Barney and Barney
[2012] FMCAfam 487
•24 May 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BARNEY & BARNEY | [2012] FMCAfam 487 |
| FAMILY LAW – Property settlement – two pool approach – identification of assets – add-backs – gift from wife’s parents – contributions – assessment of s.75(2) factors – just and equitable. |
| Family Law Act 1975, ss.79, 75(2) |
| Hickey & Hickey (2003) FLC 93-141 Anthony Dickey, Family Law (5th ed, Lawbook Co., 2007) |
| Applicant: | MR BARNEY |
| Respondent: | MS BARNEY |
| File Number: | MLC 3637 of 2011 |
| Judgment of: | Baker FM |
| Hearing dates: | 20, 21, 22 and 23 February 2012 and 24 April 2012 |
| Date of Last Submission: | 24 April 2012 |
| Delivered at: | Hobart |
| Delivered on: | 24 May 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms Stoikovska |
| Solicitors for the Applicant: | Glezer Lanteri & Associates |
| Counsel for the Respondent: | Ms Tulloch |
| Solicitors for the Respondent: | Gibsons Solicitors |
ORDERS
Within 60 days the wife pay to the husband the sum of $260,356.00.
In the event that she is unable to obtain finance to pay the husband the sum referred to in paragraph 1, the wife shall within 14 days give the husband written notice and forthwith thereafter do all such acts and things as may be required to place on the market for sale (“the sale”) the property at Property L, for the best price obtainable, and for the purposes of effecting the said sale:
(a)The wife shall engage a real estate agent (“the agent”) to be agreed by the husband, and failing agreement such agent as the President of the Real Estate Institute of Victoria shall appoint, to sell Property L and further authorise the agent to speak to the husband in relation to the conduct of the sale;
(b)The terms, conditions and marketing for the sale, including the issue of whether or not the property should be sold subject to the current tenancy or with vacant possession shall be as agreed between the parties upon the advice of the agent;
(c)In the event that the parties agree that Property L shall be sold with vacant possession the wife shall forthwith do all such acts and things as may be required to give notice to the tenants;
(d)The sale price or reserve price (as applicable) shall be as agreed between the parties upon the advice of the agent and failing agreement shall be as determined by a valuer to be nominated by the President of the Real Estate Institute of Victoria (“the valuer”);
(e)The cost of and incidental to such appointment and valuation be borne equally by the parties; and,
(f)The wife execute a contract for sale by the solicitors having conduct of the sale at a price agreed between the parties, or failing agreement at a price nominated by the valuer.
In the event Property L has not sold by private treaty or auction within six months, the parties do all acts and things and sign all documents necessary to immediately relist Property L for sale by public auction again, on a date nominated by the agent.
(a)The reserve price for the purposes of such auction will be as agreed between the parties within 14 days after the date upon which Property L is listed for sale, or failing agreement a price determined by the valuer.
(b)In the event that the bidding at the auction does not reach the reserve price the wife may negotiate with the highest bidders or any other interested person and effect a sale at a price which is agreed between the parties, and if not agreed upon the advice of the valuer.
Upon the settlement of the sale of Property L (“the first settlement date”) the proceeds of sale be distributed as follows:
(a)First, to discharge the mortgage and any other encumbrances;
(b)Second, to pay all real estate agents costs, commissions and expenses of the sale (including the cost of the valuation referred to in paragraph 2(d) of these orders if applicable);
(c)Third, to pay any council rates outstanding;
(d)Fourth, to pay the conveyancing costs in relation to the sale; and
(e)Fifth, to the husband and to the wife such amount as may be required to divide between them the non-superannuation property pool as described in paragraph 65 of the reasons for judgment such that the wife receives 63% of the non-superannuation property pool and the husband receives 37% of the non-superannuation property pool, the said non-superannuation property pool being first adjusted to take into account:
(i) The sale price for Property L;
(ii) The costs of sale as per subparagraphs 4b and d above; and
(iii) Any CGT liability arising as a consequence of the sale.
In the event that the wife fails to comply with paragraph 4 of these orders, the wife to do all such acts and things and sign all such documents as may be required to forthwith sell the property at Property E, and upon the settlement of the sale the proceeds be distributed as follows:
(a)First, to discharge the mortgage and any other encumbrances;
(b)Secondly, to pay all real estate agents costs, commissions and expenses of the sale;
(c)Thirdly, to pay any council rates outstanding;
(d)Fourthly, to pay the conveyancing costs in relation to the sale;
(e)Fifthly, to pay to the husband the sum calculated pursuant to paragraph 4 of these orders plus penalty interest from the first settlement date to the date upon which such payment is made to him in full; and
(f)Sixthly, the balance then remaining to the wife.
Each party to have liberty to apply in relation to the sale of Property L and Property E.
Pending the wife paying to the husband the whole of the amount referred to in paragraph 1 or in paragraph 4 (plus any penalty interest owing on that sum) whichever may be applicable:
(a)the wife shall be solely responsible for the payments of the principal and interest of the mortgage secured over the properties and shall make all payments in respect of it; and
(b)the wife shall be solely liable for and indemnify the husband against all payments and liabilities in respect of the properties, including but not limited to rates, taxes and outgoings of whatsoever nature and kind.
