Desai and Desai
[2018] FamCA 812
•9 October 2018
FAMILY COURT OF AUSTRALIA
| DESAI & DESAI | [2018] FamCA 812 |
| FAMILY LAW – PROPERTY–where the only assets of substance are a house and the husband’s superannuation–where the contributions are found to be equal albeit a gift is made by the wife’s parents to enable the acquisition of the house–where at the end of the marriage, the husband contributes his injury compensation money–where the wife wants cash not superannuation–where it is not just to make such an order–where a “loading” is given to the wife because of her poorer financial future. |
| Family Law Act 1975 (Cth) |
| C and C [2005] FamCA 429 Kennon and Kennon [1997] FamCA 27 Kowaliw and Kowaliw (1981) FLC 91-092 Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 Townsend & Townsend [1994] FamCA 144) |
| APPLICANT: | Mr Desai |
| RESPONDENT: | Ms Desai |
| FILE NUMBER: | MLC | 4086 | of | 2016 |
| DATE DELIVERED: | 9 October 2018 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 27 September 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Boden |
| SOLICITOR FOR THE APPLICANT: | Starnet Legal Pty Ltd |
| THE RESPONDENT: | In Person |
Orders
If by 30 November 2018, the wife pays to the husband $305,000, and provides to him a discharge of any obligation he has under the mortgage encumbering B Street, Suburb C (“the B Street property”) then the husband transfer to the wife all of his interest in that property.
If the wife fails to make the payment referred to in Order 1 by 30 November 2018 both husband and wife forthwith do all things necessary to place the B Street property on the market for sale on terms and conditions to be agreed and otherwise, as ultimately ordered by the court on application.
Upon the sale of the B Street property, the proceeds be applied as follows:
(a) First to pay all costs, commissions and expenses of the sale;
(b) Secondly, to discharge the mortgage with the wife being responsible for any increase after 1 December 2018;
(c) Thirdly, to pay the husband 40 per cent of the net balance; and
(d) Fourthly, to pay the balance to the wife.
Pursuant to s 90MT(1)(a) of the Family Law Act 1975 (Cth) (“the Act”), the amount of $35,000 is allocated as the base amount to be deducted from the interest of the husband in D Super (the Superannuation Fund) and whenever a splittable payment becomes payable out of the interest of the husband in the superannuation fund, the wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and there shall be a corresponding reduction in the entitlement of the husband to whom the splittable payment would have been made but for these orders and this order shall have effect forthwith.
This order is only operative upon the husband serving upon the trustee named in it, a copy of these orders requesting their agreement to them.
To the extent that the said trustee agrees to implement the said orders, they shall become operative 3 business days after service upon them.
The trustee has liberty to apply in the event that it disagrees with the making of this order based upon some inaccuracy of information provided to the Court by the husband.
BY CONSENT, the wife make available to the husband his motorcycle by 31 October 2018 and his personal effects (if she can find them).
That pursuant to s 78 of the Act, the court otherwise declares that each party otherwise has the sole legal and equitable interest in the property in their possessions as at the date of these orders to the exclusion of the other party.
The application of the husband filed on 31 May 2018 and the response thereto by the wife filed 22 July 2016 are otherwise dismissed
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Desai & Desai has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (X 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to X 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 4086 of 2016
| Mr Desai |
Applicant
And
| Ms Desai |
Respondent
REASONS FOR JUDGMENT
These reasons explain the property orders made in proceedings between Mr Desai (“the husband”) and Ms Desai (“the wife”).
This dispute arises out of the ending of the parties’ marriage relationship. During that relationship, Y was born in 2000, and X was born in 2005. The parties married outside of Australia under Islamic law but the wife’s view was that was not a valid marriage so they married again in Australia in 2000 just after Y was born. By the efforts of the wife, the husband came to Australia in 1999. The family has lived here ever since.
Some Background
Before dealing with the facts, some details need to be understood. These proceedings were begun in May 2016 by the Husband. Since then, they have mostly been about the husband’s relationship with X. During the hearing about property, several comments were made by both sides about lack of disclosure. It beggars belief that the property proceedings (which, as will be seen below, is modestly simple) could get this far along a two year path without attention to those details.
