Crawford and Crawford
[2009] FamCA 1299
•24 November 2009
FAMILY COURT OF AUSTRALIA
| CRAWFORD & CRAWFORD | [2009] FamCA 1299 |
| FAMILY LAW – PROPERTY – Review of property settlement orders made by a Judicial Registrar |
| Family Law Act 1975 (Cth) ss 4(1), 44(3), 75(2), 79(4)(a), (b), (c), Pt VIIB Child Support (Assessment) Act 1989 (Cth) |
| In the Marriage of Lee Steere and Le Steere (1985) FLC 91-626 |
| APPLICANT: | Ms Crawford |
| RESPONDENT: | Mr Crawford |
| FILE NUMBER: | (P)NCC | 3686 | of | 2007 |
| DATE DELIVERED: | 24 November 2009 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | The Hon. Justice Ryan |
| HEARING DATE: | 20, 21 & 22 July 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Cummings |
| SOLICITOR FOR THE APPLICANT: | Baker Love Rutter Morgan |
| COUNSEL FOR THE RESPONDENT: | Mr Hamilton |
| SOLICITOR FOR THE RESPONDENT: | Mullane & Lindsay |
Orders
Within eight weeks the wife shall do all acts and things and execute all documents to transfer to the husband all her right title and interest in the property known as M Street, M property being the whole of the land in Folio Identifier … (“the M street unit”).
Within eight weeks the wife shall pay to the husband $35,000.00.
Simultaneously with the wife’s compliance with orders 1 and 2 above the husband shall do all acts and things and execute all documents to discharge the Commonwealth Savings Bank mortgage secured thereon.
Within six months the wife shall pay to the husband $1,490.82 together with interest calculated in accordance with the Family Law Rules 2004 upon that portion of this amount unpaid as at 19 January 2010.
Within six months the wife shall pay to the husband interest calculated in accordance with the Family Law Rules 2004 on the sum of $36,490.82 from 11 February 2009 to the date upon which the wife pays the husband the amount due pursuant to order 2 above.
That the husband indemnify the wife and keep the wife indemnified in respect of any outgoings in relation to the M unit and all statutory charges arising thereon.
That the wife forthwith do all acts and things and execute all documents required to transfer to the husband the ownership and registration of the Toyota Hilux motor vehicle presently in his possession.
That the husband shall promptly do all acts and things and execute all documents to withdraw caveat registration number … lodged by him on the property known as J Street, M. Unless he has already done so, the husband shall give the wife a withdrawal of caveat together with the funds required for its registration simultaneously with the wife’s compliance with orders 1 and 2.
That should a party refuse or neglect within seven days of a written request to do so to sign any document or documents to implement the above orders, a Registrar of the Family Court of Australia shall be appointed pursuant to s 106A of the Family Law Act 1975 to execute such document or documents on behalf of the defaulting party and to do all acts and things to give validity thereto.
Subject to any application for costs all outstanding applications are dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Crawford & Crawford is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT NEWCASTLE |
FILE NUMBER: NCC 3686 of 2007
| MS CRAWFORD |
Applicant
And
| MR CRAWFORD |
Respondent
REASONS FOR JUDGMENT
This is an application by Ms Crawford (“the wife”) for review of property settlement orders made by Judicial Registrar Loughnan on 11 December 2008. In broad terms the Judicial Registrar ordered that the parties would retain property in their respective names or possession, the wife would transfer to the husband her interest in an investment unit and within two months pay him $22,000. Upon transfer of title in the investment unit the husband was required to discharge the mortgage secured thereon. No challenge was made to the s 44(3) Family Law Act 1975 (“the Act”) order.
A review of a Judicial Registrar’s decision is a hearing de novo. Consequently the parties’ competing s 79 property settlement applications are to be determined on their merits on the basis of the evidence available to the Court at the review hearing.
The wife sought to retain those assets registered in her sole name and that by way of adjustment, Mr Crawford (“the husband’) pay her $79,000. Of the major assets she would thus retain the former matrimonial home unencumbered and superannuation worth about $143,000[1]. On her application, subject to the adjusting amount, the husband would take title in the investment unit (with him to discharge the mortgage) and retain his superannuation worth about $480,100. The husband agreed the wife should retain the former matrimonial home and her superannuation. He agreed he would retain his superannuation and the investment unit and sought that the wife pays him $70,000[2]. In summary the parties were about $150,000 apart. It is disappointing to record that between them the parties have spent more than this amount on legal fees. This becomes even more troubling when it is appreciated that unless the husband receives at least $35,000 from the wife he cannot retain the investment unit. In the event the wife is ordered to pay the husband more than $35,000 she said she cannot retain the former matrimonial home. The point being each of the parties has legal expenses which, when these proceedings are finalised, must be paid and thus limits their borrowing capacity. Lest these observations be misinterpreted there is no criticism of the parties’ lawyers. My comments are intended to convey the Court’s disappointment that in their approach to these proceedings the parties abandoned commercial reason.
[1] Exhibit ‘B’
[2] Exhibit ‘K’
Before proceeding further it is appropriate to comment upon the presentation of the wife’s evidence. The wife presented unusually prolix affidavit evidence and voluminous financial records. While a testament to her attention to detail it is not a model to be emulated. More relevantly it is noteworthy that her meticulous detail did not give a balanced account of the parties’ contributions. While the husband’s evidence in some instances descended into unnecessary minutia it was not of the same volume or intensity. He made some minor misstatements and in his written evidence he too tended to focus upon his contributions with only passing reference to the wife’s. In fairness to him he probably anticipated, as the wife’s evidence demonstrated, that she would put into issue matters which ought not to engage the Court’s time. The wife’s evidence concerning the poor quality of the husband’s lawn mowing is a simple vignette of the type of matter to which I refer.
In her oral testimony the wife resisted making appropriate concessions. Not so the husband whose evidence was more appropriately balanced. Unfortunately for reasons which will become apparent it is necessary to record my conclusion that I was troubled by the misleading nature of the wife’s evidence. Her evidence was too often given in a way which, if accepted, would have distorted the facts. A simple example of which was her evidence in the final paragraph of her affidavit filed on 20 July 2009. It read: “I no longer owe any fees to the [H] Primary School.” The wife failed to disclose that it was the husband who paid their daughter’s outstanding school fees. In the context within which the wife gave this evidence it appeared to me that she hoped the Court would infer that she had paid the outstanding school fees. The wife also failed to disclose material facts, in particular, her strong relationship with her current partner and the manner by which they conducted the financial aspect of their relationship. Although I ultimately found in favour of the manner in which the wife contended the Court should treat this factor I was disquieted by her lack of disclosure.
Absent corroboration of the wife’s evidence and unless I have stated differently where the parties evidence conflicts I have preferred the husband’s.
Background facts
Throughout these reasons statements of fact are findings of fact determined on the balance of probabilities (Section 140 Evidence Act 1995 (Cth).
The husband was born in 1951.
The wife was born in 1959.
In 1975 the husband married his first wife.
In 1977 the husband’s elder child to his first wife was born.
On 21 October 1979 through his employment, the husband joined the State Superannuation Scheme (SSS)[3].
[3] Exhibit ‘D’
In 1980 the husband’s second child to his first wife was born.
In 1985 the wife purchased the property at J Street, M for $53,357. To fund the purchase, the wife borrowed $31,000 from the Commonwealth Bank by way of a home loan, $10,000 from the same bank as a personal loan, with the balance drawn from personal savings. Thus at the point of acquisition the wife had about $12,000 equity in the property.
It is apparent from the nature of the extent of the subsequent renovations and the Council’s refusal, over at least six months, to grant a s 317A certificate that the property was acquired in fairly poor condition. Between 1985 and 1987 the wife carried out renovations and improvements to J Street, the cost of which she met from her income. Although she performed some work the majority was undertaken by contractors. The renovations and improvements are particularised at paragraphs 19-20 of the wife’s affidavit. In general terms they involved rubbish removal, building up and landscaping the yard, modest repairs or enhancements to the house, gates and fences plus minor electrical and other repairs. These renovations and improvements would have improved the amenity of the home. It would be mere speculation to infer that they also increased its value.
In April 1987 the husband and his first wife were divorced.
The parties commenced their relationship in 1987.
On 11 August 1987 the husband purchased a Holden Jackaroo for which he paid $9,800[4]. The purchase price was entirely borrowed.
[4] Exhibit ‘J1’
On 21 September 1987 the husband and his former wife entered into property settlement orders from which the husband received $20,000. Child maintenance orders were made simultaneously, the effect of which was to require him to pay $30 per week for each of his two children.
On 1 April 1988 the husband joined the State Authority’s Non-Contributory Superannuation Scheme[5] (SANCS).
[5] Exhibit ‘M’
The parties terminated their relationship in 1988.
In 1989 the parties resumed their relationship.
On 3 November 1989 the husband paid $5,000, sourced from his $20,000 property settlement, into the wife’s Commonwealth Bank mortgage. At that time the wife’s mortgage interest accrued at 13.5 per cent. With this payment the balance due was reduced from $25,468.09 to $20,469.59. That this was a valuable contribution is evident from the comparison in the reduction to the mortgage the wife had by that time made, namely about $6,000 over four years. The point being with this payment the husband paid, at the rate the wife had been able to afford, only slightly less than four years mortgage instalments.
