FARRELL & FARRELL
[2010] FMCAfam 946
•4 November 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FARRELL & FARRELL | [2010] FMCAfam 946 |
| FAMILY LAW – Property – assessment of contribution – future needs. |
| Family Law Act 1975, ss.75(2) 79 |
| Browne & Green (1999) FLC92-873 DJM & JLM (1998) FLC 92-816 Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervenor) (2003) FLC 93-143 MH & MZ (2005) FLC 93-226 Kowaliw & Kowaliw (1981) FLC 91-092 Money v Money (1994) FLC 92-485 Norbis v Norbis (1986) 161 CLR 513 AJO v GRO (2005) FLC 93-218 Pierce v Pierce (1998) FLC 92-844 Townsend & Townsend (1995) FLC 92-569 Williams & Williams [2007] FamCA 313 |
| Applicant: | MS FARRELL |
| Respondent: | MR FARRELL |
| File Number: | SYC 4398 of 2009 |
| Judgment of: | Altobelli FM |
| Hearing date: | 23 August 2010 |
| Date of Last Submission: | 23 August 2010 |
| Delivered at: | Sydney |
| Delivered on: | 4 November 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms Reynolds |
| Solicitors for the Applicant: | Moira Ryan Lawyers Pty Ltd |
| Counsel for the Respondent: | Mr Millar |
| Solicitors for the Respondent: | Elliot Tuthill Solicitors |
THE COURT ORDERS THAT:
That within 60 days of the making of these Orders and subject to order (2) below the husband do all such acts and things and sign all such documents as may be required to transfer to the wife all of his right, title and interest in the property situate and known as Property G, in the state of New South Wales being the whole of the land more particularly described in folio identifier [omitted] and the wife upon transfer of the real property shall indemnify and keep indemnified the husband with respect to any liability or encumbrance affecting the real property and the husband is to vacate the real property, the subject of this Order, on or before the date of transfer to the wife.
At the same time as the transfer contemplated by order (1) above the wife is to pay to the husband the sum of $261,471.
That the wife be declared the sole and beneficial owner of her interest in the real property situate and known as Property M, and Property S. The wife shall indemnify the husband with respect to any borrowings made by her solely and or jointly with the husband from her mother, Ms V, and with respect to any encumbrance or liability arising with respect to her proprietorship of the real property referred to in this order.
That the husband be declared the sole and beneficial owner of his interest in the real property situate and known as Property B, being the real property referred to in Certificate of Title Volume [omitted] and he shall indemnify and keep indemnified the wife with respect to any encumbrance or liability arising with respect to his proprietorship in such real property.
That the husband and [S] Superannuation Scheme do all necessary acts and things, sign all documents and give all consents necessary to give cause and effect to the Orders hereunder:
(a)Order that paragraphs 5(a) to 5(j) (inclusive) of these Orders are binding on the Trustees of the [S] Superannuation Scheme ("the fund")
(b)That the amount allocated to the wife in these proceedings out of the defined benefit interest held by the husband in the [S] Superannuation Scheme is $496,650.
(c)That pursuant to Section 90MT(1)(A) of the Family Law Act 1975 ("the Act") whenever a splittable payment becomes payable in respect of the interest of the said husband in the fund, the wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 ("the Regulations") using the base amount and there be a corresponding reduction in the entitlement of the husband to whom the splittable payment would have become payable but for these Orders.
(d)That this order has an effect from the operative time.
(e)The operative time for the purposes of this order is four (4) business days from the date of these Orders being served upon the Trustee of the fund.
(f)The husband shall within 14 days of becoming entitled to receive superannuation benefits from [S] Superannuation Scheme provide to the fund all such forms as shall be necessary to enable it to determine the nature and quantum of the superannuation entitlement and any related information it may require.
(g)That there be liberty to apply to each party and the Trustee in relation to the implementation of the Orders affecting the superannuation interest.
(h)That until such time as the superannuation split to the wife pursuant to these Orders can be rolled over to a separate account of the wife:
(i)The husband shall direct and authorise the Trustee of the fund to communicate with the wife and/or any person authorised by her in writing:
A.To answer any reasonable enquiries as may be made by her or on her behalf from time to time in relation to her entitlement in the fund and
B.To provide the wife and/or her authorised representative a copy of any notice of any application or request by the husband which seeks release of entitlements in the fund insofar as that release may affect the wife's entitlement in the fund pursuant to these Orders.
