Farnell & Farnell
[2024] FedCFamC2F 222
•2 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Farnell & Farnell [2024] FedCFamC2F 222
File number(s): PAC 5064 of 2020 Judgment of: JUDGE MYERS Date of judgment: 2 May 2024 Catchwords: FAMILY LAW – property proceedings – where the parties are substantially apart in their competing applications. Legislation: Evidence Act 1995 (Cth) ss 76, 79,
Family Law Act 1975 (Cth) ss 70, 75(2), 79.
Cases cited: C v C [1998] FamCA 143, [46]
Calder v Calder [2016] FamCAFC 36, [135]
NHC & RCH [2004] FamCA 633, [56]
In M v M [1998] FamCA 42,
Kowaliw v Kowaliw [1981] FamCA 70; (1981) FLC 91-092,
AJO & GRO (2005) 191 FLR 317, [30], [39]
Stanford v Stanford [2012] HCA 52, [35], [42],
Vass v Vass [2015] FamCA 51, [138]-[39].
Division: Division 2 Family Law Number of paragraphs: 127 Date of last submission/s: 20 December 2023 Date of hearing: 3 August 2023, 7 September 2023, and 21 September 2023 Counsel for the Applicant: Mr Fermanis Solicitor for the Applicant: Family Focus Legal Pty Ltd Counsel for the Respondent: Mr Bennett Solicitor for the Respondent: Clear Lawyers ORDERS
PAC 5064 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR FARNELL
Applicant
AND: MS FARNELL
Respondent
ORDER MADE BY:
JUDGE MYERS
DATE OF ORDER:
1 MAY 2024
THE COURT ORDERS THAT:
1.That within 14 days from the date of these Orders the parties do all acts and things and provide all authorities necessary to cause the proceeds of the sale of the former matrimonial home held in trust or a controlled monies account by Family Focus Legal to be disbursed as follows: -
(a)In payment of $97,550.01 to the Husband.
(b)In payment of $198,530.91 to the Wife.
(c)That any remaining balance if any be paid as to 57.5% to the Wife and 42.5% to the Husband.
(d)That from the Wife’s share of monies she receives pursuant to Order 1 (b) above she pay to the Husband the amount of $1,200 in reimbursement for the payment of the Wife’s share of mediation fees.
2.That within 28 days of these Orders the parties in their role as trustees/directors of the trustee of the Farnell Family Superannuation Fund do all acts and things, provide all information as is necessary and sign all documents as are necessary to instruct the said fund’s accountant to:
(a)Complete all outstanding and up to date financials, audit the same, lodge the tax return/returns of the Farnell Family Superannuation Fund.
(b)Thereafter pay any tax liability for the said fund.
(c)Calculate of the parties’ entitlements/member balances within the said fund.
3.That within 28 days of obtaining the parties’ member balances within the Farnell Family Superannuation Fund the parties are to prepare and provide to the Court in Chambers a splitting order where one party makes a split to the other of their entitlement such that that Wife then holds entitlements within the Farnell Family Superannuation Fund that equate to 57.5% of the value of the fund and the Husband 42.5% of the fund. The splitting order calculation shall include an additional adjustment to the Husband from the Wife the in sum of $533.12.
4.That within 7 days following the Court making the splitting order contemplated in Order 3 above the parties shall serve the Order upon the trustee of the Farnell Family Superannuation Fund. The parties shall thereafter rollover their entitlements to another complying superannuation fund of their choice.
5.That within 14 days of the parties having rolled over their entitlements out of the Farnell Family Superannuation Fund to another superannuation fund, the parties shall do all acts and things and sign all documents necessary so as to wind up the Farnell Family Superannuation Fund in accordance with the deed establishing the Farnell Family Superannuation Fund. The parties shall thereafter deregister B Pty Ltd being the corporate trustee for the Farnell Family Superannuation Fund.
6.That the Husband thereafter be declared to be the sole legal and beneficial owner of his right, title and interest in and to:
(a)All cash at banks and monies invested in the Husband’s sole name;
(b)The company known as ‘C Pty Ltd’;
(c)Motor Vehicle 1 in the Husband’s possession;
(d)All personal effects and household contents in the Husband’s possession; and
(e)Any superannuation entitlements received by the Husband and invested by or on his behalf.
7.That the Wife thereafter be declared to be the sole legal and beneficial owner of her right, title and interest in and to:-
(a)All cash at banks and monies invested in the Wife’s sole name;
(b)Motor Vehicle 2 in the Wife’s possession;
(c)All personal effects and household contents in the Wife’s possession; and
(d)Any superannuation entitlements received by the Wife and invested by or on her behalf.
8.That otherwise as provided for in these Orders, each party shall forthwith be declared entitled to retain and shall relinquish in favour of the other party any claim to any right title or interest in all items of property presently in the possession or custody of the other party including but not limited to real property, monies held in any bank, building society or credit union, shares, superannuation or life entitlements, motor vehicles, chattels, furniture, furnishings and personal effects.
9.All Outstanding Applications are dismissed, and the proceedings are removed from the List of Matters awaiting finalisation.
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 MYERS:
This is a final property decision in the matter of Farnell & Farnell.
These proceedings were originally commenced by Mr Farnell, (Husband) against Ms Farnell, (Wife) as parenting and property proceedings.
The parties, to their credit, resolved the parenting aspect of the proceedings by way of consent orders on 30 May 2023 which in summary provided:
(1)That X (born in 2011, currently 12 years of age, hereafter “X”) live with the Wife and spend time with the Husband:
(a)During the school term, five (5) nights a fortnight;
(b)Half the school holiday periods;
(c)Special days including dates during Easter and Father’s Day.
Unusually following the commencement of the actual final hearing, the wife caused to be filed an Application in a Proceeding on 15 August 2023 where she sought the following orders:
(1)The Court notes that cross-examination of the Husband commenced on 3 August 2023, by Mr Seow, Counsel for the Wife.
(2)The Court orders that cross-examination of the Husband be permitted to continue on 7 September 2023 by counsel other than Mr Seow.
On 23 August 2023 the Court made the following orders in respect of the wife’s application:
(1)The Respondent Wife be entitled to retain Counsel of her choice for the purposes of the resumption of the Final Hearing.
(2)Counsel instructed by the Respondent Wife for the resumption of Final Hearing is not to ask the Applicant Husband questions that have previously been asked and answered during cross-examination.
(3)The Applicant Husband’s costs of these proceedings be reserved for the Final argument in respect of this Application.
(4)The Respondent Wife is directed to provide a copy of the transcript of the first day of the Final Hearing to the solicitor for the Applicant Husband, within two (2) days of today’s Orders.
To be clear there was nothing in the view of the Court that Mr Seow did or did not do, should have or should not have done during his appearance before the Court that warranted the change of Counsel. Mr Seow’s conduct during his appearance at the final hearing was in the view of the Court exemplary.
