Dowdell & Public Trustee of the Northern Territory
[2007] FamCA 1276
•16 October 2007
FAMILY COURT OF AUSTRALIA
| DOWDELL & PUBLIC TRUSTEE OF THE NORTHERN TERRITORY | [2007] FamCA 1276 |
| FAMILY LAW – PROPERTY SETTLEMENT – Death of a party – public trustee of Northern Territory substituted as party following husband’s death – marriage of almost 50 years duration – husband in receipt of DFRDB pension – husband terminally ill and took his own life – whether intentional act to deprive wife of benefit of his pension – no evidence to support – whether principles in Kowaliw and Kowaliw (1981) FLC 91-092 apply – pension not notionally added back to asset pool. FAMILY LAW – PROPERTY – parties built home on land owned by daughter and son-in-law – parties’ interest in property outlined in licence agreement – equitable position in event licence agreement unenforceable – value of equitable interest in property included in asset pool. FAMILY LAW – PROPERTY SETTLEMENT– Superannuation – husband’s DFRDB pension and interest in scheme ceased upon his death – no interest vested in husband’s estate upon his death – wife seeks splitting order with retrospective operative date prior to husband’s death – no temporal limit on operative date of splitting order – court cannot make a splitting order where no superannuation interest – must be property in existence at time of making s 79 order – splitting order cannot be made. FAMILY LAW – PROPERTY SETTLEMENT – Contributions – whether husband suffering from post traumatic stress disorder and his general behaviour affects assessment of contributions – principles in Kennon and Kennon (1997) FLC 92-757 contributions assessed as equal – 15% adjustment in favour of wife due to s 75(2) factors – Order: assets divided 65%/35% in favour of wife. |
| Family Law Act 1975 (Cth) ss 75(2), 79(4), 79(8) & 90MT Defence Force Retirement and Death Benefits Act 1973 (Cth) ss 39 & 49B |
| C and C (2005) FLC 93-220 Kennon and Kennon (1997) FLC 92-757 |
| APPLICANT: | Ms Dowdell |
| RESPONDENT: | Public Trustee of the Northern Territory |
| FILE NUMBER: | DNF | 20 | of | 2005 |
| DATE DELIVERED: | 16 October 2007 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Darwin |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 26 – 28 March 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Simpson SC |
| SOLICITOR FOR THE APPLICANT: | Withnalls Territory Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms Pyke QC |
| SOLICITOR FOR THE RESPONDENT: | Terrill & Associates |
ORDERS AND DECLARATIONS
BY CONSENT IT IS DECLARED:
That the wife holds the antiques and memorabilia comprising items derived by way of gift or inheritance by the husband or the wife or either of them from the husband’s family including his step-father, …, as trustee upon trust for the children of the marriage, AD and AA, in equal shares provided that the wife shall be entitled to the use, possession and enjoyment thereof during her lifetime, she to keep same in fair wear and tear and to obtain and keep current a policy of insurance with respect to loss, damage and theft for their current market value from time to time.
AND IT IS ORDERED:
That within TWENTY-EIGHT [28] days of the date of these orders the Public Trustee of the Northern Territory as Executor of the estate of the husband pay to the solicitor for the wife on behalf of the wife the sum of ONE HUNDRED AND NINE THOUSAND ONE HUNDRED AND SEVENTY-SIX DOLLARS [$109,176.00].
That the wife do retain as her sole property absolutely free of any claim, right, interest, demand or entitlement of the estate of the husband, the following:
(a)The wife’s interest in the house property situated at H in the Northern Territory;
(b)The proceeds of sale of the property situated at T in the state of Queensland together with all interest accrued thereon;
(c)The wife’s savings and investments;
(d)The wife’s Honda Civic motor vehicle;
(e)The wife’s jewellery;
(f)The wife’s household furniture and effects;
(g)The wife’s loans to her daughter AA and/or her son-in-law BA and/or their business;
(h)Any other asset real or personal in the wife’s power, possession or control.
That the estate of the husband do retain as its sole property absolutely free of any claim, right, interest, demand or entitlement of the wife, the following:
(a)The husband’s personal effects;
(b)The husband’s Honda motor vehicle;
(c)The husband’s share portfolio;
(d)The balance of dividends, cash and sundry payments received by the Public Trustee less the liabilities paid;
(e)Any other asset real or personal in the estate’s power, possession or control.
That forthwith the Polaris quad bike be sold upon such terms and conditions including price as may be agreed between the parties and the net proceeds of sale be divided 65% to the wife and 35% to the estate of the husband.
In the event of the Public Trustee failing to comply with paragraph (2) hereof then the said share portfolio held by the estate of the husband be sold forthwith and from the net proceeds of sale the wife receive such sum as shall then be outstanding pursuant to paragraph (2) hereof together with interest thereon calculated at the rate fixed by the Family Law Rules, and the estate of the husband receive the balance.
That the parties each have liberty to apply for consequential orders.
That all applications be dismissed and removed from the active pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Dowdell & Public Trustee of the Northern Territory is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: DNF 20 of 2005
| Ms Dowdell |
Applicant
And
| Public Trustee of the Northern Territory |
Respondent
REASONS FOR JUDGMENT
Introduction
I have before me for determination competing applications for property settlement between the wife and the Public Trustee for the Northern Territory as executor of the estate of the husband.
On 8 December 2006 the wife filed a Further Amended Application for Final Orders seeking the following orders:
“1.That in accordance with paragraph 90 MT(1)(b) Family Law Act 1975:
a.The Wife is entitled to be paid the specified percentage of each splittable payment out of the Husband’s interest in the Defence Force Retirement and Death Benefits fund (“the DFRDB fund”); and
b.The Husband’s entitlement to payments out of his interest in the DFRDB fund, is correspondingly reduced.
2.That the specified percentage for the purposes of clause 1 of this order is 100%.
3.That this order have effect from the operative time and the operative time is 3 October 2005.
4.That the trustee of the DFRDB fund shall do all such acts and things and sign all documents as may be necessary to:
a.calculate, in accordance with the requirements of the Family Law Act 1975, the entitlement created by clause 1 of this order; and
b.pay the entitlement whenever a splittable payment becomes payable out of the Husband’s interest in the DFRDB fund.
5.That in the event that Orders 1 to 4 above are made by this Honorable (sic) Court that the proceeds of sale of the [T] property currently held on trust by Sivyer and Associates as trustees for the parties be paid to the Executor of the Estate of [the husband] SAVE AND EXCEPT that in the event that Orders 1 to 4 above are not made that the proceeds of sale of the [T] property currently held on trust by Sivyer and Associates as trustees for the parties be paid to the Wife.
6.That the Public Trustee of the NT as executor of the estate of [the husband] forthwith carry out all acts and sign all documentation necessary to effect transfer to the wife of the following:
a.all shares held by [the husband] (or his estate) in Milton Corporation Ltd
b.all shares held by [the husband] (or his estate) in Australian Foundation
c.all shares held by [the husband] (or his estate) in Argo Investments
d.all shares held by [the husband] (or his estate) in AMP
7.A declaration that as between the Estate of [the husband] and the wife, that the wife is entitled to ownership of the antiques listed in the valuation of [Mr B] annexed hereto and marked with the letter “A”
8.That other than as detailed above the Public Trustee of the NT as executor of the estate of [the husband] retain all other property listed in Attachment “A” to the affidavit of Gail Fleay filed 9 October 2006 and pay all liabilities in relation to the estate
9.That unless otherwise specified in these orders and except for the purpose of enforcing the payment of money due under these or any subsequent orders the wife shall be entitled to the exclusion of the Estate of [the husband] to all other property and chattels of whatsoever nature and kind in her possession and shall be solely liable for and indemnify the Estate against any liability encumbering any item of property to which she is entitled pursuant to these orders.
10.Further or other Order”
On 30 January 2007 the Public Trustee for the Northern Territory, as legal representative for the husband, filed an Amended Response to the Further Amended Application for Final Orders.
At the time of the trial the Public Trustee for the Northern Territory, as legal representative for the husband, sought the following orders:
“1.These orders are binding upon the wife, her heirs, executors, administrators, assigns and attorneys.
2.The Public Trustee consents to an order in terms of paragraphs 1, 2, 3 and 4 of the Further Amended Application of the wife filed on the 8th of December 2006.
3.That the wife do forthwith deliver up all antiques and Chinese memorabilia currently in her possession power or control derived by way of gift or inheritance by the husband, the wife, or either of them from the husband’s family including his stepfather, […], to the Public Trustee for the Northern Territory.
4.A Declaration that the Public Trustee for the Northern Territory as between the estate and the wife is solely entitled as executor of the estate to ownership of the antiques and memorabilia referred to in paragraph 3.
5.In the alternative to paragraphs 3 and 4 hereof a Declaration that the wife holds the antiques and memorabilia described in paragraph 3 hereof as trustee upon trust for the children of the marriage, [AD] and [AA] in equal shares provided that the wife shall be entitled to the use, possession and enjoyment thereof during their lifetime, she to keep same in fair wear and tear and to obtain and keep current a policy of insurance with respect to loss, damage and theft for their current market value from time to time.
6.That the net assets of the parties (including those assets added back) (but not including the antiques and Chinese memorabilia) be apportioned between the parties as 65% to the wife and 35% to the estate of the husband, provided that if there shall be a superannuation split in favour of the wife the net assets be apportioned as to 50% to the wife and 50% to the husband.
7.To give effect to paragraph 6 hereof the wife do retain:-
i.The interest of the parties in [H property]
ii.Moneys standing to her credit in the Credit Union in the sum of $114, 714.00
iii.Her motor vehicle
iv.Contents (other than antiques and Chinese memorabilia)
v.The proceeds of sale of [T property], Queensland currently invested with the NAB ($233,614) at 13/3/07.
vi.Assets retained by the wife, including the proceeds of the sale of the Tasmanian property.
