Allport and Allport
[2015] FCCA 1053
•11 December 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ALLPORT & ALLPORT | [2015] FCCA 1053 |
| Catchwords: FAMILY LAW – Property – final orders – contributions – future needs – whether there should be any adjustment for section 75(2) factors – lump sum spousal maintenance application. |
| Legislation: Family Law Act 1975, ss.72, 74, 75, 79, 80, 81 Federal Circuit Court Rules2001, reg.24.03 |
| Babett & Falconer [2015] FamCAFC 194 In the Marriage of Ferraro (1992)16 Fam LR 1; (1993) FLC 92-335 Jong & Yeng [2014] FamCAFC 156 Z & Z [2005] FamCA 996; (2006) Fam LR 296; [2005] FLC 93-241 |
| Applicant: | MR ALLPORT |
| Respondent: | MS ALLPORT |
| File Number: | SYC 6718 of 2012 |
| Judgment of: | Judge Monahan |
| Hearing dates: | 4, 5 and 6 August 2014 |
| Date of Last Submission: | 16 February 2015 |
| Delivered at: | Sydney |
| Delivered on: | 11 December 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr P Campton SC |
| Solicitors for the Applicant: | Austin & Giugni |
| Counsel for the Respondent: | Mr G Gould |
| Solicitors for the Respondent: | Forsters Solicitors |
ORDERS
Within 42 days, the husband pay to the wife the sum of $382,417.00 with interest to accrue thereafter as prescribed by the Rules (“the Sum”).
In default of payment of the Sum within 90 days from the date of these Orders, the parties forthwith do all acts and things and execute all documents necessary to sell the property situated at Property Y being the land contained in Folio Identifier Lot (omitted) (“the former matrimonial home”) as agreed or, failing agreement within a further 14 days as to the sale process (including the appointment of a real estate agent and conveyancing solicitor) the parties forthwith do all acts and things to cause where applicable:
(a)the President of the Real Estate Institute of New South Wales or his or her nominee to nominate an agent who will then determine the method and terms of sale, including the sale price; and/or
(b)the President of the Law Society of NSW or his or her nominee to nominate a solicitor who will have the carriage of sale;
and the parties forthwith jointly instruct the relevant real estate agent and/or conveyancing solicitor.
At the settlement of the sale of the former matrimonial home, the proceeds be distributed in the following order and priority:
(a)in payment of the real estate agent’s commission, conveyancing costs and other reasonable costs of sale;
(b)in payment of the Sum to the wife;
(c)in payment of the remainder to the husband.
Simultaneously upon receipt of the Sum pursuant to either paragraph 1 or 3 herein, the wife vacate the former matrimonial home and do all acts and execute all documents necessary to transfer to the husband her entire right title and interest in the former matrimonial home.
Until the wife vacates the former matrimonial home she will maintain it in the same condition as at the date of these orders.
Pursuant to s.90MT(1)(a) of the Family Law Act 1975 (“the Act”), the wife receive a splittable payment in the amount of $315,000.00 with the husband to cause the Trustee of the Mr Allport Superannuation Fund to cause such splittable payment to be paid to a separate superannuation account of the wife and, as a consequence, there be a corresponding reduction in the entitlement the husband would have had but for these Orders.
The operative date for the s.90MT(1) order shall be the fourth (4th) business day after the day on which a sealed copy of these Orders is served on the trustee of the fund.
The husband is restrained from doing any act or thing which would prevent the wife receiving the benefit in the fund to which she is entitled pursuant to these Orders.
Until such time as the superannuation split to the wife pursuant to these Orders can be rolled over onto a separate account of the wife, the husband and the trustee are restrained from taking any step to de-value the wife’s interest in the fund.
Unless otherwise specified in these Orders:
(a)each party be solely entitled to all chattels, goods, motor vehicles, furniture, furnishings and any other property in the possession of such party as at this date;
(b)each party be solely entitled to any moneys, shares and debentures which stand in such party’s name as at this date;
(c)each party be solely entitled to any superannuation benefits held in such party’s name and each party hereby foregoes any claim they may have to any superannuation benefits belonging to or earned by the other; and
(d)each party be solely liable for and indemnify the other against any debt, loan or liability whatsoever held in such party’s name as at this date.
Each party do all such things including the signing of all documents to give effect to these Orders.
In the event that either party refuses or neglects to execute any deed or instrument that may be required to give effect to these Orders, the Registrar of the Court be appointed pursuant to s.106A of the Act to execute such deed or instrument in the name of such party or parties and do all acts necessary to give validity to the operation to the deed or instrument.
The wife’s application for lump sum spousal maintenance be dismissed.
All extant applications before this Court be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Allport & Allport is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 6718 of 2012
| MR ALLPORT |
Applicant
And
| MS ALLPORT |
Respondent
REASONS FOR JUDGMENT
Introduction
This is a contested property application by MR ALLPORT (“the husband”) against MS ALLPORT (“the wife”). The wife also seeks a lump sum spousal maintenance order against the husband.
In respect of the property dispute, the parties disagree about the following:
·what assets and liabilities should be included in the matrimonial property pool;
·the relative strength of their respective contributions made prior to and during their relationship and following their separation; and
·whether there should be a further adjustment to reflect each party’s future needs.
In respect of the spousal maintenance dispute, the wife argues that she is unable to support herself without the benefit of a lump sum payment and that the husband has the financial capacity to pay the sum of nearly $50,000 requested. The wife asserts that the sum requested represents the difference between her asserted income and expenditure. The husband disputes the wife’s assertion that she is unable to support herself adequately.
At the final hearing both parties were legally represented by counsel; the husband was represented by Mr Campton (as he then was) and the wife by Mr Gould.
Unless otherwise stated, any statutory references in these reasons will be to the Family Law Act 1975 (“the Act”).
Background
Relationship history
Both parties provided the Court with separate chronologies of relevant events. While it is certainly not in all respects an agreed chronology, the husband’s chronology is reproduced below with the competing or additional assertions made by the wife marked, where applicable.
(omitted) 1943 Husband born (omitted) 1957 Wife born 1975 Wife marries first husband (omitted) 1978 Husband commences employment with (omitted) (later known as (omitted) Pty Ltd) 1979 Wife’s son of first marriage, Mr F, born 1982 Wife divorces first husband 1984 Wife marries second husband in (country omitted) (omitted) 1985 Husband marries first wife, Ms C. 1986 Wife’s daughter of second marriage, X, born. (omitted) 1988 Husband and his first wife’s adopted son, Y, born. 1989 Wife moves to Australia
Wife attends TAFE and later sets up (omitted) business with assistance of her brother, Mr M.
Wife divorces second husband.1992 Wife becomes Australian citizen.
Property at Property P purchased by wife for $139,000 facilitated by her brother Mr M sending to Australia $140,000 (“the Property P unit”).1994 Wife alleges that during a trip to Australia, Mr M (now deceased) says, “After papa died, Mr J [Wife’s brother] didn’t get any inheritance and he doesn’t have much. I’d like to set up a trust for Mr J. I’d like the trust to buy a property for Mr J in Sydney and for you to look after the trust.” 1996 Husband engages in a settlement of s.79 entitlements with his first wife. They divorced in 1997. 1998 Wife asserts that she consults Mr A, General Manager of her then employer, (omitted), for advice in relation to setting up a trust. At that time, she asserts that Mr M had some funds to transfer to a new trust for her other brother, Mr J. Thereafter, Mr A, as settlor of the trust, allegedly gives to the wife $100 and gives her copies of Deed of Trust, thereby establishing the (omitted) Trust. At present, the assets of the trust are shares in (omitted) Pty Ltd which owns an apartment in Property H. The trust deed is Annexure A to the affidavit of Mr A filed 9 July 2014 on behalf of the wife.
Wife’s brother, Mr M, dies.26.05.1999 Deed made establishing the (omitted) Trust (“the Trust”). (omitted) Pty Ltd is the trustee. The deed of trust is marked with stamp duty on 2 January 2013. The wife is the sole shareholder and director of the trustee. The trust is exercised at the absolute discretion of the trustee, including the power to vary the terms of the deed of trust.
The wife contends that a further entity was established, (omitted) Pty Ltd (“(omitted)”), being an ‘investment company.’ The shares in (omitted) Pty Ltd are owned by (omitted) Pty Ltd in its capacity as trustee for the (omitted) Trust.
The wife applies $100,000 from the sale of the Property P unit by way of loan to (omitted) Pty Ltd in or about 1999. (omitted) Pty Ltd thereafter applies some of those monies and borrowed funds to purchase a unit at Property L and later a unit at Property H.1999 Wife asserts that she starts taking Stematil tablets for vertigo.
In December (omitted) Pty Ltd purchases Property L for $320,000 (“the Property L property”).10.2000 According to wife, Property P unit sold for $235,000, of which $55,000 is retained by the wife and the balance of $180,000 placed into (omitted) bank account, per alleged agreement with Mr M.
Wife purchases property at Property B (“the Property B unit”) for $375,000 by the Wife contributing $100,000 and borrowing the balance. The husband asserts the Property B property was purchased in December 2000 subject to mortgage of $300,000 and was not occupied by wife until 2001.2000 According to wife, (omitted) Pty Ltd purchases unit at Property H off the plan for $430,000 (“the Property H unit”). Settlement occurs in August 2001 with $180,000 provided by (omitted) Pty Ltd and balance borrowed from (omitted) Bank. 2001 to 3.2006 Wife asserts her wages and rent from the Property B unit were paid into parties’ joint (omitted) bank account, together with her Christmas bonus, sales bonuses, tax refund and redundancy payment. 2001 - 2008 Husband owns (omitted) Pty Ltd which in turn owns various properties. During this time, the wife asserts that some of the properties were not managed by agents. Wife further asserts that she helps secure tenants, assisted with cleaning of property and acts on sale without assistance of real estate agents. 06.2001 Wife asserts parties commence cohabitation in the Property B unit which was already furnished and that the husband did not bring additional furniture. Wife asserts she makes payments of mortgage, electricity, council rates, strata levies and water rates while parties reside at the Property B unit. Husband asserts that the wife’s mortgage instalments in relation to the Property B unit are equal to her after tax income. Husband also asserts that he commences to meet all of the wife’s general living expenses and supplement other fees for the Property B unit such as strata levies and rates.
Wife asserts that she has estimated net assets of $170,466 and she estimates the Husband’s assets at $1,113,305.
28.06.2001 Parties contract to purchase unit at Property J for $778,000 (“the Property J unit”) with loan from (omitted) Bank of $359,000 and applying the husband’s pre-relationship savings of $458,000 to complete the acquisition. 09.2001 Husband asserts parties commence cohabitation in Property B unit.
Husband asserts he provides wife with $15,000 to repay a debt to her sister.23.11.2001 Settlement of the Property J unit occurs and the parties move to this residence.
The Property B unit is thereafter subject to a tenancy.(omitted) 2001 Parties marry.