Within 30 days the wife:
(a)Resign as a director of (omitted);
(b)Transfer her shares in (omitted) to the husband;
(c)Relinquish and transfer the husband any credit line account she has in (omitted);
Contemporaneously upon the payment to the husband pursuant to paragraph 1 or paragraph 4 as may be applicable:
(a)The husband provide to the wife or her solicitors executed withdrawals of caveat in registrable form with respect to the Property E and Property L properties;
(b)The wife provide to the husband or his solicitors executed withdrawals of caveat in registrable form in respect of Property B.
The husband relinquish in favour of the wife any right, title or interest he may have the following:
(a)The Property E property if it is not sold;
(b)The Property L property if it is not sold;
(c)The Commodore motor vehicle;
(d)The on-site caravan;
(e)Wife’s superannuation entitlements.
The wife relinquish in favour of the husband any right, title or interest she may have the following:
(a)Property B;
(b)(omitted);
(c)The (omitted) motor vehicle;
(d)The (omitted) motor bike;
(e)The husband’s superannuation entitlements, except as specified in this order.
That for the purpose of these orders:
(a)“the Superannuation fund” is the (omitted) Master Fund;
(b)The Applicant Mr Barney is the member spouse (client number (omitted)) account number (omitted);
(c)The Respondent Ms Barney is the non-member spouse; and
(d)“The Trustee” means the trustee(s), person(s) or corporation(s) responsible from time to time for the management or investment of the Superannuation Fund.
That paragraphs 14 to 20 of these orders are binding on the Trustee.
That the base amount to be allocated to the Respondent out of the Applicant’s interest in the Superannuation Fund shall be the amount of $34,554.00 at the operative time.
That in accordance with Section 90MT of the Family Law Act 1975 whenever the Trustee makes a splittable payment from the interest held by the Applicant in the Superannuation Fund the Trustee shall pay to the Respondent the amount which is calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2011 using the base amount calculated pursuant to order 18 hereof, and there be a corresponding reduction in the entitlement that the Applicant would have had but for these orders.
That paragraph 15 has effect from the operative time.
That the operative time for the purpose of these order is the beginning of the fourth business day after the day on which a sealed copy of these orders is served upon the Trustee by the Respondent.
That the Trustee and the parties in accordance with the obligations set out under the Family Law Act, the Family Law (Superannuation) Regulations 2011 and the Superannuation Industry (Supervision) Act and Regulations 1994, shall do all such acts and things and sign all documents as may be necessary to calculate the entitlement and make the payment in accordance with these orders.
That until the happening of any of:
(a)The establishment of a separate account in the name of the Respondent in the Superannuation Fund;
(b)The transfer of “rolling over” into another superannuation fund or superannuation account of the payment split created by paragraph 15 hereof; or
(c)The Respondent satisfied a condition of release and is paid the payment split which was created by paragraph 15 hereof; or
(d)The Respondent executing a waiver of rights within the meaning of Section 90MZA of the Family Law Act in relation to the payment split created by paragraph 15 the Applicant be and is hereby restrained by himself, his servants or agents from executing a Death Benefit Nomination in favour of any person or doing any other act or thing which would render any party of his interest in the Superannuation Fund a “non splittable payment” within the meaning of Regulation 12 of the Family Law (Superannuation) Regulations 2011.
That each party and the Trustee have liberty to apply in relation to the implementation of the orders affecting the Applicant’s superannuation interest.
Unless otherwise specified in this order:
(a)Each party be solely entitled to the exclusion of the other to all property in the possession of that party as at this date save as otherwise agreed between the parties in writing;
(b)Each party be solely liable and indemnify the other party against any liability encumbering any form of property to which that parties is entitled pursuant to this order;
(c)Each party remain solely liable for their respective debts.
IT IS NOTED that publication of this judgment under the pseudonym Barney & Barney is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 3637 of 2011
| MR BARNEY |
Applicant
And
| MS BARNEY |
Respondent
REASONS FOR JUDGMENT
Introduction
These were proceedings for property settlement pursuant to the Family Law Act 1975 (Cth) (“the Act”) between the applicant, Mr Barney (“the husband”) and the respondent, Ms Barney (“the wife”).
Background
The parties commenced cohabitation in late 1994 and married in (omitted) 1998. They first separated on 21 September 2006. Final orders were made in respect of parenting and property proceedings on 30 October 2006. The parties reconciled in September 2008 and finally separated in February 2011.
The husband is 36 years old and is (occupation omitted). The wife is 34 years old and is employed full-time with the (occupation omitted).
There are two children of the marriage, namely X born (omitted) 1998 and Y born (omitted) 2009. Parenting orders were made by consent at the commencement of the trial. These orders provided that the children live with each parent each alternate week.
At the time the parties commenced cohabitation, neither of them had assets of any significance. The wife agreed with the husband’s history of the assets owned by each of them in 2006 and 2008.
Pursuant to the 2006 orders the wife retained the following property:
a)The former matrimonial home at Property L, then valued at around $360,000.00 and encumbered by a mortgage to (omitted) of approximately $150,000.00;
b)Chattels;
c)A motor vehicle;
d)Superannuation entitlements of approximately $3,710.00.
The husband retained the following property;
a)$95,000.00 payment from the wife;
b)Chattels of nominal value;
c)Superannuation entitlements of $51,473.00 with (omitted) Super and $6,319.00 with (omitted).
