Fleming and Fleming
[2007] FamCA 44
•8 February 2007
[2007] FamCA 44
FAMILY LAW ACT 1975
IN THE FAMILY COURT OF AUSTRALIA
AT BRISBANE No. BRF 83 of 2005
BETWEEN:
Mrs Fleming
Applicant Wife
AND:
Mr Fleming
Respondent Husband
BEFORE THE HONOURABLE JUSTICE O’REILLY
REASONS FOR JUDGMENT
Dates of Hearing: 31 July, 1, 9 and 10 August 2006
Date of Judgment: 8 February 2007
Appearances: Mr Hodges of Counsel, instructed by James Noble Family Law, appeared on behalf of the applicant wife
The husband appeared on his own behalf
CATCHWORDS:
FAMILY LAW - PROPERTY - Premature distributions - s 75(2) factors - Relevance of wife's prospective inheritance - Duty to maintain other persons - Legal or moral - Just and equitable allocation of assets.
CASES CONSIDERED:
Omacini and Omacini (2005) FLC 93-218
GVC v HPC (unreported), Appeal No. WA4 of 1998, Full Court, 8 October 1998
JEL and DDF (2001) FLC 93-075
Kessey and Kessey (1994) FLC 92-495
Pierce and Pierce (1999) FLC 92-844
Farmer and Bramley (2000) FLC 93-060
Figgins and Figgins (2002) FLC 93-122
Waters and Jurck (1995) FLC 92-635
Burke and Burke (1981) FLC 91-055
Kearney and Roucek (1997) FLC 92-745
Gerges and Gerges (1991) FLC 92-204
Vick and Hartcher (1991) FLC 92-262
White and Tulloch v White (1995) FLC 92-640
De Angelis and De Angelis (2003) FLC 93-133
L & L (unreported) [2004] FamCA 1010
C and M (unreported) [2000] FamCA 1086
Phillips and Phillips (2002) FLC 93-104
Rosati and Rosati 1998 (FLC) 92-804.
Overview
The wife and the husband each seek a just and equitable property settlement.
Relevant background facts
The wife is 57 years and the husband 62 years.
The parties commenced a relationship in about 1966. They married in October 1968. Final separation occurred in January 2003. Their relationship thus subsisted for about 36 years, and their marriage for about 34 years.
The parties had no children.
They migrated from Sri Lanka to Australia in October 1969, and have resided here since.
The wife has not repartnered.
The husband has repartnered. He remarried in December 2004. His new wife is Mrs F. The husband’s new wife has three children from a previous relationship, S 19 years, E 17 years and A 11 years. S lives independently. E and A are students. They live with the husband and his new wife.
Since the final separation, the husband has continued to reside in the former matrimonial home at S, now shared with his new wife, Sean and Shane.
After the final separation, the wife initially lived in rented accommodation and then with her parents. Since December 2005, she has lived in a property at S owned by the wife and her parents. The title to this property is not in evidence. The wife described the co-ownership with her parents as that of joint tenants. However, she also described the holding as 50% ownership by her parents and 50% by herself. The wife and her parents purchased the property in which the wife now resides for $350,000, the purchase price comprising $175,000 provided by her parents and the balance $175,000 borrowed by the wife for six months not as a term loan but as a “bridging loan” for six months from December 2005, which amount was wholly repayable by the wife in May 2006, but at the trial was wholly outstanding and accruing interest.
Since 1998, that is, about five years before the final separation, the parties have been and are self-funded retirees.
The nature and value of the assets in the pool
During the trial, the parties agreed the nature and value of the assets in the pool, based upon ex 20, to which I will refer further below. A Schedule of the assets and their values agreed at the trial is set out below. (See below par 32).
However, in the parties’ written submissions, received after the hearing pursuant to orders which I made on 10 August 2006, the husband (which he was entitled to do) placed in dispute items 16 and 17. It is necessary therefore that I determine this aspect of the parties’ dispute, which I will do below.
Properly, the Schedule does not include the wife’s interest in the property at S which she co-owns with her parents, on the basis that it is an asset acquired post separation with no contribution of joint funds of the parties and in respect of which the wife’s present equitable interest is nil in that as yet she has contributed no moneys towards its acquisition.
Properly, the Schedule also does not include a further property at S purchased by the husband post separation in partnership with friends funded in part by about $17,000-$20,000 drawn from superannuation post separation and in part by post separation borrowings, on the basis that the $17,000-$20,000 drawn from superannuation post separation is included already as part of the add back against the husband at item 16 in the Schedule.
It is convenient now to turn to the dispute concerning items 16 and 17.
Exhibit 20 is a document prepared by Mr Hodges of Counsel, who appeared for the wife, initialled by the husband signifying his agreement to the values in the Schedule. Items 16 and 17 refer to add backs against the husband and the wife respectively as agreed at the trial. The calculations relating to these amounts appear in a further document prepared by Mr Hodges and also agreed by the husband. That document was not placed into evidence. However, for convenience I have attached it to ex 20.
In his written submissions, the husband resiled from the parties’ agreement at the trial in relation to items 16 and 17, as recorded in ex 20, initialled by the husband, and argued in relation to item 16 that the amount to be added back against him should not be $100,549 but only $40,000 on the basis that the balance $60,549 of the amount of which he agreed he had the benefit post separation should be regarded as moneys used for his own maintenance, which he described as “my legitimate need for financial support” for “3 odd years” post separation being roughly $20,000 for each of those years which amount the husband described as a “general assessment” which I should make of his needs in those years.
In support of his argument, the husband referred to and relied on Omacini and Omacini (2005) FLC 93-218 (Full Court) at par 39:
39 Her Honour seems to be saying that the mere fact that a party has expended money realised from the disposition of assets that existed as at the date of separation, will result in that expenditure being added back “in the usual way” as a premature distribution of assets with nothing more. If that is what her Honour is saying, in our view, she is being unduly simplistic. In our opinion, it was a necessary requirement for her Honour to examine and make some assessment of the reasonableness or otherwise of the expenditure. …
In this vein, it is relevant to mention also GVC v HPC (unreported), Appeal No. WA4 of 1998, Full Court, 8 October 1998, at par 46, to the effect that, where moneys are shown to have been reasonably disposed of, the notional add back approach ought to be the exception rather than the rule:
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. …
The husband acknowledged in his written submissions that the source of the $100,549 drawn by him was $70,000 drawn from superannuation, $20,342 proceeds of an insurance and endowment policy and $10,207 from the sale of shares.
The husband’s written submissions also sought to exclude item 17, being an agreed add back against the wife of $10,338 drawn by the wife post separation, being $8,224 from superannuation and $2,114 from the sale of shares (see the husband’s proposed schedule at p 11 of his written submissions).
Mr Hodges of Counsel, for the wife, in his written submissions, resisted that the husband’s add back should be only $40,000. He argued several matters including that as at the date of the final separation in January 2003 both of the parties were self funded retirees; that on 27 February 2004 the parties agreed consent maintenance orders which “provided an equitable means for each party to live” pending the final property order; that although each party had approximately equal entitlements pursuant to the consent maintenance orders, the husband unilaterally spent joint funds of $100,549 whereas the wife spent $10,338; that between the date of the final separation (indeed slightly earlier, November 2002) and the date of the consent maintenance orders, each party either had drawn or otherwise had the use of certain funds (the wife’s version of which was set out in Mr Hodges’s written submissions); that for the whole post separation period the husband lived rent free in the former matrimonial home whilst the wife was required to pay rent for at least part of that period so that he was “better off” than the wife to that extent; that whilst the husband unilaterally drew on the parties’ funds in dispute for his own use, the wife was required to borrow $20,000 from her family for her own expenses, which amount she still owes; and that in all of the circumstances it is not reasonable for the husband to have “lived well” in the post separation period whilst the wife struggled, without access to a similar level of joint funds.