8.That the estate of the husband do pay such further or other sum to the wife to effect the aforesaid distribution, in the alternative the wife pay such sum to the estate as may effect the aforesaid distribution.
9.That the estate of the husband do otherwise retain all assets in its possession or control including:-
i.share portfolio;
ii.monies in bank;
iii.other assets in the possession or control of the trustee including share dividends, cash and investments.”
Both parties submit and agree that in terms of Section 79(8)(b) of the Family Law Act the court would have made an order with respect to property if the husband had not died and that it is still appropriate to make an order with respect to property, and thus the court may make such orders as it considers appropriate with respect to any of the property of the marriage or either of them. I agree with this submission.
As can be seen, the Public Trustee consents to the wife’s application for a splitting order in relation to the husband’s DFRDB pension operative from 3 October 2005. However, in written submissions provided by the Trustee of the DFRDB scheme it is claimed that the court cannot make the orders sought. Although invited to do so the Trustee chose not to intervene in the proceedings and not to appear at the hearing, and thus all I can do is take their submission into account in determining whether to make the orders sought.
At the time of trial, the wife indicated that she was agreeable to the items of personalty described as “antiques” the subject of paragraph 7 of the orders sought in her Further Amended Application filed 8 December 2006, being held on trust on terms substantially to the effect of paragraph 5 of the orders sought in the respondents Amended Response filed 30 January 2007. Thus, I propose to make a consent order finalizing this issue.
At trial the parties also agreed that the Polaris quad bike valued at $2,200.00 and currently in the possession of the wife should be sold and the proceeds of sale be divided between the parties in such proportions as this court determines. Thus, I will leave that item out of the pool of assets and make an order accordingly.
On 22 January 2007 I made an order adjourning the question of the costs of and incidental to the Application in a Case filed by the Public Trustee on 13 December 2006 to the trial. I will deal with that issue once I have delivered these reasons for judgment.
Factual Background
The husband was born in May 1935. He died in October 2005, aged 70 years.
The wife was born in May 1936 and is now aged 71 years.
The husband and wife married in April 1958 in Victoria. At the time of their marriage the husband was employed with Victorian Railways and the wife worked full time as a clerk and bookkeeper.
In February 1959, the husband joined the Royal Australian Navy. He was transferred to the HMAS Cerberus and the parties moved to …, Victoria where they lived with the wife’s parents. The wife worked part-time at the telephone exchange. The husband also undertook studies during this time.
In April 1960 the parties’ daughter, AA was born.
In May 1962, the husband was transferred to Canberra and the family moved there.
In November 1962 the parties’ son, AD was born.
In September 1965 the husband was posted to the HMAS Parramatta and went to sea. The wife moved with the two children back to Victoria to live with her father.
In October 1965, the wife’s father passed away and the wife moved to a Navy house on the peninsula.
In 1966 the husband’s mother died.
In late 1966 the husband was posted to the United Kingdom. The family moved to the United Kingdom to enable the husband to undertake an officer’s training course.
In approximately September 1967, the husband was posted to the United States of America. The family resided in America for 6 months.
In March 1968 the family returned to Sydney where they lived in a rented flat. The husband was immediately posted to an active warship and sailed to Vietnam. The wife and children then moved to a Navy house on the outskirts of Sydney.
In the late 1960s the husband’s stepfather suffered a stroke.
In approximately October 1969 the husband returned from Vietnam.
In 1970 the husband undertook a second tour of duty in Vietnam for 7 months.
In 1971 the husband’s stepfather came to live with the family for approximately 6 months. The wife says the husband’s stepfather was partially paralysed from the stroke and she provided assistance to him. At this time the family moved to a larger naval house.
In late 1971 the husband’s stepfather returned to live in Melbourne.
Also in 1971, the parties purchased a block of land in B, New South Wales, for approximately $7,500.00 and commissioned A V Jennings to build a home on the land. The wife returned to full time work for an insurance company.
In February 1972 the parties moved into their new home at B.
In August 1972 the husband was posted to Canberra. The wife and children remained in Sydney until the end of the year, when they moved to Canberra. The family lived in a navy house on a navy base in Canberra. The wife obtained employment as a bookkeeper.
In 1973/1974 the wife obtained employment as a retail assistant.
In December 1974 the husband was posted. The family moved to another naval home for 6 months.
In June 1975 the husband was transferred to Darwin. Over the next two years the family resided at two homes at Darwin. During this time in Darwin the husband was promoted to an officer rank.
While living in Darwin the wife obtained employment typing, before working as an office manager.
In October 1977 the husband was once again posted to Canberra and the parties returned to Canberra. According to the wife the property they resided in was in poor condition and the parties decided to sell their home in B and purchase a home in Canberra. The B property was subsequently sold for approximately $53,000.00.
Upon returning to Canberra, the wife obtained employment as an office manager at R Company.
In early 1978 the parties purchased a home in P, Canberra for approximately $70,000.00 and commenced to reside in the property.
In the mid 1980s the parties purchased a townhouse in G, Canberra for approximately $90,000.00 as an investment property.
In 1984 the husband retired from the Navy. At this time, the husband received a lump sum of approximately $75,000.00 and commenced to receive his Defence Force Retirement Death Benefit (DFRDB) pension.
The husband obtained employment with P Company as a marketing manager.
In 1984 the parties purchased a block of land at T, Queensland, with the intention of building on the land.
The parties sold their home in P, Canberra in 1991 in anticipation of retirement. At this time she says the parties’ son was living in their townhouse in G.
The parties purchased a home in M, Queensland for approximately $220,000.00. According to the wife, the parties moved into this residence in 1991, however, the respondent contends that the parties moved to M in 1988.
In approximately October 1991 the husband retired from P Company.
In November 1991 the wife retired from her employment at R Company.
While the parties lived at M the husband was diagnosed with obstructive airways disease, or emphysema.
In 1994, after visiting the parties’ daughter in Darwin a number of times for their daughter’s marriage and the subsequent birth of her two children, the wife decided she wished to move to Darwin.
The parties arranged to build a home on land at H, Northern Territory where the parties’ daughter, AA, and her husband BA were building a home. AA and BA were the registered proprietors of this land.
AA and BA had obtained finance from the ANZ Bank to build their home. On 28 June 1994 the parties signed a letter to the ANZ Bank noting that they were fully aware of the ramifications should the bank proceed to a sale of the property at H and that the value of the parties’ house could be taken into account for the purposes of the bank’s security.
In October 1994 the parties sold their home at M for approximately $285,000.00. They moved to the Northern Territory and stayed in a caravan until their new home was completed.
The wife says in 1994/1995 the husband was diagnosed by a psychiatrist as suffering from Post Traumatic Stress following his service in Vietnam.
In February 1995 the parties moved into their home on the H property. By the wife’s account, the parties expended around $300,000.00 on the construction of the residence, including an amount to install a swimming pool at AA and BA’s home.
In 1996/1997 the husband began to require portable oxygen to assist with his breathing.
In 1996, according to the respondent, the husband, the wife, their daughter AA and son-in-law BA, entered into a License Agreement. Under this Agreement the husband and wife were entitled to reside in their house property during their life and upon the death of the survivor the value of the house property less the land value was to form part of the estate of the survivor. Further if the property was disposed of or if the agreement was breached by their daughter and son-in-law, the husband and wife were entitled to the value of their house property less the land value.
In 2001 the parties sold their townhouse investment property in G for approximately $140,000.00. The parties had previously repaid the mortgage over the property and these proceeds were deposited into an account with the Australia Central Credit Union, in the wife’s sole name.
Sometime during 2002 or 2003 the parties’ son, AD, his partner and their young daughter moved in with the parties at the H property.
In 2002 the wife purchased a second hand Nissan Pulsar motor vehicle.
In 2003 the parties’ son-in-law, BA, through his company PF Pty Ltd, increased the borrowings from the ANZ Bank secured over the H property to enable the purchase of industrial land and construction of premises on this land. The wife says the husband agreed to this arrangement.
In late February 2004 the wife travelled to Tasmania with the intention of separating from the husband. She took her Nissan Pulsar motor vehicle with her and arranged for her furniture and effects to be sent to her subsequently.
On 4 April 2004 the husband and wife separated.
The wife subsequently purchased a cottage in Tasmania for $170,000.00. The wife says she spent $25,000.00 on improvements to the property and $10,000.00 on furniture and effects using the funds from the Australian Central Credit Union account.
The wife applied for and obtained a part age pension of $170.00 per week.
In July 2004 the wife transferred her interest in the parties’ share portfolio to the husband.
On the application of the husband, the parties’ divorce was granted on 8 December 2004.
On 9 February 2005 the wife filed a Form 1 Application for property settlement seeking that the Court “make orders so as to effect an equal distribution of the assets and financial resources of the parties.”
On 5 April 2005 the husband filed a Form 1A response seeking the court “make such orders as are equitable in all the circumstances”.
On 16 September 2005 the husband executed a form of transfer to effect a severance of the joint tenancy in respect of the land at T. According to the wife, this severance was not registered prior to the husband’s death and is thus ineffective.
On 19 September 2005 the husband executed a new will. The husband appointed the Public Trustee for the Northern Territory as Executor and Trustee of his will. The effect of this will was that, save for a provision for certain antiques to be shared between the parties’ two children, the residue of the husband’s estate was left to the parties’ son, AD.
In October 2005 the husband died. He committed suicide.
On 10 October 2005 the wife filed an Amended Application for Final Orders.
On 17 November 2005 probate of the husband’s estate was granted to the Public Trustee.
In December 2005 the wife moved from Tasmania back to Darwin. She sold her motor vehicle for $8,000.00.
