Daley & Cadwell
[2008] FMCAfam 88
•13 February 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DALEY & CADWELL | [2008] FMCAfam 88 |
| FAMILY LAW – Property – contributions – s.75(2) adjustment – future needs. |
| Family Law Act 1975, ss.75, 79 |
| Coghlan v Coghlan (2005) FLC 93-220 Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Kowaliw and Kowaliw (1981) FLC 91-092 Norbis & Norbis (1986) 161 CLR 513 Pierce & Pierce (1998) FLC 92-844 Williams & Williams [2007] FamCA 313 |
| Applicant: | MR DALEY |
| Respondent: | MS CADWELL |
| File number: | WOC 153 of 2007 |
| Judgment of: | Altobelli FM |
| Hearing date: | 12 November 2007 |
| Date of last submission: | 12 November 2007 |
| Delivered at: | Wollongong |
| Delivered on: | 13 February 2008 |
REPRESENTATION
| Solicitor advocate for the Applicant: | Mr Hodgson |
| Solicitors for the Applicant: | Marriott Oliver |
| Counsel for the Respondent: | Ms Christie |
| Solicitors for the Respondent: | DGB Lawyers |
ORDERS
On or before 28 March 2008, but otherwise simultaneously:
(a)The wife pay or cause to be paid to the husband or as he directs the sum of $312,612; and
(b)The husband do all things necessary to transfer to the wife his interest in the property at Gxxx in the state of New South Wales being the whole of the land comprised in Certificate of Title Folio Identifier No 9xxx, and to provide to the wife with a discharge of the mortgage no. 5xxx currently noted on the title.
Should payment not be made by 28 March 2008, or should an issue otherwise arise as regards the interpretation, implementation or enforcement of these orders, the parties have liberty to re-list this matter before me on seven (7) days notice.
Henceforth the wife is entitled to occupy the property to the exclusion of the husband provided she pays as they fall due all statutory and other outgoings on the property, all utilities and other costs associated with her occupation of the home, all insurance premiums relating to the property, and all costs associated with maintaining the property in a good condition and state of repair.
By consent, the husband is restrained from changing the nominated beneficiaries for his Xxx Travel Redundancy package.
The parties otherwise retain to the exclusion of the other their respective superannuation and non-superannuation assets and financial resources.
IT IS NOTED that publication of this judgment under the pseudonym Daley & Cadwell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
WOC 153 of 2007
| MR DALEY |
Applicant
And
| MS CADWELL |
Respondent
REASONS FOR JUDGMENT
Introduction
This application for alteration of property interests, commonly known as a property settlement, was commenced by Mr Daley, the husband. The respondent is his wife, Ms Cadwell. Both are 46 years old. They married in December 1996 following a period of cohabitation of a few months. They separated on 21 April 2005 and, despite attempting reconciliation afterwards, their separation was final. They each came into the marriage with substantial assets. They both worked very hard, in their own capacities. They are unable to agree about how to divide their assets, so I was required to make that decision. These reasons for judgment explain the orders that I have made.
Background
As it turns out the issues that I was asked to decide after the hearing were quite discrete, so it is not necessary for me to set out a detailed background of the parties and of their respective financial and non‑financial contributions during the marriage. There is an agreed list of assets which I set out below. It comprises superannuation assets, having a total value of $341,839, and non‑superannuation assets (excluding furniture) having a value of $1,168,171. The wife submits to me, through her barrister, Ms Christie, that at the end of the day, having regard to the length of this relationship and the diverse contributions of a financial and non‑financial nature that they each made, contribution is equal. Mr Hodgson, the solicitor appearing for the husband, submitted that contribution was equal save in relation to superannuation assets, where, he submitted, mainly as a result of post‑separation contributions by the husband, the adjustment should be 70/30 in the husband's favour.
Both parties agree that a s.75(2) adjustment in favour of the wife should be made to reflect a number of matters, but there is disagreement about the extent of that adjustment. The wife submits it should be 10 per cent, the husband five per cent.
The principal asset is the former matrimonial home at Gxxx. The valuation evidence before me establishes that it has a value of $875,000. The wife wants the opportunity to retain the former matrimonial home, but the husband says that because of certain issues relating to the property I should order its sale. I will need to deal with this in the context of the form of order I make.
