Duffin and Duffin
[2012] FamCA 1043
FAMILY COURT OF AUSTRALIA
| DUFFIN & DUFFIN | [2012] FamCA 1043 |
| FAMILY LAW – PROPERTY – Settlement in relation to marriage FAMILY LAW – PROPERTY – Superannuation |
| Family Law Act 1975 (Cth) |
| Alexsovski (1996) FLC ¶92-705 |
| APPLICANT: | Ms Duffin |
| RESPONDENT: | Mr Duffin |
| FILE NUMBER: | SYC | 6943 | of | 2009 |
| DATE DELIVERED: | 6 December 2012 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Fowler J |
| HEARING DATE: | 8, 9 and 10 October 2012 and written submissions |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Lethbridge SC and with him Mr Maurice |
| SOLICITOR FOR THE APPLICANT: | DC Chambers & Associates, Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Schonell SC |
| SOLICITOR FOR THE RESPONDENT: | Greg Alfonzetti, Lawyer |
Orders
Within 42 days of the date of these Orders the husband shall sign all documents and do all acts and things necessary to transfer to the wife all his right, title and interest in the property known as B Street, Suburb C in the State of New South Wales, (“Suburb C”) and simultaneously with that transfer the wife shall pay to the husband the sum of $417,141.
In the event that the said sum is not paid as aforesaid upon such transfer then the wife and the husband will do all such acts and things as may be necessary to procure the sale of Suburb C for the best price reasonably obtainable therefore and shall apply the proceeds of sale of the said property in the manner following:
(a)in payment of agents commission and selling expenses, the legal costs and disbursements of and incidental to sale
(b) in repayment of any amount charged on the said property
(c)in repayment of any amount reasonably expended by a party from the date hereof for the purpose of preparing the said property for sale
(d)in payment to the husband the amount due to him under Order 1 hereof and
(e) in payment of the balance to the wife.
Liberty is granted to either party to apply for implementing orders in the event of difficulty in relation to the sale.
The husband be entitled to and be paid the funds held in the controlled monies account controlled by DC Chambers & Associates, Solicitors which holds the balance of the proceeds from the sale of the parties’ former property at
D Street, Suburb E in the State of New South Wales, and both parties do all such acts and things as may be necessary to cause such payment to be made.
In respect of the husband’s superannuation entitlement under the F Superannuation Scheme:
(a)the husband’s entitlement is valued at $1,046,350 in accordance with the Family Law Superannuation Regulations 2001
(b)of that amount, the wife shall be entitled to a payment of $414,087.40 whenever a splittable payment becomes payable in the husband’s entitlement, pursuant to section 90MT(1)(a) of the Family Law Act 1975 (Cth) (“the Act”) and the husband’s entitlement shall be accordingly reduced.
The trustees having been afforded procedural fairness shall do all such acts and things necessary to give effect to this Order.
Orders 5 and 6 have effect from the operative time and the operative time for these Orders is ten business days from the date of service of these Orders on the Trustee of the F Superannuation Scheme.
Other than as herein provided the husband and the wife each be declared as against the other the owner at law and in equity of all property including but not limited to money, household items and personal effects in their respective possession and control.
Other than as herein provided the husband and the wife each are declared as against the other the owner of such superannuation entitlements and pension benefits to which each of them is or might become entitled in his or her own right.
Other than as herein provided the husband and the wife each remain liable for any debts in his or her sole name at the date of these Orders and in this respect shall indemnify and hold harmless the other from any liability in relation thereto.
In the event that the husband or the wife refuses, fails or neglects to comply with any of the Orders herein requiring a party to execute a deed or instrument, a Registrar of this Court at its Sydney Registry is appointed pursuant to section 106A of the Act to execute in the name of the husband or wife as the case may be, any deed or instrument necessary to give effect to the Orders herein, or any of them, and to do all acts and things necessary to give validity and operation to the said deed or instrument.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Duffin & Duffin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC6943/09
| Ms Duffin |
Applicant
And
| Mr Duffin |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings before the Court are in relation to property settlement between the husband and the wife in a marriage of approximately 24 years.
The wife was born in 1961 and is 51 years old. The husband was born in 1962 and is 50 years old. There is one child of the marriage, who at the time of separation was 22 years old and self-supporting.
The parties married in 1985 and separated in April 2009. They were divorced on 8 October 2010.
These proceedings were commenced by the wife in November 2009.
Interim orders were made by consent in March 2010 with the effect that the parties were restrained from selling, charging or encumbering their interests in the former matrimonial home at B Street, Suburb C (the “Suburb C property”) and ordered to sell their property at D Street, Suburb E (the “Suburb E property”).
The Suburb E property subsequently sold in October 2010. The net proceeds of sale after discharge of the mortgage and payment of sale costs were around $327,000. Each of the parties received $50,000 from the sale proceeds by way of partial property settlement. In August 2011, the parties agreed that they should each receive a further $90,000 from these funds by way of partial property settlement.
A significant issue in these proceedings is how the Court is to treat and value the husband’s interest in the F Superannuation Scheme. Since 2000, the husband has received a pension arising from his early retirement from his employment as a consequence of injuries that he sustained while at work in 1982.
Another issue arose as to the extent of the husband’s gambling activities and the wife’s claim that some $350,000 in unaccounted for funds should be treated as a notional asset to her benefit.
The Orders sought
The wife filed an Amended Initiating Application on 29 February 2012 and seeks final orders to the following effect:
In respect of the [Suburb C] property
1.1 That within 14 days of the date hereof the husband shall do all that is necessary to transfer to the wife all his title and interest in the property known as [B Street, Suburb C] NSW, including by:
(a) signing a transfer form to be provided to the wife’s solicitors in the proper form required by the Registrar of the NSW Department of Land and Property Information; and
(b) providing to the wife’s solicitors a withdrawal of caveat, if any, duly executed.
