Barends and Jerram
[2020] FCCA 1044
•7 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BARENDS & JERRAM | [2020] FCCA 1044 |
| Catchwords: FAMILY LAW – Property settlement – de facto relationship – Contributions – flagging order for superannuation entitlement. |
| Legislation: Family Law Act 1975 (Cth), ss.90SM, 90SF |
| Cases cited: Jones v Dunkel (1959) 101 CLR 298 Jabour & Jabour [2019] FamCAFC 78 C & C (2005) FLC 93-220 West & Green (1993) FLC 92-395 AJO & GRO (2005) FLC 93-218 |
| Applicant: | MS BARENDS |
| Respondent: | MR JERRAM |
| File Number: | LNC 510 of 2019 |
| Judgment of: | Judge McGuire |
| Hearing dates: | 4 December 2019 & 22 April 2020 |
| Date of Last Submission: | 22 April 2020 |
| Delivered at: | Launceston |
| Delivered on: | 7 May 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Petersen |
| Solicitors for the Applicant: | Petersen Legal |
| Counsel for the Respondent: | Mr G Williams |
| Solicitors for the Respondent: | Glynn Williams Legal |
ORDERS
That the net tangible property of the parties be divided as to net 50% to the applicant and 50% to the respondent.
That within twenty-eight (28) days of the date of these Orders the solicitors for the parties bring in settled Orders in accordance with Order No. 1 hereof and pursuant to the findings of fact in these reasons together with the distribution of personalty, chattels and plant and equipment made by the parties and the parties each have liberty to apply in respect of this Order.
That there be a flagging Order in respect of the applicant’s superannuation entitlement or policy with Retirement Benefits fund (Tas) in favour of the respondent with a base amount equivalent to 30% of value.
That within twenty-eight (28) days of the date of these Orders and after giving requisite procedural fairness to the relevant superannuation fund, the solicitors for the parties bring in settled Orders in proper form as to a flagging Order in respect of the applicant’s superannuation policy and entitlement with Retirement Benefits Fund (Tas).
IT IS NOTED that publication of this judgment under the pseudonym Barends & Jerram is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT LAUNCESTON |
LNC 510 of 2019
| MS BARENDS |
Applicant
And
| MR JERRAM |
Respondent
REASONS FOR JUDGMENT
Applications
These are property proceedings in respect of the parties’ de facto relationship which continued from approximately early 2004 until separation under the one roof in January 2019 and with the respondent, Mr Jerram, vacating their home in July 2019.
The applicant commenced these proceedings in an application filed 22 July 2019. In her case summary filed 25 November 2019 the applicant sought orders inter alia as follows:
1.That there be de facto property settlement between the parties so as to effect an overall settlement of the net assets and liabilities of the parties excluding superannuation on the basis of 70% to the Applicant and 30% to the Respondent.
2.That there be no order as to the splitting or flagging of superannuation interests, nor any order as to de facto spousal maintenance.
By the conclusion of the evidence and in final submissions on 22 April 2020 the applicant’s Counsel urged for a 55% distribution of the net tangible assets in the applicant’s favour and 45% to the respondent.
He also conceded a flagging order in respect of the applicant’s superannuation entitlement of a sum of $50,000 in favour of the respondent.
The respondent has since the filing of his case summary document on 27 November 2019 always sought a distribution of net tangible assets on the basis of a 50/50 division together with a flagging order of the applicant’s defined benefit superannuation fund so as to ultimately give equality of all superannuation entitlements of the parties. That remained the respondent’s position after the hearing of the evidence.
Background Facts
This matter proceeded to hearing over two days being initially on
4 December 2019 and then on 22 April 2020.
The parties commenced their relationship in about 2003 or 2004. They did not marry. There are two children of the relationship namely, X (aged 12 years) and Y (aged 9 years). The children live between the parties by agreement but according to the applicant “effectively week-about”.
