Carros & Carros (No 2)
[2023] FedCFamC2F 564
•17 May 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Carros & Carros (No 2) [2023] FedCFamC2F 564
File number(s): MLC 3767 of 2021 Judgment of: JUDGE A. HUMPHREYS Date of judgment: 17 May 2023 Catchwords: FAMILY LAW – PROPERTY – assessment of contributions – relationship of 21 years – no children – initial contributions – post-separation contributions – alleged non-disclosure by husband – whether erroneous record-keeping by husband impacts business valuation – assessment of relevant section 75(2) matters – wife’s income earning capacity limited by injury – disparity in age of parties Legislation: Evidence Act 1995 (Cth), ss 50, 140
Family Law Act 1975 (Cth), ss 75, 79, 117B
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 7.01
Cases cited: Babett & Falconer (2015) FLC 98–067; [2015] FamCAFC 124
Barnell & Barnell (2020) FLC 93–961; [2020] FamCAFC 102
Benson & Drury FLC 93–998; [2020] FamFAFC 303
In the marriage of C & C (2005) FLC 93–220; [2005] FamCA 429
Demeny & Ogden (2021) 371 FLR 444; [2021] FedCFamC1A 21
Dickons & Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Hurst & Hurst (2018) FLC 93–851; [2018] FamCAFC 146
Jabour & Jabour (2019) FLC 93–898; [2019] FamFAFC 78
K & K (2003) FLC 93–135; [2002] FamCA 1150
Mayhew & Fairweather (2022) 64 Fam LR 633; [2022] FedCFamC1A 53
Morrison v Morrison (1995) FLC 92–573; [1994] FamCA 153
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Perrin & Perrin (No 2) [2018] FamCAFC 122
Pierce v Pierce (1998) FLC 92–844; [1998] FamCA 74
Sinclair and Sinclair [2000] FamCA 262
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Wallis & Manning (2017) FLC 93–759; [2017] FamCAFC 14
Weir v Weir (1993) FLC 92–338; [1992] FamCA 69
Williams & Williams [2007] FamCA 313
Division: Division 2 Family Law Number of paragraphs: 167 Date of last submission/s: 17 April 2023 Date of hearing: 9 & 10 March 2023 Place: Melbourne Counsel for the Applicant: Mr Arnold Solicitor for the Applicant: Lampe Family Lawyers Counsel for the Respondent: Mr Moutasallem Solicitor for the Respondent: Greg Murphy Legal ORDERS
MLC 3767 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR CARROS
Applicant
AND: MS CARROS
Respondent
ORDER MADE BY:
JUDGE A. HUMPHREYS
DATE OF ORDER:
17 MAY 2023
THE COURT ORDERS THAT:
Real property
1.Within 60 days from the date of these orders (“the date”) and contemporaneously:
(a)The respondent wife (“the wife”) pay to the applicant husband (“the husband”) the sum of $984,116 (“the payment”).
(b)The wife do all acts and things necessary to discharge registered mortgage … to G Ltd (“the mortgage”) registered on the title of the real property situate at and known as H Street, Suburb J in the state of Victoria more particularly described in certificate of title reference Volume … folio … (“Suburb J”), at her expense; and
(c)The husband do all acts and things necessary and sign all documents required to the transfer to the wife all his right title and interest in Suburb J, at the expense of the wife.
2.Upon the transfer of Suburb J to the wife, the wife be responsible for and indemnify the husband in respect of all apportionable rates, taxes and outgoings relating to Suburb J of whatsoever nature and kind.
3.If by the date the payment is not made or the mortgage is not discharged, then the parties do all acts and things and sign all documents required to effect the sale of Suburb J (“the sale”) in the following manner:
(a)Within 10 business days from the date, the parties engage an agent to conduct the sale (“the agent”) and a solicitor to conduct the conveyance of the sale (“the conveyancer”) and for the purpose of this order:
(i)Within three business days of the date, the husband nominate in writing to the wife, three real estate agents and three solicitors from which the agent and the conveyancer are to be selected;
(ii)Within two business days of receiving the husband’s nominations pursuant to order 3(a)(i), the wife select an agent and solicitor from those nominated by the husband and failing the wife’s election the husband select the agent and the conveyancer; and
(iii)Failing the husband’s nomination pursuant to order 3(a)(i), the wife select the agent and the conveyancer.
(b)Suburb J be sold at a public auction to be conducted no earlier than 30 days from the date and no later than 90 days from the date; and
(c)The conduct of the auction and terms and conditions of sale be agreed by the parties with regard to the advice of the agent.
4.The parties have liberty to apply in respect of the terms and conditions and execution of the sale pursuant to order 3.
5.Upon settlement of the sale of Suburb J, the proceeds of sale be applied:
(a)First, to meet all costs, commissions and expenses of the sale including the agent’s fees, advertising and conveyancing costs incurred by the parties with the conveyancer but excluding their own individual legal costs;
(b)Second, to discharge the mortgage;
(c)Third, from the balance then remaining, to pay an amount to the husband being the dollar equivalent of “X” in the following equation:
X = [44% of (A + W + H)] – [H + S]
Where:
“A” is the net proceeds remaining from the sale of Suburb J after the payments made pursuant to each of orders 5(a) and 5(b)
“W” is the value of property retained by the wife pursuant to these orders fixed in the sum of $44,000
“H” is the value of property retained by the husband pursuant to these orders fixed in the sum of $34,610
“S” is an adjustment in lieu of a super split fixed in the sum of $63,062
(d)Finally, the balance then remaining to the husband.
6.Pending settlement of the sale:
(a)The wife have the sole right to occupy Suburb J;
(b)The wife pay all instalments pursuant to the mortgage (principal and interest), and all rates, taxes and outgoings with respect to Suburb J as and when they fall due;
(c)The wife maintain Suburb J at her sole expense;
(d)Neither party encumber or further encumber Suburb J, including by drawing down against the mortgage, without the consent in writing of the other; and
(e)The parties hold their respective interests in Suburb J upon trust pursuant to these orders.
The business
7.The husband retain his interest in the business B Company (“the business”) and indemnify the wife in respect of all debts and liabilities arising from the operation of the business.
Chattels
8.Within 30 days from the date of these orders (“the chattel sale date”) the parties do all such acts and things and sign all documents as may be required for the wife to sell the following chattels (“the agreed chattels”) in consultation with the husband, for a price to be agreed by the parties, to the listed individuals:
(a)Equipment to Mr K;
(b)Equipment to Mr L;
(c)Equipment to Mr L;
(d)Motor Vehicle 1 to Mr L;
(e)Motor Vehicle 2 to Mr L;
(f)Motor Vehicle 3 to Mr L;
(g)Motor Vehicle 4 to Mr L;
(h)Equipment to Mr L;
(i)Equipment to Mr L;
(j)Equipment to Mr L; and
(k)Equipment to Mr L.
9.Should any of the items identified in order 8 fail to sell to the named individuals by the chattel sale date, the husband do all acts and things and sign all documents required to list and sell the items online, notifying the wife in writing of each item listed for sale and the platform on which it is listed.
10.The net proceeds from the sale of each of the agreed chattels be divided between the parties, 44% to the husband and 56% to the wife.
11.The wife otherwise retain the furniture, personal possessions and like chattels in the Suburb J property and the husband otherwise retain the furniture, personal possessions and like chattels in his rental property.
Other property and superannuation
12.Unless otherwise specified in these orders and save for the purpose of enforcing any monies due under these or any subsequent orders:
(a)Each party be solely entitled, to the exclusion of the other, to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)Monies standing to the credit of the parties in any joint bank account are to be divided equally and:
(i)Each of the husband and the wife be restrained from drawing against joint bank accounts pending compliance with this order; and
(ii)Each of the husband and the wife do all such acts and things and sign all documents required to close any joint bank account, forthwith upon the request of the other;
(c)Insurance policies remain the sole property of the owner named thereon;
(d)Each party be solely liable for and indemnify the other against any liability in that party’s name or encumbering any item of property to which that party is entitled pursuant to these orders; and
(e)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
Execution of documents in default
13.In the event either of the husband or the wife refuses to or neglects to sign a deed or instrument in compliance with these orders, a Registrar of this Court and/or in respect of electronic real estate transactions, the conveyancer engaged pursuant to these orders (subject to the consent of the conveyancer), be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) (“the Act”) to execute all deeds and/or instruments in the name of the husband or the wife as required and to do all acts and things necessary to give validity to the operation to the deed, instrument or document.
