Davids and Davids - [2019] FamCA 544

FAMILY COURT OF AUSTRALIA

DAVIDS & DAVIDS

[2019] FamCA 544

FAMILY LAW – PROPERTY SETTLEMENT – Just and equitable – Contributions – Where the wife has made significant financial contributions – Where the wife’s parents have made contributions for the benefit of the parties – Where the parties have made an equal contribution to the parenting of the children – Appropriate to make an order – Orders.

Family Law Act 1975 (Cth) ss 75, 75(2), 75(2)(o), 79, 79(2), 79(4)

Aleksovski & Aleksovski (1996) FLC 92-705
Bevan & Bevan [2013] FamCAFC 116
Bonnici & Bonnici (1992) FLC 92-272
Carter & Carter (1981) FLC 91-061
Chorn & Hopkins (2004) FLC 93-204
Clifford & Lodge [2000] FamCA 1666
CPL & CPL [1998] FamCA 143
Dickons & Dickons [2012] 50 Fam LR 244
Finlayson v Finlayson & Gillam (2002) FLC 93-121
Hurst & Hurst [2018] FamCAFC 146
Kouper & Kouper (No 3) [2009] FamCA 1080
Kowaliw & Kowaliw (1981) FLC 91-092
SMB & MFB [2006] FamCA 46
Stanford & Stanford (2012) 247 CLR 108
Thurston & Loomis & Ors [2018] FamCA 26
Vass & Vass [2015] FamCAFC 51

APPLICANT:

Mr Davids

RESPONDENT:

Ms Davids

FILE NUMBER:

ADC

2298

2016

DATE DELIVERED:

14 August 2019

PLACE DELIVERED:

Darwin

PLACE HEARD:

Adelaide

JUDGMENT OF:

Berman J

HEARING DATE:

8, 9 and 10 May 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Jordan

SOLICITOR FOR THE APPLICANT:

Jordan & Fowler Family Lawyers

COUNSEL FOR THE RESPONDENT:

Ms Lewis

SOLICITOR FOR THE RESPONDENT:

Jacqui Ion Lawyers Pty Ltd

Orders

That in full and final settlement of any claim that either party may have against the other or at any time in the future for settlement of property or alteration of interests in property:-
(a)That within thirty (30) days of the date of this order the parties do all things necessary and sign all such documentation as may be required to pay to the husband the settlement sum of ONE HUNDRED AND FOURTEEN THOUSAND FOUR HUNDRED AND FORTY SIX DOLLARS ($114,446) and that thereafter the balance of the funds held in the joint ANZ savings account number …57 be paid to the wife and the parties shall cause the said ANZ account to be closed;
(b)That with respect to the wife’s interest in P personal superannuation held within the P2 Superannuation Fund (ABN …) with the account number …01 (“the superannuation fund”):-
(i)Pursuant to s 90XT(4) of the Family Law Act 1975 (Cth) the husband shall be allocated a base amount of ONE HUNDRED AND FORTY THREE THOUSAND AND EIGHTY SIX DOLLARS ($143,086) out of the wife’s splittable interest in the superannuation fund;
(ii)Pursuant to s 90XT(1)(a) of the Family Law Act 1975 (Cth) whenever the trustee of the superannuation fund (namely P Limited) (“the trustee”) makes a splittable payment out of the wife’s interest in the superannuation fund pursuant to this order, the trustee shall pay to the husband the sum calculated in accordance with Part VI of the Family Law (Superannuation) Regulations 2001 (Cth) using the base amount and there shall be a corresponding reduction in the wife’s interest in the superannuation fund thereafter;
(iii)The trustee, in accordance with the obligations set out under the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 (Cth) shall do all such acts and things as may be necessary to calculate the entitlement of and make the payment to the husband in accordance with paragraph 1(b)(i) herein;
(iv)This order shall have effect from the operative time;
(v)The operative time shall be four (4) business days after the date of service of this order upon the trustee;
(vi)The husband shall serve a certified copy of this order upon the trustee within fourteen (14) days of the date of this order by ordinary pre-paid post;
(vii)That this order binds and shall bind the trustee.
(c)That unless otherwise specified herein, the wife shall have as her sole property and free from any claim, right or entitlement of the husband the following:-
(i)Her business known as F Pty Ltd including but not limited to, her interest in the entities known as D Pty Ltd, Q Pty Ltd, and C Pty Ltd;
(ii)The entirety of the funds held in the joint ANZ account following the payment of the settlement sum;
(iii)Her separate savings and investments including, but not limited to the funds held in her CBA Smart Access Account number …77, her CBA Net Saver Account number …85 and her CBA Term Deposit account number …39;
(iv)All items of furniture and household effects and personal effects presently in her possession or under her control;
(v)All entitlements to superannuation in her name SAVE AND EXCEPT as provided in paragraph 1(b) herein;
(vi)Any life insurance policies, income protection insurance policies and trauma insurance policies held in her name; and
(vii)All other items of personal property presently in her possession or under her control and otherwise specified herein;
(d)That unless otherwise specified herein, the husband shall have as his sole property and free from any claim, right or entitlement of the wife the following:-
(i)His business known as H Business including but not limited to his interest in the entities known as R Pty Ltd and the Davids Family Trust;
(ii)His separate savings and investments;
(iii)His motor vehicles and motor cycles and accessories;
(iv)His windsurfing, surfing and other sporting equipment;
(v)All items of furniture and household effects and personal effects presently in his possession or under his control;
(vi)All entitlements to superannuation in his name;
(vii)Any life insurance policies, income protection insurance policies and trauma policies in his name; and
(viii)All other items of personal property presently in his possession or under his control not otherwise specified herein;
(e)That unless otherwise specified herein the wife be solely liable for and do indemnify the husband and forever keep him indemnified in respect of her debts and liabilities including any amounts owing by the wife to the Australian Taxation Office and/or the Commonwealth Government of Australia.
(f)That unless otherwise specified herein the husband be solely liable for and do indemnify the wife and forever keep her indemnified in respect to his debts and liabilities including any amounts owing by the husband to the Australian Taxation Office and/or the Commonwealth Government of Australia.
(g)That each party is retrained and an injunction is granted restraining each of them from pledging the credit of the other;
(h)That each party shall do all such acts and things and sign all documents necessary to give effect to the terms of this order; and
(i)That if either party shall refuse or neglect to sign any document necessary to give effect to the terms of this order after it shall have been presented to him or her and it shall remain unsigned after seven (7) days thereafter THEN upon proof by affidavit of such refusal or neglect a Registrar of the Family Court of Australia is hereby appointed to execute and if in the Registrar’s opinion it shall be necessary to do so, to settle the same and do all such other acts and things and execute such other documents as shall be necessary to give full force and effect to the terms of this order.
(j)That the wife’s periodic amount of child support pursuant to Child Support Assessment dated 18 January 2018 or any subsequent assessment be reduced to zero pursuant to s 118(1)(a) of the Child Support (Assessment) Act 1989 (Cth).

