Elgabri & Elgabri
[2009] FamCA 227
•26 March 2009
FAMILY COURT OF AUSTRALIA
| ELGABRI & ELGABRI | [2009] FamCA 227 |
| FAMILY LAW – PROPERTY SETTLEMENT – VALUE OF PROPERTY – Self managed superannuation fund – Dispute as to valuation of the superannuation fund to be resolved by appointment of an accountant and auditor to regularise the affairs of the superannuation fund – Dispute as to the valuation of the taxi plate owned by the superannuation fund – Expert opinion on the market value of the taxi plate was reliant upon information provided by the RTA in circumstances where the market evidence revealed something different – The Court ultimately relied upon the sales evidence of the market value of the taxi plate and made the deductions which the expert suggested should be made FAMILY LAW – PROPERTY SETTLEMENT – CONTRIBUTIONS – Contributions to the date of separation broadly equal – The wife’s contribution based entitlement to the husband’s “windfall” inheritance received very late in the marriage found to be approximately 5 percent. FAMILY LAW – PROPERTY SETTLEMENT – SECTION 75(2) – A 7.5 percent adjustment made in favour of the wife with respect to the husband’s inheritance and his minimally greater capacity for employment FAMILY LAW – PROPERTY SETTLEMENT – JUST AND EQUITABLE – Despite the outcome that the orders leave the husband in a significantly better financial position than they leave the wife, that disparity is entirely referable to the magnitude of the husband’s inheritance |
| Family Law Act 1975 (Cth) Part VIII, s 75(2) Pierce & Pierce (1998) 24 Fam LR 377; (1999) FLC 92-844 |
| APPLICANT: | Ms Elgabri |
| RESPONDENT: | Mr Elbagri |
| FILE NUMBER: | PAC | 46 | of | 2007 |
| DATE DELIVERED: | 26 March 2009 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Coleman J |
| HEARING DATE: | 16 & 17 March 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Merkel |
| SOLICITOR FOR THE APPLICANT: | Griffin Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Givney |
| SOLICITOR FOR THE RESPONDENT: | Watts McCray Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Sansom |
| SOLICITOR FOR THE RESPONDENT: | Watts McCray Lawyers |
Orders
That within 90 days the parties do all such acts and things and execute all deeds documents instruments and writings as shall be necessary to transfer to the wife absolutely and beneficially the whole of the husband’s right title and interest in the property known as and situate at M NSW (“M property”) being the property described in Folio Identifier ….
That upon the transfer of M property to the wife, the wife indemnify the husband and forever keep him indemnified with respect to all liabilities and outgoings of whatsoever nature or kind.
That, in consideration of the transfer to the wife of the husband’s interest in M property, the wife within 90 days of the date of these orders pay to the husband the sum of $43 556.
That in the event of the wife failing to pay to the husband the said sum of $43 556 within 90 days of the date of these orders, the husband have the option within 30 days thereafter of paying to the wife the sum of $331 444, whereupon the wife shall transfer to the husband the whole of her right title and interest in M property and the husband shall indemnify the wife in the terms referred to in these orders.
That in the event of neither the wife nor the husband exercising the rights conferred upon them by these orders within 120 days of the date of these orders, the parties do all acts and things and execute all deeds documents instruments and writings necessary to cause M property to be sold at and for a price agreed in writing between the parties, and to cause the proceeds of sale after payment out of agents commission and selling expenses to be divided between them as tenants in common in shares of 88.4% to the wife and 11.6% to the husband.
That pursuant to s 90MT(1) of the Family Law Act 1975 (“the Act”) the parties as trustees of the Elgabri Superannuation Fund do all acts and things and execute all deeds documents instruments and writings necessary to cause the Elgabri Superannuation Fund ABN … (“the superannuation fund”) to make a splittable payment to an eligible superannuation fund nominated by the wife for that purpose the sum of $126 053 being the entitlement of the wife in the said superannuation fund together with any further monies as shall be payable to the wife pursuant to orders 7 and 8 hereof.
That the parties cause an accountant and auditor agreed upon by them for that purpose, of failing such agreement, nominated by the President of the Institute of Chartered Accountants, to expeditiously audit the Elgabri Superannuation Fund.
That pursuant to s 90MT(1) of the Act the parties as trustees of the Elgabri Superannuation Fund cause any monies over and above the sum of $47 000 which are found to be due to the Elgabri Superannuation Fund pursuant to Order 7 hereof to be paid, after deduction of any sums determined by the auditor of the fund to be appropriately deducted, to the superannuation funds nominated by the parties for that purpose as tenants in common in shares of 60 percent to the wife and 40 percent to the husband.
That, upon compliance with the preceding order, the parties do all such acts and things as shall be necessary to cause the wife to cease to be a member of the Elgabri Superannuation Fund and to resign as a trustee of the said fund.
That, save to the extent provided by these orders, each party retain absolutely and beneficially all property real or personal possessed or having previously been received by each of them.
That the costs of the proceedings be reserved.
That written submissions in support of any application for the costs of the proceedings be filed and served within 28 days and that any submissions in response to such submissions be filed and served within 21 days thereafter.
IT IS NOTED that publication of this judgment under the pseudonym Elgabri & Elgabri is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 46 of 2007
| MS ELGABRI |
Applicant
And
| ELGABRI |
Respondent
REASONS FOR JUDGMENT
By Application filed 4 January 2007 Ms Elgabri (“the wife”) sought orders for settlement of property against Mr Elgabri (“the husband”) pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”).
In essence, the wife sought that the husband transfer to her his interest in the former matrimonial home of the parties at M (“the M property”). The wife further sought that the husband pay to her such monies “as the Court deems appropriate in all the circumstances.” The wife sought various orders with respect to sundry items of personalty, and a splitting order pursuant to s 90MT(1)(a) of the Act with respect to $43 500 of the husband’s interest in the parties’ superannuation fund.