The husband, in his written submissions in reply, disputed some of the details of the wife’s version of the moneys which each of the parties either drew or otherwise had the use of between the date of the final separation and the date of the consent maintenance orders (Mr Hodges’s written submissions, pp 1-4) and reiterated his own precise version of these financial matters (husband’s written submissions in reply, pp 3-5).
On balance, it seems to me that the full amount of the moneys drawn by the husband should be added back, for the following reasons.
First, both parties were self funded retirees at the date of the final separation, and both in the post separation period were and remain reliant upon their investments for their then and future maintenance and needs. Thus, even if the husband’s use of the $60,549 was reasonable for his own maintenance, and assuming for present purposes that it was, nonetheless in the equivalent period the wife unfairly was denied that advantage by the husband using the moneys to the wife’s exclusion.
Secondly, the consent orders put in place on 27 February 2004, to which I would refer without setting out, provided funds for each party’s maintenance and support pending the final property order. Although, by the order, the wife received the accumulated and future net rental from an investment property owned by the parties at C (all other moneys largely being split equally) the husband, for the whole post separation period, lived rent free in the former matrimonial home.
Thirdly, in relation to the precise detail of the parties’ different versions of exactly how much each drew or had the benefit of between the final separation and the date of the consent orders (those versions, as I have said, being set out in Mr Hodges’s written submissions at pp 1-4 and the husband’s written submissions in reply at pp 3-5), on close analysis the areas of actual dispute are so minor as to not warrant further attention for the purpose of the proper consideration of the husband’s argument, particularly when it is taken into account that for a significant period the wife was required to pay rent whereas the husband lived rent free in the former matrimonial home; and the wife was required to borrow funds from her family, which she still owes, whereas the husband drew on the parties’ superannuation and the other resources which I have mentioned.
Fourthly, although on 7 December 2004 the husband, arguably, assumed new obligations in relation to his new wife and her three children, this occurred about two years after the final separation (about 18 months before the hearing) and, more pertinently, the husband’s new wife is not unemployable and on the evidence has earned income since the marriage. (I have included this observation for prudence, despite the circumstance that the husband’s argument was limited to a claim that the additional $20,000 per year for the three years should be allowed for his own maintenance and needs).
Fifthly, having regard to the availability to the husband of the moneys to which he had access between the final separation and the date of the consent orders on 27 February 2004 (to the extent, at least, of the matters of common ground between the parties in those parts of the written submissions to which I have referred), and having regard to the terms of the consent maintenance orders from 27 February 2004 onwards, expenditure by the husband on himself of further amounts either was not reasonable (the husband has not descended to providing, with particularity, how he spent the $60,549, inviting me to make a “general assessment”, in the absence of specific evidence, that $20,000 per year was reasonable) or, even if it was reasonable, and assuming the benefit of the doubt in that regard in the husband’s favour, in this particular case it must be borne in mind that to allow the husband an additional $60,549 for his living expenses would have the effect of not providing a just and equitable result as between the parties. In particular, on the evidence there is no basis to conclude that the husband’s maintenance needs in the post separation period were greater than the wife’s. I have taken into account the husband’s ill health. In particular, during the marriage the husband suffered a brain tumour, for which he received treatment, developed depression and was diagnosed with bipolar disorder. However the wife has also suffered ill health, including a diagnosis in 2001 of a prolapsed disc and degenerative spinal problems in her lower back for which she underwent extensive physiotherapy; she suffers asthma and catarrh; has anxiety and panic attacks for which she takes medication; and has an overactive thyroid. In any event, the husband did not adduce specific evidence as to any increased need for maintenance for himself having regard to health costs.
Thus, applying the principles to which I have referred (Omacini; GVC v HPC) I am not satisfied that the husband’s expenditure of $60,549 of the $100,549, or any part of it, was a reasonable disposition for his own proper needs and maintenance, nor that of any other person.
In relation to item 17 (wife’s add back), the husband initially argued that there should be an additional component of add back against the wife in relation to the sale of a parcel of ASX shares pursuant to par 4 of the consent orders made on 27 February 2004, which had provided in effect that the share parcel be split equally. The husband argued that the wife realised about $800 more for the sale of her equal share parcel than the husband realised. However, it is common ground that the husband did not sell his shares at the same time, but held onto them, ultimately selling them for less. I explained to the husband, during argument, that in my view there should be no add back against the wife having regard to this circumstance because the effect of par 4 of the orders was that each party have 50% of the share parcel so that a further add back against the wife was not warranted. I am uncertain whether, during argument, the husband accepted this position. In any event, on the basis of the circumstances I have outlined I find that there should not be a further $800 add back against the wife in relation to the higher amount she realised for the earlier sale of her equal parcel of shares. That is to say, the husband could have sold his shares at the same time to realise the same amount, but chose not to.
In relation to items 6-12 (current bank accounts) neither party sought to argue that any account should be excluded from the pool on the basis of, for example, post separation earnings from the parties’ own exertions, as opposed to, for example, rentals from investment properties (for example items 3 and 4). I note that item 10 is a bank account held by the husband jointly with persons described as business partners. However, as the parties did not submit to the contrary, I will assume that the amount included at item 10 is the husband’s portion of that jointly held account. In any event, the amount for item 10 is an agreed figure for inclusion in the pool. I note that in the husband’s proposed schedule attached to his written submissions (p 11) he has included the same amount for this account as appears at item 10.
SCHEDULE
ASSETS
VALUE
Real property
1
S (former matrimonial home)
$310,000
2
C
220,000
3
T
230,000
4
B
210,000
5
Time Share
10,000
Bank accounts
Husband
6
St George
538
7
St George
47
8
ANZ (joint with current wife)
50
9
ANZ (joint with current wife)
128
10
NAB (joint with business partners)
894
Wife
11
St George
1,738
Husband and Wife
12
St George
1,075
Superannuation
13
AMP (Husband)
50,064
14
L (Husband)
19,648
15
First State (Wife)
6,061
Add backs
16
Post separation distributions to the Husband
100,549
17
Post separation distributions to the Wife
10,338
Furniture and chattels
18
Furniture and chattels (Husband)
10,000
19
Furniture and chattels (Wife)
1,200
Shares
20
TC (Husband)
783
21
R (Husband)
105
Motor vehicles
22
Ford Falcon 1993 (Wife)
3,000
23
Holden Commodore 1995 (Husband)
4,000
Jewellery
24
Jewellery in Wife’s possession
1,000
25
Jewellery in Husband’s possession
300
TOTAL
$1,191,518
Contribution
Initial contribution
When the parties met in 1966, neither of them had significant assets. The husband however had a motor cycle valued at about 200 rupees or about $300 and savings of about $400 more than the wife (the husband having about $500 savings and the wife about $100). The husband said that he also contributed a lottery win of about $200 value. However, he conceded that the win occurred about six months before the parties migrated to Australia in October 1969. The parties had married in October 1968, so that the lottery win occurred during the course of the marriage.
The husband said that when the parties first married he and the wife lived with his parents in Sri Lanka, which enabled the parties to save for their migration to Australia, and that when the parties migrated to Australia in October 1969, he paid about 80% of the costs of migration and the wife about 20%.