(i)The husband by himself, his servants and/or agents be and are hereby restrained from doing any act or thing which would prevent the wife, her heirs, administrators, executors or nominees from receiving the benefit in the fund to which she is entitled pursuant to these Orders.
(j)In the event that the superannuation split to the wife pursuant to these Orders can be rolled over into a separate account of the wife, each of the parties hereto and the Trustee of the fund shall each do all such acts and things and execute all such documents as may be necessary to facilitate and to implement that rollover.
That the husband do all such acts and things and sign all such documents as may be necessary to transfer to the wife the registration and all of his right, title and interest in the Honda CRV motor vehicle registered number [omitted] and the wife shall thereafter indemnify and keep indemnified the husband with respect to any liability arising from the proprietorship of such motor vehicle and the husband shall provide to the wife for the purposes of implementation of this Order signed registration papers giving effect to the transfer of the said motor vehicle within seven (7) days of being provided such registration papers for signature by the wife.
That the parties shall immediately do all such acts and things to divide equally the furniture and contents of the former matrimonial home by agreement and failing such agreement, by the method of the husband preparing two lists of such furniture and contents and the wife in selecting one list and the parties then will forthwith divide the property according to the content of such lists.
Other than is specifically provided for in these Orders (and with the exception of a Bordeaux wine bottle received by the parties in 1983) the parties be declared the sole and beneficial owner of all items of personal or real property in their respective possession of which they are entitled as at the date of the making of these Orders including but not limited to all or any monies standing the credit of either of the parties to their respective bank, building society, credit union account, their respective share holdings, motor vehicles and any present or future expectation under a trust or estate.
That notwithstanding order (8) above, within 21 days of the date of these orders the wife deliver to the husband in an undamaged state the following items:
(a)Half of the shells, the glassware and a souvenir plate given to the husband by his grandmother.
(b)Wedding photos of the husband’s parents, photographs of the husband’s parents and grandparents and photographs of the husband as a child.
(c)The husband’s childhood stamp album, if she has not already done so.
(d)Mexican pots purchased by the husband in 1971.
Any application for costs arising from the making of these orders must be by way of written submissions not exceeding 500 words and filed with my Associate and served on the other party within 28 days of the date of these orders. Any response to such application must not exceed 500 words and must be filed and served within a further 28 days.
Pending the transfer of the property at Property G to the wife the husband is to have sole occupancy of the same provided he pays all outgoings up until the date he vacates the same.
In default of the parties or either of them doing all acts and things and executing all such documents as are necessary to give effect to these orders, a Registrar of the Family Court of Australia at Sydney be appointed pursuant to s.106A to execute all documents in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said orders.
If these orders require the payment of a sum of money within a certain timeframe, non-compliance results in the accrual of interest on the said sum of money as calculated under the Family Law Act, its Rules and Regulations.
Liberty to relist this matter before Federal Magistrate Altobelli on
7 days notice as regards the interpretation, implementation or enforcement of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Farrell & Farrell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 7113 of 2008
| MS FARRELL |
Applicant
And
| MR FARRELL |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for alteration the Family Law Act, commonly known as a property settlement. The wife is the applicant. She is
58 years old. The husband is the respondent. He is 64 years old. They have been unable to agree between them as to how their assets should be divided.
Background
The husband and the wife commenced cohabitation in August 1983 and married in April 1985. They separated in either 2007 or 2008 – I am satisfied that nothing turns on this. They have three children of the marriage who are aged 24, 21 and 17. At the time of the separation the wife left the home, and all three children have continued to live there with the husband. At the time of the separation the children were either in tertiary or secondary education. As of today’s date the two younger children continue to live with their father with one undertaking tertiary education, and the other undertaking the higher school certificate this year. It is part of the husband’s case that he will continue to provide accommodation, care and support for these children so that they may complete their tertiary education. Since the date of separation the wife has been living with her mother. The husband is a retired [omitted], and the wife describes herself in her affidavit as a [omitted]. The husband and the wife cohabited for a period of about 24 years.
At cohabitation both parties had assets which had been accumulated before then. Both had been previously married. During the course of the cohabitation each received benefits by way of inheritance from members of their family. The main issues in this case revolve around assessing contribution having regard to the assets held at cohabitation, and the additional financial contributions derived from inheritances. There is an issue about assessing contribution of a non financial kind, as well as assessing contribution in the post separation period. There is also dispute between the parties as to who should receive the benefit of an adjustment under section 75 (2) of the Family Law Act, and to what extent. There are also issues between the parties about what, in the circumstances of this case, is a just and equitable order to make.
