Arnold and Arnold
[2007] FamCA 634
•29 June 2007
FAMILY COURT OF AUSTRALIA
| ARNOLD & ARNOLD | [2007] FamCA 634 |
| FAMILY LAW – PROPERTY - PROPERTY SETTLEMENT - Contribution – Just and equitable |
| Family Law Act 1975 (Cth) Sections 75 & 79 Law of Property Act 1936 (SA) s29 |
In the Marriage of Hickey (2003) 30 Fam LR 355;
In the Marriage of Coghlan (2004) 33 Fam LR 414;
In the Marriage of Omacini (2005) 33 Fam LR 134;
In the Marriage of Lenehan (1987) 11 Fam LR 615;
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712;
In the Marriage of Zyk (1995) 19 Fam LR 797;
Mallett v Mallett (1984) 9 Fam LR 449;
In the Marriage of Ferraro (1992) 16 Fam LR 1;
In the Marriage of Shewring (1987) l2 Fam LR 139;
In the Marriage Pierce (1998) 24 Fam LR 377
| APPLICANT: | Mrs Arnold |
| RESPONDENT: | Mr Arnold |
| FILE NUMBER: | SYF | 3811 | of | 2005 |
| DATE DELIVERED: | 29 June 2007 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Judicial Registrar Loughnan |
| HEARING DATE: | 24 & 25 May 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr T. Tockar |
| SOLICITOR FOR THE APPLICANT: | Broun Abrahams Burreket |
| COUNSEL FOR THE RESPONDENT: | Mr P. Campton |
| SOLICITOR FOR THE RESPONDENT: | Barkus Edwards Doolan |
Orders
Within 2 months after the date of these orders, or such further time as the parties may agree in writing, the wife shall pay to the husband or as he may direct, the sum of $371,400.
In the event that the wife does not make the payment then forthwith upon the expiration of the time provided for that payment under Order 1, the wife forthwith do all acts and things and execute all documents necessary to effect a sale of the property situate at and known as D in the State of New South Wales being the whole of the land contained in Folio Identifier …, for the best price reasonably obtainable as set out in the following manner:
2.1.list the D property for sale by public auction within fourteen (14) days with such agent as the parties may agree to appoint and in default of agreement as to agent within fourteen (14) days, with such agent as the President of the NSW Division of the Australian Property Institute (Inc) shall appoint ("the agent") and the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
2.2.the reserve price for the purpose of such auction shall be such price as may be mutually agreed upon by the parties or, in the absence of agreement reached within fourteen (14) days prior to the date of the auction sale, the reserve price shall be the price nominated as the fair market value thereof by a valuer appointed by the President for the time being of the NSW Division of the Australian Property Institute (Inc) Incorporated ("the valuer") and the costs of and incidental to such appointment and valuation to be borne equally by the parties as and when same fall due;
2.3.the wife shall co-operate in every way with the agent including (without limiting the generality of the foregoing):
2.3.1.making the key available to the agent;
2.3.2.allowing inspection of the D property at all reasonable times requested by the agent;
2.3.3.doing or saying nothing to hinder or prevent a sale being effected;
2.3.4.ensuring the D property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
2.3.5.signing all documents requested by the agent in relation to the listing for sale of the D property except a contract or agreement for sale which has not been authorised by the parties' solicitors.
2.4.in the event the bidding at the auction does not reach the reserve price the parties or such of them as attends the auction may negotiate with the highest bidders or any other interested person and effect a sale of the D property at a price which is not more than 5% below the reserve price, or at such other price as the parties agree upon in writing;
2.5.if the D property remains unsold, the wife shall do all acts and things and sign all documents necessary to immediately relist the D property for sale by public auction again on successive occasions until the D property is sold, on a date nominated by the agent and at such auction or auctions the reserve price shall be 5% below the reserve price set at the immediately preceding auction unless otherwise agreed by the parties in writing;
2.6.the wife shall instruct such solicitor as the parties agree upon to have the conduct of the sale or, in the absence of agreement reached within fourteen (14) days shall instruct such solicitor as may be appointed by the President for the time being of the Law Society Of New South Wales ("the solicitor") the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
2.7.the wife shall execute a contract for sale in the form prepared by the solicitor having the conduct of the sale at the sale price;
2.8.neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the D property or to any commission;
2.9.the husband shall be entitled upon reasonable notice once per month to enter and view the state of repair of the D property.
In the event of a sale of the D property in accordance with these orders, then on settlement of the sale, the proceeds of sale be paid in the following manner and priority:
3.1.all costs and expenses of sale including legal costs and disbursements, agents' commission, valuers' fees, and auction expenses;
3.2.the amounts required to pay all municipal and water rates outstanding with respect to the D property;
3.3.34% of the balance to the husband;
3.4.the balance to the wife.
The wife may continue to occupy the D property until completion of the sale of the D property and shall be responsible for and pay all the outgoings, telephone, gas and electricity accounts, municipal and water rates, insurance and maintenance in relation to the D property provided that the wife shall vacate possession of the D property not less than seven (7) days prior to the date fixed for completion of contract for sale of the D property.
Except as specifically provided for by any paragraph comprising this Order to the contrary, as against the husband, the wife is the sole owner of and the husband has no interest in all other property, whether real or personal (including choses in action) of whatsoever nature and kind in the possession of the wife at the date of the making of this Order.
Except as specifically provided for by any paragraph comprising this Order to the contrary, as against the wife, the husband is the sole owner of and the wife has no interest in all other property, whether real or personal (including choses in action) of whatsoever nature and kind in the possession of the husband at the date of the making of this Order.
Except as specifically provided for by any paragraph comprising this Order to the contrary:
7.1.the husband shall indemnify the wife from and in respect of all actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband;
7.2.the wife shall indemnify the husband from and in respect of all actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife.
Except as specifically provided for by any paragraph comprising this Order to the contrary, each of the husband and the wife release the other from all debts owing from one to the other.
Superannuation Orders
That paragraphs 10 and 11 have effect from the operative time.
That whenever a splittable payment becomes payable to the husband from his interest in the W Superannuation Fund, the wife will be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount of $68,242.50 and there will be a corresponding reduction in the entitlement the husband would have had but for this Order.
That, having been accorded procedural fairness in relation to the making of this Order, this Order binds the trustee of the W Superannuation Fund.
The operative time for this Order is 4 working days after the service of this Order on the Trustee of the W Superannuation Fund.
Both parties do all acts and things and execute all documents, authorities and writings as are necessary to give effect to all or any of this Order.
The Court noted that the wife’s application for spousal maintenance is withdrawn.
In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders then the Registrar of the court be appointed pursuant to Section 106A of the Family Law Act, 1975 to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
Leave is granted to both parties to re-list these proceedings by arrangement with the Associate to Judicial Registrar Loughnan on 7 days notice in relation to the form or implementation of these orders or in relation to costs.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 2722 of 2004
| Mrs Arnold |
Applicant
And
| Mr Arnold |
Respondent
REASONS FOR JUDGMENT
After a marriage of more than 11 years the parties cannot agree on a settlement of their property.
Applications
The wife seeks orders whereby she pay to the husband the sum of $180,000 and that the parties otherwise retain their own property. She sought spousal maintenance but does not intend to proceed with that claim.