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Davids & Davids has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: ADC 2298 of 2016

Mr Davids

Applicant

And

Ms Davids

Respondent

REASONS FOR JUDGMENT

Introduction

Mr Davids (“the husband”) and Ms Davids (“the wife”) separated in late 2015 following a period of cohabitation of 17 years.
There are two children of the relationship, X born … 2002 (“X”) and Y born … 2008 (“Y”) (collectively “the children”). Following separation the parties agreed that the children’s care would be shared equally, however since early 2017 X has lived in the primary care of the wife spending one week per month with the husband.
By Initiating Application filed 23 June 2016 the husband seeks orders for property settlement and non-periodic child support such that in addition to the administrative assessment of child support the wife shall pay the entirety of the significant private school tuition fees, fixed charges, school books, uniforms and extra-curricular activities for the children.
The orders sought by the husband were given more detail in his counsel’s case outline document. The husband now seeks the following orders:
a)The sum of $231,629 presently standing to the credit of the parties in a joint bank account representing the balance of the net proceeds of sale of the formal matrimonial home at B Town;
b)Such further sum as the Court shall determine;
c)That the husband retain free from claim of the wife the following:
i)R Pty Ltd and Davids Family Trust;
ii)Motor vehicle 2;
iii)Motor Vehicle 1;
iv)Trailer;
v)Furniture, household effects and personal property in his possession.
d)That the wife retain free from any claim of the husband:
i)Wife’s business;
ii)The proceeds of insurance payments received by her;
iii)The wife’s separate savings;
iv)The Motor Vehicle 1;
v)All furniture household effects and personal property in her possession.
e)That from the wife’s superannuation interest with P3 superannuation (“the fund”) a base amount of $140,099 is allocated to the husband out of the wife’s interest.
By her Amended Response filed 23 April 2019 the wife seeks that the entirety of the funds held in the joint ANZ account be paid to her.
She consents to an order allocating a base amount of $140,000 to the husband from her fund and otherwise seeks that each party retain their legal and equitable interests in personalty and realty currently held by them.
The wife opposes the orders for non-periodic child support and seeks that the current assessment dated 18 January 2018 be reduced to zero.
The parties were able to reach agreement in respect of a superannuation split of a base amount in favour of the husband and the Court was advised that they had entered into a Binding Child Support Agreement which has the effect of reducing the wife’s assessment of the Child Support Agency to zero for each of the children up to their 18^th birthday, but provides that the wife will be responsible for the children’s school related expenses.

Documents relied upon

The husband relies upon the following documents:
·Initiating Application filed 23 June 2016;
·Trial Affidavit filed 29 January 2019;
·Affidavit in Reply filed 6 May 2019;
·Financial Statement filed 30 January 2019.
The wife relies upon the following documents:
·Amended Response filed 24 April 2019;
·Trial Affidavit filed 24 April 2019;
·Financial Statement filed 24 April 2019;
·Affidavit of Dr J (“the wife’s father”) filed 24 April 2019;
·Affidavit of Dr K filed 27 April 2019.
The husband did not require Dr K for cross-examination and accordingly her affidavit is read into evidence.

Background

At the date of trial the wife is 48 years of age and the husband 49 years of age.
The parties met in mid-1996, were married in 1998 and commenced their cohabitation as at the date of the marriage. The parties separated under the same roof in September 2015 following a 17 year period of cohabitation.
The parties obtained a divorce order in 2017. X and Y are 17 and 11 years of age.
The wife holds two undergraduate degrees.
The wife obtained marketing and merchandising experience through her employment in her mother's business.
At the date of marriage the husband was studying to obtain two Bachelor degrees. The husband currently holds qualification as a professional.
In early 1996 the wife and her sister Ms Z (now deceased) developed a business model whereby business stock would be manufactured in Country W and then marketed and distributed in Australia. This was the genesis of F Pty Ltd. Ms Z utilised her artistic ability to design and craft the business stock, whereas the wife was involved in the business operations and financial management.
Between 1996 and 1998 the wife worked for a company whilst promoting and developing the business after hours.
From February 1998 the wife was engaged on a full time basis with the business.
The wife’s parents were supportive of the business endeavour and provided both encouragement and financial support for the business.
It is not controversial that at the date of the parties marriage the husband did not have assets of any significance but rather, had extensive outstanding liabilities to his former partner, business debts owed to creditors arising out of a failed landscaping business, a significant HECS/HELP debt and other miscellaneous expenses. Save as to the husband’s HECS debt, the wife’s father settled the husband’s outstanding debts without reference to the wife.
The parties lived in an investment property owned by the wife’s father. They were not charged rent between January 1998 and August 1999 when the property was sold. Thereafter, the wife’s father contributed to one half of the rental costs until the parties moved out in February 2000.
The parties are agreed that throughout their relationship they kept separate bank accounts and did not pool their income. Agreement was reached as to the extent of their separate contributions towards joint household and living expenses, with the balance remaining available to the parties for their own personal expenses.
In February 2000 the parties took up residence in a second investment property owned by the wife’s father. Rent was paid at the significantly reduced rate of $100 per week for the period of occupation between February 2000 and March 2005.
The husband completed his undergraduate degrees by 2000 and in 2001 obtained short-term employment with an international company in Country FF. Upon his return he obtained long-term employment between 2002 and 2006.
The fortunes of F Pty Ltd improved steadily.
Initially the wife, her sister and mother on 1 December 1999 incorporated D Pty Ltd. This became the corporate vehicle for the F Pty Ltd business.
The efforts of the wife and her sister were recognised by a microbusiness award in 1999 and the wife receiving a personal award in 2000.
Following the success of the F Pty Ltd business, the wife ceased involvement in other activities and focused exclusively on the development and future success of the business.
The parties purchased vacant land at BB Street, Suburb DD (“the Suburb DD land”) for $112,000. The purchase price was paid by the wife providing a deposit of $35,000 from savings prior to the marriage and the parties obtaining a loan secured by mortgage over the property for $89,600.
Following the birth of X in July 2002, in August 2003 the parties sold the Suburb DD land and purchased a property at S Street, Suburb CC (“the Suburb CC property”) for $430,000. The property was purchased by using the net proceeds from the sale of the Suburb DD land together with a loan secured over the property in the sum of $375,000.
Renovations were commenced and upon their completion the family took up occupation in March 2005.
In January 2005 the wife’s mother transferred her shareholding in D Pty Ltd to the wife and her sister for no consideration. The wife’s mother resigned as director and secretary of the company.
In July 2005 the parties refinanced the Suburb CC property resulting in a home loan balance of $435,000 and a business loan for the benefit of F Pty Ltd up to $220,000. The bank required the husband and the wife in their capacity as registered proprietors of the Suburb CC property to guarantee the loan to F Pty Ltd.
Further monies were borrowed by way of a mortgage over a property owned by the wife’s sister and the accumulated funds were invested and used to advance the commercial viability of F Pty Ltd.
Following the husband’s resignation from his employment in 2006, he established his own business known as H Business. The business was operated by a company known as R Pty Ltd which was the trustee of a discretionary trust known as Davids Family Trust.
On 5 August 2007 the wife’s sister died and as the sole beneficiary of her sister’s estate, the wife inherited the following:-
(1)Furniture and effects     $ 10,000
(2)Lump sum payment   $280,000
(3)Estimated value of sister’s interest in F Pty Ltd   $100,000
As at the date of her death, the wife’s sister had a debit loan account with F Pty Ltd of $186,690.21. This sum was repaid from her estate.
Y was born in 2008. In December 2008 the parties purchased the former matrimonial home at T Street, B Town (“the B Town property”) for $1,150,000. The parties initially had difficulty in obtaining the necessary finance for the purchase, in particular because the B Town property was purchased prior to the sale of the Suburb CC property. The lump sum of $280,000 received from the wife’s sister’s estate was required by the bank before finance could be provided.
On 2 January 2009 the wife’s parents gifted the parties $30,000 to assist them in the settlement of the B Town property.
The final financial arrangements necessary to purchase the B Town property required the refinance of the Suburb CC property to the sum of $720,000, a second loan of $450,000 secured over the Suburb CC and B Town properties and a refinance of the F Pty Ltd business loan to $300,000.
Following the purchase of the B Town property, the parties commenced substantial renovations. The parties agree that the wife took on the fiscal responsibility of ensuring that the family was able to meet the substantial loan commitments and their household and domestic needs.
For a period of 12 months following the purchase of the B Town property the husband contributed $3,000 per month into an offset account. After 12 months the wife paid all mortgage expenses in respect of both properties and continued to manage the family finances. The husband did not make further payments into the offset account and utilised his own money for his own personal expenditure.
In 2010 the wife’s parents gifted the wife and her brother each the sum of $200,000. The consequence of the gifted funds was to reduce the home loan from $621,990 to $421,990.
In May 2010 the Suburb CC property was sold and the net proceeds of sale in the sum of $729,616 was used to reduce the outstanding liability over the B Town property.
In June 2013 the wife caused the Davids Investment Trust to be settled and was appointed the sole appointor and trustee. She was also the designated beneficiary of the trust.
The trust was established on advice and acquired the wife’s shareholding in D Pty Ltd.
On 22 July 2014 the parties transferred the B Town property into the sole name of the wife arising from the concerns of the husband that he may be involved in personal litigation thereby placing his interest in the B Town property at risk.