In the alternative:
1.2 That the wife within 56 days of the date hereof pay to the husband the sum of $100,000 and simultaneously the husband shall do all that is necessary to transfer to the wife all his title and interest in the property known as [B Street, Suburb C] NSW, including by:
(a) signing a transfer form to be provided to the wife’s solicitors in the proper form required by the Registrar of the NSW Department of Land and Property Information; and
(b) providing to the wife’s solicitors a withdrawal of caveat, if any, duly executed.
In respect of the husband’s superannuation
2.1 That a base amount of $509,000 be allocated as required by
s 90MT(4) of the Family Law Act 1975 (Cth) (the “FLA”) to the wife out of the husband’s interest in the [F] Superannuation Scheme.2.2 That in accordance with paragraph 90MT(1) of the FLA:
(a) the wife is entitled to be paid the amount calculation in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (the “Regulations”); and
(b) the husband’s entitlement to payments out of his interest in the F Superannuation Scheme and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of this order.
2.3 That the trustee of the F Superannuation Scheme (the “Trustee”) shall do all acts and things and sign all such documents as may be necessary to:
(a) calculate, in accordance with the requirements of the FLA and the Regulations, the entitlement created for the wife by clause 2.1 of this Order; and
(b) pay the entitlement whenever the Trustee makes a splittable payment out of the husband’s interest in the [F] Superannuation Scheme.
2.4 That these Orders have effect from the operative time and the operative time for this Order is 10 working days after the service of this Order on the Trustee.
2.5 That this Order binds the Trustee of the [F] Superannuation Scheme.
Other orders
3. That subject to Order 2 and pursuant to s 79 of the FLA, the husband is entitled to be the sole legal and beneficial owner of all other property including superannuation currently in his possession and/or control free from any interest of the wife other than the interest stipulated in Order 2, and that the husband shall indemnify the wife in relation to any and all debts attaching thereto.
4. That pursuant to s 79 of the FLA the wife is entitled to be the sole legal and beneficial owner of all other property including superannuation currently in her possession and/or control free from any interest of the husband, and that the wife shall indemnify the husband in relation to any and all debts attaching thereto.
…
8. That the husband pay the wife’s costs of and incidental to these proceedings.
The husband filed a Response to Initiating Application on 30 November 2009 and seeks final orders to the following effect:
1.That the wife and the husband do all things necessary to sell the [Suburb C] property on the following terms and conditions:
(a) unless the parties otherwise agree in writing within 14 days from the day of these Orders the solicitor acting on the conveyance of the property (the “conveyancing solicitor”) shall be appointed by either party applying to the President of the Law Society of NSW to nominate such conveyancing solicitor.
(b) unless the parties otherwise agree in writing 14 days from the day of these Orders the selling real estate agent (the “selling agent”) shall be appointed by either party applying to the President of the Australian Property Institute (NSW Division) to nominate the selling agent.
2.That not later than 10 days after the conveyancing solicitor and selling agent are agreed upon or appointed as provided by Order 1 the [Suburb C] property shall be listed for sale by public auction on the following terms and conditions:
(a) the auction shall take place on or before 30 days after the [Suburb C] property is listed for sale;
(b) the auctioneer shall be as agreed by the parties or failing such agreement shall be appointed by the selling agent;
(c) unless the parties agree the reserve price for the purpose of the auction be as recommended by the auctioneer;
(d) the parties shall attend the auction and negotiate with the highest bidder in the event that the reserve price is not reached and take the advice of the auctioneer as to the acceptance of the price being less than the reserve price, either during or after the auction (if required);
(e) the parties shall execute all other documents necessary and do all other things required to complete the sale of the property, including but not limited to the applicant vacating the property and the respondent providing a withdrawal of caveat in a registrable form.
3.The parties shall cooperate in every required way with the selling agent in relation to the sale of the [Suburb C] property including providing a key to the selling agent, cooperating with the selling agent’s directions concerning open house inspections and generally in the promotion of the sale.
4.That in the event that contracts are not exchanged within 7 days from the auction, the parties shall cause the [Suburb C] property to be resubmitted for sale by public auction to take place not less than 42 days after the previous auction on the same terms and conditions and in the same manner as set out above, save and except that the reserve price shall be 5 per cent less than the one set at the previous auction and the parties shall accept any offer within 5 per cent of the reserve price and in any event that the property shall be sold to the highest bidder.
5.The proceeds of sale of the [Suburb C] property shall be applied and paid in the following manner and priority:
(a) in payment of the selling agent’s commission, advertising expenses and auctioneer fees and expenses;
(b) in payment of the legal costs and disbursements of the conveyancing solicitor;
(c) in payment of the usual water charges and council rate adjustments concerning the property;
(d) in payment to Westpac Banking Corporation the amount of $450,000 being to discharge the mortgage secured over the [Suburb E] property;
(e) in payment to the husband an amount equal to 50 per cent of the combined value of the net proceeds of sale from the sale of the [Suburb C] property and the market value of the [Suburb E] property; and
(f) in payment to the wife the balance of the proceeds of sale of the [Suburb C] property after all payments and reductions referred to above have been made.
6. That pending the sale of the [Suburb C] property, the wife shall:
(a) keep the property neat, clean and tidy and to maintain it in good order and condition;
(b) pay all council rates, water charges and outgoings concerning the property; and
(c) pay building insurance.
...
10.That the wife pay the husband’s legal costs of and incidental to these proceedings.
The Court notes that the [Suburb E] property was sold in 2010 pursuant to the Court’s Orders so orders 5(d) and 5(e) sought by the husband are longer appropriate.
Background Facts
Where in this judgment I make statements of fact they are, unless otherwise specified, my findings of fact.
The wife was born in 1961 and is 51 years old. The husband was born in 1962 and is 50 years old.
The husband commenced employment in 1982 at the age of 19. In that same year, he was seriously injured in his legs and feet which required surgery and convalescence. The husband asserts that, since this incident, he has suffered from depression, anxiety and other psychiatric and physical conditions, which ultimately led to his medical retirement from the workforce in 2000.