During 1989 and after the parties resumed their relationship the wife engaged a builder, to extend and open up the rear of J Street. A kitchen wall was removed and an old bathroom demolished. In the expanded area a new bathroom, small sunroom and rear deck were built. This took about two months. At about the time the parties married the kitchen was replaced, with that work also primarily undertaken by tradesmen. When the husband was not at work he laboured for the builder and assisted with the kitchen renovations. Combined these renovations and improvements cost the wife about $35,000. Parts of these funds were drawn from assets which formed part of her initial contributions and are identified later.
Newcastle was hit by an earthquake on 28 December 1989 during which J Street was damaged with, most notably, its piers damaged. Fortunately the wife had insured the property and the earthquake damage were rectified at the insurer’s expense. The parties decided this was an opportunity to improve the property beyond merely repairing the earthquake damage. Essentially this involved excavating below the rear of the property and then building a study, bathroom and laundry. Tradesman performed the majority of the work albeit with the husband’s assistance when he was not at work. As she did with all renovations the wife assisted, primarily through selecting colours, purchasing paint and selecting colour schemes, keeping an eye on cost variations and packing and unpacking household goods. Occasionally she performed minor manual work.
The earthquake insurance paid $17,353 for those additional works with the balance paid by the wife. In relation to her financial contribution to these works the wife paid $2,000-$3,000 towards excavation plus the costs of the slab and other minor repairs. The husband paid expenses incurred along the way, for example for pavers, a load of concrete, bobcat and excavator hire. Nothing turns upon him overstating the extent of his financial contribution towards the cost of a diamond saw blade. Unfortunately for the husband he did not retain records of his expenditure with the same diligence as the wife. Nonetheless it is clear that his direct financial contribution to these earthquake caused renovations was much less than the wife’s.
The wife partly conceded the husband’s evidence, set out at paragraphs 65-77 of his affidavit, concerning the extent to which he was involved in the 1989-1991 renovations. I accept the detailed account the husband gave concerning his extensive involvement in all of the renovations and improvements to the home. In particular that he devoted many hours to hard physical work as set out in the paragraphs referred to as well as making arrangements for his work mates to assist. He too liaised with tradesmen. Concerning the extent of the husband’s non financial contributions to these pre and earthquake caused extensions and improvements I am satisfied that, as to both effort and significance, his non financial contributions considerably exceeded those made by the wife.
On 5 February 1990 the wife made the final loan instalment to discharge the personal loan advanced for the purchase of J Street.
In April 1990 the parties married and commenced living together. At that time and ever since the husband has worked full time in the State public service. The wife was employed in teaching full time.
At the commencement of their cohabitation the husband had the following assets and liabilities:
Assets
Holden Jackaroo
$6,000.00
St George Bank savings
$11,536.24
Superannuation
$13,500.00
Liabilities
Fireboard car loan
$4,000.00
As I earlier found the husband purchased the Holden Jackaroo for $9,800 in August 1987. In late 1990 the husband sold that vehicle for about $6,000. I infer its value at the commencement of cohabitation was the same as the amount for which it was sold not long thereafter.
There was a factual dispute concerning whether the husband had received an inheritance from his late brother’s estate prior to the parties living together. This issue was particularly explored before the Judicial Registrar. In the context of family law proceedings with his first wife, the husband swore an affidavit on 7 March 1991[6] in which he gave evidence concerning his beneficial interest in his late brother’s estate. The gravamen of his evidence was that at that time he held a one quarter share as tenants in common in the estate assets which assets had not yet been sold. In his 1991 affidavit the husband was dealing with relatively recent events. On this topic his memory at that time was likely to have been more accurate than it was when the husband gave evidence before the Judicial Registrar or in 2009. It follows that I am satisfied the husband had not received the proceeds of his inheritance when the parties commenced cohabitation.
[6] Exhibit ‘F’
The wife had the following assets and liabilities at the commencement of cohabitation:
Assets
J Street
A late 1970’s model Ford Laser purchased in April 1983 for approximately $5,000. The evidence does not disclose its value but the likelihood is it was minimal
St George Bank savings
$263.00
Commonwealth Bank savings
$4,000.00
Legal and General policy
$8,418.00
Superannuation – GIO
$4,063.00
Liabilities
Commonwealth Bank
$19,491.90
During closing addresses counsel for the wife submitted that the wife’s GIO and Legal and General “umbrella” policies comprised cash assets. I do not agree. In par 14(d) of her affidavit filed 8 May 2009 the wife identified the GIO holding as superannuation which she subsequently rolled into her current N Super policy. The Legal and General policy was distinguished from savings and its description suggests it was an endowment or life protection policy. The wife withdrew $5,072 from her Legal and General policy so as to meet part of the $35,000 she spent on the non earthquake renovation expenses discussed above.
The Court did not receive evidence of the market value of J Street beyond the date of its purchase and the hearing. As the wife’s insurance claim evidences the earthquake damage to the house was significant and almost certainly caused its value to fall. Consequently it is not possible to precisely determine the value of J Street at the commencement of cohabitation. Similarly if J Street had increased in value it is not possible to conclude the impact, if any, which the renovations and improvements undertaken may have had as compared increased land value. Mr P, who was the single expert, was unable to ascertain the market value of J Street at the point of cohabitation and a number of adjacent dates.
On 23 July 1990 the husband’s first wife started proceedings to increase his child maintenance from the $60 per week he had been paying to $212 per week.
On 20 August 1990 the husband deposited $4,223.21 from his pre-marital savings into the parties’ joint account.
By order on 27 November 1990 the husband’s child maintenance increased to $212 per week. The husband was also ordered to pay his former wife’s costs of $2,421.80. His own legal fees were $1,780.40 which he was unable to pay until later.
The husband sold his Holden Jackeroo for $6,000 in late 1990 at which time he discharged the associated car loan[7].
[7] Exhibit ‘J2’
In December 1990 the wife commenced maternity leave. For 13 weeks she received holiday pay and paid maternity leave. By administrative error the wife received further payments which she repaid.
In January 1991 the parties’ first daughter was born. The wife was thereafter predominately responsible for their children’s care.
Within the context of the husband’s first wife’s child maintenance application, the wife swore an affidavit in August 1991[8]. In this affidavit the wife adopted the evidence which the husband gave in his affidavit sworn 7 March 1991 within her personal knowledge. She also gave evidence concerning her then financial circumstances. In effect these affidavits comprised the parties’ joint representations concerning their financial circumstances. Between them they represented that by March 1991 the husband was the sole income earner upon whom the wife and the child were financially dependent and that he was solely paying the family’s day to day expenses, including providing the wife with the money to pay mortgage instalments and rates. It follows that by early March 1991 the wife’s paid leave had finished and she had commenced a period of unpaid maternity leave. This is also consistent with the wife’s evidence that $3,000 of funds she held in her key card account represented overpaid maternity leave which she later repaid. The effect of these findings is that from late March 1991 until the wife returned to paid employment the husband was the family’s sole income earner. Also that by mid 1991 the parties savings were virtually exhausted. Later in these reasons I set out the parties’ incomes from the commencement of cohabitation. In the period until the wife stopped paid work the parties incomes were modest and it is likely they struggled to pay for renovations and other necessary expenses. It is clear that between the commencement of cohabitation and March 1991 that the parties had applied their respective cash assets held at the commencement of cohabitation to renovation costs and necessary day to day expenses.
[8] Exhibit ‘J8’
In their 1991 affidavits both parties deposed that they believed J Street was worth $130,000. The parties did not obtain a valuation before giving this evidence. Recollections about how the figure was calculated were hazy. The wife believed she may have added $40,000 or $50,000 to a recent Valuer General’s land value and compared it with her understanding of local property values. The husband believed he may have relied upon a market estimate obtained by his then solicitors. Counsel for the wife contended that either as an admission against interest or the best available evidence, the Court would find that as at March 1991 J Street was worth $130,000. This would be unsafe. Neither party was qualified in 1991 to express an opinion to which the Court could attach weight concerning the value of J Street. In reaching this view, I am bolstered by the wife’s representation to the Child Support Agency in 1995 that the property was worth $118,000. The point being, not that the property was worth $118,000 in 1995 but that reliance upon unqualified opinions on matters which require expertise often leads to flawed outcomes.
On 26 September 1991, on the husband’s application, his child maintenance for his two sons was reduced to $65 per week per child.
Almost immediately thereafter the wife returned to work in teaching. The nature of the wife’s work enabled her to complete a significant component of it at home. She attended work to teach classes and to attend meetings. When the wife was at work, the child attended day care. The parties agreed the wife would not work full time with the idea being the husband would assume primary responsibility for earning income and the wife would assume primary responsibility for the running the home and childcare. From this point on the wife has worked either part-time or as a casual employee. She has never worked beyond 2 pm during school term and during school holidays was at home with the children. The husband regularly worked paid overtime.
