwell’s drug use, I felt compelled to make some final orders in respect of care arrangements for the children.
In addition, I was enjoined by Mr Zoller to put in place a process which would finalise the parties’ financial relationship with one another, notwithstanding the lack of active participation from Ms Cornwell.
On 6 March 2019, I made the following orders:
“In the event the mother has vacated the former family home located at A Street, Suburb B, the father have sole occupation of that property.
The father’s application for settlement of property be fixed for an undefended property hearing on 16 July at 2:15pm.
The father file and serve an affidavit setting out the orders he proposes on an undefended basis on the respondent mother on or before 20 June 2019.”
The mother did not appear on the date fixed for the undefended hearing. The father served his most recent affidavit, filed by him on 20 June 2019, which was personally served on Ms Cornwell, in A Street, Suburb B on 19 June 2019.
Ms Cornwell did not attend court on 16 July 2019. She has not filed any recent affidavit material. It is Mr Zoller’s evidence, which is not subject to any form of rebuttal, that Ms Cornwell knows of the proceedings, but is either unwilling or perhaps incapable of taking part in them. Certainly, it is his opinion that it would be dangerous for her to receive any significant sum of money given the strength of her current drug addiction.
The nature of an undefended hearing
It is a significant thing for proceedings to be determined in the absence of one of the parties. The court has an obligation to ensure that the parties to proceedings before it have an opportunity to participate in those proceedings.
Before a person can be adversely affected by judicial order, he or she must be afforded an adequate opportunity to be heard.[2] I am satisfied that Ms Cornwell has been given an adequate opportunity to appear in these proceedings and put her position before the court.
[2] See Taylor v Taylor (1979) 143 CLR 1
In addition Mr Zoller is entitled to have his application, for settlement of property matters, determined within a reasonable period of time, pursuant to the applicable principles of law.
As such, he needs neither Ms Cornwell’s formal imprimatur nor her cooperation to have his application determined. Rather, there is an obligation, on Ms Cornwell’s part, if she wishes to be involved in the proceedings, for her to attend at court as required and pursue any application put by him or on his behalf with due diligence.
The Federal Circuit Court is a court of private law. It determines disputes, between parties, according to law. In this case, according to the provisions of Part VIII of the Family Law Act 1975, which relate to the division of property following the breakdown of a marriage relationship.
The court cannot compel a respondent to engage with litigation. It is however obliged to give a respondent the opportunity to put evidence before the court and, if he or she wishes to do so, contest any evidence relied upon by the applicant.
However, a respondent, whether by intransigence, disinterest or manipulation cannot succeed in denying an applicant a just resolution, according to law, to his or her application, by choosing not to take part in proceedings because they do not proceed in the manner of his or her preference.
Order 13.1A of the Federal Circuit Court Rules deals with the court’s authority to enter judgment against a respondent if that respondent defaults in complying with a court order or fails to prosecute any proceedings with due diligence.
Pursuant to Rule 13.03A(2) a respondent is in default if, amongst other things, he or she has failed to:
·Comply with an order of the court in the proceedings;
·Produce a document as required; or
·Defend the proceedings with due diligence.
I am satisfied that Ms Cornwell has not defended the proceedings with due diligence. In these circumstances, pursuant to the provisions of Rule 13.03B(2)(d) Mr Zoller is entitled to judgment in default and it is appropriate that the court exercise its discretion to enter judgment, for the husband, in the proceedings.
I reach this conclusion because I am satisfied that Ms Cornwell has been given adequate notice of these proceedings, particularly that they were listed for undefended hearing on 16 July 2019 and has not appeared in respect of them, nor given any explanation as to her conduct since her last appearance in court.
However, the applicant is not entitled, as of right, to the orders which he seeks. Rather, the onus remains on him to establish to the court that the orders which she seeks, are just and equitable, according to law.
Essentially, Mr Zoller must lead sufficient evidence to establish his case to the court and persuade it that the result he proposes is a just and equitable one. Otherwise, the court should impose the result, in the case, it considers fair according to the law and the evidence available to it.
The court’s pre-eminent responsibility is to ensure a just result between the parties, notwithstanding the failure of Ms Cornwell to participate properly in the proceedings. However, in the absence of satisfactory rebutting evidence, the applicant’s affidavit material is to be accepted by the court, unless it appears inherently unreliable or otherwise unsatisfactory.
The formal affidavit material, on which Mr Zoller relies, is as follows:
i)An affidavit of Mr Zoller filed 20 September 2018;
ii)Statement of his financial circumstances filed 20 September 2018; and
iii)Two further affidavits of Mr Zoller filed on 26 February and 20 June 2019 respectively.
The legal principles applicable
The process to be followed for the division of the parties’ property is well established by law.[3] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.
