Garbutt and Salzwedel
[2019] FamCA 110
•4 March 2019
FAMILY COURT OF AUSTRALIA
| GARBUTT & SALZWEDEL | [2019] FamCA 110 |
| FAMILY LAW – PROPERTY – Settlement in relation to a marriage – Where the parties seeks orders for an adjustment of the matrimonial property – Where the parties agree that an adjustment should be made in favour of the wife – Where the parties disagree as to the size of that adjustment and how much of it should be derived from non-superannuation versus superannuation assets – Where the wife has made a greater homemaker and parenting contribution – Where the husband has made a greater financial contribution – Court finds that the parties contributions have been equal, apart from a financial contribution made on behalf of the husband in the form of a monetary gift from his parents – Where the husband has a sizeable loan to his sister – Court finds that the parts of that loan attributable to payment of the husband’s legal fees and child support obligation should not be included as a joint liability – Orders made for the wife to receive 66.6 per cent of the matrimonial asset pool. |
| Family Law Act 1975 (Cth) ss 75, 79, 117 Family Law Rules 2004 r 15.47(1) |
| Bevan & Bevan (2013) FLC 93-545 Biltoft and Biltoft (1995) FLC 92-614 Carmel-Fevia & Fevia (No. 3) [2012] FamCA 631 Coghlan & Coghlan (2005) FLC 93-220 Drewett & Drewett [2012] FamCA 320 Farnell and Farnell (1996) FLC 92-681 Fields & Smith (2015) FLC 93-638 Grefeld & Grefeld And Anor [2010] FamCA 50 Grier & Malphas (2017) 55 Fam LR 107 Lee Steere & Lee Steere (1985) FLC 91-626 Mallet & Mallet (1984) 156 CLR 605 Petruski & Balewa (2013) 49 Fam LR 116 Rodgers & Rodgers (No. 2) (2016) FLC 93-712 Sebastian & Sebastian (No 5) [2013] FamCA 191 Stanford & Stanford (2012) 247 CLR 108 Tomasetti & Tomasetti (2000) FLC 93-023 |
| APPLICANT: | Mr Garbutt |
| RESPONDENT: | Ms Salzwedel |
| FILE NUMBER: | SYC | 2864 | of | 2017 |
| DATE DELIVERED: | 4 March 2019 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland J |
| HEARING DATE: | 5 - 9 November 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Sperling |
| SOLICITOR FOR THE APPLICANT: | Colquhoun & Colquhoun |
| COUNSEL FOR THE RESPONDENT: | Mr Othen |
| SOLICITOR FOR THE RESPONDENT: | Anne Day & Associates |
Orders
Former matrimonial home sale proceeds
Upon the sale of the property situated at and known as C Street, Suburb F NSW, being the whole of the land in Folio Identifier … pursuant to consent orders made 9 November 2018, the proceeds of sale shall be paid in the following manner and priority:
(a)Firstly, in payment of all amounts to discharge registered mortgage no. …48 to D Bank;
(b)Secondly, in payment of any expenses relating to the sale;
(c)Thirdly, payment of $40,974 to Ms B;
(d)Fourthly, payment of $8,268 to the wife;
(e)Fifthly, payment of 66.6 per cent of the net balance to the wife; and
(f)Sixthly, payment of the balance to the husband.
Superannuation
The Court allocates, as required by s 90XT(4) of the Family Law Act 1975 (Cth) (“the Act”), a base amount of $243,838 to the Respondent wife (“the wife”) out of the Applicant husband's (“the husband”) interest in the Super Fund 2, member number …21 (“the Fund”).
By consent, in accordance with s 90XT(l)(a) of the Act:
(a)The wife (or the wife’s administrators, executors, beneficiaries, heirs or assignees) is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(b)The entitlement of the husband in the Fund (or the entitlement of such other person who becomes entitled to receive a payment out of the husband’s superannuation interest) is correspondingly reduced by force of this order.
By consent, the trustee of the Fund (“the Trustee”) shall do all such acts and things and sign all documents as may be necessary to:
(a)Calculate, in accordance with the requirements of the Act, the entitlement awarded to the wife in the immediately preceding clause of this order; and
(b)Pay the entitlement whenever the Trustee makes a splittable payment from the husband’s interest in the Fund.
By consent, this order has effect from the operative time being the fourth business day after the service of this order on the Trustee.
By consent, after service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 (“the SIS Regulations”), the husband shall do all such things and sign all such documents as may be necessary, including but not limited to exercising the wife’s request in accordance with the SIS Regulations, for the rollover or transfer of the non-member spouse interest to a complying superannuation fund of the wife’s choosing in accordance with the SIS Regulations.
THE COURT NOTES THAT:
(a)The value of the non-member spouse interest is calculated in accordance with the SIS Regulations; and
(b)Any payment from the husband’s superannuation interest in the Fund made after the Trustee has created a new interest in the wife’s name in the Fund are not splittable payments in accordance with the requirements of the Family Law (Superannuation) Regulations 2001.
Ancillary orders
By consent, other than as herein provided, the parties each be declared the sole legal and beneficial owners of all other items of property presently in their respective names, possession or control, including but not limited to money, bank accounts, shares, real property, motor vehicles, entitlements to superannuation, business interests, financial resources, furniture, furnishings and personal effects including jewellery.
By consent, each party hereby releases the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the other for or by reason of or in respect of any act, cause, matter or thing and will indemnify and keep indemnified one another with respect to liabilities in their sole name.
By consent, both parties shall do all acts and things and execute all documents and instruments as are necessary to give effect to all or any of this order.
By consent, in the event that any party refuses or neglects to sign any document or do anything required or contemplated by these orders, with such failure continuing for 14 days, then the Registrar of the Court be appointed pursuant to s 106A of the Act, as amended, to sign such documents and do such things on behalf of either party.
By consent, all extant applications in this matter are otherwise dismissed.
THE COURT NOTES THAT the parties acknowledge that these orders finally determine the financial relationships between them and avoid further proceedings between them pursuant to s 81 of the Act as amended.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Garbutt & Salzwedel has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 2864 of 2017
| Mr Garbutt |
Applicant
And
| Ms Salzwedel |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns an application for property settlement in relation to the marriage of the parties, Mr Garbutt (“the husband”) and Ms Salzwedel (“the wife”). The relevant property pool is largely comprised of the former matrimonial home and superannuation. The former matrimonial home is to be sold in accordance with orders made by consent.
The parenting proceedings were settled by consent on 8 November 2018, being the penultimate day of the hearing.
Background
The wife was born in 1967. She is currently 51 years of age.
The husband was born in 1968. He is currently 51 years of age.
In 1998, the wife asserts that the parties commenced cohabitation. The husband asserts that cohabitation commenced in May 1999. That difference is not material to this decision. I accept that the duration of the parties’ relationship was approximately 20 years.
At the commencement of cohabitation, the parties both worked full time. The wife was employed in the retail clothing industry, while the husband was employed as a Senior Manager at N Pty Ltd. He continues to be employed by that company. The wife was not challenged on her evidence that, during cohabitation, she and the husband had their incomes deposited into a joint bank account, from which they met living expenses, including mortgage repayments.
The parties were married in 2000.
As stated, on 12 August 2001, the parties purchased the Suburb F property for $445,000. The deposit for that purchase was paid from the parties’ savings. The balance of the purchase price was funded by a gift of $100,000 from the husband’s parents and a mortgage to Q Bank Home Loan.
In January 2004, the wife was retrenched and received a payment of approximately $20,000, being paid leave entitlements. The wife was not challenged on her evidence that those funds were contributed towards the mortgage secured over the Suburb F property. The wife subsequently obtained employment as a manager at a large retail store.
On 23 December 2004, the child X was born. He is currently aged 14 years. The wife ceased working shortly prior to X’s birth.
In 2005, the wife recommenced her employment, but worked on weekends only. Her annual income at that time was approximately $15,000.
On 16 October 2008, the child Y was born. He is currently aged 10 years. Shortly before Y’s birth, the wife ceased working.
In 2011, the wife asserts that X was diagnosed with Dyslexia and Attention Deficit Disorder (“ADD”) by his Paediatrician, Dr D. In 2012, Dr E reassessed X and diagnosed him with Autism Spectrum Disorder (“ASD”). However, the husband states: “[X] suffers from depression, anxiety and a non-specific learning disorder”. In his chronology document, the father states:
2011 – [X] diagnosed with dyslexia and [Attention Deficit Hyperactivity Disorder] by [Dr E].
