Baldon and Baldon
[2015] FamCA 714
•31 August 2015
FAMILY COURT OF AUSTRALIA
| BALDON & BALDON | [2015] FamCA 714 |
| FAMILY LAW – PROPERTY – Settlement in relation to marriage – Where the husband and wife were married for approximately 13 years and have two children – Where overall contributions are found to be equal – Where the care of the children is now divided between the parties on an equal time basis - Where the husband earns approximately twice that of the wife – Where the husband has a higher earning capacity than the wife - Where the husband has the benefit of his current wife’s income - Where a partial property settlement had already been equally divided between the parties – Where a 5 percent s 75(2) adjustment is appropriate in favour of the wife – Where an order is made for the wife to receive 55 percent and the husband to receive 45 percent of the available property. |
| Family Law Act 1975 (Cth) – ss 75(2), 79, 106A |
| Cerini & Cerini [1998] FamCA 143 Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 In the Marriage of Lenehan (1987) FLC 91-814 In the Marriage of Norbis (1986) FLC 91-712 In the Marriage of Zyk (1995) FLC 92-644 Stanford v Stanford (2012) 87 ALJR 74; 293 ALR 70 |
| APPLICANT: | Mr Baldon |
| RESPONDENT: | Ms Baldon |
| FILE NUMBER: | SYC | 2806 | of | 2013 |
| DATE DELIVERED: | 31 August 2015 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Loughnan J |
| HEARING DATE: | 10 - 13 August 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Davies |
| SOLICITOR FOR THE APPLICANT: | Burke & Mead Lawyers |
| SOLICITOR FOR THE RESPONDENT: | Ms Harris of Lake Cathie's Local Lawyer |
Orders
In respect of the moneys held in Macquarie Bank controlled moneys account number … (“the controlled moneys account”), the parties shall do all acts and things and sign all documents necessary to:
1.1Retain $23,570.70 in the account ($13,570.70 as provision for the 2013 income tax liability of the husband and $10,000 as provision for the 2014, 2015 and 2016 financial accounts and winding up costs for D Pty Limited), to be dealt with in accordance with order 2 herein.
1.2Pay to Mr B Baldon the sum of $3,200.00, in reimbursement of moneys loaned by him to the husband and wife;
1.3Pay to the solicitor for the husband 45 percent of the remaining balance; and
1.4Pay the balance of the account to the solicitor for the wife.
In respect of the moneys retained in the controlled moneys account pursuant to order 1.1, the parties shall do all acts and things and sign all documents necessary to:
2.1Pay to the solicitor for the husband the amount agreed or advised pursuant to the regime established under orders 3 to 8 inclusive of the orders of 19 March 2015.
2.2Pay to C Accountants such sums as are sufficient to discharge:
2.2.1All invoices issued by them in relation to the finalisation of the taxation returns for D Pty Ltd for the years 2013, 2014 and 2015;
2.2.2All invoices issued by them in relation to the winding up of the company, D Pty Ltd.
2.2.3In payment to ASIC such sums as are sufficient to discharge all invoices issued by ASIC in relation to the company, D Pty Ltd.
2.3Pay to the solicitor for the husband 45 percent of the remaining balance of the retained funds; and
2.4 Pay the balance of the retained funds to the solicitor for the wife.
In the event that there is a shortfall between the amounts payable pursuant to orders 2.1 and 2.2 and the funds retained pursuant to order 1.1, unless the parties otherwise agree, the wife shall pay 55 percent of the shortfall and the husband, 45 percent thereof.
The wife shall do all acts and things and sign all documents necessary to transfer to the husband all her right title and interest in the E Vacation Ownership within 28 days.
Unless otherwise specified in these orders, the husband retain and be declared to be the sole legal and beneficial owner of all his right, title and interest in and to:
5.1 All cash at bank and other moneys invested by him;
5.2 All shares registered in his name;
5.3 All personal effects in his possession;
5.4 The motor vehicle in his possession;
5.5 His superannuation entitlements;
5.6All other personal and real property in his possession, custody or control as at the date of these orders.
Unless otherwise specified in these orders, the wife retain and be declared to be the sole legal and beneficial owner of all her right, title and interest in and to:
6.1 All cash at bank and other moneys invested by her;
6.2 All shares registered in her name;
6.3 All personal effects in her possession;
6.4 The motor vehicle in her possession;
6.5 Her superannuation entitlements;
6.6All other personal and real property in his possession, custody or control as at the date of these orders.
The husband is appointed pursuant to s 106A(1) of the Act, to execute all such deeds and documents in the name of the wife necessary to complete the accounts and winding up of D Pty Ltd and to do all acts and things necessary to give validity and operation to those deeds and documents.
Otherwise, upon being satisfied by affidavit of the refusal, neglect or default, as the case may be, of a party to execute a deed or document necessary to give effect to the remaining orders herein, the Registrar or Deputy Registrar of this Court is appointed pursuant to s 106A(1) of the Act, to execute such deeds and documents in the name of that party and to do all acts and things necessary to give validity and operation to those deeds and documents.