PARTIES’ PROPOSED ORDERS
The Husband sought the Court make the following Final Property Orders as contained in his Case Summary Document filed 21 September 2023:
1.That the proceeds of the sale of the former matrimonial home held in trust by Family Focus Legal is disbursed as follows: -
a.In payment of $9,961 to the Husband’s credit card used jointly by the parties (balance as at separation);
b.Thereafter, an amount equating to 55% of the overall asset pool to the Husband’s solicitors Family Focus Legal on behalf of the Husband;
c.In payment of the amount of $1,200 to the Husband in reimbursement for the payment of the Wife’s share of mediation fees; and
d.In payment of the balance then remaining to the Wife.
2.That within fifty (50) days, the Husband and Wife shall do all such things and acts and sign all documents necessary to cause the parties to pay any capital gains tax liability, other outstanding tax liabilities and accounting expenses arising from the sale of the [Suburb E] property owned by [B Pty Ltd] as Trustee for Farnell Family Superannuation Fund to be released from the trust account of Family Focus Legal.
3.That pursuant to paragraph 90XT (1)(b) of the Family Law Act 1975, a base amount, being an amount sufficient to result in the Wife receiving an amount equating to 55% of the overall asset pool is to be rolled over to the Wife’s [Super Fund 1] superannuation account out of the proceeds of the sale of the [Suburb E] property, held in trust by Family Focus Legal.
4.That pursuant to paragraph 90XT (4) of the Family Law Act 1975, a base amount, being an amount sufficient to result in the Husband receiving an amount equating to 45% of the overall asset pool is to be rolled over to the Husband’s [Super Fund 2] superannuation account out of the proceeds of the sale of the [Suburb E] property, held in trust by Family Focus Legal.
5.That within fifty (50) days, the parties do all things and sign all documents necessary to wind up the self-managed superannuation fund known as [Farnell] Family Superannuation Fund.
6.That within one hundred (100) days, the parties do all things and sign all documents necessary to wind up and dissolve the company known as [B Pty Ltd].
7.That the Husband thereafter be declared to be the sole legal and beneficial owner of his right, title and interest in and to:-
a.All cash at banks and monies invested in the Husband’s sole name;
b.The company known as ‘[C] Pty Ltd’;
c.The [Motor Vehicle 1] in the Husband’s possession;
d.All personal effects and household contents in the Husband’s possession; and
e.Any superannuation entitlements received by the Husband and invested by or on his behalf.
8.That the Wife thereafter be declared to be the sole legal and beneficial owner of her right, title and interest in and to:-
a.All cash at banks and monies invested in the Wife’s sole name;
b.The [Motor Vehicle 2] in the Wife’s possession;
c.All personal effects and household contents in the Wife’s possession; and
d.Any superannuation entitlements received by the Wife and invested by or on her behalf.
9.That unless otherwise provided for herein, each party shall forthwith be declared entitled to retain and shall relinquish in favour of the other party any claim to any right title or interest in all items of property presently in the possession or custody of the other party including but not limited to real property, monies held in any bank, building society or credit union, shares, superannuation or life entitlements, motor vehicles, chattels, furniture, furnishings and personal effects.
10.That the Husband and Wife hereby declare that they are not aware of any liability to which either of them has either a joint or several liability with the other, including but without limiting the generality of the forgoing, any bank, credit or charge accounts, guarantees and any liability resulting from any of the parties previous business (if any) and any other dealings.
11.That if it is subsequently found that any such liability as described in Order 10 above exists, the party pursuant to whose own business or other dealings such liability arose shall indemnify the other against all claims, costs, demands, suits, actions and proceedings which may be made against all incurred by the other party in respect thereof.
12.That the Wife pay the Husband’s costs of and incidental to this Application.
The Respondent Wife sought the following Final Property Orders as contained in her written submissions filed with the Court on 7 December 2023:
1.That the Court is to make such orders so as to effect an overall division of the net asset pool, in the following percentage of:
a.75% to the Wife; and
b.25% to the Husband;
and that for the avoidance of doubt the Wife receive such payment from the remaining proceeds of sale of [D Street, Suburb G], NSW ("the former matrimonial home"), which is presently held in trust by the Husband’s solicitors, so as to give effect to this overall percentage adjustment.
2.That pursuant to paragraph 90XT(4) of the Family Law Act 1975, within 14 days, the parties in their capacity as Trustees of the [Farnell] Super Fund take all necessary steps and execute all necessary documents to:
a. divide any funds held in the [Farnell] Super Fund;
i.50% to the wife; and
ii.50% to the husband;
b. do all things necessary and sign all necessary documents to wind up and close the [Farnell] Super Fund;
3.That these Orders have effect from the operative time and the operative time is 4 business days after the date of service of the sealed Orders upon the Trustee.
4.That Orders 2 and 3 bind the trustees of [Farnell] Super Fund.
5.That within 14 days, the parties do all such things and sign all necessary documents to equally divide and close any bank accounts held in joint names.
6.That the Husband thereafter be declared to be the sole legal and beneficial owner of his right, title and interest in and to:
a. All cash at banks and monies invested in the Husband’s sole name;
b. The company known as ‘[C] Pty Ltd’;
c. The [Motor Vehicle 1] in the Husband’s possession;
d. All personal effects in the Husband’s possession; and
e. Any superannuation entitlements received by the Husband and invested by or on his behalf.
7.That the Wife thereafter be declared to be the sole legal and beneficial owner of her right, title and interest in and to:
a. All cash at banks and monies invested in the Wife’s sole name;
b. All personal effects in the Wife’s possession; and
c. Any superannuation entitlements received by the Wife and invested by or on her behalf.
8.That unless otherwise provided for herein, each party shall forthwith be declared entitled to retain and shall relinquish in favour of the other party any claim to any right title or interest in all items of property presently in the possession or custody of the other party including but not limited to real property, monies held in any bank, building society or credit union, shares, superannuation or life entitlements, motor vehicles, chattels, furniture, furnishings and personal effects.
9.That the Husband and Wife hereby declare that they are not aware of any liability to which either of them has either a joint or several liability with the other, including but without limiting the generality of the forgoing, any bank, credit or charge accounts, guarantees and any liability resulting from any of the parties previous business (if any) and any other dealings.
10.That if it is subsequently found that any such liability as described in the above order exists, the party pursuant to whose own business or other dealings such liability arose shall indemnify the other against all claims, costs, demands, suits, actions and proceedings which may be made against all incurred by the other party in respect thereof.
11.That the husband pay the wife's costs of and incidental to these proceedings.
BACKGROUND
The Husband was born in 1977, currently aged 46, and the Wife was born in 1977, currently aged 46.
The parties commenced a relationship in 2005, separated temporarily between 2006 –2007 and then commenced living together in 2008. The parties married in 2010, and separated on a final basis in early 2020.
At the time the parties initially commenced a relationship both parties were employed. The Husband suggests at paragraphs 9 and 11 of his trial Affidavit that he was earning “approximately” $70,000 per year and the Wife was earning “approximately” $65,000 per year. While the Wife suggested at paragraph 7 of her trial Affidavit that both parties were earning “about” $60,000 per year. The difference in earnings were inconsequential.