Costs
14.The husband pay the wife’s costs of the mention hearing on 17 April 2023 fixed in the amount of $880, such sum to be deducted from the payment or in the event of default in the payment by the date, from the husband’s share of the proceeds from the sale of Suburb J before payment to the husband.
Procedural
15.All extant applications be dismissed.
AND THE COURT NOTES THAT:
A.Pursuant to section 81 of the Act, these orders are intended to finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE A. HUMPHREYS:
This is an application for an alteration of property interests under section 79 of the Family Law Act 1975 (Cth) (“the Act”). Both parties seek orders by way of property adjustment after the breakdown of their marriage. The period of their cohabitation was approximately 21 years. The period from the commencement of cohabitation until trial and the making of final orders is approximately 25 years.
BACKGROUND
The husband is aged 52. The wife is aged 61. They commenced a relationship in 1996, began living together in mid-1998 and married in 2001. The wife contends they separated under the same roof in March 2019, the husband contends they separated in August 2019 at which time the parties agree he vacated the former family home. They were divorced by way of a divorce order taking effect in 2021.
The parties do not have children together. Neither of the parties have children from other relationships.
The husband deposed that he has not re-partnered and does not live with any other person. There was no evidence adduced that the wife had re-partnered and she did not disclose any other income earners in her household.
The wife is a hospitality worker with G Ltd. She worked in that role throughout the parties’ relationship save for a period during the Covid-19 pandemic when she was stood down and worked in health care. The wife has not been working since mid-2022, due to chronic pain originating from an injury sustained in a workplace accident in 1995. She underwent surgeries in 2002 and 2022. She has used her leave entitlements and is now on extended sick leave, without pay since mid-2022. She relied on expert evidence from Dr F in relation to her health. The wife’s financial statement reveals she receives weekly payments from Super Fund 1 of $867 (wage cover insurance held within the wife’s superannuation) and $205 per week from G Ltd Superannuation by way of a transition to retirement (TTR) pension. This equates to a total weekly income of $1,072, being approximately $55,700 per annum.
The husband operates a business (“the business”), established in 2006. He deposed to total drawings of $790 per week, which equates to an income of approximately $41,000 per annum. His tax returns for the financial years ended 2019 and 2020 record a taxable income of approximately $30,000 in round terms. Early in the parties’ relationship, the husband worked in employment with G Ltd and in other roles. Between early 2021 and early 2022 he was temporarily employed by a friend’s business while his friend was setting up a factory. In that role, the husband was paid a salary of $100,000 per annum and had the use of a vehicle. The husband employed a staff member to work in the business during this time. His taxable income was higher for the financial years ended 2021 and 2022 because of his employment.
The husband gave evidence that he has suffered from diabetes for 37 years. The wife acknowledged his condition. The husband did not adduce medical evidence in respect of his prognosis or evidence in respect of medical costs.
At the time the parties began living together, the wife owned a real property in Suburb M. The parties subsequently acquired other property, including land in Suburb J on which the former family home was constructed (“the former family home”), and established the husband’s business. Suburb M was sold in 2010.
The wife has remained in occupation of the former family home since the husband moved out in August 2019 and has subsequently been largely responsible for home loan repayments, outgoings and maintenance relating to that property. The husband has been living in rental accommodation, with half of his rent paid by the business.
PARTIES’ POSITIONS
The wife
The wife contends Suburb M represents a significant contribution made on her behalf, not just by virtue of its value at the time the parties began living together in 1998 but because of how that property was used during the parties’ relationship. In particular, Suburb M was used to secure borrowings for the acquisition of the land in Suburb J and the proceeds from the sale of Suburb M in 2010 were applied to discharge joint borrowings and towards construction of the former family home. In her case outline, the wife asserts a contribution-based adjustment of 65:35 in her favour is appropriate, applied to all assets including superannuation (taking a “one pool” approach).
Pointing to her alleged inability to work due to injury, the husband’s full-time employment and the age difference between the parties (almost 10 years), she contends for a 5% adjustment pursuant to section 75(2) of the the Act. She also seeks a 5% adjustment pursuant to section 75(2)(o) in respect of what she asserts to be the non-disclosure of financial information by the husband.
A contributions finding of 65% in her favour with a 10% adjustment pursuant to section 75(2) as contended by the wife, would see her receive assets including superannuation equivalent to 75% and the husband 25%, so a differential of 50%.
To achieve this outcome, the wife seeks orders providing for her to retain the former family home upon her making a payment to the husband of $327,162.90 and discharging the existing mortgage. She does not seek a superannuation splitting order
The husband
In summary, the husband argues that the parties enjoyed a lengthy marriage and that they each contributed to the best of their abilities. He acknowledges the wife’s initial contribution by virtue of her ownership of Suburb M but contends that taking a holistic approach and considering the myriad of contributions made by the parties during the 21 years they lived together and in the period after separation, their contributions were equal.
He submits there should be no adjustment to a contributions-based assessment pursuant to section 75(2), given the wife is nearing the end of her employment career, she has the benefit of income protection insurance and superannuation and the assets she receives by way of property settlement will be sufficient to enable her to meet her accommodation needs.
The husband seeks a “two pool” approach be taken, with superannuation and non-superannuation assets considered separately. He proposes a cash adjustment in lieu of a superannuation split to achieve equality in the parties’ superannuation interests. Given the wife wishes to retain the former family home, he proposes this outcome be achieved by the wife making a payment to him of $1,151,885 and discharging the existing mortgage.
In default of payment
In the event the wife defaults in making a payment to the husband as ordered by the court, both parties propose the sale of the former family home. The wife seeks the net sale proceeds be divided to result in her receiving 75% of the combined value of the parties’ assets and superannuation, and the husband 25%. The husband seeks the proceeds be divided to achieve an equal division of property between the parties, with a cash adjustment in lieu of a super split. He seeks the wife pay interest on his ultimate share of the sale proceeds from the date of her default.
THE ISSUES
From the parties’ filed court documents, the evidence and submissions of counsel, I identified the following issues required determination:
(a)If the husband failed to make full and frank disclosure of his financial circumstances in these proceedings;
(b)The value to be attributed to the business;
(c)If a “one pool” or “two pool” approach should be taken with respect to the parties’ non-superannuation and superannuation interests;
(d)Assessment of contributions, with particular consideration given to:
(i)The assets held by the wife at the commencement of cohabitation and the use of those assets during the parties’ relationship; and
(ii)The parties’ contributions made after separation;
(e)Assessment of section 75(2) factors, including:
(i)The parties’ ages;
(ii)The parties’ incomes and capacity to earn income; and
(iii)The wife’s allegation the husband failed to make full and frank disclosure; and
(f)In the event of a default sale of the former family home, if interest should be payable on the proportion of the sale proceeds to be received by the husband.
THE EVIDENCE
The parties each set out in their case outlines the documents they relied upon at the final hearing. I have read the material carefully and had the benefit of hearing the evidence of the parties and the single expert witness, Mr D, given in cross-examination, and observing the demeanour of the parties over a final hearing of two days.
It has not been possible to include every aspect of each of the parties’ evidence. However, I have taken all the evidence into account. Just because I have not mentioned something in these reasons does not mean that I have not considered it.
Section 140 of the Evidence Act 1995 (Cth) (“the Evidence Act”) sets out that the standard of proof in these proceedings is to a balance of probabilities.
The husband
The husband’s evidence in chief was given by way of a trial affidavit of nine pages and an affidavit in reply to the wife’s trial affidavit of 10 pages.
The husband was cross-examined in respect of various aspects of his evidence. He made admissions of misreporting of personal expenses as business expenses which I will return to when considering the wife’s allegations of non-disclosure by him. He acknowledged he had inaccurately recorded drawings from the business as “spend money” until receiving accounting advice.
The husband readily admitted these and other inaccuracies in his business records and explained they were mistakes. His explanation in respect of the drawings was credible and consistent with the wife’s evidence that administration and financial management are not his strengths. However, I found the explanation in respect of the mischaracterisation of expenses unconvincing given the nature of the personal expenses and their repeated mischaracterisation as business expenses. Nevertheless, I am not persuaded the credibility of the husband’s evidence overall is tainted by this evidence as was submitted on behalf of the wife. I observed the balance of the husband’s evidence to be given in a frank and straight forward manner. He was responsive and was not disparaging of the wife. He was candid in acknowledging what information was not within his knowledge.