Having said that, the parenting dispute was also not simple. X is 13 years of age and said to have a poor relationship with his father. On the first day of the final hearing, the parties (assisted by counsel for the Independent Children’s Lawyer) compromised their positions. The minutes (supported and promoted by the Independent Children’s Lawyer), said the parties were going to endeavour to make the relationship between the father and X work. They were proposed orders loaded with language such as “by mutual agreement”. Both sides said they wanted the court to make the orders. As such, (and I stressed this) they were asking the court to impose upon them, legal obligations about encouraging X and ensuring that he spent time with the husband. I pointed to X’s age and the position he had adopted to that date, but both wanted the orders made.
The husband’s solicitor/advocate said that the husband understood the dilemma relating to his relationship with X and assured the court that a failure of the orders would not necessarily lead to contravention proceedings. However, on the very next morning, the wife offered that she had been thinking about what I had said at the time those orders were made, and on the previous evening, she had spoken to X about them and his response was “my arse”. I presume he was clearly indicating he had no intention of assisting with compliance. This has been a difficult and dysfunctional family relationship which is indicated by the fact that they could not sort out the property issue either.
The matters just mentioned are relevant to the property proceedings because they indicate that there is substance to the wife’s argument that she will have responsibility for X for some years. She says she wants to keep him in “his community” by retaining what is currently the home of the parties but also she argues that she is not able to undertake full time employment because she has to ensure X gets to, and stays at, school. That is relevant to the issues in s 75 of the Family Law Act 1975 (Cth) (“the Act”) to which I later turn, but I doubt that the wife has much control over what X does and his future participation in school must be seen as questionable.
In the property proceedings, the wife represented herself saying she had no resources to pay for lawyers. Indeed, it was her parents who had paid for her lawyer up until recently as the wife is a recipient of Newstart and Family Tax assistance from the Department of Human Services. Her self-representation made her task more difficult because she had to prepare her own trial material. However, even in that regard, I am not convinced she was diligent.
This case was called in by the Case Management Judge, Johns J, in May 2018. The wife told me she had not wanted it heard in September 2018 because of her children’s exams and her own masters’ degree endeavours. Johns J rejected the wife’s request and ordered the husband to file his affidavit by 31 May 2018 which he did. Her Honour ordered the wife to file her affidavit by 18 June 2018 but she did not. On 18 August 2018, Johns J extended the wife’s filing time to 27 August 2018 and again, despite having been given the indulgence, the wife did not comply. On 29 September 2018, the wife filed an affidavit. The document was closely typed running to 167 paragraphs with 26 exhibits.
The husband began the trial by objecting to the wife’s affidavit but conceded that if he could lead some extra evidence, he was not prejudiced. I allowed the wife to rely upon her affidavit despite her giving little satisfactory explanation for her non-compliance. As I observed, the facts over two years had not changed much so the matters relevant to the property (and indeed the issues) should have been clear and easily described particularly as she had had lawyers advising her during that time.
On the first day, the wife said she was unable to proceed and asked for an adjournment to the following morning. The husband conceded there was no prejudice to him that could not be ameliorated by costs. From the court’s perspective, the community lost a half day in an environment where there is criticisms about delays.
On the second day, the wife sent a message to say was unwell although no evidence was produced. After asking the husband’s solicitor to contact the wife, the court was informed that she would arrive at 12 noon and she did. The court again lost a half day.
On her arrival, the wife was obviously distressed and somewhat unresponsive. I pressed her to say whether she was well enough to proceed but she responded that she wanted the case to go ahead. Having endeavoured to unsatisfactorily sort that out, the wife persisted in saying it could go ahead. Once the case started, there was a remarkable transformation and it was apparent she was well-prepared and organised. Her cross-examination of the husband would have been the envy of some counsel.
The first dilemma however was that initially the husband’s solicitor had said he had no objection as to the admissibility of matters in the wife’s affidavit. Johns J had made orders about dealing with that as far back as May 2018. However, the solicitor for the husband changed his mind and gave the court a long list. Having examined that list, and heard the wife say that she considered all was relevant, it was evident that it was not the case.
Because we had lost so much time, I said we would proceed without formally crossing out the paragraphs in the court’s originals but I otherwise agreed with the objections. Accordingly I formally uphold the list of objections in the notice provided by the husband on 26 September 2018.