By a Minute of Orders relied on at the commencement of the hearing the husband seeks:
MINUTE OF ORDERS SOUGHT BY THE HUSBAND
A.The Court notes the following definition for the purpose of these Orders:
A.1."[D] property" means the property situated at and known as [D] in the State of New South Wales being the whole of the land contained in Folio Identifier […] together with the improvements, fixtures and fittings erected thereon and/or attached thereto, of which the parties are the registered proprietors;
THE COURT MAKES AN ORDER UNDER SECTION 79 OF THE FAMILY LAW ACT, 1975, IN TERMS OF THE FOLLOWING PARAGRAPHS:
17.The parties forthwith do all acts and things and execute all documents necessary to effect a sale of the [D] property for the best price reasonably obtainable as set out in the following manner:
17.1.list the [D] property for sale by public auction within fourteen (14) days of the date of this Order with such agent as the parties may agree to appoint and in default of agreement as to agent within fourteen (14) days of the date of this Order with such agent as the President of the NSW Division of the Australian Property Institute (Inc) shall appoint ("the agent") and the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
17.2.the reserve price for the purpose of such auction shall be such price as may be mutually agreed upon by the parties or, in the absence of agreement reached within fourteen (14) days prior to the date of the auction sale, the reserve price shall be the price nominated as the fair market value thereof by a valuer appointed by the President for the time being of the NSW Division of the Australian Property Institute (Inc) Incorporated ("the valuer") and the costs of and incidental to such appointment and valuation to be borne equally by the parties as and when same fall due;
17.3.the wife shall wife co-operate in every way with the agent including (without limiting the generality of the foregoing):
17.3.1.making the key available to the agent;
17.3.2.allowing inspection of the [D] property at all reasonable times requested by the agent;
17.3.3.doing or saying nothing to hinder or prevent a sale being effected;
17.3.4.ensuring the [D] property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
17.3.5.signing all documents requested by the agent in relation to the listing for sale of the [D] property except a contract or agreement for sale which has not been authorised by the parties' solicitors.
17.4.in the event the bidding at the auction does not reach the reserve price the parties or such of them as attends the auction may negotiate with the highest bidders or any other interested person and effect a sale of the [D] property at a price which is not more than 5% below the reserve price, or at such other price as the parties agree upon in writing;
17.5.if the [D] property remains unsold, the parties shall do all acts and things and sign all documents necessary to immediately relist the [D] property for sale by public auction again on successive occasions until the [D] property is sold, on a date nominated by the agent and at such auction or auctions the reserve price shall be 5% below the reserve price set at the immediately preceding auction unless otherwise agreed by the parties in writing;
17.6.the parties shall instruct such solicitor as they agree upon to have the conduct of the sale on behalf of both parties or, in the absence of agreement reached within fourteen (14) days of this Order shall instruct such solicitor as may be appointed by the President for the time being of the Law Society Of New South Wales ("the solicitor") the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
17.7.the parties shall each execute a contract for sale in the form prepared by the solicitor having the conduct of the sale at the sale price;
17.8.neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the [D] property or to any commission;
17.9.the party not in possession shall be entitled upon reasonable notice once per fortnight to enter and view the state of repair of the [D] property.
18.Upon sale of the [D] property in accordance with paragraph 1, then on settlement of the sale of the [D] property, the proceeds of sale be paid in the following manner and priority:
18.1.all costs and expenses of sale including legal costs and disbursements, agents' commission, valuers' fees, and auction expenses;
18.2.the amounts required to pay all municipal and water rates outstanding with respect to the [D] property;
18.3.66% of the balance or $692,500, whichever is the greater amount to the husband;
18.4.the balance to the wife.
19.The wife may continue to occupy the [D] property until completion of the sale of the [D] property and shall be responsible for and pay all the outgoings, telephone, gas and electricity accounts, municipal and water rates, insurance and maintenance in relation to the [D] property provided that the wife shall vacate possession of the [D] property not less than seven (7) days prior to the date fixed for completion of contract for sale of the [D] property.
20.Except as specifically provided for by any paragraph comprising this Order to the contrary, as against the husband, the wife is the sole owner of and the husband has no interest in all other property, whether real or personal (including choses in action) of whatsoever nature and kind in the possession of the wife at the date of the making of this Order.
21.Except as specifically provided for by any paragraph comprising this Order to the contrary, as against the wife, the husband is the sole owner of and the wife has no interest in all other property, whether real or personal (including choses in action) of whatsoever nature and kind in the possession of the husband at the date of the making of this Order.
22.Except as specifically provided for by any paragraph comprising this Order to the contrary:
22.1.the husband hereby indemnifies the wife from and in respect of all actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband;
22.2.the wife hereby indemnifies the husband from and in respect of all actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife.
23.Except as specifically provided for by any paragraph comprising this Order to the contrary, each of the husband and the wife release the other from all debts owing from one to the other.
Superannuation Orders
24.That paragraphs 10 and 11 have effect from the operative time.
25.That whenever a splittable payment becomes payable to the husband from his interest in the [W] Superannuation Fund, the wife is entitled to $136,496 being the base amount of the splittable payment and there is a corresponding reduction in the entitlement the husband would have had but for this Order.
26.That, having been accorded procedural fairness in relation to the making of this Order, this Order binds the trustee of the [W] Superannuation Fund.
27.The operative time for this Order is 4 working days after the service of this Order on the Trustee of the [W] Superannuation Fund.
4.THE COURT FURTHER ORDERS IN THE TERMS OF THE FOLLOWING PARAGRAPHS:
28.Both parties do all acts and things and execute all documents, authorities and writings as are necessary to give effect to all or any of this Order.
29.In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders then the Registrar of the court be appointed pursuant to Section 106A of the Family Law Act, 1975 to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
30.Each party have leave to apply further in respect of the implementation of any of these Orders on seven (7) days' notice to the other party.
31.All outstanding Applications, Responses and Replies are hereby dismissed, including all Applications for spouse maintenance.
32.The wife pay the husband’s costs of and incidental to these proceedings.
Issues for determination
The issues for determination are:
In relation to the husband’s paid legal costs:
oShould the costs paid from post separation earnings be read back as a notional asset?
oShould an asserted debt to the husband’s mother of $48,000 be allowed to be set off against the paid costs?
In relation to the wife’s 50% interest as tenant in common in R property, South Australia:
oShould the wife wife’s interest be dealt with as a resource and omitted from the pool of assets? OR
oShould the question of contributions in relation to the wife’s interest be dealt with on an asset by asset or global basis?
oIn any event should the value of the interest be put at $225,000 or by virtue of the beneficial interests of the wife’s siblings in that interest be deemed to be one quarter of that value.
What is the proper allowance for contributions overall?
oIn particular what is the effect of post-separation contributions?
What adjustment is appropriate under section 75(2)?
oIn particular, to the extent that it is relevant, what is the extent of the wife’s income earning capacity?
Should there be a split of superannuation and if so on what basis?
Whether under section 75(2) or as part of identifying a just and equitable outcome, to what extent, if any, should an allowance be made for the wife’s desire to retain the D property?
Short History
The wife and husband are 44 and 47 years of age respectively. They were married on 3 October 1992, they separated on 6 July 2004 and their divorce became final on 20 October 2005.
Children
The parties have two children:
Lwho was born …July 1995 and as at the date of the hearing was 11 years of age; and
Cwho was born … November 1997 and as at the date of the hearing was 9 years of age.