The wife
The wife gave very detailed evidence in a trial affidavit of 49 pages.
In her affidavit, the wife referred to numerous documents that would be tendered at trial. Four large folders of printed documents were delivered to the court on her behalf prior to the final hearing, followed by electronic copies in tender bundles. I indicated to counsel at the outset of the hearing that any documents sought to be tendered would need to be tendered individually during the course of the hearing.
Counsel referred to a further large printed bundle of documents present on the bar table along with a summary which I was advised had been prepared pursuant to section 50 of the Evidence Act. Counsel for the wife proposed the summary be tabled as an aide memoir. I ascertained the summary and source documents had been provided to the husband’s lawyers earlier in the week of the final hearing. I was informed the summary related to personal expenses paid for the husband’s benefit by the business identified by the wife from bank statements. The husband’s counsel advised a large proportion of those expenses were acknowledged by the husband as drawings and others were asserted to be business expenses. After these initial discussions about the summary and it being conceded by the wife’s counsel that the summary included categorisation of expenses which were disputed, the wife’s counsel indicated he was content not to rely on it and to go to each document. Accordingly, no application was made to adduce evidence in the form of a summary pursuant to section 50.
Nine exhibits were ultimately tendered on behalf of the wife, including records relating to the husband’s business, some corresponding bank statements, invoices relating to expenses paid by the wife after separation and written answers to questions put to Mr D in February 2023 in relation to his valuation of the business.
Consistent with the detail in her affidavit and the volume of documents the wife initially sought to rely upon, I found her to be focused on her contributions and criticisms of the husband in minute detail. She showed a reluctance to acknowledge the contributions of the husband, displaying a condescending attitude towards him both in her affidavit and when cross-examined. She was reluctant to answer some questions. For example, she was asked about enquiries she had made about financing a settlement and her ability to borrow from non-bank financiers. When asked about of whom she had made enquiries, she initially answered, “I don’t think I have to answer that.” She then answered obliquely, “friends and family.” She only specifically identified her brother and mother after being pressed by counsel for the husband.
Some aspects of the wife’s evidence were proven to be incorrect. For example, in respect of her allegation the husband had not made disclosure in respect of his investments. She also made broad claims, in respect of general non-disclosure and abuse which I was not persuaded of.
Accordingly, I treat the wife’s evidence with some caution.
Mr D
Mr D was instructed as a single expert to value the husband’s business by a letter of instruction dated 1 December 2021. He is a chartered accountant by profession and the director of a specialist business valuation and forensic accounting consultancy firm. Mr D’s curriculum vitae was provided with his affidavit. His qualifications, expertise and experience were not challenged.
The parties relied upon his valuation report dated 9 January 2023 which was filed on affidavit. The wife also tendered questions put on her behalf to Mr D and his answers to those questions.
Mr D attended court electronically, via Microsoft Teams. He was cross-examined in respect of his valuation, including on the basis of information provided to him by the husband upon which his report was based. I refer to that evidence when I come to consider the valuation dispute.
Mr D patiently asked all questions of him in cross-examination, considered new information put to him and provided considered and logical responses. For the reasons later outlined, I accept his opinion as to the value of the business.
Dr F
Dr F is a neurosurgeon and spine surgeon who has been treating the wife since April 2022. He prepared a report dated 19 February 2023 which was filed on affidavit. Dr F was not required for cross-examination.
Being a medical practitioner who has and is providing treatment to the wife, Dr F’s evidence is admissible in respect of the matters set out in rule 7.01(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
Dr F described the wife’s current medical condition including pain as well as numbness and paraesthesia. In his opinion:
The prognosis for [the wife] regarding her [injury] is somewhat guarded.
[…]
[The wife] is currently unable to work full time, or part-time, in her current role as a [hospitality worker]. I think it is unlikely she will be able to return to work as a [hospitality worker] in any capacity in the future. If her pain improves in the future, she may be able to work in a role part-time that does not involve lifting, manual labour or standing for prolonged periods of time.
I accept the unchallenged evidence of Dr F.
LEGAL PRINCIPLES
This application is brought pursuant to Part VIII of the Act and in particular, pursuant to section 79.
Before making any order altering the interests of the parties to a marriage in property, section 79(2) requires that I must be satisfied, in all the circumstances, it is just and equitable to do so.[1]
[1] Stanford v Stanford [2012] HCA 52.
If I am so satisfied, I then have power under the Act to make such order as I consider appropriate, after considering the matters set out in sections 79(4) and section 75(2), insofar as they are relevant.
The Full Court has emphasised the nature of the task required by section 79 is “in essence, a broad discretionary assessment, which is neither an accounting nor mathematical exercise and which, effectively as a corollary, requires a "broad-brush approach".”[2]
[2] Babett & Falconer (2015) FLC 98-067 at [44]; cited with approval in Perrin & Perrin (No 2) [2018] FamCAFC 122 at [57]–[58] referring in turn to Dickons & Dickons [2012] FamCAFC 154.
In order to consider if it is just and equitable to make an order, I must first identify the existing legal and equitable interests of the parties in property according to common law and equitable principles.
PARTIES’ PROPERTY INTERESTS
Assets & liabilities
I find the parties had the following legal and equitable interests in property at the time of the final hearing:
Assets and liabilities Ownership Value Former family home Joint $2,750,000 Home loan secured by mortgage (rounded) Joint -$370,000 Business Husband $30,610 Motor vehicle driven by wife Wife $10,000 Motor Vehicle 5 Wife $4,000 Household contents in the husband’s possession Husband $4,000 Household contents in the wife’s possession Wife $30,000 Chattels the parties agree will be sold Various To be sold Total net value of property $2,458,610.00
The parties did not agree as to the value of the business, which was the subject of a single expert valuation undertaken by Mr D. I find the value of the business to be $30,610 as valued by Mr D for the reasons that follow.
The parties did not agree on the value of various chattels but did consent to an order for those items to be sold and net proceeds of sale distributed between them in the same proportions I determine to apply to the distribution of their other assets. A minute of proposed consent orders in relation to those items was submitted to chambers after the conclusion of the final hearing and I will make orders consistently with that agreement.
In his financial statement and case outline the husband attributed a value of $4,000 to the household contents in his possession. Whilst the wife did not attribute a value to those items in her case outline, in her affidavit she submitted they were valued at $35,000 based on their insured value. The wife’s counsel conceded there was no valuation of those items. The value of $4,000 was admitted by the husband so I use that value.
The value of all other assets were agreed.
Leaving aside the former family home and home loan secured by mortgage (with a net value of $2,380,000) and the chattels the parties agree will be sold, the husband has assets with a net value of $34,610 and the wife has assets with a net value of $44,000.
Superannuation
The parties also have the following interest in superannuation:
Superannuation Member Value Super Fund 2 Husband $18,547 G Ltd Super Husband $430,357 G Ltd Super (including TTR pension account) Wife $322,780 Total value of superannuation $771,684.00
The total net value of the parties assets, including superannuation, is $3,230,294.
Financial resources
Neither party disclosed or asserted financial resources.
Legal costs
The husband filed a costs notice indicating he had paid $25,187 in legal fees prior to the final hearing and that the balance of his costs would be paid following a property settlement between the parties. The wife’s filed costs notice indicated all of her legal fees were to be paid upon settlement. The wife did not contend the husband’s legal costs had been paid from assets in existence at the time of separation and should be notionally “added back” to the assets available for distribution between the parties or taken into account in some other way, so I do not take them into account.
ALLEGATIONS OF NON-DISCLOSURE
Pursuant to Part 6.1 of the Rules, both parties are required to make full and frank disclosure of their financial circumstances.