The applicant, Ms Barends, is usually employed as a tradesperson with Employer A. Her annual income is around $100,000 gross. Her evidence in April was of a back injury which limits her employment to a degree. She did not adduce any medical evidence of an expert nature. She was employed in this role throughout the relationship save and except for some paid maternity leave.
The respondent is in good health. He is self-employed in Employer B contracting to a local company.
The Evidence
Both parties gave evidence and were cross-examined. I found each of them to be honest and candid in their evidence with good historical recollection on the most part. They differed in respect of a number of relatively minor assets and liabilities from their relationship but each were impressive witnesses and notably able to make appropriate admissions and concessions.
Counsel for each of the parties helpfully filed exhibit books but otherwise neither adduced further evidence. I repeat that it was to the credit of these parties that they seemed able to reach agreement or make concessions in respect of relatively minor financial issues during the course of the evidence and the adjournment between December 2019 and April 2020.
The Issues
The remaining issues between these parties were few and discreet. Firstly, there is an issue as to what if any loading should be given to the applicant, Ms Barends, on account of contributions. Counsel argued that she should be given credit for superior initial contributions and for a superior financial contribution during the course of the relationship where it is conceded that her annual earnings were perhaps greater than that of the respondent, Mr Jerram.
Secondly, there is similarly an issue in respect of contributions as to superannuation entitlements. That issue is complicated to a degree where the applicant’s superannuation entitlement seems to be primarily a defined benefit fund with Retirement Benefits Fund (Tas) (RBF). Thirdly, there were minor evidentiary skirmishes between the parties in respect of the asset pool and what may have or may not have been included in valuations.
I should say that generally speaking there were deficits in the preparation of each party’s case. For example, there is no formal valuation of Ms Barends’ defined benefit fund as would normally be a requirement in such matters. Evidence as to simple issues such as current and relevant mortgage liabilities were not provided to the Court by the time of the completion of the evidence. Nevertheless, I am mindful that the property pool is not of great quantum and also that the parties legal representatives most likely and prudently sought to avoid significant costs in preparing the matter for trial.
The Relevant Law
Matters of property settlement involving de facto couples are dealt with under Part VIIIAB of the Family Law Act 1975 (“the Act”).
There is no issue in this matter as to the existence of a de facto relationship which of course endured for some 14 or 15 years and produced two children. Section 90SM of the Act provides specifically as to alternation of property interest of the de facto couples. Firstly, s.90SM(3) provides that the Court should not make an order under the section unless it is satisfied that, in all the circumstances, it is just and equitable to make that order. That consideration is to be carried out separately and not conflated with any issues of contributions under subsec.(4) although such considerations may be taken into account. In this matter I have no difficulty in determining that it is just and equitable to consider the alternation of the property of these parties given the length of their relationship, the fact of the two children, together with their various contributions.
The Court is then to firstly identify and allocate value to the property pool of the parties and each of them. Property is to include assets, liabilities and financial resources. Superannuation is to be ‘treated as property’ for the purpose of this exercise although not strictly being an asset in the sense that it is usually not capable of crystallisation.
The Court is then to take into account the contributions by or on behalf of each of the parties to the acquisition, conservation and/or improvement of the property. Contributions may be of a direct or indirect financial type or they may be of a non-financial type including as home maker or parent.
The next step for the Court after considering a distribution based on contributions is to then consider whether there should be any further adjustment to either of the parties by reason of the matters set out at s.90SM(4)(d)-(g) and including any relevant matters under s.90SF(3) of the Act.
Finally, and sometimes controversially, the Court should then ‘stand back’ and consider whether the actual orders proposed to be made are just and equitable and not just the simple percentage divisions.
The Property Pool
The parties are agreed as to the major assets being the property at C Street, Suburb D valued at $500,000 and a valuation of plant and equipment by Tasmanian Valuers and Auctioneers Pty Ltd (TVA) at $201,750. The respondent concedes in his financial statement sworn 28 August 2019 of a bank account with a not insignificant balance of $10,649. The applicant’s financial statement as of July 2019 discloses a minimal bank account balance.