Wife asserts parties purchase modest gold bands as wedding rings and have small wedding, estimated cost $10,000.19.04.2002 Wife’s two shares in (omitted) Pty Ltd are transferred to her brother Mr J. This transfer is not registered until 13 December 2012, after the parties separated. 20.06.2002 Parties purchase an investment unit at Property U for $105,000 (“Property U unit”). Wife asserts the parties borrowed $150,000 secured against the Property U unit and the Property J unit and the husband retains balance of borrowed funds. 07.2002 Husband borrows $256,772 from (omitted) Pty Ltd and asserts these monies are used to reduce the mortgage on the Property J unit. The husband repays this loan in the sum of $211,092 in 2004. 10.2006 The parties sell the Property J unit for $850,000 and apply the proceeds to buy a renovated semi-detached home at Property R for $750,000 (“the Property R property”). The Wife asserts the purchase was facilitated by net proceeds of sale of the Property J unit and borrowing of $250,000 from the (omitted) Bank. 2007 Husband liquidates (omitted) Pty Ltd resulting in properties at Property E, Property A and Property C being sold in 2007 and 2008 for a total of $726,000.
Husband in progression to retirement, establishes the Mr Allport self-managed superannuation fund. His pre-relationship defined benefit superannuation entitlement with (omitted) Superannuation Fund (valued at $386,353 on 1 January 2002) is transferred to the self-managed superannuation fund. This benefit by November 2008 had a value of $630,231.
His pre-relationship accumulation interest with (omitted) Superannuation Fund (valued at $29,216.00 on 1 February 2001) was transferred to (omitted) Superannuation. This benefit by November 2008 had a value of $121,605.08.10.2007 Parties sell the Property U unit for $175,000 (noting that the wife asserts that the sale price was $107,500 in her affidavit filed 15 July 2013 which may be a typographical error). 07.2008 Wife is retrenched from (omitted).
Husband asserts that she retains her retrenchment funds for her own use and thereafter commences borrowing funds from (omitted).
The wife says the husband did not provide financial support for her and claims the (omitted) loans were for her living expenses and that Mr J agreed to the withdrawal of the funds in return for payment of interest at 5%.
Husband contends that Wife progressively spends less time at the home.2008 – 05.2012 Wife asserts receives little or no financial support from husband. From May to November 2012, husband pays wife $2,000 per month (total of $8,000). 24.02.2009 Husband discharges the mortgage over the Property R property in the sum of $230,535. (omitted) 2009 Husband’s brother Mr P, a (country omitted) resident, dies. Husband receives a benefit of $150,622.64 by way of his will. These funds are applied to renovations. 10.07.2009 Parties sell the Property R property for $792,000 and apply the proceeds of sale to acquire the former matrimonial home at Property Y for $1,100,000 (“the Property Y property”). The husband asserts that he funds the balance and stamp duty costs required to complete the acquisition over and above the proceeds of sale of Property R property by way of drawing on his superannuation.
The husband further asserts that he thereafter contributes $300,000 from his savings towards renovations to the Property Y property.2010 Wife asserts that she suffers pain and loss of strength in fingers. Wife further asserts that she commences having difficulties with her short-term memory. 2011 Wife asserts that she suffers lack of mobility in left shoulder. 24.06.2011 The wife sells the Property B unit for $657,000 and receives net proceeds of $407,111.
Wife asserts the net proceeds are paid into her (omitted) bank account and purchases Mercedes Benz (omitted) for $40,000 (further asserting the husband purchases a Range Rover for $100,000 for himself), repaid the 2008 (omitted) Pty Ltd loan of $65,636, and further asserts that upon request from Mr J she lends (omitted) Pty Ltd $103,160 at an interest rate of 5%.
Husband asserts the wife used the net proceeds to lend (omitted) Pty Ltd $177,900; gifts $100,000 to her son, Mr F; and otherwise retains the benefit of the balance of those funds.12.04.2012 Husband asserts parties effect a separation under the one roof at the Property Y property. 16.07.2012 Wife receives superannuation (Husband says $44,149; wife says $41,149). 11.2012 - present Wife asserts that she supports herself by withdrawals from her (omitted) Bank account and (omitted) Pty Ltd repaying amounts of money. 12.11.2012 Wife asserts date of separation. 5.12.2012 Wife obtains medical certificate from Centrelink indicating she is not fit for work. 02.02.2013 Husband moves out of Property Y property. 02.2013 The husband asserts that the wife agrees to list the Property Y property for sale. Relying on that agreement, the Husband vacates the Property Y property and commences to rent in the Property Y area.
The husband further asserts that the Wife then refuses to implement that agreement and secures her exclusive occupation of the Property Y property.03.2013 Husband commences living with Ms J who was soon thereafter diagnosed with breast cancer and the husband gave her $30,631.77 towards medical bills. It is unclear when this relationship ended however the husband asserts he no longer resides with Ms J.
Note: Husband also says he gave, post separation, $5,250 to a friend, Ms C, for legal expenses.12.2013 Husband accepts a redundancy from (omitted) Pty Ltd. Husband asserts he receives:-
a. Annual leave $11,503
b. Annual leave loading $1,353
c. Long service leave $74,653
d. Payment in lieu of notice $307,994 (a total of $395,503)
Husband says that $207,489 of his termination payment is directed into his superannuation fund.11.02.2014 Divorce order 06.2014 Wife asserts (omitted) Pty Ltd repays her $33,000 with balance owing of $78,600.
Procedural history
These proceedings were commenced in the Family Court of Australia and first came before Registrar Chayna for a case assessment conference on 5 March 2013. On that date the parties were referred to a Conciliation Conference and directions for filing of material was made.
The parties were unable to resolve their dispute at the Conciliation Conference before Registrar Ryan and she made orders transferring the matter to the Federal Circuit Court of Australia.
The matter came before me in my duty list on 16 July 2013 at which time interim orders were entered into for valuations to be obtained.
When the parties returned for further mention on 3 September 2013 I adjourned the matter to the callover in early 2014 to allocate final hearing dates.
On 28 February 2014, I duly listed the matter for a three day final hearing to commence on 4 August 2014. On 16 June 2014 the parties returned for mention to ensure the final hearing listing was appropriate and, having been convinced it was so, filing directions were made and the hearing dates confirmed.
As stated, the final hearing proceeded before me on 4, 5 and 6 August 2014. Unfortunately, the hearing was unable to be fully contained to the three hearing days allocated thus necessitating orders being made for written final submissions to be forwarded to Chambers. The orders provided for submissions to be provided by certain dates which neither party was able to comply with. The Wife’s submissions were finally received on 20 November 2014; the Husband’s on 19 December 2014; and the wife’s in reply on 16 February 2015.
It is unfortunate that it has taken so long to write, finalise and deliver this decision. The pressures and limitations of the Court this past year have been particularly pressing which is no fault of the parties. That said, given that this matter has a significant amount of material and is relatively complex, a significant amount of judicial time was required to deliver this decision.
Legislative requirements
Property and spousal maintenance proceedings between parties to a marriage are governed by the provisions of Part VIII of the Act.
Please note that the Court will consider the property dispute between the parties prior to considering the wife’s lump sum spousal maintenance claim.
Section 79
Section 79(1) of the Act states that the Court may make such orders as it considers appropriate altering the interests of the parties in the property.
Section 79(2) of the Act provides that:
“The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.”
If the Court is satisfied that it is just and equitable to make an order altering the interests of the parties in the property, s.79(4) of the Act sets out those matters which the Court must take into account when considering what orders should be made. Section 79(4) provides:
“In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)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; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.”
Section 79(4)(e) requires the Court to have regard to the matters set out in s.75(2) of the Act which are set out and considered later in this decision.
Approach to exercise of discretion
The approach to the exercise of the Court’s discretion has been outlined in numerous judicial decisions. The High Court in the decision of Stanford v Stanford [2012] HCA 52 (“Stanford”) held that before making any orders adjusting the parties’ interests in the property pursuant to s.79 of the Act, the Court must, as required by s.79(2) of the Act, determine that is “just and equitable” for the Court to do so. At [42] the High Court stated that in most cases:
“The just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).”
Prior to the decision in Stanford, the preferred approach in determining property matters was that set out by the of the Full Court in the matter of Hickey v Hickey [2003] FamCA 395; (2003) 30 Fam LR 355; (2003) FLC 93-143. At [39] Nicholson CJ, Ellis and O’Ryan JJ stated:
“The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. Firstly, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the court should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case…”
This approach was reconsidered by the Full Court in Bevan v Bevan [2013] FamCAFC 116; (2013) FLC 93-545 (“Bevan”) in light of the High Court’s comments in Stanford. At [71], Bryan CJ and Thackray J stated:
“71. Stanford will also serve as a reminder that the four step process “merely illuminates the path to the ultimate result”. Any future restatement of that process should incorporate acceptance of the fact that the power to make any order adjusting property interests is conditioned upon the court finding that it is just and equitable to make an order.”
In Bevan & Bevan (No.2) [2014] FamCAFC 19; (2014) FLC 93-572 the Full Court, having upheld the appeal against the decision at first instance, proceeded to re-determine the property application before the Court. At [18] to [19], Bryant CJ and Thackray J stated:
“18. Senior counsel for the husband structured his submissions by reference to the “four-step” approach to property settlement applications discussed in our earlier reasons. By way of explanation for doing so, senior counsel said:
16. The adoption of the above [four-step] approach is not intended to presuppose a positive answer to the question posed [by] section 79(2), nor to suggest that it is an approach appropriate in all proceedings. Rather, and provided that the fundamental propositions outlined by the High Court in Stanford (2012) … are not obscured, such approach is intended to and does no more than provide a principled, disciplined and structured means by which all of the matters arising for consideration pursuant to section 79 can be conveniently and properly identified and assessed.
17. Further, and whilst not said critically nor in a matter which seeks to cavil with the decision in this appeal, no other approach to the determination emerges readily from either Stanford nor the decision in this appeal. It is respectfully submitted that provided that the ‘fundamental propositions’ articulated in Stanford are not obscured, and whilst not universally so as has always been recognised, the approach set out above continues to provide a proper, transparent, certain and structured approach to the presentation and determination of applications pursuant to section 79.
19. We have no issue with what senior counsel has said about the utility of the four-step process, which we accept provides a convenient way to structure both submissions and judgments, provided the caveat mentioned is not overlooked.”
The “caveat” referred to by the Full Court is the requirement that the Court must first be satisfied that it is just and equitable to make an order adjusting property between the parties.
In the subsequent decision in Rockman & Rockman [2014] FCCA 1966 (“Rockman”), Judge Bender noted at [83] that the “High Court in Stanford “neither disapproved or approved the four steps process”. I agree with her Honour’s observation. That said, the High Court did lay down what they described as three “fundamental propositions” which would provide useful guidance to trial judges when undertaking the task under s.79 of the Act. I note that in Bevan,[1] Bryant CJ and Thackray J summarised those fundamental principles at [73] as follows:
“1. Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);
2. The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;
3. A determination that a party has a right to a division of property fixed by reference only to the matters of s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.”
[1] Bevan v Bevan [2013] FamCAFC 116; (2013) FLC 93-545.
I also agree with the view expressed in Rockman that subsequent Full Court and single judge considerations of Stanford suggest that the path that may best “illuminate the path to the ultimate result” could now best be described as the following “five step process”:
“(a)firstly, what is the parties’ legal and equitable interests in property;
(b)secondly, is it just and equitable to make an order adjusting the parties legal and equitable interests in that property;
If the answer to (b) is in the affirmative:
(c)thirdly, identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) of the Act and determine the contribution-based entitlements of each party as a percentage of the net value of the property of the parties;
(d)fourthly, identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g) and s.75(2) of the Act and determine the adjustment, if any, that should be made to the contribution-based entitlements of each party as a percentage of the property of the parties; and
(e)fifthly, given s.79(1) empowers the court to make such orders affecting the parties’ interest in the property as are appropriate, determine what order, if any, altering the parties’ interests are “appropriate” to enable the parties’ entitlements as determined pursuant to steps (c) and (d) to be achieved.”[2]
[2] Rockman & Rockman [2014] FCCA 1966 at paragraph 84.
