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 Polito & Polito  [2009] FMCAfam 511 (27 May 2009)

Last Updated: 9 June 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

POLITO & POLITO

[2009] FMCAfam 511

Applicant:

MS  POLITO

Respondent:

MR  POLITO

REPRESENTATION

ORDERS:

(1) The parties shall divide the net proceeds of sale of the property of Property S in Tasmania so that the wife receives $99,343.78 and the husband receives $31,088.22, and the parties shall divide the interest which has accumulated on the total net proceeds, 58% in favour of the wife and 42% in favour of the husband.
(2) Pursuant to section 90MT (1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the husband’s interest in Colonial FirstState Roll Over & Superannuation Fund the wife shall be entitled to be payed an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount of $23,876.00 and that there be corresponding reduction to the entitlement the husband would have had in that fund but for this order.
(3) The preceding order shall have effect from the operative time and for the purposes of this order the operative time shall be four days after the service of this order upon the Trustees of Colonial FirstState Roll Over & Superannuation Fund.
(4) This order shall be binding upon the Trustees of the Colonial FirstState Roll Over & Superannuation Fund.
(5) Unless otherwise specified in these orders and save for the purposes of any monies due under these or any subsequent orders:

• (a) Each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders.
• (b) Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
• (c) Each party be solely liable for and indemnify the other against any liability each party has.

(6) Each of the parties do all such act and things and execute all such documents as they shall be required to do and execute to give effect to the terms of this order.

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

HBC 285 of 2007

MS  POLITO

Applicant

And

MR  POLITO

Respondent

REASONS FOR JUDGMENT

Introduction

1. These are proceedings for property settlement.
2. The wife is 41 years of age and the husband is 38 years of age.
3. The parties commenced cohabitation in Sydney in about October 1996. They married in 2005 and separated on 17 April 2006.
4. The parties divorced on 25 August 2007.
5. There are two children of the marriage [X] born in 1999 and [Y] born in 2000.

Background

6. The wife met the husband when she was working in a bar. The husband was a frequent customer at the bar. Their friendship developed into a relationship and they commenced to live together in about October 1996. The husband has been married previously and has a daughter from that relationship, [Z]. He was involved in property and parenting proceedings with his former wife.
7. When the parties commenced cohabitation the wife was receiving Newstart for three months until she commenced work with [omitted]. The husband was working as a [omitted].
8. In about June 1997 the husband’s former wife transferred to the husband her share in the former matrimonial home in Sydney for $5,800. The parties lived in the home.
9. [Z] stayed with the parties each alternate weekend.
10. The husband’s parenting proceedings concluded in August 2001 and resulted in [Z] living with the parties.
11. The wife worked up until two months prior to [X]’s birth in February 1999. She worked part-time in the husband’s parent’s employment agency for a few months before she fell pregnant with [Y].
12. The wife has been the primary carer of the children since they were born.
13. The parties moved to Tasmania in 2002. The husband did not work for a period of one year, whilst he undertook training for [omitted]. He then obtained a scholarship with [omitted] from which he obtained a diploma.
14. In January 2002 the husband received sale proceeds of $110,500.00 from the sale of the Sydney home.
15. The parties purchased a home in Property S, Tasmania for $185,000.00.
16. The husband’s mother lent both parties $111,448.00 on 16 March 2002 to put towards the purchase. The balance purchase price of $80,173.00 was paid by using the net proceeds of sale of the Sydney home.
17. In late 2004 the parties borrowed $30,000.00 from Bass & Equitable Building Society to carry out renovations and repairs to the home.
18. The parties obtained 3 subsequent loans for $10,000.00 each between November 2005 and March 2006.
19. The parties separated when the husband left the home on 17 April 2006.
20. On 12 June 2007 the parties sold the Property S home. The net proceeds of $120,411.00 are held on trust with [T] Trustees, and interest is accumulating.
21. After the sale, the wife and children moved to a rental property in [M].
22. In 2007 the wife formed a friendship with Mr C, who resides in Brisbane and has a [omitted] business.
23. In 2008 the wife withdrew from her superannuation entitlement the sum of $8,137.00, due to financial hardship.
24. On 17 December 2008 this Court made orders by consent that the children live with the wife and she be permitted to relocate with them to reside in Brisbane.
25. In December 2008 the husband was dismissed from his employment as [omitted] due to stealing monies amounting to approximately $670.00. He has been charged with stealing.
26. The husband pays child support of $3.10 per week for each child.

Issues

27. The wife’s application is for a 70%-30% division of the non-superannuation and superannuation assets in her favour, including an add back of $121,344.00, which will result in the wife receiving the total of both pools. The husband is seeking an equal division of the non-superannuation and superannuation assets.
28. The major issue is whether $121,344.00 should be included in the pool as an “add back”, due to the husband’s gambling, drug and alcohol addictions. The husband is disputing that this sum should be added back.
29. The wife has expended $8,137.00 of her superannuation entitlements since separation[1]. The husband contends that this sum should be added back. This is opposed by the wife.

