Carabini and Giocca
[2009] FamCA 59
•6 February 2009
FAMILY COURT OF AUSTRALIA
| CARABINI & GIOCCA | [2009] FamCA 59 |
| FAMILY LAW - PROPERTY SETTLEMENT – Contributions – Adjustment for other matters |
| Family Law Act 1975 (Cth) ss 75 & 79 |
In the Marriage of Hickey(2003) 30 Fam LR 355
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) l2 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
In the Marriage of Coghlan (2004) 33 Fam LR 414
| APPLICANT: | Mr Carabini |
| RESPONDENT: | Ms Giocca |
| FILE NUMBER: | SYC | 8387 | Of | 2007 |
| DATE DELIVERED: | 6 February 2009 |
| PLACE DELIVERED: | Sydney |
PLACE HEARD: | Sydney |
| JUDGMENT OF: | Judicial Registrar Loughnan |
| HEARING DATE: | 5 February 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms T. Messner | |
| SOLICITOR FOR THE APPLICANT: | Doolan Wagner and Callaghan | |
COUNSEL FOR THE RESPONDENT: | Mr D. Bernie | |
| SOLICITOR FOR THE RESPONDENT: | Forbes-Smith and Company, Solicitors | |
Orders
Within sixty (60) days of the date of this order the wife shall pay to the solicitor for the husband the sum of $177,050.
In the event that she does not comply with order 1 the wife is to forthwith sign all documents and do all things necessary to effect the sale of her right, title, and interest in the property at B and from the net proceeds of sale, and prior to any distribution to her, pay $177,050 to the husband.
Except as otherwise provided in these orders that each party otherwise retain to the exclusion of the other sole legal and beneficial ownership of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of the parties respectively.
In the event that either party refuses or neglects to sign a document necessary to give effect to these orders, a Registrar of the Family Court of Australia is hereby appointed pursuant to S.106A of the Family Law Act 1975 to execute all documents and/or instructions in the name of that party and do all acts and things necessary to give validity and operation to such documents and/or instruments.
IT IS NOTED that publication of this judgment under the pseudonym Carabini & Giocca is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 8387 OF 2007
| MR CARABINI |
Applicant
And
| MS GIOCCA |
Respondent
REASONS FOR JUDGMENT
The husband and wife cannot agree on a settlement of their property. Although they are divorced, for convenience I will refer to the parties as the husband and wife.
Applications
The husband seeks orders in accordance with his Amended Initiating Application filed 8 October 2008 as follows:
1.That within sixty (60) days of the date of such Order the Respondent shall pay to the Applicant the sum of $200,000.
2.Except as otherwise provided in these Orders that each party otherwise retain to the exclusion of the other sole legal and beneficial ownership of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of the parties respectively.
3.That pursuant to s90MT(4) of the Family Law Act 1975 (“the Act”) the trustee of the AMP Superannuation Fund (“the Fund”) allocate an amount equivalent to one hundred percent (100%) of the wife’s superannuation interest in the Fund to the husband (“the base amount”) by way of splitting order as follows:
3.1That pursuant to Section 90MT(1)(a) of the Act:
a.the husband is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
b.the wife’s entitlement in the AMP Superannuation Fund, is corresponding reduced.
3.2That the Trustee do all things necessary to:
a.calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlements created for the husband by these Orders; and
b.pay the entitlement whenever the fund makes a splittable payment out of the wife’s interest in the fund.
3.3That this Order have effect from the operative time and the operative time is four (4) days from the date of the Order.
3.4Having been accorded procedural fairness in the making of these Orders, Order 3.1 and 3.2 bind the trustee of the AMP Superannuation Plan.
3.5That the trustee of the AMP Superannuation Plan have liberty to apply in relation to the implementation of the paragraphs of the Order affecting the superannuation interest.
4.That the Applicant have leave to amend this Application upon full disclosure being provided to the Respondent.
5.That the Respondent pay the Applicant’s costs of and incidental to these proceedings.
In the course of final submissions the wife indicated through her counsel a preference for there to be no splitting order, with the property settlement payment to be made in cash to the husband, or in default, out of the proceeds of sale of the B property. The husband does not seek a splitting order and agrees with that approach.
The wife seeks orders in accordance with her Response filed 4 March 2008 as follows:
1.That within sixty days of the date of the order of this Honourable court, the respondent shall pay to the applicant the sum of $50,000.00.
2.The applicant have no leave to amend his application.