The husband submitted that he should have an assessment in his favour for initial contribution not only because he contributed about 80% of the total of the parties’ assets at the commencement of their relationship, but also the effect was that his better financial position was pivotal to their ability to migrate to Australia from Sri Lanka to sooner take advantage of the greater opportunities in Australia for wealth creation. The husband submitted that “but for” his better financial position, the parties’ migration to Australia, and thus the commencement of their wealth creation, would have been delayed by about two years.
Mr Hodges of Counsel, for the wife, submitted that on any view the parties’ initial assets were modest and that having regard to the length of the relationship and marriage, the husband’s greater initial contribution should be regarded as irrelevant.
Contribution during the marriage
Each of the parties worked very hard during their relationship and marriage to accumulate the assets which they now have.
The husband, who represented himself in the proceedings, argued strongly that he made the greater financial contribution to the marriage and thus to the accumulation of the parties’ assets on the basis that he earned more income than the wife. However, it is plain, on all of the evidence, that the wife also earned income during the lengthy period of the parties’ relationship and marriage. The husband, by reference to the parties’ group certificates relating to their earnings in Australia, has calculated that he earned 66% of their total joint earnings during the marriage and the wife 33%. The husband urged that “the Court should scrutinise how the wife and I made use of the money we earned”, contending that largely the wife spent her earnings “as she saw fit”, whereas his own earnings largely were contributed to the parties’ wealth creation. The wife argued that about 95% of her earnings were given to the husband. The husband referred to detailed financial records which he said proved his contentions and the falsity of the wife’s contentions.
The husband argued that he was the party in the marriage who made property and other investment decisions, which resulted in their collective wealth as at the date of the final separation, and that the wife played little part in this process. The wife however argued that she assumed the traditional role of primary homemaker, relieving the husband of this burdensome role, to allow him the opportunity to spend time to study various investment markets, in particular the real estate market from time to time, so that in effect, by assuming the subservient role she permitted the husband to have “enough time” to “read all the marketing literature and become well versed” in property and investment matters and that, in this role, she was quite “happy” for him to look after the family finances, whilst, in turn, she performed all of the more mundane tasks of cooking, shopping, laundry, gardening and other home duties including lawn mowing and landscaping. Pertinently, the wife said that, whilst the husband did his own ironing and cleaned out the gutters in the former matrimonial home and “unpacked the dishwasher” each two to three days, she otherwise was solely responsible for the homemaker role, and thus, overall, was primarily responsible for that role. For example, the wife said, which I accept, that she did all of the cooking in the household, although the husband used to help her “make the beds” and gave her other domestic assistance to which I have referred.
The wife also said, however, that in respect of their real property investments, all or most were the subject of joint decisions in that she and the husband would together visit and inspect various real properties and discuss whether a particular property should be purchased by them, before any purchase.
When the parties migrated to Australia in 1969 they lived with the husband’s sister for about six months, during which time they contributed towards living expenses. In about 1970 they moved into rented accommodation. In about December 1974 they purchased their first matrimonial home at W in New South Wales where they resided for 27 years until they relocated to Brisbane in 2001. At about the time of their relocation to Brisbane they had several real properties in New South Wales (described in par 26 of the wife’s affidavit), some of which they sold during 2001/2002. The wife says (wife’s affidavit, par 26) that “over the years” the parties were able to purchase the following properties between 1970 and 2001:
·B1
·a half interest in B2
·a half interest in G1
·a unit at H
·a unit in P.
The wife says (wife’s affidavit, par 27) that:
·in January 2001 the H unit sold for $190,000 (before deductions)
·in October 2001 the B unit was sold for the “net proceeds” of $45,000 (B2, not B1, which is still held)
·in November 2001 the G unit was sold for the “net proceeds” of $90,499
·in February 2002 the W former matrimonial home was sold for $375,000.
The wife (wife’s affidavit, par 28) says that the parties received $700,499 from the sale of these properties.
The husband was critical of the wife’s evidence in this regard in two respects. First, he said that the wife (somewhat incompetently) had added “two gross and two net” sums, and that the true net proceeds of sale of these four properties was about $685,000. Secondly, the husband was critical of the wife for not including in her summary of the properties purchased and/or sold in the period 1970-2001 the following properties, all of which were purchased and sold, apparently, before the parties relocated to Queensland in about September 2001:
·block of land at J
·investment unit at J
·G2
·duplex at K
·other duplex at K
·duplex at L
·other unit at P
·house at L.
However, in her oral evidence, the wife explained that she had not included these properties at par 26 of her affidavit for the reason that these properties had been bought and sold over the period of 30 years and none of them was a property held as at September 2001 when the parties relocated to Queensland so that, in par 26 of her affidavit, she had endeavoured to set out only the properties which they had held at or about that time.
I accept the wife’s explanation for including in par 26 of her affidavit only the properties which she mentioned although, as is plain, the literal reading of that paragraph would suggest that the five properties there referred to had been the only properties purchased between 1970 and 2001. Certainly, it does not appear to me that the wife had any sinister reason for not referring to the several other properties bought and sold by the parties until that time and I accept that, at par 26 of the wife’s affidavit, despite its literal reading, she endeavoured to set out the parties’ property interests at or about the time of their relocation to Queensland.
As to the husband’s challenge to the wife’s estimation of $700,499 received from the sale of the four properties mentioned, and the husband’s estimation of the net proceeds of sale of those properties at the lesser sum of $685,000, nothing turns on that. In short, it is common ground that all of the proceeds were invested in properties in Queensland, except for $40,000-$42,000 which the parties divided as to $20,000 each, leaving a balance of about $1,000-$2,000 in a joint bank account.
The wife’s affidavit, par 31, sets out the properties purchased in Queensland, and the purchase prices:
·T, Brisbane (item 3 in the schedule), purchased for $170,000
·C, Brisbane (item 2 in the schedule) purchased for $149,000
·S (item 1 in the schedule, being the former matrimonial home) purchased for $155,000.
These sums, together with the cash sum of about $40,000-$42,000, amount to only $516,000. I cannot reconcile this figure with either $700,499 or $685,000. Later in his evidence, however, the husband said that he was unsure of the net amount of proceeds realised and that it may have been less than $685,000. Perhaps both figures are wrong. The husband’s evidence was confusing. However, neither party alleged against the other that, when they came to Queensland in September 2001, there were any other moneys than those used to purchase the three Queensland properties referred to, and the balance sum of $40,000-$42,000 left over.
The husband contended that the wife’s contribution as homemaker was not as great as she set out in her evidence and “would not have been so great as to offset the significant imbalance in financial contributions” made by him from his “superior income earnings and business acumen in real estate investment”, pointing to capital gains made during the marriage because of his greater financial contribution and business acumen. In this regard, the husband referred to JEL and DDF (2001) FLC 93-075 (Full Court) (see at par 152 subpars (c) - (g) per Holden and Guest JJ) in relation to “extra”, “special” and “extraordinary” skill factors, which he submitted should be recognised in his favour in relation to his business acumen in real estate investment and its impact on the parties’ wealth creation, in particular in the capital growth of the parties’ real estate investments.
The husband contended further that the wife made “negative contributions” in relation to overseas travel which she undertook (set out in detail in the evidence), and the cost of the immigration of her family from Sri Lanka to Australia.
Post separation contribution
As I have mentioned, in about 1998, that is, about five years before the final separation, the parties became self funded retirees. This circumstance continued in the post separation period in which they met their respective living and other expenses from their three investment properties, namely items 2, 3 and 4 in the schedule (the C and L properties referred to above and the unit at B1 in New South Wales which was not sold after their move to Queensland) and other moneys.