Both parties gave opinion evidence in their respective trial Affidavits as to the value of property each brought into the relationship that is discussed in the following paragraphs below. Section 76 of the Evidence Act 1995 (Cth) is clear where it provides (subject to certain exceptions) that:
evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.
Section 79 of the Evidence Act provides an exception that provides that:
if a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.
It is not disputed that neither the Husband or the Wife possess specialised knowledge based on the person's training, study, or experience such that they could give evidence as to values of real property or chattels.
It is not disputed by the parties that the Husband brought into the relationship some equity in the Suburb K property. The Husband deposed to his opinion as to the equity he held in the Suburb K property that the Court cannot accept. While the equity in that property cannot be the subject of finding where there is no expert evidence as to the property’s retrospective value the Court notes that at its highest, based on the Husband’s admission, the equity was approximately $85,000 where the Husband deposed at paragraph 10(a) of his trial Affidavit:
Property situated at [J Street, Suburb K]. The approximate value at the commencement of our relationship was $380,000. The property had a mortgage secured against it to the value of approximately $295,000. As such, I held approximately $85,000 in equity.
Similarly, the Court cannot accept the Wife’s opinion as to the equity that existed in the Suburb K property that she deposed at paragraph 14(a) of her trial Affidavit being $45,000 but accepts based on her admission it would have been $45,000 at its lowest.
It is not disputed that the parties each had other property at the commencement of the relationship as deposed at paragraphs 10(b)-(c) of the Husband’s trial Affidavit where he deposed that he had company known as M Pty Ltd with no value; a Motor Vehicle 4 valued at approximately $65,000, with an accompanying loan for approximately $50,000; and a Motor Vehicle 6 valued at approximately $50,000, with an accompanying loan for approximately $36,000. Again, there was no evidence from an expert as to the value of these items of property on which the Court could rely.
Similarly, the Wife deposed as to the items of property that existed and as to their value at the commencement of the parties’ relationship. At paragraphs 14(c)-(g) of the Wife’s trial Affidavit she set out that the Husband’s “Motor Vehicle 4 which was purchased by the M Pty Ltd company for around $75,000 in 2005” had a value in 2008 of “about $60,000”; that the Husband had Motor Vehicle 6 which was leased by the company and sold in 2010. When it was sold the “funds from the sale were used to pay out the amount owing on the loan and there was no money left over”; that the Husband had credit card debt of about $10,000 with H Bank; that the Husband had a credit card debt with O Bank of about $4,900; that the Husband had a personal loan to his father and that the Wife was “unsure of the total amount but recalls that the remaining debt was paid out in the sum of $10,158. The amount borrowed may have been more than this”.
The Wife deposed at paragraph 14(h) of her trial Affidavit that she owned “Motor Vehicle 7 worth about $10,000” and that as at 2008 “the associated car loan was $1,556”. Again, the Wife’s evidence as to values suffers the same fate as that of the Husband’s where neither party are able to give opinion evidence as values.
It is uncontroversial that in approximately early 2006 the Husband created a company called M Pty Ltd and commenced contracting with a company called F Company. For the purposes of understanding the contract between M Pty Ltd and F Company and the Husband’s subsequent company (discussed below) and F Company, the arrangement is one (based on the court having read and heard the parties’ evidence in the hearing) where F Company has various contracts. Companies (and presumably individuals that the Court will refer to as “contractors”) contract to F Company in return for F Company paying the contractors a fee. The contractors provide a motor vehicle at their expense.
It is agreed between the parties that in or around early 2008 the Wife moved into the Husband’s Suburb K Property that was encumbered by way of a mortgage. The Husband paid the mortgage on this property and asserts that the Wife paid some household expenses but not all.
In early 2009, the Husband’s company M Pty Ltd was placed into liquidation. During cross-examination the Husband conceded that following this he was not in paid employment for approximately three months. The Husband advised the Court that during this period the parties utilised joint savings and did not solely rely on the Wife’s income.
In mid-2009 the Husband incorporated a company called C Pty Ltd that entered into a contract with F Company. Having heard the Husband’s cross-examination it became clear that the Husband and indeed the Wife also received benefits beyond just receiving a wage through his company. Those benefits included the provision of the Husband and Wife with vehicles and vehicle expenses, payment for expenses associated with the Husband’s business, and the Husband’s mobile phone. During cross-examination the Husband gave evidence that the Wife had access to a company credit card in her name for most of their relationship of which she could use to purchase things for personal reasons. The Wife gave evidence that she was issued two business credit/debit type cards, one of which she did not use and the other she used for expenses such as fuel.
The Court accepts paragraph 12 of the Wife’s submissions filed 7 December 2023 that provides:
During the relationship the parties made liberal use of the funds received into the Company through which the Husband conducted his business. Its account appears to have been treated essentially as the bank account for the family.
In mid-2009 the Husband’s Suburb K property was transferred to the wife for $390,000 and was encumbered by way of a $290,000 mortgage (Wife’s trial Affidavit, paragraph 17). The Wife accepts in cross-examination that upon the property being transferred to her, the parties equally shared the mortgage repayments and household expenses.
The Husband deposed to important evidence in respect of the liquidation of M Pty Ltd and the transfer of the Suburb K property at paragraphs 14 and 15 of his trial Affidavit that provided:
14.My company was wound up by liquidators due to an unpaid workers compensation account. [Ms Dufficy] was very well aware of the debts of the business at the time. I then registered the new Company known as "[C Pty Ltd] [in] 2009. I am the sole director.
15.As a precaution, based on the advice of my accountant, I transferred my property at [Suburb K] into [Ms Dufficy]'s sole name. The amount of the transfer was noted as $390,000. [Ms Dufficy] received the first homeowners grant. The mortgage payments and household expenses were shared equally.
The Court is not aware of what savings on stamp duty or financial payment was effectively received by the parties when the Wife received the first homeowners grant on her ‘purchase’ of Suburb K from the Husband. The eligibility of the Wife to obtain benefits under an NSW Government first home buyers’ scheme is questionable where based on the parties’ evidence the transfer from the Husband to the Wife was clearly a related party transaction noting the Husband and Wife were at that time living together in the Suburb K property in a relationship. To be clear while the Wife’s eligibility is questionable the Court stops short of finding the parties engaged in any impropriety.
In 2011 the parties’ child, X was born.
In 2012 the Suburb K property was sold for approximately $440,000. The net proceeds of sale being about $100,000 were used to purchase the former matrimonial home at L Street, Suburb G. The purchase price was approximately $647,000.
In 2014 the parties formed a self-managed superannuation fund. The parties then rolled over their respective interests in superannuation into the self-managed superannuation fund. The parties then caused the fund to purchase a property at D Street, Suburb E for the sum of $357,000. The husband rolled over approximately $111,000 and the wife rolled over approximately $134,000 into the self-managed superfund that was used to purchase the said property. That property was subsequently sold by the self-managed superannuation fund and the value of the said superannuation fund as found by the Court below is available in cash for division.
