Amos & Louis
[2022] FedCFamC2F 1074
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Amos & Louis [2022] FedCFamC2F 1074
File number: PAC 1584 of 2020 Judgment of: JUDGE MURDOCH Date of judgment: 29 August 2022 Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – Where the wife seeks significant notional add backs to the property pool – Where such add backs are rejected – Where it is just and equitable to make an adjustment – Where the husband was hurt on duty and medically discharged from the Employer O – Where the husband is currently receiving his superannuation entitlements as a defined benefit pension and seeks that such benefits be excluded from the asset pool – Where the husband commuted part of his superannuation entitlements in breach of an injunctive Order – Where a two-pool approach is appropriate – Consideration of the adjustment to be made – Where the wife has been and continues to be the primary carer for the children – Where an adjustment is made in favour of the wife for future needs. Legislation: Family Law Act 1975 (Cth) Pt VIIIB, ss 4, 75, 79
Federal Circuit and Family Court of Australia Act2021 (Cth) s 67
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Pt 11.1
Family Law (Superannuation) Regulations 2001 (Cth) reg 43A
Cases cited: Aleksovski v Aleksovski [1996] FamCA 111
NHC v RCH (2004) FLC 93-204; [2004] FamCA 633
C v C (2005) FLC 93-220; [2005] FamCA 429
Edgehill & Edgehill [2007] FamCA 1102
Fields & Smith (2015) FLC 93-638; [2015] FamCAFC 57
Gollings & Scott (2007) FLC 93-319; [2007] FamCA 397
Griffiths v Kerkemeyer [1977] HCA 45
Horrigan & Horrigan [2020] FamCAFC 25
Jones v Skinner (1835) 5 LJ Ch 87
Kowaliw and Kowaliw (1981) FLC 91-092
Norbis v Norbis (1986) FLC 91-712; [1986] HCA 17
AJO & GRO (2005) FLC 93-218; [2005] FamCA 195
Perrett and Perrett (1990) FLC 92-101
Perrin & Perrin (No 2) [2018] FamCAFC 122
Schmidt & Schmidt [2009] FamCA 1386
Stanford & Stanford (2012) FLC 93-518; [2012] HCA 52
Surridge & Surridge (2017) 57 Fam LR 267; [2017] FamCAFC 10
T & T (2006) FLC 93-263; [2006] FamCA 207
Townsend & Townsend (1995) 92-569
Trevi & Trevi [2018] FamCAFC 173
Weir & Weir (1993) FLC 92-338
Division: Division 2 Family Law Number of paragraphs: 213 Date of hearing: 16, 17, 18 May 2022 Place: Parramatta Counsel for the Applicant: Ms Stenmark SC Solicitor for the Applicant: Thornton Storgato Law Pty Ltd Solicitor for the Respondent: Mr Brown
Table of Corrections 13 April 2023 Paragraph numbering of 86 and 87 which appeared twice has now been amended so that the paragraph numbers are in the correct ascending order and the paragraph numbering on the coversheet and in the certification has been amended accordingly. ORDERS
PAC 1584 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS AMOS
Applicant
AND: MR LOUIS
Respondent
order made by:
JUDGE MURDOCH
DATE OF ORDER:
29 AUGUST 2022
THE COURT ORDERS BY CONSENT THAT:
1.The Husband and Wife shall do all acts and things required to establish a bank account for the benefit of the child X born in 2005 with the Wife to be sole trustee and sole authorised account holder in respect of same.
2.Within three months of the date of these Orders the Husband shall cause the sum of $22,000 to be deposited into the account established pursuant to Order 1 above.
3.All Orders of the Court restraining the Husband from using or dealing with any account with the Commonwealth Bank, whether deposit, savings, credit or other accounts standing in his name shall be discharged.
THE COURT ORDERS THAT:
4.Within 90 days of the making of these Orders the Husband shall pay to the Wife the sum of $48,500.
5.Within 28 days of the making of these Orders the parties shall do all acts and things necessary in their personal capacities and in their capacity as directors and shareholders of Company B to:-
(a)transfer to the Wife all of the interest of Company B in Company C Hotel, City D, Country E;
(b)transfer to the Husband all shareholdings held by the Wife in Company B; and
(c)remove the Wife from all positions held and as an officeholder in Company B.
6.The parties shall equally bear the costs of and incidental to complying with Order 5.
7.As between the parties the Wife shall be solely responsible for and shall indemnify the Husband in relation to any debt owing to Mr P by the parties and/or Company B.
8.As between the parties the Wife shall be solely responsible for and shall indemnify the Husband in relation to any liabilities of or relating to the Company C Hotel, City D, Country E.
9.As between the parties the Husband shall be solely responsible for and shall indemnify the Wife in relation to any liabilities of or relating to the Company F Hotel, Country E (“the Company F Hotel”).
10.Within 28 days of the date of this Order the parties shall do all acts and things and pay all monies necessary in equal shares to close any jointly held bank accounts held in Australia and to cause the proceeds of same to be transferred to the Wife as she directs.
11.The Husband shall be declared the sole owner as against the Wife of the antique sideboard, his personal papers, stamp collection, photographs taken prior to cohabitation and tradesman’s tools stored in the shipping container in the Region G (“the shipping container”), together with the container itself.
12.Save for the items listed in Order 11 above the Wife shall otherwise be declared as against the Husband the sole owner of the contents of the shipping container.
13.Within 6 months from the date these Orders the parties shall do all acts and things necessary to remove from such container any items to which they are entitled pursuant to Orders 11 and 12.
14.That:
(a)A base amount of $256,489 is allocated, as required by s 90XT (4) of the Family Law Act 1975, to Ms Amos out of Mr Louis’ interest in the Super Fund FH member number … (“the Fund”).
(b)In accordance with paragraph 90XT(1)(a) of the Family Law Act 1975:
(i)Ms Amos is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(ii)Mr Louis’ entitlement to payments out of their interest in the Super Fund FH and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of this Order.
(c)That the trustee of the Super Fund FH (“the Trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
(i)calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement created for Ms Amos by paragraph 14(a) of this Order; and
(ii)pay the entitlement whenever the Trustee makes a splittable payment out of Mr Louis’ interest in the Super Fund FH.
(d)That these Orders have effect from the operative time and the operative time for this Order is four (4) business days from the date these Orders are served upon the trustee of the Fund.
(e)That this Order binds the trustee of the Super Fund FH.
(f)That Ms Amos shall, within fourteen (14) days of becoming entitled to receive superannuation benefits from the Super Fund FH provide to the Fund all such forms as shall be necessary to enable it to determine the nature and quantum of the superannuation entitlement and any other related information it may reasonably require.
(g)That there be liberty to apply to each party and the Trustee in relation to the implementation of the Orders effecting the superannuation interest.
15.Each party otherwise be solely entitled to the exclusion of the other to all property, assets, chattels and superannuation in their respective names or possession as at the date of these Orders and that each party indemnify the other in relation to any debt associated with any asset that is kept by each of them respectively.
16.In the event that either party fails or neglects to sign any document pursuant to these Orders, a Registrar of the Federal Circuit and Family Court of Australia (Division 2) is hereby appointed to execute such documents in the name of the party in default so as to give validity and operation to these Orders pursuant to s 106A of the Family Law Act1975 (Cth) upon being satisfied of such failure or neglect by way of affidavit evidence.
17.Each party’s costs are reserved for a period of 28 days from the date of these Orders.
18.All extant applications are otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Amos & Louis has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MURDOCH
INTRODUCTION
The parties to these proceedings seek orders for adjustment pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) arising from the breakdown of their marriage.
The husband was previously employed as a public servant with the Employer O. He was hurt on duty and medically discharged from his employer. The husband is currently receiving his superannuation entitlement as a defined benefit pension. In breach of an injunctive Order of this Court the husband commuted $600,000 of his entitlement in January 2021.
Substantial issue exists between the parties as to how to deal with the husband’s defined benefit superannuation interests in the payment phase as part of the s 79 dispute and as to the wife’s contended add backs of property that no longer exist.
BACKGROUND
The parties prepared an agreed Chronology (Exhibit J1). Exhibit J1 is recorded later in these reasons. A brief background is as follows.
The husband was born in 1960 and is currently 61 years of age. He resides in City J, Country E.
The wife was born in 1965 and is currently 56 years of age. She lives in New South Wales, Australia.
The parties commenced living together in 2001, married in 2003 and separated on a final basis in 2016. Orders for divorce were made on the 7 April 2019.
The parties have three children - X aged 16 years and a set of twins; K and L aged 7 years. The children have lived with the wife subsequent to separation.
The husband has two adult children from a prior relationship, Mr M aged 33 years and Ms N aged 30 years of age.
The husband commenced employment with Employer O in 1987. He became a member of the Super Fund FH (“the Super Fund FH”) in 1987.
The parties purchased and sold various properties in Australia during the course of their relationship, both individually and jointly.
In 2008 the parties purchased land in City D and City J, both in Country E. In 2010 they relocated to Country E for eight to 10 months and thereafter returned to Australia to live.
From mid 2013 the husband was assessed as hurt on duty and commenced sick leave from Employer O. He received various lump sum payments including monies from civil proceedings instituted by him against Employer O. His hurt on duty pension was initially 75% of his final salary. It increased to 85% of his final salary as and from December 2014 and thereafter was 95% of his final salary.
The parties again relocated to Country E with the children to live in 2015. They subsequently constructed and commenced to operate the Company C and the Company F Hotels.
The Country E property enterprises of the parties were owned by and conducted by a corporation, known as Company B. The husband and wife are directors of the company and the wife’s sister, Ms Q is the “Commissioner”. There is no evidence as to the role or powers of the Commissioner. There are 500,000 issued shares in Company B; 250,000 held by the wife, 225,000 held by the husband and 25,000 held by Ms N, the husband’s daughter from a prior marriage.
Company B holds three pieces of real property, being:
(a)The Company C Hotel located in Country E (“the Company C Hotel”). “R Restaurant” operates from the Company C Hotel.
(b)The Company F Hotel in City D, Country E (“the Company F Hotel”); and
(c)Undeveloped vacant land located at S Road, Country E (the “S Road, City T Land”). This land is adjacent to the Company F Hotel.
Subsequent to the parties’ separation in 2016 the wife has operated the Company C Hotel and the husband has operated the Company F Hotel.
The wife and children returned to Australia to live in December 2019.
AGREED FACTS
The agreed chronology of the parties (Exhibit J1) is as follows:-
Date
Event
1
1960
Date of birth of husband (61)
2
1965
Date of birth of wife (56)
3
1996
Purchase of U Street, City V NSW F/I …:by husband and his former wife for $180,000 subject to mortgage of $178,000
4
1999
Husband purchased W Street, City V F/I …: for $105,000 with mortgage of $84,000 to ANZ.
5
1999
Terms of Settlement made in the Local Court of NSW at City V on pursuant to the Family Law Act Cth 1975 between Ms Y and Mr Louis.
6
2000
Transfer of U Street, City V by Husband’s former wife pursuant to property settlement orders. Husband enters into new mortgage with ANZ Bank increasing mortgage to $202,000.00.
7
2001
Wife purchases – Z Street, Suburb AB NSW F/I … for $112,000.00 with mortgage of $103,000.00
8
2001
Commencement of cohabitation
9
2002
Husband sold U Street, City V for $330,000.00. Mortgage discharged.
10
2003
Date of Marriage
11
2003
Wife purchased AC(1) Street, City V 1/DP…: for $157,500.00 subject to mortgage
12
2003
Husband purchased AC(2) Street, City V F/I …: for $157,500.00 subject to mortgage; W Street, City V refinanced in husband’s name on same date 25/10/03;
13
2004
(a) Husband receives gift from his mother plus inheritance amounting to $228,000; Wife says not clear where deposited.
(b) In 2004 and 2005 parties spend significant funds engaged in IVF treatment carried out in Australia and in Country AD, including the costs of vasectomy reversal, cytoblast treatment, and 6 implants, accommodation and injections at an estimated cost in excess of $30,000.00.