Leave is granted to the parties to apply within 28 days, on giving at least seven days’ notice to the Court and each other in relation to the machinery provisions of these orders.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Baldon & Baldon has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 2806 of 2013
| Mr Baldon |
Applicant
And
| Ms Baldon |
Respondent
REASONS FOR JUDGMENT
Introduction
These are proceedings in respect of property settlement between Mr and Ms Baldon. There were parenting proceedings between the parties in respect of their children, F, who was 14 years of age at the time of the hearing and G who was 11 years of age. Those proceedings were resolved in terms agreed to by the parents and the Independent Children’s Lawyer on the first day of but before the commencement of the hearing. Although the parties are divorced and the husband is remarried, I will refer to them as the husband and wife.
Applications
By a Minute of Orders submitted at the conclusion of oral submissions, the husband sought the following orders:
1.That the parties do all acts and things and sign all documents necessary to distribute moneys held in the Macquarie Bank controlled moneys account number … (“the controlled moneys account”) as follows:
1.1.To the husband the sum of $86,563.32 in reimbursement of the amounts paid by him personally to reduce the liabilities of the marriage:
1.2.To [Mr B Baldon] the sum of $3,200.00, in reimbursement of monies loaned by him to the husband and wife.
2.That the parties do all acts and things and sign all documents necessary to distribute any remaining moneys held in the Macquarie Bank controlled moneys account number … (“the controlled moneys account”), after the payment of monies provided for by order 1 and 3 of these Orders and the Orders made on 19.3.2015:
2.1. to the wife a sum representing 50% of the remaining moneys
2.2.to the husband a sum representing 50% of the remaining moneys
3.That the sum of $13,570.70 and $10,000 = $23,570.70 total be retained in the controlled monies account for distribution as follows:
3.1.In payment of the amount assessed pursuant to 19 March 2015 order to be paid to the husband.
3.2.In payment to [C Accountants] such sums as are sufficient to discharge:
3.2.1.all invoices issued by them in relation to the finalisation of the taxation returns for [D Pty Ltd] for the years 2013, 2014 and 2015;
3.2.2.all invoices issued by them in relation to the winding up of the company, [D Pty Ltd].
3.3.In payment to ASIC such sums as are sufficient to discharge:
3.3.1.all invoices issued by ASIC in relation to the company, [D Pty Ltd].
3.4.In payment to the husband and the wife of the balance then remaining in the controlled moneys account as to:
3.4.1. 50% to the wife; and
3.4.2.the balance then remaining to the husband.
4.That the wife do all acts and things and sign all documents necessary to transfer to the Husband all their right title and interest in the [E] Vacation Ownership within 28 days.
5.That unless otherwise specified in these Orders, the husband retain and be declared to be the sole legal and beneficial owner of all his right, title and interest in and to:
5.1.All cash at bank and other moneys invested by him;
5.2.All shares registered in his name;
5.3.All personal effects in his possession;
5.4.The motor vehicle in his possession;
5.5.His superannuation entitlements;
5.6.All other personal and real property in his possession, custody or control as at the date of these Orders.
6.That unless otherwise specified in these Orders, the wife retain and be declared to be the sole legal and beneficial owner of all her right, title and interest in and to:
6.1.All cash at bank and other moneys invested by her;
6.2.All shares registered in her name;
6.3.All personal effects in her possession;
6.4.The motor vehicle in her possession;
6.5.Her superannuation entitlements;
6.6.All other personal and real property in his possession, custody or control as at the date of these Orders.
7.That [Mr Baldon] be appointed pursuant to Section 106A(1)(b) of the Act, to execute all such deeds and documents in the name of [Ms Baldon] and to do all acts and things necessary to complete the accounts and winding up of [D Pty Ltd].
8.That the Registrar or Deputy Registrar or other Officer is authorised to execute any such necessary instrument upon being satisfied by Affidavit that refusal, neglect or default, as the case may be, has occurred.
The wife sought the following orders:
1.That the wife receive $190,000 of the E$258,000 in joint controlled monies.
2.That the wife transfer to the Husband the [E] Timeshare within 7 days of these Orders.
3.That each party indemnify the other from all outstanding debts and liabilities in their sole name.
4.That each party retain in their name/possession all bank accounts, superannuation shares, chattels, vehicles they currently hold.
5.That each party be responsible for their individual CGT liability for FY2014 and FY2015 (or any other year) and any other future or outstanding taxation debts in their name or accountancy costs.
Written Evidence
It must be said that the parties’ affidavits were unsatisfactory. Not only was much of the content inadmissible, no objections were taken and no effort was made to explain the inconsistency between the allegations and the orders sought. In relation to the parenting dispute, despite all manner of allegations about the behaviour of each of the parents, the parties agreed to orders that took no apparent account of the allegations made. The very best that might be said about that, and I assume, that the parents either exaggerated their evidence or they believe that the offending behaviour will not be repeated in the future.