For the first 6 months of 2006 the wife suffered ill health and was cared for by her daughter.
On 9 February 2006 the Public Trustee for the Northern Territory filed a Form 2 Application in a Case seeking orders that the Public Trustee, as the legal personal representative of the deceased husband, be substituted for the husband as a party to the proceedings.
The Public Trustee also filed an Amended Response for Final Orders on 9 February 2006.
In February 2006 the separate factory premises for AA and BA’s business was completed. According to BA, the final cost of construction was $1,500,000.00, substantially more than originally allowed for.
On 20 March 2006 Dawe J made orders in terms of paragraph 1 of the application of the Public Trustee filed 9 February 2006, substituting the Public Trustee for the husband as a party to these proceedings.
On 3 July 2006 the wife sold the property in Tasmania for $180,000.00, receiving net proceeds of $172,000.00.
The wife purchased a new car at a purchase price of $28,000.00. The wife paid a $1,000.00 deposit, with her daughter and son-in-law borrowing funds through Honda Finance for the remainder. The wife makes the repayments of $590.00 per month on this vehicle.
The wife says she has undertaken renovations at the H property since her return to Darwin, at a cost of approximately $21,000.00.
In 2006 the wife lent $50,000.00 to her daughter and/or her son-in-law and/or their business. There are no specific arrangements for the repayment of this loan.
In September 2006 the land at T was sold for net proceeds of $227,815.98. These proceeds are currently held in an interest bearing term deposit on trust for the parties.
In September 2006 the wife lent $22,000.00 to her daughter AA and/or her son-in-law BA to help with the cost of a trip to Europe. Again, there are no specific arrangements for the repayment of this loan.
On 8 December 2006 the wife filed a Further Amended Application for Final Orders.
On 30 January 2007 the respondent Public Trustee filed an Amended Response to an Application for Final Orders.
The current circumstances of the parties
The wife
The wife continues to live in the house property built by the parties on the land owned by their daughter AA and her husband BA at H.
The wife, who is 71 years of age does not work and receives a partial age pension of $400.00 per fortnight.
At the time of the trial the wife had $114,561.00 in an account at the Australian Central Credit Union and $1,101.00 in a bank account. In addition, she is owed a total of $72,000.00. She lent $50,000.00 to her daughter and/or her son-in-law and/or their business, and subsequently a further amount of $22,000.00 to either her daughter and/or her son-in-law. No repayment of these loans has yet been made.
The wife’s daughter and her son-in-law assist the wife to meet her electricity and telephone accounts. The wife also has some meals with her daughter’s family and she helps out with caring for her grandchildren. She estimates that she needs approximately $450.00 per week to live comfortably.
The wife has a 2006 Honda Civic motor vehicle but the loan for its purchase is in the names of her daughter and her son-in-law. The wife though makes all of the repayments.
The husband
The husband of course is deceased and the Public Trustee for the Northern Territory is the Executor of his estate. The Acting Public Trustee, Gail Shirley Fleay, filed an affidavit on 2 February 2007 annexing a list of the assets and liabilities of the husband’s estate. Some of these assets have been realised and some of the liabilities paid, and the Public Trustee is holding funds in a trust account. It is agreed that at the time of the hearing those funds totalled $74,405.00.
The husband’s will provides for the parties’ son, AD to receive the bulk of his estate. However, clearly what that will be is dependent upon what I decide in this matter.
The issues in dispute
There are a number of issues between the parties as to the pool of assets and liabilities, namely:
93.1Whether the value of the house property on the land at H should be included in the asset pool as the Public Trustee submits or treated as a financial resource as the wife submits, and if the latter, what value if any should be assigned to it.
93.2Whether the value of the husband’s DFRDB pension which he was receiving before his death should be included in the pool of assets albeit in a separate pool in accordance with the principles set out in the decision of the Full Court in C and C (2005) FLC 93-220. The wife seeks this result but the Public Trustee opposes it unless there is a splitting order made in relation to the husband’s pension, and then the value of the wife’s pension should be included as an asset.
93.3Whether this court can make a splitting order in relation to the husband’s DFRDB pension operative from 3 October 2005, the day before his death, and if this court has the power to do that, whether such an order should in fact be made. To repeat, both parties submit that the court has the power to make such an order and should do so, but it is still an issue for the court to determine given that the Trustee has put in a submission suggesting otherwise. Although the Trustee has chosen not to intervene and become a party to the proceedings, I consider it appropriate to take into account the written submission made by the Trustee, and neither party has suggested otherwise.
93.4Whether the asset pool is to include the amount of $340,000.00 standing to the credit of the wife’s Adelaide Central Credit Union account less the purchase costs and the costs of improvements to the property that the wife purchased in Tasmania following separation ($193,000.00), less the amount currently standing to the credit of the wife’s account ($114,561.00), namely a net of approximately $30,000.00 as well as the net proceeds of sale of that property in Tasmania ($171,296.00), or simply what the wife’s assets are at the date of the trial. The Public Trustee argues for the former on the basis that the wife should bear responsibility for the reduction in her capital since the separation. The wife submits that any expenditure by her has been necessary and reasonable and should not be added back.
93.5Which party should have the share portfolio? Both parties seek it as part of their entitlement to property settlement.
93.6Whether in the liabilities there should be an amount for capital gains tax in respect of the share portfolio. If the shares remain in the estate then they will have to be sold and capital gains tax will be incurred. However, if the shares are transferred to the wife then there may be no capital gains tax paid if she ultimately sells them.
93.7What amount should be included in the liabilities for capital gains tax in relation to the sale of the T property. The wife says that it should be $36,660.00 whereas the Public Trustee says that it should be $34,689.00.
93.8Whether the value of the wife’s Honda Civic motor vehicle and the amount of the loan taken out to purchase it should be included in the assets and liabilities. The wife says that they should be but the Public Trustee suggests otherwise.
93.9The Public Trustee suggests that interest should be added to the outstanding loans due to the wife by her daughter and/or her son-in-law and/or their business. However, I indicate at this point that I am in no position to accede to this submission given that there is no evidence of what the interest might be.
Turning to the respective contributions of the parties, the Public Trustee’s case ultimately was that they should be assessed at 60%/40% in the husband’s favour. The wife’s case is that the contributions should be assessed at 60%/40% in her favour. The major issues between the parties are as follows:
94.1The Public Trustee says that the husband made greater financial contributions than the wife post-separation. The wife denies this.
94.2The wife says that the husband’s behaviour during the marriage made it more difficult for her to carry out her tasks as a home maker and parent and there should be an allowance in her favour as a result of this. The Public Trustee opposes this.
94.3The wife says that the husband’s absences through his employment and the constant changes in accommodation made her duties as home maker and parent more onerous and there should be an allowance for this. The Public Trustee also opposes this claim.
Finally, there are the Section 75(2) factors. The Public Trustee says that there should be an adjustment of 15% in the wife’s favour for these factors on the basis of there being an assessment of the respective contributions of the parties at 60%/40% in favour of the husband. The wife says that there should be a 5%-7.5% adjustment for the Section 75(2) factors in the wife’s favour on the basis of an assessment of the respective contributions of the parties being 60%/40% in her favour. Thus, the parties are not in dispute about whether there should be an adjustment in favour of the wife, it is the extent of the adjustment which is not agreed, and curiously the Public Trustee’s position is that the adjustment should be more than the wife herself seeks.
The principles to be applied
The provisions of Section 79 of the Family Law Act define the court's power and obligations in determining applications for property settlement. The court has a discretion to make orders altering the interests of parties in property, provided the court is satisfied that such orders are appropriate, just and equitable.
The court is obliged by the provisions of Section 79(4) of the Family Law Act to take into account the following matters:
97.1The financial and non-financial contributions made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them (sub-paragraph (a) and (b));
97.2The contribution made by a party to the marriage to the welfare of the family, including any contribution made in the capacity of homemaker or parent (sub-paragraph (c));
97.3The effect of any proposed order upon the earning capacity of either party to the marriage (sub-paragraph (d));
97.4The matters referred to in Section 75(2) so far as they are relevant (sub-paragraph (e));
97.5Any other order made under the Act affecting a party to a marriage or a child of the marriage (sub-paragraph (f));
97.6Any child support payable (sub-paragraph (g)).
Accordingly, in assessing the entitlement of each of the parties for property settlement, there is both a retrospective element relating to the contributions of each of the parties and a prospective element relating to matters referred to in Section 75(2).
According to guidelines established through a series of leading decisions, the court should determine the following matters on the evidence, that is:
99.1Firstly, the court must determine the assets, liabilities and financial resources of the parties to the marriage.
99.2Secondly, the court must consider all relevant contributions of each of the parties, and, where possible, the court should assign an entitlement of each of the parties arising as a result of those contributions.
99.3Thirdly, the court should then consider the prospective components of the claims of each of the parties arising as a result of the provisions of Section 75(2). The court should then identify what alteration, if any, should be made to the entitlement of each of the parties earlier assessed on account of contributions having regard to the relevant Section 75(2) factors.
99.4Fourthly, the court takes a step back and considers whether the proposed orders are just and equitable.
The evidence
The wife was represented by Mr Simpson SC. The wife gave evidence and was cross examined. She relied on her affidavits filed on 24 August 2006 and 29 January 2007 and her Form 13 Financial Statement filed on 23 August 2006.
The Public Trustee was represented by Ms Pyke QC. The husband of course did not give evidence and there was no affidavit of his that was relied upon. The Acting Public Trustee, Gail Shirley Fleay filed an affidavit on 2 February 2007 but she was not required for cross examination.
The wife called two witnesses, namely her daughter AA who filed an affidavit on 24 August 2006, and her son-in-law BA who filed an affidavit on 23 August 2006. However, paragraphs 44 to 47 inclusive of AA’s affidavit were not relied upon by the wife. These witnesses gave evidence and were cross examined.