From age 14, the wife worked at her mother’s business in the Sydney CBD. The wife asserts that she worked in this capacity six to seven days a week for a period of around ten years and that she was not paid for this work. In lieu of wages, the wife asserts that her mother provided for her housing, clothing, food and other needs.
In 1982, the wife’s mother purchased a property at G Street, Suburb H (the “Suburb H property”) and registered herself and the wife as joint owners. The wife asserts that the mother did this in lieu of paying the wife wages.
The parties married in 1985. For the first few months of the marriage, the parties lived rent-free at the Suburb C property which at that time was owned by the wife’s mother.
While the parties lived at the Suburb C property, renovations were carried out at the Suburb H property. The husband asserts that he carried out these renovations on his own outside of his work commitments. The wife asserts that, while the husband did the more technical and arduous work associated with the Suburb H renovations, she helped out each day when she returned from work. In addition, the wife asserts that the parties received help from the husband’s parents and from the wife’s uncle.
In July 1985, the wife’s mother sold her business in the Sydney CBD. Following this, the wife worked at another business in the Sydney CBD and then at her own business at Suburb I.
In August 1985, the wife’s mother transferred her joint interest in the Suburb H property to the wife by way of gift. The wife submits that this was close enough to the date of marriage to be assessed as an initial contribution. By this time, the Suburb H property had been renovated to a point where the wife and husband were able to move in.
In 1986, the wife became pregnant with the parties’ child, J, and stopped working.
In 1987, J was born. The wife asserts that she did the majority of the child-raising and domestic work while the parties lived at Suburb H. She asserts that she was frequently at home alone with the child as the husband often worked at night or otherwise returned home late.
In 1988, the wife’s mother moved into the Suburb H property with the husband and wife and began renting out the Suburb C property. The wife’s mother gave the wife and the husband the rental income from the Suburb C property. This income was used by the parties for household and family expenses.
In 1990, the wife’s mother returned to live in Europe permanently but the above rental arrangement remained in place. The wife asserts that in 1988 the rental income from the Suburb C property was around $400 per fortnight and that from 1992 it was around $1,040 per month.
The parties continued to live at the Suburb H property while receiving the rental income from the Suburb C property.
In October 1995, the wife’s mother transferred the whole of her interest in the Suburb C property to the husband and wife for no or nominal consideration.
The husband submits that the transfer of the Suburb C property was in essence in exchange for two properties in Europe previously owned by the wife which were bought for the wife by her mother prior to the marriage. Counsel for the wife submits that the transfer form discloses a consideration of $220,000 but that the Court should infer that this consideration was provided for stamp duty purposes only and that it was based on an independent and contemporaneous valuation of the property. The husband accepts that the consideration of $220,000 expressed in the transfer form was not paid but that this sum represents the value of the contribution at that time.
Whilst the transfer of the Suburb C property was to the husband and the wife in their joint names, it is clear that the contribution was at this point made by reason of the wife’s relationship to the donor.
In 1998, the parties decided that they would sell the Suburb H property and redevelop the Suburb C property to make it their home.
In 1999, the husband stopped working. The husband asserts that he was placed on sick leave for 10-12 months before retiring permanently in 2000. From the time of his retirement the husband began receiving a fortnightly pension through the F Superannuation Scheme, which he continues to receive to date.
In around early 2000, the Suburb H property was sold for $710,000 and the parties moved into the Suburb C property.
In July 2000, the parties purchased the Suburb E property in the wife’s sole name. The husband asserts that the property was purchased as an investment with the intention that it would be rented and then redeveloped to be sold at a profit.
In June 2001, the parties purchased a property at K Street, Suburb L (the “Suburb L property”). The husband asserts that he undertook renovations at this property for a period of around four months, after which time it was rented out. The property was then sold in September 2002 with the net proceeds of sale totalling $255,000.
Between May 2007 and October 2009, the Suburb E property underwent a substantial redevelopment.
The parties separated in April 2009 and a divorce order was made on 8 October 2010.
Credit
The wife impressed the Court as a witness of truth. Her answers to questions in cross-examination were reasonably responsive and direct.
The husband gave limited and short answers to questions. Further questions on occasions elicited further information which changed the impact of the original answer. In relation to his gambling, whilst conceding he did gamble, his answers were vague and did not give the impression other than they were the best answer he could give to suit his case allowing that he had difficulties in accounting for the extent of his gambling habits. The Court did not consider much of his evidence in this regard as reliable. It is noted that the husband made many cash withdrawals and said that he had done so so that the wife would not know what he was spending money on.
The Issues
What is the property of the parties or either of them? Included in this consideration is whether the Court should notionally divide property which does not exist and which the wife particularly says should be added to the pool of assets and credited to the husband’s entitlement, and whether the Court can take into account those factors which the wife says gives rise to her request aliunde with fairness to the parties. Also included in this consideration is whether the property of the parties in this case should be identified in two pools, more particularly one relating to superannuation only and the other containing the balance of the assets.
Is it just and equitable to make an order which alters the interests of the parties to the property identified through the above enquiry?
If it is just and equitable to alter the parties’ property interests, what are the respective contributions made by or on behalf of the parties to the acquisition, conservation and improvement of the property of the parties or either of them, including property no longer their property, both financially and otherwise and both directly and indirectly, and what are their respective contributions to the welfare of the family?
What effect (if any) on a decision for distribution made on contributions do those factors required to be taken into account under s 75(2) have?
What overall is a just and equitable distribution of property between the parties?
Property matters
The first step I must undertake is to identify the property of the parties or either of them available for division between them.