The wife paid the husband the sum of $95,000.00 and she retained Property L. The husband purchased the property situated at Property B for $327,244.00 using the wife’s payment of $95,000.00, together with a loan of $260,000.00 from the Commonwealth Bank (“the CBA”). During the period of separation the husband also purchased a motor vehicle worth approximately $7,000.00 and a motor bike worth approximately $8,000.00.
During the period of separation the husband was employed by (omitted) as a (occupation omitted), earning around $95,000.00 per annum. The wife was employed as a (occupation omitted) by a business called (omitted), earning approximately $75,000.00 per annum.
Upon the parties’ reconciliation in September 2008 the wife owned the following:
a)Property L encumbered by a mortgage to (omitted);
b)Savings;
c)(year omitted) Mitsubishi Magna motor vehicle;
d)Chattels; and,
e)Superannuation.
The husband owned the following property;
f)Property B, encumbered by a mortgage to the Commonwealth Bank;
g)Savings;
h)Holden Commodore worth approximately $7,000.00;
i)Motor bike valued at approximately $8,000.00;
j)Chattels in Property B of nominal value; and,
k)Superannuation.
After the reconciliation in September 2008, the parties alternated between their respective addresses until they moved permanently to Property L in early January 2009. They undertook renovations to the home during this time which cost approximately $10,000.00 to $15,000.00.
Property B was tenanted and the rent was applied to the mortgage payments. The husband paid the rates and maintenance for the property. The wife paid the mortgage instalments in respect of Property L.
In around April 2010 the property situated at Property E was purchased from the wife’s parents for the sum of $450,000.00. It was agreed that the value of the property was $850,000.00. The wife’s parents moved to a retirement home.
To enable the purchase, the parties borrowed $600,000.00 from the CBA, and a mortgage was secured over Property L and Property E. A further sum of $120,000.00 secured over Property B was obtained in May 2010.
From the sum of $600,000.00 borrowed from the CBA to purchase Property E, the sum $450,000.00 was paid by the parties to (omitted), the operators of the retirement home where the parents were to live; the sum of $46,000.00 was paid for stamp duty on the conveyance; the sum of $67,000.00 discharged the mortgage secured over Property L and the balance sum of around $36,000.00 was used to reduce the loan.
Prior to the purchase of Property E, the husband’s mortgage secured over Property B was around $225,000.00. Soon after the purchase of Property E, the sum of $120,000.00 secured over Property B was obtained. This sum was used to pay for the start up costs of the husband’s business and for the cost of renovations to Property E and other living expenses.
After renovating Property E, the parties moved to live there in August 2010. Property L became tenanted.
In about April 2010, the parties agreed that the husband would commence his own business and resign from his employment with (omitted). He was released from his employment contract in September 2010. The sum of $30,000.00 was used to set up the business (omitted) (“the business”). The husband received bonuses and leave entitlements from (omitted) of $57,113.00 between June and October 2010.
The husband, through the business, designs and develops (omitted) for medium and large corporations. He also provides (omitted) consulting and (omitted).
The wife started full-time employment with the (omitted) in December 2010 on a package of $104,000.00 per annum with bonuses.
After separation in February 2011, the husband moved back into Property B. The wife remained living in Property E.
In February 2011 the wife removed the sum of $41,500.00 from the Property L and Property E mortgage account. On 8 June 2011 the husband withdrew the balance sum in the account of $35,171.00, pursuant to orders made by this Court on 8 June 2011.
On 8 June 2011 an order was also made that the wife, until further order, apply all rental income received by her from the Property L property towards the CBA mortgage encumbering the Property L and Property E properties and pay all instalments of the mortgage. The husband was ordered to pay the instalments of the mortgage secured over Property B.
Proposals
The husband proposed that the net non-superannuation assets and superannuation be divided equally.
The wife proposed that the net non-superannuation assets be divided 82/18% in her favour, and that the superannuation be divided equally.
Issues
The main issues in these proceedings were:
·Whether the wife’s parents gave the parties antique furniture at Property E.
·Whether the gift from the wife’s parents, of the value of Property E amounting to $400,000.00, was a gift to the wife solely or a gift to both the wife and the husband.
·Whether the amount of $60,803.00, held in two bank accounts in the control of the husband for the business (omitted), should be included in the pool.
·Whether the full amount of the variable mortgage secured over Property B of $242,685.00 should be included in the pool, or whether the amount of the mortgage of $171,443.00 outstanding at the date of separation should be included.
Evidence
The husband relied upon the following documents:
·His affidavits sworn 2 May 2011, 23 May 2011 and 16 February 2012.
·Two financial statements filed 2 May 2011 and 16 February 2012.
The wife relied upon the following documents:
·Her affidavits filed 15 June 2011 and 17 February 2012.
·Financial statement filed 17 February 2012.
·Affidavit of Ms F filed 17 February 2012.
Both parties were cross-examined.
Ms F was not required for cross-examination. Mr T, the solicitor of the wife’s parents, gave oral evidence and was cross-examined. He produced the file relating to the conveyance of Property E.
Counsel for the husband asked me to make findings of credit. I did not consider that this was a matter in which I needed to do so. I was of the view that both parties gave evidence to the best of their recollection and were witnesses of truth.
Relevant Law
Section 79(2) of the Act requires that any order made under s.79 must be just and equitable. Section 79(4) provides the matters which are to be taken into account when considering what order should be made.