By his Amended Response filed 24 April 2007, the husband opposed the granting of relief in the terms sought by the wife. By minute of order provided by his Counsel at trial, the husband sought that the wife pay to him $166 234 whereupon he transfer to her the whole of his interest in M property provided that, if the wife failed to exercise such option to purchase, the husband receive M property upon payment to the wife of $208 760.10. The husband sought that each party retain all property currently possessed or previously received by them, including their respective interests in the parties’ superannuation fund.
On 21 March 2007, the mother of the respondent husband (“the second respondent”) filed a Response to the wife’s application.
Credit
Each party impressed as an essentially honest and reliable witness. So did the husband’s mother in the course of her brief cross-examination.
The parties were able to make concessions which should have been made. The husband was somewhat more willing to do so than the wife but that is not said critically of the wife’s evidence.
To the extent that the affidavits reveal differences of opinion or recollection, such differences are minor in nature and ultimately do not assume significance.
Objectively, for the parties to have accumulated what they did (apart from the husband’s inheritance) in the time they did, with the incomes which they had could only have occurred if, as the evidence clearly demonstrates, both parties were at all material times diligently and skilfully applying themselves in the various ways which the evidence reveals them to have.
To the extent that the husband was cross-examined in relation to the movements of funds 10 years or more ago but was unable to provide explanations for such movements, or to corroborate his assertions in that regard by reference to documentation, no adverse inference should be drawn. Objectively, any significant movements of money referred to in cross-examination occurred at times when transactions with the superannuation fund and/or licence plates were occurring. Broadly speaking, the figures balance in relation to those transactions.
Objectively, given the absence of any allegations that either party was wasteful of matrimonial property, or that funds of any significance had disappeared in circumstances which warranted criticism, the scope for either party having failed to adequately account for any significant funds received or disbursed by him or her is clearly extremely limited.
The husband readily conceded that the superannuation fund’s NAB trading account should have more money in it than it does, and volunteered a significant amount which is reflected in the figures to which the Court will later refer.
No part of the determination of this case turns on preferring the evidence of one party to that of the other, or rejecting any explanation of financial transactions advanced by either party. Nor does it turn on any adverse inferences in relation to the adequacy or reliability of financial disclosures made by the parties.
By the end of the trial of the proceedings, it could fairly be said that the case turned more on the exercise of discretion in relation to particular facts and circumstances which are essentially well established, than to the resolution of any significant disputed issues of fact.
Material Facts
The parties married in May 1981 and separated under the one roof 25 years later.
At the end of 2006 the husband vacated the former matrimonial home and commenced to occupy rented accommodation. The wife remained in the unencumbered former matrimonial home where she continues to reside.
There were two children of the marriage, a daughter who was born in May 1982 and a son who was born in August 1983. The children are accordingly aged 26 and 25 years respectively. The daughter turned 18 during 2000 and the son turned 18 during 2001.
The husband was born in May 1952 and is now aged 56 years.
The wife was born in October 1953 and is now aged 55 years.
The husband has not had employment since 1998. There is no medical evidence establishing that health considerations prevent the husband from seeking employment.
The wife last had employment in 2001. Health considerations prevent the wife from seeking employment.
The husband commenced employment with S Organisation in 1973. He continued in such employment until 1998 when he was made redundant. The husband accordingly completed 8 years service with S Organisation prior to the marriage and 17 years with S Organisation subsequent to the date of marriage.
In 1979 the husband purchased property at E for approximately $21 500. $3 000 was provided by the husband or by his mother on his behalf. $18 000 was borrowed to complete the purchase of the property. The husband and his mother commenced to occupy the property upon completion of the purchase.
At the date of marriage the E property was worth $35 000 and was subject to a mortgage in respect of which $15 000 was then outstanding. The husband thus had equity in the E property of $20 000. The husband had a motor vehicle and some personalty and modest savings. The wife had personalty but otherwise no assets of significance. It is common ground that a matter requiring consideration in these proceedings is the significance which should now attach to the husband’s initial contribution of $20 000 of equity in the E property at the date of marriage.
In 1982 the parties acquired a mixed business in Sydney. They lived above the shop and rented out the E property. The business continued for 12 – 18 months. Both parties and the husband’s mother worked in the shop. Although the parties disagree as to exactly who did what and for what periods, it is clear, particularly as the parties by that time had a baby, and the husband had full time employment, that managing the shop was very much a team effort.
The evidence does not suggest that the sale of the business materially advanced the parties’ financial position. To the extent that the business may have been financially disadvantageous to the parties, the evidence does not suggest that to have been the fault of the husband, or the wife, or the husband’s mother.
By 27 May 1983 the husband was able to secure a discharge of the mortgage over the E property. Within the first two years of marriage, the parties were thus able to discharge a capital debt of $15 000. During that period the wife did not have outside employment and the husband received modest wages from S Organisation. It is difficult to avoid concluding that the parties were only able to pay out their mortgage within such a short time as a result of hard work by each of them and careful management of their funds.
In 1986 the parties purchased vacant land at M for $32 000. The wife by that time was working and earning income which she contributed for the benefit of the family. At all material times prior to the termination of his employment in 1998, the husband continued to earn income from his employment by S Organisation. He contributed such income for the benefit of the family.
In 1987 the parties borrowed $72 000 from St George Bank. The parties then built a house on the M property.
The E property was sold and approximately $80 000 resulted from such sale. On completion of the house at M, the parties, their children and the husband’s mother occupied the premises. For the short period between the completion of the house at M and the sale of the E property, the E property was rented out.
The proceeds of sale of the E property were utilised to discharge the mortgage over the M property. By 1995 at the latest, the M property was unencumbered. The husband suggests that it became unencumbered in 1988. Nothing turns on which party is correct about that.
The wife continued to be in employment and, in 1988, commenced to be employed by T Organisation. That employment continued until 1994.
In 1992 the wife commenced studying by external studies for a Bachelor of Arts degree. The wife completed that course in 1994, whereupon she commenced to be employed at N Organisation. The wife at that time received $2 371.19 from her former employer, T Organisation. Those monies were applied for the benefit of the family. The wife continued her employment at N Organisation until 2001.