Evidence

30. The wife relied on the following documents:
    • Her affidavit filed 24 February 2009.
    • Her financial statement filed 24 February 2009.
    • Affidavit of Ms H filed 24 February 2009.
    • Report of Yvonne Malakoff dated 28 June 2007.
    • Report of Dr H dated 7 September 2007.
    • Relevant documents from the Parramatta Family Court file PA 6245/1996 Kingsley &  Polito  relating to proceedings concerning husband’s first marriage.
    • Notice to Admit dated 13 November 2007.
    • Notice Disputing Facts dated 23 November 2007.
31. The husband relied on the following documents:
    • His affidavit filed 12 March 2009.
    • His Financial Statement filed 12 March 2009.
    • Affidavit of Ms P filed 12 March 2009.
    • Affidavit of Mr P filed 12 March 2009.
32. The husband and wife were both cross-examined.

Should there be a separate pool for superannuation?

33. In this case both parties are seeking a splitting order. The wife contends that there should be one property pool. The husband contends that there should be two pools.
34. There is no agreement as to the approach. In my view, it is appropriate to adopt a two pool approach in accordance with the decision of C v C[2].

Relevant Law

35. Section 79(2) of the Family Law Act 1975 requires that any order made under a s.79 application must be just and equitable. Section 79(4) provides the matters which are to be taken into account in considering what order should be made.
36. Section 79(4) involves a four step exercise namely:
    • (i) The identification of the property of the parties, their assets and financial resources.

(ii) The valuation of the contributions.
(iii) The valuation of the matters referred to in s.75(2).

• (iv) A determination as to whether the result is just and equitable by considering the real impact in money terms of the orders.[3]

Add-Backs

37. The Full Court in AJO v GRO[4] identified three categories of cases where the Court has determined that it is appropriate to notionally add back into the property pool assets that no longer exist. They are:
    • (i) Where parties have expended money on legal fees (DGM & JLM [1998] FamCA 97; [1998] FLC 92-816 ;
    • (ii) Where there has been a premature distribution of matrimonial assets (Townsend & Townsend [1985] FLC 92-569);
    • (iii) Where one of the parties has embarked on a course of conduct designed to reduce or minimise the effective value or worth of the matrimonial assets or 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 (the circumstances outlined by Baker J in Kowaliw & Kowaliw [1981] FLC 90-097 at 76,644).
38. To support a finding that conduct is sufficiently reckless, negligent or wanton to have reduced or minimised the value of the assets in accordance with the decision of Kowaliw & Kowaliw, there should be cogent evidence. In D & D [5] Carmody J discussed the degree of satisfaction necessary in fact-finding and said:
    • “What this means in a practical sense is the more serious the allegation, the more cogent the evidence required to overcome the unlikelihood of what is alleged and thus to prove it.”[6]
39. The husband’s Counsel relied on the decisions of Hewitt & Tsonga[7]and De Angelis & De Angelis[8]. In Hewitt & Tsonga the Full Court said that gambling had been a form of entertainment for the parties, and that the total losses were of a relatively modest total in the context of the pool as a whole:
    • “In our view, there was nothing so disproportionate in relation to the losses incurred by the parties in the lifestyle that they chose, that would make it inappropriate for there to be an adjustment of the available capital upon the breakdown of the marriage. More is required than simply the existence of gambling losses. There needs, in our view, to be some element of waste that is disproportionate to the positive contributions being made by each of the parties.”[9]
40. In De Angelis & De Angelis[10], the Full Court said:
    • “We agree that gambling is, for some people, a form of entertainment and a party can be no more criticised for spending money on it than the other party can be criticised for spending money on sporting or other forms of entertainment. However every case must depend on its own particular circumstances. In the present case His Honour had the advantage of evidence which permitted him to arrive at actual, or at least approximate, figures for the wife’s expenditure on gambling, in addition he had expert psychiatric evidence regarding her propensity for gambling.”[11]
41. The Full Court continued:
    • “We are firmly of the view that, notwithstanding that the wife’s gambling may have been her form of entertainment or indeed even a result of illness, and also notwithstanding that the husband also spent more on golf, the sums lost by the wife through gambling are very high in the context of the total value of the parties overall assets. Further, we are of the view that the husband is entitled to some recompense or adjustment for the losses. Left to ourselves, none of us might have made that adjustment in the exact percentage or mathematical terms which His Honour did. However, we think that his approach has a certain validity or attraction in the circumstances of this case, and we will also employ it when re-exercising this discretion.”[12]
42. Both Counsel referred to the decision of Dorney & Dorney[13], in which Walters FM reviewed the decisions which dealt with how gambling losses can be dealt with. Those decisions indicate that gambling losses can be dealt with in the context of an add back to the pool, or as part of an evaluation of contributions of each party, or reflected as a factor under s.75(2)(o)[14].