Section 79(4) involves a four step exercise, [1] namely:
a)The identification of the property of the parties, their assets and financial resources.
b)The evaluation of the contributions.
c)The evaluation of the matters referred to in s.75(2).
d)A determination as to whether the result is just and equitable by considering the real impact of the orders in money terms.
[1] Hickey & Hickey (2003) FLC 93-141 and Ferraro & Ferraro (1993) FLC 92-335
It is a well accepted principle that, in property cases, the Court is not required to assess the contribution of parties with mathematical precision. The reason for this is that many of the matters which the Court is required to take into account pursuant to s.79(4) are not at all capable of precise calculation, even if such calculation were desired.[2] The Court is required to consider the competing claims and relevant considerations broadly and fairly when making orders that are just and equitable.[3]
[2] Anthony Dickey, Family Law (5th ed, Lawbook Co., 2007) at 532
[3] Ibid
Both parties are seeking splitting orders in respect of the superannuation. In my view it is appropriate to adopt the two pool approach and apply the section 79(4) considerations to both pools in accordance with the approach in In the Marriage Coghlan[4].
[4] (2005) FLC 93-220
Asset-by-asset or global approach?
In property proceedings, the Court may make such order as it considers appropriate. The usual approach is for the Court to consider the property of the parties as an overall pool. However, it is also open to the Court to consider the assets of the parties on an asset-by-asset approach. In Norbis v Norbis[5] Mason and Deane JJ, with whom Brennan J agreed, said:
…Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient.[6]
[5] (1986) FLC 91-712
[6] at 75,168
The parties were in a long relationship of around 12 years, not including the 2 year separation period. They have two children together. I am of the view that a global approach is appropriate.
Assets and liabilities – non-superannuation pool
The parties prepared a joint statement in respect of both pools.
Agreed list of assets and liabilities
Assets
Property E $940,000.00
Property L $600,000.00
Property B $430,000.00
(omitted) Commodore motor vehicle (W) $5,000.00
(omitted) vehicle (H) $10,000.00
(omitted) motor bike (H) $6,500.00
Onsite van at (omitted) $10,000.00
Mortgage funds taken by wife on 14 February 2011 $41,500.00
Mortgage funds taken by husband on 8 June 2011 $35,171.00
Liabilities
Mortgage to CBA secured against Property E and Property L
$598,416.00
Mortgage to CBA secured against Property B - fixed loan $125,583.00
Business credit card (20 January 2012) $583.00
The parties agreed not to include the wife’s personal loan of $25,672.00 in respect of her legal fees and the husband’s payment of legal fees of $12,798.00, which he drew down from the Property B variable loan.
Superannuation pool
The parties agreed that each party’s entitlements were as set out in their statements of financial circumstances as follows:
(omitted) superannuation (W) $29,352.00
NAB superannuation (W) $3,657.00
(omitted) Superannuation 59,212.00
(omitted) superannuation (H) $42,905.00
Total $135,126.00
Disputed assets and liabilities
Assets
Bank funds of (omitted)
$60,803.00 (W) $Nil (H)
Household contents in Property E
Nominal (W) $40,000.00 (H)
Household contents in Property B
Nominal (W) Not known (H)
Liabilities
Mortgage to CBA secured against Property B – Variable loan
$171,443.00 (W) $242,685.00 (H)
Counsel for the wife conceded that as the business savings of the husband should be included in the pool, it is just and equitable for the wife’s savings to be included in the pool. Her savings amount to the sum of $23,000.00.
Disputed assets and liabilities
Antiques at Property E
The husband said that it was agreed with the wife’s parents that any items left at Property E by them were to pass in ownership to the parties. He and the wife decided to keep the antique furniture, rather than donate it to charity or throw it away.
The wife said that in April 2010 when her parents agreed to sell Property E, this did not include the furniture. She agreed to keep the antique furniture at Property E. Her parents did not have room for it at the retirement home, but it could be sold in the future if they required money for any reason.
Ms F is the wife’s mother. Her evidence was not challenged. She was not required for cross-examination. Ms F deposed that the antique items, which were in dispute between the husband and wife, still belong to her and her husband. There was never any intention to give or sell these to her daughter. She has indicated to her daughter that the antiques may be sold if she and her husband require money in the future.
I accept the evidence of Ms F that she and her husband still own the antique furniture. I will not include its value in the pool.
Bank funds of (omitted)
The wife asserted that the funds of the business amounting to $60,803.00 should be included in the pool. This was opposed by the husband.
In around April 2010, the parties agreed that the husband would leave his employment and commence the business. The parties believed that the husband would be able to make more money than when he was employed. The husband was released from his employment contract in September 2010. He used equity in Property B to fund the start up costs. The husband and wife are joint directors and equal share holders in the business.
The husband said that he used the withdrawal of the sum of $35,000.00 from the Property L mortgage to pay business expenses and to partly provide him with a wage, given that the business was not in a position to pay him a regular income. The funds were depleted by February 2012. He also used $9,000.00 of the equity available from the Property B redraw facility.
In his affidavit filed 16 February 2012, the husband said that the amounts he injected into the business were outstanding in the form of a loan and that the funds in the business account were required in total to pay outstanding liabilities. He said that whilst the business is almost breaking even, he is yet to have the ability to draw a wage. The business is reliant on contractors, and he requires use of what funds are generated to pay contractors and running expenses.