In 1998 the husband accepted a voluntary redundancy package from S Organisation. He received a redundancy payment of $70 000 together with unpaid leave and other entitlements of $25 000 in cash. Those monies were applied for the benefit of the family. The husband also received preserved superannuation entitlements of $155 000.
In 1998, by Deed of Settlement, the Elgabri Superannuation Fund (“the superannuation fund”) was created. The husband and wife were and continue to be the trustees of the fund and its only members. The husband’s preserved superannuation interest from S Organisation was rolled into that fund upon the fund’s creation.
In 1999 the parties purchased a hire car plate for $150 000. The acquisition of the plate was funded by a borrowing of $70 000 together with monies borrowed to complete the acquisition, inferentially about $80 000. The hire car plate was leased out. At all material times the hire car plate, and its successor the taxi plate, were leased out to third parties and the rental payments thereby generated received and utilised by the parties.
A second hire car plate was also purchased in 1999 for $153 000 or $155 000. That was acquired by the superannuation fund, which utilised for that purpose the $155 000 which the husband had received by way of preserved benefits on termination of his employment with S Organisation.
In 2001, as a consequence of injuries she received, the wife ceased employment at N Organisation and commenced to receive a disability pension. The wife received a $3 949.82 termination payment.
In 2001 the wife received approximately $35 000 by way of compensation payment from N Council. Those monies were applied for the benefit of the family.
The wife was injured in a motor vehicle accident in about 2001. In 2004 the wife received compensation of $8 938.10 as a result of a claim made on her behalf arising out of the motor vehicle accident. Those funds were applied for the benefit of family.
In approximately 2001 or 2002, the hire car plate which the husband had earlier acquired was sold. The parties disagree as to whether it was sold for $100 000 (the husband’s contention) or $145 000 (wife’s contention). Whatever the figure, the balance after payment out of the loan which had been taken out to purchase the hire car plate was applied for the benefit of the family.
In 2001 the RTA cancelled hire car plates and converted them to taxi plates. The superannuation fund’s hire car plate was thus converted at that time to a taxi plate which was subject to three conditions, they being that the plates were leased to the holder for 50 years, that the plates could not be sold and/or transferred within the first five years of issue (other than with the consent of the RTA in certain circumstances) and, upon the sale of any such taxi plate the RTA received 39.8 percent of the sale price plus GST and a 2.5 percent transfer fee was paid by the vendor.
The superannuation fund leased the taxi plate which it thus acquired. From the time of its acquisition, which is not entirely clear, and may have been from as early as 2001, or as late as 2005 the superannuation fund has at all material times leased the taxi plate. The income generated by the lease of the taxi plate has steadily increased over the years to the point where it is currently approximately $2 200 per month. Subject to the possibility that the husband has yet to remit some of the payments received with respect to the taxi plate to the superannuation fund, the rental income from the plate has been paid into the superannuation fund.
In 2004 the husband received either $527 398.29 (husband’s contention) or $554 631.81 (wife’s contention) from the estate of the husband’s deceased uncle. That money was paid into an HSBC account in the husband’s name and has effectively remained so invested ever since. The husband has received and utilised the interest generated by the fund, for the benefit of the family until separation and, subsequent to separation for his sole benefit.
The parties separated under the one roof in June 2006. In November of that year the husband ceased to occupy the former matrimonial home and, since March 2007 the husband has been renting premises which are occupied by himself, his mother and the parties’ daughter.
Proceedings for settlement of property were commenced by the wife in this Court early in 2007. From time to time injunctive orders have been made. It is necessary for present purposes only to record that from a St George account which had a balance of approximately $171 000 at separation, the wife has received pursuant to Court orders the sum of $45 020.90, the superannuation fund has received $13 653 and the husband has received or retained approximately $112 000.
The property of the parties
Save in a couple of respects, there is ultimately no great controversy in relation to the identification and quantification of the assets of the parties.
The jointly owned former matrimonial home at M is agreed to be worth $375 000.
The husband has $19 123.36 in a St George Bank account.
The husband has a motor vehicle which he admits to be worth $800.
The husband paid legal fees of $45 752. The $19 123.36 currently held by the husband in a St George account and the $45 752 (total $64 875.36) derived from a fund of $112 000 which the husband received from an account which originally contained $170 000 at the date of the parties’ separation.
The difference between the paid legal fees and the St George Bank account (approximately $47 000) was sought to be added by Counsel for the wife on the basis that the husband has had the use of those funds in circumstances where the wife has only received from the St George account some $45 000.
Notwithstanding that the husband has had, and used, the $47 000, the Court does not propose adding that sum back. The main reason for not doing so is that the sum no longer exists, and has not been unreasonably been utilised by the husband. The evidence suggests that the husband used the $47 000 over a period of slightly more than 2 years for living expenses. The other reason for not notionally adding back that fund results from a consideration of what became of it, and the circumstances surrounding what became of it. A just and equitable determination of the proceedings is more readily thereby achieved than would be likely by notionally adding it back.
Were the sum to be added back, the post separation period would need to be considered in the somewhat unrealistic light of the husband not having had the use of the $47 000 when clearly he has.
The wife has retained $18 000 in a St George account which she had at separation and has used that for living expenses. The Court does not propose adding back that sum either, essentially for the same reasons as it has declined to add back the $47 000 which the husband has expended.
The husband retains a balance of $549,396 in a HSBC account attributable to his inheritance of a sum of $527 398.29 from his father’s brother death in 2004. The husband receives a stream of interest from this sum of approximately $238 per week, according to the husband, or substantially more, according to the wife.
The wife has paid legal fees of $45 020.90 which was sourced from the $170 000 St George account from which the husband received $112 000.
The wife has a motor vehicle which she admits to be worth $600 and a Commonwealth Bank Account in which she has $239.00. Each party asserts values of jewellery and household effects and furniture in respect of which there is no reliable evidence either as to value or with which party, if either of them, such items are held.
Objectively, ignoring the minor bank accounts, motor vehicles and furniture can have only minimal impact on determining the property of the parties to the marriage.
