Eddison & Ortis
[2023] FedCFamC2F 1141
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Eddison & Ortis [2023] FedCFamC2F 1141
File number(s): AYC 1 of 2021 Judgment of: JUDGE O'SHANNESSY Date of judgment: 31 August 2023 Catchwords: FAMILY LAW – final property orders – where parties agree on superannuation split – where superannuation split unconventional due to defence force retirement and death benefits scheme – how funds in trust should be divided – where superannuation pension treated separately – just and equitable division on small property pool. Legislation: Evidence Act 1995 (Cth), s 140
Family Law Act 1975 (Cth), ss 75, 79, 80
Family Law (Superannuation) Regulations 2001
Cases cited: Bevan & Bevan [2013] FamCAFC 116.
Fox v Percy (2003) 214 CLR 118.
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) [2003] FamCA 395; (2003) FLC 93-143.
Keskin & Keskin and Anor [2019] FamCAFC 236; (2019) FLC 93-932.
Kowaliw & Kowaliw (1981) FLC 91-092.
Parshen v Parshen (1996) FLC 92-720.
Stanford v Stanford [2012] HCA 52; (2012) FLC 93-518.
Division: Division 2 Family Law Number of paragraphs: 110 Date of hearing: 8, 9 & 10 December 2021 Place: Melbourne Counsel for the Applicant: Ms Johnson Solicitor for the Applicant: Colin S Gillespie Solicitor for the Respondent: Litigant in person ORDERS
AYC 1 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS EDDISON
Applicant
AND: MR ORTIS
Respondent
ORDER MADE BY:
JUDGE O'SHANNESSY
DATE OF ORDER:
31 AUGUST 2023
THE COURT ORDERS BY CONSENT THAT:
1.In accordance with section 90XT(1)(b) of the Family Law Act 1975 (Cth) (‘the Act’), whenever a splittable payment within the meaning of section 90XE of the Act becomes payable to or on behalf of MR ORTIS from his interest in Super Fund 1, MS EDDISON in entitled to be paid (by the trustee of DFRDB) 31% of the splittable payment and there shall be a corresponding reduction in the amount MR ORTIS would be entitled to receive but for these Orders.
2.The operative time for Order 1 is seven business days after the service of these Orders on the Trustee of the Super Fund 1 Scheme.
3.Except as otherwise provided by these orders:
(a)The Applicant be declared to be the sole beneficial owner of her right, title and interest in and to:
(i)All cash at banks and monies held in the Applicant’s sole name;
(ii)Any superannuation entitlements of the Applicant and received by the Applicant; and
(iii)Any personal property including but not limited to motor vehicles, furniture and jewellery in her name, control or possession at the time of these orders.
(b)The Respondent be declared to be the sole legal and beneficial owner of his right, title and interest in an to:
(i)All cash at banks and monies held in the Respondent’s sole name;
(ii)Except as otherwise provided in these orders, any superannuation entitlements of the Respondent and received by the Respondent; and
(iii)Any personal property including but not limited to motor vehicles, furniture and jewellery in his name, control or possession at the time of these orders.
(c)The Applicant and Respondent remain liable for any debts in their personal names and indemnify the other against all claims, costs, demands, suits, actions and proceedings which may be made against the other in respect of the said debts.
(d)The parties shall each be liable for and indemnify the other against any clam made against them with regard to any debts or liabilities in each party’s sole name including but not limited to credit card debts, personal loans, hire purchase, legal fees and car loans.
(e)Each of the Applicant and Respondent release the other from all debts owing from one to the other.
AND THE COURT ORDERS THAT:
4.The funds held in trust for the parties by the legal firm of Tremayne Fay Rheinberger Lawyers be applied as follows:
(a)$10,958 to the Husband; and
(b)6% of the interest accrued on the sum of $181,005 since 10 December 2021; and
(c)From the Husband’s part there be paid to the expert witness Mr B his fees for appearing as a witness on 9 December 2012, unless already paid, and if paid by the Wife, be reimbursed to her; and
(d)The remainder to the Wife.
5.The parties be at liberty to provide a certified copy of these sealed orders upon Tremayne Fay Rheinberger Lawyers which shall be sufficient authority to that firm to release the funds to the Applicant and Respondent or as each of them direct.
6.Unless otherwise specified in these Orders and except for the purposes of enforcing compliance with the terms of these Orders each party shall be solely liable for and indemnify the other against any liability encumbering an item of property to which that party is entitled pursuant to these Orders.