The Court will adopt this process for this decision.
Sections 80 and 81
In addition to the specific powers provided by s.79(1) to adjust property interests, s.80(1) provides the Court with general powers some of which include the power to order payment of lump sum (in one amount or by instalments), order a specified transfer or settlement of property be made by way of maintenance, the power to appoint or remove trustees, to make orders by consent and/or to make any other order considered necessary to do justice to name a few.
For completeness, I note that the Court must also consider s.81 of the Act which states:
“In proceedings under [Pt VIII], other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.”
While s.81 of the Act is clearly relevant to the making of a property order, it is neither a ‘head of power’ nor an absolute requirement. This was the view of the Full Court in In the Marriage of Crapp and Crapp (No.2) (1979) 5 Fam LR 47; (1979) FLC 90-615:
“Firstly s 81 is in the nature of an exhortation by the legislature to the courts and is not a separate source of power and secondly the section itself states that the policy of making orders which finally determine the financial relationship between the parties and avoid further proceedings is only to be taken ‘as far as (is) practicable’. Nevertheless it is true to say that it is unsatisfactory in the general context of the philosophy of the Family Law Act for a really significant issue between parties who are divorced and have gone their separate ways to remain in suspended animation for a number of years.”[3]
[3] In the Marriage of Crapp and Crapp (No.2) (1979) 5 Fam LR 47 at 61 (per Fogarty J; Pawley and Dovey JJ agreeing).
The practical effect of s.81 of the Act is that the Court must endeavour to make an order that finalises the financial relationship between the relevant spouses, but it does not require the Court to make an order that achieves finality. That said, for the comments previously made, and as far as it can be achieved, I see clear benefit in orders being made that will finalise the financial relationship between the parties to this case.
Sections 72 and 74
The liability for spousal maintenance (or the right of one spouse being maintained by the other) is enunciated in s.72(1) of the Act:
“(1) A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).”
It is clear that the spousal maintenance right is a conditional one. The general right is subject to the party in need being unable to support himself or herself and the other party being reasonably able, financially speaking, to provide such support. The Court, in doing so, can take into account the party’s ability or reasonable efforts to obtain employment to counter a claim for spousal support.
The Court has the power to make a spousal maintenance order as it considers proper under s.74 of the Act subject to considering the relevant matters set out in s.75 which I canvassed previously. In addition, s.80(1)(a) of the Act allows the Court to make the order “for payment of a lump sum, whether in one amount or by instalments”.
The power referred to in s.74 of the Act has been the subject of numerous decisions and numerous comments by the Full Court in particular cases such as In the Marriage ofWilson (1989) FLC 92-033; 13 Fam LR 205 (“Wilson”) and in the case of In the Marriage of Bevan (1993) 19 Fam LR 35 (“Bevan”).
In Bevan, the Full Court, comprising of Nicholson CJ, Lindenmayer and McGovern JJ, provided the following checklist when considering the exercise of the power under s.74 of the Act:
“[W]e would state the law as being that an award of spousal maintenance requires:
(1)a threshold finding under s 72;
(2)consideration of s 74 and s 75(2);
(3)no fettering principle that pre-separation standard of living must automatically be awarded where the respondent's means permit; and
(4)discretion exercised in accordance with the provisions of s 74, with reasonableness in the circumstances'’ as the guiding principle.”
It is noteworthy that s.75(1) of the Act requires that when exercising the jurisdiction of s.74, the Court must take into account only the matters referred to in s.75(2).
In addition, s.75(3) of the Act states:
“In exercising its jurisdiction under section 74, a Court shall disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit.”
The Court will now consider the parties’ proposals for property settlement in light of the statutory considerations and available evidence. Once the Court has considered the issue of property settlement it will thereafter consider the wife’s lump sum spousal maintenance claim.
Proposals
Husband
The husband argues that, subject to the Court making certain findings with respect to the company and trust entity associated with the wife, his contributions up to the date of the trial should be assessed to be not less than 90%.[4] More specifically, the husband says his overall contributions are not less than 70% in the event that the Court finds that the value of (omitted) and the Trust are about $771,889. Should the Court not accept the husband’s argument in that regard, and (omitted) and the Trust are valued at $82,530 then the husband’s contributions should be 90%. In addition, the husband argues that no adjustment should be made in either party’s favour for s.75(2) and related factors, and that the wife’s application for lump sum maintenance be dismissed. Such an outcome will enable him to retain the former matrimonial home and all his other property, including his self-managed superannuation fund.
[4] Husband’s Final Submissions, 19 December 2014, page 27.
The husband also seeks that the wife pay his legal costs.
The orders sought by the husband to achieve the outcome he seeks are as follows:
“1.That the wife forthwith sign all such documents and do and do all [sic] such things as may be necessary to transfer all of her right title and interest in the Real property situated at Property Y (the former matrimonial home) being the land contained in Folio Identifier Lot (omitted) to the husband.
2.That the wife vacate the former matrimonial home within 14 days of the date of these orders.
3.Until the wife vacates the matrimonial home she will maintain the former matrimonial home in the same condition as at the date of these orders.
4.Except as otherwise provided each party be declared the sole beneficial owner to the exclusion of the other party of all assets in their sole name.
5.That in the event that either part refuses or fails to execute any Deed, Transfer, Contract or other Instrument required pursuant to these orders then the Registrar of the court be appointed pursuant to Section 106A of the Family Law Act to execute such Deed, Transfer, Contract or other Instrument in the name of that party and do all acts and things necessary to validity to the operation of such Deed, Transfer, Contract or other Instrument.
6.That the wife pay the husband’s costs of and incidental to these proceedings.”
Wife
The wife argues that there should be a global division of the parties’ assets “on a 50-50% basis”.[5] This includes a “substantial” adjustment in the wife’s favour for s.75(2) and related factors.[6] This outcome would require the sale of the former matrimonial home and the equal division of the net proceeds of sale as well as a superannuation splitting order providing the wife with 50% of the value of the husband’s self-managed superannuation fund.
[5] Wife’s Final Submissions in response to the Husband’s Final Submissions, 16 February 2015, page 32.
[6] Ibid, page 31.
As stated, the wife further argues that the husband should pay her lump sum spousal maintenance in the sum of $49,972.
The wife also seeks that the husband pay her legal costs.
The orders sought by the wife to achieve the outcome she seeks are as follows:
“1.That within 30 days of the date of these Orders, the parties do all acts and things necessary to sell for the best price reasonably obtainable the property at Property Y in the State of New South Wales, being Lot (omitted) in Deposited Plan (omitted) and to divide the proceeds of sale as follows:
(a)In payment of real estate agent’s commission and other reasonable costs of sale;
(b)The balance equally between the parties, subject to Order 2.
2.That by way of lump sum spouse maintenance, the Husband pay to the Wife the sum of $49,972 representing the difference between her income and expenditure over a 12 month period.
3.That pursuant to s.90MT(1)(a) of the Act, whenever a splittable payment becomes payable to or on behalf of the Husband from his interest in the Mr Allport Superannuation Fund, the Wife shall be entitled to be paid by the trustee of the fund 50% of the splittable payment and there shall be a corresponding reduction in the entitlement the Husband would have had but for these Orders.
4.That the operative date for the s.90MT(1) order shall be the fourth (4th) business day after the day on which a sealed copy of these Orders is served on the trustee of the fund.
5.That the Husband is restrained from doing any act or thing which would prevent the Wife receiving the benefit in the fund to which she is entitled pursuant to these Orders.
6.That until such time as the superannuation split to the Wife pursuant to these Orders can be rolled over onto a separate account of the Wife, the Husband and the trustee are restrained from taking any step to de-value the Wife’s interest in the fund.
7.That in the event that either party refuses or fails to execute any deed, transfer, contract or other instrument required pursuant to these Orders, then the Registrar of the Court be appointed pursuant to s.106A of the Family Law Act to execute such document.
8.That the Husband pay the Wife’s costs of and incidental to these proceedings.”
Issues
The following issues were in dispute at the final hearing:
·whether the wife provided full and frank disclosure;
·certain ‘balance sheet’ issues being:
othe nature and value of the wife’s interests in the Trust and her loan account with (omitted);
owhether various gifts should be included as ‘add-backs’, and if so, how such add-backs (including agreed legal fees) should be treated; and
owhether the husband’s unpaid income tax for the financial year ended 30 June 2014 should be included as a liability.
·the parties’ contributions made prior to and during the relationship and following separation;
·the parties’ respective future needs and obligations, and in particular, the wife’s state of health and current and future income earning capacity; and
·whether the wife is unable to support herself adequately without the benefit of a lump sum spousal maintenance payment.
Evidence of the parties
Husband
The husband relied upon the following at the final hearing:
·Initiating Application filed 9 November 2012;
·the husband’s Affidavit sworn on and filed 14 July 2014 (noting large number of annexures contained in two volumes);
·the husband’s Financial Statement sworn on 29 May 2014 and filed 17 July 2014.
The husband also relied on his case outline document, proposed minute of order and written submissions received 19 December 2014.
The husband tendered the following documents:
·Draft tax return for the taxation year ending 30 June 2014 (“AH1”);
·Loan application (omitted) mortgage corporation 4 September 2000 (“AH2”);
·‘(omitted)’ table for 1 July 2005 to 30 June 2006 (“AH3”);
·Tax returns produced by Ms Allport – 1 July 2002 to 1 July 2013 (bar 1 July 2007 to 30 June 2008) (“AH4”);
·(omitted) financial statements (2001 to 2008 and 2014) (“AH5”);
·Correspondence between legal representatives, 30 July 2014, 11 March 2014, 1 August 2014 (“AH6”); and
·Certain documents from the material produced under subpoena from (omitted) Medical Centre as marked with “H” and “W” on behalf of each party as relevant (“AH7”).
The husband was a well spoken witness. Although he was not always able to make concessions to reasonable propositions, he did make some admissions that did not necessarily assist his case. For example, he acknowledged that his recollection of some events was not so perfect.[7] Mr Gould submits that the husband was ‘reckless’ in his evidence and deliberately tried to damage the wife’s case.[8] Whilst I would not say the husband’s evidence went so far as to be ‘reckless’, it was often convenient in that he was prone to exaggerate his own case and minimise the wife’s involvement and contributions.
[7] Transcript, 5 August 2014, p 12.
[8] Wife’s submissions, p 2, 3.
Wife
In addition to her case outline document, proposed minute of order and her written submissions dated 20 November 2014 and 16 February 2015, the wife relied on the following documents:
·Response filed 19 December 2012;
·the wife’s affidavit affirmed on 25 July 2014 and filed 28 July 2014;
·the wife’s Financial Statement affirmed on 25 July 2014 and filed on 28 July 2014.
·Affidavit of Mr A, settlor of the Trust, affirmed on 12 June 2014 and filed 9 July 2014 (not required for cross-examination); and
·Affidavit of Mr J, wife’s brother, affirmed on 24 June 2014 and filed on 9 July 2014 (cross-examined by telephone with the assistance of an interpreter).