3.Each party pay its (sic) own costs
Affidavits
The written evidence in chief is contained in the following documents:
Affidavit of the husband sworn and filed 22 September 2008
Financial Statement of the husband sworn 15 September 2008 and filed 18 September 2008
Affidavit of the wife sworn 23 September 2008 and filed 30 September 2008
Financial Statement of the wife filed 10 December 2007
Financial Statement of the wife sworn 23 September 2008 and filed 30 September 2008
Single Expert
Affidavit of Mr K sworn 21 October 2008 and filed 20 October 2008
Issues for determination
The parties identified the following issues::
1. The initial contributions of each party to the marriage.
2.Indirection contributions towards the mortgage by the Husband.
3.Husband’s indirect financial and non-financial contributions to the renovation and improvement of the former matrimonial home.
4.Section 75(2) factors in relation to the Husband’s age, health and his ability to earn an income.
The hearing
The hearing was listed for 2 days. The oral evidence and submissions were concluded within one day and judgment was reserved. The parties and their counsel are to be complimented on a taking a practical approach to the trial and are largely responsible for the polite and co-operative atmosphere in which it was conducted.
Short History
The husband and wife are 51 and 46 years of age respectively. They met in 1996, were married in September 1998 and separated on 1 August 2005. The parties’ divorce was granted by the Federal Magistrates Court on 7 December 2006.
Children
There are no children of the marriage.
Background Facts
In 1988 or 1989 the wife and her brothers P, O and S purchased a property at C in the State of NSW for $85,000 or $92,500.
In 1994 the husband opened H Business.
In 1995 the mortgage over the C property was repaid.
In January 1995 the wife bought out the shares of her 3 brothers in the property at B in the state of NSW for $150,000, that is, $50,000 each. The wife obtained a loan from the Teacher’s Credit Union to effect the purchase.
The parties met in August 1996.
From July 1998 to October 1998, the husband, with assistance from his father and brother, undertook improvements and renovations to the B property as follows:-
Painting
Gyprocking walls
Remove and install new skirting boards
Removed the back steps
Installed French doors in sunroom
Closure of two windows in sunroom
Remove and replace old floorboards
With assistance of friend installed stove and rewired
Husband paid for that work at a cost of $17,140.
Husband spent about $4,651[1] on furniture and household goods
[1] It was contended by the husband that he spent about $7,605 on furniture and household goods. He conceded in cross-examination that his wife had paid for a bed costing $1,049 and that she or she and her mother had paid for a dining suite. I calculate the remaining purchases of furniture and household goods in paragraph 24 of his affidavit to total $4,651.
The parties were married on 19 September 1998. The husband says that he paid $17,080.45 towards the wedding and honeymoon. The wife says that she contributed toward marriage costs. She sold AMP shares issued upon the demutualisation of the AMP and she also drew $10,000 on her mortgage for those costs. There is no evidence of the amount the proceeds of sale of the AMP shares.
At the time of the wedding the husband had a business and personal effects, and a debt of about $10,000. Husband made drawings of about $900 per week from the business.
At that time the wife has an interest in the B property worth between $250,000 and $270,000 subject to a mortgage of about $140,000, a ¼ share in the C property, personal effects and a Nissan motor car.
In October 1998, upon returning from their honeymoon the parties commenced living in the B property. During the marriage, the husband generally gave the wife $400 per week for expenses. In either 2002 or 2003 that was reduced to $200 per week. In addition the husband paid for weekends away, outings, some services for the wife’s motor vehicle and two dresses.
On 30 August 2000 there were bathroom renovations at B. They cost $6,000. The wife says that she paid $5,000 and husband paid $1,000. The renovations were faulty and remedial work is needed.
In September 2000 the wife suffered a miscarriage and after 3 months leave, reduced her working hours to 3 days each week. This was achieved by the wife taking leave without pay and returning to work on a casual basis.
In October 2000 the parties began residing with the wife’s brother paying $150 per week rent. The B property was rented for $340 and $165 per week (total $505) with the rental payments being contributed to the mortgage. The wife also applied her salary into the mortgage.
In February 2001 the husband moved to rented accommodation at D paying $185 per week rent. The husband paid the bond of $720. The wife contributed $720 in about May, presumably towards the rent.
In February 2002 the parties commenced residing in a flat at the rear of wife’s parents’ home paying $185 to 195 per week rent. The husband he paid the rent 20-30% of the time.