The parties separated on 7 September 2015 and remained living under the same roof until 19 January 2016. The wife and children took up rental accommodation following their departure from B Town. The husband left the B Town property and moved into his own rental accommodation in early April 2016 and in late April 2016 the B Town property was sold for $1,470,000.
Following the sale various loans were discharged including the home loan, the D Pty Ltd business loan and the husband’s overdraft.
The balance remaining of $592,568 was deposited into the wife’s account which effectively included the sum of $280,000 that the wife had received by way of inheritance.
The parties opened a joint bank account on 25 May 2016 with a deposit of $551,809.
The net proceeds have remained in that account other than the following withdrawals:-
(1)$8640 to pay for X’s school trip;
(2)$56,174 paid to the husband’s overdraft account;
(3)$11,587 paid into the wife’s account as reimbursement for the B Town sale costs;
(4)$10,148 to pay for the valuation of the husband and wife’s business interests;
(5)$5,000 to pay for mediation fees;
(6)$100,000 paid into the husband’s solicitors trust account by way of interim property settlement pursuant to order made 30 August 2017;
(7)$50,000 paid into the wife’s solicitors trust account by way of interim property settlement pursuant to order made 30 August 2017;
(8)$25,000 paid into the trust account of the husband’s solicitors by way of interim property settlement pursuant to order made 28 March 2018;
(9)$25,000 paid into the trust account of the wife’s solicitors by way of interim property settlement pursuant to order made 28 March 2018;
(10)$40,000 paid into the husband’s solicitors trust account by way of interim property settlement pursuant to order made 11 December 2018;
(11)$4,840 to pay for the fees of the updated valuation of the wife’s interest in D Pty Ltd.
It is generally agreed that the husband had the benefit of $285,914 and the wife the benefit of $89,314, leaving a balance in the joint account of $231,629 as at 22 April 2019.
On 19 December 2017 the wife was diagnosed with cancer and in early 2018 underwent medical treatment. The wife ceased working in F Pty Ltd in late December 2017 and following further treatment in June 2018 returned to work part-time in August 2018.
Further treatment was required in November 2018 and the wife did not return to work until late December 2018, but has only been able to work for eight to ten hours per week.
Following her diagnosis in December 2017, the wife paid herself an income of $3,000 per week from 1 January to 19 February 2018 and thereafter relied upon both income protection insurance payments and a trauma recovery benefit.
On 19 February 2018 the wife received a lump sum of $127,553 and regular income maintenance protection payments of two amounts of $10,497 payable each month.
The continued payments require a monthly advice and update as to the state of the wife’s health with a measure of uncertainty as to the continuation of the payments.
The wife had a further trauma insurance cover which paid the sum of $281,420 on 1 February 2018. The current balance in the term deposit account is the sum of $289,840.
On 4 October 2017 the wife’s home was broken into and a significant quantity of stock was stolen. A police report was made and the claim was ultimately settled in the sum of $87,102.
The wife contends that up to 30 March 2019 all but $81,706 received by way of insurance payments have been spent on household expenses and expenses in respect of the children.
Since separation Y’s time continues to be shared equally by the parties. X has spent more time in the wife’s home.
It is conceded by the husband that the preponderance of the children’s expenses and in particular relating to their education and extra-curricular activities have been paid by the wife with only limited contribution from the husband it is unlikely that the husband will make any financial contribution to these expenses.

Is it just and equitable to alter the property interests of the parties?

The parties both consider that it is just and equitable for the Court to make an order pursuant to s 79 of the Act.
In Stanford & Stanford (2012) 247 CLR 108 the majority held:-
35It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
36The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. …
In Bevan & Bevan [2013] FamCAFC 116 the Full Court considered at [73] that the decision of Stanford could be reduced to three fundamental propositions:-
(1)The Court needs to consider the existing property interests of the parties and to identify those interests (by reference to common law and equity); and
(2)The discretion must be exercised in accordance with legal principles and not in respect of any assumption that the parties interests should be different from those determined by common law equity; and
(3)Section 79(2) cannot be conflated by reference to matters in s 79(4).
I consider that it is just and equitable for an order to be made pursuant to s 79.

Legal fees of the parties

Exhibit “9” is a summary of the wife’s legal fees. It reveals that the wife has paid a total of $133,772 of which approximately $48,921 was sourced from the property of the parties consequent upon orders for partial settlement of property being made.
In addition to the total sum paid, the total outstanding is $117,838 comprising $87,838 for outstanding legal fees and counsel and a further $30,000 being the anticipated fees to the conclusion of the trial. Accordingly, the total of the wife’s fees both paid and anticipated is $251,610.
The husband did not file a summary of legal fees but relies upon his Trial Affidavit filed 29 January 2019 which sets out the following:-
Legal fees paid to L Business         $53,000
Legal fees paid to Jordan & Fowler  $20,000
Total     $73,000
Fees outstanding and unbilled to 29 January 2019 $20,365
There is no evidence provided as to the anticipated fees to the conclusion of the proceedings but it is reasonable to assume that the husband’s solicitor and counsel fees would not be dissimilar to that of the wife.
Chorn & Hopkins (2004) FLC 93-204 considered the treatment of the legal fees of the parties where they may have been sourced from “matrimonial property” or borrowed funds.
Following a consideration of the authorities the following appears:-
[50] In Gartner [2000] FamCA 793, Kay, Holden & Mullane JJ said:
…
47.Whilst the principle the (sic) emerges from Farnell (1996) FLC 92-681 is that where prepayment of legal costs has the effect of depleting the pool of assets available for division, it is usual to notionally include those prepaid costs in the pool, such a finding is normally dependant upon evidence as to the source of the prepayment. In the absence of any such evidence it would be entirely speculative of this Court to guess where the monies came from. If this was an issue that was important it should have been raised at the trial by Counsel so that the Judge could have dealt with it and made the necessary findings. It is too late to raise it on appeal. (Suttor v Gundowda Pty Ltd (1950) 81 CLR 418).
Their Honours at [52] referred to the decision of the Full Court in Clifford & Lodge [2000] FamCA 1666 where the following was said:-
52.It will be seen from the table of the parties’ assets and liabilities contained in his Honour’s judgment … that his Honour included as assets the legal fees already paid by each party. There seems to be no argument but that it was open to him to do this.
At [54] of the judgment their Honours also referred to the decision of Finlayson v Finlayson & Gillam (2002) FLC 93-121 where the Full Court said:-
345.If this were a payment of his legal costs of the proceedings from the husband’s own capital resources, it would be in accord with decisions of this Court, including Farnell and Farnell (1996) FLC 92-681 and Townsend and Townsend (1995) FLC 92-569 for the trial Judge to have included this as a “notional asset” in the hands of the husband for the purposes of the s.79 proceedings. If, on the other hand, this were a payment by the husband of his costs of the proceedings from funds borrowed by him from and still owing to a third party, the appropriate course would have been to disregard both the payment and the debt to the third party in calculating the total net property of the parties for the purpose of the s.79 proceedings. Alternatively, if the payment were brought to account as a “notional asset”, then the liability of the husband to repay the debt would also have to be brought into account in arriving at the net property of the parties.
The parties concede that the only source of money available to pay their legal fees has come from property available to the wife in relation to her fees and the provision of money to the husband to enable his fees to be paid.
In Vass & Vass [2015] FamCAFC 51 the Full Court said:-
[138]There is no error committed per se in adjusting the parties actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan & Bevan (2013) FLC 93-545 – or, more particularly, the decision of the High Court in Stanford & Stanford (2012) 247 CLR 108 - is authority for any necessary contrary solution. Some statements made by the High Court may lead to the conclusion that references to “notional property” as have been referred to in decisions of this Court and at first instance may need to be reconsidered.
Whilst there is a significant disparity in the totality of the costs paid by each of the parties and yet to be paid, the wife has used property of the parties to pay a portion of her legal fees to the sum of $48,921 and the husband to the sum of $76,094.
I propose that the amount expended by each of the parties should be added back into the pool.
Whether the entirety of the monies received by each of the parties pursuant to orders of interim property settlement should be added back into the pool is a matter of contention. The husband argues that they should not be added back on the basis that whilst the amounts paid to him exceed those received by the wife, she has had the advantage of the business which has provided the wife with a substantially greater income stream than that received by the husband from his employment.

