Atille and Atille
[2009] FamCA 1071
•13 November 2009
FAMILY COURT OF AUSTRALIA
| ATILLE & ATILLE | [2009] FamCA 1071 |
| FAMILY LAW – PROPERTY SETTLEMENT –Contributions – Adjustments – Just and equitable |
| Family Law Act 1975 (Cth) ss 75 & 79 |
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of Omacini (2005) 33 Fam LR 134
Noetel & Quealey [2005] FamCA 677; (2005) FLC 93-230; (2005) 34 Fam LR 190
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 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
In the Marriage of Coghlan (2004) 33 Fam LR 414
In the Marriage of Pierce (1999) 24 Fam LR 377; FLC 92-844
| APPLICANT: | Ms Atille |
| RESPONDENT: | Mr Atille |
| FILE NUMBER: | SYC | 3733 | Of | 2008 |
| DATE DELIVERED: | 13 November 2009 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Judicial Registrar Loughnan |
PLACE HEARD: Sydney
| HEARING DATE: | 6 November 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT WIFE: | Mr G. Hansen |
| SOLICITOR FOR THE APPLICANT: | Felicio Law Firm |
COUNSEL FOR THE RESPONDENT HUSBAND: | Mrs M. Cleary |
| SOLICITOR FOR THE RESPONDENT: | Hendrik J. Keulemans for Patrick McHugh & Co Solicitors |
Orders
Within 4 months from the date of these orders the husband shall pay $14,000 to wife or as she may direct in writing.
In the event that the payment pursuant to order 1 is not made, the husband shall forthwith upon that default do all things necessary and execute all documents necessary to cause the property situate at and known as P property to be sold by private treaty at the earliest possible date at a price to be agreed upon between the parties and failing such agreement at a price to be determined by the President of the Real Estate Institute of New South Wales or his nominee and the proceeds of the sales be disbursed as follows:
2.1Payment of agent's commission and advertising expenses and legal expenses of the sale;
2.2Discharge of any mortgage secured on the title of the property;
2.3Payment to the wife, or as she may direct in writing, the sum of $14,000 together with interest on that sum calculated in accordance with the Family Law Rules from the date of default to the date of payment;
2.4Payment of the balance to the husband.
In the event that order 2 applies and the property is not sold within a period of eight (8) months of the date of these Orders, then the husband shall forthwith do all acts and things necessary including executing all documents necessary to cause the property to be sold by public auction at the earliest possible date at a reserve price to be agreed upon between the parties and failing such agreement at a reserve price to be determined by the President of the Real Estate Institute of New South Wales or his nominee and the proceeds of the sales be disbursed as follows:
3.1Payment of agent's commission, auction fees, advertising expenses and legal expenses of the sale;
3.2Discharge of any mortgage secured on the title of the property;
3.3Payment to the wife, or as she may direct in writing, of the sum of $14,000 together with interest on that sum calculated in accordance with the Family Law Rules from the date of default to the date of payment;
3.4Payment of the balance to the husband.
In the event that on or after 6 November 2009 the husband receives any payment from the liquidators of C Investments or any payment arising from his original investment in C Investments he shall within 14 days of such receipt pay to the wife or as she may direct in writing, one half of any and all such payments.
Unless otherwise specified in these Orders and except for the purpose of enforcing the payment of any money due under these or any subsequent Orders:
5.1Each party shall be solely entitled to the exclusion of the other party to all property (including choses-in-action) in the possession of such party as at the date of these orders;
5.2Money standing to the credit of either party in any bank account shall become the property of that party;
5.3Each party shall hereby forego any claim to any superannuation benefits belonging to or earned by the other party;
5.4All insurance policies shall become the sole property of the beneficiary named thereunder;
5.5Each party shall be solely liable for, and shall indemnify the other party against, any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to this Order, the Registrar of the Family Court be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
IT IS NOTED that publication of this judgment under the pseudonym Atille & Atille is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 3733 of 2008
| MS ATILLE |
Applicant
And
| MR ATILLE |
Respondent
REASONS FOR JUDGMENT
After living together for about 20 years the parties cannot agree on a settlement of their property.
Applications
The wife seeks orders in terms of her Application For Final Orders filed 18 March 2008 as follows:
1.That the parties forthwith do all acts and execute all documents necessary to cause to be sold by private treaty the following properties in NSW :‑
(A) [P property],
(B) [N property],
(C) [K property]
on the following basis-
1.1that the wife have the conduct of the sale of the [N] & [K] properties and instruct solicitors and agents to act on behalf of the wife;
1.2that the husband have the conduct of the sale of the [P] property and instruct solicitors and agents to act on behalf of the husband;
1.3that the listing price be fixed by agreement by the parties but in the absence of agreement at a listing price reached in consultation with a registered valuer; and
1.4That upon settlement of any sale of any of the properties the parties do all acts and execute all documents necessary to cause the proceeds of the sale to be used as follows:
1.4.1 to pay the reasonable expenses of the sale including the agent's commission, legal costs and disbursements;
1.4.2 to reimburse to the wife or husband any money paid by her or him for selling expenses;
1.4.3 to pay any land tax owing in respect of the property;
1.4.4 to pay rate adjustments;
1.4.5 to discharge any registered charge on the property;
1.4.6 to pay the remaining balance in equal shares to the parties.