14
2005
Parties jointly purchased AE Street, Suburb AF FI …. Transfer of title into both parties names as joint tenant. Transfer marked for consideration of $290,000 without mortgage
16
2005
Parties sell AE Street, Suburb AF FI … for $307,500. Not known into which bank account consideration for the Suburb AF property was deposited.
18
2005
Birth of X in Country AG
20
2006
Parties, and Mr M and Ms N travel to Country AG to adopt X. Parties adopt X (now Louis) incurring costs of $6,000.00 in the form of a donation to the Country AG Adoption Service as well as travel, accommodation, food and other associated costs of at least a further $20,000.00. After returning to Australia the parties relocate to rental accommodation in Suburb AH.
22
2008
Parties purchase AJ Street, Suburb AH for $512,000 taking out mortgage in the sum of $532,700.
23
2008
Wife receives inheritance from her late mother Ms AK’s estate of $29,522.65
24
2008
Husband sold W Street, City V for $253,000. Mortgage discharged.
25
2008
Wife sold Z Street, Suburb AB for $229,000 and discharges mortgage of $106,000.00;
$123,000 applied to reduce the mortgages over:
(i) The Suburb AH property by $107,681.16; and
(ii) The second AC(2) Street, City V mortgage by $15,198.70
26
2008
(a) Parties purchase land in City D, Country E for the sum of $60,000.00 (upon which Company F was then built);
(b) Parties purchased vacant land (3.65 acre) located in City J Country E, for the sum of $20,000.00
29
2010
(a) Parties relocate to Country E for 8-10 months;
30
2011
(a) Original structure on Suburb AH property is demolished and construction of 2 story brick house commenced
32
2013
(a) Wife returns to her Manager position, earning $127,000 per annum
(b) Parties move into new Suburb AH home;
(c) Husband assessed as hurt on duty from 1/7/13;
(d) Husband commenced sick leave from Employer O.
(e) Parties undertake further Invitro Fertilisation treatment in Country AD at significant expense.
33
2014
Wife receives a tax refund of $70000;
34
2014
Husband receives $118,974.07 from Employer O 24/10/14;
35
2014
Youth Saver Account opened in the name of X Louis CBA …63 where husband is adult authorised to operate the same.
36
2014
Husband receives $89,081.79 from Super Fund AL on 8/11/14
39
2015
L and K born prematurely requiring ICU/hospital admission
40
2015
Parties purchased AM Street, Suburb AN FI1…: in sole name of wife for $1,350,000.00 with a mortgage of $1,410,000.00. Bridging loan entered to meet whole of purchase price pending sale of Suburb AH.
41
2015
Parties sold AJ Street, Suburb AH for $1,650,000; and Discharge mortgage of approximately
$726,000.00.Cheque paid from net proceeds of sale of Suburb AH property in favour of Commonwealth Bank in the sum of $1,483,993.06 with no residual payment to the parties
43
2015
Parties move to Country E
44
2015
Wife sold AC(1) Street, City V for $275,000.00. Mortgage discharged in a sum of $152,883.59.
Net proceeds of approx. $122,000.00 applied to reduction of the AM Street, Suburb AN property mortgage
45
2015
AC(2) Street, City V: Transferred to Mr M and Ms N for consideration of $260,000. Mr M and Ms N take over the mortgage balance of $195.000;
46
2015
Deposit of $22,000 into the YouthSaver account of X;
47
2015 to
2016
Parties build Company C property.
49
2016
Husband receives increased Hurt on Duty pension to 85% of final salary and receives back payment of
$22,687.80 for the period 7 December 2014 to 23 August 2016;
50
October 2016
Date of separation
51
October 2016
Husband took over operational/financial responsibility for Company F;
Wife took over operational/financial responsibility for Company C
52
April 2017
AM Street, Suburb AN sold for $1,400,000. Discharge Mortgage over AM Street, Suburb AN property in the sum of $1,128,818.85.
56
2017
(a) Husband receives increased Hurt on Duty pension to 95% of final salary from 7/12/14, and receives payment backdated to 7 December 2014.
(b) Husband receives payment of $29,431.91.
57
August 2018
Husband purchased house at Suburb AO, City J, Country E for $60,000.00
68
2018
Consent Order/Judgement entered in the Supreme Court proceedings brought by the husband .
71
2018
(a) Husband receives $254,000 from AP Law Firm trust account for civil claim against Employer O;
(b) Of the above sum:
(i) $60,000 paid towards Suburb AO City J, Country E property
(ii) $25,000 to pay a credit card, husband says wife’s debt;
(iii) $138,000 placed into AQ Law Firm account.in the husband’s name account …40
72
January 2019
(a) Husband commences regular (almost monthly) transfers to an account in Ms AR’s name.
73
9 April 2019
(a) Date of divorce
74
2019
(a) Husband marries Ms AR
75
21 December 2019
(a) Wife relocated to Australia with children and resides with her brother and his family in Suburb AS, NSW
76
January 2020
(a) Wife and children moved into rental property in City V NSW
(b) 23 January 2020 the sum of $25,000 is credited to Youth Saver account of X from (unknown account) CommBank App
77
February 2020
(a) 8 February 2020 the sum of $25,000 is withdrawn from Youth Saver account of X and transferred to xx…61 CommBank app leaving a balance of $5.23c
78
2 June 2020
Interim Order of (then) Federal Circuit Court
79
Late 2020/early 2021
(a) September 2021 husband places deposit on Suburb AT, City AU, Country E (where total consideration agreed is $193,000)
(b) 10 September 2020 husband pays 105,000,000,000 deposit;
(c) 27 November 202 husband pays 1,100,000,000 towards Suburb AT;
(d) 11 February 2021 husband pays 430,000,000 towards Suburb AT, Country E;
(e) 3 May 2021 husband pays 465,000,000 towards Suburb AT, Country E;
80
January 2021
(a) Husband commutes and receives the sum of $600,000 from his Super Fund AL account, reducing the same accordingly;
(b) Husband completes purchase of Suburb AT, Country E
83
23 July 2021
(a) Husband discloses to wife he has commuted $600,000.00 from Super Fund AL in January 2021
84
26 July 2021
(a) Interim Orders made requiring husband to transfer $315,000 to wife’s solicitor’s trust account within 48 hours.
88
20 October 2021
(a) Ordered that wife be entitled to the sum in the wife’s solicitor’s trust account of $315,000 as a partial property settlement; $100,000 in husband’s solicitor’s trust account be characterised as a partial property settlement to the husband.
(As per the original)
LITIGATION HISTORY
The wife commenced these proceedings on 3 April 2020. The husband filed his Response on 1 June 2020.
On 2 June 2020 interim Orders were made by consent by a Registrar of the Family Court (as it was then known) that included the following injunctive orders:-
7.That pending further Order with regard to the superannuation account number […56] of the husband [Mr Louis] in the [Super Fund FH] and/or [Super Fund AL] (the “Superannuation Fund”):
7.1.the husband is restrained by injunction from commuting all or any part of his [Employer O] Hurt on Duty Pension and membership entitlements pursuant to the Superannuation Fund, save and except for the Husband receiving his annual pension entitlement which shall not be increased except for any CPI increase.
8.That pending further order the Applicant and Respondent shall be restrained by injunction from:
8.1.Further encumbering any asset of the parties without the prior written consent of the parties;
8.2.Disposing of any real property asset standing in the parties’ names whether jointly or solely including but not limited to property held overseas or property owned by any entity in which the parties are shareholders, unless with the prior written consent of the parties.
On 18 May 2021, the matter was transferred to the Federal Circuit Court of Australia (as it was then known).
On 26 July 2021 further Interim Orders were made by consent which included the following:-
1.By consent on an interim basis and pending further order the Respondent shall be restrained from dealing in any way with his interest in Commonwealth Bank Account with number …61 (with a balance of about $315,000 and hereafter called “the CBA account “), except in accordance with the provisions of these orders;
2.That within 48 hours the Respondent shall do all acts and things to cause the balance in the sum of $315,000 in his CBA account to be paid into the trust account of the solicitor for the Applicant:
Account Name: Thornton Storgato Law Pty Ltd
BSB Number: …79
Account number: …37
AND to remain there pending further order of the court or a written authority of both parties dealing with such fund.
On 20 October 2021 further orders were made by consent of the parties in chambers including:-
1.That the parties hereby authorise and direct Thornton Storgato Law to release to the Applicant the sum of $315,000.00 held in the trust account of the solicitor for the Applicant Wife being:
Account name: Thornton Storgato Law Pty Ltd Trust Account
BSB Number: […79]
Account number: […37]
2.That the court take into account the Applicant’s receipt of the sum of $315,000.00 provided in Order 1 above as a partial property settlement in favour of the Applicant to be brought into account upon final resolution of this matter.
3.That the court take into account the sum of $100,000.00 held in the trust account of Browns the Family Lawyers on behalf of the Respondent, as a partial property settlement in favour of the Respondent to be brought in to account upon final resolution of this matter.
4. That order 1 of the orders of 26 July 2021 be and is hereby discharged.
5.That the Respondent husband be and is hereby restrained from making any election for commutation of any part of his pension or superannuation entitlement held with the [Super Fund FH] (hereafter “the fund”) pursuant to section 10C of the [Employer O] Regulation (Superannuation) Act 1906, or otherwise.
6.That the Respondent husband will cause a copy of this order to be served upon the fund by close of business on the business day of the making of this order.
7.That the Respondent will and does hereby direct and authorise the trustee of the fund to communicate with the Applicant wife and/or any person authorised by them in writing:
i.To answer any reasonable inquires as may be made by them or on their behalf from time to time regarding the Respondent husband’s entitlement in the fund; and
ii.To give to the Applicant and/or their authorised representative a copy of any notice of any application or request by the Respondent husband which seeks release of entitlements in the fund excepting payment of fortnightly payments of the allocated pension; and
iii.To seek the written consent of the Applicant before releasing any entitlements of the Respondent in the fund excepting payment of fortnightly payments of the allocated pension.
THE COMPETING PROPOSALS
The wife seeks Orders on a final basis in accordance with the Minute of Order marked as Exhibit W1. Broadly, the wife seeks that:-
(1)The parties as directors of Company B transfer the Company C Hotel to the wife free from any liability or encumbrance except the day to day running expenses of the hotel incurred since 1 November 2016 and the husband indemnify the wife with respect to any claim of interest by any party to it.
(2)The parties as directors of Company B transfer the S Road, City T land to the wife free from any liability or encumbrance and the husband indemnify the wife with respect to any claim of interest by any party to it.
(3)The husband indemnify the wife as to any claim made by any party in Company B.
(4)The husband release Ms Amos from all positions and roles in Company B when requested to do so by her and indemnify her with respect to any liability arising from her role in Company B.
(5)Contingent upon the above orders being executed in full, the wife shall execute such documents as provided to her by the husband necessary to cause the wife’s resignation as a director of and shareholder in Company B.
(6)The husband be solely entitled thereafter to Company B and indemnify the wife with respect to all liabilities relating to it.
(7)The parties close all jointly held bank accounts and cause the proceeds to be transferred to the wife.
(8)That the wife be allocated the base amount of $1,150,000 out of the husband’s interest in the Super Fund FH.
(9)That the husband be declared the sole owner of an antique sideboard, his personal papers, stamp collection, photographs taken prior to cohabitation and tradesman’s tools stored in a shipping container in the Region G together with the container itself. The wife shall otherwise be declared the sole owner of the contents of such shipping container. Within 12 months from the date these orders the parties shall do all acts and things necessary to remove from such container any items to which they are entitled pursuant to this order.
(10)In the event that either party refuses or neglects to execute any deed or instrument required to give effect to these Orders, the Registrar of the Court or their appointee pursuant to Section 106A of the Family Law Act may execute such deed or instrument in the name of such party and do all acts and things necessary to give validity to the operation of such deed or instrument.
(11)That each party otherwise retain all assets standing in their name or in their possession.
(12)The husband to pay the wife’s costs being on an indemnity basis in the event the court determines the husband has failed in his obligation to give full and frank disclosure and otherwise on a party-party basis.
