DEALBA & DEALBA
[2020] FCCA 2311
•1 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DEALBA & DEALBA | [2020] FCCA 2311 |
| Catchwords: FAMILY LAW – Final hearing – property – where husband made significant financial contribution – where wife was primary homemaker – where husband’s contributions outweighed wife’s – whether expenditure post-separation to be added back – whether legal fees to be added back – where no source of funds clear for legal fees – where no add-backs permitted – where it is just and equitable to make orders adjusting parties’ interest in property. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79, 90XE, 117 Family Law (Superannuation) Regulations 2001 (Cth) reg.11 |
| Cases cited: Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395 Stanford & Stanford (2012) 247 CLR 108 Trevi & Trevi [2018] FamCAFC 173 |
| Applicant: | MR DEALBA |
| Respondent: | MS DEALBA |
| File Number: | SYC 6305 of 2017 |
| Judgment of: | Judge Morley |
| Hearing date: | 29 August 2019 |
| Date of Last Submission: | 3 September 2019 |
| Delivered at: | Sydney |
| Delivered on: | 1 September 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Wong |
| Solicitors for the Applicant: | Bediaga Xavier and Ramon |
| Counsel for the Respondent: | Mr Friedlander |
| Solicitors for the Respondent: | Maria Mico Solicitor |
ORDERS
That pursuant to section 79 of the Family Law Act 1975 (Cth):
(a)The parties shall forthwith sign all documents and instruments and do all things necessary to list for sale the B Street, Suburb C property at B Street, Suburb C in the State of New South Wales being the whole of the land in Certificate of Title folio identifier ... (‘the B Street, Suburb C property’) at a listing price agreed upon between them with a real estate agent agreed upon between them and shall proceed to a sale of the B Street, Suburb C property at a sale price agreed upon between them and following such sale the proceeds of sale shall be applied as follows:
(i)In adjustment of rates on settlement;
(ii)In payment of agent’s commission on sale;
(iii)In payment of legal and all other proper costs of sale;
(iv)In payment to the Westpac Banking Corporation Limited of a sum sufficient to discharge the first registered mortgage over the B Street, Suburb C property;
(v)In division of the then remaining balance of the proceeds of between the parties so that overall the parties have each received an equal division of the net matrimonial assets, including superannuation entitlements, where prior to the said division of the then remaining net proceeds of sale of the B Street, Suburb C property the husband has received $1,705,480 and the wife has received $2,388,033.
(b)That in the event that the B Street, Suburb C property does not sell by private sale within three months from the date of this order then the parties shall sign all documents and instruments and do all things necessary to list the B Street, Suburb C property for sale by public auction with an auction agent agreed upon between them at a reserve price agreed upon between them and shall proceed to a sale at a sale price agreed upon between them and the parties shall be equally responsible for all costs and expenses of the auction payable prior to the auction sale and following such sale the proceeds of sale be applied as provided in order 1(a) hereof.
(c)That in the event that order 1(b) operates and the B Street, Suburb C property does not sell by public auction in accordance with order 1(b) hereof then the B Street, Suburb C property shall be resubmitted for sale by private treaty in accordance with the provisions of order 1(a) hereof and the B Street, Suburb C property shall be resubmitted for sale by public auction at four (4) monthly intervals from the last public auction and be resubmitted for sale by private treaty between such auctions, until the B Street, Suburb C property shall be sold and upon such sale either by public auction or private treaty the proceeds of sale shall be applied as provided in order 1(a) hereof.
(d)That in the event that the parties are unable to reach agreement in relation to an auction agent, a real estate agent, a listing price, a reserve price or a sale price whether for a sale by public auction or by private treaty then the parties shall and do hereby appoint the President for the time being of the Real Estate Institute of New South Wales or his nominee to determine such disputed matter or matters and the parties shall thereafter act in accordance with that determination and the parties shall be equally responsible for the costs and expenses of the President or his nominee in making such determination.
(e)That pending the settlement of the sale of the B Street, Suburb C property:
(i)the wife shall have exclusive occupation of the B Street, Suburb C property as between the wife and the husband;
(ii)the husband shall pay all payments due and payable, as and when due, on each of the four loan accounts in the husband’s name with the Westpac Banking Corporation Limited in his name secured by way of mortgage on the B Street, Suburb C property;
(iii)the husband and wife shall pay equally all council and water rates relating to the B Street, Suburb C property except any water rates calculated on the basis of volume of usage, which shall be paid by the wife solely.
(f)That within two months the husband and the wife as directors of Super Fund D shall roll out the whole of the value of the wife’s member account, if any, in the Dealba Superannuation Fund to another complying superannuation fund in the wife’s name and within seven days of that rollout being effected the wife shall pay to the husband a sum equal to the amount so rolled out and the wife shall do all things necessary, at the husband’s expense, to resign all offices held by her in Super Fund D and to transfer any shareholding held by the wife in that Corporation to the husband or his nominee.
(g)That within seven days of receipt by the husband from the wife of the necessary documentation, the husband shall complete and return to the wife such documentation as is necessary to transfer to the wife the whole of his interest in the parties’ jointly held shares in E Shares.
(h)That within seven days of receipt by the wife from the husband of the necessary documentation, the wife shall complete and return to the husband such documentation as is required for the wife to:
(i)Relinquish all entitlement to benefit from and powers in the Dealba Family Trust including assigning the benefit of any credit loan accounts in the wife’s name in that trust to the husband and being removed as appointor of that trust;
(ii)Resign all offices held by her in any of F Pty Ltd, G Pty Ltd, H Pty Ltd and J Pty Ltd; and
(iii)Transfer to the husband or his nominee the whole of her shareholding if any in any of F Pty Ltd, G Pty Ltd, H Pty Ltd and J Pty Ltd.
(i)That within 21 days the wife shall do all such acts and things and sign all such documents as may be required to transfer and assign to the husband at the expense of the husband all of the wife’s right title and interest in the estate of the late Mr K.
(j)That the husband is the sole owner in law and in equity as between himself and the wife of the following items of furniture contained in the B Street, Suburb C property:
(i)Wooden dining table and accompanying chairs;
(ii)Wooden bedside tables and dressing table in the master bedroom; and
(iii)The two large and small wooden crystal glass sideboards in the dining room/lounge
and the wife shall make those items available for collection by the husband or his agent by arrangement between them no later than 14 days prior to the settlement of the sale of the B Street, Suburb C property.
(k)That the wife is the sole owner in law and in equity as between herself and the husband of all real property, personal property, financial assets and financial resources currently in her power possession or control other than as dealt with specifically elsewhere in this order, and including, but not limited to, the real property at L Street, Suburb M in the State of Victoria, the real property at N Street, Town O in the State of New South Wales, her Motor Vehicle 1, the contents of the B Street, Suburb C property as at the date of the final hearing, her shareholding in Westpac Banking Corporation Limited and in E Shares and in P Shares, her jewellery, bank accounts in her name and her Super Fund Q entitlements.
(l)That the husband is the sole owner in law and inequity as between himself and the wife of all real property, personal property, financial assets and financial resources in his power possession or control other than as dealt with specifically elsewhere in this order, and including, but not limited to, his Motor Vehicle 2, his shareholding in R Ltd, his bank accounts, his interest in the estate of the late Mr K, and his Super Fund R entitlements and Super Fund S entitlements.
That in the event that either party refuses, fails or neglects to comply with any part of order 1 in relation to the execution of any deed, instrument or document to give effect to order 1 the Court appoints and authorises the Registrars of the Federal Circuit Court of Australia, Sydney Registry, to execute such deed, instrument or document in the name of the party who so refuses, fails or neglects and further appoints those Registrars to do all acts and things necessary to give validity and operation to the deed, instrument or document.
IT IS NOTED that publication of this judgment under the pseudonym Dealba & Dealba is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 6305 of 2017
| MR DEALBA |
Applicant
And
| MS DEALBA |
Respondent
REASONS FOR JUDGMENT
These are property settlement proceedings under section 79 of the Family Law Act 1975 (‘the Act’) between the applicant husband, Mr Dealba (‘the husband’) and the respondent wife, Ms Dealba (‘the wife’).
The matter had a final hearing from 29 August 2019 until 3 September 2019, however only for four days as those dates sat either side of a weekend. At the hearing the husband was represented by Mr Wong of counsel and the wife was represented by Mr Friedlander of counsel.
Both parties gave evidence in chief by way of affidavit and both were cross-examined during the hearing. No other witness was called by either party.
At the conclusion of the final hearing, I reserved judgment. These reasons have been too long delayed, and I apologise to the parties and to their legal representatives.
The proceedings leading up to the hearing
The proceedings were commenced by the husband filing an Initiating Application on 25 September 2017. The wife filed her Response on 24 October 2017.
The matter was before the Court for its first return date, before Judge Sexton, on 1 November 2017. The matter was adjourned to 5 December 2017 for an interim hearing in relation to interim spouse maintenance and exclusive occupation. Orders were made on 1 November 2017 in relation to disclosure by each of the parties, and for the identification and appointment of a Single Court Expert to value the real properties, if agreement as to value was not reached by the parties within a certain time.
Thereafter, the matter received several administrative adjournments at the request of the parties, as they were seeking to negotiate a settlement. They were not successful, and on 21 August 2018 the matter was before the Court and was set down for an interim hearing on 7 February 2019 on the issues of spouse maintenance and exclusive occupation of the former matrimonial home. The Court noted that the parties intended to attempt to settle the matter by way of a mediation to be conducted by the Honourable Stephen O’Ryan QC. Whether or not the mediation took place is not known to the Court, but the matter was not settled and then was administratively adjourned from 7 February to 7 May 2019.
On the adjourned date in May, the matter was set down for final hearing and orders were made by consent for:
a)The wife to have exclusive occupation of the former matrimonial home at B Street, Suburb C, NSW (‘the B Street, Suburb C property’) in Sydney;
b)The husband to pay all required payments on the loan accounts secured by way of mortgage on the B Street, Suburb C property; and
c)Further disclosure by the husband to the wife.
The matter was relisted on 19 June 2019 at the request of the parties and an order was made for appointment of a Single Court Expert to value a property, inherited under the estate of the husband’s late father at Suburb T in Victoria, if agreement could not be reached between the parties as to value of that property.
The matter proceeded to final hearing, though on the first two days it was stood in the list as the parties unsuccessfully attempted negotiations.
At the conclusion of the hearing, judgment was reserved.
Material relied upon by the parties
The husband relied upon the following material at hearing:
a)Case Outline document prepared by his counsel, Mr Wong, including a Minute of Orders sought by the husband;
b)Amended Initiating Application filed 3 June 2019;
c)The husband’s affidavit sworn 31 July 2019 and filed 2 August 2019; and
d)The husband’s Financial Statement sworn 31 July 2019 and filed 2 August 2019.