2.That all other investments including but not limited to cash, shares, savings, debentures, loans and annuities be divided in equal shares between the parties.
3.That except as otherwise provided in these Orders each party is declared to have no further interest in the items of personal property (including choses in action and rights to benefit in any superannuation fund or policy of insurance) in the possession or control of the other.
4.That if either party refuses or neglects to sign within 14 days of a written request to do so any documents necessary to put into effect the terms of these orders the Registrar of the Registry of the Family Court of Australia or Federal Magistrates Court of Australia or any court officer appointed by the court in his or her stead is hereby appointed pursuant to the provisions of section 106A of the Family Law Act (Commonwealth) to execute such documents on behalf of the defaulting party.
5.Costs.
The husband seeks orders in terms of his Further Amended Response to an Application For Final Orders as follows:
1. That the parties forthwith do all things necessary and execute all documents necessary to cause the properties situate at and known as [N] being the whole of the land contained in Certificate of Title Folio Identifier […] and [K] being the whole of the land contained in Certificate of Title Folio Identifier […] to be sold by private treaty at the earliest possible date at a price to be agreed upon between the parties and failing such agreement at a price to be determined by the President of the Real Estate Institute of New South Wales or his nominee and the proceeds of the sales be disbursed as follows:
1.1Payment of agent's commission and advertising expenses and legal expenses of the sale.
1.2Discharge of the mortgages to Perpetual Limited being Mortgage numbers […] and […].
1.3The sum of $40,000.00 to the husband.
1.4The balance to the wife.
2.That in the event that either or both of the properties situate at and known as [N] being the whole of the land contained in Certificate of Title Folio Identifier […] and [K] being the whole of the land contained in Certificate of Title Folio identifier […] are not sold by private treaty within a period of six (6) months of the date of these Orders, then the parties forthwith do all acts and things necessary including executing all documents necessary to cause the property to be sold by public auction at the earliest possible date at a reserve price to be agreed upon between the parties and failing such agreement at a reserve price to be determined by the President of the Real Estate Institute of New South Wales or his nominee and the proceeds of the sales be disbursed as follows:
2.1Payment of agent's commission, advertising and auction expenses and legal expenses of the sale.
2.2Discharge of the mortgages to Perpetual Limited being Mortgage numbers […] and […].
2.3The sum of $40,000.00 to the husband.
2.4The balance to the wife.
3.Unless otherwise specified in these Orders and except for the purpose of enforcing the payment of any money due under these or any subsequent Orders:
3.1Each party shall be solely entitled to the exclusion of the other party to all property (including choses-in-action) in the possession of such party as at this date.
3.2Money standing to the credit of either party in any bank account shall become the property of that party.
3.3Each party shall hereby forego any claim to any superannuation benefits belonging to or earned by the other party.
3.4All insurance policies shall become the sole property of the beneficiary named thereunder.
3.5Each party shall be solely liable for, and shall indemnify the other party against, any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
4.That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to this Order, the Registrar of the Family Court be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
Documents read
The wife relied on the following documents:
Wife’s Application for Final Orders filed 13 June 2008
Financial Statement of Wife filed 26 June 2008
Affidavit of the wife sworn and filed 31 July 2009
Conciliation conference documents dated 14 January 2009
The husband relied on the following documents:
Document Dated/Sworn Filed Response to an Application for Final Orders 26 August 2008 Affidavit of the husband 18 September 2009 Financial Statement of the husband 22 August 2008 26 August 2008 Conciliation Conference document 13 January 2009
Short history
As at the date of the hearing the wife was 49 years of age and the husband was 84 years of age. They started living together in November 1988, were married in 1989 and separated in January 2008. The parties were divorced in May 2009.
Children
There is one adult child of the marriage who was born in 1989 and as at the date of hearing was 20 years of age.
Background facts
The husband was born in Europe in 1925. He migrated to New Zealand in 1951 and married his first wife in 1954. They had two children who were about 55 and 52 years of age, respectively at the date of the hearing.
The wife was born in Asia in 1960.
The husband separated from his first wife in 1962.
In 1968 he purchased …, G, “the G property”.
At some point the husband married and divorced his second wife.
The parties met in Asia in 1981. They met through a friend and continued to correspond.
The wife came to Australia on 5 November 1988 and the parties were married in January 1989.
