Cordwell & Cordwell (No. 2)

Case [2021] FamCA 552

FAMILY COURT OF AUSTRALIA

Cordwell & Cordwell (No. 2) [2021] FamCA 552  

File number(s): PAC 6137 of 2018
Judgment of: FOSTER J
Date of judgment: 29 July 2021
Catchwords: FAMILY LAW – PROPERTY – property adjustment – where discussion of applicable principles – where substantial agreement as to contribution entitlements – where consideration of s 75(2) matters – where significant asset pool – where adjustment in favour of wife of 2.5 per cent – orders made accordingly.
Legislation: Family Law Act 1975 (Cth) s 75(2), 79
Cases cited:

Bevan & Bevan [2014] FamCAFC 19
Chapman & Chapman [2014] FamCAFC 91
Farmer and Bramley [2000] FamCA 1615; (2000) FLC 93-060
Horrigan & Horrigan [2020] FamCAFC 25
Kessey and Kessey (1994) FLC 92-495

Stanford v Stanford [2012] HCA 52

Number of paragraphs: 111
Date of hearing: 26 April 2021 and 5, 6 and 7 July 2021   
Place: Parramatta
Counsel for the Applicant: Mr Clarke
Solicitor for the Applicant: LCI Legal
Counsel for the Respondent: Mr Gardiner
Solicitor for the Respondent: Coleman Greig Lawyers

ORDERS

PAC 6137 of 2018
BETWEEN:

MS CORDWELL

Applicant
AND:

MR CORDWELL

Respondent

ORDER MADE BY:

FOSTER J

DATE OF ORDER:

29 JULY 2021

THE COURT ORDERS THAT:

1.That the interim order for spouse maintenance be discharged as and from the date to which it stands paid.

2.Within two months from this date the husband do all things necessary to transfer to the wife his interest in the properties situate at D Street, Suburb J (“the D Street property”) being Folio Identifier … and 1 V Street, Suburb AA (“the 1 V Street property) being Folio Identifier … and do all things necessary concurrently with such transfers to discharge all or any mortgage liability secured against the said properties.

3.Concurrently with the transfer of the said properties to the wife, the husband pay to the wife the sum of $870,539.

4.The husband and wife do all things necessary to authorise and direct that the net proceeds of sale of the parties’ interest in the property at B Street, Suburb C (“the B Street property”) be paid as to the wife $50,000 and as to the balance in reduction of the mortgage secured over the D Street property.

5.The husband and wife do all things necessary to authorise and direct that the parties’ interest in the proceeds of sale of the property at 1 R Street, Suburb T (“the 1 R Street property) be paid to the wife or as she may, otherwise, direct in writing.

6.The husband do all things within 14 days from this date necessary to transfer or cause to be transferred to the wife the following items unencumbered:

(a)Motor Vehicle 3;

(b)Motor Vehicle 2;

(c)Ski boat and trailer;

(d)Aluminium boat and trailer;

(e)Bobcat;

(f)Double wheel axle motor bike trailer;

(g)Tractor;

(h)Lawnmowers;

(i)Turf mower;

(j)Slasher.

7.The wife concurrently with the husband’s compliance with Orders 1 and 2 do:

(a)all things necessary to resign any office held by her in the J Pty Ltd group and transfer…

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AGLC
Cordwell & Cordwell (No. 2) [2021] FamCA 552
Case
[2021] FamCA 552
Decision Date

CaseChat Overview and Summary

This case involved an application by Ms Cordwell (the applicant wife) against Mr Cordwell (the respondent husband) concerning the adjustment of property interests following their separation and divorce. The matter came before Foster J in the Federal Circuit and Family Court of Australia.

The primary legal issues before the court were to determine the appropriate division of the parties' significant asset pool, considering their respective contributions to the marriage and the matters outlined in section 75(2) of the *Family Law Act 1975* (Cth). Specifically, the court was required to assess whether any adjustment to an equal division of contributions was warranted due to factors such as the disparity in the parties' financial resources and earning capacities, and the wife's role as primary homemaker and caregiver.

Foster J found that, by reason of the parties' contributions throughout the marriage, it was just and equitable that their contributions be regarded as equal. However, after considering the matters under section 75(2) of the Act, including the husband's superior financial resources and earning capacity through his business interests, and the wife's limited capacity to re-enter the workforce, the court determined that a further adjustment was appropriate. This adjustment was to be 2.5 per cent in favour of the wife, resulting in an overall division of 52.5 per cent to the wife and 47.5 per cent to the husband.

The court made detailed orders for the transfer of various properties, the discharge of mortgages, and the payment of specific sums to achieve the determined property division. These orders included the transfer of the D Street and 1 V Street properties to the wife, a cash payment to the wife, and the allocation of proceeds from the sale of the B Street property. The wife was also ordered to transfer her interests in certain properties and her shareholding in J Pty Ltd to the husband, with the husband to refinance associated mortgages and indemnify the wife. The court also made orders concerning the division of superannuation entitlements and the finalisation of financial accounts for the Cordwell Superannuation Fund.