Mr Hodges of Counsel, for the wife, submitted that there should be a small assessment in the wife’s favour to reflect the loss of capital growth/income caused by the husband’s actions post separation in “unilaterally depleting both shares and superannuation”, a reference to the husband’s unilateral use of the amount of $100,549, item 16 in the Schedule, despite the adding back of that amount.
The husband, for his part, resisted such an assessment in the wife’s favour on the basis that there is no evidence of “lost opportunities for profit” in relation to the amount used by him, and referred again to his contention that the relevant amount to be added back should be only $40,000 (which contention I have determined against him). The husband added, as a balancing factor, that the wife is responsible for “lost opportunities for profit” in relation to the moneys which he categorised as “negative contributions”, to which I have referred above, which amounts he contended otherwise could have been invested in superannuation.
Principles relating to contribution
I will refer now to the principles relevant to evaluating the weight to be given to each parties’ contributions during the course of the relationship and marriage, relative to the contributions of the other party.
In Kessey and Kessey (1994) FLC 92-495 (Full Court) at 89,151 the Full Court made clear that ultimately all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party:
… In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions. In a case such as the present, it is not necessary to arrive at precise mathematical valuations of the parties’ contributions - all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party.”
[italics and bold added]
In Pierce and Pierce (1999) FLC 92-844 (Full Court) at 85,881 a differently constituted Full Court (except for Baker J) said:
28. In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. 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. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: …
[italics and bold added]
In Farmer and Bramley (2000) FLC 93-060, Kay J clearly stated two things, namely:
· The Court’s task is to evaluate all of the contributions from the time of the commencement of the parties’ relationship until the time of the hearing and to give such weight to such contributions as the Court thinks is appropriate in the circumstances (par 68); and
· There is nothing in the legislation that requires s 79(4)(a)(b) and (c) contributions to be measured only in terms of what either party contributed to the assets of which the parties are presently possessed (par 69).
In Figgins and Figgins (2002) FLC 93-122 (Full Court) Nicholson CJ and Buckley J made the timely reminder, at par 134:
134 … Marriage is and should be regarded as a genuine partnership to which each brings different gifts. …
In the particular circumstances of this case, and as the husband expressly raised for my consideration that he contributed “extra”, “special” or “extraordinary” skill factors, I would also refer to JEL and DDF (2001) FLC 93-075 (Full Court), in particular at par 152, sub pars (c) – (g);
152 …
(c) Although in many cases the direct financial contributions of one party will equal the indirect contribution of the other as homemaker and parent, that is not necessarily so in every case.
(d) In qualitatively evaluating the roles performed by marriage partners, there may arise special factors attaching to the performance of the particular role of one of them.
(e) The Court will recognise any such special factors as taking the contribution outside the “normal range” in the sense that that phrase was understood by the Full Court in McLay (supra).
(f) The determination of an issue of whether or not a “special” or “extra” contribution is made by a party to a marriage is not necessarily dependent upon the size of the asset pool or the “financial product”. When considering such an issue, care must be taken to recognise and distinguish a “windfall” gain.
(g) Whilst decisions in previous cases where special factors were found to exist may provide some guidance to judges at first instance, they are not prescriptive, except to the extent that they purport to lay down general principles.
…
Conclusions as to contribution
I have considered all of the evidence, and all of the parties’ submissions and arguments, whether or not I have specifically referred to them.
Having regard to the relevant principles, it seems to me that the parties’ contributions during the period of their relationship and lengthy marriage should be regarded as equal.
As to the husband’s initial contributions, their very modest amount, being several hundred dollars at best, in my view does not warrant a percentage contribution adjustment in his favour having regard to three factors: (1) the very small amount of additional initial contribution by the husband; (2) the parties’ lengthy marriage; (3) the modest amount of the initial contribution having regard now to the size of the pool.
As to contribution during the marriage, whilst the husband plainly contributed more in terms of earned income, relative to the wife’s earned income, which the husband has assessed at 66% contribution by him and 33% contribution by the wife, I accept her case that, in addition to her earnings, largely she accepted the subservient and submissive role of being the primary homemaker, to free the husband to enjoy the dominant role of primary earner and investor. In many cases, homemaker contributions are to be given as much weight as those of the primary breadwinner. See Waters and Jurck (1995) FLC 92-635 at par 138 per Fogarty J, referred to in JEL and DDF at par 137. In my view, this is just such a case in which as much weight should be given to the wife’s homemaker role as is given to the husband’s higher earnings. Further, I do not accept the husband’s case that his dominant role and business acumen should warrant the status of “extra”, “special” or “extraordinary” contribution based on his business acumen and real estate skills. Rather, in all of the circumstances of the case, it seems to me that the marriage was one to which, put simply, “each brought different gifts” (Figgins, above).
Nor do I accept the husband’s case that the wife made “negative contributions”. I have carefully considered and taken into account the husband’s case that the wife expended moneys in relation to overseas travel. However, on the evidence, the trips were not inordinate in their frequency or cost, and seem to me to have been reasonable holiday/leisure expenditure having regard to the parties’ circumstances. In short, the parties were reasonably well off and, having regard to their financial circumstances, the wife was entitled to some modest holiday and leisure expenditure which, it appears, on some occasions involved holiday expenditure on her nieces and/or nephews. As the husband and the wife did not have children of their own, this circumstance seems to me to be unremarkable. Indeed, apart from these few pleasures, the wife’s lifestyle appears to me to have been frugal, and one of servility to the husband and his needs.
As to post separation contribution, as already observed, the parties had been self funded retirees for about five years before the final separation. In this circumstance, the issue of post separation contribution does not arise.
I do not accept the submission by Mr Hodges of Counsel, for the wife, that there should be a small assessment in the wife’s favour to reflect the loss of capital growth/income caused by the husband’s use of the amount of $100,549 to be added back. Rather, this circumstance, and the husband’s contention in response, to which I have referred above, are matters which generally I have taken into account.
I am satisfied, in all of the circumstances, that contribution should be assessed as equal.
I am conscious that each of the parties, at the trial, presented meticulous and detailed financial records. The husband’s approach to contribution sought to be precisely mathematical, particularly in relation to his greater financial contribution. Many of the matters advanced by the husband were so detailed as to be mathematically irreconcilable without a complete financial audit of the parties’ 36 year relationship and 34 year marriage. However, as is well understood, such a precise mathematical exercise in many cases is not required. Burke and Burke (1981) FLC 91-055 (Full Court) at 76,452-3; Kearney and Roucek (1997) FLC 92-745. It is not the function of the Judge, in a case such as this, to endeavour mathematically to audit 34 or 36 years of financial dealings, but rather, to apply the principles to which I have referred.
Procedural matter – the annexures to the husband’s written submissions
In his written submissions, the husband referred to, and annexed, voluminous original financial records, some of which (or copies of them) were not put into evidence at the hearing. Mr Hodges of Counsel, in his written submissions, took objection to the inclusion of the annexures, submitting that all of the annexures to the husband’s written submissions should be ignored. However, nothing turns on this circumstance. In fairness to the husband, as a litigant in person, I have looked at the annexures to his written submissions to ensure that he has been accorded procedural fairness in being able to put his whole case and to prove all matters which he sought to prove. However, the documents annexed to the husband’s written submissions were relied upon by him to support the text of his written submissions in relation to financial matters, and in particular the text as to his precisely mathematical approach to the financial matters in issue, whereas the substance of the husband’s case, reflected in the annexures to which Mr Hodges took objection, was already contained in the husband’s evidence adduced at the trial. As I have said, a precise mathematical exercise in many cases is not required for a trial Judge appropriately to assess each party’s contributions relative to the contributions of the other party. I wish to emphasise, for the husband’s benefit, and so that he may better understand the role of the Court, that in this case a precise mathematical exercise is not required, and that I am satisfied he has had full opportunity to present the substance of his case in relation to the financial matters between the parties which I am required to determine.