Business record-keeping
The husband was cross-examined in respect of the recording of expenses in the GST records and general ledger maintained by him for the business. When presented with corresponding bank statements, he admitted erroneous recording of personal expenses as business expenses as follows:
Date Amount Description in business records Actual expense 2020 $51.85 Motor vehicle expenses N Company 2020 $86.95 Motor vehicle expenses N Company 2020 $81.90 Motor vehicle expenses Newsagency where husband purchases lottery tickets 2020 $68.95 Motor vehicle expenses Sporting expenses 2021 $74.50 Motor vehicle expenses Newsagency where husband purchases lottery tickets) 2021 $69.96 Motor vehicle expenses Sporting expenses 2021 $12.85 Motor vehicle expenses – car wash Fast Food outlet 2021 $66 Motor vehicle expenses – fuel sporting expenses 2021 $313.65 O Company
(a repairs business)sporting expenses 2021 $93.84 Motor vehicle expenses – fuel N Company 2021 $42.70 Motor vehicle expenses – fuel Newsagency where husband purchases lottery tickets 2021 $12.45 P Company Fast food outlet 2021 $179.15 O Company N Company 2021 $89 Motor vehicle expenses – fuel N Company 2021 $32.99 P Company Chemist Total: $1276.74
The husband accepted this was just a “snippet” from the business records. Nevertheless, the total value of these discrepancies (less than $1,300 over some 15 months) is not significant in the context of the total value of property of the parties (more than $3.3 million net including super), even if it occurred over a longer period than revealed in cross-examination. I do not find this constitutes a material non-disclosure in these proceedings.
I do not find the husband’s lay recording of drawings as “spend money” constitutes a failure to disclose. The expenditure of business funds was clear and acknowledged by the husband.
I do not find the husband’s erroneous recording of business bank balances in the financial statements of the business, including his failure to update balances from one financial year to another, amounts to non-disclosure. The wife did not complain for example that the husband had not produced statements for business accounts and that those values were unknown.
Other forms of alleged non-disclosure
The wife deposed that she had not received disclosure from the husband to support any significant contribution to the construction of the former family home notwithstanding repeated requests made by her. She referred in contrast to the “detailed financial chronology itemising all monies spent to improve, maintain and complete ongoing construction” and receipts that she had furnished. The husband responded that he did not have any such documents as they were retained by the wife. I note the wife’s evidence demonstrating her thorough record keeping and in respect of the husband’s approach to financial matters, including that he questioned why she held on to receipts and paperwork. In light of that evidence, I accept the husband’s evidence that he did not have the documents requested of him.
Alleged non-disclosure in respect of investments was resolved in cross-examination, it being acknowledged the wife had misunderstood a document provided by the husband by way of disclosure.
The wife alleged the husband had not provided an employment contract in respect of work he had undertaken with his friend’s business. The husband deposed he did not have a written contract, only a verbal agreement and that he earned $112,320 (gross) from early 2021 to early 2022 before tax. I accept it is likely he didn’t have a written contract of employment given his more casual approach to record keeping and where he was working for a friend.
The wife alleged the husband had not disclosed Motor Vehicle 1 and various items of equipment. Motor Vehicle 1 was disclosed in his financial statement. The husband deposed that some items were included on the balance sheet of the business and all items save for a trailer were in the wife’s possession at the former family home. This evidence was not challenged. The parties subsequently agreed to the sale of the Motor Vehicle 1 and other items. I do not find these items were not disclosed.
The wife alleged the husband had not disclosed household items reflected in his insurance policy schedule valued at $35,000. Household contends were disclosed in his financial statement, with a value of $4,000. The wife did not seek to have those items valued. This is not a disclosure issue.
She also alleged the husband did not declare in his financial statement “all monies held in his account”. I can see the husband did not identify bank accounts in his financial statement as he ought to. However, the wife deposed the husband’s bank statements were provided shortly prior to a conciliation conference. In those circumstances, I am not satisfied the husband failed to disclose his bank accounts or bank balances.
The wife deposed in her trial affidavit, “We have never received any disclosure from the Applicant.” It is apparent from the wife’s evidence that this statement is simply untrue. She also deposed, “I have not received all financial disclosure from the [husband].” In the absence of particulars, I am unable to make findings in relation to this broad allegation.
Given the allegation of non-disclosure, which is a serious allegation, I must consider whether the husband has deliberately failed to meet his obligations in relation to disclosure. If so, I can take a robust approach, should not be “unduly cautious” about making findings in favour of the wife[3] and can draw such adverse inferences from the non-disclosure as can be supported by the evidence before me.[4] The duty of disclosure is absolute and even accidental nondisclosure may warrant the erring of generosity to a party who might be otherwise seen to be disadvantaged by the lack of complete candour.[5] I am not satisfied this is such a case. It is not a case where it is alleged the husband has failed to disclose assets or income or where it was not possible to determine the value of property. To the extent it is contended the inaccuracies in the husband’s business records constitute non-disclosure, I do not find that is so. Even if that was the case, the relatively modest amounts involved in the context of total assets valued at more than $3.3 million, in my view are immaterial.
[3] Weir v Weir [1992] FamCA 69.
[4] Morrison v Morrison (1995) FLC 92-573 at [81,671].
[5] K & K[2002] FamCA 1150, applying Chang v Su (2002) FamCA 156 andWeir v Weir [1992] FamCA 69.
I am not persuaded the husband has failed to be meet his obligations in relation to disclosure, warranting findings in favour of the wife or an adjustment pursuant to section 75(2)(o).
EVIDENCE IN RELATION TO THE DISPUTED ASSETS AND LIABILITIES
Husband’s business
The single-expert, Mr D, valued the fair market value of 100% of the equity of the business at $30,610 as at late 2021. Neither party sought to adduce an updated valuation.
Mr D’s valuation was undertaken assessing the future maintainable earnings of the business. In doing so, he calculated earnings before interest, tax, depreciation and amortisation (EBITDA) for the financial years 2022, 2021 and 2020 and then made adjustments to normalise the financial performance of the business to what he considered an independent business purchaser would assess as being the “true” income of the business. He explained that after calculating the proprietor’s earnings before interest, tax, depreciation and amortisation (PEBITDA) for each for each of those years, he applied a 0% weighting to the partial financial year ended 30 June 2022 and all weighting to the financial years ended 30 June 2021 (67%) and 2020 (33%). He explained his reasons for this weighting, including that the poorer financial performance for the annualised financial year ending 2022 appeared to be of an ad-hoc nature in comparison to the prior years. When cross-examined, he acknowledged this could have been because the husband was working outside of the business during that time.
On 30 January 2023, the wife filed an Application in a Proceeding, seeking leave to adduce evidence from an adversarial expert in relation to the value of the business. In support of that application the wife gave evidence that Mr D informed her solicitor that the husband’s personal spending through his business account would not change his opinion in respect of the value of the business. She asserted she had discovered over $200,000 in personal spending over 2.5 years from the husband’s business account. Judge O’Shannessy heard the wife’s application on 7 February 2023. His Honour noted the Rules had not been utilised by the wife, including by the asking of questions of the single expert and also referred to the wife’s ability to have the single expert cross-examined at trial. Judge O’Shannessy dismissed the wife’s application and extended the time for her to deliver written questions to the single expert. A costs order was made against the wife in respect of that application.
The wife subsequently put questions to Mr D which were answered by him. The questions and answers to those questions were tendered by the wife as an exhibit and her counsel cross-examined Mr D in respect of those questions. Mr D’s opinion in respect of the value of the business did not change after receiving and answering the questions put to him or upon cross-examination. Many of the questions posed by the wife of the single expert asked if he had undertaken enquiries to determine if various information provided to him by the husband was accurate. Mr D consistently answered that he had not made those enquiries, noting he was engaged to undertake a business valuation and not an audit or due diligence of the underlying financial information. When cross-examined, he gave evidence that he had reviewed and analysed the financial information provided to him, made some enquiries to assess the accuracy of information provided, including by tracing a sample of transactions. As one example, he identified an error in respect of a recorded credit card liability which was subsequently corrected.
When cross-examined about the recording of personal expenses as business expenses, the husband acknowledged this would influence the profitability of and tax payable by the business but denied it would impact the business valuation. This was a matter put to Mr D who gave evidence the husband’s admitted mischaracterisation of personal expenses as business expenses did not impact his opinion of the value of the business observing:
(a)This is a common occurrence in personal enterprises;
(b)Some of those expenses were from the financial year ended 30 June 2022, in respect of which he had applied a 0% weighting; and
(c)In relation to those expenses from the financial year ended 30 June 2021, when undertaking his valuation he had adjusted the average profit of $47,000 to $50,000 to provide a “buffer” of approximately $3,000 which would readily allow for discrepancies of this scale. He noted even if there were mischaracterised expenses totalling $1,000 per annum (so, higher than the 1,300 over the 15 month period revealed in cross-examination), this would still leave a buffer of $2,000.