[3] See Lee Steere v Lee Steere (1985) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
In the first step, I must ascertain what are the parties’ assets and liabilities available to be divided between them. The normal rule is that those assets are to be determined as at the date of trial.[4]
[4] See Wardman & Hudson (1978) FLC 90-466; and Biltoft & Biltoft (1995) FLC 92-614
In the second step, I must ascertain the contributions, which each party has made towards the matrimonial pool of assets, as I have found them, following the first step. Contributions fall into two broad categories.
The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent.”[5]
[5] See Family Law Act s79(4)(c)
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2)(o), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
Finally, in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[6]
[6] See Russell v Russell (1999) FamCA 187
Accordingly the fourth step is for the court to take a step back and examine whether the orders it proposes are just and equitable. These considerations must also inform each of the preceding steps. [7]
[7] See Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39] and Bevan & Bevan [2013] FamCAFC 116 at [60]
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[8] or of equalisation of assets or financial resources.
[8] See Waters & Jurek (1995) FLC 92-635
It is clear that this orthodox stepped approach remains current, notwithstanding the High Court’s decision in Stanford v Stanford.[9] In Stanford the High Court placed significant emphasis on section 79(2), which actively prevents the court from making an order, in respect of property, unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing. This follows from the use of the prohibitive words “shall not” in the relevant section.
[9] Stanford v Stanford [2012] HCA 52
In Stanford the High Court warned of the potential danger of a court conflating its responsibilities arising under section 79(2) & 79(4). The court’s fundamental responsibility is to make a just and equitable order. The High Court said as follows:
“The expression ‘just and equitable’ is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.” [10]
[10] Ibid at [35] – [36]
In this case, it is abundantly clear that the marriage between the parties has come to an end. In addition, Mr Zoller and the children alone are living in the A Street, Suburb B property. For obvious reasons, Mr Zoller wishes this state of affairs to continue. It would be a financial and logistical disaster for him, if the property had to be sold and new accommodation found for the family.
At the same time, given the end of the marriage, there is no utility in the parties remaining as joint proprietors of the property. From Ms Cornwell’s perspective, there is no advantage in her remaining liable for a mortgage in respect of a property she is not occupying.
Her position, at the outset of the case was that the property be sold to enable the crystallisation of her marital contributions in a cash sum payable to her. No doubt, she would contend that it would be grossly inequitable for her not to receive such a payment of cash, given the length of the relationship and marriage between the parties and her currently straitened financial circumstances.
In Lee Steere & Lee Steere[11] the Full Court of the Family Court observed that any order which “would deprive a party substantially of what he or she is entitled to by reason of contribution would not normally be considered just and equitable.” That is the difficulty of the position advocated by Mr Zoller. Ms Cornwell would receive no distribution of concrete assets to her in recognition of her various contributions during the parties’ long marriage.
[11] Lee Steere & Lee Steere (1985) FLC 91 – 626 at 80,077
On the other hand, the prospect of Mr Zoller and the children being deprived of their home, given the current circumstances, is alarming. This is the dilemma with which the court must grapple. A dilemma which is compounded by the absence of input from Ms Cornwell.
The case offers no obvious or easy solutions. Given the fact that Mr Zoller has recently lost his long-term employment and has currently only casual work available to him, he is not likely to be an attractive candidate for additional finance to purchase Ms Cornwell’s interest in the A Street, Suburb B property. Indeed his evidence is that he is unable to extend the mortgage on the property at present.
The general powers of the court, in respect of applications arising under Part VIII of the Act are set out in section 80. They include the following:
·Order payment of a sum either in a lump sum form or in instalments;
·Order that the payment of any sum be secured in any way considered to be appropriate.
Background
It is Mr Zoller’s untested evidence that he stopped using ice cold turkey but Ms Cornwell remains in the grip of a serious addiction to the drug. In these circumstances, he contends that he has become the undisputed primary carer for the children, particularly the two youngest children.
In the absence of current evidence from Ms Cornwell, I am not in a position to refute this assertion. He further alleges that Ms Cornwell attempted to take her own life in … of 2018 by carbon monoxide poisoning. As a consequence, she was hospitalised, initially at Suburb H and then at the Suburb J Hospital. Mr Zoller has also provided numerous text messages in which Ms Cornwell has indicated some level of dependency on ice.
It is clear that, when the parties commenced their relationship in 2001 or 2002 neither had any assets of significant value. The purchase of the A Street, Suburb B property was their most significant financial transaction.