In particular, as I have said, in the proper exercise of my function I have fully taken into account the husband’s greater financial contribution during the period of the parties’ cohabitation and marriage, and his assessment that his financial contribution, by way of comparison of the parties’ earnings, was 66% by him and 33% by the wife, according to his calculations. Thus, having accepted the husband’s submission in this regard, it is not necessary to have recourse to source documents for the husband to prove the text of his contentions.
In a similar vein, the same principle applies, and I have applied it, in relation to the minor variations in the parties’ precise mathematical evidence, and consequent contentions throughout the case, including in relation to the moneys which each party received post separation.
The s 75(2) factors
Age and state of health
The husband, at 62 years, is older than the wife, at 57 years.
During the marriage, the husband suffered a brain tumour. He presently suffers, and for some time has suffered, bipolar disorder, as to which the husband relied on the evidence of Dr M.
The wife (wife’s affidavit, pars 91-94) was diagnosed in 2001 with a prolapsed disc and degenerative spinal problems in her lower back, for which she has undergone extensive physiotherapy and which she manages by regular exercise and occasional painkillers; suffers asthma and catarrh; anxiety and panic attacks, for which she takes medication; and has had a recent diagnosis of an overactive thyroid.
Income earning capacities
The parties both retired in 1998.
Even if the parties had not retired in 1998, each of the parties, in any event, having regard to their respective ages now, is at or near retirement age.
Dr M gave oral evidence in relation to the husband to the effect that, having regard to his bipolar condition, whilst he is not mentally incapacitated so as not to be able to run his own financial affairs, does not have the capacity for gainful employment.
The husband submitted that, at 57 years, although the wife has not worked since 1998, when the parties both retired, “her financial position is not compounded by health issues of the same severity as mine”, inferring that, if she wished, the wife could again become gainfully employed. I do not accept the husband’s submission, or inference. The wife has not been in the workforce now for some eight years and, as I have said, in any event is at or near retirement age.
Responsibility for others/commitments necessary to support another person that a party has a duty to maintain
The wife does not have responsibility for any other persons.
The husband, it appears, since at least December 2004, has assumed the duty to maintain his new wife and her three children, two of whom are still dependent, aged 17 years and 11 years.
The husband referred to the circumstance that he is “legally obliged” to maintain his wife and her two dependent children not only because of his marriage but because he entered into a sponsorship agreement with the Federal Immigration Department “to maintain and support [Mrs F] and her three fatherless children”. The husband referred to various authorities, including Gerges and Gerges (1991) FLC 92-204 and Vick and Hartcher (1991) FLC 92-262, to the effect that a “duty to maintain” a child or another person, within the meaning of s 75(2)(d) of the Act, may arise as a moral duty, even if not a legal duty. However, by reference to Hartcher (see at 78,765), the husband correctly identified that the fact of marriage alone does not give rise to a duty to maintain a spouse, which duty is dependent upon proof of the need of a claimant spouse for maintenance, and the capacity of the other spouse to provide it.
In this regard, although there is no evidence as to the husband’s new wife’s age, it appears to be common ground that she is considerably younger than the husband. As to her capacity to earn income to maintain herself and her two dependent children, there is evidence that, until about October 2005, she engaged in gainful employment, part time. The husband did not adduce any satisfactory evidence that she is not able to be engaged in full time employment, for example, by reason of any incapacity. Rather, somewhat lamely I think, he offered in evidence to the effect that “there is a difference between capacity for employment and realistic prospects for employment”. The husband did not however, at the hearing, provide any affidavit by his new wife as to her capacity or willingness for gainful employment, and did not offer any cogent explanation for the absence of an affidavit by his new wife deposing to these matters, nor indeed her efforts to obtain full time employment since October 2005.
It is one thing for the husband to contend, no doubt properly, that he entered into a sponsorship agreement with the Federal Immigration Department “to maintain and support [Mrs F] and her three fatherless children”, however, it is quite another thing for him to claim against the wife in these proceedings that he should have an adjustment in his favour under s 75(2)(d) or (e) because of a “commitment” necessary to enable him to support his new wife and her children, whether legal or moral, or a “responsibility” to do so, without placing into evidence his new wife’s financial circumstances and capacity for gainful employment.
Mr Hodges of Counsel, for the wife, submitted that the effect of s 660YCFA(1) of the Social Security Act 1991 (Commonwealth) is that after 104 weeks of residence (2 years), the husband’s new wife is eligible to claim benefits under that Act. However, it appears that as the husband sponsored the immigration of his new wife and her children, under the sponsorship agreement to which the husband referred, his new wife may not be eligible for Commonwealth benefits. Indeed, in some cases sponsored immigrants are ineligible for Commonwealth benefits for a fixed period of years after immigration.
However, these matters are academic because there is no evidence adduced by the husband that his new wife is not able to obtain gainful employment to support herself and her two dependent children. Whether the absence of this very relevant evidence is deliberate or inadvertent, the effect is the same that the husband has failed to discharge the onus upon him to show there should be an alteration in the wife’s contribution based entitlement for a just and equitable property division by an adjustment in his favour related to his new wife and her two dependent children.
Standard of living
Each of the parties is entitled to a standard of living commensurate with the standard which each enjoyed during the period of their lengthy relationship and marriage.
Spousal maintenance
I have referred above to the consent maintenance orders made on 27 February 2004.
Neither party contends that any adjustment should be made in relation to the amounts which each party received pursuant to that order.
Prospective inheritance by the wife
The husband contended in his written submissions that the wife has a prospective inheritance from her parents, as one of three siblings, so that he should have a s 75(2) adjustment in his favour.
The wife’s parents are aged 89 (mother) and 90 (father).
However, there is no evidence as to the wife’s parents’ wealth, let alone which of the three siblings may be the beneficiaries (if any) under their Wills (if any). The husband contended that it is likely that under the wife’s parents’ Wills, she will equally inherit with her two siblings. However all that is known, on the evidence, is that apparently they own their home at F, in which they live, and a half interest in the unit at S owned jointly with the wife. They contributed $175,000 to the cost of the S unit, which was half its purchase cost. There is no evidence as to the value of the wife’s parents’ home at F.
The principles relevant to the treatment of expectancies are well settled. In White and Tulloch v White (1995) FLC 92-640 at 82,463 the Full Court made clear that there is no absolute rule and that, to be relevant, there must be a “worthwhile connection” between a specific element of a party’s case and the suggested expectancy:
We do not consider there is any absolute rule. The ultimate criterion is whether the evidence is, or may be, relevant to the just and equitable process under s 79. An expectancy of inheritance will not be relevant in many s 79 proceedings. In the end, relevance must depend upon the nature of the claims being put forward and the facts of the particular case. For example, if the claims were based entirely upon contributions, it could not be suggested that an issue of expectancy could be relevant because no s 75(2) factors would be involved. Where the claim includes s 75(2) factors, the nature or degree of suggested relevance between those specific claims and the expectancy in question would need to be analysed. That is to say, there must be a worthwhile connection between a specific element of the party’s case and the suggested expectancy.
[bold emphasis added]
The Full Court then set out (also at 82,463) the factors which the Court should consider in its approach to the weight to be given to an expectancy:
This accords with what we understand to be the general practice at trials in this Court. That is, the initial relevance in the particular case needs to be established; once it is it becomes a question of weight and degree. The issue is then approached by considering it in a broad, general way, by taking into account the age of the relative or other relevant testator, state of health, some general assessment of his or her financial position and some general assessment of the suggested inheritance expectancy. Detailed evidence of these matters is rarely allowed. Although that approach has a deal of imperfection about it and is a process where the weight, if any, to be attached to it may be difficult to identify, it is, we think, a process which is much to be preferred to that which is potentially anticipated in this case.
