Ekrem & Ekrem
[2024] FedCFamC2F 310
•14 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Ekrem & Ekrem [2024] FedCFamC2F 310
File number(s): LNC 203 of 2022 Judgment of: JUDGE TURNBULL Date of judgment: 14 March 2024 Catchwords: FAMILY LAW – PROPERTY – where there is significant agreement as to the facts and the assets to be divided – whether there should be a one or two pool approach – impact of the Husband’s initial contributions – impact of the Wife having primary care of a child with special needs and an inferior income. Legislation: Family Law Act 1975 (Cth) Cases cited: Beck & Beck (No 2) (1983) FLC 91-318
Briginshaw v Briginshaw (1938) 60 CLR 336,
Cabbell & Cabbell [2009] FamCAFC 205
Clauson & Clauson (1995) FLC 92-595
Dawes & Dawes [1989] FamCA 71
Dovgan & Dovgan [2021] FamCA 306
Gadhavi & Gadhavi [2023] FedCFamC1A 117
Hickey & Hickey [2003] FamCA 395
In the Marriage of Napthali (1988) 13 Fam LR 146
Jabour & Jabour [2019] FamCAFC 78
Jacobson & Jacobson (1989) FLC 92-003
Lotta & Lotta [2017] FamCA 50
Mallet & Mallet (1984) 156 CLR 605
Mallet v. Mallet [1984] HCA 21; (1984) 9 Fam LR 449; (1984) FLC 91—507
Norman & Norman [2010] FamCAFC 66
Phillips & Phillips [2002] FamCA 350
Pierce v Pierce (1999) FLC 92
Sigley & Cullen (No 3) [2015] FamCA 825
Stanford & Stanford (2012) 247 CLR 108, 122
Teal & Teal [2010] FamCAFC 120
Division: Division 2 Family Law Number of paragraphs: 67 Date of last submission/s: 13 February 2024 Date of hearing: 12 February and 14 February 2024 Place: Launceston – delivered in Hobart Counsel for the Applicant: The Applicant appeared in person Counsel for the Respondent: Mr T McKenna Solicitor for the Respondent: Simmons Wolfhagen ORDERS
LNC 203 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR EKREM
Applicant
AND: MS EKREM
Respondent
ORDER MADE BY:
JUDGE TURNBULL
DATE OF ORDER:
14 MARCH 2024
THE COURT ORDERS THAT:
Real Property and Trust Entities
1.The Applicant Husband must transfer to the Respondent Wife and/or relinquish all of the Husband’s right, title and interest in the following:
(a)B Street, Suburb C in the State of Tasmania and more particularly described in Certificate of Title Volume … Folio …;
(b)1 D Street, Suburb E in the State of Tasmania and more particularly described in Certificate of Title Volume … Folio …;
(c)2 D Street, Suburb E in the State of Tasmania; and
(d)The real property situated at F Street, Town G, Country H currently registered in the Wife’s name.
2.Subject to the Husband’s compliance with paragraph 1 of this Order, the Wife must transfer and/or relinquish to the Husband all the Wife’s right, title and interest in the following:
(a)The land at J Street, Suburb C in the State of Tasmania currently registered in the parties’ joint names;
(b)K Street, Town L in the State of Tasmania and more particularly described in Certificate of Title Volume … Folio …;
(c)The Ekrem Family Trust T/A as M Business excluding the real property at 1 D Street in the State of Tasmania (because of paragraph 1 of this Order), and
(d)The Ekrem Property Trust that includes the real property at N Street, City E in the State of Tasmania.
3.The Husband pay to the Wife the sum of $695,966.22 (‘the Cash Adjustment’) in the following manner:
(a)The Husband must pay to the Wife the Cash Adjustment, by way of three payments, as follows:
(i)$45,675.00 is to be paid by the Husband to the Ekrem Family Trust to discharge and reduce to $NIL the Wife’s beneficiary loan account (an asset of the Ekrem Family Trust) (First Payment).
(ii)The next part of the balance of the Cash Adjustment, after the First Payment, is to be paid to the Wife from the Ekrem Property Trust by way of repayment to the Wife of beneficiary loan account (a liability of the Ekrem Property Trust) owed to her, noting $189,149.45 is owing to her at the date of this Order (Second Payment).
(iii)The remaining balance of the Cash Adjustment, after the First Payment and Second Payment, will be paid by the Husband personally to the Wife (Third payment).
(b)The payment referred to in paragraph 3(a)(i) is to be paid by the Husband contemporaneously with the Second and Third Payments and within thirty (30) days of the date of this Order.
(c)The Second Payment and the Third Payment are to be paid to the Wife’s family law solicitors, Simmons Wolfhagen.
4.For the purposes of paragraph 1 of this Order and for the purposes of the Wife ceasing her roles with the Trusts and associated business, the parties will jointly instruct Mr O, Chartered Accountant, to assist them with doing all things necessary including, but not limited to, signing all documents, and providing all consents necessary to:
(a)Give effect to the paragraph 1 of this Order insofar as that paragraph relates to trust property and/or trust entities;
(b)Cause the Wife to be removed as a Trustee of the Ekrem Family Trust and Ekrem Property Trust and to otherwise resign from any other controlling role;
(c)Cause the Wife to relinquish her co-registration of business name of M Business from ASIC and the relevant industry authority issued by City E Council;
(d)Enable the Wife to relinquish to the Husband and/or assign to him as his absolutely, any beneficiary loan that would, but for this Order, be payable by either the Ekrem Family Trust and/or the Ekrem Property Trust to the Wife; and
(e)Ensure the Husband as sole trustee and beneficiary of the Ekrem Family Trust and/or the Ekrem Property Trust forgives all loans Ms Ekrem owes either trust, subject to advice from Mr O, Chartered Accountant, about achieving this in a revenue effective manner.