The husband also relied on the following documents admitted into evidence and marked as exhibits during the hearing:
a)Exhibit A1, being a “Memo of applicant husband’s costs” dated 27 August 2019 and prepared by the husband’s solicitors;
b)Exhibit A2, being American Express platinum card statements of account for an account in the husband’s name for the period from 31 December 2013 to 28 December 2014; and
c)Exhibit A3, being American Express platinum card statements of account for an account in the husband’s name for the period from 31 December 2012 to 24 December 2013.
In the course of cross-examination of the wife, the husband referred to and relied upon a part of the Financial Statement, sworn or affirmed by the wife on 24 October 2017 and filed on that day, in the proceedings being evidence in relation to “funds in banks, building societies, credit unions or other financial institutions”.[1]
[1] Financial Statement sworn by the Wife on 24 October 2017, [37] part I, part O.
The wife relied on the following material at the hearing:
a)Case Outline document prepared by her counsel, Mr Friedlander and including a Minute of Orders sought;
b)An Amended Response filed 1 July 2019;
c)The affidavit of the wife sworn 5 August 2019 and filed 6 August 2019;
d)The attachments to the affidavit of the wife sworn 5 August 2019, marked as exhibit R1 in the hearing; and
e)The wife’s Financial Statement sworn or affirmed 5 August 2019 and filed 6 August 2019.
The wife also relied on the following documents admitted into evidence during the hearing and marked as exhibits:
a)Exhibit R2, being a single page from records kept by the Westpac Banking Corporation containing:
i)Notes of a meeting between the husband and Mr U on 28 February 2019; and
ii)Communication between the wife and the bank by email on 17 April 2019;
b)Exhibit R3, being documents from the records of Employer Y relating to the husband’s share of profits as a partner in the financial years 2015, 2016, and 2017;
c)Exhibit R4, being a one page medical report dated 16 March 2019 from W Physiotherapy relating to the wife;
d)Exhibit R5, being a one page medical report dated 22 March 2019 from X Gastroenterology relating to the wife;
e)Exhibit R6, being a notification of costs document prepared for the wife by her solicitors;
f)Exhibit R7, being the husband’s income tax returns for the years 2014 to 2018 inclusive;
g)Exhibit R8, being the Dealba Family Trust (H Pty Ltd as trustee) tax returns for the years 2014 to 2018; and
h)Exhibit R9, being the F Pty Ltd income tax return for 2018.
In preparing these reasons for judgment, I have reviewed the whole of the oral evidence in the matter and the submissions made on behalf of each of the parties by their counsel, both as written in their Case Outline documents and before the Court at the end of the oral evidence. Naturally, I have also reviewed the whole of the written material in evidence.
The orders sought
The orders sought by the husband are as follows, in summary form:
a)That the former matrimonial home property at B Street, Suburb C be sold at auction with a reserve price of $3,500,000, and after payment of costs of sale and agent’s commissions and repayment of all loan accounts secured by way of registered mortgage on that property the net proceeds of sale be divided as to 50 per cent thereof to the husband and 50 per cent thereof to the wife. The equal shares are to be adjusted to reflect one half of the values of L Street, Suburb M, (‘the L Street, Suburb M property’) in the State of Victoria and N Street, Town O, (‘the N Street, Town O property’) in the State of New South Wales, such that the husband would receive an extra $562,500, and the wife therefor would detract $562,500 from her 50 per cent share;
b)That the wife retain the L Street, Suburb M property and the N Street, Town O property;
c)That until a sale of the B Street, Suburb C property is completed the wife have exclusive occupancy of the property and pay all outgoings in relation to the property and pay all payments required on all loan accounts secured by way of mortgage on the property;
d)That on settlement of the sale of the B Street, Suburb C property the following occur:
i)The wife transfer to the husband the whole of her interest in the estate of the late Mr K (the husband’s late father);
ii)The husband provide a withdrawal of caveat in relation to the caveat registered by him on the L Street, Suburb M property;
iii)The husband transfer to the wife the whole of his interest in the E shares held jointly by the parties, at the wife’s expense;
iv)The husband transfer to the wife the whole of his interest in the parties’ joint bank accounts ANZ account number ...35 and Westpac account number ...79;
v)The wife transfer to the husband the whole of her shareholding, and resign all offices held by her, in H Pty Ltd, F Pty Ltd, G Pty Ltd, and Super Fund D; and
vi)The wife transfer to the husband the whole of her interest in the Dealba Family Trust.
e)That a superannuation splitting order be made affecting the husband’s interest in the Super Fund R, in favour of the wife with a base amount of $49,280;
f)That a superannuation splitting order be made affecting the wife’s member account in the Super Fund D (the parties’ self-managed superannuation fund) with a base amount of 100 per cent of her interest therein to the husband;
g)That from the contents of the B Street, Suburb C property the husband have as his sole property a wooden dining table and accompanying chairs, wooden bedside tables and dressing table in the master bedroom, and large and small wooden crystal glass sideboard in the dining/lounge room; and
h)That the balance of the contents of the B Street, Suburb C property be divided between the parties by the wife preparing two lists dividing the household belongings, furniture, and furnishings equally between the lists, the wife providing those lists to the husband, the husband electing which of the two lists represents the property he seeks to obtain, and thereafter the contents being divided in accordance with those lists.
On hearing the wife sought final orders summarised as follows:
a)That the husband pay out all loan accounts secured on the B Street, Suburb C property “at his sole cost”;
b)That once the husband has complied with order (a), the B Street, Suburb C property be sold, with the wife having exclusive occupation thereof until sale, and following sale after payment of costs of sale and agent’s commission if any, the net proceeds of sale be divided as to 60 per cent thereof to the wife and 40 per cent thereof to the husband;
c)The wife retain L Street, Suburb M, in the state of Victoria and N Street, Town O, in the state of New South Wales;
d)That the husband retain as his sole property the items of furniture specified in his orders;
e)That the wife retain the balance of the contents of the B Street, Suburb C property;
f)That the wife transfer to the husband the whole of her interest in the estate of the late Mr K (the husband’s deceased father);
g)That there be a superannuation splitting order made in favour of the wife affecting the husband’s interest in the Super Fund R, with a base amount to the wife of $165,000;
h)That there be a superannuation splitting order affecting the wife’s interest in the Super Fund D (the parties’ self-managed superannuation fund) with a base amount to the husband of 100 per cent of the wife’s member account;
i)That the husband do all things necessary to provide a withdrawal of caveat in relation to the caveat registered by him on title to the L Street, Suburb M property;
j)That otherwise each party retains such property as in their power possession and control; and
k)That the husband pay the wife’s costs.
In accordance with the analysis and findings that I make in relation to the matrimonial asset pool later in these reasons, I find that the orders sought by the husband equate to a division of the net matrimonial asset pool, including superannuation entitlements, of 53 per cent to the husband and 47 per cent to the wife. On the same basis, I find that the orders sought by the wife equate to a division of the net matrimonial asset pool, including superannuation entitlements, of 21 per cent to the husband and 79 per cent to the wife.
The evidence
There was very little contested evidence between the parties in this matter, however there was a widely divergent view of a proper result after application of the relevant law to the evidence. Where the evidence is contested between the parties and relevant, I will indicate and make appropriate findings.
At the hearing the husband was 60 years of age and the wife was 61 years of age.
The parties were married in 1984 without cohabitating prior to their marriage and they separated on 11 December 2012, a cohabitation period of 28 years. A divorce order was made in relation to the parties’ marriage on 13 September 2016, becoming final on 14 October 2016.
There are three children of the marriage, each of whom are now adults living their independent lives – Mr Y, 32 years of age, Mr Z, 30 years of age and Ms AA, 27 years of age.
The husband is a professional currently in the employ of Employer V, a practice in which he was previously a partner and from which he resigned in 2018 and took up an employee position in 2018. A requirement of partners in the practice of Employer V is that they retire at the age of 60 years. The husband retired just short of that age when an opportunity to take up employment with the practice on retirement came to his attention earlier than his required retirement age. The husband is on an annual salary of $300,000 and earns another $150,000 through private consulting.
The husband has re-partnered and married Ms BB in 2019. Ms BB is a health care professional, 63 years of age, is currently a student, and has some moderate income from a consulting practice.
The mother has not re-partnered. She has occupied the B Street, Suburb C property, the former matrimonial home, since the parties separated.
At the time of the parties’ marriage and commencement of cohabitation, the husband was a professional employed by Employer CC, and the wife was a customer service officer employed by Employer DD. The wife’s annual income at that time was about $23,000 per year. There is no evidence as to the husband’s income at that time. The husband was the owner of a Motor Vehicle 3 valued at about $5,000. The wife was the owner of a Motor Vehicle 4 sold shortly after the commencement of cohabitation for $2,200, and savings of about $6,000.
Shortly before the parties’ marriage they jointly purchased EE Street, Suburb FF in Victoria (‘the EE Street, Suburb FF property’) for $61,000. They borrowed $49,000 from the Westpac Bank. The balance of the purchase price and costs of purchase were from their joint savings accumulated together prior to their marriage.
The wife had two superannuation funds to a value of about $15,500 at the commencement of their cohabitation, which she later drew down on in about 1988 to pay out a loan relating to a property purchase by the parties.
In 1987, when the wife was seven months pregnant with their first child, Mr Y, she took maternity leave from her employment with Employer DD for a period of 12 months. She may have then, though it is not entirely clear on her evidence, returned to work for a short period of time, resigning entirely in about 1989 at which time she received a payout of her accumulated annual leave and pro rata of her long service leave entitlements in a sum of about $30,000. The wife had been in that employment for 13 years, 10 years prior to the commencement of cohabitation and accordingly some of the payment was by way of an initial contribution by the wife being referable to her period of service before the parties were married.
The wife did not engage in paid employment again during the period of their cohabitation, and up to the hearing of the matter, except for a period of about two years between 1999 and 2001 when she did some part time work for a local business.
Following her resignation from Employer DD, the wife was engaged full time in homemaking – cooking, cleaning, washing, ironing, shopping, and so forth – and on the day-to-day care and parenting of the children of the marriage. The parties’ youngest child, Ms AA, turned 18 in 2010, just short of three years before the parties separated.
Throughout the whole period of cohabitation the husband pursued his career as a professional, first with Employer CC and later as a partner in Employer V. The husband’s worked involved interstate and overseas travel – overseas up to two or three times a year for two or three weeks and interstate about once per month for up to three days.
The husband’s usual working hours involved leaving the home at between 7:00AM and 7.30AM and returning at any time between 6.30PM and 9.00PM on weekdays.