Background Facts
In 1981 the husband commenced employment with his present employer W. On 1 July 1989 the husband became a member of his superannuation fund.
During 1989 the wife suffered from Non Hodgkins Lymphoma.
The parties started to live together in September 1992 and were married on 3 October 1992.
At the date of marriage the wife had:
· A share portfolio worth about $120,000;
· Savings of at least $7,200;
· A Nissan Pulsar motor vehicle;
· Some superannuation interest; and
· Some personalty.
At the date of marriage the husband had an interest in a unit at C owned by his parents. His interest was valued at $12,600. He had a superannuation interest worth $10,894, household contents and $12,000 in the bank.
The wife’s parents paid for the wedding and the reception and the husband’s parents paid for the drinks. There is a dispute about the purchase of the wife’s wedding ring. The husband contends that he paid for the ring. Even if the receipt is in the wife’s name then he feels that he provided the funds. I cannot resolve that issue. The wife’s mother paid for the honeymoon which involved travel to the United Kingdom and the United States of America. The parties initially lived in rented accommodation at C. From February 1993 they lived rent free in a property owned by the wife’s mother.
On 20 October 1994 the parties purchased a property at D for the sum of $425,000. The wife is the sole registered proprietor of the property. The wife’s mother paid the purchase price and the costs of the purchase, totalling about $451,000.
In 1995 the husband commenced making contributions from his income on a monthly basis to joint managed funds. These funds were invested in the name of the wife. He continued to make those contributions until mid 2005.
On 18 April 1995 the husband disposed of his interest in the C unit and received the sum of $13,307.88.
In May 1995 the wife’s mother contributed a sum of $23,030.00 to enable a new garage to be constructed at the D property.
L was born on … July 1995.
C was born on … November 1997.
The wife contends that in October 1999 her mother provided $11,000 for the cost of a veranda roof.
On 12 September 2000 the wife’s mother died in South Australia. The wife’s father received, by way of a right of survivorship pursuant to a joint tenancy, the balance of a property at R, South Australia. The wife received by way of bequest from her late mother’s estate, a property at G, South Australia.
On 16 November 2000 the wife’s father transferred one half of the RSA property to the wife by way of “love and affection” so that they held the property as joint tenants.
On 5 January 2001 the wife and her father severed the joint tenancy of the R, SA property and thereafter held the property as tenants in common in equal shares.
In 2001 the parties won a Kia Sportage motor vehicle valued at $24,000 in a competition. The wife sold the vehicle to her sister for $22,000 which was repaid by instalments. The husband contends that he is not aware as to how the wife invested such proceeds of sale. These events occurred during the marriage and nothing turns on this dispute.
On 8 August 2001 the property at G, South Australia was sold and the wife received the sum of $162,518.61. She applied those monies towards renovations to the D property.
In June 2002 the husband’s defined benefits superannuation scheme with his employer was closed and his entitlements were invested in an accumulation fund with his employer.
The parties separated on 6 July 2004. Their divorce became final on 20 September 2005.
In September 2005 the wife intermingled the joint managed funds and her S Company managed account.
On 1 March 2006 the wife filed her application in this Court seeking final financial orders.
On 1 May 2006 final parenting orders were made in the Federal Magistrates Court whereby the children live with the wife and spend time with their father from after school Friday to before school Monday of each alternate weekend and for one half of school holidays.
Credit and Submissions
The evidence of the witnesses
The only witnesses called for cross-examination were the parties and the wife’s father.
It transpired over the course of the hearing that there are very few disputed factual issues that will have any significance to the outcome of the proceedings. Most of the cross-examination was unnecessary and was unfortunate as it may have mislead the parties into thinking that various considerations that motivated them in the proceedings, such as whether or not the husband was unhappy in his present accommodation; the strong desire of the wife to retain the D property; and why the wife does not have full-time paid employment, were significant to the exercise of discretion under section 79 in this case.
Because there are few if any factual disputes, the question of credit does not arise.
Submissions
On behalf of the husband the general submissions were to the following effect:
· The wife’s interest in the R property is her 50% interest as tenant in common and has a value of $225,000. The wife has the onus of establishing that she holds her interest on trust for others and she has failed to do so;
· Just as the husband concedes that he made no contribution to the R property, the wife cannot claim to have made a contribution to the husband’s post-separation assets – post separation superannuation contributions and the component of his legal costs paid from post separation earnings;
· There should be two pools with the non-superannuation pool including the R property and totalling $1,859,447; the superannuation pool totalling $405,059; and liabilities at $50,236.
· Whether included in the same pool as the other non-superannuation assets or not, it is conceded that the husband made no meaningful contribution to the R property;
· It is conceded that the wife is ahead on contribution to the non-superannuation assets – the imbalance of initial contributions, the entire cost of purchase of the D property, the bequest of about $162,000 in 2001 and the gift of a half interest in the R property. Otherwise the husband applied himself to paid employment and to a valuable contribution as parent and homemaker;
· It is submitted that the contributions to the superannuation assets were in the proportions 60% by the husband and 40% by the wife, reflecting the pre and post cohabitation contributions made by the husband;
· It is submitted that the contributions to the non-superannuation assets were in the proportions 60% by the wife and 40% by the husband. However, it is conceded that the R property alone represents about 13% of the pool. It is conceded that alone could justify a finding of contributions 56.5% to the wife;
· On the basis of those findings of contribution, it is submitted that no adjustment would be warranted under section 75(2). However, it is submitted that should the court, as the wife contends, find that the contributions favour her by more than 60%:40% then, depending on the extent of the imbalance, there should be an adjustment to the husband under section 75(2). That adjustment would be warranted because the disparity between the parties would then be so great that it could not be reasonably bridged from the after-tax income of the husband. In particular:
oThe parties are of similar age and in good health;
oThe wife’s earning capacity is not $27,000 but is $40,000 plus superannuation contributions and therefore the disparity of income is not as great as reflected in the respective current earnings from paid employment;
oThe wife would have much more property than the husband;
oThe husband will continue to have substantial and significant care of the children and would like more;
oThe wife’s income capacity, property and resources are more than sufficient to meet her needs;
oThe superannuation should be split in accord with the contributions and there should be no further adjustment;
oNeither of the parties lives with another adult;
oThe husband pays proper child support;
oThe husband’s retained shareholdings have inherent capital gains tax liabilities.
· The legislature has signalled a preference for superannuation splits and it would be unfair to leave the husband with a disproportionate part of his settlement in the form of superannuation.
The gist of the general submissions made on behalf of the wife is:
· Except as set out below, counsel for the wife adopted the lists and values of assets and liabilities relied on by counsel for the husband. The wife’s interest in the property at R, South Australia should be either dealt with as a financial resource or dealt with on an asset by asset basis. That is justified because the interest came to the wife late in the marriage and neither she nor the husband made any financial contribution to the property. In any event the wife’s interest is not really worth $225,000 but one quarter of that ($56,250) because the wife holds the interest on trust for herself and her three siblings. Even then, because it is an undivided 50% share of a property occupied by her father and his 55 year old wife, that interest is not and will not be accessible to the wife for many years, if ever;
· The balance of contribution overall was 65% by the wife and 35% by the husband. It is submitted that the wife may have been at about 50% without the injections of funds made by her and on her behalf during the marriage. On that basis an adjustment of 15% for those injections is reasonable. In terms of three pools of assets that could be expressed as 100% contribution by the wife to the interest in the property at R, South Australia; 76% contribution by the wife to the non-superannuation assets and 24% contribution to the superannuation assets.