Other questions asked of Mr D did not result in him changing his opinion of the value of the business. I accept Mr D’s explanations and his evidence of the value of the business at $30,610.
Assets of the business
Mr D was asked by the wife if he made enquiries about the value of specific assets of the business, including for example cash at bank and a motor vehicle. Again, Mr D answered that he had not made those enquiries given the scope of his engagement, namely to value the business not undertake an audit or due diligence of the underlying financial information. Counsel for the wife conceded the wife had not adduced evidence in respect of the value of those assets, so I do not depart from the values used by Mr D.
In her case outline the wife asserted the value of “fit outs” on business vehicles to be $20,000 and the value of two work motor vehicles to be $3,000. Her counsel cross-examined the husband in respect of the written down book value attributed to office equipment of the business. However the wife did not adduce any evidence of the value of office equipment or other the plant and equipment of the business. I therefore make no adjustments to the value attributed to the business by Mr D in respect of those assets of the business.
Mr D was asked about the impact of the discharge of motor vehicle finance liabilities, paid out since the date of valuation. He responded that there would be a corresponding adjustment somewhere else on the balance sheet, either a reduction in cash or a liability to the husband if paid from a personal account and counsel for the wife did not take this matter any further.
IS IT JUST AND EQUITABLE TO MAKE AN ORDER?
In this case, the most valuable of the parties’ assets is the former family home valued at $2.70 million, subject to a loan of $370,000 secured by mortgage. That property is jointly owned and until separation was occupied and used by both parties. The separation brought an end to the parties’ common use of property. Both parties ask the court to make orders to alter their interests in their property.
On this basis, I find the requirements of section 79(2) are satisfied and it is just and equitable for there to be an alteration of property interests between the parties.
ONE POOL OR TWO POOL APPROACH?
The husband contended for a “two pool” approach, with superannuation to be considered separately to non-superannuation assets. He proposed an equal division of both, but with a cash payment to adjust for the disparity in the value of the parties’ superannuation. There is no distinction between a “one pool” and “two pool” approach if I make orders sought by the husband providing for an equal division of both non-superannuation and superannuation assets. There distinction comes into play if I find it is just and equitable for an alternate percentage to apply to one category of assets but not another.
The wife contended for a “single pool” approach.
The Full Court has made it clear that the court may treat superannuation as an asset pool separate from the parties’ pool of non-superannuation assets and that it is often preferable to do so.[6] This allows the court to give separate consideration to the distinct characteristics of superannuation.
[6] In the marriage of C & C [2005] FamCA 429.
I prefer a two pool approach given the different nature of superannuation from the parties’ other assets. In particular, whilst the wife is 61 and already accessing part of her superannuation via a TTR pension, if she returns to work in a role with G Ltd she does not expect to retire until 65 or 67. The husband (aged 52) will not be able to access his superannuation for significantly longer.
I therefore consider the contributions made by both parties and the matters relevant to section 75(2) to their non-superannuation and superannuation assets separately.
CONTRIBUTIONS
In exercising my discretion to make order that is in all the circumstances just and equitable, sub-section 79(4)(a), (b) and (c) of the Act, being the provisions relevant to this case, require me to consider the following matters:
(a)the financial contribution made directly or indirectly by or on behalf of a party to 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 … 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 …, including any contribution made in the capacity of homemaker …
The classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions” can be helpful when undertaking this task. However, in determining what orders are to be made, I am required to approach the assessment of contributions holistically, by analysing the nature, form and characteristics with reference to the particular circumstances of that particular relationship.[7] This should be done without “over-zealous attention to the ascertainment of contributions.”[8] The process of the court as required by section 79 of the Act “…is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise”.[9] All contributions are to be weighed collectively, not compartmentalised with some contributions weighed against others.[10]
[7] Dickons & Dickons [2012] FamCAFC 154 at [21].
[8] Norbis v Norbis (1986) 161 CLR 513 at [524].
[9] Dickons & Dickons [2012] FamCAFC 154 at [25].
[10] Jabour & Jabour [2019] FamFAFC 78 at [73] – [87]; Benson & Drury [2020] FamFAFC 303 at [35].
Non-superannuation assets
The husband gave unchallenged evidence that at the commencement of the parties’ relationship, he had a motor vehicle, furniture and personal possessions. It was unclear from his evidence if this was still the position at the time the parties began living together, in 1998.
The wife deposed that at the time the parties began living together, she owned Suburb M (then vacant land), a car, furniture and personal possessions and that evidence was unchallenged. She did not attribute a value to those items save for in respect of the purchase of Suburb M, as set out below.
The wife purchased Suburb M for $64,500 in 1997 in cash, while the parties were in a relationship or “courting” as the wife described it. The husband gave unchallenged evidence that he helped select the property. The wife then had a home constructed on the property, borrowing to fund the build (“the Suburb M loan”). The husband deposed to his recollection that the cost of construction was $150,000 and the wife borrowed $130,000. The wife did not challenge the husband’s evidence in this regard.
The parties moved into Suburb M in early or mid-1998 when construction of the home was complete. Evidence was not adduced as to the value of the Suburb M property or the balance of the Suburb M loan at that time. Without that evidence, I cannot ascertain the equity in Suburb M, when the parties began living together. I have only the value at the time the wife purchased it in 1997, being $64,500.
The Suburb M property was the parties’ home for some 12 years, until it was sold in 2010. During that time, the wife serviced the Suburb M loan. The husband gave evidence that in or around 2006 a further $25,000 was added to the Suburb M loan to purchase a vehicle for the wife. The wife acknowledged in cross-examination part of her car loan was added to the home loan.
In 1999, the parties purchased Suburb J for $136,000, being the land on which the former family home was later constructed. The parties borrowed 100% of the purchase price together with another $10,000 to fund an out building, water tank, and fencing at Suburb J. The total amount borrowed was $145,000 (“the initial Suburb J loan”). They parties used Suburb M as security to enable them to borrow at this level.
The land at Suburb J was titled and released in 2000. From that time, the husband made payments in respect of the initial Suburb J loan and the wife continued meeting the repayments in respect of the Suburb M loan. The parties each gave evidence as to the amount they contend the husband paid in respect of the initial Suburb J loan from 2000 until 2010 when it was repaid. The wife deposed that he made “the minimal monthly payments”. The husband deposed he made payments exceeding the interest accruing on the loan. The wife gave evidence the balance of the initial Suburb J loan repaid in 2010 was $115,000, so the principal owing had reduced by approximately $29,000 from the $145,000 borrowed in 1999, supporting the husband’s evidence that he made interest and principal repayments.
In addition to servicing the initial Suburb J loan, the husband paid the council rates and insurance and water bills for Suburb J. The wife paid council rates and insurances for Suburb M. They equally shared the cost of gas, electricity and groceries.
In 2010, Suburb M was sold and the sale proceeds of $641,000 were applied as follows:
(a)$121,000 to discharge the mortgage secured against Suburb M (meaning Suburb M realised approximately $520,101 net after discharge of the Suburb M mortgage);
(b)$115,000 to repay the balance then owing on the initial Suburb J loan;
(c)$16,287 to discharge other debts / meet other expenses associated with both properties; and
(d)$388,000 was later applied towards construction of the former family home at Suburb J and to purchase the wife’s motor vehicle ($70,000). The husband gave unchallenged evidence these funds were also used to purchase Motor Vehicle 5 ($15,000), two pieces of furniture (approximately $13,000) and to meet the cost of medical treatment undertaken by the wife (approximately $3,000).
The wife was paid $27,000 by the purchaser of Suburb M for furniture, which was applied to construction of the family home. The wife described this as “my furniture” but both parties deposed they owned furniture at the commencement of cohabitation and no other detail was provided about the furniture sold or its provenance. Accordingly, I regard this as a joint contribution.