It is not in contest between the parties that the wife was the primary carer for the children and primarily responsible for the homemaker role within the family unit from when she left work in 1987, prior to the birth of Mr Y, until the parties’ separation. The wife deposes that in the years from the parties’ marriage until she left work, she was also primarily responsible for the homemaker role with little assistance from the husband. The wife was not tested on this evidence in cross-examination and I accept her evidence in that regard.
The wife attended to the gardening and basic home maintenance in the matrimonial homes – owned or rented – occupied by the family during cohabitation, and she attended to engaging any tradesmen or similar required for matters of maintenance and repair to the parties’ properties.
The wife organised all the arrangements for the parties’ movements from home to home caused by the husband’s relocation through his employment, which I will detail shortly. This evidence by the wife was put to the husband during cross-examination and he confirmed the wife’s evidence and said “Yes, I am grateful for what she did.”
During the parties’ marriage they bought a block of vacant land at Town GG in South Australia. The wife was principally responsible for organising the building of a holiday home on the property and the fit out of the holiday home. That property was sold by the parties in 1996.
In 1985, shortly after the parties had been married, they moved to Country HH for the husband’s employment, and for the same reason moved from there to Melbourne in 1986, then to Adelaide in 1989 and then, finally, to Sydney in 1995.
In 1994 the husband set up the Dealba Superannuation Fund, a self-managed superannuation fund, with Super Fund D as trustee, of which the husband and wife were directors and the husband was the sole shareholder. Similarly, at about that time the husband set up the Dealba Family Trust, of which H Pty Ltd is the trustee, and of which the husband and wife are both directors and shareholders.
During the early years of cohabitation the Dealba Superannuation Fund and the family trust, through their respective trustee corporations, purchased and sold various real properties.
The husband became a partner in Employer CC sometime in 1993 or 1994.
In 1992 the husband organised the purchase of a shelf company, F Pty Ltd trading as “JJ”, as a corporate vehicle for the wife to operate any small business ventures she may pursue in the future. The husband and wife were directors and the husband was the secretary, with the wife holding one ordinary share and the husband holding 14 ordinary shares out of the 15 ordinary shares issued.
The parties sold the EE Street, Suburb FF property in 1995 and purchased vacant land at Suburb KK in Victoria. The husband refers to the property as being at Suburb KK in Victoria and the wife refers to the property as being at Suburb LL. Suburb KK and Suburb LL are adjoining suburbs in the Region MM of Melbourne. The purchase price was $115,000, funded from the proceeds of sale of the EE Street, Suburb FF property.
In 1995 the family moved from Melbourne to Sydney. In 1996 the parties purchased a townhouse at NN Street, Suburb OO (‘the NN Street, Suburb OO property’) for about $400,000, utilising savings they had accumulated from the husband’s earnings and a loan obtained from Westpac Bank. After purchase the family lived in that property.
Sometime in 1996 or 1997 the parties purchased a caravan at Town FFF in New South Wales for between $21,000 and $22,000. The caravan was sold by them in 2002 for $29,000.
In about November 1998, the parties sold the land at Suburb KK and in 1999 they sold the NN Street, Suburb OO property for $585,000 and took up residence in a rented home in Suburb PP, for a period of 12 months, until in 2000 they purchased the B Street, Suburb C property for $1,205,000. The parties paid the deposit for the purchase from savings accumulated from the husband’s earnings and the balance was provided from an interest only loan with Westpac Bank secured by way of mortgage on the B Street, Suburb C property.
In 2003 the wife’s father, who was residing in state housing at L Street, Suburb M, in Victoria, was notified of an opportunity to purchase that property either himself or in conjunction with child or children of his. The wife’s father took up this opportunity and the L Street, Suburb M property was purchased by the wife and her father for $275,000 from the Victorian Department of Health and Human Resources as tenants in common of one per cent in the name of the wife’s father and 99 per cent in the wife’s name.
In 2004 the wife’s father’s one per cent holding was transferred to the wife. The parties provided all of the funds for the purchase, no funds being provided by the wife’s father, and the parties allowed the wife’s father to continue in residence of that property until he passed away in 2007. Thereafter the property was leased and the wife received the rental income therefrom up until the time of hearing and continuing.
In about 2004 the husband and wife, together with another couple, Mr & Mrs QQ, purchased, through a corporate vehicle, G Pty Ltd as a bare trustee for the four of them, a residential investment property at RR Street, Town SS (‘the RR Street, Town SS property’) for $3,055,000. The purchase and subsequent renovations were funded mainly by bank finance of $3,250,000 obtained from the National Australia Bank.
In 2011 the parties purchased the interest of Mr & Mrs QQ in the investment, presumably, though it is not clear on the evidence, by purchasing their shareholding in G Pty Ltd, for $2,000,000. From that purchase money Mr & Mrs QQ paid out one half of the balance then owing on the loan account obtained for purchase of the property, which may by then have been refinanced with ANZ Bank from NAB, though it is not clear on the evidence. The parties funded this purchase by obtaining a loan of $2,812,500 from ANZ Bank and utilising the net proceeds of sale they received from the sale in 2011 of an investment property that the parties had purchased in 2007 at TT Street, Suburb UU.
In 2008, the parties purchased vacant land at N Street, Town O, NSW for $110,000. The husband gives evidence that the whole of that purchase price and associated costs “was funded from savings from my earnings”. The wife gives evidence that “the purchase was funded from my VV Bank funds and the remaining balance, the applicant husband said that I could withdraw from the H Pty Ltd bank account”.
The origin of the wife’s “VV Bank funds” is not revealed in the evidence, but I find, on the basis of the whole of the evidence in the matter, that such funds would have been from either a sale of real property purchased by the parties during cohabitation or savings from funds earnt by the husband in the course of his employment/partnership. I find that no particular point of contribution turns on the source of the funds for purchase of the N Street, Town O property.
In 2009, 2010 and 2011 the husband invested in “infrastructure bonds” through the Westpac Banking Corporation as a device he used to legally reduce his personal income tax liability. These investments were discontinued before the parties’ separation.
In the course of the parties’ cohabitation they obtained various loans for real property, infrastructure bonds investments, and other purposes. The parties had:
a)Four loans with Westpac Bank, all in the husband’s name, all guaranteed by the wife, and all secured on the B Street, Suburb C property at the time of separation. At the time of hearing, the parties were not in agreement as to debit balances of each of those loans, an issue I will address later in these reasons. The husband gives evidence that at the time of the parties’ separation the debit balances on the Westpac loans were as follows:
i)Westpac rocket home loan account number ...85, $40,812;
ii)Westpac rocket investment loan account number ...84, $638,536;
iii)Westpac rocket investment loan account number ...76, $747,541; and
iv)Westpac variable rate investment loan account number ...71, $384,646,
being a total of $1,811,535.
b)An ANZ investment loan. The evidence does not reveal borrower and guarantors, in particular, but it may be inferred from the evidence that the borrower was G Pty Ltd and each of the parties was a guarantor. The ANZ investment loan was paid out after separation when the parties sold the RR Street, Town SS property, as detailed below.
The Westpac rocket home loan account number ...85 was initially obtained by the parties for the purpose of purchasing the B Street, Suburb C property, and the husband deposited some of his earnings into this account to cover drawing for living expenses from time to time. The other three Westpac loan accounts, also secured on the B Street, Suburb C property, were used for investment and tax-deductible purposes.
The wife gives evidence that she was kept in the dark by the husband in relation to most of the financial transactions affecting the parties during their cohabitation. The husband, for his part, gives evidence that all of their financial transactions were the subject of correspondence to either or both of the parties, including bank statements for the various loan accounts, that all of the parties’ mail throughout the period of their marriage was opened by the wife and that accordingly she had every opportunity to inform herself on the matters dealt with in such correspondence, and that he discussed the various financial transactions as they arose and were undertaken with the wife.
I find that in this matter nothing will turn on this conflict in the evidence affecting the determination of whether it is just and equitable to proceed with a property settlement between the parties and thereafter with determining the appropriate adjustment of property between the parties.
At the time of separation, the husband had a Westpac rocket deposit account in his sole name with a credit balance of $717,000. The husband continued to draw on this account and to pay monies from his earnings into this account following separation. His evidence in that regard indicates total withdrawals between separation in December 2012 and a withdrawal on 22 April 2015 to be $806,808 and used to update the parties’ motor vehicles and pay tax liabilities.[2]
[2] Affidavit of the husband sworn in 31 July 2019, [46].
Prior to separation, the husband arranged his finances in such a manner that the main part of his earnings were deposited into an account operated by H Pty Ltd as trustee of the family trust, a Westpac cash management account number ...22, and from that account an amount of $10,000 per month plus an additional sum of $20,000 in December in each year was transferred to the parties’ joint Westpac classic plus account number ...79 for use by the wife in relation to the family’s living expenses, and that the wife would immediately transfer those monies from that account “to her own personal accounts.” Following separation the husband maintained this arrangement until October 2017, two months short of five years following separation.
In 1989 the husband’s father “gave us” $15,000.[3]
[3] Affidavit of the husband sworn in 31 July 2019, [48].
In 2010 the husband’s father, Mr K passed away and his deceased estate included his half interest in WW Street, Suburb T, Victoria (‘the WW Street, Suburb T property’) and his half interest in XX Street, Town YY, Victoria (the XX Street, Town YY property’) as tenant in common with his spouse. Mr K through his will left half of his estate to the husband’s brother, Mr ZZ, and the other half in equal shares to be divided equally between the husband, the wife and each of their three children. Mr K left a life interest in his share of the WW Street, Suburb T property to his spouse. The XX Street, Town YY property was sold in the course of administration of the estate and from that sale the husband received $70,539.59 plus reimbursement of funeral and other expenses, being a total sum received by him of $100,000.
The husband’s mother continues to reside in the WW Street, Suburb T property pursuant to her co-ownership with her late husband’s estate and her life interest in the estate half of that property. The husband and wife remain entitled in remainder following the termination of the husband’s mother’s life estate to their share of that property being as to five per cent thereof each.
Whilst the wife gives evidence of having superannuation entitlements at about the time of separation that were worth $15,500 at the time she cashed those entitlements in about 1988, there is no evidence before the Court of the husband being entitled to any superannuation benefits prior to the parties’ marriage. The husband had accumulated a superannuation interest in ANZ Super Advantage prior to joining Employer V, and in 2002 he rolled that interest into the Employer V Partners’ Superannuation Plan, then in 2005 rolled his accumulated superannuation into the Dealba Superannuation Fund (self-managed superannuation fund).
The wife infers in her affidavit that the husband may have an undisclosed interest in the superannuation fund by reference to the husband’s roll over of the ANZ Super Fund into the Employer V Partners’ Superannuation Plan in 2002.[4] In that regard, the wife’s evidence is not in conflict with the husband’s evidence and I find that there is no basis to assert that there has been a failure of disclosure by either party in relation to superannuation entitlements.