The wife also relied on paragraphs 1, 2, 7, 8 and 11 of the affidavit of CM filed on 5 September 2006 and paragraphs 1, 8, 9, 10, 14 and 32 of the affidavit of GD filed on the same date. Neither of these witnesses were required for cross examination.
Further, the wife relied on an affidavit of her solicitor, J Sivyer filed on 14 March 2007.
Finally, in relation to the wife’s case, the wife tendered the husband’s Form 1A Response and his Form 13 Financial Statement filed on 5 April 2005 and sought to rely on the contents of these documents.
The Public Trustee relied on the affidavits filed by AD on 29 August 2006, Ms BS filed on 29 August 2006, and Ms HS filed on 29 August 2006. None of these witnesses were required for cross examination.
The credit of the wife was attacked by the Public Trustee. It was suggested that the evidence of the wife as to the agreement between her and/or her husband and her daughter and son-in-law, and the arrangement generally as to the wife’s occupation of the house property at H was “unbelievable” and “boarded on the bizarre”. It was further suggested that the wife was part of a “deliberate attempt” to keep from the court “anything that might approximate the true state of affairs between the wife and the [daughter and son-in-law]”, and in particular, “the true extent of the borrowings” between them and the “true terms” thereof.
I do have serious concerns about the evidence of AA and BA on these topics and I will come to that shortly, but I find that the wife made every attempt to be truthful in her evidence and I do not accept that she attempted to mislead this court in any way. She obviously has been a party to the borrowings made by AA and BA and including in relation to her motor vehicle, but I consider that she has been an innocent party and she has merely agreed to whatever AA and BA have proposed without querying them or without thinking about how it might effect her.
In relation to the wife’s daughter AA, I was not impressed with her evidence generally. I do accept her evidence, unlike that of her husband, that the parties did all sign the license agreement prepared by solicitors in relation to the occupation by the husband and the wife of the house property at H, but I do not accept her evidence that she in effect does not recall much about the agreement and that she has not been involved in discussions with the husband and the wife about what might happen in the future with that property.
I also do not believe her evidence in relation to the loans of $50,000.00 and $22,000.00 from the wife. Her evidence is inconsistent with the evidence of BA as to who sought the loans, who the loans are to, as to the terms of the loans and as to whether the wife has asked for repayments. However, that is not to say that I believe the evidence of BA as to these loans either. He was no more impressive in giving his evidence than the wife. I simply do not know who is telling me the truth, and all I am able to find is that the wife is owed a total of $72,000.00 by her daughter and/or her son-in-law, and with the further possibility that the $50,000.00 loan is owed by their business. BA said that the loan was to him personally, but AA was of the view that it was lent to the business.
There was also the extraordinary circumstance of AA and BA taking out the loan in their names to buy a motor vehicle for the wife. In the context of the wife lending a total of $72,000.00 to AA and BA this makes no sense at all, and heightens my concern that I am not being told the full story.
I also do not accept the attempt by AA and BA to suggest that the business was in “dire difficulties”. Although the 2006 financial statements for the business show a loss I am not satisfied that that truly represents the ongoing state of the business. The financial statements for the 2004 and 2005 years reveal a healthy profit and there were particular reasons that explain the 2006 figures. There is no evidence to suggest that 2007 and future years will be the same. For example, I note that despite the apparent poor result in 2006, the company paid higher dividends to shareholders than in the previous year. The poor result also did not prevent AA and BA from continuing to draw the same salaries. Then of course there is the circumstance of AA and BA travelling to Europe for a holiday and borrowing $22,000.00 from the wife to partially fund the same. This does not sit well with the claim that the business was in dire financial straights.
I find that the evidence by AA and BA about the state of the business was given with a view to creating doubt about the security of the wife in relation to the house property at H. The wife’s position is that there is a real risk that the ANZ Bank, which holds the mortgage over the title to the property might foreclose and sell the property leaving the wife with no home. However, that claim is based on the evidence of AA and BA which to repeat, I reject.
I also find that the evidence of both AA and BA about the license agreement, the arrangements and the discussions (or rather the lack of discussions) between them and the wife was deliberately vague with a view to assisting the wife in her claim to exclude the value of the house property from the asset pool.
The assets, liabilities and financial resources of the parties
At the date of the marriage – April 1958
The husband had the following:
Assets
Morris Minor motor vehicle NK
Liabilities NK
Financial Resources NKThe wife had the following:
Assets
Savings £100.00
Glory box containing household linen and household items NK
At the date of separation – 4 April 2004
The assets and liabilities of the parties were as follows:
Non-superannuation Assets
The house property on the land at H NK
Share portfolio $340,000.00
Property at T Queensland NK
Wife’s cash at bank $340,000.00
Joint NAB cheque account $36,562.00
Furniture and household effects NK
Collection of antiques, curios and memorabilia NK
The husband’s Honda Legend motor vehicle NK
The wife’s Nissan Pulsar motor vehicle NK
Cash $2,000.00
The wife’s jewellery NK
Superannuation Assets
The husband’s DFRDB pension NK
Liabilities
NilIn relation to these assets and liabilities I make the following comments:
118.1Following the separation the wife retained the money in her Australian Central Credit Union account and the cash, and the husband retained the joint cheque account at the NAB. By agreement, in July 2004 the wife transferred to the husband her interest in the share portfolio.
118.2The wife used some of her money to purchase a house property in Tasmania for $170,000.00 together with expenses including stamp duty of $6,000.00. She then spent $25,000.00 on improvements to that property and she purchased furniture and household effects for the total sum of $10,000.00.
118.3Subsequent to separation the wife arranged with the parties’ son AD to transport her furniture and effects to Tasmania. She had already taken her jewellery and her motor vehicle.
118.4The collection of antiques, memorabilia and curios initially remained in the house property at H.
118.5The wife applied for and commenced to receive a part old age pension of $170.00 per week. The husband continued to receive his DFRDB pension of $816.52 per fortnight and his TPI pension of $776.80 per fortnight, and he of course had access to the dividends paid on the shares.
118.6The Public Trustee seeks to include as an asset the value of the house property built by the husband and the wife at H, but the wife submits that it should only be treated as a financial resource.
In 1994 the husband entered into discussions with AA and BA regarding the possibility of he and the wife building a home on the land at H owned by AA and BA, and on which AA and BA were either about to or had commenced to build their own home. In evidence the wife attempted to distance herself from these discussions but I find that she was as much involved as the husband. There is very little evidence though of what was discussed save and except that there was clearly agreement between all parties that the husband and the wife could build a home on the property. I have found that the paucity of evidence was a deliberate ploy by AA and BA to try and assist the wife in keeping the value of the house property out of the asset pool. The evidence that I do have though is as follows:
118.6.1There is a letter prepared by the ANZ Bank which was lending AA and BA the funds to build their house signed by the husband and the wife and which said as follows:
“We hereby confirm that we are fully aware of the ramifications should ANZ proceed to a sale of the property owned by [BA] and [AA] situated at [H].
We are in agreeance that ANZ can rely on improvements being a house we are constructing on the block, and for Australia & New Zealand Banking Group Limited to take the value of these improvements into account for their overall security calculation.”
118.6.2There is a licence agreement prepared by a solicitor which in summary provided as follows:
118.6.2.1The husband and the wife can occupy the house property until the date of the death of the last survivor of them;
118.6.2.2If the husband and the wife default then the owners may terminate the agreement and reimburse the husband and the wife the then market value of the house property less the unimproved value of the land;
118.6.2.3If the owners default or dispose of the property then the owners have to reimburse the husband and the wife the then market value of the house property less the unimproved value of the land;
118.6.2.4Upon the death of the last survivor of the husband and the wife the then market value of the property less the unimproved value of the land is to be added to the estate of that last survivor.
I have found that that agreement was signed by all of the parties and sets out the terms upon which the husband and the wife built their house on the land and occupied it thereafter.
118.6.3The husband and the wife spent approximately $300,000.00 in building the home and in providing the funds for the construction of a swimming pool at the home of BA and AA.
118.6.4In or about 1997 enquiries were made about the costs of sub-dividing the land to give the husband and the wife their own title, but that was not proceeded with when the costs were found to be approximately $75,000.00.
118.6.5No caveat was lodged by the husband and the wife on the title to the property.
In these circumstances I find that the extent of the husband’s and the wife’s interest in the property is to be found in the licence agreement. That clearly provides the husband and the wife with the right to occupy the property until the date of the death of the last survivor of them and further, where there is default or a disposal of the property the owners, AA and BA are obliged to reimburse the husband and the wife with the then market value of the property less the unimproved land value. On similar facts to this, courts have had little difficulty in finding that it would be unconscionable and inequitable for the owners of the property to retain the benefit of the expenditure of the husband and the wife and an equity arises in favour of the husband and the wife which can be satisfied by an equitable charge or the imposition of a constructive trust (Morris v Morris (1982) 1 NSWLR 61, Cierpiatka and Cierpiatka (1999) FLC 92-864, and Giumelli and Giumelli (1999) 196 CLR 101). Thus, even if the agreement was for some reason unenforceable, there is the equitable position to fall back on. However, there was no suggestion that the parties do not consider themselves bound by the terms of the agreement and that it was unenforceable.
The wife’s counsel suggested that because the husband himself did not include this property as an asset in his statement of financial circumstances filed on 5 April 2005, it was now inconsistent for the Public Trustee to promote it as an asset. However, I do not agree. There could be many reasons why the husband failed to indicate this in his financial statement, and I do not consider that the Public Trustee or this court are bound by that omission.