The business charges fees for the husband’s time. The business pays contractors to undertake specialist (omitted) jobs, and other work that the husband cannot undertake. The business generated fees of $165,571.00 between January 2011 and 7 February 2012. It was not evident what amounts the business has paid to contractors or what the amounts of his other overheads were during that period.
The monies estimated by the husband due to be paid to creditors of the business to 31 March 2012 totalled $57,981.00.[7] These were estimates, as the business has not yet been invoiced by creditors for these. The estimated income from fees was not evident.
[7] Exhibit “H3”
The husband’s financial statement indicated that there were savings in the business bank accounts of $50,000.00. It was agreed by the parties that the sum is now $60,803.00.
The balance sheet of the business as at 30 June 2011 indicated cash assets amounting to $57,854.77 and an unsecured non-current liability of a loan from the husband of $59,593.25.[8] On 18 July 2011 the sum of $45,745.55 was paid to the husband’s CBA account from the business account.[9] The payment was described on the account as “owed by the business.”
[8] Exhibit “W11”
[9] Exhibit “H2”
The husband’s financial statement filed 2 May 2011 indicated that he was owed $15,000.00 by the business. His financial statement filed 16 February 2012 indicated that he was not owed any money from the business.
I consider that this evidence indicated that the husband’s loan to the business has been repaid to him.
The funds in the bank are the only asset of the business of any significance. I am not persuaded that these cash funds are required to be used to pay creditors. The business generates income from which the creditors are paid.
I consider that the bank funds should be included in the pool.
The Variable Loan Secured over Property B
The husband asserted that it was reasonable for him to draw down the sum of $71,000.00 post separation. The draw-downs from the Property B loan between 26 February 2010 and 13 February 2012 included payments towards the Property L and Property E mortgage, $2,000.00 for motor bike repairs, $10,000.00 for repairs on Property B, $10,000.00 to purchase a motor vehicle, $4,000.00 for repairs of the vehicle, $10,000.00 for the purchase of furniture, $5,500.00 for repayment of a credit card debt, $3,000.00 for insurances and $4,000.00 for school fees. A further sum of $12,798.00 was used to pay the husband’s legal fees. It was agreed that this sum paid for legal fees was not to be included in the pool.
The wife asserted that the balance of the variable loan should be included in the pool at the amount outstanding at the date of separation. The wife asserted that the increase in the loan was due to the husband accessing significant redraws during that period of time. He redrew these amounts as well as the sum of $35,171.00, which he received on 8 June 2011 from the Property L mortgage. He also had the benefit of the business since the end of 2010.
It was conceded by the wife during her Counsel’s closing address that the sum of $25,500.00 was reasonable expenditure by the husband.
During cross-examination, the wife admitted that the husband paid the instalments of the Property L and Property E mortgage until the court order was made on 8 June 2011. Her Counsel conceded that between February 2011 and April 2011, the husband paid four instalments of the Property L and Property E mortgage from the Property B redraw amounting to $12,659.00.[10]
[10] Exhibit “H7”
I am not persuaded that the husband’s post-separation expenditure was unreasonable. He was building up the business and injecting funds into it and paying for his living expenses. He had commenced the business only four months prior to separation. He did not draw a wage from the business prior to 30 June 2011. The wife agreed for him to leave his employment to commence the business. She knew it would take some time to build it up. She agreed that the only source of funds available to him was the redraw or the business. During this time the wife was earning an income of over $100,000.00.
I consider that the sum of $229,887.00 should be included as a liability in the pool. This is the current sum outstanding of $242,685.00 less the legal costs paid of $12,798.00.
I have regard to decisions such as Chorn & Hopkins[11], Cerini & Cerini[12] and Gollings & Scott[13], in assessing whether the husband reasonably expended the joint account monies. These decisions are authority for the principle that monies reasonably disposed of by the parties in the conduct of their lives post-separation should not usually be added back.
[11] (2004) FLC 93-204
[12] [1998] FamCA 143
[13] [2007] FamCA 397
In Cerini & Cerini[14], the Full Court said:
Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.[15]
[14] Op Cit
[15] Ibid at 46
The Full Court in Edgehill & Edgehill[16] said, when discussing post separation expenditure:
[16] [2007] FamCA 1102
We accept some accounting by the wife of her expenditure of the assets acquired during the marriage was warranted, as was some examination of her expenditure by the trial judge. However, we do not consider it was incumbent on her, or realistic to expect, that the wife should provide a precise audit of every item of her expenditure post separation. Nor do we accept that the trial judge was required to conduct such an audit process.[17]
[17] para 60
Conclusions as to disputed assets and liabilities
Assets
Property E $940,000.00
Property L $600,000.00
Property B $430,000.00
(omitted) Commodore motor vehicle (W) $5,000.00
(omitted) vehicle (H) $10,000.00
(omitted) motor bike (H) $6,500.00
Onsite van at (omitted) $10,000.00
Funds taken by wife from Property L mortgage account on 14 February 2011 $41,500.00
Funds taken by husband from Property L mortgage account on 8 June 2011 $35,171.00
Bank funds of (omitted) $60,803.00
Wife’s savings $23,000.00
Total $2,161,974.00
Liabilities
Mortgage to CBA secured against Property E and Property L
$598,416.00
Mortgage to CBA secured against Property B - fixed loan $125,583.00
Business credit card (20 January 2012) $583.00
Mortgage to CBA secured against Property B – Variable loan, less $12,798.00 for the payment of the husband’s legal fees
$229,887.00
Total $954,469.00
Total assets $2,161,974.00
Total liabilities $954,469.00
Net total $1,207,505.00
Property E
I will now consider the issue of the gift of $400,000.00 from Property E from the wife’s parents.