Joint Bank Accounts
5.Within 60 days of the date of this Order the parties will close all banking and other financial institution accounts that are in the parties’ joint names including their shares account.
Superannuation Split
6.The Wife is to receive $29,903 from the Husband’s Super Fund 1.
7.For the purposes of paragraph 6 of this Order, the base amount allocated to the Wife out of the superannuation interest held by the Husband in Super Fund 1 (Member number: …) (the Fund) is $29,903.
8.In accordance with paragraph 90XT(1)(a) of the Family Law Act 1975, whenever the Trustee of the Fund (the Trustee) makes a splittable payment from the interest held by the Husband, the Trustee must pay to the Wife, an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount specified in paragraph 6 of this Order, and there must be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for this Order.
9.This Order has effect from the operative time and the operative time is four (4) business days after the day on which the final sealed, signed Orders are served on the Trustee.
10.In accordance with the obligation set out under the Family Law Act 1975 and Family Law (Superannuation) Regulations 2001, the Trustee of the Fund must do all such acts and things and sign all such documents as may be necessary to calculate the entitlement of and make payment to the Wife in accordance with this Order.
11.Each party and the Trustee has liberty to apply in relation to the implementation of this Order.
Personal Property
12.The Husband must do all acts and things including, but not limited to, signing all documents necessary to relinquish to the Wife all the Husband’s right, title, estate and interest in the following:
(a)All chattels, including but not limited to furniture and contents, personal apparel, goods, and documents in the Wife’s possession;
(b)All monies held in any accounts held in the Wife’s name in any banking or other financial institution;
(c)Motor Vehicle 1 in the Wife’s possession; and
(d)Any entitlements of the Wife arising from the Wife’s membership of any superannuation or pension or life assurance/insurance fund.
13.The Wife must do all acts and things including, but not limited to, signing all documents necessary to relinquish to the Husband all the Wife’s right, title, estate and interest in the following:
(a)All chattels, including but not limited to furniture and contents, personal apparel, goods, and documents in the Husband’s possession;
(b)All monies including Crypto currencies held in any accounts held in the Husband’s name in any banking or other financial institution or crypto currency platform;
(c)Motor Vehicle 2 registration in the Husband’s possession;
(d)The Husband’s shares and investments; and
(e)Subject to this Order, any entitlements of the Husband arising from the Husband’s membership of any superannuation fund.
14.As a separate and additional liability, the Husband must pay, indemnify, and keep the Wife effectively indemnified against any and all:
(a)creditors of the Husband and his related entities being the Ekrem Family Trust and Ekrem Property Trust (the Trust Entities);
(b)borrowings of the Husband and the Trust Entities;
(c)liabilities to the Australian Taxation Office owing by Husband and the Trust Entities and any interests, costs or penalties that may apply;
(d)other debts and/or liabilities of whatever nature in respect of the Husband and the Trust Entities; and
(e)personal guarantees given by the Wife in respect of the Husband’s debts or debts and/or liabilities of the Trust Entities and business known as M Business.
15.As a separate and additional liability, the Wife must pay, indemnify, and keep the Husband effectively indemnified against any and all:
(a)liabilities to the Australian Taxation Office owing by the Wife; and
(b)other debts and/or liability of whatever nature in respect of the Wife.
Other Property and Financial Resources
16.Unless otherwise specified in this Order and except for the purposes of enforcing payment of any money due under these or any subsequent Orders, each party is solely entitled to all property and financial resources (and choses in action) in their possession on the date of this Order to the exclusion of the other. For the purposes of this order:
(a)banking and other accounts are deemed to be in the possession of the person whose name appears on the records of the relevant financial institution;
(b)insurance policies are deemed to be in the possession of the beneficiary or beneficiaries named in the policy;
(c)superannuation entitlements are deemed to be in the possession of the person named as the worker whose age or working future provides the conditions for payment out of such entitlements; and
(d)each party is solely liable for and indemnifies the other against any liability encumbering any item of property or financial resource to which that party is entitled under these orders.
Compliance with Order
17.Each Party must do all things necessary including, but not limited to, signing all documents and provide all consents necessary to give effect to this Order in the time periods prescribed in this Order.
Liberty to apply
18.The parties have liberty to apply in relation to the implementation of the terms of this Order.
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 TURNBULL
Overview
These are property proceedings initiated by Mr Ekrem (‘the Husband’) on 14 April 2022. At trial, he sought an equal division of the parties’ net assets, with no division of the superannuation assets. Ms Ekrem (‘the Wife’) sought a 65/35 division of the non‑superannuation assets and an equal split of the combined superannuation assets.