At that time the husband owned the G Property (subject to a mortgage of $500) and shares. The wife had no assets.
In February 1989 the wife commenced work as an Enrolled Nurse.
In July 1989 the parties’ daughter was born. The wife had approximately six months maternity leave.
In 1990 the husband retired from employment to care for the child full time while the mother worked as a nurse. His eligible termination payment was $45,533.67[1]. He used his superannuation funds, Long Service Leave, Termination pay and savings totalling about $90,000 to discharge the mortgage of about $20,000 and invested the balance.
[1] Exhibit 7
In 1993 the Wife went on a holiday to Asia with the child and returned with her sister who stayed with the parties for about three months.
In 1994 the husband ceased taking boarders in the G property.
In 1995 the wife ceased working as a Nurse and commenced full time study.
The husband sold shares for $25,000.00 and used his superannuation to support the family.
The wife graduated in 1998 and commenced employment, on a full-time basis, at the R Hospital.
The husband says that the wife refused to tell him her income, resulting in him being overpaid the old age pension.
In 1999 the husband sold the G property for $460,000. The parties purchased a property at P for $279,000.00. There were costs of sale and purchase, including agent’s commission, stamp duty, legal fees as well as cleaning and removal expenses. The husband purchased a car for the wife to use for $7,000 and the balance was invested. The husband received about $150 per week on the invested funds although the actual amount fluctuated. He drew down $5,000 at some point, leaving $95,000 invested.
The wife commenced work at Y Hospital.
In 2000 the husband ceased receiving the old age pension due to the wife’s income.
In 2000 the wife commenced work as a Registered Nurse at D Hospital and continues in that position to date.
In 2002 the wife purchased an investment property at N for $130,000.00. She had a 90% mortgage and paid the 10% deposit with her own savings.
In 2003 the wife purchased a property at K for about $145,000 with a 100% mortgage from the Teachers Credit Union.
The husband provided a short term loan of $10,000 for improvements to the property.
In January 2008 the wife considered the marriage to be at an end and I take it that was about the time of separation because a divorce was granted in May 2009.
On 26 June 2008 the wife filed an Application seeking sale of all properties with equal division of proceeds.
The husband filed his Response on 26 August 2008.
In October 2008 the husband obtained a reverse mortgage facility of $65,000 secured on the P property. As at the date of the hearing that was drawn as to about $24,000.
In 2009 the wife sold the N property for $205,000. After discharge of the mortgage she made a profit of $86,000.
The wife sold the K property for $185,000. After discharge of the mortgage she made a profit of $43,000.
In April, 2009 the parties’ daughter ceased her Course at University for medical reasons but continues to reside with the husband.
The parties were divorced in May 2009.
The wife lives in shared accommodation in regional New South Wales.
Credit and Submissions
The evidence of the witnesses
The only witnesses called for cross-examination were the parties. There are only a few factual issues in the case. Both parties had problems in giving evidence. The wife deposed to currently receiving about $350 per week from the capital gain on the sales of the N and K property. The gain was about $110,000 and it is unlikely that the income from that sum could be $350 per week. English is not the wife’s first language and that affected the extent to which she was responsive to questions. However, the wife made concessions against interest in relation to aspects of the husband’s case although her answers sought to reinforce her own contributions.
The husband is 84 years of age and I gather that his hearing is not acute. That affected the extent to which his answers were responsive to questions. The husband made concessions in favour of the wife, without hesitation.
Submissions
It is submitted on behalf of the wife that there should be an equal division of the parties’ property. It is argued that the Capital Gains Tax arising from the sale of the N and K properties should be a joint responsibility because the wife would not be able to make provision for appropriate accommodation for herself without selling those properties. It is conceded that the husband made a substantial initial contribution and the wife had no assets. It is submitted that the wife made the greater financial contribution from her income during the marriage and made non-financial contributions. It is submitted that she was the primary care giver of the child. The wife is 49 years of age and in good health. The husband is 84 years of age and in reasonable health for a person of his age.
The written submissions on behalf of the husband are:
The Applicant Wife came to Australia on 5 November 1988 to live with and marry the Respondent Husband. She moved into the Husband’s home at [G]. She had no assets.
The parties married in January 1989 and remained in the [G] property. This property had a small mortgage of approximately $500.00. The Husband was working full time as a […] teacher. The Wife worked for about four months until the birth of the parties’ only child, […], (age 20 years) in July 1989.
The Wife returned to work full time in October 1990. The Husband then retired from work, received his superannuation funds and Long Service Leave termination pay, paid off the mortgage and invested the balance. He began receiving the aged pension. Thereafter the Husband provided some of the day time care for [the child] with the assistance of a babysitter and Day Care Centre.