In 2003 the wife says she assisted husband in his business with $20,000. The wife included the husband in her health benefits policy until 2005. The wife paid the insurance premiums on the husband’s premises until 2005.
In 2003 the husband’s business started operating at a loss.
In February 2003 the parties commenced residing in a rented property at W paying rent of $325 per week. The wife generally paid the rent.
From March 2003 the parties lived in rented accommodation at R.
In May 2003 the husband relocated his business at a cost of $11,000. That amount was advanced by the wife. The husband says that was part of the $20,000 advanced by her.
In November 2003 the wife says that she took out a loan to solve a business dispute that the husband was involved in. The husband said that $5,000 paid was also part of the $20,000 advanced by the wife.
In February 2004 the parties returned to live at the B property.
Final separation occurred on 1 August 2005 when the wife vacated the B property and returned to live with her parents. The mortgage over the B property then stood at $59,721.
In February 2006 the husband left the former matrimonial home and stayed at the back of the business premises.
From October 2006 the husband commenced staying at YHA at H.
In November 2006 the husband commenced staying at E.
The parties were divorced on 7 December 2006. The husband says that the parties continued in a romantic relationship after that time.
In May 2007 the husband moved into a rented property at F and paid $250, then $280 per week rent.
In September 2007 the mortgage over the B property was about $30,000.
As at 31 August 2008 the wife owed $19,288.16 by way of mortgage over the B property.
On 31 January 2009 the parties attend an informal Round Table Conference.
Credit and Submissions
The evidence of the witnesses
The wife’s evidence in chief is set out in a refreshingly concise form. Most of the relevant evidence comes from a more compendious document sworn by the husband. The only witnesses called for cross-examination were the parties. It should be said that there are few relevant factual issues, the parties were not challenged in relation to most of their sworn evidence and were both co-operative and courteous. Each of the parties readily made concessions in favour of the other in relation to the contributions of the other.
The husband was put to resiling from assertions in his affidavit on being presented with evidence that his wife had paid for various items. For example at paragraph 24.5 of his affidavit he deposed to paying for items including a queen size bed. On seeing a receipt in the sum of $1,049 for a bed, he conceded in cross-examination that he did not pay for that bed. At paragraph 24.8 he deposed to paying for a dining suite and upon seeing a receipt for most of the price, he conceded in cross-examination that he did not. The husband’s evidence about his failure to complete income tax returns for several years was entirely unsatisfactory. In September 2008 he deposed to a plan to address the deficiency in the next few months. Nothing has happened by the date of the hearing. His BAS statements are up to date as at June 2008. I am at a loss to understand what work is required to qualify his accountant to prepare the returns – at least to the end of the 2008 tax year.
The wife was a reasonable witness. It was put to the husband that the wife paid the bond on the A Street property. I can assume that question was put on instructions. It transpired that the wife cannot have paid the bond as the cheque drawn on her account for $720 was dated May 2001 whereas the bond was paid in January of that year. The issue itself is unimportant but the wife too has an imperfect memory.
Submissions
The written submissions on behalf of the husband consist of:
Property Settlement
Case Contribution-entitlement
At the commencement of cohabitation the wife had an interest in the [B] property worth between $250-270,000 subject to a mortgage of about $140,000. That is her equity was some 46% of the then value. That property is now worth $525,000 and the mortgage is now $34,260. The wife’s equity is now some 93.5%. The husband argues that he has made a significant contribution to the 47.5% increase in that equity by way of the renovations and improvements undertaken by him in 1998 and the pooling of the parties finances during the marriage.
The husband had his business during the marriage and it provided the parties with ongoing income and funds during the marriage.
The husband has made a contribution towards the increase in the wife’s superannuation during the marriage.
The husband argues that his contribution entitlement to all assets other than the [C] property and the parties superannuation is 23.75% and 50% in respect of the increase in the wife’s superannuation less half the increase in the husband’s superannuation.
s.79(4) (a) – The husband made direct financial contributions to the [B] property in the payment of renovations and improvements particularly from July to October 1998. The husband made indirect contributions to the [B] property in his support of the wife allowing a significant proportion of her earnings to be paid towards a reduction of the mortgage. The parties lived in rented accommodation for 3 ½ years and utilized the rentals from the [B] property in reduction of the mortgage. There were periods during the marriage where the wife’s income from teaching was minimal. During the marriage the mortgage was reduced from $140,000 to $45,000.
s.79(4) (b) – The husband and his family undertook renovations and improvements to the [B] property particularly from July to October 1998
s.79(4) (c) – Both parties made equal contributions as homemakers.