Superannuation of wife $8,137.00

43. The wife’s evidence was that after separation she fell into debt providing necessaries for herself and the two children, including rent and repairs on her vehicle.[15] She relied on one food parcel from
    St Vincent De Paul.[16] The wife asked the husband, through her solicitors, on two occasions in April 2008 to agree to an advance from the proceeds of sale of the home, but her solicitors did not receive a response.
44. Based on financial hardship, the wife was able to draw $8,137.00 of the Colonial MyState fund on 12 June 2008. After tax, the net withdrawal amount was $6,390.00[17].
45. The husband’s child support payments since separation have varied from $6.20 per week, $60.83 per week and $27.75 per week for both children.
46. The wife had to make payments for her ANZ, Commonwealth Bank of Australia and MyState Financial credit cards and she had living expenses for herself and the children. She made several trips to Brisbane to see her partner.
47. I refer to C & C[18] in which the Full Court said:
    • “Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.”[19]

I am of the view that the wife has expended the monies on reasonable expenses and I will not add this sum back.

Drugs

48. The wife claims an add back of $43,225.00 for the husband’s marijuana use throughout the relationship, calculated at the median of the respondent’s admitted consumption of $25.00 per week and the wife’s knowledge and evidence of up to $150.00 per week, being $87.50 x 494 weeks = $43,225.00.
49. The wife’s evidence about the husband’s marijuana use was that she knew he smoked marijuana when the relationship commenced, but was not aware of the extent of it. The husband stopped smoking marijuana during the course of the proceedings involving [Z], which continued from 1996 to 2001. After that she said that he started spending $150.00 per week on marijuana during some weeks.
50. The wife relied on the reports of Dr H dated 7 September 2007 and Yvonne Malakoff, a family consultant, dated 28 June 2007. The wife relied on admissions that the husband had made. The husband did not oppose the reports being read into evidence and he did not seek to cross-examine the authors of the reports. The report of Dr H is detailed and gives her account of her conversations with each party. Dr H said:
    • “...Mr P said that he had a problem with marijuana use that dated from when he was 14 years old...Mr P said that his marijuana use was not a problem during the relationship with Mrs P but that his use became problematic after the end of the relationship.”[20]
51. Mr P also admitted to Ms Malakoff in 2007 that he used to have a drug issue with marijuana and that he had taken speed on three or four occasions. He went to the Bridge Drug and Alcohol program after he separated from the wife and had not used marijuana for the past year. He estimated that it was three to four years ago when he last used speed. He reported that he agreed to undergo drug screening tests.[21]
52. During cross-examination the wife agreed that when she met the husband she knew that ‘he smoked the odd joint’. She did not smoke marijuana, as it made her ill. She used speed on three occasions, the last time being on the night of her thirtieth birthday. The wife smoked cigarettes.
53. The husband continued to smoke marijuana after the parties separated and made admissions to Dr H, contrary to what he told the wife’s solicitors[22].
54. The husband’s evidence was that he spent about $25.00 per week on marijuana before the parties moved to Hobart. He said that it would have been impossible to spend $150.00 per week, as that would have enabled him to purchase 600 ‘cones’ per week. He said it is not possible to smoke 100 ‘cones’ per day. At that time he was working shift work as a [omitted]. He said he smoked on his way home in the cab. He said did not smoke again for about two years after the parties came to Hobart, when he spent between $25.00 to $50.00 per week. This sum enabled him to purchase 5 to 10 ‘joints’.
55. The husband has continued to use marijuana after separation and he did not tell the truth about this. However, I accept the husband’s evidence that he could not have spent $150.00 per week on marijuana. After separation he told the Salvation Army counsellor and Dr C that he spent $25.00 per week. I accept that he spent between $25.00 - $50.00 per week when he was using marijuana. The wife knew that the husband smoked marijuana when she met him. She experimented with drugs herself during the relationship.
56. In my view, the husband’s marijuana use does not amount to conduct which is reckless, negligent or wanton and has reduced the value of matrimonial assets. I will not add back $43,225.00.