…
2012 – [X] diagnosed with [ASD] (in addition to the dyslexia and ADHD diagnosis in 2011) by [Dr E].
Further, the Single Expert in the parenting proceedings, Dr G, states:
From the information made available to the writer, it is the writer's opinion within reasonable medical certainty that [X] has psychiatric diagnoses as per DSM-5 (American Psychiatric Association 2013) consistent with attention deficit hyperactivity disorder (ADHD) and major depressive disorder (in partial remission).
The father repeats Dr G’s diagnosis summary for X in his “Summary of Argument” document. I accept the evidence of Dr E that X’s current diagnosis is that of Attention Deficit Hyperactivity Disorder (“ADHD”) and major depressive disorder (in partial remission).
In April 2012, Y commenced speech pathology.
In 2015, X commenced Arrowsmith, a program designed to assist students with learning difficulties, at his school, P Primary School.
In 2016, Y was diagnosed with ASD and ADHD by his Psychiatrist, Dr H. Y was subsequently further diagnosed with Oppositional Defiant Disorder (“ODD”).
Also in 2016, the wife was diagnosed with a depressive disorder and prescribed antidepressants. The husband was diagnosed with a major depressive disorder and was prescribed antidepressants.
In July 2016, the husband’s employment role was changed from Senior Manager to Manager.
On 12 December 2016, the parties separated. The husband subsequently vacated the Suburb F property. The wife and the children continue to live there.
On 15 May 2017, the husband commenced these proceedings in the Federal Circuit Court of Australia, seeking both parenting and property orders.
On 7 June 2017, parenting orders were made by consent for the children to live with the wife and spend time with the husband from Saturday afternoon to Sunday each week.
On 29 September 2017, the matter was listed for a Conciliation Conference, which was vacated because the wife was not ready to proceed.
On 14 November 2017, Senior Registrar Campbell made orders that the children’s time with the husband be extended to Thursday to Monday each alternate week, as well as during school holidays and on special occasions.
In 24 November 2017, the matter was listed for a Conciliation Conference, which did not proceed because the wife’s solicitor did not appear.
On 1 December 2017, the matter was listed for a Conciliation Conference, at which procedural orders were made.
On 12 September 2018, Y was approved to receive funding under the National Disability Insurance Scheme for occupational therapy, behavioural intervention and other support.
On 4 October 2018, a joint valuation of the Suburb F property was obtained, which valued that property at $1,180,000.
On 5 November 2018, the final hearing of this matter commenced.
On 8 November 2018, final parenting orders were made by consent. Those orders provided for the wife to be permitted to relocate the residence of the children to Victoria after 1 December 2019. Pending that relocation, the children will live with the wife and spend time with the husband on alternate weekends from Friday to Tuesday. Following that relocation, the children will spend time with the husband for one week in the short school holidays and three weeks in the Christmas school holidays.
On 9 November 2018, the following property orders were made by consent:
1. The parties shall sign all documents and do all things necessary to cause the property situated at and known as [C Street, Suburb F] NSW, being the whole of the land in Folio Identifier … (“the property”) to be sold and for that purpose, the following shall apply:
a. The property shall not be listed for sale any earlier than 1 September 2019, unless otherwise agreed between the parties in writing;
b. Appointing such real estate agent to act on the sale as agreed between the parties in writing or, failing agreement on or before 1 July 2019, as appointed by the President for the time being of the Real Estate Institute of NSW with the cost of such appointment being borne equally by the parties as and when they fall due (“the agent”);
c. Listing the property for sale by private treaty or by auction as agreed between the parties in writing or, failing such agreement, the parties to act on the recommendation of the agent;
d. The listing price for the property shall be such amount as agreed to between the parties or, failing agreement, the parties to act on the recommendation of the agent;
e. The sale price shall be such amount as is agreed between the parties and failing agreement, any offer to buy the property that is at least 90% of the list price shall be accepted by the parties as the sale price;
f. Instructing such solicitor or conveyancer to act on the sale as agreed between the parties in writing or, failing agreement on or before 1 July 2019, as appointed by the President for the time being of the Law Society of NSW with the cost of such appointment being borne equally by the parties as and when they fall due;
g. Cooperating in every way with the real estate agent in relation to the marketing of the property for sale, including making the keys readily available, allowing inspections at all times as reasonably requested by the real estate agent, and ensuring that the property is in a neat and clean condition at the time of inspection; and
h. Executing the Contract of Sale and all other documents necessary to complete the sale and discharge the mortgage registered on title.
2. Pending the settlement of the sale of the property, the Applicant shall pay or cause to be paid as and when the same fall due all instalments on the loan secured by the mortgage, council rates, home insurance premiums and the Security charges in respect of the property, subject to the provision of such council rates and security charges notices by the Respondent to the Applicant.
Applications
The husband’s application
Following the making of those various consent orders, the husband tendered a revised minute of proposed orders (Exhibit “F-2”) on 9 November 2018. That minute sought that the sale proceeds of the Suburb F property be distributed so that the wife would receive 60 per cent and he would receive 40 per cent. The following additional orders were also sought:
Superannuation Split
2. That the Court allocates, as required by Section 90MT(4) of the Family Law Act 1975, a base amount of $246,513.00 to the Respondent out of the Applicant's interest in the Super Fund 2, member number …21 ('the Fund').
3. That, in accordance with section 90MT(1)(a) of the Family Law Act 1975:
3.1 the Respondent (or the Respondent's administrators, executors, beneficiaries, heirs or assigns) is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
3.2 the entitlement of the Applicant in the Fund (or the entitlement of such other person who becomes entitled to receive a payment out of the Applicant's superannuation interest) is correspondingly reduced by force of this Order.
4. That the trustee of the Fund ('the trustee') shall do all such acts and things and sign all such documents as may be necessary to:
4.1 calculate, in accordance with the requirements of the Family Law Act 1975, the entitlement awarded to the Respondent in the immediately preceding clause of this Order; and
4.2 pay the entitlement whenever the trustee makes a splittable payment from the Applicant's interest in the Fund.
5. That this order has effect from the operative time being the fourth business day after the service of this order on the trustee.
6. That, after service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 ('the SIS Regulations'), the Applicant shall do all such things and sign all such documents as may be necessary, including but not limited to exercising the Respondent's request in accordance with the SIS Regulations, for the rollover or transfer of the non-member spouse interest to a complying superannuation fund of the Respondent's choosing in accordance with the SIS Regulations.
7. That the Court notes:
7.1 the value of the non-member spouse interest is calculated in accordance with the SIS Regulations; and
7.2 any payment from the Applicant's superannuation interest in the Fund made after the trustee has created a new interest in the Respondent's name in the Fund are not splittable payments in accordance with the requirements of the Family Law (Superannuation) Regulations 2001.
8. That the Respondent shall pay any fees charged by the trustee of the fund in administering the pay split.
Chattels & Liabilities
9. That other than as herein provided, the Applicant and the Respondent each be declared the sole legal and beneficial owners of all other items of property presently in their respective names, possession or control including but not limited to money, bank accounts, shares, real property, motor vehicles, entitlements to superannuation, business interests, financial resources, furniture, furnishings and personal effects including jewellery.
10. Both the Applicant and the Respondent hereby release the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the other for or by reason of or in respect of any act, cause, matter or thing and will indemnify and keep indemnified one another with respect to liabilities in their sole name.
Administrative
11. That the parties shall do all acts and things necessary and give all consents and execute all documents and writings to give effect to these Orders in the time periods prescribed.
12. That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders within 7 days of such a request, the Registrar of the Court be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
13. The applications for property adjustment and spousal maintenance are otherwise dismissed.
NOTATIONS:
14. The parties acknowledge that these Orders finally determine the financial relationships between them and avoid further proceedings between them pursuant to section 81 of the Family Law Act 1975 as amended.
Counsel for the husband submitted that the orders sought by the husband would see the matrimonial property split 62.5 per cent in favour of the wife. The husband made an open offer to the wife in those terms.
Further, in terms of the superannuation split orders sought by the husband, I note that on the final day of the hearing, being 9 November 2018, orders were made granting the husband leave to forward to my Chambers any correspondence received from the Trustee of his superannuation fund, indicating their position in relation to his proposals. On 19 December 2018, such correspondence was provided to my Chambers, in the form of a letter received by the husband’s legal representatives from Super Fund 1, stating:
… we note that [Super Fund 1] has no foreseeable objection to the base amount changing, provided that the base amount is not more than the total benefit of the respective member’s interest in the fund.
Neither party has sought an adjustment of the husband’s superannuation in a figure greater than his current entitlement, in that regard.