The parties disagree as to the value of the assets of the Elgabri Superannuation Fund of which the parties are the only members. Invested in the fund in a term deposit is the sum of $133 000. There is also, or should be, at least $47 000 in an NAB account held on behalf of the superannuation fund.
The other asset of the superannuation fund is a taxi plate. Although the taxi plate, quite properly, is on the books of the super fund at a value of $158 184, on behalf of the husband it was submitted that the market value of the taxi plate is $168 770. On behalf of the wife it was submitted that the valuation of the taxi plate was $218 000. $218 000 is the value asserted by the wife’s adversarial expert, Ms B, in her affidavit filed 2 March 2009.
Ms B suggested that, after adjustments that she identified and made, the net assets of the superannuation fund were worth $360 000, the wife’s interest in the fund being worth $133 000, the husband’s $227 000.
To Ms B’s figures, the cash at bank NAB current account of $32 207 can be further adjusted to $47 000, and the NAB term deposit of $117 366 increased to $133 000.
If, as the wife contends, and as Ms B adopted in her report, the taxi plate is worth $218 000, the assets of the superannuation fund accordingly become $390 427 and, applying the percentages of 63% (227/360) to the husband and 37% (133/360) to the wife, the parties’ interests would be respectively worth $246 185 and $144 241 respectively.
If however the husband’s contention is correct, and the taxi plate is worth $168 770, the net assets of the funds would become $341 197 and the entitlements to the husband and wife would become $215 143 and $126 053 respectively.
The Superannuation Fund
The parties do not agree in relation to the valuation of the superannuation fund.
The figure of $133 000 representing the wife’s interest in the fund is agreed to be funded by monies which are currently invested.
The wife does not accept that the figure of $47 000 advanced on behalf of the husband necessarily fully reflects the monies which the superannuation fund should have received by way of income generated by the leasing of the superannuation fund’s taxi plate. That dispute, by agreement, will be resolved on the basis that the parties will agree upon an accountant and auditor to regularise the affairs of the superannuation fund or that the President of the Institute of Chartered Accountants will appoint an accountant and auditor for that purpose.
It should be noted that while there would be significant adverse consequences if the superannuation fund ceased to be non-compliant, Ms B’s evidence is that the superannuation fund is currently regarded by the ATO as complying with its requirements for private superannuation funds.
An order that any monies over and above $47 000 found to be due to the superannuation fund be shared by the parties in accordance with their beneficial entitlements to the fund will obviate any need for further litigation in relation to the fund and ensure that the parties’ percentage entitlements to the fund are preserved.
It is necessary to consider the difficult issue of the valuation of the taxi plate.
On behalf of the wife, Ms B prepared a report in which Ms B expressed her expert opinion that the taxi plate was worth $218 000.
Counsel for the husband asserted that the valuation of the taxi plate should be $168 770. Ms B’s qualifications and experience were not challenged, nor was her expertise to value the superannuation fund and the taxi plate.
No expert opinion evidence was produced on behalf of the husband in support of the valuation of the taxi plate asserted by his learned Counsel. Given the nature of the challenge to Ms B’s expert opinion, so doing was unnecessary. The valuation asserted on behalf of the husband is based upon figures emerging from Ms B’s report. To refer to Ms B’s evidence is to identify clearly the competing contentions in relation to the value of the taxi plate.
Ms B said, uncontroversially, that the superannuation fund had previously owned a hire care number plate which, at the instigation of the RTA, became an “HAP” taxi plate on 5 April 2005 “in exchange for the hire car plate” which the superannuation fund had owned prior to that time.
Ms B also recorded, again uncontroversially, that the HAP plates have a “tenure of 50 years from the date of issue and may not be sold within the period ending 5 years from that date”. Whilst, as Ms B recorded, the sale of an HAP plate prior to the expiration of the five year period was possible “in limited circumstances”, the reality that the five year period will at its latest expire in April next year, and the reality that the husband has not suggested that he intends or wishes to sell the taxi plate, render it unnecessary to speculate whether or not the plate would be able to be sold prior to April 2010.
Ms B recorded that “In the event that a HAP plate is sold, the licensee is to receive 60.2%of the value, with the Ministry of Transport receiving the remaining 39.8%. From the share attributable to the licensee, a 2.5 percent transfer tax is additionally payable.” It is common ground that those figures apply in the event of a sale.
Both Ms B’s valuation of $218 000 and Counsel for the husband’s valuation of $168 770 were reached after discounting in accordance with the figures to which Ms B referred in her report.
The critical issue is what the market value of an HAP plate is. Ms B asserted the figure to be $371 250 being the “current market value of an unrestricted plate in the Sydney metropolitan region” as at May 2008.
Counsel for the husband relied upon a figure of $287 500 as the “average of the six HAP plates” which the RTA revealed to have been sold.
Fundamental to Ms B’s conclusion that the former figure represented the value of the superannuation fund’s HAP plate, rather than the lower figure which has resulted from averaging the sales of the six HAP plates which have occurred, was the fact that the RTA “advised that there is no difference between the values of HAP and unrestricted plates, the distinction only serving to denote the HAP plates were formerly hire car plates”.
Ms B sought, but was not provided with, the details of the dates and values of the six sales of HAP plates which generated the average sale price of $287 500. For whatever reasons, the RTA would not provide Ms B with that information.
Ms B was cross-examined in relation to her valuation. In cross-examination, Ms B confirmed that the oldest HAP taxi plate which could have been sold to date would have been valid for at least a further 40 years. The superannuation fund’s HAP plate will not expire for 46 years.
Ms B rejected the suggestion that the unlimited life of other taxi plates would have rendered HAP plates, which had a maximum life of 50 years, thereby necessarily less valuable although she conceded that with each passing year, and particularly as the expiry date of the HAP plate drew close that would change.
Counsel for the husband suggested to Ms B that a prudent purchaser would prefer an unrestricted plate to an HAP plate at the same price. Ms B responded “as a valuer I would agree” with that proposition. Ms B was giving evidence as a valuer. The concession that a prudent purchaser would prefer an unrestricted taxi plate to an HAP taxi plate for the same price provides some support for Counsel for the husband’s contention that the HAP plate would be worth less than an unrestricted plate.