The wife’s lack of representation then created an obligation for the court to assess the husband’s affidavit for objections. When I discussed several with the husband’s solicitor, he conceded that the relevant parts were not admissible. Accordingly I have struck out the following (only relating to the property issues):
[15] (Last two sentences);
[21] (Part of the last sentence);
[27] (As to the diagnosis of the husband);
[38]-[39];
[47]-[48] As to the issues of the experts’ views.
I do not strike out the relevant paragraphs from his reply affidavit.
The Issues
There are several issues that are the focus here:
a)What is the property for division and what are the legal and equitable interests of the parties in it?;
b)In assessing their respective financial contributions, how to treat:
i)financial payments they made;
ii)The husband’s personal injury money which was paid into the mortgage account at the end of the relationship;
iii)The wife’s “rent-free” accommodation in the house after separation when she (and the husband) made no periodic mortgage repayments;
iv)The husbands periodic payments to his family overseas and whether there is a “stack” of investment assets there?; and
v)What to do about some shares owned by the wife before marriage.
c)The wife’s parents contributions to the purchase of the house and subsequent payments provided to the parties;
d)How to treat the husband’s contribution in the extra jobs he undertook and what happened to that money?
e)How to treat the parties’ superannuation monies where the husband wanted the wife to have some of his but the wife did not want that, she insisting there should be “one pool” so that she could maximise her cash entitlements;
f)How should the court approach s 75(2) factors here?;
g)Is family violence relevant here?
There is no controversy here that:
a)The wife was the parent who managed the family and cared for the two children and the husband was the primary financial provider;
b)Right through the marriage, the parties only conducted a joint account into which the husband’s regular income was deposited and when the wife earned any money, it went there too. From that account the mortgage was paid;
c)The husband worked hard in various jobs;
d)The wife’s aspirations to have an unencumbered home did not materialise and she feels that the husband’s support of his extended overseas family thwarted her goal.
The Wife’s Witnesses
Leaving aside her own evidence, the wife relied upon affidavits provided by her sister and her father. They were not required for cross-examination. However, their evidence was unhelpful in determining the issues I have identified above and I have given that evidence little or no weight.
The Parties’ Positions
The Husband’s Position
The husband was the applicant. He proposed:
a)The sale of B Street and an equal division of the net proceeds (save that he wanted the wife to be responsible “for the increase in” the mortgage after separation);
b)“Equalisation” of the parties’ superannuation funds.
The second of the orders above was problematic because as the trial began, the husband did know what the wife’s superannuation was. Secondly, he had not provided notice of any splitting order to any trustee. That was necessary in respect of his own superannuation fund bearing in mind he was seeking the splitting order.
The husband also sought an order for the return of his personal property and at the very end of the trial, the wife agreed that that should occur. Because I have no confidence in the parties to implement any consensual arrangement, I shall make that as a consent order.
The Wife’s Position
Despite orders to the contrary, the wife did not alter her originally pleaded relief. Deep in her affidavit, she deposed to the fact that she wanted “85 per cent of the property pool”. In its simplest form, such an order could not be made unless the so called “property pool” was known. Here it was not only not known but there were disputes about items such as motor cars.
Over the first day adjournment, the solicitor for the husband tried to rectify the flaws in the husband’s case by getting the “Redbook” assessed values. Absent consensus, that is not evidence of the valuations of the parties’ property but rather what the average price would probably be if a willing buyer agreed with the willing seller. Whether the parties’ cars and the motorcycle were in those same conditions as contemplated by the “Redbook”, I have no idea and there was no evidence about it. Ultimately, the cars and motorcycle were removed from the contentious issues by agreement between the parties.
In final address, when I pointed out to the wife that her approach mathematically meant that she would have to pay the husband $28,000, she smiled and said that was not what she intended. She said she would pay to the husband an amount equivalent to the husband’s foot injury compensation of $85,000. When that was mathematically translated, it meant the wife was actually pursuing an order that she have 80 per cent of the non-superannuation “property pool”.
The Relevant Evidence
When the husband arrived in Australia and the parties married, the wife had about $9,000 in savings not $20,000 as she asserted. I remain unsure where she obtained her figures from but when shown a bank statement, she conceded the husbands point that she had $9,000. The husband had some money as well but much of what the parties owned went into getting the husband into Australia as well as the expenses of their wedding. Neither contribution therefore has any real significance leaving aside the effluxion of time.