The wife’s application
The wife’s updated proposed minute of orders (Exhibit “W-7”) reads, as follows:
1. That the Court allocates, as required by section 90MT(4) of the Family Law Act 1975, a base amount of $184,919 to the Respondent out of the Applicant's interest in the [Super Fund 2], member number …21 ('the Fund').
2. That, in accordance with s 90MT(l)(a) of the Family Law Act 1975:
(a) The Respondent (or the Respondent's administrators, executors, beneficiaries, heirs or assignees) is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(b) The entitlement of the Applicant in the Fund (or the entitlement of such other person who becomes entitled to receive a payment out of the Applicant's superannuation interest) is correspondingly reduced by force of this Order.
3. That the trustee of the Fund ('the Trustee') shall do all such acts and things and sign all documents as may be necessary to:
(a) Calculate, in accordance with the requirements of the Family Law Act 1975, the entitlement awarded to the Respondent in the immediately preceding clause of this Order; and
(b) Pay the entitlement whenever the Trustee makes a splittable payment from the Applicant's interest in the Fund.
4. That this Order has effect from the operative time being the fourth business day after the service of this Order on the Trustee.
5. That, after service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 ('the SIS Regulations'), the Applicant shall do all such things and sign all such documents as may be necessary, including but not limited to exercising the Respondent's request in accordance with the SIS Regulations, for the rollover or transfer of the non-member spouse interest to a complying superannuation fund of the Respondent's choosing in accordance with the SIS Regulations.
6. That the Court notes:
(a) The value of the non-member spouse interest is calculated in accordance with the SIS Regulations; and
(b) Any payment from the Applicant's superannuation interest in the Fund made after the Trustee has created a new interest in the Respondent's name in the Fund are not splittable payments in accordance with the requirements of the Family Law (Superannuation) Regulations 2001.
7. Upon the sale of the property situated at and known as [C Street, Suburb F] NSW, being the whole of the land in Folio Identifier … ("the property") pursuant to consent orders made 9 November 2018, the proceeds of sale shall be paid in the following manner and priority:
(a) In payment of any agent's commission, auction fees, marketing costs and legal costs of sale;
(b) Payment of all amounts to discharge registered mortgage no. …48 to [D Bank] Limited ('the mortgage');
(c) To all usual conveyancing adjustments;
(d) Of the balance then remaining, 80% to the Respondent paid in the following manner:
(i) To [Mr M] & Associates, such sum as is due to that firm under invoices raised to the Respondent for legal costs, counsel's fees and disbursements of these proceedings unpaid as at the date of settlement of the sale, in accordance with a written direction given by or on behalf of that firm;
(ii) To Anne Day & Associates, such sum as is due to that firm under invoices raised to the Respondent for legal costs, counsel's fees and disbursements of these proceedings unpaid at the date of settlement of the sale, in accordance with a written direction given by or on behalf of that firm;
(iii) The balance to the Respondent or as she may direct in writing; and
(e) The balance then remaining, to the Applicant or as he may direct in writing.
8. From the date of these Orders, the Applicant to indemnify and keep indemnified the Respondent in respect of any costs of ownership of the property, including the mortgage, rates and charges.
9. The parties forthwith do all acts and things and sign all documents and instruments necessary to close any joint bank accounts and the funds therein shall be divided 50% to the Applicant and 50% to the Respondent.
10. By way of spouse maintenance the Applicant shall pay or cause to be paid to the Respondent the sum of $1,000 per week for a period of 4 years from the date of the making of this order.
11. Except as otherwise provided for in these Orders, the Applicant is declared to be, as against the Respondent, the sole legal and beneficial owner of any other property of whatsoever nature and kind, including but not limited to motor vehicles, jewellery and furniture, in the possession or control of the Applicant at the date of these Orders.
12. Except as otherwise provided for in these Orders, the Respondent is declared to be, as against the Applicant, the sole legal and beneficial owner of any other property of whatsoever nature and kind, including but not limited to motor vehicles, jewellery and furniture, in the possession or control of the Respondent at the date of these Orders.
13. Except as specifically provided for by any Order to the contrary, each party shall indemnify and keep indemnified the other in respect of all debts in their sole name owing to third parties.
14. Except as specifically provided for by any Order to the contrary, the parties each release the other from all debts owing from one to the other.
15. Both parties shall do all acts and things and execute all documents and instruments as are necessary to give effect to all or any of this Order.
16. In the event that any party refuses or neglects to sign any document or do anything required or contemplated by these Orders, with such failure continuing for fourteen days, then the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act 1975, as amended, to sign such documents and do such things on behalf of either party.
17. The applications are otherwise withdrawn and dismissed.
18. The Applicant shall pay or cause to be paid the Respondent's costs of and incidental to these proceedings.
Counsel for the wife submitted that the orders sought by the wife would see her receive “roughly” 70 per cent of the matrimonial assets. That would be comprised of 80 per cent of the parties’ non-superannuation property and 55 per cent of the parties’ superannuation interests.
In terms of proposed order 10, being for the payment of periodic spousal maintenance, at the hearing, Counsel for the wife submitted:
Now, your Honour, in terms of spouse maintenance, the husband’s financial statement is in evidence as to his capacity. I would have to accept that for as long as he’s paying the mortgage, et cetera, for the wife’s benefit, there’s probably limited scope for your Honour to make a further maintenance order on that financial statement.
Given that the consent orders made on 9 November 2018 provide for the husband to meet the mortgage repayments in respect of the Suburb F property, pending its sale, I will not consider making an order for the payment of spousal maintenance by him.
Evidence
At the hearing, the husband relied upon the following documents:
a)Financial Statement filed on 24 October 2018;
b)His Affidavit filed on 15 October 2018; and
c)Affidavit of Ms B filed on 15 October 2018.
The wife relied upon the following documents:
a)Financial Statement filed on 8 October 2018; and
b)Her Affidavit filed on 3 October 2018.
The law
Insofar as is relevant to this matter, s 79 of the Family Law Act 1975 (Cth) (“the Act”) sets out the following:
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
…
(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
In exercising that discretion, the Court is required to take into account the matters set out in s 79(4) of the Act, as follows:
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Since the decision of the High Court in Stanford & Stanford (2012) 247 CLR 108 (“Stanford”), there has been some debate as to the approach that should be taken by the Court in the exercise of its discretion pursuant to s 79 of the Act.
In Bevan & Bevan (2013) FLC 93-545 (“Bevan”) at 87,230, the Full Court summarised the position in the following terms:
59. Prior to Stanford, property applications were commonly dealt with by reference to what the trial Judge called “a four stage process”. This process was described at [31] and [32] of his Honour’s reasons. The jurisprudential basis for the process was well established – see the line of cases cited in Hickey & Hickey (2003) FLC 93-143 at [39].
60. The four stage (or step) process involves:
• identification and valuation of the property of the parties;
• identification and evaluation of contributions to the property (including property no longer owned by the parties);
• identification and assessment of the various matters in s 79(4)(d) to (g) including, to the extent they are relevant, the matters in s 75(2);
• consideration of matters of justice and equity.
61. Although the four step process has been regularly applied, the Full Court has stressed it is no more than a means to an end, since the statutory obligation is to alter existing interests only if it is just and equitable to do so. Thus, in Norman & Norman [2010] FamCAFC 66 at [60], the Full Court (Finn, May and Murphy JJ) said:
It is the mandatory legislative imperative (to reach a conclusion that is just and equitable) that drives the ultimate result. For all its usefulness and merit as a “disciplined approach” or a “structured process of reasoning” (per Fogarty, Lindenmayer, McCall JJ, N and N, unreported, 10 June 1992), the “three-step” or “four-step” approach merely illuminates the path to the ultimate result.
In Sebastian & Sebastian (No 5) [2013] FamCA 191 at [161], Young J held that, after considering the factors set out in ss 79(4) and 75(2) of the Act, it was prudent to take a final “holistic overview” to ensure that the outcome of the hearing, and specifically any orders made for the alteration of property interests, are just and equitable. That approach taken by Young J is not inconsistent with what was said by the Full Court in Bevan and is entirely consistent with the statement of the Full Court in Tomasetti & Tomasetti (2000) FLC 93-023 at 87,391, that “the whole is not necessarily the sum of its component parts”.
In that regard, in Petruski & Balewa (2013) 49 Fam LR 116 at [49], the Full Court said:
The task of assessing contributions under s 79 of the Act is an holistic one; what is required is to evaluate the extent of the contributions of all types made by each of the parties in the context of their particular relationship (Dickons & Dickons [2012] FamCAFC 154). As was also said by the Full Court in Lovine & Connor and Anor [2012] FamCAFC 168, at paragraphs 40 and 41 such an evaluation “inevitably involves value judgments and matters of impression”, and accordingly it cannot be treated as “a mathematical exercise”.
