Barton and Barton
[2009] FMCAfam 1293
•7 December 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
BARTON & BARTON [2009] FMCAfam 1293
FAMILY LAW – Property – approach to assessing contribution – add backs – “external” contributions – section 75(2) adjustment – just and equitable order.
Family Law Act 1975, ss.75(2), 79
Gosper & Gosper (1987) FLC 91-818
Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Kessey & Kessey (1994) FLC 92-495
Norbis v Norbis (1986) 161 CLR 513
Pierce v Pierce (1998) FLC 92-844
Williams & Williams [2007] FamCA 313
Applicant: MR BARTON
Respondent: MS BARTON
File Number: SYC 4297 of 2008
Judgment of: Altobelli FM
Hearing dates: 22 & 23 July 2009
Date of Last Submission: 23 July 2009
Delivered at: Sydney
Delivered on: 7 December 2009 REPRESENTATION
Counsel for the Applicant: Mr Schonell
Solicitors for the Applicant: Abrams Turner Whelan Family Lawyers
Counsel for the Respondent: Mrs Cleary
Solicitors for the Respondent: Kinnear & Company ORDERS
NOTE THAT for the purpose of these Orders, the following expressions have the following meanings:
“Barton Investments” means the company Barton Investments Pty Ltd of which the Husband and the Wife are the directors, and which is the trustee of the Barton Trust.
“Barton Pastoral Co” means the farming and grazing partnership between the Husband, Ms B and Ms M t/as Barton Pastoral Co.
“Barton Super Fund” means the self-managed superannuation fund established by Deed dated 1 June 2001 of which the Husband and the Wife are trustees.
“Barton Trust” means the Barton Family Trust which is a discretionary trust created by Trust Deed dated 1 July 1982, of which Barton Investments Pty Ltd is the trustee, the Husband is the appointer, and the Husband, Wife and Children are discretionary beneficiaries, and which owns 25% of the shares in [E].
“[E]” means the company [E] Pty Ltd (of which the Husband is one of four equity directors and the Barton Family Trust is a 25% shareholder) that owns and operates the legal practice [S].
“Joint bank accounts” means the following bank accounts:-
·ANZ Access Cheque Account No. [1]
·ANZ Home Loan Interest Saver Account No. [2]
·ANZ Access Bank Account No. [3]
·ANZ V2 Account No. [4]
“Property K” means the property at Property K in the State of New South Wales, being more fully described in Certificate of Title Folio Identifier [omitted].
“Property T” means the property at Property T, Tamworth, being more fully described in Certificate of Title Folio Identifier [omitted].
“The Husband’s share portfolio” means the public company shares owned by the Husband as detailed in his Financial Statement sworn on 1 July 2009 and filed herein.
“The share loan” means the loan in the Husband’s name from ANZ Bank in the sum of $200,000 obtained to acquire the Husband’s share portfolio.
“Property V” means the former matrimonial home known as “Property V” at Property V, Tamworth in the State of New South Wales, being more fully described in Certificate of Title Folio Identifier [omitted].
“Property W” means the property known as Property W in the State of New South Wales, being more fully described in Certificate of Title Folio Identifiers [omitted].
1.That within twenty-eight (28) days of the date of these Orders, the parties do all acts and things and sign all documents necessary to place the former matrimonial home known as “Property V” on the market for sale by private treaty and do all acts and things and sign all documents necessary for the sale of Property V by private treaty.
2.To facilitate the conduct of the sale:
2.1.Property V will be placed in the hands of a reputable real estate agent practising as an auctioneer within the local area. If the parties cannot agree on the agent to be employed, the Husband will nominate three (3) such agents and the Wife will select one (1). If any further dispute arises as to the appointment of an agent, then the agent will be appointed by the President for the time being of the Australian Property Institute (New South Wales Division) (“the agent”);
2.2.Property V will be listed for sale at a price upon which the parties agree or failing such agreement at a price determined to be the fair market price by a registered valuer appointed by the President for the time being of the Australian Property Institute (New South Wales Division);
2.3.All costs incurred by the parties in appointing agents and obtaining valuations pursuant to Orders 2.1 and 2.2 will be shared equally between the parties and will be deducted from the proceeds of sale prior to a distribution of the net proceeds between the parties.
2.4.The parties will appoint a solicitor to act in relation to the sale. If the parties cannot agree on the solicitor to be appointed, the Wife will nominate three (3) such solicitors and the Husband will select one (1). If any further dispute arises as to the appointment of a solicitor, then a solicitor will be appointed by the President for the time being of the Law Society of NSW.
3.3.1 In the event that contracts for the sale of Property V have not been exchanged within two (2) months of it being placed on the market pursuant to Order 1 of these Orders, then unless the parties otherwise agree, Property V will be placed in the hands of the agent for sale by public auction.
3.2The parties will execute all such documents as may be necessary to authorise the agent to conduct such auction. Thereafter the parties will sign all documents and shall expeditiously carry out all necessary acts to sell Property V at such auction and to complete the sale if sold at such auction.
3.3The reserve price of such auction will be such amount which is agreed upon by the parties and failing agreement in that regard the parties agree to accept the recommendation of the agent.
3.4If the parties do not accept the recommendation of the agent as to the reserve price for the auction and cannot reach agreement between themselves as to the reserve price at least one week prior to the auction, then the parties will arrange for the reserve price to be determined by a registered valuer appointed by the President for the time being of the Australian Property Institute (New South Wales Division). The parties will share equally in the valuation cost and the valuation fees will be deducted from the proceeds of sale prior to a distribution of the net proceeds between the parties.
3.5The parties agree to pay to the agent any sum reasonably required for advertising expenses in relation to the auction. If one of the parties advances all of the said expenses they will be reimbursed from the proceeds as a cost of sale before a distribution of the net proceeds between the parties takes place.
3.6The parties will attend at the auction sale and in the event that the property is not sold at such auction then the parties will negotiate with the highest bidder. In the event that an offer is made below the agreed reserve price and the parties do not agree that it should be accepted, then Property V will be listed for sale by auction every four months until sold, such subsequent auctions to be conducted by the same agent but at each such subsequent auction the reserve price will be 5% less than the reserve price at the previous auction.
3.7The parties will be entitled to bid at the auction.
3.8The parties will sign all necessary documents and will expeditiously carry out such necessary acts required to sell Property V at either auction.
4.That upon completion of the sale of Property V pursuant to Orders 1 or 3 of these Orders, the proceeds of sale will, subject to Orders 2 and 3, be paid in the following manner and priority:
4.1.In payment of agent’s fees and commission due on the sale;
4.2.In payment of legal costs on the sale;
4.3.In payment of any taxes and/or duties arising by virtue of the sale;
4.4.In payment of any debt that is secured over the Property K or Property T properties;
4.5.In payment to the Wife of $257,186;
4.6.In payment to the Husband of the balance then remaining.
5.That within seven (7) days of the date of settlement of the sale of Property V, the Husband do all acts and things and sign all documents necessary to transfer to the Wife all of his right title and interest in Property K including signing and handing to the Wife a Transfer in registrable form whereupon the Wife will indemnify and keep indemnified the Wife from and against all and any further liabilities in relation to Property K including rates, taxes and other outgoings.