Uncontroversially, the wife had some shares and she retains them. No evidence was led of how they were treated during the relationship but it seems at the end of the marriage, they remained in her name. No suggestion was made that calls were made for payments on the shares. No suggestion was made that the husband paid the wife’s tax on the modest dividends that they earned. I do not consider it just and equitable in the circumstances to treat them as an asset divisible between the parties as the shares were always kept separate, not contributed to by the husband, and could not have had any impact on the finances of the family. The wife’s tax return details are in evidence and she did not earn much at all from those dividends.
Virtually upon arrival in Australia, the husband was working and earning an income. He did work for the wife’s father as well. He was given money for that.
The husband’s work record was clear and he was rarely out of work. He earned a modest wage and his roles were of a labouring-type. He ultimately earned about $60,000 to $70,000 per annum. At one point, there was a dispute in the evidence because the husband said that his take home pay was much higher than it could possibly have been. He was clearly wrong. His evidence was misleading and as he had access to his tax returns, that evidence was sloppy. That said, when pressed, he quizzically looked and said that was what he thought he had earned during that period. His inaccurate evidence made little difference because his income was the only money that sustained the family. The wife’s evidence was little better. She asserted she earned income but her tax returns showed nominal sums otherwise. For example, she said that she was earning an amount on a full time basis. Like the husband, that did not correlate with the tax returns and was wrong. Her pursuit of the husband in relation to such a modest issue meant that she ignored her own obligations to provide correct details.
The parties rented accommodation after they left the home of the wife’s parents and the rent was paid from the joint account. Predominately, the husband’s income was that which sustained the family.
In 2005, the parties bought B Street. The husband’s evidence about the details was again sloppy but, so was that of the wife. For example, the husband provided the wrong mortgage amount but he also asserted he put his savings of $75,000 into the purchase. The wife denied that assertion saying that the husband had no such savings. Rather, she said she put $29,000 of her savings into the purchase. She did not have a separate account so that was not possible either. There is no doubt the parties did not have the $75,000 or the $29,000 as they described, but more likely than not they had $29,000 in a joint account which had ultimately come from the husbands earnings.
The evidence shows that the purchase price of B Street was $390,000. There were the usual costs of about $14,000 and the wife’s parents provided $100,000. The husband’s solicitor conceded that it was a gift to the wife. The parties received $16,000 from government subsidies. They borrowed $260,000 on mortgage. Their contribution was $28,000.
The husband’s income went directly into the mortgage account and on that account the parties lived.
There was a dispute about what happened to the husband’s holiday pay. He took his holidays and the parties lived off that money which was presumably paid in advance. The wife asserted, and the husband denied, he took time off from his paid job to work another job to pay for their overseas trips to his former homeland. Even so it must be seen as the husband’s contribution and that both parties benefited.
A variety of trips were made overseas to the husband’s former homeland. The parties did not agree on how many occurred. In my view, it does not matter because ultimately, it was the husband’s income that funded them.
From the husband’s income, $105 per week was set aside and transferred to his sick mother overseas. Not only did the wife know it was happening, it was a contentious subject. There was no suggestion the wife did not know of the balances in the joint account. Curiously, the wife agreed that she did not want the husband working his day job and also working at night at a second job. She said they had agreed that he could send money to India but he had to stop working the second job. He did stop but that only lasted for a few months and he returned to his two job position to make up what was presumably the shortfall if he was sending money overseas. The wife saw that as the husband taking some “advantage” although I find the opposite because, as he said, he was still supporting the family.
The wife spent some time cross-examining the husband about his sister’s wedding. Both husband and wife attended the wedding so presumably, it was the husband’s income that paid for that overseas trip. However, the wife’s point was that the husband had been sending money to the family to her detriment. She observed that his sister was covered in gold yet, she, the wife, was “naked” by which she meant that she had no gold. However, the husband in answering her question said that she had jewellery that was not listed in the proceedings. Neither party took the matter any further and I certainly could not determine the issue on the basis of credit as neither was an accurate historian. Either way, it does not assist me on the questions of whether the wife’s insistence that money was wasted or there were investments overseas. Her assertions are not made out.