The wife’s evidence consisted of affidavits provided by herself, her mother Ms V, and her brother Mr V. Only the wife and her mother were required for cross examination. The evidence in the husband’s case consisted of his affidavits. He was cross examined.
The hearing itself was conducted economically, and efficiently, by experienced counsel whose focus was on identifying the issues in contention. Those will be discussed in further detail below.
Whilst there are some minor issues about the constitution of the asset pool, to which I will shortly refer, all of the main issues in this case revolve around assessment of contributions and section 75(2) considerations.
The applicable law
The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by the parties in bringing property into the marriage. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In MH & MZ (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
In relation to add-backs, the applicable law can be found in decisions such as the Full Court's decision in AJO v GRO (2005) FLC 93-218.
30. To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-816 the Full Court said at 85,262:
“11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.”
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
“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 into 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 moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.”
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec.75(2)(o) to applications for settlement of property instituted under the provisions of sec.79.”
31. As the Full Court said in Browne and Green (1999) FLC 92-873 at 86,360:
“44. We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction – a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.”
Determining the asset of pool
Exhibit A in these proceedings constituted the agreed balance sheet. Only two issues arise for determination. At item 19 of the balance sheet the parties are unable to agree as to the quantification of the liability to the wife’s mother, Ms V. The husband agrees that at least $300,000 is owed to her being the principal on two loans advanced to the wife but for the benefit of the parties, during the period of cohabitation. However, the wife asserts, and her mother confirmed in evidence, that the liability inclusive of interest is $338,046. The issue for determination in this regard is whether this interest is indeed payable, in the circumstance of this case. The wife says that the interest is payable. Ms V, the lender, says that interest is payable. The husband disputes this sum and relies principally but not exclusively on the absence of objective factors that would otherwise corroborate the assertion that interest is genuinely payable. For example, the husband points to the evidence indicating that the interest on payments, and supposed liability, are nowhere referred in the wife’s financial statement nor did she claim the interest as a tax deduction in her taxation returns, in circumstances where she would be clearly entitled to do so. I must say that it is rather unusual that the wife would seek to include the interest on the balance sheet for present purposes, but not claim the interest in her tax returns, or anywhere referred to the same in her sworn financial statement.
It should be noted that there is no question that the principal is owing, and it must follow that if the loan is in fact interest free that this is a substantial contribution on the wife’s part that needs to be assessed in the context of a claim for her contribution. The wife’s evidence about the interest on the $200,000 loan is that it was in fact paid for many years but ceased as at May 2009. Accordingly interest has been accruing at a substantial rate hence leading to what she asserts is the present situation of owing her mother $38,046 in interest, on top of the principal of $300,000.
It is clear from the evidence that Ms V is placing no pressure on the wife to repay either the principal or the interest despite the fact that the loan agreements in evidence clearly would entitle her to call up the loans. It is also clear from the evidence, however, that when the wife inherits her share of the estate from her mother, that the amount outstanding on the loan, including interest, would be offset against her entitlement in the estate. In other words, the full amount of the loan would be treated as an asset in the estate, and the wife’s liability would be deducted from her share of the estate before she received the same.
In the end result, it is the above factor which convinces me that notwithstanding the flexibility of the loan arrangements between the wife and her mother, the loan is genuine, and the interest would eventually be brought into account at the wife’s mother’s death. It seems to me that once the husband had conceded that the $300,000 loan should be included as a liability on the balance sheet, and once he did not challenge the written agreement dated 8 March 2003 signed by himself and the wife acknowledging the loan with Ms V at 5%, the husband is not now in a position to assert that no interest is payable. True it is the wife has failed to disclose the interest liabilities in her tax returns and financial statement. In other cases that might be conclusive evidence of the non existence of the interest liability, but on the facts of this case it doesn’t detract from the substantive matters I have referred to above. Accordingly, I conclude that item 19 in the balance sheet should in fact read $338,046.