The wife’s counsel also submitted that the agreement really conferred no rights of any substance on the wife, but I disagree. Mr Simpson correctly pointed to the circumstance that under the strict terms of the agreement, if the wife were simply to leave for whatever reason it would not necessarily follow that the owners would have to reimburse her the market value of the property. However, there is no evidence that the wife intends to leave and in any event this is a family arrangement where AA and BA would not look to take advantage of the wife and the evidence is quite clear that they would take care of her and would make proper provision for her. Mr Simpson then suggested that the evidence indicated that AA and BA are not in a financial position to be able to reimburse the wife in any event, and further there was a real risk of them not being able to meet the repayments on their mortgage and the bank foreclosing. In that event he said that the wife would miss out entirely. However, I do not view the evidence in the same way, and I have already rejected the claims by AA and BA that their business is in dire financial difficulty. I do not need to repeat what I have said already in that regard, but in summary I do not consider that there is any risk of a mortgagee sale. Perhaps more problematic though is whether AA and BA would immediately have available to pay to the wife the sum of $215,000.00 which is the current value of the house property less the unimproved land value. However, prima facie there is sufficient equity in the property to meet such a liability, and that is the basis on which I propose to proceed.
Thus, I find that the wife has an equitable interest in the property and the value of that interest should be included in the asset pool for the purposes of these proceedings, both as at separation and now.
At the date of the hearing
The assets and liabilities of the parties are as follows:
Assets
The proceeds of sale of the property at T $233,614.00
House property at H $215,000.00
The wife’s ACCU account $114,561.00
The wife’s bank account $1,101.00
The wife’s Honda Civic motor vehicle $18,500.00
The wife’s jewellery $5,000.00
The wife’s loans to her daughter/son-in-law/business $72,000.00
Interest accrued on the said loans NK
The wife’s furniture and household effects $5,000.00
The husband’s personal effects $2,712.00
The husband’s Honda motor vehicle $3,500.00
The husband’s share portfolio $487,495.00
Balance of dividends, cash and sundry payments
received by the Public Trustee less liabilities paid $74,405.00
Further dividends to be received by Public Trustee NK
The antiques, memorabilia and curios NK
The husband’s paid legal fees $31,173.00
The wife’s paid legal fees $49,589.00Liabilities
Public Trustees Estate fees NK
Honda Finance – loan in respect of the purchase of
the wife’s motor vehicle $25,766.00
Estimated CGT on the proceeds of the sale of the
property at T $36,660.00
CGT on the sale of the share portfolio $75,403.00
Brokerage fee on the sale of the share portfolio $4,875.00
Australian Taxation Office liability (estate) NK
Tax Agent’s fees (estate) NKIn relation to these assets and liabilities I make the following comments:
120.1The Public Trustee sought to exclude the wife’s Honda Civic motor vehicle from the asset pool and the amount of the loan taken out to purchase that vehicle from the liabilities. However, I can see no justification for doing this. Counsel for the Public Trustee in effect suggested that the transaction was entered into to create a net liability result for the purposes of these proceedings, but I do not accept that. Certainly, given the circumstances of there being loans totalling $72,000.00 made by the wife to her daughter AA and/or her husband BA and/or their business, it is somewhat difficult to understand why it was AA and BA who obtained this loan for the wife, but that does not impact on the reality of the situation. The wife needed a motor vehicle, and her choice was to purchase one outright or to finance the purchase. Either way the effect would be a reduction in her assets. Thus I have included the motor vehicle in the list of assets and the loan in the liabilities.
120.2With the loans of $50,000.00 and $22,000.00, to repeat it is unclear to whom these loans were made, namely whether they were made to AA and/or BA or with the first loan whether it was made to their business, but there is no doubt that these loans are assets of the wife. The Public Trustee though sought to deal with these loans in a different way. The Public Trustee submitted that given the reduction of the wife’s capital subsequent to separation there should be a series of add-backs to take account of that, and then in effect include in the asset pool the amount of money that she then had available to make these loans and to meet her legal costs, thus obviating the need to include these amounts separately. The calculation is as follows:
120.2.1The wife started with a credit union account balance of $337,504.26.
120.2.2The wife spent $193,000.00 in acquiring the Tasmanian property and in improving the same, leaving a balance of $144,504.00.
120.2.3She now has $114,561.00 in her credit union account and thus a difference of $30,000.00 should be added back together with the net proceeds of sale of the Tasmanian property of $171,296.00.
It is put that this exercise is warranted because the estate should not have to “bear the brunt of the discretionary spending and decisions made by the wife”. However, I do not agree. As I elaborate on later in these reasons, the reduction in capital is perfectly understandable and I find that the wife’s expenditure since separation was necessary and reasonable. Thus, there is no basis for adding back any amounts apart from the paid legal fees. The relevant principle was set out in the unreported Full Court decision of M and M (1998) FamCA 42, 1 May 1998, per Baker, Kay and Chisholm JJ and cited with approval in paragraph 42 of the Full Court decision of Chorn and Hopkins (2005) FLC 93-204 as follows:
“There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the Case Law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial judge.”
120.3During the course of the trial the evidence changed from the loan of $50,000.00 being interest free to interest being payable, however, there was then no evidence of what interest rate was applicable and what if any interest had accrued. Thus there is no figure that I can include for this.
I note that the Public Trustee also submitted that interest should be added to the total principal of $72,000.00 as a matter of course given that if those loans had not been made that money would have accrued interest in the wife’s credit union account. Now this is a fair submission, but again, there was no evidence of what an appropriate interest rate might be and it is not open to me to simply pluck a figure from the air.
120.4With the husband’s motor vehicle, although it is included in the assets of the estate, apparently the party’s son, AD, has this motor vehicle. The wife said in evidence that as far as she is concerned AD can keep this motor vehicle. However, that is a matter for the estate and for now it must be included in the asset pool.
120.5The amount of $74,405.00 is an agreed figure put to me by both counsel, but I did not understand it to be a final figure. There will be further share dividends that the estate will receive, and there will be ongoing liabilities such as the Public Trustee’s commission and Australian Taxation Office assessments. However, I have no evidence of what these amounts will be and accordingly once again I am not in a position to include them in the figures.
120.6There is a Polaris quad bike which is in fact in the possession of the wife, but to repeat, I have left it out of the pool of assets given that there is agreement that it be sold and the proceeds of sale divided between the parties.
120.7The parties are in agreement that their paid legal fees should be added back to the pool of assets.
120.8The wife seeks to add back the value of the husband’s DFRDB pension that he was receiving prior to his death. The agreed value is $287,149.00, but the Public Trustee opposes this being added back, unless there is a splitting order made in relation to the pension. Of course, if it or some of it is added back then I would include it in a separate pool from the non-superannuation assets in accordance with the principles set out in the decision of the Full Court in C and C (2005) FLC 93-220.
The submission of the wife’s counsel is that one reason why the husband committed suicide was to deprive the wife of the benefit of his DFRDB pension. He says that can be inferred from the following:
120.8.1The husband was on notice of the wife’s claim including a claim to the pension.
120.8.2The husband had said to the party’s daughter that “the least (the wife) deserves is my pension when I die”.
120.8.3Subsequently though the husband formed the mistaken view that the wife had been misappropriating funds from their joint account.
120.8.4That mistaken view then led him to institute proceedings for divorce, despite stating previously that he would not divorce the wife, for the express purpose of excluding the wife from the benefit that she would have otherwise received from his TPI pension.
120.8.5The husband made enquiries as to “how he might exclude his wife from any entitlements in relation to either pension”.
On this basis if it said that, “the intentional act of the deceased directly reduced the property of the parties by the value of the pension, namely $287,149.00”. However, Mr Simpson went further and suggested that there is no need to find an intention to deprive the wife of the benefit of the pension, there just needs to be “an intentional act” which results in a reduction of the property. In either instance Mr Simpson says that the principles established in Kowaliw and Kowaliw (1981) FLC 91-092 apply and the value of the property should be notionally added back to the asset pool.
The Public Trustee does not take the same position as the wife in this regard and says that it is not open to find that the husband took his life to deprive the wife of the benefit of the pension. Pausing there, I agree with this. The evidence is that he was seriously and terminally ill, dependent on an oxygen tent, and he had a fear of dying from his disease. He make that perfectly clear in his letter to the Northern Territory Coroner which is annexure “D” to the wife’s affidavit filed on 24 August 2006. In that letter he is quite candid about his situation and what he thinks of his family and particularly his wife. Yet he says nothing about his pension or wanting to prevent the wife from benefiting from it. Further, it is in fact not the case as suggested by Mr Simpson that the husband had made enquiries as to “how he might exclude his wife from any entitlements in relation to either pension”. What the husband’s close friend Mr CM in fact said in his affidavit was that the husband ascertained what his wife would receive from his pensions should he die whilst they were only separated, and the fact that his wife would be entitled to part thereof after his death deeply disturbed him.
I do not consider that the evidence supports a finding that a reason for committing suicide was to deprive his wife of benefiting from his pension. I find that it was solely to do with his state of health.
Of course, there is still the submission that all that is required is “an intentional act which results in a reduction of the property for that property to be notionally added back”. However, I must say that I have a number of issues with that proposition. According to the guideline established in Kowaliw, financial losses should be shared by the parties except:“(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.”
Now, that is not what has happened here. The husband has not acted “recklessly, negligently or wantonly” with his pension and thereby reduced or minimised its value.
Mr Simpson also mounted an argument that the onus was on the husband to fully disclose the state of his health to allow the wife to take appropriate action, for example to seek expedition of the proceedings on the basis that the husband’s health was deteriorating. This is a novel argument and is not one which finds favour with me. In any event, I am satisfied that the wife was well aware of the deteriorating state of health of the husband and she had ample opportunity to take whatever action that she considered fit given that knowledge.