The Balance Sheet
The following joint balance sheet was tendered at trial.
| Ownership | Description | Wife’s value | Husband’s value | ||
| Assets | |||||
| 1 | Joint | B Street, Suburb C NSW | 1,300,000 | 1,300,000 | |
| 2 | W | Motor vehicle 1 | 2,000 | 2,000 | |
| 3 | W | Savings – M Bank – 2 accounts (included in #6) | |||
| 4 | Joint | Controlled monies account controlled by DC Chambers – balance of proceeds from sale of Suburb E property + interest | 19,105 | 19,105 | |
| Total | 1,321,105 | 1,321,105 | |||
| Addbacks | |||||
| 5 | H | Total of interim distribution to husband from interim Orders dated 5 March 2010 and 6 October 2011 (includes paid legal fees) | 140,000 | 140,000 | |
| 6 | W | Total of interim distribution to wife from interim Orders dated 5 March 2010 and 6 October 2011 (includes paid legal fees) | 140,000 | 140,000 | |
| 7 | H | Funds not accounted for by husband | 350,000 | NIL | |
| Total | 630,000 | 280,000 | |||
| Liabilities | |||||
| 8 | H | Westpac Mastercard | NA | 12,000 | |
| 9 | H | F Credit Union Visa | NA | 10,000 | |
| 10 | H | CBA credit card | NA | 2,400 | |
| 11 | H | Citibank credit card | NA | 8,500 | |
| Total | NIL | (32,900) | |||
| Superannuation | |||||
| Member | Name of Fund | Type of interest | Wife’s value | Husband’s value | |
| 12 | W | First State Super | Defined Benefit | 7,421 | 7,421 |
| Total | 7,421 | 7,421 | |||
| Financial Resources | |||||
| Ownership | Description | Wife’s value | Husband’s value | ||
| 13 | H | Value of life pension from F Superannuation Scheme from age 60 if taken as a lump sum | See #14 | 499,606 | |
| 14 | H | Value of husband’s Superannuation entitlement in accordance with the Family Law (Superannuation) Regulations | 1,046,350 | See #13 | |
| Total | 1,046,350 | 499,606 | |||
| Net Pool | 3,004,876 | 2,075,232 | |||
The following issues arose on the balance sheet.
Whether funds utilised by the husband since January 2003 and said not to have been accounted for by the husband but utilised for his benefit should be added back into the balance sheet and, if not, whether they should be otherwise taken into account. These funds are represented at item 7.
The Court is faced with a contention that the sum at item 7 sought to be added back by the wife is property that would otherwise be available for distribution between the parties but which has been dissipated, with a consequential loss to the property otherwise available for division. It is submitted that the Court should have regard to the expenditure of that money as not falling within the ambit of the description of reasonable living expenses. The wife asserts that the loss to divisible property occasioned by the expenditure of money otherwise than on reasonable living expenses should be divided unequally as between herself and the husband and, in particular, that the husband should bear the totality of the loss.
Finally, it is submitted by the wife that the monies should be added back and taken into account on a dollar-for-dollar basis rather than be the reason for an adjustment under section 75(2)(o). If it is to be the latter, it is proposed by the wife that the amount to be taken into account is the full value of the sum.
This Court has not taken the view that the Family Law Act requires it to divide property which does not exist. There is no concept of notional property in the Act. There is a requirement to divide property justly and equitably between the parties in accordance with the Court’s view of that concept, it having taken into account those matters which are relevant and required by the Act to be taken into account.
It is accepted that there is a fashionable tide of practice which uses the concept of adding back notional assets to a pool of assets. The most one can say for that practice is that it develops a mathematical model to assist in determining a division of property between parties which may have some relevance to what is thought by some to be just and equitable.
However, the nature of decision making under this Act is not one which requires such an approach and there is no authority in the Act requiring its adoption.
There are many ways in which allowances can be made which are in direct conformity with the requirements of the Act as to the matters the Court must or can take into account.
That includes a consideration of those matters under s 75(2)(o), or perhaps as a matter going to the relative contributions of parties.
Whilst this Court might be standing as a King Canute against an advancing tide of fashionable practice, it intends to continue to adopt the view that it will not engage in the exercise proposed by the wife, save in respect to partial property settlements ordered by a Court, and which on hearing maintain that character.
That is not to say that the matters to which the wife refers will not be taken into account properly in making a determination of what is just and equitable between these parties, and that will be done under a consideration of those matters required to be taken into account under s 75(2).
It is also in issue whether items 8 to 11 on the balance sheet should be regarded as debts referable to both parties or to the husband only, given that the wife did not have access to the credit card accounts since the parties separated. In relation to those amounts, the husband was questioned on these during cross-examination and asserted that the amounts at items 8 to 10 are roughly equivalent to the amounts owing on those cards at the date of separation. He asserted that the only new debt that he had incurred since separation was the Citibank card debit balance.
With respect to item 8 (the Westpac MasterCard), Counsel for the husband directed the Court to a Westpac Earth MasterCard bank statement in Exhibit 15 which shows that the debit balance of this account was $11,490.10 as at
14 April 2009. Similarly, in relation to item 9 (the F Credit Union Visa account), Counsel for the husband directed the Court to a bank statement in Exhibit 15, which shows that this account had a debit balance of $10,667.90 on 1 April 2009. The wife then conceded that it is open to the Court to accept as joint debts items 8 and 9 in the balance sheet.
As to the debts at items 10 and 11, the wife asserts that these should not be accepted by the Court to be joint debts. Counsel for the wife submitted that the husband’s Financial Statement filed on 30 November 2009 makes no reference to these debts and that they therefore should not be included in the balance sheet.
With respect to item 10, Counsel for the husband directed the Court to Exhibit 14, that being a CBA credit card statement in the husband’s name which shows that the debt on the account at item 10 was $2,540.49 as at 22 April 2009.
As to item 11, the husband conceded that he acquired the Citibank credit card post separation. The Court accepts that this debt was incurred by the husband post separation and consequently it will be taken off the balance sheet. That is not to say that the fact that the husband owes this sum will not be a matter taken into account under the Court’s consideration under s 75(2).