The importance of taking a holistic approach to the adjustment of the parties’ property interests is particularly relevant in these proceedings, given that the wife has sought a greater proportion of the non-superannuation property, as compared to the superannuation. She has done so on the basis that an adjustment of that nature would allow her to fund the purchase of a residence for herself and the children upon their relocation to Victoria in late-2019. The husband, on the other hand, has proposed a more generous distribution of superannuation to the wife, but a lesser figure of non-superannuation property than that sought by her. He contends that he also requires access to non-superannuation property in order to rehouse himself and meet a substantial debt payable to his sister.
Consideration
Is it just and equitable to make a property adjustment?
Both parties sought an adjustment of their property interests pursuant to s 79 of the Act. In that regard, in Stanford at [42], the High Court said:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order What order, if any, should then be made is determined by applying s 79(4).
These proceedings fall within the category of cases described in that decision, and as such, the requirement of a finding that it is just and equitable to adjust matrimonial property is readily satisfied. For the avoidance of doubt, I make that finding for the following reasons:
a)The parties currently own a property, and maintain a liability, in their joint names;
b)During the course of their relationship, the parties jointly contributed to maintaining their household; and
c)With the breakdown of their relationship, the parties seek to sever their financial relationship.
The matrimonial asset pool
Having determined that it is just and equitable to make orders pursuant to s 79, the High Court in Stanford and the Full Court in Bevan & Bevan confirmed that the starting point for the Court in property proceedings is the identification of the legal and equitable interests of the parties in assets, liabilities, superannuation and financial resources, as at the date of hearing.
In that regard, the parties’ balance sheet (Exhibit “W-8”) reads as follows:
Ownership
Item
Wife’s value
Husband’s value
ASSETS
1.
J
The Suburb F property
1,180,000
1,180,000
2.
J
CBA account xx…22
Nil
Nil
3.
J
D Bank account xx…61
26
26
4.
H
CBA account xx…03
14,793
14,793
5.
H
Household contents
9,000
5,000
6.
W
CBA account xx…93
4,623
4,623
7.
W
CBA account ITF X xx…99
23
23
8.
W
CBA account ITF Y xx…55
15
15
9.
W
CBA account ITF Y (NDIS) xx…77
80
80
10.
W
Motor vehicle 1
10,000
14,000
11.
W
Household contents
1,000
5,000
TOTAL
1,219,560
1,223,560
LIABILITIES
12.
J
D Bank Mortgage
213,878
213,878
13.
H
Loan: Ms B
23,000
170,000
TOTAL
236,878
383,878
SUPERANNUATION
14.
H
Super Fund 2
405,025
405,025
15.
H
Super Fund 3
8,458
8,458
16.
W
Super Fund 4
94,436
94,436
TOTAL
507,919
507,919
Net Total Assets
1,490,601
1,347,601
It is to be noted that items 1, 2, 3, 4, 6, 7, 8, 9, 12, 14, 15 and 16 are agreed.
Items 5, 10 and 11 involve questions of value. Section 76(1) of the Evidence Act 1995 (Cth) provides that, in the absence of a specified exception:
Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.
The Court is, therefore, without admissible evidence in respect to items 5, 10 and 11. In those circumstances, it is possible for the Court to make an order for those items to be sold and the proceeds of the sale distributed according the percentage adjustment otherwise determined for the matrimonial property. However, given the nature of the relevant property listed at 5, 10 and 11, in that regard, that course of action is impractical.
It is more appropriate to recognise that, in making an order to achieve a just and equitable distribution of the matrimonial property, the parties will retain the property that is currently in their possession, in that they will each retain their own household contents and the wife will retain motor vehicle 1. In that regard, I note that, while the wife will retain motor vehicle 1 which, by her own concession, is not of inconsequential value, the husband will continue to be provided with a motor vehicle by his employer. For those reasons, I will remove items 5, 10 and 11 from the balance sheet.
The main area of dispute between the parties, in respect to the balance sheet, is whether a financial arrangement between the husband and his sister, Ms B, is in the nature of a legally enforceable loan, and if so, whether that loan should be included in the balance sheet as a liability to be borne by both of the parties.
That total liability is documented by 10 loan agreements between the husband and Ms B, which were drafted by Ms B’s husband, who is legally trained. The husband was not challenged on his assertion that, as at the date of the hearing, he had been loaned $170,000 by Ms B. The loans are repayable over five years, with minimum monthly repayments. Notwithstanding that, the husband has made no repayments in respect of those loans. In that regard, Ms B gave the following evidence:
[My husband and I] haven’t been enforcing that agreement because [the husband] has not been in a financial position to make those repayments. He has needed to draw down more, or we’ve written up further agreements to enable him to draw down more, because the – the property agreement has not been settled … It has always been our view that [the husband] would make repayment of those loans once his property had been sold. All his money was tied up in his property.
The husband gave oral evidence that, notwithstanding the fact that the first loan agreement required that he make monthly repayments of $200 and he did not make any of those repayments, Ms B agreed to loan him further funds two months later, pursuant to a loan agreement which saw the monthly repayments increased to $420.
Further, in terms of the interest which is payable pursuant to those loan agreements, the husband gave the following evidence:
Question: Which you say you don’t owe any interest. So I specifically - - -?
Answer: If – if I pay her back when the [Suburb F property] is sold and I get the proceeds from that then there will – I don’t think she will charge me interest, although she probably legally could under that agreement.
Question: Well, you don’t think that you owe her any interest, because I asked you directly how much you owed your sister as you sit there today and you said $190,000, which she had advanced you?
Answer: Yes.
Question: So that provision of the agreement as well, that doesn’t govern your relationship [with Ms B]?
Answer: Has not been enforced.
In that regard, Ms B gave the following oral evidence:
Question: So you – although the agreement refers to interest, you have no intention of requiring him to pay interest, do you?
Answer: If he repays the full balance of the loans owing there is a likelihood that we would not call on the interest payment. Yes.
Those agreements also provide for the husband to pay 50 per cent of any sale proceeds received by him from the Suburb F property in repayment of those loans.
The wife asserts that the loan arrangements between the husband and Ms B are not enforceable. She also states that she has not, at any time, agreed to the husband borrowing funds from Ms B, nor has she agreed to become indebted, herself, in such a way. In that regard, Ms B agreed that the wife had made clear to her that she did not consider that such sums of money should be advanced to the husband. The wife tendered copies of a text message she had sent to Ms B on 13 March 2013, which read:
Hi [Ms B], for your attention. It is of concern to me [that the husband] has a $20,000 loan from you and complaining it’s going to be difficult to pay the mental health bills for [X].
My concerns are that you appear to have funded a lifestyle in lawyers beyond what can truly be afforded. That is having major concerns for me to ensure the kids get their health concerns addressed.
In her oral evidence, the wife clarified that she was critical of the husband having borrowed those funds from Ms B only insofar as they were utilised in payment of his legal fees. The wife did not take issue with the husband having borrowed funds from Ms B for the purpose of meeting various of the children’s expenses.
In terms of the husband’s capacity to repay the loan, Ms B gave the following oral evidence:
Question: You didn’t go into [the husband’s] financial position?
Answer: We did not have valuations on his property. [The husband] has a good job. He has a property. We were not of the opinion that he was going to be a financial risk going forward.
Question: Are you seriously saying to the court that you made that kind of assessment?
Answer: Up until this stage, yes.
In Grefeld & Grefeld And Anor [2010] FamCA 504 at [95] Barry J described the usual characteristics of a loan as including:
• The real lender to know about the borrowing.
• Some definition of the period of the loan. Is it to be for five, ten or one hundred years, or when the borrower chooses to repay it?
• Some definition of the interest payable with evidence supporting such agreement by regular deposits to bank accounts.
• Some form of documentation to validate or authenticate a loan for such a significant sum of money.
Having regard to those considerations, I am satisfied that the contents of the loan agreements entered into between the husband and Ms B show an intention to create a legally enforceable relationship. The fact that the husband has, to date, been granted forbearance in terms of the periodic repayments due to date and the fact that Ms B does not propose to charge the husband interest if the loan is repaid from the proceeds of sale of the Suburb F property does not alter the fact that the agreements are intended to create a legally enforceable relationship. The evidence of both the husband and Ms B, in that regard and generally, was forthright and credible. I accept that they have a mutual intention for the loan will be repaid, even if the husband is afforded some latitude in respect to the terms of repayment.