[bold emphasis added]
The Full Court said further, at 82,464:
It is ultimately a question of fact and degree. During the course of argument a number of obvious examples at each end of the spectrum were referred to. In a case where the testator had already made a will favourable to the party but no longer had testamentary capacity and there was evidence of his or her likely impending death in circumstances where there may be a significant estate, and where there was a connection to s 75(2) factors, it would be shutting one’s eyes to realities to treat that as irrelevant. On the other hand, the bald assertion that one of the parties has an elderly relative who has property and is or is likely to benefit that party is so speculative that it would be inappropriate to contemplate it as relevant in a s 79 determination, it being too remote to affect the justice and equity of the case in any worthwhile way.
[bold emphasis added]
In De Angelis and De Angelis (2003) FLC 93-133 the Full Court (at par 95) referred to and applied the principles in White and Tulloch. In that case, the Full Court upheld a 10% adjustment to the husband in relation to the wife’s expectancy, but expressly on the basis that the Court must accord justice and equity to the parties (par 95); and observed that most s 75(2) matters are concerned with events in the future and thus are by their nature speculative (par 98). However, each case must turn upon its own facts. In De Angelis, the Full Court upheld the trial Judge’s adjustment specifically upon two bases, first, that the husband had contributed to the properties which the wife would inherit and thus had contributed to the wife’s expectation, which contribution had led to the expectancy (par 74 of the trial Judge’s findings, set out at par 87 of the Full Court’s judgment at 78,243); and secondly that, on the evidence, the expectancy was likely to be realised “within the very near future” (par 98).
In L & L (unreported) Appeal No EA 47 of 2004, 5 November 2004, the Full Court (at pars 45-46) referred to the principles and observations in White and Tulloch and De Angelis and said (at par 47):
47. It seems to us that generally the issue of a future inheritance may be more relevant to the defence of claim for an adjustment under s 75(2) than in support of such a claim. It is not appropriate for this Court to be effectively re-writing the will of the intended testator so as to give a benefit to a person he or she does not wish to benefit. If the wife’s parents wish to provide a bequest or a legacy for the husband they are free to do so. But if they equally do not wish to provide him with any bequest of legacy it should only be in unusual circumstances that the Court would effectively make an order which would have the indirect effect of creating such a testamentary disposition.
[bold emphasis added]
Then, the Full Court said, at par 48:
48. As indicated one might readily rely on an anticipated disposition to defeat a claim for an increased share based on capital or income disparity, both present and into the predictable future. However it is more difficult to justify an adjustment in favour of the party who would not otherwise be receiving that adjustment unless there were pressing circumstances which would indicate that the reasonable requirements of the party would not be met from a contributions based assessment.
[bold emphasis added]
I would refer also to C & M (unreported) No. SY4333 of 1999, 30 August 2000, per Moore J at par 84, as to the “narrow band of circumstances” in which a prospective inheritance properly may be taken into account.
Applying these principles, in my view the husband’s claim for an adjustment on the basis of a prospective inheritance by the wife must fail. In particular, not only is there no evidence as to the value of the wife’s parents’ assets so as to ascertain any amount which the wife prospectively may inherit from them, but there is the circumstance that even if I were to find that the wife had a substantial prospective inheritance that, of itself, ought not affect her contribution based entitlement to a just and equitable property division, there being no “worthwhile connection” to any relevant s 75(2) factors. In all of the circumstances, having regard to the parties’ other s 75(2) claims and my assessment of them, there should not be any adjustment on the basis of a prospective inheritance by the wife as claimed by the husband. Moreover, the husband, as part of his just and equitable property division, will receive the parties’ former matrimonial home at S, and other assets, to assist in meeting his own reasonable requirements.
Legal fees
Any legal fees incurred by the parties in the post separation period, in themselves, ought not warrant an adjustment.
I note that for the purpose of the trial the wife incurred the costs of solicitors and Counsel, whereas the husband represented himself. However, this was an individual choice by each party.
Conclusion as to the s 75(2) factors
In my view, having regard to the above analysis, there should not be any adjustment for either party in relation to the s 75(2) factors.
Each of the parties had retired in 1998, about five years before the final separation. Each then had the legitimate prospect, in their retirement years, of funding their retirement from their existing property and assets and of maintaining a standard of living commensurate with that which they had enjoyed during their working years.
Each of the parties has significant health problems.
It is not reasonable in my view to expect that either party should now return to the workforce.
I have dealt already with the husband’s claim for an adjustment in his favour concerning his new wife and two dependent children, the wife’s claimed prospective inheritance and the matter of post separation legal fees.
Mr Hodges of Counsel, for the wife, claimed in his written submissions a modest s 75(2) adjustment in the wife’s favour, but did not specify the reason for that claim. Possibly, the claimed adjustment may relate to the wife’s state of health. However, on the evidence each of the parties has health problems, and there is no basis upon which to determine that either party has a worse state of health than the other.
The fourth step – Phillips case
In Phillips and Phillips (2002) FLC 93-104 (Full Court) at 88,985, the Full Court made clear its acceptance of the principle that at times the application of percentages does not necessarily produce a just and equitable result; that it is the order which is to be just and equitable, not just the underlying percentage division of the net value of the parties’ assets; that usually adjustment for the s 75(2) factors will be assessed in the range of 10% and 20%; but that a number of cases will justify an assessment outside those parameters; that in any event it is the real impact in money terms which is ultimately the critical issue; and finally, that in the consideration of whether the result is just and equitable, it is the justice and equity of the actual order not of the percentage distribution which must be considered.
A just and equitable division of the parties’ property and assets
I have determined, for the reasons stated above, that subject to the application of the principles in Phillips case, the parties should share equally in the division of their property and assets.
According to the matters which the parties have agreed and my determination as to items 16 and 17, the husband and the wife respectively should have the following property and assets:
Husband
1
S (former matrimonial home)
$310,000
10
NAB (joint with business partners)
894
16
Post separation distributions to the Husband
100,549
18
Furniture and chattels (Husband)
10,000
23
Holden Commodore 1995 (Husband)
4,000
25
Jewellery in Husband’s possession
300
TOTAL $425,743 Wife
2
C
$220,000
15
First State (Wife)
6,061
17
Post separation distributions to the Wife
10,338
19
Furniture and chattels (Wife)
1,200
22
Ford Falcon 1993 (Wife)
3,000
24
Jewellery in Wife’s possession
1,000
TOTAL $241,599
This has the result that the items in contention, for division, are:
3
T
$230,000
4
B1
210,000
5
Time Share
10,000
6
St George
538
7
St George
47
8
ANZ (joint with current wife)
50
9
ANZ (joint with current wife)
128
11
St George
1,738
12
St George
1,075
13
AMP (Husband)
50,064
14
L (Husband)
19,648
20
TC (Husband)
783
21
R (Husband)
105
TOTAL
$524,176
An equal division of the parties’ property and assets would give each of them $595,759 in value.
It would be desirable, and consistent with the parties’ perceived intentions behind par 8 of the consent maintenance orders made on 27 February 2004, for the husband to continue to own item 3, namely the investment property at T. (Par 8 required the transfer of the title of this property into the husband’s name).
