FOLEY & FOLEY
[2020] FCCA 2790
•5 November 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FOLEY & FOLEY | [2020] FCCA 2790 |
| Catchwords: FAMILY LAW – Property settlement. |
| Legislation: Family Law Act 1975 (Cth), ss.75(2), 79(4) |
| Cases cited: Omacini & Omacini (2005) FLC 93-218 Trevi & Trevi [2018] FamCAFC 173 Hickey & Hickey (2003) FLC 93-143 Stanford & Stanford (2012) 247 CLR 108 Garrett & Garrett (1984) FLC 91-539 Clauson & Clauson (1995) FLC 92-595 |
| Applicant: | MR FOLEY |
| Respondent: | MS FOLEY |
| File Number: | LNC 497 of 2019 |
| Judgment of: | Judge McGuire |
| Hearing date: | 17 September 2020 |
| Date of Last Submission: | 17 September 2020 |
| Delivered at: | Hobart |
| Delivered on: | 5 November 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms K Mooney |
| Solicitors for the Applicant: | McVeity Dean Lawyers |
| Counsel for the Respondent: | Mr D Lewis |
| Solicitors for the Respondent: | O'Rourke & Kelly |
ORDERS
(A)That within twenty-eight (28) days of the date of these Orders the wife shall:
(1)Transfer and/or vest all her right, title and interest in the following to the husband absolutely:
(i)The property situate at A Drive, Town B in Tasmania;
(ii)All motor vehicles, chattels, personalty and items valued at C Valuers in the possession of or under the control of the husband as of the date of these Orders; and
(iii)The balances of any bank accounts or like investments in the name of or to the benefit of the husband as at the date of these Orders.
(2)Be solely responsible for and indemnify the husband in respect of the following:
(i)Any and all liabilities attaching to any of the assets retained by the wife pursuant to these Orders; and
(ii)Any and all liabilities incurred by the wife since separation in either joint names or in her name alone.
(B)That contemporaneously with the Orders in A(1) above, the husband shall;
(1)Transfer and/or vest all his right, title and interest in the following to the wife absolutely:
(i)The property at Suburb D in Victoria registered solely in the name of the wife;
(ii)Any vehicles, chattels, or personalty in the possession of or under the control of the wife as of the date of these Orders; and
(iii)The wife’s superannuation entitlement but subject to these Orders.
(2)Be solely responsible for and indemnify the wife in respect of the following:
(i)Any and all liabilities attaching to any of the assets retained by the husband pursuant to these Orders; and
(ii)Any and all liabilities incurred by the husband since separation in either joint names or in his name alone.
(C)That paragraphs (C) to (I) (inclusive) of this Order are binding on the Trustee of E Superannuation, member No. …07 (“the Fund”) and it is declared that this Order is made in accordance with Section 90XT(1)(a) of the Family Law Act 1975.
(D)That pursuant to Section 90XT(4) of the Family Law Act 1975 the base amount allocated to MR FOLEY out of the interest of the Applicant in the Fund is $65,386.50 (“the base amount”).
(E)That in accordance with Section 90XT(1)(a) of the Family Law Act 1975 whenever the Trustee of the Fund makes a splittable payment from the interest of the Applicant in the Fund Mr Foley 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 person to whom the splittable payment would have been made but for this Order.
(F)That this Order have effect from the operative time and the operative time is the fourth business day after the day on which the final sealed Orders are served upon the Trustee;
(G)That until the Trustees of the Fund have effected the splittable payment in favour of Mr Foley pursuant to Order (D) herein the Trustee of the said Fund, the Applicant, personal representatives and any other person or persons acting on her or their behalf be and are hereby restrained from disposing of all or any amount payable to the Applicant and/or her personal representatives received by or held in trust for the benefit of her or them;
(H)That a sealed copy of these Orders be served by the solicitors for the Applicant upon the Trustees of the fund within fourteen (14) days of the date of this Order;
That there be liberty to apply to each party and the Trustee of the Fund in relation to the implementation of this Order affecting the Applicant’s superannuation interest.