The second issue that arises in relation to the balance sheet is item 20. The wife seeks to include as a liability on the balance sheet the sum of $30,074 representing legal fees paid by her, that were advanced to her by her mother. The wife seeks to include this liability on the basis that the husband paid legal fees out of joint savings. I disagree. Firstly, the evidence is not clear enough for me to conclude that what legal fees the husband paid in the post separation period, was paid out of funds in existence of the date of separation. It is equally impossible for me to conclude that he paid those fees out of what appears to be substantial funds accumulated after separation. In any event, I think the greater obstacle to the wife’s claim is the fact that it was first asserted in closing submissions, thus causing a prejudice to the husband. Thus the husband expressed concern through his counsel, quite legitimately I believe, that he was denied the opportunity to cross examine both the wife and her mother about the nature of this loan advance, and the purpose for which it was used. In the circumstances of this case I am not prepared to allow item 20 as a liability on the balance sheet. It is a matter that quite properly ought to have been raised before final submissions. In any event, there is enough doubt about the circumstances of this loan to lead me to conclude it ought not to be included as a liability. Accordingly item 20 on the balance sheet will not be allowed.
There is one further balance sheet issue, albeit a small one. In item 23 the wife asserts that she has a small superannuation fund with the value of $150. No specific evidence was adduced in this regard, but the husband was not in the position to be able to agree to this figure. Under the circumstances, as the wife’s evidence is the only evidence, I am prepared to accept item 23 at $150.
Accordingly, the balance sheet in this case will be as follows: -
Non-superannuation assets
| Ownership | Description | Value | ||||
| 1 | Joint | Property G | 1,125,000 | |||
| 2 | Wife | Property S | 510,000 | |||
| 3 | Wife | Property O property | 95,883 | |||
| 4 | Husband | Property U property | 36,000 | |||
| 5 | Husband | Commonwealth Bank accounts | 336,906 | |||
| 6 | Husband | [omitted] Credit Union | 6,726 | |||
| 7 | Husband | Telstra Shares | 4,500 | |||
| 8 | Husband | IAG Shares | 4,961 | |||
| 9 | Husband | Honda Civic 2008 | 18,000 | |||
| 10 | Husband | Honda Civic 1800 | 1,500 | |||
| 11 | Husband | Boat | 2,500 | |||
| 12 | Husband | Household contents | 15,000 | |||
| 13 | Wife | Car | 17,000 | |||
| 14 | Wife | Bank account | 200 | |||
| 15 | Wife | Household Contents | 5,000 | |||
| 16 | Wife | Antiques & Collectables | 2,500 | |||
| Total | $2,181,676 | |||||
Liabilities
| Ownership | Description | |||||
| 17 | Joint | Wife's mother | 338,046 | |||
| Total | $338,046 | |||||
Superannuation assets
| Member | Name of Fund | Type of Interest | Wife/de facto partner’s value | ||||
| 18 | Husband | [S] Super | Defined Benefit | 1,419,000 | |||
| 19 | Husband | [N] Super | Accumulation Benefit | 42,952 | |||
| 20 | Wife | Superannuation | Small fund | 150 | |||
| Total | $1,462,102 | ||||||
| Net non superannuation assets | $1,843,630 |
| Net superannuation assets | $1,462,102 |
| TOTAL | $3,305,732 |
This means that the total assets are $2,181,676, and liabilities $338,046. Net non superannuation therefore amounts to $1,843,630. The net superannuation assets amount to $1,462,102. The combined value of the pool is $3,305,732. The percentage of the pool represented by superannuation assets is about 44%.
Contribution
It was the husband’s case that his assets at cohabitation were at accordance with paragraph 13 of his affidavit filed 27 August 2009. This evidence was unchallenged. Even if I were to doubt the values attributed by him, clearly he had substantial assets at the time of cohabitation. I find, therefore, that at the time of cohabitation the husband had the following assets:-
a)8 years of contribution to the [S] superannuation scheme
b)Untaken long service leave of approximately 50 days
c)Untaken recreation leave of approximately 40 days
d)The house at Property G, worth approximately $90,000, with a mortgage in the sum of $40,000
e)A 1978 Mazda motor vehicle
f)A half share in land at Property U
g)Savings approximately $5,000
h)Furniture and personal affects
The wife’s evidence about her assets at cohabitation is found at paragraph 21 of her affidavit filed 6 August 2010. She had a half share, with her father, of a property at Property R. Her interest in the property was realised in 1985 when she received $30,000 in consideration for a transfer to her father of her share in the property. This evidence was not challenged, and I accept the same. The mother also asserts that she had savings of about $10,000 from her employment before cohabitation. She was challenged about this evidence and I am satisfied that the basis of the wife’s recollection of this amount is so vague, and the corroborative evidence is so poor that I cannot find she had the savings in the sum of $10,000. I accept that the wife probably also had a Mitsubishi motor vehicle.
As at the time of cohabitation I therefore accept that the husband’s initial financial contribution was somewhat greater than that of the wife. It needs also to be recognised that he owned the property at Property G which became the former matrimonial home, and remains the home in which the husband and the children currently reside.