The Wife worked part time until 1995 when she began a degree in Nursing. [The child] started school in this year. The Husband maintained the family up to the beginning of 1998 when the Wife commenced full time work as a nurse.
From 1998 the Husband says that the Wife’s income was used for the food for the household and he met all other household outgoings, including [the child’s] expenses.
The Wife disagrees and says she made a greater financial contribution from this time.
The parties agree they kept separate finances.
From 1998 the Husband took on the full time care of [the child].
In 1999 the Husband sold the [G] property and bought the parties’ home on the Central Coast. He invested the balance of about $130,000 other than $7,000 for a care for the Wife.
The pattern of work by the wife, care of [the child] by the Husband continued.
The parties shared the cleaning.
The Husband cooked for himself and [the child].
In 2002 the Wife bought two investment properties and effected improvements to them. Both properties have been sold with profits retained by the Wife.
The Husband lost his retirement savings in 2007/2008. He set up a reverse mortgage facility of $65,000 and has drawn $16,000 for living expenses.
The Husband is 84. He has some health problems. [The child] is living with her father and having discontinued her studies is supported by him.
The Husband’s sole income is the Age Pension.
The wife is 49 years. She is in good health and working full time. She will have access to superannuation.
The initial contribution by the Husband was the provision of the family home and income to support the family. The Wife made varying financial contributions from October 1990 and continued to do so until separation. The Husband continued to provide the home and income.
The Husband provided most of the care for the parties’ child, […].
The overall division should be 70-75% / 25 – 30% in favour of the Husband allowing for a small adjustment in favour of the Husband pursuant to section 75(2).
In oral submissions for the husband it was argued that the Capital Gains Tax arising from the sale of the N and K properties should not be his responsibility.
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. [2]
[2] 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
There is no mention of steps in section 79 but it is convenient to approach the exercise of discretion in a structured way. The Full Court has supported such an approach.
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. That involves identifying assets, liabilities and financial resources and their values.
There are circumstances whereby assets are included in the list for division although they no longer exist. The same logic would apply to the exclusion from the relevant list of liabilities, debts that do exist at the date of the hearing. 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 parties have settled a joint balance sheet. The following matters came to attention:
C Investments
The parties agree that the investment vehicle is in liquidation and that it should be allocated no value in the list of assets. They agree that I should make an order whereby any dividend received by the husband from the failed investment be shared equally between the parties and I will do so.
Husband’s furniture
The parties agree that value of the husband’s furniture is $3,500. In evidence in chief it was revealed that the parties arranged for the wife to take some of that furniture. I was asked on behalf of the husband to deal with that fact in an appropriate way. There is no practical way of taking it into account, save to note that the valuations of furniture might favour the wife to some extent.
Paid Legal Fees
Both parties have paid legal fees for these proceedings. The wife paid $769.64 and the husband has paid about $24,000. Some of the latter payment was made from borrowings on a reverse mortgage. In that regard it was submitted on his behalf that if I include the full amount of his paid legal fees then the borrowing should only be shown as $15,000. With respect I think that would do the husband a disservice. He has drawn down about $24,000 on the reverse mortgage and if I do not allow him the full value of that liability, then I would be double counting his paid fees. On the basis that the pool of assets would but for the payment of legal costs, be greater than it is, I will read back into the list of assets the amounts paid by the parties.
I find that the assets are:
Assets Value Proceeds of sale of N property (less tree lopping $4,180.00) and of K property W $110,915 2005 Holden Astra W $13,300.00 Savings W $2,504.00 Furniture W $2,000.00 Wife’s paid legal fees $769.64 First State Super W $96,024.00 The P Home H $385,000.00 1982 Rover car H $2,000.00 Asian Antiques H $1,500.00 Furniture H $3,500.00 Husband’s paid legal fees $24,000.00 Total $641,512.64
Liabilities:
The parties disagree in relation to the relevant liabilities.
The wife has been given an estimate of the Capital Gains Tax liability of the wife in relation to the N and K property sales. It is submitted for the wife that it was always part of her claim that the properties be sold and that if she is to make any provision for appropriate accommodation those sales were necessary. It is submitted on behalf of the husband that the wife conceded in cross-examination that her reason for selling the properties was to allow for a division of property and no other reason, such as necessity, was offered. On that basis it is submitted that she should bear any liability alone.
In Noetel & Quealey [2005] FamCA 677; (2005) FLC 93-230; (2005) 34 Fam LR 190 the Full Court said:
111. Prior to the decision in Rosati (supra) the law regarding the treatment of CGT in respect of applications under s.79 of the Act was, as described by the Full Court in Rosati, subject to “a degree of confusion, and possibly conflict”. The Full Court carefully analysed a number of decisions including two unreported decisions of O’Ryan J and summarised how CGT should be treated as follows:
“(1)Whether the incidence of capital gains tax should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset.
(2)If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.