(J)That pursuant to Section 81 of the Family Law Act 1975 the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
IT IS NOTED that publication of this judgment under the pseudonym Foley & Foley is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT LAUNCESTON |
LNC 497 of 2019
| MR FOLEY |
Applicant
And
| MS FOLEY |
Respondent
REASONS FOR JUDGMENT
Applications
The husband is the applicant for orders for property settlement. The application was filed 18 July 2019. He asks for 65% of the net property pool on a 'one pool' basis inclusive of the wife's superannuation entitlement. In a lengthy a relationship of some 24 years duration he bases his claim primarily on an adjustment for considerations under the factors set out in s.75(2) of the Family Law Act 1975 (‘the Act’).
The wife takes a different view to the husband as to what constitutes the property pool. She argues that the husband should receive a loading on account of s.75(2) factors but to a maximum of 60% of the pool.
Background
The husband is 52 years of age. The wife is 49 years.
The parties commenced a relationship in about 1990 but may not have lived together for long, if at all, prior to their marriage in September 1993.
There are no children of the marriage or of either of the parties.
The parties lived variously in New South Wales, Victoria and Tasmania during their relationship.
In 1994 the husband suffered his first car accident resulting in severe injuries which then inhibited his work capacity. He returned to work in mid 1996.
In December 1996 the husband was involved in a second car accident and suffered a broken neck. He recommenced work in mid 1998 as a self-employed tradesman.
In March 1999 the husband suffered a workplace accident. He suffered serious injuries requiring multiple surgeries. He has not work remuneratively since March 1999.
Later in 1999 the husband suffered a spinal cord injury whilst in hospital for a back operation. There were further complications from that surgery.
The wife is employed as a public servant and lives in Victoria.
The husband remains resident in a caravan on the parties’ block of land at Town B in Tasmania.
The parties separated on 3 August 2017. In September 2017 the parties settled the sale of the property at Town E in Tasmania and agreed that each would receive 50% of the net proceeds of sale being approximately $56,000 each. This distribution of funds occurred almost 2 years prior to the initiating application in this Court and hence without any force of or categorisation by Court order.
In 2017 the husband received an inheritance of $56,000.
In December 2018 the wife purchased, in her own name, a property at F Drive, Suburb D in Victoria for $345,000 with a mortgage loan of $303,000.
The Issues
A primary issue between the parties is the content of the property pool where the husband argues that the pool should comprise of the legal and equitable interests of the parties and either of them as at the date of the trial. The wife argues that the proceeds of sale of the Town E property in a sum of $112,955 divided between the parties in September 2017 should be treated as a 'partial property settlement' and therefore effectively 'added back' into the property pool with the result being that the wife's post-separation purchase of the Suburb D property (and the husband's use of his $56,000) be 'quarantined' from the pool. An associated argument is whether the husband has therefore 'wasted' in a legal sense both his $56,000 from the proceeds of sale of Town E and a further $56,000 received by way of inheritance post-separation.
The husband's affidavit at [49] – [53] is evidence as to how he has spent the total amount of approximately $112,000 since separation and in response to the wife's argument that he had 'wasted' those monies. He says:
49. My father died in 2015 and when his estate was finalised in October 2017 I received a payout of $56,000.
50. I do not have any of that money left. I have had to use the funds to maintain the block of land at Town B and to make improvements to enable me to build a shed to live in. I have had the following work done:-
a. driveway constructed;
b. boundary fences built;
c. water tank installed;
d. trees cleared;
e. earthworks and levelling a building site; and
f. front gates installed.
51. I have bought a 15mx12m colorbond sheet metal shed kit for $25,000 that I wanted to have built to live in. I have not been able to pay for the cost of building the shed and having it made habitable.