Of the total funds loaned to him by Ms B, the husband asserts that the first $150,000 was applied, as follows:
a)Legal fees – $66,030;
b)Dr G's report fee – $17,884 (including credit card surcharges);
c)Payments into his solicitor’s trust account on account of Counsel's fees – $15,000 ($3,505 of which remains in trust);
d)Fees for his psychologist, Dr T – $1,200;
e)School fees and the purchase of a laptop for X – $21,890;
f)Mediation fees – $1,819;
g)Court fees – $635;
h)Relocation expenses, including rental bond, furniture and appliances – $11,387; and
i)Miscellaneous expenses, including mortgage repayments, child support and expenses of the Suburb F property – $14,155.
In terms of the miscellaneous expenses, the husband gave oral evidence that he had intermingled the loan funds with his income, making it impossible to determine the particular expenses included in that category. Ultimately, if the wife is brought to account for that part of the husband’s loan from Ms B, she will, effectively, be retrospectively meeting part of those various expenses.
In October 2018, the husband borrowed a further $20,000 from Ms B, which is included in the total loan of $170,000. That sum was loaned for the purposes of the husband meeting his legal fees in respect to the final hearing of this matter.
The wife asserts that, consistent with s 117(1) of the Act, the Court should either disregard, for the purposes of the property settlement between the parties, that portion of the liability that relates to the payment of legal fees or, alternatively, notionally “add-back” those funds.
In Rodgers & Rodgers (No. 2) (2016) FLC 93-712 (“Rodgers”), the Full Court confirmed previous authorities that, notwithstanding the general practice of including unsecured liabilities on a balance sheet, there may be circumstances where it may not be appropriate for that to occur. In that regard, at 81,491 to 81,492, Thackray, Ainslie-Wallace and Murphy JJ stated:
40. It is in our view important to reiterate and emphasise what was said in Biltoft above: there is no statutory prescription which suggests that any such treatment of the liability is mandatory. Despite the frequency with which the “rule” is applied we have not been taken to any authority, nor are we aware of any authority, which suggests that any such “rule” has the effect of a binding rule of law. What emerges from the authorities is that while there might be a “rule” the application of which is appropriate in the vast majority of cases, the manner in which a particular liability should be treated is, ultimately, dependent upon the nature of the liability, the circumstances surrounding the liability and the dictates of justice and equity shaped by each.
41. The usual practice or “rule” sits comfortably and conformably within that rubric — in many cases, perhaps almost all, liabilities will be deducted from the “gross” value of the property because it will be clear (and even if not expressly stated, determined) that the justice and equity of the case demands that the liabilities should be met by the parties in the proportions in which the court determines the property is to be divided. Liabilities that are vague, uncertain, unlikely to be enforced and the like might be treated differently because those circumstances might, in the circumstances of the particular case, render it unjust and inequitable for liabilities to be deducted in that manner. Those so-called “exceptional cases” are but instances of the broader consideration of the justice and equity of the particular case. [References omitted].
The decision of Biltoft and Biltoft (1995) FLC 92-614 (“Biltoft”), as referred to by the Full Court, recognised that the general rule that the liabilities of the parties to a marriage should be deducted from their assets in order to determine divisible property is not an absolute rule and that, in the circumstances of a particular case, a trial judge may not be obliged “to determine the quantum of [the relevant] debt and thus the net value of the property of the parties”: at 82,129. Such liabilities, the Full Court said, “would include but are not limited to a liability which is vague or uncertain, it is unlikely to be enforced or if it is unreasonably incurred”: 82,127.
In Farnell and Farnell (1996) FLC 92-681 (“Farnell”) at 83,066, Fogarty J noted that:
[The extent to which a party’s liability for legal costs should be considered in determining the size of the property pool available for distribution to the parties] is a problem which is peculiar to the Family Court and specifically to financial matters in this Court. In other jurisdictions it would be unusual for a situation to arise where the size of the property in dispute may be impacted upon by the costs of one or both parties in litigating that issue. In addition, in other jurisdictions orders for costs ordinarily follow the outcome of the litigation and are not controlled by the particular provisions as to costs contained in the Family Law Act.
His Honour also referred to the difficulty of a trial judge in determining whether the liability in respect to such legal fees was reasonably incurred. His Honour nonetheless commented at 83,068:
Nevertheless in most cases a realistic assessment of the parties' property and the division of that between them must include the circumstance that the parties have legal costs and in many cases the amounts involved are such that they will assume great importance in the outcome. In calculating the amount which one party is required to pay to the other party out of his or her existing assets the circumstance that those assets will have already been diminished or will be diminished by costs is a fact of life. Similarly, the amount ordered to be received by the other party will be significantly diminished by the circumstance that his or her costs will be deducted from that figure or have already been paid. In some cases the parties agree to a procedure by which costs are deducted from the pool so as to give a more realistic figure for available property. Where that is not done, in most cases it would be a difficult exercise for the trial Judge to do in a direct way. The best that can be done is for that circumstance to be identified; beyond that there is little that the trial Judge can do. It would not be appropriate for the figures otherwise arrived at under s. 79 to be altered to cater for that circumstance. In some cases the issue will be dealt with by considering whether to make a costs order under s. 117. But that is a separate matter and realistically costs orders at first instance in property proceedings are not frequently made.
In arriving at that conclusion, his Honour expressed doubt as to the correctness of an earlier decision of the Court in Lee Steere & Lee Steere (1985) FLC 91-626 (“Lee Steere”), where it was determined that a liability in respect to costs incurred by a party should, on the facts of that case, be deducted from the property available for distribution between both parties.
In Farnell, Kay J similarly doubted the correctness of Lee Steere, stating at 83,080:
To make any allowance for the liability for costs as was suggested by Lee Steere, in my view necessarily requires a breach of s.117(1). I have had the opportunity of reading the proposed reasons for judgment of Fogarty J and I concur with his conclusion that Lee Steere should no longer be regarded as representing the law on this issue. In my view the proper time to considering the impact of costs is when considering applications under s.117 after the proceedings have concluded.
Having regard to the principles discussed by Fogarty and Kay JJ in Farnell, I determine that the part of the loan from Ms B attributable to the payment of the husband’s legal costs should not be included as a liability to be deducted from the matrimonial property pool available for distribution. That is, I will not include the following parts of that loan:
a)Legal fees – $86,030;
b)Payments into his solicitor’s trust account on account of Counsel's fees – $15,000 ($3,505 of which remains in trust);
c)Mediation fees – $1,819; and
d)Court fees – $635.
It is, however, appropriate to recognise that both the husband and the wife have a liability in respect to legal fees, in determining what orders are just and equitable.
Further, I do not include the following expenses of the husband, for reasons which I set out below:
a)Relocation expenses, including rental bond, furniture and appliances ($11,387), given that the husband is entitled to a refund of the rental bond, while the furniture and appliances remain as property in his possession; and
b)Miscellaneous expenses ($14,155), given the absence of particularity as to those expenses, including the amount in respect to child support, which was appropriately paid by the husband, rather than jointly by the parties. The amount set out by the husband attributable to miscellaneous expenses is vague and uncertain, within the principles adumbrated in Biltoft.
I do, however, include in the balance sheet the amount of $1,200 incurred by the husband in respect to the fees for his treating psychologist, Dr T. I also include the amount of $21,890 incurred by the husband in respect to school fees and the purchase of a laptop for X.
I also include the amount of $17,884, in terms of the fees for the preparation of a report by the Single Expert in the parenting proceedings, Dr G. In that respect, the husband acknowledged that the report was obtained from Dr G at his request, absent of an agreement by the wife to meet half the cost of that report. However, I find that this issue is to be determined in accordance with rule 15.47(1) of the Family Law Rules 2004 (Cth), which relevantly provides that “[t]he parties are equally liable to pay a single expert witness’s reasonable fees and expenses incurred in preparing a report”.
As such, the figure attributable to Ms B’s loan to the husband that will be included on the balance sheet as a joint liability of the parties is $40,974.
I, therefore, determine the balance sheet setting out the parties’ property available for distribution to be, as follows:
Ownership
Item
Value
ASSETS
1.
J
The Suburb F property
1,180,000
2.
J
CBA account xx22
Nil
3.
J
D Bank account xx61
26
4.
H
CBA account xx03
14,793
6.
W
CBA account xx93
4,623
7.
W
CBA account ITF X xx99
23
8.
W
CBA account ITF Y xx55
15
9.