Orders

Orders of the court

PAC 6137 of 2018

BETWEEN:

MS CORDWELL

Applicant

AND:

MR CORDWELL

Respondent

ORDER MADE BY:

FOSTER J

DATE OF ORDER:

29 JULY 2021

THE COURT ORDERS THAT:

1. That the interim order for spouse maintenance be discharged as and from the date to which it stands paid.

2. Within two months from this date the husband do all things necessary to transfer to the wife his interest in the properties situate at D Street, Suburb J (“the D Street property”) being Folio Identifier … and 1 V Street, Suburb AA (“the 1 V Street property) being Folio Identifier … and do all things necessary concurrently with such transfers to discharge all or any mortgage liability secured against the said properties.

3. Concurrently with the transfer of the said properties to the wife, the husband pay to the wife the sum of $870,539.

4. The husband and wife do all things necessary to authorise and direct that the net proceeds of sale of the parties’ interest in the property at B Street, Suburb C (“the B Street property”) be paid as to the wife $50,000 and as to the balance in reduction of the mortgage secured over the D Street property.

5. The husband and wife do all things necessary to authorise and direct that the parties’ interest in the proceeds of sale of the property at 1 R Street, Suburb T (“the 1 R Street property) be paid to the wife or as she may, otherwise, direct in writing.

6. The husband do all things within 14 days from this date necessary to transfer or cause to be transferred to the wife the following items unencumbered:

(a) Motor Vehicle 3;

(b) Motor Vehicle 2;

(c) Ski boat and trailer;

(d) Aluminium boat and trailer;

(e) Bobcat;

(f) Double wheel axle motor bike trailer;

(g) Tractor;

(h) Lawnmowers;

(i) Turf mower;

(j) Slasher.

7. The wife concurrently with the husband’s compliance with Orders 1 and 2 do:

(a) all things necessary to resign any office held by her in the J Pty Ltd group and transfer to the husband her shareholding and any other interest she may have in the J Pty Ltd group;

(b) do all things necessary to transfer to the husband her interest in the properties:

(i) K Street, Suburb Q (“the Suburb Q property”);

(ii) L Street, Suburb C (“the L Street property”);

(iii) N Street, Suburb C (“the N Street property”);

and concurrently with such transfers the husband do all things necessary to refinance the mortgages secured over the said properties so as to remove the wife from all or any liability therefore and indemnify the wife from all or any liability arising from the trading affairs of the J Pty Ltd group including any loan account liability and any liability to the Australian Taxation Office.

8. Otherwise, the husband and wife be declared solely entitled to such items of personalty that remain in their respective possession or entitlement, save that if the husband contends that any item in the possession of the wife at the D Street property, not being the subject of the previous order, is the property of the J Pty Ltd group then he shall within one month from this date produce to the wife depreciation schedules being either historical or current evidencing such items as property of the J Pty Ltd group and thereafter he or his nominee shall be at liberty within a further period of 14 days by arrangement with the wife to attend at the D Street property and take possession of such of the items as may remain on the property.

9. The husband and wife shall as soon as practicable authorise and direct that audited financial accounts be completed for the Cordwell Superannuation Fund as at the date of these orders including preparation and lodgement of outstanding income tax returns, provision for any penalties that may be imposed, provision for capital gains tax arising from the sale of the B Street property and the calculation of the then member benefit balances for the husband and wife.

10. The husband and wife do all things necessary to cause the Trustee of the fund to comply with the following orders:

(a) That the Court allocates as required by Section 90XT(4) of the Family Law Act 1975 (Cth) (“the Act”) a base amount to the applicant wife Ms Cordwell of 50 per cent of the total member balances in the Cordwell Superannuation Fund as calculated pursuant to the previous order and the husband’s member balance be reduced accordingly;

(b) That in accordance with Section 90XT(1)(a) of the Act the Court creates an entitlement on the part of the applicant Ms Cordwell to be paid in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001;

(c) That whenever the Trustee of the Fund makes a splittable payment out of the husband’s interest in the Fund, the Trustee shall do all acts and things and sign all documents as may be necessary to pay the entitlement created by this order in accordance with the requirements of the Act and Family Law (Superannuation) Regulations 2001;

(d) These orders have effect from the operative time which is two days after the date of these orders.

11. The husband and wife cause all things necessary to be done to rollout the wife’s entitlement in the Cordwell Superannuation Fund to a complying superannuation fund of her choice as soon as practicable after compliance with the previous order.

12. The husband indemnify the wife from all or any liability including any liability to the Australian Taxation Office arising from the Cordwell Superannuation Fund.