6.That within twenty-eight (28) days of the date of these Orders, the Wife will do all acts and things and sign all documents necessary to:
6.1.Resign as a director or other office holder of Barton Investments and/or the Barton Trust,
6.2.Transfer to the Husband any other interest she may have in Barton Investments and/or the Barton Trust,
whereupon the Husband will indemnify and keep indemnified the Wife from and against any liability she may have arising out of her involvement with Barton Investments or the Barton Trust.
7.In accordance with paragraph 90MT(1)(b) of the Family Law Act, 1975:
7.1.The Husband is allocated a base amount of $146,176 out of the Wife’s interest in the Barton Family Superannuation Fund (“the Fund”); and
7.2.The Wife’s entitlement in the Fund is correspondingly reduced.
8.The Trustees of the Fund must do all acts and things and sign all such documents as may be necessary to:
8.1.Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement created for the Husband in paragraph 7 of these Orders; and
8.2.Pay the respective entitlements whenever the Trustee makes a splittable payment out of the Wife’s interest in the Fund.
9.Paragraphs 7 and 8 of these Orders have effect from the operative time which the date of the making of these Orders.
10.After service by the Trustee of the payment split notice pursuant to r.7A.03 of the Superannuation Industry (Supervision) Regulations 1994:
10.1.The Wife shall do all such acts and things and sign all such documents as may be necessary, including but not limited to, exercising her request pursuant to r.7A.06 of the Superannuation Industry (Supervision) Regulations 1994 for the transfer of the transferable benefits from the Fund to a regulated fund of the Wife’s choosing (“the Wife’s new super fund”); and
10.2.The Husband shall do all such acts and things and sign all such documents as may be necessary, including but not limited to, exercising his request pursuant to r.7A.05 of the Superannuation Industry (Supervision) Regulations 1994 for the creation of a new interest in his name in the Fund.
11.Following the receipt by the Trustee of the elections made by the Husband and Wife as contemplated by paragraph 10, the Husband and Wife in their capacities as Trustees shall cause a meeting to be held in accordance with the Rules of the Superannuation Fund Trust Deed of the Fund and in that meeting shall:
11.1.Authorise the transfer of the transferable benefits to the Wife’s new super fund; and
11.2.Authorise the consolidation of the Husband’s interest in the Fund.
12.In the event of any dispute arising between the parties in the exercise of their powers as Trustees of the Fund, the parties shall appoint an arbitrator nominated by the President of the Institute of Chartered Accountants.
13.Pending the transfer of the transferable benefits from the Husband to the Wife:
13.1.Each party is restrained from dealing with, charging, encumbering or disposing of any of the assets of the Fund other than in accordance with the terms of this Order; and
13.2.Each party shall immediately revoke any binding death benefit nomination already made and each party be and is hereby restrained from:
13.2.1.Making any binding death benefit nomination in favour of a child described in regulation 13 of the Family Law (Superannuation) Regulations 2001;
13.2.2.Making any other nomination where the effect of such nomination would be to render any splittable payment not splittable; and
13.2.3.Doing any such act or thing which would defeat, extinguish or reduce the entitlement of either party under this order.
14.Before the close of the meeting of the Trustee as contemplated by paragraph 11 of these Orders, the Wife shall do all such acts and things and sign all such documents as may be necessary to resign as a Trustee of the Fund.
15.That within twenty-eight (28) days of the date of these Orders, the Wife will do all acts and things and sign all documents necessary to transfer to the Husband the whole of her interest in the Joint bank accounts.
16.That the Husband is otherwise entitled to retain sole legal and beneficial ownership to the exclusion of the Wife of:
16.1.His interest in [E];
16.2.His interest in Barton Trust;
16.3.His interest in Barton Investments;
16.4.His interest in Barton Pastoral Co;
16.5.His interest in Property W;
16.6.The Husband’s share portfolio;
16.7.All other items of property and personalty including motor vehicles, bank accounts, money, shares, furniture, jewellery and personal effects presently in his possession and/or located at Property V (other than items belonging to the children of the parties which will be delivered to Property T upon completion of the sale of Property V); and
16.8.Any entitlements under any superannuation fund of which he is or has been a member.
17.That the Wife is entitled to retain sole legal and beneficial ownership to the exclusion of the Husband of:
17.1.Her interest in Property T and the Property K property;
17.2.All other items of property and personalty including motor vehicles, bank accounts, money, shares, jewellery and personal effects presently in her possession and/or located at Property T and Property K; and
17.3.Any entitlements under any superannuation fund of which she is or has been a member.
18.That the Husband and the Wife shall be and remain liable for any debts in his or her own name at the date of these orders and in this respect shall indemnify and hold harmless the other from any liability in relation thereto.
19.Within 14 days, the husband do all things necessary to cause an amended tax return to be filed which accurately discloses the investment income he received from [W] Trust. Any refund received is to be paid to the wife as to a 50% share.
20.That in the event that either party refuses or neglects to execute any document or documents whatsoever pursuant to these Orders the Registrar of the Court be appointed pursuant to section 106A to execute such documents in the name of such party and do all acts and things necessary to give validity to the operation of the said documents.
21.The parties have liberty to restore the matter before Federal Magistrate Altobelli on 7 days notice as regards the interpretation, implementation and enforcement of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Barton & Barton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEYSYC 4297 of 2008
MR BARTON Applicant
And
MS BARTON Respondent
REASONS FOR JUDGMENT
Introduction
1.This is an application for alteration of property interests under section 79 of the Family Law Act 1975, commonly known as an application for property settlement. The applicant is the 53 year old husband and the respondent, his 50 year old wife. The husband is [employed int the Legal Industry], and the wife is [employed in the Healthcare Industry]. They married [in] 1980, separated in either September or October 2007 (nothing turns on this), and have two adult children, [X], 22 years old and [Y] 18 years old. This is a case where the main issue is not so much disputed facts, but about disputed interpretations of those facts and the legal consequences of the same. The husband submits that I should adopt an asset by asset approach to assessing contribution, and to treat the assets in three pools. The wife submits that I should adopt a global approach to the assessment of contribution. On the applicant husband’s approach he would receive a property settlement of about 74 per cent. On the wife’s approach she would receive a property settlement of about half.
Background
2.The year before the parties married, the husband was admitted as a [occupation omitted]. He is now a partner in that [business]. It is common ground that, for all practical purposes, at the time of marriage their assets were negligible. Throughout the marriage the husband worked as a [omitted], becoming a partner in 1982. The wife initially worked as a [omitted] and commenced and then completed a [omitted] degree which, in the fullness of time, enabled her to become qualified and registered as a [omitted].
3.The history of the acquisition of assets during the marriage is relatively uncontentious and thus will only be summarised in the present context.
4.For the first 18 months of the marriage the parties lived rent free in accommodation owned by the husband’s parents. They then purchased the first matrimonial home at Property F, using joint savings and borrowings. When the husband became a partner in his legal practice he borrowed a sum of money which was secured against the matrimonial home. At the same time the Barton Family Trust was established. The matrimonial home was renovated and extended. The first child, [X], was born in 1987. In 1988 the wife’s mother died leaving her an inheritance of either thirty or thirty-five thousand dollars (nothing turns on this).