Also in issue are items 13 and 14 and the value which should be attributed to the husband’s superannuation scheme for the purpose of these proceedings. In relation to this matter, the Court proposes to treat the entitlements under the scheme as a separate pool and to deal with superannuation differentially to the balance of the assets.
Mr N (“Mr N”), a chartered accountant specialising in forensic accounting, was called to provide independent expert evidence to the Court in relation to the husband’s superannuation entitlements. The expert evidence of Mr N before the Court is that the husband’s entitlements, if valued in accordance with the Regulations, have a value of $1,046,350.
Having regard to Part 4 of the F Superannuation Regulations 2010 (the “2010 Regulations”), Mr N also gave evidence that:
a)the 2010 Regulations now provide for an immediate split of superannuation entitlements rather than a payment split which was the basis for the differential order that was devised in Trott and Trott (2006) FLC ¶93-263
b)Regulation 21 empowers the Trustee to release a “Family Law Payment Split” following a nomination under Regulation 20 with the effect that an immediate lump sum payment may be made to the wife as a
non-member spouse
c)in this case, if an equal division were made of the husband’s superannuation entitlements, the Court could order a lump sum payment of about half the valuation to the wife and, in those circumstances, the husband would continue to receive a pension albeit reduced until he reaches his commutation points
d)the superannuation portion paid to the wife as a lump sum could at her option be preserved as her own superannuation or drawn out as cash subject to payment of taxation of up to 20 per cent plus the Medicare levy.
Mr N stated that for a division, the Trustee required that there be a statement of an amount of cash to be attributed to the wife and a statement of the valuation basis on which the order was made. Thus, if the Court accepted the valuation based on the 2010 Regulations it would be obliged to say that it was on the basis that the entitlement was valued at that sum that the consequential sum ordered to be paid was to be paid.
It seems that the Trustee does not accept Orders for splitting which are based on a percentage. The reduction in the husband’s entitlements as a result of any splitting order would be calculated by the Trustee as a percentage of his entitlements based on the calculation of the effective percentage entitlement of the wife. The Court intends to deal with the calculation of that entitlement when considering the division of the separate parcel of superannuation entitlements.
Having regard to the above, the Court finds that the assets and liabilities of the parties, excluding superannuation, are as follows:
| Assets | ($) |
| B Street, Suburb C (joint) | 1,300,000 |
| Motor vehicle 1 (w) | 2,000 |
| Controlled monies account controlled by DC Chambers – balance proceeds from sale of the Suburb E property plus interest (joint) | 19,105 |
| Add backs | 0 |
| Interim property settlement payment pursuant to Orders of 5 March 2010 and 6 October 2011 (h) | 140,000 |
| Interim property settlement payment pursuant to Orders of 5 March 2010 and 6 October 2011 (w) | 140,000 |
| Total assets exclusive of superannuation | $1,601,105 |
| Liabilities | |
| Westpac MasterCard (h) | 12,000 |
| F Credit Union Visa (h) | 10,000 |
| CBA credit card | 2,400 |
| Total Liabilities | $24,400 |
| Nett assets exclusive of superannuation | $1,576,705 |
In relation to superannuation, the Court finds the following.
The Court has determined to consider dividing the superannuation in proportions so that the wife will receive a sum which will be expressed as a cash amount based on the valuation attributed to the husband’s entitlements as assessed on the basis of the Regulations. It is understood that an amount will be determined by the Trustee in accordance with the calculation of the entitlement of the wife as a percentage of the entitlement of the husband, although the Trustee will not accept, it seems, a division based on such a percentage. The relevant entitlements of superannuation are:
| Superannuation | ($) |
| First State Superannuation (w) | 7,421 |
| Valuation in accordance with the Family Law (Superannuation) Regulations 2001 of husband’s superannuation entitlements under the F Superannuation Scheme (h) | 1,046,350 |
| Total | $1,053,771 |
Whether the parties’ property interests should be altered
The wife and the husband were married for approximately 24 years but are now separated. The mutuality that was attendant between the parties during their marriage no longer exists and the parties’ current title to their property does not reflect what will allow each of them to manage their affairs into the future.
There will be as a consequence of the breakdown of their marriage a discontinuance of such fiscal unity and cooperation as previously existed.
The parties have no agreement as to the division of their assets consequent on the failure of their marriage.
In the circumstances, I find that it is just and equitable to make an order adjusting the property interests of the parties, including their interests in superannuation. The Court now turns to the nature of the order which should be made.
Section 79(4) contributions
Initial Contributions
At the date of the marriage the wife had a joint interest in a Suburb H property which was owned jointly with her mother.
In August 1985, the wife’s mother transferred her interest in the Suburb H property to the wife by way of gift. Although this occurred shortly after the marriage it was but some four months afterwards. The parties occupied that property from then until its sale in February 2000 when it was sold for an amount of $710,000.
The property, although partly renovated, was not subject to charge or mortgage until such time as the parties determined to renovate the property at Suburb C hereinafter referred to.
The wife was the registered owner of two apartments in Europe which were acquired prior to the marriage from funds provided by the wife’s mother. It appears that these apartments were sold in about 1995, the wife’s mother receiving the sale proceeds. The wife did not refer to the apartments in her affidavit but was cross-examined on this issue and it seems that she always regarded the properties as those of her mother notwithstanding that she had title to them.
The husband deposes that he had savings of about $15,000 at the date of marriage. In addition, the husband had 1967 and 1974 model motor cars said by him to have a combined value of about $13,000. The husband also had miscellaneous tools, which he says had of a value of $1,000.
Neither party had any liabilities at the commencement of cohabitation.
The initial contributions of the wife were significantly greater than those of the husband and this is conceded by the husband in his evidence and submissions.
It appears not to be in issue that the value of the wife’s assets at the date of marriage dwarfed those of the husband.
Contributions to date of separation
During the marriage the wife’s mother executed a transfer of a home at
B Street, Suburb C to the husband and the wife in their joint names. Details of that transfer are set forth above.