Whilst the parties agreed the items to be valued by TVA and have distributed them accordingly at value, for reasons that escape me, they also agreed that other items would not be valued. They now have a dispute as to the nature of, and apparently the sobriety of this collateral agreement. I find the respondent’s evidence in respect of this dispute to be the more satisfactory. He says that the parties had a number of discussions but culminating in an agreement that a container and contents held by him would not be valued and similarly horses and horse paraphernalia in the possession of the applicant would not be valued as those values effectively were set off each against the other.
In circumstances where the evidence is unsatisfactory and incomplete, I prefer that the respondent provides the best evidence and indeed such would prima facie seem sensible and giving some justice and equity and where there was agreement as to the majority of property to be valued.
Secondly, there appears to be an issue between the parties on the face of the documents as to whether a Motor Vehicle 1 in the possession of the applicant is, as she says, encumbered to a quantum of $28,524. I think the confusion arises from the applicant initially claiming a liability for a loan from her parents for a motor vehicle in a sum of $10,000. By the end of the evidence she was not pursuing this liability to be included in the property pool and, in any event, when there was a dispute she did not adduce evidence from her parents to corroborate her assertion and I might then have easily drawn a negative inference pursuant to Jones v Dunkel.[1] I have no current valuation other than from the financial statements on the vehicle and therefore intend to simply set it off against the debt.
[1] (1959) 101 CLR 298 @ 320
Finally as to the tangible asset pool, the applicant, Ms Barends, asks the Court to include her credit card liability in the pool at its current sum of $18,791. The respondent says that the proper figure is $9,800. Again, there was little and no satisfactory evidence in respect of this dispute. Simple enquiries suggest that whilst the applicant asks the Court to include the current liability, her financial statement filed 22 July 2019, being more proximate to the date of separation, shows a liability then of $9,800. Without particularised explanation by Ms Barends of the increase of $9,000 then I prefer the figure suggested by the respondent at $9,800. My notes show that Ms Barends was cross-examined with respect of this matter and gave a generic response only that the increase was due to expenditure on the farm. This was at a time when her income was approximately $100,000 per annum and I do not therefore accept her evidence as being too reasonable or necessary expenditure post-separation[2].
[2] AJO & GRO (2005) FLC 93-218
I therefore find the property pool in the sense of tangible property to comprise of the following:
Asset
Value
C Street, Suburb D
$500,000
Plant and equipment
$201,750
Respondent’s bank account
$10,649
Applicant’s Motor Vehicle 1 (valued at $32,000 as per her sworn financial statement 22 July 2019).
NIL equity (see below)
Total:
$712,399
Liabilities
Westpac Home Loan (as of 28/2/2020)
$204,444
Motor Vehicle 1 - (car finance debt $28,524 but set off as against the likely value of the vehicle in the applicant’s hands)
NIL
Respondent’s line of credit
$23,084
Total Liabilities
$227,528
Superannuation Entitlements
Applicant’s Tas Plan accumulation fund
$15,000
Applicant’s – RBF (as agreed between the parties)
$422,080
Respondent – Super Fund E
$89,600
Total
$526,680
Considerations
The applicant, Ms Barends, now asks for 55% of the net tangible property pool. My understanding is that she does so on the basis of firstly, a superior initial financial contribution and, secondly, a superior financial contribution during the course of the relationship by reason only of her earnings being higher than those of the respondent.