When the husband’s parents died, he sent money for funerals. The wife’s complaint was that others of his family should have made those contributions either entirely or as well.
Ultimately, there is no evidence of money being retained overseas to the disadvantage of the wife. There is no evidence of prejudice to her save that the mortgage has not come down as quickly as had wanted. There is no suggestion of mortgage stress or distress. The wife knew of the husband’s cultural views and conceded the appropriateness of his support for his mother, albeit, reluctantly.
I find there is no basis to say there is money hidden; the wife did not establish that if it was her intention to do so.
Looking at the husband’s support of his extended family, the wife told the court that a registrar in an early hearing in the proceedings, had said that it was “a notional add-back”. If that was said, it would have been unfortunate without a lot more evidence.
“Add-backs” are a difficult concept in the law. An “overly pernickety analysis” of expenditure is not required by s 79 (see Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513), nor is an audit.
If significant sums have been “wasted” by a party (see Kowaliw & Kowaliw (1981) FLC 91-092 or there has been a “premature distribution” (see Townsend & Townsend [1994] FamCA 144) that type of analysis through the evidence presented is required.
Here, it is hard to make any criticism of the husband because the various payments went on for a long time openly known to the wife, and apart from the complaint that the house mortgage was not reduced, it is not a case of waste. In Kowaliw (supra), Baker J said (and has been followed since by other authorities)
[8]Marriage is for most couples an economic partnership. Married couples live together and work together with the ultimate object of purchasing a home, paying it off, acquiring other assets with the overall object of attaining a higher standard of living. The reported decisions in respect of applications under s 79 of the Act are unanimous that both parties should share the economic fruits of a marriage, having regard to the provisions of s 79(4) and s 75(2) although not equally.
[9]Is not, however, the converse equally sustainable? In other words, should not financial losses incurred by parties to a marriage or either of them whether incurred jointly or severally be shared by them in the same manner as the financial gains?
[10]As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:-
(a) Where one of the parties has embarked upon a course of conduct designed to reduce or minimize the effective value or worth of matrimonial assets, or
(b) Where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimized their value.
This was not unilateral action by the husband but neither was it entirely consensual. The only finding I make is that the husband worked long hours to achieve his purpose to provide assistance to his extended family but his Australian family did not go without even if the mortgage capital debt was not reduced beyond the requirements of the bank.
In respect of the second job, it would seem that the money did go towards family purposes in Australia. The husband maintained it did asserting that the wife had access to his wallet and she took money as she wanted it. It seems that considerable sums of money were paid to the husband in cash by the second employer. The husband observed that he had “records” to show the wife spent money on such things as hairdressing. The wife violently denied that, pointing to the sister’s wedding and observing that her hair was simply tied back whereas the sister had had elaborate treatment. Neither took it any further.
The wife alleged the money from the second job was kept in a box out of her reach but the husband denied that. I have already observed that it is not the role of the court to conduct an accounting or audit process. The determinations of fact are made on the balance of probabilities and the onus of proving an assertion lies with the person who makes it.
If, as I accept, the wife had uncontrolled access to the joint account, the husband’s cash money would hardly seem significant if he was working one to two nights per week. The wife denied that was the case but the records produced under subpoena certainly seem to show roughly that as an average.
The wife pointed to the transport records and said they were inconsistent with the employer’s records but the husband plausibly explained all of that. The wife argued the husband was earning much more than he said he was but that was based on her knowledge from years ago.
All of this distraction was unhelpful and I have no sense of any significant wastage or loss. The wife has not proved her assertion to my satisfaction. I do not know how much the husband earned at his second job and how much money was actually sent overseas. This is again not a case which could be decided on credit as both parties were sloppy historians.
There is one issue that is otherwise relevant to the money from the second job. Why the money was not declared for taxation purposes was not canvassed so the Australian Tax Office may feel it appropriate to investigate although I suspect it is a small amount of money involved. The clarification of that may however assist the determination of the husband’s future income for child support purposes.
The husband was also challenged that he was an “uber” driver. He conceded that he had taken on that role recently but had lasted only days because he did not like it. There is no evidence to the contrary including no evidence of electronic deposits into the husband’s bank account. If there were, the wife did not press the issue. That can only go to extent of his obligation to pay child support as all of that was well after separation.