However, if that property is added to the items which the husband already is to receive, he would have $655,743 in value, or nearly $60,000 ($59,984) too much. The husband has little prospect of borrowing an equivalent sum to pay to the wife, having regard to his age, state of health and consequent lack of income earning capacity. (See Dr [M’s] evidence, par 78 above).
Thus, item 3 either will have to be sold, or given to the wife. If it is given to the wife, then in addition to the items which she already is to receive, she would have $451,599 value. To then give the wife item 4 as well, however, namely the investment property at B1, would result in her having too much by about $65,000 ($65,840). To give the wife item 3, and all as yet unallocated items except item 4, would not provide her with the just and equitable amount of $595,759, but only $555,755, being the significant shortfall of nearly $40,000, with which the wife should not be deprived and the husband enriched. To give the wife item 4, and all as yet unallocated items except item 3, as I have said, would give the husband nearly $60,000 too much. To give the husband the item 4 would result in his having nearly $40,000 too much.
It appears therefore that at least one of the T and B1 properties will need to be sold.
I have considered the wife having either item 3 or item 4, together with all other unallocated items, I have mentioned, and ordering the sale of the other property with the proceeds net of commission, costs of sale and capital gains tax, if any, to be apportioned so as to effect an equal division. As both parties live in Queensland, it is logical to consider the sale of the B1 property in priority to the sale of the T property. However, if I were to take that course, the wife would not have sufficient cash to pay the $175,000 bridging debt she owes in respect of the unit at S owned with her parents, the $20,000 she owes to her family, and her legal fees, and thus seemingly would have to sell the T property in any event. As I understand the matter, capital gains tax is payable in relation to the T property because it was purchased after 1987, and has increased in value (see par 48). However, neither party has adduced evidence as to the likely amount of capital gains tax payable (it may be of the order of $15,000, being tax on half of the gain on the basis that the property has been held for more than 12 months, however, it is not for me to estimate that in the absence of evidence). Plainly, it would be unfair if I were to order that the T property be transferred to the wife without taking into account the potential incidence of capital gains tax if she needed to sell it to pay her existing bridging debt and other debts. Thus, doing the best I can, I propose to order that both the T property and the B1 property be sold and that the proceeds net of commission, costs of sale and capital gains tax, if any, be apportioned to effect an equal division of all of the parties’ property and assets, after the allocation of the remaining items I am yet to allocate.
I have considered whether I may be able to divide the parties’ property and assets without a sale of one or both of these properties, so as to give effect to the principle in Phillips case, that at times the application of percentages does not necessarily produce a just and equitable result; and that it is the order which is to be just and equitable, not just the underlying percentage division of the net value of the parties’ assets. As analysed above, a just and equitable percentage division indicates the necessity for the sale of at least one of those properties. As I have demonstrated, however, the financial disparity which would result if there were otherwise than a percentage division is too great, having regard to the “real impact in money terms” for each of the parties if a basis other than the percentage basis should be used. Moreover, unless both are sold, the wife would not have the cash to pay out the debt in relation to her interest in the S unit, and her other debts. That is, if I should order the sale only of the B1 property, but transfer the T property to the wife, or vice versa, there is no way for me, in the absence of evidence, properly to take into account the amount of capital gains tax the wife would have to pay in relation to any sale by her of the T property. I am satisfied, having regard to the principles in Rosati and Rosati 1998 (FLC) 92-804, at par 6.36, that sale by the wife (whether of the T property or the B1 property) would be likely to be necessary and imminent to satisfy her bridging debt and other debts. The only just and equitable conclusion in my view, therefore, is that both of these properties be sold, so that the parties jointly share any capital gains tax liability.
I have had regard to the circumstance that each of the parties, for the future, hoped to be reliant largely upon the net rentals from their three investment properties, namely items 2, 3 and 4 in the Schedule (see exs 14, 19, 20 and 21as to the net rental amounts), and that the effect of my order will be that the wife will continue to have an investment property (C) but the husband will not. However, unfortunately, the husband has caused this circumstance by distributing to himself, in the post separation period, the very large sum represented at item 16. If he had not done that, then comfortably the husband would have been able to keep the T property and have the advantage of its annual net rental. I am acutely aware that the husband has hoped to keep the T property, however, as I have explained, if I were to order that the wife would suffer a $60,000 shortfall in her contribution based entitlement and the husband unfairly would become enriched by receiving $120,000 more than the wife. Although, as is well understood, it is the order which is to be just and equitable, not just the underlying percentage division of the net value of the parties’ assets, and it is the “real impact in money terms” which is ultimately the critical issue, in my view it is plain that it would not be just and equitable in this particular case for the husband to have the assets which he will have in any event (items 1, 10, 16, 18, 23 and 25) and the T property, as that would deprive the wife of a significant amount to which she is entitled. At the hearing, it was common ground that the husband would have the former matrimonial home at S (item 1), in which he has resided since the final separation. Leaving aside the modest items which the husband is to have (items 10, 18, 23 and 25), items 1 and 16, namely the former matrimonial home and the post separation distributions to the husband, total $410,549 so that, even if the wife were to have all other assets, unfortunately the husband still could not have either the T property or the B1 property unencumbered. As I have explained already, it is not as if the husband realistically could borrow the difference to pay to the wife a cash sum to make up her just and equitable entitlement on the basis that the husband, on his own case, does not now have the capacity for gainful employment and thus is unlikely to have borrowing capacity. The husband did not, at the hearing, adduce any evidence from any bank or lending institution that, at 62 years, in ill health, and as a self funded retiree for the last eight years, he may be likely to be considered favourably for a mortgage, nor that, if he were able to keep the T property, its modest rental would be sufficient to repay principal and interest. As will be seen below, the husband will have his superannuation (items 13 and 14) totalling $69,712. It is not as if, however, he could use this sum to pay to the wife to make up her shortfall, because, plainly enough, if the husband were able to retain the T property, items 13 and 14 necessarily would go to the wife in any event, so that the husband would not then have that sum.
On the basis that I have concluded that it is inevitable that both the T and B1 properties be sold, it appears to me to be just and equitable that the assets in par 112 be divided so that the husband have items 6, 7, 8, 9, 12, 13, 14, 20 and 21 and the wife have items 5 and 11. Items 6 and 7 are minor amounts, being accounts already in the husband’s name. Items 8 and 9 are bank accounts of the husband held jointly with his current wife. A split of items 11 and 12, one to each party, provides each with a St George bank account containing over $1,000. It is irrelevant that one account is $1,738 and the other only $1,075 because the value of all allocated assets is to be aggregated. Further, item 11 is an account already in the wife’s name, and it is logical for the wife to have item 11, as that appears to be the account opened for the purpose of receiving the C rental moneys which she was to have in any event pursuant to the consent maintenance orders. Items 13, 14, 20 and 21 already are in the husband’s name. Item 5 is a time share interest. In dividing these items, I have had regard to the husband’s “wish list” in his amended response filed on 25 February 2005.
The result will be overall that the husband will have items 1, 6, 7, 8, 9, 10, 12, 13, 14, 16, 18, 20, 21, 23 and 25, and the wife items 2, 5, 11, 15, 17, 19, 22 and 24. Items 3 and 4 will be sold, with the proceeds divided to effect an equal division.