(3)If none of the circumstances referred to in (2) applies to a particular asset, but the Court is satisfied that there is a significant risk that the asset will have to be sold in the short to mid term, then the Court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, may take that risk into account as a relevant s.75(2) factor, the weight to be attributed to that factor varying according to the degree of the risk and the length of the period within which the sale may occur.
(4)There may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset. In such a case, it may be appropriate to take the capital gains tax into account at its full rate, or at some discounted rate, having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs.”
Here the properties were at all times described as investment properties. The wife did not live in either property but rented them out. From the outset of these proceedings, the wife declared that she intended that the properties be sold. The properties have in fact been sold. The wife lives in share accommodation and albeit there is scant evidence in relation to her current circumstances or her intentions, it is reasonable to assume she would aspire to secure and appropriate accommodation. I will allow the estimated tax and the accountant’s fees.
Thus the liabilities are:
Liabilities Amount Estimated Capital Gains Tax liability for K property W $5,926.70 Estimated Capital Gains Tax liability for N property W $6,433.05 accountant’s fees W $177.00 Senior Loan – post separation H $24,000.00 Total $36,536.75
Net assets
The net non-superannuation assets have a value of $604,975.89 ($641,512.64 - $36,536.75).
Financial Resources
The parties disclose no 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[3]. 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[4].
[3] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[4] In the Marriage of Shewring (1987) l2 Fam LR 139
As to whether the Court should apply the considerations in section 79(4) to the assets globally or asset by asset, 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.
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.”
Here the case has been argued on a global basis. I will adopt the same approach.
Contributions
Section 79(4)(a) Contributions
Financial contributions, both direct and indirect were made by each of the parties.
The husband made the only initial contribution. He brought into the marriage the G property, subject to a modest mortgage, some shares and other personalty and his superannuation. There is no evidence of the net value of the property at the date of marriage but it was sold in 1999 for $460,000.
In 1990 the husband retired from his employment as a Teacher. His eligible termination payment was $45,533.67. He used his superannuation funds, Long Service Leave Termination pay and savings totalling about $90,000 to discharge the mortgage of about $20,000 and invested the balance.
The husband has not had paid employment since he retired.
The parties give conflicting evidence about the periods of the wife’s paid employment. The husband’s evidence on this issue favours the wife and vice versa. Accepting her own evidence – the wife commenced work as an Enrolled Nurse three months after the parties’ marriage (April 1989) and stopped work when she was 7 months pregnant with the parties’ child (May 1989). She returned to paid employment when the child was 15 months old (October 1990) working three days a week. She continued that work on a part-time basis until she commenced full-time study at Sydney University in 1995. While studying the wife baked cakes for nursing homes and did sewing and babysitting. It is conceded in her case that those activities provided only modest income and that the husband largely supported the family for those three years. The wife returned to the paid workforce in 1998 as a full-time Registered Nurse and has continued in that role ever since.
There is a risk of double counting elements of the parties’ contributions. It must be noted that the wherewithal for the financial support provided by the husband during the period 1995 to 1998 and at other periods of the marriage and his contribution to overseas travel was all sourced in the early contributions referred to above. Similarly, the financial support provided by the wife and the profit made by her on the sales of the N and K properties were exclusively sourced in her income as a Nurse.
Section 79(4)(b) contributions
This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions. There is no evidence of contributions of this type.
Section 79(4)(c) contributions
This provision deals with contributions to the family including contributions in the form of homemaker contributions and contributions to children of the marriage.
Following the child’s birth, the wife returned to work on a part-time basis in October 1990. The husband then retired from paid employment and provided some of the day time care for the child with the assistance of a babysitter and Day Care Centre.
The husband says that from 1998 he took on the full time care of the child. The husband says that the wife’s full-time work was from Saturday to Wednesday each week. That left the wife available on Thursdays and Fridays. In 1998 the child was about 9 years of age. It follows that the husband was significantly involved in her care.
The parties shared the cleaning but the husband cooked for himself and the child.
It is not possible to make a precise calculation about the extent to which the parties shared the parent and homemaker roles. They gave slightly inconsistent evidence in chief and were not successfully challenged in cross-examination. In any event, it is clear that the husband made a substantial contribution. That is not to suggest that the wife did not contribute but she was away from the house for much of each week. She now works at D but for many years she had substantial travel associated with attending at her employment.