Other matters
The husband seeks between 5 and 10% adjustment in his favour by way of Section 75(2).
Relevant factors
s. 79(4) (d) -The orders proposed by the husband do not effect the earning capacity of either party
s. 79(4) (e) - s.75(2)
(a)The husband is older than the wife being nearly 52 years old. The husband has some health issues, particularly after separation.
(b)The wife is in secure employment with the NSW education Department, and is in receipt of a very good income. She is a contributor to a State superannuation Fund. The husband’s income from his small business is very much less than the wife’s and his superannuation interests are minimal. Additionally the wife has her interest in the land at [C].
(c)There are no children.
(d)Both parties have commitments to support themselves.
(e)Not relevant
(f)Not relevant
(g)Both parties enjoyed a reasonable standard of living during the marriage
(h)Not relevant
(ha) Property matter only
(j)Property matter only
(k)Not relevant
(l)Not relevant
(m)Not relevant
(n)See application
(na) Not relevant
(o)The wife has with the assistance of the husband not only maintained but significantly improved her financial situation during the marriage. The husband’s financial situation has deteriorated during the marriage.
(p)Not relevant
Effect of Orders Sought
Husband receives
[Husband’s business] $9,878
Grand Piano $5,500
H’s Furniture $1,000
Payment from Wife $200,000
Husband’s bank A/c $24
$1,000
Total $217,402
Husband’s superannuation $6,649.98
Transfer Wife’s AMP Super $34,564.36
Total $41,214.34
Less Liabilities
Personal Loan $19,000
$3,000
Legal Fees $18,989
Total $40,989
TOTAL NETTto Husband including Superannuation $217,627.34
Wife receives
[B] property $525,000
[C] property $125,000
Amp Shares $2,440
IAG Shares $4,096
W’s Furniture $2,500
Wife’s Motor Vehicle $18,500
Wife’s Bank A/c’s $1,506
Total $679,042
Wife’s State Superannuation $86,546.51
Less liabilities
Mortgage $34,260
Payment to Husband $200,000
Total $234,260
TOTAL NETTto Wife including Superannuation $531,328.51
The above division represents a percentage split of the total nett pool of 29% to the husband and 71% to the wife.
The husband submits that this is a just and equitable division in the circumstances of this matter.
In oral submissions it was argued for the husband that there is a net pool of assets and liabilities of $788,849. At the commencement of the marriage the wife had a 50% equity in the B property worth about $130,000, one quarter of the C property, about $22,000 in First State Super and $8,000 with the AMP. She also had a car. The husband then owned his business and savings. As to the amount of those savings, he spent $17,000 on the B property and paid substantial expenses towards the wedding. The wife says that since the renovations, the rent achieved on the main house at B increased from $200 per week to $300 per week. During the marriage the wife had net income, after tax and superannuation were deducted, of the order of $177,760 and rental income of about $56,000. The husband contributed to the rental income by his expenditure and work on B. The husband took drawings of $900 from his business. Over 7 years that would be $327,600. It is an agreed fact that for all but one year, the husband paid $400 to the wife for housekeeping and other expenses. In one year he paid $200 per week. The wife conceded that after paying her fixed expenses she was left with an average of $3,000 per annum from her income. It is submitted that the husband must be correct in his evidence that in addition to the $400 per week he paid for significant other matrimonial expenses.
All of that, it is argued, warrants a finding that the parties contributed equally from cohabitation to separation.
Since separation, it is submitted that the contributions were also equal. The wife reduced the mortgage but she had the use of the B property, both for accommodation and rental, whereas for all but the period from August 2005 to January 2006, the husband had no use of that asset. The husband rented various types of accommodation otherwise during that period.
Overall it is submitted that the contributions were something of the order of 35% by the husband and 65% by the wife. That would warrant a distribution of $276,097 to the husband. He has $18,878 and therefore would receive $257,219.15. That is not what he seeks. He seeks $234,564.36. His formal Response sought part of that by way of superannuation split but he agrees to the wife’s request that all of his settlement be in the form of non-superannuation assets. If the finding was 30% contribution that would result in about $236,000 which is approximately what he seeks. If the contribution finding was to be less than 30% then it is submitted that a section 75(2) adjustment would then be warranted because of the large imbalance in the parties’ financial positions.