5.In April 1990 the parties purchased a home unit at Property K using joint savings including the wife’s inheritance from her late mother, together with borrowings from the ANZ Bank. Between the date of purchase in 1990 and 2004 this property was continuously tenanted.
6.The parties’ second daughter, [Y], was born in 1991. In 1996 the wife commenced what is her present employment with [omitted]. In 1996 the husband took over the running of a property called Property W, which had hitherto been operated by the husband’s uncle Mr B, together with the husband’s two aunts. Initially in 1996 he spent about one day each fortnight at the farm. Throughout the course of the rest of the marriage he spent at least that amount of time at the farm, and occasionally more than that.
7.
In 1997 the wife became conditionally registered as a [omitted] and in that year they purchased the former matrimonial home called
Property V. The property was financed using savings together with borrowings from the ANZ Bank. The first matrimonial home at Property F was subsequently sold and its sale proceeds used to pay out the bridging loan. The balance was retained as savings. In October 1997 the husband’s aunts provided him with a cheque for $30,000 in gratuitous recognition of his efforts in assisting them with the management of the property over the previous years. These payments continued on an annual basis. I accept the husband’s evidence that the total amount that was received by the husband from his aunts during the relevant period amounts to $270,000. These amounts were, for all practical purposes, tax free gifts.
8.In 1999 and subsequently the parties carried out quite extensive renovations to the former matrimonial home using their own savings together with some borrowings. In 1999 the wife became fully registered as a [omitted].
9.In 2001 the parties established the Barton Family Superannuation Fund and the husband commenced share trading for the said superannuation fund.
10.In June 2003 the husband’s mother died and he received, by way of inheritance, $321,654. He used this to discharge the ANZ mortgage over the Property K property. During that year the husband borrowed about $100,000 from the ANZ Bank to finance his share trading activities. Also that year the loan of $75,000 that had been borrowed from the ANZ Bank to finance the renovations to the former matrimonial home was paid off from the funds received by the husband, either from his inheritance, or the moneys provided by his two aunts, or from joint savings. In 2004 the rest of the ANZ loan used to finance the renovations to the former home was also paid off using the sources referred to above.
11.In October 2004 the tenants at Property K were asked to vacate the property so that both the husband and wife could make Property K their Sydney base. They spent some money refurbishing the property and this was funded from the husband’s inheritance. At this stage it seems as if the husband was still left with about $130,000 from his inheritance.
12.In 1996 there were some significant and partly disputed transactions between the husband and his two aunts, involving the partnership that was used to carry on the business of farming and grazing on the Property W property. It is certainly the case that a partnership was established between the husband and his two aunts under the business name Barton Pastoral Co, but there is an issue between the parties as to whether a liability owed by the husband to the aunts arising from the establishment of the partnership is a bona fide debt that ought to be included in the pool of assets for section 79 purposes. In addition, that year the Property W property was transferred to the husband as sole proprietor. There is an issue between the parties about the value of this property and, in particular, whether the value should reflect what the husband asserts is a life interest in the property that one of his aunts retains.
13.In October 2007 a property at Property T was purchased in the wife’s sole name. There is a dispute between the parties whether the equity was provided out of joint savings or by the husband himself. Nothing much turns on this because it is highly likely that any joint savings that the parties had at that time were sourced, ultimately, from monies provided by the husband’s aunts or from the husband’s inheritance. The wife moved to this property shortly after separation and continues to live there.
14.During the post separation period there were a number of transactions that are in contention. For example, there is a dispute between the husband and the wife about who, and using what source, contributed to the ongoing expenses of the family, including the education and accommodation expenses for the two children. In addition, the husband received two quite significant tax returns which he asserts have been expended on living expenses but which the wife asserts should be added back to the property pool.
15.The evidence in this case consisted of the affidavits of the husband and the wife, together with some valuations which were, subject to the issue of the life estate in Property W, not in contention. Both the husband and the wife gave oral evidence.
Issues
16.Having regard to that broad statement of relevant background, the following issues emerge from this case.
·In relation to the constitution of the pool of assets, there is the issue about the valuation of the Property W property.
·There is an issue about whether a debt of $115,358, which the husband asserts is owed to his aunts, should be included in the asset pool.
·There is an issue about whether a capital gains tax liability relating to the possible sale of the Property K property should be included.
·There are some issues about whether the wife’s Visa card should be included in the pool, and the treatment of legal fees, as well as some draw-downs by the wife on bank accounts in the post separation period.
·There is also an issue about the treatment of tax refunds received by the husband after separation.
17.In relation to the assessment of contribution, there is a major dispute as between the parties as to whether I should adopt a global approach, or an asset by asset approach. Once I determine which is the most appropriate approach on the facts of this case, I will then need to assess contribution including, possibly, post separation contribution. In this regard, however, it should be noted that both parties through their counsel conceded that apart from “external” contributions as at the date of separation, the contributions made by the husband and the wife should be treated equally. This is an appropriate concession to make and is certainly the finding I would have made having regard to the evidence.
18.There is an issue about the assessment of an adjustment under section 75(2) of the Act. The husband asserts that I should make a lump sum adjustment in favour of the wife, and the wife asserts that it should be expressed as a percentage of the global pool. Finally, there is an issue between the parties in relation to the framing of the orders, and how the final outcome is just and equitable as between the parties. In this regard I will need to determine, for example, how superannuation should be split as opposed to non-superannuation assets.
Applicable law
19.This is an application that is governed by s.79 of the Family Law Act. Pursuant to s.79(1) the Court is required to make an order as it considers appropriate altering the interests of the parties to the marriage in property. Section 79(2) requires such an order to be just and equitable. The matters that need to be taken into account are set out in s.79(4):
(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.
20.Thus it can be seen that s.79(4) is both retrospective and prospective in its scope and operation. Paragraphs (a), (b) and (c) are retrospective in the sense that a historical assessment of contribution is required. Paragraphs (d), (e), (f) and (g) are prospective in the sense of requiring a consideration of how an order takes into account the future.
21.Section 79(4) requires the court to consider contribution in the broadest sense: financial, non-financial, made to the welfare of the family, direct, indirect, and directed to acquisition, conservation and improvement of property.