Conclusion on Contribution
Significant contributions were made by the parties over a substantial period. The husband’s financial contributions were made at the commencement of the marriage or as a consequence of what he had at that time. The wife’s contributions were made progressively through the marriage but with her greatest income being achieved once she returned from three years full-time study in 1998. There is the problem then of comparing contributions made at very different stages of the marriage. It is relevant to consider the purposes to which individual contributions were put. In the Marriage of Pierce (1999) 24 Fam LR 377; FLC 92-844 the Full Court said:
16.His Honour then considered the contributions of the parties and made findings as to the duration of cohabitation and the assets of each party at about the time of marriage. He found that the parties cohabited for a period of about three months in 1982 and then separated. He further found that the husband was injured in a motor vehicle accident in that year and that the parties resumed cohabitation in late 1986, cohabiting until they separated in June 1996. He made no findings as to the assets of either of the parties as at either 1982 or as at late 1986, other than as appears hereunder. He went on to say (Appeal Book p.53):-
“At about the time of the marriage, in August 1988, Leon had significant assets. They included about $150,000 invested with the National Australia Bank (Leon’s compensation arising from his accident), shares having a value he estimates at about $50,000, a car and some other assets: a total of something like $226,000. Elizabeth had a car but few other assets of value: Leon’s estimate is that she had about $11,500 in all”.
He subsequently found in the passage at Appeal Book 53, to which we have earlier referred, that by 1990 the compensation fund of the husband had increased to about $200,000 and that the wife had savings of about $5,000 at the commencement of cohabitation.
And later ….
28.In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: See also Campo and Campo (unreported, Full Court (Ellis, Lindenmayer and Finn JJ), Sydney, delivered 19 May 1995 at pages 21 and 22 of the joint judgment) and Zahra and Zahra (unreported, Full Court Sydney, delivered 3 October 1996, per Ellis J. at page 10).
29.In the instant case, his Honour identified what he described as the greater initial financial contribution of the husband and his post separation contribution, but, in our view, he failed to properly assess such contributions. The period of cohabitation was ten years. At about the date of the marriage the husband had very significant assets. His Honour found that the husband had assets to the approximate value of $226,000. At the date of the trial, the parties had assets of a net value of $319,190 which 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.
30.There is an obligation on a trial judge not only to identify the relevant contributions but also to assess them. In this case his Honour failed to adequately, or at all, assess these contributions. In our view he failed to properly weigh the greater initial contribution of the husband, with all other relevant contributions, and seems not to have had regard to the use made by the parties of the husband’s greater initial contribution.
31. The finding and assessment that the contributions of the parties during cohabitation should be regarded as equal was, in our view, open to the trial judge. Given that assessment, we are of the view that in assessing the totality of the contributions of each of the parties as being 55% by the husband and 45% by the wife, his Honour, notwithstanding the observations of Stephen J in Gronow v Gronow (1979) 144 CLR 513 at 519, on the facts of this case, failed to attach sufficient weight to the greater initial financial contributions of the husband, and to his contributions post separation in caring for the children.
32.Accordingly, we are of the view that, in assessing the respective contributions of the parties from the commencement of cohabitation to the date of hearing as being 55% by the husband and 45% by the wife, the discretion vested in his Honour miscarried and the appeal should thus be allowed.
Other Grounds of Appeal
33.Having regard to the conclusion we have reached in relation to grounds 2, 3, 5 and 6, it is not necessary for us to consider the other grounds of appeal. We are however of the view that having regard to the facts as found by his Honour, none of which were challenged before us, the result embodied in the order was unreasonable and plainly unjust in the appellate sense.
Re-exercise of discretion
34.In our opinion there is sufficient material before us to enable us to exercise our own discretion in substitution for that of the trial judge as we were invited to do by counsel the husband. No submissions were made on behalf of the wife in opposition to this course if we concluded that the appeal should be allowed.
Assets
35.We have already referred in paragraphs 12, 13, 14 and 15 to the net value of the property of the parties and to their respective superannuation entitlements.
Contributions
36.The duration of cohabitation was about ten years. The husband had significant assets at about the date of the marriage. He made a significant financial contribution to the purchase of the matrimonial home in 1990, using funds that he had at about the time of the marriage, to the acquisition of which the wife had made little, if any, contribution.
37.During the period of cohabitation, the husband was continuously engaged in paid employment and utilised his earnings for the benefit of the family. In addition he made a non-financial contribution to the maintenance of the matrimonial home and a minor contribution as a parent.
38. The wife made a financial contribution to the purchase of the matrimonial home from savings which she had at the commencement of cohabitation. However this contribution was minimal compared to that of the husband. The wife was engaged in paid employment during the cohabitation but for a lesser period than the husband. She was primarily engaged in attending to domestic tasks and the care of the children. We are satisfied that this contribution was greater than that of the husband and we take it into account in a real and substantial way.
39.The supervening contributions, after the commencement of cohabitation, were the contributions which we have identified. These contributions were found by Chisholm J to be equal and we agree with that assessment. However there remains what the trial judge described as the husband’s greater initial financial contribution and the husband’s contribution in caring and supporting the children since the date of separation. But for the husband’s greater initial financial contribution the parties would not have been able to acquire the matrimonial home in 1990.