I am troubled with the first limb. The applicant’s Counsel argues that she entered this relationship with equity in a property of approximately $70,000. Superficially, this might be worthy of some consideration despite the length of the relationship and the quantum of the property pool as it now sits. Nevertheless, and quite oddly, a casual perusal of the applicant’s own trial affidavit shows at [12] the following:
In 2004, Mr Jerram still owned a property at Town F that was then tenanted; he received these proceeds and his income. He lived in my property expense-free and did not pay mortgage repayments or board. He later sold his Town F property in 2006 for, I believe, about $60,000 nett. It was around this time that we refinanced and his name was put on the mortgage for the ‘matrimonial property’.
Although the applicant at [13] of that same affidavit deposes that the respondent used some of the proceeds of sale on items such as tools, shed contents, motor bikes etc, this issue was not seriously pursued or at all in her case. As such, I am left with the bald evidence of the applicant herself that she may have entered this relationship in 2003 or 2004 with equity in a property of $70,000 and the respondent with equity of $60,000. Whilst each of the parties had other personalty and chattels, there is no great discrepancy in their financial positions at that time. The relationship was of a medium term of approximately 15 years. There have been a myriad of other contributions, both direct and indirect, during the course of their relationship.
Secondly, Counsel for the applicant argues that she had greater earnings during the course of their relationship. This may well be the case although I note that the respondent was effectively self-employed and I have little or no evidence of his ‘real’ income as opposed to his taxable income. In any event, I am not troubled by any discrepancy if indeed there was any between the parties given that it has long been the settled authority of these Courts that a relationship such as that enjoyed and endured by Ms Barends and Mr Jerram is to be considered in the sense of a family unit and not to be the subject of detailed accounting or auditing as to the fine particulars of each party’s respective financial contributions. That is, it is reasonably expected that parties will enter into a relationship fully cognisant of their financial positions and potentials and it is not, and has never been, good law that a party will obtain a loading in respect of the contribution considerations simply because their pay packet may have been heavier than that of the other party. To the contrary, it is contribution of ‘effort’ that raises the interest of the Courts. Hence, the definition of “contributions” in the Act. Historically, loadings in respect of contributions have been made where one party may have wasted his or her earnings or have used them for personal luxuries without benefit to the family unit or, more commonly, where one or other of the parties may not have exhibited equality of effort in respect of their earning capacities. I have no evidence before me in this matter that there is or has been any inequality of effort.
Consequently, and in the circumstances of a relatively long relationship of some 15 years duration and where the differences in the parties initial contributions are minimal but where there has been a myriad of contributions since by each of them, both directly and indirectly, and taking into account the learned discussions of the Full Court on these issues in the recent decision Jabour & Jabour,[3] I am not persuaded that there should be any loading to either of these parties on account of contributions.
[3] [2019] FamCAFC 78
Each party, properly in my view, states in their case summary documents that they do not seek any adjustment for s.90SF(3) considerations.
Consequently, in respect of the tangible asset pool, I am of the view that it should be divided as to 50% to the applicant and 50% to the respondent.
I understand the parties are in agreement that the applicant, Ms Barends, will retain the C Street, Suburb D property together with the mortgage liability. I am also told that the parties have themselves effected a division of plant and equipment, personalty, chattels and motor vehicles pursuant to the TVA valuations. I am not told with any precision as to the dollar-effect of that distribution. As such, I intend to make an order only that the net tangible assets of the parties pursuant to these reasons be divided as to 50% to the applicant and 50% to the respondent. If the parties, or either of them, need more detailed orders as to distribution then they have leave to bring in such orders or alternative for one or the other to make consequent application under a liberty to apply.
Superannuation
Baldly speaking, the applicant asks for a flagging order in a quantum of $50,000 in favour of the respondent in respect of her RBF superannuation entitlement. The respondent asks for a flagging order of $150,000. Both parties, despite my concerns, ‘value’ the applicant’s RBF policy at $422,080. I am prepared to proceed on their consensus. Further, the applicant’s tender documents provide copious material from RBF. Whilst the parties each concede and agree that the fund is a defined benefit one, that material does not necessarily convince me. Nevertheless, it is not for me to challenge the consensus of the parties and I will proceed on that basis where they will, in any event, need to obtain procedural fairness consent from the fund. Indeed, the material shows that the applicant’s ‘withdrawal benefit’ totals $422,080 gross. The fund does offer some options in respect ‘converting all or part of the total sum amount to an indexed contributory scheme life pension’. I have recently located a helpful definition of ‘defined benefit fund’ as:
… provides benefits to their members according to a pre-set formula specified in the Trust Deeds. This formula usually takes into account the members length of service with an employer or years of membership of the fund and final average salary or level of salary near retirement.