[4] Affidavit of the wife sworn 5 August 2019, [125].
As already stated, following separation, the husband continued to provide a sum of $10,000 per month and an extra $20,000 in December each year to the wife for her use until October 2017, being a total of $680,000. The husband asserts that the wife drew further on his income from the H Pty Ltd account for the Family Trust to pay her American Express card accounts to a total of $242,527.
Following separation, the husband continued to pay from his earnings all payments required on the loan accounts, including the ANZ loan account relating to the purchase of the full interest in the RR Street, Town SS property until it was sold in 2014, and the four Westpac Bank loan accounts being secured on the B Street, Suburb C property, one of those loan accounts being referable to the purchase of that property. During that time from separation until hearing when the husband was maintaining those payments, the wife was the sole occupant as between the parties of the B Street, Suburb C property – under an exclusive occupation order made by consent between the parties on 21 August 2018 – and the husband was funding his own accommodation by payment of, initially, motel costs and thereafter rent, from his income.
From separation until early 2019, the husband’s required payments on the four Westpac loan accounts were by way of interest only payments in a sum of about $9000 per month and from early 2019 were payments of principal and interest in the sum of $11,394 per month.
In 2014 the parties, presumably through G Pty Ltd, sold the RR Street, Town SS property for $3,600,000, the sale settling in 2014. The ANZ loan account was repaid in the sum of $2,824,515.15 and the parties received net after all sale costs and expenses $699,019.88, which sum was divided equally between them, each receiving $349,509.44.
On about 24 September 2015 the husband arranged to “roll out” the parties’ member accounts in the Dealba Superannuation Fund into the parties respective Super Fund Q and Super Fund R Funds. The husband says that he undertook this step after communicating his intention to the wife and when he was challenged in cross-examination that he had not obtained the wife’s agreement he answered that he had communicated his intention to the wife and “that she did not object”.
There is a variance between the evidence of the husband and the wife as to the amount received by the wife. On the evidence of the wife the amount she received is greater than that suggested in the evidence of the husband. The evidence of the wife concurs with the bank records put into evidence in the parties’ affidavits in relation to the division.
I find that the money available in the self-managed superannuation fund at the applicable time was $1,089,467.88 from which the husband received the then total of his member account in the sum of $625,361.33 and the wife received the then total of her member account in the sum of $464,106.55. In this regard, I am assisted by attachment ‘I’ to the wife’s affidavit being a print of an email dated 24 September 2015 from the husband to the wife, the contents of which confirm the wife’s assertion as to the value and the division.
The difference between the member account of the husband and the member account of the wife as rolled into their respective Super Fund Q and Super Fund R Superannuation Funds was $161,254.78. It is the husband’s evidence that an agreement was made between the parties at about that time that, to make up for the shortfall, it was agreed that the wife would “retain term deposits held of about $200,000 with Westpac to make up the difference.” [5]
[5] Affidavit of the husband sworn in 31 July 2019, [60].
The wife does not concede that this arrangement was made or that she received those funds. In the course of her cross-examination she gave the following evidence:
Mr Wong: In about 2015 the super fund was disposed of and the entitlements rolled out.
Wife: Yes.
Wong: The husband received about $625,000 from the super fund and you received about $432,000 rolled out.
Wife: No, I think the husband received $632,000 and I received $462,000.
Wong: You and the husband agreed that you would keep the Westpac term deposit to make up the difference in the super amounts from the self-managed super fund.
Wife: No.
Wong: You agreed to the roll out from the self-managed super fund.
Wife: No.
Wong: Yours went to another fund of your choice.
Wife: No.
Wong: You have retained since August 2015 the $200,000 in the Westpac account.
Wife: No.
Wong: That $218,000 Westpac term deposit has been in your name since separation in 2012.
Wife: Yes.
Wong: You’ve had sole control of those funds since 2012.
Wife: Yes.
Wong: The husband has not asked you to pay the $218,000 to him.
Wife: No.
Wong: Yourself and the husband agreed in 2015 that you could keep it.
Wife: No.
Wong: The husband told you to take the difference between his self-managed super fund account and your self-managed super fund account from the term deposit.
Wife: I didn’t understand that.
Wong: The husband told you to take the money from non-H Pty Ltd accounts.
Wife: I didn’t understand that.
I have gone into this detail in relation to the issue of the uneven member’s account rolled out of the self-managed super fund and the agreement asserted by the husband that she retain the $218,000 Westpac term deposit so as to address any issue arising therefrom later in these reasons.
Subsequent to the roll outs from the self-managed super fund a further sum was deposited into the super fund bank account as an interest payment leaving the Dealba Superannuation Fund with a current balance of about $740.
In about 2016, the husband purchased shares in R Ltd for $14,019.95 (45,000 shares).
During cohabitation and thereafter, the wife maintained a bank account as a trustee for each of the children and in August 2018 she withdrew the funds from each of those accounts and gave them to the applicable adult child. It was conceded by the husband in cross-examination that he did not seek in any way for those monies to be taken into account in the property settlement between himself and the wife. The wife, naturally, was of the same view.
The husband asserts that in October 2016 it came to his attention, by accident, that the wife had engaged real estate agents for a sale of the B Street, Suburb C property and had entered into an exclusive agency agreement with the agent. When the husband proposed that he would sign the exclusive agency agreement so the parties could proceed with the sale of that property, he was informed that the wife did not wish to proceed with the sale. The husband argues in the proceedings that in November 2017, the parties agreed upon a current market value of the property at $4,100,000 and that at the time of hearing they agreed a current market value of the property at $3,500,000, a difference of $600,000. The husband’s evidence in that regard was admitted without objection. The wife doesn’t address the matter in her affidavit evidence but she was cross-examined about the husband’s evidence and conceded that in October 2013 she had engaged a real estate agent with the view to selling B Street, Suburb C but she could not sell it as it was in the parties’ joint names. She asserted that she was not aware that the husband was in agreement with the sale of the property at that time.
Exhibit R6 is a “notification of costs” of the wife prepared by her solicitors and indicating that to the start of the hearing she had paid legal costs in the sum of $123,070 and that she owed legal costs in sum of $183,640. This was supplied despite the notice referring to it having been provided pursuant to Rule 19.04(2) of the Family Law Rules 2004 (Cth) (‘the Family Law Rules’), which do not apply to these proceedings unless the Federal Circuit Court Rules 2001 (Cth) (‘the FCC Rules’) are “insufficient or inappropriate”.[6] The notice does not comply with Rule 19.04(2) of the Family Law Rules in that it does not “specify the source of the funds of the costs paid or to be paid” as required by Rule 19.04(5).[7]
[6] Federal Circuit Court Rules 2001 (Cth) r 1.05(2).
[7] Family Law Rules 2004 (Cth) r 19.04(2).
The wife was cross-examined about her payment of legal costs and she confirmed that she had paid legal fees from funds in her VV bank account. It was pointed out to her in cross-examination that she swore in her Financial Statement of 24 October 2017 that she held the sum of $120,000 in her VV bank account number ...81 and that was conceded by the wife, and confirmed by the Court record.
The wife was asked if she had closed all of her VV bank accounts prior to the hearing and she replied that she had. She was then asked by Mr Wong, “So the whole of the VV Bank $120,000 has all gone to your legal fees?” to which the wife replied, “Yes, and the L Street, Suburb M money accumulated from rent.”
There is no evidence as to where the sum of $120,000 referred to as being in the wife’s VV bank account number ...81 as at 24 October 2017 came from, whether it is monies accumulated by saving from the $140,000 received by the wife annually from the husband’s earnings or otherwise. The “L Street, Suburb M money accumulated from rent” refers to the rental income received by the wife from tenants of the L Street, Suburb M property in her sole name.
Exhibit A1 is a “memo of applicant husband’s costs” provided to him by his solicitors and dated 27 August 2019. It indicates an estimate of his costs to the end of the trial and that to 27 August 2019 the husband had paid $110,918.26 by way of legal fees and:
source of funds – the costs have been paid from applicant husband’s funds derived from post-separation earnings.
At the time of the parties’ separation, the husband had accumulated Qantas frequent flyer points. Between 2012 and 2015, the husband used 368,000 Qantas frequent flyer points. There is no evidence as to the total of Qantas frequent flyer points held by the husband at the time of separation. There is no evidence as to the number of Qantas frequent flyer points held by the husband at the time of the hearing. The wife does not seek any order in relation to a dealing with the husband’s Qantas frequent flyer points.
The wife gives evidence that since 2006 she has experienced chronic severe pain radiating from her shoulders and through her arms and legs and that she takes medication for her pain. She gives evidence that she takes prescription medication for treatment of non-insulin dependent diabetes, blood pressure, and hyperparathyroidism. She requires total hip replacements.
Exhibit R4 is a one page report by Ms AAA, physiotherapist of W Physiotherapy, the relevant “findings” being “Dix-Hallpike test for BPPV indicative of L posterior canal BPPV and horizontal canal BPPV”. An explanation of that finding is not in evidence.
Exhibit R5 is a one page report dated 22 March 2019 by Dr BBB, gastroenterologist of X Gastroenterology, and is in relation to an iron deficiency that was diagnosed when the wife had a routine blood test. The balance of the information in the report is anecdotal information provided by the wife.
The husband gives evidence that he is “generally in reasonably good health for my age.”[8]
[8] Affidavit of the husband sworn 31 July 2019, [83].
The law in property settlements
The law relating to the alteration of property interests between two parties to a marriage is governed by section 79 of the Act.[9] Relevantly in this case, section 79(1) vests the Court with power to alter the interests of the parties in property,[10] and the power to make orders providing for the settlement or transfer of property, as determined by the Court.[11]
[9] Family Law Act 1975 (Cth) s 79.
[10] Family Law Act 1975 (Cth) s 79(1)(a).
[11] Family Law Act 1975 (Cth) s 79(1)(d).
However, the Court must not make an order under section 79 unless the Court is satisfied that, in all of the circumstances, it is just and equitable to do so.[12] To give proper consideration to the legislative process required by section 79, it is necessary to consider the High Court decision in Stanford & Stanford.[13]
[12] Family Law Act 1975 (Cth) s 79(2).
[13] Stanford & Stanford (2012) 247 CLR 108.
In that decision, the High Court held that section 79(2) requires that at the outset of the Court’s decision-making process the Court must consider whether or not, in all the circumstances, it is just and equitable to make an order under section 79(1) altering the interests of the parties to the marriage in property.
Is it just and equitable to make an order under section 79?