The husband seeks Orders on a final basis in accordance with the Further Amended Response filed on 6 January 2022 broadly that:-
(1)The parties as directors of Company B transfer the Company C Hotel to the wife with the costs of such transfer to be shared equally between the parties and the wife indemnify the husband with respect to liabilities relating to it.
(2)The parties as directors of Company B transfer the Company F Hotel to the husband and the wife indemnify the husband in relation to any liabilities relating to it.
(3)The parties cause the wife’s resignation as a director of and shareholder in Company B and the parties equally bear the costs of such transfer.
(4)That as between the parties the wife shall be solely responsible for and indemnify the husband in relation to any liabilities of or relating to Company B, except for any liability of the wife in relation to any contract or other dealings with Mr P with whom the wife and Company B allegedly contracted in respect of a venture to open “R Restaurant” and who alleges that he is owed AU$10,000. The Court was advised that this was a typographical error and it should read that the husband will indemnify the wife save for any alleged liability to Mr P.
(5)That husband shall be declared the sole owner of an antique sideboard, his personal papers, stamp collection, photographs taken prior to cohabitation, tradesman’s tools stored in a shipping container in the Region G, together with the container itself. The wife shall otherwise be declared the sole owner of the contents of such shipping container. Within 6 months from the date these orders the parties shall do all acts and things necessary to remove from such container any items to which they are entitled pursuant to this order.
(6)That each party otherwise retain all assets standing in their name or in their possession.
(7)In the event that either party refuses or neglects to execute any deed or instrument required to give effect to these Orders, the Registrar of the Court or their appointee pursuant to Section 106A of the Family Law Act may execute such deed or instrument in the name of such party and do all acts and things necessary to give validity to the operation of such deed or instrument
By the conclusion of the hearing the parties agreed that:
·The husband will pay the sum of $22,000 to X; the parties’ eldest child, from any property he retains after the conclusion of the s 79 dispute. The monies to be paid to X will therefore not form a liability on the balance sheet identifying the property of the parties.
·They would each retain in specie by way of distribution from Company B specific items of real property; the wife is to retain the Company C Hotel and the husband is to retain the Company F Hotel.
·The wife’s shareholding in Company B will be transferred to the husband.
·The allocation of items in the shipping container with the husband to thereafter retain the shipping container.
Senior counsel at the commencement of the hearing submitted that the parties would have to “work out” the tax implications of transferring assets pursuant to any s 79 orders made. The solicitor for the husband did not appear to dispute this proposition.
Thus broadly there is dispute as to:-
·Whether a superannuation splitting order will be made in favour of the wife from the husband’s member entitlement in the Fund currently in the payment phase, and if so, the value of that splitting order.
·Who as between the parties shall retain the S Road, City T Country E land owned by Company B.
·Whether the parties have 6 months or 12 months to remove the items from the shipping container.
·Whether Ms Amos should be removed by the husband from all positions and roles with Company B should she so request.
·What, if any, indemnities should be given upon the transferral of assets from one party to the other.
·The disbursal of funds currently held in joint bank accounts.
·Costs.
ISSUES AS TO THE RELIEF SOUGHT BY EACH OF THE PARTIES
As recorded later in these reasons there was no evidence as to the value of each parties’ interests in Company B. Senior counsel for the wife at the commencement of the hearing said that “The valuation of the company is nothing. The valuation…only comes from the two properties that are held in the name of Company B.”[1] The evidence records that the corporation in fact has three parcels of real property in Country E, not two.
[1] Transcript 16 May 2022, p.4 lines 30-32.
Neither party put into evidence any of the published financial statements of Company B, such as a balance sheet or profit and loss statement.
There was no evidence as to any liabilities of Company B save the alleged liability to Mr P. Both parties seek different orders with respect to who shall be responsible for “debts and liabilities” arising from their interest in Company B. By the end of the hearing both parties agree that Mr P alleges he is owed money arising from work undertaken with respect to the R Restaurant operating out of the Company C Hotel. It appears that the monies claimed by Mr P may be owed by Company B but this is not entirely clear. The wife disputes the quantum but has agreed to be responsible for and pay any such alleged debt if it crystallises. Otherwise both parties appear to have some understanding as to what debts of Company B relate to each particular real property or enterprise.
Senior counsel for the wife submitted at the commencement of the hearing the parties had “no idea” as to any taxation impost incurred by the company or a shareholder in the company transferring real property to a shareholder and that, subject to her instructions, “any taxation liability would have to be met by the directors in equal shares.”[2] The husband did not appear to join in issue with this submission.
[2] Transcript 16 May 2022, p.5 lines 23-24.
The parties appear to agree that the “cost of transferring the company, inclusive of legal fees and duties, were about $30,000.” It was not made clear to me what this statement was to convey. I am unaware as to whether this sum includes a provision for any corporate or personal taxation or revenue consequences as a result of such transfer.
No notice has been given to the company or the minority shareholder as to the proposed transfer of shares. It was implied by the parties that such notice was not necessary.
There is no evidence as to who will be responsible for the payment of the fee arising if a superannuation splitting order is made for the benefit of the wife.
I make no findings with respect to these matters.
The parties conducted the litigation between them on the basis of what appears to be an agreed understanding of the issues raised above. The Court in these circumstances, and having regard to the overarching purpose of the Court to facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible pursuant to s 67 of the Federal Circuit and Family Court of Australia Act2021 (Cth) ought not take the parameters of the s 79 dispute outside that set by the parties. It will be a matter for them to deal with:-
·the interests of the minority shareholder;
·ascertaining which liability of Company B travels with the hotel or land each is to retain as they appear to be broadly aware of same – I am not;
·the revenue imposts to implement their agreed position that the wife receive the Company C Hotel and, if ordered, the transfer of the S Road, City T Country E land from Company B to her; and
·the payment of the superannuation splitting fee imposed by the Trustee of the Fund.
THE ISSUES FOR DETERMINATION
As directed by the Court, the parties prepared a Joint Statement of Issues (Exhibit J3). The parties’ stated issues for determination by the Court are:-
1. The weight to be given to initial contributions, if any. More particularly - the parties use of the initial contributions.
2. The weight to be given to the inheritances received by the parties, if any. More particularly - the parties use of the initial contributions.
3. Addbacks/the extent to which the husband has had the benefit of the following to the exclusion of the wife/has depleted the net asset pool available to the parties. More particularly:
a. The funds received by the husband in January 2021 following his unilateral application to commute part of his superannuation, in breach of an injunction of the FCFCOA;
b. The funds received by the husband from [Employer O] and [Company AW] in:
i. 2014;
ii. 2016;
iii. 2017.
c. The funds received by the husband from a civil claim made in 2017 for psychological injury. Claim was made in the Supreme Court of NSW for (non exhaustively) past economic loss, past medical out of pocket expenses and past domestic assistance, arising from his employment with [Employer O] before and during the marriage until 2013.
d. The husband’s gift of equity the parties held in AC(2) Street, City V, to his children from a prior marriage.
e. The husband’s unilateral use of funds held in trust on behalf of the child [X], from her Youthsaver Bank account, number […63].
f. The use of the equity held by the parties in [AM Street, Suburb AN].
g. Removal of assets acquired in Australia during the marriage, from the jurisdiction of Australia and the name of the husband (purchase the [Suburb AT, Country E] in the name of [Ms AR]).
4. Add back to the extent the wife has failed to account for $109,000 transferred to her from the accounts of the parties after separation.
5. The failure ( as alleged by the wife ) to give full and frank disclosure by the husband. More particularly regarding:
a) his share trading /holdings;
b) the extent to which his capital losses can be characterised as waste;
c) his application for, receipt of and unilateral disposal/application of:
a. The funds received by the husband in January 2021 following his commutation of part of his superannuation;
b. Funds received by the husband from [Employer O] and [Company AW] in:
i. 2014;
ii. 2016;
iii. 2017.
c. Compensation received in 2018 arising from a civil claim made in 2017 in the Supreme Court of NSW, arising from his employment with [Employer O] before and during the marriage until 2013.
d) His use of Youthsaver Bank account , number […63], being an account opened to receive and hold on trust, funds for the benefit of the child [X].
e) The use of husband’s unilateral dealings with the equity held by the parties in [AM Street, Suburb AN].
f) Amounts the husband has transferred to an account standing in his new wife [Ms AR] name.
g) Available income from sale and/or rental of properties standing in his name in [Country E].
6. The characterisation of the husband’s interest held with [Super Fund AL] -more particularly the impact of the nature and characteristics of the Hurt on Duty Pension, whether it should be included in the asset pool and, if so, whether the court ought use a “2 pool approach” to the asset pool and the assessment of contributions to the second (superannuation) pool.
7. Each party’s s75(2) needs.
8. Whether there has been any failure by the husband to comply with his continuing disclosure obligations as alleged by the wife or any actions by him causing the depletion of the net pool of assets has caused the applicant to sustain significant and avoidable legal costs.
9. The extent to which baseless allegations by the applicant of non- disclosure on the part of the husband and meritless arguments asserting add-backs have caused the respondent significant and avoidable legal costs
MATERIAL RELIED UPON
A Balance Sheet (Exhibit J2) was filed.
The wife relied upon the following documents:
·Further Amended Application filed 6 May 2022;
·Affidavit of the wife filed 5 April 2022;
·Financial Statement of the wife filed 5 January 2022;
·Agreed Facts and Agreed Chronology;
·Financial Statement filed by the husband 24 December 2021;
·Financial Statement filed by the husband 6 October 2021;
·Financial Statement filed by the husband 1 June 2020; and
·The Summary of Applicant Wife’s Argument filed 9 May 2022.
The husband relied upon the following documents:
·Further Amended Response filed 6 January 2022;
·Affidavit of the husband filed 12 April 2022;
·Financial Statement of the husband filed 24 December 2021;
·Affidavit of Ms AX sworn 22 March 2022 and filed 1 April 2022. Ms AX is the manager of Company B (Ms AX has a first name only);
·Affidavit of Mr AY filed 31 March 2022;
·Affidavit of Mr AZ filed 28 January 2022;
·Affidavit of Ms BA filed 22 December 2021; and
·The Outline of Case Document (Final Hearing) filed 10 May 2022.
THE STATUTORY REGIME
I should only make orders pursuant to s 79 of the Act if I am first satisfied that it is just and equitable to do so. It must not be assumed that the parties’ rights or interests should be different to that which already exists: Stanford & Stanford (2012) FLC 93-518 (“Stanford”).
In determining claims for alteration of property interests pursuant to s 79, I am required to:
(a)Make findings as to the identity and value of the property, liabilities, and financial resources of the parties, or either of them, at the time of the hearing and determine the legal and equitable interests of the parties in such property;
(b)Consider, identify and assess the contributions by the parties to the acquisition, conservation and/or improvement of their property, including financial and non-financial contributions and any contributions to the welfare of the family before, during and after the relationship came to an end;
(c)After consideration of altering the interests in the property pool on the basis of contributions, to consider whether there should be any further adjustment to either of the parties on account of the matters set out in s 79(4)(d)-(g) of the Act, including any relevant considerations pursuant to s 75(2) of the Act; and
(d)Ensure that the orders to be made are just and equitable in all the circumstances.
DISCLOSURE ISSUES AND CREDIT
The wife submitted that credit was very much an issue in this matter.
As part of the credit findings it was further asserted that the husband has failed to provide a full and frank disclosure of his financial circumstances.
Senior counsel for the wife gave the following examples to ground such contentions:-
·The husband commuting the sum of $600,000 from his superannuation entitlements in breach of interim injunctive Orders restraining him from doing so;
·The husband did not disclose until he was in cross-examination that he had previously held a margin lending account;
·That the husband did not disclose the existence of a further bank account in his name in Country E;
·That the husband has provided a “drip feed” of disclosure and this has not been fulsome – the wife was only made aware by way of letter dated 7 April 2022 of another bank account held in the husband’s name ending in #[…56];
·The husband’s evidence that he has not disclosed rental income he has received. It was submitted that his statement that “I didn’t tell anyone until I was asked” is tantamount to an acknowledgement that the husband is not disclosing until he is pushed to do so;
·The husband has provided no financial disclosure with respect to his current wife, nor is his current wife on affidavit. The husband asserts that he supports his wife, her children and several extended family members. None of them are on affidavit nor are there any financial records provided for any of the people the husband asserts he is supporting.