The normal rule is that the question of who is the recipient of a gift and therefore the contributor is determined by the original intention of the donor.[18] It is open to the Court to regard gifts from parents as a financial contribution made directly on behalf of the spouse relative to the acquisition of the property during the marriage, because in many cases the gift is made only because of that relationship.[19] However, there may be evidence that the donor intended to benefit both spouses, which may not justify such a conclusion. The first step is to determine the ownership of the gift and then to consider the application of s.79 of the Act to all of the property of the parties, including property received by way of gift.
[18] Anthony Dickey, Ibid at 514
[19] see Gosper & Gosper (1987) FLC 91-818 and Pelligrino & Pelligrino (1997) FLC 92-789, Kessey & Kessey (1994) FLC 92-495
The husband believed that the parties were purchasing the property from the wife’s parents for $850,000.00 of which $250,000.00 was to be a gift to both him and the wife, on the proviso that they agreed to financially assist the wife’s parents, in the event that they required assistance.[20]
[20] Affidavit of the husband filed 16 February 2012, at paragraph 41
The husband said he met the (omitted’s) solicitor, Mr Tesoriero, with the parties’ financial advisor, Mr M, to discuss the funds required and refinancing. Other than that one meeting with Mr Tesoriero, the husband was not privy to any other specific details and was unaware of an agreement being signed by the wife and her parents on 30 April 2010. During cross-examination, the husband denied that he was at the meeting when the wife signed the agreement and denied that he was aware of the agreement.
Contrary to this evidence, the wife said during cross-examination that the husband was present when she signed the agreement with her parents. She said that Mr Tesoriero explained to the husband that the agreement was between the wife and her parents and the documents were read out by him. Mr Tesoriero could not recall whether the husband was present when the agreement was signed.
In early 2010 the wife and her parents agreed that she would buy the Property E property from them for $450,000.00. The rates’ valuation of the property was $850,000.00 at the time, and her parents and she agreed to use that value for the transfer. They agreed that the balance sum of $400,000.00 was to be a gift to her, but that she would be responsible for providing them with financial support for the rest of their lives.
Ms F’s Evidence
Ms F is the wife’s mother. Her evidence was not challenged. She was not required for cross-examination.
She deposed that until 2010, when they moved to a retirement home, she and her husband lived in their family home at Property E. It was decided in January 2010 that Property E would be sold to their daughter, as they wanted it to remain in the family for sentimental reasons. Their daughter was unable to borrow the full amount of $850,000.00 to purchase Property E, however she was able to borrow $450,000.00. This was the amount of the bonds which she and her husband were required to pay to the aged care facility. She decided to accept that amount and to give the balance of the value of Property E property to her daughter.
Ms F further deposed that the condition of the gift to her daughter of the balance of the value of Property E was, that if at any time for the rest of their lives she and her husband were unable to afford an acceptable lifestyle, their daughter was to make up any shortfall. She instructed her solicitor, Mr Tesoriero to prepare an agreement acknowledging this condition. The agreement was signed on 30 April 2010.
Conclusion about Property E
At the date of the purchase of the property by the parties from the wife’s parents, its value was agreed as $850,000.00. It was purchased for the sum of $450,000.00. The wife’s parents intended to give the wife the balance equity in the property of $400,000.00. The husband believed that the purchase price was $850,000.00 and that the gift to the parties was $250,000. He believed that the gift was to both him and the wife.
I am not persuaded that the husband was present at the meeting with Mr Tesoriero or that he was aware of the contents of the agreement. I consider that it was probable that he believed he was to benefit from the gift. He helped the (omitted’s) move into the retirement home. He assisted the wife to pay for the purchase by jointly obtaining funds from the CBA.
The evidence of Ms F was not challenged. The husband was not a party to the agreement with the (omitted’s), and his name was not registered on the title of the property. I consider that the evidence indicated that the gift was intended by the wife’s parents to be a gift solely to the wife. The gift amounted to the sum of $400,000.00, as evidenced by the agreement.
In her closing address, Counsel for the husband conceded that the evidence indicated that the gift from the wife’s parents was a gift made solely to the wife, but the contributions made by the husband to Property E ameliorated the significance of the gift.
Contributions – non-superannuation pool
At the commencement of co-habitation in 1994, it was common ground that neither of the parties owned any property of significance. During the period up to their first separation, they accumulated the property which was divided pursuant to the property orders.
During the separation both parties earned income and paid the outgoings on their respective properties. The children lived with the wife for eight nights per fortnight and with the husband for six nights per fortnight. Both parties contributed to the parenting of the children during separation.
During the period of separation, the husband purchased a motor vehicle and a motor bike. He paid the stamp duty and legal expenses on the purchase of Property B.