The wife also relied on the affidavit of Dr J affirmed and filed on 28 July 2014. This affidavit was the subject of objection and required a determination as to its admissibility. For the reasons stated below, I allowed the wife to rely on this affidavit. I also note that the husband did not require Dr J for cross-examination in the event that the Court allowed the wife to rely on Dr J’s evidence.
The wife also tendered the following documents:
·Response to divorce filed 29 January 2014 (“RW1”);
·(omitted) Insurance policy, 2005 (“RW2”);
·(omitted) Real Estate advertisement of Property Y (“RW3”);
·Further statement of Mr J dated 31 July 2014 (“RW4”);
·Certain documents from the material produced under subpoena from (omitted) Medical Centre as marked with “H” and “W” on behalf of each party as relevant (“RW5”);
·Emails between parties’ legal representatives 14 and 15 July 2014 (“HV1”); and
·Letter from Austin Giugni Martin solicitors to Forsters solicitors 17 July 2014 (“HV2”).
The wife also tendered the declaration of her sister, Ms D dated 11 July 2014 (‘MFI1’) which the subject of an objection by the husband. By agreement, the Court considered the admissibility of this declaration following the conclusion of the evidence but prior to receipt of final written submissions. On 4 September 2014 the Court made orders in Chambers refusing the husband’s objection and allowing the wife to tender the declaration (Exhibit “RW6”).
The wife was also a well spoken witness and, while her recollection of a number of events appeared clear, she also presented as giving responses which were somewhat convenient to her arguments. In particular, the wife was unable to answer most questions put to her regarding (omitted)’s finances and instead kept referring counsel (and the Court) to ask her accountant for that information as she either did not know or did not understand. As with the husband, the wife was not always able to make concessions to reasonable propositions.
Mr J presented as an articulate witness despite English not being his first language. It was clear from his evidence that he believes that the assets of (omitted) are his own[9] and understood that his late brother, Mr M, established the Trust for his benefit.
[9] Transcript, 6 August 2014, p47 to 57. For example, he stated ‘I think that 100,000 Australian given by Mr M was my money’, p49.
As stated above, the wife relied on the affidavit of Dr J affirmed and filed on 28 July 2014 which was the subject of objection by the husband. The admittance, or not, of this material was an issue raised at the final hearing which was not able to be determined due to time constraints. Consequently, it was agreed that the Court would consider the admissibility of the affidavit following the final hearing but prior to receipt of final written submissions.
Similarly, the proposed tender by the wife of a bundle of medical related documents marked as ‘MFI3’, was the subject of objection by the husband. The parties also agreed for the Court to consider this issue following the final hearing but prior to receipt of final written submissions.
The Court made orders in Chambers on 4 September 2014 allowing for the affidavit of Dr J affirmed and filed on 28 July 2014 to be admitted into evidence. However, the Court upheld the husband’s objection in respect of the proposed tender of the documents marked as ‘MFI3’.
Discussion
The Court will now consider the parties’ proposals and submissions in light of the legislative requirements and the available evidence.
Identifying and valuing the parties’ property and interests
As stated earlier in these reasons, the Court must ascertain what the parties’ property is. This requires the identification and valuation of the parties’ property, liabilities and financial resources. Generally speaking, the identification and valuation is at the date of the final hearing.[10] This will enable the Court to ascertain the net property pool.
[10] Warne & Warne (1982) 8 Fam LR 388 at 389 (per Simpson J; Strauss and Hase JJ agreeing); also see AJO & GRO (2005) 33 Fam LR 134 at 142 (per Holden, Warnick and Le Poer Trench JJ).
Prior to the Court considering the relevant ‘balance sheet’, the Court will consider whether the parties have made full and frank disclosure. In this dispute, the husband alleges the wife has not made full and frank disclosure of her finances in these proceedings, particularly in relation to (omitted) and the Trust.
Disclosure
There is a clear obligation on a party to proceedings in family law matters to make a full and frank disclosure of all relevant financial circumstances. The mere compliance with rules of the Court or practice directions does not alter the basic principle of the need for full and frank disclosure.[11]
[11] As discussed in the cases of In the Marriage of Briese (1985) 10 Fam LR 642; [1986] FLC 91-713 and Oriolo v Oriolo (1985) 10 Fam LR 665; [1985] FLC 91-653.
The Federal Circuit Court Rules2001 (“the Rules”) provide for all parties to make full and frank disclosure of all relevant financial circumstances in family law matters.[12]
[12] See regulation 24.03 of the Federal Circuit Court Rules 2001.
Apart from requiring each party in financial proceedings to file a Financial Statement, the Rules also require the production and supply of relevant documentation. If one party fails to fulfil that obligation, it would theoretically be “open to that party to rely on the absence of satisfactory evidence to prevent the making of an order against him or her which otherwise justice and equity would require”.[13]
[13] Guinti and Giunti (1986) 11 Fam LR 160 at 165; [1986] FLC 91-759 at 75, 555.
As the Full Court observed in Guinti and Giunti (1986) 11 Fam LR 160; (1986) FLC 91-759:
“It would be simple, if that were the case, to evade the jurisdiction of this court, not by outright refusal which would attract sanctions but by obfuscation and evasion.”[14]
[14] Ibid.
In the case of In the Marriage of Briese (1985) 10 Fam LR 642; (1986) FLC 91-713 (“Briese”), Smithers J, after referring to the decision of the House of Lords in Livesey v Jenkins [1985] All ER 106, stated:
“I believe that the conclusion of the House of Lords in the case of Livesey v Jenkins is apposite, namely that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of discretion. This is quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations would only exist in so far as statute or court rules required. "In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred.”[15]
[15] In the Marriage of Briese (1986) FLC 91-713 at 75,181.
These comments were approved by the Full Court in the case of Oriolo v Oriolo (1985) 10 Fam LR 665; [1985] FLC 91-653 (“Oriolo”).[16] Moreover, the Full Court in Oriolio also approved[17] the following ‘principles’ stated by Smithers J in Briese [emphasis added]:
“The wife has sought an order that the husband pay her legal costs of the proceedings. She relies upon the husband's conduct of the litigation, which in a number of respects I have referred to in this judgment. This conduct has had the effect of very greatly increasing the costs of the wife. The husband's counsel submitted that it was a matter for the wife to pursue her rights under the Family Law Regulations and that there was no positive obligation on the husband to do more than comply strictly with the Regulations and with orders of the court. He likened his client's position in this respect to that of a defendant in a civil action.
In my opinion this submission is not correct. I believe that a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner. The Regulations, and now the Rules, are not intended as a vehicle to mask the true position, or as an aid to confusion, complexity or uncertainty. They are not intended as the outer limits of the obligation of financial disclosure, but as providing avenues towards disclosure. The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding.
In this case it is possible, but I believe largely with the benefit of hindsight, to suggest one or two other strategies which the wife could have employed in her search for the facts before the trial. On the whole however, I do not believe that her case was conducted other than appropriately and reasonably. It was in the power of the husband to curtail the costs by making adequate disclosure.” [18]
[16] Oriolo v Oriolo (1985) FLC 91-653 at 80,256-7.
[17] Ibid at 80,256.
[18] In the Marriage of Briese (1986) FLC 91-713 at 75,180-1.
The issue of deliberate non-disclosure was raised in the case of Black & Kellner (1992) FLC 92-287; 15 Fam LR 343 (“Black”). In Black, the Full Court found that the “assets of the parties could not be ascertained in full because of obvious non-disclosures.”[19] This non-disclosure impacted on the ability of the first instance Court to properly ascertain and distribute the matrimonial property. The matter before the Full Court was an appeal by the husband, who was the party who had not made full and frank disclosure, against an order entitling him to a miniscule portion of the property brought into the relationship by the wife. In his judgment, Nicholson CJ (with Ellis and Cohen JJ agreed) dismissed the husband’s appeal, stating:
“I might perhaps add that speaking for myself, although I note that there is no cross-appeal, I would have been disposed to find that the appellant was entitled to nothing, and certainly would not have interfered with a decision by his Honour dismissing the husband's claim entirely. Indeed it may well be that he was fortunate to get the award that he did.”[20]
[19] Black & Kellner (1992) 15 Fam LR 343 at 347.
[20] Ibid, at 348.
Moreover, in the case of Weir & Weir (1993) FLC 92-338; (1992) 16 Fam LR 154 the Full Court, (this time comprised of Nicholson CJ, Strauss and Nygh JJ) stated:
“It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.”[21]
[21] Weir & Weir (1992) 16 Fam LR 154 at 159.
It appears that some initial disclosure occurred between the parties at or around the time that these proceedings were commenced.[22]
[22] The wife disclosed the establishment details of the Trust in letter dated 24 January 2013. See Husband’s written submissions, p5.
The husband says the wife has not provided the original filed tax returns for years ending 30 June 2012 and 30 June 2013. The wife’s amended tax return for year end 30 June 2013 showed that (omitted) recorded interest payable to the wife on her loan. In addition, the wife did not record any interest received or payable by (omitted) in her Financial Statements filed 19 December 2012 or 13 February 2013. The issue of interest paid and/or payable on the various loans associated with (omitted) is unclear. The husband submits that the original tax returns were not provided as they would not assist her case in this regard.
Under cross-examination the wife did not adequately explain this inconsistency though she conceded it was ‘payable but not paid’ and could not explain how she came to the figure of $107 per week recorded as ‘interest’ under income in her Financial Statement filed 28 July 2014.[23] Under liabilities, the wife referred to ‘loan owed by (omitted) Pty Ltd’ as $82,530.[24] The husband submits that ‘on any view the wife’s disclosure as to the value of this loan was simply untrue and misleading’.[25] The husband says the wife’s omission of this evidence (relating to interest paid or payable) was a “conscious and calculated omission”.[26]
[23] Transcript, 6 August 2014, p67-68.
[24] Wife’s Financial Statement filed 28 July 2014, Item 43.
[25] Husband’s written submissions, p8.
[26] Husband’s written submissions, p10.
In relation to (omitted) Pty Ltd, it is disappointing that the wife only produced the company’s financial accounts for the pre-2011 tax year in the midst of her cross-examination. Moreover, it appears the wife had made some handwritten amendments to the document before production inserting ‘loan to Mr M rather than ‘loan to directors’ which casts further doubt on the wife’s credit.
The wife says she did comply with her disclosure requirements. She asserts that she provided the relevant financial documents which the husband himself annexed to his own trial affidavit. Moreover, she argues that she answered questions when asked and provided schedules relating to the relevant loans. In this respect, Mr Gould referred the Court to the notations made in the orders of 3 September 2013 and 28 February. Moreover, at the compliance check on 16 June 2014, the husband’s solicitor did not raise any outstanding disclosure issues as Mr Gould points out in his submissions in reply.
I note that the wife frequently answered questions put to her during cross examination by referring to her ‘accountant’. I further note that Mr Gould invites the Court to make a Jones v Dunkel finding[27] in relation to the husband failing to call the accountant (who does work for the husband, the wife and the Trust). In response, the husband disputes the wife’s submissions and reaffirms that the onus of disclosure rests with the wife.[28] The Court agrees. It would be unusual for the burden to fall upon the husband to call the wife’s accountant to explain her financial situation. While I agree that during cross examination the wife failed to explain anomalies in her financial documents, including the monies paid by (omitted) Pty Ltd to the wife’s son, Mr F, it is difficult for the Court to conclude that the wife’s case would have been assisted by any evidence adduced from her accountant. That all said, I am satisfied that the wife was genuine in her response and was not seeking to evade her disclosure obligations.