Ms B did not explore the volume of sales of unrestricted taxi plates, being content to rely upon the RTA’s advice as to the value of unrestricted plates as she recorded in her report. Ms B agreed in cross-examination that the figure of $365 000 which she regarded as the market value of an unrestricted taxi plate may well have been the last sale rather than an average of any particular number of sales. Why Ms B did not explore the volume of sales of unrestricted plates, or any details of such sales is not in doubt. Ms B relied, as she said in her report, on the RTA’s statement that there was no difference between unrestricted taxi plates and HAP taxi plates.
Counsel for the husband submitted the failure to independently explore the sales of unrestricted plates was a defect in Ms B’smethodology. She had in effect thereby abrogated to the RTA her function as the valuer of unrestricted taxi plates. Given that the value of unrestricted taxi plates is not really in issue, or the issue in this case, this complaint lacks substance.
The issue which arises is not without complexity. Ms B is a highly qualified and very experienced valuer. If however one asks what ultimately underpins her expert opinion in this case, it is difficult to resist the conclusion that it was an opinion conveyed to her by someone within the RTA. Whether or not that opinion was soundly based neither Ms B nor this Court can discern. In those circumstances, Ms B has been placed in a potentially invidious position.
As is well known, expert opinion evidence is necessarily based upon facts or factual assumptions which are either proved by admissible evidence, or not controversial, and thus not needing to be proved (see Makita (Australia) Pty Ltd v Sprowles [2001] 52 NSWLR 705). Ms B’s expert opinion evidence in relation to the average price of the six sales of HAP plates had an empirical basis. There is no reason to doubt the accuracy of what Ms B was told by the RTA had been the number of sales of HAP plates and the average of the prices achieved for such sales. No-one suggests that Ms B’s information in that regard was other than reliable. There is no basis for assuming that the sales were other than at arm’s length. Nor can it be assumed that the sale prices did not reflect the price that “a willing purchaser would at the date in question have had to pay to a vendor not unwilling, but not anxious, to sell” (Spencer v Commonwealth (1907) 5 CLR 418 ; (1907) 14 ALR 253).
There is no reason not to accept Ms B’s evidence in relation to the current value of unrestricted plates, notwithstanding Ms B’s inability (through no fault of her own) to test or validate what she was told by the RTA.
Ms B was placed in the position where the market evidence revealed two significantly different figures for HAP plates which had been sold and for unrestricted plates which had been sold. In order to accept Ms B’s opinion that the two were identical, there needed to be some compelling, or at least persuasive explanation as to why, notwithstanding what the market place reveals to have been the sale prices of the different kinds of taxi plates, they should nevertheless be regarded as being of equal value.
With respect to Ms B, reliance upon what the RTA told her cannot be accepted without more than the evidence reveals in support of her opinion. On the face of it, if the market evidence reveals, as it does, that HAP taxi plates sell for $80 000 - $90 000 less than unrestricted taxi plates, that suggests that they are regarded in the market place as being less valuable.
It cannot be suggested that the price differential thus received has no rational basis. There is clearly a distinction between a plate which has no restrictions and a plate which, albeit only slightly, must become potentially less valuable with each passing year. Although it may not provide a rational basis for regarding HAP taxi plates as being worth as much less than unrestricted plates, as the sales evidence suggests, that is not the point. The market is not necessarily rational. The Court does not understand there to be any principle in valuation law or practice which enables market evidence to be ignored on the basis that it may not be rational.
Counsel for the husband’s submission has the attraction in valuation theory and practice that it involves comparing like with like.
In J.F.N. Murray’s Principles and Practice of Valuation (5th Edition, 1973), Murray suggests that the “utility” of comparing assets which are being valued with sales of other assets of the same or similar kind is that the comparisons be as close in every respect as is reasonably possible (page 132). In this case that exercise does not assume complex proportions given that there are two different types of taxi plates, with materially different characteristics, and that distinct markets emerge for each of those types of plates.
With all due respect to Ms B, only by accepting an opinion expressed by an unidentified person within the RTA whose means of knowledge, or basis of expertise has not been established, that the two types of taxi plate have the same value, notwithstanding that the market evidence suggests that they do not, could one accept Ms B’s opinion as to the value of the superannuation fund’s HAP taxi plate.
Relying upon what the sales evidence reveals to be the market value of an HAP taxi plate, and making the deductions which Ms B uncontroversially suggests should be made, the Court concludes the value of the superannuation fund’s HAP taxi plate to be $168 770. It follows that the superannuation fund is worth $341 197 plus any additional sums which an audit of the fund reveal should be added to the $47 000 in the superannuation fund’s NAB trading account.
Both parties invite the Court to treat their interests in the superannuation fund as “property”. It is sensible to do so (see C v C [2005] FamCA 429; (2005) 33 Fam LR 414).
The court’s findings with respect to the property of the parties are tabled below:
Property Value Total M property 375 000 Husband’s funds from St George account 64 875.36 Wife’s funds from St George account 45 000 Superannuation fund 341 197 Total assets 826 072.36 Husband’s inheritance 549 396
Contributions
The evidence in relation to the parties’ contributions to their assets, other than the husband’s inheritance (currently represented by the HSBC account) is not ultimately in serious contest. The facts are also not ultimately in serious doubt. As the evidence clearly reveals, during their 25 year cohabitation, the husband and wife applied themselves diligently, and with considerable success, in a variety of financial and non-financial ways.
It is unnecessary, and unproductive, to record more than the Court’s conclusion that, save for the particular contributions to which reference will shortly be made, to the date of separation the parties direct and indirect financial and non-financial contributions could be seen as broadly equal.
To the extent that the husband sought to enhance his contribution based entitlement in reliance upon his mother’s non-financial contributions to the welfare of the family over the entirety of the parties’ cohabitation, whilst such contributions were no doubt significant, they can be seen as counterbalanced by the wife’s direct and indirect contributions towards the husband’s mother’s wellbeing over that period.