22.The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
23.The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
24.One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
25.Another issue in this case is how, precisely, I should weigh and assess the initial contribution of the parties in bringing property into the marriage. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
26.Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
Issues arising out of the identification of the pool of assets
27.At the commencement of the hearing I was provided by counsel for the husband, with the consent of counsel for the wife, with a balance sheet document which, it was contended, identified points of agreement and disagreement, and thus helped to establish what were the contested issues in relation to the pool of assets. It was provided to me as a working document and was, indeed, most useful. I set out below that document, entitled Balance Sheet, with the only alteration being that I have numbered each of the assets, liabilities, superannuation and add backs, for ease of identification. I have not reproduced the footnotes referred to in the last column.
| Balance Sheet | |||||
| Ownership | Description | Wife's | Husband's | Notes | |
| Value | Value | ||||
| ASSETS | |||||
| 1 | Joint | Property V, Tamworth | $820,000 | $820,000 | Agreed - single expert |
| 2 | Joint | Property K | $565,000 | $565,000 | Agreed |
| 3 | Joint | Furniture at Property V | $17,765 | $17,765 | Agreed - single expert |
| 4 | Joint | Furniture at Property K | - | - | Included in value of Property K |
| 5 | Joint | Bank accounts | $160 | $160 | See note 1 |
| 6 | Husband | Property W | $2,450,000 | $1,900,000 | See note 1A |
| 7 | Husband | Barton Pastoral Co | $48,850 | $48,850 | Agreed |
| 8 | Husband | Interest in [S] | $353,400 | $353,400 | Single expert - subject to X exam |
| 9 | Husband | Barton Investments P/L | $41,451 | $41,451 | See note 2 |
| 10 | Husband | Bank accounts | $30,013 | $30,013 | See note 3 |
| 11 | Husband | [A] Trust Account | $35,614 | $35,614 | Agreed |
| 12 | Husband | Share portfolio | $167,825 | $167,825 | Agreed subject to X exam |
| 13 | Husband | 1998 Mercedes 300D (net of lease) | -$3,179 | -$3,179 | Agreed |
| 14 | Husband | 1984 Mercedes | $3,700 | $3,700 | Agreed |
| 15 | Husband | 1984 WB 1 tonner | $3,700 | $3,700 | Agreed |
| 16 | Wife | Property T | $350,000 | $350,000 | Agreed |
| 17 | Wife | Bank accounts | $1,849 | $1,849 | Agreed subject to evidence (see note 4) |
| 18 | Wife | Furniture at Property T | $18,000 | $18,000 | Agreed |
| 19 | Wife | [K] & Co Trust Account | $10,961 | $10,961 | Agreed subject to evidence |
| 20 | Total | $4,915,109 | $4,365,109 | ||
| LIABILITIES | |||||
| 21 | Husband | ANZ share loan | $200,000 | $200,000 | Agreed subject to X exam |
| 22 | Husband | Ms B & Ms M | $0 | $115,358 | Not agreed |
| 23 | Husband | Debt to Barton Investments P/L | $41,451 | $41,451 | Agreed |
| 24 | Husband | Interest on loan from Barton Investments for y/e 30.6.10 | $3,917 | $3,917 | Agreed |
| 25 | Husband | Tax payable upon declaration of Barton Investments dividend | $7,300 | $7,300 | Agreed |
| 25 | Husband | Tax payable on [E] dividend declared y/e 30.6.09 | $28,000 | $28,000 | Agreed |
| 27 | Husband | CGT Property K | $0 | $26,528 | Agreed - single expert but wife asserts it should be excluded if one party retains Property K |
| 28 | Wife | CGT Property K | $0 | $25,728 | Agreed - single expert but wife asserts it should be excluded if one party retains Property K |
| 29 | Wife | M/g over Property T | $302,239 | $302,239 | Agreed subject to evidence |
| 30 | Wife | NAB Personal Loan | $19,795 | $19,795 | Agreed |
| 31 | Wife | ANZ Visa | $2,500 | $0 | See note 5 |
| 32 | Total | $605,202 | $770,316 | ||
| SUPERANNUATION | |||||
| 33 | Husband | Barton Family Superannuation Fund | $156,585 | $156,585 | Agreed |
| 34 | Wife | Barton Family Superannuation Fund | $351,993 | $351,993 | Agreed |
| 35 | Wife | First State | $41,895 | $41,895 | Agreed |
| 36 | Total | $550,473 | $550,473 | ||
| ADD BACKS | |||||
| 37 | Husband | Legal fees paid | $47,476 | nr | See note 6 |
| 38 | Wife | Legal fees paid | $23,854 | $23,854 | Agreed subject to evidence |
| 39 | Husband | Husband's 2007 tax refund | $82,397 | nr | See note 7 |
| 40 | Husband | Wife's 2007 tax refund | $10,016 | nr | See note 8 |
| 41 | Wife | Funds drawn from joint accounts | nr | $14,485 | Not agreed |
| 42 | Husband | Monies borrowed from Barton Investments | $41,451 | $0 | Not agreed |
| 43 | Total | $205,194 | $38,339 | ||
| 44 | COMBINED NET VALUE | $5,065,574 | $4,183,605 | ||
28.With a view to simplifying the balance sheet and thus being able to focus more easily on the issues, I intend to disregard and therefore remove items 4, 5 and 17 on the basis that they are minor items. I also intend to remove item 31 from the balance sheet on the basis that the evidence does tend to indicate that it was a post separation personal liability incurred by the wife. It remains relevant, however, in considering section 75(2) of the Act.
29.The first issue that arises is the valuation of Property W. A single joint expert, Mr S, valued the Property W property at $2,450,000 on 12 May 2009. That is the value asserted by the wife. The husband asserts, however, that the value should in fact be $1,900,000 pursuant to a subsequent letter of Mr S dated 20 July 2009, which contains an adjusted valuation based on the hypothetical life interest of the husband’s 84 year old aunt, who currently lives on the property. Mr S discounted the value of the property, having regard to the aunt’s life expectancy of eight years, and on the basis of the current value will be deferred for that period at a current rate of interest.
30.The evidence of the life interest, or life estate, is contained in the affidavits of the husband, as well as the affidavit of his aunt, Ms B, sworn 23 March 2009. Ms B was not required for cross-examination. The issued raised by this evidence is whether it constitutes a life estate, or a life interest, or some other interest which requires that the value be discounted, in order to be just and equitable to the husband. In his closing submissions for the husband, Mr Schonell submitted that it is probable that the asserted entitlement of Ms B to live on the property for the rest of her life was not a life estate, but was a restriction on the husband’s entitlement of ownership, which needed to be reflected in its value. Mr Schonell’s first contention is clearly correct. The evidence before me does not justify a finding that a life estate was created as a result of the discussions between the husband and his aunt.
31.There does seem to be an agreement between them, probably more in the nature of a moral agreement than a legal agreement, that she will be entitled to continue to live on Property W for as long as she is physically able to. However, I do not agree that this interest, such as it is, affects the value of Property W. The husband conceded in cross-examination by Ms Cleary, counsel for the wife, that he had no intention of selling Property W. Indeed, I have no doubt about this. In his evidence the husband gave me the strong impression that farming, and specifically farming on Property W, was a matter in respect of which he was most passionate. Unlike [omitted] which was clearly his living, the practice of farming was his life. Having regard to the Aunt’s relatively short life expectancy in the unchallenged evidence of Mr S, and given that the husband is not going to sell the property, the value to him of the property, and its value for present purposes, is the figure calculated by the single joint expert. Thus the figure at item 6 should be $2,450,000.
32.The next issue that arises is whether the debt described as the Ms B and Ms M debt of $115,358 should be included in the balance sheet at item 22. The husband contends that it should and the wife contends that it should not. In fact both the husband and wife admit that there is a debt that the husband owes to his two aunts arising out of the partnership that was entered into between the aunts and the husband in 2006 in relation to the operation of Property W. At most, the wife’s argument seems to be that it is a debt that will not actually be sought to be recovered by the aunts, having regard to the fact that both are so old and, indeed, that one of them is incapacitated. I infer that the wife’s argument is that whilst the debt is a bona fide one it is not, in the circumstances of this case, likely to be recovered and therefore should be disregarded. I do not accept this. There is no evidence before me to indicate that the debt is anything other than a genuine and bona fide debt owed by the husband to his aunt and, accordingly, the liability will remain in the balance sheet at item 22.