Both parties came to the hearing with the major facts[1] and the balance sheet[2] agreed. They also agreed on the structure of the final orders,[3] leaving only the question of the cash payment (if any) to be made by the Husband to the Wife. The parties also agreed that in the event the Court determines that the Wife should receive a split from the Husband’s superannuation, that the base amount be $29,903. Ultimately, neither party were cross-examined, and the hearing concluded upon the reception of short written and oral submissions. I commend both parties on making every effort to narrow the issues and lessen the court time to hear the matter.
[1] Exhibit J3 Statement of Agreed Issues and Facts (‘Exhibit J3’).
[2] Exhibit J1 Balance Sheet (‘Exhibit J1’).
[3] Exhibit J2 Agreed Form of Order (‘Exhibit J2’).
Facts and Chronology
The Husband was born in 1970 and is 53 years of age. He operates a business "M Business" from a property at N Street, City E.
The Wife was born in Country H in 1979 and is 44 years of age. She is not in paid employment, and maintains her role as a primary carer for the parties’ youngest child, X.
They met and began their relationship in Country H around the year 2000 and were later married in 2001. The Wife relocated to Australia in 2001. There was a period of separation around 2004 or 2005 for around 12 to 18 months, with the couple later reconciling. The parties permanently separated on 17 March 2021.[4]
[4] Exhibit J3.
There are two children of the marriage, one of whom — Ms Q — is an adult and self-supporting. X was born in 2016 and is currently seven (7) years of age. X’s parenting arrangements are set out in final Orders made by consent on 18 August 2023, which in essence provide that he lives primarily with the Wife and spends daytime periods with the Husband each week.[5]
[5] Order of Chief Judge Alstergren in Ekrem & Ekrem (Federal Circuit and Family Court of Australia, LNC203/2022, 18 August 2023) (‘Parenting Orders’). Parties agreed to parenting arrangements that X lives with the Wife and spends time with the Husband each week on a Tuesday and Wednesday from after school until 7:00pm and every Sunday fortnightly from 2:00pm to 7:00pm and during the school holiday periods on Tuesday and Wednesday from 12.00 noon to 7:00pm and each Sunday from 2:00pm to 7:00pm. Special time arrangements were also agreed upon for Father’s Day, Christmas Day, the Husband’s birthday, the Mother’s birthday, and X’s birthday.
X has been assessed as being on the Autism spectrum, as well has having a global development delay.[6] He is currently enrolled at R School, attending school for 2 hours Monday to Thursday and no school on Friday. The Wife is unable to work because of her caring responsibility.
[6] Trial Affidavit of Ms Ekrem filed 6 February 2024 (‘Wife’s Trial Affidavit’).
There are two trusts — the Ekrem Family Trust and the Ekrem Property Trust. The Property Trust is indebted to each party whilst they each have loans from the Family Trust. The parties have agreed that the Husband will retain the assets of both trusts. Any amount payable to the Wife by the Husband, because of the property order, will first come from the monies owed to her by the Property Trust. The Wife will also clear any amount she owes the Family Trust from monies she receives. The parties have received advice that there are unlikely to be tax consequences resulting from this approach.[7]
[7] The parties received advice from Mr O, as referred to at paragraph 7 of Exhibit J3: Statement of Agreed Issues and Facts and in a letter from Mr O dated 19 February 2024.
Joint Balance Sheet
The agreed balance sheet was exhibited as J1, a summary of which is set out here:
Assets
1 B Street, Suburb C (W) $708,750 2 2 D Street, City E (W) $400,000 3 1 D Street, City E (W) $400,000 4 F Street, Town G in Country H (W) $168,706 5 K Street, Town L (H) $237,500 6 Land at J Street, Suburb C (H) $202,500 7 Ekrem Family Trust t/as M Business (H) $37,500 8 Ekrem Family Trust including N Street, City E (H) $1,400,000 9 Motor Vehicle 1 (W) $6,950 10 Country H bank account (W) - 11 Australian bank accounts (W&H) - 12 Household contents (W&H) - 13 Motor Vehicle 2 (H) $3,075 14 Australian Shares (H) $79,649 15 Crypto Currency (H) $2,207 16 Beneficiary loan payable by the Ekrem Property Trust to Husband $246,093 17 Beneficiary loan payable to the Ekrem Property Trust to Wife but to be retained by the Husband for ease of calculation $189,149 TOTAL NON-SUPERANNUATION ASSETS $4,082,079 Liabilities
18 Tax liability – FYE 30 June 2023 (W) - 19 Tax liability – FYE30 June 2020 (H) $5,800 20 Previous tax liability of Wife $6,604 21 Loan to be repaid by Husband to Ekrem Family Trust $10,046.54 22 Loan to be repaid by the Wife to Ekrem Family Trust $45,675.50 Total – liabilities $68,126.04 NET TOTAL OF NON-SUPERANNUATION ASSETS $4,013,952.96 Superannuation
23 Super Fund 1 (W) $97,908.00 24 Super Fund 1 (H) $218,700.00 25 Super Fund 2 Pension $26,985.00 TOTAL OF SUPERANNUATION ASSETS $343,593.00
The Husband did not agree to a two-pool approach, whilst the Wife sought an equal division of the parties’ superannuation holdings. The parties did agree that if there is to be a division of superannuation, that the base amount to be split form the Husband’s Super Fund 1 will be $29,903.[8]
[8] Exhibit J2 [5].