Whilst the husband’s mother may have contributed some monies to the property which, when realised, contributed substantially to the acquisition of the parties’ second matrimonial home, it is clear that the husband’s mother gained a significant, but unquantifiable benefit over the 25 years during which she lived with the parties in their home. There is an essential fairness in regarding the benefits provided by or on behalf of the husband by his mother as being offset by the direct and indirect benefits which the husband’s mother derived during her 25 years occupancy of the parties’ home. Without the wife’s co-operation, that could hardly have occurred.
It remains to consider the particular contributions upon which the husband relies to enhance his contribution based entitlement and the particular contributions upon which the wife relies to offset such claims.
As is not in doubt, the husband contributed equity in the E property of $20 000 when the parties married. As the husband’s Counsel correctly submitted, in 2009 to simply regard the husband’s contribution as being worth $20 000 in 1981 would be to risk undervaluing the real impact and significance of that contribution.
As the authorities (See Pierce & Pierce (1998) 24 Fam LR 377; (1999) FLC 92-844 and Kardos v Sarbutt [2006] NSWCA 11) make clear, initial contributions such as those made by the husband have to be considered in the light of their impact on the assets of the parties, and in the light of the “erosion” of that impact by other contributions made by the parties subsequent to the initial contribution.
As Counsel for the husband submitted, the initial contribution of the husband represented approximately 57% of the value of the E property. That necessarily resulted in the parties having to pay less by way of mortgage instalments than if a larger mortgage had been involved. It also meant, albeit as a result of the parties’ subsequent contributions, that the funds the parties had available with which to purchase the M property were increased. In the absence of off-setting contributions on behalf of the wife, albeit modest, the husband’s initial contribution of $20 000 equity in the E property would justify a modest elevation of the husband’s contributions above those of the wife.
The other matter upon which Counsel for the husband relied was the contribution in 1998 of monies referrable to the termination of the husband’s employment. There were two aspects of that claim. As is not in doubt, in 1998 the husband accepted voluntary redundancy from his employer, S Organisation. He received $70 000 by way of redundancy payment.
Although there is no clear evidence, it would be reasonable to assume that the redundancy payment was in some way referrable to the years of service the husband had completed with his employer. Having commenced employment in 1973, and being 25 years prior to his employment terminating, and having cohabited with the wife for 17 years by that time, it could be suggested that something like 8/25ths of the redundancy payment was, or may have been referrable to the husband’s pre-marriage service. Whether the same claim could be advanced with respect to the husband’s unpaid leave of $25 000 is more problematic. The evidence does not support an affirmative finding in the terms urged on behalf of the husband.
The husband also received a preserved superannuation benefit of $155 000 upon termination of his employment in 1998. That preserved entitlement was rolled over into the Elgabri Superannuation Fund which was created, apparently for that purpose, in 1998.
It was thus contended on behalf of the husband that his contribution based entitlement could be enhanced. Again, the period of service which pre-dated the marriage, 8 out of 25 years, was advanced in support of that contention.
Were those contributions not offset by contributions made by the wife, they, in conjunction with the husband’s initial capital contribution, would justify the contribution based finding of 52.5 percent to 47.5 percent urged upon the Court by Counsel for the husband.
There are however as Counsel for the wife submitted, two significant offsetting contributions for the wife to which regard must be had. Those contributions comprise monies received by the wife by way of compensation for injury sustained by her in the course of her employment, and a component of the wife’s State Government Superannuation interest referrable to disabilities on her part.
The wife contributed to the marriage, in 2001 approximately $39 000 from N Council by way of compensation for her injuries. Those funds were contributed for the benefit of the family. In 2004 the wife received approximately $9000 for injuries sustained by her in a motor vehicle accident. Those funds were also contributed for the benefit of the family. Those contributions by the wife significantly offset the contributions of the husband to which reference has earlier been made.
Upon termination of her employment in 2001, the wife rolled over her superannuation entitlement of $96 085.78 into the Elgabri Superannuation Fund (Exhibit A1). $56 007.27 of that sum was designated as “post June 1994 invalidity component”. Whilst the balance of the wife’s superannuation interest had clearly accumulated during the cohabitation of the parties, and whilst the evidence is not detailed, it is reasonably apparent that the $56 007.27 received by the wife was referrable to the invalidity which gave rise to her 2001 damages payment. That component of the wife’s superannuation interest can be seen as referrable to injuries the consequences of which have remained and will remain with the wife into the future and can be seen as a contribution of hers to the parties’ superannuation interest.
Exercising a broad discretion as the Court undoubtedly does in proceedings pursuant to Part VIII of the Act, the Court concludes that the contributions of the parties, other than to the HSBC account, should be seen as equal to the date of separation rather than slightly favouring the husband as was contended by his learned Counsel.
The post separation period
In the post separation period the wife has had exclusive occupation of the unencumbered former matrimonial home of the parties. During that period the wife has not had employment. There is no suggestion that during the post separation period the wife has had any unexercised capacity for employment of any kind. The wife has received social security benefits during the post separation period.
The post separation period, which is now a little over 2 years, is not of such duration as to render some consideration of the contributions of the parties unnecessary. The wife has met the outgoings on the former matrimonial home and has maintained it in a reasonable state of repair. There is no reliable evidence of the rental value of the property. It can however be inferred that occupying the former matrimonial home since separation has been a tangible and significant benefit for the wife. Her income during the post separation period has been considerably less than the husband but, on balance, so have her outgoings.
In the post separation period the wife has had the use and enjoyment of some $18 000 which she had in a bank account at the date of separation. All but a few hundred dollars of that sum has been expended on living or other reasonable expenses.
In the post separation period the husband has not had employment. Nor has he sought employment. This is not a case where the husband terminated his employment at or about the time of separation. The husband had not worked in the 8 years which preceded separation. Whilst it is true that as the husband asserted that, at 56 years of age, his employment prospects may be negligible, the absence of any attempt to secure any kind of employment cannot be ignored. Whilst it was not unreasonable for the husband to retire in 1998 and not thereafter seek employment, or for the wife to have ceased employment in 2001 and not thereafter sought employment, there were medical reasons justifying the wife seeking employment. The same cannot be said for the husband.