33.There is a dispute about the Property K property and capital gains tax that may flow. Property K is jointly owned. Both parties want this property as part of their property settlement. It is agreed between the parties that there is no capital gains tax liability if either of the party retains the property. For reasons that I set out below I have decided that it is just and equitable in the circumstances of this case that the wife retain Property K as part of her property settlement. There is no prospect of a sale of this property. Indeed, there would be no prospect of a sale of the property if the husband retained the same. On that basis I am not satisfied that it is necessary to include any capital gains tax liability relating to the said property. Thus items 27 and 28 can be removed from the balance sheet.
34.There is a dispute between the parties as to whether the legal fees they have each paid should be added back into the property pool (items 37 and 38). The husband asserts that all of his legal fees were paid out of post separation income and, accordingly, should not be added back. The wife has paid legal fees of $23,854 using the proceedings of a personal loan of $19,795. I think this is a case where neither party’s legal fees should be added back. There was no real challenge to the husband’s evidence that his legal fees were funded from post separation income. If I did add them back, I would feel obliged to consider this in the context of post separation contributions, which I think would be unnecessarily imprecise. The wife’s post separation income was less, and on her evidence it is highly unlikely that any part of her legal fees were paid out of her income. However, whilst there is a small difference between the legal fees paid and the amount of her personal loan, it does not warrant the difference being added back. However, a consequence of not adding back her legal fees is that the NAB personal loan (item 30) she took out to fund the same should not be taken into account into the balance sheet, though it remains relevant for section 75(2) purposes. Thus items 30, 37 and 38 should be removed from the balance sheet.
35.There is an issue between the parties about whether their respective 2007 tax refunds should be added back into the property pool (items 39 and 40). The husband asserts that both refunds were received after separation and ought not be added back because both refunds were used for the post separation living expenses, and/or joint expenses of the family. In particular, the husband gives quite extensive evidence in his affidavits of post separation expenditure which he asserts amounted to quite generous support of the wife and children during this period. He asserts it would be unjust and inequitable to him for this money to be added back in the circumstances.
36.On behalf of the wife, it was emphasised that the tax refunds arose out of monies earned during the course of the marriage and this in itself was reason for adding it back into the asset pool. I prefer to add both tax refunds back into the asset pool and to treat the question of post separation contribution separately. The husband’s approach benefits him disproportionately to the wife who, based on the evidence, seems to have genuine contentions about the nature and extent of the support that was provided by the husband in the post separation period. The husband’s contentions about post separation support of his family is properly dealt with as a contribution matter, and not as an issue going to whether the refund should be added back. Accordingly, both husband and wife’s tax refunds should be added back (items 39 and 40).
37.During the course of the evidence it transpired that as a result of an inadvertent omission in the husband’s tax return, his investment income was overstated quite considerably. As a result of the amended tax return which will be filed in consequence of this, there will be a further taxation refund. It is common ground between the husband and the wife that this further taxation refund, which may be as much as $18,000, will be divided in the same percentage, that is appointed pursuant to these orders.
38.The husband originally contended that funds drawn from joint accounts by the wife totalling $14,485 should be added back to the property pool (item 41). In closing submissions Mr Schonell, for the husband, indicated that no submission would be made in this regard, and I took that to mean that this add back was not pressed. I agree that that was appropriate under the circumstances, given the evidence about and the family finances during the post separation period. Thus item 41 should be deleted from the pool. Finally, the wife contended that there should be an add back of $41,451, being monies borrowed from Barton Investments (item 42). The debt in question is a liability in the balance sheet. Ms Cleary did not make any specific submissions in this regard, and I could not find any evidence that would justify making the add back as asserted, accordingly, I decline to do so. Thus item 42 should be deleted.
39.Having regard to all of the above matters, and referring to the balance sheet set out above, this means that items 4 and 5 are deleted, item 6 will be $2,450,000, item 17 is deleted, item 22 will be $115,358, items 27 and 28 are deleted, items 30 and 31 are deleted. Items 37 and 38, 41 and 42 will be disregarded. However, items 39 and 40 will be added back into the property pool as the notional property of the husband (item 39) and of the wife (item 40). This means that I find the pool of assets, liabilities, and superannuation in this case to be as follows:
Balance Sheet Ownership Description Value ASSETS 1 Joint Property V, Tamworth $820,000 2 Joint Property K $565,000 3 Joint Furniture at Property V $17,765 6 Husband Property W $2,450,000 7 Husband Barton Pastoral Co $48,850 8 Husband Interest in [S] $353,400 9 Husband Barton Investments P/L $41,451 10 Husband Bank accounts $30,013 11 Husband [A] Trust Account $35,614 12 Husband Share portfolio $167,825 13 Husband 1998 Mercedes 300D (net of lease) -$3,179 14 Husband 1984 Mercedes $3,700 15 Husband 1984 WB 1 tonner $3,700 16 Wife Property T $350,000 18 Wife Furniture at Property T $18,000 19 Wife [K] & Co Trust Account $10,961 39 Husband Husband's 2007 tax refund $82,397 40 Husband Wife's 2007 tax refund $10,016 20 Total $5,005,513 LIABILITIES 21 Husband ANZ share loan $200,000 22 Husband Ms B & Ms M $115,358 23 Husband Debt to Barton Investments P/L $41,451 24 Husband Interest on loan from Barton Investments for y/e 30.6.10 $3,917 25 Husband Tax payable upon declaration of Barton Investments dividend $7,300 26 Husband Tax payable on [E] dividend declared y/e 30.6.09 $28,000 29 Wife M/g over Property T $302,239 32 Total $698,265 Net non-superannuation assets $4,307,248 SUPERANNUATION 33 Husband Barton Family Superannuation Fund $156,585 34 Wife Barton Family Superannuation Fund $351,993 35 Wife First State $41,895 36 Total $550,473 44 COMBINED NET VALUE $4,857,721 Contribution
40.The first issue in this regard is whether I should adopt a global or asset by asset approach. The written outline of case document provided by Mr Schonell contained a very useful summary of the authorities in relation to the different approaches to the assessment of contribution. I accept that he has accurately set out the relevant law. His argument against adopting the global approach is a convincing one, a matter that Ms Cleary all but conceded in her closing submissions. The most significant feature in this case is the “external contributions”, a term used by Mr Schonell, and which I accept, to describe contributions to the pool of assets arising out of inheritances and other monies and property received by each of the parties, but not necessary arising directly as a result of a contribution by either one of them. In the wife’s case, for example, the inheritance she received from her mother’s estate of $30,000 in 1988 is an example of an external contribution. In the husband’s case the inheritance he received in 2004 of $320,000, the monies that he received from his aunts is an external contribution, and then the transfer of the Property W property from the aunts to himself in 2006 is another example.