Throughout the entire period of the relationship the husband was employed, initially with Xxxx, and since September 1999 with Cxxx Australia where he is employed as a maintenance coordinator.
Despite suffering from ill health, the details of which I will discuss below, the wife is employed in two jobs, one as a resource manager, and another as a receptionist. She continues to reside in the former matrimonial home, and the husband is living in rented accommodation at Wxxx.
Pool of assets
The agreed list of assets provided to me by Ms Christie and Mr Hodgson is set out below: ‑
Agreed List
1.
Gxxx Property(joint)
$875,000
Xxxx Staff Credit Union (husband)
$48, 457
BT Margin Loan Facility (husband)
$30,544
Cxxx Employee Stock Purchase Plan (Husband)
$6,215
Wife’s bank accounts
$140,000
Wife’s car
$3,700
Xxxx Shares (wife)
$2,392
Wife’s Art
$18,364
Husband’s artbook
$3,580
Wife’s paid legals
$11,885
Husband’s paid legals
$28,034
Total non-super assets
$1,168,171
Superannuation
Husbands AXA
$76,111
Skandia One Super (husband)
$166,820
Wife’s CSS
$5,900
Wife’s Xxxx
$93,008
Total super assets
$341,839
Total super and non-super assets
$1,510,010
In relation to the pools of assets I comment as follows:
a)I have excluded the furniture which each party has. The husband says that his furniture is worth $13,670 and the wife $5,000. Neither concedes that the other’s figure is correct. I am asked to accept this evidence as being the only evidence, and as being an admission against their own interest. I do not accept that is just and equitable to both parties. It is agreed they will each retain the furniture in their possession. That is the order I will make. Its value is insignificant in the overall scheme of things.
b)The paid legal fees are an agreed add-back.
Issues
Having regard to the matters set out above, the issues that I need to determine in this case may be expressed as a series of questions:‑
(i) How should I assess contribution in this case having regard to the superannuation assets, and the non‑superannuation assets?
(ii) What is the extent of the future needs adjustment that should be made in favour of the wife?
(iii) In making an order should I give the opportunity to the wife to retain the former matrimonial home, or should I order it to be sold?
(iv) Is the result otherwise just and equitable?
Applicable Law
The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by the husband in bringing property into the marriage. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 27, 28, 29 and 32:
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) …28.…said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
Assessing Contribution
For the wife, Ms Christie submits the contribution is equal and that I should treat both the superannuation assets and non‑superannuation assets as one pool. She submits I should do this because it has been a ten year relationship, the assets at cohabitation are readily identifiable, both the husband and the wife are of the same age, the assets have been intermingled, and the contributions made by each of them have been diverse. She also submitted that if it was necessary to make a superannuation splitting order, the trustee of any relevant fund had not been put on notice. According to Ms Christie, therefore, contribution is equal across the entire pool of assets.
Mr Hodgson submits that such an approach would be unjust and inequitable to the husband, particularly having regard to his significant contributions to superannuation after separation as a result of entering into salary sacrifice arrangements with his employer.
The effect of Mr Hodgson's proposal would be that, for all practical purposes, the superannuation entitlement stays where it is with no further adjustment. The effect of Ms Christie's submission, however, is that the husband would need to make an adjustment of $72,000 approximately in favour of the wife, out of non‑superannuation assets.
The husband was able to establish in evidence, to my satisfaction, that as at 30 June 1996, six months before cohabitation, he had superannuation entitlements of $59,419. He was also able to establish that on 21 April 2005 he had superannuation of $113,310 in one fund, and $30,276 in another fund as at 1 April 2005. This means that, in general terms, between the date of cohabitation and the date of separation his superannuation had increased from $59,419, to $143,586, an increase of $84,167. Moreover, the evidence indicates that as at the hearing his superannuation totalled $242,931, an increase of $93,335 from the date of separation. He asserts that he engaged in salary sacrificing his salary during this period. The growth in superannuation is probably also attributable to significant performance of superannuation funds during this period, a matter in respect of which I take judicial notice.