The written submissions for the wife are:
Contribution entitlement
Cohabitation was approximately seven years. At commencement of cohabitation, the Husband had very little in the way of assets including his business. The Wife had her property interests including the net equity in [B property]. At the start of cohabitation, the [B property] mortgage was $131,014.82. At separation, the [B property] mortgage was $60,677.11. In 2003 the Wife pays $20k to assist the Husband with his business and also takes out loan for $5k to solve business dispute for the Husband.
The wife has made direct financial contributions to the Husband’s business and the Husband has shared expenses and income with the wife so as to make an indirect contribution to [B property] which is reflected in the one half of the reduction in the mortgage.
Other matters
There is no demonstrated basis for any adjustment under section 75(2). The husband has not filed tax returns for several years and simply asserts a reduction in income. The evidence does not show any medical issue such as to affect his ability to continue to work.
Effect of orders sought
The orders sought by the wife would more than compensate for the reduction in the mortgage during cohabitation and any other improvements to [B property] given the wife has already paid $25K to the husband for his business capital.
In oral submissions it was argued for the wife that the evidence about the value of the husband’s business should be tempered by the fact that Mr K’s opinion is qualified by a lack of documents and the fact that the husband says he was recently offered $20,000 for the business. It is submitted that the husband’s evidence about his failure to procure income tax assessments for many years was unsatisfactory and he was thereby precluded from arguing that his earning capacity is less than that of the wife. That is particularly the case when the husband argues that his income during the marriage was similar to that of the wife.
The wife does not dispute that the B property mortgage was reduced by about $70,000 during the marriage; that the husband put $17,000 in to that property; that the wife’s AMP superannuation increased by about $25,000 and her First State Super interest by about $44,000. It is argued that the resultant $156,000 ‘increase’ in assets warrants the husband being paid about half that sum or $75,000. It is submitted that another way of describing it is to simply focus on the B property and give the husband 20% or 25% of the net equity - $73,500 to $89,500.
As I understand her case, the wife says that she put over $20,000 into the husband’s business and therefore he should receive $50,000 by way of settlement.
The approach in proceedings under section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. First, I am to make findings as to the identity and value of the property, liabilities and financial resources of the husband and wife at the date of the hearing. Second, I should identify and assess the contributions of the husband and wife within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the husband and wife expressed as a percentage of the net value of the property of the husband and wife. Third, I should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the husband and wife established at step two. Fourth, I should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. [2]
[2] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370
The property of the husband and wife at the date of the hearing
The Court is required to make a finding as to the property of the husband and wife at the date of the hearing. That is largely agreed. As to the disputed issues:
Husband’s business, H Business
There was a single expert and he put the value of the husband’s business at $9,878. The wife contends that the business has a greater value because the valuer’s opinion was made without all relevant records and because the husband says he was offered $20,000 for the business. In his report Mr K notes that the husband did not provide a complete set of records. There are no wage records, he had not filed a tax return for a number of years and relied on extrapolating from a hand written record, the turnover of the business. He also noted that the business trades irregular hours – 4 days some weeks and 5 days in others and never on a Monday.
The problem for the wife is that none of this has been put to Mr K. The business has the value he ascribed to it.
Paid costs
The wife has paid $5,000 in legal costs from her savings. The husband has paid no costs. I will read back into the list of assets, the wife’s costs.
Thus the assets of the husband and wife are:
Assets Value B property W $525,000 C property W $125,000 Bank Accounts x2 W $1,506 488 AMP shares (as at 28.1.09) W $2,440 1024 IAG shares (as at 28.1.09) W $4,096 Motor Vehicle 2006 Kia W $18,500 Household Contents W $2,500 Wife’s paid legal costs $5,000 Wife’s First State Super $86,546.51 Wife’s AMP –Flexible Lifetime $34,564.36 H Business H $9,878 5’7” Yamaha G2 piano H $5,500 Westpac Bank Savings account H $24 Westpac Passbook Account H $1,000 Household Contents H $1,000 Husband’s AMP –Flexible Lifetime $5,555 Total $828,109.87
Liabilities:
The wife has a small Visa card debt which varies from time to time. No attempt was made to trace it to the time or purposes of the marriage. The husband has debts to members of his family. He owes $19,000 to his parents and $3,000 to his brother. Again I cannot be satisfied that the debts relate to the time or purposes of the marriage. The parties have obligations for legal fees for these proceedings. In the husband’s case he owes $18,989.