Should the amounts received by the parties by way of partial settlement of property be added back?

The wife seeks to add back the sums that each of them have received pursuant to orders of interim property settlement, but also substantial distributions paid to the husband from the net proceeds of the sale of the B Town property.
The wife has received the following interim property settlement sums:-
Order 30 August 2017  $50,000
Order 23 March 2018  $25,000
Total  $75,000
The husband has received the following interim property settlement sums:-
Order 30 August 2017  $100,000
Order 28 March 2018  $ 25,000
Order 11 December 2018  $ 40,000
Total  $165,000
As considered, I propose to add back the amounts used by the parties for the payment of their legal fees.
In addition, the husband has received the following interim distributions from the net proceeds of the B Town property:-
29 April 2016  $9,666
3 May 2016  $ 20,759
4 May 2016  $ 20,000
18 August 2016  $ 56,174
Total  $ 106,599
The husband seeks to exclude sums received by each of the parties pursuant to orders of interim property settlement.
In CPL & CPL [1998] FamCA 143 the pool of property as between the parties was approximately $3 million and the trial Judge had made a number of add backs. The Full Court considered on appeal whether $13,000 spent by the husband post-separation on an overseas trip should have been added back. The Full Court said at [46]:-
Whilst not seeking to place a fetter upon the exercise of discretion of a trial Judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in the manner that is consistent with properly getting on with their lives. Providing modest support for their adult children or taking not inappropriate holidays for themselves seems to fit comfortably within that description.
In Kouper & Kouper (No 3) [2009] FamCA 1080 Murphy J was required to consider the treatment of the loss by the husband of $4.5 million in money invested in failed business ventures. The wife argued that the monies invested and ultimately lost amounted to waste in the sense as referred to in Kowaliw & Kowaliw (1981) FLC 91-092. His Honour identified at [108] that the issues could be approached by reference to five questions:-
(a)Is it contended that property (including money) that would otherwise be available for distribution between the parties if a s 79 order is made, has been dissipated with consequential loss to the property otherwise potentially divisible between the parties at the date of trial?;
(b)If so, is it alleged that dissipation of property was in respect of things other than what, in the particular circumstances of this particular marriage, can be classified as “reasonable living expense”?;
(c)If it is asserted that any loss to the divisible property results from dissipation of property other than in respect of such expenses, why is it asserted that the result should be a sharing of that loss by the parties other than equally?;
(d)If it is contended that this be the result, why should there be an add back (which brings to account dollar for dollar, such past expenditure in current dollars) as distinct, for example, from there being an adjustment made pursuant to s 75(2)(o)?; and
(e)How should either any “add back”, or adjustment pursuant to s 75(2)(o) be quantified?
In Kowaliw & Kowaliw (supra) Baker J said at 76,644:-
As a statement of general principal, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability should be shared by them (although not necessarily equally) except in the following circumstances:-
(a)Where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets; or
(b)Where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79.
In Thurston & Loomis & Ors [2018] FamCA 26, Forrest J considered that an assessment needed to be conducted of the reasonableness of the expenditure, noting that the Court generally takes the property of the parties as it finds it at the date of the trial.
In Chorn & Hopkins FLC 93-204 the Full Court considered two earlier Full Court decisions at [24]:-
We will refer again later in these reasons to the decision in Townsend, but we would in the present context draw attention to the following observations by later Full Courts:
2.11 There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.[1]
…
46. Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. (Cerini [1998] FamCA 143, per Nicholson CJ, Ellis, Kay JJ.)
[1]Marker [1998] FamCA 42, 1 May 1998, per Baker, Kay and Chisolm JJ.
In SMB & MFB [2006] FamCA 46 the wife had received a total sum of $102,500 from various Court orders.
The consideration by the Full Court is apposite to the competing arguments of the parties in the present case:-
18. The wife filed an application in September 2001 seeking, inter alia, interim orders for spousal maintenance. By consent, the husband agreed to pay the wife a total of $25,500 in two instalments. A series of further orders, all made by consent, required the husband to make lump sum payments to the wife. In all, between September 2001 and June 2002, a total of $102,500 was paid by the husband to the wife. Each order reserved discretion to the judicial officer dealing with the final issues of property settlement and spousal maintenance as to how, and in what proportions to classify the payments (be it spousal maintenance, interim costs or interim property settlement).
The trial Judge considered that there should be some allowance in respect of spousal maintenance, but ultimately considered that the sum of $102,500 received by the wife should be categorised as property.
The Full Court considered that the treatment by the trial Judge was erroneous and said:-
68. Even if his Honour had been correct in not categorising the sum of $102,500 as spousal maintenance on the basis that it was essentially paid from capital of the husband rather than income, it is not axiomatic that a sum, even if characterised as property, will be added back to the pool. Here, his Honour did not consider whether the money was available to the wife and how it had been spent. Having characterised it as property he simply added it back notionally to the pool. True it was that the wife was “on notice” of a need to account for the funds that she had received, but subject to the comments that we have made, she did so and that evidence was not the subject of any significant challenge. Nor was there any evidence that she had misapplied the funds in some way.
The husband does not provide evidence as to how the money received by way of interim property settlement order was spent other than at [65] of his trial affidavit where he concedes that $76,094 was spent on legal fees and a disbursement to a single expert accountant. In addition, the husband paid his outstanding tax of $16,000.
The evidence of each of the parties supports a finding that during the course of the marriage the wife was the financial manager for the family and kept detailed records of income, expenditure and prepared various budgets to ensure that the liabilities of the parties and the expenses could be met from the resources of the parties.