· As to section 75(2) the wife asserts that the adjustment should be of the order of 8% because:
oThe wife suffered from a number of serious medical conditions;
oThe husband’s income earning capacity is greater than the wife, his income is over $100,000 pa compared to about $27,000 pa for the wife. The wife will never attain the level of income or financial security available to the husband. The marriage contributed to that outcome;
oThe wife’s access to her interest in the R property is restricted;
oThe wife is the principal carer of the children. They are with her 9 nights out of 14 each fortnight. The children are 9 & 11 years of age. L has special needs;
oThe husband has applied to reduce his child support and pays less now than he did in 2005;
oThe husband is better able to contribute to his superannuation entitlements than the wife;
oThe payment proposed by the wife of $180,000 would allow the husband to address his main complaint, that, unlike the wife, he has inadequate accommodation for himself and the children;
· Notwithstanding that these submissions argue for the wife to receive 73% of the assets (65% contribution and 8% under section 75(2)) she only seeks orders that would give her about 65% of the assets (of the pool including superannuation but excluding the R property). In oral submissions it was argued that the wife might have been able to argue for a section 75(2) adjustment of 10-15% in the normal course and that the reduced claim allows for facts such as the delay in the husband being able to access his superannuation.
· The court has a discretion not to order a superannuation split. The orders should not include a superannuation split so as to improve the wife’s chances of retaining the home and in framing the orders the wife should be given the opportunity to buy the husband out;
· It would be inequitable if the wife had to sell the D property because:
oD was entirely paid for by the wife’s mother;
oThe renovations to D were financed almost entirely by the wife and her mother;
oIt has been the home of the children since birth and comprises ideal accommodation for them (size, grounds, location etc);
oL suffers from conditions which make it harder for her to cope with change. Given the breakdown of the marriage, a change of home is an avoidable interference with her routine and stability.
The approach in proceedings under section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. First, I am to make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I should identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, I should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. [1]
[1] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370
The property of the parties at the date of the hearing
The Court is required to make a finding as to the property of the parties at the date of the hearing. There are circumstances which the Court has found in other cases, to have justified the inclusion of property that no longer exists, in the pool of property for settlement. Similarly the Court has sometimes found that debts that do exist should not be included in the list that goes to make up the net pool of assets. In In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
[30] To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
The issue here relates to legal fees paid by the parties. Dealing then with disputed claims that notional assets be included in the list of assets for division:
Paid legal fees
Each of the parties has paid legal fees. I am satisfied that the pool of assets for distribution would be greater but for the fact of those payments. In the husband’s case, some of the funds applied to the payment of fees came in the form of a loan from his mother. Given that the fees have been read back into the list of assets, that loan too is a legitimate ‘joint’ debt.
Otherwise the assets are agreed save for the inclusion and value of the wife’s R property.
R property
The wife has an undivided 50% legal interest in R property, S.A. as tenant in common with her father. The property is occupied by her father and his second wife, who is about 55 years of age.
As is referred to above the submission of behalf of the wife is that the interest should be treated as a financial resource or on an asset by asset basis; that the wife’s interest is not really worth $225,000 but one quarter of that ($56,250) because the wife holds the interest “for the benefit of herself and her three siblings”. It is further submitted that by the fact of her evidence on this issue and that of her father in these proceedings, the wife’s siblings would have no difficulty in establishing their interests in the property. It is further submitted that the wife cannot access her interest because of “the right of habitation” of her father and his wife.
On the other hand the submission on behalf of the husband is that the legal title reflects the beneficial ownership of the interest; South Australian law excludes the possibility of some other interest; there is no evidence to support the contention made on behalf of the wife; relevant witnesses have not been called and I can assume that their testimony would not help the wife’s case.
The sequence of events is as follows.
The wife’s parents bought the property at R, South Australia as joint tenants and moved into the property in August 2000. They bought the property in the knowledge that the wife’s mother was terminally ill;
On 12 September 2000 the wife’s mother died;
As a consequence of his wife’s death the wife’s father received the balance of the property by way of the right of survivorship arising from the joint tenancy;
On 16 November 2000 the wife’s father transferred one half of the R property to the wife by way of his “love and affection” so that they held the property as joint tenants;
On 5 January 2001 the wife and her father severed the joint tenancy of the property and since then hold the property as tenants in common in equal shares.
It is the evidence of the wife and her father, that at all relevant times, they each understood that the wife’s interest was held by her on behalf of herself and her three siblings. Indeed the wife’s father said he formed that intention in 1966. Given there was no interest in the R property in 1966 I take it that he meant by that answer, that he always intended to treat his children equally.
The wife’s father knows of no document that suggests that the wife holds her interest on trust for her siblings. He did not instruct the conveyancer handling the transfers in late 2000 and early 2001 to put the property in the names of his other children. He has not thought of buying out the wife’s share in the property. He has not requested that the wife transfer her interest to others and does not foresee such a request in the future. He is not aware of any demand made to the effect that the wife deal with her interest in the property in any way and does not foresee such a demand in the future.
The wife concedes that unlike her latest Financial Statement, the Financial Statement she swore in February 2006 makes no reference to her holding her interest in the property on trust for herself and her siblings. She is not aware of any document that contradicts the legal ownership of the property. She has never received a demand to change the legal title of the property. She conceded that her siblings could have given evidence in these proceedings and did not.
Section 29 of the Law of Property Act 1936 (SA) prevents the creation or disposition of an interest in land or a declaration of trust in respect of land without a written document. The section does not purport to affect the creation or operation of resulting, implied or constructive trusts. I note that there is no mention of a trust of any type in the summary of argument of learned counsel for the wife. Nor is it submitted that the preconditions for the establishment of a trust exist. Nevertheless I should briefly deal with the issue.
It seems to me that Section 29 is fatal to any suggestion that there was a declaration of trust. There is simply no evidence to support a finding that any other sort of trust exists. Beyond the interesting and self-fulfilling argument to the effect that the evidence in these proceedings could be relied on by the wife’s siblings to rebut any defence to a claim for an interest in the property, there is no basis on which it could be said to be unfair to those siblings that they have no enforceable rights in relation to the property. None of them asserts any interest, any trust or any contribution to the property. There is no suggestion of an injustice to the wife’s siblings arising from any unconscionable conduct of the wife or her father that would warrant the imposition of a constructive trust. It is not submitted for the wife that the circumstances in question fall within the circumstances whereby a resulting trust could be found.
The wife’s father says that he regretted his initial action in transferring an interest in the property to the wife. It is his case that he did not properly think through a decision that was made at a time when he was still dealing with the loss of his first wife. I am unsure about the reason for his regret. In his evidence he made reference to the desire to ensure that his second wife would be properly provided for. The change made in January 2001 meant that there remained an interest in land that he could leave to his second wife in his will but it did not guarantee her right to remain in the property in the event of his death. It is also possible that his regret related to the disposition of a half interest in the property to only one of his children. Whatever was the source of his regret, when he revisited the transfer in January 2001 he had a chance to change the legal title. At that time he had the opportunity to give effect to his stated intention that the other 50% be held by all if his children equally. By January 2001 another two months had passed since the death of his first wife. The fact is that when he took the trouble to change the title he left the interest in the sole name of the wife in these proceedings. The most likely reason why he did not take the later opportunity to change the legal title is that did not want to vest an interest in his other children. Whatever his intention, he did not vest a legal or equitable interest in the R property to the wife’s siblings.