[27] Referring to Jones v Dunkel (1959) 101 CLR 298; for a discussion of the rule in Jones v Dunkel see Heydon, J.D. (2004) Cross on Evidence (7th edition), Chatswood, New South Wales: Lexis Nexis Butterworths, [1215].
[28] Husband’s written submissions, paragraph 29.
The evidence is clear that the husband had a reasonable understanding of the relevant Trust during the marriage and he clearly took some interest in the wife’s finances. Moreover, I note again that the same accountant was used by both parties and (omitted) Pty Ltd.
While the husband submits that the Court should find that the wife “intended to deliberately mislead and consciously conceal her financial position”,[29] it is difficult for the Court to make such a finding. I have already made some comments on the credit of the wife and while I agree that the wife’s oral and affidavit evidence lacks reliability and is incomplete, I am not satisfied that she deliberately misled or concealed her financial position. Nevertheless, the wife’s failure to fully disclose all relevant financial information, in particular the $100,000 loan to Mr F, diminishes her credit and impacts upon the relevant balance sheet items. Clearly, her failures should be considered in relation to s.75(2)(b) and (o) of the Act (discussed later in these reasons).
[29] Husband’s written submissions, p4.
It is noteworthy that in Chang & Su [2002] FamCA 156 (“Chang”), the Full Court (Kay, Dawe and Finn JJ) found that where there has not been full and frank disclosure of financial circumstances by a party, it is open to a Court to find that an indeterminate undisclosed amount is held by one of the parties and to make property orders without reference to an overall pool.
The facts of this case can be distinguished from those in Chang v Su given that there is considerable evidence before the Court. That said, the vexing issue here is not a lack of documents per se but that the documents provided by the wife are unclear, conflict each other and/or conflict with affidavit and oral evidence given by the parties. The end result is that it is very difficult for the Court to ascertain the quantum and timing of payments (and repayments), loans, interest and gifts related to (omitted) Pty Ltd and the Trust and, to a lesser extent, the marriage generally. The evidence before the Court is confusing at best; although whether it has been ‘deliberately’ confused is not a finding I am comfortable in making. It could very well be that the wife has indeed provided all the documents related to (omitted) Pty Ltd and the Trust. I note that the wife has relatively limited English skills, as does her brother, which likely led to misunderstandings or unclear evidence and instructions. Whether she should have put her accountant on affidavit is again, not a matter I can comment on, as to whether that would have clarified certain issues (such as the payment of interest of loans to the wife and Mr J) or could have further muddied the waters. On balance, looking at all the circumstances, I am satisfied that the wife has complied with her obligations as to disclosure however I will treat her evidence with caution and as stated, I am further satisfied that her explanations and recollections of some aspects of her evidence to be convenient and will treat such evidence cautiously.
Joint balance sheet
The parties provided the following joint balance sheet:[30]
[30] In the table, ‘J’ refers to jointly registered or other jointly owned property, ‘W’ refers to property registered in the wife’s name or otherwise legally owned by her or in her possession and ‘H’ refers to property registered in the husband’s name or otherwise legally owned by him or in his possession.
Non-Superannuation Assets 1 Property Y 2106 (J) $1,450,000.00 2 Balance in (omitted) account (omitted) (H) $10,724.53 3 569 shares in (omitted) Pty Ltd (H) $19,347.50 4 (omitted) Range Rover registration number (omitted) (H) $51,000.00 5 Household contents (H) $7,500.00 6 (omitted) Pty Ltd (H) $40,000.00 7 Balance in (omitted) account (omitted) (W) $6,718.00 8 Mercedes Benz (omitted), registration number (omitted) (W) $30,000.00 9 Household contents (W) $7,500.00 10 Loan to (omitted) Pty Ltd (W) $420,810.53 (H)
$82,530.00 (W)11 (omitted) Trust / (omitted) Pty Ltd (W) $351,079.00 (H)
Nil (W)Sub-total $2,394,679.56 (H)
$1,705,320.03 (W)Add-backs 12 Gift Ms C for legal fees (H) Nil (H)
$5,250.00 (W)13 Gift to Ms J for medical expenses (H) Nil (H)
$33,450.00 (W)14 Gift to Mr F (W) $100,000.00(H)
Nil (W)15 Legal Fees paid by Husband (H) $58,594.74 16 Legal fees paid by Wife (W) $65,605.00 Sub-total $224,199.74 (H)
$162,899.74 (W)Superannuation Mr Allport Superannuation Fund Pty Ltd (H) $1,050,000.00 Sub-total $1,050,000.00 Liabilities 17 Unpaid income tax for financial year ending 30 June 2014 (H) $8,103.20 (H)
Nil (W)18 Visa Credit Card (H) Nil Sub-total $8,103.20 (H)
Nil (W)Net Assets Non-Superannuation Assets $2,394,679.56 (H)
$1,705,320.03 (W)Add-backs $224,199.74 (H)
$162,899.74 (W)Superannuation $1,050,000.00 (less) Liabilities $8,103.20 (H)
Nil (W)Total net assets $3,660,776.10 (H)
$2,910,116.57 (W)
Areas in dispute
To determine the net available property pool several issues or items require determination:
·Item 10: the amount of money owed to the wife by (omitted) Pty Ltd;
·Item 11: the value of the Trust (and whether it should be treated as an asset of the wife);
·Items 12 to 16 i.e. the ‘add-backs’:
o Item 12: ‘gift’ of $5,250.00 by the husband to his friend Ms C for legal fees;
o Item 13: ‘gift’ of $33,450.00 by the husband to his former partner Ms J;
o Item 14: ‘gift’ of $100,000.00 by the wife to her son Mr F; and
o Items 15 and 16: ‘add back’ of paid legal fees by both parties;
·Item 17: whether the husband’s unpaid income tax for the financial year ending 30 June 2014 should be included as a matrimonial liability.
Before considering the above items, I will deal with the associated or preliminary issue of the Trust first, and the nature and extent of the wife’s interest in the Trust/ (omitted) Pty Ltd.
Wife’s interest in the Trust/(omitted) Pty Ltd
Uncontroversial facts
The Trust was established by deed on 26 May 1999. The wife is the sole director of the trustee ((omitted) Pty Ltd) with power to vary the terms. The only significant asset of the Trust is the shares in (omitted) Pty Ltd (“(omitted)”). (omitted) Pty Ltd was registered on 26 May 1999[31] and since then the wife has been the only director.
[31] See Wife’s affidavit filed 28 July 2014, Annexure F.
The wife’s brother, Mr J, is a ‘first presumptive beneficiary’, amongst others, of the Trust however the wife is not listed. Mr A was the settlor of the Trust and filed an affidavit filed on behalf of the wife and he was not required for cross-examination by the husband.
The two initial contributions to the Trust were $100,000 in 1999 (alleged by the wife to have come from the estate of her deceased brother, Mr M) and $180,000 from the wife in 2000.
Since 1999 the wife has maintained and lodged the statutory accounts and relevant taxation documents of both the Trust and (omitted) Pty Ltd, albeit with the assistance of an accountant.
The Trust has not distributed any capital or income to any beneficiary, nor has (omitted) Pty Ltd paid any dividend to the shareholder (i.e. the Trust). The wife says this is “nothing remarkable” and the assets of the company have steadily grown.[32]
[32] Wife’s written submissions in reply, p11.
The Husband’s case
The husband says the wife is the ultimate beneficial owner of the Trust. Further, the Trust is the ‘alter ego’ of the wife and its property, that is (omitted) Pty Ltd, is available to the wife pursuant to s.79 of the Act. Essentially, the husband says the wife used (omitted) Pty Ltd as her own personal banking facility.[33]
[33] Husband’s written submissions, p7.
The husband referred the Court to numerous authorities.[34] For example, the husband referred to the case of Harris v Harris (1991) FLC 92-254; (1991) 15 Fam LR 26 (“Harris”) where the Court considered whether a trust was the ‘puppet’ or ‘alter ego’ of a party (being the husband in that case). The Full Court in Harris dismissed the appeal and, on the point relevant here, held that the husband’s interest in the trust was property to the value of the trust assets and was not dependant on the trust being his ‘alter ego’ as such. The Full Court stated
“In order to determine the nature of the interest of a party under a family trust, the trust deed must be considered in the light of existing factual circumstances. In the present case, the husband was both the appointor and guardian and also a beneficiary under the trust deed. He had full power of control over the trustees and over the assets of the family trust and was entitled to apply all these assets to his own use and benefit. Therefore for the purpose of s 79 of the Family Law Act 1975 the rights, powers and interests which the husband had in the family trust constituted property which was properly evaluated as being equivalent to the value of the assets of the trust.”[35]
The case law referred to by the husband would indicate that trusts or companies may be found to be an ‘alter ego’ of a party where that party has the control of that entity. In that event, the value of the trust or company’s assets may be attributable to the relevant party either as property or as a financial resource.
I note that the husband argues that:
·Exhibit “AH3”, being (omitted) Pty Ltd’s profit and loss statements for year end 30 June 2006, shows a shortfall of $23,922.68 which was met by a loan from the wife;
·the wife acted as “personal guarantor” for the (omitted) Pty Ltd in the purchase of the Property H unit which supports the husband’s assertion that the wife is the ultimate beneficial owner of both (omitted) Pty Ltd and the Trust; and
·the 2014 (omitted) Pty Ltd accounts (Exhibit “AH5”) and the wife’s own evidence show that the outstanding loans provided to the wife and Mr J come to a total value of $450,946.53.
[34] Ashton v Ashton (1986) FLC 91-777, Stein v Stein (1986) FLC 91-779, Goodwin v Goodwin-Alpe (1991) FLC 92-192, Davidson v Davidson (1991) FLC 92-197 and Harris v Harris (1991) FLC 92-254.
[35] In the Marriage of Harris 15 Fam LR 26 at [27] per Ellis, Strauss and Lindenmayer JJ.
The Wife’s case
The wife through Mr Gould submits that the first time there was “any hint” that the husband was going to seek the trust be considered the wife’s ‘alter ego’ (rather than as a financial resource), and that the wife is owed $420,810 by the company, was in the husband’s ‘summary of argument’ document received on the eve of the trial.[36] Moreover, Mr Gould is critical that the wife’s brother, Mr J, was not put on notice and given procedural fairness.
[36] Wife’s written submissions in reply, p5; See also Husband’s Summary of Argument p.7.
I agree with the wife in that it appears the husband changed his position in relation to the Trust close to, or at, hearing, which did not allow for expert evidence to be called. Such evidence would have assisted the Court on this vexed issue.
I note that for the purpose of these proceedings, the wife prepared ‘schedules’ as to the payments made between herself and (omitted) Pty Ltd from 2008.[37] Although these documents are of some assistance, it is difficult to place too much weight on this ‘evidence’ given the circumstances of their creation. In addition, the general timeline of events and transactions has been somewhat confused by the wife’s evidence which is confusing in many regards, even as to the dates regarding how the Trust was established. For example, the wife first indicated that Mr M provided $100,000 for the Trust in 1999, however later confirmed that Mr M in fact had passed away in 1998 and thus he must have provided the funds before the Trust or (omitted) Pty Ltd existed.[38]
[37] Exhibit AH3, Exhibit DDD of the husband’s affidavit affirmed and filed 14 July 2014; Transcript, 5 August 2014, p106.