The husband admitted that he “was not focused on income, expenses and budgets as the wife was”. The joint household and living expenses, together with those of the children, were paid for by the wife without contribution from the husband. The husband concedes that “more of the family expenses were paid by the wife than me”.
Following separation the husband presented the wife with a schedule of what he considered he should have paid towards the family expenditure and what he actually paid. The husband’s own calculation was that for the period March 2012 to November 2015 he should have contributed a further sum of $213,000.
The husband admitted that he was not able to accumulate any savings during the marriage and that from time to time, but in particular in respect of his taxation liability, he was not able to pay the assessments when they fell due.
The husband did not resile from the proposition that at times his expenditure was profligate in that he made purchases that he was not able to reasonably afford other than by seeking financial assistance from the wife via F Pty Ltd or from the sale of the parties’ assets.
The husband conceded that he presently has a motor vehicle that he cannot afford.
Whilst it might be considered unnecessarily detailed, the presentation of the wife’s affidavit material demonstrates a high level of precision and it is apparent that she has kept financial records detailing the financial fortunes of the parties both during the period of cohabitation and following their separation.
The wife was not challenged as to the accuracy of the financial information presented by her and accordingly, where there is a conflict in the evidence as to the financial circumstances of the parties I prefer the evidence of the wife.
Following the sale of the B Town property the wife transferred $40,759 to the husband’s overdraft account which paid it out in full. As at 4 May 2016 the husband’s overdraft account was in credit to $5,038.95.
The husband received a further sum of $56,174.24 to pay his outstanding taxation liability as at 18 August 2016.
The parties separated on 7 September 2015. Following separation the children spent approximately equal time with each of the parties, although that changed to the extent that X now lives predominantly with the wife.
Whilst I accept that the husband received significant distributions from the net proceeds of sale of the B Town property, I find that they generally fell into the category of monies required to pay the husband’s outstanding overdraft and his taxation.
It is likely that both the overdraft liability and the outstanding taxation assessment were incurred substantially during the period of cohabitation.
I do not propose to add back those amounts.
By his Affidavit filed 2 November 2018, the husband provides some assistance as to the disbursement of the sum of $100,000 received pursuant to the order of 30 August 2017:-
(a)$53,000 to L Business for legal fees;
(b)$16,000 to ATO;
(c)$31,000 to the husband’s ANZ overdraft.
As discussed, I propose to add back the monies contributed by the parties towards their legal fees from interim property settlement orders and accordingly the focus is as to the husband’s liability and subsequent payment to the ATO and to his overdraft in the total sum of $47,000.
The further sum of $25,000, by way of order made 28 March 2018, was paid by the husband into his ANZ overdraft account to cover the shortfall in his living expenses.
The final sum of $40,000, pursuant to order made 11 December 2018, was calculated on the basis of $25,000 being paid to his solicitors and the balance of $15,000 to cover the husband’s anticipated shortfall of $3,770 per month to trial.
The husband explains his financial predicament by reference to his monthly total net of tax income of $6,602 and his expenses totalling $10,372. There is therefore a shortfall of $3,770 per month.
I do not consider that the matter should be approached on a strictly arithmetical basis, nor is it appropriate for the Court to conduct an audit of the husband’s expenses or make value judgements as to the nature of his expenditure. It is readily apparent that his financial position is exacerbated by the purchase of a Motor vehicle 2 requiring financial payments of $971.61 per month, his outstanding credit card payments and overdraft interest in the sum of $1,700 per month and further expenses in relation to his motor cycle.
It is a relevant consideration that the husband has paid little towards the children’s expenses other than basic household costs during the time that they spend with him.
The wife argues that whilst her income may exceed that of the husband, his income is nonetheless substantial in the sum of $2,494 per week and there is no proper justification for the property of the parties to cover the husband’s shortfall created by his expenditure exceeding his income in circumstances where notwithstanding the wife’s significant income she pays all of the children’s expenses.
The husband was not prepared to concede that his expenditure was “profligate” but he does not resile from the proposition that his expenditure is not well controlled.
The husband was cavalier in his attitude to the proposition that he expected that any shortfall would be covered by the wife. At times his answers were redolent with sarcasm as to the significant efforts of the wife in promoting fiscal responsibility.
He readily conceded that the debt associated with the Motor vehicle 2 that he purchased in August 2016 had the consequence of increasing his debt from $25,720 to $81,615.
The husband counters the wife’s position and argues that the wife has had access to the following amounts:-
(a)Proceeds of business stock insurance      $ 87,102
(b)Proceeds of disability insurance               $127,553
(c)Proceeds of trauma insurance                   $281,420
(d)The wife’s superior income now comprising income protection payments.
Whilst not necessarily conceded by the husband as an appropriate approach, it is uncontroversial that the wife has a debit loan account in favour of D Pty Ltd of $468,474 and to Davids Investment Trust of $58,000.

Should the proceeds of the insurance claims be added back?

The wife was diagnosed with cancer in December 2017 and underwent medical treatment in early 2018. She ceased her employment with F Pty Ltd and following further treatment in June 2018 returned to work in August 2018 for between eight and ten hours per week.
Further treatment was required in November 2018 and the wife ceased working until her return in December 2018 on a part-time basis.
On 1 February 2018 the wife received $281,420 on account of trauma insurance with M Business. The money was deposited into a term deposit account and following rollover in August 2018, the term deposit matured on 9 April 2019 and was re-invested and as at 23 April 2019 held a current balance of $289,840.
The wife received the sum of $87,102 following a successful insurance claim consequent upon a robbery of the wife’s home in October 2017.
The wife transferred funds to her day to day savings account from which the wife paid the following expenses:-

Household expenses for period 17 February 2018 to 30 March 2019	$75,819
Children’s expenses during the period 17 February 2018 to 30 March 2019	$ 9,069
Household expenses incurred on wife’s credit card between 17 February 2019 and 30 March 2019	$ 5,670
Children’s expenses paid from wife’s credit card during period 17 February 2018 and 30 March 2019	$64,411

The wife incurred further expenses in respect of food and miscellaneous medical expenses totalling $2,500.
The husband concedes that the wife has paid for all of the children’s school fees, ancillary expenses and extra-curricular activities.
The total tuition fees from 2016 to April 2019 is in the sum of $152,963. Significant other expenses have been incurred for school uniforms, excursions and miscellaneous expenses. The wife has met the further costs from her income or insurance claims.
An indication of the onerous nature of the expenditure pertaining to the children appears at [504] of the wife’s trial affidavit where the wife estimates that the children’s school expenses for 2019 will total $82,550.

Business valuation

The parties jointly instructed Mr W of N Accountants (“the valuer”) to prepare a valuation of the wife’s interest in the business of F Pty Ltd conducted via D Pty Ltd and Q Pty Ltd.
The valuer determined that the business valuation methodology should be based upon a capitalisation of future maintainable earnings. The methodology approach is not the subject of objection by the husband, although the wife argues that such an approach brings to account the previous trading history in an attempt to predict the future.
The wife argues that because of her ill health she has returned to work in December 2018, but effectively only on light duties. The business has value only because of the energy, involvement and innovation of the wife. There is uncertainty in respect of her prognosis and the wife argues that the trading history is not a reliable indicator of the trading future.
Neither party sought to call the valuer and accordingly each of them are content for the Court to consider the first report dated 16 November 2016 which valued the wife’s interest at $1,220,722 and more relevantly, the second report dated 21 November 2018 which valued the wife’s interest at $284,376.
The valuer considered that the future maintainable earnings before interest and tax to be $80,000. The estimated maintainable sales are $1,800,000 with a gross profit margin of 49 per cent, salary to the wife of $125,000 and marketing costs of $250,000.
Given the wife’s state of health, the valuer adopted a capitalisation rate of 50 per cent which provided for a value of $160,000.
The valuer considered the adjusted consolidated balance sheet as at 30 June 2018 which determined an asset backing valuation for all of the F Pty Ltd entities at $810,850.
The husband is content to bring that figure into the balance sheet of the property of the parties.
On closer inspection, $526,474 represents the debit loan account of the wife in favour of D Pty Ltd and Davids Investment Trust as at 30 June 2018. Accordingly, the net value of the wife’s interest is $284,376, noting that the balance of $526,474 is money owed by the wife to the named entities.
The wife does not have the capacity to repay those liabilities. It would be a nonsense if she was required to do so. To the extent that the husband seeks to bring to account the wife’s interest in the F Pty Ltd business at $810,850, this by necessity would result in a liability being brought to account of $526,474 as against the wife’s other assets.
The relevant enquiry is not as to whether there is any real dispute as to the value of the business but rather, to what extent the money received by the wife and recorded as a debit loan account should be the subject of an add back.
The evidence is that at 30 June 2016 the wife had a debit loan account of $388,514 which was brought to account in the valuer’s first valuation report.
The husband points to [250] and [251] of the wife’s trial affidavit where she notes that the loans up to 30 June 2015 have been repaid in full via dividends and the balance owing of the 2016 drawings were in the sum of $97,787.
The contention of the husband is as at 30 June 2018 the wife’s debit loan account was $526,474.
A consideration of the loan account provides a breakdown of the wife’s loan account balances for 2016, 2017 and 2018 financial years.
It appears that the opening balance in the 2016 financial year was $153,943.81. The closing balance was $129,226.92.
In the 2017 financial year the opening balance was $221,847.92 with a closing balance of $192,826.32. It is noted that a credit by way of dividends was credited back into the wife’s loan account.
In the 2018 financial year the wife debited $150,766 and following credits of $4,345 the closing balance was $146,421. On closer inspection, $115,000 was represented by the wife’s drawings for the 2018 financial year.
The husband concedes that the majority of the wife’s drawings in 2016 were wages. Similarly, in 2017 the wife’s drawings were $156,000 and in 2018 they were $105,000.
In any event the husband agrees that at separation the wife’s loan account may have been in debit to the sum of $262,688, or possibly $97,787 in respect of the 2016 year.
The wife’s drawings also reflect the payment of taxation from time to time.
The Court was not assisted by any expert evidence as to the proper interpretation of the wife’s expenditure that has resulted in the substantial debit loan account balance of $526,474.
Given the significant expenditure by the wife for the children over and above that as accounted for, and the expenditure of the insurance settlement sums received, I am not satisfied that any component of the monies received by the wife should be the subject of add back.
Demonstrably, no evidence has been presented that suggests that the wife was wanton or reckless in her expenditure. The parties were in agreement that as far as possible the circumstances of the children should not change. It is the parties’ intention that the children continue at their current private schools until the completion of year 12. It is also the case that the parties considered that the children’s interests would be best served by each of the parties to maintain a lifestyle and standard of living that the children had enjoyed.
What is apparent is that money that each of the parties have received from time to time has been spent without the accumulation of any asset.
I do not propose to add back any amounts attributable to the wife or the husband save and except the payment by each of them of their legal fees.
I do consider that the husband’s cavalier attitude in relation to his expenditure is a matter that should be considered under s 75(2)(o) and in the circumstances as presented, I do not consider that it would be equitable to bring to account the husband’s Motor Vehicle 1 in the sum of $40,000 and then to require the wife to share in the shortfall of the husband’s car loan in the sum of $55,158.
The husband was given leave to adduce further evidence as to the existence of a HECS debt with a balance owing as at 6 May 2019 of $12,362.
Exhibit “7” is a copy of the ATO client account list which shows that the husband has a Student Financial Supplement Scheme (SFSS) account of $12,364.71. This sum is not a HECS debt in respect of higher education but rather, is an additional loan received by the husband by way of financial assistance during his university years. It is paid off in accordance with the usual guidelines based upon a percentage of the husband’s current income subject to a threshold amount.
No evidence was presented as to the period during which the financial assistance was provided, but by reference to the history he entered. He commenced his tertiary education as a mature age entry student in 1995 and following a transfer to a different discipline, completed his two degrees in 1998 and 2000.
It is likely that a portion of the liability had accumulated in the period leading up to the marriage of the parties in 1998.
I propose to bring the liability to account, but the extent to which the wife is considered to be contributing to a pre-cohabitation debt of the husband is a matter that should be considered under s 75(2)(o) of the Act.