In about December 1991 the husband received an inheritance from his late brother’s estate. He used his inheritance to pay child maintenance arrears, outstanding adverse costs orders incurred in the child maintenance proceedings, his own legal fees of about $3,800 incurred in the same proceedings and other debts. Having regards to the parties’ 1991 affidavits I infer the outstanding debts were modest joint liabilities. The husband did not discharge that portion of the $1,780 debt due to his solicitors which he was repaying by instalment. That debt was finally paid out in 1996. In his 2008 affidavit the husband said he also paid $2,522 to discharge the Holden Jackeroo car loan. It was clear from exhibits ‘J2’ and ‘F’ that the loan had been discharged before the husband received this inheritance. However it was also clear the husband had another credit union loan in relation to which $2,900 was outstanding in March 1991. Whether this was used to fund car repairs, to meet ongoing expenses or for another reason is unclear. The point being this was the loan which the husband discharged from his inheritance. In her 1991 affidavit the wife did not suggest that liability was unrelated to these parties and I accept it was related to joint matrimonial expenses. The net effect of these findings is that excluding child maintenance and associated legal expenses from his inheritance the husband contributed about $4,500 towards matrimonial expenses.
The parties separated for the first time in February 1992. The husband vacated the home where the wife and the child remained. For the first couple of years the husband spent time with the child while the wife worked with a small number of additional periods. On average he cared for her between 10 to 20 times each year. By the time the child was about three years old his time, but not the frequency, with her increased. The child was able to attend child care and preschool and on those further occasions when the wife needed assistance with her care, the child’s grandmothers helped. More so the maternal than paternal grandmother.
At separation in 1992 the husband withdrew $1,770 from the parties’ joint account and re-established himself with few belongings in rented accommodation. The wife remained in residence at J Street and had possession and control of the overwhelming majority of the available matrimonial assets. These included the contents at J Street and savings of approximately $5,000. To the extent there was criticism of the husband for withdrawing a portion of the parties’ savings this was unwarranted. The criticism failed to acknowledge that the husband reasonably required a few at least of the parties’ matrimonial assets in order to re-house himself.
When the parties separated in February 1992 the balance outstanding on the J Street mortgage was $15,584.21. At that time the loan interest rate was 12 per cent and the monthly instalment was $160.60. The following month the loan interest rate reduced to 11per cent and the monthly mortgage payment was in the vicinity of $135.19 to $142.87. The wife’s Commonwealth Bank statement for the period 31 May 1991 to 7 May 1992 revealed she was able to pay throughout that period at least double the mortgage instalment and in the latter part of the period nearly triple the amount due.
Following separation in 1992 and until the parties resumed cohabitation in 1997 the husband variously lived with friends, with his mother or shared rented premises with colleagues.
At the time of this separation the parties agreed the husband would pay $40 per week child support. The husband made his first child support payment in early March 1992 on which occasion he paid $206. Thereafter and until July 1994 the husband paid child support on average each four to six weeks. Throughout the period he was persistently in arrears, with the arrears generally in the vicinity of $400 to $900. It is noteworthy that the amount of child support which the husband paid was greater than the J Street mortgage instalments. The point being that the wife had accommodation she could readily afford to which the husband had contributed.
On 1 January 1993 the wife joined N Super.
In 1994 the wife’s employer ceased short term contracts. When the wife’s contract expired in 1994 the child was in pre-school. Because preschool finished at 3.00 pm and was not available during school holidays the wife decided against accepting a fulltime position and between 1994 and the end of 1998 she worked on a casual basis. By this stage the wife was employed to teach no more than a couple of classes each week.
In July 1994 the wife applied for and was granted Centerlink benefits. These comprised a family tax benefit payment and, during teaching vacation, a single parent pension. So as to satisfy Centerlink eligibility requirements the wife applied for an administrative assessment of child support. Throughout the following 12 months the husband was liable to pay $190 per fortnight child support. In June 1995 this increased to $202 per fortnight which was reduced to $130 per fortnight in July 1995. In November 1995 the husband’s child support liability increased to $164 per fortnight which continued until July 1996 when it was reduced to $185 per for fortnight. As annexure ‘P’ to the wife’s affidavit showed throughout these periods the husband was in arrears. It appears that by early 1996 his child support liability may have been registered for collection by the Agency as from that point the amount the wife received matched the husband’s liability. Even with the early arrears taken into account the husband’s child support payments were greater than the J Street mortgage instalments.
Between February 1992 and when the parties resumed cohabitation in October 1997 the wife paid various tradesmen to complete improvements to J Street. During 1993 and 1994 the wife paid a builder approximately $16,000 to build a rumpus room, laundry, bathroom and a spare bedroom underneath the house; for recladding, completion of an awning over the front entrance, drainage installation and various minor works identified at paragraphs 48 and 49 of her affidavit. The wife borrowed $10,000 from the Commonwealth Bank with the difference sourced from her savings. In 1995 the wife paid $3,500 to install Colorbond fencing around the property. In 1996 she paid $4,000 for the installation of a Colorbond roof and guttering. That same year the wife paid $3,100 for the exterior of J Street to be painted. These expenses the wife met from savings. During this separation the wife paid $25,190 principal and interest towards her mortgage. It is immediately apparent that the wife was able to make significant payments towards the reduction of principle as well as the modest monthly instalments.
The wife purchased a Nissan Pintarra in 1995 for $5,000.
In November 1995 the husband’s eldest son turned 18 for whom he did not thereafter pay child support.
On 14 March 1997 the parties divorced.
The parties resumed cohabitation in October 1997. When they resumed cohabitation the wife had the following assets, financial resources and liabilities:
Assets
J Street
Commonwealth Bank Keycard Savings Account (approx)
$5,000.00
Contents J Street
Nissan Pintarra worth less than its purchase price
Superannuation
NK
Commonwealth Trust Cash Management Account
$4,954.00
Liabilities
Commonwealth Bank mortgage
$4,530.00
Commonwealth Personal Loan (home renovation)
$4,300.00
At the same time the husband had the following assets and no liabilities:
Bicycle
Modest personal belongings and effects
State Employees Credit Union
$17,603.77
Newcastle Permanent Building Society
$943.59
SSS superannuation – withdrawal benefit
$55,466.11
SANCS superannuation
NK
On 14 May 1998 the wife paid out the Commonwealth Bank mortgage.
The parties’ second daughter was born in July 1998. For the following year, the wife predominately worked from home and when she needed to attend work the child accompanied her.
In September 1998 the husband’s son second son with his first wife turned 18 following which he no longer paid child support for any children from his first marriage.
At a cost of $10,461 the wife arranged and paid for the installation of an eclipse roof above a deck at J Street in July 1999. To do so the wife redrew $3,500 from the home loan facility with the balance paid from accounts in her sole name. Not long afterwards she paid $1,200 for the installation of a home security system.
On 24 March 2000 the wife purchased 500 Coles Myer shares which, including brokerage and stamp duty, cost $3,405.10. This gave the parties access to a share holder’s discount for purchases made at Coles Myer outlets.
Following the demutualisation of the NRMA the wife was allocated 364 IAG shares.
From their respective savings in April 2001 the parties each contributed $5,500 towards the purchase of a Mitsubishi Nimbis.
The parties purchased an investment property at M Street, M on 28 August 2001 for $215,000. From his savings, about $18,500 of which he saved whilst the parties were separated, the husband paid $21,500 by way of deposit. The balance of the purchase price and other acquisition costs were funded through a line of credit the parties jointly established with the Commonwealth Bank. The Commonwealth Bank took collateral security over both the M and J Street properties for the line of credit. The line of credit facility was capped at $400,000. At that time the parties intended to, but ultimately did not, acquire a second investment property.
Using the line of credit, the parties discharged the wife’s Commonwealth personal loan, with the final payment of $3,485.24 paid on 5 September 2001. The monies advanced from this loan had been used towards the 1999 J Street renovations and improvements earlier referred to.
Once the line of credit was established the parties deposited their wages into it and used the account for payment of day to day living expenses and the shortfall on the investment unit. A few thousand dollars was spent on whitegoods and landscaping for J Street. In addition, the wife made a number of lump sum deposits into the account, being, $10,105.36 from her Commonwealth Bank cash management account and $3,000.01 from her Newcastle Permanent account on 3 September 2001, $2,550 from her Greater Building Society account on 28 November 2001 and on 10 March 2003 $2,000 from the same account. The funds transferred from the wife’s Greater Union Building Society account were predominantly Centerlink payments plus small share dividends.
M Street has been substantially rented from purchase. The parties have never used it for their own accommodation. For the financial year ended 30 June 2006 M Street earned $13,136 with expenses of $19,259. The following year M Street produced $13,520 income with expenses amounting to $20,756.17.
During 2006 the parties disposed of the wife’s Nissan Pintarra, by which time it had no value.
On 5 December 2006 the husband purchased a Toyota Twin Cab motor vehicle for $15,000. The funds for this purchase were drawn from the line of credit in relation to which on 7 December 2006 the draw down increased by $15,225 from $188,559.67 to $203,824.67.
On 6 December 2006 the husband vacated J Street. The parties have not resumed cohabitation.