During the marriage the husband began receiving a pension owing to his early medical retirement and from 2000 this pension became part of the parties’ household income. The husband also contributed a lump sum of $90,835.13 received by him arising from his employment entitlements in 2008.
It is suggested that these payments should be treated as a contribution solely by the husband and not income to which the wife had made any indirect contribution.
It is the view of the Court that the pension until the age of commutation is an amount designed to replace income which would normally have been earned but which by reason of the consequences of the injury are no longer available to him.
It is in effect significant part compensation for loss of income and, to the extent that it represents lost income, there is no reason why it should not be treated to that extent as earned income.
The case of Alexsovski (1996) FLC 92-705, to which the Court was referred by Counsel for the husband, contained observations by the Full Court on the treatment of compensation awards which in that case contained a very significant award for pain and suffering. In the Full Court’s view, where that compensation is a discernable part of an award it can be treated in the way suggested by Counsel for the husband. In this case, however, the Court’s attention has not been drawn to any such discernment being available.
In conformity with a consideration of indirect contribution, it is also the case that during the marriage the husband was sustained in his employment and able to work and to receive the entitlements that went with that occupation, including his entitlement to a pension in 2000, by the contribution made aliunde by the wife to the marriage.
The wife also worked during the cohabitation and her income was available to the family.
In addition, when the wife’s mother for a period lived with the parties and let the Suburb C property, that rent was paid to the parties. It continued to be paid on the wife’s mother taking up residence overseas.
The husband made contributions in the form of managing and being otherwise involved in the renovation of properties acquired by the parties. Although the Court accepts that the wife was involved in such matters, it seems that hers was a minor role by comparison. The wife made the major contributions as homemaker and parent although no doubt the husband also made a contribution in that manner.
It does seem, however, that the financial contributions to those renovations were more significantly sourced from the capital brought in by the wife and, more particularly, the realised capital gain on that capital.
The parties engaged in a number of exercises in the acquisition, redevelopment and sale of property, namely with respect to the Suburb L property and the Suburb E property. These undertakings were not particularly profitable; nevertheless, they were agreed projects which the husband undertook with the concurrence of the wife. The failure of judgment of the parties, the escalation of costs and changes in the market are some of the risks of such enterprises. The Court does not think, however, that one can ignore the effort and contribution made by the husband to such renovations though the result may have been unprofitable or disappointingly below expectations.
Contributions post separation
The parties separated in 2009 and after that date the wife made further contributions to the costs including some renovations and other costs of the properties. In particular, the wife spent $34,904 to complete the project at Suburb E and, when sold in 2010, the property realised a sale price of $838,500. The loan secured in relation to the property was by that time in the sum of $485,000. After discharge of this mortgage and payment of costs a net amount of $327,000 remained. Given the purchase price of the property was $276,000, the project was not particularly profitable on its realisation some ten years later.
Conclusion based on contribution
All in all I assess the contributions of the parties to the acquisition, conservation and improvement of the property of the parties to the marriage or either of them, including such property which is no longer the property of the parties to the marriage or either of them, to be in the ratio of 58:42 in favour of the wife to the date of the hearing.
Section 75(2) considerations
There are a number of matters required to be taken into account under this heading. The matter which drew particular attention and time at trial was the assertion that the husband should be taken to have received $350,000 for which he had not accounted, it being argued that he had applied this sum to his own use probably gambling. Although it was argued that this should be regarded as notional property in the hands of the husband, the Court declines to deal with it in that way but will now consider the matter under the provisions of s 75(2)(o).
There are clear concessions by the husband that he gambled on poker machines and that he gambled frequently. He did so at a number of venues. In her submissions the wife says:
a)the husband and the wife had as at 2003 savings derived from the surplus of proceeds of the sale of Suburb H of $255,000 and a CBA loan of $100,000 provided in relation to the property at Suburb E. The husband at this time was receiving his pension of about $56,000 and the wife was receiving the rent from Suburb E.
b)the project commenced in May 2007 after planning issues had been resolved.
c)in January 2007 the parties increased their CBA loan limit from $100,000 to $300,000. At that time the balance owing was $88,777 and their savings had been reduced to a sum of $108,000 of which reduction the wife says she was unaware.
d)by May 2007 the parties’ savings were reduced further to about $75,150 and the CBA loan had been drawn down to $130,000.
e)by March 2008 all their savings had been expended and the CBA limit increased from $300,000 to $400,000.
f)by December 2008 the parties increased their CBA loan from $400,000 to $450,000.
g)the husband received a sum of $90,835 from his pension the application of which has not been explained.
In these circumstances, the wife submits that the realistic cost of the Suburb E project was about $294,000. This sum is calculated on the evidence of what a competent builder would have charged based on the Quantity Surveyor’s findings, excluding commercial and GST expenses, and given the husband’s evidence that he did the majority of the work. The husband puts this in issue.
The basis of that calculation is submitted by the wife as follows:
| Husband adopts from Quantity Surveyors Report for materials and 35 per cent labour | 378,469 |
| Wife asserts cost excising commercial overheads & GST | |
| The figure is $293,286.46 calculated as follows | |
| NB: Preliminaries, defined by QS para 0.054 are commercial overheads, services not part of construction work itself See also para 0.055, management of work, (deduct $43,831 (p.1 of 19, October 2010 QS report) plus $868.00 (parg. 0.81 October 2010 QS report) plus $1,002.77 (page 1 of 3 November 2010 QS report) | (45,707.77) |
| Deduct GST added in reports in addition to Preliminaries | (4,570.77) |
| Amount spent by Wife to complete, from Ex 3 | (20,509) |
| and from Ex 4 (GST included) | (14,395) |
| Adjusted figure excising commercial components and monies spent by Wife to complete | 293,286.46 |
The unaccounted for amount is said by the wife to be $350,000 based on the fact that the St George Dragon saver account as at 13 January 2003 had a balance of $236,246.55 and it is not in issue that the parties arranged a line of credit loan with the CBA bank to a limit of $300,000 in January 2007 in anticipation of the construction commencing. This account had a drawn balance as at 29 January 2007 of $88,776.98 which was the existing loan for the purchase of the property. Although construction of the Suburb E property did not commence until 12 May 2007, the CBA loan by then had a debit balance of $129,585.15. It is asserted therefore that an amount of $40,808.17 had been drawn and not used for construction, as construction had not commenced.