In October of 2018, the wife disclosed an income of zero on her financial statement. She is not paying any child support to Mr Zoller in respect of the children. Prior to his redundancy, he was earning $1,690.00 per week prior to tax at Employer E, which equates to $87,880.00 per annum. His major expense, apart from direct living expenses, is the mortgage payment of $150.00 per week, which equates to $7,800.00 per annum or just under 10% of his gross income.
I accept Mr Zoller’s evidence that he has continued to pay the mortgage both during periods he has lived in the property and when he has been absent from it due to the problems he and Ms Cornwell have had with one another.
Step One – the pool of property
In general terms, there appears to be no controversy about the items which should appear in any table of the parties’ pool of assets. The difficulty is that no definitive process of valuation has been embarked upon, in respect of those items and, in the absence of Ms Cornwell, it is not possible for their value to be agreed.
In their respective financial statements, the husband asserts the A Street, Suburb B property is worth $240,000.00; whilst the wife asserts it is worth $270,000.00. The mortgage secured against the property is $109,000. The South Australian Department of Planning, Transport & Infrastructure attributes a capital value of $230,000.00 to the property as at 1 January 2018.
Otherwise each party has two motor vehicles, which are not of a large value. I have not been provided with any Redbook or dealer’s guides in respect of any of these vehicles. The husband has a camper and a tin boat, which in total he values at $6,000.00.
The husband values his Motor Vehicle K at $8,000.00 and his Motor Vehicle L at $3,000.00. The wife values her Motor Vehicle M, which is not registered at $8,000.00. The husband also attributes an old Motor Vehicle N to her, which he values at $500.00 only. It seems to me, in the absence of valuation, to be not necessary to include these items in the pool.
In effective terms, the case is about the house and superannuation; Mr Zoller proposing trading off a significant proportion of his superannuation to Ms Cornwell to secure a home for him and the children. As previously indicated, Mr Zoller has superannuation to a value of $120,000.00; whilst Ms Cornwell has a nominal amount of $7,000.00.
The net equity in the A Street, Suburb B property is between $161,000.00 and $131,000.00. If the property is sold, there will be selling costs. I concede that the property may also achieve a sum greater than that attributed to it by its owners. On the other hand, I also accept that it will be difficult for Mr Zoller to re-enter the property market given his current financial situation.
Step two – assessment of contributions
When the parties began their relationship, Mr Zoller was working as a tradesman in Employer G. Ms Cornwell was not working. Ms Cornwell was the primary carer of W and X in the early years of the parties’ relationship. She commenced work as a labourer when they started at school. Mr Zoller was in paid employment throughout the relationship.
It is Mr Zoller’s evidence that both he and Ms Cornwell were involved parents and each “made a relatively equal contribution to the child caring responsibilities and domestic duties.” In all these circumstances, in my view, the parties’ various contributions, provided during their relationship of approximately eighteen years, should be assessed to be essentially equal in weight.
Step three – assessment of prospective needs – section 75(2)
This is where the real weight of decision making rests in this particular case. The obvious difficulty being that I have no considered input from Ms Cornwell about her current circumstances and likely needs in the future.
I do know that she is not currently working and it would seem she labours under some substance abuse issues, which are likely to retard her easy return to the workforce. It also seems to be the case that she has no significant skills to speak of. Her accommodation situation is not currently known. In all these circumstances, her financial prognosis cannot be predicted with certainty but it does not appear to be particularly secure.
In all these circumstances, her future financial needs – particularly to find somewhere secure to live – are likely to be significant. I also concede, in this context, if Mr Zoller’s characterisation of Ms Cornwell is accurate, it may not also be in her interests to provide her with access to a large sum of money, which she may not utilise wisely, given her current addiction issues.
Mr Zoller has been proactive in these proceedings, which adds weight to his assertion that he has overcome his drug addiction. He has a good employment history and appears to enjoy good health with the conquest of his substance abuse issues. It is to his credit that, since his retrenchment from Employer E, he has been able to secure at least some casual employment for himself.
In these circumstances, I would have some confidence he will be able to return to full time employment. However, like the wife, he has no formal skills to speak of and, as a consequence, it is more probable than not that he will receive a modest wage for the foreseeable future. It is also relevant that he lives in a rural part of South Australia in which rates of unemployment are high when compared to other areas of both the state and Australia generally.
More significantly, he has financial responsibility for the parties’ four children, two of whom are of very tender years. It seems unlikely Ms Cornwell will be in a position to provide financial assistance to him, by way of child support, for the foreseeable future, unless her circumstances change markedly, which does not appear probable.
This factor is the most significant one in the case and clearly favours Mr Zoller to a marked degree. The Full Court has observed that section 75(2) factors are to be given real not token weight. Given his responsibilities to support the parties’ children, which include providing them with accommodation, Mr Zoller has a pressing need to be able to continue to occupy the property at A Street, Suburb B.