7.All outstanding applications are otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE O’SHANNESSY
INTRODUCTION
Having separated after a marriage just shy of 39 years, the Applicant, Ms Eddison (‘the Wife’) now 65 years and the Respondent, Mr Ortis (‘the Husband’) now almost 67 years, ask the Court to determine a just and equitable property division.
There are limited issues in dispute in this case. The parties reached agreement on some of the matters, including the percentage of superannuation payment split order. What remains in dispute is how the funds held in a solicitors trust account, comprising of the sale proceeds of the former matrimonial home (‘FMH’) plus interest, should be divided.
During the Final Hearing, which occurred over three days of the City C Circuit, the Wife was represented. The Husband, incarcerated at that time, represented himself throughout the proceedings. He appeared at the Final Hearing via telephone.
BACKGROUND
The Wife was born in 1958 and at the time of the Final Hearing was aged 63. She is retired and receives a Carer payment from Centrelink and a Carer payment from the Department of Veteran Affairs (‘DVA’) with respect to her current partner. The Husband was aged 65 at the Final Hearing, also retired and receiving payments from his Defence Force Retirement and Death Benefits Scheme (‘DFRDB’) of $335 per week and disability pension from DVA of $480 per week,
The parties began a relationship in 1974, and married and began cohabitating in 1979. At that time the Wife was 22 years old and had just completed studies to become a health care worker. The Husband was a member of the Military. The Wife worked at various employers whilst the parties were stationed in New South Wales from 1979 to 1986. In 1986, the parties moved to a military facility in Victoria.
The parties have two children, a son born in 1985 and a daughter born in 1987. From 1979 until 2000, the parties were housed by the Military.
THE PROCEEDINGS
After an unsuccessful attempt to resolve property matters between themselves, on 1 December 2021 the Wife filed an application in this Court seeking a property division. The matter was heard before a Judge on 21 May 2021 at which time orders were made for the Husband to file a Financial Statement within 14 days and otherwise, the matter was adjourned for Directions Hearing in the City C Circuit on 13 July 2021. On the adjourned date, the matter was set down for a one day Final Hearing in the week commencing 6 December 2021 in the City C Circuit with trial directions.
FINAL HEARING
Documents relied upon
The Wife relied upon the following documents:
·Amended Application for Final Orders filed 2 November 2021;
·Affidavit of the Wife filed 2 November 2021, that annexed an expert superannuation statement; and
·Financial Statement filed 1 January 2021.
The Husband relied upon the following documents:
·Response to Initiating Application filed 18 May 2021;
·Affidavit of Mr Ortis filed 18 May 2021.
During the Final Hearing the Husband indicated that he had prepared updating documents including a Financial Statement that were rejected from filing when he attempted to do so. The Husband sent and served an unsealed version of his Financial Statement during the Final Hearing and I permit him to rely on that.
Witnesses
The Wife and Husband were cross-examined, as well as Mr D who prepared the valuation of the Husband’s Super Fund 1 .
The Wife and Husband were both forthright, courteous and helpful witnesses.
Mr D was an expert witness. He has been valuing Super Fund 1 for more than 20 years. He provided insight to the parties as to how the valuations are determined with consideration of the Family Law (Superannuation) Regulations 2001.
APPLICABLE LAW
Standard of proof
In these reasons, statements of fact are findings of fact. Findings are made on the balance of probability. I apply section 140 of the Evidence Act 1995 (Cth) (‘the Evidence Act’) which states as follows:
(1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.
Credit & reliability of the parties evidence
Fox v Percy (2003) 214 CLR 118 (‘Fox v Percy’) is a High Court case concerning the skid marks of a Kombi van on the correct side of the road. When discussing the drawing of conclusions about truthfulness and reliability solely or mainly from the appearance of the witnesses, the plurality observed:
[31]…in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events…
(Citations omitted)
In Fox v Percy, a Kombi van had collided with two horses and their riders. A rider was found to be a more reliable witness than the driver of the Kombi Van about which side of the road the collision occurred. The High Court had to interfere with the first instance decision because by determining, by reason of the apparent reliability of the witnesses, which side of the road the collision occurred, the decision was wrong because the uncontroversial skid marks of the Kombi van incontrovertibly demonstrated that the Kombi van had been on its correct side of the road and the horses and riders on the wrong side at the point of collision.