At the date of the parties’ reconciliation, the husband was employed earning $95,000.00 per annum plus bonuses. The wife was employed earning approximately $75,000.00. In early 2010 she was earning $80,000.00 with (omitted). From April 2010 until December 2010, she worked part-time, until she started working full-time with the (omitted). Both parties contributed their income for the benefit of the family.
At 1 September 2008, the wife’s mortgage secured over Property L amounted to the sum of $182,000.00, which included the sum of $95,000.00, which the wife borrowed to pay the husband on the first separation. On 3 June 2010 the sum of $67,300.00 was outstanding. This sum was discharged when the parties borrowed $600,000.00 to purchase Property E. Between 1 September 2008 and 3 June 2010, the mortgage was reduced by $115,000.00. Both parties contributed to the reduction of the loan. The wife accepted that the loan could not have been reduced to that extent without the husband’s income.
The husband was earning an annual income of $120,000.00 at the date he left (omitted) in September 2010. He received bonuses and leave entitlements from (omitted) of around $57,113.00 between June and October 2010. The sum of around $46,000.00 was paid into the mortgage.
The husband said that the parties renovated the Property E property at an expense of between $48,000.00 and $50,000.00. The husband outlined the costs for each part of the work. The wife disputed that amount, and said that the renovations cost $30,000.00. They funded the renovations with their respective incomes and the husband’s bonuses. Half the tradesmen were paid in cash, others by electronic transfer, and some by credit card. The husband alleged that the wife had the documentation in relation to the cost of the renovations. During the trial she was asked to produce the documentation. She said that she could not find it, apart from one receipt for a small amount. The bulk of the renovations were done between April and July 2010.
I consider that the husband’s estimate of the costs is the more probable estimate. He was the person assisting the workmen with time and labour. He was able to provide a detailed account of the work. The wife did not give details of how she made her estimate.
The husband gave evidence that he assisted the tradesmen with the renovations. The husband said that he undertook a significant amount of the work himself each evening and weekend for about three months. He detailed the building works undertaken.[21] He pulled out the kitchen, retiled, installed the floating floor, painted and wall papered, as well as other general repairs and clean up. He estimated that he spent at least 240 hours and he accordingly saved a significant amount of the cost of labour. The husband’s evidence about this work was not challenged.
[21] Affidavit of the husband filed 16 February 2012, at paragraph 50
There was no evidence about what the wife did to assist with the renovations. During cross-examination, it was put to the husband that the wife indirectly assisted with the renovations. The husband said that the wife’s role was to do the decorations for her parents’ new home and his role was to do the renovations.
I accept the husband’s evidence about the extent of his labour and I consider that he made a significant non-financial contribution to Property E.In my view, he made a non-financial contribution greater than that of the wife, in respect of the work he did on Property E.
The husband also helped the wife to facilitate the purchase of Property E. He assisted with the move of her parents to the retirement home.
The husband made contributions in relation to homemaking and parenting. Once he started working from home, he cared for the children when the wife was at work.
After separation the husband paid the mortgage instalments in respect of Property B, which had increased after the purchase of Property E.
The wife made homemaking and parenting contributions. After the birth of X, she stayed at home for 9 months to care for her. She was engaged in full-time home duties from 2000 to 2006, when she was the primary carer of the children. In 2006 she returned to the workforce. Until 2010 she worked as a (omitted) and then as a (omitted). From April 2010 until December 2010 she worked part-time. The wife made financial contributions throughout the marriage for the benefit of the family.
The gift made by the wife’s parents in respect of Property E, which was a financial contribution made by wife, was a significant financial contribution made towards the end of the marriage. This contribution must be weighed with all the other contributions of the parties.
The gift to the wife was agreed between her and her parents on the basis of the value of Property E at $850,000.00 and the purchase price of $450,000.00, the amount needed by the (omitted’s) for bonds to the retirement home. The parties borrowed $600,000.00 from the CBA to enable the purchase. They further borrowed $120,000.00, secured on Property B. Around $50,000.00 was used to pay for renovations of Property E. The equity in Property E is currently $340,000.00. The value of the gift, the contribution made by the wife, needed to be considered in that context.
Since June 2011 the wife has paid the mortgage instalments in respect of Property L and Property E. Since separation the wife has paid the on site costs for the van at (omitted).
Currently the parties have shared care and spend equal time with the children. They meet the costs of the children whilst they are in their respective care.
Conclusion about contributions
The wife sought an 82/18 % division of the non-superannuation asset pool in her favour. Her Counsel submitted that the contributions of the parties were equal. The reason for the 32% adjustment was a result of her contribution of her parent’s gift of Property E.
Counsel for the husband submitted that there should be an equal division of the assets because the husband’s contributions ameliorated the contribution made by the wife’s parents.
I do not accept either party’s submissions. Taking into account all the contributions of the parties and the contribution of the gift from the wife’s parents, which is a financial contribution of the wife, I consider that on a contribution based entitlement, the wife should receive 65% of the pool and the husband 35%.
Contributions – superannuation pool
There was little evidence about the contributions of the parties to their superannuation entitlements.
At the commencement of the relationship, the parties had minimal superannuation. At the time of the separation in 2006, the wife had superannuation totalling approximately $3,710.00 and the husband had superannuation totalling approximately $57,792.00.
Both parties sought an equal division of the superannuation. I consider that is just and equitable in the circumstances of these parties.