In considering the proposition posed by this first step, a Court should start by identifying items under the following categories:
a)The existing legal and equitable interests of the parties in property, according to ordinary common law and equitable principles;
b)The existing liabilities of the parties, according to ordinary common law and equitable principles and under legislation; and
c)The rights of the parties, if any, according to ordinary common law and equitable principles and under legislation, in relation to any asserted resources of the parties that may, if it is considered just and equitable to proceed with the property settlement, be taken into account in the Court’s consideration of the matters referred to in section 75(2) of the Act, to which section 79(4)(e) directs the Court’s attention.[14]
[14] Stanford & Stanford (2012) 247 CLR 108; see especially [37].
I further note the comments of the High Court in Stanford at paragraph 42 which I reproduce in full here:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the Court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).[15].
[15] Stanford & Stanford (2012) 247 CLR 108, [42] (emphasis added).
Accordingly, I find that it is just and equitable to proceed with alteration of the parties’ interests in their property as reflected in the matrimonial asset pool.
What orders under section 79 are appropriate to be made?
Having determined that it is indeed just and equitable to make an order under section 79, the Court is then tasked with the job of considering what orders are appropriate to be made. In doing so, I will follow the four-step process set out in Hickey & Hickey.[16]
[16] Hickey & Hickey & Attorney-General for the Commonwealth of Australia (‘Hickey’) [2003] FamCA 395, [39].
In Hickey, the Full Court of the Family Court set out a process of four inter-related steps that must be taken by a Court when determining a property application:
a)First, “the Court should make findings as to the identity and value of the property, liabilities, and financial resources of the parties at the date of the hearing”;[17]
b)Second, “the Court should identify and assess the contributions of the parties within the meaning of section 79(4)(a), (b), and (c), and determine the contribution-based entitlements of the parties expressed as a percentage of the net value of the property of the parties”; [18]
c)Third, “the Court should identify and assess the relevant matters … (“the other factors”) including…the matters referred to in section 75(2) so far as they are relevant…”;[19]
d)Fourth, “the Court should … resolve what order is just and equitable in all the circumstances of the case”.[20]
[17] Hickey [2003] FamCA 395, [39].
[18] Hickey [2003] FamCA 395, [39]. See also Family Law Act 1975 (Cth) s 79(4)(a)-(c):
[19] Hickey [2003] FamCA 395, [39].
[20] Hickey [2003] FamCA 395, [39].
How should the Court treat the contribution from the husband's father's estate?
At the prompting of the husband, the husband’s father, for estate-planning purposes, left half of his estate to the husband's brother and the other half equally amongst the husband, the wife, and each of their three children. The estate comprised the late Mr K's half interest in both the real property at WW Street, Suburb T in Victoria and the real property at XX Street, Town YY in Victoria. The interest of the beneficiaries in the WW Street, Suburb T property is in remainder after a life estate left by the late Mr K to his wife, the husband's mother.
The XX Street, Town YY property was sold and, not taking into account repayments made by the estate to the husband for expenditure by the husband on funeral and other expenses for the estate, a sum of $70,539.59 was received by the husband. What then happened with that sum is not in evidence. Whether or not $14,107.92 was paid out by the husband to each of the parties' three children as their entitlement is not in evidence. Whatever portion of those moneys were the entitlement of the husband and the wife, the question arises as to whether it should be treated as a sole contribution by the husband by way of an inheritance from his father or a joint contribution by the parties by way of inheritance from the husband's father.
As the gift was specifically to the husband and the wife (leaving aside the children's shares at the moment), I find that it should be treated as a joint contribution by the parties.
How should the Court treat the parties' remainder interest in the husband's late father's estate?
On termination of the life estate in that part of the WW Street, Suburb T property that forms part of the estate of the late Mr K, the husband, the wife, and each of their three adult children will be entitled to a five per cent interest each in that property. The breakdown of the interest on the evidence is that 50 per cent is with the husband's mother; the other 50 per cent, which is subject to the life estate is held in remainder by the husband's brother as to 25 per cent and each of the parties and their children as to five per cent thereof. None of the remainder persons have a right to possession of the property until the termination of the life estate. When that will occur cannot be known.
However, each of the remainder persons do have a present estate in fee simple. It is a “presentlyg-existing estate”.[21]
[21] Brendan Edgeworth, Butt's Land Law (Lawbook Co, 7th ed, 2017) 3.280.
The only evidence I have as to the value of the interest of each of the parties in that property (5 per cent interest) is the assertion of the husband in his Case Outline that “as per joint valuation” each interest is worth $84,070.
As a present interest in that property, though in remainder, and with a present value placed on those interests, I find that it is appropriate to include both five per cent shares of each of the parties at a value of $84,070 each in the matrimonial asset pool for division between the parties.
The value of the contents of the B Street, Suburb C property
The one asset in the matrimonial asset pool of which the value was not agreed between the parties, was the contents of the former matrimonial home at B Street, Suburb C. The husband asserted that the contents were valued at $30,000. The wife asserted the contents were valued at $10,000. No valuation by way of expert evidence was presented.
The husband was cross-examined on the issue. It was put to him that the contents of the home, particularly the furniture, were "pretty old - 20 years old". He responded that the parties had refurnished the B Street, Suburb C property in about 2008 or 2009, and the furniture was therefore about 10 years old. When it was put to him that the contents had "little commercial value" he responded “Yes, I don't think they have a great value.” It was put to him that the value of the contents would be about $5,000 at a garage sale, to which he responded that he was "not sure."
Without a consensus of the parties or some expert evidence, the only approach I can take is to find the value of the contents of the B Street, Suburb C property at the midpoint between the values contended by the parties, that is, $20,000.
Add-back of the husband's post-separation earnings
A significant part of the case presented on hearing for the wife was to establish the husband's post-separation earnings, and establish that he had either wasted those earnings, including through non-business travel, both by himself and with "his lady friends" at his expense.[22] It was submitted on behalf of the wife by Mr Friedlander that some part of the husband's post-separation earnings - the amount was never specified - should be either added back or, more appropriately in line with more recent authority in the Full Court, taken into account by the Court when considering what adjustment may be made between the parties under section 75(2)(o) of the Act as a fact or circumstance which the justice of the case requires to be taken into account.
[22] Affidavit of the wife sworn 5 August 2019, [152].
The husband was cross-examined extensively by Mr Friedlander on behalf of the wife on this issue, and ultimately was given opportunity by Mr Friedlander to respond to the assertion that he had wasted much of his income by giving evidence of his expenditure. The husband did so by referring to, amongst other necessary expenditure:
a)His payment of all payments required on the four Westpac bank loan accounts secured on the B Street, Suburb C property;
b)His payments required in relation to the ANZ loan account relating to the RR Street, Town SS property until its sale;
c)His payment of $10,000 per month and $20,000 in December each year to the wife from separation until October 2017;
d)His own accommodation costs through the payment of rent; and
e)His payment of the wife's American Express card account expenditure.
The direct evidence given by the husband in response in cross‑examination was that his income over the period from separation to trial was $3,265,662 after income tax, estimated at a flat rate of 40 per cent, and that from that amount he had expended $2,460,527 on the expenditures he detailed in his evidence in cross-examination. That in turn left a balance of $805,135, which, over six and a half years between separation and trial, equated to an annual net income of $123,866.
I bear in mind that one of the expenses deducted before that figure was arrived at was the husband's accommodation costs for rent, estimated at $5,000 a month in his evidence.
The thrust of the argument being put on behalf of the wife by Mr Friedlander was that either:
a)The husband should have accumulated some part of his income post-separation as capital, so that same was available for any adjustment between the parties in the matrimonial asset pool on property settlement, to be dealt with in consequence of it not being so accumulated as either an add-back or by being taken into account in any adjustment under section 75(2)(o) of the Act. As an aside, I suggest there is great difficulty in the evidence in establishing a proper amount; or
b)That there be an adjustment in favour of the wife under section 75(2) of the Act in consequence of what the wife asserted was the husband's higher standard of living compared to her, demonstrated by his spending over the relevant period.
I was referred in submissions by Mr Wong for the husband to the decision of Murphy J in Hackshaw & Hackshaw,[23] where his Honour said in similar circumstances at [258] to [267]:
[23] Hackshaw & Hackshaw [2010] FamCA 1123.
[258] The picture that emerges from the evidence is of a husband earning significantly greater amounts than the wife. That income was spent lavishly and freely by the husband. The wife did not have access to it post-separation. The wife met her expenses from her own (significantly less) income. She also provided not insignificant sums to the parties' 27 year old son who resides with her. Her lifestyle was comfortable, but her expenditure was very significantly more modest than that of the husband. The husband spent very large sums of money from a very large income, which such sums were spent on himself and were not available to the wife.
[259] I am not convinced that the facts and circumstances here point, as a matter of principle, to the adding back of the funds identified by the wife. I repeat, in that respect, my reliance upon the principles collated in Kouper referred to earlier in these reasons.
[260] Even if the expenditure might be classified as "wasteful" or "reckless" or "wanton", there is, here, no identified impact upon "the property of the parties or either of them". There has been no "premature distribution of property". The money has not come from an identified fund which, it might be argued, would in all likelihood have been part of the property of the parties or either of them for division between them pursuant to s 79.
[261] It is submitted by the husband:
47.It is argued in the wife's case that [the husband's] income stream ought in some way have been quarantined or preserved by the husband for the benefit of the wife or that post-separation he is in effect a trustee in respect of some notional entitlement of the wife to this income stream. There is, it is submitted, little support for this proposition in the authorities. To the contrary, provided that neither party is exposed to hardship by reason of want of support from the income stream of the other party, it is usual to permit each party to apply their post-separation income in the manner which they consider appropriate.
48.It is submitted on behalf of the husband that the case law does not support the proposition that there is a positive onus on either party to ensure that their post separation application of their income adheres to some abstract and unascertainable level of "reasonable living expenses", in default of which they will be treated as trustees of the balance for themselves and the other party.
[262] It might be thought that these submissions have echoes in statements by the Full court in C v C [1998] FamCA 143 at para 46:
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. …
[263] There is, though, a disquieting sense of unfairness that, toward the very end of, and after the end of, a very lengthy marriage partnership, one of the marriage partners should have access to, and use, very considerably more than the other. A strong feeling of unfairness should, as it seems to me, trouble a court that is charged, relevantly, with doing justice and equity in the distribution of property at the end of a marriage — particularly a very long marriage.
[264] Attempting to meet unfairness, or to do justice and equity, must also take account of the fact, as it seems to me, that (a) the statutory task is directed to the "property of the parties or either them" and "notional property" might seem somewhat antithetical and (b) if an "add back" is made (ie "notional property" is included in the pool) that, of itself, has the potential to create significant injustice to the party allotted the added back sum. (This issue is discussed in Kouper, earlier referred to).