In those circumstances the wife submits that where there is any dispute as to a fact or circumstance, I would accept the evidence of the wife and may further take it into consideration under s 75(2)(o) of the Act.
The husband submitted that this matter does not really turn on credit issues. He asserts that where the parties differ in their version of events there is objective documentary evidence supporting the husband’s evidence. The husband submits that the reality of the case promoted by the wife is that her recollection or version of events should be accepted in preference to documentary evidence including that of Ms AX, whose evidence was not impeached. I find some substance in this submission.
In relation to issues as to credit, the husband submitted that:-
·The wife did not make any admissions at all during the course of cross-examination. In contrast, the husband gave his answers “honestly, imperfectly, certainly, realistically and credibly. He made concessions when appropriate.”[3] I find this summary accurately records the nature and content of the oral evidence of the parties.
·The wife herself has not provided full and frank disclosure. The wife seeks an order that the husband be responsible for and pay all liabilities with respect to Company B. Her Affidavit deposes at paragraph 206:
Prior to being served with [Mr Louis’] Amended Response e-filed on 9 December 2021, I was unaware of any liability in relation to any contract or other dealings with [Mr P] (“[Mr P]”) and [Mr P] has never contacted me regarding any alleged debt. It would seem from the order sought by [Mr Louis] in his Amended Response e-filed on 9 December 2021 that [Mr Louis] alleges that myself and [Company B] owe [Mr P] the sum of AUD$10,000. [Mr Louis] alleges that such claim exists in relation to the venture to open [R] Restaurant. I have not been provided with any documentation in relation to this alleged claim from [Mr P] or [Mr Louis] and to the best of my knowledge and belief, there was no outstanding fees owing to [Mr P].
The wife conceded during the course of cross-examination that she had been aware that Mr P was claiming he was owed monies. The wife’s oral evidence was that the sum alleged is “rubbery” and she has not received documents that justify to her satisfaction the monies alleged to be owed. I find that the wife was aware of the assertion by Mr P that he was owed monies and her affidavit evidence was misleading on this subject matter.
·It was Ms AX’s evidence that each of the parties had a bank account in Country E. I accept Ms AX’s unchallenged evidence on this topic. I find that neither of the parties disclosed the bank accounts through which they operate their separate hotel enterprises in Country E.
·It was the wife’s evidence that the husband had disbursed monies without the wife’s knowledge by increasing the loan secured over the property at AC(2) Street, City V. The wife did not disclose that both the AC Street properties were cross-collateralised despite her having the mortgage search recording this fact. I find that her presenting evidence in such an incomplete way was misleading by omission.
[3] Transcript 18 May 2022, p.354 lines 23-24.
I am not satisfied that the wife has established to the required requisite degree that the husband has deliberately failed to provide financial disclosure or an intention to hide assets such that I should not be unduly cautious in making findings in the wife’s favour: see Weir & Weir (1993) FLC 92-338. I am satisfied and find that, whilst not optimal, the husband has discharged his disclosure obligations to the best of his ability. Whilst this disclosure might not have been as fulsome and timely as perhaps it should have been, I am satisfied and find that the husband discharged his obligation to the best of his ability. I find that the effect of any disclosure failures of the husband was limited to making the process of fact finding as sought by the wife more difficult.
The above finding is reinforced by it being uncontroversial that the husband lives with Post Traumatic Stress Disorder. He was cross-examined about the contents of a report of Dr BB, consultant psychiatrist. The husband acknowledged that he had told Dr BB that his concentration is ordinary and he is very forgetful; he has persistent problems with his concentration.
The husband was asked a series of questions about ad hoc transfers of monies to and from bank accounts arising out of a large volume of statements issued by various financial institutions. I had the opportunity to carefully observe the husband in his oral evidence and listen to his answers. He was unshaken in his cross-examination that he “absolutely” has not transferred money in or out of his accounts and to overseas destinations to hide them from the wife. I accept this evidence and so find.
On balance, I am satisfied that the husband encounters challenges with his memory and concentration. I am satisfied that he simply could not remember specific bank transactions during the course of his cross-examination, some of which occurred 20 years ago.
THE BALANCE SHEET
There are significant disputes between the parties as to the constitution of the pool of property and liabilities to be adjusted between them.
The wife seeks that a significant number of other items be “added back” to the balance sheet comprising the property of the parties to be adjusted. She seeks to include in that pool of property for adjustment the value of the husband’s Hurt on Duty Pension as property.
The husband submits that the husband’s Hurt on Duty Pension is a financial resource rather than property and does not form part of the property pool.
Grounded from Exhibit J2, the evidence and the parties’ submissions, I have constructed the balance sheet contended by the parties as follows. The items that are in dispute and their values are in bold.
Ownership Description Wife's Value Husband's Value ASSETS Joint Company B:
a) Company F Hotel in City BC, Country E, currently operated by the Husband
b) Company C Hotel in City D, Country E, operated by the Wife (hotel no longer operating)
c) Vacant land in City J Country E$540,141
$393,185
$44,318
$540,141
$393,185
$44,318
2. Wife Company BD (50%) Nil Nil 3. Husband Property – Street BE, Suburb AO (Part Owner) $63,998 $63,998 4. Husband Property – Suburb AT, City J ( “Suburb AT, Country E”) $186,000 $186,000 5. Husband Motor Vehicle 1 $10,000 $ 5,000 6. Husband Motor Vehicle 2 $10,577 $ 10,000 7. Joint CBA Smart Access Account – # …81 $120 $120 8. Wife CBA Smart Access Account $22 $22 9. Husband Bank BF account a/c # …56 $20,000 $20,000 10. Husband Employer O Bank Account A/C # …45 $1,000 $1,000 11. Husband CBA Smart Access Account $1,500 $1,500 12. Husband AQ Law Firm A/C # …40 $1,206 $1,206 13. Husband AQ Law Firm Timed Deposit Acc …79 Nil Nil 14. Wife Partial property settlement to wife $315,000 $315,000 15. Husband Partial property settlement to husband $100,000 $100,000 16. Husband Household contents $5,000 Nil 17. Joint Contents of container in Region G Nil $5,000 18. Wife Household contents $3,500 Nil 19. Husband CBA Youthsaver Account on trust for X $6 $6 20. Husband Bank BF account …13 $15 $15 21. Husband Employer O Bank Account – BSB …00 Account …33 Nil Nil 22. Wife Motor Vehicle 3($21,495 paid for within item 14) Nil Nil 23. Wife CBA Streamline Basic …07 …12 $3 $3 Total $1,695,591 $1,744,558 ADD BACKS Ownership Description Wife's Value Husband's Value Husband Amount the husband received and unilaterally utilised following commutation of superannuation in breach of an injunction restraining him from doing so $95,500 Nil Husband Balance of termination payments based on salary at 72.5% received in October ($118,974.070 and November ($89,081.79) 2014 $143,055 Nil 26. Husband Increased termination payment received 20 August 2016 based on 85% of pre-injury salary and back dated to 7 December 2014 $19,636 Nil 27. Husband Increased termination payment received 23 August 2017 based on 95% of pre-injury salary and back dated to 7 December 2014 $29,431 Nil 28. Husband Amount received into husband’s Employer O Bank account on 5 December 2018 following civil claim against State of NSW $73,500 Nil 29. Husband Amount received on 24 December 2019 following civil claim against State of NSW $7,073 Nil 30. Husband Amounts withdrawn from X’s bank account transferred to husband’s Country E Bank Account and unilaterally disposed of in 2016 $22,000 Nil 31. Husband Amounts withdrawn from X’s bank account transferred to husband’s Country E Bank BF Account and unilaterally disposed of 28 May 2017 to 14 June 2017 $51,000 Nil 32. Husband Amounts withdrawn from X’s bank account transferred to husband’s credit card ending #...69 on 24 June 2018 $13,000 Nil 33. Husband Amounts withdrawn from X’s bank account transferred to husband’s credit card ending #...56 on 24 June 2018 $10,000 Nil 34. Husband Amount gifted to Mr M and Ms N 2015 $80,000 Nil 35. Husband Amounts withdrawn from AM Street, Suburb AN mortgage $ 290,000 Nil 36. Husband Amount husband invested in shares and sale proceeds from 2002 to date “ at least” $250,000 Nil 37. Wife Money received into the wife’s account post separation Nil $109,000 Total $1,084,195 $109,000 LIABILITIES Ownership Description Wife's Value Husband's Value Wife Bank BF Mastercard Nil Nil 39. Joint CBA Platinum Mastercard Number
…35Nil Nil 40. Husband Employer O Bank Personal Loan Nil Nil 41. Husband CBA Mastercard (#...56) Nil Nil Total Nil Nil SUPERANNUATION Member Name of Fund Type of Interest Wife's Value Husband's Value Wife Balanced Growth $237,896 $237,896 43. Husband Super Fund FH Defined Benefit in the payment phase/ hurt on duty pension $1,283,290 Nil Total $1,521,186 $237,896 FINANCIAL RESOURCES Ownership Description Wife's Value Husband's Value Husband Employer O Disability Pension $1,690 per week Husband Rent from Suburb AT, Country E $150 per week 46. Husband Income from renting Company F Hotel, Country E Not Known 47. Husband Balance of account held by Ms AR into which the husband makes regular monthly deposits. Not Known BALANCE SHEET FINDINGS
Items 1 – 23: Assets
Item 1: Company B
As stated above, there is no evidence as to the value of the interests of the husband or wife in Company B. The parties have agreed as to some of the items of real property they will retain as part of the s 79 adjustment. There is no evidence as to the liabilities and costs arising from the transferring of the wife’s shareholding in Company B to the husband save as recorded earlier in these reasons.
The wife belatedly conceded during cross-examination that she was aware of monies that Mr P (“Mr P”) asserts are owing to him with respect to the R Restaurant. The wife disputes that any monies are owed to Mr P, but stated during her evidence that she would assume this debt if there was found to be one. No submissions were made with respect to this evidence. I accept and find there is a contingent liability of the wife’s of unknown value with respect to the “R Restaurant” which she will be receiving as part of the s 79 adjustment.
Items 5 and 6: The Husband’s Motor Vehicle 1 and Motor Vehicle 2
There is no expert opinion evidence as to the valuation of these motor vehicles. I find values as conceded by the husband at $5,000.00 for item 5 and $10,000 for item 6.
Items of 16 and 18: Personalty
The wife asserts that a value of $5,000 be attributed to the household contents in the husband’s possession and a value of $3,500 be attributed to the value of the household contents in her possession. The husband does not ascribe any value to these items. There is no expert opinion evidence as to the valuation of these items. The wife provides no evidence as to how she came to such values nor why she asserts that the value of the items the husband is to retain is higher than those to be retained by her. In circumstances where the parties agree they will each retain items currently in their possession and control save for the items in the storage container, I will not ascribe any value to items 16 and 18 in the balance sheet.
Item 17: The Region G Container
There is no expert opinion evidence as to the value of the items in the shipping container. The parties both agree as to how the items in the container and the container itself will be distributed between them. The value of the item shall be excluded.
Item 22: The Wife’s Motor Vehicle 3
There is no value attributed by either party to this motor vehicle. The wife asserts that the monies used to purchase the vehicle were from the monies received by her by way of partial property settlement listed as item 14 on the Balance Sheet. The husband does not appear to dispute this. I am satisfied that to list this as a further item on the balance sheet would be double counting. The item is excluded.
Items 24 - 37: Add Backs
At the commencement of the hearing the wife contended that a cumulative value of $1,084,100.95 should be notionally added back to the balance sheet and credited against the husband’s entitlement to existing property.
The wife’s case was broadly that monies should be added back to the balance sheet if:-
·it did not “go into the family coffers”; or
·the wife felt she didn’t have a say as to how the monies were spent; or
·she does not accept the husband’s accounting to her of the application of funds.