It may not make any significant difference in the circumstances of this case whether the wife’s interest in the R property is treated as an asset or a resource. However, I will deal with the wife’s interest as an asset. There is a valuable interest in land in the name of the wife.
As to its value, the best that can be said is that the value is the agreed value of $225,000. There are other matters that will have a bearing on the weight to be given under section 75(2) to the fact that the wife has this interest and they will be dealt with later in these reasons.
I find that the assets of the parties are:
Non Superannuation Assets Value D property, N.S.W. $1,100,000.00 R property, S.A. (wife’s 50% interest) $225,000.00 Wife’s NAB account … $2,585.00 Wife’s NAB account … $2,259.00 Wife’s investment with S Company $268,741.00 Wife’s 2003 Honda CRV motor vehicle $18,000.00 Wife’s jewellery $1,810.00 Contents of the D property $14,602.00 Wife’s paid legal fees $62,730.00 Husband’s ANZ account $8,000.00 Husband’s 358 BHP shares $9,748.00 Husband’s 111 W shares $3,964.00 Husband’s 797 B shares $39,802.00 Husband’s 600 T shares $2,532.00 Husband’s W Share Allocation (net of loans & CGT) $26,535.00 Husband’s household contents $5,994.00 Husband’s paid legal fees $67,145.00 Total $1,859,447.00
Superannuation Assets Value Wife’s H superannuation $3,583.00 Wife’s M superannuation $21,945.00 Husband’s superannuation $379,531.00 Total $405,059.00
Liabilities:
As to the disputed issues:
Husband’s debt to his mother
As is referred to above, the husband borrowed $48,000 from his mother and applied those moneys to the payment of legal fees. The debt must be allowed as a relevant joint debt as the paid legal fees are being read back into the pool as a notional asset. It would be unfair to ignore the debt.
I find that the relevant liabilities of the parties as at the date of the hearing are as follows:
Liabilities Amount Wife’s visa card debt $1,339.00 Husband’s debt to his mother (legal fees) $48,000.00 Husband income tax debt $897.00 $50,236.00
Net assets
The net non-superannuation assets have a value of $1,809,211 ($1,859,447 - $50,236). The superannuation assets have a value of $405,059.
Financial Resources
There is no evidence that either of the parties has any other financial resources.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets[2]. There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties[3].
[2] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[3] In the Marriage of Shewring (1987) l2 Fam LR 139
As to whether the Court should assess contributions asset by asset or globally the authorities have it the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
A separate pool for superannuation
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that that:
“… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.”
None of those features apply here. The Full Court goes on at page 429 to say:
[63] However, given the conclusions we have reached above, we consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in s 4(1)), a separate list containing any superannuation interest or interests (valued according to the regulations if a splitting order is sought in any application before the court, or if no such order is sought, valued either according to the regulations or otherwise)….
I will apply the preferred approach.
Further, the wife would prefer that the R property be left out of the relevant pool of assets. By way of alternate submission on behalf of the wife it is argued that the assessment of contributions be assessed asset by asset insofar as the R property is concerned. The husband opposes that approach. In my view there are advantages in dealing with the R property separately. It came into the marriage late in the piece. It was never intermingled with the other assets of the parties. No contributions were made from joint funds to the acquisition, maintenance or improvement of the asset. Finally, there are special characteristics of the property that need to be taken into account in arriving at a just and equitable settlement of property.
In In the Marriage of Coghlan the Full Court said that where the list of assets is divided into superannuation and non-superannuation assets, the assessment of contribution must be undertaken in relation to each list:
[64] Then for the reasons we earlier gave, whether or not a splitting order is sought on either party’s application, the parties’ contributions to both the property (as defined in s 4(1)) and also to the superannuation interests should be assessed. The other factors in s 79(4)(d), (e), (f) and (g) would then need to be considered. Specifically in the context of s 79(4)(e), that is the s 75(2) factors, any division of the property (as defined in s 4(1)) and any “division” of any superannuation interest (in the sense of an allocation of the base amount) based respectively on the assessments of the parties’ contributions to the property and to any superannuation interest, would then be considered. Similarly, the parties’ future superannuation prospects (be they in capital or income form) would also need to be considered. The overall justice and equity of the ultimate award (including any proposed splitting order or the need for such an order) would then be considered
Thus the assessment of contributions will be undertaken on the basis of three pools of assets: Superannuation, the wife’s interest in the R property and the other non-superannuation assets.
Contributions to Superannuation Assets
Section 79(4)(a) Contributions
The parties each brought an interest in superannuation into the marriage. They each made direct contributions to superannuation during the marriage. The husband contends that at one point he made a direct contribution to the wife’s superannuation. The husband’s superannuation interest increased by about $140,000 after separation. It was the parties’ arrangement that the husband retained full-time employment and that the wife was out of the paid workforce for a significant period.
Section 79(4)(b) contributions
There is no evidence of non financial contributions to superannuation.
Section 79(4)(c) contributions
During the marriage and particularly for the periods when the parties were separated and for the periods when the wife was out of the paid workforce, her contributions as parent and homemaker allowed the husband to make provision for his superannuation.
Conclusion on Contribution to Superannuation Assets
It is argued for the wife that her contribution to the superannuation pool was about 24%. For the husband it is submitted that the balance of contributions to superannuation were 60% by him and 40% by the wife. The latter finding seems to reflect the circumstances of the case better than the former. The contributions to the pool of superannuation of the wife and on her behalf were 40% compared to 60% by and on behalf of the husband.
Contributions to the wife’s interest in the R property
Section 79(4)(a) Contributions
Neither of the parties made any direct or indirect contribution to the acquisition, conservation or improvement of the interest.
On 16 November 2000 the wife’s father transferred one half of the R property to the wife by way of “love and affection”. The wife and her father initially held the property as joint tenants. The title was later changed so that they hold it as tenants in common in equal shares.
The gift of the interest to the wife came from the wife’s father and there is no suggestion that this was other than a financial contribution made by the wife’s father to the acquisition of an interest in property, made on behalf of the wife.
Section 79(4)(b) contributions
There are no relevant contributions.
Section 79(4)(c) contributions
Parent and homemaker contributions were made but should not have any weight in relation to this asset.
Conclusion on Contributions to the R property
It is an agreed fact that the only contribution to this asset was that made on behalf of the wife. The asset was not brought into the marriage in the sense that it was not held in joint names, it was not the subject of direct financial or non-financial contributions by either party, it was not occupied by the parties. The contributions favour the wife in the proportions 100% compared to 0% by the husband.
Contributions to the other non-superannuation assets
Section 79(4)(a) Contributions
Financial contributions were made by and on behalf of each of the parties.
The financial contributions by and on behalf of the wife were:
Initial contributions of:
oA share portfolio worth about $120,000;
oSavings of at least $7,200;
oA Nissan Pulsar motor vehicle;
oPersonalty; and
oSome superannuation
Capital injections:
oThe wife’s parents paid for the wedding and the reception;
oThe wife’s mother paid for the honeymoon which involved travel to the United Kingdom and the United States of America;
oIn 1994 the wife’s mother paid a total of $451,000 in order to purchased the property at D in the name of the wife;
oIn 1995 the wife’s mother contributed a sum of $23,030 to enable a new garage to be constructed at the D property;
oIn 1999 the wife’s mother provided $11,000 for the cost of a veranda roof;
oFollowing her mother’s death in 2000 the wife received by way of bequest from her late mother’s estate a property at G South Australia. On 8 August 2001 the property was sold and the wife received the sum of $162,518.61. That sum was applied to renovations to the D property.