[265] In that respect Counsel of the husband places reliance upon a decision of the Full court in Gollings v Scott [2007] FamCA 397. (Finn, Kay and Boland JJ, 17 October 2006). The Full court said:
68.As a general rule, once the parties have separated, subject to obligations of maintenance and support, and subject to the type of considerations described in Kowaliw (1981) FLC 91-092 relating to waste, each party is entitled to get on with his or her life independent of the other. The husband would be free to go about spending the money he earned post-separation and the furtherance of his relationship with Ms Y if he chose to do so, providing that at the same time he properly met his obligations towards his wife and children for their due support. It would not normally be appropriate some years after separation, to require each of the parties to account for any monies they had spent post-separation, so as to determine whether or not that expenditure was reasonably necessary for their own self-support, and to the extent that it was not, to determine whether it would be proper to add it back into the pool of assets available for division between the parties …
69.The ultimate resolution in the manner in which the monies spent by the husband in furtherance of his relationship with Ms Y should be categorised in this case, is not without difficulty. It might well have been said by the trial judge as appropriate that some allowance be made in favour of the wife under s 75(2)(O) for the husband having effectively gifted $70,000 to Ms Y in the comparatively short period between separation and trial, particularly as this sum included the husband's long service leave entitlement acquired during the marriage. But at the same time the magnitude of the gift needs to be viewed in light of the general economic circumstances of the parties, which included the husband earning between $700-$800,000 a year over that period and making generous provision for the wife and children from his income. The law imposed no further obligation upon him to continue to accumulate assets during that period, and he was in a sense free to do with his income as he pleased.
[266] In this case, even if I was persuaded — which I am not — that the expenditure could be described as "waste" as that expression is used within the authorities, justice and equity is, in my judgment, not done by adding back this sum in the manner urged. I decline to add the figure to the property.
[267] However, the reality of the parties respectively chosen post-separation lives, might well have ramifications for other aspects of the s 79 process, including, for example, post-separation contributions or s 79(4)(e), each of which topics will be addressed below.[24]
[24] Hackshaw & Hackshaw [2010] FamCA 1123, [258]-[267].
In this matter, the husband made significant voluntary contributions to the financial support of the wife post separation:
a)From separation until October 2017, he paid to her $10,000 per month and $20,000 in December each year;
b)Payment of all required payments on the Westpac and ANZ loan accounts, the Westpac accounts being secured on the B Street, Suburb C property occupied by the wife from separation to trial; and
c)The availability to the wife of expenditure through an American Express credit card account with repayments of that expenditure coming from the husband's earnings.
As set out in Kasiopoulos & Garapiperis,[25] it is a different circumstance if post-separation earnings are used to purchase or improve capital assets. That is a circumstance that would be considered in the overall consideration of contributions by the parties from the commencement of their cohabitative relationship up to trial. Similarly, where assets have been disposed of or significant liabilities eliminated or reduced post-separation. In that circumstance, it would be as the Court said in Kasiopoulos at [44] that “The genesis of the funds utilised for such purposes, and how they were then conserved, enhanced or otherwise dealt with” is of relevance in the assessment of contributions.[26]
[25] Kasiopoulos & Garapiperis [2012] FamCAFC 85.
[26] Kasiopoulos & Garapiperis [2012] FamCAFC 85.
I find that it is not just and equitable in this matter to add-back as some form of ‘notional property’, any part of the post-separation earnings of the husband that have been expended, in any manner. I find that it is not appropriate in this particular matter to consider an adjustment between the parties under section 75(2) of the Act in favour of the wife, in consequence of the husband's retention post-separation of a greater proportion of his income than that received from him by the wife or from which the wife benefited directly or indirectly.
The relative positions of the parties in relation to their income and earning capacities must certainly be considered when,[27] if it is found to be just and equitable to proceed with a property settlement, consideration of those matters is required in step three of the four-step process under section 79(4)(e) of the Act, which refers to the relevant considerations in section 75(2) of the Act.
[27] Family Law Act 1975 (Cth) s 75(2)(d), (j), (k), (o).
A proposed sale of the B Street, Suburb C property in 2016
As detailed earlier in these reasons, the husband gives evidence of a proposed sale of the B Street, Suburb C property initiated by the wife in about October 2016 and in which, he asserts, he indicated he would be a willing participant. The sale did not proceed, the husband asserts, due to the wife's change of mind and refusal to sell. The wife gave her evidence on that assertion in her cross-examination.
The husband asserts that there was a consequent loss, being the difference between an agreed value of the home in November 2017 at $4,100,000 and the agreed value of the home at hearing, being $3,500,000, a difference of $600,000, together with a loss consequent upon his payment of $8,935 per month in payments on the Westpac loan accounts secured on the B Street, Suburb C property and his payment of $4,775 per month for rental accommodation for himself and his partner, that would not have been necessary had the B Street, Suburb C property been sold and a capital sum been available to him to purchase his own home.
There is, of course, no certainty that if the B Street, Suburb C property had been sold in late 2016 or during 2017 a capital sum would have been available to the husband from the sale to apply to a purchase of his own home, absent agreement of the wife to release of funds or an order of the Court once these proceedings had been commenced in September 2017.
The fact that the wife took steps to list the property with a real estate agent is not conclusive of an intention on her part to sell. She may have been, as many people do, ‘testing the market’.
In the husband's Amended Initiating Application filed 8 November 2017, he sought interim orders for sale of the B Street, Suburb C property and following a sale and payment out of the home loan secured on the property, agent's commission and other expenses and costs of sale, that the net proceeds of sale “…be held in an interest bearing account for the parties' pending further Court order.”
I find that there is no ‘add-back’ or adjustment to be made between the parties based upon any refusal by the wife to cooperate in a sale of the B Street, Suburb C property prior to trial.
Should there be an add-back of legal fees paid?
The husband asserts in his evidence that the amount of $110,918.26, which he had paid to the date of trial for legal fees relating to these proceedings, had been paid from his post-separation earnings. The husband's evidence for that is found in exhibit A1.
The wife's evidence in relation to paid legal fees is contained in her evidence in exhibit R6 that to the date of trial she had paid $123,070 for legal fees. Her evidence in cross-examination, detailed earlier in these reasons, was that same had been paid from the $120,000 that had been in a VV Bank account in her name, and under her sole control, and from income received by her as rent from the tenants of the L Street, Suburb M property.
The Full Court of the Family Court of Australia has provided useful guidelines for adding back to the property available at trial at [27] to [42] of Trevi & Trevi,[28] where the Court found “propositions emerging from authority that paid legal fees as a category of add-back is imbued with considerations specific to that expenditure.”[29]
[28] Trevi & Trevi [2018] FamCAFC 173.
[29] Trevi & Trevi [2018] FamCAFC 173, [31].
While confirming that the matter is still a matter for the discretion of the trial judge, the Court pointed out that if the funds used to pay legal fees prior to trial have come from capital as opposed to post-separation income or post-separation borrowings, the Court notes at [36] that:
Paid legal fees occupy a particular position in the consideration of add-backs by reason of section 117(1) of the Act: a matter not relevant to any other form of expenditure or dissipation of property the subject of an add-back claim.[30]
[30] Trevi & Trevi [2018] FamCAFC 173, [36].
At [37]:
An order failing to add back a legal cost is a pre‑emptive decision about one party paying the other’s legal costs. The statutorily prescribed default position is that neither party pays all or some of the other party’s costs. Any awarding of costs is to be based upon a finding of justifying circumstances, and dependent to a large extent on the result of the proceedings.[31]
[31] Trevi & Trevi [2018] FamCAFC 173, [37].
As stated earlier in these reasons, there is no evidence as to the source of the sum of $120,000 that was standing to the wife's credit in her VV bank account as at 24 October 2017, which she admitted in cross-examination had been expended on legal fees.
The husband was not challenged in cross-examination on his assertion that the whole of the legal fees he had paid for the proceedings had come from his post-separation earnings.
Whilst the authorities make clear that all questions of ‘add-backs’ of any nature are a matter within the discretion of the trial judge and that the discretion must be exercised in a judicial manner, so as to do justice and equity between the parties, the question of an add-back of funds expended from capital on legal fees must carry with it a consideration that where legal fees have been paid from capital, that would otherwise have remained within the matrimonial asset pool, then to disregard those payments in calculation of the matrimonial asset pool is to, in effect, impose a de facto costs order under section 117 of the Act on the other party.
If the source of the accumulated savings to $120,000 in the wife's VV Bank account then expended on legal fees was a capital sum from a sale of property of some nature, then I would have no hesitation in accepting the submission made by Mr Wong on behalf of the husband that in line with the Full Court's decision in NHC v RCH[32] there should be an add-back of at least that part of the wife's paid legal fees. Any amount of the wife's paid legal fees that came from the rental income received by her from the tenants of the L Street, Suburb M property I would regard as a payment of legal fees from post-separation income by the wife and not consider adding back.
[32] NHC v RCH) (2004) FamCA 633.
However, as I have no evidence as to the source of the funds that were saved by the wife in her VV Bank account as at 24 October 2017, and though she admits in cross-examination that she expended those funds on payment of legal fees, I will not make the assumption that same was simply a capital sum and in no way referable to accumulation of a post-separation income, whether being the share of the husband's post-separation income she received until October 2017 – which I find would put it into the same character as the moneys used by the husband to pay his paid legal fees – or from accumulation of rental income or dividend income. Therefore, I find that it is not just and equitable to make any add-back of legal fees paid by either the husband or the wife.
Rollover of the parties' members accounts in the self-managed superannuation fund and the husband's assertion that the wife retained a term deposit of $218,000 as “even-up”
In what the husband thought at the time was an exhaustion of the Dealba Superannuation Fund by rollout of each parties' member account into their own Super Fund Q and Super Fund R superannuation fund, I have found that the husband received his member account of $625,361.33 and the wife received her member account of $464,106.55.
The husband asserted that the wife and he reached an agreement at that time that she would retain a term deposit in her name of $218,000 by way of "even-up" of the superannuation, but in cross-examination the wife denied that there was any such agreement, whilst accepting that she had and retained a term deposit with Westpac Banking Corporation in the sum of $218,000 from separation through to the trial.
I find that there is nothing to be made of this issue on the basis that all of the parties' superannuation entitlements, as rolled out of the self‑managed super fund, remain as part of the matrimonial asset pool. Further, the wife retains a Westpac term deposit account in her sole name with the value of $450,000, though whether or not those moneys incorporate the $218,000 referred to in the husband's evidence and by the wife in cross-examination is not revealed to me in the evidence. Nevertheless, I find that all of the property referred to on this issue – the member accounts and the self-managed superannuation fund and the Westpac term deposit in the wife's name – are either available for distribution between the parties in the matrimonial asset pool or, in relation to the term deposit, are either still in the wife's bank account or have been expended on living expenses by the wife or capital expenditure on items elsewhere in the matrimonial asset pool, there being no evidence to the contrary.