It is not necessary to recount in these reasons precisely how the assets owned by either of the husband or the wife were used during the marriage, and how they come to be represented in the balance sheet as I have found it. It is significant that the most valuable assets on the balance sheet i.e. the former matrimonial home, and the husband’s [S] super entitlement both had their genesis prior to cohabitation.
I turn now to consider of what I would describe as the “additional” financial contributions made by either of the husband and the wife during the course of cohabitation. On the facts of this case, these additional financial contributions consisted primarily of inheritances received by the parties. During the period of cohabitation the husband received an inheritance from his father’s estate in the sum of $15,900, and from his mother’s estate of about $20,000, the latter coming in shortly before separation. The wife does not dispute this.
During the course of cohabitation the wife received an inheritance from her uncle, and an inheritance from her father and it is not disputed by the husband that the value of these inheritances amounted to $148,314.
Clearly, during the period of cohabitation, the wife made a greater additional financial contribution than the husband. Indeed, significantly greater.
It was not disputed that all of these additional financial contributions, whether sourced from the wife or the husband, were applied for their joint benefit.
Counsel for the wife asserted that she should be credited with a further additional contribution by way of the loan advances provided by Ms V, the wife’s mother. In this regard it will be recalled that $100,000 was provided interest free, and $200,000 at a rate of 5% interest. Moreover, counsel for the wife argues that the interest forgone on the $200,000 loan should be further credited as an additional financial contribution by the wife during cohabitation.
I agree that the provision by the wife’s mother of $100,000 interest free is something that benefited both the husband and the wife and that is an additional financial contribution made by the wife.
I agree that the provision of $200,000 at a 5% interest is also of benefit to the husband and the wife, and is a contribution made by the wife. I am troubled with the submission about the interest forgone. Whilst, on the one hand, I have already found that the interest outstanding of $38,046 ought to be included on the balance sheet as a liability, I remain troubled about the contribution argument in so far as it relates to interest forgone. The interest has not really been forgone but, if I have understood the evidence correctly, the time for payment has been postponed to some time in the future. In that regard, because Ms V appears to be in no rush to have the loan repaid, this in itself could be treated as a contribution on behalf of the wife. It is not something that, of itself, I would place much weight on. Nonetheless, the above matters certainly do reinforce a finding that during the course of cohabitation the wife’s additional financial contribution was greater than that of the husband.
I turn now to consider all other contributions made by either the husband or wife during the marriage, apart from the additional financial contributions referred to above. This was a long marriage which had the usual ups and downs that one would normally expect in a marriage of this length. The wife was clearly ill for periods of time, and this meant that her husband had to step into the roles within the marriage that were formally undertaken by the wife. Likewise there were periods when the husband was, in the course of his work, working long hours and travelling, which meant that the wife had to take on additional responsibilities. The husband sets out in his evidence, at length, the direct and indirect, financial and non financial contributions that he made, including contributions to the welfare of the family. But so does the wife, though not with the same level of particularity. It is interesting in this case that neither the husband nor the wife utter any words of criticism about the nature and extent of the contribution undertaken by the other. There is a tacit, and in my opinion quite appropriate, acknowledgement that both performed the tasks that they had agreed on within the marriage to the best of their respective abilities and capacities and having regard to such matters as their health, and who was physically capable of bearing children. The fact is that the husband and wife, like many many other husbands and wives in the Family Law Courts made different contributions, but all in the context of advancing the interests of their family. In these circumstances, and having regard to the length of the marriage, it is not just and equitable in my opinion to seek to somehow make fine distinctions and therefore assess contribution in different ways.
If one, therefore, excludes the additional financial contributions during cohabitation which I have discussed above, then a conclusion as to equality of all other forms of contribution up until the date of separation is the only just and equitable one on the facts of this case.
The wife contends that there should be a further adjustment in her favour for the period after separation, on the basis that the husband had the sole benefit of all of the relevant assets of the parties, or certainly the more valuable ones including the former matrimonial home, and his superannuation entitlement, which was in the payment phase by way of a fortnightly pension. However, I am not prepared to make a separate and distinct adjustment in favour of the wife for the post separation period. Whilst it is true, at one level, that the husband was able to enjoy the benefit of the former matrimonial home, a substantial cash entitlement and his superannuation entitlements, it is also true that he made a contribution towards the welfare of the family in the sense that he was primarily responsible for the care of the children, and certainly meeting their needs, in the post separation period. Moreover, I am not prepared to find, on the evidence before me, that the wife experienced undue difficulties in a financial sense, even during the period before the husband commenced to make voluntary maintenance payments to her. In short, I do not accept that there is a case for a further adjustment for post separation contribution.