In 2007, the husband was injured at work. It took until 2014 to resolve that litigation and the husband received almost $86,000. The wife’s cross-examination was about the reluctance of the husband to put all of that money into the mortgage account but is seems that he ultimately did. At the time of separation, that is March 2015, that was a very significant contribution by the husband. Because the wife conceded that his injury did not affect the household income stream.
The wife expressed cynicism about the seriousness of the husband’s injury saying that he soon went jogging but that does nothing to detract from the evidence of his contribution. The family did not suffer and the husband’s compensation was entirely based on pain and suffering.
In this period, the mortgage was not paid and the wife lived “rent free” after separation but in reality, she paid through a reduction of the capital available for division.
There was a further piece of litigation by the husband against his employer but that began after separation. His employment was ultimately terminated and in a settlement, he received 35 weeks of income and psychiatric treatment costs for life. The wife challenged the fact that he had not received that money for over a year since the matter settled. The wife subpoenaed the husband’s common law solicitors and the husband waived privilege. Nothing in that file indicated any inconsistency in the husband’s evidence. What all of this did prove is that the husband has psychiatric problems and has the right to free treatment.
Having been out of work from December 2015, the husband was unemployed for a year. Those 35 weeks in the settlement represent that period. The husband has to repay Centrelink. His income will no doubt flow through the Child Support Agency in due course but I do not consider it should be treated as an asset because I do not know when, if at all, he will receive the money and how much. As it also occurred after separation, there is little (if any) connection with the wife.
In the meantime, the husband continued work at his second job. All of that shows his industriousness. How much he earns remains unclear. In my view, it is modest having regard to the present evidence that his job is for 28 hours per week in retail.
An issue that permeated the wife’s affidavit was family violence. She made allegations of sexual violence. In discussion, the wife said she thought it relevant as a contribution but apart from the psychological effect upon her, about which there was no evidence, the impact was otherwise not connected to any contribution she made.
In Kennon and Kennon [1997] FamCA 27, the Full Court said:
Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s.79 We prefer this approach to the concept of "negative contributions" which is sometimes referred to in this discussion.
In my view, the wife fulfilled her role admirably in the home. The evidence does not satisfy the Kennon proposition. The wife said she would got to the criminal law to have the husband dealt with and that is her prerogative.
Superannuation
At the last moment, the parties agreed that the wife had $15,700 in superannuation. The husband’s superannuation was agreed at $84,800.
The wife’s view was that this should all be added to “the pool”. It is not that simple.
In C and C [2005] FamCA 429, the Full Court examined what was then new legislation permitting the alteration of interests in superannuation. Bryant CJ, Finn and Coleman JJ observed the following:
[38]In our opinion, s 90MC does no more than operate to extend the definition of “matrimonial cause” by extending the jurisdiction, which the various courts which exercise the jurisdiction under the Act, have in proceedings between parties to a marriage with respect to their property, to include a jurisdiction to make orders with respect to the superannuation interests of the parties to property settlement proceedings.
[39]The interpretation of s 90MC for which we have contended in the last paragraph is supported by the later provision, s 90MS(1), which appears in the division of Part VIIIB which is concerned with the two types of orders which the Court may make. Section 90MS provides (emphasis added):
(1) In proceedings under section 79 with respect to the property of spouses, the court may, in accordance with this Division, also make orders in relation to superannuation interests of the spouses.
Note 1: Although the orders are made in accordance with this Division, they will be made under section 79. Therefore they will be generally subject to all the same provisions as other section 79 orders.
Note 2: Sections 71A and 90MO limit the scope of section 79.
(2) A court cannot make an order under section 79 in relation to a superannuation interest except in accordance with this Part.
[40]We acknowledge that were it not for s 90MS(1), it might perhaps be possible to take the view that because of the provisions of s 90MC, superannuation interests should be regarded as synonymous with property for the purposes of proceedings under s 79. However we are of the view that the use of the word “also” prevents such an interpretation. We interpret the use of the word “also” in s 90MS(1) to mean that superannuation interests are another species of asset which is different from property as defined in s 4(1), and in relation to which orders can also be made in proceedings for property settlement under s 79. There is nothing in our view in s 90MS(1) which indicates that superannuation interests are to be treated as property in proceedings under s 79 (irrespective of whether or not an order under Part VIIIB is sought in those proceedings). Indeed, the only stated purpose anywhere in Part VIIIB for superannuation interests being “treated as property” is for the purposes of the definition of “matrimonial cause” which, as earlier explained, is the jurisdiction conferring provision.