41.The use of the term “external contributions” is a useful descriptor, but it must not detract from the detailed analysis that takes place when contribution is assessed, even in the case of external contribution. Nonetheless, the presence of so many and such substantial external contributions in this case is a strong contra-indicator to the use of the global approach to assessing contribution. Mr Schonell, on behalf of the husband, thus contended for a modified asset by asset approach which involved dividing the assets in this case into three distinct pools of assets:-
(i) Pool A consisting of Property W
(ii) Pool B consisting of Property K
(iii) Pool C consisting of the remaining assets
42.
He contended that in relation to pool A the wife made no contribution, and the husband made 100 percent of the contribution. In relation to pool B, the Property K property, he submits the husband made the overwhelmingly greater contribution and it should be assessed as to
90 percent in his favour. In relation to pool C, he submitted the contribution should be assessed as to 55 percent in his client’s favour. In each case the focus is on assessment of contribution, and not the assessment of any adjustment under section 75(2).
43.Ms Cleary, on behalf of the wife, contended that if the asset by asset approach was adopted, then there should be two pools. She notionally would accept pool A as consisting of Property W. However, the only other pool, notionally pool B, would consist of all the other assets. I accept that in the circumstances of this case contribution to the Property W property, with its substantial value in relation to the other assets of the parties, must be assessed on an asset by asset approach and quite independently of the other assets. However, I do not accept that pool B should be limited simply to Property K. Mr Schonell submitted that even though the wife’s contribution to this property was substantial and can probably be traced back to her inheritance, such contribution was overwhelmed by the much later contribution made by the husband out of his inheritance to discharge the mortgage on the Property K property. On this somewhat minimalist approach to assessing contribution, he submitted that the Property K property should form its own pool.
44.
Ms Cleary submitted, however, that the situation was not nearly as simple or as minimalist, to use my terminology, as the husband would contend. The evidence indicates that it was purchased in 1990 for about $258,000 using a loan of $220,000, and then rented out for 14 years on a negative gearing basis. During this entire period, of course, the contribution made by the husband and the wife was a joint one, both in the sense of funding the short fall, and in the sense of taking advantage of the consequent tax relief. When the mortgage was discharged
14 years later, even acknowledging that the source of funds to discharge was the inheritance, it would not be just and equitable to the wife to then say that this asset was discretely acquired as a result of the inheritance, or acquired as to 90 percent as a result of the inheritance, and should therefore comprise its own asset pool.
45.The husband’s contention might have had more substance, perhaps, if there were any evidence about the value of Property K in 2004 when he discharged the mortgage. Hypothetically, if the property had not significantly increased in value from the $258,500 purchase price in April 1990, there might be a more compelling reason to treat this property as the husband asserts. What is known, however, is that its present value is $565,000, more than double what it was purchased for in 1990. Having regard to these matters, it is very difficult indeed to assess contribution to this property in the simplistic and minimalist way submitted on behalf of the husband. The myriad contributions made by both the husband and the wife since the date of acquisition need to be considered in the context of the other contributions that were made during this period. Accordingly, Property K will form part of pool B, but this pool will consist of all the assets of the parties other than Property W.
46.Thus there are 2 pools of assets in this case. Pool A consists of Property W having a value of $2,450,000. Pool B consists of all remaining superannuation and non-superannuation assets and has a value of $2,407,721 net.
47.How then should contribution to Property W be assessed? The husband contends that it should be 100 percent to him, that is that there should be no contribution assessed in favour of the wife. The wife submits, in essence, that it would not be just and equitable to adopt the husband’s approach, but her counsel was not able to submit a precise figure in the event that an asset by asset approach was adopted. It is necessary to consider the evidence of the husband, the wife, and Ms B about the husband’s acquisition of Property W and the background circumstances relating to it.
48.The husband’s evidence commences from paragraph 74 of his affidavit, but culminates at paragraphs 91-92 where he states:
91. This led to a number of discussions about the future of Property W as regards its ownership and I recall responding to a question from either Ms M or Ms B and said to them both words to the effect of “transferring properties between fathers and sons can take place without any costs these days through what it called intergenerational transfers and there is no stamp duty payable. This has been extended to Uncles and Aunts transferring to nieces and nephews”. Prior to this discussion I had no idea or expectation that my Aunts had any intention of transferring the farm to me. I was, however, aware at that time that I was the sole beneficiary of my Aunts’ Wills.
92. In subsequent discussions with Ms M and Ms B at Property W I recall Ms B saying one weekend words to the effect “Ms M and I have been talking and we would like you to have the place now. We know it will still be our home and you will never sell Property W” I said “I would never want you to do that unless you were totally comfortable about it and of course I would never sell it. I know it has been your home for almost 50 years. The law says in any event that you would need to have some separate legal advice about this anyway. Would you like me to arrange for you to see your Solicitor Mike Baxter?” Ms B said “that’s fine have the papers sent to him”.
49.The context of this evidence indicates that the conversations took place during the first half of 2006. At paragraph 94 the husband deposes to driving his aunts to the offices of their solicitors in [G], and to then being handed a signed transfer by his aunts, presumably in relation to the Property W property. The relevant evidence from Ms B is from paragraph 12 of her affidavit, but, in particular, paragraphs 16-18 which state:
16. It was important to us that Property W not be sold, as Ms M and I needed to be able to reside there as it has been our home for almost 50 years.
17. I can recall about this time Mr Barton saying to Ms M and me, “I am not interested in you even thinking about the transfer of Property W unless you and Ms M are totally comfortable with that happening”. Both Ms M and I said, “We are”
18. As a result of many discussions and after careful consideration, Ms M and I decided to transfer Property W to Mr Barton, which we did in about September 2006. Ms M and I were aware that we would always be able to stay on the property in our home as long as we wished to do so. The transfer of the farm to Mr Barton was decided upon by Ms M and me with that reassurance and to ensure that we would be able to obtain the substantial funding from the Government to enable a new major water system to be constructed and numerous fences erected.
50.The wife’s evidence about the circumstances of the transfer of Property W to the husband, and of her contribution thereto, is set out at paragraphs 86-116 of her affidavit. It is important to recognise that none of the evidence set out above was seriously challenged in cross-examination. I am satisfied from the cross-examination of the husband and his evidence generally that he has sought to minimise the nature and extent of the contribution that the wife made to his extended family, including his aunts, and to Property W, but the wife’s evidence is otherwise unchallenged.
51.It is hard to say whether the idea of the transfer of Property W to the husband was an idea initiated by the husband or by his aunts. I am satisfied that it was certainly not a spontaneous decision. His aunts had carefully considered this and obtained advice. For present purposes nothing turns on whether the transfer of the property was a matter initiated by the husband or by his aunts, though I did have a sense that he was seeking in his evidence to contend that he did not initiate the relevant discussions.