This approach was consistent, irrespective of the source of funds and when they were received; it included monies received and disbursed for example during the course of the parties’ relationship. Significant time was spent during the course of the hearing in advancing this position.
In the alternative the wife submitted that if such funds were not added back, they could be taken into consideration by way of s 75(2)(o) of the Act.
The husband contends that the sum of $109,000.00 should be notionally added back to the asset pool of the parties and credited against the wife’s entitlement to existing property. The wife asserts that this sum should not be added back.
The Full Court in AJO & GRO (2005) FLC 93-218 identified three clear categories where it may be appropriate to notionally add back an item of expenditure:
·where the parties have expended money on legal fees;
·where there has been a premature distribution of matrimonial assets;
·where there has been a waste, reckless, negligent or wanton dissipation of assets as outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 (“Kowaliw”).
Notionally “adding back” items to the asset pool is a discretionary exercise which ought to be the exception rather than the rule: NHC v RCH (2004) FLC 93-204. As stated by the Full Court in Trevi & Trevi [2018] FamCAFC 173 at [30]:
…When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion — usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
(Footnotes omitted)
The parties now have been separated for a period of almost 6 years and they are entitled to reasonably conduct their affairs post separation: see Gollings & Scott (2007) FLC 93-319. Reasonably incurred expenditure usually does not come within the accepted categories of an “add back”. Contrary to the approach taken by the wife in this matter, a party is not expected to be able to provide a precise audit as to every post separation expenditure: see Edgehill & Edgehill [2007] FamCA 1102 (“Edgehill”).
Item 24: Monies received by the Husband following commutation of $95,500.00
Contrary to injunctive orders restraining him from doing so, in January 2021 the husband commuted and received the sum of $600,000 from his Super Fund H Member entitlement. It is the husband’s evidence that he applied some of these funds as follows:-
Funds invested in Suburb AT, Country E $89,500
Support of his current wife’s family $12,900
Company F costs @ $1,400 a month $12,600
Balance in the Bank BF account $56,000
Trip costs to Australia $11,900
$182,900
$415,000 of the $600,000 withdrawn from the Super Fund H member entitlement was the subject of subsequent partial property Orders made by consent on 20 October 2021 with the wife receiving $315,000 and the husband receiving $100,000. The parties agreed to the notional add back of these sums and they are recorded as items 14 and 15 on the balance sheet.
The wife submitted that the sum of $95,500 should be added back because it came out of the superannuation pool. The wife did not identify how she came to the figure of $95,500.
The husband accepts that he did not comply with an Order of the Court and the criticism he will receive for it. He submits however that the real question to be determined is – what is the effect of such breach? It was submitted that it is significant that the wife is only claiming an add back of $95,500 as all the other money was accounted; he was in receipt of the money for at least six months after he withdrew it and still had the majority of it in the bank.
The husband deposes that the financial support provided to his current wife’s family was required as they all lost their sources of income during the COVID-19 pandemic and the monies supported 17 family members. They were provided to his current wife in one lump sum to be used by her to assist her family members where necessary, and in return “they would help us with work where possible.”[4]
[4] Husband’s affidavit filed 12 April 2022, paragraph 102.
The wife’s contentions do not engage with the reality that assets totalling the sum of $524,500 of the $600,000 sum commuted is now on the balance sheet - $415,000 in interim property distributions (items 14 and 15 on the balance sheet), $89,500 to Suburb AT, Country E (item 4) and $20,000 still remaining in the husband’s bank account (item 9). This leaves $75,500. I am satisfied that the balance of funds applied by the husband for the purposes identified in his affidavit are reasonable in the circumstances.
The item is rejected.
Item 25: Balance of termination monies received by the husband in 2014 totalling $143,055.00
Item 26: Termination payment received by the Husband of $19,636.00 in August 2016
Item 27: Lump sum received by Husband in August 2017 of $29,431
These three items were grouped for the purposes of the wife’s submissions.
Item 25 comprises the total sum paid of $208,055.86 in payments made to the husband from Super Fund AL:- a termination payment of $118,974.07 in October 2014 and $89,081.79 in November 2014. From this total sum the wife acknowledges that the sum of $65,000 was applied towards a mortgage, leaving a balance of $143,055. These monies were received by the husband two years prior to the parties separating.
Item 26 is a lump sum received by the husband on 23 August 2016 as his hurt on duty increase was backdated to 7 December 2014. It was received 2 months prior to the parties’ separation in October 2016.
Item 27 is a lump sum received by the husband in August 2017 being a backdated further increase to his hurt on duty pension to 95% of his final salary as a further increase to his hurt on duty pension was backdated. It was received by the husband subsequent to the parties’ separation.
Senior counsel for the wife submitted that these items should be added back to the asset pool as they are a premature distribution to the husband in the terms identified in Townsend & Townsend (1995) 92-569; they are not income as they were received in lump sums and were backdated to the period of time the parties were living together. It was submitted again that unless it can be shown that the money has gone into the “family coffers” and the wife had a say in how it was applied, it should be added back. Senior counsel did not cite any authority to support this proposition.
It was further asserted in submissions that these payments ought to be added back irrespective of whether they currently form part of other assets listed on the balance sheet. Although then conceded by senior counsel for the wife that this would be “double counting”, the wife’s position was still prosecuted.
It is the husband’s evidence that the monies listed in item 25 were originally deposited into the Employer O Bank account and then transferred to the parties’ joint account. The husband gives detailed evidence as to the application of these funds including finishing and presenting the Suburb AH property for sale and as a contribution towards the building of 10 extra rooms and kitchen at Company F Hotel.
The husband deposes that the monies received by him with respect to item 26 were received and spent by him well prior to the commencement of these proceedings. $10,000 of this money was lent to the husband’s son Mr M and was subsequently repaid by him.
Whilst the husband does not give specific evidence as to the application of monies received by him in item 27, he deposes quite clearly that he has had ongoing expenses of approximately $1,400 a month to maintain the Company F Hotel.
I accept the husband’s evidence that the monies listed in items 24-26 were either applied towards the acquisition and improvement of the parties’ property or for living expenses and upkeep of the Company F Hotel as necessary.
The items are rejected.
Item 28: Civil Claim monies received by the Husband in December 2018 of $73,500
The wife’s notes to Exhibit J2 records the foundations for her quantification of this add back. In 2018 the husband received the sum of $254,000 personal injury moneys from his civil claim against the Employer O. The wife accepts that from this sum $60,000.00 was applied towards the purchase of the Suburb AO property (item 3) and $120,500 was applied towards the purchase of Suburb AT, Country E (item 4). Whilst the wife in oral evidence conceded this money may have been spent by the husband, as she does not “know”, it should be added back.
Senior counsel for the wife in final submissions said that this sum should be “particularly” added back because the husband sought the sum of $132,500 as a Griffiths v Kerkemeyer [1977] HCA 45 (“Griffiths v Kerkemeyer”) component of the total value of the husband’s civil claim against the Employer O: “it’s money that he has claimed for himself but used her as a basis for the claim. So then we would say it should be matrimonial property.”[5] It was further submitted as the husband has not accounted for the disbursal of “all the money” it should be added back or come into consideration under s 75(2)(o).
[5] Transcript 18 May 2022, p.317 lines 37-39.
It did not appear to be disputed that the compromise sum achieving a settlement of the husband’s personal injury claim did not specify any value to the Griffiths v Kerkemeyer portion of the settlement. As a matter of law, it was his verdict and monies, not the wife’s, he being able to expend those monies reasonably and consistently with “getting on with his life”. It has not been established that the husband has wasted or prematurely distributed the balance of the funds he received 4 years ago. The item is rejected. It will be taken into account in the contribution findings.
Item 29: Civil Claim Monies received by the Husband of $7,073.00 in 2019
This sum is a back payment of Medicare expenses. The wife submitted this should be added back for the same reasons as item 28. The item is rejected for the reasons identified above.
Items 30-33: Monies withdrawn from X’s Bank Account totalling $96,000.00
During the course of the relationship the parties discussed gifting to X and the husband’s two eldest children a one third share each of the equity in the property at AC(2) Street, City V. X was under the age of 18 years at the time. The property was transferred to the husband’s two eldest children only. The two eldest children then paid an amount of $22,000 for X’s one third share in the property. This money was paid into a Commonwealth Bank account created by the husband on trust for X.
The husband clearly acknowledges that he thereafter applied this sum for his own use and the parties have agreed that orders be made that he reimburse such monies to X out of any s 79 adjustment he receives.
It is clear from the husband’s oral evidence, and I find, that the husband used this account as his own – transferring monies in and out of it as he required. The wife submits that, as “It goes to different accounts of his and his only” it should be added back, even if the monies were used to purchase assets or pay off credit card liabilities as “that’s not acquisition of any property.”[6] If I understood the submission correctly, the wife contends that unless monies are applied to acquire an asset, they ought to be added back to the pool for adjustment. Senior counsel for the wife did not identify any authority to support this contention. It is novel.
[6] Transcript 18 May 2022, p.318 lines 24-40.
The husband asserts that there is no evidence to establish that this was anything other than him expending funds and “getting on with his life” and that some of the monies were applied towards the payment of mortgages. I accept that submission and so find.
The item is rejected.
Item 34: Amount gifted to Mr M and Ms N in 2015 of $80,000.00
This sum again relates to the gifting of the equity in the AC(2) Street, City V property discussed in items 30-33 on the balance sheet above.
For this item, as the wife wanted one third of the property to be transferred to X and this did not happen (in lieu thereof the sum of $22,000 was paid by the husband’s two eldest children for X) she is asserting that her asserted value of the equity in the property transferred to the husband’s two elder children should be added back.
The sum of $80,000 appears to be grounded on the wife’s assertion that whilst the stamped transfer of the property reports a consideration of $260,000 the real value of the property at the time was $275,000 minus the mortgage the husband’s children were responsible for in the sum of $195,000. It ignores the $22,000 that was paid for X’s share by the husband’s eldest two children as the husband utilised these monies for his own benefit.
There is no evidence of the value of this property at the time of the transfer. I infer and find that the stamping of the transfer was grounded from a contemporaneous valuation of the property at that sum. There is no evidence the value of the property was other than $260,000.00. I find that the value of the equity of $65,000.00 in the property was transferred to the husband’s two eldest children. I find and accept that they paid to the husband $22,000 for X’s share.
The husband concedes that he has used the sum of $22,000 for his own purposes and the parties have now agreed that I make orders that the husband will deposit monies back into a bank account for X in the sum of $22,000 that will come out of his share of the assets he receives by way of an adjustment pursuant to s 79 of the Act.
The add back is rejected.
Item 35: Amounts Withdrawn from AM Street, Suburb AN Mortgage by the Husband of $290,000.00
The husband deposes that in 2015 the parties decided to establish another hotel business in addition to the Company F Hotel. They purchased one block of land for $150,000 and a smaller block which contained a villa and other infrastructure for $105,000. The husband deposes that the costs of constructing the Company C Hotel was approximately $600,000. The money was obtained by redraws on the AM Street, Suburb AN mortgage.
The wife seeks an add back of monies withdrawn by the husband from the AM Street, Suburb AN mortgage in excess of the costs she accepts to buy and build Company C Hotel, Country E. She deposes that bank records evidence multiple withdrawals from the mortgage from 22 January 2016 to 13 December 2016 totalling the sum of $890,000. The wife will only accept that the total costs including the purchasing of land and construction totalled $600,000. Her evidence to ground the asserted add back is that on an unknown date the husband said to her: “…the costs to build Company C were around $300,000” and that she understood that to be the land and building costs, although she has never seen receipts.[7] During the course of the hearing documents were tendered by the husband recording estimations being given of $400,000 and $600,000.
[7] Wife’s affidavit filed 5 April 2022, paragraph 95.
The manager of Company B, Ms AX, swore an affidavit in the proceedings and was cross-examined. She has been employed by Company B since 2013 and managed the building of both the Company C and Company F hotels. She was responsible for financial management of the Company C Hotel build. She completed spreadsheets as to the costs of the build but does not have receipts for every single expense as some were disposed of, some payments were made in cash and some suppliers did not issue a receipt. Her evidence was that the costs for the build totalled some $640,000. She provided detailed evidence and was cross-examined. She gave her evidence clearly and was unshaken. I accept her evidence.