In December 2008, the husband drew down a lump sum on his superannuation amount of $90,835.13. His F Credit Union Visa account had a debit balance at this time, which meant that the net credit balance after the deposit of the drawn down amount was $79,752.42.
The husband in evidence conceded that the wife had never used the Westpac Earth MasterCard which had a credit limit of $12,100 and which by the date of separation was fully drawn down.
The wife asserts that the total of the above figures, rounded down to $350,000 from about $368,800, is an amount which the husband has applied to gambling and other expenditure not accounted for. The wife concedes that the apportionment of that amount between gambling and other expenditure cannot be precisely determined.
The husband gave evidence of his gambling during cross-examination. He was confronted with the withdrawals of hundreds of dollars from bank accounts at various hotels and sometimes multiple withdrawals on the same day within short timeframes. The husband conceded that some of the cash obtained from his withdrawals at hotel ATMs was used for gambling but stated that the money obtained from other such withdrawals was used to pay bills, which he preferred to pay in cash.
He subsequently said that he paid bills in cash at the post office whilst acknowledging that Eftpos facilities were available there. He said that his reason for doing this was that his wife would not then discover what he was spending his money on. The husband also asserted that he liked to “have money in [my] pocket” and that where there had been multiple withdrawals within a short timeframe, the last of them was so that he could have money to carry on him.
The Court is asked to infer that, in a series of withdrawals, each of the withdrawals apart from the last one were for gambling. It is noted that multiple withdrawals were made from different bank accounts.
The husband also asserted that the cross-examiner had not taken into account his winning bets. It is observed by Counsel for the wife that, if this were the case, one would reasonably have expected the husband’s statement as to winning bets to have been included in the husband’s affidavits.
Counsel for the wife refers to the fact that the withdrawals ranged from between about $300 to $800 and they occurred more than once per week.
The wife asserts that, if the Court does not intend to add back the unaccounted for funds, there should be allowances made for both the gambling of the husband and the failure to account for his expenditure.
In relation to the unaccounted for funds, the husband puts in issue the calculation of the amount provided for the construction of the Suburb E property, which he asserts is based upon a builder undertaking the work without a margin and amounts to $420,000 excluding GST. He asserts that there is no evidentiary basis for the wife’s assertions given the whole of the evidence.
Counsel for the husband submitted as follows:
48.It is apparent therefore when one assesses the evidence that the funds available to the parties between January 2003 and January 2009, namely the relevant period that the Wife contends, were as follows:
(a) Parties’ Income – (Husband at [184] and [185]), the Husband identifies the income of the parties during the relevant period. In the case of the Husband, it was $335,815 gross and in the case of the Wife $80,117 gross.
415,932(b) St George Bank Account (Husband at [94])
235,000(c) Commonwealth Bank loan (Husband at [105])
400,000(d) Superannuation payout (Husband at [11]) of $90,835, less the amount referred to in the Husband’s tax return (Husband at [184]) of $32,374
58,461$1,109,393
49.This then is the total amount of money that the parties had available to them during the relevant period from the evidence as opposed to the Wife’s reliance upon aide memoirs, the propositions of which were not in large measure put to the Husband or for that matter accepted by him. This amount of money however, makes no allowance for income tax payable on the parties’ income referred to in (a) above.
50.The evidence demonstrates these monies were expended as follows:
(a) Wife’s calculation of living expenses (Exhibit 16)
This does not include payments made by cash
401,358(b) Landscaping to [Suburb C] (Husband at [97])
20,000(c) School Building Fund (Husband at [99]) 5,000 (d) Surplus in off-set account (Husband at [163]-[164])
51,237(e) Demolition costs (Husband at [139]) 11,665 (f) Interest for period to end of January 2009 (Husband at [140])
41,906.92(g) Development Approval costs (Husband at [93] – the mid-point of the two numbers)
40,000(h) Holiday for [J] (Husband at [154.2]) 10,000 (i) motor cars (Husband at [154.3] and (154.4]) 14,450 (j) Payments to [J] whilst at university (Husband at [154.6] for 49 months)
29,400(k) Life insurance policy (Husband at [154.7]) 24,000 (l) Furniture, tools and jeweller (Husband at [154.8])
10,000$659,016
Based on the above, Counsel for the husband submits that the surplus of funds available for the parties to spend between January 2003 and January 2009 was $450,376. This figure, it was submitted, excludes allowances for income tax paid on the parties’ income, the purchase of items with cash, expenditure on the Suburb E property and the husband’s conceded gambling. Accordingly, the husband’s case is that the parties did not have enough funds available to support the wife’s claim in relation to the husband’s gambling and that there is no basis on which so imprecise a figure as $350,000 should be added back.
The wife takes issue with the figures provided by the husband in the above tables and asserts that the surplus of funds available to the parties between January 2003 and January 2009 ought to be $719,153.
With respect to the parties’ income during the relevant period, Counsel for the wife submitted that the husband’s first table contains the following errors:
a)the total at item (a) should be $487,280 ($404,731 for the husband and $83,089 for the wife)
b) at item (c), the loan limit in January 2009 was $450,000.
With respect to the parties’ expenditure during the relevant period, Counsel for the wife submitted that the husband’s second table contains the following errors:
a)the calculation of living expenses at item (a) (Exhibit 16) includes cash payments.
b)the expenses at items (c), (h), (i) and (k) were already accounted for in Exhibit 16.
c) the figures at items (b) and (j) are not corroborated.
d) the expenses at items (e) and (g) combined total $40,000 not $51,665.