The husband's submission is that, for all practical purposes, the wife neither made a contribution to the superannuation at cohabitation, nor to the superannuation after separation. There is considerable merit in this submission.
In Coghlan v Coghlan (2005) FLC 93‑220 at page 79646 the Full Court explains that a trial judge may take into account the relationship between years of fund membership and cohabitation, actual contributions made at various times including at the commencement of cohabitation, separation and the date of the hearing, and other relevant matters.
Even if one looks at just the post‑separation accretion to the superannuation fund, $93,345, that represents 27 per cent of the total value of both the husband and the wife's superannuation, and even this figure ignores his initial contribution at cohabitation. Under the circumstances, his submission that superannuation should be dealt with on the basis of contribution 70/30 in his favour is clearly just and equitable. The best way to give effect to such a conclusion is for the husband to retain his current superannuation entitlements and the wife likewise to retain hers. This is due to the fact that the husband’s superannuation amount of $242,931 is 71 per cent of the parties combined superannuation total.
As both parties agreed that the assessment of contribution for non‑superannuation should be equal, it follows that the remaining assets should be divided equally, subject to a discussion about future needs.
How should the wife's future needs be assessed?
The husband conceded that there should be a five per cent adjustment in the wife's favour to reflect a disparity in earning capacity. Indeed, there is a disparity in earning capacity. The husband earns at least $1,800 per week from his job, and the wife earns a total of $1,004 per week from her two jobs, interest on funds invested and a superannuation guarantee contribution. I agree that at least a five per cent adjustment in this regard is certainly warranted. On behalf of the wife, however, Ms Christie emphasises not just the disparity in earning capacity, but the wife's medical condition in respect of which her evidence was unchallenged. The wife's evidence in this regard consisted of the affidavit of Dr O, a consultant neurologist at S Clinic in Sydney. He described the wife's condition as an asymmetrical benign essential tremor. Dr O's prognosis was that the tremor would continue for the rest of her life, probably very slowly worsening with the passage of time. I record that the tremor in question was clearly apparent during the course of the wife's evidence. In terms of the impact of the medical condition on the wife's capacity for employment, Dr O records that he was impressed by the wife's work history to date. He was of the opinion that she will clearly remain full‑time in the workforce for the indefinite future, though it may not be possible for her to obtain the type of work for which she might be qualified by way of her education.
I record that the wife is, indeed, highly qualified. She has a Masters Degree in Business Administration. I accept Dr O's evidence in his report that the physically obvious tremor would be a negative factor for employers when considering a candidate for employment, especially in a professional capacity. I believe that a further s.75(2) adjustment needs to be made in the wife's favour to reflect the impact that this condition will have on her future employability. The adjustment must not be too high, however, as I believe five per cent already seeks to make an adjustment in the wife's favour based on income disparity. However, I think that in all the circumstances a five per cent adjustment is warranted, on top of the five per cent that I have notionally allowed for disparity in earning capacity. Having observed the wife and her tremor I am left in no doubt that it will limit the scope of her health and future employment. She is clearly an intelligent, articulate and capable woman, but her physical condition will lead to the very frustrating situation whereby she will probably never find work that matches her ability. Dr O also explained in his evidence that the reaction by other people to the wife's condition may serve to aggravate any underlying anxiety/depression state which the wife has. He records that the wife required treatment for depression at the time of separation and noted at the time of meeting with the wife that she did look somewhat anxious. All of this evidence tends to make me think that there is a question mark over the wife's future employability generally. I thus consider it appropriate to make a total s.75(2) adjustment in the wife's favour of 10 per cent.
The form of order to be made
The issue here relates to the former matrimonial home at Gxxx. The wife would like the opportunity to keep it, if she can buy the husband out. The husband prefers that the property be sold. He says that it would be unfair to him for the wife to be able to keep the property at its agreed value because of the possibility that a buyer will come along and actually pay more than the price at which it was valued. The husband's argument proceeds as follows. The single joint expert appointed to value the home was Mr W & Mr V, and their valuation report dated 31 October 2007 was in evidence. Their report provides that the property has a value of $875,000. The husband was not in a position to cavil with that valuation, because of the appointment of a single joint expert. However, he submitted that the valuation report itself indicates that depending on the extent of disclosure given to a purchaser about potential slip problems affecting the property, it could be sold for as high as $925,000. Indeed, the valuation reflects the fact that a prudent purchaser who has had the benefit of disclosure of all of the relevant documents relating to the slip problems affecting the property would only pay $875,000, and not $925,000.