Both parties give evidence that in 2016 the Husband’s father died. The Husband received an inheritance from his late father’s estate in the amount of $46,000. It is agreed that of this inheritance $9,000 was used towards the purchase of a car for the Husband, $5,000 was put towards a plaque to be placed on the Husband’s father’s grave, and the balance of the funds went towards purchasing personal items and furniture for the parties’ joint use.
In around late 2017, the Husband started a business.
In early 2017 the Wife recommenced work, part time to begin with and then increased to full time work.
In 2017 the Husband was offered additional work from F Company and employed an additional person who was able to work night shifts to reduce the Husbands work hours.
From early 2020 to mid-2020 the Wife was unemployed.
The parties separated on or about April 2020.
The Husband moved into rental accommodation in on or about mid-2020.
In early 2021 the former matrimonial home at Suburb G was sold.
On 30 May 2023 the parties entered into final parenting orders by consent that provided that the parties equally share parental responsibility for their son X, and that X live with the wife and send time with the husband 5 nights a fortnight during school term, half the school holidays and on other special occasions including Christmas, Father’s Day, the husband’s and X’s birthday.
On 12 December 2023 the Court made orders with respect to the parties’ tender bundles and in respect of the parties’ written submissions.
BALANCE SHEETS
The Court notes the contents of the Balance Sheets supplied by the parties respectively that form Exhibits “E” and “F” in the proceedings.
The Applicant Husband’s proposed balance sheet forms Exhibit “F” in these proceedings and is as follows:
Description
Ownership
Value
ASSETS
1
Sale proceeds from Suburb G property in Access Law Group trust account
Joint
$296,080.92
2
Motor Vehicle 2
Wife
$5,000E
3
Motor Vehicle 1
Husband
$12,000E
4
Household contents – including BBQ, furniture and equipment
Husband
$7,500E
5
Household contents – including equipment and furniture from former matrimonial home
Wife
$7,500E
6
NAB Account – …07
Wife
$2,000E
7
NAB Account – …37
Husband
$1,000E
8
H Bank Account
Husband
$161
9
C Pty Ltd – Joint Valuation completed in May 2021
Husband
$0
10
Personal gear, equipment, tools
Husband
$3,000
Assets subtotal
$334,241.92
LIABILITIES
11
NAB Credit Card (used for matrimonial expenses with a balance of $9,927.29 at separation)
Husband
$9,927.29
Liabilities subtotal
$9,927.29
SUPERANNUATION
Name of Fund
Type of Interest
Member
Applicants Value
12
Farnell Super Fund
162,757.45 (proceeds of sale)
Self-managed
Joint
$162,452.45
13
Super Fund 1
Accumulation
Wife
$8,425
14
Super Fund 2
Accumulation
Husband
$5,300
Superannuation subtotal
$176,177.45
TOTAL (assets – liabilities)
$324,314.63
TOTAL (assets – liabilities + superannuation)
$500,492.08
FINANCIAL RESOURCES
Description
Ownership
Applicants Value
Financial resources subtotal
NIL
OTHER
Description
Ownership
Applicants Value
15
Interim distribution of sale proceeds
Husband
$27,000
16
Interim distribution of sale proceeds
Wife
$27,000
17
Interim distribution of sale proceeds
Husband
$150,000
18
Interim distribution of sale proceeds
Wife
$150,000
Other subtotal
$354,000
TOTAL (assets – liabilities + superannuation + financial resources + other)
$854,492.08
The Respondent Wife’s proposed balance sheet forms Exhibit “E” in these proceedings and is as follows:
Description
Ownership
Value
Agreed/not agreed
ASSETS
1
Sale proceeds from Suburb G property in Access Law Group trust account
Joint
$296,080.92
Agreed
2
Motor Vehicle 2
Wife
$5,000E
Agreed
3
Motor Vehicle 1
Husband
$12,000E
Agreed
4
Household contents – including BBQ, tools and furniture
Husband
$7,500E
Agreed
5
Household contents – including furniture and fridge from former matrimonial home
Wife
$7,500E
Agreed
6
NAB Account – …07
Wife
$2,000E
Agreed
7
NAB Account – …37
Husband
$1,000E
Agreed
8
H Bank Account
Husband
$161
Agreed
9
C Pty Ltd – Joint Valuation completed in mid-2021
Husband
$0
Agreed
10
Personal gear, equipment, tools, furniture and equipment
Husband
$3,000
Agreed
ADDBACKS
11
Husband Motor Vehicle 1 disposed of
Husband
$7,000
Not agreed
Assets subtotal
$341,241.92
Not agreed
LIABILITIES
12
NAB Credit Card (used for matrimonial expenses with a balance of $9,927.29 at separation)
Husband
$9,927.29
Agreed
Liabilities subtotal
$9,927.29
Agreed
SUPERANNUATION
Name of Fund
Type of Interest
Member
Applicants Value
Agreed/not agreed
13
Farnell Super Fund
162,757.45 (proceeds of sale)
Self-managed
Joint
$162,452.45
Agreed
14
Super Fund 1
Accumulation
Wife
$8,425
Agreed
15
Super Fund 2
Accumulation
Husband
$5,300
Agreed
Superannuation subtotal
$176,177.45
Agreed
TOTAL (assets – liabilities)
$331,313.63
Not agreed
TOTAL (assets – liabilities + superannuation)
$507,491.08
Not agreed
FINANCIAL RESOURCES
Description
Ownership
Applicants Value
Agreed/not agreed
Financial resources subtotal
NIL
Agreed
OTHER
Description
Ownership
Applicants Value
Agreed/not agreed
16
Interim distribution of sale proceeds
Husband
$27,000
Agreed
17
Interim distribution of sale proceeds
Wife
$27,000
Agreed
18
Interim distribution of sale proceeds
Husband
$150,000
Agreed
19
Interim distribution of sale proceeds
Wife
$150,000
Agreed
20
Motor Vehicle 3
Husband
$23,100
Not agreed
21
Sale Price of Motor Vehicle 4
Husband
$45,000
Not agreed
22
New Motor Vehicle
Husband
UNKNOWN
Not agreed
23
Laptops and Printers
Husband
$2,000
Not agreed
24
Motor Vehicle 5
Husband
$3,000
Not agreed
25
NAB Business Account – …56
Husband
$4,000
Not agreed
26
NAB Account Number – …73
Husband
UNKNOWN
Not agreed
27
Motor Vehicle 3
Husband
$5,000
Not agreed
28
Unpaid Superannuation by employer
Husband
$24,934.00
Not agreed
Other subtotal
$461,034.00
Not agreed
TOTAL (assets – liabilities + superannuation + financial resources + other)
$968,526.63
Not agreed
The first item the parties disagree upon in their respective balance sheets is that contained in the Wife’s balance sheet under the heading “ADDBACKS” numbered item 11 and described as “Husband Motor Vehicle 1 disposed of”. The wife seeks to assign a value of $7,000 to the item.