The wife deposed that from 1998 until 2010, the husband lived “rent free” in Suburb M. However, Suburb M was the parties’ home during this 12 year period and it was not disputed that husband made direct and indirect contributions to Suburb M during that time. He assisted with establishing and maintaining a garden, undertook maintenance tasks and paid for telephone, internet and private health insurance (up until 2011). The parties each paid half of electricity, gas and grocery expenses for Suburb M. The husband was also making contributions in respect of the parties’ other property during this time, including repayments in respect of the initial Suburb J loan from 2000 to 2010 and meeting other expenses of the parties.
The former family home and outbuildings were subsequently constructed at Suburb J utilising monies from:
(a)The balance of proceeds from the sale of Suburb M;
(b)Interest from investment of that balance by the wife in the amount of $39,880 (with tax paid by her on that interest);
(c)Proceeds from the sale of assets (including furniture, the wife’s previous car and Motor Vehicle 5); and
(d)A loan of $360,000 in 2013 and a further loan of $86,917 in 2016 (“the Suburb J construction loans”).
The parties equally shared repayments towards the Suburb J construction loans, rates and outgoings until they began living separately and apart in 2019. The wife has been meeting those expenses since separation.
The parties’ salaries were paid into individual bank accounts and they each contributed to a joint account for bills. The parties shared the cost of rent while the former family home was constructed. In addition to the expenses already mentioned, the parties each gave evidence about other expenses they variously each paid individually, jointly or were paid through the business.
The husband established the business as a sole trader in 2006. He initially worked part-time in the business and in employment. From 2009, he worked in the business on a full-time basis, save for the period in 2021/2022 when he worked for a friend’s business. The wife also deposed to financial and non-financial contributions she made to the business during the parties’ relationship.
The wife was critical in her affidavit of the husband’s conduct of the business, deposing:
(a)His decision to work the business on a full-time basis “was very slow on the uptake”;
(b)He “ambled along casually for many years and lacked the enthusiasm to further the business”; and
(c)“[t]he marriage never financially benefited from the business.”
She also gave evidence monies were injected into the business from the parties’ joint account during the parties’ relationship to prop it up and that those funds were referenced as a loan to the business yet never repaid.
The wife nevertheless acknowledged the husband’s financial contributions to the Suburb J loans and other expenses through the relationship, which were sourced from his employment and business income. She also gave evidence about other benefits derived from the business, including expenses paid by the business for the parties’ mutual benefit, a GST refund for her car and the benefits of business ownership she pointed to when critiquing the business valuation. At the final hearing, she asserted the business is a valuable asset to the husband.
The parties each gave evidence about the non-financial contributions they contended they made during their relationship, including household duties by the wife and maintenance, gardening and other work undertaken by each of them. The husband’s evidence was given in broad terms, the wife’s in detail. The wife acknowledged some of the husband’s non-financial contributions but challenged others.
For example, the husband deposed that he carried out a “tremendous amount of work” on the Suburb J property and provided examples of that work, some of which were disputed by the wife. In her trial affidavit, under the heading “Suburb J build”, the wife gave evidence of her asserted contributions in respect of the Suburb J property, listed over four pages from (a) to (zz). That list included items such cleaning, watering pot plants and putting out the rubbish and recycling bins every week. I point these items not to diminish the other contributions made by the wife but to demonstrate the minute detail of the contributions she sought to have taken into account. In reply to the wife’s trial affidavit, the husband provided some further examples of his non-financial contributions to the Suburb J build, albeit not in the same level of detail as the wife. As an example, he gave unchallenged evidence of driving to Sydney and back in a day to collect furniture the parties had purchased.
The wife deposed that she observed the husband attend the Suburb J build only occasionally, “maybe on average once a week”, compared with her own attendance most days. The husband acknowledged that the wife was able to attend more regularly at the Suburb J build because she had time available to her due to her roster, whereas his work commitments did not provide him with the same opportunity. He deposed that he attended whenever his work permitted and that whenever the wife was away overnight, he attended at Suburb J to feed her animals. The wife travelled regularly in her role as a hospitality worker and the husband deposed that while she was away (usually up to five nights a month), he was responsible for caring for her animals.
In respect of the husband’s contributions, the wife criticised his work ethic, describing him as “lazy”. She deposed to viewing his whereabouts from synced devices and discovering he “[w]as not working a full day on numerous occasions… in fact, playing sports during the weekday’s around 12noon.” (sic) The husband deposed that if he played sports during the week, he worked on weekends, as he continues to do now. I do not find the parties’ engagement in leisure activities detracts from their respective contributions.
In response to the wife’s trial affidavit, the husband adduced numerous lengthy text messages sent to him by the wife after separation in which she expressly acknowledged financial and non-financial contributions made by him in various forms (including by way of example):
(a)August 2019:
Only now can I see how much you’ve contributed with the everyday running of a household
All the things you’ve put in place
Your beautiful kindness when we spoke on Wednesday
You’ve always been so forgiving & I’ve taken all that u do & don’t say for granted
You are so worth fighting for
I have been so selfish by not supporting you
You have worked harder than every lately
In doing my tax, I can see all that u pay for
OMG – I’M SO SORRY …(b)August 2019:
I bag u for not being able to spell
I again eat my words as I have no idea about internet & technology, I don’t know what to do with the [yard]
I had to change [tools] over yesterday
Not hard but u usually did it(c)August 2019:
I know I took for granted all that u did
The set up of wifi, the computer, the printer, scanner, the, the TV’s, the spraying of weeds, the mowing, the help with the animals, and even your being here gave me that sense of safety & security(d)September 2019:
The kitty cats & animals miss u
Especially the cats
They were so happy the day u were here mowing
They were so excited when I got home because u were here
They were always so well taken care of when I was away
Thank u for all that u did
The wife deposed the husband ceased all financial contributions to the former family home from September 2019. She contended she had improved and maintained the assets of the relationship solely since he vacated the former family home in August 2019. Those financial and non-financial contributions were detailed in 18 paragraphs of her affidavit.
In respect of her financial contributions after separation, the wife deposed she met home loan repayments and expenses relating to the former family home after separation amounting to $88,000. She tendered a bundle of invoices in support of that evidence. Her evidence in this regard was not challenged by the husband. The husband deposed the wife transferred a total of $22,323.60 from the parties’ joint mortgage redraw facility shortly after separation. In cross-examination the wife conceded she withdrew $19,000 from the parties’ joint account at separation which was applied to these expenses relating to the former family home. Accordingly, the wife spent approximately $69,000 on mortgage repayments and maintenance of the former family home other than from joint resources since the parties began living apart, more than 3.5 years ago.
The husband argued those contributions were balanced by the benefit to her of occupation of the former family home since separation. In response, the wife emphasised the loan repayments made by her after separation (currently $606 per week) are higher than the husband’s rent (currently $215.50 per week) given half of his rent is paid by the business as a business expense. The wife did not adduce evidence to demonstrate a reduction in the principal owing on the home loan attributable to her post-separation home loan repayments.
Superannuation
Neither party gave evidence as to the value of superannuation held by them at the commencement of cohabitation.
The wife deposed to making increased voluntary contributions to her superannuation during the relationship. The husband deposed that aside from superannuation paid during his employment, he has not been able to make contributions himself. I am unable to ascertain from the evidence how it came to be that the husband has accumulated more superannuation than the wife.
Assessment of contributions
Whilst I have set out my consideration of the parties’ evidence in respect of their contributions in categories for convenience, referring to initial contributions and post-separation contributions for example, my assessment of their contributions is a holistic one. I have weighed and assessed the contributions of all kinds and from all sources made by each of the parties throughout the period of cohabitation, as the Full Court in Wallis & Manning[11] made clear, is the task of a trial judge. My holistic assessment of the parties’ contributions has extended to the period after separation.
[11] (2017) FLC 93-759 at [20].
The husband acknowledged the wife’s initial contribution consisting of her ownership of Suburb M at the commencement of cohabitation but submitted “no weight should be given to the wife’s greater initial contribution due to the length of the relationship.”
The wife asserted it would be in error to confine the assessment of the wife’s initial contribution to an assessment of the mere value of the property at cohabitation, referring in her case outline to the following passage from the Full Court in Pierce v Pierce:[12]
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. 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. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: See also Campo and Campo (unreported, Full Court (Ellis, Lindenmayer and Finn JJ), Sydney, delivered 19 May 1995 at pages 21 and 22 of the joint judgment) and Zahra and Zahra (unreported, Full Court Sydney, delivered 3 October 1996, per Ellis J. at page 10).