Alcohol

57. The wife claims an add back of $19,760.00 for the consumption of alcohol during the marriage, calculated at one carton of beer per week, being $40.00 x 494 weeks = $19,760.00.
58. The wife’s evidence was that during the course of the proceedings concerning [Z] between 1996 and 2001, the husband’s expenditure on alcohol increased. After the parties moved to Tasmania the husband drank more alcohol. The wife relied on an admission to Dr H, to whom the husband acknowledged that he used to consume alcohol but claimed that he did not drink it to excess. The wife relied on reports from the Salvation Army dated 28 March 2006 and Dr C dated 26 June 2008, in which it was noted that the husband purchased one carton of beer per week.
59. The wife told Dr H that she met the husband when she was running a bar in Sydney. She said that the husband would be knocking on the door half an hour before opening time wanting a drink and he would then come in and get drunk.
60. During cross-examination, the wife accepted that she met the husband in a bar and that she also drank alcohol but did not drink much. She agreed that the husband’s parents brought wine when they came to the parties’ house for dinner and that the parties drank on social occasions. She agreed that she currently drinks alcohol. The wife said that she did not regard the husband’s drinking as a problem until after [X] was born.
61. In her report, Dr H referred to the husband’s substance abuse:
    • “There is no easy way of knowing the extent of Mr P’s previous substance use...although Mr P acknowledged his substance use and acknowledged treatment for his problematic substance use behaviour, it is likely that he downplayed the extent of his use when interviewed by me. However, it would appear that Mrs P has overestimated the extent of Mr P’s problems. It would appear that Mr P was employed or studying throughout the period when Mrs P indicated that his substance use was uncontrolled. [Z] reported being unaffected by her father’s substance abuse.”
62. The husband worked and earned an income throughout the marriage except for a period of 12 months when he trained for [occupation omitted] and obtained a scholarship with [omitted].
63. The consumption of alcohol was accepted by the wife during the relationship as a form of entertainment. I do not view the husband’s consumption of alcohol of one carton of beer per week as conduct amounting to reckless, negligent or wanton, which has reduced or minimised the value of matrimonial assets. I will not add back the sum of $19,760.00.

Gambling

64. The wife claims an add back of $68,759.86 for the husband’s gambling losses, made up as follows:
    • Centrebet Pty Ltd (“Centrebet”) records show losses of:

$41,201.88 from 25 May 2000 to 11 February 2006 (296 weeks or $139.19 per week)

• The relationship lasted 494 weeks:

494 x $139.19 = $68,759.86

The wife’s evidence

65. The wife was aware of the husband’s gambling when the relationship commenced, but it was not until they commenced to live together that she became aware of the extent of it.
66. She does not describe the extent of the gambling, but said that the husband’s expenditure increased during the course of the proceedings concerning [Z] between 1996 and 2001. She said that she threatened to leave him because of the large amounts of money the husband spent on alcohol, drugs and gambling, which placed a strain on their financial circumstances. She said they decided to move to Tasmania to make a fresh start.
67. The wife did not know how $30,000.00 from sale proceeds of the Sydney home were used, but believed that the husband spent some of the proceeds on alcohol, gambling and marijuana.
68. The wife said that money was often an issue, with little money being available at times, due to the husband’s gambling expenditure.[23]
69. At Christmas 2004, the parties borrowed $30,000.00 from Bass & Equitable for the purpose of carrying out renovations and repairs to the home. Some of the money was used for Christmas presents and a holiday. The wife said that a large portion of the loan was used by the husband for gambling through Centrebet, which the wife discovered in early 2005.
70. Between 4 November 2005 and 17 March 2006 the parties obtained three further loans of $10,000.00 each from Bass & Equitable. The wife referred to large cash withdrawals made by the husband from all of the loans from Bass & Equitable.
71. The wife’s summary of the Bass & Equitable statements and the husband’s Commonwealth Bank statements showed the cash withdrawals made by the husband between 21 December 2004 and
    18 April 2006 and miscellaneous purchases. They amounted to the sum of $30,532.98. The wife’s cash withdrawals and miscellaneous purchases amounted to $21,453.73. During this period the husband received income and petrol allowance of approximately $31,000.00.
72. The records of Centrebet show that the husband’s gambling losses through Centrebet from 25 May 2000 to 11 February 2006 amounted to $41,201.88, a period of five and three quarter years or $139.00 per week. The Centrebet figures do not include the husband’s losses on cash gambling.
73. The wife relied on the husband’s admission to Dr H in 2007 that he attended Gamblers Anonymous for four to five months and he could now see how destructive his gambling was.
74. The husband said that the wife gambled during the relationship. The wife denied that she gambled. In her affidavit, the wife said that an account was opened in her maiden name, which was used by the husband and was always in credit and only existed for four months.
75. During cross-examination, the wife said that in the early part of the relationship she gambled occasionally, by going to the Casino two to three times. She has gambled on poker machines on about six occasions in her life. On one occasion, on a trip to Queensland, she played blackjack and the parties went to the races. Three months after [X]’s birth she opened a Centrebet account to gamble on a rugby final. She denied that gambling was part of their lifestyle and said it was only done on special occasions. She admitted that the husband’s winnings enabled the parties to purchase a dining table, which she was happy about. The wife said that gambling was not so much a problem for the husband until 1999.