In respect of the issue Counsel for the Husband succinctly set out at paragraph 9 of the Husband’s submissions filed 22 November 2023:
The Court is reminded that after two days of cross-examination of the Husband, the Wife abandoned the “add back argument”. Notwithstanding this abandoned argument, well after the closing of evidence the Wife now relies on a purported addback relating to the disposal of a motor vehicle. There was no cross examination and in fact there was a ruling on this point. The Court should reject the argument.
While the Court does not accept it made a ruling on the topic, the Court is conscious of the manner in which the add-back argument was advanced, or in this case not advanced by the Wife, noting the following exchange between the Court and Counsel for each party during the hearing:
MR FERMANIS: With respect, where does this take matters in circumstances where the wife is now abandoned the add back case.
HIS HONOUR: Well, that’s okay. There’s no – that’s why I wanted an updated balance sheet. The add backs are abandoned, aren’t they?
MR BENNETT: The add backs are abandoned.
(Transcript dated 21 September 2023, page 7, lines 11-19).
The Courts have, following the decision in Stanford v Stanford [2012] HCA 52, remained willing to add-back notional property available for division where in Vass v Vass [2015] FamCA 51 the Full Court held at [138]-[39] that:
There is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan v Bevan … or, more particularly, the decision of the High Court in Stanford v Stanford … is authority for any necessary contrary solution. Some statements made by the High Court may lead to the conclusion that references to “notional property” as have been referred to in decisions of this court and at first instance may need to be reconsidered.
The decisions referred to seek to remind the Court that, however the exercise of discretion might seek to deal with property that is said to be the subject of “add‐ back”, proper consideration must be given to existing interests in property, and the question posed by s 79(2) as a separate inquiry from any adjustment to property interests by reference to s 79(4) if a consideration of s 79(2) reveals that it is just and equitable to alter existing interests in property.
In Calder v Calder [2016] FamCAFA 36 the Full Court reaffirmed its position regarding add-backs as articulated in Vass where the Court set out at [135]:
The trial judge proceeded on the basis that he “suspect[ed] that the payment of legal fees can in an appropriate case fall into the category of circumstances where an add‐ back of the legal fees into the pool is justified”. His Honour’s suspicion accords with well‐established authority (see for example NHC & RCH at [55]). If there was any doubt that the position might have changed as a result of what was said in Stanford v Stanford or Bevan & Bevan …, that doubt has been removed by what was said by this court in Vass & Vass.
In AJO & GRO (2005) 191 FLR 317 at [30] the Full Court identified “three clear categories” or circumstances in which the court will consider notionally adding back property to the pool of assets being:
a.Monies the parties have expended on legal fees;
b.Monies prematurely distributed for instance by way of sale matrimonial assets; and
c.Wastage where one party has embarked on a course of conduct designed to reduce the value of matrimonial assets or has acted recklessly, negligently or wantonly with matrimonial assets. (See In the Marriage of Kowaliw (1981) FLC 91‐092)
It is ultimately a matter of discretion for the trial judge whether to notionally add‐back property into the asset pool. (See NHC & RCH [2004] FamCA 633 at [56])
While in C v C [1998] FamCA 143 the Full Court held at [46]:
Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post separation in a manner that is consistent with properly getting on with their lives.
In Townsend v Townsend (1995) FLC 92 ‐ 569 Nicholson CJ set out at [30]:
[30]. In my view what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought to account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband's receipt of those monies is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
In AJO & GRO (2005) 191 FLR 317 at [39] the Full Court pointed out that the Court’s discretion to add‐back funds is not simply be enlivened where a party has expended money received from the disposal of an asset in existence at the time of separation. Instead, the Court needs to consider the reasonableness or unreasonableness of that expenditure.
On the topic of reasonable expenditure, the Full Court in In M v M [1998] FamCA 42 was clear to set out at [2.11]:
There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have subsequently been spent on meeting reasonably incurred living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial judge.
The onus of proof falls upon the person asserting that the Court should notionally add-back property to the pool of assets available for division.
The Court does not accept that the Wife has established that the Court should add back to a notional pool of assets available for division the sum of $7,000 at item 11 of the balance sheet characterised as “Husband Motor Vehicle 1 disposed of”.
The Court considers the interim distribution of monies paid to the parties during the period of these proceedings numbered 16-19 in the balance sheet totalling the sum of $177,000 each.
On 11 March 2021 the Court made orders that provided:
4. That within seven (7) days from the settlement of the former matrimonial home, the parties authorise Access Law Group (the conveyancers) to release the amount of $20,000 from the sale proceeds to each party by way of an interim property distribution.
On 22 December 2021 the Court made orders that provided:
1. From the funds held in the trust account of the wife’s legal representative, being the proceeds of sale of the former matrimonial home, $7,000 is to be distributed to each party by way of interim property distribution.
On 30 May 2023 the Court made orders that provided:
1. Within seven (7) days, the parties do all things necessary and sign all documents to cause the firm trading as Access Law Group (the Firm) to release funds held in their trust account by way of interim property distribution AND within seven (7) days, the Firm shall release those funds as follows: -
a. $150,000 to the Wife’s solicitor Clear Lawyers on behalf of the Wife; and
b. $150,000 to the Husband’s solicitors Family Focus Legal on behalf of the Husband.
Noting the joint position of the parties and the decision in AJO & GRO (discussed above) the Court will add-back those funds that were paid to the parties in the sum of $177,000 each.
The Court considers those assets termed under the heading “Other” numbered 20-28 in the Wife’s balance sheet. In the Applicant’s Submission in Reply filed 20 December 2023 on behalf of the Husband the following submission was made at page 3, paragraph 3.6.2:
3.6.2. The Respondent has asserted certain values in Items 20 to 28. The Respondent has advanced no submissions as to why those items ought to be taken into consideration nor has she advanced any basis upon which the Court can make findings with respect to those values.
The Court accepts the submission made on behalf of the Husband and as such does not accept items numbered 20-28 in the balance sheet as being property of the Husband that is to be taken into account in the division of property between the parties.
The Court finds the total pool available for distribution inclusive of Assets, Liabilities and Superannuation is that in accordance with the Husbands proposed balance sheet set out at paragraph 25 above in the sum of $854,492.08.
C PTY LTD
The Court considers the Wife’s submissions in respect of C Pty Ltd.
There is no dispute in these proceedings as to the following:
(a)C Pty Ltd is a company that owns and operated a transport business that contracts to F Company.
(b)C Pty Ltd is owned by the Husband.
(c)C Pty Ltd was valued by a single expert.
(d)The parties agree in their respective balance sheets that C Pty Ltd is worth nil.
(e)There was no forensic accounting expert engaged jointly or by either party to provide evidence in the proceedings that examined the operation, books, records, record keeping, business expenses, profit and loss and generally the transactions conducted by C Pty Ltd.