SIGNIFICANT FINANCIAL EVENTS
The parties helpfully set out in great detail the significant financial events over the many years of this long marriage and have done their best in reliance on recollection of what money was applied to what purpose. The parties disagree here and there about what money, or what borrowing and the amount was applied to what. It was unnecessary that they do so. In Parshen v Parshen (1996) FLC 92-720 the Full Court of the Family Court of Australia, Ellis, Finn and Purdy JJ, in a case that is regarded as a precedent (also known as an “authority”), set out the following practical guidance for property division cases. At 83,665, the Full Court observed:
In our view, in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to s 79 that moneys howsoever received by a party during the course of the parties’ cohabitation, are used by the party for the benefit of the family unit.
Hence that the parties have different recollections of the receipt and application of funds, or no recollection at all, and apart from being consistent with the usual fallibilities of human recollection, does not inform the division of property and it is unnecessary to determine the myriad of disputes about what was spent where.
In this case I accept that money received by the parties over this long marriage, by salary or wages, by sale of property, by borrowing and modest inheritance were applied to the benefit of the family unit. I am not satisfied on the balance of probability that any funds received were wasted or hidden or applied other than for the benefit of the family unit.
However in deference to the industry of the parties, I will recite some of the significant financial events.
Early Days
In 1989 the Husband was stationed overseas for around six months, during which time the Mother and children remained at a Military facility. Upon the Husband’s return he discharged himself to pursue alternative employment, but after an unsuccessful career endeavour the Husband was able to resume duties in the military within the six month grace period.
The parties moved several times, to Queensland in 1992, Victoria in 1994 before setting in Tasmania in 1997 where they remained until separation. The Wife engaged in home duties and volunteering at the children’s various schools. In 1999, the Wife obtained full time employment in which she remained employed for five years until the business closed. In 2000, the Husband retired from the military and began working part-time until 2003.
The first home
The parties purchased their first home in 2000 with an adjoining vacant block. The parties’ dispute as to how the funds for the property were obtained but it is unnecessary to determine that dispute.
Husband’s injury
In 2000 the Husband began receiving $600 per fortnight from his retirement pension through Super Fund 2. He was employed in various odd jobs. In 2003, apparently resulting from injuries sustained by the Husband whilst in the military in 1990 which were later reassessed, the Husband began receiving $380 per fortnight from the Department of Veteran Affairs, which increased to somewhere between $500-600 per fortnight in 2007.
Wife’s long history of work
Over the many years of raising the children, the Husband was the primary income earner and the Wife was the primary homemaker and parent. The Act does not regard either activity as more important than the other. Both must be recognised.
In 2004 the Wife began receiving worker’s compensation as a result of an injury. The Wife obtained full time employment in 2004 where she worked for 10 years, moving to part-time for a further two years. The Husband also obtained full time work at the same employer however ceased employment there in 2005. He did not resume paid employment but continued to receive funds from Super Fund 2. His evidence is that although the DVA were prepared to retrain him, he completed most of the training and did not follow it up to completion.
In 2006 the Wife had surgery for an injury.
The Wife’s evidence is that in 2009 the parties’ refinanced their home to consolidate debt and to purchase a new motor vehicle. The Husband disputes that it was to consolidated debt or purchase a new car. As the Husband was no longer working, the Wife met the repayments of the loan, refinancing again in 2012 for a lower interest rate.
In 2013 the Husband was again reassessed with a higher disability and began receiving Intermediate TPI Pension from the DVA of approximately $900 per fortnight. In 2013 the Wife, then aged 55 years, began a transition to retirement through her superannuation fund and began receiving $113 per fortnight. In 2015 she began working part-time. That same year, she took out a personal loan of $20,000 to consolidate credit card debt. The Husband said and I accept that he was unaware of this. For the purposes of the section 79 division of property nothing turns on this.
Inheritance from Wife’s Mother
During this year the Maternal Grandmother suffered a fall, and eventually was diagnosed with dementia, during which time the Wife cared for her and received a Centrelink Carer’s allowance. The Maternal Grandmother lived with the parties during this time, her health declining, until she was placed in a nursing home until her passing in 2017. The Wife’s evidence is that as part of the Maternal Grandmother’s estate, the Wife received the sum of around $25,000 which, she says, she applied to general living expenses. I accept that evidence.
Wife retires & Husband receives pension
In 2017, at age 59, the Wife ceased employment, receiving the sum of approximately $18,000 from accrued annual and long service leave. The Husband disputes knowledge of the inheritance referred to in the preceding paragraph, and says that the funds used to pay living expenses came from the Wife’s cessation of employment payout, which he says was $40,000 not $18,000. Whatever the sum was, I am satisfied it was expended on and for the purposes of the parties relationship.