13. The husband and wife have liberty to apply as to implementation or enforcement of these orders.

14. The matter be removed from the active pending cases list.

15. All subpoenaed documents produced and all exhibits tendered in these proceedings, be returned at the expiration of one calendar month unless an appeal is lodged.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

The husband relied on the following:(a)His Amended Response filed 29 June 2020;(b)His trial affidavit filed 9 September 2020;(c)His updating affidavit filed 29 June 2021;(d)His financial statement filed 22 October 2020.Background The wife is presently aged 44 and the husband is 49. The parties met in 1998 and commenced cohabitating shortly thereafter in 1999. At that time, they lived together at 1 JJ Street, Suburb KK (“the 1 JJ Street property”) owned by the husband. The parties were married in 2006. There are two children of the parties’ marriage now aged 20 and 19. The husband and wife separated in August 2017 and were divorced on 12 February 2020. At separation the children were aged 15 and 17. In 1999, at the commencement of cohabitation, the parties had the following assets and liabilities:(1)The husband:(a)The 1 JJ Street property in which the parties resided, purchased by him in 1997 for $149,000 with a mortgage of $134,000;(b)A property situated at LL Street, Suburb KK (“the LL Street property”), purchased by him in 1999 at about the time of cohabitation for $164,000 with a mortgage of $147,600 thus having an equity of about $16,400;(c)Superannuation entitlements of about $80,000;(d)A motor vehicle and a motor cycle.(2)The wife:(a)A motor vehicle that was encumbered by way of loan; The husband is qualified as a tradesperson and at the commencement of the relationship he worked full-time, earning an income of between $100,000 to $130,000 per annum, dependent on the hours worked. At the commencement of the relationship the wife was apprenticed as a technician which she completed and she worked in that capacity until 2001. From 2009 until 2014 she worked doing administrative work for the parties’ business and some work from home. In 2016 the wife completed a design course. Her administration work was interrupted for a time in 2010 by reason of the wife’s then serious health circumstances. As a consequence of her health circumstances, the wife in October 2010 received a Trauma Payout of about $243,163 that was deposited into the mortgage offset account, with $176,857 paid to discharge the mortgage then secured over the matrimonial home. The home was thereafter used as collateral security for the parties’ later borrowings detailed below. From 2005 until separation the parties and their two children lived in the matrimonial home at D Street, Suburb J (“the D Street property”). The first child was born shortly after cohabitation commenced and the second child only 14 months later. There is no issue that the wife was the primary care giver for the children, attending to their needs and the primary homemaker. The husband worked long hours including weekend work. These work hours continued throughout cohabitation and then until trial.J Pty Ltd In 1999 while working full-time and mostly on night shift for HH Company, the husband established a business as a sole trader where he undertook additional jobs. In 2001 the business was re-structured as a partnership with the wife, presumably for income tax purposes.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The parties’ contentions acknowledge the holistic approach to assessment of contributions. Overall, by reason of the discussion and history set out above, it is just and equitable that their contributions be regarded as equal. Section 75(2) Considerations The husband contends that there should be no further adjustment by reason of the matters referred to in this section. The wife contends for an adjustment of 10 per cent in her favour resulting in an overall division of property as to 60 per cent to her and 40 per cent to the husband. This would create a disparity of just under $2 million. The wife contends that significant considerations will be the disparity in the parties’ financial resources and the wife’s limited income earning capacity. The husband is aged 49 and in good health. The wife is aged 44 and in good health but with concerns as to a past cancer scare. The property and financial resources of the parties are set out above. Both will have significant assets by reason of the contribution findings. The husband will retain the J Pty Ltd consortium (Exh “C”) that has been the primary source of the parties’ wealth. In the nine months to March 2021 the husband paid himself a salary of about $135,000, being about $180,000 on an annualised basis. In addition, in previous years he has paid himself director’s fees and has company funded motor vehicles. As at March 2021 J Pty Ltd had retained earnings of about $2.045 million. It was conceded at trial that those earnings could be paid as dividends in a staged manner to the husband to reduce and ultimately remove his loan account debt to the company. Otherwise, the husband is able to manage and control, his ongoing superannuation contributions into the future. The wife has limited capacity for work. She has substantially been out of the commercial workforce for many years. She has technician qualifications, some administrative experience and a modest start-up company. Thus, this consideration is significant as between the parties. The superannuation entitlements of the parties are set out above. They are capable of being adjusted. The husband by reason of the financial resource of the J Pty Ltd group will have the ability to contribute to his superannuation as he wishes. The wife’s role within the home with the children and within the household has facilitated the husband devoting significant time to the J Pty Ltd enterprise. The asset pool is significant with 10 per cent representing almost $1 million. Overall, and by reason of the matters in s 75(2) as discussed, it is appropriate that there be a further adjustment to the equality of contribution finding as to 2.5 per cent in favour of the wife. As such she will receive 52.5 per cent of the overall pool and the husband 47.5 per cent. Thus, creating disparity between the parties of five per cent or about $500,000. The wife’s entitlement is thus in the sum of $5,229,625. The wife primarily seeks orders that she retain unencumbered real estate and other assets as follows:(a)the home at D Street, Suburb J $ 2,500,000(b)the home unit 1 V Street, Suburb AA $ 625,000(c)the factory premises K Street, Suburb Q $ 650,000(d)home contents Suburb J $ 10,000 (e)Ski boat $ 136,250(f)Motor bike $ 6,000$ 3,927,250(g)and a cash adjustment of $1,302,375Total: $ 5,229,625