Finally, there is the circumstance that the guideline established in Kowaliw does not in fact require that the amount by which the value of the property is reduced be notionally added back. What Baker J said in that case was that if there was conduct of the kind identified on the part of one party then that would be relevant under Section 75(2)(o) of the Family Law Act. In other words, that conduct would be taken into account in determining what, if any adjustment should be made to the percentage division as a result of that circumstance.
There have been subsequent cases though where courts have said that if the circumstances outlined by Baker J in Kowaliw are found to exist then the amount of money involved can be notionally added back to the property pool. For example, this was said by the Full Court in Omacini and Omacini (2005) FLC 93-218. Thus it is certainly possible to notionally add back losses, but the court still retains a discretion as to whether to do so or not. In this case, even if it is open to me to add back the value of the pension, I do not consider it appropriate to do so. I am not prepared to find that the husband committed suicide in order to deprive the wife of the benefits of the pension. Nor can it be said that the husband acted “recklessly, negligently or wantonly with matrimonial assets”. Thus I do not propose to notionally add back the value of the husband’s pension to the asset pool.
In relation to the CGT payable in respect of the proceeds of sale of the property at T a letter from a chartered accountant was tendered by consent (Exhibit P1) which indicated that depending upon the wife’s income the estimated capital gains tax was between $34,689.00 and $38,631.00. Unfortunately no agreement was reached about this between the parties but in the end result Mr Simpson was able to demonstrate to me that the wife’s income was such that the estimated capital gains tax would be $36,660.00 being the halfway point between the two extremes.
In relation to the CGT payable on a sale of the shares, there was agreement about the figure, but whether it becomes a liability or not depends on whether the estate is to retain the shares or they are to be transferred to the wife. If the former is to occur then the capital gains tax will be payable, but maybe otherwise if the latter occurs. If the shares are transferred to the wife she will take subject to an embedded capital gains tax liability but may incur no tax liability because of her income and capacity to dispose of the shares in different financial years. Thus, I only propose to include this as a liability if the shares stay with the estate.
With the brokerage fee on the sale of the shares that of course will only remain as a liability if the shares are left with the estate. In that event the estate is obliged to sell the shares and thus this fee would be payable.
The husband’s DFRDB pension
The wife seeks a splitting order of 100% of the husband’s DFRDB pension with an operative date of 3 October 2005, namely the day before the husband committed suicide.
The Public Trustee does not oppose such an order being made but the Trustee of the DFRDB Scheme does.
The husband became a member of the scheme in January 1959 and thereafter until his retirement he contributed to that scheme. Upon his retirement he commenced to receive a fortnightly pension under the scheme, but that payment ceased on his death. At that time he ceased to be an eligible member and he no longer had an interest or entitlement in the scheme. Importantly no interest vested in the husband’s estate consequential upon his death.
There is provision in Section 39 of the Defence Force Retirement and Death Benefits Act for an eligible spouse to receive a pension after the death of the member. However, because the husband and the wife were divorced the wife was not an eligible spouse.
Thus, at the present time neither the estate of the husband nor the wife have any interest in the DFRDB Scheme.
This circumstance forms the basis of the opposition to the order by the Trustee of the scheme. In other words, there is no superannuation interest to which an order under Section 90MT of the Family Law Act can apply, and this cannot be altered by the specification of an operative time prior to the husband’s death.
The DFRDB Act was amended to provide for splitting orders made under the Family Law Act. Part VIA was introduced into the DFRDB Act, and relevantly Section 49B provides as follows:
“(1)This section applies to a superannuation interest (the original interest ) if:
(a)the Authority receives a splitting agreement or splitting order in respect of the original interest; and
(b)the original interest is not an entitlement to pension under section 42 or 43; and
(c)the member spouse and the non‑member spouse are both alive at the operative time; and
(d)if a base amount applies—the base amount at the operative time is not more than the family law value or the scheme value.
(2)If, at the operative time, standard pension is payable in respect of the original interest, then the non‑member spouse is entitled to associate pension from the operative time, at the rate calculated under the Orders by reference to the transfer amount.
Note: If standard pension is not payable at the operative time in respect of the original interest, then the non‑member spouse will be entitled to benefits under the Military Superannuation and Benefits Act 1991.”
The wife’s submission, adopting an opinion of Mr BE who valued the DFRDB pension, is that this court is able to make a splitting order because proceedings had commenced prior to the death of the husband, and further, the operative time of such an order can be before the death because there is no temporal limit on the specification of the operative time either in the Family Law Act or in the DRFDB Act. The latter simply adopts the definition of “operative time” in the Family Law Act, namely, “…the time specified in the order”.
However, in my view the submission of the Trustee of the Scheme is correct, i.e., the court is not able to make a splitting order here where there is no superannuation interest that can be the subject of that order. To repeat, upon his death the husband’s entitlement to a pension ceased and nothing became payable to his estate.
The fact that there is no temporal limit on the operative time of a splitting cannot overcome the fact that there is no superannuation interest which can be the subject of the splitting order in the first place.
Nor does the fact that the proceedings were commenced prior to the husband’s death overcome this difficulty. This certainly is necessary for Section 79(8) of the Family Law Act to apply, and there is no question that the court has the jurisdiction to make a splitting order that has a retrospective operative time, but this court only has the power to make a splitting order in respect of a superannuation interest that is in existence at the time that the order is made. That there must be property in existence at the time of a Section 79 order is made is clearly established by the Full Court decision of Law-Smith and Seinor (1989) FLC 92-050, per Nicholson CJ at p.77,565, and there should be no difference where a superannuation interest is involved. The splitting order is still an order under Section 79, albeit a payment splitting order and not an interest splitting order.
In support of her submission, the wife relied on the Full Court decision of Evans and Public Trustee of the State of Western Australia (1991) FLC 92-223, but in my view that does not assist her. It certainly does not support the bald assertion that the order sought can be made simply because proceedings have been instituted.
The issue in Evans was whether superannuation which vested on the husband’s death and was paid to his estate was property which could be the subject of an order under Section 79(8)(b) of the Family Law Act. The Full Court held that it was property to which Section 79(8)(b) applied. Thus it can be seen that at the time of the making of the order under Section 79 there was property which could be the subject of the order. To repeat, that is not the case here.
The Trustee of the DFRDB Scheme relied on the Full Court decision of Casey and Braione-Howard and DRFDB Authority (2005) FLC 93-219. That was a case stated to the Full Court by a Federal Magistrate. The husband in the proceedings was a contributing member to the DFRDB Scheme and following his divorce from the wife he had remarried. During the currency of the proceedings the husband died and his new wife (the widow) became entitled to a spouse’s pension. The former wife (the applicant) sought an order splitting the payments made to the widow.
The Full Court held that the husband’s interest in the fund was a “superannuation interest” immediately before his death, but that to enliven Section 79(8), the property constituting the payments must be the property of the estate of the deceased member. Upon the husband’s death, nothing became payable to his estate. The interest the husband’s new wife received was her personal property, and the Full Court found that Part VIIIB of the Family Law Act could not properly operate so as to impact on the rights of third parties.
The Full Court said this at paragraphs 43 and 44 of the joint judgment:
“43.In our view, the legislative intention evidenced by the DFRDB Act is clear. No part of the Act in our view provides for a former spouse to share in the superannuation interest of a member of the DFRDB Scheme other than during the lifetime of the member. The operation of Part VIIIB of the Family Law Act, and subsequent enactment of Part VIA of the DFRDB Act, enabled a former spouse to seek orders pursuant to the provisions of the Family Law Act with respect to such interests prior to the death of the fund member…
44.Crucial to the power under Section 79 is in our view that there be, in the circumstances of this case, “property” of the deceased member. It is clear that, upon his death… nothing became payable by the DFRDB Authority to the Estate of the deceased member… On his death, on the proper construction of the DFRDB Act, the deceased member ceased to have a superannuation interest in the scheme…”
Clearly this case can be distinguished on the facts, but that does not take away the force of the expression of principle by the Full Court, and which applies equally to the facts of this case. In short, there is no superannuation interest to which the order sought can apply, and thus it cannot be made.
This finding also obviates the need to address the question of the interpretation of paragraph 49B(1)(c) of the DFRDB Act which occupied so much of the time of counsel for the wife. It is an interesting question as to why that paragraph requires both parties to be alive at the operative time when the DFRDB Act adopts the definition of operative time that is used in the Family Law Act, but to repeat it would only become necessary to consider that if an order could be made in the first place, and that is not the case here.
That only leaves the submission of the counsel for the Public Trustee that it could not be the intention of the legislature to prevent the wife from sharing in the husband’s superannuation just because of the death of the husband. Ms Pyke highlighted the fact that on that interpretation, if the husband died between the hearing and the date of judgment no splitting order could be made. Ms Pyke described that as a gross injustice and as inconsistent with the remedial purpose of the superannuation amendments.
Counsel for the wife touched on this as well but in the context of whether the operative time of a splitting order could be back-dated to a time before the husband’s death.
Now, whatever I might think of these sentiments, the fact of the matter is that that is precisely the effect that the legislation has. The superannuation amendments did not change the fact that upon the death of the husband the pension ceases and nothing devolves to his estate. They simply provided for the recognition of a splitting order with an operative time in the payment phase (Section 49B of the DFRDB Act).
Contribution
I now turn my attention to the respective contributions of the parties pursuant to Section 79(4) of the Family Law Act.
Section 79(4)(a) and (b)
I have set out above the assets that each party brought into the marriage. They comprise their respective initial contributions under this heading, however as can be seen not only were the assets minimal but neither party can be said to have made a greater contribution than the other.