Income:
oFrom March 1993 the wife worked at a hotel as a housekeeping room attendant and later in a housekeeping office position;
oFrom November 1993 to April 1994 the wife worked as an assistant at a dry cleaners;
oFrom June 1994 to June 1995 the wife worked as a bank officer;
oFrom July 2003 the wife sold goods direct;
oFrom December 2003 to July 2004 (separation) the wife worked as an assistant manager.
The financial contributions by and on behalf of the husband were:
Initial contributions of:
oan interest in a unit at C owned by his parents. On 18 April 1995 the husband disposed of his interest in the C unit and received the sum of $13,307.88;
o$12,000 in the bank;
oa superannuation interest worth $10,894; and
ohousehold contents
Capital injections:
oThe husband’s parents paid for the drinks at the wedding;
Income:
othe husband remained in full-time paid employment with W from the date of marriage to the date of separation. His remuneration at the date of marriage was a salary of $43,000 pa together with superannuation contributions and the use of a company car. His income increased by between 4% and 8% each year. As at the date of separation it was about $92,000 pa together with superannuation contributions and a company car. The husband estimates that during the marriage he earned a total of at least $700,000 in income.
oIn the course of his case the husband gave evidence about things he has bought for the home and about his investments. I have not set them out separately because I assume the source of those purchases and investments was his income and I have already taken that into account.
Section 79(4)(b) contributions
From February 1993, until they moved into the D property after October 1994, the parties lived rent free in a property owned by the wife’s mother.
The husband:
Painted the exterior of the D property, including brick walls, down pipes, facias, window frames and eaves. This was undertaken over many weekends spanning a two year period;
Painted the interior of the property at least once. He painted ceilings, walls, skirting boards, door and window frames. He prepared the surfaces including sanding, scraping and cleaning;
Applied waterproofing to the exterior of the property;
Sanded and repainted the pergola;
Sealed the shower recess.
Section 79(4)(c) contributions
There are two children of the marriage. There is no real conflict between the parties on the issue of parent and homemaker contributions. In cross-examination the wife conceded that the general roles involved the husband as wage earner and her greater involvement with the children. I take that to be the agreed position.
Both in her affidavit and in cross-examination the wife conceded that she and the husband shared the care of the children when they were both home. She conceded that the parties shared the domestic chores but asserts that she performed a greater proportion than did the husband. She acknowledged that the husband did not have his attentions diverted by hobbies or sports, with the concession that he was a “stay-at-home dad”. She conceded that the husband was very involved at home when he was not at work.
The wife says that she attended to the children’s medical needs, booking and attending appointments with doctors and other health professionals. She nursed them when they were ill. The wife took the children to and from school and undertook various voluntary roles. She taught them to cook and undertake household tasks and ensured that they were appropriately dressed, groomed and presented. The wife noticed certain behaviours in L in 2004 and the resultant specialist consultations lead to diagnoses of ADHD and Tourette’s Syndrome. Much of the day to day arrangements of medical appointments, treatment and communication with L’s school have fallen to the wife.
The wife records the fact of significant assistance given by members of her family in respect of the children, including the period when the she was hospitalised and recovering from surgery. However, there is no scope under section 79(4)(c) for parental or homemaker contributions to be made on behalf of a party.
The husband did not reciprocate with concessions about the wife’s contributions. To be fair to him, such concessions were not sought during cross-examination. His affidavit focuses on his own contributions but a careful reading of it reveals tacit acknowledgment that the wife made some contributions. On a few topics the husband says that he made the only, the main or a greater contribution. For example he painted the house inside and out, he did all of the ironing; he undertook “the weekly shop”; he bathed and read stories to the children on most nights; it was more his role than the wife’s to help the children with homework. Whatever one might say about those claims and some are challenged, I take it that otherwise, whether he expressly stated it or not, he contends that he shared the various homemaker and parenting tasks. That would make sense in the context of his unbroken record of full-time paid employment, some work related travel and the fact that the wife was largely out of the paid workforce or working on a casual or part-time basis.
In particular, the husband fed, washed and clothed the children. He read them stories, attended plays and performances and most kindergarten and primary school functions and events. He was more involved in helping the children with their homework than the wife. He has been actively involved in the children’s extra curricular activities such as swimming and fishing.
The husband occasionally cleaned inside the house, shopped on a weekly basis, performed most, if not all of the ironing, and undertook laundry. He prepared some and later, all, weekend meals and some others.
The husband spent 6-8 hours each week working in the garden of the D property. He planted, pruned, dug, weeded, aerated the lawn, applied fertiliser, mowed the lawn and watered. He carried out the regular maintenance on the property including sweeping, raking, cleaning out the gutters and scrubbing pavers.
Apart from a short period when he was overseas, from separation until the orders were made in May 2006 the children were generally with the husband on alternate weekends. Since May 2006 they have lived with him in accordance with the orders, which he describes as them spending 40% of the time with him and 60% with the wife.
Conclusion
It is agreed that the wife’s contributions exceeded those of the husband. It is submitted for the wife that her contributions to this pool of assets were 76% compared to 24% by and on behalf of the husband. Albeit in relation to a pool that includes the R property, it is submitted for the husband that the contributions to the non-superannuation assets were made in the proportions 60% by and on behalf of the wife and 40% by the husband.
But for the initial contributions and the injections of funds during the marriage, the evidence would support a finding that the parties’ contributions were equal. In a case involving 11½ years of cohabitation and where contributions have been made over more than 14 years, care is needed in identifying the extent of the disparity of contributions. However in a net pool of $1,584,211 the injection of a total of $774,748 by and through the wife, compared to $25,307 by the husband warrants appropriate recognition. In addition, the wife’s parents bore the major costs of the wedding and her mother paid for the honeymoon and provided 20 months of rent-free accommodation in the early part of the marriage. The husband’s non-financial contributions would be set off against those made on behalf of the wife. My task is not a mathematical exercise and there is no concept of erosion of contributions made earlier in the marriage. I am to assess the respective contributions and to give them appropriate weight.
There is a relevant discussion about the approach taken to this sort of weighing exercise in In the Marriage Pierce (1998) 24 Fam LR 377. In that case the trial judge had found that the parties had contributed in the proportions 55% by the husband and 45% by the wife in circumstances where, at the date of the trial, the parties had assets of a net value of $319,190 but the husband came into the marriage with assets to the approximate value of $226,000. The pool included the matrimonial home valued at $260,000 to which the husband had contributed about $200,000 from moneys to which the wife had made no contribution. In re-exercising the discretion the Full Court put the balance of contributions at 70%: 30%. Every case is dealt with on its own facts but there are some similarities between the case before me and the facts in Pierce. The main similarities being a large imbalance of lump sum contributions and a marriage of 10-11 years cohabitation that produced two children.