In the financial proceedings, where there is little if any scope for relevant evidence about the conduct or behaviour of the parties, conduct features heavily in the allegations made by one party against the other. There are allegations about breaking, entering and stealing; destruction of property; financial oppression; revenue, social security and corporate fraud; violent assaults and waste. Again, no objection was taken to the evidence; there was little if any cross-examination about it and no effort was made in final submissions to make any sense of it. It was as if the contents of the affidavits were designed for a purpose unrelated to the controversy before the Court. I understand that the parties were not properly or fully represented for at least part of the proceedings but at the time of trial, their lawyers should have done something to moderate, challenge or explain the affidavit material relied on. Sensibly, by the stage of final submissions most of the extraneous disputes were no longer agitated but those disputes probably distracted the parties from compromising their dispute earlier and in a way that better matched the costs of the proceedings to the value of the property. Apart from anything else, by including that material in the affidavits, it is likely that the parties were misled into thinking that it was all relevant and probative.
The Hearing
The hearing was listed for four days, commencing on 10 August 2015. The parties spent 10 August 2015 resolving the parenting dispute. Upon the making of final parenting orders in terms of the parties’ agreement, the Independent Children’s Lawyer was excused. The hearing commenced on 11 August 2015 and following final submissions, on 12 August 2015 judgment was reserved.
Short History
The husband was born in 1976 and as at the date of the hearing he was 39 years of age. The wife was born in 1979 and as at the date of the hearing she was 35 years of age. The parties met in 1996 and married in 2000. On 19 November 2012 the parties separated but remained under one roof until 21 December 2012, when the wife moved into rented accommodation. The parties were divorced with effect from 7 March 2014. The husband married Ms R in 2014.
The parties’ children are:
F, who was born in 2001; and
G who was born in 2004.
Background Facts
The parents met in 1996 and commenced cohabitation in H Town, South Australia in April 1998. At the time of cohabitation, the husband was working at three casual jobs and studying at university and the wife worked casually as a cook. The parties had no significant assets.
In 1999 the parties moved to Adelaide. The husband commenced full-time employment, and the wife worked in casual jobs.
In 2000 the parties were married in Adelaide. They bought a property in Suburb I, S.A. for $115,000 using a small amount of savings and the first home buyers grant.
F was born in 2001.
In August 2002 the parties moved from Adelaide to Melbourne.
In December 2002 the parties moved from Melbourne to Sydney.
In 2003 the parties bought an investment property at J Town, S.A. for $178,000 (“The J Town property”).
G was born in 2004.
In 2004 the parties purchased K Street, L Town (“K Street”) for $135,000 under one title, as an investment.
In early 2007 the parties sold the Suburb I property for $250,000. The mortgage on that property was paid out and the balance of the proceeds were initially applied to a joint bank account where the income offset the parties’ other mortgages.
In 2008 the parties purchased a vacant block of land for $388,000 at M Street, N Town (“M Street”). The deposit for this property came from the Suburb I proceeds and the purchase was financed using the equity in K Street.
From 2008 until 2011 the husband experienced periods of unemployment.
In 2010 the parties sold the J Town property for $275,000.
In 2012 the parties were both in paid employment on a fulltime basis.
In May 2012, the parties began construction of a three bedroom home on the land at M Street. They refinanced the property in order to fund the construction.
On 19 November 2012 the parties separated but remained under one roof until 21 December 2012 when the wife moved into rented accommodation at O Street, P Town.
At the time of separation the parents agreed that the children should live with the husband in a rental property at Q Street, P Town (“Q Street”). The parties agreed that the children would stay with the wife on Wednesday night and every second Friday and Saturday night. The husband says that he continued to pay mortgage payments on the parties’ properties, household bills including rent on the home, and other outstanding bills.
On 11 February 2013 the husband met his new partner, Ms R.
The husband deposed that on 5 March 2013 the wife withdrew $2,200 from the parties’ joint mortgage account.
The husband deposed that on 18 March 2013 the wife withdrew $590 from the parties’ business overdraft account.
The husband deposed that on 27 March 2013 the wife withdrew $2,000 from the husband’s credit card account and on 13 April 2013 $875.50 from the business account overdraft facility.
The husband deposed that on 30 April 2013 and 31 May 2013 respectively, the wife withdrew $1,101.55 and $170.40 from the parties’ joint mortgage account.
In May 2013, the husband applied for a financial hardship package from the Commonwealth Bank for the two mortgages, the joint personal credit card and the business credit card. He was granted this in June.
On 22 May 2013 the proceedings commenced when the husband filed an Initiating Application.
On 17 June 2013 the matter came before Federal Magistrate Altobelli, as his Honour was then known, for mention. The parties agreed to change the children’s living arrangement, reducing their time with their father from 10 nights per fortnight down to four.