Whilst, as Counsel for the husband submitted, it was not unreasonable for him to remain retired after 1998, the change of circumstances represented by the parties’ separation in late 2006 imposed some obligation on the husband to at least seek some form of employment thereafter. Whether the husband would have obtained employment cannot be known. The court certainly cannot make a finding that the husband would have obtained employment had he sought it, much less what he might have earned.
In the post separation period, the husband had the benefit of income on the HSBC account. It was submitted that the income interest is as low as $238 per week, as may be the case in the period of record low interest rates. The figure was, as Counsel for the wife submitted, several times that in 2007.
In addition to the monies generated by the HSBC account, the husband drew down an average of $436 per week (between January 2007 and March 2009) from monies in the NAB account from which each party has received significant funds pursuant to Court orders. Those drawings approximate $47 000 in total and have not been added back.
The husband has had no other income in the post separation period. He has paid rent of $615 per week for accommodation which he occupies with his mother and the parties’ adult daughter. The husband suggested in his financial statement that he did not know what income either his mother or daughter derived and gave no evidence of any arrangements with respect to their apportionment of rent and living expenses.
Whilst so doing does not involve anything approaching empirical precision, there is in the Court’s view an essential fairness in concluding that the post separation period ought not alter the contribution based entitlement of the parties up to the date of separation with respect to their property and superannuation interests. Different considerations apply to the husband’s inheritance. On the one hand the husband has had the greater enjoyment of capital generated during the course of cohabitation ($47 000 as against the wife’s $18 000). To the extent that the husband has had the totality of the interest income generated by the HSBC account, regard must be had to the reality that, on any view of the evidence, that fund arose overwhelmingly as a result of contributions by or on behalf of the husband.
Significantly, Counsel for the wife submitted that the wife’s entitlement to the inheritance should be assessed at 10 percent after contributions and s 75(2) factors were considered. The husband has, whatever notional adjustment might be made by reason of two other adults occupying his accommodation, had to pay rental in the post separation period whilst the wife has not.
Realistically, on the evidence, to increase the contribution based entitlements of either party by virtue of the post separation period would in the circumstances be arbitrary and unjustified.
Contributions to the husband’s inheritance
The evidence in relation to the HSBC fund is not in doubt. The husband’s father’s brother died in 2004 and left his estate to the husband. That materialised as a fund of $527 398.29 which was transmitted to the husband from England.
The husband’s evidence makes clear that he played no part in the administration and finalisation of his uncle’s estate. In fairness, the husband did not suggest that he had contributed in any material way to his uncle’s benefaction. Objectively, the husband’s inheritance was in every way a “windfall”.
As Counsel for the wife sensibly submitted, the only nexus between the husband’s inheritance and the marriage arose by virtue of the husband in 2002, at his expense, having visited his uncle in England and stayed with him there for one month. Apart from the modest expense the trip no doubt caused, and the absence of the husband from the home and consequential inability to make contributions during the one month period, that was the only real nexus between the inheritance and the marital relationship of the parties.
When the inheritance was received, the capital invested in the HSBC account was not diminished, drawn down on or otherwise utilised by the parties. With respect to Counsel for the wife, whilst the conservation of the fund can be seen as an indirect contribution by the wife, it can also be seen as having been offset by the availability to the parties of the income interest which it generated over the two years between its receipt and the parties’ separation.
As Counsel for the wife fairly acknowledged, on any view of it, the wife’s contribution to the acquisition, conservation and improvement of the husband’s inheritance must be seen as minimal.
Caution must be exercised in the treatment of the husband’s inheritance given that having regard to its magnitude relative to the other assets of the marriage, it has the potential to impact significantly on the entitlements of the parties pursuant to section 75(2) of the Act. The Court must be careful on the one hand not to recognise the wife’s indirect contributions or its section 75(2) impact inadequately, whilst on the other hand being careful not to effectively count the same thing twice, albeit by describing it differently.
Objectively, to regard the wife’s contribution based entitlement to the husband’s inheritance as being approximately 5 percent would in the Court’s view be a realistic, if necessarily somewhat arbitrary conclusion.
Conclusions with respect to contributions
Having regard to the asset pool which the Court has determined to be appropriate (totalling $826 072) it is apparent that each party should received with respect to that pool $413 036, reflecting the Court’s conclusion that the parties should be equally entitled to such property.
The wife’s contribution based entitlement to the husband’s inheritance (5%) translates as a sum of $27 470. Given that the wife wishes to retain the former matrimonial home at M, and pay to the husband as little as possible in order to so, which warrants no criticism, it is sensible to reflect the wife’s $27 470 contribution based entitlement to the husband’s inheritance by way of adjustment to her entitlement of $413 036 with respect to the property and superannuation interests generated during the course of the marriage.
So doing, the entitlement of the wife with respect to those assets becomes $440 542 whilst the husband’s entitlement becomes $385 566, albeit that having made that adjustment, the husband is entitled to retain the entirety of his inheritance.
Section 75(2)
There are, as Counsel for both parties sensibly recognised, only two section 75(2) factors of potential significance. Albeit in different contexts, each has earlier been alluded to.
It was submitted on behalf of the wife that the husband has a greater earning capacity than does the wife. Given that the wife has no demonstrated earning capacity, that proposition can be accepted.
The more difficult issue is what the husband’s capacity for employment might be and, if a finding in that regard can be made with any confidence, what that might mean in terms of actually earning income.
The husband has not sought employment during the past 10 years. He has only ever had one employer. That may be both a strength and a weakness in terms of any attempts he makes to obtain employment. Whilst the husband achieved success and promotion during the 25 years of his employment with S Organisation, and is undoubtedly intelligent, the evidence does not reveal that the husband has any qualifications and experience which would provide a basis for confidence that he could obtain employment in any particular capacity.