…
[43]Thus, the way in which s 90MS is drafted leads us to the view that superannuation interests are another species of asset which is different from property as defined in s 4(1), and in relation to which orders also can be made in proceedings under s 79.
[44]However s 90MS(1) does have the effect, in our view of requiring that in a case where the Court intends to make orders in relation to superannuation interests of the spouses, it must do so “under” s 79 (although s 90MS(2) makes it clear that the Court cannot make an order in relation to a superannuation interest except in accordance with Part VIIIB). In other words, the Court must apply to superannuation interests the matters to be taken into account under s 79.
[45]The starting point in any determination of any proceedings under s 79 (whether or not the parties have superannuation interests) must remain s 79(1) which provides:
In proceedings with the respect to the property of the parties to a marriage or either of them, the court may make such order as it considers appropriate altering the interests of the parties in the property, including an order for a settlement of property in substitution for any interest in the property and including an order requiring either of both of the parties to make, for the benefit of either or both of the parties or of a child of the marriage, such settlement or transfer of property as the court determines.
…
[47]The court in dealing with property proceedings and with proceedings where the parties have superannuation interests must then turn to s 79(2), which requires that any order, including an order that relates to superannuation interests, must be just and equitable. (original emphasis)
Their Honours went on to say:
[51]Nothing in the Explanatory Memorandum would seem to suggest that superannuation interests are “to be treated as property” in proceedings in relation to property under s 79.
…
[57]We recognise, in connection with the approach just suggested, that paragraphs 79(4)(a) and (b) refer to the contributions to “property” and that the expression “property” as used in those paragraphs must be taken to mean property as defined in s 4(1). Accordingly, it might be argued that there is no requirement for the Court to consider the parties’ contributions to their respective superannuation interests in a case where no splitting order is sought. But if this view is correct the contributions to superannuation interests would still remain to be considered under s 75(2)(j). (See in this regard the observations of the Full Court in Wunderwald & Wunderwald(1992) FLC 92-315 at 79,361-2, which we consider have general application despite the nature of the particular superannuation fund under consideration in that case. See also the discussion in B and B (No 2) [2000] FamCA 734; (2000) FLC 93-031, paragraphs 59 to 70).
[58]Thus, we consider that because of the obligation under s 79(2) to make a just and equitable order, then in order to ensure such a result the Court should wherever there is a superannuation interest apply the provisions of s 79(4)(a) to (g) (which will include the matters contained in s 75(2)) to that superannuation interest whether or not a splitting order is sought. (original emphasis)
It was not suggested by the husband that his superannuation should not be treated as if it were property. He just wants it shared so that he was able to share in the non-superannuation assets. The only way equity can be achieved here is to see the impact of treating those assets separately or as one bundle.
The wife wanted to keep the house. Her logic was that it may have to be sold but she would prefer for X’s sake to keep him there. She was not attracted to the possibility that her superannuation could be built on for her future on the basis that she may not go back into the workforce even if she completes her masters’ degree.
The husband has no money other than that derived from his earnings. He has no prospects of buying a home on his current disclosed income. He is six years younger than the wife so he has a longer work life but he also has child support obligations for about five years on the wife’s estimation. In other words, the husband cannot advance his position by trying to get into either the housing market, or if that was not available, getting some cash investment, without the share of the house. To add to his problems, the husband has a $150,000 debt to his lawyers. On the other side, the wife does not have that debt because her parents have made the contribution to assist her.
These last few points distinguish the parties. If the house is sold, both will have the opportunity to build on an admittedly low base, and clear their debts. The children will be under the wife’s control for a short few years and then she, like the husband, can build on her cash resources whilst also having a retirement superannuation policy. In addition, at her age of 49 years, if she does not return to the workforce, she could convert her superannuation interest long before the husband could.
In my view, to treat the superannuation as a s 79 asset in “one pool” does a large injustice to the husband. The superannuation should therefore be treated separately.