52. I have also bought a petrol power generator, solar power panels and batteries because I cannot currently afford to pay for the power to be connected. I have obtained a quote from G Electricians, for $26,000, not including the necessary earth works.
53.I also bought a 2017 motor vehicle for $40,000. I paid $10,000 cash and the balance of the purchase was funded by way of a car loan.
I have evidence of a valuation of the property at Town B which evidences the capital appreciation by reasons of the husband's post-separation expenditure. I also have the benefit of evidence agreed for the husband's 'vehicles and chattels' at value of $63,180.
In circumstances where the wife is essentially arguing that the husband's dissipation of the funds is by way of ‘wastage’ a consideration of 'add-backs', is appropriate. The Full Court in Omacini & Omacini[1] held that add-backs fall into 'three clear categories' being, firstly, where parties have expended money on legal fees; secondly, where there has been a premature distribution of matrimonial assets; and thirdly 'waste' in the form of wanton, negligent, or reckless dissipation of assets. Nevertheless, and as noted by a later Full Court in Trevi & Trevi[2], an add-back does not necessarily occur whenever 'a party has expended money realised from the disposition of assets that existed as at the date of separation being a proposition that would be 'unduly simplistic'.’[3]
[1] (2005) FLC 93-218
[2] [2018] FamCAFC 173
[3] Omacini @ 79,619 [39]
At [29] of Trevi their Honours observed:
The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it” at trial. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
In circumstances where the $56,000 received by the wife is most obvious and traceable in her purchase of the Suburb D property, I am not persuaded that the husband has 'wasted' his $56,000 from the proceeds of sale and from his inheritance in a similar quantum. To the contrary, his expenditure of those monies and his inheritance is essentially apparent in the improvements he has made to the Town B property, his motor vehicle and other assets evident in the valuation. Also circumstantially the husband is severely disabled and has had to accommodate himself as best he can in establishing a form of home on the Town B property.
In my view it is also a relevant to that the distributions from the proceeds of sale of the former matrimonial home were made voluntarily, without Court order, and indeed some years prior to the commencement of these proceedings and without categorisation.
There is a further issue between the parties in respect of paid legal costs. The husband's evidence, which I accept, is that he has borrowed to pay legal costs. The best evidence is that the wife has utilised the sum of $8,756 from savings to partially meet legal costs. For the reasons set out above and with reference to Omacini (supra) it is proper, in my view, that the wife's paid legal costs in a sum of $8,756 be added back to the pool.
The only other significant issue between these parties remains the adjustments, if any, under s.79(4) of the Act.
Relevant Law
Matters of property settlement are provided for in s.79 of the Act which, subject to statute, provides a broad discretion to make orders permeated by the notion of justice and equity.
Whereas previously it was considered that trial judges should follow a strict four-step process consistent with the decisions of the Court in Hickey & Hickey[4] the High Court in Stanford v Stanford[5] confirmed that concerns of justice and equity were prominent. Specifically, the Court in Stanford emphasised the need for trial judges to firstly consider pursuant to s.79(2) whether it is just and equitable in the circumstances of the parties to make any orders at all. That consideration is circumstantial to the parties and not simply to be conflated with a consideration of the contributions under s.79(4)(2)(a) – (c). In the matter now before me and where the parties’ relationship endured for some 24 years, I am not troubled in this respect. They have made contributions and there are circumstances personal to each of them which activate my consideration.
[4] (2003) FLC 93-143
[5] (2012) 247 CLR 108
Without strict application of a step-by-step process it is generally agreed that the Court should firstly identify the legal and interests of the parties and either of them in property. 'Property' can include assets, liabilities and financial resources and for these purposes superannuation is to be 'treated as property' although, as in this case, not immediately able to be crystallised. In doing so the Court can adopt a ‘one pool’ approach inclusive of both assets and superannuation or treat them separately in 'two pools'. As set out above, and for reasons of practicality, reality, justice and equity it is normally accepted that the property pool is to be determined as to its content and value as at the date of the hearing although matters such as post -separation contributions are, of course, to be taken into account and assessed.
