Ken and Barbie Exam Practice Question PDF

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Practice Exam Question
Family Law - Property Settlement and Children...

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Topic 4 – Property Settlement Ken (born in 1952) and Barbie (born in 1962) were married in 1982 and separated in 2002. They have no children. At the time of the marriage, Ken was working as an apprentice chef and Barbie was a stewardess with Ansett. Both have worked full time throughout the marriage, and their incomes were about the same, although Barbie would often receive extra allowance for travel and so on. When Barbie traveled in the course of her work, she was very frugal, and would often be able to pocket all the additional allowances, which increased her overall income by about 25%. Both have accrued superannuation funds. Barbie’s is current worth $120,000 and when it vests in 15 years the payout will be $920,000. Ken’s super is currently $110,000 and will vest in 10 years at $800,000. Prior to the marriage, Ken had inherited a small cottage on the beach at Avoca on the central coast. It is currently registered in his sole name, and it is worth $328,000. It is unencumbered. Between the date of marriage until 1985, Ken and Barbie rented a flat in Sydney. Ken paid the rent out of his wages, while Barbie took care of the bills and household expenses like groceries. Otherwise they spent most of their income on lifestyle such as going out, holidays abroad, purchasing books, CDs and so on. In 1985 Ken and Barbie purchased a home in French Forest in Sydney. For tax reasons, the house was registered in Barbie’s name only. They paid $312,000 for it. They source of the purchase price was $60,000 given to them by Ken’s parents, and a bank loan for the balance. They continued to use Ken’s income to pay off the mortgage, while Barbie paid the household expenses. Barbie also used her income to purchase stamps for her stamp collection (see below). In late 1986, Star Casino was built in Sydney, and Ken visited one night with a friend. He won about $6,000 that night. As a result of this Ken developed a taste for gambling, but unfortunately his efforts were never profitable after that first night. Ken spent much of his income on gambling for about three years. On several occasions he was unable to pay the mortgage, so Barbie had to make up the payments out of her income. In about 1989 Ken started attending Gamblers Anonymous, and he was able to wean himself off the habit. Since late 1989 he has stopped gambling altogether. While Ken was absorbed with his gambling, Barbie found consolation in having a string of extra-marital affairs with her co-workers. She made very little effort to hide her conduct from Ken, and he became seriously depressed. He started seeing a psychiatrist in 1988. He would attend every week at a cost of $250 per session. This went on for four years.

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By 1999, Ken and Barbie had paid off all but $25,000 of the original loan. They decided to borrow more money to renovate the house. They borrowed a further $250,000 and put a second storey on the house. Ken spent a lot of his spare time helping with the renovation work. As his work as a chef was mostly in the evenings, Ken spent many days labouring with the builder engaged in the renovation. This reduced the costs of the renovation quite a bit. The costs were furthered reduced by the fact that the Builder was Barbie’s brother, who worked at ‘mate’s rates’ on the renovations. At separation, the home was valued by an independent valuer at $578,000. That area of Sydney has experienced a boom in recent years, and a current valuation puts the value at $640,000. The house is encumbered by a mortgage of $200,000. In 1993, Ken suffered a work accident, and received a lump sum compensation payment of $48,000. Of this, he invested $20,000 in shares, which are now worth $70,000. These are in Ken’s name only. Another $20,000 he spent purchasing a 4WD. The balance of $8,000 was placed in a long-term deposit account in Ken’s sole name, where it has accrued and is now worth $22,000. Barbie is a beneficiary of a discretionary trust, along with her two sisters. Over the last 8 years she has received 6 monthly payments of $5,000. These have been spent by her and Ken on holidays and luxury items such as skis, clothing, stereo equipment and so on. One of Barbie’s sisters, Midge, is an alcoholic. Midge uses her trust payments to support herself, but often finds that she needs money. Over the years Midge has borrowed extensively from all her siblings. Barbie has lent her about $35,000 since she and Ken were married. Barbie also owns a stamp collection, which she began as a child. At the time of the marriage the collection was worth about $8000. At separation is was worth about $15,000. She has recently added more stamps, to the value of $3500. In 1999 Barbie discovered that she had an outstanding tax debt of $7,000. Her parents kindly paid that for her. Throughout the marriage, Ken and Barbie enjoyed a very high standard of living. They spent freely on furniture, cars, holidays and so on. They also invested in various shares, and they have a portfolio of shares in joint names. At separation the portfolio was worth $80,000. The value has now increased to about $84,000. The furniture in the home is worth $75,000. When they separated, Ken moved out of the home and rented a flat in Mosman. He currently pays rental of $450 per week. Barbie is paying the mortgage out of her income. At separation, they had one car worth $70,000. At separation, Barbie purchased her own vehicle for $95,000. Unfortunately, Barbie is not a very good driver. Prior to separation, she used to let Ken do most of the driving. Since separation, she has had several car accidents, all minor, which have seriously reduced the value of her car. It is now worth $38,000. The source of the funds for the purchase was from a joint bank account. At separation the account held $140,000. Barbie spent $95,000 on the car. Ken withdrew $35,000 from the 2

account to buy furniture for his new flat after leaving the matrimonial home. The balance of $10,000 has been spent since separation by Barbie on upkeep of the home. Barbie has a savings account with $56,000 on deposit. Ken has an account with $2,000. These accounts were held by them during the marriage. At separation, Barbie’s account had $18,000 in it and Ken’s had $20,000. Ken spent most of the money in his savings account on a lengthy overseas holiday after separation. He was on leave without pay, and used his savings to live on. Not long after his return, he suffered another accident at work which took him some months to recover from. During that time, his brother loaned him money for rental and living expenses over and above his workers compensation payments. He now owes his brother $4,000. His solicitors are preparing a claim for lump sum compensation, which they estimate is worth $35,000 $40,000. Last year (2003) Barbie won $42,000 on the lottery. She used $7,000 to repay her parents for the tax debt they paid on her behalf in 1999. She spent $5,000 on a holiday. The balance of $30,000 was deposited into a long-term savings account. It is now worth $31,500. Barbie is aware that she and her sisters are beneficiaries named in her great-Aunt Murgatroyd’s will. As great-Aunt Murgatroyd is 97 years old and frail in health, Barbie expects to receive her inheritance in the next couple of years. She is likely to receive a net amount of $250,000. Last week we identified the property of the marriage. Some changes have been made to the facts since then. Your mission? (a) Update the list of marital property which the court would consider in any application for orders under s79. (b) Assess the relative contributions of Ken and Barbie under s 79(4)(a), (b) and (c). (c) Identify and discuss any adjustments which might be made in relation to the other factors under s79(4).

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List of Assets Ken’s Superannuation Barbie’s Superannuation Avoca Holiday House 328,000 French Forest House 640,000 Ken’s shares 70,000 Ken’s long-term deposit 22,000 Barbie’s stamp collection 18,500 Joint share portfolio 84,000 Frenchs Forest furniture 75,000 Ken’s furniture 35,000 Ken’s motor vehicle...