Evidence
As stated, both parties relied upon the joint balance sheet, the joint minute of agreed form of Orders and the statement of agreed issues and facts.[9]
[9] Exhibit J1, J2 & J3.
The Wife relied upon:
·Response to Final Orders filed 10 June 2022;
·Affidavit of Ms Ekrem filed 6 February 2024;
·Case outline filed 13 February 2024; and
·Short written submissions filed 13 February 2024.
The Husband relied upon:
·Application for Final Orders filed on 14 April 2022;
·Affidavit of Mr Ekrem filed 14 April 2022;
·Case outline filed 6 February 2024; and
·Short written submissions filed 13 February 2024.
Standard of Proof
I note briefly, before continuing, that all facts in issue in these proceedings must be proved on the balance of probabilities. A fact in issue is 'proved' if I am reasonably satisfied, on the evidence, that it, is more likely than not that the fact existed or occurred in the manner ultimately determined.
Dixon J, as he then was, also remarked upon the standard of proof for civil proceedings in Briginshaw v Briginshaw (1938) 60 CLR 336, which remain relevant and authoritative:
The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.
I must ground my assessment of the issues in dispute on facts, of which I am persuaded, on the balance of probabilities.
Issues for Determination
The major questions to be determined were:
(a)Should there be a one or two pool approach?
(b)What is the impact of the Husband’s introduction of significant real estate to the relationship, when assessing the parties’ contribution-based entitlements?
(c)What is the impact of the Wife having a child with special needs in her predominant care and an inferior income, upon the assessment of the matters set out in s79(4) (d) – (g)?
The parties’ submissions
Mr McKenna, Counsel for the Wife, submitted that the parties’ contributions should be assessed 55/45 percent in the Husband’s favour — to give proper account of the significant contributions of both parties made throughout a long marriage including the Husbands’s initial introduction of several properties. He argued that there should be an adjustment of up to 20%, favouring the Wife for the factors set out in s 79(4)(d)-(g), given her inferior income earning capacity and her role as the fulltime carer of X. This results in an overall adjustment of the non-superannuation assets of 65/35 percent in the Wife’s favour, together with an equalisation of the superannuation assets.
Mr Ekrem, representing himself, submitted that the entire net asset pool should be divided equally. On a contribution-based assessment, his entitlement should be assessed at 65% to give account to his significant initial contributions. He accepts, however, there should be a 15% adjustment to the Wife for other factors. This, he argues, gives proper account to the significant assets he brought into the relationship whilst acknowledging the Wife’s financial inferiority by virtue of her role as X’s primary carer.
Property adjustment: The Law
Property proceedings under Part VIII and the approach in Hickey and Stanford
Part VIII of the Family Law Act 1975 (Cth) (‘the Act’) governs the scope of the Court’s power with respect to property and financial matters. The Court’s powers under ss 79(1) — as ‘very wide discretion[s]’ — must be exercised according to principled reason,[10] and are constrained by a number of factors to which the Court must direct itself.[11] To this end a typical approach, which I intend to follow, is that set out in Hickey & Hickey [2003] FamCA 395 and Stanford & Stanford (2012) 247 CLR 108,[12] comprising four steps:
(1)identify the parties’ existing legal and equitable property interests, liabilities, and financial resources at the time of trial, and then determine whether it is just and equitable to adjust their interests pursuant to s 79(1);[13]
(2)consider the parties’ contributions under s 79(4)(a)–(c);
(3)consider the factors under s 79(4)(d)–(g) including, by virtue of s 79(4)(e), the ‘subjective considerations’ under s 75(2) insofar as they are relevant;[14] and then,
(4)‘stand back’ to consider the justice and equity of the actual terms of order proposed to be made.[15]
[10] Stanford & Stanford (2012) 247 CLR 108, 122 [41].
[11] Mallet & Mallet (1984) 156 CLR 605, 608 (Gibbs CJ), noting that the ‘very wide discretion to make such order as [the court] thinks fit’ is conferred only ‘when [the court] is satisfied that it is just and equitable that an order should be made’, with his Honour further stating that ‘there are some broad principles to which the court is required to give effect, and some circumstances which it is required to take into account’ in making an order, and with Dawson J (at 647) referring to the just and equitable requirement as the ‘overriding requirement’.
[12] Hickey & Hickey [2003] FamCA 395, [39], noting the remarks of the Full Court in Norman & Norman [2010] FamCAFC 66, [60], at which their Honours state that ‘[i]t is the mandatory legislative imperative (to reach a conclusion that is just and equitable) that drives the ultimate result’ and that ‘[f]or all its usefulness and merit [the four—step approach] merely illuminates the path to the ultimate result’. I also note the three ‘fundamental propositions’ set out in Stanford & Stanford (n 10) 120 [36], as alternative guidance for trial judges, ultimately towards the same objective as the approach in Hickey, namely to cover off on all necessary points and criteria in pt VIII.
[13] Stanford & Stanford (n 10) 120 [37], noting the explanatory remarks in Lotta & Lotta [2017] FamCA 50, [283]–[284], importantly that ‘[s]uch a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist’ and that ‘the court needs to conclude that it would be unjust or unfair to leave property rights intact under s 79(2) of the Act’.