In 2016, upon the Husband turning 60, he began receiving a military service pension.
The Criminal Proceedings
In 2013 allegations were made, and in 2015 charges brought, against the Husband in relation to sexual assault on the parties’ daughter. The parties’ remained in a relationship at this time.
In 2017, in anticipation of the trial, the Wife began to prepare the parties’ home for sale, withdrawing $12,000 from her superannuation in early 2018 to apply to renovations, marketing and mortgage repayments.
In mid-2018, after a two day trial with a jury, the Husband was sentenced to a period of incarceration for a number of years with a non-parole period of a few years. He is registered on the sexual offender’s registry for a period of 15 years. The Wife says, and I accept, this was their date of final separation.
The Husband met mortgage repayments until early 2018 prior to his sentencing. After his incarceration, the Wife resumed mortgage repayments for the two loans against the property, as well as the personal loan. The Wife deposed to raising $8,000 from a garage sale, selling the parties’ motor vehicle for $10,000 and the parties’ boat and trailer for $6,500, applying those funds to mortgage repayments, renovations and general living expenses. The Wife deposed that she applied around $33,000 towards renovations to the home prior to sale.
The Husband complains that the Wife should have arranged for storage of his many bits and pieces accumulated over a life time. The Wife sold some and disposed of some. The Husband was in gaol and the home was being sold and vacant possession was required. The Wife had the burden of arranging renovation and tidying up of the home for sale while the Husband was in gaol. In circumstances where the Husband had been convicted and sentenced for the sexual assault of their daughter, this was a most difficult time for the Wife and I am unable to be critical of how she managed and conserved the parties’ property at that time.
Until the day of conviction, the Wife supported the Husband at great personal cost to her.
Sale of the last joint home
The house sold in late 2018 for $350,000, the proceeds of which total $181,000 including interest as at 2 November 2021 and currently held on trust in an investment account with lawyers.
The Wife had been receiving DVA payments until June 2018 when the parties’ separated.
Wife’s new relationship
The Wife’s began a new relationship after separation. In about early 2019 the Wife and her new partner borrowed funds from her partner’s mother and a bank to purchase a modest home in a country town for $170,000 (‘the Wife’s new home’). The total cost including stamp duty was about $167,000. $128,000 was borrowed from the bank and about $35,000 was borrowed from her partner’s mother for the purchase.
In August 2019 the Wife withdrew the remaining funds in one of her superannuation accounts, totalling $11,755.58. She applied those funds to transfer and registration fees for motor vehicles, repairs and furniture. In November 2019 she withdrew the remaining funds of her last open superannuation fund totalling $1,376.
The Wife’s new home has increased a little and the debt to the partner’s mother has been reduced.
PROPERTY DIVISION
Applicable law
The property orders dispute falls to be determined by application of Part VIII of the Family Law Act 1975 (Cth) (‘the Act’) and in particular the provisions of sections 79, 75 and 80. The relevant parts of section 79 are as follows:
Section 79 Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
…
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
…
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party 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, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) 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, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
By section 79(4)(e), the shopping list of largely prospective factors of section 75(2), that are the same factors to be considered when considering spousal maintenance, must be had regard to.
The relevant parts of section 75 provide as follows:
Section 75Matters to be taken into consideration in relation to spousal maintenance
(1)In exercising jurisdiction under section 74, the court shall take into account only the matters referred to in subsection (2).
(2) The matters to be so taken into account are:
(a) the age and state of health of each of the parties; and
(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; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii)child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
…
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
…
(3)In exercising its jurisdiction under section 74, a court shall disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit.
(4) In this section:
"party" means a party to the marriage concerned.
The Court has wide powers as set out as section 80 of the Act:
Section 80 General Powers of Court
(1)The court, in exercising its powers under this Part, may do any or all of the following:
(a)order payment of a lump sum, whether in one amount or by instalments;
(b) order payment of a weekly, monthly, yearly or other periodic sum;
(ba)order that a specified transfer or settlement of property be made by way of maintenance for a party to a marriage;
(c)order that payment of any sum ordered to be paid be wholly or partly secured in such manner as the court directs;
(d)order that any necessary deed or instrument be executed and that such documents of title be produced or such other things be done as are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;
(e) appoint or remove trustees;
(f)order that payments be made direct to a party to the marriage, to a trustee to be appointed or into court or to a public authority for the benefit of a party to the marriage;
(h)make a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order;
(i) impose terms and conditions;
(j) make an order by consent;
(k)make any other order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks it is necessary to make to do justice; and
(l)subject to this Act and the applicable Rules of Court, make an order under this Part at any time before or after the making of a decree under another Part.