The Court agrees that such a sum as is proposed by the wife should be added back but that does not mean to say that, subject to the claim for income tax, there is no disclosure in relation to the balance of the husband’s expenditure; it is simply unaccounted for other than the husband’ s general assertion that it was applied to “spending”. The Court takes the view that it cannot come reasonably to the inference proposed by the wife; however, the Court will make an allowance for the gambling undertaken by the husband and for his withdrawals for that purpose which appear to be not inconsiderable.
In that regard, the Court finds the evidence of the husband lacking consistency. It was delivered in a manner which led the Court to the conclusion that the witness was floundering to find some other explanation for the withdrawals that were made at hotels. Had that explanation been available, it would, in the Court’s view, have been delivered in a forthright manner in the first instance. It is not as though the husband was not aware of the wife’s assertions as to his gambling. Equally, the husband’s claims to credit amounts of any significance are given no weight. His evidence was imprecise and his attempt to explain cash deposits which were income tax refunds as winnings on gambling was less than convincing. In company with his general performance under cross-examination and his demeanour, this led the Court to believe that he had a significant and expensive gambling habit.
The sum spent appears to be probably not less than $550 (between $300 and $800) probably three times a fortnight (more than once per week) which, on average, is $1,650 per fortnight or approximately $43,000 per year. Over a six-year period (from 2003 to 2009) those estimates, rounded down to allow for a percentage of winnings which the husband was unable to quantify, would produce an amount in the order of $240,000. Whilst some gambling may be reasonable expenditure, an amount of this nature in the circumstances of this case is beyond what is reasonable. Although not in a strict mathematical sense, this will be taken into account in the final assessment of matters under this section.
The state of health of the parties was in issue. It is clear that the wife describes symptoms of neck and back pain. There is no qualified medical evidence but the Court accepts the wife’s evidence that she does suffer such pain. The husband concedes that the wife has a limited earning capacity by reason of her lack of qualifications, education and the work experience that she has had. The wife nevertheless indicated a willingness to return to the workforce in the field which she had vacated. She has in the past, it is submitted, earned an amount similar to that paid to the husband.
Dr O (“Dr O”) was called as a witness and questioned about a report that she prepared in January 2012 in relation to the husband’s physical capacity to gain employment and/or to earn an income. This report became Exhibit 1. In her oral evidence, Dr O stated that there are areas in which the husband could obtain work, such as light clerical work with varied sitting and standing or point-of-sale work for about 30 hours a week. She did not offer, nor was she qualified to offer, any assistance to the Court as to the husband’s mental capacity to gain employment or how the post-traumatic stress disorder from which the husband was said to be suffering would impact on his ability to do such work.
The husband has a credit card debt acquired post-separation of some $8,500 which appears at item 11 of the jointly prepared balance sheet provided to the Court. This liability was taken off the balance sheet but is a factor that will be taken into account by the Court under this section.
The husband claims that there should be an allowance in his favour of 2.5 per cent under s 75(2).
Conclusion on section 75(2)
Having regard to the matters referred to above and the available pool of assets, the Court has come to the conclusion that there should be a further adjustment to the entitlement of the wife in the sum of 7 per cent in her favour.
Overall division of assets
The above determination will see the wife receive 65 per cent and the husband receive 35 per cent of the pool of assets which excludes superannuation.
In relation to the superannuation entitlement it seems clear that each party has on the evidence a capacity to work. It is suggested that they can earn approximately equal amounts. The Court has come to the conclusion that a differential adjustment should be made to the pool of superannuation since it is devoid of the initial contributions made by the wife and her contributions to it have been indirect. The Court finds that an appropriate adjustment is in the percentage of 40 per cent to the wife and 60 per cent to the husband.
Just and equitable
The division of assets would see the wife receive $1,024,858.25 worth of net assets from the pool which excludes superannuation and the husband receive $551,846.75 worth of such assets.
The division of the superannuation pool, comprising the aggregate of the wife’s superannuation and the valuation of the husband’s superannuation in accordance with the Regulations, would mean that the wife would receive the sum of $421,508.40.
In the circumstances of this case I determine that result to be just and equitable.
Orders which should be made
I propose orders which will give effect to the following division of assets excluding superannuation.
The wife will receive:
| Assets | ($) |
| B Street, Suburb C | 1,300,000 |
| Motor vehicle 1 | 2,000 |
| Addback: interim property settlement | 140,000 |
| Total assets (excluding superannuation) | $1,442,000 |
| Liabilities | |
| Payment by the wife to the husband | 417,141.75 |
| Total liabilities | $417,141.75 |
| Net assets (excluding superannuation) | $1,024,858.25 |
The husband will receive:
| Assets | ($) |
| Controlled monies account controlled by DC Chambers (balance of proceeds from sale of Suburb E property plus interest) | 19,105 |
| Payment by the wife to the husband | 417,141.75 |
| Addback: interim property settlement | 140,000 |
| Total assets (excluding superannuation) | $576,246.75 |
| Liabilities | |
| Westpac Mastercard | 12,000 |
| F Credit Union card | 10,000 |
| CBA credit card | 2,400 |
| Total liabilities | $24,400 |
| Net assets (excluding superannuation) | $551,846.75 |
I propose orders which will give effect to the following division the parties’ superannuation. The wife will receive:
| Superannuation | ($) |
| Wife’s superannuation | 7,421 |
| Wife’s entitlement to the husband’s superannuation | 414,087.40 |
| Total superannuation | $421,508.40 |
The husband will receive:
| Superannuation | ($) |
| Husband’s superannuation of $1,046,350 less $414,087.40 to be received by the wife | 632,262.60 |
| Total superannuation | $632,263.60 |
The Court finds that the adjustment of the parties’ property effected by the Orders set forth above is appropriate, just and equitable.
I certify that the preceding one-hundred and thirty-three (133) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler delivered on 6 December 2012.
Associate:
Date: 6 December 2012
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Family Law
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Property Law
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Procedural Fairness
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