In July 2013 the husband moved in with his partner, Ms R.
On 8 August 2013 the matter was listed before Federal Magistrate Altobelli, for an interim hearing. The parties agreed that the children should spend five nights per fortnight with the husband and otherwise live with the wife, and that F should see a psychologist.
On 14 August 2013 the husband sent the wife a letter requesting assistance in meeting debts. He says that he received no response or assistance.
On 15 January 2014 amount owing on K Street was $134,102 and on M Street the amount owing was $399,982. The husband’s application to extend the hardship accommodation with the Commonwealth Bank was declined.
On 6 February 2014 the parties entered into consent orders for both parenting and property issues. Regarding parenting, the parties agreed that they would have equal shared parental responsibility for the children, that the children would live with the wife and spend time with the husband on each alternate week from Thursday until Monday or as otherwise agreed. Regarding property, the parties agreed to effect the immediate sale of M Street and K Street.
The husband deposed that on 9 April 2014 F came to live with him after she had a dispute with the wife.
In 2014 the husband and his partner were married in a ceremony in Country S.
M Street was sold on 17 May 2014 for $975,000.
As at June 2014, the parties had a number of debts owing to the Australian Taxation Office (“ATO”) that accrued during the relationship including:
a)ATO Integrated Client Account $84,692
b)ATO Baldon Partnership $13,398
c)ATO D Pty Ltd $41,951
On 30 June 2014 the husband’s employment was terminated. By way of termination payment, he received two months pay in lieu of notice.
The settlement of the M Street sale occurred on or about 10 July 2014 and the net proceeds of $410,983.64 were placed into an account with T Lawyers.
On 18 July 2014 the parties agreed on interim orders which provided that various liabilities were to be settled using funds from the husband’s solicitor’s trust account, and that the parties each be paid $20,000 from this account, by way of a partial property settlement.
On 12 September 2014 the proceedings were transferred to this Court.
On 19 March 2015 the parties entered into interim consent orders regarding property, providing for each party to be paid $30,000 by way of partial property settlement from the moneys held in trust.
The husband returned to paid employment in May 2015. The children continued to live for 10 nights a fortnight with their mother and four nights per fortnight with their father, pursuant to the orders made in February 2014.
The final hearing commenced on 10 August 2015. On that day final parenting orders were made by consent. The orders included provision for the parents to have equal shared parental responsibility, for the children to live week about during school term, for special days and for the school holidays to be shared.
The Approach In Proceedings Under Section 79
In the context of these proceedings s 79 of the Family Law Act 1975 relevantly provides:
FAMILY LAW ACT 1975 - SECTION 79
Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property; or
….
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i)either or both of the parties to the marriage; …
….
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
….
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
In Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395; (2003) FLC 93-143; (2003) 30 Fam LR 355 the Full Court said:
39.The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC 92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEJ and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.
In Hickey the Court was not asked to address the preliminary enquiry required by s 79(2) as to whether an order should be made at all. Similarly, the proceedings before me do not involve any controversy about that issue. As was observed in Stanford v Stanford (2012) 87 ALJR 74; 293 ALR 70, that preliminary, just and equitable requirement is often readily satisfied. The remaining proceeds of sale of the parties’ real estate are held in a controlled moneys account and orders are required to disburse those moneys. There are other assets that are held in joint names and orders will be required to sever the joint ownership. Both parties have invoked s 79, seeking, apart from other orders, orders about the controlled moneys account. The parties’ relationship is not one that will accommodate shared assets. In any event s 81 calls as far as practicable, for the Court to “make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them”. It is just and equitable that the parties have relief under s 79.
In identifying what orders are required to effect a just and equitable settlement of property, I will address the following matters:
a)Make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing;
b)Identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties;
c)Identify and assess the relevant matters referred to in ss 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; and
d)Consider the effect of those findings and determinations and resolve what order is just and equitable in all the circumstances of the case.
The property of the parties
In determining what order is appropriate, it is necessary to make findings as to the property of the parties. That involves identifying assets, liabilities and financial resources and their values.
Albeit that the document was not settled until immediately prior to final submissions, the husband and wife relied on a joint balance sheet as follows:
Assets
Owner Description Wife’s value Husband’s value 1 J T Trust Account (Proceeds of sale of the N Town Property and the L Town Property $258,243.74 $258,243.74 2 H V E Commodore $20,000 $12,400 3 W Mitsubishi Lancer NIL $25,000 4 W Woolworths shares $2,500 $2,500 14 H E (holiday time shares) $10,500 $10,500 Total
Addbacks
Owner Description Wife’s value Husband’s value 17 H Early release $80,000 NIL 18 W Early release $80,000 NIL Total
Liabilities
Owner Description Wife’s value Husband’s value 23 J FY 13 Pre-Separation Income Tax Liability Husband $13,570 28 W B Brant – personal loan $5,000 Nil 29 H G. R. Baldon personal loan NK $3,200 32 J FY14 FY15 & FY 16 D Pty Ltd accountancy and winding up costs $10,000 Total $26,770.00
Superannuation
Owner Description Wife’s value Husband’s value 38 H BT Wrap $10,508 39 H BT Lifetime $12,503 40 H Colonial $5,031 41 H One Path $16,268 42 H ATO Held $913 43 H Rollover Fund $707 44 W AMP $32,340 45 W REST $7,730 Total $86,000.00
As to the issues about the balance sheet:
Assets & Add-Backs
The parties do not agree about the treatment of items 2, 3, 17 & 18.