[38] Transcript, 5 August 2014, p89, 100. See also Husband’s written submissions, p6.
The wife claims that the Trust was created by her brother, Mr M, to “secure some asset for Mr J [the wife’s other brother]”[39] as Mr J could not inherit from the wife’s late father due to his not being an (country omitted) citizen. It is curious though that in cross-examination Mr J appeared to indicate that he inherited the family (business omitted) which would seem to contradict the wife’s assertion.[40]
[39] Exhibit CCC of Husband’s affidavit affirmed and filed 14 July 2014.
[40] Transcript, 6 August 2014, p50.
The wife’s $180,000 came from the proceeds from the sale of her Property P unit which the wife says was based on an agreement she had with Mr M in 1997.[41] It appears that Mr M had contributed $140,000 (i.e. all the funds) used by the wife to purchase the Property P unit on the understanding that when the unit was eventually sold, a sum from the sale of that unit would be held on behalf of Mr J[42]. Given the circumstances, I accept the wife’s evidence in this regard for no other reason than because it provides an explanation as to why she would have put $180,000 from the sale of her Property P unit into the Trust.
[41] Wife’s affidavit filed 28 July 2014, paras 29 and 38.
[42] Wife’s affidavit filed 28 July 2014 paragraph 29 says “…Mr M said…’If you sell the Property P unit, you can have $55,000. These funds will enable you to pay a deposit for a new unit. Can you apply all of the other funds from the sale of your unit for Mr J in the trust?’ I said ‘I will do so’…”.
In 2002, Mr J put $85,000 into the (omitted) Pty Ltd account ostensibly for the purpose of reducing the Property H mortgage. The wife says this transaction supports her case as he would not have done this if Mr J had concerns about the wife meeting her fiduciary duties as the sole director of the Trustee. This was the only time that Mr J provided any monies to the company.
In relation to the Property H property, which is owned by (omitted) Pty Ltd, it would appear that it was unencumbered by 2012 as the mortgage had been paid out prior to 30 June 2011. However, as at 30 June 2012, the relevant documents indicate that (omitted) Pty Ltd had a non-current liability of $322,554 and a current liability of $290,594 (a total of $613,148). The husband argues that these debts could not be a bank debt but rather “could only be due by (omitted) Pty Ltd by way of a loan obtained from a director or a person. The shareholder, the Trust, had no funds at any time to loan to (omitted) Pty Ltd. That director or person was the wife, save only to a very limited extent her brother Mr J…’[43] In this respect I note that the wife, somewhat surprisingly, gave evidence that she thought that the amount of $613,148 was owed to her deceased brother, Mr M.[44] Mr Gould admits that the wife’s evidence on this was not very clear and that the Court should find that the accountant may have “made a mistake as to the reference to the amount of the Director’s loans”.[45]
[43] Husband’s written submissions, p7.
[44] Transcript, 5 August 2014, p100.
[45] Wife’s written submissions, p12.
Regardless, it was clear from Mr J’s evidence that he had little to no idea as to the financial circumstances of (omitted) Pty Ltd and left “Ms Allport to handle it”[46]. It was only under cross-examination that the wife said Mr J’s loan to (omitted) Pty Ltd was repaid from 2008 so that to 2014 he had been repaid $54,864[47]. The wife also gave evidence that there was no interest payable on Mr J’s loan. This is contrary to (omitted) Pty Ltd recording the interest payable to Mr J as an expense in the accounts from 2009 to 2012 and to Mr J’s evidence that he had been paid interest from 2002 (although I note that Mr J also gave evidence that (omitted) Pty Ltd received the interest due to him).[48] The Court finds this all very hard to believe as it firstly, does not seem logical and secondly, it is not clearly documented at all and seems all rather convenient. That said, Mr J also gave evidence to the effect that he views the assets of (omitted) Pty Ltd to be his and referred to the Trust property as ‘mine.’[49]
[46] Transcript, 6 August 2014, p55.
[47] Transcript, 6 August 2014, p25.
[48] Transcript, 6 August 2014, p52.
[49] Transcript, 6 August 2014, p53.
The wife says that Mr J took an ‘active interest’ in the Trust and she would communicate with him when making important decisions.[50] For example, they had discussions prior to the wife taking a loan in July 2008 for health and living expenses on the condition that it was a loan at a rate of 5% to be repaid on selling her unit.
[50] Wife’s written submissions, p10.
The wife’s evidence is that the value of her brother’s loan account is at best $30,136.00 (i.e. $85,000.00 minus $54,864.00). The husband contends that the balance of the loan account (being $420,810.53) is due and payable to the wife.
The wife sold the Property B unit in 2011, repaid the debt and, for reasons which are unclear to the Court, then lent $103,160 to (omitted) Pty Ltd. On this the wife says the following in her affidavit:
“About the time I repaid my loan to (omitted) Pty Ltd, I had a conversation with Mr J. Mr J said to me, “As (omitted) Pty Ltd lent you money, could you lend (omitted) Pty Ltd, with the sale proceeds from your unit, the amount needed to repay the mortgage on the Property H unit. (omitted) Pty Ltd will pay the same interest of 5%.” In June 2011, I lent (omitted) Pty Ltd $103,160 at an annual interest rate of 5%. …”[51]
[51] Wife’s affidavit filed 28 July 2014, paragraph 98.
The wife says she was reluctant to sell the Property B unit at all but essentially felt she had to as Mr J did not want (omitted) Pty Ltd to lend her more money. The wife, of course, argues that if she really had the control over the company that the husband asserts, she would never have needed to sell the unit.
The wife submits that she is not a legal or beneficial owner of any interest in either (omitted) Pty Ltd or the Trust and makes the following submissions to support her case:
·the only benefit she has ever received from the Trust is the loan at a commercial interest rate.[52]
·she is not named as a beneficiary in the Trust Deed and she is not a shareholder of (omitted) Pty Ltd as shown in the company documents.[53]
·the Trust was established prior to the parties meeting, and before cohabitation commencing;
·the only contributions to the Trust were made before cohabitation;
·the wife has operated the Trust for her brother Mr J in accordance with her legal responsibilities;
·Mr J is the beneficiary of the Trust and it will continue to be operated for his benefit;
·the wife already had property at the time the Trust was established and had no other motivation in establishing it; and
·there is no expert evidence to the contrary.
[52] Wife’s written submissions, p6.
[53] Wife’s written submissions, p7, Wife’s affidavit filed 28 July 2014, Annexure E, F.
There is also evidence that the husband also contributed about $150,000 received from his late brother’s estate in 2009 which was put towards renovations to the Property Y property.
During the marriage, the husband earned a steadily increasing income[75] (see Exhibit “AH1”). The husband salary sacrificed funds to his superannuation to a total of about $1.7 million. The wife’s income was significantly less than this; the wife’s highest taxable income being $55,444 in year end 30 June 2011 which appears to have included capital gains tax due to the sale of Property B unit. In addition, I note again that the wife used the sale proceeds from the Property B unit (being about $407,000) to provide to (omitted) Pty Ltd and her son.
[75] See Husband’s affidavit affirmed and filed 14 July 2014, Annexure JA-1 and Exhibit AH1.
The husband argues that the wife did not make any financial contributions to the household after her redundancy in 2008 and that she retained some $44,000 in superannuation in July 2012.[76]
[76] Husband’s written submissions, p25.
In his written submissions in reply, Mr Gould asked the Court to note that the husband has made withdrawals from his superannuation about which details are not known. I note that in cross examination, the husband acknowledged that he had drawn down on his superannuation since retiring in early 2014 and that the monies were used for “living expenses”, although no specific details were given. I also note that the husband had previously drawn on his superannuation, including sums of $109,931 and $161,001.90 that was put towards the Property Y property[77]. It is unclear what happened to the balance of the husband’s redundancy payment.
[77] See Husband’s affidavit filed 14 July 2014 at [64].
The husband submits that the Property Y property was purchased and renovated ‘solely’ with the proceeds of the husband’s Property R property (which had been bought with funds from the husband’s Property J unit), inheritance from his late brother, his income and sale of property he brought to the relationship.[78] The wife did not make any direct financial contribution(s) to these properties.
[78] Husband’s written submissions, p22.
Since separation the wife has remained in the Property Y property contrary to an agreement to sell in January 2013. The wife has not been required to pay rent or mortgage payments as the property is unencumbered. The husband submits the wife behaved unconscionably in abandoning the agreement to sell. The wife argues that, as joint owner, she was entitled to remain in the Property Y property and she did not agree to its sale in circumstances where the husband was not prepared to support the wife in obtaining other accommodation in lieu. The reality is that by the time this judgment is delivered, the wife will have been residing in the Property Y property without incurring the costs the husband has had to in rent alone for well over 2 years.
The husband also submits that the wife made no contribution, direct or indirect, to his company (omitted) Pty Ltd and related assets, the husband’s superannuation, the inheritance received from the husband’s late brother, and nor did she contribute to the purchase and renovation of the properties occupied by the parties before they occupied the Property Y property.
There was some issue about what funds were put by whom into the acquisition of the wife’s cars. I accept that the wife had a (omitted) Mercedes car at the commencement of cohabitation. In 2001 this car was traded in on the purchase of a (omitted) Mercedes car. I accept that the husband provided the balance of the funds for that purchase. In 2011 the (omitted) Mercedes car was traded in for $8,500 and a (omitted) Mercedes car purchased with the balance (being $31,500) paid by the wife using some of the proceeds from the sale of her Property B unit. I note that the husband also bought a Range Rover around this time. As both parties still have, and intend to keep both of these respective vehicles, I do not think this particular aspect takes the Court very far in considering contributions.
The extent of the parties’ non-financial contributions to the property is difficult to ascertain as neither party presented much evidence on this.[79]
[79] See Husband’s affidavit filed 14 July 2014 paragraph 57, 61 and 68; Wife’s affidavit filed 28 July 2014, paragraph 149-157.
While there is some evidence on this point in the husband’s material, he did concede in cross-examination the wife assisted with some home improvements that he did not include in his affidavit material.[80] However this does not appear to be a case where the contributions made by the wife ‘offset’ the initial contributions made by the husband. That said, it appears both parties were involved in renovations.
[80] Transcript, 5 August 2014, p.48.
The wife asserts she equally contributed to the management and sale of the three home units owned by (omitted) Pty Ltd as well as cleaning and ‘open houses’ between tenancies and as required. The wife also says she financially contributed to decorating each of the parties’ three homes they lived in during their relationship.
Overall, I find that the husband made the more significant contributions pursuant to s.79(4)(a) and (b) of the Act.
Family contributions (as homemaker and parent)
The husband submits that “any homemaking contribution is of little relevance in this matter.”[81] The wife disagrees and argues that she was the primary homemaker and took care of cooking, shopping, cleaning and washing and accompanied the husband, at his request, on business trips and activities.[82]
[81] Husband’s written submissions, p2.
[82] Wife’s written submissions, p14, 15.
Having considered the evidence I find that the wife’s contributions pursuant s.79(4)(c) of the Act modestly outweigh those of the husband.
Global or asset-by-asset assessment of contributions
The parties are also in dispute as to which approach the Court should take in assessing contributions. The wife seeks the Court use the usual ‘global’ approach[83] and the husband, the ‘asset-by-asset’ approach. It is clearly established that either approach is available to the Court.[84]
[83] Wife’s written submissions in reply, p22.