W
CBA account ITF Y (NDIS) xx77
80
TOTAL
1,199,560
LIABILITIES
12.
J
D Bank Mortgage
213,878
13.
H
Loan: Ms B
40,974
TOTAL
254,852
Net non-superannuation property
944,708
SUPERANNUATION
14.
H
Super Fund 2
405,025
15.
H
Super Fund 3
8,458
16.
W
Super Fund 4
94,436
TOTAL
507,919
Net total assets
1,452,627
Contributions
Initial contributions
At the time that the parties commenced cohabitation, the wife contends that she had about $5,000 in savings. She cannot recall what the husband’s assets were. Comparatively, the husband asserts that he had approximately $10,000 in non-superannuation assets, being $5,000 in bank accounts and $5,000 attributable to a motor vehicle, furniture and personal effects. He also asserts that he had approximately $40,000 in superannuation. He estimates the value of the wife’s property, at that time, to be approximately $3,000. I have, therefore, accepted the value of $3,000 conceded by the husband.
I accept the contention of Counsel for the wife that the documentation produced during the course of the proceedings establishes that, at the commencement of cohabitation, the husband had $5,043 in Super Fund 3 (Exhibit “5-W”). Prior to cohabitation, the husband also had an entitlement of approximately $2,858 with Super Fund 5, which was rolled into a Super Fund 6 account on 17 April 1997 (Exhibit “W-6”). As such, I find that, at the commencement of cohabitation the husband had at least $7,901 in superannuation.
In circumstances where the husband’s recollection of the amount he had in superannuation at that time was significantly over estimated, in the absence of corroborating documentary evidence confirming the amount that he held in back accounts, I am not satisfied of the estimate provided by the husband that he held approximately $5,000 in bank accounts at the time of cohabitation.
Similarly, the husband’s opinion as to the value of his motor vehicle and personal effects at the commencement of cohabitation is inadmissible to establish that value: s 76(1) Evidence Act 1995 (Cth)).
Accordingly, I find that, at commencement of cohabitation, the wife had approximately $3,000 in property, while the husband had $7,901 in superannuation. In the context of a relationship of approximately 20 years, that difference is relatively insignificant and does not justify a distribution in favour of the husband.
Contributions until separation
During the period of cohabitation, the parties agree that the husband made a greater financial contribution, while the wife has made a greater homemaking a parenting contribution.
As set out above, the husband has worked full time since the parties commenced cohabitation and has contributed his income to the benefit of the family since then.
The wife worked full time at the commencement of cohabitation, then moved to part time for a period between the births of X and Y, before leaving the workforce to be a full time parent and homemaker. In that regard, the wife asserts that her contributions since that time have been, as follows:
a)Washing, cooking, cleaning and otherwise maintaining the interior of the home;
b)Receiving and managing bills in respect to household expenses, which she then forwarded to the husband to pay;
c)Role as primary carer for the children, including bathing them, dressing them, cooking for them, playing with them and cleaning up after them;
d)Driving the children to and from school, taking them to medical and therapy appointments, sporting and other extracurricular activities;
e)Assisting the children with their homework;
f)Ensuring the children’s bags were packed before school or attending other sporting or extracurricular activities; and
g)Obtaining and administering medication to the children on a regular basis.
The wife acknowledges that, during the course of the parties’ relationship, the husband assisted her in respect to her responsibilities as a parent and homemaker, as follows:
a)Occasionally washing the dishes;
b)Undertaking odd jobs around the home, such as putting up shelving;
c)Assisting in driving the children to sporting and extracurricular activities; and
d)Assisting with the care of X while she worked.
In Mallet & Mallet (1984) 156 CLR 605 (“Mallett”) at [4], Gibbs CJ stated that, under the Act, there is no presumption that the “contribution of one party as a homemaker or parent and the financial contribution made by the other party are deemed to be equal” or that “equality of division should be the normal starting point for the exercise of the Court’s discretion … the respective values of the contributions made by the parties must depend entirely on the facts of the case”. To similar effect, in Fields & Smith (2015) FLC 93-638, Bryant CJ said at [43]:
In each case the contributions made by the parties must be evaluated in the context of the facts particular to that case.
In Carmel-Fevia & Fevia (No. 3) [2012] FamCA 631 at [113], Cronin J summarised the applicable principle derived from Mallett, in the following terms:
In Rolfe v Rolfe (1979) FLC 90-629, Evatt CJ said that where one party was earning an income and the other fulfilling responsibility at home, there was no reason to attach greater value to the contribution of one of them to that of the other because that was the way the parties arranged their affairs. Her Honour said that the contribution of each should be given equal value. In Mallet (1984) FLC 91-507 Wilson J referred to Rolfe (supra) and agreed with Evatt CJ’s exposition subject to one reservation. His Honour said that the Act required that the contribution of the wife as a homemaker and parent be seen as an indirect contribution to the acquisition, conservation or improvement of the property of the parties regardless of whether legal ownership resided. His Honour then said:
The contribution must be assessed, not in any merely token way, but in terms of its true worth to the building up of the assets.
I accept that the parties have made contributions to their relationship in different spheres, in this case the wife’s contribution being primarily as a parent and homemaker and the husband’s being through financial support provided to his family. However, based on the authorities to which I have referred, I do not consider that either form of those contributions rendered them necessarily inferior to those of the other party others: Grier & Malphas (2017) 55 Fam LR 107.
As stated above, the parties purchased the Suburb F property with the assistance of a $100,000 gift from the husband’s parents. At the hearing, Counsel for both parties conceded that, leaving aside the $100,000 gift received from the husband’s parents, it is reasonably open to the court to find that the parties should be considered to have made equal contributions, in their respective spheres. Having regard to the evidence set out above regarding those contributions, I accept that to be the case, other than in respect to the $100,000 gift from the husband’s parents.
Contributions since separation
The parties similarly agree that, since separation, the husband has continued to make greater financial contributions, while the wife has continued to be the primary carer of the children.
In that regard, the husband asserts that, as well as meeting his own expenses, he has made the following financial contributions since separation:
a)The total living expense of the wife and the children from separation until about May 2017;
b)Child support as assessed since June 2017;
c)All mortgage repayments on the Suburb F property;
d)All Council rates for the Suburb F property;
e)All home and contents insurance premiums for the Suburb F property;
f)All home security costs for the Suburb F property;
g)All health insurance premiums for the wife and the children;
h)All education expenses for the children, including private school fees, uniforms and equipment;
i)Some medical treatment costs for the children;
j)The costs of the Single Expert in the parenting proceedings;
k)$400 of utility expenses for the wife in October 2018; and
l)$605 that was placed into the joint account in October 2018 and withdrawn by the wife.
In summary, the husband was not challenged on his evidence that, in addition to child support, he has been paying approximately $1,928 per month “in additional expenses of mortgage repayments, council rates, home and contents insurance, private health insurance for [the parties and the children] and the security alarm for the [Suburb F property]”.
During the hearing, Counsel for the wife submitted that the husband’s child support payments are a “government liability”, rather than a contribution. I propose to consider those payments below, pursuant to s 75(2) of the Act.
Further, I have earlier dealt with the report fee of Dr G and I do not have regard to that payment in determining the husband’s contributions.
The husband contends that, in assessing the wife’s post separation contributions, it is relevant that she has expended $15,750 of funds that are held in trust for the children. In her oral evidence, the wife conceded that she has expended those funds on her legal fees. She also agreed that she had not notified the husband of her intention to expend those funds or the fact that she had, in fact, done so. Counsel for the husband confirmed that his client was not seeking to have those funds added back to the matrimonial pool.
The wife has also have the benefit of living in the Suburb F property.
From the wife’s perspective, in the period since separation, she has been the primary carer of the parties’ children, who both have significant learning and behavioural difficulties. It is necessarily the case that the assistance that the husband has been able to provide, in that regard, in circumstances where he has not been living with the wife and the children, has been diminished. This has placed a considerable responsibility on the wife and she is entitled to have that effort recognised as a significant contribution.
Having regard to the husband’s ongoing financial contributions to the welfare of the wife and the children in the period subsequent to the parties’ separation and having regard to the additional responsibilities taken on by the wife, I am satisfied that it is appropriate to regard the contributions of the parties in their respective spheres as being equivalent.
Accordingly, aside from the gift of $100,000 provided by the husband’s parents for the purchase of the Suburb F property, I regard the parties’ contributions, both financial and non-financial, as being equal throughout their relationship and since separation.