The balance sheet reveals that the husband argued that the motor vehicles used by him and the wife should be included at $12,400 and $25,000, respectively. However, during submissions, the husband’s counsel proposed that the Court exclude the parties’ motor vehicles from the balance sheet. On the face of it, such an approach would favour the wife as an asset of greater value would be ignored on her side of the balance sheet. As to items 17 & 18, I understood the husband’s position to be that the Court could include the preliminary distributions of $80,000 or exclude them, provided the parties were treated in a similar fashion.
The wife does not agree with those suggested approaches because, whether the preliminary distributions to the parties referred to at items 17 and 18 are both omitted or both included, similar treatment of the two cars would be unfair. As I understand the argument, because she had acquired the Mitsubishi Lancer from her preliminary distribution, the value of her car was being counted twice. As I understand the argument, the mischief is said to arise because the husband did not spend his preliminary distribution on items that now appear in the balance sheet.
Further, the wife would prefer that the preliminary distributions at items 17 & 18 be added back because she seeks a greater overall proportion of the pool. If the pool is expanded by $160,000, as the parties divided that sum equally, if the overall distribution favours her, she will receive a greater adjustment in her favour in the final result. As to the V E Commodore, I understood the wife’s solicitor to concede the value asserted by the husband at $12,400.
It might be easiest to start with items 17 & 18. In other cases there have been circumstances whereby assets that no longer exist have been included in the list prepared at the first stage of the process of identifying a just and equitable division of property. The same logic has been applied to exclude from the relevant list of liabilities, debts that do exist at the date of the hearing. Often legal fees are treated in that way. As I understand the current state of the authorities on this issue, there are no circumstances whereby add-backs must be included, nor are add-backs proscribed in all situations. However, they have been authoritatively found to be “the exception rather than the rule…” Cerini & Cerini [1998] FamCA 143.
Here the parties do not agree about the proper approach to items 17 & 18. Add-backs can cause a problem in property proceedings because they introduce a level of artificiality to the reasoning and calculations. The s 79 task is to change interests in property, not to rearrange the parties’ interests in assets that no longer exist.
I will not include items 17 & 18 in the balance sheet. Subject to the argument made by the wife about an uneven distribution, there is nothing to gainsay the general approach, that add-backs should be the exception rather than the rule.
Turning to the motor vehicles, the safest course is to include them at the identified values. The cars exist and have a value. The wife concedes the value of the husband’s car at $12,400. The husband claims that the wife’s car has a value of $25,000. The wife says that she used the lion’s share of $25,000 to buy her Mitsubishi Lancer. I will include it at that value.
Liabilities
Item 23 – the Pre-separation income tax liability of the husband
A pre-separation tax debt is a debt like any other. It is the price of funds used to make contributions. There is no reason to exclude such a debt. A method of quantifying this item was the subject of orders made by consent on 19 March 2015. It was proposed during final submissions that the parties quarantine $13,570 from the distribution until the mechanism established by those orders has done its work. Any surplus could then be distributed in the same proportions as the overall property settlement. I did not detect any significant objection to that course. That is the approach I will take.
Item 28 – Personal loan owed to B Brant
The claim in the balance sheet is for a liability owed to the wife’s father in the sum of $5,000. Suffice it to say that there is no probative evidence to support that claim. The alleged liability will not be included in the balance sheet.
Item 29 – Personal loan owed to G R Baldon
The claim in the balance sheet is for a liability owed to G.R Baldon in the sum of $3,200. The wife’s endorsement in the balance sheet is “NK”. However, during her cross-examination the wife conceded the claim. The claimed liability will be included in the balance sheet and the final orders will include provision for the debt to be paid out.
Item 32 – FY14 FY15 & FY16 D Pty Ltd accountancy and winding up costs
The claim in the balance sheet is for the accountancy and other winding up costs of D Pty Ltd Pty Limited. As I understand her case, the wife does not agree to the claim because the husband could and perhaps should have wound up the company some time ago. The wife tried to resign as a director of D Pty Ltd. The parties do not agree as to whether her resignation was received by the company.