At the date of separation the wife had the following assets, financial resources and liabilities:
Assets
J Street
Share in contents J Street
Half share in M Street
Half share Nissan Pintarra
$1,000.00
Greater Building Society
$880.00
500 Coles shares
364 IAG shares
Superannuation
NK
Liabilities
Commonwealth Bank line of credit (joint)
$203,824.67
ANZ credit card
$2,127.04
Diner Club credit card
$1,567.38
At the same time the husband had the following assets, financial resources and liabilities:
Assets:
Half share interest in M Street
Half share in Nissan Pintarra about
$1,000.00
Share in contents of J Street
Toyota Twin Cab motor vehicle
$15,000.00
Newcastle Permanent Building Society
$943.59
SSS superannuation[9]
(assuming retirement at 65)$384,643.00
SANCS superannuation (assuming retirement at 65)[10]
$26,396.45
Liabilities
Commonwealth Bank line of credit (joint)
$203,824.67
ANZ credit card
$1,861.23
[9] Exhibit ‘J10’
[10] Exhibit ‘J10’
Since separation the wife and children have continued to reside in J Street. The wife has thus had the effective use and benefit of the overwhelming majority of the parties’ non superannuation and available assets.
Concerning the line of credit, post separation the wife no longer deposited her wages into the account. Between separation and August 2007 she paid $2,370.34 into the line of credit. The wife attached to her affidavit two bank statements[11] which show the line of credit transactions between 7 December 2006 and 5 January 2007. She correctly pointed out that the husband made a payment on his ANZ credit card for $1,861.23 on 4 January 2007. The wife made no mention of the payment from the line of credit to Diners Club on 27 December 2006 of $1,567.38 or $2,127.04 paid to a second ANZ credit card on 2 January 2007. The second ANZ card carries the same number as the statements for the wife’s account attached to her affidavit[12]. The Diners Club card carries the same account number as the statements[13] for the wife’s account attached to her affidavit filed 20 July 2009. I accept the husband’s evidence that the parties generally used these credit cards for family expenses and the probability is that these amounts had accrued prior or as a consequence of separation. It is noteworthy that the wife specifically mentioned the husband’s payment to a credit card in his name but failed to disclose payments made to her own. This is another example of the misleading manner in which the wife presented her evidence, particularly the gloss she attempted to place upon her financial documents. Since August 2007 the wife has not paid any money into the line of credit. Post separation the wife withdrew more from the line of credit than she deposited.
[11] Annexure ‘RR’ and ‘SS’
[12] Annexure ‘A’
[13] Annexure ‘H’
Since separation the husband has lived in rented accommodation. The husband’s salary continued to be deposited into the line of credit until 3 January 2007 during which period he paid $3,168.60 into the account. He made the credit card withdrawal referred to above and on 5 January 2007 withdrew $1,500. Having withdrawn his salary immediately thereafter, without the wife’s knowledge, the husband capped the line of credit at $210,000. The husband was concerned that the wife would continue to make withdrawals from the line of credit and he wanted to ensure that the line of credit was not extended.
Since separation the rental income from M Street has continued to be paid into the line of credit. After deduction of agent’s commission the net weekly rental is $233. Interest, rates, insurances and body corporate fees have been $403 per week which left a weekly shortfall of $170 per week. Of this about $23 related to the drawdown for the husband’s Toyota Hilux. Other than a payment the wife made of $1,400 the husband has met the shortfall. The husband has paid $20,005.34[14] onto the line of credit.
[14] Exhibit ‘D’
For the 2007 and 2008 taxation years the wife claimed a legitimate taxation loss for the losses the parties incurred on M Street. From her taxation returns it appeared she claimed losses of $3,639 in 2007 and $5,436 in 2008[15]. In these years the wife received taxation refunds of $1,630 and $2,981.74 respectively, which included refunds for deductions unrelated to M Street. However the husband’s point that for 18 months the wife received tax savings for expenses paid by him is valid. The wife retained those refunds.
[15] Exhibit ‘H’
Neighbours adjacent to J Street have, for some time, sought council approval which would enable them to build a comparatively large home on their land. While the parties cohabited they jointly opposed the development application. Since separation the wife has spent a few thousand dollars on her ongoing opposition to the proposed development which thus far has resulted in the neighbours’ plans being stymied. The wife claimed these expenses and her associated efforts as contributions which she said have enhanced the value of the former matrimonial home. I do not accept the wife’s proposition that her efforts have improved or maintained the value of the parties’ property. While the outcome is to the wife’s satisfaction it is mere speculation that somehow these activities affect the value of the property. For the purpose of this hearing her expenditure of these matters post separation is irrelevant.
In June 2008 the wife purchased a Corolla motor vehicle for $22,000. The wife traded in the Nimbus for $500 and borrowed $22,000 at 15 per cent by way of a personal loan from the Commonwealth Bank. The wife has had sole use of the Corolla and made all loan repayments. It had been the wife’s intention to offer J Street as security for the advance. However, the husband had wrongly lodged a caveat against the home which he refused to uplift so as to permit the bank to secure its advance. Consequently the loan was advanced at a higher interest rate than would otherwise have been the case. At little cost the wife could, but did not, have issued the husband with a caveat lapsing notice which would have resulted in the bank being able to secure its advance and her having the benefit of a lower interest rate. Thus although I accept the husband acted inappropriately and caused the wife an unnecessary degree of difficulty in securing the loan I do not accept that he should be made accountable for her paying a higher rate of interest.
On 30 June 2009 the husband paid the younger daughter’s outstanding school fees in the amount of $1,204. Other than for this payment since separation the wife has paid this child’s school fees.
General principles for the adjustment of matrimonial property
The approach to the determination of an application under s 79 is well established by authority. In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595. The process ordinarily involves a four part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in s 79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. I must then evaluate the matters contained in s 75(2) insofar as they are relevant, any other order made under the Act affecting a party or child and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide, or might be liable to provide in the future, for a child to the marriage.
In determining what order the court should make under s 79, the court must be satisfied in all the circumstances that it is just and equitable to do so (s 79(2)). It is the justice and equity of the actual orders that the court must consider. Russell v Russell (1999) FLC 92-877.
In Coghlan (2005) FLC 93-220 the Full Court discussed the relevant provisions of Pt VIIB including the manner in which a Court should formulate the asset pool. Specifically, whether the Court should effectively adopt a two pools approach, one for s 4(1) property and a separate pool for superannuation. The majority held at 79,646:
We consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in s 4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise).
Assets, liabilities and financial resources as at date of hearing
The parties reached agreement as to the value of most assets and liabilities.
I find that the parties’ assets, liabilities and financial resources as at the date of hearing are as identified in the following table.
Non –superannuation Assets
J Street (W)
Agreed
$625,000.00
M Street (Joint)
Agreed
$315,000.00
Toyota Hilux (H)
Agreed
$8,950.00
Wesfarmer shares (W)
Agreed
$4,090.32
IAG shares (W)
Agreed
$1,306.76
NIB shares @ 0.78 cents (H)
Agreed
$4,680.00
Furniture and furnishings (W)
Agreed
$2,500.00
Wife’s savings
Not agreed
$1,000.00
Husband’s savings
Not agreed
$1,000.00
Total non superannuation assets
$962,727.08
Liabilities
Colonial mortgage, M Street (J)
$210,000.00
Total
$210,000.00
Net non superannuation assets
$752,727.08
Superannuation assets
Husband
Agreed
$480,147.00
Wife
Agreed
$143,529.00
Total
$623,676.00
Net assets
$1,377,203.08
There are a number of findings which require explanation.
The husband’s superannuation interest comprises his interests in the SSS fund which is worth $445,985.48 and $34,162.42 for his interest in SANCS.
The wife’s Wesfarmers 184 shares resulted from her acceptance of a scrip for scrip offer when Wesfarmers took over Coles in 2007 for which she also received a small cash adjustment. As the Coles shares were acquired during the course of the marriage ownership of which provided the nexus for the acquisition of the Wesfarmers shares it is appropriate to include the later shareholding in the asset pool.
When NIB demutualised in early 2009 at no cost to him the husband received 6000 NIB shares. The husband maintained insurance with NIB throughout the marriage and as the husband’s membership provided the nexus for the subsequent share allocation it is appropriate to include these shares in the asset pool.
The husband argued against inclusion of the wife’s Corolla and its associated loan in the asset pool. As I understood it his position was that because the acquisition and liability arose post separation and are items in relation to which neither party sought an adjustment they should be excluded. It was submitted in effect that it would not be just and equitable to require the husband to contribute to the wife’s liability. The wife submitted in favour of the inclusion of both the car and liability in the pool and said the husband’s arguments went to contribution rather than pool issues. On balance the approach contended for by the husband delivers a more just and equitable outcome. These items will nonetheless be considered in the context of s 75(2).
The husband submitted against the inclusion of the parties’ savings in the asset pool. Both parties’ savings are modest and have been acquired post separation. In her affidavit filed 20 July 2009 the wife disclosed four bank accounts, three of which had a total credit balance of $1003 and a Commonwealth Bank Account (608) in which there was $9,249.00. This later amount related to funds advanced by family members towards accrued legal fees and, consistent with the approach in Chorn and Hopkins (2004) FLC 93-204 has been excluded. As to the balance of the savings although they were acquired post separation the parties supported each other in a multitude of ways throughout cohabitation and thus indirectly to their respective earning capacity. I agree with the wife’s approach that the remaining savings should be included.