[12] (1998) FLC 92-844 74 at [28].
In relation to Pierce, the Full Court in Jabour & Jabour emphasised the importance of that decision is that the “the weight to be attached to an initial contribution must be assessed against the rubric of all of the contributions, both financial and non-financial, made by the parties over the course of their relationship.” [13]
[13] [2019] FamFAFC 78 [at 55].
In closing submissions the wife’s counsel also referred to the following passage from the Full Court’s decision in Williams & Williams:[14]
We think that 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 towards 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 or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in so doing 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.
[14] [2007] FamCA 313 at [26]
However, the Full Court in Jabour identified that subsequent decisions indicate the Full Court in Williams overstated in this passage the importance of the increase in value of a piece of property at the expense of “the myriad of other contributions that each of the parties has made during the course of the relationship.” [15]
[15] Jabour & Jabour [2019] FamCAFC 78 [at 43].
The wife submitted the ownership of Suburb M was “instrumental” in the ownership and improvements to the former family home, including:
(a)In 1999, as security for the loan to acquire Suburb J;
(b)Upon its sale in 2010, to discharge the Suburb M mortgage and repay the initial Suburb J loan; and
(c)After its sale in 2010, the net sale proceeds and interest thereon were applied towards the construction of the former family home at Suburb J.
She submits her initial contribution has been “a very significant reason” as to why the parties now own a home valued at $2.70 million. In cross-examination, the husband acknowledged being able to secure the initial Suburb J loan against Suburb M was “handy” because they otherwise would not have been able to borrow 100% of the purchase price of Suburb J but did not agree they could not have purchased Suburb J without Suburb M. He also acknowledged the sale of Suburb M in 2010 was “handy” in relation to funding the construction of Suburb J.
I accept that the purchase of Suburb M by the wife shortly prior to the parties’ cohabitation provided a “springboard” for the parties, assisting them to secure funding for the purchase of Suburb J and to the value of Suburb M at the time of its sale in 2010. However, the parties each made a miscellany of financial contributions to Suburb M during the 12 years it was their home and to their other property during that period and throughout their long relationship. Their contributions were made directly and indirectly. For example, by servicing the initial Suburb J loan, the husband enabled the wife to retain Suburb M and to continue applying her income to service the Suburb M loan. They each also made very significant non-financial contributions to the acquisition, conservation and improvement of their other assets.
Notwithstanding the wife’s detailed evidence emphasising her non-financial contributions and that she worked harder than the husband, taking the holistic approach required, I find they both worked hard and over many years they both contributed to the full extent of their capacity within the roles each took within the marriage. They each also made significant contributions to the welfare of the family constituted by the two of them, including providing one another with care and support throughout their relationship, as acknowledged in the wife’s text messages sent to the husband after separation.
I also take into account the financial and non-financial contributions made by the wife after separation, including by making home loan repayments and maintaining the former family home.
The contribution-based adjustment of 65:35 sought by the wife would result in a 30% differential between the parties across superannuation and non-superannuation assets (equating to $970,000 in round terms). Such an adjustment would in my view give inadequate weight to the myriad of other contributions made by both parties throughout the course of their long relationship and does not accord with the approach required to be taken by this court including as set out in Hurst & Hurst,[16] Jabour & Jabour[17] and Barnell & Barnell.[18] On the other hand, the husband’s submission that I should find the parties contributions were equal does not in my view adequately take into account the wife’s contribution of Suburb M and the subsequent retention and use of that property or the contributions made by the wife to the former family home after separation.
[16] [2018] FamCAFC 146.
[17] [2019] FamCAFC 78.
[18] [2020] FamCAFC 102.
Having considered the totality of the parties’ evidence as to the financial and non-financial contributions they each made during a long marriage, I assess the contributions of the parties to their non-superannuation assets to be 53% to the wife and 47% to the husband. That reflects a differential of 6% between the parties in respect of contributions, equating to approximately $150,000 in round dollar terms when applied to the non-superannuation asset pool, which I consider appropriate.
The husband has superannuation interests valued at $448,904 and the wife has superannuation interests valued at $322,780. The husband’s superannuation interests equate to 58% of the combined value of the parites’ superannuation and the wife’s superannuation represents 42%.
The husband contended the parties’ contributions to the superannuation pool should be considered equal. Counsel for the wife acknowledged in his closing submissions there should be no contribution-based adjustment in respect of superannuation if considered in a separate pool.
Consistently with those submissions, I find both parties contributed to their superannuation to the best of their abilities during their relationship, within their respective roles in the relationship, and that each made also non-financial contributions to the accumulation of superannuation by supporting the employment and superannuation contributions of the other. Accordingly, in respect of the parties’ superannuation, I find they made equal contributions.
MATTERS RELEVANT PURSUANT TO SECTION 75(2)
Non-superannuation assets
I refer to the background set out earlier in my reasons regarding the parties’ ages, health, employment and income.
The wife submits the husband has a greater earning capacity than he is currently exercising and points to his income from employment from early 2021 to early 2022, of $100,000 per annum. She contends that period of employment reflects his true income earning capacity. The husband gave evidence that the role working for his friend was temporary and he worked six or seven days per week, which was unsustainable for him. I accept that evidence and that it is reasonable for him to continue working on a self-employed basis as he has been. I am not satisfied the husband’s diabetes impacts his earning capacity or medical costs in the absence of expert medical evidence or evidence about his medical costs.
Dr F’s evidence does not rule out the wife returning to work in some capacity. However, the scope of work he considers she will be able to undertake significantly limits the scope of employment available to her. The wife gave evidence in cross-examination that even if she is able to return to work with G Ltd in a role that accommodates her chronic pain, she is required to retire between the age of 65 and 67. She acknowledged she had not provided a copy of her employment contract to the husband, advising in cross-examination that she had not been able to find it. The wife deposed she will continue to receive income from Super Fund 1 for two years (from August 2022) provided she remains an employee of G Ltd. She will also receive income from her superannuation. The wife deposed her medical expenses are not covered by Super Fund 1 but did not provide evidence of her medical expenses or if they are met by her or G Ltd.
I am satisfied the husband has a superior income earning capacity to the wife because of the impact of her injury and chronic pain. He also has greater longevity of employment (self-employed or otherwise) than the wife. These are relevant consideration pursuant to section 75(2)(b).
The husband deposed in his trial affidavit that liability for the wife’s workplace injury was accepted by G Ltd’s insurer. I do not put any weight on his evidence that he “presumes” she would be entitled to compensation. The wife did not disclose any entitlement or intention to make a claim in her evidence. She was cross-examined about remedies that might be available to her if she was dismissed by G Ltd while on sick leave but her counsel contended she could not speculate about that. There is no evidence the wife has any entitlement or claim against G Ltd and this is not a matter I take into account.
Counsel for the wife submitted I should infer from the husband’s evidence that the examples of “defective disclosure” identified during the course of the hearing can’t be the only instances of defective disclosure. He referred to the husband acknowledging he had been cross-examined only in relation to a “snippet” of the business records He submitted I should make an adjustment pursuant to section 75(2) based on the husband’s admitted inaccurate business record-keeping. In respect of the husband’s alleged “non-disclosure generally”, it was submitted on behalf of the wife a further 5% adjustment should be made pursuant to section 75(2)(o), relying on authorities including Mayhew & Fairweather.[19] I note a 5% adjustment in favour of the wife as contended would result in a differential between what each would receive of 10%, or approximately $323,000 in round terms.
[19][2022] FedCFamC1A 53.
I am not prepared to make the inference suggested by the wife’s counsel, based on the value of the book-keeping errors identified during cross-examination of the husband, in the context of the value of the assets to be divided between the parties. I have not found there has been a material non-disclosure of assets by the husband generally as alleged by the wife, so this is not a matter I take into account pursuant to section 75(2)(o).
I do find there is a financial benefit to the husband in retaining the business beyond its value as an asset, including that he is able to benefit from expenses paid by the business and the deductibility of other expenses, including part of his rental given he stores business equipment at his home. This is a matter I take into account pursuant to section 75(2).
I take into account the greater value of property the wife will be retaining pursuant to my mooted contribution-based assessment pursuant to section 75(2)(b) and (n) and that a greater proportion of the husband’s entitlements will be comprised of superannuation which he cannot access for some time.