(2)The making of an order of a kind referred to in paragraph (1)(ba), or of any other order under this Part, in relation to the maintenance of a party to a marriage does not prevent a court from making a subsequent order in relation to the maintenance of the party.
Stanford v Stanford [2012] HCA 52; (2012) FLC 93-518
In the High Court of Australia case of Stanford v Stanford [2012] HCA 52; (2012) FLC 93-518 (‘Stanford’) the majority stated some fundamental propositions about section 79 proceedings. In Stanford the essential issue was whether it was just and equitable to make any property settlement order at all, in circumstances where the consortium vitae or marriage relationship had not broken down by way of a separation and the Wife’s needs were otherwise provided for.
The High Court varied the existing order and found that in the circumstances it was not just and equitable that a property settlement or property alteration order be made at all. This was so despite 37 years of marriage and contribution by the wife. Hence section 79(4) contribution, even 37 years of it, was not to be conflated with the section 79(2) “just and equitable” requirement but should be considered separately.
In Stanford the High Court did not go on to comment upon how section 79(4) should be applied where it was just and equitable that a property alteration or settlement order be made. Stanford was not concerned with the nuts and bolts of how section 79(4) was to be applied in the ordinary run of cases, to the extent there is such a thing.
In this case both parties assert that it is just and equitable to make property alteration orders. I am satisfied it is.
The Preferred Approach
In Keskin & Keskin and Anor [2019] FamCAFC 236; (2019) FLC 93-932 the Full Court, Strickland, Kent and Austin JJ, at [44] approved what was the age old and pre-Stanford “preferred approach” as to the how the nuts and bolts of section 79(4), fitted together recited in the earlier decision of Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) [2003] FamCA 395; (2003) FLC 93-143 (‘Hickey’) as follows:
[20] In (Hickey) at [39] the Full Court, in setting out what the case law revealed as the “preferred approach” to the determination of an application under s 79 of the Act, referred to four inter-related steps, including that “the Court should identify and assess the contributions of the parties within the meaning of ss. 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties”…
That preferred approach set out at [39] Hickey as follows:
[39]The case law reveals that there is a preferred approach to the determination of an application pursuant to the provisions of section 79. That approach involves four interrelated steps. Firstly, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of hearing. Secondly the court should identify and assess the contributions of the parties within the meaning of section 79(4)(a), (b) & (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly the court should identify and assess the relevant matters referred to in section 79(4) (d), (e), (f) & (g) (“the other factors”) including, because of section 79(4), the matters referred to in section 75(2) so far as they are relevant and determine the adjustment study (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
(Citations omitted and emphasis adde)
I regard the use of “entitlement” in the above context as synonymous with “assessment.” I will have regard to what I find to be the contribution based assessment rather than entitlement. Also the requirement for justice and equity is “not a threshold issue, but rather one permeating the entire process”[1].
[1] Bevan & Bevan [2013] FamCAFC 116 at [86].
The Wife’s case
The Wife alleged that during the relationship the Husband consumed alcohol heavily. She alleged that after he ceased employment, his alcohol consumption during the day increased and any appointments that he needed to attend needed to be before 10am. She alleged that on Saturdays, he withdrew $500 cash from his bank account to spend on alcohol and lotto tickets however he would also purchase more during the week. The Wife alleged that due to his alcohol consumption and using funds in his bank account for this, the electricity and telephone land lines were disconnected on a few occasions and unpaid bills were passed on to collection agencies. She further alleged that he did not meet the local council rates which became overdue.
The Husband denies that at any time the electricity or telephone lines were disconnected, nor that he did not meet the cost of those bills. He is not aware of any debt collection agency notices. His evidence included that the Wife was the one who paid the council rates. With respect to his alcohol consumption, he gave evidence that two to three days per week he would consume alcohol from the afternoon into the night. He agreed that he would buy lotto tickets, cigarettes and a cask of alcohol which would last him 3-5 days. He gave evidence that in the five years before incarceration he didn’t drink much alcohol, but he and the Wife wine, namely a large cask, which lasted about a week.
I am unable to prefer one account to the other on the balance of probabilities and if I were I cannot determine the extent of family resources applied to the excess or the period, or the proportion of the marriage that took up.