The M Street property, if sold, will be subject to Capital Gains Tax, which if the property were to be sold now would be levied in the amount of about $16,374. Selling and agents costs of about $8,500 would also be incurred. The parties agreed these expenses would not be included in the asset pool. I agree with the husband’s approach that Capital Gains Tax at least should be taken into account pursuant to s 75(2). Also that if the outcome of my findings concerning contributions and s 75(2) are such that the trigger point for a sale of M Street is reached these costs should be shared between the parties.
Section 79(4) – the evaluation of contributions and other factors
Section 79(4) requires that the Court looks at the entirely of the contributions, both financial and non-financial, to the welfare of the family as well as to the acquisition, conservation and improvement of assets. Contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense. Farmer and Bramley (2000) FLC 93-060. In Ferraro the Full Court highlighted the difficulty involved in evaluating and balancing fundamentally different contributions. It also reinforced that the Court’s task includes evaluating the significance of the various contributions, the weighting of which is ultimately a matter for the court.
The parties agreed that the Court would evaluate their contributions by reference to two asset pools; that is superannuation and non-superannuation assets.
Although some repetition is necessary it is unnecessary to slavishly repeat all of the findings made which touch upon the evaluation of the parties contributions.
I will firstly consider the non superannuation assets. Before doing so it is appropriate to refer to Parshen v Parshen (1996) FLC 92-720 where the Full Court held:
In our view in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to the provisions of s.79 that monies how so ever received by a party during the course of the party’s cohabitation, are used by that party for the benefit of the family unit. Such monies, in those circumstances, thus constitute a financial contribution by the party who received the money.
Counsel for each of the parties agreed these principles applied in this case. As I have earlier commented the wife was a meticulous record keeper who generally made payments to third parties via direct payments from her credit cards and accounts. On the other hand the husband was more likely to make cash withdrawals to pay expenses, personally and by giving the wife access to his income. His inability to prove ongoing specific payments on matrimonial expenses does not establish that he only used those funds where receipts or direct payment details exist. Nor does the fact that he routinely made cash withdrawals persuade me that he used those funds for purposes unrelated to the marriage. Nor do I accept the implication, if that is the meaning the wife intended to convey at paragraph 155 of her May 2009 affidavit, that the husband secreted funds from his first wife or withdrew money for some collateral purpose. Had the wife been troubled about the possibility that the husband had misused or secreted the funds there referred to she would have made mention of this in her August 1991 affidavit. I infer the reason she did not do so is because she was satisfied the husband used the funds for day to day and then their joint matrimonial expenses.
The wife’s evidence that the husband participated in sports and social activities, for example as a member of his local surf club and flying, seemed to an extent to be designed to persuade the Court he spent money other than on matrimonial purposes. It also went to the amount of time he was available to the children. The husband’s expenditure on social interests was relatively modest and part and parcel of family life. Although the wife said her regular gym attendances related to her health issues plainly there was also a social element. My point being that throughout cohabitation each of the parties expended modest sums on personal activities which are properly treated as being for the benefit of the family unit, albeit in each instance, an individual party.
I am satisfied that throughout cohabitation each of the parties contributed all the monies they received for joint matrimonial purposes and the betterment of the family unit. The only qualification to this finding relates to the husband’s child support payments made for the benefit of his children from his first marriage, which although not always paid on time were fully paid, and his associated legal expenses.
The table below sets out each party’s taxable income until their final separation. I have included years during which the parties separated primarily so as to inform my understanding of the differential concerning superannuation contributions. Although the salary figure used by SSS and SANCS was not necessarily the same amount as the husband’s taxable income it was close. The wife’s income during these years corroborated her evidence concerning, amongst other things, that she had sufficient funds to continue to maintain and improve J Street. Where I have made findings which are approximations these are the mean of adjacent years. The exceptions are the wife’s first year income where a mean could not be calculated and June to December 2006 period for which I have used 23 weeks of the full year taxable income. While I accept the husband regularly worked overtime the amount of overtime was reasonably consistent. The approximations of the wife’s income may be slightly advantageous to her. I have used her 1991 figure for 1990 as well, inferring the higher amount over two years.
The figures set out in the table provide an approximation of the parties financial contributions from earned income during cohabitation. To these figures must be added the non superannuation assets each party brought into the relationship, the husband’s inheritance and in the wife’s favour the proceeds of the earthquake insurance.
Financial year
Husband
Wife
Cohabit 28 April 1990 – Feb 1992
$
$
30 June 1990
32,894
25,784 (approx)
30 June 1991
33,193
25,784
30 June 1992
35,496
16,418
Separated Feb 1992 – Oct 1997
30 June 1993
36,188 (approx)
32,210
30 June 1994
36,880
32,028
30 June 1995
43,046
28,454
30 June 1996
44,781
22,538
30 June 1997
44,478
17,426
Cohabit Oct 1997-Dec 2006
30 June 1998
49,448
18,673 (approx)
30 June 1999
51,994
19,921
30 June 2000
55,519
21,853
30 June 2001
53,829
28,654
30 June 2002
64,406
29,476
30 June 2003
65,001
23,240
30 June 2004
66,427
27,409
30 June 2005
68,734
30,196
30 June 2006
69,332
33,140
June-Dec 2006
31,403 (approx)
14,658 (approx)
For the financial years ended 30 June 2007 and 30 June 2008 from his employer the husband earned about $71,000 annually. From her employer the wife earned $36,789 and $38,259 respectively[16]. Although the parties notionally distributed equally the $280 per week rent from M Street this was paid onto the line of credit.
[16] Exhibit ‘H’
The evaluation of financial contributions is more complex than the mere calculation of the funds introduced by each party. Antman (1980) FLC 92-800. This point is reinforced by the oft quoted comments in Pierce (1999) FLC
92 -844 where, in relation to initial contributions, the Full Court said:
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.
The wife made a modestly greater initial contribution to the non-superannuation assets than the husband. In reaching this conclusion I have taken into account the money which the husband paid onto the wife’s mortgage prior to cohabitation. Although it has not been possible to determine the market value of J Street at that time, even in its damaged condition J Street was almost certainly worth more than the wife paid for it five years earlier. The nature of this asset attracts particular significance as it provided the foundation for an important component of the parties’ wealth. The fact of the wife’s ownership of J Street enabled them to put their earned income to good use in the sense that it could be applied to developing this asset, reducing debt for the betterment of family and not be lost to them through the necessity of paying rent. It was required as collateral security for the acquisition of M Street. Notwithstanding the parties’ various subsequent contributions this is a consideration which weighs in the wife’s favour.
From the time the parties commenced cohabitation the husband earned more than the wife. Even when the money which he diverted to his children by his first marriage is deducted the husband’s earned and received funds exceeded the wife’s. Excluding periods when the parties were separated from the time the parties commenced cohabitation no valid distinction can be drawn between which party actually paid expenses. This is because, as I have already mentioned, the wife had access to the husband’s income, for example to his cash. Thus although the wife was at pains to ensure that I appreciated she was responsible for specific payments made whilst the parties cohabited ultimately this has not influenced the outcome in the manner she hoped for. The point being irrespective of who actually made the innumerable payments throughout cohabitation ultimately all funds received were contributed and expended on the family.
During the years of the parties’ first separation the husband paid child support but otherwise made no further direct contribution towards J Street. However as with each subsequent separation he gave the wife exclusive use of his contributions made towards J Street, the effect of which was that she had exclusive use of the overwhelming majority of the available assets. By utilising the matrimonial assets this way the wife’s cost of living was reduced and the parties retained a valuable asset which increased in value.
During these intervening years the wife maintained the outgoings on J Street and paid for the renovations and improvements to which I have already made reference. Whilst she had the benefit of the asset, including the contributions to it which the husband had made prior to separation, her financial support of J Street ensured that the asset remained available to the parties. Because of the benefits which the wife received through her exclusive use of J Street, particularly inexpensive accommodation, these are factors which warrant only a small adjustment in her favour.
I have earlier identified the non-superannuation assets which the parties brought back into the marriage in October 1997. In the years after the parties resumed cohabitation in 1997 and until they finally separated the husband’s financial contributions significantly exceeded the wife’s. His income was materially greater than hers and provided the financial backing for the family, including the acquisition of M Street. By this I mean not just the funds he introduced when the parties resumed cohabitation but also the financial capacity to borrow funds and to support the losses M Street created. Without the husband’s contribution towards the deposit for M Street it is doubtful the parties would have been able to acquire an investment property. So that it is clear I accept that the husband was able to retain his savings in tact partly because of the money and assets which the wife brought back into the marriage at this time. However the wife contributed to M Street but not to the same extent. The wife must also receive some recognition for J Street being available as collateral security for the line of credit which enabled the parties to acquire M Street. The parties have not improved M Street. Its increased value is attributable to upward movements in the property market. Post separation the husband has supported M Street at considerable cost but no immediate benefit to himself. The wife has benefited through taxation deductions from expenses the husband paid post separation towards M Street. These are factors which weigh modestly in his favour.