The total superannuation pool amounts to $135,126.00. One half of this sum is $67,563.00. The adjustment is therefore $34,554.00 in the wife’s favour.
Both parties sought a splitting order. However, Counsel for the wife submitted that another option was to off-set the superannuation adjustment against any cash payment to be made to the husband.
Section 75 (2) factors
Counsel for the husband submitted that if the Court is against the husband by not ordering an equal division by way of a contribution based entitlement, there should be an adjustment in the husband’s favour for s.75(2) factors, so that an equal division of the assets is the result.
Counsel for the wife submitted that there should be no adjustment for s.75(2) factors.
Both parties are young and are in good health.
The husband is self-employed. The amount of income he currently earns was not evident. He has been successful in his professional life. He has tertiary qualifications in (omitted) and was employed as an (omitted) with the (omitted). He worked as an (omitted) and then as a (omitted) with (omitted).
The husband anticipated that the business would succeed and that he would be able to rely on his contacts, expertise and experience to build up the business. In the past he has received income of over $100,000.00. His self-employment provides him with taxation benefits.
I consider that the husband’s skills and experience will enable him to build up a successful business to provide him with an income of over $100,000.00.
The wife is earning approximately $104,000.00 per annum together with bonuses. She receives rental income from Property L of $22,250.00 per annum, from which she pays the mortgage to CBA. She will not receive that income if she has to sell Property L.
On a contribution based entitlement, the husband will receive non-superannuation assets to a value of $422,627.00 and the wife will receive non-superannuation assets to a value $784,878.00, a difference of $362,251.00. There is a significant disparity of the non-superannuation asset pool between the parties.
Both parties have commitments set out in their statements of financial circumstances. The wife has weekly commitments of $1,952.00. The husband has weekly commitments of $2,092.00.
The wife’s employer contributes to her superannuation in the sum of $182.00 per week. The husband has not contributed to his superannuation entitlements since leaving his paid employment. Both parties proposed that they have an equal amount of superannuation.
The parties are each currently assessed to pay no child support to each other until 30 June 2012.
I have included in the pool the husband’s post-separation expenditure of the variable loan secured over Property B. I take into account that this expenditure has reduced the asset pool and that the wife should receive some allowance for it.
I consider that there should be an adjustment of two percent, or $24,150.00, in favour of the husband. This will mean that the husband will retain non-superannuation assets to a value of $446,777.00 and the wife will receive assets to a value of $760,728.00, a difference of $313,951.00.
Is this Just and Equitable?
It is probable that the wife may need to sell Property L or Property E to pay the husband. The wife has obtained approval for a loan of $100,000.00. She said that is the maximum amount she can pay the husband. She has a strong sentimental attachment to Property E and wants to retain it. She can sell Property L so as to discharge all or the majority of the mortgage to CBA. The wife could then borrow against Property E to pay the husband. I will make orders to enable a sale to occur.
Both parties sought an equal division of the superannuation and a splitting order.
In her closing address, Counsel for the wife submitted that in the event that the wife was required to pay a cash sum to the husband of greater than $100,000.00, an option would be, not to make the adjustment for superannuation but to make a cash adjustment. The wife’s cash payment to the husband will reduce by $34,554.00 if I make that order.
As the wife can borrow only $100,000.00, a reduction in the payment by not making the superannuation splitting order will not assist her. The husband has a greater amount of superannuation. I consider that there should be a splitting order so that the parties will have an equal amount of superannuation, and they will each have real estate and other property. They will receive a mix of assets.
Assets to be retained by the husband
Assets
Property B $430,000.00
(omitted) vehicle $10,000.00
(omitted) motor bike $6,500.00
Funds taken by husband from Property L mortgage account on 8 June 2011 $35,171.00
Bank funds of (omitted) $60,803.00
Cash payment from wife $260,356.00
Total $802,830.00
Liabilities
Mortgage to CBA secured against Property B - fixed loan $125,583.00
Business credit card (20 January 2012) $583.00
Mortgage to CBA secured against Property B – Variable loan, less $12,798.00 for the payment of the husband’s legal fees
$229,887.00
Total $356,053.00
Net Total
Total assets $802,830.00
Total liabilities $356,053.00
Net total $446,777.00
Superannuation
The husband will also retain superannuation:
(omitted) Fund (H) $24,658.00
(omitted) superannuation (H) $42,905.00
Total $67,563.00
Assets to be retained by the wife
Assets
Property E $940,000.00
Property L $600,000.00
(omitted) Commodore motor vehicle $5,000.00
Onsite van at (omitted) $10,000.00
Funds taken by wife from Property L mortgage account on 14 February 2011 $41,500.00
Wife’s savings $23,000.00
Total $1,619,500.00
Liabilities
Mortgage to CBA secured against Property E and Property L
$598,416.00
Cash payment to husband $260,356.00
Total $858,772.00
Net Total
Total assets $1,619,500.00
Total liabilities $858,772.00
Net total $760,728.00
Superannuation
The wife will retain her superannuation:
(omitted) superannuation (W) $29,352.00
NAB superannuation (W) $3,657.00
(omitted) Fund superannuation $34,554.00
Total $67,563.00
I consider that this is a just and equitable result for the parties.
I certify that the preceding one hundred and twenty-five (125) paragraphs are a true copy of the reasons for judgment of Baker FM
Date: 24 May 2012
0
2
1