The Shakespearean farce that represents the competing arguments and evidence about the wife’s efforts to resign from the company has greatly agitated the parties and paralysed the completion of financial statements and tax returns for the company. In my view none of that matters. D Pty Ltd was the parties’ company. It was incorporated in 2008, as a vehicle for the husband’s income. The parties were both directors of the company. In 2009 the company was also used for the wife’s income as a cleaner. There would have been some costs associated with winding up the company, whenever that was done. The company is a creature of the marriage and the costs of winding it up should be shared. I will provide for $10,000 to be retained in controlled monies account until the costs are known and paid. Any surplus can then be distributed in the same proportions as the overall property settlement. The estimated liability will be included in the balance sheet.
Superannuation
Ultimately there was no dispute about the parties’ superannuation interests.
I find that the relevant assets and liabilities are:
Assets
Owner Description Value 1 J T Trust Account (Proceeds of sale of the N Town Property and the L Town Property $258,243.74 2 H Motor vehicle 1 $12,400 3 W Motor vehicle 2 $25,000 4 W Woolworths shares $2,500 14 H E (holiday time shares) $10,500 Total $308,643.74
Liabilities
Owner Description Value 23 J FY 13 Pre-Separation Income Tax Liability Husband (Estimated) $13,570 29 H Mr B Baldon personal loan $3,200 32 J FY14 FY15 & FY 16 D Pty Ltd accountancy and winding up costs (Estimated) $10,000 Total $26,770.00
Superannuation
Owner Description Value 38 H BT Wrap $10,508 39 H BT Lifetime $12,503 40 H Colonial $5,031 41 H One Path $16,268 42 H ATO Held $913 43 H Rollover Fund $707 44 W AMP $32,340 45 W REST $7,730 Total $86,000.00
Net assets
The net assets of the parties have a value of $367,873.74 ($308,643.74 + $86,000 - $26,770).
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions by and on behalf of the husband and wife.
As to whether the Court should apply the considerations in s 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.
Here the submissions about contributions and adjustments were made on a global basis. I will adopt the same approach.
The parties agree that to the date of separation, their contributions were equal. As a result, the focus of the cross-examination and submissions was necessarily on the period after separation (after 19 November 2012). I say ‘focus’, because although equal, the pre separation contributions (made over a period in excess of 12 years) cannot be ignored when assessing the position overall. For example a small imbalance in the contributions made during less than three years after separation might not have any influence on an overall assessment of equality largely based on the contributions made over a much longer period prior to separation.
Section 79(4)(a) Contributions
Financial contributions to property, both direct and indirect were made by each of the husband and wife.
The parties had no significant assets at the commencement of their relationship. During the marriage, the husband and wife had paid employment. The husband’s income was generally at a higher rate than that of the wife but he was out of work for significant periods. His accountants estimated his 2013 income at $102,690. The husband had periods of unemployment after separation with the most recent period being from 30 June 2014 to May 2015.
In November 2012 the husband was working as a casual Patient Transport Driver earning about $900 per week. The wife was then employed at Woolworths earning at a similar rate.
In a sense the parties’ post separation contributions followed the pattern established during the marriage, with the husband making the greater financial contribution.
As to the application of income, it is conceded by the wife that the husband spent $19,620.92 on the N Town project (see annexure MB159).
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.
The husband undertook much of the physical work related to the N Town construction. He had help from friends and some work was performed by tradesmen. Relevant to the remaining dispute about contributions, the husband contends that he performed a significant amount of work after separation. The husband deposed[1] that from December 2012 to early March 2013 he continued to work on the N Town construction. He deposed that the following things were done:
·Internal electrical and plumbing work was commenced. Pipes and cables were put in place inside the walls and ceiling;
·Ceiling linings, ceiling insulation, and strengthening sections were installed;
·Wall insulation, internal wall cladding, and internal wall strengthening sections were installed;
·Cornicing was commenced;
·Gas, Electricity and Water pipes were installed underground between the property boundary and the house (approximately 40-50m in length);
·Gas was connected to the mains; and
·Conduit for telephone/internet cables was installed underground.
[1] Paragraph 416 of the husband’s trial affidavit
Some of that work presumably called for licensed tradespersons. The husband did not say that he personally performed some or all of the listed tasks but that is clearly his case.
The wife rejected the contention that the husband made a significant contribution to the completion of the N Town property. The wife says that she attended the property and a neighbouring property on a regular basis after separation and therefore was in a position to observe any progress. The wife says that even at the time of sale (May 2014), the plumbing fittings were not connected and the wiring was unfinished. It was put to the wife in cross-examination that an Occupancy Certificate was issued for the property prior to sale. In my view that would have conclusively resolved the factual dispute between the parties on this issue. It transpired later that there was no such certificate and quite properly, the husband’s counsel later apologised to the wife for putting an inaccurate proposition to her.