40.In our opinion the two additional matters of contribution, which we have identified, favour the husband. Weighing the initial contributions of the husband and his post separation contributions with all other relevant contributions by both the husband and the wife we would attach significant weight to the initial contribution and would assess the respective contributions of the parties within the meaning of paragraphs (a), (b) and (c) of s.79 (4), from the date of the marriage to the date of the hearing, expressed as a percentage of the net value of their assets, as at the date of the hearing, as being 70% by the husband and 30% by the wife.
In the proceedings before me the husband’s initial contribution provided the family with secure and appropriate accommodation throughout their 20 year cohabitation, without the expense of rent or mortgage payments. The mortgage on the G property was modest and was paid out from the husband’s termination payment. There was no mortgage on the P property until long after separation. For about 5 years, the G property provided some income from boarders.
The husband has had the use of the P property since separation, to the exclusion of the wife and she was obliged to pay rent or board. Albeit her current board is a modest $100 per week, I accept that the husband had the better of that arrangement. However, the child has also lived in the property since separation.
There is no evidence on non-financial contributions.
The parties each made valuable contributions as parents and homemakers. As the wife returned to the workforce, initially part-time and from 1998 on a full-time basis, the husband increased his parent and homemaker role. The financial load on the wife was reduced until 2002 because the husband received Centrelink benefits.
In my view both parties made valuable contributions but the husband’s contributions were greater than those of the wife. His initial contribution made a fundamental impact on the family for 20 years and the wife’s strong contribution from paid employment was balanced, at least to some extent by the additional component of parent and homemaker contributions made by the husband.
The submission on behalf of the husband would have the contributions sufficient to arrive at an overall adjustment of the order of 65% to 70% to the husband, relying on a small section 75(2) adjustment. I take it then that the submission is for a finding of 60% to 65% on the husband’s contributions. Care is needed in allowing too great an imbalance in contributions made over 20 years. In my view the contributions overall would be properly recognised by a finding that they were made in the proportions 57.5% by the husband and 42.5% by the wife.
The other matters in Section 79
Once contributions have been assessed, the other factors in section 79(4) need to be considered. They are:
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. There is no relevant effect.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in Section 75(2) would seem to be paragraphs (a), (b), (d), (f), (j), (k) and (o).
(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 and husband are 49 and 84 years of age, respectively. The wife is in good health. The husband suffers from arrhythmia which is well controlled by medication. He recently suffered a urological problem but understands that it was an infection and has been successfully treated. Without putting any evidence before me on the topic, learned counsel for the wife suggested that the difference in the life expectancies of the parties should greatly influence any adjustment made. I accept that the life expectancy of the wife is substantially greater than that of the husband.
(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 as disclosed in her Financial Statement sworn on the day of the hearing is said to be $1,647 per week made up of $1,291 by way of salary as a Registered Nurse with NSW Area Health Service and $351 per week being investment income from the capital gain on the K investment property. Learned counsel for the husband sought to explore the latter income in cross-examination but I stopped her. I doubt that the wife’s evidence is correct but it does not much matter whether the wife’s income is $1,647 or $1,291 – it eclipses that of the husband by a substantial margin. The figure of $1,291 is the wife’s base salary. The wife was asked about shift allowances and overtime and said that in total, in the last 6 months she may have received a total of $200-$300 on top of her base wage for those allowances.
The wife lives in shared accommodation in regional New South Wales. She supports no other occupant of that accommodation and no other occupant supports her.
The wife’s expenses are as follows:
Expense Amount Income tax $380.00 Superannuation contributions $150.00 Rent $100.00 Motor vehicle insurance, health insurance, home contents insurance $36.00 Motor vehicle registration $5.00 Minimum Mastercard repayments $63.00 All other expenditure $300.00 Total $1034.00
Of the wife’s living expenses, she pays $100 per week to the child as a living allowance.
Thus even after making additional superannuation contributions, the wife has a substantial weekly surplus.
Evidence about the wife’s assets and liabilities is set out earlier in these reasons.
I note that in her Financial Statement of August 2008 the wife deposed to a weekly wage of under $900. It is not suggested that the wife is not fully exercising her earning capacity.
The husband receives a payment from Centrelink and from the New Zealand Government Superannuation Fund which together equate to the value of the Australian Age Pension. He deposes to that being $265 per week which seems low. He lives with the child in the former matrimonial home. In order to address large expenses that might arise from time to time, the husband has put in place a reverse mortgage of $65,000. He has drawn on that facility as to $24,000 for necessary payments, including legal fees.
The husband puts his expenditure as follows:
| Expense | Amount |
| Rates – unknown | $0 |
| Health Fund contributions | $25.00 |
| Motor vehicle registration | $20.00 |
| Total | $45.00 |
In his Financial Statement of August 2008 the husband deposed to paying $80 per week to the child. He explained in oral evidence that as she is no longer studying, he does not make that payment any longer. However he houses and feeds her and pays utilities from which she benefits. The husband shows a substantial surplus each week but has not disclosed anything of his living expenses. It is not suggested that the husband has unexercised earning capacity.