[14] Lotta & Lotta (n 13) [289].
[15] Teal & Teal [2010] FamCAFC 120, [70], referring to Phillips & Phillips [2002] FamCA 350 in which, at [68], their Honours discuss the importance of considering the ‘real impact’ of an order to assess whether the result is just and equitable.
Identifying the parties’ legal and equitable interests
As stated, the balance sheet was agreed and evidenced a net non-superannuation pool valued at $4,013,952.96 and a superannuation pool valued at $343,593.00.
Should the non-superannuation and superannuation assets be considered in two separate pools?
Mr McKenna submitted that splitting a modest sum from the Husband’s superannuation assets to the Wife will give her an opportunity to have a small nest egg for her retirement years, in circumstances where she will not be able to easily build superannuation from paid employment for many years, because of her role as the primary carer for X. It is, therefore, just and equitable that a two-pool approach be adopted and that the parties’ superannuation assets are equalised.[16]
[16] Trial: oral submission.
The Husband submitted, given his age, that it was important that he be able to retain his superannuation so that he can maximise his financial position for retirement. He is nine years older than the Wife, and she will have the ability to build her superannuation assets once X attains the age of eighteen years.[17]
[17] Written Submissions of Mr Ekrem filed 13 February 2024 [9(a)] (‘Husband’s Written Submissions’); Trial: oral submission.
Both parties hold superannuation — the Wife $124,893.00 and the Husband $218,700.00. The Wife’s ability to work in paid employment in the years ahead will be curtailed because of her caring responsibilities. This will result in the Wife not being able to add significantly to her superannuation. The Husband will, however, continue to work to improve his superannuation balance each year.
The proposed spilt to the Wife is modest. I am satisfied that it is just and equitable that the Wife be able to leave the relationship with a reasonable superannuation base. I will, therefore, adopt a two-pool approach and will order that the Wife receive $29,903 from the Husband’s Super Fund 1.
By reference to the parties’ existing legal and equitable property interests, is it just and equitable to make an order pursuant to s 79?
As foreshadowed above, the law requires that any interference with regard to the legal and equitable interests of the parties' adheres to principled reason.[18] Justice and equity, with respect to property settlement in s 79(2), does not admit of exhaustive definition and it is ‘not possible to chart its metes and bounds’.[19] The principles contained within the Act also accommodate ‘stated or unstated assumptions and agreements about property interests during the continuance of the marriage’.[20] It is just and equitable, according to Stanford, for a Court to make a property settlement order if such agreements or assumptions with respect to property interests during the marriage have been brought to an end, which usually occurs with the end of the marriage or relationship.
[18] Stanford & Stanford (n 10) 121 [41].
[19] Ibid 120 [36].
[20] Ibid 122 [41].
Both parties seek a property order. Their financial lives are intertwined. They own real estate, superannuation, cash, and other property and hold liabilities. They each owe money to the Family Trust and are owed monies by the Property Trust. The assumptions the parties' held during their relationship as to the appropriateness of the arrangement of their property interests and liabilities ended when the parties' separated. It is just and equitable for there to be a property order in this case.
Section 79(4)(a)–(c) — assessment of contributions
In assessing the parties’ contributions, I must ‘weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation’.[21] A trial judge must not disproportionately account for one contribution over and above the ‘myriad of other contributions’ made during the relationship[22] This means that any contribution, whatever its size or significance, should not be weighed against the other ‘miscellany’ of contributions made, but instead should be assessed as one of those myriad contributions.[23] In essence, as expressed by Harper J in Dovgan & Dovgan [2021] FamCA 306, the introduction of property by one party to a long relationships must be assessed holistically: ‘all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder’.[24]
[21] Jabour & Jabour [2019] FamCAFC 78, [60].
[22] Ibid [43].
[23] Ibid [59], [73].
[24] Dovgan & Dovgan [2021] FamCA 306, [347].
Recently, the Full Court in Gadhavi & Gadhavi [2023] FedCFamC1A 117 at [30], confirmed that the Court cannot overlook the use and impact of an asset introduced into the relationship by a party:
30.It was not in dispute that the primary judge applied proper principle in determining that the assessment of the impact of the Husband's initial contributions could only properly occur after she assessed "the totality of the parties' contribution-based entitlement over the entirety of the marriage and post-separation" (at [210]).
31.In that respect, in Pierce v Pierce (1999) FLC 92-844 ("Pierce"), the Full Court stated at [28]:
… It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the Husband and the Wife. In considering the weight to be attached to the initial contribution, in this case of the Husband, regard must be had to the use made by the parties of that contribution. (Emphasis added)
32.To similar effect, in Cabbell & Cabbell [2009] FamCAFC 205, the Full Court stated at [54] that in considering the parties' contributions, it is necessary to trace the use of those assets and consider the foundation that they laid for the subsequent accumulation of wealth by the parties.