The wife’s refusal to make a concession in light of the evidence was reflective of her oral evidence throughout the hearing.
The add back is not allowed.
Item 36: Amount Husband invested in Shares and sale proceeds from 2002 to date – “not disclosed but appears to be at least $250,000.00”
The wife was questioned as to how she arrived at the figure of $250,000 when her own evidence was that the husband had told her he had invested $60,000 in shares. Her response was:
[THE WIFE] …I’m assuming through searches.
[SOLICITOR FOR THE HUSBAND] So the answer is you don’t know?
[THE WIFE] I have no idea.[8]
[8] Transcript 16 May 2022, p.100 lines 32-34.
During the course of final submissions senior counsel for the wife submitted that the add back should be the sum of $199,097. This figure comprises the loss the husband carried forward on his taxation return in 2012 of $46,007 plus a $3090 capital loss in 2013 together with the sum of $150,000 being the husband’s margin lending facility.
The wife submitted that it should be added back as it was a waste as there was “no evidence…that the wife knew about it.”[9] I asked senior counsel how the husband’s conduct in purchasing shares, even when he conceded that he was a “terrible trader” grounded a finding as identified in Kowaliw. It was submitted on behalf of the wife that:
…it can’t be anything else, in my view, than reckless or wanton. This man is not a professional investor. This man is an amateur who is losing money on most investments. He doesn’t have any personal advice. He doesn’t have a particular stockbroker.[10]
[9] Transcript 18 May 2022, p.327 lines 16-17.
[10] Transcript 18 May 2022, p.327 lines 39-42.
The husband submitted, and I find, that there is no evidentiary basis that a margin loan of $150,000 was called in. Exhibit W16 is a letter from the husband to the ANZ Margin Lending dated 29 November 2007 asking that his margin lending account be cancelled and “Will you transfer my funds to the linked ANZ account and the remaining shares to my E Trade account...”
I find that the evidence does not establish that the husband’s investing in shares was negligent, reckless or wanton.
I will not add back the sums as sought by the wife.
Item 37: Add back to Wife of Monies received post separation of $109,000.00
At the request of the wife in March 2018, the husband transferred to a joint account but which the husband asserts the wife solely used subsequent to separation the sum of $109,000, being the balance of monies received from the sale of the AM Street, Suburb AN property. The sum of $100,000 was thereafter transferred to an account in the wife’s sole name ending #...66.
The husband submits that these monies should be added back as it was a lump sum paid to the wife post separation from the remaining sale proceeds of the AM Street, Suburb AN property and there is no evidence as to how the funds were applied by the wife.
The wife concedes that there is no evidence as to how these monies were applied by her. Her affidavit is silent on the issue. There is no documentary evidence to support the assertion made by senior counsel from the bar table during the course of final submissions. Despite this, and the basis upon which the wife grounds many of her contentions as to the add backs sought by her as against the husband, she asks the Court to accept from the bar table that the monies have been applied towards the acquisition or improvement of matrimonial assets. She does not agree that the monies should be notionally added back to the asset pool.
It does not appear to be asserted by the husband that the monies are still in existence. In the circumstances of a vacuum of evidence as to how such monies were applied I cannot make a finding as to their reasonable use and application. I will take them into account by way of adjustment to the contribution findings.
The add back is not allowed.
Conclusion as to Add Backs
Given the above analysis, I am not satisfied that there should be any “add-backs” in the balance sheet as sought by the wife or the husband save as to the agreed partial property distributions made pursuant to the Orders of 20 October 2021 being items 14 and 15 on the balance sheet. I will return, however, to the use and application of funds and will consider what, if any, further adjustments should be made to the contribution findings.
The wife’s approach in requiring the husband to provide her with an audit of each and every dollar he has spent over the last 21 years consumed a significant proportion of the time required to hear this matter and is contrary to authority: see Edgehill.
Item 43: Superannuation Entitlements of the Husband
The husband has a defined member benefit in the Super Fund FH. The date of commencement of the husband’s eligible service period was 1987. The husband first became a member of the plan in 1987.
The husband ceased work in 2014 on medical grounds. He is receiving his superannuation entitlement as a defined benefit pension of $88,212.38 annually. This pension is not taxable.
The husband had the opportunity to partially or fully commute his pension to a lump sum within 6 months of his 60th birthday. Contrary to an injunctive order the husband commuted $600,000 of his entitlement in 2021.
The parties obtained a single expert report with respect to the husband’s superannuation entitlements from Mr BG of Super Fund BH (Exhibit H5). Also in evidence as Exhibit J5 is the Form 6 Superannuation Form. Contained within Exhibit J6 is a letter from Ms BJ of the Super Fund AL Scheme to the wife’s solicitors dated 2 March 2022. It is agreed and I find that pursuant to the regulations, the value of the husband’s member entitlement is $1,283,290.
I find based on the evidence contained within Exhibits H5, J5 and J6 that:-
·The husband’s pension is payable for life and is indexed annually in accordance with the percentage movement in the Consumer Price Index (“CPI”).
·It is a defined benefit superannuation payment and is not considered to be compensation for loss of wages.
·The pension is calculated in accordance with a formula that is based on a percentage of the member’s final superable salary at their exit date and their length of service. In addition to the pension, Super Fund H members are entitled to payment of a Basic Benefit which is fully funded by the employer.
·The husband can undertake any other gainful employment outside the Employer O Service without reduction to the value of his pension.
·The husband’s superannuation benefit is splittable by way of a Pt VIIIB order. Any splittable payment made to a non-member spouse pursuant to a Pt VIIIB order is to be based on the family law valuation of the member entitlement determined using alternative factors approved under reg 43A of the Family Law (Superannuation) Regulations 2001 (Cth) valuation and not the commuted value of a pension. A payment split will incur a fee of $1,347.00.
·In the event a splitting order is made, the wife must receive a lump sum splittable payment in the base amount specified in the order. That lump sum will be paid to the fund of the wife’s choice. The husband’s pension will be reduced accordingly. Hence, if a 40% splitting order was made, this would leave 60% of the current pension paid to the husband.
·As the husband’s superannuation has a preservation classification of unrestricted non-preserved, the wife can “access the lump sum at any time as if it were cash”; she does not need to wait until she reaches her retirement age and retires from the workforce. This will however have taxation consequences of 22% as the wife is under the age of 60 years. To achieve a tax free payment the wife would have to roll over her splittable payment into an eligible super fund and only access it after she is 60 years of age.
·There are no taxation consequences for the husband in the event of a superannuation splitting order being made. He will continue to receive the pension free of tax irrespective of whether it is split, albeit in a reduced amount if a split is ordered.
·The husband had the option to commute the pension to a lump sum at the ages of 55 and 60; an option he exercised at the age of 60 years. There does not appear to be any further opportunities for him to commute any further sums.
·The family law value (“FLV”) for the husband’s falls each month due to his diminished life expectancy. In essence, he can expect to receive less pension over his remaining lifespan. The diminished family law value over time is offset once a year when the CPI increase is applied. “Over the very long term, the FLV would fall considerably.”[11]
[11] Exhibit H5.
The parties are in dispute as to whether the husband’s benefits are subject to medical review. The husband submits that he is subject to medical review whilst conceding that in practice this rarely happens. The wife submits that the husband is not subject to medical review.
I find that the husband will not be subject to medical review based on the following:-
·The correspondence from Super Fund AL states “As stated above in 4(1), Mr Louis’ pension is payable for life. As he is over 60 his pension is not subject to any further medical review.”[12]
·Mr BG’s report is contradictory. In one paragraph it states that whilst the husband must submit to a medical examination if required by the trustee in practice this rarely happens. In the following paragraph it states:
The husband’s pension will continue without review until his demise as he is now over 60.
While in receipt of the invalidity pension, the member can undertake other gainful employment outside the [Employer O], without any reduction to the member’s entitlement to the invalidity pension.[13]
[12] Exhibit J6.
[13] Super Fund BH Pty Ltd report of Mr BG dated 11 March 2022 page 3.
Mr BG was not cross-examined. I am satisfied and find that having regard to the evidence from the superannuation trustee that the husband will not be the subject of medical review.
The wife asserts this is an aged/retirement pension deriving from superannuation. The wife contends that the Court should deal with the husband’s superannuation entitlements as property and seeks a splitting order. As a splitting order is available to the wife as a lump sum and the husband has been able to commute part of it as a lump sum, it should be listed on the balance sheet in accordance with the agreed value. The wife submits there are compelling reasons as to why it should be on the balance sheet in this way, including that it is the only asset of value remaining in Australia and the wife has made indirect contributions to it.
The husband submits that the husband’s entitlements do not form part of the asset pool. The husband submits in accordance with authorities such as Surridge & Surridge (2017) 57 Fam LR 267 (“Surridge”) and Perrin & Perrin(No 2) [2018] FamCAFC 122 (“Perrin”) that whilst there is a value to the entitlement pursuant to the regulations the Court should exercise its discretion to not include it on the balance sheet of assets available for division. It was submitted that as the entitlement is in the payment phase it has special considerations.
Section 4 of the Act defines property in the following terms:
(a)in relation to the parties to a marriage or either of them--means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion;…
Whilst “property” has been defined as “the most comprehensive of all terms” (Jones v Skinner (1835) 5 LJ Ch 87 at 90) it is uncontroversial that to answer the question of whether a particular right or entitlement should be categorised as property it is necessary to carefully examine and identify the precise nature of the particular entitlement in question: Perrett and Perrett (1990) FLC 92-101. Whether the capitalised amount of a future income stream is treated as property depends on the circumstances of the case and is a matter of discretion: see Surridge.
The husband’s superannuation interest can be subject to a splitting order. Whilst if a splitting order were made the wife would receive a lump sum and the husband would not, a sizeable portion of his superannuation entitlements have already been commuted and received by the parties. Having regard to my findings that the entitlement will not be the subject of medical review, that the husband is able to undertake other gainful employment if he wishes and that the wife can access any splittable payment as a lump sum as if it were cash, the agreed value of the entitlement will be dealt with as property of a superannuation character on the balance sheet. This approach is reinforced by the value of the entitlement as against the rest of the asset pool.
Financial Resources
Item 44: In addition to the wife wanting the asserted value of the husband’s superannuation to be dealt with as an asset, she also asserts via the balance sheet that the pension amount received by the husband each week in the sum of $1,690.00 should be taken into account on the balance sheet as a financial resource. It was conceded during the course of final submissions that this approach was incorrect. I reject this as a balance sheet item.
Item 45: The wife asserts that the Court should take into account the sum of $150.00 per week rental monies she asserts he receives from Suburb AT, Country E. It was disputed that this payment was regular or continuing. There is no evidence that these rental monies are continuing to be paid. I reject this item.
Item 46: The wife also wants taken into account a “not known” figure of the income the husband will receive when travel groups start rebooking from April 2022. The wife noted on the balance sheet that “Borders with Country E are open and international travellers need only show vaccination status and a clear PCR test 48 hours before entry.” The wife did not make it clear how an unknown contingent quantum is to be taken into account without any evidentiary foundation. I reject this item.
Item 47: Lastly, the wife wants the Court to take into account as a “not known” figure the balance of a bank account held by the husband’s current wife, Ms AR “into which the husband makes regular monthly deposits.” I reject this for the reasons outlined for item 46 above.