How then, should contribution be assessed? The wife’s counsel contends that it should be equal i.e. 50:50. Implicit in this submission is a plea to recognise that her greater additional financial contribution during cohabitation needs to be taken into account in assessing the weight to be given to the greater initial contribution made by the husband at the commencement of cohabitation. There is force in this submission.
The husband’s counsel submits that, particularly when taking into account his assets at the time of cohabitation, and the various other matters relating to the husband’s non financial contribution during cohabitation, this means there is a disparity in the totality of contribution which favours the husband. The husband’s counsel says that a two pool approach ought to be adopted with the separation of superannuation from non superannuation assets. Because of what is asserted for the greater contributions by the husband, he submits there should be a 5% adjustment in the husband’s favour for the non superannuation assets, and in relation to the superannuation assets, because the husband bought in 8 years worth of contributions towards his [S] super, there should be an adjustment in his favour of 12.5%.
I do not agree with the husband’s assessment. It places too much weight on the husband’s initial contributions at the date of cohabitation, and then minimises the weight to be given to the wife’s greater additional financial contribution during cohabitation. Of course, one needs to recognise the value to the parties of the husband’s initial contribution of what then became the former matrimonial home and is now the second largest asset in the pool. Likewise, the husband’s initial contribution by way of his [S] super entitlement needs also to be recognised, given that it is the largest asset in the pool. However, to elevate the value of these contributions over and above the very significant contributions made by the wife during the next 25 years, particularly her additional financial contributions by way of inheritances, would result in an outcome that is not just an equitable. Indeed, when one has regard to the myriad contributions made by both parties since the date of cohabitation a final assessment of contribution at 50:50 is, in my opinion, the only outcome which is just and equitable on the facts of this case. I have not lost sight of the fact that there are still two separate and distinct pools, superannuation and non superannuation. In framing the orders I need to make, I must of course have regard to this but for the purposes of assessing contribution, at this stage, I still remain of the view that it is just and equitable that a conclusion of equality of contribution be applied across both pools.
Section 75 (2) considerations
Both parties argue that there should be a section 75 (2) adjustment in their favour. The wife asserts it should be 5%. The husband asserts it should be 2.5% in his favour. Each party of course frames their claim for a section 75 (2) adjustment by reference to their claim for contribution.
From the wife’s perspective she asserts that the most significant factor is the disparity in earning capacity. In his financial statement the husband deposes to a weekly income of $2,439, whereas the wife deposes to a weekly income of $945. Interestingly, both parties show a surplus of income over expenditure which is hardly indicative of need, when viewed in that narrow sense. Most of the husband’s super comprises the pension paid to him through his [S] Super entitlement which is currently $1,950 per week. Of course, if I decide that that fund needs to be split, this will have the effect of reducing his income. The wife asserts that the husband has a capacity to earn additional income but, even if that were the case, I am not satisfied from the evidence that this income would be so substantial as to make any real difference in the current context and, in any event, the husband is 6 years older than the wife. The wife has certainly retrained and obtained qualifications as a [omitted] and I am satisfied from the evidence that, apart from having to focus on the current proceedings, she could be in gainful employment as a [omitted] and will, in all likelihood, be in gainful employment as a [omitted] once these proceedings have been concluded. Given the evidence of the income that she has earnt as a [omitted] in the past, it is hard to imagine a situation where even if the wife were working full time as a [omitted] that she would be earning as much as the husband is from his superannuation pension.
The evidence indicates that the wife will receive a substantial inheritance from her mother’s estate, when her mother dies. That is a future benefit which is impossible to quantify or to predict time wise. I accept that the husband will be responsible to provide for the children who he has a duty to maintain, or alternatively a responsibility to support, even though it will shortly be the case that all children have attained the age of 18 years. Another section 75 (2) factor operating in favour of the husband is the fact that his [S] super entitlement is valued for balance sheet purposes at $1,419,000, but it has no cash value to him as he is obliged to take it as a pension until death.
Even before the wife comes into her inheritance she clearly has a valuable resource in the form of her mother who has generously provided to her accommodation, loan advances, and interest forgone.