As I have already found the wife has had the exclusive use and benefit of J Street since December 2006. That property was encumbered only as collateral security for M Street and as far as the wife was concerned she has paid rates and presumably other minor maintenance expenses. My approach to the wife’s contributions to this asset post separation is similar to that taken to it during the parties’ prior separation except that in this period the overall benefits to the wife equate to her contributions. Consequently the wife’s financial support of J Street post separation does not warrant an adjustment in her favour.
Both parties have acquired shares or cash assets as a consequence of demutualisation of companies through which they had insurance. The parties maintained these policies throughout cohabitation and during periods when they were separated. Whether directly or indirectly the ultimate share acquisition and cash payment derived are assets to which both parties contributed in accordance with my overall assessment of their contributions to non-superannuation assets.
Excluding the wife’s Corolla the parties introduced and acquired various motor vehicles, personalty and furniture of modest value. To these assets their financial contributions were equal.
When the parties’ initial contributions are considered overall their financial contributions are assessed as slightly favouring the husband.
Notwithstanding the repairs and improvements undertaken to J Street by tradesmen as I have earlier found I accept the husband’s evidence concerning the improvements and renovations which he undertook to it prior to cohabitation and subsequently. Throughout cohabitation he performed running repairs and maintained the grounds and performed ongoing minor repairs on the parties motor vehicles. While the wife also contributed by undertaking improvements and overseeing repairs and improvements to J Street, once the children were born her time was substantially subsumed in their care and her work in teaching. I infer that during the years the parties were separated the wife was called upon to make minor repairs and attend to the grounds. Even taking into account the wife’s non-financial contributions to the maintenance of J Street during the years the parties were separated, I am satisfied the husband’s non-financial contributions to the maintenance and improvement of the parties non-superannuation assets overall exceed the wife’s.
Before departing from the issue of improvements, whether paid for or personally undertaken, it is appropriate to comment that the evidence does not enable me to determine the extent to which the various repairs and improvements made to J Street increased its value. Ultimately whether the parties overcapitalised, materially enhanced its value or merely improved the amenity of the property to their satisfaction was something of a dry argument. This is because the effort and expenditure has been considered and taken into account.
During cohabitation the wife was primarily responsible for running the home, managing their finances and caring for the children. The husband was primarily engaged in earning income. From the time of the first child’s birth the wife’s contribution as a homemaker and parent considerably exceeded the husband’s. The wife was enthusiastically involved in every aspect of the children’s care and has diligently worked to give the children her support and ensure their social and educational success. It is for this reason she reduced her paid employment and amongst other things keenly involved herself in the children’s schools, their extra-curricular and social activities. When the breadth and nature of the children’s extra-curricular activities is taken into account it is not surprising that at various times the wife found it difficult to balance the children’s needs with paid employment. However this does not mean that somehow the husband’s contributions as a homemaker and parent and to the welfare of the family were deficient. His primary role was as an income earner in a full-time position which was physically demanding, involved roster considerations and regular overtime. The point being the wife’s hours of employment were less than his.
Although I thought the husband in some respects gave a slightly exaggerated account of his homemaker and parent contributions I generally accepted his evidence on this topic. For the period during which she was a neighbour Ms S’s evidence was generally consistent with that given by the husband. Her evidence also demonstrated that the wife’s evidence vis-à-vis the homemaker and parent contributions made by the husband were considerably understated. The effect of this is that I am satisfied that when the husband was at home he involved himself in the children’s care and running the home. He was interested in the children’s education, sports and social activities and cared for the children when the wife was out. For example her sports activities often required the husband to collect a child from school or ballet, to care for one or both after school and on those weekends when the wife was involved in competitive sport. All of these things the wife did as well, more so, when the husband was unavailable. When he was on holidays the husband was as involved in the children’s care as the wife.
During each separation the wife’s homemaker and parent contributions dramatically increased. This is because throughout these periods the children were overwhelmingly in her exclusive care. Irrespective of the reasons for it the reality is that during separations the husband’s contact with the children was very limited. Overnight contact with the older child was very rare and with the younger child occurred with the inadequate frequency set out in the wife’s written evidence. During these periods the wife’s home maker and parent and contributions to the welfare of the family greatly exceed the husband’s.
The parties’ homemaker and parent contributions are of considerable duration and must be valued in a real and significant way. They significantly favour the wife.
When these factors are viewed overall the wife is assessed as making a greater contribution to the non superannuation assets 53 per cent compared to the husband’s 47 per cent.
I will now evaluate the parties’ contributions to superannuation. During the final addresses there were animated submissions concerning how this exercise should be undertaken and the extent to which the Court should adopt an approach akin to that utilised in West & Green (1993) FLC 92-395 or another arithmetic calculation. In M & M (2006) FLC 93-281 the Full Court said, at par 116:
There should, in our view, be no doubt that since the introduction of Pt VIIIB, that there is no longer any need to make orders of the kind in West & Green nor to use the so called formula to arrive at a value for superannuation entitlements …
and at par 121
We do not find a contribution assessment based on a calculation of years of marriage divided by the years the member had been in the fund to be helpful. In the context of considering contributions pursuant to s 79 it has never been necessary to apply a mathematical formula in the way we have described. All that is required is that the contributions of the parties be evaluated in relation to superannuation as they are to other assets.
Their Honours, having referred to pars 65 and 66 in Coghlan (2005) FLC 93-220 then said:
The relationship between years of fund membership and cohabitation might be relevant in a defined benefit scheme whereas actual contributions made by the fund member at the commencement of the cohabitation might be relevant to an accumulation fund where in both cases the marriage was of short duration. However, in our view there is nothing said in the majority of Coghlan (supra) that would give any support for the application of some kind of a formula or that contributions to superannuation whatever the nature of the fund, should be treated in a different way from contributions to other property under s 79(4).
Summarised counsel for the wife submitted the Court would assess the husband as having made an initial 5 per cent contribution to his SSS fund which would be extracted from the pool and to the balance the parties contributions assessed as equal. Although counsel for the husband appeared to abandon a West & Green submission his arithmetical approach seemed to bear many of its hallmarks.
The period from when the parties commenced cohabitation could not be described as relating to a short marriage. As annexure ‘A’ to the husband’s affidavit filed on 1 October 2008 demonstrated when compared with his SSS statement of 2007 the employer contributions to his superannuation have raised considerably in the latter years. Consequently when their Honour’s remarks above referred to are applied neither of the formulations pressed by counsel would deliver a just and equitable outcome.
As I have already found the husband is a member of two superannuation schemes. In both the husband’s interest is a defined benefit interest in the growth phase. Interests in Defined Benefit superannuation funds are generally based upon years of service and salary levels prior to retirement together with contributions and investment returns. In relation to both schemes in which the husband has an interest the Commonwealth Attorney General has approved fund specific methodology to be used in the valuation of superannuation interests. These funds’ specific valuation methodologies enable trustees and the Court to calculate the present day value of a superannuated worker’s interest in the fund. For both funds’ the fund specific valuation methodology captures the essential components of a defined benefits scheme to which I have made reference.
The calculation of the husband’s present day value of his interests in SSS was undertaken assuming his retirement in June 2009 and on the basis that his retirement age was 65 at a salary figure of $69,857[17]. The calculation of his interest in SANCS was undertaken using the same assumptions, subject only to the salary figure being $68,833[18]. The Court has valuations of the husband’s interest which assume he would retire at age 65 but calculated on his April 2008 and June 2009 salary figures. Otherwise there is no evidence of the value of his superannuation, calculated in accordance with the regulations, at any other time. The Court received various superannuation statements which identified amounts payable on retrenchment, invalidity and resignation. Employer contributions were identified as were reserve units. In his affidavit the husband said his lump sum entitlement from superannuation if he resigned at about the date of marriage was about $16,500. Annexure ‘A’ to his affidavit suggests the figure was closer to $13,500 – which figure it is worth remembering was not calculated by reference to the regulations. Thus while the figure is illustrative it does not enable direct comparison to the present value of the husband’s superannuation. Simply put such an exercise would be the equivalent of comparing apples with oranges.
[17] Exhibit ‘M’
[18] Exhibit ‘M’
In any event the husband’s initial contribution to non superannuation assets is materially more significant than its then withdrawal value when the parties commenced cohabitation. This is because he brought in slightly more than 10 years of service to the SSS fund and one year to SANCS. These years of service significantly and favourably impact upon the current value of the husband’s superannuation and in relation to the SSS fund weighs materially in his favour.
The husband has never made any personal contribution to superannuation. From the time he commenced with SSS his award conditions have resulted in his employer making mandatory payments calculated by reference to his salary figure. These were funds which would never have come into the husband’s possession as income and are contributions which neither he nor his employer could divert or avoid. In the strictest sense the financial contributions paid to towards the husband’s superannuation were a factor of his employment.
The parties agree upon the value of the wife’s superannuation, but there is no valuation of her interests at any other time other than at the commencement of cohabitation and the hearing. Similar issues arise as were discussed in relation to the values of the husband’s superannuation interests calculated other than in accordance with the regulations. It is illustrative to note, however, that when valued by reference to industry methods the husband’s initial contribution towards superannuation was greater than wife’s.