The husband’s age, the years since he last worked and the current difficult economic circumstances all suggest that the husband’s prospects of appropriate gainful employment should be regarded as very limited. Given that the Court cannot with confidence find what employment the husband might secure, or on what terms, it is unsurprising that any attempt to quantify his possible or probable earning capacity could be no more than speculation.
Objectively, beyond recording that the husband probably has some modest capacity for some unspecified part time work for which he would be unlikely to receive other than very modest remuneration, the Court can productively say nothing.
Realistically, those very qualified findings, and complete inability to quantify whatever the husband’s capacity for employment might be lead inevitably to the conclusion that no more than a nominal section 75(2) adjustment could flow to the wife by reason of the husband’s capacity for employment.
The other section 75(2) factor which undoubtedly does necessitate an adjustment, and is conceded to do so, is more difficult to assess, and that relates to the husband’s inheritance. The only issue in relation to the husband’s inheritance is the magnitude of the adjustment which should be made in the wife’s favour.
Whilst Counsel for the husband submitted a substantial adjustment was warranted, given that so doing was predicated on a number of factual assumptions which have not been fulfilled, it would be unfair and unsafe to rely upon that figure
Counsel for the wife, in a spreadsheet which she presented at the conclusion of the trial, submitted that the combination of the wife’s contribution and section 75(2) entitlement to the husband’s inheritance should be assessed at 10 percent. The Court has earlier, for reasons it briefly advanced, concluded that a 5 percent adjustment would in the circumstances be appropriate recognition of the wife’s contribution based entitlements to the husband’s inheritance.
Given that the adjustment pursuant to section 75(2) is because of the husband’s inheritance, it would not in the Court’s view be logical to quantify the section 75(2) adjustment by reference to it. Doing so would not in the Court’s view be able to be accommodated within any of the provisions of section 75(2) and would be effectively an unjustifiable double counting.
As the transcript of the trial would confirm, the section 75(2) adjustment contended to be appropriate by Counsel for each of the parties was significantly contingent upon the Court’s conclusions with respect to factual issues and the contribution based entitlements of the parties. The Court’s obligation is to do what is just and equitable pursuant to section 75(2) of the Act. That may or may not be more consistent with the position of one party than of the other.
A 7.5 percent adjustment pursuant to section 75(2) with respect to the husband’s inheritance and his minimally greater capacity for employment would in the circumstances be justified. The Court will accordingly adjust the assets of the parties, other than the husband’s inheritance by 7.5 percent in favour of the wife pursuant to section 75(2) of the Act.
The effect of increasing the wife’s entitlement of $440 542 by $61 955 is to produce an overall entitlement of $502 497.
The wife’s entitlement translates as approximately 60% of the property and superannuation interests of the parties (other than the husband’s inheritance of $549 396).
There is no suggestion that part of the wife’s entitlement should not be satisfied by the receipt of her superannuation interests. Applying the respective entitlements of the parties to the superannuation fund to which reference has been earlier made (paragraph 65), the wife should receive by way of cash funds from the superannuation fund the sum of $126 053. The balance of her entitlement with respect to the property of the parties thereby becomes $376 444.
Given that the wife has received $45 000, she would be entitled to receive a further $331 444. In order to retain the M property, the wife would accordingly have to pay to the husband $43 556. The husband would, on the basis proposed by the Court, receive $43 556 from the wife, retain his interest in the superannuation fund worth $215 143, plus the sum of $64 875.36 previously received by him from the St George account, and retain the totality of his inheritance. Exclusive of the inheritance, the husband’s property would thus total $323 574. Inclusive of his inheritance, the husband would receive $872 970.
Whilst it could be suggested that the party acquiring the taxi plate would not only receive a valuable asset, but one which generated an income stream, the receipt of the underlying value of the taxi plate could only be achieved by its sale and consequential loss of the income stream from the taxi plate itself. The capital generated would generate investment income.
The receipt of the matrimonial home by the wife, whilst not of itself income producing, obviates the necessity to pay rent or raise a mortgage to purchase alternate accommodation. If the matrimonial home were sold, thereby realising its underlying value, it too could be invested and generate investment income.
There is, albeit arising in different ways, a measure of equivalence between the husband’s receipt of the taxi plate, which the wife fairly does not oppose and the wife’s receipt of the former matrimonial home.
Section 79(2)
It remains to consider whether the proposed division of the property of the parties to the marriage offends the provisions of section 79(2) of the Act.
As is transparently obvious, notwithstanding the Court’s conclusions with respect to the parties’ contributions to the assets generated during their cohabitation as a result of those contributions, and the wife’s entitlement to a substantial adjustment pursuant to section 75(2) of the Act, the orders proposed by the Court leave the husband in a significantly better financial position than they leave the wife. The wife’s overall entitlement of $502 497 falls substantially short of the husband’s entitlement of $872 970.
As is clear beyond doubt, that disparity is entirely referable to the magnitude of the husband’s inheritance. The Court must exercise its discretion within the statutory framework of section 79(4) and section 75(2) of the Act. As much as the Court would like to give the wife more because of the “windfall” nature of the husband’s inheritance, it does not perceive that it could justify so doing by reference to the statutory provisions which guide the exercise of discretion.
As the authorities make clear, a windfall such as the husband’s inheritance, received very late in the marriage, must be regarded with some caution. Whilst it could be said that there is no statutory “brake” on the extent to which a section 75(2) adjustment may be made simply because the parties’ financial positions are significantly disparate, to exercise the discretion in reliance upon such disparity simply to “even up” the positions of the parties to some extent does not seem a permissible exercise of discretion.
Accepting that others may well have been more generous to the wife than the proposed orders of the Court will be, the Court is persuaded that the proposed outcome is just and equitable.
Whilst it is unnecessary to make any formal order so providing, there seems no valid reason why the wife should not be able to satisfy her obligation to the husband pursuant to these orders out of her interest in the superannuation fund.
Costs
As foreshadowed at the conclusion of the trial, both parties’ costs will be reserved.
I certify that the preceding one hundred and sixty three (163) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman
Associate:
Date: 26 March 2009
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