When one looks so closely at all of the relevant section 75 (2) considerations at play in this case, the fact is that there are considerations applying in favour of both the husband and the wife the net result of which is that their sections 75 (2) factors are the same, and thus no separate adjustment should be made in this regard. Thus, for example, even if there is a difference in earning capacity between the husband and the wife, I am left in no doubt that she has access to far greater financial resources than the husband has. Subject to the orders I actually make about splitting superannuation, the husband will be left in a position where potentially a major part of his entitlement will be in the form of an asset valued for these proceedings but which merely provides him with an income. Accordingly, no adjustment under section 75 (2) is appropriate on the facts of this case.
A just and equitable order
The effect of my findings in relation to assessment of contribution and a section 75(2) adjustment means that the overall split between the parties will be equal. The question to be determined now is whether that split should also be applied equally across both pools of assets i.e. superannuation and non superannuation assets.
In the husband’s application he seeks an order for the sale of the jointly owned former matrimonial home at Property G. Extrapolating the orders sought by him, I infer that he would then require the sale proceeds to be divided equally. He also proposed that the boat be sold and the sale proceeds divided equally. In relation to his [S] Super again extrapolating his application I infer that he would propose also splitting the superannuation equally. Of course, in each case I am making inferences about what the final split should be in the husband’s case, based on the percentage splits he propose. I infer that any further adjustment needed to implement any order made by the Court, would be adjusted out of other assets. It is important to note that the evidence indicates, and the wife did not contend otherwise, that the wife would be entitled to in effect cash in whatever her splittable payment is in the [S] Super fund.
The husband also sought orders in relation to the division of furniture and contents and other specific items, to which I will make reference below.
The orders sought by the wife are predicated on her receiving the property at Property G as part of her entitlement. She also sought orders for sale of the Property S property, and the payment of the debt to her mother. Her proposal for the split of the husband’s [S] superannuation scheme entitlement would result in her receiving $584,800 or about 41% of the entitlement.
The wife desires to keep the former matrimonial home. Her reasons for doing so, expressed in cross examination, do not appear to me to be logical, but there does not seem to be any reason to deny her this opportunity in circumstances where the husband does not oppose the same, provided the adjustment between superannuation and non superannuation assets remains just and equitable.
The wife proposes orders for the sale of the Property S property, but I do not understand the logic behind that position when the property is in her name only. I do not intend to make this order. If the wife wishes to sell that property, she can do so and she certainly doesn’t need an order from me in that regard.
If I were to split both superannuation and non superannuation assets on a 50:50 basis then each of the husband and the wife would receive $921,815 in non super assets, and $731,051 in superannuation assets.
If the husband retains the Property U property, the savings in the Commonwealth bank and credit union, the Telstra and IAG shares, the two Hondas, boat, and contents he would receive non superannuation assets totalling $426,093.
If the wife retained the Property S property, her interest in Property O, her car, bank account, contents, antiques etc she would receive an entitlement of $630,583. However, I think it would be appropriate to attribute to her responsibility for taking care of the loan from her mother of $338,046. This would mean her net assets would be $292,537.
If I leave the former matrimonial home to the wife, this adds to her asset pool $1,125,000. This gives her a total of $1,417,537. Given that her entitlement is $921,815 on the non superannuation pool, this means that payment to the husband would be $495,722. I note that the source of these funds would be either the sale proceeds of Property S, or her cashing in her share of the husband’s superannuation entitlement.
Turning now to the superannuation assets if I simply split these equally each of the husband and the wife would receive $731,051. The husbands total superannuation entitlement consists of his [S] Super of $1,419,000 together with his [N] super of $42,952 totalling $1,461,952. The wife’s superannuation entitlement is only $150. On the 50:50 scenario the wife would receive a super split of $731,051.
In the circumstances of this case I think that a super split of 50% across the board is not just or equitable. Neither the husband or the wife proposes this.
The husband proposes that the super split be about 35% of the share of his [S] super. If I adopt this percentage i.e. 35% it would have the following impact on the above calculations. The husband’s 65% share of his [S] super benefit would become $922,350 and the wife’s 35% share $496,650.
This would mean the husband share of the superannuation would become $922,350 plus his [N] super $42,952 totalling $965,302.
Conversely the wife superannuation entitlement would become $496,650 plus her $150 equals $496,800.