On its face, the $100,000 gift is slightly more than 6.9 per cent of the parties’ net assets. While the assessment of the parties’ respective contributions is not a mathematical exercise, it is significant that that gift assisted the parties to purchase the Suburb F property, which has since considerably increased in value. On the other hand, the significance of contributions made early in the parties’ relationship needs to be seen in the context of the totality of contributions made. Having considered those matters, I am satisfied that an adjustment of the parties’ net property in favour of the husband of 3.4 per cent, referable to that gift from his parents, is appropriate.
Section 75(2) factors
Certain of the considerations set out in s 75(2) of the Act are not relevant to the facts of this matter. Accordingly, while I have considered all of the factors listed in s 75(2) of the Act, I will focus only on those that are considered to be of relevance to these proceedings.
(a) the age and state of health of each of the parties
The husband and the wife are both aged 51 years.
While both parties have previously been treated for depression, there is no evidence that either of them currently have any relevant health concerns. The husband’s evidence, in that regard, is that his condition continues to be monitored by a psychologist, but he is no longer required to take antidepressant medication. The wife contends that both parties are in good health and I accept that is the case.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
The husband has been employed by N Pty Ltd for approximately 21 years. For some time until 2016, the husband was employed as a Senior Manager. In 2016, the husband’s role was changed to that of a Manager. In terms of that transition, the husband’s oral evidence was that:
I was approached by the national management team, who I worked with for many, many years. And they essentially told me, “[Mr Garbutt], it’s time. You’re too stressed. We need to find a role for you in the company that’s not going to give you a heart attack”.
… I’m now a [manager]. It’s – essentially, I look after some key accounts. I do a lot of the operational work. But many of the more stressful aspects, particularly in staff management and some of the financial management of the division, is no longer my responsibility.
The husband was not challenged on his evidence that his salary was reduced from $175,000 to approximately $135,000 per annum, as a result of that role change. The husband also currently has the use of a company motor vehicle and phone, the value of which he estimates at $500 per week.
The husband asserted that he has no intention to return to his previous, more highly remunerated, position. Further, the husband gave evidence that, based on his research, he does not consider that he would be able to find a position at another company that would be as highly remunerated and flexible as his current employment. The husband’s evidence regarding his transition to his new position and his intention to remain there was given in a direct and straightforward manner. It was plausible and his reasoning was logical. On that basis, I accept that the husband is currently fully exploiting his earning capacity.
Comparatively, while the wife has 10 years of experience in the retail industry, she has been out of the workforce since 2008. She also has no formal qualifications.
The husband asserts that the wife undertook photography and computer skills training in recent years to assist with her re-entering the workforce. However, some allowance must be made for the wife transitioning back into the workforce.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
Pursuant to the final parenting orders made by consent on 8 November 2018, the children will continue to live with the wife and spend time with the husband from Friday to Tuesday each alternate weekend and during half of the school holiday periods. As stated, once the wife relocates to Victoria with the children, the children will spend time with the husband during half of the school holiday periods.
The Affidavits filed by the parties set out details of significant learning and behavioural difficulties confronting the children. Those difficulties are also referred to in the report of Dr G. The wife’s responsibility to act as primary carer for the children is particularly challenging, in those circumstances. When the wife relocates with the children to Victoria in late-2019, she will be responsible for caring for the children at all times other than for half of the school holidays. This will limit her ability to return to the workforce as a full time employee.
(f) the eligibility of either party for a pension, allowance or benefit under: (i) any law of the Commonwealth, of a State or Territory or of another country; or (ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party
The wife is entitled to, and is in receipt of, government allowances, as set out in her Financial Statement. However, s 75(3) of the Act requires the Court to disregard those benefits.
As stated above, the husband is currently a member of two superannuation funds and has a total entitlement of $413,483. Comparatively, the wife’s superannuation entitlement is valued at $94,436.
The wife’s capacity to contribute to her superannuation in the future is very limited, compared to that of the husband. As stated, the wife is restricted in her employment options by her responsibilities as the children’s primary carer, as well as her lack of qualifications and the time she has spent out of the workforce.
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
Since their separation, the parties have continued to enjoy a comfortable standard of living. In the case of the wife, she has been able to continue residing at the Suburb F property and has been assisted in meeting the expenses associated with that property by the husband. The husband contends that he has only been able to maintain a reasonable standard of living as result of funds that he has borrowed from Ms B. Counsel for the wife contends, however, that it would have been possible for the husband to have lived more frugally in order to have avoided incurring that debt. It is my view that, while both parties have lived comfortably, neither has lived extravagantly.
The husband currently lives in rental accommodation. Pursuant to consent orders made, the Suburb F property will be sold and the wife will be required to rehouse herself and the children. As has been discussed, the parties’ respective accommodation needs are a significant issue in respect to each of their contentions as to how the superannuation available for distribution should be treated.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant
Both the husband and Ms B gave evidence that, upon the sale of the Suburb F property, 50 per cent of the husband’s share of the proceeds of that sale will be paid to Ms B, pursuant to the terms of the loan she has given to the husband.
As previously noted, I am satisfied that it is the intention of the husband and Ms B that the monies loaned by her will be repaid. However, given the history of generous forbearance on the part of Ms B, in regard to such repayments, I am satisfied that the husband will have a considerable amount of flexibility in terms of that repayment.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party
Counsel for the wife submitted that, in her capacity as homemaker and primary carer for the children, his client indirectly contributed to the husband’s earning capacity during the parties’ relationship and following their separation.
I accept that, in the absence of the wife fulfilling her responsibility to care for the parties children, particularly in circumstances of the challenges faced by those children, the husband would have had significant demands placed upon his time, which would have impeded his ability to progress in his career.
I am, therefore, satisfied that the role that the wife has played as a parent and homemaker has contributed to the husband’s income and earning capacity.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
I am satisfied that the parties’ relationship existed for a period of approximately 20 years.
As previously noted, the wife reduced her participation in the workforce subsequent to the birth of X and removed herself from the workforce after the birth of Y. In the context of the children having the significant learning and behavioural challenges, it has been entirely reasonable that the wife has devoted her attention to their care. As previously indicated, I am satisfied that this has impacted upon the wife’s earning capacity.
(l) the need to protect a party who wishes to continue that party's role as a parent
As stated, the wife will continue in her role as the children’s primary carer. The children have special needs and, as such, the wife’s responsibilities in that regard, will necessarily consume her time and resources to a greater degree than would otherwise be the case. As such, her capacity to return to the workforce as the children mature is less than what it otherwise would have been if the children did not have those special needs.
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage
The husband’s unchallenged evidence in relation to his payment of child support since separation is set out at paragraphs 39 to 41 of his Affidavit, as follows:
39. I was first assessed for Child Support in April 2017 for the amount of $2,053.83 per month. This was later revised to $1,437.68 per month based on my non-agency payments for the mortgage, and education and medical expenses of the children. [The Child Support Agency] advised me that I was "overpaying" since the non-agency payments could only offset up to 30% of the child support, but I continued to make all such repayments regardless, to ensure [the wife] and the children were provided for.
40. This amount changed again as a result of the revised parenting arrangements in November 2017 and is now $1,732 .83 per month. Despite there being a $981.38 credit for prescribed non-agency payments, this credit never gets applied and I no longer receive any offset for any payments made towards the mortgage or any other expenses which I continue to pay regardless. …
The husband’s actions in continuing to financially support the wife and the children, including by way of child support, are commendable. There is no reason to assume that he will not continue to meet his child support obligation, including in the event that it may be increased as result of his time with the children being reduced when the mother relocates with them to Victoria.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
I note that the wife currently has outstanding legal fees of $140,000.
The husband is in debt to his sister, Ms B in the sum of $170,000. Approximately $103,484 of those total funds relates to legal fees incurred by the husband.
The parties’ respective debts for legal fees they have incurred will significantly impact upon the funds that they will each have available to purchase new accommodation. This is a relevant consideration in determining whether there should be a weighting of the parties’ superannuation, as against their non-superannuation property.
Finding
Non-superannuation adjustment
Having regard to those relevant s 75(2) considerations to which I have referred, leaving aside the parties’ superannuation, I am satisfied that there should be a 20 per cent adjustment of the matrimonial property in favour of the wife. My primary reasons for making that adjustment include the fact that the husband has a significantly greater earning capacity than the wife, which includes an ongoing ability to contribute to his superannuation. Comparatively, the wife’s future earning potential has been significantly limited by the responsibility she has had to date, and will continue to maintain, as the children’s primary carer.