The Court is then to consider the contributions by the parties themselves or on their behalf to the acquisition, maintenance and improvement of the property pool. Contributions may be of a direct or indirect financial type or may be of a non-financial type including contributions as homemaker and parent.
After a consideration of the parties entitlements on account of contributions it is then for the Court to consider whether there should be any adjustment to either of the parties by reason of the matters set out in s.79(4)(d) – (g) and including any relevant matters under the numerous factors set out in s.75(2) of the Act.
Evidence
Both parties provided affidavits and sworn financial statements. They both gave evidence and were briefly cross-examined. I found each to be witnesses of the truth and essentially good and honest witnesses.
The husband adduced evidence from his sister, Ms H, who swore an affidavit on 6 April 2020. She was briefly cross-examined. Her evidence essentially challenged that of the wife as to the assistance rendered the father's parents by the wife where she appears to argue this as a form of contribution by her.
An affidavit of the husband's brother, Mr I, filed 8 April 2020 was read into evidence without the need for cross-examination. His evidence was unremarkable and focused on the husband's investment in a share portfolio which proved unsuccessful but without any wanton, negligent or reckless behaviour on the part of the husband such a ‘negative contribution’ is applicable.
The husband also relied on affidavit of Mr J, valuer, filed 6 April 2020. Mr J's evidence was not controversial and valuations were agreed.
The Property Pool
Given substantial agreement between the parties and the findings made above, I can determine the property pool of the parties to be the following:
ASSETS
F Drive, Suburb D (Wife)
345,000
A Drive, Town B (Joint)
135,000
Cash at bank (Wife)
8,756
Cash at bank (Husband)
250
K motor vehicle (Wife)
20,650
Husband’s vehicles, chattels (valued by C Valuers) (Husband)
63,180
Household contents (Husband)
500
Household contents (Wife)
1,000
Total
$574,336
LIABILITIES
Home Loan (Wife)
302,568
Car loan (Husband)
19,379
Total
$321,947
TOTAL NET TANGIBLE ASSETS
$252,389
SUPERANNUATION
AMP superannuation (Wife)
139,511
Total Net Pool
$391,900
Contributions
The wife worked for the duration of the marriage. By reason of his injuries the husband's employment effectively ceased in about 1999. He has, however, received substantial damages payments in three lots and totalling some $214,200 together with receipt of a pension.
It is well-established that it is not the task of the Court to conduct a precise and detailed mathematical audit of these parties’ contributions to their marriage. As the Full Court said in Garrett & Garrett[6], and particularly in a long marriage where the contributions are many and varied, that it is improper, if not impossible, to have a detailed accounting of financial contributions where the task of the Court, of course, is to identify and assess all contributions including of a non-financial type. Similarly, the circumstances of the parties during the relationship are also relevant where it is perhaps more pertinent to consider any inequality of effort rather than of financial quantum of contribution in making adjustments from the property pool.
[6] (1984) FLC 91-539
The wife in this case argues a contribution in the sense of assisting in the care of the husband’s elderly and ailing parents. The husband's sister gave evidence perhaps disputing the magnitude of the wife's claimed contributions in this respect. In any event, I accept the wife’s evidence that she did assist these elderly in-laws. However, her evidence was striking in cross-examination where she described herself and her mother-in-law as being mutually 'fond' of each other. I gleaned no sense of compulsion in the wife's actions but see it rather as a part of the myriad of contributions that people make to long relationships. In the same sense, I assume that the wife offered care and support to the husband given his unusual but tragic propensity for accidents. I fear that I might then fall into error if I was to ‘quarantine’ the wife’s undoubtedly sincere and beneficial, yet altruistic assistance to her in-laws as some ‘special contribution’[7].