33.That is, in evaluating the parties' contributions, it was necessary for the primary judge to have regard to the context of the Husband's initial contribution and specifically, to the opportunity that initial contribution created and the impact of that initial contribution on the subsequent wealth of the parties as at the date of the hearing. (Emphasis added)
The Court must also consider the parties' non-financial contributions, including those as homemaker and parent, and not give such contributions token weight. In Dawes & Dawes [1989] FamCA 71, the Full Court stated:
73.Although it is difficult, as it always is in such cases, to put one's finger squarely on what led his Honour to so undervalue the Wife's contribution, we think that one significant matter which did so was that he failed to give any weight to the fact that the Wife's performance of her role as homemaker and parent during the 30 years of cohabitation was not just a contribution under s.79(4)(c) (which he subsequently recognized to some degree) but was also a significant contribution under s.79(4)(b). That point was made by the Full Court (Nicholson, C.J., Murray and Buckley, JJ.) in In the Marriage of Napthali (1988) 13 Fam LR 146 at p 151, where their Honours said:-
151.Turning now to the second ground of appeal, (which was that 'the court erred in law in failing to take into account contributions made by the Wife during the marriage as homemaker and parent') it is apparent that nowhere in her Honour's judgment does she consider the contribution of the Wife to the business assets as a home-maker and parent. It is clear that the Wife did perform this role and nowhere in the evidence or in the submissions was any criticism directed at her capacities in this regard. It is to be noted that in Mallet v. Mallet [1984] HCA 21; (1984) 9 Fam LR 449; (1984) FLC 91-507, the High Court whilst rejecting the proposition of a presumption of equality, approved statements by this Court that the purpose of s 79(4)(b) is to give recognition to the position of the house Wife who by her attention to the home and the children frees her Husband to earn income and acquire assets and also approved the proposition that the contribution made by the Wife as a home-maker and parent should be recognised not in a token way but in a substantial way: see Gibbs C.J. at Fam LR 451; FLC 79,111; Mason J. at Fam LR 461‑2; FLC 119-20.”[25] (Emphasis added)
[25] Dawes & Dawes [1989] FamCA 71, [73] (Lindenmayer, Strauss and Cohen JJ).
I shall have regard to all these principles when assessing the parties' contributions.
Non-superannuation assets
Section 79(4)(a)–(c) — contributions
The parties agree that the Husband brought three properties[26] into the relationship that remain part of the asset pool to be divided. The Wife, by contrast, brought in a modest number of assets.[27] The properties introduced by the Husband now constitute approximately 26% of the net non-superannuation pool,[28] and are income producing. The properties were also used as leverage to purchase other real estate during the marriage, including the Wife’s property situated in Country H.[29] The introduction of these properties was a significant contribution of the Husband. They should not, however, be considered in isolation. They form part of the myriad of contributions of both parties throughout a lengthy marriage. The Husband did purchase a property for the wife whilst they were separated in 2004/5. The Wife, of course, had Ms Q in her care throughout that period.[30]
[26] Affidavit of Mr Ekrem filed 14 April 2022 [4] (‘Husband’s Affidavit’).
[27] Exhibit J3 [14].
[28] The value of the City E and Town L properties is $1,037,500, out of a total net pool of $4,013,952.96.
[29] Wife’s Trial Affidavit (n 6) [41].
[30] Wifes’s trial Affidavit (n 6) [13]
I have no doubt that both parties worked very hard to preserve their asset base and build upon the same. The Wife’s contributions as the primary carer for Ms Q and X, and as homemaker, cannot be underestimated. Her contributions as X’s primary carer, with his special needs, have continued post separation. The Husband also made important non-financial contributions to the maintenance and upkeep of the properties.[31] The parties agree that their other financial and non-financial contributions should be regarded as equal.[32]
[31] Husband’s Written Submissions (n 17) [8(c)].
[32] Exhibit J3 [23].
Conclusion regarding the parties’ contributions
I determine that the parties financial and non-financial contributions over approximately 21 years of marriage should be assessed 55/45 percent in the Husband’s favour. This results in the Husband being entitled to net assets valued at $2,207,674.13 and the Wife $1,806,278.83 — a differential of $401,395.30.
Section 79(4)(d)-(g), including s 75(2) — other factors
It is not the task of a Court with jurisdiction under Part VIII to engage in social engineering under s 79(4)(d)-(g) — that is, to serve any ‘moral’ or ‘charitable’ (but non-legal) ends outside the bounds of s 79.[33] The Full Court in Beck & Beck (No 2) (1983) FLC 91-318 explained that:
[i]t is the financial consequences of all of the relevant matters that are to be taken into account and the section is so drafted to effect this purpose while excluding matters of conduct in a moral or non-financial sense.[34]
[33] Clauson & Clauson (1995) FLC 92-595, 81, 912.
[34] Beck & Beck (No 2) (1983) FLC 91-318 78,167–78, 168 (‘Beck & Beck’).
Whether, in relation to maintenance or property settlement, the Court cannot assess or account for the s75(2) (or s90SF(3)) factors without satisfying itself that it bears upon a party’s financial circumstances.[35]
Section 79(4)(d): the effect of any proposed order upon the earning capacity of either party to the marriage
[35] Jacobson & Jacobson (1989) FLC 92-003, 77, 178, at which Nygh J remarks that there ‘cannot be any doubling up as between the adjustment in capital position of the parties, which is implicit in sec 75(2) factors [in the context of s79], and making provision for the periodic needs of a party who suffers from an inability to support [themselves] pursuant to sec 72 of the Act’. Both assessments, on his Honour’s remarks, require an assessment of the financial consequences of the factors considered. See also Sigley & Cullen (No 3) [2015] FamCA 825, [42], [105], as an example, in which Cronin J discusses the Applicant ’s health as it affected her academic studies, which in turn may have affected her employment prospects.