Balance of the wife’s insurance claim

At [576] of her trial affidavit the wife sets out the further amounts standing to her credit as follows:-
(a)Funds in CBA smart access account  $ 4,801
(b)Funds in CBA net saver account (23 April 2019)            $ 81,706
(c)Funds in CBA term deposit (23 April 2019)                   $289,840
Whilst the liabilities of each of the parties is never static, the wife states that she has a personal taxation debt of $39,495 which is intended to be paid from the funds in the CBA net saver account.
I propose to ignore the savings accounts of each of the parties that contain minimal balances, but the treatment of the balance of the CBA net saver account of $42,211 and the sum of $289,840 needs to be considered.
In Bonnici & Bonnici (1992) FLC 92-272 the Full Court considered the treatment of an asset inherited by a party. They did not consider that it should be quarantined or protected simply because there is no financial nexus with both parties.
In Carter & Carter (1981) FLC 91-061 at 76,492 the Full Court said:-
Where property is absolutely owned by one spouse before marriage, different considerations may apply under sec. 79(4)(a) and (b), in the sense that the other spouse may not be able to show any direct or indirect contribution to the acquisition of that property… Nevertheless, the other spouse may be able to rely on a contribution to the conservation or improvement of that property…
The Full Court in Hurst & Hurst [2018] FamCAFC 146 referred with approval to the decision of Dickons & Dickons [2012] 50 Fam LR 244 and in particular the following paragraphs:-
16.While that apparent “causal connection” might be seen in s 79(4)(a) (and (b)), no such connection is apparent from the terms of s 79(4)(c); contributions of that latter type are not linked by the words of the subparagraph to the “acquisition, conservation or improvement of any of the property” or, indeed, to “ property” at all. This is not a legislative oversight; the 1983 amendments to the Act which inserted the current s 79(4)(c) were specifically intended, relevantly, to remove any suggestion that there needed to be a causal link between contributions of that type and any particular asset or property. The explanatory memorandum to the Family Law Act Amendment Bill 1983 provides, at cl 36, that a specific purpose of the re-casting of s 79(4) was, relevantly, to:
…revise sub-section 79(4) to remove the possibility of an interpretation of the sub-section requiring that there be a nexus between a spouse’s contribution and a specific item of property in section 79 proceedings …
17.Within that context, then, it is self-evident that financial contributions (whether direct or indirect) can be made to a relationship that have an effect on the property of the parties without those financial contributions finding their way directly into, or being directly linked to, specific property or, indeed, directly to the totality of the property available for distribution at the time of trial. Financial contributions can be made to the “acquisition, conservation or improvement” of property “directly or indirectly” (s 79(4)(a), emphasis added). A financial contribution can be made indirectly by, for example, the use by parties of income or assets for purpose A freeing up the use of other income or assets for purpose B. Moreover, a particular financial contribution might have been used wholly in discretionary expenditure which, but for that contribution, would not have been available to the parties or would have required borrowings or a diminution of capital. Such a contribution can also, in that way, be seen, for example, as an indirect contribution to the conservation of property. Indeed, the principles discussed for example in In the Marriage of Kowaliw (1981) FLC 91-092 and In the Marriage of Townsend …(1995) FLC 92-569, can be seen as an exception to that general proposition.
In Hurst (supra) the Full Court considered the approach of the trial Judge in quarantining a property that had been inherited by the husband. The gravamen of her Honour’s reasoning is to be found in the following statement:-
It cannot be said that the wife has made any contribution to this property other than indirectly by the rates and slashing costs being paid.
Whilst the Full Court considered that there was no error in her Honour considering separately any such contributions, the following is stated at [17]:-
However, there is a danger in doing so. Isolating indirect contributions to but one part of the property interests of the parties in the context of a global assessment of contributions risks ignoring significant contributions made by both parties that do not have a nexus with that particular property. We consider, with respect, that her Honour did not heed that risk. …

And at [22]:-
The corollary of seeking a nexus within a global assessment is, relevantly, the quarantining of other indirect contributions made by each of the parties across all the property during the entirety of the approximately 39 year period between cohabitation and trial. We respectfully consider that here, by isolating the Suburb C property, her Honour did in fact quarantine those contributions from having any application to it in the finding earlier highlighted. In our respectful view, that is an error.
The discussion is not the weight to be given to the respective contributions of the parties, but whether the identified property should be considered as “protected” and “quarantined”.
It is not difficult to understand the wife’s opposition to the inclusion of her compensation settlement sums in the pool of property available for division. She considers that those funds may well be required for her own financial support in the event that she does not remain in remission. The reality however is that a significant component of the settlement sums have been utilised for personal and child related expenses.
The inclusion does not prevent a proper consideration of the weight to be attached to the contribution of the parties and factors relevant to s 75(2) including a consideration of the wife’s future health needs.

Adjusted property pool

Assets

Proceeds of the sale of B Town property

$231,629

Wife’s interest in F Pty Ltd business

$284,376

CBA term deposit held by wife

$289,840

Funds in CBA net saver account of wife

$ 42,211

Wife’s Motor Vehicle 1

$ 22,000

Husband’s motorcycle

$ 15,000

Total

$885,056

Add Back

Wife’s legal fees

$ 48,921

Husband’s legal fees

$ 76,094

Total

$125,015

Total Assets

$1,010,071

Superannuation

Wife’s P superannuation interest

$322,049

Husband’s V Superannuation interest

$ 43,470

Total

$365,519

Liabilities

Tax payable in respect of 2016 Div 7A loan

$ 39,569

Husband’s motorcycle loan

$ 14,299

Total

$53,868

Balance (Excluding Superannuation)

$956,203

The parties have agreed that their separate superannuation entitlements will be equalised and accordingly there will be a superannuation splitting order from the splittable interest of the wife in her P Superannuation Fund in favour of the husband in the base amount of $143,086.