The wife deposed that since 1985 she had made minimal payments towards her superannuation. As I understood her evidence she initially focussed upon property acquisition and when later she became a casual or contract employee she directed minimal payments into superannuation. It is unclear whether when the nature of the wife’s contractual relationship with her employer is taken into account whether the wife’s employer also contributed to her superannuation. It follows that unlike the situation with the husband where the funds paid into his superannuation would never have been received directly, from cohabitation the wife contributed funds which would otherwise have been available into superannuation. Her contributions could effectively be seen as a type of savings.
Although in a strict sense the source of the parties contributions towards their superannuation was different for both the critical component is the nexus to their employment. It is apparent the parties have maintained continuity of employment from the commencement of cohabitation. While the effort of employment is that of the worker party the other party contributed indirectly to the worker’s ability to maintain stable employment. For example each assisted the other to meet their parental obligations and relieved them from this when work and family commitments were incompatible. During periods of separation indirect contributions ceased while the wife’s contributions to the welfare of the family and as a homemaker and parent increased in the same manner as earlier assessed.
From when the parties commenced cohabitation the financial contributions to the husband’s superannuation have always exceeded the wife’s. This is clear from his superannuation statements, greater income and the wife’s evidence concerning her minimal superannuation contributions. During cohabitation the parties’ indirect contributions were equal. The wife’s homemaker and parent and the like contributions favour her. To this must be added the husband’s greater initial contribution and that he brings ten plus pre-cohabitation “years of service” to the present value of his SSS fund.
The effect of these findings is that towards superannuation assets the husband is assessed as having contributed 54 per cent compared to the wife’s 46 per cent.
The orders will not effect either parties’ earning capacity.
I have already taken into account the child support which the husband has paid for the children.
Rounded out when the two pools are combined the overall effect of my findings expressed as a percentage of the net value of assets results in 50.2 per cent to the husband and 49.8 per cent to the wife.
Section 75(2) factors
The wife contends there should be a 10 per cent adjustment pursuant to s 75(2) in her favour. It is the husband’s contention that neither party is entitled to an s 75(2) adjustment.
The husband is 58 and the wife is 50 years old. Each of the parties is in reasonably good health. The wife has a long standing, chronic lower back problem which she generally manages through exercise and occasional medical review. Years ago the husband injured his knee and is no longer as agile as he once was. These matters do not warrant an adjustment.
I have already made findings about the parties’ assets and liabilities. As a consequence of my s 79(4) contributions and other findings, rounded out the wife will have assets worth about $685,448.69.She will also have her Corolla worth $14,600[19] and the associated personal loan of $18,952. The husband will have assets worth about $690,954.30. Of these the husband’s assets will overwhelmingly comprise superannuation which he will be unable to access for two years. On the other hand the wife will receive predominately non superannuation assets. While she must wait longer to access her superannuation the fact that the husband will be unable to access the majority of his entitlement for at least two years requires a small adjustment to him. The husband will also take on a significant Capital Gains Tax liability, which he may be able to continue to defer. As my later findings reveal the husband’s ability to retain M Street is uncertain and the prospect he may need to subsequently pay Capital Gains Tax, albeit possibly at a reduced rate, requires consideration in his favour.
[19] Exhibit ‘L’
Each of the parties has outstanding legal costs. As at 20 July 2009 the husband had incurred legal expenses which amounted to $79,004.70[20]. From income earned post separation he paid approximately $22,000 and when the hearing commenced there remained $67,909.35 outstanding. As I understand the husband’s costs disclosure statement, by the end of the hearing he incurred $6,600 in additional legal expenses. So as to promptly pay these fees, which he must, the husband plans to increase the mortgage against M Street. The maximum amount the husband’s bank is prepared to secure against M Street is $250,000.00 which means he is only able to increase the mortgage by $40,000.00. This will leave him with a sizeable mortgage and about $33,000.00 due to his lawyers.
[20] Exhibit ‘C’
From post separation income and loans advanced by family members (which included $5,000 from the parties’ elder daughter), the wife paid $73,238 legal expenses. When the costs of the hearing were taken into account, she had $28,000.00 outstanding in legal fees. The wife’s brother and mother are of modest means and require her to promptly repay the $45,000.00 they have advanced towards her legal fees. As well as paying her outstanding legal fees the wife will borrow at least $50,000.00 against J Street. The wife owes about $14,500 in credit card debt, $13,727 of which relates to legal fees. If the wife combined her current credit card debt, car loan and $50,000 into one mortgage she would have a mortgage of about $83,400. Such an approach is likely to result in a more favourable interest rate and is likely to be the approach adopted by the wife. The wife will, if ordered to pay the husband an adjustment, need to borrow that sum.
Each of the parties has the physical and mental capacity for fulltime employment until they reach retirement age. Presently, the husband plans to retire when he turns 60. His conditions of employment would enable him to continue work until he is 65 years old. The husband would thus continue to earn about $71,000 plus any annual increments until he retired. The issue however is whether, when all of the husband’s circumstances are considered, he is likely to achieve this apparent earning capacity. Until the husband is able to access his superannuation he is in a reasonably precarious financial position. His expenses identified in his Financial Statement filed 7 May 2009 suggest that until the husband retires he will manage but struggle to be able to afford to service the increased M Street mortgage when his cost of living and child support are taken in to account. At that point although the husband would prefer to take his entire superannuation entitlement in the form of a pension it is likely he will need to take a component of it as a lump sum. This is the only obvious way the husband is likely to be able to reduce his mortgage to a manageable amount. That is to an amount he can afford at this late stage of his working life to be able to repay. When the husband occupies M Street he will lose its rental income.
Although I am satisfied the husband has the physical capacity to continue to work until he is 65 I accept that he finds the hard physical effort required of him in his role an ever increasing struggle. Combined with the factors discussed in the paragraph above I am persuaded that the husband needs to retire when he is 60. I attach greater weight to his actual earning capacity, that is $71,000 plus until he is 60 and thereafter in accordance with his superannuation pension.
Although the wife works part-time and has done so for many years, she has the physical and mental capacity to increase her hours of employment. Her present salary is paid at 60 per cent of a full time position. Consequently if the wife worked full time at her current grade she would earn about $60,000 per annum. I accept the wife’s evidence that promotional advancement, and thus an even greater increase to her earning capacity, is unlikely. Whether because she lacks the qualifications required for an increase in her hours or because the wife will, as she is entitled, continue to work part-time so that she can care for the younger child outside of school hours, the reality is that she will earn less than her earning capacity. However, the wife is younger than the husband and she will be able to continue working for a number of years after the child has completed school. Thus although she will by that stage still work part-time she will continue in paid employment longer than the husband. The wife will thus be able to contribute towards superannuation for a considerably longer period than him. In the circumstances of this case reality is more important than a theoretical earning capacity.
The wife’s Financial Statement filed 12 May 2009 disclosed that she earns $769.30 from paid work and receives $67.51 in Family Tax Benefit payments. The wife receives $150 child support which gives her a total weekly income of $968.81. The wife will continue to receive an income of approximately this amount until the husband retires and her child support is somewhat reduced at which reduced level the wife’s income is likely to remain until the younger child has finished school.
The younger is likely to continue living with the mother until she has completed Year 12 and turned 18 years. The younger child sees the father reasonably regularly but rarely overnight. Last year for example the child had about 11 nights with the father. As I said to the parties at the end of the hearing, each of them needs to do more to ensure that the present ad hoc arrangements for the child’s time with her father are regularised so that she has a proper opportunity to enjoy her relationship with him. With modest effort by both parties this should be achievable. While the husband’s payment of child support will to an extent moderate the financial consequences to the wife of not taking up full time work as the Full Court in Clauson (1995) FLC 92-595 held at 81,911: “…it should not be forgotten that the payment of child support in no way compensates the custodial parent for the loss of career opportunities, lack of employment mobility and the restriction on an independent lifestyle which the obligation to care for children usually entails”. These are findings which warrant an adjustment in the wife’s favour.
Since separation the wife has been in an intimate personal relationship with Mr R. Mr R stays overnight between four and five nights per week at the wife’s home. The wife only disclosed the circumstances of this relationship, indeed its existence, after her objections to the admissibility of evidence from Ms S failed. The wife’s obligation to give full and frank disclosure of her financial circumstances required that she disclosed her relationship with Mr R. Her failure to do so reflects poorly upon her. Mr R works fulltime as a labourer and, on weekends, as an artist. He owns his home which is free of encumbrance. Mr R has for years been a member of a superannuation fund and he has about $5,500 in cash assets. It is Mr R’s habit to take his evening meal at his home and more often than not, spend the night at the wife’s home. He usually returns to his own home if he has an evening job on the weekend. He and the wife do not mingle their finances and they have no plans to cohabit in the foreseeable future. The husband contends Mr R is a financial resource for the wife. I do not agree. The evidence did not establish there exists such financial benefits for the wife, actual or potential as a consequence of her relationship with Mr R which would enable me to treat him as a financial resource for the wife.