52.It is important also to note that this is not an inheritance case, and, accordingly, I regard as irrelevant any evidence or submissions about expectations of inheritance. The transfer of the Property W property to the husband was a gift, and I consider the relevant authorities to be the decision in Gosper & Gosper (1987) FLC 91-818, and the Full Court’s decision in Kessey & Kessey (1994) FLC 92-495, and in particular the passage at page 81150. When these decisions are applied to the facts of this case I think the question to be answered is this: was it the intention of the aunts only to benefit the husband, or was it their intention to benefit the husband and the wife? The fact that the property was transferred to the husband only is one indication that they intended to benefit him only. If the intention was only to benefit the husband, then there is little scope, if any, to consider any contribution made by the wife, directly or indirectly, before the date of the transfer. If, however, there was an intention to benefit the wife as well, then a broader enquiry about assessment of contribution is possible.
53.On the facts of this case I find that there was an intention to benefit both the husband the wife, even though the property was transferred just to the husband. My finding in this regard is based on the evidence of Ms B herself, and particularly paragraphs 23 to 26 of her affidavit. Those paragraphs state:
23. Whilst Mr Barton continued to come to Property W about every second weekend and was involved in the farm Ms Barton’s visits on other occasions were generally to assist in driving Ms M or me to see Ms H, particularly when she was residing in Inverell in a group home. Ms Barton was never involved in any physical work on the farm. Mr Barton and Ms Barton only on rare occasions would ever come to Property W together. I am unaware if Ms Barton had any real interest in the property itself like
Mr Barton does but Ms M and I always appreciated her assistance in driving us to see Ms H and to attend medical appointments outside [G] when Mr Barton was unable to do so.
24. In June 2007 Ms M suffered a major stroke and was hospitalized. Ms M has been living at [omitted] Nursing Home in [G] ever since. I initially visited her daily by driving myself from Property W about 30 kms however over the last year I have reduced this to about every second day.
25. Subsequent to Ms M suffering the stroke I have seen my solicitor and had prepared and signed a new Will. I have left my Estate to Mr Barton however in the event that Mr Barton passes before me I have nominated Ms Barton to have everything.
26. Over the years since Ms Barton and Mr Barton were married I have developed love and affection for Ms Barton, [X] and [Y] and see Ms Barton to be part of the family. It is for this reason I have nominated her in my Will after discussing the matter with my Solicitor should something happen to Mr Barton before me.
54.I regard this evidence as significant. Clearly, even in the context of property settlement proceedings between the aunt’s nephew and his wife, the aunt continues to hold the wife in high regard. This regard is evidenced by the fact that she is the substitutionary beneficiary of the estate in the event that the husband predeceases the aunt. Paragraph 23 recognises the direct contribution that the wife made for the benefit of the aunts and, in my opinion, the indirect contribution made as a result of the husband attending the property every second weekend over an extended period of time. It is notable that the aunt, who had every opportunity in her affidavit to minimise or negate any direct or indirect contribution by the wife, or to categorically state that she did not intend the wife to benefit in any way, fails to do so. Indeed, in the context of contested property settlement proceedings in this court, one can only be impressed by the high esteem with which the only donor of the Property W property who has the capacity to give evidence holds for the respondent wife in these proceedings. Accordingly, I am entitled to infer, and I do so find, that there was an intention to benefit the wife in transferring the Property W property to the husband.
55.Of course, a finding of intention to benefit does not translate into a finding that the contribution made by each of the husband and wife and which was, at least by inference, recognised in the form of the transfer, should be either quantitatively or qualitatively assessed in the same way. This is not a case, for example, where the transfer to the wife was in a stated share. The question of assessment of contribution, in any event, ultimately remains the task of this court. Even if I accept the evidence of the wife about her contribution in this regard, at face value, it could not possibly be assessed in the same way as that of the husband’s. That is not to minimise what the wife did in terms of the support for the aunts and the support for her husband in terms of homemaking and parenting during his frequent absences from the home whilst he was at Property W.
56.On the facts of this case, even though I have found that there was some intent to benefit the wife, the strength of the family ties and the long family connection that pre-existed the marriage, point to a finding of significantly greater contribution on the part of the husband. On the facts of this case I find that the husband contributed to Property W as to 90 percent, and the wife as to 10 percent.
57.The next issue is the assessment of contribution of pool B, consisting of all assets except Property W. As a result of the concession that contribution should be assessed as equal, except for the impact of external contribution, the focus must be on to what extent do the external contributions indicate that contribution should be other than equal? The operative factors here are, of course: the wife’s inheritance of $30,000 in 1988; the husband’s inheritance of $320,000 in 2004; and the receipt of tax free gratuitous payments to the husband from his aunts totalling $270,000. The external contributions made through the husband are more recent in time than that of the wife. Clearly, they call for an adjustment in the husband’s favour over and above 50 percent. There was no evidence to suggest that the wife made any contribution towards the receipt of the 2004 inheritance of $320,000. Whilst there is evidence to point towards the wife’s contribution towards the receipt by the husband of the tax free payments from his aunts, it must be remembered that this evidence was taken into account in the context of assessing the wife’s contribution towards Property W. To recognise her contribution towards the receipt of these payments runs the risk of “double dipping” in assessing her contribution.
58.
Pool B has a net value of $2,407,721. The husband’s external contributions received comparatively late in the marriage contribute, in a mathematical sense, to about one quarter of pool B. The mathematical approach does not, in my opinion, work justice and equity in this case having regard to the length of the marriage and the myriad contributions made by both the husband and the wife before their external contributions were made and after those contributions were made. If I assess the husband’s contribution to pool B at
60 percent, this means that he receives 20 percent more than the wife, which, under the circumstances, I consider as appropriate recognition of the external contributions that have been made by him, or through him. Accordingly, I assess contribution in pool B as to 60 percent to the husband and 40 percent to the wife.
59.I record here that there was an issue about post separation contribution argued on behalf of the husband, though no specific percentage was raised by his counsel. The date of separation was less than two years ago. This was a family that enjoyed a high income and a high standard of living up until separation. There were two children, one of whom was an adult, and another a young adult, who were attending university and private school. I have no doubt that the expenses of maintaining this family were high, though by no means extravagant.
60.From a financial perspective the husband met a greater share of these family expenses than did the wife, and the wife was a beneficiary of his post separation support. That is not to minimise the contribution she made, but to recognise that he earned more and was thus in a greater position to meet these expenses. The separation no doubt caused financial strain on the family. However, both the husband and wife contributed according to their capacity, and I’m not prepared to make a separate and distinct finding of contribution in favour of the husband arising as a result of this post separation period. The wife’s unchallenged evidence, for example, explains that she made a very significant contribution as a parent in this post separation period. The youngest child appears to have suffered emotionally as a result of the circumstances of the separation and the wife bore the brunt of this. Thus, her non financial contribution in this period, at the very least, matched the husband’s financial contribution.
Conclusion about contribution
61.Having regard to the matters set out above, contribution will be assessed as to 90 percent for the husband and 10 percent for the wife in relation to pool A consisting of Property W, and as to 60 percent to the husband and 40 percent to the wife in relation to pool B, comprising the remaining assets. This means that in net dollar terms each would receive:
Husband
Wife
Pool A
$2,205,000
$245,000
Pool B
$1,444,632
$963,088
Total
$3,649,632
$1,208,088
An adjustment under section 75(2)?