None of those obligations are properly taken into account in identifying the net assets of the parties for the purposes of section 79.
I find that the relevant liability of the parties as at the date of the hearing is:
Liabilities Amount Mortgage over B property (Teachers Credit Union) $34,260 $34,260.00
The net assets have a value of $793,849.87 ($828,109.87 - $34,260).
Financial Resources
There are no financial resources of the husband and wife that are not included in the table of assets.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the husband and wife. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets[3]. There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the husband and wife in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of husband and wife[4].
Asset by asset or global
[3] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[4] In the Marriage of Shewring (1987) l2 Fam LR 139
As to whether the Court should assess contributions asset by asset or globally, the authorities have it that the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court opined that it is preferable for contributions to superannuation to be assessed separately from those made to other assets. However the Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that that:
“… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.”
Here the husband has adopted a global approach to the assessment of contributions. However, the wife’s case was argued on the basis that the main issue was the increase in value of the B property. Thus the C property, the parties’ superannuation, the items of personalty are all put to one side. The argument goes that the wife made contributions to the husband’s business, the husband made contributions to the B property and by setting one off against the other, the payment proposed on behalf of the wife is justified.
In those circumstances I will assess the contributions by reference to categories of assets. As I indicated to learned counsel for the wife, this approach can lead to unnecessary complexity and artificiality. True it is that superannuation has different characteristics to other forms of property. On the one hand there are restrictions in accessing it and on the other, the interest itself and income produced by it, enjoy very preferential tax treatment etc. There are also different characteristics between real property and other assets. Some items of personalty generally appreciate and some generally depreciate. Livestock has different characteristics to inanimate objects. The reasoning could take us to so artificial an exercise as to make a mockery of the simple and flexible task set by the legislature in section 79(1), which is to be undertaken by reference to section 79(2) and the components of section 79(4). As has been said on many occasions, there is no reference to pools or asset by asset approaches in section 79.
Here, I will apply section 79(4) to three pools of assets. The parties’ superannuation, the C property and the remaining property.
Contributions to C property
The submission made on behalf of the wife is to the effect that the wife brought the interest into the marriage and in effect, made the entire contribution. The husband’s case was put on a global basis but I think it was conceded in that case that even with his evidence about work done on 4 or 5 visits, his contributions were not significant. Nevertheless, he argues for a 29% interest overall and therefore in the C property.
Section 79(4)(a) Contributions
The wife had her 25% interest in the C property at the commencement of the marriage. The husband made no financial contribution to it.
Section 79(4)(b) contributions
The husband says and the wife disputes that he made some contributions at the C property. He deposes to attending at the property on 4 or 5 occasions and to:
ØClearing weeds and lantana;
ØBuilding and repairing fences;
ØMoving timber.
There is no detail about the extent or value of these contributions. It was put to him that he did not make the contributions and he said that he did. I accept that he made contributions of the nature he identifies but without some indication of the significance or extent of the work done it is not possible to give the contributions any significant weight.
Section 79(4)(c) contributions
This provision deals with contributions to the marriage, rather than to an asset. There are no children of the marriage. The only evidence about homemaker contributions is that of the husband. Thus, but for his evidence, there would be no evidence about homemaker contributions by the wife.
The husband’s evidence is that the parties shared the homemaker duties equally. The wife did 50-60% of the cooking and cleaning, with the husband cooking 2 – 3 times a week and whenever the parties entertained guests. He cleaned the house once a week or once a fortnight. He usually dusted once a week, mopped once a week, cleaned the bathroom once a week, swept the courtyard and veranda once every few days and cleaned the laundry once a week. The parties shared the washing up, after meals. The wife and sometimes, her mother, would generally attend to washing and ironing although on 2-3 mornings each week he ironed the wife’s skirts, shirts, dresses and jackets in preparation for work.
The homemaker contributions were equal.
Contributions to superannuation
Albeit that no submissions were made about the balance of contributions to superannuation I take it that the husband would argue that they were in the overall proportions he presses for – 29% by him.
The effect of the wife’s case would be that she brought in a significant interest and that the parties’ current interests properly reflect their entitlements.
Section 79(4)(a) Contributions
At the commencement of the marriage the wife had $22,207.48 in First State Super and about $8,000 with the AMP. At separation those interests stood at $64,530.27 and about $31,300, respectively. At the date of hearing they are agreed at $84,546.51 and $34,564.36 respectively. During the period of cohabitation, the wife’s superannuation interest increased by about $65,000.