Despite the above, submissions were made on behalf of the Wife at paragraphs 12 to 27 in the Respondent’s Closing Submissions document filed on 7 December 2023 that went to issues related to company expenses, the legitimate/illegitimate journalising of company/non-company expenses, fringe benefits, profit and loss of the company, turnover/revenue and shareholder loan accounts. To be clear, these are matters about which the Court, in the absence of expert evidence from perhaps a forensic accountant, can draw no conclusion or make any findings. The Court cannot find that the value of C Pty Ltd is different to that contended for by the single expert and acknowledged by both parties as being nil.
The Court notes the argument advanced on behalf of the Wife as to the significance of the Husband retaining C Pty Ltd, where it was submitted at paragraph 5(b) the Respondent’s submissions filed 7 December 2013 that:
b. the Husband retains Company (defined below) being the economic engine of the parties, significant either as:
i. a financial resource, or
ii. a factor towards of a significant earning disparity.
Despite the absence of forensic accounting expert evidence, the Court heard during cross-examination details of expenditure by both parties from the company bank account of C Pty Ltd. The Court accepts in part the submissions made on behalf of the Wife found at paragraph 12 that provides:
12. During the relationship the parties made liberal use of the funds received into the Company through which the Husband conducted his business. Its account appears to have been treated essentially as the bank account for the family.
If the submissions and cross examination went to the point that the operation of C Pty Ltd has afforded the parties substantial financial benefit through the income paid to the husband and fringe benefits to the parties during the course of their relationship and then post separation to the Husband, then that point is made out.
The Court listened to the Husband’s evidence in cross-examination and considered his Financial Statement filed on 4 May 2023 in which the Husband disclosed an income from C Pty Ltd of $2,833 per week. The Court finds that C Pty Ltd has provided the Husband with a good source of income and fringe benefits beyond those available to the Wife since separation through her employment as an administrative assistant earning some $76,000 per year as disclosed in her Financial Statement filed 25 July 2023. There appears little argument beyond speculation that the contract C Pty Ltd has with F Company might not be renewed and as such it is the view of the Court that the Husband’s income and the fringe benefits he receives will continue.
The Court having identified, according to ordinary common law and equitable principles the existing legal and equitable interests of the parties, the Court now considers whether it should make an order pursuant to section 70 of the Family Law Act 1975 (Cth) (‘the Act’). Section 79(2) of the Act provides:
(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
In Stanford v Stanford (2012) 247 CLR 108 the High Court set out how the intersection of sections 79(2) and 79(4) operate. At [35] the Court held:
35. It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
Helpfully, and particularly relevant to this case, noting the ownership of C Pty Ltd by the Husband, the High Court stated at [42]:
42. In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
In this case the Court considers whether it is satisfied that it is just and equitable to make an order adjusting the parties’ property by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property identified in the husband’s balance sheet adopted by the Court.
While the Court notes the sole ownership of some items and the joint ownership in property such as the proceeds of sale of the former matrimonial home, the Court importantly notes the husband’s ownership of C Pty Ltd. The Court recognises that C Pty Ltd had afforded the parties significant financial benefit during their relationship despite the Husband’s legal ownership of C Pty Ltd. The arrangement where C Pty Ltd benefited both parties and the family lasted while the parties’ marital relationship remained intact. Now that the marital relationship is over any benefits from C Pty Ltd fall to the Husband alone. In other words, while the parties express or implicit assumption that the parties made to the effect that existing arrangements of C Pty Ltd being held by the husband were sufficient and appropriate during the continuance of their marital relationship, that sufficiency and appropriateness ended with the ending of the marital relationship. Given this outcome the Court initially finds that it is satisfied that, in all the circumstances, it is just and equitable to make the order pursuant to s 79 of the Act.
The Court is required to consider the legislative pathway set out at section 79(4) of the Act. Section 79(4) provides that in considering what order (if any) should be made under this section in property settlement proceedings, the Court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last - mentioned property, whether or not that last - mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last - mentioned property, whether or not that last - mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage:
As set out above the parties had some property when they commenced their relationship. The parties’ property, with the exception of the property owned by the Husband at J Street, Suburb K was not so significant (particularly where the Court could not find a value) as to cause the Court to make any adjustment in either party’s favour based on bringing that property into the relationship. While the property at Suburb K could not be ascribed a value by the Court, the Court is prepared to accept that its net value was somewhere between $45,000 and $85,000 based on each parties’ admission. While such a range is not overall an enormous one when compared to the value of the current property pool, the Court does not ignore the fact that the property was the financial springboard for the parties where in 2012 the parties were able to sell the Suburb K property for approximately $440,000 and use the net proceeds of sale being about $100,000 to purchase the former matrimonial home at L Street, Suburb G for approximately $645,000.
The parties in the view of the Court worked together, working hard doing their best to the maximum of their capacity in what can only be described by the Court as a joint endeavour. They had a go. The Husband and Wife were prudent and sought to protect their assets (the Suburb K property) when the Husband’s company M Pty Ltd failed. They pooled their superannuation funds into the self-managed superannuation fund and purchased a property. While in some limited instances both parties did not work, it was not for want of trying or laziness by the parties, rather it was a product of the circumstances the parties found themselves such as the Wife not working following X’s birth. The Court accepts that the Wife worked in the business with respect to undertaking clerical/bookkeeping work but the overwhelming majority of the work in the business was undertaken by the Husband.
The Court accepts that the parties received the benefit of the Husband’s late father’s inheritance. When taking into account the expenditure of the sum of $46,000 received as set out above, the receipt of the same into the marriage from the Husband made slight if not nominal difference when considering any adjustment that the Court should make based on contributions.
Contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage.
This is not a case where for instance one of the parties built a home with their own two hands. There are no discernible contributions other than financial contributions the Court takes into account in this matter.
The contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent.
In this case the Wife did the overwhelming majority of unpaid work around the home as homemaker where the Husband worked in the business. Similarly, the Wife was the primary carer for X since his birth to the date of the hearing. This circumstance is reflected by the fact the parties entered into final parenting orders that provided X to live with the Wife and spend time with the Husband.
Overall, the Court considers that an adjustment be made in favour of the Husband as to 5% based on contributions.
Effect of any proposed order upon the earning capacity of either party to the marriage.
This is not a case where for instance the Wife seeks an order for the sale of C Pty Ltd that would in turn have a negative effect upon the Husband’s earning capacity. In this case neither set of proposed orders will have any effect upon either party’s earning capacity.
RELEVANT SECTION 75(2) FACTORS
The Court considers those matters referred to in s 75(2) of the Act so far as they are relevant.
The age and state of health of each of the parties: s 75(2)(a)
The Court notes the Husband was born in 1977 and the Wife was born in 1977. Both parties are currently 46 years old. There was no admissible evidence that would allow the Court to find other than the parties being in reasonable health.