I am unable to be satisfied on the balance of probabilities of the extent and cost of the Husband’s greater alcohol consumption and I am unable to find that this is a negative contribution, compared to the many years of hard work and joint endeavours that requires adjustment on the principles of Kowaliw & Kowaliw (1981) FLC 91-092 (‘Kowaliw’). In Kowaliw, Baker J observed (at 76,644):
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
Noting that the parties reached agreement on the superannuation split entitlement, the Wife only otherwise sought orders seeking the entirety of the funds held in trust from the sale of the FMH, plus any interest accrued, to be transferred to her. The Wife’s counsel asserted that contribution should be 60/40% in the Wife’s favour, that is proportions of 1:1 ½.
The Husband’s property case
The Husband seeks that he receive $60,000 from the funds held on trust with the remainder to the Wife on the basis that he needs funds to establish a home for himself.
Shortly before the matter was listed for judgment delivery, the Husband sent in an email to chambers that may have been intended to be an application to re-open. I was prepared to treat it as such. The Wife opposed reopening. I determined, in the exercise of my discretion, that I would not permit either side to re-open.
I did not permit re-opening because:
·after a long delay, not the fault of the parties, judgment was soon to be handed down and the further delay and cost would likely result from reopening, was not in either parties interests;
·The delay, and any further delay, was more to the Wife’s disadvantage than the Husband’s. The Husband had had since the hearing the benefit of his savings of $136,000 and the full Super Fund 1. The parties had agreed the Wife would receive a 31% superannuation split but the order had not been made. The capital the Wife was to receive on either case was still held in trust.
·I was not satisfied that the Husband’s opinion of the matters discussed in the email (funds available at separation, discussion of the value of the Super Fund 1 and advice that the Husband had purchased a home, had expended his savings and needed funds) would materially affect the result.
·Re-opening is not usually permitted to have a second go at matters already dealt with at final hearing.
I determined I would take account of the Husband’s and the Wife’s emails as further submissions. The real point of the Husband’s email submission is that interest rate rises would impact on him and he said would cause him financial hardship. The opinion put forward did not provide specific information of the other matters to be considered, like equity in the purchased home and application of the capital available at hearing.
Agreement as the Super Fund 1 payment split
The parties agreed that the Husband’s Super Fund 1 should be dealt with by way of a payment split of 31% to the Wife. I am satisfied such an order is just and equitable. This will reduce the Husband’s income and increase the Wife’s income. The benefits cannot be commuted to a lump sum. The Husband did not withdraw consent to the 31% superannuation payment split.
In the event that the Husband has withdrawn, or intended to, withdraw his consent to the Super Fund 1 superannuation payment split, which is not apparent to me, the Wife maintains her position of seeking that split. I am satisfied that such a split is just and equitable, notwithstanding that without agreement, I may have made a different order. The final hearing was conducted on the basis of that agreement and had there been no agreement, and a different superannuation split order made, the division of the other elements of the asset pool would also be different.
APPLICATION OF THE PREFERRED APPROACH
I turn now to the application of the law to the facts by the preferred approach.
Step one: identify the property and liabilities
I am satisfied the parties assets and liabilities at the time of final hearing are as alleged by the Wife.
Description Ownership Wife alleges Husband alleges[2] ASSETS 1 Proceeds of sale FMH held on trust and accruing interest Joint 181,005[3] 181,005 2 Bank Accounts (4) Husband 136,000[4] 136,000 3 Bank Accounts (1) Wife 1,090 Accepted 4 Motor Vehicle 1 Wife 7,500 Accepted 5 Jewellery Wife 3,000 6 Household contents Wife 800 7 Credit card
Wife’s “keep”, total line 3-7Wife (370)
12,020
Accepted
12,020
8 Jointly contributed assets 329,025 329,025 9 Wife’s post sep’n assets 10 Wife’s ½ share in W property
½ Bank debt
½ debt to partner’s mother
Wife’s share of W Equity
Shares
Total Wife’s post separationWife 87,500
(65,731)
(4,800)16,969
3,90520,874
Accepted
20,874
11 Total all non-super assets 349,899 349,899 SUPERANNUATION 12 Super Fund 1 Husband Accepted 253,762[5] [2] When the individual items were discussed with Mr Ortis, at TP 31, he said he was “in full agreeance to that”.
[3] Plus interest accruing.
[4] Husband’s assertion accepted.
[5] Valued by Mr B of E Pty Ltd and I am satisfied he is a highly experienced expert in Super Fund 1 superannuation matters.