The term ‘earning capacity’ is defined as ‘a capacity to obtain income which could be used to provide maintenance … and not merely as current income from personal exertion or from the use of personal skills.’[36]
[36] Beck & Beck (n 33) 166.
Neither parties’ proposal, nor my assessment of the parties’ contributions, has any effect upon their earning capacity. Both parties will retain income producing assets. The Husband will continue to operate the business and the Wife will remain the primary carer for X and will receive child support from the Husband and government benefits.
Section 79(4)(e): the matters referred to in subsection 75(2) so far as they are relevant
Section 75(2)(a): the age and state of health of each of the parties
The Husband is 53 years of age and the Wife is 43. Although the Husband submitted that his energy levels are somewhat diminishing, neither he or the Wife, produced any evidence to establish that they are unable to continue to work and function due to ill health or any other credible reason.
Section 75(2)(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
The Husband continues to operate ‘M Business’, and in addition to his rental income, earns a taxable income of approximately $103,000.[37] The Wife has previously had a taxable income of up to approximately $61,000, but in 2023 it reduced to approximately $28,000.[38] The Husband calculated that as a result of the rent she will receive from the her retained properties, the Wife’s income will increase to approximately $39,000 per annum plus government benefits and child support.[39] The Wife did not dispute this estimate.[40]
[37] Exhibit J3 [27], [31].
[38] Ibid [27], [31].
[39] Husband’s Written Submission (n 17) [9(b)].
[40] Written Submissions of Ms Ekrem filed 13 February 2024 [23.15] (‘Wife’s Written Submission’).
The Husband submitted that his income cannot be assured into the future given his age.[41] There was, however, no evidence that the Husband suffers from any impairment that would prevent him from continuing to earn his current income.
[41] Trial: oral submission.
The Husband also hinted that the Wife has health care qualifications that enable her to earn a higher income. The Wife disputed this suggestion:
23.6 The Wife has not worked outside the family since the Parties’ arrival in Australia in 2002. This is not disputed by the Husband. See for example his 14 April 2022 affidavit at [18], [19] and [20].
23.7 [X] is 7 years old living in the primary care of the wife. He is currently attending school four days a week for two hours each day.
23.8 [X] has a global development delay and has been assessed on the Autism Spectrum. The Wife describes [X] as having a disability that requires numerous medical and therapy appointments that she is solely responsible for, noting she does not have family supports in Tasmania.
23.9 Having not worked for 21 years it is submitted the duration of the Parties’ marriage has affected the Wife’s capacity for gainful employment. Further, with the care of a 7-year old child with special needs who currently spends 8 hours a week at school, it is submitted the wife has no ability to earn an income from personal exertion in the foreseeable future.[42]
[42] Wife’s Written Submissions (n 39) [23.6]-[23.9].
I accept the Wife’s argument — she has little capacity to move into paid employment given her caring responsibilities. The Wife is younger than the Husband and will be in her middle 50’s when X attains the age of 18. There is, however, no guarantee that her caring role for X will not extend into his adulthood.
The Husband has greater earning capacity than the Wife and there is an income disparity between the parties. Some of that disparity is, however, returned to the Wife via child support payments.
Section 75(2)(c): whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
The Wife is the primary carer of the youngest child of the parties. As per the parenting orders made by consent on 18 August 2023, X lives with the Wife and spends time with the Husband each Tuesday and Wednesday, and Sunday fortnightly.[43] The Wife has sole parental responsibility in relation to X’s health and education but otherwise the parties’ have shared parental responsibility.[44] As mentioned above, X has been assessed as being on the Autism Spectrum and having a global development delay.
[43] For details, see paragraph 6 of these Reasons.
[44] Parenting Orders (n 5) [7]-[8].
X attends school eight (8) hours per week and is otherwise in the care of the Wife, excluding the time spent with the Husband.[45] Although there is a plan for school attendance to increase in the future, there are no steps in place for that to occur at this time.[46] The Wife’s role as X’s carer curtails her ability to undertake meaningful paid employment.
Section 75(2)(d): commitments of each of the parties necessary to enable them to support themselves and a child or another person that the party has a duty to maintain
[45] Wife’s Trial Affidavit (n 6) [22].
[46] Ibid.
The Wife contends that X is eligible for some funding under the National Disability Insurance Scheme, which is used for his occupational therapy, but the Scheme does not cover all his expenses, with the Wife having to meet the rest of the expenses out of her own pocket.[47] The Husband does pay a reasonable level of periodic child support.
[47] Ibid [21].
Both parties will receive sufficient incomes to enable them to meet the reasonable expenses of X and themselves.
Section 75(2)(e): the responsibilities of either parent to support any other person
This factor is not relevant.
Section 75(2)(f): subject to s 75(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) an superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside of Australia
The Wife is entitled to $26,985.00 from the Super Fund 2 Pension, which was set up when the Wife was working in Country H. The pension acts like a superannuation fund — the Wife is not receiving any payments from the pension and will only be able to access it once she reaches retirement age.[48] At the time of the hearing, the Wife was not paying any amount into the fund.[49] The Wife does receive $346.66 per fortnight from Family tax benefits and a Carers Allowance.[50]
[48] Ibid [25(d)].