Other than the parties’ younger daughter, neither party has any responsibility to support another person.
The parties each has the expenses identified in their Financial Statements. The wife has included expenses she pays for the older daughter who is over the age of 18. The older daughter lives with the wife and is in part time employment. It is the wife’s contention that her ongoing commitment to the older daughter’s support, personal and financial, is a factor to be taken into account under s 75(2)(d). I do not accept her submission. In coming to this conclusion I have not overlooked that since the older daughter contracted glandular fever in mid 2006[21] she has struggled with chronic fatigue and episodic depression. This year she discontinued her first year university studies which she will resume fulltime next year. Although the older daughter has the financial capacity to make a modest contribution to the wife’s household expenses, the wife does not require this from her. I accept the wife contributes to the older daughter’s ongoing financial needs in a manner which the husband does not. Nonetheless, this is a voluntary arrangement established between the wife and the older daughter, the financial consequences of which are, from the wife’s perspective, relatively inconsequential.
[21] Exhibit ‘G’
Presently the wife’s expenses exceed her income. However these include about $500 per week for credit card payments which substantially relate to her legal expenses. Clearly the wife is paying much more than the minimal monthly payment required to service these loans. If the wife rolled her credit card, $111 per week car loan and legal expenses loans into a single secured loan as I have already said she is likely to do, her weekly expenses fall markedly and to an amount she is able to afford. The size of the loan repayments which the husband makes on the M Street mortgage is illustrative of the benefits to the wife of taking this course.
The husband’s expenses are his alone and are set out in his Financial Statement. These include board which he will stop paying when he moves into M Street, $385 income tax and $212 per week superannuation which he will stop paying upon retirement. As is referred to later the husband’s child support liability is likely to reduce upon his retirement. While his fixed expenses are greater than the wife’s so too is his income.
Other than Family Tax Benefits, which has already been taken into account in calculating the wife’s income, neither party receives or is eligible for a pension, allowance or benefit of the type referred to in s 75(2)(f).
Since separation, the wife has had exclusive use of the family home and her standard of living has not materially fallen. The husband has lost the amenity of his own home and has had few of the matrimonial assets. These matters have been taken into account when the parties’ post separation contributions were evaluated. The husband will shortly move into M Street and thus further adjustment would not be appropriate.
I have already made findings concerning the nature of the wife’s relationship with Mr R. Presently the husband lives in shared accommodation. The husband meets his own expenses and his financial circumstances are not intermingled with his flatmate. These matters do not warrant an adjustment.
The husband pays $654 per month child support for the parties’ younger daughter. The Child Support Agency collects the husband’s child support liability directly from his employer. For so long as the husband remains employed he will pay child support at about this rate. Once he retires and commences receiving his superannuation pension the rate of child support is likely to be reduced. Although he will be retired the Child Support Agency will be able to continue to collect the assessed child support. Notwithstanding the wife’s criticisms of the husband’s approach to the payment of child support, I am satisfied the husband will pay child support until the child is 18.
As I have already found the husband is a member of two superannuation schemes. The calculation of his present day value of his interests in both schemes was undertaken assuming his retirement at 22 June 2009. The relevant multiplication factor attributed by the fund specific formulae changes by reference to the date to retirement. In the husband’s case the multiplication factor used to calculate the agreed value of his interest was 0.851 per cent (8 years from retirement). At age 60, provided he retires, the multiplication factor is 0.9446 per cent. When these factors are combined counsel for the wife submitted the amount the husband will actually receive will be greater than the funds’ specific methodologies determined the present day value of the husband’s superannuation interest to be. As the final benefit is dependent on future events, counsel was unable to identify the amount by which the husband’s actual payment would differ. In response, counsel for the husband submitted that there were too many uncertainties for the Court to draw the inference contended for by the wife. For example, the formula assumes a notional increase in the husband’s salary during the intervening period which may or may not occur. Although unlikely, the husband’s salary may fall. Investment earnings may also fall. While I accept that the husband’s employer will continue to contribute towards his superannuation the evidence does not enable me to do more than infer that the husband is likely to receive slightly more than the agreed present day values of his superannuation interests. That a modest increase is likely is supported by the increase in the value of the husband’s superannuation calculated as at April 2008 compared to June 2009. At the earlier date and on the assumption the husband would retire at 65 his SSS superannuation was worth $384,643[22] and SANCS was worth $30,590.61[23]. However beyond concluding that the husband will at age 60 receive a slightly higher superannuation entitlement that its present value, there are too many uncertainties for the Court to adopt the more bullish approach the wife contended for.
[22] Exhibit ‘J10”
[23] Exhibit ‘J10”
The wife contended the Court would take into account that if she was ordered to pay the husband more than $35,000 she could not afford to retain J Street. At that point any mortgage would be in the vicinity of about $125,000 which I agree she would find difficult to service. I accept her contention that she and the children are happily ensconced in J Street and that they would be greatly upset to leave it. While I accept there are personal advantages for all of them to remain in the home to which they are attached, this is not a consideration which could be used to deny the husband his entitlement to a just and equitable adjustment of property.
Having regard to all of the s 75(2) factors I find it appropriate that there should be an adjustment in the wife’s favour of 4 per cent. This reflects the cumulative outcome of the findings I have made pursuant to s 75(2). Tomasetti (2000) FLC 93-023. To test the measure of that assessment, it should be viewed in monetary terms Waters & Jurak (1995) FLC 92-635. That puts in the wife’s hands a further $55,056.12 a modest but nonetheless appropriate recognition of her future parenting responsibilities in the overall context of my s 75(2) findings. The difference in the amounts the parties will receive as a consequence of my s 79(4) and s 75(2) findings does not warrant further adjustment.
The wife would therefore be entitled to a property settlement of 53.8 per cent or $740,935.26 compared to the husband’s 46.2 per cent or $636,267.82.
Section 79 (2)
Because the Court must consider the actual orders, not just the percentage distribution, under s 79(2) justice and equity in cases like this requires that the Court stands back and looks carefully at the outcome of the s 79(4) and s 75(2) process. It is at this stage that the Court considers the actual structure of the orders. I will not repeat the findings made thus far. It is sufficient that I observe that I am comfortably satisfied that an outcome distributing the available assets of 53.8 per cent to the wife and 46.2 per cent to the husband is just and equitable.
It is agreed that whatever adjustment is ordered it will be made against non superannuation assets.
The parties agree that they will each retain those assets in their possession. On this basis, the wife’s property settlement entitlement would give her the following assets:
J Street (W)
$625,000.00
Wesfarmers Shares
$4,090.32
IAG Shares
$1,306.76
Furniture
$2,500.00
Savings
$1,000.00
Superannuation
$143,529.00
Total
$777,426.08
Less payment to the husband
$36,490.80
Entitlement
$740,504.28
In addition, the parties agreed that in the event the wife was ordered to pay an amount to the husband she would pay interest on that amount calculated in accordance with the Family Law Rules 2004 commencing from 11 February 2009.
The wife will be given the opportunity to pay the husband by instalments. The orders are structured in a fashion which should ensure her ability to retain J Street. She will be required to pay the husband the $35,000 which she said she can afford within eight weeks. This will provide her with sufficient time to consolidate her liabilities plus finalise arrangements for an advance with her bank. Any longer would be unreasonable to the husband. As to the balance the wife will be required to pay this within six months. While the husband is likely to consider this delay to be unreasonable the perceived unfairness to him will be moderated by the payment of interest. Commencing eight weeks hence interest on the amount which remains outstanding calculated in accordance with the Family Law Rules will be payable by the wife.
The husband will be required to discharge the mortgage secured against M Street within eight weeks. It would offend s 81 notions of finality to keep the parties tied to a mortgage for which they are jointly liable. This is sufficient time for the husband to arrange his affairs with his lender.
The husband must promptly remove the caveat he has lodged against J Street. Unless it has been withdrawn earlier the husband shall give the wife a Withdrawal of Caveat when she pays him $35,000.
The husband will receive:
M Street
$315,000.00
Toyota Hilux motor vehicle
$8,950.00
NIB shares
$4,680.00
Savings
$1,000.00
Superannuation
$480,147.00
Total
$809,777.00
Less Commonwealth Bank mortgage
$210,000.00
Add cash payment from the wife
$36,490.82
Entitlement
$636,267.82
In the difficult circumstances of this case I consider this outcome to be a just and equitable division of property between the parties.
For these reasons I propose to make the orders identified at the start of these reasons.
Before entering the proposed orders I published my reasons and invited the parties’ lawyers to proof read the orders so as to ensure that my calculations and findings were reflected in the orders. They agree that the net pool of assets is $1,377,203.08 which is $800.00 more than at par 89 of these reasons I found. Their figure is correct. This means that the wife must pay the husband $36,490.82 and not $36,921.80. My orders will reflect this revised calculation.
Rather than issue a corrigendum I have amended the findings in accordance with the schedule agreed between the parties lawyers to reflect these revised figures.
I certify that the preceding one hundred and seventy-four (174) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan
Associate:
Date: 24 November 2009
Key Legal Topics
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Family Law
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Civil Procedure
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