Contributions of the parties

The Court is required to make such orders in adjusting the interest of the parties in property as is just and equitable.
I am required to consider the direct financial contributions made by the parties to the acquisition, conservation or improvement of property (s 79(4)(a)), the contribution other than a financial contribution made directly or indirectly by or on behalf of a party to a marriage (s 79(4)) and the contributions made by the parties to the welfare of the family in their capacity as parent or homemaker (s 79(4)(c)).
The parties were in employment during the course of cohabitation, however, it is conceded that the wife’s income was superior to that of the husband.
An indication of the husband’s income stream is better understood by the following records of his taxable income provided in his Case Outline Addendum:
2004              $31,635
2005              $38,353
2006              $35,804
2007              $33,292
2008              Not known
2009              $18,279
2010              $2,657
Thereafter, the following comparison is informative:-

Year

Wife

Husband

2011

$115,760

$94,722

2012

$191,075

$104,801

2013

$262,540

$95,392

2014

$329,230

$82,767

2015

$294,705

$97,449

2016

$270,458

$58,957

2017

$272,309

$39,963

2018

$246,349

$32,355

In addition, the husband should have contributed a greater amount towards the expenses, he concedes that other than the purchase of some groceries or the payment of household expenses on an occasional basis the majority of all of the costs were met by the wife.
The husband also admits that he paid his personal and recreational expenses from his own income. The relevance of the schedule prepared by the husband was to demonstrate his acceptance of a significant shortfall in terms of his contribution to the finances of the household between March 2012 and November 2015 being represented by a figure of $213,000.
I accept that the expenses of the household were significantly greater than considered appropriate by the husband.
I do not propose to bring to account as a contribution that the wife was able to earn a higher income than the husband. I consider that there is the normal ebb and flow in any relationship and that as a partnership it cannot be a factor that a person’s ability to generate income should in and of itself justify weight being given to a parties’ contribution.
The evidence in this case supports the finding that whilst the husband’s income may well have been limited, he had little enthusiasm to make reasonable financial contribution to the household expenses in preference for his own personal pursuits.
Such a consideration does not ignore that the husband may well have made contributions in other areas, such as an indirect contribution or a contribution as a homemaker.
The wife was the sole beneficiary of her sister’s estate. She received significant benefit in terms of a lump sum payment of $280,000 which is reflected in a reduction of the home loan over the Suburb CC property and ultimately is reflected in the net proceeds of sale in the B Town property.
The sister’s estate also paid a lump sum of $186,690 into the F Pty Ltd business to repay an outstanding debit loan account.
The wife seeks that I bring this sum to account as a contribution for and on her behalf. I decline to do so. The value of the F Pty Ltd business would have brought to account as an asset which included an outstanding liability from the wife’s sister. The wife’s entitlement as principal beneficiary of her sister’s estate is predicated on the payment by the estate of all outstanding liabilities and obligations.
The inheritance by the wife of her sister’s one third interest in F Pty Ltd (but effectively one half given that the wife’s mother did not seek any payment for the transfer of her interest in the F Pty Ltd business) is a relevant factor. No valuation evidence has been presented, but the financial history as presented by the wife enables the Court to find that whilst undefined, the wife’s sister’s interest had value.
Following the wife’s diagnosis with cancer she made two successful claims for income protection and trauma.
She received $281,420, which amount was invested and now stands at $289,840.
In addition, the wife received income protection.
The wife seeks that her compensation payments be treated as a third pool to better focus on the weight to be given to the contribution of the payments received by the wife.
In Aleksovski & Aleksovski (1996) FLC 92-705 the Full Court confirmed that a damages claim should not ordinarily be quarantined and said at page 83,437:-
In our opinion, in most cases, a damages verdict arising from a personal injuries claim, whether received, is a contribution by the party who suffered the injury. It should not be considered in isolation, for the reason that each and every contribution, which each of the parties makes to the relationship, must be weighed and considered at the same time.
The wife received her compensation monies significantly after separation and in circumstances where it could not be said that there had been any contribution by the husband in terms of assistance by the husband to the wife’s care, a greater burden falling upon his shoulders to maintain the household, or that any portion of the compensation monies received related to the husband.
I accept that the premiums were made by the F Pty Ltd business during the course of the relationship and in particular from about 2010 when the trauma policy was taken out.
I place little weight on that aspect in terms of it being a substantial contribution by the husband.
The nature of the monies received by the wife is directed to her future maintenance in circumstances where she may not be able to return to work.
Whilst I have decided that the wife’s compensation monies should be included in the pool of property divisible between the parties, it would be appropriate for significant weight to be given to the contribution by the wife of those monies.[2]
[2] See Fontana & Fontana [2018] FamCAFC 63.
The wife has received significant benefit from her family.
Whilst not directly relevant to the current consideration, the wife’s father provided the wife and her sister $52,000 to assist in the establishment of F Pty Ltd. Those funds have been repaid.
The wife’s parents covered the cost of the parties’ marriage in the sum of $30,000.
Moreover, from January 1998 to 11 April 1998 the husband lived in premises owned by the wife’s parents for no rent.
Following marriage the parties both lived in the GG Street premises until August 1999 when it was sold. No rent was charged.
Following sale, the parties continued to reside in the GG Street property. However, the wife’s parents supplemented the rent to the sum of $85 per week. This continued until February 2000.
In January 2000 the wife’s father became aware of the precarious financial position of the husband. The parties had been married for two years and the wife’s father received correspondence advising that there was an outstanding claim for an unpaid loan borrowed by the husband from his previous partner in November 1995. As at December 1999 the balance was $11,894.
Ultimately the wife’s father paid a settlement sum of $11,000 to discharge the outstanding loan.
Legal fees were also paid without contribution by the husband.
The husband advised the wife’s father in January 2000 that he was the subject of action by a collection agency acting on instructions from a finance company seeking $9,360. The wife’s father settled the debt for $6,000.
A further obligation of $3,700 arising from outstanding creditors to a failed business venture was settled by the wife’s father for $2,000.
On 2 January 2009 the wife’s parents gifted the wife $30,000 to assist in their precarious financial position arising out of the purchase of the B Town property and the difficulty in selling the Suburb CC property.
On 10 September 2010 the wife was gifted the further sum of $200,000 paid directly into the parties joint ANZ home loan account.
Significant assistance was received by the parties from the injection of funds from the wife’s parents.
Their contribution made for and on behalf of the wife should be given significant weight.
The parties each made a valuable contribution as homemaker. I do not consider that either party has made a superior contribution in that regard. Their care of the children during the course of the relationship continued post-separation when the children’s care was shared equally by the parties. That arrangement continued until relatively recently when X determined that she would spend more time with her mother than with her father.
It is a relevant consideration to consider the extent of the wife’s financial contribution in terms of the significant costs attributed to the personal expenditure for and on behalf of the children, but also in respect of their education fees and extra-curricular activities.
It is conceded by the husband that he has contributed little to their financial maintenance following separation. Whilst it would be reasonable to attribute weight to the financial contribution of the wife in respect of the payment of the ongoing costs of the children, the wife used some of the compensation monies that she received together with substantial drawings from the F Pty Ltd business to meet those added expenses.
It may well be that the wife’s superior income both generated from the business and then more recently from the income protection payments received, together with the monies available to her may indicate a superior financial contribution by her. I am not satisfied however that the evidence will enable me to forensically pick over the financial complexities of the wife’s financial arrangements in order to discern whether the husband’s refusal to contribute was unreasonable, or whether it was justified by the wife being able to access her loan account with the business (which has had the effect of reducing the value of the business) or from her compensation monies.
I do not propose to do more than bring to account as a relevant consideration that the husband was cavalier in his refusal to contribute to the expenses incurred by the wife in respect of the children in circumstances where he had some financial ability to do so.
If the Court agrees with the wife’s asset pool, she seeks an adjustment of 65/35 in her favour. I have regard to the size of the asset pool and given consideration to the need for an adjustment, not just to be reflected by a percentage but to the monetary effect that results from that decision. In this case I have regard to the asset pool and in particular the differential that results from a 15 per cent adjustment in favour of the wife (namely a difference of 30 per cent between the parties) and consider that the adjustment as proposed by the wife but for different reasons should be made.