[7] Jabour & Jabour [2019] FamCAFC 78
In this matter, I consider that the contributions of the parties generally to be equal. They both worked until the husband's incapacity. He contributed lump sum payments. He has received a pension income. It is the nature of the marriage relationship, therefore, that causes these Courts to avoid just such a mathematical audit.
s.75(2) Factors
The wife is in continuing employment with a current income of around $90,000 per year. The husband's income is limited to his pension that appears to come in a form of 'loss of income payment' from Work Safe Victoria at $708 per week which does not to incur any taxation. The wife's evidence is that she 'clears' approximately $1,200 per week after tax. Further, the wife has the benefit of ongoing compulsory contributory superannuation from her employer.
The comments of the Full Court of the Family Court in Clauson v Clauson[8] are pertinent to this consideration. Firstly, the Court echoed the view of a previous High Court in Best v Best[9] to the effect that in a relationship of limited property pool value then the 'best asset' that a party can leave that marriage with is the benefit of an income. Secondly, the Court in Clauson urged caution in trial judges in simply allocating a token percentage to a party on account of s.75(2) factors but rather should consider the reality and impact of any adjustment as against the value of a property pool. Their Honours in Clauson said at (81,911):
There is, we think, at times a tendency to assess s75(2) factors in percentage terms without considering its real impact, and we think there is legitimacy in the views expressed in more recent times that the Court has tended to operate in this area within artificially delineated boundaries. That is, it appears almost to be inevitable that the s75(2) factors will be assessed in a range between 10% and 20%. A number of cases will justify an assessment outside those parameters and in any event it is the real impact in money terms which is ultimately the critical issue.
[8] (1995) FLC 92-595
[9] (1993) FLC92-418
The property pool in this matter is not large in quantum and any adjustments must be seen accordingly.
There is a discrepancy in the income between these parties of, on my calculations, around $500 net per week. The wife with a superior income has a consequent ability to continue to superannuate herself for the remainder of her working life. The husband does not enjoy that benefit and he is effectively excluded from the workforce for the rest of his life. Nevertheless, the husband achieves an income of almost $800 per week until he reaches 65 years of age. His sworn financial statement discloses a modest lifestyle commensurate with his income. In all of those circumstances, I am of the view that an adjustment of 12.5% to the husband on account of s.75(2) would be appropriate given the parties ages, current incomes and potential for superannuation.
Conclusion
Consequently, I conclude that, after consideration of the circumstances of the marriage, contributions and relevant s.75(2) factors, a distribution of the property as to 62.5% to the husband and 37.5% to the wife would be appropriate.
In all the circumstances of the wife seemingly accruing the majority, if not all, of her superannuation entitlement during the marriage and that entitlement being modest in its quantum and where the husband has no superannuation entitlement and also taking into account the fact that the wife has the benefit of a recently purchased home albeit with a mortgage but whereas the husband's living circumstances are problematic, I will deal with this matter on a 'one-pool' approach. This will necessitate a superannuation-split in favour of the husband.
The wife will retain the equity in her home ($42,432); cash-at-bank ($8,756); K motor vehicle ($20,650); household contents ($1,000); and her superannuation (subject to a split) ($139,511) being a total of $212,349. I calculate the wife’s entitlement at 37.5% of the pool to be $146,962.50 and hence a splitting order in favour of the husband in a base amount of $65,386.50 is required.
The husband will retain the south Town B property ($135,000); cash-at-bank ($250); vehicles and chattels ($63,180); household contents ($500); less his car loan ($19,379) giving him net property in land at value of $179,551. The husband’s entitlement from the pool at 62.5% would be $244,937.50 and thereby confirming a splitting order from the wife’s superannuation of $65,386.50.
I am satisfied that such orders would be just and equitable given the current distribution of real property and assets between the parties and the circumstances of the superannuation entitlement.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Associate:
Date: 5 November 2020
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Injunction
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Statutory Construction
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Intention
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