I find the assets of the parties are as follows:
B Street $970,000
Less mortgage $208,000
Net $762,000
The superannuation interests are:
Wife’s superannuation $15,700
Husband’s superannuation $84,800
Total $100,500
There are no other assets that should be taken into account for the reasons already articulated.
In assessing the contributions in s 79(4) of the Act, I find the financial and non-financial contributions to be equal. The wife brought into the marriage $100,000 from her parents at a time when the parties had little chance otherwise of becoming homeowners. However it is not just the accumulation of wealth that must be contemplated here. The evidence supports a finding that the obligations of a periodic nature under the mortgage were less than the rental they were paying. There was an advantage to both parties and it would seem that the wife’s parents knew that and encouraged them to buy the property.
The husband worked and contributed his various income streams thereafter and accordingly his contribution of a financial nature was greater than that of the wife save for the money provided by her parents.
There were other gifts apparently made by the wife’s parents although the amounts were contentious. The court was not assisted by any precise details as to amounts. There were “renovations” but that could only have been a gift to both of the parties by virtue of the fact it was specifically going into renovations of a property that was owned by both parties. The wife’s father also put money into their joint account for things such as “Christmas”.
The husband’s pain and suffering did not affect his earnings so his late contribution to the mortgage is also significant and balances the financial scales. Despite his pain and suffering, it appears that he continued to work.
The wife’s non-financial contribution as a homemaker and parent certainly outweighed that of the husband. I am not prepared to say that the husband’s money sent overseas has had any significant impact on the parties wealth for the reasons already discussed. Accordingly, I find the contributions of the husband and the wife to have been equal or very close thereto.
Section 79(4)(e) requires the court to take into account the matters in s 75(2). Those factors favour the wife. She has a 13 year old (apparently difficult) child for five years to come. She can improve her academic standard but nothing suggests she will financially prosper then. She is otherwise reliant on government financial support.
However, the husband is not much better off save that he can work more hours at his second job because he has no family obligations. He is industrious and has a good work record which indicates that he will have work in the future. But that too means that if the superannuation is split, he will build on that faster than the wife. Against his current financial position is the obligation to pay child support. As I understand it, the husband has been diligent in making the assessment payments however one must query his candidness in relation to whether the second job payments were included.
The wife wanted me to take into account her health but there is no expert evidence. As against that, there is a judgment of a court indicating that the husband has an entitlement to psychiatric treatment. He has been admitted previously to a psychiatric hospital.
Both parties have lived modestly so their standards of living will not change even if both have to rent.
I have considered s 75(2)(ha) relating to the husband’s obligation to his solicitors and the fact that it would be probable that he could not pay them without a share of the house. Against that however, he could enter a payment plan.
I very much appreciate and respect the wife’s desire to remain as a parent but her retention of the house would not necessarily mean that her desire would be fulfilled in the long term. Her son is already having difficulties at school and could conceivably leave. The future is very unclear as to her parenting. The wife endeavoured to argue that she had the children for years to come but the definition of child in the Act relates to someone under the age of 18 years.
I find there is a basis to make an adjustment in favour of the wife of 10 per cent which in real terms, is only $75,000, but that will give her the opportunity to rehouse if she cannot keep the B Street property.
The same approach could be taken to the superannuation. However, the contributions should be seen to be equal notwithstanding the husband obviously received the benefit under his employment entitlements. He could only do that work because the wife cared for the household.
The same adjustment for s 79(4)(e) does not apply here because I cannot see either party obtaining any benefit from superannuation for some years to come and in any event, the wife is more likely to obtain that benefit earlier. I decline to make any adjustment knowing that she also has the shares which are worth $6,000. That gives her an advantage over the husband.
I find it just and equitable to divide the net value of the house as to 60 per cent to the wife and 40 per cent to husband and otherwise to equalise the superannuation entitlements.
The absence of the superannuation trustee service means that the court requires the husband to notify the trustee of the nature of the order and to confirm in writing that the trustee has no objections to that order being made. I should otherwise give the trustee liberty to apply.
I am concerned about the diligence of the wife in completing obligations. I have mentioned her approach to court orders. To ensure compliance with any sale of the house, she should be responsible for the increases in the mortgage from unpaid periodic payments after 1 December 2018 which is the default date.
I certify that the preceding eighty-nine (89) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 9 October 2018.
Acting Associate:
Date: 9 October 2018
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