[49] In her trial affidavit, the Wife states that she normally would be paying monies into the Super Fund 2 Pension of the rent received from the unit, however, the payments have stopped as the unit is no longer tenanted.
[50] Wife’s Trial Affidavit (n 6) [75].
Section 75(2)(g): a standard of living that in all the circumstances is reasonable
The parties maintained a reasonable standard of living during the relationship. The Wife’s financial circumstances are more precarious than the Husband’s due to her fulltime caring responsibilities for X, however, each of them will receive sufficient income (including government benefits and child support for the Wife) to meet their reasonable expenses and maintain their current standard of living.
Section 75(2)(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
This factor is not relevant.
Section 75(2)(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
This factor is not relevant.
Section 75(2)(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
This was a long marriage with each party making substantial contributions. The Wife’s contribution as homemaker and primary carer of the children assisted the Husband to make his important contributions as the primary income earner. Both parties worked very hard to build the asset pool available for division.
Section 75(2)(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
The parties were married for approximately 21 years. The Wife’s financial circumstances have been, and remain, impacted by her ongoing role as the primary carer of the parties’ children.
Section 75(2)(l): the need to protect a party who wishes to continue that party’s role as a parent
Both parties agree that the Wife will remain X’s primary carer.
Section 75(2)(m): if either party is cohabiting with another person—the financial circumstances relating to the cohabitation
Neither party has re-partnered.
Section 75(2)(n): the terms of any order made or proposed to be made under section 79 in relation to the property of the parties
Pursuant to my contribution-based assessment, the parties financial and non-financial contributions over 21 years of marriage have been assessed 55/45 percent in the Husband’s favour. This results in the Husband being entitled to net assets valued at $2,207,674.13 and the Wife $1,806,278.83 — a differential of $401,395.30.
Section 75(2)(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
The Husband pays the Wife child support currently assessed at in the sum of $953 per month.[51] He was paying X's private school fees and related expenses for his enrolment at S School,[52] however, X now attends a public school.[53]
Section 75(2)(o): any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account
[51] Ibid [78].
[52] Husband’s Affidavit (n 26) [44].
[53] Wife’s Trial Affidavit (n 6) [22].
There are no other relevant factors.
Section 79(4)(f): any order made under this Act affecting a party to the marriage or a child of the marriage
Pursuant to the Parenting Orders,[54] the Wife is to remain as X’s primary carer and the Husband will spend day time periods with him each week.
Section 79(4)(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
[54] Parenting Orders (n 5); See paragraph 6 of these Reasons.
As stated previously, the Husband pays the Wife assessed child support.[55]
[55] See paragraph 59 of these Reasons.
Conclusion regarding the matters referred to in s 79(4)(d)–(g)
Considering all the relevant factors set out above, including the parties’ income disparity and the Wife’s role as X’s primary carer, I determine that there should be an adjustment in favour of the Wife of 13%.[56] I acknowledge that both parties referred to a percentage adjustment of 15%, however I consider a 13% adjustment to be more appropriate.
[56] 13% of the non-superannuation pool amounts to $521,813.89 whilst 15% is $602,092.95.
Overall Conclusion
I have determined that the parties’ non-superannuation assets should be divided 58/42 percent in favour of the Wife. This results in the Wife being entitled to net assets valued at $2,328,092.72 and the Husband $1,685,860.24 — a differential of $642,232.48.
The Wife holds net assets valued at $1,632,126.50[57] and the Husband $2,381,826.50. The Wife is entitled to net non-superannuation assets valued at $2,328,092.72 and as such the cash adjustment payable to her by the Husband is $695,966.22 (including the monies owed to her from the Ekrem Property Trust). I note that she will repay the monies she owes the Family Trust from these funds.
[57] For ease of calculation, the amount owed to the Wife from the Ekrem Property Trust of $189,149.45 will be regarded as an asset to be retained by the Husband, noting that that amount will be returned to the Wife as part of the monies payable to her under the property order. The Wife will retain the assets at 1, 2, 3, 4 and 9 of the balance sheet and the liabilities at 20 and 22.
Final assessment: a just and equitable exercise of discretion?
After assessing contributions and other factors this Court must consider whether, considering those assessments and the actual property to be divided, the proposed exercise of the discretion under s 79 is just and equitable. In Clauson & Clauson, the Full Court said the following:
… that exercise is not done in isolation; it is done against the background of conclusions already arrived at on contributions, the consequence of which will be in some cases to intrude into the s 75(2) exercise because of the dimension of the former conclusion and the total pool.
It is largely for that reason that it is ultimately necessary to stand back from the process and reach a conclusion which appears overall to be a just and equitable exercise of the discretion.[58]
[58] Clauson & Clauson (n 32) 81,911–81,912.
As a result of my assessment, both parties will retain superannuation, real estate, and cash. Each party will retain assets that are income producing. The Husband will be able to continue to operate his business and in turn help financially support the Wife, who has the fulltime care for X. Standing back, I am satisfied that a 58/42 division of the parties’ non-superannuation assets in favour of the Wife and a superannuation split to the Wife of $29,903, is a just and equitable outcome.
I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Turnbull. Associate:
Dated: 14 March 2024
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