The husband’s AMP superannuation was commenced during the marriage and the wife made no direct contributions to that interest. The husband’s interest is agreed at $5,555 at the date of hearing.
There is no detailed evidence about it but I take it that the parties each made some direct financial contributions to their own superannuation. In the wife’s case, her employer made contributions on her behalf.
Section 79(4)(b) contributions
There is no evidence about non-financial contributions to superannuation.
Section 79(4)(c) contributions
I have found above that the homemaker contributions were equal.
Contributions to the rest
The submissions made on behalf of the husband are that the contributions favour the wife 71% to 29% by him. The wife argues that if the husband receives a further $50,000 then he will have benefited from about 20% contributions overall or about half of the value of the increases in the wife’s superannuation and the B property.
Section 79(4)(a) Contributions
The husband owned the business and had some savings. From those savings he paid about $17,000 towards improvements on the B property and contributed $17,080.45 towards the wedding and related costs. He owed $10,000. The husband took drawings of $900 from his business during the marriage. Over 7 years that would be about $327,600. That was not necessarily his net income. From his income, the husband generally paid $400 per week to the wife for housekeeping and other expenses. In one year he paid only $200 per week. The husband contends and the wife concedes that he also made other payments for the benefit of the marriage.
The wife owned the B property, subject to a mortgage and a Nissan motor vehicle. She had an equity of about $130,000 or 50% of the value of the property. During the marriage the wife received of the order of $177,760 by way her salary as a teacher (after tax and superannuation were deducted), and net rental income from B property of about $56,000. The wife conceded that after paying her fixed expenses she was left with an average of $3,000 per annum from her income. It is submitted that the husband must be correct in his evidence that in addition to the $400 per week he paid for significant other matrimonial expenses.
The husband contributed to the rental income to an unquantifiable extent by his expenditure and work on B property. There is no necessary direct link between the improvements and an increase in rent of $100 per week.
The wife made contributions to the mortgage during the marriage by direct debit, ad hoc payments on some occasions and by applying the net rental income to the mortgage.
Section 79(4)(b) contributions
There is some evidence about non-financial contributions.
From July 1998 to October 1998, the husband, with assistance from his father and brother, undertook improvements and renovations to the B property as follows:-
Painting
Gyprocking walls
Remove and install new skirting boards
Removed the back steps
Installed French doors in sunroom
Closure of two windows in sunroom
Remove and replace old floorboards
With assistance of friend installed stove and rewired
Husband paid for that work at a cost of $17,140.
Section 79(4)(c) contributions
I have found above that the homemaker contributions were equal.
Conclusion on Contribution
The wife made the greater contribution overall.
The main focus of the proceedings is on financial contributions and the wife brought more assets into the marriage. The parties’ incomes from paid employment were of the same order. There is no contention that earnings were applied other than to matrimonial purposes.
This was not a long marriage, there are no children and so the main focus is on financial and non-financial contributions.
The husband’s contributions to the C property and to the wife’s superannuation were nominal. In each case the wife brought into the marriage a substantial asset.
The task under section 79 is not akin to the taking of accounts or winding up an business enterprise. For that reason the arithmetic approach offered on behalf of the wife is not appropriate. I accept however that there are a number of possible approaches to a proper outcome. Looking at the B property alone the husband can make a case that his contributions are of the order of 35% compared to 65% by the wife. That would represent about $171,759 of the net value which is $490,740 ($525,000 - $34,260).
By way of a check that would represent 21.6% of the net assets of the parties. In the exercise of discretion that proportion seems to favour the wife in the context of a marriage of over 7 years.
The other matters in Section 79
Dealing with the matters identified in the legislation:
Section 79(4) (d)
Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the husband and wife. There is no evidence about this.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in Section 75(2) would seem to be paragraphs (b) and (o).
(a) the age and state of health of each of the parties;
First, as to the age and state of health of each of the husband and wife. The husband is 51 and the wife is 46 years of age. There is no probative evidence about their health.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The husband receives an income of $760 per week made up of his drawings from his business. He lives alone. The husband spends:
Expenditure
Amount
Income tax
$33.00
Superannuation – AMP Flexible Lifetime Super Plan
$27.00
Rental payments – business and residential
$643.00
Private health insurance – NSW Teachers Federation Health Fund
$29.00
All other expenditure
$316.00
Total
$1048.00
Evidence about the husband’s assets and liabilities is set out earlier in these reasons.