[84] In the Marriage ofNorbis [1986] FLC 91-712 per Mason J and Dean J, p 75,173 per Wilson J and Dawson J.
The husband argues that the Court should adopt an asset-by-asset approach for the following reasons:
·the modest length of the marriage;
·there are no children of the relationship;
·there being no significant homemaker contribution;
·the “disparate and distinct roles of the parties during the marriage”;
·the distinct contributions which remain ‘in specie’;
·the wife’s decision to maintain a ‘strict’ approach to dividing and keeping her assets ‘very separate’ while ‘inducing’ the husband to put property into joint names’; and
·the “secret and covert financial conduct of the wife during and post the marriage in relation to (omitted) Pty Ltd, and her disposition of funds to her son Mr F absent the husband’s knowledge or consent”.[85]
[85] Husband’s written submissions, p20.
The husband further argues that an asset by asset approach will allow the Court to set out the clear impact of the respective contributions of the parties and this would “enable an equitable result to be seen in a manner that derives from history and reality in the contact of these people”.[86] Moreover, the husband argues that the application of a global assessment in this case would “lead to error” and there would be a danger of “glossing” the assessment of contribution.
[86] Husband’s written submissions, p21.
With respect, I disagree that the application of a global approach is erroneous in this case. While I accept that there are some factors which may lend the assessment to an asset-by-asset approach, they can and will be carefully considered by the Court taking a global approach. While some of the financial decisions of the parties have been made unilaterally, there is a mix of direct and indirect contributions by both parties in the asset pool as a number of assets have been acquired and disposed of during the marriage. Both parties have drawn on their superannuation (and the value of the husband’s grew substantially during the marriage), although the use of those funds is somewhat unclear as to whether it was put towards the parties’ joint benefit or not.
Clearly each party seeks the Court take the approach that they think will give them the best possible result.
Given the circumstances of this case, the ‘global’ approach to the assessment of contributions is the most appropriate and convenient. As the High Court stated in the decision of In the Marriage of Norbis (1986) 10 Fam LR 819:
“…which of the two approaches is the more convenient would depend on the circumstances of the particular case. However, there is much to be said for the view in most cases that the global approach is more convenient. It follows that the Full Court is quite entitled to prescribe that approach as a guideline in order to promote uniformity of the approach within the Courts. In saying this we are not to be understood of denying the legitimacy of the trial judge’s ascertainment in the first instance of the financial contributions of the parties by reference to particular assets. It is difficult to conceive how the trial judge in many cases could otherwise take account of such contributions as is required by s 79(4) of the Act … Again, it seems to ask that it would depend on the circumstance of the particular case, though in the majority of cases the global approach will be more convenient … It has not been suggested that there is any fundamental difference between the two competing approaches which we have considered, in the sense that one will yield more just and equitable entitlements than the other. The general preference which has been expressed for the global approach is not by reason of any notion that it is the only approach authorised by the Act, but by reason of considerations of convenience.” [87]
[87] In the Marriage of Norbis (1986) 10 Fam LR 819 at 824-825 (per Mason and Dean JJ).
Contributions analysis
Given that the Court has accepted that the loan from (omitted) Pty Ltd to the wife is valued at $82,530 and that the company/Trust is not the wife’s asset but rather a financial resource of the wife, I note again that the husband seeks that his contributions be assessed as 90%.
Regardless of the ultimate percentage assessment, the wife is arguing that her own competing contributions would act to erode the significance of the husband’s initial contributions. In this context, I note the decision of the Full Court in In the Marriage of Pierce (1998) 24 Fam LR 377; (1999) FLC 92-844 where it stated:
“In our opinion it is not so much a matter of 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 the use made by the parties of that contribution …”[88]
[88] In the Marriage of Pierce (1998) 24 Fam LR 377 at 386-387; (1999) FLC 92-844 at 85,881 (per Ellis, Baker and O’Ryan JJ).
Clearly some considerable weight must be attributed to the interests of the husband that were brought into the marriage and used in order to acquire and improve further real property, namely, the Property J unit, the Property U unit, the Property R property, the properties owned and sold by his entity (omitted) Pty Ltd, and of course the Property Y property which is unencumbered. The use of the husband’s initial contributions appears to have placed the parties on a trajectory to enable them to presently enjoy an unencumbered property valued at $1,450,000.00.
That said, the competing contributions made by the parties post-cohabitation and post-separation also need to be appropriately considered.
I have accepted aspects of the evidence of both parties as to what occurred during the course of the marriage. I am satisfied that the husband has minimised the non-financial contributions made by the wife in supporting the husband is in his business activities, assisting with the tenancy and sale of the various properties as well as the renovations. The parties were together and ostensibly supporting each other through the purchase and sale of these properties. That said, the wife appears to have utilised the money received from the sale of Property B for either her own, her son’s or (omitted) Pty Ltd’s benefit rather than the benefit of the parties’ joint property in circumstances where, in around the same time frame, the husband liquidated his entity and sole various properties, received a substantial redundancy and drew on his superannuation with those monies being put into joint acquisition and renovation of the Property Y property. It is noteworthy that the value of the Property Y property makes up almost half of the property pool.
Given the available evidence, I find that the final assessment of contributions, in percentage terms, is 70:30 in favour of the husband.
Section 75(2) (and related) factors
As stated, the Court must have regard to the relevant factors under s.79(4)(d) to (g) of the Act in light of the evidence.
Section 79(4)(d): effect of any proposed order upon the earning capacity of either party to the marriage
The husband is in retirement and intends to rely upon his assets to support himself in the future.
The wife is not currently employed and has not been employed since she was retrenched in 2008. The parties dispute her capacity to be gainfully employed. The wife says the marriage had a “quite profound” effect on her in that at commencement of cohabitation she was in reasonable health, employed and owned a unit. At its end, she had sold her unit and her health issues were/are such that she cannot work.[89] I note that in his submissions in reply, the wife’s solicitor states:
“I submit that the wife would have been in a stronger financial position and her health and emotional well-being would have been better had she not been married.”[90]
[89] Wife’s submissions in reply, p29.
[90] Wife’s submissions in reply, p29.
It does not appear that the wife has made, or indicated that she will be, seeking employment.
The husband says the wife could find employment should she seek it and that her apparent health issues have been overstated and, in any event, have not limited her lifestyle. The husband says the marriage did not have an adverse impact on the future needs of the parties.[91]
[91] Husband’s written submissions, p27.
In these circumstances I find that there are no orders proposed which would impact on the earning capacity of the parties.
Section 79(4)(e): matters referred to in sub-section 75(2) so far as they are relevant
(a)The age and state of health of each of the parties
The husband is aged 71 and in fair health.
The wife is aged 57 and says she has various asserted health issues. The wife says she has restricted movement in her arms following from a frozen shoulder injury in 2011 as well as arthritis. In support of this assertion, the wife relied on the evidence of Dr J. It is noteworthy that Dr J is a medico legal expert of the wife’s rather than her treating physician. I agree with the husband’s submission that Dr J’s evidence can be given little weight as the opinion is based on a letter of instruction and the selective history given by the wife. Moreover, Dr J did not consider the material now found in Exhibit ‘RW5’ (referred to below) and did not make any reference to the clinical notes of the wife’s general practitioner Dr V nor any discussions with him.
I would also note that the wife conceded that she dances at least twice per week in ‘(omitted) dancing’ style, as opposed to ballroom dancing referred to in the medical records.
In respect of the wife’s submissions regarding her poor health the husband argues that the wife “either misled the Court as to the fact of her current health and ‘disabilities’ or grossly exaggerated them.”[92]
[92] Husband’s written submissions, p13.
Having had regard to the evidence, in particular, Exhibit “RW5”, I agree that the wife has over-stated the seriousness of her health issues.
(b)The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
As stated, the husband is in retirement and intends to rely on his assets to maintain himself in the years ahead. Although he currently lives in a two bedroom ‘granny flat’ in Property Y (see Exhibit “RW3”), he seeks to retain the Property Y property in his sole name. If successful, the husband would presumably be able to live there or otherwise sell it, noting it was valued some time ago at $1,450,000. I further note that the parties had previously agreed to sell the Property Y property. The husband has already drawn on his superannuation although it appears those monies were put into reducing the mortgage and for renovations, and were otherwise used for living expenses.
As stated, the wife is not currently engaged in paid employment and does not appear to be seeking employment. I note that the wife’s level of English is ordinary and this could impact upon her ability to obtain work. The wife last worked as an (occupation omitted) about 6 years ago.
That said, the wife will retain the benefits of her involvement with the Trust and (omitted) Pty Ltd. She has an outstanding loan due from (omitted) Pty Ltd for $82,500 (plus interest which has presumably accrued since the final hearing). Moreover, for well over two years now, the wife has had all the benefits associated with having continued to live in the Property Y property. I note the wife seeks the sale of the Property Y property on a final basis (and seeks one half of the net sale proceeds) and presumably has turned her mind to her future living arrangements once these proceedings are finalised.
As stated, I have also accepted that the wife has also retained for her own benefit (or the benefit of her son and/or (omitted) Pty Ltd) the proceeds from the sale of her Property B unit. The wife asserts that she had no choice but to sell this unit in order to maintain herself and that, had she been able to keep it, the unit would have most likely increased significantly in value. Even if this was true, the reasons as to why the wife felt she had to sell the Property B unit at this time do not necessarily assist her case as she also gives evidence that essentially her brother Mr J ‘forced’ that situation on her by not agreeing to her borrowing more funds from (omitted) Pty Ltd. In any event, the property was sold and of more interest to the Court is how those proceeds were used. It is most curious that in circumstances in which the wife needed ‘survival funds’ she was still able to gift $100,000 to her son and provide a loan to (omitted) Pty Ltd. The wife’s evidence in relation to these payments is difficult to accept.
The wife also accessed all of her superannuation entitlements in 2012. She asserts that she had “no choice” but to access these funds when they became available to her on turning 55 as the husband did not provide her with any “survival funds”. The logic of her submission is that if the husband had contributed to her living expenses, then in all likelihood, her superannuation would have remained intact.[93] It is also noteworthy that the value of the wife’s superannuation entitlements was significantly lesser than that of the husband’s and the withdrawal date was near the date of separation.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
[93] Wife’s written submissions in reply, p27.
As stated, there are no children of the relationship.
(d)Commitments of each of the parties that are necessary to enable the parties to support:
(i)himself or herself;
(ii)a child or another person that the party has a duty to maintain
The wife has two adult children from previous relationships and the husband has one adult child from a previous relationship.
The wife says she had told Mr F that she would assist him financially when she could ‘afford to’ and I note that in her submissions she refers to her having a ‘moral obligation’ to support her adult son.[94] With respect, the Court disagrees. Mr F is an adult and any rights to support would be an argument following the wife’s passing. I find it interesting that the wife’s solicitor’s submissions in reply states that the “wife had no knowledge or inkling that her marriage would fail sometime later”,[95] that is, later than the payments of the two $50,000 gifts to Mr F in June 2011 and July 2012. The Court finds this submission difficult to accept.
[94] Wife’s affidavit 101, 102, Wife’s submissions in reply, p30.
[95] Wife’s submissions in reply, p30.
(e)The responsibilities of either party to support any other person
I refer to the above comments.
(f) The eligibility of either party for a pension, allowance or benefits…
The Court is not aware whether that either party is in receipt of any pension, allowance or government benefit. I have previously referred to the parties’ past and present superannuation entitlements.