Following the commencement of cohabitation the husband made the following contributions:
147.1The husband was in full time employment until his retirement in October 1991. Initially he worked with the Victorian Railways, then in February 1959 he joined the Royal Australian Navy. He remained in the Navy until he retired in 1984 at age 49 years. He immediately obtained employment as a marketing manager with P Company and continued in that employment until he retired in October 1991. Thereafter, and until the separation on 4 April 2004 the husband received a DFRDB pension and a TPI pension as a result of suffering from post-traumatic stress disorder following his service in Vietnam.
There is no issue that the income earnt from the husband’s employment together with the pension income was used for the benefit of the family. Of course, the court recognises that the income was not all used to acquire, conserve or improve any particular property of the parties or either of them, but it is still appropriate to take it into account here.
147.2When the husband retired from the Navy in 1984 he received a lump sum of $75,000.00. The evidence is unclear as to what this was used for but it seems that at about that time the parties purchased a block of land at T in Queensland.
147.3Some of the husband’s family resided in Shanghai. Over the years a substantial collection of antiques, memorabilia and curios were either gifted to or inherited by the husband. These items then became part of the property of the husband and the wife.
147.4The husband and the wife received income from an investment property and from a portfolio of shares. This income was also used for the benefit of the family but of course it was a joint contribution by the husband and the wife.
The wife’s contributions during cohabitation under this heading were as follows:
148.1The wife was in employment at various times during cohabitation. In the early stages she was employed full time and then part time before giving birth to the children of the marriage. She resumed full time employment in 1971 and she remained generally in full time employment thereafter until she retired in November 1991 at age 55 years.
Again, there is no issue that the income earnt by the wife from her employment was used for the benefit of the family, and although not solely a contribution to the acquisition, conservation or improvement of any particular property of the parties or either of them, it is still appropriate to take it into account here.
148.2The wife made indirect contributions to the husband’s lump sum superannuation payout in 1984 and to his DFRDB pension. These entitlements accumulated as a result of his employment in the Navy. It was part of his employment package and it represented a form of saving by the parties (Bailey and Bailey (1978) FLC 90-424 at p.77,145; Hauff and Hauff (1986) FLC 91-747 at p. 75,441).
148.3The wife managed all of the household finances and savings. Although all the major financial decisions were made jointly, the wife paid the bills and managed the investments and savings on a daily basis.
148.4At each of the homes owned by the paries, it was the wife who attended to the establishment of the garden and prior to the husband’s retirement in October 1991, it was the wife who generally attended to the maintenance and upkeep of these properties. After retirement the husband was able to contribute more in these areas. For example, at T he always mowed the lawns and participated in the planning of the garden. He also helped in the construction of retaining walls and he built a trellis. Yet, it was still the wife who planted and maintained the garden.
There was no evidence presented of the amount of income earned or received by either party during cohabitation or the precise use to which that income was put, but I still find that overall the contributions of the husband pursuant to Section 79(4)(a) and (b) of the Act outweigh the contributions of the wife. I can imply from the evidence that the husband earnt and received more income than the wife, and apart from this there is the lump sum superannuation that he received in 1984, albeit indirectly contributed to by the wife.
Section 79(4)(c)
I have no difficulty in finding that the wife was the primary caregiver to the children during cohabitation. For a start, the husband was away from home for substantial periods of time with his employment, sometimes for as long as seven months, and at these times the sole responsibility for caring for the children fell on the wife. At all other times she was the primary caregiver with the husband assisting where he could, but even then he was often unavailable. He was regularly called out at night as part of his employment duties.
Similarly, as a result primarily of the husband’s absences, the wife had the sole responsibility for running the household and attending to all of the household duties. Even when the husband was home and following his retirement I find that it was the wife who primarily attended to all of the household tasks. The husband assisted where and when he could and he occasionally dried dishes and cooked meals, but in general this was also left to the wife.
It is also relevant under this heading to dwell on the nature of the husband’s employment and where that left the parties. To repeat, the husband was absent from the home for long periods including during the infancy of the children. The wife was left with the sole responsibility for the welfare of the children and as homemaker. For example, at times she made all of her own clothes and most of the children’s clothes. This responsibility was further magnified by the circumstance that the husband’s profession necessitated approximately 15 moves of residence. It was generally the wife who had the task of establishing the family in the next home and in the next city.
However, that said, the wife was well aware of what was entailed with the husband’s employment and she was supportive of him joining the Navy in the first place. There was also no doubt that the husband worked hard and for long hours in difficult circumstances including overseas and in war zones. He was away from his family for lengthy periods of time serving his country and earning income for use by the family. He studied hard and rose to an officer rank of by the time he retired, but that did not necessarily compensate him for having to reacquaint himself with his children each time he returned from overseas service. Thus, it is not all one way.
Although it does not fit directly into this category, I also take into account the fact that in 1971 the husband’s step-father lived with the family for about six months. He had suffered a stroke and could no longer live alone. He needed assistance with most tasks of daily living, and although a district nurse attended to him the wife assisted him with most things. It was after this that he gave to the husband a collection of antiques, memorabilia and curios from China and these were then used by the husband and the wife.
The family lived a modest lifestyle and the parties rarely went out. The children primarily played sport and generally it was the wife who would take them to and from their extra-curricular activities.
In 1994 or 1995 the husband was diagnosed by a psychiatrist as suffering from post-traumatic stress disorder arising from his service in Vietnam, and when the parties were living in T he was diagnosed with emphysema. By 1996 or 1997 the husband required a portable oxygen tank to assist him to breathe. This obviously placed a greater burden on the wife in not only running the household but also in attending to and looking after the needs of the husband.
For a period of time just prior to the separation the parties’ son AD and his partner and their new baby moved in with the husband and the wife. They made minimal financial contributions to the running of the household and the wife continued to do the bulk of the housework including cooking for everyone.
In the later years of cohabitation the wife went to Tasmania for a holiday for four weeks every 18 months or so. Prior to her leaving she would stock up her house with groceries, and she would cook meals and freeze them for the husband to use.
The wife attempted to maintain an argument based on the well-known principles from the Full Court decision in Kennon and Kennon (1997) FLC 92-757, that she should receive greater credit than otherwise for her contributions during cohabitation. The wife claims that the conduct of the husband arising from his post traumatic stress disorder and his behaviour towards the wife and the children generally made the wife’s tasks all the more onerous. It is said that she was in a constant state of apprehension when dealing with the husband.
The relevant principles from Kennon are no better set out than in the following quotation from the decision of the majority, Fogarty and Lindenmayer JJ at p.84,294:
“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 have been, that is a fact which a trial judge is entitled to take into account in assessing the parties’ respective contributions within s79. We prefer this approach to the concept of “negative contributions” which is sometimes referred to in this discussion.
In the above formulation, we have referred only to domestic violence, for the reasons which we indicated earlier, but its application is not limited to that.”
Now, there was evidence both from the wife and from the daughter, AA as to how the husband behaved towards the wife and how he disciplined the children, but there was virtually no evidence that satisfies me that that behaviour or conduct had a “significant adverse impact upon (the wife’s) contributions to the marriage” or “made (the wife’s) contributions significantly more arduous than they ought to have been”.
Clearly, because of his post-traumatic stress disorder the husband was a difficult man to live with, but that is not enough. The wife still went about her daily tasks in caring for the children and running the household and performed them well, and she will receive credit for what she actually did, but to repeat, there is no evidence that indicates those tasks were more onerous because of the husband’s behaviour or conduct. Indeed, I accept the submission of Ms Pyke that the most that can be said is that the wife was not happy with the way that the husband spoke to her on occasions or how he handled the children, but they stayed together until the presence of their son AD and his partner and their child brought about their separation.
As regards their daughter, it is noteworthy when considering how the husband behaved towards the children that she chose to return to the household for four years while studying for her tertiary qualifications. She says she did this to try and improve things, but I find that it was more for her convenience, something which she would not have done if the husband was the ogre that she tries to suggest.
Despite the wife receiving no specific credit under the principles of Kennon, there is no doubt that her contributions under this heading far outweigh the husband’s contributions.
Post-separation contributions
The wife of course moved to Tasmania where she purchased a property for $170,000.00 together with expenses including stamp duty of $6,000.00. She used some of the savings of $340,000.00 that she had in her Australian Central Credit Union account. She then spent $25,000.00 on improvements and $10,000.00 on furniture and household effects. She also applied for and obtained a part age pension of $170.00 per week. She transported her Nissan Pulsar motor vehicle to Tasmania and arranged for her son to send her furniture there as well.
The husband stayed in Darwin living in the house built on the property owned by AA and BA. He continued to receive his DFRDB pension of $408.00 per week and his TPI pension of $388.00 per week. He also agreed with the wife that she could retain the $340,000.00 in her account on the basis that she transfer to him the share portfolio valued at approximately the same amount. This transfer took place in July 2004 and thereafter the husband had the benefit of the dividends.
In addition, the husband retained the joint NAB cheque account.
Following the husband’s death in October 2005, the wife returned to Darwin to live in the house at H. She sold her house property in Tasmania for net $172,000.00 and she sold her motor vehicle for $8,000.00. She paid a deposit of $1,000.00 on a new Honda Civic motor vehicle, and the balance of the purchase price was borrowed by AA and BA but on the basis of the wife making the monthly repayments. The wife also spent $21,000.00 in renovating the home at H and lent AA or AA and BA, or their business $50,000.00 and AA or AA and BA $22,000.00.
Since the wife has returned to live in the house at H she has been responsible for maintaining it as was the husband between the date of separation and his death. That is difficult for the wife but she receives assistance from her grandchildren, from BA and from a workman and his assistant who attends when needed.
The Senior Counsel for the Public Trustee submits that the husband’s financial contributions post-separation far outweigh the wife’s and that there should be a 10% adjustment in his favour for that reason. She points to the substantial increase in the husband’s assets since the separation and particularly the increase in the value of the share portfolio compared to the reduction in the wife’s capital as a result of her expenditure since the separation.