I have addressed this issue as it was a matter raised in the evidence and in argument by the husband.
The husband's Qantas Frequent Flyer points
The wife does not seek any specific order relating to any Qantas Frequent Flyer points held by the husband. The wife in her evidence details the use by the husband of Frequent Flyer points for post‑separation travel. The wife gives evidence that post-separation the husband used “…over 350,000 of these Qantas Frequent Flyer points for his constant travels for himself and his female companions”, but I have no evidence of the Qantas Frequent Flyer points held by the husband at the time of separation or, if any, at the time of trial. I have no evidence as to the value of the Qantas Frequent Flyer points. The husband does not refer to Qantas Frequent Flyer points in his Financial Statement sworn or affirmed on 31 July 2019 and relied on by him at hearing. The husband was not cross-examined on the issue.
I find that though the husband has used Qantas Frequent Flyer points for the purposes of his own travel and on occasions the travel of accompanying others, post-separation, I cannot find that those points were an entitlement of the husband prior to separation. I find that it is just and equitable that I should treat that use of Frequent Flyer points by the husband as expenditure on living expenses for travel, whether for work or personal pleasure, post-separation and that same is neither a wastage by the husband, nor that there should be any notional add-back in relation to the use of the points.
In line with my reasoning set out above in relation to the wife's assertion that there should be an adjustment in her favour under section 75(2)(o) of the Act for the husband's expenditure of his income post-separation, I find that there is no basis for an adjustment in favour of the wife consequent upon the husband's use of Qantas Frequent Flyer points post-separation.
The balances owing at the time of trial on the four Westpac loan accounts secured on the B Street, Suburb C property.
While the parties, commendably, were in agreement at the time of trial in relation to the value of all of the assets in the matrimonial asset pool, except for the contents of the B Street, Suburb C property, there was no agreement at the time of the trial as to the balance owing on the Westpac loan accounts secured on the B Street, Suburb C property, being account number ...85, account number ...84, account number ...76, and account number ...71.
The husband asserts in his evidence that the amounts owing were respectively $57,841, $604,765, $750,000, and $245,016. The total of those debit balances is $1,662,460.
The husband in his Financial Statement sworn or affirmed 31 July 2019 asserts that the parties' liability for the “home mortgage” was at that time $1,657,622.
The husband was not cross-examined in relation to paragraph 46 of his Financial Statement where he made the assertion as to the amount owing on the "home mortgage". The husband was not cross-examined on his assertion at trial that the total amounts owing on the four Westpac accounts was $1,662,460.
No evidence was presented by the wife as to the balances owing on the four Westpac loan accounts at the time of trial or at any time reasonably approximate thereto.
I accept the figures put by the husband as to the balances owing on the four Westpac loan accounts at trial, to a total of $1,662,460.
The marital asset pool
I find that the asset pool is as follows:
| No. | Ownership | Property | Value |
| 1 | Joint | B Street, Suburb C | $3,500,000 |
| 2 | Wife | L Street, Suburb M, Victoria | $1,025,000 |
| 3 | Wife | N Street, Town O, New South Wales | $100,000 |
| 4 | Husband | Motor Vehicle 2 | $30,700 |
| 5 | Wife | Motor Vehicle 1 | $27,900 |
| 6 | Joint | 708 E shares at $7.785 per share | $5,522 |
| 7 | Husband | 45,000 R Ltd shares at $0.385 per share | $17,100 |
| 8 | Wife | 2261 CCC shares at $27.44 per share | $62,042 |
| 9 | Wife | 11,121 E shares at $7.785 per share | $8,727 |
| 10 | Wife | 780 P shares at $0.67 per share | $522 |
| 11 | Joint | Contents of the B Street, Suburb C home | $20,000 |
| 12 | Wife | Jewellery | $15,000 |
| 13 | Wife | Various bank accounts (including a $450,000 term deposit) | $533,295 |
| 14 | Husband | Various bank accounts (including a $606,824 term deposit) | $776,092 |
| 15 | Husband | DDD Pty Ltd bank account in the husband's control | $35,219 |
| 16 | Husband | F Pty Ltd bank account in the husband's control | $434 |
| 17 | Husband | Remainder interest in estate of the late Mr K | $84,070 |
| 18 | Wife | Remainder interest in the estate of the late Mr K | $84,070 |
| TOTAL | $6,325,693 |
I find the liabilities affecting the matrimonial asset pool to be as follows:
| No. | Ownership | Property | Amount |
| 1 | Wife | Westpac Platinum Visa card account number ...41 | $338 |
| 2 | Husband | Westpac loan account account number ...85 | $57,841 |
| 3 | Husband | Westpac loan account account number ...84 | $627,581 |
| 4 | Husband | Westpac loan account account number ...76 | $750,000 |
| 5 | Husband | Westpac loan account account number . | $263,441 |
| TOTAL | $1,699,201 |
I note that each of the four Westpac loan accounts is in the husband's name as the borrower, and each has been guaranteed by the wife.
I find that the superannuation entitlements of the parties are as follows:
| No. | Ownership | Property | Value |
| 1 | Husband | Super Fund R | $653,858 |
| 2 | Wife | EEE Super Fund | $595,363 |
| 3 | Husband and Wife | Dealba Superannuation Fund (SMSF) | $740 |
| 4 | Husband | Super Fund S Employee Super Account | $18,197 |
| TOTAL | $1,268,158 |
I have evidence that the total value at trial of the Dealba Superannuation Fund was $740, but I have no evidence as to the value of each of the parties' member accounts in that fund.
Accordingly, the net matrimonial asset pool available for distribution between the parties, not including superannuation entitlements, is $4,626,492. The net matrimonial asset pool of property available for distribution between the parties including superannuation entitlements is $5,894,650.
Section 79(2) - in all the circumstances, is it just and equitable to make a property settlement order?
As a result of the parties' separation in December 2012 and the irretrievable breakdown of their marriage, as evidenced by their divorce, they are no longer living in a marital relationship and there is no longer any common use of property by them.
The most valuable asset in the property pool, the B Street, Suburb C property, is in the joint names of the parties and is occupied at the time of trial by the wife to the exclusion of the husband.
I find that I am satisfied that it is just and equitable in all the circumstances to make property settlement orders between the parties.
Contributions
I have reviewed the evidence of the parties earlier in these reasons and I make the following findings.
At the commencement of the parties' cohabitation, the husband contributed his Motor Vehicle 3 valued at about $5000 and the wife contributed her Motor Vehicle 4 valued at about $2,200, savings of about $6,000, superannuation entitlements to a value of about $15,500 and accumulated long-service leave based on about 10 years' service that was received by the wife as a lump-sum payment on termination of her employment with Employer DD in 1989.
I find that the wife was in paid employment as a customer service officer with Employer DD from the commencement of the parties' cohabitation until taking maternity leave during 1987 with the parties' first child, Mr Y. Upon her resignation from her position with Employer DD in 1989, she received a lump-sum payment of about $30,000, including the pro rata for her long-service leave entitlements and any accumulated annual leave entitlements.
I find that the husband was in employment throughout the whole of the parties' cohabitation and continuing up to the date of trial and that up to the date of separation he applied his earnings to the acquisition, conservation and improvement of the property of the parties of the marriage and to the welfare of the family unit by payment of the family's living expenses.
I find that the wife engaged in paid employment on a part-time basis as an admin assistant to a local business during 1999 and 2001 and that the wife applied all income she received from employment originally with Employer DD and later as an admin assistant toward the acquisition, conservation and improvement of the property of the parties' of the marriage and towards the welfare of the family unit by payment of living expenses.
I find that the wife was principally responsible, and in large part through most of the marriage solely responsible as between herself and the husband, for the role of homemaker and parent, including attending to gardening and upkeep of the exterior of the family homes and the making of all the arrangements involved in the parties' several interstate relocations in consequence of the husband's employment.
I find that a sum of $15,000 which they received from the husband's parents in 1989 and should be treated as a sole contribution on behalf of the husband.
I find that the inheritance by the parties from the husband's father of their share of $70,539 received by the family, including the parties' children, from the sale of the XX Street, Town YY estate property and their share in remainder in the WW Street, Suburb T property, was a gift by the deceased in equal share to each of the parties, in accordance with the terms of the deceased's will, and that accordingly all benefits received by the parties under the estate of the husband's late father should be treated as an equal contribution by the parties.
I find that post-separation the husband made a superior financial contribution to that of the wife to the acquisition, conservation, and improvement of the property of the parties of the marriage, particularly by reason of his payment from his post-separation income of the payments required on the loan accounts with ANZ Bank and Westpac Banking Corporation. I also take into account his contribution to the welfare of the family unit by providing financial support to the wife on a voluntary basis from his income from separation until October 2017 in the sum of $10,000 per month and $20,000 in each December, and additionally by payment from his income of the wife's American Express credit card account during that time.
In taking a holistic approach to the contributions made by each of the parties and by the parties jointly as set out above, I find that the contribution-based entitlement of the parties is 55 per cent for the husband and 45 per cent for the wife.
Is there any adjustment to be made between the parties for relevant matters under section 75(2)?
At trial, the husband was 60 years of age and in good health. He continues in employment with Employer V on a salary of $300,000 per year and he earns an additional $150,000 per year from private consulting work, giving him an annual income of $450,000 a year.[33]
[33] Family Law Act 1975 (Cth) s75(2)(a),(b).
In cross-examination, the husband gave evidence that he will continue in his employment with Employer V for “…the term of the contract, another four years.” He gave evidence that “My consulting can be ended at any time. I hope to continue for a few more years.” When it was put to him that he intended to continue to work for as long as he could, the husband replied “Until I retire. At the end of the contract period.”
It was then put to him that he could choose to continue to work after the contract period ended, to which the husband replied “Anything's possible, but I want to retire. I've worked long enough.”
On the evidence, it is plain that the husband can continue to earn a high income for at least the four years following trial and possibly continue to receive the substantial income for such time thereafter as he may choose to continue to work before retirement.
The wife is not in employment and her current income is derived from dividends received on her shareholding and interest on her deposits with financial institutions and rent from the L Street, Suburb M property. It is common between the parties in their proposed orders that the wife should retain the L Street, Suburb M property in a property settlement.
The wife gives some evidence in her affidavit of some current health difficulties and she relies on the evidence in exhibits R4 and R5 in relation to her health.