Section 75(2) factors

The husband has commenced employment with a government agency. Whilst there is no guarantee of continuing employment he has a guaranteed position until 26 March 2021.
His salary excluding superannuation is at the rate of $109,829 with the possibility of an increase to $114,187.
The husband’s employer will also pay the appropriate superannuation guarantee contribution.
The husband’s health is good and his evidence is of a person engaged in significant physical activities.
The husband’s qualifications are of longstanding and he does not promote any evidence that his ability to continue in his current employment or to find work in his profession will be significantly in doubt.
The husband continues to operate his private practice.
There has been some issue as to the valuation of the husband’s interest in his business. Consideration was given to value in 2016. No evidence was called at trial because it was considered that the husband had not engaged in any private services given his current employment.
At trial some evidence was presented which suggested that the husband had undertaken some private work. Despite the level of mistrust between the parties I consider that even at its highest the husband’s ability to generate income in excess of his employment contract is at best modest.
His business has no value other than his preparedness to charge a fee for his services.
The wife’s position is qualitatively different. She had a diagnosis of cancer and received treatment both by way of operative intervention and also ongoing medication.
There is a significant cost to the medication that the wife consumes to maximise her health outlook.
It is fortunate that the wife took out both trauma and income protection insurance.
The wife now is in receipt of ongoing income protection payments subject to a rigorous review process each month.
I am not able to decide the period during which the wife will be considered as unfit to return to her normal work related duties with F Pty Ltd, but it is likely she will receive the ongoing payments for the foreseeable future.
On that basis the payments that the wife receives are not dissimilar to the husband’s income.
The unknown aspect is the extent to which the wife’s current state of health impacts upon her ability to conduct the F Pty Ltd business and whether she will be able to take on an increasing role if her prognosis is promising.
The Court is entitled to find that the wife was impressive in respect of her energy and enthusiasm and that she has a clear intention (subject to health considerations) to resume her duties with F Pty Ltd.
The wife is not the only employee within the business, but she is the innovator. The fate of F Pty Ltd rests very much in her hands.
The parties have the care of X now aged 17 years and Y now aged 11 years.
Y spends equal time with the parties, whereas X has now decided to spend more time in her mother’s home.
The parties have an appropriate and complimentary arrangement in respect of the future parenting of the children. The expenses of the children incurred in the homes of each of their parents are paid for by that parent without contribution from the other.
Moreover, an agreement has been reached between the parties that any current assessment of child support will be reduced to nil and that the husband will repay any overpayment of child support.
The wife has agreed to fund the remainder of the private school fees and associated costs and charges and consents to an order in those terms.
The concession by the wife is significant. There had been a modest Child Support Assessment in favour of the husband, however, this was likely to reduce by X’s increased time in the mother’s home. To place the effect of the mother’s agreement into context, the historical expenses in respect of the children’s school fees at their separate private schools is in the total sum of $152,963 from separation in 2016 to 2019.
The wife has paid for the entirety of the expense in terms of uniforms, school clothing, stationery, books, bags and sports equipment without contribution from the husband. The wife has paid in full for the children’s extra-curricular activities also without contribution by the husband.
The wife’s evidence is that the likely expenses for the children in 2019 will total $82,550.
The costs will reduce when X leaves school, but until that occurs the fees for X to attend her school are $53,371.
A similar calculation undertaken for Y reveals future fees and related expenses of $189,884.
The wife’s budget for fixed household expenses is $70,116, of which a significant proportion relates to the children’s time with her.
I find that there is no reasonable prospect of the husband making voluntary contribution to the children’s expenses. I do not consider that the disadvantage to the husband of relinquishing his child support entitlement (principally in relation to Y) is in any way proportional or offset by the children’s future expenses to be paid by the wife.
The evidence supports a finding that it is important to each of the parties that the children complete their private school education and that they enjoy a lifestyle not dissimilar to that enjoyed when the family was intact.
The husband assumes that the wife will be able to make ends meet, although he does not explore how that is to occur. Obviously, the wife would not be able to meet the children’s expenses let alone her own personal expenses from the income protection monies she currently receives. It is reasonable to assume that the wife’s confidence of her ability to pay the anticipated outgoings will be derived from any lump sum money available to her from orders for property settlement, her ability to generate income from the business, or possibly as a safety net, some financial support from the wife’s parents.
Neither party has re-partnered in the sense that they share accommodation, although the husband agrees that he is in a current relationship but is not cohabitating with his partner.
Some consideration needs to be given to the treatment of monies received by each of the parties pursuant to orders for interim property settlement. As discussed, the legal fees of each of the parties have been added back, however, whilst I have not acceded to the wife’s application to add back all of the interim payments received by each of the parties, it is reasonable to assess that the husband’s prime justification for monies that he did receive in excess of the wife was because his expenditure exceeded his income and it was not his decision to adjust his financial affairs such that his cloth would be cut to suit his measure.

Whilst difficult to quantify, nonetheless it should be brought to account as a s 75(2)(o) factor.
I propose to give weight to the future expenses likely to be incurred by the wife in respect of the ongoing care of the children and taking into account the uncertainty of the wife’s health, but the possibility that if she is able to return to her normal duties, then her history demonstrating a level of endeavour and industry will promote and enhance her financial position.
The counter-veiling factors pursuant to s 75(2) should be reflected in a 15 per cent adjustment in favour of the wife.

Conclusion

The net pool of property is in the sum of $956,203.
The wife retains the following property:-

Net proceeds of sale of B Town property

$231,629

Interest in F Pty Ltd

$284,376

Motor Vehicle 1

$ 22,000

Funds in CBA term deposit

$289,840

Wife’s legal fees added back

$ 48,921

Balance of funds in CBA net saver account

$ 42,211

Total

$918,977

Less Div 7A Tax

-$39,569

Net total

$879,408

The husband retains the following property:-

motorcycle

$ 15,000

Legal fees paid by husband added back

$ 79,094

Total

$ 94,094

Less motorcycle loan

-$14,299

Net total

$ 79,795

If the wife is to receive 80 per cent of the property of the parties, she is entitled to the settlement sum of $764,962. She retains property to the sum of $879,408 and accordingly the difference of $114,446 is the settlement sum payable to the husband.
The parties have agreed that their separate superannuation entitlements shall be equalised and given that I am satisfied that procedural fairness has been afforded to the trustees of the wife’s P Superannuation Fund, I propose to make orders as agreed between the parties in that regard.
I make orders as appear at the commencement of these reasons.

I certify that the preceding two hundred and sixty eight (268) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 14 August 2019.

Associate:

Date: 14 August 2019

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Assets
Proceeds of the sale of B Town property	$231,629
Wife’s interest in F Pty Ltd business	$284,376
CBA term deposit held by wife	$289,840
Funds in CBA net saver account of wife	$ 42,211
Wife’s Motor Vehicle 1	$ 22,000
Husband’s motorcycle	$ 15,000
Total	$885,056
Add Back
Wife’s legal fees	$ 48,921
Husband’s legal fees	$ 76,094
Total	$125,015
Total Assets	$1,010,071

Superannuation
Wife’s P superannuation interest	$322,049
Husband’s V Superannuation interest	$ 43,470
Total	$365,519

Liabilities
Tax payable in respect of 2016 Div 7A loan	$ 39,569
Husband’s motorcycle loan	$ 14,299
Total	$53,868
Balance (Excluding Superannuation)	$956,203

Year	Wife	Husband
2011	$115,760	$94,722
2012	$191,075	$104,801
2013	$262,540	$95,392
2014	$329,230	$82,767
2015	$294,705	$97,449
2016	$270,458	$58,957
2017	$272,309	$39,963
2018	$246,349	$32,355

Net proceeds of sale of B Town property	$231,629
Interest in F Pty Ltd	$284,376
Motor Vehicle 1	$ 22,000
Funds in CBA term deposit	$289,840
Wife’s legal fees added back	$ 48,921
Balance of funds in CBA net saver account	$ 42,211
Total	$918,977
Less Div 7A Tax	-$39,569
Net total	$879,408

motorcycle	$ 15,000
Legal fees paid by husband added back	$ 79,094
Total	$ 94,094
Less motorcycle loan	-$14,299
Net total	$ 79,795