In my view the difference in the contributions of the parties cannot be 3:1, as the wife submits. Although that reflects the arithmetic of the wife injecting the equivalent of one half of the current pool, this is not a mathematical exercise. Similarly a 10% adjustment proposed on behalf of the husband, creating a difference of 20% between the parties, does not do justice to the financial contribution of the wife made over and above the other contributions of the parties. In my view the contributions were made in the proportions 65% by and on behalf of the wife and 35% by and on behalf of the husband.
The other matters in Section 79
In the passage of In the Marriage of Coghlan quoted above (para 64) the Full Court went on to say that once contributions have been assessed in relation to each of the superannuation and non-superannuation assets, the other factors in section 79(4) need to be considered
Dealing with the matters identified in the legislation:
Section 79(4) (d)
Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the parties. Each of the parties draws income from investments. Their income will therefore be directly impacted by the sale or disbursement of the assets that produce dividends or interest. One can envisage that each of the parties will want to realise those assets. I take it that the husband plans to acquire better accommodation than the premises he is in. The wife wants to buy the husband out of his interest in the D home. Whether that is practicable or not, she too will want to apply her funds towards accommodation. The funds will then not be available to produce income.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in Section 75(2) would seem to be paragraphs (a), (b), (d) and (k).
(a) the age and state of health of each of the parties;
First, as to the age and state of health of each of the parties. The wife is 44 years of age and the husband is 47. There is no relevant recent medical evidence. The husband enjoys good health. The wife enjoys reasonable health. It is an agreed fact that the wife suffered from cancer and was given the ‘all clear” in 1993. She suffered from recurring migraine attacks, particularly between 2000 and 2004. She suffered miscarriages in March and September 2001 and underwent a dilatation and curettage in October 2001. The wife was hospitalised with bowel obstructions in 2005 and 2006.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The wife’s income is $1,141 per week made up of her salary as an administrative officer at N Hospital of $521 per week, $300 in interest and dividends from the investment with S Company and $265 per week in child support. But for the parties’ children, the wife lives alone. The children have no income.
The wife’s expenses are as follows:
Expense Amount Income tax $150.00 Rates and levies $43.00 Personal protection insurance – M $35.00 Motor vehicle insurance – A $20.00 House and contents – A $20.00 Private health insurance – F $33.00 Motor vehicle registration – Honda CRV … $5.00 Living expenses $1,433.00 Food $270.00 Household supplies $40.00 House repairs $12.00 Gas $12.00 Electricity $25.00 Telephone $65.00 G insurance $10.00 Petrol $60.00 Motor vehicle maintenance $40.00 Fares and parking $20.00 Clothing and shoes $200.00 Children’s activities $50.00 Child minding $50.00 Medical dental optical $24.00 Entertainment and hobbies $90.00 Holidays $200.00 Educational expenses $60.00 Chemist pharmaceuticals $15.00 Gardening / lawn mowing $10.00 Repair of furnishings and appliances $12.00 Dry cleaning $6.00 Books and magazines $12.00 Gifts $80.00 Hairdressing toiletries $60.00 Dogs $10.00 $1433.00 Total $1,739.00
Evidence about the wife’s assets and liabilities is set out earlier in these reasons.
As to her earning capacity, the evidence is that the wife works part-time and does not intend to consistently work more than about 27 hours a week. It is the unchallenged contention of the husband that were she to work on a full-time basis, the wife could earn a salary of up to $40,000 per annum. The wife has not worked on a full-time basis for many years. She does not have an unqualified medical history. The living and schooling arrangements for the children must restrict the wife’ availability to some extent. L’s health has placed greater demands on the wife’s time than might otherwise have been the case. In those circumstances and in the context of the history of the parties’ arrangements, in my view the wife is exercising her earning capacity or close to it.
The husband earns $2,119 per week made up of his salary as Manager for J Company and $158 in dividends from various companies. He also has the use of a company car. There have been some benefits in the form of share allocations from the husband’s employment. The husband referred to an allocation of 27 shares at a reduced price. There is provision for the husband to earn bonuses. The bonuses are linked to both personal and company performance, the husband has never attained a bonus and is not optimistic about earning one in the future. The husband’s fixed expenditure is as follows:
Expense Amount Income tax $575.00 Superannuation contributions to W Superannuation by salary sacrifice $58.00 Rent to L & Co $360.00 Private Health insurance – P Company $25.00 Child Support payments $266.00 Total $1284.00
There is no evidence about the husband’s living expenses. Evidence about his assets, liabilities and resources is set out earlier in these reasons.
It is not suggested that the husband is not fully exercising his earning capacity but there is simply no evidence on the issue. As I understand it the husband has had unbroken service with the same employer from 1981 to date.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
The parties share the care and control of the children.
(d) commitments of each of the parties that are necessary to enable the party to support:
himself or herself; and
a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out the wife’s commitments for herself and for the children. She apportions the weekly living expenses of $1,433 as to $764 per week to her own needs and as to $687 to those of the children. I note that the wife deposes to a weekly shortfall of nearly $600 per week. Some of the claimed expenses are clearly discretionary so there may be some room to economise. There is no evidence about the husband’s living expenses. He has a weekly surplus of $835 to apply to those expenses.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
any law of the Commonwealth, of a State or Territory or of another country; or
any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
Each of the parties has superannuation interests. The husband is three years older than the wife but they are both likely to have to wait many years to access their benefits. Neither of them is in receipt of a Centrelink benefit.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is little evidence in relation to the standard of living of the parties during the marriage. The disparity in the respective standards of the parties’ accommodation is a matter raised by the husband in the proceedings. The parties can each legitimately aspire to a comfortable standard of living.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
There is no evidence that either of the parties studied during the marriage.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The wife gave up paid employment for some periods when the children were young. She did not have full-time paid employment after they were born. The wife has worked in various roles and fields but has rarely commanded a level of remuneration comparable to that earned by the husband. She has no doubt lost the benefits of unbroken paid employment. They include the opportunity for promotion or progression, long service and other leave entitlements and the establishment of employer funded superannuation entitlements. Beyond that fact, there is no evidence to the effect that the marriage adversely affected her earning capacity.
(l) the need to protect a party who wishes to continue that party's role as a parent;
It is part of the wife’s case that she wishes to continue to be involved in the delivery and collection of the children from school.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
Neither of the parties lives with another adult. The wife enjoys a relationship with a person by the name of Mr N or some similar name. They have been dating since September last year but do not live together.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
I have referred to the fact of child support payments. The current payment is around $265 per week. An assessment issued on 10 May 2007 and fixes the husband’s child support liability for the period 1 July 2007 to 31 July 2008 at $16,370 which will be about $310 per week.
Much was made in the wife’s case of the fact that the husband has agitated for reductions in his child support liability. Nothing turns on that fact alone. Provided the husband pays the assessed child support then it is beyond the scope of proceedings under the Family Law Act to re-visit the adequacy or otherwise of the outcome of the definition of child support, whether under the administrative scheme or by a Court. The fact of the rate of payment is already taken into account above.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
Nothing comes to attention under this provision.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the parties.
Section 79(4)(f)
I have referred to the parenting orders made in the proceedings.
Section 79(4)(g)
This is not relevant.
Conclusion
The thrust of the submissions is that the husband seeks some adjustment to himself under this head, the amount of that adjustment depending on the extent to which the wife’s contributions to non-superannuation assets exceed 60%. It is argued for the wife that there should be an adjustment to her of the order of 8%.