I repeat that the material before me does not necessarily sit comfortably with that definition of a defined benefit fund.
In circumstances where neither party has given me any evidence of procedural fairness on the RBF, I propose to make findings only in respect of a relevant ‘base amount’ in respect of their proposed flagging order. It will then be for the parties to either separately or jointly give requisite procedural fairness to the fund and then to bring in a settled order to the satisfaction of the fund.
The applicant’s argument is that she was a member of RBF for some
7 years prior to the parties commencing cohabitation. The implication of that simplistic argument is that she has therefore contributed to a greater extent to that policy than has the respondent. With respect, that argument is overly simple when considering the authorities such as C & C [4] where their Honours found at [66]:
In the context of a consideration of the matters (in s79(4)) … the following matters may well be relevant:
·The relationship between years of fund membership and cohabitation;
·Actual contributions made by the fund member at the commencement of cohabitation ( if applicable), at separation and at the date of hearing;
·Preserved and non-preserved resignation entitlements at those times; and
·Any factors peculiar to the fund or to the spouse’s present and/all future entitlements under the fund.
[4] (2005) FLC 93-220
Again, the Court must be careful not to follow some formulaic mathematical approach but to consider contributions in an holistic manner.
Yet again, the evidence before the Court in respect of superannuation in this matter is seriously lacking. Whilst the applicant’s position is understandable in its simplicity, the respondent’s affidavit material does little to assist. He says at [31] of his affidavit of 22 November 2019 that he is responsible for his own superannuation in circumstances where he is a contractor. He does indicate that he has been ‘self-employed’ throughout the relationship with the applicant. Interestingly, Mr Jerram’s sworn financial statement of 28 August 2019 leaves blank at [20] any payments for superannuation. Similarly,
I am unable to locate in Mr Jerram’s affidavits or in the exhibits any material which evidences the quantum of his own superannuation entitlements at the commencement of cohabitation. I am therefore left in a situation where I do have evidence as to the applicant’s pre-cohabitation membership and contributions to her fund but I do not have that information in respect of Mr Jerram.
Counsel for the applicant mounted an argument that her contributions to the fund should somehow be weighed in her favour for the period during cohabitation, I cannot accept that argument given my findings above as to the nature of this 14 or 15 year relationship. In all the circumstances, I am of the view that the applicant should be given some loading in respect of her pre-cohabitation membership and contributions to the fund. Whilst not being trapped in the sense of a bald ‘West & Green’[5] approach it seems to me that the applicant has been a member of her fund now for some 23 years of which 15 were in cohabitation with Mr Jerram. I calculate, therefore, that cohabitation occupied at least 65% of her membership period. The applicant’s initial contribution of accrued superannuation entitlement is relevant but only as viewed in the context of the myriad of contributions from both parties although her initial contributions of superannuation brought into this relationship would in all likelihood have accrued in value. I have made findings above generally as to contributions to this relationship. I also note the accumulation funds of each party. I am of the view, therefore, that Mr Jerram should receive a ‘base amount’ from the applicant’s superannuation of approximately 30% of its value which I calculate as $126,624. I will order accordingly.
[5] (1993) FLC 92-395
I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Date: 7 May 2020
Key Legal Topics
Areas of Law
-
Family Law
-
Equity & Trusts
Legal Concepts
-
Procedural Fairness
-
Remedies
0
2
2