The husband’s evidence

76. The husband said that gambling was entertainment for both parties. He said the wife was happy to use the winnings from time to time from the Centrebet gambling account, such as when a dining table was purchased. The husband said that the gambling losses did not impact on the parties’ lifestyle. He attended a Salvation Army Bridge Program towards the end of the relationship as he recognised he did have an addictive nature and that he had difficulties as a result with gambling and substance abuse.
77. In his affidavit the husband said:
    • “...I state that I did not obtain employment in Tasmania for a period in excess of 12 months. Therefore the proceeds from the sale of my house in Sydney were used on living expenses and the cost of relocating from Sydney to Tasmania...”[24]
78. He said in response to the wife’s statement that she did not know where the balance of the sale proceeds of $30,00.00 from the sale of the Sydney property went to:
    • “...the monies I received from the sale of the property in Sydney were used to meet living expenses for the family including the payment of rent in the amount of $260.00 per week”[25]
79. During cross-examination the husband admitted that this evidence in his trial affidavit about the balance sale proceeds was untrue. The husband admitted that he lost $17,500.00 by gambling in February 2002, at a time when he was not employed and the parties had moved to Tasmania. In less than one month, between 26 January 2002 and
    22 February 2002, the husband made a $17,500.00 loss.
80. The husband agreed that if he had not lost the sum of $17,500.00 included in a total of $41,201.88, the parties would have been able to reduce their loan.
81. The records show that the husband’s loss from gambling from
    18 October 1997 until March 2000 was $3,937.20. From 25 May 2000 to 11 February 2006 the net loss was $41,201.88 or $139.00 per week.
82. The husband told Dr H the loss of $41,201.88 was incurred over a
    10 year period. In the Notice to Admit dated 23 November 2007 he disputed that the loss of $41,201.88 from 25 May 2000 until
    11 February 2006 was his loss through gambling with or through Centrebet for that period. The husband also disputed that he incurred 38 failed Centrebet transactions during that period, and said that they occurred over a 10 year period. During cross-examination the husband admitted these facts. He said however, that there were no economic consequences for the parties.
83. The husband disagreed with the wife’s assertion that he made cash withdrawals from the Bass & Equitable monies and his Commonwealth Bank account amounting to over $25,000.00 between 21 December 2004 and 18 April 2006. He did not say how much he had withdrawn. He gave no explanation as to how he spent the money, apart from the cost of a family holiday to the Gold Coast costing $5,348.00. The husband said that he did some cash betting but it was minimal and the wife would cash bet too. He said that most of his betting was done through Centrebet because the odds were better.
84. The husband’s Counsel submitted that the wife could not have been concerned about the husband’s gambling, otherwise she would not have jointly obtained three extra loans from Bass & Equitable. The wife’s evidence was that the husband promised her that he would not gamble. She had asked him to go to counselling for the problem. Whilst she may have been too trusting in obtaining the loans, I am of the view that the wife should not be held responsible for the husband’s conduct.
85. An examination of the Centrebet records[26] indicated that at the times the parties obtained the Bass & Equitable loans, the amount of the husband’s bets through Centrebet increased, as it did when he had the use of the sale proceeds of the Sydney property in 2002. Whenever he received a settlement from a win he also increased the betting amounts. When there was insufficient money, he attempted on 38 occasions to make deposits into the Centrebet account from his credit card, which failed due to lack of funds.
86. The husband’s Commonwealth Bank account statements indicated that the husband’s net income, while working for [omitted] in 2004 and 2005, was up to $845.04 per fortnight. The only regular payment evident from the statements was a loan payment of $240.00 per month to GE Finance. I infer that the husband also paid the telephone and electricity accounts, as the wife said that on separation she had to reconnect the telephone as well as take over the electricity account. The husband’s income of $422.50 per week meant that after payment of bills there would have been little money for the husband to have used cash to gamble with, in addition to the money he used with Centrebet. When he was paying the loan instalments of $240.00, this left $362.00 per week for the other living expenses.
87. The husband was not truthful about the loss of $17,500.00 in 2002 and attempted to underplay the losses amounting to $41,201.88 by stating that these losses occurred over a 10 year period.
88. I am of the view that the husband had a gambling habit which became a serious problem from about 2000. This is consistent with the Centrebet records from 1997 to 2000 which indicated a small loss of $3,937.20. The husband’s gambling continued after separation.[27]
89. I find that the husband’s conduct, in losing $41,201.88 or $139.00 per week over a period of five years and seven months, which included a time when he was not employed for a period of 12 months, was conduct which was reckless, negligent or wanton and reduced or minimised the value of the assets. The parties could have used $17,500.00, which the husband lost, to reduce the amount of the loan they obtained from the husband’s mother when they purchased Property S. The funds lost from the Bass & Equitable loans could have been used to reduce the loan to the husband’s mother, which would have increased the sale proceeds now available to the parties.
90. I am of the view that the total amount of $41,201.88 should not be added back to the property pool. This amounts to a large percentage of the property pool, about 40% of it. I am of the view that in the circumstances of this case, having regard to the financial circumstances of the parties, and the fact that the husband used alcohol and marijuana for entertainment, that it was reasonable to allow $30.00 per week for entertainment for gambling over the five year and seven month period. The loss therefore amounts to $32,264.00 (296 weeks x $109.00). In respect of the husband’s gambling prior to May 2000, I am of the view that he did not gamble unreasonably and his losses were minimal.
91. I find that the asset pool is made up as follows:

Net proceeds of sale $130,432.00

Husband’s car $2,000.00

Add-Back $32,264.00

Total $164,696.00

Liabilities

Husband

Husband’s Bass & Equitable personal loan $1,735.00

Husband’s ANZ Credit card $2,512.00

Husband’s Harvey Norman card $3,767.00

Husband’s Centrelink debt $460.00

Husband’s Telstra debt $560.00

Total $9,034.00

Wife

Wife’s credit cards $9,500.00

Wife’s Centrelink debt $3,500.00

Wife’s MyState loan $8,571.00

Total $21,571.00

Total Liabilities $30,605.00

Net assets $134,091.00

Superannuation

Husband’s Colonial Superannuation $39,268.00

Husband’s Master Super $794.00

Wife’s superannuation $403.00

Total $40,465.00

Contributions
Wife

92. At the date of cohabitation the wife did not have any assets of any significance. She had a $4,000.00 Citibank debt.
93. At the commencement of cohabitation she did not work for three months and received a Newstart allowance. She then worked for [omitted]. The wife contributed her income to the cost of food and entertainment. She worked full-time until [X] was born and part-time prior to the birth of [Y].
94. The wife was the primary carer of [X] and [Y] and looked after them on a full-time basis during the marriage. She continues to be the primary carer after separation.
95. The wife supported the husband during the court proceedings with his former wife from 1996 to 2001.
96. Both parties were equally involved in the general maintenance and upkeep of their homes during the marriage.
97. The wife remained residing in the matrimonial home after separation until it was sold in June 2007. She took over mortgage payments several months after separation.
98. It was submitted by the wife’s Counsel that the husband’s expenditure on gambling, alcohol and marijuana detracted from the husband’s contribution as a husband and father and made the wife’s role more difficult. Whilst the wife complained that there were times when the family had little money due to the husband’s expenditure on alcohol, marijuana and gambling activities, the parties owned a home, their children attended a private school and they went on family holidays. The husband’s consumption of alcohol and his marijuana use did not affect his ability to earn an income. I am not satisfied that there is sufficient evidence to satisfy me that the wife’s contributions were made more arduous as a result of these activities.