It is necessary and convenient to treat the Wife’s half share entitlement to her principal place of residence which she purchased with her current partner, and the shares she has purchased with her partner, differently. There is no evidence that funds used for that purchase came from any joint funds of the parties. I also do not include any legal fees owing to the parties’ respective solicitors or the “notional” asset of those paid legal fees, but acknowledge they exist.
I do not regard it as appropriate to total the non-superannuation assets with the valuable superannuation because of the different nature of that asset. The superannuation benefit cannot be taken in a lump sum, or be sold, or assigned. It will be received as a pension only.
The only issue in dispute in this matter is how the funds held in trust from the sale of the FMH are divided.
Step two: section 79(4)(a), (b) & (c) contributions
Neither party brought in any significant assets of value at the commencement of the relationship.
During the relationship, at least when the parties’ children were younger, the Husband was the main income earner and the Wife engaged in homemaking and voluntary roles. In 2005 the Wife commenced part-time employment in a retail business, later moving into an allied health care role full-time, then part-time, over a period of 10 years. The Husband ceased employment in 2006 and continued to receive three separate streams of income from his engagement in the military. The Wife also received payments from the military as the spouse of the Husband, until around three months after his incarceration.
Following separation the parties’ home was sold and the funds are currently held in a solicitor’s bank account.
As recited earlier I do not find the allegation of a significant negative financial contribution by the Husband’s drinking made out on the balance of probabilities.
I am satisfied that contribution as defined at section 79(4)(a),(b) & (c) over this very long relationship should be regarded as equal. Section 79 does not impose a moral judgment or punishment on the Husband because he has been convicted and imprisoned because of serious offending. The parties separated the date he was found guilty.
Overall, I regard contribution as being about equal, save for extrinsic contribution, over this long relationship to what I regard as the jointly contributed assets. The Wife’s inheritance must be acknowledged.
The Husband has not made any contribution, direct or indirect to the equity the Wife has acquired post-separation in her home because of her new relationship. Hence, treating contribution in dollar terms, the Husband has contributed equally to about $329,025 of assets and hence the parties’ proportionate contribution to all non-superannuation assets of about $349,899 is about 47/53 in the Wife’s favour. After taking her inheritance into account, it should be regarded as about 46/54 in the Wife’s favour.
Further the Wife has contributed equally to the Super Fund 1 which has a value of $253,000 but will be received in periodic payments over many years.
Step three: section 75(2) factors
Although sometimes described as “future needs” this is only partly accurate as some factors relate to circumstances during the relationship. Although the headings that follow only paraphrase the relevant sections, I take the whole of the provision recited earlier into account.
(a) Age and state of health
The Wife’s evidence is that she suffers from depression, post-traumatic stress disorder, and other medical conditions. In late 2020 she was diagnosed with an illness.
The Husband’s evidence is that he suffers from hypertension, and requires two surgeries related to his back upon release from prison. He suffers from several medical conditions.
Neither party sought to challenge the others medical diagnosis or issues.
The parties are effectively retired from the work force because of poor health, age and in the Wife’s case, caring responsibilities. There is no evidence of the parties’ poor health incurring financial expense beyond the Government universal health scheme.
(b) Income, property, financial resources and capacity for employment
The Wife receives $85 per week from a Centrelink carer’s allowance and $160 per week from a DVA carer’s allowance, both received with respect to her partner. The Wife has a small equity in a property with her partner. The Wife purchased this property with a loan from her partner’s mother and the remainder on mortgage. The Wife gave unchallenged evidence that her partner pays, on her behalf each week, $200 towards legal fees and meets most other expenses. She notes her weekly expenditure as $245 per week.
The Wife, aged 63 years at the final hearing, is retired and a carer. I do not consider that she has capacity in her current circumstances to engage in substantive employment.
Prior to incarceration the Husband had three income streams, namely the defined benefit interest pension, disability pension and service pension. His evidence is that his service pension ceased upon his incarceration however such payments would resume in the realm of around $700 per week upon his release.
(c) Care of children under 18 years
Not applicable.
(d) Commitments of each of the parties to themselves or a child
Neither of the parties are engaged in employment and rely on varying pensions. The Wife has financial support of her de facto partner.
(e) Responsibilities of either party to support any other person
As mentioned earlier in these reasons, the Wife receives a modest carer’s payment for her de facto partner. Her evidence during cross-examination is that her partner was medically discharged from the military due to post traumatic stress disorder, anxiety, depression and other medical conditions, and he has undergone surgery due to an injury or injuries sustained whilst in service. Her evidence includes that she often assists him with tasks like dressing and hygiene due to his back injury.