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: s 75(2)(b)
As set out earlier in this decision the Husband has a significantly higher income than that of the Wife. The company C Pty Ltd is the property of the Husband and although valued at nil is a financial resource to the Husband that is not available to the Wife that has, and in the view of the Court will continue to provide to the Husband fringe benefits above the income he earns from the company. Both parties have the physical and mental capacity for appropriate gainful employment.
Whether either party has the care or control of a child of the marriage who has not attained the age of 18 years: s 75(2)(c)
The parties’ son X is aged 12 years. Pursuant to consent orders dated 30 May 2023 he lives with the Wife and spends five nights per fortnight with the Husband.
Commitments of each of the parties that are necessary to enable the party to support; himself or herself; and a child or another person that the party has a duty to maintain: s 75(2)(d)
The Court is aware of the usual commitments of each of the parties that are necessary to enable them to support themselves and their son, X. Beyond the parties’ commitments to support themselves and their son X neither party has other commitments to support a child of another person.
The responsibilities of either party to support any other person: s 75(2)(e)
The Court is not aware either party has a duty to maintain any other person.
The eligibility of either party for a pension, allowance or benefit under: (i) any law of the Commonwealth, of a State or Territory or of another country; or (ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party: s 75(2)(f)
Neither party on the face of their financial statements or in their evidence is eligible for a pension, allowance or benefit under any law of the Commonwealth, of a State or Territory or of another country, nor are they currently eligible to a pension allowance or benefit under any superannuation fund or scheme operating within or outside Australia.
Standard of living that in all the circumstances is reasonable: s 75(2)(g)
The parties’ property will be split between them. The standard of living the parties will be afforded into the future will obviously be less than it was when they were together but will in all the circumstances be reasonable.
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: s 75(2)(ha)
The orders proposed by the parties will not deprive any creditor the ability to recover that creditor’s debt.
The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration: s 75(2)(k)
The Court finds based on the evidence, that the duration of the marriage has not adversely affected the earning capacity of either party.
The need to protect a party who wishes to continue that party’s role as a parent: s 75(2)(l)
The making of an order by the Court based on either party’s application and proposed division or for instance somewhere in between will have no impact on either parties’ ability to continue on in their respective roles as parents of X.
If either party is cohabiting with another person – the financial circumstances relating to the cohabitation: s 75(2)(m)
There is no evidence to suggest that either party is cohabiting with another person.
The terms of any order made or proposed to be made under s 79 in relation to the property of the parties; or vested bankruptcy property in relation to a bankrupt party; the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to a party to the marriage; or a person who is a party to a de facto relationship with a party to the marriage; or the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii): s 75(2)(n) and s 75(2)(naa)
Neither party is bankrupt.
Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provide, is to provide, or might be liable to provide in the future, for a child of the marriage: s 75(2)(na) and s 79(4)(g)
The Husband has been liable for child support. The Court expects that the Husband will continue to be liable to provide child support to the Wife in respect of their son.
Any other matters: s 75(2)(o)
There was significant time expended in the hearing around the Husband having expended money on his hobbies. To be clear the evidence in the proceedings tended to suggest that the Husband’s engagement in his business was nothing more than a hobby that at times the whole of the family were involved in. For instance, the Court heard evidence that the family had gone away together for a weekend. The Court does not accept that the Husband’s engagement in his hobby business, on what appeared to be relatively inexpensive equipment, was anything other than a hobby. The Court considers the decision in Kowaliw v Kowaliw [1981] FamCA 70; (1981) FLC 91-092, and finds that when the Husband took up this work as a hobby, he did not embark upon a course of conduct designed to reduce or minimize the effective value or worth of matrimonial assets. The Court further finds that the Husband’s expenditure on his hobby equipment was something the parties could afford and that the Husband did not act recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
The terms of any binding financial agreement binding on the parties to the marriage and the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage: s 75(2)(p) and s 75(2)(q)
The Court is not aware of there being any Financial Agreement that is binding on the parties nor of there being any Part VIIIAB Financial Agreement that is binding on a party to the marriage.
When taking into account those matters found at section 75(2) of the Act the Court finds that there should be an adjustment made to the Wife of 12.5%
Any other order made under this Act affecting a party to the marriage or a child of the marriage. 79(4)(f)
Other than interim orders made in these proceedings and the final parenting orders made for X, the Court is unaware of any other order made under the Act affecting the parties or their child X.
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: s79(4)(g)
The Court is aware that the Husband has been liable to pay child support and will continue to be liable to pay child support to the Wife for X.
JUST AND EQUITABLE
When considering the matters set out at sections 79(4) and 75(2) of the Act the Court finds that it is just and equitable to make an overall adjustment in favour of the Wife of 7.5%. This adjustment in favour of the Wife will see her receive a division of 57.5% and the Husband 42.5% of the property available for division. A division of these percentages will see the Wife receive a share of the overall property that is 15% greater than the amount the Husband will receive.
Thus, the Court will make orders taking into account the following calculations, adjustments and reasoning.
The Wife conceded in cross examination that she owed the Husband the amount of $1,200 being her half share of the mediation fees (transcript 21 September 2023, page 37, lines 10-19). Accordingly, it is just and equitable that the Court make orders that the Wife pay the Husband the sum of $1,200 from the monies she will receive pursuant to the orders made by the Court.
In order to achieve a division of property that is just and equitable the Court will divide the non -superannuation assets on a 57.5/42.5% basis and the superannuation assets on a 57.5/42.5% basis.
The Court will not adjust the non-superannuation and superannuation assets in a way that sees the Husband receive a greater percentage of superannuation assets and lesser percentage of non-superannuation assets as is sought by the Wife in her proposed orders. The Court finds that splitting the non-superannuation and superannuation assets in the same percentage division will not disproportionately disadvantage or advantage one party as compared to the other where they will both have to wait until their age-appropriate retirement in order to receive the benefit of their respective superannuation entitlements. In other words, the Husband is not being loaded up with superannuation he cannot get his hands on in the short term while the Wife receives her entitlements mostly in cash she can use now.
Division of non-Superannuation Assets:
In order to achieve an adjustment between the parties where the Wife receives 57.5% and the Husband 42.5% it will be necessary to consider the Husband’s balance sheet set out above that has been accepted by the Court and take into account what each party has in their possession and the monies each party received that has been treated by the court as an add-back of notional property in each party’s possession. The court sets out the following calculations:
Non-Superannuation assets of the Husband:
(1)Motor Vehicle 1 $12,000
(2)Interim distribution of sale proceeds $177,000
(3)Household contents – including BBQ, tools and equipment $7,500
(4)NAB Account – …37 $1,000
(5)C Pty Ltd $0
(6)Hobby gear, equipment, tools, equipment $3,000
(7)H Bank Account $161
Total: $200,661
Husband Liabilities:
(1)NAB Credit Less: $9,927.29
Net total: 190,733.71
Non-superannuation assets of the wife:
(1)Motor Vehicle 2 $5,000
(2)NAB Account – …07 $2,000
(3)Interim distribution of sale proceeds $177,000
(4)Household contents $7,500
Net Total: $191,500
The combined net total of the parties’ individual assets is $190,733.71 plus $191,500 being: $382,233.71. The monies held in trust jointly for the parties being the sale proceeds from Suburb G is $296,080.92.