There is oath against oath about the extent of the work performed at the N Town property by the husband after separation. However, the wife was not at the property all the time between separation and sale and therefore cannot exclude the possibility that the husband performed some work. The conceded fact of the husband’s expenditure on work, fixtures and fittings lends some support to the husband’s case. Similarly, a response from Natural Gas[2] to a request by the husband that they connect the gas to the property, is not inconsistent with the husband’s claims. Although, for obvious reasons the photographs[3] put into evidence by the husband cannot corroborate his testimony, they too are not inconsistent with his evidence about the type of work he undertook at the property after separation. The husband completed Owner Builder Certification in 2011 and had Workcover certification. On balance I find that between separation and early March 2013 the husband performed work within the categories set out in his affidavit.
[2] Letter dated 3 January 2013 - Exhibit 10
[3] Exhibit 11
The husband had assistance from his father on the project.
The wife does not contend that she made significant non-financial contributions after separation.
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.
The wife had the primary parenting and homemaker role, with the parties’ arrangement involving her having part-time employment for periods so as to be available to the children. The wife’s contribution freed the husband to work full time and to make his non-financial contributions. For periods in the early part of the marriage, the wife was largely left to manage the household while the husband travelled for his work. That travel included periods in Country U.
Following separation the parties’ arrangements had the responsibility for parenting shared between them.
Conclusion on Contribution
It is agreed that the parties’ contributions between the commencement of their relationship and separation, were equal. That agreement makes sense of the evidence, whereby the parties had little at the start of their relationship and each of them had paid employment and undertook a parenting role.
The husband contends that his contributions made after separation exceeded those of the wife. Rather than a percentage, the husband contends that his contributions would be properly recognised if he was to be credited with about $86,000 in payments for joint expenses after separation and that thereafter the net pool is divided equally. By my calculation that amounts to an apportionment of contributions in the approximate proportions 63 per cent to the husband and 47 per cent to the wife. There is reference in the husband’s affidavit linking his work and expenditure on the N Town property and the apparent appreciation in its value. No attempt was made to press that argument in final submissions and sensibly so.
For the wife it is argued that the contributions after separation continued to be equal. In effect, it is the wife’s submission that after separation things continued as they had before, with the husband making more financial and non-financial contributions and the wife having paid employment and taking her share of the parenting load. By her purchase of a motor vehicle from her preliminary distribution from the controlled moneys account the wife made a direct contribution to that balance sheet item. The wife acknowledges that the husband made payments towards the construction.
The parties raised many issues in relation to expenditure, waste and misappropriation of funds after separation but no attempt was made to rationalise, support or test the competing claims.
The parties made contributions of value. They agree that their contributions were equal to the date of separation. It is possible that the husband’s contributions were greater than those of the wife after separation but in my view, and in the context of an overall assessment, the parties’ contributions should be seen as equal.
The other matters in Section 79
Once contributions have been assessed, the other factors in s 79(4) need to be considered. They are:
Section 79(4)(d)
Nothing comes to attention in respect of the effect of any proposed orders on the earning capacities of the husband and wife.
Section 79(4)(e) - Section 75(2) factors
The relevant matters in s 75(2) would seem to be paragraphs (b) and (o).
(a) the age and state of health of each of the husband and wife;
The wife is 35 years of age and the husband is 39. The husband says that he commenced consulting a psychologist in November 2014, in part to deal with the stresses of conflict with the wife. Otherwise there is no evidence about the parties’ health.
(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 weekly income is $1,085 made up of $1,000 in wages as a manager and $85 in family tax benefit. In her Financial Statement she records that she is to be paid $136 per week in child support but receives nothing. I note that the husband says that he pays $477.70 per week. I also note that the husband has child support arrears of $4,331.88[4]. The wife spends $150 per week on tax, $90 on superannuation contributions, $590 per week on rent, $90 in medical benefits, $195 as her share with Mr V of a contribution towards a holiday club, $135 on loan repayments and $670 on living expenses. The wife lives with Mr V who earns $950 per week. According to her Financial Statement she pays nothing for the benefit of others and no one pays anything for her benefit. That is unlikely to be true. Putting aside the children, Mr V presumably benefits from the wife’s rent, for example. One would anticipate that Mr V would make some payments from which the wife benefits. Beyond his income, there is no evidence about Mr V’s financial circumstances.
[4] Screen shot of the Child Support Agency website – exhibit 6
In addition to the debts brought to account in the balance sheet, the wife owes $7,000 on a personal loan in the name of herself and Mr V and owes half of a debt for the holiday club which amounts to $9,250.
The husband’s income is $2,096.00 per week from his employment as an analyst / programmer. He only commenced his most recent employment in May 2015. He spends $1,826 per week, including $587 in tax, $420 in rent, $45 in medical benefits, $55 and $54 per week in loan repayments, $30 on an ANZ credit card and $90 per week on an American Express card. His child support payments as at 7 August 2015 were $477.70 per week. The husband deposed that he was assessed to pay $1,173.17 per month and was also paying $900 per month for arrears. The husband anticipates a reduction in his child support liability. He lives with his wife, Ms R who earns $4,230 per week. According to his Financial Statement he pays $40 per week, in addition to child support, for the benefit of the children and nothing else for the benefit of others and no one pays anything for his benefit. It would be remarkable if that was true. One would anticipate that his wife, for example, would make some payments from which the husband benefits. Beyond her income, the husband deposed that his wife recently bought a property for $750,000 and financed it by borrowing $732,000. He says that she has about $100,000 in additional debts. There is no other evidence about the husband’s wife’s financial circumstances. The husband anticipates that his wife may leave the workforce, at least for a period, because they want to have children together.