(g)Where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable
I am satisfied that the orders to be made in this matter will provide a reasonable standard of living for the parties having regard to their assets and liabilities and the circumstances existing at the present time.
To a point, I agree with the husband’s submission that the parties have more or less continued on the paths they had already planned to in the latter stages of their relationship.[96] The parties are fortunate to have so little debt.
(h)Extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income
[96] Husband’s written submissions, p28.
The wife has given no evidence in relation to potentially using the lump sum spousal maintenance that she is seeking to undertake a course of education or training to establish herself in a business or obtain an income.
(ha)The effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant
I am satisfied that on the evidence presented, there are sufficient assets to satisfy the claims of known creditors, including present legal costs.
(j)Extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party
I refer to my earlier comments on the wife’s contribution to the husband’s income, earning capacity, property and financial resources.
(k)Duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
The parties were married for some 11 years, though dispute the exact dates. As discussed, the parties dispute the extent to which the wife’s earning capacity has been affected by the marriage.
(l)Need to protect a party who wishes to continue that party's role as a parent
As stated, there are no children of the relationship.
(m)If either party is cohabiting with another person – the financial circumstances relating to the cohabitation
Neither party is currently cohabiting with another person.
(n)Terms of any order made or proposed to be made under section 79
The Court is yet to determine the orders to be made under s.79 of the Act. The Court will consider this sub-section further, if appropriate, when it separately considers the wife’s lump sum spousal maintenance claim.
(naa)Terms of any order or declaration made, or proposed to be made, under Part VIIIAB
This consideration is not relevant to the present dispute.
(na)Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage
This consideration is not relevant to the present dispute.
(o)Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
There are a number of facts or circumstances the Court wishes to raise.
Firstly, despite the considerable difficulty the Court had in making a finding in relation to the wife’s interest in the Trust/(omitted) Pty Ltd, the wife’s actions in making a sizable gift of monies to her son in the twilight of her relationship with the husband has diminished the amount of property available for distribution. Moreover, the wife’s failure to make disclosure of this gift of monies raises a question mark that the Court has previously commented upon.
Secondly, I note that the wife submits the Court should take into account that her financial security and health has deteriorated during the marriage. The wife argues that her third marriage was an unhappy one due to the husband’s controlling and emotionally abusive behaviour towards her. As stated, the wife raised the suggestion that the husband’s alleged failure to provide her with adequate financial support influenced her decision to sell the Property B unit and to access her superannuation entitlements. Overall, I find this argument difficult to accept. While I accept that financial need may have influenced the wife’s actions, I have previously noted that the wife chose to provide substantial funds to both (omitted) Pty Ltd (by way of loan) and her son (by way of gift) from the sale of the Property B unit.
Thirdly, I have previously referred to the husband’s decision to advance sums by way of gift to Ms C and Ms J. On balance, I am satisfied that these post separation payments could not be characterised as wasteful or without merit. The wife’s gift of $100,000 to Mr F is, on the other hand, rather perplexing. Whilst I accept that the wife gifted this money to her son to assist him in purchasing property himself (rather than loaned), it is the timing and amount of the gift that the Court finds difficult to understand. I find it difficult to accept the wife’s argument that at the same time as she was in such dire financial straits to have been forced to selling the unit in the first place in order to generate living expenses she is also able to provide such a significant sum as a gift. Moreover, if the Court had been persuaded to make an adjustment in the wife’s favour, which as discussed above it has not, then the wife’s actions in giving $100,000 to her son negate her argument in this regard and also in the context of the wife claiming a need for lump sum spousal maintenance of about half that sum. In any event, I accept it was a gift and does not go far as to warrant an adjustment in favour of the husband, not that the husband seeks such of course.
Fourthly, on the limited evidence on this before the Court, it appears both parties have paid their legal fees (or have money in trust to pay such invoices as required) from undisclosed sources. Moreover, the amounts payable are not dissimilar. As with the previous circumstance, I am satisfied that the post separation payment of legal fees was appropriate and not wasteful.
Otherwise, there are no other factors which the justice of the case requires to be taken into account that have not been discussed previously in this decision.
(p)The terms of any financial agreement that is binding on the parties to the marriage
This consideration is not relevant to the present dispute.
(q) The terms of any Part VIIIAB financial agreement that is binding on a party to the marriage
This consideration is not relevant to the present dispute.
Further adjustment analysis
It would be fair to say that the parties in this dispute are in fervent disagreement as to what adjustment should be made in this matter.
The wife seeks a ‘substantial’ adjustment in her favour for the reasons articulated above.
The husband argues that there be no adjustment to either party and, indeed, further argues that to make any further adjustment to the wife for s.79(2) and related factors “would occasion an affront to the s.79(2) mandate”[97] Indeed, the husband suggests that the wife’s objective is to “utilise s.79 of the Act to engage in some wealth shifting or social engineering”.[98] In the alternative, the husband argues that should the Court be against him on this issue, then a dollar sum be set by way of adjustment rather than a percentage.
[97] Husband’s written submissions, p28.
[98] Husband’s written submissions, p28.
In light of the above-mentioned circumstances, the Court agrees with the submissions made by the husband that there should not be any adjustment in the wife’s favour pursuant to s.75(2) and related factors.
Spousal maintenance
As stated, the wife seeks an order for the husband to pay her $49,972 in lump sum spousal maintenance arguing that this sum represents the difference between her asserted income and expenditure.
The wife asserts that she is unable to support herself due to her limited English language skills and her health concerns which together mean that she has no capacity for employment. The wife also says the husband has the capacity to meet the lump sum order sought.
The husband argues the wife has not achieved the threshold test required by s.72 of the Act for two main reasons:[99]
·Firstly, he argues that the wife is able to support herself from her own income earning capacity and property; and
·Secondly, he argues that the wife’s financial circumstances must be sufficient because it allowed her to gift $100,000 to her son and permit her son to access (omitted) Pty Ltd funds.
[99] Husband’s written submissions, p28-29.
I note that there is nothing in the husband’s submissions arguing that he does not dispute his capacity to meet such an order, indeed he does not address that aspect at all.
In the event that I am wrong as to the wife meeting the threshold test, I am nevertheless satisfied that the property orders to be made herein will provide the wife with the necessary means to re-establish and provide for herself. Moreover, I would note that she has remained in occupation of the former matrimonial home for almost three years.
I agree with the husband’s submission that the wife’s application for lump sum spousal maintenance does her little credit.[100]
[100] Husband’s written submissions, p28.
In light of the findings made above, particularly in relation to (omitted) Pty Ltd being a financial resource of the wife, I find that the wife has not met the threshold test.
Consequently, I dismiss her lump sum spousal maintenance application.
Conclusion
As stated, in this case, given the various findings made above and given the fact that the parties are no longer living in a marital relationship, I consider that it would be just and equitable to alter the parties’ interests in their property and liabilities.
Overall, the Court is satisfied that the parties should receive, in net terms, matrimonial property to the value of 30% the wife and 70% to the husband.
As stated, the wife’s application for spousal maintenance will be dismissed.
Based on the net known property pool, being $2,747,217.00, there should be an adjustment (in monetary terms) to the wife of $824,165.00 and to the husband $1,923,052.00.[101]
[101] These figures have been rounded to the nearest dollar.
Given the competing orders sought, and the circumstances presented by this case, the husband will have the option of acquiring the wife’s interest in the former matrimonial home. If he declines or is unable to make the necessary payment within 90 days from the date of the relevant order then the parties will be required to cause the sale of the property and the net proceeds will be divided in accordance with the orders to be made. The wife will also be required to vacate the property upon receipt of the required payment.
Given the assets which make up the pool, I find it appropriate that there be a superannuation splitting order in favour of the wife from the husband’s self-managed superannuation fund. I note that both parties are of an age to be able to draw on their superannuation.
There will be a further order that, subject to any order to the contrary, the parties will retain all property including personal property, savings in bank accounts and such held in their sole names or in their respective possessions.
The division of net assets may be summarised as follows:
Husband’s Net Asset Distribution Property Y $1,450,000.00 Balance in (omitted) account (omitted) $10,724.53 569 shares in (omitted) Pty Ltd $19,347.50 (omitted) Range Rover, registration number (omitted) $51,000.00 Household contents $7,500.00 (omitted) Pty Ltd $40,000.00 Superannuation $1,050,000.00 Sub Total $2,628,572.03 (less taxation liability) ($8,103.20) (less cash payment to wife) ($382,417.00) (less superannuation splitting payment to wife) ($315,000.00) Total net assets $1,923,052.00[102] [102] This figure has been rounded to the nearest dollar.
Wife’s Net Asset Distribution Balance in (omitted) account (omitted) $6,718.00 Mercedes Benz (omitted), registration number (omitted) $30,000.00 Household contents $7,500.00 Loan to (omitted) Pty Ltd $82,530.00 Payment from husband $382,417.00 Superannuation splitting payment from husband $315,000.00 Total net assets $824,165.00
I find that the distribution above is just and equitable in all the circumstances. Both parties will have sufficient funds to hand (or accessible), a motor vehicle and superannuation. The wife will have sufficient funds to live a comfortable life and assist her to buy or rent appropriate accommodation for herself with time allowed for her to vacate the former matrimonial home which, again I note she has had occupancy of for almost three years now. The wife is of an age where she will be able to access the significant super funds to be transferred to her from the husband relatively quickly. As discussed above, her relationship with (omitted) Pty Ltd is, if needed, one which will surely be able to assist her with further ‘commercial loans’ should that be required, though not necessary depending on her accommodation expectations. The husband will have full ownership of the former matrimonial home, presumably unencumbered, and worth a significant amount. It is of course a matter for the husband whether he will retain or otherwise sell that property noting that its sale was previously agreed to between the parties and provided he is able to pay the wife the requisite amount. He will have the balance of his significant superannuation, noting he had drawn on some of this already, the boat, shares and bank account.
I am satisfied the financial arrangements are such so as to enable the parties to move forward with their lives and more or less maintain their comfortable lifestyles and put finality to their relationship.
Consequently, there will be Orders to the following effect:
·within 42 days, the husband pay to the wife an amount of $382,417.00;
·if the husband does not, or cannot, pay the wife within 90 days, then the house will need to be sold with the sum of $382,417.00 to be paid to the wife out of the net proceeds (plus any accrued interest);
·contemporaneously with the above payment, the wife transfer to the husband her interest in the former matrimonial home and vacate the property; and
·upon noting that procedural fairness has been provided to the relevant superannuation trustee/upon noting the relevant superannuation fund is a self-managed fund, within 42 days a superannuation splitting order to the wife in the amount of $315,000.00.
There will be a further order that the parties each retain all property including personal property, savings in bank accounts and such held in their sole names or in their respective possessions.
There will be an order, pursuant to s.106A of the Act, to take effect in the event of default in signing any required documentation.
I note again that both parties sought an order for costs against the other. In the event that either party seeks to press a costs order in light of this decision, then an Application in a Case and relevant supporting affidavit should be filed and the Court can consider these issues separately.
The Court is satisfied that the above outcome is just and equitable.
I certify that the preceding two-hundred and forty-one (241) paragraphs are a true copy of the reasons for judgment of Judge Monahan
Date: 11 December 2015
[64] Watson & Ling [2013] FamCA 57 at paragraph 34.
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