Husband

99. The husband made an initial contribution of the Sydney home which he purchased from his former wife for $5,800. The only evidence of the value of the home at that date and the amount of the mortgage was in the husband’s previous wife’s financial statement of 8 January 2007 which shows a value of $160,000.00 with a mortgage of $134,000.00, and an equity of $26,000.00. As the husband paid his former wife $5,800.00 to obtain a transfer of his interest in the home, it is likely that it was not an amount greater than $26,000.00.
100. The way the assets brought into marriage by the parties are to be treated was considered in the decision of the Full Court in Pierce & Pierce[28]. The Full Court said:
     • “In our opinion, it is not so much an erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to use made by the parties of that contribution. In the present case that use was a substantial contribution of the purchase of the matrimonial home.”[29]
101. In Williams & Williams[30] the Full Court stated:
     • “We think that there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus, where the pool of assets available for distribution between the parties consists of say an investment portfolio of a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so, it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.”[31]
102. The weight to be attributed to initial contributions and other contributions is not required to be a mathematical or a counting exercise. In Crick & Crick[32], the Full Court said:
     • “We accept that the task to be undertaken by a trial judge in assessing weight to be attached to initial contributions, and other contributions, is not always an easy one and not discharged by a strict accounting exercise...”[33]
103. The initial contribution must be considered in the context of a ten year marriage and the parties’ subsequent contributions.
104. During the relationship, the husband paid the mortgage instalments in respect of the Sydney and Property S properties.
105. Whilst the parties lived in Sydney the husband earned $50,000 to $70,000 per annum working as a [omitted]. Whilst in Tasmania he earned between $20,000.00 and $30,670.00, except for 2003 when he earned $12,408.00.
106. In 2002 the Sydney home was sold and the husband received $110,500.00 net proceeds of sale. From the sum, $80,173.00 was used towards the purchase of the parties’ property in Property S, Tasmania.
107. Some of the balance sum of $30,000.00 was used towards relocation costs and living expenses. Some of the balance was used by the husband for gambling.
108. The husband’s mother loaned the parties the sum of $111,448.80 to assist them with the purchase of a home at Property S. The husband contends that this is a contribution made on his behalf. The wife contends it is a contribution made on behalf of both parties.
109. The normal rule is that the question of who is the recipient of a gift and therefore the contributor, is determined by the original intention of the donor[34]. However, it is open to the Court to regard gifts from parents as a financial contribution made directly on behalf of the spouse relative, to the acquisition of the property during the marriage, because in many cases the gift is made only because of that relationship.[35] However, there may be evidence that the donor intended to benefit both spouses, which may not justify such a conclusion.
110. Ms P and her husband Mr P made affidavits. They were not cross-examined. The affidavit evidence of Ms P, with whom her husband agreed, was that she entered a loan agreement with her son and the wife in the sum of $111,448.80 to assist them with the purchase of Property S. The loan agreement was signed by Ms P and the husband and wife. The loan agreement provided that no interest was payable. The agreement included a repayment schedule, but no monies were repaid until the property was sold in 2007. In her affidavit, Ms P said further, that the loan was provided to assist her son with the purchase of the house, because he was unable to obtain a loan from the bank at that time.
111. On 10 May 2006 the husband and wife signed a variation of loan agreement charging the property at Property S with payment of all monies under the loan agreement.
112. I am of the view that the loan agreement is evidence of Ms P’s original intention to lend both parties the money to enable them to purchase the Property S home. If the loan was intended by Ms P to benefit only the husband, the loan agreement would have been made with the husband only. The statement in Ms P’s affidavit that “...the loan was provided to assist her son with the purchase of the house” does not alter the original intention of Ms P.
113. This contribution meant that the parties did not have to pay interest on the loan during the period of it and saved about $43,000.00.
114. The husband’s evidence was that both parties were equally involved in the general maintenance and upkeep of the parties’ homes.
115. At separation the wife remained in the matrimonial home until it was sold in June 2007. The husband paid one half of the mortgage instalments for several months after separation.

Conclusion as to contributions

116. I place weight upon the husband’s initial contribution of the Sydney home. The home meant that the parties could afford to purchase the property in Property S, where they lived. The money invested from the sale proceeds of Property S is the major asset to be divided.
117. The husband was the main financial contributor throughout the marriage and the wife was the primary carer of the children. The wife earned what income she could prior to and after the birth of [X].
118. Since separation the wife has contributed by caring for the two children.
119. I find that, having regard to the all the contributions of the parties, that the husband has made a greater contribution. I asses the contributions as 52% in favour of the husband 48% in favour of the wife.

Superannuation

120. The husband’s Colonial First State superannuation has a value of $39,268.31 and his MasterSuper has a value of $794.44. The wife’s Colonial First State superannuation has a value of $402.91.
121. It was conceded by both parties that their contributions to superannuation during the marriage were equal. There was no evidence in respect of this issue. I accept the concessions and conclude that the contribution of both parties were equal.

Section 75(2) matters

122. Both parties are in good health. The husband is 38 years of age and the wife is 41 years of age.
123. The wife is a homemaker and parent and does not earn an income outside the home. She receives a Newstart allowance of $198.00 per week or $10,296.00 per annum. She said that she is currently looking for part-time work.
124. The husband was working as a real estate agent earning $28,559.00 in the 2007-2008 financial year. He was dismissed from his employment with [P] late in 2008. He believes that he will be able to work as a real estate agent again. He currently receives a Newstart allowance of $250.00 per week or $13,000.00 per annum. The husband has an earning capacity of approximately $30,000.00 per annum.
125. The wife has the full time care of the two children of the marriage. [X] is 10 years old and [Y] is 8 years old. The wife has the main financial burden of the children.
126. The wife has not set out her commitments and the children’s commitments in her financial statement. The only expense she has indicated is $25.00 per week for her visa card minimum payments. The “Costs of Children”, based on the Lee scale indicated that the cost of supporting an 8 year and 10 year old is $358.80 per week or $717.60 per week for both children.
127. The wife is living with her partner in Brisbane, Mr C. Mr C is a [omitted] and has a taxable income for 2008 of $16,716.00. She has the benefit of residing with him and he is supporting her and the two children.
128. The husband set out his commitments in his financial statement as $294.50 per week. The husband pays child support of $3.10 per child per week. The husband will have the expense of travelling to Queensland in order to re-establish a relationship with the children.
129. The effect of the findings as to contributions is that the wife will receive $64,363.68 and the husband $69,727.32.
130. The wife cared for the husband’s daughter [Z] during the marriage. [Z] spent time with them each alternate weekend. She lived with the parties from 2001 on a full-time basis and the wife cared for her. This is a factor for which the wife should receive some adjustment.
131. I find that there should be an adjustment of the wife’s contribution based entitlements by a further 10% in her favour, having regard to the relevant matters in s.75(2) of the Family Law Act 1975.
132. As a result of my findings, the wife shall receive assets to a value $77,772.78 and the husband $56,318.22, $32,264.00 of which has been notionally added back.
133. In respect of superannuation, the parties are of similar age. However, the wife is responsible for the primary care of the children and only has a capacity for part-time work. The wife will be unable to increase her superannuation in the same way the husband will be able to increase his superannuation in the future.
134. I do not give the husband an allowance for the expenditure of the wife of the majority of her superannuation post-separation, which reduced the superannuation pool. The wife was suffering financial hardship and receiving a minimal amount of child support from the husband.
135. In respect of the husband’s use of alcohol and marijuana, I have found that there was no wastage in accordance with the Kowaliw principles. I do not consider that there has been a significant reduction in the asset pool as a result of these activities such as to result in an adjustment pursuant to s.75(2)(o). I have found that the wife knew that the husband drank alcohol and smoked marijuana when she commenced cohabitation with him and she also drank alcohol and experimented with drugs during the relationship.
136. I am of the view that the appropriate adjustment for s.75(2) factors should be 10% in favour of the wife so that she receives 60% of the superannuation and the husband 40%. In monetary terms this means an adjustment of $4,046.00 which I consider is appropriate given the amount of the superannuation pool.
137. The order which I propose to make in respect of both pools does not affect the earning capacity of either party.