However, this is a submission which I reject entirely, and I agree with what the wife’s Senior Counsel put to me in this regard. The increase in the value of the share portfolio and in the cash held by the estate were not caused by any actions of the husband. The increase was solely as a result of market forces, and the fact that the husband continued to receive income from the two pensions. Moreover, the wife’s reduction in capital is perfectly understandable given the far less income that she had compared with the husband, the loss she made in buying and then selling the Tasmanian property, and the money she has spent in renovating the house at H. There was a substantial shortfall between her income and her reasonable expenditure over a period of approximately three years and she had no option but to meet this shortfall out of capital.
Thus, in relation to the contributions of the parties post-separation I consider that they should be assessed as equal, or put another way, there is no basis for finding that one party made greater contributions post-separation than the other.
Conclusion on contributions
The Public Trustee’s Senior Counsel submitted that the respective contributions of the parties should be assessed at 50%/50% during cohabitation, but with a 10% adjustment in favour of the husband for his greater financial contribution post-separation.
On the other hand, the wife’s Senior Counsel submitted that the assessment during cohabitation should be 60%/40% in favour of the wife, and there should be no adjustment for post-separation contributions.
I have found that neither party’s initial contributions are greater than the other, that the husband’s financial and non-financial contributions were greater than the wife’s, that the wife’s parent and homemaker contributions were greater than the husband’s, and that neither party’s post-separation contributions were greater than the other’s.
In my view, in weighing up all of the contributions of the parties, overall they should be assessed as being equal. The husband’s greater financial contributions do not justify a weighting in his favour, and as I have said before on a number of occasions there is a danger in comparing contributions that can be quantified in money terms such as the husband’s with contributions which cannot, such as the wife’s. There can be a tendency to discount the latter contributions by highlighting the former simply because they cannot be quantified. This has been recognised in leading cases such as Mallet and Mallet (1984) FLC 91-507 and Ferraro and Ferraro (1993) FLC 92-535, and the message is that even though they cannot be quantified in money terms, great weight should still be accorded to contributions such as those of parent and homemaker.
Section 75(2) of the Family Law Act
I now turn as Section 79(4)(e) of the Act dictates to the individual matters that need to be taken into account pursuant to Section 75(2). Clearly though, because the husband is deceased, it is only the wife’s circumstances that are relevant, and there are no competing factors to take into account. The sub-paragraphs that are relevant here are (a), (b), (f) and (g).
(a) the age and state of health of each of the parties;
The wife is now 71 years of age and she is already finding that she needs assistance in some aspects of her daily life. For example, she is not able to attend to the garden at the house property at H, and she is reliant on assistance from her daughter and her son-in-law and others. She has had to make improvements to the bathroom at the home to enable her to more easily use the facilities. As she gets older she will need increasing assistance, and the prospect of her having to leave the home and move to a retirement home for example also becomes a possibility. The evidence though is that she intends to remain in the home for the foreseeable future, and it may be that with the assistance of her family she will not need to move.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
To repeat, the wife is presently 71 years of age and she has no realistic capacity for gainful employment. Her income comprises a part age pension of $400.00 per fortnight, and interest on her savings. There is also interest accumulating on the proceeds of sale of the T property, and although she isn’t receiving that interest at the moment she will be required to declare it, or at least some of it as income.
The wife also seeks an order transferring the share portfolio to her. If successful that will provide a further source of income for her.
Importantly the wife is not receiving interest on the loans that she has made to AA and AB and/or their business. However, she cannot have it both ways. She cannot claim that she is unable to meet her expenses without dipping into her capital and allow these loans to continue interest free. Thus, it is appropriate to proceed on the basis that the wife should be receiving interest on those loans and that will increase her income.
In relation to the property of the wife, she currently has assets to the value of $664,776.00, and her known liabilities are the loan due to Honda Finance of $25,766.00 and the estimated capital gains tax of $36,600.00 payable on the proceeds of sale of the T property.
The wife is of course entitled to more of the property of the parties as a result of my finding on contribution, and thus I need to take this into account here.
There are no financial resources to be taken into account.
(f) …the eligibility of either party for a pension, allowance or benefit under:
any law of the Commonwealth, of a State or Territory or of another country;
The wife of course is eligible for and is in fact receiving a part old age pension, however, whether that will continue will of course depend on her other income and her assets into the future. There was no specific evidence directed to this topic and there were no submissions made, and thus I cannot make any findings about it. All I can do is note the wife’s current circumstances in this regard.
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
The wife’s counsel correctly submitted that it is not just a matter of looking to meet the wife’s minimum needs, but rather considering what is a reasonable standard of living taking into account all the circumstances. However, as the wife’s counsel also submitted, it is not a matter of looking to replicate the previous standard of living of the parties. That said, with the wife having the house at H available to her for her lifetime, with the other assets that she will have, and the income able to be generated therefrom, I consider that she will have a reasonable standard of living.
Conclusion on Section 75(2) factors
The wife’s counsel submitted that on the basis of a finding of 60%/40% in favour of the wife on contributions there should be an adjustment of 5%-7.5% to her. The primary basis for this adjustment is the need to ensure a reasonable standard of living. Thus, it was then put that if the finding on contributions was less in favour of the wife the adjustment for Section 75(2) factors should be higher.
The counsel for the Public Trustee submitted that based on the Public Trustee’s case of contributions being assessed at 60%/40% in the estate’s favour, the adjustment for Section 75(2) factors should be 15% in the wife’s favour. The primary basis for this adjustment is that although it is said that the wife’s needs will be able to be met out of her 40% entitlement on contributions, it is recognised that she will have future needs, that the estate has none, and thus “it would be appropriate to make some concession”.
I have found that contributions should be assessed as being equal. On that basis both parties would seek a different adjustment for Section 75(2) factors. In my view though there should be an adjustment of 15% in the wife’s favour. The bases for that are her age and the impact of that on her financial position, her lifestyle and her future generally, her level of income, her property, and the need to ensure that she continues to enjoy a reasonable standard of living.
Conclusion
The assets of the parties should be divided 65%/35% in the wife’s favour.
Just and equitable
Pursuant to Section 79(2) of the Act, the court cannot make an order unless the court is satisfied that in all the circumstances it is “just and equitable” to make the order. To assess that I need to stand back and consider the practical effect of my proposed orders (Waters and Jurek (1995) FLC 92-635; Jel and DDF (2001) FLC 93-075; Phillips and Phillips (2002) FLC 93-184).
The gross asset pool comprises a monetary equivalent of $1,313,650.00. However, the question is what liabilities should be taken into account, and that depends on what happens to the share portfolio and the proceeds of the sale of the T property. The plain fact of the matter though is that the wife cannot have both of these items of property because that will then exceed her entitlement. Thus, I can only proceed on the basis that each party will retain the assets that they currently have, and the liabilities will have to follow suit. Thus, the estate has the share portfolio and, upon sale, there will be a capital gains tax liability of $75,403.00 and a brokerage fee of $4,875.00. The wife in effect has the proceeds of sale of the T property and thus there is a capital gains tax liability of $36,660.00 to be taken into account. On that basis the net asset pool comprises a monetary equivalent of $1,170,946.00. Using this figure, the effect of my findings is that the wife is entitled to net assets of $761,115.00 and the estate is entitled to net assets of $409,831.00.
The wife currently has the benefit of net assets totalling $651,939.00 calculated as follows:
Assets
The proceeds of sale of the property at T $233,614.00
The house property at H $215,000.00
The wife’s ACCU account $114,561.00
The wife’s bank account $1,101.00
The wife’s Honda Civic motor vehicle $18,500.00
The wife’s jewellery $5,000.00
The wife’s loans to her daughter/son-in-law/business $72,000.00
The wife’s furniture and household effects $5,000.00
The wife’s paid legal fees $49,589.00
Total $714,365.00
Liabilities
Honda Finance – loan in respect of the purchase of the
wife’s motor vehicle $25,766.00
Estimated CGT on the proceeds of sale of the property
At T $36,660.00
$62,426.00
Net $651,939.00The estate currently has the benefit of net assets totalling $599,285.00 calculated as follows:
Assets
The husband’s personal effects $2,712.00
The husband’s Honda motor vehicle $3,500.00
The husband’s share portfolio $487,495.00
The balance of dividends, cash and sundry payments
received by the Public Trustee less liabilities paid $74,405.00
The husband’s paid legal fees $31,173.00
Total $599,285.00
Liabilities
CGT on sale of the share portfolio $75,403.00
Brokerage fee on the sale of the share portfolio $4,875.00
$80,278.00
Net $519,007.00Thus, if the parties each retain these assets and liabilities the estate would have to pay to the wife the sum of $109,176.00.
On this basis the wife will have the house property at H, substantial savings comprising her ACCU account, her bank account, the amount of $109,176.00 from the estate, and the proceeds of sale of the property at T subject to the payment of capital gains tax, she will have her Honda Civic motor vehicle subject to payment of the loan in relation to the same, she will have her jewellery and furniture and household effects. In addition, there is the loan of $72,000.00 as well as her share of the proceeds of sale of the Polaris quad motor bike. In relation to the latter, it would seem appropriate to divide the proceeds of sale in accordance with the same overall percentage division that I have fixed upon, namely 65%/35% in favour of the wife.
With the cash amount that she will have, the wife will be able to invest the majority of the same and earn further income.
Having considered the result and revisited the history of the relationship between the parties, their respective contributions and the relevant Section 75(2) factors, I am satisfied that my proposed orders are just and equitable.
I certify that the preceding
198 numbered paragraphs are
a true copy of the reasons herein of the
Honourable Justice Strickland.
The 16th day of October 2007.
……………………………………….
Associate
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