Mr Hodges of Counsel, for the wife, provided a draft order annexed to the husband’s written submissions (par 10 of the draft order) seeking that the husband transfer to the wife half of the Qantas Frequent Flyer and American Express membership rewards points currently in his name. The wife has not however made any claim in her application filed on 20 August 2004 or amended application filed on 18 April 2005 in relation to the husband’s reward points. The husband, in his response filed on 7 February 2005 and amended response filed on 25 February 2005, sought that he transfer half of the rewards points to the wife. However, I am not able to deal with this matter for the following reasons. First, there was no argument raised at the trial nor in the written submissions. Secondly, although the husband sought the division, in his response and amended response, he may well have made a different submission at the trial, having regard to the various matters and arguments advanced on either side, if he had been given notice of the wife’s claim. Thirdly, the rewards points are not mentioned in the parties’ joint case summary document, nor in ex 20, which is a list of assets and liabilities prepared by Mr Hodges and initialled by the husband purporting to be a list of all property and assets in issue to be the subject of a s 79 order. Fourthly, there is no evidence as to the number of rewards points or their redemption value in kind nor whether the husband may have earned some or all of them in the post separation period. In all of the circumstances, in my view it would be procedurally unfair to the husband to now accede to the wife’s claim. In short, the effect of ex 20 is that the husband was not put on notice at the trial that the wife was claiming, in addition to the items in her own application and amended application, an item referred to in his response and amended response.
As the T and B1 properties are to be sold, and as it is likely that capital gains tax will be payable out of the net proceeds of sale of each of those properties, it is necessary to make a machinery order for the net proceeds of sale to be held in a trust account pending the issue of Australian Taxation Office capital gains tax assessments and the physical payment of the capital gains tax payable before distribution to the parties of the balance.
If the husband and the wife both had solicitors on the record, I have no doubt that these matters could be attended to with relative ease, with each party being charged a reasonable amount. However, only the wife has solicitors on the record, the husband does not.
In the absence of any realistic alternative, subject to their willingness to act, I propose to appoint the wife’s solicitors to receive the net proceeds of sale, as trustee, to attend to the payment of the capital gains tax and remit the balance to the parties to effect an equal division of their property and assets, as I have determined should be the case.
It would be unfair to the wife if, solely, she should be liable to pay her solicitors the costs of this exercise which, plainly, should be borne equally by the husband and the wife. Thus, in the order which I have formulated, provision is made for the husband and the wife equally to share the wife’s solicitors’ reasonable costs, as trustee, of giving effect to this part of the order. Realistically, I cannot think of an alternative scheme at less cost to the parties. In particular, the history of the parties’ dispute and their mistrust of each other dictates that it would be inappropriate to order that the parties themselves be responsible for the distribution of the net proceeds of sale, and neither party should be exposed to the risk of liability for the other’s equal portion of any capital gains tax debt.
If the wife’s solicitors are unwilling to perform the role of trustee pursuant to the order, then the husband and the wife will have liberty to apply to suggest an alternative scheme.
I will in any event grant liberty to apply for any further machinery orders which may be necessary.
Order
Pursuant to s 79 of the Family Law Act 1975 the property and assets of the parties or either of them be divided in accordance with the following:
The husband have:
(a)S (former matrimonial home) ($310,000)
(b)St George bank account ($538)
(c)St George bank account ($47)
(d)ANZ Bank account ($50)
(e)ANZ Bank account 6988 ($128)
(f)NAB bank account (joint with business partners) ($894)
(g)St George bank account ($1,075)
(h)AMP superannuation ($50,064)
(i)L superannuation ($19,648)
(j)Post separation distributions to the husband ($100,549)
(k)Furniture and chattels in possession of the husband ($10,000)
(l)Shares in TC ($783)
(m)Shares in R ($105)
(n)Holden Commodore 1995 ($4,000)
(o)Jewellery in the husband’s possession ($300)
(p)The amount to be calculated in accordance with paragraph 7.
The wife have:
(a)C ($220,000)
(b)Time Share ($10,000)
(c)St George Bank account ($1,738)
(d)First State superannuation ($6,061)
(e)Post separation distributions to the wife ($10,338)
(f)Furniture and chattels in possession of the wife ($1,200)
(g)Ford Falcon 1993 ($3,000)
(h)Jewellery in the wife’s possession ($1,000)
(i)The amount to be calculated in accordance with paragraph 7.
The parties are to:
(a)appoint a real estate agent at T to sell the property at T at a realistic market value and a real estate at B to sell the property at B1 at a realistic market value, each by exclusive sixty day listings; and
(b)in respect of each of those properties, sign a contract for sale if each agrees that the offered price and conditions are reasonable.
If the parties, within 14 days, are unable to agree the appointment of suitable real estate agents for each of the T property and the B1 property, they must request the President of the Real Estate Institute of Queensland to nominate in writing an agent at T for the sale of the T and an agent at B for the sale of the B1, and immediately list the properties with those agents.
If, within 60 days after listing, the T property and/or the B1 property is not sold, appoint the same agent/s to offer the property/ies for sale at public auction, the advertising, reserve price, auction date/s and conditions to be as determined by the agent/s after consultation with each of the parties.
The net proceeds of sale, after deduction of the costs of sale, including commission, auction costs (if any) and agent’s fees, are to be paid by the selling agents to the wife’s solicitor’s trust account.
Subject to their willingness to act, the wife’s solicitors, as the trustee of the amounts so received, and after checking the selling agents’ trust account statements to ensure all amounts due have been received, are to:
(a)calculate the maximum amount for which the parties may be jointly liable for capital gains tax in respect of the T and B1 properties;
(b)calculate their reasonable costs of complying with this paragraph of the order, for which the husband and the wife are to be jointly liable;
(c)hold in their trust account the aggregate of the amounts calculated pursuant to subparagraphs (a) and (b);
(d)calculate the amount to be paid to each of the husband and the wife to effect an equal division of their property and assets having regard to the values specified in paragraphs 1 and 2 of this order, but excluding the amount to be held in their trust account pursuant to subparagraph (c) of this order, for the liabilities for which the husband and the wife are to be equally liable;
(e)pay those amounts so calculated to each of the husband and the wife (subject always to any agreement which the wife may have with her solicitors in relation to her own legal fees, costs and disbursements related to acting for her in these proceedings);
(f)provide to each of the husband and the wife a trust account statement showing:
(i) the amounts received
(ii) the amounts calculated pursuant to subparagraphs (a) and (b) and held pursuant to subparagraph (c), and
(iii) the amounts paid to each of the husband and the wife;
(g)upon receipt from the parties of Australian Taxation Office assessments relating to the capital gains tax payable by them in relation to the T property and the B1 property:
(i)on the parties’ behalf, pay the capital gains tax according to the assessment/s
(ii)after the deduction of their own reasonable costs of complying with this paragraph of the order, to be apportioned equally as between the husband and the wife, calculate and pay the balance amount to the parties to effect an equal division of their assets and
(iii)provide a final trust account statement to each of the parties.
Unless otherwise specified in this order:
(a)each party is solely entitled to the exclusion of the other to all property and assets (including choses in action) in the possession of that party as at the date of this order;
(b)each party is solely entitled to the credit of any moneys in any bank accounts in his or her name;
(c)each party is to forego any claim he or she may have to any superannuation benefits belonging to or earned by the other;
(d)each party is to be solely liable for and to indemnify the other against any liabilities encumbering any item of property or any asset to which that party is entitled pursuant to this order.
Should either party refuse or neglect to sign any documents which may be required to give effect to this order then a Registrar of the Family Court of Australia at Brisbane is authorised to sign all documents and do all things necessary to give effect to this order.
The parties have liberty to apply, on seven days notice, and by arrangement with the Associate to the Honourable Justice O’Reilly, if the wife’s solicitors are unwilling to perform the role of trustee pursuant to this order, or in relation to any further machinery orders which may be required to give effect to this order.
I certify that the preceding 129 paragraphs
are a true copy of the Reasons for Judgment
of The Honourable Justice O’Reilly
Associate
Date: 8 February 2006
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