(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 child is over 18 years of age.
(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 evidence in relation to the parties’ 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;
The husband receives the equivalent of the age pension. The wife has an interest in a superannuation fund.
(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. They had some overseas travel, together and separately. The child was educated at a private school.
(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 of either party planning further study or intending to set up in business.
(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;
This is not a relevant matter.
(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;
The husband provided support to the wife and the household while the wife undertook studies from 1995 to 1998.
(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;
It is likely that the marriage had some impact on the husband’s earning capacity as he gave up work at about the time of the child’s birth. It is likely that the marriage enhanced the wife’s earning capacity.
(l) the need to protect a party who wishes to continue that party's role as a parent;
This is not relevant.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
I have set out that evidence above.
(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
There is no child support.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
The husband lives in the P home. He has made no enquiries about retirement accommodation. It would be a substantial dislocation if he is obliged to sell the home and move out. If a sale of that home can be avoided then the costs of sale too would be avoided and that would benefit both parties. If from no other source, the husband has room within the approved reverse mortgage to raise a modest fund to pay the wife. Of the parties, the wife is far better placed in terms of physical and financial capacity to search out and fund new accommodation.
(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)
There are no other relevant orders made under the Family Law Act 1975.
Section 79(4)(g)
There is no child support.
Conclusion
The wife seeks an equal division overall. The husband seeks a small adjustment leading to an overall outcome 65% - 70% in his favour. The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:
ØA division based on 57.5% to the husband would leave him with more assets than the wife;
ØSome of the wife’s assets are held in the form of superannuation and there are restrictions on her accessing them. On the other hand there are tax benefits in making superannuation contributions and substantial tax concessions in drawing on superannuation after 60 years of age;
ØThe husband is 84 years of age, lives on the equivalent of the age pension and the equity in the P property;
ØThe wife is 49, in good health and has secure, well paid employment;
ØThe wife’s income is greater by a substantial margin, than that of the husband and she will be able to continue to make provision for her retirement through additional superannuation contributions;
ØUnlike the wife, the husband has no earning capacity and it is likely that he will continue to make ends meet by borrowing against his equity in the P property;
ØThe wife is likely to live for more years than the husband;
ØThe husband supported the wife while she qualified for employment as a Registered Nurse.
These matters call an adjustment to the husband. What would otherwise call for a very substantial adjustment is moderated by the fact of the husband’s age and that the wife too will face the challenges of providing for her own retirement. I will allow a 5% adjustment to the husband.
Just and Equitable
The net assets have a value of $604,975.89 ($641,512.64 - $36,536.75).
If the assets are divided in the proportions 62.5% to the husband and 37.5% to the wife that would amount to about $378,110 to the husband and $226,865 to the wife.
The husband has and would like to retain:
Assets Value The P Home H $385,000.00 1982 car H $2,000.00 Asian Antiques H $1,500.00 Furniture H $3,500.00 Husband’s paid legal fees $24,000.00 Senior Loan – post separation -$24,000.00 Total $392,000.00
In order to bring him to 62.5% he would need to pay the wife about $13,890. I will round that up to $14,000.
That would leave the wife with the benefit of:
Assets Value Proceeds of sale of N property (less tree lopping $4,180.00) and of K property W $110,915 2005 Holden W $13,300.00 Savings W $2,504.00 Furniture W $2,000.00 Wife’s paid legal fees $769.64 First State Super W $96,024.00 Payment from the husband $14,000 Capital gains tax liability for K property W -$5,926.70 Capital gains tax liability for N property W -$6,433.05 accountant’s fees W -$177.00 Total $226,975.89
The orders I propose commit the husband to make a payment to the wife. I will allow 4 months for the husband to make the payment. In the event that he cannot make the payment, the P home will be sold and the wife will receive that payment from the net proceeds of sale.
The parties agree that C Investments is in liquidation and that I should make an order whereby any dividend received by the husband from the failed investment be shared equally between the parties.
Conclusion under Section 79
Significant contributions were made by each of the parties. In the course of over 20 years of cohabitation and since, the parties shared the work of the family in different ways. The husband made a pivotal and substantial initial contribution and the wife provided the main income in the second half of the marriage. Of the parties, only she has the capacity to improve her financial position. The orders I propose will effect a just and equitable settlement of their property.
I certify that the preceding one hundred and twenty three (123) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 13 November 2009
Key Legal Topics
Areas of Law
-
Family Law
-
Property Law
Legal Concepts
-
Remedies
-
Injunction
-
Costs
-
Jurisdiction
0
3
1