Neither party gave evidence that they financially support another person.
(f) Pension or benefit
As above.
(g) Reasonable standard of living
The evidence indicates a modest standard of living during the relationship. The parties will at best have a modest standard of living after theses orders. This factor is of neutral affect.
(h) Would maintenance assist education or training
Not applicable.
(ha) Effect on creditors
When the Husband was incarcerated he had two personal loans. The Husband gave evidence that after consultation with the bank by the financial advisor at the prison the debt was waived. There is no evidence these orders will affect any creditor.
(k) Effect party contribute to the earning capacity and property of the other
Because of age, health and caring responsibilities earning capacity is not relevant for these parties.
(l) Protect parties role as a parent
Not applicable.
(m) Whether party cohabiting with another person
The Wife cohabitates with her partner in a property that they jointly own. That relationship financially assists the Wife because she is able to maintain modest accommodation as a co-owner of her home with her partner along with the other financial support such as contributing to legal fees. The Husband does not have equivalent support as to accommodation or legal fees.
The Wife’s evidence is that her de facto partner receives $1,800 per week from the military, which includes total and permanent disability payments. The Wife’s partner has a greater income than either of the parties. The Wife has the indirect benefit of cohabiting with a partner and so obtains some modest financial support from the co-habitation.
The Husband has no equivalent indirect support.
(naa) Child support to be provided
Not applicable.
(o) Any fact or circumstances required to take into account
The grief that the Wife has suffered as a result of the Husband’s offending and conviction and the consequent severance of family relationships is significant and this contributes to the Wife’s poor health.
The parties most pressing needs at this time are for capital to house themselves. The Wife has housing because of her relationship but her equity is very small. Both also need income.
Conclusion as to section 75(2) factors
The future pension entitlements of the Super Fund 1 asset valued at $253,000 are to be split by the 31% payment split. This will reduce the Husband’s Super Fund 1 income by 31%. The Wife will, over a longer period because she is younger, receive that proportion of the total but will actually receive a little less than 31% of what the Husband now receives.
In this case the Super Fund 1, in the payment phrase, is an entitlement to a pension for life. I must have regard to the nature, form and characteristics of all contributions but also of the assets themselves. For these parties a dollar of the Super Fund 1 is not equivalent, in substance, with the utility to them of a dollar of capital.
After the Super Fund 1 split the Husband’s income will be reduced and the Wife’s increased. The Husband will receive about 69% of the jointly contributed Super Fund 1 future pension entitlement and the Wife only 31%.
Balancing all of those matters I am satisfied that there should be an adjustment on the non-superannuation assets of about 4% in the Wife’s favour of about $13,996 (rounded) with a resultant disparity of $27,992 between the parties on account of section 75(2) factors of the total non-superannuation pool. The Husband has a greater income but does not have the support of a partner.
I acknowledge the disparity between the parties of that adjustment is less than the disparity of the value of the Super Fund 1 the parties have agreed upon but I refer to and repeat the discussion about the nature of the asset and the utility of the different assets to the parties in their modest circumstances.
Step four: just and equitable and conclusion
I must have regard to all of the parties’ contributions over many years and all of the applicable section 75(2) factors and the nature of the assets each will retain. I am satisfied that the Super Fund 1 should be treated differently because of the nature of the asset. I am satisfied contribution to the non-superannuation pool (including the Wife’s post separation assets) should be regarded as 46/54 and a section 75(2) adjustment of 4% of that pool is appropriate. I am satisfied that a division of the Super Fund 1 asset as 31/69 in the Husband’s favour and the non-superannuation assets of 42/58 in the Wife’s favour, after taking into account the agreed Super Fund 1 division, is appropriate.
CONCLUSION & CALCULATIONS
I will make orders which reflect a 42/58 division in the Wife’s favour on the non-superannuation assets of the property pool and the agreed superannuation order.
The non-superannuation pool is $349,899. Of that the Husband retains or retained at final hearing $136,000. 42% of $349,899 is $146,958 (rounded) and he retains $136,000, so he should receive $10,958 from the funds in trust. In addition those funds have been invested and he should receive the pro rata proportion of the interest earned on the sum of $181,005 held on trust, that is, 6% of that component of the interest earned.
I certify that the preceding one hundred and ten (110) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Shannessy. Associate:
Dated: 31 August 2023
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