I find that the property pool consists of assets and liabilities as follows:-
Ownership Description Value ASSETS Joint Company B
a) Company F Hotel in City BC, Country E, currently operated by the Husband
b) Company C Hotel in City D, Country E, operated by the Wifec) Vacant land in City J Country E
$540,141
$393,185
$44,318
2. Wife Company BD (50%) Nil 3. Husband Property – Street BE, Suburb AO (Part Owner) $63,998 4. Husband Property – Suburb AT, City J ( “Suburb AT, Country E”) $186,000 5. Husband Motor Vehicle 1 $5,000 6. Husband Motor Vehicle 2 $10,000 7. Joint CBA Smart Access Account – BSB …99 Account …81 $120 8. Wife CBA Smart Access Account – BSB …13 Account …86 $22 9. Husband Bank BF account …56 $20,000 10. Husband Employer O Bank Account – BSB …00 Account …45 $1,000 11. Husband CBA Smart Access Account – BSB …92 Account …61 $1,500 12. Husband AQ Law Firm Acc No …40 $1,206 13. Husband AQ Law Firm Timed Deposit Acc …79 Nil 14. Wife Partial property settlement to wife (add back) $315,000 15. Husband Partial property settlement to husband (add back) $100,000 16. Husband Household contents Nil 17. Joint Contents of container in Region G Nil 18. Wife Household contents Nil 19. Husband CBA Youthsaver Account – BSB …83 Account …63 on trust for X $6 20. Husband Bank BF account …13 $15 21. Husband Employer O Bank Account – BSB …00 Account …53 Nil 22. Wife Motor Vehicle 3 Provided for in item 14 23. Wife CBA Streamline Basic …07 …12 $3 Total $1,681,514 SUPERANNUATION Member Name of Fund Type of Interest Value Wife Super Fund AL Balanced Growth $237,896 25. Husband Super Fund AL Defined Benefit in the payment phase/ hurt on duty pension $1,283,290
Total $1,521,186
I find that the value of the parties’ non-superannuation property is $1,681,514. I find that the value of the parties’ superannuation property is $1,521,186. The total value of the non-superannuation property and superannuation property of the parties is $3,202,700.
If a superannuation splitting order is made in the wife’s favour the fee incurred is $1,347. As stated earlier in these reasons there is no evidence as to who would be responsible for the payment of this fee.
WHETHER AN ORDER ALTERING PROPERTY INTERESTS SHOULD BE MADE
I find that the requirements identified in Stanford are satisfied in this matter having regard to:
·The parties in this matter, having married and mixed their finances as a family, have now separated. It is therefore not possible for them to continue to mutually enjoy the accumulated assets.
·Both parties invoke s 79 of the Act seeking orders for property settlement.
·The current legal interest of the parties needing to be changed or adjusted when consideration is given to the contribution and other factors identified below.
It is therefore just and equitable in all the circumstances to make orders pursuant to s 79 of the Act adjusting the financial interest of the parties.
THE ASSESSMENT OF CONTRIBUTIONS
The wife had commenced employment with the Employer BK in 1998. At the commencement of the relationship she was employed on a full time basis as a public servant with a salary of between $55,000 and $76,000 per year.
The husband commenced employment with the Employer O in 1987. At the commencement of cohabitation the husband was employed as a public servant with the Employer O earning approximately $60,000.00 per year.
The husband was the sole legal owner of W Street, City V in the state of New South Wales (“the W Street, City V Street property”) at the commencement of the relationship. This property had been purchased by the husband in approximately 1999 for the sum of $103,500. The husband asserts that the value of the W Street, City V Street property at the commencement of cohabitation was $125,000.00 and the loan secured by way of mortgage was approximately $70,000. The wife conceded during the course of cross-examination that the equity in this property as at 2000 (a year prior to the parties commencing cohabitation) was approximately $31,000. I accept and find that the equity in the property was between approximately $30,000 - $55,000. The property was sold in 2008 for the sum of $253,000.00. I accept that the net proceeds of sale were applied towards reducing the mortgage on a property at AJ Street, Suburb AH (“the Suburb AH property”) purchased jointly by the parties in 2007.
The husband was the sole owner of the property at U Street, City V (“the U Street, City V property”) at the commencement of cohabitation. A retrospective valuation of this property as at the commencement of cohabitation referred to in the husband’s affidavit was not tendered. The husband asserts the value of the U Street, City V property at the commencement of the relationship was $300,000.00. There is no evidence as to the loan amount secured by way of mortgage over the U Street, City V property at the commencement of the parties’ cohabitation; the husband cannot recall how much it was. The U Street, City V property was sold in 2002, one year after the parties commenced living together, for the sum of $330,000.00. There is no evidence as to the net balance of proceeds received by the husband upon sale. The husband deposes that the funds received were applied to discharge the mortgage on the W Street, City V Street property and for joint living expenses. The wife conceded in cross-examination that it is likely that the husband used the net proceeds of the sale of the U Street, City V property for the joint benefit of the parties. I find that this was so.
The husband asserts that the combined equity in these properties at the commencement of the relationship was approximately $157,000.00. In final submissions the wife conceded that the husband received the sum of approximately $33,000 from the sale of W Street, City V and that, whilst there is no evidence as to the mortgage on the U Street, City V property on disposal, “giving him some allowance, there would be maybe $100, 120,000.”[14] I accept and find that at a minimum the sale of the two properties owned by the husband at the commencement of the relationship netted to the parties a sum of $100,000. I have made findings above that these monies were applied towards reducing the parties’ liabilities and for household living expenses.
[14] Transcript 18 May 2022, p.338 line 5.
The husband otherwise had a motor vehicle, savings of approximately $2,000, furniture and personal belongings including tools. There is no valuation of the husband’s superannuation entitlements at the commencement of cohabitation. He deposes he has been unable to obtain such a valuation. The husband had accumulated 14 years of entitlements prior to the parties’ cohabitation.
The wife estimates her equity in the property at Z Street, Suburb AB (“the Z Street, Suburb AB property”) at the commencement of the relationship was approximately $25,000. The husband does not take issue with the wife’s estimate and I find that this was so. The wife rented the Z Street, Suburb AB property and applied the rent towards the mortgage and day to day living expenses. The Z Street, Suburb AB property was subsequently sold in 2008, some 7 years after the parties’ commenced cohabitation, with the net proceeds of sale of approximately $123,000 being applied towards the acquisition of the property at AJ Street, Suburb AH (“the AJ Street, Suburb AH property”).
The wife otherwise had a motor vehicle, furniture, personal belongings and savings in the sum of approximately $1,000. It does not appear to be disputed and I find that at the commencement of the relationship the wife had superannuation entitlements of approximately $26,000.
Both parties obtained promotions and pay increases during the course of their relationship. The parties supported each other in their respective careers.
The husband received gifts from his mother during 2002-2004 totalling the sum of $228,000.00. I accept the husband’s evidence that these monies were applied towards mortgage payments, the purchase of shares by the husband and payment of household living expenses.
In 2008 the wife received an inheritance from her late mother in the sum of approximately $30,000.00 and this sum was applied towards the costs of the swimming pool at the Company F Hotel.
The husband received various lump sum payments as recorded above in these reasons. This included a termination payment from the Employer O in the sum of approximately $230,000.00 comprising unused leave, long service leave and other benefits accumulated for 14 years prior to cohabitation and 13 years during cohabitation. I find that these sums were applied towards the acquisition and improvement of the parties’ assets as recorded earlier in these reasons
The husband received the sum of $254,000 being the compromise settlement reached of the husband’s civil claim proceedings filed against the Employer O for injury sustained on duty. I find that these monies were also applied to the acquisition and improvement of the parties’ assets as recorded earlier in these reasons. Suburb AT, Country E was purchased in the name of the husband’s current wife, Ms AR (item 4). The personal injury monies are a direct contribution by the husband: Aleksovski v Aleksovski [1996] FamCA 111. I find that the wife made indirect financial contributions in an unspecified sum to a portion of the monies received by the husband by way of a Griffiths v Kerkemeyer component. The additional $8,000 received by the husband was money that the husband’s solicitor has incorrectly calculated was owing to Medicare and was not compensation for his injuries.
During the course of the relationship the parties applied their endeavours to the acquisition and improvement of assets including items of real estate at City V and Suburb AF in New South Wales. They further applied their incomes and endeavours to the acquisition and improvements of the Country E properties. Both parties worked full time except for paid maternity leave and when the husband was medically discharged. I am satisfied and find that during the course of the parties’ cohabitation they shared their income and expenses as a married couple. I am satisfied they both applied their best endeavours and efforts to the acquisition and improvements of matrimonial assets including the building of properties and renovations both in Australia and Country E.
I am satisfied and find that for the most part the parties had different roles in the relationship. The wife undertook the bulk of cooking the meals and maintaining the home. The husband was responsible for managing financial matters including the maintenance of the vehicles. I find that both parties assisted the other in the care of the children. I find that the level of responsibility for the children was not consistent throughout the entirety of the relationship. The wife took on more of a parenting role when on maternity leave and when the husband was not in a position to provide significant assistance. The husband took on more responsibility, at least with respect to X, when he ceased paid employment.
The children have lived with the wife subsequent to separation. I accept that immediately post-separation the husband had limited time but this increased to eventually having a shared care arrangement. The husband saw X in accordance with her wishes. The parties and the children remained living in Country E until 21 December 2019.
From the time of separation until the wife and children relocated to Australia the husband paid the wife $300 a week child support as well as the children’s school fees for international school at City J Country E. The husband deposes that from the 2015/2016 financial year to the 2019/2020 financial year he paid school fees totalling the sum of approximately $37,500. The child support paid by the husband decreased in 2021 to $201 per week as a result of his commuting part of his superannuation entitlements.
The wife has had almost sole responsibility for caring for the children subsequent to their relocation back to Australia in 2019. The husband had travelled to Australia to see the children at the time of swearing his affidavit on 4 occasions. A further trip had to be cancelled due to the COVID-19 pandemic.
Whilst a global approach to the assessment of contributions is generally preferred this is a discretionary determination and particular circumstances may dictate that contributions to a particular asset or group of assets should be assessed separately: Norbis v Norbis (1986) FLC 91-712 (“Norbis”).
The wife submitted that a global approach should be adopted in circumstances where the husband’s entitlements are the largest asset and the only significant asset in Australia available for distribution.
The husband submitted that in the event the Court found the husband’s superannuation is to be included on the balance sheet then the Court should adopt a two pool approach with the second pool comprising the husband’s superannuation.
In this case a global approach to the assessment to the contributions made by each of the parties to the asset pool is appropriate, however for the reasons that follow it ought to be applied to two different pools of property. The Full Court has repeatedly affirmed that drawing distinctions as to the nature, form and characteristics of superannuation interests is an important task in certain cases: see C & C (2005) FLC 93-220 (“C & C”).
I find that it is appropriate in this matter as identified by the High Court in Norbis to adopt an approach to the assessment of contributions to the parties’ superannuation entitlements separately to the assessment of the parties’ contributions to the non-superannuation assets. I have made findings above as to the specific nature and form of the husband’s superannuation entitlements. The value of the husband’s superannuation is a substantial part of the overall pool of assets and a superannuation splitting order is sought: see C & C. The husband has already commuted a substantial portion of his entitlements. The wife seeks a superannuation splitting order. The husband had accumulated 14 years of benefits in the Employer O prior to the commencement of the parties’ cohabitation and it has significantly different characteristics to the other property of the parties.
It is appropriate in this case to consider and evaluate contributions in two separate pools of property :-
(1)The non-superannuation property; and
(2)The superannuation property.
At final submissions senior counsel submitted that the Court should make a contribution finding as to 65% to the wife of a single superannuation property and non-superannuation property pool on a global basis. When asked what adjustment was sought if any pursuant to s 75(2) of the Act, it was submitted that no further adjustment was sought as it had been taken into consideration in the adjustment sought and they “can go into consideration of the 75(2)(o).”[15]
[15] Transcript 18 May 2022, p.351 lines 40-41.
The husband contended that an assessment of contribution finding as to 35% to the wife and 65% to the husband should be made. On the basis that the husband’s superannuation entitlements were not included on the balance sheet the husband conceded an adjustment to the contribution findings of between 5-10% in the wife’s favour would be appropriate.
In the event the Court adopted a two pool approach, the husband submits there should be a 42% adjustment to the wife of the property pool excluding the husband’s superannuation entitlements and an adjustment of 17% of the husband’s superannuation – which would mean in the husband’s submission that as the wife has already received $315,000 by way of partial property settlement from the monies commuted, no further splitting order to the wife as to a base amount would be made.