I do not take into account the cost to the wife of servicing the liability she will assume if she opts to retain the former family home, as she is doing so at her election. Her capacity to retain the property and refinance the property was the subject of cross-examination and she gave evidence she has enquired family (including her mother and brother) for assistance to retain the home, had also made finance enquiries with her lawyer and may also utilise superannuation. If anything, the wife’s intention to retain the property indicates she has confidence in her ability to secure and service commercial borrowings, through employment or otherwise, or that she will receive financial support from family, mitigating against me taking into account any liability she will have if she retains the home as a section 75(2) consideration.
I consider the assessment of the relevant section 75(2) factors identified above and in particular the wife’s age, present inability to work in paid employment and the uncertainty of being able to return to paid employment in the future, warrants an adjustment in the wife’s favour of 3%. Such an adjustment represents a differential of 6% and approximately $147,500 in dollar terms between the parties, which I consider appropriate.
Superannuation
The husband is 52 and the wife 61. She gave evidence she is required to retire between 65 and 67. She will soon be able to access her superannuation. She already has access to some of her superannuation by way of a TTR pension. When cross-examined about her capacity to raise the finance to refinance the former family home, she gave evidence she may access her superannuation to assist her to do so. This is a significant benefit to her. The husband will be unable to access his superannuation for some time.
The husband may make further contributions to his superannuation over his working life but he will have to continue working to do so. If he continues to earn income from his business at the rate he has been, his superannuation contributions are likely to be modest. The wife has given evidence it is unlikely she will return to employment, making further superannuation contributions unlikely.
The husband contended for a notionally equal distribution of the parties’ superannuation, with a cash adjustment in lieu of a superannuation split.
Counsel for the wife submitted if a “two pool” approach was taken, there should be a 5% adjustment to the wife in respect of superannuation, applying the same section 75(2) considerations as in respect of the non-superannuation pool. She also sought a cash adjustment in lieu of a superannuation split if this approach is taken.
I find no adjustment is warranted pursuant to section 75(2) to the contribution-based assessment made in respect of the parties’ superannuation.
FAMILY VIOLENCE
Under the heading “Applicant’s abusive behaviour”, the wife gave evidence over some 43 paragraphs in relation to conduct of the husband she considered to be abusive. No submission was made in the wife’s case outline document or by her counsel in respect of findings I ought to make in respect of that evidence and as to how the wife contended the alleged conduct is relevant to the alteration of property interests between the parties.
In any event, I am not satisfied the husband’s conduct described by the wife constituted abuse or family violence.
For these reasons, the wife’s allegation of abusive behaviour by the husband is not a matter I have taken into account in respect of the parties’ contributions or pursuant to section 75(2).
CONCLUSIONS
Alteration of property interests
Pursuant to the above assessment, I consider it just and equitable for the parties’ interests in property to be altered such that non-superannuation assets are divided in the proportions of 56% to the wife and 44% to the husband.
The total net value of the parties’ non-superannuation assets is $2,458,610. In order to achieve this outcome, the husband needs to retain non-superannuation assets worth $1,081,788. He already has assets valued at $34,610 and accordingly the wife would be required to make a payment to the husband of $1,047,178 to make up his entitlement.
In relation to the “non-superannuation pool”, the wife will retain assets with a net value of $1,376,822, being $295,000 (in round terms) more than the husband.
The husband has superannuation valued at $448,904 and the wife at $322,780. The total value of their combined superannuation is $771,684. If I was to make a superannuation splitting order to achieve equality in the parties’ “superannuation pool”, the base amount would be $63,062 In lieu, I will provide for a cash adjustment consistently with the position advocated by both parties and noting I cannot make a superannuation splitting order in any event given a trustee was not afforded with procedural fairness of a proposed splitting order. This will see the payment to be made by the wife in respect of the parties’ non-superannuation assets reduced by $63,062, to $984,116.
Considered globally, this equates to the wife receiving 54.6% of the parties’ property and superannuation and the husband receiving 45.4%.
I consider this to be a just and equitable outcome, in percentage and actual terms, consistent with my holistic assessment and weighing of the parties’ respective contributions and those matters relevant pursuant to section 75(2) in the context of a 21 year relationship and a separation of now more than 3.5 years.
The parties agree which items of property will be retained by each of them and which items will be sold. They agree to the wife being given an opportunity to retain the family home, making a payment to the husband and discharging the existing mortgage. She gave evidence she may be able to do so, including possibly with family support. They agree to retain their respective superannuation interests.
Section 79(4)(d) of the Act requires me to consider the effect of any proposed order upon the earning capacity of either party to the marriage. The orders sought by both parties will see the husband retain his business and therefore his earning capacity. The orders they seek do not otherwise have any impact on the earning capacity of either party.
Having regard to the above matters, I consider the configuration of the property settlement proposed by the parties and that the order I propose to make is just and equitable.
Interest in the event of a default sale
The husband did not provide a particularised minute of the orders sought by him during the conduct of the final hearing as I directed. It was agreed he would provide one following the conclusion of the hearing and that the wife was at liberty to seek a mention in respect of any matters arising from that minute which were not addressed during the hearing.
A minute of orders sought was provided by the husband after the final hearing and the matter was listed for mention on 17 April 2023. Like the wife, the husband seeks orders for the sale of the former family home if the wife defaults in making the payment ordered by the court, with the net sale proceeds to be divided to achieve the settlement ordered in percentage terms. I note this is the preferred approach, when an item of property is to be sold – for there to be a percentage division of the net sale proceeds rather than one party receiving a particular sum and the other the balance, particularly if the value of the property is likely to change.[20] Given the single expert valuation of the former family home was undertaken in early 2023 and it is agreed the wife is to be given 60 days from the date of final orders to make the payment, there is a prospect of the value of the home changing by the time of a sale if the wife defaults. For these reasons I agree a percentage division of the sale proceeds is appropriate in the event of a default sale.
[20] Demeny & Ogden [2021] FedCFamC1A 21 citing with approval Sinclair and Sinclair [2000] FamCA 262.
Submissions were made on behalf of both parties in relation to an order sought by the husband for the wife to pay interest on the share of the net sale proceeds received by him in the event of a default sale of the former family home.
It was submitted on behalf of the husband that section 117B of the Act requires the payment of interest in the event of default, unless an order is made to the contrary. However, as I observed at the mention, section 117B relates to an order for the payment of money.
Here, the husband agreed the wife should have an opportunity to retain the home. In default, it is agreed there will be a division of sale proceeds referable to the overall percentage division of assets, rather than a payment of money. If the property sells for more than the single-expert valuation, both parties will benefit (subject to sale costs). If it sells for less than valued, they will both receive less.
Counsel for the wife also submitted even if the parties had not agreed to provide the wife with an opportunity to sell the property, it would still take some time to sell, so the husband will not be significantly disadvantaged by the 60 day delay in the event she defaults. He also submitted the husband would benefit from the wife continuing to make principal and interest payments towards the home loan. I agree with these submissions.
For the above reasons, I will not make an order requiring the payment of interest by the wife on the husband’s share of the net sale proceeds in default of her making the ordered payment to the husband. Should the property sell for more than valued by the single expert valuation, the husband will share in any surplus, as well as any sale costs. If the property sells for less, both parties will share that disadvantage.
Costs of mention
The husband was wholly unsuccessful in respect of his application for interest. The mention on 17 April 2023 was necessitated by the husband’s failure to particularise the final orders he sought in an Amended Initiating Application, in his case outline, or in a minute during the course of the hearing. Counsel for the wife who attended the final hearing on her behalf was briefed to attend the mention. Both parties are to retain or receive assets of significant value at the conclusion of these proceedings. I therefore make an order for costs as sought by counsel for the wife at the mention on 17 April 2023, in the amount of $880, finding that sum to be just. The husband’s updated financial statement records that he does not have any funds held in bank accounts and his costs notice recorded that he will be paying the balance of his legal costs upon settlement. Accordingly, I will provide for those costs to be deducted from the payment I order the wife to make by way of property adjustment or from his share of the proceeds of sale upon settlement of a default sale of the former family home.
Orders
I otherwise make final orders as are set out.
I certify that the preceding one hundred and sixty-seven (167) numbered paragraphs are a true copy of the Reasons for Judgment of Judge A. Humphreys. Associate:
Dated: 17 May 2023
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