The difference, of course, is $50,000 and, as both parties had to frankly concede, if the property were to be sold a substantial part of that additional potential gain would be lost through the costs of sale.
In any event, the essence of the husband's argument is that a less than prudent purchaser could come along, not make all the inquiries about the slip problems affecting the property that a prudent purchaser would make, and therefore pay a higher price, in fact possibly as high as $925,000. However, this Court could not countenance a sale by the parties where less than full disclosure was given of the slip problems affecting the property, which are set out at length in the valuation report, but which do not need to be recited in these reasons. In any event, this Court would not be prepared to make the assumption that valuation should be established on the basis of a less than prudent purchaser. The valuation evidence speaks for itself. Having regard to the problems affecting the property its valuation is $875,000. The wife is in occupation of the property. She would like the opportunity to retain it. The husband has no ideological or in principle objection to that. His real objection seems to be that the property could, in fact, be worth more than what the single joint expert says it is. That is a hypothetical situation I am not prepared to take into account. Accordingly, I accept, of course, that the former matrimonial home has the value of $875,000 and I will frame orders in such a way as to give the wife the opportunity to purchase the property from the husband.
Is this order just and equitable?
Having regard to the s.75(2) adjustment that, I believe, is necessary in this case the net result is that the wife will receive 60/40 on the non‑superannuation assets, and 40/60 on the superannuation assets. Neither party asks me to make splitting orders and I am informed that neither party has notified the trustee of the respective funds, in any event. I consider it appropriate, therefore, to leave the superannuation as it is and seek to implement the split out of non‑superannuation assets.
The total pool of assets in this case is as follows:
Non-superannuation assets
$1,168,171
Superannuation assets
$341,839
Total
$1,510,010
The wife is to receive 60% of non-superannuation assets: 60% x $1,168,171 = $700,902 (Husband = $467,264)
The wife is to receive 40% of superannuation assets: 40% x $341,839 = $136,735 (Husband = $205,103). As it is agreed that the parties will retain their own superannuation without a split, the difference between what the wife is entitled to, and what she has, will be paid out of the non- superannuation assets.
This means the wife’s total assets will be $837,637 or approximately 55.5% of the total pool of assets. I am satisfied that this is just and equitable under the circumstances.
I will give the wife the opportunity to return the home at Gxxx and to pay out the husband. The wife currently has in her possession assets totalling $176,341 not including the home, which she is to retain. In order to retain the home and achieve a 60:40 split of the non-superannuation assets the wife will need to pay the husband $312, 612. On that basis, from the wife’s perspective, the final alteration of property interests will mean:
| Gxxxoa | $875,000 |
| Wife’s bank accounts | $140,000 |
| Wife’s car | $3700 |
| Wife’s Xxxx shares | $2392 |
| Wife’s art | $18,364 |
| Wife’s paid legals | $11,885 |
| Wife’s CSS super | $5900 |
| Wife’s Xxxx super | $93,008 |
| $1,150,249 | |
| Less payment to husband | (312,612) |
| Balance available to wife | $837,637 |
From the husband’s perspective, this means that he will receive by way of alteration to property interests:
Payment from wife
$312,612
Xxxx Staff Credit Union account
$48,457
BT Margin loan facility
$30,544
Cxxx stock purchase plans
$6215
Artbook
$3580
Paid legals
$28,034
AXA super
$76,111
Skandia super
$166,820
Balance available to husband
$672,373
At the hearing the wife’s counsel was quite confident that that the wife would have the financial capacity to meet an order to pay out the husband. Her own minute of order proposed payment of $247,150. I will give the wife the opportunity to pay $312,612 but not make orders for sale until she defaults on her obligation to do so. In this regard the husband will have liberty to apply to re-list in chambers.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Lisa Molloy
Date: 13 February 2008
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