In addition to the debts brought to account in the balance sheet, the husband owes $20,000 to Mr W and Mr X Baldon, $70,000 to Mr Y, $40,488 to his former solicitors, a total tax debt of $69,000, and nearly $30,000 in bank debts.
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
On 10 August 2015 final parenting orders were made by consent. The children will live week about with the parents during school term, for special days and the school holidays will be shared.
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) 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 above, what there is of 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:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)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 wife receives a family tax 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 of the parties’ standard of living. The wife complained that the husband favoured expenditure on his own interests during the marriage and did not support such expenditure for her or the girls. The wife notes that since separation the husband has had overseas travel. The husband minded the children on one occasion while the wife went overseas at an earlier time. The parties are each entitled to a decent standard of living for themselves and their daughters.
(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 application for maintenance.
(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;
Both parties have debts that are not brought to account in the balance sheet. Provision will be made for some debts to be paid directly. Otherwise the range of orders sought will allow the parties to address their indebtedness.
(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 studied during the marriage but he did so on a part time basis.
(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;
There is no evidence going to this criterion.
(l)the need to protect a party who wishes to continue that party's role as a parent;
Although not independent, the children are not infants and the parties have been able to make arrangements sufficient for them both to hold down full-time paid employment. In the future the children will share their time between the households.
(m)if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
I have set out above what there is of that evidence.
(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 are child support debt arrears of $4,331.88[5]. There will be an adjustment to the child support position as a result of the change in the children’s living arrangements. I do not know what the precise change will be but the husband’s child support liability will reduce.
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
[5] Exhibit 6
As was argued in the wife’s case, the $160,000 already released to the parties from the controlled moneys account was evenly distributed. In the event that the overall distribution favours the wife, then the husband was advantaged by that distribution.
Otherwise, nothing comes to attention here.
(p)the terms of any financial agreement that is binding on the parties.
There is no such agreement.
Section 79(4)(f)
Beyond those referred to above, there are no relevant orders made under the Family Law Act 1975.
Section 79(4)(g)
I have referred to the child support position.
Conclusion
The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:
·The husband’s salary is twice that of the wife;
·For the time being and perhaps indefinitely, the husband has a substantial financial resource in the form of his current wife’s income. If that income is interrupted, there is the potential for her to return to a substantial income; and
·$160,000 has already been equally divided between the parties.
Those factors argue for an adjustment in favour of the wife. In my view the allowance should be 5 per cent. 5 per cent represents about $18,390 and will make a difference between the parties of twice that sum.
Just and Equitable
The net assets of the parties have a value of $367,873.74 of which $86,000 is in the form of superannuation and $281,873.74 is in the form of non-superannuation assets.
If the assets are divided in the proportions 55 per cent to the wife and 45 per cent to the husband then the wife will have about $202,330.60 and the husband will have about $165,543.14. As to the form of the orders, the operative order will deal with the division of the fund held in the controlled moneys account.
Of the pool of assets identified by me, the wife has the benefit of and would like to retain:
Description Value Motor vehicle 2 $25,000 Woolworths shares $2,500 AMP Superannuation $32,340 REST Superannuation $7,730 $67,570.00
In order to bring her to 55 per cent of the net assets she would need to receive $134,760.60 which I will round out to $134,760.
That would leave the husband with:
Description Value Motor vehicle 1 $12,400 E (holiday time shares) $10,500 BT Wrap Superannuation $10,508 BT Lifetime Superannuation $12,503 Colonial Superannuation $5,031 One Path Superannuation $16,268 ATO Held Superannuation $913 Rollover Fund Superannuation $707 Payment from the Controlled Moneys Account $96,713.74 $165,543.74
In order to deal with the likelihood that the $23,570 withheld for debts will exceed the amount owing, I will provide for any residue to be distributed as to 55 percent to the wife and 45 percent to the husband. In the unlikely event that there is a shortfall, the wife will pay 55 percent of the shortfall and the husband, 45 percent thereof.
Conclusion under Section 79
This was a marriage that spanned more than 13 years and various contributions were made by each of the parties during that time and since. The parties shared the work of the marriage but overall their contributions were equal. An adjustment in favour of the wife is justified by reference to s 75(2) factors. In my view that will reflect a just and equitable division of their property.
I certify that the preceding one hundred and twenty nine (129) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 31 August 2015
Associate:
Date: 31 August 2015
Key Legal Topics
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Family Law
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Equity & Trusts
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Remedies
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Injunction
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