Is the order just and equitable?

138. To make an order under s.79 the Court must be satisfied that in all the circumstances it is just and equitable to do so. I must stand back and look at the overall result to ensure that it is just and equitable. My findings result in both parties receiving some cash and some superannuation.
139. Each party will receive cash, although once their debts are repaid, they will not have a large sum of money due to the size of the asset pool. They will also each receive superannuation.
140. The wife will retain the following:

Net proceeds of sale $99,343.78

Liabilities

Credit cards $9,500.00

Centrelink $3,500.00

MyState loan $8,571.00

Total $21,571.00
Net $77,772.78

141. The husband will retain the following:

Car $2,000.00

Add back already received $32,264.00

Net proceeds $31,088.22

Total $65,352.22
Liabilities

Bass & Equitable personal

Loan $1,735.00

ANZ credit card $2,512.00

Harvey Norman card $3,767.00

Centrelink $460.00

Telstra $560.00

Total $9,034.00
Net $56,318.22

142. In respect of the superannuation the wife will receive $24,279.00, comprising $403.00 of her Colonial FirstState Superannuation and a superannuation split of $23,876.00.
143. The husband shall retain superannuation worth $16,186.00.
144. I am satisfied that this result is overall, a just and equitable one between the parties.

I certify that the preceding one hundred and forty four (144) paragraphs are a true copy of the reasons for judgment of Baker FM

Associate: Sita Buick

Date: 27 May 2009

[1] Exhibit “W13”
[2] [2005]FLC 93 -220
[3] Hickey & Hickey [2003] FamCA 451; 2003 FLC 93-141 and Ferraro & Ferraro [1992] FamCA 64; 1993 FLC 92-335
[4] [2005]FLC 93-218
[5] [2005] FAMCA 356
[6] para 146
[7] [2008] FAMCAFC 8
[8] [2003] FLC 93-133
[9] op sit at para 37
[10] op sit
[11] page 78239
[12] page 78,240
[13] [2007] FMCA 617
[14] para 96, decisions of Crampton [2006] FamCA 528; [2006] FLC 93-269, Kennedy & Cahill NA44 of 1995, Plummer & O’Connor [1998] FamCA 53
[15] exhibit “W9”
[16] exhibit “W4”
[17] exhibit “W13”
[18] [1998] FamCA 143
[19] op sit at para 46
[20] para 4 – page 5 Dr H report
[21] para 23 – page 8 report of Ms Malakoff 28.06.07
[22] paras 53b, 54-56 wife’s trial affidavit
[23] para 32-36 – wife’s trial affidavit.
[24] Para 59 – husband’s trial affidavit
[25] Para 61 – husband’s trial affidavit
[26] exhibit “W10”
[27] paras 54 and 60 – wife’s trial affidavit
[28] [1999]FLC 92-844
[29] para.28
[30] [2007] FamCA 313
[31] para.26
[32] [2008] FamCAFC 172
[33] at para.44
[34] Dickey, A Family Law (Law Book Co. 5th Edition 2007at page 514)
[35] see Gosper & Gosper [1987] FLC 91-818 and Pelligrino & Pelligrino [1997] FLC 92-789, Kessey & Kessey (1994) FLC 92-495