The Full Court in Horrigan & Horrigan [2020] FamCAFC 25 reinforced the holistic approach espoused in Fields & Smith (2015) FLC 93-638 and stated that the proper approach to the assessment of contributions is:
[35] …established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties’ respective contributions, in a holistic way across the course of the relationship and in the post separation period to the point of assessment…
The Non Superannuation Property
I find that the financial contributions of the husband at the commencement of the relationship were superior to those of the wife.
I am satisfied and find that the husband made superior financial contributions during the course of the relationship. The monies received by him during the course of the relationship was the springboard for the acquisition of items of real estate both in Australia and overseas. Both parties worked hard and applied their best endeavours during the course of the relationship. The wife has made financial contributions and substantial direct and indirect non-financial contributions including indirect contributions to the receipt of the monies relating to the husband’s employment.
Contributions post-separation favour the wife.
Adopting a holistic approach I assess the parties’ contributions to the non-superannuation pool as 37.5% to the wife and 62.5% to the husband.
By way of cross check in dollar terms this equates to:
37.5% to wife = $630,568
62.5% to husband = $1,050,946
The differential = $420,378.
The Superannuation Property
The husband accumulated 14 years of entitlements arising from his employment prior to the parties’ cohabitation. He accumulated further contributions to these entitlements by way of his employment during cohabitation. He was assessed as hurt on duty in 2013 and ceased work on medical grounds in 2014.
It is well settled that the wife cannot claim any direct contribution arising from the husband being hurt on duty. The wife however has made indirect financial contributions and contributions as homemaker and parent: Schmidt & Schmidt [2009] FamCA 1386. The wife’s contributions as a homemaker and parent to the parties’ children has continued post separation.
A significant portion of the husband’s entitlements arose prior to the parties’ cohabitation. The wife seeks almost the entirety of his current entitlements. This would leave him with almost no income and the wife being able to access a sizeable cash sum.
The wife’s superannuation has increased during the course of the parties’ relationship. The husband has also made indirect contributions to its accumulation.
I am satisfied, again adopting a holistic approach that the wife’s contributions to the superannuation property pool are 25% and the husband’s 75%.
By way of cross check:
Superannuation Value: $1,521,186
25% to the wife = $380,297
75% to the husband = $1,140,889
Differential = $760,592
With the wife retaining her superannuation entitlements of $237,896 this would result in a contribution adjustment to her in the sum of $142,401.
ADJUSTMENT TO THE CONTRIBUTION FINDINGS
It is a matter of discretion as to whether an assessment of any adjustment to the contribution findings under section 79(4)(d) – (g) is dealt with by way of separate findings against each of the pools of superannuation property and non-superannuation property or whether any adjustments to be made to the contribution finding can be more conveniently made by looking at the superannuation and non-superannuation property pools together: see T & T (2006) FLC 93-263. I am satisfied that the latter is more appropriate and that to look at this issue separately for each pool of property in this matter would be a hollow and artificial exercise.
The husband’s earning capacity on the evidence before me is his ability to receive his superannuation entitlements paid as a fortnightly pension. As stated earlier in these reasons, any splitting order made in favour of the wife will reduce the amount received by the husband by way of his periodic payments. It does not appear that the husband can commute any part of his future superannuation pension to a cash lump sum.
I accept and find the calculations of Mr BG based on an agreed value as at 1 April 2022 as to the effects of a splitting order to the wife in the following scenarios as being:
Base amount to W
Husband’s pension after split
Paid to Husband per fortnight
FLV after split
$1,150,000.00
$9,927.83
$381.84
$289,419.86
$1,003,554.00
$19,896.93
$765.27
$418,592.76
$832,676.00
$31,529.19
1,212.66
$569,315.93
$661,808.00
$42,160.78
$1,660.03
$720,030.29
The wife is 56 years of age. The husband is currently aged 61 years.
The wife is currently employed on a part time basis. I am not satisfied on the evidence that the wife has any health issues impacting on her ability to obtain gainful employment. I am satisfied and find that her income earning capacity will be restricted as a result of her caring for the 3 children who are currently aged 16 years and seven years. Her capacity to obtain employment in the future will increase as the younger two children mature.
I accept and find that the husband has been diagnosed with acute anxiety and post traumatic stress disorder. He is prescribed anti-anxiety and anti-depressants. He has been assessed as 95% incapacitated for work and deposes that it is highly unlikely he will ever return to Australia as his condition is exacerbated when he is in Australia. I accept and find that this is so. There is no evidence that the husband’s prognosis will improve. I find that the capacity of the husband to obtain future gainful employment is restricted.
The wife is currently employed on a part time basis of 17.5 hours per week earning the sum of $816 per week net. She receives child support in the sum of $201 from the husband and a family tax benefit of approximately $185 per week totalling the sum of approximately $1,202 per week. In the event a superannuation splitting order is made in favour of the wife she will be able to access this as a cash sum.
The husband receives an income from his hurt on duty pension. It is currently $1,690 per week. The husband receives this pension free of tax. This will decrease if a superannuation splitting order as to a base amount is made in favour of the wife. There is no calculation made by Mr BG as to the effect on the husband’s pension entitlements of a splitting order made in favour of the wife of less than $661,808.00. I have found earlier in these reasons that in the event a lump sum splittable payment is made to the wife in a base amount there will be a proportional reduction in the value of the husband’s pension as recorded in Mr BG’s evidence.
Neither of the parties are receiving any significant income from the properties in Country E as a result of the COVID-19 pandemic which followed a volcanic eruption in 2017 and an earthquake in 2018. Both parties are hopeful that the tourism industry in Country E will recover and they will begin operating at a profit. Both parties accept that neither of them have much of an income at all from the hotel businesses. Both parties have been expending monies on meeting the ongoing costs of the Country E properties. Both agree it will be a slow increase in tourists and therefore business.
The children continue to reside with the wife in a rental property. K has been under the care of a speech therapist and an occupational therapist. As the husband will continue to reside in Country E, the wife in those circumstances will bear the majority of the responsibility for caring for the children.
The husband continues to live in Country E with his current wife, her two children aged 15 and 11 years and his mother in law. The husband deposes and I accept that he supports his current wife and her family.
I accept that the wife moving to Country E with the family required her to relinquish her role with the Employer BK and upon her return to Australia she has been unable to obtain employment at the same level, suffering loss of income and benefits as a result.
The wife currently receives the sum of $201 per week in child support payments from the husband as assessed by the Child Support Agency. This amount will reduce in the event the husband’s pension payments decrease. There is no evidence as to the reduction in child support payable by the husband to the wife as a result of a reduction in periodic payments received by him. There is no evidence that the husband will not continue to pay child support to the wife and I accept and find that this will continue.
During the course of the parties’ cohabitation the husband’s son, Mr M primarily resided with the parties and his daughter, Ms N resided with them 2 to 3 days per week. Their expenses were met from the parties’ joint funds.
The husband will incur the costs of overseas flights from Country E to Australia to see the children.
I take into account and weigh that both parties have had the benefit of matrimonial monies post-separation.
I am satisfied that an evaluation holistically of the adjustments to the contribution findings to each of the non-superannuation and superannuation pools of property ought to be 7.5% in favour of the wife. An adjustment of 7.5% of the non-superannuation property pool equates to $126,114. An adjustment of 7.5% of the superannuation property pool equates to $114,089.
Thus the wife will receive 45% of the non-superannuation property pool and 32.5% of the superannuation property.
JUST AND EQUITABLE
The value of the non-superannuation property of the parties is $1,681,514. If the wife is to receive 45% of this property, that equates to $756,681. The husband will be required to pay to the wife an additional cash sum of $48,351. I will round this figure to $48,500.
The value of the superannuation property to be adjusted to the wife is $494,385. If the wife is to retain her superannuation entitlements of $237,896 a superannuation splitting order will be required in the wife’s favour of $256,489.
The parties will receive the following:
Item Description Husband Wife THE NON-SUPERANNATION POOL 1a. Company F Hotel in City BJ, Country E, currently operated by the Husband $540,141 1b. Company C Hotel in City D, Country E, operated by the Wife $393,185 1c. Vacant land in City J Country E $44,318 2 Company BD (50%) $0 3 Property – Street, BE Suburb AO, Country E (Part Owner) $63,998 4 Property – Suburb AT, City J (“Suburb AT, Country E”) $186,000 5 Motor Vehicle 1 $5,000 6 Motor Vehicle 2 $10,000 7 CBA Smart Access Account – BSB …99 Account …81 $120 8 CBA Smart Access Account – BSB …13 Account …86 $22 9 Bank BF account …56 $20,000 10 Employer O Bank Account – BSB …00 Account …45 $1,000 11 CBA Smart Access Account – BSB …92 Account …61 $1,500 12 AQ Law Firm Acc No …40 $1,206 13 AQ Law Firm Timed Deposit Acc …79 $0 14 Partial property settlement to wife (add back) $315,000 15 Partial property settlement to husband (add back) $100,000 16 Household contents $0 17 Contents of container in Region G $0 $0 18 Household contents $0 19 CBA Youthsaver Account – BSB …83 Account …63 on trust for X $6 $0 20 Bank BF account …13 $15 21 Employer O Bank Account – BSB …00 Account …53 $0 22 Motor Vehicle 3 $0 23 CBA Streamline Basic …07 …12 $3 24 Cash sum payment -$48,500 48,500 Total of the Non-Superannuation Pool $924,684 $756,830 Percentage of Non-Superannuation Pool 55% 45% THE SUPERANNUATION POOL 24 Wife’s First Super Fund AL $237,896 25 Husband’s Super Fund AL Defined Benefit in the payment phase/ hurt on duty pension $1,026,801 $256,489 Total of the Superannuation Pool $1,026,801 $494,385 Percentage of Superannuation Pool 67.5% 32.5%
The husband is receiving property to the value of $167,854 more than the wife. He is receiving over twice the value of the parties’ superannuation entitlements. The wife will receive her superannuation entitlements and a splitting order of $256,489. She will be able to access this as a cash lump sum if she wishes to, but this will incur taxation imposts. I am unable to figure the potential taxation consequences for the wife as there is no evidence as to her intention if a superannuation splitting order was made in her favour. The husband’s weekly pension as stated earlier in these reasons will be reduced proportionally.
OTHER MATTERS
The revenue impost of the transfer of the real property of Company B to the wife will be shared equally between the parties as there appeared to be an implicit agreement as to this at trial. Further, the quantum is uncertain and the desire to avoid further disputes dictates that this is just and equitable in the circumstances.
Other financial implications that flow from the Orders made today will again, it appears to be by agreement between the parties, “lay where they fall.”
The wife seeks that the vacant block of land in City J, Country E be transferred to her. The husband seeks that it remain as part of the assets of Company B Hotel. The land is adjacent to the Company F Hotel which both parties agree is to be retained by Company B and therefore the husband. In those circumstances on balance, so as to avoid any further disputes between the parties having regard to the proximity of the land to the hotel the husband will retain, it is appropriate that such real property remain with Company B.
The wife seeks 12 months for the parties to retain the assets currently held in the container in the Region G, the husband six months. There is no evidence as to why a period of 12 months is required. I am satisfied that to ensure a severing of the financial relationship between the parties as soon as it practicable that a six month period is adequate and will order accordingly.
The wife seeks an order that the husband will remove Ms Amos from all positions and roles within Company B should she so request. There is no evidence that Ms Amos has been put on notice that the wife seeks such an order. There is no evidence to support such an order being made and in those circumstances I decline to make it.
It is a matter for the husband to arrange his financial affairs as he considers appropriate to pay the capital sum to the wife. No party sought orders by way of enforcement in default of payment of any adjusting capital sum. In the event the husband fails or neglects to comply with any order as to the capital payment the wife can avail herself of the enforcement procedures contained in Part 11.1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
CONCLUSION
Standing back and looking at the distribution of property on an overall basis, I find that this distribution achieves a just and equitable alteration of the property interests of the parties.
Orders will be made accordingly.
I certify that the preceding two hundred and thirteen (213) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Murdoch. Associate:
Dated: 29 August 2022
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