Due to a lack of disclosure and the informality of the husband’s business accounting it is not possible to be certain but based on the past, the husband is not fully exercising his earning capacity.
The wife’s income is $1,579.57 per week made up of her salary as teacher of $1,388.57, $200 in rent and $11.00 in dividends. She lives alone.
The wife’s expenses are as follows:
Expense
Amount
Income tax
$336.00
Contributions to First State Super
$95.00
Mortgage payments to the NSW Teachers Credit Union
$317.00
Health insurance – NSW Teachers Federation Health
$28.66
Stand Alone Recovery Money- Aviva-Norwich Union Life Insurance
$34.95
Income Excell-Schedule - Aviva-Norwich Union Life Insurance
$36.25
Motor vehicle registration – Nissan
$11.30
Visa card repayments
$50.00
Living expenses
$161.16
Total
$1070.32
Evidence about the wife’s assets and liabilities is set out earlier in these reasons.
The wife’s earning capacity was not the subject of cross-examination.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
There are no children of the marriage.
(d) commitments of each of the parties that are necessary to enable the party to support:
himself or herself; and
a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out the detail of those commitments above.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
any law of the Commonwealth, of a State or Territory or of another country; or
any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
The husband and wife have been able to generate some superannuation entitlements. No splitting order is sought.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is little evidence in relation to the standard of living of the parties during the marriage. They enjoyed weekend and other modest travel.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
This is not relevant.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
This is not relevant.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
This is not relevant.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
This is not relevant.
(l) the need to protect a party who wishes to continue that party's role as a parent;
This is not relevant.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
This is not relevant.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
There is no child support assessment.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
The division based on contributions will provide the wife with more assets than the husband. Otherwise, there is nothing further requiring attention under this provision.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the husband and wife.
Section 79(4)(f)
There are no relevant orders.
Section 79(4)(g)
There is no child support assessment.
Conclusion
The wife will have more assets than the husband. Otherwise the parties are both in paid employment. They have earned at similar rates in the past and because of the husband’s conduct it is not possible to make any differential assessment now.
The outcome of the calculation of contributions would have the wife with $622,90.87 and the husband with $171,759. It is no part of the role of section 75(2) to even up the financial circumstances of the parties but I am required to give effect to the relevant components of the provision. In making an adjustment, that can be by reference to a percentage or in a dollar sum. Here I propose to make an adjustment to bring the husband to $200,000.
Just and Equitable
Based on their contributions and the other matters in s 79 the appropriate division of property is $593,849.87 to the wife and $200,000 to the husband. I must consider whether it would be just and equitable within the context of s 79 if the net assets of the husband and wife were divided in those proportions.
The net assets have a value of $793,849.87. The outcome of the division proposed above would leave the husband with the benefit of:
Husband’s assets
Value
H Business
$9,878
5’7” Yamaha G2 piano H
$5,500
Westpac Bank Savings account H
$24
Westpac Passbook Account H
$1,000
Household Contents H
$1,000
Husband’s AMP –Flexible Lifetime
$5,555
Total
$22,957.00
In order to bring him to the division proposed he would receive a further $177,043. I will round that figure to $177,050. He will owe his legal fees and his personal debts.
That would leave the wife as follows:
Assets and Liabilities
Value
B property W
$525,000
C property W
$125,000
Bank Accounts x2 W
$1,506
488 AMP shares (as at 28.1.09) W
$2,440
1024 IAG shares (as at 28.1.09) W
$4,096
Motor Vehicle 2006 Kia W
$18,500
Household Contents W
$2,500
Wife’s paid legal costs
$5,000
Wife’s First State Super
$86,546.51
Wife’s AMP –Flexible Lifetime
$34,564.36
Minus Mortgage over B property (Teachers Credit Union)
-$34,260
Minus payment to the husband
-$177,050
Total
$593,842.87
She will owe her legal fees and any other personal debts.
In my view that would be a just and equitable outcome. As was argued in the husband’s case, minds might differ about the calculation of contributions. It would be within the range of discretion to have the husband at about 40% contributions for B property alone or expressed another way, at 25% overall. If so, there would be a less compelling argument for an adjustment for the non-contribution aspects of section 79(4). However, the outcome would be similar.
As to time to pay the wife’s counsel suggested 90 days during final submissions but I note that 60 days was proposed in her formal Response. In the circumstances 60 days should be sufficient.
I certify that the preceding one husband and thirty two (132) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 6 February 2009
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