The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:
Ø The parties are at a similar time of life although the wife is three years younger than the husband;
Ø As is often the case, one of the most valuable ‘assets’ of this marriage is the husband’s unbroken history of well paid, secure employment. Whether the wife could work full-time or not, she cannot aspire to remuneration of the order of that received by the husband. In cross-examination he did not cavil with the assertion that his package is of the order of $128,000 per annum – more than three times the salary of a full-time receptionist;
Ø The wife has had an unfortunate health history but has reasonable health;
Ø The wife has an undivided half interest in a property in South Australia. The interest is worth $225,000. The interest is not readily accessible. In order to deal with that interest the wife would need to strike an agreement with her father and his wife or take legal proceedings. The wife is unlikely to wish to dispossess her father or, in the event of his death, her step-mother;
Ø The children live more of the time with the wife than the husband;
Ø The husband pays the proper level of child support;
Ø The calculation based on contributions alone would leave the wife with a far greater share of the non-superannuation assets. The husband would have a greater share of the superannuation assets;
Ø Albeit that the husband’s contributions to superannuation were greater than those of the wife and he is probably closer to retirement age than the wife, he probably cannot access his superannuation for many years;
In my view there should be no adjustment by virtue of the other matters in section 79(4). The factors tend to balance out. The wife has more capital than the husband but less income and a lower earning capacity. She has the children for a greater part of the time.
Just and Equitable
Based on their contributions and the other matters in s 79 the appropriate division of superannuation property is a division that is about 40% to the wife and 60% to the husband. The pool of non-superannuation assets (excluding the R property) should be divided in the proportions 65% to the wife and 35% to the husband. Finally, I must consider whether it would be just and equitable within the context of s 79 if the net assets of the parties were divided in those proportions.
The above calculations would have the parties dividing the assets as follows. The net non-superannuation assets (excluding the R property) have a value of $1,584,211. A division 65% to the wife and 35% to the husband would have the wife receive $1,029,737.17, the R property and $162,023 by way of superannuation. The husband would receive $554,473.85 and $243,035 in superannuation.
The husband seeks a splitting order in relation to his superannuation. In order to improve the wife’s chances of retaining the home it is submitted for the wife that there be no splitting order and that the superannuation imbalance be adjusted out of non-superannuation assets.
In amending the Family Law Act 1975 to permit the splitting of superannuation payments the Parliament has indicated a preference for dealing with superannuation by splitting superannuation payments. The policy aims include the priority placed on there being better provision for self-funded retirement. Given that superannuation interests cannot normally be accessed and dealt with as easily as other assets it is often unfair to require one party to retain a disproportionate amount of the superannuation interests and the other to retain a disproportionate amount of the non-superannuation assets.
The Court can take judicial notice of the fact that recent changes to the law including the reduction in tax paid on superannuation income after 60 years of age may have reduced the disadvantages of taking funds in the form of superannuation compared to accessible assets. Nevertheless, I cannot lightly leave the husband with all of his superannuation. On the other hand, there is a discretion to be exercised in relation to the proportions in which the parties retain a superannuation interest. The fact is that whatever I do the wife is unlikely to be able to generate a self-funded retirement by way of superannuation. With the potential for salary sacrifice arrangements and his stronger starting position, the husband is likely to be able to make a proper provision for his retirement. In my view some splitting order is appropriate but I will only reflect on half of the wife’s superannuation entitlement in the form of superannuation and will adjust the rest from the other assets.
The superannuation assets have a value of $405,059. The wife’s entitlement pursuant to section 79 as identified above is 40% or $162,023. She already has $25,528 in her own superannuation funds. To bring her to 40% she should receive $136,495. If she is to receive only one half of her entitlement in the form of a splitting order then the base amount for the splitting order will be $68,242.50. The resultant adjustment out of the non superannuation assets (excluding the R property) would bring the wife to $1,097,979.67 ($1,029,737.17 + $68,242.50), her superannuation of $25,528 and a splitting order for $68,242.50.
The wife has the R property and has or has had the benefit of:
Non Superannuation Assets Value D property, N.S.W. $1,100,000.00 Wife’s NAB account … $2,585.00 Wife’s NAB account … $2,259.00 Wife’s investment with S company $268,741.00 Wife’s 2003 Honda CRV motor vehicle $18,000.00 Wife’s jewellery $1,810.00 Contents of the D property $14,602.00 Wife’s paid legal fees $62,730.00 Minus Wife’s visa card debt -$1,339.00 Total $1,469,388.00
Superannuation Assets Value Wife’s H superannuation $3,583.00 Wife’s M superannuation $21,945.00 Total $25,528.00
Therefore she would need to pay the husband $371,408.33. I will round that amount down to $371,400.
That would leave the husband with the benefit of:
Non Superannuation Assets Value Husband’s ANZ account $8,000.00 Husband’s 358 BHP shares $9,748.00 Husband’s 111 W shares $3,964.00 Husband’s 797 C shares $39,802.00 Husband’s 600 T shares $2,532.00 Husband’s W Share Allocation (net of loans & CGT) $26,535.00 Husband’s household contents $5,994.00 Husband’s paid legal fees $67,145.00 Payment from the wife $371,400.00 Minus Husband’s debt to his mother (legal fees) -$48,000.00 Husband income tax debt -$897.00 Total $486,223.00
Superannuation Assets Value Husband’s superannuation $379,531.00 Total $379,531.00
On the making of a splittable payment from his fund, there will be a payment to the wife calculated on a base amount of $68,242.50 and a consequential reduction in the payment to the husband.
I acknowledge that on that basis the wife will struggle to retain the D property. The required payment will exhaust her cash reserves and there will still be a shortfall. There are likely to be other calls on those reserves in any event. The matters raised by learned counsel for the wife in support of an outcome that avoided the sale of the property included:
a)D property was entirely paid for by the wife’s mother;
b)The renovations to D property were financed almost entirely by the wife and her mother;
c)It has been the home of the children since birth and comprises ideal accommodation for them (size, grounds, location etc);
d)L suffers from conditions which make it harder for her to cope with change. Given the breakdown of the marriage, a change of home is an avoidable interference with her routine and stability.
The first two points have been fully accommodated in the outcome I have arrived at and it would reflect a doubling up of factors to adjust for them again. As to the children, in my view there is little scope for an outcome at significant variance from the application of section 79(4) because of these matters. There must be justice and equity to the husband too.
In my view, notwithstanding the risk that the property will need to be sold and depending on the sale price, the fact that the sale itself may have a significant cost, the outcome I have identified would be a just and equitable result.
Conclusion under Section 79
I will make orders whereby the parties retain what they have, the wife pays to the husband $371,400 and there is a splitting order in relation to the husband’s superannuation interests, in favour of the wife with a base amount of $68,242.50. In the event that the wife is unable to pay the husband $371,400, the D property will be sold. In order that the parties share in any profit or loss caused by any variation between the net sale price and the value agreed for the property for the purposes of these proceedings, I will express the distribution of the net sale proceeds in terms of percentages. The agreed value is $1,100,000. $371,400 is about 34% of the agreed value. In the event that the property has to be sold the net proceeds will be divided in the proportions 66% to the wife and 34% to the husband.
I certify that the preceding one hundred and thirty six (136) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 29 June 2007
IT IS NOTED that this judgment for all publication and reporting purposes be referred to as ARNOLD & ARNOLD
Key Legal Topics
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Family Law
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Property Law
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Jurisdiction
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Procedural Fairness
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