The costs of maintaining the children are likely to be both significant and protracted. In addition, Mr Zoller’s responsibilities in this regard may impact on his capacity to gain full time work. In particular, it would seem to be axiomatic that he will not be able to engage in work far away from his home or which involves a significant level of overtime.
In general terms, I would allow a further 20 to 25% weighting in favour of the husband in respect of these factors. However, I also appreciate the artificiality of such considerations given the modesty of the asset pool and the great claims each party has on it. It also has the potential to be fundamentally inequitable if all Ms Cornwell’s contributions account to nought given her undoubted significant prospective needs.
However, given that he has maintained the property since the parties separated, in my view, it would be grossly inequitable for the property to be sold to provide a sum of money to Ms Cornwell, which she may not be in a position to utilise wisely or in a way which benefits the children in this case.
Conclusion – considerations of justice and equity
At this stage, I accept that the evidence available indicates to me that Mr Zoller has assumed the primary parenting role for the parties’ children and wishes to continue to discharge this role into the future. His evidence, currently unrebutted by Ms Cornwell is that she is not able to discharge this role due to her methamphetamine issues.
Both the husband and indeed the children are entitled to a reasonable standard of living referable to that which they enjoyed during the parties’ relationship. I accept that it would be both a financial calamity and very far from fair if the A Street, Suburb B property had to be sold to pay a definitive amount to Ms Cornwell, given the extent of Mr Zoller’s current needs.
However, it would be equally unfair if Ms Cornwell is left with effectively no recompense for her various contributions levied over a lengthy relationship approaching eighteen years in duration. It is also manifest that Ms Cornwell is also likely to have her own pressing prospective needs, although these have not been clearly delineated.
The obvious mechanism to secure a fair account would be to grant Mr Zoller security in respect of his occupation of the property and to carve out some interest in it in Ms Cornwell’s favour, the crystallisation of which can be deferred. I propose that the sum be $45,000.00, which is roughly equivalent to 30% of the equity in the parties’ home.
This could be secured by a charge or equitable mortgage to be lodged over the property requiring payment if the property is sold or falling due on some specified date, say in five years’ time. The chief advantage of such a regime being that it will safeguard the interests of the children and Mr Zoller for a reasonably lengthy period of time.
It will also provide Mr Zoller with an opportunity to re-finance the property at this stage in the future if and when he has secured permanent employment and is better placed to borrow. It will also avoid any prospect, at least in the short to medium term, of Ms Cornwell possibly not utilising the sum in an efficacious manner.
In this context, I note that is not my function to act protectively so far as Ms Cornwell is concerned. It has not been suggested that she requires a litigation guardian. However, the fact remains she has not taken part in the proceedings and I am not persuaded that it would be equitable for the parties’ former family home to be sold, at this juncture and so deprive Mr Zoller and the four children of the security which they need.
Given Mr Zoller’s future needs and the drain on his income earning capacity arising from his responsibility to parent the children concerned, I propose to divide the parties’ respective superannuation holdings along the same lines of 70/30% in Mr Zoller’s favour. On my calculations, this will require a split in an amount of $31,100.00, in Ms Cornwell’s favour from his superannuation.
In my assessment, it is a fair and equitable outcome that results in Mr Zoller retaining the home; indemnifying Ms Cornwell in respect of the mortgage thereon; and providing her a significant sum of money, albeit on a deferred basis. The outcome I propose will also see Ms Cornwell being better provisioned for her retirement.
The most significant factor influencing this outcome is the care arrangements for the children. As a consequence of the wife’s incapacity the husband has responsibility for providing for the parties’ children. He needs a secure home to do so effectively. This dictates that he should receive more of the parties’ modest pool of assets.
Ms Cornwell may have a valid and satisfactory explanation as to why she has not taken part in these proceedings. In addition, considerations relating to fairness and the desirability of Ms Cornwell being able to provide evidence that the court’s discretion has miscarried may dictate that the orders which I propose should be revisited.
However, it is also undesirable that Mr Zoller’s financial affairs be held in a state of suspended animation for an indefinite period on the uncertain basis that Ms Cornwell will do something about the matter. Under the provisions contained in Order 16.05 of the Federal Circuit Court Rules 2001 a party may apply to the court to set aside any judgment if it was made in his or her absence.
I will grant Ms Cornwell twenty eight days to make such an application after the orders made in this matter have been personally served upon her by the husband.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and nine (109) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 19 August 2019
Clauson v Clauson (1995) FLC 92-595; Hickey v Hickey and Attorney General for Commonwealth of Australia (2003) FLC 93-143 at 78,386
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Jurisdiction
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Procedural Fairness
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Statutory Construction
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Appeal
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