Given that the wife’s notional 50% share of superannuation would have to amount to $731,051, in order to implement the super split proposed by the husband in terms of his [S] super benefit, there would have to be an adjustment in the wife’s favour of $234,251, in relation to non superannuation assets. This has the effect of reducing the payment that the wife needs to make to the husband in consideration for retaining the former matrimonial home, from $495,722 to $261,471. This is actually a satisfactory outcome because all of this payment can be funded from cashing in of the whole or part of the wife’s share in [S] super and or selling the Property S property. Indeed, the wife is put in a position where she can elect to either cash in all of the super or cash in part and roll over some other part of it. This simply provides for her longer term needs, as well as her short term needs. From the husband’s perspective if 65% of his superannuation is maintained, this only potentially reduces his income flow by about 35% in circumstances where he will have considerable assets (both liquid and non liquid non superannuation assets as well as superannuation assets).
The final outcome for the parties will be as follows. The husband will receive the Property U property, his bank and credit union accounts, his Telstra and IAG shares, the two Hondas, a boat and the contents totalling $426,093. In addition he will receive a payment from the wife of $261,471. He will retain his [N] super of $42,952, and the post split [S] super of $922,350. He will thus receive total assets of $1,652,866, or half of the total pool of assets consisting of $3,305,732.
The wife’s entitlement will consist of the Property S property,
Property O property, her car, bank account, contents, and antiques totalling $630,583, less the loan from her mother $338,046 leaving net assets of $292,537. She will receive the former matrimonial home to the value of $1,125,000, a post [S] super split of $496,650 together with her own superannuation of $150. Of course out of this she needs to have paid the husband $261,471. This leaves her with a net entitlement of $1,652,866, or half of the combined pool of assets in this case.
In the circumstances of this case I consider orders to this effect would be just and equitable. Fortunately, the asset pool is big enough so that the short and long term needs of both the husband and the wife are as satisfactorily met as they can be in the circumstances of this case. The husband loses nothing by the wife acquiring his interest in the home – indeed, arguably he stands to benefit because none of the costs of realisation will be crystallized. The husband minimises the extent of the split of his income producing superannuation entitlement thus minimising the impact of the reduction of income.
There was evidence about an issue of division of chattels between the husband and the wife. Doing the best I can the items in question are referred to in order 8 proposed by the husband. What is not clear to me, however, is whether the furniture and contents referred to in 8.1 of the order sought by the husband is already referred to in the balance sheet as an asset. I have made the assumption that the furniture and contents referred to at 8.1 is not referred to in the balance sheet given that the husband seeks an equal division in specie. If I am wrong, however, and the parties prefer to divide these items in specie (and I can see the logic of this) then the value attributable to the household contents can be removed from the balance sheet by the parties. As I am not clear about what the evidence is in this regard, I prefer to proceed in the matter that I have done.
The wife was cross examined about the chattels referred to in order 8.2 of the husband’s Response to Amended Initiating Application filed in court on 23 August 2010. Doing the best I can I think she agreed to return half of the shells given to the husband by his grandmother, the souvenir plate given to the husband by his grandmother and the wedding photographs of the husband’s parents and grandparents and photographs of the husband as a child. However the evidence indicates that she doesn’t know about the glassware given to the husband by his grandmother, believes she has already returned the husband’s childhood stamp album, wishes to retain a half interest in the Bordeaux wine bottle which she considers was a gift to them jointly, rather than a gift to the husband, but is prepared to return the Mexican pots purchased by the husband in 1971. I will make orders that give effect to any concessions made by the wife. I am not prepared to make an order in relation to the Bordeaux wine bottle but perhaps, if the husband and wife are unable to agree, they might give it to charity, their children, or even consider drinking it together to celebrate the end of all litigation between them.
It is appropriate for the wife to indemnify the husband in relation to any claims that might be made by Ms V in relation to any of the loans, including interest.
I will give to the wife 60 days to pay to the husband his cash entitlement pursuant to the above in consideration for a transfer of his interest of the former matrimonial home to her. Until that happens, he will be entitled to occupy the property to the exclusion of the wife, provided he pays all expenses and outgoings in relation to the property.
I note that the wife sought an order for the transfer to her of one of the Honda motor vehicles, but I could not discern from the evidence which of these motor vehicles is referred to in the balance sheet and therefore could not attribute a value to it. I trust that the parties can sort this issue out with the assistance of their respective solicitors and make any necessary adjustments to the balance sheet.
An application for costs may flow from the making of orders, and the publication of these reasons. Any application for costs must be by way of written submissions not exceeding 500 words, and filed within 28 days of the date of publication of these reasons. The responding party will then have 28 days to similarly file submissions not exceeding 500 words, by of a way of response.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate:
Date: 4 November 2010
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