The wife has not been a participant in the workforce since leaving work in 1987 in preparation for the birth of the parties' first child, Mr Y except for some work with a local business in 1999 to 2001, but at the time of trial, had not been in paid employment since that time. Given the wife's age and the period during which she has been out of the workforce, it is questionable whether the wife will be able to obtain any employment in anything but a very modestly-paid position of unskilled work.
It was submitted on behalf of the husband that the wife's work experience for 13 years with Employer DD, terminating in 1987, provides her with the skills to reengage in employment as a customer service officer. The change in work practices and operations since that time are against that submission having any force.
The disparity in the parties' income and earning capacity in the time between trial and their chosen retirement age favours an adjustment in favour of the wife.
The parties' three children are all adults in their late twenties and early thirties and live independently of the parties.[34]
[34] Family Law Act 1975 (Cth) s75(2)(d),(e).
The commitments of each of the parties that are necessary to enable them to support themselves and, in the husband's case, his wife, Ms BB, are as set out in their Financial Statements relied upon by each at the hearing.[35] Neither party was cross-examined or challenged in relation to the accuracy of the evidence each side presents, and on that basis I accept the evidence of each of the parties so presented. I find that while the wife's weekly income from all sources is $698, her weekly expenditure is $2,456. I find that the husband's weekly income from all sources is $8,793 and that his weekly expenditure is $9,403.
[35] Family Law Act 1975 (Cth) s75(2)(d),(m).
In terms of the orders to be made for property settlement as a result of these proceedings, it is common between the parties that the Westpac Bank loan accounts secured on the B Street, Suburb C property are to be paid out, though they are in disagreement as to from what source – the wife proposes the loan accounts be repaid by the husband from his own funds prior to a sale of the property and the husband proposes that the loan accounts be paid out from the proceeds of sale of the property.
However, in either case, on a sale of the matrimonial home, the husband will no longer be responsible for the monthly repayments that relate to those accounts, though that may be replaced to whatever extent if the husband needs to borrow further funds to purchase a home for himself and his wife as he asserts in his evidence he intends to do.
Nevertheless, on the husband's evidence, he expends $2,629 per week on repayment of the current Westpac Bank loan account secured on the B Street, Suburb C property in addition to the $1,052 per week he expends on rent for his accommodation. On that basis, it is likely that the husband will have an excess of income over expenses once the B Street, Suburb C property has been sold. The ratio of income to expenses of the parties I regard as part and parcel of the disparity of income and earning capacity referred to above and so it forms a part of that finding that such is a basis for an adjustment in favour of the wife.
The husband is responsible for the support of his wife, Ms BB. Ms BB is a health care professional, though currently earning an estimated $573 per week and is engaged as a student. On the basis of the husband's level of income and his likely excessive income over expenses after sale of the B Street, Suburb C property, I find that there is no basis for any adjustment for this consideration.
There is no evidence that either party is eligible for a pension allowance or benefit under the laws of the Commonwealth or of a state or territory or of any other country. There is no evidence in relation to the parties activating their entitlement under the law as being persons over 55 years of age to receive a transition to retirement pension from their superannuation fund.
Since the parties separated in December 2012, it has been inherent that neither has been able to enjoy a standard of living enjoyed by both prior to their separation. The husband may be able to regain a standard of living comparable with that he enjoyed prior to the parties' separation due to his high income until retirement, but the wife will not be in a position to do so despite any capital holding of property following property settlement, in consequence of her real earning capacity circumstance.
I find that this consideration is also part and parcel of the consideration referred to above of the disparity in income and earning capacity between the parties that grounds an adjustment in favour of the wife.
I make the same finding in relation to the incontrovertible fact that on the evidence, the duration of the parties' marriage has affected the earning capacity of the wife in the manner I have already referred to in consequence of her being the agreed stay-at-home mother and homemaker through all but the first three years of cohabitation.
I have made findings earlier in these reasons in relation to the submissions made on behalf of the wife that there should be an adjustment in her favour in consequence of the husband's expenditure of his income since separation, asserted by the wife to have been over and above his necessary expenses, rather than accumulating that as capital by way of savings. I have found that it is not just and equitable to make an adjustment on that basis.
I find that it is not just and equitable to make any adjustment between the parties in consequence of the higher standard of living enjoyed by the husband compared to that of the wife in the period from separation to trial in relation to interstate and overseas travel.
Overall, I find that it is appropriate to make an adjustment in favour of the wife of five per cent for the relevant considerations under section 75(2) of the Act.
On the basis of my finding that the net matrimonial assets available for distribution between the parties including superannuation is valued at $5,894,650, that five per cent adjustment in favour of the wife has a value of $294,732.50.
Accordingly, I find that it is just and equitable to make orders that have the effect of dividing the net matrimonial assets, including superannuation, between the parties on the basis of an equal division.
What orders are appropriate to be made?
The parties both seek orders for a sale of the B Street, Suburb C property, the wife seeking that the Westpac loan accounts secured on that property by way of mortgage be paid out by the husband from his own funds prior to sale, and the husband is seeking that those accounts be paid from the net proceeds of sale following sale.
Both parties seek orders that the wife retain the L Street, Suburb M property and the N Street, Town O property and that the wife transfer to the husband the whole of her interest in the estate of the late Mr K.
The parties agree that the husband should retain from the furniture contained in the B Street, Suburb C property the wooden dining table and accompanying chairs, the wooden bedside tables and dressing table in the master bedroom, and the large and small wood and crystal glass sideboard (two) in the dining/lounge room. The parties disagree as to the distribution of the balance of the contents. The wife contends that she retain the contents, and the husband contends that the parties should engage in an ‘A & B list’ arrangement with lists prepared by the wife, dividing the contents equally, and the husband selecting a list.
I find that it is just and equitable to approach the property settlement orders on the basis of a one-pool approach, including all of the available assets and the parties' superannuation entitlements, on the basis that the husband is close to the age where he can call for his superannuation entitlements, whether or not he continues in full-time employment, and the wife is in the circumstance where she can call for her superannuation entitlements without tax penalty relating to age, if she confirms that between her current age and 65 years of age she will not engage in full-time employment.
I find that it is just and equitable to make property settlement orders that provide for the wife to receive the following:
Property Item Value L Street, Suburb M property $1,025,000 N Street, Town O property $100,000 Wife's Motor Vehicle 1 $27,900 Transfer to her of the jointly-held E shares $5,522 The wife's CCC shareholding $62,042 The wife's E shareholding $8,727 The wife's P shareholding $522 Contents of B Street, Suburb C less the husband's furniture $15,000 Jewellery $15,000 The wife's bank accounts $533,295 Wife's EEE super $595,363 LESS Wife's Platinum Visa card account number ...41 $338 TOTAL $2,388,033
I find it just and equitable to make orders that the husband receive the following property:
Property Item Value Husband's Motor Vehicle 2 $30,700 Husband's R Ltd shares $17,100 Furniture from B Street, Suburb C as agreed $5,000 Husband's savings $776,092 DDD Ltd bank account $35,219 F Pty Ltd bank account $434 Estate of the late Mr K $168,140 Husband's Super Fund R $653,858 Dealba Superannuation Fund $740 Husband's Super Fund S Superannuation $18,197 TOTAL $1,705,480
The orders do not involve any superannuation splitting order affecting either parties' Super Fund Q and Super Fund R superannuation entitlements.
It is not possible within the legislation to make a splitting order affecting the Dealba Superannuation Fund so as to provide to the husband the whole of the wife's member account therein. Because the fund as a whole has a value of $740, the wife's member account necessarily being $740 or less, and pursuant to regulation 11 of the Family Law (Superannuation) Regulations 2001 (Cth) (‘the Regulations’) an "un-splittable interest" is defined as “…a superannuation interest of a member with a withdrawal benefit of less than $5000.”[36]
[36] Family Law (Superannuation) Regulations 2001 (Cth) reg 11.
Section 90XE(2) of the Act provides that a payment is not a splittable payment if it is prescribed by the Regulations for the purposes of that subsection and the Act provides for the Court, in accordance with section 90XS, to make a splitting order of the kind referred to therein in relation to a superannuation interest other than an un‑splittable interest.
The orders the Court intends to make
I will make an order for the sale of the B Street, Suburb C property and upon sale, payment out from the proceeds of sale of the four Westpac Bank loan accounts in the husband's name, guaranteed by the wife, secured by way of first registered mortgage on the B Street, Suburb C property and that after payment of all agents' commission and other costs of sale, the proceeds of sale be divided between the parties so as to achieve an equal division of the net matrimonial asset pool between them on the basis of the wife having already received $2,388,033 and the husband having already received $1,705,480.
I will make an order requiring the husband and the wife as directors of Super Fund D as trustee of the Dealba Superannuation Fund and the wife as a member of the fund to rollover the whole of the wife's member account into another compliant superannuation fund in the wife's name, and for the wife to pay to the husband within seven days thereof a sum equal to the amount of her member's account so rolled out.
As the husband will have effective control of and be the only remaining member in the Dealba Superannuation Fund, I will make an order that the wife resign her offices in and transfer any shareholding held by her in the Super Fund D to the husband.
As the husband has historically been the only contributor of the funds to the Dealba Family Trust, I will make an order that the wife do all things necessary, by way of completing documents submitted to her by the husband, to relinquish all entitlements to benefits, powers and all office holdings in the Dealba Family Trust and to resign all offices held by her and transfer all of her shareholding in H Pty Ltd to the husband.
As the husband is in effective control of F Pty Ltd and will be entitled to its only asset (a bank account) pursuant to the orders and as he is similarly in control of G Pty Ltd, I will make an order that the wife resign all and any offices held by her in either of those corporations and transfer any shareholding held by her in either of those corporations to the husband.
Finally, the husband has sought an order that the wife have sole right to occupy the B Street, Suburb C property pending its sale and that during such right of occupation the wife pay all rates and other outgoings of the real property, and all monthly repayments on the Westpac mortgage loans as they fall due. Payment of rates goes to ownership, not occupation, and accordingly I will make an order that the parties be equally responsible for payment of all rates, both council and water rates, other than for specific water usage, in relation to the B Street, Suburb C property until sale.
Given the disparity in income between the parties, I will not make an order that the wife pay all monthly repayments on the Westpac loan accounts secured by way of mortgage on the B Street, Suburb C property pending its sale, but will require their payment by the husband pending settlement of a sale.
Finally, I will make orders providing that each party retains as their sole property in law and in equity as between that party and the other party any property not otherwise dealt with specifically in these orders.
Accordingly, I make the orders set out at the start of these reasons.
I certify that the preceding two hundred and nine (209) paragraphs are a true copy of the reasons for judgment of Judge Morley
Associate:
Date: 1 September 2020
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the Court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party …
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party …;
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage … including any contribution made in the capacity of homemaker or parent; …
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Injunction
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Jurisdiction
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