The combined net total of the parties’ individually owned property and that of the jointly held monies in trust is $382,233.71 plus $296,080.92 totalling $678,314.63.
Of the amount of $678,314.63 the Wife is to receive 57.5% and the Husband 42.5% as follows:
·Wife 57.5% of $678,314.63 = $390,030.91
·Husband 42.5% of $678,314.63 = $288,283.72
The Wife has individually owned property worth net $191,500. In order to receive $390,030.91, the Wife will need to be paid the sum of $198,530.91 from the monies held in trust.
The Husband has individually owned property worth net $190,733.71. In order to receive $288,283.72, the Husband will need to be paid the sum of $97,550.01 from the monies held in trust.
If there are any monies left over where the monies had been held in a controlled monies rather than trust account by Family Focus Legal and attracted interest than that additional sum will need to be disbursed 57.5% to the Wife and 42.5% to the Husband.
Division of Superannuation Assets:
As set out in the balance sheet accepted by the Court the parties hold the following individual and joint superannuation assets.
·Farnell Family Superannuation Fund (Self-managed) Jointly owned $162,452.45
·Super Fund 1 Owned by Wife $8,425
·Super Fund 2 Owned by Husband $5,300
Total: $176,177.45
Unfortunately, in this case it is not as simple as the Court just calculating the overall pool of superannuation and then making allowances for the disproportionate superannuation each party holds in order to achieve an overall adjustment whereby the Wife receives a total 57.5% of the overall superannuation and the Husband 42.5% of the overall superannuation. This problem arises because there will be costs associated with the winding up and division of the value of the self-managed Farnell Family Superannuation Fund. It is not disputed that the cash held by the Farnell Superannuation Fund are the proceeds of sale of a property at D Street, Suburb E that the fund had purchased for the sum of $357,000 in 2014.
There will possibly be capital gains tax payable by the Farnell Superannuation Fund and other costs that will include accountancy fees and auditor fees associated with preparing financials and the lodging of tax returns up to what will be the date the Farnell Superannuation Fund is wound up. This position is supported where the Husband gave evidence of a profit of some $50,000 being made on the sale of the Suburb E property (Transcript 3 August 2023, page 14, lines 13-14).
These issues are canvassed by the Husband in the drafting of the orders sought by him numbered 2-6 but do not go as far as putting in place a regime by which the issue of a superannuation split is finalised in a way that is in the view of the Court correctly formulated and enforceable.
In order to achieve a final adjustment of superannuation between the parties it would be best that there be two separate adjustments between the parties in respect of their superannuation interests. Ordinarily the Court would make the first adjustment between the parties’ non-self-managed funds and then another adjustment between the parties’ interest in the self-managed superannuation fund.
The parties would need to provide the Court a further set of orders that provide for the split between the parties of the Wife’s interest in her Super Fund 1 to the Husband after having provided procedural fairness to Super Fund 1 having served the proposed order on N Company and then allowing 28 days to elapse or respond to any request made by Super Fund 1 such that the proposed order for the superannuation split to in a form acceptable to Super Fund 1. Following procedural fairness having been afforded to Super Fund 1 then the parties would need to forward to the Court orders for the superannuation splitting order to be made by the Court in Chambers.
However, when calculating what would need to actually be split from the Wife’s interest in Super Fund 1 to the Husband the exercise becomes economically unviable and pointless.
As set out above the parties’ non-self-managed superannuation is as follows:
·Super Fund 1 Owned by Wife $8,425
·Super Fund 2 Owned by Husband $5,300
Total: $13,725
The Wife is entitled to receive the sum of $7,891.88 and the Husband $5,833.12 from the pool of $13,725. Where the Wife currently has $8,425 and the Husband $5,300 the split from the Wife to the Husband would only be $533.12. As such there is little point in making an adjustment between the parties non-self-managed superannuation. What could be done instead is to calculate an adjustment in favour of the Husband from the Wife’s ultimate entitlements in the Farnell Superannuation fund of $533.12.
In respect of the Farnell Family Superannuation Fund it will be necessary that the Parties instruct the fund’s accountant to complete the financials, audit the same, lodge the tax return/returns, and have the Farnell Family Superannuation Fund pay any tax liability. What will then need to take place is a calculation of the parties’ entitlements/member balances within the fund. A splitting order will then need to be made in respect of the parties’ interests where one party makes a split to the other of their entitlement such that that Wife then has entitlements within the Farnell Family Superannuation Fund that equate to 57.5% of the value of the fund and the Husband 42.5% of the fund. The parties will then need to provide the Court with a splitting order that will be binding upon the trustee of the Farnell Superannuation Fund that sees a split of superannuation from one to the other whereby the Wife’s member balance will represent 57.5 % of the fund and the Husband’s balance will represent 42.5% of the fund. The parties can then rollover their entitlements to another complying superannuation fund of their choice.
After the rollover by the parties of their entitlements out of the fund, the Farnell Family Superannuation Fund can be wound up in accordance with the deed establishing the Farnell Family Superannuation Fund. The parties can then as a final step deregister B Pty Ltd that the Court understands is the trustee for the Farnell Family Superannuation Fund.
The parties are not caught by surprise by the Court seeking to make orders around establishing and then adjusting by way of a splitting order the parties’ member balances within the Farnell Family Superannuation Fund. During the hearing the Court had raised the issue of the parties’ actual member balances within the Farnell Family Superannuation Fund with counsel for Husband and for the Wife in the following exchange:
HIS HONOUR: Okay. Tell me this: is it really equal? Are the parties’ entitlements in the super fund really equal or we don’t know? What’s
MR FERMANIS: I can’t tell your Honour off the top of my head what the members’ balances for the fund
HIS HONOUR: Yes, that’s what I will need to know.
MR FERMANIS: Yes. I can’t off
HIS HONOUR: Because you’ve got a member balance, as it is sitting here, at fifty-fifty and possibly not, probably not.
MR SEOW: Well, I don’t know either and it seems unlikely.
(Transcript, 3 August 2023 page 23, line 1-14).
Each party’s Counsel was unable to advise the Court of the member balances within the Farnell Family Superannuation Fund. As set out earlier in this judgement the parties formed the Farnell Family Superannuation Fund in 2014. The Husband rolled over approximately $111,000 and the Wife rolled over approximately $134,000 into the self-managed superfund and as such the likelihood of the member balances being the same is remote. The Court will therefore make orders that will require the parties to provide further sets of orders in respect of the splitting order for the parties.
Final orders will be made in accordance with the findings and reasons set out above and are contained at the beginning of this judgment.
I certify that the preceding one hundred and twenty-seven (127) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Myers. Associate:
Dated: 2 May 2024
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