62.The husband concedes that there should be a section 75(2) adjustment but submits that it should be a lump sum of $200,000. I accept that there is clear authority for allocating a dollar figure in relation to section 75(2) assessment. What he does not explain, however, is why on the facts of this case it should be assessed at a dollar amount, rather than as a percentage. The sum of $200,000 represents about four percent of the combined pool or eight percent of any one of pools A or B. In her case outline the wife’s counsel submitted a section 75(2) adjustment should be in the range of 10 to 15 percent in favour of the wife, calculated on one pool, ie, predicated on the global approach. This would be the equivalent of $485,000 assessed at 10%.
63.The husband and the wife are aged 53 and 50 respectively, so they have quite a few years of working life ahead of them. The husband gave evidence about his state of health, but there was no indication that his health was preventing him from earning an income, either from the practice, or from Property W. The husband enjoys a significantly higher income than the wife. As will be apparent from the findings about contributions I have made above, he will enjoy significantly greater property and financial resources as compared to the wife. However, both appear to have a physical and mental capacity for continued appropriate, gainful employment. Both children of the marriage have now turned 18, but I accept that both parents will continue to be involved in supporting the children financially, though the wife will have a greater responsibility for the emotional support of the younger child in particular.
64.There is no doubt that the separation will have an impact on the standard of living that the husband and the wife enjoyed during the course of the marriage, but this is offset, at least in part, because of the size of the matrimonial pool, and also because both children are no longer at home, and so the financial responsibilities in that regard have altered. It has been a long marriage, and both husband and wife have come out of it with disparate, but nonetheless reasonable earning capacities.
65.Clearly, the facts call for an adjustment in the wife’s favour. There are two issues: what percentage, and how to apply it across the pools given the asset by asset approach that has been adopted. On the facts of this case I propose to apply the section 75(2) adjustment to pool B only on the basis that there are so many special features associated with pool A that it makes a section 75(2) analysis somewhat artificial. On the facts of this case I consider a ten percent adjustment against pool B is appropriate to reflect the matters that I have referred to above. In dollar terms this means an additional $240,772 to the wife. This takes the wife’s entitlement to $1,448,860 or just under 30% of the combined net asset pool. The husband’s entitlement becomes $3,408,860.
What is the just and equitable order to make on the facts of this case?
66.The husband proposes that the former matrimonial home known as Property V be sold and during the course of her cross-examination the wife expressed agreement in this regard. The husband would like to retain Property K, but so would the wife. A complicating factor is the various liabilities referred to in the balance sheet, particularly given that some or all of these may be cross collateralised and are secured against more than one property. In relation to superannuation, the husband proposes that each keep the superannuation entitlement that they have. As for the wife, she proposes that the husband be allocated a base amount of $201,993 out of her super fund, and that he otherwise retain his super fund.
67.Thus, the main issues arising in the context of making a just and equitable order include allocating Property K or otherwise ordering its sale, and then making a decision in relation to the splitting of superannuation entitlements. In relation to Property K, whilst the husband does not expressly articulate a reason for wanting to retain the property in his evidence, from the submissions made by his counsel it seems that he considers he has made a greater financial contribution to it and it is, in any event, a convenient Sydney base for him to pursue legal and personal activities. From the wife’s perspective her wishes to retain Property K are based around meeting the needs of and supporting the two children, particularly [Y], the youngest child, who is expected to attend university in Sydney in 2010. She proposes that [Y] would stay in the property at Property K in the same way as her sister, [X], did during her university studies.
68.I consider as a relevant consideration in determining how to allocate Property K that the evidence indicates that, at least for the time being, the relationship between the husband and [Y] is strained. I do not know the reason for this, but a reasonable inference from such evidence as there is suggests that it is related to the circumstances of the separation. It would be awkward indeed for Property K to be allocated to the husband whilst at the same time meeting the legitimate expectation of, I suspect, both parents for [Y] and [X] to be able to use Property K during the period of their university education. I understand the husband’s reasons for wanting to retain Property K, but his contribution can be recognised in other ways as part of the overall alteration of property interests in this case. I’m quite sure that he’ll be able to make alternative arrangements so far as his Sydney based legal activities are concerned. Accordingly, I propose to order that the husband transfer to the wife the Property K property.
69.The next issue relates to the possible splitting of superannuation. The total value of superannuation is $550,473. Most of that, $508,578, is found in the Barton family superannuation fund, of which about 69 percent is allocated to the wife and 31 percent to the husband. The evidence does indicate that the source of the accumulation of this superannuation fund was income splitting from the husband’s legal practice during the course of the marriage. The wife’s counsel submitted that it is artificial indeed now, after separation, to retain a split of almost 70:30 in favour of the wife, particularly when the facts indicate that the husband not only retains his own personal earning capacity, but the two assets of the marriage which either produce, or have the potential to produce the most considerable income i.e. Property W, and the husband’s legal practice.
70.I think there is force in these submissions. However, the wife’s proposal that she only takes about $150,000 out of her account in the Barton family superannuation fund as well as retaining her own First State superannuation entitlement leaves her with about 35 percent of the superannuation, and the husband 65 percent. I do not consider that as just and equitable under the circumstances. The fact is that both the husband and the wife need to provide for their long-term needs as well as their short-term needs. Under the circumstances, on the facts of this case I believe it is more just and equitable for the wife to retain a total of 45 percent of the superannuation entitlement, or about $247,713, of which $41,895 will come from her own First State super entitlement, and $205,817 from the Barton family superannuation fund.
71.If I make orders to reflect the matters set out above, is this a just and equitable outcome?
72.Out of the wife’s total entitlement of $1,448,860 she wishes to retain Property K ($565,000), Property T ($350,000) and she will need to retain total superannuation of $247,713. Specifically the wife’s share of the asset pool would be:
Property K
$565,000
Property T
$350,000
Furniture
$18,000
[K] & Co Account
$10,961
Total Superannuation
$247,713
$1,191,674
73.On this Scenario, the husband would need to pay her the balance i.e. $257,186. As there is agreement that Property V is to be sold, this will fund the payment of all liabilities that are secured against either of the Property K or Property T properties, as well as the payment of the wife’s remaining entitlement pursuant to these orders.
74.The husband would be left with all remaining assets and liabilities. Both parties proposed a number of ancillary orders to implement the property settlement and these appear relatively uncontentious. If there is any difficulty with these, I will grant leave to relist before me.
75.I am satisfied that these orders are just and equitable on the circumstances of this case. The wife will have her present home and Property K unencumbered. She will have superannuation and payment of a substantial lump sum. She may well feel that her settlement, expressed as a percentage, is low having regard to the length of the marriage. If this is the case it ignores the reality that so much of the property pool was derived from “external” contributions made through the husband, and relatively late in the marriage. On the facts of this case 30% is just and equitable, reflects the diverse contribution she has made, and meets her future needs. From the husband’s perspective he receives a substantial portfolio of liquid and non-liquid assets which enables him to meet his needs and reflects the contribution he has made.
76.I note that the husband seeks an order transferring to the wife the 1984 Mercedes Benz which I presume is item 14 in the final balance sheet as I have found it. The wife seeks no such order. If this in an omission and the parties’ need the court’s assistance to rectify the problem, the matter can be relisted.
I certify that the preceding seventy-six (76) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Anthony Thompson
Date: 7 December 2009
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