As stated above, the husband has made a significant financial contribution to the matrimonial property in the form of the $100,000 gift provided by his parents to the parties. For that reason, there will be an adjustment of 3.4 per cent in his favour. Accordingly, I determine that there should be an overall 16.6 per cent adjustment of the parties’ non-superannuation property in favour of the wife.
Superannuation adjustment
The wife has proposed that she receive a greater proportion of the parties’ non-superannuation property because she has “a clear and pressing need for capital that she can use”. Counsel for the wife explained that application on the basis that:
… the level of adjustment that’s proposed by the husband, while in itself of course generous, when combined with first receiving a lesser share of the proceeds of sale, is problematic, because the wife would then receive a substantial amount of her entitlements in superannuation, at a time when she really doesn’t need them, and has a clear and pressing need for capital that she can use. I accept that your Honour may come to the view that if my client receives the kind of adjustment she wants from the proceeds of sale, your Honour then declines to make a further adjustment to superannuation. That’s certainly within your Honour’s power, if I may put it like that.
In that regard, Counsel for the wife submitted that his client should receive “roughly” a 70 per cent of the matrimonial assets, comprised of the non-superannuation property and 55 per cent of the parties’ superannuation interests.
Counsel for the husband, on the other hand, contended that there should be a total adjustment in favour of the wife of 12.5 per cent and that that adjustment should also be differentially apportioned such that the wife would received 60 per cent of the non-superannuation property and 65 per cent of the parties’ superannuation interests. That submission was based on the fact that the husband also faces the challenge of acquiring a home, as well as meeting his debt to Ms B.
It is accepted that superannuation assets can be treated differently to non-superannuation assets in the distribution of matrimonial property, given the particular characteristics of superannuation: Coghlan & Coghlan (2005) FLC 93-220 (“Coghlan”). Most relevantly, apart from in circumstances of financial hardship, superannuation is usually not able to be accessed until the identified retirement or withdrawal date. In this case, no evidence has been provided as to when the relevant withdrawal dates for the parties’ superannuation funds are. However, I accept that, in the absence of the parties demonstrating special circumstances to the trustees of the respective funds, they will not be able to access their superannuation entitlements for some time.
In Drewett & Drewett [2012] FamCA 320 at [184], Cronin J referred to Coghlan as providing a preferred approach to the treatment of superannuation, wherein the majority of the Full Court said:
We consider the preferred approach to the determination of property settlement cases must be to prepare, in addition to the list of items of property which would clearly fall within the definition of that term in s 4(1), a separate list containing any superannuation, interest or interests valued according to the regulations if a splitting order is sought in any application before the court or if no such order is sought that either according to the regulations or otherwise.
In further discussing Coghlan, Cronin J said at [185] – [188]:
Their Honours said that whether or not a splitting order was sought on either party's application, their contributions to both the property as defined in s 4(1) and also the superannuation interests should be assessed. The other factors in s 79(4)(d), (e), (f) and (g) would then need to be considered. The s 75(2) factors would then be considered.
Similarly, the parties' future superannuation prospects, be they in capital or income form, would also need to be considered. The overall justice and equity of the ultimate award, including any proposed splitting order or the need for such an order, would then be considered. The Full Court then went on to set out how that pathway was to be followed. Their Honours then said:
In the context of the consideration of the matters referred to in subparagraphs (b) and (c) of a preceding paragraph in which they referred to the pathway the following matters may be relevant: the relationship between years of fund membership and cohabitation; actual contributions made by the fund member at the commencement of the cohabitation (if applicable) at separation and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse's present and/or future entitlements under the fund.
Their Honours then said:
If this approach is adopted whereby superannuation interests are dealt with separately from properties defined in s 4, but are subject to the considerations in s 79(4) then not only will any contributions both direct and indirect by either party to such superannuation interests be more likely to be given proper recognition, but the real nature of the superannuation interests in question can also be taken into account both in consideration of the s 75(2) matters and in the final assessment of whether the ultimate order is just and equitable.
The Full Court referred to the real nature of the relevant superannuation interest and by that they were referring to not just the value of the superannuation interests according to the regulations but also the relevant value to the party in the future. In this case, the parties have obtained and agreed upon the valuations of their respective interests and it was not suggested that I should examine what those interests will mean for them in the future. Initially therefore, I propose to simply assess their respective contributions and then make adjustments separately.
Despite the fact that it will be a number of years before either party is likely to access their superannuation entitlements, there was no suggestion that the Court should consider anything other than the agreed valuations of the parties’ respective interests.
I have had regard to the fact that, at the commencement of the parties’ relationship, the wife had no superannuation entitlement. On the other hand, the husband’s superannuation entitlement of approximately $7,900 was relatively modest. Accordingly, the value of the parties’ current respective superannuation entitlements is substantially due to contributions that occurred during the course of their relationship.
In those circumstances, I have had regard to each of the parties’ overall contributions in respect to the non-superannuation property. As noted above, during the marriage, the wife was the primary carer of the parties’ children. The responsibility taken on by the wife, in that respect, enabled the husband to give greater focus to his career and hence his ability to contribute to his superannuation.
In my view, both parties will require access to cash funds in the near-future in order to rehouse themselves, as opposed to a greater interest in the superannuation entitlements, which will not become available to them for some time. In those circumstances, I am of the opinion that the relative distributions that apply to the parties’ non-superannuation property, being 66.6 per cent to the wife and 33.4 per cent to the husband, should similarly be applied to the parties’ superannuation entitlements.
Orders
Based on my findings in respect to the balance sheet, the wife’s bank account funds are currently $4,741, while the husband’s are $14,793. There will necessarily need to be an adjustment in relation to those figures, in order to effect the overall property distribution of 66.6 per cent to the wife. The combined bank funds are $19,534 and 66.6 per cent of that figure is $13,009. After subtracting the bank funds currently held by the wife from that figure, it is clear that she should receive an adjustment of $8,268. Therefore, from the proceeds of the sale of the Suburb F property, it will be necessary for a distribution of $8,268 to be made in favour of the wife.
Accordingly, I propose making orders for the following payments from the proceeds of the sale of the Suburb F property:
a)Firstly, payment of the D Bank mortgage;
b)Secondly, payment of expenses relating to the sale;
c)Thirdly, payment of $40,974 to Ms B;
d)Fourthly, payment of $8,268 to the wife;
e)Fifthly, payment of 66.6 per cent of the net balance to the wife; and
f)Sixthly, payment of the balance to the husband.
Further, I calculate 66.6 per cent of the parties’ combined superannuation pool to be $338,274. The wife currently has superannuation to the value of $94,436. I will, therefore, make a superannuation splitting order in respect to the husband’s superannuation entitlement with Super Fund 2, being the larger of the two funds he maintains, in the in the amount of $243,838.
Overall assessment
Based on the agreed value of the Suburb F property, the wife will receive an amount of approximately $610,642 from the proceeds of its sale, less sale expenses. That figure, combined with the adjustment of $8,268 and the bank account funds she already maintains, will provide her with a total non-superannuation distribution of approximately $623,651.
From that amount, the wife is responsible for payment of her outstanding legal fees in the sum of approximately $140,000. This will leave her funds of approximately $483,651. The wife will also retain the use of motor vehicle 1, her furnishings and personal effects.
The wife will also retain the benefit of her existing superannuation entitlement of $94,436 and she will receive an adjustment by way of a superannuation splitting order in respect to funds held in the husband’s superannuation funds of $243,838, giving her a total superannuation entitlement of $338,274.
The husband will receive, from the net proceeds of the sale of the Suburb F property, the sum of $306,237, less sale expenses. When this figure is combined with the bank account funds held by the husband, it can be anticipated that he will receive non-superannuation property to the approximate value of $321,030.
From that amount, he will be responsible for repaying to his sister the amount of $170,000 less the sum of $40,974, which will be paid at the time of the sale of the Suburb F property. As stated, I find that the husband will have some flexibility as to when he is required to repay that loan. After repayment of that loan, the husband will retain approximately $162,004 from the property distribution. This is a respectable deposit for the purchase of a property, in circumstances where the husband’s history of stable employment and reasonable income can reasonably be inferred to provide him with a greater borrowing capacity than the wife.
The husband will also continue to enjoy a comfortable income, together with a motor vehicle provided by his employer.
The husband’s superannuation entitlement will be reduced to $169,645. However, the husband’s greater earning capacity provides him with a better opportunity to supplement that superannuation entitlement, than is available to the wife.
On balance, I am therefore satisfied that the orders I propose represent a just and equitable property settlement.
I certify that the preceding one-hundred and sixty (160) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice McClelland delivered on 4 March 2019.
Associate:
Date: 4 March 2019
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